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TMI Tax Updates - e-Newsletter
February 18, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Interest earned on advances paid during pre-commencement period found to be linked to setting up of the plant of the assessee would need to be treated as capital receipt" - AT
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Reopening of assessment - validity of issue of notice under Section 148 to non-existent person - assessment in the name of the erstwhile firm is bad in law, void ab-initio and non-est - AT
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Disallowance of 50% of the provisions out of the expenditure claimed under the head ‘post sales expenses’ for warranty expenses - AO directed to allow the liability which is found to be reasonable - AT
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Revision u/s 263 - order cannot be passed by the CIT u/s 263 of the Act to ask the AO to decide whether the assessment order was erroneous or not - AT
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Accrual of income - treatment given by the assessee in its books of accounts is not conclusive or decisive so as to bring it into tax and in order to be computed in accordance with the provisions of the Act - AT
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Exemption u/s 54B mandates - Capital gain on transfer of land used for agricultural purposes - This section nowhere talks that the land must be used for agricultural purpose at any time in the preceding two years from the date when the transfer took place. - AT
Service Tax
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Classification of service - providing maintenance and repairs on behalf of M/s. Modi Xerox to the customers - liable to service tax under 'business auxiliary service' w.e.f. 10.09.2004 - AT
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Penalty u/s 76, 77 & 78 - the show-cause notice should not have been issued especially when the appellant paid the Service Tax within a week of being pointed out - no penalty - AT
Central Excise
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Composite issuance of SCN to two parties - tribunal set aside the demand on the ground that duty demand against Assessee could not be confirmed since it was not possible to arrive at the value of clearances separately between the two - Composite SCN ipso facto did not vitiate the proceedings - order of tribunal is not correct - HC
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Abatement under Rule 10 of Pan Masala Packing Machines - Closure of machines - Revenue's case that the appellants should have paid the duty for the subsequent month in full and should have claimed the abatement separately is incorrect - demand set aside - AT
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When the statements and records relied upon by the revenue are not considered to be sufficient ground for clandestine removal, in that case merely on the basis of statements authenticating the said records cannot be a ground to allege clandestine removal. - AT
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Conditional Exemption - Whether reversal of cenvat credit before utilizing would be amount to non availment of credit - it amount to non availment of credit - benefit of exemption allowed - AT
Case Laws:
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Income Tax
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2015 (2) TMI 591
Genuineness of gift received from an NRE account - whether the assessee had discharged onus and proved genuineness of the gift? - Held that:- Referring to the facts of the present case, we find the order passed by the Tribunal is justified and correct. They were right in holding that the assessed has not been able to prove genuineness of the gift and also the factum that the transaction was out of love and affection, a sine qua non to establish a genuine gift. - Decided against assessee
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2015 (2) TMI 590
Undisclosed salary - income on account of a document seized during the search proceedings - ITAT deleted the addition - Held that:- Since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the ITAT’s view which endorsed the findings of the CIT(Appeals) were well-founded and do not call for interference. The reliance placed upon Urmila Gambhir V. CIT (2009 (12) TMI 440 - DELHI HIGH COURT ) in this Court’s opinion is inapt because in that case there was other corroborative material for the income tax authorities to link the description of the transactions found in the said innocuous document seized with respect to other material. However, such inference cannot be drawn in this case because there is no other material. On the contrary the AO’s acceptance and finalization of the assessment for 2007-08 on the basis of salary income of the assessee, undermines the entire findings with respect to the inferences drawn and the additions made, indicated above. - Decided against the revenue. Unaccounted property - ITAT deleted addition - Held that:- So far as the second amount ₹ 41,32,800/- is concerned there cannot be any doubt that the above was sought to be made in respect of the period 1999-2000. Clearly that was beyond the block period and therefore time-barred. That apart the CIT(Appeals) noted that after the remand during the pendency of appellate proceedings, the affidavit relied upon by the assessee in Brij Bhushan Gupta was not adversely commented upon. This being a factual finding the Court finds no reason to interfere with the ITAT’s order. Also the addition was made only on the basis of some loose papers and a chit. This too would fall in the same category of material which could not have been the sole basis for addition without some surveillance of the substantiation. Consequently, the ITAT’s reasoning cannot be faulted.- Decided against the revenue. Undervaluation of property - addition on account of differential value added - Held that:- In the absence of any incriminating evidence with respect to payment over and above the reported amount, the revenue is under the burden of proving that in fact there was understatement or concealment of income. In the present case too there was no material at all for the revenue to conclude that the transaction relating to the properties was undervalued. See CIT Vs. Ravi Kant Jain (2001 (3) TMI 52 - DELHI High Court) and CIT V. Naveen Gera [2010 (8) TMI 194 - Delhi High Court ]. - Decided against the revenue.
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2015 (2) TMI 589
Block assessment set aside - assessee had amalgamated with M/s Lakhanpal Infrastructure Pvt. Ltd. - whether the amalgamation of the original assessee corporate had rendered the assessment framed against it as void? - Held that:- The issue urged is no longer res integra. As stated earlier, Spice Entertainment (2011 (8) TMI 544 - DELHI HIGH COURT) is an authority for the proposition that completion of assessment in respect of a nonexistent company, due to the amalgamation order, would render assessment in the name and in respect of the original assessee company, a nullity. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. The Court was further of the opinion that a jurisdictional defect such as nullity shakes the entire proceedings and does not render the order a mere irregularity. For this purpose the Court has relied upon CIT vs. Norton Motors [2004 (11) TMI 56 - PUNJAB AND HARYANA High Court ] - No substantial question of law arises - Decided against Revenue.
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2015 (2) TMI 588
Surcharge u/s 113 - Tribunal held surcharge not applicable to block period 1989-1990 to 1998-1999 - Held that:- The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. See Commissioner of Income Tax (Central)-I v. Vatika Township Private Limited [2014 (9) TMI 576 - SUPREME COURT] - Decided in favour of the assessee.
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2015 (2) TMI 587
Disallowance of unpaid service tax u/s 43B - Tribunal deleted the addition - Held that:- Unable to appreciate the grievence of the Revenue as the Delhi High Court in Noble & Hewitt Pvt. Ltd. ( 2007 (9) TMI 238 - DELHI HIGH COURT) has considered both Section 43B of the Act and also the issue of mercantile system of accounting followed by the assessee before it. The revenue is not able to point out why the decision of Delhi High Court requires reconsideration. In our view, the Delhi High Court's decision in Noble & Hewitt Pvt. Ltd. (supra) has correctly held that Section 43B of the Act is a provision for allowing deduction of tax on payment but this can only be triggered if deduction with regard to taxes payable is claimed for arriving at taxable income and the issue raised in this appeal is conclusively covered by this decision above - Decided against revenue.
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2015 (2) TMI 586
Failure to give adequate hearing after calling for additional evidence to be produced before such Tribunal - Held that:- As the Tribunal did not give an opportunity of hearing based on such additional documents has not been fairly disputed by the learned Counsel appearing for the respondents/Revenue. Without going into the merits of the rival contentions and in the interest of justice, we find it appropriate to quash and set aside the order passed by the Tribunal and direct the Tribunal to decide the appeal preferred by the respondents/Revenue afresh after giving the appellant and respondents an opportunity of being heard with regard to the additional documents - Decided in favour of assessee by way of remand.
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2015 (2) TMI 585
Provision of storage and handling charges - CIT(A) deleted the addition and the adjustment of book profit on account of addition of provision for storage and handling charges - Held that:- From the nature of details of provisions and the evidence of having made payments of the same in subsequent year clearly establish that the provisions were ascertained liability and therefore, Ld. CIT(A) has rightly deleted the disallowance. We find that the details were submitted to Ld. CIT(A) as an additional evidence and these were duly forwarded to A.O. From the remand report, it is found that despite given the opportunity, the A.O. has not made any comment on the additional evidences but maintained that the provisions for reimbursement of transportation and telephone expenses etc. were not allowable under the law. However, we find that these provisions were ascertained liabilities for which assessee had filed complete details and order of Ld. CIT(A) is exhaustive and we do not find any infirmity in the same. - Decided against revenue. Write off of inventory - CIT(A) deleted the addition - Held that:- The Ld. A.R. though invited our attention to minutes of Board Meeting and details of inventory loss but did not bring to our notice as to how sum of total loss written off during this year and how only this amount was determined to be written off during this year, was arrived at. On the one hand, Ld. A.R. argued that total loss on account of reconciliation was about ₹ 2 crores out of which ₹ 1.51 crores was written off in the year under consideration and ₹ 49 lacs was written off in the succeeding year but the facts noted in the P & L account reveal that in earlier year also, a similar loss was written off to the extent of ₹ 2.13 crores. Therefore, the matter needs to be readjudicated by Ld. CIT(A) who on the basis of total amount of loss determined on account of reconciliation will determine the actual amount of total inventory loss to be written off in the year under consideration. The Ld. CIT(A) will also examine as to when settlement took place between the parties and when the loss was determined and was required to be written off. - Decided in favour of revenue for statistical purposes.
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2015 (2) TMI 584
Addition u/s.68 - reopening of assessment - contention of learned AR is that in a situation when the impugned addition was based upon the action taken in A.Y. 2004-05, now stood deleted by the Tribunal then this Appeal should also be decided on the same lines - Held that:- We find force in this submission of learned AR; primarily because of the reason that one bench of the Tribunal should respectfully follow the decision of an another Co-ordinate Bench pronounced on identical facts. In addition to the view taken by ITAT Ahmedabad in assessee’s own case we have also noted that the fact about the issuance of cheque by the assessee in favour of M/s. Bharat Jari Works has not been denied. The doubt was that the power of attorney holder Sri Rajesh Kapadia has expired on 16th of August, 2001 and proprietor of Bharat Jari Works Smt. Kailashben expired on 8th May, 2002 then how the bank transaction was carried out. The explanation of the assessee before the AO was that through cheque no.M004308 the impugned amount was transacted in favour of M/s. Bharat Jari Work on 12th of January, 2002 and on that the proprietor Smt. Kailashbank was alive. Therefore it is relevant to comment that although some doubts were raised by the Revenue Department about the said transaction but the direct evidence of the execution of transaction through bank cannot be altogether brushed aside. A suspicion or doubt howsoever strong cannot replace the evidence. There was also a doubt in respect of an affidavit of a third party, namely, Chandrakant Raghunath Patil, but that affidavit was in respect of criminal proceedings and therein he has mentioned the figures of advance as well as the date which have not tallied with the actual figure and the date as mentioned in the ledger account. But the purpose of that affidavit was not to establish the correctness of this transaction but the purpose of the said affidavit was in respect of some bail application pertaining to a criminal case where the bank was the complainant against some bank officer. It transpires form the said affidavit that the proceedings were carried out against the alleged fraud stated to be committed by a public servant, i.e., an officer of the bank. We, therefore, hold that such third party mistakes should not adversely affect the facts as stated by the assessee, therefore, to conclude we hereby hold that in a situation when on identical facts in the past a view has been taken by Respected Co-ordinate Bench in A.Y.2004-05 in assessee’s own case, therefore, we have no reason to take any other view but to follow the view already taken; hence in the result we hereby reverse the findings of the authorities below and direct to delete the addition. - Decided in favour of assessee
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2015 (2) TMI 583
Addition on account of alleged peak credit and business income - CIT(A)deleted the addition entertaining additional evidence - whether the provisions of Rule46A of the Income Tax Rules, 1962 were not adhered to by CIT(A) - Held that:- Obtaining a remand report per-se is not a substitute for recording of the finding of the ld CIT(A) setting out the reason and fulfilment of conditions of the Rule 46A. It would be also appropriate to state here that assessee did not move an application under Rule 46A, specifically stating the fulfilment of conditions specified under Rule 46A, though it is seen that ld CIT(A) has noted that non-compliance before AO was on account of the fact, that the assessee was having marital discord with his wife Mrs. Sonu Seth which kept the assessee engaged in litigation. Thus it would be just and fair to remit the matter back to the file of AO for fresh adjudication.- Decided in favour of revenue for statistical purposes.
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2015 (2) TMI 582
Penalty u/s 271(1)(c) - deduction under section 80-IC denied - Held that:- As ultimately part of the deduction has been denied on some estimated profits on certain sales. It is almost settled now that penal action cannot be taken on the basis of estimated additions. A reference may be made to the decision cases of CIT v. Ravail Singh and Co. [2002 (1) TMI 52 - PUNJAB AND HARYANA High Court ] and CIT v. Sangrur Vanaspati Mills Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT]. Therefore, this is not a fit case for levy of penalty because the part of the deduction was denied on the basis of some estimated addition. Accordingly set aside the order of CIT(Appeals) and delete the penalty. - Decided in favour of assessee
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2015 (2) TMI 581
Disallowance of interest expenditure on borrowings - deduction under section 57(iii) against the interest income on fixed deposits with banks - Held that:- There is a direct nexus of funds of the borrowed capital with the Fixed Deposits in question partly. The interest paid on a loan taken to avoid premature encashment of the Fixed Deposit is deductible against the interest earned on the Fixed Deposit as held by in the case of Raj Kumari Agarwal vs. DCIT [ 2014 (7) TMI 867 - ITAT AGRA]. Having decided on the issue of nexus of funds and the allowability of the interest expenses against the interest income, the remaining issue is about the interest rate of 7.81% applied by the AO in determining the interest expenses. This requires revisit of the issue to the file of the AO. Assessee must demonstrate before the AO the exact account of interest expenses relatable to the interest income in question. It is the submission of the Ld Counsel that the purpose of funds does not determine the allowability of the claim made u/s 57(iii) of the Act. - Decided in fvaour of assessee for statistical purposes. Interest income on security deposit - 'income from other sources' OR 'capital receipts' - Held that:- CIT (A) relied on various decisions of the higher judiciary and one of them is the case of Tuticorin Alkali Chemicals and Fertilizers Ltd vs. CIT [1997 (7) TMI 4 - SUPREME Court] which is relevant for the proposition that interest earned on surplus funds would need to be treated 'income from other sources' and accordingly interest earned on advances paid during pre-commencement period found to be linked to setting up of the plant of the assessee would need to be treated as capital receipt". Considering the settled position of the issue at the level of the Apex Court, we are of the opinion that the decision taken by the CIT (A) while allowing the assessee's appeal is fair and reasonable and it does not call for any interference. - Decided against revenue.
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2015 (2) TMI 580
Reopening of assessment - validity of issue of notice under Section 148 to non-existent person - Held that:- It is a settled law that the partnership firm and the company are separate juridical persons. Under the Income-tax Act also, they are assessed separately. Chapter IX of the Companies Act permits the conversion of the partnership firm into company and, on such conversion, the partnership firm ceases to exist and the company comes into existence. This incident has taken place on 1st March, 2006 and therefore, from 2nd March, 2006, DLF Cyber City firm is no more in existence. Notice under Section 148 was issued on 18th August, 2008, i.e., the date on which the partnership firm was not in existence. Thus assessment in the hands of dead person would be clearly void. The aforesaid observation would be squarely for the issue of notice under Section 148 in the name of dead person. Therefore, respectfully following the above decision, we hold that the issue of notice under Section 148 in the name of a dead person is void. - assessment in the name of the erstwhile firm is bad in law, void ab-initio and non-est - Decided in favour of assessee.
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2015 (2) TMI 579
Disallowance of 50% of the provisions out of the expenditure claimed under the head ‘post sales expenses’ for warranty expenses - CIT(A) deleted the addition - Held that:- We do not find any consistency in the provision for warranty. At the time of hearing before us, the learned counsel for the assessee was unable to state the method by which such provision for warranty was computed. Considering the totality of the facts, we deem it proper to set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We direct the assessee to submit before the Assessing Officer the basis by which the provision for the liability of warranty was computed. Thereafter, the Assessing Officer is directed to examine the reasonableness of the same in the light of the parameters laid down by Hon’ble Apex Court in the case of Rotork Controls India P.Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA). We direct the Assessing Officer to allow the liability which is found to be reasonable considering the facts and circumstances of the case. We further direct the Assessing Officer that if any part of the liability is disallowed, he will ensure that if the same is written back in the subsequent year, then, in the subsequent year, the tax may not be levied on the provision written back which is disallowed in this year, otherwise, it would amount to double taxation which is not permissible in law. Decided in favour of Revenue for statistical purposes.
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2015 (2) TMI 578
Revision u/s 263 - examining the correctness of the assessee’s claim of deduction u/s 80IC - Held that:- Distinction must be kept in mind by the CIT while exercising jurisdiction u/s 263 of the Act between the cases of no inquiry and the cases of lack of inquiry and in the absence of findings that the order is erroneous and prejudicial to the interest of revenue the exercise of the jurisdiction u/s 263 of the Act is not sustainable. We further observed that the order of the AO may be or may not be wrong but CIT cannot direct consideration of this ground of the lack of inquiry but only when the order is erroneous and prejudicial to the interest of revenue the CIT can quash the asstt. order and direct the AO to reframe the assessment u/s 263 of the Act. We are inclined to hold that the order cannot be passed by the CIT u/s 263 of the Act to ask the AO to decide whether the assessment order was erroneous or not . The CIT must after recording reasons hold that the order is erroneous then only assessment order can be quashed and the AO may be directed to pass the asstt. order in pursuant to order of CIT u/s 263 of the Act. Coming the factual matrix in the present case, from careful perusal of the impugned order we clearly observe that the CIT has stressed on the mismatch and discrepancy in the form No.10CCB and Form No. 3CD. Replying to the notice u/s 263 of the Act the assessee submitted auditors report pertaining to 2008-09 and asstt. year 2009-10 which make it clear that the discrepancy and mismatch arose due to typographical and clerical mistake as the assessee company claimed u/s chapter VI-A amounting to ₹ 14,17,940/- in asstt. year 2008-09 and this figure remained unchanged in the text auditor report and report for the asstt. year 2009-10 which is clear form annexure 5 and annexure 6 of the appeal CIT rejected our above explanation threshold without assigning any reason and the CIT wrongly hold that the assessment order was erroneous and prejudicial to the interest of revenue. We further hold that CIT was grossly erred and not justified in remitting the matter to the file of the AO for fresh consideration and adjudication as this is out of ambit of powers of CIT u/s 263 of the Act. Respectfully following the decision of Hon’ble Jurisdictional High Court of Delhi in the case of ITO vs. DG Housing Project Ltd. (2012 (3) TMI 227 - DELHI HIGH COURT ) we reach to the conclusion that the order passed u/s 263 of the Act is bad on facts and in law therefore the same deserve to be quashed and we quash the same. - Decided in favour of assessee.
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2015 (2) TMI 577
Reopening of assessment - CIT(A)quashing of notice issued under Section 148 - Held that:- From a perusal of the reasons recorded, it is evident that the Assessing Officer has mentioned about some information by which the assessee is the beneficiary of an accommodation entry of ₹ 6 lakhs because some bank instrument was got prepared on 19.04.2002 of ₹ 6 lakhs in favour of the assessee presentable at Bank of Baroda, Faridabad. Now, in the reasons recorded, there is no mention about the name of the person who are the alleged entry provider. The nature of the entry i.e. in which form the assessee is alleged to be taking entries is given. The information only says that some bank instrument of `6 lakhs was got prepared. When the factual details are compared with the reasons recorded, we find that the reasons recorded are vague and factually incorrect also. No bank instrument of `6 lakhs was received by the assessee. No justification to interfere with the order of learned CIT(A) - Decided against revenue. Addition of ₹ 12 lakhs - CIT(A) deleted the addition - Held that:- Once the reopening of assessment itself has been held to be invalid, consequentially, the assessment order passed in pursuance to such notice under Section 148 would not survive. - Decided against revenue.
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2015 (2) TMI 576
Reopening of assessment - disallowance to be made u/s.14A - Held that:- Unable to find any tangible material in the reasons recorded by the AO.He has at the time of original assessment already deliberated upon the issue of disallowance to be made u/s.14A of the Act.Therefore,it can safely be held that in the case under consideration there was no tangible material.In these circumstances,we are of the opinion that the reassessment proceedings were initiated due to change of opinion of the AO and not because there was tangible material.Courts are of the view that if a notices is issued u/s.148 because of change of opinion,then same is to considered bad in law and has to be quashed.Considering the facts and circumstances of the case,we are reversing the order of the FAA and decide the effective ground of appeal(GOA-1)in favour of the assessee.
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2015 (2) TMI 575
Deduction u/s.80IB(10) - disallowance as Assessee is not a developer but is a contractor - Held that:- As far as the issue with respect to 80IB(10) with respect to the land being not in the name of the Assessee is concerned, it is now settled by the decision of Hon’ble Gujarat High Court in the case of Radhe Developers[2011 (12) TMI 248 - GUJARAT HIGH COURT] wherein has held ownership of property is not a condition precedent for grant of deduction because there is nothing in section 80IB(10) of the Act requiring that the ownership of land must vest in a developer for him to be able to qualify for deduction. - Decided in favour of asssessee. Non utilizing the FSI available for the construction of the housing project fully - Held that:- As far as the issue with respect to unutilized FSI is concerned, we find that Assessing Officer while denying the deduction u/s. 80IB(10) has noted that out of the total FSI of 8000.27 s.q. mts available with Assessee, the FSI that has been consumed is to the extent of 1310.02 sq. mts (which works out to around 17% of the total FSI) and the FSI unutilized is to the extent of 6690.25 sq. mts. We further find that in the decision of Hob’ble Gujarat High Court in the case of Shreenath Infrastructure [2014 (4) TMI 482 - GUJARAT HIGH COURT], the underutilization of FSI as noted by Hon’ble Gujarat High Court was in the range of 25 to 30 % and therefore the ratio of decision in the case of Shreenath Infrastructure, which has been relied by ld. A.R. would not be applicable to the facts of the present case. We further find that while denying the issue, ld. CIT(A) has given no finding with respect to the unutilized FSI. We therefore feel that the issue of unutilized FSI and thereby the deduction u/s. 80IB (10) on the unutilized FSI needs to be re-examined at the end of CIT(A) in view of the decision of Hon’ble Gujarat High Court in the case of Moon Developers (2014 (4) TMI 1042 - GUJARAT HIGH COURT). We therefore remit the issue to the file of CIT(A) to decide the issue afresh as per law and after giving adequate opportunity of hearing to both the parties. - Decided in favour of revenue for statistical purposes.
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2015 (2) TMI 574
Accrual of income - advances received against time slots - denial of exemption u/s. 11 - assessee is a company registered u/s. 25 of the Companies Act engaged in broadcasting of television programs - Held that:- The income of the assessee should be computed on strict commercial principles. Though the assessee is not entitled for exemption u/s. 11 of the I.T. Act, the main charging section is sec. 4(1) of the I.T. Act which levies income tax as only one tax, on the ‘total income’ of the assessee as income u/s. 2(45) of the I.T. Act. The income, in order to come within the purview of the definition must satisfy two conditions. Firstly, it must ‘comprise the total amount of the income referred to in sec. 5 and secondly, it must be paid in the manner laid down in this Act’. If either of these conditions fails, the income will not form part of the total income that can be brought to tax as held in the case of CIT vs. Harprasad & Co. (1975) (1975 (2) TMI 2 - SUPREME Court & 125) and treatment given by the assessee in its books of accounts is not conclusive or decisive so as to bring it into tax and in order to be computed in accordance with the provisions of the Act as held in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971 (8) TMI 10 - SUPREME Court). We are of the opinion that the Assessing officer shall not include the amount received as advance as income of the assessee if it does not contain the income element in it. With these observations, we are inclined to direct the Assessing officer to examine the above issue in the light of the above observations and decide accordingly. - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 573
Disallowance of deduction u/s 40(a)(ia) - assessee failed to deposit tax to Government account within due date on the ground that the provision in this section are amended by the Finance Act, 2010 with retrospective effect - CIT(A) deleted the addition - Held that:- It can be seen that the amendment made by the Finance Act 2010 allows additional time upto the due date of filing of the return in respect of even those instances where TDS has been deducted during the first eleven months of the previous year. The additional time till the due date of filing of the return, in case of TDS made during the last month of the previous year was already available by the amendment made by Finance Act 2008. Thus, it is apparent that the relaxation made by the amendment made under the Finance Act, 2010 brings the law in parity with the aforementioned situation and accordingly, for the TDS deducted all throughout the year, time is extended from payment till the filing of return. It is thus apparent that when the amendment introduced by the Finance Act, 2008 of relaxing the time for deposit of TDS was made retrospective from the year 2005 [1st April 2005], the amendment by Finance Act 2010 with regard to other limb of time limit for payment of TDS has to be held retrospective not from 1st April 2010 only. If we recall at this stage the speech of Finance Minister while introducing this provision by way of Finance Act, 2010, this amendment essentially has been brought for relaxing the current provision on disallowance of expenditure. The tax, if is deducted at any time during the financial year and paid before the date of filing of the return, the Legislature intended to allow deduction on such expenditure with an intention to permit additional time for most deductors upto September of the next financial year. CIT(A) has rightly deleted the disallowance. See Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT]. - Decided in favour of assessee.
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2015 (2) TMI 572
Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases - whether CIT(A) erred in allowing the deduction U/S 54B without considering the basic condition of the said section “the assessee should have used the land for agricultural purpose for a period of two years? - Held that:- We set aside the order of CIT(A) as, in our opinion, the provisions of Sec. 54B mandates that the land must have been in the two years immediately preceding the date on which the transfer took place used by the Assessee or his parent for agricultural purpose. This section nowhere talks that the land must be used for agricultural purpose at any time in the preceding two years from the date when the transfer took place. We, accordingly, set aside the order of CIT(A) and restore the order of the AO and direct the AO not to allow the exemption to the Assessee u/s 54B. - Decided in favour of revenue.
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Customs
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2015 (2) TMI 599
Classification of goods - Bituminous Coal or Steam coal - Calculation of gross calorific value - Held that:- As per note No. 2 to Chapter 27 while volatile matter has to be computed on air dry basis, the gross calorific value has to be computed on moist, mineral matter free basis. The ASTM standards prescribe formula for conversion gross calorific value (ADB) on air dry basis to moist, mineral matter free basis and if that formula is applied, it would appear that the gross calorific value in respect of present three consignments would exceed 5833 Kcal/Kg and the goods appear to merit classification as bituminous coal. However, we notice that the goods had originated from Indonesia and in terms of notification No. 46/2011-Cus dated 01/06/2011 the appellant would be entitled for a concessional rate of duty on bituminous coal and the effective rate of duty would work out to 40% of the normal rate of duty applicable. In the present case, we notice that this notification has been taken into account while finalizing the assessment by the adjudicating authority which is a clear error. Therefore, while confirming the duty demand, the adjudicating authority should have extended the benefit of Notification No. 46/2011-Cus to the appellant, notwithstanding the fact that the appellant had not made any claim for exemption under the said notification. Since there is an error in the computation of duty demand, we are of the considered view that the matter has to go back to the adjudicating authority for re-determination of duty liability in terms of the provisions of Notification No. 46/2011-Cus and the matter has to be considered afresh. - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 598
Valuation of goods - Enhancement in value - Lower appellate authority held that the goods under import were part of a bulk order of 100 MT and therefore, the value declared cannot be assailed by comparing the import price of smaller quantity of imports of the order of 1 MT or below - Held that:- The assessing officer has adopted the transaction value in transactions where the quantum of import if of the order of 1 MT or below whereas in the facts of the present case, the consignment imported was of 5 MT which was part of an order for 100 MT and the imports were done directly from the manufacturer. It is a normal trade practice that when higher quantities are offered for sale, discounts are given and therefore, while comparing the values of the transaction value of contemporaneous imports, adjustments have to be made for the quantity involved. There is no evidence led by the Revenue to show that discounts of 37.5% which is noticed is not reasonable or is not in accordance with the normal trade practice. In the absence of such evidence, the order of the lower appellate authority cannot be assailed or interfered with. Accordingly, we find no merits in the appeal filed by the Revenue - Decided against Revenue.
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2015 (2) TMI 597
Waiver of pre deposit - Valuation - Inclusion of entire value of technical knowhow and royalty - Held that:- On the one hand there is no evidence to show that the payments of technical knowhow and royalty is a result of condition of sale of the imported goods. On the other hand the Deputy Commissioner observed that the price is not influenced by the relationship. In view of the above, the appellant has made out a prima facie case for complete waiver of pre-deposit and stay against recovery. Accordingly the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (2) TMI 596
Waiver of predeposit - Classification of Coal - bituminous coal or steam coal - Held that:- the chapter note has defined "bituminous coal" as having certain specifications, any coal satisfying the said definition merits classifications as "bituminous coal", notwithstanding the fact that in commercial or other parlance it may be know otherwise. Since a final order of the Tribunal is available in this regard, classifying similar/identical goods under CTH 2701.12 as "bituminous coal", we are of the considered view that at the interim stage the said final order of the Tribunal has to be followed. Further, we have in three instances followed to the said decision and have held that coal satisfying the definition under sub-heading note 2 to Chapter 27 would merit classification under 2701.12 as "Bituminous coal". Therefore, as a matter of principle and discipline, we are bound to follow the said precedent [1981 (3) TMI 77 - SUPREME COURT OF INDIA], unless the same is set aside by a superior authority. Therefore, in the present case also, we are of the considered view that the coal imported by the appellant, prima facie, merits classification under CTH 2701.12 as "bituminous coal". Consequently they would be liable to Customs duty under the said heading. Inasmuch as the assessments are provisional, the question of time bar would not arise. Therefore, the demand of duty confirmed in the impugned order prima facie appears to be sustainable in law, subject to reduction in duty liability, in view of the Indonesian origin of coal in terms of Notification No. 46/2011-Cus. No financial hardship has been pleaded nor any evidence placed before us in that regard. Therefore, the balance of convenience lies in favour of Revenue - Partial stay granted.
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2015 (2) TMI 595
Extension of warehousing period - Imposition of penalty u/s 117 - violation or defiance ofthe provisions of the Customs Act, 1962 - Whether penalties are imposable upon the appellant for not seeking extension of warehousing period of one year under Section 61(1) of the Customs Act, 1962 - Held that:- it was strongly argued by the learned Advocate of the appellant that in Kandla Customs House, there was no practice to ask for extension of time of warehoused goods which are being supplied as ship stores. It is observed from the facts available in Para 4 of the appeal memoranda filed by the appellant that such a practice could be in vogue at Kandla during the relevant period. Appellant did ask the department for providing them the copies of such orders passed by Commissioner on 24.3.2009, which is still pending with the department. In the interest of justice, these matters are required to be remanded back to the adjudicating authority to provide copies of such orders to the appellant and pass suitable speaking orders after affording an opportunity of personal hearing to the appellant. - Matter remanded back - Decided in favour of assessee.
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Service Tax
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2015 (2) TMI 615
Classification of service - providing maintenance and repairs on behalf of M/s. Modi Xerox to the customers - Assessee contends that service would fall under Business Auxiliary service - Held that:- On perusal of the records it transpires that the appellant's contract with M/s. Modi Xerox is termed as a service agreement and it lays down the obligations to be provided by the appellant which includes necessary service of the products assigned by M/s. Modi Xerox. It is also on record that the appellant is billing M/s. Modi Xerox for the services rendered by him in the territory to which he has been assigned. We find that the appellant's contention that they are not covered under the 'repair and maintenance service' is having strong force inasmuch as the certificate issued by M/s. Modi Xerox indicates that they have directly billed the customers, for the repairs and maintenance which has been attended to by the appellant herein. - From a plain reading of the definition of Business Auxiliary Service, we find that there is no clause for taxing the services or providing the services on behalf of the client. Appellant is providing services on behalf of M/s. Modi Xerox who are his client. This would indicate that the appellant is liable to service tax under 'business auxiliary service' w.e.f. 10.09.2004 to which we were informed by the Chartered Accountant that they are doing so. - impugned order upholding the demands, interest and penalty is unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (2) TMI 614
Denial of refund claim - Notification No. 9/2009-ST dt. 3.3.2009 - Since the services were wholly consumed within the SEZ, the department has ordered recovery of the refund sanctioned by the adjudicating authority - Held that:- SEZ Act 2005, under Section 26(i) (e), provides that all services imported into the SEZ to carry on authorized operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makes made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright exemption to services which are provided to be wholly consumed within the SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers. Notification no. 9/2009 exempts taxable service provided to SEZ units. Once refund is provided for under this Notification, the provisions of statute under Section 11(B) of the Central Excise Act as made applicable to the Finance Act, 1994 comes into play. Therefore, refund cannot be denied under the Act for procedural infraction of having paid the Service Tax which ought not to have been paid by the service provider. The matter already stands decided in the case of Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad - [2013 (7) TMI 703 - CESTAT AHMEDABAD] - Decided in favour of assessee.
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2015 (2) TMI 613
Levy of service tax - Reverse Charge Mechanism - Penalty u/s 76 & 78 - notification no.36/2004 dated 31.12.2004 - Held that:- In view of the notification published in the Gazette of the Central Government on 31.12.2004 and made effective from 1.1.2005, no tax can be demanded from the appellant assessee on reverse charge basis prior to 1.1.2005. We further observe that such payment made by appellant as receiver of service to its agent like gift, foreign trip as well as cash prizes, which are in nature of incentive, shall not form part of gross value of the taxable service. - Decided in favour of assessee.
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2015 (2) TMI 612
Denial of refund claim - Unjust enrichment - Export of services - Bar of limitation - Held that:- Commissioner (Appeals) that the appellant would be unjustly enriched is not clear to me. - Clearly, the invoices show that the incidence of tax has not been passed on to the customers abroad. Once appellant have discharged the proof of not passing on the incidence of tax, the onus lies on the department to prove that duty incidence was passed. The invoices prove to be contrary and the department has not been able to establish that the duty incidence has been passed on to the customers abroad. In any case, it is a settled matter that the unjust enrichment does not arise in the case of export of services. On the issue of limitation, the Commissioner (Appeals)'s reliance on Eaton Industries (2010 (12) TMI 71 - CESTAT, MUMBAI) is clearly misplaced. -The provisions of Central Excise Act including Section 11B have been made applicable to Service Tax under Section 83 of the Finance Act, 1994. Therefore, the provisions of Section 11B will apply. - amount for which refund has been claimed was paid in cash on 5.2.2011 and the refund application was filed on 28.7.2011. Therefore, the refund was filed on 28.7.2011. - refund allowed on merit as well as period of limitation - Decided in favour of assessee.
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2015 (2) TMI 611
Penalty u/s 76, 77 & 78 - Discrepancy was noticed between the turnover reflected in the balance sheet and the turnover in the ST-3 returns - Held that:- From the appeal papers as well as the Commissioner (Appeal)'s order, I find that the appellant claimed before the Commissioner (Appeals) that the discrepancy which resulted in the alleged non-payment of duty is only because of the accounting system. While the balance sheet was prepared on mercantile basis, the payment of Service Tax is reflected in the ST-3 returns is on receipt basis. I note that the correct legal position during the relevant time was that Service Tax was required to be paid only on receipt basis as per Section 77 of the Finance Act, 1994. The learned Counsel pleaded that so called short payment is only about 4% of the total Service Tax paid during the four years in question. In these circumstances, neither was there short payment nor was there any intention to avoid payment of duty. I also find that Hon'ble High Court of Karnataka held in the case of Master Kleen (2011 (9) TMI 788 - KARNATAKA HIGH COURT) that the show-cause notice should not have been issued especially when the appellant paid the Service Tax within a week of being pointed out. The learned Counsel is not contesting the duty demand because he fairly concedes that even though amounts were received later they would have had to pay Service Tax in later years. In view of the facts and circumstances of the case and the Hon'ble High Court judgment in the case of Master Kleen (2011 (9) TMI 788 - KARNATAKA HIGH COURT), I find that no case for imposition of penalty is made out. - Decided in favour of assessee.
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2015 (2) TMI 593
Inclusion of amount of Re-imbursement of expenses in the value of taxable services for the purposes of levy of service tax - Company providing consulting engineering services - Petitioner receives payments not only for its service but is also reimbursed expenses incurred by it such as air travel, hotel stay, etc - Supreme Court granted the leave in the appeal filed by the Revenue against the decision of High Court [2012 (12) TMI 150 - DELHI HIGH COURT] - Wherein High Court held that Rule 5 (1) which provides for inclusion of the expenditure or costs incurred by the service provider in the course of providing the taxable service in the value for the purpose of charging service tax is ultra vires Section 66 and 67 and travels much beyond the scope of those sections. To that extent it has to be struck down as bad in law.
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Central Excise
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2015 (2) TMI 609
Composite issuance of SCN to two parties - Whether on the facts and circumstances of the case, the CESTAT was right in law, in concluding that duty demand against Assessee could not be confirmed since it was not possible to arrive at the value of clearances separately between M/s. Florida Electrical Industries Limited and assessee - Held that:- A look at the CESTAT’s order would reveal that the Tribunal was guided principally by the proportion rule directed by the Commissioner in apportioning liability. The Commissioner had dealt with, at some length the nature of evidence and materials gathered during the investigation which included statements of various individuals recorded. It also included several receipts, copies of ledgers, books etc. As to whether it was completely unfeasible for him to attribute production figures based on such seized materials is something which this Court can only speculate on, but not determine through any finding. Undoubtedly, the show cause notice was issued in a composite manner to both the parties. However, in our opinion, that ipso facto did not vitiate the proceedings. If at the stage of determination of liability or at the final stage, it was open to the Commissioner to ascribe one figure or the other, to each of the parties, that course ought to have been adopted. To that extent, the submission of the assessee/respondent that no rule or principle authorizes the apportionment of liability based upon the past figures is justified. - matter requires to be re-examined on the merits of the clandestine removal. - Matter remanded back to tribunal with direction. Jurisdiction of the commissioner to issue the show cause notice - Held that:- Held that:- Section 38A has the effect of saving investigations, legal proceedings etc. The respondent’s submissions that upon the issuance of Notification in 2002, legality of investigations stood protected but upon the ceasing of such proceedings, the appropriate Commissioner necessarily had to exercise jurisdiction is textual and narrow. This Court has to be alive to the fact that the provision was brought with retrospective effect, keeping in mind the larger public interest to avoid precisely the kind of contentions that were successfully urged in the present instance. In tax proceedings, such as the present one, there is certain seamlessness to the entire process, and splitting up that into different stages, i.e., investigation, adjudication, etc. and the spelling up of the process would defeat the underlying object of Section 38A, and lead to startling as well as anomalous results. - Consequently, the second question of jurisdiction is answered in favour of the Revenue and against the assessee.
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2015 (2) TMI 608
Maintainability of appeal - Section 35G - Held that:- Revenue alleges in its appeals that the CESTAT fell into error in curtailing the period of limitation and not allowing the extended period under Section 11A of the Central Excise Act in the given facts of the case. It is also urged that clubbing of clearances which resulted in unjustified exemption is appealable to this Court under Section 35G. - Section 35G as it stands clearly excludes the ‘High Court’s scrutiny in regard to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment’. That scrutiny is exclusively left to the Supreme Court in its appellate jurisdiction under Section 35L (b) of the Act. - Appeals are not maintainable - Decided against Revenue.
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2015 (2) TMI 607
Attachment of property - Arrear of excise duty of sick company - Petitioner purchaser of sick company - Held that:- Industry, which fell sick, was in arrears of excise duty and respondents 1 and 2 were entitled to take steps for recovery of the same. In a given case, the Central Excise Department is entitled to proceed against the movable or immovable property of the manufacturer for recovery of the arrears of duty. In the instant case, however, the only basis on which respondents 1 and 2 sought to proceed against the petitioner was that it purchased the property of the industry. The purchase was not the result of a voluntary transfer by the industry. It was in the course of recovery of loan, that the property came to be sold and it was rather incidental, that the petitioner emerged as the highest bidder. Things would have been different altogether, had the sale in favour of the petitioner taken place after the department has attached that very property for recovery of arrears of duty. That, however, is not the case. It is only after the sale in favour of the petitioner became the absolute and the property vested in them free from any encumbrances, that respondents 1 and 2 initiated proceedings for recovery of arrears of duty and sought to attach the property. In respect of the very property purchased by the petitioner, steps were initiated by the electricity supplier for recovery of arrears of the electricity charges. It is stated that the previous order was affirmed by a Division Bench in the writ appeal. Viewed from any angle, we do not find any basis for the respondents to proceed against the petitioner. - Decided in favour of petitioner.
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2015 (2) TMI 606
Abatement under Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 - all the requirement for abatement like giving due intimation, getting the machines sealed, giving the due intimation for re-start of production etc had been duly followed - Revenue's case is that the appellants should have paid the duty for the subsequent month in full and should have claimed the abatement separately. Held that:- In none of the impugned orders, it is in dispute that there was a closure of factory for more than 15 days and the required procedure of due intimation of closure, sealing and due intimation of re-opening was followed. In other words, it is not in dispute that the requirements stipulated in Rule 10 of the said Rules were fulfilled. It is also not disputed that the adjustments made were not more than the amounts of duties mandated to be abated as per the said Rule 10. - Rule 10 does not make any stipulation about the abatement having to be claimed by filing an application therefor although it does not imply anything to be contrary either. We find the Rule 9 of the said Rules in one of its provisos stipulates that in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by 20th day of the following month. When seen in the light of this proviso, there is force in the argument of the appellants that when the intention of the Government was that the amount should be refunded, an express provision was made therefore; in the said Rule 10, there is no such provision. - It is quite evident from the foregoing that apart from the Board s circulars dt.30.08.1997 and 15.09.1999, in a series of judicial pronouncements, a consistent approach has been taken to the effect that in case of such adjustment of duty which is mandatorily required to be abated (as has been done in these cases), Revenue cannot insist upon recovery of the amount so adjusted - Decided in favour of assessee.
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2015 (2) TMI 605
Clandestine removal of goods - difference between the production figures shown in the Balance Sheets and that mentioned in their respective ER-2 returns - Ex parte order - Assessee not filed reply to SCN - Held that:- Impugned Order has been passed ex-parte/ and also it is not disputed that the Appellant had not filed their reply to the Show Cause Notice nor appeared for hearing before the Adjudicating Authority. We are not impressed with the arguments of the ld. Advocate for the Appellant that they could not get sufficient time to submit their reply, after issuance of the Show Cause Notice, and later on, they were not accorded an opportunity of personal hearing even though on the date of hearing they visited the Office of the Commissioner. On the contrary, prima facie, from the records and the impugned Order it can easily be inferred that there has been lack of sincerityon the part of the Appellant in participating in the adjudication proceedingbefore the Commissioner. However, in the interest of justice, we are of the view that the Appellant be given a chance to place all the documents before the ld. Commissioner in support of their defense/claim. - Matter remanded back - Decided in favour of appellant.
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2015 (2) TMI 604
Valuation - Determination of job charges - Revenue argued that assessee have wrongly excluded the sale price of the spent Sulphuric Acid from job charges which is not correct - Held that:- When the job charges consist of the conversion charges plus the cost of the raw material belonging to the job worker which were used by him, the cost of only that much quantity of raw material would be required to be included in the job charges which has actually been used. On going through the calculation of the processing charges, annexed with the job work agreement, we find that this is what the assessee have done. The landed cost of 1.1 MT of Sulphuric Acid required for manufacture of 1.45MT of Sulphonic Acid (by treating one MT of LAB) is ₹ 1980/- and in the process 0.8 MT spent acid is generated, which was sold by the assessee for ₹ 380/-. The assessee, therefore, have treated the cost of the Sulphonic Acid used as ₹ 1980 minus ₹ 380, that is, ₹ 1600/- and accordingly, after adding the conversion charges of ₹ 700/- per MT have taken the job charges as ₹ 2300 per MT and it is on the basis of these job charges that the assessable value has been determined after adding the cost of LAB. We find no mistake in the practice adopted by the appellant - Decided against Revenue.
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2015 (2) TMI 603
Benefit of exemption no. 13/98-CE - DTA Clearances - 100% EOU engaged in manufacture of spun silk yarn - Invocation of extended period of limitation - whether longer limitation period under proviso to section 11A(1) is applicable or the demand can be confirmed only for the normal limitation period - Held that:- Once it is accepted that the respondent under their letter dated 24.03.1999 had intimated the Department that they would be making DTA clearances on payment of applicable duty, which in their case is nil, and when the invoices under which the DTA clearances were made at nil rate of duty also bear the signatures of the Central Excise Officers, the Department cannot be allege that the appellant had concealed the fact of making the DTA clearances at nil rate of duty, and in this regard, in our view, non filing of ER-2 return would not make any difference, as the departmental officers otherwise knew that the respondent were making DTA clearances at nil rate of duty. It is not the allegation of the Department that the jurisdictional Central Excise Officers were in collusion with the Respondent company and had collaborated with the Respondent in evasion of duty. There is no infirmity in the Commissioner's order holding that the longer limitation period is not applicable. Once this finding is upheld, there would be no question of demanding interest under section 11AB, as during the period of dispute, interest under Section 11AB on the duty non levied, short levied, short paid or erroneous refunded was linked with the fact as to whether non-levy, short levy, short payment or erroneously refunded of the duty was in account of any fraud, wilful misstatement, suppression of facts etc., on the part of the assessee. When these elements are not there, the interest under section 11AB cannot be charged. Since, the elements for imposing longer limitation period are not present, in our view, there would be no justification for imposition of penalty on the General Manager and Directors of the appellant company under Rule 209-A as, for this purpose, there has to be evidence on record to show that these persons dealt with certain excisable goods in the manner specified in this rule while knowing that the goods are liable for the confiscation, while in this case there is no such evidence. As regards permitting the cum duty benefit, in our view, the same was in accordance with the Apex Court judgment in the cases of CCE vs Maruti Udyog Ltd. reported in [2002 (2) TMI 101 - Supreme Court] as this is not a case where there was deliberate short payment of duty. - No merit in appeal - Decided against Revenue.
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2015 (2) TMI 602
Clandestine removal of goods - disallowance of SSI Exemption - clearances value in the year 2003-04 exceeded the SSI Exemptions limit - Held that:- except his statement which stands nullified in cross examination, and the note books no other corroborative evidence of clearance of goods by M/s Shree Krishna and receipt of the said goods by M/s Maruti is appearing on record. No investigation was conducted at the end of M/s Maruti Ceramics regarding receipt of goods and the charges were made only on the basis of notebooks and statement. I find that once the cross examination does not support the statement and the adjudicating authority does not contradict the contents of the cross examination, in that case it cannot be said that M/s Maruti Ceramics has received any clandestine clearances of M/s Shri Krishna. show cause notice has relied upon the investigation and statements of two transporters - no Lorry receipt or record of transportation was found. There is no quantity determined which he has transported. Only on the basis of statement, demand cannot be confirmed against M/s Shree Krishna. Since there is no consignee of the goods who has received any goods through M/s Shah Roadways. I am of the view that his statement cannot be a ground to make allegation against M/s Shri Krishna. Merely on the basis of the transporter statements, allegation of clandestine removal does not sustain. Except the alleged receipt of Borax Acid which is one of the material required for manufacturing of Fritz, there is no evidence appearing in the seized records or otherwise that the Appellant has received any other raw material clandestinely. Even no transportation of any of the other raw material required for manufacture of fritz is appearing nor alleged in show cause notice. The allegation of the clandestine removal needs to be established by showing receipt of major raw materials, atleast of some quantity, use of excess raw material, input output ratio, transportation of raw materials, use of such goods in manufacture of finished goods, excess utilization of power, fuel, transportation of finished goods, investigation at the buyer s end, receipt of money etc. However I find that none of the above factors are taken into consideration during the investigation, which leads me to the conclusion that charges of clandestine removal are not established. When the statements and records relied upon by the revenue are not considered to be sufficient ground for clandestine removal, in that case merely on the basis of statements authenticating the said records cannot be a ground to allege clandestine removal. The investigation has not been able to substantiate the charges of clandestine removal. - Since the charges of clandestine removal against M/s Shri Krishna does not stands proved and the demands raised are not sustainable, therefore the benefit of SSI Exemption to M/s Shree Krishna for the year 2004 05 is not deniable and hence there is no reason to demand duty. - Following decision of VISHWA TRADERS PVT. LTD. Vs. CCE [2013 (4) TMI 55 - GUJARAT HIGH COURT] and COMMISSIONER OF CENTRAL EXCISE Versus BRIMS PRODUCTS [2008 (9) TMI 603 - PATNA HIGH COURT] - Decided in favour of assessee.
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2015 (2) TMI 601
Differential duty - Appellant, in terms of the orders of Central Government, had cleared 6809 qntl. of sugar from their free sale sugar quota as levy sugar on loan basis by paying duty at the rate applicable for levy sugar. Subsequently, the Central Government paid the difference between the price of levy sugar and price of free sale sugar to the appellant alongwith the element of differential duty and before this, the National Federation of Cooperative Sugar Mills as well as Indian Sugar Association had been notified about this decision of the Government - Imposition of interest and penalty - Held that:- Once the assessee received the element of differential excise duty, that amount, in any case, would become payable to the Central Government. There is no dispute that the appellant have already paid this amount on 20th August 2002. Therefore, so far as the duty demand is concerned, the impugned order has to be upheld. However, as regards the interest under Section 11AB and penalty under Rule 173Q (1), the interest under Section 11AB during that period would be attracted only when any short payment of duty occurred due to fraud, wilful mis-statement or deliberate violation of provisions of Central Excise Act, 1944 or of the Rules made thereunder, but these elements are not present in this case. Therefore, interest liability under Section 11AB would not arise and, hence, the impugned order upholding the levy of interest under Section 11AB being not sustainable has to be set aside. In the circumstances of the case, there is also no justification for penalty under Rule 173Q as this is not the case of deliberate short payment in contravention of the provisions of Central Excise Rules. In view of this, the imposition of penalty would also not be sustainable. - while the duty demand of ₹ 2,24,697/- is upheld, the interest under Section 11AB and penalty under Rule 173Q (1) is set aside - Decided partly in favour of assessee.
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2015 (2) TMI 600
Conditional Exemption - Whether reversal of cenvat credit before utilizing would be amount to non availment of credit - benefit of exemption Notification No. 30/04-CE - composite mill manufactured cotton yarn from cotton and used the same within the factory for weaving of fabrics. - Held that:- Benefit of the exemption notification is subject to the condition that no duty credit that is taken but the assessee during November and December 2005 had taken Cenvat credit of ₹ 6,622/- in respect of certain inputs and during January to March 2006 had taken Cenvat credit of ₹ 2,753/- in respect of certain inputs. However, the Assessee s claim that this credit had not been utilised and had been reversed as soon as this irregularity was pointed out by the Department is not refuted by the Department. Since the credit taken was reversed without being utilised, in our view, the judgment of Hon ble Allahabad High Court in the case of Hello Minerals Water (P) Ltd. vs. Union of India (2004 (7) TMI 98 - HIGH COURT OF JUDICATURE AT ALLAHABAD) which is based on the Apex court s judgment in the case of Chandrapur Magnet Wires (P) Ltd. vs. CC, Nagpur (1995 (12) TMI 72 - SUPREME COURT OF INDIA) would be applicable to the facts of this case and the Assessee have to be treated as not having taken the Cenvat credit and would be eligible for the exemption benefit. In view of this, the impugned order denying the benefit of exemption Notification No. 30/04-CE and confirming the duty demand on this basis against the Assessee is not sustainable and the same is set aside. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (2) TMI 616
Validity of Tribunal's order - Whether the Tribunal erred in adjudicating on merits despite first Appellate Authority adjudicated only on the issue of pre-deposit - Following decision of State of Gujarat Versus Gujarat Ambuja Export Limited [2015 (2) TMI 480 - GUJARAT HIGH COURT] and JYOTI TRADERS Versus STATE OF GUJARAT [2015 (2) TMI 592 - GUJARAT HIGH COURT] - Tribunal has committed error in examining the matter on merits instead of examining the question for pre-deposit and, therefore, the order passed by the Tribunal would be required to be quashed and set aside with the further direction that the appeal stands restored to the Tribunal for fresh consideration - Decide in favour of Revenue.
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2015 (2) TMI 610
Rejection of request for substituting appellant's name as "successor manufacturer" in place of Pashupati Bottling Pvt. Ltd. in the eligibility certificate issued under section 4-A - exemption of certain goods from sales tax - Section 4-A was amended by U.P. Act no. 28 of 1991. The word ''manufacturer' defined under section 2(ee) was also amended - Amendment retrospective or prospective - whether the amend to sub-section (2-B) of Section 4-A by U.P. Act No.11 of 1997 is retrospective or prospective in nature. - Held that:- Government had invoked its power under latter part of section 4-B, which empowers it to exempt sales tax on goods manufactured by new units, set up in particular area, in order to promote development of industries in such areas. - reconstitution of a partnership firm will not mean that the machinery in its possession are old machineries, purchased by the erstwhile firm. Its application for exemption is to be considered on the basis of first sale, irrespective of the person constituting the firm. Government in the past, had often invoked power under section 4-A to provide impetus to setting up of industries in various backward areas, which it felt could be developed by attracting capital investment in form of new industrial units. It not only creates new job avenues for the local populace, but also results in strengthening of the infrastructure in the area, as a result of increased industrial activity. The Government, while attracting capital investment, is not concerned with the person or individual who sets up the industry, as the object is to "promote the development of industries in the State, generally and in certain district and parts of district in particular", as mentioned in the opening lines of notification dated 29.1.1985 itself. The provision to extend tax benefits for certain years, is thus, linked to the new unit irrespective of the person who runs it. The judgement of this Court in the case of M/s. Jagat Industries (1987 (10) TMI 368 - ALLAHABAD HIGH COURT) and M/s. Panchsheel Industries (2005 (1) TMI 670 - ALLAHABAD HIGH COURT) when takes the view that the change in constitution of partnership firm will not defeat the entitlement to exemption from tax with respect to goods manufactured in the new unit, is in recognition of the above proposition of law. Section 8(c) of U.P. Act No.28 of 1991 provides that sub-section (2-B) shall be deemed to be inserted to Section 4-A on 12.10.1983. The relevance of 12.10.1983 is that the provision of exemption in substantially its existing form was substituted w.e.f. such date, by U.P. Act 22 of 1984. Thus, to cover all past transfers, it is made retrospective since 12.10.1983. The use of words "is deemed to have been inserted on 12.10.1983", is suggestive of the fact that the amendment is merely curative or declaratory of the previous law, and is thus to be applied retrospectively. It has been passed to supply an obvious omission, i.e. it provides the procedure for extending tax holiday to successor manufacturers, a meaning which was otherwise implicit in the existing legislation itself. Sub-section (2-B) which extends benefits to all past successions, reinforces the aforesaid legislative intendment. The only rider is that application in this regard is to be made by 25.9.1990, which time was extended to 31.12.1991, vide U.P. Act no.8 of 1992. Even thereafter, the Commissioner of Sales Tax is invested with power to entertain application for adequate and sufficient reasons. Sub (2-B) thus only provides for the mechanism for availing tax holiday by a successor manufacturer. It does not create any new right, but only clarifies and declares the existing provisions of law. It thus fulfills the object of enactment viz "remove difficulty experienced" by successor manufacturer in availing benefit of exemption, "clarifies" existing position of law that tax exemption is linked to a new unit, irrespective of the person running it. Sub section (2-B) of section 4-A was further amended by U.P. Act no. 11 of 1997. Amendments seeks to define the words "successor manufacturer" which was hitherto not defined anywhere in the Act, thus removing confusion regarding its extent and scope. It is a inclusive illustrative definition and comprehends the entire gamut of possibilities by which transfer could take place. Even where title is not being transferred, like in case of license, contract, lease, or managing agency, the benefit shall be available. The common thread which brings them under one genus is the change of management by any one of the modes of transfer stipulated irrespective of whether title is being transferred or not. The use of phrase "in any other manner" exhausts all cognate modes of transfer, where there is change of management and not necessarily the title. Exemption is thus linked to new units and its benefits devolves on the successor, running the unit. Amendment has to be applied retrospectively, otherwise, the object of amendment will stand defeated. So construed, there is no scope from the conclusion that the revisionist herein will be covered by the phrase "successor manufacturer" and would thus, be entitled to benefit of tax exemption for the remaining period under the eligibility certificate. The questions of law are answered accordingly. The view taken by the Tribunal is illogical, irrational, leading to consequences never intended by the legislation and cannot be accepted. - that impugned orders cannot be sustained and are hereby set aside. The State Level Committee or whoever be the Competent Authority, is directed to issue the eligibility certificate to the revisionist for remaining period, treating it to be successor manufacturer and extend all benefits flowing out of such exemption to the revisionist. - Decided in favour of Appellants.
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2015 (2) TMI 592
Validity of Tribunal's order - Where the Hon’ble Tribunal was right in adjudicating the appeal on merits, instead of restricting itself to the issue of predeposit - Held that:- after the order of the Assessing Officer, appeal came to be preferred by the Assessee before the Deputy Commissioner of Commercial Tax and the prayer of the Assessee for pre-deposit of 10% of the amount was not accepted and the appeal was dismissed. Against the said order, the matter was carried before the Tribunal. The Tribunal, instead of considering the aspect of pre-deposit, touched the merits of the appeal and rendered the decision, which is impugned in the present appeal. - Following decision of GUJARAT AMBUJA EXPORT [2015 (2) TMI 480 - GUJARAT HIGH COURT] - judgement of the Tribunal is set aside. The appeal is restored before the Tribunal for fresh consideration bearing in mind the observations made. - Decided in favour of assessee.
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Indian Laws
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2015 (2) TMI 594
Imposition of penalty - Obstruction in the disclosure of information to the appellant in response to RTI application - Held that:- Commission notes that the FAA vide his order dated 1-2-2012, partly allowing the appeal held, as follows : “After receipt of reply from 3rd parties, the CPIO had also not informed about their decision to the appellant. This also appears to be due to oversight”. Further to this, the FAA ordered “The disclosure of information relating to the 3rd party, i.e. DOPT is allowed and its copy is enclosed with this order; and (iii) The disclosure of information relating to the other 3rd party i.e. the Supreme Court is not allowed, as disclosure of the information is exempted under the provisions of Section 8(1)(b), (e) & (j) of the RTI Act, 2005. A copy of the reply received from the concerned 3rd party is enclosed for information of the appellant”. Whereas, Shri Victor James, the then CPIO in his submissions dated 27-2-2014 and 9-4-2014 states that in response to Notice u/s 11 of the RTI Act the CPIO, Supreme Court of India vide letter dated 18-5-2011 denied disclosure of information to the appellant u/s 8(1)(b), (e) and (j) of the RTI Act to the appellant and the CPIO, Appointment Committee of Cabinet vide letter dated 17-11-2011 permitted disclosure of information and the CPIO had passed his order dated 18-11-2011 to disclose the information pertaining to ACC and not to disclose the information pertaining to Supreme Court of India. The contention of the CPIO is not borne out in view of the orders passed by the FAA as stated above. Moreover, the CPIO has not given any evidence with regard to dispatch of his letter dated 18-11-2011 to the appellant. The CPIO has failed to establish whether the said letter dated 18-11-2011 has been dispatched to the appellant. The third party information was only provided by the CPIO vide letter dated 15-2-2012 to the appellant only after the FAA’s order dated 1-2-2012. Shri Victor James, the then CPIO has caused a delay of 89 days in providing third party information to the appellant. The FAA has also erred in directing the CPIO to charge photocopying charges at appellate stage, which is violative of Section 7(6) of the RTI Act. The respondent public authority is directed to refund ₹ 68/ to the appellant. A penalty of ₹ 22,250/- (Rupees twenty two thousand two hundred fifty only) [@ ₹ 250 x 89 days] is imposed u/s 20(1) of the RTI Act, 2005 upon Shri Victor James, the then CPIO [presently posted as Director (Vigilance), East Delhi Municipal Corporation, Delhi] which shall be recovered in five monthly instalments of ₹ 4,450/- each from his pay and allowances from the month starting July, 2014 to November, 2014 - Decided in favour of appellant.
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