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TMI Tax Updates - e-Newsletter
February 14, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Highlights / Catch Notes
Income Tax
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SSTCG or LTCG - sale of composite factory land, factory building alongwith borewell was sold consideration received should be bifurcated in respect of each of the assets on reasonable basis - AT
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There was no justifiable ground to accept the plea of the assessee that the parking shed put up by the assessee should be treated as temporary one for the purpose of granting depreciation at 100% - HC
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Section 158BE expressly states that the satisfaction is to be recorded by the AO with respect to the need to issue notice to the third party before he hands-over possession of books and assets seized or requisitioned, to the AO of such third party - HC
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Power of AO to pass an assessment order where application was filed before settlement commission Income Tax Settlement Commission, rejected the application - decided in favor of revenue - HC
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Petition for quashing the Notice issued u/s 263 of the Act he petitioner ought not to have approached the Writ Court at the stage of show cause notice - HC
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Recovery of dues - stay - If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws - HC
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The amounts written off were advanced during the course of carrying on of business and sprang directly from the business, the amounts forgone are business loss and are allowable - AT
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Capital gain Sale of mutual fund units DTAA with Switzerland in the absence of any specific provision under the Act to deem the unit as shares, it could not be considered as shares of companies and, therefore, the provisions of Article 13 (5) (b) cannot be applied in case of units - AT
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Disallowance of expenses there was no permanent closure of the business - even if the assessee was not able to restart the business there will be no use of any such loss carried forward claim allowed - AT
Customs
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Claim of interest at the rate of 9% in respect of sale value of the gold which was sold by the Customs Department pursuant to the order of absolute confiscation which was passed - claim not allowed - HC
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Permit of transit of liquor - all the necessary official documents issued by the Customs authorities - State Excise authorities therefore had no authority whatsoever to seize the said consignment and to register a case - HC
Service Tax
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Filing of appeal before wrong Forum - Tribunal has adopted a hypertechnical view forgetting the fact that every endeavour should be made to dispose of the lis on merits - HC
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Waiver of pre-deposit - Financial Hardship - It is well-settled that payment under compulsion of any amount which is not due and payable would also constitute hardship so far as the assessee is concerned, even though the assessee may be in a financial position to pay the same. - HC
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Waiver of pre-deposit - principle of natural justice - non-consideration of the petitioners application to receive the additional evidence in spite of the fact that it is listed for hearing, caused grave prejudice to the case of the petitioner - HC
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Arrears of service tax - applicant has been arrested in connection with the offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 - conditional bail allowed.- HC
Central Excise
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Suo moto credit taken due to excess Reversal of CENVAT Credit - appellant has taken the credit of the excess amount paid by them, which is not duty. - provisions of Section 11B are not applicable - AT
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Valuation of goods - Related parties - There is absolutely neither any allegation, nor any evidence to show that the respondent and M/s P.S. Steel Tubes (P) Ltd. have interest in the business of each other. - demand set aside - AT
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Reversal of Un-utilized CENVAT Credit - On being pointed out by the audit, the appellant immediately reversed the same. - the same would not attract any interest or penalty - AT
VAT
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Inclusion of value of Gold declared under VDIS scheme of Income Tax Act by the partner in the hands of Firm - decided against the revenue - HC
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Allegation of crossing of goods from check post without form 31 - how the department has issued Form 31 time to time without getting the verification of the previous Forms. - there is no concealment/malafide intention - no penalty - HC
Case Laws:
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Income Tax
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2014 (2) TMI 541
Confirmation of penalty u/s 271(1)(c) of the Act Held that:- There was no clear finding by the Assessing Officer whether the assessee is guilty of concealing the income and/or furnishing inaccurate particulars of the income - the requirements as provided u/s 271(1) (c) for imposing penalty are required to be complied with - while imposing the penalty under Section 271(1)(c) of the Act, two conditions are required to be satisfied i.e. , the assessee has concealed the particulars of his income and the assessee has furnished incorrect particulars of such income Relying upon CIT Vs. Manu Engineering Works [1978 (9) TMI 18 - GUJARAT High Court] and New Sorathia Engineering Co. Versus Commissioner of Income-Tax [2006 (1) TMI 71 - GUJARAT High Court] - the Assessing Officer is required to give clear finding whether the assessee is guilty of concealing the income and/or furnishing incorrect particulars of income thus, there was no reason to interfere in the order of the ITAT Decided against Revenue.
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2014 (2) TMI 523
Short Term Capital Gain or Long Term Capital Gains (STCG / LTCG) - sale of composite factory Held that:- The assessee had sold his bakery including the land, building and machinery - it was found that the assessee sold only factory land, factory building alongwith borewell was sold - the assessee sold for a composite consideration factory land on which no depreciation was claimed and allowed, alongwith factory building and borewell on which depreciation was claimed and allowed to the assessee in earlier years - The gain which the assessee derived on sale of factory land is therefore, to be treated as long term capital gains and the profit which the assessee derived on sale of factory building and borewell is to be treated as short term capital gain in view of special provisions contained in section 50 of the Act thus, consideration received should be bifurcated in respect of each of the assets on reasonable basis - the Assessing Officer was not justified in treating the entire capital gains as short term capital gains nor the CIT(A) was justified in treating the entire capital gains as long term capital gains as claimed by the assessee the order set aside and the matter remitted back to the AO for recomputation of the capital gains Decided in favour of Revenue.
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2014 (2) TMI 522
Deduction u/s 80HHC of the Act Profits derived from business of export - Held that:- Unless the assessee is in a position to point out that the income earned is derived by the assessee from export of such goods and merchandise, such income would not qualify for deduction under Section 80HHC of the Act The decision in CIT Vs. K.Ravindranathan Nair [2007 (11) TMI 10 - Supreme Court of India] - every receipt is not an income and every income would not necessarily include element of export turnover - receipts constituting independent income having no nexus with exports are required to be reduced from business profit - every receipt cannot constitute sale proceeds from exports - every receipt is not income under the Income-tax Act and every income may not be attributable to the business of export - even though the assessee is an exporter, there was no necessary materials to point out as to whether the assessee's forward contracts were with reference to any particular contract or not or generally kept as an export house and not by way of speculative business the matter remitted back to the AO to find out whether forward contract were made in the course of its business of export and whether the profit earned from exchange fluctuation were with reference to any particular contract for export of goods. Claim of depreciation on temporary parking shed Held that:- The expenditure incurred was apart from the extent of expenditure thus incurred - whether the parking shed is a temporary one for parking vehicle or the shed itself is temporary one is not yet cleared - other temporary shed for keeping spares - ware-house and other expenditure incurred on storage facilities there was no justifiable ground to accept the plea of the assessee that the parking shed put up by the assessee should be treated as temporary one for the purpose of granting depreciation at 100% - order set aside and the depreciation on the expenditure incurred on putting up of temporary shed for parking vehicle would be at 10% only thus, the matter remitted back to the AO. Expenditure on dies & moulds Held that:- Replacement of the new dye in the place of old dye would qualify for current repairs under Section 31 of the Act - The decision in CIT Vs. Sri Mangayarkarasi Mills P.Ltd [2009 (7) TMI 17 - SUPREME COURT] followed - what is allowable as revenue expenditure under Section 37 of the Act are those expenditure other than one falling for consideration under Sections 30 to 36 of the Act - when the picture tube in a television set is replaced, such repairs would come within the connotation of the phrase "current repairs" thus, the claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs the order of the Tribunal modified. Deduction under Entry Tax Held that:- The Tribunal rightly considered the claim of the assessee for deduction of entry tax payment made by the assessee - The payment made on the entry tax demand and its adjustment against the Sales Tax assessment has nothing to do with deduction provision under the Income Tax Act on the entry tax paid - The provisions of Sales Tax Act and the Income Tax Act are on the different lines - The adjustment or the treatment given under the Sales Tax Act cannot be read in to the Income Tax Act and the only question is whether the entry tax actually paid by the assessee during the year under consideration is allowable as deduction or not - The Tribunal rightly allowed the deduction claimed by the assessee on account of tax payment made under Entry Tax Act - Decided partly in favour of Revenue.
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2014 (2) TMI 521
Time-barred notice issued u/s 158BD of the Act Search u/s 132 of the Act conducted - Held that:- CIT(A) was of the view that the communication dated 14.7.2003 by the AO holding jurisdiction over Major Aggarwal cannot be constructed to be the satisfaction as required by the provisions of Sec. 158BD - the notice u/s 158BD was issued on 14.6.2005 which is approximately 34 months after the framing of the assessment of Shri Manoj Aggarwal which was made on 29.8.2002 thus, it cannot be said that the notice was issued within reasonable time - The interpretation of section 158BD not only furthers the intention of the Parliament, but also sub-serves the larger public interest in that it places reasonable fetters upon the jurisdiction of the concerned AO who might otherwise be left with uncontrolled discretion in such matters - Section 158BE expressly states that the satisfaction is to be recorded by the AO with respect to the need to issue notice to the third party before he hands-over possession of books and assets seized or requisitioned, to the AO of such third party there was no substantial question of law arises Decided against Revenue.
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2014 (2) TMI 520
Power of AO to pass an assessment order where application was filed before settlement commission Income Tax Settlement Commission, rejected the petitioners application on the ground that the assessment was time barred. The petitioner contended that the entire proceedings had to be closed since the block assessment had become time barred on 29.02.2000 - Held that:- The decision in Deen Dayal v. Union of India [1985 (5) TMI 8 - DELHI High Court] followed - even while upholding the authority of the Assessing Officer to complete assessment, clarify that there will be no impediment to the Settlement Commission in exercise its powers if it decides to exercise them. The consequence of accepting the argument of the assessee would be that even though there was a search of his premises u/s 132 of the Act which yielded incriminating material, the proceedings arising out of which he wanted to settle by approaching the Settlement Commission, he would still end up not paying any tax, as the block assessment became barred by time and there would also be no settlement order u/s 245D(4). Such a situation could not have been intended by the statute. Though now the situation has been taken care of by the insertion of the first proviso to Section 245F(2) by the Finance Act, 2007 w. e. f. 01.06.2007, but that cannot prejudice the rights of the revenue prior to that date as it seems to us that it was inserted only ex abundant cautela". In Calcutta Jute Manufacturing Co. vs. CTO, (1997 (7) TMI 118 - SUPREME COURT OF INDIA), the Supreme Court held that a machinery provision must be so interpreted as to effectuate its purpose, and the distinction between a charging section and a machinery provision whose function is to effectuate the charge, was pointed out in the context of the rule of interpretation to be adopted. The details of the application, probe, consideration, hearing and disposal, found in the report, had been incorporated in the statutory provisions in Chapter XIX-A - it was only in the nature of machinery provisions for the purpose of settlement of tax disputes between the assessee and the Revenue - The provisions do not compel any assessee to resort to section 245C, but that can be availed of, if the assessee so chooses - the remedy provided under section 245C, as a machinery provision for effecting settlement of tax disputes, was only in the nature of a concession or option open to the assessee who desired to settle his tax matters Decided against Assessee.
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2014 (2) TMI 519
Petition for quashing the Notice issued u/s 263 of the Act Held that:- The Commissioner has stated that on perusal of the assessment records in the case of the appellant for the assessment year 2009-10 shows that the assessment was completed under Section 143(3) of the Act vide order dated 19.12.2011 - the immovable property sale proceeds were treated as Long Term Capital Gains instead of Short Term Capital Gain, which has resulted into an order which is prejudicial to the interests of revenue - The expression "resulted into an order which is prejudicial to the interest of revenue" has to be held to be sufficient for the purpose of invoking the power under Section 263 of the Act - the petitioner ought not to have approached the Writ Court at the stage of show cause notice - It is appropriate for the assessee to submit his reply to the notice and raise all the contentions available before the Assessing Authority Decided against Assessee.
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2014 (2) TMI 518
Recovery of dues - stay - attention was drawn to the Circular No.530 dated 6 March 1989 issued by the Central Boards for Direct Tax (CBDT) wherein it has been specifically provided that when the demand in dispute relates to an issue that had been decided in favour of the assessee in an earlier order by an Appellate Authority, then in such a situation, the assessee should not be treated as an assessee in default and stay should be granted. Held that:- The Assessment Order dated 17 December 2013 ignores it on the ground that the view of the Tribunal is not tenable - In hierarchical system of jurisprudence, it is not open to the Lower Authority to ignore the binding decision of a Superior Authority unless the order of the Superior Authority has been stayed the decision in Union of India v/s Kamlakshi Finance Corporation Ltd. [1991 (9) TMI 72 - SUPREME COURT OF INDIA] followed - The principles of judicial discipline require that the order of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department in itself an objectionable phrase and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court - If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws - the revenue is keen in not giving petitioner its refund and are acting contrary to and in defiance of orders passed by the Appellate Authority - The CIT (A) to give a priority to the petitioner's appeal for the Assessment Year 2012-13 and hear the same as expeditiously as possible. - stay granted.
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2014 (2) TMI 517
Validity of block assessment proceedings within time limit - Notice u/s 143(2) of the Act not issued Held that:- The decision in Assistant Commissioner of Income-Tax and another vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] - Notice u/s 143(2) would be mandatory even in case of block assessment proceedings - issuance of notice is mandatory, it is the notice which is the very foundation of the jurisdiction of the Assessing Officer Omission on the part of the Assessing Officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable, and therefore, the requirement of notice cannot be dispensed with thus, the Assessing Officer failing to issue notice within time limit merely because the assessee participated or that the notice was issued later on would not cure the jurisdictional defect Decided against Revenue.
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2014 (2) TMI 516
Disallowance of claim u/s 80(P)(a)(i) of the Act Held that:- The decision in Totgars' Co-operative Sale Society Ltd. vs. ITO [2010 (2) TMI 3 - SUPREME COURT] followed - The only interest which is received by the Cooperative Credit Society from its members for providing credit facilities to them is eligible for deduction u/s 80P(2)(a)(i) of the Act - the interest income arising from various sources and it would come in the category of "Income from other sources" thus, the interest income would be taxable u/s 56 of the Act - interest income do not fall within the meaning of expression "Profits and Gains of Business" - such business income cannot be said to be attributable to the activities of the Co-op Credit Society, namely, carrying on the business of providing credit facilities to its member or marketing facilities to its members - thus, the appellant is not eligible for deduction u/s 80P(2)(a)(i) in respect of interest the order of the CIT(A) upheld Decided against Assessee. Setting off of expenditure u/s 57 of the Act Bank Interest Held that:- A statement has been submitted showing interest income and interest expenses according to which proportionate interest should have been disallowed - Since these details were not before lower authorities thus, the matter is remitted back to the AO for fresh adjudication Decided partly in favour of Assessee.
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2014 (2) TMI 515
Unexplained credit Capital introduced by the partner in the firm - Held that:- The Assessee had satisfactorily explained the nature and source of capital introduced by the partner and had also proved even the source of source - all the partners are assessed to tax and the Assessee placed on record, the copy of the I.T. returns, personal balance sheets - From the computation of the income of the various partners placed on record, revenue pointed out that the interest on capital received from the firm has been shown by the Assessee as income and the same has also been allowed and the income on capital has also been allowed as expenditure by the Revenue Relying upon CIT vs. Ranchhod Givabhai Nakhaba [2012 (5) TMI 186 - GUJARAT HIGH COURT] - the order of the CIT(A) upheld - the Revenue could not controvert the findings of CIT(A) nor has brought any material on record in its support Decided against Revenue. Addition made u/s 69C of the Act Held that:- CIT(A) was of the view that only real income should be taxed and therefore there was no reason for determining income u/s. 69C when the expenses were actually recorded - even in principle the expenses found, which related only to six weeks and that too in a period of two months, cannot be averaged over the whole year as production is not at the same levels throughout the year and depends on several factors - If the unexplained expenditure made under section 69C is removed from the income, meager taxable income remains in the hands of Assessee - CIT(A) has noted that on the comparison of details of expenses recorded in the books and those mentioned in the loose papers - the expenses were recorded in the books except from some minor discrepancies for week ending 22.12.2007 - mismatch of data for one week cannot be extrapolated for the year Revenue could not controvert the findings of CIT(A) nor has brought any material on record in its support Decided against Revenue.
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2014 (2) TMI 514
Addition made u/s 43B of the Act - Assessee has not furnished any explanation to the proposal - Held that:- The assessing officer found that the sales were shown as net of trade discount - the assessee debited an amount in the profit & loss account and claimed the same as sales-tax paid over and above sales-tax collected - The explanation called for by the lower authorities was not properly responded by the assessee thus, giving one more opportunity to the assessee to explain how the payment was made over and above the tax collected may not prejudice the interest of the revenue thus, the order set aside and the matter remitted back to the AO for fresh adjudication. Validity of block assessment proceedings Held that:- Notice u/s 143(2) shall be issued on or before 30-09-2006 - no notice was issued u/s 143(2) - the issues concluded by operation of law cannot be reopened in view of the specific provisions contained in Second Proviso to section 153A(1) of the Act - The main issue with regard to addition was remitted back to the file of the assessing officer Decided in favour of Assessee. Addition of proportionate interest and diversion of interest bearing funds Held that:- The assessee clearly demonstrated before the CIT(A) that sufficient interest free / own funds were available for making advance to relatives and investment in shares - The assessee has also filed copies of the statement of accounts in respect of respective years to explain the availability of non interest bearing funds - when the assessee had sufficient non interest bearing funds, advances made from and out of the non interest bearing funds cannot be a reason to disallow interest on the borrowed funds Relying uponMunjal Sales Corporation Versus Commissioner of Income Tax [2008 (2) TMI 19 - Supreme Court] - when the assessee has sufficient own funds and profit, it cannot be said that the borrowed funds were diverted thus, the CIT(A) has rightly deleted the addition - From the orders of the CIT(A) and the materials filed by the assessee before this Tribunal, it is obvious that non interest bearing funds were available with the assessee Decided against Revenue. Addition towards unexplained investment in construction CIT(A) deleted the addition only on the ground that the assessee is entitled for exemption u/s 10(23C)(vi) - Held that:- The Tribunal found that the term "any income" referred in section 10(23C) does not include the money collected for admission of the students over and above the prescribed fee - the income generated in the course of running of the educational institution, the income generated from the property held under trust and any voluntary donation other than for admission of the students may fall within the term "any income" referred in section 10(23C) of the Act thus, the assessee was entitled for exemption us 10(23C) of the Act - the assessing officer has made only protective assessment - a further addition on protective basis in the hands of the trustee, viz. the present assessee cannot be justified Decided against Revenue. Addition towards unaccounted receipts Held that:- The assessee furnished the name and address of Smt. Hazeena so as to enable the department to make necessary enquiries - In spite of that the assessing officer has not made any enquiry Relying upon CIT vs Lakshmi Hospital [2011 (7) TMI 532 - Kerala High Court] Decided against Revenue. Payment of sales-tax over and above the sales-tax collected The decision in AA Salam. Versus Assistant Commissioner Of Wealth-Tax. [2006 (8) TMI 235 - ITAT COCHIN] followed - when the sales-tax collected was not routed through the profit & loss account, the claim of the assessee that he made the payment over and above the sales-tax collected needs to be verified thus, the matter remitted back to the AO for fresh adjudication.
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2014 (2) TMI 513
Deletion made on account of unadjusted balance of advances written off as business loss. Held that:- The assessee had written off the amount - There is no evidence on record to suggest that the amounts were recoverable even when relevant details were available - In the absence of any contrary evidence we have no alternative but to presume that the amount became irrecoverable when the assessee wrote it off in its books of account - The decision inCIT vs. Abdul Razak and Co. [1981 (2) TMI 27 - GUJARAT High Court] followed - there was no evidence to suggest that any partner of the debtor firm was related to the partner of the assessee firm held that the loss should be allowed as deduction u/s. 28 of the Act - every loss is not so deductible unless it is incurred in carrying out the operation of the business - the amounts written off were advanced during the course of carrying on of business and sprang directly from the business, the amounts forgone are business loss and are allowable Decided against Revenue.
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2014 (2) TMI 512
Penalty u/s 271(1)(b) of the Act Held that:- The penalty in these cases has been levied for failure of the assessee to comply with the notice u/s. 142(1) of the Act - there was reasonable cause for the failure of the assessee to comply with the notice on the specified date - assessee has sought 45 days time to comply with the notice in this regard - it can be construed as reasonable cause for failure on the part of the assessee to comply with the notice. Section 273B provides that that no penalty shall be imposable on the person or the assessee, for any failure referred to in the provisions if he proves that there was reasonable cause for the failure - there was reasonable cause for the failure on the part of the assessee - Relying upon Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income Tax [2007 (8) TMI 386 - ITAT DELHI-G ] - assessment have been made under section 143(3) and not under section 144 of the IT Act - subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO - thus, the penalty u/s. 271(1)(b) could not be levied thus, the order of the CIT(A) set aside and the penalty set aside Decided in favour of Assessee.
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2014 (2) TMI 511
Disallowance of deduction claimed u/s 36(1)(viia) of the Act 10% of aggregate advances by the rural branches Held that:- The decision in Kodungallur Town Co-op Versus Assistant Commissioner of Bank Ltd.[2014 (2) TMI 137 - ITAT COCHIN] followed - The term banking Company also includes a Co-operative Bank - Thus a co-operative bank falls under the definition of banking company - Further as per the definition given in Explanation under sec. 36(1)(viia) of the Income tax Act, a banking company as defined in sec. 5(c) of the Banking Regulation Act, which is not a scheduled bank, is classified as a non-scheduled bank thus, a Co-operative bank would be classified as a non-scheduled bank for the purpose of sec. 36(1)(viia) of the Act Decided against Assessee.
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2014 (2) TMI 510
Liability to deduct TDS u/s 194C of the Act - Disallowance under section 40(a)(ia) of the Act - Can a distinction between joint ventures formed for the purpose of obtaining a contract and other Joint Ventures be made Liability for tax and interest u/s 201(1) and 201(1A) of the Act - Held that:- If the Joint Venture has not executed the work and the entire work has been executed by the constituents on a back to back basis and the contract amount received by the Joint Venture was entirely transferred to the constituents of the Joint Venture without retaining any amount towards profit, then there may not be any liability on the assessee to deduct tax at source. Where Joint Venture is formed only for the purpose of obtaining contracts and specific portions of the contract are to be completed by individual constituents independently, then it cannot be a case of the Joint Venture giving works contract to the constituents - the profit of the project in such a case should be assessed in the hands of the individual constituents and not in the hands of the consortium AOP - The entire work was executed by the constituents and the Joint Venture has paid the entire contract receipts received by it from the contractee to the constituents without retaining any portion of the profit by whatever name it may be called - the matter remitted back to the AO for fresh adjudication Decided in favour of Revenue.
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2014 (2) TMI 509
Deletion of Penalty u/s 271(1)(c) of the Act Whether the addition could be treated as unexplained cash credits Held that:- The decision in Shri Prakash K. Patel Prop. Pakash Plastics Versus Income Tax Officer [2010 (12) TMI 1083 - ITAT AHMEDABAD] followed - The penalty levied on the addition does not survive, thus, the same is deleted - In respect of addition - the addition on the basis that capacity of creditworthiness of the donor could not be established - assessee contended that there is no dispute with regard to genuineness and identity of the donor - The CIT(A) deleted the addition on the basis that provisions of section 68 of the Act creates a legal fiction and fiction created by such provision are only for the limited purpose of assessment and the same cannot be made applicable u/s.271(1)(c) of the Act - Mere operation of the fiction in the quantum proceedings does not by itself justify the levy of penalty - the only reason why the additions have been confirmed is the failure of the assessee in proving the creditworthiness of the donors which is material in so far as quantum assessment proceedings are concerned and not in case of penalty proceedings - there is no infirmity in the finding of CIT(A) and the order is upheld Decided against Revenue.
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2014 (2) TMI 508
Taxability of capital gain Sale of mutual fund units DTAA between India and Switzerland Scope of Article 13(6) of the tax treaty - Held that:- Even though the section 32(3) had created the fiction to make the UTI a deemed company and distribution of income received by the unit holder a deemed dividend, the deeming provision had to be applied for the purpose for which it had been specifically created Relying upon Apollo Tyres Ltd. Versus Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court] It was confined only to deeming UTI a company and deeming the income from units as dividend - There were no specific provisions for deeming the units as shares - units of UTI are not shares of companies - in the absence of any specific provision under the Act to deem the unit as shares, it could not be considered as shares of companies and, therefore, the provisions of Article 13 (5) (b) cannot be applied in case of units the order of the CIT(A) upheld that provisions of Article 13(6) are applicable in case of units as per which the capital gain cannot be taxed in India Decided against Revenue.
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2014 (2) TMI 507
Undisclosed sales and purchase - Search made u/s 132 of the Act Incriminating documents found during search Held that:- The CIT(A) was reasonable as also justified in granting the part relief to the assessee - The reasons assigned is evident that it is justifiable on the part of CIT(A) - This is not a case where the addition was made in a regular or normal course of assessment proceedings - But where on account of search or surveys certain documents were unearthed and on that basis the addition was made - The amount which was already declared by the assessee was considered and due relief was given, but for rest of the amount in the absence of satisfactory explanation the addition was made - In the absence of any evidence on merits from the side of the assessee, the order of the CIT(A) upheld Decided against Assessee. Unaccounted transactions as undisclosed sales and purchase - Search made u/s 132 of the Act Incriminating documents found during search Held that:- The amount as reflected in AS-21 of Rs.4,69,000/- and an amount as appeared at AS-24 of Rs.42,000/- did not belong to the assessee - the entries on that paper did not relate to the assessee rather no name of the assessee had appeared at any place on this document marked as AS-21 which was not recovered from the assessee but from the premises - the treasury receipt marked as AS-24 did not belong to the assessee but it was related to some other party, namely, M/s. Royal Enterprises - the assessee's contention has some force, thus, deserves relief only in respect of these two additions - For rest of the documents, the same have been proved to be connected to the assessee, hence, no interference is required in respect of those additions Decided aprtly in favour of Assessee.
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2014 (2) TMI 506
Addition made as suppressed sales AO noticed that the three flats in three different floors were sold at different prices - As per AO, assessee has earned more income from sale of flats than disclosed in sale agreement. - Held that:- The assessee has furnished various details and from there AO noticed that the three flats in three different floors were sold at different prices - Prima facie the explanation of the assessee is a plausible explanation and as seen in the MOU, there is a good reason to obtain a different and higher price - Whatever may be the reason for paying higher amount, the assessee has accounted for the entire amount and if there is any understatement of sale price of flat, it is for the revenue to establish the understatement by separately examining the sale of these flats rather than basing the assessment on the fact that flat was sold at a higher price. The assessee has filed additional evidence in terms of Rule 18(4) of not only an affidavit by the partner, letter from Shri N.R. Murthy and from the other purchasers of flat 701 and 801 but also placed the MOU entered on 06/10/2005 between builder and Mrs. Sudha Murthy and copies of photoes indicating the view point from apartment - As the additional evidence is admitted, Assessing Officer has to examine these, as they are not placed before Assessing Officer in the course of assessment proceedings thus, the addition cannot be sustained on the basis of the reasoning taken by AO - Since the additional evidence was not placed before Assessing Officer, in the interest of justice, the order is set aside and the matter remitted back to the AO to consider the additional evidence and complete the assessment as per law and facts Decided in favour of Assessee.
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2014 (2) TMI 505
Profits from sale of shares treated as STCG against Business income Held that:- The assessee showed profit from the transfer of shares as Long term capital gain and Short term capital gain which was assessed by the Assessing Officer as such in assessment made u/s 143(3) of the Act - This shows that the assessee held and declared the shares as `Investment' and this stand came to be accepted by the Revenue - different treatment cannot be given in the previous year relevant to the assessment year under consideration Relying upon CIT vs. Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] the view approved in which the principle of consistency was followed and the profit from transfer of shares was accepted as capital gain on the strength of similar view taken and accepted in the earlier orders the CIT(A) has taken an unimpeachable view on the issue and the order is upheld Decided against Revenue. Nature of F/O losses Business loss OR Speculative loss Held that:- The decision in CIT v/s Bharat R. Ruia (HUF) [2011 (4) TMI 37 - BOMBAY HIGH COURT] followed - the loss on account transactions in derivatives is speculative up to A.Y. 2005-06 and further that the insertion of clause (d) to the proviso to the section 43(5) is prospective and hence applicable from assessment year 2006-07 - As the assessment year under consideration is prior to the insertion of clause (d) the order of the CIT(A) set aside and the order of the AO restored Decided in favour of Revenue. Income treated as Business Income istead of STCG Held that:- The assessee continued to make investment in shares as was done in earlier years and earned Long term/ Short term capital gain - Both the sides are in agreement that the facts and circumstances of this issue are mutatis mutandis similar to those for the assessment year 2005-06 - While disposing of the appeal for the A.Y.2005-06, the similar amount should be considered as Short term capital gain instead of `Business income' the order of the CIT(A) set aside and the AO is directed that transfer of shares to be treated as Short term capital gain and not as `Business income Decided in favour of Assessee.
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2014 (2) TMI 504
Disallowance of expenses there was no permanent closure of the business - Held that:- Similar disallowance on the ground of no business activity had been made by AO in assessment year 2004-05 of the expenses claimed - the expenditure was not capital in nature and since there was no permanent closure of the business and business was under rehabilitation scheme/ revival scheme due to financial difficulties, the expenses had to be allowed - the assessee was doing its best to restart the production activity as was clear from the renewal of factory license - even if the assessee was not able to restart the business there will be no use of any such loss carried forward thus, the claim of the assessee allowed the order of the CIT(A) set aside Decided in favour of Assessee. Addition on account of loans u/s 68 of the Act Held that:- The assessment order has been passed by AO ex-parte - The assessee was a sick company and was under rehabilitation scheme by BIFR thus, in such a situation the difficulty faced by the assessee in filing the confirmation and other evidence before AO has to be appreciated and these additional evidences were required to be considered by CIT(A) as the same were useful in deciding the issue - the additional evidences admitted in the form of loan confirmations as done by the Tribunal in assessment year 2004-05 the order of the CIT(A) set aside and the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Income received from scrap treated as income from other sources Held that:- The assessee has claimed that the income had arisen from sale of scrap the nature of receipt has not been examined by the authorities properly thus, the matter is remitted back to the AO for fresh adjudication Decided partly in favour of Assessee.
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Customs
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2014 (2) TMI 540
Classification of goods - Exemption under notification No. 21/2002- Cus, dated 01.03.2002 (Sr. No. 357A) and Notification No. 10/2006- CE dtd. 10.02.2006 - Classification under CTH 90189099 or CTH 90229090 - appellants imported FCR Capsula, Dry Pix 7000 and IP Cassette & Imaging Plate - Held that:- FCR Capsula X process the X- Ray image already captured on the image plate housed in casettee. In this machine processing starts only after the image is captured. This instrument is not based on X- Rays and X- rays are not an input for this machine and therefore, it is an independent apparatus. In these circumstances , we find that the item is rightly classifiable under CTH 90229090/90221490 and hence not eligible for the benefit of the Notification. Drypix 7000 is an instrument / applicants which is exclusively means for medical use. This machine prints the image of X- Ray obtained on imaging plate and cannot be used for printing on paper or otherwise for general purposes. On perusal of the CTH 9022 and the literature available, we find that these items conclusively contribute to well defined function of X- Ray based diagnosis apparatus. CTH 9022 covers not X- ray machine but apparatus used in diagnoses. The apparatus used in diagnoses would therefore include the impugned items as essential parts of apparatus. Therefore the item is rightly classifiable under CTH 90229090 and not eligible for the benefits of the Notification. Imaging plates & I.P. Cassettes Imaging place (IP is used instead of film to record X- ray images). The IP contains photostimulable phosphors that store X- ray energy. Scanning, the IP released the energy , producing electronic signals, which are converted to digital values. Barium fluorohalide (BafX) phosphors in a high density layer deliver the sensitivity, sharpens and low noise in computed radiographic diagnosis the I.P. is inserted in a cassette for X- ray exposure. In these circumstances, we find that the items are rightly classifiable under 90189099 and eligible for the benefit of Notification as applicable - Decided against assessee.
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2014 (2) TMI 538
Writ of Mandamus - claim of interest at the rate of 9% in respect of sale value of the gold which was sold by the Customs Department pursuant to the order of absolute confiscation which was passed. - Held that:- It is not in dispute that the said amount paid to the petitioner by way of refund by the Department. Now the claim of the petitioner is that the Department is liable to pay interest at the rate of 9% per annum from the date of the order i.e., 12-1-2007 till the order of the Tribunal on 17-12-2007. Petitioner having not questioned the sale of the gold bars during the pendency of the appeal, nor made any claim before the Tribunal nor made any representation to the authorities, now cannot seek for interest to be granted for the said period by filing this writ petition. - when the sale was effected the goods in question namely, gold bars stood absolutely confiscated and therefore, as on such date, the petitioner had no subsisting right over the said goods - Decided against the petitioner and in favor of revenue.
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2014 (2) TMI 537
Permit of transit of liquor - Removal of goods from one warehouse to another - power of state excise authorities - Whether it was necessary for the petitioner to have obtained a permit under the Kerala Liquor Transit Rules, 1975 before transporting the goods. Since the Foreign Made Foreign Liquor was transported without a transport permit, an offence under Section 55(a) of the Abkari Act was made out. - Held that:- The transport of goods from one bonded warehouse to another bonded warehouse is done under the proper control of Customs officials. In the present case, the transport of liquor was effected under proper documents as evident from paragraph 2 of the statement filed by the sixth respondent. The list of documents stated to have been seized from the driver of the vehicle includes all the necessary official documents issued by the Customs authorities in compliance with Sec. 67 of the Customs Act as well as the Goods Imported (Conditions of Transshipment) Regulations, 1995. The State Excise authorities therefore had no authority whatsoever to seize the said consignment and to register a case as done in the present case by Exts. P12 and P14. - Decided in favor of appellant / assessee and against the revenue.
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2014 (2) TMI 536
Petition for review of earlier order dismissing the appeal - Determination of rate of customs duty - Held that:- In the case of M/s. Tungbhadra Industries v. The Government of Andhra Pradesh,[1963 (10) TMI 25 - SUPREME COURT], a Three Judge Bench of the Supreme Court had held that there is a distinction between a mere erroneous decision and a decision which should be characterised as vitiated by error apparent and review is not an appeal in disguise whereby an erroneous decision is reheard and corrected and laying down the connotation of an error apparent on the record. The Supreme Court had held that where without any elaborate arguments whether the court points to the error which stairs one in the face and there would reasonably be two opinion entertained about it a clear case of error apparent on the face of the record would be made out. If the order of the Tribunal relates to determination of any question having a relation to the duty of customs for the purpose of an assessment, the proper remedy should be by way of an appeal, which is provided in Section 130E of the Customs Act. - case sought to be made out by the petitioner does not calls for any interference in exercise of review jurisdiction. - Decided against the revenue.
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Service Tax
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2014 (2) TMI 539
Filing of appeal before wrong Forum - order imposing service tax and penalty erroneously stated that an appeal would lie therefrom to the Customs, Excise and Service Tax Appellate Tribunal. The petitioner cannot therefore be faulted with for filing an appeal with the tribunal though in fact such appeal would lie to the second respondent Commissioner only. Tribunal has adopted a hypertechnical view forgetting the fact that every endeavour should be made to dispose of the lis on merits. - The first respondent (CESTAT) shall return Ext.P2 appeal to the petitioner within a period of one month from today. The petitioner shall re-present the appeal with the second respondent Commissioner within a period of two weeks therefrom. Every endeavour shall be made by the second respondent Commissioner to dispose of the appeal on merits within a period of three months after its preferment.
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2014 (2) TMI 533
Waiver of pre-deposit - Financial Hardship - Composite and indivisible Works contract - fabrication and fixing of false ceiling inside the office premises - Held that:- Under Section 35F pre-deposit is a condition precedent for filing of an appeal. However, the requirement of pre-deposit might be dispensed on the application of an assessee - Financial hardship is undoubtedly a kind of hardship. In deciding an application for dispensation of pre-deposit, the Appellate Authority is thus required to consider the financial capacity of the assessee to make the pre-deposit. In the absence of any pleadings relating to financial position of the assessee or in the absence of documents that show financial weakness, as in this case, the Appellate Authority is legitimately entitled to arrive at the conclusion that the assessee has the financial capacity to make the pre-deposit. It is well-settled that payment under compulsion of any amount which is not due and payable would also constitute hardship so far as the assessee is concerned, even though the assessee may be in a financial position to pay the same. Notification dated 1st March, 2006 which has not at all been considered - t was for the Appellate Authority to consider the prima facie case in the light of Notification I/2006-S.T., dated 1st March, 2006 on which reliance has now been placed. - appeal has been dismissed for non-compliance of the direction for pre-deposit. The appeal restored before the appellate authority.
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2014 (2) TMI 532
Waiver of pre-deposit - principle of natural justice - CESTAT directed that the petitioner shall remit the entire assessed liability to the credit of the revenue - business of providing Multi-System Operator (MSO) services to the Cable Operators. - Held that:- Having regard to the admitted fact that the petitioners application to receive the additional evidence and additional grounds are also numbered and in fact the said applications were listed for hearing on 9-7-2013 it appears to us that the Tribunal below ought to have considered the same and passed orders thereon before taking up the Stay Application. In the facts and circumstances of the case, we find force in the submission of the learned counsel for the petitioner that non-consideration of the petitioners application to receive the additional evidence in spite of the fact that it is listed for hearing, caused grave prejudice to the case of the petitioner - matter remanded back to tribunal.
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2014 (2) TMI 531
Recovery of Service Tax and Income Tax - Levy of Service Tax on providing of services by telecom operators to various customers - Tax deduction at source on the commission/brokerage paid by the Telecom Service Providers to distributors and by distributors to retailers. - Held that: - the services provided by cellular operators are chargeable to service tax; Pre 2012 and Post 2012; - the entire amount received by the cellular operators from the customer, including the price of SIM card, is the value of taxable service; - in the system in which the prepaid vouchers are sold, either physically or electronically, the price of such vouchers would include processing charges or administration fee, Service Tax and the price of talk time or activation charges, as the case may be; - if the break-up is not given, the entire price should be deemed as gross value inclusive of Service Tax; [see Section 67(2)] - sale of vouchers, i.e. plan vouchers, top up vouchers or special tariff vouchers, either sold physically or electronically, are not counted properly and there is no provision either in the TRAI Regulations or in the Service Tax to ensure that the entire sale of vouchers is accounted for the purposes of levy of Service Tax The Service Tax Department needs to look at the above aspect in respect of all cellular operators to ensure that Service Tax is assessed and levied on all schemes, transactions and plans by whatever name called and under whatever schemes as long as they result in providing of service by Cellular operator to the consumer. Regarding TDS - The commission paid by Cellular Service Providers to the distributors or retailers is thus commission from which the tax is required to be deducted at source under the provisions of Section 194 of the Income Tax Act. - Whether tax is deducted at source on such amount or not is not clear and whether such TDS is reflected in the accounts of cellular operators as well as distributors, needs to be seen. - When the commission is paid by way of additional talk time, how the same has to be treated for the purposes of tax is another angle which needs to be looked into by the Income-Tax Authorities. It the issues which have been highlighted before the Court by the amicus curiae as noted above, would require a closer application of mind and investigation both by the Service Tax authorities and by the concerned Income Tax authorities. - a response both of the Service Tax and Income Tax authorities to the issues which have been raised before the Court would be warranted.
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2014 (2) TMI 530
Arrears of service tax - applicant has been arrested in connection with the offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 - prayed for his release on bail or grant of temporary bail - applicant has collected service tax amounting to Rs.2.17 crores for the State and has not deposited the same to the State. - Held that:- applicant has deposited Rs.87,60,475/- and Rs.1,29,86,207/- is still due. Considering period of detention of the applicant, liability of the applicant, amount due against the applicant, grounds taken in the applications for conditional bail and undertaking, and offer of the applicant, it would be appropriate to provide one opportunity to the applicant in the light of his offer/ proposal. - conditional bail/temporary bail to the applicant is partly allowed.
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2014 (2) TMI 529
Denial of CENVAT Credit - Availment of CENVAT credit on MS Channels, MS Plates and HR Coils etc. used in the newly constructed Block by the appellant - Held that:- appellant has deposited 50% of the duty demanded as per the stay order passed by the Commissioner (Appeals). Since this Tribunal has been taking a view that extended period may not be invokable in all cases of availment of CENVAT credit on MS Channels, Angles & Beams etc., appellants can be said to have made out a case in their favour against demand beyond the normal time limit. Accordingly, we consider that the amount already deposited by the appellant as per the stay order passed by the Commissioner (Appeals) is sufficient - Stay granted.
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2014 (2) TMI 528
Classification of service - incentives received for achieving targets of sales of cars - Whether its activities fall within the definition of Business Auxiliary Service - Held that:- it appropriate to grant stay of further proceedings pursuant to the impugned order, on condition that the appellant shall deposit 50% of the tax component as assessed, while granting stay of the balance of the duty component and whole of the penalty component. - stay granted partly.
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2014 (2) TMI 527
Waiver of predeposit of penalty - Renting of immovable property - Tax was deposited after investigation - Held that:- there is no dispute of the levy of the tax. It is also noted that the applicant has collected the tax which was not deposited with the Government. The deposit was made after the Department issued summons and started investigation. Hence the applicant has failed to make out a prima facie case for waiver of the entire amount of penalty - Conditional stay granted.
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2014 (2) TMI 526
Availment of CENVAT Credit - benefit of Notification No. 1/2006-ST dated 1.3.2006 - Penalty u/s 76 - Held that:- if the CENVAT credit is reversed subsequently also, it amounts to the credit not being taken initially. Therefore, prima facie, the subsequent reversal of CENVAT credit availed by the appellant appears to fulfill the obligation under Notification No. 1/2006-ST of not availing the CENVAT credit for entitlement to the benefit of Notification - Appellant has made out a strong prima facie case in their favour for wavier of predeposit and grant of stay - Stay granted.
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2014 (2) TMI 525
Classification - preparation of ship model of 90 mts AOPV including all appendages as per the technical data and design - assessee contended that the said service was liable to service tax under the reverse mechanism only if the service was partly or wholly performed in India. Since the said service was wholly received in Netherlands they were not liable to service tax under the reverse mechanism. - Held that:- In this particular transaction the said taxable services mentioned in Section 65(105)(zzh) can be said to have been received in India only when such services are partly or wholly performed in India. In the instant case service is performed and received only outside India i.e. in the Netherlands and there is no import of service. As such there is no taxable service. - the conclusion of the Lower Adjudicator that the service merits classification under Section 65(105)(g) - Consulting Engineer, gets set aside. - Decided in favor of assessee.
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2014 (2) TMI 524
Classification of services - issuing Country of Origin Certificate - Extended period of limitation - Held that:- services rendered by the appellants towards issuing Country of Origin Certificate are classifiable under Technical Inspection and Certification Services, whereas the present show cause notice and the impugned order have classified the activities of the appellants under the Club or Association Services - Demand set aside. Regarding Project income - services provided to United Nations Organization - exemption under notification 16/2002 ST - Held that:- UNCTAD is not covered in the list of international organizations to whom certain privileges and immunities have been granted. - Demand confirmed. Extended period of limitation - Held that:- under the self-assessment regime of tax liability, the appellants were under obligation to correctly classify the services rendered by them and to discharge their Service Tax liability correctly. - he appellants neither got themselves registered with Service Tax nor did they discharged their Service Tax liability at all. The act of non-observance of rules tantamount to contravention of the stipulation made under Service Tax law with intent to evade payment of Service Tax - demand confirmed invoking extended period of limitation.
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Central Excise
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2014 (2) TMI 503
Restoration of appeal - Appeal dismissed for failure to compliance of pre deposit order - Application for modification of stay order was dismissed for non-prosecution - Held that:- time-bar issue is a factual aspect based on evidence and the Tribunal failed to appreciate the prima facie case on the limitation during the stay stage. On reading the findings in the stay order, it is very clear that the applicant withdrew their application seeking provisional assessment - Tribunal observed that the aspect would be considered after hearing the matter at length and examining the evidences in detail. In view of that, we do not find any reason for modification of the stay order dated 5.8.2013. However, after considering the submission of the learned Advocate, we extend the period of compliance of the stay order by further four weeks - Appeal restored.
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2014 (2) TMI 502
Waiver of pre-deposit of penalty - Goods not removed even though invoiced prepared - Cancellation of order - Held that:- Prima facie even though the goods were manufactured and accounted for, in the private records maintained by the Applicant and subsequently invoices were also prepared for clearance of the said goods, but due to non-lifting of the said goods by the respective customers, the applicant could not clear the goods from the factory. However, subsequent to the visit of the Central Excise officers on 25/6/2010, the applicant paid appropriate Central Excise duty against 559 invoices again. Prima facie applicants are maintaining proper records from which it could be established the manufacture and clearance of goods, from the factory on payment of duty . Thus, at this stage, the applicants could able to make out a prima facie case for waiver of pre-deposit of penalty imposed against each of the applicants under various provisions of Central Excise Rules. In the result, pre-deposit of penalty against each of the applicants, is waived and its recovery stayed during the pendency of the appeal - Stay granted.
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2014 (2) TMI 501
Waiver of predeposit of duty - Imposition of equal amount of penalty - Suppression of the production of M.S. ingots and removal thereof without payment of duty - Removal of manufactured goods clandestinely - Held that:- Mumbai Bench of this Tribunal in Shridhar Castings case (2012 (9) TMI 170 - CESTAT, MUMBAI), while disposing of a bunch of stay applications, involving similar dispute, had analyzed the issues in the light of various judgments on the subject, including RA castings case (2008 (6) TMI 197 - CESTAT NEW DELHI), in detail, and directed pre-deposit of 50% of the duty confirmed and 25% of penalty against each of the applicants. - Further in view of the decision of Division Bench of the Bombay High Court in Orange Alloys Pvt. Ltd.(2012 (11) TMI 374 - BOMBAY HIGH COURT), disposing of appeals under Section 35G of CEA,1944, applicant has not been able to make out a case for full waiver of the dues adjudged. - Conditional stay granted.
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2014 (2) TMI 500
Suo moto credit taken due to excess Reversal of CENVAT Credit - Revenue contended that they have to file refund application u/s 11B - Held that:- appellant has reversed the excess amount which was required to be reversed by them. The excess amount reversed by them is not a duty. Therefore, in the light of the judicial pronouncement where the Hon'ble High Court of Karnataka [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] held that any amount paid by mistake in excess, that amount cannot be termed as duty. Therefore, the provisions of section 11B of the Central Excise Act are not applicable. Further, in the case of Sopariwala Exports P. Ltd. (2013 (5) TMI 430 - CESTAT AHMEDABAD) wherein this Tribunal has held that duty paid twice is not duty. Therefore, assessee is entitled to take suomotu credit - appellant has taken the credit of the excess amount paid by them, which is not duty. Therefore, provisions of Section 11B are not applicable - Decided in favour of assessee.
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2014 (2) TMI 499
Valuation of goods - Related parties - Application of Rule 10 read with Rule 8 of the Central Excise Valuation Rules, 2000 on the basis of 110% of the cost of production - Held that:- Show cause notice treats the respondent and M/s P.S. Steel Tubes (P) Ltd. as related persons only on the basis that they are interconnected undertakings in terms of its definition of this term as given in Section 2 (41) of the Companies Act and the show cause notices, nowhere discusses as to how the conditions prescribed in Rule 10 of the Central Excise Valuation Rules, 2000 are satisfied, that is either the buyer is holding company or subsidiary company of the assessee or the two are so connected that they are also related in terms of Clause (ii), (iii) or (iv) of Clause (b) of sub-Section (3) of Section 4 of the Act. There is absolutely neither any allegation, nor any evidence to show that the respondent and M/s P.S. Steel Tubes (P) Ltd. have interest in the business of each other. Neither M/s P.S. Steel Tubes (P) Ltd. is holding company or subsidiary company of the respondent nor there is any evidence to prove that the respondent are so connected with M/s P.S. Steel Tubes (P) Ltd. that they are also related in terms of Clause (ii), (iii) or (iv) of Section 4 (3) (b). In view of this, the respondent and M/s P.S. Steel Tubes (P) Ltd. cannot be treated as related persons and, as such, there is no infirmity in the impugned order - Decided against Revenue.
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2014 (2) TMI 498
Availment of MODVAT Credit - Credit of duty paid on the inputs lightings - Original adjudicating authority denied credit on the ground that the inputs which were received first by the appellants stand used by them in the manufacture of the final product which are already cleared - Held that:- though the adjudicating authority has correctly recorded that there are two conditions which stand imposed by the Tribunal for de novo adjudication but has wrongly added the third condition itself it is equally necessary to prove the existence of in such inputs in tangible physical form. There is no dispute that there was stock of the inputs lying in the appellant s factory as on 01.03.19997 either as such or as contained in their final product. There is also no dispute that such stock was duty paid. The only reason adopted by the adjudicating authority is that the stock of the inputs received by them earlier stands utilised and cleared in the shape of final product - there is justification for adoption of the above legal principle. As long as the inputs are available, as on 01.03.1997 in any shape or condition, the credit involved therein has to be allowed based upon the documentary evidence reflecting upon the payment of duty on the same - Following decision of Hind Lamps Vs. C.C.E., Kanpur [2006 (11) TMI 514 - CESTAT, NEW DELHI] - Decided in favour of assessee.
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2014 (2) TMI 497
Reversal of CENVAT Credit - Credit availed in routine manner - invoking extended period of limitation after reversal of credit - Held that:- appellant took the credit on 31.03.2007 and reversed the same on 30.04.2008. As per the appellant, the credit was taken by their employees in a routine manner without realising that the same was not available to them. On being pointed out by the audit, the appellant immediately reversed the same. It is also a fact that the credit remained unutilised and such as they were paper entry only during the relevant period. Where the credit remains unutilised and on paper entry only, the same would not attract any interest or penalty - demand barred by limitation. Admittedly, the excess credit taken by the appellant was reversed on 30.04.2008 and as such the Revenue was in the knowledge of the same. In spite of that, issuance of Show Cause Notice in the year 2010 by invoking extended period of limitation was not justifiable - Decided in favour of assessee.
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2014 (2) TMI 496
Waiver of pre-deposit of the amount of Excise duty - Confirmation of duty arose on the ground that the appellant as an 100% EOU, herein had cleared the goods to DTA based upon the positive achievement of the NFE during the period 2005-2006 to 2009-2010, without having any permission from the DGFT authorities - Held that:- Development Commissioner has not retrospectively granted any permission for DTA sales to the appellant for the period in question. In the absense of any authorization, we are of the view that the Department is correct in demanding the duty at the full rate on their total clearances done by the appellant to DTA - appellant needs to be put to some condition for hearing and disposing the appeals - Conditional stay granted.
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2014 (2) TMI 495
Cenvat Credit on Input Services - Benefit under the definition of Rule 2(l) of CENVAT Credit Rules, 2004 - Held that:- services have been availed by the appellant in the course of business of manufacturing therefore, they are entitled for input service credit. Appellant is entitled to avail the input service credit on the above mentioned services as the same has been availed by the appellant as a manufacturer in the course of their business activity - Decided in favour of assessee.
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2014 (2) TMI 494
Demand and penalty - Denial of Cenvat Credit of duty paid for inputs - Non-production of ST XXVI-A forms in view of conflicting record maintained by assessee such as payments made by cheque/drat to suppliers for receipt of raw materials - Held that:- non-production of ST XXV I-A forms of sales department verifying entry of vehicles to Himachal Pradesh where factory located raising presumption of non-receipt of goods held by Tribunal in identical cases that credit do not to be denied on sole ground of non-production of ST XXVI-A forms in view of conflicting record maintained by assessee such as payments made by cheque/drat to suppliers for receipt of raw materials. No inquiry made by Revenue from supplier in instant case. Information from Sales Tax Department not reliable as some ST XXVI-A forms produced by assessee declared not available by said department. Demand and penalty set aside as not sustainable - Following decision of Himalayan Pipe Industries Vs. CCE, Chandigarh [2013 (12) TMI 216 - CESTAT NEW DELHI] - Decided against Revenue.
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CST, VAT & Sales Tax
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2014 (2) TMI 535
Assessment made under Section 7-A - Inclusion of value of Gold declared under VDIS scheme of Income Tax Act by the partner in the hands of Firm - Assessing Authority presumed that the old gold disclosed has been brought into the capital account of the partnership firm by one of the partner, on behalf of his wife (who is admittedly not a partner), and thereby estimated the value of the gold and included it as taxable turnover - Tribunal held that Gold jewellery in good condition personally held as on 1987 and brought to the capital account under VDIS and gold jewellery in good condition purchased from other persons who had disclosed the stock under VDIS, when they are sold as such, are not liable to tax either under entry No.3 in Part B of the First schedule as last purchase on worn out jewellery or under Sec.7A of the TNGST Act - Whether on the facts and circumstances of the case, the Tribunal is right in law in deleting the assessment made under Section 7-A on the gold declared under voluntary disclosure of income scheme on turnover. Held that:- On a plain reading of Section 34(3)(b) it will appear clear that before that provision can be invoked or applied three conditions are required to be satisfied: (a) that the ship, machinery or plant must have been sold or otherwise transferred, (b) that such a sale or transfer must be by the assessee, and (c) that the same must be before the expiry of 8 years from the end of the previous year in which it was acquired or installed. It is only when these three conditions are satisfied that any allowance made under Section 33 shall be deemed to have been wrongly made and the Income Tax Officer acting under Section 155(5) will be entitled to withdraw such allowance. Further, Section 2(47) gives an artificial extended meaning to the expression transfer for, it not merely includes transactions of sale and exchange which in ordinary parlance would mean transfers, but also relinquishment or extinguishment of rights which are ordinarily not included in that concept - While so, there is no question of purchase made by the dealer during the course of its business, as has been made clear under Section 7-A of the Act - Following decision of Malabar Fisheries Co. v. Commissioner of Income Tax, Kerala [1979 (9) TMI 1 - SUPREME Court] - Decided against Revenue.
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2014 (2) TMI 534
Allegation of crossing of goods from check post without form 31 - Levy of Penalty under Section 15-A(1) (O) of the Trade Tax Act - Violation of Section 28-A - Held that:- The penalty was imposed on the amount shown by the revisionist for the purchases. The same was not disturbed by the A.O. The only charge is that Forms 31 were not produced at the check posts. The revisionist has also not informed the department within the prescribed time but fact remains that how the officers at the check posts had allowed to cross the goods of the revisionist without proper paper or verification of Forms-31. Nowhere, it is mentioned that the department has taken any action against the said officers. Similarly, when the revisionist has not informed the department within the prescribed time, then how the department has issued Form 31 time to time without getting the verification of the previous Forms. - there is no concealment/malafide intention - revisionist has concealed the imported goods or resale the same. - the mere breach of provision of Section 28-A would not be sufficient for levy of penalty under Section 15-A (1)(o) of the Act - Decided in favour of assessee.
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