Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 25, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Highlights / Catch Notes
Income Tax
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Depreciation - transaction is a fraudulent transaction by noticing the conduct of the asessee in the manner in which the lease transactions were finalised, much prior to the sanction of the loan by IREDA - HC
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Reassessment - AO cannot open the accounts which have been drawn in accordance with the Companies Act, 1956, certified by the chartered accountant, accepted by the general body of the company, and placed before the Registrar to which he has not taken any objection - HC
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Applicability of section 240 - Refund on appeal Block assessment - the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. - SC
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Transfer of ongoing business - assessee is entitled for deduction u/s. 80IA(4)(iii) for the unexpired period during which the transferor enterprise would have been entitled for deduction if the transfer had not taken place - AT
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Assessee is eligible for deduction u/s 80IB(10) in relation to additional income offered in a statement u/s 132(4) in the course of search and subsequently declared in the return filed u/s 153A(1)(a) - AT
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Rejection of books of accounts - Without pinpointing any defect much less any material defect in the books of account of the assessee regularly maintained, provision of Section 145(3) cannot be invoked - AT
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Deduction u/s 10A or 10B - Profits on one unit cannot be set off from the loss of another firm in the process of computation of deduction under section 10A of the Act - AT
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Unexplained unsecured loan - By furnishing confirmation with Pan, primary onus is discharged by the appellant - Onus thereafter shifts to the Assessing Officer to make further investigation and prove the credit non-genuine - AT
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In case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period till maturity is allowable as revenue expenditure - AT
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The contention of the assessee that the UPS is an energy saving device, therefore, depreciation @ 80% should be granted cannot be accepted - AT
Customs
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Extension of stay beyond 180 days or 365 days - Pendency of the appeals are not on account of any conduct of the appellants but on account of pendency of a large number of older appeals and a critical supply/demand mismatch in the Tribunal - stay extended - AT
Service Tax
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Maintainability of Revenue appeal - the decision of Committee of Commissioners or Chief Commissioners as the case may, be is a sine qua non for a legitimate appeal to be preferred - AT
Central Excise
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100% EOU - Demand of SAD on account of clearance to other units located in DTA by way of stock transfer - the appellant is entitled to the benefit of exemption from levy of SAD - AT
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Valuation of goods - Sale through depot - The expressions of such goods and such other place are significant such goods refers to goods of the same kind and quality and such other place means the place from which the goods would be ultimately sold on removal from the factory. - AT
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100% EOU - Clearance of non-duty paid goods to DTA - The documents prepared by the appellants were found to be fake lead to clandestine removal - demand and penalty confirmed invoking extended period of limitation - AT
VAT
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Condonation of delay - here is a case which shows a complete careless and reckless long delay on the part of applicant, which has remained virtually unexplained at all - Condonation denied. - HC
Case Laws:
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Income Tax
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2014 (2) TMI 951
Depreciation - Legality of lease agreements Genuineness of the transaction - Entitlement for depreciation Assets put to use or not - Whether the lease agreements entered by the assessee with the six concerns are sham transactions and whether they are entitled for a claim for depreciation and whether the assets purchased by the assessee before 31.03.2001 were put to use Held that:- The transaction is a fraudulent transaction by noticing the conduct of the asessee in the manner in which the lease transactions were finalised, much prior to the sanction of the loan by IREDA. Further, the certification of the lanterns were in the godown of PHOTON and not in the place where it was installed or in the premises of the so called lessees to whom it was stated to have been despatched. assessee is not entitled to the claim for depreciation. - decided against Assessee. Claim of advance in the income - Whether the amount received by the assessee from DLWL claimed by the assessee as advance, is income of the assessee for the relevant assessment year Held that:- The advances shown by the assesssee are nothing but payment received on account of the completion of work executed by the assessee and the Assessing Officer made the addition - The Tribunal after carefully analysing the entire facts and referring to the MOU and the FIR rightly held that payments received by the assessee and shown as outstanding in the accounts are to be treated as income and assessed to tax Decided against Assessee.
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2014 (2) TMI 950
Re-opening of assessment of income u/s 148 of the Act Held that:- The reassessment proceedings initiated by the revenue are nor sustainable - The Assessing Officer has to apply his mind to any information in form of the valuation report and must form a belief thereon that there is escapement of income - The opinion of the DVO is per se not an information for the purpose of reopening of an assessment - The Assessing Officer has to apply his mind to the report of the DVO and only if on application of mind, if he forms a belief that there is escapement of income, he can seek to reopen the assessment under section 147 of the Act. Relying upon Assistant Commissioner of Income-tax Versus. Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India] - For the report of the Valuation Officer to become a basis for the reopening, the Assessing Officer should have applied his mind to the report of the Valuation Officer - The Assessing officer has clearly not applied his mind to the report of the Valuation Officer - Perusal of the Balance Sheet of the Assessee for the year ending 31.03.2005 shows that the Assessee has shown an amount as an expenditure of capital nature on the Bayadgi Unit towards the School building - The Assessing Officer has taken the amount shown as nil - For the year ending 31.03.2006 the Assessee has shown an investment as expenditure of capital nature on the Bayadgi unit and the value of the school building as on 31.03.2006 thus, the assessing officer has merely intended to revisit the concluded assessment and it is a clear case of change of opinion which is not permissible in law Decided in favour of Assessee.
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2014 (2) TMI 949
Legality of Notice u/s 147/148 of the Act Notice u/s 143(2) of the Act Reopening of assessment - Held that:- The assessee was asked details about the same "fictitious entities" in respect of which amounts were reflected in the returns and documents disclosed at the time of the assessment - there was no "tangible" material apart from what existed at the finalization of the original assessment, undermining the exercise of reassessment notice - The information received from the bank which forms the information on which the Assessing Officer forms his belief under Section 147, does not and cannot relate to the year 1990-91 - The decision in Phool Chand Bajrang Lal And Another Versus Income-Tax Officer And Another [1993 (7) TMI 1 - SUPREME Court] relied upon - there is no material or information on record that relates to income in 1990-91 that may justify the reopening of assessment for the year 1990-91 there is no reason to believe that income has escaped assessment for the year 1990-91 thus, the reassessment notice served to the assessee in respect of the year 1990-91 by the Revenue is liable to be quashed. Claim of depreciation of re-valued assets Held that:- The decision in Apollo Tyres Ltd. v. CIT [2002 (5) TMI 5 - SUPREME Court] followed - the Assessing Officer cannot open the accounts which have been drawn in accordance with the Companies Act, 1956, certified by the chartered accountant, accepted by the general body of the company, and placed before the Registrar to which he has not taken any objection Thus, the notice under Section 147/148 and all further proceedings set aside - Decided in favour of Assessee.
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2014 (2) TMI 948
Applicability of section 240 - Refund on appeal Block assessment - Whether the HC was correct in holding that Section 240 of the Act is not applicable to Chapter XIV B of the Act and the taxes paid pursuant to the return filed in the block assessment is liable to be refunded to the block assessment proceedings, especially in view of Section 158BH of the Act Held that:- The decision in Commissioner of Income-Tax Versus Shelly Products And Another [2003 (5) TMI 4 - SUPREME Court] followed - the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. - Decided in favour of revenue.
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2014 (2) TMI 947
Estimation of income in liquor business Estimation of income on cost of goods sold @5% - Held that:- The assessee had already admitted sales and treated the balance sum as undisclosed sales and after reducing the unaccounted investment from it, brought to tax the difference - The decision in Income tax Officer-Ward-2, Hyderabad Versus Amaravathi Wine Shop, Hyderabad [2012 (8) TMI 706 - ITAT, HYDERABAD] followed - CIT(A) directed AO to estimate net profit at 5% of the purchases or stock put to sale during the year, subject to net profit being not less than returned profit - there is no reason to interfere in the findings of CIT(A) as he followed Coordinate Bench decision Decided against Revenue. Additions made on rejecting books of account - Taxability u/s 69 and 69C of the Act Examination of payments on behalf of license fee Held that:- The issue of payment of license fee and sources require fresh examination by A.O -assessee is in the same business of running wine shop - the statements did not indicate the business from 1.4.2008 to June, 2008 - The opening stock as on 31.03.2008 was shown as NIL - the purchases from 1.4.2008 to 30.04.2008 and corresponding sales are required to be examined on the basis of books/bank statements also, outstanding license fee (rather prepaid fee) of earlier year, if assessee was in business as contended, reconciliation with payments this year and claims in next year also require verification thus, the matter remitted back to the AO for fresh adjudication Decided partly in favour of Assessee.
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2014 (2) TMI 946
Eligibility for deduction u/s. 80IA - Transfer of ongoing business - Treatment of income derived Held that:- M/s. Meenakshi Infrastructure Pvt. Ltd., was duly approved by the Ministry of Commerce, Govt. of India as an industrial park in terms of Industrial Park Scheme, 2002 notified by the Department of Industrial Policy & Promotion, Ministry of Commerce and that assessee is entitled for deduction u/s. 80IA(4)(iii) of the Income-tax Act, 1961 - M/s. Meenakshi Infrastructure Pvt. Ltd., has transferred the operation and maintenance of industrial park the transfer was duly noted by the Department of Industrial Policy & Promotion and intimated to both transferor and transferee vide Ministry's letters dated 9th August, 2006 and 3rd August, 2007 thus, the assessee is entitled for deduction u/s. 80IA(4)(iii) of the Act for the unexpired period during which the transferor enterprise would have been entitled for deduction if the transfer had not taken place but, M/s. Meenakshi Infrastructure Pvt. Ltd., cannot claim deduction u/s. 80IA(4) on the same income - There cannot be overlapping claim by each other. The AO straightaway disallowed the claim of deduction u/s. 80IA(4) and not gone into the quantification of deduction, such as whether computation is proper or not thus, the matter remitted back to the AO for fresh adjudication of computation aspect of deduction u/s 80IA(4) of the Act Decided partly in favour of Revenue.
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2014 (2) TMI 945
Allowability of Expenditure Repairs and maintenance Held that:- The assessee has incurred the expenditures for not creating any new asset and /or carried out total new premises - The expenditures has been incurred to, only for renovation and to carry out the repairs and replacement of existing door frames, electricity wiring etc- the expenditure has been incurred to put new wooden panel, plastering walls, ceiling and to replace electrical wire - the expenditures cannot be said to be an for renovation of the building -out of the total expenditure of Rs.17,24,609/- the expenditure of Rs. 15,96,849/- is the revenue in nature, the expenditure incurred towards current repairs for renovation and the repairs of the premises in connection with the business of the assessee and the same is to be allowed as revenue expenditure Decided against Revenue. Disallowance u/s 14A of the Act Held that:- The AO before invoking the provisions of Rule 8D read with section 14A sub-section (2)(iii) has to give a finding that he is not satisfied with the correctness of the claim of the assessee with regard to such expenditure - the assessee has not on its own made any disallowance on account of investment made and earning of the dividend income - the AO in the assessment order has referred the provision of section 14A (2) of the Act as well as CBDT notification dated 24.3.2008 for applying Rule 8D and to make disallowance under Rule 8D(2)(iii) of the Rules there is no infirmity in the order of ld. CIT(A) and accordingly the disallowance made u/s 14A of the Act sustained Decided against Assessee. Rebate u/s 88E of the Act Held that:- Assessee submitted that nowhere it has been mentioned that how the expenses are incurred under indirect expenses and has been considered for making the adjustment while making rebate u/s 88E of the Act revenue could not controvert the contention of the assessee as both the parties agreed that the matter be restored to AO to recalculate the rebate to be allowed to the assessee u/s 88E of the Act thus, the matter remitted back to the AO for recalculation Decided in favour of Assessee.
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2014 (2) TMI 944
Nature of Income Whether the income falls under any of the heads of income as described u/s 14 of the I.T. Act Held that:- The income is nothing but unaccounted money received by the assessee from customers on account of sale of flats of its housing project, 'The Crest' at Pimple Saudagar, Pune - the source of the additional income is the sale of flats in the housing project, 'The Crest thus, once the source of income is established the assessability has to follow - The nature of income has to be treated as 'business income' , the same was not accounted for in the account books. Deduction u/s 80IB(10) of the Act Search conducted u/s 132(1) of the Act Held that:- Having regard to the expression "all other provisions of this Act shall apply to the assessment made under this section" in Explanation (i) of section 153A of the Act, it clearly implies that in assessing or reassessing the 'total income' for the assessment years specified in section 153A(1)(b) of the Act, the import of section 80A(1) of the Act comes into play, and there shall be allowed the deductions specified in Chapter VIA of the Act, of course subject to fulfillment of the respective conditions - the phraseology of section 153A r.w. Explanation (i) does not support the premise arrived at by the CIT(A) thus, the assessee's claim for deduction u/s 80IB(10) of the Act even with regard to the enhanced income was well within the scope and ambit of an assessment u/s 153A(1)(b) of the Act and the Assessing Officer was obligated to consider the same as per law. Factually, there is no material to negate the assertion of the assessee, which are borne out of the material on record, that the additional income in question has been received in the course of carrying on its business activity of developing the housing project, 'The Crest' at Pimple Saudagar, Pune, which is eligible for section 80IB(10) benefits thus, Relying CIT vs. Sheth Developers (P) Ltd. [2012 (8) TMI 159 - BOMBAY HIGH COURT] the claim of the assessee is justified thus, assessee is eligible for deduction u/s 80IB(10) of the Act in relation to additional income offered in a statement u/s 132(4) of the Act in the course of search and subsequently declared in the return filed in response to notice u/s 153A(1)(a) of the Act Decided in favour of Assessee.
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2014 (2) TMI 943
Setting off of speculation loss Loss of earlier years to be set off against the profit of the same business Held that:- CIT(A) was of the view that there has not been any change in the nature of the transactions during the year under consideration as compared to the preceding year - The nature of transactions in shares and securitμes as carried out by the appellant company is admittedly speculative Relying upon CIT v. Soorajmall Baijnath Agencies (P) Ltd.[ 2004 (7) TMI 25 - CALCUTTA High Court ] - Section 73(2) prescribes that loss of the speculation business of a particular year can be carried forward to the subsequent previous year and be set off or be adjusted against the income of any speculation business of the said previous year The loss of AY 2006-07 was allowed to be carried forward to be set off of subsequent years' speculation business profit against this speculation loss - In AY 2007-08, there is no objection on the part of the revenue the revenue has treated this loss in AY 2006-07 as speculation loss arising out of the same business - the assessee is carrying on share trading activity in share business which is a speculation business in term of explanation to Section 73 of the Act thus, there was no infirmity in the order of CIT(A) Decided against Revenue. Rebate on account STT Calculation of MAT u/s 115JB of the Act Allowability of Rebate u/s 88E of the Act Held that:- The decision in CIT Vs. M/s. Winro Commercial India Ltd [2013 (10) TMI 1223 - CALCUTTA HIGH COURT] and CIT Vs. M/s. Todi Securities (P) Ltd. [2013 (10) TMI 1223 - CALCUTTA HIGH COURT] followed - when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid under Section 88E is given deduction, by way of rebate, under section 87 of the Act - This is the legislative intent - This is a promise to give deduction of the tax already paid - This is the mode in which tax already paid is handed back at the time of final computation the order of the CIT(A) upheld Decided against Revenue.
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2014 (2) TMI 942
Substitution of addition on account of suppression of sales Estimation of wastage not considered Held that:- The AO is not justified in rejecting the books of account by invoking Provisions of Section 145(3) of the Act the additions made by the AO are liable to be deleted - The objection of the DR that the CIT(A) has not relied upon the CGCRI Report, Calcutta , the AR has pointed out that the in the same report it has been mentioned that the said organization is not involved production practice and they are not sure to what extent their opinion will be useful for the purpose of the assessee thus, the report of CGCRI, Calcutta alone cannot be the basis for rejection of books of account and making an estimation of wastage - CIT(A) was not justified in ignoring other material which was placed before him thus the CIT(A) was not justified in sustaining the applicability of Section 145(3) of the Act Decided against Revenue. Application of Section 145(3) of the Act Held that:- The CIT (A) has applied the provision of section 145(3) only on the technical ground which cannot be the defect in the eyes of law - CIT (A) has not point out specific defects in the books of accounts and without pointed out any defects in the books of accounts the provision of 145(3) cannot be applied Relying upon Madnani Construction Corporation (P) Ltd. Vs. CIT [2006 (12) TMI 79 - GAUHATI HIGH COURT] - When the AO has neither expressed his dissatisfaction about the correctness or completeness of the accounts nor any error is pointed out in P&L a/c and Audited report, the powers of best judgment cannot be invoked - Without pinpointing any defect much less any material defect in the books of account of the assessee regularly maintained, provision of Section 145(3) of the Act cannot be invoked - The provision of Section 145(3) of the Act has been wrongly invoked thus, any addition made as a consequence of invoking of Section 145(3) has to go Decided in favour of Assessee. No specific defect much less any material defect has been pointed out by the AO in the books of account of the assessee duly maintained during the course of this regular business - The other issues regarding adoption of a particular gross profit rate is not tenable in the eyes of law thus, no trading addition can be made in the hands of the company on account of trading activities thus, the entire addition made by the AO deleted Decided in favour of Assessee.
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2014 (2) TMI 941
Confirmation of Penalty u/s 271(1)(c) of the Act Disallowance of Depreciation on leased assets Held that:- The decision in IndusInd Bank Limited Versus Addl. CIT, Range 2(3), Mumbai [2014 (2) TMI 594 - ITAT MUMBAI] followed - It is a legal claim made by the assessee and even the same claim was made in the earlier years - The CIT(A) gave a finding that the assessee neither concealed its income nor furnished inaccurate particulars of income and the claim is continuous one thus, the assessee is entitled for the claim of depreciation - this is neither the case of inaccurate particulars of income or concealment of income thus, the penalty is not exigible the order of the CIT(A) reversed Decided in favour of assessee.
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2014 (2) TMI 940
Allowability of Depreciation on ship Whether the ship was put to use for the purpose of business Held that:- The Ship M.V. Maanav Star was purchased and was delivered to the new owner on 24th August, 2004 and the vessel departed from Rue Wharf to Rye Anchorage and the vessel was grounded on port of U.K. on 11.09.2004 - The vessel was used from 24th October 2004 till 30th March, 2005 and assessee has received the freight and hire charges - The assessee has earned the income after returning from Moroni - The vessel came to Mumbai and was loaded cargo at Mumabi and sailed to port Mina Rashid, Dubai - Thereafter, vessel had gone to various places thus, the vessel has earned the total freight charges which is reflected in the profit and loss account thus, the assessee has used this vessel for carried out the business the CIT(A) is justified in his action Decided against Revenue. Deletion made on account of lease rent of luxury cruiser Accrual of rent and System of accounting Held that:- The assessee has accounted the rent only at 50% of the total lease rent the assessee has received the lease rent from March-April - The assessee has received lease rent from M/s. Advani Hotels & Resorts (I) Ltd. for period of 16th March 2005 to 15th April 2005 - The assessee has received the amount but as the assessee was following Mercantile System and the Assessment Year ending on March- Thus, assessee has shown the lease rent for A.Y. 2006-07 and remaining rent was shown in the subsequent year - CIT(A) verifying this accounts has deleted the addition there is no need to interfere in the findings of the CIT(A) Decided against Revenue.
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2014 (2) TMI 939
Addition made u/s 69 of the Act Unexplained investment Held that:- On the date of survey the stock found from the two business places i.e., at Nachinda Bazar and from Rasulpur Service Station and the item-wise details of stock found from the business premises during the course of survey - there is no stock found of HSD and lubricants at Nachinda Bazar and stock found in the business premises, at best can be added - The differences of closing stock as on 31st March, 2006 and stock found during the course of survey on 17-11-2005, the difference can be added to the returned income of the assessee - The value of petrol at Rasulpur Service Station i.e, closing stock and that of HSD (diesel) - the assessee has stock available as against stock found during the course of survey - the difference being at best can be treated as unexplained stock, which can be added to the returned income of the assessee - thus, the Assessing Officer is directed to restrict the addition at Rs.1,27,035 only Decided partly in favour of Assessee. Difference on the stock as on date of survey and the statement submitted Opportunity to adduce evidences Held that:- The assessee stated that on the two issues the Assessing Officer made addition and CIT(A) also confirmed the action of AO and no proper opportunity of being heard was provided to the assessee and assessee also fails to explain the source of this deposit - the assessee requested that fresh opportunity of being heard to be provided revenue has not objected to set aside the two issues to the file of AO thus, the matter remitted back to the AO for fresh adjudication Decided partly in favour of Assessee.
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2014 (2) TMI 938
Addition u/s 68 of the Act set aside Validity of Admission of additional evidences under Rule 46A of the Rules Held that:- The assessee has failed to submit the relevant documents before the AO though, he has submitted some details before the CIT(A) - As regards the contention of the assessee that the amount was received as share application money, it is a matter of factual verification - If the assessee has only received Rs. 12,00,000/- share application money during financial year 2006-07, AO can consider only the said amount u/s. 68 of the IT Act for A.Y. 2007-08 - Rest amount cannot be considered in the current year as share application money receipt under section 68 of the I.T. Act thus, the matter remitted back to AO for fresh adjudication.
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2014 (2) TMI 937
Validity of additions of Completed Assessement Sustainability of Assessment u/s 153A r/w 143(3) of the Act Held that:- The decision in Shri Govind Agarwal vs. ACIT [2014 (2) TMI 810 - ITAT MUMBAI] and Jai Steel (India) vs. ACIT [2013 (6) TMI 161 - RAJASTHAN HIGH COURT] followed - The first proviso to section 153A empowers the AO to issue notice u/s 153A of the Act in respect of the AYs prior to the assessment year in which the search took place - The relevance of the existence of incriminating material is not provided in the provisions - As per the revenue there should not be any difference qua the completed assessments and the abated assessments for all six AYs in so far as the powers of the AO is concerned and he is empowered to issue notice u/s 153A and make additions either based in the incriminating material or otherwise. The case deals with the case of disturbing the 'completed assessment' - Earlier the assessment was completed u/s 143(1) of the Act - In case of the concluded assessments, the additions are made only based on the incriminating material discovered during the search action the AO made additions by reassessing u/s 153A on the completed assessment u/s 143(1) of the Act thus, the issue of notice u/s 153A of the Act is valid - In the absence of incriminating material, the role of the AO is only to reiterate the returned income filed in response to the notice u/s 153A of the Act The arguments relating to the validity of the notice u/s 153 are disapproved - the validity of the notice issued u/s 153A of the Act confirmed the additions made by the AO in the absence of any incriminating material are not sustainable Decided in favour of Assessee. Addition u/s 68 of the Act - Unexplained gifts received Held that:- The decision in M/s. Govind Agarwal (HUF) vs. DCIT [2014 (1) TMI 1394 - ITAT MUMBAI] followed - there is no reference to any seized material or any incriminating documents so as to suggest that addition made in the assessment order are based on any incriminating material found at the time of search - Once that is so and also that the assessment for the assessment year has attained finality before the date of search, then no addition can be made under section 153A - the disallowance made u/s 68 is uncalled for as the same is beyond the scope of section 153A / 153C of the Act - No incriminating material in support of the additions made u/s 68 of the Act was brought to notice by the Revenue thus, the addition made u/s 68 of the Act is set aside Decided in favour of Assessee. Applicability of the provisions of section 14A of the Act Held that:- Revenue contended that the AO erroneously applied the Rule-8D for the assessment year in question which actually applicable from the assessment year 2008-2009 - Considering the factual matrix of the case as well as the prayer of the Counsel for remanding the matter remitted back to the AO for fresh adjudication Decided in favour of Revenue.
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2014 (2) TMI 936
Deduction u/s 10A or 10B - Held that:- From the order passed by the AO and learned CIT(A), it is observed that the arguments stated in the chart were not taken by the assessee before them - The issue has been restored for fresh adjudication. Pre-commencement expenses - Held that:- No material was brought to the attention of CIT(A) to show that whether Dehradun Unit is proposed to manufacture same item (as being manufactured in existing other units) or different product, business as integrated one has different sources of income - Assessee has not shown in any manner that the Dehradun Unit is being set up to expand production of an item already manufactured elsewhere - The CIT(A) has confirmed the action of the AO to treat the impugned expenses/ loss pertaining to pre-commencement period of new business facility - Decided against assessee. Set off of brought forward business loss - Held that:- Deduction u/s 10A has to be given effect to at the stage of computing the profits and gains of business and the computation should be anterior to the application of provisions of section 72 of the Act - Profits on one unit cannot be set off from the loss of another firm in the process of computation of deduction under section 10A of the Act - The issue has been restored for fresh adjudication in the light of aforementioned judgement. Deduction u/s 10B - Held that:- a deduction of such profits and gains as are derived by 100% Export Oriented undertaking from the export of articles or things or computer software for a period of 10 consecutive assessment years relevant to the previous year in which the undertaking begins manufacture or products articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee - The approval relates to the assessment year relevant to previous year in which undertaking begins manufacture or products articles or things - Decided against Revenue. Product registration charges - Held that:- The expenditure incurred by the assessee on registration of its products was in the Revenue nature - The products once registered are not sold only in that particular year but the sale can be made over a span of time until the renewal of registration is required - The benefit form the said registration of the product is not restricted to the relevant assessment year at the same time the expense is of revenue nature - Decided in favour of assessee.
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2014 (2) TMI 935
Disallowance out of interest expenditure - Held that:- Some business exigency was involved for the interest expenditure claimed - As observed by the A.O. certain manipulation by the assessee to reduce its taxable income cannot be ruled out - The disallowance at the rate of 25% made by the A.O. was excessive - To justify, the disallowance made out of interest expenditure has been restricted to the extent of 10% of the total interest expenditure claimed by the assessee - Partly allowed in favour of assessee. Electricity expenses of the offices - Held that:- The burden is on the assessee to establish that the expenses claimed were wholly and exclusively for the purpose of business - The facts of the case require verification - The issue has been restored for fresh adjudication. Disallownace u/s 43B - Held that:- The service tax in question was payable by the assessee for the financial year 2007-08 and as per the relevant Service Tax Rules, the same was payable after recovery from the receiver of the service - He submitted that such recovery was made by the assessee during the year under consideration and the service tax payable for financial year 2007-08 was duly paid on such recovery within the stipulated period - No such verification has been made either by the A.O. or by the ld. CIT(A), the matter should be restored to the file of the A.O. for such verification The issue has been restored for fresh adjudication. Expenditure incurred for protecting the ownership of hoardings Held that:- The displaying of hoardings being the business of the assessee, the expenditure incurred for right to display is thus business right of the assessee If the expenditure incurred for protection of business rights, is revenue in nature If the expenditure is incurred for acquisition of right to display will fall in the definition of capital expenditure Relying upon the decision in the case of Dalmia Jain & Co. [1971 (7) TMI 2 - SUPREME Court] - In deciding whether a particular expenditure is capital or revenue in nature, what the courts have to see is whether the expenditure in question was incurred to create any new asset or was incurred for maintaining the business of the company - If it is the former it is the capital expenditure; if it is the latter, it is the revenue expenditure - Distinction is to be made as to whether the expenditure is for creating, curing or completing the assessees title to capital or for protecting the business The issue has been restored to the file of A.O. to make a distinction as to which of the expenditure was incurred by the assessee for protection of its right to display over a prominent or particular site and which of the expenses were incurred for acquisition of right to display on such sites.
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2014 (2) TMI 934
Disallowance of loss - Held that:- The assessee failed to submit details and evidences of expenses incurred by it - Also the Auditor put a remark that during excise search accounting and stock records were seized and audit was done in the absence of these records and documents - No verification was made even by the auditor, therefore appellant cannot claim that accounts are audited - Loss has been claimed but in support of such claim, no evidence is furnished - The assessee has not taken any step to take the certified copies from the Central Excise Department of the records seized - No panchnama of the records seized is placed on record, therefore in the absence of the material evidence, the authorities below were justified in rejecting the claim of the assessee - Decided against assessee. Unaccounted production and unrecorded sale - Held that:- Relying upon the decision in Motorol Technologies Ltd.v s. ITO [2014 (2) TMI 253 - ITAT AHMEDABAD] - The assessee failed to furnish the sales bill along with other basic records for verification as called by the AO - The AO has made additions solely on the basis of the penalty order passed by the Commissioner of Central Excise, Vadodara-II penalty order F.No.V.Ch.27(15)9/0A/AC/Prev./03 dated 29/10/2004 - Director of the assessee-company has agreed that goods have been removed from the premises without making entries in Central Excise Records and without paying the duty involved. No material is placed on record by the Revenue that any independent enquiry was made by the AO to find out whether such details of sales were not recorded in the regular books of account by summoning the record from the central excise authorities - The decision in aforesaid case followed to make addition @ 12.5% margin on unaccouted sale - Partly allowed in favour of assessee. Unexplained unsecured loan - Held that:- The appellant submitted accounts confirmations from Parikh Enterprise, Alpana Gandhi, Motorol Enterprise, Nirmala S.Gandhi, Motorol Speciality Oils Ltd, Manhatton Fingrowth Ltd. and Flexi Pack India Ltd - Confirmation received from all these seven parties bear the complete address and PAN - Except the case of Motorol Enterprise, the money was received by cheque - Relying upon the decision in Commissioner of Income-Tax, Orissa Versus Orissa Corporation Pvt. Limited [1986 (3) TMI 3 - SUPREME Court] - By furnishing confirmation with Pan, primary onus is discharged by the appellant - Onus thereafter shifts to the Assessing Officer to make further investigation and prove the credit non-genuine - Since primary onus is discharged by the appellant by submitting confirmation with PAN, credit cannot be treated as unexplained on non-submission of additional information Decided against Revenue.
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2014 (2) TMI 933
Whether the amount paid for acquisition of Process Design Documentation is fee for technical services - assessee had pleaded that the impugned portion of the consideration is for the supply of drawings, designs and detailed engineering services for the erection of the "plant" for the manufacture of the licensed products and, therefore, the same constitutes a 'plant' and in terms thereof no income accrues in India to the foreign collaborator. - Held that:- The learned Departmental Representative has not referred to any incriminating material or evidence to demonstrate that the bifurcation made out in the supplementary agreements was with any mala fide intentions - Assessee is not liable to make such payment on such deduction of tax on said amount of remittance - Decided in favour of assessee.
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2014 (2) TMI 932
Amortization of premium paid on Government Securities - revenue or capital expenditure Held that:- As per RBI guidelines dated 16th October, 2000, the investment portfolio of the banks is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortised over the period remaining to maturity. In the case of HFT and AFS securities forming stock in trade of the bank, the depreciation/ appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. Decisions in DCIT Vs. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. [2014 (1) TMI 754 - ITAT PUNE] and ACIT vs. The Bank of Rajasthan Ltd. [2010 (12) TMI 894 - ITAT, Mumbai] followed.- In case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period till maturity is allowable as revenue expenditure since the claim is as per RBI Guidelines and CBDT also has directed to allow such premium - Nothing contrary was brought to our notice against the order of the Tribunal, therefore, we find no infirmity in the order of the CIT(A) and Tribunal deleting the disallowance Decided against Revenue.
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2014 (2) TMI 931
Validity of reassessment proceedings DTAA between India and Thailand - Held that:- There is no new material or tangible evidence in the hands of the Revenue - It was only based on a change of opinion that reopening was resorted to - That a reopening cannot be done based on a change of opinion Relying upon CIT v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Revenue has no case that assessee had failed to disclose truly and fully any particulars necessary for its assessment - proviso to Section 147 is squarely applicable - Reopening done based on change of opinion after four years from the end of the assessment year could not be held as valid - The reopening and resultant reassessment are quashed Decided in favour of Assessee. Revision u/s 263 - Allowance of rural bad debts u/s 36(1)(vii) of the Act - Held that:- The decision in Indian Overseas Bank v. Dy. CIT [2014 (2) TMI 930 - ITAT CHENNAI ] followed - There is always a possibility that an asset, which is fully recoverable, may not be so at future date - possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts - claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law - a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee - here there was no enquiry made during the course of assessment proceedings - "prejudicial to the interests of the Revenue" is a term of wide import and not confined to loss of tax - An order without application of mind is definitely prejudicial to the interests of the revenue - We are in agreement with ld. CIT that the order of Assessing Officer was erroneous insofar as it was prejudicial to the interests of Revenue Decided against Assessee. Disallowance u/s 14A of the Act r.w Rule 8D of the Rules Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - Rule 8D could not be applied for assessment year - even after the application of Rule 8D, disallowance under Section 14A could be made the matter remitted back to the AO for Re-adjudication Decided in favour of Assessee. Depreciation on UPS claimed Held that:- The decision in Indian Overseas Bank v. Dy. CIT [2014 (2) TMI 930 - ITAT CHENNAI ] followed - depreciation @ 60% granted by treating UPS as part of computer hardware - depreciation @ 60% on UPS is allowed Decided partly in favour of Assessee. Double Income Taxation Relief (DITR) allowed - Held that:- The decision in Indian Overseas Bank v. Dy. CIT [2014 (2) TMI 930 - ITAT CHENNAI ] followed - The Tribunal need not refer it to the Assessing Officer as well just to see and pass an order - The Tribunal clearly directed the Assessing Officer to enquire into the existence of a DTAA between India and Bangkok - "Enquiry" means to investigate and apply the same - the Assessing Officer has rightly investigated and applied the same and decided the issue The order of the CIT(A) set aside Decided in favour of Revenue.
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2014 (2) TMI 930
Bad debts written off u/s 36(1)(vii) of the Act- Held that:- After the amendment of section 36(1)(vii) of the Income Tax Act, 1961 with effect from 1st April, 1989, it is not necessary for the assessee to establish that the debt - It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Rejection of P&L account Provisions of section 115JB of the Act not complied Held that:- The decision in assessees own case for the previous year followed Held that:- In view of amendment to the provisions of section 115JB by the Finance Act, 2012, the provisions of section 115JB are applicable to the banks as well from assessment year 2013-14 Decided in favour of Assessee. Restriction in claim of deduction u/s 36(1)(viia) of the Act Held that:- There was no application of mind by the Assessing Officer at the time of assessment - Assessing Officer had not come to any conclusion at all having not considered the claim in the light of the conditions set out in Section 36(1)(viia) of the Act - there was no enquiry made during the course of assessment proceedings - the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue - An order without application of mind is definitely prejudicial to the interests of the revenue the order of the CIT(A) upheld Decided against Assessee. Disallowance u/s 43B of the Act - Claim of leave encashment Held that:- The decision in Calcutta Co. Ltd. v. CIT [1959 (5) TMI 3 - SUPREME Court] relied upon The provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability - The liability is not a contingent liability Decided in favour of Assessee. Charging of Tax Surplus arising on account of takeover Held that:- The facts that the assessee has been treating the shares of Bharat Overseas Bank Ltd. as stock-in-trade has not been rebutted by the AR - The assessee bank has been offering profit on sale of shares as business income - The cancellation of stock-in-trade which has resulted in gain to the assessee is thus a business income there is no infirmity in the order of the CIT(A) Decided against Assessee. Claim of depreciation on UPS at 80% - Held that:- The contention of the assessee that the UPS is an energy saving device, therefore, depreciation @ 80% should be granted cannot be accepted the decision in COMMISSIONER OF INCOME TAX Versus ORIENT CERAMICS & INDS. LTD [2011 (1) TMI 26 - DELHI HIGH COURT ] followed - depreciation @ 60% granted by treating UPS as part of computer hardware Decided partly in favour of Assessee. Claim of double taxation relief of foreign branches Held that:- The decision in assessees own case for earlier year is followed - The Assessing Officer in accordance with the directions given by the ITAT enquired all the provisions of the DTAA between India and Thailand and as per Article 23(3) by following the tax credit method whatever tax was paid by the assessee in Thailand was given credit to the assessee - The CIT(A) hyper technically held that the only job of the Assessing Officer was to see whether there is a DTAA between India and Thailand - The Tribunal clearly directed the Assessing Officer to enquire into the existence of a DTAA between India and Bangkok the order of the CIT(A) upheld Decided in favour of Revenue. Deletion of disallowance of contribution towards staff welfare fund Held that:- The decision in assessees own case for the previous year followed - the assessee has not been able to show that the liability has been crystallized or the contribution has been made towards approved fund as per the provisions of the Act - The claim of the assessee based upon the provision of section 43B has no merit - Before the provisions of section 43B can be applicable, deduction must otherwise be allowable under the Act - the contribution towards staff welfare fund is not allowable expenditure the order of the CIT(A) set aside - Decided in favour of Revenue. Depreciation on fixed assets taken over Held that:- the diminution in the value of the securities held by the bank should be allowed as deduction disregarding the method prescribed in the Reserve Bank of India as per which permanent investments had to be valued only at cost and only current investments were to be valued at market price at the close of the accounting year Decided against Revenue.
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Customs
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2014 (2) TMI 928
Waiver of pre deposit - Clearance of goods without payment of duty and filing bills of entry - Mis declaration of goods - Held that:- prima facie the first three appellants have clearly played active roles in smuggling the cargo without payment of duty from the Air Cargo Complex. Shri P. Ganesh, prima facie is the owner of the goods. Shri M. Ramesh was an employee of a cargo holder of a CHA, had access to the customs area and actively participated in the smuggling. Shri A.Saravanan was aware of the smuggling and he provided information to Shri M. Ramesh for identifying the cargo. All the three played major roles in the manner suggested above. In the case of International Airport Authority, no awareness at an organization level is prima facie brought out - Conditional stay granted.
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2014 (2) TMI 927
Penalties under Regulation 12 (8) of the Handling of Cargo in Custom Area Regulation, 2009 and Section 158(3) of the Customs Act, 1962 and penalties on the co-appellant of ₹ 1 lakh each under Section 117 - Held that:- assessee failed to produce the copy of application for registration. Moreover, in the Registration certificate survey no. 117 was not entertained, therefore although the appellant may have applied for Survey no. 117 but without they have been granted to operate from works from Survey no. 117, the appellant is not entitled to operate from Survey no. 117. In these circumstances, I do not find any infirmity with the impugned order. Further, penalty on the appellant are highly excessive, therefore, the same is reduced to 50% in the case of M/s. Ashte Logistics P. Ltd. - Decided partly in favour of assessee.
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2014 (2) TMI 926
Extension of stay beyond 180 days or 365 days - operation of the orders expired in terms of the 2nd and 3rd pvosisos to Section 35C(2A) of the Central Excise Act, 1944 Held that:- An order of waiver of pre-deposit granted under provisions of Section 35F does not, either expressly or by any compelling implication, have a legislatively enjoined sunset period. Waiver of predeposit granted always operates during pendency of the appeal. Pre-deposit is a threshold requirement for triggering the substantive jurisdiction of the Tribunal. Decision in the case of R. Ariyappan and M/s. OPG Metals Pvt. Ltd. and others Versus Commissioner of Central Excise & Service Tax, Tiruchirapalli [2013 (12) TMI 457 - CESTAT CHENNAI] followed Pendency of the appeals are not on account of any conduct of the appellants but on account of pendency of a large number of older appeals and a critical supply/demand mismatch in the Tribunal - it is appropriate to grant extension of the stay orders earlier granted, to operate during the pendency of the appeals Decided in favour of Assessee.
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2014 (2) TMI 925
Classification of goods - whether the goods imported are classifiable as other multiple folded or cabled artificial yarn under sub-heading no.54034990 of the Tariff or as chenille yarn under sub-heading no.56060090 - Held that:- whether the yarn, in question, is chenille yarn covered by heading 5606 of Chapter 56 of HSN or is polyester filament yarn covered by heading no.5403 of the HSN has to be decided by testing. In this regard while NITRA in its report has categorically stated that the yarn, in question, is not chenille yarn, and on the basis of this report classification under Heading no.5606 (sub-heading 56060090) is ruled-out, the report of the CRCL is inclusive as it is silent as to whether the characteristics of the yarn, in question, are those of chenille yarn and it does not give any conclusion. We do not accept the Revenues plea that preference should be given to the report of Textile Committee or CRCL as compared to the report of NITRA. Therefore, it is the report of NITRA, which would have to be relied. If the adjudicating authority had doubts about the correctness of the report of NITRA, he could have called the chemical examiner of NITRA for cross examination for ascertaining as to which testing method has been adopted and what is the basis for his conclusion, but his has not been done - Decided against Revenue.
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Corporate Laws
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2014 (2) TMI 924
Winding up of company - Inability to pay debts - Respondent has failed and neglected to pay the invoices raised by the petitioner for the goods supplied by the petitioner to the respondent - Held that:- in the present case there was no corresponding credit note issued by the petitioner and therefore the debit note which has been issued by the respondent could not be stated to have been accepted. It is common accounting knowledge that a debit note only represents a debit entry made by a party in the account of another party maintained in its books of account. In other words a party who decides to debit an account of another party would issue a debit note to enable the other party to pass a corresponding entry in its books. Similarly a credit note is issued if the account of the other party is credited. Both credit notes and debit notes are primary vouchers representing entries in the books of accounts. A unilateral issue of debit note would, obviously, not by itself extinguish a debt. However, a debit note would indicate that the party issuing the debit note has debited the account of the other party in its books. The debit note issued in the present case represents a claim that had been made by the respondent on account of alleged defective goods. It is not disputed that it is a contemporaneous document, which had been issued much prior to the filing of the present petition or the issuance of notice under Section 433(1)(a) - Decided against Petitioner.
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FEMA
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2014 (2) TMI 929
Contravention of the provisions of section 13 of the Foreign Exchange Management Act, 1999 (FEMA) - The petitioner seeks an order directing the respondents to supply all the documents referred to in a complaint dated 13.07.2011 and not annexed to the complaint and the show cause notice and an order quashing a letter dated 04.06.2013 by which the respondents refused to furnish the documents to the petitioner. - Held that:- the petitioner is entitled to be furnished the documents referred to in paragraph 3(k) of the letter dated 22.08.2011. The respondents shall be entitled to either issue a fresh show cause notice and proceed afresh on the basis thereof in accordance with law or to furnish the documents in paragraph 3 of the letter dated 22.08.2011 and thereafter form an opinion afresh under rule 4 after affording the petitioner a fresh opportunity to show cause as contemplated under Rule 4. On Mr.Setalvad's application, the operation of this judgment and order is stayed for a period of six weeks, in view of his statement that in the meantime the Special Director, Directorate of Enforcement will not proceed with the hearing pursuant to the impugned notices. This stay will not however, prevent the respondents from proceeding with the matter in accordance with this judgment.
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Service Tax
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2014 (2) TMI 958
Maintainability of Revenue appeal - Review of order by the Committee of Chief Commissioners - Valuation - GTA service - inclusion of delivery charges collected from the customers - Held that:- the proposition in the judgement in Bhushan Ltd [2008 (10) TMI 397 - CESTAT, NEW DELHI] does not reflect the correct position in law. There may be instances where one Commissioner alone records a decision to review. Illustrations may be multiplied. The essential fact however is that the decision of Committee of Commissioners or Chief Commissioners as the case may, be is a sine qua non for a legitimate appeal to be preferred and if such opinion is absent either because of a fundamental infirmity in the composition of the Committee or on account of absence of a manifestation of opinion, there would be no valid decision in the eye of law and consequently no valid appeal could be said to have been preferred. - Following the decision of Delhi High Court judgement in Kundalia Industries [2012 (8) TMI 789 - DELHI HIGH COURT], appeal dismissed - decided against the revenue.
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2014 (2) TMI 957
Services of widening of road, repairing and maintenance of roads etc - retrospective amendment inserted by virtue of Section 97 and 98 of the Finance Act, 2012 relating to repair and maintenance of road service. - Held that:- the demand to that extent is not sustainable in law. Computation error - Held that:- appellant could not place sufficient reasons as to why the records could not be produced before the Ld. Adjudicating authority either by filing their reply or attending the hearing before Commissioner - matter remanded back subject to pre-deposit of small amount towards demand of service tax.
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2014 (2) TMI 956
Payment of service tax using CENVAT credit account under reverse charge mechanism for the services availed by them overseas. - first issue is whether the respondent has paid any remuneration towards the service received or not? - Held that:- no amount is paid, therefore, payment of service tax does not arise. - Decided against the revenue.
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2014 (2) TMI 955
Waiver of pre-deposit - Classification of servcie - Management and Repair Services or Works Contract Service - Cleaning Services - Construction Services of premises namely, hospitals and educational institutes - Held that:- pplicant have failed to substantiate their claim that they were rendering services under Works Contract Service for the relevant period. Repairing & Maintenance of roads, Renovation Works for the railways and Civil Construction Services to non-commercial premises would fall within the exclusion Clause of taxable services viz. Commercial & Industrial Construction Service - Applicant could not able to make out a prima facie case for total waiver of predeposit of the dues adjudged. - stay granted partly.
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2014 (2) TMI 954
Waiver of pre-deposit of Service Tax - Penalties under Sections 76 & 77 - Man Power Supply Service - Held that:- appellant has been awarded contract by the dairy for a specific job which is evident from the contract which is attached to the appeal memorandum - appellant has made out a prima facie case on merits and hence we allow the application for waiver of pre-deposit of amounts involved and stay the recovery thereof till the disposal of appeal - Following decision of Ritesh Enterprises [2009 (10) TMI 182 - CESTAT, BANGALORE], Divya Enterprise [2009 (12) TMI 155 - CESTAT, BANGALORE] and K. Damodar Reddy [2009 (9) TMI 386 - CESTAT, BANGALORE] - Stay granted.
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2014 (2) TMI 953
Demand of service tax - Man Power recruitment and supply agency - Held that:- Despite giving the time to assessee to produce invoices on which the payment was received from M/s Radhe Renewal Energy Development Pvt. Ltd, the assessee chose not produce the invoices before us and did not produce the same before the lower authorities also - appellant should be put to some condition to hear and dispose the appeal - Conditional stay granted.
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2014 (2) TMI 952
Residential Complex Section 65(91a) whether Construction of Complex Service is chargeable to service tax Held that:- Following decision of S KADIRVEL Versus COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX, TIRUCHIRAPALLI [2013 (8) TMI 262 - CESTAT CHENNAI] - Conditional stay granted.
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Central Excise
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2014 (2) TMI 923
Waiver of pre-deposit - Valuation - Manufacture of wagons for Indian Railways - Inclusion of Free supplies - Rule 6 of valuation Rules - Held that:- It is difficult to appreciate that M/s. Burn Standard Company, who are engaged in the manufacture of railway wagons, could not appreciate the new provisions prescribed under Section 4 of the CEA, 1944 and the Rules made thereunder, introduced from 01.07.2000. On a query from the Bench, whether the Applicant had approached the Department for any clarification regarding the includibility of the value of free issue materials in the assessable value of wagons, after introduction of the Transaction Value regime, the ld. Advocate expressed his inability to answer the same, as nothing is borne out from the record available with him. - Applicant could not able to make out a prima-facie case for total waiver of predeposit of the dues adjudged. - Stay granted partly.
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2014 (2) TMI 922
100% EOU - Demand of SAD on account of clearance to other units located in DTA by way of stock transfer - Benefit of exemption from levy of SAD leviable under Section 3(3) of the Customs Tariff Act 1975 - Interest u/s 11AB - Held that:- it is admitted position that the goods are not exempted from the Sales tax in the DTA to which they have been cleared from EOU unit of the appellant. Thus, we hold that the appellant is entitled to the benefit of exemption from levy of SAD leviable under Section 3(3) of the Customs Tariff Act 1975 in view of the specific exemption granted under Notification NO. 23/2003-CE, as amended - Decided in favour of assessee.
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2014 (2) TMI 921
Valuation of goods - Whether one normal price will have to be worked out for all depots or different normal prices for different depots may be accepted for assessment purposes - Held that:- From the instructions issued by the Board in 1996 and 2000, it is absolutely clear that when the goods are sold not at the factory but form a depot, the value to be taken is the value prevalent at the depot at the time of removal and if the value is not available at the time of removal, at the nearest point of time. The Board Circular also clarifies that when the goods are sold from different depots what is to be taken is only the value at a particular depot from where the goods are ultimately going to be sold and not the values prevalent at other depots. It is abundantly clear that except for the change that "normal value" is replaced by "transaction value" there is no material difference in the method of valuation under the old section 4 and new section4 and also the valuation Rules made thereunder. The new section 4 introduced form 01/07/2000 envisages that the value has to be determined for each removal of excisable goods. In other words, the new Section 4 envisages the possibility of the goods being sold at different values to different places and to different customers and each of such values were acceptable for the purpose of assessment of duty, so long as the other conditions prescribed therein are satisfied. On a given day, then there would be only one value irrespective of the fact that the goods are removed from different refineries and sold from different different depots. Such an interpretation of law, in our view defeats the purpose and object of new Section 4 which to levy excise duty on transaction value for each removal. Further Rule 7 of the Valuation Rules, 2000 also envisages that where the goods are sold by the assessee at the time and place of removal but are transferred to depot/other premises from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and buyer of the goods are not related and price is the sole consideration for sale, then the value shall be the normal transaction value such goods sold from such other place at or about the same time, and where such goods are not sold at or about some time at the time nearest to the time of removal of goods assessment. The expressions of "such goods" and "such other place" are significant "such goods" refers to goods of the same kind and quality and such other place means the place from which the goods would be ultimately sold on removal from the factory. if the goods are to be sold after removal from the factory at Mumbai through the depot at Ahmedabad, it is the price prevailing at Ahmedabad at that particular time which would be relevant for the purpose of determination of assessable value for the goods cleared at Mumbai factory at a given date. If we take the value of the aggregate quantity of goods from all the depots throughout the country, the expression "such other place" loses its meaning and significance. It is a settled position of law that while interpreting no word should be rendered redundant or surplus. If the view taken by the adjudicating authority is accepted, it would result in an absurd situation as it would render the word "such goods" and "such other places" redundant - Following decision of Brakes India Ltd. vs. CCE, Chennai [2005 (1) TMI 211 - CESTAT, CHENNAI] - Decided in favour of assessee.
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2014 (2) TMI 920
Denial of Cenvat credit ISD - Services can be treated as input services' under Rule 2(l) of CENVAT Credit Rules, 2004 OR not - Nexus between services rendered in Corporate Office and RDCs with the manufacturing activity - Waiver of Pre-deposit Held that:- The services were rendered at the applicant's Corporate Office as Regional Distribution Centers (RDC) - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - The contention of the ineligibility of credit on the input service credit on transportation from depot to retail outlets by the revenue holds ground - Following decision of asessee's own previous case [2013 (12) TMI 923 - CESTAT CHENNAI], stay was granted on all the items of services except in respect of tax relating to transportation of goods from RDCs to retail outlets. - Conditional stay granted.
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2014 (2) TMI 919
Rectification of mistake - while the show cause notice proposes to deny CENVAT credit on the ground that the invoices were issued in the name of the head office whereas the credit is taken at the factory - Held that:- The order does not propose anything which is not sanctioned by the statute. Credit can be availed on receipt of services and services so received are utilized in relation to the manufacture of final products. The order merely makes obvious this position. Therefore, I do not find any mistake in the impugned order - Decided against assessee.
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2014 (2) TMI 918
Rectification of mistake - Tribunal in the said order has observed that waste and scrap sold by the appellant has arisen out of capital goods on which no credit was availed by them and as such, there was no requirement of payment of any duty on the said waste and scrap - Held that:- Revenue in the present application has introduced a letter dated 14-6-2006 written by the Superintendent (Demand) to Superintendent (Review) wherein the list of all the capital goods/inputs on which the appellant has taken the credit stand enclosed. We note that show cause notice in the present case was issued on 24-4-2002 and the Order-in-Original was passed on 13-1-2004. Thereafter the Order-in-Appeal was also passed on 26-5-2005. As such, it is clear that the said letter dated 14-6-2006, which is now being sought to be relied upon by the Revenue, was never the part of either the show cause notice or the adjudication order or the first appellate authoritys order. Further, the said letter was not produced before the Tribunal at the time of disposal of the appeal. As such, the Revenues endeavour to introduce the said letter in the records of the present case cannot be appreciated. Further, when the said letter was not placed before the Tribunal and accordingly was not considered, it cannot be said that there is any mistake on the part of the Tribunal requesting rectification of final order - Decided against revenue.
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2014 (2) TMI 917
Rectification - Corrigendum replacing the entire findings - Held that:- adjudicating authority becomes functus officio, as soon as he passes the Order-in-Original and corrigendum, if any, at the most can be for correcting the factual errors. It is an admitted fact by both sides that the corrigendum issued by the Commissioner of Central Excise, Surat-I has replaced the entire findings of the Order-in-Original Nos. 31-35/demand/2012, it is so; the same seems to be inconsistent with law - At the same time to meet ends of justice; as requested by both sides, we direct the adjudicating authority to reconsider the issue afresh after following the principle of natural justice - Decided in favour of assessee.
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2014 (2) TMI 916
100% EOU - Clearance of non-duty paid goods to DTA - Extended period of limitation - Imposition of interest and penalty - Appellants were working under Notification 1/95-CE dated 1.4.1995 and procuring the raw material without payment of duty on the condition that the same is used in the manufacture of goods exported - Held that:- statutory records maintained by the appellants show the use of the raw material procured without payment of duty for intended use. However, the detailed investigation was conducted from various transporters as well as buyers, which shows that in fact the raw material which was procured without payment of duty was cleared clandestinely to DTA. The documents prepared by the appellants were found to be fake and ultimately in the year 2006, the evidence collected was put to the proprietors and they admitted the clandestine clearance of the goods without payment of duty and thereafter the show cause notices were issued within five years hence the ratio of the above decisions relied upon by the Revenue are fully applicable on the facts of the present case. As the appellants are not disputing the demands on merits before the adjudicating authority nor in the present appeals, therefore we find no merit in the contention of the appellants that the demands are time barred - Decided against assessee.
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2014 (2) TMI 915
Waiver of pre-deposit - Denial of benefit of CENVAT credit of additional customs duty - Disallowance of on the ground of violation of condition of Notification No. 32/2005-Cus., dated 8-4-2005 regarding installation of capital goods - The lower authorities have denied the CENVAT credit on the ground that there was no extension of periods granted by the appropriate officer for installation of the capital goods - Held that:- violation, if at all, is of Notification issued under the Customs Act, relatable to the import of the capital goods. As such, denial of CENVAT credit by the Excise authorities on the said ground is not appropriate. We are informed by the ld. Advocate that no action stands taken by the Commissioner alleging any violation and the consequent denial of the benefit of the Customs notification. Certificate showing installation of the capital goods in the appellant factory stands given by the Central Excise authority on 28-9-2008. Even if there is no express extension of the period of 6 months, grant of such certificate within the extended period reflects upon the deemed extension - drawback also stands availed by the importer. It is only a doubt expressed by them and we are of the view that such doubt so expressed was a verifiable fact and the authorities were within their rights to verify the same - stay granted.
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2014 (2) TMI 914
Rejection of miscellaneous application seeking certified copy of Order-in-Appeal - Held that:- First appellate authority vide Order-in-Appeal No. CCEA-SRT-II/SSP-97/u/s 35A(3) (Misc. Order), dated 21-11-2012, has passed an order under the provisions of Section 35A rejecting the miscellaneous application filed by the assessee for providing him certified copy of Order-in-Appeal dated 26-2-2007. Suffice to say that the first appellate authority had no business to pass an appealable order on miscellaneous application filed for supplying an assessee a certified copy of Order-in-Appeal, we hold that the impugned order is non est and needs to be disposed as such. Be that as it may, we find that the appellant herein is asking only a certified copy of the Order-in-Appeal passed by first appellate authority on 26-2-2007, which in our considered view, needs to be given to the assessee. We are also surprised with the attitude of the assessee to file a miscellaneous application, when he could have got a copy of the Order-in-Appeal dated 26-2-2007 by filing a RTI application.
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CST, VAT & Sales Tax
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2014 (2) TMI 962
Assessment of turn over tax Compoundment u/s 7 of the KGST Act Assessment on the basis of the actual sales turn over of IMFL Held that:- On a reading of section 7 of the KGST Act (as amended) it is evident that Bar attached Hotels were permitted to make payment of turn over tax at the compounded rate, notwithstanding the normal liability for payment of tax at the rate as contemplated under section 5(2). The facility is not extended to Hotels having classification above '3 Star' level and for Heritages or Clubs. With respect to others compounding is permitted at their option In such case the assessees are permitted to pay TOT at the turn over calculated at 140% of the purchase value of the liquor, with respect to hotels situated within municipal area. It is pertinent to note that, under section 7(b) an alternate method for calculation of the turn over is provided for adopting 150% of the highest turnover tax conceded with respect to the previous 3 consecutive years. But when calculating the turn over under the two alternate methods whichever is higher need be adopted - methods of calculation provided under section 7(a) and 7(b) are on the alternative. The authority can fix the turn over by adopting the method as provided under sub section (a) when it is not possible to adopt the method of calculation under section 7(b) - Decided against assessee.
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2014 (2) TMI 960
Denial of refund claim - Objection on assessment not considered within stipulated period - Held that:- what the respondent has done was that instead of granting the refund they had raised demands equivalent to the refunds claimed vide four separate default assessment order Nos. 1539-1542, all dated 23.02.2007. According to the petitioner these default assessment orders were time barred. Anyhow, the fact of the matter is that the Tribunal has set aside these demands and has ordered accordingly. The consequence of which would be that the refund claims of the petitioner were to be allowed as prayed for. Despite this the respondents have not paid the refund amounts. Going through the provisions of the statute it becomes clear that the refunds are to be paid promptly and the decisions are to be taken as per the time schedule prescribed in the Act - Amount to be refunded subject to furnishment of bank guarantee - Decided partly in favour of assessee.
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2014 (2) TMI 959
Condonation of delay - Held that:- The Rules of limitation are not meant to destroy rights of parties. They virtually take away the remedy. They are meant with the objective that parties should not resort to dilatory tactics and sleep over their rights. They must seek remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The statute relating to limitation determines a life span for such legal remedy for redress of the legal injury, one has suffered. Time is precious and the wasted time would never revisit. During efflux of time, newer causes would come up, necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The statute providing limitation is founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). It is for this reason that when an action becomes barred by time, the Court should be slow to ignore delay for the reason that once limitation expires, other party matures his rights on the subject with attainment of finality. Though it cannot be doubted that refusal to condone delay would result in foreclosing the suiter from putting forth his cause but simultaneously the party on the other hand is also entitled to sit and feel carefree after a particular length of time, getting relieved from persistent and continued litigation. If delay has occurred for reasons which does not smack of mala fide, the Court should be reluctant to refuse condonation, will not help the petitioner in any manner keeping in view the kind of explanation rendered herein since I find that here is a case which shows a complete careless and reckless long delay on the part of applicant, which has remained virtually unexplained at all - No question of law, in my view, has arisen in this case, particularly when findings of fact recorded by first appellate court as well as Tribunal are also not shown perverse or contrary to material on record - Condonation denied.
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Wealth tax
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2014 (2) TMI 961
Valuation of the right to receive compensation - whether the value of enhanced compensation awarded to the assessee in includible under wealth tax assessment - Held that:- Following the decision of Hon'ble Supreme Court in the case of CIT vs. Ghanshyam, [2009 (7) TMI 12 - SUPREME COURT], decided in favor of assessee.
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