Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 27, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Power to grant stay u/s 254(2A) of the Act – Stay to be granted beyond 365 days – Section 254(2A) does not prohibit/bar the High Court from issuing appropriate directions, including granting stay of recovery. - HC
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Validity of direction for special audit of accounts u/s 142(2A) - the AO is empowered to refer the accounts to the special auditor “at any stage of the proceedings” S.142(2A) - HC
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Income from sale of land – Business income OR Capital gain – there was no business activity and the land was sold during the year on which income had been derived could not be considered to be a business activity - HC
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In case of contravention of Section 13(1)(d), maximum marginal rate of tax under Section 164(2), proviso is applicable only to that part of income of the Trust which has forfeited exemption and not the entire income - HC
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Disallowance of foreign exchange loss – The provisions of section 43A of the Act could not apply to the facts of the case as the provisions can be invoked only when assets are acquired by raising the FCNR (B) loan - AT
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Applicability of Section 50C of the Act - sale of development rights are not subject to section 50C i.e stamp valuation - AT
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Payment of upfront fee of Rs.150 crores paid by assessee to “AAI” has created capital assets in the form of license to develop and modernize the Airport - depreciation allowed - AT
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TDS u/s 192 - any allowance given by the company to its employees in the name of uniform allowance cannot be said to be exempt under Rule 2BB(1)(f) r.w.s 10(14)(i) of the Income Tax Act - AT
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Assessment having been made u/s 144 and with clear provisions of section 184(5), the ld. CIT(A) is not justified in allowing interest and salary to the partners - AT
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Premium paid on Keyman Insurance Policies - once the assessee after nursing these policies for some time by paying premium thereupon, has been assigned to the partners, then also the payment of such a premium has to be allowed as deduction - AT
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Addition made u/s 40A(3) - cash payments – There is no prohibition or restriction on a middleman to work as agent of different parties, if he was acting on behalf of the assessee as agent - AT
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Addition u/s 68 - Cash deposit - Primary onus is on assessee to substantiate the claim of failure of land deals due to which cash remained unutilized - Assessee had not discharged onus - Additions confirmed - AT
Customs
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Classification of goods - Import of parts of tower - if for Central Excise purposes, the same goods are considered as components of WOEG then there is no reason as to why for Customs classification purposes the same towers could not be treated as essential components of WOEG - AT
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Immediate Suspension of CHA License - the allegation that the appellant is a habitual offender, on the basis of the order of revocation of their CHA licence on 18-8-2006 has already been set aside - licence restored - AT
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China border trade between the local residents living either side of the border - Exemption - there is no definition of the border trade available anywhere or the distance from the border within which the importer should have been residing. - AT
Service Tax
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Waiver of penalty in respect of delayed payment of service tax on renting of immovable property - penalty waived - AT
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Refund of CENVAT Credit - denial of credit on air-conditioner, renting of cafeteria areas, AMC to air-conditioner are not sustainable - AT
Central Excise
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Validity of para 2.3 of FTP and Para 8.3.6 of the HOP - Power of DGFT - Power to frame Duty Draw Back Rules - powers conferred under Section 19 cannot be re-delegated to the DGFT as expressly prohibited under Section 6(3) of the Act - HC
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Denial of remission of duty - destruction of goods - The appellant had taken all the possible actions from his side to keep the departmeat informed about the requirement of remission of the duty and also of the destruction of the goods. - demand set aside - AT
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CENVAT Credit on inputs - Captive consumption u/ntf 67/95 - Exemption vide Notification No. availing exemption on Final Products as supply to International Competitive Bidding (ICB) Project - prima facie case is in favor of assessee - AT
Case Laws:
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Income Tax
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2014 (2) TMI 1037
Power to grant stay u/s 254(2A) of the Act – Stay to be granted beyond 365 days – Held that:- The legislative mandate has to be respected and the courts do not legislate but interpret the statute as a legislative edict - The third proviso after amendment, undoubtedly bars and prohibits the tribunal from extending interim stay order beyond 365 days - It stipulates deemed vacation and imposes no fault consequences in strict terms - The language is clear and therefore has to be respected - However, the provision does not bar or prohibit an assessee from approaching the High Court by way of writ petition for continuation, extension or grant of stay. The High Court in appropriate matters can grant or extend stay even when the tribunal has not been able to dispose of an appeal within 365 days from the date of grant of initial stay - This perhaps appears to be and apparently is the intention of the Parliament - Relying upon Jethmal Faujimal Soni vs. Income Tax Appellate Tribunal [2010 (4) TMI 747 - Bombay High Court ] - Grant of stay by the tribunal is not a matter of right, but is decided by a speaking order, recording prima facie view on merits - In case there is an error or the tribunal has erred in granting stay, Revenue is not without remedy and can approach the High Court in accordance with law – the Revenue is the appellant before the High Court in disproportionately large percentage of cases, being aggrieved by the finding/adjudication by the tribunal on the question of law and fact - Appeals are preferred by the Revenue mostly in cases where the tax demand is ₹ 10 lakhs or above - The figures/data does indicate that in substantial number of matters, Revenue may not have succeeded before the tribunal in sustaining the tax demand. In view of the third proviso to Section 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay - In case default and delay is due to lapse on the part of the Revenue, the tribunal is at liberty to conclude hearing and decide the appeal, if there is likelihood that the third proviso to Section 254 (2A) would come into operation. Third proviso to Section 254 (2A) does not bar or prohibit the Revenue or departmental representative from making a statement that they would not take coercive steps to recover the impugned demand and on such statement being made, it will be open to the tribunal to adjourn the matter at the request of the Revenue - An assessee can file a writ petition in the High Court pleading and asking for stay and the High Court has power and jurisdiction to grant stay and issue directions to the tribunal as may be required - Section 254(2A) does not prohibit/bar the High Court from issuing appropriate directions, including granting stay of recovery. Determination of Arm’s length price – Held that:- Determination of arm’s length pricing on international transactions and the tax amount involved which includes interest under Section 234B of the Act - By the order dated 4th January, 2013, stay was extended by 180 days or till the disposal of the appeal, whichever occurs first.
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2014 (2) TMI 1036
Recall of order – Opportunity of being heard – Held that:- Assessee contended that the his version could not be put forth with - Order 41 Rule 21 of the Code of Civil Procedure provides that where an appeal is heard ex parte and judgment is pronounced against the respondent, he may apply to the Appellate Court to re-hear the appeal - if he satisfies the court that the notice was not duly served or that he was prevented by sufficient cause from appearing when the appeal was called on for hearing, the court shall re-hear the appeal on such terms as to costs or otherwise as it thinks fit to impose upon him - the Court has power to exercise the inherent power - The cause shown by the applicant is satisfactory and as such, to secure the ends of justice, it would be apt to recall the judgment and order dated dated 27.8.2013 – thus, all the applications are allowed with a cost - The judgment and order dated 27.8.2013 passed in the aforesaid appeals is recalled subject to payment of the cost – Decided in favour of Assessee.
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2014 (2) TMI 1035
Validity of direction for special audit of accounts u/s 142(2A) of the Act – Transfer pricing adjustments - Held that:- There is no merit in the petition of the assessee - in the petitioner’s letter dated 31.10.2011, addressed to the respondent in response to various notices issued by the latter and with reference to the subsequent discussions held in the course of the hearing which took place on 19.10.2011, the petitioner has submitted an elaborate reply in paragraph 9 of the letter under the caption “show cause as to why special audit under Section 142(2A) of the Act should not be conducted in the instant case” - The paragraph clearly refers to the request made by the respondent on 19.10.2011 to the petitioner to show cause as to why special audit should not be conducted because of the nature and complexity in the financial statements. The inclusion of the last mile charges in the profit and loss account as a debit, when the capitalised infrastructure cost is eligible also to depreciation, may amount to double deduction - The approval was accorded by the CIT on 23.12.2011 - It cannot be said that the CIT did not apply his mind to the proposal for special audit - The assessing officer referred the matter to the Transfer Pricing Officer under Section 92CA of the Act on which the latter did make an addition on account of transactions with the petitioner’s associated enterprises and it was at that stage the assessing officer made a reference to special audit; the suggestion was that the exercise was uncalled for since the direction of the TPO was binding on the AO in any case - the AO is empowered to refer the accounts to the special auditor “at any stage of the proceedings” S.142(2A) - there is no bar, and there is nothing in the sub-section which makes its provisions subject to the powers of the TPO - The reference to special audit cannot be held to be contrary to law on that score – Decided against Assessee.
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2014 (2) TMI 1034
Nature of Income – sale of land - Business income OR Capital gain – Held that:- CIT(A) held that the activity of business has not been established conclusively - The conduct of the appellant in the previous years, their actions as apparent from the balance sheet of the previous years and their source of income in the previous years, all point to the fact that there was no business activity and the land was sold during the year on which income had been derived could not be considered to be a business activity – thus, the sale of land be treated as capital gain and not business income – Tribunal upheld the decision of CIT(A) - Whether the income arose out of any business activity or out of capital gain is essentially a question of fact or a mixed questions of law and fact - Both the CIT (Appeals) and the learned Tribunal agreed as regards the fact that the income arose out of capital gain - revenue could not point out any infirmity in the view taken by the CIT (Appeals) and the Tribunal – there is no question of law arises in the appeal to be entertained – Decided against Revenue.
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2014 (2) TMI 1033
Power of Commissioner u/s 263 of the Act – Held that:- The decision in MALABAR INDUSTRIAL CO. LIMITED v/s COMMISSIONER OF INCOME TAX [2000 (2) TMI 10 - SUPREME Court] followed – commissioner cannot exercise the power of revision solely on the ground that the order passed is erroneous - He gets jurisdiction only if such erroneous order is prejudicial to the interest of the Revenue - for attracting Section 263, the condition precedent has to be abide - if one of the requirements for satisfaction of taking action under Section 263 of the Act is absent, then recourse cannot be made to Section 263 of the Act - The Commissioner cannot invoke his revisional power to correct each and every type of mistakes committed by the Assessing Officer – Decided against Revenue. Interpretation of section 13(1)(d) of the Act - Whether the Tribunal is correct in holding that when a part of income is held to be violative of the provisions of Section 13(1)(d) only to the said extent maximum marginal rate of tax is to be levied and not for the whole income more particularly when there is violation of provisions of Section 11(5) of the Act – Held that:- It is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to denial of exemption under Section 11 on the total income of the assessee – the decision in Director Of Income-Tax (Exemptions) Versus Sheth Mafatlal Gagalbhai Foundation Trust [2000 (10) TMI 26 - BOMBAY High Court] followed - in case of contravention of Section 13(1)(d), maximum marginal rate of tax under Section 164(2), proviso is applicable only to that part of income of the Trust which has forfeited exemption and not the entire income – thus, the entire income of the respondent-Trust cannot be assessed for the tax – Decided against Revenue.
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2014 (2) TMI 1032
Retrospective effect of Section 14A and Rule 8D of the Act - Disallowance of Expenses - Whether the Tribunal was justified in holding that the provisions of sub-sections (2) and (3) inserted in Section 14A of the Income Tax Act, 1961 with effect from April 1, 2007 and rule 8D inserted in the Income Tax Rules, 1962 on March 24, 2008 were procedural and retrospective and were applicable for the assessment years 2001-02, 2004-05 and 2005-06 – Held that:- Assessee contended that Rule 8D cannot, by any stretch of imagination, be said to be retrospective in nature – Relying upon Godrej and Boyce Mfg. Co. Ltd. Vs. Deputy Commissioner of Income Tax and Anr. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The provisions of rule 8D of the Income Tax Rules which have been notified with effect from March 24, 2008, shall apply with effect from the assessment year 2008-09 – the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act - the department must be deemed to have accepted the position that Rule 8D is only prospective in nature - the department has to have some consistency in its views and it cannot blow hot and cold at its sweet-will – Decided in favour of Assessee.
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2014 (2) TMI 1031
Order of CIT(A) - Proper examination not done – CIT(A) deleted various additions as opening Capital Balance, Gift from parents & sister, outstanding expenses, unsecured loans, disallowance of expenses and agricultural Income returned - Revenue objected for deleting various additions by CIT(A) without evidence or giving opportunity to the A.O - The matters raised before require re-examination by AO - As seen from the balance sheet placed on record, there are no immovable properties, even the so-called agricultural land purchased in 2005 - As stated by AO no books of accounts or vouchers are furnished - The confirmation of gift letters signed and filed also are devoid of any information about date of gift, mode of gift and amount advanced by each person - Opening capital claimed also require confirmation about sources - CIT(A) without examining this issue, deleted them without proper reasons - Whether assessee has any other Balance Sheet reflecting assets is also not on record - Rule 46A violation is also there – thus, the matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue.
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2014 (2) TMI 1030
Disallowance of foreign exchange loss – Held that:- The assessee has taken FCNR (B) loan from banks on 27.01.2000 and the same was utilized for repayment of 15% Unsecured Redeemable Non-Convertible Debentures of Rs.10 crores - The amount was an actual expenditure incurred by the assessee for the purchase of forward contracts for repayment of FCNR (B) loan – thus, it was not a notional or contingent but actual expenditure - by taking FCNR (B) loan, the assessee has not acquired any fixed asset in foreign currency either in earlier years or in the current years - The provisions of section 43A of the Act could not apply to the facts of the case as the provisions can be invoked only when assets are acquired by raising the FCNR (B) loan by taking the payment in foreign currency on acquisition of capital assets on account of these borrowings – Relying upon Radhasoami Satsang vs CIT [1991 (11) TMI 2 - SUPREME Court] the amount has been utilized for repayment of debentures - The purpose of loan was to swap the costlier loan with the cheaper loan - similar expenditure has been allowed in the preceding and succeeding years – Decided against Revenue.
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2014 (2) TMI 1029
Penalty u/s. 271(1)(c) of the Act - Disallowance of technical know-how expenditure U/s. 35AB of the Act – Held that:- A case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation. 1 to Section. 271(1)(c) - Penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings - merely because additions have been confirmed in appeal it cannot be the sole ground for coming to the conclusion that the assessee had concealed any income - in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income – Relying upon Reliance Petroproducts 2010 (3) TMI 80 - SUPREME COURT] – thus, no penalty is leviable u/s 271(1)(c) – Decided in favour of Assessee.
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2014 (2) TMI 1028
Applicability of Section 50C of the Act - Whether the provisions of section 50C of the Act are applicable or not to the sale of development rights – Held that:- The decision in The decision in ITO Versus SHRI CHANDULAL P PATEL [2013 (12) TMI 946 - ITAT MUMBAI] followed - during the course of assessment proceedings for earlier year i.e. assessment year 2006-07, the AO, himself observed that the assessee was in the business of construction and development rights purchased by the assessee is part of stock in trade - the property was affected with innumerable court proceedings and the assessee could not get possession of the said property till the date the assessee transferred his rights in the property -the assessee was never in possession of the said property. The assessee has not claimed any benefit of indexation in the cost of acquisition - the assessee has treated the said property as stock in trade - There is no dispute to the fact that if a property is in the nature of stock in trade, the provisions of section 50C are not applicable as it applies only in respect of capital assets being land or building or both - On perusal of above section 50C, shows that the provisions are applicable only in respect of capital asset, being land or building or both and there is no reference that the said provisions is applicable to stock in trade - There is no infirmity in the order of the CIT(A) to hold that the provisions of section 50C are not applicable to the property under consideration - The department has also not brought any material on record that the sale value as per agreement for sale of development rights under the facts and circumstances of the case is not genuine – thus, the order of the CIT(A) upheld – Decided against Revenue.
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2014 (2) TMI 1027
Revenue or capital expenditure - Operate, Maintain, Develop, Design, Construct, Develop, Modernize and Maintain the Airport - nature upfront fees and various other expenses – Held that:- the CIT(A) has rightly held that the payment of upfront fee of Rs.150 crores paid by assessee to “AAI” has created capital assets in the form of license to develop and modernize the Airport and collect charges as per terms and conditions as prescribed under the agreement entered into which is an “intangible assets” to the assessee - Thus assessee is entitled for depreciation – Decided against revenue. Deletion of Operating and Administrative expenses – Expenses treated as capital expenditure – Held that:- the CIT(A) examined the chart and the details of the expenses item-wise and after considering the same he has held that no disallowance is called for – Revenue has not been able to point out any infirmity in the findings of CIT(A), the order is upheld – Decided against Revenue. Deletion of disallowance of payments – Payment made to group concerns and sister concern – Held that:- CIT(A) after considering the said details has stated that over all expenditures were reimbursed to GVK and/or the assessee filed the copies of invoices and the details of the transactions with sister concern of the payment made by assessee to substantiate the expenditure – the contention of the assessee is allowed that the disallowance have been made by AO merely on assumptions and without controverting the facts furnished by assessee before the authorities – thus, there is no reason to interfere in the findings of the CIT(A) – Decided against Revenue. Nature of expenses – Disallowance on expenses incurred on resurfacing of runway, replacement of floors tiles and regularizing storm water drains – Held that:- the assessee is to redesign, upgrade, modernize and also to operate and maintain Airport but the expenditure under consideration has been incurred only to ensure that the existing assets continued to be used for use safely and as per norms to enable assessee to run its activity - the expenditure is incurred to facilitate of carrying on by the assessee its main business for which the assessee has been engaged and pending the expansion of the Airport etc. – thus, expenditure is a revenue in nature and cannot be said to be capital in nature irrespective of the fact that the assessee in its books of account has given treatment of it as capital in nature - the assessee will not be entitled for depreciation as it is held to be revenue in nature – Decided in favour of Assessee. Restriction of depreciation allowance – Held that:- The decision in The Hon’ble Bombay High Court in the case of CIT V/s Mazagaon Dock Ltd [1991 (3) TMI 114 - BOMBAY High Court] and Commissioner Of Income-Tax Versus Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME Court] followed - dry dock and wet dock created for ships are to be treated as plant and not building - power generating station building is not a simply concrete structure but a specially designed building and is to be treated as part of plant – thus, taxiways and aprons, parking bays cannot be said to be merely concrete structures but are necessary tools for operating/using the Airport –the same are to be considered as part of plant and machinery – thus, assessee is entitled for depreciation at the rate as applicable on plant and machinery in respect of taxiways, aprons, parking bays etc. – Decided in favour of Assessee. Reduction in amount debited to capital work in progress – Confirmation from the vendor not furnished – Held that:- The CIT(A) itself has mentioned that the assessee filed during the course of appellate proceedings before him forwarding note of running bill for reduced amount and also interalia submitted account for the period 1.4.2006 to 31.3.2007 - the execution of the work by L&T has not been accepted merely because M/s L&T had not sent its reply to the notice issued u/s 133(6) of the Act by AO – thus, the execution of work by L&T for an amount cannot be considered as not genuine merely because there was no reply from M/s L&T in response to notice issued u/s 133(6) of the Act - in the absence of any other evidence on record, the enhancement of the CWIP is directed in respect of the work executed by M/s L&T – Decided in favour of Assessee.
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2014 (2) TMI 1026
Search u/s 132 of the Act – Protective Assessment made - Jurisdiction of AO u/s 153 r.w section 154 of the Act – Held that:- Though the ground was raised before CIT(A) but CIT(A) has not adjudicated it as there is no finding of CIT(A) on the same - the ground needs to be adjudicated by CIT(A) – thus, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Assessee.
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2014 (2) TMI 1025
TDS u/s 192 - Demand u/s 201(1) of the Act – TDS not deducted on various charges u/s 201(1) and Interest u/s 201(1A) of the Act – Held that:- The assessee was specifically asked whether during the year under appeal any "uniform for the employees was prescribed by the company" and the answer was in negative - any allowance given by the company to its employees in the name of uniform allowance cannot be said to be exempt under Rule 2BB(1)(f) r.w.s 10(14)(i) of the Income Tax Act - tax at source is deductable from payments in the nature of uniform allowance – Decided against Assessee. Deletion of Demand u/s 201(1) and 201(1A) of the Act – TDS not deducted on various charges u/s 201(1) – Held that:- The decision in assessee’s own case followed - CMRE was actually not a reimbursement and had and had no correlation with actual expenditure on vehicles - Rule 2BB(i)(c) & not Rule 3 would govern taxability of CMRE payments in employee's hands due to CMRE having no correlation with 'actual running & maintenance charges' of motor car which is the condition required to be satisfied for application of Rule 3(2), Table II(2) - due to declaration by employees of having utilized CMRE for official work – the appellant cannot be treated as assessee in default u/s 201(1) even for AY 2010-11 - As far as assessments of employees in A.Y. 2010-11 are concerned, tax liability is to be determined on case to case basis by applying Rule 2BB(l)(c) – thus, appellant cannot be treated as assessee in default u/s.201(1) for non-deduction of tax at source from CMRE payments for A.Y.s when FBT was in force, i.e. 2006-07 to 2009-10 as well as AY 2010-11, when FBT was not in force – the order of the CIT(A) upheld – Decided against Revenue. Scope of taxable income in addition to the salary u/s. 17(1) (iv) of the Act - Whether the AO was justified in treating assessee as assessee in default u/s. 201(1) for non-deducting tax from the amount of advance disbursed under a Scheme to the employees by considering it to be from salary – Held that:- As per rule 3(7)(vii) of Income Tax rules where employer provides movable assets to its employees for their personal use perquisite value to be taxed as salary is determined @ 10% per annum of the actual cost of asset - the position remained same as envisaged under rule 3(7)(vii)/(viii) of Income Tax Rule, even though instead of assessee-company itself purchasing the goods the same were purchased by the employee in the name of assessee-company out of advance given by the assessee-company - The scheme was designed in accordance with provisions of rule 3(7)(vii)/(viii)of Income Tax Rule and was implemented accordingly by the assessee for the benefit of its employees - The revenue has not brought any material on record to show that the advance was not utilized in accordance with the scheme – thus, the order of the CIT(A) upheld in holding that assessee company was not assessee in default u/s. 201(1) for not deducting tax from the amount of advance given under the scheme to the employees by considering the same to be their salary – Decided against Revenue.
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2014 (2) TMI 1024
Application of Net profit rate - Assessment framed u/s 144 of the Act - Deduction by way of any payment of interest, salary to be allowed or not u/s 185(5) of the Act – Estimation of income in the absence of evidences - Held that:- Even in the remand proceedings before the AO and the CIT(A), the claim has not been substantiated by the assessee - As regards the increase in the cost of building material and fall in net profit, no cogent explanation or supporting evidence has been brought on record before any of the authorities and even in the remand proceedings before the AO and the CIT(A) – Thus, the CIT(A) has rightly has rightly confirmed the provisions of section 145(3) of the Act though that have not been challenged by the assessee either in the cross appeal or in the cross objection – There is great possibility of leakage and therefore, the past history cannot be the guide for application of net profit rate. The facts and circumstances of the concerned year have to be taken into consideration for estimation of income - The assessee has not produced copies of the bills of the assets purchased by him and has not brought on record whether assets have been put to use for the purpose of business during the year – the AO who has rightly applied net profit rate of 7% on the gross receipts by the assessee - no separate allowance or depreciation is made and the application of net profit rate is inclusive of depreciation and interest and salary to the partners - Once the said estimation has been held to be correctly made and assessment having been made u/s 144 of the Act and with clear provisions of section 184(5), the ld. CIT(A) is not justified in allowing interest and salary to the partners. Allowability of Depreciation u/s 32 of the Act – Held that:- The assessee has not brought on record that the assets purchased by him have been put to use during the year – the CIT(A) is not justified in allowing depreciation – the order of the CIT(A) set aside and order of the AO is restored – Decided in favour of Revenue.
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2014 (2) TMI 1023
Disallowance u/s 14A of the Act r.w. Rule 8D of the Rules – Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed – rule 8D is not applicable prior to the assessment year 2008–09 – thus, the order set aside and the matter remitted back to the AO for fresh adjudication – If the assessee has sufficient interest free funds for making the investment in shares of subsidiary company, then no disallowance of interest expenditure should be made - The Assessing Officer is also directed not to apply the provisions of Rule-8D for the assessment year - Decided in favour of Assessee. Addition on account of CENVAT credit in valuation of stock – Held that:- The component of CENVAT has to be added to the closing stock and adjustment has to be made accordingly in the opening stock - The assessee submitted that the adjustment has to be made on the purchases also – the contention of the assessee is accepted for the purpose of valuation of purchase and sale of goods and inventories adjustment on account of tax, duty, cess or fee, actually paid or incurred by the assessee has to be made in view of the provisions of section 145A of the Act – thus, the Assessing Officer is directed to make necessary adjustment and give CENVAT credit on account of purchases also – Decided partly in favour of Assessee.
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2014 (2) TMI 1022
Disallowance u/s 10(10B) of the Act - Premium paid on Keyman Insurance Policies - Revenue was of the view that the policies were not Keyman Insurance Policies as given in the Explanation to section 10(10D) of the Act – Held that:- Once the assessee has bought a policy under a life insurance scheme, then whether the insurance company is making investment in mutual funds for capital appreciation or under any other investment scheme, will not make any material difference - it is clearly evident from the clauses of that it is these policies that it is for life insurance only - if the assessee surrenders the policy within the period of three years, then there is no surrender or maturity value. Under both the policies, the maturity value up to three years is zero - Once it is an admitted fact that the policy has been surrendered and it has been assigned to the policy holders on which no maturity amount or surrender value has been received, then such an observation of the CIT (A) does not make any difference - once the assessee after nursing these policies for some time by paying premium thereupon, has been assigned to the partners, then also the payment of such a premium has to be allowed as deduction – Relying upon Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] – thus, the order of the CIT(A) set aside and the assessee is eligible for claiming deduction towards premium paid in respect of Keyman insurance policy and should be allowed accordingly – Decided in favour of Assessee.
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2014 (2) TMI 1021
Addition made u/s 40A(3) of the Act - Claim of exemption in respect of cash payments – Held that:- The decision in Sahitya Housing Pvt. Ltd. vs. DCIT [2014 (2) TMI 811 - ITAT HYDERABAD] followed - There was no choice for the assessee except to make the payments in cash due to exceptional or unavoidable circumstances as provided under Rule 6DD - since there is no evidence brought on record by the AO to suggest the availability of banking facility in the place where the properties were purchased by the assessee - as per Rule 6DD(g) the disallowance cannot be made u/s 40A(3) of the Act – thus, the CIT(A) is justified in deleting the addition. Addition of payments were made to agents – Held that:- The strong contention of the Department is that the above agents worked for other persons as agents and they cannot be agents to the assessee - There is no prohibition or restriction on a middleman to work as agent of different parties, if he was acting on behalf of the assessee as agent - The assessee's case falls under the purview of clause 6DD(k) of IT Rules, 1962 – thus, exemption is to be given and addition cannot be made u/s 40A(3) of the Act - The reasons advanced by the Department are not appropriate – thus, the claim of the assessee is allowed – Decided partly in favour of Assessee.
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2014 (2) TMI 1020
Disallowance made u/s.14A r.w.s. rule 8D of the Act – Held that:- No disallowance can be made by applying the provisions of rule 8D - A.O. had disallowed 1% of the interest expenses on adhoc basis and the same was enhanced by CIT (A) by following the method prescribed under Rule 8D - AO has not pin pointed any expenditure which the assessee has incurred for earning exempt income – Relying upon Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] – thus, the addition set aside – Decided in favour of Assessee. Depreciation on lease-hold land – Held that:- The land in question was not acquired by the assessee - Merely because the deed was registered the transaction in question would not assume a different character - By obtaining the land on lease the assessee has acquired a facility to carry on business by paying nominal lease rent, therefore, lease rent paid was held allowable as Revenue expenditure – Relying upon DCIT vs. Sun Pharmaceuticals Industry Ltd. [2009 (3) TMI 587 - Gujarat High Court] - thus, the matter has been remitted back to the file of AO for fresh adjudication – Decided In favour of Assessee.
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2014 (2) TMI 1019
Addition u/s 68 of the Act – Cash deposit out of undisclosed sources of income – No documentary evidences furnished - Held that:- The assessee has claimed that there was planning to purchase the land jointly with his father Shri Subhash Chand Jain for group housing complex at G.T. Road, Sonepat, Haryana - Assessee had not filed any documentary evidence in this regard. Assessee’s claim that the amount was withdrawn for initial payments to land owners though Satbir Singh with whom the assessee was negotiating to purchase the land but assessee failed to produce the same - It is claimed that agreements to sell were prepared with respect of the deal with the intended sellers - no evidence was filed in this regard. The assessee also claims that he came to know at later stage that the land, which was intended to be purchased, was already identified by the HUDA for the purposes of housing complex for M/s. Omaxe Limited - None of the claims of the assessee as made in letter are substantiated by any documentary evidence - Even the concerned persons with whom the transaction were made or negotiated were not produced – thus, the claim of assessee that cash withdrawal was not utilized for other purposes have remained unproved - Primary onus is on assessee to substantiate the claim of failure of land deals due to which cash remained unutilized - Assessee had not discharged onus by filing any evidence either documentary or oral in this regard - thus, the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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Customs
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2014 (2) TMI 1018
Classification of goods - Import of parts of tower - Whether the towers meant for WOEG, imported by the appellant which are used in the erection of WOEG, should be classified under CTH 7308 as towers or the same should be classified under 8503 as components of WOEG - Held that:- As per the functions of the towers explained by learned sr. advocate, the goods imported are required for the purpose of placing the windmill at a height and some extent also used to control the windmill face in relation to direction of the wind. It is therefore, apparent that these towers meant for WOEG are designed solely and specifically for the purpose of WOEG and are not meant for any other purpose. As per Section Note 2 to Section XV, only parts of general use can be classified under Chapter 73 but the parts solely and specifically designed for use in a particular type of machinery will have to be classified in that chapter where the main machine is classified. This view is also clarified by the CBEC Circular dated 9.8.1997 wherein it has been held that such towers are essential components of WOEG. Further, it has been correctly argued by learned sr. advocate of the appellant that if for Central Excise purposes, the same goods are considered as components of WOEG then there is no reason as to why for Customs classification purposes the same towers could not be treated as essential components of WOEG - towers imported by the appellant are correctly classifiable under Heading 8503 of the Customs Tariff Act and subsequent benefits were correctly availed by the appellant - Decided in favour of assessee.
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2014 (2) TMI 1017
Waiver of pre deposit - Rejection of value declared - Confiscation of goods - Re-determination of goods - Demand of differential duty - Held that:- while seeking waiver of pre-deposit and stay of all further proceedings for realization of the adjudicated liability; the petitioners have failed to disclose particulars of the transfer of 40,000 shares in favour of his son by Mr. Sangit Agrawal. This was crucial information which was bound to be disclosed. We prima facie consider the omission to state this crucial fact as amounting to suppression of material facts while seeking the discretionary relief of waiver of pre-deposit and stay - Taking the totality of the circumstances into account and duly considering the hardship of the petitioners and the interests of Revenue as well, we find no justification to modify the order dated 18.3.2013 directing remittance deposit of 25% of the adjudicated liability as pre-deposit. However, appellant may either deposit 25% of the duty liability assessed by the orders in original dated 26.3.2011 and 30.4.2012 bearing reference Nos.16/2011 and 11/2012 or may furnish bank guarantee for the amount representing 25% of the duty liability, within six weeks - Decided partly in favour of assessee.
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2014 (2) TMI 1016
Immediate Suspension of CHA License - habitual offender - Regulation 20 of the Customs House Agents Licensing Regulations, 2004 - Time for issuance of Suspension notice - Misdeclaration of the value of artificial leather cloth imported - Forgery of the signatures of officers of the CHA company during the course of clearance of imported goods under DEPB - Held that:- the allegation that the appellant is a habitual offender, on the basis of the order of revocation of their CHA licence on 18-8-2006 has already been set aside by this Tribunal and the same has been confirmed by the Hon’ble High Court of Bombay vide order dated 8-2-2012, is not sustainable. Impugned order has been filed within 15 days as prescribed in Regulation 20(2), as the offence report was received by the Commissioner on 5-11-2012 and the order of suspension was passed on 15-11-2012. Therefore, the same is within time - investigation is going on and the grounds on which the licence has been suspended are not sustainable as the appellant is neither a habitual offender. The statement of Shri Vishal Madan cannot be relied upon at this stage. Further, the fact that the appellant has filed an application for inclusion of the names of Shri Surendra Pandey and Shri Nagendra Pandey as Directors and police verification has been conducted has not been denied. Therefore, the order of suspension of the CHA Licence No. 11/273 under Regulation 20(2) is not sustainable and accordingly the same itself is set aside - respondent is directed to revoke the suspension of CHA Licence - Decided in favour of appellant.
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2014 (2) TMI 1015
China border trade between the local residents living either side of the border - Import of raw silk from China - Exemption under Notification No. 38/96-Cus. dated 23-7-1996 - Commissioner has primarily held against the appellants on the ground that Shri Krishna Singh Garbyal is staying at a place about 80 Kms. away from the border, the import made by him cannot be held to be border trade - violation of the provisions of MoU - Confiscation of goods - Imposition of penalty - Held that:- benefit of notification is available in respect of imports made from China through Gunji route and there is no restriction of the actual user of the goods so imported. Having held that importer has not violated any other condition of the notification - there is no definition of the border trade available anywhere or the distance from the border within which the importer should have been residing. In the absence of the same, the findings of the lower authorities that Shri Krishna Singh Garbyal was not a local resident, cannot be appreciated. Admittedly, the bill of entry was filed by M/s. Krishna Enterprises and as such he has to be held as importer of raw silk in question. As per domicile certificate produced before the Commissioner, he has been shown a person living along the Indo-China border. Import was made by a person living along the Indo-China border and as such can be safely concluded as a border trade. Further, as per the authority for the advance rulings, there is no restriction on the sale of the goods after import. As such, even if Revenue’s allegation as regards the sale of the raw silk by M/s. Krishna Enterprises to M/s. Elegant Industries is accepted to be correct, the same are very much in the legal frame work of law. Levy of anti-dumping duty - Revenue’s allegation of misdeclaration of the Mulberry Raw Silk - Held that:- even if part of raw silk imported by the appellants is held to be of grade 2A, even then no anti-dumping duty is leviable, inasmuch as the Notification No. 106/2003, dated 10-7-2003 levies anti-dumping duty on Mulberry Raw Silk of grade 2A and below, if the landed value of consignment is less than US$ 27.97 per Kg. Admittedly, in the present case the landed value of consignment is US$ 28.18 per Kg. In fact, we find that Commissioner in his impugned order has not confirmed anti-dumping duty against the appellants. In these circumstances, the charge of misdeclaration against the appellants cannot be upheld so as to confiscate the goods, in terms of provisions of Section 111(m) of the Customs Act - Decided in favour of assessee.
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2014 (2) TMI 1013
Validity of para 2.3 of FTP and Para 8.3.6 of the HOP - Unconstitutional and ultra vires the FTDR Act or the FTP - Power of DGFT - Delegation to DGFT - Power to frame Duty Draw Back Rules - Power of DGFT to re-verify or re-determine the duty drawback benefits - Held that:- DGFT has no power to legislate - the power to frame Duty Draw Back Rules can be legislated by the Central Government only and the same cannot be delegated to the DGFT - The power to frame Duty Draw Back Rules under the FTDR Act can be legislated by the Central Government only in exercise of power conferred under Section 19 in the manner prescribed under the FTDR Act and the same cannot be delegated to the DGFT as expressly prohibited by Section 6(3) of the above Act. The power granted to the DGFT under FTP is to lay down the procedure to be followed by an exporter or by any licensing/regional authority or by any other authority for the purposes of implementing provisions of FTDR Act, Rules and the orders made there under and FTP and, therefore, those by necessary implication excludes the “Rule making power” conferred under Section 19 of the FTDR Act inasmuch as the powers conferred under Section 19 cannot be re-delegated to the DGFT as expressly prohibited under Section 6(3) of the Act. The provisions of the FTDR Act do not grant power to the DGFT or its subordinates to re-determine or re-verify the deemed export benefits if such benefits have been approved or granted as per the provisions of the FTDR Act except by way of review as provided in Section 16. In the absence of any power under FTDR Act, the DGFT or its subordinates cannot assume quasi-judicial power for instance, the power to re-determine or re-verify under the administrative guidelines i.e. Para 7 of the ANF -8 Form. Therefore, by virtue of Para 7 of the ANF -8, the DGFT is deriving the quasi-judicial power which is beyond the provisions of FTDR Act. Although specifically prohibited under section 6 of the Act, the DGFT has been illegally vested with the power to intervene in the subject-matters coming within the purview of Sections 3, 5, 15, 16 and 19 in clear violation of sub-section 3 of Section 6 of the FTDR Act - what is specifically prohibited by the FTDR Act, by taking aid of the HOP, the DGFT has assumed such power in colourable exercise of the power conferred upon it. Binding nature of circular / Clarification issued by board - the interpretation given by the respondent No.2 in terms of Paragraph 2.3 of the FTP, no doubt, binds all the officers or the authorities under the FTDR Act provided however that there is no existing interpretation on the relevant point given by the High Courts or the Supreme Court and at the same time, such interpretation given by the Respondent no. 2 will not be binding upon the High Courts or the Supreme Court while making judicial review of any decision taken by the adjudicating authorities under the Act. Para 7 of the declaration attached with ANF-8 form read with the provisions of HOP cannot lawfully confer any power upon the Respondent No.2 or its subordinates to recall any adjudication under the Act by taking aid of such declaration attached with ANF- form. The right of review, it is needless to mention, is a creature of Statute and according to the FTDR Act, a review can be made only in accordance with the provision contained in Section 16 thereof and in a manner provided therein and not beyond the scope of said Section 16 - Decided in favour of assessee.
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Corporate Laws
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2014 (2) TMI 1014
Application for setting aside the Winding up order - Misappropriation of funds - Applicant was in custody while misappropriation done - Held that:- The applicant claims himself to be one of the founder directors of the company and its single largest shareholder. If these claims are correct, it was expected of the applicant to be more diligent than what he has been. He was no doubt not made a respondent in the company petition. But there were 7 other directors who were made respondents and they also did not take part in the winding-up proceedings after 02.08.2004. It is difficult to believe that there was lack of communication between the other directors and the applicant and that the applicant was not made aware of the winding-up proceedings. It would have been quite natural for the directors who were respondents in the company petition to have informed the founder director/ single largest shareholder of the company that winding-up proceedings have been instituted against the company. There appears to have been no impediment in the way of the applicant in those 4-5 months. The applicant, in my view, could not have been unaware of the company petition or the proceedings in connection therewith before this Court prior to his being taken into custody in March, 2005; he could have, therefore, taken steps, to oppose the winding-up proceedings. In any case the publication of the citation in the English newspaper “The Statesman” was made before 12.10.2004 as recorded by this Court in its order passed on 22.03.2005. At that time the applicant was not in custody and, therefore, his claim that he could not have access to newspapers published in Delhi while he was in custody in Lucknow does not hold water. The company was represented before this Court in the winding-up proceedings and up to 02.08.2004 counsel had appeared for the company. It was only thereafter that there was no representation on behalf of the company. The order of provisional winding-up and appointment of provisional liquidator was passed in the present case on 12.10.2004 on which date the applicant was a free person. The publication in the English newspaper i.e. the Statesman was made and a copy of the citation published in the said newspaper was filed in the Court by the OL, as noted by this Court in its order dated 22.03.2005. The applicant thus had ample opportunity to resist the winding-up proceedings. He could not have been unaware of the citation published in the English newspaper or of the order of provisional winging-up and appointment of the provisional liquidator. He was not in custody when these developments took place - diligence shown by the applicant after he was released on bail on 15.07.2007 cannot avail him - application rejected.
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Service Tax
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2014 (2) TMI 1045
Waiver of penalty in respect of delayed payment of service tax on renting of immovable property - Section 80 was amended and a new provision of section (2) was introduced, vide Finance Act, 2012 - Held that:- The appellant in the present case has deposited the service tax alongwith interest on 03.12.2011 and 25.05.2012. As such the said provision is fully applicable to the facts of the present case. - Following the decision in M/s. Euro Ceramics Ltd. Versus Rajkot [2013 (5) TMI 538 - CESTAT AHMEDABAD], penalty waived - Decided in favor of assessee.
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2014 (2) TMI 1044
Refund of CENVAT Credit - eligibility of input service credit taken on lift maintenance or air-conditioner, renting of cafeteria area, sale of foreign currency, AMC to air-conditioning - Held that:- denial of credit on air-conditioner, renting of cafeteria areas, AMC to air-conditioner are not sustainable. - Decision in the case of assessee's own case [2013 (12) TMI 741 - CESTAT CHENNAI] followed. The respondent is an 100% EOU with the Software Technology Park of India and during the course of business some of the employees were required to travel outside India to the patent company for knowledge transfer relating to the business. It is also noted that the lift maintenance is related to their office premises. - all these activities are covered within the definition of input services under Rules 2004 - Decided against the revenue.
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2014 (2) TMI 1043
Valuation - construction service - inclusion of free supplies - Held that:- free supplies made by the Customers to the construction service provider would not get added in the gross amount charged for providing construction services. - Following the decision in the case of Bhayana Builders Pvt. Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI] decided in favor of assessee.
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2014 (2) TMI 1042
Levy of penalty for delayed payment of service tax - works contact service - Held that:- in view of the on going contract which was entered into prior to 10.09.2004 and the levy of tax being a new levy from 10.09.2004 and the appellant was under the bona fide belief that they do not fall under the Service Tax liability and keeping in mind the conduct of the appellant that he has discharged the Service Tax alongwith interest soon after being pointed out, it is a fit case for setting aside the penalty under Section 78
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2014 (2) TMI 1041
Stay application - Demand of service tax - Intellectual property service - Transfer of licence for production of certain aircrafts and equipments and transfer of technology - Held that:- confirmation of demand under IPR category is justified. Similarly, the appellant has not disputed that the engineers of foreign parties came to their premises for giving advice and consultancy for the manufacture of aircrafts. As such, we prima facie agree with the Adjudicating Authority that the demand on the said count is also sustainable - demands stand raised by invoking the longer period of limitation. The Adjudicating Authority has himself extended the benefit of Section 80 in respect of penalties to be imposed on the appellant in terms of various Sections. If that be so, there cannot be any malafide or suppression on the part of the appellant so as to invoke the longer period of limitation - Conditional stay granted.
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2014 (2) TMI 1040
Rectification of mistake - Change in cause title - Held that:- Registry is directed to correct the cause title insofar as the words written ‘Commissioner of Central Excise, Chennai IV Commissionerate’ would be substituted by ‘Commissioner of Service Tax, Chennai’. The assessee is also directed to mention the correct cause title in further proceedings - Rectification made.
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2014 (2) TMI 1039
Demand of service taxes - Benefit of Notification No.24/2004 - Denial of benefit in respect of computer training service - Held that:- Following decision of C.C.E. vs. Sunwin Technosolution P. Ltd. [2010 (9) TMI 71 - SUPREME COURT OF INDIA] - Conditional stay granted.
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2014 (2) TMI 1038
Stay application - Commercial coaching and training service - Recovery of Credit - Imposition of interest and penalty - Held that:- use catering service, photography service, service of repair and maintenance of the motor vehicles and renting of halls and travelling expenses is not disputed. I am of prima facie view that all these services have nexus with the appellant’s activity of providing commercial coaching and training and, as such, the same appear to be covered by the definition of input service as given in Rule 2 (l) of the Cenvat Credit Rules. In view of this, the requirement of pre-deposit of Cenvat credit demand, interest and penalty is waived for hearing of the appeal and the recovery thereof is stayed till the disposal of the appeal - Stay granted.
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Central Excise
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2014 (2) TMI 1012
Denial of CENVAT Credit - Clandestine removal of goods - After detailed investigation, the Revenue Officers on scrutiny of the records carne to a conclusion that the respondent had removed their finished goods clandestinely without payment of duty and they have availed ineligible Cenvat credit of the petrochemical products the quantity of which was short received in their factory premises - Imposition of equivalent penalty - Held that:- As regards the denial of the Cenvat credit to the respondent on the inputs which were received short, I find that the assessee in their appeal against the very same impugned order had contended that the confirmation of demand on this ground of even Rs. 38,250/- is incorrect. The said appeal was allowed by this Bench vide final order dated 4-5-2012 wherein the Bench has held that there is no case for upholding the order passed by the Commissioner (Appeals) for denial of Cenvat credit on the quantity of inputs which were received short. Conversely it would mean that the Bench has accepted the findings of the first appellate authority that the loss of the inputs being marginal, the Cenvat credit should not be denied to an assessee. Respectfully following the same; I hold that the Revenue’s appeal to the extent it challenges the appeal of the first appellate authority on this point of denial of Cenvat credit for short receipt of the inputs is liable to be rejected. In the Order-in-Original, the adjudicating authority has admitted that as far as the role of buyers is concerned, there is little evidence from the buyers’ end to corroborate that the goods despatched were not under the proper duty paying documents and also noted that Revenue would not bring corroborative evidences to substantiate their case. If these are the findings of the adjudicating authority as to there being no corroborative evidences, then, the Revenue has failed to bring home charges against the respondent, as has been correctly held by the first appellate authority as per the findings reproduced hereinabove. I find that the first appellate authority has correctly come to the conclusion that there is no evidence of clandestine removal of the goods by the respondent herein. In view of this, the Revenue’s appeal against the main assessee fails. Since the Revenue’s appeal against the main assessee fails, the consequent appeals of setting aside of the penalties on other two individuals also fail - Decided against Revenue.
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2014 (2) TMI 1011
Duty demand - Revenue imposed duty since no excise duty is paid on final product, namely, cement, the applicant had to pay 10% of the value of cement, as per the provisions of Rule 6 of the CENVAT Credit Rules, 2004, especially because supplies to SEZ developer was not mentioned in the clause 6(6) of CENVAT Credit Rules 2004 at the relevant time - Held that:- where the benefit was extended for clearances to 100% EOU or FTZ by amending Rule 57C, wherein, the Tribunal had held that said notification can have only prospective effect and not retrospective effect - benefit has to be extended for the earlier period also. Besides, the applicant has a very strong case on time bar also. Considering all these aspects, we order that the appeal may be admitted without any pre-deposit - Stay granted.
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2014 (2) TMI 1010
Waiver of pre deposit - Availment of CENVAT Credit - manufacture of computers system and is also engaged in the trading - input services i.e Management, maintenance and repair service, software services - Held that:- In respect of the credit attributable to the trading activity, we do not find any merit in the submissions of the learned counsel for the applicant because the applicant should not have taken or at least reversed it on his own. There is no submission that they have made any reversal either at Bangalore or Pondicherry. The matter under consideration is credit taken at Pondicherry. So it is appropriate that the portion attributable to trading is ordered to be reversed immediately. Therefore, we order the applicant to make a pre-deposit of Rs.1.7 crores in respect of Appeal - Conditional stay granted.
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2014 (2) TMI 1009
Waiver of pre-deposit - Classification of the product “Gronimix Neem Blended Organic Manure” - fertilizer - Classification under CETA 3101 00 99 or CETA 3808 99 10 - Held that:- literature/pamphlet available in para 85.1 of the adjudicating order dated 21-2-2013 as to what nutrient/nutrients are provided by the product manufactured/marketed by the appellants. On the contrary one of the features of the product mentioned in the pamphlet is that “Application of Gronimix with ‘N’ containing fertilizers regulates the release of nitrogen for longer time and increases the effect of fertilizers”. This feature only seems to suggest that release of Nitrogen (N) from a fertilizer is also regulated by the product manufactured by the appellant. Under the heading ‘Effectiveness’ of the pamphlet contained in para 85.1 of the adjudication order dated 21-2-2013 also the product has been advertised to control Nemotodes, termites and soil borne pests which have been appropriately interpreted by the adjudicating authority in paras 89.1 & 89.2 of the adjudication order. Appellants have, therefore not made out a prima facie case for complete waiver of the dues and are required to be put to certain conditions - Conditional stay granted.
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2014 (2) TMI 1008
Waiver of penalty - short payment was due to error of interpretation of exemption Notification No. 15/2002, dated 1-3-2002 - Payment of Short duty - Held that:- spell of contravention is only 5 months from the date of implementation of notification. There is no observation that the appellant deliberately caused loss to revenue except an assumption that there was intentional short-payment. As soon as the respondent came to understand right interpretation it made good loss of revenue. For this short spell of breach, it may not be construed that there was deliberate breach of knowable law. At the infancy stage of implementation of notification, arise of difficulties may not be ruled out. Finding no contumacious conduct of the respondent, granting waiver of penalty by ld. Commissioner (A) appears to be justified. Therefore, there shall be no interference to his order - Decided against Revenue.
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2014 (2) TMI 1007
Denial of remission of duty - destruction of goods - Appellant’s both factories were flooded by water due to heavy rains and flood in Daman Ganga River in August, 2004 - Application was unanswered by the office of the Commissioner of Central Excise or the office of the Assistant Commissioner of Central Excise having jurisdiction over the appellant’s factory - Held that:- the appellant having informed the authorities about the quality of the goods which needs to be destroyed, as being unfit for human consumption, it was for the lower authorities to respond to such a letter received from the appellant and also the remission application. - The lower authorities have not even bothered to call for any details or give any response to the appellant on the remission application. - The appellant had taken all the possible actions from his side to keep the departmeat informed about the requirement of remission of the duty and also of the destruction of the goods. The rejection of the remission applications by the adjudicating authority in these cases is not in consonance with the law and are unsustainable. - Following decision of assessee's own previous case [2008 (4) TMI 636 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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2014 (2) TMI 1006
Waiver of pre deposit - Availment of CENVAT Credit on inputs - Captive consumption u/ntf 67/95 - Exemption vide Notification No. 6/2006-C.E., dated 1-3-2006 - availing exemption on Final Products as supply to International Competitive Bidding (ICB) Project - Held that:- assessees prima facie were not required to discharge the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001 as they were covered by Clause (vii) of Rule 6(6), which stipulates that the provisions relating to payment of 10% or 5% as the case may be were not required to be followed as the goods were supplied against I.C.B. in terms of Notification No. 6/2002 or 6/2006 and therefore, exempted from levy of duty of customs and additional duty as per Clause (vii) of Rule 6(6) of the Cenvat Credit Rules. The assessees therefore, have made out a prima facie case on merits and we therefore dispense with pre-deposit of duty, interest and penalty and stay recovery thereof pending the appeal. - Following its earlier decision in [2012 (10) TMI 105 - CESTAT, CHENNAI] - Stay granted.
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CST, VAT & Sales Tax
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2014 (2) TMI 1047
Stay application - Difference between tax paid under the TNVAT Act under Works Contract Act - Suppression of sales - Difference in purchase turnover between the trial balance and the monthly sales tax returns - Held that:- A perusal of the material documents reveals that what are all the information available with the assessee had been furnished to the department and the assessee had been duly assessed to tax and the liability had been fixed - sales cannot be construed as Inter State sales and it is only a sales within the State of Tamil nadu, now the respondents have invited the dealer to prove their objections through an audited trial balance and the Profit and Loss Account and undoubtedly, it is for the assessee to prove its objections in accordance with law. As the respondents have proposed to revise the assessment only for non-furnishing of the audited trial balance and the plea of the petitioner that they are prepared to prove their objections with the audited accounts, these writ petitions are disposed of with a direction to the writ petitioner to file their proof of objections within a period of four weeks from the date of receipt of a copy of this order. Thereafter, the respondents shall consider the same in accordance with law and on merits, give an opportunity of hearing to the dealer and pass appropriate orders thereon within a period of eight weeks thereafter. Till such time, the respondents are directed not to proceed with the recovery order - Stay granted.
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2014 (2) TMI 1046
Execution of bank Guarantees for the balance amount of disputed tax - Held that:- The petitioner has already deposited 25% of the disputed amount of tax pursuant to the direction given by the Appellate Deputy Commissioner. In addition to the deposit of 25%, the Appellate Deputy Commissioner, directed the petitioner to produce Bank Guarantee for the remaining amount of tax and penalty - This Court has passed several orders on earlier occasions substituting the condition with regard to execution of Bank Guarantee by permitting the concerned appellants to produce personal bonds, undertaking to pay the entire amount , in case the appeal is rejected - The petitioner in these three petitions is also similarly placed and therefore, I am of the view that the petitioner should be permitted to execute personal bonds instead of Bank Guarantees - Decided in favour of assessee.
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