Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 28, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Trade surplus on sale of jewellery - The amount is reflected in the account for long time over number of years as trade surplus amount it has to be considered as income as observed by the Tribunal - HC
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When the admitted fact is that the assessee charged and received only the book value of its finished product, there was no reason for the Assessing Officer to tax the amount which the petitioner never received - HC
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Entitlement for benefit u/s 10A - partnership firm was converted into a company - benefit under Section 10A allowed - HC
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Penalty u/s 271B – Tax audit u/s 44AB - Since the order passed by the Income Tax Officer does not contain the requisite recital, it has to be held that no such approval was obtained - The order itself is incompetent - HC
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Reassessment u/s 147 / 148 - Reasons to believe must have nexus and live link with the formation of opinion by the AO that taxable income had escaped assessment - As per mandate of Section 149(1)(b), income escaping assessment should be or likely to exceed Rupees one lac - HC
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Expenditure claimed by the assessee to fund the higher education of its director had an intimate and direct connection with its business - expenditure allowed u/s 37(1) - HC
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TPA - The use of word ‘shall’ in sub-section (13) shows that it is mandatory on the part of Assessing Officer to pass the final assessment order by only implementing the directions of the DRP- AT
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When educational institution is approved by the prescribed authority and when the assessee also applies its income for the income or accumulates the same for subsequent application, it entitled for exemption u/s 10(23C)(iiiad) - AT
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Assessee could not conduct business activity during the financial year, then also the assessee company is entitled to allowance of fixed and necessary expenses to maintain basic infrastructure of the company - AT
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Disallowance u/s 14A of the Act r.w Rule 8D of the Rules - while arriving at the disallowance of rule 8D, disallowance of interest expenditure should be restricted to 20% of the exempt income i.e., dividend income - AT
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Penalty u/s 271D - directors withdrawing from the capital account in their respective proprietary concerns for the purpose of construction of building and purchase of machinery of the new company, cannot be treated as a loan or deposit as contemplated u/s 269SS - AT
Customs
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Whether the clearance made in DTA against Advance Authorisation, where payments are not received in foreign currency, are admissible for the purpose of fulfilling export obligation under Exim Policy - Held yes - AT
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Recovery of refund claim of SAD - Only condition of the notification in question is payment of appropriate VAT or sales tax. They are not having jurisdiction to go into the question of correctness of sales tax paid by the assessee. - AT
Service Tax
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Collection of fly ash - the service is more appropriately classifiable under Cargo Handling Service and not under Business Auxiliary Service - stay granted - AT
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Demand of differential duty - Discrepancy in annual financial statements and ST-3 Returns - Suppression of value of services rendered - Conditional stay granted. - AT
Central Excise
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CENVAT Credit - Whether the radio active material (californlum - 252) used in fast lab analyzer is a eligible capital goods or not - Credit allowed - AT
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Valuation - the buyers price to their own sellers cannot be the basis for determination of assessable value at the hands of the assessee who undertakes the activity of recording the audio cassettes - AT
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Exemption on the basis of 11C Notification No. 44/90-C.E. (N.T.) - the drug montorip Capsule which is a formulation of 3 combination mainly Rifampicin + Pyrazinamide + Isoniazid shall not be eligible for exemption under the Notification in question - AT
VAT
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Use of Form -C and Form 31 to import the chemicals and machinery without permission - levy of penalty confirmed - HC
Case Laws:
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Income Tax
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2014 (2) TMI 1081
Deleting the disallowance of interest – Held that:- The CBDT instruction No.3 of 2011 dated 9.2.2011 followed - The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee - In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit, the Commissioner of Income-tax shall specifically record that “even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction” – these appeals have been filed by department on 11.2.2012 and the tax effect in both the appeals is of Rs.1,71.663/- and Rs.1,76,354/-, respectively, the above instructions of CBDT are applicable and the appeals filed by department are liable to be dismissed as the tax effect in these appeals are below Rs.3 lakhs - Decided against Revenue.
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2014 (2) TMI 1080
Bad debt u/s 36(1)(viia) of the Act - Whether the Tribunal is correct in law and fact in holding that the bad debt relating to the non- rural branches in excess of the credit balance of the provisions for bad debts created u/s 36(1)(viia) alone is admissible for deduction u/s 36(1)(vii) of the Act – Held that:- The provisions of Section 36(1)(vii) and (viia) of the Income Tax Act are distinct and independent items of deduction and operate in their respective fields - the proviso would not permit the benefit of double deduction operating with reference to rural loans while, under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year – Decided in favour of Assessee. Disallowance of claim for leave encashment – Held that:- The opinion of the Tribunal so far as disallowance claimed in respect of leave encashment under Section 43B(f) of the Act, as on today, the provision seems to be in force in the light of the stay order granted - as long as Section 43B(f) is on Statute, the disallowance is justified. Trade surplus on sale of jewellery - Whether the Tribunal is correct in holding that the surplus outstanding in the appellant's accounts acquired the character of trade surplus when the appellant had not credited the sum in their P&L account and there is nothing to show that there is cessation of the liability – Held that:- The decision in Catholic Syrian Bank Ltd. CIT (Asst.) [2012 (2) TMI 262 - SUPREME COURT OF INDIA] followed – The amount is reflected in the account for long time over number of years as trade surplus amount it has to be considered as income as observed by the Tribunal - there is no fault with the opinion of the Tribunal – thus, the appeal is partly allowed – Decided against assessee.
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2014 (2) TMI 1079
Deduction u/s 43B of the Act Basis of valuation Held that:- The claim was made on the basis of a valuation which was disputed by the assessee - it was a factual dispute which needed adjudication - Once the claim was adjudicated, the assessee had the option to prefer an appeal, but before the time to prefer an appeal ran out the assessee chose to put an end to the controversy and paid the amount adjudicated and correspondingly claimed deduction The decision in CIT vs. Orient Supply Syndicate [1981 (2) TMI 33 - CALCUTTA High Court] followed - the Division Bench took the view that the question whether the liability of the earlier years discharged subsequently can be allowed to be deducted is a question which would depend on the facts and circumstances of the case and the statutory provisions - the payment was made after adjudication and not during the relevant year - even before introduction of Section 43B, it could not have been said that in all cases the assessee, maintaining books of accounts in a mercantile system, could not be permitted to deduct the amount paid in respect of liability which was incurred in the earlier years Decided in favour of Assessee.
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2014 (2) TMI 1078
Block Assessment – Notice for undisclosed income for the block period u/s 158BC of the Act – Held that:- Both the authorities have expressed doubt regarding the sufficiency of the document as prima facie material and it is after verifying the statement of accounts, day book and ledger that they have formed an opinion that the certificate alone was not enough to mulct such a liability for payment of tax on the assessee - Since there is no perversity in the findings of the appellate authorities, thus, the contentions raised by the revenue cannot be taken as a substantial question of law. The appellate authority has considered all the documents produced and has clearly narrated the source of income for the purpose of the said investment - The view of the appellate authority had been confirmed by the Tribunal as well – The validity of the documents relied upon by the assessing officer had been considered in great detail and the first appellate authority had narrated the availability of evidence for arriving at the conclusions with reference to the undisclosed income alleged to have been made by the assessee - thus, there is no need to take a different opinion – no substantial question of law arises from the appeal – Decided against Revenue.
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2014 (2) TMI 1077
Reopening of Assessment u/s 147 of the Act - Held that:- The reason why the assessee did not credit the entire sale consideration to the Profit and Loss account was explained - Explanation whether valid in law is not important at this stage - What is important is that the reason for such reduced amount being credited to Profit and Loss account was eloquently and elaborately stated in the notes - In the return filed by the assessee itself, thus there was clear explanation why and on what basis the assessee adjusted the loss of MEK and Foods Division against the sale proceeds of Carbon Black unit before crediting remainder to the Profit and Loss account – thus, there was no failure on part of the assessee to disclose truly and fully all material facts - There was no suggestion that the income chargeable to tax had escaped assessment for the failure of the assessee to disclose truly and fully all material facts - There was no hint in the reasons recorded by the Assessing Officer that there was failure on part of the petitioner in disclosing true and full facts – Notice is liable to be set aside. Disallowance u/s 32A of the Act - Investment allowance – Agreement to sell – Held that:- The grounds relied upon by the Assessing Officer simply would not permit him to reopen the assessment that too after four years of end of relevant assessment year - The second ground itself is based on inaction on part of the Assessing Officer in the original assessment in not disallowing the investment allowance under section 32A(4) of the Act which was earlier granted to the assessee pertaining to its unit which was now sold - In the agreement parties decided to transfer the finished goods at market value - deviation from the agreement may either be by mutual consent, explicit or implied, or may even be in breach of terms of the agreement - when the admitted fact is that the assessee charged and received only the book value of its finished product, there was no reason for the Assessing Officer to tax the amount which the petitioner never received – Decided in favour of Assessee.
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2014 (2) TMI 1076
Entitlement for benefit u/s 10A of the Act – Business of exporting software – Conversion from firm to company - Benefit u/s 80HHE of the Act - Whether the Tribunal was correct in holding that the conversion of assessee firm to a company and conversion of the same into an STP unit would not amount to transfer of ownership or beneficial interest or reconstruction or splitting of business - Held that:-The benefit under Section 10A can be extended even to the existing units, if they have fulfilled the condition under Sections 10A(2)(a)(ii) and 10A(2)(a)(iii) of the Act and as contended by the assessee, the requirement of setting up of a new STP unit does not arise – Relying upon Commissioner of Income-Tax Versus Texspin Engineering And Manufacturing Works [2003 (3) TMI 56 - BOMBAY High Court] - the conversion of a Firm into a Company is not a case of distribution of assets or dissolution of the Firm. There is no transfer of business as contemplated under Section 45(1) of the Act and only the partnership firm was converted into a company and all the partners of the firm have become the shareholders of the company - In view of the STPI scheme framed by the Government of India, the existing DTA units can also be converted into STP units and enjoy the deduction under Section 10A of the Act - the assessee has not violated any of the conditions prescribed under Section 10A of the Act - The benefit under Section 10A would also be available even when an existing unit gets converted into STP unit - it is not open to the Assessing Officer to contend that no new undertaking came into being after approval of STPI – Decided against Revenue.
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2014 (2) TMI 1075
Penalty u/s 271B of the Act – Audit of accounts as per section 44AB of the Act – Mandatory requirement to obtain approval - Held that:- The order imposing penalty does not disclose that prior approval of the Joint Commissioner was obtained in either of the two cases – Relying upon Indrajit Banerjee Vs. Commissioner of Wealth Tax, Kolkata & Anr. [2014 (1) TMI 415 - CALCUTTA HIGH COURT] - It was the obligation of the Income Tax Officer to indicate in his order that he passed the order after obtaining requisite approval - Since the order passed by the Income Tax Officer does not contain the requisite recital, it has to be held that no such approval was obtained - The order itself is incompetent - An incompetent order is a nullity and the point as regards nullity can be taken at any stage – the order of penalty cannot be sustained – thus, the order set aside and the matter remitted back to the AO for passing an order under Section 271B after obtaining necessary approval – Decided in favour of Assessee.
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2014 (2) TMI 1074
Deletion of disallowance of transport charges – Held that:- The court Concurred its decision with the findings of the Tribunal - Revenue did not dispute the fact that the question as regards the amount of transport charges incurred by the assessee is a pure question of fact - He is unable to show as to why is the order passed by the learned Tribunal perverse - finding of fact cannot be interfered with just because the revenue chooses to prefer an appeal without disclosing any reason as to why or how is the order of the learned Tribunal is perverse – Decided against Revenue.
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2014 (2) TMI 1073
Validity of Reassessment proceedings u/s 148 of the Act – Held that:- This is a serious lapse, and it is apparent that the proceeding sheets in the revenue custody and charge have been removed – when proceedings/hearings were held, then order/proceeding sheet should be available - reassessment proceedings have been initiated after four years from the end of the relevant assessment year and as per the first proviso to Section 147 of the Act - it has to be shown that there was failure on the part of the assessee to disclose fully and truly all facts necessary for the assessment - In the “reasons to believe” it is mentioned that absence of “crucial information” relating to income and expenditure on account of activities of the petitioner in India had resulted in improper computation of income for the assessment year 2003-04. As per the reasons to believe itself, in case the petitioner had furnished statement showing income and expenditure from Indian activities in the course of the original assessment proceedings, there was no lapse or failure on the part of the assessee i.e. the petitioner - Once it is held that the details were furnished, the reassessment notice would fail - Letter/reply dated 22nd March, 2006 enclosing the details would go to the very root and falsify the averments made in the reasons to believe - The said reasons would be factually incorrect and reassessment notice bad and contrary to the first proviso to Section 147 of the Act - The reassessment notice is hit by the principle of “change of opinion”. Reasons to believe must have nexus and live link with the formation of opinion by the Assessing Officer that taxable income had escaped assessment - As per mandate of Section 149(1)(b), income escaping assessment should be or likely to exceed Rupees one lac. - This required prima facie computation of income escaping assessment - This in turn required examination of data or figures relating to “Indian operations” - This being the position and stand of the Revenue, the Assessing Officer could not have formed any prima facie or tentative opinion that income had escaped assessment as the petitioner had positive income from “Indian operations”, if we take into account “actual expenditure” incurred relating to Indian operations. In the absence of the details, the averment made in the reasons to believe will be only a guess work or surmise and not cogent or reliable material to form a prima facie view - the Assessing Officers may be handicapped in such cases but there are sufficient provisions in the Act to get hold of the said data before proceedings are initiated or reasons are recorded - There is nothing to indicate and show the data and figures of the year in question were ascertained or gathered from records for other assessment years or otherwise - Thus, the petition is allowed and the reassessment proceedings set aside initiated by issue of notice under Section 148 relating to assessment year 2003-04 – Decided in favour of Assessee.
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2014 (2) TMI 1072
Scope of Business expenditure u/s 37 of the Act - Whether the Tribunal fall into error of law in holding that the appellant’s claim that the amount has been spent for the higher education of son of the Director, was not liable as “business expenditure” u/s 37 of the Income Tax Act – Held that:- The burden of showing that expenditure would be wholly and exclusively for the purpose of business under Section 37(1) is upon the assessee and that personal expenditure cannot be claimed as business expenditure - there is nothing on record to suggest that such a transaction is not honest - Dushyant Poddar not only worked but his chosen subject of study would aid and assist the company and is aimed at adding value to its business. It would be unwise for the Court to require all assessees and business concerns to frame a policy with respect to how educational funding of its employees generally and a class thereof, i.e. children of its management or Directors would be done - Nor would it be wise to universalize or rationalize that in the absence of such a policy, funding of employees of one class – unrelated to the management – would qualify for deduction under Section 37(1) – that was not such an intent in the statute which prescribes that only expenditure strictly for business can be considered for deduction – thus, the expenditure claimed by the assessee to fund the higher education of its employee had an intimate and direct connection with its business, i.e. dealing in security and investments – thus, it was appropriately deductible under Section 37(1) – the AO is directed to grant the deduction claimed – Decided in favour of Assessee.
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2014 (2) TMI 1071
Reopening of assessment u/s 147 of the Act - Held that:- The assessment was reopened within four years and there is specific findings that there was under assessment of income in the case of the assessee - This is nothing on record to suggest that the reopening was due to change of opinion – thus, the order of the CIT(Appeals) on this issue is confirmed – Decided against Assessee. Application of provisions of section 115JB of the Act - Levy of minimum alternate tax – Held that:- As decided in assessee’s own case for the previous year, it has been held that the provisions of s. 115JB can only come into play when the assessee is required to prepare its P&L a/c in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act - The starting point of computation of MAT under s. 115JB is the result shown by such a P&L a/c. In the case of banking companies, however, the provisions of Sch. VI are not applicable in view of exemption set out under proviso to s. 211(2) of the Companies Act - The final accounts of the banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act - The provisions of s. 115JB cannot thus be applied to the case of a banking company - the provisions of Sec.115JB could not be applied on the assessee – Decided in favour of Assessee. Interest on securities – whether the interest on securities are to be taxed on due basis or on accrual basis - Held that:- The decision in Tamilnadu Mercantile Bank Limited [2007 (1) TMI 128 - MADRAS High Court ] followed - the interest on securities can be taxed only on due basis - When the principal amount involved in the instrument itself is redeemable only on due date, there is no reason to hold that the interest element would be generated on accrual basis - The interest also goes along with the principal amount in the case of securities – Decided against Revenue.
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2014 (2) TMI 1070
Addition on account of treating the arms’ length price as nil - Held that:- When the assessee has taken a business decision of outsourcing a part of the R & D activity it is not for the department to question it - it is for the assessee to decide what is best for his business interest - The department cannot step into the shoes of a businessman and ask him to conduct his business in a particular manner or advise him what to do or not – Relying upon CIT vs. EKL Appliances Limited [2012 (4) TMI 346 - DELHI HIGH COURT] - It is not necessary for the assessee to show that any legitimate expenditure incurred by him was also incurred out of necessity - It is also not necessary to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years - The only condition is that the expenditure should have been incurred "wholly and exclusively" for the purpose of business and nothing more. The only thing that the TPO is required to examine is whether the payment made to AE towards reimbursement of R & D expenditure is within arm’s length - when the department is contradicting, then it is for the department to bring on record material to show that such facilities are available in India and what would be cost of research and development work with regard to this particular research work - without bringing sufficient evidence on record to prove that the transaction between the assessee and its AE is not genuine, the conclusion arrived at by the TPO/DRP that it is a sham transaction, cannot be accepted - The efforts of the TPO to justify the transaction as not genuine, the TPO has failed to examine and make necessary enquiry to find out whether the expenditure incurred towards outsourcing R & D work is within arm’s length – thus, the matter remitted back to the AO for fresh consideration. Disallowance u/s 40(a)(i) of the Act – Held that:- DRP has completely misdirected itself while coming to such conclusion - A perusal of the certificate dated 6-7-2007 clearly shows that assessee was permitted to pay an amount of Rs.20 crores to its AE towards reimbursement of expenditure incurred on assessee’s behalf without deducting tax at source – thus, no disallowance could be made u/s 40(a)(ia). Claim of Expenditure u/s 35(1)(i) of the Act - Scientific research expenditure – Whether the ACIT/DRP is justified in law in observing that the assessee company is still in the pre-commencement stage and thereby disallowing the entire scientific research expenditure incurred in India – Held that:- The finding of the Assessing Officer as well as DRP is not on the basis of cogent evidence - Assessing Officer has allowed similar expenditure claimed in the subsequent assessment year i.e. assessment year 2008-09 - section 35(1) and 35(2) of the Act also provided that both revenue expenditure as well as capital expenditure incurred towards scientific research relating to the business of the assessee is eligible for deduction - There is enough material on record to show that assessee is carrying on R & D activities – thus, it cannot be said that assessee has not commenced its business – the Assessing Officer is directed to allow the expenditure incurred in R & D activities carried out in India – Decided in favour of Assessee. Disallowance of interest on reimbursement of expenses – Held that:- The disallowance made cannot be sustained - Since it has already been held that the transaction between the assessee and its AE relating to outsourcing of research and development activity cannot be held to be a sham transaction or diversion of funds – also, it cannot be held that the amount advanced to the AE is for non-business purposes – thus, the Assessing Officer is directed to delete the addition – Decided in favour of Assessee. Interest income treated as income from other sources – Held that:- The Assessing Officer shall complete the assessment in conformity with the directions of DRP - The use of word ‘shall’ in sub-section (13) shows that it is mandatory on the part of Assessing Officer to pass the final assessment order by only implementing the directions of the DRP - an issue which is not considered in the draft assessment order and consequently was not subject matter for consideration before DRP could not be dealt with in the final assessment order – thus, the AO is directed not to treat the amount as income from other sources – Decided in favour of Assessee.
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2014 (2) TMI 1069
Addition made u/s 69B of the Act - Undisclosed sale consideration for the purchase of a land - Claim of Exemption u/s 10(23C)(iiiad) of the Act - Survey action under S.133A - validity of statement which was retracted later – Held that:- In view of the retraction made by the said person, the Assessing Officer should not have simply gone by the contents of the letter dated 18.12.2010, without bringing on record any corroborative evidence – Relying upon Mehta Parikh V/s. CIT [1956 (5) TMI 4 - SUPREME Court] once an affidavit is filed by a person, the contents thereof have to be taken as true, unless established otherwise - Even assuming that the assessee paid any amount over and above the consideration disclosed in the sale deed, the payment of such amount was for the purpose of advancement of the objects of the assessee-society, viz. education, and consequently even on that ground, there is no justification for any addition, since its income is, as it is, exempt from tax - The claim of exemption under S.10(23C)(iiiad) in respect of ‘any income’ means the same is exempt provided the educational institution solely exists for educational purpose and not for the purpose of profit. The assessee society is exiting solely for purpose of carrying on educational activities, through its institutions - When such educational institution is approved by the prescribed authority and when the assessee also applies its income for the income or accumulates the same for subsequent application, wholly and exclusively for its objects, the institution is entitled for exemption in respect of any income – The decision in ACIT V/s. Muslim Educational Society [2009 (3) TMI 900 - ITAT COCHIN] followed – thus, there was no justification for the additions made by the Assessing Officer. Applicability of section 115BBC of the Act – Held that:- The assessee contended that the right from the beginning that it has been maintaining regular books of account, and has maintained record as to the identity of donors and the relevant details, and consequently provisions of S.115BBC are not applicable – the contentions of the assessee have not been controverted by the Revenue with any supportive material – The decision in Hans raj Samarak Society v. ADIT(E) [2012 (9) TMI 843 - DELHI HIGH COURT] followed – the assessee has maintained record of the donations with relevant details as to the identity of the donors, the provisions of S.115BBC are not applicable – thus, the order of the CIT(A) set aside – Decided in favour of Assessee.
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2014 (2) TMI 1068
Partial business loss allowed - Allowability of claim expenditure – Continuity of Business Activity – Whether the CIT(A) has erred in only allowing expenditure partially instead of allowing the entire business loss and in holding that no business was carried out by the assessee as such the expense incurred including deprecation etc. were not allowable – Held that:- The decision in Commissioner of Income Tax vs Northern India Iron & Steel Co. Ltd. 1994 (9) TMI 53 - DELHI High Court] relied upon - where the assessee has the intention to take up manufacturing activity in the near future, an inference should be drawn that the assessee has an intention to conduct business activities - the intention to conduct business activity is a paramount factor for examining the claim of the assessee in regard to expenses and depreciation - there was lack of cash flow and funds during the financial year and the same cause is acceptable and cogent reason for non-conducting of any business activity during the year under consideration - In this situation when the assessee is intending to carry on business activity but due to unavoidable circumstances beyond his control, the assessee could not conduct business activity during the financial year, then also the assessee company is entitled to allowance of fixed and necessary expenses to maintain basic infrastructure of the company and also depreciation on plant and machinery although the same could not be used for manufacturing activity during the year under consideration. The assessee has an intention to conduct business and manufacturing activity during the financial year under consideration – thus, basic expenses to maintain office and factory premises of the assessee are allowable and legal expenses pertaining to auditor’s fee etc. are also allowable - the plant and machinery was ready for use in manufacturing activity, then obviously the assessee is also eligible for allowance of depreciation on plant and machinery for the year under consideration - But there is a certain discrepancy, inconsistency in the amounts shown by the assessee in its profit and loss account and computation of depreciation - the amount of depreciation is to be determined at the end of Assessing Officer as per provisions of the Act as well as Company’s Act in the light of amount of depreciation which was allowed for the assessee during the preceding assessment year to the year under consideration and as per written down value brought forward in the beginning of the year – thus, The claim of the assessee pertaining to expenses and depreciation is allowable – Decided in favour of Assessee.
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2014 (2) TMI 1067
Disallowance u/s 14A of the Act r.w Rule 8D of the Rules - Dividend Income - Whether the disallowance u/s 14A r/w rule 8D can be with regard to the dividend earned on the shares held as stock-in-trade – Held that:- The decision in DH SECURITIES PVT LTD Versus DEPUTY COMMISSIONER OF INCOME TAX [2013 (12) TMI 720 - ITAT MUMBAI] and GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - even though the shares have been held as stock-in-trade, the dividend income earned on such shares has to be examined for the purpose of disallowance under section 14A - the disallowance under section 14A has to be worked out even when the dividend income has been accrued on the shares held as stock-in-trade - Once the shares which yield tax exempt dividend income, then it cannot be held that under the formula, the entire interest expenditure is to be disallowed under the said formula as these shares are also held as stock-in-trade, which yields trading income which is taxable - while arriving at the disallowance of rule 8D, disallowance of interest expenditure should be restricted to 20% of the exempt income i.e., dividend income – thus, the order of the CIT(A) set aside – Decided partly in favour of Assessee.
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2014 (2) TMI 1066
Genuineness of expenses - Whether CIT(A) was right in deleting the disallowance made by the Assessing Officer when the expenses were highly inflated by the assessee under the head bank charges and interest, conference and membership fee, charity and donation etc. – Held that:- The CIT(A) has rightly appreciated the fact that the assessee is the proprietor of two concerns and both the concerns were functioning from the same premises and were doing the same business and the employees were the same for both the concerns - Therefore the income of the assessee’s receipts and expenditure he incurred are from one source only - the proprietorship is a type of business entity that is owned and run by a single individual and there is no legal distinction between the owner and the business – the CIT(A) has rightly appreciated the facts in this matter and has rightly deleted the said addition made by the Assessing Officer – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue. Genuineness of creditors - Deletion on account of outstanding credit to M/s. Tajikistan Airlines - Held that:- CIT(A) rightly held that since the assessee did not benefit or gain from the said transaction he has shown it as liability in his balance sheet as ‘creditor’ and due to dispute with the airlines, the assessee was unable to furnish the confirmation from the said airlines - till the time the payment is made by the said airlines to the assessee or vice-versa the value of the benefit would not be accruing to either of the parties - If the value of the benefit goes in favour of the assessee it would be deemed to be the profit and gains of business, which otherwise would not be the income - The value of the benefit would be made chargeable to income tax as the income of the previous year in which such benefit was obtained and not otherwise – the amount was obtained by the assessee for selling the said airlines tickets for FY 2004-05 and the said amount has not been transferred to the account of the airlines -the liability has not been discharged by the assessee during the relevant Assessment Year since the matter is sub-judice before the Hon’ble Delhi High court – There was no infirmity in the findings of the CIT(A) and the decision to delete the addition is valid – Decided against Revenue.
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2014 (2) TMI 1065
Applicability of section 115A(1)(b)(BB) and Section 9(1)(vii) of the Act - Business income or fee for technical services - Services in relation to construction of pipeline project - Responsibility to execute contract - Whether the assessee’s company is providing technical services and the receipts to be treated as business income or not - Held that:- The decision in Joint Stock Company Zangas Versus ADIT (International Taxation), Ahmedabad [2011 (8) TMI 370 - ITAT AHMEDABAD] followed - Even if extra responsibility of the assessee is there as per the consortium agreement and as per the terms of contract awarded by GAIL to the consortium, the assessee has not done those extra activities and the consideration received by the assessee is as per the cooperation agreement for the activities provided in the cooperation agreement and having accepted by the Assessing Officer the amount of consideration received by the assessee at 3 per cent of gross receipts of the consortium, it has to be accepted that the same is for providing FTS as per the cooperation agreement. The assessee was the leading partner of the consortium, the entire construction work of the project in the hands was done by the assessee and the assessee's activities are not confined to mere providing of FTS - the assessee is required to provide design and engineering of various aspects and is also required for preparing the welding procedure and is also required to review the work procedure for pipeline laying and in addition to this, the assessee is required to depute experts for site review and implementation by KPTL and technical supervision provided by the assessee. No case has been made out by the Assessing Officer to show that section 115A and section 9(1)(vii) are not applicable in the present case as per which the income of the assessee with regard to PDPL project is liable to tax @ 10 per cent as has been claimed by the assessee. - AO directed to apply the provisions of sub-clause BB of clause (b) of sub-section (1) of section 115A along with section 9(1)(vii) of the Act - the order of the CIT(A) confirmed but the AO is directed to verify that 96% receipts of contract has been disclosed by it in case of KPTL and tax has been paid on it – Decided in favour of Revenue.
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2014 (2) TMI 1064
Computation of LTCG - Addition made on Interest free deposits given to the owners - assignment of development agreement to the firm – Whether the consideration of Rs.18 lacs specified in the agreement is inclusive of the refundable deposit of Rs.15 lacs or not – Held that:- The assessee was entitled to a consideration of Rs. 3 lacs only on assignment has rightly returned his net income is subject to the adjustment of incidental expenses - The interest-free deposit as paid up to the date of the assignment was paid for or financed only by the assignee - The CIT(A), while accepting that the assessee did not make any investment in the project, which had not even commenced as on the date of the assignment, and was only a middle man, yet continues to be guided by the lack of credibility of the rectification deed despite clear findings corroborating the assessee’s stand - the agreed consideration in its books, being admissible as expenditure toward work-in-progress (WIP). This would at once satisfy or quell its doubts with reference to an external evidence - The inference of an after-thought is inconsistent with and not borne out of the material on record, as well as the conduct of the parties even prior to the execution of the rectification deed, including the returning of the income itself on the transaction by the assessee - The same would matches with the net of the other sums received up to the last rupee, and at variance with the rectification deed itself - the assessee’s claim of the stated consideration of Rs.18 lacs under the assignment deed is inclusive of Rs.15 lacs to be paid to the owners by way of a refundable deposit is correct – thus, it is rightly deducted in computing the capital gain arising – Decided in favour of Assessee.
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2014 (2) TMI 1063
Penalty u/s 271D of the Act - Violation of section 269SS of the Act – Mode of taking certain loans or deposits – Held that:- Without giving any reason as to why he is not following the judgement in the case of Idhayam Publications Ltd.[2006 (1) TMI 97 - MADRAS High Court] as relied upon by the assessee, the First Appellate Authority went on to confirm the penalty which is not a correct approach. The transaction does not fall within the meaning of loan or advance, there is no violation of section 269SS of the Income-tax Act - the promoter Director of the assessee company have contributed these amounts by withdrawing from the capital account in their respective proprietary concerns for the purpose of construction of building and purchase of machinery of the new company, it cannot be treated as a loan or deposit as contemplated u/s 269 SS - In any event shares were allocated by the company to the promoter directors for the amounts contributed – the decision in Shri SidhData Ispat P.Ltd. [2012 (9) TMI 846 - DELHI HIGH COURT] and IP. INDIA PVT. LTD. [2011 (11) TMI 252 - DELHI HIGH COURT] followed - no penalty can be levied – thus, the penalty levied u/s 269SS of the Act set aside – Decided in favour of Assessee.
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2014 (2) TMI 1062
Power of the CIT(A) to set aside - Whether the CIT(A) erred in directing the AO to recalculate the disallowance u/s 14A of the Act – Held that:- The power to set aside which earlier vested with the CIT(A) has been removed by the Finance Act, 2011 w.e.f 01.06.2001 - the CIT(A) as per the amended provision while deciding the appeal filed by the assessee may either confirm, reduce, enhance or annul the assessment - The power to set aside has been withdrawn by the Legislature - the assessee has made detailed arguments as would be evident from the paper book on record, however it is seen no finding on those facts has been given by the CIT(A) - No findings has been recorded by the CIT(A) - the order is not in compliance with the Statutory mandate – thus, the matter remitted back to the CIT(A) with the direction to decide the same in accordance with law by way of a speaking order after giving the assessee a reasonable opportunity of being heard – Decided in favour of Revenue.
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Customs
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2014 (2) TMI 1061
Computation of Net Foreign Exchange (NFE) - export obligation - deemed export - Adjudicating Authority held that the entire monetary realisation of appellant's clearances/sales proceeds have been effected in Indian currency and not foreign exchange - Whether the clearance made in DTA against Advance Authorisation, where payments are not received in foreign currency, are admissible for the purpose of fulfilling export obligation under Exim Policy or not - Held that:- It is evident from the provisions/procedures prescribed that supplies made under Para 6.9 of Chapter-6 of the Exim Policy has to be included while calculating NFE. It is further observed from Para 6.9 of the Exim Policy, effective from 1.4.2006, that Clause 6.9(b) relied upon by the Adjudicating Authority was deleted and did not exist during the period under dispute. No other contrary provision was brought to the knowledge of the Bench to the effect that such DTA sales under Advance Authorisation Scheme are not to be considered for the purpose of calculating NFE. Even the concerned monitoring agency of Development Commission, KSEZ, Gandhiham vide Final Exit Order dated 25.1.2011, issued from F No. KASEZ/100%EOU/II/62/05-06/3390 has finally allowed exit from the 100% Scheme approved under the LOP No. ESEZ/100% EOU/II/62/05-06 dated 21.4.2006 - Decided in favour of assessee.
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2014 (2) TMI 1060
Recovery of refund claim - Notification No. 102/2007, dated 14-9-2007 - recovery of refunded SAD on the ground that set top boxes were not sold ‘as such’ but were assembled with other items and hence the said set top boxes were used for process of manufacture - Held that:- set top boxes were sold at a value lesser than the landed cost. However, full sales tax stand paid on the sale value - Even if the sales tax was paid on the lesser value, the Customs authorities have no jurisdiction to decide on the same and it is only the sales tax authorities who can dispute the quantum of sales tax paid on the goods. There being no such objection by the sales tax authorities, the Customs have to only satisfy themselves about the payment of sales tax and not about the correctness of the same - though the value of set top boxes was on the lower side the rate of sales tax discharged by them was 12.5% as against 4% SAD and as such more quantum of sales tax stand paid by them. Only condition of the notification in question is payment of appropriate VAT or sales tax. They are not having jurisdiction to go into the question of correctness of sales tax paid by the assessee. Inasmuch as the appellants had admittedly paid sales tax in the present case - invoices issued by the appellants, admittedly had packing list annexed to the same and STB was one of the items mentioned therein. As such, absence of specific mention of the same in the invoice cannot be held to be a ground for denial of benefit inasmuch as the same is in the nature of a technical procedural objection - Stay granted.
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2014 (2) TMI 1059
Retesting of the sample by the CLRI - Testing done for the first time was not proper - Held that:- procedure prescribed allows retesting of samples when the testing for the first time is done by the Chemical Examiner/Deputy Chief Chemists attached to the Customs House and a request for retesting is made before the original authority. In such cases, retesting is done by the Chief Chemist, who is a higher authority. Normally, in respect of outside testing laboratories, retesting is not allowed as it may result in too many frivolous requests every time an adverse report is received - appellants in this case are small exporters and they have a genuine doubt that the testing has not been done properly in the first time and that the original authority was given a letter for adjudication of the case without a show-cause notice and personal hearing. As such, they had no opportunity to ask for a retesting before the original authority. Hence, considering all aspects of the case and as a very special case, the retesting is allowed subject to the original samples being available and the appellants paying the necessary fees for such testing - Decided partly in favour of assessee.
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Corporate Laws
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2014 (2) TMI 1058
Validity of lease date - whether the Company Law Board erred in ignoring the interest of the appellant company - Held that:- Rights of the respondent will not be prejudiced in any manner if the offer made by the learned counsel for the appellant is accepted. Accordingly, the interim order of status quo dated 19.09.2006 passed by the Company Law Board is varied to the limited extent as indicated below. The appellant company is entitled to apply to the DDA for restoration of the lease as well as apply for revalidation of the sanctioned building plans and carry out construction in accordance therewith. The funds required for these specific purposes will also be brought in by the rival group claiming to be the shareholders of the company at whose behest the present appeal has been filed. It is made clear that in the event the respondents were to prevail before the Company Law Board the appellant company will not be liable to repay any amount to the said rival group or any other person from who any funds may be sourced by the rival group for the specified purposes - It is also made clear that no charge or any lien will be created on the property of the company. It is clarified that the present order would not be read or construed as creating or accepting any rights or interest in favour of the Rival Group - Decided in favour of Applicant.
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Service Tax
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2014 (2) TMI 1089
Demand of service tax - Penalty u/s 76, 77 & 78 - Recovery Agent for loans given by different Financial Institutions - Held that:- applicant has not disclosed full details of the value of the service provided by them and amounts collected as service tax from various clients. Instead the applicant has only asked for cross examination of representatives of the Financial Institutions. Since this case is based on records, cross examination of representatives of the banks is not that important. Going by figures admitted by the applicant itself there is substantial amount of tax to be paid. Under the circumstances, the applicants failed to make the case of total waiver of pre-deposit of dues arising from the impugned order - Conditional stay granted.
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2014 (2) TMI 1088
Waiver of pre-deposit - Cargo Handling Services - Imposition of interest and equivalent penalty - Held that:- at least demand for the period June 2007 to September 2010 seems to be hit by limitation as the earlier show cause notice culminated in an order which is in favour of the appellant - appellant needs to be put to some condition for hearing and disposing the appeal at least for the demands which are raised within the limitation period - Conditional stay granted.
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2014 (2) TMI 1087
Denial of refund/rebate claim - Bar of limitation - Time limit as per Notification 12/05 read with Rule 5 of the Excise Rules - Held that:- wherever no time limit is prescribed, the time limit prescribed under the Act will be applicable. Admittedly, in Section 11B of the Central Excise Act, 1944 time limit has been prescribed. Therefore, provisions of Section 11B of the Central Excise Act are attracted in this case and as per Section 11B of the Central Excise Act, the rebate claim filed are barred by limitation - Following decision of Emco Ltd. vs. CCE [2011 (6) TMI 567 - CESTAT, MUMBAI] - Decided in favour of Revenue.
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2014 (2) TMI 1086
Waiver of pre-deposit - Business Auxiliary Service - collection of fly ash - Job work - Held that:- To fall under Business Auxiliary Service, the activity undertaken should amount to producing or processing of goods on behalf of the client. In the present case, fly ash is produced by the Nasik Thermal Power Station. The appellant does not process or produce fly ash at all. They merely collect the fly ash from Nasik Thermal Power Station and delivers the same at the premises of his client M/s. Dirk India Ltd. in the vehicles given by M/s. Dirk India Ltd. Thus, the service is more appropriately classifiable under Cargo Handling Service and not under Business Auxiliary Service. In view of the above, the appellant has made out a strong prima facie case for waiver of pre-deposit of the dues adjudged. Accordingly, we grant waiver from pre-deposit of the adjudicated liabilities against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.
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2014 (2) TMI 1085
Demand of differential duty - Discrepancy in annual financial statements and ST-3 Returns - Suppression of value of services rendered - Held that:- Prima facie, it appears that the applicant was providing only security services and no proof of supply of man-power supply has been produced at lower levels and some feeble evidences have been produced before Tribunal as a fresh evidence - Conditional stay granted.
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2014 (2) TMI 1084
Waiver of pre deposit - Demand of service tax - Service of training programs - Held that:- Prima facie case not in favour of assessee - Conditional stay granted.
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2014 (2) TMI 1083
Waiver of pre deposit - Demand of service tax - Commercial Training or Coaching Service - Quantum of the demand - Liability not disputed - Held that:- refunds made by the assessee to their students during the period of dispute were allowed to be excluded from taxable value of service rendered in the preceding half-years. For instance, while calculating the taxable value for the half-year October 2003 to March 2004, the total amount of fees collected from the students for that half-year less refunds made to the students in the succeeding half-year was adopted as taxable value. If that be so, it is incomprehensible from the impugned order as to why the refunds to students in the half-year April 2006 to September 2006 were not allowed to be excluded from the taxable value of the service provided in the previous half-year - Conditional stay granted.
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2014 (2) TMI 1082
Waiver of predeposit - valuation - Civil construction - included the value of goods/services involved in any other contract - Held that:- it appears from the impugned order that appellant has paid VAT on the material of civil construction. As far as the claim of the applicant to avail option under Rule 3(1) of the Rules 2007 is concerned, prima facie we find force in the submission of Ld. AR. However, we find that the applicant have already paid 4% in terms of rule 3(1) of the Rules, 2007. In view of that, the applicant is directed to deposit 20% of the tax demanded in both the appeals within 6 weeks. Upon such deposit, predeposit of the balance amounts of tax, penalties along with interest is waived and recovery is stayed till pendency of the appeals - Conditional stay granted.
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Central Excise
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2014 (2) TMI 1057
Manufacture of aluminium utensils - SSI Exemption or concessional rate of duty vide Notification No. 10/2002 - Captive consumption - Sometimes utensils are directly made from the sheets or some times sheets are further cut into circles which are used in the manufacture of utensils. Some of the articles like handles to be attached to the utensils are made by the casting process - Held that:- duty was being paid on the circles which are captively consumed as they were clearing the utensils free of duty. If the lower authorities comes to a finding that benefit of notification is not available to the appellant and the utensils are leviable to duty, the circles would become exempt on account of captively consumption Notification No. 67/95. The duty already paid on the same would be adjusted against the duty required to be paid by the appellant - issue involved is complex interpretation of law and no mala fide can be attributed to the appellant to impose penalty upon them. We accordingly, set aside the penalty. For the same reason, demand beyond the normal period of limitation would also not to be sustainable - matter is being remanded to the original adjudicating authority for de novo decision for the normal period of limitation - Decided in favour of assessee.
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2014 (2) TMI 1056
Denial of CENVAT Credit - duty paying documents - delay in availing credit - Department has denied the CENVAT credit to the appellants on the ground that the bills of entry are in the names of ABB Ltd. and original of which are not available - Held that:- Rule 9(1)(a)(ii) that any invoice issued for importer is admissible documents for CENVAT credit. In the present case, the appellants are having importer’s invoices showing the amount of duty on which they are seeking CENVAT credit. I, therefore, find no reason in denying the CENVAT credit to the appellants on the basis of the importer invoices. As regards second ground of denying credit on ground of delay in taking credit, there is no time-frame mentioned in the CENVAT Credit Rules in availing the CENVAT credit. Therefore, there is no reason to reject the CENVAT credit on the ground of time also - Decided in favour of assessee.
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2014 (2) TMI 1055
Availment of CENVAT Credit - Whether the radio active material (californlum - 252) used in fast lab analyzer is a eligible capital goods or not - Held that:- appellants had pleaded before the adjudicating authority that the item in question is a component of Fastlab Analyzer, and in fact without this component the said analyzer cannot function at all. The appellants had also submitted the brochure of the Fastlab Analyzer, published by the manufacturer, which clearly shows the impugned item, namely “One to three Cf252 neutron sources” as a component of the Fastlab Analyzer, and in the sketch the location of the same has also been indicated very clearly. The adjudicating authority has not contradicted above submissions of the appellants in the impugned order. Therefore, Without going into the dispute as to whether the said item can be considered as capital goods, same would be in any case covered by the inputs definition and would be admissible for the credit - Decided against Revenue.
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2014 (2) TMI 1054
Benefit of SSI exemption - brand name of others - extended period of limitation - Held that:- Though the earlier show cause notice was in respect of seizure of goods, seized on the date of visit of officers, but we note that during the relevant period, use of brand name of others on goods different than the one manufactured by the brand name owner was held to be permissible by various decisions of Tribunal. Even if we accept the Revenue’s contention that the said brand name belonged to reputed manufacturer, they have not shown anything to establish that the said brand names were being used by their owners in respect of Transmission rubber belting. As various decisions during the relevant period had laid down that use of brand name of others, in respect of different goods would not bar claim of small scale exemption, we are of the view that no suppression can be attributable to the assessee - Decided against Revenue.
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2014 (2) TMI 1053
Denial of cenvat credit - Availment of cenvat credit distributed by head office as inputs service distributor - Held that:- Adjudication order seems to have been passed in a hurry without considering the submissions made by the appellants herein in their letter dated 18.01.13. Since we are of the view that the impugned order is passed in violation of principles of natural justice, we allow the stay petitions filed and take up the appeals themselves for disposal - appellant herein had filed a written submission on 18.01.13 raising various grounds in their defence on merits as well as on limitation. Obviously, the impugned order which was passed on 27.12.12 could not have considered these written submission given by the appellants in their defence. To that extent, we are of the view that the impugned order is unsustainable as it has been crossed in a violation of principles of natural justice - Matter remanded back - Decided in favour of assessee.
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2014 (2) TMI 1052
Disallowance of MODVAT Credit - Credit on hydraulic jack, ammonia paper and parts of locomotive - Held that:- in respect of hydraulic jack which is an item supplied with power transformers. It is used for lifting of the transformer tank, in order to move it on rails for changing oil in the event of short circuit fault. It is necessarily supplied against each order for transformer - assessee is entitled to avail the Modvat credit, in respect of excise duty paid on kits. In Daewoo Motors India Ltd. [2000 (6) TMI 96 - CEGAT, COURT NO. I, NEW DELHI] this Tribunal was considering whether the value of tool kits is to be incorporated in the assessable value of the motor vehicle - No infirmity in the order-in-appeal passed by the Commissioner of Central Excise (Appeals) - Following decision of BAJAJ AUTO LIMITED Versus COLLECTOR OF CENTRAL EXCISE, PUNE [1996 (10) TMI 117 - CEGAT, NEW DELHI] - Decided against Revenue.
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2014 (2) TMI 1051
100% EOU - Clearance of goods upto 50% of FOB value of the exports into Domestic Tariff Area (DTA) by availing concessional rate of duty under Notification No.23/2003-CE dated 31.3.2003 as amended - use of duty-free imported raw materials / inputs like rough granite blocks, multi-colour granites, abrasives, tin oxide powder for the manufacture of finished goods cleared in DTA - Held that:- the Commissioner observed the allegation of non-fulfillment of the condition of exemption under Sl. No.3A of the said Notification has not been contested by the applicant - applicant failed to make out a prima facie case for waiver of predeposit of entire amount of duty along with interest - Conditional stay granted.
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2014 (2) TMI 1050
Classification of goods - Reclassification of the products such as GOC and C-Pentane - Revenue relying upon the test report showing that boiling range of motor spirit and the product in question qualifies the same to be classifiable as motor spirit - Held that:- as per Chapter Note 4(a) of Chapter 27 of the Central Excise Tariff, “motor spirit” means any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25°C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. In the present case, there is no evidence on record produced by the Revenue either before the adjudicating authority or in the present appeal that the product in question is suitable for use as fuel in spark ignition engines. In the absence of such evidence, we find no infirmity in the impugned order - Decided against Revenue.
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2014 (2) TMI 1049
Valuation - Show cause Notice was issued on 06.09.1984 demanding duty in respect of recorded copies on the ground that M/s Gramophone Company of India Ltd are holding copyright of the programme recorded by the respondents - Respondents have no right to sell to any other party other than M/s GCIL - Therefore, Revenue held that Respondents are liable to pay duty on the price at which M/s GCIL is selling the tapes manufactured by the Respondents to their dealers - Held that:- In the Show Cause Notice, the allegation is that M/s GCIL are the manufacturers as per the provisions of Section 2(f) of the Central Excise Act. In a similar situation we find that the Tribunal in the case of Collector vs Music India Ltd (supra) held that the buyers price to their own sellers cannot be the basis for determination of assessable value at the hands of the assessee who undertakes the activity of recording the audio cassettes - in the Show cause Notice there is a specific averment that M/s GCIL is the manufacturer and the present Respondents are liable to pay duty on the price at which M/s GCIL is selling. In case M/s GCIL is to be treated as manufacturer then the Respondents are not liable to pay any duty - Decided against Revenue.
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2014 (2) TMI 1048
Exemption on the basis of 11C Notification No. 44/90-C.E. (N.T.), dated 1-11-1990 - Manufacturing of drugs - Held that:- Reading of 11C Notification makes clear that rifampicin and formation of rifampicin with Isoniazid (INH) are only eligible under the exemption Notification. Therefore, the drug montorip Capsule which is a formulation of 3 combination mainly Rifampicin + Pyrazinamide + Isoniazid shall not be eligible for exemption under the Notification in question - so far as Montomycin and Montex Forte is concerned, the appellant has already succeeded before adjudicating authority who followed 11C Notification and granted relief. In view of the clear mandate of 11C Notification appeal is dismissed insofar as montorip capsule is concerned - Decided against assessee.
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CST, VAT & Sales Tax
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2014 (2) TMI 1091
Use of Form -C and Form 31 to import the chemicals and machinery without permission - Permission was only for hides and skins - Penalty u/s 10A of the Central Sales Tax Act - First Appellate Authority has reduced the penalty and the Tribunal has confirmed the same - Held that:- assessee has imported the goods without having the proper sanction. The permission was only for the hides and skins but Form C and Form 31 were utilized for importing various chemicals and machinery. Thus, the the assessee has imported the goods without proper permission, wrongly by misrepresenting the facts - The assessee has imported the goods by knowing that the same are without any permission. The First Appellate Authority has already reduced the amount of penalty and at present, there is no further scope to reduce the same - impugned order passed by the appellate authorities appears reasonable and the same is hereby sustained along with the reasons mentioned therein for all the assessment years under consideration - Decided against assessee.
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2014 (2) TMI 1090
Cancelling the registration of the appellant under the Gujarat Value Added Tax, 2002 - Non consideration of documents - Held that:- appellant had produced the paper book containing several documents – one of them being return submitted on 8th June 2012. The said document contains the counter signature of its having received on 8th June 2012. We have no reason to discard such document. Under the circumstances, it cannot be stated that there was no representation on the part of the appellant on various dates fixed by the Deputy Commissioner of Commercial Tax for hearing. Atleast, the return submissions could have been taken into account which apparently was lost sight of. Under the circumstances, the order dated 16th August 2012 is set-aside. Resultantly, subsequent order of the Tribunal confirming such order is also rendered ineffective. The issue is placed back before the Deputy Commissioner of Commercial Tax, Bhavnagar for fresh hearing and disposal in accordance with law - Decided in favour of Assessee.
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