Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 16, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
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Change in tariff value of Crude Palm Oil, RBD Palm Oil, others – Palm Oil, Crude Palmolein, RBD Palmolein, others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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INDIA’S FOREIGN TRADE: January, 2017
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Employees Enrolment Campaign 2017 offers opportunity to employers to voluntarily declare details of all employees
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RBI Reference Rate for US $
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Agreement between India and Croatia on Economic Cooperation
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Repurchase of Government Securities through Reverse Auction
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Insolvency and Bankruptcy Board of India invites public comments on Draft Regulations for Voluntary Liquidation by 8th March, 2017
Notifications
Highlights / Catch Notes
Income Tax
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Additional depreciation claim @ 20% - the provision of section 32(1)(iia) is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. - HC
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MAT computation - addition of share income of AOP in the book profit - The mischief which has been sought to be remedied is that the share income of the member of the AOP which was not taxable in terms of section 86 was getting taxed under MAT while computing the book profit. This was also never the purpose of section 115JB to tax any income or receipts which is otherwise not taxable under the Act. - AT
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Higher rate of TDS @20% for non-furnishing of PAN - where the tax has been deducted on the strength of the beneficial provisions of DTAAs, in that case, the provisions of section 206AA cannot be invoked because section 90(2) provides that the provisions of the act shall apply to the extent they are more beneficial to the assessee - AT
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Levy of penalty u/s 271(1)(b) r.w.s. 274 - Though, the assessee failed to appear on initial days, he had furnished all the information and the A.O. has completed assessment u/s 143(3) r.w.s. 153C - the assessee had fully cooperated for completion of assessment proceedings. - No penalty - AT
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TDS u/s 195 - payment made to the non-residents for dismantling and sea worthy packing of paper mill machinery - dismantling of machinery does not require any technical services, therefore, the present case does not fall in the ambit of fees for technical services and the assessee company does not require to deduct TDS - AT
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Since no activities have been carried out by the Assessee in India with respect of such maintenance activity, it is unreasonable to conclude that the business of the Assessee was carried out in India through such subcontractor, to constitute its PE in India - AT
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Royalty or Fees for Technical Services (FTS) - assessee has only provided a standard facility for data processing without any human intervention - the said payment is not taxable in India as ‘fees for technical services’ in terms of Sec. 9(1)(vii) - AT
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The service tax and land tax are statutory liabilities which are paid during the year as per the orders of the CESTAT and Hon’ble Rajasthan High Court. These are statutory liabilities which pertain to the business carried on by the assessee. The assessee cannot be denied a deduction in respect of these payments merely on account of the fact that no expenditure were booked earlier - AT
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Capital receipt OR revenue receipt - On delivery of aircrafts fitted with the engines supplied by the IAE, the assessee was allowable to get some credits from IAE. Similarly, suppliers of other components of aircrafts also extended credits to the assessee - Held as capital receipt - AT
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When the order passed by the TPO was a nullity in law and void ab initio, AO cannot entertain a belief that certain income chargeable to tax had escaped assessment u/s 147 - subsequent order passed by the AO u/s 143(3) r.w.s. 147 and 144C quashed - AT
Customs
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Valuation - royalty - assessee is paying royalty to their foreign supplier for the manufacturing of goods under their license in India. The same cannot be termed as royalty paid for the imported goods. - AT
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Undervaluation - it is evident that the car was imported by producing the Bill of Entry of under-valuation - the Department has taken the price of the impugned car as was available on the manufacturer - demand of duty with interest and penalty confirmed - AT
Service Tax
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Sub-contract - denial of exemption available to the construction of dam only on the ground that the dam is part of the Hydroelectric Power Project - there is no justification to give a restrictive meaning to the term “dam” to the effect that the exemption will be available only when it is not part of any bigger project - exemption allowed - AT
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Levy of tax - GTA services - whether tax can be levied when consignment note was not issued? - appellant has paid the major portion of Service Tax along with interest prior to the issuance of Show Cause Notice - no penalty - AT
Central Excise
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Considering separate premises as single factory - All the units under reference are separate factories and are not the precincts nor the part of the same premises - The various factors such as common management common administration, common sharing of water, job work transactions amongst them, close relationship amongst the partners etc. including the so-called operational unity are entirely irrelevant for the determination of the issue involved. - AT
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Interest on the delayed payment of rebate claims - export of goods - whether the appellant are eligible for interest from three months after the date of sanctioning the rebate for the reason that the appropriation was illegal and against the provisions of law? - Held Yes - AT
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Reversal of CENVAT credit - since the ER-1 returns do not reflect the non-reversal of the credit when the inputs were removed as such, the SCN issued invoking extended period of time is proper - AT
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Sugar cess - effect of increase in levy of sugar cess after clearance of sugar from the factory - the increased levy of Sugar Cess, after the date of clearance from the factory on payment of appropriate Central Excise duty and appropriate Sugar Cess does not arise - AT
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CENVAT credit - tyres used for dumpers - tyres are necessary accessory to dumpers which are capital goods used in the manufacturing activity and integrally connected in the manufacture of final products - credit on tyres of dumpers is admissible under the category of inputs - AT
Case Laws:
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Income Tax
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2017 (2) TMI 653
Registration u/s 12AA denied - non charitable activities - Held that:- The society was mainly established with the object for skill imparting by the Industrial Training Institute and to keep pace with qualitative and technological demands in the industry. It is noticed that all the objects of the society are for advancement of benefit of general public. The activities of the society are being run for non-profit motive. The profit of the society is not distributed among the members of the society. The aims and objects of the society are charitable in nature as per Section 2(15) of the Act which covers the definition of charitable purposes as (a) Relief of the poor,(b) Education,(c) Medical Relief and (d) Advancement of any other object of general public utility On perusal of the order of the ld. CIT (Exemption), it is also observed that he has not given any finding about the object of the society whether any aims and objects are not charitable in nature. Hon'ble Allahabad High Court in the case of Fifth General Education Society vs. CIT [1990 (5) TMI 38 - ALLAHABAD High Court] had also opined that at the time of considering the application for grant of registration u/s 12A, the ld. CIT was not required to examine the application of income or carrying on of any activity by the trust. Thus CIT (exemptions) is directed to grant registration to the assessee society. Thus the appeal of the assessee is allowed.
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2017 (2) TMI 652
Non granting the registration no. u/s 12AA - objects of the assessee trust are not charitable - assessee filed an application u/s 154 before the ld. CIT which has also been rejected on the ground that there is no mistake apparent on record in his order as to refusal of registration of the trust - Held that:- It is noted from the records that the assessee trust was constituted on 5-05-1955 and it was granted permission for registration by the Sahayak Dev Sansthan Ayukt, Jaipur vide order dated 5-04-1972. The issue in question arises from the submission of the ld. AR of the trust that the assessee trust was established before the commencement of the Income Tax Act, 1961 and the provisions of Section 13(1)(b) are not applicable. The prayer of the ld. AR of the assessee trust was that the he was not provided an opportunity of being heard into the merits of the trust. Hence, in view of the above facts and circumstances of the case, the appeal of the assessee trust is restored to the file of the ld. CIT (Exemptions) to decide it afresh by providing reasonable opportunity of being heard to the ld. AR of the assessee trust. The ld. AR of the assessee trust is also directed to submit all the relevant papers concerning the registration of the trust before the ld. CIT (Exemptions). - Decided in favour of assessee trust for statistical purposes.
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2017 (2) TMI 651
Penalty u/s 271(1)(c) calculation - addition made on the basis of estimation of gross profit based on average of last four years - Held that:- As per the observations of the this Tribunal made in quantum appeal order, Ld.CIT(A) has calculated the understated income of the assessee on the basis of average GP rate worked out and the declared GP rate. Accordingly, the Ld. CIT(A) has directed the AO to calculate the penalty u/s 271(1)(c) of the Act on the difference between average GP and the GP declared by the assessee. Hence, we do not find any inference in the order of the Ld. CIT(A) so as to interfere with the same. We, therefore, uphold the findings of the Ld. CIT(A) and dismissed the appeal filed by the assessee. - Decided against assessee
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2017 (2) TMI 650
Transfer pricing adjustment - addition to AMP expenses - Held that:- Considering the material facts like the absence of an agreement, arrangement or understanding between the appellant and its associated enterprise for sharing the advertisement, marketing and promotion expenses or for incurring the advertisement, marketing and promotion expenses for the sole benefit of the associated enterprise, payments made by the appellant under the head "advertisement, marketing and promotion" to the domestic parties cannot be termed as an "international trans action" specifically when the learned Transfer Pricing Officer has not been able to prove that the expenses incurred were not for the business carried out by the appellant in India. We are thus of the opinion that the Transfer Pricing Officer had wrongly invoked the provisions of Chapter X of the Act for the said advertisement, marketing and promotion spent. The addition is, therefore, directed to be deleted. - Decided in favour of assessee. Adjustment on account of notional interest attributable to the delayed payments receivable from the associated enterprise - Held that:- Undisputedly, in the present case the benchmarking of the main international transactions applying the transactional net margin method has been accepted by the Transfer Pricing Officer. Considering this, we find that the ratio laid down by the Mumbai Income-tax Appellate Tribunal in Rusabh Diamonds' case [2016 (4) TMI 400 - ITAT MUMBAI] is clearly applicable to the facts of instant case as held No ALP adjustments can be made, on the facts of this case, in respect of delay in realization of sale proceeds. The amendment in Section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1st April 2012. The assessment year before us being an assessment year prior to that date, the amended provisions of Section 92 B have no application in the matter. - Decided in favour of assessee. Disallowance of deduction under section 10A - Held that:- Dispute Resolution Panel's action in enhancing the total income in the assessment year 2009-10 and disallowing the claim for deduction under section 10A in the instant case is contrary to the decision of the honourable jurisdictional High Court of Delhi in the case of CIT v. Neo Poly Pack (P.) Ltd [2000 (4) TMI 26 - DELHI High Court ]. Even otherwise on the merits we are unable to sustain the view adopted by the learned Dispute Resolution Panel. The learned authorised representative is justified in submitting that the learned Dispute Resolution Panel has written factually incorrect findings in its order. Moreover, the details, filed by the appellant have also been partially taken into consideration. The learned Dispute Resolution Panel takes note of top 25 employees but omits to take into consideration crucial fact that the director of the appellant-company, Shri Ankur Bhatia, is a software engineer with 16 years of experience. Moreover, the division-wise break up of the total employees strength has also partially been reproduced by the learned Dispute Resolution Panel in its order. We direct the Assessing Officer to allow the claimed deduction under section 10A of the Income-tax Act, 1961, on unit II of the appellant.- Decided in favour of assessee.
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2017 (2) TMI 649
Disallowance on account of proportionate interest and administrative expenses - Held that:- The assessee was already having enough fund for investment in tax free security and therefore, the learned CIT(A) directed to delete disallowance made on account of proportionate interest. The same has been confirmed by the learned tribunal. It is required to be noted that similar disallowance in the case of the very assessee for the A.Y. 2004-05 and the same has attained finality. The aforesaid has also been considered by the learned tribunal while passing the impugned judgement and order. So far as the disallowance of administrative expenses assessee itself voluntarily offered ₹ 6 Lacs towards administrative expenses before the A.O. The learned CIT(A) has restricted administrative expenses with respect to the balance of ₹ 4,54,333/-. The aforesaid has been confirmed by the learned tribunal. The relevant discussion has been made by the learned tribunal in para 21 to 27. We are in complete agreement with the reasons and the view taken by the learned tribunal. Under the circumstances, we see no reason to interfere with the impugned judgement and order passed by the learned tribunal so far as question No. [A] is concerned. - Decided against revenue. Addition on account of unutilized modvat/cenvat credit - Held that:- Tribunal has taken note that with respect to modvat receivable account, there is corresponding less debit to the purchase account and hence to that extent there is already income offered for tax. If that be so, there was no question of further adding modvat/cenvat credit to the income of the assessee for the year under consideration. Under the circumstances, we see no reason to interfere with the impugned judgement and order passed by the learned tribunal confirming the order passed by the learned CIT(A) deleting the addition made by the A.O. on account of unutilised modvat/cenvat credit - Decided against revenue. Addition on account of project loss in relation to amount receivable from Mahanagar Gas Ltd. - Held that:- The said issue is squarely covered against the revenue in view of the decision of the Hon'ble Supreme Court in the case of T.R.F. Ltd. Versus Commissioner of Income Tax, reported in (2010 (2) TMI 211 - SUPREME COURT) wherein observed that with respect to bad debt claim, the assessee is required to establish only that the debt was written off and it is not necessary for the assessee to establish that the debt, in fact, had become non-recoverable. Under the circumstances, even the present appeal qua question No.[C] also deserves to be dismissed.- Decided against revenue.
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2017 (2) TMI 648
Validity of reopening of assessment - objections by the petitioner against the reopening rejected - Held that:- We set aside the reassessment order which was passed without disposing of the objections raised by the assessee. See Banaskantha District Oilseeds Growers Co-Op. Union Ltd. Versus ACIT [2015 (8) TMI 269 - GUJARAT HIGH COURT] Impugned assessment order dated 30.12.2016 passed by the Assessing Officer is hereby quashed and set aside. Consequently, the demand notice dated 30.12.2016 is also quashed and set aside. The matter is remitted to the file of the Assessing Officer at the stage of submitting the objections by the petitioner against the reopening of the assessment for AY 200910. The Assessing Officer now to deal with and dispose of the objections raised by the petitioner on 24.11.2016 and pass a speaking order, before proceeding with the reassessment in respect of the assessment year for which such notice has been issued and communicate the outcome of the same and thereafter after giving some reasonable time to the petitioner to challenge the decision dispose of the objections (in case the Assessing Officer overrules the objections raised by the petitioner by a speaking order).
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2017 (2) TMI 647
Disallowance u/s 14A - application of Rule 8-D - Held that:- There would be several instances where an Assessing Officer can come to the conclusion that the claim is incorrect but would be unable to assess the extent of the inaccuracy. That is precisely the purpose of Rule 8D. For instance in the present case, the Assessing Officer was entitled to presume that a part of the expenses from the common fund are attributable to the expenditure incurred for earning the exempt income. He was entitled to resort to Rule 8D without determining the amount expended by the assessee towards earning the exempt income. Indeed if he could have done so, it would not have been necessary for him to resort to Rule 8D at all. In the case before us, the Assessing Officer cannot be faulted for not being satisfied with the claim of the assessee. As we noted earlier the Assessing Officer was entirely justified in presuming that the assessee had incurred expenditure towards administrative activities necessary to earn the exempt income. If the presumption or inference is correct, as we have held it is, the Assessing Officer is entitled to resort to Rule 8D. AO on not being satisfied with the correctness of the claim by the assessee in respect of the expenditure incurred to earn exempt income ought to have applied Rule 8D which he did not. Instead he made an estimate on the basis that he considered to be reasonable. This he was not entitled to do. Where an Assessing Officer is not satisfied with the correctness of the claim of the assessee, in this regard, he is bound by the provisions of sub section (2) of Section 14A to follow the prescribed method which at the relevant time was Rule 8D. - Decided in favour of the Revenue. Whether assessee earned exempt income by investing its own funds and not from the interest bearing funds? - Held that:- We leave the question as to whether such a presumption is valid and if valid whether it arises in this case open. The Assessing Officer must determine the same after taking all the provisions of law and the precedents into consideration. If the Assessing Officer justifiably is not satisfied with the correctness of the assessee’s claim regarding the expenditure, he must resort to Rule 8D entirely for the determination of the expenditure incurred with respect to the exempt income for the purpose of section 14A. For instance, if the assessee claims that he has not incurred any interest expenditure but has incurred administrative expenses or vice-versa and the Assessing Officer disagrees with either claim, Rule 8D cannot be applied only in respect of any particular clause of sub-rule (2) of Rule 8D. He must then determine the amount of expenditure incurred in relation to exempt income entirely in accordance with Rule 8D. Mr. Klar’s submission that Rule 8D(ii) includes amounts other than interest such as bank charges for courier handling etc. is not well founded. Rule 8D(ii) refers only to interest. We cannot read into it words that are clearly not there.
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2017 (2) TMI 646
Addition made on share application money u/s.68 - Held that:- Respectfully following the order of the Tribunal in assessee’s own case on the very same ground, we do not find any infirmity in the order of CIT(A) for deleting the addition made u/s.68 of the IT Act as the identity and creditworthiness of the creditor and genuineness of the transaction stood satisfactorily explained. In the absence of any credible material with the Revenue to disprove the findings of the CIT(A), we hereby affirm the same. TDS u/s 195 - Disallowance made u/s.40a(ia) - whether payments made to the overseas entities will be liable for withholding tax - Held that:- AO was satisfied that these are pure reimbursements and therefore section 195 read with section 40(a)(i) of the Act does not apply and accordingly deleted the entire disallowance. In view of the above, Departments' ground cannot survive since the Learned AO has already verified the details and has accepted that these are pure reimbursement, not attracting provisions of section 195 of the Act. Accordingly, we dismiss the ground raised by the Revenue. Disallowance on account of loss of stock - Held that:- Tribunal in assessee’s own case for the assessment year 2008-09 wherein assessee’s claim for deduction u/s.36(1)(vii) r.w.s. 36 was allowed in favour of the assessee as held that the conditions laid down in section 36(1)(vii) r.w.s. 36(2) of the Act have been complied with. - Decided against revenue Disallowance on account of foreign exchange fluctuation loss - Held that:- This issue was discussed in great detail in the recent landmark ruling of Supreme Court in the case of ClT vs Woodward Governor India P. Ltd (2009 (4) TMI 4 - SUPREME COURT ) wherein observed where profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as port of circulating capital embarked in the business. But, if on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss Thus would be of capital nature. Thus in the interest of justice, we restore this ground back to the CIT(A) for deciding in terms of decision above.
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2017 (2) TMI 645
Search and seizure u/s 132 - Held that:- There is no dispute about the contention raised by the petitioner that at the time of search and seizure no bullion or jewellery has been recovered, but there is also no dispute about the fact that certain documents have been seized as would be evident from the inventory list and when the authorities have gone through the seized documents, they have found that the income having been undisclosed by the petitioner reason being in spite of specific direction given to the petitioner to produce his documents, the documents have not been produced. After going through the explanation given by the Assistant Commissioner of Income Tax, Central Circle-2, Bhubaneswar that although at the initial stage, no bullion or jewellery has been recovered, since it was in permissible limit, documents have been seized and in course of their examination, the authorities have come to a definite conclusion that certain income has not been disclosed and as such, for being satisfied, a notice under Section 153-A of the Act, 1961 has been issued and in terms thereof, the petitioner has given his detailed reply as would be evident from Annexure-6 annexed to the writ petition and after scrutiny of the reply, the authorities came to the conclusion that the books of account pertaining to M/s.Vasumati Builders Pvt. Ltd. has not been produced in spite of the direction having been given to him by the Income Tax authorities, as a result, the authorities have no other alternative than to conduct search and seizure in the premises of the petitioner. The competent authority can resort to the provisions of the Act, 1961, if it is opinion that the assessee is flouting the provisions of the Act and if in that situation, it comes to the conclusion that it is necessary to resort to the provisions under Section 132, then it cannot be said that there was no reason behind resorting to the provisions of the Act, 132 of the Act, 1961. Moreover, initiation of the proceeding under Section 132 has never been questioned by the petitioner immediately thereafter before any Court of law save and except challenging the same after lapse of two years by way of writ petition. There is no dispute about the contention raised by the petitioner that if the root will go, nothing remains. But as we have discussed hereinabove, we found that the submission made by the learned counsel for the petitioner has got no substance. We are of the further considered view that since the assessment order has been passed by the competent authority, it will not be proper for this Court to enter into the merit of the assessment order since this is not questioned in this writ petition.
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2017 (2) TMI 644
Additional depreciation claim @ 20% under Section 32 [1](iia) - machinery purchased before 31st March 2005, but installed after 31st March 2005 ? - Held that:- If the contention on behalf of the Revenue is accepted, in that case, the assessee shall never get the additional depreciation as provided under Section 32(1)(iia) of the IT Act. In the facts and circumstances of the case, the twin conditions of the acquired and installed shall never be satisfied in a year and therefore, the assessee shall never get any depreciation. The purpose and object of granting additional depreciation under Section 32(1)(iia) of the IT Act is stated hereinabove i.e. to encourage the industries by permitting the assessee setting up the new undertaking / installation of new plant and machinery and to give a boost to the manufacturing sector by allowing additional depreciation deduction. Thus, as rightly held by the learned ITAT the provision of section 32(1)(iia) of the IT Act is required to be interpreted reasonably and purposively as the strict and literal reading of section 32(1)(iia) of the IT Act will lead to an absurd result denying the additional depreciation to the assessee though admittedly the assessee has installed new plant and machinery. Under the circumstances, no error has been committed by the learned ITAT in allowing the additional depreciation at the rate of 20% on the plant and machinery installed by the assessee after 31st Day of March 2005 i.e. the year under consideration. No substantial question of law arise. - Decided in favour of the assessee
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2017 (2) TMI 643
MAT computation - addition of share income of AOP in the book profit - assessment order of the AOP - Held that:-Since the profit and loss account so prepared has been approved by the Board of Director of Assessee Company, there is no reason to exclude the profit credited in the P&L account in respect of share of assessee’s income in two AOPs while computing book profit u/s.115JB. Accordingly, ground raised by assessee with regard to exclusion of such income while computing book profit u/s.115JB is not tenable Amending Act had sought to bring parity between similar kind of situation faced by two class of assessees, where in one case, statute envisaged that if the income of the assessee is not taxable, that is, in case of partner the share income from the partnership firm, then it cannot be taxed as book profit under MAT liability. Similarly, in second case also, that is, in case of member of an AOP where no income-tax is payable on the share of a member of an AOP in certain situations in terms of section 86, should also not be brought to tax under MAT liability. The legislature by this amendment has thus removed this imparity between two classes of assessees so that mischief or prejudice caused to other class of assessees should be removed. The mischief which has been sought to be remedied is that the share income of the member of the AOP which was not taxable in terms of section 86 was getting taxed under MAT while computing the book profit. This was also never the purpose of section 115JB to tax any income or receipts which is otherwise not taxable under the Act. If the intention of legislature was always that income which is not taxable under the normal provisions of the Act should not be brought to tax under MAT also, then it has to be interpreted that such a benefit has to be given to all and where the income is otherwise not taxable under the Act cannot be brought to be taxed under MAT. Therefore, any remedy brought by an amendment to remove the disparity and curb the mischief has to be reckoned as curative in nature and hence, is to be held retrospectively. Accordingly, this issue is allowed in favour of the assessee.
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2017 (2) TMI 642
Higher rate of TDS @20% for non-furnishing of PAN - proceedings under section 200A - whether cannot be at a rate prescribed u/s 206AA which is higher than the rate at which the relevant income is chargeable to tax under Act or DTAA - DTAA between India and GermanyHeld that:- As decided in the case of Infosys BPO Ltd [2015 (9) TMI 792 - ITAT BANGALORE ] in which it was held that the provisions of IT Act, 1961 cannot override the provisions of DTAA. We noticed that the assessee had deducted the tax at source at the rates prescribed in respective DTAAs between India and Germany at the prescribed rate of 10%. We have also considered that, where the tax has been deducted on the strength of the beneficial provisions of DTAAs, in that case, the provisions of section 206AA of the act cannot be invoked because section 90(2) of the act provides that the provisions of the act shall apply to the extent they are more beneficial to the assessee. In view of the above stated facts and legal findings, in our considered opinion the ld. CIT(A) has not substantiated the sustaining of impugned demand raised by the assessing officer ,therefore, we allow the appeal of the assessee.
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2017 (2) TMI 641
Disallowance u/s 14A - Held that:- AO is clearly in error in computing the disallowance u/s 14A of the Act on the basis of Rule 8D of the Rules given the fact that the said rule is not applicable for the assessment year under consideration, as held by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg Co. (2010 (8) TMI 77 - BOMBAY HIGH COURT ). As considering that the assessee has itself asserted that certain expenditure was incurred in relation to such exempt income, it would be in the fairness of things that a reasonable estimate be made of such expenditure. In order to arrive at such estimation we have perused the explanation furnished by the assessee to the Assessing Officer, which has been reproduced in the assessment order. The assessee that no significant activity is required in monitoring the investments inasmuch as the investments have been made in preference shares of subsidiary company and that the earnings from mutual fund is also on account of deployment of funds in the in-house mutual fund schemes. On this basis, the assessee estimated a portion of the cost of person looking after the banking matters as an expenditure disallowable u/s 14A of the Act. In our considered opinion, it would be in the fitness of things that on an estimated basis a sum of ₹ 5,00,000/- is considered as overhead expenditure incurred in relation to earning of the exempt income. Expenses debited in the Profit & Loss Account as Research expenses - revenue or capital expenditure - AO contends that such expenditure is capital in nature, yet he proceeds to treat 10% of such expenditure as revenue in nature - Held that:- The fact-situation in the present case clearly brings out that the research reports obtained by the assessee are for use in carrying on assessee’s business of investment banking, involving advising its clients for raising of funds, financial restructuring, mergers & acquisitions and project advisory, etc. Therefore, the benefits to assessee are purely in the field of generation of business and profits thereof. The plea of Revenue that the benefit of research may extend beyond the year under consideration is of no significance so long as it is clear that such benefit is in the revenue field and not in the capital field. Judgement of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (1980 (5) TMI 1 - SUPREME Court ) is fully attracted inasmuch as the expenditure which results in benefits over a period of time is allowed as revenue expenditure so long as such benefit is in the revenue field. Therefore, as the uncontroverted assertion of learned representative for the assessee that in the past and in the subsequent years no such disallowance have been made, we deem it fit and proper to uphold the plea of assessee that the expenditure incurred by way of payments to JM Morgan Stanley Securities Pvt. Ltd. on account of research reports is fully allowable as revenue expenditure. - Decided in favour of assessee
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2017 (2) TMI 640
Disallowance of expenditure incurred on the strengthening of perimeter road - treated by the AO as capital expenditure - Held that:- Respectfully following the decisions of the tribunal for A.Y. 2007-08, the impugned expenses are held to be allowable as revenue expenditure. Thus, no interference is called for in the decision of the Ld. CIT(A) and therefore, same is upheld in view of detailed and well reasoned findings of the Tribunal for A.Y. 2007-08 - Decided in favour of assessee Disallowance of refurbishment expenses in the nature of civil works - treated by the AO as capital expenditure - Held that:- It is noted that the expenses incurred are of similar nature and pattern. The other conditions i.e. no creation of new asset and no benefit of enduring nature also remain the same. This fact is not disputed that the concerned premises or building or the structures did not belong to the assessee company. Since the Tribunal has already taken a view by holding the same as revenue expenditure, respectfully following the same, the expenses under consideration should also be held as revenue expenses. Thus, we find that Ld. CIT(A) has rightly held these expenses as revenue expenditure. Thus, respectfully following the order of the Tribunal for A.Y.2007-08, no interference is required in the order of the Ld. CIT(A) and the same is upheld - Decided in favour of assessee Non deduction of TDS u/s 194J, 194C as well 195 - addition u/s 40(a)(ia) - Held that:- Nothing has been discussed about the nature of the expenses, position of crystallisation of these expenses, availability of particulars of the payees, etc. It has been observed in the order by Ld. CIT(A) that whenever payments are actually made against these provisions, TDS is deducted as was stated by the Ld. Counsel. But, what are the precise facts in this regard has not been discussed in the order. No details are available or discussed by the Ld.CIT(A) regarding various aspects, e.g. when these expenses were actually incurred, in whose name these are finally credited, who are the actual payees, when the payments were made actually and whether the TDS was deducted at the time of making of payments or not? Nothing has been brought out on record to ensure that finally there was no revenue leakage and full compliance of the TDS provisions was made ultimately. We find that order of Ld. CIT(A) is devoid of any factual narration and, therefore, we find it appropriate to send this issue back to the file of the CIT(A) for complete factual analysis and thereafter applying the correct position of law. Ld. CIT(A) shall provide adequate opportunity of hearing to the assessee. Disallowance of 25% depreciation on upfront fees - Held that:- Tribunal for A.Y. 2007-08 held that the amount paid on account of upfront fee is in the nature of an “intangible asset” eligible for depreciation and accordingly allowed the claim of depreciation upon the same. The assessee has claimed depreciation in the impugned year on the WDV of the same asset. Therefore, we find that no different decision can be taken in the year under consideration, more so, when no distinction has been made on facts or law, therefore, respectfully following the order of the Tribunal, the claim of depreciation on the upfront fee is allowed. Disallowance of interest - treated by the Assessing Officer as capital expenditure - Held that:- Submissions and details submitted by the assessee have not been analysed by the Ld. CIT(A) in the light of AO’s allegations and doubts narrated in the assessment order. With the assistance of the parties, it was also noticed by us that the assessee had submitted some details before the Assessing Officer vide letter dated 06-12-2010. But no discussion, whatsoever, had been made by the Ld. CIT(A) while allowing relief. Therefore, find it appropriate to send this issue back to the file of the Ld. CIT(A) with the direction to decide this issue in a speaking manner after analysing the details and evidences submitted by the assessee and after giving adequate opportunity of hearing to the assessee to explain its case and furnish further details / evidences as may be considered appropriate by the assessee. Thus, with these directions, this issue is sent back to the file of the Ld. CIT(A). Disallowance of legal and professional charges - Held that:- From CIT(A)’s order, it is noted that he has not given proper reasoning while allowing relief to the assessee. The details submitted by the assessee have not been discussed by the Ld. CIT(A). He has made a sweeping and general remark that the details submitted by the assessee show that legal and professional charges are clearly allowable expenses u/s 37(1) of the Act. He has not discussed the details of the legal and professional charges and whether these have been incurred on account of revenue or capital field. Disallowance u/s 14 r.w.r 8D - Held that:- Disallowance made by the AO without assuming jurisdiction as per law for invoking provisions of Rule 8D(2)(iii) is directed to be deleted. Disallowance on account of provision for leave encashment made by the assessee on the basis of actuarial valuation - Held that:- None of the authorities have narrated proper facts as to whether the total amount debited under this head was on account of provision or some part of it was paid also. Further, it is also not coming out whether provision for leave encashment has been made on the basis of actuarial basis or not. In our view, this issue needs to go back for proper verification of facts, and therefore, we send this issue back to the file of the AO for proper adjudication Amount of Passenger Service Fee – Security Component (PSF – SC) received - whether forms part of taxable income of the assessee company - Held that:- As per the terms of SOP issued by MOCA, if ultimately there was some deficit, then it was required to be funded by Government of India, and if there was ever any surplus (i.e. unspent amount), it was to be transferred to the account of Airport Authority of India (AAI). Thus, viewed from this angle too there was no question of there being any income in this exercise, much less, any income, which could be characterised as taxable income in the hands of the assessee company. Thus, we have no hesitation in holding that the aforesaid amount is not taxable as income in the hands of the assessee company. The AO is directed to recompute the income of the assessee accordingly. The AO has also the liberty to examine that no portion of amount collected by the assessee on account of PSF-SC is utilised by the assessee for its own purposes or for any purposes which are not permitted by MOCA/other competent authorities. In case any violation is done by the assessee in this regard, then the AO will be at his liberty to treat the amount so misappropriated as income of the assessee but to that extent only. Further, if any refund is received by the assessee on account of TDS deducted on this component, i.e. on PSF-SC, then the same shall also be deposited by the assessee in the Escrow Account, as was fairly agreed by the Ld. Counsel during the course of hearing before us, failing which it would be treated as income of the assessee, to that extent only. Depreciation on taxiways, taxiing track and parking ways - @10% as applicable to buildings OR 15% made by the assessee as applicable to plant and machinery - Held that:- Tribunal has allowed the claim of depreciation @15% as applicable to plant & machinery. No distinction has been made by the Ld. DR on facts or on legal position. Therefore, respectfully following the order of the Tribunal for A.Y. 2007- 08, this issue is decided in favour of the assessee, and therefore, the claim of depreciation @15% is directed to be allowed.
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2017 (2) TMI 639
Levy of penalty u/s 271(1)(b) r.w.s. 274 - assessing officer has completed assessment u/s 143(3) r.w.s. 153C - non-appearance for hearing by assessee - Held that:- Following the coordinate bench decision, in the case of Pillala Ramakrishna Rao Vs. ACIT (2016 (10) TMI 552 - ITAT VISAKHAPATNAM) we are of the view that the reasons given by the assessee for non-appearance for hearing as on the date of hearing appears to be reasonable and bonafide. The A.O. has given short period of 7 days to 26 days to furnish various information in connection with search assessment. Though, the assessee failed to appear on initial days, he had furnished all the information and the A.O. has completed assessment u/s 143(3) r.w.s. 153C of the Act. Therefore, we are of the view that the A.O. was erred in levying penalty for initial failure to comply with statutory notices u/s 143(2) & 142(1) of the Act, despite the fact that the assessee had fully cooperated for completion of assessment proceedings. Therefore, we direct the A.O. to delete penalty levied u/s 271(1)(b) of the Act, for the assessment years 2007-08 to 2013-14.- Decided in favour of assessee
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2017 (2) TMI 638
TDS u/s 195 - payments made to the non-residents for dismantling and sea worthy packing of paper mill machinery are payments made for fees for technical services - DTAA between India and Poland - assessee in default - Held that:- There is a difference between Contract of work and Contract of service . The two words convey different ideas. In the 'Contract of work' the activity is predominantly physical; it is tangible. In the activity referred as 'Contract of service', the dominant feature of the activity is intellectual, or at least, mental. Certainly, 'Contract of work' also involves intellectual exercise to some extent. Even a gardener has to bestow sufficient care in doing his job; so is the case with a mason, carpenter or a builder. But the physical (tangible) aspect is more dominant than the intellectual aspect. In contrast, in the case of rendering any kind of 'service', intellectual aspect plays the dominant role. In the case under consideration, the scope of work mentioned in the agreement clearly explains that it is contract of work to dismantle the machinery, therefore, it is not a contract of service hence payment by the assessee is not for technical services, therefore, the assessee company is not liable to deduct TDS. Thus we are of the view that dismantling of machinery does not require any technical services, therefore, the present case does not fall in the ambit of fees for technical services and the assessee company does not require to deduct TDS. - Decided in favour of assessee
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2017 (2) TMI 637
Disallowance made u/s. 35D - assessee is engaged in the business of Third party logistics operations - Held that:- CIT(A) has given finding that the assessee has not issued any shares for public subscription and the same appears to be a case of private placement of equity. The learned CIT(A) has also stated that the assessee has not met any of the required criteria specified in section 35D of the Act. Accordingly, the learned CIT(A) held that the disallowance made by the Assessing Officer was justified. Even though, learned AR argued that the claim made by the assessee is allowable u/s. 35D of the Act, yet he could not convincingly explain as to how this expenditure would fall in the list of expenses specified u/s. 35D of the Act. Further in the case of Brooke Bond India Ltd. (1997 (2) TMI 11 - SUPREME Court) has held that expenditure incurred in augmenting the share capital is capital in nature. Hence, we do not find any reason to interfere with the order passed by the learned CIT(A) on this issue. - Decided against assessee. Double addition of interest income - Held that:- The assessing officer has already assessed the interest income (credit entry), whose corresponding debit entry is the increase in the amount of “Capital work in progress”. In any case, since Capital workin- progress is a Balance sheet item, its increase will not increase the business profit of the assessee, as presumed by the Assessing Officer. Hence, we are unable to agree with the view taken by the tax authorities as the same is against the accounting principles. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition made towards under valuation of work-inprogress, as the same results in double addition of same item. - Decided in favour of assessee.
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2017 (2) TMI 636
Transfer pricing adjustment - use of single year’s data and applying the said data to determine the arithmetic mean of margins of comparables - Held that:- Where the assessee has failed to demonstrate any qualitative clarities in the data which would justify invoking of the proviso to Rule 10B(4) of the Income Tax Rules in the present case and hence, we find no mistake in the order of Assessing Officer / TPO in considering single year’s data pertaining to assessment year 2007-08 in order to arrive at the PLI of comparable cases while applying transfer pricing provisions. The ground of appeal raised by the assessee is thus, dismissed. Selection of companies - Held that:- There is difference in the factual aspects, wherein the concerns are not simply loss making concerns but persistently loss making concerns. In case they fall in the category of persistent loss making, then the margins of said concerns should not be adopted in order to benchmark the international transactions of the concern which is making supplies to its associate enterprises and which is market dominant concern. Accordingly, we hold so. We direct the Assessing Officer to verify the claim of assessee that both the Keltron group companies and Gujarat Poly-Avx Electronics Ltd. are persistent loss making concerns and if so, then both the concerns are to be excluded from the final set of comparables while benchmarking the international transactions in manufacturing segment Non-exclusion of depreciation while calculating PLI - Held that:- We hold that where the assessee is engaged in the business of manufacture of resistors and capacitors which in turn, are used in various electronic applications and products and where the assessee’s manufacturing facilities are established separately for the domestic tariff area and for export oriented unit and the items manufactured by the are used in different products which contained electronic circuits and has wide application in different spheres, there is no merit in the claim of assessee in adopting the cash PLI or PBDIT as the PLI. We dismiss the plea of the assessee in this regard. Non allowance of capacity utilization while computing the margins of assessee company - Held that:- Rule 10B(1)(e)(iii) of the Act, adjustments for variations is to be provided which could materially affect the amount of net profit margin in the open market in Comparable Uncontrolled Transactions, then adjustments are to be made in respect of net profits realized by the comparable transactions or enterprises. In other words, adjustment, if any, on account of capacity under-utilization is not to be made in the profits earned by the tested party i.e. assessee but in the hands of comparables. So, we find no merit in the claim of assessee that capacity utilization adjustment should be allowed in the hands of assessee. Adjustment on account of differences in working capital employed by the assessee and the companies considered as comparables - Held that:- Similar issue was raised in assessment year 2006-07 and the Tribunal remitted the issue back to the file of Assessing Officer/TPO to examine the claim of assessee relating to working capital adjustment and eliminate such difference, if any, as would materially affect the profit margins, following the same parity as in Demag Cranes & Components (2012 (1) TMI 60 - ITAT Pune ) Pvt. Ltd. Vs. DCIT (supra) and as per law. Following the same parity of reasoning, the issue is remitted back to the file of Assessing Officer. Non-allowance of benefit of provision available to the assessee under the proviso to section 92C(2) - Held that:- Issue of computing adjustment without giving benefit of provision available to the assessee under the proviso to section 92C(2) of the Act for +/- 5% stands decided against the assessee and following various decisions on this issue, this ground of appeal raised by the assessee is thus, dismissed. Computation of transfer pricing adjustment with reference to total turnover of exports, computing and restricting the same with reference to the value of international transactions - Held that:- This issue also has been adjudicated by the Tribunal in assessment year 2006-07 wherein the plea of assessee that transfer pricing adjustment, if any, was to be made to the total income of the assessee, then the same should only with reference to international transactions of the assessee with associate enterprises and not with reference to total turnover, is accepted and the Assessing Officer was directed to determine the arm's length price of international transactions accordingly. Transfer pricing adjustment, if any, is to be made to the total income of assessee, then the same should only be with reference to international transactions of assessee with its associate enterprises and not with reference to total turnover. The Assessing Officer is thus, directed to determine the arm's length price of international transactions accordingly. Disallowance of stock written off in DTA unit - Held that:- The plea of the assessee for the year under appeal is that all the evidences were before the Assessing Officer. However, we find that the Assessing Officer has not considered the said evidence since the matter was already decided against the assessee in assessment year 2006-07 and following the same, the amount was disallowed. The assessee has also furnished certain additional evidences in this regard i.e. evidence relating to the amount of stock written off in the case of raw materials and manufactured finished goods with monthly returns and in case of finished goods trading with quarterly Excise returns filed by the assessee. The Assessing Officer is directed to consider the said evidences while adjudicating the issue raised. We remit this also back to the file of Assessing Officer, who shall verify the claim of assessee and decide the issue in accordance with law. Reduction of insurance and communication expenses from export turnover and not from total turnover while computing deduction under section 10B - Held that:- We remit this issue also back to the file of Assessing Officer to determine the appropriate amount of insurance and communication expenses which are attributable to the exports made by the assessee and the same are to be excluded both from the export turnover and total turnover. Re-computation of deduction under section 10B of the Act by setting off of brought forward losses of eligible unit and all the other units before computing deduction under section 10B - Held that:- Deduction under section 10B of the Act is unit specific and is to be allowed anterior to the application of provisions of sections 71/72 of the Act which deals with carry forward and set off of business losses. The Assessing Officer is thus, directed to compute the deduction before adjusting brought forward unabsorbed losses or depreciation of eligible unit or other units.
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2017 (2) TMI 635
Penalty u/s 271(1)(c) - addition made on account of alleged undervaluation of closing stock - Held that:- The assessee who is dealing into the business of diamond having a wide range of varieties and there is uncertainty about correct valuation of such items even then assessee had properly maintained quantitative records, proper books of account duly audited, consistent adoption of method of valuation at “cost price or at market price whichever is less” and the basis of finding by the Revenue for valuing of closing stock at average cost taken from the records of assessee itself, clearly shows that assessee has not furnished inaccurate particulars of income nor has it concealed any particular of income and in such case where there is only a claim of valuation of closing stock by certain method which is bonafidely deemed correct by the assessee but not accepted by the Revenue, we are of the confirmed view that assessee should not have been visited with penalty u/s. 271(1)(c) of the Act. We accordingly delete the penalty u/s 271(1)(c) - Decided in favour of assessee
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2017 (2) TMI 634
Transfer of copyrights - India-Netherlands DTAA - whether the consideration received for provisions of such services is taxable as FTS under the provisions of India- Netherlands DTAA or not? - PE in India - Held that:- The action of the DRP in directing the treat the sum of Euro 154655 as FTS cannot be sustained. A perusal of the invoice in this regard together with the purchase order clearly shows that what the Assessee did was installation, testing and commission and training. The training was half-day training and was intended to familiarize the Assessee with the operation of the equipment. In the light of the India-Netherlands DTAA Article 12(5)(b) and in the light of the various judicial pronouncements referred to in the earlier paragraphs on this issue, it cannot be said that the services rendered “make available” technical knowledge, experience, skill, know-how or process etc. It cannot be said that the sum in question was in the nature of FTS chargeable to tax under the Treaty. Assessment of income from Gulf of Kuchch (GOK) Project - PE in India - Held that:- For constituting Installation PE within the meaning of Article 5(3) of the India-Netherlands DTAA the test of duration of time for which the activities are carried out in India becomes relevant. In the present case the question is computation of the duration of time. The supply of equipments that have to be installed by the consortium could be said to be a direct preparation for coming into existence of an Installation PE. The DRP has not given any specific reason for coming to the conclusion that there existed an installation PE of the Assessee in India except to observe that the project has to be seen in a holistic way. Even if one were to look at the project in a holistic way, the question still remains open whether the supply of equipments by itself would constitute an installation PE. There are no provisions in the treaty providing for circumstances such as the present one when it can be said that an installation PE has come into existence. There are no circumstances brought out to show that the parties resorted to treaty abuse. In the given circumstances, we are unable to uphold the findings of the DRP that there existed an Installation PE of the Assessee and profit arising out of off-shore supply of equipments are attributable to the installation PE and therefore taxable in India as business profits. Since the Assessee did not have a PE in India, such profits cannot be brought to tax in India. Taxation of income arising out of Assessee’s AMC contract with ONGC for supply, installation, testing and commissioning of Vessel and Air Traffic Management System (VATMS) - Held that:- since the VATMS equipment was already accepted and handed over to the customer in the year 2007 and no installation activity was carried out in India during the subject year, it cannot be held that the Assessee had an 'Installation PE' in India in the subject year. As far as the conclusion of the revenue that the independent contractor of the Assessee in India created a virtual presence of the Assessee in India so as to create an installation PE, given that the entire onshore maintenance contract has been performed by an independent local contractor in India, it cannot be said that the business of the Assessee has been carried out by the presence of the local contractor in India, so as to create its PE in India. The examination of whether a PE exists needs to be determined based on the activities of the foreign enterprise in India. Since no activities have been carried out by the Assessee in India with respect of such maintenance activity, it is unreasonable to conclude that the business of the Assessee was carried out in India through such subcontractor, to constitute its PE in India. We therefore hold that receipts in the form of AMC fees from ONGC on VATMS cannot be brought to tax in India as business income. In view of the above conclusion, the question of what quantum of income has to be attributed to the PE in India that is agitated in Gr.No.D-3 & 4 do not require any consideration. Taxation of income arising out of Extra Work Contract performed by the Assessee in respect of contract with ONGC for supply, installation, testing and commissioning of Vessel and Air Traffic Management System (VATMS) - Held that:- The revenue cannot bifurcate the consideration towards software and license embedded in the equipment from the combined sale value of the equipment and accessories and seek to bring to tax the amount bifurcated for software as in the nature of "Royalty" as envisaged under section 9(l)(vi) of the Act. For the reasons given in para 41 to 47 of this order, we hold that there was no installation PE in existence in so far as the ONGC VATMS AMC project is concerned. Therefore the receipts in question cannot be brought to tax India. Credit of taxes deducted at source- Held that:- It would be just and appropriate to direct the AO to consider the TDS certificate produced by the Assessee and after verification allow credit for prepaid taxes without insisting on the TDS being reflected in Form 26AS. The ground is treated as allowed.
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2017 (2) TMI 633
Benefits of Sec. 115A - Payments made to Standard Chartered Bank (SCB) India - payments for “Royalty” or “Fees for Technical Services (FTS)- Held that:- Since the assessee-company is incorporated in Hong Kong and is providing services/facilities for processing data to SCB from Hong Kong, therefore, the payment made by SCB India to assessee has to be seen from the perspective of domestic law, i.e. Income-tax Act and not under any treaty. There is neither transfer of any of right in respect of any patent, invention, model, design, secret formula or process or trademark or any similar property by the assessee to SCB, nor there is any imparting of any information or use of any of similar nature of things. Here, the entire equipment and technology which are used for processing the data is solely for performing the activity of assessee for itself while rendering data processing services to SCB. There is absolutely no transfer of any technology, information, knowhow or any of the terms used in Explanation 2 or any kind of providing of technology in the form of data centre, infrastructure, connectivity and application technology by the assessee to SCB for SCB’s banking operations. Thus, we are of the opinion that the payment made by SCB to assessee-company does not fall within the realm of “royalty” and hence cannot be taxed in India as royalty u/s 9(1)(vi) of the Act. The payment made by SCB to assessee-company does not fall within the realm of ‘fees for technical services’ as contained in Sec. 9(1)(vii), albeit the assessee has only provided a standard facility for data processing without any human intervention. Accordingly, we hold that the said payment is not taxable in India as ‘fees for technical services’ in terms of Sec. 9(1)(vii) of the Act. Thus, the issue raised in ground no. 1.1 is decided in favour of the assessee. With regard to rate of tax u/s 115A however this issue will become purely academic because we have already held that the amount of payment received by assessee from SCB is not taxable in India. Credit of tax paid we direct the Assessing Officer to look into this issue and allow credit of tax paid as per the directions given by Tribunal in the stay petition. Chargeability of interest u/s 234B - It is admitted that this issue is covered in favour of assessee in view of the decision in the case of NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT). Accordingly, respectfully following the same we direct to delete the interest u/s 234B.
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2017 (2) TMI 632
Validity of reopening of assessment - share premium subscribed by different companies in the assessee's share capital as re-investment of latter's unaccounted money itself - Held that:- We afforded sufficient opportunity to Shri Patel to take us to any such material in BF-01 forming part of the paper so as to even prima facie indicate at slightest pretext that there is even any evidence much less a conclusion indicating the assessee's unaccounted income have been invested in the share capital in question. He fails to refer to any such material. We accordingly observe that the impugned reopening reasons nowhere indicate any live nexus between the income sought to be reassessed. Our view therefore is that the Assessing Officer has proceeded on a mere apprehension leading to the impugned long drawn process of roving inquiry which has held to be not permissibl. This first reason accordingly fails the test of cause-effect relationship as discussed in the preceding paras. The assessee's first limb of argument is thus accepted. Second reason of the impugned reopening that the assessee-company bought back the share capital in question from the ten investor companies by paying them a sum of ₹ 75.20 lakhs no more survives in view of the Assessing Officer's remand report as well as the Commissioner of Income-tax (Appeals)'s lower appellate findings that it is the relatives of the assessee's directors who have been found to be the purchasers of the share capital in question. We put up a specific query to Shri Patel to point out that the above four share capital purchasers are in any way related to the assessee's directors. His case is that the assessee is a closely held company and it is not possible for the Department to prove this relationship. This plea does not impress upon us. Our view is that neither there is any material on record to point out specified relationship under section 40A(2)(b) of the Act nor are their assessment records placed in the case file to prove this crucial relationship. We are also of the opinion that this negative burden that these purchasers are not its relatives cannot be put to the assessee. Nor the Department in instant case made any effort to find about finding of the assessment in cases of investor companies as well as the four individual assessee who have repurchased the share capital despite that the fact it itself is the assessing authority of all of them. We rely on the case law in preceding paragraphs that the basic tenet of cause-effect relation between the reopening reasons and taxable income having escaped assessment is accordingly not made out. The assessee succeeds in the instant argument as well. Assessee's third limb of argument that the mere fact of Shri Jain's statement not being able to furnish names of the investor companies or their negotiators cannot form the reason to believe of its taxable income having escaped assessment, we notice survey party's specific queries as to whether he remembered the above state particulars of the investors. His reply was that he did not remember. We reiterate that the assessee transferred its share capital in financial year 2008-09 and this survey statement is dated September 3, 2012 i.e. after a time gap of four years. There is further no issue that the Department had already impounded BF-01 on August 31, 2012 stating all details of the assessee's companies contained in its annual statement and other documents. The same was furnished back only after issuance of reopening notice. There is thus nothing in Shri Jain's statement which could be held to be treated as an admission or that it is pointing towards introduction any unaccounted income in share capital. The Central Board of Direct Taxes Circular dated March 10, 2003 (as reiterated on December 18, 2014 vide clarification No. 286/98/2013-IT (Inv-II)) has already clarified that search/survey teams have to collect evidence instead of obtaining confessions of the concerned assessee. As in Kailashben's case (2008 (9) TMI 525 - GUJARAT HIGH COURT) concluded that an addition in absence of corroborative evidence ought not to be made merely on the basis of the assessee's admission. We accordingly reject the Revenue's contentions supporting this third limb of the impugned reopening as well. Assessee's written correspondence dated September 3, 2012 and September 4, 2012 disclosing names of ten investor companies through whom it had allegedly introduced the impugned unaccounted money Assessing Officer did not collect any material even up to section 148 notice on February 13, 2013 despite the fact that he was having at his disposal all the impounded material coupled with details of the ten investor companies. The Revenue at this stage seeks to involve estoppel principle. Its case is that the above correspondence binds the assessee since filed during survey or under section 131 of the Act as the case may be. We do not agree with this plea either way. We quote the Board's circular hereinabove to hold that the same hardly carries any significance in absence of corroborative evidence. The Revenue's latter limb of argument is also devoid of merits because if this admission is not even admissible in special provisions of search or survey, it can be safely held that the very analogy covers section 131 proceedings for general provisions as well. We adopt the very reasoning to observe that the Revenue's approach in seeking to assess the assessee's amount declared of ₹ 9 crores and at the same time questioning genuineness thereof by adopting pick and choose method is accordingly rejected. The assessee therefore succeeds in its fourth argument as well. Decided in favour of assessee
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2017 (2) TMI 631
Reopening of assessment - disallowance of claim of additional depreciation and claim of deduction u/s 43B - Held that:- In the instant case, the assessee has claimed depreciation on power plant and windmill @ 80% on written down value basis under section 32(1)(ii) of the Act. The Assessing officer has not challenged such claim of depreciation under section 32(1)(ii), however, on the same assets, the claim of additional depreciation under section 32(1)(iia) has now been challenged by issuance of notice u/s 148 of the Act. The basis of formation of belief by the AO that the assets falls under clause (i) and not clause (ii) and hence, claim of additional depreciation on such assets is not allowable, cannot therefore be accepted. More so, when the claim of depreciation on such assets under section 32(1)(ii) has been allowed by the Revenue in original assessment proceedings and also in the instant reassessment proceedings which are under challenge before us. There cannot be a situation where the additional claim of depreciation is disputed stating that the original claim of depreciation has been wrongly claimed but without disturbing (rather accepting) such original claim of depreciation. We are therefore of the considered view that the reasons recorded are self-contradictory and cannot form the basis to initiate reassessment proceedings. On this ground alone, the reopening of assessment u/s 147 cannot be held valid in law and is liable to be quashed. As far as the issue of claim of deduction u/s 43B of the Act we agree with the contentions of the ld. AR that the issue has been duly examined by the AO during the course of original assessment proceedings and to this extent there is clearly a change of opinion which has been rightly upheld by the ld. CIT(A). - Decided against revenue. Disallowance on account of additional depreciation on the assets of power generating units - CIT(A) allowed the claim - Held that:- It is now a settled position that the process of generation of electricity is akin to manufacture of an article or thing, the assessee in the instant case satisfy the requirement that it is engaged in the business of manufacture or production of an article or thing. Now coming to the amendment which has been brought-in by the Finance Act 2012 w.e.f. A.Y. 2013-14 whereby the assessee engaged in the business of generation or generation & distribution of power have specifically been included and held eligible for claim of additional depreciation. In our view, the said amendment cannot be held to disentitle the assessee to claim of the additional depreciation. Various Coordinate Benches have held that even prior to the amendment brought in by the Finance Act 2012, the assessees engaged in generation or generation and distribution of electricity were held eligible for additional depreciation. In light of above, the assessee is held entitled to the additional claim of depreciation on the power plant and the windmill installed during the year. Hence the ground of the department is dismissed. Disallowance u/s 43B - CIT(A) allowed the claim - Held that:- The service tax and land tax are statutory liabilities which are paid during the year as per the orders of the CESTAT and Hon’ble Rajasthan High Court. These are statutory liabilities which pertain to the business carried on by the assessee. The assessee cannot be denied a deduction in respect of these payments merely on account of the fact that these are payments in respect of matters which are contested before the authorities and no expenditure is book in the profit and loss account. The decision of Hon’ble Delhi High Court in case of Dharampal Satyapal Sons (2010 (11) TMI 993 - DELHI HIGH COURT) supports the case of the assessee. In light of above, we upheld the order of the ld CIT(A) in deleting the disallowance u/s 43B - Decided in favour of assessee
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2017 (2) TMI 630
Nature of receipt of Credits - capital receipt OR revenue receipt - Aircraft were acquired on lease - On delivery of aircrafts fitted with the engines supplied by the IAE, the assessee was allowable to get some credits from IAE. Similarly, suppliers of other components of aircrafts also extended credits to the assessee. - Held that:- Credits received by the appellant from IAE are capital in nature. TDS u/s 195 - disallowance of supplementary lease rents exempted under section 10(15A) - Held that:- Assessee was not required to deduct TDS on supplementary lease rental being exempt under section 10(15A) of the Act. Accordingly, the disallowance made under section 40(a)(i) of the Act is deleted .See Jet Light (India) Ltd.[2015 (11) TMI 304 - DELHI HIGH COURT] Disallowance u/s 14A - Held that:- The computation of disallowance made by the Assessing Officer under Rule 8D of the Rules, cannot be accepted. Accordingly, we restore the issue to the file of the Assessing Officer to examine the submission of the assessee in respect of interest specific to loans and compute the disallowance under Rule 8D in view of the ratio laid down by the Hon’ble High Court in the case of Bharti Overseas Private Limited (2015 (12) TMI 1423 - DELHI HIGH COURT ).
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2017 (2) TMI 629
Reopening of assessment based on order passed by TPO u/s 92CA - TPO had worked out the adjustment in relation to international transaction under section 92CA(3) on a reference made by the Assessing Officer under section 92CA(1) - Held that:- When no assessment proceedings were pending in relation to the relevant assessment year, the Assessing Officer was precluded from making a reference to the TPO under section 92CA(1) of the Act for the purposes of computing the arm's length price in relation to the international transaction. Consequently, order passed by the TPO under section 92CA(3) proposing an adjustment of ₹ 85,63,973/- to the arm's length price of the international transaction was a nullity in law and void ab initio. Thus such an order passed by the TPO was not a valid material for the Assessing Officer to entertain a belief that certain income chargeable to tax had escaped assessment within the meaning of section 147 of the Act. Consequently, we hold that the reasons recorded for reopening the assessment under section 147 of the Act do not meet the requirements of the section and hence the Assessing Officer had no jurisdiction to issue notice under section 148 of the Act. Consequently, the subsequent order passed by the Assessing Officer under section 143(3) r.w.s. 147 and 144C of the Act is liable to be quashed. Accordingly, we hold so. - Decided in favour of assessee
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2017 (2) TMI 628
Disallowance under Section 14A - - Held that:- Tribunal had accepted the submission of the assessee that there was no satisfaction recorded by the Assessing Officer for invoking the provisions of Section 14A read with Rule 8D. In Dhanuka & Sons (2011 (4) TMI 861 - CALCUTTA HIGH COURT ) it was found there was no dispute that part of the income of the assessee from its business was from dividend whereas the assessee was unable to produce any material before the authority below showing the source from which such shares were acquired. That decision is distinguishable on facts as not applicable to this case. We also do not find the Revenue had urged that the expenditure being disallowed was in relation to exempt income not arising in the previous year for application of the said circular to be considered. The Assessing Officer had accepted the correctness of the disallowable expenditure offered by the assessee on its claim of ₹ 25,68,04,353/- as long term capital gain. He did not allow the claim itself treating the said amount as business income to thereafter disallow the offered expenditure. In view of the clear finding of fact regarding the exempt income claimed treated to be business income and the shares held by the assessee having been treated as stock in trade, we do not find the case involves a substantial question of law. - Decided against revenue
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2017 (2) TMI 627
Addition made u/s.68 in respect of share application money received - Held that:- On the basis of documentary evidence placed on record we found that the assessee has discharged the onus cast upon by proving the identity, genuineness and creditworthiness-of the parties from whom it had received share application money. In the case of assessee neither any statement was given by third party to the Investigation Wing in which they have mentioned specifically that assessee was involved in the arrangement nor AO has proved specific involvement of the assessee in the arrangement of introduction of own money in the garb of share application money. There was no such specific finding or evidence was made available by the Assessing officer to prove that money received by the assessee was not genuine and it came from the coffers of the assessee company. - Decided in favour of assessee
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2017 (2) TMI 626
Disallowance u/s 14A computation - Held that:- Revenue has invoked Rule 8D of Income-tax Rules, 1962 for making disallowance u/s 14A of the Act in a stereo typed manner without having regard to the accounts of the assessee and without satisfying the mandate of Section 14A(2) of the Act before making disallowance u/r 8D(2)(iii) of Income-tax Rules, 1962 read with Section 14A of the Act which in our considered view cannot be sustained in the instant appeal keeping in view facts and circumstances of the case moreso without pointing out and defect by the Revenue as to how the working of the disallowance submitted by the assessee u/s 14A of the Act is not correct having regard to the accounts of the assessee. AO did not made any attempt to work out disallowance of expenses incurred in relation to earning of income which does not form part of total income having regards to the accounts of the assessee in accordance with mandate of Section 14A(2) of the Act and also no attempt was made by the AO to dislodge the claim of the assessee in bringing forth and working disallowance u/s 14A of the Act having regard to the accounts of the assessee. In our considered view, the disallowance made by the A.O. in the instant appeal u/s 14A of the Act r.w.r. 8D(2)(iii) of Income-tax Rules, 1962 cannot be sustained and the disallowance of the expenses is to be made keeping in view expenses debited to the Profit and Loss Account (including , inter-alia, PMS Fees) having regard to the accounts of the assessee in accordance with mandate of Section 14A of the Act and hence, the issue is set aside to the file of the AO for making de-novo disallowance of expenses u/s 14A of the Act on merits in accordance with directions in this order in accordance with provisions of Section 14A of the Act. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law before de-novo determination of disallowance of expenses u/s 14A of the Act on merits.
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Customs
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2017 (2) TMI 609
Abatement of appeal - death of appellant. Smuggling - Natural justice - confiscation of currency - Held that: - the Tribunal in the earlier order had remanded back the case with the direction to give fair opportunity to the appellant so that a fair trial shall be ensured. Since cross-examination did not occur and appellant is accused on the basis of the statements of Jullu Mondal, I find that it would be appropriate in the facts and circumstances of the case to remand the matter to the original authority - appeal allowed by way of remand.
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2017 (2) TMI 608
Valuation - royalty - whether the amount of royalty to be included in assessable value? - Rule10(1)(c) of the Customs Valuation (Determination of value) of imported goods Rules, 2007 - Held that: - royalty under the said Rule can be included in the assessable value if in case of imported goods, it is the condition of sale. And as per the explanation, royalty would be includable in the case even after the imported goods have undergone the process after importation of said goods - in the present case, the respondent is paying royalty to their foreign supplier for the manufacturing of goods under their license in India. The same cannot be termed as royalty paid for the imported goods. Appeal dismissed - decided against Revenue.
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2017 (2) TMI 607
Confiscation - penalty - undervaluation - import of brand new car of Chrysler 300C 3.0CRD V6 Saloon SRT - car in dispute was manufactured in Austria but was imported from the United Kingdom - Held that: - On the official website of the car manufacturer, the value of the identical model was shown as 32505 British Pound. Thus, it is evident that the car was imported by producing the Bill of Entry of under-valuation - the Department has taken the price of the impugned car as was available on the manufacturer. When it is so, there is no reason to interfere with the impugned order which is hereby sustained - appeal dismissed - decided against assessee-Appellant.
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Service Tax
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2017 (2) TMI 625
Refund claim - various input services - N/N. 41/2007-ST dated 06/10/2007 - denial on the ground that the said services are not confirming to port service - Held that: - the services concerning Terminal Handling Charges, B/L charges, Custom Clearance Charges, Documentation Charges, Agency Charges, haulage charges, business auxiliary service, business support service and Repo Charges were provided by the service providers within the port, facilitating export of goods. Since those services were provided within the port, irrespective of the classification of the services by the service providers, the benefit of refund provided in notification dated 06/10/2007 should be available to the appellant. Since the entire invoices referred to in the SCN were not submitted by the appellant, the matter should go back to the original Authority for verification of the invoices issued by the service provider - appeal allowed by way of remand.
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2017 (2) TMI 624
Sub-contract - denial of exemption available to the construction of dam only on the ground that the dam is part of the Hydroelectric Power Project - Held that: - The statutory definition did not define the scope of the term “dam” or its ultimate use. It is common knowledge that in many cases, the dams are for multi-purpose like, irrigation, power generation, flood control, etc. The Exclusion Clause did not put any condition that the dams for particular purpose only will be excluded from tax liability - there is no justification to give a restrictive meaning to the term “dam” to the effect that the exemption will be available only when it is not part of any bigger project - exemption allowed - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 623
Refund claim - N/N. 17/2009-ST - denial on the ground of original invoices with certification not submitted; Bill of Lading charges, THC were not covered under the category of Port services; refund claim in respect of certain shipping bills is less than ₹ 500/-; in case of freight, service tax is to be paid by exporter etc. - Held that: - the service was transportation of goods by rail service. The invoice issued by CONCOR clearly shows the payment of service tax made by them. Accordingly, the payment of service tax refund on such cases is allowable to the appellant. Refund claim in respect of certain shipping bills is less than ₹ 500/- - Held that: - The impugned refund claim has been disallowed in all cases where service tax refund is less than ₹ 500/- in respect of each shipping bill. This is clearly a wrong interpretation of Para 2(h) of the relevant notification. Since the total service tax refund claim is much more than ₹ 500/-, rejecting the refund in each case is not called for. Certain services not covered under port services - Held that: - The various services for which the refund has been denied are rendered within the Port and hence, may be considered as Port services which are listed in the relevant notification for sanction of refund of service tax - refund is allowable in respect of the services under category of Port services. Appeal disposed off - decided in favor of assessee.
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2017 (2) TMI 622
Levy of tax - GTA services - whether tax can be levied when consignment note was not issued? - the appellants had paid the entire Service Tax liability but for a nominal amount of ₹ 1,372/- before the issuance of SCN - interest - imposition of penalties u/s 76, 77 and 78 - Held that: - There were decisions interpreting the provisions to hold that Service Tax cannot be demanded whereas some of the decisions held the issue in favor of Department. Taking note of this fact and also taking in to consideration that the appellant has paid the major portion of Service Tax along with interest prior to the issuance of Show Cause Notice Immediately on being pointed out by the Department, the penalties imposed are unwarranted as per provisions contained in sub-Section 3 of Section 73 of Finance Act, 1944. Penalties imposed u/s 76 as well as 78 would not lie simultaneously - impugned order is modified to the extent of setting aside the penalties imposed without disturbing the confirmation of demand and interest - appeal disposed off - decided partly in favor of appellant.
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Central Excise
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2017 (2) TMI 621
Imposition of penalty u/s 11AC of the CEA, 1944 - validity of SCN - variation in SCN - Held that: - It is not incorrect to draw a conclusion to the effect that the contents of the notice were varied after the signature of the issuing authority. There is no endorsement or approval of such changes by issuing authority. As such, we find any proceedings pursuant to such notice, having such legal infirmity, cannot be sustained - appeal allowed.
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2017 (2) TMI 620
Condonation of delay - Clandestine removal - production and clearance of branded Chewing Tobacco under the guise of unbranded Chewing Tobacco - Held that: - there is a non-maintenance of the accounts in respect of certain quantity of the raw materials, finished product and non-finished product for which assessments were made and also that has been recovered and private accounts is maintained instead of maintaining regular accounts. So only on technicality, the assessee is fighting the matter. The issue is a long drawn one. It is pending for more than 15 years. In the event of remand, it has to go once again before the assessing officer or before the Commissioner (Appeals) which would not serve any useful purpose, rather, it is seen that statement from the accountant is also said to have been recorded, and also there is a clear admission on the part of the assessee with regard to manufacturing of tobacco related goods without declaring to the Department which attracts duty under the Central Excise Rules. There is no bona fide on the part of the assessee in seeking to condonation of delay and it is only with the defiant intention to delay the process of recovery - Review Application dismissed - decided against applicant.
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2017 (2) TMI 619
Considering separate premises as single factory - Why the parties grouped against each serial number should not be regarded as constituting the same factory for the purpose of Notification No. 253/82 (earlier Notification No. 80/76) by the virtue of the facts that one unit is power operated and other is non power operated unit? - Held that: - the issue involved in the present appeals have already been settled in this Tribunal’s judgment reported as Commissioner of Cus. & C. Ex., Pune Vs. Swastik Dyeing & Bleaching Factory 2004 [2003 (12) TMI 206 - CESTAT, MUMBAI] where it was held that the Notification under reference viz. 253/82-C.E. will never apply, for the reason that the exemption conferred by N/N. 253/82-C.E. is applicable only if bleaching, dyeing or printing is carried on in one premises (factory) and the calendering in another premises (factory). If according to the department bleaching/dyeing/calendering are one integrated process and different premises where these activities are undertaken will therefore render these premises one factory, then no one will be able to comply with the proviso to N/N. 253/82-C.E. and Notification will be rendered nugatory. All the units under reference are separate factories and are not the precincts nor the part of the same premises - The various factors such as common management common administration, common sharing of water, job work transactions amongst them, close relationship amongst the partners etc. including the so-called operational unity are entirely irrelevant for the determination of the issue involved. The benefit of N/N. 80/76-C.E. as amended and/or 253/82-C.E. cannot be denied - appeal dismissed - decided against Revenue.
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2017 (2) TMI 618
Clandestine removal - duty paying invoices - goods not covered by invoices - Held that: - the evidences i.e papers/ records found from the third party i.e M/s Super Trading cannot be a basis for holding clandestine removal by M/s Hira Enterprise in absence of any corroboration from assessee’s side and thus demand cannot be made against M/s Hira Enterprise - in case of goods found at the premises of M/s Super Traders alleged to have been cleared from the factory of M/s Hira Enterprises without payment of duty and wherein confiscation of goods and imposition of penalties upon the assessees were ordered by the adjudicating authority, the Commissioner (Appeals) dropped the charges vide OIA dt. 27.11.2006 holding that there is no evidence that M/s Hira Enterprise has cleared unaccounted excess production. The allegations against M/s Hira Enterprise of removal of goods clandestinely are not sustainable and no demand can be made against them - appeal allowed - decided in favor of assessee.
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2017 (2) TMI 617
Interest on the delayed payment of rebate claims - export of goods - whether the appellant are eligible for interest from three months after the date of sanctioning the rebate for the reason that the appropriation was illegal and against the provisions of law? - Held that: - the assessee is entitled to interest for delay in payment of sanctioned rebate on account of the sanctioned rebate being adjusted to pending arrears which have not reached finality - The appropriation of the amount, prior to the demand attaining its finality, and also during the pendency of the stay application is highly harsh on the assessee. The appellant is eligible for interest after three months from the date of filing the rebate claim till the actual payment of refund - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 616
CENVAT credit - the appellant has not reversed the credit for the relevant period when the timber logs/inputs were removed as such - Held that: - there is irregular availment of credit for which the demand has been rightly raised. It is to be noted that the appellant has paid an amount of ₹ 1,10,504/- immediately on being pointed out by the audit party. However, since the ER-1 returns do not reflect the non-reversal of the credit when the inputs were removed as such, the SCN issued invoking extended period of time is proper - the penalty of equal amount is unjustified and requires to be revised to the period beyond the normal period - appeal allowed - decided partly in favor of appellant.
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2017 (2) TMI 615
Sugar cess - effect of increase in levy of sugar cess after clearance of sugar from the factory - Held that: - The provisions of Central Excise Act, 1944 require payment of duty of excise at the time of clearance of goods from the factory. Central Excise Act has not empowered authorities to collect the duty on goods after they are cleared from the factory when appropriate duty leviable at the time of clearance was paid. Similarly, Central Excise Authorities are not empowered to collect any duty which has been increased after clearance of goods, on goods cleared on payment of appropriate duty at the time of clearance. Since all the provisions of Central Excise Act are made applicable for levy and collection of Sugar Cess through Sub-section 4 of Section 3 of Sugar Cess Act, 1982, the increased levy of Sugar Cess, after the date of clearance from the factory on payment of appropriate Central Excise duty and appropriate Sugar Cess does not arise - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 614
Whether the appellant is required to pay interest from the date of default till 23.01.2006 that is, the date of deposit of ₹ 50.00 Lakhs u/s 35F of CEA, 1944, as a condition to hear their appeal, or to be paid till they reversed the credit i.e. 10.09.2012 pursuant to the order of the Tribunal reducing the demand to ₹ 9,88,236/-? - Held that: - though the appellant was required to deposit the entire amount of duty and penalty, however, the Tribunal has reduced the said pre-deposit amount to ₹ 50.00 Lakhs against the confirmed liability of ₹ 2.64 crores. Therefore, it is incorrect to say that the appellant had not paid the amount of ₹ 9,88,236/- as on 23.01.2006, which was ultimately confirmed by the Tribunal, in disposing their appeal by Order dt.29.06.2012 and reversed by the Appellant on 10.09.2012, pursuant to the said Order. Whether benefit to discharge 25% of the penalty be extended to the appellant considering adjustment of interest from the pre-deposit amount? - Held that: - the appellant is required to pay interest till 23.01.2006 and consequently, also eligible to claim the benefit to discharge 25% of the penalty of ₹ 9,88,236/-, since, they complied with the direction of the Tribunal Order dated 29.06.2012, in the sense that the required amount due pursuant to the said Order was lying with the department as on the date of the order of the Tribunal. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 613
CENVAT credit - manufacture of Yeast classifiable under Tariff Item No. 21022000 of the schedule to Central Excise Tariff Act, 1985 - Held that: - there is no co-relation of raw material and final product - there cannot be reversal of credit unless it is irregularly taken. The said SCN has not made any allegation in respect of credit except credit of ₹ 2,27,130/- that the credit was taken irregularly. Therefore, we find that Cenvat credit except ₹ 2,27,130/- was not liable to be recovered. Therefore, we hold that the impugned Order-in-Original is sustainable to the extent of denial of Cenvat Credit of ₹ 2,27,130/- and remaining part of the said order is set aside including penalty on the appellant - appeal partly allowed - decided partly in favor of appellant.
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2017 (2) TMI 612
Imposition of penalty - Whether the proceedings against the co-noticees can be considered as concluded, when the matter has been settled by the main noticee before the Settlement Commission? Held that: - the proceeding against the co-noticees come to an end when the main noticee has settled the matter before the Settlement Commission - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 611
CENVAT credit - tyres used for dumpers - denial on the ground that the tyres used for the dumpers do not fall within the definition of capital goods - Held that: - The Division Bench of the Tribunal in the recent decision rendered in the case of M/s Aditya Cement [2016 (9) TMI 1127 - CESTAT NEW DELHI] had held that tyres are necessary accessory to dumpers which are capital goods used in the manufacturing activity and integrally connected in the manufacture of final products - It was further, held that the credit on tyres of dumpers is admissible under the category of inputs - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 610
CENVAT credit - fuel used as input in the manufacture of exempted goods - Rule 6 of the CCR, 2001 - Rule 6(1) read with Rule 6(2) of the Cenvat Credit Rules, 2001 - Held that: - Since the order passed and impugned in this Appeal is unreasoned and cryptic, we have no alternative but to allow this Appeal. We set aside the Tribunal's order. We restore the Appeal before the Tribunal for a decision afresh on merits - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (2) TMI 606
Release of detained goods - payment of tax alongwith compounding fee - Held that: - the writ petition is disposed of with a direction that if, the petitioner were to deposit the tax, of ₹ 1,03,697/-, the detained goods would be released, immediately, thereafter - the petitioner having the liberty to assail the imposition of tax and compounding fee, on merits, in accordance with remedy available under the 2006 Act - petition allowed - decided partly in favor of petitioner.
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2017 (2) TMI 605
Obtaining VAT registration for illegal purpose - role and involvement of tax professionals - Offences punishable u/s 406, 409, 420, 467, 468, 471, 474, 120(B) of the Indian Penal Code read with Sections 85(1)(b)(c)(e)(f)(g), 85(2)(j), 85(4) and 85(c) of Gujarat Value Added Tax Act, 2013 - Held that: - the applicant has rendered professional services for the purpose of getting registration numbers from the office of the Commissioner of Commercial Taxes, and no material at this stage is brought to the notice of the Court to point out that the applicant had gained anything on the basis of the false registration taken in the name of fake Firms from the office of the Commissioner of the Commercial Taxes, finds that the discretion deserves to be exercised in favor of the applicant under Section 438 of the Code - without prejudice to the right of the accused to seek stay against an order of remand, if ultimately granted, and the power of the learned Magistrate to consider such a request in accordance with law. It is clarified that the applicant, even if, remanded to the police custody, upon completion of such period of police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order - applicant to be released on bail - application for bail disposed off.
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2017 (2) TMI 604
Stay on recovery proceedings - Held that: - t is fairly conceded that as on today, neither any provisional assessment order is passed nor any final assessment order is made, hence, the proceedings are at the notice stage. Thus, the tax liability has not been crystallized till the date. Under the circumstances, the respondent no. 2 cannot deposit the cheques which are recovered from the petitioner - while continuing the attachment of the residential property, it is directed that the respondent no. 2 shall not deposit the said cheques which were recovered from the petitioners till a provisional assessment order and/or final assessment order is passed - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (2) TMI 603
Scheme for rehabilitating of sick company - revival of Adilabad Unit - Held that:- State of Telangana intends to represent to the Union of India seeking revival of the Cement Corporation of India Limited, Adilabad District, considering the number of representations received from the local public as well as employees of the Cement Corporation of India Limited, Adilabad District. Inasmuch as the learned Special Government Pleader requests this Court to deal with this aspect as well, it may be observed that the above-quoted paragraph refers to revival of the Cement Corporation of India Limited, Adilabad District. The Cement Corporation of India Limited having a number of units is different from the Cement Corporation of India Limited, Adilabad District as there is no Company existing like Cement Corporation of India Limited, Adilabad District in strict legal sense. Probably, what the Principal Secretary means is Adilabad unit of Cement Corporation of India Limited. Inasmuch as the issue before the BIFR as well as the Appellate Authority was the revival of the Cement Corporation of India Limited the Sick Industrial Company with multiple units, the question of revival of Adilabad Unit on stand alone basis does not arises. However, it may not be construed that if the State of Telangana or any other party interested to rehabilitate or revive the Adilabad Unit, the same would have to be strictly done in accordance with the scheme as approved by the BIFR which aspect has already been dealt with in the preceding paragraphs. This Court finds no merits in the writ petition and accordingly, the writ petition is dismissed making it clear that the respondent-authorities shall implement the scheme formulated with respect to the workers in letter and sprit expeditiously.
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