TMI Tax Updates - e-Newsletter
February 4, 2016

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Simultaneous penalties for abetment can be imposed on the firm and the partners under the Customs Act and more particularly u/s 112(a) - HC

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Articles

1. DEEMED EXPORT UNDER FOREIGN TRADE POLICY 2015 - 2020

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. 5th Edition of the Status Paper on Government Debt released; Overall liabilities of the Central Government are on a medium-term declining trajectory with the Government’s debt portfolio characterized by prudent risk profile

2. Karnataka should grow faster than India: Shri. Arun Jaitely

3. Mrs. Aruna Sethi (ICoAS 1985) appointed as head of Indian Cost Accounting Service

4. The Public Private Project Appraisal Committee (PPPAC) and the Empowered Committee (EC) clears 6 road projects and 1 ports sector project with estimated project cost totalling ₹ 9672.12 crores

5. MSP for Copra for 2016 season

6. RBI Reference Rate for US $

7. Ministry of Corporate Affairs - Notice Inviting Comments on the Report of the Companies Law Committee

8. Government to repurchase securities through reverse auction for an aggregate amount of ₹ 20,000 crore (Face Value)

9. Memorandum of Understanding (MoU) Between National Investment and Infrastructure Fund (NIIF) Ltd and Rusnano OJSC of Russia; both Agreed to Set-Up The Russia-India High Technology Private Equity Fund for Joint Implementation of Investments into Projects in India

10. Repurchase of Government Stocks

Notifications

Central Excise

1. 3/2016 - dated 3-2-2016 - CE (NT)

Seeks to amend Notification No. 45/2001 - CE (NT) dated 26th June, 2001, as amended, to allow export of material/equipment under bond, without payment of Central Excise duty, for Kholongchhu Hydro-Electric Project (KHEP) in Bhutan

2. 02/2016 - dated 3-2-2016 - CE (NT)

Seeks to amend CENVAT Credit Rules, 2004, so as to i. specify that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Swachh Bharat Cess. ii. allow credit of service tax paid on sale of dutiable goods on commission basis.

DGFT

3. 36/2015-2020 - dated 2-2-2016 - FTP

Amendment in policy condition No.9 of Chapter 87 of ITC (HS), 2012 – Schedule – 1 (Import Policy)

Service Tax

4. 03/2016 - dated 3-2-2016 - ST

Seeks to amend notification No. 39/2012- ST, dated the 20th June, 2012 so as to provide for rebate of Swachh Bharat Cess paid on all services, used in providing services exported in terms of rule 6A of the Service Tax Rules

5. 02/2016 - dated 3-2-2016 - ST

Seeks to amend notification No. 12/2013- ST, dated the 1st July, 2013 so as to allow refund of Swachh Bharat Cess paid on specified services used in an SEZ

6. 01/2016 - dated 3-2-2016 - ST

Seeks to amend notification No. 41/2012- ST, dated the 29th June, 2012 so as to allow refund of service tax on services used beyond the factory or any other place or premises of production or manufacture of the said goods for the export of the said goods and to increase the refund amount commensurate to the increased service tax rate

Circulars / Instructions / Orders

DGFT

1. 59/2015-2020 - dated 2-2-2016

Addition of two Pre-Shippment Inspection Agencies (PSIA) in Appendix 2G at Sl. no. 36 and 37 upto 31.05.2016

Customs

2. 03/2016 - dated 3-2-2016

Extending the Indian Customs Single Window to other locations and other Participating Government Agencies

Central Excise

3. 1015/3/2016-CX - dated 3-2-2016

Refund of Excise duty on purchase of cars by physically handicapped persons

Highlights / Catch Notes

Income Tax

• Road Maintenance Costs Allowed as Revenue Expenditure Due to Lack of Enduring Benefit for Assessee.

  Case-Laws - AT : Nature of road repairs expenses - assessee is required to incur expenditure every year to maintain the road of huge stretch shows that the assessee is not enjoying enduring benefit. - Claim allowed as revenue expenditure - AT
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• Taxpayer's Claim u/s 57 Cannot Be Dismissed Without Evidence Against FDR and OD Interest Connection.

  Case-Laws - AT : Deduction U/S 57 - The claim of the assessee cannot be thrown into the dustbin on the basis of conjectures and surmises that the agreement does not prove any nexus between the interest income earned form FDR and interest paid on OD account claimed u/s 57 of the Act without declaring the agreement as false and frivolous document. - AT
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• Mall Lease Income Classified as Business Profits for Taxation; Taxed Under Profits and Gains of Business or Profession.

  Case-Laws - AT : Treatment of property lease income as income under the head “Profits and Gains of Business or Profession” - the nature of business of the assessee as “Operation of Mall’ therefore any income earned by the assessee by the operation of mall has to be taxed under the head Profits & Gains of Business or Profession. - AT
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• Court Rejects Tax Officer's Claim on Wedding Gifts Due to Lack of Verification; Assessment Reopened for Review.

  Case-Laws - AT : Reopening of assessment - marriage expenses and jewellery gifted at the time of marriage - The assessee has given list of persons who have given shagun at the time of marriage of daughter of the assessee. - Addition made by the AO without verification cannot sustain, deleted - AT
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• Trust's BMW Registration Error Corrected; Section 11 Exemption Granted Despite Initial Registration Mistake.

  Case-Laws - AT : Exemption u/s 11 - there was a mistake happened at the time of purchase of the BMW car whereby it got registered in the name of the trustee instead of the assesssee trust although it was purchased by the assessee trust and once the mistake was detected, the steps were initiated to correct the mistake and to transfer the motor car in the name of the assessee trust. - Exemption allowed - AT
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• Provisioning for Accounting and Auditing Expenses Deemed Revenue Neutral; Must be Allowed Annually for Assessee.

  Case-Laws - AT : Provision for accounting and auditing expenses - If the assessee is following this practice consistently, then it is revenue neutral because every year this expenditure is required to be allowed - AT
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• Discrepancy in Share Transactions: No Justification for Addition Over 500-Share Shortage; Broker's Account Shows 62,272 Shares Balance.

  Case-Laws - AT : Unaccounted purchase and sale of share - there is no reason for addition on the basis of shortage of delivery of 500 shares since contra account of broker also shows stock at 62272 shares. - AT
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Customs

• Partners and firms can both face penalties under Customs Act Section 112(a) for customs violations.

  Case-Laws - HC : Levy of simultaneous penalties on both the Partner and Partnership firm in adjudication proceedings under the Customs Act. - Penalty for abeting - Simultaneous penalties can be imposed on the firm and the partners under the Act and more particularly under Section 112(a) of the Act. - HC
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• Exemption Granted: Laser System for Diamond Processing Qualifies Under Notification No. 159/86-Cus After Factory Inspection.

  Case-Laws - AT : Claim of exemption - benefit of Notification No. 159/86-Cus - After examination of machine and visit to factory premises it was found that the said machine is "Laser system for diamond processing (sawing, kerfing and drilling) based on CNC. - Benefit of exemption allowed - AT
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Indian Laws

• Proposed amendments to Companies Act, 2013 aim to streamline governance, increase penalties, and enhance transparency in India.

  News : Proposed Amendments in the Companies Act, 2013 - as per the report of the Companies Law Committee
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• Proposed Amendments to Companies Rules: Streamlined Registration, Enhanced Governance, Revised Reporting, and Increased Penalties for Non-Compliance.

  News : Proposed Amendments in the Companies Rules - as per the report of the Companies Law Committee
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Wealth-tax

• Wealth Tax Exemption for Income-Producing Properties u/s 2(ea)(i)(5): Leased Assets Not Taxed.

  Case-Laws - AT : Inclusion of let out property in the wealth tax assessment - scope and ambit of wealth tax u/s 2(ea)(i)(5) - wealth tax is not to be levied on productive assets - AT
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Service Tax

• Amendment to Notification No. 39/2012-ST: Rebate on Swachh Bharat Cess for Exported Services u/r 6A Service Tax Rules.

  Notifications : Seeks to amend notification No. 39/2012- ST, dated the 20th June, 2012 so as to provide for rebate of Swachh Bharat Cess paid on all services, used in providing services exported in terms of rule 6A of the Service Tax Rules - Notification
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• Refund of Swachh Bharat Cess Allowed for Services in SEZ through Amendment to Notification No. 12/2013-ST.

  Notifications : Seeks to amend notification No. 12/2013- ST, dated the 1st July, 2013 so as to allow refund of Swachh Bharat Cess paid on specified services used in an SEZ - Notification
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• Amendment to Notification 41/2012-ST: Refund of Service Tax on Export Services Beyond Factory Premises Adjusted for Rate Increase.

  Notifications : Seeks to amend notification No. 41/2012- ST, dated the 29th June, 2012 so as to allow refund of service tax on services used beyond the factory or any other place or premises of production or manufacture of the said goods for the export of the said goods and to increase the refund amount commensurate to the increased service tax rate - Notification
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• Court Examines Service Tax Obligation for Renting Farmhouse; Lease Deed Suggests No Tax under "Renting of Immovable Property.

  Case-Laws - AT : Renting of farm house - whether appellant is liable to pay service tax under the category of "Renting of Immovable Property Service" - scope of the lease deed - prima facie, the same is not taxable - AT
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Central Excise

• Amendment to Notification No. 45/2001 allows duty-free export of materials for Kholongchhu Hydro-Electric Project in Bhutan.

  Notifications : Seeks to amend Notification No. 45/2001 - CE (NT) dated 26th June, 2001, as amended, to allow export of material/equipment under bond, without payment of Central Excise duty, for Kholongchhu Hydro-Electric Project (KHEP) in Bhutan - Notification
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• CENVAT Credit Rules Update: Credit Not Usable for Swachh Bharat Cess; Allows Service Tax Credit on Commission-Based Sales.

  Notifications : Seeks to amend CENVAT Credit Rules, 2004, so as to i. specify that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Swachh Bharat Cess. ii. allow credit of service tax paid on sale of dutiable goods on commission basis. - Notification
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• Refund Granted for Valuation and Quantity Discounts Post-Clearance u/r 7 of Central Excise Regulations.

  Case-Laws - AT : Refund - valuation - quantity discount given after clearance of goods from factory to their depot - Rule 7 - Refund allowed - AT
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• Exemption for Devices Converting Waste to Energy Under Notification 6/2002: Eligible for Tax Benefits.

  Case-Laws - AT : Benefits of the notification 6/2002 - the items in question are only devices for the purpose of conversion of the waste material into non conventional energy for which purpose the exemption is granted. - Exemption allowed - AT
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• Cenvat Credit Confirmed for Commission Paid to Abroad Agents Under Central Excise Rules. Eligible Input Service Expenses.

  Case-Laws - AT : Cenvat Credit - eligible input serivce - appellant is entitled to avail cenvat credit in respect of commission paid to the commission agent based abroad - AT
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• Lubricating Oil in 50-Liter Containers Valued by MRP, Not Transaction Value, Per Central Excise Act, Section 4A.

  Case-Laws - AT : Valuation - MRP based value or transaction value - Goods i.e. Lubricating oil 50 Ltrs package should be valued in terms of Section 4A and not u/s 4 of the Central Excise Act, 1944 - AT
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Case Laws:

• Income Tax

• 2016 (2) TMI 90
  Revision u/s 263 - exemption u/s 54F alowed to assessee - Held that:- Before the Ld. CIT as well as before us the assessee had duly demonstrated that the assessee had claimed exemption against property purchased at Dosti and another property at Hiranandani Maitry Park was under construction for which only advance was given and assessee had not acquired any possession of the said property. Otherwise also, the said property was jointly held by his mother who was the first holder and the assessee was the second holder. Once the assessee has invested the entire LTCG arising from the sale of shares and the said gain has been invested entirely in the purchase of flat in his name within the time period given in section 54F, then assessee is eligible for exemption u/s 54F from such LTCG. Ld. CIT has not disputed this contention of the assessee raised before him, but has simply set aside the assessment to the AO to examine it afresh. Such an exercise by the CIT cannot be appreciated, firstly, he should give specific finding as to why such a contention raised by the assessee is not correct or divorced from the facts and material records and secondly, how on the facts the order of the AO is actually erroneous and also prejudicial to the interest of the revenue. Simply mentioning the phrase in the order that the “assessment order is erroneous and so far as it is prejudicial to the interest of the revenue” is not sufficient - Decided in favour of assessee

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• 2016 (2) TMI 89
  Disallowance of depreciation - whether the same amount has been disallowed under block assessment proceedings and was assessed as undisclosed income thus the disallowance of depreciation is wrong? - Held that:- The settled legal proposition is that the block assessment and regular assessment are two different assessment proceedings and they will run parallelly. The items that are required to be considered in the block assessment cannot be considered in the regular assessment proceedings and vice versa. Hence the items which have been assessed as undisclosed income in block assessment proceedings cannot be considered/assessed in regular assessment proceedings. According to the Ld A.R the disallowance of depreciation of 1.36 crores has been assessed as undisclosed income in the block assessment proceedings. Hence the AO cannot assess the same again in the regular assessment proceedings. However, these factual aspects require verification. Accordingly, we set aside this issue to the file of the AO with the direction to examine this claim of the assessee and take appropriate decision in accordance with the law in the light of discussions made supra. Disallowance of Machinery purchase - Held that:- We notice that the assessee has claimed that it has declared the sales of films picturised by using the films of 1.04 crores referred above. There should not be any doubt that the pictures could not be produced without the use of films and if the sale of pictures is assessed, then the corresponding expenditure should be allowed. Even though the assessing officer has considered the sales also as bogus, he did not exclude the value of sales from the income of the assessee. Since the purchase of films have not been proved by the assessee, we are of the view that this issue should be settled by disallowing some portion of the purchases in order to take care of the deficiencies in the purchase claim. Accordingly, we direct the assessing officer to disallow 20% of the film cost of 1.04 crores, since the assessing officer has assessed the sale of pictures. We order accordingly. Disallowance of Expenditure related to bogus sales - Held that:- We agree with the contentions of the assessee that the same is beyond the scope of the set aside proceedings. As noticed earlier, though the assessing officer has taken the view that the sale of pictures also is bogus one, he has not eliminated the same from the total income of the assessee. Accordingly, we are of the view that there is no reason to disallow the expenses arrived on a proportionate basis. Accordingly we direct the AO to delete this disallowance Disallowance of finance charges - Held that:- It is not clear as to how the assessee could obtain hire purchase finance facility on the non-existing machineries. If the assessee has actually obtained the hire purchase finance, then the question arises about its utilisation. If the loan obtained has been used by the assessee for business purposes, we are of the view that the finance charges are allowable as deduciton, as the hire purchase finance is only one of the modes of raising loans. Hence, in our view, this issue requires fresh examination. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to examine the manner of utilization of loan availed from the finance companies Disallowance of depreciation - Held that:- In the earlier paragraphs, the assessee has claimed that the above said sum of 1.36 crores was assessed as undisclosed income of the assessee in the block assessment proceedings. If the said claim is found to be correct, then there is no requirement of adding the same in the regular assessment proceedings. If it is not found to be correct, then it is the responsibility of the assessee to show that the difference amount of 0.32 crores (1.36 less 1.04) represents the value of machinery on which 100% depreciation is allowable. Further it is also the responsibility of the assessee to show that the machineries worth 0.32 crores was actually purchased. Accordingly, this issue is also set aside to the file of the AO with the direction to examine the same afresh.

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• 2016 (2) TMI 88
  Disallowance of interest expenditure u/s 43B - Held that:- In the paper book, the assessee has not furnished the “Object clauses” of MMRDA. There should not be any dispute that the object clauses shall determine the nature of MMRDA and only if one examines the object clause, he can decide as to whether it falls in any of the categories prescribed in sec. 43B of the Act. Accordingly, in our view, this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to adjudicate this issue afresh by examining the object clause of MMRDA and whether it shall fall in any of the categories of financial institutions prescribed in sec. 43B of the Act and there after decide about the applicability of the provisions of sec. 43B to the impugned interest payment. Disallowance of Repairs expenditure of Studio No.3 - Held that:- There is no dispute with regard to the fact that the fire occurred long back in the year 2002 and even after the said occurrence and damage, the assessee has proved that it has continued to give Studio No.3 on hire and earned income. That very fact shows that the Studio No.3 was not completely damaged by fire. Hence, we are of the view that there is merit in the submissions of the assessee that the expenditure of 35.37 lakh was incurred only to preserve Studio No.3 by carrying out repair works. Further, no material was brought on record by the assessing officer to show that the assessee has built any new asset by incurring this expenditure. Under these set of facts we are of the view that the expenditure incurred by the assessee should be allowed as revenue expenditure. Accordingly, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the disallowance.- Decided in favour of assessee Disallowance of road repairs expenses - Held that:- . We notice that the assessee is holding an area of 512 acres of land and it is submitted that there is huge stretch of road therein. We notice that the assessing officer has not brought any material to show that the assessee has built any new road. According to the assessee, it has incurred expenditure to re-surface the existing roads. Hence it is a case of maintenance of existing asset, in which case, the same is allowable as revenue expenditure. Hence the decisions relied upon by Ld CIT(A) are not applicable to the facts of the instant case. Though the ld.CIT(A) has taken the view that the expenditure incurred by the assessee would give benefit of enduring nature, yet the very fact that the assessee is required to incur expenditure every year to maintain the road of huge stretch shows that the assessee is not enjoying enduring benefit. Further, it is a known fact that the roads are damaged by wear and tear by passage of time and also due to rain. Further, it is stated that, during the course of film shooting also roads are damaged to erect temporary structure and also due to usage of heavy equipments. Hence, we find merit in the contentions of the ld.AR that the expenditure incurred on re-surfacing of roads is revenue in nature - Decided in favour of assessee

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• 2016 (2) TMI 87
  Addition being 20% of labour charges - CIT(A) deleted the addition - Held that:- We find that the payments of labour charges were made to three parties as submitted by the Ld. AR of the assessee after deduction of TDS which were also verified by the Ld. CIT(A), and he gave specific findings to this effect in the appeal order. The payments of these labour and processing charges were made by account payee cheques. We also note that the assessee furnished the copies of ledger accounts with bills which contained the complete details as to the recipient of the labour and proceessing charges , their addresses etc and the observations of the AO that verification of these could not be possible is wrong and contrary to the facts on records. In our opinion adhoc disallowance cannot be sustained as it was not supported by the AO with specific reason/defects in the Books of Account where the payments were made by accounts payee cheques after deduction of TDS and also the return of TDS were filed and, therefore, we uphold the order of CIT(A) on this point by dismissing the appeal of the revenue on this point. - Decided against revenue Addition on account of sundry creditors - CIT(A) deleted the addition - Held that:- We find that the AO added the entire amount of Sundry Creditors on the ground that the assessee did not furnish the names and addresses of the Sundry Creditors and, therefore, the necessary verification could not be carried out. However, the ld. CIT(A) observed the necessary details, had been filed by the assessee vide letter dated 16.11.2011 in paragraph 4 50,000/- were furnished with the names and addresses. The ld. CIT(A) further observed that most of these creditors were paid in the subsequent years on the basis of confirmations and copies of accounts for the subsequent years and thus, deleted the addition. From the facts of the case and on the basis of records and arguments of the ld. Counsel, we find that the AO made an addition without examining the details and information available before him and made the addition without application of mind to the facts and information before him. We do not find any infirmity in the order of CIT(A) on this point and uphold the same by dismissing the appeal of the revenue. - Decided against revenue Addition u/s.68 as unexplained cash credits for unsecured loans - CIT(A) deleted the addition - Held that:- We note that the assessee had filed the Tax Audit in the form 3 CD with the returns of income which contained comprehensive details as to the un-secured loans with opening balance, outstanding at the beginning of the year, borrowed during the year, closing balance. Besides interest details to the parties were also given in the tax audit report. We also find that on page number 13 of the CIT(A) had given a findings of facts that there loans were taken in the earlier years. In our considered view the provisions of section 68 of the Act cannot be invoked the loans were taken in the earlier years and therefore, the CIT(A) was justified in deleting the addition made by the AO u/s 68. The interest on unsecured loan was paid at the rate of 12% which is very reasonable and therefore, the CIT(A) had rightly deleted the addition on that point. - Decided against revenue

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• 2016 (2) TMI 86
  Levy of fee u/s 234E in the order u/s 200A - Held that:- The adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee

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• 2016 (2) TMI 85
  Deduction U/S 57 - deduction of of interest expenditure against interest income - nexus between borrowing of funds from the bank and interest income earned on the FDR - Held that:- CIT(A) has not applied his mind to decide the evidentiary value of the documents sought to be brought on record by the assessee rather acted as a post office to tow the line of Assessing Officer. When the assessee has specifically come up with the defense that the deduction claimed by her (the assessee) u/s 57 of the Act are based upon the documents sought to be brought on record by way of additional evidence, it was incumbent upon Ld. CIT(A) to decide the application on merit and not without disputing the documents (agreement to sell) in question sought to be brought on record by the assessee. The claim of the assessee cannot be thrown into the dustbin on the basis of conjectures and surmises that the agreement does not prove any nexus between the interest income earned form FDR and interest paid on OD account claimed u/s 57 of the Act without declaring the agreement as false and frivolous document. Without entering into the merits of the case, we are of the considered view that the file is required to be restored to Ld. CIT(A) for fresh adjudication by taking out into account the loan documents relied upon by the assessee. Needless to say that Ld. CIT(A) is require to provide adequate opportunity of being heard to the parties before passing fresh order. - Decided in favour of assessee for statistical purposes.

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• 2016 (2) TMI 84
  Addition on account of depreciation on goodwill - CIT(A) deleted the disallwoance - Held that:- The issue in controversy has already been decided by the Coordinate Bench in the case of Nitrex Chemical India Ltd. (2015 (11) TMI 340 - ITAT DELHI ) by relying upon the judgement delivered by Hon'ble Supreme Court in case of CIT Vs SMIF Securities Ltd. in SLP (2012 (8) TMI 713 - SUPREME COURT) to the effect that "the goodwill is an asset under Explanation (3 b) to Section 32(1) of the Act" and as such, is intangible asset, being know how, patent, copyright, trade mark licence, franchise and other business or commercial right of similar nature, the same is eligible for depreciation u/s 32 of the Act as claimed by the assessee. Since Ld. D.R. has failed to bring on record if the order passed in case of DCIT Vs Nitrex Chemical India Ltd. (supra) has been challenged or any contrary order has been passed on the question of law decided by the Hon'ble Supreme Court, we are of the considered view that there is no illegality or perversity in the findings returned by Ld. CIT(A) hence, ground is determined against the Revenue. Addition on account of royalty paid - revenue v/s capital - CIT(A) deleted the addition - Held that:- Held that:- In the instant case, benefit of enduring nature has to be transferred to the assessee company as is evident from Article 6 of the Agreement. Transfree company i.e. CEIPL would get 3% of the net selling price of the licensed products manufactured by the licensee, calculated as per Article 6 of the agreement, meaning thereby, transferee company (CEIPL) was having complete lien on the technical know-how, assisting skills and other expertise as per Article 4 of the agreement. So, finding no illegality or perversity in the findings returned by Ld. CIT(A), ground is also determined against the Revenue.

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• 2016 (2) TMI 83
  Addition on rebate on Hire purchase written off - Addition on additional Finance charges on account of change in method of accounting from Mercantile basis to Cash basis - CIT(A) deleted the addition - Held that:- The assessee company being in finance and leasing Business has claimed rebate on hire purchase written off in the books of accounts based upon the guidelines and accounting policies of ICAI. But no information was submitted to substantiate the claim before completion of assessment. In the appellate proceedings, the assessee has submitted written submissions and also filed ledger copies of hire purchase accounts, which the Assessing Officer could not verify the genuiness of the transaction. In the facts and circumstances of the case, we are of the opinion that under Rule 46A additional evidence was submitted before the Commissioner of Income Tax (Appeals) without providing an opportunity to the Assessing Officer to examine the issue and the next ground is connected to Hire purchase were the assessee company has not recognized additional finance charges on NPA and changed method of accounting from mercantile system to cash system. The ld. Authorised Representative explained the hardship and constrains of the company for recoveries, were majority of hire purchase transactions have defaulted and charging of additional finance charges on NPA will not be prudent practice for the company. The ld. Authorised Representative filed paper book and drew our attention to page no.17 were list of parties on which additional financial charges not recognized during the financial year 2004-2005. We considering the evidences submitted in appellate proceedings and submissions of the ld. Departmental Representative, set aside the order of the Commissioner of Income Tax (Appeals) and remit both the issues to the file of the Assessing Officer to re-examine in detail with evidence furnished after providing adequate opportunity of being heard to the assessee and decide the issue on merits - Decided in favour of revenue for statistical purposes.

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• 2016 (2) TMI 82
  Treatment of property lease income as income under the head “Profits and Gains of Business or Profession” - Held that:- The entire dispute has to be considered in the light of the decision of the Hon’ble Supreme Court in the case of Chennai Properties & Investments Ltd Vs CIT [2015 (5) TMI 46 - SUPREME COURT] wherein held that letting out of the properties being the business of the assessee, the income from which has to be treated as income from business. The Hon’ble Supreme Court has further observed that the Memorandum of association of the assessee company clearly mentions that main objects is to acquire and hold the properties and holding the aforesaid properties and earning income by letting out those properties is the main objective of the company. Therefore, any income earned has to be taxed under the head ‘Income from ‘business’. In the present case also we find that in A.Y. 2008-09, the AO himself has accepted the nature of business of the assessee as “Operation of Mall’ therefore any income earned by the assessee by the operation of mall has to be taxed under the head Profits & Gains of Business or Profession. The main object of the company as per the Memorandum of Association also refers to such activities as the main object for which the company is incorporated. As the main object itself shows that the assessee-company has been incorporated for running shopping malls /departmental stores, super markets, shopping arcades, shopping outlets, entertainment, recreation and amusement centre therefore any income earned from such activities has to be taxed under the head profits and gains of business.The assessee is entitled for the claim of depreciation and also brokerage expenses. The AO is directed to allow the same - Decided in favour of assessee Addition on account of notional lease rental income - Held that:- As relying on Reliance Industrial Infrastructure [2009 (1) TMI 4 - BOMBAY HIGH COURT ] we direct the AO to exclude the notional lease rental income from the total income of the assessee - Decided in favour of assessee. Disallowance of interest (a) for giving interest free advances (b) for earning exempt income - Held that:- A perusal of the factual matrix elsewhere shows that the assessee was having sufficient own funds for making the investments and for giving interest free advances. The facts of the case are squarely covered by the decision of the Hon’ble High Court of Bombay in the case of Reliance Utilities and Power Ltd(supra) followed by the Hon’ble High Court of Bombay in the case of CIT Vs HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT]. . Respectfully following the same, we direct the AO to delete the impugned disallowances made on account of interest expenditure. - Decided in favour of assessee

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• 2016 (2) TMI 81
  Unexplained investment in purchase of flat - Valuation of the residential flat - adoption of value as per jantri rate by CIT(A) - Held that:- The assessee who is not having any business income and is only earning income from salary and interest is not required to maintain any books of account. However, assessee has submitted details of cash book ledger, balance sheet and purchase bills and submitted that all the investments made in residential flat are having proper source in the form of accumulated capital balance of the assessee for past few years as well as housing loan from Canara Bank. We are further of the view that valuation report cannot be taken as an evidence for arriving at valuation of the residential flat as it was dated before the date of purchase/sale deed. As it can be seen from the record available and the valuation report by the Registered Valuer is dated 4th January, 2005 whereas the sale deed is dated 25.1.2005. Certainly section 50C of the Act refers to the value adopted or assessed by any authority of State Government for the purpose of payment of Stamp duty and ld. CIT(A) has rightly taken the value as per jantri rate at 4,79,400/-. The assessee’s submissions that the income surrendered at 2 lacs during the statement given u/s 132(4) of the Act should not be given any cognizance as the same has been given on oath and has not been retracted in a reasonable time. Also the fact remains that assessee has been unable to support the opening capital balance of 6,52,730/- shown in the balance sheet before the lower authorities and nor has been able to submit financial statement of previous years to depict that how assessee has been able to arrive at this capital of 6,52,730/-. However, we agree to the value of the residential flat at 7,49,970/- arrive at by the ld. CIT(A) but we differ on the deduction which has been restricted by ld. CIT(A) to 4,00,000/- as received by assessee as housing loan because some element of savings of previous years cannot be eliminated and in the interest of natural justice, we think that assessee certainly should have possessed its own fund and also in view of the surrender made by the assessee we sustain the addition to 2,00,000/- and thus assessee will get relief of 1,49,970/-. - Decided partly in favour of assessee

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• 2016 (2) TMI 80
  Disallowance of salary expenditure - CIT(A) allowed the claim - Held that:- Once it is established that the business was set up all related expenditures will have to be allowed as deduction. Hence, we do not find any infirmity in the impugned order passed by the Ld. CIT(A) on the issue in dispute and hence, we uphold the same by dismissing the appeal filed by the Revenue. - Decided against revenue Disallowance of depreciation - CIT(A) allowed the claim - Held that:- Act does not allow for partial depreciation being allowed once the assets has been put to use. Hence, we do not find any infirmity in the impugned order passed by the Ld. CIT(A) on the issue in dispute and therefore, we uphold the action of the Ld. CIT(A) of deleting the addition in dispute - Decided against revenue

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• 2016 (2) TMI 79
  Non deduction of tds - disallowance of lorry hire charges under section 40(a)(ia) - TDS u/s 194I or u/s 194C - Held that:- The vehicle owner/driver had to carry out the transportation of goods and the same was not done by the assessee. In view thereof, we have no hesitation to hold that the provisions of section 194C of the Act are correctly applied by the Revenue - Decided against revenue It is pertinent to mention that the ITAT, Cochin Bench in the case of Siraj V E vs. ITO [2016 (1) TMI 929 - ITAT COCHIN] by following the decision of the Hon'ble Kerala High Court in the case of Thomas George Muthoot (2015 (7) TMI 810 - KERALA HIGH COURT ) wherein held Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax is deductible at source, commits default. The language of the Section does not warrant an interpretation that it is attracted only if the interest remains payable on the last day of the financial year. If this contention is to be accepted, this Court will have to alter the language of Section 40(a) (ia) and such an interpretation is not permissible. - Decided against assessee Disallowance made under section 14A read with Rule 8D - Held that:- The disallowance under section 14A cannot be invoked as the assessee has not earned any exempt income during the relevant assessment year. The Assessing Officer is directed to delete the disallowance made under section 14A of the Act.- Decided against revenue

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• 2016 (2) TMI 78
  Reopening of assessment - marriage expenses and jewellery gifted at the time of marriage - AO referred to the statement given to the police on 09.12.2009 under section 161 CrPC as well as 'Will' of his mother dated 04.07.2002 - Held that:- The re-opening of the assessment only on the basis of verification of the facts is not permissible under the law. The Assessing Officer is not empowered to reopen the assessment nor verify the facts for re-assessment.' The sole reliance on the statement recorded by the police under section 161 of CrPC on 09.12.2009 itself was wrong because Section 161 of CrPC deals with examination of witness by police. It requires that the Investigation Officer may examine orally any person supposed to be acquainted with the facts and circumstances of the case. The statement recorded by the Police Officer under section 161 of the CrPC is not signed by the witness. The genuineness of the statement recorded under section 161 of CrPC could be tested only at the time of the statement of witness recorded in the court. The statement recorded by Police Officer during investigation is neither given 'on oath' nor it is tested by Cross Examination. According to the law of evidence, such statement is not evidence of the fact stated therein and therefore, it is not considered as 'substantive evidence'. Thus we are of the view Assessing Officer was not justified in re-opening the assessment under section 148 of the Act. The assessee has given list of persons who have given shagun at the time of marriage of daughter of the assessee. This list contained the complete names and addresses and in some of the cases, their telephone number as well. The Assessing Officer, without making any enquiry from any of these persons who have given shagun to the assessee in the marriage of his daughter, has accepted the claim of assessee of receipt of shaguns in a sum of 14,13,000/-. The ld. CIT(Appeals), without giving any notice to the assessee for taking any adverse view in this regard, has restricted the benefit of shaguns in a sum of 6 lacs only. The order of the ld. CIT(Appeals) is, therefore, unjustified and cannot be sustained in law. It may also be noted here that Assessing Officer without bringing any evidence on record estimated the marriage expenses in a sum of 25 lacs. Similarly, ld. CIT(Appeals) without any basis or justification or without bringing any evidence on record, made the estimate of marriage expenses of assessee in a sum of 20 lacs. Therefore, both the estimates made by Assessing Officer and ld. CIT(Appeals) cannot be sustained. There is no basis to sustain the orders of authorities below for estimating marriage expenses in a sum of 20/25 lacs. The ld. CIT(Appeals) gave a benefit of estimated past savings and contributions made by the family members of 6 lacs for the purpose of restricting part addition. If the same amount is added to shagun received by assessee in a sum of 14,13,000/-, no addition of 8 lacs would sustain because Assessing Officer has himself granted relief to the assessee in a sum of 14.13 lacs which ld. CIT(Appeals) without any reasons did not consider favourably to the assessee. The assessee has produced sufficient evidence and material on record to prove 'will' genuinely executed by his mother and through the 'will', the gold ornaments and silver utensils were given to Ms. Megha. Therefore, the entire addition against the assessee was wholly unjustified. The assessee also produced sufficient evidence on record about the valuation of the jewellery at the time of marriage of the daughter of assessee. No evidence against the valuation report has been brought on record, therefore, departmental appeal would have no merit and is liable to be dismissed. - Decided in favour of assessee.

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• 2016 (2) TMI 77
  Registration of the assessee trust u/s 12AA cancelled - exemption u/s 11 denied - cancellation on the grounds as the registration of the BMW car in the name of the trustee - Held that:- We have observed that the assessee trust had purchased the BMW car for 32,20,000/- which is registered in the name of Prof. (Retd) Abdulqadir Abdulla Kazi, chairman and trustee of the assessee trust although the said car has been capitalized and reflected in the Balance sheet of the assessee trust and also in the audited accounts. The depreciation on the afore-stated BMW car was also availed by the assessee trust as provided under the Act. The assessee trust has also availed the loan facility from ICICI bank in the name of the assessee trust for which repayments of loan has been made from the asseseee trust bank accounts and ultimately the car has been sold in the subsequent year and sale proceeds were credited in the bank account of the assessee trust. The assessee trust has also submitted before us that there was a mistake inadvertently committed by the staff of the assessee trust in getting the same registered in the name of trustee of the assessee trust while buying the BMW car instead of getting it registered in the name of the assessee trust and it has been stated in the audited accounts for the financial year 2008-09 of assessee trust in ‘Schedule P -Notes forming part of Accounts' The audited accounts for the financial year 2008-09 was signed on 17th September 2009 in which above note was incorporated and signed by the Trustees and the auditors of the assessee Trust. This clearly evidences on the touch stone of preponderance of probabilities that there was a mistake happened at the time of purchase of the BMW car whereby it got registered in the name of the trustee instead of the assesssee trust although it was purchased by the assessee trust and once the mistake was detected, the steps were initiated to correct the mistake and to transfer the motor car in the name of the assessee trust. CIT(A) has rightly allowed the exemption u/s 11 of the Act to the assessee trust by passing a well reasoned order. We find no infirmity in the orders of the CIT(A) and accordingly we uphold the same and hold that the assessee trust is entitled for exemption u/s 11 of the Act - Decided in favour of assessee.

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• 2016 (2) TMI 76
  Disallowance of prior period expenses - Held that:- From the details filed by the assessee, it appears that some of the expenditure pertains to the salary revision of the employees. The assessee has claimed that due to revision of salary, the liability on account of enhanced salary has been crystallized only during the year under consideration. Since the details of expenditure filed by the assessee do not throw much light on this fact that the expenditure pertaining to enhanced liability towards pay to the employees on account of revised salary were finalized and crystallized only during the year under consideration, accordingly, in the facts and circumstances of the case, as well as in the interest of justice, we remand this issue to the record of the AO with a direction to the assessee to furnish better particulars for examination of the AO and accordingly the claim of the assessee has to be decided as per law. Addition on ad hoc upfront premium received by the assessee under the concession agreement with three parties - Held that:- When the assessee claims to have followed the accrual basis of accounting and recognizing the income on accrual basis then this very fact of recognizing the entire upfront premium as income in the books of account shows that the entire receipt accrued during the year under consideration. Though the C&AG has raised some objections in his Audit report in respect of recognizing the entire income as income of the year under consideration and recommended only proportionate amount of upfront premium to be considered as income of the year under consideration, however, the said remarks of the C&AG would not change the character or the incidence of accrual of the income. No error or illegality in the orders of the authorities below in treating the entire upfront premium received by the assessee as income for the year under consideration. Disallowance on account of provision for accounting and auditing - Held that:- There is no dispute that audit of the accounts by the C&AG is a definite requirement as well as a certain procedure of conducting the audit by the audit team. Therefore, there is no question of any contingency in respect of said expenditure except the fact that the audit has to be done only post closure of the accounts. If the assessee is following this practice consistently, then it is revenue neutral because every year this expenditure is required to be allowed. Accordingly, if the assessee is following this practice consistently then the said expenditure cannot be disallowed for a particular year. In the facts and circumstances of the case, this issue is set aside to the record of the AO with the direction to verify whether the assessee is following this practice of recognizing the expenditure of the audit fee pertaining to each year irrespective of the actual payment then, it should not be disallowed for the year under consideration.

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• 2016 (2) TMI 75
  Disallowances of cessation of liability u/s. 41(1) - CIT(A) deleted the addition - Held that:- View of CIT(A) is fortified by the Hon’ble Gujarat High Court in case of Commissioner of Income Tax vs. Dhobibhai Ramjeelal Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT] wherein it has been held that provisions of section 41(1) of the Act would apply in case where there has been remission or cessation of liability during the year under consideration subject to conditions contained in statute being fulfilled. Additionally, such cessation or remission has to be during previous year relevant to the assessment year under consideration. Even in case before us both elements are missing there is nothing on record to suggest that there was remission or cessation of liability that too previous year relevant to the assessment year under consideration. In view of above, order of CIT(A) is upheld whereby he has deleted the addition of disallowance of cessation of liability made by AO u/s. 41(1) of the Act - Decided in favour of assessee Unaccounted purchase and sale of share - CIT(A) deleted the addition - Held that:- Assessing Officer was of the view that assessee should have shown 62,272/- shares of Spectra Industries as closing stock while assessee had been showing 61772 shares i.e. 4791 as per demat account 5698 in the pool holding account. The details of closing stock furnished revealed that assessee had shown 62272 shares of Spectra Industries and not 71772 shares as stated by Assessing Officer based on demat account. The stand of assessee shortage of 500 shares in demat and pool holding as on account of transaction of purchase of 7500 shares of Spectra Industries on 29-03-2007 out of which there was short delivery of 500 shares at the year and or found plausible by CIT since it is as per system of stock exchanges pay in and pay out, delivery of shares normally comes after 3 days and in case there is short delivery from stock then exchange proceedings to auction shares and only after 7-8 days thereof brokers are able to confirm whether delivery of shares had come or not or whether they got close out opportunities of the shares. Sell delivery then it will show short to the extent in the pool account until brokers get confirmed from exchange. In closing, as per books and account total stock was shown as 62272 shares in not 61772 shares as assumed by Assessing Officer. Accordingly, CIT(A) held that there is no reason for addition on the basis of shortage of delivery of 500 shares since contra account of broker also shows stock at 62272 shares. Accordingly, CIT(A) was justified in deleting addition of 14,490/-, same is confirmed.- Decided in favour of assessee

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• Customs

• 2016 (2) TMI 57
  Levy of simultaneous penalties on both the Partner and Partnership firm in adjudication proceedings under the Customs Act. - Penalty for abeting - abets the doing or omission of such an act - Penalty u/s 112 of the Customs Act, 1962 - Held that:- A plain reading of Section 112(a) clearly indicates that there is no requirement of a mens rea for imposing a penalty for an act of abetment. Abetment in this context would be abetment to contravene the provisions of the Act. This can be noted from the fact that the legislature has not used the words 'knowingly', 'willfully' etc. It may not, therefore, be appropriate to read such words into the provision which would render it nugatory. Whenever the legislature wanted to include such prior knowledge or intention in contravening the provisions of the Act, it has been so expressly included. A perusal of Section 112(a) clearly indicates that abetment as envisaged in this provision would not require any mens rea. The position in law in interpreting such provisions wherein it is held that mens rea is not to be read in statutory contraventions/offences, can be noted from some decisions. Simultaneous penalties can be imposed on the firm and the partners under the Act and more particularly under Section 112(a) of the Act. However as the Act itself stipulates, the same would be subject to the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention.

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• 2016 (2) TMI 56
  Restoration of appeal - Tribunal dismissed the appeal for non-compliance - amount of duty yet to be determined by the lower authority - Held that:- it is not necessary to deal with and decide any larger controversy - However, after having noted the essential controversy in the appeal and when the assessing authority is yet to re-compute the liability and determine the demand, we deem it appropriate to direct that the Tribunal shall restore the appeal of the Petitioner to its file and decide it in accordance with law and without insisting on a pre-deposit. The condition of pre-deposit is waived in the peculiar facts and circumstances. - Appeal restored.

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• 2016 (2) TMI 55
  Refund of 4% special additional duty - Jurisdiction - SAD was collected on the purchases made by the petitioners from the units situated in the SEZ - According to the petitioners, as per Government of India decision, such additional duty was not payable - Held that:- the petitioners' refund claims remain in suspended animation on account of confusion between the Customs Department and the SEZ organizations, we direct the competent authority under the Commissionerate of Customs to dispose of all refund applications on merits, preferably by 31.03.2016.

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• 2016 (2) TMI 54
  Claim of exemption on import of CNC based Laser Drilling machine - benefit of Notification No. 159/86-Cus dated 01/03/86. - After examination of machine and visit to factory premises it was found that the said machine is "Laser system for diamond processing (sawing, kerfing and drilling) based on CNC. - Held that:- the expression sawing machines had been used without any qualification. There is no dispute that the goods were imported for the purposes as specified in the notification. Other condition subject to which the benefit of concessional rate of duty was available and had also been fulfilled. - the notification covers the machine imported by the appellants. - appellant succeeds on both counts. The appeal is allowed - Decided in favor of assessee.

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• 2016 (2) TMI 53
  Onus to prove goods are smuggled or not - licit or illicit import of dry battery cells & Calculators - Appellant contended that even if some of the goods bear a foreign country name the same does not make them smuggled goods as all the seized goods are freely available on the roadsides in India. That once the goods are not liable to confiscation then Revenue has no authority to retain the seized good, & were required to be released to the owner or the appellant who was the custodian of the goods during transportation. Held that:- As these goods are not notified under Sec 123 of the Customs Act 1962, therefore, the onus is on the Revenue to establish that these goods were smuggled into India, Except for the goods mentioned at Sr No. 3,4,&5 (Calculators) all other goods of foreign origin or believed to be of foreign origin are not liable to confiscation as correctly held by the first appellate authority. Under the existing factual matrix it can not be upheld that the goods of Indian origin were used for concealing contrabed goods and are not considered as liable to confiscation under Sec 119 of the customs Act 1962. However calculators of foreign origin, mentioned at Sr. No. 3,4, & 5 of the inventory dt 23/8/10, are liable to confiscation in view of Sec 123 of the customs Act 1962. As these is no absolute prohibition on importation of these goods, therefore, these calculators can not be confiscated absolutely. Appellant is thus required to be given an option to redeem the same on imposition of appropriate redemption fine under Sec 125 of the customs Act 1962 by the Adjudicating authority. Decided partly in favor of revenue.

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• Corporate Laws

• 2016 (2) TMI 50
  Winding up petition - Held that:- In the instant case, despite receiving the legal notice, that no payment has been made to liquidate the amount payable by the Respondent-Company has not been disputed. Admittedly, the software was purchased by the Respondent-Company pursuant to the Agreement and even assuming that the alleged termination has to be accepted, a sum of 10,99,615/- was due by the Respondent-Company to the Petitioner. Consequently, in case of the default of the payment of the said amount or any part thereof within the time specified herein the petitioner would be entitled for the relief in the above petition. The Petitioner are directed to pay a sum of 10,99,615/- in this Court within three months from today.In case the Respondent -Company fails to deposit the said sum of 10,99,615/- or any part thereof within the said period, the petition shall stand admitted and the Petitioner shall proceed to publish the notice in two newspapers one in “The Navhind Times” and other in regional language Marathi “Gomantak”.In case the amount is deposited within the said period stipulated herein above, the petition shall stand accordingly dismissed with liberty to the Petitioner to recover the legal dues from the Respondent in accordance with law.

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• 2016 (2) TMI 49
  Scheme of Amalgamation deserves to be sanctioned as on perusal of the Scheme and other documents on record, it appears that the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme appears to be in the interest of the shareholders and creditors.

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• Service Tax

• 2016 (2) TMI 73
  Refund - unjust enrichment - filing of writ petition against the order of adjudicating authority - Held that:- The Court is of the considered view that instead of there being parallel proceedings on the question of entitlement of the Appellant to refund, the better course would be to permit the Appellant to raise the aforesaid three issues, apart from other issues it may want to raise, in the appeal to be filed by it against the order dated 30th November 2015. In any event, on the second issue raised by the Appellant, the Appellate Authority will have to examine the documents and materials placed on record by the Appellant and come to a conclusion on merits. - Considering that the Appellants application for refund has been pending for quite some time, and with the Appellant having already approached this Court once earlier, the Court directs that the appeal to be filed by the Appellant be disposed of by the Commissioner Appeals within a period of three months from the date of registration of such appeal.

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• 2016 (2) TMI 72
  Simultaneous penalty u/s 76 and 78 - Option of pay reduced penalty @25% - While deciding the issue Adjudicating authority did not impose Sec 76 penalty and also did not give the option of 25% reduced penalty under Sec 78 of the Finance Act 1994 to the appellant - Commissioner of Central Excise, Bolpur also reviewed OIO dt 28/8/2008 & imposed Sec 76 penalty in addition to penalty u/s 78 - Held that:- in the present proceedings simultaneous imposition of penalties under Sec 76 & 78 was permissible as show cause notice in the present case was issued before 16/5/2008 when Sec 78 of the Finance Act 1994 was amended. So for as option of 25% reduced penalty under Sec 78 not given to the appellant is concerned, it is observed from the OIO dt 28/8/2008 that no such option was extended to the appellant. Accordingly it is ordered that appellant shall have an option to pay 25% reduced penalty if all the dues & 25% reduced penalty is paid within one month from the date of receipt of this order. - Decided partly in favor of assessee.

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• 2016 (2) TMI 71
  Construction of residential complex services and renting of immovable property services - applicant is a Rajasthan Housing Board and Constructing residential flats / complex on behalf of State Government and lease out the said flats to the intended buyers and charging lease rent on yearly basis - Held that:- independent units have been constructed in a colony are not covered in construction of residential complex - for the demand raised under the category of Construction of Residential complex, the applicant has made out a case but for the lease rent collected by the applicant, we find that lease rent is recovered by the applicant yearly from the intended buyer of the flats and lease has been granted for a limited period. In that circumstances, the applicant has failed to make out a case for waiver of pre-deposit. - Stay granted partly.

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• 2016 (2) TMI 70
  Seeking adjournment where stay application was listed for hearing on several occasions - Renting of Immovable Property - appellant is the Municipal Corporation and rented out commercial properties - Held that:- the appellants have not made prima facie case for waiver of pre-deposit. - the appellants are directed to make pre-deposit of 30,00,000/- (Rupees Thirty lakhs only) in six equal monthly instalments and the first instalment commences by 03.12.2015 and the last instalment in the month of May, 2016 and report compliance on 26.05.2016. - stay granted partly.

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• 2016 (2) TMI 69
  Renting of farm house - whether appellant is liable to pay service tax under the category of "Renting of Immovable Property Service" - scope of the lease deed - Held that:- As per clause 2(c) of the lease deed, it is mentioned the property is leased out for residential purpose and for the employees of the lessee. We find that the lessee also issued certificate to certify that the premises was never used except for residential purposes. Moreover, electricity bills and property tax returns also support the case of the appellant. Revenue has not produced any contrary evidence to the evidence produced by the appellant. Therefore, prima facie, we are of the view that the demand confirmed under the category of "Renting of Immovable Property Service" is not sustainable - Stay granted.

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• Central Excise

• 2016 (2) TMI 68
  Equal penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - Held that:- There is no allegation regarding fraud, wilful misstatement, suppression of fact which are required as per Rule 15(2) read with Section 11AC of the Central Excise Act to impose equal amount of penalty. Moreover, once the learned Commissioner (Appeals) has dropped the interest on the ground that the cenvat credit was availed but not utilized by the appellant and, therefore, by relying upon the judgment of the Hon’ble High Court of Punjab & Haryana in the case of Ind-Swift Laboratories Ltd. cited supra, the interest was dropped and once the interest part was dropped by the Commissioner (Appeals) and there are no allegations of suppression and no categorical finding on the requirement of Section 11AC, then in my considered opinion, the imposition of penalty by the respondent is wrong and illegal. Therefore, set aside impugned order and allow the appeal. - Decided in favour of assessee

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• 2016 (2) TMI 67
  Refund - valuation - quantity discount given after clearance of goods from factory to their depot - Rule 7 - appellant argues that assessable value in such circumstances should be the assessable value arrived at when goods were sold from the depot to the independent customer i.e. the price after allowing the quantity discount. Held that:- The price at which the goods are cleared from the factory to the depot does not become the assessable value for the purpose of assessment. The Revenue's reliance on the decision of MRF Ltd. (1997 (3) TMI 104 - SUPREME COURT OF INDIA) is not correct in so far as in that case the goods were cleared from the factory premises and not from the depot and, therefore, the facts are substantially different. If in this case during the period of dispute there were quantity discount schemes and the quantity discounts in the form of free quantity were given at the time of sale from depot, the same would have to be allowed, even if Central Excise invoices issued at the time of clearance of the goods from the factory do not mention the quantity discount, as the same can be mentioned only when the goods are sold from the depot. Appeal is allowed with consequential benefit subject to necessary safeguards. - Decided in favor of assessee.

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• 2016 (2) TMI 66
  Failure to pay the duty on time - Penalty under Section 11AC - Held that:- A perusal of invoice No.16 dated 8.6.2005 issued by the appellant clearly shows that though the duty has been charged, but the same was not deposited. Further, on the invoice, it is clearly mentioned that no sales tax is charged as the goods are being transferred to their own unit No.II which is situated in Andheri (East) and it appears that the goods were intended to be transferred to their own unit, but inadvertently instead of issuing challan, the appellant has wrongly issued the invoice. It is also a fact that the appellant has paid the duty along with interest on being pointed out by the audit officer of the respondent vide entry in PLA dated 27.11.2007. When there is no intention to evade payment of duty on account of fraud, wilful misstatement, suppression of fact etc. as mentioned in Section 11AC, the penalty cannot be imposed and further, for imposition of penalty under Section 11AC, the duty must be determined by the excise officer after giving sufficient opportunity to the appellant as required in Section 11A(10), which has not been done in this case and as per Section 11A(b), it is provided that the person chargeable to duty may, before service of notice under clause (a), pay on the basis of (i) his own ascertainment of such duty or, (ii) the duty ascertained by the Central Excise officer and if the person pays the duty along with interest payable thereon under Section 11AA, then as per sub-section (ii), the Central Excise officer shall not serve any notice upon him. Since in this case there is no determination of duty and in accordance with law as provided in sub-section (10) of Section 11A, therefore under Section 11AC, penalty cannot be imposed - Decided in favour of assessee

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• 2016 (2) TMI 65
  Benefits of the notification 6/2002 dated 01.03.2002 (Sl No. 237 of the notification) denied - the goods cleared by the appellants were only in parts of non conventional energy devices/systems and not the complete device itself - Held that:- We notice from the findings of the lower authorities that the goods cleared by the appellants have reached finality in the sense that they have become identifiable goods though according to the lower authorities they are only parts. We find that this conclusion has not been arrived at based upon the description of the items in the said notification with reference to the exemption claim as we have already mentioned that the description would cover all devices without reference to the nature of the device or description of the devices. If the items cleared have attained individual identity and finality it cannot be said it is not a device. Therefore, taking into consideration the specific description under which the exemption is allowed, we have no hesitation in allowing the exemption as the items in question are only devices for the purpose of conversion of the waste material into non conventional energy for which purpose the exemption is granted. See Commissioner of Central Excise, Delhi-IV Versus Rachitech Engineers Pvt Ltd [ 2015 (6) TMI 823 - CESTAT NEW DELHI ] - Decided in favour of assessee

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• 2016 (2) TMI 64
  Entitlement to cenvat credit in respect of service tax paid to the commission agents based abroad - can the services rendered by the foreign based commission agent be stated to be input services within the meaning of such expression as defined under Rule 2(l) of the Cenvat Credit Rules, 2004? - Held that:- We find that as per Notification 41/2007-ST dated 6.10.2007 as superseded by Notification 18/2009-ST dated 7.7.2009, the appellant has an option either to avail cenvat credit or to claim refund and the appellant has chosen to claim cenvat credit and this fact has been reflected in the records of the appellant also, but the respondent has never raised any objections all through. Earlier to the present audit, the department has conducted the audit on two occasions but the department never raised this issue. Further, with regard to limitation, we are of the considered opinion that the entire demand is barred by limitation as there is no material placed on record by the department to show that the appellant has suppressed the material facts with intent to evade duty. On the other hand, the appellant has placed on record two audit reports conducted by the department, wherein certain other objections were raised, but this issue was never raised which is sought to be raised now by the present show cause notice dated 27.4.2011 for the period from April 2006 to June 2009 by invoking the extended period of limitation. Further, the appellant has been disclosing the payment of commission to foreign based agent in all their shipping bills and also in their periodical returns submitted to the department. Therefore, keeping in view all the facts and circumstances and the definition of “input services” as well as Notification No.18/2009-ST we are of the considered opinion that the appellant is entitled to avail cenvat credit in respect of commission paid to the commission agent based abroad and the impugned order is liable to be set aside and we allow the appeal by setting aside the impugned order with consequential relief, if any. - Decided in favour of assessee

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• 2016 (2) TMI 63
  Waiver of pre-deposit of CENVAT Credit and equal amount of penalty imposed seeked - non providing adequate opportunity in defending the case by way of supplying the documents and allowing cross examination of the witnesses as submitted by assessee - Held that:- Analyzing the said contention of the appellant, we find that even though the show cause notice was issued on 17/12/2012, specifically mentioning therein to file their reply within thirty days, but the appellant chose not to respond to the said notice; also in spite of sufficient opportunities of hearings were allowed to them in December, 2012 and January/February, 2013 they failed to respond. Therefore, it is inappropriate to say that the Ld. Commissioner has not allowed sufficient opportunity to the appellant to defend their case. Simultaneously, it can not be brushed aside also that the present demand raised serious allegation ie. non-receipt of inputs, and availment of credit only on the invoices during the period May, 2008 to December, 2009 when the finished goods were claimed to have been manufactured and cleared on payment of duty. While confirming the demand, the Ld. Commissioner referred to the statement of the proprietor, the employees, the transporters, input suppliers and the certificate issued by the Chartered Engineer etc. in arriving at the conclusion that the appellant at the relevant point of time did not have infrastructure to manufacture the quantity of excisable goods claimed to have been manufactured and cleared from their factory. All these evidences need to be examined in detail after taking into consideration the reply of the appellant against such evidences. Therefore, in the interest of justice, we are of the opinion that the Appellant be provided a chance to rebut the allegation levelled against them.

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• 2016 (2) TMI 62
  Valuation - MRP based value or transaction value - whether 50 Ltrs package of Lubricating oil should be valued as per Section 4 or 4A? - Held that:- The fact emerges is that the goods in question are not sold to industry and are is not used as raw material by any industry, it is admitted position that 50 Ltrs. Package is sold to the truck owners who consumed themselves. In such situation, it cannot be said that 50 Ltrs package is covered under the exemption provided under Rule 34 of Standards of Weight and Measures; therefore we are of the considered view that since the nature of the sale i.e. 50 Ltrs package is made to the ultimate customers, MRP is statutorily required to be affixed and the goods will be valued in terms of Section 4A. Goods i.e. Lubricating oil 50 Ltrs package should be valued in terms of Section 4A and not under Section 4 of the Central Excise Act, 1944. Therefore demands of differential duty confirmed by the lower authorities are upheld. As regards the penalty, we find that all the show cause notices were issued within the normal period of one year, no suppression of mis-statement exists in the present case. Moreover, issue involved in the present case is purely of interpretation of valuation provisions. In view of this undisputed fact we are of the view that penalty of equal amount is not warranted in the facts and circumstances of the case. We therefore reduce the penalty from 9,28,432/- to 2,00,000/- While confirming the demand, penalty reduced - Decided partly in favor of assessee.

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• 2016 (2) TMI 61
  Valuation - claim of deduction on account of cash discounts and product discounts as offered by the trader - Revenue appeal against the decision of tribunal in [2005 (8) TMI 414 - CESTAT, MUMBAI] - As the tax effect is low, we are not inclined to entertain this appeal. - Appeal dismissed.

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• 2016 (2) TMI 60
  Valuation (Central Excise) - Freight, includibility of - Revenue appeal against the decision of tribunal in [2005 (12) TMI 121 - CESTAT, NEW DELHI] - As the tax effect is low, we are not inclined to entertain this appeal. - Appeal dismissed.

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• 2016 (2) TMI 59
  Dutiability - Intermediate product - Marketability - Revenue appeal against the decision of tribunal in [2005 (10) TMI 380 - CESTAT, MUMBAI] - No question of law arises for consideration. - Appeal dismissed.

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• 2016 (2) TMI 58
  Modvat Credit - Manufacture of exempted goods - Revenue appeal against the decision of tribunal in [2005 (11) TMI 473 - CESTAT MUMBAI] - As the tax effect is only 1.33 lacs approximately, we are not inclined to entertain this appeal. - Appeal dismissed.

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• CST, VAT & Sales Tax

• 2016 (2) TMI 52
  Validity of assessment order - writ petition - The contention of the petitioner as projected by the learned counsel appearing for them before this Court in these Writ petitions is to the effect that the Assessing Authority has not considered the scope of the clarification issued and also erroneously applied certain provisions under the Tamil Nadu Value Added Tax Act, 2007, while passing the orders of assessment. Therefore, it is contended that the Writ petitions are maintainable. Held that:- Needless to say that if the consideration of objection was not proper or erroneous, that cannot be a ground to maintain the writ petition, since the alleged erroneous consideration or improper consideration cannot be stated as violation of principles of natural justice. On the other hand, it may be a good ground for filing an appeal. Therefore, when the present assessment order having been passed by the competent authority, after giving opportunity of hearing to the petitioner, the same cannot be questioned under Article 226 of the Constitution of India, as the petitioner has to raise all those grounds only before the appellate authority who is also a fact finding authority. Writ petitions are not maintainable solely on the ground that availability of alternative remedy. - Decided against the assessee.

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• 2016 (2) TMI 51
  Petition for condonation of delay by computing the delay of 119 days in filing the appeal from the date of receipt of the order - Held that:- It is seen that without considering the counter affidavit, especially, paragraph 8, wherein,the delay in filing the appeal is calculated to the tune of 134 days, the Tribunal passed the order. - the date of service of the order of the Appellate Tribunal to the State's representative as the actual date to be taken into consideration for calculating the period of limitation and if that is being taken into consideration, it is apparent that the filing of appeal is beyond the condonable period and hence, the impugned order in this Writ Petition deserves to be set aside. - Writ Petition is allowed

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• Wealth tax

• 2016 (2) TMI 74
  Inclusion of let out property in the wealth tax assessment - scope and ambit of wealth tax u/s 2(ea)(i)(5) - wealth tax escaped assessment u/s 17 - The assessee claimed that the said property was in the nature of commercial establishment as per section 2(ea)(i)(5) of the Act and thus it could not be included in the net wealth of assessee. - Held that:- the subject mentioned property is a commercial complex and is a productive asset deriving rental income of 15,00,000/- per annum. It is well settled from the Memorandum explaining the provisions in the Finance No. 2, 1998 under the head “incentives proposed under the wealth tax act” that wealth tax is not to be levied on productive assets. - Decided in favor of assessee.

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• Indian Laws

• 2016 (2) TMI 48
  Office of the Official Liquidator - extension of terms of Qualified Company Secretary - It is submitted that both the Company Secretaries have shown good performances in the daytoday compliance of Court orders, Merger and Amalgamation, dissolution of Companies, distribution of dividends and claims to the workers, IncomeTax matters, including outdoor duties and other administrative work assigned to them by the Official Liquidator, from time to time. - Held that:- The term of the qualified Company Secretary Mr. Pramod Kumar Sabot shall be extended for a further period of one year, with effect from 05.12.2015 upto 04.12.2016, on the existing terms and conditions, or till further orders.

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