Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 3, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Undisclosed investment in Lamorghini Car - addition u/s 69 - the question whether an investment had been made or not is a matter of fact and the same cannot be presumed. - HC
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Stay application - recovery proceedings - once the petitioner has already been granted opportunity to pay the outstanding demand in four installments as noted above and no prejudice has been demonstrated to be caused to the assessee on that account - HC
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Upholding the method adopted by the assessee to devalue the closing stock - the findings of the Tribunal that the stock of packing materials had become obsolete warranting a reduction in its value is a finding of fact not shown to be perverse. - HC
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Reopening of assessment - AO has failed to furnish the assessee with a copy of the reasons so recorded that has prevented the assessee from filing his objections, if any, to the notice - This failure on the part of AO is in violation of the principles of natural justice - AT
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Computation of capital gains - The expenditure incurred in pursuant to or as an obligation under the Joint Development Agreement can be claimed as business expenditure despite the fact that the said Joint Development project could not materialize - the expenditure incurred subsequent to JDA cannot be treated as the expenditure incurred for improvement of the capital asset in question - AT
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TDS u/s 194C or 194I - assessee has rightly deducted the tax at source on berth hire charges paid to Mumbai Port Trust in terms of section 194C of the Act as contractual charges - AT
Customs
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Guidelines for handling and storage of valuable goods that are seized/ confiscated by the Department - CBEC
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Request for re-import of machines duty free under Notification No. 158/95 dated 14.11.1995 - when some marks and numbers have been found on plates on the burnt machines as indicated in the examination is found, identity is established - benefit of exemption allowed - AT
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Denial of refund claim - discharge export duty, considering the FOB value as cum-duty price or transaction value - very purpose of issuing the said Circular is to bring uniformity to the divergent assessment practice followed in the collection of Customs Export Duty across the country. - Circular is binding on the Department - AT
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Denial of refund claim - unjust enrichment - once it is established from the books of account of the appellant that the amount of Revenue deposit has been undisputedly shown as deposit with government authorities under the head of loans and advances in the balance sheet it is sufficient to conclude that the incidence of said revenue deposit has not been passed on to any other person - AT
Service Tax
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Business Support Service - owner allowed to use its entire infrastructure to the assessee - assessee was manufacturing and doing the business in the name of owner and received huge money as conducting charges - The nature of the transaction would not fall within the meaning of support services for business or commerce - HC
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Whether the Tribunal, while remitting the matter back, is right in law in giving a positive direction not to impose penalty on the 1st respondent, especially when the imposition of such penalty u/s 76 and 78 of Finance Act, 1994 is not only automatic but also mandatory - Order of Tribunal is not correct - HC
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Claim of refund of excess service tax paid - appellant had requested the department on 16.7.2010 in writing that the excess amount paid by them in April 2010 may be kept as deposit with the department to be adjusted against any future liability of service tax. - Period of limitation not appliable - AT
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Demand of interest on delayed payment of service tax - interest is liable to be paid under Section 75 of the Finance Act, 1994 and not barred by limitation - AT
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When there are contra views on a particular issue, assessee cannot be attributed with a malafide intention and longer period of limitation would not be available - demand of service tax beyond one year set aside - AT
Central Excise
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Transfer of CENVAT Credit - There was no provision in law at the relevant point of time requiring “prior” permission or “previous” approval of the authority to transfer the credit while the input and capital goods moved - AT
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Denial of CENVAT Credit - invoices did not contain the registration number of the service provider which is a mandatory requirement - Rule 9(2) of Cenvat Credit Rules - credit allowed - AT
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CENVAT Credit - duty paying documents - sole ground for denial of credit is non-appearance of the signature of the input supplier. The said defect is rectifiable defect and in the absence of any allegations that the appellants have not received the inputs, credit allowed - AT
VAT
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Restoration of the penalty - transporting goods without valid document -It is only in cases where there was no consignor at all and the documents on which reliance was placed was found to be not genuine, action has been taken. - HC
Case Laws:
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Income Tax
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2015 (12) TMI 118
Review petition - Levy of interest upon the assessed income or upon the income declared in the return - Held that:- It appears that the department wants to argue the same issue again in this civil review application. This tantamounts to an appeal against the order passed by a Division Bench of this Court in Ajay Prakash Verma Versus Income Tax officer [2013 (1) TMI 140 - JHARKHAND HIGH COURT]. This is a civil review application in the format of an appeal. We are not sitting in appeal against the decision passed by a Division Bench of this Court. There may be even an erroneous order or decision rendered by a Division Bench of this Court, as per the department, but, the fact remains that the aforesaid issue of levying interest either upon the assessed income or upon the income declared in the return was already addressed to this Court and, the proposition propounded by this appellant was not accepted by this Court. This judgment and order is dated 25th July, 2012 in Tax Appeal No. 38 of 2010. Till today, this appellant has not preferred Special Leave Petition before Hon'ble Supreme Court. Thus, no clerical error or statistical error has been pointed out by this appellant, but, an error on the merits of this case has been pointed out by the appellant. This is an appeal in the form of civil review. The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found; it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a court of appeal. A power of review is not to be confused with appellate powers which may enable an appellate court to correct all manner of errors committed by the subordinate court. See ARIBAM TULESHWAR SHARMA Versus ARIBAM PISHAK SHARMA [1979 (1) TMI 228 - SUPREME COURT ] The term 'mistake or error apparent' by its very connotation signifies an error which is evident per se from the record of the case and does not require detailed examination, scrutiny and elucidation either of the facts or the legal position. If an error is not self-evident and detection thereof requires long debate and process of reasoning, it cannot be treated as an error apparent on the face of the record for the purpose of Order 47 Rule 1 CPC or Section 22(3)(f) of the Act. To put it differently an order or decision or judgment cannot be corrected merely because it is erroneous in law or on the ground that a different view could have been taken by the court/tribunal on a point of fact or law. In any case, while exercising the power of review, the court/tribunal concerned cannot sit in appeal over its judgment/decision
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2015 (12) TMI 117
Undisclosed investment in Lamorghini Car - addition u/s 69 - ITAT deleted the addition - Held that:- Assessee had produced sufficient material to establish that the vehicle had been imported by the Sanjay Bhandari (in the name of VKTT) and evidence was also produced to show payment of the cost of the vehicle. The AO on the other hand, has discovered no evidence or material on the basis of which it could be concluded that the cost of the vehicle and the initial duty had not been paid by Sanjay Bhandari. The assertion that the Letter of Credit had been issued by Oriental Bank of Commerce on 21st December, 2004 and subsequently, the Bank Account of M/s History Logistics had been debited by a sum of ₹ 70,77,773/- towards cost of the vehicle has not been contested by the AO or the CIT(A). Neither the AO nor the CIT(A) has any material to dispute these assertions. In the circumstance, we are inclined to agree with the Tribunal that the question whether an investment had been made or not is a matter of fact and the same cannot be presumed. In the present case, it is probable that either the Assessee or any other person related to the Assessee, would have paid for acquiring the vehicle in question. An investigation into the sources of the funds of Sanjay Bhandari/VKTT may perhaps have established a link between the funds used for the purchase of the vehicle and JCT/Sameer Thapar/the Assessee. However, no such link has been established. In absence of any material to show that the consideration for the vehicle had not been paid by Sanjay Bhandari/M/s History Logistics, it is not possible to conclude that the Assessee had made an investment in purchase of the vehicle in question. - Decided in favour of the Assessee and against the Revenue.
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2015 (12) TMI 116
Stay application - recovery proceedings - Held that:- It is true that while considering an application for stay, it is neither expedient nor appropriate for the Court to initiate a detailed enquiry to find out whether the stand of the assessee is on solid ground, because expression of a final opinion on the merits at that stage, without examining the entire material and affording full opportunity of hearing, is likely to cause prejudice to either side. But, at the same time, the Court is required to consider whether, on the basis of the material placed before it, a prima facie case for grant of stay is made out or not. Similarly, the Court has to consider whether on the basis of the pleadings and the material placed before it, undue hardship is likely to be caused to the assessee in case the stay is declined or when a conditional stay is granted, the conditions imposed are so burdensome that the assessee is unable to comply with the same and, thus, rendering the right of appeal non-existent. Needless to point out that the power of stay by the Court is not likely to be exercised in a routine manner or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the court will consider whether to stay the recovery proceedings and on what conditions and the stay will be granted in most deserving and appropriate cases where the court is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. In the present case, applying the aforesaid guiding principles and keeping in view the totality of facts and circumstances of the case as noticed herein before, once the petitioner has already been granted opportunity to pay the outstanding demand in four installments as noted above and no prejudice has been demonstrated to be caused to the assessee on that account, there appears to be no error in the impugned order passed by respondent No.2. Further, learned counsel for the petitioner has also not been able to show that the order is unjustified. Consequently, finding no merit in the petition, the same is hereby dismissed.
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2015 (12) TMI 115
Unexplained deposits/investment in the bank - Held that:- The authorities below on appreciation of material on record have concurrently recorded that ₹ 12,12,000/- was unexplained deposits/ investment in the bank of the assessee. Nothing could be shown that the approach of the Assessing Officer, the CIT(A) and the Tribunal was erroneous or perverse except only an effort was made to reappreciate the evidence so as to record a finding different from the one arrived at by the authorities below. The view of the Assessing Officer, the CIT(A) and the Tribunal is a plausible view based on material on record which warrant no interference by this Court. - Decided against assessee.
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2015 (12) TMI 114
Levy of penalty under section 271(1)(c) - surrender of income - Held that:- Tribunal held that the surrender had been made on account of discrepancies found in the books of account, loose papers, documents etc. maintained by the assessee. The assessee had incorporated the surrendered amount in the profit and loss account but by showing the sale of opening stock at lower price, the income was again reduced to ₹ 48,054/-. The assessee deposited the amount of ₹ 14 lacs in the bank stating that miscellaneous assets were purchased which were later on sold. There was no evidence to show the existence of such assets Since the assessee itself in its letter of surrender admitted that the the amount of ₹ 14 lacs was surrendered to cover up all alleged discrepancies in the books of account, loose papers, documents, stock, byproducts and other record, the Tribunal was right in upholding the levy of penalty on ₹ 14 lacs addition imposed by the Assessing Officer. Learned counsel for the assessee has not been able to point out any error in the approach of the Tribunal warranting interference by this Court. - Decided against assessee.
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2015 (12) TMI 113
Reduction of interest payable under Section 220(2) to 25% - entitlement for complete waiver of the interest - Held that:- In the facts and circumstances, the authority had applied its mind to the situation while granting 75% waiver of the interest. It is not correct to state that the Commissioner did not apply its mind though we do find that proper reasoning has not been given. However, by not giving such proper reasoning it does not mean that the order is incorrect or is liable to be set aside. We are of the opinion, that a finality should be reached and the matter should be laid at rest. The petitioner has been litigating for almost 20 years and the matter should come to an end once and for all. The contention that complete waiver of interest should be granted cannot be accepted. Admittedly, the enhanced income was found to be valid to a certain extent and the contention of the assessee was not accepted. A demand of ₹ 75,000/- was eventually accepted by the petitioner which was paid. Consequently, interest was liable to be paid under Section 220(2) of the Act. Considering the peculiar facts and circumstances of the present case, we find that the original demand was reduced to ₹ 75,000/-. However, the interest component under Section 220(2) of the Act has swelled to ₹ 4.77 lacs. According to the learned counsel for the petitioner, the interest as on date would be ₹ 1,19,353/- as per the impugned order. We find that for the assessment year 2008-09 the petitioner's total salary was ₹ 1,40,400/-. Considering the aforesaid, we are of the opinion that directing the petitioner to pay ₹ 1,19,353/- would entail undue hardship to him. Considering the peculiar facts and circumstances in the given case, we are of the opinion, that in the interest of justice, the demand of interest should not exceed the demand of ₹ 75,000/- - Decided partly in favour of assessee.
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2015 (12) TMI 112
Eligibility to claim depreciation in respect of plant & machinery of discontinued business - ITAT allowed claim - Held that:- The refining machinery was a part of the block of assets of plant and machinery. In such a case depreciation is granted to the entire block of assets whether or not an individual item therein has been used during the subject assessment year. In support the impugned order placed reliance upon its decision in the case of DCIT Vs. Boskalis Dredging India (P) Ltd. (2012 (8) TMI 447 - ITAT MUMBAI ) wherein it has been held that once the concept of block of assets was brought into effect from assessment year 1989-90 onwards then the aggregate of written down value of all the assets in the block at the beginning of the previous year along with additions made to the assets in the subject Assessment Year depreciation is allowable. The individual asset looses its identity for purposes of depreciation and the user test is to be satisfied at the time the purchased Machinery becomes a part of the block of assets for the first time. In the circumstances the respondent's appeal was allowed and the disallowance of depreciation was deleted. - Decided in favour of assessee. Disallowance of "loss due to fire" - Held that:- Tribunal by the impugned order correctly accepted the respondent's contention that the amount returned as loss was revenue in nature as the amount claimed and not granted by the Insurance Company was expenditure for repair of factory Building and Plant & Machinery. This expenditure as repairs was allowable as revenue under Sections 30 and 31 of the Act in principle. In the circumstances the impugned order of the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and restored the issue to the Assessing Officer to examine whether the expenditure claimed was incurred for repairs of Building and Plant & Machinery affected by the Fire.The view taken by the Tribunal in principle that the amounts spent on repairs has to be allowed under Sections 31 and 32 of the Act cannot be faulted.- Decided in favour of assessee. Upholding the method adopted by the assessee to devalue the closing stock - Held that:- We find that the entire exercise of devaluation of stocks is essentially a question of fact and before us the same is not urged as being perverse. The Revenue is contending that it is contrary to Section 145A of the Act. However nothing is shown to us in support of its contentions. Devaluation of stock due to obsolescence is a feature not unknown to business (See the decision of this Court in Alfa Laval India Ltd. Vs. Deputy Commissioner of Income tax, [2003 (9) TMI 43 - BOMBAY High Court] as upheld by the Supreme Court in Commissioner of Income Tax Vs. Alfa Laval (India) Ltd., [2007 (11) TMI 281 - SUPREME Court ] . Thus the findings of the Tribunal that the stock of packing materials had become obsolete warranting a reduction in its value is a finding of fact not shown to be perverse. - Decided in favour of assessee.
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2015 (12) TMI 111
TDS on enhanced compensation - whether the action of the respondents in charging TDS is not legal and valid as per the law laid down in Ghanshyam's case (2009 (7) TMI 12 - SUPREME COURT ) and the circular dated 13.4.2011 issued by the respondents - Held that:- we find merit in the stand taken by the respondent authorities. Admittedly, interest had been awarded to the petitioners on the enhanced compensation on account of acquisition of their land on which TDS was deducted by the respondent authorities. It needs to be noticed that the judgment in Ghanshyam's case (supra) was delivered on 16.7.2009 by the Apex Court. Thereafter, amendments were made to Sections 56 and 145A of the 1961 Act w.e.f 1.4.2010 thereby including income by way of interest received on compensation or on enhanced compensation to be income of the year in which it was received. In view of the said amendments, the interest component on the amount of compensation or enhanced compensation being revenue receipt was exigible to tax in the year of receipt irrespective of the method of accounting employed. Similarly, in Bir Singh's case (2010 (10) TMI 581 - PUNJAB & HARYANA HIGH COURT ), it was held that the interest awarded by court on enhanced compensation was interest under section 28 of the Act and chargeable to tax in the year of receipt. Also decided in Prem Singh's case [2010 (12) TMI 460 - PUNJAB AND HARYANA HIGH COURT ] the interest component on enhanced compensation under section 28 is liable to be taxed under Section 56 of the Act even when compensation is treated as agricultural income and is not covered by Section 45(c) of the Act. We thus answer the questions in favour of the revenue and modify our order dated 5.7.2010 accordingly. The amount of interest on enhanced compensation is held to be taxable in the year of receipt irrespective of pendency of proceedings against award of enhanced compensation - Decided against assessee.
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2015 (12) TMI 110
Reopening of assessment - non issue of notice - Held that:- We do not concur with the contentions of Revenue that non-supply of copy of the reasons recorded by the Assessing Officer, for initiation of re-assessment proceedings under Section 147 of the Act, as requested for by the assessee is not fatal to the reassessment proceedings / order. The Hon'ble Apex Court in the case of GKN Drive Shafts (India) Ltd. in [2002 (11) TMI 7 - SUPREME Court ], laid down the law that it is mandatory for supply of the copy of the reasons recorded, if asked for by the assessee; provided the assessee has complied with his duty of filing a return of income in response to the notice under Section 148 of the Act. In the case on hand, the learned CIT (Appeals) in the impugned order at paras 3.4 to 3.10, after examining the records of assessment has rendered a finding that the assessee has complied with the obligations cast upon him by the notice under Section 148 of the Act and has also sought for the reasons recorded by the Assessing Officer for initiating re-assessment proceedings under Section 147 of the Act. The learned CIT (Appeals) observed that the Assessing Officer, however, has failed to furnish the assessee with a copy of the reasons so recorded and this failure on the part of the Assessing Officer, in our view, has prevented the assessee from filing his objections, if any, to the notice issued under Section 148 of the Act. This failure on the part of the Assessing Officer is in violation of the principles of natural justice - Decided in favour of assessee.
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2015 (12) TMI 109
Eligibility for interest on refund - Held that:- Identical issue has been deliberated upon and decided by the Tribunal in other group cases, following the order of the Special Bench, that the Hon’ ble Gujarat High Court had upheld the order of the Special Bench in Punitaben K. Patel OSFDT (2008 (6) TMI 576 - GUJARAT HIGH COURT refund should be granted with interest. We are in full agreement with the order of the Special Bench of the Tribunal. We repeat that Revenue should not drag the respondents to unnecessary avoidable litigation. But assessee is not entitled to interest on interest.
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2015 (12) TMI 108
Computation of capital gains - Disallowance of cost of improvement - development of the property under joint development agreement (JDA) and subsequent cancellation as well as sale of the property - Held that:- One of the expenditure has already been allowed by the AO, therefore, we are of the view that the other than the interest expenditure no other expenditure can be allowed either as cost of the acquisition or cost of improvement of the land as per the provision of sec. 48 of the Act. As regards interest expenditure, the same is allowable as cost of acquisition if paid on the amount used for acquisition of the land in question. Further the interest paid for the period prior to the joint development agreement would be allowable as cost of the acquisition. Accordingly, the AO is directed to verify and determine the interest paid on the borrowed funds used for acquisition of the land in question up to the date of Development agreement and allowed the same as cost of acquisition while computing the capital gain on the sale of land. - Decided in favour of assessee in part. Disallowance of the indexed cost of expenses - CIT(A) has confirmed the action of the AO by holding that the assessee has failed to establish that the expenditure was incurred on land and that it has resulted in any improvement of the property - Held that:- The entire expenditure is claimed to have been incurred in cash. However, the assessee has not produced any bills or details of work as well as parties to whom the payment was made. What was produced by the assessee were the self made vouchers without any confirmation from the other party. It is pertinent to note that the assessee companies are in the business of development of the properties and the joint development agreement were entered into between the parties in connection with their business activities. The assessee were to get 13% of the developed property and the income from the sale the developed property would be the business income of the assessee. Therefore, any activity under the Joint Development Agreement was in the nature of business activity of the assessee. The expenditure incurred in pursuant to or as an obligation under the Joint Development Agreement can be claimed as business expenditure despite the fact that the said Joint Development project could not materialize. Therefore, the expenditure incurred subsequent to the Joint Development Agreement cannot be treated as the expenditure incurred for improvement of the capital asset in question. Accordingly, in the facts and circumstances of the case, we do not find any error or legality in the orders of the authorities below to qua this issue. - Decided against assessee.
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2015 (12) TMI 107
Rejection of claim for deduction u/s 80IB - tax authorities have taken the view that the assessee has not actually manufactured goods - Held that:- Perusal of the documents filed in paper book would show that the assessee has obtained permanent SSI certificate, which is normally given after commencement of production only that too after physical inspection. Further, the assessee has also furnished copies of registration made under Central Excise Act, Sales tax Act, Pollution control committee, import & export code, electricity payment bills, labour register etc. Further, the books of accounts also support the claim of manufacture of goods. With regard to the purchase of machineries, the assessee has furnished copies of relevant bills supporting the claim of purchase of machinery and also the particulars of payments made. We notice that none of these evidences were not examined by the tax authorities. Thus, we notice that the tax authorities have drawn adverse inference only on the basis of denial of supply of machinery to the assessee’s personal name by the supplier. In view of the over whelming evidences furnished by the assessee to support the claim of manufacture and sale of goods, we are of the view that the tax authorities are not justified in holding that the assessee was not manufacturing goods.Accordingly, we set aside the order of Ld CIT(A) and direct the AO to allow the claim for deduction u/s 80IB of the Act to the assessee. - Decided in favour of assessee. Disallowance of interest expenditure on unsecured loan - Held that:- This disallowance was made by following the decision taken by the AO for AY 2003-04. The Ld CIT(A) has also observed that there has been no fresh assessment in the set aside proceedings. However, he proceeded to examine this issue of genuineness of laons in AY 2004-05. However, there is no dispute with regard to the fact that the assessee had availed loans in the year relevant to AY 2003-04 and hence the disallowance of interest expenditure would depend upon the decision taken in AY 2003-04 on examination of loans in terms of sec. 68 of the Act. Accordingly, we are of the view that the Ld CIT(A) was not justified in examining the loans in AY 2004-05, which were taken in AY 2003-04. Accordingly, we set aside his order on this issue. However, since the assessment order for AY 2003-04 was not passed, we are of the view that no adverse decision could be taken on this issue in AY 2004-05. Accordingly, we direct the AO to allow the interest claim. - Decided in favour of assessee. Disallowance of depreciation on the machinery purchase - Held that:- We have noticed that the claim of purchase of machinery was rejected only on the ground that the supplier has denied supply of machinery in the name of assessee’s personal name. However, the assessee has furnished copies of bills, particulars of payment, the list of machineries approved under SSI Act etc. Further the assessee has manufactured goods by using the machineries and sold the same. The registration under Sales tax Act and Central Excise Act also shows that the assessee was furnishing necessary returns under those Act. The said In view of the evidences furnished by the assessee, we are of the view that there is no reason to suspect the purchase of machinery. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the depreciation.- Decided in favour of assessee.
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2015 (12) TMI 106
Accumulation of income - 15% accumulation for application in future has to be calculated on gross receipts or net receipts after deduction of revenue expenditure? - Held that:- As per the statutory language of section 11(1)(a) the income which is to be taken for purpose of accumulation is the income derived by the trust from property any expenditure which is in the shape of application of income is not to be taken into account. Having found that trust is entitled to exemption under s. 11(1), we are to go to the stage of income before application thereof. The gross income earned by the assessee is relevant. See Jyothy Charitable Trust Versus The Deputy Commissioner of Income Tax (Exemptions) , Circle 17 (1) , Bangalore [2015 (11) TMI 1295 - ITAT BANGALORE] - Decided in favour of assessee.
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2015 (12) TMI 105
Accumulation of income - 15% accumulation for application in future has to be calculated on gross receipts or net receipts after deduction of revenue expenditure? - Held that:- As per the statutory language of section 11(1)(a) the income which is to be taken for purpose of accumulation is the income derived by the trust from property any expenditure which is in the shape of application of income is not to be taken into account. Having found that trust is entitled to exemption under s. 11(1), we are to go to the stage of income before application thereof. The gross income earned by the assessee is relevant. See Jyothy Charitable Trust Versus The Deputy Commissioner of Income Tax (Exemptions) , Circle 17 (1) , Bangalore [2015 (11) TMI 1295 - ITAT BANGALORE] - Decided in favour of assessee.
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2015 (12) TMI 104
Addition on account of commission on sale - deduction of TDS - Held that:- When the payments are made through account payee cheques and also furnished PAN of recipients commission, the same could have been verified by the AO from the assessment records of the respective recipients. Further, this commission is subject to TDS and assessee has either deducted TDS or furnished certificate issued u/s. 197(1) of the Act by the ITO, TDS in favour of the commission agents for lower deduction or nil deduction of TDS. The assessee has also filed complete particulars of commission recipients i.e. names and addresses along with confirmations. The complete sale bills and commission bills mentioning the nature of services rendered by these parties are filed and the services rendered includes enquiry for orders, translating enquiry in to orders, arrangement of supplies, collection for payment and also collection for statutory forms i.e. sales tax, excise duty etc. In terms of the above facts and circumstances, we are of the considered view that the CIT(A) has erred in confirming the addition made by AO and accordingly, we delete the disallowance of commission paid to above mentioned parties. Decided in favour of assessee.
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2015 (12) TMI 103
Addition made for bogus liability - CIT(A) deleted the addition - Held that:- AO has just made addition on estimate basis without giving any basis or finding as can be observed from the observation of the AO. Even otherwise, the CIT(A) after going through the remand report of the AO dated 09.11.2009 noted that the assessee company filed partywise details of liabilities for expenses, liabilities for others, liabilities for garden and liabilities on account of trade deposits and advances. The AO during remand proceeding could not point out any defect or adverse inference from these details. In such circumstances, we are of the view that the CIT(A) has rightly accepted the contention of the assessee after taking remand report from the AO. Even now before us the Ld. Sr. DR could not point out what is the error in the order of the CIT(A) or the factual finding is wrong. In the absence of the same and the facts narrated by CIT(A), we confirm the order of CIT(A) - Decided against revenue. Addition made by AO on account of expansion of maintenance of new extension as capital in nature - CIT(A) deleted the addition - Held that:- We find that the assessee has incurred expenses for maintenance of existing bushes which involved planting, growing and nurturing of such tea bushes which are entirely necessary for basic operation and manufacturing and production of tea. The assessee produced copy of ledger account before CIT(A) from where he observed that these expenses were incurred for payment of casual workers for uprooting, leveling and cutting jungle and weeding out unnecessary things and accordingly, these expenses are in the nature of revenue expenditure and cannot be held to be capital in nature. We concur with the finding of CIT(A) in view of the above facts and circumstances and accordingly, this issue of revenue's appeal is dismissed. - Decided against revenue. Direction to AO to apply rule correctly and determine the loss from tea business as income from other sources by CIT(A) - Held that:- We find that the CIT(A) has merely directed the AO to compute the business income after applying the provisions of Rule 8 of the I. T. Rules. However, we are of the view that the CIT(A) has no power under the Act to set aside the issue but in our view, we direct the same accordingly. This issue of revenue's appeal is allowed for statistical purposes. - Decided in favour of revenue for statistical purpose.
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2015 (12) TMI 102
Penalty u/s 271(1)(c) - deduction under section 80-I denied - Held that:- As evident from the record that the assessee has filed returns of income for the impugned assessment years claiming deduction under section 80I of the Act after the order of the Tribunal. Therefore, the assessee has a reasonable belief that it is entitled for deduction under section 80I of the Act. The legal position has been changed after the judgment of the Hon'ble High Court of Allahabad in the assessee’s case in the year 2012 when a contrary view was taken and it was held that the assessee is not entitled for deduction under section 80I of the Act. Relying upon the verdict of the Hon'ble High Court of Allahabad, the Revenue has levied penalty under section 271(1)(c) of the Act without realizing the fact that when return was filed, there was the order of the Tribunal in the assessee’s own case, in which it was held that the assessee is entitled for deduction under section 80-I of the Act. Therefore, there is neither concealment of income nor furnishing of inaccurate particulars on the part of the assessee. Under these circumstances, we are of the considered view that the Revenue has wrongly levied the penalty under section 271(1)(c) of the Act in the impugned assessment years whereas the assessee has claimed deduction under section 80I of the Act on the basis of the order of the Tribunal. - Decided in favour of assessee.
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2015 (12) TMI 101
Transfer pricing adjustment - assessee challenged Transfer Pricing Officer (TPO) not allowing the adjustment of +/- 5% while computing the addition in the hands of assessee on account of arm's length price of the international transactions entered into by the assessee - Held that:- In view of proviso to section 92C(2) of the Act, no adjustment is to be made since the variation between the price paid in respect of the international transaction and the arm's length price determined by the TPO did not exceed 5%. We find merit in the plea of the assessee and benefit of proviso to section 92C(2) of the Act, can be allowed only if variation between price charged/paid in respect of international transaction and arm's length price determined by taking results of comparables cases does not exceed 5% and, in case such variation is more than 5%, then no such benefit can be allowed on standard basis. We find support from the ratio laid down by Mumbai Bench of Tribunal in Thyssenkrupp Industries India (P.) Ltd. Vs. Addl.CIT (2013 (11) TMI 930 - ITAT MUMBAI -). In view thereof, the ground of appeal raised by the assessee is allowed - Decided in favour of assessee. Excise duty paid / payable - whether was not part of the total turnover within the meaning of section 10B? - Held that:- The issue raised before us is identical to the issue before the Tribunal in assessee's own case relating to assessment year 2007-08 and following the same parity of reasoning, we uphold the order of CIT(A) in directing the Assessing Officer to exclude the Excise duty paid / payable being not part of the total turnover while computing deduction under section 10B of the Act. The grounds of appeal raised by the Revenue are thus, dismissed.
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2015 (12) TMI 100
Undisclosed acquisition of the silver jewellery - search proceedings - Held that:- From the details furnished by the assessee we find the assessee is not a wealth tax assessee. There is no direct evidence regarding date-wise purchase of silver articles. There is also no evidence that the agricultural income earned by the assessee and his wife is exclusively utilized for purchase of silver articles/jewellery. Therefore, the plea of the Ld. Counsel for the assessee that no addition is called for is not sustainable. However, it is a fact to be noted that the assessee comes from a very reputed family of Pune and is engaged in the business of medical profession. Therefore, customary gifts might have been received by the assessee on various occasions in the last 35 to 40 years. Further, there is possibility of inheriting some silver items by the assessee from his parents/grand parents and also by his wife from her parents and in-laws. Further, from the rate of silver from A.Y.1981-82 to 2009-10 filed by the Ld. Counsel for the assessee, we find the rate of silver has gone up from ₹ 2,715/- per kg during A.Y. 1981-82 to ₹ 22,230/- per kg during A.Y. 2009-10. Thus there is wide variation in the rate of silver in the last 30 years. Considering the totality of the facts of the case, silver jewellery weighing 12 kgs in our opinion can be considered as reasonably explained. We therefore hold that assessee has duly explained the source of acquisition of silver articles to the tune of 12 kgs out of 21,021 grams found during the course of search. We accordingly modify the order of the CIT(A) and direct the AO to accept the silver articles weighing 12 kgs valued at ₹ 2,40,000/- as explained and make addition of the remaining silver weighing 9,021 grams valued at ₹ 1,80,420/- to the total income of the assessee. We hold and direct accordingly. - Decided partly in favour of assessee.
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2015 (12) TMI 99
Addition towards notional interest @ 12% on the amounts advanced to Adityam Technoplast Pvt. Ltd. - Held that:- No cogent material on record to establish that the assessee had sufficient/ surplus funds available with him, which could be advanced as interest free loans to the said company. His total capital as on the first day of the financial year was ₹ 18,32,831/- and at the year end was ₹ 17,79,072/-. Secured loan is of ₹ 2,58,375/- and unsecured loan is of ₹ 50,93,062/. The trade creditors and others are of ₹ 1,25,41,822/- and cash credit loan from ICICI Bank is of ₹ 46,63,335/-. The assessee has also issued cheques from cash credit account on different dates. His investment in Fixed Assets is ₹ 78,41,751/-, in Fixed Deposits ₹ 9,98,156/-, in current assets ₹ 1,19,08,899 and in loans and Advance is ₹ 36,86,860/-. From the above, it is clear that the assessee had no surplus funds which could be advanced as interest free loan. It appears that loan has been given to Adityam Polymer (P) Ltd., Roorki for the purpose of purchasing land out of loan fund. The assessee could not be able to substantiate his stand that he had surplus fund which could be advanced as interest free loan to the sister concern so as to make the assessee eligible for deduction of interest. The case laws cited by the assessee, actually deal with the cases where there was surplus fund on account of huge profit or huge reserve or interest free fund. Hence, the same are not applicable to the present case in hand. We, therefore, do not find any good reason or material on record to interfere with the conclusions arrived at by the learned authorities below.- Decided against assessee.
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2015 (12) TMI 98
Expenditure incurred on partitions and structures for the leasehold building - CIT(A) treated as capital expenditure and granted depreciation at 15%, where the assessee claimed it as Revenue Expenditure - Held that:- In the case of Thiru Arooran Sugar Ltd. vs. DCIT [2013 (2) TMI 450 - Madras High Court] wherein it was held that "the Expenditure incurred in respect of maintenance of leased premises is deductible as revenue expenditure’’. Similar view was also taken in the case of CIT vs. Ayesha Hospitals (P) Ltd [2006 (10) TMI 117 - MADRAS High Court] wherein it was held that "Expenditure incurred by assessee on painting relaying of damaged floors, partitions etc. in leasehold premises is allowable as revenue expenditure". - Decided against revenue
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2015 (12) TMI 97
Deduction of tax at source on ‘berth hire charges paid to Mumbai Port Trust - TDS u/s 194C or 194I - Held that:- The parity of reasoning laid down by the Hon’ble Supreme Court in the case of Japan Airlines Co. Ltd. (2015 (8) TMI 185 - SUPREME COURT) are required to be applied to the present case also. As per Hon’ble Supreme Court to treat the charges paid to the Airport Authority of India as merely for use of land would a be simplistic approach and that one will have to keep in mind ‘the substance behind such charges’. In this background, the nature of the charges paid was understood not as ‘rent’ for the purposes of section 194-I of the Act. In our view it would be in appropriate to consider the payment of berth charges as rent simplicitor, and rather the same is being paid for a host of other services when the vessels are anchored at the Port area. Therefore, assessee has rightly deducted the tax at source on berth hire charges paid to Mumbai Port Trust in terms of section 194C of the Act as contractual charges - Decided in favour of assessee.
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2015 (12) TMI 96
Valuation of property - capital gain computation - whether fair market value as on the date of dissolution of the firm shall be taken into consideration - rectification of mistake - Held that:- This Tribunal is of the considered opinion that when the partnership was dissolved, the asset of the firm has to be valued on real basis i.e at market value, and not at cost price. As observed in A.L.A Firm vs CIT [1991 (2) TMI 1 - SUPREME Court] the value reflected in the books of account cannot reflect the fair market value. Therefore, the property has to be valued on the date of dissolution in view of this judgment of the Apex Court which was not brought to the notice at the time of hearing of the appeal. This Tribunal is of the considered opinion that there is an error in the order of this Tribunal dated 26.6.2015. Accordingly, in exercise of the jurisdiction conferred on this Tribunal u/s 254(2) of the Act, the order of this Tribunal dated 26.6.2015 is rectified as follows: At page 6, para 7, the following shall be deleted: "Now coming to the valuation, the Assessing Officer has rightly taken the value as reflected in the balance sheet of the partnership firm and it was confirmed by the CIT(Appeals). Therefore, this Tribunal do not find any infirmity in the order of the lower authority and accordingly, the same is confirmed." Now the following shall be inserted as para 7: "7. Now, coming to the valuation, admittedly, there was dissolution of the firm and the partnership firm ceased to exist. Therefore, as observed by the Apex Court in A.L.A Firm vs CIT, [1991] 189 ITR 285, the value of the asset has to be revalued and the fair value on the date of dissolution has to be taken into consideration. As observed by the Apex Court, the partner of the firm being a commercial man, will value the asset only on real price and not at cost or at any other value. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall find out the fair value/market value of the property as on the date of dissolution of the firm i.e 20.2.2007 and thereafter compute the capital gains in accordance with law. In the result, the appeal of the assessee is partly allowed
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2015 (12) TMI 95
Adjustment as interest on short term facility extended - TPA - Held that:- Considering the orders of the DRP in AY. 2006-07 and also order of ITAT in AY. 2008-09 in assessee's own case on the issue of adjustment towards interest and advance provided to AEs, we direct the AO/TPO to adopt EURIBOR + 2% rate of interest for making the adjustment under the provisions Adjustment in respect of share application money - Held that:- The investments are in the nature of equity then, they cannot be treated as 'loans and advances'. Since in this case, the investments are in the nature of equity and shares have been allotted after a period of four months, we are of the opinion that TPO cannot reclssify the amount as 'loans and advances'. Moreover, we have considered the appeal in AY. 2008-09 vide orders dt. 10-01-2014, wherein it is noticed that TPO has not made any adjustment from 1st April 2007 to the period of allotment. Therefore, keeping that factor also in mind, we are of the opinion that adjustment proposed by the TPO as confirmed by the DRP is not warranted. We direct the same to be deleted. Ground is allowed. Adjustment in respect of corporate guarantee extended - Held that:- There is a service rendered to AE by providing guarantees and therefore invoking provisions of TP does arise on the facts of the case. Considering case of M/s. Four Soft Ltd. [2011 (9) TMI 634 - ITAT HYDERABAD ] the adjustment made on the guarantee commission on the corporate guarantees provided by assessee to its AEs. However, as far as the rate at which the guarantee commission is to be considered, the adoption of 2% was not approved in various co-ordinate Bench decisions thus we direct the TPO to adopt 0.53% as the guarantee commission rate instead of 2% adopted by him Reducing the operating profits of the tax-payer company on account of income from settlement of patent infringement suit credited to Profit Loss account and foreign exchange fluctuations (Credit) - Held that:- We agree with the finding of the Assessing Officer as held by the DRP that the income from settlement of patent infringement cannot become part of operating revenues either on bulk drug manufacturing (API) segment or on product development service (PDS) segment which are two different segments in which assessee is operating and accordingly we agree with the DRP's stand that this income falls under the category of 'other income' and not operating revenue. Not only that the income does not pertain to the relevant financial year nor the costs are incurred in the year under consideration. If without the cost, the income is included in the computation of operational profits, the same gets skewed because of inclusion of extraordinary items. It was decided in number of cases by the Tribunal that incomes of extraordinary nature are to be excluded and further extraordinary events in any company also make it non-comparable while doing exercise of FAR analysis for comparability purpose. For the reasons stated above, we agree with the Assessing Officer/DRP that this income from settlement of patent infringement cannot be considered as operational income while working out the segmental profits or as total profits of the assessee for the purpose of comparison. For credit of foreign exchange fluctuations this issue was already decided in favour of assessee holding that foreign exchange fluctuation gain/loss are part of operating margin of assessee as well as comparable companies while undertaking ALP adjustments. See case of Capital IQ Information Systems (India) (P.) Ltd. [2014 (3) TMI 626 - ITAT HYDERABAD ] Adjustment u/s. 92CA in respect of sales to Associated Enterprises determining the Arms-length price of Profit Level Indicator being operating profit margin at 27.34% (operating profit/cost) and 20.48% (operating profit/operating revenue) - selection of comparable - Held that:- On the reason that multiple year data was taken by assessee some of the companies selected by it are rejected. TPO should have considered data of this year. Moreover, when assessee made detailed objections before the DRP, DRP did not adjudicate the objection at all as can be seen from the order. Therefore, this forum is handicapped to that extent, in deciding the issue one way or the other. Since the objections are not examined by the DRP, we are of the opinion that that selection of comparables should be restored to the authorities. As can be seen from the objections raised, assessee objected selection of these two companies as comparables. This require re-examination by the TPO, as more data would have come by this time into the public domain. Therefore, we are of the opinion that the matter should go back to TPO who should consider selecting proper comparables, after appropriate FAR analysis and by giving due opportunity to assessee, to re-consider the comparability analysis Non deducting from the returned income, corresponding to adjustment u/s. 92CA made by Transfer Pricing Officer in Astrix Laboratories Limited - Held that:- there is no dispute with reference to the receipt of these amounts, one as an income i.e., management fee of ₹ 1.12 crores and other being the reimbursement of expenses of ₹ 1.05 crores. As far as the reimbursement of expenditure is concerned, we have already directed in the earlier ground to consider the nature of amount and exclude from the computation for the purpose of transfer pricing on verification. Therefore, to that extent, the claim will be a double claim. With reference to the management fee, we are not sure why there is an adjustment in another domestic transaction, if contentions of assessee are correct. If transaction is between two domestic companies transfer pricing regulations does not apply in the impugned year. If one domestic company paid to its AE and assessee receives from AE, the transactions are different in nature. Whether the same can be allowed in the hands of other domestic company or not has no bearing in the assessee's hands as the said amount was received and was accepted by the assessee to be taxed. We approve the DRP observation that taxability or otherwise of the amount in one hand does not affect the adjustment in other hand unless it is provided so in the Act. Therefore, this ground of the assessee is rejected Deduction claimed u/s. 10B of the Act in respect of Export Oriented Undertakings situated at Pashamylaram (Unit-7), and Jeedimetla (Unit-3.2) - Held that:- AO following the orders in earlier years did not allow the claim of assessee u/s. 10B on the said unit. DRP however, noticed that the issue is subject to revisional proceedings by the CIT and the WP is pending before the Hon'ble High Court of AP. DRP considered it fit not to interfere with a stand of AO, but however, directed the AO to follow the judgment of Hon'ble AP High Court as and when the issue was decided. It further suggested that the demand on account of disallowance of deduction be kept in abeyance till the decision of the Hon'ble High Court.Assessee has raised this issue but submitted that the matter is subjudice. Since DRP has already given clear directions on the issue, we uphold the directions of DRP with an observation that AO should follow the same as and when the issue is decided by the Hon'ble High Court. This ground is considered allowed for statistical purposes. Disallowance of Superannuation Contribution paid to LIC in respect of the working directors of the Company - Held that:- From the facts and materials on record, it is evident that the incurring of expenditure has not been doubted or disputed by AO. The only reason for which the AO disallowed the expenditure is since contribution to superannuation / gratuity fund is covered u/s 36(1)(iv) the same cannot be allowed u/s 37. The DRP has confirmed the disallowance solely for the reason that similar disallowance was upheld by CIT(A) for the AY 2005-06. However, on going through the facts and materials on record, we are of the view that the expenditure incurred is allowable as deduction if not u/s 36(1)(iv) but u/s 37 of the Act as it is exclusively incurred for the purpose of business. Moreover, it is not disputed that assessee has deducted tax at the time of making contribution to the fund and has treated it as part of salary of the concerned directors. That being the case, the expenditure incurred should be allowed as a deduction. Allowance of Employee Stock Option Scheme - Held that:- We restore this issue to the file of the Assessing Officer to examine the claim afresh in the light of decision of the Hon'ble Special Bench of the ITAT Bangalore in the case of M/s. Biocon (2014 (12) TMI 838 - ITAT BANGALORE). Rejection of basis for apportionment of common corporate overhead expense to all the units of the company including 100% Export Oriented undertakings eligible for deduction u/s. 10B and in the process reducing the benefit u/s. 10B - Held that:- Allocation of expenditure as was done by the assessee is more rationale and is in tune with the principles laid down by the Institute of Cost Accountants and also for the purpose of Company Law. Therefore, considering the detailed objections raised by the assessee as placed in the objections to the DRP, we are of the opinion that the allocation by the assessee is to be upheld. Assessing Officer is directed to accept the assessee's allocation of corporate overheads. Accordingly, ground is allowed. Weighted deduction at 150% U/s. 35(2AB) in respect of clinical drug trials carried out by it on the ground that it is incurred outside the in-house R D' - Held that:- As assessee is in a position to support and substantiate its claim by filing relevant documentary evidence and has urged that an opportunity may be given to the assessee for this purpose by sending the matter to the Assessing Officer we restore the issue to the file of AO with the same direction to examine assessee s claim in respect of expenditure incurred for clinical trials outside India after giving assessee proper and sufficient opportunity to establish the case in regard to explanation to Section 37(2AB). Delete expenditure attributed under Rule 8D of Income tax Rules, 1962 for earning exempt dividend from Mutual funds - Held that:- The action of AO cannot be upheld. As seen from the order, he invoked Rule 8D which was not applicable for the impugned assessment year. However, DRP confirms the disallowance made under Rule 8D as reasonable amount . ITAT is holding an amount of 2% to 10% on the exempt income as reasonable amount in the year prior to application of Rule 8D. Accordingly, we are of the opinion that an amount of ₹ 1,00,000/- can be considered as a reasonable amount incurred for earning the exempt income, considering that assessee has made investments and require personnel to monitor the same. For the same. AO is directed to disallow an amount of ₹ 1,00,000/- under the provisions of Section 14A. Depreciation @ 12.5% being 50% of normal depreciation in respect of non-compete fee - Held that:- The depreciation cannot be allowed on an amount of non-compete fee, which was in fact paid to the Managing Director of the Company for not taking any employment. This cannot be considered under section 32(1) as an intangible asset Depreciation on brought forward written down value in respect of non-compete fee paid - Held that:- Even though the assessee's claim was crystallized wherein the payment of fee was considered eligible for depreciation, the Assessing Officer did not grant the depreciation on the reason that reference application is pending before the Hon'ble High Court and the issue has not been finalized. This cannot be a reason for denying the depreciation claimed. Since, ITAT has already ordered the depreciation to be allowed in assessment year 2002- 2003, consequently, depreciation has to be allowed on WDV in this year. He is empowered to take rectification proceedings in case that order was not upheld by the Hon'ble High Court. In view of this, to that extent of claim of depreciation amounting to on brought forward written down value, Assessing Officer is directed to allow the depreciation after verifying the WDV figures. LTCG or STCG - difference between the market value for the purposes of levy of stamp duty while registering the sale deed and actual sale consideration per sale agreements for sale of Petbasheerbad land - Held that:- The capital gain is attracted the moment the property was handed over, the sale consideration was also received. So the capital gain is correctly offered by assessee in AY. 2006-07 itself.Provisions of Section 50C can be invoked but what AO did was to bringing to tax only the difference in SRO price and Sale Price to tax. He is bound to calculate the capital gains. He did not bring the capital gain offered in AY. 2006-07 to this year. There cannot be computation of capital gains in two assessment years on sale of one property. The action of AO is not according to the provisions of the Act.AO should have considered that the gains become Long Term Capital Gain as the same was purchased in April, 2003 and according to AO sold on 24-08-2006. But the same was brought to tax as Short Term Capital Gain. Even the DRP failed to consider the same when assessee pointed out. No direction was given to AO to treat it as Long Term Capital Gain.The order of AO in the reassessment proceedings indicate that AO did not reduce the capital gains offered in this year. This indicates that the action of assessee in offering Short Term Capital Gain was accepted. Even though, the provisions of Section 50C was amended to clarify that the SRO value as on date of agreement of sale has to be considered that need not be considered here as AO on facts accepted capital gain in AY. 2006-07 itself. Restricting the deduction under clause (II) of Explanation to Section 115JB in respect of export profits from the 100% export oriented undertaking eligible for deduction under sec. 10B - Held that:- Supreme Court in the case of Ajanta Pharma (2010 (9) TMI 8 - SUPREME COURT ) is against the Department and in favour of the assessee. The Apex Court laid down the law that for purposes of computing book prof it, the deduction to be allowed under clause (iv) of Explanation is the export prof its as computed with reference to book prof its. Sec. 115JB is a separate code for company assessees' for computing minimum tax payable in the absence / inadequacy of normal taxable income falling under the 5 heads of income. The minimum tax is to be computed with reference to book prof its as per the audited accounts of the company. Consequently the export prof its computed under the provisions of sec. 80HHC based on 'prof its of business or profession' cannot be substituted into the computation scheme as prescribed in sec. 115JB which is an alternative computation to the normal computation of income. The Court also held that the deduction under clause (iv) of Explanation for the export prof its should not be phased out as provided in sub-section (1B) of sec. 80HHC because, 115JB is an independent code and it covers full export prof its as the eligible prof its for the purposes of book prof its tax and no phasing is required to be carried out
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2015 (12) TMI 94
Disallowance of deduction claimed u/s 80P(2)(a)(i) - Held that:- As decided in CIT Vs Grain Merchants Co-operative Bank Ltd., [2003 (10) TMI 21 - KARNATAKA High Court] and Tumkur Merchants Souharda Credit Co-operative Ltd., Vs ITO (2015 (2) TMI 995 - KARNATAKA HIGH COURT ) and we hold that the learned CIT(A) was not correct in denying the assessee’s claim of deduction u/s 80P(2)(a)(i) and hold the assessee is entitled to deduction under section 80P(2)(a)(i) of the Act, in respect of interest income earned on fixed deposits, as well as that the said interest income forms art of the business income earned by the assessee and the same is not to be taxed under the head “Other Sources” - Decided in favour of assessee.
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Customs
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2015 (12) TMI 65
Request for re-import of machines duty free under Notification No. 158/95 dated 14.11.1995 - Held that:- Order of the Dy. Commissioner is very cryptic. It appears that he gave a personal hearing to the appellant but does not record the details of the personal hearing. He brushed aside the details of personal hearing by making a short statement in his order to the effect that ‘party appeared for personal hearing’. He has not given details of the evidence produced by the appellant in support of their case. Further, even the order of Commissioner (Appeals) is equally cryptic and almost non-speaking. Order of Commissioner does not bring upon record, the various evidences available with the appellant to support their case. Being a very old case, we proceed to decide the matter on the basis of evidence on record. - order of the Dy. Commissioner does not indicate how the identity of the machine could not be established when some marks and numbers have been found on plates on the burnt machines as indicated in the examination report above. It is also not on record whether the Dy. Commissioner made an attempt to verify from the Central Excise Authorities in whose jurisdiction the machines were got repaired by the manufacturer - Revenue has not made any contention that other identical machines were exported to the same buyer and therefore there could be some confusion whether same machines were re-imported. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 64
Jurisdiction of Commissioner (Appeals) - investigation was conducted by Special Valuation Branch (SVB) - Valuation - Enhancement in value of goods - Inclusion of royalty - CBEC Circular No.1/98-Cus. dt. 1.1.1998 - Held that:- Commissioner (Appeals) has misread the provisions of law as well as Board Circular No. 29/2012. The legal provisions are very clear. Any appeal against assessment order passed by Customs at JNCH will lie to the jurisdictional Commissioner (Appeals) Nhava Sheva. The Board Circular No. 29/2012, in fact, supports this view and states that the work relating to appeal etc. will continue to be handled by the jurisdictional Commissioner of Customs. For the sake of uniformity, the circular also states that Director General Valuation will provide its views on the orders passed by the adjudicating authority, which will be given due consideration when the orders are examined by Commissioner of Customs for review or acceptance of the orders under Section 129D of the Customs Act. Therefore, we hold that Commissioner (Appeals), Nhava Sheva is the appropriate authority to hear the appeals against assessment orders passed by Nhava Sheva, Customs. In the peculiar circumstances of the case where the view of DGOV are considered by all reviewing authorities, we would request DGOV to direct the Adjudicating Authority in Delhi to decide the case expeditiously in the interest of justice as well as in the interest of Revenue. Only after the case is decided by SVB Delhi, will the Commissioner (Appeals) Nhava Sheva be able to take a view. No additional EDD will be payable by the appellant. Only a PD bond will be required to be submitted by them. This is as per the clear instructions of the Board in Circular No. 11/2001 as well as Mumbai High Court order in the case of E.I. DuPont India Pvt. Ltd. (2014 (8) TMI 290 - BOMBAY HIGH COURT). - Petition disposed of.
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2015 (12) TMI 63
Modication of order - Waiver of pre deposit - Classification of goods - Bituminous coal or steam coal - Classification under under CTH 27011200 or under CTH 27011920 - Held that:- As per the test report issued at the load port, the gross calorific value was found to be exceeding 5833 kcl/kg and the goods merited classification as "bituminous coal" as defined in sub heading note 2 to Chapter 27. Further this Tribunal also took into account the final order of this Tribunal in the case of Coastal Energy Pvt. Ltd., & Others vide order dated 20/06/2014 wherein it was held that the coal imported having volatile matter content exceeding 15% and gross calorific value limit exceeding 5833 cal/kg would merit classification as "bituminous coal". Subsequent orders of the Tribunal either by the Madras Bench or by the Circuit Bench at Hyderabad are only interim orders, whereas the decision relied upon by this Tribunal while passing the stay order is based on a final order passed by the Bangalore Bench on the matter. It is a settled position of law that interim orders passed by the co-ordinate benches do not have any binding value. Further, interim order relied upon is subsequent to the passing of the order by this bench in the appellants' cases and therefore, they cannot be said to have any precedential value. - No merit in modification application - Decided against assessee.
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2015 (12) TMI 62
Evasion of Customs duty - Undervaluation of the goods - Held that:- in the case of one of the Appellants, M/s American Almond Corporation, in Para 5.4 of their reply to the show cause notice dated 26.11.2009, read with Annexure 3 thereto, had given evidence of contemporaneous imports of poppy seeds to support the transactional value and had further called upon the Revenue to verify and satisfy itself of these particulars as well as those of other imports (which the Appellants could not furnish evidence of) but which could easily be ascertained by the Revenue by accessing the NIDB-DOV database. The impugned order does not even advert to this aspect of the matter. - appellants have made out a strong case in their favour for grant of stay. Accordingly we grant waiver from pre-deposit of dues adjudged against the appellants and stay recovery thereof during the pendency of the appeals - Stay granted.
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2015 (12) TMI 61
Denial of refund claim - Power of Commissioner (appeals) to remand - Held that:- Section 128A deals with the power of Commissioner (Appeals), is similar to the adjudicating authority who may refer the case back to the adjudicating authority with such directions as he may deem fit, for fresh adjudicating or decision , which were substantially valid after the 2001 amendment. The issue is now settled by the decision of Hon'ble Supreme Court in the case of Umesh Dhaimode (1997 (2) TMI 140 - SUPREME COURT OF INDIA) order dated 13.2.1997. - we agree with the law laid down by the Hon'ble Supreme Court in the case of Umesh Dhaimode (supra) and also the law appreciated by the Hon'ble Gujarat High Court in the case of Medico Labs. (2004 (9) TMI 108 - HIGH COURT OF GUJARAT AT AHMEDABAD) and accordingly, we dismiss the Revenue s appeal. - Decided against Revenue.
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2015 (12) TMI 60
Denial of refund claim - assessment was made provisional and the Appellant had directed to discharge export duty, considering the FOB value as transaction value instead of cum-duty price, and they had discharged duty accordingly, under protest - Withholding of cheques on the ground that review applications against the Assessment Orders were filed before the Ld. Commissioner (Appeals) - Held that:- Board has taken a policy decision on the assessment of export duty till 31.12.2008. It is stated that the existing method of assessment of computation of export duty and cesses would be continued, that is, by adopting the FOB price as the cum-duty price, till 31.12.2008. We do not find force in the observation of the ld. Commissioner (Appeals) that the said practice of assessment relates to those Customs Houses only, where the practice of export-levy was adopted by considering the FOB price as the cum-duty price, and cannot be extended to other places. On the other hand, the very purpose of issuing the said Circular is to bring uniformity to the divergent assessment practice followed in the collection of Customs Export Duty across the country. - Circular is binding on the Department in view of the principle laid down by the Hon’ble Supreme Court in the case of Collector of C.Ex. Vs. Dhiren Chemicals [2001 (12) TMI 3 - SUPREME COURT OF INDIA]. - Decided in favour of assessee.
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2015 (12) TMI 59
Denial of interest claim - Delay in sanction of refund claim on SAD paid by them under notification no.102/2007 - Held that:- As the High Court of Madras has held that provisions of claiming interest are applicable for the refunds pertaining to notification no.102/2007 in the case of KSJ Metal Impex (P) Ltd. (2013 (6) TMI 148 - MADRAS HIGH COURT). I hold that appellant is entitled to claim interest for delayed refund after three months from the date of filing of their refund till the realization of the refund claim. - impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 58
Denial of refund claim - unjust enrichment - Held that:- On the basis of all the records produced by the appellant before us such as balance sheet, ledgers, general vouchers and account for plant and machinery etc., it is very clear that the appellant has accounted for the amount of Revenue deposit under the head of loans and advances , which can also be seen from bifurcation of the total amount shown in the balance sheet. From this it is clear that the amount of Revenue deposit has not been booked by the appellant as expenditure in the profit and loss account. - appellant has not claimed any depreciation on the amount of revenue deposit as same was not capitalized alongwith the value of plant and machinery. As regard inconsistency between two C.A. certificate pointed out by the Ld. Commissioner(Appeals) and made sole ground for rejection of the appellant’s claim, we are of the view that once it is established from the books of account of the appellant that the amount of Revenue deposit has been undisputedly shown as deposit with government authorities under the head of loans and advances in the balance sheet it is sufficient to conclude that the incidence of said revenue deposit has not been passed on to any other person. - appellant, on the basis of record produced before, made us satisfied that incidence of revenue deposit has not been passed on to any other person - matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 57
Reassessment of bill of entry - Valuation - Enhancement in value of goods - Held that:- Commissioner (Appeals) has not given any basis to arrive at the conclusion that the declared value is the correct and to that extent his direction to the assessing Officer to reassess the Bill of Entry by accepting the declared value is prima-facie a non-speaking one making it unsustainable. We accordingly order the Revenues stay application and stay operation of the impugned order-in-appeal with regard to its direction for reassessment of the Bill of Entry on the declared value. - Appeal disposed of.
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2015 (12) TMI 56
Validity of impugned order - Approval by the Committee of Chief Commissioner not taken - Held that:- Revenue has failed to bring out how the company- respondent which is Sheetal Fibres Ltd. committed any omission and commission under the law to invite huge penalty when civil court did not find fault with it in terms of para 166 of the order. In absence of specific submission as to how the company caused prejudice to the Revenue, there is no scope to interfere to the order of the learned Commissioner - Decided against Revenue.
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2015 (12) TMI 55
Classification of goods - Bituminous coal or Steam coal - Held that:- Since the entire amount of duty and interest has been paid and in the case of Coastal Energy Pvt. Ltd and others Vs CC Visakhapatnam vide [2014 (8) TMI 246 - CESTAT BANGALORE] we have already a take a view that only duty and interest within the normal period would be payable and demand for extended period, penalty and confiscation etc. are not sustainable, we consider that the matter can be remanded at this stage itself treating the amount deposited by the appellant as sufficient. Accordingly the matter is remanded to the original authority - Decided in favour of assessee.
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2015 (12) TMI 54
Valuation of goods - Enhancement in value of goods - additions of freight and insurance. - Held that:- It is appropriate that the adjudicating authority should examine evidences such as Chartered Accountant certificate, copies of Bills of Entry of the appellant and unrelated third party, agreements with the same supplier etc for finalization of assessment. Accordingly, we set aside the impugned order. Matter is remanded back to the adjudicating authority to decide afresh after considering the evidences in accordance with law. At this stage, Ld. AR submitted that along with the questionnaire, Bills of Entry were submitted by the appellant and comparative chart was given by them. We direct the adjudicating authority to consider all these documents. - Matter remanded back - Decided in favour of assessee.
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Corporate Laws
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2015 (12) TMI 49
Decline of grant fee continuity to the Respondents - SEBI seeks to reaffirm its stance that the Respondents lost all entitlement to the advantage of fee continuity, no sooner any of the erstwhile partners ceased to be Whole-time Directors of the corporate entity which was the metamorphosed partnership firm - Held that:- We are in agreement with the Tribunal on the interpretation it has given to Paragraph I(4) of Schedule III. We shall elucidate our understanding of Paragraph I(4) as it stood, up until the issuance of Circular dated 12.9.2002. Anecdotally, a partnership firm which consists of five partners and which holds a membership card of a stock exchange, may decide to convert itself into a corporate entity. After incorporation, of the five erstwhile partners, one of the partners holds 40 per cent shares of the paid-up equity capital of the newly formed corporate entity and is also its Whole-time Director. Subsequently, four of the partners decide to exit from the corporate entity, leaving behind only the Whole-time Director who was also an erstwhile partner. In our opinion the said corporate entity will still be eligible for the benefit of fee continuity under Paragraph I(4) of Schedule III of the Regulations. In order to qualify for the benefit of the said provision, there is a two-fold requirement. First, the corporate entity must earlier have been either a sole proprietorship or a partnership. Second, an erstwhile partner should own at least 40 per cent of the paid-up equity share capital and should also be the Whole-time Director of the company, for a minimum period of three years. Alternatively, erstwhile partners who together hold at least 40 per cent equity must remain Whole-time Directors for a minimum of three years. Thus the subsequent entry or exit of partners to and from the original partnership firm would have no relevance on the entitlement of the newly formed corporate entity to take advantage of the benefit not only of fee continuity under the said provision but also fillip to the growth of the corporate sector and the national economy. The same benefit would also be extended to erstwhile partners who after corporatization jointly retain at least 40 per cent of the paid-up equity capital of the corporate entity and were its Whole-time Directors. In other words, if there are five partners, of which three partners subsequent to corporatization jointly hold 40 per cent of the shares of the paid-up equity capital and are also the Whole-time Directors of the company, then the departure of the other two erstwhile partners will not deny the corporate entity the benefits of fee continuity. We also agree with the finding of the Tribunal that the Circular dated 12.9.2002 is not clarificatory. A clarificatory Circular is for the purpose of elaborating the existing provision and removing ambiguities, without altering the effect of the said provision. However, in the instant case, our interpretation of Paragraph I(4) prior to the issuance of Circular dated 12.9.2002, is contrary to that mentioned in the said circular. Hence this Circular cannot be held to be clarificatory in nature, and as a logical corollary is not capable of having any retroactive effect.
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Service Tax
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2015 (12) TMI 93
Business Support Service - owner allowed to use its entire infrastructure to the assessee - assessee was manufacturing and doing the business in the name of owner and received huge money as conducting charges - Held that:- Under the agreement, the Assessee agreed to pay to M/s. KSM an amount of ₹ 30 lacs towards use of infrastructure for manufacture of liquor. As per clause 2 of the agreement, all profits and losses in respect of the manufacturing and sale of the products in the distillery division are on account of the Respondent Assessee. The Respondent Assessee had actually taken over the distillery unit of M/s. KSM. It undertook the manufacturing activity as well as sale of products. There was no evidence on record to show that the Assessee had received any amount from M/s. KSM for providing any service in relation to the business. It is the conducting agreement which has been referred extensively. Its clauses have been read together and harmoniously to conclude that the arrangement or deal in the present case is of such nature that M/s. KSM's distillery unit is taken over for conducting and managing by the Assessee. The Assessee is therefore responsible for any profits being generated or losses sustained. The nature of the transaction therefore would not fall within the meaning of support services for business or commerce. The conducting of the running business and its management and administration is therefore the basis of the finding. We are of the opinion that such factual findings and which are consistent with the materials placed on record cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. - Appeals do not raise any substantial question of law - Decided against Revenue.
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2015 (12) TMI 92
Demand of service tax - C&F/CHA, Storage and Warehousing services - Held that:- petitioner has an effective alternate remedy against Ext.P7 order, by way of approaching the Customs, Excise and Service Tax Appellate Tribunal, through a duly constituted appeal under the Finance Act 1994 as amended. Taking note of the fact that the proceedings that culminated in Ext.P7 order were initiated by a show cause notice dated 15.10.2013, which is well before the amendment dated 06.08.2014 in the Finance Act, 1994 which mandates that an appeal before the CESTAT must be accompanied by a fee of 7.5% of the tax amounts demanded by the adjudication order, and the fact that this Court has in the decision dated 02.03.2015 in WP(C) No.6173 of 2015 rendered in a case of an assessee similarly situated as the petitioner in the instant writ petition, made it clear that the appeal to be filed by the petitioner would be governed by the statutory provisions as they stood prior to the amendment introduced with effect from 16.08.2014, while dismissing the writ petition in its challenge against Ext.P7 order, I make it clear that, if the petitioner prefers a duly constituted appeal under the provisions of the Finance Act, 1994, as they stood prior to 16.08.2014, then the appellate tribunal shall number the appeal and consider the application, if any filed by the petitioner for waiver of pre- deposit and stay of recovery of amounts confirmed against him by Ext.P7 order, on merits, and thereafter proceed to hear the appeal itself in due course. - Appeal disposed of.
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2015 (12) TMI 91
Validity of Tribunal's order - Whether the Tribunal, while remitting the matter back, is right in law in giving a positive direction not to impose penalty on the 1st respondent, especially when the imposition of such penalty under Section 76 and 78 of Finance Act, 1994 is not only automatic but also mandatory - Held that:- Once the quantum, as to whether correct amount of duty has been paid and at what stage and its implication has been left to the discretion of the adjudicating authority, on remand, it is always open to the said authority to decide the question of penalty and it cannot be restricted by any direction that no penalty should be imposed. The Tribunal cannot take away the discretion of the authority to levy penalty if it is imposable according to law. - Matter remanded back - Decided in favour of Revenue.
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2015 (12) TMI 90
Denial of refund claim - demands consequent to audit by department under EA 2000 - Discrepancy found during Audit - Held that:- It is observed that Assessee had not accepted the contentions of the audit. It is not on record that the audit party had raised the same objections, which they have confirmed in their audit report, to the appellant earlier. It is also not on record that the appellant had accepted these objections finally before they were included in the audit report. Therefore, in all fairness, the appellant should be given an opportunity to present their case before the adjudicating authority alongwith whatever evidences they have to substantiate their case. The adjudicating authority is free to decide the issue on merit as per law. - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 89
Claim of refund of excess service tax paid - Bar of limitation - Section 11B - Held that:- appellant had requested the department on 16.7.2010 in writing that the excess amount paid by them in April 2010 may be kept as deposit with the department to be adjusted against any future liability of service tax. Hence, we find force in the arguments of the learned Advocate that the amount should be treated as deposit only. As only the part of the amount could be utilised subsequently in 2012 and the balance amount could not be utilised, the balance amount which is only a deposit, should be refunded to them. The issue, whether refund of such amount can be denied under the provisions of Section 11B, is no more res-integra as the Tribunal [2008 (2) TMI 760 - CESTAT, AHMEDABAD] and various High Courts [2012 (7) TMI 22 - KARNATAKA HIGH COURT ] in a number of cases have held to the contrary - time-limit prescribed under Section 11B is not applicable in the instant case. The impugned order of the Commissioner (Appeals) is therefore set-aside. - Decided in favour of assessee.
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2015 (12) TMI 88
Demand of service tax - Security Agency Services - Imposition of penalty - Held that:- Appellant had paid the service tax due alongwith interest, albeit after the investigations were started, but before issuance of show cause notice. In the facts and circumstances of the case as brought out hereinabove, it appears a fit case for waiving the penalties under the provisions of Section 80 of the Finance Act, 1994, due to the reasons advanced by the Proprietor of the appellant concern for the omissions and commissions. In view of the same, while upholding the impugned orders of the lower authorities, we set-aside the penalties imposed on the appellant - Decided partly in favour of assessee.
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2015 (12) TMI 87
Waiver of pre deposit - Penalty u/s 78 - Renting of immovable property service - Held that:- according to the appellant, the Finance Bill was enacted on 28-5-2012. The penalty has been imposed on the ground that the payment was not made within six months. On going through Section 5 of the General Clauses Act, we find the date on which the enactment took place has to be omitted according to that Act and if that is omitted the appellant should have paid Service Tax with interest on or before 28-11-2012, which they have done. In view of the above, we find that appellants have made out a prima facie case for complete waiver of penalty during the pendency of appeal. Accordingly the requirement of penalty is waived and stay against penalty is granted during the pendency of appeal. - Stay granted.
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2015 (12) TMI 86
Demand of service tax - consulting engineer service - reimbursement of the expenses - Held that:- Karnataka High Court and the Delhi High Court in C.S.T., Bangalore vs. Turbotech Precision Engineering Pvt. Ltd. - [2010 (4) TMI 344 - KARNATAKA HIGH COURT] and C.C.E.& Service Tax vs. Simplex Infrastructure & Foundry Works - [2013 (5) TMI 336 - DELHI HIGH COURT] clearly ruled that prior to 1.5.2006, a company registered under the Companies Act, 1956 was not included within the definition of ‘consulting engineer’ defined in Section 65(31) of the Finance Act, 1994. - respondent/assessee is not liable to remit service tax for providing ‘consulting engineer’ service during 2001 to March, 2005, prior to 1.5.2006. - Decided against Revenue.
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2015 (12) TMI 85
Denial of CENVAT Credit - Reverse charge mechanism - Held that:- There is no dispute about the admissibility of credit. Learned advocate submits that though the credit was taken prior to the deposit of same, but the credit was never utilized by them. It is a bona fide interpretation of law and no penalty should be imposed upon them on that ground. - Inasmuch as the entire credit was availed by reflecting the same on the statutory records and issue being bona fide interpretation of the provisions of law, no mala fide can be attributed to the appellant so as to invoke the penal provisions against them. - appellant was entitled to the credit and no penalty was to be imposed upon him - Decided in favour of assessee.
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2015 (12) TMI 84
Demand of service tax - returned / rejected services - In respect of the Commission, originally received and subsequently rejected, the appellant did not pay any service tax - Business Auxiliary service - Commission agent franchisee service - Held that:- assessee was initially paid the commission and the subsequent rejection of the said commission has to be treated as penal in character in which case it has to be held as if the appellant has received the service consideration. However, we find no merit in the above contention of the Revenue. The said rejection of commission is only in respect of those services which were not fully completed by the appellant. The Commission is to be received by the assessee only on full completion of the services. There is also no indication in the agreement so as to show that the “rejection commission” is penal in character. At this stage, we also take note of the Hon’ble Punjab & Haryana High Court decision in the case of Commissioner of Central Excise and Service Tax, Jallandhar v. Janta Travels Pvt. Ltd. reported in [2008 (8) TMI 187 - PUNJAB AND HARYANA HIGH COURT ] wherein it was held that the service of air travel agent having been provided but consequently ticket having been cancelled and the Commission returned, is required to be treated as if no service was rendered. The ratio of the above decision is fully applicable to the facts of the present case - Decided in favour of assessee.
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2015 (12) TMI 83
Waiver of pre deposit - demand of interest on delayed payment of service tax - Held that:- Applicants discharged finally their service tax liability for the relevant period, only in August, 2007, which has not been disputed, at any point of time, by the applicant. The difficulty mentioned by the applicant in not discharging the service tax liability, is due to non-availability of relevant data for determining the correct Service Tax liability which is clear from the finding of the Ld. Commr. (Appeal). On the other hand, prima facie, demand for recovery of interest is not barred by limitation and there is no invoking of suppression of facts, mis-statement and mis-declaration etc. for recovery of the outstanding dues. We do not find substance in the argument of the Ld. Consultant that in such cases, the interest is not liable to be paid under Section 75 of the Finance Act, 1994 being barred by limitation as held by the Honble Delhi High Court in Kwality Ice Cream case (2012 (1) TMI 88 - Delhi High Court ). - Partial stay granted.
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2015 (12) TMI 82
Waiver of pre deposit - Appeal dismissed for non compliance with pre deposit order - Held that:- Tribunal in the appellant's own case reported as M/s. National Institute of Banking Studies & Corporate Management of [2013 (1) TMI 163 - CESTAT NEW DELHI] has granted un-conditional stay to the appellant. By following the same, we are of the view that the stay order passed by the Commissioner directing applicant/appellant to deposit 50% of the confirmed duty and the subsequent order of dismissal of non-compliance are required to be set aside and the matter is required to be remand to Commissioner (Appeals) for decision on merit without insisting on any pre-deposit. Accordingly, We set aside both the impugned orders and allow both the appeals and remand the matter to Commissioner (Appeals) for decision on merits - Decided in favour of assessee.
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2015 (12) TMI 81
Valuation - Service of Maintenance or repair - non-inclusion of cost of various material - Held that:- Demand stands raised from the period 16.06.05 to 31.03.07 by way of issue of Show Cause Notice dt.01.02.08. Though the Commissioner has held against respondent on the point of limitation but they have filed Cross Objection Application which have to be treated as appeal. It is further noticed that during the relevant period there were various decisions in favour of the assessee. The issue of limitation stands decided by the tribunal in the number of decisions. It was held that when there are contra views on a particular issue, assessee cannot be attributed with a malafide intention and longer period of limitation would not be available. - part of the demand would fall within the limitation period for which the matter is being remanded for quantification of the demand. As we already held that there was no suppression on the part of the respondent, no penalty would be imposable upon them - Appeal disposed of.
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2015 (12) TMI 80
Demand of service tax - Import of services - Tax on the amount which the foreign bank charged from ING Vyasa Banker which, in turn, was recovered from the appellant - Held that:- No documents have been produced showing that foreign bank has charged any amount from the appellant directly. The facts as narrated in the impugned order clearly indicate that it is the ING Vyasa Bank who had paid the charges to the foreign bank. In view of this, the appellant cannot be treated as service recipient and no Service Tax can be charged from them under Section 66A read with Rule 2(l)(2)(iv) of the Service Tax Rules, 1994. Moreover, we also find that in Appellant’s own case for the previous period similar order had been passed by the original adjudicating authority and on appeal being filed against the same, the Commissioner (Appeals), vide order-in-appeal dated 12-11-2008 has set aside that order and as per the appellant’s counsel, no appeal has been filed against that order. In view of this, the impugned order is not sustainable - Decided in favour of assessee.
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2015 (12) TMI 79
Demand of differential duty - Reimbursable expenses - Held that:- Appellant is saddled with differential service tax amount on the ground that he has not discharged the service tax on the amount received which undisputedly, are towards reimbursable expenses. Since we have already taken a view in the case of Aashita International Limited (2013 (12) TMI 797 - CESTAT AHMEDABAD) and respectfully following the judgment of Hon’ble High Court of Delhi in the case of International Consultants and Technocrats Pvt. Limited, we are convinced that the impugned order is liable to be set-aside - Decided in favour of assessee.
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2015 (12) TMI 78
Availment of CENVAT Credit - Maintenance and Repair Services - Held that:- It is seen that Service Tax credit is pertaining to the services availed for maintenance and repair of Xerox Machine used by the appellant in their office. Services availed with respect to the said machine in the office of the appellant will be an activity in relation to the business of the appellant. Accordingly, it is held that Cenvat credit was correctly taken by the appellant. - Decided in favour of assessee.
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2015 (12) TMI 77
CENVAT Credit - exemption under Notification No. 9/2002, dated 1-8-2002 - Insurance Auxiliary Services - Held that:- It is to be noted that the period involved is prior to the notification of Cenvat Credit Rules, 2004. During the period Rules prescribed one-to-one correspondence between input service and output service for eligibility to credit. Further there was no concept of “deemed output service provider” as in the case of Rule 2(p) in Cenvat Credit Rules, 2004. - As per the rules which existed at the relevant time, this was not an input service for any taxable output service provided by the appellant and they did not qualify for the credit as claimed. Therefore, the appeal is not maintainable - Decided against Assessee.
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2015 (12) TMI 76
Waiver of pre deposit - supply of tangible goods service - lease of a boiler owned by the petitioner - Held that:- On a prima facie analysis, the transaction appears to be clearly outside the purview of STGU. We therefore grant waiver in full of pre-deposit and stay all further proceedings for realisation of the adjudicated liability, pending disposal of the appeal - Stay granted.
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2015 (12) TMI 75
Demand of service tax - BAS - Collection of EMI on behalf of bank - whether when the appellants sold the loan portfolio and collected the EMI amount and gave an assurance that they would be collecting the EMI, the appellants are liable to pay Service Tax on the discount given by the appellants to the bank at the rate of 10% of the sale consideration received by the appellant from the banks - Held that:- in this case both bank as well as the assessee have not recorded anything as to the cost attributable to the collection of EMI in the agreement. It is also not possible to quantify what is the amount spent by the appellants for collecting the EMI. In our opinion 10% fixed by the Commissioner for arriving at the cost of collection of EMI is arbitrary and cannot be sustainable. At the same time we are unable to agree with the submission that appellant is not liable to pay any Service Tax towards the cost of collecting of EMI on the ground that there is no such cost at all. In our opinion when EMI is collected by the appellant from the borrower, it amounts to providing business auxiliary services to the banks and therefore appellant’s contention that there is no service at all and no cost has been collected by them towards collecting EMI cannot be accepted. Matter remanded back for quantification of demand with the help of professional cost accountant - Decided partly in favour of assessee.
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2015 (12) TMI 74
Demand of service tax from the Senior Divisional Engineer (Coordination), North Western Railway, Jodhpur. - renting of immovable property service - Held that:- Property belongs to the Union of India, Ministry of Railways and is situate within the territorial/administrative jurisdiction of the North Western Railway, Jodhpur Division. The entire adjudication proceedings were against the Senior Divisional Engineer (Coordination), North Western Railway and at no point of time the Union of India was impleaded. No notice was issued and no participation of the Central Government invited to the proceedings. The adjudication order is also passed against the Senior Divisional Engineer (Coordination), North Western Railway, State actor. It is again the Senior Divisional Engineer (Coordination), North Western Railway who has filed the appeal and this application for condonation of delay before the Tribunal. In the light of settled authority and the provisions of Article 300 of the Constitution, proceedings instituted against an official of the Central Government in the Ministry of Railways without arraying the Union of India/Central Government as a party, when the alleged tax liability of the State, would be a nullity and no liability would attach to the Central Government, in the circumstances. - under Section 99 of the Act, the liability of the Railways, to service tax, is unenforceable.
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Central Excise
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2015 (12) TMI 73
Duty demand - violation of Rule 8(3A) of the Central Excise Rules, 2002 read with Section 11A of the Central Excise Act, 1944 - Held that:- Gujarat High Court in the case of Indsur Global Limited vs. UOI - [2014 (12) TMI 585 - GUJARAT HIGH COURT] held that Rule 8(3A) of the Central Excise Rules, 2002 for payment of duty without utilising cenvat credit, is unconstitutional. - No reason to interfere to the order of Commissioner (Appeals) - Decided against Revenue.
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2015 (12) TMI 72
Determination of assessable value - whether the amount collected over and above the insurance premium paid to the insurance company is taxable in the hands of appellants - Held that:- The excess collection being profit in the hand of the appellant is immaterial to Section 4 of central excise law and that may be material to Income Tax Act, 1962. Therefore, following the ratio laid down by the Apex Court in the case of Baroda Electric Meters Ltd. v. Collector, Central Excise - [1997 (7) TMI 126 - SUPREME COURT OF INDIA] such excess is not liable to duty. Once there shall not be levy as above, levy of duty has unjustly enriched the State. That is the ratio laid down by the Apex court in the case of Union of India v. ITC - [1993 (7) TMI 75 - SUPREME COURT OF INDIA]. Accordingly, State is not empowered to keep that money without refunding to appellant. Such collection when refunded is not barred by limitation, following the ratio laid down in ITC case (supra) - Decided in favour of assessee.
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2015 (12) TMI 71
Transfer of CENVAT Credit - whether the Cenvat credit of ₹ 3,30,315/- lying in the records of transferor of Gurgaon shall be admissible to transferee at Noida - Held that:- There was no provision in law at the relevant point of time requiring “prior” permission or “previous” approval of the authority to transfer the credit while the input and capital goods moved. - In absence of such a mandate in law, denial of permission to transfer the Cenvat credit is unjustified - Decided against Revenue.
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2015 (12) TMI 70
Reversal of CENVAT Credit - whether prior to 27-2-2010 the reversal of Cenvat credit availed on capital goods shall be on the written down value method or straight line method - Held that:- Both sides agree that after 27-2-2010 the method prescribed was straight line. Appellant followed straight line method. But prior to that there was no express provision of law. The demand in question is ₹ 3,13,336/-. It does not appeal to common sense as to the reason why appellant shall suffer in absence of clarity in law and when ambiguity was resolved by legislature after 27-2-2010 prescribing straight line method - Decided in favour of assessee.
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2015 (12) TMI 69
Denial of CENVAT Credit - invoices did not contain the registration number of the service provider which is a mandatory requirement - Held that:- Even under Rule 9(2) of Cenvat Credit Rules, which empowers the proper officer to condone such omissions, non-mentioning of the registration number of the provider is not one of the omissions which can be condoned. Therefore, the demand Service Tax and interest has to be sustained as correctly made. Since the mistake is not on the part of the appellant and in fact if they were vigilant they could have got credit by insisting on a proper invoice. In such a situation for a mistake committed by the service provider, it may not be appropriate to impose penalty in addition to the reversal of credit with interest. Accordingly, the penalty imposed on the appellant is set aside - Decided partly in favour of assessee.
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2015 (12) TMI 68
Duty demand - Excess stock found - Malafide intention - Held that:- Revenue has not produced any inventory to show that the stock was physically verified by them. Mere acceptance of such excess at the time of visit of the officers by itself cannot be held to be a conclusive proof. In any case and in any way of the matter, I find that it is not the case of the Revenue that such excess stock was not entered in the RG register deliberately and with mala fide intent to remove clandestinely. As such, I find no merits to interfere in the order of the Commissioner (Appeals). - Decided against Revenue.
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2015 (12) TMI 67
Clandestine removal of goods - whether the difference in figures of final product/raw-materials as reflected in RG-I register and as reflected in the bank statements can lead to the findings of clandestine removal or not - Held that:- Admittedly, apart from difference, there is no other evidence on record indicating clearance of goods without payment of duty. As such, I find no infirmity in the impugned order of the Commissioner (Appeals) - Decided against Revenue.
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2015 (12) TMI 66
CENVAT Credit - duty paying documents - Held that:- Part of Cenvat credit stands denied on the sole ground that the invoices received by the input suppliers were not duly signed by the authorised representative. Ld. Advocate submits that in terms of Rule 9 of Cenvat Credit Rules, 2004, signature of the authorised representative of the input supplier is not a requisite pre-condition, though he agrees that the same should be signed by the authorised representative. However, he submits that inasmuch as there is no dispute about the receipt of the inputs, the duty paid character of the inputs and their utilisation in the manufacture of the final product, which stands cleared on payment of duty, denial of credit on the said count is not justified. - sole ground for denial of credit is non-appearance of the signature of the input supplier. The said defect is rectifiable defect and in the absence of any allegations that the appellants have not received the inputs, I do not find any justification for denial of credit on the above technical and procedural aspect. Accordingly, confirmation of demand on the said count is set aside. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (12) TMI 119
Levy of purchase tax - Section 15B and/or 50 - breach of Form No.26/40 - Held that:- It is evident that the entire naptha purchased by the assessee for running the gas turbine was used for generating electricity used for the purposes of manufacture in its own unit. However, the steam, which was generated in the gas turbine by way of waste material was utilised by the assessee in a steam turbine which also generated the electricity. Such electricity generated in the steam turbine was mostly used by the assessee itself; however, a minuscule quantity thereof, was wheeled out to its sister concern. It is this wheeling of the electricity to the sister concern, which according to the appellant amounts to a breach of Form No.26 or 40 on the part of the assessee. From the findings recorded by the Tribunal as well as from the facts as appearing from the record, it is evident that the entire material which was purchased against Form No.26 or 40, namely, naptha, was used by the assessee for generating electricity through the gas turbine and such electricity was used solely for the purpose of manufacture in its own unit. Wheeling out of a minuscule amount of electricity generated out of the steam turbine, to its sister concern cannot in any manner be said to be a breach of Form No.26 or 40 as is sought to be contended by the appellant. It is also not the case of the appellant that any part of the naptha had been used solely for the purpose of generating steam for operating the steam turbine. Under the circumstances, it is not possible to state that the impugned order of the Tribunal suffers from any legal infirmity warranting interference. The impugned order of the Tribunal, therefore, does not give rise to any question of law, much less, a substantial question of law so as to warrant interference - Decided against Revenue.
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2015 (12) TMI 53
Provisional assessment - Non submission of Form-C and Form F issued from the respective authorities of other States where the goods were transferred - Held that:- Some of the Forms were filed along with the reply, which were required to be considered by the assessing authority, which in the instant case has not been done and the assessing authority has rejected the same on a flimsy ground that the Forms were filed after the period of three months. Normally, assessment orders are passed after the end of financial year and Forms filed on or before the conclusion of the assessment order would be considered by the assessing authority. Consequently, on this analogy the assessing officer committed an error in holding that he would not consider the Form, which has been filed after the stipulated period of three months. Looking from the another angle, Section 6 A (1) and the proviso to Rule 12 (7) of the Rules indicates that the period of three months can be extended and therefore it is not a mandatory provision making it obligatory upon the assessee to file the requisite forms within the stipulated period of three months. Forms can be filed even after the period of three months. In view of the aforesaid, we are of the opinion that the provisional assessment order cannot be sustained and is, accordingly, quashed. - Decided in favour of assessee.
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2015 (12) TMI 52
Restoration of the penalty - transporting goods without valid document - Held that:- The material on record clearly establishes that on an investigation by the authorities, some other documents on which reliance was placed by the transporter were found to be not genuine. It is not a case of avoidance of tax by the transporter. It is a case of transporting goods without valid document. When the transporter is unable to produce confirmation letter from the persons from whom he received the goods for transportation, nothing more requires to be done. In all cases where genuinely he received the document from the consignor, on being satisfied about the genuineness, the authorities have cleared those goods. It is only in cases where there was no consignor at all and the documents on which reliance was placed was found to be not genuine, action has been taken. The Tribunal was also justified in imposing additional penalty. In these circumstances, we do not see any justification to interfere with the well considered order passed by the Appellate Tribunal. - Decided in favour of Revenue.
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2015 (12) TMI 51
Whether a transporter can be held liable to pay tax and penalty in terms of Section 13A of the Tripura Sales Tax Act, 1976 and Section 77 of the Tripura Value Added Tax, 2004 - Held that:- Revenue contends that State of Tripura has challenged the validity of judgment [2011 (3) TMI 1503 - GAUHATI HIGH COURT] before the Apex Court. We had given various adjournments and the State was directed to produce stay order, if any, granted by the Apex Court. No such order has been produced. - Decision in the case of FREIGHT MOVERS followed - Petition disposed of.
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2015 (12) TMI 50
Maintainability of petition - Who can file the appeal - Held that:- It is well settled that, in order to invoke the extraordinary remedy under Article 226 of the Constitution of India, there must be a constitutional or statutory or legal or customary right recognized under law and that there should be a infringement to his personal rights - Court is not inclined to entertain the writ petition - Decided against assessee.
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