Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 5, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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STANDARD OPERATING PROCEDURE FOR PROSECUTION IN CASES OF TDS/TCS DEFAULT - Circular
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Tax liability of trust - the purpose of tax under the Act, the Assessing Officer may be in a position to find out the status of the beneficiaries of the First Level Trust and while finding out the status of the beneficiaries of the First Level Trust, he may look upon the taxable liability of the beneficiaries of Second Level Trust, who are the beneficiaries of First Level Trust and if the tax payable is higher, while making assessment of the First Level Trust, option may be resorted to under Section 164 of the Act to that extent only, but such cannot be permitted again to reach to the Third Level Trust and to find out the taxable liability of the beneficiaries of the Third Level Trust. - HC
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Whether share application money received in cash is in the nature of deposit - rigours of Section 269SS of the Income Tax Act cannot be applied, penalty could not be levied under Section 271D - HC
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Transfer pricing adjustment - AO/TPO/DRP not appreciating the 50:50 revenue split business model between the appellant and its associated enterprises in relation to international transactions, i.e. provision and receipt of freight forwarding services, and, further making an upward adjustment alleging that such transactions were not at arm’s length - TNMM v/s CUP method? - AT
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Compensation to the customers, who have booked their flats claimed as buy-back expenses aggregating to ₹ 65,68,500/- which has been claimed as deduction - expenses allowed as in the course of regular business - AT
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Excess amortization cost debited to the profit and loss account - addition was in respect of Satellite rights of 107 films, Split wide open (satellite rights) and Satellite rights of six films - order of CIT(A) deleting the addition sustained - AT
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Disallowance of finance charges payable - Interest is paid whenever money is borrowed or some debt is incurred. Both elements are missing in these transactions. - AT
Customs
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Import of TV broadcasting equipments - non payment of duty - Their contentions that they have obtained bills/invoices from the dealers is beyond acceptable as having fully known that the goods are of foreign origin and they cannot claim ignorance that they have bonafide belief that these goods are validly imported and sold to them. - AT
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Valuation - Determination of transactional value - ship demurrage charges are not includible in the assessable value of the imported goods prior to CVR, 2007 coming into force - AT
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Classification of goods - import of parts of Room Air Conditioners - sub-assembly of air conditioners to which the appellant/assessee is claiming to be “ventilating and recycling hood” is incorrect and supported by no catalogue literature or any authoritative book. - AT
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100% EOU - DTA clearances - products are not similar to the goods exported or expected to be exported - this is a case where it cannot be said that appellant has a strong prima facie case - AT
Indian Laws
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Scope of RTI Act - An applicant is entitled for information, prescribing the criteria and the marks allotted under different heads for giving employment to public servants - The Act does not impose fetters with regard to supply of record, which may be voluminous - HC
Wealth-tax
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Exclusion from wealth tax - value of the assets used for the purpose of earning lease rent income - decision is the tribunal treating the same is business income is not wrong - HC
Service Tax
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Penalty u/s 76 - Renting of immovable property - The appellant paid the Service Tax on 10.12.2012 i.e after two weeks from the expiry of the period specified under Section 80(2) - however taking lenient view, penalty waived - AT
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Rejection of refund claims - If the service provider pays Service Tax on the service provided to an SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers - AT
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Denial of rebate claim - Export of Business Auxiliary Services - Notification No. 12/2005-ST - contravention of not following the procedure of filing the declaration is indeed a procedural formality, for contravention of which substantial justice cannot be denied - AT
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Refund - service tax was paid on advance receipt whereas no services were provided - amounts paid by the Respondent cannot be termed as payment of duty but has to be considered as a ‘deposit’ to which provisions of Section 11B of the Central Excise Act, 1944 will not be applicable - AT
Central Excise
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Whether activity of re-packing/re-labeling/re-fining of laboratory chemicals undertaken by the appellant in respect of Petroleum Benzine and Hexane for Chromatography Lichrosolv - the way in which order passed by the tribunal, is not correct - HC
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Recovery of excise duty - Petition a sick company - Protection granted u/s 22 of SICA - Since Section 11E of the Excise Act was inserted after the enactment of the Act giving first charge over the dues of the central excise, thus, it will have overriding operation over the provisions of the Act. - HC
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Invocation of extended period of limitation - The Department had chosen not to issue notice pending appeal, for which failure thereof, they are not entitled to invoke the proviso to Section 11-A, as has been rightly held by the Tribunal - HC
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There is no provision for cash refund of the unutilized Cenvat credit at the time of surrender of registration certificate on closure of unit.- AT
Case Laws:
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Income Tax
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2015 (2) TMI 151
Unutilized CENVAT credit - whether not included in the profit & loss account in view of provisions of section 145A of the Act even though the assessee was following mercantile system of accounting? - Held that:- There is submission of the assessee before the authorities below that while the entire amount of excise duty realized on sales was included in the sale amount but out of entire amount of excise duty paid on purchases, only that portion of such excise duty paid which was utilized by way of MODVAT, had been included in the value of purchases and the balance amount of Modvat credit which could not be utilized in the present year was shown in the balance sheet as an amount receivable and this portion of ₹ 11,25,342/- was not included in the value of purchases. Ld. D.R. could not controvert these submissions of the assessee made by the assessee before the authorities below. Once it is accepted that these submissions of the assessee are correct, it means that excise duty paid but not included in the purchases was shown in the balance sheet as excise duty receivable and therefore, there cannot be a reason to make any addition in the income of the assessee because even if we include such excise duty receivable in the value of closing stock, the same is also required to be included in the value of purchases and it will have no impacts on the profits of the assessee. - Decided in fvaour of assessee.
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2015 (2) TMI 150
Disallowances under section 40 [a](ia) - non deduction of TDS on labour contractors payment - due date for payment into the account of Central Government - ITAT deleted the addition relying on the amendment made in Section 40 [a](ia) thereby giving it retrospective effect - Retrospective v/s prospective - Held that:- Substantial question of law raised in these Appeals in favour of the assessee and against the Revenue by holding the amendment made in Section 40 (a)(ia) of the Income Tax Act, 1961 by the Finance Act 2010, as retrospective in operation, having effect from 1st April 2005 ie., from the date of insertion of Section 40 (a) (ia) of the Act. Resultantly, we hold that the Tribunal rightly decided the said issue following the Calcutta High Court’s decision in case of Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT ] by holding that the disallowance made under Section 40 (a)(ia) by the CIT [A] even for the amount for which the TDS had been deducted before 1st March 2005, holding amendment brought on 1st April 2010 as retrospective in nature. - Decided in favour of assessee.
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2015 (2) TMI 149
Exemption under section 54F denied - Held that:- The claim of the assessee is that the house was habitable and there is no material evidence brought on record by the lower authorities to controvert the averments of the assessee or to disbelieve the assessee's claim. At this point of time i.e. 5 years after the construction in 2009, it would not be possible to verify the condition of the building or whether it was inhabitable at that point in time. On the basis of the material on record, we are satisfied that the assessee has fulfilled the conditions for grant of exemption under section 54 of the Act. Incoming to this finding, we draw support from the decision of the co-ordinate bench of this Tribunal in the case of M.A. Patel (2012 (9) TMI 360 - ITAT, BANGALORE) relied on by the learned Authorised Representative wherein on similar facts the Tribunal held that the assessee would be entitled to exemption under section 54 of the Act. Following the aforesaid decision of the co-ordinate benches of this Tribunal (supra), we direct the Assessing Officer to allow the assessee exemption claimed under section 54 of the Act. - Decided in favour of assessee.
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2015 (2) TMI 121
Tax Liability of Trust - whether Assessee Trust is a discretionary Trust and, therefore, charged tax at the maximum marginal rate under Section 164 and not under Section 161 of the Act? - Held that:- Attempt to contend that if the beneficiary of Second Level Trust is a discretionary Trust or the shares are uncertain of the beneficiaries of Second Level Trust, the beneficiary of the First Level Trust can also be taxed at the maximum marginal rate under Section 164 of the Act, in our view cannot be accepted because the relationship between the Trustees in representative capacity and the answerability of the Trustees to the beneficiary is limited to the beneficiary of a particular Trust as per the Trust Act and it cannot be stretched or reached to the beneficiaries of the beneficiary and then again beneficiaries’ beneficiary. It is true that for the purpose of tax, the provisions of the Act are to be considered and the Act provides for assessment in representative capacity, but the representative capacity of the Trustees of the First Level Trust is to represent the beneficial interest of the beneficiary of its Trust, it cannot reach to the Third Level Trust or the beneficiaries of the Third Level Trust as sought to be canvassed. Had the option been not available under Section 164 of the Act to the Assessing Officer, possibly the beneficiaries of Second Level Trust could also not be considered, but as such option is expressly made available under Section 164 of the Act, we are inclined to read and interpret that for the purpose of tax under the Act, the Assessing Officer may be in a position to find out the status of the beneficiaries of the First Level Trust and while finding out the status of the beneficiaries of the First Level Trust, he may look upon the taxable liability of the beneficiaries of Second Level Trust, who are the beneficiaries of First Level Trust and if the tax payable is higher, while making assessment of the First Level Trust, option may be resorted to under Section 164 of the Act to that extent only, but such cannot be permitted again to reach to the Third Level Trust and to find out the taxable liability of the beneficiaries of the Third Level Trust. Hence, the said contention to that extent of the Revenue cannot be accepted. The question arise for reaching to the beneficiaries of the second level with third level trust for the assessment of first level trust, the impugned orders of the Tribunal cannot sustain for charging tax at the maximum marginal rate under section 164 of the Act. - Decided in favour of assessee. Income recognition - whether once the amount credited in the books of account was on contingencies of the remuneration available, it could not be considered as real income? - Held that:- Tribunal after considering the terms of the agreement has recorded the finding of fact that as per the agreement, the income which had already accrued in favour of the assessee trust during the completion of accounting year cannot be treated as no income merely because the respective societies sent notices after many years demanding the refund of the aforesaid amount. Nothing is brought to our notice that the agreement expressly provided for the refund of the amount already paid by way of remuneration nor there is any adjudication by any authority that the assessee was under obligation to refund the amount. Under these circumstances, when the Tribunal has recorded ultimate finding of fact. Whether a particular income was real income as per the terms and conditions of the agreement of the assessee or not in our view is essentially a question of fact which would be beyond the scope of judicial scrutiny in the present appeals before this Court. Same will be the position for examining references which would be limited to only substantial questions of law. Hence, we find that the second substantial question of law as sought to be canvassed by the respective appellants or the assessee would not arise for our consideration further as sought to be canvassed - Decided against assessee.
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2015 (2) TMI 120
Computation of deduction u/S.80HHC - ITAT directing not to exclude 90% of interest on overdue payment of sale consideration in computing the deduction - Held that:- Interest income on overdue payment is part of profit derived from it, however, this interest on overdue payment is received by the assessee on account of late payment of sale consideration by the overseas customers to whom the export have been made by the assessee. Thus considering case of Nirma Industries Ltd. (2006 (2) TMI 92 - GUJARAT High Court), such interest has a direct nexus with the sale price of an item which is exported. Hence, answer to question (A) shall be in affirmative in favour of assessee. Adjustment to the expenses having nexus with the earning of interest before excluding 90% of such interest under Explanation (baa) below section 80HHC despite the word used in the Explanation being "receipts" and not income and the adjustment of 10% having already been provided for expenses by a legal fiction - Held that:- As relying on ACG Associated Capsules Pvt. Ltd. vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA] while calculating the amount of interest, the net interest income is to be considered and not the gross interest income. Under the circumstances, we find that the answer to question (B) shall be in affirmative in favour of the assessee. Exclusion of 90% of compensation in computing the deduction u/S.80HHC - Held that:- The compensation received may be on account of improper functioning or less than the expected capacity of the windmill by the assessee would have a different category of the income received and it cannot be made corelatable to the profits and gains from business. In our view, so far as amount of compensation received is concerned, it has no element of export turnover of the assessee and therefore, a separate treatment would be required to be given.Rational for excluding 90% of the receipt by way of brokerage, commission, interest, rent or charges is that these are independent income and their inclusion in the profit of business would result into distortion.the income by way of compensation received by the assessee cannot be made directly relatable to the regular course of business as sought to be canvassed. Hence, we find that question (C) needs to be answered in negative by holding in favour of the revenue and against the assessee.
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2015 (2) TMI 119
Deduction under Section 80M allowed on gross amount of dividend received allowed - Held that:- In respect of the first substantial question of law, it is held that the decision of the Tribunal in allowing the deduction under Section 80M is contrary to Distributors (Baroda) P. Ltd.’s case ( 1985 (7) TMI 1 - SUPREME Court). Thus, the order of the Tribunal is set aside and that of the Assessing Officer is restored. - Decided in favour of revenue. Addition made on account of Closing Stock of stores, spare parts and tools etc - Held that:- At best, even if the addition is to be made, it could be on the basis of closing stock of the previous year i.e. 1988-89. Such argument seems to be attractive, but cannot be accepted at this stage. It has come on record from the assessment year 1983-84 till the assessment year 1988-89, the assessee made to believe that stocks purchased by him stands consumed by the end of the year. Such accounting method even in respect of petty items cannot be said to be an accepted accounting procedure, the notice of such method could be taken by the Assessing Officer while making assessment. We find that the finding of the Commissioner of Income Tax (Appeals) as well as of the Tribunal is not based upon sound reasoning. The reason given is on the basis of the finality of the assessment proceedings in the previous years. The opening and the closing stocks have to be certain and cannot be left to the rule of thumb, as adopted by the assessee in the present case.Thus, the findings of the Tribunal and of the Commissioner of Income Tax (Appeals) in respect of setting aside the addition relating to the closing stock are set aside and that of the Assessing Officer are restored. - Decided in favour of revenue.
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2015 (2) TMI 118
Nature of expenses - Expenses incurred for replacement of membrane cells-II disallowed - ITAT deleted the addition treating the same as capital expenditure by following the rule of consistency - Held that:- We do not find that the approach on the part of the department to take up a different stand in absence of any material or valid reason could be said as justified. The consistency expected on the part of the Revenue in taxation matter is not unknown but rather is expected so as to make the Assessee aware about the taxable liability. We do not mean to say that if the legal position is changed or there is cogent material available, the Revenue cannot take a different stand or make a valid departure but at the same time, in absence of any such circumstances, namely, any material leading to different conclusion or change in legal position, the consistency on the part of the Revenue should be adhered to. The attempt to contend that life of membrane would be spread over from 3 to 5 years or that the amount involved for replacement of membrane is huge and, therefore, the departure on the part of the Revenue could be said as justified, in our view, cannot be countenance for two reasons. One is that the amount involved would not make difference for chargability of the tax but the nature of expenditure would be relevant for the chargability of tax. It hardly matters whether the amount is more or less. Further, on the aspect of life of the membrane, nothing is referred to by the A.O. nor by C.I.T. (Appeals) that earlier, such aspect, namely, life of the membrane spread over from 3 to 5 years was not considered or it had missed or otherwise. - Decided in favour of the Assessee.
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2015 (2) TMI 117
Nature of additional Compensation received - ITAT held that the alleged amount of compensation cannot be brought within the meaning of income u/s 45(5) - Held that:- Considering the decision of the Apex Court in the case of Ghanshyam (2009 (7) TMI 12 - SUPREME COURT) wherein the Apex Court has distinguished its earlier decision in the case of Hindustan Housing and Land Development Trust Ltd (1986 (7) TMI 10 - SUPREME Court) which has been relied upon by the Tribunal in the impugned order, we are of the opinion that these matters are required to be remanded to the Tribunal for reconsideration. Thus these matters are remanded to the Tribunal, which shall consider the issues afresh in light of the provisions of law
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2015 (2) TMI 116
Penalty under Section 271D - whether share application money received in cash is in the nature of deposit and not in contravention to the provisions of Section 269 SS ? - Held that:- In the present case the assessee was under the bona fide impression that the money received was only towards allotment of shares and it is not a loan or deposit. Hence, following the decision of this Court CIT V. Rugmini Ram Raghav Spinners Private Limited [2007 (7) TMI 237 - MADRAS HIGH COURT] we find when rigours of Section 269SS of the Income Tax Act cannot be applied, penalty could not be levied under Section 271D of the Income Tax Act. - Decided in favour of assessee.
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2015 (2) TMI 115
Computation of income under Section 80 HHC - exclusion of scrap sales from the total turnover - Held that:- As regards the issue of scrap sales, it is covered by the decision of the Hon'ble Madras High Court in the case of Fenner (India) Ltd. - Vs - CIT (1998 (4) TMI 67 - MADRAS High Court) therefore the Appellate Tribunal was right in law in holding that the scrap sales is to be excluded from the total turn over for the purpose of computing the income under Section 80 HHC - Decided against revenue. Expenditure on earning exempt income - restricted to 2% by ITAT when the assessing officer has proved on a scientific basis that the interest paid on loans taken for investment in the exempt bonds was much larger - Held that:- the assessee has claimed exemption from interest on tax free bonds. It is fact that the assessee has made systematic huge investments resulting in income and no expenditure in the form of expenditure and management have been made by the assessee. As the income is exempted, proportionate expenditure in this regard to be disallowed but as to how much. This issue has to be considered. It is to be noted that reasonable disallowance can be made i.e., to the extent of 2% of the exempted income. Accordingly, the Assessing Officer is directed to disallow proportionate expenditure to the extent of 2% of the exempted income as relying on Southern Petro Chemical Industries - Vs - DCIT [2004 (10) TMI 308 - ITAT MADRAS-C] - Decided against revenue.
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2015 (2) TMI 114
Transfer pricing adjustment - AO/TPO/DRP not appreciating the 50:50 revenue split business model between the appellant and its associated enterprises in relation to international transactions, i.e. provision and receipt of freight forwarding services, and, further making an upward adjustment alleging that such transactions were not at arm’s length - TNMM v/s CUP method? - whether the business model said to have been adopted by the assessee, in principle, meets the test of arm’s length price determination under rule 10BA as well? - Held that:- It may appear to be some kind of a dichotomy in the tax legislation but the well settled legal position is that when a legislation confers a benefit on the taxpayer by relaxing the rigour of pre-amendment law, and when such a benefit appears to have been the objective pursued by the legislature, it would a purposive interpretation giving it a retrospective effect but when a tax legislation imposes a liability or a burden, the effect of such a legislative provision can only be prospective. What logically follows from the law so settled by a constitutional bench of Hon’ble Supreme Court in the case of CIT Vs Vatika Townships Pvt Ltd [2014 (9) TMI 576 - SUPREME COURT], is that the operation of rule 10BA, which confers the benefit of an additional method of ascertaining arm’s length price and, inter alia, relaxes the rigour of CUP method, can only be retrospective in effect. In our considered view, therefore, rule 10BA is to be held as effective from 1st April 2002, i.e. the time when transfer pricing provisions were introduced in India. In view of the above discussions, the conclusion arrived at by the coordinate benches meets our considered approval not only because of our respect for the pioneering work done by the coordinate benches but also because of our analysis elsewhere in the order and the subsequent developments, in jurisprudence as also in legislative field, supporting the conclusions arrived at by the coordinate benches. The business model of 50:50, as was admittedly prevalent in the line of business activity of the assessee and as is followed by the assessee, thus indeed satisfies the test for determination of arm’s length price. The assessee’s contention to the effect that the arm’s length price of services rendered to, or received from, the associated enterprises, which was computed on the basis of the same 50:50 model as is the industry norm and as has been employed by the assessee for computing similar services to the independent enterprises, was at arm’s length. Accordingly, the impugned arm’s length price adjustment of ₹ 2,09,00,179 stands deleted. - Even as we admit the additional grounds of appeal, we are alive to the fact that all the related aspects of the matter have been examined at the assessment stage. We, therefore, consider it appropriate to remit the matter to the assessment stage for examination of the plea raised by way of the additional ground of appeal. Decided in favour of assessee for statistical purposes i.
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2015 (2) TMI 113
Revision u/s 263 - AO has not made disallowance of 170 payments towards professional fees and contract charges on which tax had not been deducted at source - Retrospective v/s prospective - Whether to follow the decision of the Hon’ble Special bench [Bharati Shipyard Ltd. 2011 (9) TMI 258 - ITAT MUMBAI] taking the view that Amendment to Sec.40(a)(ia) is prospective or the decision of the Hon’ble Calcutta High Court[2011 (11) TMI 348 - CALCUTTA HIGH COURT] taking a contrary view? - Held that:- Considering the decision of Tej International (P) Ltd. v. Dy. CIT (2000 (9) TMI 215 - ITAT DELHI-A ) wherein it was held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the Court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a non-jurisdictional High court does not really alter this position, as laid down by the Hon'ble Bombay High Court in the case of CIT v. Godavaridevi Saraf (1977 (9) TMI 24 - BOMBAY High Court). Amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 was held to be retrospective from 1.4.2005. If the amendment is considered as retrospective from 1.4.2005, the effect will be that payments of TDS to the credit of the Government on or before the last date for filing return of income u/s.139(1) of the Act for the relevant AY have to be allowed as deduction. Admittedly in the case of the Assessee payments were so made before the said due date and in terms of the decision of the Hon’ble Calcutta High Court in COMMISSIONER OF INCOME TAX, KOL-XI, KOL Versus VIRGIN CREATIONS [2011 (11) TMI 348 - CALCUTTA HIGH COURT] no disallowance could be made by the AO u/s. 40(a)(ia) of the Act. Admittedly in the present case, the Assessee had deposited the tax deducted at source on or before the due date for filing return of income u/s.139(1) of the Act and therefore the impugned disallowance deserves to be deleted. Decided in favour of assessee.
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2015 (2) TMI 112
Penalty u/s.271(1)(c) - CIT(A) deleted the levy holding hat penalty cannot be levied in respect of the additions made on estimate basis by applying the gross profit rate - Held that:- Penalty levied u/s.271(1)(c) of the Act on the income admitted during the course of survey proceedings is to be deleted. The contention of the assessee is not controverted by the Revenue by placing any material on record, therefore respectfully following ratio laid down by the Hon'ble Gujarat High Court rendered in the case of Kirit Dahyabhai Patel vs. Asst. CIT [2015 (1) TMI 201 - GUJARAT HIGH COURT] we do not find any merit in the Revenue's appeal. Hence penalty deleted. Decided in favour of assessee.
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2015 (2) TMI 111
Estimation of profit - revenue recognition - rejection of books of accounts - as per AO assessee was following project completion method and no profit is declared on the basis of percentage completion method - in respect of project Iraisaa and Costarica, the AO made an addition by taking 10% profit on work-in-progress in respect of these projects also confirmed by CIT(A) - Held that:- After verifying all the accounts for the years under consideration, we found that assessee was following percentage completion method for Iraisaa and Costarica projects and has offered for taxation he amount of ₹ 3,60,509/- and ₹ 474,060/- respectively for the said projects, the work of which is under progress. In view of these facts allegation of AO to the effect that the assessee did not declare any profit with regard to work-in-progress and the completed project, is also having no basis. In view of above discussion, we set aside the order of lower authorities for making addition by estimating 10% profit on work-in-progress for both the years. The AO is directed to reframe assessment keeping in view our above observation. Needless to say the assessee should be given full opportunity before finalizing the assessment. - Decided in favour of assessee for statistical purposes. Disallowance of business expenditure - Held that:- It is clear from the record that payments so made was towards compensation to the customers, who have booked their flats and the same was paid for the reason of commercial expediency. It is pertinent to mention that assessee has not claimed expenditure in respect of refund of sale consideration of ₹ 1,43,97,500/-, however, only amount of compensation termed as buy-back expenses aggregating to ₹ 65,68,500/- which has been claimed as deduction which amount as has been informed in the course of regular business. Thus, there is no reason to disallow such expenses as revenue expenses. Accordingly, we direct the AO to allow expenses of ₹ 65,68,500/- as revenue expenses. - Decided in fvaour of assessee.
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2015 (2) TMI 110
Excess amortization cost debited to the profit and loss account - addition was in respect of Satellite rights of 107 films, Split wide open (satellite rights) and Satellite rights of six films - CIT(A) deleted the addition - Held that:- CIT(A) has given his finding and to the extent details were not available Ld. CIT(A) has directed the AO to verify the details. The findings recorded by Ld. CIT(A) are based on the details filed by the assessee before Ld. CIT(A). No discrepancy has been pointed out by the Revenue in the findings recorded by Ld. CIT(A). With regard to 107 satellite rights, it has been specifically mentioned by Ld. CIT(A) that realization of the assessee from these films were upto the date of rights available with the assessee and these facts have been described in the table which remains uncontroverted. Similarly, with regard to split wide open, the cable TV and video rights available to the assessee were upto 30/09/2005 and 28/06/2005 respectively which were sold upto 7/12/2005 and similarly for other films also Ld. CIT(A) has recorded the dates and that portion of Ld. CIT(A)’s order has also reproduced in the above part of this order. In absence of any discrepancy pointed out in these findings, it cannot be said that Ld. CIT(A) has granted the relief to the assessee without application of mind or in absence of details of facts. The respective dates are clearly mentioned in respect of rights available to the assessee and the period upto which those rights were sold. Therefore, we decline to interfere in the relief granted by Ld. CIT(A) and the appeal filed by the Revenue is dismissed. - Decided in favour of assessee.
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2015 (2) TMI 109
Bogus purchases - sham transactions - CIT(A) partly deleted addition - Held that:- Simple confirmation on the ledger account and confirmation of sales to the parties in the absence of any filing of return of income tax or sales tax return and without having any PAN/CST/PST numbers and the said parties having no books of account or any explanation offered or any evidence of having consumed the goods by the assessee, the purchases cannot be said to be proved especially in the absence of any consumption shown by the assessee on the alleged purchases debited in the books of account. It will be too early to conclude that the said purchases are sham in the absence of any verification or examination of M/s Rajiv Electric Trading Co. and M/s Krishna Hardware & Mill Store and their books of account and records and whether at all genuine purchases have been made or not. Therefore, in the interest of justice, matter is set aside to the file of A.O. to find the genuineness of the purchases/genuineness of the parties from whom the purchases are claimed to have been made. - Decided in favour of asseessee and revenue for statistical purposes. Disallowance on account of ESI and EPF - delay in payment - CIT(A) deleted the addition - Held that:- No infirmity in the order of ld. CIT(A) as the contributions by employees are regulated by sections 2(24)(x) r.w.s. 36(1)(va) of I.T. Act than under section 43B of I.T. Act. But in the light of decision of ITAT, Delhi “C” Bench in the case of Addl. CIT vs. Vestas RRB India Limited (2004 (5) TMI 245 - ITAT DELHI-C ) one of the issue in that case being of addition under section 2(24)(x) of IT Act, the deposit of employees contribution to PF etc. in this case as in that case being late, but before the due date of return, the same is eligible as deduction as per the said decision. Thus, the assessee has rightly been allowed relief of ₹ 1,49,429/-. - Decided in favour of assessee.
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2015 (2) TMI 108
Deduction u/s 10A of the Act was reduced on account of adjustment of unabsorbed business loss and depreciation - Held that:- Deduction u/s 10A of the Act is to be calculated before reducing the unabsorbed loss and depreciation from the profits of the undertaking. - Decided in favour of assessee Exchange variation on share application money received from abroad excluded from profits and gains of business - Held that:- While considering this ground, it was observed, the CIT (A) had neither adjudicated nor disposed off the issue as to whether the exchange variation of ₹ 7,85,820/- should be excluded from the assessee's income or not?. Since this issue was considered neither by the AO nor by the CIT (A), we deem it appropriate to restore this matter to the AO for denovo consideration. - Decided in favour of assessee for staistical purposes.
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2015 (2) TMI 107
Addition made u/s 68 - not production of conclusive evidence - Held that:- The assessee could not adduce any conclusive evidence in support of its contention that the impugned transaction is akin to the security scam transaction. The ld. Counsel for the assessee has repeatedly said that the Revenue Authorities has failed to discharge the burden of proof. As mentioned elsewhere section 106 clearly lay down that the burden of proving fact specially within the knowledge of any person is upon that person. Even today in the year 2014, no such conclusive confirmation has been brought before us either from Andhra Bank or from the broker M/s Champaklal Devidas. After carefully perusing the order and the evidences brought on record, we have to hold that the assessee has miserably failed in discharging the burden of proof cast upon it by virtue of section 68 r.w.s. 106 of the Evidence Act. The explanations of the assessee are full of discrepancies and contradictions and above all unsubstantiated. Considering the facts in totality, the decision of the first appellate authority cannot be faulted with. - Decided against assessee. Disallowance of finance charges payable - Held that:- There is a mention of sale of units of ₹ 132,275,000/- from which is deducted purchase of units amounting to ₹ 134,942,875/-. The difference is claimed as finance charges. A perusal of these transactions clearly show that there was a loss on purchase and sale of units. By any stretch of imagination, this cannot be considered as equivalent to finance charges. Interest is paid whenever money is borrowed or some debt is incurred. Both elements are missing in these transactions. Therefore, the finance charges claimed by the assessee is rightly denied by the A.O. and confirmed by the ld. CIT(A).- Decided against assessee.
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2015 (2) TMI 106
Service tax inclusion in the total receipts for determining the presumptive income - Held that:- CIT(A) following the rule of consistency was justified in granting relief for the assessee as service tax collected by the appellant for and on behalf of the central government by itself cannot be said to have been received in return of providing any services or facilities in terms of section 44BB of the Act. We are unable to see any valid reason to take a different view on the same issue which is squarely covered in favour of the assessee in assessee’s own case for AY 2008-09 which is on similar point and the department has not shown any contrary view of any Hon’ble higher court. - Decided in favour of assessee.
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2015 (2) TMI 105
Interest on PDCs Paid outside the books of account - part of purchase consideration of land was paid through PDCs - CIT(A) deleted addition - Held that:- Ground raised by the Revenue is misconceived because learned CIT(A) has not deleted the addition but has only directed to recalculate the interest. - after examining the loose papers seized at the time of search at the assessee’s premises, it was noticed that interest is paid on the PDCs only during the period of extension of PDCs and, therefore, he directed the Assessing Officer to recompute the interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible to work out the extension of PDCs in each case, then the Assessing Officer is directed to recompute interest on PDCs after six months from the date of issue of the PDCs. Therefore, the ground of appeal of the Revenue that the CIT(A) deleted the addition of ₹ 5,06,625/- made by the Assessing Officer on account of interest on PDCs is factually incorrect and contrary to the order of the CIT(A). - Decided against revenue.
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2015 (2) TMI 104
Validity of reopening u/s. 148 - certain investigation were carried out by the Directorate of Investigation, Jhandewalan, New Delhi in respect of the bogus / accommodation entries provided by certain individual / companies - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. A mere reference is made to certain information received from the Investigation Wing which was supplied to the assessee vide AO’s letter dated 15.9.2010. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO had mechanically issued notices u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Investigation, Jhandewalan, New Delhi. Thus the reopening in the case of the assessee for the asstt. year in dispute is bad in law and deserves to be quashed. - Decided in favour of assessee.
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2015 (2) TMI 103
Sale of shares - Short term capital gains v/s business income - assessee is an individual – non-resident Indian settled in Jeddah since more than 30 years - Held that:- Capital gain was earned only on delivery basis transactions and there was no income by way of speculation or further and options. The assessee has not only earned not only dividend income but also short term and long term capital gains in respect of investments in shares held by it since last 7-8 years. The AO has not shown any reason to deviate from the conclusions drawn in earlier year and subsequent years vis-a-vis treatment of investment shown by assessee in its audited account. The fact that assessee has earned substantial long term capital gain amounting to ₹ 30,06,635/- and also dividend income of ₹ 41,13,545/- clearly establishes intention of assessee regarding holding of shares as investment. Since intention of assessee was always to make investments and not trade, hence, the holding period and investment gone from year to year from 6 crores to 22 crores. Without any cogent material the AO has reached to the conclusion that assessee has traded in shares since he was not having any business in India, whereas the fact is that assessee is an NRI, engaged in his business at Jeddah since more than 30 years. No merit in the action of the lower authorities for treating capital gain as business income. - Decided in favour of assessee
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2015 (2) TMI 102
Deduction u/s 10B - Non consideration of foreign exchange difference as part of export turnover and total turnover - Held that:- Export proceeds simply on the ground that the rate has increased subsequent to sale but prior to realization. Eventually it has been held that the foreign exchange fluctuation gain is part of export turnover for purposes of section 80HHC of the Act. Since the connotation of ‘export turnover’ under section 10B is no different from that u/ss 10A or 80HHC of the Act, the meaning ascribed to export turnover will apply with full vigour in the context of section 10B as well. We, therefore, hold that such foreign exchange fluctuation difference has to be considered as part of ‘export turnover’. As the instant foreign exchange fluctuation difference forms part of the export turnover, the total turnover, in the denominator will also include the effect of foreign exchange fluctuation difference. We, therefore, sum up by holding that the amount of foreign exchange fluctuation difference should be included in the ‘export turnover’ and ‘total turnover’ and it should be excluded from the ‘domestic turnover’ as was done by the AO. - Decided against assessee. Treatment of scrap sale as domestic sale while computing deduction u/s 10B - Held that:- This issue is no more res integra in view of the judgment of the Hon’ble Supreme Court in the case of CIT vs. Punjab Stainless Steel Industries (2014 (5) TMI 238 - SUPREME COURT) in which it has been held that the sale of scrap is not includible in the ‘total turnover.’ As the assessee in question is engaged in the business of manufacturing and export of fasteners, the amount of sale of scrap cannot be included in the ‘total turnover’ or ‘domestic turnover’. Rather, it would go to reduce the cost of production. -- Decided against revenue. Treatment of interest income as ineligible for deduction u/s 10B - Held that:- Interest income having close nexus with the business activity of the assessee is assessable as income from business and, hence, eligible for the benefit u/s 10A and section 10B. Thus we hold that the assessee is entitled to deduction u/s10B of the Act in respect of the interest income earned on FDRs made for the purposes of keeping margin money or for availing any other credit facility from banks. The impugned order on the issue of deduction u/s 10B is set aside and the matter is sent back to the AO for computing deduction u/s 10B afresh in conformity with our above findings and conclusions.- Decided in favour of assessee for statistical purposes. Disallowance of interest u/s 24(b) - Held that:- Section 24(b) talks of allowing deduction for the interest payable by the assessee where property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital. The assessee has admittedly shown some income from let out property under the head ‘Income from house property.’ Once some term loan has been taken for acquiring or constructing, etc., the property, which fetched income under the head ‘Income from house property’, then, interest on such loan has to be allowed as deduction u/s 24(b) of the Act. The view point of the assessee to this extent is ergo accepted in principle. However, we are unable to calculate such amount of interest with precision. Under such circumstances, the impugned order is set aside on this score and the matter is sent back to the AO for verifying and ascertaining the amount of loan utilized for the building in respect of which rental income assessable under the head ‘Income from house property’ was earned and, accordingly, allowing deduction towards such interest u/s 24(b) of the Act.- Decided in favour of assessee for statistical purposes. Ad hoc disallowance of ₹ 1 lac. - Held that:- Undisputed fact that some of the expenses incurred by the assessee were backed only by the internal vouchers. This view point of the AO has not been controverted by the ld. AR. It is but natural that if some of the expenses are not properly substantiated with evidence, then disallowance to that extent is called for. Considering the totality of facts and circumstances prevailing in this case and taking a holistic view of the matter, we are of the considered opinion that the ends of justice would meet adequately if the disallowance is reduced to ₹ 50,000/-. - Decided partly in favour of assessee. Disallowance of ₹ 86,400/- on account of festival expenses - Held that:- The aspect of necessity considered by the AO is of no substance. The AO cannot step into the shoes of the businessman to decide as to whether a particular expenditure is necessary or not. Coming to the second aspect about the non-availability of bills, we find two invoices for ₹ 66,000/- and ₹ 20,400/- in respect of 110 pieces of pressure cookers and 120 pieces of gift bags,thus find no reason to make or sustain any disallowance in this regard. - Decided in favour of assessee. Ad hoc disallowance of expenses @ 10% on account of personal nature - Held that:- No reason to disturb the finding of the authorities below in making and sustaining the disallowance @ 10% of these expenses towards personal use. This disallowance, being reasonable, is upheld.- Decided in favour of revenue. Disallowance towards payment of contribution to ESI - late deposits - Held that:- here is no doubt on the fact that the employees’ share of ESI relating to the month of June, 2008 was deposited within the year though beyond the due date under the respective Act. The Hon’ble jurisdictional High Court in CIT vs. Aimil Ltd. & Others, 321 ITR 508 (Del), has held that if the employees’ share of contribution is paid before the due date of filing the return u/s 139(1) of the Act, then, no disallowance can be made. Disallowance deleted.- Decided in favour of assessee.
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Customs
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2015 (2) TMI 129
Wavier of predeposit of penalty - Confiscation of red sander logs - Held that:- M/s. Sheth Commercial Company in whose name the impugned Shipping Bills were filed, had denied to have exported the impugned consignment. We find from the observations of the ld. Commissioner that none of the Applicants verified the credential of the documents and the identity of the actual Exporter. He has also recorded that Shri Laha and Shri Sambhu Das were present during stuffing of the containers. We find that the evidences produced by both sides in their support, requires appreciation of evidences which can be examined in detail, at the time of final disposal of the Appeals. However, from the chain of events narrated by the ld. Commissioner, it is evident that the complicity of the Applicants in the present case of exporting red sander wood, a prohibited item, cannot be ruled out. We find that action or omission on the part of the above-mentioned Applicants has resulted into the export of red sander log, which is a prohibited item, and therefore, the export consignments are liable for confiscation and penalty is imposable on the Applicants. Prima facie, the Applicants are not able to make out a case for full waiver of the penalty. Accordingly, we direct each of the Applicants, to deposit 10% of penalty imposed, within a period of eight weeks of the communication of the Order. On deposit of the said amount, predeposit of the remaining amount of penalty imposed on each of the Applicants, stands waived and its recovery stayed, during pendency of the Appeals - Partial stay granted.
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2015 (2) TMI 128
Confiscation of goods - Imposition of penalty - Whether show cause notice issued by the ADG, DRI as proper officer is sustainable or not and whether the confiscation of the goods under Section 111 (d) of Customs Act as ordered by the adjudicating authority and imposition of redemption fine in lieu of confiscation under Section 125 and imposition of penalty under Section 112 of Customs Act on the appellants is correct or otherwise - Held that:- DRI officers had detained 53 items of various TV broadcasting equipments from the premises of main appellant i.e. Vijay TV on 29.12.98 as no valid documents were produced to prove that these are imported and duty paid. Out of these, 32 items were purchased by M/s.Vijay TV from the local dealers and others and the remaining items were taken on hire/lease/loan. The investigating officers had released 37 items to the appellants on production of valid documents showing licit nature of import. Out of 6 items, the items at Sl.No.11, 16 (i), 35, 37, 38, 39 and 41 were purchased by the appellants and the remaining items were procured on hire or lease basis. It is abundantly clear that the department had pursued the trail from the last person who purchased the goods to the immediate seller. I find that the investigations started at the appellants' premises and it extended to various places in Mumbai, Bangalore, New Delhi, and in fact the department had sufficiently proved their case to the last possible evidence. Only when the ultimate person who happens to be non-existant or it led to purchase from local Burma Bazaar as evidenced above, the investigation could not proceed any further. This clearly proves that the department had discharged its burden with so much evidence on record to prove that the impugned goods which are in possession of the appellants are illicitly imported without payment of duty as no proof of illicit import produced. Therefore, the onus is on the appellants. The ratio of Hon'ble Apex Court's decision in the case of CC, Madras And Others Vs D. Bhoormull - [1974 (4) TMI 33 - SUPREME COURT OF INDIA] and Kanungo & Co. Vs CC Calcutta and Others - [1972 (2) TMI 35 - SUPREME COURT OF INDIA] squarely applies to the present case. Further, the Hon'ble High Court of Karnataka in the case of CC Bangalore Vs Vikram Jain (2009 (9) TMI 179 - KARNATAKA HIGH COURT) by relying the apex court decision has held that the department is not required to prove with mathematical precision that the goods are smuggled or non-duty paid. The very fact that appellant being a private limited company operating its own TV channel acquired these impugned items of foreign origin for use in the production programme as well as broadcasting purpose. Considering the nature and importance of each items which are of foreign origin meant for use in their production studios etc. there is no doubt that being an owner of a TV Channel definitely is aware before hand that these impugned goods are not licitly imported and not suffered customs duty. It is further confirmed beyond doubt that out of 53 items detained by the DRI, the appellants themselves produced valid documents for 37 items on licit import whereas on these items they failed to prove with any documents and this confirms that even before purchase of these goods or entering into hire/lease agreement, the appellants were fully aware of its illicit importation and acquired the same. Their contentions that they have obtained bills/invoices from the dealers is beyond acceptable as having fully known that the goods are of foreign origin and they cannot claim ignorance that they have bonafide belief that these goods are validly imported and sold to them. Appellants' contention that the burden of proof is not discharged by the department is not maintainable as the department has sufficiently discharged the proof. Accordingly, I hold that the goods are liable for confiscation and the adjudicating authority has rightly ordered for confiscation of the said goods under Section 111 (d) of Customs Act and the order of confiscation of the goods is upheld. As regards the imposition of redemption fine in lieu of confiscation under Section 125 of the Customs Act, by taking into consideration that the said items are purchased or hired by the appellants and these were meant for their own use for rendering TV and broadcasting service and not for sale, I take a lenient view and the redemption fine imposed by the adjudicating authority M/s. Vijay TV and M/s. Motherland Pictures needs reduction. As regards the imposition of penalty on the appellants under Section 112 of the Act, the lower authority has rightly imposed penalties on all the appellants. The appellant s contention is not acceptable for the reason discussed in the preceding paragraphs as once it is held that the appellants contravened the provisions of the Act and the goods are liable for confiscation, the appellants are liable for penalty. The appellants relying on Tribunal decision in the case of M/s. Ameet Industrial Corpn. (2005 (2) TMI 581 - CESTAT, MUMBAI) for waiver of penalty is of no help to the appellants. As seen from the trail leading to involvement of 3 to 4 persons before the first appellant purchased/acquired on hire of these items, each person is unable to prove the licit nature of imports. There are number of judicial rulings by the Hon’ble High Courts and the Tribunal decisions where the penalty imposed under Section 112 is upheld on identical issues. I rely on the Hon’ble High Court of Delhi order in the case of Ajay Dahyabhai Sridhar Vs. CC, Delhi - [2010 (11) TMI 826 - DELHI HIGH COURT] and this Tribunal Division Bench decision in the case of Mujeeb Rahman Vs. CC,Chennai - [2010 (1) TMI 994 - CESTAT CHENNAI]. Therefore, I hold that the appellants are liable for penalty under Section 112 of the Act. However, by taking overall facts and circumstances of the case and the submissions of each appellants, a lenient view is warranted for reduction in penalty. - Decided partly in favour of assesee.
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2015 (2) TMI 127
Valuation - Determination of transactional value - Provisional assessmet - Unjust enrichment - whether duty liability has to be determined on the basis of transaction value paid or payable for the supply of goods or the duty liability should be determined on the basis of the shore tank receipt quantity - Held that:- rate of duty was ad valorem during the period of imports in the present case and the appellant was required to pay to the foreign supplier the value agreed upon for the bill of lading quantity even though the actual quantity received could be less due to ocean and other losses or due to natural causes and the appellant was not entitled for any deduction in the value on bill of lading quantity. As regards the reliance placed by the appellant on the decision in appellant's own case vide order dated 2-5-2003, the imports in the said case pertained to the period 1992-97 and the rate of duty was specific during most of the period of imports. Thus the factual and legal position obtaining with regard to the customs levy was different when compared to the facts of the present case where the rate of duty is ad valorem. When the rate of duty is ad valorem and payment is made for the bill of lading quantity without any adjustment in value for the various losses, it is on the transaction value that the duty liability has to be discharged and not on the basis of the quantity of bulk liquid cargo which is actually received. As regards the various case laws relied upon by the appellant, we find that they are not relevant to the facts of the present case before us. However as regards NCCD duty which is levied at specific rates, the above analysis will not apply and they will have to be levied on the actual shore tank receipt quantity and we hold accordingly. - Following decision of MANGALORE REFINERY & PETROCHEM. LTD. Versus CC, MANGALORE [2006 (2) TMI 518 - CESTAT, BANGALORE]. Whether ship demurrage charges are includible in the assessable value of the goods imported - this matter was referred to the Larger Bench for consideration in view of conflicting decisions in the matter in the case of Grasim Industries Ltd. (2013 (10) TMI 246 - CESTAT AHMEDABAD). The larger Bench noted that rule 10(2) of the Customs Valuation Rules, 2007, which was pari material with Rule 9 (2) of CVR, 1988, added an explanation specifically including ship demurrage charges, lighterage or barge charges in the cost of transport of imported goods. Therefore, for the period prior to 2007, the said charges were not includible even if the assessments were made provisionally. This larger bench decision prevails over other decisions of this Tribunal. In the present case, this period involved is prior to 2007. Consequently, it has to be held that ship demurrage charges are not includible in the assessable value of the imported goods prior to CVR, 2007 coming into force and we hold accordingly. Doctrine of unjust enrichment will not apply considering Sections 27(2), (3) of the Customs Act. The doctrine of unjust enrichment will only apply when the assessment is finally completed. There can be no application for refund before the final assessment is made. Any adjustment between the differential amount of duty in relation to the one set of bills of entry where there is a short payment and the excess amount of duty covered by another set of bills of entry is not permissible. It was further held that "what is required to be done by the assessee is to pay the duty short paid and separately claim refund of the duty paid in excess". Since the issue of unjust enrichment has to be considered, it obviously follows that each transaction has to be examined separately and therefore, there cannot be any clubbing of clearances. Prior to 13-7-2006 there was no provision for demand of interest on differential duty on finalisation of provisionally assessed bill of entry. Levy of Interest is substantive in character and therefore, in the absence of specific provisions, the demand for interest cannot be made - impugned orders are set aside and the matter remitted back to the adjudicating authority for computation of the differential duty demands and also for consideration of the refund claims due to the appellant in accordance with law - Appeal disposed of.
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2015 (2) TMI 126
Classification of goods - import of parts of Room Air Conditioners - whether components/parts of Ventilating and Recycling hood - whether the goods imported by the appellant/assessee are classifiable under sub-heading 8414.90 as claimed by the appellant/assessee or under 8415.90 as claimed by the Revenue - Held that:- While the appellant/assessee have been able to produce invoice T002 along with the enclosure as also copy of the bill of entry on which assessment were made, the so called literature and catalogue produced by them at the time of clearance has not been produced by them in reply to show cause notice in 1990 or before the adjudicating authority either in 1991 or 2009 or before this Appellate Tribunal in both the rounds of litigation. We are unable to appreciate why the appellant/assessee has not able to produce the literature and catalogue which they claim to have produced to the Appraising Officer at the time of clearance of goods. The obvious conclusion is either no such detailed literature or catalogue was produced or if produced, must be Xerox of some photograph or manipulated document. In fact, if there was detailed catalogue indicating that parts in question are parts of ventilating and recycling hood, there was no need to go for expert opinion, by them. In view of the descriptions given in the tariff, HSN Explanatory Notes relating to ventilating and recycling hood, details available on the Internet in the Google search, report of the Mechanical Engineering Department, Govt. College of Engineering, Pune (as discussed earlier) and the certificate dated 23-10-1989 we have no hesitation in holding that the term “ventilating and recycling hood” as used in tariff does not cover the Ventilating and recycling hood purported to be an intermediate product in manufacturing of room air conditioner but touch items used in home or in restaurants, canteens, hospitals, etc. In view of this conclusion, the parts imported by the appellant/assessees cannot be considered as parts classifiable under heading 8414.90. In fact, in our view the sub-assembly of air conditioners to which the appellant/assessee is claiming to be “ventilating and recycling hood” is incorrect and supported by no catalogue literature or any authoritative book. All this is based upon the imagination of appellant as is clear from statement of Shri V.N. Dhoot, Managing Director. There is no dispute all the parts were used to assemble room air conditioner and therefore are to be considered as parts of air conditioner falling under 8415.90. Revenue has also filed an appeal on the ground that Section 112 of the Customs Act, 1962, which provides that when the goods are liable for confiscation, the person responsible shall be liable to a penalty. While we do agree with plea, we note that the issue of question of penalty was discussed by this Tribunal while remanding the matter and the Revenue had not filed an appeal against the said order of the Tribunal before High Court. Hence, the said order of the Tribunal has attained finality. In view of this fact, the learned Commissioner in the impugned order has correctly not imposed penalty. - Decided partly in favour of assessee.
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2015 (2) TMI 125
100% EOU - DTA clearances - products are not similar to the goods exported or expected to be exported - Denial of benefit of concession availed under Notification No. 23/2003-C.E., dated 31-3-2003 - Held that:- If a unit is manufacturing only one product, the unit can sell 50% of FOB value of exports and if the unit is manufacturing more than one product and exporting, they can sell 90% of FOB value of export of the specific products subject to the condition the average DTA sale does not exceed 50%. Therefore, the most important question that arises is whether the assessee before us is engaged in the manufacture of one product or multiple products. Apparently, the Department has taken a view that it is multiple products and a common man’s understanding would be the same. Going by layman’s understanding and going by the meaning of similarity in the dictionary, it is difficult to accept the submission that the 4 items in dispute are similar to the ones which have been exported. The reliance on Appendix 16A which gives the list of products which would be eligible for the facility on the ground of 100% exports, it appears that even though the heading gives tentative list of products, the objective in the list does not seem to list out individual products rather than category. Decision in the case of Consolidated Coin Co. Ltd. (2013 (2) TMI 416 - CESTAT NEW DELHI) is only an interim order and the Tribunal was considering dispensation of pre-deposit. In that case, the Tribunal straightaway accepted the similarity of the items in dispute and when there is no discussion and no law has been laid down, this decision cannot be applied. As regards the decision in the case of Hindustan Lever Ltd. (2010 (10) TMI 532 - CESTAT, CHENNAI), this was rendered while considering the Notification No. 2/95-C.E. and there a view was taken that fresh mushrooms and processed mushrooms are similar and it was held that both belong to same classification of goods and therefore similar. In this case also, there was no detailed discussion and the consideration was only of the products before the Tribunal. When decisions are taken in respect of particular products, it may not be correct to apply the decisions straightaway to other products. The discussion above would show that this is a case where it cannot be said that appellant has a strong prima facie case but issue is one which is highly technical, debatable and requires consideration of various provisions of FTP, policy relating to 100% EOU and also technical terms and the meaning of the word ‘similar’ and its detailed examination which can be done at the time of final hearing. - Partial stay granted.
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FEMA
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2015 (2) TMI 124
Validity of detention order - Forfeiture of property under SAFEMA - Detention notice not served - Violation of principle of natural justice - Held that:- Shri Sarin was never served with the detention order, nor even made aware of it ever, during the time it was in force. The respondents were unable to show any material to say that they tried to serve it upon him, and that he could have in any manner known of its existence, in order to challenge it. In these circumstances, it was impossible for him to impugn it, for the period July 1975 to March 1977. Once the Emergency was revoked, and the detention order suffered a similar fate, there was no manner for him again to challenge the detention order as it had no consequence. Another very important aspect is that when the Emergency was in force, individuals whose personal liberty was forfeited under preventive detention laws, such as COFEPOSA, were, by reason of the Proclamation of Emergency, prevented from asserting their Fundamental Rights. Initially nine High Courts held that notwithstanding this position, orders of detention could be challenged under Article 226 of the Constitution of India. However, the Supreme Court held that such petitions were not maintainable; effectively barring even the writ remedy to those aggrieved against detention orders, in A.D.M. Jabalpur v Shiv Kant Shukla [1976 (4) TMI 211 - SUPREME COURT]. The submission of the respondents that the revocation order in the present case was not under Section 12-A, but under Section 11 is of not much consequence. The only power of revocation which could have been sought recourse to, by the Central Government, under COFEPOSA, during Emergency, in respect of orders under Section 12-A, was under Section 12-A (3) after review and recommendation to release the detenu. That class of detention orders too stood excluded by virtue of Section 2 (2) (b) third proviso; however, the first category, i.e. those detention orders that had not been revoked before cessation of Emergency, could have been revoked only under Section 11 of COFEPOSA. - revocation of the detention order, in the present case, clearly fell within third proviso to Section 2 (2) (b) and was thus excluded from exercise of jurisdiction under SAFEMA. The writ petition has to consequently succeed; the orders of the competent and appellate authority are hereby quashed. - Decided in favour of appellant.
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Service Tax
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2015 (2) TMI 148
Rent a Cab service - Service of providing bus on contract basis by the appellant to various factories and firms on monthly rental basis - Supreme Court after condoning the delay did not find any merit in the appeal of the Revenue filed against the order of Tribunal [2015 (2) TMI 100 - CESTAT BANGALORE] - Wherein Tribunal held that BMTC cannot be considered to be a person engaged in renting of cab service at all.
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2015 (2) TMI 147
Penalty u/s 76 - Renting of immovable property - Held that:- Penalty under Section 76 is imposable for failure to pay Service Tax, Section 80 (1) grants waiver from the payment of penalty if the assessee proves that there was reasonable cause for the said failure. In the present case, no doubt there was confusion regarding leviability of Service Tax on the renting of immovable property service due to various court decisions. The matter has still not attained finality in view of the decision pending in the Hon'ble Supreme Court in the case of Retailers Association of India [2011 (10) TMI 12 - Supreme Court of India]. However, at the same time, the Hon'ble Supreme Court did not grant stay unconditionally. It only granted the conditional stay. As the recipient in this case did not observe conditions of the stay, the interim order of the Hon'ble Supreme Court does not help the appellant who is the service provider in this case. Further, Government gave the benefit of waiver of penalty under Section 76 if the tax was deposited before 26.11.2012 under Section 80(2) of the Finance Act, 1994. The appellant paid the Service Tax on 10.12.2012 i.e after two weeks from the expiry of the period specified under Section 80(2). Clearly the waiver of penalty cannot be extended to the appellant in view of Section 80(2) because the Government had given enough opportunity to the appellant to deposit the tax before the date specified under Section 80(2). It is clear that normally the scheme is not applicable when the tax had already been paid before the introduction of the scheme. At the same time, Government has left a window open for taking a lenient view in some circumstances under Section 80 of the Finance Act, 1994. - appellant deserves a lenient view in the matter. - penalty under Section 76 of the Finance Act, 1994 is waived. The impugned order is set aside - Decided in favour of assessee.
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2015 (2) TMI 146
Rejection of refund claims - whether the refund is admissible to the appellant, an SEZ unit, in respect of Service Tax paid on input services i.e. Telecommunication services, Management or Business Consultants services, Information Technology Software services, Business Support services - Notification No. 9/2009-S.T. dated 3 rd March, 2009 as amended by Notification NO. 15/2009-S.T. dated 20th May, 2009 - Held that:- SEZ Act 2005, under Section 26 (i) (e), provides that all services imported into the SEZ to carry on authorised operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makers made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright exemption to services which are provided to be wholly consumed within the SEZ. If the service provider pays Service Tax on the service provided to an SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers. - Decided in favour of assessee.
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2015 (2) TMI 145
Denial of rebate claim - Export of Business Auxiliary Services - Notification No. 12/2005-ST dated 19.04.2005 - Held that:- Conditions prescribed in the Notification, have admittedly been complied with by the appellant. However the procedure was not followed to the extent that declaration was filed after the export of services. I note that the contents of the declaration are not such, as cannot be verified from the records maintained. Records such as invoice on which input tax credit is availed and records indicating export of services will not reveal any information which is not verifiable later. Further the learned Counsel has made a statement that there has been no duplication of refund and they have not availed refund under Rule 5 of the CENVAT Credit Rules, 2004 and the Notification No. 12/2005-ST simultaneously. Further the finding of the adjudicating authority and Commissioner (Appeals) clearly indicated that the appellant had not availed CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004. The contravention of not following the procedure of filing the declaration is indeed a procedural formality, for contravention of which substantial justice cannot be denied relying on the case of Convergys India Pvt. Ltd (2009 (5) TMI 50 - CESTAT, NEW DELHI). In view of the above the rebate is sanctioned - Decided in favour of assessee.
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2015 (2) TMI 144
Denial of refund claim - period of limitation - whether amount paid by the Respondent should be considered as payment of ‘duty’ or an amount paid as ‘deposit’ - Held that:- From the facts available on records service tax was paid on the amount of advances received by the Respondent but ultimately no service could be provided as the said works contract got terminated. In the case of Addition Advertising vs. UOI (1997 (7) TMI 2 - HIGH COURT OF GUJARAT (AHMEDABAD)) jurisdictional Gujarat High Court has, inter-alia, held that if no service is provided then there is no service tax. It means that once service is not rendered then no service tax is payable. Similarly Karnataka High Court in the case of CCE, Bangalore vs. Motorola Private Limited (2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE) held that any duty paid by mistake cannot be termed as ‘duty’. Similar view has been taken in the other case laws relied upon by the Respondent. In view of the above, it has to be held that the amounts paid by the Respondent cannot be termed as payment of duty but has to be considered as a ‘deposit’ to which provisions of Section 11B of the Central Excise Act, 1944 will not be applicable. Accordingly, there is no reason to interfere with the order dated 23.7.2013 passed by the first appellate authority. - Decided against Revenue.
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2015 (2) TMI 143
CENVAT Credit - Repair and maintenance service - Service availed by branch office by credit availed by Head office - Held that:- there is otherwise no dispute about the fact that Kota office has received the input services and were entitled to the benefit of Cenvat credit of service tax paid on the same. However, inasmuch as they were not registered with the service tax department for payment of service tax on the output service, which was being discharged by their Udaipur head office, the credit was actually availed at Udaipur. Revenue’s objection is that invoices were in the name of Kota stand rectified by the appellant by way of producing a certificate from the service provider clarifying that address may be read as Udaipur head office address. - no valid reason for denial of credit. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (2) TMI 142
Refund claim - Unutilized CENVAT Credit - Storage & Warehousing service, Insurance charges, Transportation charge, and Terminal Handling charges - Held that:- There is no contrary evidence produced by the department that the warehouse has been used by the appellant for storage of the goods other than the export goods. In fact the appellant is a merchant exporter and all the goods stored in the warehouse have been exported. In these circumstances, I hold that the appellants are entitled for refund of service tax paid on Storage & Warehousing service. - It is seen that the insurance cover has been taken by them for export goods only. Therefore, the appellants are entitled for refund of service tax paid on Insurance charges - transportation charge has not been paid for the exported goods. In these circumstances, I hold that the appellants are entitled for refund of service tax paid on transportation charge. - Terminal Handling charges although not covered it is not disputed that the service has been availed in the course of export of goods. If the CHA has paid the service tax under some other head, that does not disentitle the appellant to claim the service tax paid on Terminal Handling charges. - appellants are entitled for refund of input service credit lying unutilised in their Cenvat credit account - Decided in favour of assessee.
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2015 (2) TMI 141
Denial of refund claim - CENVAT Credit - refund was sought on the ground that service tax was remitted by assessee on the rendition of erection, commissioning and installation of transformers at different sites of PSEB; that this service was exempted from the liability to service tax under exemption Notification Nos. 11/2010-S.T., dated 27-2-2010 and 32/2010-S.T., dated 22-6-2010 - Held that:- Revenue has preferred this appeal on the singular ground that since the work order between the assessee and the PSEB contained a covenant that the consideration payable by PSEB to the assessee was inclusive of taxes including excise duty, VAT, service tax and other taxes, the service tax burden must be deemed to have been passed on to the recipient namely PSEB. In the light of the settled precedent in the area including the order of the Ahmedabad Bench of this Tribunal in Modest Infrastructure [2012 (11) TMI 924 - GUJARAT HIGH COURT] which is confirmed by the Gujarat High Court, the appeal filed by the Revenue is misconceived - Decided against Revenue.
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2015 (2) TMI 140
Composite service tax demand - assessee had conducted training programmes to impart and promote Advancement and diffusion of knowledge in the field of Aerospace, Aviation Science, Aircraft engineering, technology and evaluation of Aeronautical Profession - Held that:- Delhi High Court in Indian Institute of Aircraft Engineering v. Union of India reported in [2013 (5) TMI 592 - DELHI HIGH COURT] has declared that aircraft maintenance engineering training, a course approved by the DGCA and imparted by aircraft Training Institutes does not fall within the ambit of “commercial coaching or training”; and no taxable service is thus provided. In the light of this decision, the liability of the petitioner assessed by the main adjudication order, as confirmed by the Commissioner (Appeals), is to that extent unsustainable and is declared inoperative. The service tax due and assessable on the consideration received towards fees on the appellant providing a study centre for the Janaardan Rai Nagar Rajasthan Vidapeeth, Udaipur, Rajasthan, is however taxable as “commercial coaching or training” service, but has not been separately determined. We therefore remit the matter to the Additional Commissioner, Central Excise, Bhopal for computation of the tax liability on the consideration received on operation of the study centre. - Decided partly in favour of assessee.
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Central Excise
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2015 (2) TMI 138
Condonation of delay - Power of Court - Power of Judicial review - whether the appellate authority under the Central Excise Act, 1944 is empowered to condone the delay beyond the maximum period provided in the statute - Held that:- Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. Power of judicial review is a rule of discretion than of compulsion. Any attempt to undermine the power of judicial review enshrined under Article 226 of the Constitution would offend the basic structure of the Constitution. High Court, therefore, in an exceptional cases can interfere with the order of the authority provided an extraordinary circumstances warrants it. The judgment rendered in case of Singh Enterprises (2007 (12) TMI 11 - SUPREME COURT OF INDIA) and Hongo India Private Limited (2009 (3) TMI 31 - SUPREME COURT ) does not lay down the proposition of law that under any conceivable circumstances, the remedy under Article 226 of the Constitution is not available. It is one thing to say that the Court cannot condone the delay beyond the maximum limit provided under the statute but it would be different when a challenge is made to an order where the statutory authority acted in defiance of the fundamental principles of judicial procedure or passed an order to a total violation of principles of natural justice. - if an extraordinary case is made out, even if, a remedy by way of a statutory appeal is available, the Court can exercise the power of judicial review under Article 226 of the Constitution. The power of the High Court under Article 226 of the Constitution is not excluded merely because the alternative efficacious remedy is provided in the statute. It is a self-imposed restrictions and depends upon the facts of the each case and, therefore, is more a rule of discretion than of compulsion. The power of judicial review can be exercised where remedy available under the statute is not effective but mere formality with no substantial relief, where the statutory authority have acted in violation of the statutory provision or not acted in accordance therewith where the decision of the statutory authority is incomplete defiance of the fundamental principles of judicial procedure or the statutory authority have passed an order in gross violation of principles of natural justice or a fundamental rights guaranteed under the Constitution is infringed by the statutory authority. The power under Article 226 of the Constitution can be exercised when the statutory remedy is not available because of the interdiction of the limitation prescribed in the statute in an extraordinary circumstances when an extraordinary case is made out. - The doctrine of merger would be attracted in a case when an appeal is dismissed for default or an application for condonation of delay is rejected but not when the appeal is allowed to be withdrawn. CESTAT found that the order of the Commissioner (Appeals) cannot be faulted with as the statute provides a maximum limit to condone the delay. The Tribunal dismissed the said appeal and the order of the tribunal is challenged in this writ petition. the petitioner prayed for setting aside the order of the tribunal with further prayer to condone the delay and transmit the matter to the Appellate Authority for consideration on merit. Section 35 of the Act puts a restriction on the Commissioner (Appeals) to condone the delay beyond certain limits and, therefore, there is no illegality in the order of the Commissioner (Appeals) in rejecting the appeal on such ground. Equally this Court cannot find fault in the order of the tribunal in dismissing the appeal and affirming the order of the Appellate Authority. This Court, therefore, does not find that there is any uniformity and/or illegality in the order of the tribunal in rejecting the appeal because of the restrictions provided under Section 35 of the Act. In view of the ratio laid down in Shyam Sundar Sarma (2004 (11) TMI 523 - SUPREME COURT OF INDIA), the order of the sub-ordinate authority must be the order of the higher authority upon rejection of an application seeking condonation of delay. It is, therefore, the order of the Appellate Authority which is an existence as two orders cannot operate in the field. The Appellate Authority have rejected the application for condonation of delay which resulted into the dismissal of an appeal itself. There is no ambiguity in the order of the Appellate Authority in dismissing the appeal having timebarred, as the statute does not provide the power to condone delay beyond certain limits. This Court, therefore, does not find any fault in the order of the Appellate Authority as the order-in-original has merged into it. - Decided against appellants.
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2015 (2) TMI 137
Manufacturing activity or mere repacking activity - Whether activity of re-packing/re-labeling/re-fining of laboratory chemicals undertaken by the appellant in respect of Petroleum Benzine and Hexane for Chromatography Lichrosolv - Held that:- there is a far more serious legal infirmity. The appellants claim to be carrying on job work for E.Merck Specialties (P) Ltd.. The principals of the appellants (E.Merk) faced identical allegations and were proceeded against for having carried on manufacturing activity in their premises. The product or goods in relation to which the allegations are made are identical. The Tribunal upheld the arguments of E.Merck and allowed its Appeal. That order was relied upon by the appellants in the proceedings against them. They succeeded before the Commissioner. The Tribunal does not make any reference to all this and does not deem it necessary to consider the arguments based on its earlier orders. These orders were stated to be final. Yet, the Tribunal omits to consider them. Rule of judicial discipline requires reference being made to a larger bench in case of differences of opinions or views between the benches of the Tribunal on identical facts. A healthy way of deciding matters and to maintain purity and sanctity of the judicial process is emphasized by this Court in Mercedes Benz (2010 (3) TMI 300 - BOMBAY HIGH COURT) and relying upon the judgment of the Hon'ble Supreme Court of India. This binds the Tribunal. We have also cautioned the Tribunal in number of cases that the process of adjudication and in Revenue matters requires an early finality to vexed issues. If the issues are raised repeatedly then all more there ought to be certainty and end to the litigation. - Order of Tribunal is set aside - Decided in favour of assessee.
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2015 (2) TMI 136
Recovery of excise duty - First charge or not - Petition a sick company - Protection granted under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - Application of section 11E - Held that:- Examining the principles laid down in the said judgment to the facts of the present case, we find that Section 11E of the Excise Act gives overriding effect over the provisions of all Central and State statutes except to the extent of the dues of the workmen and the secured creditors. In Central Bank of India case (2009 (2) TMI 451 - SUPREME COURT OF INDIA), the issue was considered in relation to the first charge given under the statute framed by the State Legislature vis-à-vis law framed by the Parliament. But in the present case, the issue pertains to the Statutes framed by the Parliament. Since Section 11E of the Excise Act was inserted after the enactment of the Act giving first charge over the dues of the central excise, thus, it will have overriding operation over the provisions of the Act.
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2015 (2) TMI 135
Excisability of waste and scrap - Invocation of extended period of limitation - Whether the CESTAT is right in giving the relief to the assessee with reference to the excisability and durability of plastic waste and scrap based on the Order-in-Original No.12/95 dated 15.9.1995 which had been set aside by the Commissioner (Appeals) and CESTAT, wherein both the authorities had held that plastic waste and scrap are excisable and dutiable - Held that:- On a perusal of the order of the Tribunal, the facts, as is evident, make it clear that on and from 1.3.94, i.e., period post the order of the Deputy Commissioner of Central Excise dated 15.9.95, till the order in appeal No.37/02 dated 8.6.02, the assessee was under the bona fide impression that removal of waste and scrap does not attract duty. The Department had chosen not to issue notice pending appeal, for which failure thereof, they are not entitled to invoke the proviso to Section 11-A, as has been rightly held by the Tribunal. - Tribunal was justified in allowing the appeal on the question of limitation. There is no such finding of fact by the Commissioner (Appeals), for invoking the extended period in terms of proviso to Section 11-A of the Central Excise Act and, therefore, a question of fact, which was not the subject matter of finding by the Commissioner (Appeals) and not dealt with therein, ought not to have been raised and, therefore, the said question does not require to be answered by this Court. - Decided against Revenue.
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2015 (2) TMI 134
Demand of differential duty - Imposition of interest and penalty - Held that:- Noticing that the previous writ petition has been dismissed as there is an effective efficacious remedy available and the appellant having chosen to prefer the appeal before the appellate authority, the Commissioner of Central Excise (Appeals), Tiruchirappalli, vide appeal No.113/08- TRY, as against the original order dated 06.06.2008 and as the appellant's contention on the point of limitation also warrants consideration, it is always open to the appellant to go before the appellate authority for adjudication of the matter in accordance with law. - Therefore, as the finding of the learned single Judge as to the appeal remedy is not contrary to law and in view of the availability of efficacious alternative remedy, the stand taken by the learned single Judge to that effect warrants no interference. - appellant has to move the appellate authority and contest the matter keeping all the points raised before this Court open, including the limitation aspect, and in that event, the appellate authority shall decide the matter on merit and in accordance with law, untrammeled by any of the observations made by this Court in the earlier proceedings independently. - Petition disposed of.
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2015 (2) TMI 133
Clubbing of clearances - Held that:- Admittedly M/s. Saron Mechanical Works was established in 1994. The same cannot be held a dummy unit of M/s. Jagatjit Agro Industries, which was established in 2001. A unit which was already working for almost six to seven years cannot be held to be a dummy of another unit, which is yet to become into existence. - it is not the Revenue’s case that both the units are not having complete machinery so as to manufacture the goods in question. Merely because a common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw-materials cannot be held to be a reason for clubbing the clearances of both the units, when there is no dispute about both the units being complete in themselves and manufacturing goods independently of each other. - Decided against Revenue.
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2015 (2) TMI 132
Denial of CENVAT Credit - Held that:- details of inputs stand entered in the statutory records; non-entry of the same in the private records maintained by the respondent, when there is no obligation to maintain them, will not disentitle the assessee to avail credit, especially when there is no allegation or evidence showing non-receipt of such inputs. As regards credit of ₹ 7,75,427/-, lower authorities had denied the same on the ground that there was certain discrepancy on account of non-entry of certain particulars in the invoices. The appellate authority has observed that absence of some particulars in the invoices issued by the suppliers stands accepted by the assessee but inasmuch as same is mistake due to oversight, credit cannot be denied merely on doubt as regards non-receipt of inputs. He has further observed that the respondent has taken credit on the basis of invoices, which were issued and inputs were received under the cover of challan. - both the objections are technical nature and cannot result in denial of substantive right of availment of credit in respect of inputs received by the assessee. There is no justification to do so in the absence of any allegation or evidence to show that either inputs are not received or not duty paid or the same were not used in the manufacture of final products. Revenue is also aggrieved with the finding of appellate authority setting aside of penalty imposed on respondent in respect of excess found seized goods. The original adjudicating authority has not confiscated the goods and has imposed equal amount of penalty to the value of seized goods. The appellant authority has set aside the same on the ground that the goods were still in the factory. Inasmuch as the adjudicating authority has not confiscated the goods, I find no justification for imposition of penalty on such count and the same stands rightly set aside by the Commissioner (Appeals). - Decided against Revenue.
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2015 (2) TMI 131
Cash refund of unutilized CENVAT Credit - Surrender of excise registration - Held that:- There is no dispute about the fact that the appellants discharged their duty liability during the period 2006-2007 to 2009-2010 either by way of payment through Cenvat credit or also by way of cash. This might have resulted in accumulation of Cenvat credit. However, the payments made towards the duty in cash, were proper and appropriated payment at that point of time. The assessment in respect of same also stand finalized. As such, at the end of the day, when the appellant is closing its factory, it has claimed refund of payment made in cash during preceding financial year on the ground that the same should be adjusted against the available credit at the time of closure of the factory. First of all, we are not aware as to whether such credit was also available at the relevant time when the appellants made the payment in cash. Secondly, the appellants having made the payments in cash without any protest, even when there was credit available at the relevant time, cannot be allowed to take U turn at the end of closure of their factory. And thirdly, the assessment having been finalized cannot be opened after a period of 4 to 5 years so as to allow the assessee to make a claim of adjustment of cash payment with the credit available. I also find that Tribunal in the case of Swaran Steel Industries v. CCE, Chandigarh reported as [2009 (1) TMI 623 - CESTAT, NEW DELHI] has held that there is no provision for cash refund of the unutilized Cenvat credit at the time of surrender of registration certificate on closure of unit. - Decided against assessee.
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2015 (2) TMI 130
Clandestine removal of goods - Shortage of goods found - benefit of Cenvat credit of duty paid on the inputs. - Held that:- For detected the shortage of Sponge Iron and Silico Manganese to the extent 275.290 MT and 353 MT as alleged by the Revenue, the officers were required to physically weigh the entire stock of the Sponge Iron & Scrap etc. which was to the tune of around 1491 MT. Commissioner (Appeals) has observed that during the entire span of 15 hours, the officers could have weight not more than 50-60 MT. As such, he has held that there is no evidence to show that actual physically verification was undertaken. He set aside the charge of shortages and the consequent confirmation of demand. - Apart from the fact that its not possible to [weigh] such a huge quantum of scrap, for which the revenue has neither produced the inventories nor any other evidence on record, I also note that apart from the alleged shortages, there is factually no evidence on record to show that the said short raw material was used by the appellant in the manufacture of the final product, which was cleared without payment of duty. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (2) TMI 139
Imposition of penalty - cuttings/overwritings in declaration form - Intention to evade tax - Held that- Penalty has rightly been imposed by the learned ACTO and both the lower Appellate Authorities were not justified in deleting the penalty as the Hon’ble Apex Court clearly speaks about the fact that if there is a blank declaration form, or material particulars have been left blank then there is every apprehension that it could be reused and in such case, penalty could be imposed. Here in this case, there are overwritings and cuttings in the columns of the declaration form and in material particulars and the learned ACTO has rightly come to the conclusion that the form was re-used and which has been the view of the Hon’ble Apex Court in the case of Guljag Industries v. Commercial Taxes Officer (2007 (8) TMI 344 - SUPREME Court). Therefore, in the light of the aforesaid judgment of the Apex Court in the case of Guljag Industries v. Commercial Taxes Officer (supra), the said judgment in my view, is squarely applicable to the facts and circumstances of the present case as the apprehension of the ACTO that the form could be re-used has been found to be correct. On perusal of the order, it is found that there are cuttings and overwritings against the columns of value of the goods and also cuttings in the other columns of the form as referred to above, therefore, the penalty has been rightly imposed. The Tax Board had summarily decided the issue by following the previous order of Full Bench of the Tax Board, which has already been reversed by the Hon’ble Apex Court, in the case of Assistant Commercial Taxes Officer v. Bajaj Electricals Ltd. (2008 (11) TMI 374 - SUPREME COURT OF INDIA). - penalty in such a matter could be imposed and the ACTO was fully justified in imposing the penalty and the order of the ACTO Flying Squad, Bharatpur imposing penalty is sustained. The order passed by the two Appellate Authorities, are quashed, set aside and reversed - Decided in favour of Revenue.
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Wealth tax
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2015 (2) TMI 122
Benefit of Section 40(3)(vi) of the Wealth Tax Act - Whether on the facts and in the circumstances of the case, the ITAT has substantially erred in law in directing to delete the value of the assets used for the purpose of earning lease rent income treating the same as business income and thereby giving benefit of Section 40(3)(vi) of the Wealth Tax Act. - Held that:- Tribunal while deciding the appeal rightly observed that after the unit was set up, the assessee had admittedly never carried out the manufacturing activities for manufacturing of shoe polish. Further, The Tribunal rightly held that the facts of the case clearly indicated that the assessee wanted to exploit the asset as a commercial asset for commercial gain. It is further to be noted that leasing out had been done in the accounting year 1988-1989 and for the preceding assessment years, the assessee had shown the lease rent as business income, and the same had been accepted by the A.O. The Tribunal further held that the principle of res judicata was admittedly not applicable to the Income Tax Proceedings. - CIT(A) as well as the Tribunal has given cogent and convincing reasons in arriving at the conclusion and we are in complete agreement with the view taken by the Tribunal. In our view, the income of the assessee is a business income. Apart from that, learned advocate for the appellantrevenue is not in a position to show how the findings of the CIT (A) and Tribunal are bad in law and on facts. - Following decision of assessee's own previous case [2015 (1) TMI 438 - GUJARAT HIGH COURT] - Decided against Revenue.
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Indian Laws
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2015 (2) TMI 123
Scope of RTI Act - whether names of the Reporting, First and Second Review/Accepting Authority, authors of the Annual Confidential Reports (for short ACRs) of respondent-Santosh Kumar Kaushal (hereinafter referred to as the applicant), can be disclosed to him under the provisions of the Right to Information Act, 2005 - Held that:- applicant is seeking information with reference to his ACRs, pertaining to different period’s upto the year 2008. He apprehends that he has been unfairly dealt with by the authorities. We see no reason why entries recorded prior to the Act coming into force be not supplied to the applicant. The Supreme Court in Dev Dutt (2008 (5) TMI 632 - SUPREME COURT) has only explained the position of law as it stands on the date of enactment. It cannot be said that the Act is to apply prospectively, for information recorded after its enactment. - What is further argued is that there is fiduciary relationship between the employer and the reporting/reviewing (1st & 2nd) authority and as such their particulars cannot be disclosed. Term “fiduciary relationship”, in the context of the Act, stands context of the Act, stands considered by the apex Court in Central Board of Secondary Education and Another v. Aditya Bandopadhyay and Others, [2011 (8) TMI 538 - SUPREME COURT OF INDIA ]. There the Court was dealing with the issue as to whether an examinee is entitled to inspect the evaluated answer sheets of a public examination or take certified copies thereof and also as to whether the examining body holds the examination answer books in a fiduciary relationship and thus was under no obligation to give inspection thereof. The Court while making the following observations held that the examining body is not in any fiduciary relationship with respect to the examiner and the evaluated answer books held by the examining body are not by virtue of any fiduciary relationship. Fiduciary relationship, if at all, is between the employer and employee. Information, which is accepted to be kept exempt from disclosure, is the information concerning the employee. Acceptance of petitioner’s contention would lead to doing violence to the statutory provisions, its ambit and scope. The exemption is from disclosure to a third party and not to the employee. In fact, as explained in Dev Dutt (2008 (5) TMI 632 - SUPREME COURT), if the intention of making adverse entries, in the ACRs of an employee, is to improve his performance, then the purpose is not achieved by keeping the information secret from him. Unless adverse entry is communicated to the employee and he is allowed to explain his position, the exercise of getting improved his performance would not be achieved. Cases of error, malice, act of arbitrariness and unreasonableness cannot be ruled out. An employee, as a part of good governance, must know who his reporting and accepting authority is. In fact, it is not a trade secret at all. It is known to all within the organization. Disclosure of their names, in no manner, would jeopardize their relationship either with the employee or with the employer. There is no question of compromise of any confidentiality in adopting such a practice. There is no threat to life of any person. There is also no question of invasion of privacy. Information relating to posting, transfer and promotion of clerical staff,a Public Sector Undertaking (Bank) does not pertain to any fiduciary relationship of the bank vis-a vis its employees, within the dictionary meaning of the word “fiduciary”. Also, such information cannot be said to be held in trust by the employer on behalf of its employees. - Information relating to third party, cannot be disclosed, even in public interest, without disclosing and affording opportunity to the concerned. - An applicant is entitled for information, prescribing the criteria and the marks allotted under different heads for giving employment to public servants - The Act does not impose fetters with regard to supply of record, which may be voluminous - Right of a citizen to seek information emanates from Section 6 of the Act. He need not assign any reasons for seeking such information - not only an employee has constitutional and statutory right to obtain information sought for, but also petitioners have a corresponding legal duty to disclose the same. - Decided against Petitioner.
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