Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 30, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Clarifications for implementation of FATCA and CRS - Order-Instruction
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Revision u/s 264 in favor of assessee - Commissioner has rejected the revision petition u/s 264 on the ground of that the Petitioner did not comply with the mandatory requirement of payment of prescribed fees - the petitioner paid the requisite fee, though belatedly and thus cured the irregularity - order of CIT is not sustainable - HC
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Entitlement to the benefit u/s 10(22A) - whether private limited company cannot come within the purview of the word "Institution", used in section 10(22A)? - When the legislature has not restricted the meaning of the word "Institution", there is no reason why any restriction should be put to the word by the Court - HC
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Deemed dividend u/s.2(22)(e) - assessee could not justify that the advance given by the company to the assessee is for business purposes. - additions confirmed - AT
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Reimbursement of bank guarantee commission - TDS u/s.194A @10% OR u/s.194C @2% - revision u/s 263 - bank guarantee commission does not come under the purview of interest so as to make assessee liable for TDS u/s.194A - AT
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Registration under section 12AA denied - assessee is not carrying on the charitable activity of imparting education, but is only holding education summits to facilitate and help people in pursuing higher education by identifying foreign and Indian institutes etc. - registration was rightly denied - AT
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Transfer pricing adjustment - determination of ALP - merely because the assessee-company incurred more expenditure on AMP compared to the expenditure incurred by comparable companies, it cannot be inferred that there existed international transaction between assessee-company and its foreign AE - AT
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Powers of CIT(A) u/s 251 - enhancement of income - whenever question of taxability of income from new source of income is concerned, which has not been considered by the Assessing Officer, the ld. CIT(A) or the first appellate authority cannot examine that issue or new source of income. - AT
Customs
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Prevention of use of non-genuine transferable duty credit scrips or DFIA (duty free import authorizations) - Circular
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If the petitioner has misused his IEC, it is the matter for that Authority to consider the issue. The Customs Authority may bring it to the notice of that Authority about such misuse but that cannot be a reason to withhold the release ordered u/s 110A - HC
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Sustainability of enhancement of value done under Rule 5 of the Customs Valuation Rules, 1988 - no evidence led by the Revenue to counter the values declared by the appellant - demand set aside - AT
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Invokation of extended period of limitation - It is well settled that when at the level of Tribunal there was difference of opinion regarding includibility of the licence fee in the assessable value necessitating the reference to a 3rd Member, the extended period is not invocable - AT
Indian Laws
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The nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non- metropolitan area and as such the Chief Judicial Magistrate in a non- metropolitan area gets jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002. - HC
Service Tax
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Recovery of dues said to be payable - Attachment of bank accounts on the ground that another entity has not paid the service tax - when the petitioner company is a separate and independent entity, the bank account of the petitioner company cannot be attached for the dues of the proprietorship concern - HC
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Classification of services - the action of the respondent is management of immovable property and nothing has brought to our notice which indicates that the respondent were engaged for and doing “Management Maintenance or Repairs” services. - No demand - AT
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Rejection of refund claims - In the absence of any appeal against such an order of appellate authority, the adjudicating authority has not followed settled principle of judicial discipline; and has entered further voyage to reject the refund claim by issuance another show-cause notice, which is beyond his jurisdiction - AT
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The Service Tax liability on ‘Management Consultancy Services' was in nascent stage when the Audit Party brought to the knowledge of appellant that Service Tax liability arises, which was discharged immediately. So, by invoking the provision of Section 80, penalties imposed u/s 76, 77 and 78 set aside - AT
Central Excise
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Doctrine of unjust enrichment - It is seen from the extract of the C.A. certificate that the excise duty paid in respect of gauges was charged as expenditure during the respective years. The fact that it has been charged as expenditure indicate the facts that the same has been recovered from the customer. - Refund not allowed - AT
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Manufacture - processed fabrics - embossing and pleating are temporary in nature - the process of pleating and embossing does not amount to manufacture. - AT
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CENVAT credit denied on the condition that the capital goods so supplied by M/s. ITC Ltd. is not a financing company - There is no dispute that the capital goods so procured on lease basis are indeed used in the manufacturer of final product on behalf of M/s. ITC Ltd. - credit allowed - AT
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Suo moto availement of credit of duty - excess paid duty adjusted against short paid duty - Cause of action started from the date when the differential duty paid by the appellant, nothing has prevented the department to issue a show cause notice within one year from the date of payment of excise duty. There is no suppression of fact, fraud and mis-statement etc on the part of the appellant therefore demand is patently time bar. - AT
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Recovery of cenvat credit - There is no need to maintain separate records for returned goods. The appropriate duty has been paid when the returned goods were cleared. - AT
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Surrender of Central Excise Registration - Even, if it is assumed that appellant's registration should not be cancelled, in such case new registration to any other person on the same premises cannot be given and if that be so then no operation can be carried out in the said premises. In my view, it is a national loss to stop production in any factory premises. The law cannot be such by which production in this country can be suspended for any reason - AT
Case Laws:
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Income Tax
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2016 (3) TMI 978
Disallowance u/s 14A of the Act read with Rule 8D(2)(ii) and (iii) of the Rules - Held that:- The relevant assessment year under appeal is 2005-06 at which point of time, the provisions of Rule 8D was not in force and the same was made applicable only from Asst Year 2008-09 as decided in the decision of Godrej & Boyce Manufacturing [2010 (8) TMI 77 - BOMBAY HIGH COURT ]. However, it is not in dispute that the assessee had derived taxable income as well as tax free income and incurred expenditure for deriving both the incomes and hence disallowance is definitely warranted in terms of section 14A which is brought in the statute book with retrospective effect from 1.4.1962. The disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of earning tax free income. Thus we direct the Learned AO to disallow 1% of exempt income under this issue - Decided partly in favour of assessee Transactions of frequent purchase and sale of shares in a systematic and organized manner - assessed as capital gains OR business income - Held that:- There is no material brought in by the revenue to show that separate accounts of two portfolios are only a smokescreen and there is no real distinction between two types of holdings. This could have been done by showing that there is intermingling of shares and transactions and the distinction sought to be created between two types of portfolios is not real but only artificial and arbitrary. Therefore, in absence of any material to the contrary, and on appreciation of cumulative effect of several factors present as culled out above , we hold that the surplus is chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolio - Decided against revenue
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2016 (3) TMI 977
Revision u/s 264 in favor of assessee - Commissioner has rejected the revision petition u/s 264 on the ground of that the Petitioner did not comply with the mandatory requirement of payment of prescribed fees - Held that:- It is an admitted position that the requisite fee was paid during the pendency of the revision petition. The rejection of the application on the technical ground of non payment of would be taking a hyper technical view. The condition requiring the payment of fees prior to the filing of the revision application would be directory in nature. From a reading of the provisions of Section 264 of the Act, it cannot be gathered that the non payment of the prescribed fee prior to the institution of the application for revision would be fatal. The non payment of the requisite fee would be a mere irregularity which could be cured at a later stage. The applicant can always be called upon to pay the requisite fee and make good the deficiency. If the deficiency is cured, the irregularity would be rectified. In the present case, the petitioner paid the requisite fee, though belatedly and thus cured the irregularity. The finding returned by the commissioner that the application was not maintainable on this account cannot be sustained and is accordingly set aside The other ground for rejection was that the assessing officer was not at fault as there was no material on the basis of which period of holding shares by the petitioner could be calculated, by taking the date of acquisition as the year 1987 or 2005 and no fault could be found with the action of the Assessing Officer in the processing/rectification under section 143(1)/154 of the Act. Tax gains arising on sale of shares - STCG OR LTCG - Held that:- In the present case, as per the Petitioner, in his return of income, he has erroneously offered to tax gains arising on sale of shares as short term capital gains instead of same being long term capital gains exempt from tax. Subsequently, the petitioner on 14.01.2011 filed the application under section 154 of the Act. The assessing officer on 21.02.2011 partly rectified the intimation and computed the tax on capital gains @ 10% as against 30% computed in the intimation issued under section 143(1) of the Act. The assessing officer, however refused to accept the application under section 154 filed by the petitioner. When the assessing officer could rectify the intimation on 21.02.2011, he could also consider the prayer of the petitioner made in the rectification application under section 154 of the Act, which was already pending before him on that date. When the commissioner was called upon to examine the revision application under section 264 of the Act, all the relevant material was already available on the record of the assessing officer. The commissioner instead of merely examining whether the intimation was correct based on the material then available should have examined the material in the light of the Circular No. 14(XL-35) of 1955, dated 11.4.1955 and Article 265 of the Constitution of India. The commissioner has erred in not doing so and in failing to exercise the jurisdiction vested in him on mere technical grounds. - Decided in favour of assessee
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2016 (3) TMI 976
Assessment u/s 153A - Held that:- As far as TGJ s concerned, there is no denial of the fact that no search took place in its premises. Only a survey was undertaken. Consequently, the Court considers it to be a waste of time to require the Petitioners to now go before the AO. For the search to be undertaken under Section 132 of the Act, there had to be a recording of reasons to believe that the information that may be unearthed cannot otherwise be gathered through a regular enquiry. It appears that the entire search proceeding as far as Mr Jolly was concerned was unnecessary as the information provided by the Petitioners could have been easily gathered without resorting to a search. Additionally, it is plain that no incriminating material qua the Petitioners was found during the search operation. Thus no hesitation in quashing the impugned notices under Section 153 A (1) - Decided in favour of assessee
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2016 (3) TMI 975
Deduction of interest expenditure - nature of the business of the assessee is share broking and not of financing - whether the claim of expenditure of interest was inadmissible under Section 37(1)? Held that:- Appeal admitted on first substantial question of law Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing as a deduction interest expenditure of ₹ 21,92,68,519/to the assessee even though the nature of the business of the assessee is share broking and not of financing and the claim of expenditure of interest was inadmissible under Section 37(1) of the I.T. Act, 1961?
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2016 (3) TMI 974
Reopening of assessment - non-charging of interest from SPPL on the sum advanced - Held that:- Petitioner did disclose all the material facts necessary for the assessment. Apart from the fact that the return was picked up for scrutiny, a detailed questionnaire was issued, in which specific questions touching upon the said loan to SPPL were raised. The Petitioner replied to the said letter disclosing all the necessary information. Consequently, as far as the first ground for reopening of the assessment is concerned, the Court is satisfied that the precondition of the first proviso to Section 147 regarding failure on the part of the Assessee to fully and truly disclose the material facts, is not fulfilled. The mere fact that the assessment order may itself not advert to the fact that a questionnaire was issued and a reply was filed thereto by the Assessee would not ipso facto lead to an inference that the AO did not apply his mind and form an opinion on that ground. - Decided in favour of assessee Share capital received by the Assessee during the AY - Held that:- Even if the records are now to be produced before the Court and perused by it, it is not open for the Court to gather from the records the material/information which would support the reasons as communicated to the Petitioner by the DCIT. The court is therefore satisfied, that even in respect of the second reason for reopening the assessment, the mandatory requirement of the AO having to form a prima facie view regarding failure on the part of the Assessee to fully and truly disclose all the material facts is not fulfilled. - Decided in favour of assessee
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2016 (3) TMI 973
Rectification of mistake - grievance of the Petitioner is that the impugned order does not consider various issues raised by the petitioner in its rectification application - Held that:- We find that the impugned order passed by the Tribunal clearly exhibits a flaw in the decision making process. There is no mention in the impugned order as to what was the basis for revising the grounds of appeal filed by the Revenue in rectification application filed by the Petitioner. The Tribunal was concerned only with regards to the Petitioner's application for rectification. Thus, the Petitioner was not given any opportunity to deal with the revised grounds of appeal and it is not clear as to whether the revised grounds of appeal were at all filed by the Revenue. Nothing has been placed by the Revenue on record that any application has been filed by them, seeking revision of its grounds of appeal before or after the order dated 17.4.2015.
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2016 (3) TMI 972
Reopening of assessment - failure to consider the objections filed by the Assessees - Held that:- Revenue's contention that the AO is not required to apply his mind to the facts in relation to the escapement of income at the stage of considering objections is wholly without merit. Whilst, the AO is not expected to finally decide whether income of an assessee has escaped assessment at the stage of considering the objections he, nonetheless, has to consider the facts presented in support of the objections in a meaningful manner and at least to consider whether his reason to believe that income escaped assessment is justified or is without sufficient basis. Since in the present case, the AO has failed to consider the objections filed by the Assessees, the order dated 11th September 2015 passed by the AO rejecting the objections raised cannot be sustained. Reopening set aside -Decided in favour of assessee
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2016 (3) TMI 971
Validity of reopening of assessment - accommodation entries - Held that:- We find that the reasons in support of the impugned notice indicates that the Assessing Officer has received definite information that one Mr. Praveen Kumar Jain and the companies controlled by him was in the business of providing accommodation entries. On receipt of the aforesaid information, the Assessing Officer called for the necessary information in regard to the accommodation entries made in respect of the assessees in his jurisdiction. Consequent thereto, the Assessing Officer found that the information received indicated that the eight companies mentioned in the reasons belonged to Mr. Praveen Kumar Jain group and formed the basis of his reasonable belief. At this stage the Assessing Officer has merely to establish that there is justification for him to form a reasonable belief that income chargeable to tax had escaped assessment and not conclusively prove the same In these facts, we see no reason to exercise our extraordinary writ jurisdiction and interdict the Revenue from proceeding further with the reassessment proceedings. Needless to state that during the reassessment proceedings, the petitioner would have occasion to establish that the loans taken from the eight entities referred to in the reasons were genuine loans before the Assessing Officer and also before the appellate authorities under the Act. - Decided against assessee
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2016 (3) TMI 970
Entitlement to the benefit under Section 10(22A) - whether private limited company cannot come within the purview of the word "Institution", used in section 10(22A)? - Held that:- Even a private limited company can get the benefit of section 25 of the Companies Act, 1956. The benefit is to have the word "Limited" or the words "Private Limited" dropped. On the basis of this sub-section, one cannot say that a private limited company cannot come within the purview of the word "Institution", used in section 10(22A) of the Act. When the legislature has not restricted the meaning of the word "Institution", there is no reason why any restriction should be put to the word by the Court. No further submission was advanced by Mr. Agarwal. We find no substance in the submission, which, he already advanced and, therefore, the is answered in the affirmative in favour of assessee
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2016 (3) TMI 969
Registration under section 12A (a) cancelled - Held that:- CIT(E) has not brought out any allegation to show that the receipt/income of the assessee's trust was not used for the educational purposes and the same was used for other purposes beyond the objectives of the applicant trust. CIT dismissed application of the assessee for grant of registration under section 12A of the Act by recording incorrect and irrelevant facts and circumstances and the assessee successfully established that it was created for the charitable purposes including education activity and it used its funds for the purpose of educational activities and therefore the applicant trust is eligible for registration under section 12A of the Act. During the assessment proceedings while considering such claim of assessee the AO is fully empowered to examine and verify these facts that whether the assessee/applicant has applied its receipts towards its charitable objects and the AO is also empowered to verify as to whether the applicant assessee is conducting any activity in the name of charitable which is actually in the nature of trade commerce or business. These sovereign powers of the tax authorities are perpetual which cannot be taken away only by grant of registration under section 12A of the Act. It is also relevant to mention that the grant of registration under section 12A of the Act merely a pre-qualification for claiming exemption under section 11 and other relevant provisions of the Act, which should be granted by recording satisfaction as required under the said provision. Thus we hold that the CIT dismissed application for registration without any justified reason and by considering incorrect and irrelevant facts and the ld. CIT(A) has not brought any adverse finding on record to show that the objects of the Trust are not charitable or non genuine. - Decided in favour of assessee
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2016 (3) TMI 968
Penalty under Sec.271(1)(c) - surrender of income in revised return - Held that:- The assessee filed revised return in time offering the additional income voluntarily in good faith to purchase peace with the Department, though in the course of investigation and to avoid protracted litigation. Thus, we see that it is a case of simply accepting the additional income by the assessee in the course of investigation and filing the revised return in time and to avoid protracted litigation as to in whose hands the addition is to be made whether assessee or the AOP and in which the case, the ratio of the decision of Hon’ble Supreme Court Zin the case of CIT Vs. Suresh Chandra Mittal reported in [ 2001 (6) TMI 63 - SUPREME Court] will apply. Thus following the said decision, we hold that there is no concealment of income. Thus we direct the ld. Assessing Officer to delete the penalty levied under Sec.271(1)(c) of the Act.- Decided in favour of assessee
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2016 (3) TMI 967
TDS u/s 194C - Disallowance made u/s. 40(a)(ia) - assessee has not deducted tax at source on the payments made to the constituents of J.V. - AOP status - Held that:- As decided in the preceding assessment year i.e. assessment year 2009-10 CIT(A) deleted the disallowance u/s. 40(a)(ia) as CIT(A) was justified in holding that in absence of any contract or sub-contract work by joint venture to its member companies, provisions of section 194C were not applicable for the purpose of TDS. The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective shares and TDS apportionment certificates were also issued by the Assessing Officer every year for these eight years including the current assessment year to enable them to claim the same in their own cases. Moreover, there was no Profit and Loss Account in the assessee’s case and there was no claim of any expenditure. Therefore, there was no question of any disallowance under the provisions of section 40(a)(ia) of the Act. Moreover, disallowance u/s. 40(a)(ia) made by the Assessing Officer cannot be sustained. In effect, the method adopted by the Assessing Officer will also result in double taxation of the same contract revenue which is in violation of case Commissioner Of Income-Tax Versus Manjunatha Motor Service And Canara Public Conveyances [1991 (6) TMI 23 - KARNATAKA High Court ] - Decided in favour of assessee
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2016 (3) TMI 966
TDS u/s 194C - whether the assessee Joint Venture was in full control of the contract, responsible for its completion, submitting bills, receiving payments and making those payments to its members towards sub contract on which tax was deductible u/s.194C? - Held that:- AOP status - Held that:- As decided in the preceding assessment year in absence of any contract or sub-contract work by joint venture to its member companies, provisions of section 194C were not applicable for the purpose of TDS. The two corporate entities forming joint venture were already being assessed since A.Y. 2000-01 onwards on their respective shares and TDS apportionment certificates were also issued by the Assessing Officer every year for these eight years including the current assessment year to enable them to claim the same in their own cases. Moreover, there was no Profit and Loss Account in the assessee’s case and there was no claim of any expenditure. Therefore, there was no question of any disallowance under the provisions of section 40(a)(ia) of the Act. Moreover, disallowance u/s. 40(a)(ia) made by the Assessing Officer cannot be sustained. In effect, the method adopted by the Assessing Officer will also result in double taxation of the same contract revenue which is in violation of case Commissioner Of Income-Tax Versus Manjunatha Motor Service And Canara Public Conveyances [1991 (6) TMI 23 - KARNATAKA High Court ] - Decided in favour of assessee
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2016 (3) TMI 965
Deemed dividend u/s.2(22)(e)- CIT(A) allowed part relief - Held that:- CIT(A) after considering the ledger account of the assessee in the books of the company sustained an amount of ₹ 3,44,689/- being the amount outstanding against the assessee out of the addition of ₹ 13,96,057/- made by the AO and deleted the balance amount of ₹ 10,51,368/-. The Revenue is not in appeal before us for the relief granted by the CIT(A). We find the CIT(A) had rejected the contention of the assessee that the advance given by the company to the assessee was for the purpose of business in absence of any evidence given by the assessee. Before us also the Ld. Counsel for the assessee could not justify that the advance given by the company to the assessee is for business purposes. Under these circumstances and in absence of any contrary material brought to our notice by the Ld. Counsel for the assessee against the order of the CIT(A), we find no infirmity in the order of the CIT(A). In our opinion, the order of the CIT(A) is justified under the facts and circumstances of the case since the maximum amount advanced by the company to the assessee which is outstanding at any time during the year is ₹ 3,44,689/-. - Decided against assessee
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2016 (3) TMI 964
Taxing receipts for Management Services to be in the nature of ‘Fees for Technical Services’ (‘FTS’) DTAA between India and Sweden - Held that:- Identical issue arose before the Tribunal in assessee’s own case in assessment year 2007-08 and 2008-09 wherein held on the principle of most favoured nation clause, that the payment received by the assessee company from its Indian subsidiaries could not be brought to tax. - Decided in favour of assessee
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2016 (3) TMI 963
Reimbursement of bank guarantee commission - TDS u/s.194A @10% OR u/s.194C @2% - revision u/s 263 - Held that:- In the instant case, there is no money borrowed or debt incurred. Therefore, provisions of sec. 2(28A) and sec. 194A do not apply. Payment made to NCL is not income by way of interest . The impugned receipt would be in the nature of reimbursement of expenses incurred by it. In view of the above discussion, we do not find any merit in the order passed u/s.263 in respect of one of the possible view taken by the AO. Even on merit, we found that bank guarantee commission does not come under the purview of interest so as to make assessee liable for TDS u/s.194A. - Decided in favour of assessee
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2016 (3) TMI 962
Disallowance of depreciation on customer rights - Held that:- Respectfully following the order of Tribunal in assessee’s own case, we direct the AO to allow assessee’s claim of depreciation on customers’ rights as once it is seen that the expenditure has been incurred for acquiring the business, we cannot hold that acquisition of customer rights are bogus. We, therefore, hold that the expenditure as such was genuine.Once the expense has been accepted by us to be genuine, it would fall within the inclusions of section 32(1)(ii). - Decided in favour of assesse Disallowance u/s 14A - Held that:- Assessee is in the business of stock broking having taxable brokerage of income. Most of the expenses were incurred for the purpose of business and the expenditure incurred for investment in shares was suo motu offered for disallowance. So far as disallowance of interest is concerned, we found that interest income earned by the assessee was more than the interest expenditure and since the interest income is positive no interest disallowance can be made.- Decided in favour of assesse Disallowance of claim of bad debts - Held that:- The issue is covered in favour of assessee vide order of the Tribunal in assessee’s own case for A.Y.2007-08 upholding the action of CIT(A) for deleting disallowance of bad debts. Also see CIT Vs. Shreyas S. Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT ].- Decided in favour of assesse Disallowance of depreciation on VSAT (Very Small Aperture Terminal) - Held that:- Respectfully following the order of the Tribunal in assessee’s own case for earlier AYs we confirm the action of CIT(A) for deleting the disallowance of depreciation on VSAT.- Decided in favour of assesse Disallowance of Vanda loss - Held that:- Respectfully following the order of the Tribunal in assessee’s own case for earlier AYs we confirm the action of CIT(A) for deleting the disallowance - Decided in favour of assessee Disallowance of mark to market loss - Held that:- CIT(A) has deleted disallowance by relying on the order of special bench of the Tribunal in the case of CIT Vs. Bank of Baharain [2010 (8) TMI 578 - ITAT, MUMBAI ]. The issue is covered in favour of the assessee vide decision of the Hon’ble Supreme Court in the case of CIT Vs. Woodward Governor [2009 (4) TMI 4 - SUPREME COURT] - Decided in favour of assessee Disallowance on depreciation on goodwill - Held that:- Explanation 3 to Section 32(1)(ii) the commercial or business right which is similar to a "licence" or "franchise" is declared to be an intangible asset, therefore, the right of membership, which includes right of nomination, is a "licence" or "akin to a licence" which is one of the items which falls in Section 32(1)(ii). See CIT Vs. Smiff Securities [2012 (8) TMI 713 - SUPREME COURT ] - Decided in favour of assessee
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2016 (3) TMI 961
Unexplained cash deposits in the bank account by adopting peak cash deposits (on 60 days basis) - Held that:- CIT(A) observed that even if it was accepted that peak theory would be valid in this case, because the assessee was in the business of financing; the day to day peak could not be applied in the present case because as admitted by the father of the assessee and the Authorized Representative of the assessee that the loan was disbursed by the assessee to various persons for 2 to 4 months. The CIT(A), therefore, held that if peak theory is to be applied, then the peak has to be worked out on the basis of 60 days; meaning thereby, if a cash withdrawal is made on the first day then, it can be expected to be deposited in the bank account of the assessee on or after 61st day. Similarly, withdrawal of second day could be expected to be deposited back on or after 62nd day. In this background, the CIT(A) rightly directed the Assessing Officer to work out the peak on the above basis and tax that peak amount as unexplained investment of the assessee. Therefore, these reasoned and factual findings of the CIT(A) do not require any interference from our side Addition on account of cash credit - Held that:- This addition in question has been confirmed the CIT(A) in appeal on the ground that the assessee has failed to prove the genuineness of loans from the parties and creditworthiness of other depositors. It is not in dispute that no such proof was furnished before the Assessing Officer but only affidavits from such depositors were produced before the First Appellate Authority which was not admitted by him on the ground that the same was not genuine as per the reasons recorded in the appellate order. Therefore, in our opinion, the CIT(A) has rightly confirmed the addition as unexplained cash credit u/s 68 of the Act because no books of accounts are maintained by the assessee and there were no such details on record which can be verifiable.
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2016 (3) TMI 960
Registration under section 12AA denied - Held that:- We find that assessee only intends to facilitate the education programmes in and outside India, but is not carrying on the education activities as such. It intends to be a facilitator by holding various summits, particularly, in the field of higher education by bringing in foreign universities. Further, the assessee also intends to develop, process, export and market all types of educational material and software both in India and abroad. We find that the activities of the assessee are not restricted to India, nor is the application of income earned by the assessee restricted to application of the same within India. In the case before us, we find that assessee is not carrying on the charitable activity of imparting education, but is only holding education summits to facilitate and help people in pursuing higher education by identifying foreign and Indian institutes etc. Therefore, we find that assessee is also not carrying on the charitable activity as required under section 2(15) of the I.T. Act. Therefore, we do not see any reason to interfere with the order of the CIT(E) denying the registration under section 12AA of the I.T. Act. - Decided against assessee
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2016 (3) TMI 959
Transfer pricing adjustment - determination of ALP - treatment to transaction of expenditure on AMP as a separate transaction - Held that:- TP adjustment can be made by deducing from the difference between AMP expenditure incurred by assessee-company and AMP expenditure of comparable entity, if there is no explicit arrangement between the assessee-company and its foreign AE for incurring such expenditure. The fact that the benefit of such AMP expenditure would also enure to its foreign AE is not sufficient to infer existence of international transaction. The onus lies on the revenue to prove the existence of international transaction involving AMP expenditure between the assesseecompany and its foreign AE. We also hold that that in the absence of machinery provisions to ascertain the price incurred by the assessee-company to promote the brand values of the products of the foreign entity, no TP adjustment can be made by invoking the provisions of Chapter X of the Act. Applying the above legal position to the facts of the present case, it is not a case of revenue that there existed an arrangement and agreement between the assessee-company and its foreign AE to incur AMP expenditure to promote brand value of its products on behalf of the foreign AE, merely because the assessee-company incurred more expenditure on AMP compared to the expenditure incurred by comparable companies, it cannot be inferred that there existed international transaction between assessee-company and its foreign AE. Therefore, the question of determination of ALP on such transaction does not arise. However, the transaction of expenditure on AMP should be treated as a part of aggregate of bundle of transactions on which TNMM should be applied in order to determine the ALP of its transactions with its AE. In the present case, we find from the TP study that the operating profit cost to the total operating cost was adopted as Profit Level Indicator which means that the AMP expenditure was not considered as a part of the operating cost. This goes to show that the AMP expenditure was not subsumed in the operating profitability of the assessee-company. Therefore, in order to determine the ALP of international transaction with its AE, it is sine qua non that the AMP expenditure should be considered as a part of the operating cost. Therefore, we restore the issue of determination of ALP, on the above lines, to the file of the AO/TPO. - Decided partly in favour of assessee
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2016 (3) TMI 958
Disallowance u/s 36(1)(vii) on account of bad debts written off relating to non-rural branches - Held that:- As decided in assessee's own case as a result of the amendment, the scheduled bank would be entitled to the deduction of the entire bad debt relating to advances made by the urban branches written off in the books and also the difference between the amount written off in the books relating to advances made by the rural branches during the previous year relevant to the assessment year and credit balance in the provisions for bad and doubtful debt account relating to advances made by the rural branches made in clause (viia). Also if the bad debt written off relates to debts other than for which provision is made under clause (viia), such debt will fall squarely under the main part of clause (vii) which is entitled to deduction and in respect of that part of the debt with reference to which the provision is made under clause (viia), the provisos will operate to limit the deduction to the extent of the difference between that part of debt written off in the previous year and the credit balance in the provision for the bad and doubtful debts accounts made under clause (viia). - Decided in favour of assessee
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2016 (3) TMI 957
Validity of provisions of section 251(2) invoked by CIT(A)- enhancement of income - examination of new source of income - Held that:- Undisputedly the Assessing Officer has made disallowance under the head gross profit rate and disallowance of certain expenses claimed by the assessee under different heads. The Assessing Officer has not examined the issue of sundry debtors and sundry creditors available in the balance sheet, but during the course of hearing of the first appeal, the ld. CIT(A) has examined the issue of huge balance existed against the sundry debtors and sundry creditors of the assessee. He has also examined the interest paid on borrowed funds and advances made by the assessee to the sister concern without interest. The ld. CIT(A) accordingly made corresponding disallowance of interest paid on the borrowed funds, which were advanced to its sister concern. The ld. CIT(A) has also examined reasonableness of the commercial expediency for advancement of loan on the borrowed funds to the sister concern. In the light of these facts, of the considered opinion that the ld. CIT(A) has adjudicated a new issue which was not even touched upon by the Assessing Officer for making disallowance in the hands of the assessee. Also carefully perused the judgment of CIT vs. Sardari Lal & Co. (2001 (9) TMI 1130 - Delhi High Court ), in which Hon'ble High Court has adjudicated the powers of the ld. CIT(A) conferred under section 251(1)(a) of the Act in the light of various judicial pronouncements of different High Courts and Apex Court and was of the view that whenever question of taxability of income from new source of income is concerned, which has not been considered by the Assessing Officer, the ld. CIT(A) or the first appellate authority cannot examine that issue or new source of income. Since the ld. CIT(A) has examined a new source of income in the instant case, the ld. CIT(A) has exceeded his jurisdiction. Therefore, the addition resulting into enhancement of income is not sustainable in the eyes of law. - Decided in favour of assessee
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Customs
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2016 (3) TMI 942
Seeking provisional release of goods with modification of conditions mentioned in the impugned order and in particular the condition regarding payment of 100% of the differential duty - Serious dispute raised by the respondents in the SCN as to the genuineness of the documents produced by the petitioner - Held that:- a serious dispute has been raised by the Respondents regarding the genuineness of the documents produced by the Petitioner and this has been crystallized in the SCN which is pending adjudication. The issues arising therein has a bearing on the question of even the provisional release of the goods. The Court is, therefore, not inclined at this stage to interfere with the impugned order which grants provisional release subject to the conditions. - Petition disposed of
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2016 (3) TMI 941
Entitlement for provisional release of goods pending adjudication - Holder of Importer-Exporter Code Number (IEC) issued under the Foreign Trade (Development and Regulation) Act, 1992 imported certain goods - After investigation Customs authority took stand that petitioner is not the owner of the goods and therefore, the goods cannot be released to him on a provisional release - Held that:- as far as the Customs Authority is concerned and in terms of the Customs Act, bringing the goods of others using IEC cannot be treated as a violation. It is a matter for the Directorate General of Foreign Trade to enter a finding whether there is any violation or not. To saddle with any liability on the petitioner under the Customs Act, one need not be the owner of the goods imported. If such stand of the Customs Authority is accepted, any importer of the goods can escape from the liability from the clutches of the Customs Act, by shifting the onus to the owner of the goods. If the petitioner has misused his IEC, it is the matter for that Authority to consider the issue. The Customs Authority may bring it to the notice of that Authority about such misuse but that cannot be a reason to withhold the release ordered under Section 110A referred to the judgment of Hon'ble Supreme Court in Union of India v. Sampat Raj Dugar and Another [1992 (1) TMI 103 - SUPREME COURT OF INDIA]. Therefore, Customs Authority is directed to release the goods to the petitioner under Section 110A of the Customs Act without any delay. - Decided in favour of petitioner
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2016 (3) TMI 940
Seeking modification of sentence order - Seizure of 116 packets of Ganja weighing 432.900 kilograms - Appellant convicted under Section 20(b) of the N.D.P.S. Act - Held that:- it is to be clarified that the appellant is to be convicted under Section 20(ii) (C) N.D.P.S. Act rather under Section 20(b) of the N.D.P.S. Act. The charge was framed saying that the appellant was found in illegal possession of 432.900 kilograms of contraband Ganja which he was carrying by a Truck which shows that he knew fully well that he was to answer the charge of carrying Ganja of commercial quantity and hence no prejudice would be caused to him if his conviction is converted to one under Section 20(ii) (C) N.D.P.S. Act while maintaining his sentence. - Decided against the appellant
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2016 (3) TMI 939
Refusal of refund of duty paid under protest - Duty demanded for cost recovery charges - No challenge to the adjudication by the competent authorities of the amounts - Held that:- there was no statutory Appeal filed from the demand for bonding costs claimed by the competent authority upon assessment. So, as no Appeal has been preferred against such adjudication, the question of filing an application for refund of the amount would not arise at all. Therefore, the Tribunal was justified to come to the conclusion that the claim of refund could not be entertained as there was no challenge to the adjudication of the amounts by the competent authorities. - Decided against the appellant
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2016 (3) TMI 938
Eligibility of benefit of Notification No. 146/94-Cus - Import of acrylic resin based sports surface in liquid form - Certificate issued by the Sports Authority of India to import the items provided by appellant - Held that:- the issue is no more res integra in asmuch as this Tribunal in the case of Syncotts International vs. Commissioner of Customs [2016 (1) TMI 184 - CESTAT MUMBAI], the goods imported by the appellant are eligible for the benefit of Notification No. 146/94-Cus. Demand of duty - Timber pallets, 20 foot container, 3 foot drop drag and 3 foot drop drag straps - Department contended that 3 foot drop drag and 3 foot drop drag straps are restricted as per show cause notice and can be imported by specific licence only - Held that:- no such licence is produced by the appellant-importer before the lower authorities or even before us. Also timber pallets, 20 foot container do not form part of the certificate issued by the Sports Authority of India for the benefit of exemption under Notification 146/94-Cus as they may not play any role in the laying of turf for All India Tennis Association. Therefore, duty liability on all four items are confirmed. - Appeal disposed of
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2016 (3) TMI 937
Imposition of penalties - Section 114AA of the Customs Act, 1962 - Export of potassium chloride declaring them as calcium chloride hence, mis-declaration - Held that:- Since Shri Babulal Shantilal Shah and Ms. Preeti Dinesh Shah are not playing any active role in day to day functioning of the firms which sold “potassium chloride” to Shri Balwinder Arora, the penalty cannot be imposed on them under Section 114AA ibid The penalties imposed on Shri Balwinder Arora needs to be reconsidered by the adjudicating authority, as it is found from the show-cause notice that there is a proposition to impose penalty under Section 114(i) and 114(iii) of the Customs Act, 1962. Also the provisions of Section 138B of the Customs Act, 1962 needs to be followed in its letter and sprit by the adjudicating authority before coming to a conclusion. The provisions of Section 138B of Customs Act. The cross-examination sought by other appellants should have been granted in order to arrive at a correct conclusion as to of the appellants were aware of the facts or otherwise. - Matter remanded back
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2016 (3) TMI 936
Sustainability of enhancement of value done under Rule 5 of the Customs Valuation Rules, 1988 - Import of medium density fiber boards - Transaction value under Rule 4 ibid rejected - Value enhanced on the basis of value noted for contemporaneous imports - Held that :- the learned counsel placed on record a bill of entry filed at Chennai where the same value was declared and was accepted by the Customs.Also, there are number of contemporaneous imports at higher values, but the details of those contemporary imports have not been disclosed. Moreover, the observation in the order-in-original that the contemporary imports varied from USD 160/- to USD 220/- per CBM, but the adjudicating authority has ignored the evidence produced by the appellant that the value of USD 130/- and USD 140/- were also accepted by the Customs. Moreover, the copies of bill of entry and invoices relied upon by the adjudicating authority were not supplied to the appellant. The names of the importers are also missing; the quantity is not mentioned and the size, grade and quality are also absent. The unit price which is the most important factor is missing and, therefore, the order of the adjudicating authority is completely weak and not reliable. Also, no evidence led by the Revenue to counter the values declared by the appellant. Therefore, by considering the various case laws, the value of per CBM declared by the appellant as USD 130/- should be accepted as the transaction value. Consequently, the enhancement of the value made by the lower authorities is not sustainable in law. Decided in favour of appellant with consequential relief
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2016 (3) TMI 935
Invokation of extended period of limitation - Import of recorded media such as beta tapes, digibeta tapes etc. containing feature films/programmes - Discharged duty liability on the value declared by courier, based on the invoice submitted by the foreign supplier - Includibility of licence fee in the assessable value - Rule 9(1)(c) of Customs Valuation Rules, 1988 - Held that:- the issue involved is squarely covered against the appellant vide CESTAT judgement in the case of Star Entertainment [2014(5) TMI 713-CESTAT-Mumbai (LB)]. Thus, the appellant has no case on merit. It is however seen that the said judgement of CESTAT is a 2 : 1 majority judgement. Initially there was difference of opinion between the ld. Member (Technical) and ld. Member (Judicial) and the issue was then referred to the 3rd Member. It is well settled that when at the level of Tribunal there was difference of opinion regarding includibility of the licence fee in the assessable value necessitating the reference to a 3rd Member, the extended period is not invocable. Indeed in the case of Star Entertainment it was held that in these facts and circumstances (which are similar to the facts and circumstances in the present appeal) extended period cannot be invoked. As the entire demand pertains to period beyond the normal period of one year, (the bill of entry was filed on 30.4.2007 and show cause notice was issued on 1.12.2009), it is hit by time-bar. - Decided in favour of appellant with consequential relief
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Corporate Laws
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2016 (3) TMI 930
Scheme of Amalgamation - Held that:- The queries of the Regional Director and of the Official Liquidator have been met with the petitioners. It is, therefore, ordered that, the Scheme, at Exhibit “A” to the petition, is sanctioned and the prayers as prayed at 15(a) in the Company Petition are granted. The petitioner is directed to pay the fees amounting to ₹ 7,500/to Mr. Devang Vyas, learned Assistant Solicitor General of India and ₹ 7,500/to the Office of the Official Liquidator. The petitioner Company is further directed to lodge a copy of this order, the Schedule of Assets of the Transferor Company as on the date of this order, if any, and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order.
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2016 (3) TMI 929
Non providing of opportunity to subscribe to Rights issue - increase of share capital - Whether the alleged resignation of Appellant No. 1 & 3 from the directorship of the Company could be held to be valid, when specific case of the Appellant Nos. 1 & 3 was that they never resigned and in the absence of any such resignation in writing being brought on record by the Respondent? - Held that:- The appellants did not impugn either the allotment of the Rights Issue or their removal from the Board of Directors at the relevant time; coupled with the fact that, admittedly, there is no challenge to the company’s requirement for funds through the offer of rights, as well as by way of a bank loan, alongwith the explanations being offered by the respondent in this regard; as also the real likelihood of the appellants having been persuaded to raise all these grievances once the company’s economic difficulties were over, and the company was clearly on the path of substantial progress; makes it clear that these allegations need not be probed further. Obviously if the company’s affairs had taken a down turn after the Rights Issue as well as the loan from the bank, there would have been no question of the appellants’ raising any grievance whatsoever even in June, 2007. To enable the appellants to now reprise their role as directors, whilst also giving them the opportunity to avail the Rights issue at this stage would, in effect, amount to handing them the prize without having played the game at all, because the appellants never ran the risk normally associated with business expansions or personal guarantees. To my mind, once it is clear that the decision to infuse capital through the issue of Rights as well as Loans on personal guarantees was bonafide; and the appellants failed to raise any protest in a timely fashion; then regardless of the reasons for the non subscription to the Rights issue, or for not being required to furnish the necessary personal guarantees to the bank; it would be grossly inequitable to now reward the appellants with the rewards sans the risk; and that too at the expense of the respondents who actually did run that risk by putting in their own moneys and personal guarantees on the line, thus facilitating the increase in the company’s valuation from ₹ 30 lakhs in 1996 to ₹ 12 crores in 2008. Had the appellants been responsible and conscientious participants, both as directors and shareholders; fully able and ever willing to shoulder their burden of the increased business risk under contemplation, nothing stopped them from taking the required steps; and also approaching the Company Law Board if necessary; in a timely fashion, but they chose not do so. That they chose not to protest the lack of any information about any Board meeting, despite the belief that they were indeed directors, for years together; while duly receiving the annual accounts and dividends throughout; can only lead one to conclude that their interest in the company was limited to their initial shareholding and nothing more. After the venture has clearly fructified; and the associated risks run successfully; to enable the appellants to now claim that they would certainly have subscribed to their share of the Rights issue to finance the venture in the first place, and consequently direct the allotment of proportionate shares to the appellant at the initial offer price; while divesting others, who had put down their own moneys at the crucial juncture for those shares; and that too when their current price and future prospects are much more, would not only ensure an undeserved windfall to the appellants; it would, to my mind, also demonstrate an extremely unjudicious naivety on the part of the Court.
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Service Tax
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2016 (3) TMI 956
Recovery of dues said to be payable - Attachment of bank accounts on the ground that another entity has not paid the service tax - Seeking refrainment from taking any coercive recovery proceedings against the company - Engaged in the business of providing erection, commissioning and installations services and provided taxable services to some companies - Department issued a notice for attachment of the bank account of petitioner on the ground that another entity of which the petitioner company was the proprietor has not paid the service tax as demanded - Held that:- when the petitioner company is a separate and independent entity, the bank account of the petitioner company cannot be attached for the dues of the proprietorship concern, viz., M/s.Atchaya Enterprises. Therefore, the bank account of the petitioner company, which was attached by the respondents is liable to be raised and accordingly, the attachment in respect of the petitioner company stands raised. - Petition disposed of
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2016 (3) TMI 955
Legality of second show cause notice - Violation of Articles 14, 19(1)(g) and 30A of the Constitution of India and the orders of this court - Held that:- when the respondent is bound by the directions given by this Court and when this Court had directed the petitioner to submit their objections by treating the impugned proceedings as show cause notice and when this Court directed the respondent to consider the same and pass orders in accordance with law, after giving an opportunity of personal hearing to the petitioner Company, the issuance of the 2nd show cause notice, contrary to the direction of this Court is liable to be set aside. Also the respondent cannot violate the orders of this court on the guise of filing an application for modification. If the respondents are really aggrieved over the order passed by this Court in the earlier Writ Petition, they should have filed modification petition at the earliest point of time. As already stated, even the modification petition has not yet been numbered and brought before the Court for hearing. Therefore, the show cause notice is set aside. - Decided in favour of petitioner
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2016 (3) TMI 954
Eligibility of refund for the period April, 2009 to September, 2009 - Service Tax paid on input services and used for providing output service which are exported under the category of “Information Technology Software Services” - Refund claim of ₹ 8,42,760/- allowed and refund claim of ₹ 8,03,031/- rejected as services were received prior to output service being notified but first appellate authority after following due process rejected the allowed claim also - Held that:- the first appellate authority was in error in rejecting or setting aside refund of ₹ 8,42,760/- sanctioned by the adjudicating authority. Against sanctioning of refund claim of such an amount there was no appeal from Revenue, hence the first appellate authority cannot suo moto set aside the order sanctioning refund of ₹ 8,42,760/-. As regards the refund claim of ₹ 8,03,031/-, the issue is no more res integra. By relying on the judgment of Hon'ble High Court in the case of mPortal India Wireless Solutions P. Ltd. Vs. C.S.T., Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], the appellant is eligible for the refund claim. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 953
Classification of services provided for the period prior to 01.05.2006 and during the period 2005-06 to 2009-10 - Whether services of maintenance or repair i.e. operation of cooling water system, operation of raw water plant, operation of MP boilers & operation of IG plant & compressed Air system provided by the appellant comes under Management, Maintenance or Repairs - Held that:- the action of the respondent is management of immovable property and nothing has brought to our notice which indicates that the respondent were engaged for and doing “Management Maintenance or Repairs” services. Therefore, the services provided by the appellant do not come under Management, Maintenance or Repairs. - Decided against the revenue
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2016 (3) TMI 952
Rejection of refund claims for the period 10.09.2004 to 31.03.2005 - Eligible for benefit of Notification No. 05/2006 dated 14.03.2006 - 100% Export Oriented Unit received inputs services on which credit was availed and utilised for manufacturing for goods that were exported - Entitled to avail CENVAT credit on such input services that they are not in a position to utilise the CENVAT credit for discharge of duty liability for the clearance made to home consumption - Held that:- the first appellate authority had sanctioned the refund claims holding categorically in favour of the appellant. It was not left to the adjudicating authority to revisit the issue of rejection of the three refund claims which have been sanctioned by the higher judicial authority. In the absence of any appeal against such an order, the adjudicating authority has not followed settled principle of judicial discipline; and has entered further voyage to reject the refund claim by issuance another show-cause notice, which is beyond his jurisdiction. Both the lower authorities have not followed the judicial discipline while rejecting the refund claim which were already sanctioned by the first appellate authority.Therefore, the impugned order to that extent is unsustainable liable to be set aside. Also, in the three refund claims, the findings that the benefit of Notification dated 14.03.2006 is not applicable for the period prior to Notification dated 14.03.2006 are not sustainable followed by the judgment of Tribunal in the case of Fibres & Fabrics International Pvt. Ltd. Vs. Commissioner of Commissioner (Appeals), Bangalore [2009 (2) TMI 110 - CESTAT Bangalore]. Therefore, refund claims which were rejected by both the lower authorities are to be allowed. - Decided in favour of appellant
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2016 (3) TMI 951
Imposition of penalty - Section 76, 77 and 78 of the Finance Act, 1994 - Management Consultancy Service - Appellant rendered the services of advice and consultancy for various individuals and independent organizations with regard to the entire operation of the hotel in order to bring those hotels to the level of “Taj” - Entire Service tax along with interest paid before issuance of show-cause notice - Held that:- appellant could have entertained bonafide believe that the advice, consultancy as given by them may not be covered under ‘Management Consultancy Services' and they are rendering the business of the various hotels in the same manner from 1988, therefore, no Service Tax liability arises. So, the appellant has made out a justifiable case for setting aside the penalties imposed. Therefore, the Service Tax liability on ‘Management Consultancy Services' was in nascent stage when the Audit Party brought to the knowledge of appellant that Service Tax liability arises, which was discharged immediately. So, by invoking the provision of Section 80 ibid, penalties imposed under Section 76, 77 and 78 are set aside. - Decided in favour of appellant
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Central Excise
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2016 (3) TMI 950
Availment and utilization of CENVAT credit - extended period of limitation invoked - Held that:- The appellant has not suppressed any facts from the department. The appellant has mentioned in all the statutory records viz. RG23A (Part II), TR-6 challan and ER-1 returns regarding the factum of availment of the credit, but the department has not considered these factual aspects before passing the impugned order. The impugned order has traveled beyond the show cause notice in the sense that in the show cause notice the allegation is that the appellant availed input service credit on construction of shopping complex outside the factory premises whereas in the impugned order, the demand has been confirmed on the ground that the service provided and credit availed was not either directly or indirectly in relation to the manufacture of the appellant's final product. The entire demand in this case is time barred because the show cause notice was issued on 24.9.2009 for alleged inadmissible credit availed by the appellant during the period July 2007 by invoking the extended period whereas in fact there has not been any suppression or wilful declaration by the appellant and the entire records were with the department, wherein the appellant has reflected the availment of credit. - Decided in favour of assessee
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2016 (3) TMI 949
Doctrine of unjust enrichment - refund claim rejected - whether the C.A. certificate is sufficient to establish that there was no unjust enrichment ? - Held that:- The doctrine of unjust enrichment is attracted in the instant case. We find that the appellant had failed to produce any original records before the adjudicating authority and their claim to lack of the unjust enrichment is based solely on the C.A. certificate. It is not understood that how when the original records are not available, the C.A. could give a certificate. It is seen from the extract of the C.A. certificate that the excise duty paid in respect of gauges was charged as expenditure during the respective years. The fact that it has been charged as expenditure indicate the facts that the same has been recovered from the customer. In view of the above, the appellant failed to establish that there was no unjust enrichment in the instant case. - Refund not allowed.
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2016 (3) TMI 948
Manufacture - whether the process of pleating and embossing does amount to manufacture? - whether the duty cannot be demanded from the job-worker but should be demanded from the supplier of the materials under rule 12B? - Held that:- In view of the clear cut findings and in absence of any evidence to the effect that pleating and embossing results in a permanent change in the fabrics, we are unable to differ with the impugned order concluding that the process of pleating and embossing does not amount to manufacture. - Decided against the revenue.
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2016 (3) TMI 947
CENVAT credit denied on the condition that the capital goods so supplied by M/s. ITC Ltd. is not a financing company - Held that:- Present respondent is on a better footing as they have taken the capital goods from the principal manufacturer and against which they are paying the lease rent to the principal manufacturer. There is no dispute that the capital goods so procured on lease basis are indeed used in the manufacturer of final product on behalf of M/s. ITC Ltd. Applying the ratio of the German Remedies Ltd. (2002 (4) TMI 140 - CEGAT, MUMBAI ) the respondent is entitled for the credit. - Decided in favour of asseessee
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2016 (3) TMI 946
Demand raised on presumption - Held that:- Tribunal in its remand order had directed the Revenue to provide copies of all the relied upon documents and opportunities to be heard to the appellant. It is seen that the Revenue has failed to do both. In these circumstances, we are left with no option but to set aside the impugned order and remand the matter for fresh adjudication after providing the copies of relied upon documents and opportunities to be heard.
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2016 (3) TMI 945
Suo moto availement of credit of duty - excess paid duty adjusted against short paid duty - extended period of limitation invoked - Demand of differential duty - Held that:- As on pointed out by the audit team, the appellant have discharged the differential duty of bonfide belief that excess paid duty can be adjusted against short paid duty, difference is the amount for which the show cause notice was issued. It is pertinent to mention that demand of show cause notice arises from differential duty paid by the appellant, in such case department could have issued the show cause notice within one year from the date of payment of differential duty i.e. from September, 2007. Show cause notice issued was after almost two years from the date of payment of differential duty. In my view, even the payment of differential duty was made at the right time as the same stands payable only after finalization of cost audit report. Cause of action started from the date when the differential duty paid by the appellant, nothing has prevented the department to issue a show cause notice within one year from the date of payment of excise duty. There is no suppression of fact, fraud and mis-statement etc on the part of the appellant therefore demand is patently time bar. Therefore set aside the impugned order on limitation and allow the appeal of the appellant. - Decided in favour of assessee
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2016 (3) TMI 944
Recovery of cenvat credit - Returned goods - non maintenance of separate accounts of receipt and utilization of inputs used in dutiable and exempted final products - Demand of 8% amount on the value of exempted acid oil - Held that:- In the impugned order that Sulphuric Acid has been used in the manufacture of Acid Oil from soap stocks. This process is separate and independent of manufacture of refined edible oils. During the manufacture of edible oils, the by-product viz. soap stock emerges. The present demand is for a percentage amount of exempted Acid Oil. The entire credit taken on Sulphuric Acid used in the manufacture of Acid Oil has been reversed by the respondents. We find no reason to interfere with the decision of the Commissioner (Appeals) in this regard. Non maintaining proper accounts in respect of the products received for re-processing, the Commissioner (Appeals) observed that one to one correlation of returned goods as per the entries in the RG-I is not possible in a unit having huge turnover. He observed further that the appellants have entered all the returned goods in the RG-I and taken back the credit of excise duty paid. There is no need to maintain separate records for returned goods. The appropriate duty has been paid when the returned goods were cleared. The ld. Commissioner (Appeals) recorded that the respondents produced copies of RG-I register and the respondent's claim regarding proper accounting appears to be correct. He directed the Lower Authority to examine the evidences produced by the respondents for a fresh decision. We find no infirmity in the findings of the Commissioner (Appeals). - Decided in favour of assessee
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2016 (3) TMI 943
Surrender of Central Excise Registration - Held that:- In the present case, firstly new company M/s. Monomer Chemical Industries Pvt Ltd has been issued new registration therefore the present appellant cannot be remained as registered person. As regard compliance of the provision of the notification, requirement is only to file declaration, the appellant have filed declaration in Annexure III and disclosed the entire fact including the status of their case which is pending at show cause notice stage. Secondly, appellant even though, there is no confirmed demand, in view of show cause notice, executed indemnity bond wherein they have undertaken to discharge the Central Excise duty liability as and when it arises in future. Therefore it is of the view, after making substantial compliance of the provision there is no reason to deny the de-registration of the appellant. Even, if it is assumed that appellant's registration should not be cancelled, in such case new registration to any other person on the same premises cannot be given and if that be so then no operation can be carried out in the said premises. In my view, it is a national loss to stop production in any factory premises. The law cannot be such by which production in this country can be suspended for any reason. In view of my above observations, it is of the considered view that Adjudicating authority is legally and correctly ordered for de-registration of the appellant and accepted the surrender of registration. Therefore set aside the impugned order and allow the appeal of the appellant.
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CST, VAT & Sales Tax
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2016 (3) TMI 934
Validity of dismissal order passed by below authorities - Whether on the facts and circumstances of the case, both the authorities below were justified in dismissing the appeals by holding the condition of pre-deposit of 25% as mandatory for the entertainment of appeal - Held that:- the issue involved in this appeal stands concluded by the decision of this Court in Punjab State Power Corporation Limited v. The State of Punjab and others [2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT]. Therefore, by following this, the orders passed by the Deputy Excise and Taxation Commissioner (Appeals) and the Tribunal are set aside. - Matter remanded back
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2016 (3) TMI 933
Validity of dismissal order passed by below authorities - Whether on the facts and circumstances of the case, both the authorities below were justified in dismissing the appeals by holding the condition of pre-deposit of 25% as mandatory for the entertainment of appeal - Held that:- the issue involved in this appeal stands concluded by the decision of this Court in Punjab State Power Corporation Limited v. The State of Punjab and others [2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT]. Therefore, by following this, the orders passed by the Deputy Excise and Taxation Commissioner (Appeals) and the Tribunal are set aside. - Matter remanded back
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2016 (3) TMI 932
Availability of an alternative remedy - Reversal of input tax credit - Input tax credit was reversed to the appellant in the main appeal as well as in the rectification appeal but the question regarding the prevention of appellant from filing manual returns and whether the password was given belatedly was not considered in such rectification order passed under Section 84 - Held that:- it is true that there is a remedy of revision. But, a revisional remedy is not exactly equivalent to an appellate remedy. The questions Whether the appellant was given password to enable them to file a return online only belatedly and whether it was not allowed to file manual returns are the questions that were not even gone into in the order passed under Section 84 which shows clear non application of mind by assessing officer. Therefore, the appellant could not have been driven to the alternative remedy of revision under Section 54. - Matter remanded back
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2016 (3) TMI 931
Validity of Commissioner's order - Order passed without providing any reasons - Breach of principles of natural justice - Held that:- Respondent is also unable to show any reasons supporting the operative portion of the Order passed by the Commissioner. It is also hardly required to be stated that unless some reason if not in detail but precise are recorded, the operative portion of the Order would not be backed by the reasons of the Authority who has ultimately passed the Order. Therefore, the order of the Commissioner set aside. - Matter remanded back
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Indian Laws
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2016 (3) TMI 928
Chief Judicial Magistrate exercising his jurisdiction in Corporation area - whether CJM can assist secured creditor in taking possession of secured asset and pass an order in favour of secured creditor for the purpose of taking possession or control of any secured asset? - Held that:- The intention of the Legislature was to achieve speedier recovery of the dues without the intervention of Tribunals or the Courts and for quick resolution of disputes arising out of the action taken for recovery of such dues. Ergo, by conferring jurisdiction on an authority to exercise the power of assistance, which, his counterpart in a Metropolitan area, is exercising, the Court is not interpreting the provision in a different manner so as to negate the intent of the Legislature. Giving jurisdiction to Chief Judicial Magistrates in non-metropolitan area, who are exercising the same functions as that of Chief Metropolitan Magistrates in metropolitan areas, would not in anyway abrogate or contradict the words used in Section 14 of the SARFAESI Act, thereby causing prejudice to any of the parties. On the other hand, it would hasten the process of rendering assistance to the secured creditors to recover possession of their assets thereby achieving the object for which the SARFAESI Act has been introduced. For the aforesaid reasons, we answer the reference holding that the nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non- metropolitan area and as such the Chief Judicial Magistrate in a non- metropolitan area gets jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002.
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2016 (3) TMI 927
Validity of auction - forgeg Vat clearance certificate submitted - forfeiture of earnest money by invoking the bank guarantee and to debar the petitioner firm from participating in future for a period of 3 years - suppression of material facts - Held that:- The petitioner has not only suppressed the material facts in the petition, but has also not come with clean hands. Though the petitioner knew that the impugned action of invoking the Bank guarantee submitted by him was taken by the respondents as the petitioner was found to have submitted forged Vat clearance certificates, the said fact was not disclosed in the petition. It was only when the respondents filed the reply to the effect that such false affidavits and the false certificates were produced by the petitioner before the respondent-authority in order to procure the tender in question, the petitioner has filed the rejoinder stating that the same was done by his Advocate without his knowledge. The said contention is not believable inasmuch as the petitioner himself had filed the affidavit dated 18.10.2014 (Annexure-3), stating interalia that the Commercial Tax certificates issued by the Dy. Commissioner on 21.08.2014 and 14.10.2014 submitted by him were correct and genuine. When the said two certificates submitted by the petitioner raised suspicion about their genuineness, the respondents had inquired from the concerned authority, who vide the letter dated 14.11.2014 (Annexure-R/5) intimated that no such certificates were issued by him. The respondents thereafter had taken the decision to invoke the bank guarantee furnished by the petitioner towards the bid security. In that view of the matter, the Court is of the opinion that the petitioner being guilty of suppression of material facts and having not come with clean hands, the petition is liable to be dismissed, and is accordingly dismissed with cost of ₹ 50,000/- (rupees fifty thousand), which will be paid by the petitioner to the respondent-Authority within one week. By this order, the stay application and other pending application if any, also stand dismissed.
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9911796707
