Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 17, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
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CBDT resolves disputes to the tune of ₹ 5000 crore under Mutual Agreement Procedure (MAP) of Tax Treaties
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RBI Reference Rate for US $
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Government Approves Ten (10) Proposals of Foreign Direct Investment (FDI) Amounting to ₹ 607 Crore Approximately; Recommends One Proposal for Approval of CCEA Involving FDI of ₹ 5856.51 Crore.
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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
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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CBDT issues direction that all rectification applications must be disposed of after passing an order in writing, to be duly served upon the taxpayer concerned and not by merely making necessary rectification on the AST System.
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Prescribed time-limit of 6 months in passing order u/s 154(8) of Income-tax Act, 1961 to rectify any mistake apparent from record must be followed strictly.
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Section 244A does not mandate that interest cannot be allowed on self assessment tax paid u/s 140A. As discussed earlier it cannot be said that interest u/s.244A can be allowed only in cases where excess payments of tax is made consequent to a notice of demand u/s.156. - HC
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Exemption u/s 11 - Addition on advances to sister concern instead of using the fund on the object of the Trust - The advance made to VISEA Trust therefore can be said to be out of surplus accumulated and remained at the disposal of the assessee and does not offend provisions of section 11(2) in any manner - AT
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Reopening of assessment beyond the time allowed - period of limitation - - When by an order of the Tribunal, the income is excluded from the total income of the assessee for the block assessment - the provisions of sec. 150(1) are applicable - reopening upheld - AT
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Registration granted u/s 12AA and 80G rejected - A colourable transaction is a transaction, which is apparently a valid transaction but really unlawful and illusory. - No such circumstances exist in the present case - registration allowed - AT
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MAT applicability - whether the provisions of section 115JB of the Act are applicable to the assessee being a Corporation established under Damodar Valley Corporation Act, 1948 for the Asst Years 2008- 09 and 2009-10 - Held No - AT
Customs
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Jurisdiction of tribunal to exercise its discretion and grant relief to the respondents - Miss-use of the DEEC and DEPC Scheme and submitting fictitious or forged shipping bills - The misconduct reflects a chain of acts. In such a situation, we are disposed to think that the discretion exercised by the tribunal is inappropriate. - SC
FEMA
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Challenge to the RBI (FEMA) circular - validity and legality - Policy in relation to import of Gold - there is no basis for the complaint that it lacks jurisdiction or authority to regulate the dealings in foreign exchange. In the instant case, the Reserve Bank of India is doing precisely this and, therefore, it neither interferes nor takes over the powers of the competent authority either under the Act of 1992 or the Customs Act, 1962 - HC
Service Tax
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RBI is required furnish AIR in relation to import of services and Electricity Board to submit AIR in relation to consumption of electricity in specified circumstances
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Export of services - taxability of ‘management, maintenance or repair' service rendered by the respondent prior to the amendment of Export of Service Rules, 2005 - The location of the client cannot be uncoupled from the performance of the service - AT
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Validity and scope of Interim order while passing Final Order - The scope of Interim Order is very limited. It is temporary and effective only during the pendency of litigation; ceases to exist as soon as the Final Order is passed. No law can be laid down in an interim order. - HC
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Management, Maintenance or Repair of roads (MMR) - exemption has been extended even for the earlier period from 16.06.2005 to 26.07.2009 - HC
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Taxability of supervision charges collected from the consumer of electricity in outride contribution scheme in relation to power supply - service in question is also covered under the exemption notification No. 45/2010-ST - AT
Central Excise
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Revenue authorities have erred in demanding of Central Excise Duty on the amount received by the appellant for erection and commissioning of the equipment at their customer's place - AT
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Shortage of inputs as well as finished goods - Merely on the basis of stock taking on average basis the allegation of clandestine removal of goods is not sustainable. - AT
VAT
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Question of Refund of amount deposited during pendency of appeal as per the direction and when appeal was dismissed as not maintainable - TNVAT - amount to be refunded - HC
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Pray for de-sealing of its business premsies - exercise the powers indiscriminately and routinely under DVAT - The action of the Respondents in proceeding to seal the premises of the Petitioner, almost in continuation of the action u/s 59 of the DVAT Act, and only for the failure to produce books of accounts, without anything more, is unsustainable in law. - HC
Case Laws:
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Income Tax
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2016 (2) TMI 470
Interest on Refund u/s 244A - Date from which interest is payable on refund - rectification of mistake - Whether the explanation to Section 244A(1)(b) bars payment of interest upon refund of excess payment on self-assessment? - in order u/s.154 the assessing officer held that interest u/s.244A(1)(a) is not payable on refund of excess self assessment tax whereas s.244A(1)(b) is not attracted in view of the explanation appended thereto - Held that:- We are of the opinion that Clause (b) of Sub-Section 1 of Section 244A is residual in nature and provides for interest on refund of excess self-assessment tax paid by the assessee. Furthermore the explanation to section 244A(1)(b) would have no application since the tax in question was not paid consequent to any notice of demand u/s. 156, rather it was paid u/s 140A. Hence according to mandate of section 244A(1)(b) interest is payable on refund of excess self assessment tax from the date of payment of such tax to the date when the refund is granted. An error, which is by no means self-evident, cannot be called an apparent error. Nevertheless a mistake capable of being rectified u/s. 154 is not limited to clerical or arithmetical mistakes only. However it does not include any mistake which may be discovered by a complicated process of investigation, argument or proof. A decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. The ordinary meaning of the word "apparent" is that it should be something, which appears to be so ex facie that it does not admit scope for any argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. Section 244A does not mandate that interest cannot be allowed on self assessment tax paid u/s 140A. As discussed earlier it cannot be said that interest u/s.244A can be allowed only in cases where excess payments of tax is made consequent to a notice of demand u/s.156. The language of the Act is clear and there is no ambiguity in it. Hence the assessee is clearly entitled to claim interest u/s.244A on refund of excess self assessment tax. Thus in the instant case there was no mistake apparent from the record which could be rectified u/s. 154 of the Act - Decided against revenue
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2016 (2) TMI 469
Reopening of assessment - non disposing of the objections to the reasons recorded for reopening - Held that:- It is accepted by the Revenue that passing of an assessment order without disposing of the objections to the reasons recorded in support of the reopening notice, is an order without jurisdiction being in defiance of the Apex Court's decision in GKN Driveshafts (India) Ltd (2002 (11) TMI 7 - SUPREME Court ). Therefore, we set aside the order dated 3rd February, 2015 passed on reassessment for the A.Y. 2010-11. - Decided in favour of assessee.
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2016 (2) TMI 468
Entitlement to claim deduction under section 80-IA - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. See CIT Vs. Eastman Exports Global Clothing (P) Ltd [2015 (1) TMI 830 - MADRAS HIGH COURT] and Velayudhasamy Spinning Mills (2010 (3) TMI 860 - Madras High Court ) - Decided in favour of the assessee.
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2016 (2) TMI 467
Addition u/s 69A - CIT(A) deleted the addition made by the AO - Held that:- It is clear that the Assessing Officer failed to establish any case against the appellant. The impugned order does not throw any light on any inquiry/investigation carried out by the Assessing Officer that could corroborate the entries found in the seized material and justify the additions made in the case of the assessee. Further inquiry/investigation, was required to be carried out on the information passed by the DCIT, Central Circle 19, New Delhi, but apparently no worthwhile or cogent work was done towards this end. In the second round of assessment proceedings, the said persons during the cross examination has denied any sort of dealings with the assessee and in fact has even failed to identify the assessee. They have furnished their duly sworn affidavits deposing these facts(supra). No direct of corroborative evidence could be discovered by the ld.AO from the assessee's possession, which could substantiate the alleged addition. It is not at all the case where the assessee has made an unexplained investment of cash. The Assessing Officer merely summarized the salient features of the assessment proceedings relating to Shri Brij Mohan Gupta and thereafter summarily rejected the reply of the assessee as 'not acceptable'. Therefore, the Assessing Officer was not justified in making the addition of ₹ 20,00,000/-. - Decided against revenue
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2016 (2) TMI 466
Legality of reopening of assessment - non issue of notice under section 142(1) - Held that:- In the present case, as noted earlier, law itself does not oblige the Assessing Officer to issue notice u/s 143(2) in the absence of return u/s 139 or u/s 142(1). Concurrently, we notice that the impugned assessment was framed after proper opportunity were afforded to the Assessee by issuing notice under section 142(1) in sync with principles of natural justice. Therefore, we do not find any force in the contention of the Ld. Authorized Representative for the assessee that non issuance of notice under section 143(2) is fatal and has vitiated the re-assessment order and rendered it bad in law. To reiterate, we take note of the fact that the assessee has appeared before the Assessing Officer and was in acquiescence and privy to the re-assessment proceedings. Thus, interest of the Assessee is not jeopardized in any manner. Omission to serve or any defect in the service of the notice not statutorily required in the facts of the case will not, in our view, impinge upon the legality of impugned re-assessment order. we are of the considered view that in the absence of return filed in accordance with law or any valid return being on record, the objections raised by the assessee is not sustainable in law and is thus without any merit. - Decided against assessee Addition on advances to sister concern instead of using the fund on the object of the Trust - Held that:- The assessee trust has correctly utilized the funds for the purpose of the object of trust. When the amount has been spent by the assessee for the construction of the building that was for its stated education purpose, then the amount claimed can be considered as utilized for the purpose of the object of trust and the requirements of section 11(2) r.w.s. 11(3)(a) of the Act stands fulfilled. Thus, the relief claimed under section 11(2) of the Act has been rightly allowed by the CIT(A) as noted above. The advance of ₹ 13,00,000/- made to VISEA Trust therefore can be said to be out of surplus accumulated and remained at the disposal of the assessee and does not offend provisions of section 11(2) of the Act in any manner. Hence, we are not inclined to interfere with the order of the CIT(A) - Decided in favour of assessee
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2016 (2) TMI 465
Deduction u/s. 80P(2)(a)(i) - Held that:- Respectfully following the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Jafari Momin Vikas Co –op. Credit Society Ltd.(2014 (2) TMI 28 - GUJARAT HIGH COURT ), we uphold the finding of the ld.CIT(A) that the assessee is a credit co-operative society with no banking licence , accepting deposits and advancing loans only to its members, and is, therefore, entitled to deduction u/s. 80P(2)(a)(i) of the Act. We find there is no merit in the grounds of appeal raised by the revenue - Decided in favour of assessee
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2016 (2) TMI 464
Disallowance of claim of the assessee made u/s.80-IB(10) - Held that:- It is seen that the entire risk is of the appellant who is developing the project and there is no agreement for fixed remuneration as a contractor. In the instant case, the appellant has purchased the land for fixed consideration and has developed the housing project on its own cost and there is no joint venture with the land owner and thus in terms of decision in the case of M/s. Shakti Corporation [2008 (11) TMI 436 - ITAT AHMEDABAD ] and the ratio of Radhe Developers [2007 (6) TMI 316 - ITAT AHMEDABAD ] the AO is directed to allow deduction u/s.80IB(10) to the appellant. - Decided in favour of assessee
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2016 (2) TMI 463
Disallowance on interest expenses u/s.40(a)(ia) - assessee had not deducted/remitted any TDS on these expenses - Held that:- In the absence of any material to suggest that the amount is outstanding at the end of the close of the previous year relevant to the assessment year, then impugned amount cannot be disallowed u/s. 40(a)(ia) of the Act. Similar view has been taken by the Co-ordinate Bench of Chennai Tribunal in the case of Shri N. Palanivelu Vs. ITO, Salem reported in [2015 (10) TMI 1415 - ITAT CHENNAI]. Accordingly, we direct the Assessing Officer to disallow the only amount which is outstanding at the end of the close of the previous year relevant to the assessment year. Hence, for limited purpose to verify the outstanding amount out of this impugned amount at the end of the close of the previous year relevant to the assessment year, we remit the issue back o the file of the ld. Assessing Officer. Further, we also make it clear that if the assessee paid the TDS before the returns filed u/s.139(1) of the Act, that expenses cannot be disallowed. The ld. Assessing Officer has to decide the issue after giving an opportunity to the assessee for producing necessary evidence. - Decided in favour of assessee for statistical purposes.
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2016 (2) TMI 462
Reopening of assessment beyond the time allowed - period of limitation - whether the date on which the block assessment was framed, the AO could have taken action by issue of notice u/s.149(1)(b)(iii) - addition u/s.43B - Held that:- When by an order of the Tribunal, the income is excluded from the total income of the assessee for the block assessment, then the assessment of such income for the assessment year 1998-99 shall be deemed to be one made in consequence of, or to give effect to any finding or direction in that order (in appeal) for the purpose of lifting the ban of limitation under Explanation 2 to sec.153(3). In view of the above, in our opinion, the provisions of sec.150(1) are applicable. Thus, ground of the assessee in its appeal is dismissed. AR, as per the return of income, ₹ 13,29,74,324/- was disallowed u/s.43B, which includes a sum of ₹ 7,02,87,355/- and the same was disallowed in re-assessment and there cannot be any further disallowance in the reopened assessment. In our opinion, this argument of the ld. AR is having no merit. The assessment was not completed as per return of income filed by the assessee, whereas it is completed on the income admitted by the assessee on its own admission as the assessee has made various claim u/s.10B, 80IA etc. which appears to be merely to offset the excess income booked in the window dressed profit & loss account. The disallowances u/s.43B were taken care of while making own admission by the assessee that the income is ₹ 3 lakhs. Being so, the assessment was reopened to consider the disallowance of ₹ 7,02,87,355/- u/s.43B of the Act. In our opinion, the provisions of sec.43B are applicable on this amount and there is no dispute and the same to be added in the reassessment order, which is confirmed - Decided against assessee
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2016 (2) TMI 461
Denial of exemption under section 80P(2) on the interest income earned from the fixed deposits with nationalized bank - Held that:- The total interest income received by the assessee from FDRs. in nationalized bank qualify for exemption under section 80P(2)(a)(i). But, since the assessee itself has offered an amount of ₹ 98,015/- for taxation, the assessee has not challenged the inclusion of this amount from its taxable income. The grounds of appeal which arose from the impugned order pertain to the amounts, over and above to this. Therefore, in view of above discussion, allow the claim of the assessee partly out of total interest income of ₹ 2,48,563/-. The ld.AO is directed to grant exemption under section 80P(2) of ₹ 1,50,548/-. - Decided in favour of assessee in part.
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2016 (2) TMI 460
Registration granted under Section 12AA and registration under Section 80G rejected - extending loan to the trust by the trustees - Held that:- Nothing wrong in extending loan to the trust by the trustees. In the case in hand, the trustees or their relatives have extended loan and transferred land at arm’s length price as trustees and their families to fulfill the desire of charitable activity have extended loans or transferred the property to the trust. By these actions of the trustees or their relatives, the trust is not at disadvantage or the transactions are not prejudicial to the interests of the trust. Thus, we find that the finding of the ld CIT that trust has not maintained its affairs in transparent and logical manner and transaction made by the trust for purchase of land were highly disproportionate to the known funds available with the trust are completely devoid of merit and deserve to be rejected. Further, interpretation of the fact and circumstances of the assessee as a colorable transaction by the ld CIT DR, is also without correct appreciation of facts and circumstances. The ld CIT DR contended that in view of the purchase of land and extending loan by trustee shows that the trust and family members of the trust are acting as one entity is not convincing. In India, generally, the families keep the affairs of the trust with them so that they can advance the purpose of charitable nature for which the trust is established. But, if the family or any trustee abuse his power and authority and take undue and unlawful advantage from the trust, in that circumstances, it may be called as a colourable device, but in the facts of the case till the stage there is nothing, which could constitute a colorable transaction. A colourable transaction is a transaction, which is apparently a valid transaction but really unlawful and illusory. We don’t find any such circumstances in the present case. Thus, in our opinion, the transactions carried out by the assessee are not colourable transactions and the activities of the trust are genuine till the relevant period of time. Further, the learned Commissioner of Income Tax has not given any finding as regard to the fact that the objects of the assessee were not charitable in nature. - Decided in favour of assesseee
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2016 (2) TMI 459
Deduction under sec. 80IA rejected - whether the assessee generates and sells the electricity or utilizes it for its manufacturing of other goods for sale - CIT(A) allowed the claim - Held that:- The emphasis for grant of relief is on the manufacture of one or more of the item enumerated in Schedule VI. Whether the items mentioned in Schedule- VI are manufactured and sold by the assessee as such or utilized by the assessee in the manufacture of other goods for sale will not make any difference for grant of relief under sec. 80I. We are of the view that the Learned CIT(Appeals) was justified in accepting the claimed deduction with this finding that it does not make difference whether the assessee generates and sells the electricity or utilizes it for its manufacturing of other goods for sale. The Assessing Officer had simply used the steam pressure for allocation of the cost which cannot be a basis. It was contended that measurement has to be done in terms of energy which has to be measured in kcl. In absence of any reason given by the Assessing Officer as to why the formula used by the assessee was wrong, we are of the view that Learned CIT(Appeals) has rightly accepted the above contention of the assessee that observation of the Assessing Officer that the assessee had allocated cost in proportion to temperature was not correct. CIT(Appeals) has dealt with the issue and observed that the perusal of the submissions of the assessee shows that it had computed its calculation at 85% of the efficiency itself. The assessee considering the efficiency at 8% to 86% had computed the power transferred to paper unit at 39,06,143 units, clearly demonstrating that the assessee himself had computed the efficiency by reducing the same to 85 to 86% and therefore, the Assessing Officer was not justified in further reducing the same by another 15%. In absence of specific rebuttal of the above facts by the Revenue before the ITAT, we do not find reason to interfere with the findings of the Learned CIT(Appeals) in this regard The Assessing Officer agreed with the view that State Electricity Board, selling price was ₹ 4.50 per unit and if that be the case then provisions of sec. 80IC(8) cannot be ignored whereby the profit has to be computed by applying the market rate. The market rate has to be the price at which power is being sold in the open market. If the assessee bought power from UP State Electricity Board, it would be have been required to pay ₹ 4.50 per unit. Considering these submissions, the Learned CIT(Appeals) has come to the conclusion that the Assessing Officer was not justified in reducing the per unit price to ₹ 3 per unit as against ₹ 4.50 per unit. In this regard, the cl has also taken strength from the decision of Mumbai Bench of the ITAT in the case of DCW Ltd. vs. ACIT (2010 (1) TMI 939 - ITAT, Mumbai). The First Appellate Order is comprehensive and reasoned one we are not inclined to interfere therewith. The same is upheld. - Decided in favour of assessee
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2016 (2) TMI 458
MAT applicability - whether the provisions of section 115JB of the Act are applicable to the assessee being a Corporation established under Damodar Valley Corporation Act, 1948 for the Asst Years 2008- 09 and 2009-10 - Held that:- As we hold that in view of the legislative change brought about by the introduction of Explanation 3 in section 115JB of the Act by the Finance Act, 2012 , the assessee’s contention in fact stands more fortified. The Explanation 3 to section 115JB makes it evidently clear that section 115JB is applicable only to entities registered and recognized to be companies under the Companies Act, 1956. Since the assessee is not a company within the meaning of Companies Act, 1956 , section 211(2) and proviso thereon is not applicable and therefore consequently we hold that the provisions of section 115JB of the Act are also not applicable. Disallowance u/s 14A - Held that:- AO had adopted the disallowance figure u/s 14A of the Act at ₹ 20,03,61,170/- under normal provisions of the Act and at ₹ 41,16,36,422/- under the provisions of section 115JB of the Act. There seems to be apparent mistake on adoption of figures by the Learned AO while computing the book profits u/s 115JB of the Act. However, we have already held that the assessee corporation is not liable to pay tax on the book profits u/s 115JB of the Act and accordingly, the issue of whether the disallowance u/s 14A of the Act could be added to the book profits u/s 115JB of the Act, becomes infructuous. Accordingly the ground raised by the assessee in this regard is allowed. Applicability of rule 8D - Held that:- As the action of the Learned AO in directly embarking on Rule 8D(2) of the Rules without recording any satisfaction as mandated in Rule 8D(1) of the Rules is not appreciated and hence no disallowance u/s 14A of the Act by applying Rule 8D(2) of the Rules could be made in the facts of the instant case. In the instant case the assessee corporation had disallowed a sum of ₹ 11,08,315/- and no adverse inference has been brought on record and no satisfaction has been recorded with cogent reasons by the Learned AO as to why the said figure computed by the assessee is incorrect. Without satisfying the requirement contemplated in Rule 8D(1) , the Learned AO had directly proceeded to apply Rule 8D(2) in the instant case. Hence the disallowance u/s 14A of the Act cannot be made in the instant case of the assessee corporation for the Asst Years 2008-09 and 2009-10. Interest u/s 234C - Held that:- As per Circular: No. 676, dated 14-1-1994 and section 10 of General Clauses Act, we hold that the assessee had not committed any default in payment of first instalment of advance tax and hence we direct the Learned AO not to charge interest u/s 234C in the instant case for the first quarter.
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2016 (2) TMI 457
Non deduction of tds u/s 194A by the banks including the assessee bank with respect to interest paid to NOIDA - Held that:- As decided in case of Canara Bank [2015 (8) TMI 1259 - ITAT DELHI] payment of interest by the banks to NOIDA does not require any tax withholding as the same is covered u/s 194A(3)(iii)(f). Resultantly, the order passed by the Addl CIT(TDS) u/s 201(1) and 201(1A) read with section 194A has been set aside.- Decided in favour of assessee. - Decided in favour of assessee
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2016 (2) TMI 456
Enhancing addition relating to discrepancy in stock - Held that:- First of all, stock shortage of ₹ 37.87 lakhs has been arrived on estimated basis i.e. book stock has been estimated by adopting GP ratio of 29.6%. There is also merit in the submissions of the assessee that the effect of stock shortage was not properly understood by the partner of the assessee firm. We have earlier noticed that the additional income surrendered in the original assessment proceedings is more than the Gross profit that should have been earned on sale of Stock shortage. Hence, we are of the view that the assessee has proved that the admission of ₹ 30.00 lakhs made by it was wrong. Hence, we are of the view that the admission of ₹ 30 lakhs made by the assessee cannot be given credence in the facts and circumstances of the case. Disallowance of deduction u/s 40(b) - Held that:- After hearing the parties, we are of the view that this issue should be examined afresh by the AO, by duly considering the instrument of partnership, entries made in the books of accounts and explanations that may be furnished by the assessee. Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the same to the file of the AO.
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Customs
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2016 (2) TMI 479
Smuggling of gold - exoneration of the respondent in the adjudication proceedings - It was submitted on behalf of the Department that the respondent had not joined investigation and as such the instant petition did not deserve any consideration and that there were not two Pramod Kumars but only one person having two addresses. The High Court by its judgment and order under appeal, allowed the petition and quashed Complaint No.66/1/96 pending before the Additional Chief Metropolitan Magistrate, New Delhi. - Held that:- it cannot be accepted that the exoneration of the respondent in the adjudication proceeding was on merits or that he was found completely innocent. - High Court was not right and justified in accepting the prayer for quashing of the proceedings - Proceedings to continue against the respondent.
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2016 (2) TMI 478
Jurisdiction of tribunal to exercise its discretion and grant relief to the respondents - Miss-use of the DEEC and DEPC Scheme and submitting fictitious or forged shipping bills either with a view to obtain inadmissible Duty Entitled Pass Books (DEPBs) or for fulfilling the export obligations against advance licences under Duty Exemption Entitlement Certificate (DEEC) Scheme, and to obtain waiver of BG conditions against the DEEC Licence as per the Exim Policy, though in reality no physical export of goods was taking place. On a perusal of the order passed by the Commissioner, it is clearly perceptible that there has been number of violations by the respondent. The enquiry report which formed the plinth of the order of the Commissioner demonstrates that by virtue of the transfer of the licence in contravention of the Regulations, on many an occasion, immense financial loss has been caused to the revenue. As the factual matrix would exposit, it is a serious violation. The misconduct reflects a chain of acts. In such a situation, we are disposed to think that the discretion exercised by the tribunal is inappropriate. Resultantly, we allow the appeal and set aside the orders of the High Court and the tribunal and restore that of the Commissioner. - Decided in favor of Revenue.
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2016 (2) TMI 477
Challenge to the Levy of anti-dumping duties - appellant urged that tribunal was not justified in comparing the normal value of a foreign exporter with the NIP of Indian producers and further there was no warrant to direct the DA to determine cost of production for foreign exporters and of Indian producers following the same methodology when the foreign exporters and Indian producers adopt and apply different accounting practices as permissible in their respective countries; that the tribunal has applied the principle laid down in HCC case though in the said case, the normal value and the value of export price was the same and there was really no dumping; that the tribunal has grossly erred by treating chlorine as a co-product or a joint-product along with caustic soda without taking note of the accounts of the company which has been maintained on the basis of the generally accepted accounting principles; that the tribunal has really not kept itself alive to the language employed in Para 12 of Schedule III to the 1967 Rules which lays down the concept of "Equal Economic Importance" for the joint products. Held that:- the tribunal should have dwelled upon the said facet before it recorded the finding whether it is a co-product or a by-product. It is because the "Equal Economic Importance" has to be considered on a rational and pragmatic basis. It is the duty of the tribunal to see whether the DA had considered the said aspects or proceeded on hypothetical basis. The tribunal has the jurisdiction to appreciate the evidence in entirety and arrive at a conclusion and that having not been done and the entire judgment having been based on the application of M/s. Hanwha Chemical Corporation's case and the price rise in the price of Chlorine, we are constrained to dislodge the judgment and order of the tribunal. Appeals are allowed and the judgment and order passed by the tribunal are set aside and the tribunal is directed to decide the matter afresh keeping in view the observations made hereinabove. - Matter remanded back to tribunal.
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Corporate Laws
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2016 (2) TMI 447
Amalgamation - Scheme for the management and administration of BBPL - injunction - Held that:- The Board of Directors of 'BBPL' is superseded. Hon'ble Mr. Justice Permod Kohli and a former Chief Justice of Sikkim High Court is appointed as an Administrator of 'BBPL' company to look after its day to day affairs. The Administrator shall be provided with the office area in New Delhi befitting his Lordship's status by Respondent Nos. 1 & 2 and whole record of 'BBPL' be placed before him. The Learned Administrator may first explore the possibility of an amicable settlement by holding parleys between all parties and non-parties because they are all closely related. It is needless to say that the Administrator would associate Respondent No. 4 and 'BCDP' also while working out amicable settlement. The Administrator may exercise all powers of Board of Directors or Managing Director of 'BBPL' in conducting affairs of the company. All concerned shall assist the Learned Administrator. Further the Administrator may take all necessary steps to preserve and protect the properties of the 'BBPL' He may also depute counsels, if so desired, to defend litigation initiated by Petitioner No. 1 at the Bombay High Court and suit filed by 'BCDP' and Respondent No. 4 in City Civil Courts at Bangalore as well as in the High Court of Karnataka or any other litigation. The aforesaid course has been adopted as Petitioner No. 1 and Respondent No. 2 are not only real brothers but appears to be very close to each other at least in the past. With immediate effect Petitioners and Respondents are restrained from operating the bank accounts of 'BBPL'. The bank account shall be operated only by the learned Administrator and none else. Any cash in hand with the Petitioners and/or Respondents belonging to BBPL be deposited with Ld. Administrator within one week from today. The Learned Administrator shall be entitled to remuneration which may be fixed by his Lordship himself. The meetings of the Board of Directors dated 22.02.2011 and 09.08.2014 along with resolutions passed therein are suspended at this stage instead of declaring them invalid. Likewise JDA dated 29.03.2011, Rectification Deed dated 15.04.2011 and GPA dated 29.03.2011 are also suspended instead of declaring them invalid. The Ld. Administrator may at his discretion submit a report with regard to the affairs of the company and progress made concerning amicable settlement.
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FEMA
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2016 (2) TMI 476
Challenge to the RBI (FEMA) circular - validity and legality - Policy in relation to import of Gold - On or about 14th August, 2013, RBI issued another Circular no. 25, referring to the said Circular no. 15 dated 22nd July, 2013, for clarification / modification in supersession of the earlier instructions, and made it incumbent on all nominated agencies to make exclusively available at least one fifth i.e. 20% of every lot of gold imported to the country, for the purpose of exports and the balance for domestic use. Further conditions were also imposed for such import referred as import of gold on 20/80 principle. The said RBI Circular also stipulated that Premier Trading Houses irrespective of whether they are nominated agencies or not, are permitted to import gold exclusively for the purpose of exports only. Held that:- There are the provisions under which the Central Government through its Ministry of Commerce and Zonal Director General (Joint) of Foreign Trade acted. It was empowered to impose conditions while granting or issuing the Certificates. Pertinently, the conditions at page 83 and the power to impose them are not challenged. Unable to agree with Mr. Chagla that a conjoint reading of these provisions in the 1992 Act together with the Customs Act, 1962, would not empower the Director General in this case to impose penalty. As we have already held, the Reserve Bank of India has enough powers and, therefore, there is no basis for the complaint that it lacks jurisdiction or authority to regulate the dealings in foreign exchange. In the instant case, the Reserve Bank of India is doing precisely this and, therefore, it neither interferes nor takes over the powers of the competent authority either under the Act of 1992 or the Customs Act, 1962. Once the certificates in favour of the petitioners were subject to the provisions of the Foreign Trade Policy and the procedure laid down thereunder, the Reserve Bank of India guidelines and Customs Rules and Regulations, then the import of 550 kgs of gold was governed by the same. The show-cause notice alleged that from the import of 550 kgs of gold only 350 kgs of gold was exported and as per the export details 200 kgs of gold was supplied to the domestic unit. This is a violation of the Reserve Bank of India’s Circular. Each of the terms and conditions, either in the certificates relied upon by the petitioners or the Reserve Bank of India guidelines are in consonance with the policy of the Government that precious metals having been brought in they ought to be exported so that the cost of imports could be mitigated by the earnings from export. That would save valuable foreign exchange as well. That is how the diversion in the domestic market was termed as a violation of Reserve Bank of India guidelines. We have, therefore, no hesitation in concluding that none of the contentions as raised before us by the petitioners have any merit. The present petitioners raise conflicting pleas and versions only to avoid compliance with the conditions and which are invited by them on their own. The conditions as imposed on them in the Nominated Agency Certificate and which is issued in their favour right from 2010 have never been questioned. In these circumstances, they cannot place any reliance on the Division Bench judgment. Writ Petition fails. Rule is discharged - Decided against the petitioners.
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Service Tax
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2016 (2) TMI 475
Export of services - taxability of ‘management, maintenance or repair' service rendered by the respondent prior to the amendment of Export of Service Rules, 2005 - Assessee submitted that 97% of their services are rendered to foreign clients and are provided by accessing the server/system of the client located outside India through internet and that, to the extent that these services have the effect of making the software functional at the client's end, at least a part of the service is performed outside India. - Held that:- When there is a specific deeming of exports in a particular circumstances that squarely fits the activities of the respondent, reference to the meaning of a specific phrase in the general provision is irrelevant. Whether it is ‘technical testing and analysis' or ‘management, maintenance or repair' that is performed on software of the clients of the respondent, it is accepted that expert employees sitting in India have to access the servers/computer networks abroad. The performance of these operations is manifested in the efficient and smooth working of the software in the operations of the client. The location of the client cannot be uncoupled from the performance of the service. And as at least some portion of the service is, thereby, rendered outside the country and hence the renders these services outside the ambit of taxation even before 1 st March 2008. Demand of service tax set aside - Decided in favor of assessee.
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2016 (2) TMI 474
Cenvat Credit - the Commissioner (Appeals) held since the Appellants were maintaining separate accounts "they should not have utilized the CENVAT Credit on those inputs services which were used for providing non-taxable output services." Further there was a condition of restricting the CENVAT credit to 20% as per the provisions of Rule 6 of the CENVAT Credit Rules, 2004. - Held that:- no substantial question of law arises in the present appeal against the impugned order of the CESTAT which has concurred with the finding of both the Assistant Commissioner and the Commissioner (Appeals). As far as the penalty is concerned, the minimum penalty, as mandated by Section 76 of the Finance Act as it stood at the relevant time, has been imposed. This also does not call for any interference. - Appeal dismissed - Decided against the assessee.
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2016 (2) TMI 473
Validity and scope of Interim order while passing Final Order - whether Tribunal is empowered to pass non-speaking orders while disposing of statutory appeals and while discharging judicial functions - Refund of accumulated cenvat credit - Relevant date in case of export of services - Held that:- it is clear that the Tribunal in all its eagerness to decide the pending cases, in order to reduce the pendency of appeals, has adopted a technique in clubbing nearly 192 cases and passing an interim order on all the issues involved in the batch of cases and the same is applied in the Final Order of the individual cases. We would have appreciated if, the Tribunal had passed the Final Order in one case and the same is adopted in other batch of cases. The scope of Interim Order is very limited. It is temporary and effective only during the pendency of litigation; ceases to exist as soon as the Final Order is passed. No law can be laid down in an interim order. The procedure adopted by the Tribunal is strange and contrary to the settled principles of law. Passing Final Order, referring to the paragraphs in the Interim Order is not a speaking order. As such, the order passed by the Tribunal is not sustainable. - Matter remanded back.
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2016 (2) TMI 472
Management, Maintenance or Repair of roads (MMR) - Retrospective effect of Notification No.24/2009-Service Tax, dated 27.07.2009 - Held that:- The question as to whether the above Notification would have retrospective effect for the period from 2005 to 2009, was also answered by Notification No.24/2009-Service Tax, dated 27.07.2009, which was issued under Section 93 of the Finance Act, 1994. The special provision for exemption in certain cases relating to service tax on repair of roads was made in Section 97 of the Finance Act, 1994. The Notification No.24/2009 states that the exemption has been extended even for the earlier period from 16.06.2005 to 26.07.2009. - Writ petition allowed - Decided in favor of assessee.
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2016 (2) TMI 471
Taxability of supervision charges collected from the consumer of electricity in outride contribution scheme in relation to power supply. - appellant submits that the services are related to supply and distribution of electricity to the consumer. This services have been exempted from retrospective effect for the period upto 21st June 2010 vide Notification No. 45/2010-ST dated 20/7/2010 issued under Section 11(C) of Central Excise Act, 1944 therefore demand does not sustain. Held that:- As per the facts of the present case it is undisputed that so called consulting engineer Service is provided in relation to supply and distribution of electricity to the consumer, therefore in our considered view the service in question is also covered under the exemption notification No. 45/2010-ST dated 20/7/2010. - Demand set aside - Decided in favor of assessee.
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Central Excise
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2016 (2) TMI 455
Default in payment of duty - requirement of Clearance/removal of the goods without utilising the CENVAT Credit and making payment of duty in cash - Held that:- The original authority had confirmed the demands in March, 2010 and the appeal was disposed by the Ld. Commissioner(Appeal) in September, 2010, whereas, the BIFR order was passed on 07th April, 2011. Now, the claim of the appellant is that they had complied with the direction/order of the BIFR, hence as per the scheme sanctioned, they are entitled to waiver of penalty and interest. However, both sides agree that all these evidences could not be examined by the Ld. Commissioner (Appeals) and need to be scrutinised afresh so as to ascertain the claim of the appellant that pursuant to the rehabilitation scheme ordered by the BIFR, the same had been complied with and accordingly they are eligible to the benefit of penalty and interest in the light of this Tribunal’s decision in Andhra Cements Ltd.'s case (2009 (2) TMI 147 - CESTAT, BANGALORE ). In the result, the impugned order is set aside and the appeals are remanded to the Ld. Commissioner (Appeals) for deciding the issue afresh in the light of subsequent developments in the case. All issues are kept open. Needless to mention that a reasonable opportunity of hearing be granted to the Appellant.
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2016 (2) TMI 454
Demand of Central Excise Duty - for the period 14/08/2002 to 30/06/2003 - denial on the ground that they had undervalued the goods cleared by them - Held that:- The issue is no more res-integra as the Apex Court in the case of Thermax Limited (1998 (4) TMI 134 - SUPREME COURT OF INDIA) has settled the law that installation commissioning charges for installation of Boilers at customer's premises is not includable in assessable value. This ratio is followed by Tribunal in the case of Nichrome Metal Works P. Ltd. [1999 (11) TMI 583 - CEGAT, MUMBAI] Revenue authorities have erred in demanding of Central Excise Duty on the amount received by the appellant for erection and commissioning of the equipment at their customer's place. - Decided in favour of assessee
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2016 (2) TMI 453
Denial of Cenvat credit - assessee has suffered duty against the purchases made from the dealer who dealt with the excisable goods came from M/s. CPCL - Held that:- In absence of any contrary finding as to non-payment of duty by the respondent or for no deposit of such duty realized from respondent, into the treasury by M/s. IOCL, it would be impracticable to deny Cenvat credit to the respondent in respect of the duty paid by it on good faith to M/s. IOCL following the ratio laid down in the case of CCE Vs. MDS Switchgear Ltd. [2008 (8) TMI 37 - SUPREME COURT ]
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2016 (2) TMI 452
Interest on rebate (refund) - whether Commissioner (Appeals) committed error in granting interest to the respondent from the date of the expiry of three months of the application for a rebate - Held that:- Section 11BB of the Central Excise Act, 1944 has mandate that interest is payable on any rebate or refund claim, if such a claim is not paid within three months of the application made in that behalf. Respondent's application not being entertained within three months of the respective dates as stated above, entitlement to the interest arose under section 11BB of the Central Excise Act, 1944. In view of the aforesaid factual position and the law as well as decision of the Tribunal in the case of Jayanta Glass Industries Pvt. Ltd. Vs Commissioner of Central Excise, Kolkata-III (2007 (11) TMI 107 - CESTAT, KOLKATA ), Revenue's appeal is dismissed. - Decided in favour of assessee
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2016 (2) TMI 451
Entitlement to refund claim - Held that:- It is elementary principle of jurisprudence that the duty if any, paid excessively should not enrich the State at the cost of the citizen. Therefore, the Adjudicating authority is directed to examine whether any duty was paid in excess of the duty actually payable in respect of 69 chassis as pleaded by learned counsel. If there is any excess payment that should not be retained with the State but should be refunded to the appellant. It is pertinent to mention that guidelines for grant of refund is laid down apex court in the case of Mafatlal Industries Ltd. Vs Union of India (1996 (12) TMI 50 - SUPREME COURT OF INDIA ). The authority following such guidelines shall order refund, if any, admissible in accordance with law. The authority shall therefore grant fair opportunity of hearing to the appellant and examining the evidence thoroughly shall pass appropriate order.
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2016 (2) TMI 450
Shortage of inputs as well as finished goods - Demand of duty along with interest - Penalty imposed - Held that:- Weighment of stock has been done on the basis of averages of the stocks found in the factory during the course of investigation. In appellant’s own statement although the duty has been paid but reasons for shortages has been explained by the appellant that shortage might be the reason that the weighment has been done on average basis. Therefore, the facts of the case of Bajrang Petro Chemicals (P) Ltd. (2014 (12) TMI 738 - ALLAHABAD HIGH COURT ) are distinguishable from the facts of the case in hand. In fact, in that case explanation of shortages were not offered by the appellant but in this case appellant has explained the reason of shortages for average base method for weighment. Further, the Hon’ble High Court of Allahabad itself in the case of Minakshi Castings (2011 (8) TMI 896 - ALLAHABAD HIGH COURT ) has held that the shortage without any evidence of clandestine removal cannot lead to inference to evasion of duty. Therefore, as in this case Revenue has not come with any evidence which can lead the goods have been cleared clandestinely. Merely on the basis of stock taking on average basis the allegation of clandestine removal of goods is not sustainable. With these observations, hold that stock taking done on average basis is not a correct method. Consequently, the allegation of shortage of input/finished goods due to clandestine removal is not sustainable. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (2) TMI 449
Question of Refund of amount deposited during pendency of appeal as per the direction and when appeal was dismissed as not maintainable - TNVAT - Held that:- When the second respondent held that there is no jurisdiction to adjudicate on the issues raised, then the consequential orders passed are also without jurisdiction and it is a nullity. It is settled law that any order passed without jurisdiction is non-est in the eye of law. Therefore, the second respondent should have ordered the return of amount which was already paid by the appellant herein. Therefore, the claim of the appellant that the learned single judge ought to have specifically directed the second respondent to return the amount is correct and it has to be accepted. In the result, the writ appeal is partly allowed. The order passed in Writ petition to the extent to which relief is not granted is fulfilled and the ungranted relief of return of the amount to the extent of ₹ 33,61,000/- is ordered.
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2016 (2) TMI 448
Pray for de-sealing of its business premsies - exercise the powers indiscriminately and routinely under DVAT - Held that:- The Court is at this stage not required to examine the correctness of the allegations in the petition as far as what transpired during the visit of the survey team. What, however, concerns the Court is the action taken to seal the premises almost in continuation of the action under Section 59 of the Act. The Court notes that there have been other such instances which have been brought to the notice of the Court recently where the Respondents have been invoking the powers under Section 60 of the DVAT Act indiscriminately and routinely. The action of the Respondents in proceeding to seal the premises of the Petitioner, almost in continuation of the action under Section 59 of the DVAT Act, and only for the failure to produce books of accounts, without anything more, is unsustainable in law. Learned counsel for the Petitioner states that the Petitioner is prepared to produce the records and accounts before the concerned VATO on any date as may be directed. Reveue directed to de-seal the property - Decided in favor of appellant.
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