Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 22, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194C - assessee a sugar manufacturer made payment of harvesting and transportation charges to harvesting and transport contractors on behalf of farmers which formed part of purchase price of sugar cane for assessee, and same had not been claimed as separate deduction - No TDS liability on transportation charges paid - AT
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Income generated on sale of goods generated on trial run - taxable as revenue or not - if the assessee receives any amounts which are inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of a capital nature and cannot be taxed as income. - AT
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Penalty proceeding u/s271B - reason for the delay in auditing the accounts - accountant and the other employees had resigned during the relevant period - assessee also produced the original trial balance and ledger to point out that there was a huge difference in the trial balance and the same could not be reconciled - delay was duly explained - no penalty - HC
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Exemption u/s 11 - trust - Financial status of the said student or other things are immaterial so far as purpose for which scholarship to Adheesh Bhagat is concerned - scholarship was admissible as charitable expenditure. - HC
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100% Depreciation on "Jetty" - The main function of a Jetty was to provide a passage or, a platform to ferry articles onto the concerned Vessels. This could have been done manually. That it was done by using a conveyor belt, would not, to our minds, convert a Jetty into a plant - 100% Depreciation allowed - HC
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Addition u/s 69 - unless it is first established beyond doubt that there is an investment which is not recorded by the Assessee in its books, no occasion to explain about the nature and source of the investment can arise - The invocation of Section 69 of the Act before establishing investment not recorded in its books of Account, is not justified - HC
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Addition of unexplained cash not recorded in the books of account u/s 69A - Merely because, at the relevant time aforesaid amount was not seized and returned, it cannot be said that the subsequently during the course of assessment, the aforesaid amount which was found in cash from the premises of the assessee could not have been added as unexplained income - HC
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Entitled to raise a fresh claim before the Appellate Authorities - claim which was not made in the return of income originally filed under Section 153A r.w.s. 143(3) of the Act before the Assessing Officer and also before the appellate Authorities - claim allowed - HC
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TDS - taking of the machinery and equipment on hire would not amount to a contract for carrying out any work as contemplated in section 194C - The said contract i.e. taking of machinery and equipment on hire also cannot be treated with a contract for supply of labour - No TDS liability u/s 194C - HC
Customs
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Classification of imported goods - Eye Tracking System - considering note 5 to chapter 90, the item deserves classification under chapter 9031 and further under its sub heading 90318000 - AT
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Valuation of imported goods - Time Bound Software - Beta Software - deductive value or computed value - the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available in India - AT
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Loss in transit - normal loss or not? - import of Crude Palm Oil - benefit of N/N. 12/2012-CUS dated 17.03.2012 - the loss in the given facts and circumstances is a normal loss and in such case, the material lost in transit have been definitely put to use for manufacture - benefits allowed - AT
Indian Laws
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Cash transactions proposed to be capped at ₹ 2 lakh
Service Tax
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Import of services - reverse charge - amount paid as insurance premium by the appellant to TD Bank as part of loan amount - borrower of money in India is neither a service provider nor service recipient in connection with insurance taken by the lender. - AT
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Import of services - reverse charge - if a foreign entity is having a business establishment in India, the service rendered through such establishment cannot be taxed under reverse charge in terms of Section 66A. - AT
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Business Auxiliary services - PFL is only producing and selling concentrate to the main appellant for converting into aerated water - the main appellant is not promoting or marketing or selling the concentrates which are produced or provided by PFL to them for manufacturing of aerated waters - Demand of service tax set aside - AT
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Service to foreign party - scope of the term export - the destination has to be decided on the basis of the place of consumption, not the place of performance of Service - demand set aside - AT
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Liability of tax - GTA service - the appellant being a public limited company is covered within one of the seven categories specified where the service tax liability will be on the consignor / consignee - the liability for payment of service tax under GTA in this case falls on the appellant in terms of Rule 2(d)(v) of Service Tax Rules, 1994. - AT
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Airport service - sale of entry ticket at the airport - in terms of the agreement with the Airport Authority of India the appellant was allowed to recover the entry charges alongwith service tax. The Airport Authority of India also have clarified the issue to the appellant regarding payment of service tax - the extended period of limitation has been rightly invoked. - AT
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Classification of taxable service - various composite activities starting from receipt, shifting, handling, loading, packaging in suitable manner, security X-ray, scanning and loading of cargo for outward movement by aircraft - The service is area specific - this is not a general category of tax entry - the services rendered by the appellant are taxable under the category airport service w.e.f. 10/09/2004. - AT
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Public Relation Service - The use of the phrases “in relation to” and “in any manner” widens the scope of the taxability with reference to public relations - the services have been provided to AP Govt. From a reference to the various activities illustrated in section 65(86c), the activities undertaken are to be considered as public relations - demand of service tax confirmed - AT
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Valuation - inclusion of airport taxes, passenger service fee (PSF) - it is necessary to establish with documentary evidence the background of such fee or taxes, legal term of contractual obligation to collect and pay the amount on actual basis. These documentary evidences are not forthcoming in the present appeal - demand confirmed - AT
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Classification of services - packaging activity cannot be equated with cargo handing services - prior to the amendment made by the Finance Act of 2005 with effect from 16.06.2005, the appellant would not be liable to pay service tax - SC
Central Excise
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Claim of refund and interest on delayed refund - adjustment of refund with the amount due in another case against which the appeal was pending - It is improper for them to make such adjustment - No question of invoking equitable consideration - refund allowed with interest - AT
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Classification of Synthetic Web Equipment - classified under Chapter Sub Heading No. 6307.90 or under Tariff Item No. 4202 1990 - Synthetic Web Equipment are classifiable under Sub Heading No. 4202 of the said Schedule - AT
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MODVAT credit - iron and steel products - welding items - the word ‘include’ in the definition of inputs cannot be given a restrictive approach. The items shown in the table would fall under the category of capital goods or inputs - AT
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SSI exemption - dummy units - The concept of “related person” is relevant for valuation of excisable goods. The turnover of related persons cannot be perse clubbed together for arriving at the threshold limit of SSI exemption- AT
Case Laws:
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Income Tax
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2017 (3) TMI 906
Claim of deduction under Section 36(1)(viia) - Assessing Authority took population figures of the Census 2001 to be adopted for the purpose - Apex Court dismissed the SLP against the HC Order [2015 (1) TMI 1328 - KARNATAKA HIGH COURT] Provisional population total cannot be acted and in that view of the matter the Tribunal was justified in upholding the order passed by the assessing authority where they have acted on the Census figures of 2001 as reflected in the provisional population totals and denied the benefit to the assessee - Decided against assessee
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2017 (3) TMI 905
Penalty proceeding under Section 271B - reason for the delay in auditing the accounts - Held that:- The Commissioner (Appeals), rightly considered the documents placed by the assessee on record to hold that the explanation tendered by the assessee sufficiently explained the delay in not auditing the accounts before the specified date. It appears that on the first date of hearing when time was sought by the assessee as the chartered accountant was ill, the tribunal went in to the niceties of the matter to observe that there was no written authority from the assessee for seeking the adjournment and the adjournment application was not signed by the chartered accountant and was signed by the clerk working in the firm of the chartered accountant. At least on the first date of hearing, the tribunal could not have rejected the application of the assessee for an adjournment by recording the aforesaid reasons. The tribunal has casually observed that the cause of illness of the accountant, resignation of the employees of the firm and the difference in trial balance are casual and routine excuses and the assessee had not substantiated or proved the cause as aforesaid. We find that the assessee had produced documents on record to show that the accountant and the other employees had resigned during the relevant period and had also produced the original trial balance and ledger to point out that there was a huge difference in the trial balance and the same could not be reconciled. Though there were documents on record to substantiate the cause for the delay, the tribunal has erroneously held that the cause were not substantiated or proved. - Decided in favour of assessee
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2017 (3) TMI 904
Investment write off - whether could be characterised on the Revenue side or did it fall in the Capital side as loss? - Held that:- Where monies were advanced through the mechanism of equity participation, the intention of the lender – in the present case, the assessee, was to derive income rather than to increase its investment on the capital side. Such being the case, if there were profits, with the assessee/lender from the investment, it would properly lie in the Revenue side of income and conversely, if there were losses – as in the present case – it properly would have fallen, as was correctly claimed, as bad debts in the present instance. See Badridas Daga Versus Commissioner Of Income-Tax [1958 (4) TMI 2 - SUPREME Court ]
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2017 (3) TMI 903
Application for settlement - application rejected on the ground that the petitioner had not declared additional income for those assessment years in its settlement application - Held that:- Either all the Assessment Years mentioned in the application are to be settled or none at all. It cannot be split so as to settle the dispute for one of the Assessment Years and reject the others. In view of the above, the impugned order of the Commission to the extent it has rejected / not entertained, the petitioner's application for settlement for the Assessment Years 2011-12 to 2014-15 for not disclosing additional income in its application, prima facie appears to be incorrect. In the above view, the Assessing Officer is restrained from issuing notices and initiating proceedings under the normal provisions of the Act for Assessment Years 2011-12 to 2014-15. See Airtech Pvt. Ltd. and others Versus Income-tax Settlement Commission [1994 (6) TMI 192 - INCOME TAX SETTLEMENT COMMISSION]
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2017 (3) TMI 902
Interest under sections 234B and 234C not chargeable if the total income is assessed to tax under section 115J - Recall of HC order [2011 (6) TMI 915 - GUJARAT HIGH COURT ] - Held that:- A conjoint reading of section 115J of the Act as it stood at the relevant time, with sections 115JA and 115JB of the Act reveals that insofar as sections 115JA and 115JB are concerned, they are a complete code in themselves. Sub-section (4) of section 115JA and sub-section (5) of section 115JB of the Act specifically provide that save as otherwise provided in the section, all other provisions of the Act shall apply to every assessee, being a company, mentioned in the section; whereas, no similar provision is found in section 115Jof the Act. Moreover, the Supreme Court in the case of Rolta India Limited (2011 (1) TMI 5 - SUPREME COURT OF INDIA ) has specifically referred to the decision in the case of Kwality Biscuits Ltd. as having been affirmed by the Supreme Court (2006 (4) TMI 121 - SUPREME Court ) and has not disturbed the position of law enunciated therein. In Rolta India Limited (supra), the Supreme Court, in the context of the provisions of sections 115JA and 115JB of the Act, which are held to be a self-contained code pertaining to MAT, held that interest under sections 234B and 234C of the Act shall be payable on failure to pay advance tax in respect of tax payable under those sections. Apparently therefore, the judgment and order dated 24.06.2011 made by this court in Tax Appeal No.31 of 2003 has been rendered on a misreading of the decision of the Supreme Court in the case of Rolta India Limited (supra). Moreover, this court in the case of Farmson Pharmaceuticals Guj. Ltd (2011 (4) TMI 1037 - Gujarat High Court ) has followed the decision of the Karnataka High Court in Kwality Biscuits Ltd. (2006 (4) TMI 121 - SUPREME Court ) as affirmed by the Supreme Court and has held that interest cannot be charged under section 234B and 234C of the Act where the total income is determined under sec 115J of the Act. The said decision has been rendered on 07.04.2011, that is, prior in point of time to the judgment and order dated 24.06.2011 which is sought to be recalled. In the aforesaid premises, the application deserves to be allowed.
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2017 (3) TMI 901
Income from share transactions - ITAT holding as Long Term Capital Loss on sale of shares in place of business income - shares held as stock in trade by the assessee - Held that:- It is permissible for an assessee to have two accounts; one for trading of shares and other for investment. In the absence of any material being brought on record by the revenue to suggest that the Long Term Capital Gain claimed by the assessee was not in respect of trading of shares, the findings recorded by the Tribunal does not call for any interference by this Court. Allowing the membership fee & annual subscription expenses - allowable business expenses - Held that:- There is no material to suggest that the expense claimed by the assessee was non-business or of a personal in nature. Being essentially a finding of fact, the Tribunal having recorded findings on the basis of the material and evidence before it, the same does not suffer from any infirmity.
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2017 (3) TMI 900
Penalty under Section 271(1)(c) - apportionment of foreign exchange fluctuation loss between the Tonnage Income and Non Tonnage Income while filing the return of income for A. Y. 2007-08 - whether socalled voluntary disclosure was not voluntary? - Held that:- The so-called mistake as claimed by the assesssee, was only after notices dated 14th January, 2009 were issued under Sections 142 and 143 of the Act. It was only an attempt to preempt the Revenue finding out the the appellant had furnished inaccurate particulars. Therefore, it cannot be said that it was voluntary disclosure. In fact, the Apex Court in MAK Data (P) Ltd., (2013 (11) TMI 14 - SUPREME COURT ) has held that voluntary disclosure itself does not release the assessee from penal consequences. In the peculiar fact of the present case, the socalled voluntary disclosure was only after the Assessing Officer initiated proceedings under Section 142 of the Act. Thus, it was not a voluntary disclosure. In fact, the Assessment Order dated 24th December, 2009 under Section 143(3) of the Act also records the fact of verification by the Assessing Officer, leading to a finding that the appellant-assessee had debited foreign exchange loss to arrive its non-tonnage income. This order was accepted and no grievance in respect of the same being found by the Assessing Officer, was made by the appellant-assessee. It is only in penalty proceedings that this issue is raised for the first time. Further, the appellant-assessee besides stating it is a mistake, has not offered any explanation. Therefore, the explanation under Section 271(1)(c) of the Act was not found to be satisfactory by the authorities under the Act and penalty imposed and sustained. - Decided against assessee
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2017 (3) TMI 899
Reopening of assessment - Entitled for tax deduction under Section 80IB - Held that:- Commissioner of Income Tax-II, Jodhpur vs. M/s PTM Industries, Balotra (2015 (3) TMI 1264 - RAJASTHAN HIGH COURT) affirmed the order passed by the Income Tax Appellate Tribunal upholding the grant of deduction to the assessee PTM Industries (one of the petitioners herein) under Section 80IB of the IT Act for the assessment years 2005-2006, 2007-2008 and 2008-2009. Since for the assessment years preceding and following the questioned assessment year, the issue has already been decided in favour of the assessee, this Court is of the firm opinion that the assessing officer was not at all justified in reopening the matter by exercising the powers under Section 148 of the IT Act. The impugned orders apart from being totally perverse and laconic, also suffer from total non-application of mind and also amount to colourable exercise of power and thus, cannot be sustained. - Decided in favour of assessee
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2017 (3) TMI 898
Application under Section 256 (1) rejected - admitting additional evidence - payments as per information submitted by the assessee - peak deficit addition - Held that:- The Tribunal referred to each of the questions separately and gave convincing reasons for refusing to refer the same. The Tribunal held that though it was the case of the Department in the appeal before the Tribunal that the assessee had tendered additional evidence and no opportunity was granted to the Department to refute the same, the Tribunal found as a matter of fact that no additional evidence was admitted before the Tribunal in the appeal filed by the assessee. The Tribunal recorded that the Counsel for the Department was not able to demonstrate before the Tribunal while hearing the application under Section 256 (1) of the Act that any additional evidence was considered by the Tribunal. In regard to the other questions Tribunal held that on a scrutiny of the Note Book, D14 it was apparent that all the entries mentioned therein did not pertain to the receipts and several entries pertain to expenditure and therefore, it was rightly observed by the Tribunal that it was dangerous to accept the statement of the Managing Director of the Company that was initially made on 4.8.1995. The Tribunal held that it could not be said after considering the Note Book, D14 that there was a contradiction in the statement made by the Managing Director as the subsequent statement of the Managing Director was an explanatory statement that was substantiated by the Managing Director, on the basis of the Note Book, D14. The Tribunal has, in the order dated 21.03.1997 recorded reasons for reducing the peak deficit and quantifying the undisclosed income by referring to the material available before the Tribunal. In the order under Section 256 (1) while refusing to refer question no.4, the items from the peak deficit of ₹ 55,52,042/are recorded and it is observed that the Tribunal had given sufficient reasons for reducing the peak deficit. While refusing to refer the questions that were sought to be referred, after recording convincing reasons it is observed by the Tribunal that no question of law would arise for being referred to the High Court. We find on a reading of the orders of the Tribunal, dated 21.03.1997 and 10.09.1997 that the order of the Tribunal, dated 21.03.1997 is based on the material on record and no legal principles are applied, that would give rise to a question of law that would require a reference being made to the High Court. We find that the order of the Tribunal dismissing the application under Section 256 (1) of the Act is just and proper and the jurisdiction under Section 256 (2) of the Act is not exercisable in the facts of the case. - Decided against revenue
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2017 (3) TMI 897
Reopening of assessment - development rights held in its earlier avatar of firm was its stock in trade and on its conversion into a private limited company under of the Companies Act is now shown as its capital asset - Held that:- On conversion from a firm to a company, the petitioner continued to hold the same as capital asset. Without prejudice to the above, the petitioner also pointed out that there is no bar in a company even when converted from a firm to a company under the Companies Act to convert its stock in trade into its capital assets. The above objection was disposed of by an order dated 09.11.2016 by the Assessing Officer holding that it was not appropriately disclosed in the return of income filed by the petitioner in its avatar as a firm. However, we find this very issue was subject of inquiry during the regular assessment proceedings and the Assessing Officer was satisfied that the land admeasuring 61,506 sq. mtrs. is a capital asset in the hands of the petitioner while passing an assessment order dated 31.3.2011 for the subject assessment year under Section 143(3) of the Act. Thus prima facie the aforesaid ground would not justify the impugned notice as it is a case of change of opinion. In any case, prima facie there is no failure to disclose fully and truly all material facts necessary for assessment. In this case, prima facie, we are of the view that the Assessing Officer proceeded on an erroneous fact i.e. by placing reliance upon the Annual return filed by M/s. SVI Realtors (P) Ltd. in respect of the Annual General Meeting held on 24.7.2009. This while ignoring the share transfer forms which indicated that the transfer of shares took place in April, 2008 coupled with choosing to ignore the annual report filed by M/s. SVI Realtors (P) Ltd. with the the Registrar of Companies, Ministry of Corporate affairs and available on its website in respect of the earlier year in respect of the Annual General Meeting held on 26.4.2008. Further, prima facie we are of the view that in the present facts there was no failure on the part of the petitioners to truly and fully disclose material facts necessary for assessment. Thus the impugned notice is hit by the proviso to Section 147 of the Act. This Court in N.D. Bhatt, Inspecting Assistant Commissioner of Income Tax and Anr. vs. I.B.M.World Trade Corporation [1993 (7) TMI 7 - BOMBAY High Court ] has observed that the obligation of disclosing true and basic facts on the assessee during the course of assessment proceeding is only of facts of which the assessee has knowledge. Prima facie the above decision applies to this case. In the present facts, the petitioner was not aware during its assesment proceedings of the Annual Report filed by M/s. SVI Realtors Pvt. Ltd in respect of the Annual General Meeting held on 24.7.2009 indicating date of transfer as 4.10.2008. Thus prima facie the reopening notice being beyond a period of four years for the end of the relevant assessment year is hit by the proviso to Section 147 of the Act. - Decided in favour of assessee
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2017 (3) TMI 896
Depreciation on assets of trust - One of the earliest judgment is from Karnataka High Court in Commissioner of Income Tax, Karnataka-I Vs. Society of the Sisters of St. Anne 1984 (1983 (8) TMI 44 - KARNATAKA High Court ). Court observed that income derived from property held under trust cannot be total income because Section 11(1) shows that former shall not be included in latter, of the person in receipt of the income. Depreciation is nothing but decrease in value of property through wear, deterioration or obsolescence and allowance is made for this purpose in book keeping, accountancy, etc. - Decided in favour of assessee. Payment of scholarship - admissibility as charitable expenditure - Held that:- Scholarship was disbursed for pursuing Engineering course from University of California, Los Angeles, USA. The candidate was selected after a process of selection and finding him most deserving candidate, scholarship was disbursed to the said incumbent. This is in the process of charitable object of Assessee - Society for advancement of higher technical education to deserving students. It cannot be doubted that advancement of education is a 'charitable purpose'. The candidate, beneficiary, was directly or indirectly not related to Members of Society nor otherwise has any bearing or connection with the Society Members. Financial status of the said student or other things are immaterial so far as purpose for which scholarship to Adheesh Bhagat is concerned. Hence we are in agreement with the view taken by CIT(A) as also Tribunal that payment of scholarship was admissible as charitable expenditure. Question answered in favour of Assessee.
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2017 (3) TMI 895
Depreciation on "Jetty" at 100% under the head "Building - Temporary Structure" - Held that:- A bare perusal of the meaning of the word Jetty would show that, it is, in the nature of a construction, which is used, either as a landing stage, a small pier, bridge, staircase or a construction, built into the water to protect the harbour. The utility of a Jetty is limited by its construct. It is used to obtain either access to a Vessel, or, protect the harbour.The provisions of the contract, as quoted by the Tribunal, would show that, the Jetty/loading platform was constructed, in this particular case, by the Assessee, on BOT basis, for a period of three (3) years, from the date of commencement of the vessel loading operation. Jetty/loading platform, in this case, was erected by the Assessee, in order to effectuate its business under the contract, entered into with MMTC, which was tenure based, and, therefore, could not have been treated as anything else, but a temporary erection. Upon completion of the contract, the Assessee was required to dismantle it. The fact that the Jetty had other contraptions attached to it, such as, a conveyor belt, to facilitate the process of loading, cannot convert such a structure into a plant. Therefore, even, if, the functional test is employed, the main function of a Jetty, in the facts of the instant case, was to provide a passage or, a platform to ferry articles onto the concerned Vessels. This could have been done manually. That it was done by using a conveyor belt, would not, to our minds, convert a Jetty into a plant. In sum, the Tribunal has reached the same conclusion and, thus, reversed the decision of the Assessing Officer and CIT(A) by allowing depreciation at the rate of 100%. We agree with the conclusions reached by the Tribunal, which, according to us, is a pure finding of fact.
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2017 (3) TMI 894
Disallowance of additional depreciation at 10% of the cost of the windmill acquired and installed by the assessee - Held that:- It appears that the assessee – Company set up an industrial unit for production and manufacture of ceramic glaze tiles. The assessee also installed a windmill through which the production of electricity was done. It is not in dispute and cannot be disputed that as such the windmill installed by the assessee was in fact acquired and installed by the assessee for generation of electricity. It appears that out of the electricity generated, some electricity was used by GEB. For the aforesaid purpose control of plant and machinery was with the GEB. Merely because control of plant and machinery of the windmill was with GEB, it cannot be said that the assessee was not the owner of the windmill installed. The assessee shall not lose the character of owner solely on the ground that the plant and machinery of windmill was under the control of GEB. No error has been committed by the learned CIT(A), which has been confirmed by the learned tribunal, in allowing additional depreciation claimed by the assessee of ₹ 1,33,96,265/- at 10% of the cost of windmill installed by the assessee under Section 32(1)(iia) of the Act. - Decided n favour of assessee
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2017 (3) TMI 893
Addition u/s 69 - adopting NAV method of valuation for calculating the share market value - Held that:- In the absence of any corroborative evidence establishing receipts and payments outside the regular books of Account, it cannot be alleged that investments have been made which are not recorded. Further the Revenue has in this case proceeded to hold that there is investment in shares in excess of what is shown on the basis of pure suspicion i.e. the shares purchased at a price less than its actual valuation. Therefore unless it is first established beyond doubt that there is an investment which is not recorded by the Assessee in its books, no occasion to explain about the nature and source of the investment can arise. The invocation of Section 69 of the Act before establishing investment not recorded in its books of Account, is not justified. - Decided in favour of assessee
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2017 (3) TMI 892
Expenditure incurred towards temporary structure on leased business premises - capital or revenue expenditure - Held that:- None of the authorities below have examined in detail the nature of the expenses. The authorities below have adverted to, broad heads while rendering their respective decisions in the matter. To give an example, the details submitted by SRP along with their invoice dated 01.06.2007 would show that there are expendses incurred, towards painting of walls, supply and fixing of covin cum capping, light fittings, etc.; which, to our minds, prima facie, appear to be in the nature of revenue expenditure. The authorities below, as indicated hereinabove, have not examined, in our view, the expenditure incurred under each sub-head minutely so as to ascertain as to whether or not they would fall under the category of capital expenditure. Furthermore, as correctly pointed out by the learned counsel for the assessee, a Division Bench of this Court in Thiru Arooran Sugars Ltd. vs. Deputy Commissioner of Income-Tax, (2013 (2) TMI 450 - Madras High Court ), has held that temporary structures such as false ceiling, could not be categorised as a capital expenditure.As a matter of fact, in that particular case, deduction was claimed qua expenditure incurred on re-laying of damaged floors, painting and setting up partitions in a leased property. Therefore, to our minds, the authorities below ought to have carefully examined each sub-head of the expenditure incurred by the assessee and then, come to the conclusion whether or not they ought to categorise the expense as capital expenditure, keeping in mind, the facts obtaining in the present case and the case law on the point. We are, thus, of the view that for the foregoing reasons, the impugned order would have to be set aside with the direction to remit the matter to the Assessing Officer for a de novo assessment.
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2017 (3) TMI 891
Deduction under Section 80IA - non factual evidence of bogus and fabricated sales - ITAT allowed claim - Held that:- We note that both the CIT (A) and the Tribunal have rendered findings of fact that there has been no bogus sales of AH to M/s. JPL and M/s. JIL. Besides the impugned order further reveals the fact that the alleged undisclosed income has been disclosed in the accounts filed for the respective assessment years. The aforesaid findings of fact are not shown by Mr.Suresh Kumar, learned counsel for the Revenue as in any manner perverse or arbitrary. Nor the reliance by the impugned order on the decision of this Court in Vikram Doshi (2002 (2) TMI 51 - BOMBAY High Court ) and Shamlal Gurbani (2000 (2) TMI 37 - BOMBAY High Court ) as being inapplicable to the present facts. In the above view as the finding is one of fact, not shown to be perverse the question as framed does not give rise to any substantial question of law. Thus not entertained. - Decided against revenue
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2017 (3) TMI 890
Addition u/s 41 - genuineness of the sundry creditors - Held that:- Assessee miserably failed to furnish any proper detail and details of sundry creditors nor could furnish any detail if any payment was made to the sundry creditors in subsequent years and most importantly the fact that assessee has himself offered to ld. Assessing Officer for making addition of ₹ 7,02,042/-. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) on this issue. Accordingly, the appeal of assessee is dismissed. Deduction u/s.54EC - Held that:- Legislature has introduced the prospective amendment w.e.f. 1.4.2015 in the existing provisions of sub-section (i) of section 54EC of the Act, thus we confirm the view that assessee has rightly claimed deduction u/s 54EC of the Act of ₹ 1 crores. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) and accordingly dismiss the appeal of Revenue.
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2017 (3) TMI 889
Penalty u/s. 271(1)(c) - quantum addition of estimated gross profits after rejection of books - Held that:- Assessee’s gross profits are @42.99% as against 45.77% in the immediate preceding assessment year. The case file indicates that its gross profits at much lower rates of 40.90% have been assessed in assessment year 2001-02, very high rate of 50.25% in assessment year 2007-08 and again a very low figure of 32.59% in assessment year 2010-11; respectively as disclosed and accepted in scrutiny assessments. The assessee had sought to justify its decline in gross profit as compared to the preceding assessment year by placing on record all necessary details which formed the necessary basis for the Assessing Officer to reject its book and arrive at estimated GP @45%. It has also come on record that he examined all the raw material items, their purchase prices, consumption as well as all other heads of expenses stated in the record at assessee’s behest only. It is evident that the Assessing Officer is very fair in admitting in his assessment order that the assessee could not get verified key component of its excess consumption of raw material in the impugned assessment year. All this indicates that the assessee’s supportive evidence justifying the above low GP ratio in the impugned assessment year lacked verification rather than being in the nature of an altogether false explanation. We thus conclude that the above estimation of gross profits after rejection of books in quantum proceedings neither amounts to furnishing of inaccurate particulars nor concealment of income for the purpose of imposing Section 271(1)(c) penalty under challenge. The same is accordingly deleted. See Reliance Petroproducts’ case [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.
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2017 (3) TMI 888
Revision u/s 263 - Held that:- There is no force in learned PCIT former reason holding that the Assessing Officer failed to conduct any enquiry before finalizing the above regular assessment. Page 20 of the paper book duly contains Section 142(1) notice dated 07.03.2013 raising a specific query at no.4 at page 24 thereby proposing to add the sum in question of ₹ 48crores. The ultimate fact is that he nowhere made the said addition in above regular assessment. We quote judgment in CIT vs. Gabriel India Ltd. [1993 (4) TMI 55 - BOMBAY High Cour ] holding that the mere fact that an Assessing Officer does not discuss the relevant issue in assessment order nowhere renders the assessment in question to be a case of no inquiry in case he has examined the said issue in the course of scrutiny. It is further evident that a co-ordinate bench in assessee’s case itself reported that [2014 (10) TMI 617 - ITAT AHMEDABAD] has already reversed an identical exercise of Section 263 jurisdiction in the immediate preceding assessment year by holding that the Assessing Officer had duly conducted the necessary inquiry before finalizing the said regular assessment. Whether the assessee’s remuneration in question could be held to be income from other sources or attempt to cause substantial loss to the Revenue? - Held that:- We notice herein as well that the assessee’s payer has already disallowed the sum in question of ₹ 48crores (supra). Learned counsel files before us copy of its assessment order in scrutiny accepting the said disallowance. We observe in these peculiar facts that it would not be proper for the Revenue to adopt different course of action in case of a payer and a payee since the assessee is entitled to make corresponding adjustment u/s. 28(v) of the Act. We accordingly find force in assessee’s arguments challenging learned PCIT’s order passed u/s.263 of the Act. The same is therefore reversed. - Decided in favour of assessee
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2017 (3) TMI 887
Income from sale of shares - business income or capital gain - Held that:- Assessee is consistently showing income from short term and long term capital gain in sales of shares and showing the investments at cost price in the balance sheet and not as a stock-in-trade. We further observe that assessee is mainly engaged in the business of diamond trading and apart from she is having income from short term and long term capital gains from sale of shares. Further for Asst. Year 2009-10 also profit from shares is shown as long term and short term capital gain. In view of these relevant facts and the consistent approach of assessee showing income from shares under the hear ‘long term and short term capital gain’ and also showing of investments in shares and debentures under the head investment and not as a closing stock, we are of the firm view that ld. Commissioner of Income Tax(A) has rightly allowed the assessee’s claim - Decided against revenue
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2017 (3) TMI 886
Penalty u/s.271(1)(c ) - Held that:- Admittedly, in these appeals, the penalty was initiated for furnishing inaccurate particulars whereas it was imposed for concealment of income, therefore, respectfully following the decision of T Ashok Pai Versus Commissioner of Income-Tax [2007 (5) TMI 199 - SUPREME Court ] we direct the Assessing Officer to delete the penalty because the Assessing Officer himself was not sure about the charge whether the assessee has furnished inaccurate particulars or concealed the income. - Decided in favour of assessee.
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2017 (3) TMI 885
Addition on account of bogus purchases - Held that:- The report of AO was forwarded to the assessee for his reply / objections. The assessee filed its objection, in objection the assessee contended that no opportunity was given to the assessee to cross examine the vendors. The assessee further contended that he submitted a letter dated 21.01.14 and 22.01.14 and the AO overlooked the documents while furnishing the remand report. After considering the contention of the assessee and remand report the Ld. CIT (A) rejected the admission of additional evidence. Though the ld CIT(A) himself directed the assessee to file certain evidences. The ld CIT (A) not considered the evidences which was filed in compliance of his direction. We are of the considered opinion that ld CIT(A) wrongly rejected the admission of additional evidence. Hence, we admit the additional evidences filed by the assessee and remand this ground of appeal to the file of AO to consider the issue afresh and pass order in accordance with law. Disallowance under section 80G - Held that:- We have seen the assessee’s letter dated 29.01.10 while giving the cheque of donation. The assessee has clearly mentioned that the donation may be treated as donation to the corpus fund/interest. The donation was made during the validity of certificate under section 80G in favour of Dr. D.Y. Patil University. We have perused the provisions of section 80G of the Act. On perusal, we do not find any condition wherein the donor may be held disentitled for the benefit of section 80G in case his relative or dependent is getting education in the institution where the donation is made. In our view, the AO wrongly made his conclusion that expenses was made by partner for securing admission of his son and was claimed as a deduction by showing the amount as donation. Thus, we delete the disallowance made under section 80G of the Act - Decided in favour of assessee Disallowance of interest expenses paid to partner - Held that:- AO disallowed the interest holding that payment of ₹ 30 lakhs paid on account of gift represents the personal expenses of partner as the same was disallowed by him. Since the amount of gift was disallowed, therefore the interest for two month on ₹ 30 lakhs which was worked out at ₹ 60,000/- was disallowed. The Ld. CIT(A) confirmed the disallowance of interest holding that the claim of 80G is sustained in appeal and thus it was not a personal drawing of the partner. As we have already allowed the claim of deduction under section 80G and reversed the finding of AO that drawing of ₹ 30 lakhs was not personal expenses of the partner, thus the disallowance of interest expenses is also deleted. - Decided in favour of assessee
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2017 (3) TMI 884
Income generated on sale of goods generated on trial run - AO held that same had to be treated as income earned by the assessee - as argued that AO should be directed to allow the underlying expenditure from the receipts which had been taxed - Held that:- As decided in Bokaro Steel Ltd.[1998 (12) TMI 4 - SUPREME Court] the advances which the assessee made to the contractors to facilitate the construction activity of putting together a very large project was as much to ensure that the work of the contractors proceeded without any financial hitch as to help the contractors. The arrangements which were made between the assessee-company and the contractors pertaining to these three receipts were arrangements which were intrinsically connected with the construction of its steel plant. The receipts had been adjusted against the charges payable to the contractors and had gone to reduce the cost of construction. They had, therefore, been rightly held as capital receipts and not income of the assessee from any independent source. In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed assets created as a result of such expenditure. By the same reasoning if the assessee receives any amounts which are inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. These are receipts of a capital nature and cannot be taxed as income. We find that while deciding the appeal, the FAA has directed the assessee to allow the expenditure from the taxable receipts. Thus, he has followed the very basic principle of taxation jurisprudence and that principle stipulates that all the expenditure incurred by the assessee have to be compulsorily allowed from the income taxed by the AO. If the AO wants to tax a particular income, he cannot disallow the expenditure incurred by the assessee to earn the said income. Considering the above,we are of the opinion that the order of FAA does not suffer from any legal or factual infirmity. Therefore, confirming the same we decide the effective Ground of appeal against the AO.
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2017 (3) TMI 883
Amount received from tenants / occupants for extra facilities or amenities - revenue receipts or capital receipt - Held that:- The accounting of expenses and income in a year has to be considered on the basis of project as a whole and not on the basis of individual units. Therefore, the amount received by the Assessee from tenants / occupants for extra facilities or amenities represents revenue receipts and the same is to be accounted for on the basis of percentage completion method which was consistently followed by the Assessee right from the beginning and the Revenue has accepted such accounting of percentage completion method on such projects in the previous assessment years and also in the subsequent assessment years and therefore following the principle of consistency there is no justification in bringing to tax the amount transferred to deferred sales suspense account for which no work has been carried out by the Assessee in the current assessment year. In view of the above findings of the Ld. CIT (Appeals), we do not find any valid reason to interfere with the findings of the Ld CIT (Appeals). - Decided against revenue
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2017 (3) TMI 882
Addition to the capital gains adopting the guideline value of Stamp Valuation Authority u/s.50C - Held that:- The value adopted for the purposes of Wealth Tax and the guideline value reported in the website is estimated value of the locality but not the assessed value of the specific property. In case of actual transaction, the Stamp Valuation Authorities make the assessment with reference to specific property considering the locational advantages and the previous Registrations of the same locality. Therefore, we do not find any infirmity in the orders of lower authorities and hold that for the purpose of computation of capital gains u/s.50C guideline value fixed by the Stamp Valuation Authorities has to be adopted. The grounds raised by the assessee on this issue are dismissed. Whether to compute the capital gains adopting the deemed consideration per Sec.50C of the Act or the sale consideration disclosed as per sale deed, when the assessee has invested the whole of a sum in capital gains exemption bond u/s.54EC - Held that:- The assessee’s A.R raised this issue in his arguments but not raised any specific ground on this issue in the appeal. It is seen that, before the Ld.CIT(A) also no such ground was raised by the assessee and the Lower authorities have not considered this issue. The eligible deduction u/s 54EC has to be allowed and the balance amount of capital gains has to be brought tax. Since the assessee has invested the entire sale consideration in 54EC Bonds, this issue needs to be addressed by the AO as per the language used in section 54EC. Therefore, we remit the matter back to the file of the assessing officer to decide this issue afresh on merits.
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2017 (3) TMI 881
TDS u/s 194C - payments to HGL and transporters - non deduction of tds - Held that:- In this case undoubtedly, the assessee in not the person who makes the payment directly to HGL and Transporters. The assessee categorically proved with necessary proof that it had made payments on behalf of the farmers out of amount payable to the farmers towards cost of sugarcane. The assessee also proved with evidence that the impugned payments to HGL and transporters is not its expenditure, but only advance payment to farmers which was finally adjusted against cost of sugarcane payable to the assessee. We, therefore, of the opinion that where assessee a sugar manufacturer made payment of harvesting and transportation charges to harvesting and transport contractors on behalf of farmers which formed part of purchase price of sugar cane for assessee, and same had not been claimed as separate deduction, provisions of sections 194C of the Act is not applicable, consequently the assessee is not liable to deduct TDS on such payments. Thus the impugned payments to HGLs and transporters paid by the assessee company on behalf of farmers are not hit by the provisions of sec. 194C of the Act. The CIT(A) after considering relevant facts, rightly deleted additions made by the A.O. u/s 201(1) of the Act. - Decided n favour of assessee
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2017 (3) TMI 880
Addition of unexplained cash not recorded in the books of account under Section 69A - Held that:- It is true that ₹ 6,38,800/was found in cash from the bedroom of the sister of the assessee. As rightly observed by the learned Tribunal, as such nothing is on record that the bedroom was in exclusive possession of the sister. Even otherwise, there are contradiction in the statement of assessee recorded under Section 132(4) of the Act and even the affidavit of the sister of the husband which as such is after three weeks from the date of search and seized. In answer no.9, the assessee has stated that out of amount of ₹ 7 to 8 lakh found to be in cash, ₹ 2.5 lakh belonged to her sister. He has not stated that the amount in cash is found from the bedroom of the sister, entire amount belonged to her sister. The sister in her affidavit dated 4.1.2006 has stated that the amount of ₹ 6,38,800/found in cash from the room where she was sleeping with her husband was received by her from in laws, out of the aforesaid amount, some amount is of Stridhan received from her in laws and the parental house and towards the savings from the labour work by her and her husband. However, it is required to be noted that no further evidence is produced with respect to any share received from her in laws. As observed herein above, even the said affidavit is dated 4.1.2006 i.e. after a period of three weeks. As observed herein above, assessee has stated that out of ₹ 7 to 8 lakh found to be in cash, ₹ 2.25 Lakh belonged to her sister, thus there are material contradiction in the statement of assessee and even the affidavit of her sister. Under the circumstances, however on appreciation of the evidence the learned AO made addition as unexplained cash, it cannot be said that the AO has committed an error. So far as the submission on behalf of the assessee that at the time of search and seizure out of ₹ 9,48,000/, ₹ 6,38,800/which was recovered from the bedroom of the sister of the assessee was returned and not seized and therefore, the aforesaid amount of ₹ 6,38,800/could not have been added in the hands of the assessee as unexplained cash of the assessee is concerned, the aforesaid cannot be accepted. Merely because, at the relevant time aforesaid amount was not seized and returned, it cannot be said that the subsequently during the course of assessment, the aforesaid amount which was found in cash from the premises of the assessee could not have been added as unexplained income in the hands of the assessee. As such, no question of law arise. No reason to interfere with the impugned judgment and order passed by the learned Tribunal and confirmed the addition made by the AO as unexplained cash not recorded in the books of account under Section 69 A - Decided against assessee
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2017 (3) TMI 879
Entitled to raise a fresh claim before the Appellate Authorities - claim which was not made in the return of income originally filed under Section 153A r.w.s. 143(3) of the Act before the Assessing Officer and also before the appellate Authorities under the Act - Held that:- The pending assessment before the Assessing Officer consequent to return filed under Section 139(1) of the Act for the subject Assessment years had abated. This was on account of the search and as provided in second proviso to Section 153A(1) of the Act. The consequence of notice under Section 153A(1) of the Act is that assessee is required to furnish fresh return of income for each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessement by the Revenue for the first time in the case of abated assessment proceedings. Consequent to notice under Section 153A of the Act the earlier return filed for the purpose of assessment which is pending, would be treated as non est in law. Further, Section 153A(1) of the Act itself provides on filing of the return consequent to notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the respondent-assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act and the case laws on the provision of the Act would equally apply. This Court in Pruthvi Brokers and Share holders P.Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ) while dealing with a return of income filed under Section 139(1) of the Act has held that an assessee is entitled to raise a fresh claim before the Appellate Authorities, even if the same was not raised before the Assessing Officer at the time of filing return of income or by filing a revised return of income. - Decided in favour of assessee
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2017 (3) TMI 878
Sale consideration of land - capital gain OR business income - Held that:- It is required to be noted and it is not in dispute that the assessee was already having a dealership with the Mercedes Benz since 1997. That thereafter, the assessee purchased the land on S.G. Highway Road, Ahmedabad in the year 2003, which according to the assessee was insisted as per the requirement of Mercedes Benz and to continue dealership with the Mercedes Benz. That thereafter, assessee purchased the land on SG Highway Road on 1.12.2003 for sale consideration of ₹ 95,92,500/. That therefore, the assessee got the said land converted from agricultural to non agricultural use in the year 2005 and thereafter obtained necessary development permission from the AUDA (competent authority) for construction of the showroom etc. Thereafter the dispute arose between the assessee and Mercedes Benz and therefore, the dealership with the Mercedes Benz came to be discontinued in the year 2009. That thereafter, in the year 2011, the assessee sold the land and received the sale consideration which was claimed by it as a capital gain. Considering above it cannot be said that when the assessee purchased the land in the year 2003, the intention was to purchase the land to make profit by selling it. The aforesaid circumstances would suggest that the land was purchased for showroom etc. As such, the assessee hold the land for approximately 8 years and thereafter sold the same for the reasons stated herein above. When the learned Tribunal has held the income of ₹ 24,13,24,783/received by the sale of land as capital gain as claimed by the assessee and not as income from business as held by the AO confirmed by the learned CIT(A), it cannot be said that the learned Tribunal has committed any error
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2017 (3) TMI 877
TDS u/s 194C - liablilty to deduct any TDS - possession of the machinery temporarily was passed to the assessee after entering into agreement with the lender - Held that:- Agreement of hire, which was subject matter of interpretation in the case in hand, was in regard to machinery and equipment owned by lender, i.e., M/s Jaiprakash Associates Ltd. Since these machineries and equipments are of big size, for the purpose of their operation requisite staff etc. was to be provided by lender but hirer was to make payment of only hire charges. The assessee was not under an obligation to carry out the work as it was not under the control of the lender and the possession of the machinery temporarily was passed to the assessee after entering into agreement with the lender. Therefore, in the present case, taking of the machinery and equipment on hire would not amount to a contract for carrying out any work as contemplated in section 194C of the Act. The said contract i.e. taking of machinery and equipment on hire also cannot be treated with a contract for supply of labour. Therefore, the provisions of section 194C of the Act were not applicable to the facts of the assessee's case, as such no disallowance was called for u/s 40(a)(ia) of the I.T. Act - Decided in favour of assessee
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2017 (3) TMI 876
Expenditure incurred on technical and marketing knowhow - revenue v/s capital - Held that:- Entries in the account books are not conclusive of the nature of expenditure i.e. revenue or capital and whether an assessee is entitled to a deduction or not would entirely depend upon the provisions of law and not treatment given to it in the books of accounts by the assessee. The expenditure incurred on account of technical and marketing knowhow was in the revenue field is not disputed by the Revenue. Consequently the entire expenditure of ₹ 18.67 crores has to be allowed in the subject assessment year. See Kedarnath Jute Mfg. Co. Ltd. v/s. Commissioner of Income Tax (Central) Calcutta [1971 (8) TMI 10 - SUPREME Court ] - Decided in favour of assessee
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Customs
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2017 (3) TMI 914
Valuation of imported goods - Time Bound Software - Beta Software - deductive value or computed value - Held that: - the elements required for arriving at Deductive value u/r 7 or for arriving at Computed value u/r 8 of the said Rules are not present for the imported item namely “Time Bound Software”. Therefore, the valuation is to be decided u/r 9 of CV Rules, 2007 - Rule 9 says that subject to the provisions of Rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available in India - matter remanded to the original adjudication authority for deciding the valuation issue afresh under Rule 9 of CVR, 2007 read with provisions of Section 14 (1) of CA, 1962. Valuation of “Beta Software” - The appellant importer argues that “Beta Software” is not “goods” u/s 2(22) of the CA; therefore, no customs duty is liable to be paid on the said item - Held that: - The item imported being beta software, one cannot be allowed to state that the said item is not “goods” in terms of Section 2(22) of the Customs Act. The item is a kind of moveable property which has been put into a media-CD/DVSs and is being transacted/ passed over/ traded as such - matter is remanded to the original adjudicating authority to decide afresh the valuation in the light of the observations made here u/r 9 of CVR, 2007 read with Section 14(1) of CA, 1962. Appeal allowed by way of remand.
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2017 (3) TMI 913
Classification of imported goods - Eye Tracking System - The appellant wants to classify under Customs Tariff Heading 84715000, whereas Revenue wants classification of the subject item under Custom Tariff heading 90318000 - Held that: - the item imported is eye tracking system having specific measurement function relating to eye activity. Thus, undoubtly it measures activity of the eye and that is why it is called “eye tracking system” - the item has got specific measuring capability in case of activity of eyes and when Chapter 90 of Custom Tariff mainly covers the items namely, optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and parts and accessories thereof and when there is no exclusion for the subject item from chapter 90, considering note 5 to chapter 90, the item deserves classification under chapter 9031 and further under its sub heading 90318000 - appeal dismissed - decided against appellant-assessee.
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2017 (3) TMI 912
Confiscation of the goods cleared by M/s Spak Exports - non-imposition of penalties on the CHA - Revenue's case is that some importers were utilizing regular import channels for importing various consumer items such as VCD players, Car Stereos, Video Cassettes, for handicam cameras, mobile accessories etc., and declared very low price and also for various contraventions undertaken - rejection of declared value - Held that: - the conclusion reached by the adjudicating authority, that the value of the contemporaneous import needs to be applied is incorrect and is not in consonance with law due to there being no details of contemporaneous inputs in the adjudication order. In the absence of contemporaneous import details, we have to hold that the impugned order is unsustainable and liable to be set aside and declared value needs to be accepted. Non-imposition of penalty on the CHA - Held that: - none of the ingredients of Section 112(a) is applicable as the adjudicating authority has not confiscated the goods u/s 111 - also the CHA's role in the entire case is not the one which would attract the provisions of Section 112(a) of the CA, 1962 for imposing penalty - imposition of penalty on the CHA is also devoid of merits and rejected. Appeal disposed off - decided in favor of importer and against Revenue.
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2017 (3) TMI 911
Loss in transit - normal loss or not? - import of Crude Palm Oil - benefit of N/N. 12/2012-CUS dated 17.03.2012 - Held that: - the duty issue is squarely covered by the precedent ruling of Hon’ble High Court of Allahabad in the case of Jhunjhunwala Vanaspati Ltd. Vs. CCE, Allahabad [2015 (10) TMI 1532 - ALLAHABAD HIGH COURT], wherein the Hon’ble High Court under similar facts and circumstances held that the said Rule of the Customs (import of Concessional rate of duty for manufacture of excisable goods), Rules 1996, comes into operation only when the goods are intended to be used by manufacturer for the specific purpose - the loss in the given facts and circumstances is a normal loss and in such case, the material lost in transit have been definitely put to use for manufacture - benefits allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 910
Rectification of mistake - smuggling - import of mobile phone of China origin - confiscation on the ground that the goods do not have the MRP/RSP printed or labelled either on the carton or individual packets of mobile phones which are mandatory requirement u/s 4A of the CEA, 1944 readwith Packaged Commodity Rules, 1977 - Held that: - all the pre packaged commodities which includes mobile phones were required to confirm to the provisions of Packaged Commodities Rules readwith Section 4A of the Central Excise Act, 1994 readwith provisions for Additional Customs Duty under Section 3(1) of the Customs Tariff Act, 1975 on their import, readwith General Notes regarding import policy, were required to bear the declaration to the effect - no error of law and/or fact appears on the face of the record before us, except that in view of findings by this Tribunal, that the goods in question (mobile phones) were not found related to the bills of entry produced by importers namely M/s. Gold Manner Overseas and M/s. Waho Wireless Pvt. Ltd., we find that no penalty was imposable on these two applicants. In retaining the penalties on these two importers-applicants there have crept anomaly in order, as on the one hand their relation to the goods seized is not established and secondly penalty imposed on them has been reduced and retained under Section 112 of the Act. In this view of the matter, we set aside the penalty on the two importers namely M/s. Gold Manner Overseas and M/s. Waho Wireless Pvt. Ltd. So far other appellants are concerned, no interference is required in the Final Order dated 29.07.2015 passed by this Tribunal - ROM application disposed off.
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2017 (3) TMI 909
Amendment to Bill of Entry - It is a case of the appellant that, at the time of shipment of the goods, the certificate of origin was not provided by the exporter from Korea, which was subsequently provided. Subsequently on receipt of the certificate of origin the respondent-assessee filed the claim for amendment of the Bill of Entry and to allow the benefit of exemption under the said notification - Held that: - the issue involved herein is no longer res-integra, under the similar facts and circumstances in the case of Samsung India Electronics Pvt. Ltd. [2016 (10) TMI 726 - CESTAT ALLAHABAD], where it was held that the Ld. Commissioner (Appeals) have erred in rejecting the appeal and it is clear case of failure of his part to exercise jurisdiction - amendment in bills of entry allowed - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (3) TMI 908
Discontinuation of satellite services - default in payment of charges - Held that:- On a perusal of the order passed by the TDSAT, we find that the conclusion that has been arrived at by it with regard to the justification of disconnection by the respondent, cannot be found fault with. It has analysed the default at length by the appellant and come to a definite conclusion that there was default by it and the disconnection had been done in accordance with clause 17 of the agreement. Therefore, on the said score, we concur with the view expressed by the Tribunal. As far as the counter claim is concerned, the Tribunal has declined to accept the claim of ₹ 59,328/- which was made by the respondent towards service tax. The TDSAT has ruled that the same had been erroneously charged and accordingly declined to allow the same. As the respondent has not preferred any appeal with regard to such non-allowance of the claim, we need not revert to the same. As far as the quantification of the amount payable by the appellant to the respondent is concerned, that has been appositely done as is manifest from the factual analysis and hnce, does not require any interference. Levy of interest the interest should be reduced to 12% per annum and accordingly it is directed that the amount awarded by the TDSAT along with 12% interest be computed and be paid to the respondent within eight weeks hence.
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Service Tax
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2017 (3) TMI 943
Import of services - reverse charge - advisory fee - services received while availing commercial loans and buyer’s credit in the form of external commercial borrowing from foreign banks - reverse charge mechanism - Held that: - It is clear from the agreement that ABN Singapore and ABN India are branches of ABN Amro Bank, NV, a registered company located in Amsterdam in Netherland. As the lender is having a representative office in India by way of another branch entity of the bank, no service tax liability arises on the appellant in terms of Section 66A - reliance was placed in the case of Nagarjuna Oil Corporation Ltd. vs. CCE, Puducherry [2016 (8) TMI 41 - CESTAT CHENNAI], where the Tribunal examined the scope of Explanation 1 under Section 66A and held that if a foreign entity is having a business establishment in India, the service rendered through such establishment cannot be taxed under reverse charge in terms of Section 66A. Tax liability - amount paid as insurance premium by the appellant to TD Bank as part of loan amount - Held that: - It is clear that the insurance premium amount is paid by TD Bank. The appellant is paying the full amount, including the said insurance amount as a term loan to TD Bank. In such arrangement, we find no consideration is paid by the appellant to be considered as taxable value, under reverse charge basis, in terms of Section 66A - reliance was placed in the case of Kingfisher Airlines P. Ltd. vs. CST, Mumbai [2014 (11) TMI 503 - CESTAT MUMBAI], where in similar situation the Tribunal held that borrower of money in India is neither a service provider nor service recipient in connection with insurance taken by the lender. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 942
Business Auxiliary services - marketing and advertising of the products - demand of duty with penalty - Held that: - On perusal of the said clauses of the agreement, we notice that it talks about the steps necessary to be taken by the main appellant to promote and enhance the visibility and goodwill of trademarks and in particular the main appellant shall endeavour to maximize the sales and to increase the beverage's share of market. Both the clauses when scrutinized in depth, do not indicate that the main appellant is required to promote or market or sale of goods produced or provided or belonging to PFL - In the case in hand, PFL is only producing and selling concentrate to the main appellant for converting into aerated water - the main appellant is not promoting or marketing or selling the concentrates which are produced or provided by PFL to them for manufacturing of aerated waters - the impugned order is unsustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 941
Service to foreign party - scope of the term export - Online information and Data Base access or retrieval service, management consultant service in the field of health care management - whether the service will be treated as export or not? - Held that: - identical issue has come up before this Tribunal in the case of Paul Merchants Ltd. vs. CCE, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] wherein it was held that When the person on whose instructions the services in question had been provided by the agents/sub-agents in India, who is liable to make payment for these services and who used the service for his business, is located abroad, the destination of the services in question has to be treated abroad. The destination has to be decided on the basis of the place of consumption, not the place of performance of Service - demand set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 940
Liability of tax - GTA service - sub-contract work - reverse charge mechanism - Held that: - in the case of GTA service the levy of service tax has been shifted from the service provider to the person who is liable to pay freight where consignor or consignee of the goods is covered under any of the seven specified categories - From the agreement entered into between the appellant and M/s Lee & Muirhead Pvt. Ltd, we note that the latter will be entitled to the payment of ₹ 927/- per freight tonne which included ₹ 770/- for transportation and balance for other services. From this, it is evident that it is the appellant who pays freight for the transportation of the goods - the appellant being a public limited company is covered within one of the seven categories specified where the service tax liability will be on the consignor / consignee. Further, the freight is also borne by the appellant. There is no doubt that the consignee is M/s NTPC. Consequently, the liability for payment of service tax under GTA in this case falls on the appellant in terms of Rule 2(d)(v) of Service Tax Rules, 1994. Appeal dismissed - decided against appellant.
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2017 (3) TMI 939
Airport service - sale of entry ticket at the airport as per the agreement entered into with Airport Authority of India - demand - time limitation - Held that: - the said short payment of service tax could be detected only when authorised person of the appellant’s company was questioned and his statement was recorded on 08.11.2005 and the department had occasion to scrutinise the agreement with their port authority. On the basis of the details submitted by the appellant on 18.10.2007, the department quantified the service tax recoverable. In fact, in terms of the agreement with the Airport Authority of India the appellant was allowed to recover the entry charges alongwith service tax. The Airport Authority of India also have clarified the issue to the appellant regarding payment of service tax - the extended period of limitation has been rightly invoked. The proviso to Section 73 of the FA, 1994 empowers the department to demand service tax within a period of five years from the date of issue of notice in cases where suppression of facts is established - present SCN has been issued more than three years after the date of knowledge of the short payment of service tax by the department - demand valid. Appeal dismissed - decided against appellant.
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2017 (3) TMI 938
Classification - Cargo handling services / airport services - The service tax liability was sought to be confirmed on the appellant under the category of “storage and warehousing service” upto 09/09/2004 and under “airport services” w.e.f. 10/09/2004. The appellants contended that the services now sought to be categorized under these tax entries were actually “cargo handling services” and as they relate to export cargo they are excluded from tax liability - Held that: - the appellants are basically engaged in various composite activities starting from receipt, shifting, handling, loading, packaging in suitable manner, security X-ray, scanning and loading of cargo for outward movement by aircraft. These activities are not relating to storage and warehousing of cargo - The cargo brought by exporters are not for storage or warehousing in the airport. The cargo is brought for shipment and the shipment happens at the earliest available opportunity. Till the shipment, the cargo is held for a short duration by the appellant. During this duration, various activities to make the cargo fit for shipment is undertaken - As such, appellant are not involved in providing storage and warehousing service with reference to the cargo - there is no tax liability under this tax entry for the appellant upto 09/09/2004. Admittedly the appellants are an airport authority involved in providing service in the airport. The claim of the appellant is that ‘cargo handling service’ is more specific than ‘airport service’. We are not in agreement with such proposition. While cargo handling may be specific with reference to services rendered in connection with cargo, ‘airport service’ is also specific to the extent that this service can be rendered only by airport authority or any other person in a designated airport or a civil enclave. The service is area specific - this is not a general category of tax entry - the services rendered by the appellant are taxable under the category airport service w.e.f. 10/09/2004. Time limitation - Held that: - these activities were not subjected to levy as they were relating to export cargo till 09/09/2004. The all covering entry of airport service was brought in w.e.f. 10/09/2004. As such, there is no justification for the allegation of fraud, collusion, willful mis-statement and intention to evade tax against the appellant - the service tax liability shall be restricted to the normal period - penalty u/s 77 and 78 also set aside for the same reason. Appeal allowed - decided partly in favor of appellant.
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2017 (3) TMI 937
Refund claim - composite service of extraction of minerals along with various incidental works - mining services - Held that: - In the circular dated 12.11.2007, it is clearly mentioned that the services with reference to making the land suitable for construction of building, factory or civil structure are to be taxed even before 1.6.2007 under the category of “site formation & clearance service”. The said circular also clarifies that coal cutting or mineral extraction and lifting them upto the pit head is integral part of the mining operations and are not to be taxed prior to 1.6.2007 - In the present case, there is an excavation of gypsum and loading of said gypsum in the mines. Other activities are with reference to the main intention of extraction of gypsum. Accordingly, the lower authorities have not examined the scope of the service with statutory entries during the relevant period - matter needs reconsideration. Time limitation - Held that: - the relevant date to calculate the time bar should be the date of initial filing of claim i.e. 20.03.2008. The appellant’s eligibility, if any, for refund should be reckoned considering the said date as the relevant date of filing the claim - the same requires re-consideration by taking original date of filing the claim relevant for deciding the time bar. The provisions of Section 11B will apply. The question of undue enrichment is also required to be examined afresh, in case of eligibility of the appellant for the claim on merit as well as on time bar. Appeal allowed by way of remand.
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2017 (3) TMI 936
Public Relation Service - The respondent executed an agreement dated 31.03.2008 with the Govt. of AP (Information and Public Relation Department) (IPRD) for providing Integrated Mobile Publicity in Assembly Constituencies *“IMPACT”) through Mobile Publicity Vehicles - whether the above servce comes under the head Public Relation Service or not? - demand - Held that: - the services have been provided to AP Govt. From a reference to the various activities illustrated in section 65(86c), the activities undertaken are to be considered as public relations - The definition makes it amply clear that the scope of tax is not limited to management of public relations. The use of the phrases “in relation to” and “in any manner” widens the scope of the taxability with reference to public relations - IPRD has prepared the overall plan to be implemented. However, for carrying-out the plan, the respondent is required to plan and organize the logistic support required in terms of the hardware as well as the experienced persons to carry-out the activities. When this is to be done on a state-wise basis, this will require considerable planning and management of the whole exercise. In our view this is to be considered as management of the public relations campaign. The activity would fall within the definition of public relation services in terms of the work carried-out by the respondent as seen from the terms and conditions of the contract entered into with IPRD. The services also do not fall under any category mentioned in general exemptions - demand upheld - appeal allowed - decided in favor of Revenue.
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2017 (3) TMI 935
Valuation - airport taxes, passenger service fee (PSF) collected by the appellant from the passengers, in addition to base fare - whether included in the assessable value or not? - Held that: - the amount collected from the passengers by the appellant, apparently, includes service tax. It is not clear as to how, when acting as an agent, for Airport Authority, with reference to collection of PSF, the appellant can collect the service tax also from the passengers. There can be no concept of pure agent for collecting tax on behalf of the client. Any amount collected as service tax from any person, cannot be passed on to any other person other than Government - While we note that any amount collected from the passenger specifically identified for the particular service, to be rendered by other than the appellants, are not to be included in the gross value, it is necessary to establish with documentary evidence the background of such fee or taxes, legal term of contractual obligation to collect and pay the amount on actual basis. These documentary evidences are not forthcoming in the present appeal - appeal dismissed - decided against appellant.
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2017 (3) TMI 934
Classification of services - whether the service rendered by the appellant amounts to “cargo handling service” within the meaning of Section 2(23) of the Finance Act, 1994 or the "packaging activity"? - Held that: - A careful reading of Section 65(23) of the Act, which defines Cargo Handling Service would go to show that though the word packing is included therein, the same is referable to the word “Cargo” whereas in Section 65(76b) “Packing Activity” is defined to mean “Packaging of Goods” - the appellant has nothing to do with the transportation of goods which it packs within the factory unit of the principal manufacturer prior to the goods leaving the factory. It is nobody's case before us that the appellant is a cargo handling agency. All activity undertaken by the appellant, though related to packing activity, is at a stage when the goods are yet to clear the factory gate as manufactured goods for onward transportation. Prior to the amendment made by the Finance Act of 2005 with effect from 16.06.2005, the appellant would not be liable to pay service tax on the service rendered by it in terms of Section 65(23) read with Section 105(zr) of the Act. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (3) TMI 933
Clandestine removal - Whether there was manufacture and removal of 3017 MT of sodium silicate during the period 2005-06, 2006-07 and 2007-08 resulting into short payment of duty? - Held that: - the department was not sure about the correctness of the ratio adopted in making the demand alleging clandestine production and clearance - where the revenue is not able to establish the clandestine removal by adducing cogent and tangible evidences the argument of the appellant that he has not suppressed any production merits consideration - in catena of decisions it is held that clandestine production and demand cannot be made on the basis of theoretical calculation and presumption by the department - appeal dismissed - decided against Revenue.
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2017 (3) TMI 932
Classification of Synthetic Web Equipment - classified under Chapter Sub Heading No. 6307.90 of the First Schedule to CETA, 1985 or under Tariff Item No. 4202 1990 of the said schedule? - Held that: - Synthetic Web Equipment are classifiable under Sub Heading No. 4202 of the said Schedule - the entire duty demanded through the said SCN has been deposited before the adjudication - Since the matter was related to interpretation, we set aside the equal penalty imposed on appellants and personal penalty imposed on the other appellant - the appellants are directed to pay interest as required by law - appeal allowed - decided partly in favor of appellant.
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2017 (3) TMI 931
Claim of refund and interest on delayed refund - adjustment of refund with the amount due in another case against which the appeal was pending - Held that:- the issue involved in the present appeal is covered in favour of the appellant by the decision of the Hon’ble Karnataka High Court in the case of Stella Rubber Works [2013 (3) TMI 299 - KARNATAKA HIGH COURT], where it was held that When once the adjudicating authority has held that the assessee is entitled to refund of the amounts which he had paid to the Department, in absence of a specific provision authorizing the Revenue adjusting the said amount towards due to them, it is improper for them to make such adjustment, No question of invoking equitable consideration - as per Section 11B and 11BB, appellants are entitled to interest after the expiry of three months from the date on which the application for refund was received - appeal allowed - decided in favor of appellants.
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2017 (3) TMI 930
CENVAT credit - penalty - demand on the ground that appellant had imported 408.917 MT of laminated scrap during the year 2000-01 and they have suppressed the production of their final product under the guise of sub standard imported material by claiming more wastage - Held that: - there is virtually no evidence on record to establish the manufacture of final product and clearance of the same without payment of duty. There is no evidence of manufacture, their clearance and identification of the buyers and transporters - demand not justifiable - appeal dismissed - decided against Revenue.
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2017 (3) TMI 929
CENVAT credit - fake invoices - denial on the premise that the dealer M/s S.K. Garg & Sons who has supplied the goods to the respondent is non existence and he has merely issued invoice not the goods - Held that: - no investigation conducted at the end of manufacturer/supplier or the transporter to reveal the truth whether manufacturer/supplier has supplied the goods in question to M/s S.K. Garg & Sons or the transporter has transported the goods to the premises of the respondents which is vital evidence to reveal the truth - it cannot be alleged against the respondents that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer - in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the respondents - appeal dismissed - decided against Revenue.
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2017 (3) TMI 928
Input credit - Drain Trap - Steel Furniture - Outward freight - sales commission - Held that: - the credit with respect to drain trap ₹ 5,655/- and the credit of ₹ 28,248/- with respect to steel furniture, admittedly used in the factory premises, particularly in the change room etc. are fully allowable as the appellant cannot manufacture drugs without complying with the ‘good manufacturing practices’ under the Drugs and Cosmetics Rules. Outward freight - Held that: - ‘Goods Transport Agency service’ for transportation of final products from place of removal is an eligible input service as the expression – “activities relating to business”, covers transportation upto customer’s place and the word “relating” widens scope. Thus, credit is not deniable relying on coverage of outward transportation up to place of removal in inclusive clause. Sales commission - Held that: - Commission has been paid to service providers for procuring orders, which is essential for effecting sale and/or clearances of the manufactured goods. Such expenditure forms part of the cost of manufacturing on which admittedly Excise duty is paid - also sales promotion expenses is specifically includable u/r 2(l)(ii) of CCR, 2004. Accordingly, the credit for the same is fully allowable. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 927
CENVAT credit - MS items - Held that: - MS items were used for fabrication of molasses storage tank. Undisputedly such tank is necessary and is integral part of the manufacturing process carried out the factory. The Chartered Engineer certificate states that the MS items were used for fabrication of molasses storage tank and also gives the quantity of MS items used for fabrication of the same - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 926
Clandestine removal - natural justice - the authorities failed to offer all the witnesses for cross examination by the appellants - Held that: - ld. Commissioner could not rely on the statements of these witnesses without providing them for cross-examination - reliance was placed in the decision of the case of G. Tech Industries vs. UOI [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT], where it was pointed out that Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. The computer printouts have been taken out as RUD-1 and 2 are in the form of prints taken out from the pen-drive as well as from the hard-disk recovered, the conditions under Section 36B(2) have not been satisfied for the admissibility of evidence in the form of computer printouts, in RUD-1 and 2. It is true that the evidence which is required to be produced in quasi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high as in criminal proceedings, where the charges are required to be established beyond reasonable doubts - in the present case the allegation of clandestine manufacture and clearance has not been substantiated by any tangible evidences, The Revenue has failed to produce any corroborative evidence in the form of purchase of raw materials, clearance of finished products or even the capacity to manufacture such a huge quantity of finished products alleged to have been cleared. The evidence, at best, raises suspicion in the minds but is not sufficient to prove the charges of clandestine removal. The evidences produced by the Revenue for sustaining the duty demand has not been corroborated by detailed investigation - The allegation of clandestine manufacture and clearance cannot be sustained on the basis of such flimsy evidences - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 925
Liability of interest - erroneous CENVAT credit reversed on being pointed out - appellant case is that there is no justification for demanding interest in respect of Cenvat Credit since the credit was never utilized before the same was reversed - Held that: - the issue has been settled in favour of the appellant for the period prior to the date of amendment of rule 14. It has been held consistently that there will be no liability to pay interest in these cases where Cenvat Credit was taken erroneously but reversed without utilization - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 924
CENVAT credit - structural steel items such as MS Ingots, HR plate, HR Coil, MS Plate etc. falling under chapter 72 & 73 of the Central Excise Tariff Act, 1985 which have been used for fabrication of support structures for capital goods - Held that: - Cenvat Credit on such steel items used for fabrication of structures of capital goods had been allowed by the Tribunal in several decisions - reliance was placed in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that Applying ‘user test’, structural items used in the fabrication of support structures would fall within the ambit of 'Capital Goods' as contemplated u/r 2(a) of the CCR, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 923
Rectification of Mistake - The ld. Counsel for the applicant has highlighted a few points which according to them are in favor of the appellants but pleaded that these points have not been specifically discussed in the impugned order - Held that: - the impugned order has been passed after consideration of all evidence on record including those highlighted by the applicant - It cannot be said that by not specifically discussing a few of the points highlighted, the order has been passed in error - A re-appreciation of the evidence at the stage of rectification of mistake would amount to re-writing the order, which is not permissible, since, the Tribunal has become functus officio with the issue of the impugned order - ROM application dismissed.
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2017 (3) TMI 922
CENVAT credit - Polyester textured/twisted yarn (POY) - demand on the ground that POY was received by appellants on fictitious names/invoices without accounting the same - The 14 invoices could not be placed for consideration of the benefit before the adjudicating authority and therefore the benefit of 14 invoices to the time of was not allowed to the appellant - Held that: - verification of 14 invoices which were not considered at the time of second round of remand. In view thereof, remand the matter to the adjudicating authority for the limited purpose of verifying 14 invoices and to give the benefit of credit - appeal allowed by way of remand.
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2017 (3) TMI 921
MODVAT credit - iron and steel products - Held that: - the nature of subject items and their use as explained by the counsel for appellant, the disallowance of credit is unjustified. The Larger Bench of Hon'ble Supreme Court in the case of Ramala Sahakari Chini Mills Vs. CCE Meerut [2016 (2) TMI 902 - SUPREME COURT] has held that the word ‘include’ in the definition of inputs cannot be given a restrictive approach. The above items shown in the table would fall under the category of capital goods or inputs - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 920
Refund claim - abatement of duty - sealing of machinery - denial of refund on the ground that the respondent failed to clear the stock of finished goods within a period of two days from the date of closure as specified in Rule 10 of the Pan Masala Packing Machines (Proviso) - the main issue is how to complete the period of two days within which the respondent is required to clear the goods manufactured and not stock at the time of closure of the machine - Held that: - as last day of the prescribed two days period is Sunday which is holiday and no production and clearances are undertaken on Sundays. Hence, clearance of notified goods on the very next day i.e. Monday on 11.07.2011 is to be considered as done or taken in due time in terms provisions of section 10 of the said act which is also applicable to Pan Masala Packing Machine Rules 2008 in terms of provisions of Rule 18 of the said rules - appeal dismissed - decided against Revenue.
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2017 (3) TMI 919
SSI exemption - dummy units versus related persons - Held that: - financial and management control, as discussed in the impugned order has also not been categorically established. The original order also did not assert under which provision such clubbing is called for either in terms of N/N. 01/1993-CE or the provisions of CEA or rules made thereunder. The concept of “related person” is relevant for valuation of excisable goods. The turnover of related persons cannot be perse clubbed together for arriving at the threshold limit of SSI exemption. For this the legal existence of SSI unit has to be disproved and it should be established that the SSI unit is a mere dummy creation. We find that no such evidence exist in the present case to accept such proposition. Appeal dismissed - decided against appellant.
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2017 (3) TMI 918
Imposition of penalties u/r 26 of CER, 2002 - levy on the ground that the appellants have received fake invoices to enable Shri R.K.Gupta to issue cenvatable invoices enabling the manufacturer/buyers to avail cenvat credit on the strength of bogus invoices - Held that: - penalty u/r 26 (2) cannot be invoked unless and until the appellant have dealt with such goods during the impugned period - Admittedly, it is allegation against the appellants that they have dealt with issuance of bogus invoices. Therefore, the penalty u/r 26 of the CER, 2002 is not imposable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 917
SSI exemption - clubbing of clearances - demand of duty from all units simultaneously on same issue - clandestine removal - Held that: - In respect of demand of differential duty on clubbing of clearances, Revenue has jointly demand duty from M/s. Punjab General Manufacturing Works, Mathura, M/s. Ashoka General Industries, M/s. Elite Metal Products, M/s. Karam Sanitations, M/s. Shreya Sanitations, M/s. Ellkay Sanitations and M/s. Goldline Bath Fixtures Pvt. Ltd. - the finding of this Tribunal in the said case of C.C.E., Chandigarh vs. Shiva Exim Enterprises [2005 (2) TMI 294 - CESTAT, NEW DELHI] is squarely applicable in the present case, where it was held that the duty can be only demanded from the principal unit and not from both the units and that Where the duty has been demanded from both the units, it would rather lead to an inference that the Revenue has recognized implicitly both of them as independent units - the said part of the SCN is not sustainable. In so far as it relates to demand of differential duty of ₹ 1,44,96,923/. We did not find any ground forwarded by Revenue to negate such holding by the Original Authority in respect of allegation of clandestine clearance - appeal filed by the Revenue dismissed. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 916
Clandestine removal - penalty u/s 209A of CER, 1944 - the appellant urges that there is no finding of his involvement in any clandestine activity - Held that: - disproportionate penalty may be maintained as he was the Managing Director and C.E.O. of the company and as such he was definitely aware with the misdeeds going on in the company - Penalty on Mr. R.K. Somani is reduced to ₹ 25,000/- u/r 209A of CER, 1944 - appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 915
CENVAT credit - plates - shape and section - MS angles - GP coil/sheet - HR coil - CR strip - MS channels - paints - storage tanks - Held that: - the issue of Cenvat credit on the items in question have been decided in favour of the appellant-assessee in their own case in preceding rulings of this Tribunal Dhampur Sugar Mills Ltd. Versus Commissioner of Central Excise, Meerut-II [2016 (8) TMI 492 - CESTAT ALLAHABAD] wherein it has been held that MS/SS plates used for repair and maintenance of machinery which are further used for manufacture of final excisable products are eligible for modvat credit - Further storage tank is an eligible capital asset u/s 2(a)(A)(VII) - credit allowed - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 875
CENVAT credit - benefit of N/N. 50/2003 dated 10.06.2003 - denial of credit on the ground that the benefit of notification was availed by the assessee - Held that: - the issue is covered by the Hon'ble Uttrakhand High Court's decision in case of CC&CCE, Meerut-I v. Apco Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT ], where it was held that CENVAT credit which was validly availed at the time of the receipt of the inputs for the manufacture of the final product, on which excise duty was payble, but subsequently utilized for the manufacture of the same final product which became exempted from payment of excise duty pursuant to a subsequent notification, was not liable to be reversed under Rule 6(1) of the CENVAT Credit Rules, 2002 - the appellant assessee will be entitled to the Cenvat credit availed and credited to their Cenvat credit account prior to 03.02.2007, the day when the assessee opted for benefit of the N/N. 50/2003 dated 10.06.2003 - appeal allowed - decided in favor of appellant-assessee. Benefit of N/N. 50/2003 dated 10.06.2003 - denial on the ground that additional production of writing & printing paper was a result of the expanded capacity and not establishment of a new unit - Held that: - the assessee namely M/s Century Pulp and Paper has fulfilled the condition laid down in the N/N. 50/2003-CE dated 10.06.2003 and is eligible for exemption from payment of duty - appeal of department dismissed. Appeal allowed - decided in favor of assessee.
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Indian Laws
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2017 (3) TMI 907
Complaint under Negotiable Instruments Act - whether the role of the appellant in the capacity of erstwhile Director of the defaulter Company makes him vicariously liable for the activities of the defaulter Company as defined under Section 141 of the Act? - Held that:- Admittedly the cheques dated 28-12-2004 were issued while the appellant was Director of the Company with validity for a period of six months but during that period they were not presented for realization at the bank. The appellant has resigned as Director w.e.f. 2-1-2006 and the fact of his resignation has been furnished by Form 32 to the Registrar of Companies on 24-03-2006 in conformity with the rules. Thereafter, the appellant had played no role in the activities of the default Company. This fact remains substantiated with the Statement filed by the default Company on 20-02-2006 with the Registrar of Companies that in an advertisement of the Company seeking deposits (Annexure P3), only the names of three Directors of the Company were shown as involved in the working of the Company and the name of appellant was not therein. Indisputably, therefore, the cheques bounced on 24-08-2006 due to insufficient funds were neither issued by the appellant nor the appellant was involved in the day to day affairs of the Company. Before summoning an accused under Section 138 of the Act, the Magistrate is expected to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and then to proceed further with proper application of mind to the legal principles on the issue. Impliedly, it is necessary for Courts to ensure strict compliance of the statutory requirements as well as settled principles of law before making a person vicariously liable. We are of the view that this is a fit case for quashing the complaint. The High Court ought to have allowed the criminal miscellaneous application of the appellant because of the absence of clear particulars about role of the appellant at the relevant time in the day to day affairs of the Company.
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