Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 23, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
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Government constitutes a Sub-Committee under the aegis of the High Level Committee (HLC) on issues related to excise duty on different articles of jewellery imposed in Budget 2016-17; Committee to submit its Report within sixty days
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Buyback of WPI-Linked Inflation Indexed Bond
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Repayment of 7.59% Government Stock 2016 and 10.71% Government Stock 2016 on April 12, 2016 and April 19, 2016 respectively
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Finance Minister Shri Arun Jaitley: Low premium New Crop Insurance Insurance Scheme would reduce distress in the Farm Sector; Launches the NABARD Agri-Credit Monitoring portal, which will help financial institutions to monitor the status of agricultural loans given to farmer; Unveils the Roadmap of E-Shakti Expansion Programme of digitization of Self-Help Groups (SHGs)
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Quarterly Report on Public Debt Management for the Third (Q3) Quarter of FY 2015-16 (October-December 2015) released; Government issued Dated Securities worth ₹ 1,50,000 crore in ten tranches taking the Gross Borrowings from April-December of FY16 to ₹ 5,01,000 crore or 83.5 per cent of BE FY16, vis-à-vis 83.9 percent of BE FY15
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Atal Pension Yojana (APY) amended to give an option to the spouse to continue to contribute for balance period on premature death of the subscriber; After the death of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60 years of the subscriber
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RBI Reference Rate for US $
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Attachment of bank account - any action to recover taxes adopting coercive means is not permissible till the petitioner's application for stay under Section 220(6) of the Act is disposed of. - HC
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Reopening of assessment - AO has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then,in the garb of re-opening the assessment, review would take place - to reopen an assessment tangible material should be there - HC
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Carry forward of excess application of income over the income - Unfortunately, the details of such income and application of income in the earlier year is not available on record. Therefore, this Tribunal has no other choice except to presume that the income of the assessee was already allowed in the earlier year. Hence, nothing remains to carry forward. - AT
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Levy of penalty u/s 272A(2)(k) - assessee could not upload the quarterly statement in respect of the tax deducted at source - in respect of those deductees whose PAN is not available with the assessee, there was a reasonable cause for the delay in uploading the quarterly statement as required under the scheme of the Income-tax Act, 1961. - AT
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Tds u/s 194C - non deduction of tds on hamali charges paid to daily labourers employed by the assessee -Just because the payments are made through the mestri, the A.O. was not correct in coming to the conclusion that there exist written or oral contract for supply of labour which attracts the provisions of section 194C - AT
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Revision u/s 263 - section 292BB of the Act can be made applicable only for assessment or reassessment proceedings and the same cannot be made applicable for revisional proceedings as contemplated u/s. 263 - when there is a jurisdictional defect, it does not become curable - AT
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Transfer pricing adjustment - Berry ratio selected as most appropriate method for determining the ALP - since the assessee had incurred abnormal expenses for specific activities conducted by the assessee for the predominant benefit of the assessee’s AEs, the decisions cited by the Ld. A.R. are rejected because in those cases only routine expenses were incurred unlike the case of the assessee - AT
Customs
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Leviability of anti-dumping duty - appellant has correctly declared the good as "Energy saving 32W 4 U shaped tubes" as it is an item of 32W, therefore it does not come under the purview of Notification No.55/2009-Cus, dated 26.05.2009 to demand anti-dumping duty and the same is not leviable. - AT
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Platinum imported but found shortage - terms of policy even violated in so far as they have consumed platinum much in excess of the prescribed process loss prescribed under the policy. To that extent appellant have not fulfilled the conditions of the notification and have failed to account for the platinum and therefore, liable to payment of duty on the unaccounted platinum. - AT
Corporate Law
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The scheme of demerger of which sanction is sought appears to be only a device for avoidance of obligation towards capital gains tax and stamp duty and also falls foul of Explanation to Section 2(19AA) of the Income Tax Act of 1961. The scheme of de-merger cannot therefore be sanctioned - HC
Indian Laws
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Bouncing of cheques - appellant having already been convicted under Section 138 of the Negotiable Instruments Act, 1881 - it is a clear case of abuse of the process of the court by dragging the appellant to prosecute him for the offences punishable under Sections 409 and 420 of the Code - SC
Service Tax
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Cenvat credit - service tax paid by the sub-broker - there is no evidence to elevate such suspicion to a level to come to an inference that the higher commission (than the commission received by the appellant) was paid to sub-brokers in respect of goods other than the goods for which it received commission from its clients - credit allowed - AT
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CENVAT Credit - eligibility of input services - By denying credit on all the input services, it seems to appear that the appellants has not availed any input service for providing output service during the relevant period, which is not possible. - AT
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Cenvat Credit wrongly taken for the period April 2009 to November 2009 - Sometimes such unintentional mis-happenings / mistakes do take place for which the appellant is not to be punished by imposing the penalties - AT
Central Excise
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Recovery of interest on the cenvat credit wrongly taken - the appellant is liable to discharge interest liability paid subsequently under protest to the respondent. - AT
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Recovery of dues pending against predecessor of the premises from the subsequent purchaser of the premises in auction - When the appellant took over the possession of the premises in question in July 2004, the provisions of section 11 of the Act was not in force - In these circumstances, the dues paid by the appellant are refundable - AT
Case Laws:
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Income Tax
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2016 (3) TMI 739
Monetary limit - Held that:- Since the tax effect is below ₹ 25,00,000/- (rupees twenty five lacs only) at the time of filing of the civil appeal, in view of the circular issued by the Central Board of Direct Taxes, this civil appeal is dismissed.
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2016 (3) TMI 737
Application for settlement of cases - Held that:- There is no material to reject the application for settlement at the stage of 245 D(2C) of the Act. The view taken in the present case is on the basis of submissions made by the parties before it and such a view has not been shown to be perverse and/or arbitrary. It must be emphasised that the impugned order does not postpone the consideration of the issue of true and full disclosure to a future date. However, we clarify that the view taken at this stage on the impugned order would not estop the Revenue from urging the issue raised at this stage before the Commission at the stage of Section 245D(4) of the Act. The Commission would consider and pass an order on its merits without in any manner being influenced by this order. This for the reason that the requirement of true and full disclosure on the part of the Applicant should be satisfied at all stages. Moreover, the impugned order of the Commission itself states that it is a primafacie view on consideration of facts and submissions made before it at Section 245D(2C) stage. Delay on the part of the Petitioner is not being considered. However, we only wish to point out that if and when any party is aggrieved by the order of the Commission (particularly interim orders) and it is sought to be challenged, it must be done expeditiously, particularly, bearing in mind that the Commission is under an obligation to pass an order within 18 months from the date of filing of application under Section 245(D)4(a)(iii) of the Act. In the above view, we see no reason to entertain the present Petition.
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2016 (3) TMI 736
Transfer pricing adjustment - Selection of comparable - Held that:- Tribunal has on application of Function, Assets and Risk (FAR) analysis found that the functions of the respondent-assessee are similar to that of M/s. Carlyle India viz. advising its AE on the possible companies it could invest in but the final decision whether to accept the advise of the respondent-assessee or not is taken by the AE. Similarly, so far as assets are concerned, the impugned order finds that the expertise available with M/s. Carlyle India [2012 (10) TMI 884 - ITAT, MUMBAI] is similar to the expertise available with the respondentassesee for the purpose of rendering advise to its AE and so far as the Risk is concerned, it is found that the consideration is received by it is on cost plus basis similar to M/s. Carlyle India Ltd. i.e. both are risk insulated. However the Tribunal had in this case also adopted only IDC (India) Ltd. as comparable as in its decision in Carlyle India (supra). It must be noted that the figures of IDC (India) Ltd. to arrive at the ALP were of the subject Assessment Year. We note that finding of the comparable to be adopted to determine the ALP as the basis of the activity conducted by the respondent assesee is essentially a finding of fact. The view taken by the Tribunal is a reasonable and possible view. No substantial questions of law.
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2016 (3) TMI 735
Tds u/s 195 - Held that:- As no income has accrued or arisen to the non-resident sub-arrangers in India, the question of deduction of tax under section 195 of the Act will not arise. This is in addition to a possible view on facts taken by the impugned order that the services rendered by non-resident sub-arrangers to the Respondent – Assessee would not fall within the category of managerial, technical or consultancy services in terms of the Explanation (2) to section 9(1) (vii) of the Act so as to deemed to accrue or arise in India. - Decided in favour of assessee Mobilization of IMD - whether allowable as a deduction in the current year as per ITAT whereas the assessee had amortized the same in its books of accounts for a period of 5 years no expenses amortized were directly due to the benefit received by assessee as long term deposit from SBI for 5 years ? - Held that:- The issue is no longer res integra in view of the decision of the Apex Court in Taparia Tools Ltd. v/s Joint CIT, reported in (2015 (3) TMI 853 - SUPREME COURT ) wherein on application of the principle of matching concept upheld the view of the Assessing Officer to spread the interest paid in the very first year over a period of five years because the term of the debt was five years and the Assessee therein had itself in its books of account amortized the interest over a period of five years. In Appeal, the Apex Court while reversing the decision of this Court held that normally the ordinary rule is that the Revenue expenditure incurred in a particular year is to be allowed in the year of expenditure and the Revenue cannot deny a claim for entire expenditure as deduction made by the Assessee. However, the apex Court also held that in case the expenditure is shown over a number of years and so claimed while determining its income, then it would open to Revenue only on the principles of matching concept to deal with the submission as the Assessee. It is not so in this case. The Apex Court held that once the return has been filed making a particular claim, then the Assessing Officer was bound to carry out assessment by applying provisions of the Act and he could not go beyond the return. - Decided in favour of assessee
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2016 (3) TMI 734
Reopening of assessment - escapement of income proved or not? - Held that:- Whether it was a case of change of opinion or the non-disclosure of true and correct facts, if considered in light of the report, one may say that such may fall in the arena of question of fact which may include the consideration of the earlier proceedings of the assessment. The Tribunal having found that the relevant material including that of transfer by the assessee to PEPL was on record and therefore it was not a case where there was non-disclosure of true and correct facts. The aforesaid finding, in our view, could be said to be rather pertaining to the questions of fact to be examined on the basis of the material on record which would fall outside the judicial scrutiny in the present appeal. On the questions of law, the Tribunal has gone by the decision of the Apex Court in case of CIT Vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) as held one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open - The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then,in the garb of re-opening the assessment, review would take place - to reopen an assessment tangible material should be there. - Decided in favour of assessee
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2016 (3) TMI 733
Taxability of interest awarded on enhanced compensation - amendment through Section 145-A - Held that:- Supreme Court in Commissioner of Income-tax, Faridabad Versus Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] held that the interest awarded on enhanced compensation is not taxable. The effect of the judgment has been statutorily abrogated by virtue of the amendment. The award of the Collector itself has been passed subsequent to the amendment on November 10, 2010. The orders already passed are recalled and the review applications are allowed holding that interest on the additional award is taxable under income tax and liable to be deducted at the time of deposit.
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2016 (3) TMI 732
allowability of 80 HHC in respect of the interest income - Held that:- The issue is no more res-integra as the Larger Bench of this Court in the case of Reliance Trading Corporation Vs. ITO (2015 (5) TMI 689 - RAJASTHAN HIGH COURT ) has answered the questions in favour of the Revenue. Consequent thereto this Court in the case of CIT & ors. Vs. Vimal Chand Surana and ors. (2016 (3) TMI 681 - RAJASTHAN HIGH COURT), had also gone into the issue at length and after considering the arguments raised by the counsel for the parties held that the deduction u/Sec. 80-HHC is not admissible on the interest earned by such exporters. - Decided against the assessee
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2016 (3) TMI 731
Disallowance of foreign exchange fluctuation loss - restatement of foreign currency loan at the end of the year and at the time of actual repayment of loan in installments - Held that:- Since the revenue's appeal for the Asst Year 2004-05 is pending before the Hon'ble Calcutta High Court wherein the notional exchange gain has not been subjected to tax, we deem it fit and appropriate, in the interest of justice and fair play, to direct the Learned AO, to decide the issue under appeal, in the light of the decision to be rendered by the Hon'ble Calcutta High Court.The assessee is at liberty to file fresh evidences and documents to substantiate its contentions before the Learned AO. - Decided in favour of assessee for statistical purposes. Mat computation - whether while computing the book profits u/s 115JB provision for contingencies is to be added back or not, as the same was offered to tax and assessed u/s 115JB of the Act in the years in which the provision was made? - Held that:- CIT(A) had deleted this addition by observing that the appellant has been assessed as per its submissions u/s 115JB in the assessment year 2002-03, 2003-04 and 2004-05. Therefore, since the said amounts have been taxed in the year of creation of provisions, therefore, the same cannot be added back in the assessment year 2005-06 when the addition has been written back. Therefore, the addition is hereby deleted. We find that the factual findings given by the Learned CIT(A) were not controverted by the revenue before us. Thus no infirmity in the order of the Learned CITA in this regard and hold that the assessee is entitled for reduction of provision for contingenciesvwhile computing book profits u/s 115JB in terms of clause (i) of Explanation 1 to section 115JB of the Act. - Decided against revenue Disallowance towards various advances and deposits written off - CIT (A) deleted the addition - Held that:- As find from the facts of the case that the deposits and advances were given in the ordinary course of business and were lying in the books of the assessee company for quite a long time. The same were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a trading loss u/s 28 of the Act. We hold that the Learned CIT(A) had rightly deleted the addition made in this regard. - Decided against revenue Disallowance of excess depreciation claimed by way of revised return - Held that:- This issue is squarely covered by the decisions of this tribunal in favour of the assessee for earlier years Asst years 2000-01, 2001-02 and 2002-03 respectively and held that the assessee is entitled for additional depreciation. - Decided against revenue
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2016 (3) TMI 730
Carry forward of excess application of income over the income - Held that:- As observed at para 4.5 of the order of the Tribunal the six sources of income as enumerated could be the only possible income. All the income would be entitled for exemption under Section 11 of the Act provided the same is applied for charitable activity. The assessee is also eligible to accumulate to the extent of 15% of income from such property. If any income, which could not be applied for charitable purpose and such income does not exceed more than 15%, then the Assessing Officer would have allowed the claim of the assessee in the year in which it was not utilized for charitable purpose. Therefore, it is for the assessee to explain before the Tribunal the income of the assessee for the earlier assessment year and what was applied for charitable purpose and how much exemption was allowed by the Assessing Officer. Unfortunately, the details of such income and application of income in the earlier year is not available on record. Therefore, this Tribunal has no other choice except to presume that the income of the assessee was already allowed in the earlier year. Hence, nothing remains to carry forward. If that is the situation, this Tribunal is of the considered opinion that there is no occasion for the assessee to carry forward the income to the subsequent year. In the absence of any details, this Tribunal finds no reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed. - Decided against assessee
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2016 (3) TMI 729
Penalty u/s 271AA - delay in filing the information u/s.92CD within 30 days - Held that:- TPO has not made upward adjustment of Arms Length price in order u/sec 92CA of the Act and the same was brought on record by the Assessing Officer in the assessment order r u/s.143(3) r.w.s 144(c) of the Act. We are of the opinion that reasons specified by the assessee in not filing the said information u/s.92CD within 30 days looks genuine considering the technicalities of Transfer Pricing as the Auditor has to explain and clarify on international transaction to the Assessing Officer. The factual evidence referred in paper book in respect of marriage of ld. Authorised Representative son’s and the Assessing Officer has rejected the adjournment petition filed stating the reasons which is not a good practice as the Child’s marriage is a very important occasion in parents life time. The assessee company made an application alongwith details of international transaction and filed the information on record with Assessing Officer We considering the apparent facts evidence provisions of law and the genuine grounds for delay in filing the information and also no upward revision of Arms Length Price by the TPO and the supporting decision, direct the Assessing Officer to delete the penalty. - Decided in favour of assessee
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2016 (3) TMI 728
Short term capital gain V/S business income - criteria for judging the transaction as capital asset or trading asset - Held that:- The conduct of the assessee is clear from the details of shares held by the assessee as on 31.03.2008 that the assessee had held the investments in shares for fairly long period of time ranging from 17 days to 2971 days which is placed at pg. no. 5&6 of the paper book. Similarly the period of holding in the case of long term capital gain from the shares ranged between 740-239 days. We are in agreement with the plea of the ld. AO that during the year there was heavy activity by way of sale and purchase of shares in which the period of holding ranged between 1-356 days but that in itself is not enough to treat the income from sale of shares as income from the business contrary to what had been shown by the assessee. Decide the issue in favour of the assessee and direct the AO to treat the income from sale of shares as short term capital gain and not as business income - Decided against revenue
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2016 (3) TMI 727
TDS u/s 194H - whether roaming charges paid by the appellant qualify as Fee for Technical Services and thus, subject to tax deduction at source? - Held that:- The relationship between assessee and its distributors qua the sale of impugned products is on principal to principal basis; the consideration received by assessee is sale price simpliciter. There is no relationship of Principal and agent between assessee and distributors as held by authorities below their orders are reversed. Looking at the transaction being of Sale/Purchase and relationship being of principal to principal the discount does not amount to commission in terms of sec. 194H, the same is not applicable to these transactions. Therefore, assessee cannot be held in default; impugned demand raised applying sec. 194H is quashed - Decided in favour of assessee
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2016 (3) TMI 726
Treatment to subsidy received - revenue v/s capital receipt - Held that:- Hon’ble Supreme Court in CIT vs. Ponni Sugars and Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT ), wherein held that the character of the receipt of a subsidy in the hands of the assessee under a scheme has to be determined with respect to the purpose for which the subsidy is granted. In other words, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. If the object of the subsidy is to enable the assessee to run the business more profitably then the receipt is on the revenue account. On the other hand, if the object of the assistance under the subsidy scheme is to enable the assessee to set up a new unit or to expand an existing unit then the receipt of the subsidy would be on capital account. We find that in the facts of this case, where the subsidy was given on the capital account in the form of capital cost to encourage upgrading the textile industry and the purpose and object was for capital investment, as such, is clearly a capital receipt as per the case laws relied upon by the ld. AR before us. Therefore, we direct that the receipt to be treated as receipt of capital nature and not to be taxed in the hands of the assessee. - Decided in favour of assessee
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2016 (3) TMI 725
Entitlement to deduction under sec.80IB - Held that:- The assessee entered into construction agreement with the prospective buyers, who has no choice of giving the construction to another builder and thereafter, the assessee constructed the building as per the approved plan and provided various amenities common to all people. Therefore, looking into the entire transaction, as such, it is a development of housing project by the assessee itself and no one awarded any work to the assessee. Even if, there is an enabling clause in the partnership deed to do the works contract, that cannot be a reason to conclude that the assessee undertook works contract. Further, in similar circumstances, the Tribunal, in the case of Sanghvi & Doshi Enterprises v. ITO (2011 (5) TMI 597 - ITAT, CHENNAI ) has taken a similar view, wherein it was held that where the assessee entered into a joint development agreement to build up a housing project on land owned by some other person and assumed all risks that are assumed by a developer, then the assessee was entitled to deduction under sec.80IB of the Act. - Decided in favour of assessee.
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2016 (3) TMI 724
Disallowance made under Section 14A on account of indirect administrative expenses under Rule 8D(2)(iii) - Held that:- There is no movement in the investment portfolio except ₹ 20,000 which too in NSC. Accordingly when there is no movement in the investment portfolio, then, we are in agreement with the claim of the assessee that there is no expenditure incurred by the assessee on account of indirect expenditure for earning the dividend income. Even otherwise while applying the provisions of section 14A and computing the quantum of disallowance under Rule 8D(2)(iii), it cannot exceed the amount which is attributable for the earning the exempt income. Since the formula given in the Rule 8D does not recognize the actual expenditure incurred by the assessee but it calculates the disallowance being 0.5% of the average investment therefore, this computation of disallowance cannot disregard and over ride the actual expenditure attributable for earning the exempt income. Accordingly, we set aside the orders of the authorities below on this issue and delete the disallowance made by the Assessing Officer on account of indirect expenditure under section 14A by applying Rule 8D(2)(iii). - Decided in favour of assessee Disallowance under section 36(1)(iii) being interest calculated at the rate of 10% on the increase in work-in-progress - Held that:- When there is no dispute that the interest expenditure was incurred by the assessee on the term loan used for expansion of its business, then the same cannot be allowed as revenue expenditure but has to be capitalized as cost of the expansion being part of the work in progress. Accordingly, we do not find any error or illegality in the orders of authorities below on this issue. - Decided against assessee Disallowance of interest attributable to the diverted fund to the related parties by invoking the provisions of Section 40A(2) - Provisions of section 40A(2) invoked and a proportionate disallowance of interest expenditure made - Held that:- We find that when there is no fresh investment during the year under consideration therefore, in view of our finding on this issue in the earlier assessment years, we do not find any error or illegality in the order of the CIT (Appeals) who has recorded that the assessee's own funds are more than ₹ 220 Crores. There is no dispute on this fact that the assessee's own fund as recorded by the CIT (Appeals) amounting to ₹ 220.52 Crores. Therefore, this amount covers the disallowance made by the Assessing Officer by applying the provisions of section 40A(2) of the Act. Accordingly in view of our finding in the appeals for the earlier assessment years, we do not find any error or illegality in the order of the CIT (Appeals) in deleting the disallowance made by the Assessing Officer on account of interest expenditure under Section 14A as well as under Section 40A(2) of the Act. It is pertinent to note that during the year under consideration the interest free advance to the sister concerns are shown at ₹ 128.11 Crores which again is a reduction in the amount of advance to the related parties from the earlier years. Therefore when the assessee was having its own sufficient funds of more than ₹ 220 Crores which covers the advance given to the related parties, then the Assessing Officer is not justified in invoking the provisions of section 40A(2) of the Act in making the disallowance of interest expenditure - Decided against revenue
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2016 (3) TMI 723
Levy of penalty u/s 272A(2)(k) - assessee could not upload the quarterly statement in respect of the tax deducted at source - contention of the assessee is that PAN of some of the deductees is not available - Held that:- When the assessee deducted tax and paid the same to the Government account, mere failure to upload the quarterly statement as required u/s 200(3) of the Act will not result in levy of automatic penalty. Of course, it is statutory function of the assessee to upload the quarterly statement as required under the statutory provision. The fact remains that unless the PAN of the deductees is available with the assessee, the assessee could not upload the statement. It is not the case of the Department that the assessee can upload the statement in absence of the PAN of the deductees. In those circumstances, this Tribunal is of the considered opinion that in respect of those deductees whose PAN is not available with the assessee, there was a reasonable cause for the delay in uploading the quarterly statement as required under the scheme of the Income-tax Act, 1961. However, in respect of those deductees, whose PANs are available, the assessee is expected to upload the quarterly statement as provided under the Act. In the case before us, the penalty is levied only in respect of those deductees whose PAN is not available with the assessee. Therefore, the Assessing Officer is not justified in levying penalty u/s 272A(2)(k) of the Act - Decided in favour of assessee
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2016 (3) TMI 722
TDS liability - technical knowledge, expertise, knowhow, provided by Foster Wheeler USA - DTAA - Held that:- The technical knowledge, expertise, knowhow, provided by Foster Wheeler USA were very much made available to the assessee. Hence, the assessee is liable to deduct tax while making payment. Therefore, the assessee is also liable to pay interest under Section 234A and 234B of the Act. Accordingly, this Tribunal do not find any reason to interfere with the order of the lower authority and the same is confirmed. - Decided against assessee.
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2016 (3) TMI 721
Tds u/s 194C - non deduction of tds on hamali charges paid to daily labourers employed by the assessee - assessee submitted that it has not deducted TDS, because there is no written contract entered into between any individual and the payment is made to individual labouers, therefore, no disallowance can be made by invoking the provisions of 40(a)(ia) - Held that:- On verification of the ledger accounts, it was noticed that the assessee has made the payments on weekly basis towards wages payments to the daily workers employed in the factory. The assessee made the payments through the mestri, just because for it is convenient and also this has two advantages i.e. it is the responsibility of the mestri to provide labour to the management on one hand and on the other hand, it is convenient to the assessee instead of dealing the whole lot, the assessee could deal with a single person. This is a recognized system followed everywhere, where there in unskilled work force. Just because the payments are made through the mestri, the A.O. was not correct in coming to the conclusion that there exist written or oral contract for supply of labour which attracts the provisions of section 194C of the Act. There is no contract between the mestri and the assessee, as such these payments are not covered under the provisions of section 194C of the Act, therefore the A.O. was not correct in disallowing the amounts by invoking the provisions of section 40(a)(ia) of the Act. The CIT(A) after considering the relevant details and submissions of the assessee deleted the additions made by the A.O. We do not find any error or infirmity in the order passed by the CIT(A). Hence, we inclined to upheld the order passed by the CIT(A) and direct the A.O. to delete the additions. - Decided in favour of assessee Addition made towards credits in capital account - CIT(A) deleted the addition - Held that:- On perusal of the ledger account copies, we find that most of the transactions were done in cash. Though assessee claimed to have furnished the relevant details before the A.O. with regard to the sources for the credits in capital account, the A.O. could not had an occasion to verify the same, because the books of assessee were not available at the time of assessment. It is an admitted fact that the books of assessee were not before the A.O. to verify the sources of the credits in capital account. Unless, the A.O. satisfied himself about the source with reference to assessee books of account, he cannot came to a conclusion that the sources for the credits were satisfactorily explained. Therefore, we are of the opinion that to meet the ends of justice, we deem it proper to remit the issue back to the file of the A.O. and direct the A.O. to verify the details filed by the assessee with regard to the sources for the credits in capital account and pass appropriate orders as per law. - Decided in favour of revenue for statistical purposes.
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2016 (3) TMI 720
Addition on account of accrued interest on NPA accounts - Held that:- There is no dispute that the assessee/Co-operative Bank has not recognized the impugned accrued interest of ₹ 1.36crores overdue on non performing assets as its income by following real income principal. Ld. co-ordinate bench of the tribunal in Karnavati Co-op. Bank Ltd ( 2011(11) TMI 367 - ITAT AHMEDABAD ) already holds in case of a similar Co-operative Bank that no income accrues in an instance of crediting of overdue interest from NPAs to P&L account and debited as per RBI guidelines, since there is no ultimate credit in P&L account. The Revenue is unable to point out any distinction on facts or law after being granted adequate opportunity. We confirm CIT(A)'s appeal's findings accordingly deleting the impugned addition of ₹ 1,36,09,737/- on account of accrued interest on NPA accounts. - Decided in favour of assessee Section 14A r.w.r. 8D disallowance - Held that:- There is no dispute that the Assessing Officer invoked Rule 8D for computing the impugned disallowance. Applicability of this Rule is no more res integra since the hon'ble Bombay high court in Godrej Boyce Mfg. Company Limited Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT ] holds that the same applies w.e.f. A.Y. 2008-09 only. This course of action adopted is accordingly held as not sustainable. We come to CIT(A)'s findings that the assessee's interest free funds as well as interest income (supra) exceeds its interest expenditure (not utilized in tax free investment in question) and the tax free investments as well. The hon'ble jurisdictional high court (supra) as well as Bombay high court in CIT vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) hold that a presumption can be drawn in such cases that the assessee has utilized its interest free funds only. - Decided in favour of assessee Disallowance of bad debts written off u/s.36(1)(viia) - CIT(A) deleted the disallowance - Held that:- The CIT(A) construes Section 36(1)(viia) as to envisage 5% entitlement of bad debts deduction as on last day of the year and not the net figure as taken by the Assessing Officer. There can be no dispute that this one is a deduction provision. The Revenue fails to take us to a different construction thereof in the course of arguments that the net figure has to be adopted instead of the one appearing on last day of year. We find no reason to interfere with CIT(A) findings accordingly - Decided against revenue Addition on account of amortization of premium paid on investments - Held that:- There is hardly any dispute about the fact that the assessee has held the securities in question, paid premium amounts and amortize the same in the manners stated hereinabove. Hon'ble jurisdiction high court in a recent decision of CIT vs. Rajkot District Central Co-operative Bank Ltd. [2014 (3) TMI 110 - GUJARAT HIGH COURT] has allowed a similar amortization claim pertaining to "held to maturity" category securities' premium by taking into account paragraph VII of the CBDT's Circular No.17 of 2008 dated 26.11.2008 clarifying that investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value in which the premium should be amortized over the period remaining to maturity. The Revenue fails in pointing out any distinction on facts or law thereto - Decided against revenue Disallowance of depreciation on investment - CIT(A) allowed claim - Held that:- We find that hon'ble Karnataka high court in case of CIT vs. Vijaya Bank (2013 (10) TMI 1030 - KARNATAKA HIGH COURT ) upholds tribunal's action thereby observing that it was correct in allowing depreciation claimed on held to maturity investment by treating it as stock in trade despite the same not being traded on a regular basis in accordance with RBI and CBDT Circulars. Similarly, hon'ble Bombay high court in CIT vs. Bank of Baroda [2003 (3) TMI 80 - BOMBAY High Court ] observes that the said bank valued its investments in the form of shares and securities at cost or market price, whichever is lower. And that it was entitled to deduction on account of depreciation in value of investments involving debiting of loss to P&L account as reflected in the nature of provision for liability in balance sheet and in case of shares and securities valued at cost on assets side. The Revenue does not refer to any case law to the contrary. We draw support therefrom for upholding the CIT(A)'s findings accordingly - Decided against revenue Administrative expenditure disallowance - CIT(A) restricts the same to 1% of the exempt income - Held that:- We find that Rule 8D(2)(iii) envisages the same to be 0.5% of the average value of the investment in question. The CIT(A)'s findings under challenge do not take into account this specific clause. We accept assessee's arguments accordingly and direct the Assessing Officer to proceed afresh for necessary computation of the impugned disallowance. - Decided against revenue
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2016 (3) TMI 719
Revision u/s 263 - whether order passed by the ld. CIT on the dead person is not valid? - Held that:- As find from reply letter dated 27-01-2015 before the ld.CIT in response to show cause notice issued u/s 263 of the Act, the assessee herein had specifically brought to the notice of the ld. CIT that M/s. The Bond Company Ltd was merged with the assessee herein. Hence, we find that the assessee has duly discharged its onus of intimating the revenue officials about the fact of merger of the said company. In these circumstances, the ld. CIT ought to have taken cognizance of the same and should have issued fresh show cause notice in the name of the assessee herein and proceeded to pass the fresh order in the name of the assessee. Pursuant to the merger, the amalgamating ( M/s. The Bond Company Limited) loses its existence in the eyes of law. We find that the section as relied on by the ld.DR on the provisions of section 292BB of the Act cannot be applied in the facts of the instant case for the reason that section 292BB of the Act can be made applicable only for assessment or reassessment proceedings and the same cannot be made applicable for revisional proceedings as contemplated u/s. 263 of the Act. Moreover, the provisions of section 292BB would not come to the rescue of the revenue when there is a basic fault on the assumption of jurisdiction itself on a non-existent entity by the ld.CIT by issuing show cause and passing the order on the non-existent entity. We hold that when there is a jurisdictional defect, it does not become curable. - Decided in favour of assessee
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2016 (3) TMI 718
Transfer pricing adjustment - Berry ratio selected as most appropriate method for determining the ALP - Held that:- Considering the facts of the case we are in total agreement with the view of the Revenue on the issue of accepting Berry ratio as the most appropriate method for determining the ALP in the case of the assessee as the contention of the Revenue that the assessee is indulging in value added service to its AEs along with distribution activities is unquestionable. Since the Tribunal on several occasions has accepted the Berry ratio, the contention of the Ld. A.R. that the same cannot be applied as per Rule 10B(1C) of the Rules, is not acceptable. In the case of the assessee company it was not a routine purchase and sale transactions but immense activities were performed in order to bring awareness of the existence of the AE’s products and the AE. Therefore, the contention of the Ld. A.R. that Resale Price Method is most appropriate method cannot be accepted.We also make it clear that since the assessee had incurred abnormal expenses for specific activities conducted by the assessee for the predominant benefit of the assessee’s AEs, the decisions cited by the Ld. A.R. are rejected because in those cases only routine expenses were incurred unlike the case of the assessee. - Decided against assessee Non providing adjustments on account of differences in working capital - Held that:- DRP agreed with the view that adjustments has to be granted for eliminating material effects, if any, arising out difference in working capital between the tested party and comparables. It was the contention of the assessee that it was having negative working capital as against substantial positive working capital enjoyed by the comparables. Ld. DRP observed that the assessee has not demonstrated as to how the negative working capital of the assessee has affected its margin. Since the assessee was not able to justify the adjustments that were required to be made on account of negative working capital the Ld. DRP did not give effect to working capital adjustments. Before us also the Ld. A.R was not able to justify its stand on working capital adjustments in the case of the assessee with any tangible materials on record. Therefore, we do not have any other option but to reject the claim of the assessee - Decided against assessee Adjustments on account of foreign exchange fluctuations - Held that:- since the Tribunal on the earlier occasion has already recognized adjustments towards foreign exchange fluctuations, the same ratio has to be applied in the case of the assessee. Accordingly, we hereby direct the Ld. Assessing Officer to make adjustments on account of foreign exchange fluctuations in the case of the assessee. - Decided in favour of assessee
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Customs
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2016 (3) TMI 705
Grant of bail after imposing condition of deposit - Admission of liability for payment of duty under the Customs Act, 1962 - Condition stayed by this court as far back as on 17th August, 2010 - Held that:- the accused appellant should be permitted to remain on bail granted by the High Court and the condition of deposit of ₹ 200 crores should not be interfered with. - Decided in favour of appellant
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2016 (3) TMI 704
Jurisdiction of Settlement Commission – Bar as per section 127B(1) and 123(2) - Apex Court dismissed the appeal against the decision of High court [2015 (9) TMI 197 - DELHI HIGH COURT] wherein it was held that no application under Section 127B(1) can be made in relation to gold.
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2016 (3) TMI 703
Phytosanitary Certificate of the Exporter - FIR filed against importer and exporter of the timber consignment for producing forge certificate - Amount spent on fumigation of timber in the exporting country - Respondent contended that no import of consignment of timber can be permitted into India unless accompanied by the original Phytosanitary Certificate issued by an authorized officer at the country of origin by relying upon Rule 3 (20) of the Quarantine Order - Held that:- in accordance with the Plant Quarantine Order, timber has to be fumigated by the exporter. Rules 3 (20) and 9 (1) make it abundantly clear that fumigation prior to export is mandatory. No importer can state that because the timber has been fumigated in India, it should not be sent back to the country of origin. Though, undoubtedly the power of relaxation is contained in the Quarantine Order, yet it has to be exercised for some cogent reasons and that too, in larger public interest. If the fault cannot be attributed to the petitioner for non-fumigation by the exporter, the consignment in question cannot be allowed to remain in India as firstly, it would lay down a wrong precedent and secondly, non-fulfillment of mandatory condition of fumigation at exporter's end could have serious ramification for our flora and fauna as well as environment in general. - Decided against the appellant
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2016 (3) TMI 702
Leviability of anti-dumping duty - Import of "Energy saving 32W 4 U shaped tubes" from China- Held that:- the declared good is a combination of 4 U-tubes joint together to make a tube of 32W, which can be used as one lamp and can be operated by one PCBs and same is marketable in the market and easily available in the market and cannot be segregated without breakage/wastage. So the appellant has correctly declared the good as "Energy saving 32W 4 U shaped tubes" as it is an item of 32W, therefore it does not come under the purview of Notification No.55/2009-Cus, dated 26.05.2009 to demand anti-dumping duty and the same is not leviable. Also the gods are not liable for confiscation and no penalty is imposable. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 701
Demand of Customs duty - Platinum imported but found shortage - Explanation provided but not found acceptable by revenue in terms of condition No.3 of Notification No.137/2000-Cus dated 19/10/2000 - Held that:- the records did not match the actual stocks. On one hand excess loss has been sought to be explained on account of using Gold jewelry machines for making platinum jewelry, while on the other it is claimed that the shortage may have been in the dust whish was to be processed before end of financial year. The benefit of Notification is available only subject to following condition imposed in the EXIM policy. It is common ground between the parties that the EXIM policy permits process loss of only 9% in case of platinum jewellery. Therefore, terms of policy even violated in so far as they have consumed platinum much in excess of the prescribed process loss prescribed under the policy. To that extent appellant have not fulfilled the conditions of the notification and have failed to account for the platinum and therefore, liable to payment of duty on the unaccounted platinum. Imposition of penalty - Invokation of Section 114A of the Customs Act, 1962 - Held that:- Section 114A can be invoked where the duty has not been levied by reason of collusion or any wilful mis-statement or suppression of facts but here there is a bland allegation, there is no evidence of any wilful mis-statement or suppression. The notice alleges that despite the knowledge that there were shortages the respondents did not inform the revenue. But the respondents have argued that the shortages were to be calculated at the end of financial year and would have been reported. It is nobody’s case that the respondents were required to report it on daily or weekly basis. Therefore, in the absence of any evidence of any wilful mis-statement or suppression no penalty is imposable. Confiscation of goods - In lieu of redemption fine - Held that:- as per Hon'ble Supreme Court decision in a case, if the goods are released in custody of a person under a bond then the same can be confiscated even if the same are not physically available. But here, there was no bond for the use of goods in a particular manner. Therefore, the goods can not be confiscated followed by the decision of Tribunal in the case of SS Watch Industries Vs. CC (I) New Delhi [2008 (11) TMI 420 - CESTAT, NEW DELHI]. - Decided partly against the revenue
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2016 (3) TMI 700
Validity of Commissioner (Appeals) order - Finalisation of assessment - Held that:- The Commissioner (Appeal) has given his finding on the issue of provisional assessment vide order dated 05/08/2005 and the appellants have challenged before the Tribunal and the same is still pending. The Commissioner (Appeals) has no jurisdiction to go into the same issue himself. The order of Commissioner (Appeals) is clearly without jurisdiction and is therefore, set aside. Availability of Notification No. 6/2002-CE dated 01.03.2002 - Import of Steam Turbine - Held that:- by applying the decision of Hon'ble Supreme Court in the case of Triveni Engineering & Industries Ltd. Versus Commissioner [2015 (4) TMI 1078 - SUPREME COURT], the benefit of Notification No.6/2002-CE is not available to steam turbine. - Appeal dismissed
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Corporate Laws
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2016 (3) TMI 697
Scheme of amalgamation - Held that:- Having examined the Scheme of Amalgamation, this Court finds nothing prejudicial to the interest of creditors, members of both the Transferor and Transferee Company or to public interest. All required procedures had been followed. Consequently, the company petition is allowed. This Court does hereby sanction the scheme of amalgamation set forth in Annexure-1 appended to the Company Petition and does hereby declare the same to be binding on creditors and equity shareholders of the Divine Heritage Hotels Private Limited (Transferor Company) and Mahindra Holidays & Resorts India Limited (Transferee Company). The parties to the amalgamation or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the amalgamation scheme sanctioned under this order. The order in prescribed Form No.42 be issued separately by the Registrar as per Rule 84 of Companies (Court) Rules, 1959.
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2016 (3) TMI 696
Sanction of scheme of de-merger - Held that:- The sanction to the scheme of de-merger as sought by the petitioner company cannot be granted. The company does not appear to have had any real pre-existing real estate division since its inception. It is evident that the petitioner company was all along engaged in the business of manufacturing, processing and sale of vegetable oil alone. As evident from the facts on record no income or profit and loss on account of real estate business has been reflected in books of accounts of the company. The land of the company also has not been shown in the inventory under the head of current assets of the petitioner company as it would have been and warranted by the General Accounting Principles, if the company indeed had a real estate business. A bare look at the explanation to Section 2(19AA) of the Income Tax Act, 1961 makes it manifest that for a demerger a pre-existing undertaking is a prerequisite. That pre-requisite is found absent in the facts of the instant case. To sanction the scheme of demerger of purported (not real) and nonfunctional real estate business of the company as sought would also be in the cross hair of a statutory provision i.e. explanation to Section 2(19AA) of the Act of 1961. Thus the scheme of demerger of which sanction is sought appears to be only a device for avoidance of obligation towards capital gains tax and stamp duty and also falls foul of Explanation to Section 2(19AA) of the Income Tax Act of 1961. The scheme of de-merger cannot therefore be sanctioned - Decided against petitioner company
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Service Tax
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2016 (3) TMI 717
Imposition of penalty - Section 77(1)(a) of the Finance Act, 1994 - Failure to take service tax registration - Penalty imposed of ₹ 200/- per day till the date of payment of tax under Section 77(1)(a) but as per amended provisions the penalty of ₹ 200/- per day has been deleted instead the maximum penalty of ₹ 10,000/- was prescribed - Held that:- the amended Section came into effect from 10.5.2013 and the SCN was issued on 8.1.2014. Therefore, the amended Section 77 (1) (a) is applicable and maximum penalty is imposable is ₹ 10,000/-. Imposition of equivalent penalty - Section 78 of the Finance Act, 1994 - Entitlement for reduced penalty of 25% which is paid within 30 days from the date of communication of the OIO as per second proviso of Section 78 of the Finance Act as OIO received on 6.6.2014 and the 30th day falls on 6.7.2014 which was being Sunday and appellants have paid the entire service tax along with interest and reduced penalty on Monday 7.7.2014, the next working day - Held that:- the certificate issued by City Union Bank dt.11..7.2014 certifies that DD ws issued in favour of Asst. Commissioner of Central Excise and Service Tax payable at Thanjavur on 05.07.2014. The 30th day i.e. 6.7.2014 being Sunday, so as per the General Clauses Act, the next working day, is to be considered as relevant date for payment purpose. Accordingly, appellants have deposited within 30 days from the date of receipt of OIO the entire service tax, interest and reduced penalty and complied the provisions of Section 78 of Finance Act and therefore, eligible for the reduced penalty as envisaged in the second proviso to Section 78 i.e. 25% which is already paid. - Decided partly in favour of appellant
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2016 (3) TMI 716
Demand of Service tax for the period 1997-1998 - Period of limitation - Recipient of GTA services - Held that:- the decision of the Larger Bench, which stand relied upon by the authorities below was considered by the Tribunal in the case of Kisan Sahkari Chini Mills vs. CST, NOIDA [2013 (5) TMI 57 - CESTAT, NEW DELHI] but there were various other decisions of various High Courts holding in favour of the assessee, on the point of limitation. The Hon’ble High Court decision would have preference over the Larger Bench decision of the Tribunal and by following the Hon'ble High Court decision, demands issued in 2004, for the period 1997-1998 are set aside. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 715
Demand of Service tax for the period 2004-2005 to 2007-2008 - Construction of complex service - Failure to pay tax liability in respect of 50% of the constructed property assigned to the owners of the land in terms of the Joint Development agreement - Held that:- Department's contention that CBEC Circular dated 29/1/2009 not applicable to appellant's case is not accepted. The main point of clarification by the CBEC is on the implication of “agreement to sale” and provisions of Transfer of Property Act to determine the question of service to another person or service to self. It has been clarified that the execution of sale deed transfers the ownership of their property to the ultimate owner. Hence, any services provided by seller till the execution of such sale deed will be in the nature of self-service with no liability to service tax. Therefore, the distinction sought to be made in the impugned order is not tenable. - Decided in favour of appellant
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2016 (3) TMI 714
Cenvat credit - service tax paid by the sub-broker - input services for the period from April, 2007 to October, 2008 - Held that:- the CENVAT Credit Rules clearly allow credit of such services of sub-brokers because those services were used by the appellant for providing taxable service on which service tax was paid. Commission paid was higher than the commission received by the appellant may at best raise some suspicion about the same being in respect of certain goods which were not the same on which it received commission, but there is no evidence to elevate such suspicion to a level to come to an inference that the higher commission (than the commission received by the appellant) was paid to sub-brokers in respect of goods other than the goods for which it received commission from its clients. Therefore, the Cenvat credit is allowed. - Decided in favour of appellant
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2016 (3) TMI 713
CENVAT Credit - eligibility of input services vis-a-vis manpower recruitment or supply agency service, renting of immovable properly services, telecommunication services, rent a cab services, etc. - Department denied credit on all input services availed - Held that:- the view of the department do not have nexus with the output services as it has denied credit on all input services availed. By denying credit on all the input services, it seems to appear that the appellants has not availed any input service for providing output service during the relevant period, which is not possible. In the Circular No. 120/01/2010-ST dated 19-01-2010, Board has specifically clarified that in the case of BPO/call centers the services like renting of premises, software technology services, telecom services, rent a cab services etc. would be needed for providing their output services efficiently and that such services would be eligible for credit. Therefore, by taking into account the judicial dispositions laid in the judgments in Coca Cola India Pvt.Ltd [2009 (8) TMI 50 - BOMBAY HIGH COURT], KPMG Vs CCE. [2013 (4) TMI 493 - CESTAT NEW DELHI] and CCE Vs HCL Technologies [2014 (11) TMI 663 - ALLAHABAD HIGH COURT], on the issues and the circular dated 19-01-2010, the CENVAT Credit is admissible on all the services. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 712
Liability of Interest - Cenvat Credit wrongly taken for the period April 2009 to November 2009 - Held that:- as the Cenvat Credit has wrongly taken/claimed by the appellant for the said period, trhe interest become payable under provisions of Rule 15(1) of Cenvat Credit Rules 2004 read with provisions of Section 75 of Finance Act, 1994 to be paid by the appellant. Imposition of penalty - Rule 15(1) of Cenvat Credit Rules - Cenvat Credit wrongly taken for the period April 2009 to November 2009 - Appellant said that the said services were received from abroad in their Mumbai office and statements using such services come to their centralized office in Bangalore - Held that:- there was no intention of the appellant to take the Cenvat Credit when it was not due. In fact it had become due to them, when they had paid the service tax in the month of November 2009 and the reason has explained by the appellant for the same mistake. Sometimes such unintentional mis-happenings/mistakes do take place for which the appellant is not to be punished by imposing the penalties. Therefore, by considering the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court], the penalty under Rule 15 ibid is not imposable. Eligibility of Cenvat Credit - Taken twice on same set of documents - Appellant pleaded that that they have seven documents against eight documents to prove correctness of the credit and the 8th document is not available but for this they have a board letter confirming the eligibility of taking Cenvat Credit - Held that:- as regard to appellant plead, matter remanded to the original adjudicating authority with the direction that the appellant is given full opportunity of personal hearing and that of submission of necessary documents before taking decision in the case afresh. - Decided partly in favour of appellant
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Central Excise
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2016 (3) TMI 711
Denial of refund claim under Rule 5 of CCR - denial of claim on the ground that supplies made to EOU and SEZs are not qualified under Rule 5 of CCR - Held that:- On perusal of the OIO dt. 7.1.2011, there is no dispute on the fact that appellants are a EOU who supplied the goods to SEZs and EOUs under bond following the procedures. There are number of Tribunal and High Court decisions which have ruled that supplies made to SEZs and EOUs which are exported and manufactured by the assessee are entitled to all the benefits including the refund of credit on inputs services under Rule 5 of CCR. In this regard, we rely on the Hon'ble Gujarat High Court decision in the case of CCE Vs NBM Industries (2011 (9) TMI 360 - GUJARAT HIGH COURT ) wherein the Hon'ble High Court dismissed the Revenue appeal on this issue. Thus appellants are entitled for claiming refund under Rule 5 of CCR relying on Board's circular No.1001/8/2015-CX dt. 28.4.2015 held that supplies to SEZs are entitled to all benefits - Since the adjudicating authority has not examined the issue on merits, the impugned order is set aisde and matter is remanded to the adjudicating authority to process the refund claim on merits - Decided in favour of assessee by way of remand
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2016 (3) TMI 710
100% EOU - clearing goods to DTA - Entitlement to benefit of Notification No. 13/98-CE dated 02/06/98 - notice was issued seeking to recover duty - Held that:- In order to avail the benefit of notification 13/98-CE it is essential to establish that such goods are otherwise exempt. The respondents had sought to establish that they are entitled to benefit of notification 6/2006-CE. In the instant case the raw material is obtained without payment of duty. The expression such finished products for the condition (a) relates to the product manufactured by the respondent. There is no doubt that the respondents are procuring their primary raw materials, tapes, without payment of any duty. As a result they would not be entitled to the benefit of Notification No.6/2002 as they would not have fulfilled the condition 34 specified in the said notification. Therefore, they would not have been eligible for availing of Notification No. 13/98 as, they failed to establish availability of notification 6/2006-CE. Furthermore the importer had fulfilled the condition of the notification in so much as he had not availed the credit under CENVAT. - Decided in favour of revenue
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2016 (3) TMI 709
Recovery of interest on the cenvat credit wrongly taken - Held that:- Where the cenvat credit is taken or utilized or erroneously refunded, the same along with interest should be recovered from the manufacturer or the provider of output service and the provisions of Section 11A and 11AB shall apply mutatis mutandis for effecting such recoveries. The recovery of interest is under Rule 14. Only the mode of recovery is as provided for under Section 11AB of the Central Excise Act. The Hon’ble Supreme Court in the case of Ind-Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court ) examined the question whether interest would be liable to be paid even when the cenvat credit has been taken wrongly but not utilized and noted that since the Rule covers both the situations i.e. cenvat credit taken or utilized wrongly and the word “or” is disjunctive in nature, even if the credit has been availed wrongly, the liability pay interest would accrue. Therefore hold that the appellant is liable to discharge interest liability paid subsequently under protest to the respondent. - Decided against assessee.
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2016 (3) TMI 708
Recovery of interest under Section 11AA of the Central Excise Act, 1944 - Held that:- In the present proceedings appellant paid the entire duty within three months after being determined by Supreme Court, as required under Section 11AA of the Central Excise Act, 1944. In view of the above observations and the settled proposition of law, order dated 24.04.2006 of the Adjudicating authority is based on a wrong premises that duty was determined against the appellant under Section 11A(2) of the Central Excise Act, 1944. In the present appeal before us neither the duty is determined under Section 11A(2) of the Central Excise act, 1944 nor appellant has given any such undertaking. Inspite of that appellant deposited the entire disputed duty decided by Supreme Court within three months from the case was decided by Apex Court. Even if it is presumed that duty was determined under Section 11A(2), which is factually incorrect, still the revised duty determined by Supreme Court stands paid within three months of such determination as per the provisions of Section 11AA(1) of the Central Excise Act, 1944, read with Explanation-I to this Section. In view of the above observations appeal filed by the appellant is required to be allowed.
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2016 (3) TMI 707
Central Excise registration revoked - non follow of appropriate procedure - Held that:- As find that on the application filed by the applicant for common registration, the registration was granted on 6.9.2013. The same was revoked without following the principles of natural justice without giving an opportunity of being heard to the respondents or to bring even the effective reasons for revoking the registration in the knowledge of the respondents. Further, the same was revoked without following the due procedure for revocation and these things have been examined by the learned Commissioner (Appeals) in the impugned order - Decided in favour of assessee
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2016 (3) TMI 706
Rejection of refund claim - recovery of dues pending against predecessor of the premises from the subsequent purchaser of the premises in auction - rejection of claim on the ground that the Revenue has collected dues confirmed under section 11A of the Central Excise Act which were due to M/s. Regency Industries Ltd. and appellant is a subsequent owner of the said premises and has taken over the liability thereof - Held that:- When the appellant took over the possession of the premises in question in July 2004, the provisions of section 11 of the Act was not in force. Therefore, the said provision cannot be enforced on the appellant for dues pertaining to the predecessor which are in challange. Further as find that in the case of M/s. Rana Girders Ltd. [2013 (8) TMI 540 - SUPREME COURT] the appellant are not in any legal obligation to pay the dues of predecessors. In these circumstances, the dues paid by the appellant are refundable. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (3) TMI 699
Seeking of an opportunity of further hearing - Opportunity of hearing not provided on several aspects of the matter to justify the claim of the petitioners - Appellant engaged in construction and Engineering consultancy services - Held that:- the original notice did not contain the grounds on which the assessment order has been passed thereby indicating the detailed objections filed by the petitioners and the relevant material produced has been completely over ruled and hence seeks that the entire order is unjustified. As the learned Government Pleader conceded that if the petitioner has not been given an opportunity of hearing on several aspects of the matter, he could be permitted to make his submission to the concerned authority in due course, so the opportunity of further hearing is provided and the impugned order is quashed. - Decided in favour of petitioner
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2016 (3) TMI 698
Validity of seizure memo issued by commercial Tax Officer - Section 68(4)(b) of the Gujarat Value Added Tax Act, 2003 - Trading of Sopari in truck - Truck was stopped by police who was not the officer-incharge of the notified check-post and seized the goods under Section 68 of the GVAT Act without giving an opportunity of being heard to the petitioner - There is no such provision under the Act, therefore, the action of the respondent is without any authority of law - Held that:- the action taken by the second respondent in issuing the seizure memo under section 68(4)(b) of the GVAT Act is without any authority of law and therefore, lacks jurisdiction. Therefore, it is not sustainable. Also Section 69 of the GVAT Act does not empower the authorities under the said Act to seize a vehicle or the goods. If the requirements of section 69 of the GVAT Act are met with, the respondents were not and are not precluded from taking any action thereunder, however, the action taken under section 68(4)(b) of the Act is totally without jurisdiction. - Decided in favour of petitioner
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Indian Laws
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2016 (3) TMI 695
Offenses punishable under Sections 409 and 420 of the Indian Penal Code - bouncing of cheques - appellant having already been convicted under Section 138 of the Negotiable Instruments Act, 1881 - Held that:- After hearing learned senior counsel/learned counsel for the parties, perusing the impugned judgment and order and also the order passed in proceedings arising out of Section 138 of NI Act, apart from the fact that the decree is obtained by the respondents in respect of the very same matter, we are of the opinion that it is a clear case of abuse of the process of the court by dragging the appellant to prosecute him for the offences punishable under Sections 409 and 420 of the Code. In our considered view, the reliance placed upon the judgment of this case in the case of Kolla Veera Raghav Rao (2011 (2) TMI 1257 - SUPREME COURT OF INDIA ) is aptly applicable to the fact situation. Applying the said principle and in view of the decree obtained by the respondents against the appellant herein, the impugned judgment and order is liable to be set aside and is set aside accordingly. A higher amount cannot be claimed by the respondents against the appellant.
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2016 (3) TMI 694
Order of acquittal reversed - present appellant has been convicted by the High Court under Section 302 of Indian Penal Code, 1860 (for short “IPC”), and sentenced to imprisonment for life and directed to pay a fine ₹ 5,000/- and in default of payment of fine he is directed to undergo rigorous imprisonment for a further period of six months - Held that:- There are three injured eye witnesses in the present case, namely, PW-1 Amrik Singh, PW-2 Sukhchain Singh and PW-3 Raj Singh. It is a case of day light incident. Injuries on the person of said eye witnesses have been corroborated by PW-4 Dr. Sarabjit Singh Sandhu, PW-5 Dr. Manjit Singh and PW-14 Dr. S.P. Singla. Ocular testimony of eye witnesses cannot be discarded lightly. Once the prosecution has discharged its burden, the burden to prove that appellant Darshan Singh was not present with other accused at the place of incident and had gone elsewhere, lies on him. Injured eye witnesses have assigned specific role as to how he assaulted Santa Singh who suffered ante mortem injuries which gets corroborated from the autopsy report of Santa Singh. There are as many as five stabbed wounds out of the six ante mortem injuries. The word alibi means “elsewhere”. The plea of alibi is not one of the General Exceptions contained in Chapter IV of IPC. It is a rule of evidence recognized under Section 11 of the Evidence Act. However, plea of alibi taken by the defence is required to be proved only after prosecution has proved its case against the accused. In the present case said condition is fulfilled. After scrutinizing the entire evidence on record, we do not find any illegality in appreciation of evidence, or in arriving at the conclusion as to the guilt of the present appellant by the High Court.Therefore, for the reasons discussed above, we find no force in this appeal which liable to be dismissed.
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