Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 5, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
FEMA
- 41 - dated
4-2-2016
Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR
- 42 - dated
4-2-2016
Settlement of Export/ Import transactions in currencies not having a direct exchange rate
- 43 - dated
4-2-2016
Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015
- 44 - dated
4-2-2016
Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015
- 45 - dated
4-2-2016
Foreign Exchange Management (Export and Import of Currency) Regulations, 2015
- 46 - dated
4-2-2016
Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015
- 47 - dated
4-2-2016
Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015
- 48 - dated
4-2-2016
Definition of "Currency", 2015
- 49 - dated
4-2-2016
Post Office (Postal Orders/Money Orders), 2015
DGFT
- 60/2015-20 - dated
3-2-2016
SCOMET Export permission for ‘Stock & Sale' purposes and for export of spare parts
Highlights / Catch Notes
Income Tax
-
Reopening of assessment - mere accounting entry or even if there was some defect in indicating such amount in the accounts presented by the assessee, as long as income chargeable to tax had not escaped assessment, reopening of the assessment would not be permissible - HC
-
Disallowance u/s 14A - the action of the AO in directly embarking on Rule 8D(2) of the Rules is not appreciated and hence no disallowance u/s 14A could be made in the facts of the instant case - AT
-
Addition on account of Capital Subsidy u/s. 41(1) - to encourage the setting up of wind mill to promote generation of energy through non conventional sources - the subsidy received by the assessee is not taxable u/s 41(1), neither u/s 43(1) and nor u/s 50 - AT
-
Disallowance of interest expenditure u/s 57 - nexus between the interest income vis-à-vis the interest expenditure - no nexus between the impugned income and interest is forthcoming - Additions confirmed - AT
Customs
-
Duty drawback - mis-declared the goods in the Shipping Bill to claim higher drawback - The claim of drawback separately on Jackets & Pants is an error but malafide intention cannot be ascribed to invoke penalty. - AT
DGFT
-
Procedure for export of sesame seeds to the European Union countries - Notification
-
SCOMET Export permission for ‘Stock & Sale' purposes and for export of spare parts - Public Notice
Central Excise
-
Classification - rough forging - classification under 73.26 as claimed by the respondent or 7207.10 as confirmed by the first appellate authority - order cannot travel beyond the show-cause notice and classifying the product under Chapter Heading No. 7207 seems to be incorrect - AT
VAT
-
Recovery of outstanding dues - liability of members of HUF is not joint or several - the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act. - HC
Case Laws:
-
Income Tax
-
2016 (2) TMI 130
Reopening of assessment - Income of the assessee chargeable to tax having escaped assessment - Held that:- We may recall that the reason recorded by the Assessing Officer for issuing the impugned notice states that the assessee had leased out a property for monthly rent of ₹ 3 lacs, which was exclusive of the service tax. He had collected service tax of ₹ 8.23 lacs and showed it under the head of administrative and other expenses. According to the Assessing Officer, instead, the assessee should have shown gross income of ₹ 44.23 lacs of rental income and thereafter should have claimed ₹ 8.23 lacs of service tax as expense. In our opinion, whichever way it is shown, in the eventual tax computation, it would not make any difference. Whether the assessee showed net income of ₹ 36 lacs by way of rental income or showed the gross income of ₹ 44.23 lacs inclusive of the service tax and claimed ₹ 8.23 lacs of service tax separately as expense, in the ultimate analysis, it was this sum of ₹ 36 lacs which was chargeable to tax. In other words, the service tax component of ₹ 8.23 is not only as per the CBDT circular, even as per the Assessing Officer himself, as indicated in the reasons recorded, was not chargeable to tax. That being the position, mere accounting entry or even if there was some defect in indicating such amount in the accounts presented by the assessee, as long as income chargeable to tax had not escaped assessment, reopening of the assessment would not be permissible. - Decided in favour of assessee
-
2016 (2) TMI 129
Profit estimation - ITAT reducing the profit estimated from 16% to 8% - Held that:- The entire examination was on the basis of evidence on record and would not call for any question of law. It is true that the provisions of section 44AD of the Act would not ipso facto apply to every acts of the Tribunal merely adopting a yardstick in absence of any other concrete evidence to enable itself to estimate the true profit of the assessee. With respect to further additions, the Tribunal correctly dismissed the revenue appeal on the ground that the CIT (A) had adopted a gross profit rate methodology, new additions would, therefore, be not called for.
-
2016 (2) TMI 128
Validity of penalty order under Section 271(1)(c) - failure to comply with a notice - Held that:- Assessing Officer had no jurisdiction to pass the penalty order under Section 271(1)(c) of the Act without issuing a proper notice as required under law and moreover, when the particulars are disclosed in the return of income. Assessing Officer has not applied his mind at the time of issuing notice under Section 274 R/W Section 271(1)(b) of the Act. This view is fortified by the order passed under Section 271(1)(c) of the Act. No direction is coming forth in the assessments order for levying penalty which is mandatory as per Section 271(1B) of the Act. Considering the relevant factors, appellate commissioner has rightly allowed the appeal of the assessee setting-aside the order passed by the Assessing Officer which has been reversed by the ITAT on the ground that the assessee deliberately evaded the payment of tax by declaring the capital expenditure as revenue expenditure in the ‘financial expenses’. In our considered opinion, for the reasons stated above, the order passed by the ITAT is not sustainable. Accordingly, we set aside the order of the ITAT and restore the order passed by the CIT(A) answering the substantial questions of law in favour of the assessee and against the revenue.
-
2016 (2) TMI 127
Undisclosed income in the block assessment - interest income received by the assessee on which tax has already been deducted at source - Held that:- When the TDS has already been deducted by the Citi Bank on the interest income in question as referred to by the Assessing Officer in the assessment order, the same cannot be again put to tax by declaring undisclosed income, so it cannot be again subjected to tax. So, we are of the considered view that the Assessing Officer has erred in declaring the interest income of the assessee for the Assessment Year 1997-98 as undisclosed income on which TDS has already been deducted. - Decided in favour of the assessee. Credit of TDS Certificate denied - Held that:- It is settled principle of law that the benefit of TDS is to be claimed by the assessee in the normal assessment and not in case of block assessment made by the Revenue in the instant case. In case, the assessee has any such claim, he is at liberty to approach the appropriate authority to take benefit of any such TDS. So, we find no ground to interfere into the findings returned by the Assessing Officer - Decided against assessee.
-
2016 (2) TMI 126
Deemed dividend addition u/s 2(22)(e) - CIT(A) deleted the addition - Held that:- the assessee before the AO and the ld. CIT (A) has submitted that both these companies are public limited companies and they have produced evidences to substantiate that the STLL and PHDL are listed companies at Delhi Stock Exchange and PHDL is also listed on Ahmedabad Stock Exchange and also the shareholding pattern as on 31.03.2008. And that Section 2(22)(e) is not applicable to loans or advances by Non Banking Finance Companies (NBFC). In order to substantiate that STLL and PHDL are NBFC, it was submitted that they are registered with Reserve Bank of India since 1998 in Category of Loan Investment Company and engaged into the activities of shares sale, financing activities, loan syndication activities and hypothecation activities. It is a well settled principle of law that deeming provision has to be interpreted strictly and it cannot be stretched to more than that for which the deeming provision can be literally interpreted. Nothing can be added or implied while interpreting a deeming provision. One can only look at the language used. Therefore, we concur with the ld. CIT (A) that the lender company i.e. M/s. STLL and M/s. PHDL are public limited companies and so the loan/advance/ICD given to the assessee does not fall in the ken of section 2(22)(e) and moreover, the lender companies are NBFC which are also excluded from the said deeming provision, therefore, we do not find any merit in this ground of appeal and we uphold the ld. CIT (A)’s order and dismiss this ground. - Decided in favour of assessee
-
2016 (2) TMI 125
Revision u/s 263 - deduction under section 80IA allowed in an order under section 154 by AO - Held that:- As seen from the order under section 143 passed on 31.12.2009, the then A.O. has given detailed projects, road projects, BOT related projects, irrigation projects and also role of the assessee. Without examining the nature of project or calling for further information about the role of the assessee in executing various projects and further without giving any opportunity to the assessee, we are of the opinion that A.O. had wrongly allowed the claim, that too in an order under section 154. As extracted above, the order is so cursory and nothing can be made out whether A.O. examined all the issues as directed by the ITAT. Since the direction of the ITAT has not been implemented in its correct perspective, we are of the opinion that the Ld. CIT is well within his rights to invoke the jurisdiction under section 263 and set aside the order dated 07.04.2013 with a direction to re-examine and allow accordingly. Since the ITAT directions are not implemented in its correct perspective, we are of the opinion that the Ld. CIT order under section 263 is to be upheld. - Decided against assessee
-
2016 (2) TMI 124
Applicability of provisions of section 44AD - nature of work - income from business or from other sources - Held that:- Since Shri. P. Shyamaraju was also a partner of the assessee firm, cannot find any fault in him exercising control over the accounts of the assessee as well. Copy of the partnership deed placed also show that Shri. P. Shyama Raju was a partner of the assessee fim. In any case we find that the statement of Shri. V. Samba Moorthy was neither put to the assessee nor assessee was given an opportunity to cross examine in the fact of this. Assessee had produced sufficient records to prove that it was doing contract work. It could very well rely on Section 44 AD of the Act since its turnover was less than ₹ 40 lakhs. Thus of the opinion that CIT (A) was therefore not justified in shifting the source of income from business to other sources. - Decided in favour of assessee
-
2016 (2) TMI 123
Addition on suppression of closing stock - Held that:- As find from the stock reconciliation statement submitted by the Learned AR which was filed based on the directions from the Bench to the Learned AR, that the stock statements contain both raw materials and finished goods and there was absolutely no quantity difference between what has been submitted to the bank vis- a- vis the audited balance sheet filed along with the return except in respect of Dried Slag of 520.6 MT which is a scrap item and which was omitted to be shown in the stock statement submitted to the bank but duly considered in the audited balance sheet. In view of this, we find that there is absolutely no scope for making any addition in the sum of ₹ 1,49,66,105/- towards suppression of closing stock. - Decided against revenue Disallowance u/s 37 - penal interest paid to the bank due to non-fulfillment of conditions stated in the loan agreement - CIT(A) deleted the addition - Held that:- The assessee had merely paid penal interest for not fulfilling a stipulated condition in the loan agreement which is only compensatory in nature. The banks in such a case are entitled to charge extra rate of interest which would be reimbursed to the borrower (assessee) as and when the stipulated conditions are fulfilled. We hold that the assessee had not committed any offence prohibited by any law and hence does not come under the ambit of Explanation to section 37 of the Act - Decided against revenue Subsidy received from Government of West Bengal towards incentive on Building and Pollution Control Devices - capital v/s revenue receipt - Held that:- Subsidy received is capital in nature and accordingly, the ground raised by the revenue is dismissed. - Decided against revenue Addition towards difference in debtors - Held that:- We find that the stock statements and debtors balances were submitted to the bank based on unaudited figures in order to review the situation of availability of drawing power in cash credit facility availed from the bank by the assessee. We agree to the fact that the debtors balances are bound to undergo changes pursuant to the statutory audit conducted and the list of balances of debtors are not disputed by the revenue. If there is any doubt, the Learned AO could have obtained direct information from the concerned debtors u/s 133(6) or any other means provided in the Act. We hold that there is no scope for making this addition - Decided against revenue Addition made u/s 68 - CIT(A) deleted addition - Held that:- We find from the said bank statements of share applicants, the immediate source of credit appears to be some cheque realizations and not cash deposits. We also find from the break up of loans and advances given by the share applicants, the assessee’s name is reflected which is evident from the ledger copy of “advance for share” filed in the paper book. Since the Learned AO had raised a preliminary objection that the bank statements and the break up details of loans and advances were not produced before him as claimed by the assessee, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law after going through all the documents available on record. The assessee is given liberty to file fresh evidences and documents in support of its contentions before the Learned AO - Decided in favour of revenue statistical purposes. Addition on account of bogus purchases - Held that:- As find that the assessee had given reasonable explanation before the lower authorities that the proprietor of Shakti Trading Company had expired and their business is closed in the last known address with the assessee and no subsequent transactions were made with the said supplier. We find that the Learned AO had treated this purchase as bogus only on the limited ground that his notice u/s 133(6) of the Act could not be served on the supplier in the address given by the assessee. In our opinion, this alone cannot be the deciding factor for treating the purchases as bogus. Nothing prevented the Learned AO from making the verification from the bankers of the assessee as to whether the payments made by the assessee through account payee cheques had indeed been credited only to the account of the supplier or not. We find that the payments made to the supplier has been accepted as genuine by the Learned AO. Then the scope for disputing the purchases made from supplier is lost. Hence we don’t find any infirmity in the order of the Learned CIT-A in this regard - Decided against revenue
-
2016 (2) TMI 122
Penalty u/s.272A(2)(k) - Tax Collection at Source (TCS) - Held that:- The assessee was not aware of the provisions of TCS deduction and deposit and filing of quarterly returns. The assessee first came to know upon survey on its business premises and thereafter immediately deposited TCS along with interest and thus, it is technical and venial breach of provision causing no loss to Revenue. We are therefore of the considered view that the penalty levied u/s.271A(2)(k) cannot be sustained and therefore, the same is hereby ordered to be deleted. A.O. is directed accordingly. - Decided in favour of assessee Penalty u/s. 271CA - Held that:- The assessee had paid TDS along with interest and therefore there was no loss to the revenue and there was only technical or venial breach with constitute reasonable cause within the meaning of section 273B of the Act and in view of this the order of CIT(A) cannot be sustained and we delete the penalty by allowing the appeal of the assessee.- Decided in favour of assessee
-
2016 (2) TMI 121
Addition u/s 69A representing realization of assets inherited from mother pursuant to her 'WILL" - Held that:- The said WILL is a valid WILL and the same regulated the succession as declared by the testator, i.e. the mother of the assessee. In respect of page no.16, where the Profit & Loss account belonging to the mother of the assessee is produced, wherein it shows that she has invested in shares, particularly, in MKJ Development Ltd., Starlight Credit (I) Ltd. and Kherapati Vanijya Ltd. which altogether come to ₹ 4,28,795/-. Therefore, in our view, the amount to an extent of ₹ 4,28,795/- is validly proved to have been invested by the assessee in his business concern from his personal account which is the sale proceeds of such shares which he got from WILL. Therefore, the nature and source of the fund was received from the mother of the assessee is proved. As regards the balance sum of ₹ 16,000/- (Rs.4,44,795/- - ₹ 4,28,795/-), no arguments were advanced by the assessee before us. Hence, we dismiss the claim of the assessee in this regard. - Decided partly in favour of assessee Ad hoc disallowance @ 20% out of car expenses, depreciation on car and telephone expenses treating the expenses incurred for personal use - Held that:- On mere presumption the AO just made the additions on ad hoc basis without any basis. The AO himself opined that the expenses of personal use could not be ascertained in the absence of log book. The ld. CIT(A) himself has admitted that the AO has not identified any specific item of personal expenses. The ld. CIT(A), without going into the details of the expenses and the basis of disallowance, restricted to 10% of the expenses on ad hoc basis. Ad hoc disallowance is always made without having any concrete evidence that the assessee has incurred the expenses for personal use. We, therefore, find no reason to disallow the above expenses incurred by the assessee - Decided in favour of assessee
-
2016 (2) TMI 120
Accrual of income - Addition on account of Tax Deducted at Source (TDS) certificate - Held that:- AO at the time of assessment made reconciliation between income based on TDS certificates and the actual income offered to tax. The AO found the difference between the income as per TDS certificates and income shown by assessee. As per AO the assessee has declared less income and claimed the full credit of the TDS. Accordingly the AO has added the undisclosed income for the above stated amount. However, we find from the submission of Ld.AR that all the income having duly shown in the relevant year by assessee and tax thereon has been duly paid as per mercantile accounting system. The reason for the difference was mainly on account of interest income which the assessee has declared on the basis of mercantile accounting system and the payer deducted the TDS on the cash basis of accounting. The ld. AR has submitted sufficient number of documents in the form of the paper book and we found no ambiguity from the details submitted. In view of above, we reverse the orders of authorities below and delete the addition made by AO which confirmed by Ld. CIT(A). - Decided in favour of assessee.
-
2016 (2) TMI 119
Disallowance u/s 14A - Held that:- We find from the facts of the instant case that the Learned AO has though had examined the accounts of the assessee with regard to the availability of own funds in the context of making separate disallowance of interest on borrowed capital u/s 36(1)(iii) of the Act, did not look into the accounts of the assessee in the context of Rule 8D(1) of the IT Rules and record his satisfaction as mandated thereon that the claim of the assessee that no expenditure was incurred for earning exempt income is incorrect. The assessee had claimed that no expenses were incurred by it for the purpose of earning the exempt income in the form of dividend as admittedly the said dividend income was earned out of auto swap funds which was done directly by the bank without any interference from the side of the assessee. Hence there was no need for the assessee to incur any expenditure thereon for earning the dividend income. We find that the Learned AO rejected the claim of assessee with regard to claim of assessee that no expenditure was incurred in relation to exempt income without indicating any cogent reasons for the same. We find that the Learned AO had straight away embarked upon computing disallowance under Rule 8D(2)(iii) of the Rules. Hence we hold that the action of the Learned AO in directly embarking on Rule 8D(2) of the Rules is not appreciated and hence no disallowance u/s 14A of the Act could be made in the facts of the instant case. - Decided in favour of assessee
-
2016 (2) TMI 118
Penalty order passed u/s 271(1)(c) - Held that:- Following the judgment of the Hon'ble High Court in case of Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) as well as case of H.Lakshminarayana (2015 (7) TMI 601 - ITAT BANGALORE ), we hold that the orders of levy of penalty u/s 271(1)(c) in all the assessment years are invalid for want of spelling out the specific grounds on which the penalty was sought to be imposed and consequently the penalty imposed is cancelled. - Decided in favour of assessee
-
2016 (2) TMI 117
Addition on account of Capital Subsidy u/s. 41(1) - revenue or capital in nature - Held that:- Admittedly, in the case in hand, the capital subsidy, as it is named in the notification of the scheme dated 12.03.1998 of the Government of Maharashtra, has been granted as an incentive to promote and encourage the installation of wind mill for generation of electricity. The said subsidy being provided to the assessee to encourage the setting up of wind mill to promote generation of energy through non conventional sources, thus, is to be treated as capital receipt. So far as the applicability of the section 41(1) is concerned, it relates to the benefit derived by an assessee in respect of loss, expenditure or trading liability and not in respect of capital receipts. So far as the ‘Explanation 10’ to ‘Section 43(1)’ is concerned, we find that as per the policy of the government, the subsidy is not given automatically on the acquisition of asset or for the purpose of acquisition of asset. The precondition is that the assessee must install a wind power project and that the wind power plant must be successfully operated with a minimum 12% plant load factor for at least one year. Admittedly, the assessee had installed the project in the financial year i.e. 2001-02. The assessee after successfully operating the plant with a minimum 12% plant load factor for one year had applied for capital subsidy vide letter dated 31.03.03, which subject to fulfillment of certain conditions were ultimately released to the applicant during the financial year i.e. 2007-08 at ₹ 20 lakhs. However, out of the said amount of ₹ 20 lakh, ₹ 10 lakh had to be returned back by the assessee to the government. So the mere acquisition of the asset was not sufficient to claim subsidy. The subsidy was not given for the purpose of acquisition of the asset but on the production of power generation as an incentive to promote through non conventional sources. Hence, the grant of subsidy in this case is of such a nature that it cannot be directly relatable to the asset acquire. So far as the contention of the AO that the subsidy is liable to be taxed under section 50 of the Act is concerned, we find that in this case neither there was a transfer of any asset from the block nor did the block has ceased to exist. It is not a case of capital gains by way of transfer but it is only a case of capital receipt as observed above as an incentive by the state government to promote the generation of electricity through non conventional sources. In view of the above, in our view, the subsidy received by the assessee is not taxable under section 41(1) neither under section 43(1) and nor under section 50 of the Act. - Decided in favour of assessee
-
2016 (2) TMI 116
TDS u/s 194A - non deduction of tds on interest by assessee bank - CIT(A) holding the assessee bank as “Assessee in Default” under sec. 201(1) and raising demand - Held that:- It is not in dispute that the recipient of interest income i.e. Visvesvaraya Technological University has filed its return of income and has included the interest paid by the assessee as its income in the said return of income. As per sec. 4 of the Income Tax Act, it is the recipient of interest who is liable to pay tax. We find that no material has been brought before us to show that in pursuance to any assessment made in the case of Visvesvaraya Technological University any tax was determined by the Department as payable by Visvesvaraya Technological University and which had become unrecoverable from Visvesvaraya Technological University. However, we find force in the argument of the Departmental Representative, the issue requires to be set aside to the file of the Assessing Officer for verification of additional evidence filed by the assessee in Form 26A and thereafter adjudicate afresh after taking into consideration the decision of the Hon‟ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) and the observations made hereinabove and after allowing reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purpose.
-
2016 (2) TMI 115
Transfer pricing adjustment - excluding Asian Business Exhibition and Conferences Limited as comparable by DRP - Held that:- The business model of the assessee and Asian Business Exhibition and Conferences Limited are totally different. While assessee undoubtedly is providing support services to its overseas AE’s, Asian Business Exhibition and Conferences Limited is primarily and fundamentally engaged in event management. Thus, under no circumstances it can be considered as a comparable to the assessee. Therefore, for the aforestated reasons the DRP, in our view, was justified in excluding this company as a comparable. - Decided against revenue
-
2016 (2) TMI 114
Addition u/s. 68 - CIT(A) deleted the addition - Held that:- CIT(A) has rightly deleted the addition in dispute, because the assessee has furnished all necessary documentary evidence for substantiating the claim in dispute. The issue in dispute is also squarely covered by the judgment of PR. CIT vs. Rakam Money Matters Pvt. Ltd. 2015 (10) TMI 2057. In view of the above, we do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the impugend order on the issue in dispute and dismiss the Apppeal filed by the Revenue. - Decided in favour of assessee
-
2016 (2) TMI 113
Disallowance of interest expenditure - nexus between the impugned interest income vis-à-vis the interest expenditure - Held that:- CIT(A) has treated the assessee’s fixed deposit income of ₹ 22.5 lacs under the head other sources to be exempt. His claim of corresponding interest expenditure made u/s 57(III) qua any other expenditure not being in the nature of capital expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income has been accepted. We have already given details of the same in the preceding paragraphs. The Assessing Officer invoked the impugned disallowance quoting assessee’s failure in proving nexus between the impugned interest income vis-à-vis the interest expenditure. The lower appellate authority follows case law of SA Builders (2006 (12) TMI 82 - SUPREME COURT ) accepting plea of commercial expediency involved in a case of borrowed funds being advanced to a sister concern without charging interest. The same is nowhere applicable qua the facts of the instant case wherein no nexus between the impugned income and interest is forthcoming. Thus, we accept Revenue’s arguments. The Assessing Officer’s findings disallowing the impugned interest expenditure are accordingly restored. - Decided in favour of revenue
-
Customs
-
2016 (2) TMI 101
Levy of penalty - mis-declaration of goods - import of second hand machines as scrap - appellant contended that supplier instead of sending after mutilation had supplied as uncut scrap. - Held that:- Appellant is a actual user having manufacturing facility for re-melting the scrap. - Considering the fact that the goods are still lying in customs custody since 2004, and appellants have not exercised the option of redeeming the goods on payment of redemption fine, and only pleading for setting aside penalty, taking into over all facts and circumstances of the case, the penalty is liable to be redeemed. Accordingly we uphold the impugned order in so far as confiscation of the machinery and melting scrap. We reduce the penalty of ₹ 3,00,000/- imposed on the appellant to ₹ 50,000/- (Rupees Fifty thousand only) - Decided partly in favor of assessee.
-
2016 (2) TMI 100
Duty drawback - mis-declared the goods in the Shipping Bill to claim higher drawback - appellant exported Industrial Garments Boiler Safety Suits Jackets 2000 pieces and Industrial Garments Boiler Safety Suit Cotton Pants 2000 pieces as per description in the Shipping Bill. While claiming drawback they claimed drawback separately on the Jackets & Pants. As per notes to the drawback schedule, the drawback is allowed on an "ensemble" which means a set of garments comprising of upper part and lower part. Held that:- there is no mis-declaration of description of goods in the Shipping Bill. Neither is there any mis-declaration of value. The claim of drawback separately on Jackets & Pants is an error but malafide intention cannot be ascribed to invoke penalty. Section 113(i) can be invoked when there is mi-declaration of description or value. In this case it is not so. - Decided in favor of assessee.
-
2016 (2) TMI 99
Levy of penalty on CHA - non following or contravening the provisions of law - Held that:- the adjudicating authority has only directed reclassification of the goods imported under the description of 'powder of natural diamonds' and accepted the declared value, which is the transaction value, and assessed the same on the same value. - the adjudicating authority has not held the goods are liable for confiscation for mis-declaration of the description. - penalty imposed under Section 117 of the Customs Act, 1962 is not sustainable. - Decided in favor of appellant.
-
2016 (2) TMI 98
Levy of penalty - appellant herein had abetted mis-declaration of the vehicle inasmuch as the manufacturing date - import of car - Held that:- penalty imposed on the appellant under Section 112(a) of the Customs Act, 1962 cannot be sustained for the simple reason that demand of duty and the confiscation of the vehicle is not sustainable under the provisions of the Customs Act, 1962. - appeal is allowed and the penalty imposed is set aside. - Decided in favor of appellant.
-
2016 (2) TMI 97
Refund claim of 4% Additional Duty of Customs (SAD) - Notification No.102/2007 - imported timber logs were sold as “cut sizes” - refund was rejected in regard to timber logs sold as “cut sizes” on the ground that there was no correlation with the goods imported and the goods sold - Held that:- the order passed by the Tribunal which was confirmed by the Hon'ble High Court of Gujarat is binding even though the appeal is pending before the Hon'ble Apex Court. In obedience to judicial discipline following the dictum laid in the case of M/s. Agarwalla Timbers Pvt. Ltd. & M/s. Variety Lumbers Pvt. Ltd., I find that the appellants are eligible for refund. The denial of refund is unjustified. - Decided in favor of assessee.
-
Corporate Laws
-
2016 (2) TMI 93
Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioner Transferor Company shall preserve its books of accounts, papers and record and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. The costs of both the petitions are determined at ₹ 7,500/each, payable to Shri Devang Vyas, learned Assistant Solicitor General of India. The petitioner Transferor Company is directed to pay an amount of ₹ 7,500/to the Official Liquidator.
-
2016 (2) TMI 92
Scheme of Amalgamation - Scheme of arrangement is in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned.
-
Service Tax
-
2016 (2) TMI 111
Cenvat Credit of service tax on reverse charge basis - revenue denied the claim of credit - Held that:- . It does not appeal to common sense as to reason why legitimate tax paid on reverse mechanism to the treasury on taxable service shall be denied to be set off against duty/tax liability in India in absence of any statutory bar in that regard. As the scheme of law relating to CENVAT Credit exists, there appears no anomaly in respect of reverse charge tax system - credit allowed - Decided in favor of assessee.
-
2016 (2) TMI 110
Levy of Interest and penalty - validity of the addendum issued after the date of order-in-original - telephone services - It was contended that When the amount of tax demanded is not payable there is no question of charging interest on delayed payment and no question of imposition of penalty. - Held that:- the appellant is right in asserting that after the issuance of the Order-in-Original, the adjudicating authority became functus officio and therefore he could not have issued the addendum which essentially imposed penalty at least not without notice to it - appeal against the addendum dated 27.09.2001 allowed - Decided in favor of assessee.
-
Central Excise
-
2016 (2) TMI 131
Clubbing of clearances for the purpose of SSI Exemption - Company controlled by family members - Dummy units - Apex Court dismissed the appeal against the decision of tribunal in [2013 (11) TMI 1019 - CESTAT NEW DELHI] - Tribunal had confirmed the demand on lifting the corporate veil - Appeal dismissed.
-
2016 (2) TMI 109
Recovery of interest - Inadmissible cenvat credit on basic customs duty instead of CVD - entire amount of cenvat credit was later voluntarily reversed much before issuance of the show cause notice - Held that:- Undisputedly, the appellant had reversed the cenvat credit, before issuance of the demand notice. Also, it is not in dispute that demand notice was issued three years after reversal of the credit. The Ld. Commissioner (Appeals) has dropped the penalty imposed under section 11AC of CEA, 1944 by the adjudicating authority observing that there was no misdeclaration, suppression of facts etc. with intention to evade payment of duty. This findings of the Ld. Commissioner (Appeals) has not been challenged by the revenue. In this premises, it is not difficult to infer that there has been no suppression, misdeclaration etc. by the appellant. Consequently the show cause notice issued for recovery of interest issued after three years, was barred by limitation in view of the judgement of the Hon’ble Delhi High Court in Hindustan Insecticides Ltd. case (2013 (8) TMI 225 - DELHI HIGH COURT ). - Decided in favour of assessee
-
2016 (2) TMI 108
Claim of refund - relevant date - entitlement to refund after final judgement - period of limitation - whether or not the appellant filed the claim for refund in time as per Section 11B of the Central Excise Act, 1944? - Held that:- As per Section 11 B, the relevant date means "in case where the duty becomes refundable as consequent of judgement, decree, order, or direction of appellate authority, appellate Tribunal, or any court, the date of such judgement, decree, order, or direction". It is an admitted fact that the present claim for refund arose consequent on the order dated 3.5.2011 of the Commissioner (Appeals). The refund claim in proper form was filed by the appellant on 23.02.2013. As find that the appellant's plea that their communication dated 19.09.2011 addressed to the Superintendent of Central Excise, in connection with the recovery proceedings of arrears cannot be accepted. Firstly, such fax communication dated 19.09.2011 could not be placed on record by the appellant for examination of the contents. Secondly, the Original Authority had given a factual finding as to whether the said communication can be treated as a valid document for determining the relevant date. He recorded that the said communication deals with recovery of outstanding arrears and also mentions about amount of ₹ 2,58,025/- due to the appellant. It is also to be noted that immediately on receipt of communication dated 19.09.2011, the Dy. Commissioner informed the appellant to file a claim as per procedure and, if necessary, may seek guidance of jurisdictional Range Officers. Even after receipt of such communication, the appellant did not file any claim for refund though they had much more than six months time before the time limit. The claim was filed only on 23.02.2013.
-
2016 (2) TMI 107
Recovery of rebate claim - maintainability of appeal before Tribunal in terms of Section 35B of the Central Excise Act - Held that:- In the present case, we find that the rebate claims arose from the export of excisable goods under Rule 18 of the Central Excise Rules 2002. The contention of the department before the Commissioner (Appeals) was that the Assistant Commissioner had allowed rebate on the goods exported at 12% whereas the rate of duty on the said goods is 6%. We find that as per Rule 18 of the Central Excise Rules the Central Government may, where any goods are exported, grant rebate of duty paid on such excisable goods. Thus, it is apparent that facts in the present case and the facts in the case of Venue International (2015 (10) TMI 657 - BOMBAY HIGH COURT ) are entirely different. In the present case no issue of Cenvat Credit is involved. Therefore, the ratio of the Hon'ble High Court of Mumbai judgment in the case of Venus International does not apply. The proviso (b) to Section 35B (1) clearly states that no appeal shall lie to the Tribunal against orders passed by Commissioner in respect of rebate of duty of excise on goods exported out of India. In view of the above, appeal is not maintainable. However, the appellant is at liberty to file appeal before the appropriate forum.
-
2016 (2) TMI 106
Cost recovery charges - whether the appellant never opted to operate under cost recovery scheme, confirmation of amount" under the said scheme by the authorities below is not proper and justified? - Held that:- The appellant vide its letter dated 15.12.2009 had requested the Jurisdictional Deputy Commissioner of Central Excise to deposit the MOT charges instead of cost recovery charges for the period from 1.1.2010 to 31.12.2010. Since the dispute in the present case is for the period from 2007 to 2009, when the appellant had paid ₹ 2,32,500/- for operating under the cost recovery scheme, it is evident that the charges are payable in entirety by the appellant, which has not been paid. Thus, the short paid amount on that account is payable to the Central Excise Department in terms of the statutory mandates. Therefore, no infirmity in the impugned order passed by the Ld. Commissioner (Appeals), and thus, the appeal filed by the appellant is dismissed.
-
2016 (2) TMI 105
Valuation - free distribution of physician sample - whether valuation is to be done on pro rata value of the sale pack of the said physician samples of medicines - Held that:- valuation of the physician sample of the medicines needs to be done on the basis of cost of production + 15% as profit margin Levy of penalty - Held that:- Since the issue of valuation of physician sample was being litigated during the relevant period, we're of the firm view that there is no necessity to visit the appellant with any penalty. Accordingly, penalty imposed by the lower authorities are set aside.
-
2016 (2) TMI 104
Clandestine removal - cross examination of the buyers and brokers - Held that:- The allegation of the clandestine removal cannot be established merely on the basis of the statement of the buyers and brokers and the documents recovered from the buyer without any enquiry of the assessee. It is also noted the statement of the partner of the assessee is un-corroborative nature. In any event, the cross examination of the buyers and brokers were not allowed. So, the case of M/s Shiv Sakti Ingots Pvt. Ltd. (2015 (11) TMI 1239 - CESTAT AHMEDABAD) would be applicable in the present appeal. In view of the above discussions, the impugned order cannot be sustained. So, the penalty imposed on the partner of the assessee is unwarranted. - Decided in favour of assessee
-
2016 (2) TMI 103
Adjudication power - Classification - whether the product manufactured by respondent is "rough forging", and merits classification under 73.26 as claimed by the respondent or 7207.10 as confirmed by the first appellate authority? - Held that:- The matter needs to be adjudicated by the first appellate authority inasmuch, the dispute of classification as put forth by the show-cause notice was whether the product would merit classification under Chapter Headings 73.26 or 72.14/72.16. The classification which has been arrived at by the first appellate authority in his impugned order is under Chapter Heading No. 7207. In our view the impugned order cannot travel beyond the show-cause notice and classifying the product under Chapter Heading No. 7207 seems to be incorrect. At the same time the findings of the adjudicating authority are contested before the first appellate authority. Hence in the interest of justice we find that the matter needs reconsideration by the first appellate authority. Without expressing any opinion on merits of the case, keeping all issues open, we set aside the impugned order and remand the matter back to the first appellate authority to reconsider the issue afresh following the principles of natural justice.
-
2016 (2) TMI 102
Maintainability of appeal - appellants were issued a notice for maintainable, as the Registry has noticed a defect that "proof of pre-deposit is insufficient" - Held that:- The appeal filed by the appellant is dismissed as non-maintainable for lack of compliance with the mandatory requirement under Section 35F.
-
CST, VAT & Sales Tax
-
2016 (2) TMI 96
Condonation of Delay of 29 days in filing appeal from the date of receipt of return memo - TNVAT - Held that:- The 1st respondent passed the impugned orders on account of delay in representation which he cannot condone. This Court, on being satisfied with the reasons adduced in the affidavit filed by the petitioner, is inclined to accept the same. Accordingly, the delay caused in representing the appeal papers before the Appellate Authority is condoned. The petitioner is directed to represent the appeal papers before the 1st respondent within a period of two weeks from the date of receipt of a copy of this order and on such representation, the Appellate Authority/1st respondent is directed to accept the same if they are otherwise in order and dispose of the same, on merits and in accordance with law, after affording due opportunity of hearing to the petitioner. - Delay condoned.
-
2016 (2) TMI 95
Exclusion of cost of land from the Sales Consideration / Value of the Works Contract - The assessing authority did not accept the land cost at 45%, but instead assessed it at 40% and assessed the tax. The assessee challenged the assessment order by filing the appeals, where it claimed the land cost to be 50% of the sale consideration, instead of 45% as had been claimed in the returns. - Karnataka Value Added Tax Act, 2003 (KVAT) Held that:- according to the petitioner, the claim is exclusion of land cost and as once the authority has accepted it to be higher than 50%, no tax could be levied on such amount which was beyond 50% of the sale consideration. We are unable to accept such submission made by the learned counsel for the petitioner as nothing more than what is claimed by the assessee in its return can be given by the authorities, and if it is permitted, then the assessing authority or the appellate authorities would be given unfettered powers to grant any such relief which may not even have been claimed by the assessee in its returns. The Act provides for filing a revised return under Section 35(4) of the Karnataka Value Added Tax Act, 2003. If the assessee fails to avail the benefit of filing revised return, then it is only the return which is filed, which has to be considered by the assessing officer or other authorities and nothing more than what is claimed in the return that can be granted by the authorities in favour of the assessee. - Decided against the assessee.
-
2016 (2) TMI 94
Recovery of outstanding dues - liability of members of HUF is not joint or several - property under attachment was acquired by the member or by the HUF - GVAT - discontinuance of the business of Hindu Undivided Family - Held that:- Tribunal was wholly justified in holding that the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act. - The impugned order passed by the Tribunal does not suffer from any legal infirmity so as to give rise to any question of law, much less a substantial question of law, warranting interference. The appeal, therefore, fails and is accordingly dismissed. - Decided against the revenue.
-
Wealth tax
-
2016 (2) TMI 112
Second / Third round of litigation - validity of order of AO - the learned AR of the assessee has forcefully contended that the subsequent order dated 28/12/2006 passed by the AO is without jurisdiction when the AO has already passed order dated 25/3/1997 in pursuance to the order of the CWT(A) dated 30/12/1994 which was not disturbed either by this Tribunal or by the Hon’ble High Court. Therefore, second order passed by the AO is without jurisdiction and therefore, is null and void. Held that:- When the AO has already given effect to the order of the CWT(A) dated 30/12/1994 and that order has not been disturbed by the Hon’ble High Court, then in the absence of any fresh direction or any change in the scope of the remand proceedings by virtue of the order of the Hon’ble High Court, the AO was having no jurisdiction to initiate the proceedings in the third round despite the fact that the proceedings in the second round have already attained finality. We further note that the second round came to an end on 18/9/2002 when the Tribunal dismissed the appeal of the revenue and the revenue has not pointed out this development of the second round of litigation arising in pursuance to the giving effect order passed by the AO dated 25/3/1997 to the Hon’ble High Court at the time of hearing of the appeal of the revenue which was disposed of vide order dated 11/5/2005. The impugned order dated 28/12/2006 passed by the AO purported to give effect to the order of the Hon’ble High Court dated 11/7/2005 is without jurisdiction when the AO had already passed a giving effect order dated 25/3/1997 and the proceedings arising from the said order has already attained finality. - Decided in favor of assessee.
-
Indian Laws
-
2016 (2) TMI 91
Company under liquidation - prayer for dissolution of company and Official Liquidator attached to this Hon’ble Court may be discharged and relieved as Liquidator of M/s. Windsor Foods Ltd. - Held that:- it is evident that as the Company in liquidation has no further realizable funds and assets, all the dues against the said Company have been settled and no claims survive, and as no objections have been received from any of the interested parties to the dissolution of the Company in liquidation, an appropriate order, as per Section 481 of the Act, can be passed. Hence, the following order: M/s.Windsor Foods Pvt. Ltd., Company in liquidation, is hereby ordered to be dissolved from the date of this order.
|
9911796707
