Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 15, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Reopening of assessment - It cannot by any stretch of imagination be said that the A.O. has not gone through the tax audit report while framing assessment u/s 143(3) and in fact the A.O.is duty bound to go through the same before framing the assessment - now re-opening the assessment merely on the basis of information received from revenue audit team while there is no independent application of mind by the AO before re-opening the assessment which is not permissible - AT
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Disallowance towards the cost of land - On probing amount of the work in progress the AO has come to know that these expenses have not all been incurred by the assessee and on perusal of the sale deed AO has stated that sale consideration is inclusive of all rights. - CIT(A) has rightly confirmed that disallowance towards the cost of land - AT
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Rectification of mistake - order u/s 154 on debatable issues - in order u/s 154 AO allowed refund and interest thereon u/s 244A - In the absence of any accusation against assessee in the order sought to be rectified, ld. CIT(Appeals) should not have given a direction to examine afresh the assessee's case u/s 244A(2) - AT
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Disallowance of expenditure - The factum of the payment of money may not be in doubt, but the factum of rendering of services at the end of these three persons is totally missing - Expenses were rightly disallowed - AT
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Eligibility of registration u/s 12A - approval u/s 80G(5)(vi) - The competent authority should have acted vigilantly to pass an appropriate order in the matter within the prescribed time as per sub-rule (6) of the Rule 11AA of the Rules and having not done so, the competent authority has put the assessee in a helpless and embarrassing situation which caused jeopardy against the assessee for no reason or good cause - AT
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Income from license fee arising from leave and license agreement entered into by the assessee company is chargeable to tax as income under the head “income from house property” and not under the head ‘Income from other sources’ - AT
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Assessee is eligible to claim deduction u/s 80IB(10) of the Act for the undisclosed income surrendered during search/survey action in a situation when assessee has been assessed in previous years and has been allowed deduction u/s 80IB(10) of the Act as well as there is no other source of income of the assessee other than the business of developing housing projects - AT
Customs
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Writ petition - Validity of Tribunal's order - Tenability of claim for interest under Section 28AA - Period of limitation in relation to amount receivable upon forfeiture of the bond - matter remanded back - HC
Service Tax
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Condonation of delay - delay of almost 2 years - the order in Original was passed on 30.11.2012. Even as on today, no steps were taken by the department in collecting the tax amount, which has been demanded by the order dated 30.11.2012 - there is lapse on the part of the department in not enforcing the order - delay condoned - HC
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Extended period of limitation - Bonafide belief - An assessee who has a bonafide belief that it is not liable to tax would naturally not obtain registration, assess itself to tax or file returns. This by itself does not tantamount to wilful misstatement / the suppression of facts. - AT
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Taxability of maintenance and repair services relating to information technology software till December 2007 - the clients of the appellant in this case would be users of ‘information technology software' and hence any maintenance of that software would be taxable only after 16 th May 2008 - AT
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CENVAT credit - Scope of input services - Input services received at their Head Office and subsequently distributed to the appellant herein - In the absence of any doubt raised as to the eligibility to avail the CENVAT credit at their Head Office, the recipient unit, cannot be asked to explain the nexus of such credit to the output service provided by them. - AT
Central Excise
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Inadmissibility of CENVAT credit availed on Colchester CNC crane - central excise duty demand under Section 11A along with interest and equal amount of penalty - contention of Revenue that Colchester CNC machine was used exclusively for job work and therefore CENVAT credit of duty paid thereon was not admissible - the contention rejected - credit allowed - AT
VAT
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Attachment of bank of account - Recovery of GVAT - section 45 of the Gujarat Value Added Tax Act, 2003 - Attachment to be lifted - Revenue restrained from making any further coercive recovery from the petitioner till the stay application filed by the petitioner is heard and decided - HC
Case Laws:
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Income Tax
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2016 (3) TMI 423
Availability of the revisional power under Section 263 in respect of the orders passed by the inspecting Assistant Commissioner of Taxes - Held that:- These cases will be decided on merits by answering the question of law only after the Revenue satisfies the Court that the question posed is a live issue in other adjudications. List these cases again on 17th March, 2016. As directed, this order be brought to the notice of the Chairman of the Central Board of Direct Taxes.
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2016 (3) TMI 422
Penalty u/s 271 (l)(c) - disallowance u/s 35ABB - Held that:- In this case it is merely the claim made was unsuccessful before two authorities but none of the authorities have held that the claim of the assessee not at all sustainable. Merely because the deduction claim was negative by the appellate authorities assessee cannot be subjected to penalty by holding that assessee has deliberately furnished inaccurate particulars of Income. In this case AO has held because the claim of the assessee was not allowed u/s 35ABB of the act assessee has deliberately furnished inaccurate particulars of income and penalty u/s 271(1) (c) was levied. We are of the view the claim made by the assessee was highly debatable and on such claims being not allowed, it does not amount to furnishing inaccurate particulars of Income. Therefore we confirm the order of CIT (A) in deleting the penalty u/s 271(1) (c) of the act in all the three appeals. - Decided in favour of assessee
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2016 (3) TMI 421
Addition to gross receipts - offer to tax revenues only on a pro-rata basis - Held that:- As far as the issue of inclusion of ₹ 3,04,18,274/- in gross receipt for the purposes of computing is concerned, we are of the considered opinion that the contention of the assessee is incorrect. Gross payments are intricately linked to the services/works rendered by the assessee and arise due to the execution of contract in India, under the terms and conditions of the contract between the assessee and Siem Offshore Inc. The vessel was hired by the contract and it was only for this purpose that the vessel and the crew were involved in the said contract. Thus, it is improper on the part of the assessee to offer to tax its revenues only on a pro-rata basis based upon the number of days the vessel was stationed within 200 nautical miles from the Indian shore line. As the contract for the provision of crew was a continuing contract, it cannot be said that revenues were not earned for the period the vessel was out of the territorial waters of India. Hence, the entire contract amount is to be considered for the purpose of calculating the gross receipts and all receipts received against the execution of the contract would come under the purview of gross receipts. Thus, gross amounts for the months of November 2007, December 2007 and January 2008 are to be included in the gross receipts. We accordingly uphold the action of the Assessing Officer and the Ld. CIT (A) on this issue and decline to interfere. - Decided against assessee Revenues earned - taxed as Fees for Technical Services (FTS) or under the provisions of section 44BB - Siem Offshore Inc had leased a vessel under a time charter agreement to Electromagnetic Geo Services AS ('EMGS') to assist EMGS in its exploration of seabed and subsoil (EMGS has entered into a contract with Oil and Natural Gas Corporation Ltd) - Held that:- Specific services are contemplated only under section 44BB and, therefore that being special provision, the same will prevail over all other provisions dealing with royalty/FTS. In no other section dealing with royalty/FTS, specific services are provided. In this regard, one may also refer to section 293A of the Act which empowers the Central Government to grant exemptions in relation to participation in the business of prospecting for or extraction etc. of mineral oil. In fact separate notifications have been issued by the Government in exercise of its power conferred u/s 293A to give relief to the assessees in connection with the business of exploration and extraction of mineral oil. Considering the pressing requirement of the oil industry, sections 42 and 293 A were inserted in the Act in view of the high expenditure involved in the business of oil exploration. When viewed in the back drop of this objective, we find that section 44BB has been couched in such a manner so as to encompass within its ambit all services connected with oil exploration. Thus, in our opinion, if a non-resident is engaged in the business of providing services or facilities in connection with the prospecting for extraction or production of mineral oil, then 10% of the aggregate of the amounts received/accrued will be deemed to be the profits and gains of such business chargeable to tax in terms of provisions of section 44BB of the Act. Thus on the facts of the case and respectfully following the ratio of the judgment of the Hon’ble Apex Court in ONGC vs. CIT & Anr. [2015 (7) TMI 91 - SUPREME COURT] it is our considered opinion that the revenues of the assessee should be taxed under the provision of section 44BB of the Act. - Decided in favour of assessee
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2016 (3) TMI 420
Addition to the undisclosed return income - addition made on the basis of GP rate and peak credit - Held that:- We find that the AO was not justified to make the addition of ₹ 65,78,933/- in addition to the undisclosed return income of ₹ 21,36,111/- which was filed by the assessee during the course of block proceedings and as such the AO has ignored the block return income of ₹ 21,36,111/- which is the part of the total undisclosed income of the assessee of ₹ 65,78,933/-. It is apparent that the total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is ₹ 65,78,933/- which included the undisclosed block return income of ₹ 21,36,111/- and as such the AO should only assess the total income of ₹ 65,78,933/- only. We find considerable cogency in the Ld. CIT(A) order wherein the observed that the Assessee has stated that that the AO has made double addition of ₹ 21,36,111/- which has already been offered by the assessee in the block return income and accordingly, the Ld. CIT(A) has rightly directed the AO to assess the total undisclosed income of ₹ 65,78,933/- only (Rs. 6,76,393/- + ₹ 59,02,540/-) after the order of the Tribunal and as such the appeal of the assesse was rightly allowed. Keeping in view of the facts and circumstances of the case, we do find any infirmity in the order of the Ld. CIT(A), which in our opinion, does not need any interference - Decided against revenue Penalty order u/s. 158BFA(2) - Held that:- AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated, hence, the Ld. CIT(A) has rightly cancelled the penalty, which in our considered opinion does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue - Decided against revenue
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2016 (3) TMI 419
Reopening of assessment - sufficiency or correctness of the material - Held that:- When no assessment u/s 143(3) of the Act was completed, there was no information available on the file of the Assessing Officer for verification whether any credit was introduced by those two creditors either by way of investment or loan or in any other forms. The AO while recording reasons verified that the information belonged to the assessee and it belonged to the relevant assessment year under consideration and the information was received from a reliable source i.e. the Director of Income Tax (Investigation) and thereafter he recorded satisfaction that he had reason to believe that there was a escapement of income in the case , therefore, in the circumstances it cannot be said that AO has not applied his mind. In the case of ITO vs. Comero Leasing & Financing Pvt. Ltd. ( 2014 (8) TMI 761 - ITAT DELHI ) cited by the ld. AR, the assessment was completed and the records were available with the AO before issue of notice u/s 148 of the Act, whereas in the case of assessee, the return was processed u/s 143(1) of the Act only and no scrutiny assessment was completed before issue of notice u/s 148 of the Act, thus, the ratio of the said decision is not applicable of the fact of the case of the assessee. We also agree with the contention of ld Sr DR that sufficiency or correctness of the material cannot be considered at the stage of issuing notice under section 148 of the Act as held by the Hon’ble Supreme Court in the case of the Raymond Woolen Mills Ltd Vs ITO (1997 (12) TMI 12 - SUPREME Court ).Thus, we uphold the finding of the Ld. CIT(A) in impugned order that notice issued by the AO under section 148 of the Act was in accordance to law - Decided against assessee
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2016 (3) TMI 418
Reopening of assessment - assessment based on the information received from the revenue audit team - change of opnion - Held that:- We have observed that detail of deviation from the method of valuation prescribed u/s 145A of the Act are duly given in Annexure “D” to tax audit report u/s 44AB of the Act which was submitted before the AO and also in the computation of income filed along with the return of income with the Revenue, hence, the assessee company has truly and fully disclosed all the material facts necessary for the assessment. With respect to the amount of ₹ 10,72,897/-, we have observed that the assessee company has disclosed the said facts in the computation of income filed with the Revenue Authorities. The tax audit report u/s 44AB of the Act is an important piece of evidence and is a statutory document u/s 44AB of the Act, which is filed before the A.O. along with the return of income from where the A.O. seeks all the prescribed information which is vital and necessary for framing the assessment. It cannot by any stretch of imagination be said that the A.O. has not gone through the tax audit report while framing assessment u/s 143(3) of the Act and in fact the A.O.is duty bound to go through the same before framing the assessment . The said information was also duly declared and disclosed in the computation of income filed with the Revenue Authorities. The Revenue is seeking reopening of the assessment based on the information received from the revenue audit team. Thus, as per section 147/148 of the Act change of opinion is not permitted as the AO while framing the original assessment u/s 143(3) of the Act vide orders dated 09-03-2008 has duly applied his mind to the issues as detailed above and is now re-opening the assessment merely on the basis of information received from revenue audit team while there is no independent application of mind by the AO before re-opening the assessment which is not permissible and more-so when the AO has passed scrutiny assessment u/s 143(3) of the Act in original assessment and four years have elapsed from the end of the assessment year when the assessment was reopened vide notice u/s 148 of the Act dated 28-03-2012 and the reasons were recorded on 26-03-2012 , and there is no failure on the part of the assessee company to truly and fully disclose all material information in the return of income filed with the revenue and during the course of original assessment proceedings u/s 143(2) of the Act read with Section 143(3) of the Act. - Decided in favour of assessee
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2016 (3) TMI 417
Disallowance towards the cost of land - Held that:- On probing amount of the work in progress the AO has come to know that these expenses have not all been incurred by the assessee and on perusal of the sale deed AO has stated that sale consideration is inclusive of all rights. Therefore in this case AO is disputing the closing stock of the earlier years also. In view of the above facts and circumstances of the case we are of the view that learned Commissioner of Income-tax (Appeals) has rightly confirmed that disallowance towards the cost of land - Decided against assessee
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2016 (3) TMI 416
Rectification of mistake - order u/s 154 on debatable issues - in order u/s 154 AO allowed refund and interest thereon u/s 244A - Held that:- From the orders passed by AO u/s 154 there is neither any hint nor any reference that any delay was attributable to the assessee. Ld. CIT(Appeals) instead of deciding the grounds raised by the assessee has decided a new issue by holding that AO's order u/s 154 was to be upheld and 244A(2) should be examined. Instead of deciding the main issue raised in assessee's appeal, a new direction has been given to examine the interest u/s 244A, which required ascertainment of new facts inasmuch as in none of the earlier orders, there is any whisper to the delay attributable to the assessee. Thus, ld. CIT( Appeals) instead of deciding the merits of the AO's order in terms of rectificatory order has traveled into debatable issue which require mere factual finding, arguments and ascertainment of facts which does not fall in the realm of rectification of mistake. Be that as it may, Sec. 244A(2) postulates that where any dispute arises about the delay for reasons attributable to the assessee the same should be referred to the CCIT/ CIT, whose decision is final on this issue. The reference is not applicable to assessee alone but when the AO raises a dispute, he can also refer the matter to CCIT/ CIT. Surprisingly, in all these proceedings there is no whisper of delay attributable to assessee or any issue raised by AO in first order giving effect to ITAT order. Even in the order of Id. CIT(Appeals) there is no accusation. In the absence of any accusation against assessee in the order sought to be rectified, ld. CIT(Appeals) should not have given a direction to examine afresh the assessee's case u/s 244A(2). We are unable to agree with Id. DR that ITAT has no jurisdiction inasmuch as either there is allegation for attributable to reasons for delay in granting of refund nor AO ever raised this dispute in first order giving effect to ITAT order. On the plain reading of the provisions of sec. 244A(3) if the assessee's refund is increased in that case the increased interest u/s 244A is to be given by way of a statutory exercise. The merits about delay and reasons attributable to assessee fall within the realm of arguments and regular proceedings and not rectification of mistakes, more so amount of refund is concurred by Addl. CIT & CIT. Thus the impugned order of AO passed u/s 154 cannot be upheld. Similarly, ld. CIT(Appeals) also erred in not deciding the dispute as raised in grounds of appeal and instead gave a fresh direction to verify facts and examine the applicability of sec. 244A which would require ascertainment of fresh facts, reasons and accountability. In view of these facts we hold that the impugned order passed by the AO u/s 154 cannot be sustained. - Decided in favour of assessee
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2016 (3) TMI 415
Eligibility for deduction u/s.80IB(10) - claim of deduction was denied by the A.O. mainly for the reason that assessee was not the owner of the land and according to him, the assessee was merely a contractor - Held that:- We find that ld. CIT(A) while deciding the issue in favour of assessee and after perusing the development agreement has given a finding that assessee had acquired land from the society at fixed cost and society was not entitled to any further benefits arising from development of the project, all the development and construction of the project was carried out be assessee at its own risk and the assessee had borne all the expenditures, assessee had received entire sale consideration from the buyers of the units as per rates decided by it and assessee has taken full risk of executing the housing project and that the assessee was entitled to all the profit and gains including losses, if any, arising from sale of housing units. He has further given a finding that the facts of the assessee’s case were identical to the facts of the case in the case of Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT ], which was decided in assessee’s favour. Before us, Revenue has not brought on record any material to controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against revenue
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2016 (3) TMI 414
Penalty under section 271(1)(c) - undisclosed deposits - Held that:- The assessee has given explanation about the source of deposits in the accounts. The explanation could not be substantiated with the supporting evidence, but the explanation was not held by the AO as false. Had the assessee gave confirmation from M/s.Shrinathji Corporation in the Asstt.Year 2002-03, then the addition itself would have been deleted, but the AO has not issued any notice to M/s.Shrinathji Corporation in order to find out whether the explanation given by the assessee is false or not. Similarly, in the Asstt.Yar 2003-04, the explanation given by the assessee is that he has received back ₹ 1.50 lakhs from Shri Anvarbhai Kapadia and that amount was deposited in the bank account. The AO has accepted the facts that a sum of ₹ 3.00 lakhs advanced by the assessee, but disbelieved the explanation of ₹ 1.50 lakhs. Again the explanation of the assessee was not held to be false. Therefore, in view of our discussion, we are of the view that the assessee does not deserve to be visited with penalty under section 271(1)(c) of the Act, and accordingly impugned penalty in both the appeals are cancelled. - Decided in favour of assessee
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2016 (3) TMI 413
Addition made on account of accrued interest on OFCPNs/DDBs - Held that:- CIT(A) in his order observed that this issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in the case of Kisan Discretionary Family Trust[2007 (11) TMI 622 - ITAT AHMEDABAD ] - Decided in favour of assessee Disallowance of loss on sale of Optionally Fully Convertible Promissory Notes - Held that:- The assessee converted the investment into stock in trade and conversion was allowed under Income-tax Act. There is no legal bar for such conversion. If the assessee had not converted the investment into stock in trade, the total loss suffered would have been claimed as loss under short term/long term capital gain as the case may be. However, when the assessee converted it into stock in trade, the loss suffered between the date of investment to the date of conversion was treated as loss under capital gain assessable in the year when sale was made and loss from the date of conversion to the date of sale was to be treated as business loss, which assessee claimed. The valuation on date of conversion into stock in trade was taken on the basis of report of Chartered Accountant. There was no contrary sale price available on the date of conversion. When the purchase & sales are genuine and purchases & sale prices are accepted, the parties are independent and not related to the assessee u/s.40A(2)(b) of the Act and there was no evidence that suppressed sale price difference came back to the assessee, the loss on sale could not be disallowed as loss arising from sham transaction or as bogus loss. Hence, the addition made by the Assessing Officer was rightly deleted by the CIT(A). - Decided in favour of assessee Disallowance out of administrative and other expenses and payment to and provision for employees u/s 14A - Held that:- We are inclined to concur with the findings of the CIT(A) who has rightly deleted the disallowance in question, because the dividend income, agricultural income and other incomes of the assessee having found no nexus with the expenses incurred by the assesseecompany. The assessee-company is a member of Association of Persons (AOP) and AOP is a separate legal entity. The assesseecompany received share of profit from AOP. The expenses incurred by the assessee-company have no direct or indirect nexus for receipt of share of profit from AOP and the profit on sale of security is the income assessable to tax under the head capital gain. The assessee-company had offered short term capital gain of ₹ 2,79,33,377/- and long term capital gain of ₹ 88,68,072/- which was considered for taxation in the return of income and the same was also assessed in the assessment order passed u/s 143(3) of the Act. In view of the above, the CIT(A) was rightly deleted the addition in question i.e. ₹ 3,64,050/- made u/s 14A of the Act. - Decided in favour of assessee
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2016 (3) TMI 412
Disallowance of expenditure - Held that:- The nature of activity which has given rise to commission income to the assessee, because, the assessee was working as plant operator in the Gujarat State Electricity Corporation Ltd. and a salaried employee. The assessee submitted that the assessee has received commission income from Jindal Aluminum and Banco Aluminum. These concerns must have made certain purchases of aluminum products and the assessee with the assistance of these three persons helped these concerns. In respect of this activity, not a single document was being maintained by the assessee. He could not produce any details from Jindal Aluminum or Banco Aluminum. The CIT(A) has provided opportunity to the assessee to demonstrate what is the nature of services these three persons have given to the assessee. Not to talk of services provided by these persons, even, the assessee could not produce the nature of activity for giving rise to the commission income. He has received some income, but failed to demonstrate the activity of earning of this commission income. The expenditure for earning any income can be claimed by the assessee, if he is able to demonstrate that the expenditure was exclusively and wholly incurred for the purpose of business activity. The factum of the payment of money may not be in doubt, but the factum of rendering of services at the end of these three persons is totally missing. Therefore, the ld.CIT(A) has rightly confirmed the disallowance made by the AO. No interference is called for in the order of the ld.CIT(A). - Decided against assessee.
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2016 (3) TMI 411
Penalty u/s 271(1)(c) - Excess claim of deprecation under TUF Scheme and capital subsidy - Held that:- Penalty imposed by the AO cannot be held as sustainable and the first appellate authority rightly deleted the same. Our conclusion also gets support from the landmark judgment of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd [2010 (3) TMI 80 - SUPREME COURT] and judgment of CIT Vs. Brahmaputra Consortium Ltd. [2011 (8) TMI 8 - DELHI HIGH COURT ] wherein it was held that merely because claim of the assessee was not accepted or not found to be acceptable by the Revenue does not amount o concealment of particulars of income or furnishing of inaccurate particulars of income. - Decided in favour of assessee
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2016 (3) TMI 410
Eligibility of registration u/s 12A - approval u/s 80G(5)(vi) - whether the appellant society not being engaged in any charitable activities to deny it the approval u/s 80G(5)(vi)? - Held that:- Registration granted to the assessee u/s 12A of ht Act as charitable association is existing and has not been shown to have withdrawn or cancelled till date. It is the situation in our considered opinion the grant of approval u/s 80G of the Act cannot be denied or rejected. The preposition laid down by the ITAT Amritsar and New Delhi, as cited by the assessee and discussed above also strongly support the grant of approval u/s 80G of the Act. Thus we are inclined to hold that there is no good cause or reason before the competent authority and we are unable to see any justification in the rejection of the claim of the assessee by charitable status granted to the assessee by certificate issued u/s 12AA of the Act is cancelled or withdrawn by following prescribed procedure u/s 12A(3) of the Act. In the present case after getting registration u/s 12A of the Act the assessee has done what was expected from it under the relevant provisions of the Act and the Rules made thereunder. The competent authority should have acted vigilantly to pass an appropriate order in the matter within the prescribed time as per sub-rule (6) of the Rule 11AA of the Rules and having not done so, the competent authority has put the assessee in a helpless and embarrassing situation which caused jeopardy against the assessee for no reason or good cause. In the light of above legal dicta and factual discussions and following the decision relied by the assessee, we are inclined to hold that the assessee is entitled for approval u/s 80G of the Act and the competent authority is directed to grant the same. - Decided in favour of assessee
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2016 (3) TMI 409
Income from license fee arising from leave and license agreement - “income from house property” OR ‘Income from other sources’ - Held that:- The assessee company acquired the plot of land for a long period i.e. 95 years from the MIDC and the assessee company is the deemed owner of this plot by virtue of section 27(iiib) of the Act read with Section 269UA(f) of the Act. The assessee company is the owner of the factory building and it is also a deemed owner of the land and the licensee fee income received has to be assessed under the head ‘income from house property’ and not under the head ‘income from other sources’. With respect to the lifts and electrical installations in the factory building given on leave and license along with the premises consisting of land and building , the lift and electrical installations are amenities , which are necessary for the use and enjoyment of the building and hence part of the building and cannot be separately assessed and charged to tax under the head ‘Income from other sources’ rather the same is also chargeable to tax under the head ‘Income from House Property’. In our considered view, the CIT(A) has rightly held that income from license fee arising from leave and license agreement entered into by the assessee company with Omnitech Infosolutions Limited dated 10.12.2007 is chargeable to tax as income under the head “income from house property” and not under the head ‘Income from other sources’ - Decided in favour of assessee
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2016 (3) TMI 408
Inadmissibility of deduction u/s 80IB(10) - surrender made on account of undisclosed income (on money found during search proceedings) - Whether the assessee is a developer or a works contractor? - Held that:- As examined the financial statement of the assessee and find that in the audited balance sheet as on 31.3.2006 assessee has shown sundry debtor of ₹ 1,99,21,445/-, the list of which includes 42 parties including Shri Madhav Co-op. Housing Society Ltd. being a sundry debtor of ₹ 8,87,166/- and the remaining amount of debtor i.e. ₹ 1,90,34,279/- are being debit balance in the names of various flat owners from whom the assessee had yet to receive the amount which it has spent for the housing project. This shows that assessee was not working only as a work contractor on behalf of Shree Madhav Co-op. Housing Society Ltd. else the assessee would have been showing the complete outstanding balance in the name of Shree Madhav Co-op. Housing Society Ltd. This fact has not been controverted by the revenue at any stage below and, therefore, looking to the terms and conditions of the development agreement and audited financial statement of the assessee, we are of the view that assessee comes under the category of developer and not of works contractor and, therefore, comes within the definition of developer as referred in the provisions of section 80IB(10) of the Act. Relying on the above decision of the co-ordinate bench in the case of Golden Developer vs. ITO (OSD), Range-9, Ahmedabad (2015 (9) TMI 645 - ITAT AHMEDABAD ) and looking to the facts of the case of assessee and applying the ratio of consistency, we find that assessee has successfully been able to fulfill all the requisite conditions for getting deduction u/s 80IB(10) of the Act. Even in the situation if the assessee is not the owner of the land, nor approval for construction received from the local authority is in its name but still assessee being a developer and fulfilling all the conditions embedded in the provisions of section 80IB(10) of the Act assessee is eligible for deduction under section 80IB(10) of the Act. Respectfully applying the judgment of co-ordinate bench in the case of Madhav Corporation (2015 (7) TMI 992 - ITAT AHMEDABAD ), we are of the view that assessee is eligible to claim deduction u/s 80IB(10) of the Act for the undisclosed income surrendered during search/survey action in a situation when assessee has been assessed in previous years and has been allowed deduction u/s 80IB(10) of the Act as well as there is no other source of income of the assessee other than the business of developing housing projects. - Decided in favour of assessee
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2016 (3) TMI 407
Revision u/s 263 - entitlement to claim u/s. 80IA(4) allowed by AO - Held that:- The admitted facts of the case are, therefore, clear that while making original assessment, the assessee submitted proper explanation and evidence before the AO to justify the claim u/s. 80IA(4) of the IT Act. The assessee is engaged in the business of developing and constructing infrastructure facilities in the form of railway tracks and canals on behalf of the Government and their agencies. The assessee was granted exemption in initial assessment year 2003-04 being first year of operation accepting that the assessee is engaged in developing of infrastructure facilities. Similar claim was also allowed in assessment year under appeal. Thus, the AO was satisfied that the assessee was entitled for exemption u/s. 80IA(4) of the Act. It is also proved on record that the assessee has a history of granting exemption u/s. 80IA(4) of the Act. In preceding assessment years 2006-07 and 2007-08, the AO allowed similar claim of assessee u/s. 143(3) of the Act. Copies of the assessment orders are placed on record. Therefore, the AO in preceding assessment years as well as in the assessment year under appeal has considered the Explanation to section 80IA(13) of the IT Act and was satisfied with the explanation of the assessee on the eligibility for deduction u/s. 80IA(4) of the IT Act. The AO, therefore, took one of the plausible view in the matter and therefore, the assessment order could not be treated as erroneous and prejudicial to the interest of revenue. - Decided in favour of assessee
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2016 (3) TMI 406
Levy of fee under section 234E - Held that:- The provisions accepting levy of late filing fees under section 234E have indeed been brought to the statute w.e.f. 1st June, 2015 and the impugned order was passed much before that date. In view of the above discussions and bearing in mind entirety of the case, we hereby delete the levy of late filing fees under section 234E of the Act by way of impugned intimation issued on 11.12.2013. - Decided in favour of assessee
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Customs
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2016 (3) TMI 392
Seeking anticipatory bail - Under Sections 25A/29 of NDPS Act, 1985 - Attraction of Section 37 ibid - Held that:- the conduct of the petitioner disentitles him to the relief. Summons were sent to the petitioner for appearance on 28.08.2015 and 31.08.2015 but he sent a reply through counsel showing his inability to appear on the ground that he was in Nasik Kumbh Mela. Thereafter, he approached the High Court of Himachal Pradesh seeking protection where he was granted interim protection subject to the condition that he shall join investigation as and when required by the investigating agency besides other conditions. Several summons were sent to him to join investigation on 2, 03/07/10/15.09.2015 but he failed to join the investigation. Simultaneously, while his application before the High Court of Himachal Pradesh was pending, he also approached the Special Judge, NDPS Cases, Saket Courts, New Delhi and after arguments, withdrew the application before the High Court of Himachal Pradesh on 09.09.2015 and the application before the Special Judge, NDPS Cases, Saket Courts, New Delhi on 10.09.2015. The second application was dismissed on 22.01.2016. The petitioner asked an another opportunity to join investigation which cannot be entertained because as stated above, number of opportunities were granted to him to join investigation but he failed to avail the same. As various summons were issued to him and he failed to appear as a result criminal complaint has been filed against him and the Court had issued non-bailable warrants and even process under Section 82 Cr.PC has been executed. Also the petitioner cannot claim parity with co-accused who have been granted bail as, as per the prosecution case, as in their cases, provision of Section 37 of the Act was not attracted. Therefore, keeping in view the seriousness and gravity of the offence and the conduct of the petitioner himself, he is not entitled to the relief.
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2016 (3) TMI 391
Validity of Tribunal's order - Appeal dismissed for non-compliance of stay order and directed to deposit a sum of ₹ 1 crore - Held that:- as the bank guarantee furnished by the appellant, for ₹ 1,63,03,455/-, on 14.7.2014 and for ₹ 17,78,249/-, on 19.7.2014, had been encashed by the Department, therefore, the Tribunal's order is set aside. - Decided in favour of the appellant
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2016 (3) TMI 390
Writ petition - Validity of Tribunal's order - Tenability of claim for interest under Section 28AA - Period of limitation in relation to amount receivable upon forfeiture of the bond - Held that:- there appears to be at lest prima facie some substance in the submission advanced by Mr. Saraf that the claim for ₹ 20,21,378/- arose out of forfeiture of the bond. - there are some questions of fact like Whether the claim is barred by limitation? Whether the importer in fact made any misrepresentation? Whether the goods exported contained 98% of cotton, which are better to be left with the appellate authority to deal with. Therefore, Tribunal's order is set aside and it is open to the writ petitioners to prefer an appeal in accordance with law. - Decided in favour of revenue i.e. writ petitioners
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2016 (3) TMI 389
Seeking an establishment of permanent bench of CESTAT at Allahabad and allocating the entire red building - More than two years have elapsed and no steps has taken - Held that:- (1) the Secretary, Department of Revenue, Ministry of Finance, Government of India, New Delhi is directed to appear before the Court along with Sri S. Bhowmick, Under Secretary, Department of Revenue on 5-1-2016 and explain the hurdles, which they are facing in not establishing a permanent Bench of the CESTAT at Allahabad, (2) The onerous duty of establishing a Bench of CESTAT is upon the CESTAT and they have not done their duty on their part seriously. So, the Registrar, CESTAT is also directed to appear before the Court and apprise the latest status in this regard as to how they have pursued the matter with the appropriate authorities. (3) The Commissioner, Central Excise, Allahabad will have to ensure that the possession of entire red building is handed over to the Tribunal on or before the next date and an affidavit to that extent is filed before the Court.
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2016 (3) TMI 388
Writ petition - Validity of order - Passed without affording an opportunity of personal hearing - Held that:- no opportunity of personal hearing was afforded to the petitioner as provided under the Customs Act and unless and otherwise the petitioner is permitted to produce the documentary evidence so as to consider, then there is no point for the authority to pass an order in original. Thus, on the ground of violation of principles of natural justice the impugned order is liable to be set aside. - Decided in favour of petitioner
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2016 (3) TMI 387
Writ petition - Refund of principal and interest amount under Section 129 EE of the Customs Act, 1962 - Setting aside of demand penalty and fine - Confiscation of fourteen machineries which were not covered by the EPCG licence - Held that:- the entire amount has been refunded and interest alone has to be paid to the petitioner. The claim of the petitioner towards interest under Section 129 EE of the Customs Act, 1962, could have been granted within 60 days, but the same has not been made. Further, the issue in question has already been over, since the Civil Appeal No.3207 of 2007 filed by the department was dismissed for non prosecution by the Hon'ble Apex Court. Even thereafter, the petitioner's claim for interest has not been considered. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad vs. I.T.C. Limited [2004 (12) TMI 90 - SUPREME COURT OF INDIA] and in view of the Circulars F.No.275/37/2K-CX.8A dated 02.01.2002 and 802/35/2004-CX dated 08.12.2004 issued by Ministry of Finance, the petitioner is directed to submit a calculation memo with regard to interest to the respondents and the same shall be considered. - Petition is disposed of
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Corporate Laws
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2016 (3) TMI 383
Scheme of Amalgamation - Held that:- The Official Liquidator has filed his report dated 09.06.2015 in respect of the Transferor Company making only one observation and that is with regard to the treatment of employees of the Transferor Company. In this regard, it is submitted that the petitioner company has already clarified this aspect in its response to report of the Regional Director. It is stated that the Transferor Company does not have any employee and therefore, no provision is made in that regard in the Scheme. The report however confirms that the affairs of the Transferor Company are not conducted in a manner prejudicial to the interest of its members or to the public interest. The Official Liquidator, however, has requested this Court to direct the petitioner-Transferor Company to preserve its books of accounts, papers and records and not to dispose of the records without the prior permission of Central Government under Section 396A of the Companies Act, 1956. Having heard Mr. Navin K. Pahwa, learned counsel for the petitioner companies, Mr. Kshitij Amin, learned Central Government Standing Counsel on behalf of Mr. Devang Vyas, learned Assistant Solicitor General of India for the Regional Director and upon perusal of the reports of the Official Liquidator and the Regional Director, the reply filed on behalf of the petitioner Transferee Company and having considered the Scheme of Amalgamation together with relevant documents on record, the Court finds it appropriate to grant sanction to the present Scheme of Amalgamation.
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Service Tax
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2016 (3) TMI 405
Condonation of delay - CESTAT dismissed the appeal, as barred by limitation - delay of almost 2 years - Held that:- The reasons for seeking condonation of delay is only one singular reason which has been stated in the affidavit that the appellant was under bonafide belief that TTD would discharge their liability with respect of service tax. Inasmuch as the appellant was under the impression that the service tax is only a pass-through and payable by TTD, they did not file any appeal. Though the taxable turnover so far as the service tax is concerned, is alleged to be only about 70 lakhs notwithstanding the total turnover of ₹ 4.70 crores, we are of the opinion that the reasons stated in the delay condonation petition are not fully satisfactory. However, we also notice that the order in Original was passed on 30.11.2012. Even as on today, no steps were taken by the department in collecting the tax amount, which has been demanded by the order dated 30.11.2012. Assuming the delay is caused in asserting the right by the appellant, there is also lapse on the part of the department in not enforcing the order which has been passed on 30.11.2012 even after expiry of the appeal time under the Statute - Delay condoned subject to conditions.
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2016 (3) TMI 404
Extended period of limitation - Bonafide belief - Not seeking registration - Technical Inspection and Certification Agency - wilful misstatement / suppression of facts - Held that:- Nothing has been brought out as to how the appellant was guilty of wilful misstatement / suppression of facts. An assessee who has a bonafide belief that it is not liable to tax would naturally not obtain registration, assess itself to tax or file returns. This by itself does not tantamount to wilful misstatement / the suppression of facts. The appellant initially took registration on 10.08.2000 thinking that it was providing management consultant service and even paid tax thereunder for a while before it was advised that it was not liable to pay service tax under Management Consultant Service by its legal Consultant, establishes its bonafides. Thus even in the show cause notice the only grounds on which wilfull misstatement/ suppression of facts has been alleged are that the appellant did not declare the service to the Department, did not obtain registration and did not pay tax. These grounds have been analysed above in the light of authoritative judicial pronouncements and held to be inadequate for the said purpose in the absence of any substantial evidence that all that was wilfull and to evade tax. Demand set aside - Decided in favor of assessee.
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2016 (3) TMI 403
Monetary limit - whether departmental internal instructions biding upon the tribunal - Validity of direction issued by the AC to adjudicating authority to implement the appellate order beyond the scope of order in appeal - additional ground sought to be raised in the appeal - eligibility of M/s Himalaya Tyres for threshold limit, applicable to small service-providers under notification no. 6/2005-ST dated 1 st March 2005 - Held that:- The introduction of additional ground of appeal through the review undertaken in exercise of powers conferred by section 86(2A) of Finance Act, 1994 is outside the scope of these proceedings. We notice that the impugned order has not touched upon imposition of penalty under section 76 while disposing off the order of the original authority dated 11 th December 2009 against which the assessee had filed an appeal before Commissioner of Central Excise & Customs (Appeals), Aurangabad. - Additional ground not admitted. Our reason for not deciding on merits is prompted by the letter of respondent dated 8th January, 2016 placed before us in lieu of representation and seeks dismissal of appeal of Revenue as the amount in dispute is below the threshold limit that allows exercise of discretion in refusing to hear the matter. We notice that this is so and, additionally, that it is well below the prevailing limit of ₹ 10 lakhs prescribed by the Central Board of Excise and Customs, in its instruction in F.No. 390/Misc./163/2010-JC dated 17 th December 2015 in exercise of powers under section 35R of the Central Excise Act, 1944 made applicable to Finance Act, 1994 for filing appeals before the Tribunal. Taking cognizance of the tax amount in dispute and the non-applicability of the exclusions in the instruction supra, we dismiss the appeal filed by Commissioner of Central Excise & Customs, Aurangabad. The cross-objection is also disposed of. - Decided against the revenue.
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2016 (3) TMI 402
Taxability of maintenance and repair services relating to information technology software till December 2007 - Held that:- The articulation of legislative intent sought to be derived from this decision by the Central Board of Excise & Customs may not be tenable to the extent that it exceeds the compass of the cited decision. Therefore, the cited circular, relying as it does on the cited decision, does not permit for taxability of any software other than ‘canned software' and reliance on that circular cannot appreciably sustain the findings in the impugned order. 'Goods' are, therefore, and more particularly in the context of the new taxable entry of 2008, restricted to computer software, which appears to be interchangeable with proprietary software, whose maintenance alone is liable to be taxed prior to 16 th May 2008 under section 65(105)(zzg). Software, other than ‘canned' would not be amenable to description as computer software which is essential to start up and run the core programs of a system. ‘Information technology software' is essential for smooth running of the business activities of the user. Thus the clients of the appellant in this case would be users of ‘information technology software' and hence any maintenance of that software would be taxable only after 16 th May 2008 as decided by this Tribunal in re SAP India Pvt. Ltd. The demand under ‘maintenance or repair services' in the impugned order does not survive. - Demand set aside - Decided in favor of assessee.
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2016 (3) TMI 401
CENVAT credit - Scope of input services - Input services received at their Head Office and subsequently distributed to the appellant herein - Input Service Distributor (ISD) - procedure not followed - Held that:- The plain reading of the definition of input services (as hereinabove reproduced) indicate that the activities relating to business which is in the second portion of the definition includes the activity of financing which would mean that if an assessee pays service tax for the various services received by them for raising the finance, CENVAT credit can be availed. In our considered view, the CENVAT credit availed by the appellant or service tax paid cannot be disputed. We find nothing on record to indicate that Head Office of the appellant was issued a show-cause notice denying them such CENVAT credit. In the absence of any doubt raised as to the eligibility to avail the CENVAT credit at their Head Office, the recipient unit, cannot be asked to explain the nexus of such credit to the output service provided by them. As regards the dispute raised in the impugned order as to eligibility to avail the CENVAT credit on the invoices raised by the ISD for the services received prior to the registration of the Head Office as an Input Service Distributor, it is held that such credit can be availed. Demand set aside - Decided in favor of assessee.
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Central Excise
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2016 (3) TMI 400
Duty demand on Free supplies - equivalent penalty under Section 11AC - suppression - Held that:- We find force in the arguments of the learned Advocate that at the relevant time, there was sufficient reason for the Appellants to have had bonafide belief that duty is not payable on the free supply of goods in view of the decision of the Tribunal in the case of Vinayaka Mosquito Coil Mfg. Co. (2004 (8) TMI 179 - CESTAT, BANGALORE ). As the issue was under dispute and was finally settled only later by the decision of the Larger Bench in the case of Indica Laboratories Pvt. Ltd (2007 (5) TMI 19 - CESTAT,AHMEDABAD ), imposition of equivalent penalty under Section 11AC is not justified. Hence, we set aside the imposition of penalty under Section 11AC in respect of both the appeals - Decided in favour of assessee
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2016 (3) TMI 399
Inadmissibility of CENVAT credit availed on Colchester CNC crane - central excise duty demand under Section 11A along with interest and equal amount of penalty - contention of Revenue that Colchester CNC machine was used exclusively for job work and therefore CENVAT credit of duty paid thereon was not admissible - Held that:- The supplier of the crane, i.e., the sister unit of the appellant was required to pay an amount equal to credit availed in respect of the capital goods, (namely, crane in this case) when removed from the factory as such, i.e., as capital goods. Once the duty paid on the crane was shown in the invoice, the appellant was entitled to take the credit thereof. If it is contended by Revenue that duty was paid in excess, then that issue is to be taken up with the supplying unit by the concerned authority having jurisdiction over the supplying unit and it is not open to the central excise authority having jurisdiction over the appellant to question the correctness of duty paid by the supplier-unit; the receiving unit was entitled to take credit of duty shown in the invoice. Incidentally, CBEC Circular No.877/15/2008-CX, dated 17.11.2008 is supportive of this view. The appellant has clearly stated that the machine was used in its manufacturing unit. The balance-sheet figures show not only the charges received for use of the machine for job work, but also the value of dutiable goods manufactured by it. Even if initially the said machine was used only for job work, the fact is that the appellant used the said machine for manufacture of dutiable goods also, as reflected from the balance sheet for the year 2006-07 in which besides job charges, sales figures of goods manufactured are also shown. Resultantly, do not find sufficient support to sustain the allegation of inadmissibility of CENVAT credit availed on Colchester CNC crane. The said short payment has been worked out on the basis of scrap which would have “likely” generated. It obviously shows that the short-levy has been worked out by assuming certain quantity of scrap likely generated without any evidence that that quantity of scrap was actually generated. Thus, the said demand is based on assumption and presumption and hence is clearly unsustainable. - Decided in favour of assessee
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2016 (3) TMI 398
Demand of interest for delayed payment of tax - Payment of interest through CENVAT Credit - Violation of Rule 8(3A) of the Central Excise Rules, 2002 - Held that:- It is a fact that the show-cause notice, Order-in-Original and Order-in-Appeal are based on the violation of Rule 8(3A) of the Central Excise Rules, 2002 which require the payment of duty only through account current in case of violation of payment of duty in time as prescribed in Rule 8. As submitted by the ld. Counsel for the appellant that this Rule 8(3A) has been struck down by Hon'ble High Court of Gujarat, Madras and Punjab & Haryana in various judgments - no duty and penalty can be imposed as observed in the case of Shreeji Surface Coatings P. Ltd. (2014 (12) TMI 656 - GUJARAT HIGH COURT ) by the Hon'ble High Court of Guajarati. Since the rule under which the entire proceedings have been initiated have been declared unconstitutional, no liability arises under the said Rules. Therefore, keeping in view the law laid down by Hon'ble High Court of Gujarat, Madras and Punjab & Haryana, set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.
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2016 (3) TMI 397
Clandestine removal - goods not actually manufactured and cleared - Held that:- Bogus invoices have no meaning in the face of full payment of duty, as such invoices will help unscrupulous entities to show higher expenditure and to derive financial benefits in tax matters etc. It is not clear how, even if accepted, such assertion is going to change the findings in the impugned order. The duty which is sought to be demanded and confirmed by the Original Authority has already been remitted by the main respondent to the Government. Now again such demand was justified on the ground that equivalent amount of impugned goods were manufactured and cleared clandestinely. For this, no attempt even has been made to adduce evidence. After careful consideration of the grounds of appeal agitated in the present case and the detailed finding in the impugned order dated 07/3/2008, find that there is no basis to interfere with the findings in the impugned order - Decided against revenue
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2016 (3) TMI 396
Duty on the cut flowers grown and sold in DTA - as the respondent already paid duty on the cut flowers i.e. non excisable goods, whether they are entitle for the refund claim and whether refund claim hit by "unjust enrichment" - Held that:- We find that the cut flowers produced by the respondent is not excisable goods at the relevant time, they were working under Notification No. 126/94-Cus dated 3/6/1994 as amended by Notification No. 56/2001 dated 18/5/2001. In the present case the cut flowers is non excisable goods, by application of above notification the duty require to be paid is equal amount of duty leviable on the input used in the production of cut flowers. In the impugned order, Ld Commissioner has upheld the duty of input like fertilizer, chemical therefore duty over and above this amount is not payable on the cut flowers. The judgment cited by the A.R. are on the issue that what duty is to be paid on the non excisable goods and it was held that duty is required to be paid as per notification no. 126/94-Cus i.e. equal amount of custom duty leviable on input used in the excisable goods therefore we find that Ld. Commissioner(Appeals) has correctly held that the duty of the total duty paid by the respondent of amount of ₹ 18,91,609/- is not payable. This tribunal in another case of Commissioner of Central Excise, Pune-I Vs. Vikram Greentech(I) Ltd [2016 (3) TMI 380 - CESTAT MUMBAI ] held that no duty can be demanded on cut flowers being non excisable goods. As per above legal position, we are of the view that the duty is not chargeable on the cut flowers produced by the respondent. As regard unjust enrichment, we find that the respondent has taken a stand that since duty was not payable, the payment made by them is without authority of law, in such case unjust enrichment is not applicable. The Ld. Commissioner (Appeals) also held that payment made is without authority of law, unjust enrichment is not applicable. We disagree with these submissions as well as findings of the Ld. Commissioner(Appeals) at the time of payment of duty it was paid as excise duty only and refund of the said duty was sought for therefore it cannot be said that duty was paid without authority of law. If the contention of the Ld. Commissioner (Appeals) is accepted then in all the cases where amount paid by the assesee which was not laible to be paid and refund is sought for, the payment will be treated as without authority of law and in such cases the law of unjust enrichment will become redundant. We find that neither the Adjudicating authority nor Ld. Commissioner(Appeals) has verified the documentary evidence produced before us claiming that incidence of duty so paid was not passed on to any other person, we therefore remand the matter to Adjudicating authority to consider all the documents produced/to be produced by the respondent and pass a fresh order only on the aspect of unjust enrichment.
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2016 (3) TMI 395
Cenvat credit reversal at the time of clearance of imported and used Capital goods at the time of export against UT-1 Undertaking - Held that:- It is observed that Rule 57AB has been repealed and there is no parallel provision contained in the present Cenvat credit Rules, 2001/2002. The contention of the department that a manufacturer can export only the goods manufactured in India under bond without payment of duty is not tanable, in view of the fact that while importation of Capital goods, the Countravalling duty to the extent of Excise duty, as if the goods have been manufactured in India, had already been recovered. In view of the above, find that the Board's Circular No. 345/2/2000-TRU dated 29/8/2000 is applicable in this case and there is no need to reverse the credit already availed. Therefore, there is no merit in the stand of the department. - Decided in favour of assessee
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2016 (3) TMI 394
CENVAT credit on input services denied - Held that:- Assessee are not disputing the denial of CENVAT credit on Authorised Service Station, Manpower Recruitment Service and Convention Service after considering the amount itself as ₹ 5.00, 74,620.00 and ₹ 1,989.00 respectively. In view of the above discussions, the impugned order is modified to the extent the denial of CENVAT credit on Chartered Accountant Service and Outdoor Catering Servic (subject to reversal of the credit by the staff), Advertisement Service is set-aside. The denial of CENVAT credit on the other input services are upheld. Penalties are set-aside. The appeal filed by the appellant is disposed of in the above terms. The application for extension of stay order is dismissed as infructuous.
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2016 (3) TMI 393
Entitlement to exemption - Blue Star Pre Fabricated Building consisting of insulated panels - notifications nos. 17/98 CE dated 18/9/1998 and Notification No. 5/99 CE dated 28/2/1999 - Held that:- Excise duty at the tariff rate i.e. 8% despite the exemption. Notification No. 17/98 CE dated 18/9/1998 and Notification No. 5/99 CE dated 28/2/1999 were available. Prior to insertion of subsection (1A) w.e.f. 13/5/2005 it was not mandatory for a assessee to avail the exemption notification accordingly it was a option available to the assessee either to avail the exemption or to pay the duty as per rate specified in the Central Excise Tariff. Therefore the revenue cannot insist the respondent that they should have compulsorily availed the exemption notifications nos. 17/98 CE dated 18/9/1998 and Notification No. 5/99 CE dated 28/2/1999, for this reason in our view whole proceedings for recovery of an amount of ₹ 5,94,493/- and appropriation thereof was illegal. Demand of an amount u/s 11D - Cenvat / Modvat Credit reversed towards exempted goods shown and claimed in the Invoice - - As regard the demand of ₹ 6,47,313/- paid under Rule 57CC by invoking Section 11D, we find that it is very clear from the invoices that respondent have not recovered the amount of 8% reversed by them under Rule 57CC. This was correctly observed by Ld. Commissioner (Appeals). The revenue also, on the contrary, could not produce any evidence to support their allegation of recovery of the said amount by the respondent, therefore the demand under Section 11D is not correct. - Decided against revenue
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CST, VAT & Sales Tax
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2016 (3) TMI 386
Attachment of bank of account - Recovery of GVAT - section 45 of the Gujarat Value Added Tax Act, 2003 - During the pendency of the reassessment proceedings, the respondent / revenue attached the bank accounts of the petitioner. It is the case of the petitioner that he was never informed about such attachment and it was only when the petitioner visited the concerned bank that he came to know about the attachment of his bank accounts. - Held that:- The learned Assistant Government Pleader, under instructions, submitted that in the light of the fact that the reassessment order had been passed the provisional attachment would no longer remain in force and, therefore, the concerned officer shall ensure that the attachment of the bank accounts of the petitioner shall be forthwith lifted. In the light of the statement made by the learned Assistant Government Pleader, the relief prayed for vide paragraph 15A would not survive. At the same time, as pointed out by the learned advocate for the petitioner, despite the pendency of the petitioner’s appeal and stay application, the second respondent has withdrawn an amount of ₹ 4,07,000/- from the bank account of the petitioner. - in the absence of any exceptional circumstances, there is no warrant for the respondent authority to proceed to initiate coercive recovery in exercise of powers under section 44 of the Act. The second respondent is hereby restrained from making any further coercive recovery from the petitioner till the stay application filed by the petitioner is heard and decided - Decided partly in favor of appellant.
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2016 (3) TMI 385
Validity of an order passed by the Tribunal - Whether the KAT was justified in upholding the lower authorities' orders in a routine manner without considering the documents on record submitted by the petitioner independently on merits, which would prove that the product sale consideration under the contract between the petitioner and its customer/client, is inclusive of warranty period replacements and has already suffered tax? - Held that:- the finding is recorded by the Tribunal that there is failure to discharge the burden and if the appellant is to contend that there was no failure to discharge the burden, such shall be an essentially a question of fact and not the question of law as sought to be canvassed. The second ground contended that, as it was not a case of transfer of stock and therefore, no declaration was required to be filed, in our view, cannot be accepted on the face of Section 6-A of the CST Act more particularly when on facts there is a finding that, the appellant has failed to discharge the burden by placing valid material to show that the goods were not transferred to any other place of business or to his agent or his principal. The petition does not deserves to be entertained. Hence, dismissed. - Decided against the appellant.
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2016 (3) TMI 384
Re-assessment based on clarafication - KVAT - applicability of the clarification to the respective assessment in question whether prospective or retrospective has not been considered. - in the clarification different products different rates were prescribed - Held that:- all the lower Authority from the stage of the Assessing Authority till the Revisional Authority, have not examined the aforesaid aspect of applicability and the prospective effect or retrospective effect of the clarification and hence such being the peculiar circumstances, we find that remanding of the matter to the Assessing Authority would be more appropriate instead to the Revisional Authority. When vital aspects of the applicability of the clarification whether retrospectively or prospectively is not considered and the same is found to be sufficient by this Court for exercise of the discretion to remand the matter, the same as such it cannot be read that the Court has made any conclusive observation. Still, however, suffice it to observe that all rights and contentions of the parties before the Assessing Authority shall remain open. The impugned Order passed by the Assessing Authority and subsequent orders arising therefrom including that of the Revisional Authority are quashed and set aside with a further direction that the matters shall stand restored to the Assessing Authority for examining the matter in the light of the observations made by this Court in the present Judgment and in accordance with law. - Decided partly in favor of assesseee.
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Indian Laws
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2016 (3) TMI 382
Determination of amount deposited under SARFAESI Act - what sum (claimed by the secured creditor) is to be taken into consideration by the DRAT whilst determining the amount that ought to be deposited by the borrower under section 18 of the SARFAESI Act (before its appeal can be entertained)? - whether the DRAT was justified in ordering the Petitioner to deposit a sum of ₹ 20,00,000/-? - Held that:- Section 13(2) notice issued by the Respondent – Bank to the Petitioner was dated 14th August, 2007. In the said notice the amount claimed as due from the Petitioner was ₹ 96,14,085.61 together with future interest. From the date of the section 13(2) notice (i.e. 14th August, 2007) to 28th February 2012, admittedly no payments were made by the Petitioner. As on 29th February, 2012 the outstanding dues owed by the Petitioner along with the interest accrued thereon came to ₹ 1,65,36,770.61. On the very same date (i.e. 29th February, 2012), the Respondent – Bank forfeited the deposits of the Petitioner lying with it in the sum of ₹ 5,29,441/-and gave credit for the same in the loan account. Thereafter, one of the guarantors (viz. Mr K.P. Malkani) sold one of the mortgaged properties with the consent of the Respondent – Bank and the sale proceeds thereof to the tune of ₹ 1,18,00,000/- were deposited with the Respondent – Bank on 24th March, 2012. After giving due credit for the aforesaid amounts (Rs.5,29,441/- plus ₹ 1,18,00,000/-), the amount outstanding as on 24th March, 2012 was ₹ 52,24,200.16. Admittedly, no further payments were made by the Petitioner. The DRAT has taken into consideration this figure of ₹ 52,24,200/- for determining the amount that had to be deposited under the 2nd proviso to section 18(1) of the SARFAESI Act. It is pertinent to note that the appeal and the waiver application preferred by the Petitioner before the DRAT, were filed on 4th March, 2010. On the said date, the outstanding of the Respondent – Bank was in excess of ₹ 96,14,085/- as no payments were made by the Petitioner between the date when the section 13(2) notice was issued (14th August, 2007) and the date of filing of the appeal and waiver application (4th March, 2010). However, this waiver application was heard by the DRAT on 30th June 2014. By the time, the DRAT heard the waiver application, the Petitioner had made part payments of ₹ 1,23,00,000/- (approximately) towards its debt due to the Respondent - Bank. It is in this view of the matter that the DRAT whilst determining the amount to be deposited under the 2nd proviso to section 18(1) of the Act took into consideration the figure of ₹ 52,14,200/-. Looking to these facts and the clear language of the 2nd proviso to section 18(1) of the SARFAESI Act, we do not think that the DRAT committed any error in directing the Petitioner to deposit a sum of ₹ 20,00,000/- with the Registry of the Appellate Tribunal within a period of eight weeks from the date of the said order in two equal installments. We find that the said order is not only in conformity with the provisions of section 18 of the SARFAESI Act but does complete justice between the parties as it gives credit for the amounts paid by the Petitioner to the Respondent – Bank before directing the Petitioner to deposit a sum of ₹ 20,00,000/- as a condition precedent to entertaining its appeal. In this view of the matter, we do not think that any case has been made out by the Petitioner for review of our order dated 10th June, 2015. No illegality and / or perverse in order dated 30th June, 2014 passed by the DRAT. Consequently, we do not find any error in our dated 10th June, 2015 requiring interference in review jurisdiction. The Review Petition is accordingly dismissed.
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2016 (3) TMI 381
Maintainability of prosecution launched under section 138 of the Negotiable Instruments Act against a partner alone without joining the partnership firm - Held that:- As supported by the judgment of the Delhi High Court in Vijay Power Generators Ltd. vs. Sumit Seth,[2014 (5) TMI 1088 - DELHI HIGH COURT], wherein also it has been held that unless the partnership firm is prosecuted and convicted, the partner thereof cannot be convicted with the aid of section 141 of the NI Act. Considering that by allowing this writ petition, this Court is quashing the process issued against the petitioner for not joining the partnership firm, the interests of justice require that liberty be given to the respondent no.1 to move before the Court of competent jurisdiction for appropriate relief with a petition under section 14 of the Limitation Act seeking exclusion of the period during which he was prosecuting this case. As a result, all the four writ petitions are allowed. The process issued against the petitioner alone for the offence under section 138 read with section 141 of the NI Act without joining the partnership firm stands quashed and set aside. However, it will be open for the respondent no.1 to move the Court of competent jurisdiction for appropriate relief with a petition under section 14 of the Limitation Act seeking exclusion of the period during which he was prosecuting this case.
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