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TMI Tax Updates - e-Newsletter
March 14, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Unexplained credit u/s 68 - The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(A), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made - HC
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Goodwill v/s non compete fee - The reliance placed by the Assessing Officer on Section 55(2)(a) of the Income Tax Act was repelled by the Tribunal rightly on a plea that the said provision came into effect in the year 1998-99, whereas the assessment year in the present case is 1996-97 - HC
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Salary income - amount received by the appellant under the non-competition agreement - there is no relationship of employer and employee between the foreign company and appellant/assessee and this conclusion arrived at by the Tribunal is a misreading of the agreement - HC
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There is no specific notification or circular indicating that CPWD rate alone should be adopted in arriving at the cost of construction, the Tribunal is justified in adopting the valuation of the State P.W.D. rates for the purpose of determining the cost of construction - HC
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Revenue recognition as per AS-7 - guidance note was issued in 2012 and could not have been the basis for the additions made. Under such circumstances, in our opinion, the correct approach should be to examine the reasonableness of claim rather than strictly apply a guidance note - HC
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The treatment given in the books of account is not a sole factor to determine the year in which land was converted into ‘stock-in-trade’ but series of events undertaken, facts and circumstances of the case which are very much relevant while considering the year in which “capital asset” is converted into “stock-in-trade” - AT
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Unaccounted cash deposits in Bank on various dates - addition u/s 68 deleted by CIT(A) - as the rest of substantive addition has been deleted, then there is no ground to uphold the protective addition in the hands of present assessee - AT
Service Tax
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Waiver of pre-deposit - event management service - On the one hand the Commissioner says that KSCA conducting the event and on the other hand the demand is confirmed under event management service. - on the ground of contradiction in the order, stay granted - AT
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Jurisdiction of Tribunal - appeal in respect of rebate claims made under the Finance Act, 1994 - This Appeal was clearly maintainable and should have been entertained and decided on merits. - HC
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Tribunal had passed the exparte order directing pre-deposit - repeated adjournment sought by the counsel - matter restored before tribunal for reconsideration - HC
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Waiver of pre-deposit - Tribunal ought to have dealt with the specific contention of the petitioner with regard to the non establishment of the fact of wilful misrepresentation/suppression, while dealing with the contentions of the petitioner on limitation - But since the amount is only around 33% of the total demand, no relief - HC
Central Excise
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Denial of CENVAT Credit - pest control services - appellant has availed these services in the course of their business of manufacturing of excisable goods - credit allowed - AT
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Commissioner has observed that penalty under Rule 13(1) can be imposed on the appellant but he further observed that the appellant has not been able to make out a case for reduction of penalty. But he failed to discuss why the appellant has not made out a case for reduction of penalty. - AT
VAT
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Determination of turnover - Disallowance of discount - Assessee give discount on sale of motor vehicles - by issuing a credit note after receiving the amounts, of course, before filing the returns it cannot be said that the amount of discounts goes outside the purview of the turnover - HC
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Classification - If it had been the intention of the Legislature to distinguish between edible and inedible Starch, the Entry 118 itself would have explicitly said so and therefore when the Legislature itself is silent a meaning or interpretation to a word used in the statute must not be given which the Legislature itself did not intend and did not say in so many words - HC
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Classification - pure coconut oil which is manufactured by the revisionist - would be liable to tax at 4% and not as an unclassified item taxable at 12.5% - HC
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Classification of goods - Whether portable hand held electronic ticketing machine is an IT produce and falls under heading and sub-heading No.8471 to be eligible for tax at 4% - Held No - HC
Case Laws:
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Income Tax
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2015 (3) TMI 411
Addition to income - amount in question which has been seized i.e. Signature Not Verified ₹ 1,18,87,490/- - whether the amount does not belong to the clients of the petitioner? - Held that:- As the High Court had directed the respondents to complete the inquiry and verification within the time fixed in the Income Tax Act. The order was passed three years ago and the time fixed has long expired. Under the circumstances, we direct the respondents to return the seized amount of ₹ 1,18,87,490/- to the petitioner within a period of four weeks from today.
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2015 (3) TMI 410
Unexplained credit u/s 68 - commission paid on entry taken from entry provide - Reopening of assessment - Held that:- The CIT (Appeals), as also the ITAT, in the case at hand, in our view, unjustifiably criticized the AO for not having confronted the assessee with the facts regarding return of some of the summons under Section 131 or not having given opportunity for the identity of all the share applicants to be properly established. The order sheet entries taken note of in the order of CIT (Appeals) seem to indicate otherwise. The order of CIT (Appeals), which was confirmed by ITAT in the second appeal, does not demonstrate as to on the basis of which material it had been concluded that the genuineness of the transactions had been duly established. There is virtually no discussion in the said orders on such score, except for vague description of the material submitted by the assessee at the appellate stage. Whilst it does appear that the time given to the assessee for proving the identity of the third party was too short, and further that it is probably not always possible for the assessee placed in such situation to be able to enforce the physical attendance of such third party (who, in the case of share applicants vis-à-vis a company, would be individuals at large and may not be even in direct or personal contact), the curtains on such exercise at verification may not be drawn and adverse inferences reached only on the basis of returning undelivered of the summonses under Section 131. Conversely, with doubts as to the genuineness of some of the parties persisting on account of non-delivery of the processes, the initial burden on the assessee to adduce proof of identity cannot be treated as discharged. We are inclined to agree with the CIT (Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or from the fact that the transactions were through banking channels, it does not necessarily follow that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a “further inquiry” in exercise of the power under Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld. - Decided in favour of the Revenue.
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2015 (3) TMI 409
Penalty under Section 158BFA(2) - income which was not undisclosed income but was determined on the basis of estimation on the application of Weight Formula on gross credits in various bank statements considered as turnover - Held that:- In the present instance, there is no doubt at all that the AO did determine the undisclosed income; that it was based upon estimation or an inference is a matter of detail. The plain text of the enactment admits no room for doubt that all manners of determination of income, per se might call for action at the discretion of the AO. As to whether the AO has properly exercised discretion in a particular matter or otherwise can certainly be subject to further scrutiny. The assessee’s argument that there was no fresh material since the entire amount was disclosed earlier and that amount has not been varied, in our opinion, is not accurate. The sum of ₹ 1,04,76,94,004/- was claimed in entirety (originally) to have been derived from share business. However, it did not exclusively stem from the share business and in fact the assessee admitted, in the course of search proceedings under Section 132(4) of the Act, that the said amount also included sums forming part of the turnover on account of providing accommodation entries. Now, that radically changed the complexion of the nature of declaration made and certainly formed the basis for materials discovered during the course of proceedings. Furthermore, having regard to this admission, the AO, most importantly, was entitled to determine: having regard to the nature of commission originally declared, whether that was in line with the new activity disclosed. It is a matter of record - noted by the CIT(A) in the quantum proceedings that the commission ranged upto 1%. Having regard to the conspectus of circumstances, therefore, the AO determined the commission to be 1.5% on the said total turnover; the ITAT decreased it. Nonetheless, the important fact is that the determination in the course of block assessment order was based upon a material discovered, i.e. in the form of statement made by the assessee under Section 132(4) of the Act; that radically changed the character of the income originally declared. Consequently, the estimation directed by the ITAT was accepted by the assessee. In view of the above circumstances, this Court is of the opinion that the question of law urged has to be answered against the assessee - Decided in favour of the Revenue.
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2015 (3) TMI 408
Goodwill v/s non compete fee - Tribunal held that no part of the consideration should be apportioned towards goodwill, and that the entire amount should be treated as non compete fee contrary to the ruling of this Court in the case of G.D.Naidu (1985 (11) TMI 5 - MADRAS High Court) - Held that:- The admitted fact in this case is the assessee company has transferred the technical know how and other advantages to the joint venture company consisting of the assessee company and MR and the assessee continued its business using its own logo, trade name, licenses, permits and approval under an agreement with another company. The Tribunal came to hold that there was no intention to acquire goodwill of the assessee and therefore, non-compete fee received by the assessee could not be treated as goodwill and it is not taxable as income.We find, on facts, that there is no reason to differ with the said finding. The reliance placed by the Assessing Officer on Section 55(2)(a) of the Income Tax Act was repelled by the Tribunal rightly on a plea that the said provision came into effect in the year 1998-99, whereas the assessment year in the present case is 1996-97. Therefore, there was no basis to fall back on the said provision. As has been recorded by the Commissioner of Income Tax (Appeals) and the Tribunal, we find, in the facts of the present case, that the non-compete fee received by the assessee is capital in nature. See Guffic Chem. P. Ltd. V. Commissioner of Income-Tax [2011 (3) TMI 6 - Supreme Court] - Decided in favour of assessee.
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2015 (3) TMI 407
Salary income or not - amount received by the appellant under the non-competition agreement - AO, CIT(A) and ITAT confirmed the taxability udner the head salary income - assessee had rich experience in design, development and commissioning of Industrial Drives, power electronic equipments, such as High Power Battery Chargers and UPS Systems - Held that:- In the present case, this Court finds that the employment contract is between the joint venture Indian company, viz., CTIL and the assessee and the terms and conditions of the employment is restricted only in relation to three items, which we have already referred to in the earlier part of this order and there is nothing to show that it has any relation with the industrial drives in question and, therefore, the foreign collaborator was justified in entering into a non-competition agreement, i.e., only after 26.9.95 when the Government of India, Ministry of Industries, granted approval to increase the shareholding of the foreign company in the joint venture Indian company. There are clear indications as to why the foreign company entered into the non-competition agreement after this approval given by the Government of India, Ministry of Industries, Department of Industrial Policy and Promotion, Foreign Collaboration-II Section. The Tribunal erred in holding that the amount paid by the foreign company to the assessee/appellant is by the employer to the employee, which conclusion, on the face of it, is not correct, as there is no relationship of employer and employee between the foreign company and appellant/assessee and this conclusion arrived at by the Tribunal is a misreading of the agreement. On a plain interpretation of Section 15 read with Section 17 of the Act, we are unable to subscribe to the view of the respondent/Revenue as has been confirmed by the CIT (Appeals) and the Tribunal, that the payment received in this case is in the nature of salary. The principles, as laid down by the Supreme Court in Guffic's case (2011 (3) TMI 6 - Supreme Court) is squarely applicable to the facts of the present case. In view of the aforesaid reasoning and findings, this Court holds that the payment in this case, received by the appellant/assessee, is not in the nature of a salary and it is only a capital receipt. - Decided in favour of the appellant/assessee.
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2015 (3) TMI 406
Determination of the cost of construction - whether Tribunal was right in holding that the CPWD rates cannot be applied to the commercial-cum-residential complex constructed at Coimbatore on the ground that Coimbatore is a small town? - Tribunal directing the Assessing Officer to restrict the addition to ₹ 8 Lakhs as offered by the assessee - Held that:- It is evident that in a case of this nature, the Department should give credence to the valuation of the State P.W.D. in relation to the value of construction either on the side of the assessee or on the side of the Department. Since we find that there is no specific notification or circular indicating that CPWD rate alone should be adopted in arriving at the cost of construction, the Tribunal is justified in adopting the valuation of the State P.W.D. rates for the purpose of determining the cost of construction. Tribunal was justified in partly allowing the appeal filed by the Revenue. - Decided against revenue.
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2015 (3) TMI 405
Computation of relief u/s 80HHC - Interpretation of term “Total turnover” - whether Scrap sales should be included in the Total Turnover while computing deduction under 80HHC? - Held that:- As relying on Commissioner of Income Tax-VII Vs Punjab Stainless Industries [2014 (5) TMI 238 - SUPREME COURT] wherein held that the proceeds generated from the sale of scrap would not be included in the "total turnover" - If all accountants, auditors, businessmen, manufacturers, etc., are normally interpreting the term "turnover" as sale proceeds of the commodity in which the business unit is dealing, we see no reason to take a different view than the view normally taken by the persons who are concerned with the said term. - Decided in favour of assessee.
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2015 (3) TMI 404
GP rejection - ITAT rejecting the assessee’s accounts on the footing that quantitative tally of the ingredients and raw materials were not maintained and proceeded to arrive at an improper GP Rate as well as the turn-over figures - Held that:- The assessee categorically appears to have submitted that a quantitative tally of all the raw materials consumed in the making/preparation of the final marketable product was being maintained. Even though CIT(Appeals) noticed this contention as a matter of fact, the said authority did not render any finding. The ITAT instead went by the findings of the lower authority and merely based its conclusion on the interpretation of Section 145(2) of the Income Tax Act, 1961. In fact, there is an assumption in para 9 that the assessee did not maintain quantitative details of ingredients such as mixing gum, starch and oil. Considering assessee’s stand that such details were forthcoming both by way of books as well as through a quantitative tally, the CIT (Appeals) should have addressed himself to the issue and rendered clear findings. Failure to have done so has prejudiced the assessee. Consequently, the impugned order is hereby set aside. The matter is remitted back to the CIT (Appeals) for fresh examination of the books of accounts - Decided in favour of the assessee.
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2015 (3) TMI 403
Revenue recognition - Applicability of accounting standard was AS-7 rejected - differential treatment of revenue on the basis of whether it was development of plots or construction of flats. The assessee had inter alia contended that AS-9 has provided the flexibility to treat development of cost of group housing residential projects at 30% whereas in the case of development of plots it could claim 50% towards cost - Held that:- This Court notices that the guidance note was issued in 2012 and could not have been the basis for the additions made. Under such circumstances, in our opinion, the correct approach should be to examine the reasonableness of claim rather than strictly apply a guidance note, formulated and published later.
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2015 (3) TMI 402
Revision u/s 263 - payment of gratuity - disallowance u/s 43-B - Whether there existed any figure like ₹ 7,35,787/-, which formed the basis of discussion by CIT(A) in its order passed u/s 263 which was considered in the context of Section 43-B of Act, 1961? - Held that:- Before Tribunal the assessee specifically raised an issue that this figure of ₹ 7,35,787/- is not traceable and let it be known to him as to wherefrom this figure has come. When we required learned counsel for the appellant to show whether there existed any such figure in any of the document, he fairly admitted that atleast from the record he had seen, he could not lay his hand on existence of such amount. He also could not dispute that there is nothing on record to show that assessee ever claimed deduction of ₹ 7,35,787/- as provident fund. Thus it is evident that Commissioner of Income Tax while discussing the question of disallowance of ₹ 7,35,787/-, under Section 43-B of Act, 1961, has considered the matter relating to an amount which did not exist at all and before this Court also it could not be shown to have existed. This shows a total non-application of mind on the part of Commissioner. The view taken by Tribunal in favour of assessee, therefore, cannot be faulted. - Decided in favour of assessee.
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2015 (3) TMI 401
Transfer pricing adjustment - TPO while working out the Profit Level Indicator (PLI) of the operating cost/total cost, arrived at a percentage of 6.88% - Held that:- Submissions made by the ld. counsel for the assessee have to be accepted and the operating profit to the total cost of the assessee should be adopted at 9% on the basis of the assessee's operating revenue and operating cost. Selection of comparable - Avani Cimcon Technologies Ltd. - Held that:- The reasons given by the Assessee for excluding this company as comparable that this company is functionally different from the assessee are found to be acceptable. The decision of ITAT (Mumbai) in the case of Telcordia Technologies Pvt. Ltd. v. ACIT (2012 (6) TMI 388 - ITAT MUMBAI) also supports the plea of the assessee as this company has revenue from software product and observed that in the absence of segmental details, Avani Cincom cannot be considered as comparable. Celestial Labs Ltd. - in the light of the submissions made by the Assessee and the fact that this company was basically/admittedly in clinical research and manufacture of bio products and other products, there is no clear basis on which the TPO concluded that this company was mainly in the business of providing software development services. We therefore accept the plea of the Assessee that this company ought not to have been considered as comparable. KALS Information Systems Ltd - Held that:- TPO has drawn conclusions on the basis of information obtained by issue of notice u/s. 133(6) of the Act. This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.6.2010 to the TPO. We also find that this company 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. Accel Transmatic Ltd. - This company 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. Lucid Software Limited - Due to non-availability of full information about the segmental details as to how much is the sale of product and how much is from the services, therefore, this entity cannot be taken into account for comparability analysis for determining arms length price in the case of the assessee. Infosys Technologies Ltd - lnfosys is a giant in the area of development of software and it assumes all risks, leading to higher profit and cannot be compared with the company which is a captive unit of its parent company assuming only limited currency risk. In view of the above finding, we hold that the Infosys cannot be taken as a comparable for determining the arms length price in the case of the assessee. Wipro Ltd.-IT Services Seqment ('Wipro') - This company is also a global IT Company having varieties of service and products and looking to the magnitude of its operations, sales and expenses, the same cannot be taken into consideration for comparability analysis. Moreover, 67% of its sales relates to its product which are sold on premium resulting into higher profitability, therefore, cannot be compared with the assessee company at all. Flextronics Software Systems Ltd. - From the perusal of the profit and loss account of the said company, it is seen that the revenue sales from services constitutes almost 90% and the product sales is only 10%. Thus, in this case also not much adjustment is required to be made for taking the profit ratio for comparing it with the assessee in determining the arms length price. In view of the above, we hold that TPO has rightly included the said company as comparable case which can be taken into consideration for comparing the profit ratio. Tata Elxsi Limited - Tata Elxsi is engaged in development of niche product and development services, which is entirely different from the assessee company. We agree with the contention of the learned AR that the nature of product developed and services provided by this company are different from the assessee as have been narrated in para 6.6 above. Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company fit for comparability analysis for determining the arms length price for the assessee, hence, should be excluded from the list of comparable parties. Megasoft Ltd - In the present case factors for abnormal profits have not been highlighted by the Assessee. In such circumstances it is not possible to accept the submission of the Assessee to exclude this company for the purpose of comparison. Thus the adjustment to be made by way of transfer pricing adjustment and the consequent addition to the total income will be a sum of ₹ 17,32,27,953 and the AO is directed to restrict the addition accordingly. TP adjustment in the Support Services segment of the Appellant - ICC International Agencies Ltd. selected as comparable - Held that:- As can be seen from the functional profile of ICC International Agencies Ltd. given by the assessee, which is not disputed by the TPO, that it does trading and also acts as commission agent for machineries used textiles industry. As against this, the functional profile of the assessee, as we have already seen, is only giving support services. Keeping in mind the functions and risk analysis, it is not possible to compare the assessee with ICC International Agencies Ltd. If ICC International Agencies Ltd. is not taken as a comparable, then the margin of the assessee would be well within the OP/Cost PLI of the other comparable companies chosen by the TPO. We accordingly hold that in respect of the international transactions of rendering marketing support services, the price received by the assessee is at arm's length and no adjustment is called for. - Decided in favour of assessee. Deduction u/s. 10A - assessee had allocated common expenses between 10A and non-10A units - Held that:- As far as recruitment charges are concerned, the AO's reasons for rejecting the same is on the ground that the STPI unit i.e., the Sec.10-A unit was started in July 2006 and therefore majority of employees recruited would be only for the STPI unit. Therefore the AO held that allocating only 25% of total expenditure on training to Sec.10-A unit was not correct. Secondly, the AO held that the details of employees recruited in STPI unit and Non-STPI unit could not be provided by the Assessee and therefore adverse inference had to be drawn. When the basis of allocation is the number of employees of Sec.10A unit, which fact is not seriously disputed the basis of allocation has to be held as proper. The AO has proceeded on the basis that recruitment cost for Sec.10A unit will be much more than Non-Sec.10A unit. This assumption of the AO in our view is without any basis. In any event turnover cannot be the basis on which these expenses have to be allocated. We therefore hold that allocation on the basis of number of employees is proper. As far as travel and conveyance expenses are concerned, the basis of allocation is on the basis of employees travelling for projects of 10A unit. There can be no objection for this allocation. As far as hotel expenses included in Travel and conveyance expenses is concerned, the basis of allocation is proportionate basis i.e., travel expenditure of 10A unit to the total travel expenditure. As rightly contended on behalf of the revenue when the details of persons travelling for project of 10A unit is available there should be no difficulty in identifying the hotel expenses of employees travelling for project of 10A unit. But allocating such costs on the basis of turnover would also be not appropriate. We are of the view that it would be just and appropriate to set aside the order of the AO on this issue and direct the Assessee to give the details of hotel expenses of employees who travelled for projects of 10A unit and allocate expenses on the basis of available evidence direct or circumstantial. As far as software licenses are concerned, the basis of allocation on the basis of ratio of average head count of 10A unit to the average head count of all units as a whole. The Assessee has done so because software licenses were used both for 10A project and non-10A unit. In such circumstances, the basis of allocation by the Assessee is held to be proper. As far communication expenses are concerned the basis of allocation by the Assessee on the basis of ratio of average head count of the 10A unit to the average head count of all units as a whole is no valid basis. As rightly held by the AO, Communication expenses may be dependent not only on the employee strength but also on the projects allocated to each unit. In the absence of any other details allocating those expenses on the basis of turnover is only accepted method. We therefore are of the view that the AO's basis of allocation has to be upheld.- Decided partly in favour of assessee. Computer software expenses - revenue v/s capital - Held that:- This issue requires re-examination by the AO in the light of the principles laid down by the Special Bench in the case of Amway India Enterprises (2008 (2) TMI 454 - ITAT DELHI-C ) wherein principles to be applied in deciding such issues have been laid down - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 400
Capital gains on account of 'transfer' of capital asset - whether on the date of agreement, the impugned property at Bangalore was not a capital asset within the meaning of section 2(14) of the Income Tax Act as the same had been converted into stock-in-trade? - Held that:- A.O.’s action for computing capital gain on the basis of Development Agreement is not well founded and as such there was no transfer within the meaning of section 2(47)(v) and 2(47)(vi) of the Act. With regard to A.O.’s objection that Godrej Properties Ltd. had acted upon the Development Agreement by constructing its site office and also entered into contract agreement with the contractor, we found that GPL had merely constructed site office but not carried out any development activity on the land owned by the assessee in the previous year relevant to A.Y.2008-09. Similarly, GPL had not assigned any contract or appointed M/s Ashed Properties P. Ltd. as contractor pursuant to DA. In fact, after evaluating the market conditions, GPL found that the project as envisaged by the assessee was not viable and hence, DA was annulled. The treatment given in the books of account is not a sole factor to determine the year in which land was converted into ‘stock-in-trade’ but series of events undertaken, facts and circumstances of the case which are very much relevant while considering the year in which “capital asset” is converted into “stock-in-trade”. Thus Development Agreement has to be harmoniously construed with reference to the related facts and circumstances of the case. Before reaching to the conclusion, we cannot forget the fact that the ownership and possession of land were always retained with the assessee and the same has been expressly stated so in clause 6 of the Development Agreement. The assessee has not received any consideration from Godrej Properties Ltd. nor was there any assurance about profit given by the Godrej Properties Ltd. in the project, the project had not materialized and ultimately Development Agreement was annulled in 2011. If we analyse all these facts, we can safely conclude that there was neither any transfer of land to Godrej Properties Ltd. nor any gains arisen to the assessee during the relevant A.Y. 2008-09 under consideration. The ld. D.R.’s contention that assessee had entered into sham transaction, we found that neither it is the case of A.O. nor that of ld. CIT(A) that the assessee has entered into any sham transaction to avoid any tax. Accordingly, this contention of the ld. D.R. cannot be accepted at this juncture. Even otherwise, if the Development Agreement is to be ignored, there is no transfer and no income as the A.O. as well as ld. CIT(A) have computed and taxed the assessee on the basis of Development Agreement only. A.O. is directed to delete the capital gains computed in the hands of the assessee. - Decided in favour of assessee.
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2015 (3) TMI 399
Deduction on account of bad debts written off u/s. 36(1)(vii) denied - Held that:- Considering the accounting principles described it cannot be the legislative intent of section 36(1)(vii) to mandate that the debit to the profit and loss account be in the same previous year in which the claim is made there under. While a debit to the profit and loss account is certainly a prerequisite for a write off, such a debit alone does not constitute a write off until the asset being written off is obliterated by a credit to its account. Where this credit has occurred in a subsequent year, the asset can be said to have been written off only in such subsequent year. There has been a write off by squaring off the debtors account only in the previous year relevant to A.Y. 2009-10. This should be sufficient for the Revenue to allow the claim of assessee us/. 36(1)(vii) of the Act. For the reasons given above, we direct the AO to allow claim of the assessee for deduction for the amount of bad debts - Decided in favour of assessee. Disallowance of payments to non-residents - deduction claimed by the assessee under the head ‘agency commission’ u/s. 40(a)(i) - Held that:- On applicability of Expln-2 to Sec.195(1) of the Act which was introduced by the finance Act, 2012 w.e.f. 1.4.1962, we are of the view that the said explanation is applicable only when there is accrual of income in India. When the conclusion reached is that there is no accrual of income in India, we fail to see how Expln.2 to Sec.195(1) of the Act are attracted. Thus there was no obligation on the part of the Assessee to deduct tax at source while making payment to the non-resident. Consequently, no disallowance of commission expenses paid to non-resident could be made invoking the provisions of sec.40(a)(i) of the Act. We hold accordingly and direct the AO to delete the disallowance so made. - Decided in favour of assessee.
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2015 (3) TMI 398
Disallowance u/s 14A r.w.r 8D - CIT(A) deleted the addition - Held that:- Since the own capital and free reserves of the assessee company is much more than the investment in shares and mutual funds, the dividend income of which is exempt, and since there is no categorical finding by the AO that borrowed funds have been utilized for investment in share and mutual funds, therefore, no disallowance under Rule 8D(2)(ii) is warranted in the instant case. Accordingly, the order of CIT(A) deleting the disallowance of ₹ 57,929/- under Rule 8D(2)(ii) is upheld.However, as regards the disallowance of ₹ 8,636/- under Rule 8D(2)(iii) is concerned the same relates to disallowance of administrative expenses. Nothing has been brought to our notice that administrative expenses is not required or has not been incurred for earning such exempt income. Therefore, in absence of any such details the disallowance under Rule 8D(2)(iii) amounting to ₹ 8,636/- has to be sustained. - Decided partly in favour of revenue. Disallowance by invoking provisions of sec. 36(1)(va) - Employees' contribution to the Provident Fund paid beyond the due date prescribed in the Provident Fund Act - CIT(A) deleted the addition - Held that:- Issue stands decided in favour of the assessee by the recent decision of CIT Vs. Ghatge Patil Transports [2014 (10) TMI 402 - BOMBAY HIGH COURT] where it has been held that Employees' contribution paid after the due date prescribed under the relevant Act but deposited on or before the due date of filing of the return prescribed u/s.139(1) is to be allowed as expenditure. We therefore do not find any infirmity in the order of the CIT(A) on this issue. - Decided in favour of assessee. Disallowance of write-off u/s 36(1)(vii) - CIT(A) allowed the claim of the assessee - Held that:- In the instant case we find the Ld.CIT(A) allowed the claim of deduction as business loss considering the smallness of the items. It is an admitted fact that these are very old EMDs lying with various departments such as National Safety Council, Indravai Hydro Power, SBI Satpura, Bhusawal Thermal etc. Although these are not bad debts but considering the smallness of the amounts lying with various departments under the head EMD the assessee has written off these items and the CIT(A) considering the rationale behind the provisions of section 36(1)(vii) has allowed the same as business loss in the year of write off. The Ld. Departmental Representative could not seriously challenge the finding of Ld.CIT(A). Considering the totality of the facts of the case and considering the smallness of the amounts vis-à-vis number of entries we do not find any infirmity in the order of Ld.CIT(A) on this issue. - Decided in favour of assessee. Disallowance of interest calculated on interest free advances made by the assessee to group concerns - CIT(A) deleted dis allowances - Held that:- The Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) has held that if there be interest free funds available to an assessee sufficient to meet its investment and at the same time the assessee had raised a loan, it can be presumed that the investments were from the interest free funds available. Since in the instant case the capital and free reserves as well as interest free funds are much more than the loans advanced to sister concerns and since the sale proceeds are deposited in the cash credit account from where the loans have advanced to the sister concerns, therefore, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the AO - Decided in favour of assessee.
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2015 (3) TMI 397
Gift received by the appellant as undisclosed income - addition of ₹ 45 lakhs in the assessment made u/s 143(3) r.w.s. 153C - Search u/s 132 - Held that:- The total income shall be determined in respect of assessment year for which original assessments have already been completed on the date of search by restricting additions only to those which flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the proceedings u/s 153A shall be computed by considering the originally determined income. If some incriminating material is found in respect of such assessment years for which the assessment is not pending, then the „total income? would be determined by considering the originally determined income plus income emanating from the incriminating material found during the course of search. In respect of assessment pending on the date of search which got abated in terms of second proviso to section 153A(1), the total income shall be computed afresh uninfluenced by the fact whether or not there is any incriminating material. As already observed that no incriminating material has been found relating to the year in which the assessee has received gifts. Therefore, in our opinion, no addition on account of the gifts can be sustained. Accordingly, on this basis itself, we delete the addition on account of gifts - Decided in favour of assessee.
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2015 (3) TMI 396
Unaccounted cash deposits in Bank on various dates - addition u/s 68 deleted by CIT(A) - Held that:- The impugned cash deposits have been made out of the funds withdrawn in the preceding years and hence, we are in agreement with the conclusion drawn by the CIT(A) that assessee’s stand on this issue has been proved by positive evidences. Per contra, the AO has not brought out any material or evidence in spite of search operation at the residential premises of the assessee to dismiss assessee’s claim/stand that the assessee actually has such funds available at the time of subsequent cash deposits. We are also inclined to hold that the CIT(A) was quite justified in reaching to a conclusion that the assessee has discharged its onus incumbent upon him u/s 68 of the Act by submitting supportive and reliable evidence and explanation viz. same bank pass book etc. Therefore, the addition u/s 68 of the Act was not sustainable. - Decided against revenue. Addition on figures scribbled on loose slips, found and seized during the course of search - CIT(A) deleted addition - Held that:- the substantive addition was made in the hands of Smt. Avinash Monga and in the assessee’s case, there was merely a protective addition. We further note that the CIT(A)-XXX, New Delhi, after detailed deliberations found that the substantive addition is not sustainable and both the additions of ₹ 12,72,707/- and ₹ 91,870 except addition to the extent of ₹ 10,000 were deleted. We are also in agreement with the conclusion of the CIT(A) in the impugned order that whatever undisclosed income had to be taxed based on these loose papers, has been taxed in the hands of assessee’s wife Smt. Avinash Monga substantively and as the rest of substantive addition has been deleted, then there is no ground to uphold the protective addition in the hands of present assessee Shri Suresh Monga. Finally, under above noted facts and circumstances, we reach to a logical conclusion that the CIT(A) was right in granting relief for the assessee and deleting the protective addition. - Decided against revenue.
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2015 (3) TMI 395
Disallowance made under rule-8D(2)(iii) - Held that:- Nothing specific has been mentioned about non-incurring of any indirect expenditure, it is clear that major part of the investments were done in FY: 2005-06. Incremental investment was only 4.80 lakhs. The investment which yielded the dividend income of ₹ 33,600/- claimed as exempt, came from shares worth ₹ 2,30,400/- held in M/s Indian Overseas Bank, which holding was the same all though, brought forward from earlier year. Under section 14A of the Act, once assessee has taken a stand that it had not incurred any expenditure under section 14A, then in our opinion, the AO is not justified in invoking Rule 8D(2)(iii) for a disallowance of indirect expenditure unless he recorded his dis-satisfaction of claim. It is essential such non-satisfaction has to be given with cogent reasons before invoking Section 14A. Doctrine of satisfaction no doubt, does not mean that an AO should presume what was in the mind of the assessee and express his approval or disapproval thereon. However, once assessee say that it had incurred no expense covered by section 14A of the Act for its investment portpolio, AO has to make a verification. Especially so, when incremental investments is negligible. In these circumstances, we are of the opinion that CIT(A) while he was justified in deleting the disallowances made under Rule 8D(2)(ii) and ought not have sustained the disallowance made under Rule 8D(2)(iii). Order of the learned CIT(A) is set aside to the extent. Disallowance under rule 8D(iii) is also deleted. - Decided in favour of assessee.
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2015 (3) TMI 394
Application of deeming provision u/s 50C to the business income - Validity of Samjuti Karar - addition made in the hands of Assessee on account of 100% profit in document price of land sold deleted by CIT(A) - Assessee shown 25% only - Disallowance of the loss on sale of Land - Held that:- CIT(A) after perusing the various documents and the submissions of the Assessee and by detailed order has decided the issue in favour of the Assessee and interalia has also noted that the A.O has failed to substantiate the stand that the “Samjuti Karar” was a part of planning for evasion of tax. He also noted that the profit out of the sale of the land was duly reflected by the co-owners in the respective return of income and the same has been accepted by the Department. He has further noted that the land records were also upgraded to include the name of the co-owners and the “Samjuti Karar” was in the form of ratification of an early agreement which is permissible in law. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A), we therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue and the ground raised by Assessee in the C.O are dismissed. - Decided in favour of assessee. Interest expenses - CIT(A)deleted the disallowance - Held that:- We find that A.O while making the addition has noted that no details were furnished by the Assessee in support of his claim of interest for expenses. We find that before ld. CIT(A) Assessee had filed details on the basis of which the ld. CIT(A) has granted relief to the Assessee. Rule 46A of the I.T. Rules stipulate that CIT(A) for the reasons to be recorded, can admit the evidence produced by the Assessee in the appeal. However, the evidence produced by the Assessee under Rule 46(A)(1) cannot be considered on merits under Rule 46A(3) unless the A.O is given an opportunity to examine the evidence or document produced by the Assessee. In the present case, we find that on the additional evidence submitted by Assessee before CIT(A), the same were not confronted to the A.O nor any remand report was obtained from A.O. Therefore are of the view that in the interest of justice, the A.O should have been given an opportunity to examine the evidence that were furnished for the first time before CIT(A). We therefore set aside the issue to the file of ld. CIT(A) for him to decide the issue afresh after considering the submissions of the Assessee and in accordance with law. - Decided in favour of Revenue for statistical purposes. Disallowance on account of depreciation, interest expenses, salary expenses etc. - Held that:- while disallowing the claim, A.O has noted that there appear to be no business activity undertaken by the Assessee. We find that there is no finding of the A.O that the expenses that have been claimed by the Assessee are only with respect to his share of 6.25% of the profits which have been considered by ld. CIT(A). We are therefore of the view that the matter needs re-examination at the end of A.O. We therefore set aside the issue to the file of A.O to decide the issue afresh after giving an opportunity of hearing to the Assessee.- Decided in favour of Revenue for statistical purposes.
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2015 (3) TMI 393
Applicability of section 201(1) - non deduction of TDS - Held that:- As can be seen from the facts on record, A.O. raised the demand on the ground that the assessee has not deducted tax at source on the payments made. However, before the first appellate authority a plea was taken by the assessee that the concerned payees have offered the amounts received by them as their income of the relevant assessment year. A certificate from the Chartered Accountant was also filed certifying the aforesaid fact. The Ld. CIT(A) after considering this aspect and keeping in view the ratio laid down by the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd.(2007 (8) TMI 12 - SUPREME COURT OF INDIA) directed the A.O. to verify whether the concerned payees have offered the amount received by them as income of the relevant assessment year. In our view, the direction by the Ld. CIT(A) to verify this aspect cannot be faulted. - Decided in favour of assessee for statistical purposes. Non deduction of TDS - demand raised under section 201(1) - professional charges and consultancy charges - Held that:- . It is the claim of the assessee not only before the first appellate authority but also before us that many of the payments constituting the professional charges of ₹ 8,24,762 and consultancy charges of ₹ 4,17,465 are less than ₹ 20,000. Hence, there is no requirement for deduction of tax at source. It is also the claim of the assessee that on all other payments exceeding ₹ 20,000 assessee has complied to the TDS provisions but due to some reason or other he could not produce the evidences before the A.O. or first appellate authority. In support of such claim, assessee has submitted certificates in Form No.16A containing the payment particulars, dates of remittance of TDS into the Government account, corresponding cheque numbers etc. We consider it appropriate to remit the matter back to the file of A.O. for necessary verification and deciding the matter afresh - Decided in favour of assessee for statistical purposes. Tds on advertisement and publicity expenses - demand raised under section 201(1) and 201(1A) - Held that:- It is the claim of the assessee before us that assessee has not incurred the expenditure towards advertising and publicity directly but it was Siri Media P. Ltd., who is the distributor and has made the payments on behalf of the assessee. It is also the contention of the assessee that Siri Media P. Ltd., has deducted tax at source on such payments made to the payees towards advertising and publicity. In this context, he has produced before us the TDS certificates and Form 16A and has requested for treating them as additional evidence. As these evidences were not produced either before the A.O. or Ld. CIT(A) and has been submitted before us for the first time, in the interest of justice, we consider it appropriate to remit the matter back to the file of A.O. to verify assessee’s claim - Decided in favour of assessee for statistical purposes. TDS on equipment hire charges - demand raised under section 201(1) and 201(1A) - Held that:- There is no dispute to the fact that assessee has paid the amount of ₹ 3,50,000 towards equipment hire charges without deducting any tax. It is the claim of the assessee that the payee M/s. Parade has offered the amount received as income in the relevant previous year. Hence, as per the ratio laid down by the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd., (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) no demand under section 201(1) can be raised against the assessee as he cannot be termed as ‘assessee in default’. Having heard the parties, we are of the view that the Ld. CIT(A) was correct in directing the A.O. to decide the issue after verifying assessee’s claim of offering of income by the payee on the amounts received. If assessee’s claim is found to be correct, A.O. cannot treat the assessee as assessee in default as held by the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd., (supra). Accordingly, we direct the A.O. to decide the issue within a period of six months from the date of this order - Decided in favour of assessee for statistical purposes. Payments made towards location rent - demand raised under section 201(1) and 201(1A) - Held that:- matter requires re-consideration by the A.O. as the exact nature of payment has to be verified by examining the contract entered into between the parties. It is claimed by assessee, location rent also includes payments towards manpower and food, electricity, diesel expenses etc., Atleast these payments cannot be said to be coming within the expression ‘rent’ as defined under section 194I. Therefore, without verifying the details of payments and terms of contract, it cannot be concluded that the location rent is payment received towards lease, sub-lease, tenancy etc., as per Explanation (i) of Section 194I. As the terms of contract and details of payment are not before us, we are not in a position to decide the issue. Accordingly, we remit the matter back to the file of A.O. for deciding afresh after due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (3) TMI 421
Demand of differential duty - Imposition of interest and penalty - Undervaluation of goods - Commissioner remanded matter back in respect for partial appellants - Power of Commissioner to remand the matter back - Held that:- No reason to interfere with the order of the Commissioner (Appeals) against which appeals filed by the Revenue. As the Commissioner (Appeals) by the earlier Orders-in-Appeal set aside the Adjudication order and, therefore, the impugned order passed by Commissioner (Appeals) against Shri Chaman Lal Bhambri cannot be sustained. Accordingly, the impugned Order-in-Appeal against which the appeal filed by Shri Chaman Lal Bhambri is liable to be set aside and remanded to be to the Adjudicating authority. - Following decision of Commissioner of Central Excise, Meerut-II Vs Honda Seil Power Products Ltd. reported in [2013 (3) TMI 303 - CESTAT NEW DELHI] - Decided in favour of appellants.
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2015 (3) TMI 420
Mis-declaration of description of goods - Smuggling of goods - imposition of penalty - Held that:- Goods were found to be mis-declared in its description when the unmutilated goods were found as against declared mutilated goods in the shipping documents and other connected documents. The appellant cleared the bills making payment through Indian Bank. This is recorded by ld. Adjudicating authority in para 19 (5) of his order. He has recorded the sequential evidence in such a manner, that reflects his proper application of mind as to his minute examination of the gravity of the case. Subsequent arrangement between the appellant and consigner is vividly clear as the letter sent on 07.12.2007 shows the date thereon as 17.01.2007. Once the goods were misdeclared that becomes smuggled goods under section 2(39) of the Customs Act 1962. This is done by misdeclaration and fabricating evidence and antedating the same. Record does not reveal bonafide of the consignor as well as the consignee who had hand in glove for misdeclaring description of the goods. The appellant was admittedly to be beneficiary of the goods imported fraudulently. Even though the appellant has not filed the bill of entry, the appellant is answerable under the law to the import by its intimate connection with the above smuggling. The goods became dutiable under section 12 of the Customs Act 1962. Accordingly, the appellant importer is answerable for the mis-declaration. The appellant did not come out with clean hands to prove without leaving any doubt against the mis-declaration. The goods were proved to be smuggled goods. That became property of the state. Re-export of the above import was not sought by the appellant. - However, penalty is reduced - Decided partly in favour of assessee.
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2015 (3) TMI 419
Waiver of penalty - Classification - whether ‘Red Whole Lentils’ are ‘pulses’ or not - Held that:- Ministry of Commerce has opined that Red Whole Lentils ‘are pulses’. Accordingly, at this stage, the offer made by the Ld. Advocate seems to be reasonable. Consequently, I direct the applicants to deposit 10% (Ten per cent) of the penalty imposed on each of them within a period of two weeks from today and on deposit of the said amount, balance amount of penalty imposed on the applicants would stand waived and its recovery stayed during the pendency of the appeals - Partial stay granted.
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2015 (3) TMI 418
Suspension of CHA licence - Regulation 20(2) of CHALR, 2004 - negligence of the CHA in respect of the goods exported from Mumbai - Held that:- Enquiry was made as to the involvement of the appellant to find out whether he had any exclusive knowledge or special knowledge of attempt to export of the goods through M/s. A.S. Exports, Mumbai. Materials on record do not suggest active involvement of the appellant to conclude that offence was committed by appellant. Therefore before completion of the proceedings under Regulation 22 of CHALR, 2004 any opinion by Tribunal would result in miscarriage of justice. It is apparent from the record that two years have expired from the order of suspension under Regulation 20 (2) of CHALR, 2004. Proceedings under Regulations 22 of CHALR, 2004 has already commenced. Looking into the time already expired, it would be appropriate to set aside the order dated 27.07.2012 till conclusion of the proceedings under Regulation 22 of CHALR, 2004 - Decided in favour of assessee.
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2015 (3) TMI 417
Determination of assessable value of export goods - whether duty be calculated on ‘Wet Weight’ basis, under which the Assessee/Respondent agreed to supply the goods to the overseas purchaser or on the transaction value of the goods on ‘Dry Weight’ basis for the period after 13.06.2008 - Held that:- Following decision of assessee's own previous case [2014 (8) TMI 213 - CESTAT KOLKATA] it is held that for the period after 01.01.2009, the said goods be assessed to duty adopting the FOB Price - export goods namely, Iron Ore Fines, be assessed to duty, adopting the criteria of ‘Dry Weight’, as agreed to between the Assessee/Respondent and the overseas purchasers - for determination of the value, we remand the case to the ld. Adjudicating Authority for deciding the issue afresh after supplying the relevant data to the Respondent. - Decided in favour of Revenue.
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Corporate Laws
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2015 (3) TMI 438
Power of Banks to publish the photograph of loanees/defaulters in newspapers - Against the fundamental rights under Article 21 of the Constitution of India - Held that:- The Supreme Court referring to the human dignity as an intrinsic value of every human being has held in M. Nagaraj case [2006 (10) TMI 420 - SUPREME COURT] that "The expression of 'life' in Article 21 does not connote merely physical or animal existence. The right to life includes right to live with human dignity." Also in case of S.Samuthiram [2015 (2) TMI 1021 - SUPREME COURT] held that "Every citizen in this country has the right to live with dignity and honour which is a fundamental right guaranteed under Article 21 of the Constitution of India".Even the right to privacy of the loanees enshrined under Article 21 of the Constitution of India is infringed to a certain extent as is evident by the following observations in Mr. X TOKUGHA YEPTHOMI [1998 (9) TMI 650 - SUPREME COURT]. There is nothing immoral in being unable to repay the loans availed of owing to the floundering of business or due to some other unavoidable reason which can enable the bank to infringe the right to privacy of loanees. There is no compelling public interest warranting the publishing of the photographs of the loanees in newspapers in which case only the right to privacy has perhaps to give way. Some of the loanees may even be driven to commit suicide for fear of ignominy on publishing their photographs in newspapers at the instance of the bank and it will remain a permanent taboo for their family. The publishing of the photographs in newspapers for the inability to clear the loan arrears to the bank in time is clearly an affront to the right to live with dignity and honour as well as the right to privacy of the loanees. I have no hesitation to hold that publishing the photographs by the bank under such circumstances is violative of the rights guaranteed to the loanees under Article 21 of the Constitution of India. A writ of prohibition is therefore issued restraining the bank from publishing the photographs of the petitioners in the leading newspapers for failure to repay the debt within a specified date. This will not however disable the bank from surging ahead with the proceedings already initiated or anew for realisation of its dues from the petitioners in any manner sanctioned by law. -Decided in favour of appellants.
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2015 (3) TMI 416
Appeal against order of admitting Winding up petition - Held that:- From the provisions contained in the RDB Act, 1993 it is evident that a Debts Recovery Tribunal does not have any jurisdiction to wind up a debtor company. The power of the company court to wind up a company, under the Companies Act, 1956 is in conflict with any provision of the RDB Act, 1993 and the provisions of Section 34 of the RDB Act, 1993 has any application in case of winding up application by a bank or financial institution. Thus, the ratio of the decision of the Supreme Court in the case of Allahabad Bank [From the provisions contained in the RDB Act, 1993 it is evident that a Debts Recovery Tribunal does not have any jurisdiction to wind up a debtor company. The power of the company court to wind up a company, under the Companies Act, 1956 is in conflict with any provision of the RDB Act, 1993 and the provisions of Section 34 of the RDB Act, 1993 has any application in case of winding up application by a bank or financial institution. Thus, the ratio of the decision of the Supreme Court in the case of Allahabad Bank vs. Canara Bank (Supra), laying down that in case of a conflict between the Companies Act, 1956 and the RDB Act, 1993 the provisions of the latter special Act shall override the previous general Act, has no manner of application in this case.], laying down that in case of a conflict between the Companies Act, 1956 and the RDB Act, 1993 the provisions of the latter special Act shall override the previous general Act, has no manner of application in this case. We are also supported in our view by a judgment of the Supreme Court in the case of Haryana Telecom Ltd. [1999 (7) TMI 545 - SUPREME COURT OF INDIA]. The Supreme Court held that arbitrator having no such power could not have entertained the petition and, therefore, the application made to the High Court for referring the matter to arbitration was misconceived. In our considered view, the principle laid down in the said judgment of the Supreme Court with regard to the exclusive power of company court to wind up a company squarely applies to the instant case before us. The Debt Recovery Tribunal not having been invested with the power to wind up a company, it would not be possible to urge before the company court that the petition should not be heard. we agree with the order made by the learned Single Judge admitting the petition for winding up. The appeal is dismissed as without substance.
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2015 (3) TMI 415
Application for the Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Regional Director observations regarding Securities Premium Account, Temporary employees, Placing on record the details of meetings of the secured creditors and unsecured creditors,Regarding the appointment date,Change in name of company and regarding NBFC activity - Submitted that Section 211(3B) of the Companies Act, 1956 provides that if the practice adopted for such accounting entry, varies from the said standard, necessary disclosure should be made in the financial statements. The Transferee company hereby undertakes that in case of deviation from the aforesaid Accounting Standard or Practice, the Transferee company shall make necessary disclosures in its First Financial Statement after the Scheme is made effective and also that the petitioner companies shall comply with the necessary Accounting Principles. Further submitted that the employees other than permanent employees that are employed by the Transferor companies are as per the contractual obligations and therefore cannot be absorbed by the Transferee company as the validity of the contract is for a specific period. In any case, the employees other than the permanent employees are automatically covered under the Scheme as all the contracts entered into by the Transferor companies which are valid as on the effective date shall be binding on the Transferee company and therefore, this becomes an automatic absorption of all the employees other than permanent employees by the Transferee company. Further submitted that the proposed Scheme does not envisages any compromise or agreement with the Secured Creditors and/or Unsecured Creditors of the Transferee company. The Transferee company shall continue to exist and carry on its commercial activities even after the Scheme is made effective. It was submitted that Clause 19 of the Scheme relates to the Change in the Name of the Company on approval of the Scheme by this Court. The petitioner companies undertake to comply with the relevant provisions of the new Companies Act, 2013 and rules thereto for Change in the Name of the Transferee company upon Scheme coming into effect. It was submitted that as the petitioner Transferee company is still engaged in the business of manufacturing and trading of pharmaceutical products as mentioned in the Memorandum of Association, the same is not ultra vires of the Memorandum of Association and also the Company will not be covered in the category of NBFC as more than 50% of the total income has been derived our of sale of pharmaceutical products. In view of above, all the observations and comments by the Regional Director made in respect of the Scheme in question have been explained and/or met with and/or do not sustain. The necessary report is produced by the official liquidator. Furthermore, from the material on record and perusal of the Scheme, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy. None of the parties concerned have come forward to oppose the Scheme except as mentioned above. All requisite statutory compliances are fulfilled. - Scheme of amalgamation approved.
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2015 (3) TMI 414
Default in payment of dues - Amount admitted as due and payable - Winding up petition by other party - Debt recovery tribunal (DRT) order not to pay till proceedings over - Held that:- In this regard, the very minutes of the meeting referred to by the learned counsel for the petitioner, on a close perusal would indicate that though the said amount of ₹ 34,83,215/- was admitted as the net amount due and payable by the respondent to the petitioner, in the very meeting it is recorded that the respondents herein will be in a position to release the payment to the petitioner on getting 'no objection certificate' from the Bank of Maharashtra which would be relevant for the purpose of the settlement of claim between the petitioner and the respondent. Therefore, if this aspect is kept in view and the fact that the Bank of Maharashtra has initiated proceedings against both the petitioner and the respondent before the DRT in O.A. No. 157/2010 and in the said proceedings, the Bank of Maharashtra has obtained an order of restraint against the respondent herein against paying the amount to the petitioner would disclose that the defence as put forth by the respondents herein is a bona fide one and it cannot be considered that the respondent-company are unable to pay their debts. On the other hand, they have been prevented in law against paying the said amount to the petitioner. Therefore, the prayer as made in the petition to wind up the respondent-company would not be maintainable in the instant petition. - Application of winding up rejected.
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2015 (3) TMI 413
Application by Office Liquidator in relation to declaration of dividend - To seek dispensation of filing of Form 137 - To seek permission of sending Form 138 by speed post instead of under certificate of posting - Held that:- Insofar as the permission to declare the interest at 4% per annum as sought is to be permitted as the same being done pursuant to the orders of this Court. Insofar as dispensation of publication of notice of declaration in Form 137, the same is also granted. Insofar as other permission that has been sought requires consideration in the background of the application filed in C.A.No. 1348/2014, which is filed by M/s.Mysore Acetate and Chemicals Company VRS Employees Association. In the said application, they seek that the interest on the claim made by the members of the applicant/association be paid to the association in compliance of the order passed in C.A.No. 1072/2011. The applicant therein, infact, is seeking to facilitate the payment to its members as they are scattered in different parts of the State and the Official Liquidator may not be in a position to contact each of them. The Official Liquidator, therefore, instead of dispatching Form 138 through 'speed post' shall deliver the same to the office bearers of the applicant in C.A.No. 1348/2014. The office bearers shall secure all particulars from its members including the details of their bank account number so as to facilitate payment by RTGS to the concerned employees. The necessary documents, which are to be obtained from members of the applicant in C.A.No. 1348/2014, shall be delivered to the office bearers by the Official Liquidator. On submission of the details, the payment to be made in respect of each of the employees, who are the members of the association, shall be done forthwith to the account number furnished by the association on behalf of the employees. If the applicant/association does not furnish the details of all the 517 members, payment as indicated shall be made only in respect of the employees, whose details are furnished by the applicant/association. In respect of unclaimed dividend, Official Liquidator is permitted to comply with the provision of Section 555 of the Companies Act. Leave to open the account is also granted.
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2015 (3) TMI 412
Off-market transfer of shares - Private transaction between parties - Outside the purview of SEBI - SEBI provisions do not bar the common law remedies - Held that:- The complaint made by the petitioner before the SEBI was for imposition of penalty upon respondent no.2. However, the SEBI found that petitioner had failed to provide any material to conclude that respondent no.2 had approached the petitioner as a broker. Consequently, the SEBI held that the disputes related to entities, which were not regulated by SEBI. I do not find any infirmity with the SEBI’s decision. The impugned order passed by SEBI is neither patently erroneous nor ill-informed by reason. Accordingly, the present petition is dismissed as bereft of any merits. - Decided against the appellant.
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Service Tax
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2015 (3) TMI 439
Denial of refund claim - Bar of limitation - claims were rejected by the original authority on the ground that the condition No. 2 of the Notification No. 05/2006-CE was not fulfilled and accordingly the claims were time barred - Held that:- these claims were submitted by them electronically on 13.12.2010. I find that the Range superintendent vide his letter dated 13.05.2011 asked the appellant to submit the hard copy of the refund claim in office of the Central Excise, Division Noida. In response to that letter the claims were submitted by the appellants in the Divisional Office on 25.08.2011. The fact of submission of the claim on 13.12.2010, has been admitted by the Range Superintendent in his letter dated 13.05.2011. Since the appellants have submitted the claim electronically in pursuance of Board Circular as well as the trade notices, it will be in interest of justice not to treat the claims as time barred as the refund claims were electronically submitted on 13.12.2010. I therefore set aside the Order-in-Appeal and hold that claims cannot be rejected as time barred in view of the fact that the claims were submitted electronically within time. - Decided in favour of assessee.
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2015 (3) TMI 437
Waiver of pre-deposit - Extended period of limitation - suppression or willful misrepresentation - Held that:- Tribunal ought to have dealt with the specific contention of the petitioner with regard to the non establishment, by the 2nd respondent Commissioner, of the fact of wilful misrepresentation/suppression, while dealing with the contentions of the petitioner on limitation. - However, Tribunal has only directed the petitioner to pay an amount of ₹ 20 lakhs, out of the confirmed demand of ₹ 61,20,000/-. The amount required to be deposited works out only to 33% of the amount confirmed against the petitioner - interim order not to be interfered with - Decided against the assessee.
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2015 (3) TMI 436
Tribunal had passed the exparte order directing pre-deposit - Construction of residential complex - services rendered by the appellant to the Tamil Nadu Slum Clearance Board - Held that:- The finding that there was abuse of process of law on account of the counsel seeking adjournment, that too for the first time after being engaged, appears to this Court to be too harsh. It is evident from proviso to Section 35-C of the Central Excise Act, that even in respect of appeals, the Tribunal is entitled to grant adjournment not exceeding three times, to a particular party. The finding of the Tribunal relating to abuse of process of law, warrants leniency and the matter deserves to be relooked into for which course the learned senior counsel for the appellant is fully agreeable and more so, accepts that a specific date be fixed for hearing. Therefore, accepting the plea of the appellant, this Court, while setting aside the order passed by the Tribunal, remands the matter back to the Tribunal for reconsideration of the application filed for waiver of pre-deposit to be heard on 18.3.2015, which date, it is stated, that the appeal has been posted for reporting compliance of the order of the Tribunal. It is made clear that the appellant/assessee will not seek further adjournment and the discretion as to adjourning the matter is left to the Tribunal on the date of hearing, if the matter so requires.
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2015 (3) TMI 435
Jurisdiction of Tribunal - appeal in respect of rebate claims made under the Finance Act, 1994 - issue related to claim for rebate on the services exported - Held that:- various subsections of section 86 would enable the Appellate Tribunal to deal with the Appeal and what the Tribunal has noted in this case is only subsection (7) of section 86. That is enabling it to apply the same provisions of the Central Excise Act,1944 while dealing with the Appeals under section 86. Thus,the same powers and the same procedure as is provided in Central Excise Act,1944 while dealing with Appeals may be followed by the Tribunal. The Tribunal,thus,has the same powers and can follow identical procedure as is found in Central Excise Act,1944. To our mind,this was not the provision which could have enabled the Tribunal in this case to rely on the issue of maintainability or competency of the Appeal. The Tribunal has clearly missed and omitted from consideration subsection (2A) of section 86. In this case,it is the Committee of Commissioners which objected to the order passed by the Commissioner of Central Excise (Appeals) and directed the Central Excise Officer to appeal on its behalf to the Appellate Tribunal against that order. This Appeal was clearly maintainable and should have been entertained and decided on merits. The subject Appeal therefore could not have been dismissed for want of jurisdiction. - Decided in favor of revenue.
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2015 (3) TMI 434
Waiver of pre-deposit - event management service - whether M/s. Karnataka State Cricket Association (KSCA) has rendered event management service - service tax liability on club or association service - Held that:- The way the consideration has been worked out on the ground that KSCA had rendered the service shows that all the income received in connection with the matches have been included and therefore we find considerable force in the submission of the learned counsel that what is being proposing to tax is the event and not the event management. In fact the learned counsel called the effort of the Revenue as an effort to collect cricket tax and not an event management fee. There is a contradiction in the ultimate finding and the proposal in the show-cause notice. What the show-cause notice proposed or concluded was that activity was undertaken on behalf of BCCI. How could a view that event management service has been provided by KSCA to BCCI can be taken is a question which would require much more detailed consideration. - On the one hand the Commissioner says that KSCA conducting the event and on the other hand the demand is confirmed under event management service. How the fans are related to the issue of event management and how does conducting events by the BCCI through the associations would amount to event management by the associations are not explained. The conclusions are contradictory to the findings above that the associations conduct the matches/events. We find ourselves in agreement with the submissions that there are contradictions between the observations of facts and the conclusions. Prima facie case is in favor of assessee - Stay granted.
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Central Excise
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2015 (3) TMI 429
Demand of Differential duty - excess amount was collected by the appellant from the customers in their invoices - It has been alleged that the appellants paid duty not on actual basis but on the previous month’s actual - Assesse contends that after adjustment of excess/short payment of duty, no demand will sustain. They have not collected the excess amount from their customers - Held that:- Tribunal in the case Bajaj Tempo Ltd. (2004 (7) TMI 145 - CESTAT, MUMBAI), held that net amount of differential duty is payable by the appellant after adjustment of the excess/short payment of duty. In that case, the issue relates to valuation of the impugned goods cleared from one factory of the appellants to another factory under the new Valuation Rules brought into effect from 01.07.2000. The Department contented that the appellant should have paid the differential duty and claimed refund of excess amount instead of adjustment excess/short payment. In the present case, we find that no sale of the goods involved and the appellant is a job worker and cleared the goods to the raw material supplier on the basis of conversion charges. Hence, the decision of the Tribunal in the case of Bajaj Tempo Ltd. (supra), would applicable in the present case. The decision of the LB in the case of BDH Industries Ltd. (2008 (7) TMI 78 - CESTAT MUMBAI) as relied upon by the Ld. AR is in respect of suo motto adjustment of cenvat credit, which is not applicable in the present case. - adjudicating authority to make adjustment of short payment and excess payment of duty made by the appellant and also take into consideration as to whether the appellants have collected any excess amount of duty from the raw material supplier. Thereafter, the adjudicating authority will determine the demand of duty - Decided in favour of assesse.
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2015 (3) TMI 428
Waiver of pre deposit of duty - Penalty u/s 11AC - Held that:- Cost Accountant had not signed the annexures to the Certificate, the Ld. Commr. (Appeal) has confirmed the Order-in-Original dated 30/01/2009 and rejected the appeal filed by the appellant. Now the Ld. Advocate submits that even though the certificate was signed but its annexures were not signed while submitting before the Ld. Commr. (Appeal). However, the same is signed now and a copy is placed before the Tribunal. The contention of the Ld. A.R. for the Revenue on the other hand is that the certificate does not conform to CAS-4 method. Therefore, the same may not be accepted at this stage. The Ld. Advocate submits that all the data required for completing the CAS-4 certificate are available in the present certificate. However, they have no objection to compile the data in accordance with CAS-4 guidelines. We are of the view that in the interest of justice, the appellant be given an opportunity to submit the certificate in proper form i.e. CAS-4 and after the said certificate is submitted, the Ld. Commr. (Appeal) would consider the same in accordance with law. Needless to mention that all issues are kept open in relation to adjudication order dated 30/01/2009.In the result, the impugned order-in-Appeal is set aside to the extent of deciding the issue in relation to the adjudication order dated 30/01/2009 and to that extent the matter is remitted to decide the issue on merit, without insisting for any pre-deposit - Decided in favour of assesse.
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2015 (3) TMI 427
Waiver of pre deposit - Reversal of CENVAT credit on GTA service - Held that:- Purchases orders of M/s.BHEL dt. 28.12.2010, 28.5.2011 and 16.6.2011, it is clearly indicated that contract for supply and delivery of goods is on FOR Destination. Considering the above facts and circumstances, I am of the view that applicant has made a prima facie case for waiver of predeposit of the dues. Accordingly, predeposit of entire amount of duty, interest and penalty arising from the impugned order is waived and its recovery is stayed till the disposal of the appeal - Stay granted.
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2015 (3) TMI 426
Demand of CENVAT Credit - Commissioner (Appeals) found that invoices on which credit was taken were having different address than which was reflected in their STC code and registration number - Held that:- if opportunity of reconciliation is granted, they would be able to satisfy Commissioner (Appeals). To provide natural justice, it is necessary that one opportunity is granted. - Accordingly stay application could not be considered at this stage and it is disposed off. Further Order-in-Appeal is also set aside and case is remanded back to Commissioner (Appeals). He will listen both the side after issuing notice and granting opportunity to produce documents, if any and decide the case within three months from the issue of this order. - Decided in favour of assessee.
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2015 (3) TMI 425
Waiver of pre deposit - Benefit of exemption under Notification No.67/95-CE dated 16.3.1995 - Clearance of molasses for captive consumption - Reversal of CENVAT Credit - Held that:- Final order of this Tribunal relied upon by the learned counsel in respect of the very same appellant on the very same issue is applicable to the facts of this case and the fact that the commissioner for a subsequent period has also followed this decision would support the case of the appellant. Moreover the decision in the case of Jeypore Sugar Co. Ltd. (2012 (8) TMI 828 - CESTAT BANGALORE) is also applicable. In this view of the matter, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (3) TMI 424
Denial of CENVAT Credit - Receipt of defective tubes - Tubes were returned to the supplier for repair but instead of repair of the said tubes, the supplier supplied fresh tubes without payment of duty - Held that:- Shri P.M. Narvekar, the Quality Control officer of the appellant have made a statement under Section 14 of the Central Excise Act, 1994 on 11.09.1993 confirming that they are receiving fresh manufactured “aluminium collapsible tubes” as replacement for the rejected tubes from M/s. Jyoti Record Manufacturing Co. Ltd. The statement of the Quality Control officer is relevant to decide the issue before me. The said statement confirmed the allegation alleged against the appellant as the said statement has not been retracted. Therefore, as per the decision of CC vs. D. Bhoormull [1974 (4) TMI 33 - SUPREME COURT OF INDIA] wherein it is held that what is admitted need not be proved; the statement of the Quality Control Officer is conclusive. - Decided against assessee.
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2015 (3) TMI 423
Denial of CENVAT Credit - failure to co-relate the pest control services with the manufacturing of final product - commission has been paid under Business Auxiliary Service - Held that:- Any service availed by a manufacturer of excisable goods, in the course of their business, is entitled for input service credit. Admittedly, in this case the commission has been paid by the appellant for procuring the inputs and the pest control has been done in their factory for cleanliness of the factory. In these circumstances, I hold that the appellant has availed these services in the course of their business of manufacturing of excisable goods. Therefore, the appellant is entitled for inputs service credit. Accordingly, the impugned order is set aside - Decided in favour of assesse.
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2015 (3) TMI 422
Denial of CENVAT Credit - penalty under Rule 13 of the CENVAT Credit Rules, 2002 - Held that:- Penalty under Rule 13 can be imposed on the person who is taking credit. In this case, the credit has been taken by M/s. Anthea Aromatics P. Ltd. and not by Shri Vincent Paul. Therefore, following the aforesaid decision, I hold that the penalty on Shri Vincent Paul is not sustainable - Coming to the penalty imposed on M/s. Anthea Aromatics P. Ltd. the show-cause notice alleges that assessee has intentionally/wrongly availed credit. When the department is also of the view that credit has taken wrongly then it cannot be held that it has been taken intentionally, as ‘intentionally' and ‘wrongly' are contrary terms. These terms cannot be applied concurrently. Therefore, the conclusion is drawn that the appellant has taken credit wrongly. Therefore, the penalty under Rule 13 (2) cannot be imposed. - Commissioner has observed that penalty under Rule 13(1) can be imposed on the appellant but he further observed that the appellant has not been able to make out a case for reduction of penalty. But he failed to discuss why the appellant has not made out a case for reduction of penalty. In this case, the appellant has apparently lost the refund admissible to them. Therefore, the appellant has made out a case for leniency in imposing penalty - Penalty reduced - Decided partly in favour of assesse.
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CST, VAT & Sales Tax
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2015 (3) TMI 433
Determination of turnover - Disallowance of discount - Assessee give discount on sale of motor vehicles - But, due to the policy of manufacturers of the vehicles that their motor vehicles should be sold at the same prices to all the purchasers and also as per the practice in the trade, the assessee do not show the discount in its tax invoices but issues credit notes towards the same separately - Whether the assessee-dealer can claim deductions and the amounts allowed as discounts in determining the taxable turnover without the said discount being shown in the invoice - Held that:- it is clear that a harmonious reading of Section 30, Rule 31 and Rule 3(2)(c) makes it clear that if a dealer/assessee has claimed the tax in excess of what is payable under the Act, he can issue a credit note for the excess amount claimed from the purchaser within six months from the date of sale invoice. After issuance of such credit note, he should promptly declare them in his returns to be furnished for the tax period in which the credit note is received and claim reduction in tax. How the said credit note should be issued and what are the details which the credit note should contain is what is stipulated in Rule 31. However, Rule 3 deals with the determination of the turnover. Sub-Rule 2 deals with the deductions from the total turnover to arrive at the taxable turnover. If a dealer has given discount and wants to claim deductions from the total turnover to arrive at the taxable turnover, the condition precedent is all amounts allowed as discounts should be shown in the tax invoice or bill of sale, as discounts allowed and then only the said amount could be deducted from the taxable turnover. However, if the discount given is not shown in the tax invoice or bill of sale, then the dealer is not entitled to deduction of the said amount from the total turnover. Once the sale invoice is issued and the sale price is collected along with tax, the aggregate of such sale constitutes the total turnover and the tax is payable on taxable turnover. To arrive at the taxable turnover what are the deductions that are legitimately be made is provided under Rule 3(2) of the Rules. One such permissible deduction is that the amount paid by way of discount provided that the discount is reflected in the sale invoice. Accordingly by issuing a credit note after receiving the amounts, of course, before filing the returns it cannot be said that the amount of discounts goes outside the purview of the turnover. - Therefore, the learned Single Judge was justified in not entertaining the writ petition against the said order - Decided against Revenue.
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2015 (3) TMI 432
Denial of exemption - Whether or not there was an exemption available to manufacturers of centrifuged latex and crumb rubber, from the payment of tax payable under the Kerala General Sales Tax Act, on the purchase turnover of rubber in any form used for the manufacture of centrifuged latex and crumb rubber - Held that:- Exemption from payment of tax payable under the KGST Act on purchase turnover of rubber used for the manufacture of centrifuged latex and crumb rubber was covered by Notification SRO 695/03 for the period from 01.04.1988 to 09.10.2001. Thereafter, the same exemption continued for the period from 10.10.2001 to 31.03.2004 through SRO 316/05. The benefit of exemption granted by the latter Notification was sought to be taken away through the introduction of a third Notification, namely SRO 946/07. - there is a distinction between the power to grant exemption which is available under Section 10 (1) and the power to cancel or vary any Notification that is available to the Government under Section 10 (3) of the Act. While the power to grant exemption or reduction in rate of tax payable under the Act can be exercised either prospectively or retrospectively, the power of the Government to cancel or vary any Notification issued under Sub Section (3) of Section 10 is one that can be exercised only prospectively. The respondents cannot rely on SRO 946/07 for the purposes of denying the benefit of exemption in terms of SRO 316/05 to the petitioners for the period from 10.10.2001 to 31.03.2004. - that insofar as the exemption Notifications in question clearly indicate the understanding of the State Government that there is a process of manufacture involved in the conversion of field latex to centrifuged latex and crumb rubber, it cannot be the stand of the department that there is no manufacturing process involved in such a conversion. In that view of the matter, the 2nd objection raised by the departmental authority while denying the benefit of exemption to the petitioners, also does not have any legal basis. Petitioners, cannot be denied the benefit of the exemption envisaged under SRO 316/05 for the period from 10.10.2001 to 31.03.2004. The assessments completed against the petitioners taking a contrary view, as also the notices issued by the respondents under Section 35 of the KGST Act on the basis that the exemption is not available to the petitioners, cannot be legally sustained - Decided in favour of assessee.
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2015 (3) TMI 431
Classification - Whether pure coconut oil which is manufactured by the revisionist is taxable at 4% under entry 43 or entry 131 of Schedule II Part A of the U.P. VAT Act, 2008 - whether Revive Instant Starch, which is also manufactured by the revisionist and which contains 90% tapioca starch and about 3% of other additives is liable to be charged to tax under Entry 118 of Schedule II Part A of VAT Act, 2008 or was liable to be treated as an unclassified item chargeable to tax at 12.5%. - Held that:- Tribunal having accepted that the findings recorded by the authorities below that pure edible coconut oil should be identified by its common parlance association with hair oil was not a sound finding and the appellate authority should have determined as to whether it fell within Entry 43 or Entry 131 of Schedule II, Part A is no doubt a correct finding but having said that it was incumbent upon the Tribunal, since the matter was before it and also within its competence, to have itself recorded a clear and unambiguous finding as to whether pure coconut oil (edible) fell within Entry 43 or Entry 131 or both for the purposes of tax. The Tribunal has in any case not accepted the finding of the appellate authority or the assessing officer that edible coconut oil should be treated as an unclassified item taxable at 12.5%. - Entry 43 of Schedule II Part A of the U.P. VAT Act, 2008 mentions edible oil and oil cake therefore if Parachute pure coconut oil which is marked as "edible" on its packaging cannot be labeled as hair oil and therefore an unclassified item liable to tax at 12.5% it must necessarily be classified as edible oil under Entry no. 43 of Schedule II Part A and therefore, in my opinion would be liable to tax at 4% and not as an unclassified item taxable at 12.5%. Word Starch as used in Entry 118 of Schedule II Part A of the U.P. VAT Act, 2008 has neither been referred to as edible or inedible and therefore Revive Starch must be held to be falling within the meaning of word Starch as used in Entry 118. If it had been the intention of the Legislature to distinguish between edible and inedible Starch, the Entry 118 itself would have explicitly said so and therefore when the Legislature itself is silent a meaning or interpretation to a word used in the statute must not be given which the Legislature itself did not intend and did not say in so many words. - order of the Tribunal dated 28.3.2011 is set aside - Decided in favour of assessee.
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2015 (3) TMI 430
Classification of goods - Whether portable hand held electronic ticketing machine is an IT produce and falls under heading and sub-heading No.8471 to be eligible for tax at 4% or under sub-heading No 8470 attracted tax rate at 12.5% - Held that:- Electronic ticketing machine is an IT product. - Schedule-III Item No.53 namely IT products including telecommunication equipments as would be notified are taxed at 4% and therefore, the assessee is entitled to the said benefit. - where a commodity is described against any heading or sub-heading, if the aforesaid description is different in any manner from the corresponding description in the Central Excise Tariff Act, 1985, then only those commodities described as aforesaid will be covered by the scope of this notification and other commodities though covered by the corresponding description in the Central Excise Tariff will not be covered by the scope of this notification. The KSRTC invited tender for supply of ticketing machines with technical specifications detailing the hardware and software components. They called the said goods as portable handheld ticketing machine. As per Annexure-A the assessee is in the business of sale of ticketing machines. The Annexure-"A" which is issued by them reads that it is versatile bus ticketing machines from the pioneers of ticketing machines in India. Introduces compact and rugged hand held bus ticketing machines. Over 10,000/- machines in use in various State Road Transport Corporations including KSRTC, NEKRTC, NWKRTC AND BMTC in Karnataka and KSRTC, Kerala apart from various private organizations in India and Abroad. In the hind portions, they have given the specifications of the hardware. Therefore, in the light of the judgment of the Supreme Court [1990 (11) TMI 142 - SUPREME COURT OF INDIA], how the goods are understood in the commercial sense has to be taken into consideration for the purpose of classification of the goods and the scientific and technical meaning has no place. Therefore, when the goods involved is a portable handheld ticketing machine that is how the assessee has described the machine and that is how the customers have also understood it and in the Central Excise Tariff Act this ticket issuing machines are expressly included in Entry 8470, by any stretch of imagination, the Court cannot hold that it falls under 8471 especially when it specifically states that "not elsewhere specified or included". The notification issued specified 8471 does not include this ticketing machine. This is precisely what the authorities have concurrently held. Therefore, we do not see any error in the orders passed by any of the authorities. Therefore, the finding is just and proper and in accordance with law. - Decided against assessee.
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