Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 31, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Highlights / Catch Notes
Income Tax
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Bad debts not allowed - loss incurred on sale of capital assets is not allowable u/s. 36 (1)(vii) of the Act as bad debt written off as well as business loss u/s. 37 of the Act because it is a capital loss - AT
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Restriction of disallowance - Bogus purchases - Restriction of disallowance @30% of total disallowance addition of 12.5% net profit on bogus purchase is reasonable - AT
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Addition made u/s 68 - once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds - HC
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Addition u/s 40(a)(ia) - the amount paid by the purchaser on account delay in payment of sale price also constitutes a component of sale price and is a part of sale consideration - No TDS required to be deducted - AT
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Transfer pricing adjustments - Selection of comparable - ITES services cannot be further bifurcated or classified as BPO and KPO services for the purpose of comparability analysis. - AT
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The amount of sales tax and other subsidies received by the assessee were revenue in nature and are taxable - AT
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Disallowance of insurance premium on directors life - it is not a business expenditure of the assessee company particularly when the assessee does not consider it as a perquisite in the hands of the concerned director - AT
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If a valid notice u/s 143(2) is issued, then there is no need to issue a fresh notice u/s 143(2) for this reason alone that a revised return has been filed by the assessee after the issue of notice u/s 143(2) - AT
Customs
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Penalty for involvement in export of a consignment of red sanders wood, an item prohibited for export out of India - penalty increased from Rs. 5,00,000/- AT
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Non passing of speaking order - if the adjudicating authority has not followed direction issued by Commissioner (Appeals), the remedy lies in taking up the matter with the jurisdictional Executive Commissioner - appeal dismissed - AT
Corporate Law
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Chapter XII - The Companies (Meetings of Board and its Powers) Rules, 2014. - Notification
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Chapter XI - The Companies (Appointment and Qualification of Directors) Rules, 2014. - Notification
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Chapter IX - The Companies (Accounts) Rules, 2014. - Notification
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Chapter VIII - The Companies (Declaration and Payment of Dividend) Rules, 2014. - Notification
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Chapter VII - The Companies (Management and Administration) Rules, 2014. - Notification
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Chapter VI - The Companies (Registration of Charges) Rules, 2014. - Notification
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Chapter IV - The Companies (Share Capital and Debentures) Rules, 2014 - Notification
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Chapter III - The Companies (Prospectus and Allotment of Securities) Rules, 2014. - Notification
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Chapter II - The Companies (Incorporation) Rules, 2014. - Notification
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Chapter I - The Companies (Specification of definitions details) Rules, 2014. - Notification
Service Tax
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Levy of service tax - outsourcing of this service to third party content providers amounts only to sub-contracting its obligation under the contract - applicant can not escape from its tax liability - AT
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Waiver of pre deposit - NSK Ltd. Japan has supplied their employees and rendered service in the joint venture company who is the applicant and both are separate company - stay granted partly - AT
Central Excise
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CENVAT Credit - input services - Security services were engaged by the appellant due to various incidences of theft of export cargo, at the time of movement of containers is port - credit allowed - AT
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CENVAT Credit - invoices are in the name of their head office - even imposition of penalty of Rs.10,000/- is not called for, but in as much as the respondents have not challenged the said order, by way of filing a separate appeal, the same cannot be set aside - AT
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Evasion of duty - If evasion is permitted to perpetuate that shall be bonus to evaders and economy shall be shacked. Therefore, adjudication sustains in so far as levy of penalty on the respondent is concerned - AT
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Cenvat Credit - Scope of inputs services cover all the services relating not only to erection, installation, commissioning of the plant and machinery, but also the services used in relation to construction of the office premises within the factory. - AT
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Rate of duty - removal of goods in June - Mere fact that the sales invoices were raised in February, 2006, when the goods were exempted, but no removal took place, by itself cannot be held to be shifting the date of removal to February, 2006 - AT
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Denial of Modvat credit - movement of inputs not disputed - the discrepancy, if any, in the invoices issued by the TISCO stockyard will not result in denial of credit to the respondents - AT
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Rectification of mistake - Limitation - order of the Honble High Court does not grant liberty to the department to move such application under Section 35(c)(2) of the Central Excise Act, 1944 even beyond a period of six months - AT
VAT
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If in a Statutory Rule or Statutory Notification, there are two expressions used, one in General Terms and the other in special words, under the rules of interpretation, it has to be understood that the special words were not meant to be included in the general expression. - SC
Case Laws:
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Income Tax
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2014 (3) TMI 899
Bad debts not allowed - Sale of immovable property Written off non receipt of deposit Held that:- revenue contended that it is a capital loss which cannot be claimed either u/s. 37 as business loss or as bad debt u/s.36(1)(vii) of the Act - the assessee had taken possession on immovable property i.e. residential house in earlier years which was sold during the year and claimed loss on account of sale of the immovable property - The assessee had shown these assets in the balance sheet as capital assets - loss incurred on sale of capital assets is not allowable u/s. 36 (1)(vii) of the Act as bad debt written off as well as business loss u/s. 37 of the Act because it is a capital loss - the assessee made deposit for booking car to M/s. Pal Peugot Ltd. which was not recovered from it and deposit was for capital assets - No income against this debt had been disclosed by the assessee in past thus, there is no reason to intervene in the order of the CIT(A) Decided against Assessee.
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2014 (3) TMI 898
Allowability of set off of unabsorbed depreciation Calculation of book profit Held that:- CIT(A) was of the view that the AO clearly allowed the set off brought forward depreciation which was originally set off by the assessee in its return as according to it only this much of book profit were available to it - Revenue accepted that the AO had calculated the book profit as per Section 115JB as per the direction of the CIT(A), which has been accepted by the assessee Decided against Revenue. Sale of scrap and disallowance of expenses Expenses relatable to export turnover Deduction u/s 10B of the Act Held that:- The AO did not make any adjustment for expenses in computing 10B deduction, who has made the adjustment on account of expenditure relatable to any income to which Section 10 applies for the purpose of 115JB which has been held by the CIT(A) against the law and he had allowed the appeal for Section 115JB computation of income the ground does not exist from the order of the AO as well as order of the CIT(A) Decided against Revenue.
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2014 (3) TMI 897
Restriction of disallowance - Bogus purchases - Restriction of disallowance @30% of total disallowance Held that:- The assessee is in trading of steel on wholesale basis - AO verified the purchases and two parties and had denied having been made any sales to the assessee - assessees purchases were found bogus - without purchase, no sales can be made - The assessee has shown GP @ 3.86% during the year - In the trading of steel, the margin is less compared to other business - The assessee is not able to prove that he has obtained the bill from these parties but actual purchase the goods were from other parties from grey market The decision in CIT vs. Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] followed - estimation of profits on bogus purchases in case of trading in steel on wholesale basis and purchases were found bogus but CIT(A) found that these purchases were made from the grey market from other parties - The ld. CIT(A) confirmed the addition on 30%, however, ITAT reduced it to the extent of 12.5% - the assessee held that 12.5% net profit on bogus purchase could be added to the assessees income as a profit element - 12.5% net profit on bogus purchase is reasonable Decided against Revenue.
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2014 (3) TMI 896
Penalty u/s 271(1)(c) of the Act Inaccurate particulars furnished - Held that:- As decided in assessees own case for the previous assessment years, merely an incorrect claim was made by the assessee, it would not tantamount to furnishing of inaccurate particulars so as to make the assessee liable for penalty u/s 271(1)(c) - in such situation no penalty can be levied u/s 271(1)(c) the decision in COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] followed - CIT(A) was of the view that the addition under the head of Shortage expenses, Tanker diesel expenses and Transport Expenses thus, the claim of the Revenue cannot be accepted as assessees claims were merely incorrect which would not tantamount to furnishing inaccurate particulars so as to make the assessee liable for penalty u/s. 271(1)(c) Decided against Revenue.
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2014 (3) TMI 895
Addition made u/s 68 of the Act Unexplained cash credit Held that:- The assessee disclosed the identity and address and particulars of share allocation of the shareholders - all the shareholders were in existence - Only nine shareholders subscribing to about 900 shares out of 6,12,000 shares were not found available at their addresses, and that too, in course of assessment proceedings in the year 1994, i.e., almost 3 years after the allotment - The Tribunal was of the view that there were materials to show that the assessee had disclosed the particulars of the shareholders - The factual findings cannot be interfered with, in appeal -once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds thus, there is no reason to interfere in the findings of the Tribunal Decided against Revenue.
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2014 (3) TMI 894
Rejection for the registering the Kar Vivad Samadhan Scheme Jurisdiction u/s 264 of the Act - The registration was rejected on the ground that on the date of filing the declarations, there is no dispute pending in the eye of law as the revisions filed by them u/s 264 of the Act are not maintainable and are beyond the scope of jurisdiction u/s 264 of the Act - Held that:- The decision in COMMR. OF INCOME TAX, RAJKOT Versus SHATRUSAILYA DIGVIJAYSINGH JADEJA [2005 (9) TMI 362 - SUPREME COURT OF INDIA] followed - while processing the declarations filed by the assessees under the Scheme, there is no scope for the designated authority to consider the object and motive of a particular declarant in filing the declarations in terms of the Scheme - What all the designated authority is required to consider is that whether the petitioners are eligible to file such declarations in terms of the Scheme, and if so, the designated authority is left with no option but to process the same - the designated authority is directed to process the declarations filed by the petitioners in terms of the K.V.S.S. and pass appropriate orders Decided in favour of Assessee.
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2014 (3) TMI 893
Allowability of deduction u/s 80IB(10) of the Act Building not constructed as per plan sanctioned - Whether the Tribunal is justified in law in allowing the claim for deduction u/s 801B(10) of the Act Held that:- Tribunal was of the view that as the provisions of Section 80IB(10), there is no bar for development to developing Housing Project on approved site - the approved site may be in the name of different persons who has sold this approved project to another developer and who within the time-limit prescribed u/s. 80IB(10) of the Act has completed the project - the Tribunal confirmed that the claim of assessee - a buyer in law is a representative of the seller - the sanctioned plan obtained by the seller naturally ensures to the benefit of his representative - thus, the order of the Tribunal is upheld Decided against Revenue.
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2014 (3) TMI 892
Addition u/s 40(a)(ia) of the Act - TDS on interest paid for delayed payment of purchase consideration to raw material suppliers located in Singapore and Malaysia - Details of interest portion contained in purchase invoice not considered Held that:- The decision in CIT Vs. Vidyut Corporation [2010 (4) TMI 229 - BOMBAY HIGH COURT] followed - the amount paid by the purchaser on account delay in payment of sale price also constitutes a component of sale price and is a part of sale consideration - there was no infirmity in the order of the CIT(A) in deleting the disallowance made by the AO u/s 40(a)(ia) of the Act the order of the CIT(A) sustained - Decided against Revenue. Disallowance of interest u/s 36(1)(iii) on the ground that the assessee failed to establish any commercial expediency and as the assessee diverted the borrowed funds to the related parties as interest free advances - OD account increased - Assessee contended that that own funds were given to sister concerns Held that:- The AO was silent on the interest free funds received by the assessee from its sister concerns if the assessee has got surplus funds which do not carry interest and also as other borrowals like bank overdraft etc., the presumption is that the interest free and own funds are advanced to the sister concerns thus, the charging of notional interest does not arise Relying upon Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] - if there were funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of interest free funds generated or available with the company, If the interest free funds were sufficient to meet the investments - Since the orders of the revenue does not contain the fact on the existence of the excess or own and interest free funds of the assessee - AO is required to study the funds position before the making of interest free advances - The AO shall also apply the 'principle of presumption' in correct perspective and in accordance with the law in force thus, the matter is remitted back to the AO for examination of the fund flow statement Decided in favour of Revenue.
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2014 (3) TMI 891
Transfer pricing adjustments - Selection of comparable - Whether a company performing KPO functions should be considered as comparable or not providing back office support services to their overseas associated enterprises - Held that:- all the entities providing IT enabled services can be taken as potential comparables by applying a broad functionality test - further dissection or classification of ITES services can be done depending on the facts and circumstances of each case so as to select the entities having a relatively equal degree of comparability. Keeping in view the large number of services falling under ITES, the difficulty in classifying these services either as low end BPO services or high end KPO services, the difficulty in creating a third category of entities falling in between BPO and KPO and lesser degree of comparability even within BPO and KPO sector, we are of the view that the ITES services cannot be further bifurcated or classified as BPO and KPO services for the purpose of comparability analysis. If the assessee company, on the basis of its own functional profile, is found to have provided to its AE the low-end back office support services like voice or data processing services as a whole or substantially the whole, the companies providing mainly high-end services by using their specialized knowledge and domain expertise cannot be considered as comparables. If the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relatively equal degree of comparability and the said entities cannot be taken as comparables for the purpose of determining ALP of the transactions of the assessee company with its AEs. We, therefore, direct that these two entities be excluded from the list of 10 comparables finally taken by the AO/TPO as per the direction of the DRP. Selection of comparable Whether a company earning high profit margin to be included in the list of comparable Held that:- the answer to this question will depend on the facts and circumstances of each case inasmuch as potential comparable earning abnormally high profit margin should trigger further investigation in order to establish whether it can be taken as comparable or not. Such investigation should be to ascertain as to whether earning of high profit reflects a normal business condition or whether it is the result of some abnormal conditions prevailing in the relevant year. The profit margin earned by such entity in the immediately preceding year/s may also be taken into consideration to find out whether the high profit margin represents the normal business trend. If it is found on such investigation that the high margin profit making company does not satisfy the comparability analysis and or the high profit margin earned by it does not reflect the normal business condition, we are of the view that the high profit margin making entity should not be included in the list of comparable for the purpose of determining the arm's length price of an international transaction. Otherwise, the entity satisfying the comparability analysis with its high profit margin reflecting normal business condition should not be rejected solely on the basis of such abnormal high profit margin. - Decided partly in favour of Assessee.
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2014 (3) TMI 890
Deduction u/s 80P(2)(a)(i) of the Act Sale of Govt. securities Held that:- The assessee has a valid licence issued by the RBI for conducting banking business and as per the guidelines issued by the RBI an Urban Co-operative Bank is required to maintain investment in certain securities as per RBI guidelines that income derived from the funds was so placed arose from the business carried on by it - The placement of such funds being imperative for purpose of carrying on the banking business, the income derived therefrom would be income from the assessees business Relying upon CIT vs. Nawanshahar Central Co-operative Bank Ltd. [2005 (8) TMI 28 - SUPREME COURT OF INDIA] - any income derived from funds so place arose from the business carried on by it and the assessee had not, by reason of section 80P(2)(a)(i), to pay income-tax Decided against Revenue.
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2014 (3) TMI 889
Deletion of penalty u/s 271(1)(c) of the Act Scope of saving provisions of section 273 of the act - Held that:- The first appellate authority has passed a well-reasoned order by following the order in the case of CIT v. Reliance Petro Products Ltd. [2010 (3) TMI 80 - SUPREME COURT] - by any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars - A mere making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars - the assessee has accepted the addition made by the revenue authority and made the payment of tax also - the assessee has not filed its false claim in the return of income it may be incorrect claim but not false claim thus, the penalty is not sustainable - the order of the FAA upheld Decided against Revenue.
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2014 (3) TMI 888
Claim for exemption on account of Subsidies - Sales tax, entry tax and electricity duty subsidy Held that:- The decision in Sahney Steel And Press Works Limited And Others Versus Commissioner of Income-Tax [1997 (9) TMI 3 - SUPREME Court] and assessees own case for the previous assessment year has been followed - If payments in the nature of subsidy from public funds are made to the assessee to assist him in carrying on his trade or business, they are trade receipts - The character of the subsidy in the hands of the recipient-whether revenue or capital-will have to be determined, having regard to the purpose for which the subsidy is given - The source of the fund is quite immaterial - if the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes - But if monies are given to the assessee for assisting him in carrying out the business operations and the money is given only after and conditional upon commencement of production, such subsidies must be treated as assistance for the purpose of the trade. As per the scheme of the incentive of Madhya Pradesh Government, sales tax subsidy is taxable - The view taken by the ITAT in assessee's own case for AY 2004-05 is similar thus, the sales tax and other subsidies provided by Madhya Pradesh Government were revenue receipt - the amount of sales tax and other subsidies received by the assessee were revenue in nature Decided against Assessee. Confirmation of adhoc disallowance Expenses incurred for non-business purposes Held that:- As decided in assessees own case for the previous assessment year, the expenditure relatable to trips made for non-business purposes could only be disallowed by the Department - the entire disallowance for the trips undertaken by the assessee was for non-business purposes and the whole disallowance was sustained the AO has mentioned that the Managing Director of the company has been using the said plane for purposes other than the business of the company - instead of working the disallowance on the basis of such trips which were for non-business purposes, he made an adhoc disallowance - Complete details of aero plane expenses with the purpose of each visit have not been furnished thus, the matter is remitted back to the AO for working of disallowance Decided in favour of Assessee. Deletion made on account of front end fee Nature of expenses capital or revenue Held that:- CIT(A) deleted the disallowance made by the AO being satisfied with the submission made in this regard by the assessee - The decision in India Cements Limited Versus Commissioner Of Income-Tax, Madras [1965 (12) TMI 22 - SUPREME Court] followed - front end fees was like processing fees for signing loan agreement and was a revenue expenditure thus, there is no reason to interfere in the findings of the CIT(A) decided against Revenue. Deletion made on account of interest Held that:- The decision in DEPUTY COMMISSIONER OF INCOME-TAX Versus CORE HEALTH CARE LTD. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] followed - CIT(A) has rightly allowed deduction for interest paid to UTI Bank for non-convertible debentures utilized for the purposes of business - the setting up of 55 MW power project at Raigarh was part of expansion of the existing business of the assessee has not been satisfactorily rebutted by the Revenue thus, the order of the CIT(A) upheld Decided against Revenue. Deletion made of consultancy charges paid to price water house Held that:- The decision in HPCL Vs. DCIT [2004 (8) TMI 321 - ITAT BOMBAY-F] followed - just because an expenditure was voluntary in nature and was not forced on the assessee by a statutory obligation, it could not cease to be a business expenditure - It is evolved over a period of time to include in its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular thus, the findings of the CIT(A) upheld Decided against Revenue. Deletion made of acquisition of capital assets Held that:- CIT(A) was of the view that the expenditure was attributable to current repairs and there had been no increase in capacity of the asset and hence, the expenditure is revenue in nature the decision in Empire Jute Co. Ltd. Vs. CIT [1980 (5) TMI 1 - SUPREME Court] followed - there is no increase in the production capacity the CIT(A) has rightly come to the conclusion that the claimed expenditure was revenue in nature Decided against Revenue.
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2014 (3) TMI 887
Disallowance of telephone expenses Held that:- The decision in Sayaji Iron And Engg. Co. Versus Commissioner of Income Tax [2001 (7) TMI 70 - GUJARAT High Court] followed - no disallowance is called for in the hands of the assessee company on account of use of telephone by the directors although the same may be considered as a perquisite in the hands of the concerned director because the telephone even if installed at the residence of the director can be used for both, official and personal purposes thus, there is no reason to interfere in the order of CIT(A) Decided against Revenue. Deletion of disallowance of travelling expenses Held that:- The decision in Sayaji Iron And Engg. Co. Versus Commissioner of Income Tax [2001 (7) TMI 70 - GUJARAT High Court] followed - no disallowance is called for in the hands of the assessee company on alleged personal use of some expenses by the directors although the same can be considered in the hands of the concerned directors as perquisite thus, there is no reason to interfere in the order of CIT(A) Decided against Revenue. Deletion of disallowance of repairs and maintenance of building Held that:- CIT(A) was of the view that the disallowance was made by the AO on the basis of his doubt that the payment of this amount to M/s Explorer Associates is capital in nature but the AO has not given any specific and definite finding that it was an expenditure on capital account the decision in CIT vs. Hotel Control Pvt. Ltd. 2003 (10) TMI 31 - UTTARANCHAL High Court] followed Revenue could not controvert this finding of CIT(A) thus, there is no reason to interfere in the order of CIT(A) Decided against Revenue. Deletion of disallowance of enhanced payment of rent Held that:- CIT(A) was of the view that the rate of rent paid by the assessee is less than the rent paid by the bank in same vicinity - CIT(A) has given a finding that the reference of section 40A(2)(b) of the Act is totally misplaced under these circumstances Revenue could not controvert this finding of learned CIT(A) - thus, there is no reason to interfere in the order of CIT(A) Decided against Revenue. Deletion of disallowance on estimate basis - Advertising and promotion expenses Held that:- CIT(A) was of the view that the expenditure relates to business purposes and the books of account are audited u/s 44AB and it is also not a case where personal expenditure is made on this account - the addition was made without any basis and also without pointing out any discrepancy the addition is uncalled for because books of account, bills and vouchers are produced before the Assessing Officer during the assessment and onus for claiming the expenditure has been discharged by the assessee - Revenue could not controvert this finding of learned CIT(A) - thus, there is no reason to interfere in the order of CIT(A) Decided against Revenue. Disallowance out of repairs and maintenance expenses Held that:- The decision in Sayaji Iron And Engg. Co. Versus Commissioner of Income Tax [2001 (7) TMI 70 - GUJARAT High Court] followed - no disallowance is called for on the basis of personal use of vehicle by the directors although the same may be considered as a perquisite in the hands of the concerned director thus, the disallowance is set aside Decided in favour of Assessee. Disallowance of insurance premium Premium paid on the life of directors Held that:- CIT(A) was of the view that the disallowance was as per the Tax Audit Report and no specific reply has been made on this issue - it was seen that copy of Form 12BA is also available, which is a statement showing particulars of perquisites etc. as per Rule 26A the value of the perquisite on account of insurance premium is not included in the same because the only perquisite shown by the assessee is regarding accommodation and car provided to the directors - it may not be possible for the assessee to include the perquisite value for the same in Form 12BA but insurance premium has been paid separately by the assessee - the benefit out of insurance premium will accrue to the director of the assessee company and not to the assessee company - the liability was of the concerned director to pay insurance premium on his life - it is not a business expenditure of the assessee company particularly when the assessee does not consider it as a perquisite in the hands of the concerned director thus, there is no reason to interfere in the order of the CIT(A) Decided against Assessee. Disallowance of electricity expenses Electric consumption at the residence of the directors Held that:- Electricity charges are specifically paid at the residence of a specific director and therefore, value of the same should be added by the assessee company in the perquisite of the concerned director but this was not done by the assessee company the assessee company has not treated it as perquisite in the hands of the director thus, it cannot be considered as a business expenditure of the assessee company thus, there is no reason to interfere in the order CIT(A) decided against Assessee. Deletion made u/s 14A of the Act Subscription amount not invested in mutual funds and shares Held that:- It is by now a settled position of law that provisions of Rule 8D are not applicable prior to assessment year 2008-09 and since the assessment year involved is 2006-2007, Rule 8D is not applicable in the present case The decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - in spite of this that Rule 8D is not applicable prior to AY 2008 - 09, reasonable disallowance should be made by the Assessing Officer - Since the AO made the disallowance by invoking the provisions of Rule 8D the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Deduction u/s 35D of the Act Held that:- The decision in Goetze (India) Ltd. Vs Commissioner of Income-tax [2006 (3) TMI 75 - SUPREME Court] followed - even if the claim was made by the assessee without filing revised return of income, the AO cannot consider the claim but the same may be considered by CIT(A) or by the Tribunal thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Validity of assessment proceedings Held that:- The grounds are technical grounds regarding validity of the assessment proceedings but no such ground was raised by the assessee before CIT(A) but, it being a legal issue, the same could have been raised by the assessee by way of additional ground but the assessee has not done so - from the conduct of the assessee, it comes out that he has nothing to argue on the legal issue. If the claim of the assessee is accepted that separate notice is required to be issued u/s 143 (2) after filing of each revised return, it will amount to accepting the second and subsequent revised returns are not rectifying the original return and in that case, such second and subsequent revised returns are to be held to be invalid - there will not be any need to issue any fresh notice u/s 143 (2) - if a valid notice u/s 143 (2) is issued, then there is no need to issue a fresh notice u/s 143 (2) for this reason alone that a revised return has been filed by the assessee after the issue of notice u/s 143 (2) - this is not the case of the assessee that no valid notice u/s 143 (2) was issued thus, there is no legal ground involved Decided against Assessee.
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2014 (3) TMI 886
Determination of the correct base in the PLI Held that:- The decision in Li & Fung (India) Pvt. Ltd. Vs CIT [2014 (1) TMI 501 - DELHI HIGH COURT] followed - the FOB value of goods between the third party enterprises, sourced through the assessee, was not in accordance with the law - there remains no doubt whatsoever that the base of 'total cost' as adopted by the TPO and approved by the DRP in considering the FOB value of goods between the third party enterprises cannot be accepted thus, the order is set aside and the 'total cost' being the denominator in the PLI of OP/TC, has to be taken as the costs incurred by the assessee and not the FOB value of goods between third party enterprises sourced through the assessee - the tested party should be the assessee and not it's A.E. Transfer pricing adjustment on account of ALP International transaction of provision of sourcing support services Services provided to AE - Held that:- The 'total cost' in the denominator will stand changed to the 'total cost' incurred by the assessee instead of the FOB value of goods between third party enterprises - necessary details for the determination of ALP with the correct base of the assessee as well as comparables are not readily available on record thus, the matter is remitted back to the AO for fresh adjudication. Depreciation of computer peripherals 15% OR 60% - Held that:- The decision in DCIT Vs Datacraft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] followed - whether a particular machine can be classified as a computer or not, the predominant function, usage and common parlance understanding, would have to be taken into account - the authorities below were not justified in reducing the rate of depreciation on computer peripherals Decided partly in favour of Assessee.
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2014 (3) TMI 885
Addition made u/s 92CA(A) of the Act Transfer pricing adjustment Held that:- There is no worthwhile discussion about the objections taken by the assessee in Form No. 35A - it is summary of the view canvassed by the AO/TPO for making addition without properly noting or dealing with the objections raised by the assessee - if the assessees similar transactions with non-Associated enterprises are available then it is always better to go by such internally comparable uncontrolled transactions for benchmarking the price charged/paid from/to its associated enterprises in comparable transactions- At the same time, it is relevant to observe that if complete data of such comparable uncontrolled transaction is not available, then the Revenue is at liberty to discard the CUP method and resort to any other suitable method - assessee contended that it has provided full details to satisfy the authorities below as regards the application of CUP method and hence the matter should be restored to the file of TPO instead of DRP, who had also failed to appreciate the contentions made before him - thus, the order set aside and the matter remitted back to the TPO Decided in favour of Assessee.
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2014 (3) TMI 884
Deletion made u/s 68 of the Act Unexplained cash u/s 68 of the Act Held that:- The assessee has given the detailed statement of withdrawals and deposits in his bank account - the deposits were made out of the cash in hand from earlier withdrawals as well loans and advances etc. - Even the assessee has also explained the necessity and requirement of making such transactions - when the deposits in the bank accounts are made from the cash balance available to the assessee in its books of accounts, addition under section 68 cannot be made irrespective of the time between the earlier withdrawal from the bank and such deposits - the assessee has established the correlation between the entries of withdrawals and that of deposits. Merely because the number of transactions was more, that itself is not sufficient to hold that the same has arisen out of the undisclosed income of the assessee especially when the assessee has explained the reasons and requirements of making such transactions further corroborated with books of accounts, bank statements and other relevant documents - The CIT(A) has thoroughly examined and discussed the facts and circumstances of the case and has passed a well-reasoned order deleting the additions made by the AO u/s 68 of the Act thus, there is no infirmity of the order of the CIT(A) Decided against Revenue.
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Customs
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2014 (3) TMI 883
Penalty for involvement in export of a consignment of red sanders wood, an item prohibited for export out of India - Revokation of CHA licence - Held that:- The argument that section 113 will apply to only goods attempted to be exported and will not apply to this case because the attempt was successful is a very illogical argument. A successful export takes place only after attempt to export and if the goods were liable to confiscation for attempt to export it can be confiscated even after successful attempt so long as the goods could be brought back which has happened in this case. At any rate the attempt was not fully successful because the goods were brought back. Acting as a proxy for non-traceable persons and allowing the laws of the country to be flouted is not a matter to be encouraged. An argument that IE codes are assigned so that the code can be rented out for consideration is not an acceptable argument at all. By his own statement two consignments were exported in the past also. Such persons trying to enrich themselves by taking benefit of prohibitions on export, needs to be dealt with severely - Penalty imposed is low considering the value of goods. - penalty increased from ₹ 3,00,000/- to ₹ 5,00,000/- Penalty on CHA and revocation of his licence - Held that:- Since he was not taking even the minimum care to avoid this type of incident from happening there is an omission on his part which is punishable under section 114 (i) of the Customs Act, 1962. Such an approach needs to be dealt with severely and the penalty as reduced by the Commissioner (Appeal) is not commensurate with his omissions of duties cast on him by CHALR, 2004. - If the omissions of duties cast on him have rendered any goods liable to confiscation penalty under section 114 (i) is justified. - penalty increased from ₹ 3,00,000/- to ₹ 5,00,000/- Penalty on G. Ravi, Proprietor of M/s. Deepak Logistics, Tuticorin. Shri Ravi had obtained an H card (Identity cum Authorization card) issued under Regulation 19(6) of CHLAR 2004 - Held that:- Shri Ravi is a person who signed Annexure-A form for export of goods by Shri. George using blank signed forms given by Shri Rama Theena Thayalan. - he was aware of the manipulation of the contents in the container. - . In the case of economic offences, non-compliance with statutory obligations resulting in loss to the Government itself is punishable. - penalty increased from ₹ 2,00,000/- to ₹ 5,00,000/- Decided against all the applicants and partly in favor of revenue.
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2014 (3) TMI 882
Non passing of speaking order - Inspite of direction of Lower appellate authority adjudicating authority did not pass any speaking order - Held that:- there is no fault in lower appellate authority directing the adjudicating authority to pass a speaking order with regard to denial of benefit of exemption claimed by the appellant in Bills of Entry. If the adjudicating authority has not followed this direction, the remedy lies in taking up the matter with the jurisdictional Executive Commissioner. This Tribunal being an appellate authority does not have authority to control the functioning of the customs officer in a particular commissionerate - appeals are not maintainable - Decided against assessee.
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2014 (3) TMI 881
Seizure of prohibited item being - smuggling of goods - source of procurement - Burden of proof - appellant is a trader of polyester yarn - Held that:- in this case although the Adjudication order has been passed by the Additional Commissioner but at the time of review, the Joint Commissioner was appointed in place of Additional Commissioner. As per Section 35E(2), the appeal is required to be filed by such authority which has passed the Adjudication order. In this case, the direction to file an appeal was given to the authority which has passed the Adjudication order - appellant is able to prove that they have procured the goods through proper channel. Further, investigation revealed that the supplier of the goods is not procured the goods through proper channel but no proceedings have been initiated against the supplier. In these circumstances, the proceeding against the appellant is not sustainable as they have been able to discharge the burden of proof that they have procured the goods through licit means - Decided in favour of assessee.
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Service Tax
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2014 (3) TMI 904
Demand of service tax - Mandap Keeper and Convention Service - Held that:- Considering the fact that, in appellant's own case, for the previous period, this Tribunal has granted unconditional waiver from pre-deposit of the service tax liability on room charges and also considering the decision of this tribunal in the case of Rambagh Palace Hotels Pvt. Ltd. (2013 (12) TMI 556 - CESTAT NEW DELHI), the appellant has made out a prima facie case for grant of stay. Accordingly, we grant waiver from pre-deposit of the adjudicated liability and stay recovery thereof during the pendency of the appeal - Stay granted.
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2014 (3) TMI 903
Classification of service - Video production agency service - Invocation of extended period of limitation - appellant contended that it has sub-contracted all the services and acted merely as interface between Discovery Asia INC, USA; and video content providers in India - Held that:- With regard to classification of the service provided, we are prima facie of the view that since under the agreement between the Discovery Asia and the petitioner, the obligation of dubbing, editing and executing all necessary acts to customize Discovery Asia programmes in accordance with its directions is that of the petitioner; the rendition of this service is the essence of this contractual obligation; and the outsourcing of this service to third party content providers amounts only to sub-contracting its obligation under the contract. Therefore there appears no escape from the liability to tax for having provided the video production agency service in relation to the video tape production under Section 65(105)(zi) - the case is evenly balanced, both on the classification of the taxable service aspect and on validity of invoking the extended period of limitation - Condition stay granted.
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2014 (3) TMI 902
Waiver of pre-deposit of tax - Membership of Club or Association Service - Mandap Keeper Service - Held that:- Applicant has made out a prima facie case for waiver of pre-deposit in respect of the demand of service tax on the fees paid by members to a "Club or Association" - prima facie, the applicant is liable to pay tax on the "Mandap Keeper Service" used by outsiders. The applicant already paid a sum of Rs.1,11,638/-. Accordingly, we direct the applicant to deposit a further amount of Rs.1,00,000 within a period of six weeks from today - Conditional stay granted.
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2014 (3) TMI 901
Waiver of pre deposit - Manpower Recruitment and Supply Agency Service - Held that:- Commissioner had given a detailed finding that there is no employer employee relationship between the applicant-company and the Japanese company. We have perused the clauses as reproduced in the adjudication order. In the present case, we find that M/s. NSK Ltd. Japan has supplied their employees and rendered service in the joint venture company who is the applicant and both are separate company under the Act. So, the submission of the learned counsel that there is no relation of service provider and client in the joint venture company would be examined after going through the agreement in detail at the time of appeal hearing. The decision of the Honble Supreme Court in the case of Eli Lilly & Co. (2009 (3) TMI 33 - SUPREME COURT ) is in the context of deduction of tax at source under the Income Tax Act. Prima facie, we find that there is a categorical observation of the Commissioner that the applicant paid the amount to M/s. NSK Ltd. Japan for the service rendered by its employees. Hence the applicant failed to make out a prima facie case for waiver of entire amount of tax and penalty along with interest - Conditional stay granted.
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Central Excise
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2014 (3) TMI 907
CENVAT Credit - Security services - Held that:- security services are engaged by the respondent in respect of movement of finished goods from factory premises to the port in container. It is also undisputed that such security services were engaged by the appellant due to various incidences of theft of export cargo, at the time of movement of containers is port. On this factual matrix, I find that the security services engaged by the appellant would be required in order to safe-guard the business interest and will be covered under the provisions of Rule 2(l) of CENVAT Credit Rules, 2004 which defines the input services - in respect of export goods, the place of removal is considered as port and if that be so, any expenses or tax till the goods reach the place of export, the benefit of CENVAT Credit has to be extended to the respondent - respondent has made out a case for availment of credit of such Service Tax paid on the security services - Decided against Revenue.
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2014 (3) TMI 880
Waiver of pre deposit - Whether in facts & circumstances of the present case the Appellate Tribunal is correct in directing the Appellant to deposit ₹ 40 lacs as a pre-condition to hear the matter on merits when the entire issue is covered by the ruling of coordinate bench in Appellant's own case for the previous period - Held that:- Appellant has been required to predeposit ₹ 40 lacs on demand of duty and penalty of ₹ 3 crores which is about 13.33% which cannot be said to be unreasonable. Even otherwise, from the argument of the learned counsel for the appellant, it would emerge that on combined liability of two periods of ₹ 8 crores, the appellant would be depositing ₹ 50 lacs only which cannot be held to be excessive in any manner. The quantum required to be pre-deposited would vary if the total demand increases - no substantial question of law arises - However, time period to make pre deposit extended - Decided partly in favour of assessee.
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2014 (3) TMI 879
Denial of CENVAT Credit - Denial on the ground that the invoices are in the name of their head office - Commissioner (Appeals) held that the respondents would be entitled to the credit of commission paid to the sole selling agents, where the paper was excisable - However, demand of which the respondents had already reversed was upheld - Held that:- no infirmity can be found in the order of the Commissioner (Appeals). However, as regards the contention of the Revenue is that admittedly CENVAT credit of Rs.5,52,226/- stands denied to the respondents, who have also not challenged the same, penalty to the extent of 100% should have been imposed. As such, the prayer to enhance the penalty. Entire credit was taken by the respondent on statutory record and they were filing the returns to the Department. In as much as the issue involved is of legal interpretation, no mala fide can be attributed to the respondents so as to impose 100% penalty upon them. In my views, even imposition of penalty of Rs.10,000/- is not called for, but in as much as the respondents have not challenged the said order, by way of filing a separate appeal, the same cannot be set aside - Decided against Revenue.
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2014 (3) TMI 878
Denial of refund claim - Unjust enrichment - Refund sanctioned by the Commissioner (Appeals) - Held that:- appellants have produced letters from their customers who have certified that they have paid the CVD amount calculated @ ₹ 30 per Sq Meter and not @ 16% Adv. In this situation the tribunal decision relied upon by the appellants in the case of Alstom Ltd. vs. CCE Allahabad - [2004 (4) TMI 127 - CESTAT, NEW DELHI] is relevant. In the said decision the Tribunal held that bar of unjust enrichment is not applicable when buyers never paid the duty amount. I therefore find that the appellants have produced sufficient documentary evidence to show that the incidence of duty has not been passed onto the customers. Also the adjudicating authority has mentioned about the accounting treatment given to duty paid on expenditure and not as receivable and observed that hence there is chance of it being passed on indirectly. - Commissioner (Appeals) has examined the issue of bar of unjust enrichment on basis of evidence therefore, I hold that the respondent has passed of unjust enrichment as they have not passed the duty burden on the customers - Decided against Revenue.
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2014 (3) TMI 877
Evasion of duty - Movement of the goods covered by parallel invoices - Held that:- The manner how transactions have been made proved oblique motive and connivance of the buyer respondent. The respondent was one of the beneficiary of clandestinely removed goods by manufacturer. Secrecy hides conspiracy and ill design of committer comes to see the light when that is unearthed. An offender voluntarily reveals secrecy rarely. But generally that is demonstrated by governing facts and attendant circumstances of the case. The goods escaping duty from the end of the manufacturer causing evasion is bound to escape in the hands of buyer being unaccounted. If evasion is permitted to perpetuate that shall be bonus to evaders and economy shall be shacked. Therefore, adjudication sustains in so far as levy of penalty on the respondent is concerned - Decided in favour of Revenue.
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2014 (3) TMI 876
Availment of CENVAT Credit - Erection, installation, and commissioning service - Held that:- As regards, the service for civil work relating to setting up of the factory, we find that during the period of dispute, the definition of input service, as given in Rule 2 (l) of Cenvat Credit Rules, specifically included "services used in relation to setting up, modernization, renovation or repair of a factory, premises of provider of output service or an office related to such premises or factory". The above expression is very vide and would cover all the services relating not only to erection, installation, commissioning of the plant and machinery, but also the services used in relation to construction of the office premises within the factory. services, in question, are covered by the definition of input service. Since, the factory has been set up for manufacture of final products - automobiles components, the service, in question, has to be treated as an input services used in or in relation to manufacture of final product - the auto components and would be eligible for Cenvat credit - Decided in favour of assessee.
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2014 (3) TMI 875
Duty demand - Date of clearance of goods - Lecithin was exempted till 28-2-2006 and became dutiable from 1-3-2006 with issuance Notification No. 21/2006, dated 1-3-2006, vide which earlier exemption Notification No. 115/75, dated 30-4-1975 was rescinded - Appellant sold Lecithin in February, 2006 by way of commercial invoice - However, it was actually cleared by them in the month of June and July, 2006 - Held that:- rate of duty applicable to the excisable goods shall be the rate in force on the date when such goods are removed from the factory. Inasmuch as admittedly the said goods were removed from the factory in the month of June and July, 2006 when they attract duty, we are of the view that confirmation of demand of duty against the appellant is in accordance with law. Mere fact that the sales invoices were raised in February, 2006, when the goods were exempted, but no removal took place, by itself cannot be held to be shifting the date of removal to February, 2006. In terms of said Rule, it is the date of actual and physical removal of goods from the factory which has to be taken into consideration. As such, we find no possible ground to interfere in the order of the authorities below - Penalty set aside - Decided partly in favour of assessee.
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2014 (3) TMI 874
Denial of Modvat credit - vehicle nos. mentioned in the invoices issued by TISCO are registered as scooters, tractors and motorcycles which were not capable to transport quantum of such huge scrap shown in the respective invoice - Commissioner (Appeals) set aside demand - Held that:- there is no dispute about the correctness of the invoices issued by TISCO for their stockyard. Further the invoices issued by the dealers showing movement of the goods from their place to the respondent are also not being disputed. The only dispute is about the correct vehicle nos. mentioned in the invoices issued by TISCO. Revenue has also not disputed about receipt of the inputs of the appellant. In the absence of any allegation as regards the invoices issued by the dealers showing movement of the inputs from his place to the assessees factory, I am of the view that the discrepancy, if any, in the invoices issued by the TISCO stockyard will not result in denial of credit to the respondents - Decided against Revenue.
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2014 (3) TMI 873
Eligibility to credit in respect of the impugned goods such as MS angles, channels etc. - Inputs or Capital goods - Held that:- appellants have claimed that they have used the impugned goods for manufacturing sand plant, which in turn is used for making sand moulds, which in turn is further used for manufacturing various castings. If the sand plant can be considered as machinery and capital goods, the appellants would have been entitled to input duty credit in respect of the impugned goods utilized for making a sand plant. However, there is a categorical finding by the original authority in his order that the sand plant is embedded to earth and is immovable and as such the same cannot either be considered as goods or as capital goods. Hence, the claim of the appellants for Cenvat credit has been rejected. The reasoning given by the original authority is sound and the same requires no interference - However penalty is waived - Decided partly in favour of assessee.
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2014 (3) TMI 872
Benefit of Notification No. 34/97 in terms of DEPB scrip - Procurement of DEPB scrip on the strength of forged/substituted shipping bills - Held that:- Admittedly the export had taken place when the DEPB scrip were not cancelled by the DGFT and were still valid in the eyes of law. There is also no finding of any aiding and abating Beni Export by the appellant. The portion of the order of the adjudicating authority dropping the proposal to impose penalty does not stand appealed against by the Revenue - demand, having been raised by invoking the longer period of limitation is not sustainable. The same is accordingly set aside - Decided in favour of assessee.
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2014 (3) TMI 871
Waiver of pre deposit - Interpretation of Section 93 of the Finance Act, 2004 - Assessee contends that cement cess and dolomite cess have been levied not by the Ministry of Finance (Department of Revenue) but by the Ministry of Industrial Development and Ministry of Labour respectively. Therefore said amount of cess could not have been added to the aggregate amount for the purpose of calculation of education cess - Held that:- on prima facie reading of Section 93 we find that there is merit in the submission made by the learned Counsel for the appellant. Accordingly, we hold that it is a fit case for waiver of the condition of pre-deposit of duty, interest and penalty - Stay granted.
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2014 (3) TMI 870
Shortage of stock - physical verification of goods - Held that:- No doubt preponderance of probability may come to the rescue of revenue but to take shelter of such principle there should be circumstantial evidence and precision in the inquiry demonstrating the real criteria adopted for determining the shortage. No conclusion should flow on mere surmises or assumption or presumption. Whim and capies being alien to justice, the present impugned order has no leg to stand - Decided in favour of assessee.
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2014 (3) TMI 869
Penalty - Commissioner reduced penalty - Availment of CENAVT Credit - Held that:- show cause notice demanding recovery of cenvat credit was issued under Rule 12 of Cenvat Credit Rules read with Section 11A of the Central Excise Act. The penalty under Rule 15(1) provides that any person taking cenvat credit in respect of inputs or capital goods wrongly or in contravention of any of the provisions of the rules will be liable to penalty not existing the duty on the excisable goods of which any contravention has been committed or Rs. 10,000/- (Rs. 2,000/-) w.e.f. 11-5-07 whichever is greater. Therefore the quantum of penalty leviable will be up to the duty on the excisable goods involved or Rs. 10,000/- or (Rs. 2,000/-) whichever is greater. I find that as per the Order-in-Original the penalty has been imposed under Rule 13(2) [now Rule 15(2)] of Cenvat Credit Rules, 2004 read with Section 11AC of the Act. Rule 15(2) is para materia with the erstwhile Rule 57-I(4) of the Modvat Scheme. Even if a harmonious reading of Rule 15(1) and 15(2) of Rules the contention of the respondent that the penalty cannot be less than the excise duty involved will not find any support legally - Decided against Revenue.
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2014 (3) TMI 868
Disallowance of CENVAT Credit - Simultaneous claim of depreciation under the provisions of the Income-tax Act - Held that:- entire amount of Rs. 5,16,024/- availed as credit was reduced by the assessees from the cost of fixed assets for the purpose of claiming depreciation under the Income-tax Act, 1961 - Rs. 4,16,528/- was reduced from the cost of fixed assets in the year ending 31st March, 2004 and a sum of Rs. 99,496/- was reduced for the purpose of claiming depreciation in the year ending 31st March, 2006 - assessees are entitled to credit of Rs. 1,33,578/-, set aside the impugned order denying credit and imposing penalty, and allow the appeal of the assessees with consequential relief, if any, due to the assessees in accordance with law - Decided against Revenue.
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2014 (3) TMI 867
Rectification of mistake - Limitation - Held that:- order of the Honble High Court does not grant liberty to the department to move such application under Section 35(c)(2) of the Central Excise Act, 1944 even beyond a period of six months. Liberty to take appropriate remedy would not imply that the Honble High Court had condoned the delay in filing such application in the absence of any specific direction by the High Court in that regard. Mere grant of liberty to take appropriate remedy does not amount to extend the period of limitation to file the application for rectification of mistake - the application having been filed beyond the period of limitation is liable to be dismissed - Decided against Revenue.
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CST, VAT & Sales Tax
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2014 (3) TMI 906
Liability to pay tax and interest - Demand of interest for not depositing the tax within deferred Held that:- While taking over the possession of the Assessee`s unit by the M/s Universal Dairy Products Private Limited, the petitioner's unit was actually closed down on 23.12.2002 - The Commissioner u/s 8(2-A) & 4-A of the Act r/w Rule 43 under U.P. Trade Tax Rules, 1948 allowed the deferment in place of exemption in tax on the manufactured products during 31.10.1996 to 22.12.2002 with direction to deposit the admitted tax in terms of Rule 43(4) (b) within three months from 23.12.2002, the day on which the unit was closed down - It was also mentioned in the order itself that on account of closure of business on 23.12.2002, the facility of deferment automatically comes to an end and tax amount ought to have deposited. The Assessing Authority has already granted the benefit of deferment of all the previous years till the date of closure of the unit and only asked the interest after three months from the date of closure of the unit till the date of actual deposit of tax by the petitioner - the petitioner is liable to pay tax after closure of the unit in terms of Rule 43(4) along with interest There is no illegality, infirmity or jurisdictional error in asking the petitioner for the payment of interest by the impugned orders and the recovery sought to be made cannot be said to be against the provisions of the Act or the Rules made thereunder No merits Petition dismissed Decided against Assessee.
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2014 (3) TMI 905
Eligibility for exemption of tax Scheme for exemption from payment of sales tax notified u/s 4(2) of the Rajasthan Sales Tax Act, 1954 - Interpretation of Statute Principle of harmonious construction - Intention and object of the legislation Specific versus general provision - Held that:- Judgment in Gobind Sugar Mills Ltd. Versus State of Bihar and Others [1999 (8) TMI 761 - SUPREME COURT OF INDIA], Reserve Bank of India versus Peerless General Finance & Investment Co. Ltd. ors. and Vice [1987 (1) TMI 452 - SUPREME COURT] and JK. Cotton Spinning & Weaving Mills Co. Ltd. versus State of Up. [1960 (12) TMI 77 - SUPREME COURT] followed If in a Statutory Rule or Statutory Notification, there are two expressions used, one in General Terms and the other in special words, under the rules of interpretation, it has to be understood that the special words were not meant to be included in the general expression. The rule is, that whenever there is a particular enactment and a general enactment in the same statute and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. - Specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that can be overcome by textual indications that point in the other direction - This rule is particularly applicable where the legislature has enacted comprehensive scheme and has deliberately targeted specific problems with specific solutions - A subject specific provision relating to a specific, defined and descriptable subject is regarded as an exception to and would prevail over a general provision relating to a broad subject. The item 1E is subject specific provision introduced by an amendment in 1996 - The amendment removed new cement industries from the non-eligible Annexure-B and placed it into Annexure-C amongst the eligible industries - It classified the cement units for eligibility of tax exemption into three categories: small, medium and large - The said categories are comprehensive whereby small and medium cement units have been prescribed to have maximum Fixed Capital Investments (FCIs) of ₹ 60/- lakhs and ₹ 5/- crores, respectively and large to be over the FCI of ₹ 5/- crores - The maximum ceiling for large cement units has been purposefully left open and thereby reflects that the intention clearly is to provide for an all-inclusive provision for new cement units so as to avoid any ambiguity in determination of appropriate provision for applicability to new cement units to seek exemption -What is specific has to be seen in contradistinction with the other items/entries - The provision more specific than the other on the same subject would prevail - Here it is subject specific item and therefore as against items 1, 4, 6 and 7, which deal with units of all industries and not only cement, item 1E restricted to only cement units would be a specific and special entry and thus would override the general provision. The introduction of the subject specific entry vide amendment into general scheme of exemption speaks volumes in respect of intention of the legislature to restrict the benefit to cement industries as available only under Item 1E, which categorically classified them into three as per their FCI - The specific entries being mutually exclusive have been placed so systematically arranged and classified in the Scheme - The construction of provisions must not be divorced from the object of introduction of subject specific provision while retaining other generalized provision that now specifically exclude the new cement industries, which could otherwise fall into its ambit, lest such interpretation would be not ab absurdo (i.e., interpretation avoiding absurd results) - The Company would only be eligible for grant of exemption under Item 1E as a large new cement unit in accordance with its FCI being above ₹ 5/- crores - The judgment and order passed by the High Court set aside and the appeals of the Revenue allowed Decided against Assessee.
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Indian Laws
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2014 (3) TMI 900
Enforceability of contract - Transportation through the Tiger Reserve - Lifting and transportation of the iron ore fines Violation u/s 38(v) of the Wildlife (Protection) Act, 1972 as amended in 2006 Held that:- On March 31, 2010, the PCCF (Wildlife) & Chief Wildlife Warden, Bangalore, specifically stated to the appellant that Bhadra Wildlife Sanctuary was declared as a Tiger Reserve and was required to be maintained as inviolate for tiger population, therefore, transportation through the said Tiger Reserve u/s 38(v) of the Wildlife (Protection) Act, 1972 as amended in 2006 was refused - The contract of lifting and transport the iron ore fines became unenforceable and further, the contract is also hit by Section 38(v) - Thus, the object of the contract is forbidden by law - Hence, the contract is unlawful and cannot be given effect to No need to interfere the High Court order - No merit in the appeal, and the same is dismissed Decided against appellants.
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