Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 26, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Highlights / Catch Notes
Income Tax
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Surrender of sub-tenancy right - capital gain v/s casual income - it cannot be treated as a casual and nonrecurring receipt under section 10(3) and subject to tax under section 56 of the Act. If the income cannot be taxed under section 45, it cannot be taxed at all. - HC
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Registration u/s 12AA - Amendment of the trust deed - when the power has been given to the trustees by the settler, no further power basically from the civil court is required - rectified trust deed can be relied on by the Revenue authorities for the purpose of registration - HC
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Unexplained expenditure - Hence, taxing M/s Pathik Construction on this account does not arise as no payment has been made by the assessee firm in cash. Therefore, provisions of section 69C or 40A(3) are not applicable in the assessee firm’s case. - AT
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Disallowance u/s 14A - Since no dispute has been raised with regard to the computation of disallowance as per rule 8D - Order of the AO confirmed - AT
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The assessee has not given the possession of the property in question to the developer for F.Y. 2008-09 (A.Y. 2009-10) and hence, there is no transfer within the meaning of Sec. 45 r.w.s. 2(47)(v) of the Act. - AT
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Assessee Bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such investment as stock-in-trade, thus depreciation allowed - AT
Customs
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Levy of anti dumping duty - Authority has accepted all the information furnished by the appellant, and in respect of their exports determined a negative dumping margin based on the information furnished. Thus, they can not justifiably claim to have been prejudiced - AT
Service Tax
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Sale of space of advertisement services - appellant's product KALDARSHIKA cannot be termed as a business directory, yellow pages or trade catalogue; hence it is to be held as ‘book' to be covered under the explanation (2) to the definition of the ‘Sale of Space for advertisement' - AT
Central Excise
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Penalty of ₹ 10,000 imposed on the adjudicating authority / Commissioner for passing irresponsible adjudication orders defying the Tribunal's direction and ignoring the provisions of law - AT
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For categorizing a service as 'input service' covered by Rule 2(l) of Cenvat credit Rule 2004, what is relevant is as to whether it has nexus with the manufacturing business of the appellant in contrast to the nexus with the manufacture of the final product in case of 'Input. - AT
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Duty demand u/s 11D - merely from the contract terms that providing that the price at which the pipes are to be supplied shall be inclusive of all the taxes, it cannot be presumed that the price also included excise duty - AT
VAT
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Cancellation of registration certificate - if there was evidence and material to indicate that the Appellant in collusion with the hawala operators perpetrated a fraud on the department by obtaining a bogus registration, then, all such documents and materials should have been disclosed to the appellant much in advance so that he could have dealt with them. - HC
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Denial of balance 10% refund claim - once the refund in part is made, the refund for the balance amount is required to be made and there is no question of applying limitation as sought to be canvassed on behalf of the respondent - HC
Case Laws:
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Income Tax
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2015 (2) TMI 934
Share transaction - long term capital gain v/s business income - revision u/s 263 - Held that:- The intention of holding shares for a long period as investment does not amount to business income. The CIT has also dropped the proceedings initiated u/s. 263 of the I.T. Act in the immediately preceding assessment year 2004-05 on similar facts. Therefore, these transactions are to be treated as long term or short term capital gain and not business income. Thus these transactions are investment and not business. - Decided in favour of assessee.
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2015 (2) TMI 911
Project management fee - ITAT deleted dis allowances - whether fees accrued in the preceding assessment year i.e. 2006-07 not allowable to the assessee in A. Y. 2007-08 under the mercantile system of accounting? - Held that:- CIT( A) and the Tribunal have reached a concurrent finding of fact that the amount claimed as an expenditure of ₹ 339 lakhs being paid as project management fees to M/s. Kumar Builders was only in respect of amount received for sale in the Assessment Year 2007-08. Consequently, no occasion can arise to disallow any part of the expenditure of ₹ 339 lakhs on the assumption that some amount thereof is attributable to an earlier Assessment Year. The finding of fact arrived at by the CIT(A) and the Tribunal is not shown in any manner to be perverse and/or arbitrary. Decided in favour of assessee.
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2015 (2) TMI 910
Proceeding under Section 201 - whether barred by time? - Held that:- Section 201 itself was amended, by introduction of Section 201(1) (A), significantly that amendment was given irrespective effect from 01.04.1966. The Parliament consciously did not amend Section 201 by inserting sub-section (3) with irrespective effect. ITAT correctly affirmed an order of the CIT (Appeals) to the effect that the treatment of the assessee’s company as one in default for the purpose of proceeding under Section 201 of the Income Tax Act, is barred by time. No substantial question of law arises - Decided against revenue.
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2015 (2) TMI 909
Entitlement to deduction Section 80IA - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. In the decision reported in Velayudhaswamy Spinning Mills V. Asst. CIT (2010 (3) TMI 860 - Madras High Court) there appears to be no distinction on facts. - Decided in favour of the assessee
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2015 (2) TMI 908
Penalty u/s 271(1)(c) - re-imbursement of expenses and claim for long term capital loss rejected ITAT deleted penalty levy - Held that:- As far as issue of reimbursement is concerned, the ITAT noticed that the above was based only on account of letter dated 28.10.2009 addressed to the assessee by AO. After noticing the materials on record the ITAT held that the amount had in fact been disclosed in AY 2007-08 and they were directed to be deleted in appellate proceedings. Given these set of facts the ITAT felt that at least penal action was not warranted even though in quantum proceedings the assessee might have failed. We see no infirmity in the findings which are based upon pure appreciation of facts. Penalty imposed on quantum of capital loss made by the assessee this Court noticed that all that the assessee did was to say that the transaction was reversed inasmuch as the amount received from Mr. Rana Iqbal Singh Jolly was returned to him. Whether that transaction was shrouded or suspicious or not, the fact remains that the capital loss was claimed on account of the subsequent sale to M/s Patel Estate (P) Ltd. Having regard to these facts, the ITAT noticed -and rightly so - that the assessee could not be accused of having furnished inaccurate particulars or concealed income or amounts which were liable to be taxed in its return so as to call for penal action under Section 271(1)(c) based upon binding rules of the Supreme Court including CIT V. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) was justified and warranted. - Decided in favour of assessee.
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2015 (2) TMI 907
Income from undisclosed sale - Tribunal upholding the order of the CIT(A) directing AO to tax 4% net profit on unaccounted sales of ₹ 35 lakhs - entire sales which are unaccounted cannot be undisclosed income of the assessee, particularly as the purchase had been accounted for held by tribunal - Held that:- Grievance of the Revenue that Section 69C of the Act is to be invoked and entire amount of undisclosed sales has to be brought to tax is unacceptable as we are unable to appreciate how Section 69C of the Act which speaks of unexplained expenditure is all at relevant for this appeal. We are not concerned with any unexplained expenditure in this case. CIT(A) and Tribunal have came to the concurrent finding that the purchases have been recorded and only some of the sales are unaccounted. Thus, both the authorities held that it is not the entire sales consideration which is to be brought to tax but only the profit attributable on the total unrecorded sales consideration which alone can be subject to income tax. The view taken by the authorities is a reasonable and a possible view. - Decided against revenue.
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2015 (2) TMI 906
Net profit addition - AO proceeded to work out "after rejection of the assessee's books of account" the gross profit rate at 5.35% and on that basis, determined the net profit to be 1.96% - based upon the previous year's assessments - Held that:- AO did not apply his mind to the circumstances of the case, considering that the assessee had urged, during the course of the proceedings, that the cost of raw material had increased. Likewise, the rate of interest payable had increased, considering that it had borrowed amounts in the routine course of its business. That explanation, was furnished to argue that the rate of net profit was 1.04%, as opposed to the rate of the previous years i.e. 1.96%. By all accounts, the explanation of the assessee was reasonable as was held by the CIT(Appeals) and the ITAT. No reason to interfere with the concurrent findings. - Decided in favour of assessee.
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2015 (2) TMI 905
Rejection of application u/s 12AA - Tribunal remanding the issue back to the CIT on non consideration of documentary evidences - Held that:- It is evident from the records that the main plea taken by the assessee/respondent herein before the Tribunal appears to be on violation of principles of natural justice stating that documents and evidence produced by the assessee/respondent have not been considered by the authority is acceptable. It is clear from the order passed by the Tribunal that it is an open remand without any fetters on the department and, therefore, no grievance can be addressed in this appeal. - Decided against revenue.
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2015 (2) TMI 904
Excise duty refund received - taxability u/s 41(1) - ITAT deleted the addition - Held that:- In view of the decision in the case of Polyflex (India) Pvt. Ltd. v. CIT reported in [2002 (9) TMI 4 - SUPREME Court] wherein, the hon'ble Supreme Court has held that the refund of excise duty has to be treated as deemed profit. In that view of the matter, the above decision of the hon'ble Supreme Court, the judgment which is sought to be relied upon by the Tribunal in the case of CIT v. Bharat Iron and Steel Industries reported in [1992 (1) TMI 40 - GUJARAT High Court] is reversed. - Decided in favour of revenue.
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2015 (2) TMI 903
Stay of assessment order in pending appeal denied by CIT(A) - Held that:- The Assessing Officer and the Commissioner do not stay the order in appeal but only stay the demand issued consequent to the order which is in appeal. This only to ensure that the assessee is not deemed to be a assessee in default. Therefore, the Commissioner of Income-tax (Appeals) ought not to have confused his jurisdiction as an appellate authority with that of either the Assessing Officer under section 220(6) of the Act or to that of the Commissioner of Income-tax in his administrative capacity. Thus set aside the impugned order dated June 30, 2014 of CIT(A). The Commissioner of Income-tax (Appeals) is directed to dispose of the stay application as expeditiously as possible and preferably within three weeks from today. - Revenue will not adopt any coercive proceedings against the petitioner till the disposal of its stay application by the Commissioner of Income-tax (Appeals) and for the period of two weeks from the date of the communication of the order passed by the Commissioner of Income-tax (Appeals) - Decided in favour of assessee
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2015 (2) TMI 902
Extension of stay refused - ITAT refused to extend the stay citing section 254(2A) which enjoins that the interim relief granted not to exceed one year - Held that:- It is apparent that the ITAT was satisfied about the overall interest of justice when it, in fact, amended the interim relief in the first instance, i.e., on December 16, 2011. Whilst, the statutory provision which prevents it from extending the interim stay is undenied, yet this court's power under article 226 of the Constitution to pass appropriate orders in the interest of justice, equally cannot be denied. In the circumstances, the respondent is hereby restrained from enforcing the tax deduction in respect of the assessment year in question assessment year 2007-08, during the pendency of the petitioner's appeal. It would request the Tribunal to dispose of that appeal preferably within three months from today. - Decided in favour of assessee
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2015 (2) TMI 901
Surrender of sub-tenancy right - capital gain v/s casual income - Held that:- As decided in CIT v. D. P. Sandu Bros., Chembur P. Ltd. [2005 (1) TMI 13 - SUPREME Court] a tenancy right is a capital asset and its surrender would attract section 45 and the gains derived would be assessable, if at all, only under the head 'Capital gains'. That being so, it cannot be treated as a casual and nonrecurring receipt under section 10(3) and subject to tax under section 56 of the Act. If the income cannot be taxed under section 45, it cannot be taxed at all. Thus it becomes clear that the appellant- Revenue could have taxed the amount of ₹ 5,00,000 under the head of "Capital gains", which was received towards surrendering of tenancy right from the lessor and not under any other head. - ITAT correctly decided matter - Decided in favour of assessee.
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2015 (2) TMI 900
Registration u/s 12AA - Amendment of the trust deed - whether need not be made by approaching the appropriate civil court ? - Tribunal directing the DIT(E) to grant registration to the assessee-trust under section 12AA of the Income-tax Act, 1961 - Held that:- When the power had been given to the trustees by the settler, it can be amended without approaching the civil court provided all the conditions laid down by the settler are fulfilled. The approach of the civil court is required where there is no such power. No law has been produced before us that the trustees without approaching the civil court in spite of the specific power being given by the settler cannot change the trust deed. According to us, when the power has been given to the trustees by the settler, no further power basically from the civil court is required. See CIT v. Kamla Town Trust [1995 (11) TMI 1 - SUPREME Court] . Thus ribunal has correctly dealt with the matter in this case and the rectified trust deed can be relied on by the Revenue authorities for the purpose of registration. - Decided in favour of assessee.
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2015 (2) TMI 899
Income from provision of seismic survey vessels on hire to CGG Services (erstwhile Compagnie General De Geophysique (CGG) / CGG Marine) - taxable under the provision of section 44BB of the Income Tax Act, 1961 OR as "royalty" under section 9(1 )(vi) of the Act - DRP held that the income earned from provision of seismic survey vessel is also taxable as "royalty" under Article 13 of India-France DTAA - Held that:- On no stretch of imagination can we hold that the nature of receipts on account of provision of supply of vessels on hire basis can have character of fees for technical services within the meaning of Expln. 2 to s. 9(1)(vii). The services required by CGG (Hirer) are rendered by the assessee by lending the vessels on hire cannot bear the character of fees for technical services. The assessee's income no doubt is derived from letting out the plant/ship which is used for prospecting for or extraction or production of mineral oil, therefore, the second limb of sec. 44BB is clearly attracted in the instant case. The non-resident assessee in our opinion satisfies the requirement stipulated by sec. 44BB and thus, qualifies its income earned thus to be treated and taxed as per the special provision and not otherwise as contended by the Revenue. We could not find any restriction or fetter in section 44BB as contended by the Revenue to disqualify the assessee in applying the said section to compute its tax. We cannot read what is not said in sec. 44BB and add words in sec. 44BB to bring in a restricted interpretation as contended by the Revenue to the effect that only direct contract with the oil producing company would only qualify. It is nobody's case that assessee is not a non-resident nor it has not given on hire its ship for the purpose of prospecting for or extracting or production of mineral oils. So the assessee falls in the special provision meant for computing profits and gain in connection with the business of exploration etc. of mineral oils; and its income has to be computed as per the said provision unless and otherwise the assessee claims lower profits and gains as stipulated under sub-section (3) of section 44BB. Also we take note of the fact that in A.Y. 2004-05, the AO accepted the claim of the assessee that the income need to be taxed u/s 44BB and in A.Y. 2006-07 the DRP also directed that the income of the assessee to be taxed as per sec. 44BB of the Act. No changes in facts or circumstances were pointed out by the ld. DRP in the instant assessment year. See Commissioner of Income-Tax Versus Rajeev Grinding Mills.(2003 (4) TMI 7 - DELHI High Court ). Thus on the principle of consistency too no deviation was warranted. - Decided in favour of assessee.
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2015 (2) TMI 898
Undeclared income - CIT(A) directing AO to give credit of admitted undeclared income of ₹ 3,41,90,000/-(3,05,00,000/- + 36,90,000/-) shown in the return of income filed when the assessing officer has given due credit for the same while computing the taxable income of the assessee in the assessment order - Held that:- Additional income of ₹ 3,05,00,000/- was accepted by the department and while computing the total income the AO has taken the same into account. Accordingly, we do not find any justification on the part of the CIT(A) for deleting the addition of ₹ 3,05,00,000/- on the plea that same was double addition. Similarly, a sum of ₹ 36,90,000/- was directed by the CIT(A) to be deleted on the plea that it was double addition. However, there is no such double addition. Accordingly, we set aside the order of CIT(A) insofar as he has deleted the addition of ₹ 3,05,00,000/- and ₹ 36,90,000/-. - Decided in favour of revenue. Unexplained expenditure - CIT(A)deleted addition made u/s 69C - CIT(A) held that provisions of section 40A(3) cannot be applied to expenses as provisions of section 40A(3) are not applicable to block proceedings - Held that:- AO has himself noted that "as per the MOU, the amount of ₹ 5,94,96,000 was to be paid to the respective members of the Society (i.e., Jai Ganesh Society) at the time final selling of the plot to another party or on or before 31.01.2008 whichever is earlier. Accordingly the cash payment made to the CHS was made directly by ICONIC REALTORS but on behalf of M/s Pathik Constructions so that the transaction can be completed expeditiously. Hence, taxing M/s Pathik Construction on this account does not arise as no payment has been made by the assessee firm in cash. Therefore, provisions of section 69C or 40A(3) are not applicable in the assessee firm’s case. Accordingly, we do not find any infirmity in the order of CIT(A) deleting the addition - Decided in favour of assessee. Deemed dividend u/s.2(22)(e) - whether advances received by the assessee from MIs Kalpana Struct Con Private Limited are commercial transactions - Held that:- CIT(A) has held that there is no question of attracting the provisions of section 2(22)(e). The findings of CIT(A) had not been controverted by ld. DR by bringing any positive material on record. We, therefore, see no reason to interfere in the decision of CIT(A) for the A.Y.2008-09 and 2009-2010 for deleting addition made u/s.2(22)(e) of the Act. - Decided in favour of assessee.
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2015 (2) TMI 897
Transfer pricing adjustment - selection of comparable - Held that:- For M/s Accentia Technologies Ltd. has not been found to be comparable to a concern rendering IT enabled services. The arguments putforth by the TPO, which has been reiterated before us, do not justifiably meet with the assessee’s plea for exclusion of M/s Accentia Technologies Ltd. from the final set of comparables. The plea of the assessee is quite potent and is in-fact based on the discussion available in public domain in the form of Annual financial statement of the said concern. Moreover, in the light of the decision of the Pune Bench of the Tribunal in the case of PTC Software (India) Private Limited (2015 (1) TMI 466 - ITAT PUNE), we find no reason to negate the plea raised by the assessee for exclusion of Accentia Technologies Ltd. from the final set of comparables. For Crossdomain Solutions Ltd it is indulged in high skill IT services which are not comparable to the routine I.T. Enabled services. Further, the company is engaged in providing Niche services as well as developed its own brand ‘Exdion’ to target the insurance industry in US. Thus we uphold assessee’s plea for exclusion of Crossdomain Solutions Ltd. from the final set of comparables. For M/s Cosmic Global Ltd.in relation to the financial year under consideration, the business model in which M/s Cosmic Global Ltd. has functioned is quite dissimilar to the business model of the assessee while carrying out the activity of an ITES provider. Moreover, none of the objections raised by the assessee have been met by the TPO on the basis of any cogent reasoning. On that count also, we find that the plea of the assessee to exclude M/s Cosmic Global Ltd. from the final set of comparables is justified. The objection of the TPO that the said concern was found comparable by the assessee in earlier year cannot be the sole basis to include the said concern in the list of comparables. For Eclerx Services Ltd. the plea of the assessee that the said concern is functionally dissimilarly to the assessee, has been wrongly rejected by the TPO. Even before us, there is no cogent reasoning brought out by the Revenue to assail assessee’s plea for exclusion of M/s Eclerx Services Ltd. from the final set of comparables. We direct accordingly. For Coral Hubs Ltd. (Formerly known as Vishal Informational Technologies Ltd.) the Tribunal in the assessee’s own case had held that the said concern was found to be operating in different functional environment and the same was excluded for the purpose of comparability analysis, thus we uphold the plea of the assessee in excluding the margins of the said concern M/s. Vishal Technologies Ltd. Since we have upheld the plea of the assessee for exclusion of (i) Accentia Technologies Limited; (ii) Crossdomain Solutions Limited.; (iii) Cosmic Global Limited; (iv) Eclerx Services Limited; and, (v) Coral Hubs Limited from the final set of comparables, the other Grounds of Appeal raised by the assessee in order to assail the addition of ₹ 9,56,21,498/- on account of transfer pricing adjustment are rendered academic and are not being adjudicated for the present. - Decided in favour of assessee.
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2015 (2) TMI 896
Addition on lower Gross Profit rate - assessee has made purchase of raw material and sold finished goods to specified persons covered u/s 40A(2)(b) - CIT(A) deleted addition admitting additional evidence - Held that:- The Assessing Officer has made disallowance after rejecting the books of account only on two counts - one is with regard to the payment towards electricity charges and the other with regard to the alleged inflated purchases made from the sister concern and on both these counts, the ld. CIT(A) has categorically held that the disallowances were made by the Assessing Officer having ignored the available documents, materials and the books of account produced before him. The ld. CIT(A) accordingly deleted the addition. During the course of hearing, the ld. D.R. could not point out any specific defect in the order of the ld. CIT(A). We, however, have examined the material on record and we find that the documents available on record were properly appreciated by the ld. CIT(A) and we find no infirmity in his order on these issues. Accordingly, we confirm the same - Decided in favour of assessee. Unexplained cash credit under section 68 - CIT(A) deleted the addition - Held that:- As before the Assessing Officer, the assessee has furnished complete details in support of its contention that the amounts were received by M/s Hans Castings Pvt. Ltd. on account of business transaction and the same amount was debited to the account of M/s Hans Castings Pvt. Ltd. and credited to these parties. It was also contended that in the subsequent assessment year, the sales were effected, but the Assessing Officer did not appreciate these facts and made addition under section 68 of the Act, having treated the credit entry as unexplained; whereas the ld. CIT(A) has appreciated all the evidence filed before the lower authorities and was of the view that the said credits have been in the nature of purchase advances through banking channels, therefore, no addition under section 68 of the Act is called for. - Decided in favour of assessee. Non genuine transaction - assessee was unable to file copy of contract note, purchase and sales bills issued by the broker and to prove genuineness of the transaction - Held that:- The basis for addition of ₹ 40,97,700/- was on account of nonavailability of details of 10,000 shares held by the assessee. This mistake was pointed out before the ld. CIT(A) and the ld. CIT(A) has re-examined the details furnished before the lower authorities and having noted that the Assessing Officer has missed one entry of 10,000 shares on 20.2.2004, he rectified the mistake and deleted the addition. The assessee has also filed the details of purchase and sale of shares at pages 74 to 101 of the compilation of the assessee. During the course of hearing, the ld. D.R. could not point out any specific defect in the order of the ld. CIT(A) with regard to the availability of 10,000 shares with the assessee; whereas the ld. CIT(A) has categorically adjudicated the issue of discrepancy of 10,000 shares, which has resulted into an addition of ₹ 40,97,700/-, thus find no reason and no rational for addition of ₹ 40,97,700/- made by AO - Decided in favour of assessee. Addition u/s 41(1) - the assessee was unable to file confirmation of accounts and to prove the genuineness of the transactions before the A.O. - CIT(A) deleted the addition - Held that:- In the instant case, these are commercial transactions and it cannot be treated to be cessation of liability under section 41(1) of the Act for making an addition. We, therefore, find no merit in the addition made by the Assessing Officer. On carefully examining the order of the ld. CIT(A) it is find that the ld. CIT(A) has properly examined the issue in the light of the relevant evidence. Moreover, the evidence filed before the Assessing Officer are sufficient to hold that provisions of section 41(1) of the Act cannot be invoked, as these purchases were made in the month of March, 2004 and the liabilities were liquidated in the succeeding year. Accordingly, we find no merit in the ground of the Revenue and the order of the ld. CIT(A) on this issue is confirmed. - Decided in favour of assessee.
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2015 (2) TMI 895
Disallowance u/s 14A - CIT(A) deleting the addition made u/s 14A on account of disallowance of expenditure incurred in earning dividend income - Held that:- Once the Assessing Officer has any reason to doubt the expenditures and is not satisfied with the correctness of the claim of the assessee in respect of such expenditures in relation to the income which does not form part of the total income under the Income-tax Act, the Assessing Officer shall determine the amount of expenditures so incurred in accordance with such method as may be prescribed under rule 8D of the Rules. No option was given to the Assessing Officer to adopt different formula to compute the amount of expenditures incurred in relation to such income which does not form part of the total income under the Act. Only two options are left with the Assessing Officer - one is to accept the expenditures claimed by the assessee and if he disputes the same, he has to compute the expenditures by adopting the formula laid down in rule 8D of the Rules. Once provisions of section 14A of the Act are to be invoked, the disallowance is to be computed as per rule 8D of the rules. In the instant case, nothing has been brought on record to demonstrate that there was any incorrectness in the computation of disallowance as per rule 8D. It was simply contended that disallowance under section 14A of the Act cannot exceed the receipt of dividend income. This aspect has already been examined by us in the foregoing paragraphs. Since no dispute has been raised with regard to the computation of disallowance as per rule 8D, we find no infirmity therein and accordingly we confirm the order of the Assessing Officer after setting aside the order of the ld. CIT(A), as the ld. CIT(A) has granted relief to the assessee without looking to the mode of computation as per rule 8D of the rules. - Decided in favour of revenue.
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2015 (2) TMI 894
Additional deduction u/s 35(2AB) disallowed - no inhouse scientific research has been carried out by the appellant - Held that:- Merely getting approval from ARAI and purchasing certain material from the market cannot be said to be carrying out in-house research & development activity. Research & development means to carry out research to find out some new technology or new equipment or product and that should be carried out in-house as per the requirement of section 35(2AB) of the Act. The assessee has failed to justify his claim of in-house scientific research carried out and therefore, no deduction under section 35(2AB) is admissible to the assessee. - Decided against assessee. Disallowance of interest paid on loans - CIT(A) directing the assessing officer that interest from FDs be assessed under the head Income from Other Sources - Held that:- The disallowance made by the Assessing Officer was ₹ 63,61,399/- being the difference in these two figures. Since the assessee could not establish that borrowings were for business purposes, deduction is not allowable u/s 36(1)(iii) of the Act and moreover, u/s 57(iii) also, deduction is already allowed by the Assessing Officer to the extent of interest income and entire interest expenditure cannot be allowed because it could not be established by the assessee that the borrowing was made for making investment in FDR by showing direct nexus between the borrowing from bank and making FDR in bank. Considering all these facts, we do not find any reason to interfere in the orders of the authorities below. - Decided against assessee. Disallowance of Bad and Doubtful Debts, Advances and others written off - Held that:- a clear finding is given by CIT(A) that the assessee has not written off bad debts in question and assessee has credited the amount to the account with the heading ‘provision for doubt debts.’ As per the provision of section 36(1)(vii), bad debt is allowable on actual write off and not on provision and hence, we do not find any reason to interfere in the order of CIT(A) on this issue - Decided against assessee. Fees to Registrar of Companies for enhancement of authorized capital - revenue expense v/s Capital expenditure - Held that:- The amount in question was debited by the assessee in the profit & loss account in the present year, the same is not allowable as deduction in view of these judgments of Hon'ble Apex Court in the case of Brooke Bond India Ltd. vs. CIT [1997 (2) TMI 11 - SUPREME Court] and Punjab State Industrial Development Corporation Ltd. vs. CIT [1996 (12) TMI 6 - SUPREME Court]. However, if the assessee can show that the cheque in question was not encashed by the ROC and reverse entry was passed by the assessee in the next year and the corresponding amount was taken by the assessee as income in the next year then in the next year, the same should not be taxed.- Decided against assessee. Payment of gratuity paid under the scheme of LIC - disallowance invoking the provisions of sec.40A(7) - Held that:- Since the issue is covered against the assessee by the Tribunal decision in assessee’s own case for assessment year 2002-03 and 2003-04 [2014 (8) TMI 767 - ITAT LUCKNOW] we do not find any reason to take a contrary view - Decided against assessee. Disallowance of interest subsidy on housing loan - non deduction of TDS - Held that:- in assessee’s own case for assessment year 2002-03 and 2003-04, this issue was decided in favour of the assessee and it was held that the interest subsidy to the employees is for maintaining harmonious relationship and welfare of the employees, which is nothing but business expenditure. Respectfully following this Tribunal decision in assessee’s own case, we hold that in the present year also, this disallowance is not justified. - Decided in favour of assessee. Unreconciled bank balance in the bank account - addition of ₹ 53,000/- - Held that:- there was a difference of ₹ 53,000/- as unreconciled bank balance in the bank account at Chennai for which no explanation was furnished by the assessee before the Assessing Officer or CIT(A). Even before us, no explanation has been furnished and therefore, we do not find any reason to interfere in the order of CIT(A) on this issue. - Decided against assessee.
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2015 (2) TMI 893
Capital gain - transfer of development rights in land near PARVATI, Pune - Held that:- The assessee has not given the possession of the property in question to the developer for F.Y. 2008-09 (A.Y. 2009-10) and hence, there is no transfer within the meaning of Sec. 45 r.w.s. 2(47)(v) of the Act. CIT(A)-II, Pune erred in law and on facts in confirming the taxability of receipt as capital gains and holding that the said amount is part consideration arising from transfer of development rights in land near PARVATI, Pune. - Decided in favour of assessee.
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2015 (2) TMI 892
Write off of Non-Convertible Debentures - Held that:- Actual write off in the NCD account had taken place in this year. The claim of the assessee as made in the A.Y. 2000-01 and 2001-02 would be on the basis that there is a diminution in the value of stock in trade, whereas the claim of the assessee in this assessment year would be on the basis that it is a bad debt and allowable as a deduction u/s. 36(1)(vii) of the Act. We are of the view that the claim of the assessee has to be allowed in either of the assessment years, as the loss in question is incidental to the business and had to be allowed as a diminution in value of stock in trade. We therefore hold that in the event of the claim of the assessee being rejected in A.Ys. 2000-01 & 2001-02, the claim should be allowed in the A.Y. 2002-03 - Decided in favour of assessee. Amortization of premium paid on Held to Maturity (‘HTM’) category of investment - Held that:- The assessee is entitled to claim this deduction - Decided in favour of assessee. Disallowance under section 43B - whether write back excess provision of bonus needs to be allowed as a deduction from the taxable income as the provision was offered to tax in earlier years - Held that:- Before us, the ld. counsel for the assessee drew our attention to page 12 of the paperbook, which contains the statement showing the details of sums which fall for consideration u/s. 43B of the Act. The same is annexed as Annexure-I to this order. He also drew our attention to page 9 & 10 of the paper book which is the computation of income from business. The same is annexed as Annexure-II. Attention was also drawn to the fact that one of the items added to the profit & loss account was Schedule-C of the computation of income from business and that in Schedule-C the excess provision of bonus of ₹ 44,80,266 had been duly considered while arriving at the sum of ₹ 6,31,91,125 which was the amount debited to the profit and loss account. It was submitted that there was no claim made for deduction as assumed by the revenue authorities. - the order of the CIT(A) is set aside and the matter is remanded to the Assessing Officer for fresh consideration - Decided in favour of assessee for statistical purposes. Section 115JB not applicable - whether provisions of MAT do not apply to the assessee? - Held that:- Provisions of section 115JB of the Act are not applicable to the assessee which is a banking company - Decided in favour of assessee.
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2015 (2) TMI 891
Depreciation of valuation of investment portfolio - treatment to the investments held by the bank as stock-in-trade by CIT(A)- Held that:- As decided in assessee's own case for the assessment year 2004-05 assessee Bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such investment as stock-in-trade, thus depreciation allowed. - Decided in favour of assessee. Disallowance u/s 14A r.w.Rule 8D(2) - addition of expenditure relating to exempt income deleted by CIT(A) - whether Rule 8D is prospective or retrospective? - Held that:- As relying on Godrej BoyceManufacturing Co. case [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein held that Rule 8D of IT Rules, 1962 is applicable only prospectively, i.e., from assessment year 2008- 09, thus Rule 8D is only prospective and cannot be applied for the assessment year 2007-08. For quantum of disallowance there is no dispute about the fact that the assessee himself has disallowed 5%, following the earlier decision of the Tribunal in assessee's own case. In such circumstances, we do not find it necessary to interfere with the same as the assessee has accepted the earlier decision of the Tribunal and has not taken it before the High Court, particularly the facts and circumstances remaining the same. - Decided in favour of assessee.
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Customs
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2015 (2) TMI 923
Merchant Overtime Tax Charges (MOT) - whether the applicant is required to pay the MOT charges (Merchant Overtime Tax) for the services rendered by the Departmental Officers (as Customs Officers) during office hours for any Customs examination/work is being done in their factory/ware house - Held that:- Larger Bench of the Tribunal in the case of CCE Rajkot Vs Reliance Industries Ltd. [2013 (10) TMI 675 - CESTAT AHMEDABAD], following the decision of Hon’ble Delhi High Court in the case of Sigma Corporation Ltd. [2013 (4) TMI 649 - DELHI HIGH COURT], on the identical issue, held that in view of the decision of Hon’ble Delhi High Court, the issue referred for constitution of Larger Bench, does not survive. The issue referred to Larger Bench is whether there is requirement for payment of Merchant Overtime Charges (MOT) towards services rendered by Central Excise Officers during working hours, in respect of services pertaining to supervision of boarding of goods exported through containers, i.e. levy of fees the under Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998, these Regulations having been issued in exercise of powers under Sections 157 and 158 of the Customs Act, 1962 read with para 1.2, part II, Chapter 18 of the C.B.E. & C. Excise Manual of supplementary instructions. - Respectfully following the decision of Hon’ble Delhi High Court and Larger Bench of the Tribunal, we find that the impugned orders cannot be sustained. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (2) TMI 915
Abatement of offence by exporter - held that:- Since the amount involved is well within the threshold monetary limit for entertaining the appeal before Tribunal, the appeal is dismissed under proviso to Section 129A (1) of the Customs Act, 1962 as not maintainable - Decided against appellant.
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2015 (2) TMI 914
Waiver of penalty - Benefit under DFIA scheme announced in Foreign Trade Policy - License on the basis of exports - Dispute in export quantity - Held that:- The Applicant are claiming benefit under DFIA scheme on the basis of exports made by them against various shipping bills recorded as above. It is the contention of the Revenue that applying the norms, the quantity claimed to have been exported by the Applicants are incorrect. Hence, the benefit under DFIA Scheme cannot flow from the said exports. Whereas, the contention of the Applicants on the other hand is that the licensing authority, namely Directorate General of Foreign Trade has even though initially through their letter dated 12.12.2006 disputed the fact of export of the said goods, but later on scrutiny and verification closed the case against the Applicants, and in support they have placed letters issued by the DGFT in respective Appeals. Also, both sides agree that the benefit out of the said export is yet to be availed by the Applicants, a fact not disputed by the Revenue. Therefore, at this stage, we are of the view that confirmation of penalty against the Applicants may not sound well. Their involvement and violation of the provisions of Customs Act would be examined only after necessary confirmation received from DGFT by the Customs department which would be considered at the time of disposal of the Appeals. At this stage we are of the opinion that the Applicants could able to make out a prima facie case for waiver of penalty imposed against each of them. Consequently pre-deposit of penalty against each of the Applicants is waived and its recovery stayed during pendency of the appeal. Decided in favour of appellants.
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2015 (2) TMI 913
Restoration of appeal - Appeal dismissed for COD clearance - Held that:- Even though in terms of the apex Court order, permission from CoD is not required for pursuing the appeal before the appellate Tribunal, it has been held in a number of judicial pronouncements that the appellant should have filed for clearance from CoD and only in such cases the permission from CoD can be waiver. Inasmuch as the appellant has not filed any application before CoD for pursuing the appeal before this Tribunal, we are unable to permit the appellant to pursue the appellate remedy before this Tribunal. - Restoration denied.
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2015 (2) TMI 912
Levy of anti dumping duty - imports of caustic soda - extension of duties on the exports made by the appellant from Indonesia - sunsut review - Whether the Designated Authority was correct in rejecting the exports made by the appellant during the period of investigation as being temporary and unreliable and proceeding to give its findings on the likelihood of dumping and injury on the basis of other exports from Indonesia - Held that:- The fact that there were NO (i.e. Zero) exports prior to Jan. 2007 and after Dec. 2007 is certainly an occurrence which, besides being out-of-the-ordinary, has significant bearing for the decision whether these exports can be regarded as temporary and unreliable particularly when no good reasons are forthcoming from the appellant in this regard. Having found the exports of the appellant to be unreliable and temporary the Authority proceeded to determine the likelihood of dumping and injury based on the determination relating to other exports from Indonesia. The Authority found a positive dumping margin, in respect of other exports from Indonesia, as reflected in Paragraph 25 of the Final Findings. It is settled position that anti-dumping duties are required to be country specific and there is no legal requirement to determine the appellant-specific dumping margin in sun-set review. On the aspect of injury, although duties were in force, the domestic industry continued to be injured by the exports from Indonesia, as reflected in the Final Findings. Thus the Authority rightly determined that there is a likelihood of dumping and injury, warranting continuation of duties from Indonesia. - As regards the grievance regarding inadequate disclosure, we find that the appellant has not clearly brought out the specific details, which were not provided to it. The Authority has disputed this. Even otherwise, the Authority has accepted all the information furnished by the appellant, and in respect of their exports determined a negative dumping margin based on the information furnished. Thus, they can not justifiably claim to have been prejudiced. - No infirmity in the findings of the Designated Authority - Decided against assessee.
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Service Tax
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2015 (2) TMI 933
Sale of space of advertisement services - Advertisement in publication KALDARSHIKA - Covered in definition of Book or a business directory, yellow page etc. - Held that:- As against the factual finding as recorded by the first appellate authority, we find hat the revenue has not brought any material which is contrary to the facts as recorded by the first appellate authority. Be that as it may, we find that definition of ‘Sale of space for advertisement' as relied by the Departmental Representative falling under Section 65(105)(zzzm) would not cover the product published by the appellant, as the said publication cannot be considered a calendar, but an Almanac, which gives reader a host of information in respect of religions, cultural and historical events, as also the panchang. We agree with the first appellate authority that the appellant's product KALDARSHIKA cannot be termed as a business directory, yellow pages or trade catalogue; hence it is to be held as ‘book' to be covered under the explanation (2) to the definition of the ‘Sale of Space for advertisement'. - Decided against the revenue.
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2015 (2) TMI 932
Penalty u/s 76 & 78 - Suppression of facts - Whether there was suppression in declaring the receipt of taxable service tax and consequent short payment of service tax and consequently imposition of penalty under section 76 and 78 of Finance Act was justified or not - Held that:- While going through the records, it is evident that suppression of taxable receipt was detected by the revenue and the appellant accepted short levy of service tax and deposited the service tax, Their contention that there should not be imposition of penalty as service tax has been deposited by them is not tenable. It was only on investigation Toy the revenue that suppression could be detected. As such no benefit of exemption from penalty could be made available to the appellant. - Decided against assessee.
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2015 (2) TMI 931
Waiver of pre deposit - Commercial Coaching and Training Institute service - Imposition of interest and penalty - Held that:- The fact is that the applicant is running the courses recognised by the University have not been considered by the Revenue at the time of issuance of show-cause notice. In fact the applicant is running courses recognised by the university and issuing degree for providing those courses. Therefore, for the period prior to May 11 prima facie the applicant is not covered under the definition of "Commercial Coaching and Training Centre". Therefore, the argument advanced by the AR that running of degree courses by the applicant being recognised by the University is not subject matter is not correct as we have to see the whole activity carried out by the applicant. Therefore, the applicant is not providing service under the category of "Commercial Coaching and Training Centre". Further, we find that post 2010, the applicant is collecting service tax on the fees recovered by them from the students to whom they are providing professional courses which are not recognised by the University. Although they are maintain a separate account as "Deposits towards service tax." But as they have collected the amount on account of service tax the same is required to be paid to the department at this stage. - Partial stay granted.
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2015 (2) TMI 930
Goods Transport Agency - Authorised Service Station - Revenue have disallowed the input service credit on GTA service, holding that the input service is in respect of sales of motor cycles, which is a trading activity and not related to the servicing activity of the appellant - Held that:- The facts are squarely covered by earlier ruling of this Tribunal in [2014 (5) TMI 614 - CESTAT MUMBAI] & in the case of CCE Vs. Shariff Motors (2009 (3) TMI 155 - CESTAT, BANGLORE). I have taken up the matter for final disposal with consent, and accordingly, following the ruling of this Tribunal I allow the appeal in favour of the appellant and Revenue is directed to refund the amount of tax within six weeks from receipt of copy of this order, along with interest as per Rules. - Decided in favour of assessee.
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2015 (2) TMI 929
Waiver of pre deposit - construction of residential complex service - Held that:- Applicant was engaged in construction of residential complex for the Tamil Nadu Police Housing Corporation Ltd. under the Govt of Tamil Nadu - following the Tribunal's earlier decision (2013 (8) TMI 262 - CESTAT CHENNAI), we waive predeposit of tax along with interest and penalty till disposal of the appeal - Stay granted.
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Central Excise
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2015 (2) TMI 925
Waiver of pre deposit - Clandestine removal of goods - Financial hardship - Held that:- Tribunal has considered the prima facie case and also the plea of financial hardship expressed by the appellant and taking into consideration the quantum of demand of ₹ 3,02,08,777, had ordered pre-deposit to the tune of ₹ 1 Crore only as pre-condition for hearing the appeal. However, though modification was sought for on the same set of arguments, the Tribunal thought it fit not to modify the order. The Tribunal has further observed that, the said amount having not been deposited and the order having not been complied with, and even on enquiry by the Tribunal on the question of extension of time for making the pre-deposit, the counsel for the appellant having submitted that the appellant is not in a position to make the pre-deposit, the Tribunal thought it fit to dismiss the appeal. In view of the well considered order of the Tribunal, wherein the prima facie case and financial hardship of the appellant were taken into consideration while ordering pre-deposit, which order has not been complied with, the bona fide of the appellant in filing the appeal now itself is in question. In such view of the matter, this Court finds no reason to interfere with the order of the Tribunal at this point of time, more so when the issue has become stale by efflux of time. The appellant is unable to point out any question of law that warrants consideration by this Court to justify this appeal. Nevertheless, we find no question of law, much less substantial question of law that arise for consideration in this appeal - No merit in appeal - Decided against assessee.
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2015 (2) TMI 924
Reversal of Cenvat credit in case of Common Cenvat credit - Manufacturing of dutiable as well as exempted articles - Retrospective amendment in Rule 6(3) of the Cenvat Credit Rules, 2004 - Commissioner in de novo proceedings could not go into question already decided by tribunal - Safeguarding the interests of the Revenue does not mean that a duty demand must be confirmed ignoring the facts on record, pleas made by the assessee and the judgments of the Tribunal and the courts - Penalty on adjudicating authority / Commissioner for passing irresponsible adjudication orders. Held that:- We are of the view that this order of the Commissioner is not only without application of mind whatsoever but is also in contumacious disregard of the decision of the Tribunal. - in the de novo adjudication proceedings, which will be the third round of adjudication by the Commissioner, the Commissioner must requantify the cenvat credit to be reversed on proportionate basis for the period from 1.4.2008 to August, 2009 strictly as per the Tribunal's order i.e under Rule 6(3) (ii) read with the formula prescribed in Rule (3A) and in this regard, the Commissioner shall consider the Appellant's plea that they, during this period, have not taken the credit in proportion to the inputs/input services used in on in relation to manufacture of exempted final products and also the reports of Asstt. Commissioner of Central Excise, Agra to Asstt. Commissioner (Adjudication) on this issue. In view of the Tribunal s final order dated 27.12.2012, the Commissioner cannot once again go into the question of applicability of the provisions of Rule 6(3)(ii).Since the Tribunal had set aside the penalty, in de novo proceedings, the Commissioner cannot decide to impose the penalty again. - Decided in favour of assessee. Hon'ble Delhi High Court in case of Rahul Enterprises [1998 (12) TMI 577 - DELHI HIGH COURT] has held that Commissioner of Sales Tax, as quasi judicial authority, can impose adjournment cost, as while awarding costs acts as a deterrent to the frequent requests for adjournment, it also compensates the other party for inconvenience caused by adjournment. In our view this principle, though in the context of frequent requests for adjournment, will apply in a case where the commissioner defying the Tribunal's directing and ignoring the provisions of law passes an order which should never have been passed and thereby forcing the assessee to file appeal before the Tribunal. Accordingly, a cost of ₹ 10,000/- (Rupees ten thousand only) is imposed on the Respondent Commissioner which is to be paid by the Commissioner who has adjudicated this matter.
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2015 (2) TMI 922
Denial of Cenvat credit on capital goods and rent a cab service - denial on the premise that the said service does not qualify as input service as per Rule 2(l) of Cenvat Credit Rules, 2004 - Held that:- It is not in dispute that capital goods have not been received by the appellants and duty has not been paid by the appellant. Therefore, reliance on the decision of Hon'ble High Court of Punjab and Haryana in the cases of Stelko Strips Ltd.(2010 (3) TMI 68 - PUNJAB & HARYANA HIGH COURT) and Ralson India Ltd. (2005 (12) TMI 37 - HIGH COURT OF PUNJAB & HARYANA (CHANDIGARH)), the appellant is entitled to take Cenvat credit on the strength of original triplicate copy of invoices issued by the supplier. Further, I find that in appellants own case, the Hon'ble High Court of Bombay, any services availed by any manufacturer of excisable goods in the course of their business of manufacturing, appellant is entitled to take Cenvat credit. Therefore, the appellant is entitled to take Cenvat credit on rent-a-cab service as same has been used by them in the course of their business activity of manufacturing of excisable goods. In these circumstances, I hold that appellants are entitled to take Cenvat credit. Therefore, impugned order deserves no merits, hence set aside - Decided in favour of assessee.
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2015 (2) TMI 921
Clandestine removal of goods - Mandatory penalty under section 11AC - Invocation of extended period of limitation - Held that:- It is the admission by the appellant that they have cleared inputs without payment of duty which resulted in shortage of inputs at the time of investigation on 18.3.2010. It is also a fact on record that on 10.4.09 when the investigation was done, that was in relation to the shortage of inputs. In these circumstances, I hold that extended period of limitation is rightly invoked. When there is an admission of removal of inputs without payment of duty and that fact came in the knowledge of Revenue during the course of investigation. Therefore, the extended period of limitation is rightly invoked. Further, I find that appellant has paid only duty and not interest, hence as per the provisions of section 11 AC of the Act, appellants are required to pay penalty equivalent to duty. I also find that appellant has relied upon the decision of Rajasthan High Court in the case of Rituraj Pipes & Plastics Pvt. Ltd. (2008 (8) TMI 878 - RAJASTHAN HIGH COURT). The facts of the said decision are not relevant to the facts of this case as in that case there was shortage of inputs which was found during the course of investigation but in this case apart from the shortage of inputs, it is admission on the part of the appellant that they have cleared the inputs without payment of duty. In these circumstances, I do not find any infirmity in the impugned order - Decided against assessee.
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2015 (2) TMI 920
Denial of CENVAT Credit - main noticee was purchasing cenvatable invoices from the registered dealers and availing cenvat credit thereof without receiving inputs in the factory premises - Penalty u/s 11AC - Held that:- penal provisions on the Respondent would be considered after examining all the facts and circumstances of the case in totality of the main noticee. So, while directing the case of the main noticee in de-novo adjudication, it is required to consider the case of the respondent. In view of that, we modify the impugned order to the extent that the adjudicating authority shall also consider the case of the respondent in de-novo proceedings. It is directed that the adjudicating authority during the de-novo adjudication would take into consideration the observation of the Commissioner (Appeals) as well as the submissions made by the learned advocate of the Respondent before the Tribunal. - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 919
Denial of CENVAT Credit - CENVAT Credit paid on the Furnace oil used in generation of electricity cleared to other units - Held that:- The present show cause notice dt.10.09.2007 was issued for the period from March 2003 to November 2003. In my considered view, when the demand of duty against the earlier show cause notice was set aside as time barred, thus, the demand of duty for the extended period of limitation, on the same facts in the present show cause notice cannot be sustained. The findings of the Tribunal in the appellant s own case for the earlier period would be squarely applicable in the present case. Hence, demand of CENVAT Credit to the extent of ₹ 11,92,394.00 along with interest and penalty is set aside is barred by limitation. In so far as demand of CENVAT Credit of ₹ 8,158.00 along with interest and penalty is upheld. Penalty imposed on the appellant No.2 cannot be sustained - Following decision of assessee's own previous case [2012 (7) TMI 603 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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2015 (2) TMI 918
Clandestine removal of goods - Shortage of stock - Invocation of extended period of limitation - Held that:- This is a case of clandestine removal of goods. Therefore, the normal period of limitation would not be applicable. It is supported by the decision of the Hon'ble Gujarat High Court in the case of Neminath Fabrics Pvt.Ltd. (2010 (4) TMI 631 - GUJARAT HIGH COURT). It is seen from the adjudication order that the case was made out on the basis of folding report, transport documents and miscellaneous papers as mentioned in the Annexure to the show cause notice. So, the submission of the appellant that the case was made out on the basis of statement, cannot be accepted. The appellant has not countered the documents as referred in the show cause notice as well as in the adjudication order. - No merit in the appeals filed by the appellants. Accordingly, the impugned order is upheld and the appeals filed by the appellants are rejected - Decided against assessee.
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2015 (2) TMI 917
Cenvat credit on Outdoor catering Service and House Keeping Service - Welfare activities as mentioned in agreement or Covered under Input service definition as activities relating to business - Held that:- In our view, just because the agreement mentions these activities as "welfare", the same do not become welfare activities, as from the language of the agreement, it is clear that it is an obligation of the appellant company to provide each visiting personnel of M/s SMC, Japan, with furnished western style house with all the facilities including cooking facility. Therefore, in our prima facie view, these services would be covered by the "activities relating to business" as these activities have nexus with the manufacturing business of the appellant. As emphasized by Hon'ble Bombay High Court in the case of Ultratech Cement [2010 (10) TMI 13 - BOMBAY HIGH COURT], for categorizing a service as 'input service' covered by Rule 2(l) of Cenvat credit Rule 2004, what is relevant is as to whether it has nexus with the manufacturing business of the appellant in contrast to the nexus with the manufacture of the final product in case of 'Input. Prima facie case in favour of assessee . The requirement of pre-deposit of the Cenvat credit demand, interest and penalty is, therefore, waived for hearing of the appeal and recovery thereof is stayed. - The stay applications are allowed.
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2015 (2) TMI 916
Duty demand u/s 11D - Collection of excess duty from customer which was not mentioned in the invoice - whether the appellant have collected from their customer (PHED) an amount of ₹ 1,72,80,890/- towards excise duty which is excess of the excise duty mentioned in the invoices and which has not been paid to the Government and whether this amount alleged to have been collected by the appellant from PHED can be adjusted against their duty liability of ₹ 1,73,74 - Held that:- Under section 11D(1) every person who is liable to pay excise duty under this act or rules made there under and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this act or rules made there under, from the buyer of such goods in any manner as representing excise duty, shall forthwith pay the amount so collected to the Central Government. Section 11D has to be read with section 12A and 12B. While section 12A provides that notwithstanding anything contained in this act or any other law for the time being in force, every person who is liable to pay excise duty on any goods shall, at the time of clearances prominently indicate in all the documents relating to assessment, sale invoice and other like documents, the amount of such duty which will form part of the price at which the goods are to be sold. Section 12B provides that every person who has paid the duty of excise on any goods under this act, unless the contrary is proved by him, shall be deemed to have passed on the full incidence of such duty to the buyer. Thus, when an assessee in the invoices issued by him to his customers mentions an amount as excise duty a presumption can be made that that amount had been recovered by him from the customer as excise duty and only in that case section 11D can be invoked if that amount had not been paid to the Central Government. In this case all the Central Excise invoices placed on record by the appellant excise duty payable is shown as nil. Therefore, merely from the contract terms that providing that the price at which the pipes are to be supplied shall be inclusive of all the taxes, it cannot be presumed that the price also included excise duty. Impugned order demanding an amount of ₹ 1,72,80,890/- from the appellant under Rule 11D is not correct. The requirement of pre-deposit of this amount along with interest for compliance with the provisions of section 35F would result in undue headship to the appellant. The requirement of pre-deposit of the demand under confirmed section 11D along with interest is, therefore, waived for hearing of the appeal and recovery thereof is stayed - Stay granted.
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CST, VAT & Sales Tax
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2015 (2) TMI 928
Cancellation of registration certificate - whether the Tribunal is correct in holding that the Appellant has not done any genuine business of buying and/or selling goods but issued only bogus bills without considering and examining the facts of the transactions of sale and purchase of goods brought to the notice of the Tribunal - Held that:- If there was no genuine business transaction and carried on in the name of this entity, then, how the registration certificate was issued and on whose application and in relation to what business transaction is not adverted to, at all. - If the notice in Form No.309 is relied upon and the order recites that it was issued, then, the further finding that it was duly served by affixing a copy thereof on 3rd October, 2012 appears to be contradictory. It was issued and stated to have been reversed, then, why it came to be affixed has not been clarified at all. If the affixation has been done because none was found in the premises on whom personal service could have been effected, then, a clear endorsement in that behalf was required. If the act envisages a request being made by the dealer for cancellation of the Registration certificate and order in that behalf is capable of being reviewed, then, that is to precede by serving the concerned dealer a notice in the prescribed form. If Rule 87 of the MVAT Rules, 2005 are referred to, then, that demands service of orders and notices by delivery by hand of a copy of the order or notice to the addressee or to a person declared by him in Form 105 or to his agent duly authorized in this behalf by him, or to a person for the time being employed by him in connection with the business in respect of which he is registered as a dealer, or to any adult member of his family residing with the dealer. Therefore, one of the modes has to be adopted and in terms of Rule 87(1)(a)(b)(c)(d) and (e) all these are either hand delivery or by post or by email or by sending a copy of the order or notice by a courier agency appointed by the Commissioner. If upon an attempt having been made to serve any order or notice by the above stated modes, does not result in the person being duly served and the sales tax authorities are of the opinion that the order or notice cannot be served by any of the above, then, he can resort to other more prescribed and which, inter alia, is affixing of such notice on the premises or office of the dealer. Tribunal ought to have been satisfied that the notice could not be served by the modes set out under rule 87(1) and, therefore, affixing was necessitated. Secondly, if the reliance is placed by the Tribunal on a statement being recorded during the course of investigation and that of the Appellant, then, the Appellant should have been put to notice of any such statement given by him. The Appellant ought to have been given an opportunity to inspect the record and which was before the Deputy Commissioner of Sales Tax when he passed the order dated 29th November, 2012. Thus, if there was evidence and material to indicate that the Appellant in collusion with the hawala operators perpetrated a fraud on the department by obtaining a bogus registration, then, all such documents and materials should have been disclosed to the appellant much in advance so that he could have dealt with them. There was a necessity of giving a proper and complete opportunity to the Appellant to contest the factual materials we quash and set aside the order of the Tribunal and restore the VAT Appeal on the file of the Tribunal for rehearing and decision afresh on merits and in accordance with law - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 927
Adjustment of carried forward input tax credit - Whether the Tribunal has committed any error in law and in facts in deleting the interest and penalty or not - Held that:- As the demand is confirmed and the adjustment is permitted but the interest and penalty imposed are deleted - Assessee had no surplus balance of input credit, which has been adjusted against the demand of tax upon re-assessment. Under these circumstances, the element of avoidance of tax could be said as lacking. Consequently, the deletion of interest and penalty on the part of Tribunal could not be said as unjustifiable. In the event, when the issue is already covered by the referred decision [2015 (2) TMI 372 - GUJARAT HIGH COURT], we do not find that any substantial question of law would arise as sought to be canvassed. - Decided against Revenue.
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2015 (2) TMI 926
Denial of balance 10% refund claim - 90% of provisional refund already granted - Petitioner did not apply for balance disbursement - Bar of limitation - Held that:- As such, when the refund to the extent of 90% was already made as a provisional refund and 10% was to be refunded at the later stage, there is no question of expiry of the period of the assessment as sought to be canvassed. In normal circumstances, as per section 38 of the Gujarat Value Added Tax Act, the refund is required to be made with interest at the rate of 6% p.a. However, Mr. Kaji, learned counsel appearing for the petitioner under the instruction of his client declared before the Court that if the petitioner is permitted to adjust the amount payable by way of refund of ₹ 1,04,118/towards future tax liability, his client would not claim for interest and the same would satisfy his client. - in view of the declaration made by the petitioner himself, the matter can be put to rest, but suffice it to observe that once the refund in part is made, the refund for the balance amount is required to be made and there is no question of applying limitation as sought to be canvassed on behalf of the respondent. Interest not awarded in view of declaration made by the petitioner - Decided in favour of assessee.
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