Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 11, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Dis-allowance of interest - we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. - HC
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Application of cross examination - It is for the Appellate Authority to consider the request of the petitioner, before passing final order and before deciding all the issues in the appeal as well as in the applications, and pass orders on merits and in accordance with law. - HC
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Stay of penalty proceedings u/s 271(1)(c) – to prevent multiplicity of proceedings and harassment to the assessee, CIT(A) directed to keep the penalty proceedings in abeyance till the disposal of quantum appeal by the Tribunal - AT
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Accrual of income - Recognizing the revenue when the sale deed has been registered by the Assessee in favour of the buyer cannot be regarded to be either cash or mercantile system of accounting - AT
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Rectification of mistake - Mistake either of fact or of law - It is trite law that no court or tribunal can, vide its action or non action, cause prejudice to any party before it. There has thus occurred a mistake in terms of section 254(2) of the Act. - AT
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Deduction u/s 54 or u/s 54F - it was not necessary that the assessee should become owner of the property on only through registration, as the section speaks of “purchase” and registration of document was not imperative. - AT
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Deduction u/s 54F - assessee is eligible for deduction u/s 54F on the amount spent on acquisition of rights in a property from the other members of the family or HUF - AT
Customs
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Revocation of CHA License - forgery and fraud - when the partners of the appellant CHA firm themselves have admitted to not knowing the importer, there is no need to prove the case by the department as the settled legal position is that admitted facts need not be proved - AT
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Classification of goods - Forged Penion - the goods in question though it is part of sugar machinery but since there is an independent entry for Cranks and Transmission Shaft provided in the schedule to the custom tariff, it will merit classification under CTH of Transmission Shaft as others i.e. 84831099. - AT
FEMA
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Delay in Utilization of Advance Received for Exports - Circular
Service Tax
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Financial advisory services - Banking and financial service - Merely because the appellant is registered as a stock broker with the SEBI, which is a statutory requirement the appellant cannot be considered as a financial institution - AT
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Commercial or industrial construction services - change of classification to works contract service - ongoing projects where service tax had been paid earlier (prior to 01.06.2007), the benefit of the Composition Scheme is not available - AT
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Levy of penalty - Appellant has paid service tax along with interest on pointing out by the Revenue during the course of investigation and the appellant is entitled to Cenvat credit of serviced tax paid; in that situation intent to evade duty stands not proved - AT
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Denial of refund claim - SEZ developers - the intention of legislation was that if any service tax has been paid by unit which was not required to pay service tax does not mean is not is entitled for refund claim. - AT
Central Excise
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Denial of refund claim - t the claim for refund made by the respondent had to be decided according to the law laid down by this Court in Mafatlal Industries Ltd. (supra) and would not be governed by the proviso to sub- rule (5) of Rule 9B - HC
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Benefit of SSI Exemption - Use of other company's brand name - conduct of the appellant proves his willful intention to evade duty. Under the circumstances, we hold that extended period of limitation is correctly invoked. - AT
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Denial of CENVAT Credit - In the case of capital goods, the CENVAT rules do not provide installation of capital goods as a pre-requisite for taking CENVAT credit. - AT
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Abatement of duty - Rule 10 of the Pan Masala Packing Machines - the purpose of intimation has been achieved as the sealing of the machines in the manner prescribed was done on 14.01.2013 - the benefit of abatement cannot be denied on the ground that intimation of less than three working days prior to closure. - AT
Case Laws:
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Income Tax
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2015 (2) TMI 332
Reopening of assessment - legality of a notice issues u/s 148 - deduction u/s.33AC has been wrongly allowed to the assessee as assessee's main business is not operation of ships as claimed in the return of income but only ancillary services - Held that:- The reasons as furnished by the Assessing Officer to reopen the assessment do not indicate that there was failure on the part of the petitioner to fully and truly disclose any material fact in regard to the nature of its business so as to claim deductions under section 33 AC of the Act. The entire basis of reopening the petitioner’s assessment is the opinion of the CIT (Appeals) as contained in his letter dated 13.2.2007 which is nothing but the petitioner’s own disclosure in regard to the nature of the petitioner’s business. This assertion of the Assessing Officer thus in no manner can legally justify reopening of the assessment after four years from the end of the relevant assessment year. Moreover, an action to reopen the assessment on a mere change of opinion is wholly impermissible in law. We are therefore of the clear opinion that the Assessing Officer has acted without application of mind and wholly without jurisdiction in issuing the impugned notice to reopen the assessment of the petitioner. - Decided in fvaour of assessee.
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2015 (2) TMI 331
Product Registration expenses - revenue v/s capital expenditure - Held that:- Decided in favour of assessee by allowing the expenses as revenue expenditure as relying on CIT Vs. Torrent Power Limited [2013 (4) TMI 570 - GUJARAT HIGH COURT] AND CIT vs. Cadila Healthcare Limited [2013 (3) TMI 539 - GUJARAT HIGH COURT] Dis-allowance of interest - advances given have been continuing for a long period of time - Held that:- Once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. Respectfully following the ratio laid in the judgement of the Hon'ble Jurisdictional High Court in the case of CIT vs. Raghuvir Synthetics Ltd. (2013 (7) TMI 806 - GUJARAT HIGH COURT), we cannot uphold the action of the authorities below. - Decided in favour of assessee Disallowance of depreciation - Held that:- In the present case, the assessee has produced the evidence of electricity power consumption that goes to show that the Plant was running and this fact is not rebutted by placing any contrary evidence on record by the Revenue that the electricity so consumed for any other purpose. Therefore, respectfully following the ratio laid down by the Hon'ble Jurisdictional High Court in the case of ACIT vs. Ashima Syntex Ltd.(2000 (8) TMI 22 - GUJARAT High Court), we hereby delete the dis-allowance and direct the AO to allow the depreciation amounting to ₹ 28,77,600/- as claimed by the assessee. - Decided in favour of assessee
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2015 (2) TMI 330
Reopening of the assessment - Tribunal held reopening within the period of limitation - addition towards unexplained cash credit - Held that:- In the present case, the relevant assessment year is 1994-95 and the limitation period of four year expires on 31.03.1999. In the present case, the impugned notice is issued on 07.03.2000 which means that the notice is issued after the period of limitation. From the perusal of assessment order as well as assessment records there seems to be no evidence whatsoever to conclusively prove that the cash credits of the assessees were not genuine. The entire information available at the time of reassessment was also available at the time of original assessment as well and the Assessing Officer while completing the original return had accepted the cash credits as genuine in the assessment framed u/s 143(3).There is nothing on record to indicate any omission on the part of the assessee in fulfilling any obligation in law. Whether the Assessing Officer while framing original assessment had failed to work out the tax liability correctly or not, the assessee cannot be charged for any omission. In case the assessee had laid a claim to a particular amount, it was the job of the Assessing Officer to correctly compute the tax liability. Merely making a claim cannot be stated to be non-disclosure of material facts so as to vest in the Assessing Officer jurisdiction under section 147 of the Act. See Parashuram Pottery Works Co. Ltd. vs. Income-tax Officer reported in [1976 (11) TMI 1 - SUPREME Court] and Cadila Healthcare Ltd vs. Deputy Commissioner of Income-tax reported in [2010 (5) TMI 570 - Gujarat High Court ]. - Decided in favour of the assessees
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2015 (2) TMI 329
Computation of deduction u/s 10B - Tribunal dismissed the appeal filed by the Revenue holding that it was only an apprehension of the Assessing Officer that the assessee had shifted profits for the purpose of claiming deduction under Section 10B and upheld the order of the CIT (Appeals) with regard to the deletion of disallowance made under Section 40(a)(i) on the commission paid to overseas agents while computing deduction allowable under Section 10B - Held that:- Tribunal had accepted the plea of the assessee that in granite dimensional blocks trade, price may vary depending upon size of the block and uniformity in colour, defects etc., as granite is a natural product and if there is any mole, crack or difference in colour, the same could not be exported and hence there are lot of wastages. The Tribunal while allowing the appeal of the assessee held that the sale of dimensional granite blocks to the assessee by the three companies was 131.37 CBM, whereas the sale of dimensional granite blocks by the three companies to the third parties at 8 to 17 CBM. Hence, the huge volume purchased by the assessee could have tilted the sale price in favour of the assessee. The Tribunal was of the view that based on the conjectures and surmises, the Assessing Officer made comparison of the sale price and reduced the profit while computing deduction under Section 10B of the Income Tax Act. We find that on fact the Tribunal had clearly come to the right conclusion that there is no reason to accept the findings of the Assessing Officer, which is bereft of details and based on incomplete investigation. - No substantial question of law arises for consideration - Decided against revenue
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2015 (2) TMI 328
Interest tax charged on interest received on trade advances - whether advance could not be treated as loan to attract the provisions of the Interest-tax Act? - Held that:- Assessee's case does not fall for consideration under sub-clause (iv) of Section 2(5B). The assessee is a credit institution. As a finance company engaged in hire purchase and leasing transaction, the assessee also does not deny that its activities in respect of financing, falls for consideration under sub clause (iv). As rightly pointed out by the assessee, when the payment of money as advance was towards the purchase of machinery, there exists a distinct feature from all those transactions of financing on hire purchase and leasing that an exception has to be made in respect of the amount advanced by the assessee for the purpose of purchase of machinery. On the delay in delivery, the manufacturer had paid interest. As already pointed out, going by the fact - a fact which is not disputed by the Revenue, that the amount given by the assessee was towards the purchase of machinery as advance, we hold that the case of the assessee does not fall for consideration under sub-clause (iv) of Section 5(B). Going by the definition therein, we hold that the trade advance given does not fall under the phrase loan or advance or otherwise so as to cover the nature of transactions herein. - Decided in favour of the assessee.
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2015 (2) TMI 327
Application of cross examination - cross-examine the concerned MMTC Officials pertaining to the income assessed for the Assessment years 2006-2007 to 2012 -2013 on the basis of the so called payments said to have been made by MMTC - Held that:- Admittedly, the appellate authority is following the procedures prescribed under the Income Tax Rules. There is also no prohibition for cross examining the parties concerned, if required. But the petitioner cannot pessimistic that his application for request to cross examine will be rejected. He should be optimistic and it is for the appellate authority to consider the request of the petitioner with regard to the Cross examination of the officials before deciding the final issue. Therefore, without going into the merits of the contentions raised in the affidavit filed in support of the writ petition need to be dismissed with liberty to the petitioner to agitate all the issue raised in these writ petitions before the Appellate Authority. It is for the Appellate Authority to consider the request of the petitioner, before passing final order and before deciding all the issues in the appeal as well as in the applications, and pass orders on merits and in accordance with law. The appellate authority is at liberty to permit the petitioner to cross examine the officials of the MMTC, if required
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2015 (2) TMI 326
Disallowance of interest - for earning exempted income the interest paid cannot be allowed - Held that:- As such the dividends was earned on the shares which were purchased in earlier year. But apart from that whether the interest bearing funds have been used to make investment or not is a question of fact for which the tribunal is the ultimate fact finding authority thus holding that the Assessing Officer could not prove that the relevant investments were made out of interest bearing funds. We do not find any substantial question of law arise for consideration as sought to be canvassed. - Decided against revenue. Deferred revenue expenditure - expenditure of the term loan interest - ITAT deleted the addition - Held that:- CIT (Appeals) as well as the Tribunal for holding in favour of assessee has followed the decision of this Court in case of Core Healthcare Limited [2001 (4) TMI 46 - GUJARAT High Court] to be treated as revenue expenditure - Decided against revenue. Disallowance on account of interest on loans given to staff - CIT(A) deleted the addition - Held that:- Before dis-allowance of the interest or part thereof, it should be established that the material borrowed is utilized for non-business purpose. As no finding was recorded by AO, tribunal concurred with a view of CIT (Appeals) and did not find any case for interference.As such whether borrowed money for business is utilized for non-business purpose is an aspect relating to finding a fact for which the Tribunal is the ultimate fact finding authority. - Decided against revenue.
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2015 (2) TMI 325
Reopening of assessment - Petitioner not entitled to deduction under Section 80M of the Act - Held that:- Section 80M of the Act of the dividend received is concerned, the Counsel are agreed that the issue stands covered by the decision of this Court in favour of the Petitioner by virtue of Virtuous Finance Limited v/s. Deputy Commissioner of Income Tax(2014 (12) TMI 978 - BOMBAY HIGH COURT). Therefore, the first ground mentioned in the reasons in support of the reopening notice are not sustainable. Non consideration of diminution in value of investments - Held that:- As relying on Rallis India Limited v/s. Assistant Commissioner of Income Tax [2010 (3) TMI 164 - BOMBAY HIGH COURT] the validity of the notice issued by the Assessing Officer in seeking to reopen the assessment must be determined with reference to the reasons which are found in support of the reopening of the assessment. These reasons cannot be allowed to be supplemented on a basis which was not present to the mind of the officer and could not have been so present on the date on which the power to reopen the assessment was exercised. We, therefore, hold that the principle laid down by the Supreme Court in Max India (2007 (11) TMI 12 - Supreme Court of India) would be attracted to the present case. Consequently, it is evident that the order of the Assessing Officer with reference to the computation of book profits under section 115JB was at the least a probable view and as a matter of fact the correct view to take in view of the decision of the Supreme Court in HCL (2008 (9) TMI 18 - SUPREME COURT). Thus no warrant for reopening the assessment in exercise of the power conferred under Section 147 - Decided in favour of assessee.
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2015 (2) TMI 324
Advances from transport department - Accural of income - Assessee has shown as Current Liabilities - AO treated as income under P&L Account - CIT(A) deleted the addition - assessee contended that the amount was held in fiduciary capacity and was in the nature of liability as no services against this advance were rendered in the year under consideration. - Held that:- Revenue could not bring any material before us to show that the expenses of more than ₹ 14,83,508/- was incurred by the assessee during the year under consideration in respect of the project under consideration. The AO has simply stated that the expenses of the project must have been debited in the Profit & Loss account, but failed to point out any expenses, which were related to the project in question, which was debited in the profit & loss account. In the absence of any such findings, the assessment was made merely on the basis of suspicion or guess-work without any concrete facts brought on record and such assessment is unsustainable. We, therefore, do not find any good reason to interfere with the order of the CIT(A), which is confirmed, and the ground of the appeal of the Revenue is dismissed. - Decided against revenue. Disallowance of deduction under section 80IA - profit derived from internet telephony service business - AO did not accept the claim for want of audit report in prescribed Form No.10CCB - Held that:- Hon’ble Madras High Court in the case of CIT Vs.Medicaps Ltd., (2010 (1) TMI 261 - MADHYA PRADESH HIGH COURT) held that furnishing of audit-report for claim of deduction under section 80IA of the Act was not mandatory and the same can be filed even at the appellate stage. Still further, the Hon’ble Apex Court in the case of Aurangabad Electricals Ltd vs Commissioner Of Central Excise & Customs, (2010 (11) TMI 8 - Supreme Court of India) observed that keeping in view the well settled principles laid down by this Court that technicalities should not defeat rendering of complete justice to a litigant, and remanded the matter to the Tribunal to verify and consider whether the certificate which is already placed on record by the appellant, would assist them in support of their defence. In view of the above decisions, as the audit report in Form No.10CCB was filed before the CIT(A), in our considered view, it shall be just and fair and in the interest of justice to restore this issue back to the file of the AO to readjudicte the issue after taking into consideration the audit report in Form No.10CCB filed belatedly by the assessee, and after examining all the aspects of the matter, in accordance with law. - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 323
Denial of registration under section 12A - clause No.23 of the object clause of the Trust Deed was specifically for the benefit of Jain community and the Trust had not commenced its activities as yet - Held that:- Ratio laid down by Hon'ble Allahabad High Court in Hardayal Charitable & Educational Trust v. CIT-II (2013 (3) TMI 377 - ALLAHABAD HIGH COURT) wherein it was held that at the time of registration under section 12A of the Act, it is not necessary to look into the activities vis-ŕ-vis claim of exemption under sections 11 and 12 of the Act. The Hon'ble Supreme Court in CIT v. Dawoodi Bohara Jamat (2014 (3) TMI 652 - SUPREME COURT) had also laid down similar proposition. Accordingly, the view favourable to the assessee is adopted for deciding the issue. In the totality of the above said facts and circumstances and the legal propositions, we find no merit in the order of CIT in this regard and accordingly, we direct the CIT to grant registration to the assessee Trust under section 12A of the Act and pass the order under section 12AA of the Act registering the said Trust. The assessee in the present facts and circumstances of the case, had in its objects recognized the field of education as the activity to be carried on. Merely because that the said activity has not started, does not dis-entitle the assessee from the claim of registration under section 12A of the Act. No merit in the order of CIT in refusing to grant registration under section 12A of the Act, as the assessee had not started its activities. Following the above said ratio laid down by Hon'ble High Court of Gujarat in Director of Income Tax (Exemption) v. Panna Lalbhai Foundation [2013 (8) TMI 110 - GUJARAT HIGH COURT] , we direct the CIT to grant registration under section 12A of the Act and issue the necessary Certificate under section 12AA of the Act. - Decided in favour of assessee.
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2015 (2) TMI 322
Stay of penalty proceedings u/s 271(1)(c) – Held that:- As relying on GE India Industrial (P.) Ltd. Versus Commissioner of Income-tax (A) -IV, Baroda [2013 (12) TMI 191 - ITAT AHMEDABAD] the provisions of Section 275(1)(a) of the Act Assessing Officer cannot pass an order imposing penalty u/s 271(1)(c) of the Act till relevant assessment is subject matter of appeal before ld. CIT(A) (i.e. the first appellate authority). By the same analogy CIT(A) shall not undertake penalty proceedings till the disposal of appeal by the Tribunal – In view of the powers conferred u/s 254(1) and Following M.K. Mohammad Kunhi [1968 (9) TMI 5 - SUPREME Court] and to prevent multiplicity of proceedings and harassment to the assessee, we are inclined to direct Id. CIT(A) to keep the penalty proceedings in abeyance till the disposal of quantum appeal by the Tribunal - Decided in favour of assessee.
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2015 (2) TMI 321
Liability to deduct TDS - payment made to Partner for use of his trucks - disallowance made in respect of payment made to Partner of ₹ 11,07,400/- u/s. 40(a)(ia) of the Act on ground that TDS was not deducted on it - Held that:- Since the payee had already deposited the tax by filing his return, therefore, there was no responsibility of the assessee to again deduct the tax as held in the case by Hindustan Coco Cola Beverages (2007 (8) TMI 12 - SUPREME COURT OF INDIA ).We hereby hold that the provisions of section 194C r.w.s. 40(a)(ia) were not applicable on the assessee hence the disallowance of expenditure was not warranted. Therefore, we hereby direct to delete the same. - Decided in favour of assessee.
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2015 (2) TMI 320
Disallowance made u/s 14A - CIT(A) deleted the disallowance - Held that:- CIT(A) just gave a finding that the Assessee had surplus funds available which was invested with no material to support this finding, especially when the AO has given a specific finding that out of the loan taken from Saraswat Bank amounting to ₹ 105.30 lacs, sum of ₹ 79.3 lacs has exclusively been used for the purchase of shares from Counto Automobiles. We do not find any material being brought on record by the Assessee and referred to by the CIT(A) while giving this finding. We find that the finding given by the CIT(A) is perverse and the onus is on the Assessee to prove that it has invested the surplus funds in purchase of the shares. Under these circumstances, we are of the view that the AO has correctly disagreed with the claim of the Assessee. We do not find any infirmity or illegality in applying Rule 8D or in the computation of the disallowance made by the AO in accordance with Rule 8D. - Decided in favour of revenue. Disallowance under the head “Professional/Consultancy/ Survey fees” - AO noted that these expenses relate to the projects in progress and therefore should have been debited to the work in progress and thus disallowed the sum - CIT(A) deleted the disallowance - Held that:- Each assessment year is independent and income for each assessment year has to be computed independently. We, therefore, set aside the order of CIT(A) on this issue and restore this issue to the file of CIT(A) with the direction that the CIT(A) shall re-decide this issue after getting the evidences from the Assessee as to what extent these expenses relate to the current year and to what extent these expenses relate to the work in progress. Further, the CIT(A) should also obtain evidences that these expenses have been incurred by the Assessee genuinely for the purpose of the business. To the extent these expenses relate to the work in progress, it should be disallowed. Only the expenses which the Assessee proves to have been genuinely incurred for the purpose of the business and does not relate to work in progress be allowed - Decided in favour of revenue for statistical purposes. Addition to income - AO re-computed the profit relating to the projects completed crediting the sale proceeds to the profit and loss account - CIT(A) took the view as if the AO has changed the method from project completion method to percentage completion method and accordingly he deleted the addition - Held that:- The method as has been followed by the Assessee, in our opinion, is neither project completion method nor percentage of completion method. Percentage of completion method is not linked with the consideration received by the Assessee from the intended buyer. We noted that the Assessee has recognized the revenue only when the registration of the sale deed has been done by the Assessee in favour of the buyer. Under AS-7 this is not a recognized method of recognizing the revenue. This method is neither project completion method nor percentage of completion method. The method adopted by the Assessee, therefore, cannot be regarded to comply with the ingredients as laid down u/s 145 of the Income Tax Act. Sec. 145 of the Income Tax Act makes it mandatory on the part of the Assessee to follow either cash or mercantile system of accounting regularly. Recognizing the revenue when the sale deed has been registered by the Assessee in favour of the buyer cannot be regarded to be either cash or mercantile system of accounting. We, therefore, set aside the order of CIT(A) and restore the order of the AO. - Decided in favour of revenue.
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2015 (2) TMI 319
Transfer pricing adjustment made for the international transaction of ‘Cost allocation from associated enterprises’ - Held that:- Both the sides before us are in agreement that the facts and circumstances for the instant year are mutatis mutandis similar to those of the preceding year. It can be seen that for this year also, the assessee has moved an application under rule 29 of the ITAT Rules seeking to file some additional evidence. Without going into the merits of this issue and respectfully following the precedent, we set aside the impugned order on this score and send the matter back to TPO/AO for a fresh decision as per law after allowing a reasonable opportunity of being heard to the assessee. Needless to say, the assessee will be at liberty to file any fresh evidence before the authorities in such de novo examination.- Decided in favour of assessee for statistical purposes Transfer pricing adjustment for international transaction of ‘Cost Recharges’ - Held that:- t can be noticed that the assessee tried to file certain details in this regard before the DRP vide its letter dated 5.8.2011, a copy of which is available on page 4 to 6 of the paper book. Such details appear to have escaped the attention of the DRP. It was claimed that Shri Ratindra R. Puri was sent by its foreign AE as Managing Director of the assessee-company, whose salary etc. was paid through its foreign AE and the same was reimbursed as such without any mark-up. Since the necessary details in this regard were not filed before the TPO and the DRP also chose not to comment upon the same, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this issue is also set aside and the matter is restored to the file of TPO/AO. - Decided in favour of assessee for statistical purposes TP adjustment in IEC Segment - selection of comparable - Held that:- Following the order in the case of Toluna India (2014 (10) TMI 424 - ITAT DELHI), we hold that the companies Avani Cimcon Technologies Ltd.,E-Zest Solutions Ltd., Ishir Infotech Ltd. and Thirdware Solutions Ltd. are comparable, while the others are not. In the final analysis, we set aside the impugned order on this issue and send the matter back to the file of TPO/AO for the determination of the ALP of the international transaction under IEC segment afresh in the light of our above directions. - Decided in favour of assessee for statistical purposes
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2015 (2) TMI 318
Rectification of mistake - non-application of the provision of section 32(1)(iii) in the instant case - Held that:- The order by the tribunal suffers from a mistake apparent from record; the assessee being admittedly a company in the manufacturing of garments and bicycles and not engaged in the production and distribution of power. The discovery of the said mistake, noticed suo motu, would necessitate amending the order with a view to rectifying the said mistake apparent from the record. No objection thereto was raised by either party during hearing, even as it was clarified that the hearing had called only to allow them to state their objections, if any, thereto. We, accordingly, confirm the disallowance of the assessee’s alternate claim of depreciation for the entire amount of WDV of the relevant asset. Disallowance u/s.14A - assessee challenged disallowance on the ground that no satisfaction had been recorded by the Assessing Officer (A.O.) prior to effecting the disallowance u/s.14A, which is mandatory - Held that:- no specific ground raised by the assessee before the tribunal or, for that matter before the first appellate authority, in the matter. Further, no pleading in its respect was also made during the course of the hearing. The decision in the case of Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court ) was neither cited before us nor is a copy thereof on record. In any case, even as observed at the time of hearing, the matter has been set aside back to the file of the first appellate authority to adjudicate the assessee’s case afresh, i.e., qua the said disallowance, allowing the assessee opportunity to present its case on both the factual and legal aspects. We are, thus, unable to see as to how any prejudice stands caused by the said decision by the tribunal. - Decided against assessee. Disallowance of depreciation - asset under reference is not a building, but repair and renovation expenditure in respect of a leased building, which stands capitalized under the block of assets ‘Furniture, fixture and electrical fittings’ - Held that:- Statement of the depreciation allowable under the Act was made by the AR during hearing, specifically adverting to the opening WDV of the block of assets ‘Furniture, fixture and electrical fittings’, which is stated at ₹ 53,09,065/-. The tribunal has moved on the basis that the asset under reference is a building covered under Explanation 1 to section 32(1)(ii). The decision thus stands rendered on an incorrect factual premise or, in any case, one inconsistent with the contentions by the assessee in its respect, without meeting the same. The order by the tribunal, accordingly, contains a mistake apparent from record, i.e., qua this aspect, and is accordingly recalled for being considered afresh. - Decided in favour of assessee. Disallowance of depreciation - relevant asset being no longer in existence, or of the assessee being no longer its’ owner - Held that:- On principle, i.e., assuming the amount, as claimed, forms part of the block of assets ‘Furniture and Fittings’, and stands carried over from an earlier year, we find the assessee’s claim as valid. Section 43(6)(c), defining WDV of a block of assets, clearly stipulates a reduction from the opening WDV for the ‘moneys payable’ in respect of any asset falling within a block of assets, which is sold or destroyed or demolished or discarded during the relevant previous year. Assets which are subject to any of the conditions provided in section 43(6)(c)(i)(B) are no longer in the assessee’s domain, while the value realized in their respect stands to be adjusted, so that the question or issue boils down to one of value adjustment. It also needs to be noted that the changed method of allowance of depreciation, i.e., after introduction of the concept of ‘block of assets’, does away with the allowance of terminal depreciation, which is since applicable only to the assets falling u/s. 32(1)(i), i.e., where depreciation is charged on individual assets (also refer section 32(1)(iii) r/w s.41(2)). - Decided in favour of assessee.
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2015 (2) TMI 317
Revision u/s 263 - non deduction of tds on sales commission including impugned payment to Australian party - Held that:- AO has issued a notice u/s 142(1) along with details questionnaire asking the assessee to file all the documentary evidence for substantiating its claim. In response to the same assessee filed all the details along with documentary evidence before the AO on various dates fixed by the AO and the AO has examined the same thoroughly and completed the assessment by taking a possible view as per law. Meaning thereby the AO has made detailed enquiries about the sales commission subject to TDS during the course of assessment proceedings including the impugned payment of ₹ 1822206/- to the Australian party. It is evident from the letter dated 29/04/2011 by the assessee to the AO furnished all the details and evidences. The assessee has also filed all the evidences before us in the shape of small paper book along with case law supporting the argument advanced by the ld. Counsel for the assessee. We are of the considered view that where the assessee had made an enquiry before completion of assessment, the same could not be set aside for the reasons of inadequate enquiry. Ld. CIT has set aside the assessment of the assessee only for the reason that AO has not verified all the facts and evidences submitted by the assessee as well as material on record. In our considered view the finding given by the ld. CIT in the impugned order is not as per law and is contrary to the records of the assessee’s case and is not sustainable in the eye of law because as discussed above, the AO had made an enquiry before completion of assessment by calling the explanation along with documentary evidence on the issue in disputes from the assessee. Therefore, the impugned order is deserved to be cancelled. - Decided in favour of assessee.
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2015 (2) TMI 316
Transfer pricing adjustment - addition of ₹ 42,02,000/ - made on account of arm's length price - Held that:- The reasons given by the revenue authorities for arriving at such conclusion was that a comparison of a risk profile of a facultative reinsurance business could not be established on the basis of documents in comparison to the treaty reinsurance. On this issue, we also note that assessee was not provided an opportunity to furnish the requisite evidence in the form of copy of contracts before the TPO. In view of these facts, we hold that the documents submitted along with this application under Rule 29 of the ITAT Rules, 1963 which are copies of illustrative contract/cover notes pertaining to the facultative reinsurance shall be necessary in comparative analysis of the risk factor in the reinsurance under treaty reinsurance and facultative reinsurance. In view of these facts, we admit these additional evidences furnished by assessee and find it appropriate to remit this issue to the file of the Assessing Officer for deciding de novo. - Decided in favor of assessee for statistical purposes. Disallowance of deduction claimed u/s 37 - Held that:- We considered it necessary in the light of the arguments advanced before the Bench that the AO shall examine the position of double taxation vis-ŕ-vis the amounts which already stood offered to tax u/s Fringe Benefit Tax. The past position can be considered but simply because it was not challenged in the earlier year is not a good enough reason to resort to ad hocism the AO is directed to ascertain the correct facts and then decided the issue in accordance with law by way of speaking order after giving the assessee a reasonable opportunity of being heard. We restore back this issue to the file of the Assessing Officer. - Decided in favour of assesssee for statistical purposes. Addition made under Section 14A - profits and gains of any business of insurance - Held that:- In view of provisions of Section 44, read with Rule 5 of the First Schedule, the provisions of Section 14A are not applicable in the appellant's case - Decided in favour of assesssee.
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2015 (2) TMI 315
Disallowance u/s 10B - CIT(A) deleted the addition - Held that:- Respectfully following the judgement of Regency Creations Ltd.[2012 (9) TMI 627 - DELHI HIGH COURT], we allow the grounds of Revenue and restore the order of the AO disallowing the claim made by the assessee u/s 10B of the Act. - Decided against assessee. Eligibility for deduction u/s 10A - Cross objection - Held that:- As relying on the case of ITO vs. Neetee Clothing (P) Ltd. [2010 (1) TMI 53 - ITAT DELHI-A ] it is decided cross Objections cannot be raised, wherein an entirely new claim is sought to be made.Thus we dismiss the grounds of C.O. as "not maintainable".- Decided against assessee.
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2015 (2) TMI 314
Rectification of mistake - Mistake either of fact or of law - The Revenue, vide its instant applications, has impugned the tribunal's finding with regard to the non-applicability of section 40A(2)(b) - Held that:- The first appellate authority had clearly held that the assessee, the payee, ICICI Cap. Services Ltd., and ICICI Bank Ltd. are related concerns, to which the provision of section 40A(2)(b) are clearly applicable. The said finding could only be disturbed or reversed on some factual basis, which we find as absent. There is, accordingly, no basis for the tribunal to have held that section 40A(2)(b) would apply qua the impugned payment/s to ICICI Capital Services Ltd. (I-Caps), which thus cannot be said to be on a firm basis. It is trite law that no court or tribunal can, vide its action or non action, cause prejudice to any party before it. There has thus occurred a mistake in terms of section 254(2) of the Act. We may at this stage also clarify that we are not going by the certificate by ICICI Equity Fund and the order by the hon'ble court being now produced before us by the Revenue in-as-much as the same were not before the tribunal, nor have been shown to us as having formed part of the tribunal's record. We accordingly admit the said mistake, recalling the impugned order for deciding the question of the applicability of section 40A(2)(b) in terms of the said provision. For A.Y. 2003-04, the tribunal, vide its' order dated 20.08.2010, issues no specific finding in the matter. Rather, it proceeds to discuss the issue on merits, issuing definite findings of fact per para 22 of its order, which have since been held by the hon'ble high court as not giving rise to any substantial question of law. However, to the extent it endorses the findings by the tribunal for A.Y. 2002-03, i.e., when it states that the tribunal (for A.Y. 2002-03) has considered all the aspects of the matter, it stands inflicted with the same infirmity as observed by us for A.Y. 2002-03, i.e., qua the legal issue raised by the Revenue per its instant applications. We, accordingly, hold the payee company as a specified person u/s. 40A(2)(b) of the Act for the relevant years. This order is to read be along with the impugned orders by the tribunal, and shall to the extent inconsistent therewith, prevail.
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2015 (2) TMI 313
Deduction under provision of section 54F disallowed - long term capital gain on account of sale of shares of Hindustan Platinum Private Limited invested for acquisition of rights in a property - How the constructed building can be sold without ownership of the land being transferred? - Held that:- The land is an independent and identifiable capital asset, which can be separate from superstructure built up on it. A person can be the owner of a superstructure and can earn income separately from such a superstructure, either in the form of rent or by gain on selling it. It is not necessary that the assessee should hold the exclusive right on the land while purchasing the house or vice versa. Such kind of arrangement always happen in the case of lease land. Therefore, we are unable to agree with the contention of the department that, simply because the property has been sold without the transferring the right in the land, the same cannot be held to be sale of property. - Decided in favour of assessee. Eligibility for claim of deduction u/s 54F is only on the purchase of a new and separate house rather than purchasing the shares / fractional interest in a property wherein the assessee himself is one of the co-sharers - Held that:- Sale proceeds invested for purchase of interest in the residential house owned by the assessee’s husband and son, amounts to purchase and hence entitled for exemption u/s 54F. Section 54F, per se, does not prohibit or bar that fractional interest or share in the property, which has been purchased, will not be entitled for deduction u/s 54F. Thus, following the said proposition we hold that the assessee is eligible for deduction u/s 54F on the amount spent on acquisition of rights in a property from the other members of the family or HUF. - Decided in favour of assessee. MoU, through which the assessee had acquired the rights in the property, has not been registered - Held that:- For the purpose of attracting the provisions of section 54, it was not necessary that the assessee should become owner of the property on only through registration, as the section speaks of “purchase” and registration of document was not imperative. Thus, on all counts, the reasoning given by the A.O. as well as CIT(A) cannot be sustained in view of the aforesaid legal proposition discussed above. Accordingly, we hold that the assessee is eligible for claim of deduction of ₹ 60,95,000 u/s 54F in purchase of acquiring one half share of the residential house owned by Smt.Indrani Chandrakant Choksi, one of the members of the assessee-HUF. - Decided in favour of assessee.
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Customs
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2015 (2) TMI 339
Revocation of CHA License - forgery and fraud - Forfeiture of security deposit - Contravention of the provisions of Regulations 12, 13(a), 13(b) and 13(d) of CHALR, 2004 - Non examination of witnesses - Held that:- If the appellant CHA never met the importer, he could not have tendered any advice to the importer to comply with the provisions of the Customs Act. Therefore, once violation of regulation 13(a) is established, contravention of regulation 13(d) is also established, for compliance to 13(d), the CHA should know and meet the importer, which is not the position in the present case. Thus when the partners of the appellant CHA firm themselves have admitted to not knowing the importer, there is no need to prove the case by the department as the settled legal position is that admitted facts need not be proved. - Therefore, it cannot be said that the appellant's interests were prejudicially affected by non-examination of Shri Bhavesh Mehta or Shri Prashant Popat. Shri Bhavesh Mehta, in his statement recorded under Section 108 of the Customs 1962 has clearly admitted that he has merely signed the documents on behalf of the M/s. D/M. Mehta & Bros. and all the work relating to documentation, examination and clearance of the imported goods were undertaken by Shri Prashant Popat. There is no reason to disbelieve the statements of Shri Bhavesh Mehta even though he had subsequently retracted the same. Further, this retraction was done by means of an affidavit before a Notary and not addressed to the officer who had recorded the statement. There is no evidence brought before us that the said retraction was ever made known to the department at all. Therefore, the so called retraction of Shri Bhavesh Mehta is clearly an after-thought as it has not been informed to the department that the statement is being retracted. Retraction made is not valid and the facts recorded in the statements have been corroborated by others involved in the transaction, the said statements can be taken as a valid piece of evidence in a proceeding under CHALR also and we hold accordingly. CHA did not know the importers. The CHA allowed Shri Prashant Popat to do the clearance work relating to the imported goods. The CHA did not verify the re-warehousing certificates and Shri Bhavesh Mehta, Power of Attorney holder of the appellant-CHA firm was fully aware that the re-warehousing certificates were fake and bogus and the entire transactions were undertaken for monetary consideration. The CHA is vicariously liable for the action of its employees. Thus, the contravention of Regulation 12, 13(a), 13(b) and 13(d) stand clearly proved against the appellant. There were some minor procedural irregularities in the inquiry proceedings conducted, that by itself does not vitiate the conclusions/findings of the inquiry and the adjudicating authority. In the present case, the infractions and the contraventions of CHALR have taken place over a period of time in respect of 82 consignments involving a huge revenue of more than ₹ 8 crore and these contraventions have taken place with the full knowledge and connivance of the appellant-CHA. The gravity of the offence committed is quite serious as it involved forgery and fraud to which the appellant and its officials were a party. No reason to interfere with the decision of the adjudicating authority - Following decision of Commissioner of Customs vs. Worldwide Cargo Movers [2006 (11) TMI 281 - BOMBAY HIGH COURT] - Decided against the appellant.
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2015 (2) TMI 338
Classification of goods - import of Forged Penion - Classification under CTH 84839010 or 84831099 - whether the goods in question i.e. 'Forged Pinion' imported by the Appellant is correctly classifiable under CTH 84831099 as 'Cranks and Transmission Shafts' or 8439010 as 'Part of Sugar manufacturing machinery' - Held that:- Transmission Shaft (Forged Pinion) has a place under specific tariff entry under Chapter heading 8483 and Forged Pinion covered under the entry 'others', therefore it will fall under CTH 8483 10 99. Though the said Forged Pinion is undisputedly for use in Sugar manufacturing machinery, but, since it has specific tariff entry under CTH - 8483 10 99, by virtue of Note 2 (a) of Section XVI of first schedule to Custom Tariff Act, the goods will merit classification under the said specific entry, irrespective of it's application for use. More or less similar issue came up earlier before this Tribunal in the case of Larsen & Tourbro [1997 (11) TMI 204 - CEGAT, NEW DELHI], the division bench of Tribunal at Delhi applying the provision of Note 2 (a) of Section XVI held that the Torsion Shaft merits classification under Heading 84.83. In view of this settled legal position, in our considered view, we hold that the Forged Pinion is correctly and legally classified under 8483 10 99 as 'others' under the main tariff entry of Transmission Shaft. - Even though a goods is a part of any machinery but if it is specifically covered in a heading, in all cases of chapter 84 & 85, it shall be classified in that respective heading. Only those parts will classify as parts of any machinery in the heading of that machinery, which is not specified independently in any other heading. Therefore the goods in question though it is part of sugar machinery but since there is an independent entry for Cranks and Transmission Shaft provided in the schedule to the custom tariff, it will merit classification under CTH of Transmission Shaft as others i.e. 84831099. - Decided against the assessee. As regards the confiscation of the goods and imposition of redemption fine of ₹ 5 lakhs on the appellant, the fact that the goods confiscated by the ld. Adjudicating authority has never been seized nor provisionally released, as the goods were not available for seizure. As of now it is settled legal position that if the goods is not available nor the same is released provisionally, redemption fine could not have been imposed. As regards the imposition of penalty of ₹ 5,76,193/- on the appellant under section 114(A) of Customs Act, 1962, we have observed that the appellant while filing the bill of entry correctly declared the description of the goods, as was mentioned in the invoices and also rate of duty was mentioned without claiming any concession. However, due to wrong mention of custom tariff the relevant notification was automatically applied and duty was calculated on concessional rate. This has occurred due to online processing of bill of entry. This fact shows bonafide of the appellant. It is also to be noted that on pointing out the mistake, the appellant has suo moto paid differential duty before the issuance of show cause notice. The issue involved is of classification dispute of the goods imported by the appellant. It is settled law that in case where the issue is related to interpretation of classification of the goods, penalty should not be imposed in such cases. - Decided in favour of assessee.
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2015 (2) TMI 337
Denial of refund claim - Provisional clearance - Unjust enrichment - Whether the appellant has passed the bar of unjust enrichment or not - Held that:- when the appellant has shown the revenue deposit as receivable and the same has been certified by the CA, the appellant has passed the bar of unjust enrichment. Hence, there is no merit in the impugned order and the same is set aside. - Decided in favour of assessee.
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2015 (2) TMI 336
Levy of Penalty u/s 112 on CHA - Forfeiture of security deposit - Held that:- Adjudicating authority held that the CHA had not advised the importer properly. We find that in the present case, the appellant filed Bill of Entry on the basis of document supplied by the importer. The assessable value of the imported goods has been loaded on account of adding the air freight. The freight charges were paid by the foreign supplier. The appellant along with Bill of Entry filed the airway bill also. As appellant by CHA filed all the documents supplied by the importer, in these circumstances and in view of order passed by Tribunal setting aside the forfeiture of security amount, we find that imposition of penalty on the present appellant is not sustainable. Therefore, the penalty imposed on the present appellant is set aside. - Decided in favour of appellant.
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2015 (2) TMI 335
Valuation of goods - Enhancement of the value under Sec. 14(1) of the Customs Act, 1962 - Held that:- Out of the total 8 cases, in 6 cases the country of origin is different and in remaining 2 cases we find that the contemporaneous value taken for loading the value is from the imports made by the appellants only and in that case the quantum of import was 2 to 3 times more. Therefore, it cannot be treated as contemporaneous price and the action of the department in enhancing the value is not sustainable in law. Therefore, the impugned order is set aside - Decided in favour of assessee.
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FEMA
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2015 (2) TMI 334
Proceedings for forfeiture of her property under SAFEMA - Removal of superstructure of property - Forfeiture of property - Ownership of property - Society opposed request of CGOVT for entering its property in its name that a member of the Society is only the owner of the superstructure, the ownership of the land always remains with the Society, and further that in view of Section 22 of the Gujarat Cooperative Society Act, the Central Government cannot be a member of the Cooperative Society - Held that:- Central Government obviously be interested in liquidating the property by selling the property and to recover the sale proceeds. On the other hand, the Society has in the said affidavit in-rejoinder as well as through the counsel before the Court made it clear that if any individual member applies for membership of the society, who is otherwise qualified under the byelaws and agrees to abide by the byelaws of the society, the society would have no objection, subject to clearance of legal dues of the Society, to make him a member of the society, and transferring the plot in his name. - It would be open for the respondents and particularly, Respondent No.1 to identify the intending purchaser of the plot in question by assuring highest possible price to the Central Government through such means as may be permissible. - The Society shall make such purchaser its member and transfer the plot in question in his or her name, of course subject to clearance of all the legal dues of the society and payment of such transfer charges as may be permissible under the law. - Petition disposed of.
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Service Tax
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2015 (2) TMI 351
Financial advisory services - Banking and financial service - Whether assessee be classified as Banking and financial service agent - Held that:- To fall within the tax net, the appellant has to be a banking company or a financial institution including a non-banking company. Obviously, the appellant is not a banking company or a non-banking financial company. As per the definition of "financial institution" only when the appellant carries on business of acquisition of shares, bonds, debentures or securities issued by a Government or Local Authority or other marketable securities of a like nature, the appellant can be categorized as a financial institution. Merely because the appellant is registered as a stock broker with the SEBI, which is a statutory requirement the appellant cannot be considered as a financial institution. If that be so, all stock brokers dealing in shares/securities would be financial institutions which is a totally wrong interpretation of the statutory definition of a financial institution. There is also no evidence available on record to show that the appellant has been registered under the RBI Act as a "Financial institution". - Conclusion of the lower authorities that the appellant is a financial institution as defined in the RBI Act cannot be sustained. Accordingly, we set aside the impugned order - Decided in favour of assessee.
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2015 (2) TMI 350
Commercial or industrial construction services - change of classification to works contract service - Entitlement to benefit of Notification No.1/2006-ST - Held that:- Services were being rendered under ongoing projects on a continuous basis. It was not that the entire service was rendered on the date of entering into the contract. Thus, the classification of the services has to be done in accordance with the provisions of section 65 (105) ibid and with the introduction of the new service w.e.f. 01.06.2007, if the service got more appropriately covered under the scope of works contract service, it will have to be classified there-under in terms of Section 65 A of the Finance Act 1994. To that extent the Board's Circular is devoid of correct appreciation of the legal provisions. It is claimed in the orders of the lower authorities that the said Board Circular has been upheld by the judgment of Andhra Pradesh High Court in the case of Nagarjuna Construction Company vs. Govt. of India - [2010 (6) TMI 91 - ANDHRA PRADESH HIGH COURT ]. We have perused the said judgment of Andhra Pradesh High Court and find that nowhere the High Court has said that the classification of ongoing services cannot be changed to works contract service, if the service was more appropriately classified there-under; what the High Court has, however, upheld is the Board s clarification that in respect of the ongoing projects where service tax had been paid earlier (prior to 01.06.2007), the benefit of the Composition Scheme is not available. Thus, the lower authorities are correct in holding that for such ongoing project the appellants were not eligible to avail of the Composition Scheme. The appellants have contended that they have all the required evidence to be eligible for the benefit of Notification No.12/2003 or the Provisions of Rule 2A of the Service Tax (Determination of Value) Rules, 2006. Needless to say, however, that the onus remains on the appellants to demonstrate that they satisfy the conditions/requirements for the purpose of claiming the said benefit. - Matter remanded back with directions - Decided partly in favour of assessee.
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2015 (2) TMI 349
Taxation of Services (provided from outside India and received in India) Rule, 2006 - Commission paid to overseas company- consideration was paid in foreign currency as commission, which is taxable w.e.f. 18.4.2006 on reverse charge basis in terms of Section 66A of the Finance Act, 1994, read with rule 3(i) of Taxation of Services (provided from outside India and received in India) Rule, 2006 - Bar of limitation - Invocation of extended period of limitation - Held that:- Whole demand relates to extended period. Further, the matter was in the knowledge of the Revenue since 8.9.2006 since the date of filing the writ petition. Thus there being a prima facie good case on limitation, it is fit and proper to allow stay of the balance demand of tax, interest and penalty till disposal of the appeal. - Stay granted.
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2015 (2) TMI 348
Imposition of penalty under Section 76, 77 & 78 - Delayed payment of service tax - revenue neutral situation - Malafide intention - whether the appellant was having any intent to evade payment of service tax - Held that:- in the case of Indian Oil Corporation Ltd. (2010 (8) TMI 800 - CESTAT MUMBAI) where the appellant after taking Cenvat credit on various inputs cleared as such to their other units indicated the duty payable. However, neither the duty was actually paid and nor the issue of such invoices was declared to the department, in that case it was held by this Tribunal that whatever duty they were to pay the credit of same is available to their sister unit. In such a situation of revenue neutrality, mala fide intention cannot be proved. Therefore, it was held that extended period is not invokable. Appellant has paid service tax along with interest on pointing out by the Revenue during the course of investigation and the appellant is entitled to Cenvat credit of serviced tax paid; in that situation intent to evade duty stands not proved. Consequently, the appellant is entitled for the benefit of Section 73 (3) of the Finance Act, 1994, as held by the Hon'ble Gujarat High Court in the case of Tejas Agency (2014 (8) TMI 151 - GUJARAT HIGH COURT) wherein it was held that it is not a case of non-payment of service tax with intent to evade the payment of same and therefore question of applying sub-section (4) of Section 73 of the Finance Act, 1994 and resultantly exclusion of application of sub-section (3) would not arise. In these circumstances, we hold that the appellant is entitled for the benefit of Section 73(3) of the Finance Act, 1994. Therefore, the show cause notice was not required to be issued. Consequently, the penalties confirmed in the impugned order as not required to be imposed on the appellant - Decided in favour of assessee.
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2015 (2) TMI 347
Denial of refund claim - SEZ developers - notification No. 15/2009-ST dt. 20.5.2009 - period of limitation - Held that:- the intention of legislation was that if any service tax has been paid by unit which was not required to pay service tax does not mean is not is entitled for refund claim. The intention of the legislature is that the person providing services is not required to pay service tax. Therefore, the Revenue has misinterpreted the notification No. 15/2009 ibid to deny the refund claim. The same issue came up before this Tribunal in the case of Tata Consultancy Services Ltd. Vs. Commr of Ex. & S.T. (LTU), Mumbai reported in [2012 (8) TMI 500 - CESTAT, MUMBAI] Refund claim of ₹ 21,451/- has been denied to the appellant as time bar. I find that similar issue came up before this Tribunal in the case of Raymond Ltd. (2014 (3) TMI 45 - CESTAT MUMBAI) wherein Tribunal has held time limit prescribed as per Section 11B has been applicable. It is not in dispute that appellant has filed refund claim within the time limit prescribed under Section 11B of the Act. Therefore, I hold that the refund claim of the appellant is within time, as both the issues have been decided in favour of the appellant. Therefore, I set aside the impugned order - Decided in favour of assessee.
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Central Excise
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2015 (2) TMI 346
Refund claim - Whether on the facts and circumstances of the case, the Appellate Tribunal is right in dismissing the Department's appeal placing reliance on the decision of the Apex Court in the case of Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT OF INDIA], passed during 1997, in respect of provisional assessment when a new provision clause (eb) to Explanation B in Section 11B of the Central Excise Act, 1944, was enacted with effect from 01.08.1998 by virtue of which the refund on finalization of the provisional assessment after 01.08.98 is governed by Section 11B of the Act - Held that:- There is no doubt that clause (eb) to Explanation B of Section 11B is squarely applicable and the assessee also does not dispute the same. But the only issue that is raised here is that whether the refund claim has been made in terms of the said provisions. It is evident from the records that the order of the Commissioner (Appeals) is dated 21.8.98 and the refund claim has been made by the assessee on 21.9.98. Therefore, for all purposes, the relevant date will be the date of adjustment of the duty after final assessment made thereof. In this case, consequent to the order of the Commissioner (Appeals), the refund claim was made. Therefore, it is clear that the date is well within the time stipulated under Section 11B and there can be no dispute raised by the Department on this aspect. Accordingly, the first substantial question of law becomes totally irrelevant and does not require to be answered. Refund claim in this case was made much prior to the addition of the proviso in sub-rule (5) of Rule 9B. On the date on which the refund claim was made, the law applicable was the law as declared by this Court in Mafatlal Industries Ltd. (1996 (12) TMI 50 - SUPREME COURT OF INDIA) which we have reproduced above. However, it is contended by the learned counsel Shri Verma for the department, that the claim of refund would be governed by the proviso introduced in sub-rule (5) of Rule 9B, and that as a consequence, the restrictions in Section 11A and Section 11B with regard to the procedure for refund would apply to the case of the respondent. The same question came up for consideration of this Court in Sinkhai Synthetics & Chemicals Pvt. Ltd. v. C.C.E., Aurangabad, [2002 (4) TMI 65 - SUPREME COURT OF INDIA]. This view has been reiterated in a subsequent judgment of Court in Commissioner of Central Excise, Meerut v. M/s. Star Paper Mills Limited, [2003 (4) TMI 557 - SUPREME COURT] upholding the view of the tribunal that the refund claim of the assessee before the court was justified. - This Court took the view that the case would be governed by the rule laid down in Mafatlal Industries Ltd. (supra). - The Commissioner of Central Excise and the CEGAT were, justified in holding that the claim for refund made by the respondent had to be decided according to the law laid down by this Court in Mafatlal Industries Ltd. (supra) and would not be governed by the proviso to sub- rule (5) of Rule 9B. - no merit in appeal - Decided against Revenue.
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2015 (2) TMI 345
Rate of duty - whether the classification of water filters manufactured and cleared by the appellant/assessee to be assessed under CET sub-heading 7323.10 as tableware and kitchenware, as claimed by the assessee or under CET sub-heading 8421.10, as filtering or purifying machinery or apparatus - Held that:- As evident from the objection as made by the Department, the issue pertains to rate of duty that is payable by the assessee. Therefore, the objection as raised by the respondent is liable to be sustained, more so, in view of the decision of the Supreme Court in Navin Chemicals Manufacturing & Trading Co. Ltd. - Vs - Collector of Customs (1993 (9) TMI 107 - SUPREME COURT OF INDIA), which decision has been followed by this Court in Commissioner of Central Excise - Vs - Vadapalani Press (2015 (1) TMI 318 - MADRAS HIGH COURT). - while this Court is not inclined to deal with the matter, while disposing off the present appeal as not maintainable, is inclined to grant liberty to the appellant/assessee to pursue the matter before the Supreme Court, if so advised. - Appeal not maintainable.
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2015 (2) TMI 344
Penalty under Section 96ZP(3) - Whether the Commissioner (Appeals) and the Appellate Tribunal are right in reducing the penalty from ₹ 37,818/= to ₹ 5,000/= when the said penalty was imposed in accordance with Rule 96 ZP (3) of the Central Excise Rules, 1944, which is mandatory by law, when the respondent has committed default in payment of duty - Held that:- Issue stands covered by the decision of the Supreme Court in Commissioner of Customs & Central Excise, Coimbatore Vs Kannapiran Steel Re-Rolling Mills (2010 (12) TMI 146 - SUPREME COURT OF INDIA), wherein the Supreme Court has considered identical question of reduction of penalty imposed under Rule 96 ZP (3) of the Central Excise Rules - substantial questions of law are answered in favour of the Revenue and against the assessee. Accordingly, the order of the Tribunal stands set aside - Decided in favour of Revenue.
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2015 (2) TMI 343
Benefit of SSI Exemption under Notification No.8/2003 dated 01.03.2003 - Use of other company's brand name - Invocation of extended period of limitation - Interest u/s 11AB - Penalty u/s 11AC - Benefit of cum-duty - Held that:- It is claimed that an application has been made on 13.11.2006 wherein Trade Mark Authority was requested for correction of clerical error in their application and as per the said application the name of the applicant was to be changed as Mr. Satish V. Shetty, Sole Proprietor of the appellant firm. It is not clear from the documents submitted what happened to the said application. To our mind, change of applicant cannot be considered as clerical error that also after more than a year. Moreover, we find that M/s. Bharat Cafi Pvt. Ltd. has submitted a letter dated 19.04.2011 addressed to the Registrar of Trade Mark, Mumbai. - From the said letter it is very clear that M/s. Bharat Cafi Pvt. Ltd. has filed an application on 22.09.2005. Further the application was accepted and advertised vide TMJ 1373 Regular on 01.08.2007. The letter further states that they are withdrawing the said trade mark application. We note that this letter of M/s. Bharat Cafi Pvt. Ltd. very clearly indicates that during the period from 22.09.2005 to 19.04.2011 the said brand name belongs to them. The period of dispute in the present case is from October 2005 to 16.07.2007 and even the advertisement was made on 1.8.2007. - no hesitation in holding that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd. during the material period. After the said letter Proprietor of the appellant Co. was summoned but he did not respond on some or the other pretext and it was after collecting the detailed information the Revenue officer took further steps in the investigation during 2007. Thus the said letter was sent to the department during the course of investigation of the case and therefore the appellant cannot claim that he had informed the department. We also note that in the said letter it clearly suppresses the fact that brand name of Ribbons and Balloons belongs to M/s. Bharat Cafi Pvt. Ltd., and appellant is using the same consequence to a deed of agreement. We are in agreement with the learned A.R. s contention that the Proprietor of the appellant firm is one of the Directors in M/s. Bharat Cafi Pvt. Ltd. and is the main promoter and hence it cannot be assumed that the appellant s firm was not aware of the fact that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd. In fact, conduct of the appellant proves his willful intention to evade duty. Under the circumstances, we hold that extended period of limitation is correctly invoked. After crossing exemption limit during 2006-07 (i.e. w.e.f 9.11.2006) they started paying full duty and therefore Revenue cannot demand duty again for the said period. We find force in the argument of the appellant. From the annexure to the show-cause notice as also various ER-1 returns submitted before the Tribunal it is clear that w.e.f 9.11.2006 to 31.03.2006 the appellant has paid full rate of duty as they had crossed the SSI exemption limit. Thus the goods during this period were cleared on payment of duty at normal rate. Department cannot demand the duty again and this part of the demand is therefore, set aside. Benefit of cum-duty - after crossing SSI exemption limit the appellant has themselves paid the duty. Under the circumstances in our view the appellant is entitled to the benefit of cum-duty. Impugned order is upheld on merits including extended period of limitation however, demand of duty during 9.11.2006 to 31.3.2007 is set aside as the appellant had already paid the duty. Further for remaining demand, the appellant would be entitled to cum-duty benefit. Original authority is directed to recompute the duty in above terms. The penalty under Section 11AC will also come down in view of the fact that the duty liability of the appellant will come down after excluding the clearances from 9.11.2006 to 31.3.2007 and extending the benefit of cum-duty. The original authority will accordingly impose penalty under Section 11AC equal to the duty after re-computation - Interest is also to be computed thereafter - Appeal disposed of.
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2015 (2) TMI 342
Denial of CENVAT Credit - Availment and utilization of credit before actual installation of the capital goods - Port Services - service tax paid under section 66 A of the said Act is not qualified to avail the Cenvat credit as the same has not been specified under Rule 3 of Cenvat credit Rule 2004 - Held that:- In the case of capital goods, the CENVAT rules do not provide installation of capital goods as a pre-requisite for taking CENVAT credit. The credit can be taken as and when the capital goods are received in the factory. For such capital goods which were received prior to 1.4.2000 but not installed upto 1.4.2000 also, the CENVAT credit would also be admissible. It may, however, be noted that in respect of all capital goods whether received on or after 1.4.2000 or those that were received prior to 1.4.2000 but not yet installed, the condition that CENVAT credit only up to 50%of the total admissible amount would be available in the financial year 2000-2001 would apply. The balance of the CENVAT credit in respect of such capital goods can be taken in a financial year subsequent to 2000-2001. During the period 01.04.2000 to 09.09.2004, the balance of 50% of CENVAT credit cannot be allowed in the subsequent year unless the capital goods are put to use and mere possession is not enough. - Thus it is apparent that the condition of installation for availing Cenvat Credit on capital goods was effective till 09.09.2004 and not thereafter. In the present case the capital goods have been procured after this date, in the year 2007-08. - In view of retrospective amendment made to sub-rule (1) of Rule 3 of Cenvat Credit Rules, 2004 by inserting clause (ixa) with effect from 18.4.2006, I conclude that the notice is eligible to take CENVAT credit of the Service Tax paid under Section 66A of the Finance Act, 1994. - Decided against Revenue.
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2015 (2) TMI 341
Abatement of duty - Rule 10 of the Pan Masala Packing Machines (capacity determination & collection of duty) Rule 2008 (PMPM) - Closure of factory - Held that:- Application of intimation for closure from 15.01.2013 was given on the 10.01.2013 and was received in the office of Assistant Commissioner as well as Superintendent on same day. There is no dispute that on 11.01.2013, which was a holiday, the Assistant Commissioner gave the orders for sealing of the machines. This is clear from the first paragraph of the punchnama of the sealing. There is also no dispute that the sealing as per the requirement of Rule was done on 14.01.2013 at 23:32 hours and after completion of the period of the closure, the machines were desealed at 10:10 Hours on 01.02.2013. When the purpose of giving prior intimation is three working days prior to commencement of closure, that the officers have enough time to seal the machines in the manner as prescribed in this rule, and this purpose has been achieved as the sealing of the machines in the manner prescribed was done on 14.01.2013 in pursuance of the orders given by the Assistant Commissioner on 11.01.2013, the Conditions of the intimation of closure being given at least three working days prior to closure lose its significance and the benefit of abatement cannot be denied on the ground that intimation of less than three working days prior to closure. Just because of this technical requirement this substantive benefit in terms of the Rule 10 of the abatement of duty for the closure cannot be denied. We, therefore, hold that the impugned order is not correct. The same is set aside. - Decided in favour of assessee.
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2015 (2) TMI 340
Duty demand u/s 11D - Interest u/s 11AB - Reversal of CENVAT Credit - appellant were using common Cenvat credit availed inputs for manufacture of dutiable final product and exempted final products and in respect of clearance of exempted final products, in accordance with the provisions of Rule 57CC of Central Excise Rules, were paying an amount equal to the 8% of the sale value - appellant were mentioning this amount being paid to the Government under Rule 57CC of the Central Excise Rules, 1944 in their invoice as modvat reversal and were recovering this amount from the customers - Department seeks to recover the amount recovered from customers - Held that:- Initially there was no provision for charging of interest on the amount determined as payable under Section 11D (3). Such a provision was made by inserting Section 11DD w.e.f. 14/5/03. The amount payable under Section 11D is not the same as the duty which has not been levied or paid or has been short paid or which has been erroneously refunded and whose recovery is recovered by Section 11A. The provisions of Section 11AB are applicable only to the duty which has not been levied or has been short levied or short paid or has been erroneously refunded and has been held as recoverable from a person in terms of Sub-Section (2) of Section 11A. We are of the view Section 11AB is not applicable to the amount recoverable under Section 11D (3) readwith Section 11D (1) and 11D (2). The provisions of recovery of interest on the amount determined as payable under Section 11D (3) was made only w.e.f. 14/5/03 by inserting Section 11DD and in absence of any specific provision regarding its retrospective application, the same cannot be applied retrospectively. Therefore, no interest under Section 11AB was chargeable on the demand confirmed under Section 11D (3). - impugned order upholding the recovery of interest under Section 11AB on the amount demanded under Section 11D (3) by adjustment against refund claim payable to the appellant is not sustainable. The same is set aside. - Decided in favour of assessee.
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Indian Laws
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2015 (2) TMI 333
Denial of information sought for - Denial on the ground that exemption granted under Section 24(1) - Held that:- Learned Single Judge has observed that the information sought by the appellant/petitioner did not pertain to corruption or human rights violations and, therefore, did not fall within the proviso to Section 24(1) of the said Act. - inasmuch as the information that was sought by the appellant/petitioner pertained to her service record which had nothing to do with any allegation of corruption or of human rights violations. Therefore, the CIC as well as the learned Single Judge were correct in holding that the information sought would not come within the purview of the Right to Information Act. It is another matter that the CIC had, as a matter of course, directed the DRDO to supply the information, which was ultimately supplied by the DRDO. The fact of the matter is that the DRDO could not have been compelled to supply the information under the said Act. That being the position, the provisions with regard to penalty under Section 20 of the said Act would also not apply. Appellant/petitioner had candidly submitted that he had not prayed for imposition of penalty but for compensation, which, admittedly, is not provided for under the said Act. In any event, even if we construe the prayer for compensation as a prayer for imposing penalty under Section 20 of the said Act, the same cannot be granted in view of the fact that the information sought by the appellant/petitioner did not pertain to allegations of corruption or of human rights violations. That being the case, the Act itself does not apply to the DRDO, particularly, in the facts and circumstances of the present case. - Decided against Appellant.
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