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TMI Tax Updates - e-Newsletter
December 31, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Computation for the income chargeable under the head 'capital gains' - If the arguments of the revenue that the transfer of trade mark itself is goodwill of a business is accepted, then there was no necessity for the Legislature to amend Section 55(2)(a) of the Act inserting the words "trade mark" or "brand name" associated with the business by Finance Act, 2001 - HC
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TDS u/s 194I - assessee in default - the Revenue is permitted to charge interest even after the Recipient has deposited the tax, the same would amount to undue enrichment of the Revenue - HC
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TDS u/s 194I - assessee in default - the order passed under Sec.201 (1) and (1A) of the Act on 28.1.2008 for the assessment year 2002-03, would be barred by limitation as the period of limitation would be four years from the end of the financial year in question - HC
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Disallowance u/s 40A(2)(b) - for the purpose of disallowing a deduction, AO has to form an opinion not only that the expenditure is excessive or unreasonable, but that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made - that is not done - no addition - HC
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Transfer pricing adjustments - Profit Level Indicator (PLI) - Exchange loss / gain - treated as operating in nature for working out the PLI of the assessee - whether there was any nexus between foreign exchange loss / gain with the business activity of the assessee? - Held Yes - AT
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Unexplained share application money - Addition u/s 68 - Lot of developments have taken place after the addition - the defunct companies at the time of assessment, as pointed out by the AO, have resurrected back to life after statutory compliances were fulfilled - Additions confirmed - AT
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Penalty levied u/s 271(1)(c) - Considering one of the methods of accounting for determining the profits of the project adopted by the CIT (A) is not free from the debate or dispute. It is also a settled issue that when debate is an integral part of any addition, the concealment penalties will not survive. - AT
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Additions merely on the basis of statement - It seems that addition has been made merely on the basis of statement/presumptive basis and no corroborative material has been brought on record. Presumption cannot take the shape of evidence, however, strong it may be - AT
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Penalty u/s. 271(1)(c) - The addition has been made by invoking deeming provisions of section 50C. In our considered view in assessment proceedings the provisions u/s. 50C can be invoked for making addition, however penalty cannot be levied on the basis of such deeming provisions. - AT
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Addition u/s 69B - unexplained investment - reference to the DVO without rejecting the books of account is bad and therefore the valuation report submitted consequent thereto cannot be relied on for making an addition - AT
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In all cases under scrutiny, where the AO proposes to make additions or disallowances, the assessee would be given a fair opportunity to explain his position on the proposed additions/disallowances in accordance with the principle of natural justice
Customs
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Release of bank guarantee - Petitioner already surrendered its warehousing licence and is currently not holding any of the license - Moreover, the petitioner has also given an undertaking to the respondents that it will discharge all liabilities that may be finalised or arise against the petitioner. In these circumstances, in the opinion of this court, the respondents are not justified in withholding the bank guarantees - HC
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Writ petition against the order of Tribunal refusing to rectify the error which was apparent on record - to that extent the finding recorded by the Tribunal is perverse to the record of the case. The impugned order dated 23.6.2014 being contrary to the record of the case, therefore, cannot be sustained. - HC
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Suspension of the Customs Broker Licence of the Petitioner - show cause notice dated 13.7.2015 has been issued after 90 days from the date of the suspension order - therefore show cause notice issued by the respondent is without jurisdiction - HC
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Rejection of the renewal application to renew the Customs Broker Licence - Petitioner contravened the regulation, by submitting forged documents, which was proved by the forensic report and that claiming change in the constitution by forgery document would amount to misconduct and accordingly, the renewal application of the Petitioner was rejected and there is no illegality or infirmity in the impugned order. - HC
Indian Laws
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DRT whilst deciding whether it has territorial jurisdiction to entertain a Securitisation Application filed under section 17 of the SARFAESI Act would be guided by the principles enshrined in section 19(1) of the RDDB Act and not by section 16 of the Code of Civil Procedure, 1908. - HC
Service Tax
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Utilization of CENVAT Credit to pay service tax under reverse charge - if the appellant is required to discharge the service tax under reverse charge mechanism, then it has to be conclude that he is provider of taxable service who provides output service, during the relevant period - AT
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Benefit of VCES - the matter was under consideration of audit as on 1.3.2013, which is not yet being over. Therefore, as per Section 106(2) of the Finance Act, the petitioner is not entitled to get the benefit of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) - HC
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Delayed filings of return - Penalty u/s 76 - claim of relief for waiver of penalty u/s 80 - Since no acceptable cause or reason had been shown by the appellant for exercising its discretion, for waiving the penalty, u/s 80, the penalty amount levied on the appellant had been confirmed by the Tribunal, is correct - HC
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Demand of service tax - renting of cab without transferring control - unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under Section 65(105)(o), read with Section 65(91) of the Service Tax Act - AT
Central Excise
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Classification - Medicaments or fixed vegetable oils - products “Primosa” and “Simrose” would be classifiable under Heading No. 15159091 of CETA and not under sub-heading No. 30049069 of CETA - AT
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Claim of refund of excess interest (@24% instead of @13%) paid on differential duty - refund application having been filed beyond the period of one year from the relevant day, has to rejected as barred by limitation - AT
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CENVAT Credit - duty paying documents - whether the respondents can avail CENVAT credit of service tax paid by them on various services received and utilized, on the basis of debit notes - Held Yes - AT
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Denial of CENVAT Credit - Goods neither inputs not capital goods - bservations of the chartered engineer which have been relied by the appellant have been discarded by the authorities below without any tangible evidence. Merely saying that all the items were used for supporting structure is not admissible evidence - credit allowed - AT
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Area based exemption - The attempt to set up the Unit-II as a separate Unit on first floor of the Unit-I appears to be an attempt by the appellant company to enjoy the exemption in the name of Unit-II for another period of ten years. Since, we have held that Unit-II has no existence and Unit-I and Unit II have to be treated as one unit, the same would be eligible for exemption only for a period of ten years from the date on which the unit-I had commenced commercial production - AT
Case Laws:
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Income Tax
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2015 (12) TMI 1470
Computation for the income chargeable under the head 'capital gains' - whether the Tribunal after elaborately considering the clauses in the Settlement Agreement entered into between the parties, has rightly come to the conclusion that the 'capital gains' income is only towards the transfer of trademarks associated with the product 'SHARP' and not to the business of the assessee as a whole? - Held that:- The assessee has suffered a loss during the relevant assessment year as reflected in the assessment order and it is also submitted by the learned counsel appearing for the assessee that in the previous three assessment years also, the assessee had suffered loss. In such an event, it can be observed that the goodwill of a business of a company running under loss, may not have a potential value, profit would be sine qua non for the goodwill of a business. This factor also adds to hold that the goodwill of a business is not transferred. The goodwill of a trade mark associated with the business cannot be construed as a goodwill of a business, as already held, these are two distinct separate intangible assets, both cannot be intermixed. We have perused the relevant clauses of the settlement deed entered into between the parties extracted supra, which clearly indicates, the assignment made by the assessee company to M/s Sharp Corporation, is only transfer of trademarks and the goodwill associated with the trade marks. It cannot be misconstrued to that of goodwill of a business. It is observed in the judgment of the ITAT, "it is common ground before us that the assessee did not sell its entire business undertaking to Sharp Corporation". This admitted fact itself proves that the assessee has transferred only the trade marks and not the goodwill of a business. Even assuming the goodwill related to the trade mark is transferred, it cannot be construed as the goodwill of a business. If the arguments of the revenue that the transfer of trade mark itself is goodwill of a business is accepted, then there was no necessity for the Legislature to amend Section 55(2)(a) of the Act inserting the words "trade mark" or "brand name" associated with the business by Finance Act, 2001. In such view of the matter, we are of the considered opinion that the ITAT, after elaborately examining the terms of the settlement deed, has arrived at a right conclusion and the same does not warrant any interference by this Court. - Decided in favour of the assessee and against the revenue
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2015 (12) TMI 1469
TDS u/s 194I - assessee in default - Whether the Tribunal was correct in holding that the order passed under Section 201(1) and 201(1A) for the assessment year 2002-03 is barred by limitation? - Held that:- In the memorandum explaining the provisions in the Finance (II) Bill, 2009, it was clearly stated that ‘to provide sufficient time for pending cases, it is proposed to provide that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011’. As such, the memorandum itself clarified that the proviso is for pending cases, and not decided cases. The Circular dated 3.6.2010, issued by the CBDT, also clearly specifies that the said proviso would be for pending cases and not decided cases. With regard to the applicability of the amendment made by the Finance Act, 2009 with effect from 1.4.2010, it was also clarified to be from the assessment year 2011-12 and subsequent years. As such, it is clear that proviso to sub-section (3) did not legalize the cases where action had already been taken, but was meant for only such cases which were pending at the time of insertion of sub-section (3) to Section 201 of the Act. Thus, for the reasons given above, we find that the Tribunal was correct in holding that the order passed under Sec.201 (1) and (1A) of the Act on 28.1.2008 for the assessment year 2002-03, would be barred by limitation as the period of limitation would be four years from the end of the financial year in question. - Decided in favour of the respondent assessee and against the Revenue. Liability to interest under Section 201(1A) - ITAT held that the assessee was liable to pay interest under Section 201(1A) of the Act for not deducting TDS, from the date when the payment was made by the assessee to the Recipient, till the date the tax was deposited by the Recipient - Held that:- the provision for tax deduction at source is only a mechanism for collection of tax by the payer, even though the liability to pay tax is that of the Recipient. The provision for payment of interest under sub-section (1A) of Section 201 of the Act is only of compensatory nature. It cannot be a means to penalise the payer. The provision for payment of interest would arise from the date when it ought to have been deducted i.e., from the date of payment by the payer to the Recipient. The liability to pay interest would end on the date when such tax has been deposited by the Recipient, either by way of advance tax or along with the return of income. Interest, herein, being compensatory in nature, cannot be thus charged for the period beyond the date when such tax has already been deposited by the Recipient. If the Revenue is permitted to charge interest even after the Recipient has deposited the tax, the same would amount to undue enrichment of the Revenue, as even after receiving the tax, it would continue to get interest on the amount which has already been paid or deposited with it. As such, the liability of the assessee herein would not be for payment of interest after the period of deposit of tax by the Recipient.- Decided in favour of the respondent assessee and against the Revenue.
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2015 (12) TMI 1468
Reopening of assessment - Held that:- The facts as revealed from the original record relating to the proceedings as recorded hereinabove, make it amply clear that insofar as the first respondent - Assessing Officer is concerned, he has, in the communications referred to hereinabove, given a clear opinion that no case has been made out for reopening of the assessment and that the objection raised by the Audit was not acceptable. However, it is only on account of the persistence of the Audit Department, that the Assessing Officer has reopened the assessment for the assessment year under consideration by issuing notice under section 148 of the Act. Clearly, therefore, the Assessing Officer has not formed any belief that income chargeable to tax has escaped assessment and on the contrary, is of the opinion that there is no cause for reopening the assessment; however, he has sought to reopen assessment only upon the insistence of the Audit Department. Under the circumstances, the primary requirement for reopening the assessment under section 147 of the Act, namely that the Assessing Officer should have reason to believe that income chargeable to tax has escaped assessment has clearly not been satisfied. The assumption of jurisdiction on the part of the Assessing Officer by reopening assessment for the year under consideration by issuance of notice under section 148 of the Act is, therefore, without any authority of law. Resultantly, the impugned notice under section 148 of the Act cannot be sustained. - Decided in favour of assessee.
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2015 (12) TMI 1467
Disallowance u/s 40A(2)(b) - payment of sale value was in excess of the fair market value - related parties - Held that:- Section 40A(2)(a) of the Act provides that where the assessee incurs expenditure in respect of which payment has been made to any person referred to in clause (b) of that sub-section, and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefits derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. Therefore, for the purpose of disallowing a deduction, the Assessing Officer has to form an opinion not only that the expenditure is excessive or unreasonable, but that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made. As noticed hereinabove, the Commissioner (Appeals) has recorded a categorical finding of fact to the effect that the Assessing Officer has not brought any material on record to show that the payments in question exceeded the fair value of the services received. Insofar as the legitimate needs of such services etc. is concerned, the Commissioner (Appeals) has found as the matter of fact that as a result of utilising the employees of its sister concerns and on payment of service charges, the assessee company started making operational profits from assessment year 2001-02. Under the circumstances, it cannot be said that the services were not availed for any legitimate need. The Tribunal has concurred with the aforesaid findings of fact recorded by the Commissioner (Appeals). Essentially, therefore, the conclusion arrived at by the Tribunal is based upon findings of fact to the effect that there is no material to show that the payments made exceed the fair market value and that the services have been availed for legitimate needs of the assessee company. On behalf of the appellant nothing has been pointed out to show that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. No contrary material has been brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal. Under the circumstances, the conclusions arrived at by the Tribunal being based upon findings of facts recorded by it after appreciating the evidence on record.- Decided against revenue Depreciation on goodwill - ITAT allowed claim - Held that:- Section 32 of the Act provides for the deductions to be allowed in respect of depreciation of - (a) buildings, machinery, plant or furniture, being tangible assets; and (b) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets being acquired on or after the 1st day of April, 1998. Explanation 3 to section 32 provides that for the purposes of that sub-section, the expressions “assets” and “block of assets” shall mean (a) tangible assets, being buildings, machinery, plant or furniture; (b)intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. (a) While goodwill has not been specifically mentioned in the category of intangible assets under clause (b), in the case of CIT v. Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT ] has held that goodwill is an asset under Explanation 3(b) to section 32(1) of the Act. Under the circumstances, the controversy raised vide the second proposed question clearly stands concluded by the above decision. The Tribunal, therefore, did not commit any error in following the said decision. - Decided against revenue
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2015 (12) TMI 1466
Block assessment - Benefit of telescoping relating to cash actually found during the course of search - promissory note found during search - undisclosed income of the assessee - ITAT deleted addition - Held that:- All that has been done by the Commissioner (Appeals) is that the benefit of telescoping has been given to the assessee in relation to the cash that was actually found during the course of search, which view has been confirmed by the Tribunal. This court in the case of Commissioner of Income Tax, Gandhinagar v. Jagatkumar Satishbhai Patel (2012 (12) TMI 1017 - GUJARAT HIGH COURT) has held that applying the principles of telescoping does not give rise to a question of law. Under the circumstances, the impugned order passed by the Tribunal confirming the order of the Commissioner (Appeals) granting the benefit of telescoping to the assessee does not give rise to any question of law, much less, any substantial question warranting interference. - Decided against revenue.
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2015 (12) TMI 1465
Disallowance of interest paid to various parties invoking the provisions of section 40(a)(ia) - assessee had belatedly filed form 15G before the Ld.A.O and also before the Ld. CIT. - Held that:- From the facts of the case, it appears that the assessee had filed the Form 15G belatedly before the Ld. A.O except from two individuals. Since there were defect in the Form 15G because the same was undated, the Ld. Assessing Officer as well as the Ld. CIT disallowed the interest expenses claimed by the assessee by invoking the provisions of section 40(a)(ia) of the Act. The assessee has relied in the decision of the Jurisdictional High Court in the case of Vijay Hemant Finance & Estates Ltd.,[1999 (4) TMI 65 - MADRAS High Court ] which is identical to the case of the assessee wherein the Hon’ble High Court remitted the matter back to the file of Ld. Assessing Officer for providing an opportunity to the assessee to rectify the defects in the Form 15H. Following the aforesaid decision of the Hon’ble Jurisdictional High Court, we also hereby remit the matter back to the file of Ld. Assessing Officer with similar direction. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1464
Transfer pricing adjustments - Working capital adjustment to be made while working out the Profit Level Indicator (PLI) - Held that:- To bring the uncontrolled transaction comparable to the transactions of an assessee, it is required to eliminate the material differences which are likely to affect the price or cost or profits arising from the transactions. Assessee had given a detailed working capital study of the twelve comparables selected by it and worked-out the average working capital and the ratio of the average working capital to sales of such comparables. There is no case for the Revenue that the comparables considered were not carrying debtors, inventories and creditors. When assessee was not having any debtors and was entirely funded by advance received from AE abroad against supplies, then in order to bring parity between the results of the selected comparables and that of the assessee it is essential that adjustment for the working capital is made on the results of such comparables. Only then can the uncontrolled transaction become comparable to the international transactions of the assessee. In such a situation we are of the view that DRP was correct in giving the direction to the AO to carry out the necessary working capital adjustment in working out the average PLI of the comparables. We do not find any reason to interfere with the order of the DRP. - Decided against revenue Exchange loss / gain - treated as operating in nature for working out the PLI of the assessee - whether there was any nexus between foreign exchange loss / gain with the business activity of the assessee? - Held that:- Financial results of the assessee showed that its earnings from export on granite slabs to AE were ₹ 15,55,02,752/-. In our opinion, given this fact situation, foreign exchange gain / loss could have been considered as non-operational only if the AO could show that such gains / loss came out of hedging and transactions which were independent of the business revenue earning transaction of the assessee. The preponderance of probability will always weigh in favour of the assessee when its revenues are only from exports. In such a situation we cannot take a presumption that foreign exchange gain / loss were not having any nexus to the operations of the assessee - Decided against revenue Adjustment for under utilisation of rated capacity not allowed while comparing its results with that of the comparables selected for the TP study - Held that:- Depreciation on fixed assets need not be directly proportional to utilisation of machinery. Assets can get depreciated by non usage as well. Hence attempt of the assessee to have a lesser charge of depreciation while working out its PLI in the guise of under utilisation of capacity, in our opinion, was not correct. No doubt, as mentioned by the Ld. AR, Rule 10B(1)(e) requires adjustment of differences between international transactions and the comparable uncontrolled transactions which would materially affect the net material margin. However, assessee here was unable to establish that the comparables had claimed depreciation after considering their capacity utilisation. Further assessee also could not establish the existence of a linear relationship between its depreciation cost and machine utilisation. - Decided against assessee Addition for the working capital adjustment - Held that:- Assessee has produced before us a chart according to which the average working capital adjustment that was required to be done for working out the average PLI of the comparables was (-) 2.85%. TPO had however added 2.85% to the unadjusted average PLI of the comparables. We are of the opinion that this issue also requires a fresh look by the AO / TPO. If the working capital adjustment was negative, AO / TPO should rework the adjusted PLI of the comparables after reducing the quantum of such adjustment from the average PLI of the comparables. Ordered accordingly. - Decided in favour of assessee for statistical purpose.
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2015 (12) TMI 1463
Penalty under section 271(1)(c) - disallowance/expenditure, namely, (i) claim of depreciation under block "buildings" ; (ii) loss on sale of current assets ; (iii) claim of bad debts ; (iv) investments written off ; (v) irrecoverable project expenses written off, on the ground that the assessee has furnished inaccurate particulars of income - Held that:- Other than the claim made by the assessee with regard to five items of deduction, namely, claim of depreciation under block buildings, loss on sale of current assets, claim of bad debts, investments written off and irrecoverable project expenses written off, no fault has been found by the Assessing Officer in the particulars of income submitted by the assessee in its return. Therefore, this Tribunal is of the considered opinion that merely because the claim of the assessee was found to be not sustainable in law by the Assessing Officer, that cannot be a reason to say that the assessee has furnished any inaccurate particulars regarding its income. This Tribunal is of the considered opinion that the assessee has not furnished any inaccurate particulars regarding its income. In view of the judgment of the apex court in CIT v. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] the assessee cannot be by any stretch of imagination construed as to have furnished any inaccurate particulars of income. - Decided in favour of assessee
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2015 (12) TMI 1462
Unexplained share application money - Addition u/s 68 - What is burden of proof? - Held that:- CIT (A) has relied on the audited balance sheet for the FY 2007-08 i.e. AY 2008-09 and the copy of the ITR of AY 2009-10 to uphold that the share applicant / investor companies are existing companies and the audited balance sheet show that the share applicants companies had enough paid up capitals and reserves to subscribe for the shares from the assessee’s company. Though we find that cheque numbers which are dated between 10.08.2006 to 25.08.2006 have been mentioned by the ld. CIT (A) to uphold the genuineness of the transaction, however, we are unable to accept the said reasoning and finding of ld. CIT (A) because the assessee failed to prove the identity of the share applicants by adducing evidences of their existence at the addresses or by cogent materials before the AO. The PAN details were wrong. The transactions from the bank which were claimed to have transacted the share application money has been found to be bogus and even during the remand proceedings, the assessee failed to produce even a single share applicant before the AO. In the said scenario, the ld. CIT (A) accepting the audited balance sheet for FY 2007-08 i.e. AY 2008- 09 which is subsequent assessment year is not acceptable. The assessee cannot say that it did not had sufficient time to discharge its burden in respect to the share capital money which has come to its account. We find that the AO had investigated the matter fairly and had given enough opportunities to the assessee to come clean with the identity, creditworthiness and genuineness of the transaction. We find that the AO had given sufficient notice and furnished the enquiry reports to the assessee at various stages to show that he was not satisfied with the documents filed by the assessee before the AO. The AO has disproved the evidences brought by the assessee to discharge its burden of proof, which show that the assessee failed to discharge its burden of proof in respect to share application money which has come into its account. The CIT (A) erred in taking the audited balance sheet of subsequent assessment year and documents to prove the creditworthiness which was filed before him to prove the existence of the said companies and individuals. The case laws relied upon by the ld. AR as aforestated pertains to cases where public issue of shares are involved and the case laws regarding share subscription of Public Limited company stands on a different footing than the share application money in the context of private limited company and, therefore, the case laws relied on by the ld. AR does not apply to the case in hand. We would like to deal with the plea of the ld. AR that in case of any doubt regarding the impugned order, the matter may be remanded, if necessary, back to the AO then the AO can satisfy himself about the identity, creditworthiness and genuineness of the transaction as found by the ld. CIT (A). This prayer cannot be granted for the simple reason that lot of water has flown the Ganges after the impugned assessment order. Lot of developments have taken place after the addition of ₹ 3.46 crores u/s 68 of the Act. We find that the defunct companies at the time of assessment, as pointed out by the AO, have resurrected back to life after statutory compliances were fulfilled; and the said documents were furnished before the ld. CIT (A) who has erred in relying upon it to delete the addition. So, therefore, we cannot allow such a prayer of the assessee for the simple reason that the AO had demolished the case of the assessee to prove the identity, creditworthiness and genuineness of the alleged shareholders. So we are not inclined to send the case back to the AO again for fresh adjudication - Decided against assessee
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2015 (12) TMI 1461
Penalty levied u/s 271(1)(c) - receipt of interest income - Held that:- So far as the offer of interest income under the head "business income" after netting the said income against the financial charged incurred for the purposes of business, nothing is brought on record that there is any furnishing of inaccurate particulars. It is a case of change of head of income and the CIT (A) attempted to tax it u/s 56 of the Act. In our opinion, the issue is debatable in nature, and there is no default of disclosure or furnishing of inaccurate particulars in this case relating to this issue. We have also perused the cited judgment of the Hon‟ble jurisdictional High Court in the case of Bennet Coleman & Co Ltd (supra) and find the said decision supports the arguments of the Ld Counsel for the assessee. Therefore, we are of the considered opinion that this particular addition does not invite levy of any penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee Pre-ponment of sales offered in next year - Held that:- The assessee offered the said income in the later assessment year basing on the principle "pay as you earn". This principle is upheld by the Hon‟ble Supreme Court in the case of Excel Industires (2013 (10) TMI 324 - SUPREME COURT ) wherein it is held that the income tax cannot be levied on hypothetical income. Income accrued when it becomes due at the same time, it must also be accompanied by corresponding liability of other party to pay the amount. Only then, it can be said for the purpose of taxability that the income is not hypothetical and it has really accrued to the assessee. In the instant case, the liability to pay by the other parties is crystallized in the AY 2010-2011 not in the AY 2009-2010. But the CIT (A) insists the same would be taxable in the year under consideration. In our opinion, such additions, in principle, are unsustainable in law considering the said binding judgment. If some of the reasons, such additions are accepted by the assessee, the same will not attract penalty u/s 271(1)(c) of the Act as the said amount was already offered to tax by the assessee. In our opinion, there is neither concealment of income nor furnishing of any inaccurate particulars in such matters.- Decided in favour of assessee Addition based on the estimated total cost of construction for the project - Held that:- We find that there is no dispute on the fact that the total estimated cost of the project is 1628.02 Crs. There is no fact based reasons for the CIT (A) to adopt the sum of ₹ 1425.19 Crs as an actual expenditure spent on the project till the end of AY 2012-2013, the year of completion of project. Rest of the calculations made by the CIT (A) is directly related to the change in the method of accounting rejecting the assessee‟s figures and the methods in this regard. What is the better method of accounting is a matter of debate and no concealment of penalty should be attracted to such debatable issues. We find the addition of ₹ 28.62 Crs has the genesis in the estimations on one side and preponement on the other and also on the change of method of accounting. In our opinion, penalty cannot be levied on such additions as they constitute debatable issues. It is an undisputed fact that the said profits of the project are subject to tax in the AY 2009-2010 or in AY 2012-2013. It is a matter of dispute. The above citations were also perused and we find they are relevant for the proposition that change in the method of accounting involving the estimates do not attract the penalty u/s 271(1)(c) of the Act. Therefore, we are of the opinion that the penalty levied by the AO on the said addition of ₹ 28.62 Crs is unsustainable in law. - Decided in favour of assessee Income of the project resultant of the calculations based on change of method of accounting - Held that:- Considering one of the methods of accounting for determining the profits of the project adopted by the CIT (A) is not free from the debate or dispute. It is also a settled issue that when debate is an integral part of any addition, the concealment penalties will not survive. The decisions relied upon by the Ld Counsel for the assessee were also perused and found supporting to his arguments. On such facts, whether the assessee appealed against the additions or not in quantum proceedings, we are of the opinion that the penalty levied by the AO is unsustainable and therefore, we order the AO to delete the penalty accordingly. - Decided in favour of assessee
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2015 (12) TMI 1460
Registration under section 12AA - CIT(A) refused to grant registration on the ground that the application of the assessee is not accompanied with the accounts of the society for the period ending March 31, 2014 - Held that:- We do not agree with the view of the learned Commissioner of Income-tax (Exemptions). As rightly argued by the learned authorised representative that at the time of registration the learned Commissioner of Income-tax (Exemptions) has to only look into the objects of the trust and if it found appropriate grant of registration under the provisions of the Act. Therefore in the case of the assessee, the learned Commissioner of Income-tax (Exemptions) ought to have examined the objects of the trust and decide the issue on its merits as per law. Moreover, the assessee-trust is in incubation stage and yet to commence its activities. At this juncture it is premature to determine the genuineness of the trust by seeking its statement of accounts. Therefore we hereby remit back the matter to the file of the learned Commissioner of Income-tax (Exemptions) to consider the objects of the trust and pass appropriate order as per merits and law. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1459
Addition as undisclosed income in respect of commission expenses treated as non-genuine - Held that:- Assessing Officer has made addition purely on the basis of statement made during the course of survey under section 133A, which was later on retracted by the assessee, therefore, we are of the considered view that any addition made on the basis of these statements is without any basis and deserves to be deleted as there is no corroborative materials on record. It seems that addition has been made merely on the basis of statement/presumptive basis and no corroborative material has been brought on record. Presumption cannot take the shape of evidence, however, strong it may be. It is also noted that the statement on oath, claimed to be recorded from Shri Kiran Wasudeo Somalwar neither bears the signature of the deponent nor of any officer, thus, in our view, its evidentiary value is also under cloud - Decided in favour of assessee. Disallowance of transportation expenses under section 40(a)(ia) - appellant has not deducted tax at source from such payments - Held that:- The transportation expenses on which no TDS has been stated to be deductible and also the transportation charges stands paid before March 31, 2006. However, the issue is being restored back to the file of the Assessing Officer to verify the claim of the assessee whether the amount was paid or payable at the end of the year and if the amount is found to be paid then it has to be allowed in the light of the aforesaid decision from hon'ble Allahabad High Court in the case of CIT v. Vector Shipping Services P. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1458
Unaccounted loan - Assessing Officer found that the gift portion of ₹ 5 lakhs is a separate one and it cannot be linked to the loan portion of ₹ 7 lakhs which was said to be given during the assessment year 2007-08 - Held that:- The fact remains that the total sum of money given by the assessee to his son is only ₹ 12 lakhs. ₹ 5 lakhs was given in the assessment year 2006-07 and another sum of ₹ 7 lakhs was given in assessment year 2007-08. The Assessing Officer appears to have accepted the gift of ₹ 5 lakhs. However, he confuses himself that the loan of ₹ 5 lakhs is a separate one and he made an addition with regard to loan and not with regard to gift. The fact remains is that for the assessment year 2006-07, what was given by the assessee is only a sum of ₹ 5 lakhs either as loan or gift to his son Shri R. Ganesan. Therefore, there is no necessity for the Assessing Officer to take the transaction as two independent transactions. This Tribunal is of the considered opinion that the transaction of ₹ 5 lakhs is only one transaction. Therefore, the Assessing Officer may not be justified in treating the transaction between the assessee and his son in the assessment year 2006-07 as two transactions and making an addition of ₹ 5 lakhs. Since the transaction is only one transaction, this Tribunal is of the considered opinion that the addition made by the Assessing Officer to the extent of ₹ 5 lakhs is not justified. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer stands deleted. Coming to the assessment year 2007-08, reading of the assessment order clearly shows that the assessee and his son categorically admitted that payment and receipt of loan was to the extent of ₹ 7 lakhs. The Assessing Officer appears to have presumed that the sum of ₹ 7 lakhs would not have been repaid during the year under consideration, since neither the assessee nor the assessee’s son claimed before him that the same was repaid. This Tribunal is of the considered opinion that when the loan transaction was confirmed and they claimed that it is not reflected in the statement because the transaction was settled during the same financial year, the presumption of the Assessing Officer was that the loan transaction was not settled during the year under consideration. Therefore, the presumption of the Assessing Officer that there was no claim either by the assessee or by his son that the loan was repaid during the year under consideration is beyond imagination. This Tribunal is of the considered opinion that there is no justification in making addition of ₹ 7 lakhs. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 7 lakhs made for the assessment year 2007-08. - Decided in favour of assessee.
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2015 (12) TMI 1457
Penalty u/s. 271(1)(c) - as per revenue assessee had furnished inaccurate particulars with respect to sale of property at Igatpuri - AO invoked the provisions of section 50C for determining Long Term Capital Gain - Held that:- the addition has been made by invoking the provisions of section 50C. It is a well settled law that penalty cannot be levied on the additions based on assumptions, estimations and by invoking deeming provisions. It is an undisputed fact that the assessee has disclosed the sale transaction of land in his return of income and has even computed Long Term Capital Gain thereon. The assessee had computed Long Term Capital Gain on the basis of sale consideration stated in sale deed, whereas, the Assessing Officer has determined Long Term Capital Gain on the basis of valuation certificate submitted by the assessee for the year 2010. The addition has been made by invoking deeming provisions of section 50C. In our considered view in assessment proceedings the provisions u/s. 50C can be invoked for making addition, however penalty cannot be levied on the basis of such deeming provisions. The Department cannot presume that there is a concealment or inaccurate particulars are furnished. There must be independent finding. Once, the assessee has furnished the explanation, the onus shifts on the Revenue to prove that the explanation furnished by assessee is wrong. We observe that the Revenue has not discharged the onus in proving that the sale consideration stated in the sale deed is wrong. Therefore, in the facts of the case, we are of the view that penalty u/s. 271(1)(c) cannot be levied on such additions even if admitted by the assessee in quantum proceedings. - Decided in favour of assessee.
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2015 (12) TMI 1456
Disallowance u/s.14A - CIT(A) deleted the addition on the ground that provisions of section 14A r.w.Rule 8D are not applicable to dividend income on shares held as stock in trade - Held that:- As decided in case of Kunal Polymers Pvt. Ltd. [2015 (10) TMI 2373 - ITAT PUNE ] it is an undisputed fact that the shares are held by the assessee as stock-in-trade. The assessee has earned dividend income on such shares. The assessee has not held the shares for earning dividend income. Dividend income is incidental to the share trading business of the assessee. Thus, no disallowance u/s. 14A is warranted on dividend earned on shares held as stock-in-trade. Our view is fortified by the decision of Mumbai Bench of the Tribunal in the case of DCIT Vs. M/s. India Advantage Securities Ltd. [2012 (11) TMI 458 - ITAT, MUMBAI]. Also see CCI Ltd. Versus Joint Commissioner of Income-tax [2012 (4) TMI 282 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2015 (12) TMI 1455
Allowance of claim of exemption u/s 10(30) - CIT(A) directing the ld. AO to verify the certificate issued by the Tea Board for the subsidy paid to the assessee - Held that:- We have heard the ld. AR on this issue and held that in the interest of justice and fair play, this issue be restored to the file of the ld. AO to verify the certificate from Tea Board for the subsidies paid to the assessee during the assessment year under appeal and direct the ld. AO to grant exemption u/s 10(30) of the Act only to the extent of subsidies received during the year subject to production of certificate from Tea Board. Decided in favour of revenue for statistical purposes. Addition employees’ contribution to Provident Fund (P.F.) - CIT(A) deleted the addition - Held that:- This issue is directly covered in favour of the assessee by the decision of the Hon’ble Apex Court in the case of Vinay Cement reported in (2007 (3) TMI 346 - Supreme Court of India) wherein it has been held that statutory items like Provident Fund and ESI, if paid before the due date of filing the return of income have to be allowed irrespective of the fact whether the contributions related to the employee and employer. However, we are not able to verify from the materials available on record as to whether the provident fund remittances were indeed made before the due date of filing the return of income by the assessee. Accordingly, we set aside this issue to the file of the ld. AO with the direction to verify the dates of remittance and if the same is paid before the due date of filing of return of income, the deduction should be granted to the assessee - Decided in favour of revenue for statistical purposes. Deduction towards cess on green leaf - CIT(A) allowed claim - Held that:- This issue is squarely covered by the decision of the Hon’ble Calcutta High Court in the case of CIT vs AFT Industries Ltd. reported in ( 2004 (7) TMI 81 - CALCUTTA High Court) wherein held entire amount paid as cess on green leaf seems to be eligible for deduction - Decided against revenue Claim of subsidy for the purpose of ascertaining the book profit u/s 115JB - CIT(A) allowed claim - Held that:- this issue is only consequential to the first ground raised by the revenue. There, we have directed the ld. AO to grant exemption u/s 10(30) of the Act towards tea plantation subsidy to the extent of subsidy received during the year subject to production of certificates from Tea Board to that effect. We hold that whatever is allowed by the ld. AO pursuant to that ground, the same amount had to be reduced from the net profit as per profit and loss account towards exemption u/s 10(30) of the Act for the purpose of ascertaining the book profit u/s 115JB of the Act - Decided in favour of revenue for statistical purposes.
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2015 (12) TMI 1454
Addition u/s 69B - unexplained investment made on the basis of DVO's report - CIT(A) deleted the addition - Held that:- Following the judgment of CIT vs. Lucknow Public Educational Society [2011 (3) TMI 1326 - Allahabad High Court ] we hold that the reference to the DVO without rejecting the books of account is bad and therefore the valuation report submitted consequent thereto cannot be relied on for making an addition. Thus, no addition on account of unexplained investment is sustainable in the eyes of law. We, therefore, find no infirmity in the order of the ld. CIT(A) and we accordingly confirm the same. - Decided in favour of assessee.
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2015 (12) TMI 1453
Addition u/s 68 - CIT(A) deleted the addition - Held that:- The Assessing Officer made this addition on account of unsecured loan as the assessee was not explained the source of cash credit. The Assessing Officer came to this conclusion mainly on the ground that the assessee-company failed to prove that the statement recorded from Shri Mukesh C. Choksi and Shri Jayesh Sampat by the Investigation Wing was incorrect. According to the Assessing Officer, the genuineness of the transaction could not be proved. In appeal, the CIT(A), having considered the submission of assessee-company, has rightly deleted the addition on both accounts (i.e. ₹ 85 lakhs on account of share application money and ₹ 30,47,169/- on account of unsecured loan) by holding that the assessee-company had duly discharged the initial burden in respect of identity, creditworthiness and genuineness of all transactions by relying on various judicial pronouncements. Thus, this addition is not justified under the provisions of Section 68 of the Act. Therefore, we do not see any reason to interfere with the findings of the CIT(A) who has rightly deleted the amount on account of unsecured loan which was made by the Assessing Officer u/s 68 of the Act. - Decided in favour of assessee
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Customs
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2015 (12) TMI 1437
Confiscation of goods - Non declaration of goods - Held that:- There is no rational, sound reason and any redeeming factor giving scope to reduce the penalties imposed on these appellants. The matter is quite serious when the restricted items like 49 air pistols and 37 air rifles have been imported and the said imports were not declared; they were found concealed in 12 cartons containing light fittings and furniture. It has also come on record that invoices were fabricated by making use of the appellants office; though invoices were submitted by the other person but the office owned by Shri K. Nithyananda Pai, the appellant was allowed to be used. Consequently both these appeals are dismissed and disposed of as having no substance and reason to interfere with the impugned order-in-appeal passed by the Commissioner of Customs (Appeals) Cochin. - Decided against assessee.
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2015 (12) TMI 1436
Valuation of goods - enhancement in value of goods - Held that:- Though in the adjudication order the authority has relied upon the price of contemporaneous goods, but no any evidence in support of contemporaneous import was adduced. The goods imported by the appellant is rags which admittedly a residual product. The residual product cannot be of standard quality. As regards its characteristics, quality, size, shape, colour etc. it various from consignment to consignment. - Since no evidence was produced by the Revenue, enhancement of the price of the impugned goods appears to be without any basis. It is a trite law that for applying the price of contemporaneous goods, it is necessary to ascertain that the goods is of same character, quality, quantity, country of origin etc. and without ascertaining the same, the adoption of price of contemporaneous goods cannot be treated as price of contemporaneous goods. Due to the said deficiency in the whole proceeding, we are of the considered view that there is no sufficient basis for revenue to enhance the value of imported goods - Decided in favour of assessee.
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2015 (12) TMI 1435
Release of bank guarantee - Petitioner already surrendered its warehousing licence and is currently not holding any of the license - Held that:- The record of the case reveals that in connection with the warehousing activities, three cases came to be instituted against the petitioner which culminated into orders against the petitioner whereby the demand and/or the penalty came to be confirmed. The petitioner challenged the orders either before the first appellate authority or the Tribunal, as the case may be, and against the order passed by the first appellate authority, before the Tribunal. In all the three cases, the Tribunal has granted stay subject to pre-deposit of the amount stipulated in such orders, which the petitioner has already deposited. Therefore, in relation to all the three orders which have been passed against the petitioner, proceedings are pending before the Tribunal and such orders had been stayed. - If the respondents are permitted to retain the bank guarantees, it would amount to negating the stay orders granted by the Tribunal because the amount under the bank guarantee would be in addition to the amount directed by the Tribunal to be deposited by way of predeposit. Moreover, once the licence has been surrendered and no amount is outstanding and payable by the petitioner towards the warehousing licence and the bonds executed by the petitioner have been cancelled, the respondents are not justified in retaining the bank guarantees. Petitioner has also placed on record a copy of the undertaking given by the petitioner to the respondents assuring the Customs Department that they would discharge any liability that may be finalised or arise against the petitioner and have also sought release of the bank guarantees aggregating to ₹ 10,00,000/-. Thus, the warehousing licence stands surrendered, the warehousing bonds stand cancelled, the demands raised by the orders passed against the petitioner in the three proceedings stand stayed by the Tribunal. Moreover, the petitioner has also given an undertaking to the respondents that it will discharge all liabilities that may be finalised or arise against the petitioner. In these circumstances, in the opinion of this court, the respondents are not justified in withholding the bank guarantees. - Decided in favour of appellant.
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2015 (12) TMI 1434
Writ petition against the order of Tribunal refusing to rectify the error which was apparent on record - Tribunal, which, by an order dated 6.2.2014 partly allowed the appeal by holding that the petitioner is eligible for the benefit of CVD as per Serial No.202A of Notification No.21/2002-Cus dated 1.3.2002. The Tribunal further held that since separate value of 16mm, 20mm, 25mm and 32mm TMT bars was not made available, separate duty cannot be assessed for 16mm TMT bars Held that:- As can be seen from the impugned order dated 23.6.2014 passed on the rectification of mistake application made by the petitioner, the Tribunal has rejected the application on the ground that in the absence of separate value of 16 mm TMT bars, separate duty cannot be assessed for 16 mm TMT bars. As noticed hereinabove, the learned counsel for the petitioner has clearly demonstrated before the court that the relevant material to establish the value of 16 mm TMT bars was already there on the record in the form of the bill of lading indicating the quantity of goods as well as the commercial invoices indicating the price of the 16 mm TMT bars. Therefore, the duty of 16mm TMT bars can easily be worked out on the basis of the available record. Under the circumstances, the finding recorded by the Tribunal in the order dated 6.2.2014 as well as in the impugned order dated 23.6.2014 made on the rectification application to the effect that separate value of 16 mm TMT bars was not available, is clearly incorrect and contrary to the record. Under the circumstances, to that extent the finding recorded by the Tribunal is perverse to the record of the case. The impugned order dated 23.6.2014 being contrary to the record of the case, therefore, cannot be sustained. - Decided in favour of assessee.
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2015 (12) TMI 1433
Request for permission to sell an aircraft - Concessional rate of duty - Customs authorities formed a belief that the valuation declared by the petitioner at the time of import was not accurate and further that the petitioner had breached the condition on which the concessional rate of duty was applied - Held that:- Principal duty liability as indicated in the show cause notice is ₹ 8.78 crores. This principal amount of duty may further invite interest and penalties. However, it is not necessary that in every case maximum penalty would be levied. There is also a proposal for confiscation, of course, with the statutory provision of permitting redemption fine in lieu of confiscation. In totality of the facts of the case, we would adopt sum of ₹ 20 crores in all which would safeguard the interest of the revenue. In other words, as long as the petitioner offers full security for such sum, the permission for sale of the aircraft should be granted. - petitioner has already provided the bank guarantee of ₹ 10 crores to the department in addition to bond of ₹ 30 crores. The first condition would therefore be that these guarantees would be kept alive till the disposal of the show cause proceedings. - Petition disposed of.
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2015 (12) TMI 1432
Suspension of the Customs Broker Licence of the Petitioner - Petitioner is under invoicing the imports and thus, is evading payment of customs duty - Forfeiture of security - Bar of limitation - Held that:- Customs Broker Licensing Regulations, 2013 were promulgated in exercise of powers conferred under Sub-Section (2) of Section 146 of the Customs Act,1962. It is only under the regulations, the licence is granted and the regulations also contain various provisions to regulate the affairs of the customs broker including the revocation of the licence. The Regulations contemplates action against the customs broker dehors the provisions under the Customs Act. Therefore, the regulations cannot be treated as sub-ordinate legistlation. Moreover, every implementing authority of any fiscal statute is only performing a public duty. Therefore, it cannot be said that the provision is to be termed as directory just because its adherence is in the nature of performance of a public duty. What is to be considered is the object of the enactment in prescribing a period for the performance of such public duty. - an independent right is issued to the Commissioner to initiate action dehors the enquiry under other Regulations and the Customs Act. The regulations does not only contemplate action against the erring Brokers, but also contemplates timely action. No doubt that action is to be initiated against the erring brokers as laid down by this Court in the case of Kamatchi Agencies cited 2000 (11) TMI 144 - HIGH COURT OF JUDICATURE AT MADRAS, but the same has to be in strict compliance with the provisions. The law of limitation is common to both the parties. The provision not only enables the respondent to levy penalty, but also empowers the respondent to revoke the license, which is an extreme step curtailing the right to carry on any trade or profession as guaranteed by the Constitution of India. Every act of breach by the Broker would entitle the authorities to initiate proceedings from the date of knowledge of the offence. It is only if the time limit is strictly followed, swift action can be initiated against the Customs Brokers and the authorities can also be made accountable. The Regulations only contemplate initiation of proceeding by issuance of notice within 90 days. While, making out a prima facie case, the respondents ought to have, without any shadow of doubt, treated the word shall in Regulation 11 as mandatory and not directory . Therefore, when a time limit is prescribed in Regulations, which empowers action in Regulation 18 and procedure in Regulation 20 (1), the use of the term shall cannot be termed as directory . It is pertinent to mention here that the CBLR, 2013 have replaced the CHA Regulations. The CHA regulations did not have any time limit to complete the proceedings. Therefore, by a Circular 09/2010 dated 08.04.2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 08.04.2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20.01.2014. Impugned show cause notice dated 13.7.2015 has been issued after 90 days from the date of the suspension order dated 27.3.2015 and the report of the investigating agency dated 17.3.2015 or in other words, from the date of knowledge of the offence. - court is of the view that the impugned show cause notice issued by the respondent is without jurisdiction, as it has been issued beyond the period prescribed in the regulations, which have statutory force and hence, not sustainable. - Decided in favour of Appellant.
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2015 (12) TMI 1431
Restoration of petitioner's courier license - seizure of goods since the goods were smuggled into India through a false declaration and in violation of Foreign Trade Policy, 2009-14 and the Customs Act, 1962 - unauthorized criminal act of an employee outside the purview of his employment - Held that:- Similar courier parcels were smuggled for 85 times for the past several months in the same modus by the Petitioner and that the Petitioner cannot claim to be unaware of the happenings when their employee was manipulating the system and entries made therein for over a period of several months. It is the specific case of the respondents that the Petitioner has not carried out the courier operations with due diligence and not complied with the Regulations under which the Petitioner was issued with the licence and has violated the provisions of the Act Contentions of the Petitioner cannot be a basis to circumvent the appeal remedy available for the petitioner as per Section 129(A) of the Customs Act, 1962, since the said Section provides an efficacious alternative remedy before the Appellate Tribunal against the impugned order. There is also no justifiable grounds to bypass this appeal remedy. Further the issues pointed out by the Petitioner as well as the Respondents are questions of fact and the allegations that the Petitioner had earlier involved around 85 times and illegally cleared such goods against the Regulations, which have to be established by the Parties by producing records and could be examined by the appellate authority. That apart, in the impugned order itself, it has been clearly stated that any person aggrieved by the order can prefer an appeal to the CESTAT under Section 129A of the Customs Act. Since the disputed questions cannot be gone into by this Court, leaving it open to the Petitioner to avail the statutory appeal remedy provided under the Act - Decided against Appellant.
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2015 (12) TMI 1430
Suspension of CHA License - Bill of Entries were filed by the Petitioner on behalf of M/s.Shahi Foods, Chennai and M/s.High Regards International, Chennai, declaring the goods as biscuits, juices, confectionery, cheese, sausages and beverages without obtaining authorization and without verifying the antecedents, correctness and identity of their clients and violated the provision of Regulation 13(a), 13(b), 13(d), 13(e) and 13(k) of CHALR 2004 (Regulation 11(a), 11(b), 11(d), 11(e) and 11(k) read with Regulation 18(b) of CBLR 2013) that the said importers mis-declared the value and retain sale price to evade the custom duty and hence, the Petitioner was suspended from working/performing the customs related activities - Held that:- The suspension of CHA licence was made on 19.11.2014, which was not within 15 days from the date of receipt of the report from DRI. On the representation of the Petitioner, the suspension was revoked by order dated 23.12.2014, accepting the delay of one year. However, by notice dated 23.12.2014 under Regulation 20, it was proposed to impose penalty and to forfeit the security, which is also barred by limitation. Despite the same, it is the case of the Respondents that on intelligence, it was found that the Petitioner misdeclared and undervalued the goods and has violated the provisions of the CBLR. - without going into the merits of the case, since the stay granted by this court in the other Writ Petition filed by the Petitioner is still in force and the subject matter of the said Writ Petition is also to be considered on merits and the application for renewal is also pending, pending consideration of renewal application, the Respondents are directed to permit the Petitioner to continue his business operations - Petition disposed of.
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2015 (12) TMI 1429
Rejection of the renewal application of the Petitioner to renew the Customs Broker Licence - Denial on the ground of partnership dispute - Held that:- When the Petitioner applied for renewal on 8.9.2014, it was not processed by the Respondent Department on the grievance made by one of the erstwhile partners Suresh Kumar Sain. Thereafter, in order to find out the genuineness of the grievance and enquire into the matter, the erstwhile partners, P.Manikandan, Amit Manchanda, Suresh Kumar Sain, Pradeep Kumar Sain and Balachandran and the Manging Partner were summoned and their statements were recorded on 29.12.2014, 30.12.2014 and 9.1.2015. All the erstwhile partners, in their respective statements, have categorically stated that they are not aware of the reconstituted partnership deed dated 2.4.2012 and the signatures contained in the said reconstituted partnership deed and their resignation letters dated 31.3.2012 were forged. Hence, on the suspicion that their signatures were forged, the said partnership deed dated 2.4.2012, the resignation letters dated 31.3.2012 and the statements were sent to the Forensic Department for expert opinion. After analysis, the Forensic Department submitted a report dated 26.3.2015, opining that the signatures in question have been imitated and differ significantly from the standard in the handwriting characteristics and there was forgery of signatures. On the other hand, the Petitioner failed to disprove the forgery and the misconduct, by producing valid evidence. Therefore, ultimately it was held that there was no consensus among the partners of the Petitioner firm and the performance or act of the Petitioner was rightly held to be not satisfactory in terms of Regulation 9(2), inasmuch as the Petitioner contravened the said regulation, by submitting forged documents, which was proved by the forensic report and that claiming change in the constitution by forgery document would amount to misconduct and accordingly, the renewal application of the Petitioner was rejected and there is no illegality or infirmity in the impugned order. - Decided against Appellant.
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Service Tax
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2015 (12) TMI 1452
Utilization of CENVAT Credit to pay service tax under reverse charge - levy of service tax on import of services u/s 66 A of the Finance Act 1994 - Held that:- Plain reading of the said sub-Rule 4 of Rule 3 of CCR indicates that Cenvat Credit may be utilized for the payment of service tax on any output service. We find from the provisions of Rule 2(r), which provides that "provider of taxable service" includes person who liable for paying service tax; Rule 2(p) provides that "output service" means taxable service provided by the provider of taxable service. Reading holistically, if the appellant is required to discharge the service tax under reverse charge mechanism, then it has to be conclude that he is provider of taxable service who provides output service. In our view, the lower authorities were incorrect in interpretation of the provisions and holding that appellant could not have utilised Cenvat Credit for discharge of service tax. - impugned order is incorrect and unsustainable. The impugned order is set aside - Decision in the case of TATA AIG Life Insurance (2014 (4) TMI 637 - CESTAT MUMBAI) and Panchmahal Steel Ltd. (2014 (12) TMI 876 - GUJARAT HIGH COURT) followed - Decided in favour of assessee.
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2015 (12) TMI 1451
Benefit of VCES - whether the petitioner, who is an assessee for the service tax payable for the years 2010- 11, 2011-12 and 2013-13, is entitled to file the declaration on 21.6.2013 before the fourth respondent seeking to declare that the petitioner is entitled to get the benefit of VCES in the light of Section 106(2) of the Finance Act, 2013 - Held that:- If a declaration is made by a person against whom an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of search of premises or an audit has been initiated, during the pendency of such an inquiry as on the first day of March, 2013, the designated authority shall by an order reject such declaration with the reasons to be recorded therein. In the present case, admittedly the premises of the petitioner came to be visited by the internal audit section of the respondents and an audit was conducted on 25.2.2013 and 28.2.2013. During the course of audit, the audit party noticed that the assessee was also providing renting of immovable property service, but had not taken registration for this service nor had included this service in the service tax registration certificate and also not paid the service tax for the renting of immovable property service. Hence the matter was under consideration of audit as on 1.3.2013, which is not yet being over. Therefore, as per Section 106(2) of the Finance Act, the petitioner is not entitled to get the benefit of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES), hence the fourth respondent, rightly in this case, has rejected the application dated 21.6.2013 holding that the petitioner is not entitled to get the benefit of the VCES. Court is not inclined to interfere with the impugned order of rejection of the declaration filed by the petitioner. Accordingly, the writ petition fails - Decided against assessee.
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2015 (12) TMI 1450
Delayed filings of return - Penalty u/s 76 - claim of relief for waiver of penalty u/s 80 - outdoor publicity services - Held that:- t the appellant had not furnished any material to substantiate its claim that it was under severe financial hardship. - no materials were made available, by the appellant, to show that the erstwhile partnership firm had been converted into a sole proprietary concern. The service tax payable, by the appellant, for the period, between May 1997 and April 2000, had not been paid, for nearly about 3 years. Therefore, the appellant had been imposed with the penalty, under Section 76 of the Act. Since no acceptable cause or reason had been shown by the appellant for exercising its discretion, for waiving the penalty, under Section 80 of the Act, the penalty amount levied on the appellant had been confirmed by the Tribunal. In such circumstances, we do not find any reason to interfere with the impugned order passed by the Tribunal, dated 22.11.2010. Further, it is seen that the decisions relied on by the learned counsel, appearing on behalf of the appellant, are not applicable to the facts and circumstances of the present case.
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2015 (12) TMI 1449
Business Auxiliary Service - Invocation of extended period of limitation - commission received by the respondent from BSNL for the sale of SIM cards - Held that:- in the case of Prakash R. Jaiswal (2015 (12) TMI 680 - CESTAT MUMBAI), it was held that, invocation of extended period in this case seems to be incorrect as the issue was being agitated before the judicial forum. Accordingly, we hold that the show-cause notice which invokes the extended period for demand of service tax from the appellant-assessee needs to be set aside and we do so. However, for the demand within the period of limitation from the date of issuance of show-cause notice we hold that the appellant-assessee is liable to pay the service tax liability along with interest. In the present case, service tax arises within the limitation period and the respondent-assessee is liable to pay the service tax along with interest. - Decided partly in favor of assessee.
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2015 (12) TMI 1448
Demand of service tax - renting of cab without transferring control - whether levy of service tax under new category would mean that it was not taxable earlier - whether the appellant-asessee who was entered into a contract of hiring of vehicles falls under the category of "Rent-a-Cab scheme operator" is liable for service tax under the category of "Rent-a-Cab Service" or otherwise - Held that:- Judgement of the Hon'ble High Court of Uttrakhand in the case of Sachin Malhotra (2014 (10) TMI 816 - UTTARAKHAND HIGH COURT) is specifically on the issue. We note that Hon'ble High Court was called on to decide the question of law on the issue whether hiring of vehicles would fall under the category of Rent-a-cab scheme operator" or otherwise - Tribunal did take a view against the assessee but the Tribunal's judgement [2013 (7) TMI 816 - CESTAT NEW DELHI] was delivered on 02.05.2013 while the judgement of the Hon'ble High Court of Uttrakhand was delivered on 06.08.2014. Further, we notice that the Hon'ble High Court of Uttarakhand in the said judgement has distinguished the judgement of the Hon'ble Madras High Court in the case of Secy. Federn of Bus-operators Assn. of Tamil Nadu [2001 (4) TMI 7 - MADRAS HIGH COURT]as well as the judgement of the Hon'ble High Court of Delhi in the case of Kuldip Singh Gill [2005 (5) TMI 353 - CESTAT, NEW DELHI]. This judgement of the High Court of Uttarakhand being a recent one we follow the same and hold that the impugned order is unsustainable and liable to be set aside on merits itself. When the lawgiver introduced this new source of taxation, it must be treated as having been aware of the distinct concept of renting a cab for which there is provision in the Central Legislation, namely, Section 75 of the Motor Vehicles Act and also a scheme stood framed as early as in 1989. We are, therefore, of the view that, unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under Section 65(105)(o), read with Section 65(91) of the Service Tax Act - Decided against Revenue.
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Central Excise
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2015 (12) TMI 1447
MODVAT Credit - Whether the assessee can be granted modvat credit without fulfilling the conditions of Rule 57R of the erstwhile Central Excise Rules 1944 viz. production of a certificate from M/s KSFC to the effect that the assessee have paid the amount of CVD to them and that M/s KSFC have not claimed depreciation amount under the Income Tax Act - Held that:- Due to some disputes between the KSFC and the respondent, the respondent was not in a position to make available of the required documents to be placed before the authorities as per Rule 57(6) of the Rules, which would not be fatal to the case. The non-compliance of the said Rule would not disentitle the respondent from availing the Modvat credit having deposited the countervailing duty as prescribed under the Rules. The Tribunal having accepted this contention and following the law laid down by the Apex Court in the case of Commissioner of Customs (imports) -vs- Tullow India Operations Ltd. [2005 (10) TMI 502 - SUPREME COURT OF INDIA] has given a finding that the denial of Modvat credit to the appellant on the ground that KSFC has not furnished the required certificate would result in gross miscarriage of justice - cost of the capital goods shall be reduced by the amount of duty to excise in respect of which a claim of credit has been made and allowed under the Rules, KSFC cannot claim depreciation on the portion of the capital goods representing countervailing duty taken as Modvat credit. - order passed by the Tribunal is just and proper and does not call for any interference by this Court - Decided in favour of assessee.
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2015 (12) TMI 1446
Rectifion of order of larger bench [2013 (4) TMI 532 - GUJARAT HIGH COURT] - Reversal of CENVAT Credit where duty has been remitted on destroyed goods - Whether in view of the provisions contained in Rule 3 of the Cenvat Credit Rules, 2004 and Rule 21 of the Central Excise Rules, 2002, the decisions of this Court in case of COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AHMEDABAD-I v. GDN GARMENTS, reported in [2010 (7) TMI 431 - GUJARAT HIGH COURT ] and COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS V. BIOPAC INDIA CORPORATION LTD., reported in [2010 (7) TMI 433 - GUJARAT HIGH COURT ] lay down correct law in holding that even after remission of duty upon destruction of final product, the manufacturer is not required to reverse the Cenvat Credit on the inputs used in manufacturing such final product. Held that:- Full Bench has held that prior to introduction of sub-rule (5C) of rule 3 of the Cenvat Credit Rules, there was no provision, which provided for reversal of the credit by the excise authorities where it has been lawfully taken by a manufacturer and that by way of the amendment, a new right was created in favour of the revenue, it is evident that there is clear contradiction in the second part of the operative portion of the judgement, to the extent it is held that there is no scope of reversal unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. In the opinion of this court, when the Full Bench has clearly held that prior to September 7, 2007, there was no statutory provision permitting the revenue authorities to direct reversal of credit already taken, the question of imposing any condition for reversal while granting remission of duty in terms of rule 21 of the Central Excise Rules would certainly not arise. Thus, it appears that the aforesaid part has crept in on account of inadvertent error and the same being in direct conflict with the main part of the judgment, requires to be deleted in the interest of justice. Powers of review can be exercised in rectifying an error in the earlier judgment. In the light of the above discussion, the applicant has clearly made out a case warranting exercise of review jurisdiction by this court. - The judgement and order dated 29.08.2012 passed by the Full Bench in Tax Appeals No.2520 of 2010, 896 of 2011 and 1586 of 2010, is hereby modified by deleting the following sentence from paragraph 20 of the said judgement: "Unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed" Decided in favor of Assessee.
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2015 (12) TMI 1445
Reversal of cenvat credit - some iron ore fine or smaller pieces of iron ore emerge which are not usable for further manufacture of sponge iron. Therefore, same were cleared without payment of duty - duty on 10% of the value of exempted goods cleared by the respondents - Held that:- As the facts of the cases in hand are identical to the facts of the case in Maa Mangla Ispat Pvt.Ltd. (2013 (5) TMI 268 - CESTAT NEW DELHI), and after examining the impugned order, in the light of the decision in the case of Maa Mangla Ispat Pvt.Ltd. (supra), I do not find any infirmity in the impugned order, the same is upheld. - Decided against Revenue.
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2015 (12) TMI 1444
Duty demand - Determination of annual capacity of production - Demand of differential duty - penalty under Rule 96ZP (3) - Held that:- No case of deliberate default is made out against the appellant. I also hold that the differential duty became payable only on pronouncement of the order of the Hon'ble Supreme Court dated 06.07.2011. It is admitted fact that the appellant paid the differential duty (50% was paid during pendency of appeal and the balance was paid soon after passing of the OIO). Thus, there is no deliberate delay on the part of the appellant. In this view of the matter, I hold that the appellant would be liable to interest w.e.f. 30th day of service of OIO on the amount of duty paid belatedly, if any. Such interest, shall be calculated by the adjudicating authority and intimated to the appellant. The appellant is also at liberty to calculate the interest payable, if any, in terms of this order and filed the same for approval of the' adjudicating authority - Decided partly in favour of assessee.
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2015 (12) TMI 1443
Classification of “Primosa” and “Simrose” - Medicaments or fixed vegetable oils - Classification under Sub-heading No. 15159091 or under Sub-heading No. 30049069 - enhancement of penalty - Held that:- tribunal in appellant’s own case held that the “Primosa” and “Simrose” which are encapsulated fixed vegetable oil,classifiable under Heading No. 15.03 of CETA as fixed vegetable oil. In that case, the Revenue contended that it would be classifiable under Sub-heading No. 2108.99 of CETA as “Dietary Food Supplement”. - It is evident from record that EPO is a fixed oil obtained from the seeds of plant containing Linolenic Acid with some Gamolenic Acid. It is encapsulated i.e. packed in small capsules in the appellants premises. It is not chemically modified. The Fatty acids contained in EPO is natural ingredient. There is no addition of fatty acid under Section VI of CETA. As per Chapter Note I (e) of Chapter 15 of CETA, fatty acid of Section VI of CETA would not cover in Chapter 15. Section VI of CETA covers “Products of Chemical or allied industries.” In the present case, EPO is edible grade oils and sold as EPO in capsules with the name of “Primosa” and “Simrose.” We find that the similar issue was raised before the Tribunal in the case of M/s. Supreme Enterprises (2015 (2) TMI 954 - CESTAT MUMBAI). This product is of Amazon origin and inca inchi oil is a natural oil extracted from the seeds of the Inca Inchi tree. The oil contains natural vitamins and antioxidants (Omega 3) and has not been chemically modified at all. Revenue contended that the product is claimed to have properties of preventing blood clotting triglycerol blood sugar and so on. The Tribunal held that impugned product merits classification in under Sub-heading No. 1515.90 of CTA. In the present case, it should be kept in mind that the Customs Authorities classified EPO under Sub-heading No. 1515 of CTA and the dispute was raised by Central Excise Authorities - products “Primosa” and “Simrose” would be classifiable under Heading No. 15159091 of CETA and not under sub-heading No. 30049069 of CETA and the demand of duty alongwith interest and penalty cannot be sustained. The impugned orders are set-aside - Decided in favour of assessee.
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2015 (12) TMI 1442
Denial of CENVAT Credit - nexus with the appellant's manufacturing activities - Imposition of equivalent penalty - Held that:- Services involved in the said show-cause notice are training services received by the appellant from M/s Pegassus HRD Centre Pvt Ltd for training of their employees in managerial and management skills; photography services received to cover the company functions organized inside the factory; travel expenses for employees' family visits to the factory plant of the assessee and travel agent services for reobtaining of the residential permit of the Japanese Director, who lost the same. Out of the said services, I find that training of the employees is an integral part of the running of the business. Similarly photography services to cover the company functions has been held to be cenvatable input service by the Hon'ble Karnataka High Court in the case of Toyota Kirloskar Motor Pvt Ltd Vs CCE [2011 (3) TMI 1373 - KARNATAKA HIGH COURT ] . The services obtained from the travel agent for reissuance of the residential permit of the Japanese Directors are also services availed in connection with the business. However, the travel expenses for employees' family visit to the factory plant of the assessee cannot be held to be having any connection with the appellants' manufacturing activities or business activities. As such, except for CENVAT credit of ₹ 895/-, I hold that the other credits are available to the appellant. - Decided partly in favour of assessee.
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2015 (12) TMI 1441
Claim of refund of excess interest (@24% instead of @13%) paid on differential duty - Bar of limitation - Held that:- Admittedly the refund application filed by the appellant on 08.04.2009 is beyond the period of limitation. The appellant's contention is that they had challenged the earlier order of finalization and the Commissioner (Appeals) had directed them to file a refund claim instead of challenging the rate of interest. Inasmuch as they have filed refund application within a period of one year from the date of the order of Commissioner (Appeals), the same has to be treated as having been filed within the limitation period - appellate authority has observed that if the payment of interest is erroneous on the part of the assessee they can file refund claim within the normal period of one year. There is nothing in the said observation or finding of Commissioner (Appeals) to suggest that the period of one year would start running from the date of passing of the order. There is also no provision of law to that effect. If the appellant was aggrieved with the said order of Commissioner (Appeals) in deciding on the correct rate of interest, they could have challenged the same. In fact, the appeal was filed before the Tribunal, but the same was subsequently withdrawn, thus allowing the said order of Commissioner (Appeals) to attain finality. - refund application having been filed beyond the period of one year from the relevant day, has to rejected as barred by limitation - Decided against Assessee.
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2015 (12) TMI 1440
CENVAT Credit - duty paying documents - whether the respondents can avail CENVAT credit of service tax paid by them on various services received and utilized, on the basis of debit notes - Held that:- original adjudicating authority has made certain observations that such documents do not contain full details but there is neither any reference to such non-mentioning of requisite particulars in the said debit notes nor is there any rebuttal by the original adjudicating authority to the respondent's claim of the said debit notes disclosing full particulars. The Commissioner (A) has noted the said fact and has held that a mere observation by the adjudicating authority, without even disclosing or indicating the particulars not available in the said debit notes cannot be appreciated. Even in their memo of appeal, Revenue has not referred to any such particulars being not available in the debit notes. As such, I find no infirmity in the impugned order of the Commissioner (A) - Decided against Revenue.
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2015 (12) TMI 1439
Denial of CENVAT Credit - Goods neither inputs not capital goods - Held that:- It is no doubt some of the items have been used by the appellant for fabrication of supporting structure embedded to earth for which the Chartered Engineer who is an expert in the field as already given in his report that appellant has used the quantity of 49.85 MT of these items for supporting structures and on the said quantity appellant has not claimed Cenvat Credit. The appellant is able to show by way of Chartered Engineer Certificate that out of the total quantity 150 MT were used by the appellant for fabrication of capital goods. These observations of the chartered engineer which have been relied by the appellant have been discarded by the authorities below without any tangible evidence. Merely saying that all the items were used for supporting structure is not admissible evidence. Therefore, as the appellant has been able to show the usage of the items in question for fabrication of capital goods as directed by this Tribunal in the earlier round of litigation, I have no hesitation to hold that appellant is entitled to take Cenvat Credit on this quantity. For the remaining quantity if revenue feels that appellant has taken the credit they may initiate another proceeding against the appellant. But to the quantity upto 150 MT appellant is entitled to take Cenvat Credit. - Appeal disposed of.
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2015 (12) TMI 1438
Area based exemption - dispute is about another manufacturing unit (unit II) claimed to have been set up by the appellant company in March, 2010 on the first floor of the same building and this unit is also for manufacture of the same products - Denial of duty exemption under notification no. 49/03CE - Clubbing of clearances - Held that:- Goods manufactured from the new machinery, if any installed, in the name of Unit-II on the first floor would be eligible for duty exemption under notification no. 49/0 3CE. However, since both the Units, - Unit-I as well as Unit-II, are upheld to be one entity and not the independent Units, they would be eligible for exemption under notification no. 49/03CE only for ten years from the date on which the Unit-I had commenced commercial production - if the Unit-I had commenced commercial production sometime in 2004 it would be eligible for exemption under this notification till 2014 only. The attempt to set up the Unit-II as a separate Unit on first floor of the Unit-I appears to be an attempt by the appellant company to enjoy the exemption in the name of Unit-II for another period of ten years. Since, we have held that Unit-II has no existence and Unit-I and Unit II have to be treated as one unit, the same would be eligible for exemption only for a period of ten years from the date on which the unit-I had commenced commercial production - Appeal disposed of.
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CST, VAT & Sales Tax
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2015 (12) TMI 1428
Non speaking orders - Exemption under CST - petitioner had not produced the declarations and related documents - Held that:- In the case of Madras Granites (P) Limited vs. Commercial Tax Officer, Arisipalayam Circle, Salem and another reported in [2002 (10) TMI 767 - MADRAS HIGH COURT], a Division Bench of this Court made it very clear that when records are produced before the authority concerned, the same should be considered by the authority concerned and by applying his mind independently in the issues related to the assessment, should pass appropriate orders, after affording due opportunity. - impugned orders are liable to be set aside and accordingly, the same are set aside. The matters are remitted back to the respondent for passing fresh orders after verifying the books of accounts, considering the objections and after affording an opportunity of being heard - Decided in favour of Assessee.
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2015 (12) TMI 1427
Waiver of pre deposit - Whether on the facts and in the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in directing payment of pre-deposit of tax as well as interest amount for both the years - Held that:- In the first round of litigation, the first appellate authority had dismissed the appeals preferred by the appellant on the ground of non-payment of pre-deposit. The appellant carried the matters in appeal before the Tribunal, which remanded the matters to the first appellate authority, subject to the appellant making a deposit of ₹ 5,00,000/-. It is an admitted position that the amount of ₹ 5,00,000/- had been deposited by the appellant at that stage. However, the proceedings before the first appellate authority lingered on for a period of six years. After a period of six years, notice of hearing came to be issued to the appellant. In the meanwhile, the business premises of the appellant had been sealed. Under the circumstances, the appellant was not aware of the hearing fixed by the first appellate authority as the notice of hearing had been pasted on the closed premises. The first appellate authority, in view of the fact that the appellant had not remained present for personal hearing, confirmed the earlier order passed by it. Tribunal had thought it fit to direct pre-deposit of only ₹ 5,00,000/- for the purpose of hearing of the appeal by the first appellate authority, there was no justification for now directing pre-deposit of the total tax amount together with interest. From the facts as emerging from the record, it is evident that the appellant was not served with the notice of hearing by the first appellate authority and it is on account of this reason that no one could remain present for hearing of the appeals. The learned advocate for the appellant has stated before this court that pursuant to the order dated 8th January, 2015, the appellant has deposited a further amount of ₹ 3,45,000/- so that the total figure comes to 10% of the tax amount under the order of assessment. Gujarat value Added Tax Tribunal was not justified in directing payment of pre-deposit of the entire tax amount together with interest - Decided in favour of Appellant.
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2015 (12) TMI 1426
Levy of penalty under Section 27(3) - escapement of assessment due to wilful non disclosure of assessable turnover and in the absence of any omission of turnover - Held that:- For the pre-assessment notices dated 26.12.2014, the petitioner had filed replies dated 06.01.2015, which are supported by acknowledgements dated 08.01.2015. However, in the impugned orders, it has been specifically stated that no objections had been filed. Hence, it is crystal clear that the respondent without considering the detailed objections, passed the impugned orders - matter remanded back - Petition disposed of.
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2015 (12) TMI 1425
Inclusion of value of land for charging Value Added Tax - development and sale of apartments/flats/units - Held that:- Issues raised in the present petition have been adjudicated by this Court in [2015 (4) TMI 784 - PUNJAB AND HARYANA HIGH COURT] (CHD Developers Limited, Karnal v. The State of Haryana and others). It was urged by the learned counsel for the petitioner that additionally the proceedings initiated were barred by limitation and even the statutory notice in Form N-2 issued, considering the petitioner as lump sum dealer, is also barred by limitation. It shall be open to the petitioner(s) to agitate the question of limitation and any other plea before the assessing authority who shall adjudicate the same also after hearing the petitioner - Petition disposed of.
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Indian Laws
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2015 (12) TMI 1424
Jurisdiction to entertain the Securitization Application filed by the Petitioner - Held that:- DRT is required to send a copy of the Recovery Certificate for execution to the DRT within whose jurisdiction the property is situated. As mentioned earlier, section 19(23) clearly stipulates that where the tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the jurisdiction of two or more tribunals, it may send copies of the Recovery Certificate for execution to such other tribunals where the property is situated. The word “may” clearly indicates that this provision is discretionary and not mandatory in nature. Under section 19(23), discretion is given to the DRT to either itself execute the Recovery Certificate issued by it against a property not within its jurisdiction, or to send it to the concerned DRT where the property is situated. This is a distinct departure from the provisions of the CPC and more particularly section 39 thereof. DRT whilst deciding whether it has territorial jurisdiction to entertain a Securitisation Application filed under section 17 of the SARFAESI Act would be guided by the principles enshrined in section 19(1) of the RDDB Act and not by section 16 of the Code of Civil Procedure, 1908. Rule is accordingly made absolute and the Petition is granted in terms of prayer clause (a). Securitisation Application is restored to the file of the DRT – III, Mumbai, to be decided on merits and in accordance with law. We would request the DRT to dispose of the Securitisation Application as expeditiously as possible and in any event, within a period of three months from today.
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