Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 7, 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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Penalty under Section 271-D - firm had accepted payments from the partners - applicability of the provisions of Section 269-SS - Section 273B of the Act would come to the aid and help of the respondent-assessee - HC
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Mere fact that the appeal is pending before the Commissioner of Income Tax (appeals) after the orders of the Tribunal does not oust the jurisdiction of the Assessing Officer to initiate recovery proceedings on the basis of the order passed by it. - HC
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Sale of assets - for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. - HC
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Capitalization proportion of the the general, administrative expenses, including on employee and director remuneration, toward workin- progress (WIP) - different expenditures ad different rate directed to be capitalized - AT
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Unsecured loan - amount received from husband of the appellant Shri Manoj Kumar who is an independent assessee - he is doing Kiryana business and he has deposited the amount in the Bank and advanced the amount in dispute to her wife from her Kiryana business - no addition u/s 68 - AT
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Scope of revision u/s 263 - when the claim of the assessee is not allowable and there is no possibility of two views, then allowing the claim by the Assessing Officer without examining and application of mind would definitely render the assessment order erroneous so far as prejudicial to the interest of revenue - AT
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Wrong offer to tax on capital gains on the conversion of capital asset to stock in trade by wrongly applying the provisions of section 45(2) - the assessee is estoped from his own act and conduct to dispute the date of transfer - AT
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Conversion of capital asset to stock in trade - The land in question was not actually transferred and hence no value was adopted by the Stamp Duty Authorities as the matter never went to Stamp Duty Authorities. Thus provisions of section 50C were not applicable - AT
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Non deduction of TDS - when it pays interest income to a member both on time deposits and on deposits other than time deposits, with such co-operative society, need not deduct tax at source u/s 194A - AT
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Safe Harbour Rules for generation, transmission or distribution of electricity Notified vide Income-tax (2nd Amendment), Rules, 2015. - Notification
Service Tax
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CENVAT Credit on GTA services - Before amendment dated 1-4-2008, services used for clearance of final products from the place of removal is covered in input service, hence credit will be allowed. - AT
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Demand of duty on vocational coaching service and on excess utilization of input service credit beyond the limit of 20-% of service tax payable on output service - once duty has been paid by the appellants, imposition of penalties is harsh and not warranted - AT
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Denial of refund claim - Classification of service - , the show-cause notice proposed demand under one service category whereas confirmation was under another category - the appellant is eligible for the refund of tax - AT
Central Excise
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Claim of Refund of interest paid on duty - When the statute does not provide for payment of interest while sanctioning the refund of interest on duty, the Tribunal has no power to order refund of interest on interest being creation of the statute. - AT
VAT
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Scheme of compounding - KVAT - there cannot be any splitting up or proportionate reduction of the annual turn over of the previous year to determine the compounded tax that could be paid in terms of that provision. - HC
Case Laws:
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Income Tax
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2015 (2) TMI 242
Rectification of the mistake - alternate direction given by the Tribunal to the Assessing Officer to consider the rate adopted by the assessee in the immediately next year by discounting the same is contrary to Rule 10C(4) - Held that:- Keeping in view the clear and unambiguous provisions of Rule 10B(4) as further interpreted by the Tribunal in various decisions, we find merit in the contention of the learned Counsel for the assessee that there is a mistake of law in the order of the Tribunal in giving alternate direction to the Assessing Officer to consider the rate adopted by the assessee in the immediately next year for comparability analysis and the same being apparent from record, we rectify the same by deleting such alternate direction given by the Tribunal. The order of the Tribunal dated 15.07.2011 is modified and the miscellaneous application of the assessee is allowed. - Decided in favour of assessee.
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2015 (2) TMI 214
Unaccounted cash credits - Held that:- From the record, it appears that assessee has claimed that ₹ 3.90 lacs was taken from family members to purchase the plot in Delhi, but the deal was not finalized so, the assessee was returning to Bareilly along-with cash. It also appears that all the creditors have shown the entries in their books of account, a few of them have given a meager amount for which no entry was made out. The order of the custom authorities was not before the CIT (A), who has wrongly observed that the assessee was engaged in the business of gold, especially when the custom authorities have observed (supra) that the assessee was not involved in the business of gold then the statement given by the assessee as well as Driver cannot be relied upon. Regarding creditworthiness of the creditors, it appears that either the amount was meager or the same was shown in the books of accounts. No attempt was made by the Department to verify/examine the creditors. The identity of the creditors has been established. From family members, loan for petty amount can be taken in cash. Hence, it appears that the creditors were genuine - Decided in favour of assessee.
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2015 (2) TMI 213
Reopening of assessment - the interest received is much less than interest paid resulting substantial business loss, it transpires that it is a case of diversion of business funds for non-business purpose - Held that:- T here is no sufficiency or adequacy of material available with the assessing officer. This information or material was already available in the computation of income filed by the petitioner in his return. Nothing new has been received by way of information or otherwise by the assessing officer. The present case is not a case of testing the sufficiency of material available, but is a case of absence of material, as held by the Supreme Court in Ganga Saran case (1981 (4) TMI 5 - SUPREME Court). There is no direct nexus or live link between the material coming to the notice of the assessing officer and the formation of his belief that there had been escapement of income of the assessee from the assessment in the particular year in question. In our view, there is no rational and tangible nexus between the reason and the belief and the conclusion is inescapable, namely, that in the absence of material the assessing officer had no jurisdiction to initiate the proceedings under Sections 147/148 of the Act. - Decided in favour of asessee.
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2015 (2) TMI 212
Penalty under Section 271-D - firm had accepted payments from the partners, during the relevant year corresponding to the Assessment Years, in cash - Held that:- The answer to the issue which arises for our consideration has its contours in realm of the Partnership Law as well as the Act.The transactions between the partner and the firm do not partake the character of a loan or deposit and therefore, there is no applicability of the provisions of Section 269-SS of the Act. There is no separate legal entity for the partnership firm and the partner is entitled to use the funds of the firm. The transaction was bona fide and not aimed to avoid any tax liability. Creditworthiness of the partners and genuineness of the transactions coupled with the relationship between the “two persons” and two different legal interpretations put forward could constitute a reasonable cause in a given case for not invoking Section 271-D and 271-E of the Act. Section 273B of the Act would come to the aid and help of the respondent-assessee. See Commissioner of Income Tax, Madras Vs. R.M.Chidambaram Pillai & Ors [1976 (11) TMI 2 - SUPREME Court] and Commissioner of Income Tax Vs. V.Sivakumar. [2013 (3) TMI 265 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2015 (2) TMI 211
Rectification of mistake - Tribunal quashed the order of the assessing officer passed under Section 154 - Tribunal not considering Section 94 (8) while dealing with the issue on hand - Held that:- This Court is in agreement with the findings of the Tribunal that when the Assessing Officer is in doubt as to the nature of the units sold and the fact that Section 94 (8) of the Act being clarified by the Tribunal to have retrospective operation only by the subsequent decision of the Tribunal, there is no scope for the Assessing Officer to resort to Section 154 proceedings after having accepted the assessee's stand and completed the assessment under Section 143 of the Act on 18.10.06. Therefore, this Court is of the considered view that the proceedings under Section 154 of the Income Tax Act is not justified in the facts and circumstances of the present case. In view of the above, this Court holds that the CIT (Appeals) was justified in setting aside the order of the Assessing Officer, which was subsequently confirmed by the Tribunal. - Decided against revenue.
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2015 (2) TMI 210
Addition to income - Tribunal held that the disclosure made by the assessee was not over and above the income declared in its books of accounts despite the fact that this amount was disclosed by the assessee during the survey - statement recorded u/s. 133A is deemed to be statement recorded u/s 131(1) - Held that:- As per the Tribunal the Revenue has not brought any material on record to demonstrate that the additional of ₹ 35,00,000/- made by the A.O., is taxed by any tangible material apart from the statement recorded during the course of survey. The statement made is considered by the Tribunal and upon appreciation of evidence of the statement if the Tribunal has found that the Assessee admitted the income tax of ₹ 35,00,000/- for the respective year and the Tribunal did not find that it was in addition to the income already declared, such aspect would fall in the arena of finding of fact, which would be beyond the scope of Second Appeal. Attempt was made by the learned Counsel for the Revenue to contend that the statement made can be interpreted to mean the income declared of ₹ 35,00,000/- in addition to the normal income to which we find that the same cannot be accepted, because we have not found any perversity in the finding of fact by the Tribunal for treating the income of the Assessee at ₹ 35,00,000/-. In any event, when there is no perversity in the finding of fact, this Court in exercise of the power in Second Appeal would substitute another finding of fact as sought to be canvassed. - Decided against revenue.
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2015 (2) TMI 209
Waiver of pre-deposit - whether could be passed by respondent no.2 without recording any reasons or not? - stay application has been initially granted on the condition to furnish the bank guarantee, but subsequently, as the bank guarantee was not furnished, the application is dismissed - Typographical error for claiming the benefit under section 10A, though wrongly typed as 10B - Held that:- The perusal of the order dated 28.07.2014 as well as order dated 25.08.2014 shows that when the application for stay came to be decided for the first time, vide order dated 28.07.2014, the reasons are not mentioned for prima facie consideration of the merit or even on the aspect of balance of convenience. Nothing is recorded in the order as to why the ground of bank guarantee for grant of stay is taken into consideration. In our considered view, the order can be said to be nonspeaking order since no reasons are mentioned. When the matter is to be considered for grant of stay against any demand made of tax, it may be required for the authority to prima facie consider the merits and balance of convenience and also irreparable injury. None has been examined nor considered. In any event, as the appeal is pending, we leave it at that. Suffice it to observe that when the application is to be considered and decided, it would be required for the concerned authority to record the reasons and then to reach to the ultimate conclusion as to whether the stay should be granted or not and if yes on what condition. In absence of any reasons, the order cannot be sustained. The impugned order dated 28.07.2014 (AnnexureC) and the subsequent order dated 25.08.2014 (AnnexureD) based on the earlier order, are quashed and set aside with the further direction that the stay application shall stand restored to the CIT (Administration) and the stay application shall be considered on merits and appropriate decision after recording the reasons shall be passed. Petition allowed.
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2015 (2) TMI 208
Reopening of assessment - depreciation claimed on Goodwill and Non-compete fees at 25% cannot be allowed as they are not listed amongst the intangible assets set out in Appendix to the Income Tax Rules, 1961 - Held that:- In this case, the assessment sought to be re-opened is less than four years from the end of the relevant Assessment Year. In such a case also, the primary conditions for invoking jurisdiction under Section 147/148 of the Act has to be satisfied, i.e. one there must be reason to believe and two - income chargeable to tax must have escaped assessment. In the present case in the return of income filed for the Assessment Year 2002-03, the Petitioner had in the computation of income, disclosed the claim for depreciation made on intangible assets including the Non-compete fees. During the course of assessment proceedings, various queries were raised by the Assessing Officer including seeking a detailed working of the depreciation claimed. By letter dated 11th January, 2004, the Petitioner had supplied the necessary details and the Assessing Officer by an order dated 28th January, 2005 passed under Section 143(3) of the Act in regular assessment proceedings allowed the claim for depreciation on Non-compete fees. In fact, the order dated 28th January, 2005 passed in regular assessment proceedings specifically discusses the Petitioner's claim for depreciation and disallows the excess depreciation claimed on buildings at 10% to the extent it is in excess of the prescribed 5%. This would be further evidence of the Assessing Officer having applied his mind to the depreciation claimed by the Petitioner in respect of its block of assets. Hence, it is clear that the reason recorded in support of the impugned notice seeking to deny depreciation on Non-compete fees has been issued on account of change of opinion. Thus, it lacks reasonable belief. Consequently, the impugned notice is not sustainable. There has been a change of opinion, is evident from the fact that for earlier assessment years as well as for subsequent assessment years, the depreciation has been allowed in respect of Non-compete fees as a part of block of assets, claiming depreciation at 25%. Where facts and law are identical over different years, then the principle of consistency sets in and the Revenue is not permitted to change its stand from year to year when there is no change in the facts and the law. In these circumstances, we find that the Assessing Officer had no reason to believe that income chargeable to tax has escaped assessment on account of depreciation being claimed on Non-compete fees. - Decided in favour of assessee.
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2015 (2) TMI 207
Recovery proceedings - Whether in the facts and circumstances of the case, the up-holding of the addition made by the Assessing Officer on issues not pending on the file of the Assessing Officer is legally sustainable? - Held that:- Mere fact that the appeal is pending before the Commissioner of Income Tax (appeals) after the orders of the Tribunal does not oust the jurisdiction of the Assessing Officer to initiate recovery proceedings on the basis of the order passed by it. However, such recovery proceedings shall be subject to final decision in appeal by the Commissioner of Income Tax (Appeals) or thereafter. Therefore, the additions made by the Assessing Officer would be deemed to be final till such time the same are set aside in appeal. No substantial question of law arises for consideration; hence, the appeals are dismissed.
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2015 (2) TMI 206
Bogus purchases - CIT(A) deleted the addition u/s 69C, u/s 40(a)(ia) and machinery repair & maintenance - Tribunal directed the assessing officer to assess income at a net profit rate of 6% and thereafter deleted all additions - Held that:- The impugned order suffers from a fundamental flaw. The Tribunal ignored the evidence relied by the assessing officer particularly the reference to variation in the name of the party on the voucher and the corresponding bill, variation in description of purchases on the voucher and the corresponding bill, variation in rates of the same item of purchase etc. The assessing officer also referred to failure of the assessee to prove the existence of these parties and while doing so did not merely rely upon absence of a sales tax registration number/ or absence of registration with the Pollution Control Board (as held by the Tribunal) but also sought a report from an inspector who found that these parties did not exist at the addresses mentioned in the bills. The Tribunal having ignored relevant facts, in our considered opinion, has committed an error of jurisdiction.Tribunal has erred in applying a net profit rate without considering the material collected by the assessing officer and by ignoring relevant facts and factors referred to by the assessing officer, thereby leading to miscarriage of justice and an error of jurisdiction that must necessarily be rectified by the Tribunal itself. - Decided in favour of revenue.
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2015 (2) TMI 205
Disallowance of interest made by the Assessing Officer u/s. 36(1)(iii) - whether interest free funds were available with the assessee? - Held that:- Tribunal was justified in holding that interest free funds were available with the assessee and thereby deleting the disallowance of interest made by the Assessing Officer u/s. 36(1)(iii) of the Act. The Tribunal has rightly considered that the assessees have clearly demonstrated that it had interest free funds available and the balance amount of interest free advances after reducing the advance of M/s. Mehta Financiers was given for purchase of shares. The Tribunal proceeded on the footing that if total interest-free advances including debit balances of partners do not exceed the total interest-free funds available with the assessee, no interest is disallowable on account of utilisation of fund for non-business purposes and if it exceeds, the proportionate disallowance can be made. We are in complete agreement with the findings of fact arrived at by the Tribunal. - Decided in favour of assessee.
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2015 (2) TMI 204
Capital gain tax - Excess on sale of the business undertaking realized on sale of fixed asset - whether be taxed as gains? - whether as cost of the undertaking was incapable of determined, the computation of gain was impossible and, therefore, tax was leviable on the alleged surplus ? - Held that:- Section 45 charges the profits or gains arising from the transfer of a capital asset to income-tax. In other words, it charges surplus which arises on the transfer of a capital asset in terms of appreciation of capital value of that asset. The asset must be one which falls within the contemplation of Section 45. It is further held that, the charging section and the computation provisions together constitute an integrated Code and when in a case the computation provisions cannot apply, such a case would not fall within Section 45. On a plain reading of Section 41(2) of the Act it becomes clear that for the purpose of invoking the said section it is necessary that each individual asset, be it a building or plant or machinery, has to be (a) owned by the assessee, (b) used for the purpose of business of the assessee, (c) should have written down value and actual cost, and (d) there should be excess which does not exceed the difference between the actual cost and the written down value which shall be chargeable to tax as income of the business of the previous year in which monies payable for such building, machinery, plant or furniture became due. Therefore, for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. Also to take note of the fact that Supreme Court itself has in similar fact situation in the case of CIT vs. Electric Control Gear Mfg. Co. (1997 (7) TMI 8 - SUPREME Court) distinguished its own decision in Artex Manufacturing Company [1997 (7) TMI 7 - SUPREME Court] by holding that there was nothing to indicate that the price attributable to the assets like machinery, plant or building out of the total consideration amount and merely because depreciation had been allowed, it could not be said that the balance was the excess amount between the price and the written down value. Thus considering the above subsequent principle laid down in the case of PNB Finance Ltd (2008 (11) TMI 7 - SUPREME COURT) and Garden Silk Weaving Factory (2005 (6) TMI 32 - GUJARAT High Court ), we are of the considered opinion that the questions posed in this appeal are required to be answered in favour of the assessee. Charge of interest under Section 243B and 243C does not arise for the purpose of capital gain. Therefore, the same is also required to be answered in favour of the assessee
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2015 (2) TMI 203
Transfer pricing adjustment - determination of ALP of royalty at 2% by TPO as against 3% claimed by assessee - assessee has benchmarked the royalty payment by bringing comparables both under TNMM as well as CUP - Held that:- TPO has rejected the analysis done by assessee under both the methods without any reasonable basis nor has brought a single comparable to justify ALP of royalty at 2%. Unfortunately, ld. DRP has approached the entire issue in rather mechanical manner without examining whether approach of the TPO is in accordance with statutory mandate. Therefore, determination of ALP of royalty at 2% cannot be supported, hence, deserves to be struck down. Moreover, theory of benefit test applied by TPO also falls flat considering the fact that TPO does not question the necessity of paying royalty but only objects to the quantum. Further, quantum increase in sale with no apparent increase in production, minimal product recalls, low after sales maintenance cost certainly goes to prove assessee’s claim that these could be achieved due to utilization of advanced technical know-how transferred by AE. The TPO has not been able disprove these facts with any sound argument. Considering the totality of facts and circumstances, we are of the opinion, reduction of rate of royalty by TPO from 3% to 2% is without any basis, hence, cannot be accepted. Accordingly, we delete the addition made on account of TP adjustment to royalty payment. - Decided in favour of assessee.
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2015 (2) TMI 202
Transfer pricing adjustment - selection of comparable - CIT(A) upheld the rate per man hour of USD 18 adopted by TPO to be appropriate, however, he held that further adjustment of 5% is to be allowed on account of material differences between assessee and Wipro - Held that:- On the earlier occasion while disposing off the appeals of assessee as well as the department, the Tribunal has given a clear direction to TPO to determine the ALP under the CUP method by bringing comparable cases on record. Of course it directed the TPO, as a second option, to adopt the rate charged by assessee in the subsequent FY in case no comparable case is available under the CUP. However, the Tribunal while considering the Miscellaneous Application of assessee [2015 (2) TMI 242 - ITAT HYDERABAD] modified the appeal order by deleting direction given to TPO to consider the rate adopted by assessee in the immediate next year. Thus, after the order dated 09/01/2015 passed in M.A., the only option left to AO/TPO for determining ALP is by applying CUP method. As ALP determined by TPO and confirmed by DRP is not under CUP method, the same is invalid. Rule 10B(1)(a) of IT Rules prescribes the method for determination of ALP under CUP. As per the said provision, TPO at first has to find out the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction or a number of such transactions and thereafter making necessary adjustments of such price on account of differences between the international transactions and comparable uncontrolled transactions or between the enterprises entering into such transactions which could materially affect the price in the open market, TPO will have to determine ALP. Therefore, unless, comparables are brought on to benchmark the price charged by a particular assessee, it cannot be said that the price charged by assessee is not within the arm’s length. However, on a perusal of the order dated 23/05/2013 of the TPO passed in pursuance to the direction of the Tribunal, it is very much clear, TPO has expressed his inability in finding a comparable under CUP method. In these circumstances, there was no other choice left to TPO but to accept the price charged by assessee as ALP. Thus we hold that adjustment made to ALP is not justified. Accordingly, we delete the addition made on that account. - Decided in favour of assessee.
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2015 (2) TMI 201
Disallowance of architect & engineering fees, tender & survey expenses and advertisement & sponsorship and brand building expenses treating them as a part of the construction work in process - Held that:- As long as the assessee is carrying a particular business during the year, income there-from has to be computed u/s.28 of the Act, allowing it all permissible deductions, i.e., in accordance with the provisions of sections 30 to 43D (refer section 29). Whether the method of accounting followed by the assessee, i.e., the project completion method, is a correct method in accordance with the law, i.e., given that it follows mercantile method of accounting, is another matter altogether, which has not been impugned by the Revenue in any manner. We, accordingly, find no merit in the Revenue’s case. The assessee’s plea merits acceptance, and is upheld. - Decided in favour of assessee. Disallowance of repair and maintenance expenses of a rented premises - Held that:- The impugned expenditure is in fact only toward effectuating the decision of acquiring the premises (by way of lease) in the first place, by making it fit for use, both in terms of capacity and capability, in-as-much as it has both quantitative and qualitative attributes, so as to constitute an improvement. It is not a case of a lumpsum payment in lieu of annual business expenditure. The benefit arising out of a capital expenditure, again, does not imply permanence, in which case no expenditure even on regular maintenance, or for keeping it in a state of good repairs, a stipulation that marks most tenancy agreements, would be required. The said benefit, though, cannot also be said to be limited to the period of lease, which may well be extended. Further, that the same, i.e., capital expenditure, is excluded, stands amply clarified per Explanations to sections 30 and 31 of the Act, brought on the statute by Finance Act, 2003 w.e.f. 01.04.2004. The expenditure, in our view, thus stands rightly considered by the ld. CIT(A) to form a part of an admissible asset in view of Explanation 1 below section 32(1)(ii), carving an exception for depreciation, which is generally allowed only on assets owned by an assessee, on a building not owned by it, but in respect of which it holds a lease or other right of occupancy. - Decided against assessee. Capitalization of 80% of the general, administrative expenses, including on employee and director remuneration, toward workin- progress (WIP) - Held that:- We consider 50% of the personnel costs, claimed at ₹ 40.22 lacs, i.e., including director’s remuneration, as liable for inclusion in the project cost, to be allocated on some systematic or rational basis which would capture project execution, which is a composite activity commencing with site identification to the construction in a deliverable state. No such proportion could be applied to rent, rates and taxes, which, at ₹ 70.53 lacs, constitutes the second major component of the impugned expenditure. The same would need to be examined with reference to the purpose for which each item comprising the same is incurred, to be decided accordingly. If not for any specific project, no part of the said cost could be capitalized. Rent for office premises, however, if forming part thereof, would stand to be allocated on the basis of the balance expenditure of ₹ 22.48 lacs. Again, as no particulars in respect of these expenses stand specified; the account head describing only the nature of the expense and not its purpose or the activity in relation to which it is incurred, we consider 20% of such expenditure to be allocable to WIP toward project overhead cost, again on the same parameter as applied to the personnel costs. Further, renovation expenses (which is the subject matter of Gd. 1), include ₹ 1.20 lacs paid to a vaastu consultant, Sh. Kirti Sheth . The same is toward consultancy for various sites at Mumbai. The said expenditure, thus, as it appears, is not toward renovation (as claimed) and, rather, relatable to projects located at different sites, and would therefore require being considered in proper perspective - Decided partly in favour of assessee.
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2015 (2) TMI 200
Expenditure incurred for leveling the land and construction of boundary walls - denial of claim of deduction by holding that no evidence was furnished in support of claim of expenditure - expenditure incurred was duly recorded in the books of accounts in the preceding assessment years - Held that:- We have perused the relevant documentary evidence filed by the assessee in the Paper Book containing pages 1 to 37 as well as the order passed by the Revenue Authorities, we are of the view that in the interest of justice, the issue requires re-examination at the level of the AO, because some relevant evidence assessee has produced before the Revenue Authority, has not been appreciated by them. In the interest of justice, we set aside the issue to the file of the AO, with the direction to decide the same afresh under the law, after adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Unsecured loan - amount received from husband of the appellant Shri Manoj Kumar who is an independent assessee - Held that:- assessee has produced necessary evidence before the AO to prove the genuineness and creditworthiness of Sh. Manoj Kumar who had advanced the loan of ₹ 4 lacs to her wife i.e. assessee. Assessee has filed the return of income of her husband Sh. Manoj Kumar and copy of the bank account in which her husband has deposited money on 5.12.2008, 10.12.2008 and 16.12.2008 and advanced the same to the assessee on 16.12.2008 through cheque. The important basis of evidence is the statement of Sh. Manoj Kumar, husband of the assessee has also been recorded by the AO on 19.10.2011 and he stated that he is doing Kiryana business and he has deposited the amount in the Bank and advanced the amount in dispute to her wife from her Kiryana business. The assessee has discharged her onus to prove the genuineness and creditworthiness of her husband who has given the loan to the unsecured loan to her wife i.e. assessee. Thus the amount of ₹ 4 lacs has been fully explained by the assessee, therefore, the addition in dispute is hereby cancelled. - Decided in favour of assessee. Advances made in earlier years and received in the instant year - addition to income - Held that:- At the time of hearing, Ld. Counsel of the assessee filed the documentary evidence and draw our attention towards the relevant evidence which support the claim of the assessee qua the addition of ₹ 5,50,000/-. We are of the view that relevant evidence produced by the assessee, has not been appreciated by the revenue authorities which requires examination at the level of AO.- Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 199
Scope of revision u/s 263 - issues on which the provisions of section 263 were invoked were not involved in the reassessment order passed under section 147 r.w.s. 143(3) - Held that:- Since there is no original assessment in the case in hand and the reassessment is the first order of assessment by the Assessing Officer; therefore, the Assessing Officer was expected to apply his mind on all the issues to see whether the income chargeable to tax has escaped assessment. The Assessing Officer ought to have exercised due diligence and minimum enquiry as expected from ordinary prudent person acting as a quasi judicial authority being an Assessing Officer. Once the assessment has been reopened, the Assessing Officer was expected to follow all the relevant general provisions for framing the assessing as in the case of regular assessment and find out whether any income chargeable to tax has escaped assessment or not. In the case in hand, the assessee has not challenged the disallowance as proposed in the revision order by the CIT on merits but has challenged the revision order only on technical/legal grounds. Therefore, when the claim, which was allowed by the Assessing Officer with out any examination and adjudication, but are not allowable, then the question of taking a possible view does not arise in the case in hand. In a case where the Assessing Officer allowed a claim without examining the records but there is possibility of taking a view in favour of the assessee, then it may be said that the Assessing Officer has taken a possible view. But when the claim of the assessee is not allowable and there is no possibility of two views, then allowing the claim by the Assessing Officer without examining and application of mind would definitely render the assessment order erroneous so far as prejudicial to the interest of revenue and Commissioner has the power to exercise the jurisdictional u/s 263. - Decided against assessee. Review application - Held that:- The Tribunal has taken a view after considering the various precedents as well as facts and circumstances of the case in particular. Therefore, it may be at the most an error of judgment but cannot be an apparent error from record which can be rectified under section 254(2). The jurisdiction of the Tribunal under section 254(2) is very limited and circumscribed. It is settled proposition of law that only the mistake apparent on record can be rectified and not the point of dispute requires a long drawn reasoning and argument. A decision on merits after considering the facts and relevant law as well as the contentions of parties given by the Tribunal cannot be reviewed or revised in the garb of rectification of error under section 264(2). Therefore, the Tribunal has no jurisdiction to review or revise its own order passed on the merits of the case and based on detailed reasoning. - Decided against assessee.
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2015 (2) TMI 198
Deduction u/s. 80IB(10)- Assessing Officer has disallowed the claim of assessee on the ground that assessee firm is not the owner of land at relevant point of time on which project was constructed and permission from local authority was not accorded in the name of assessee firm - whether the legal relationship between the assessee and the end user of the units was that of ‘work contract’? - Held that:- For the purpose of claiming deduction u/s 80IB(10) of the Act, it is not necessary for assessee to own the land. Such condition is not mentioned in the relevant section. In view of above discussion, this ground as taken by Assessing Officer was not justified in rejecting the claim of assessee because in this case, housing project has been approved by the local authority on 24-05-2004 and plan was passed on 02-08-2004. The size of plot of land was 12,141.59 sq.mtrs. which was more than 1 acre. Built-up area of each unit did not exceed 1500 sq.fts. The undertaking starting construction in the financial year 2004-05 and the same was completed in F.Y. 2007-08. Assessee firm developed housing project and entire risk with regard to such housing project was to be borne by it only. Accordingly, Assessing Officer was not justified in denying the claim u/s. 80IB(10) and same has rightly been granted by CIT(A). This reasoned finding of CIT(A) needs no interference from our side. - Decided in favour of assessee.
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2015 (2) TMI 197
Conversion of capital asset to stock in trade - date of conversion - admission of additional evidence - market value adopted by AO for the purpose of calculation of capital gains by invoking the provisions of section 50C - Held that:- Ld. CIT(A) had forwarded the documents/evidences sought to be produced by the assessee during appellate proceedings to the Ld. AO and called for his comments and has given a categorical finding that the AO neither had put a specific query regarding the date of conversion and even had not given proper opportunity to the assessee to produce the necessary evidences on the file. Even the AO had been given opportunity to rebut the evidences but the AO could not point out any defects in the evidences/accounts of the assessee. Hence, we do not find any infirmity in the order of the Ld. CIT(A) so far the question as to admission of additional evidence is concerned. The Ld. CIT(A), after detailed discussion and appreciation of evidence on file, has held that the date of conversion of capital asset into stock in trade was 01.04.2001. The land in question was not actually transferred and hence no value was adopted by the Stamp Duty Authorities as the matter never went to Stamp Duty Authorities. Thus provisions of section 50C were not applicable. The Ld. CIT(A) has given a well reasoned finding regarding the non application of section 50C of the Act to the assessee’s case. The Ld. CIT(A) has also discussed that the Hon’ble High Court has decreed the plaint holding the assessee to be owner on the basis of agreement of the year 1973. Thus no infirmity in the order of the Ld. CIT(A) on the above issues. - Decided against revenue. Wrong offer to tax on capital gains on the conversion of capital asset to stock in trade by wrongly applying the provisions of section 45(2) - cross objection by assessee - Held that:- The Ld. CIT(A), after going through the evidences, has held that the assessee had entered into a development agreement on 28.06.04 with Shree Balaji Developers and thereby had conveyed the land for the purpose of development to the developer. He has held that such conveyance of land very much falls within the meaning of transfer under section 2(47) of the Act and the capital gains arising as per the provisions of section 45(2) were taxable in the instant year. Without further going into this controversy, we find that the assessee itself had offered the tax on capital gains under section 45(2) treating the conveyance of the land to the developer vide development agreement dated 28.06.04. Now, the assessee, in our view, is estoped from his own act and conduct to dispute the date of transfer. Thus find no merit in the cross objections and the same are accordingly dismissed. - Decided against assessee.
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2015 (2) TMI 196
Disallowance u/s 40(a)(ia) - Non deduction of TDS - payment towards interest exceeding ₹ 10,000/- on time deposits - Held that:- This issue is covered by the decision of the co-ordinate Bench of the Tribunal in the case of The Bagalkot District Central Co-op. Bank vs. JCIT [2015 (1) TMI 1005 - ITAT BANGALORE] wherein it has been held that the assessee which is a co-operative society carrying on banking business, when it pays interest income to a member both on time deposits and on deposits other than time deposits, with such co-operative society, need not deduct tax at source u/s 194A by virtue of exemption granted vide clause (v) of sub-section(3) of the said section. - Decided in favour of assessee. Disallowance of gratuity paid to retired employees - Held that:- Gratuity actually paid by the assessee cannot be disallowed u/s 36(1)(v) or u/s 40(a)(ia) of the Act. However, the assessee’s contention that gratuity has been paid to the retired employees has not been verified by any of the authorities below. In view of the same, we deem it fit and proper to remit this issue to the file of the AO for limited purpose of verification as to whether gratuity has actually been paid to the employees. - Decided in favour of assessee for statistical purposes. Interest accrued on NPA but not credited to the profit and loss account - CIT(A) deleted the addition - Held that:- In case of CIT vs. Canfin Homes Ltd. [2011 (8) TMI 178 - KARNATAKA HIGH COURT ] has laid down the law on accrual of income, particularly interest on sticky loans/NPA and has held that if in the account of the assessee, it is clearly stated that though a particular income is due to him but it is not possible to recover the same, then it cannot be said to have been accrued and the said amount cannot be brought to tax. Thus no reason to interfere with the order of the CIT(A). - Decided against revenue.
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Customs
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2015 (2) TMI 222
Determination of transaction value - Discounts - Held that:- Authority has recorded that in case of series of imports the discount being fluctuating reasonable discount may be determinable within the above range, without a straight jacket formula. Commissioner (Appeals) has noticed that imports of appellant are subject to warranty condition which calls for higher rate of discount to be allowed. Further, the level of discount varies with the commercial quantity imported. Revenue has no material to controvert the findings of learned Commissioner (Appeals). In absence thereof to show that the relation of the parties has depressed import value, there is no scope to intervene to the order passed by that Authority. - Decided against Revenue.
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2015 (2) TMI 221
Import of old and used digital multifunction printing and copying machines during the period 05.06.2012 to 20.08.2013 without obtaining proper licence - Held that:- for the import of the subject machines during the period in dispute, there is no requirement of licence. In these circumstances, relying on the decisions of the honble Madras High Court in the case of Shrishti Digital Solution (2013 (6) TMI 273 - MADRAS HIGH COURT), we hold that the respondents have correctly imported the goods without obtaining the licence. Therefore, we do not find any infirmity with the impugned orders. - Decided against Revenue.
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2015 (2) TMI 220
Low Remission of excise duty by the manufacturer - Imposition of penalty - Held that:- It is not the case of Revenue that the appellant colluded with the manufacturer M/s. Ind Synergy Ltd. for under-remittance of Excise Duty by the latter or that the appellant had foreknowledge of such evasion of Duty. Since it is not alleged that the appellant had passed on a credit of Duty in excess what was mentioned in invoices under which it had purchased billets and sold these to M/s. Jai Sidh Yogi Steel Rolling Mills, imposition of penalty on the appellant is illegal. Imposition of penalty without establishing any culpability, cannot be sustained. The order passed by the primary Authority as confirmed by the appellate Commissioner, New Delhi cannot therefore, be sustained. - Decided in favour of assessee.
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2015 (2) TMI 219
Penalty u/s 117 or u/s 112 - Penalty u/s 112 dropped against assessee - Held that:- In the impugned order it is found that there is a finding of the adjudicating authority that the appellant is not liable for penal action as he is not concerned with the impugned goods. It was observed by the ld. Commissioner that he had extended help to the importer in the massive evasion of duty. If he would have been careful, the duty evasion could have been avoided but he restrained to impose penalty under Sec. 112 of the Customs Act on these findings. When the ld. Commissioner has not imposed any penalty under Sec. 112 of the Customs Act, 1962 which provides that penalty can be imposed on the appellant on the allegation of aiding and abetting on the payment of duty, penalty under Sec. 117 is not leviable on the appellant. In these terms, we set aside the impugned order qua the appellant - Decided in favour of assessee.
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2015 (2) TMI 218
Valuation of goods - Confiscation of goods - Perishable nature of goods - whether the case was processed by the Revenue in accordance with the Customs Valuation (Determination of value of Export Goods), Rules, 2007 - Held that:- Neither the adjudication order nor the appellate order had expressed any doubt as to the value declared by appellant attracting Rule 8 of the Valuation Rules. In such circumstances, this is not a fit case to keep the appeal pending or to remand the same when the very foundation of the adjudication is not based on statutory rules - Decided in favour of assessee.
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FEMA
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2015 (2) TMI 217
Waiver of pre deposit - Appeal dismissed for want of satisfying the predeposit requirement - Held that:- though as per subsection( 1) of section 15, an appeal against an order of penalty or redemption charges should ordinarily be accompanied by payment of such amounts, it is within the power of the appellate authority to waive fully or in part such requirement either unconditionally or subject to conditions if it is found that such deposit would cause undue hardship to the appellant. - Under the circumstances, when the petitioner had made such an application making specific request for waiver of predeposit requirement, the appeal could not have been dismissed on the ground that the appellant did not fulfill such predeposit requirement. It was expected in law of the appellate authority to first decide such an application even if the application was rejected by the appellate authority refusing to waive predeposit requirement or same was waived on some condition, the appellate authority had to give reasonable time to the appellant to either make full predeposit or to fulfill the condition that may have been imposed in such order. In any case, dismissal of the appeal for want of predeposit without disposing of the petitioner’s application for waiver thereof was simply not permissible. - Impugned order stands quashed - Decided in favour of appellants.
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Service Tax
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2015 (2) TMI 241
Business Auxiliary Services - whether the appellant is to be saddled with the service tax liability on an amount received by them as commission for procuring orders on behalf of overseas manufacturers - Held that:- Appellant does not engaged himself in assembling and organizing of the imports. His duty as is ascertained from the agreement, indicates that he is supposed to procure the orders and pass it on to the overseas manufacturers; on receipt of such orders, the overseas manufacturers executes the same on his own and the consideration for such supplies is directly paid to the overseas manufacturers by the person who has placed the order. The entire transaction in our considered opinion seems to be of only procurement of orders and the rendering of services, if any, by the appellant is towards the foreign or overseas manufacturers. In our view, this activity though culminates in supplies to Indian Company, cannot be considered as services provided in India. We are fortified in our view by the ratio of the Tribunal in the case of Vodafone Essar Cellular Ltd. (2013 (7) TMI 178 - CESTAT MUMBAI). When the service provided by a person in India is consumed and used by a person abroad, co-ordinate Bench relied upon the judgement of the Paul Merchants Ltd. [2012 (12) TMI 424 - CESTAT, DELHI (LB)]; interpreting provisions of export of services rules to hold such services as rendered by M/s. GAP International Sourcing (India) Pvt. Ltd. [2014 (3) TMI 696 - CESTAT NEW DELHI], would be export of services and would not fall under the category of BAS. - impugned order is unsustainable and liable to set aside and we do so - Decided in favour of assessee.
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2015 (2) TMI 240
Denial of refund claim - Classification of service - Scientific or Technical Consultancy Service or Technical Testing and Analysis Services - Held that:- In this case, the period involved is prior to 18.4.2006 and as per the decision of the Hon ble High Court of Bombay in the case of Indian National Shipowners Association: [2008 (12) TMI 41 - BOMBAY HIGH COURT] service tax cannot be collected from the receipt of service in India in respect of services received from abroad prior to 18.4.2006. In this case, the period involved is September 2003 to March 2005, thus the entire period is prior to the date on which service tax was required to be paid. Moreover, the show-cause notice proposed demand under one service category whereas confirmation was under another category. Therefore, I find that the appellant is eligible for the refund of tax which was paid by them and it was not required to be paid. I was informed that the remand order has not yet been implemented by the original adjudicating authority. Therefore, the original adjudicating authority is requested to proceed further in the light of observations made hereinabove and decide the matter afresh. - Appeal disposed of.
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2015 (2) TMI 239
Demand of duty on vocational coaching service and on excess utilization of input service credit beyond the limit of 20-% of service tax payable on output service - Held that:- Omission by the government to exempt vocational coaching service for the period 1.7.2004 to 9.9.2004 could have lead to confusion in the mind of tax payers. When the notifications are frequently issued sometimes exempting services, then withdrawing exemption and then again issuing exemption, the assessees are not able to follow the notifications due to confusion. We find that no mens-rea or deliberate act of avoidance of payment of service tax has been established by the Revenue. As far as second issue of availability of excess cenvat credit is concerned, We find that the appellant voluntarily paid tax alongwith interest when being pointed out by the authorities. Here again, mens-rea does not get established. We also note that the condition of utilization of service tax to the extent of 20% did not prevent the assessee from having cenvat credit in their account; it only debarred them from utilizing the same to an extent exceeding 20%. In other words, as held in the various decisions, remaining cenvat credit would not have lapsed, it would have remained as credit in the account. Therefore once duty has been paid by the appellants, imposition of penalties is harsh and not warranted. - Reliance is placed on the judgement in the case of the case of CCE, Bangalore vs. Geneva Fine Punch Enclosures Ltd. (2011 (1) TMI 746 - KARNATAKA HIGH COURT) and in the case of CCE & SR, Bangalore vs. Adecco Flexione Workforce Solutions Ltd. (2011 (9) TMI 114 - KARNATAKA HIGH COURT). - Impugned order set aside - Decided in favour of assessee.
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2015 (2) TMI 238
CENVAT Credit on GTA services - Clearance of final products from the place of removal- Appellants did not show any documents evidencing that clearances were made on FOR basis and therefore the factory gate becomes the place of removal - whether the service tax paid on input service as defined in Rule 2(l) of Cenvat Credit Rules, 2004 would be eligible for cenvat credit accordingly - Held that:- Before amendment dated 1-4-2008, services used for clearance of final products from the place of removal is covered in input service, hence credit will be allowed. W.e.f. 1-04-2008, services used upto the place of removal will be covered in input service definition. The matter stands decided by Hon ble Karnataka High Court in the case of CCE, Bangalore vs. ABB Ltd- [2011 (3) TMI 248 - KARNATAKA HIGH COURT] - It is held that the appellants are eligible for cenvat credit - Decided in favour of assessee.
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2015 (2) TMI 237
CENVAT Credit - Photostat service - Held that:- Such services being necessary input services, it would not be proper to keep the appeal pending but to allow the same. Accordingly, the Miscellaneous Application is disposed of as infructuous - Decided in favour of assessee.
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2015 (2) TMI 236
Disallowance of Cenvat credit of service tax paid on insurance premium - Insurance of employee - Held that:- It is stated by appellant that insurance is essential to insure the workers in the factory and becomes an input service - insurance for worker has an integral connection with the manufacture - Decided in favour of assessee.
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2015 (2) TMI 235
Rectification of mistake - Held that:- On perusal of the records it transpires that there seems to be an error apparent on the face of record, as the core issue was agreed to have been covered by the Larger Bench decision but other various issues were not argued and not considered by the Bench. Since the other issues were not argued no findings were recorded, we are of the view that there is an error apparent on the face of the record. - Previous order recalled - Rectification done.
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Central Excise
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2015 (2) TMI 233
Maintainability of appeal - Whether excise duty is leviable on samples drawn for batch analysis and retention by the respondent, considering it to be deemed removal under Rule 9 and Rule 49 of the erstwhile Central Excise Rules, 1944 - Held that:- excise duty of ₹ 15,754/- has been imposed upon the assessee under Section 11A( 1) of the Central Excise Act by the Joint Commissioner, Central Excise. Penalty of ₹ 15,754/- was imposed by him. Against the said order, appeal was preferred by the assessee. The Commissioner (Appeals) allowed the appeal filed by the assessee and deleted the penalty. However, the demand of excise duty of ₹ 15,754/- was upheld. The said order was challenged before the Central Excise & Service Tax Appellate Tribunal (CESTAT). The Tribunal set aside the excise duty. This Tax Appeal has been filed by the Department challenging the order of the CESTAT. It is not disputed by the appellant's counsel that the amount of excise duty imposed upon the assessee is less than ₹ 2 lakh and in view of the Circulars issued by the Department which have been considered in COMMR. OF C. EX. & CUS., VADODARA-I VS. PHARMANZA HERBAL PVT. LTD. reported in [2014 (9) TMI 330 - GUJARAT HIGH COURT] and Commissioner of C. Ex. & Customs Vs. Stovec Industries Ltd. reported in [2013 (1) TMI 72 - GUJARAT HIGH COURT], Tax Appeal below amount of ₹ 2 lakh is not maintainable. Even though the appeal was filed prior to issuance of the Circulars in the year 2010, the Circulars would apply even to the pending appeal. - Decided against Revenue
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2015 (2) TMI 232
Contravention of the provisions of Rules 9(1), 51, 52A, 53, 54, 173F, 173G, 174 and 226 of the Central Excise Rules, 1944 - Imposition of interest and penalty - Held that:- it is evident that the order of the Tribunal has been set aside in its entirety and the Tribunal was directed to re-consider the issue as to whether M/s.Southern Press Tools is entitled for exemption under Notification No.164/87 dated 10.6.1987 for the goods cleared to M/s.Universal Radiators Ltd. without observance of the procedures prescribed under Chapter X of the Central Excise Rules, 1944 and also whether penalty can be imposable under Rule 209(A) of the erstwhile Central Excise Rules, 1944. - . Since the entire order of the Tribunal has been set aside with a direction to the Tribunal to consider the issue de novo, the present appeal by the assessee on a limited issue does not survive. Therefore, the plea now made by the appellant can be agitated by the appellant before the Tribunal and the Tribunal inter alia is directed to go into the issue raised by the present appellant on the plea of confiscation of goods as well - Following decision of Commissioner of Central Excise Versus Universal Radiators Ltd. [2011 (8) TMI 100 - Supreme Court of India] - Matter remanded back.
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2015 (2) TMI 231
Imposition of penalty - Suppression of facts - Held that:- A perusal of the order passed by the Tribunal reveals that while setting aside penalty, the learned Tribunal has recorded a positive finding that there is no suppression of relevant facts. The question of suppression of material facts was germane to both issues i.e., assumption of jurisdiction by the Assessing Authority to re-assess and penalty. The Tribunal having held that there is no suppression of material facts while deciding the question of penalty, was required to apply this finding to the legality of assumption of jurisdiction to re-assess duty. The revenue in its appeal impugns the setting aside of penalty by urging that suppression of material facts has been proved. The finding recorded by the Tribunal on the question of suppression of material facts, being contradictory, we have no option but to set aside the impugned order and call upon the Tribunal to consider whether there was any suppression of material facts, that enabled the revenue to assume jurisdiction to re-assess the appellant and thereafter to impose duty and penalty. - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 230
Refund claim - Whether the appellant is eligible for refund of the difference paid by the manufacturer through modvat credit - Held that:- Here is a case where the appellant seeks refund of duty paid through Modvat. The final products, admittedly, are not dutiable and, therefore, the benefit of Modvat credit is also not available in respect of inputs as per the provisions of the Modvat at the relevant point of time. There is no provision in the MODVAT, which provides for refund of duty paid on inputs. In such circumstances, the authorities below had rejected the claim of the assessee, which action was confirmed by the Tribunal. This Court is in full agreement with the said view. In view of the concurrent finding of fact and law by the authorities below, we find no reason to differ. - Court finds no reason to take a view different from the one taken by the Tribunal. In any event, nothing survives for adjudication in the matter in view of the judgment in ARR Sales Agency (2014 (9) TMI 478 - Madras High Court) and, therefore, this appeal is liable to be dismissed - Decided against assessee.
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2015 (2) TMI 229
Waiver of pre deposit - Undue hardship - Held that:- A perusal of the balance-sheets, would show that the Company is running into losses and it does not have any free reserves and surplus. The losses have not eroded the net worth but that the losses are substantial, which will not enable the Company to make pre-deposit of 25% of the assessed duty demand. - counsel appearing for the appellant contends that the Finance Act, 2014 has omitted Section 35C of the Central Excise Act, for pre-deposit, and that now the pre-deposit with effect from 01.10.2014, has been confined to 7.5% of the demand in case of an appeal, and 10% of the demand in case of second appeal, to make the remedy of appeal effective and to avoid the CESTAT to spend most of its time only in deciding matters of pre-deposit. - In the meantime, in case the appellant deposits 10% of the demand, excluding the demand of penalty, within a period of sixty days from today, after adjusting the amount of ₹ 5 lakh, which has been deposited, the recovery of the remaining amount shall remain stayed. - Decided conditionally in favour of assessee.
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2015 (2) TMI 228
Claim of Refund of interest paid on duty - Taking over by the another company - Department did not allow transfer of registration and cancellation of registration, the appellant had to make the payment of balance dues with interest - HC hold that appellant was eligible for the credit and allowed the appeal. - the appellant filed a refund claim for ₹ 14,74,012/- paid in cash by them comprising of inadmissible credit of ₹ 6,96,710/- and interest of ₹ 7,77,302/- Held that:- After going through the records, it was found that interest was added to the duty in Section 11B in May 2008. However, the Parliament did not consider it appropriate that the word interest should be added in Section 11BB also. If interest was also to be added in Section 11BB while providing for payment of interest on duty, the claim of the appellant could have been sustained. When the statute does not provide for payment of interest while sanctioning the refund of interest on duty, the Tribunal has no power to order refund of interest on interest being creation of the statute. - Decided against assessee.
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2015 (2) TMI 227
Exemption from payment of duty under Notification No.67/95-CE dated 16.03.1995 - entire quantity of TMT Bars/Rods had been used in the factory premises for laying down the foundation/structural - Held that:- Prima facie, on going through the said Certificate, we find that it is vague and definitely difficult to verify the use of such TMT Bars/Rods in the respective plant, machinery, structural etc.., consequently, resulted in confirmation of the demand. Now, before this Tribunal, the Appellant had placed a Chartered Engineer s Certificate dated 17.06.2010, furnishing the use of such TMT Bars/Rods in the respective plant and machinery. We find that since this Chartered Engineer s Certificate was earlier not placed before the ld. Adjudicating Authority, hence, the same could not be verified by the Department. In the interest of justice, therefore, the contents of the Certificate and the claim of the Appellant, need to be verified vis-a-vis the allegations in the Demand Notice. Thus, the matter needs to be remanded to the ld. Commissioner for necessary verification of the said Certificate - Pre deposit ordered - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 226
Demand of duty in respect of removal of used and old conveyor belts - whether the used and old conveyor belts removed by the appellant as waste and scrap, are required to discharge its duty liability in terms of the provisions of Rule 57S(2)(C)-Where capital goods are sold as waste and scrap - Held that:- old and used rubber goods would fall under Chapter 40 only when they are converted into waste and scrap before their removal. Merely on account of repeated use, old and used conveyor belts would not be shifted to Chapter 40, from their maiden classification under Chapter 84. The fact that no processing was undertaken on the conveyor belts at the time of their clearances, is clear from the allegations made in the show-cause notice. - The Notice treat broken and worn out conveyor belts as waste and scrap which are sold by them in the market without payment of Central Excise duty. As such, it is clear from the above that the conveyor belts are cleared as used and worn out conveyor belts without converting the same into waste and scrap. A specific contention stands taken by the learned advocate that the appellant might treat the said old and used conveyor belts as waste for them but the same may be used by the buyers, after some reprocessing etc. as conveyor belts only, in which case it cannot be held that it is waste and scrap falling under Chapter 40. - provisions of Rule 57S(2)(C) of the CENVAT Credit Rules are not attracted in the present case inasmuch as the goods cleared by the appellant are not leviable to duty of excise. - Decided in favour of assessee.
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2015 (2) TMI 225
Large scale evasion of excise duty - Shortage of goods found - Clandestine removal of goods - Held that:- There was no protest by Shri Dinesh Gupta or by the Appellant Company immediately after the stock taking that the shortage of 12096.565 M.T. in the stock of MS Ingots determined on that day is not genuine shortage and weighment on that day had not been determined correctly. In view of this, plea at this stage that the weight of MS Ingots had been determined on eye estimation only without weighment and the shortage of 12096.565 M.T. in the stock of MS Ingots is not genuine shortage, cannot be accepted. However, what is of more significance is that the fact that this huge shortage in the stock of MS Ingots, for which there is no explanation, corroborates, the allegation of clandestine removal which is also supported by the recovery of 13 parallel invoices involving duty of ₹ 6,98,495/- from the factory premises. These invoices were bearing the same number and the same date as the invoices under which the goods had been cleared on payment of duty but the names of the buyers were different. No explanation has been given by the Appellant Company for these 13 parallel invoices recovered from the factory which also point to the evasion of duty by the Appellant Company by clandestine removal. The despatch slips were in 11 files and had been recovered alongwith the other documents pertaining to the factory like attendance register for the period from December 2006 to August 2007 and also the weighment register of Dharamkanta, also belonging to the Appellant Company. - Though the appellant plead that cross-examination all the dealers and transporters were not allowed, in our prima facie view, since this is not the only evidence to link the 11 files containing the despatch slips to the Appellant Company, at this stage, it cannot be said that the appellant have prima facie case in their favour. The Appellant Company has pleaded financial hardship, in case of a company which has indulged in large scale evasion of duty by under reporting of its production, no credibility can be attached to its profit and loss account. Moreover, though the Appellant Company has filed an application before the BIFR on 19/7/13, so far no orders have been passed. In any case, as held by the Apex Court in the cases of Indo Nissan Oxo Chemical Industries -2007 (12) TMI 220 - SUPREME COURT OF INDIA, even if a unit has been declared a sick unit under Sick Industrial Companies (Special Provision) Act, 1985 it would not exempt it from the provisions of Section 35F. As regards the requirement of pre-deposit of penalty under Rule 26 imposed on Shri Zakir Ali Rana, the Managing Director of the appellant company from his role discussed in para 125 (i) of the impugned order it is clear that he was actively involved in unaccounted manufacture and sale of the excisable goods without payment of duty and, as such, the provision of Rule 26 are prima facie attracted in his case. Therefore, this appellant also has to be put to some conditions for considering waiver from the requirement of pre-deposit under Section 35F. As regards the other appellants namely Shri Dinesh Gupta, Shri Sarfraz Ali and Shri Neeraj Garg, since they were only employees of the Appellant Company, who are acting as per the directions of the management, in our prima facie view the penalty on them under Rule 26 is not called for in view of the Tribunals judgment in the case of Z.U. Alvi vs. CCE, Bhopal reported in [2000 (1) TMI 79 - CEGAT, COURT NO. I, NEW DELHI]. Therefore, so far as these three appellants are concerned, the requirement of pre-deposit has to be waived for hearing of their appeals. Appellant company directed to pay an amount of ₹ 8,00,00,000 within a period of eight weeks for compliance with the provisions of Section 35F. This amount would be in addition to the amount of ₹ 40,00,000/- already paid by them. On payment of this amount within the stipulated period, the requirement of pre-deposit of balance amount of duty demand, interest and penalty shall stand waived and recovery thereof stayed. As regards, Shri Zakir Ali Rana, he is required to deposit an amount of ₹ 10,00,000/- (Rupees Ten Lakhs) within a period of eight weeks for compliance with the provision of Section 35F. On deposit of this within the stipulated period, the requirement of pre-deposit of balance amount of penalty and its recovery stayed. - Partial stay granted.
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2015 (2) TMI 224
Waiver of pre deposit - Exemption under Notification No. 6/06 dated 01/3/06 (Sl. No. 7) - exemption to the pipes of any type needed for delivery of water from water sources for the water treatment plant and from the treatment plant to the storage facility - Non production of certificate from the District Collector regarding the use of the pipes for water supply project - Held that:- While the certificates regarding requirement of MS Pipes would also cover the MS Specials as the MS Specials are only a sort of MS Pipes of smaller length, the certificates issued for PSCC Pipes would not cover the MS Specials, as while PSCC Pipes fall under Chapter 67 but the MS Specials fall under Chapter 73. In view of this, this is not the case for total waiver. The appellant are, therefore, directed to deposit an amount of ₹ 3,00,000 within a period of eight weeks for compliance with the provisions of Section 35F - Partial stay granted.
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2015 (2) TMI 223
Clandestine removal of goods - Lack of evidence - goods found short during verification in the factory and consequent imposition of penalties - Held that:- detailed punchnama has been drawn during the visit to the factory on 20.7.2009 and detailed inspection has been conducted indicating standard weight of each bundle of 8 mm,10 mm, 12 mm, 16 mm, 20 mm and 25 mm of M.S.Bars. Simple physical weighments were done in the factory which were based on weight indicated by the representative of the appellant and accordingly that was made basis of calculation. This fact is not contested by the appellant. Only contest is weight of loose TMT and mixed lot of round, TMT and Tor and the bar. I find that their representative associated in weighment and consequent determination of shortage and those conclusions were duly accepted with signatures on verification report put by the authorised representative of the appellant. Raising those points at this level is not acceptable as fact of shortage is clearly manifested and acceptance of shortage by their representative and consequent deposit of duty on the shortage voluntarily clearly indicated that the proceedings have been conducted after taking them into confidence and were based on specified para-meters. Material involved for verification are M.S.Bars and M.S.Ingots which were steel items having identity, shape and specified weight. M.S.Ingots are used in the factory as inputs for manufacture of M.S.Bars of the process of rolling. Ingots are normally received from outside in the factory on which credit is taken by the appellant. For shortage lying in the stock has to be duly counted as items are not as such which will get mixed and remain identifiable. This cannot be stated that due to certain percentage of wastage, these items will not get consumed. I do not find any force in the contention of the appellant that merely because of percentage of total stock of 2.55% in the M.s.Ingots and in the bars 8.5% against the book balance 378.445 MT ipso-facto does not lead to conclusion that shortage should be ignored and no action for demand of duty and imposition of penalty should be taken. No justification is found for the shortage and representative has duly admitted the shortage by signing stock report, duty voluntarily paid. There is no case for dropping of penalty as the demand relating to the duty has already been paid. Further imposition of penalty has been already dealt with very liberally by the Commissioner (Appeals) even though provision of section 11AC are applicable. I do not interfere in the reduction of the Commissioner (Appeals)s order - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (2) TMI 234
Scheme of compounding - Whether a dealer who opts to pay compounded tax under section 8(f)(i) of the Kerala Value Added Tax Act, 2003 is entitled to say that, since one of his branches was closed down on the last date of the previous financial year (2011-12) in question, that is, on March 31, 2012, was he entitled to exclude the turnover of that branch for determining the compounded tax payable for the next financial year, that is, 2012-13 - Held that:- The liability of a dealer to pay tax under the KVAT Act is in terms of section 6, which is the charging provision. The optional system of payment of tax at compounded rates is permitted in terms of section 8. Section 8(f)(i) relates to dealers in ornaments or wares or articles of gold, silver or platinum group metals, etc. Clauses (a) to (d) under that provision clearly show that the compounded tax has to be determined on the basis of the annual turnover of the assessee. Therefore, those provisions do not admit any classification of the establishment of the assessee into branches, for the purpose of determining the total turnover to determine the annual turnover, for the purpose of such determination. - dealers opting for payment of tax under that clause shall pay compounded tax in respect of their branches existing in the year (to which the option relates). While that Explanation excludes any dissection of the establishment for payment of tax, the principle that the compounded tax has to be determined on the basis of annual turnover remains the same. Therefore, there cannot be any splitting up or proportionate reduction of the annual turn over of the previous year to determine the compounded tax that could be paid in terms of that provision. - No legal infirmity or jurisdictional error in the impugned judgment issued by the learned single judge (Fashion Jewellery v. Commercial Tax Officer [2013 (3) TMI 585 - KERALA HIGH COURT] - Decided against Assesse.
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Wealth tax
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2015 (2) TMI 215
Enhancement in the value of land owned by the firm where the appellant is a partner - Rule 20 of Schedule III of the Wealth Tax Act 1957 - Held that:- land being used as business asset, its value was to be determined as per Rule 14 and not as per Rule 20 of Schedule III. - Following decision of Subrata Roy Sahara vs. DCWT [2015 (2) TMI 51 - ITAT DELHI] - Decided in favour of assessee.
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Indian Laws
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2015 (2) TMI 216
Penalty u/s 20(1) of the Right to Information Act, 2005 - Delay in providing information - held that:- when the Central Information Commission or the State Information Commission, as the case may be, while hearing the complaint or appeal, is of the opinion that Central Public Information Officer or the State Public Information Officer, as the case may be, has, without any reasonable cause, refused to receive an application for information or has not furnished information within the time specified under sub-section (1) of Section 7 or mala fidely denied the request for information or knowingly given incorrect, incomplete or misleading information or destroyed information which was the subject of the request, in that event penalty can be imposed. In the further opinion of this Court, if there was reasonable cause for furnishing the delayed information then Chief Information Commissioner should not impose penalty merely because there was some delay in supplying the information. Appellant was not present before the Appellate Authority at the time when the appeal was taken up for hearing for the reason he had already received the information. Moreover, the explanation furnished by the petitioner before respondent No. 1 that he had directed the Head Clerk to supply the information immediately but information could not be supplied before his transfer for the reason that entire staff of the Municipal Board was engaged in the collection of data and preparation of the voter identity card under the order of Collector, Rudrapur and was busy in the rescue work after natural calamity happened in June, 2013, seems to be reasonable ground for non-supplying the information within time. - Consequently, imposition of penalty on hypertechnical ground that information was not supplied within thirty days seems to be totally unjustified and arbitrary - Decided in favour of appellant.
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