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TMI Tax Updates - e-Newsletter
February 2, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Interest liability under Section 234B - non-payment of advance tax - non deduction of tds - no interest is leviable on the respondent assessees under Section 234B, even though they filed returns declaring NIL income at the stage of reassessment. - HC
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Rectification of mistake - CCIT cannot sit as an Appellate Authority over the decision of the Appellate Tribunal. The CCIT is bound by the decision of the Appellate Tribunal which is a higher forum and cannot take a contrary view to what has been taken therein. - HC
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Registration under section 10(23AAA) rejected - On close scrutiny of word "contribution", it presupposes the contribution of employee is mandatory and other contribution by the employer in any form is acceptable. - Commissioner has wrongly interpreted Rule 16(C) of the Income Tax Rules - HC
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Addition on account of IPCL/link charges - the payment is in the nature of reimbursement of expenses and accordingly not taxable in the hands of the assessee - said payments do not constitute Royalty under the provisions of Article 12 of the tax treaty - AT
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TPA - One of the comparables Caliber Point Business Solutions has related party transactions of 30% of Revenue and going by the threshold filter of 25% of the related party transactions the said comparable cannot be said to be uncontrolled comparable and ought to be excluded from the list of comparables. - AT
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Interest paid on borrowed capital utilized for construction of house property - interest payable to sundry creditors, who supplied material for construction of the property, is an allowable deduction u/s 24(b). - AT
DGFT
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DGFT notifies operationalisation of the new system of applications for online IEC with effect from 01/02/2015 - The facility of submission of application in manual mode will, however, continue for those applicants who do not have access to net banking facility with the ten notified banks
Service Tax
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CENVAT Credit - availment of the Cenvat Credit on the invoices received prior to service tax registration - appellant is entitled to take Cenvat Credit on the invoices received prior to Service tax registration - AT
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Activity of supervision of fabrication and erection of supporting structures and equipment from the client - it cannot be termed that appellant is providing technical assistance to their clients. - the activity of the appellant does not fall under the category of Management Consultancy Services. - AT
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Penalty u/s 76, 77 & 78 - service tax was paid before issuance of show cause notice - although the Show cause notice was issued to the respondent which was not required to be issued as per section 73(3) - No penalty - AT
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Laying of paver blocks at JNPT - appellant is undertaking the assigned job on behalf of their clients through contractors - activity does not fall under the business auxiliary service - AT
Central Excise
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Method of Valuation - Glues and adhesives - MRP based valuation or transaction value - appellant in the grounds of appeal have not controverted the fact that they were selling the goods to industrial consumers, and also whether they have affixed MRP or not - transaction value to be adoped - AT
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CENVAT Credit on "Steatite Ceramic" falling under CTH 6804 availed as 100% as inputs instead of 50% as capital goods during the first year - interest on 50% to be paid for one year - demand of duty and penalty waived - AT
Case Laws:
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Income Tax
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2015 (1) TMI 1168
Interest liability under Section 234B - non-payment of advance tax - non deduction of tds -assessee was manufacturing equipment relating to oil and gas, energy, transportation and aviation, for supply to customers in India - assessees had a permanent establishment (“PE”) in India - Held that:- The primary liability of deducting tax (for the period concerned, since the law has undergone a change after the Finance Act, 2012) is that of the payer. The payer will be an assessee in default, on failure to discharge the obligation to deduct tax, under Section 201 of the Act. For the above reasons, this Court finds that no interest is leviable on the respondent assessees under Section 234B, even though they filed returns declaring NIL income at the stage of reassessment. The payers were obliged to determine whether the assessees were liable to tax under Section 195(1), and to what extent, by taking recourse to the mechanism provided in Section 195(2) of the Act. The failure of the payers to do so does not leave the Revenue without remedy; the payer may be regarded an assessee-in-default under Section 201, and the consequences delineated in that provision will visit the payer. The appeal of the Revenue is accordingly dismissed - Decided against revenue.
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2015 (1) TMI 1167
Rectification of mistake - Scope of Section 154 - Whether power of CCIT u/s 154 can only be exercised for rectification of a mistakes which are apparent on record and not when an elaborate reasoning is to be provided to arrive at the finding that there appears to be a mistake apparent on record? - petitioner is substantially financed by the State of Sikkim and entitled to an exemption under Section 10 (23C) (iiiab) of the Act - Held that:- The assessment order, passed on the return file in pursuance of the notice under Section 148 of the Act, was based on the fact that the petitioner is not entitled to an exemption under the said Section. The Appellate Tribunal reversed the said order with categorical finding that the petitioner is substantially financed by the Government of Sikkim and is, therefore, entitled to an exemption under Section 10 (23C) (iiiab) of the said Act. The CCIT is bound by the decision of the Appellate Tribunal which is admittedly a superior forum. The hierarchical system of dispensation of justice, which exists in our country, requires a strict adherence and respect to avoid any abuse or misuse of the power and conflict in views. The authority of the Court standing on a lower pedestal is bound by the decision of the higher authority or the Court and it is not open to disregard the decision. It does not require any debate on the proposition of law that the principle of res judicata cannot be applied in a matter of taxation because each year’s assessment is final in that year and does not have any bearing at the time of determination of the tax for a subsequent period or other period as held in Installment Supply (P) Ltd. & Another (1961 (5) TMI 53 - SUPREME COURT OF INDIA). It is not a case of the petitioner that the principle of res judicata is applicable in the present case. The CCIT has wrongfully invoked the jurisdiction under Section 154 of the Act by recording an elaborate reasoning in the garb of the mistake apparent from the record and has, in fact, percolate the sense of change of opinion. Furthermore, the CCIT cannot sit as an Appellate Authority over the decision of the Appellate Tribunal. The CCIT is bound by the decision of the Appellate Tribunal which is a higher forum and cannot take a contrary view to what has been taken therein. This Court, therefore, finds that the order impugned suffers from illegality and/or infirmity and cannot be allowed to stand. Accordingly, the order dated 17th January, 2013 is hereby quashed and set aside. - Decided in favour of assessee.
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2015 (1) TMI 1166
Registration under section 10(23AAA) rejected - Held that:- It is clear that the very object of the trust is to see that the employees may not have to lend their hands before any person for money at a higher rate of interest from outsider, and for that, the trust is created. If we go through the clauses no. 7 and 10, they are in consonance with the guidelines issued by the CBDT. On close scrutiny of word "contribution", it presupposes the contribution of employee is mandatory and other contribution by the employer in any form is acceptable. The finding of Commissioner is bad in law and against the provision. In that view of the matter, in our view, the Commissioner has wrongly interpreted Rule 16(C) of the Income Tax Rules. In that view of the matter, the interpretation put forward by the Commissioner is required to be rejected. The apprehension which has been emphasized by Mr. Desai learned advocate for the respondent that the fund, on dissolution of Trust, will go to Kandla Port Trust, in our view, till the last beneficiary of the Trust remain in existence. However, only with the order Central Government, the Trust can be dissolved and the amount remained with the Trust will go back to the Statutory Authority i.e. Kandla Port Trust. Therefore, in the facts and circumstances of the case, the clauses are not objectionable. Thus petition is allowed. The Commissioner of Income-Tax, Rajkot-1, Rajkot is directed to grant approval to the petitioner-Trust on or before 31.1.2015, from the date on which they made application. - Decided in favour of assessee.
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2015 (1) TMI 1165
Deemed dividend under Section 2 (22)(e) - loan received by the Respondent-Assesee from M/s. NS Fincon Pvt. Ltd. - Held that:- On strict interpretation of Section 2(22)(e) of the Act, unless the Respondent-Assessee is the shareholder of the company lending him money, no occasion to apply it can arise. In the present facts, it is an admitted position that Respondent-Assessee is not a shareholder of M/s. NS Fincon Pvt. Ltd. from whom he has received loan. Therefore, no fault can be found with the decision of the Tribunal in having followed the decision of the High Court in Universal Medicare (2010 (3) TMI 323 - BOMBAY HIGH COURT). This view has been further reiterated by another Division Bench of this Court in Impact Containers (2014 (9) TMI 88 - BOMBAY HIGH COURT) rendered on 4th July, 2014. - Decided against revenue.
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2015 (1) TMI 1163
Levy of penalty u/s 263 for failure to deposit advance tax - incorrect estimation of advance tax - Held that:- In the case on hand, there is no material to show that that the assessee has consciously concealed certain particulars pertaining to his income or has supplied inaccurate particulars, deliberately. Further, it is the case of the Revenue that the explanation given by the assessee in connection with his income is not acceptable and it is not the case that the assessee has offered no explanation or false explanation, at all. Instead the case of the revenue is that the explanation given by the assessee cannot be accepted. Decision of the Apex Court in CIT VS. KHODAY ESWARSA & SONS (1971 (9) TMI 19 - SUPREME Court) and AMRUT TUBEWELL COMPANY VS. ASST. CIT (2015 (1) TMI 1149 - GUJARAT HIGH COURT), penalty being proceedings being penal in character, the department must establish that the receipt of the amount in dispute constitutes income of assessee. Apart from falsity of explanation given by the assessee department must have before it before levying penalty cogent material or evidence from which it could be inferred that assessee has consciously concealed particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. No doubt the original assessment proceedings, for computing the tax may be a good item of evidence in the penalty proceeding s but the penalty cannot be levied solely on the basis of the reasons given in the original order of assessment question of law raised in this appeal is answered in favour of the appellant-assessee
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2015 (1) TMI 1162
Reopening of assessment - proceedings are sought to be initiated after the period of four years from the end of relevant Assessment Year - As the provisions of 195 of the IT Act is very clear the amount of ₹ 1064281/- required to be disallowed and added back to the total income of U/s 40(A) failure to do so has resulted into u/a of income of ₹ 1064281/- - Held that:- The reasons supplied to the Petitioner do not disclose that there was any failure on the part of the Petitioner to provide all the material facts. That being the position, this ground could not have been taken up against the Petitioner at the time of disposing of the objections. Once this was not the basis for issuance of notice for Reassessment, it cannot be held against the Petitioner that the Petitioner had failed to make a true and full disclosure. It will have to be held that the Petitioner did not fail to make full and true disclosure of all material facts. The jurisdictional requirement for carrying out the reassessment, after the expiry of period of four years, is not fulfilled in the present case. - Decided in favour of assessee.
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2015 (1) TMI 1161
Penalty proceedings under Section 271(1)(c) - revised income showing a total income of ₹ 10,86,060/-, which includes NRE gift received by the assessee - proceedings initiated under Section 147 - Appellate Tribunal held that the provisions of Clause B to Explanation 1 to Sec.271(1)(c) are attracted thereby reversing the order of first appellate authority cancelling the penalty - Held that:- When the concealment of the income was with reference to the original return and there was no explanation at all as regards the non-disclosure, the mere claim that the income was offered in the revised return, as a matter of purchasing peace, by itself, would not exonerate the assessee from the culpability. Having regard to the fact that the assessee had not disclosed any reason for the omission in the original return and that the revised return was filed only after the search, this Court held that penalty was leviable. When there is no satisfactory explanation as regards its non-disclosure of the income in the original return and that the undisclosed income came to be shown only in the revised return, rightly the Tribunal reversed the order of first appellate authority cancelling the penalty. - Decided against assessee.
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2015 (1) TMI 1160
Addition u/s 68 - unaccounted share capital and unsecured loans - ITAT deleted the addition - Held that:- It is evident that the ITAT went into the record and held that there was a satisfactory explanation and consequently addition under Section 68 was unwarranted. Counsel for the revenue submitted that besides furnishing affidavit of the parties - so far as the inclusion of capital to the tune of ₹ 35 lakhs is concerned, there was nothing on the record to warrant deletion of the said amount. This Court notices that besides the affidavits, the particulars of the bank, the cheque numbers, the ledger account was furnished to the AO. Though this was in the course of remand proceedings, having regard to the bank accounts of the subscribers - who are concededly family members, and whose identities were ascertainable, the AO, failed to probe further. In these circumstances, this Court is of the opinion that considering the law declared in CIT V. Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA], the inference drawn by the AO, in the circumstances of the case to add back a sum of ₹ 35 lakhs under Section 68 was clearly not warranted. The question of law sought to be urged therefore does not arise. - Decided in favor of assessee.
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2015 (1) TMI 1159
Interest under Section 244A and 244(1A) - revision u/s 263 - Held that:- CIT had no jurisdiction to pass revision order u/s.263 on 12.03.03. On that day, the order of this court dt.30.07.01 did exist. On the contrary, this order has become final. As regards grant of interest on refund, we find that Tribunal was justified in holding that refund should be granted with interest. Accordingly, we hold that the Tribunal was right in law in directing the Assessing Officer to allow interest under Section 244A and 244(1A) of the I.T Act. - Decided in favour of assessee.
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2015 (1) TMI 1158
Deduction under section 80HHC - Appellate Tribunal held that the amount of Sales Tax and Excise duties do not form a part of total turnover for the purpose of calculating deduction - Held that:- Issues squarely covered by the decision of Commissioner of Income Tax v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] wherein while deciding the issue in favour of the assessee the Honourable Supreme Court has observed that Section 80HHC of the Income-Tax Act, 1961 is a beneficial section: it was intended to provide incentive to promote exports. The intention was to exempt profits relatable to exports. Just as commission received by the assessee is relatable to exports and yet it cannot form part of "turnover" for the purposes of section 80HHC, excise duty and sales tax also cannot form part of "turnover". Just as interest, commission, etc. do not emanate from such turnover. Since excise duty and sales tax did not involve any such turnover such taxes are however to be excluded. Commission, interest, rent, etc. do yield profits, but they do not partake of the character of turnover and therefore they are not includible in the "total turnover". If so, excise duty and sales tax also cannot form part of the "total turnover" under section 80HHC(3). - Decided in favour of the Assessee
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2015 (1) TMI 1157
Investment allowance - entitlement to claim on all the items viz. Molasses storage tank, molasses pump, weigh bridge and diesel generating sets without appreciating the facts that items are not 'Plant and Machinery' on which investment allowance is allowable - Held that:- In the light of the well settled legal position in the case of Tribeni Tissues Ltd. Vs. CIT (1991 (1) TMI 98 - CALCUTTA High Court) and CIT Vs. Mahant Oil Industries Pvt. Ltd. (1991 (3) TMI 72 - KARNATAKA High Court) we are of the opinion that the Tribunal has rightly observed that the assessee was entitled for investment allowance storage tank, molasses pump, weigh bridge and diesel generating sets, which were exclusively used in the factory. - Decided in favour of assessee. Disallowed of market fee - Held that:- As decided in Commissioner of Income Tax Vs. Moti Lal Padampat Udyog Ltd. (2013 (3) TMI 394 - ALLAHABAD HIGH COURT) observed that payment of market fee to purchase the sugar cane and sugar is allowable deduction. Also in the case of CIT Vs. Macdowell & Company Ltd, (2009 (5) TMI 28 - SUPREME COURT ) had held that "bottling fee" realized under the Rules framed under the Excise Act is neither tax nor duty as such Section 43B of the Act is not applicable on it.- Decided in favour of assessee.
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2015 (1) TMI 1156
Transfer pricing adjustment - attribution of profits to the Permanent Establishment - India-USA DTAA - Held that:- Ld.CIT(A)’s order on the proposition of PE deserves to be upheld. The employees of the assessee frequently visited the premises of CIS to provide supervision, direction and control over the operations of CIS and such employees had a fixed palce of business at their disposal. CIS was practically the projection of assessee’s business in India and carried out its business under the control and guidance of the assessee and without assuming any significant risk in relation to such functions. Besides assessee has also provided certain hardware and software assets on free of cost basis to CIS. Thus, the findings of the CIT(A) that assessee has a fixed place PE in India under Article 5(1) of the DTAA is upheld. Assessee has a fixed base Permanent Establishment in India. Addition on account of IPCL/link charges - Held that:- no transfer of the right to use, either to the assessee or to CIS. The assessee has merely procured a service and provided the same to CIS, no part of equipment was leased out to CIS. Even otherwise, the payment is in the nature of reimbursement of expenses and accordingly not taxable in the hands of the assessee. Therefore, it is held. that the said payments do not constitute Royalty under the provisions of Article 12 of the tax treaty - Decided in favour of assessee. Interest under Section 234 B - Held that:- The charging of interest is automatic under the Act if the assessee has defaulted in payment of advance tax. The income of the assessee was not liable for withholding tax under section 195 of the Act. In this case we have no option but to hold. that the assessee is liable to interest u/s 234B, as the income being assessed now cannot be held. to be income liable to TDS under Indian provisions. The same is being assessed in the hands of PEs who had not filed their return on the ground that this income was not attributed to Indian Business Connection. Provisions of section 234B are mechanical in nature. - Decided against assessee.
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2015 (1) TMI 1155
Upward adjustment to the prices charged - international transactions namely rendering of IT enabled design engineering services to its associated enterprises - Held that:- the assessee has placed reliance on the decision of ITAT, Pune in the case of Amdocs Business Services Private Limited [2012 (12) TMI 482 - ITAT PUNE ] wherein identical issue raised by the learned TPO that margins of comparable parties are to be adjusted and not of the tested party. The Tribunal in such a situation has upheld the validity of such an adjustment to the profits of the assessee. It was also claimed that the DRP has not adjudicated this issue. Nothing contrary has been brought to our knowledge on behalf of the Revenue. So, in the interest of justice, we restore this issue to the DRP with a direction to decide the same as per fact and law after providing an opportunity of being heard to the assessee. Selection of comparable - Held that:- AO/TPO is directed to omit these three companies chosen, i.e. Rolta India, KLG and Powersoft by the TPO from the set of comparables for the year under consideration as Rolta India Ltd has huge turnover difference, Powersoft Global Solutions Ltd has financial year of the company differs by six months and KLG Systel Ltd is functionally not comparable, thus the matter is restored back to the TPO/AO who shall carry the search of comparables afresh in terms of criteria laid down in Rule 10B(2) of Income Tax Rules 1962 after giving an opportunity of being heard to the assessee. One of the comparables Caliber Point Business Solutions has related party transactions of 30% of Revenue and going by the threshold filter of 25% of the related party transactions the said comparable cannot be said to be uncontrolled comparable and ought to be excluded from the list of comparables. We direct the TPO/AO to exclude the said comparable from the list of comparables taken for the purpose of benchmarking for the said A.Y. 2008-09. - Decided in favor of assessee.
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2015 (1) TMI 1154
Disallowance u/s 14A r.w.Rule 8D - whether investment in shares and securities have been made out of borrowed funds, therefore, the provisions of s.14A are applicable? - Held that:- We uphold the finding of the First Appellate Authority that the income received from the sale and purchase of shares is to be taxed under the head “income from capital gains”. Hence we dismiss this appeal of the Revenue. - Decided in favour of assessee.
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2015 (1) TMI 1153
Rejection of claim of deduction u/s.80IA - prescribed monetary limit fr filling appeal - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a low tax effect case, the appeal of the revenue dismissed in limine without going into merits. - Decided against revenue.
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2015 (1) TMI 1152
Allowance of expenditure - Held that:- In view of there being no change in facts and circumstances of these cases respectfully following the order of the Tribunal in Konichiva Builders Ltd. [2014 (4) TMI 533 - ITAT DELHI] the issue of allowability of expenses in similar lines is restored to the AO herein also requiring the assessee to prove its claim with cogent material the limited plea of the assessee is accepted. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 1151
Disallowance of electric power charges - Held that:- The assessee has already been allowed depreciation on the amount of electric power capitalized and no case for allowing the same as revenue expenditure could be made before us, and accordingly, the ground no.1 of the assessee is dismissed. - Decided against assesse. Disallowance of garden expenses - Held that:- Garden expenses were incurred by the assessee for the business purpose and copies of bills were also produced before the AO and the CIT(A), and therefore, there is no case for disallowance of 20% of the total garden expenses claimed by the assessee.- Decided in favour of assesse. Disallowance u/s 14A r.w.r 8D - Held that:- The AO has estimated 10% of those expenses for the purpose of disallowance. For A.Y. 2007-08, we have also noted that the provisions of Rule 8D were wrongly applied being prospective in nature. We therefore, direct to delete the addition. The result is that the ground of the Assessee for A.Y.2006-07 and 2007-08 are allowed but for A.Y.2008-09 this ground is dismissed. Exemption u/s 10A claim pertaining to SEZ unit. - Held that:- We find that the Assessing Officer has not allowed any opportunity to the assessee for claiming exemption u/s 10A after computing the business income of the alleged eligible undertaking at a positive figure for the first time. In our considered view, while making the assessment u/s 143(3) of the Act, the Assessing Officer is duty bound to compute the total income as per the provisions of Income-tax Act and therefore, in allowing deductions/exemptions also to the assessee which is statutorily allowable to the assessee. In the circumstances, we set aside the orders of the lower authorities on this issue and restore the matter back to the file of the Assessing Officer for verification of the claim of the assessee for deductions u/s 10A of the Act and thereafter passing an order in accordance with the law. - Decided in favour of assessee for statistical purposes. Disallowance of professional charges - Held that:- The assessee has furnished the details of the expenditure hence it was unwarranted on the part of the AO to estimate the impugned disallowance in the absence of any specific contrary finding. We, therefore, reverse those findings and direct to allow the claim. - Decided in favour of assessee. Taxing MAT liability - Held that:- AO is otherwise duty bound to recalculate the tax under MAT provision after giving effect of the Appellate orders. Naturally, if MAT credit is available as per law the AO shall grant the same to the assessee under the provisions of the Act. We order accordingly. - Decided in favour of assessee. Addition made after making adjustment of Section 145A - Held that:- There was no fallacy in the findings of learned CIT(A) when it was found on facts that the amount in question was included in the closing stock and that the assessee is following this method year after year. We hereby affirm the factual as well as legal finding given by learned CIT(A) and dismiss this ground of the Revenue.- Decided in favour of assessee. Penalty levied u/s.271(1)(c) - disallowance of expenditure held as capital expenditure and the disallowance made u/s.14A - CIT(A) deleted the levy - Held that:- Genuineness of the expenditure is not in doubt. No material has been brought on record to show that the assessee has concealed any particulars of income or has furnished any inaccurate particulars of income in this respect. On the basis of particulars furnished in respect of expense in question, it was inferred that the same was capital in nature and only depreciation was allowable to the assessee. The claim of the assessee was that it was a revenue expenditure as no tangible asset was acquired by the assessee by incurring the said expenditure. Thus the opinion of CIT(A) that the disallowance was because of difference of opinion and therefore, penalty u/s 271(1)(c) cannot be sustained is justified. - Decided in favour of assessee.
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2015 (1) TMI 1150
Interest paid on borrowed capital utilized for construction of house property - whether the interest credited to sundry creditor's account par takes the character of interest payable as contemplated u/s 24(b) or not? - CIT(A) confirmed disallowance made by AO - Held that:- It cannot be denied that for the relationship of lender (creditor) and borrower (assessee), it is not necessary that there should be actual flow of money between lender and borrower, but the borrowing can take place in different forms also. The true nature of relationship has to be considered and no restrictive meaning can be assigned to the term "borrowed capital" in section 24(b). If there is direct nexus between the interest payment and construction of property, which in the present case is through creditors, because they had supplied material for construction, then the said interest would come within the ambit of section 24(b). Therefore, in principle we agree with the assessee that interest payable to sundry creditors, who supplied material for construction of the property, is an allowable deduction u/s 24(b). As the assessee has not been able to substantiate its claim regarding supply of material by alleged creditors, inasmuch as the AO, inter alia, observed that the interest had not been paid and it was merely credited in the accounts of the parties year after year. Therefore, we restore the matter to the file of AO for verification of bills, confirmation of parties etc. which were filed before ld. CIT(A) and also to verify whether the payment of interest had been made to parties in subsequent years or not, as claimed by assessee. - Decided in favour of assessee for statistical purposes. Disallowance of various expenses claimed by the assessee u/s 37(1) - Held that:- CIT(A) correctly restricted the disallowance to the extent of 10% out of salary claimed to have been paid to the employees, further restricted disallowance, and on estimate basis, to ₹ 6,500/- as against 11,500/- on account of telephone expenses; ₹ 24,000/- as against 54,000/- on account of security expenses; ₹ 14,610/- as against 24,610/- on account of conveyance expenses; ₹ 14,780/- as against 19,780/- on account of staff welfare expenses; and ₹ 6,670/- as against ₹ 12,670/- on account of office expenses. - Decided against assessee.
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2015 (1) TMI 1149
Penalty under Section 271(1)(c) - addition of the low G.P. and cash credit as income of the assessee - Held that:- The CIT(A) upheld the penalty levied by AO on the ground that the explanation offered by the assessee, herein, in respect of low G.P. And cash credit was either false or the assessee was not able to substantiate the same by producing convincing evidence in support, thereof. Having gone through the record, we find that it is neither the case of the respondent-revenue nor is there any material to show that there was any willful concealment or furnishing of inaccurate or incorrect details of income by the appellantassessee. In other words, there being no conscious concealment of income, the AO could not have imposed penalty under Section 271(1)(c) of the Act.- Decided in favour of the appellant-assessee Penalty under Section 273(2)(a) - Held that:- penalty imposed by the AO under this section on the ground that the difference between the earned income and the assessed income of the assessee was more and that the assessee, himself, had declared income of ₹ 75,000/- by filing revised return. The Tribunal, further, observed that the CIT(A) had found that the assessee was not able to prove the source of cash credit, and therefore, CIT(A) upheld the penalty levied by the AO, which is confirmed by the Tribunal. However, while doing so, here again, the Tribunal failed to appreciate the fact that the assessee had not furnished any details pertaining to advance tax which was untrue. On the contrary, the additions were of such nature that the assessee could not have foreseen. We are, therefore, of the opinion that the order of the Tribunal cannot be sustained and deserves to be quashed and set aside. - Decided in favour of the appellant-assessee
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Customs
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2015 (1) TMI 1178
Maintainability of appeal - Imposition of penalty - Held that:- In this Tax Appeal the CESTAT has allowed the appeal of the Revenue and set aside the penalty of ₹10,000 imposed on the assessee - A Division Bench of this Court in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS V. STOVEC INDUSTRIES LTD., reported in [2013 (1) TMI 72 - GUJARAT HIGH COURT] held that in view of instruction dated 17.8.2011, tax appeal below ₹ 10 lakh is not maintainable and this instruction also applies to the pending appeal. Following the aforesaid decision of the Division Bench, we dismiss this tax appeal as not maintainable. - Decided against Revenue.
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2015 (1) TMI 1177
Maintainability of appeal - Imposition of penalty - Held that:- In this Tax Appeal the CESTAT has allowed the appeal of the Revenue and set aside the penalty of ₹ 3,63,100 imposed on the assessee - A Division Bench of this Court in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS V. STOVEC INDUSTRIES LTD., reported in [2013 (1) TMI 72 - GUJARAT HIGH COURT] held that in view of instruction dated 17.8.2011, tax appeal below ₹ 10 lakh is not maintainable and this instruction also applies to the pending appeal. Following the aforesaid decision of the Division Bench, we dismiss this tax appeal as not maintainable. - Decided against Revenue.
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2015 (1) TMI 1176
Denial of Permission for re-export of goods - Violation of principle of natural justice - Reason for decision not recorded - Held that:- Face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak and it must not be like the inscrutable face of a sphinx . Recording of reasons operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power and it re-assures that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. The authority shall adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Therefore, the statutory authority, which is a decision maker, by exercising statutory power given under the Act, must assign the reasons while making the decisions and communicate the same to the aggrieved party. As already noted, the impugned communication was served on the petitioner with one sentence mentioning denial of re-exporting the consignment and admittedly, no reasons have been assigned in the impugned proceedings, dated 24.7.2012. It is clear that the re-export of the material can be made based on the declaration of the Director of testing Lab that the said drugs are not of substandard. In the present case, the Deputy Drugs Controller was of the view that the material itself is ‘spurious drugs’ since it has been imported by the petitioner without adequate registration and import licence and the documents furnished by the petitioner are forged and fake. For the risk of repetition, this Court reiterates that this Court cannot venture upon the issues, viz., whether the petitioner has imported the consignment based on the forged and fake documents from unregistered source contrary to the provisions of the Act and whether the detained material is a ‘spurious’, etc., since these are the allegations levelled against the petitioner, are the disputed questions of fact and are subject matter of the prosecution already launched against the petitioner. Therefore, it is not appropriate for the Deputy Drugs Controller to pre-determine that the drugs are ‘spurious’ now itself in order to reject the claim of the petitioner for re-exporting of the consignment. As regards the contention raised on behalf of the respondents that the material in dispute is the subject matter of the prosecution and it is required for marking during the trial as part of the evidence, is concerned, as rightly pointed out by the learned senior counsel that there is no need to detain the entire material for the purpose of marking as material object during the trial of the prosecution and it may be sufficient that a sample thereof may be retained for that purpose and the consignment can be permitted to re-export since the retention of the same is causing great prejudice to the petitioner since the funds of the petitioner to the extent of the invoice value of the goods has been blocked under the letter of credit. - Decided in favour of assessee.
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2015 (1) TMI 1175
Waiver of pre deposit - Import of BMW cars under EPCG scheme - tourist purposes - Non maintenance of books of accounts - High Court after hearing both sides passed an order that There will be an order of interim stay on condition that the appellant deposits a sum of ₹ 25,00,000 only on or before 7-8-2014, failing which stay granted shall stand vacated. This appeal was filed by the assessee against the decision of Tribunal [2014 (8) TMI 359 - CESTAT CHENNAI].
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2015 (1) TMI 1174
Waiver of pre deposit - Undervaluation of goods - Imposition of penalty - Whether the Tribunal erred in directing the deposit of a sum of ₹ 5,00,000/- by the HUF as also separately by the appellant - Held that:- Tribunal was not justified in imposing the condition of pre-deposit of the penalty amount. In the facts and circumstances of the case and when the appellants not being attributed any direct role in relation to the under-valuation of goods, the Tribunal should not have imposed a condition which prejudicially affects the right of the appeal conferred on the appellant by law. For all these reasons, we direct that on a deposit of the sum of ₹ 2,50,000/- by the HUF and which sum shall be deposited within a period of four weeks from today, there shall be waiver of pre-deposit and stay of recovery in so far as the amount of penalty directed against the appellant. Meaning thereby the appellant would not be required to deposit the sum of ₹ 1,00,000/- as directed by the Tribunal, in the event, our order passed today is complied by the HUF. If the order is not complied with, then, the direction issued by the Tribunal shall revive and non-compliance therewith to visit all the consequences in law. In the event, our order is complied, the Tribunal to hear the appeal in accordance with law. - Decided conditionally in favour of assessee.
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2015 (1) TMI 1173
Benefit of the Notification 97/2004-Cus., dated 17-9-2004 - Import of catalysts - Ommission of consumable from benefit of Notification - High Court admitted the appeal of Revenue against the decision of tribunal [2013 (10) TMI 1258 - CESTAT MUMBAI] on the following questions of law:- (i) Whether in the facts and circumstances of the case and in law the Tribunal is justified in holding that the catalyst is different from consumable and therefore denial of benefit to the Respondent is not sustainable? (ii) Whether in the facts an circumstances of the case and in law the Tribunal is justified in holding that the policy will prevail over the customs notification when the Ministry of Finance, Govt. of India has every authority to regulate the customs duty benefit? (iii) Whether in the facts and circumstances of the case and in law the Tribunal is justified in holding that the extended period of limitation is not available despite the fact that the benefit of notification was availed by willfully misdeclaring the goods?
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2015 (1) TMI 1172
Surrender of CHA license - Deprivation from right of livelihood - Held that:- petitioner is not a CHA licencee, yet the action of the respondent directing him to surrender the ‘G’ Card has factually deprived him for his livelihood for the past four months. As to whether the respondents ultimately propose to suspend the CHA licence or give a show cause notice is not known. In other words, the petitioner is at mercy of the respondents for an indefinite period. - respondents may grant a hearing to the petitioner and thereafter, pass a speaking order as in terms of the Regulation 19(2). A direction is accordingly issued to the concerned Commissioner to afford a hearing to the petitioner. The petitioner shall appear before the concerned Commissioner under Regulation 19 on 30-5-2014 at 11:00 AM. After granting him the hearing, the said Commissioner shall pass an order either revoking or confirming the direction to surrender the ‘G’ Card, within 15 days, in terms of the said regulation 19(2). - Decided in favour of Appellants.
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2015 (1) TMI 1171
Waiver of pre deposit - Held that:- CESTAT failed to take into consideration the fact that a sum of ₹ 38,30,000/- was paid by the appellant during the course of investigation, has some merit. The CESTAT ought to have considered that the demand of differential duty of ₹ 65,53,233/- in respect of 48 bills of entry and further differential duty demand in respect of two other bills of entry, is thus secured at least substantially. - CESTAT can be modified with a direction that the appellant need not deposit anything over and above the amount already paid to the Department, but to secure the balance sum the appellant shall furnish a bank guarantee of any nationalized bank and which bank guarantee shall be of ₹ 29 lacs - Decided partly in favour of assessee.
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FEMA
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2015 (1) TMI 1170
Foreign exchange allocated against the license having not been utilized - Waiver of pre deposit - Imposition of penalty - Held that:- Under the statutory scheme the appellants are under an obligation to file appeal simultaneously along with penalty amount unless and until dispensation is granted under Second proviso to Section 52 (2) on the application of the appellants after getting satisfied about the prima facie good case and undue hardship of the appellants. In the instant case, the appellate has not taken care to comply the judicial order despite sufficient indulgence shown by this Tribunal by granting 50% dispensation in favour of the appellant which shows lack of bonafide on the part of the appellant. The order was passed long back on 12.02.04 where the appellant has shown total defiance towards judicial order where equity does not lie in his favour. Looking towards this situation this appeal is liable to be dismissed. Written submissions stated to be filed by the Petitioner on 15th September, 2009 are not on record of the Tribunal. However, in view of the endorsement even if it is accepted that the written submissions in para-7 submitted that without prejudice to the submissions the Petitioner herein prayed for time of two months to comply with the order dated 12th February, 2004, the same would not enure to the benefit of the Petitioner in as much as this alternate submission of depositing the amount was not taken when the application for withdrawal of the direction of pre-deposit was being considered. - Decided against Assessee.
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Service Tax
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2015 (1) TMI 1199
CENVAT Credit - availment of the Cenvat Credit on the invoices received prior to service tax registration - Credit availed on housekeeping and hotel services charges paid - Revenue is of the view that the appellant is not entitled to take Cenvat Credit on service received prior to service Tax registration and the Housekeeping and hotel services charges are not related to their business of manufacturing as this services have been availed outside the factory premises and in residential colony - Invocation of extended period of limitation - Held that:- Following decision of MPortal India Wireless Solutions Pvt. Ltd Vs. CST reported in [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - appellant is entitled to take Cenvat Credit on the invoices received prior to Service tax registration. For availment of Cenvat Credit for housekeeping services and hotel service charges which has been availed by the appellant in residential colony or for individuals. Therefore, I hold that Cenvat Credit on these services is not available to the appellant. Further, I find that during the course of the audit it was pointed out that appellant has taken inadmissible Cenvat credit and appellant has not paid inadmissible Cenvat credit. In these circumstances, revenue has rightly invoked the extended period of limitation. In these circumstances, I confirm the demand of ₹ 47,182/- to be paid by the appellant along with interest. With regard the penalty as the services is new and appellant has taken the Cenvat Credit on House keeping services which may be utilized for the business purposes of the appellant. Therefore, on that part of the input services credit the penalty is not imposable. But for the hotel services availed by the appellant, the penalty is confirmed - Decided partly in favour of assessee.
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2015 (1) TMI 1198
Management Consultancy Services - Activity of supervision of fabrication and erection of supporting structures and equipment from the client - Invocation of extended period of limitation - Held that:- In this case the activity undertaken by the appellant is only supervision of fabrication and erection of supporting structures and equipments. From the records it does not reveal that appellant is providing any other assistance to their clients or appellant is providing any kind of advice to their clients. In the factual matrix, it cannot be termed that appellant is providing technical assistance to their clients. Consequently, the activity of the appellant does not fall under the category of Management Consultancy Services. Further, we find that in the show cause notice there is no allegation of fraud, collusion, suppression, willful misstatement and suppression of fact by the appellant and it has not been alleged that appellant was having any malafide intentions not to pay any service tax. In these circumstances, extended period of limitation was also not invokable. - Decided in favour of assessee.
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2015 (1) TMI 1197
Penalty u/s 76, 77 & 78 - service tax paid before issuance of show cause notice - outward goods transportation services - Held that:- As per the provisions of the section 73(3) of the Act, the show cause notice is not required to be issued when service tax along with interest has been paid by the assessee before issuance of show cause notice and there is no allegation against the assessee for fraud, collusion, willful misstatement, suppression of facts or having any malafide intention to not to pay any service tax. We have also gone through the show cause notice. In the show cause notice there is no specific allegations against the respondent that respondent had not paid by way of fraud, collusion, willful misstatement or suppress the material facts or was having any malafide intention of not to pay service tax. - although the Show cause notice was issued to the respondent which was not required to be issued as per section 73(3) of the Act. Therefore, we do not find any infirmity with the impugned order. Accordingly, the same is upheld and appeal filed by the revenue deserves no merit - Decided against Revenue.
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2015 (1) TMI 1196
Waiver of pre deposit - Classification of service - Held that:- Considering that the issue is on the classification dispute of taxing entry involving interpretation of law, there shall be waiver of predeposit and stay of recovery thereof during pendency of appeal. - Stay granted.
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2015 (1) TMI 1195
Condonation of delay - Held that:- The appellant is still casual to consciously pursue the remedy ad law relating to limitation before the Tribunal is given go bye by the appellant. - present case is not a case which justifies to keep the appeal pending with an application for condonation of appeal with no good reason - Condonation denied.
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2015 (1) TMI 1194
Waiver of pre deposit - Non consideration of certain amount already paid - Held that:- If certain amount already paid was not taken into account throughout the proceedings till the matter reached the Tribunal, there is no harm in taking such amount into consideration for determining whether the appellants have made the pre-deposit as per the order or not. However we do appreciate the concern expressed by the learned AR that this submission unless verified by the Revenue with the cooperation of the assessee should not be accepted. Accordingly we direct the appellant to produce the paper book produced before us today giving details of payments made, P&L Account, Reconciliation of Account, copies of S.T.-3 Returns and ledger of payments and proof of payments etc. to the jurisdictional Commissioner who shall cause verification of the same and after getting the same verified examine whether the claim of the appellant that they had deposited ₹ 3.25 crores and that has not been taken into account while confirming the demand is correct or not. A copy of the verification report should be submitted to the Tribunal on or before 4-2-2015 and a copy of the report may be given to the appellant also. It is made clear if it emerges after verification that the appellant's claim of making the payment is not correct, the appellants have to make deposit of the balance amount and report compliance - Appeal disposed of.
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2015 (1) TMI 1193
Denial of input service credit - Availment of service beyond place of removal - Held that:- CHA services have been availed by the appellant in the course of export of goods and in the case of the export goods, the place of removal is the port from where the goods have been exported. Therefore, we hold that the CHA service has been availed by the appellant till the place of removal. Further, we find that in the case of Commissioner of C. Ex., Nagpur v. Ultratech Cement Ltd., reported in [2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein the Hon’ble High Court of Bombay has held that being a manufacturer of excisable goods if the assessee availed any services, the assessee is entitled to take input service credit in the course of their business activity. As it is not in dispute that appellant being a manufacturer has availed all the services in the course of their business. Therefore, we hold that appellants are entitled for input service credit on all the services discussed hereinabove. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (1) TMI 1192
Delay in filing of appeal - Bar of limitation - Power of Commissioner to condone delay - Denial of refund claim - Held that:- On a true and fair construction of the amended provision , it is clear that an appeal is required to be presented within two months from the date of receipt of the decision or order of such adjudicating authority, which is made on or after the Finance Bill, 2012, receives the assent of the President. Since the assent of the President was granted on 28-5-2012, the amended provision would not apply to the adjudication order passed by the Assistant Commissioner on 21-5-2012. The date of dispatch of the adjudication order on 13-6-2012, is a wholly irrelevant factor. - Since the adjudication order against which the appeal was preferred to the Appellate Commissioner was passed on 21-5-2012, (prior to the date the relevant provision of the Finance Bill, 2012 had received the assent of the President i.e., on 28-5-2012) the amended provision prescribing a new period of limitation and the proviso to sub-section (3A), which authorizes the Assistant Commissioner to condone the delay if the appeal is presented within further period of one month (beyond the normal period of limitation of two months) would not be applicable. The unamended limitation period as specified in Section 85(3) is the applicable provision. Conclusion recorded by the ld. Commissioner (Appeals) that the appellant herein had presented the appeal beyond the further period of limitation and outside powers of the appellate Commissioner to condone, qua the amended Section (3A) of Section 85, is a fallacious conclusion based on an imperfect analysis of the relevant provision, is unsustainable and is accordingly quashed. The matter is remanded to the ld. Appellate Commissioner for consideration of the COD application on its merits - Decided in favour of assessee.
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2015 (1) TMI 1191
Business auxiliary service - appellant is undertaking the assigned job on behalf of their clients through contractors - Held that:- Admitted facts of the case are that the appellant had undertaken the job of laying of paver blocks at JNPT. In the impugned order in para 35, the adjudicating authority also held that prima facie there is force in the claim of the appellant as they claim to be carrying out the work of constructing the structure at port by using paver block only and that they are only laying paver blocks at roads, commercial premises etc. hence the service is classifiable under commercial or industrial construction. As per the provisions of the above Section, we find that the activity undertaken by the appellant, i.e. laying of paver blocks, more appropriately comes under the scope of ‘commercial or industrial construction service’ and the industrial construction service does not include any service provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. As commercial and construction activity is undertaken by the appellant at the port, therefore we find merit in the contention of the appellant that the activity undertaken by the appellant does not fall under the business auxiliary service. The impugned order is set aside - Decided in favour of assessee.
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2015 (1) TMI 1190
Photography service - Power of Appellate Commissioner to remand the matter - Held that:- The position regarding availability of the power to remand to the Appellate Commissioner under provisions of the Finance Act, 1994 was directly considered by the Gujarat High Court in CST v. Associated Hotels Ltd. - [2014 (4) TMI 406 - GUJARAT HIGH COURT]. The High Court having considered several authorities including the judgment of the Supreme Court in MIL India Ltd., provisions of Section 35A(3) of the Central Excise Act, 1944 and provisions of Section 85(4) of the Finance Act, 1994, concluded that the power of remand continues to inhere in the Commissioner (Appeals), in an appeal preferred under provisions of 1994 Act. - Appellate Commissioner has the power to remand the matter to the primary authority having regard to the amplitude of the appellate jurisdiction conferred on him under Section 85(4) of the Finance Act, 1994 the contention by Revenue to the contrary does not commend acceptance by this Tribunal. The appeal is without merits - Decided against Revenue.
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2015 (1) TMI 1184
Demand of interest and penalty on reversal of CENVAT Credit - payment of service tax on Manpower Recruitment Agency Service and taking cenvat credit of the same - Held that:- In this case the respondent has paid the service tax and taken suo motu credit. Although the respondent has committed an error, which was rectified immediately on pointing out by the department, therefore, it cannot be said that the respondent was having any malafide intention to avail inadmissible credit. Moreover, during the argument, the ld. AR submits that the amount of service tax paid by the respondent has already been refunded. This also supports the fact that there was no intention of the respondent to take inadmissible credit. In these circumstances, the Commissioner (Appeals) has rightly dropped the penalty against the respondent. Therefore, I do not find any infirmity in the impugned order, same is upheld - Decided against Revenue.
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Central Excise
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2015 (1) TMI 1188
Default in payment of duty - Wrongful availment of CENVAT credit despite restriction under Rule 8(3)(A) - Imposition of penalty - Held that:- counsel relies upon the decision of the Hon’ble High Court of Gujarat in Special Civil Application No.3344 of 2014 to submit that Rule 8(3)(A) relating to non-utilisation of CENVAT credit has been quashed and therefore there cannot be any demand. He also relies upon the decision of this Tribunal in the case of Allianz Steel Ltd. Vs. CCE, Indore [2013 (3) TMI 404 - CESTAT NEW DELHI] wherein unconditional waiver of predeposit and stay against recovery was granted. Since the decision of the Hon’ble High Court of Gujarat [2014 (12) TMI 585 - GUJARAT HIGH COURT] and the decision in the case of Allianz Steel Ltd. were not available to the original adjudicating authority, I consider it appropriate that the matter should be remanded for fresh consideration at this stage itself. Accordingly, the impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh consideration in accordance with law after giving reasonable opportunity to the appellant to present their case. - Appeal disposed of.
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2015 (1) TMI 1187
Method of Valuation - Glues and adhesives - MRP based valuation or transaction value - held that:- Both lower authorities have confirmed the demands raised on the appellant on the ground that they have wrongly adopted MRP based assessment under the provisions of Section 4A of Central Excise Act, 1944. It is noted from the records that the products “Glues and adhesives” were falling under Chapter 35 of the Central Excise Tariff Act, 1985; but the packing of the products manufactured by the appellant were indicating that they were supplied to industrial consumers and hence they were not covered by the provisions of Standards of Weight and Measurement Act, 1976 - As against such factual finding, the appellant in the grounds of appeal have not controverted the fact that they were selling the goods to industrial consumers, and also whether they have affixed MRP or not. In the absence of any evidence, we find that the first appellate authority has correctly upheld the demands raised and confirmed against the appellant. - Decided against assessee.
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2015 (1) TMI 1186
CENVAT Credit - input services - Credit taken on the strength of debit notes - Imposition of equivalent penalty - Held that:- Appellants have availed input service tax credit based on the debit notes for the input services received on professional fees, and internet tele- communication service amounting to ₹ 83,722/-. The appellants relied upon the decisions of the Tribunal in the cases of Jalaram Plastic Work (2012 (4) TMI 130 - CESTAT, AHMEDABAD ) and Grasim Industries Ltd. (2011 (7) TMI 944 - CESTAT, NEW DELHI) wherein the Tribunal dismissed the Revenue's appeal and held that credit cannot be denied purely on the basis of debit notes. The decision of the Tribunal in the case of Friends & Friends Shipping Pvt. Ltd. (2013 (11) TMI 768 - CESTAT AHMEDABAD), as relied upon by the learned AR, is not applicable to the present case as in that case the issue related to eligibility of service tax paid by the CHA on behalf of the appellant for the service rendered by Kandla Port Trust and Kandla Dock Labour Board where the CHA issued the debit note. In the present case, the appellant availed the credit on the service tax paid on professional fee and internet telecommunication service. In view of the Tribunal's decision, as relied upon by the learned counsel, the appellants have made out a prima facie case for waiver of predeposit of entire dues. Accordingly, I grant waiver of predeposit of entire dues and stay its recovery during the pendency of the appeal - Stay granted.
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2015 (1) TMI 1185
CENVAT Credit on "Steatite Ceramic" falling under CTH 6804 availed as 100% as inputs instead of 50% as capital goods during the first year - Held that:- Although the appellant is not in dispute as these are not capital goods and they are entitled to take CENVAT Credit to the tune of 50% of duty paid in the first year as per Rule 4(b) of Cenvat Credit Rules, 2004. Therefore, for the first year availement of CENVAT Credit is restricted to 50% of the duty paid but the appellant is entitled to take the remaining 50% CENVAT Credit in the subsequent year. In the circumstance, at the most, interest for the intervening period was required to be demanded from the appellant. The adjudicating authority has directed the appellant to reverse the excess 50% of CENVAT Credit for the first year along with the interest and also imposed penalty which were not required. In these circumstances, I dispose of the appeal of the appellant by confirming the demand of interest for the intervening period and setting aside the demand of duty and penalty against the appellant. - Decided partly in favour of assessee.
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2015 (1) TMI 1183
Whether Rule 6 of the Cenvat Credit Rules, 2004 would apply in respect of bagasse and press-mud generated during the course of manufacture of sugar and the assessee-manufacturer is required to reverse Cenvat credit on the inputs contained in the waste product generated or in the absence of maintenance of separate records, whether payment @ 5%/6% of the value of exempted goods needs to be done? - Held that:- Tribunal considered the very same matter in the case of Commissioner of Central Excise, Pune-II v. DY Patil SSK Ltd. & Ors. - [2014 (4) TMI 52 - CESTAT MUMBAI] and held that the waste products arising in the course of manufacture of sugar such as bagasse and compost fertilizer, cannot be considered as final products, and, therefore, payment of a sum equal to 10%/5% of the price of the goods is not required to be made in terms of Rule 6(3) of the Cenvat Credit Rules, 2004. The said decision was based on the decision of the Hon’ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. v. Union of India - [2013 (1) TMI 525 - ALLAHABAD HIGH COURT]; and of this Tribunal in the case of Indian Potash Ltd. v. Commissioner of Central Excise, Allahabad - [2012 (12) TMI 347 - CESTAT, NEW DELHI]. Ratio of these decisions applies squarely to the facts of the present case. Accordingly, we set aside the impugned order confirming the payment of a sum of ₹ 2,01,087/- under Rule 6 of the Cenvat Credit Rules, 2004 and allow the appeal with consequential relief, if any, in accordance with law.- Decided in favour of assessee.
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2015 (1) TMI 1182
Waiver of Cenvat credit - penalty imposed under Rule 57U(6) - Held that:- Period involved in the present case is from August, 1995 to February, 1997. Undisputedly, during the relevant period, in accordance with sub-rule (5) of Rule 57R and/or sub-rule (8) of Rule 57R, the assessee, who avails Modvat credit on capital goods and claim the value of such capital goods as revenue expenditure, then, they were barred from availing the benefits of Modvat credit on the capital goods. I also find that this position has been changed retrospectively by virtue of Section 149 of the Finance Act, 2003. In view of the above retrospective amendment, I do not find any merit in the impugned order and accordingly, the same is set aside - Decided in favour of assessee.
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2015 (1) TMI 1181
Interest on the delayed payment of refund - Held that:- In the case of ITC - [2004 (12) TMI 90 - SUPREME COURT OF INDIA], the Hon’ble Apex Court held that the amount deposited while considering the stay application as duty and if that is required to be refunded the same should be refunded within three months from the date of application of refund. C.B.E. & C. vide Circular No. 387/5/2001-JC, dated 25-10-2004 held that the application for refund of pre-deposit has to be decided within three months from the date of disposal of the appeal, if not, the interest is payable. Following the above decisions, the learned Commissioner (Appeals) granted interest on the delayed refund. I do agree with the observations made by the learned Commissioner (Appeals) in the impugned order. Therefore, I do not find any infirmity with the impugned order and the same is upheld. - Decided against Revenue.
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2015 (1) TMI 1180
Condonation of delay - Inordinate delay of 739 days - Imposition of penalty - Held that:- On 3-9-2013, the COD application was taken up for consideration and an order was passed observing that there was a dispute as to the date of receipt of the appeal in the Tribunal's Registry. The appeal in fact was physically filed on 6-2-2013, with a delay of 739 days. The Tribunal observed that in the COD application, the petitioner asserted that there was no delay as the appeal was sent to the Tribunal through a Courier service - M/s Time Pak Courier on 21-1-2011 and as per the Courier service receipt, the appeal was received by the Tribunal on 22-1-2011 along with a Demand Draft towards the appeal fee. In its order dated 3-9-2013, Tribunal directed the Registry to verify and report regarding the petitioner's claim of filing the appeal through Courier and whether the appellant had sent an e-mail enquiring about the filing of appeal, on 19-3-2012. Registry has furnished a report signed by the Registrar on 3-9-2013. As per this report, no appeal was received either by Courier, by post or by hand, earlier to 6-2-2013. The report also states that signature on the Courier receipt does not tally with the signatures of any officer of the Registry. The report also states that the e-mail sent by the petitioner on 19-3-2012 was received by the Registry along with the copy of the Courier receipt, on 19-3-2012. However no Demand Draft was received and there is no entry of receipt of a Demand Draft in the Demand draft register. Choice of the Courier is of petitioner/appellant and therefore the Courier service provider is an agent of the appellant. In the light of the report of the Registrar dated 30-9-2012, it is apparent that the appeal was not filed/received in the Tribunal prior to 6-2-2013, a date on which the appeal was physically filed by the petitioner. In the circumstances, the extraordinary delay of 739 days cannot be condoned as there is no valid justification established for such inordinate delay. - Condonation denied.
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2015 (1) TMI 1179
Denial of CENVAT Credit - Disallowance of depreciation - Denial of claimed double benefit of CENVAT Credit as well as depreciation - Held that:- Commissioner (Appeals), relying on the order of the Income-tax Department issued under Section 154 of the Income-tax Act, 1961 which revised the Income-tax returns of the respondent on the ground that they have not claimed double benefit of Cenvat credit as well as depreciation, therefore, the respondents are entitled for Cenvat credit, and rejected the appeal of the Revenue. I also find that the Revenue has not given any reason as to why this order is not correct. Merely saying the impugned order is not correct is not a ground for filing appeal before this Tribunal. In view of the above, I do not find any infirmity in the impugned order and the same is upheld - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (1) TMI 1189
Entitlement for exemption for 5 years u/s 4A(1) of the U.P. Trade Tax Act, 1948 – Exemption from the date of registration of the sale deed - Whether the Tribunal was wrong in ignoring the date of ownership accruing from the date of entry into possession with effect from 20.10.1986 i.e. the date of registration of the agreement to sale and when the petitioner came into possession of the property in question for the purposes of determining the ownership as being the first date for grant of exemption - Held that:- The word owned has been interpreted in Mysore Mineral Ltd. Vs. Commissioner of Income Tax [1999 (9) TMI 1 - SUPREME Court] wherein it has been held that the term "owned" as occurring in section 32(1) of the Income-tax Act, 1961, must be assigned a wider meaning - anyone in possession of property in his own title exercising such dominion over the property as would enable others being excluded there from and having the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner of the buildings though a formal deed of title may not have been executed and registered as contemplated by the Transfer of Property Act, the Registration Act, etc. - the revisionist which is a private limited Company engaged in the manufacture and sale of Diesel, Engines, Generating Sets, Alternators etc. had purchased the land and building for establishing a new unit through registered agreement to sale - Vacant possession of the land and building had been given to the revisionist on 20.10.1986 on the basis of the agreement of sale dated 20.10.1986 - the revisionist under the registered agreement to sale had entered into possession of the land and building and the agreement to sale was registered on 20.10.1986, thus, the revisionist would be entitled for the grant of exemption from 20.10.1986 to 22.12.1991 – Decided in favour of revisionist assessee.
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Indian Laws
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2015 (1) TMI 1169
Failure to discharge liability - Non payment of goods delivered - Goods delivered with Consignee Copies - According to the respondent, all the relevant documents including the CONSIGNEE COPIES of the consignment notes were duly communicated by the respondent through its banker to the Islami Bank Bangladesh Ltd. It is specifically averred in the complaint that the said transaction was originally covered by letter of credit opened by the said Islami Bank but the said letter of credit had expired. Therefore, the documents mentioned above were sent to the said banker on collection basis. - Islami Bank Bangladesh, though received all the documents sent by the respondent, did not honour the same and made no payment for a long time - Upon the return of the original documents by the Islami Bank, the respondent herein, by its letter, dated 12th July, 1993, called upon the appellant to “rebook all the five consignments : for transportation to New Delhi and deliver the same to the complainant at New Delhi”. (Para 10 of the Complaint)) In response to the said letter, the appellant herein, by its letter, dated 22nd July, 1993, assured the respondent that all the five consignments would be rebooked for delivery at New Delhi. The appellant further called upon the respondent “to surrender the original consignee copies alongwith the invoice copies and pay one side freight and octroi at its Ahmedabad office for rebooking”. - National Commission held in favour of Respondent. Held that:- The appellant did not plead as to what is the procedure prescribed under the law of Bangladesh for the unloading of the imported goods at its Customs Stations? Nor does the appellant give the details of the dates of the actual delivery of each of the 4 consignments at Bengapole - However, the appellant placed heavy reliance on a letter, dated 11-4-2002 allegedly written by some officer of the Customs Department of the Republic of Bangladesh at Beanpole addressed to the Joint Commissioner, Customs Department, Benapole - Jessore (Bangladesh). It refers to four bills of entry, dated 9-1-1993, 13-12-1992, 20-12-1992 and 11-2-1993. It is rather difficult to understand the content of this document, apart from the other problems with the document which shall be discussed later. It speaks about three bills of entry having had been “accepted” through three different shipping agents of M/s. Azim Garments Ltd., Dhaka. Of the 4th bill of entry having not being accepted, the goods were auctioned. It is difficult to understand what exactly is meant by ‘accepting a bill of entry’. At least, insofar as the Indian law is concerned, a bill of entry is a document, under Section 46 of the Customs Act, which is required to be presented by the importer. Section 47 stipulates that on receipt of a bill of entry, the proper officer, on being satisfied about the legality of the import and the factum of payment of the appropriate duty on the import of such goods, is required to clear the goods. Assuming that the law of Bangladesh is similar to the law of Customs in India, it is therefore, difficult to understand the content of the said letter. It speaks about acceptance of three bills of entry on different dates by three different shipping agents of M/s. Azim Garments Ltd. No explanation in the pleading as to what exactly is the implication of the statement extracted above is available. The document purports to be the internal correspondence between the two officers of the Customs department of Bangladesh, no doubt purportedly with a copy marked to the appellant herein. There is no pleading explaining the occasion for such a correspondence. The proof of public documents is required to be made in the manner specified under Section 78 of the Evidence Act. Sub-section (6) stipulates the mode of proof of public documents other than those mentioned in sub-section (4) of a foreign country. - defence of the appellant based on the letter, dated 10-4-2002 (supra) that the appellant had delivered four consignments entrusted to it by the respondent at the Benapole Customs Station, Bangladesh cannot be accepted. The subject of drawback is dealt under Chapter X of the Customs Act 1962. The expression ‘drawback’ is not defined under the Act. Sections 74 and 75 create a right to claim a ‘drawback’. Section 74 entitles an exporter to claim the repayment/return (drawback) of 98% of any duty paid on material imported into India when again exported out of India subject to the various conditions specified under the Section and the Rules made thereunder. - it is not clear from the pleadings of the appellant whether the respondent herein claimed a drawback either under Section 74 or under Section 75. Be that as it may. In either case, the right to a drawback accrues to the exporter once the exporter makes an entry for export of the goods under Section 50 of the Act and on the making of an order by the proper officer under Section 51 permitting clearance and loading of the goods. Rules are made by the Government of India from time to time in this regard. The Rules currently in vogue are known as the “Customs, Central Excise, Duty and Service Tax Drawback Rules, 1995”, which are made in exercise of the rule making authority conferred under the various enactments including the Customs Act. However, these rules are subsequent to the export transaction in question. Neither the relevant rules governing the situation on the date when the respondent claimed the drawback are placed before us nor is there any clear pleading by either party as to the relevant date on which such a claim for drawback could be made. We are not sure whether under the rules applicable to the transaction in question, whether it is the date of the actual delivery of the goods in the foreign country which entitles the exporter to file an application claiming drawback or is it the date of the entry of the goods for export from India. In the absence of any material on record such as the one indicated above, the mere fact that the respondent did claim (the respondent admitted that they did claim a duty drawback as alleged by the appellant) a duty drawback does not necessarily lead to the inference that the appellant had duly delivered the goods in question at Benapole Customs station. Under the 1995 Drawback Rules, which are in force today, Rule 13 stipulates that the claim for a drawback can be filed on the date when the proper officer makes an order permitting clearance and loading of the goods under Section 51 of the Act. We refer to Rule 13 not because it is applicable to the facts of the case, but only to demonstrate that the law clearly provides for the date and event, the happening of which, entitles the exporter for seeking the drawback. - In view of the fact that the appellant admitted the entrustment of goods by the respondent to the appellant for transportation to Benapole (Bangladesh), the burden to prove that the appellant satisfactorily discharged his legal obligation to deliver the goods at Benapole (Bangladesh) in accordance with law is on the appellant which burden the appellant failed to discharge. In our opinion, therefore, the National Commission rightly allowed the claim of the respondent. - Decided against appellant.
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2015 (1) TMI 1164
Claim of refund of additional amount charged by DDA - Additional Floor Area Ratio (FAR) charges for institutional plots - clarificatory Notification dated 17.07.2012, whereby para 6(g) of the earlier Notifications dated 10.10.2008 and 23.12.2008 was modified to the extent that educational societies/healthcare and social welfare societies having income tax exemption were exempted from levy of additional FAR charges - Held that:- Admittedly, the petitioner is registered as a Trust and enjoying a tax exemption under Section 80-G of the Income Tax Act, 1961. Therefore, applying the doctrine of parity, the petitioner herein being similarly situated of the petitioners whose cases have been allowed by this Court, the petitioner is also entitled for the same relief. At the cost of repetition, it is again opined that the subsequent Notification dated 17.07.2012, which is clarificatory in nature, has retrospective effect in its operation.Accordingly, the respondent No.2/SDMC is directed to refund a sum of ₹ 13,17,32,564/- to the petitioner within a period of two months from today, failing which the petitioner shall be entitled for the interest at the rate of 9% per annum on delayed payment. Decided in favour of assessee.
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