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TMI Tax Updates - e-Newsletter
March 10, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Payment is on account of compensation not to M/s. Khaitan & Co. but to M/s. Services & Supplies India and this is not a legal fee necessitating deduction of tax at source as prescribed u/s. 194J of the Act. Once the provisions of section 194J of the Act are not attracted, the disallowance cannot be made u/s 40(a)(ia) - AT
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All the four items, namely - Custom duty/expenses on importing of free samples; Consultancy charges; Cost of material used for in-house development transferred from Raw material cost; and Cost of direct labour transferred from labour cost - are in the nature of revenue expenses. - AT
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Payments were made to individual models for a shoot carried out in Nepal. The said payments were not chargeable to tax in India as per the DTAA between India and UK and there is no tax at source. Thus, the provisions of Section 40(a)(i) were not applicable - AT
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Short credit of the tax deducted at source - Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee's claim/s. - AT
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Deduction u/s 10B - manufacturing of testing of equipment - manufacturing of assembling the plants which are disassembled for exports - exemption allowed - AT
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Registration u/s 12A in favour of the assessee is in force. Merely because the copy of the registration u/s 12A is not available with the assessee and the revenue department is not able to trace the file and the copy of the registration, it cannot be said that the assessee is not eligible for recognition u/s 80G - AT
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Interest u/s 234B - shortfall in TDS deduction at the payer's end - shortfall in advance tax at assessee's end - payee/deductee whose payments have already been subjected to TDS provisions cannot be held liable to pay consequential interest u/s 234B - AT
Customs
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Classification of goods - Merely because the import is from same supplier and the weight of the rim is identical to the weight of present rim, will not make them the rims of commercial vehicles instead of rims of harvester combine - AT
VAT
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Exemption u/s 3F of CST - The State legislature cannot by law, treat sales outside the State and sales in the course of import as 'sales' within the State by fixing the situs of sales within its State in the definition of 'sale' as it is within the exclusive domain of Parliament to fix the location of sale by creating legal fiction or otherwise - HC
Case Laws:
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Income Tax
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2015 (3) TMI 237
Deletion of penalty levied under section 271AA - transfer pricing adjustment disallowance - Non maintenance and furnishment of the required documentation in accordance with section 92B r/w rule 10D - Held that:- it is an admitted fact that the assessee has filed its audit report in Form no.3CEB, highlighting the international transaction and has also done the bench marking of the arm’s length price in relation to the transaction undertaken with the A.E. and how such bench marking has been done after following the most appropriate method. The assessee had submitted its transfer pricing documentation vide letter dated 30th July 2010, before the Assessing Officer as well as before the Transfer Pricing Officer. The statement explaining the self–adjustments done by the company was also furnished which has been reproduced by the Transfer Pricing Officer in his order. The assessee has also complied with all the notices sent by the Transfer Pricing Officer which is evident from the Transfer Pricing Officer’s order where it is mentioned that the assessee has attended from time–to–time in respect to the notice and also submitted clarification and documents. The learned Commissioner (Appeals) has also examined the requirement of each and every clauses of rule 10D, and has come to the conclusion that clause by clause documentation required under rule 10D, has been made by the assessee not only in its transfer pricing study report but also in the documents filed before the Transfer Pricing Officer. Thus, we do not find any infirmity in such an order of the learned Commissioner (Appeals) - Decided against Revenue.
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2015 (3) TMI 236
Disallowance u/s 40(a)(ia) - non deduction of TDS on rent paid to Kolkata Port Trust - Held that:- CIT(A) has deleted the disallowance for the reason that the payments made to Kolkata Port Trust do not attract the TDS provision. For this, he observed that "I find that the Kolkata Port Trust is under the Ministry of Surface Transport, where in the Govt. of India has full beneficial interest. Therefore, any payment made to Kolkata Port Trust will be covered u/s. 196 of the I. T. Act, 1961 and as such assessee's appeal on this ground is allowed." We find that the findings of CIT(A) is totally perverse and against law for the reason that the TDS from rent payment to Kolkata Port Trust is liable to TDS u/s. 194-I of the Act. Kolkata Port Trust is assessable entity within the provisions of Income Tax Act and it is not Government itself. It is a Corporate entity assessable to tax. Once the payment of rent on account of warehouse by the assessee was made to Kolkata Port Trust and is claimed as expenditure, the same is liable for TDS u/s. 194-I of the Act, for which the assessee has not deducted any TDS. The disallowance made by invoking the provisions of section 40(a)(ia) of the Act by the AO is within the provisions of law. Hence, we restore the disallowance and the order of CIT(A) is reversed - Decided in favour of Revenue. Non deduction of TDS for payments were towards the settlement of legal disputes with Services & Supplies India for which, during the pendency of settlement M/s. Khaitan & Co. - Held that:- Payment of ₹ 769746/- for legal settlement with Services & Supplies India that these payments were towards the settlement of legal disputes with Services & Supplies India for which, during the pendency of settlement M/s. Khaitan & Co., a law firm acted as sole arbitrator and held the money in Escrow account with them. We find that on settlement of dispute the sum of ₹ 769746/- was paid out of the Escrow Account to M/s. Services & Supplies India as compensation. This payment is on account of compensation not to M/s. Khaitan & Co. but to M/s. Services & Supplies India and this is not a legal fee necessitating deduction of tax at source as prescribed u/s. 194J of the Act. Once the provisions of section 194J of the Act are not attracted, the disallowance cannot be made by invoking the provisions of section 40(a)(ia) of the Act. - Decided against Revenue.
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2015 (3) TMI 235
Addition on account of arm’s length price (ALP) adjustment - Held that:- CIT(A) has granted the impugned relief by making adjustments, on account of capacity underutilization, in the results shown by the tested party and thus computing hypothetical financial results which the tested party would have achieved in perfect conditions. Such an exercise, in our humble understanding of law, is impermissible. As is the undisputed legal position, such comparability adjustments can only be made in the comparables and not the tested party itself. It is specifically provided in Rule 10B (1)(e)(iii) that adjustments for variations, which could materially affect the amount of net profit margin in the open market in comparable uncontrolled transactions, are to be made in respect of net profits realized by the comparable transactions or enterprises. Learned CIT(A) was thus clearly in error in proceeding to make capacity underutilization adjustments in the profits earned by the assessee. As the assessee does not have the liberty to work for any other customer, and is wholly dependent on its AE for productive use of its capacity to work, the AE should normally make good any losses to the captive unit caused by its not being able to make use of the available capacity. In the case before this, the AE has indeed given some financial support to the assessee which has been reduced from the ALP adjustment figure, and the business rationale of AE’s extending financial support to the assesse is thus not in doubt. However, there is nothing on record to show how this financial support has been computed and is on what ground, and on what basis, this financial support is given. The reason for underutilized capacity and the facts regarding financial support extended to the assessee are not clear from the material on record. Learned CIT(A) has granted the impugned relief merely by making capacity underutilization adjustments to the profits achieved by the tested party, but then such an approach, as we have noted earlier, is wholly unsustainable in law. - Matter remanded back - Decided in favour of Revenue.
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2015 (3) TMI 234
Disallowance of depreciation - Revaluation of stock - Method of calculation - Held that:- The assessee company having followed consistent policy of claiming of depreciation on loose tools every year below ₹ 10,000/- by charging to P&L account and the same is allowable as deduction. In the assessment year under consideration the assessee quantified the total loose tools at ₹ 3,30,09,993/-. Out of this, the tools which cannot be traceable or lost, which works out to ₹ 95,65,385/- and the same was charged to P&L account. Accordingly, the ld AR pleaded before us that this method has been following consistently and it is not claiming the deprecation rather revalued the stock at the end of each year and it has followed the same method of valuing the stock at market price or cost whichever is less as the loose tools are stock–in-trade. In our considered opinion the method followed by the assessee is correct considering the actual stock of loose tools as stock-in-trade, which is acceptable method in accordance with accounting Policies. Accordingly, we do not find any reason to interfere with the order of the CIT(A), which is confirmed. - Decided against Revenue.
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2015 (3) TMI 233
Disallowance of R&D expenses - Capital expenditure or Revenue Expenditure - Held that:- Assessee is a company in existence for last more than twenty years doing the same business. During the year under consideration it incurred the expenditure on R & D for developing prototypes of the products to be supplied to specific customers strictly as per the specifications and samples given by them. It is further a matter of record that if the prototype so developed does not conform to the samples supplied by the customer, no orders can be expected, in which case the expenditure so incurred on developing the prototypes constitutes a sheer loss. It is still further relevant to note that the manufacturing of products from such developed prototypes was meant only to the customers who had given sample and the products so manufactured could not be sold to anyone else. These facts clearly indicate that it is not the case that the assessee set up its business for the first time on the basis of prototypes developed by spending on R&D during the year in question. It is in the same business for more than two decades. The expenses incurred by the assessee during the year under consideration were only to conform to the specifications of customers so as to get the supply orders in the regular course of business. Further such prototypes were of limited use meant only for manufacturing the products for a specific customer. All the four items, namely - Custom duty/expenses on importing of free samples; Consultancy charges; Cost of material used for in-house development transferred from Raw material cost; and Cost of direct labour transferred from labour cost - are in the nature of revenue expenses. No shred of such expenses can be construed as capital expenditure. The fact that the assessee incurred total R&D expenses as above has not been disputed by the AO. Rather, the undisputed nature of such expenses has been reproduced in the assessment order. The above discussion shows that the assessee incurred R&D expenses in relation to its business and these were of the revenue nature. Going by the mandate of section 35(1)(i), such amount is eligible for deduction - Decided against Revenue.
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2015 (3) TMI 232
Penalty u/s 271(1)(b) - Non appearance in assessment proceedings - Non service of notice - Held that:- One of the notices was returned by the postal authorities for want of delivery, the other notice was delivered under the acknowledgement which does not bear the seal or name of the recipient. Further, the assessee explained before the Assessing Officer in the penalty proceedings that the notice allegedly served at the address 319, Marathon Max, Mulund (West), Mumbai was not received by the assessee because the assessee hired the said premises for a short period and subsequently cancelled the lease agreement. The notices sent at the Bandra address of the assessee were not at all served to anybody and therefore there was no service on the assessee. - reasons explained by the assessee for non appearance before the Assessing Officer in the assessment proceedings as reasonable cause as none of the notices were properly served to the assessee so as to cause the appearance before the Assessing Officer in the assessment proceedings. Accordingly, in the facts and circumstances of the case and in the interest of justice, we are of the view that the case of the assessee falls under the reasonable cause as contemplated under section 273B of the Income Tax Act and consequently penalty levied under section 271(1)(b) is deleted. - Decided in favour of assesse.
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2015 (3) TMI 231
Reopening of the assessment u/s 147/148 - Change of opinion - Held that:- Commissioner of Income Tax has called for the record of this assessment order dated 05.10.2007 and after show causing the assessee u/s 263, had found the order not only erroneous but also prejudicial to the interest of the revenue and had directed the A.O. to revise his order. But the A.O. failed, inadvertently, to give effect to the revisional directions and the same became time barred. This fact has remained uncontroverted, rather, is found to be correct. Having found that, we have further noticed that the A.O. has issued notice u/s 148 after recording same reasons as were the grounds of revision in the notice issued u/s 263 of the Act by the Commissioner. Thus, it becomes clear that with the object of correctlinghis mistake the A.O. has taken the route of re-assessment. We have found it for a fact that no new material came to the possession of the A.O. The assessee had disclosed all the facts of his case fully and truly. No authority can be allowed to take a benefit of its mistakes. The provisions of the Act are very clear. These are not to be carried out simultaneously. It would amount to misuse of the provisions of the Act in case we accept the contention of ld. D.R. that the A.O. can put into use all the provisions of the act at his sweet will. This is not the intention of the legislation. The A.O. has, in fact, not applied his mind to form his opinion regarding the escapement of income. - notice issued u/s 148 in this case as invalid and quash the re-assessment order being ab-initio void - Following decision of CIT vs M/s. Vardhman Industries [2014 (6) TMI 223 - RAJASTHAN HIGH COURT] - Decided in favour of assesse.
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2015 (3) TMI 230
Undisclosed stock - Admission of alternate plea regarding making an addition after telescoping and taking the peak value of the negative stock - Held that:- No fault can be found from ld. CIT(A) in accepting the assessee's alternate plea of peak valuation of negative stock. The ld. Counsel for the assessee could not improve his case from the level of the ld. CIT(A) i.e. in respect of two instances. The stock discrepancy is not satisfactorily explained. In these circumstances, we uphold the order of the ld. CIT(A). - Decided against Revenue.
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2015 (3) TMI 229
Deduction u/s 36(1)(viia) - Calculation of correct amount of deduction available to the assessee bank towards provision for bad and doubtful debts - Held that:- aggregate average advances made by the rural branches have to be computed by taking the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year. Thus, it is clear that there is no provision to consider only the advances made during the year under consideration. It is the funding of the Assessing Officer that the assessee has furnished the working as per Rule 6ABA. It is not in dispute that the working is as per Rule 6ABA but the Assessing Officer seems to have interpreted the provision not warranted by law. - computation made by the assessee is as per law and the Commissioner of Income-tax(Appeals) has rightly upheld the computation made by the assessee against the deduction towards provision for bad and doubtful debts - Decided against Revenue. Treatment of the reserve brought down by the assessee and credited in its profit and loss account - much amount of reserve was not necessary to be retained - Held that:- at the first instance when the amounts were transferred to reserve as well as at the second instance when such amounts are taken out of the reserves and brought back to the profit and loss account, the transfers were only in the nature of appropriation. The earlier appropriation entry of transferring a portion of the profit to the reserves is reversed by passing a subsequent appropriation entry of transferring the amounts from the reserves to the profit and loss account. Thus, appropriation entries and transfers of funds do not affect the computation of taxable income of the assessee bank either at the time of first appropriation or at the time of second appropriation. Therefore, the view taken by the lower authorities that the credits found in the profit and loss account, as a result of reversal of the reserves is in the nature of taxable income, is not correct. It is not sustainable in law. In that way, the lower authorities are proposing to tax an amount, which has already been suffered tax. It results in double taxation, which is not permissible in law. Lower authorities have made a finding that the assessee bank has not placed before them the appropriate details regarding the transfer and re-transfer out of the reserves and they were not in a position to verify the nature of entries passed by the assessee in the profit and loss account. Therefore, we direct the assessee to furnish before the Assessing Officer the year-wise details of crediting and debiting the reserve account through profit and loss account from year to year. The assessee is also directed to produce before the Assessing Officer the computation statements of income-tax to prove that the amounts transferred to the reserve account have already been suffered tax and the assessee has not claimed any deduction for such amount in computing the taxable income of the respective assessment years. For this limited purpose of verification of details, the file is remitted back to the Assessing Officer. - Matter remanded back - Decided in favour of assessee.
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2015 (3) TMI 228
Disallowance of interest - Held that:- addition is wholly unjustified. The balance sheet of the assessee P.B.37 shows that assessee has capital of ₹ 56,37,092/- and apart from the same the assessee has also sufficient liquidity in the form of sundry creditor of ₹ 1,20,83,648/- on which no interest was payable and was also available for investment, sundry debtors and other assets. if there were funds available both interest free and overdraft/loans taken, then the presumption would arise that investments would be out of interest free funds generated or available with the company, if the interest free funds was sufficient to meet the investments. In this case, this presumption was established considering the finding of fact both by the learned CIT(A) and the Tribunal. Interests were deductable all these decisions support the case of the assessee. The A.O. has not proved any nexus between the borrowed funds and interest free loans given - it is clear that assessee has sufficient capital, profit and interest free funds available with him for the purpose of giving interest free loans to the above person. Therefore, proportionate disallowance of interest is wholly unjustified. Disallowance in respect of depreciation and vehicle expenses for personal use - A.O. disallowed 1/5th of these expenses for personal user of the car - CIT(A) restricted the same to 1/8th of the expenditure - Held that:- personal user of the car cannot be ruled out being the assessee individual, however, the disallowance is reduced to 1/10th of the total claim. Disallowance of telephone travelling staff welfare, sales promotion and Diwali expenses - Held that:- According to A.O., these expenses are not fully supported by the vouchers and mostly vouchers have been produced, therefore, expenses were not subject to verification. 1/5th of the expenses were disallowed which were modified and reduced by the learned CIT(A) to 1/8th of the expenditure. Considering the explanation of the parties, we find that the addition is justified on this issue, however, the addition is reduced to 1/10th of the total claim - Decided partly in favour of assesse.
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2015 (3) TMI 227
Exemption u/s 10(23C)(iiiae) - Deduction u/ 11(2) - set off unabsorbed deduction - Delay in filing declaration in Form 10 - Held that:- time limit for giving notice for accumulation is extended upto the completion of assessment order. This legal fact is found supported by the judgement of the Hon'ble Apex Court rendered in the case of CIT Vs. Nagpur Hotel Owners Association [2000 (12) TMI 99 - SUPREME Court]. Further, the Hon'ble Jurisdictional High Court in the case of CIT Vs. Anjuman Moina Fakharia [1993 (10) TMI 51 - RAJASTHAN High Court]. In the given case, obviously the assessment was completed on 20.12.2011. The Form No. 10 was admittedly filed before the A.O. on 7.10.2011 which is much before the completion of the assessment order u/s 143(3) of the Act. Thus, in view of the above stated dictum of the Hon'ble Jurisdictional High Court and that of the Hon'ble Apex Court the A.O. cannot deny deduction u/s 11(2) of the Act to this assessee. Therefore, we confirm this finding of the ld. CIT(A). Further, the assessee-society has claimed exemption u/s 10(23C)(iiiac) of the Act and not u/s 10(23C)(iiiae) of the Act as the receipts of the assessee-society are from treatment given to the persons suffering from illness on charitable considerations. The assessee society is substantially found financed by the State Government, which fact has been verified by the A.O. and has not been rejected by him. The State Government employees are executive office bearers of the society and its doctors, nurses and other staff are paid by the State Government itself. Further, set off of unabsorbed depreciation carried forward from earlier years could be allowed from income from other sources even if the assessee had no income falling u/s 28 of the Act. Accordingly, the entire addition made by the A.O. have been correctly deleted by the ld. CIT(A) - Decided against Revenue.
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2015 (3) TMI 226
Benefit of tonnage tax scheme - Held that:- ship operated by the assessee M.V.Gem of Ennore transporting thermal coal from one location to another location within the country is a qualifying ship under section 115VD of the Income Tax Act, 1961 and the assessee is entitled for the benefit of tonnage tax scheme provided under section XII C of the Act. Following decision of assessee's own previous case [2011 (7) TMI 1017 - ITAT CHENNAI] Disallowance under section 14A - Held that:- Following decision of Varun Shipping Co.Ltd. [2011 (11) TMI 370 - ITAT MUMBAI] - order of the Commissioner of Income Tax (Appeals) on this issue is upheld - Decided against Revenue.
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2015 (3) TMI 225
Transfer Pricing Adjustment - AMP expenses - Held that:- There is a merit in the contention of the ld. AR that the selling commission and discount etc. should be excluded from AMP expenses for working out the TP adjustment, if any. The Special Bench in LG Electronics India (P.) Ltd. (2013 (6) TMI 217 - ITAT DELHI) has specifically dealt with this issue in para 18 of its order and held that the sales specific expenses such as commission and discount etc. should not be included within the overall AMP expenses for processing them u/s 92 of the Act. Following the Special Bench decision, we hold that the selling expenses and discount paid by the assessee should be excluded from the total of AMP expenses and thereafter a fresh determination should be made for ascertaining the extent of TP adjustment, if any, in accordance with the directions given by the Special Bench in the case of LG Electronics India (P.) Ltd. (supra). - Matter remanded back - Decided in favour of assesse. Non recording of transactions in books of account - assessee explained that the PAN of the assessee company got reported against this expenditure incurred by Mr. I. Rahumathullah, who was earlier working for the assessee and after leaving the assessee, joined M.J. India - Held that:- relevant material on record we find that the said Mr. I. Rahumathullah categorically admitted the version stated by the assessee. There is further corroboration of this version from Citi Bank, a copy of which has been reproduced in the direction of the DRP. These facts amply prove that the credit card with the PAN of the assessee was actually used by its former employee, who admitted this fact. Further in view of the fact that the bank has also supported the version of the assessee, we are unable to see as to how any addition can be made in the hands of the assessee. This addition is directed to be deleted - Decided in favour of assesse.
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2015 (3) TMI 224
Section 201, read with section 191 of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay (Penal interest) - Assessment year 2009-10 - Assessee-bank filed its e-TDS statement - TDS officer observed that assessee bank had short deducted tax at source on interest paid and held assessee to be in default under section 201(1) and 201(1A) - Assessee-bank submitted that payees had already included such interest in their respective total incomes and paid tax thereon - Whether in view of Hindustan Coca Cola Beverages (P.) Ltd. v. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA], if payees had included interest income earned from assessee-bank in their total income and paid tax thereon, assessee could not be considered as in default in terms of section 201(1) - Held that:- It is further relevant to note that Explanation to sec. 191 now makes it unequivocal that where the person who is required to deduct any sum in accordance with the provisions of this Act does not deduct or after so deducting fails to pay, or does not pay the whole or any part of the tax as required by or under this Act, he may be deemed to be an assessee in default within the meaning of Sec. 201(1) in respect of such tax, if the deductee has also failed to such tax directly. Thus it is obvious that the person responsible for deduction of tax at source on an income paid can be considered as in default only where the payee has not paid any tax on such income. To put it simply, if the payee has paid tax on such income, then the payer cannot be considered as the assessee in default. The insertion of this Explanation by the Finance Act 2008 with retrospective effect from 1.6.2003 is the reiteration of the mandate laid down by the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA). In the light of the above discussion, we set aside the impugned order and send the matter back to the A.O for necessary verification. The assessee is directed to produce the relevant evidence in support of its contention that all the payees included such interest income in their total income and paid tax thereon. In so far as the question of interest u/s 201(1A) is concerned, the same is chargeable for the period between the date on which tax was deductible till the date on which the tax was actually paid by the payee notwithstanding the fact that the payee ceases to be an assessee in default for the purpose of Sec. 201(1) - Decided in favour of assessee.
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2015 (3) TMI 223
Disallowance of depreciation - Non maintenance of logbook - Held that:- When the assessee has given vehicles on hire through hire agreement, there is no question of maintenance of any logbook or vouchers for expenses as is noted by the authorities below. The details have to be verified from the hire agreements before arriving at the just decision in the matter. The ld. CIT(A) failed to consider the same and also failed to pass any reasoned order. We, accordingly, set aside the order of the ld. CIT(A) and restore this issue to his file with the direction to re-decide this issue by passing speaking order and giving finding on the hire agreements. The ld. CIT(A) shall give reasonable sufficient opportunity of being heard to the assessee. Disallowance of interest - assessee claimed interest as revenue expenditure against vehicle receipts - no evidence of interest payment was furnished - Held that:- Since the assessee is using these taxis for hire, therefore, interest was allowable deduction. The ld. CIT(A) without giving any reasons for decision, confirmed the addition, holding that no evidence has been filed. It, therefore, appears that this issue also requires re-consideration at the level of ld. CIT(A). The assessee is using taxis for hiring and claimed interest paid to the bank for loan taken against purchase of vehicle given on hire. Therefore, these facts should have been verified from the record and the hiring agreements etc. The ld. CIT(A) did not pass any speaking order on this issue and no reasons have been given for confirming the addition. We accordingly, set aside the order of the ld. CIT(A) and restore this issue also to his file with direction to re-decide this issue by verifying the fact and by giving reasons for decision in the appellate order. Disallowance of rent paid for vehicle - Disallowance on the reasons that though the assessee paid rent but no single penny has been debited against fuel expenses - Held that:- The AO did not realize the fact that the assessee has handed over the keys of these taxis to the hirers and all the expenses are born by the hirers. Since the rental income is accepted, therefore, the rent paid should not have been disallowed. Similarly, the ld. CIT(A) without giving any reasons for decision rejected the claim of assessee. The AO also without any reasons should not have mentioned the agreement to be sham. When vehicles have been given on hire, there is no question of maintaining the records as was claimed by the AO. The ld. CIT(A), therefore, should have verified all the transactions in detail and the agreements in question and should have pass the reasoned order on the same. We accordingly, set aside the order of the ld. CIT(A) and restore this issue also to his file with direction to re-decide this issue by verifying all the facts and by giving reasons for decision in the appellate order. Assessee challenged the addition of ₹ 1,50,000/-. The AO noted that the assessee has received ₹ 1,50,000/- being Sahmatikarta No. 2 in respect of one property deal between Raj Kumar Samadhiya and Others and Smt. Priti Pawaiya and others (seller and purchaser) plot No. 28/2505 size of 2850 sq. feet. The sellers paid entire amount of ₹ 24 lacs during the year and as such, ₹ 1,50,000/- were received by the assessee in the year under appeal, but has not offered for taxation. The addition of ₹ 1,50,000/- was accordingly made. The assessee claimed before the ld. CIT(A) that the addition of ₹ 1,50,000/- relates to assessment year 2009-10. Therefore, no addition could be made in the assessment year under appeal. The ld. CIT(A) on examination of the material before him found that the assessee has received the income during the assessment year under appeal, i.e., 2008-09 and accordingly, the addition was confirmed. - Therefore, the assessee being party to the deal and the agreement, would have received ₹ 1,50,000/- being Samatikarta No. 2. Since the receipt of ₹ 1,50,000/- relates to the assessment year under appeal, therefore, the addition of the same was correctly made in the assessment year under appeal - Decided partly in favour of assessee.
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2015 (3) TMI 222
Diallowance u/s 40(a)(i) - disallowance of production expenses - Held that:- expenditures were incurred on production of films. The genuineness of expenditure was not doubted. The CIT(A) also observed that AO has not cited a single instance of non-variable expenditure where self made vouchers existed. Without giving any cogent reason he has restricted the disallowance to 50% of what the AO has made. Since the expenditure was incurred for the purpose of business, considering the similar issue decided by the Tribunal in assessee's own case in earlier and keeping in view the totality of the facts and circumstances of the case, we direct the AO to restrict the disallowance to the extent of 5% of only those expenditure which have been incurred in cash as held by ITAT in assessee's own case in [2013 (11) TMI 309 - ITAT MUMBAI]. Payment was for shoot carried on abroad in course of Fast Time's Business and Fast Time has no Permanent Establishment (PE) in India, hence, its profit is taxable only in Thailand as per Article 7 of DTAA between India and Thailand. There is no dispute to the fact that the shoots were held abroad and that Fast Time Ltd. did not have any PE in India. Alternatively, the payments made for shooting, hence, the same was in respect of professional services rendered in abroad. Hence, Article 14 of DTAA will be applicable. Thus, considering the Article 14 and 7 of DTAA, we do not find any merit in the disallowance so made by the CIT(A). Payments were made to individual models for a shoot carried out in Nepal. The said payments were not chargeable to tax in India as per the DTAA between India and UK and there is no tax at source. Thus, the provisions of Section 40(a)(i) were not applicable. Since these payments for professional services of artists, therefore, covered by the Article 15 of the DTAA between India and UK. The CIT(A) has wrongly applied Article 23, which can be applied only for taxing an income i.e. not dealt with the other articles specifically. Similar proposition has been laid down by the ITAT Mumbai Bench in the case of Channel Guide India (2012 (9) TMI 95 - ITAT MUMBAI). We found that in respect of similar payments made to models from Germany, the CIT(A) has accepted the argument that no TDS was to be done on those payments. Accordingly, we do not find any merit in the disallowance made by the CIT(A) under Section 40(a)(i) - Decided partly in favour of assessee.
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2015 (3) TMI 221
Short credit of the tax deducted at source - Held that:- Though Form 26AS (r/w r.31AB and ss. 203AA and 206C(5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee. The assessee, by furnishing the TDS certificate/s bearing the full details of the tax deducted at source, credit for which is being claimed, has in our view discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee's claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee's claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably armed by law therefor. The plea that the deductor may have specified a wrong TAN, so that the TDS may stand reflected in the account of another deductee, is no reason or ground for not allowing credit for the TDS in the hands of the proper deductee. The onus for the purpose lies squarely at the door of the Revenue. - firstly, no infirmity attends the impugned order in-as-much as we subscribe to and endorse the directions by the ld. CIT(A) in the matter, i.e., in principle. However, as explained here-in-above, the Revenue is obliged to grant the assessee credit for the TDS of which he is able to satisfactorily prove to the A.O. the factum of deduction of tax at source and its deposit to the credit of the central government, subject of-course to the conditions of sections 198 and 199. The A.O. is accordingly directed to allow the assessee credit for the impugned shortfall, subject to the said verification/s and condition/s - Decided in favour of assesse.
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2015 (3) TMI 220
Deduction u/s 10B - Held that:- As for the disallowance of the assessee's claim for deduction under S.10B of the Act, the Assessing Officer disallowed the same, for want of approval of the Board/Ratification by Inter-Ministerial Standing Committee appointed by the Ministry of Industry, Department of Industrial Development as envisaged in clause (iv) to Explanation 2 to S.10B of the Act. It was the contention of the assessee that corresponding claim having been accepted in the preceding years, there is no justification for the disallowance in the year under appeal. Observing that principle of res judicata does not apply to the proceedings under Income-tax Act, in which each year is an independent unit of assessment, the CIT(A) sustained the disallowance made by the Assessing Officer. In the absence of anything to the contrary brought on record by the assessee, we do not find any justification to interfere with the orders of the Revenue authorities on this aspect. Claim u/s 10A - Held that:- It has been averred that the CIT(A) in the course of appellate proceedings, enquired with the officials of the assessee company, whether they could furnish the report in Form 56F if the matter was remanded to the file of the Assessing Officer for examination of alternative claim of the assessee under S.10A of the Act, and the said enquiry by the CIT(A) was responded by the officials in affirmative. Considering totality of facts and circumstances of the present case, and following the consistent view taken by the coordinate benches of the Tribunal, we find that the CIT(A) was not justified in declining to admit the additional grounds raised by the assessee with regard to alternative relief under S.10A of the Act. We accordingly set aside the impugned order of the CIT(A), and restore the matter to the file of the Assessing Officer with a direction to examine afresh the alternative claim of the assessee under S.10A of the Act - Decided in favour of assesse.
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2015 (3) TMI 219
Deduction u/s 10B - manufacturing of testing of equipment - Held that:- Tribunal in the order [2013 (9) TMI 197 - ITAT DELHI] as referred by the Ld. CIT(A) has elaborate referred to the facts and circumstances of the case and has concluded that assessee was engaged in the manufacturing of assembling the plants which are disassembled for exports. Considering these facts, the Tribunal affirmed the Ld. CIT(A)’s order. We find that the aforesaid decision of the Tribunal is also applicable in this assessment year - Decided against Revenue.
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2015 (3) TMI 218
Application for recognition u/s 80G - Receipt of donations - Registration u/s 12A - Held that:- assessee is a charitable organization and is carrying on charitable activities and it has been allegedly granted registration u/s 12A of the Act, as far back as 1988-89. The subsequent events such as the assessee filing returns as charitable organization before the DIT(E) and the revenue department accepting such returns, goes to prove that the registration u/s 12A is in force. Even the order of the DIT(E) did not raise any objection as to the furnishing or non-furnishing copy of the registration u/s 12A of the Act. Pursuant to the direction of the Tribunal that the activities of the assessee of agitating for cause of the trade and commerce are not in violation of the provisions of section 80G(5)(vi) of the Act, we find that the DIT(E) has granted recognition u/s 80G of the Act to the assessee. We find that all these circumstances go to prove the contention of the assessee that registration u/s 12A in favour of the assessee is in force. Merely because the copy of the registration u/s 12A is not available with the assessee and the revenue department is not able to trace the file and the copy of the registration, it cannot be said that the assessee is not eligible for recognition u/s 80G of the Act. Matter remanded back - Decided in favour of assesse.
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2015 (3) TMI 217
Interest u/s 234B - shortfall in TDS deduction at the payer's end - shortfall in advance tax at assessee's end - Held that:- Admittedly, the fact remains that qua 'fee for technical services', the assessee's status is only that of a payee. The payer turns out to be its subsidiary company. We find that case law Madras Fertilisers Ltd. (1983 (9) TMI 74 - MADRAS High Court) holds that in case of TDS deduction, the payee concerned need not pay advance tax and interest u/s 234B of the Act. Their lordships have observed that in case interest is levied in such a payee's case; it would lead to double levy of interest qua the same income. Similarly, the hon'ble Delhi High Court Jacabs Civil Mitsubishi Corpn. case (2010 (8) TMI 37 - DELHI HIGH COURT) observes that in case of a payer-payee relationship, the payee concerned is not absolved from the tax liability in case of shortfall in TDS deduction. However, in such a case, interest liability u/s 234B cannot be fastened to the payee. Similar principle stands echoed by the full bench of hon'ble Uttarakhand High Court Maersk Co. Ltd. (2011 (4) TMI 886 - Uttarkhand High Court). Thus, the net conclusion which flows from the aforesaid case law is that a payee/deductee whose payments have already been subjected to TDS provisions cannot be held liable to pay consequential interest u/s 234B of the Act. - Decided in favour of assesse.
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2015 (3) TMI 216
Capital receipt or revenue receipt - Excise duty refund - Held that:- Following the decision of the Coordinate Bench of this Tribunal as extracted above as it is noticed that the ld. CIT(Appeals) has followed the decision of assessee’s own previous case, the finding of the ld. CIT(Appeals) stands confirmed - Decided against Revenue.
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Customs
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2015 (3) TMI 246
Confiscation of goods - duty is sought to be recovered from so many persons without ascertaining or apportioning the duty amount in respect of each person - Duty is sought to be recovered on joint and several basis - Held that:- It is a settled position in law, that duty cannot be demanded on joint and several basis. The liability of each person has to be determined separately and therefore, the impugned order is clearly unsustainable in law. Therefore, the matter has to go back to the adjudicating authority for fresh consideration for determination of the facts as to who is the person responsible for payment of duty in respect of each bill of entry. If more than one person is found to be responsible, then the liability of each person has to be determined separately. Thereafter, the adjudicating authority has to consider the roles played by others to see that if they are liable to any penalty under the provisions of the Customs Act. - Matter remanded back - Decided in favour of appellants.
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2015 (3) TMI 245
Waiver of pre deposit - Differential duty - Penalty u/s 114A - benefit of the notification No. 01/2011-CE dated 01/03/2011 as amended by notification No. 16/2012-CE dated 17/03/2012 - Held that:- goods are manufactured under customs bond and when cleared from the customs bond, custom duty rates are applicable. Notification No. 01/2011-CE dated 01/03/2011 as amended by notification No. 16/2012-CE dated 17/03/2012 prescribed an excise duty rate of 2% adv on the goods subject to the condition that no cenvat credit of duty paid on inputs or input services has been taken under Cenvat Credit Rules, 2004. This condition stipulated in the Notification clearly shows that the rates are prescribed for domestically manufactured products/goods and does not apply to imported goods as the condition cannot be satisfied by the manufacturer abroad. Therefore, the imported goods will not be eligible for the aforesaid exemption. As the goods are manufactured in customs bond are treated on par with the imported goods, the appellants are not eligible for the aforesaid exemption. This Tribunal's decision in the case of Priyesh Chemicals & Metals (2000 (5) TMI 72 - CEGAT, NEW DELHI) supports this view. Accordingly, we are of the considered view that the appellant has not made out a prima facie case for complete waiver of pre-deposit of the dues adjudged against them - Partial stay granted.
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2015 (3) TMI 244
Confiscation of goods - Redemption fine - Imposition of penalty - denial of DEPB - Misdeclaration of goods - Held that:- Four items were sought to be exported. The first item is unstitched suit pieces "Poly/Cotton Blended" with embroidery" and the second item is "Unstitched pieces (poly/cotton blended)". The test memo is for one sample per memo. The description of goods in the test memo also refers to Unstitched suit pieces which indicates what was sent for testing was only the second item because the first item relates to "Unstitched suit pieces with embroidery. The test memo does not refer to the word "Embroidery' at all. Therefore the fact that the test reports indicate that two samples were tested, only means that two pieces, namely the top and bottom of the same suit piece were tested. No evidence has been shown to contradict this. It appears that the adjudicating authority himself was not sure whether the testing was for 2 items out of 4 items mentioned in the invoice or for two pieces of the same item. Therefore, the benefit has to go to the appellants and I hold that only the second item was found to be mis-declared and the DEPB amount is to be amended only for the second item. Redemption fine and personal penalty reduced - Decided partly in favour of assessee.
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2015 (3) TMI 243
Suspension of CHA licence - Non submission of copies requested by appellant - Non completion of enquiry proceedings - Held that:- As per the provisions of Regulation 20 of CBLR, 2013, time-limits have been prescribed for completing the enquiry proceedings. A time-limit of 90 days have been prescribed for issue of notice from the date of receipt of an offence report; another 30 days time has been given to the CHA to file reply to the notice; another 90 days time to the inquiry officer to complete the inquiry report; another 30 days for the CHA to make his submission against the inquiry report. Thus, overall a period of 9 months has been prescribed for completing the inquiry proceedings and passing of an order under the provisions of law. The CBEC also, vide Circular No. 9/2010 dated 08/04/2010 has reiterated that these time-limits should be adhered to. This Tribunal also in the case of Bombay Shipping Agency has held that, if the inquiry is not completed within the stipulated period, the suspension need not be continued. In spite of such time-limits prescribed, the Customs authorities have not taken up the matter with any seriousness. There is no provision in the CBLR, 2013 or in the authority. Inasmuch as 15 months has passed since the passing of the suspension order and the Customs authorities have not bothered to complete the inquiry within the stipulated period of 9 months, we are of the considered view that this suspension need not be continued and the CHA should be allowed to function in this capacity. However, the Customs authorities are at liberty to complete the inquiry proceedings as early as possible. - Appeal disposed of.
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2015 (3) TMI 242
Classification of goods - misdeclaration of goods - Held that:- Entire case of the Revenue is based upon description of the goods made in the subsequent bills of entry filed on 15.5.2007. Inasmuch as the description for the said bills of entry was found to be wrong, which was based upon the Chartered Engineers certificate, Revenue arrived at a finding that the description in the earlier Bills of Entries were also wrong. We note that at the time of clearance of goods in terms of earlier Bills of Entries, the same were put to first check examination - samples were taken and referred to some Chartered Engineer M/s. Varun Chandok. As per his report dated 8.3.07, the goods were examined, market survey was undertaken and were found to be wheel rim of harvester combine. He has also opined about CIF value of the goods as also quality and condition of wheel rim and agreed with the value declared by the importer. The goods were cleared only after the first examination report as also the opinion of the same Chartered Engineer. - In the above scenario, the Revenue’s contention that the earlier imports were also of wheel rims of commercial vehicles cannot be appreciated. Merely because the import is from same supplier and the weight of the rim is identical to the weight of present rim, will not make them the rims of commercial vehicles instead of rims of harvester combine, especially when the same chartered engineer has examined the earlier imported goods and have conducted market inquiry and found the same to be wheel rims of harvester combine, the Revenue’s endeavor to change the classification of the goods earlier imported by changing the description, is neither justified nor warranted. - Decided in favour of assessee.
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Corporate Laws
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2015 (3) TMI 241
Winding up application - Disputed questions of fact - Held that:- The proceedings of winding up are summary proceedings under Sections 433-434 of the Companies Act. The court in a petition seeking winding up of a company would not go into disputed questions of fact which may require the parties to lead evidence. There is a dispute whether the Petitioner is liable to pay any rental or pay rental till November 2012 or till November 2013 or for the 36 month lock in period. The position that emerges is that the security deposit and advance rental already paid do not cover the entire period upto November, 2013 and, as such, there is no admitted amount that can be held to be admittedly due as payable by the respondent to the Petitioner.Since the petition involves disputed questions of fact and the defence raised by the Respondent is not moonshine, the parties would have to have them settled before the appropriate civil forum.The petition seeking winding up of the respondent company is thus held not to maintainable. - Winding up petition dismissed.
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2015 (3) TMI 240
Application for proposed Scheme of Amalgamation under Section 391 & 394 of the Companies Act, 1956 - Regional Director observation regarding absence of dissolution clause in scheme , compliance of AS-14 issued by ICAI with Section 2(43) of the Companies Act, 2013 , Computation of share exchange ratio and Appointment date - Affidavit submitted for compliance of observations Held that:- In view of the approval accorded by the shareholders of the Petitioner Company, Representation/Report filed by the Official Liquidator and the Regional Director, Northern Region and the submissions of the Petitioner Company, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956. The Petitioner Company will comply with the statutory requirements in accordance with law. - Scheme of Amalgamation approved.
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Central Excise
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2015 (3) TMI 256
Waiver of pre-deposit - whether the appellant is liable to pay Central Excise duty of ₹ 1,12,369/- demanded under Section 11A of the Central Excise Act, 1944.with interest and imposition of penalty under Rule 25 of the Central Excise Rules, 2002, for mis-classification of Modified Tamarind Kernel Powder (hereinafter referred to as MTKP) - Held that:- order of the lower authorities as regards the classification of the excisable product MTKP is correct to the extent that it falls under chapter 1302.3900 as has been decided by the Tribunal in assessee's own previous case [2012 (7) TMI 748 - CESTAT, NEW DELHI]. To that extent, appeal filed by the appellant is liable to be rejected and we do so. As regards the demand of duty for the goods which were cleared from the factory premises, we find that Revenue has no case inasmuch as it is undisputed by both the lower authorities that quantity of 16000 Kgs stand exported and the documentary evidence has been accepted as to the export of such goods. It is settled law that in case the goods are finished and exported, the question of demand of duty does not arise. To that extent the impugned order confirming demand of duty and interest thereof is unsustainable and liable to be set-aside and we do so. - Since there is no duty liability that can be fastened on the appellant, we do not find any reason for visiting the appellant with any penalty, more so under Rule 25 of the Central Excise Rules, 2002. To that extent the impugned order is liable to be set-aside. - Decided partly in favour of assessee.
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2015 (3) TMI 255
Mandatory equivalent penalty - Suppression of facts - Excisability of ‘sludge’ and ‘pulper waste and refuge’ - Held that:- Following decision of assessee's own previous case [2014 (4) TMI 416 - CESTAT NEW DELHI] - Decided in favour of assesse.
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2015 (3) TMI 254
Waiver of pre deposit - appellants were receiving certain motor parts from one of their suppliers namely M/s. Spicer India Ltd., Pantangar on which duty was payable by the appellants on further clearance - Held that:- It is seen that the report received from the Central Excise Authority mentioned earlier does not disclose on what evidence the report is based. On the other hand, the appellants have contended that the said supplier in Uttarakhand supplied the goods in packed condition with MRP affixed thereon. The appellants have produced a written document signed by the appellants and the said supplier (i.e M/s. Spicer India Ltd.) which clearly laid down the procedure for Uttarakhand vendors for supplying goods to the appellants. As per the said document M/s. Spicer India Ltd. are required to supply the goods in packed condition with proper MRP affixed thereon. Seen in this context, the appellant’s contention that the basis on which the report from the Central Excise officer of Uttarakhand is made is not disclosed assumes significance with regard to its inadmissibility as an evidence of any value. - appellants have been able to make out a good case for waiver of pre-deposit. We accordingly waive the pre-deposit and stay the recovery of the impugned duty, interest and penalty during the pendency of the appeal. - Stay granted.
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2015 (3) TMI 253
Waiver of pre deposit - Inclusion of value of the free supplied item i.e. stack in the value of the final product - Held that:- Admittedly stack are being supplied by the principal M/s. Leroy Somer India Pvt. Ltd. at Noida under the job work Challan, issued under Rule 4(5) of the Cenvat Credit Rules. After fixing the stacks in the Bodies of the Industrial Alternators, the goods are being returned to the principal, who further uses the same in the manufacturer of their final product and the duty is being paid by the principal manufacturer on the full value. The provisions of Rule 4(5) of the Cenvat Credit Rules 2004 allows movement of the goods on job work basis, under the job work Challan. As such, at this prima facie stage, we are of the view that the appellant has a good case in its favour so as to allow the stay petition unconditionally. - Stay granted.
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2015 (3) TMI 252
Discharge of SAD on the goods cleared to D.T.A - Levy of 4% SAD on clearance of goods from 100% EOU - Held that:- The appellants are export oriented unit and are eligible clear goods to DTA on payment of appropriate duty. In the case in hand, it is undisputed that appellants had discharged appropriate Central Excise duty on the goods cleared to their sister unit located in D.T.A. They had not discharged SAD on the premise that transactions between sister unit cannot be considered as sale transaction. demand on the ground that the assessee has not paid Service Tax would require the assessee to pay SAD, has been negatived - Following decision of M/s Micro Inks Ltd vs CCE&ST, Daman [2014 (2) TMI 207 - CESTAT AHMEDABAD] - Decided in favour of assessee.
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2015 (3) TMI 251
Difference between export and deemed export - Held that:- There is no law to advance such proposition. Ld. Commissioner (Appeals) in para-11 of his order has given his reasoning stating that he has not found deemed export and export to be different - Decided against Revenue.
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2015 (3) TMI 250
Waiver of pre-deposit of tax - excisability of spent solvent/sludge - Held that:- Following decision of CCE, Chennai Vs. Tamil Nadu Petro Products Ltd. [2007 (7) TMI 460 - CESTAT, CHENNAI] - After considering the duty amount and we waive the pre-deposit of duty along with interest and penalty and stay its recovery till the disposal of the appeal - Stay granted.
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2015 (3) TMI 249
Waiver of pre-deposit of duty interest and penalty - clandestine removal of goods - there is excess electricity consumption - Held that:- when the examination has been conducted in the factory of the applicant, and duty has been arrived at during the impugned period on the basis of electricity consumption, production has been made by the applicant and same has been cleared without payment of duty. In these circumstances, applicant has failed to make out a case for 100% waiver of pre-deposit. Accordingly, I direct the applicant to pay 50% of the duty within eight weeks and report compliance on 09.06.2014. On such compliance, balance amount of duty, interest and penalty shall remain waived during the pendency of the appeal. - Partial stay granted.
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2015 (3) TMI 248
SSI Exemption - Exemption on plastic bottles - Held that:- Counsel submits that vide Notification No. 10/2013-CE(NT) dated 2.8.2013, retrospective exemption has been provided for clearances of plastic containers and plastic bottles meant for use as packing material by the person whose brand name such goods bear for the clearances from 10/06/2003 to 26/02/2010 and the period in the present dispute is covered by the Notification. Further she also submits that in the case of Ajay Plastics vide [2015 (1) TMI 295 - CESTAT BANGALORE] this Tribunal had considered the same issue and allowed the appeal finally while considering the stay application itself - Decided in favour of assesse.
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2015 (3) TMI 247
Determination of value to be adopted for payment of duty on petroleum products sold through COCO (Company Operated and Company Owned) - Revenue has taken a view that provisions of Rule 7 of Central Excise (Valuation) Rules, 2000 would be attracted - Held that:- Following decision of CCE, Visakhapatnam vs. BPCL: [2012 (12) TMI 471 - CESTAT, Bangalore] and BPCL vs. CCE, Chennai [2009 (9) TMI 845 - CESTAT CHENNAI] - Decided in favour of assesse.
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CST, VAT & Sales Tax
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2015 (3) TMI 260
Levy of interest - Held that:- It will be apparent from a reading of the said provision that the repeal of the Agricultural Income Tax Act, 1950 did not affect the previous operation of the said Act or anything done or any action taken, including any notice, order issued in exercise of any power conferred by or under the said Act and the same was deemed to have been done or taken in exercise of the powers conferred by under the 1991 Act. As already noticed, in the instant case, the proceedings that were initiated in terms of the 1950 Act were continued under the 1991 Act and Ext.P1 assessment order was passed only on 27.3.1993, after the coming into force of the new Act. Thereafter, pursuant to a modification of the completed assessment, a modified assessment order was passed on 8.10.1998. It was still thereafter, pursuant to the appellate proceedings before the Appellate Tribunal, that Ext.P2 revised assessment order dated 24.5.2006 was passed which levied interest on the tax amount that was found due and payable by the petitioner for the assessment year 1988-89. It needs to be noted that at the time of passing Ext.P2 revised assessment order, the provisions providing for the levy of interest, for a delay in payment of tax, had already come into force through the 1991 Act. Further, by way of the transitional provisions contained in the 1991 Act, all proceedings initiated under the earlier enactment had to be deemed as proceedings under the later enactment for the purposes of assessment and recovery of tax. In that view of the matter, therefore, the levy of interest for the period from November, 1998 to May, 2006, when Ext.P2 order was passed, cannot be said to be illegal. Reference to sub section (5) of Section 99 is only in respect of arrears pursuant to assessments that were concluded prior to the coming into force of the 1991 Act. The said provision is an enabling provision that enables the State Government to recover taxes, that became due and payable under the earlier enactment, subsequent to the repealing of the said enactment and the passing of the new enactment. In the case of proceedings that were pending at the time of coming into force of the 1991 enactment, it is the provision of sub section (1) of Section 99 that would apply, to deem those proceedings as proceedings under the 1991 Act for the purposes of assessment and effecting recovery of tax thereafter. In that view of the matter also, I am of the view that the levy of interest on the amounts found due and payable by the petitioner in the instant case cannot be found fault with. While finalising the assessment, the respondents had issued a demand notice demanding the balance tax that was found payable by the petitioner consequent to the assessment. Thereafter, when modified orders were passed, including the levy of interest, the order specifically indicated that the demand notice already issued to the petitioner would stand modified to take into account the modifications effected in the modified order. This admittedly included the interest component as well. As the petitioner does not deny having received the original demand notice, it will not be open to him to contend that there was no demand notice in respect of the interest subsequently levied since it was made known to him, through the modified order, that the demand notice earlier issued would also stand modified accordingly. Resultantly, I do not find any reason to interfere with Exts.P6 and P8 orders passed by the respondents - Decided against Appellant.
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2015 (3) TMI 259
Exemption u/s 3F of CST - Authority took the view that the contract for transfer of right to use machines was executed at Kanpur, which is a separate transaction, and import of machine from outside of the State is a separate transaction. The dealer transferred the machine with right to use the same at Kanpur on a lease rent of ₹ 5457837/- per quarter, which being independent transaction is taxable under Section 3F of Act, 1956 - whether transaction in question of dealer is taxable under Section 3F or the dealer is entitled to exemption under Section 3F(2)(B)(1) of Act, 1956. Held that:- A simple reading of the Section 3F clearly show that it is transfer of right to use any goods in the State which is the taxable incident under the aforesaid provisions. However, this aspect has been considered by a Constitution Bench of Apex Court with respect to similar statutes of various States including the State of U.P., Therefore, it would be useful to look into the aforesaid decision, namely, 20th Century Finance Corporation Ltd. and another Vs. State of Maharashtra, AIR 2000 SC 2436. After addressing entire history of certain amendments in the constitution, as also State Legislation in respect of sale or purchase of goods, the Court observed that, by virtue of entry 92-A, List 1, Seventh Schedule of the Constitution, the Parliament has power to legislate in regard to taxes on sales or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. Article 269 provides for levy and collection of such taxes. Vide Article 286 (1) of the Constitution, the State legislature is precluded to make law imposing tax on the transactions of transfer of right to use any goods where such deemed sales takes place (a) outside the State and (b) in the course of import of goods into the territory of India. There are some other limitations on the taxing power of the State legislature by Article 286(3) of the Constitution. In respect to inter-State trade or commerce the situs of sale or purchase is wholly immaterial. The State legislature cannot by law, treat sales outside the State and sales in the course of import as 'sales' within the State by fixing the situs of sales within its State in the definition of 'sale' as it is within the exclusive domain of Parliament to fix the location of sale by creating legal fiction or otherwise. The situs of sale can only be fixed by the appropriate legislature. Tribunal has considered the question whether there was any inside sale or not, in the light of relevant facts and applying the dictum laid down and discussed above, has found that no transfer of right to use the goods had taken place inside the State of U.P. and on the contrary, it has taken place outside U.P., which view, I find myself in entire agreement. Learned Standing Counsel could not point out any manifest, legal or otherwise error in the view taken by the Tribunal, so as to persuade the Court to take a different view. I, therefore, find no justification to interfere with the view taken by the Tribunal in the impugned order. - Decided against Revenue.
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2015 (3) TMI 258
Classification - petitioner's contends that the thermoplastic road marking material is classified for the Central Excise under entry 38069090, and accordingly the same would fall under entry 145 for the purpose of VAT Act - Held that:- Unless anything there is inconsistent under the notification with respect to any commodity, the description of such commodity for the purpose of central excise would be accepted. We notice that the same product "rosin and resin acids and derivatives thereof; rosin spirit and rosin oils; run gums" is classified under entry 38.06 under Central Excise Tariff Act. We notice that the manufacturer from whom the petitioner procures such product, classifies the product for the purpose of central excise under entry 38069090. This is also the classification and description, the petitioner's invoices contained. - Thus, there is sufficient material for the petitioner to contend prima facie that its declaration of the product falling under entry 42A of the II Schedule is correct. The tax already collected is sufficient to meet with the petitioner's tax liability. - Resultantly, the subsequent orders insisting on providing Bank Guarantees for lifting such orders would also be rendered invalid. The respondents shall release the Bank Guarantees - Petition is disposed of.
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2015 (3) TMI 257
Condonation of delay - Inordinate delay of 1710 days in filing the Tax Appeal - Held that:- ordinarily the Court while considering the question of condonation of delay would take into account sufficiency of the cause in explaining the delay caused in filing the proceedings and once being satisfied with sufficiency of the cause explained, it would not travel to the merit of the matter. However, there is no prohibition in the Court touching the merit of the case while considering the question of delay. In the instant case, as could be noticed from the explanation rendered by the applicant, we could notice that much delay has been caused at the end of the Government Pleader’s Office. - It is explained by the applicant petitioner that though the Tax Appeal was required to be filed on or before 12.11.2008, due to the limitation of the administrative mechanism, the appeal was filed belatedly and delay of nearly 1710 days was caused. Mr. Gandhi, when specifically queried, admitted that due to inadvertence the delay was caused at the office of the Government Pleader only. Determination the Entry under section 80 of the Gujarat VAT Act , which attains finality once the Tribunal holds that the transaction is not the transfer of right to use the produce with which the respondent deals with and once this transactions are held not taxable under the Gujarat VAT Act, the State would be permanently debarred from the collecting tax from the respondent - explanation rendered in the form of administrative clearance and the consumption of time at the office of the Government Pleader for preferring appeal as also considering the substantial question of law raised in the present Tax Appeal, we are of the opinion that the issue involved would have far reaching effect as the determination order under section 80 of Gujarat VAT Act attains finality and thus it will be a permanent loss to the exchequer, if the order is not permitted to be challenged by way of Tax Appeal and it is not a question of any conjuncture or presumption to hold that large amount of the revenue is at stake. Resultantly, this Civil Application requires to be considered and is allowed. Considering the cumulative aspects discussed hereinabove, while condoning the delay of 1710 days, the applicant is directed to pay cost of ₹ 25,000/- to the respondent within the period of 4 weeks - Delay condoned.
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Indian Laws
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2015 (3) TMI 239
Applicability of Section 34 of SARFAESI Act - Civil court not to have jurisdiction in those cases which are pending with Debt recovery tribunal - Held that:- We are of the view that the Civil Court jurisdiction is completely barred, so far as the “measures” taken by a secured creditor under Sub-Section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal to determine as to whether there has been any illegality in the “measures” taken.” A perusal of the plaintiff shows that in the suit the plaintiff is seeking to challenge measures that had already been taken by the bank. The respondent bank refer case law Jagdish Singh [2014 (3) TMI 73 - SUPREME COURT] in support of his contention that the suit is barred under section 34 of SARFAESI Act. The plaintiff is not remediless. In fact, the plaintiff has filed an appeal under Section 17 of the SARFAESI Act. The said appeal is pending. In view thereof, the suit is barred by law and stands dismissed. - Decided against the appellant.
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2015 (3) TMI 238
Sale of property under SARFAESI ACT, 2002 - Commercial Transaction - Proceeding pending before Debts Recovery Tribunal - Refund of purchase price with reasonable interest - Held that:- The writ petitioners have put in a sum of ₹ 1.21 crores with the respondent authorities. The respondent authorities have put up the property for sale in exercise of powers under the SARFAESI Act, 2002. The respondent authorities have conducted the sale in its usual course of business. The transaction, therefore, can only be commercial. The writ petitioners are therefore, entitled to refund of the purchase price together with reasonable interest thereon. The respondent authorities did not put up the property for sale on the condition that, the possession of the property will be made over only after completion of the proceeding before Debts Recovery Tribunal with regard to the property or that the purchase price will not be refunded till disposal of any SARFAESI action. In such circumstances, the respondent authorities are directed to refund the sum of ₹ 1,21,00,000/- to the writ petitioners within a period of seven days from date together with interest calculated at the rate of 12 % per annum on and from the date of receipt of the purchase price until the full payment thereof is made to the writ petitioners. Such rate of interest is awarded keeping in view that, the nature of transaction between the parties is commercial. - Decided in favour of appellant.
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