Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 26, 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
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Instead of terminating the proceedings initiated u/s 148 of the Act by dropping them the revenue chose inexplicably to keep those proceedings alive - This amounts to nothing but harassment of the petitioner - HC
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Service of Notice u/s 143(2) - period of limitation - provisions of section 292BB cannot extend to a case where the question of limitation is raised on admitted factual position in a given case - AT
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TDS u/s 194H - nature of expenditure on foreign travelling of its dealers/sub-dealers - dealers and sub-dealers had purchased the goods directly from the assessee they cannot be treated as commission agents - AT
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Denial of deduction u/s 80IB(8A) - CIT(A) cannot override the approval/renewal granted by the prescribed authority and deny the benefit to the assessee - AT
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Liability to deduct TDS u/a 194A - the amount disbursed by a chit fund company to the members from the contribution cannot be treated as interest - AT
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Product registration and filing fee - If the non-resident has not rendered any services in India, or the amount paid is not taxable in India, provisions of section 195 does not apply - AT
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In 153A/C assessments additions cannot be made unless they are based on any incriminating material or inquiries based on such material. - AT
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Payment of expenditure in cash - Section 40A(3) - the payment made by the assessee for the purchase of country liquor and country spirit from the territorial licensee bottling plant is protected by the exemption in terms of Rule 6DD(b) - AT
Customs
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Rejection of refund claim - when pilferage was found during the course of examination before the charge was given, the assessee is entitled for refund claim of duty paid on shortage of the goods - AT
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Penalty for mis-declaration of goods - import of CRT picture tubes 14 CRT picture tubes - there was absolutely no reason for mentioning the words data graphic display tubes colour with phosphor dot Screen pitch smaller than 0.4 mm in the bill of entry - AT
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Appellant's refunds of interest, paid as per the provision of Sec. 61(2) of the Customs Act, 1962, will not be hit by the doctrine of unjust enrichment - AT
Corporate Law
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Winding up petition - Escrow account - Non payment for certain invoices - there is no debtor-creditor relationship between Yahoo and Inflow. The escrow account was but a mode of payment - HC
Service Tax
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Levy of service tax on parking charges - Now, parking services - regardless of wherever it is carried on - stand excluded in entirety. - HC
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The definition of input service under Rule 2(l) is worded in a broad manner so as to bring within its ambit services availed by a provider of taxable service, whether directly or indirectly - AT
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Condonation of delay - the delay was caused due to the absence of Finance manager from duty and his failure to communicate in time about the passing of the said order - Delay condoned. - AT
Central Excise
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Valuation - Deduction of breakage allowance from assessable value in terms of sales policy - Any allowance in speculation is not permissible in law. - imaginary deduction not permissible - AT
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Demand of differential duty - appellants are liable to pay the excise duty on the said finished goods shortages which is noticed by the authorities during the stock verification. - AT
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Imposition of penalty - penalty on signatory - Unless cogent evidence is brought to record to say that retraction in affidavit is untruthful and the appellant was instrumental to create fake documents, role of the appellant cannot be appreciated. - AT
VAT
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Special audit under Section 58A of the Delhi Value Added Tax Act, 2004 - Commissioner of DVAT to issue Show Cause Notice and grant reasonable opportunity - HC
Case Laws:
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Income Tax
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2014 (2) TMI 996
Restriction of addition on account of difference in stock - During the course of survey difference in physical stock as compared to the book stock was found. AO has noted that the assessee could not reconcile the difference - the contention of Assessee cannot be accepted that there was mistake in stock taking - with respect to addition made on account of difference in stock, when the difference in stock is found, addition on account of gross/Net profit of such difference can be made instead of the entire difference being added to the income - the AO was not justified in making the addition of the entire difference found in the stocks as income of the Assessee - the gross profit declared by the Assessee for the year under consideration is 22.96% , the addition is restricted made on the basis of gross profit Decided partly in favour of Revenue. Addition made on account of construction of godown Held that:- The expenditure in construction of godown was done by Assessee in the year under appeal and earlier years - The percentage of expense, incurred during the year works out to around 26% - valuation is a subjective exercise and in which case the estimates made of construction would differ from valuer to valuer - the Assessee has not maintained books of account with respect to the cost of construction thus, the estimate of addition of Rs. 7,00,000/- would meet the ends of justice the AO is directed to restrict the addition to 7,00,000 Decided partly in favour of Assessee.
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2014 (2) TMI 995
Addition u/s 68 of the Act Burden to prove Furnishing of Satisfactory explanation - Whether the Tribunal fall into an error in holding that the assessee had not discharged the initial onus cast upon it under Section 68 and furnishing satisfactory explanation Held that:- There is no need for any authority for the proposition that the scope of enquiry of lower authority or Court in the face of a remand is confined to the points required of it to return a finding - Having regard to this aspect, once the Tribunal had spelt out what was expected of the assessee, it was not now open for the latter to contend that the requirement was unreasonable - The assessee did not appeal against the remand nor seek dilution of points on which the Tribunal recollected finding after due enquiry - it is now not open for the assessee to state that even though it could afford explanations by way of affidavits of the two individuals and the foreign national, its inability to secure any confirmation or documentary proof in support of its contention that the two foreign remitters did not have any independent transaction carries no consequence - Since the aspect goes to the root of the second requirement under Section 68 - the genuineness of the transaction by the assessee cannot be said to have been shown by it in discharge of the initial burden placed on it by Section 68 of the Income Tax Act Decided against Assessee.
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2014 (2) TMI 994
Validity of Notice issued u/s 148 of the Act Validity of Letter issued by the AO Held that:- The contentions of the petitioner deserve acceptance - Once the revenue found there was no basis to connect the petitioner with the May Fair Garden property, he ought to have dropped the reassessment proceedings - Nothing survived thereafter - He was acting outside jurisdiction when he issued a letter calling upon the petitioner to avail of the opportunity given to him to cross-examine the complainant i.e., the person who was the author of the tax evasion petition. Instead of terminating the proceedings initiated under Section 148 of the Act by dropping them the revenue chose inexplicably to keep those proceedings alive - This is illegal and impermissible in law - This amounts to nothing but harassment of the petitioner - There appears to be some vested interest in keeping the proceedings against the petitioner pursuant to the notice alive revenue have to act in accordance with law and not under any pressure - The AO, being a responsible officer should not be party or pressurised by someone to personal vendetta thus, the notice issued under Section 148 of the Act as well as the letter set aside Decided in favour of Assessee.
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2014 (2) TMI 993
Deduction u/s 80HHC of the Act - Whether the Tribunal was right in law in holding that the components of sales tax and central excise do not form part of the sale proceeds for the purpose of Section 80HHC of the Act despite insertion of Section 145A Held that:- The decision in CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] and Commissioner of Income Tax vs. Shiva Tex Yarn Ltd. [2012 (9) TMI 658 - SUPREME COURT] followed - sales tax and excise duty do not have any element of "turnover" which is the position even in the case of rent, commission, interest etc. - excise duty and sales tax are indirect taxes - They are recovered by the assessee on behalf of the Government - if they are made relatable to exports, the formula under Section 80HHC would become unworkable - The view which is taken in the light of amendments made to Section 80HHC from time to time the Tribunal has not committed any error in holding that the components of sales tax and central excise do not form part of sale proceeds for the purpose of Section 80HHC of the Act despite insertion of Section 145 A of the Act Decided against Revenue.
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2014 (2) TMI 992
Allowability of deduction u/s 80IB(10) of the Act Held that:- Nothing has been brought on record by the Revenue to demonstrate that the powers were exercised by the DVO to take the measurement of the flats when the same was denied by Assessee - the DVO has himself admitted in the noting "Property inspected from terrace - The flats from inside will not be available for verification of measurements in a day which could not be arranged today the noting of DVO that he has inspected the property in question personally and had measured the same from terrace and the area is less than 1500 sq. ft. per unit shows that even by including the outer walls, while measuring from terrace, the area was less than 1500 sq. ft. per unit Relying upon CIT vs Anriya Project Management Services (P) Ltd [2012 (5) TMI 196 - KARNATAKA HIGH COURT] - the definition of "built up area" inserted by Finance No 2 of 2004 which came into effect from 1.4.2005 is prospective in nature and has no application to the housing projects which were approved by the local authority prior to that date - Thus, the Assessee is eligible for deduction u/s 80IB(10) the order of CIT(A) set aside Decided in favour of Assessee.
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2014 (2) TMI 991
Determination of Arms Length Price Transfer Pricing Adjustment - Held that:- The decision in Assistant Commissioner of Income-tax Versus DHL Danzas Lemuir (P.) Ltd. [2006 (9) TMI 498 - BOMBAY HIGH COURT] followed - The assessee shared profit in the ratio of 50:50 both on the payments made by it and the receipts of freight from its AEs - The assessee paid certain sum to its AEs abroad for doing the work similar to which it did for which it received freight revenue from its AEs - the assessee has earned/paid revenue from to its AEs in the same proportion thus, the transactions have been recorded at arm's length price and there was no justification for making such addition there is no reason to interfere with the order Decided against Revenue. Denial of benefit of Percent range as per section 92C(2) of the Act Held that:- The lower authorities have erred in denying the benefit of the proviso to Sec. 92C(2) of the Act while computing the ALP thus, the benefit of the proviso to Section 92C(2) of the Act should be given to the assessee Decided in favour of Assessee.
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2014 (2) TMI 990
Claim of Deduction u/s 80P(2)(a)(i) of the Act - Co-operative society Whether the gross total income of a cooperative society includes income from carrying on the business of banking or providing credit facilities to its members and is allowed as deduction or not Held that:- The decision in ACIT, Circle 3(1), Bangalore v. M/s. Bangalore Commercial Transport Credit Co-operative Society Ltd. [2011 (4) TMI 1222 - ITAT BANGALORE] followed - section 80P(4) is applicable only to cooperative banks and not to credit cooperative societies - The intention of the legislature of bringing in cooperative banks into the taxation structure was mainly to bring in par with commercial banks - the assessee is a cooperative society and not a cooperative bank, the provisions of section 80P(4) will not have application in the assessees case thus, it is entitled to deduction u/s 80P(2)(a)(i) of the Act. The Revenues contention cannot be accepted that section 80P(4) would exclude not only the cooperative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks thus, the assessee is not a credit co-operative bank but a credit cooperative society - Exclusion clause of sub-section(4) of section 80P would not apply Decided against Revenue.
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2014 (2) TMI 989
Service of Notice u/s 143(2) of the Act - Applicability of Section 292BB of the Act - Whether the notice was issued and served within the time contemplated u/s. 143(2) of the Act - Held that:- The notice issued by the AO u/s. 143(2) of the Act in the present case will not fall within any mistake, defect or omission which is in substance and effect in conformity with or according to the intent and purpose of this Act - The requirement of giving of notice because completion of the assessment proceedings cannot be dispensed with by taking recourse to the provisions of Sec.292B of the Act Relying upon Manish Prakash Gupta v. CIT [2014 (2) TMI 657 - ALLAHABAD HIGH COURT] & CIT v. Parikalpana Estate Development (P.) Ltd. [2012 (10) TMI 617 - ALLAHABAD HIGH COURT] the provisions of section 292BB cannot be applied in a case where admittedly no notice u/s. 143(2) had been issued within the time limit prescribed in law. The provisions of Sec.292BB lay down presumption in a given case - It cannot be equated to a conclusive proof - The presumption if rebuttable - The provisions of section 292BB cannot extend to a case where the question of limitation is raised on admitted factual position in a given case thus, the provisions of section 292BB of the Act will not be applicable to the present case - the assessment proceedings are invalid for the reason that the notice u/s. 143(2) of the Act had not been issued and served within the time limit prescribed by those provisions - The order of assessment is accordingly annulled Decided in favour of Assessee.
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2014 (2) TMI 988
Claim of depreciation u/s 32(1) of the Act Computation of income u/s 11(1)(a) of the Act - Whether the computation of income u/s 11(1)(a) of the Act, without classification under various heads as set out in section 14 of the Act amount to double deduction Held that:- The decision in DIT vs. Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT] followed - claim of depreciation on fixed assets utilized for the charitable purposes has to be allowed while arriving at the income available for application to charitable and religious purposes, since the income of the society should be computed on the basis of commercial principles - there is no business activity - As seen from the computation of income placed on record, assessee has not claimed any application of income towards purchase of assets in this year - A.O. has not brought out anything on record that assets purchased by assessee have been claimed as deduction in earlier years and without examining the issue A.O. cannot disallow the amount, simply because there was a case law establishing the principle that double deduction is not allowable the order of the AO and CIT(A) set aside and the claim of the depreciation is allowed Decided in favour of Assessee.
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2014 (2) TMI 987
TDS u/s 194H - nature of expenditure on foreign travelling of its dealers/sub-dealers - Commission or Discount - Held that:- The assessee had paid incentives/commission to its dealers, which had been debited in the Profits & Loss Account under the head of foreign travel expenses - the expenses had been claimed under the garb of foreign travel expenses - there is nothing other than incentive/commission - this fact was evident since the higher sales achieved by the dealers would result in more bonus points to the dealers - commission includes any payment received directly or indirectly by a person acting on behalf of another, for services rendered in the course of buying or selling of goods - The Assessing Officer has miserably failed to appreciate the real controversy - He has totally misconstrued the explanation given by the assessee - The dealers and sub-dealers had purchased the goods directly from the assessee - They have not acted as a commission agent for third person where upon sec. 194H would be applicable Decided in favour of Assessee. Disallowance of interest paid excessive and unreasonable expenditure - Held that:- Section 40A(2)(b) is not applicable on a public limited company - The premises in question, consisting of 21000 sq. ft. of office area, was taken on rent in Assessment Year 1999-2000 - During the year, total rent amounted to Rs. 48 lacs - In addition, Rs. 11.35 crores had been paid as interest free security deposit, which was as per clause (2) of rent agreement dated 31.12.2008 - it had been agreed to keep the rent @ Rs. 4 lacs per month and to increase the security deposit by Rs. 6 crores, which facts do not stand disputed Decided in favour of Assessee.
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2014 (2) TMI 986
Denial of deduction u/s 80IB(8A) of the Act - Profits derived from Medicinal Chemistry and Clinical Pharmacology Division Held that:- The decision in GVK Biosciences Pvt. Ltd., Versus Addl. CIT [2014 (2) TMI 597 - ITAT HYDERABAD] followed - The prescribed authority under the Act, having approved the assessee as a research and development company, assessee is eligible for deduction under S.80IB(8A) and also renewed such approval from year to year, the learned CIT(A) cannot override the approval/renewal granted by the prescribed authority and deny the benefit to the assessee - deduction u/s 80IB cannot be denied to the assessee, till such time, the assessee is approved as a Research and Development Organisation - the assessee is entitled to deduction under S.80IB of the Act Decided in favour of Assessee.
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2014 (2) TMI 985
Liability to deduct TDS u/a 194A of the Act Held that:- The decision in Income-Tax Officer Versus M/s. Neeladri Chit Fund (P) Ltd[2014 (2) TMI 456 - ITAT HYDERABAD] followed - the amount disbursed by a chit fund company to the members from the contribution cannot be treated as interest - the payment made/disbursed to the subscribers/members is not interest, the question of deducting any tax at source from it would not arise - In the case of a chit fund, there is no borrowing of money nor any debt is incurred and as such the provisions of section 194A and 2(28A) of the Act are not attracted there was no infirmity in the order of the CIT(A) Decided against Revenue.
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2014 (2) TMI 984
Disallowance of expenditure U/s 37 read with Section 40A(3) - Cash payment - disallowance to lower percentage site development and construction Held that:- The decision in M/s. Lahari Homes, Hyderabad [2014 (2) TMI 596 - ITAT HYDERABAD] followed - CIT(A) directed the the assessing officer to exclude the cheque payments out of the disallowance and with regard to balance payments, to restrict the disallowance to 15% of cash payments made on account of such items of expenditure which have been considered by the Assessing Officer. In the absence of any material to contradict the findings of the CIT(A) brought on record by the Revenue there was no infirmity in the impugned order of the CIT(A) Decided in favour of Revenue.
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2014 (2) TMI 983
Denial of deduction u/s 80IB(10) of the Act Effect of amendment - Non receipt of completion certificate - Held that:- The decision in Opel Shelters (P) Ltd. Vs. ACIT [2014 (2) TMI 593 - ITAT PUNE] followed - The law as it existed in the A.Y.04-05 when the Assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17.11.2003 and when the Assessee commenced development is to be applied - the legislature would not have intended to take away a vested right without clear words to that effect in the provisions of Sec. 80-IB(10) as amended by the Finance Act, 2005, w.e.f. 1-4-2005 - By applying the principle of harmonious construction to interpret the provisions under Sub-section (10) to Section 80IB as amended w.e.f. 1.4.2005, the Legislature always intended that the project must be approved by the local authority, thus in those approved projects where construction has been started much earlier than 1.4.2005, the assessees are required to complete the plan as it has been approved - The project was approved on 12-10-2001, i.e. prior to 01-04-2005 thus, the amended provisions of section 80IB(10) w.e.f. 01-04-2005 restricting the commercial area in a housing project are not applicable and the assessee is eligible for deduction u/s.80IB(10) of the Act. The assessee has applied to the PMC for issue of completion certificate and that possessions were given to all the respective flat owners before 31-03-2008, Corporation has started levying taxes to all the individual flat owners, electricity connections have been given to all the flat owners and the final completion certificate is also obtained by the assessee on 09-05-2008 the decision in Runwal Multihousing Pvt. Ltd. Vs. ACIT [2014 (2) TMI 595 - ITAT PUNE] - the assessee cannot be denied the benefit of deduction u/s 80IB(10) for not obtaining the completion certificate before 31-03-2008 thus, the order of the CIT(A) set aside and the Assessing Officer is directed to allow the claim of deduction u/s 80IB(10) to the assessee Decided in favour of Assessee.
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2014 (2) TMI 982
Disallowance of claim of deduction u/s 80IB(10) of the Act Entire project not eligible for deduction Project not completed - Housing project "Leela Garden" - Held that:- The assessee has obtained the completion certificate before the statutory due date - the assessee has obtained the completion certificate before 31-03-2008 and out of the 83 flats the assessee has claimed deduction u/s.80IB(10) in respect of 61 flats where the built up area is less than 1500 sq.ft. - thus, the deduction u/s.80IB(10) has to be allowed on proportionate basis with reference to the qualified residential units and that the assessee would not be denied claim of deduction u/s.80IB(10) of the Act - the assessee is entitled to deduction u/s.80IB(10) in respect of the 61 flats of the housing project "Leela Garden. Housing project "Hill View Residency" Held that:- Out of the 5 Buildings, the assessee was able to obtain completion certificates for 4 Buildings and therefore it is the case of the assessee that the deduction u/s.80IB(10) should be allowed in respect of the 4 Buildings The decision in Runwal Multihousing Pvt. Ltd. Vs. ACIT [2014 (2) TMI 595 - ITAT PUNE] Followed - It is the case of the Revenue that since the completion certificate for Building D has not been obtained before 31-03-2008, therefore, deduction u/s.80IB(10) should not be allowed. There was substance in the contention of the AR that approval of the housing project and approval of building plan are two different concepts - plan for development is only a work order and not final plan sanctioned by the local authority - the assessee has claimed deduction u/s.80IB(10) in respect of Buildings A, B, C on which profit has been earned on sale of units and the completion certificate has been obtained before the statutory date and none of the units in the above building is in excess 1500 sq.ft. - thus, the assessee is entitled to deduction u/s. 80IB(10) in respect of buildings A, B and C of the project "Hill View Residency" thus, the order of the CIT(A) set aside and the AO is directed to allow the claim of deduction u/s 80IB(10) in respect of the housing projects "Leela Garden" and "Hill View Residency" Decided in favour of Assessee.
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2014 (2) TMI 981
Transfer pricing adjustment Interest received on loans given to Associated enterprises Held that:- The decision in Siva Industries & Holdings Ltd. Versus Assistant Commissioner of Income-tax, Co. Circle VI(4), Chennai [2012 (10) TMI 890 - ITAT CHENNAI] followed LIBOR rate which has to be considered while determining the arm's length interest rate in respect of the transaction between the assessee and the Associated Enterprises - no addition on this count is liable to be made in the hands of the assessee - The AO is directed to examine whether the rate of interest received was at LIBOR + percentage points - The adoption of Prime lending rates is not approved in various coordinate bench decisions thus, assessee lending at LIBOR plus rates can be considered as arms length provided there is no other expenditure on the borrowed funds - Since some of the loans are reflecting rate at ordinary percentage points, conversion to LIBOR plus is required It can also be taken as arms length rate for the loans advanced during the year. AO is directed to examine Decided in favour of Assessee. Claim of bad debts Held that:- It is not necessary to prove that the debt has become irrecoverable and is enough if bad debt is written off in the accounts of the assessee - There is no dispute that the amount claimed is towards supplies made and the debtor company is not in the position to repay the decision in TRF. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] followed - the AO is directed to allow the amount as claimed Decided in favour of Assessee. Disallowance made u/s 40(a)(ii) of the Act Held that:- As decided in assessees own case for the previous assessment year, since no services are rendered in India, sales commission cannot be disallowed under the provisions of section 40(a)(ia) the amounts covered by sales commission are not accruing or arising to the non-residents in India thus, provisions of section 195 does not apply and, section 40(a)(ia) cannot be invoked. Product registration and filing fee Held that:- Without examining the nature of the amount and whether the other non-resident has any permanent establishment in India or made available anything in India or rendered any services In India, the amount cannot be considered under the provisions of section 40(a)(ia) - Since complete details of the amounts and to whom they are paid are not forthcoming on record thus, the matter is remitted back to the AO for fresh adjudication - If the non-resident has not rendered any services in India, or the amount paid is not taxable in India, provisions of section 195 does not apply and disallowance under section 40(a)(ia) does not arise Decided in favour of Assessee. Disallowance of claim u/s 35D of the Act Held that:- The assessee's contentions are to be accepted - Even though assessee made claim under section 35D, the claim is allowable under section 37(1) as in Mahindra & Mahindra Limited vs. CIT [2009 (10) TMI 639 - ITAT MUMBAI] The assessee is eligible for deduction under section 37(1) - Since the issue of allowance under section 37(1) was not examined by the AO thus, the matter remitted back to the AO Decided in favour of Assessee. Disallowance of payment u/s 40(a)(ia) of the Act Held that:- The order of the AO cannot be upheld which mainly focus on non-obtaining of TDS certificate and also there is no clarity in the order of the A.O. about nature of payments and its taxability under the IT Act - even the DRP also expressed difficulty to conclude whether the payments are in the nature of income or not - since the nature of payment and whether any services are rendered in India or not have not been examined in detail, item-wise along with the applicable DTAA provisions The matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (2) TMI 980
Additions made u/s 143(3)/153A of the Act Block assessment - Admission of additional evidence under Rule 46A(3) Held that:- The revenue wants to adopt an unfair course for ascertaining the tax liability, firstly by making an arbitrary and untenable sort of ex parte assessment and secondly not ensuring the process for proper evidence to come on record - Thus there is no justification for revenue to challenge the CIT(A)s action in admitting the additional evidence after following the due procedure laid down by the act - CIT(A) has been vested with powers coterminous to that of AO, over and above it to undertake further inquiries and even to enhance the assessment - Observations of CIT(A) clearly indicate the fact that the AO not only had an opportunity of submitting its comments on the merits of the case but also he actually submitted requisite comments - the assessments were completed in unjustifiable manner violating even the basic principles of natural justice. Neither sufficient opportunity of hearing nor time was given to the assessee to represent his case - The questionnaire issued by AO had no question about the agricultural income already assessed -This income was not being shown for the first time and has been regularly accepted year to year by department in preceding years thus, the assessee had no remedy except to file additional evidence in first appeal thus, assessee was prevented by sufficient cause in filing these papers during the course of 153A assessment proceedings Relying upon COMMISSIONER OF INCOME TAX Versus TEXT HUNDRED INDIA PVT. LTD. [2013 (6) TMI 72 - DELHI HIGH COURT] - In 153A/C assessments additions cannot be made unless they are based on any incriminating material or inquiries based on such material. There is neither reference nor reliance on any incriminating material - Besides there is no reference to any inquiries conducted by AO based on any incriminating material the additions have been rightly deleted by the CIT(A) on this count the assessee owns a fairly large agricultural holding known as Prag Farms - Agricultural income has been returned and accepted by department year after year - Confirmation from agricultural tenant is on record - AO cannot reject documentary evidence on surmises and conjectures - Assessee has supported his claim based on relevant agricultural record - The tenant has confirmed that the agricultural expenses were borne by him and not by the assessee thus, there was no infirmity in the order of the CIT(A) Decided against Revenue.
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2014 (2) TMI 979
Deletion made u/s 40A(3) of the Act Cash payment - Whether the assessees case falls under exception contained in Rule 6DD(b) of the I.T Rules Held that:- CIT(A) held that the Rule 6DD(b), would not hold water in so far as exemption provided is in Rule 6DD - The various clauses of the said Rule would have to be considered - Even otherwise, the said Rule is not exhaustive - The State Government has closed its doors in so far as the local treasury is concerned and the payment for the purchase of country spirit or country liquor has to be made to the warehouse, run by the government - This shows that any payment made to the warehouse, which is under the direct control of the state government, is a payment made directly to the government. Once, this is accepted then the provisions of Rule 6DD(b) of the I.T Rules 1962 which clearly spells out that the payment made to the government in legal tender under the rules framed by the Government, is exempted from the rigours of section 40A(3) of the Act - the payments made by the assessee for purchase of country spirit and country liquor is to the government as per the notification issued by the government and is in legal tender specified by the notification - the payment made by the assessee for the purchase of country liquor and country spirit from the territorial licensee bottling plant is protected by the exemption in terms of Rule 6DD(b) of the I.T Rules 1962 - the addition as made by the AO and as confirmed by the CIT(A) by invoking the provisions of section 40A(3) of the I.T Act 1961 stands deleted Decided in favour of Assessee.
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2014 (2) TMI 978
Modvat Excise Duty credit - Closing stock of raw material and packing goods Held that:- The decision in ADDL COMMISSIONER OF INCOME TAX Versus M/s JOHNSON & JOHNSON LTD [2013 (6) TMI 286 - ITAT MUMBAI] followed - merely because Modvat credit is an irreversible credit available to the manufacturers upon purchase of duty paid raw material, it would amount to income which is liable to be taxed under the Act, is not acceptable thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Disallowance of provision for Executive Retirement Scheme (ERS) Held that:- The decision in ADDL COMMISSIONER OF INCOME TAX Versus M/s JOHNSON & JOHNSON LTD [2013 (6) TMI 286 - ITAT MUMBAI] followed - the AO is directed to allow the expenses on account of ERS on the basis of actual payment made during the relevant assessment year as business expenses thus, the matter remitted back to the AO to allow the deduction on account of ERS on payment basis as against provision basis claimed by the assessee Decided in favour of Assessee. Disallowance on account of provision for cash discount Disallowance of expenditure on repairs, maintenance - Held that:- The decision in ADDL COMMISSIONER OF INCOME TAX Versus M/s JOHNSON & JOHNSON LTD [2013 (6) TMI 286 - ITAT MUMBAI] followed the matter remitted back to the AO for fresh adjudication to allow cash discount which has been actually paid by the assessee The Tribunal has allowed the claim of the assessee because the assessee has successfully explained the nature of expenses by filing necessary details the details have not been properly examined by the lower authorities thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Disallowance u/s 80HHC of the Act - Liabilities/provisions written back - Gross rental income - Sundry receipts - Held that:- The decision in M/s. Johnson & Johnson Limited Versus The Addl. Commissioner of Income-tax [2013 (4) TMI 228 - ITAT MUMBAI] followed the Tribunal has remitted the matter back to the AO for fresh adjudication in the light of the decision taken in earlier years following the direction of the Tribunal in assessee's own case For rental income, the Tribunal directed that netting off of rent paid against rent received should be allowed and only 90% of the net rent income should be considered for disallowance u/s. 80HHC of the Act - Decided in favour of Assessee. Transfer pricing adjustment Determination of arm's length price Held that:- The application made by the assessee to RBI for brand usage agreement specifically mentions that the royalty to be remitted is net of taxes - the approval was received from the RBI to remit the royalty on brand usage by the assessee @ 1% net of taxes - taxes were liability of J&J India under the terms of agreement - The assessee has entered into a commercial arrangement with J&J US and it has been so arranged that the payment of taxes have to be borne by the assessee being a commercial arrangement, the same should not be questioned while calculating arm's length price Relying upon Dresser Rand India (P.) Ltd. v. Dy. CIT [2012 (10) TMI 127 - ITAT MUMBAI] the order of the CIT(A) set aside Decided in favour of Assessee. Enhancement made in respect of brand usage royalty Held that:- The CIT(A) erred in ignoring the copy of draft brand usage royalty agreement which was submitted by the assessee alongwith application to RBI on 10.8.2001 - If the assessee which carries on a business find that it is commercially expedient to incur certain expenditure directly or indirectly, it would be open to such an assessee to do so notwithstanding the fact that a formal deed does not precede the incurring of such expenditure Relying upon CIT v. Associated Electrical Agencies [2003 (12) TMI 36 - MADRAS High Court ] there is no merit in the enhancement made by the CIT(A) thus, the AO is directed to delete the addition made by the CIT(A) Decided in favour of Assessee. Disallowance of tax and R&D cess paid on technical know-how royalty Held that:- Royalty payments has been approved by RBI and therefore deserves to be allowed - as the payments have been made in the light of the agreement with J&J US and as per the approval/guidelines of the RBI, there is no reason to disallow the tax and R&D Cess paid on technical royalty - the AO is directed to delete the addition made Decided in favour of Assessee. Deletion of the disallowance on account of royalty payment on sale of traded finished goods - Restriction on technical know-how royalty to 1% instead of 2% - Held that:- As it has been held in assessee's appeal, it has already been held that the agreements between J&J India and J&J USA for payment of royalty has to be considered in the light of the approval of the RBI there is no substance in the findings of the TPO that there is no need for paying royalty for technical/marketing know-how - The CIT(A) has rightly considered the relevant clauses of the agreement between J&J India and J&J USA Decided against Revenue. Deletion on account of unaccounted production and sales Deletion of publicity expenses being expenses on advertisement films Held that:- The CIT(A) observed that the AO has not pointed out any mistakes or manipulations in the records maintained by the assessee nor he has invoked provisions of Sec. 145 for making the addition - As decided in assessees own case for the previous years - the production loss depends on number of factors and in absence of any comparable to show that the loss shown by the assessee is excess and decided the appeal in favour of the assessee - no evidence of purchase/sales outside the books of account have been brought on record thus, there is no reason to interfere in the findings of the CIT(A) Decided against Revenue. Disallowance of 10% of payment made to M/s. Crawford Bailey & Co. payment made to Crompton Corporation - Held that:- The decision in M/s. Johnson & Johnson Limited Versus The Addl. Commissioner of Income-tax [2013 (4) TMI 228 - ITAT MUMBAI] followed - the Tribunal has deleted the addition mentioning that in order to make any disallowance u/s. 40A(2)(b), it is for the AO to bring on record some material to indicate that the payment was in fact excessive having regard to the fair market value of goods or services for the legitimate needs of the business - CIT(A) has deleted the addition holding that for the payments for legal counseling, it is futile to think of comparables because counsels may not charge standard fee but may charge according to the issue involved - there is no reason to interfere with the findings of the CIT(A) Decided against Revenue. Adhoc disallowance of Travelling expenses Held that:- The assessee is a company and therefore in such a case disallowance on account of personal expenses cannot be sustained - The AO has made an adhoc disallowance presuming that such expense have personal element there is no logic/basis for making disallowance which are based on presumptions and surmises thus, there is no reason to interfere with the findings of the CIT(A) Decided against Revenue. Deletion made on Club Membership fees 10% adhoc disallowance of expenses incurred on professional sponsorship Held that:- As decided in assessees own case for the previous years, the Tribunal decided in favour of Assessee, Relying upon Otis Elevator Co. (India) Ltd. v. CIT [1991 (4) TMI 53 - BOMBAY High Court] - once the expenditure is held to be for business purposes, there is no question of adhoc disallowance of such expenses by treating same as non-business expenditure - Decided against Revenue.
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2014 (2) TMI 977
Power of the CIT(A) for setting aside the assessment passed by AO Held that:- Assessee contended that the CIT (A) has enabled the Assessing Officer to make such inquiry as he deems fit to verify the cash statement to be produced by the assessee - The CIT (A) has deleted the addition made by the Assessing Officer and it is not a case of setting aside the assessment and remitting the matter to the Assessing Officer - the directions given by the CIT (A) were not required to be given and the same are liable to be expunged thus, the order of the CIT(A) upheld Decided against Revenue.
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Customs
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2014 (2) TMI 975
Rejection of refund claim - pilferage - Reassessment of bills of entry not done - Held that:- in the Bill of Entry it is mentioned that out of charge was given on 28.04.2006. The same cannot be disputed. - The claim that the pilferage was found after out of charge was given without presenting or bringing any evidence on record is not sustainable - Board's Circular No. 58/96-Cus has clarified that when pilferage was found during the course of examination before the charge was given, the assessee is entitled for refund claim of duty paid on shortage of the goods. Therefore, the appellants are entitled for refund claim. - the appellants have paid excess duty on the goods received by them, therefore, they are entitled for refund claim. - adjudication authority directed to implement this direction within 30 days of receipt of this order - Decided in favour of assessee.
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2014 (2) TMI 974
Penalty for mis-declaration of goods - import of CRT picture tubes 14" CRT picture tubes - whether the Mis declaration is deliberate - Valuation of goods - Confiscation - Penalty u/s 112(a) - While the colour picture tubes for use in colour television are classifiable under sub-heading 85401190 where the basic customs duty is 12.5%, the data/graphic display tubes ( colour ) with phosphor dot Screen pitch smaller than 0.4 mm are classifiable under sub-heading 85404000 where the tariff rate itself is nil. Held that:- Since the assessment is online and in normal course, the assessment would have been done online on the basis of declared description without seeing the invoice and without examination as bill of entry had been assessed online under Risk Management System under "no assessment, no examination order" and without any compulsory compliance requirement, the act of the appellant has to be treated as deliberate, as when the invoice mentioned the goods as stock lot of colour picture tubes and the goods were actually colour picture tubes meant for colour television, there was absolutely no reason for the appellant for mentioning the words "data graphic display tubes colour with phosphor dot Screen pitch smaller than 0.4 mm" in the bill of entry and at the same time, classifying the same under sub-heading 85404000 pertaining to data/graphic display tubes and claiming nil rate of duty on this basis. In the background in which the wrong description had been given, it has to be treated as deliberate. - the description of the goods had been deliberately mis -declared with intent to evade the duty so as to attract the provisions of Section 111(m). - Decided against the assessee. Declaration of valuation - Held that:- The price of the goods in these bills of entry could be adopted for the goods, in question, if and only if, those bills of entry were in respect of import of "identical goods" or "similar goods" within the meaning of these terms as defined in the Customs Valuation Rules, in comparable quantity. Since, the details of the goods covered under these bills of entry have not been disclosed, it is not known as to whether goods imported under these bills of entry were also unbranded and of the same country of origin or the same were branded goods of different country of origin and also whether the quantities were comparable. Without such comparison, the unit import price of these bills of entry cannot be adopted in respect of the goods, in question. Penalty of ₹ 1.5 Lakh u/s 112 (a) maintained - Decided against assessee.
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2014 (2) TMI 973
Denial of refund claim - finalization of provisions assessments - djudicating authority sanctioned the refund claim filed by the appellant but credited the same to the consumer welfare fund - Unjust enrichment - Held that:- On the issue of applicability of the principles of unjust enrichment an amendment has been made under Section 18 of the Customs Act, 1962 with effect from 13.07.2006, linking the refunds arising out of finalization of provisions assessments to the provisions contained in Section 27 of the Customs Act, 1962. As the period involved in the present refund claim is 07.09.2007 when amendment carried out in Section 18 w.e.f. 13.07.2006, linking provisions of Section 18 and 27 of Customs Act, 1962, was existing, therefore, doctrine of unjust enrichment will be applicable to the appellants refund claim pertain to the period after 13.07.2006. Both the original adjudicating authority and the first appellate authority has giving a finding that appellant has not submitted documents like Charter - Party Agreement, Balance Sheet or Audited Financial documents to support the CA certificate to the effect that unjust enrichment is not attracted. In order to meet the ends of justice it is required that an opportunity should be given to the appellant to substantiate their claim that duty refund sought for has not been recovered by furnishing necessary documentary evidences. The matter is remanded to the adjudicating authority a fresh devono proceedings, with directions to the appellant to furnish all the documentary evidences to establish that excess duty paid has not been recovered - Decided in favour of assessee.
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2014 (2) TMI 972
Denial of refund claim of Interest - Unjust enrichment - Denial on basis of Previous order of Commissioner (Appeals) - Held that:- appellant's refunds of interest, paid as per the provision of Sec. 61(2) of the Customs Act, 1962, will not be hit by the doctrine of unjust enrichment. - decision in the case of Ashok Leyland Vs. Commissioner [2001 (3) TMI 786 - CEGAT, CHENNAI] and J.K. Synthetics Ltd. v. CC, Jaipur [1997 (7) TMI 414 - CEGAT, NEW DELHI] followed. - Decided in favor of assessee.
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Corporate Laws
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2014 (2) TMI 971
Winding up petition - Escrow account - Non payment for certain invoices - Creditor debtor relationship - Whether or not Yahoo was or could in law be bound by any such escrow agreement between Inflow and Apara - Held that:- abundantly clear that Inflows case is entirely speculative. It proceeds on a fanciful supposition, unsubstantiated by facts, unsupported by documents and belied by its own conduct, that Inflow is Yahoos creditor. It is not. The reasons are many. Yahoo has paid the invoices on which Inflow founds its claim. It may not have paid these into the escrow account but that does not mean they were unpaid. If Apara, to whom direct payment was made of the invoices in question, did not in turn transmit them to the escrow account, then that is a matter between Inflow and Apara, one of no concern whatever to Yahoo. There is no cogent material that there ever existed any such tripartite escrow contract binding Yahoo such that its direct payments to Apara were to count for nothing. Inflows suggestion is that if Yahoo paid Apara directly, it is Yahoo that should file recovery proceedings against Apara. That suggestion, wholly untenable, posits the existence of a binding and inflexible tripartite agreement with clearly spelled out terms applicable to all invoices and payments. There is none. Inflows cause is also betrayed by its own conduct. For, in its email of 2nd July 2010, it spoke of future payments being made into the escrow account and sought payment advice details for past direct payments. That puts the matter beyond the pale. Mr. Tulzapurkar is, therefore, entirely correct in his submission that there is no debtor-creditor relationship between Yahoo and Inflow. The escrow account was but a mode of payment. It brought no privity between Yahoo and Inflow. None of Inflows invoices are drawn on Yahoo, but always only on Apara. That they show Yahoo as the endcustomer does not establish any direct privity; it only specifies a destination, not a contractual liability - The petition is as thoroughly misconceived as it is misdirected and quite possibly mischievous as well - Decided against Petitioner.
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FEMA
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2014 (2) TMI 976
Foreign exchange remittance - liaison office (LO) in India - salaries and emoluments of the empaloyees are payable by the Head Office (HO) - contravention of Section 8(1) of the Foreign Exchange Regulation Act (FERA), 1973 - Held that:- The Court finds that both the AO and the AT erred in proceeding on the basis that the employees of the parent corporation, seconded to the Appellant, were borrowed employees. There is no question of the Appellant being an agent of Mitsubishi, Japan. The Appellant, as a LO, is not permitted to undertake any commercial activity. The letter dated 30th January 1976, issued by the RBI under Section 29(2) of the FERA granting permission to the LO to operate clearly states that the LO would only undertake the liaison activities relating to import/export trade, collection of commercial, industrial and other business information in Tokyo etc. and that Excepting the said promotional work, the Indian offices will not undertake any activity of a trading commercial or industrial nature without the prior permission of the Reserve Bank of India. Significantly, with the AO itself finding the Appellant not liable under Section 9(1)(c) of the FERA on the ground that there was no debt owed by the Appellant to the parent company, it could not have held that there was a liability owed by the LO to the parent company for the purposes of Section 8 (1) (b). AO dated 10th February 2004 and the impugned order dated 30th October 2007 of the AT set aside - Decided in favor of appellant.
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Service Tax
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2014 (2) TMI 1002
Waive of pre-deposit - Security Agency Services / Man Power Recruitment Supply - Classification - Applicant have supplied para-medical staff to M/s. ESIC - Held that:- Applicant have been receiving the payments for supply of the para-medical staff on monthly basis, not on the basis of average work rendered or the performance of the staff supplied. - Applicant had rendered the Services of Man-Power Supply to its clients. - prima facie case is against the assessee. Regarding Conservancy and Watch & Ward Service - Held that:- prima facie, the services rendered by the Applicant, are in the nature of Security Agency Services. Applicant could not able to make out a prima facie case for total waiver of the predeposit of dues adjudged and the Applicant had not pleaded any financial hardship. - stay granted partly.
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2014 (2) TMI 1001
Levy of service tax on parking charges - Management of cars/scooter parking facilities at Indira Gandhi International Airport, New Delhi - Imposition of penalty u/s 76, 77 and 78 - - Held that:- Explanation makes it clear beyond any doubt, that Parliament had intended that renting or immovable property was to be taxed, for the first time, from 1st June, 2007. Its intention that parking was to fall within the expression renting of immovable property- again with effect from 01.06.2007, is also clear from Section 65 (90a). Yet, the definition of taxable service, while introducing Section 65 (105) (zzzz) specifically excluded parking services. Now, parking services regardless of wherever it is carried on - stand excluded in entirety. Therefore, it is not open now for the revenue to argue that it falls within the expression airport service under Section 65 (105) (zzm). Parliament would have manifested its intention to bring to tax a part of the activity, carried out in airport premises, if it wished, in more express and clearer terms - Following decision of M/s. Flemingo Duty Shops Pvt. Ltd v Union of India and Ors. [2013 (1) TMI 523 - DELHI HIGH COURT]. So far as the revenues argument that the issue cannot be gone into, because the assessee did not dispute the basic liability is concerned, this Court is of the opinion that a concession, if made on an erroneous understanding of the law; at any rate without the sanction of law to collect the amounts demanded, the revenue cannot rely upon the technicality of a concession of law. - Decided in favour of assessee.
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2014 (2) TMI 1000
Cenvat Credit - Nexus between input and output service - Held that:- For rendering services, the appellant has to hire premises, recruit employees, use information technology software, engage management consultant, manage, maintain or repair both movable and immovable properties, use telecommunication services for communication purposes and so on. - The definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 is worded in a broad manner so as to bring within its ambit services availed by a provider of taxable service, whether directly or indirectly, and also enumerates some of the services which fall within the purview of the input service. Appellant has, clearly and in detail, explained the nexus between the input service on which credit was taken and the output service provided. Instead of examining the claim of the appellant and rebuting the same, if required, the adjudicating authority has dealt with the issue in a cavalier and irresponsible way. - matter remanded back for reexamination of the facts - Decided in favor of assessee.
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2014 (2) TMI 999
Condonation of delay - Delay due to Finance manager leaving - Held that:- delay was caused because of the absence of Sri Sunil Prasad from his duty without informing the applicant. They came to know about impugned order after being communicated by the Range Superintendent. Thereafter, they made all out efforts to locate Mr. Sunil Prasad and consequently, filed the appeal after his resuming duty. I find from the records and correspondence between the applicant and Mr. Sunil Prasad that the delay was caused due to the absence of Mr. Sunil Prasad from duty and his failure to communicate in time about the passing of the said order. The reasons explained seems to be bonafide - Delay condoned.
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2014 (2) TMI 998
Stay application - Demand of service tax - Interest u/s 75 - Penalty u/s 76 - Whether the appellant would be liable to pay interest under Section 75 on the service tax and also penalty under Section 76 of the Finance Act, 1994 for failure to pay the service tax by the due date - Held that:- appellant had not paid the service tax by the due date. In view of this, I am of the view that this is not the case for waiver. The appellant are directed to pay the disputed amount of interest for the period of delay and also pay the entire penalty imposed on them under Section 76 - Stay denied.
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2014 (2) TMI 997
Demand of service tax - Held that:- applicant already paid a sum of Rs.74,65,676/-. We find that the deposit of the said amount is sufficient for the purpose of hearing of appeal - Hence, predeposit of the balance amount of tax and penalty are waived and stayed till disposal of the appeal - Stay granted.
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Central Excise
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2014 (2) TMI 970
Availment of CENVAT Credit - Penalty u/s 11AC - Interest u/s 11AB - Held that:- appellant discharged excise duty liability on the activity of repacking and this payment of duty by the appellant was not challenged by the Revenue. Revenue's contention is that the activity does not amount to manufacture and therefore, the appellant is not eligible for the credit of the CVD paid on the input materials - Even if the appellant had not discharged any excise duty liability, they could have claimed drawback of the Customs and Excise duty paid on the input materials. Therefore, there is no incentive for the appellant to undertake repacking activity and discharge duty liability with an intention to gain any undue benefit - Therefore, we are of the prima facie view that the appellant has made out a case in their favour for grant of stay and accordingly we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.
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2014 (2) TMI 969
Valuation - determination of cost of prodcution - Incorrect CAS-4 figures - Held that:- Adjudication order that the applicant withdrew their application seeking provisional assessment and assured that after finalization of annual accounts they will produce details of cost construction. It is also seen from the adjudication order that the applicant had not furnished the documents as assured by them. We also notice that Deputy Director (Cost) opined that Cost/Unit shown against Sl.No.20 with particulars "cost of production of goods disposed should be taken for determination of cost of production for levy of duty in terms of Rule 8 of the Valuation Rules. We find that the duty was demanded on the basis of the opinion given by the Deputy Director (Cost), who is also an authority on this issue. In view of that, the applicant failed to make out a prima facie case for waiver of pre-deposit of the entire amount of tax - Conditional stay granted.
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2014 (2) TMI 968
Valuation - Deduction of breakage allowance from assessable value in terms of sales policy - Held that:- Any allowance in speculation is not permissible in law. Therefore, ld. Authority below have rightly pointed out that an imaginary deduction was claimed by the appellant. Such observation of the appellate authority does not require intervention - Decided in favour of assessee.
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2014 (2) TMI 967
Demand of differential duty - Shortage in stock - Held that:- there is a shortage of 11.8 tones of finished goods in the factory premises when the officers visited the said premises. Today also, there is no dispute as to the shortage of finished goods as the appellant herein is only claiming that the shortage is not worked out correctly and they are unable to ascertain the correct shortage since the Revenue has not given the calculation sheet which was drawn at the time of stock taking. In my considered view, the shortage was sought to be explained by the Manager and the Director of the company by giving an explanation that over a period of time there could be shortage due to the sizing of all the ingots manufactured by them. To my knowledge, even such an explanation could have been accounted for only few kgs but could not be considered valid for entire shortage which has been noticed. Shortage which is detected by the department is of the finished goods manufactured by the appellant. I also note that the appellants have never challenged the shortages. On the background of such a factual matrix, I find that there is no corroborative evidence adduced by the Revenue either in form of any statement of the purchaser or a transporter or the statement of the director or the general manager as to the allegation of removal of these goods which were found short. Since there is no allegation of clandestine removal, but there is a shortage of finished goods. I hold that the appellants are liable to pay the excise duty on the said finished goods shortages which is noticed by the authorities during the stock verification. As regards the penalties imposed on the individuals who are General Manager and Director of the appellant-assessee, I find that there is no reason for visiting them with penalty under Rule 26 of the Central Excise Rules, 2002 inasmuch as, there is no evidence of there being a clandestine removal of the finished goods nor there is any role attributed to the individuals/appellant in the shortages which was noticed during the stock taking by the authorities. In the absence of any such evidences, I am of the view that the penalties imposed on these individuals unsustainable and are liable to be set aside - Decided partly in favour of assessee.
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2014 (2) TMI 966
Levy of interest - Deemed manufacture - refined oil - Period of dispute - Held that:- in Finance Bill, 2005 refining was specifically brought into the scope of Chapter 15 - In the bill it was stated that the said note shall be effective from 1-3-86 and ending 28-2-2005 - Examination of the provision enacted by the 2005 Finance Bill shows that clearances of refined oil made by the appellant for the period 17-12-2004 to 12-1-2005 was dutiable which is claimed to have suffered duty on 2-3-2005. Till the position is made clear by Finance Bill, 2005, Assessees were not in a position to determine their liability - Therefore let the dispute come to an end without levy of interest as has been held by learned Commissioner (Appeals) - Decided against Revenue.
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2014 (2) TMI 965
Waiver of predeposit of duty - captive consumption - Cement cleared to units in Special Economic Zone (SEZ) without payment of excise duty - Applicants had also claimed exemption on clinker captively consumed in manufacture of cement as per Notification No.67/95-CE dated 16.3.1995 - Exemption denied - Held that:- demand has been confirmed on clinker manufactured as an intermediate product in the course of manufacture of cement which has been cleared to units in SEZ, for the reason that as per the proviso to Notification No. 67/95-CEd dated 16.3.95 the benefit of captive consumption exemption is not available to inputs used in or in relation to the manufacture of final products which are exempt from whole of the duty of excise or additional duty of excise leviable thereon or chargeable to nil rate of duty thereon other than those cleared - prima facie proviso to Notification No.67/95-CE is not attracted against the assessee - Following decision of Dalmia (Bharat) Cements Ltd. Vs. CCE [2008 (10) TMI 466 - CESTAT, CHENNAI] - Stay granted.
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2014 (2) TMI 964
Disallowance of CENVAT Credit - Non production of ST-XXVI-A forms during the course of investigation - Certain quantity and value of goods did not reach factory of respondent for which Cenvat credit was to be disallowed - Held that:- Nothing has come out from the adjudication order that the extent of goods which entered the State of Himachal Pradesh has gone elsewhere without reaching to the factory of the respondent. In absence of cogent evidence by Revenue to prove the diversion of goods after that reached the State of Himachal Pradesh, the order of learned Adjudicating Authority granting relief to the extent of Rs. 21,35,577/- cannot be disbelieved - Decided against Revenue.
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2014 (2) TMI 963
Imposition of penalty - penalty on signatory - Appeal dismissed for non-compliance to the stay order - Held that:- Appellant was dealt with as authorised signatory in Para 1.5 thereof. The allegation therein shows that there was failure to make entry of certain transactions by this appellant. That adjudication order does not show role of the present appellant causing prejudice to revenue. Learned Adjudicating Authority simply basing on an affidavit held that the appellant had a criminal intention. Unless cogent evidence is brought to record to say that retraction in affidavit is untruthful and the appellant was instrumental to create fake documents, role of the appellant cannot be appreciated. For lack of examination and corroborative evidence proving the retraction was under influence, but there were fake documents proposition of penalty of Rs. 60,000/- on the appellant is not possible to be sustained - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (2) TMI 1004
Special audit under Section 58A of the Delhi Value Added Tax Act, 2004 - Adequate opportunity in the context of proposal under Section 142(2A) of the Income Tax Act - Held that:- Section 142(2A) before this amendment in 2006 was cast in pari materia terms. Interpreting that provision, the Supreme Court was alive to the fact that the order of special audit was likely to cause prejudice, hardship and even great deal of displacement to the assessee. The Court, therefore, read into Section 142(2A), the requirement that the tax administrator ought to issue prior notice and grant reasonable opportunity. That the Parliament assimilated the law and codified it through a proviso is a matter of detail which ought not to be determinative in the circumstances. In the present case, given the pari materia terms of both provisions, this Court rules that an identical opportunity in the case of special audit in the Income Tax is necessary to be given through notice by the Commissioner on each occasion when special audit is proposed - It is open to the respondents, if so advised, to issue Show Cause Notice and grant reasonable opportunity in line with the Supreme Courts decision in Rajesh Kumar (2006 (11) TMI 135 - SUPREME Court) and Sahara India (Firm) (2008 (4) TMI 4 - Supreme Court) - Decided in favour of assessee.
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2014 (2) TMI 1003
Liability to tax - Exemption from Central Sales Tax - Goods exempted in U.P. Sales Tax Act, 1948 however, taxable under the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 - Tribunal following the judgment in Oudh Sugar Mills Ltd. Vs. CST [1986 (10) TMI 313 - ALLAHABAD HIGH COURT] granted exemption - Whether sale of alcohol during the relevant period was exempt under 'sales tax law' of the State of U.P. hence, there would be no liability of payment of central sales tax in accordance with the provisions of Section 8 (2-A) of the Central Sales Tax Act - Whether the judgment of learned Single Judge in Oudh Sugar Mills Vs. CST 1987 U.P. Tax Cases 1034 and other three judgements following the said judgment as noted above lay down the correct law. Section 8(2-A) makes it clear that if the sale or purchase of any goods is exempt from tax generally under the sales tax law of the appropriate State there shall be no liability of payment of central sales tax - provisions of 1939 Act were amended by U.P. Act No. 12 of 1974 by which amendment under Section 3 of the 1939 Act alcohol become taxable w.e.f. 2.5.1974. Similarly by U.P. Act No. 8 of 1975 payment of tax under the 1948 Act on alcohol was exempted under section 4 of the 1948 Act. By virtue of amendments made in Section 4 by U.P. Act No. 8 of 1975, the tax on alcohol was exempted under section 4 w.e.f. 2.5.1974. The exemption from the Central Sales Tax Act under the repealed provision was in respect of 'sales or purchases ........ of any goods by a dealer'. The section granted exemption to any goods of a dealer when such goods were 'exempt from tax generally .......'. In order to take advantage of this Section 8(2A), a dealer will have to establish that sale or purchase of the goods in question was exempt from tax generally. If it was a special exemption granted to him because his undertaking was a new industrial undertaking or for any other reason for a limited period, then the exemption will not be of general nature and he will not be entitled to get the benefit of this sub-section. There was an Explanation to the old sub-section (2A) of Section 8, which made it clear that if the exemption was only in specified circumstances or under specified conditions or in relation to which the tax was levied at specified stages or otherwise than with reference to the turnover of goods, then the sale or purchase of goods shall not be deemed to be exempted from tax generally. United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of Central Sales Tax Act, 1956. The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol was not exempted as per provisions of Section 8(2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The judgment of learned Single Judge in Oudh Sugar Mills Vs. Commissioner of Sales Tax (supra) does not lay down the correct law - The Tribunal fell in error in taking the view that assessee was not liable for payment of central sales tax on the inter-State sale of alcohol. The orders of the Tribunal impugned in these revisions are hereby set aside - Decided in favour of Revenue.
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Wealth tax
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2014 (2) TMI 1005
Valuation of assets under Wealth tax - Whether Tribunal was justified in Fixing the value of the beneficial interest in the corpus at 50% of the value fixed by the valuer on the alleged grounds of uncertainties, hazards and risks of litigation, etc.? - Held that:- Tribunal is the last fact finding authority and the High Court in exercise of its jurisdiction under Section 27 of the Act and Section 256 of the Income Tax Act has to accept the finding as recorded by the Tribunal as correct unless a specific question as to the perversity of such finding of fact has been raised in the given case. Question Nos.1 and 2, relating to valuation of the asset in issue, in the present case are pure questions of fact. In view of the facts and in the circumstances of the case, we deem it appropriate that the two questions are required to be answered in favour of the assessee and against Revenue.
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