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TMI Tax Updates - e-Newsletter
February 13, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deemed dividend u/s 2(22)(e) - Amount paid as loan and advances to Director the arrangement between the assessee and the company was merely for the sake of convenience arising out of business expediency - additions confirmed - AT
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Penalty for concealment u/s 271(1)(c) - Without verifying this explanation as to whether 5.4.2008 was Saturday or not cannot be arrived at a conclusion beyond doubt that explanation of the assessee was false- AT
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Accrual of income on Kisan Vikas Patra - Promissory note OR not - the interest on Kisaan Vikas Patras has to be assessed to income tax on accrual basis - HC
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Special Audit u/s 142(2A) - single account pertaining to three engineering colleges was being maintained without any distinction to the engineering colleges run by separate societies - Action of AO is correct - HC
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The commission was paid to Managing Director and Director (Operations) as per their terms of appointment as is apparent from Board Resolution - claim of expenditure allowed - AT
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Transfer pricing adjustment Since the profit margin of the assessee after taking into consideration the DEPB benefit as part of its turnover comes to 12.30% as against the average net profit margin of 13.05% of the comparables which is within the safe limit of 5% - no TP adjustment - AT
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Disallowance claimed as bad debts -assessee has claimed provision during the assessment year without any advice of the RBI against the provisions of the Income-tax Act - no allowance - AT
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Deletion of addition made on account of excise duty The Excise Duty was paid under protest - merely because assessee contested the liability, the same cannot be disallowed - AT
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TDS on dividend / premium on chit fund Interest u/s 2(28) - he payment to the subscribers of a chit towards dividend does not partake the character of interest - No TDS u/s 194A - AT
Customs
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Transhipment of goods - Goods Imported (Conditions of Transhipment) Regulations, 1995 - no confiscation could have been ordered under Section 111(d) and (f) of the Customs Act, 1962 - HC
Service Tax
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Cenvat credit taken against invoices dated prior to 10.09.04 - Tribunal should not be deciding new policy by giving effect to such benefits retrospectively contrary to legal provisions and policies of the government - AT
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Cenvat Credit of service tax paid on GTA services paid on transportation of inputs to the job worker premises and transportation of goods from job worker premises to the depot of the appellant - demand beyond normal period of limitation set aside - AT
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CENVAT Credit - Input service distributor (ISD) - the defects in ISD invoices are curable defects - stay granted. - AT
Central Excise
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Denial of CENVAT Credit - Duty paid on laptop - Merely because the laptop is a movable item and can be shifted to another place cannot be a reason to hold that the same would not fall within the definition of capital goods. - AT
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Payment of duty through CENVAT Credit or PLA - Rule 8 - Admittedly the respondents had paid the amount on 23.7.08 and thereafter he would be entitled to utilize the credit for payment of duty in respect of subsequent clearances - AT
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Imposition of interest and equivalent amount of penalty has been confirmed against them for short payment of Rs.10/- only - order set aside - AT
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Availment of CENVAT Credit without receiving concerned inputs - assessee was required to reverse the cenvat credit which the assessee admittedly did not do. - The Authority rightly invoked the extended period of limitation - HC
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Tribunal while deleting the penalty has made a passing observation to the effect that there was no intention to evade payment of duty. - This, however, does not in any way nullify or negate the principal finding - demand confirmed - HC
VAT
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Penalty under Section 16(2) of the TNGST - Simply because the assessees' claim for exemption was negatived by the department, that does not mean that the assessees have suppressed anything. - HC
Case Laws:
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Income Tax
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2014 (2) TMI 476
Confirmation of Penalty u/s 271(1)(c) of the Act Nature of Lease Whether the lease was a finance lease or it was an operating lease between the assessee and RSEB Held that:- The Tribunal has not accepted that the assessee has adopted colourable device in order to reduce its tax liability and has stated that the agreement entered into between the parties, i.e assessee and RSEB were legal - The Tribunal has also held that there a sea change has taken place by delivery of the judgment of the Hon'ble Apex Court in the case of Asea Brown Bovery Ltd (supra) in respect of Finance lease and to allow depreciation to the lessee and not to the lessor. The agreement between the assessee and RSEB was in the nature of finance lease - Thus the assessee is not entitled for depreciation on the lease assets - if the assessee made a claim bonafide and also offered explanation which has not been accepted but it is not false or is not of the nature that the assessee is not able to substantiate its explanation, the provisions of section 271(1)( c ) of the Act is not attracted - it cannot be said that the assessee has furnished inaccurate particulars of income and/ or the assessee has concealed its income Relying upon CIT v. Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] - merely because the claim of the assessee has not been accepted but the assessee has made the bonafide claim, the provisions of section 271(1)( c ) of the Act are not attracted thus, the levy of penalty in the case is not justified Decided in favour of Assessee.
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2014 (2) TMI 475
Deemed dividend u/s 2(22)(e) of the Act - Amount paid as loan and advances to Director Held that:- There was credit balance of the assessee in the books of the company as on 1.4.2005 - the nature of the transaction is clearly in the nature of loan/advance received by the assessee from the company which is repaid in the subsequent year - Merely because there was a credit balance of the assessee with the company, it cannot be said that more amount received after the repayment of assessee's credit balance is not in the nature of loan and advance - After the repayment of the credit balance of the assessee in the books of the company, if assessee has received further amount, it was certainly in the nature of loan/advance which is to be repaid by the assessee and actually repaid by the assessee in the subsequent year the arrangement between the assessee and the company was merely for the sake of convenience arising out of business expediency - no such business expediency has been established by the assessee in the case under appeal decided against Assessee.
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2014 (2) TMI 474
Violation u/s 13(1)(C) of the Act - Nil return filed Denial of Exemption u/s 11 and 12 Whether payments made were for the personal benefit of Dr.C.Gopalan - Held that:- The assessee paid security charges and rent for the year in respect of the premises in New Delhi - Relying upon CIT vs. Foundation for Social Care [2013 (9) TMI 869 - ALLAHABAD HIGH COURT] - Dr.C.Gopalan is an internationally renowned Nutritional Scientist who held the position of Director in the "National Institute of Nutrition" and was Director General of "Indian Council of Medical Research" - the First Appellate Authority was right in holding that the assessee has not violated provisions of S.13(1)(c) of the Act - The expenses incurred are reasonable - This is not a case whether the Founder Trustee has been remunerated - It is a case where reasonable expenses were incurred for a furtherance of objectives of the Trust thus, the order of the First Appellate Authority is upheld Decided against Revenue.
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2014 (2) TMI 473
Interest free loans given to sister concern Held that:- The amounts advanced by the assessee to CDPL was for the purpose of commercial expediency of the assessee only - the judgement in S.A. Builders v. CIT [2006 (12) TMI 82 - SUPREME COURT] - the interest-free loans were given to its sister concerns and others as a measure of commercial expediency - the interest-free loan was given to the sister company (which is a subsidiary of the assessee) as a measure of commercial expediency, and if it was, it should have been allowed - The expression 'commercial expediency' is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business - The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency Decided in favour of Assessee.
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2014 (2) TMI 472
Deletion made u/s 68 of the Act Search u/s 132(1) of the Act made Held that:- Nothing was found incriminating against interest of assessee during the course of survey - The additions were made merely on the basis of surrender made by the assessee on the basis of statement recorded during the survey - No material is also referred during the course of statement to show if assessee earned any unaccounted income for the assessment years under appeals - it was mere statement of assessee without any basis for making surrender - The assessee in reply to show cause notice u/s. 142(1) with regard to surrendered income also explained that he is maintaining regular books of accounts and vouchers and no material discrepancy was found to make any surrender - Thus, there is nothing on record to prove that any material was found to indicate earning of undisclosed income Relying upon Paul Mathews And Sons Versus Commissioner of Income-Tax [2003 (2) TMI 25 - KERALA High Court] and on Board's circular apply in favour of the assessee Decided against Assessee.
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2014 (2) TMI 471
Rectification of order u/s 154 of the Act Error apparent on record Payment made from account payee cheque on holiday - Held that:- The mistake apparent from record in the assessment order as pointed out by the assessee in its application u/s 154 of the Act before the AO - in the application u/s 154 of the Act made before the AO such explanation was made before the AO or any evidence was filed in support to the explanation - The first appellate authority to this extent has thus rightly approved the action of the AO in this regard - The CIT(A) was not justified in approving the assessment order that there was no mistake apparent from record in the assessment order regarding denial of explanation towards the payment made to OM Advertising - The mistake was apparent and the AO was supposed to rectify it while rectifying the other mistake pointed out in the application - The AO is directed to allow the same Decided partly in favour of Assessee. Sustainability of Penalty for concealment u/s 271(1)(c) of the Act - Disallowance u/s 40A(3) of the Act Held that:- There was mistake apparent in the order of the AO in not accepting the payment made to OM Advertising through an account payee cheque in support of which bank statement was also furnished before the AO - Without verifying this explanation as to whether 5.4.2008 was Saturday or not cannot be arrived at a conclusion beyond doubt that explanation of the assessee was false thus, the AO was not justified in attracting penal provisions u/s 271(1)(c) of the Act - in absence of arriving at this fact clearly beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee towards the disallowance Decided in favour of Assessee.
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2014 (2) TMI 470
Disallowance u/s 40(a)(ia) r.w Section 194C of the Act Transport and octroi charges Held that:- As per the provisions of s. 194C(5) of the Act, Assessee was not required to deduct TDS as each of the payment to transporter was less than Rs. 20,000/- and the aggregate payment in the financial year was less than Rs. 50,000 the CIT(A) has held the issue of payment to different truck drivers, dates, modes and quantum of payment to be irrelevant and there is no finding of CIT(A) of the submissions of the Assessee thus, the matter remitted back to the CIT(A) to decide the issue Decided in favour of Assessee.
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2014 (2) TMI 469
Accrual of income on Kisan Vikas Patra - Rectification of error apparent on record Promissory note OR not - Held that:- The Tribunal was correct in confirming the opinion that the KVP did not amount to a promissory note and which, at the end of the period, the authority promise to pay a fixed sum of money only - It was a case where even premature exit from the scheme was permissible - After completion of two years and six months from the date of issuance of the certificate, the investor could withdraw his investment at the rate of return specified in the rules. The authorities correctly relied on Circular No. 687 dated 19th August 1994 in which it was stated that, the interest on Kisaan Vikas Patras has to be assessed to income tax on accrual basis, the amount of interest accrued on these patras during initial two and half years has to be determined in consultation with the department of Economic Affairs - The amount of interest accrued on investment in Kisaan Vikas Patra by an assessee is to be calculated on the basis of the table received from the Department of Economic Affairs wherein rates of interest and maturity amount for Rs. 1000 denomination of Kisaan Vikas Patra are given Thus, the authorities correctly recorded that the assessee was entitled to encash KVPs after two years and six months and the period was over Decided against Assessee.
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2014 (2) TMI 468
Stay of demand - Calim of deduction u/s 80IB(10) of the Act Held that:- There is a strong prima facie case that the case of the petitioner for deduction under section 80IB(10) of the Act is governed by the decision of this Court in the case of Commissioner of Income-tax Versus Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] it would be gross inconvenience would be caused to the petitioner if pending the appeal, the petitioner is required to deposit 50% of the tax demand - Thus, the communication dated October 30, 2013 of the Commissioner (Appeals) is quashed - There shall be complete stay of the tax demand against the petitioner pending the appeal - the observations are prima facie and the appeal shall be decided independently thus, in addition to disallowing deduction u/s 80IB(10) of the Act Decided in favour of Assessee.
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2014 (2) TMI 467
Special Audit u/s 142(2A) of the Act It was noticed that the account so maintained were not correct and complete and single account pertaining to three engineering colleges was being maintained without any distinction to the engineering colleges run by separate societies. - Held that:- The arguments on behalf of petitioners rejected - the orders do not suffer from any legal infirmity Relying upon Sahara India (Firm) Vs. CIT [2008 (4) TMI 4 - Supreme Court] - the object behind Section 142(2A) is to assist the assessing officer in framing a correct and proper assessment based on the accounts maintained by the assessee, and when he finds the accounts of the assessee to be complex, in order to protect the interest of the revenue, recourse to the said provision can be had the twin conditions, i.e, nature of nature of accounts, complexity of accounts and interest of the revenue exist in the present set of facts - the Assessing Officer has lawfully invoked the provisions of Section 142(2A) of the Act so as to frame a correct and proper assessment and to protect the interests of the revenue, in view of the fact that he found the accounts of the Assessee to be complex on the basis of objective criteria - the conditions prescribed for invoking Section 142(2A), i.e., nature of accounts, complexity of accounts and interest of the revenue are fulfilled and therefore the proposal for special audit under Section 142(2A) of the Act was approved Decided against Assessee.
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2014 (2) TMI 466
Deletion made on account of commission to Managing Director Held that:- The decision in DCIT, Circle 9 (1), New Delhi Versus M/s. Spirotech Heat Exchangers Pvt. Ltd. [2013 (11) TMI 140 - ITAT DELHI] and AMD Metplast (P) Ltd [2011 (12) TMI 320 - Delhi High Court]followed - Commission is part and parcel of salary and is subject to tax deduction at source Contrarily, dividend is a return on investment and not salary or part thereof Managing Director and whole time Director (Operations) were paid commission on the basis of duly passed Board Resolution and was in accordance with the provisions of the Companies act. The payment of Commission is necessarily a part of salary as defined in section 17 - the payment of commission was paid to Managing Director and Director (Operations) as per their terms of appointment as is apparent from Board Resolution - the payment of commission was a genuine business expenditure and there was no reason to interfere in the order of CIT(A) Decided against Revenue. Deletion on account of foreign travelling expenses Held that:- Spouses had also accompanied with the directors of the company there must be some element of personal nature in the expenses the AO had rightly made disallowance of 20% out of foreign travel expenses the order of the CIT(A) set aside Decided in favour of Revenue. Deletion of bad debts written off Held that:- The only requirement for allowability of the bad debts is that the assessee should write off the bad debts as irrecoverable in its accounts in the relevant year Relying upon TRF. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] - the assessee was entitled to claim of bad debts debited to the profit & loss account - there cannot be more disallowance than what is actually debited to the profit & loss account - the assessee is entitled to the deduction of bad debts decided against Revenue.
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2014 (2) TMI 465
Disallowance of repair and maintenance expenses - excess depreciation on furniture and fixture and plant & machinery Held that:- The decision in IP Support Services (India) Pvt. Ltd. Versus DCIT (OSD) CIT-IV, New Delhi [2012 (9) TMI 364 - ITAT DELHI] followed - There is no error whatsoever in the order of the Ld. CIT (A) - there was no separate claim of repair and maintenance and depreciation by the assessee - The reimbursement and 25% mark up had already been offered by the assessee to tax - The reimbursements have been found on deductions claimed in the profit and loss account on account of repair and maintenance of building, furniture and depreciation claimed on computers, furniture and fixtures, vehicles and office equipment provided - The order pertaining to the deletion of disallowances on account of repair and maintenance on let out buildings and disallowance on account of depreciation claimed on furniture, fixtures and plant and machinery upheld Decided against Revenue. Disallowance u/s 14A of the Act r.w. Rule 8D of the Rules - Held that:- The Tribunal has upheld the findings of the Commissioner of Income Tax(A) which deleted the addition made by the Assessing Officer by invoking Rule 8D of the Income Tax Rules r/w section 14A of the Act - the assessee had itself added portfolio management expenditure incurred for maintaining portfolio of the assessee and the assessee has added expenditure of portfolio management services voluntarily, then if it is found that no interest expenditure stood debited in the P&L account, Rule 8D r/w section 14A of the Act cannot be invoked - the Commissioner of Income Tax(A) rightly upheld part addition in this regard and another part of the addition has been deleted on justified grounds there is no reason to interfere with the findings of the Commissioner of Income Tax(A) Decided against Revenue.
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2014 (2) TMI 464
Addition made u/s 68 of the Act - Undisclosed cash deposits Held that:- The confirmations filed are on stamp papers but these are not verified by any notary or other authority - The assessee has not disclosed the purpose for which these loans were raised - Loan stated to have been raised without any purpose - The amount was not utilized for any purpose during the year - No evidence had been placed on record to show that such amount unutilized for any purpose in future - Nothing on record to show the repayment of these loans - the true nature of these transaction remains to be established - Simply land holding shall not prove the capacity or creditworthiness of these lenders. It has to be established by yield and availability of such money with them to lend that too without interest - The assessee was in a government service in the railway department - These amounts were not utilized during the financial year for any purpose - No one will raise loan just to deposit in the SB A/c with the bank - The CIT Appeal was justified in restricting the addition to the peak amount - He has rightly directed the AO to restrict the addition to the peak amount - only the peak amount of the credit entries in the bank account of assessee can be added to the income of the assessee supports the order of the CIT Appeal Decided against assessee.
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2014 (2) TMI 463
Deduction claimed u/s 10A of the Act Form No. 56F not furnished Held that:- The assessee has furnished all the details in support of its claim of deduction u/s. 10A before the Assessing Officer and the only reason given by the Assessing Officer in the assessment order for non-allowing of the claim was the non-furnishing of Form 56F - The same Form was admitted by the Commissioner of Income Tax (A) in the appellate proceedings thus, there was no infirmity in the order of the CIT(A) Decided against Revenue. Addition made on account of depreciation Held that:- The Assessing Officer has inter-alia noted that the bills of contractors for the construction were not produced before him - There is nothing on record to show that these submissions of the assessee were put before the Assessing Officer - the Assessing Officer has noted that assessee has not produced any bill of contractor for construction - interest of justice demands in the case that Assessing Officer be given an opportunity to go through these bills and satisfy himself about the veracity of the same the matter remitted back to the AO for fresh adjudication. Deletion of addition on account of unexplained sundry creditors - The Assessing Officer in this regard has noted that assessee has failed to produce the confirmation certificate from sundry creditors it was not produced before the CIT(A) - the addition on account of sundry creditors was unjustified - Commissioner of Income Tax (A) has erred in this regard - Assessing Officer wanted to examine the sundry creditors - But the assessee did not provide the confirmation certificate - CIT (A) has not himself made the verification - the veracity of sundry creditors is not established the matter remitted back to the AO for fresh adjudication Decided in favour of Revenue.
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2014 (2) TMI 462
Rate of depreciation on boiler and trucks used Held that:- The CIT(A) found that in the table of rates of depreciation the energy saving devices specifically for specialized boiler and furnaces the rate of depreciation is provided @ 80% - the CIT(A) has rightly upheld the order of AO as in depreciation Appendix, the admissible depreciation on Boiler is 80% - there was no infirmity in the order of CIT(A). Depreciation on Trucks - The decision in M/s. Bhole Baba Milk Food Industries Ltd., Versus Deputy Commissioner of Income Tax Circle 4(1), Agra. & Others [2012 (12) TMI 189 - ITAT, AGRA] followed - the benefit of 40 per cent. depreciation allowance was admissible only for vehicles used for business of hire in view of the provisions of Entry No.III(ii)E(1-A) of Part I of Appendix I to the Income-tax Rules, 1962, and since the assessee used the vehicles for its own business of transporting its goods only 30 per cent. depreciation was allowable. Disallowance of deduction u/s 80IB of the Act Duty drawback Held that:- The decision in Liberty India vs. CIT [2009 (8) TMI 63 - SUPREME COURT] followed duty drawback, rebate etc. should not be treated as adjustment (credited) to cost of purchase or manufacture of goods Decided against Assessee. Deletion made u/s 14A of the Act Held that:- The decision in Bhole Baba Milk Food Industries Ltd., Versus Dy. Commissioner of Income Tax [2012 (7) TMI 365 - ITAT, AGRA] followed - Rule 8D can be applicable only where disallowance of interest on borrowed capital warrant for expenses out of such borrowed capital with the amount relating to investment in shares and search and not ascertainable - the disallowance of interest is not warranted under the circumstances - there is no question of invoking Rule 8D of the Rules - the assessee was having sufficient own interest free fund to cover the investment made in shares thus, no disallowance can be made under section 14A of the Act there was no infirmity in the order of CIT(A) - Order of CIT(A) on the issue is confirmed Decided against Revenue.
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2014 (2) TMI 461
Transfer pricing adjustment Determination of arms length price u/s 92CA of the Act - Determination of profit margin - Export incentives included in export sales Comparables under TNMM method Held that:- The decision in Welspun Zucchi Textiles Ltd. Versus Assistant Commissioner of Income-tax-2(3), Mumbai [2013 (9) TMI 336 - ITAT MUMBAI] followed - The DEPB benefit was not taken into consideration by the AO/TPO for the purpose of working out the profit margin of the assessee whereas such benefit was taken into account in the comparable cases while working out their profit margin as found by the learned CIT(Appeals) - nothing has been brought on record to controvert or rebut this finding recorded by the learned CIT(Appeals) and this being so, there was no justifiable reason to interfere with the decision of the learned CIT(Appeals) that the DEPB benefit received during the year under consideration should be considered as part of the turnover of the assessee for working out the profit margin to make the comparison of like to like and similar to similar - Since the profit margin of the assessee after taking into consideration the DEPB benefit as part of its turnover comes to 12.30% as against the average net profit margin of 13.05% of the comparables which is within the safe limit of 5%, - no TP adjustment in respect of transactions made with the associated enterprises was required to be made in the case of the assessee the decision of the learned C1T(Appeals) upheld in deleting the addition made by the AO by way of TP adjustment Decided against Revenue. Deletion on the loss on account of foreign exchange fluctuation Speculative transaction - Proper explanation not furnished - Held that:- The decision in CIT v. Badridas Gauridu (P.) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] followed - the assessee, an exporter of the cotton, having booked foreign exchange in forward market to hedge against losses, loss suffered by the assessee on account of failure to honour certain contract was not speculation loss but was allowable as business less the export contracts entered into by the assessee for export of cotton in some cases failed. In the circumstances, the assessee was entitled to claim deduction as a business loss Decided against Revenue.
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2014 (2) TMI 460
Disallowance out of business maintenance expenses Held that:- 1/3 portion of the properties at Lucknow and Moradabad were let out, therefore, the income from house property is to be computed with respect to the said 1/3 property let out to different tenants and while allowing standard deduction as per clause (a) of section 24 of the Act, 30% of the annual value is required to be deducted - no other maintenance expenses are allowed to be deducted as there is no specific provision in this regard in the Act the Assessing Officer has rightly disallowed 1/3 of maintenance expenses claimed by the assessee while computing deduction under section 24 of the Act the assessee could not place any relevant material on record, according to which the assessee can claim maintenance expenses besides standard deductions envisaged under section 24 of the Act while computing the income from house property there was force in the observations of the CIT(A) that the entire expenditures need to be disallowed while confirming the disallowance. Disallowance claimed as bad debts Held that:- The CIT(A) has confirmed the disallowance following the disallowance made in assessment year and nothing has been placed on record as to what has happened to the said disallowance - Whether it was challenged before the appellate authorities or it was accepted by the assessee as per advice of the RBI provision of the investment is possible during the first three years - its provision cannot be allowed without any further instruction of the RBI - The assessee has claimed provision during the assessment year without any advice of the RBI against the provisions of the Income-tax Act - the claim raised by the assessee is not in accordance with the law and the CIT(A) is justified in disallowing the same the order of the CIT(A) upheld Decided against Assessee.
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2014 (2) TMI 459
Addition made u/s 50C of the Act Capital gain Held that:- The CIT(A) has not adjudicated the issue properly in the light of correct facts - He should have looked into the contentions of the assessee raised through his affidavit clarifying the facts and then ask the assessee to file some evidence on the basis of which he disputed the valuation so adopted by the Stamp Valuation Authority for the purpose of payment of stamp duty in respect of such transfer - But the ld. CIT(A) has not done so thus, the issue was not properly examined by the lower authorities and requires a fresh adjudication The order of the CIT(A) set aside Matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 458
Deletion of addition made on account of excise duty Held that:- The Excise Duty was paid under protest - He was not required to pay the Excise Duty but when the excise authorities have demanded, the assessee had paid the same - the assessee has gone before the Commissioner, Central Excise (Appeals) and won the case but the Department has preferred an appeal before the CEGAT - since the assessee has paid the Excise Duty under protest, it is expenditure incidental to his business and should be allowed u/s 37 of the Act Relying upon Kedarnath Jute Manufacture Co. vs. CIT [1971 (8) TMI 10 - SUPREME Court] - the liabilities of the Excise Duty accrues on the taxable event taking places viz. manufacture of excisable goods - The liability is on the manufacturer and not ultimately on sellers - It was an enforceable legal liability allowable irrespectively of whether subsequently, exemption granted or the same has been contested in the appeal there is no specific infirmity has been pointed out in the order of CIT(A) except placing heavy reliance upon the assessment order, the order of CIT(A) confirmed Decided against Revenue. Deletion of disallowance of payment Interest on advances and loans Held that:- The assessee has furnished the details of interest free funds available with it - the assessee was having general reserve besides share capital which was utilized for interest free advances - The Revenue has not placed any evidence on record to establish that the borrowed funds were utilized for interest free advances thus, no corresponding disallowance can be made there was no infirmity in the order of CIT(A) Decided against Revenue.
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2014 (2) TMI 457
Levy of penalty u/s 271(1)(c) of the Act Concealment of income - Inaccurate particulars furnished Held that:- The decision in CIT Vs. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] followed - where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - Such a claim made in the return cannot amount to furnishing inaccurate particulars - The AO merely proceeded on the footing that the assessee furnished inaccurate particulars by claiming addition of the expenditure which is not otherwise admissible under law previously also, the penalty is not leviable and the Revenue appears to have not preferred any appeal - there is no malafide intention on the part of the assessee in claiming the impugned expenditure as revenue in nature the order of the CIT(A) upheld Decided against Revenue.
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2014 (2) TMI 456
Non deduction of TDS on dividend / premium on chit fund Interest u/s 2(28) of the Act comes within the purview of section 194A of the Act or not Held that:- The decision in Bilahari Investments (P) Ltd., v. CIT [2006 (6) TMI 59 - MADRAS HIGH COURT] - The members (subscribers) need not pay the total monthly subscription and instead, they pay the monthly subscription after deducting the amount of dividend earned. Members who have bid for the chit in auction have the liability to keep the contribution to the chit till the end of the chit period and the prized members get dividend in future months also - the payment to the subscribers of a chit towards dividend does not partake the character of interest - the orders of the CIT(A) upheld in holding that the assessee is not liable to deduct TDS u/s 194A of the Act thus, not liable for interest u/s. 201(1) and 201(1A) of the Act Decided against Revenue.
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Customs
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2014 (2) TMI 493
Release of seized documents - In the alternative, the Petitioner has prayed for a direction to the Respondents to furnish certified copies of all the documents seized by the Respondents from the office of Petitioner in a search and seizure activity conducted on 19 July 2009. - Held that:- Since the Petitioner has already made a request for providing photocopies as far back as on 13 October 2009, we direct the Assistant Director of DRI, Nhava Sheva to provide the Petitioner certified photocopies of the documents seized on 19 July 2009 and which have not yet been returned to the Petitioner.
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2014 (2) TMI 492
Waiver of pre-deposit - Commissioner of Customs(Appeals) has directed the petitioner to deposit a sum of Rs.3.75 lacs out of penalty of Rs.15 lacs imposed upon - Held that:- the petitioner has himself made a statement to the Customs Department under Section 108 of the Customs Act, 1962 and admitted his involvement in defrauding the revenue. The contention of the petitioner that he was not given any opportunity to cross examine the persons whose statements were relied upon by the Customs Department during the course of investigation has to be seen in the context of petitioner in his statement under Section 108 of Customs Act, 1962 admitting his involvement in defrauding the revenue. The extent to which absence of cross examination of others can lead to absolving the petitioner of any involvement is an issue which would be required to be gone in some depth and does not by itself in the present facts constitutes a good prima facie case warranting complete dispensation of predeposit as urged by the petitioner. - no reason to interfere in the impugned order - petition dismissed.
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2014 (2) TMI 491
Transhipment of goods - Goods Imported (Conditions of Transhipment) Regulations, 1995 - it was argued that the violation of Sections 33, 34 and 36 of the Customs Act, if any, is not by the petitioners but by the carrier i.e. Indian Airlines - Held that:- . Section 30 as it stood at the relevant time requires the person in charge to deliver to the proper officer such import manifest within 24 hours after arrival of an aircraft at customs station i.e. customs airport. Here, the aircraft arrived at the Nagpur customs airport at 9.30 P.M. on 01.09.1997 and the respondents were informed about arrival of said machine on 02.09.1997 itself. The impugned order, rightly, nowhere alleges violation of Section 30 of the Customs Act, 1962. Merely because on 04.08.1997 Petitioner No. 2 had written to Respondent No. 2 to take necessary steps to enable commencement of full fledged cargo importexport operations from Nagpur customs airport, an inference as drawn in the impugned order cannot be sustained. Even otherwise, on merits also no confiscation could have been ordered under Section 111(d) and (f) of the Customs Act, 1962. Question of scope & field occupied by Section 8(a) of the Customs Act, 1962, left open for appropriate consideration in future - order set aside - revenue to appropriate amount of duty paid by the petitioners towards duty on imported machine. If on that count, they are entitled to charge any interest in accordance with law, they are permitted to claim the same from the petitioners and recover it. The order of confiscation and penalty is also set aside - Decided in favor of assessee.
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2014 (2) TMI 490
Narcotic drugs - appellant contended that he was in possession of 510 grams of 'Ephedrine Hydrochloride' and not in possession of 'Methamphaetamind Hydrochloride' - Held that:- there is no doubt that both are narcotic drugs and possession of these two drugs is punishable under the Narcotics Drugs and Psychotropic Substances Act. - sending of the 2nd sample for analysis does not - it is for the trial court to alter the charges framed against the petitioner accordingly and proceed with the trial taking into account the said fact. - Decided against the petitioner.
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2014 (2) TMI 489
Order under COFEPOSA - smuggling of gold - passport was already in the custody of the Authorities - it is contended that there was no possibility of the detenu travelling abroad and indulging in smuggling activities - Held that:- For abetting smuggling activities, it is not necessary for the detenu to travel abroad. Therefore, this contention has no merit. Delay in passing the orders of detention - Held that:- delay by itself is not fatal - The total generated documents were running into 807 pages. Considering the nature of prejudicial activities alleged and the propensity of the detenu in both the cases in hand, it is not possible to conclude that the livelink was snapped due to time gap between the date of the alleged prejudicial activities and the orders of detention. - , it is not possible to accept that the live link was snapped due to delay. Moreover, in the reply, the Detaining Authority has explained the delay. Grounds of detention - Held that:- The Detaining Authority has set out in the grounds the contents of these statements which were not retracted. They give a vivid account of the active participation of Sandeep and Jayant in the smuggling of gold for considerably long time. There is a seizure of a bag containing 5.804 kg of jewellery and gold bars which were made on 10th/11th August 2012. Hence, sufficiency of material before the Detaining Authority cannot be disputed. Therefore, in the facts of the cases in hand, the orders of detention are not vitiated on account of nonplacement of retraction of statements of Sandeep. The Writ Petitions are rejected - Decided against the appellant.
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2014 (2) TMI 446
Drawback Conversion of free shipping bills to drawback shipping bills Soya bean meal exported and drawback not claimed due to ignorance of its entitlement - entitlement to 1% All Industry Rate drawback requested for conversion of the free shipping bills into drawback shipping bills - Commissioner rejected the request for the reason that the asessees had failed to comply with the provisions of Rule 12(1)(a) of the Drawback Rules, 1995 not for reasons beyond his control - Held that:- A plain reading of the Rules, particularly Rule 12(1)(a) makes it very clear that conversion of a free shipping bill can be allowed into a drawback shipping bill only if the assessee is able to satisfy the Commissioner that for reasons beyond his control, drawback was not claimed. In the instant case, there is nothing on record to suggest that the claim for duty drawback was beyond the control of the assessee. All that has been stated by the assessee is that it was not aware of the correct legal position and, therefore, it did not make the claim for duty drawback in the first instance. Assessee did not make any claim for duty drawback for as many as eight months even after the shipping bills were filed. It is quite clear that the assessee made the claim for duty drawback only as an afterthought. There were no reasons beyond its control for making the claim for duty drawback earlier - Tribunal was in error in allowing the appeal filed by the assessee and directing the conversion of the free shipping bills filed by the assessee into drawback shipping bills - Decided in favour of Revenue.
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Service Tax
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2014 (2) TMI 486
Demand of service tax on the basis of Profit and loss account figuring in Income Tax Return - Held that:- The appellant has demonstrated the reconciliation before the Tribunal by showing Bank Statement and entries dated 04-05-2008 and 03-06-2009 - In an appeal involving such a small amount and obvious explanation from the appellant there is no reason to expose the appellant to another apparently hostile round of adjudication - it is reasonable to accept the evidence and explanation submitted by the assessee - Demand set aside. Regarding penalty u/s 78 - Held that:- this is a fit case to waive penalty in exercise of the powers under section 80. This appellant and the facts of the case cannot be considered on the same footing as the various assessees mentioned in para 10 (iv) earlier. So the penalty under section 78 is waived.
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2014 (2) TMI 485
Demand of service tax on the basis of Profit and loss account figuring in Income Tax Return - inclusion of TDS amount - cum-duty value - The reason given by appellant is that this liability is in respect of amounts received by the appellant in the subsequent financial year on which they paid tax in the subsequent financial year - Held that:- there is some default on the part of the appellant in submitting reconciliation statement before the lower authorities though the basic reason for difference between figures in Income Tax return and ST-3 return was stated before the lower authorities. In the circumstances non-submission of reconciliation statement before lower authorities is not a sufficient reason for sending this matter involving such a small tax amount for another round of litigation. - Demand set aside. Regarding penalty u/s 78 - Held that:- this is a fit case to waive penalty in exercise of the powers under section 80. This appellant and the facts of the case cannot be considered on the same footing as the various assessees mentioned in para 10 (iv) earlier. So the penalty under section 78 is waived.
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2014 (2) TMI 484
Levy of penalty - de-novo adjudication order is passed by the adjudicating authority on the same matter and appellant wants to pursue appeal remedy against that order - Held that:- The right of the appellant to contest the de-novo adjudication order in all respects need not be limited because of submission made during oral hearing for withdrawal of appeal filed against imposition of penalty. It was not clear from the submission of the advocate whether the advocate was mentioning tax liability as ordered by Commissioner (Appeal) in order dated 28-09-2012 impugned in this appeal or the tax liability as determined in the de-novo order dated 06-11-2013 of the adjudicating authority. - the present appeal has become infructuous and the same is dismissed accordingly with liberty to the appellant to pursue appeal remedy against the de-novo order.
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2014 (2) TMI 483
Cenvat credit taken against invoices dated prior to 10.09.04 - Held that:- There are clear provisions under Cenvat Credit Rules, 2004 that the new credit scheme is applicable only in respect of duties paid on or after 10-09-2004 and against invoices raised dated on or after 10.09.2004, giving a clear demarcation on time frame based on which the new scheme was to be operated. Tribunal should not be deciding new policy by giving effect to such benefits retrospectively contrary to legal provisions and policies of the government. The decisions cited by the appellant were in the context of situations where there could be doubt regarding the scope of the legislation, and the Govt. considered it appropriate to add explanations to clarify disputes. - Decided against the assessee.
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2014 (2) TMI 482
Cenvat Credit of service tax paid on GTA services paid on transportation of inputs to the job worker premises and transportation of goods from job worker premises to the depot of the appellant - Held that:- procedures laid down for taking credit cannot be by-passed based on argument of revenue neutrality or the argument that if not appellant someone else could have taken credit. During the relevant time there was considerable confusion about the scope of the expression service used for clearance of final products from the place of removal which was used in definition at Rule 2 (l) (ii) of the definition of input service - since this issue was one of legal interpretation of rules wherein two views were possible, demand may be restricted to normal period of limitation. - Decided partly in favor of assessee.
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2014 (2) TMI 481
Waiver of pre deposit - CENVAT Credit - Input service distributor (ISD) - nexus with manufacturing activity - trading activity - Held that:- Commissioner has not examined the service-wise eligibility for the credit involved but has only given a general finding in paras 27 & 28 of the adjudication order. The question whether the disputed input services were in relation to taxable output services or manufacturing activity is not examined. Further services like advertisement services continued to be covered by Rule 2 (l) of CCR Rules 2004 - Against the contention of the assessee, that they have had transferred only about 34.78% of the credit proportional to the turnover of manufacturing no finding is given - In view of these factors and the fact that the defects in ISD invoices are curable defects we are of the view that it is not proper to call for any pre-deposit for admission of appeal. Therefore, requirement of pre-deposit is waived and there shall be stay on collection of such dues during the pendency of the appeal - Stay granted.
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2014 (2) TMI 480
Waiver of pre deposit - Demand of service tax - Reversal of CENVAT Credit - Held that:- Waiver and stay can be granted to the assessee inasmuch as a major part of the CENVAT credit in question was reversed by them and there is no outstanding dispute with regard to the credit of Rs.9,800 - Stay granted.
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2014 (2) TMI 479
Waiver of pre deposit - Stay of recovery - Demand of service tax - Business Support Service - Held that:- no prima facie case for the appellant against the demand raised on them for the period prior to 10/05/2007. From the records, it appears that the consistent case of the appellant is that they were providing only BSS. This very service was a taxable service prior to 10/05/2007 also but no service tax was paid by the appellant. There is no cogent explanation for this default - Conditional stay granted.
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2014 (2) TMI 478
Waiver of pre-deposit of tax - Interest under Section 75 - Penalties under Section 76, 77 & 78 - Man-power Recruitment or Supply Agency Service - Held that:- Assessee already deposited partial amount - Therefore assessee directed to make remaining deposit - Decided against assessee.
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2014 (2) TMI 477
Waiver of pre deposit - Valuation - GTA service - certain inward & outward freight charges directly paid to owners of trucks which were used for transportation of goods were not included in the taxable value of GTA service. - Held that:- Following decision of Commissioner of Central Excise & Guntur Vs Kanakadurga Agro Oil Products (Pvt.) Ltd. [2009 (3) TMI 130 - CESTAT, BANGLORE] - Stay granted.
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Central Excise
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2014 (2) TMI 455
Clearance of goods under parallel invoices - Confirmation of the duty demand - Interest under Section 11AB - Imposition of penalty - Held that:- On comparing the particulars of the goods sold to PDIL under commercial invoice no.309 A dated 5.12.2000 with the particulars of the goods mentioned in the corresponding excise invoice no.227 dated 5.12.2000 issued by NSLED to PDIL, it is seen that the particulars are the same. These particulars tally with the description of the goods mentioned in the AR4 and also the description mentioned in the shipping bill. The AR4 had been filed by PDIL against which the goods had been cleared for export. The statement of Shri Nathu Lal of Nirmala Road Lines that the goods have been delivered at the premises of PDIL at Indore is simply based on their documents and in this regard, no inquiry has been conducted with the driver of the trucks to ascertain as to whether the goods covered under the four commercial invoices after their clearance from the factory had been transported to the ICD, Pithampur or to the premises of PDIL at Indore Therefore, the duty demand of Rs.12,89,279/- is not sustainable and the same has to be set aside. Ongoing through the 18 disputed quadruplicate copies of invoices, it is seen that out of 18 invoices, 11 invoices are defective inasmuch as the details in the upper portion rate per unit, quantity supplied and value does not match with the value on which excise duty has been calculated, as indicated in the lower portion of invoices. Therefore the 18 quadruplicate copies of invoices recovered from file no. 229 seized from the factory of NSLED cannot be treated as parallel invoices representing clearances made without payment of duty and hence the duty demand of Rs.6,49,002/- based on the same is not sustainable. Even of the setting aside the duty demand of Rs.19,38,281/- , the duty demand of Rs. 4,91,32/- would still remain, the penalty on him is reduced to Rs.20,000 - there is no evidence on record to prove that they had dealt with any goods cleared without payment of duty, in the manner specified in Rule 26 of the Central Excise Rules, 2002, penalty on them is not sustainable and the same is set aside - Decided in favour of assessee.
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2014 (2) TMI 454
Availement of CENVAT credit - Availment on basis of the invoices issued by the dealer - Discrepancies in the invoices and challans - Clandestine removal of goods - Held that:- credit stands denied on the ground that there were no corresponding invoices to the challans under which the inputs were cleared. The assessee has not produced any evidence to the contrary. Accordingly, I do not find any merit in the above plea of the assessee. Similarly, the respondents have admitted before the Commissioner (Appeals) that the scrap was generated during the manufacturing process which has been cleared by them without payment of duty - Decided in favour of Revenue.
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2014 (2) TMI 453
Denial of CENVAT Credit - Duty paid on laptop - Revenue issued a Show Cause Notice alleging that the said laptop was not either part of any machine or linked with the production process - Bar of limitation - Held that:- admittedly, during the period when the credit was availed, the machines were not in a position to work without laptop. Merely because the laptop is a movable item and can be shifted to another place cannot be a reason to hold that the same would not fall within the definition of capital goods. The laptop falls within Chapter 84 of the Customs/Central Excise Tariff and as per the definition of capital goods in terms of Rule 2(a)(A) of CENVAT Credit Rules, goods falling under Chapter 84 are to be treated as capital goods. There is nothing in the definition to assert that if the capital goods are movable, they would not be considered as capital goods. Demand is hopelessly barred by the limitation. Commissioner (Appeals) has observed that the Show Cause Notice was issued within a period of one year from the date of audit objections raised and as such is within the limitation period. I observe that the above finding of the Commissioner (Appeals) is not correct in as much as the relevant date as specified under the law does not start from the date of audit objection. Adopting the said date as the relevant date, for the purposes of limitation, would amount to rewrite the law. Admittedly, the appellants have availed the credit in the statutory records and the same was reflected in the returns/declarations filed by them. As such, no mala fide can be attributed to them, the issue being a genuine issue of interpretation of law - Decided in favour of assessee.
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2014 (2) TMI 452
Availment of CENVAT Credit - Bogus transactions or not - registered dealer - Held that:- Revenue has not made any investigations with the transporter so as to arrive at the correct factual position as to whether the inputs were supplied or not. The revenue has now placed on record a letter written by the Assistant Commissioner wherein certain investigations stand conducted at the appellate stage, recording the statement of excessive pressure of owner of the vehicle laying down that such vehicles was not used for transportation of the goods. However, I find that in the said statement, which stand produced before me, the deponent has clearly deposed that said truck in question remained with his brother only and was driven by the drivers employed by them as also by his brother. He has nowhere disclosed that he was aware of movement of said truck. It is not understood why such an inquiries from the transporter were not made during the relevant period. In any case, the Revenue has not produced any evidence to reflect that the appellant has procured the raw material from some other alternative sources. Admittedly the inputs stand reflected in the RG I register and stand used by the appellant in the manufacture of their final product, which stand cleared on payment of duty. In the absence of any evidence to show that such raw material was procured from other sources. The Revenues case that no inputs were received by the appellant cannot be held sustainable. Following decision of Talson Mill Store vs. CCE & ST, Ludhiana [2014 (2) TMI 443 - CESTAT NEW DELHI] wherein it was held that relieance on the sole statement of representative of M/s. Sidh Balak Enterprises cannot be appreciated- Decided in favour of assessee.
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2014 (2) TMI 451
Payment of duty through CENVAT Credit or PLA - Imposition of Penalty of identical amount - appellant defaulted in payment of duty during the period February, and March, 2008 and the said default was made good on 23.7.08 when the appellant paid the entire duty along with interest - Held that:- period involved in the present appeal is admittedly after 23.7.08 i.e. December 2009 to August, 2010. In terms of provisions of Rule 8, the default period would result in assessees liability to pay duty on consignment basis till the date assessee pays the outstand amount including interest. Admittedly the respondents had paid the amount on 23.7.08 and thereafter he would be entitled to utilize the credit for payment of duty in respect of subsequent clearances - Following decision of Meenakashi Associates vs. CCE, NOIDA [2012 (6) TMI 275 - CESTAT, NEW DELHI] - Decided against Revenue.
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2014 (2) TMI 450
Duty demand - Imposition of interest and equivalent amount of penalty has been confirmed against them for short payment of ₹ 10/- only - Held that:- entire amount of duty along with higher education cess has been already been paid by the appellant and there was a mis-calculation which resulted in short payment of ₹ 10/- only which was also paid by the appellants on their own. In these circumstances, the impugned proceedings were not warranted. Accordingly, impugned order is set aside - Decided in favour of assessee.
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2014 (2) TMI 449
Availment of CENVAT Credit without receiving concerned inputs - Recovery of credit with interest and penalties - Held that:- assessee had indulged into availment of cenvat credit without actually receiving the goods. It was found that the goods were never received in the factory and mere entries were made. This was established through the evidence on record which showed that the vehicles supposed to have been used for transport of the goods could never have been put to such use. The Revenue Authorities relied on the RTO reports which showed that the vehicles in question were of two wheelers and auto-rickshaws which allegedly transported tonnes of goods to the factory premises of the assessee. The assessee did not dispute the RTO reports, but canvassed that the entries in the record could have been made erroneously and hence discrepancy. From the stage of the show cause notice itself, it was alternatively suggested that in view of the short-fall in the stock in the premises of the assessee at the time of checking, even if the goods were actually received, the same were removed without payment of duty or reversal of the cenvat credit. Report of the RTO authority established that the numbers of the vehicles through which the goods were said to have been transported were two wheelers and rickshaws in which such heavily weighing goods could not ever have been transported. The assessee did not dispute the RTO report, but only suggested that the numbers of the vehicles in their registers would have been wrongly noted. We are afraid, such a flimsy explanation cannot be accepted. Discrepancies were noted not in one or two vehicles, but in large number of cases. Further, the assessee in order to explain away the short-fall in the physical stock, contended that the goods previously received were sold in the market as the same was found to be inferior and not possible for use in manufacturing activity. Even this was so, the assessee was required to reverse the cenvat credit which the assessee admittedly did not do. The Authority, therefore, rightly invoked the extended period of limitation - Decided against assessee.
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2014 (2) TMI 448
Manufacturing of exempted as well as dutiable goods - Cenvat facility - Rule 6 - the appellant did not maintain separate accounts as required under Rule 6 (2) of the Cenvat Credit Rules, 2004 in respect of common inputs service used in the manufacture of exempted products as well as dutiable products. - Appellant made reliance on the case of Shree Rama Multi tech Ltd., Vs. UOI, reported in [2011 (2) TMI 575 - GUJARAT HIGH COURT] wherein proportionate credit was allowed to be reversed instead of 10% of the price of exempted goods - Held that:- Appellant was manufacturing dutiable as well as exempted goods and while availing of Cenvat credit, the Appellant had not maintained a separate account as required by Rule 6(2) and suppressed this fact. On this ground, the extended period of limitation was invoked and the Appellant was held liable to pay an amount equal to 10% of the total price of the exempted final product as required by Rule 6(3)(b). Material before the Tribunal was sufficient to indicate that admittedly the Appellant produced dutiable and exempted products. Though it failed to maintain a separate account in respect of the input service utilised in or in relation to the dutiable and exempted final products as required by Rule 6(2), this fact was suppressed from the Department with the intent to evade duty - Appellant had failed to avail of the facility which was available under the amended provisions of the Finance Act, 2010. The Tribunal while deleting the penalty has made a passing observation to the effect that there was no intention to evade payment of duty. This, however, does not in any way nullify or negate the principal finding of the adjudicating authority and the first Appellate Authority which has been confirmed by the Tribunal - Decided against assessee.
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2014 (2) TMI 447
Denial of MODVAT Credit - credit taken in respect of PVC resin received during the period from 24th February, 1992 to 4th May, 1992 - Recover of credit under Rule 57-I of the Central Excise Rules, 1944 - contravention of Rule 57-I - IMposition of penalty - The basis of the demand of Rs. 25,87,588-90 is in relation to the utilization of credit availed for PU resin other than Grade 5702 in payment of duty on LBSP, though such inputs have not been used in manufacture of the said product. The appellate authority noted that use of PU Resin other than Grade 5702 was not made, but it was pleaded by the petitioner that other grades could be used ajnd the petitioner intended to use the same in manufacture of LBSP. The case of the petitioner noted by the CEGAT is that actual use need not be made as the petitioner was conducting various experiments. Inputs of only Grade 5702 were used by the petitioner. Perusal of the statements shows that the intention to use other grades is not at all reflected from the said statements. A mere desire to use the other grades in future or a mere possibility that the other grades may be used for manufacture of the final product is not sufficient for the purposes of Clause (i) of sub-rule (3) of Rule 57F. Therefore, the Collector and more specifically CEGAT were right in taking the view that the PU of other grades was never intended to be used - In the circumstances, the order of the appellate authority cannot be faulted with. As far as penalty is concerned, the same has been reduced to 1/4th by the Appellate Authority - Decided partly in favour of assessee.
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2014 (2) TMI 445
Denial of refund claim - Bar of limitation - Whether Tribunal was justified in holding that the refund claim is barred by limitation except the only small part thereof which forms part of the endorsement in the personal Reserve Account - Held that:- where a person proposes to contest his liability by way of appeal, revision in the higher courts, he would naturally pay duty, whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests levy of duty, its rate, classification or any other aspect. If one reads second proviso to sub-section (1) of Section 11B along with definition of relevant date, there is no room for any apprehension - no refund shall be ordered unless claimant establishes that he has not passed on the burden to others. Tribunal committed no error in recording the findings that the claim was barred by time, as even on the procedure prevalent prior to Mafatlals case, Rule 223B was not fully complied with. If it is necessary to show that burden has not been passed on to the consumer, Rule 223B had to be complied with, and in that case not only endorsement in the PLA account but also gate passes should have indicated that the passes have been issued under protest - Decided against assessee.
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2014 (2) TMI 444
Duty demand - Invocation of extended period of limitation - suppression of facts - Held that:- The material on record would clearly show that there is suppression of fact as it clear from the order passed by the adjudicating authority and the appellate authority that there was no manufacturing activity involved in refurbishing and modification of the 3 washing machines, despite the same, Cenvat credit was claimed and though duty of Rs. 2,61,760/- was collected, the said fact was suppressed and therefore availed extended period of limitation. Non-disclosure of receipt of such amount at the time of assessment extended period of 5 years applicable and Rule 10(1)(C) of the Central Excise Rules, 1944, corresponding to Section 11A of the Central Excises and Salt Act, 1944. Thus extended period was applicable. Hence, the show cause notice issued after one year was not barred by limitation under Central Excises and Salt Rules wherein provision is identical to the provisions under the Central Excise Act. Tribunal has not at all considered the reasoning assigned by the adjudicating authority and the appellate authority in holding that there is no suppression of material facts and thus has proceeded to set aside the order passed by the appellate authority and by holding that there is no suppression of fact which is baseless and based on conjuncture and surmises and not based upon the material on record - The order is set aside and the matter is remitted to CESTAT for consideration of the appeal - Decided in favour of Revenue.
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CST, VAT & Sales Tax
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2014 (2) TMI 488
Penalty under Section 16(2) of the Tamil Nadu General Sales Tax Act 1959 - Whether on the facts and in the circumstances of the case, the Tribunal was right in levying penalty on the petitioner even after holding that the petitioner has reported the turnover and claimed exemption is correct in law - Held that:- The assessing authority also levied penalty under section 16(2) of the TNGST Act, 1959. According to the assessees the claim of exemption was made bona fide and the same was also accepted in the original assessments. The assessments were revised on a mere change of opinion. Therefore, the penalty under section 16(2) of the Act would not be attracted. According to the Revenue, the original penalty orders of the assessing officer should be restored. The assessees have filed counters for enhancement petitions filed by the department. According to the assessees the Appellate Assistant Commissioner ought to have deleted the entire penalty instead of sustaining 50 per cent of the penalty levied by the assessing authority. It remains to be seen that the exemption claimed by the assessees was allowed in the original assessment. The non-disclosure of turnover on the apart of the assessees came into existence because of the revised assessments made by the assessing officer. Simply because the assessees' claim for exemption was negatived by the department, that does not mean that the assessees have suppressed anything. Under these circumstances, the Tribunal was correct in holding that no penalty is exigible in the case of all the assessees under section 16(2) of the Act - Following decision of Deputy Commissioner of Commercial Taxes, Trichy Division, Trichy Versus VR. Kuppusamy Gounder and Sons [1994 (11) TMI 375 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2014 (2) TMI 487
Penalty under section 15-A (1)(e) of the U.P. Trade Tax Act - Tax u/s 3-F - Imposition of tax on transfer of right to use on the application - Tribunal passed an interim order on the second appeal staying realisation of the disputed amount of tax upto 80% - While the second appeal was still pending before the tribunal and yet to be finalised, the Assistant Commissioner passed order on 8.9.1997 by which it imposed a penalty on the assessee under section 15-A (1)(e) of the Act taking a view that the assessee had not deposited the tax within time - Held that:- since the assessee had taken recourse to the statutory remedy available to him under the Act and had filed an appeal as well as stay application, it is not possible for this court to come to the conclusion that the assessee had without reasonable cause failed to deposit within time allowed the tax which was due. To come to this conclusion would mean that it would render statutory remedy itself nugatory and of no use. The facts that the tribunal did not pass orders on the stay application filed by the petitioner for six months, cannot be said to be a fault attributable to the assessee. The assessee on his part had within time prescribed applied for the statutory remedy and it was statutory authority who did not pass necessary orders speedily - in order to give meaning of section 15-A (1)(e) of the Act, 3 which has to be read in certain manner and if a party had applied within time and within time allowed to deposit due tax, it could not be said that it had failed to pay the tax due from him - The delay, if any in passing of the stay order in this case was attributable to the tribunal. The assesee had not failed to comply with the demand of section 15-A (1)(e) of the Act. The order imposing penalty on the assessee is thus set aside - Decided in favour of assessee.
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