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TMI Tax Updates - e-Newsletter
March 11, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Undisclosed income - on occasions such as marriage the parents and parents-in-law of a bride do normally gift jewelery to the bride. On occasion such as this, it is not possible to expect the bride to ask for evidence of bills/invoices to support the purchase of the jewelery. One has to proceed on the basis that it is genuine. - HC
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Restructuring of the Income Tax Department challenged - If a rational and reasonable balance is struck in the modality adopted for restructuring, the judiciary would loathe interfere with such process, primarily because such restructuring; including the manner in which the restructuring is to be done; is a matter purely in the realm of administration - HC
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Apportionment of expenses - revenue has not pointed out any item which has been incurred for Parwanoo business and charged to non-Parwanoo business so as to increase the profit of the Parwanoo business which may result in higher deduction u/s 80IB of the Act - AT
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Undisclosed incomes - Presumption u/s 292C - assessee having miserably failed to point out with reference to each of the entries in the seized diary as to how it does not give rise to income, the assessee cannot take a valid plea that he disowned the diary - AT
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Claim of deduction u/s 43B in respect of Purchase Tax payable - AO to verify whether the said purchase tax payable by the Assessee got converted into loan as per the Industrial Policy before the date of filing of the return - AT
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TPA - income of section 10A unit has to be excluded at source itself before arriving at the gross total income, hence, question of setting off of loss against such profits of 10A units will not arise. Assessee’s claim of set off of losses of the STPI Unit against other income has to be allowed - AT
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Revision u/s 263 - Company has not commenced its business or development of SEZ / real estate still the interest payable / paid on the loans and other incidental expenses were charged to the profit and loss account as expenses - Revision upheld - AT
Customs
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Denial of refund of Special Additional Customs Duty - period of one year for filing refund claim of SAD is to be counted from the date of finalization of provisional assessment - AT
Service Tax
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Erection, commissioning or installation service - activity of construction of border-fencing with road along Indo-Bangladesh Border provided by (i) the Executive Agencies; and (ii) the contractors - Not taxable - AT
VAT
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Tribunal set aside the mandatory penalty on the ground of unnecessary harassment - non-filing of returns where the appellant is not liable to pay tax under DVAT - order sustained - HC
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If for any reason Form-C is not forwarded by the purchasing dealer to the selling dealer then the only recourse available is to file a suit for recovery against the Sales Tax Department from purchasing dealer or arbitration clause under the agreement. - HC
Case Laws:
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Income Tax
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2015 (3) TMI 280
Entitlement to any amount for the delayed payment of interest under Section 244A on the principal refund amount claimed by it - Held that:- Plain text of Section 244A does not provide for a construction which entitles the assessee aggrieved by delayed payment of principal to any amount over and above the interest directed by Section 244A(1) itself. See Commissioner of Income Tax V. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] In Sandvik Asia Ltd. (2006 (1) TMI 55 - SUPREME Court), the Court admittedly was dealing with facts prior to the insertion of Section 244A. Therefore, it would be inappropriate for this Court to consider that judgment now as binding authority. More importantly, Sandvik Asia Ltd. (supra) was explained by the larger Bench i.e. three Judge Bench decision in Gujarat Fluoro Chemicals (supra) where the Supreme Court categorically held that the only amount which an assessee aggrieved by delayed payment can legitimately claim under the statute is interest and that “no other interest on such statutory interest” is payable. This ruling, in the opinion of this Court, rendered by a larger Bench, would have to be followed as opposed to the ratio in HEG Ltd. (2009 (12) TMI 35 - SUPREME COURT ) where the Supreme Court had expressed a contrary opinion by indicating that the interest component towards the delayed payment of the tax refund would partake of the character of the „amount of due‟ under Section 244 A. In other words, HEG Ltd. seems to suggest that there would be dues on bar, refund and delayed interest. Clearly, that view has not been approved in Gujarat Fluoro Chemicals (supra). Decided against assessee.
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2015 (3) TMI 279
Taxability of income earned by the joint venture company - ITAT held the entire income of JVC in the hand of one of the members of the assessee company - Held that:- If the TDS claim was not erroneous, the income could have been shown in the account of joint venture/ assessee. If leave to withdraw was being sought with some ulterior motive, the income would have been reflected in the account of joint venture/ assessee. The consideration either by the Assessing Officer or Appeal authorities does not show this position. On the other hand, the Assessing Officer has worked out income tax at 3% of the contract value at the hands of joint venture/assessee. Such guess work would not have been essential, had the assessee actually received the amounts and those amounts would have been reflected in the books of account. The department would have procured some material to show receipts by assessee towards contract. There is no finding of receipt of any income by joint venture assessee on account of said contract. The finding of fact, therefore, reached by the Commissioner of Income Tax (Appeals)I, Nagpur [CIT(A)] and sustained by ITAT, cannot be said to be perverse. No substantial questions of law arising out of impugned order - Decided against assessee.
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2015 (3) TMI 278
Validity of reopening of assessment - ITAT’s findings that the CIT lacked the authority to sanction re-assessment proceedings through issuance of notice u/s 148 - whether notice under Section 147 not approved by the competent authority in accordance with Section 151 of the Act? - Held that:- This Court has to give effect to plain words of the statute which unambiguously states that the competent authority in such cases is the Joint Commissioner (and not the Chief Commissioner or the Principal Commissioner). The Revenue’s submissions that all such cases, are covered under proviso to Section 147(1), the competent authority for prior approval would be four superior officers, renders Section 151(2) superfluous. If anything the Court is clear that it is not its job to render, in the process of interpretation, an entire provision academic or inoperative. This court is of the opinion that accepting the Revenue’s position would result in that consequence. In this case, since the original assessment was completed “other than” the eventualities contemplated in Section 151(1), i.e. it was processed under Section 143(1). Thus, clearly Section 151(2) applied. Thus there is no infirmity in the order of the ITAT. No substantial question of law arises. - Decided against revenue.
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2015 (3) TMI 277
Gains arising from sale of land - business profit or capital gains - Held that:- Neither in the assessment order nor in the order of the Commissioner of Income Tax (Appeals) there is any material to show that the assessee is engaged continuously in the business of purchasing and selling of land with or without development, as has been observed by the Commissioner of Income Tax (Appeals). A solitary instance of purchase in the year 1993, development and plotting out in the assessment year 2001 cannot partake the character of business venture or profit. ITAT was right in holding that the gains arising from sale of land is not business profit and liable only to be assessed under capital gains - Decided in favour of assessee.
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2015 (3) TMI 276
Penalty under Section 271(1)(c) - Stay of disputed outstanding entire demand of ₹ 10,00,00,000/- in lieu of penalty levied seeked - Penalty proceedings initiated in respect of adjustments made by the Transfer Pricing Officer under Section 92CA(4) - first respondent granted partial stay in respect of total outstanding demand - Held that:- As petitioner has not challenged the order of the first respondent, dated 28.1.2015, who granted partial stay in respect of total outstanding demand, but only sought for mandamus, to direct the respondents to stay the entire disputed outstanding demand of ₹ 10,00,00,000/- pending disposal of the appeal. As the said order has not been challenged, it could be presumed that the petitioner has accepted the said order, of-course, partially. However, while the said order was in force, the petitioner cannot seek stay for entire outstanding by way of a direction to the respondents from this Court and even assuming that the relief as sought for by this Court is entertained, the authority cannot be expected to comply with the direction unless and until the earlier order is set aside. Admittedly, the petitioner has not filed the present writ petition for grant of Writ of Certiorarified Mandamus. Therefore, on this ground, this Court is of the view that the relief sought for by the petitioner cannot be granted. - Decided against assessee.
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2015 (3) TMI 275
Undisclosed income - interpretation of Section 158B, 158-BA and 158-BB - Tribunal held that the sum of ₹ 69,298/-was to be assessed under Chapter XI-VB of the Act as undisclosed income of the assessee - whether maximum nontaxable limit of income for each year is not to be included in undisclosed income? - Held that:- In the present facts, in view of the law as prevailing prior to the retrospective amendment of 2002 w.e.f. 1995, none of the authorities determined the issue whether the amount of ₹ 69,298/- was arrived at on the basis of entries in the books of account and other documents maintained by the appellant before the search. Therefore though the retrospective amendment to Section 158BB of the Act by the Finance Act, 2002 would be applicable in case of the appellant, the benefit of the same would be available only on the appellant satisfying the authorities that the amount of ₹ 69,298/- is duly supported by entries in books of account or such other memorandum. This exercise could be carried out by the Assessing Officer while giving effect to this order. It is only on satisfaction of the aforesaid condition precedent would the benefit of ₹ 69,298/- be extended to the appellant resulting in reduction of total undisclosed income to the above extent. - Decided in favour of assessee for statistical purposes. Undisclosed jewelery - Unexplained investment under Section 69 - Held that:- Explanation offered by the respondentassessee to her possession of jewelery of ₹ 6.57 Lakhs was that the same was gifted to her on occasion of her marriage by her father and fatherinlaw. This explanation was not contested by the father and fatherinlaw. The authorities accepted the source of the jewelery in her possession. However, the Tribunal was not satisfied with the evidence produced by her father and father-in-law. This cannot be lead to be conclusion that the explanation offered by the respondent-assessee in respect of the jewelery in her possession is not satisfactory. In the normal course of human conduct, on occasions such as marriage the parents and parents-in-law of a bride do normally gift jewelery to the bride. On occasion such as this, it is not possible to expect the bride to ask for evidence of bills/invoices to support the purchase of the jewelery. One has to proceed on the basis that it is genuine. Thus her explanation that she received the jewelery as gifts from her father and father-in-law is sufficient explanation of the jewelery in her possession and the gifts are not denied by her father and father-in-law. Thus invocation of Section 69 of the Act is these facts is completely unwarranted. - Decided in favour of assessee
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2015 (3) TMI 274
Interest under Section 234B - default in payment of advance tax when the income is computed under Section 115JA - Held that:- Section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and consequently the provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable. Tribunal was right in imposing interest under Section 234B of the Act for default in payment of advance tax as the issue raised in this appeal is no longer res integra in view of the decision of Joint Commissioner of Income Tax v. Rolta India Limited, (2011 (1) TMI 5 - SUPREME COURT OF INDIA), wherein an identical issue was answered against the assessee. - Decided in favour of revenue.
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2015 (3) TMI 273
Gross profit addition - CIT(A) directed the assessing officer to apply gross profit rate of 7.19% as against 17.22% done by AO - Held that:- CIT while determining 7.19% as gross profit rate noticed that the assessing officer while rejecting the books of accounts applied gross profit rate of 17.22% on basis of the case of M/s. Tarsem Kumar & Co., but the same was distinguishable on facts. The Commissioner of Income Tex on examination of peculiar facts of the instant case, arrived at the conclusion that the highest gross profit rate of immediately 2 previous assessment orders should be accepted as gross profit rate. Accordingly, the rate of 7.19% was applied. The orders passed by the Commissioner of Income Tax as well as the Income Tax Appellate Tribunal are quite reasoned and those do not require any interference being not having any substantial question of law to be adjudicated. - Decided in favour of assessee.
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2015 (3) TMI 272
Expenditure incurred for production of T. V. films and commercials - revenue v/s capital expenditure - Held that:- Issue arising in the present case is covered against the Revenue by the decision of this Court in CIT v/s. Geoffrey Manners and Co. Ltd. [2009 (2) TMI 13 - BOMBAY HIGH COURT] wherein held since expenditure was in respect of promoting ongoing products of the assessee, they are held as by way of revenue expenditure - Decided in favour of assessee.
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2015 (3) TMI 271
Restructuring of the Income Tax Department challenged - Held that:- When restructuring of a department is carried out based on the institutional need to augment the productivity of that department aiming at proper governance attuned with the change of timer, it goes without saying that there is always a chance of certain surplusages or flying of the frills, which have to be excused from judicial review, because they are inexcusable administrative exigencies, where the prime requirement is the paramount public purpose sought to be achieved, rather than a critical examination on the basis of relative and comparable personal aspirations of individual employees, or even a group of them. If a rational and reasonable balance is struck in the modality adopted for restructuring, the judiciary would loathe interfere with such process, primarily because such restructuring; including the manner in which the restructuring is to be done; is a matter purely in the realm of administration. That notwithstanding, as rightly noted by the learned Tribunal, no situation of injustice, even to any particular class of employees, was made out. The challenge to the impugned restructuring and the order of the Tribunal, therefore, fails. W.P. dismissed.
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2015 (3) TMI 270
Eligibility for deduction u/s 80IC - issue of substantial expansion at Parwanoo Unit was decided by the AO against the assessee by holding that the assessee has failed to substantiate that the plant and machinery at Parwanoo unit as on 1.4.2005 was only of ₹ 34,63,220 out of total plant and machinery - CIT(A) allowed the claim - Held that:- We are in agreement with the conclusion of the CIT(A) that this amount of increase of plant and machinery during the year under consideration viz. ₹ 18,35,423 is more than 50% of the opening value of the plant and machinery for Parwanoo i.e. ₹ 34,63,220 (as on 1.4.2005) then the claim of expansion of Parwanoo unit was rightly held in favour of the assessee. We also note that the Director of Industries, H.P. also acknowledged the substantial expansion of Parwanoo unit as on 24.11.2005 by the certificate dated 8.2.2006 which has not been controverted by the AO which clarifies that after substantial expansion as on 24.11.2005, the investment in plant and machinery was increased from ₹ 33.32 lakh to ₹ 52.36 lakh during the year under consideration.CIT(A) dealt the issue of substantial expansion as per letter and spirit of the provisions of the Act and the percentage of revenue of total turnover cannot be the sole basis for deciding the claim of substantial expansion of the assessee without appreciating the other surrounding circumstances and totality of the facts. - Decided in favour of assessee. Apportionment of expenses on the basis of sales ratio of Parwanoo and non-Parwanoo unit - Books of accounts rejected for invoking provisions of section 80IC(6) read with section 80IA(10) - Held that:- Although we note that deduction u/s 80IC was claimed for the first time by the assessee company during the year under consideration i.e. AY 2006-07 but as the scheme of statutory provisions of the Act is itself clear on this issue that on the issue of allocation of expenses with reference to computation of eligible profits for determination of the amount of deduction u/s either 80IB or 80IC is concerned, provisions of section 80IA(5), (7) to (12) of the Act shall apply. In this situation, it is also relevant to note that the conclusion of the Tribunal in assessee’s own case for AY 2001-02 in which has been upheld by the Hon’ble High Court, wherein approving apportionment of expenses placed by assessee has been approved by holding that the revenue has not pointed out any item which has been incurred for Parwanoo business and charged to non-Parwanoo business so as to increase the profit of the Parwanoo business which may result in higher deduction u/s 80IB of the Act. Thus the CIT(A) granted relief for the assessee on legal and cogent reasons - Decided in favour of assessee. Discount offered to the employees under ESOP Scheme disallowed - Held that:- expenditure in question is wholly for the purpose of business of the assessee and the fact that the parent company is also benefitted by a reason for motivated work benefits would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 137(1) of the Act. - Decided in favour of assessee.
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2015 (3) TMI 269
Exemption u/s 11 - AO denied the claim of exemption to the assessee on the fact that assessee on the fact that assessee has not done any kind of 'medical relief and neither do the objects of the assessee authorize the assessee to extend any kind of medical relief by way of running of any hospitals, nursing home or similar institutions - CIT(A) allowed the exemption - Held that:- In the facts of the present case since the Ld. Sr. DR inviting attention to only the agreement of Pepsico has canvassed that it cannot be related to any charitable activity as the other companies may be health related and pharmaceuticals companies we find on considering the copy of the specific agreement that the “endorsement ” refers to “Quaker Oats” and “Tropicana 100% fruit Juice and fortified drinks”. Per se we find no conflict if the assessee in the advancement of its aims and objects to promoting by improving public health if on research and analysis it propounds that there are significant health benefits to the uses of Oats or drinking fruit based, fortified health drinks as opposed to aerted drinks having no health benefits. It is not the case of the Revenue that the endorsement of healthy nutrition is medically/scientifically incorrect. The assessee as per the mandate of its objects and the methods set out in Clause IV(2); (3)(5) (6); (7) and (16) has endorsed products on the claims of health and nutritional benefit the grievance of the Revenue appears to be misplaced. In the absence of any adverse finding in regard to the activities of the trust we find that the department’s case has no merits. Prime land was made available to the assessee to facilitate its objects of providing space on rent etc. for promotion of trade wherein the assessee apart from selling tickets etc was also providing food & beverage outlets and providing for water, electricity etc in the facts of the present case admittedly financial support is also provided to the assessee trust whose activities have not been assailed to be contrary to the aims and objects and we find that mobilizing resources towards its aims and objects that too within the methods enshrined by the trust deed which are ploughed back by the society towards its aims & objects to our minds does not cause any grievance to the Revenue. It goes without saying that financial support from the Ministry of Health and Family Welfare to the assessee necessarily would be based on the functions performed by the said trust and would necessarily be monitored at each and every step and stage with adequate checks and balances and would not be allowed to be frittered away carelessly. - Decided in favour of assessee.
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2015 (3) TMI 268
Addition on account of interest and penalty - CIT(A) noted that out of ₹ 88,453/-, ₹ 8,594/- was penal in nature and, therefore, he allowed a relief of ₹ 79,859/- and restricted the addition at ₹ 1,25,846/- - Held that:- No infirmity in the order of ld. CIT(A), because only those payments, which were penal in nature, could be disallowed. - Decided against revenue. Work out of short term capital gain - AO invoking the provisions of section 50 - CIT(A) held that AO erroneously took the figure of sales proceeds of the assets at ₹ 70,36,357/- which included MODVAT, excise duty etc. as against the actual sale consideration of ₹ 47,50,5001-. The Ld. AO also missed out the fact that the entire block was not sold out and there was an addition of ₹ 29,5001- to the same during the year - Held that:- Respectfully following the decision of CIT Vs. Eastman Industries Ltd. [2008 (9) TMI 17 - HIGH COURT DELHI ] in the event the block of assets i.e., a class of asset(s) bearing same rate of depreciation exist(s) was with the assessee at the end of the previous year, then the provision of Section 50 (2) would not apply. The Section creates a deeming fiction. It cannot be extended beyond the purpose for which it has been enacted. - Decided against revenue. Depreciation claim rejected - After Sales, assessee was only left with 30% of the plant and machinery therefore, the assessee’s claim of depreciation of ₹ 3,11,660/- disallowed by AO - CIT(A) allowed the claim - Held that:- No reason to interfere with the order of CIT(A). Firstly, because the block of plant and machinery continued to exist and the manufacturing activities had temporarily been suspended and the business was not closed down. Secondly, the machinery was kept ready for future use and, therefore, the assessee’s claim was rightly allowed by ld. CIT(A). See Capital Bus Service (P) Ltd. v. CIT [1980 (2) TMI 69 - DELHI High Court] - - Decided against revenue. Sales service charges disallowed - CIT(A) sustained the part addition - Held that:- reason to interfere with the order of ld. CIT(A) because the AO has not disputed the rendering of after sales service by assessee. His only objection was that assessee was not bearing the entire cost of rendering after sales service and same ought to have been met partly by other distributors. We find that ld. CIT(A) has rightly restricted the disallowance only relating to non-franchise. We accordingly, confirm the order of ld. CIT(A) on the issue in question. - Decided against revenue. Sales service charges - Non apportionment of transactions of the assessee with its sister concerns - Held that:- Findings of ld. CIT(A) regarding allocable expenses to sister concerns have not been controverted by the department. Therefore, we confirm the order of ld. CIT(A) in restricting the addition on account of administrative expenses to ₹ 98,123/- - Decided against revenue.
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2015 (3) TMI 267
Transfer Pricing adjustment - Improper Selection of Comparables - Held that:- Following the decision of the co-ordinate bench of this Tribunal in the case of Agile Software Enterprises Pvt. Ltd. (2015 (1) TMI 600 - ITAT BANGALORE), we hold that the three companies Megasoft Ltd., Aztech Software Ltd. and Geometric Software Ltd. be excluded from the list of comparables. - Decided against revenue KALS Information Systems Ltd. was developing software products and not purely or mainly software development service provider. We therefore accept the plea of the Assessee that this company is not comparable was not comparable in the case of the assessees engaged in software development services business. Accepting the argument of the ld. counsel for the assessee, we hold that the aforesaid company should be excluded as comparables - Decided against revenue Accel Transmatic Ltd. has also been considered as a software product company, thus directed be excluded from the comparables. - Decided against revenue Tata Elxsi Ltd. has to be excluded from the list of comparable chosen by the TPO as the assessee before us is not developing any niche product. - Decided against revenue R. Systems International Ltd. the learned Authorised Representative of the assessee could not demonstrate that the revenue of ₹ 79.42 Crores is mainly from license fees or product development. In these factual circumstances, we find no reason to contradict the finding of the TPO that this company is mainly into software development services and therefore its inclusion by the TPO in the list of comparables cannot be faulted. This finding of ours is in tune with the decisions in transfer pricing appeals decided by the coordinate benches of this Tribunal, wherein the status of this company as being a software development services entity was not disputed. In this view of the matter, we uphold the inclusion of this company as a comparable company by the TPO - Decided against assessee. Deduction u/s. 10A - Held that:- It would be just and appropriate to direct the Assessing Officer that freight, telecommunication charges and insurance charges incurred in foreign currency are to be excluded from both export turnover as well as total turnover while computing the deduction under Section 10A of the Act, as has been prayed by the assessee in its alternate plea at Ground raised . In view of the acceptance of the alternate plea of the assessee, we are of the view that no adjudication is called for on Ground as to whether the aforesaid expenditure are required to be excluded from export turnover. - Decided in favour of assessee.
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2015 (3) TMI 266
Undisclosed incomes - absence of any explanation by the assessee with regard to the entries in the seized diaries in respect of which assessee did not make any declaration of income - validity of proceeding u/s. 153A - Held that:- It is not in dispute that the assessee was subjected to a search u/s. 132 of the Act on 20.11.2009. As per the provisions of section 153A of the Act, the AO was duty bound to make an assessment for the six assessment years as referred to in section 153A of the Act. A.Ys. 2004-05, 2005-06 and 2007-08 are assessment years failing within the period contemplated u/s. 153A of the Act. The assessment to be done u/s. 153A is not dependent on any incriminating material being found during the course of search. There is no such requirement u/s. 153A. While concluding assessment u/s. 153A, the AO can take cognizance of any material relating to the assessee. As we have already seen, it is not in dispute that the diaries were written under his instructions and contains recordings of transactions. In fact, K.P. Shetty took copies of seized diary and admitted undisclosed income based on entries therein. In such circumstances, the plea taken by the assessee that the proceeding u/s. 153A are invalid and that the proper course would be to proceed u/s. 153C of the Act and therefore the impugned assessment order has to be held to invalid is a contention, which cannot be accepted and has no force or merit. We are also of the view that u/s. 292C of the Act, there is a presumption that the documents found in the possession or control of any person in the course of search, belongs to such person and contents of such document are true. In the light of the fact that the assessee owned the entries in the seized diary, the contents should be presumed to be true and it is for the assessee to show that all the entries in the seized diary does not represent income. The assessee having miserably failed to point out with reference to each of the entries in the seized diary as to how it does not give rise to income, the assessee cannot take a valid plea that he disowned the diary and therefore no reliance can be placed on the diary to make addition in the hands of assessee. - Decided against assessee. Addition u/s. 69C - Held that:- The assessee, amongst other things, was a property developer. The payments made by the assessee are not reflected in the regular books of account. They were held to be in addition to and over and above the business transactions of the assessee. The assessee has not explained the source as to how this expenditure (payments) were made. Therefore, addition u/s. 69C of the Act is called for. As far as the receipts are concerned, the AO has taxed the excess of expenditure over the receipts. We fail to see as to how such an approach adopted by the AO can be found fault with. We do not find any merits in the aforesaid submission made by the ld. counsel for the assessee. - Decided against assessee.
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2015 (3) TMI 265
Disallowance made under section 40(a)(ia) - entire amount has actually been paid during the previous year itself - CIT(A) upheld the order of the Assessing Officer in making the disallowance - Held that:- We are in conformity with the order of the CIT(A) in disallowing the advertisement expenses for non-deduction of tax at source under the provisions of section 194C of the Act. Consequently, expenditure is not allowable in the hands of the assessee for the instant assessment year in view of the provisions of section 40(a)(ia) of the Act. - Decided against assessee. Addition to Process, Project and Research Fund - assessee was unable to explain the source of addition to the said fund and consequently a sum of ₹ 40,71,516/- was treated as income of the assessee society - Held that:- he money held by the assessee under the Process, Project and Research Fund was with a specific obligation to purchase milk testing machines and milking machines for its primary cooperative societies who in turn were contributing to the cost of the purchase of the said machines. The amount collected by the assessee do not constitute the income of the assessee as the said collection has been made for the specific purpose of purchasing the milk testing machines and milking machines at village centre level. Accordingly, we hold that the amount reflected in the Process, Project and Research Fund is not the income of the assessee and there is no merit in holding the same as income of the assessee. Accordingly, we direct the AO to delete the addition of ₹ 40,71,516/-. - Decided in favour of assessee. Treatment of the subsidy received from the Central Government - whether the said amount is a capital receipt in the hands of the assessee? - Held that:- In the facts of present case, the subsidy received by the assessee is capital subsidy. In the totality of the above said facts and circumstances, we direct the Assessing Officer to allow the depreciation on the bulk coolers purchased by the assessee without reducing the amount of subsidy from the cost of the asset for computing the depreciation under section 32(1) of the Act - Decided in favour of assessee. Deduction under section 80P(2)(d) - Gross amount of interest received v/s net amount of income received - Held that:- As relying on CIT Vs. Daoba Cooperative Sugar Mills Ltd. [1997 (4) TMI 49 - PUNJAB AND HARYANA High Court] direct the Assessing Officer to allow the deduction under section 80P(2)(d) of the Act on the gross amount of interest income. - Decided in favour of assessee.
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2015 (3) TMI 264
Penalty u/s 271AAA - Held that:- Penalty u/s 271AAA is not leviable if an assessee, in his statement recorded during the search u/s 132 of the Act, admits the undisclosed income, specifies and substantiates the manner in which it has been derived and pays the taxes due thereon, together with interest. Here, undisputedly, the assessee has paid due tax on the admitted undisclosed income. The question of specifying the manner in which the undisclosed income was derived, stood duly answered by the assessee before the authorities. The same was accepted by the AO, without variation, this fact itself evidencing the assessee having passed the test of Section 271AAA of the Act. Then, there is no specific format/procedure prescribed in the Act for specifying and substantiating an undisclosed income. The statement of the assessee, specifying the manner in which the undisclosed income was derived and substantiated, did not face any rebuttal or rejection at the hands of the AO. As there is no factual dispute, we uphold the contention of the assessee and deleted the penalty imposed u/s 271AAA on the item of income of ₹ 1,86,01,810/-. Thus the entire penalty levied u/s 271AAA, as confirmed by the Ld.CIT(A) is hereby deleted. - Decided in favour of assessee.
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2015 (3) TMI 263
Depreciation on plant and machinery used for generation of the power - belated return filed - Held that:- It is apparent that Rule 5(1A) has not prescribed any particular form or procedure in the second proviso in relation to exercising of the option by the Assessee. The second proviso to Rule 5(1A) only lays down that the option has to be exercised before the due date of furnishing of return of income u/s 139(1) for A.Y 1998-99 in respect of power generating undertaking then existing and for the first assessment year in which a new undertaking begins to generate power. The Assessee claimed depreciation in its return, even though filed belatedly, but within the date as prescribed u/s 139(4) in accordance with sub-rule (1) read with Appendix-1. Rule cannot supersede the Act. U/s 32 there is no specific provision of exercising of the option within a particular time, therefore, to that extent the condition imposed under Rule 5(1A) proviso (ii), in our opinion, is invalid. We, therefore, set aside the order of CIT(A) on this issue and direct the AO to allow the depreciation to the Assessee in accordance with Appendix-1 on the items which are mentioned under column 8(ix)(d) as per the rate specified therein. - Decided in favour of assessee. Claim of deduction u/s 43B in respect of Purchase Tax payable - Held that:- In the present case even though the Assessee has filed abstract of the Industrial Policy but has not adduced any evidence or material which may prove that the purchase tax payable by the Assessee has been converted into loan and therefore the liability towards the purchase tax stand discharged before the due date of filing of the return. In the interest of justice and fair play to both the parties, we set aside the order of CIT(A) and restore this issue to the file of the AO with the direction that the AO shall look into the evidence filed by the Assessee whether the said purchase tax payable by the Assessee got converted into loan as per the Industrial Policy before the date of filing of the return by the Assessee for the impugned assessment year. In case the AO finds that the purchase tax payable by the Assessee was converted into loan under the Karnataka Government scheme before the due date of filing of the return, the deduction be allowed to the Assessee, otherwise not.- Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 262
Transfer pricing adjustment - selection of comparable - Held that:- For Genesys International Ltd. - there is vast difference between the functions of the above company and that of assessee. This company as such, cannot be treated as comparable on FAR analysis. We therefore, direct the Assessing Officer/TPO to exclude this company. Eclerx Services Ltd. - As seen from the Annual Report, the above company is involved in diverse nature of services and there was no segmental data for diversified service port folio. Moreover this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee’s services. We therefore, direct the Assessing Officer/TPO to exclude this company. Cosmic Global Ltd. - A captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at ₹ 86.10 lacs. As the segmental revenue of BPO segment of Cosmic Global Limited at ₹ 27.76 lac is still on much lower side, the reasons given above would fully apply to hold Cosmic Global Limited as incomparable. This case is, therefore, directed to be excluded from the list of comparables. Acropetal Technologies Ltd. (Seg.) - As seen from the Annual Report, this company is involved in engineering design services and has products also, which makes it functionally not comparable. Even at the segmental level, it provides engineering design services, which was considered as high end. Therefore, we are of the opinion that this company cannot be selected as a comparable. Accentia Technologies Limited. - This company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. As submitted by the learned counsel, this year also, the acquisition of some companies by that company may have impact on the profit. Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (supra), which indicates that the TPO therein has excluded it at the outset. Thus direct the Assessing Officer/TPO to exclude this comparable, from the list of comparables selected. Inclusion of reimbursement transactions as part of operational cost - Held that:- Respectfully following the view taken by the coordinate bench in assessee’s own case, we direct AO/TPO to exclude reimbursement cost while working out the operating cost. In view of above, we direct AO/TPO to recompute ALP afresh and if warranted, make necessary adjustment to the price charged by assessee for the international transaction. Set off of losses from the income assessed - Held that:- Merit in the contention advanced on behalf of assessee that income of section 10A unit has to be excluded at source itself before arriving at the gross total income, hence, question of setting off of loss against such profits of 10A units will not arise. Assessee’s claim of set off of losses of the STPI Unit against other income has to be allowed. The direction of the DRP in the particular circumstances of the case is correct. - Decided in favour of assessee. Exclusion of communication charges both from the export and total turnover - Held that:- Respectfully following the decision of ITO Vs. Saksoft [2009 (3) TMI 243 - ITAT MADRAS-D] and CIT Vs. Gemplus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] we uphold the direction of DRP to exclude communication charges both from the export and total turnover - Decided in favour of assessee.
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2015 (3) TMI 261
Revision u/s 263 - allowability of interest and other incidental expenses after ascertaining whether the appellant has carried out its business activities as per the Memorandum of Association (MOA) and whether lending money to the holding and subsidiary companies constitutes its business activities - CIT has issued two notices dated 25.10.2013 as well as 28.10.2013 - Held that:- Notice issued u/s 263 is concerned, it is merely a show cause notice. It does not decide that the order is erroneous as well as prejudicial. Section 263 requires an assessee be given an opportunity of being heard. The notice represent the opportunity of hearing given to the assessee. Issuing of the notice u/s 263 does not get the assessment proceedings pending. The CIT can give in our opinion as many opportunity as he may desire. Therefore, issuing two notices to the assessee on different dates u/s 263 will not invalidate the order passed u/s 263. Company has not commenced its business or development of SEZ / real estate still the interest payable / paid on the loans and other incidental expenses were charged to the profit and loss account as expenses incurred during the previous year relevant to the assessment year and computed the business loss at ₹ 36109708/-. The assessing officer has allowed the carry forward of these expenses even though the assessee has not commenced its business. The order passed u/s 263 has to be upheld as, in our opinion, it has passed through test of fulfilment of both the conditions by the CIT that the order passed by the AO is erroneous as well as prejudicial to the interest of the revenue on the issue of claim of expenses allowed to the Assessee without verifying whether the assessee has set up / commenced the business during the year. We, therefore, dismiss the appeal filed by the Assessee by upholding the order passed u/s 263. - Decided against assessee.
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Customs
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2015 (3) TMI 289
Reclassification of goods - denial of notification benefits - Held that:- Samples of the products should be drawn and sent to a recognized institution for obtaining expert opinion as to whether the goods under importation derive their property solely from their elasticity and conditions specified in Note 6 to chapter 90 are satisfied or not. Without such expert opinion, coming to any conclusion either way will not be correct in our considered view. - Matter remanded back - Decided in favour of assessee.
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2015 (3) TMI 288
Condonation of delay - Rectification of mistake - Held that:- In the application Condonation of Delay in filing the application for Rectification of Mistake it is stated that on the part of the department, there is an inadvertent delay has been occurred in filing the ROM application but no specific reason has been given for condoning the delay. As the provisions are very specific and granting six months time from the order passed by this Tribunal therefore, provisions of Section 5 of the Limitation Act shall not apply for consideration of delay in filing the application for Rectification of Mistake. as per the statutory provisions of the Customs Act, 1962, the application for Rectification of Mistake filed by the Revenue is beyond six months after passing of the order is not maintainable - condonation denied.
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2015 (3) TMI 287
Denial of refund of Special Additional Customs Duty - notification no.102/2007-Customs - refund claims had been dismissed on the ground that the same have been filed after expiry of one year from the date of payment of duty and thereby violating the conditions of the notification - Held that:- assessments of customs duty including SAD were on provisional basis. Since the assessements were on provisional basis and are yet to be finalized, the question of limitation would not arise. Moreover, we also find that the Honble Delhi High Court in the case of Pioneer India Electronics (P) Ltd. Vs. Union of India & Another reported in [2013 (9)TMI 705 (Delhi)] involving identical facts has held that period of one year for filing refund claim of SAD is to be counted from the date of finalization of provisional assessment. The impugned order, therefore, is set aside and the matter is remanded to the original adjudicating authority to decide the SAD refund claims after finalization of the provisional assessments, as we are informed that the assessment of the bills of entry is yet to be finalized - Decided in favour of assessee.
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2015 (3) TMI 285
Confiscation of goods - Imposition of redemption fine - Penalty under Section 114(ii) - Held that:- Appellant had appeared for personal hearing on 13.12.2010 before the Commissioner (Appeals) and had contended that the T-Shirts have been exported for promotion purpose and not by way of sale, nor the export was under any beneficial scheme and further no duty was leviable on the said goods and accordingly, there was no case of any mis-declaration and or failure as per Regulation 13(b) of the Courier Imports and Exports (Clearance) Regulations, 1998 and as such, no penalty was leviable on them. I further find that the said contention of the appellant have neither been found to be wrong nor rejected in the impugned order and as such I hold that the impugned order is perverse and contrary to the facts on record. Thus, the impugned order is set aside and the appeal is allowed in favour of the appellant. Penalty imposed on the appellant under Section 114(ii) of the Customs Act stands set aside. - Decided in favour of assesse.
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Corporate Laws
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2015 (3) TMI 284
Application for Scheme of Amalgamation - Observation of Regional Director regarding violation of provision of the Urban Land (Ceiling & Regulation) Act, 1976 fully addressed - Held that:- In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, 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 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. - Scheme of amalgamation approve.
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2015 (3) TMI 283
Transfer / Assignment of debt - Matter of Substitution - Held that:- Mr. Joshi submitted that the observations made by the learned Company Judge in paragraph no. 7 of the impugned order is now squarely covered by the judgement in Kotak Mahindra Bank [2015 (3) TMI 90 - GUJARAT HIGH COURT] passed by this Bench.The relevant paragraphs of the said judgement are reproduced.In light of the above observations made by the Apex Court, Mr. Mihir Joshi, learned Senior Counsel submitted that the issue regarding substitution has already been concluded by the Apex Court. Mr. Ashok Shah, learned Senior Counsel has tried to contest this contention by submitting that the issue of substitution is not concluded by the Apex Court. We cannot accept this submission of Mr. Shah. A bare reading of the observations of the Apex Court in para 46 as extracted hereinabove makes it explicitly clear that the moment ICICI Bank Ltd. transfers the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the bank and becomes the borrower(s) of Kotak Mahindra Bank Ltd (assignee). Thus it is explicitly clear that Kotak Mahindra Bank has become entitled to recover the amount from the borrowers and therefore their prayer for substitution cannot be rejected. In view of the above, we are of the opinion that the observations made by the learned Company Judge in paragraph 7 of the impugned judgement and order are required to be quashed and set aside and the same are hereby quashed and set aside. The appeal shall be governed by the judgement and order dated 30.09.2014 passed in O.J. Appeal No. 156 of 2007 & allied matters. It shall be open to the appellant or successor or assignee to apply afresh and the same shall be considered on merits. Appeal is allowed to the aforesaid extent.
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Service Tax
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2015 (3) TMI 303
Erection, commissioning or installation service - activity of construction of border-fencing with road along Indo-Bangladesh Border - there are two categories, namely (i) the Executive Agencies; and (ii) the contractors who had carried out the work - Held that:- Revenue has vehemently argued that after insertion of the expression, structure whether pre-fabricated or otherwise , the scope and scheme of levy of service tax under the category of Erection, Commissioning or Installation Service , has undergone a total change. In other words, his argument is that, even though the word structure is also mentioned in the definition of Commercial or Industrial construction service , but when erected, would fall under the scope of Erection, Commissioning or Installation Service after 01.05.2006, the effective date from which the expression structure-pre-fabricated or otherwise has been inserted. This argument, in our opinion, at the first blush though sounds attractive, but is devoid of merit when read with the object behind insertion of the word erection to the definition of Commissioning or Installation. It would be incorrect to interpret that after addition of the expression, structure-pre-fabricated or otherwise to the existing list of objects of levy of plant, machinery or equipment, it brought significant change in the said entry so as to result an interpretation that activity of erection of structure standing alone, would be leviable to service tax. On the contrary, the purpose for which the word erection was inserted continued to be the same as was applicable to plant, machinery or equipment even after addition of the expression structure-pre-fabricated or otherwise. Validity and enforceability of circular - Circular No 80/10/204-ST dated 17.09.2004 and 123/5/2010-TRU dt.24.05.2010 - Held that:- the circulars issued by the Board explaining/clarifying the meaning of Erection, Commissioning or Installation Service, cannot be ignored, while interpreting the same and applying it to the facts and circumstances of the present case - Decision in the case of Paper Products Ltd. Vs. Commissioner of Central Excise, [1999 (8) TMI 70 - SUPREME COURT OF INDIA] followed. - The Decision precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time. The activity/service of erection of border fencing-structure standing alone would not be subjected to service tax under clause (39a) of Sec.65, but ought to be along with the activity of commissioning or installation, in a composite contract, and no such finding is recorded in the impugned order that other activities of commissioning or installations are involved in the present Appeals, therefore, the other alternative arguments including the issue of limitation, raised by the Appellants become academic, hence, not delved into. - Demand set aside - Decided in favor of assessee.
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2015 (3) TMI 286
Denial of CENVAT Credit - contractor provided the services in the premises of Thermal Power Station and the Operation and Maintenance service were rendered to the Thermal Power Station for collecting Dry Fly Ash, which has no relation to the manufacturing activity of cement - Held that:- Prime facie, it is not clear whether the Fly Ash Handling System installed in the Thermal Power Station is the applicant's property. The case laws relied upon by the applicant are not applicable in the facts and circumstances of the present case. In view of that, we direct the applicant to make a pre-deposit of ₹ 15,00,000 within a period of eight weeks. Upon deposit of the said amount, pre-deposit of the balance amount of tax along with interest and penalty is waived and stay recovery thereof till the disposal of the appeal. - Partial stay granted.
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Central Excise
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2015 (3) TMI 298
CENVAT Credit - Whether welding electrodes used for repair and maintenance of the plant and machinery are eligible for cenvat credit or not - Held that:- issue stands decided in the appellant’s favour by the judgement of the Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. Vs. CCE, Raipur reported in [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] and also by the judgement of the Hon’ble Rajasthan High Court in the case of Hindustan Zinc Ltd. Vs. Union of India reported in [2008 (7) TMI 55 - HIGH COURT RAJASTHAN]. There is also another judgement of the Hon’ble Karnataka High Court in the case of CCE Vs. Alfred Herbert (I) Ltd. reported in [2010 (4) TMI 424 - KARNATAKA HIGH COURT], wherein also the same view has been taken. In view of this, the impugned order is not sustainable. The same is set aside - Decided in favour of assesse.
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2015 (3) TMI 297
CENVAT Credit - suppression of facts - house keeping & dry cleaning service, event management service and legal service - Held that:- Regarding event management service, appellants contended that in their own case vide [2015 (1) TMI 294 - CESTAT NEW DELHI] the credit in respect of taxies used for carrying their employees for the function in respect of which the event manager was engaged has been allowed. When credit of service tax paid on taxi service utilised for carrying their employees for the function has been allowed, the credit of service tax in respect of event management service engaged for the same function has to be allowed mutatis mutandis. It has been stated that the function was in relation to business as the outstanding employees working in the factory were honored by way of rewarding and entertaining them to encourage the employees in general for better performance; it was an annual day function which is organized every year. Thus the function does have relation to business of manufacture. The appellants cited the judgment of Karnataka High Court in case of Toyota Kirloskar Motor Ltd. v. CCE, LTU, Bangalore, [2011 (3) TMI 1373 - KARNATAKA HIGH COURT]. In the said judgment Hon’ble High Court of Karnataka has in effect held that organising such a function cannot be separated from business of manufacture of final product. That such credit is allowable is also evident from the Cestat judgment in case of Endurance Technologies Vs. CCE Aurangabad [2013 (8) TMI 601 - CESTAT MUMBAI] which allowed credit in respect of mandap keeper for the annual day function. Thus denial of credit in respect of event management service in this case cannot be sustained. As regards mandatory penalty, the adjudicating authority has stated that it is settled principle of law that in taxation matters mens rea is not an essential factor for imposition of penalty and therefore penalty is imposable under Rule 15 of Cenvat Credit Rules read with Section 11AC of Central Excise Act. This observation is obviously untenable because for Section 11AC ibid wilfull mis-statement/suppression has to be brought out and this necessarily involves mens rea. Indeed, the concerned Order-in-Original does not bring out as to how the appellants are guilty of wilfull mis-statement or suppression of facts. Thus the extended period is also not sustainably invokable in the case as a consequence the demand is also hit by time-bar and mandatory penalty also cannot be imposed. - Decided in favour of assesse.
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2015 (3) TMI 296
Levy of duty as per Section 4 or Section 4A - Classification of goods - Held that:- Examiner's report is not in dispute which clearly classified the product as "Other Mastics". Although the product in question is covered under Ch.3214, is "Other Mastics" but "Other Mastics" have been excluded for levy of duty as per Section 4A of Central Excise Act, 1944. Therefore, both the lower authorities have rightly held that the duty on the product is to be leviable as per Section 4 of the Act i.e. on transaction value. - No infirmity in the impugned order and the same is upheld - Decided against Revenue.
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2015 (3) TMI 295
Levy of Central Excise duty on the DTA clearances - Held that:- Section 3 of the Central Excise Act provides that the duties of excise which shall be levied and collected on any excisable goods manufactured by a 100% EOU shall be an amount equal to aggregate of the duties of Customs which would be leviable on like goods produced or manufactured outside India and if imported into India. Therefore, the law is very clear. What is charged on domestic clearances by 100% EOU is duty of excise. In this case the goods namely cut flowers are non-excisable. The judgments cited by the Commissioner support this obvious interpretation of Section 3. Revenue's appeals on the ground that the Notification provides otherwise is not acceptable because a Notification cannot override the basic provision of law for charging duty. Revenue's reference to Cosco Blossoms Pvt. Ltd. (2003 (12) TMI 114 - CESTAT, NEW DELHI) to justify the duty can be demanded on imported inputs is totally mis-placed and uncalled for because what was demanded in the show-cause notice is Central Excise duty. - Decided against Revenue.
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2015 (3) TMI 294
CENVAT Credit - whether courier services, clearing and forwarding services, cargo-movers services and housekeeping services are input services as per the definition of input service vide Rule 2(l) of CENVAT credit Rules, 2004 - Held that:- all the four services in question are input services relating to the manufacturing activity of the appellant. The impugned order is set aside - Following decision of Commissioner of Central Excise Vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] - Decided in favour of assesse.
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2015 (3) TMI 293
Waiver of pre deposit - Denial of CENVAT Credit - Cenvat Credit balance transferred from the 100% EOU at the time of conversion into DTA unit - Held that:- After conversion of 100% EOU to DTA unit the appellant has transferred capital goods, input, work in progress and finished goods on payment of duty. Therefore, the appellants are entitled to take Cenvat Credit in DTA unit which was lying unutilized with the books of accounts of 100% EOU unit, which has been allowed by the Hon'ble Madras High Court in the case of CESTAT (2008 (7) TMI 116 - HIGH COURT MADRAS). In these terms, we set aside the impugned order and allow the appeal with consequential relief if any - Decided in favour of assesse.
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2015 (3) TMI 292
Waiver of pre deposit - Demand of interest - wrong availment of CENVAT credit - Held that:- Considering the Hon’ble Supreme Court’s decisions in the case of Ind-Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court) and the Hon’ble Madras High Court’s decision in the case of Sundaram Fasteners Ltd. (2014 (2) TMI 551 - MADRAS HIGH COURT), the appellants are prima facie has not made out a case for full waiver of interest. Regarding the contention of the learned counsel for the appellants on the issue of time-bar, the same will be examined at the time of final hearing. It is also seen from the impugned order, the appellant has admitted that if at all any interest liability arises, it should be for the period from July 2007 to November 2007 and the amount of interest is approximately ₹ 1.20 lakhs - Partial stay granted.
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2015 (3) TMI 291
Rectification of mistake - Revenue raised a preliminary objection insofar as the application for rectification of mistake of Final Orderwere filed beyond the stipulated period of six months as provided under Section 35C(2) of the Central Excise Act, 1944 - Held that:- Sub-section (2) of Section 35C of the Central Excise Act, 1944 provides that the appellate Tribunal may, at any time, within six months from the date of the order, with a view to rectify any mistake apparent on the record, amend any order by it under sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central Excise or the party. There is no dispute that the present ROM applications were filed beyond six months as provided under Section 35C(2) of the Act. We find that there is no provision for condonation of delay in filing ROM applications under Section 35C(2). Rule 41 of the CESTAT (Procedure) Rules, 1982 provides that the Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. Rule 41 of the said Rules, 1982 has not permitted the Tribunal to rectify the mistake in Final Order. The power of the Tribunal under Rule 41 of the said Rules, 1982 is basically to implement the Tribunal s order, to meet the ends of justice, which is not applicable in the present case. - Superintendent of Central Excise by the said letter stated that the interest liability is automatic and the interest is liable to be paid even if the interest is not demanded in the show-cause notice. Thus, the payment of interest has no relation with the impugned order, which would be applicable as per law of the interest provisions. - Rectification denied.
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2015 (3) TMI 290
Waiver of pre deposit - CENVAT Credit - Whether at the time of converting from 100% EOU to DTA, the applicant is eligible to avail the accumulated cenvat credit lying unutilized in 100% EOU to their DTA unit - Held that:- Following the Tribunal's decision (2011 (3) TMI 632 - CESTAT, BANGALORE), we waive the predeposit of entire amount of duty along with interest and penalty and stay its recovery till disposal of the appeal - Stay granted.
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CST, VAT & Sales Tax
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2015 (3) TMI 302
Compounding of offence - offences falling under Section 72(1)(a) of TNVAT Act, 2006 - dealer has attempted to evade tax payable under TNVAT Act - Held that:- Without going into the question as to whether registration, as a dealer, under the provisions of the TNVAT Act is mandatory or not, we are of the considered opinion that the appellant should consider the reply of the respondent pursuant to the compounding notice and pass final orders. - Having regard to the fact that the respondent is not a registered dealer, it is not proper to direct the appellant to release the goods on payment of tax, as, in the event, the respondent is liable to pay the compounding fee, it will be difficult for the appellant to recover the same from the respondent, on account of his non-registration as a dealer. - Matter remanded back - Decided in favour of Revenue.
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2015 (3) TMI 301
Tribunal set aside the mandatory penalty on the ground of unnecessary harassment - non-filing of returns where the appellant is not liable to pay tax under DVAT - Whether the DVAT Tribunal acted correctly in holding that in the absence of rules under Section 59(2) of the DVAT Act, 2004 (hereafter referred to as "the Act"), penalty action under Section 86(14) for non-compliance with Sections 59(1), (2) and (3) could not have been initiated and taken - Held that:- Substantive powers to require production of records imply a substantive obligation to maintain books and other documents - the corresponding right of the Commissioner is located in Section 59(1); Section 59(2) is not compulsive but only enabling. This is evident from the use of the expression, "the Commissioner may". In other words, the proceedings for violation of Section 59(1) are not dependent on the existence otherwise of rules which may or may not be framed in the given fact situation. The Court’s view is supported by the decisions - Gannon Dunkerley and Co. and Ors. v. State of Rajasthan and Ors. [1992 (11) TMI 254 - SUPREME COURT OF INDIA]; Sudhir Chandra Nawn v. Wealth Tax Officer, Calcutta and Ors. [1968 (4) TMI 1 - SUPREME Court] and Mahim Patram Pvt. Ltd. v. UOI [2007 (2) TMI 73 - SUPREME COURT OF INDIA]. - interference with the ultimate order setting aside the penalty of ₹ 50,000/- is not warranted. - Appeal disposed of.
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2015 (3) TMI 300
Non filing of returns - Intention to evade tax - Non compliance with Section 22(4) and Section 81 of the Tamil Nadu Value Added Tax, 2006 by the Revenue - Held that:- Prior to the introduction of the Act 2006 with effect from 2007, this Court had considered a similar issue with regard to Tamil Nadu General Sales Tax Act in the case of T.M.RAJAGANAPATHI TRADERS VS. COMMERCIAL TAX OFFICER, SALEM reported in [2005 (2) TMI 781 - MADRAS HIGH COURT]. Section 54 of the Tamil Nadu General Sales Tax Act is pari materia to Section 81 of 2006 Act. This Court in the above cited decision has held that aggrieved person is entitle to cross-examine and that the authority concerned shall issue summons in terms of the provisions of the said Act. - Similarly as per Section 81 of the 2006 Act, the respondent is empowered to issue summons to the persons and give an opportunity to the dealer to cross examine them, without which there would be no scope for the authority concerned to rely on the materials for determination of tax liability of the dealer. - while setting aside the order impugned in this writ petition, I direct the respondent to comply with Section 81 of the 2006 Act in its letter and spirit and before passing final order afresh on merits, an opportunity of hearing is mandatory besides asking the petitioner to file objections, if any - Decided in favour of assessee.
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2015 (3) TMI 299
Concessional rate of tax under the Central Sales Tax Act - Based on the agreement entered by the petitioner with various parties it is alleged that the goods were supplied on concessional rate of tax but the respondents failed to issue Form-C. Due to the non-supply of Form-C by the private respondents, the petitioner could not submit Form-C to the tax department. Accordingly, the Assessing Officer passed assessment order levying the general rate of tax applicable on the sale made by the petitioner - Held that:- There is an agreement between the petitioner and the private respondents for supply of goods on certain terms and conditions. The Sales Tax Department is not party to this agreement nor is privy with any assurances that might have been exchanged inter se between the petitioner and the respondents. Form-C is obtained by the purchasing dealer from his assessing authority upon due verification and genuineness being shown and if for any reason Form-C is not forwarded by the purchasing dealer to the selling dealer then the only recourse available is to file a suit for recovery against the Sales Tax Department from purchasing dealer or arbitration clause under the agreement. We are, accordingly, of the opinion that no mandamus could be issued to the private respondents for issuance of Form-C. - Decided against Assessee.
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Indian Laws
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2015 (3) TMI 282
Refund of partly purchase price due to difference in area of property - Immovable property purchased from bank which was sold under SARFASI Act, 2002 - Negligent of rights - Valuation report obtained by bank - Held that:- As the purchaser the Writ Petitioner No. 1 was obliged to satisfy itself as to title of the property as well as the area of the property put up for sale. The sale was conducted on “As is where is” and “As is what is” basis. The sale notice also specified that the intending purchasers can inspect the immovable property and seek clarification with regard thereto. The writ petitioners did not take any inspection and did not seek any clarification. The petitioners cannot be allowed to set up alleged mis-description of area of the flat in the sale notice to claim refund after not having exercising its option to inspect the flat and satisfy themselves as to the area available and other aspects. The contention of the writ petitioners that, the calculation of the super built up area published in the sale notice is without any basis. Firstly, the writ petitioners made no effort to check the actual area of the immovable property put up for sale. They participated in the sale without making such inquiry. The writ petitioners cannot be allowed to urge to that there is a misdescription in the area of the property. Secondly, the Respondent No. 1 obtained a valuation report with regard to the immovable property concerned. The valuer calculated the built up area and the super built up area and gave a basis for such calculation. It is not for the writ petitioners to assail such basis after a concluded deal. Thirdly, it is not for the Writ Court to grant relief to a party which has been negligent of his rights. Writ petition dismissed. - Decided against the appellant.
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2015 (3) TMI 281
Sale of immovable property by secured creditor under the provisions of the SARFAESI Act, 2002 - Contravention of Rule 9 of the Security Interest (Enforcement) Rules, 2002 - Failure to obtain consent for extended time - Held that:- In Mathew Varghese [2015 (1) TMI 461 - SUPREME COURT] the Supreme Court was of the view that, the secured creditor was entitled to enforce the secured asset in conformity with the provisions of the SARFAESI Act, 2002. In J. Rajiv Subramaniyan & Anr. [2014 (6) TMI 17 - SUPREME COURT] the Supreme Court considered Mathew Varghese [2015 (1) TMI 461 - SUPREME COURT] and was of the view that, the secured creditor as a trustee of the secured asset cannot deal with the same in any manner it likes and that such an asset can be disposed of only in the manner prescribed in the SARFAESI Act, 2002. Applying the ratio laid down in Mathew Varghese , J. Rajiv Subramaniyan & Anr. to the facts of this case, the irresistible conclusion is that, the secured creditor while enforcing the secured asset in the instant case did not do so in conformity with the provisions of the SARFAESI Act, 2002 by failing to obtain the consent of the writ petitioner who is the owner of the property put up for sale when extending the time for deposit of the balance purchase price by the purchaser. Such consent of the writ petitioner is mandatory as laid down in J. Rajiv Subramaniyan & Anr. In such circumstances I find that the sale conducted by the secured creditor in respect of the property of the writ petitioner put up for sale by the notice dated April 11, 2014 is vitiated. Such sale is declared as null and void. - Decided in favour of appellant.
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