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TMI Tax Updates - e-Newsletter
February 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Incentive subsidy - It was meant for entrepreneurs and industrialists who had established their units and made certain capital outlay and the assessee was merely required to ensure distribution of subsidies to the industrialists and thus it could not be treated as funds in hand of the assessee as taxable - HC
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Revision u/s 264 - whether benefit of Section 54F could be granted when it was originally not claimed during the assessment proceedings - there is no bar in the grant of the relief despite the assessee apparently having missed the bus and having committed the mistake - HC
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Nature of contribution to another institution - nothing was brought on record to highlight, how the assessee has got the benefit either in this year or in the future or any benefit to the overall benefit to the organisation as a whole. There has to be some benefit directly or indirectly to the organisation - Cannot be allowed as expenditure u/s 37(1) - AT
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Determination of Annual Value u/s. 23(l)(a) - Assessee has rightly assigned “NIL” Annual Lettable Value of the impugned 16 shops which were ready to be let out during the year but remained vacant throughout the year - AT
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Revision u/s 26 - The order was also prejudicial to the interest of Revenue because in the absence of assessee succeeding to establish the nexus between cash deposits and business receipts, entire deposits were to be added - Revision upheld - AT
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TDS u/s 194H - commission or brokerage - cash discount on sale - assessee was not required to deduct tax at source from the amount in question paid to the Hawkers and the question of disallowance under section 40(a)(ia) would not arise - AT
Customs
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Non-fulfillment of export obligation - Diversion of imported polyester staple fibres under DEEC scheme - the import duty has to be paid inevitably by the importer. Confiscation or fine in lieu thereof is an infliction on the offender or circle of offenders - HC
Indian Laws
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Offence under Section 138 NI Act - Cheque bounce - The accused also did not explain as to why the cheque allegedly given to Manoj Kumar was, firstly, given in blank i.e. without name and, secondly, why it was not taken back at the time of repayment of the loan to Manoj Kumar - HC
Service Tax
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Levy of penalty for late filing of return - It is not disputed that appellant had filed returns along with the late fee and also paid the service tax along with interest - penalty under sub Section (2) of Section 77 is unwarranted. - AT
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CENVAT credit - input services - Labor charges for drinking water and cleaning at Lorry Yard - Maintenance of cycle stand - erection of Cycle shed - Insulation works at recreational club - credit eligible on these services - AT
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CENVAT Credit - inputs - angles, channels and beams etc., used to erect the towers and pre-fabricated buildings on which transmission equipments were installed - assessee will not be eligible to avail the cenvat credit - AT
Central Excise
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Levy of penalty for Double availment of Cenvat credit - willfully suppression of fact with an intent to evade duty - onus of taking credit correctly has been put on the appellant and this self assessment memorandum requires them to take the credit correctly and as per law. - Levy of penalty confirmed - AT
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Zinc Sulphate, Ferrous Sulphate and Magnesium Sulphate and Micro Nutrients manufactured by M/s. Chakradhar Chemicals are fertilizer - benefit of exemption allowed - AT
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Refund claim - amount paid during investigation - section 11B of Central Excise Act, 1944 - denial of the claim as barred by limitation owing to payment having been made about nineteen months before applying for refund - Tax administrators must be responsible and responsive - claim reinstated - AT
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Valuation - fabrication and mounting of LPG tanker on the chassis - in terms of the notification, the value of running gear is not includible in the value of motor vehicle for the reason that the running gear is part of chassis - AT
VAT
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Imposition of penalty - Deemed assessment u/s 22(2) of the TNVAT Act, 2006 - whether the impugned notice is premature and is liable to be set aside? - Held Yes - HC
Case Laws:
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Income Tax
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2017 (2) TMI 462
Addition in respect of reimbursement of expenses to head office - addition in respect of reimbursement of expenses like sundry expenses, rent, travelling expenses, car hiring expenses, etc. to sub-contractor - ITAT deleted addition - Held that:- Tribunal while coming to the conclusion has rightly relied upon its own decision and has deleted the whole addition. Furthermore, for execution of Dahej project, expatriates were working, as also the sub-contract was also given to the Indian company which is subsidiary of parent company and the expenses were to be borne by the parties as per the agreement. Even, some technical persons were required to be employed and their expenses were debited and the Tribunal has rightly appreciated this aspect of the matter that the said expenses which were debited, are for the project in India. As quoted earlier, the Tribunal in its order at paragraph Nos. 13, 14, 16 and 18 has rightly come to the conclusion and in our view the same is just and proper. This court is of the opinion that no error can be said to have been committed while passing the impugned orders by the Commissioner of Income-tax (Appeals) and the Tribunal. We are in complete agreement with the view taken by the Commissioner of Income-tax (Appeals) and the Tribunal. It is also required to be noted here that the additions made by the Assessing Officer in its order are not part of the show-cause notice and no fresh notice is issued for initiating the penalty proceedings, but it was made on the basis of remand of the earlier proceedings. Accordingly, we answer the issues raised in these appeals in favour of the assessee
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2017 (2) TMI 461
Recovery proceedings - eligible creditor - Held that:- The date on which the notice was issued, admittedly in view of the correspondence which has come on record, and complete documentary evidence clearly established that petitioner was creditor and fixed deposit receipt lien was with the petitioner bank. The Department has seized fixed deposit receipt, which was not proper. Therefore, the bank was a creditor and notice under section 226 of the Act and recovery pursuant thereto is misconceived and not proper. Therefore, order at annexure E against the petitioner is misconceived and ought not to have been issued under section 226(3). Assuming even if there are some fixed deposit receipts in the name of Shri Om Prakash Agrawal, i.e., also encashed. Therefore, the order is required to be quashed and set aside. Accordingly, order dated December 14/18, 2000 together with notice of the same date, which is at annexure A to the petition, is quashed and set aside.
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2017 (2) TMI 460
Penalty u/s 271E - contravention of the provisions contained u/s 269T - CIT(A) proceeded to delete the penalty by treating the averments made by the assessee company during appellate proceedings that they have repaid the money in case of first two companies by way of cheques - Held that:- It is difficult to make out as to how ld. CIT (A) has recorded in para 3.4 of the impugned order, “that the money has been actually returned in subsequent years in respect of two parties through account payee cheques as mentioned in the assessment order”, whereas no such findings are there in the penalty order. Assessee has not brought on record any such documents in the form of Paper Book before the Bench to support its averments made in written reply to the penalty notice rather preferred to be proceeded against ex-parte. So, in the given circumstances, we are of the considered view that to meet with the ends of justice, the matter is required to be restored to the ld. CIT (A) to decide afresh after providing an opportunity of being heard to the parties. So, the impugned order is set aside and consequently, the appeal is hereby allowed for statistical purposes.
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2017 (2) TMI 459
Gains from the purchase and sale of shares and mutual funds - Long Term Capital Gains OR Business income - Held that:- In view of the fact that the Revenue has been consistently taking a view that the income earned on investments is taxable under the head capital gains no difference in facts and /or in law has been pointed out to take a different view for the subject Assessment Year. Moreover, the entire question of the nature of activity carried out by the respondent-assessee i.e. business or investment is a question of fact. Both the CIT(A) as well as the Tribunal have concurrently come to a finding of fact that the income earned on the investment portfolio is chargeable under the head capital gains and not under the head 'profits from trading of shares' which is not shown to be perverse. No substantial question of law.
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2017 (2) TMI 458
Statutory remedy of appeals available - Held that:- Based on the communications that are available on record, even the question with regard to jurisdiction of respondent No.4 or respondent No.5 to conduct the assessment proceedings is a disputed question of fact and, therefore, it cannot be said that it is a case where from the face of the record and on the admitted position, the jurisdiction exercised by the assessing officer can be termed to be illegal or without jurisdiction. On the contrary, it is a case where even the jurisdiction available to the assessing officer is in dispute. That being so when a three tire remedy of appeal is available to the petitioner, it is not appropriate for a writ Court to exercise its extra ordinary jurisdiction in such case and make indulgence when the petitioner can very well ventilate all these grievances before the appellate Authority when the appeals can be filed as indicated herein above.
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2017 (2) TMI 457
Chargeability of tax upon the interest - Held that:- In the Karnataka High Court decision in the case of Karnataka Urban Infrastructure Development and Finance Corporation [2006 (2) TMI 114 - KARNATAKA High Court] it has been rightly pointed out by the High Court that once it has been found at the level of Tribunal that the interest was income derived out of funds received from the State Government and thus the interest was not taxable as having the same character, that would be a question of fact. We are in respectful agreement with the view expressed by the Karnataka High Court and thus no substantial question of law arises on the said issue. Incentive subsidy - Held that:- It was meant for entrepreneurs and industrialists who had established their units and made certain capital outlay and the assessee was merely required to ensure distribution of subsidies to the industrialists and thus it could not be treated as funds in hand of the assessee as taxable.
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2017 (2) TMI 456
Amount received under the agreement - whether held as a capital receipt not liable to tax or is it a business income? - Held that:- There cannot be a set formula or manner in which commercial entities engaged in business can be said to behave. In the present case, the assessee along with other business entities came together. The assessee used to carry on a restaurant business and was also distributing ice cream and related products. The agreement not to engage in the latter meant that it had ceased from doing so for ten years which can by no means of imagination be called temporary. In business parlance ten years can be as permanent as completely excluding oneself given the fast changing nature of the goodsindustry. It is quite likely that at the end of ten years, the assessee might itself not be interested in creating a distribution network and engaging in the same activity or conversely the agreement and compensation might be to defer competition which may deter it from entering into the same business. Whatever be the reasons, its desisting from the business on the one hand and agreeing to receive compensation on the other clearly points to the fact that the sum of ₹ 2 Crores was paid as non-compete fee. Therefore, it fell in the capital stream. - Decided in favour of the assessee
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2017 (2) TMI 455
Revision u/s 264 - whether benefit of Section 54F could be granted when it was originally not claimed during the assessment proceedings - Held that:- Unless there is a direct impediment to the power under Section 264 (exercisable by the Commissioner) which inhibits the grant of relief, it is per se admissible. The impediment may be in the form of a substantive provision which might place a time limit, to the grant of such relief or it may be otherwise. In the present case, the concerned provision Section 54F, does not per se contain any such impediment. Therefore, as far as the text of the provision goes, this Court is of the opinion that there is no bar in the grant of the relief despite the assessee apparently having missed the bus and having committed the mistake. The interpretation of this Court is clarified by the ruling of the Jammu & Kashmir High Court in Snehlata (2004 (4) TMI 579 - JAMMU & KASHMIR HIGH COURT ) where too the question was whether in the absence of the assessee’s claiming relief under Section 54F either in the original return or even in the revised return, it could be granted in revision. The Court unequivocally held that it could be granted. In view of the above discussion, we are of the opinion that the petition has to succeed. The matter is remitted to the AO for consideration who shall take into account the petitioner’s claim preferred by it in its revision petition and having regard to the provisions of the law.
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2017 (2) TMI 454
Claim of deduction under section 80IB - whether subsection (10) of Section 80IA cannot be invoked in the facts of the present case to restrict its deduction under Section 80IB on the basis of the profits of the Appellant's wife unit at Valsad? - Held that:- Nothing has been shown by the Revenue that there is any business transacted between Appellant's unit at Jammu and his wife's unit at Valsad which resulted in inflating the profits being earned by the Appellant or that there is any transaction between them. The Tribunal has without considering the validity of the above finding of CIT(A), adopted the test of common customers of both the Appellant's Jammu unit and his wife's unit at Valsad, to conclude that profits of the Appellants, are inflated. Common customers by itself in the absence of some arrangement between the parties does not indicate transfer of profits to Appellant's Jammu unit. The factual finding of the CIT(A) has not been considered by the Tribunal in the impugned order. This issue requires reconsideration by the Tribunal in the context of the appropriate interpretation to be put on Section 80IB(8) and (10) of the Act. Substantial question of law is answered in the affirmative by way of remand. Therefore, we set aside the order of the Tribunal and restore the issue for fresh consideration by the Tribunal, in accordance with law.
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2017 (2) TMI 453
Remand of the matter to AO for passing appropriate orders in the scrutiny proceedings under Section 143 (3) - best judgment assessment u/s 144 - Held that:- Though the appellant-revenue had made a prayer for remand of the matter to the Assessing Officer for passing an order in the scrutiny proceedings by considering the material placed by the assessee before the Assessing Officer, the Appellate Tribunal rejected the prayer without recording any reasons much less any cogent reasons. If the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were of the view that the order under Section 144 of the Act was passed by the Assessing officer in violation of the principles of natural justice, the Authorities should have made an appropriate order for remand of the matter to the Assessing Officer in the proceedings initiated against the assessee under Section 143 (3) of the Act. Without assigning any reason for rejecting the prayer for remand, the Tribunal rejected the prayer in paragraph 8 of the impugned order. Though it was pointed out by the appellant-revenue that the Assessing Officer that had passed the order under Section 144 of the Act has changed and the matter would come up before another Income Tax Officer and no prejudice would be caused to the assessee if the matter is remanded, the Tribunal rejected the prayer of the appellant-revenue. Since no order was passed in the matter of scrutiny under Section 144 (3) of the Act and the order was passed under Section 144 of the Act on the assumption that the assessee had not supplied the relevant material that was sought from him, it was necessary for the Tribunal to have remanded the matter to the Assessing Officer to complete the scrutiny and pass an appropriate order in the proceedings under Section 143 (3) of the Act. The substantial question of law is answered in favour of the appellant-revenue and against the assessee.
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2017 (2) TMI 452
Reopening of assessment - exemption from the payment of capital gain - agricultural land - nature of land - Held that:- SLP dismissed. In this case [2016 (9) TMI 1195 - GUJARAT HIGH COURT] HC has held that, Strong case is built up against the petitioner of having produced a document which was not genuine.There is serious doubt about genuineness of the certificate dated 16.1.2013 of the Executive Engineer certifying that the land in question was situated beyond 8 kms from the outer limit of Vadodara Municipal Corporation, upon which the petitioner heavily relied - Decided against assessee
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2017 (2) TMI 451
Repayment of loan - whether was a capital receipt and not subject to tax as deemed income under Section 41? - Held that:- SLP dismissed. In this casee, [2017 (2) TMI 388 - BOMBAY HIGH COURT] HC has held that, Benefit on account of premature payment of deferred sales tax being on Capital Account and cannot be considered as income under Section 41(1) of the Act stands concluded in favour of the assessee.
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2017 (2) TMI 450
Validity of the action initiated under Sections 201(1) and 201(1A) - non-deduction of tax at source for periods earlier than four years prior to 31st March, 2011 - Held that:- SLP dismissed. In this case [2016 (8) TMI 509 - DELHI HIGH COURT], HC has held that, Proviso to Section 201(3) meant to expand the time limit for completing the proceedings and passing orders in relation to ‘pending cases’ and said proviso cannot be interpreted, as is sought to be done by the Department, to enable it to initiate proceedings for declaring an Assessee to be an Assessee in default under Section 201 of the Act for a period earlier than four years prior to 31st March, 2011.
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2017 (2) TMI 449
Disallowance u/s 40(A)(9) - reimbursement of expenses of appellant made to its Staff Recreation club - Held that:- This issue is covered by the decision of the co-ordinate bench of this tribunal in assessee’s own case for the Asst Year 2003-04 Disallowance of deduction u/s 80HHC of the Act on total company as against the individual product wise claimed by the assessee - Held that:- We find that as agreed by the ld AR that this issue is covered against the assessee by the decision of the Hon’ble Apex Court in the case of IPCA Laboratory Ltd vs DCIT [2004 (3) TMI 9 - SUPREME Court] as held that while computing the business profit for the purpose of section 80HHC of the Act, all the trading results of different units of the business of the assessee are to be aggregated and deduction u/s 80HHC of the Act would be allowable only when there is positive income of the business after such aggregation. Transfer pricing adjustment - comparable selection - Held that:- Auction and Private Businesses are different in terms of the functions performed, risks assumed and hence should not be combined for the purpose of comparison. The auction business of the assessee is comparable with auction purchases with third parties. Price charged by the assessee on the international transactions computed on the basis of segmental results of Auction and Private Business is at Arm’s Length and no adjustment need to be made thereon. In view of the above conclusion, the other contentions put forth on behalf of the assessee do not require any consideration. Disallowance of expenditure incurred on payment of cess on green leaf from composite income - Held that:- Hon’ble Calcutta High Court in the case of CIT vs A.F.T. Industries Ltd reported in (2004 (7) TMI 81 - CALCUTTA High Court) wherein it was held that the same was to be fully allowed from the composite income. Claim of depreciation - Held that:- For purpose of computing the WDV of depreciable assets used in tea business, only 40% instead of 100% of depreciation allowable at the prescribed rate should be deducted.
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2017 (2) TMI 448
Unexplained deposits - Held that:- AO while making the impugned additions has not considered the explanation of the assessee in right perspective, even he has not considered the earlier withdrawals which were re-deposited by the assessee and had also not given due weightage to the agricultural income earned by the assessee. Therefore, by considering the totality of the facts deem it appropriate to set aside this issue back to the file of the AO to be re-adjudicated in accordance with law after providing due and reasonable opportunity of being heard to the assessee.- Appeal of the assessee is allowed for statistical purposes.
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2017 (2) TMI 447
Reopening of assessment - Mismatch of TDS certificates - Held that:- We find from the record that while filing the return of income, the assessee has not claimed deduction under section 35(1)(ii) in the return of income, in which the columns were left blank. Only in the memo of computation (refer page 42), the assessee mentioned that it has claimed deduction under section 35 at 100 per cent. on weighted deduction. Only during the assessment proceedings, the assessee made submission before the Assessing Officer to treat the above contribution as deduction under section 37. Considering the above, the submission of the assessee is inconsistent. Mismatch of TDS certificates prompted the Assessing Officer to consider the reopening of the assessment. This is indeed a proper reason to believe at that point of time that income escaped from tax. In our considered view, the Assessing Officer has proper material at that point of time to consider reopening of the assessment. We do not find any mistake in reopening the assessment. - Decided against revenue Disallowance of deduction under section 37 - contribution to M/s. Institute of Life Sciences - Held that:- In the present case, the assessee has made the contribution but there is nothing on the record to show that the benefit has passed on to the assessee or to its employees by making such contribution. Since the assessee is not running any business and not brought on record to show that it has benefitted by making such contribution. Merely making contribution to other institute which has similar object does not mean any benefit to the assessee. In our considered view, to claim of deduction under section 37(1), there has to be an expenditure, which is incurred for the benefit of business in the same year or for the future benefit. In the given case, nothing was brought on record to highlight, how the assessee has got the benefit either in this year or in the future or any benefit to the overall benefit to the organisation as a whole. There has to be some benefit directly or indirectly to the organisation. In our considered view, the assessee has made the contribution to M/s. Institute of Life Sciences without any reciprocal benefit to its business or to its employees even though the objectives are similar, it cannot claim any deduction under section 37(1) of the Act. Hence, the grounds raised by the assessee are dismissed.
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2017 (2) TMI 446
Deduction u/s 80IC - whether the incentive is not part of the profit and gains derived from the business of industrial undertaking so as to make the assessee eligible to deduction u/s 80IC? - assessee company is a 100% EOU engaged in creating and processing of Mushrooms, culinary herbs and other fruits and vegetables - Held that:- Keeping in view the undisputed fact that this is the 5th year of claim made by the assessee u/s 80IC and the assessee has been continuously allowed deduction u/s 80IC qua transport subsidy and AO/CIT(A) have not brought on record any reason for departing from the previous years as on the same set of facts pertaining to the year under assessment, the issue is required to be restored to the AO to decide afresh in the light of the orders passed in the preceding years. So, the grounds no.1 to 5 in both the assessment years i.e. 2009-10 & 2010-11 are determined in favour of the assessee for statistical purposes.
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2017 (2) TMI 445
Determination of Annual Value u/s. 23(l)(a) - property lying vacant - Held that:- Assessee has rightly assigned “NIL” Annual Lettable Value of the impugned 16 shops which were ready to be let out during the year but remained vacant throughout the year and the same was duly covered under the provisions of section 23(1)(c) of the Act. We accordingly set aside the order of ld. CIT(A), delete the impugned addition and allow the appeal of assessee. See case of Vikas Keshav Garud vs. ITO [2016 (7) TMI 942 - ITAT PUNE ]
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2017 (2) TMI 444
Disallowance made u/s.14A - Held that:- We find that the assessee had an exempt income to the tune of ₹ 7.97 lakhs,that the AO made disallowance of ₹ 2.84 lakhs, invoking the provisions of section 14 A r.w.r. 8D of the Rules, that the FAA enhanced disallowance to ₹ 21.80 lakhs,that both the authorities held that there was no proof that the assessee had sufficient own funds to make investments in shares during the year under consideration. We have gone through the balance sheet of the assessee as on 31.3.2010.We find that the reserve and surplus along with the capital of the assessee for the year (Rs.286 crores approx.) is far more than the investments made(Rs.2.99 crores). Nothing has been brought on record to prove that the shares purchased by the assessee for the year under appeal was not a strategic investment.We find that the AO/FAA has not mentioned anything about the expenditure incurred by the assessee for earning exempt income.In our opinion if the assessee does not claim any expenditure for earning exempt income no dis - allowance can be made invoking the provisions of section 14A r.w.r.8D of the Rules. - Decided in favour of assessee Addition under the head sundry balances written off - Held that:- There is no bar on making a claim about the sums written off in a slump sale transaction. The assessee had taken over the assets as well as the liabilities of VI. In the remand report proceedings,the assessee had submitted the evidences proving that the erstwhile entity had offered the income under the head other income. It is found that grant receivable from ASIB of ₹ 71.78 lakhs was credited in the P&L A/c. for the period ended 22.5.2009. Thus, the amount written off during the year under consideration was already offered for taxation. FAA was not justified in rejecting the claim made by the assessee. VAT on service charges portion on natural gas is concerned it is found that the clients had disputed levy of services and finally did not pay such tax. The loss claimed by the assessee was directly linked with business activity and, therefore,was a business loss. The writing off of the amount is not in dispute. So, even if it could not be allowed u/s.36 the same is allowable u/s.28 of the Act. Therefore, we allow Ground No.2. Addition under the head insurance claim written off - Held that:- We find that the claim had arisen after the slump sale took place,that the erstwhile company had claimed loss with the insurance company, that the claim was rejected, that the assessee discarded the assets for the year ended on 31.03.2008 and 31.03.2009. In the light of these developments the assessee wrote off the insurance claim of ₹ 9.37 crores. We have gone through the insurance claim lodged by the assessee and we find that all the conditions for allowing bad debts stand fulfilled i.e. offering the income in earlier year and writing off the amount in the books of account. Therefore, reversing the order of the FAA, we decide Ground No.3 in favour of the assessee. FAA was not justified in enhancing the book profit u/s. 115JB of the Act with regard to 14A disallowance. Addition on account of bogus expenditure - Held that:- If we go through the above statement of BG and the letter of the assessee dt.3.12.2012, it becomes clear that the BG had made the disclosure of ₹ 5 crores in the capacity of MD of the company and that the assessee had promised to pay outstanding taxes.The land develop - ment A/c. clearly proves that accommodation entries were obtained for assessee company. Therefore, in our opinion the FAA was not justified in reversing the order of the AO.In our opinion, the AO had rightly made the disallowance of the impugned sum in the hands of the assessee
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2017 (2) TMI 443
Revision u/s 263 - non establish the nexus between cash deposits and business receipts - Held that:- Since AO has referred to only para 3 of the reply, therefore, it is evident that he has only considered the discrepancy regarding gross receipts but did not carry out any inquiry in regard to the nexus between business receipts and cash deposits which was the specific direction of the Tribunal. Whether there was application of mind or not is to be examined having regard to the fact that how a person abreast of the nuisances of law would proceed in the given circumstances. This is a case of not only inadequate enquiry but complete lack of enquiry. The order was also prejudicial to the interest of Revenue because in the absence of assessee succeeding to establish the nexus between cash deposits and business receipts, entire deposits were to be added. We, therefore, are in agreement with the ld. Commissioner that the assessment order was erroneous in so far as it was prejudicial to the interests of revenue. Accordingly, we decline to interfere with the order of ld. Commissioner passed u/s 263 of the Act. - Decided against assessee
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2017 (2) TMI 442
TDS u/s 194H - addition u/s 40(a)(ia) on account of payment made by the assessee to the Hawkers - non deduction of tds - Held that:- Concerning the modus operandi of the assessee’ s business as well as the functions performed by the Hawkers, it is of the view that the amount in question paid by the assessee to the Hawkers is in the nature of discount and the same cannot be treated as commission merely on the basis of nomenclature used by the assessee in his books of account. For this conclusion, we derive support from the decision of in the case of Ahmedabad Stamp Vendors’ Association –vs.- Union of India [2002 (6) TMI 32 - GUJARAT High Court] wherein it was held that discount in the nature of cash discount on sale is outside the expression of “commission” or “brokerage” as envisaged in section 194H of the Act. The assessee therefore, was not required to deduct tax at source from the amount in question paid to the Hawkers and the question of disallowance under section 40(a)(ia) would not arise. - Decided in favour of assessee.
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2017 (2) TMI 412
Penalty u/s 271(1)(c) - AO rejected the books of account and applied gross profit @ 25% on the basis of unverifiable purchases - Held that:- In case of Shiv Lal Tak Vs CIT (2001 (2) TMI 62 - RAJASTHAN High Court) wherein held that “in making computation of total income where the income returned has been rejected by rejecting the trading results, finding some discrepancy in the books of account and substituting the same by an estimated figure, in the strict sense, can neither be said to be addition of any amount in the returned income nor disallowance of any amount as deductions claimed. The word ‘‘amount’’ of which additions made or deductions disallowed also denotes reference to specific item of amount added or disallowed as deduction in contrast to substitution of altogether a new estimated sum in place of the income returned. It is a case neither of addition or disallowance but a case of substitution.” In view thereof, the Hon'ble High Court has upheld the decision of the Tribunal for deleting the penalty. In the light of the above decision of the Hon'ble Jurisdictional High Court, we hereby direct the Assessing Officer to delete the penalty as in the present case also the Assessing Officer has estimated the profit by rejecting the books of account. - Decided in favour of assessee
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Customs
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2017 (2) TMI 424
Benefit of N/N. 94/96 dated 16.12.1996 - export of agarbattis by SSI unit, which came back due to defects - denial on the ground that as per of the conditions laid down under Sl.No. (1) (e) of the said notification, such benefit is not permissible to SSI units for the goods exported under DEEC Scheme - Held that: - Every exemption being subjected to conditions prescribed by the notification, non-fulfilment thereof debars appellant to the notification benefit. Therefore, appellant is directed to plead before the ld. Commissioner (Appeals), as to the eligibility to the exemption under the notification and satisfy him on the compliance to the terms of notification both on substantial ground as well as on the limitation as per the proviso to the notification. - appeal allowed by way of remand.
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2017 (2) TMI 423
Imposition of redemption fine and penalty - classification of goods - Opel Glassware and not Ceramic Dinner sets - misdeclaration of description and value of goods - Held that: - The authority in the impugned order however permitted re-export of the goods on the same amount of redemption fine as per the prayer made by the importer. From para-3 of the impugned order it is seen that the prayer for re-export was made by the appellant for the reason that they cannot afford to pay the ADD. Taking into account the acts and omissions committed by the importer which resulted in violation of the Customs Act, 1962, penalty imposed on them u/s 112 (a) was justified; even that was reduced to ₹ 6,00,000/- by the lower appellate authority - no scope for further reduction, or waiver of redemption fine and penalty - appeal dismissed.
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2017 (2) TMI 422
Maintainability of appeal - time limitation - Section 128 of the Customs Act, 1962 - whether in the given facts and circumstances, this Court should treat the representation dated 28.03.2016, or, the representation dated 27.04.2016, as an appeal in the eyes of law? Held that: - while there can be no cavil with the proposition that respondent No.2 has no power to condone the delay under the provisions of Section 128 of the Act, what is required to be considered in the given facts obtaining between the parties for the present, is that, should this Court treat the representations made by the petitioner as appeals filed to assail the order-in-original. Litigants, who claim to be aggrieved, should approach the Courts in time. Should they fail to do so, their right may survive, but the remedy available to agitate the right may not be accessible - the petitioner did approach the correct forum, at least, via the representation, dated 27.04.2016, in time, though, not in the manner prescribed under the rules - this was more an error which pertained to the form than the substance of the matter. Impugned order set aside with a direction to respondent No.2 to decide the appeal on merits, subject to the petitioner depositing a cost of ₹ 10,000/- - appeal allowed by way of remand.
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2017 (2) TMI 421
Valuation - rejection of declared value u/r 10 of the Customs Valuation Rules, 1988 - application of Rule 6 - valuation done on the basis of contemporaneous price of similar goods - Held that: - the invoices produced by the appellant at the time of assessment are not genuine documents. Furthermore, the quantities mentioned in the Air Way Bill and the invoices of K Line Air Services (Hong Kong) Ltd. do not match with quantities and description given by the appellants in their declaration before the Revenue. The invoices produced by the appellants are not genuine and therefore, the same was to be rejected outright. Once the invoices produced by the appellants are rejected, the only alternate is to rely on the documents recovered from the Hong Kong Government. The Commissioner has taken the value declared in the corresponding invoices of K Line Air Services (Hong Kong) Ltd. as the assessable value while doing this he has given suitable adjustments after examining the contemporaneous imports of similar goods in terms of Rule 6 of the Customs Valuation Rules. Appeal rejected - decided against appellant.
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2017 (2) TMI 420
Non-fulfillment of export obligation - Diversion of imported polyester staple fibres under DEEC scheme - Whether in the facts and circumstances of the case, the learned Tribunal is justified in setting aside the demand of duty on the goods on the ground that though they were seized after customs clearance and absolutely confiscated under Section 111 [m] and 111 [o] of the Customs Act? Held that: - The liability to pay duty has nothing to do with confiscation of the goods under Section 111 and/or under Section 125 of the Act. Under the circumstances, the learned Tribunal has materially erred in setting aside the demand for duty on the goods solely on the ground that they were seized after the customs clearance and absolutely confiscated under Section 111 [m] of the Customs Act. Identical question came to be considered by the Apex Court in the case of Security & Finance [P] Limited [1975 (10) TMI 30 - SUPREME COURT OF INDIA], where it was held and observed that the levy of duty and the order of confiscation both operate in a different field. It is further observed that the import duty has to be paid inevitably by the importer. Confiscation or fine in lieu thereof is an infliction on the offender or circle of offenders. It is also observed that sometimes, the burden in both the cases, falls on the same person and at the other times, they may fall on different person. Appeal allowed - decided in favor of Appellant-Revenue.
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Corporate Laws
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2017 (2) TMI 416
Public auction - Attachment orders - Held that:- We direct that the contemnors shall file a list of properties that can be put to public auction. Needless to emphasize that the properties suggested for public auction shall be free from any encumbrance. Needless to say, “any encumbrance” means it shall not be encumbered in any manner whatsoever. The said list be positively filed on or before 27th February, 2017, after giving a copy to the learned counsel for SEBI and Mr. Shekhar Naphade, learned Amicus Curiae. A copy of the same shall also be handed over to Mr. Maninder Singh, learned Additional Solicitor General and Mr. Rana Mukherjee, learned senior counsel appearing for the Union of India. At this stage, it is obligatory to note, as submitted counsel appearing for SEBI, which has been echoed in similar voice by Mr. Naphade, learned Amicus Curiae, that the contemnors who own a property situate at Aamby Valley City, Pune, Maharashtra, would be sufficient for realization of the whole amount. Mr. Venugopal, insisted that the property should be attached so that the contemnors shall make all endeavour to deposit the amount with SEBI. The said submission is seriously opposed by Mr. Sibal, learned senior counsel for the contemnors. Thus we are of the convinced opinion that the property situated at Aamby Valley City, Pune, should be attached and, accordingly, it is so ordered.
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Service Tax
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2017 (2) TMI 441
Imposition of penalty u/s 76 of FA, 1994 and the general penalty imposed under Sub Section (2) of Section 77 - late payment of service tax and late filing of returns - Rule 7 (c) as well as the Transitory Provisions u/s 78 (B) introduced by amendment w.e.f. 14.05.2015 - Held that: - From the Transitory Provision it is clear that no penalty can be imposed u/s 76 because the SCN in this case is issued prior to the amendment - the penalty u/s 76 is unjustified and the same requires to be set aside. Penalty imposed under sub Section (2) of Section 77 - Held that: - The second proviso to Rule, 7(C) states that when the late fee is paid along with the returns the proceedings in this respect shall be deemed to be concluded. It is not disputed that appellant had filed returns along with the late fee and also paid the service tax along with interest - penalty under sub Section (2) of Section 77 is unwarranted. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 440
CENVAT credit - input services - Labor charges for drinking water and cleaning at Lorry Yard - Maintenance of cycle stand - erection of Cycle shed - Insulation works at recreational club - Held that: - In the case of M/s. Coca Cola India Pvt. Ltd., [2009 (8) TMI 50 - BOMBAY HIGH COURT], the Honorable High Court had occasion to discuss the eligibility of credit on various input services. The subject services fall within the definition of input services and the Ld. Counsel has also explained the purpose for which the services were availed - credit eligible on these services - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 439
CENVAT Credit - inputs - angles, channels and beams etc., used to erect the towers and pre-fabricated buildings on which transmission equipments were installed - Held that: - the matter is already been decided against the appellant by Hon'ble High Court of Bombay in the case of Bharti Airtel Ltd., Vs CCE, Pune-III [2014 (9) TMI 38 - BOMBAY HIGH COURT], where on similar inputs, it was held that the subject items are neither capital goods u/r 2(a) nor inputs u/r 2(k) of the Credit Rules - the appellant-assessee will not be eligible to avail the cenvat credit on angles, channels and beams etc. used to erect the impugned towers. Imposition of penalty - Held that: - the issue is interpretational in nature. Concerning the eligibility of credit on the parts used in the towers, there has been sufficient confusion in the matter. It is also not disputed that there was more than one view in the matter - penalty set aside - extended period of limitation also set aside. Appeal disposed off - decided partly in favor of assessee.
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2017 (2) TMI 438
Refund claim - rejection on the ground that refund claim was filed by not fulfilling the conditions of N/N. 41/2007, inasmuch as it was filed before the wrong forum - whether the learned Commissioner (Appeals) has correctly remanded the matter to the Adjudicating authority to examine the refund application on merit, when the initial refund claim was filed before the Assistant Commissioner of Service Tax instead of the Assistant Commissioner of Central Excise? Held that: - I do not find any discrepancy in the said order of the learned Commissioner (Appeals) as he has only condoned the filing of refund claim before the inappropriate authority, and remanded the matter to the proper authority for scrutiny of the same - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (2) TMI 437
Imposition of penalty - clearance of goods under SSI exemption without payment of excise duty even after crossing the SSI exemption limit of ₹ 1/- crore as specified under Notification No.8/2003 dated 1.3.2003 - Held that: - reliance placed in the case of RASHTRIYA ISPAT NIGAM LTD. Versus COMMISSIONER OF C. EX., VISAKHAPATNAM [2002 (11) TMI 234 - CEGAT, BANGALORE], where it was held that penalty is not imposable when duty demand is deposited before the issue of show-cause notice - appeal dismissed - decided against Revenue.
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2017 (2) TMI 436
Clearance of Vanaspati, both branded and unbranded, after introduction of levy of duty with effect from 01.3.2003 - after imposition of levy with effect from 01.3.2003, the appellant had cleared branded Vanaspati in the guise of unbranded one, which attracted nil rate of duty. Held that: - the panchanamas, statements by the appellant are illegible and some of the statements are in vernacular language(Gujarati) and not translated ones leading to difficulty in considering the grounds raised in assailing the impugned order - Since the matter is of 2006, we do not see any reason to keep the appeal pending. In the circumstances, we do not find any alternative, but to dismiss the appeal as non-maintainable.
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2017 (2) TMI 435
CENVAT credit - Rail and Air Travel Agents Services - conveyance service - whether the appellant had produced sufficient evidences before the Ld. Commissioner (Appeals) in support of their claim that the Rail and Air Travel Agent Service had been received by them and used in or in relation to their manufacturing business activity? - Held that: - The documents/evidences now enclosed with the appeal memorandum, according to the appellant, support their claim - the matter needs to be remanded to the Ld. Commissioner (Appeals) for scrutiny of these documents - Appeal allowed by way of remand.
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2017 (2) TMI 434
CENVAT credit - GTA services - denial on the ground that the outward transportation is not upto the place of removal and that in respect of the clearance of goods sold directly to the customers - reverse charge mechanism - Held that: - it prima facie appears that the transportation in respect of which the appellants have availed the cenvat credit is in connection with the clearances of goods to their depot. The depot is the place of removal as per the definition given in Section 4 therefore the credit is clearly admissible if the transportation is upto the depot - the documents submitted by the appellants not been properly looked into and due to which it could not be ascertained whether the credit is related to the outward transportation used for removal of goods to their depot. Therefore the matter needs to be reconsidered - appeal allowed by way of remand.
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2017 (2) TMI 433
CENVAT credit - denial on the ground that the credit was availed on inputs which were exclusively used in the manufacture of exempted goods - Held that: - the fact that the respondent goods are cleared under exemption as well as dutiable goods is not under dispute therefore the entire basis of the demand does not sustain - appeal dismissed - decided against Revenue.
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2017 (2) TMI 432
Double availment of Cenvat credit - willfully suppression of fact with an intent to evade duty - whether the appellants are liable to penalty for availing the Cenvat Credit twice? - invocation of proviso to Section 11A(1)of the Central Excise Act, 1944, read with Rule 14 of the Cenvat Credit rules, 2004 - Held that: - The fact that the Cenvat Credit has been taken over a period of 6 months shows that they continued filing wrong declarations suppressing the facts and misdeclared the fact of wrongly availing the Cenvat Credit in their ER-I declarations - reliance placed in the case of M/s Mahindra Sona ltd. Vs. CCE, Nashik [2016 (4) TMI 1149 - CESTAT MUMBAI], where it was held that the onus of taking credit correctly has been put on the appellant and this self assessment memorandum requires them to take the credit correctly and as per law. The above decision is squarely applicable in the instant case as elements for invoking extended period and penalty under Sec. 11AC are identical. Hence, the plea of the appellant that they had no intention to suppress is not tenable. Appeal dismissed - decided against appellant.
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2017 (2) TMI 431
Refund claim - time bar - Section 11 B of the Central Excise Act, 1944 - in view of the new Rules w.e.f. 01.07.2001, the permission granted under the old Central Excise Rules, 1944 was no longer effective and thus the refund u/s 11 B of the Act, 1944 is time barred and thus rejected - Held that: - under the provisions of section 38A (c) the provisional assessment permission granted under the Central Excise Rule 9B in the year 1989, remained valid and continuing upon enforcement of the new Central Excise Rules, 2002. Accordingly, I hold that the denial to finalize the assessment, not treating the same as provisional, is bad and against the provisions of law. There is no deliberate delay or latches on the part of the appellant-assessee, in approaching the Revenue for finalization of the assessment. Accordingly, I allow these appeals with directions to the concerned Assistant Commissioner to finalize the Provisional Assessment under the provisions of Rule 7 of Central Excise Rules, 2002 - appeal allowed by way of remand.
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2017 (2) TMI 430
Evasion of duty - SSI exemption - the use of the brand name ‘Domino’s’ on all the containers would deprive them of the benefit of small-scale exemption rendering each of the outlets to be liable to duty - Held that: - the respondent may, indeed, have led fresh evidence before the appellate authority, the finding in the impugned order flows from perceptible non-compliance with section 4 which is a legal issue that can be raised at any time. We do not find any impropriety in the impugned order. The appeal is against the remand ordered by the first appellate authority; that authority has not settled the classification dispute but has merely directed that the classification needs to be considered afresh along with other aspects such as valuation. The exclusion of classification from the instruction to withdraw pending appeal is intended to ensure that discriminatory treatment is not meted out in applying the appropriate rate of duty - Remand does not open up such a possibility and, hence, the issue before us is the propriety of the remand which is not excluded from applicability of the new litigation policy - appeal dismissed.
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2017 (2) TMI 429
Benefit of exemptions under N/N. 5/1999-CE dated 28.02.1999, 3/2001-CE dated 01.03.2001, 6/2002-CE dated 01.03.2002 and 4/2006-CE dated 01.03.2006 - in terms of notifications, benefit of clearance of Sulphuric Acid without payment of duty if the same is used in the manufacture of fertilizer - whether goods such as Zinc Sulphate, Ferrous Sulphate and Magnesium Sulphate and Micro Nutrients manufactured by M/s. Chakradhar Chemicals are fertilizer or not? - Held that: - If they are fertilizers then as provided in above stated notifications, they are eligible to procure Sulphuric Acid without payment of duty. In that event above stated 07 show cause notices become unsustainable. Now we have already gone through The Fertilizer (Control) Order and we also noticed that the goods manufactured by M/s. Chakradhar Chemicals are included as Micro Nutrients in Part A of Schedule I to The Fertilizer (Control) Order dated 25.09.1985 issued by Government of India. The said Order at Clause h has defined fertilizer means substance used as a fertilizer of the soil and specified in Part A of Schedule I. Since the goods manufactured by M/s. Chakradhar Chemicals are specified in Part A of Schedule I they are fertilizer - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 428
Refund claim - amount paid during investigation - section 11B of Central Excise Act, 1944 - denial of the claim as barred by limitation owing to payment having been made about nineteen months before applying for refund - Held that: - the bar of limitation prescribed in section 11B can be enforced, in equity, only with reference to date of order granting relief. Accordingly, the impugned order has erred in upholding the rejection of the claim as barred by limitation of time. The order of the appellate authority should have been implemented upon receipt of the application for refund. Failure to do so is also a patent act of judicial indiscipline which must be curbed if the tax administration of the country is to mature. Tax administrators must be responsible and responsive. The claim for refund is reinstated with effect from the date that it was originally filed grant of refund by setting aside the impugned order of original authority and show cause notice for denial of refund claim. Appeal allowed.
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2017 (2) TMI 427
Imposition of penalty - cost of free power supplied by HPL has to be taken into account while determining the value of gas supplied to HPL - valuation done in terms of Section 4 of the Central Excise Act, and duty with interest discharged. whether the imposition of penalty justified? - Held that: - the issue of penalty hinges on the fact whether the appellant has already furnished a copy of the product supply agreement to the department at any time prior to 5.7.2000, the date of visit of the departmental officers. If this fact is confirmed, then the allegation of suppression is not justified and consequently, no penalty is imposable under Section 11AC of the Act. However, if such agreement has been recovered by the departmental officers, only at the time of visit on 5.7.2000, as has been made out in the impugned order as well as in the argument of the DR, the allegation of suppression will have to be upheld and penalty imposed fully justified - matter is remanded to the original adjudicating authority to verify the fact when the agreement came to the notice of the department and to pass a revised order in de novo proceedings - appeal allowed by way of remand.
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2017 (2) TMI 426
Storage loss - Time limitation - whether the period of limitation prescribed u/s 11A is not applicable to a situation contemplated u/r 223A? - Held that: - The issue is no more res-integra in view of the decision of the larger bench of the Tribunal in the case of Rourkela Steel Plant vs. Commissioner of Central Excise, Bhubaneswar [2008 (5) TMI 47 - CESTAT, KOLKATA]. In that case the larger bench held that Section 11A and Rule 223A deal with different situations and that the period of limitation prescribed under section 11A is not applicable to a situation contemplated under Rule 223A. Therefore, the limitation under section 11A of the Central Excise Act, 1944 would not be applicable under Rule 223A of the erstwhile Central Excise Rules, 1944 - matter is remanded to the Commissioner (Appeals) to decide on merits after observing the principles of natural justice - appeal allowed by way of remand.
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2017 (2) TMI 425
Valuation - fabrication and mounting of LPG tanker on the chassis - inclusion of the value of running gear - The contention of the department is that only the value of chassis is excluded from total value of the motor vehicle and not the value of the running gear. - Held that: - the identical issue has been considered by this Tribunal in the appellant's own case Ganesh Chandra Ghosh [2012 (5) TMI 381 - CESTAT, MUMBAI] where it was held that the value of running gear should not be included in the assessable value of the motor vehicle, in terms of N/N. 4/97-CE - the value of running gear is not includible in the value of motor vehicle for the reason that the running gear is part of chassis - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (2) TMI 419
Imposition of penalty - Deemed assessment u/s 22(2) of the TNVAT Act, 2006 - whether the impugned notice is premature and is liable to be set aside? - Held that: - Sub-section (4) of Section 22 provides that, if, no return is submitted by the dealer for any period, or, if the return filed is incomplete or incorrect, or, if it is not accompanied by prescribed documents or proof of payment of tax, the Assessment Authority, after making an enquiry, as it may consider necessary, can assess a dealer, by adopting the best judgement principle. It is only after an assessment is complete under sub-section (4) of Section 22, that penalty can be imposed by the Assessing Officer - but, as per the provisions of Clause (iii) of the explanation to Section 22(5), the petitioner is entitled to seek deduction from the tax assessed under sub-section (4) of Section 22 of tax paid on any such turnover on which, tax is paid at a concessional rate, if requisite declarations are furnished, before levy of penalty. The impugned show cause notice being both premeditated and/or premature, is required to be set aside - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 418
Garnishee proceedings - Section 45(1)(b) of the Tamil Nadu Value Added Tax Act - attachment of bank account - Held that: - When the garnishee order has been issued subsequent to the appropriation of the entire sale proceeds, the appellant has to proceed against the dealer independently, as no proceeds remain left with the CFS Agency - the attachment of the Bank Account of the first respondent for the dues of the dealer is unsustainable in law - appeal dismissed.
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2017 (2) TMI 417
Scope of pre-assessment notice - scope enlarged while making assessment - Held that: - the impugned order is set aside to the extent of tax imposed qua amounts added back on account of stock transfer and export sales qua, which exemption was, purportedly, claimed under Section 5(1) of the CST Act, 1956 - petition disposed off.
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Indian Laws
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2017 (2) TMI 415
Acquittal of the petitioner in the complaint case u/s 138 of the Negotiable Instrument Act - default for want of prosecution - Held that:- The acquittal of the petitioner accused in the complaint case under Section 138 of the NI Act was a result of nonappearance of the plaintiff and by resort to Section 256 of the Code. There was no determination, one way or another, of any issue of fact or law by the learned Magistrate, and there was no trial by the learned Magistrate in the said complaint case. No finding or decision was rendered- either on facts, or in law by the learned Magistrate who had acquitted the accused. The result of such acquittal, by force of Section 300(1), would be that “while such … … … acquittal remains in force”, the petitioner accused shall not be liable to be tried again for the same offence, namely the offence under Section 138 of the NI Act in relation to the dishonour of the cheque(s) which formed the basis of the complaint. In my view, the further prohibition against the accused being tried on the same facts for any other offence would not apply to this fact situation. The relevant words “nor on the same facts … … …” clearly show that for latter part of Section 300(1) to apply, the “same facts” should have been tried and determined in the earlier trial conducted for any other offence. Though the accused may have been technically “acquitted” in respect of one of such complaints, there would be no determination of any issue of fact, or law, since no trial had taken place determining any issue of fact, or law. However, if one of such complaints were to result in an acquittal after a trial, the findings returned by the Court in its decision “would constitute estoppel or res judicata against the prosecution, not as a bar to the trial and conviction of the accused for a different or distinct offence, but as precluding the acceptance/ reception of evidence to disturb the findings of fact when the accused is tried subsequently for a difference offence”. Since the “trial” in the complaint case under section 138 of the NI Act had not taken place, there would be no question of the petitioner accused being “tried again”. In the present case, the learned Judicial Magistrate, Gurugram, was dealing with the complaint of the complainant u/s 138 of Negotiable Instrument Act. Merely because in the said complaint, the facts which constitute offences u/s 406/420 IPC may have been laid out, it does not follow that the Magistrate was obliged to take cognizance of the said offences and he having failed to do so, the FIR in question could not have been registered against the accused. Thus, even if the petitioner was tried in respect of one of the charges, namely, u/s 138 of Negotiable Instrument Act, and even if he is taken to have been acquitted, he may be tried for any distinct offence for which at the former trial a separate charge may have been, but was not made.
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2017 (2) TMI 414
Professional misconduct - default under Chartered Accountants Act - non explanations of three certificates issued to the company on the strength of which the company started trading its shares on the two stock exchanges - Held that:- SEBI has noted that the respondent was confronted with the bank statement of account issued by the banker of the company. Indeed respondent had no answer. Interestingly the order passed by SEBI brings out that in his stand before SEBI the respondent had inter-alia taken an alternative defence of relying on return of allotment in Form 2 submitted by the company to the Registrar of Companies. The said form was signed by the Company Secretary of the Company on December 01, 1999. Rightly it has been held by SEBI that the respondent could not have acted on the strength of the form because the dates on which he issued the certificates preceded the date of Form No.2. Proceeding to take cognizance of a report submitted by SEBI the Council of the Institute of Chartered Accountants constituted a Disciplinary Committee, forming a prima-facie opinion that the respondent was guilty of professional misconduct. Proceedings were initiated by the Disciplinary Committee. The respondent was served. His reply was taken on record. He was heard on various dates. The report of the Committee dated November 02, 2009 is a reflection of the order passed by SEBI. In the interregnum CBI had stepped in. Record of the company had been seized by CBI. No assistance from the respondent who has chosen not to appear today and would therefore highlight that in the certificate dated November 13, 1999 the respondent has consciously omitted to add the column of the date when the cheques were encashed for the reason he knew that no cheque had been encashed by the date he gave the certificate. We would also highlight that before the Disciplinary Committee that the respondent relied upon Form 2 which had been submitted by the Company to the Registrar of Companies, and suffice it to record that said form could not form the basis on which the respondent issued the certificates because the date of issue of said form under signatures of the Company Secretary of the Company, is much after the date when the three certificates were issued by the respondent. Accepting the report of the Disciplinary Committee, the Council at its meeting recommended penalty of removal of the name of the respondent from the Register of Members of the Institute for a period of five years.
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2017 (2) TMI 413
Offence under Section 138 NI Act - Cheque bounce - Held that:- The cheque has been signed by the accused is not denied by the accused. This itself raises a presumption against the accused under Section 139 of Negotiable Instruments Act that the cheque had been issued in respect of an outstanding debt or for consideration. The accused had claimed in his defence that the said cheque had been delivered to one Manoj Kumar from whom he had taken a loan, which he had repaid. The accused claimed that the cheque was not returned by Manoj Kumar to him and that Manoj Kumar – who was also known to the complainant, had delivered the cheque to the complainant for it being misused. The same story was adopted in respect of Ex CW-1/1 and Ex. CW-1/2. In the present case, the initial burden was on the accused to probablise his defence. It was for the accused to establish upon preponderance of probabilities, his defence that he had taken a loan from Manoj Kumar in respect whereof the cheque had been issued. However, the accused did not produce the so-called Manoj Kumar to establish his loan transaction with Manoj Kumar, and also to establish that he had delivered the cheque in question to Manoj Kumar. No document evidencing the alleged loan transaction with Manoj Kumar was produced by the accused. He did not produce his own accounts / ITR to show that he had reflected the so called loan taken by him from Manoj Kumar in his books. The statement of the accused is as vague, as could be. He gives no particulars of the amount of loan taken from Manoj Kumar; the date of the said loan transaction; the manner in which it was taken – i.e. whether in cash or through cheque; the dates(s) of its repayment, and; the manner of its repayment i.e. whether in cash or through cheque. Though the accused claimed that he had repaid the loan to Manoj Kumar, no document evidencing repayment of the loan was produced. The accused also did not explain as to why the cheque allegedly given to Manoj Kumar was, firstly, given in blank i.e. without name and, secondly, why it was not taken back at the time of repayment of the loan to Manoj Kumar. No notice or communication was issued by the accused to Manoj Kumar, recording that the loan had been repaid but the cheque not returned. The accused also did not stop payment of the said cheque by issuing any communication to his bank contemporaneously. The stand taken by the accused that documents Ex CW-1/1 and CW-1/2 had been given to Manoj Kumar is also completely belied by a perusal of the said documents. Both these documents have been executed in favour of, and by reflecting the name of the complainant Mukesh Kumar, and not Manoj Kumar. Had the loan been taken from Manoj Kumar and the said document executed and delivered, the same would have been delivered in the name of Manoj Kumar and not Mukesh Kumar. Thus, the stand taken by the accused in his defence with regard to issuance of the cheque to secure a loan taken from Manoj Kumar, was not at all probabalised. For all the aforesaid reasons, the impugned judgment is set aside and, since all the ingredients of the offence under Section 138 NI Act are established in the present case, the respondent/ accused is convicted of the offence under Section 138 of Negotiable Instruments Act.
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