TMI Tax Updates - e-Newsletter
February 8, 2014

Case Laws in this Newsletter:

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

Articles

1. No Service Tax required to be paid on Services provided by an Authorised Person or Sub-Brokers to Member of Commodity Exchange up to 30th June, 2012

   By: Bimal jain

2. AUDIT SHIFTS TO RISK BASED INTERNAL AUDIT (RBIA) IN BANKS – PART- 1

   By: Dr. Sanjiv Agarwal

News

1. Pension Plan by MF Companies

2. Plastic Notes

3. Bhartiya Mahila Bank

4. CCI Imposes Penalty of Rs.55.42 lakhs on Ferozepur Chemists and Druggists Association

5. RBI Reference Rate for US $ and Euro

6. RBI authorises Four Non-Bank Entities to set up White Label ATMS

7. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

8. Proposal of M/s CGP India Investment Limited for increase in foreign equity in M/s Vodafone India Limited from 64.38 percent to 100 percent

9. Amendments to the Guidelines for appraisal/approval of projects/schemes eligible for financing under the National Clean Energy Funds

Notifications

Customs

1. 09/2014 - dated 6-2-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 7th February, 2014

SEZ

2. D.6/35/2012 - dated 30-1-2014 - SEZ

Policy to regulate functioning of Worn and Used clothing units in SEZs – regarding.

Highlights / Catch Notes

Income Tax

• Tribunal Must Act Against Arbitrary Actions by Assessing Officer to Protect Legal Process During Pending Stay Applications.

  Case-Laws - HC : Recovery when stay application is pending - Tribunal can not be a silent spectator to the arbitrary and illegal actions on the part of the AO so as to frustrate the legal process provided under the Act - HC
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• Court Rules: Seized Paper with Figures Isn't Enough to Increase Taxpayer's Income Without Further Evidence.

  Case-Laws - AT : Merely on the basis of that some figure is written on a piece of paper seized from the premises of the assessee, would not be sufficient to make the addition of that figure - AT
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• Modeling and TV Commercial Income Classified as Artist Profession u/s 80RR, Deductions Allowed for Dual Roles.

  Case-Laws - AT : Deduction u/s 80RR - income received from modelling and appearing in T.V. commercials could be termed as income derived from the profession of 'an artist' - there was no bar on the part of the assessee to have its second profession as an artist apart from playing cricket - AT
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• Assessee's Cash Basis Interest Income Sparks TDS Credit Dispute; Tax Laws Scrutinize Accrual vs. Cash Basis Accounting.

  Case-Laws - AT : Taxability of interest - assessee was accounting for interest income on cash basis regularly and consistently - Merely because the assessee claimed credit for TDS of interest income which is not assessable as income on accrual basis - AT
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Customs

• Customs Valuation: NIDB Data Insufficient for Enhancing Goods Value Without Clear Evidence on Import Details.

  Case-Laws - AT : Valuation of goods - NIDB data cannot be made the basis for enhancement of value - transaction value cannot be rejected without clear and cogent evidence produced by the department with regard to quality, import of origin and place and time of import - AT
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• Penalty Imposed for Concealing Facts; Demand for Differential Duty Due to Bona Fide Mistake, Not Intentional Evasion.

  Case-Laws - AT : Levy of penalty - concealment of facts or not - what is demanded is only differential duty - matter has been declared in the return - his was a case of bonafide mistake rather than an attempt to evade payment of duty. - AT
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• Goods Returned to SEZ from DTA Meet Initial Permission Purpose, Complying with SEZ Regulations for Authorized Operations.

  Case-Laws - AT : Setup of SEZ - If the goods which were removed from the Zone to the DTA were ultimately received back into the SEZ and were finally used only for SEZ's authorized operation, the object behind the permission stood achieved and fulfilled. - AT
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Service Tax

• Authorities Deny CENVAT Credit Distribution by ISD to Job Worker; Demand Repayment with Interest and Penalties.

  Case-Laws - AT : CENVAT Credit - Input service distributor (ISD) - distribution of service tax credit to the Job worker not allowed - demand with interest and penalty confirmed - AT
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• Court Grants Stay in Service Tax Case on 'Technical Testing and Analysis' Export Services and Reports Sent Abroad.

  Case-Laws - AT : Whether the ‘Technical Testing and Analysis’ Service and resultant report sent abroad can be considered as export of servic - stay granted - AT
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Central Excise

• CENVAT Credit Entitlement Upheld Despite Procedural Lapses if Substantive Compliance is Met; Focus on Compliance Essence.

  Case-Laws - AT : CENVAT Credit where job work formalities was not followed - a substantial benefit of cenvat credit cannot be denied for not following the prescribed procedures - AT
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Case Laws:

• Income Tax

• 2014 (2) TMI 274
  Disallowance of Interest on old outstanding advances – Advances given for bonafide business consideration and commercial expediency – Held that:- Following the decision of the assessee as decided in earlier year the Matter remitted back to the AO for fresh consideration. Disallowance of 1/10th of renovation expenses – Allowability of deferred revenue expenses – Held that:- For allowability of deferred revenue expenditure, there cannot be different decision in every year - The Revenue should either accept the assessee's claim of deferred revenue expenditure and accordingly allow the spread-over of deduction in number of years or reject the assessee's claim and allow the deduction for expenditure in the year in which expenditure was incurred – the order set aside and the matter remitted back to the AO for fresh adjudication and the Decision of CIT Vs. Industrial Finance Corporation of India Ltd. [2009 (9) TMI 877 - DELHI HIGH COURT]. Restriction on account of consultancy charges – Held that:- The Assessing Officer disallowed the entire claim of consultancy charges on the ground that the assessee is not liable to make any payment to International Caterers Pvt.Ltd. because they have not provided any services - Jurisdictional High Court agreed with International Caterers Pvt.Ltd. and held that they provided the services to the assessee and the assessee is liable to make the payment of consultancy charges to them - the decision of Hon'ble Jurisdictional High Court is binding upon the assessee as well as the revenue authorities for computing the assessee's liability in respect of consultancy charges – the CIT(A) rightly allowed the deduction of consultancy charges – the matter remitted back to the AO to allow the deduction of consultancy charges – Decided in favour of Assessee.

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• 2014 (2) TMI 273
  Disallowance of deduction for fees paid to master card – Non deduction of TDS - Held that:- As decided in assessee's own case for ealier years, the deduction can be allowed, only in the year in which the tax has been paid or deducted under Chapter XVII-B - in the assessment year no tax has been deducted while remitting these amounts to companies situated outside India, the first appellate authority was right in upholding the disallowance made by the assessing officer - in the absence of any evidence on record that payee has paid the taxes on the amount paid by the assessee as fee to Master Card – there was no reason to interfere with the order of CIT(A) – Decided against Assessee. Disallowance of Franchise Tax and Pre factural Municipal Inhabitant tax – Held that:- The CIT(A) has already given the direction to the AO to verify the claim and allow the claim on the basis of actual payment in respect of taxes paid relating to assessee’s New York and Tokyo Branch - the sssessee should have no grievance against the order of CIT(A) as CIT(A) has directed the AO to allow claim of the assessee on the basis of actual payment in respect of taxes paid relating to assessee’s New York and Tokyo Branch after verification – Decided against Assessee. Disallowance u/s 14A of the Act – Income as Expenses – Held that:- The disallowance made by the AO by following 12% of the income as expenses is not justified and is not based on any rational basis - the disallowance of 0.5% of tax free income would be reasonable - The order of the CIT(A) set aside on the issue and the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (2) TMI 272
  Assessment of interest income on securities – Held that:- As per terms of securities, the interest became payable to the holder of security and only on the due dates - the interest is not payable to the holder of security on a date other than the one stipulated in the instrument - The right to receive interest on the securities was vested in the assessee only on the due dates mentioned in the securities - income on account of interest of securities for the broken period till the end of the previous year had not accrued to the assessee - The decision in Director (International Taxation) vs. Credit Swisse First Boston (Cyprus) Ltd. [2012 (8) TMI 17 - BOMBAY HIGH COURT] followed - interest from securities for the broken period till the end of the previous year is not assessable in case of the assessee – order of the CIT(A) set aside and the additions made for noth the years are deleted. Disallowance of depreciation on the assets leased – Held that:- It was a case of mere advancing of loan by the assessee to Indo Gulf Fertilizers & Chemical Corporation and there was no genuine leasing of the boiler - no depreciation was allowable in case of the assessee lessor – the order of the CIT(A) upheld. Disallowance u/s 37(1) of the Act - Entertainment expenditure on estimate basis – Held that:- From assessment year 1988-89 there is no provision for disallowance of entertainment expenses - The expenses incurred by the assessee bank on employees during the official visits and in connection with clients and business visitors have to be allowed as incurred wholly and exclusively for business purposes - There is no case made out by the revenue that expenses are not properly vouched - CIT(A) had agreed that expenses were allowable but has restricted the same to 75% when there is no limit provided under the Act – order of the CIT(A) set aside and the claim of the assessee is allowed. Disallowance of loss on unmatured foreign exchange contracts – Held that:- The claim as per the method of accounting is allowed and as per FEDAI guidelines which is allowable – the order of CIT(A) set aside and the claim of the assessee allowed. Reduction of claim of bad debt u/s 36(1)(vii) of the Act – Held that:- The decision in Oman International Bank, SAOG vs. DCIT [2012 (12) TMI 414 - ITAT MUMBAI] followed - The deduction s. 36(1)(vii) is only supplemental in nature inasmuch as it comes to the play only when, and is admissible to the extent, the provision for bad and doubtful debts allowed u/s 36(1)(viia)(b) falls short of the actual bad debts written off as irrecoverable – thus, the AO is directed to allow deduction u/s 36(1)(vii), without taking into account the admissible deduction u/s 36(1) (viia)(b) for the relevant previous year which can only be taken into account for computing deduction u/s 36(1)(vii) for subsequent year(s) – Decided partly in favour of Assessee.

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• 2014 (2) TMI 271
  Stay of demand - Relief / refund where the amount recovered when stay application is pending - Held that:- Relying upon the decision in UTI Mutual Funds vs. ITO [2012 (3) TMI 333 - BOMBAY HIGH COURT ] - No recovery of tax should be made before expiry of the time limit for filing an appeal before the higher forum has expired - When the bank account has been attached the revenue would not withdraw the amount unless it has furnished a reasonable prior notice to the assessee to enable the assessee to seek recourse to a remedy in law - The action of the petitioner revenue in not only attaching the bank account but withdrawing the money from the bank was before the expiry of the time limit for filing appeal was not justfied. The undue haste on the part of the Assessing Officer in recovering a sum of Rs.159.84 crores was not only contrary to the binding decisions of this Court but also shocking to the judicial conscience. No appellate authority and much less the Tribunal can be a silent spectator to the arbitrary and illegal actions on the part of the Assessing Officer so as to frustrate the legal process provided under the Act. In terms of the proviso to Section 254(2A) of the Act, the Tribunal is empowered to grant stay against any demand, pending disposal of appeal before it - The order passed by the Tribunal directing the revenue to refund the amount of Rs.159.84 crores to respondent No.2 was upheld - Decided against petitioner.

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• 2014 (2) TMI 270
  Estimation of gross profit rate - Held that:- The assessee has shown gross profit rate of 17.82% in assessment year 2005- 06 and 10.26% in assessment year 2004-05 - Keeping in view the aforesaid rates of gross profit shown by the assessee itself in preceding 2 years, it is considered proper to direct the Assessing Officer to apply gross profit rate of 11% as against 17.82% applied by him and 8% applied by the CIT(A) - There is bound to be some estimation and guess work when the Tribunal on the basis of the recent rate of return of the assessee’s business in his own case, estimated the GP rate at 11% - Decided against assessee.

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• 2014 (2) TMI 269
  Renewal of registration u/s 12AA - Held that:- The assessee has not responded to the notice issued by the C.I.T. and no books of account were produced for verification - The Tribunal has passed the order without going into the merits of the case - After the order passed by I.T.A.T., the respondent-assessee has approached the C.I.T. and also filed the books of account and other documents for verification - The CIT has passed the fresh order - Decided against Revenue.

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• 2014 (2) TMI 268
  Effect of retrospective amendment in Section 40(a)(ia) of the Act – Held that:- The decision COMMISSIONER OF INCOME TAX Versus OMPRAKASH R CHAUDHARY[2014 (2) TMI 120 - GUJARAT HIGH COURT] followed - amendment to section 40(a)(ia) of the Income Tax Act by virtue of Finance Act, 2010 would apply to pending proceedings also – the question is not required to be entertained. Deletion of disallowance of remuneration paid to partner of assessee – Held that:- The CIT (Appeals) concluded that though initially the partnership agreement did not have a term containing payment of the partners subject to the limits of the Income Tax Act, for the assessment year under consideration, the partners had already entered into a supplementary agreement making such a provision - there was no dispute about the genuineness of the payment and the same was within the limits of section 40(b) of the Act - the Tribunal committed no error in confirming the view of the CIT (Appeals) deleting such disallowance – Decided against Revenue.

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• 2014 (2) TMI 267
  Addition u/s 69B - Held that:- The assessee has submitted year wise details of cost of construction before AO - The books of accounts of the appellant have been produced before the AO during the course of assessment proceedings - The assessee has not hired any architect and constructed building on self supervision basis - DVO has granted deduction of self supervision charges of 5% of the cost of construction - Appellant has carried out construction activity in four assessment years, the DVO has taken CPWD rates, there is no defect in the books of accounts of the appellant and the expenses are supported by proper vouchers and bills - Further reduction of 10% of the valuation arrived by DVO is to be granted - The order of CIT(A) upheld - Decided against Revenue.

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• 2014 (2) TMI 266
  Unexplained investment - Held that:- Merely on the basis of that some figure is written on a piece of paper seized from the premises of the assessee, would not be sufficient to make the addition of that figure in the income of the assessee as unexplained investment - The AO should have placed material on record in support of his contention that the figure represented is not an estimation but it is actual payment of the 'on-money', since the market value of the land in the particular area is higher than the assessee has reflected in his books of accounts - Decided in favour of assessee. Unexplained cash credit - Held that:- Relying upon the decision in CIT vs. Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME Court] - No question of law arises where the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him by furnishing the names, addresses, index numbers of the alleged creditors. In this case, creditors have given confirmation as well as their returns of income were also furnished before the AO - The AO rejected the evidences on the basis that there is a cash deposit of Rs.1 lac before one or two credit entries of loan making to the assessee - The AO has recorded that the loan was provided on 22/11/2006 and on 6/12/2006 and the cash was deposited on 28/09/2006 - The presumption of AO was wrong - Decided in favour of assessee.

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• 2014 (2) TMI 265
  Deduction u/s 35D - Held that:- The ground has not been raised before the CIT(A), it cannot be admitted - No facts and details have been brought on record by the assessee - Decided against assessee. Liability u/s 115JB - Held that:- The assessee, being a banking company, is not exigible to tax under the MAT provisions of Chapter XVII-B - Decided in favour of assessee. Disallowance u/s 14A - Held that:- Rule 8D is applicable from A.Y. 2008-09 - The issue has been restored for fresh adjudication. Book profit u/s 115JB - Held that:- Section 115JB includes within its ambit the companies to which the proviso to section 211(2) of the Companies Act, 1956 is applicable - The amended section 115JB is applicable w.e.f. 01.04.2013 - Decided in favour of assessee.

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• 2014 (2) TMI 264
  Whether share application money received is bogus - Held that:- The assessee has discharged its onus of establishing the identity and credit-worthiness of "SSRCWL" - The assessee has submitted certificate of incorporation, commencement of business, memorandum of association, articles of association and annual report of "SSRCWL" - The AO should have made further inquiries and should have given the copy of statement of Shri Narendra Shah to the assessee along with opportunity to the assessee to cross-examine Shri Narendra Shah - Merely on the basis of statement of a third party, the addition could not be made in the hands of the assessee without allowing opportunity to cross-examine the said person - Decided in favour of assessee.

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• 2014 (2) TMI 263
  Validity of re-assessment u/s 147 - Held that:- Assessee has not claimed any deduction in respect of unpaid sales tax liability of Alpa Marketing Enterprises of Rs. 16,180/- since beginning - The question of any disallowance of this amount or escaping any income from assessment did not arise - The re-opening of assessment was not valid - Decided in favour of assessee. Disallowance of depreciation - Held that:- Assessee has paid Rs. 80 lacs towards intangible assets on acquisition of business of M/s. Alpa Marketing Enterprises - This consideration was paid towards intangible assets on acquisition of business and be considered as the goodwill - Relying upon the decision in CIT vs. Smith Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - Goodwill was an asset as per explanation 3 to Section 32(1) of the Act and therefore depreciation on the same should be allowed - The issue has been restored for fresh adjudication. Non-granting of credit for TDS - Held that:- Income relating to this TDS has been offered in assessment year 01-02 & 2002-03 but TDS certificate was received late - The credit of tax was claimed during the year under appeal - Decided in favour of assessee. Disallownace of interest expenses - Held that:- Funds borrowed by assessee were used by the assessee for business purposes and interest was paid by assessee to the lender and same was offered to tax - The AO has observed the requirement of funds by the appellant - The borrowings so made are represented by the business assets of the appellant, it is not the case that the amount so obtained has been diverted for non-business purpose - The disallowance should be deleted - Decided against Revenue.

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• 2014 (2) TMI 262
  Reassessment u/s 147/148 of the Act quashed - Deletion made u/s 14A of the Act – Proportionate management expenses – Held that:- Without bringing the 154 proceedings to any logical conclusion the assessing officer on the same set of facts and without there being any new information framed another satisfaction that it amounts to escapement of income and issued notice u/s 148 albeit after expiry of 4 years from the end of the assessment year - there is no allegation that there was any failure on the part of the assessee to disclose fully and truly material facts relevant for assessment of his income – the CIT(A) has rightly observed by relying on CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - the reopening of assessment to be bad in law on the count that notice u/s 148 was issued after the time limit of 4 years which was not permissible and there was no allegation in the reasons recorded about the assessee having not furnished any true and full particulars of his income - The action u/s 148 was taken on the same set of facts and evidence on record, without any new information or evidence to sustain a new belief it amounts to change of opinion - Decided against Revenue.

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• 2014 (2) TMI 261
  Addition made u/s 69A of the Act – unexplained money – Held that:- Several transactions through banking channel were carried out in their bank accounts in several lacs to prove that they were regularly getting the amounts on clearance and were withdrawing - it is proved on record that the purchasers were having creditworthiness to make advance with the assessee for purchase of land - The genuineness of the transaction could not be disputed - the assessee has been able to satisfy the conditions of section 69A of the IT Act - advance in the form of cash amount have been shown as receipts from number of parties all residents of New Delhi towards proposed site of flats in city of Jaipur in the residential scheme stated to have been floated by the assessee in the names of Sunder Nagar Scheme and Radha Vihar Scheme - The assessee filed all the affidavits of the depositors confirming the transactions with the assessee, copies of IT returns to show their source of income - The allotment of flats and refund of amount letters were also filed - All the depositors have also confirmed their transactions with the assessee independently through their replies filed u/s. 133(6) of the IT Act - the assessee genuinely entered into the transaction with the buyers – order of the CIT(A) set aside and the addition of 30 lacs deleted – Decided in favour of Assessee.

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• 2014 (2) TMI 260
  Annulment of assessment u/s 153C of the Act – Interpretation of section 153A/153C of the Act - Assessment of income of any other person – Held that:- The documents recovered during the search and seizure operation were not discussed by the Assessing Officer or Ld CIT(A) regarding its nature and belongingness - section 153C is triggered when the documents or any money or bullion belonging to another person is recovered from the premises of person searched and assessment has to be made as per the provisions of the section 153A of the Act - The Assessing Officer has referred to a number of documents which were recovered during search and seizure operations but has not mentioned the nature of documents - The CIT(A) has cancelled the assessments holding that documents did not belong to assessee – thus, the action of CIT(A) in annulling the assessments is not correct and is not as per law – orders of the CIT(A) set aside and the matter remitted back to the CIT(A) for re-adjudication – Decided in favour of Revenue.

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• 2014 (2) TMI 259
  Addition of interest on FDRs – Held that:- The matter requires reconsideration at the level of the AO - the assessee pointed out to the computation of income in which the income from business was shown at Rs. 67,310/- which includes the bank interest of Rs. 44,763/- which is supported by profit and loss account - assessee has shown interest under the head 'business' as well as income from other sources - This point is not examined by the authorities below from the record and there appears some mistake on the part of the authorities below in not appreciating the contention of the assessee – order set aside and the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Addition made in the capital account – Held that:- The issue also requires reconsideration partly at the level of the AO - The assessee pointed out that from the joint account, cheques No. 205279 was credited to the personal account of assessee of Rs. 26,000/- and similarly, Rs. 1,00,000/- was transferred through cheques No. 205280, but the joint account statement shows the amount of this cheques was Rs. 631/- only – order set aside and the matter remitted back to the AO for re-adjudication – Decided partly in favour of Assessee. Addition made u/s 68 of the Act – Unexplained cash credits – Held that:- The amount of Rs. 1,20,000/- was transferred from account of Mrs. Veena Khokha and from her bank account and the amount of Rs. 1,20,000/- was transferred on 04.11.2008 and similarly on 21.03.2009, there was a transfer of Rs. 1,00,000/- through cheques - the assessee submitted that no proper opportunity was given to explain this issue - Considering the bank accounts, the matter requires reconsideration at the level of the AO –the order set aside and the matter remitted back to the AO for re-adjudication – Decided in favour of Assessee. Addition made out of total addition – Held that:- The addition has been correctly made in the matter – assessee pointed out that to show the account of Ankit Khokha from where another deposit of Rs. 1,50,000/- was made on 02.02.2009 - the assessee has not been able to contradict the finding of the ld. CIT(A) that the entry of Rs. 1,50,000/- was not appearing and source of cash deposited of Rs. 25,000/- was not explained - In the absence of any evidence on record to explain both these entries, the ld. CIT(A) was justified in confirming the addition of Rs. 1,75,000 – Decided against Assessee. Computation of LTCG of residential property – Held that:- In the absence of any evidence of cost of construction, no further relief could be given to the assessee - the assessee, however, produced a duplicate copy of the valuation report (unsigned) and requested that the same may be admitted as additional evidence to give benefit of higher cost of construction in favour of the assessee - The request cannot be accepted - It is photocopy duplicate valuation report and is not signed by any person – also, the valuation report cannot substitute actual cost incurred by the assessee towards the construction - In the absence of any proof regarding construction cost of such house and any investment made therein, would clearly disentitle the assessee from any relief – Decided against Assessee. Long term capital gain – Claim of Deduction – Application u/s 154 of the Act pending - Held that:- There is no question for the CIT(A) to have decided the issue of Rs. 20,00,000 - the CIT(A) was not required to adjudicate upon such alleged ground of appeal - The ld. counsel for the assessee further submitted that the assessee has moved application u/s. 154 before the CIT(A) which is still pending - Let the assessee may pursue his application given before the CIT(A) – Decided against Assessee.

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• 2014 (2) TMI 258
  Claim of exemption on award money – Allowance of expenditure – Held that:- The incomes are offered under the head 'income from business or profession', that does not mean that assessee is a professional player - assessee is playing for the country under the aegis of BCCI and he has no individual professional involvement to play in any match as he wish - the findings of the CIT(A) upheld that assessee is not a professional cricketer – Decided against Revenue. Restriction of disallowance u/s 57(iii) of the Act - Expenditure claimed against earning of logo money – Held that:- There was no reason to interfere with the well-reasoned order of the learned CIT(A) -There is no dispute with reference to the Circular of Board which in principle accepted that players have to incur expenditure - Even though the allowance at 75% of receipt by the Circular was withdrawn during the year, considering that assessee has paid about 45% of the amount by way of cheque, the disallowance out of cash expenditure would work out almost 40% of the amount paid in cash – Decided against Revenue. Restriction of disallowance u/s 57(iii) of the Act - Expenditure claimed against earning of match fees – Held that:- AO was not justified in disallowing the entire expenditure on the reason that being a popular cricketer and was also captain of Indian cricket for several years no expenditure would be incurred by the cricketer and all expenses were borne by the BCCI - CIT(A) has erred in restricting the amount to 50% of the claim - in the earlier year also, he has examined the expenditure incurred by the assessee and considered 20% of the amount only to be disallowed - Since assessee has accepted such disallowance in earlier year, it is reasonable to restrict the disallowance to 20% of the claim as in earlier year to be consistent with the facts of the case - the order of the CIT(A) modified and claim of expenditure is allowed subject to disallowance at 20% - Decided partly in favour of Assessee. Deduction u/s 80RR of the Act – Amount received towards advertisement for acting in ad-movies – Held that:- The CIT(A) got carried away by the role of assessee as cricketer - Even though assessee may be reputed cricketer, for acting in T.V./ print media, it requires special talent – Even though he may not be professional cricketer, he can pursue modelling as a professional - the A.O. rejected the claim on the reason that assessee was not a professional cricketer and income from modelling on advertisements was not derived from exercise of his profession – The decision in Sachin R. Tendulkar vs. ACIT [2011 (5) TMI 20 - ITAT MUMBAI] followed - the income received by the assessee from modelling and appearing in T.V. commercials and similar activities could be termed as income derived from the profession of 'an artist' - there was no bar on the part of the assessee to have its second profession as an artist apart from playing cricket – thus, the assessee is eligible for deduction under section 80RR of the I.T. Act – Decided in favour of Assessee.

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• 2014 (2) TMI 257
  Disallowance u/s 14A of the Act r.w Rule 8D of the Rules – Claim of Interest - Earnings of dividend income on mutual fund – Held that:- The decision in Godrej & Boyce Manufacturing Co. Ltd vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - Rule 8D of the Income- tax Rules to be prospective in nature and the assessee's challenge of CIT (A)'s action in increasing the amount of disallowance u/s 14A of the Act without pointing out any valid basis for such further disallowance was upheld – Decided in favour of Assessee. Claim of depreciation – Property used for business purpose – Held that:- The matter remitted back to the AO for fresh adjudication and the assessee has agreed to file evidence of user of the property in question. Capital loss treated as business loss – conversion of investment from stock-in-trade to capital asset - Held that:- For the earlier years also, the Tribunal has upheld the CIT (A)'s direction for treating the loss as a capital loss – Decided against Revenue. Deletion made u/s 68 of the Act - Unexplained credits in bank – Held that:- The CIT (A) correctly arrived at the conclusion that the amount had been received by the assessee company from Hotline CPT Ltd. – it was correctly observed that the amount could not be treated as unexplained cash credit u/s 68 of the IT Act - The department has not been able to successfully refute the well-reasoned findings of fact recorded by the CIT (A) in this regard – Decided against Revenue.

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• 2014 (2) TMI 256
  Dealing in shares - Business income or income from capital gains - Held that:- The intention of the assessee at the time of acquisition should be considered while deciding the nature of income from dealing in shares - No single factor alone can be conclusive guidance for ascertaining the intention of the assessee - Merely because the period of holding was short, it cannot be concluded that the assessee acquired the units and shares with an intention of dealing in those units and shares - There were only 3 or 4 transactions of purchase and sale of units and shares during the entire year, investment in shares and units were made from own funds and not out of borrowed funds, the assessee was engaged in the business of dealing in futures and auctions - The assessee can be said to be investor in shares and the dealer - Decided in favour of assessee. Taxability of interest - Accrual basis or cash basis - Held that:- The assessee was accounting for interest income on cash basis regularly and consistently - Merely because the assessee claimed credit for TDS of interest income which is not assessable as income of the assessee of the year on the basis of consistent and regular system followed by the assessee does not empower the Assessing Officer to change the consistent system of accounting and bring to tax interest income on mercantile basis - As per provisions of section 145 of the Act - The interest income is assessable on the basis of consistent and regular system of accounting either cash or mercantile as regularly followed by the assessee - The order of CIT(A) upheld - Decided against Revenue.

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• 2014 (2) TMI 254
  Disallowance of leaseline charges – Disallowance for non-deduction of TDS – Held that:- The decision in Angel Capital And Debt Market Limited. Versus Assistant Commissioner Of Income-Tax [2008 (5) TMI 294 - ITAT BOMBAY-I] followed – Held that:- The findings of fact recorded by the I.T.A.T. is that VSAT and Lease Line charges paid by the assessee to Stock Exchange were merely reimbursement of the charges paid/payable by the Stock Exchange to the Department of Telecommunication - the VSAT and Lease Line Charges paid by the assessee do not have any element of income, deducting tax while making such payments do not arise. Disallowance of Penalty – Held that:- The decision in Angel Capital And Debt Market Limited. Versus Assistant Commissioner Of Income-Tax [2008 (5) TMI 294 - ITAT BOMBAY-I] followed - The amount paid as penalty was on account of irregularities committed by the assessee’s clients - Such payments were not on account of any infraction of law and hence allowable as business expenditure - the capital market regulations of the stock exchanges were in the nature of indoor management governing relations between the member and the stock exchange and not an offence punishable by the statute - the CIT(A) has rightly deleted the addition – Decided against Revenue. Disallowance u/s 40(ia) of the Act - Transaction charges paid to the stock exchanges - fees for technical services TDS u/s 194J of the Act - Held that:- The decision in Commissioner of Income-tax - 4(3) Versus Kotak Securities Ltd. [2011 (10) TMI 24 - Bombay High Court] followed – The transaction charges paid by the assessee to the stock exchange constitute 'fees for technical services' is covered u/s 194J of the Act and – thus, the assessee was liable to deduct tax at source while crediting the transaction charges to the account of the stock exchange - both the revenue and the assessee were under the bonafide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the assessing officer under Section 40(a)(ia) of the Act in respect of the transaction charges cannot be sustained – Decided in favour of Assessee. Disallowance u/s 14A of the Act r.w. Rule 8D of the Rules – Expenses in relation to income not forming part of total income - Held that:- The decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed – the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act - The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - The matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Disallowance u/s 40A(IB) r.w. Section 88E of the Act - STT paid on behalf of client – Held that:- There was force in the contention of the Counsel for the assessee so far as the treatment of brokerage inclusive of STT – thus, the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee.

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• Customs

• 2014 (2) TMI 288
  Valuation of goods - Enhancement of value of imported PU coated fabric - Held that:- customs has power to reject the transaction value and enhance the assessable value in terms of Customs Valuation Rules. However, such rejection of transaction value and enhancement of assessable value has to be on the basis of some evidences on record. Contemporaneous imports have to be considered with reference to quality, quantity and country of origin with the imports under consideration. It has been held in a number of decisions that NIDB data cannot be made the basis for enhancement of value - transaction value cannot be rejected without clear and cogent evidence produced by the department with regard to quality, import of origin and place and time of import - Following decision of Eicher Tractors Ltd. v. CC [2000 (11) TMI 139 - SUPREME COURT OF INDIA] - Decided against Revenue.

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• 2014 (2) TMI 287
  Levy of penalty - concealment of facts or not - Demand of differential duty - Shortage in inventory - Goods cleared as samples - Exemption under notification 2/95-CE dt. 01-04-95 - Held that:- A question can arise whether declaration of information in the books accounts is sufficient disclosure to the department and whether it can be taken as a case of suppression when the facts are reflected in the balance sheet but not specifically declared to the department - goods were cleared as samples and the position was reflected in the returns filed. Since what is demanded is only differential duty and since there was payment of duty as per notification 2/95-CE, it is apparent that the matter has been declared in the return and hence I am of the view that this was a case of bonafide mistake rather than an attempt to evade payment of duty. Though the Order-in-Original used the expression ‘concealment of facts by way of book adjustment’ the order does not explain what book adjustment was done except to making a provision to reflect the shortage in the financial statement. This action is not an action of suppression but an action to deal with the issue in an open manner. Such approach is confirmed by the fact that they paid duty and interest without any protracted proceedings - No penalty.

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• 2014 (2) TMI 286
  Denial of refund claim - Finalization of provisional assessment - Unjust enrichment - Held that:- consequence arising out of finalization of provisional assessment if results in refund, that shall be allowed suo moto subject to pre amendment and post amendment provision relating to test of unjust enrichment. If the provisional assessment relating to 209 bills finalized by an express order, there shall be no dispute at all since that can be verified from the order assessing finally. But no such order was placed before us to show in clear terms as to finalization of provisional assessment relating to 209 Bills of Entry - appellant failed to show from order dated 10.3.04 that learned commissioner assessed finally 209 bills of entry by that order. Therefore, in all fairness, the matter is remitted to learned adjudicating authority to verify with the co-operation of the appellant as to whether those 209 bills of entry reached to finality by the order dated 10.3.2004 or any other order finalizing provisional assessment was passed - Therefore, appeal is remanded to learned Adjudicating Authority - Decided in favour of assessee.

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• 2014 (2) TMI 285
  Setup of SEZ - meaning and scope of the term additional area - Removal of Goods from SEZ to DTA area for storage without payment of duty under permission - movement of Goods from DTA to another DAT area called Refinery Tank Farm (RTF) was considered as contravention of Rules - Confiscation u/s 111 - Penalty u/s 112 - Imposition of redemption fine u/s 125 - Violation of terms of the permissions granted under Rule 50 (1) (e) of the SEZ Rules, 2006 - Held that:- Notification dated 04.06.2007 should relate back to 19.04.2006. In view of this, the construction activities conducted in the additional area will have to be deemed as carried out within the SEZ. The permission granted under Rule 50 (1) (e) as also the conditions laid down therein will become irrelevant in view of the subsequent action of notifying the additional area as part of the existing SEZ. SEZ Unit is not required to file a Bill of Entry or pay duty on the goods removed temporarily under the above referred rules. The entire purpose of the above-referred rule is to ensure that the goods which are permitted to be cleared to the DTA are returned back to the SEZ, so that they are ultimately used only for the required purpose of undertaking "authorized operation" within the SEZ. The "authorized operation" within the SEZ, insofar as the assessee is concerned, is the activity of refining Crude oil so as to obtain various Refined end-products such as gasoline, diesel etc. If the goods which were removed from the Zone to the DTA were ultimately received back into the SEZ and were finally used only for SEZ s authorized operation, the object behind the permission stood achieved and fulfilled. Steel materials were used for the purpose of construction of storage tanks in the RTF. Such storage tanks were still under construction on 04.06.2007, when the additional land was notified to be part of the SEZ. As such, neither the storage tanks nor the steel materials used for their construction had been used or utilized for any purpose other than the originally contemplated purpose of setting up a refinery in the SEZ. We also take note of the fact that before effecting any removal of goods in terms of the permission granted to it, the Developer had informed the Ministry of Commerce on 03.08.2006 that construction activity was proposed to be undertaken in the additional area. Even in the applications filed by the assessee on 18.10.2006, the fact that construction activity was being undertaken by using the steel materials was disclosed. Since entire operation of the appellant was relatable back to the SEZ notification dated 19.04.2006, therefore, impugned order confiscating the goods, levy of interest and the penalties on other two appellants is not sustainable and is liable to be set aside - Decided in favour of assessee. It cannot be said that there is no machinery to recover the duties of Customs/Central Excise under the SEZ Act 2005 and the Rules made thereunder and the Bond-cum-Legal undertaking, given by the appellants to the authorities implementing the SEZ Act 2005 and the SEZ Rules 2006, is available to enforce the dues if utilization of duty free goods received is not satisfactorily explained and such recovery will not be time barred, However, this power to invoke and enforce the Bond-cum-Legal undertaking, is available only to the appropriate authorities working under the SEZ Act 2005 and the SEZ Rules 2006 and cannot be made use of by other authorities working under the Customs Act, 1962 to demand duties under Section 28 that acts.

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• Corporate Laws

• 2014 (2) TMI 284
  Trademark infringement - Trademark ‘4T PREMIUM’ - Use of deceptively similar trademark - Held that:- A perusal of the product of the Plaintiff shows that it uses the name of its company before 4T PREMIUM, that is, VALVOLINE 4T PREMIUM and not simplicitor ‘4T PREMIUM’. Similarly the Defendant has though used the word 4T PREMIUM however, the container also depicts its logo and the company name AGIP. Packaging and colouring etc. of the two products are totally different - an action for passing off is a Common Law remedy being in substance an action for deceit, that is, a passing off by a person of his own goods as those of another, that is not the gist of an action for infringement. The action for infringement is a statutory remedy conferred on the registered proprietor of a registered trade mark for the vindication of the exclusive right to the use of the trade mark in relation to those goods. It was further held that where the similarity between the Plaintiff’s and Defendant’s mark is too close either visually, phonetically or otherwise and the Court reaches the conclusion that there is an imitation, no further evidence is required to establish that the Plaintiff’s rights are violated. Defendant is using the word “AGIP” and its logo along with “4T PREMIUM” and not simplicitor “4T PREMIUM”. Further even the Plaintiff is using the word “VALVOLINE” with “4T PREMIUM” and not “4T PREMIUM”. In view of the aforesaid discussion, I find no reason to grant interim injunction in favour of the Plaintiff and against the Defendant - Decided against Appellant.

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• Service Tax

• 2014 (2) TMI 298
  Availment of CENVAT CRedit - Whether the appellant is entitled to avail the Cenvat credit of Service Tax paid by them where the invoices stand issue by the Service provider in the address of the appellant's head office - Held that:- where the invoices are in the name of head office or registered office, benefit of Cenvat credit cannot be denied, especially when there is no dispute about the receipt and utilization of Services - Board's Circular No.211/45/96-CX, dated 14-5-1996 clarified that Modvat credit would be available even when the invoices are in the name of Registered Office or Head Office. In the present case, I find that there is no dispute about the receipt of the Services by the appellant in their factory and about the availability of the Cenvat credit - Decided in favour of assessee.

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• 2014 (2) TMI 297
  CENVAT Credit - Input service distributor (ISD) - distribution of service tax credit to the Job worker - Contravention of Rules 2(m) and 7 of CENVAT Credit Rules, 2004 (CCR, 2004) - Invocation of extended period of limitation - Held that:- the question of distribution of credit by M/s. Merck Specialties ltd. to the job-workers does not satisfy the condition that the credit is distributed to its manufacturing units. It is a settled position of law that job-workers who actually undertake the manufacturing process is the ‘manufacturer' of goods and not the supplier of raw materials. It is the appellants who are the manufacturers and not M/s. Merck Specialties Ltd. who has merely supplied the raw materials to be the appellants for the manufacture of the goods. It is also not in dispute that it is the appellants who are discharging the excise duty liability though on the price declared by M/s. Merck Specialties Ltd. The value on which excise duty liability is discharged is not determinative of the liability to pay excise duty or who the manufacturer - The fact that the appellants are independent job-workers and the transactions were on a principal-to-principal basis was not disclosed to the department. Thus, there is a deliberate mis-declaration on the part of M/s. Merck Specialties Ltd. in stating that the units to which they have distributed the credit are their own manufacturing units whereas the facts were otherwise. Similarly, in the declaration made to Dy. Commissioner, Belapur I Division, the appellants did not intimate that they were availing credit in terms of Rule 7 of CCR, 2004. In views of the deliberate mis-statement of facts on the part of the appellants, the invocation of extended period of time is clearly justified. Therefore, the demands are sustainable. Once the invocation of extended period of time is held to be correct in law, mandatory penalty under Section11AC is an automatic consequence. Therefore, the appellants are liable to penalties under Section 11AC of the Central Excise Act, 1944 - once there is a mis-statement of facts or suppression of facts, mandatory penalty is imposable - Following decision of Union of India vs. Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT ] - Decided against the assessee.

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• 2014 (2) TMI 296
  Export of service or not - Whether the ‘Technical Testing and Analysis’ Service and resultant report sent abroad can be considered as export of service or not – Denial of exemption Notification No. 52/2003-Cus and Notification No. 22/2003-CE - Export of Service – Waiver of Pre-deposit - Held that:- The appellants receive chemicals and materials from their parent-company, conduct testing and analysis on the same and send the report electronically to the parent-company - the parent-company receives such chemicals from various clients and sends it to the appellant and ultimately the test reports are given to the service receivers - Prima facie, unless a service receiver receives the test reports, it cannot be said that the activity of provision of service is complete - The activity is complete only when the report is sent, received by the service receiver and further action if necessary is taken by them - the appellant has been able to show a strong prima facie case in their favour and have been able to show that the service rendered by them has to be treated as an activity of export of service – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (2) TMI 295
  Waiver of pre-deposit of service tax - Commercial or Industrial Construction Services - Held that:- Since the appellant is contesting the issue on merits as well as on limitation, we consider the amount of Rs. 31.82 Lakhs deposited by the appellant as enough deposit to hear and dispose the appeal. Accordingly, the application for the waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.

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• 2014 (2) TMI 294
  Demand of service tax - Liability of main contractor - Held that:- service tax demand of Rs.1,56,100/- has become recoverable from the appellant. The stay application is already 11 months old - Law does not postpone recovery when the liability is crystal and for belief of the appellant Revenue cannot be prejudiced. Therefore, we reject the stay application and direct the appellant to deposit entire demand within 4 weeks - Stay denied.

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• 2014 (2) TMI 293
  Stay application - Waiver of pre-deposit - Demand of service tax - Construction of residential complex service - Held that:- Prima facie case not in favour of assessee - Assessee directed to make a pre deposit - Conditional Stay granted.

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• 2014 (2) TMI 292
  Stay - Duty Demand – Interest and Penalty u/s 78 – Assesse was engaged in the business of providing commercial and industrial construction service and also construction of residential complex service – Held that:- The service would be liable to tax depending on the date of providing service and not based on the date of receiving payment or consideration in the form of land – The contention that the huge amount of black money that exchanges hands in land deals and since the so called free construction was done for a party who made land available and not to a totally independent party cannot be accepted. Service tax payable on the owners share of the residential complex – Revenue was of the view that the sale value of land was an artificial value recognized by the State authorities for the purpose of registration and was not the real value of the land - Construction undertaken for the land owner involves service rendered by the assesse to the land owner – relying upon LCS City Makers Pvt. Ltd. Vs CST, Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI ]. Part of the service to the land owners were received in the form of land prior to 01-06-2007 follows – the contention that they started receiving consideration for the service only after 01-06-2007 does not appear to be correct - If liability accrued prior to 01-06-07, the assesse may not be eligible to scheme notified from 01-06-2007 – a person who did not promptly pay tax can be put on a more advantageous position as compared to a person who complied with law cannot be held eligible for benefit of the new scheme as per Rule 3 (3) of Works Contract Rules - a harmonious construction may imply situations - If the demand was confirmed under the construction of complex service as proposed by Revenue as against works contract service adopted by assesse, the assesse may be eligible for the benefit of abatement under Notification No.1/06-ST with suitable adjustment for reversal of CENVAT credit taken. Waivers of pre-deposit – 1crore were ordered to be paid as pre deposit – upon such submission rest of the duty to be waived till the final disposal.

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• 2014 (2) TMI 291
  Waiver of predeposit - General Insurance Service - Denial of CENVAT CRedit - Credit was denied on the ground that the applicant availed credit on the basis of invoices issued by Authorized Service Stations were not in the name of the applicant but were in the name of vehicle owners - Held that:- Tribunal has already granted unconditional stay in M/s CHOLAMANDALAM MS GENERAL INSURANCE CO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, LTU, CHENNAI [2013 (2) TMI 132 - CESTAT CHENNAI] - However assessee is directed to make to pre deposit - Conditional stay granted.

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• 2014 (2) TMI 290
  Waiver of pre deposit - Penalty u/s 76 & 78 - Service tax liability discharged before the issuance of show cause notice - Held that:- appellant herein had collected the service tax leviable on the services rendered by them from their clients but not deposited with the authorities. Appellant had deposited the amount, during the scrutiny of records admitting that they collected the same. At this juncture, we find that the appellant having not deposited the amount collected by them, needs to be put to some condition to hear and dispose the appeal - Conditional stay granted.

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• 2014 (2) TMI 289
  Waiver of pre-deposit of service tax - Availment of CENVAT Credit - Service tax paid on courier charges and on the legal and provisional charges - Held that:- services also include processing of printing of list for EGM etc. - The cenvat credit of the service tax paid by the service provider is an arguable one which can be considered only at the time of final disposal of appeal. Accordingly, we find that the appellant should be put to some condition to hear and dispose the appeal - Conditional stay granted.

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• Central Excise

• 2014 (2) TMI 283
  Waiver of per deposit - Non compliance of Section 35F - Held that:- according to the appellant the requirement of pre-deposit as directed by the Tribunal had been complied with, by way of debiting the amount from Cenvat Credit Account of its Ghaziabad factory and by such an act, the order of the Tribunal for pre-deposit had been complied with. Such a contention is to be determined by the Tribunal and cannot be based upon the mere declaration by the petitioner. Hence, it is necessary to remit the matter back to the Customs, Excise & Service Tax Appellate Tribunal for determination of such an issue - Decided in favour of assessee.

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• 2014 (2) TMI 282
  Condonation of delay in filing an appeal before Commissioner (Appeals) - Bar of limitation - Held that:- If the aggrieved person prefers to file the appeal through courier, the courier does not become the agent of the Commissioner (Appeals). It is only the agent of the aggrieved person, i.e. the appellant. The delay caused in delivering the memo of appeal to the appellate authority would be attributed to the appellant and by no stretch of imagination, the date of handing over documents to the courier would be treated to be the date of delivery of the appeal to the appellate authority - Commissioner (Appeals) has rightly declined to entertain the appeal on the ground that he has no power to condone the delay beyond 30 days and the Tribunal has rightly held that the appeal is not maintainable - Decided against assessee.

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• 2014 (2) TMI 281
  Nature of amount paid during pendency of investigation - whether voluntarily payment towards the duty - Held that:- when the entire demand in the show cause notice was declared to be barred by limitation, the adjudicating authority erred in concluding that the amount already paid was validly paid and was justified on merits. The reasoning is self contradictory. The amount paid was part of duty, demanded in the show cause notice, which was clearly held to be beyond time. Once the demand was held unsustainable, no amount of duty could have been treated as leviable - Decided against Revenue.

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• 2014 (2) TMI 280
  Denial of benefits of Modvat credit - Assessee reversed the credit duty on furnace oil used for generation of electricity supplied to the other units up to August, 2002 by adopting the lowest value of furnace oil procured during the relevant period - Short duty paid - Demand of differential duty - Held that:- the assessee would not be entitled to claim Cenvat credit in case where it sells electricity outside the factory to joint ventures, vendors, etc. - when the electricity generation is a captive arrangement and the requirement is for carrying out the manufacturing activity, the electricity generation also forms part of the manufacturing activity and the “input” used in that electricity generation is an input used in the manufacture of final product. However, to the extent the excess electricity is cleared to the grid for distribution or to the joint ventures, vendors, and that too for a price (sale) the “process and the use test” fails. In such a case, the nexus between the process and the use gets disconnected. In such a case, it cannot be said that electricity generated is “used in or in relation to the manufacture of final product, within the factory. Therefore, to the extent of the clearance of excess electricity outside the factory to the joint ventures, vendors, grid, etc. would not be admissible for Cenvat credit as such wheeled out electricity, cleared for a price, would not fall within the definition of “input” in Rule 2(g) of the Cenvat Credit Rules, 2002 - Therefore, assessee is entitled to credit on the eligible inputs utilised in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to Cenvat credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors, etc., which is sold at a price - Following decision in the case of Maruti Suzuki Limited [2009 (8) TMI 14 - SUPREME COURT] - Decided in favour of Revenue.

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• 2014 (2) TMI 279
  Recovery of MODVAT Credit availed - Availment on inputs used in the generation of electricity and transferred outside the factory premises - Imposition of interest and penalty - Held that:- assessee is entitled to credit of inputs utilized in the generation of electricity only to the extent to which they are used to produce electricity within their factory - definition of “input” brings within its fold, inputs used for generation of electricity or steam, provided such electricity or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time-to-time in favour of its joint ventures, vendors, etc. for a price and has also cleared such electricity in favour of the grid for distribution. To that extent, in our view, the assessee was not entitled to Cenvat credit - Following decision of Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi-III [2009 (8) TMI 14 - SUPREME COURT] - Decided partly in favour of Revenue.

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• 2014 (2) TMI 278
  Availment of CENVAT Credit - CENVAT Credit on furnace oil/ lubricants etc. where job work formalities was not followed - cenvat credit with respect to angles, channels, CTD bars etc. used in the construction inside the factory is admissible or not - Held that:- Cenvat Credit of inputs will be admissible to an assessee when the inputs are sent to a job worker and after undertaking the required manufacturing processes the final products can also be cleared on payment of duty from the premises of the job worker subject to imposition of certain conditions. The only irregularity committed by the appellant was that they did not follow the prescribed procedures. It has been a settled position of law now that a substantial benefit of cenvat credit cannot be denied for not following the prescribed procedures when it is not disputed that inputs on which credit is taken have been utilized for manufacture of final product on which Central Excise Duty has been paid/payable. Cenvat credit with respect to inputs, sent to the power plant by the clinker unit for generation of electricity sent to grinding unit, can not be denied to the appellant for not following the prescribed procedures of Rule 4(5)(a) and Rule 4(6) of the Cenvat Credit Rules 2004 which allowed the appellant to send the clinker to grinding unit under job work and then clear the finished goods from the job worker’s factory premises when diversion of inputs/electricity is not alleged by the Revenue. Appeal filed by the appellants with respect to cenvat credit taken on structural items, electricity supplied to DMW plant used for supplying de-mineralized water to Gujarat Water Board and electricity supplied to residential colonies of the appellant is rejected. Appeal of the appellant with respect to Credit of inputs used for generating and supplying electricity to the grinding unit of the same group companies is allowed. As the issue of admissibility of cenvat credit on this inputs in the present proceedings was highly contentious and debatable this case is not fit for imposing penalties upon the appellant where credit is disallowed and are accordingly set aside - Decided in favour of assessee.

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• 2014 (2) TMI 277
  Denial of Modvat credit - Denial relates to a diesel engine which was a bought out item requiring affixture thereof to the alternator for removal of the total D.G. Set which is composed of alternator as well as diesel engine - Revenue held that the diesel engine not being used for manufacture, Modvat credit to above extent is not permissible - Held that:- If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods - appellant shall cooperate with the ld. adjudicating authority for verification of evidence relating to the claim of credit - Upon verification of the entry, the appellant shall be allowed the benefit of Modvat credit - Decided in favour of assessee.

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• 2014 (2) TMI 276
  Denial of CENVAT Credit - Interest under Rule 14 of the Cenvat Credit Rules, 2004 - Penalty under Rule 15(1) Cenvat Credit Rules, 2004 - Revenue denied credit because Cenvat Credit of Service Tax paid on GTA Services from the place of removal is not admissible - Held that:- Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service - Following decision of UOI Vs. Ind- Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court) decided against the assessee. Regarding penalty - Held that:- Appellant was under the bonafide belief that Cenvat Credit is admissible on GTA Services. As there is no indication of suppression with intention to evade any Service Tax, therefore, penalty is not attracted in this case under Rule 15 of the Cenvat Credit Rules, 2004 - Decided in favour of assessee.

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• 2014 (2) TMI 275
  Valuation of goods - Inclusion of escort charges, erection and commissioning charges - Held that:- Charges in respect of escort and supervision of erection and commissioning are after the clearance of goods and this issue is now settled by the decision of CCE vs. Puissance DE DPK, Pondicherry reported in [2013 (7) TMI 564 - CESTAT CHENNAI]. The Tribunal after taking into account the earlier decision held that these charges are not to be added in the assessable value of the goods - Decided against Revenue.

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• 2014 (2) TMI 255
  Stay - Valuation - Carbon-di-oxide were sold to TAC at a lower price than the one sold to SICGIL - Held that:- processes of CO2 supplied to TAC and SICGIL are different. However, this will be considered at the time of appeal hearing. We find that applicant already paid a sum of Rs.24,27,310/- as per earlier stay order of the Tribunal. In view of that, we direct the applicant to make a further deposit of an amount of Rs.10,00,000 within 8 weeks. Upon such deposit, predeposit of balance duty along with interest and penalty is waived and its recovery is stayed during pendency of the appeal - Conditional stay granted.

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• CST, VAT & Sales Tax

• 2014 (2) TMI 300
  Rejection of books of accounts - Discrepancy in books of accounts and actual stock - First appellate authority deleted adjudication based on estimation and reduced penalty amount - Joint Commissioner set aside that order and uphold original adjudication - Held that:- a perusal of the order reveal that while upholding the actual suppression, the First Appellate Authority pointed out that the slips recovered during the inspection and the entries in the slips did not contain specific dates of the transaction and therefore, it could be construed for the whole period and not for any particular period, thus, giving benefit of doubt, the further addition was cancelled; on the aspect of stock discrepancy too, the First Appellate Authority cancelled the addition. The Joint Commissioner, while revising the order had not stated any specific period for the slip to fix it with any particular year for consideration; except for the view expressed to disagree with the findings of the Appellate Assistant Commissioner - here are no grounds shown to uphold the order of the Joint Commissioner and there are no grounds for sustaining further addition by way of estimation - Therefore, we set aside the order of the Joint Commissioner and restore the order of the Appellate Assistant Commissioner - Decided in favour of assessee.

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• 2014 (2) TMI 299
  Sales exemption - Whether in the facts and circumstances of the case, the Tribunal was legally justified in interfering with the orders of the First Appellate Authority by allowing the claim of second sale exemption when the assessee failed to establish the entries of the bills supporting the alleged purchase of goods from the registered dealers - Held that:- Going through the order of assessment as well as the order passed by the Appellate Authority, when the assessee had acted on the representation of the vendors and that at least in one case, the registration itself was cancelled subsequent to the assessment order, we do not find any justifiable ground to interfere with the order of passed by the Sales Tax Appellate Tribunal - Decided against Revenue.

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