Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 31, 2017
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
GST
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Goods and services tax - Acts, Rules, Statutory provisions
Income Tax
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TDS liability - ascertained liability or not - provision made was reversed later - if the assessee is able to establish that it was only a notional provision which was reversed afterwards then no TDS liability can be imposed on the assessee - AT
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Application of provisions of Section 150(1) - period of limitation - the directions issued by the ld. CIT(A) u/s 150(1) of the Act for the assessment years 2004-05 to 2006-07 are barred by limitation legally and not permissible considering the facts of the present case.- AT
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Deduction u/s 80IB(11A) - interest subsidy - if bank has charged 12% and it got subsidy of 5%, then it had charged the rate of 7% on the profit & loss account, then it would have enhanced its profit to this extent, and therefore, this interest subsidy is to be considered as eligible for grant of deduction under section 80IB(11) of the Act. - AT
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Addition u/s 68 - assessment u/s 153A - un-explained cash deposits by the assessee in Mahila Vikas Co-operative Bank - The additions in the absence of any seized material are not sustainable. - AT
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TDS u/s 194J on capitalized expenditure - Since the claim of depreciation is not payment or expenditure in strict sense but the same is statutory allowance, so strictly the claim of depreciation will not be covered u/s 40(a)(ia) - AT
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Exemption u/s 10(23B) - the income of interest is attributable to and arises from working funds in an integrated manner and for this reason also we find that interest cannot be separated from the overall income and activities of the Trust - Benefit of exemption allowed- AT
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Entitled to the benefit of deduction u/s 80P - belated filing of return of income - It is not justified in denying the benefit of exemption u/s 80P of the Act on the mere ground of belated filing of return of income. - AT
Customs
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Classification of imported goods - HP Slate 6’ Voice Tab - to be classifiable under 8471 as an automatic data processing machine or under 8517 as telephone for cellular network? - dimensions of the goods are smaller in comparison with the WCO guidelines for tablet, computers - the goods merit classification under 8517 and not under 8471 - AT
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Refund of SAD - rejecting the refund claim only on the grounds that appellants have not produced invoices to substantiate sale of the imported goods would be putting the appellant to disadvantage merely because they have complied the VAT law - AT
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Whether the duty already paid by the appellant in respect of goods imported by them can be claimed as refund in the case of non-clearance of the same? - Held Yes - Merely because the importer has already deposited the duty instead of waiting for the adjudication order, will not change the legal issue - AT
Service Tax
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Valuation - erection, commissioning & installation - value of the goods and material supplied free of cost by a service recipient to the provider of the taxable service, being neither monetary or non-monetary consideration paid or flowing from the service recipient, accruing to the benefit of the service provider, would be outside the taxable value of the goods amount charged under the said notification - AT
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It is fairly well settled that service tax is liable only on the value of consideration received for providing the services. Out of pocket expenses which are in the nature of the conveyance, travel, mobile expenses etc. cannot be included for purpose of levy of service tax - AT
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Short payment of tax - At the very first instance, the proprietor of the appellant has deposited the admitted tax liability and the issue being wholly interpretational, extended period of limitation is not attracted - AT
Central Excise
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Refund claim - unjust enrichment - the prices were reduced retrospectively, therefore, the appellant's buyer issued debit notes to the appellant - In the absence of any contrary views, the debit notes issued by the buyer is evidence to pass the bar of unjust of enrichment - refund allowed - AT
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CENVAT credit - If the shortages are within the tolerance limits fixed by an efficient management and certified to as within the norms by qualified accounting professionals, it would be unreasonable and unfair for tax authorities to take a different view - credit allowed - AT
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Penalty u/s 11AC of CEA,1944 - clearance of Copper Strips - the appellant after being pointed out by the audit and issuance of SCN, discharged the entire amount of duty and interest - in absence of suppression of facts or mis-declaration, penalty u/s 11AC of CEA, 1944 cannot be sustained - AT
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Clandestine manufacturing and removal - manufacturer of Pan Masala & Gutkaha - the whole demand have been raised by way of wild guesswork. - The whole demand has been raised on the basis of estimated extra minutes of production per day, which is beyond the scope of the scheme of Act and the Rules - demand set aside - AT
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Input service credit - outdoor catering service - there is a positive act on the part of the appellant as they went on collecting the charges from the employees and also availing the Cenvat Credit in respect of the same - Demand confirmed - However, since penalty provisions invoked wrongly, reduced penalty of ₹ 2000 u/r 15(3) imposed - AT
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Valuation - scrap - job-work - scrap retained by appellant, who is a job-worker, to be included in assessable value or not? - the appellant has discharged the duty liability on the scrap and again, demanded duty by including the value in job work charges, which will amount to double taxation - AT
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Classification of goods - Keshyog Oil and Keshyog Herbal Powder Hair Wash/Shampoo - As pointed out by the lower authorities, Tariff and HSN notes also advice classification of the product as a drug - the product, in question, are rightly classifiable under Chapter 30 as Ayurvedic Medical Preparation. - AT
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Deemed manufacture - process of labelling, packing - combo boxes (with one oil and one shampoo container) - carton box is fit for retail sale undertaken by GTM/Global - the processes undertaken by the appellant will amount to manufacture attracting Central Excise levy - AT
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Export of exempted goods - medicaments - credit is available on “inputs used in mfg. of goods exported” even if goods are exempted - credit allowed - AT
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100% EOU - SSI exemption - assessee-Appellants are not eligible for the deduction under EOU. Inasmuch as the assessee-Appellants did not follow the CT-3 procedure, the goods will have to be included in the threshold limit of SSI Exemption - AT
VAT
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Detention of goods with vehicle - subsequently order of attachment was passed - is detention justified? - the department has already attached other goods worth ₹ 1.60 crores, lying in the petitioner's godown. Additional attachment of the consignment of the goods in question therefore would not be necessary. - HC
Case Laws:
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Income Tax
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2017 (3) TMI 1482
Levy of fees under section 234E in intimation issued under section 200A(1) - scope of amendment to section 200A(1) - Held that:- Following the referred decision in the case of Gajanan Constructions and others [2016 (11) TMI 1247 - ITAT PUNE] we hold that the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore the intimations issued by the AO under section 200A of the Act in this appeal are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015 and consequently allow the ground of appeal raised by the assessee.
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2017 (3) TMI 1481
TDS liability - ascertained liability or not - primary liability of payment of income tax - Held that:- In the present case, no evidence has been brought on record hat interest credited as per this software was only a notional provision and the same was reversed afterwards. But this is also an undisputed fact that the bank is using CBS software as in that case. Hence, we feel it proper that the matter should be restored back to the file of the AO for a fresh decision in the light of this Tribunal order rendered in the case of Bank of Maharashtra (2010 (3) TMI 885 - ITAT AHMEDABAD ) and if the assessee is able to establish that it was only a notional provision which was reversed afterwards then no TDS liability can be imposed on the assessee. We order accordingly. I order under section 201(1) & 201(1A) validity - Held that:- In the present case, the orders u/s 201(1) & 201(1A) of the IT Act were passed by the AO on 29-09-2014 and the earliest assessment year involved is 2008-09 and therefore, it is seen that six years from the end of the relevant assessment year has not elapsed at the time of passing the impugned orders
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2017 (3) TMI 1480
Section 14A Disallowance - investment income - interest paid by the Assessee Company on borrowed funds - Held that:- The Hon’ble Bombay High Court in CIT Vs. M/s. Delite Enterprises (2009 (2) TMI 498 - BOMBAY HIGH COURT) have held that where there is no income arising to the assessee on its investment, then no disallowance is to be made under section 14A of the Act i.e. interest expenses related to such tax profits are not to be disallowed under section 14A of the Act. Accordingly, we hold that in so far as the interest expenditure being attributable to such investments, against which the assessee had not received any exempt income, no disallowance of interest expenditure could be made under section 14A of the Act. Accordingly, we allow the claim of assessee in respect of interest expenditure of ₹ 21,52,504/- and allow the ground of appeal No.1 raised by the assessee. Balance interest expenditure - Held that:- Admittedly, the assessee had borrowed the funds but on the other hand, the assessee has sufficient interest free funds available with it, which is apparent from the copy of balance sheet filed by the assessee. The Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT ) have clearly laid down that in such cases, where the assessee has sufficient capital available with it, no disallowance was to be made out of interest expenditure under section 14A of the Act. Applying the ratio laid down by the Hon’ble Bombay High Court, we hold that no disallowance is to be made out of balance interest expenditure of ₹ 5,80,523/-. The ground of appeal No.2 raised by the assessee is thus, allowed. Disallowance of part of administrative expenses under section 14A - Held that:- Applying th e ratio laid down by the Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT), we direct the Assessing Officer in restricting the disallowance under section 14A of the Act on account of administrative expenses to ₹ 50,000 /-. Accordingly, we partially allow the claim of assessee and ground of appeal No.3 raised by the assessee is thus, partly allowed. The grounds of appeal raised by the assessee are thus, partly allowed.
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2017 (3) TMI 1479
Entitled to the benefit of deduction u/s 80P - belated filing of return of income - Held that:- It is not justified in denying the benefit of exemption u/s 80P of the Act on the mere ground of belated filing of return of income. See Chirakkal Service Co-Operative Bank Ltd. Versus The Commissioner of Income Tax [2016 (4) TMI 826 - KERALA HIGH COURT] The assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in assessee’s own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. - Decided in favour of assessee
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2017 (3) TMI 1478
Entitled to the benefit of deduction u/s 80P - belated filing of return of income - Held that:- It is not justified in denying the benefit of exemption u/s 80P of the Act on the mere ground of belated filing of return of income. See Chirakkal Service Co-Operative Bank Ltd. Versus The Commissioner of Income Tax [2016 (4) TMI 826 - KERALA HIGH COURT] The assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in assessee’s own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. - Decided in favour of assessee
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2017 (3) TMI 1477
Reopening of assessment - amount of loan taken by M/s K. N. Parikh (firm) can be considered as income of assessee - Held that:- AO failed to appreciate the facts properly while reaching to the conclusion that there was any ‘escapement of income’ on behalf of assessee. Since in the present case no amount was taken as loan by the assessee from M/s N.H. Securities. Therefore, in such circumstances, the very basis for reopening is not based on correct appreciation of facts. Hence, the orders of ACIT for reopening the assessment of the assessee on the basis of reasons recorded by him u/s 148(2) of the Income Tax Act is not sustainable in the eyes of law. In such circumstances, we allow this ground of appeal and set aside the order of CIT(A) sustaining the order of reopening. - Decided in favour of assessee.
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2017 (3) TMI 1476
Denial of benefits of exemption under s.10(23B) - AO treated the interest income as ‘income from other sources’ and held that the interest income cannot equated with income earned from activities of development of Khadi or village industries - whether interest income on surplus funds deployed in fixed deposits and other investments etc. partakes the character of income attributable to business of production, sale or marketing of khadi and allied products in terms of section 10(23B)? - Held that:- As decided in assessee’s own case in earlier years the provisions under which relief is claimed by the assessee is part of exemption provisions whose purpose is also to encourage prescribed activities of such institutions and therefore as per settled judicial principal in this regard such provisions are always to be given a beneficial interpretation with a view to advance the legislative intent. From the facts and financial figures on record we also note that the income of interest is attributable to and arises from working funds in an integrated manner and for this reason also we find that interest cannot be separated from the overall income and activities of the Trust. For the reasons above we therefore hold that the interest income earned by the assessee is entitled to the exemption u/s.10(23B) of the Act. This ground of appeal of the department is therefore dismissed.
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2017 (3) TMI 1475
Claim of deduction u/s 80P(2) denied - assessee is primarily engaged in the business of banking - Held that:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in assessee’s own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act.
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2017 (3) TMI 1474
Revision u/s 263 - proper opportunity of being heard was not granted - issues relating to 40 A (2) (b) in respect of one of the parties was not examined by the assessing officer - Held that:- Commissioner of income tax in his order has duly noted that on several occasion notices were issued but nobody attended. Before us also despite several notices nobody has attended. Hence we do not find any cogency in this aspect of assessee submission that proper opportunity of being heard was not granted. As regards the merits of the order passed we find that learned Commissioner of income tax has raised relevant issues on which the assessing officer should have made enquiries, which are not emanating from the assessment order. Hence it was incumbent upon the assessee to prove that the assessing officer has duly examined these aspects. In absence of any responses from the assessee in our considered opinion there is no infirmity in the direction of learned Commissioner of income tax to the assessing officer to examine the issues denovo. - Decided against assessee
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2017 (3) TMI 1473
Application of provisions of Section 150(1) - period of limitation - Held that:- If we read sub Section (2) of Section 150, it provided that sub Section (1) thereof will not apply to a case of assessment, reassessment or recomputation of income, if it related to assessment year in respect of which assessment, reassessment etc. could not have been made at the time when the order, which was the subject matter of appeal, reference or revision was made, by reason of the time limits fixed u/s 153 for making the reassessment, it would be seen that sub section (2) of Section 150 does not refer to Section 153. It only refers to “ any other provisions limiting the time within which any action for assessment, reassessment or recomputation may be taken. The word “taken” refers only to initiation of proceedings and not to completion. The time limit for initiation of such proceedings are contained in Section 149 & 150 while the time limit for completion of such proceedings are mentioned in sub Section (2) & (3) of Section 153 just as Section 150 is the proviso to Section 149, sub Section (3) of Section 153 is a proviso to sub section (2) thereof. We find that the plain language of sub-section (2) of Section 150 clearly restricts the application of sub-section (1) of Section 150 to enable the authorities to reopen the assessments which have not already become final on the expiry of the period of limitation prescribed u/s 149(2) of the Act. In the light of above discussion in respect of provisions of Section 150(1) and (2) of the Act and relying on various judicial pronouncements as relied on by the ld. Authorized Representative of the assessee as well as discussed as above by us and the decision of Jurisdictional High Court in the case of Computer Science Corporation India (P) Limited (2013 (3) TMI 743 - MADHYA PRADESH HIGH COURT), we are of the considered opinion that the directions issued by the ld. CIT(A) u/s 150(1) of the Act for the assessment years 2004-05 to 2006-07 are barred by limitation legally and not permissible considering the facts of the present case. Accordingly, the same are directed to be expunged and deleted.
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2017 (3) TMI 1472
Addition applying net profit rate of 8% after invoking the provisions of Section 145(3) - Held that:- As find from the copy of the order of Sales Tax Authority dated 04.11.2010, wherein the assessee has shown gross sales in computation sheet at ₹ 6,03,44,734/-, which also shows that there is a variation in the sales shown by the assessee in profit and loss account and as per sales registers as well as sales to the Sales Tax Authorities. Further, the Sales Tax Authorities has also pointed out the variation of sales amounting to ₹ 4,72,299/- in their assessment order dated 04.11.2010. In the light of these facts and circumstances of the case, we are of the considered opinion that the AO was correct in invoking the provisions of Section 145(3) of the Act, as in absence of non-production of original documents, audit report, sales and purchase bills, vouchers of expenses and FIR, profit from the books of accounts cannot be deduced properly. Therefore, we are of the view that the AO was justified in invoking the provisions of section 145(3) of the Act. Considering the claim of the assessee, the deduction/ set-off on account of DEPB income of ₹ 18,70,576/- would also be available to the assessee as set-off as the assessee has already shown this income in profit and loss account. Therefore, net income is worked out at ₹ 14,80,589/- (33,51,165-18,70,576) as against the income computed at ₹ 44,68,220/-by the AO as per the assessment order and ₹ 6,25,650/- disclosed in return of income by the assessee under regular provision of Act. As regards, the deletion of ₹ 18,70,576/- on account of addition of DEPB income by the AO, we are of the view that the ld. CIT(A) has wrongly deleted the same while deleting total addition of ₹ 44,68,220/- made on application of net profit as the said income is shown by the assessee in its profit and loss account. However, the set off of the same is available to the assessee as given above by us from the estimated income as computed above by taking the gross profit at 6% estimate of gross profit rate. Therefore, we make it clear that the net taxable income after this order would be at ₹ 14,80,589/- as against returned income of ₹ 6,25,650/- as shown by the assessee. Appeal of the Revenue is partly allowed.
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2017 (3) TMI 1471
Denial of claim of exemption u/s 10(23C)(iiiad) - Held that:- We find that the assessee society is engaged in the running of school and amount of surplus has also been utilized by the assessee for construction of school building, which was also used by the assessee, hence, the society is engaged in the charitable purpose u/s 2(15) of the Act. Since the gross receipts of society is less than ₹ 1 crore, therefore, it is eligible for exemption u/s 10(23C)(iiiad) of the Act. We also find that the facts of the present case are squarely covered by the above decisions discussed above. Therefore, we are of the considered opinion that the lower authorities were not justified in not allowing the deduction to the assessee u/s 10(23C)(iiiad) of the Income-tax Act, 1961. Accordingly, the AO is directed to treat the Society as covered by Section 10(23C)(iiiad) of the Act and allow the relief accordingly. Addition u/s 40(a)(ia)- Held that:- Since, the claim of assessee that the recipient has paid due tax in the light of second proviso to Section 40(a)(ia), we deem fit to restore this issue to the file of the AO for verification and if found correct allow the same as the ratio laid down in the case of Ansal Land Mark Township P.Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT ] Disallowance out of kitchen expenses - Held that:- The assessee has claimed kitchen expenses of ₹ 5,75,486/- out of which ₹ 1,89,000/- were claimed as reimbursement to Imperial Academy and for balance of ₹ 2,86,484/- only ledger copy was filed. On spot inquiry, the Inspector found that no meal was provided to students, considering the genuineness, the AO disallowed ₹ 28,648/- being 10% of expenses of ₹ 2,86,480/- as income for non- education activity.
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2017 (3) TMI 1470
Addition u/s. 68 - gifts received by the assessee - Held that:- The bank accounts from which the stated gifts have been given are NRE accounts. All deposits in the said accounts can be made only out of the earnings made outside the country. In any case, no cash deposits have been found in the said accounts. Further there are enough deposits in the said accounts to make the impugned gifts. When the availability of funds has been adequately proved, the capacity of the donors to make the gifts also stands proved. By asking the assessee to file copies of the Income Tax Returns and also their bank statements in their country of residence, the Revenue is indulging in the exercise of verifying the source of the source which is settled law, cannot be done in this case. The onus to explain the credit being on the assessee, reflects the general rule of law of evidence codified in section 106 of the Evidence Act, 1872, ,as per which the source of income is a matter with the exclusive knowledge of the assessee which he has to prove and demonstrate. It is for this reason only that the source of source, which is not within the knowledge of the assessee at all, is not required to be proved by the assessee. The addition we find has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessees income only. This cannot be the basis of making an addition under a deeming provision, section 68 in the present case. We reject the contention of the learned D.R. that the assessee has failed to prove the capacity and genuineness of the transaction by not filing the copies of income tax returns as also copies of bank statements of the donors in their countries of residences. In view of the above, we hold that the assessee has adequately discharged its onus of proving identity of the donor, capacity of the donor as also the genuineness of the transaction being in the nature of gift received from brothers and, therefore, there is no reason to make any addition under section 68 on account of unexplained credit. The addition so made of ₹ 45,00,000/-, is therefore, deleted. - Decided in favour of assessee.
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2017 (3) TMI 1469
Reopening of assessment - approval does not meet the requirements laid down u/s 151(2) - Held that:- The assessee applied for PAN on 8.11.2006. Based on the information provided by the assessee it was assigned to the jurisdiction of Circle 1(2)(1), Delhi, which came under the jurisdiction of Addl DIT(IT), Range 1, Delhi. Vide notifications no. 263/2001 of 14.09.2001 and 250/2007 dated 28.09.2007 read with order of DIT (IT)-l Delhi dated 11.10.2007 (copies enclosed), the Add DIT (IT), Range 1, Delhi was empowered to exercise the powers and the functions of Additional Commissioner of Income-tax. Therefore, the grant of approval for issue of notice u/s 148 by Addl DIT (IT), Range-1, Delhi was as per law. The proposition canvassed by the AR that notices u/s 143(2)/142(1) cannot be issued till the disposal of objections made by the assessee in response to the communication of 'reasons to believe' -is an erroneous interpretation of the SC judgment in 'GKN Driveshafts' [2002 (11) TMI 7 - SUPREME Court ]case. After issue of notice u/s 148 the AO cannot be expected to remain idle waiting for the assessee to seek reasons and then prefer objections at the last minute. It is also worth noting that the time available with the AO for passing draft assessment order was only up to 31.03.2015. Under the circumstances, and keeping in view that the assessee had not sought reasons for almost six months even after receiving the notice u/s 148 on 21.03.2014 the action on part of the AO to issue notices u/s 143(2) and 142(1) before 10.06.2014 cannot be faulted upon. Regarding claim of assesses that Reasons Recorded by the AO were not signed contention has never been raised before at any stage. Not only that the assessee through letter dated 16.10.2014 responded to the reasons conveyed, but continued to participate in the proceedings even after that without raising any disagreement about the same, till now. Nevertheless, the fact that the AO not only recorded reasons (and, of course, signed those) for reopening of assessment, but also obtained approval of the competent authority for issue of notice u/s 148 is undeniable. Moreover, the AO conveyed the 'reasons' for issue of notice u/s 148 to the assessee on 25.07.2014 through a duly signed covering letter of the same date. The office copy of the signed letter along with the sticker of 'Speed Post' bar-code is available in the assessment records (P-201/c). It is worth noting that another similar letter addressed to Cairn Energy PLC (a group company) was also sent on the same date to the same address receipt of which is not denied. Proof of dispatch of these letters is also available with the office (copy enclosed). The assessment records in original were produced for kind perusal of Hon'ble Members. The Bench also allowed the AR to inspect the assessment file and verify that the AO had indeed sent the reasons for reopening through a covering letter under his signature. Information on share transfer was available with AO of CIL - Held that:- Even though information was available with the AO of CIL, it reached the AO of the assessee much later. In any case, the law does allow action against an erring assessee (i.e. reopening of assessment in cases where income has escaped assessment) within certain time frame. In this case the action was taken within the prescribed time frame i.e. within 6 years of income having escaped assessment.Even though the assessment of CIL was made with full application of mind, income in the case of the assessee had escaped assessment because, among other aspects, the assessee had failed to file any return whatsoever till the notice u/s 148 was sent. Regarding claim that Reopening is contrary to 'Vodafone'Judgment [2012 (1) TMI 52 - SUPREME COURT OF INDIA ] - Held that:- Vodafone judgment, to remove doubts the Parliament clarified the law as it stood since 1962. Whether the Parliament of the Country was competent to do so, it is most humbly submitted, cannot be deliberated in this Hon'ble Tribunal. At the time of issue of notice, the law was thus clear and the AO had clearly stated (order disposing of objections; page 36 - 47 of assessee's paper book) that the conditions laid down in section 9(l)(i) were satisfied and the capital gains accruing to the assessee from transfer of CIHL shares which derived all their value from the assets situated in India, was taxable in India. Regarding issue on Survey Report - Held that:- The assessee did not file the tax return voluntarily is a fact. In such a scenario, whether the survey brought out any new facts for the purposes of reopening is not material. That there was income chargeable to tax in India and the assessee had not even filed the tax return was sufficient reason to believe that the income had escaped assessment. The survey only confirmed the aspect of income accruing or arising in India through the transfer of assets situate in India. Whether survey report was received by the AO before or after issue of notice u/s 148 does not come in the way of the legality of such notice. Issue regarding Territorial Jurisdiction - Held that:- The challenge to the jurisdiction was made 72 days after the service of notice u/s 148, much after the 30 days bar placed in that regard u/s 124 of the Income Tax Act. Any challenge to the jurisdiction of the assessing officer at this stage deserves to be rejected. Approval does not meet the requirements laid down under section 151 (2) - Held that:- Necessarily the grant of approval for issue of notice under section 148 of the Income Tax Act was also required to be given by the Additional Director of income tax (International Taxation), New Delhi. The appellant also could not say that the notifications relied upon by the revenue are not in accordance with the law. The decisions relied upon by the Ld. authorized representative are not applicable to the facts of the present case as in this particular case there is a notification issued by the Central board of direct taxes conferring jurisdiction of the Joint Commissioner/Additional Commissioner of income tax on the joint director/ Additional Director of income tax. In view of this we reject the contention of the Ld. authorized representative that the approval does not meet the requirements laid down under section 151 (2) of the Income Tax Act, 1961. Form number ITNS – 34 provides for the format of notice under section 148 of the Income Tax Act, 1961 - Held that:- Undisputedly, in this case proper approval of Ld. Additional Director of income tax (international taxation) has been taken by the Ld. assessing officer under section 151 of the Income Tax Act. Merely if the notice issued does not mention some facts that are prescribed in a non-statutory form when substantially the procedure laid down by the Income Tax Act has been complied with cannot make the notice invalid. In view of this we also rejected the contention of the Ld. authorized representative of the assessee that the notice is not in the prescribed format, it should be held to be invalid. Violation of guidelines - Held that:- In the present case, the notice under section 148 was issued on 21/01/2014 where the Ld. assessing officer granted time of 30 days from the date of service of the notice to file a return. In response to that notice, assessee filed return only on 03/04/2014, beyond the time limits provided by the Ld. assessing officer. The assessee sought the reasons only on 10/06/2014, which were supplied on 25th July 2014 and assessee filed its objection only on 16/10/2014. Therefore, we do not agree with the contention of the Ld. authorized representative that in this case there is any violation of the guidelines Share transfer of Cairn India Holdings Ltd was available with the Ld. assessing officer - Held that:- It cannot be argued that if assessment in the case of some another assessee has been made who was also a party to the contract, reassessment proceedings in the hands of the other party cannot be initiated. Here, the argument of the assessee is that that the information could have been passed on to the Ld. assessing officer of the appellant from the assessing officer of the Cairn India Ltd, and such information has not been passed by the Ld. assessing officer of the Cairn India Ltd to the Ld. assessing officer of the appellant and therefore the reopening is invalid. Such an argument is required to be rejected at the threshold only because the assessment proceeding of one person is quite different from the assessment proceedings of another person and the provisions of the Income Tax Act should be applied fully with respect to the records and information relevant to that assessee only. Chargeability of capital gain - whether transaction entered into by appellant of transferring 251224744 shares of Cairn India holdings Limited to Cairn India Limited on 12/10/2006 is whether liable to tax in India or not ? - assessee company is a tax resident of United Kingdom - Held that:- 1st contention of the assessee is that lower authorities have erred in holding that capital gains arising to the appellant on account of the sales of shares of Cairn India Holdings Ltd to cairn India Ltd is deemed to accrue or arise in India under section 9 (1) (i) of the act and is therefore, chargeable to tax in India. The argument of the assessee is that retrospective amendment to section 9 (1) (i) of the act by The Finance Act, 2012 is bad in law and ultra vires. In view of the decision of the Hon‘ble Supreme Court in L. Chandra Kumar V Union of India [1997 (3) TMI 90 - SUPREME Court] this is not the right forum to challenge validity of provisions of the Income Tax Act. In view of this contention of the assessee rejected. As an internal reorganization of the group there is no change in controlling interest as a result of these internal or reorganization - Held that:- According to us there are series of transactions entered in to by the group, which culminated in to the Initial Public Offering of 98639903 shares @ 160 per share of Cairn India Limited. Part of the purchase price of the share of ₹ 6101 crores have been paid out of the proceeds of the public issue by Cairn India Limited to the appellant. In the IPO as per Annexure 1 to the letter submitted before DRP placed at page no 159 of the paper book of the revenue shows that in IPO, cairn India Limited has divested 30.50 % of the stake to the General Public and Institutional investors. The complete financial arrangement of the Group has ended through series of transfer of shares from U K Jurisdictions to Jersey Jurisdiction to India. On divesting 30 % stake in these oil and gas assets located in India and part of IPO proceeds app. ₹ 6101/- Crore paid to the appellant in U K. Therefore, we are not convinced that these series of transactions entered in to by the group is merely a business reorganization process in consolidation of its oil and gas business India. Furthermore arguments of the assess also do not have any rational that there is no increase in the wealth of appellant as the value of the holdings of the appellant in Cairn India Limited has been unlocked due to IPO and value is derived by the book building process. No real income accruing to the assessee and only real income can be taxed - Held that:- The argument of the assessee that there is no increase in the wealth of the appellant and there is no real income earned by the assessee does not deserve to be accepted. In fact, the assessee has earned substantial gain on sale of the shares and also has gained on account of taxes too as according to the assessee itself such gain is not chargeable to tax. Therefore, the assessee has earned the real income on account of sale of its shares in Cairn India Holdings Ltd to Cairn India Ltd. Cost of acquisition should be stepped up to the fair value of the shares of cairn India holding Ltd on the date of acquisition while computation of the capital gain - Held that:- On conjoint reading of provisions of section 48, 49 and 55 of the Act it is apparently clear that property held by the assessee and its mode of acquisition do not fall in any of the clauses which provides for taking the cost of acquisition in the hands of the assessee in these transaction being cost to the previous owner. No such provision has also been cited before us. We also do not agree with the contention of the assesee that as there is no timing difference between the acquisition and disposal of shares , the full value of consideration and the cost of acquits ion is same. Provision of section 48, 49 and 55(2) of the act does not allow such treatment. Therefore the computation of capital gain in the hands of the assessee is required to be made by deducting from the full value of consideration cost of acquisition incurred by the assessee for acquisition of the property. We do not find any infirmity in the order of the ld AO in taking the cost of acquisition, which is derived by issues of shares as well as by sale of debt. In the result we confirm the order of the Ld AO in working out capital Gain on sale of shares of Cairn India Holding limited in the hands of appellant of ₹ 245035012588/-. DTAA provisions applicability - whether according to Article 14 of Indian United Kingdom except as provided in Article 8 and 9 each contracting state may tax capital gain in accordance with the provisions of its domestic law? - Held that:- In relation to applicability of Article 3(2) of the relevant DTAAs, that it can apply only to terms not defined in the DTAA. Since the relevant DTAAs in the case before them defined “royalty”, Article 3(2) could not be applied. For terms which are defined under the DTAA, there is no need to refer to the laws in force in the Contracting States, especially to deduce the meaning of the definition under the DTAA. Further, the court has held that neither act of parliament supply or alter the boundaries of DTAA or supply redundancy to any part of its. Similarly, according to us, the provisions of DTAA where it simply provides that particular income would be chargeable to tax in accordance with the provisions of domestic laws , such article in DTAA also cannot the limit the boundaries of domestic tax laws. In view of this, we do not find any force in the argument of the assessee and dismiss ground of the appeal. Interest u/s 234A and 234B - retrospective amendment made by The Finance Act, 2012 - Held that:- Admittedly in the present case, the income of nonresident appellant has become chargeable to tax due to retrospective amendment in the act and further the payments made to assessee was also subject to withholding tax u/s 195 of the act and in view of the above judicial precedents cited before us, we are of the opinion that assessee cannot be burdened with interest u/s 234A and 234B of the Act on tax liability arising out of retrospective amendment w.e.f. 01.04.1962 in the provision of section 9(1) of the Income Tax Act. In the result ground of the appeal of the assessee is allowed.
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2017 (3) TMI 1468
Higher depreciation civil foundation work - Held that:- Civil structure and electric fitting, equipments are part and parcel of wind mill and depreciation on investment of such work should be allowed. CIT vs. K.K. Enterprises [2015 (2) TMI 508 - RAJASTHAN HIGH COURT] Not allowing the set off of loss on shares - Held that:- CIT(A) has rightly confirmed the action of the AO by not allowing the set off of loss on shares claimed as business loss by the assessee. Addition u/s 14A - Held that:- During assessment proceedings, the assessee explained that Section 14A are not applicable as some investments and advances wee interest bearing and also that the assessee had a share capital which adequately covers such advances and investment in shares. The AO did not agree with the submissions of the assessee as no details of availability of funds with details of investments and their linkage to own funds was provided. Therefore, the AO invoked the provisions of Section 14A of the Act made a disallowance which has been confirmed by the ld. CIT(A) in first appeal. Taking into consideration the facts, circumstances of the case and the written submission of the assessee, the assessee is directed to submit the details of investment made, own funds available and the availability of the same at the time of making investment relating to the linkage of the own funds before the AO. The AO is directed to provide adequate opportunity of being heard to the assessee in accordance with law
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2017 (3) TMI 1467
Disallowance of deduction under section 80IB(11A) - Discount amount - Held that:- Discount is an item by which the assessee has reduced its cost of purchase, i.e. cost of material has been saved which has resulted a little higher profit. Thus, this discount has a direct nexus with activities of the assessee and it is treated as business profit. Accordingly, we allow the claim of the assessee and direct the AO to consider sum as eligible for grant of deduction under section 80IB(11A) of the Act. Interest received from PGVCL - Held that:- Assessee conceded that in view of the judgment in the case of CIT Vs. Nirma Ltd.(2014 (10) TMI 388 - GUJARAT HIGH COURT ) only net interest income is to be excluded for grant of deduction under section 80IB. We remit this aspect to the AO. He shall exclude net interest income from PGVCL for admissibility of deduction under section 80IB. Interest subsidy received from Govt. of Gujarat - Held that:- Thus issue is squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules P.Ltd. vs. CIT (2012 (2) TMI 101 - SUPREME COURT OF INDIA). The AO himself has not treated the interest income as income from other sources. He treated it as a business income, but did not grant deduction under section 80IB(11) of the Act. Since this interest income has direct nexus with the activities of the assessee, it only goes to reduce the expenditure incurred on the loans availed from the bank. The assessee could reduce the net interest expenditure. In other words, if bank has charged 12% and it got subsidy of 5%, then it had charged the rate of 7% on the profit & loss account, then it would have enhanced its profit to this extent, and therefore, this interest subsidy is to be considered as eligible for grant of deduction under section 80IB(11) of the Act. Eligible profit to claim deduction under section 80IB(11) - interest payable to the partners on their capital contribution and remuneration reduction - Held that:- Direct the AO not to reduce interest payable to the partners on their capital contribution and remuneration from the eligible profits for grant of deduction under section 80IB because, it is the discretion of the assessee to pay interest and remuneration to partners or not.
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2017 (3) TMI 1466
TDS u/s 194J - incurred expense towards the technical and professional charges without deducting the TDS - addition u/s. 40(a)(ia) - Held that:- Since the expenses has not been claimed in the profit and loss account, the question of any disallowance under section 40(a)(ia) of the Act does not arise. A careful analysis to the above provisions of Section 40(a)(ia) reveals that it is applicable to sums allowable u/s 30 to 38 of the Act. Hence, if any capital expense is allowable as deduction u/s 30 to 38 of the Act while computing income under the head “Profits and gains from business or profession”, the same will be covered u/s 40(a)(ia) of the Act. Now, the issue arises where the claim of depreciation u/s 32 of the Act is covered u/s 40(a)(ia) of the Act. The provisions of Section 40(a)(ia) of the Act is applicable to payments specified therein which are allowable u/s 30 to 38 of the Act. Since the claim of depreciation is not payment or expenditure in strict sense but the same is statutory allowance, so strictly the claim of depreciation will not be covered u/s 40(a)(ia) of the Act. Further, the actual cost and WDV is defined in Section 43 of the Act and provisions of Section 40(a)(ia) of the Act does not override the provisions of Section 43 of the Act. In view of above, we are of the considered opinion that the provisions of section 40(a)(ia) of the Act is not applicable in the instant case. Therefore, there is no question of deducting the TDS on capital expenditure. Short deduction of TDS - Held that:- In case of short deduction the Hon’ble Calcutta High Court in the case of M/s S.K Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT ] has held that the disallowances cannot be made under the provisions of section 40(a)(ia) of the Act. Thus, we find no reason to interfere in the order of ld CIT(A). Hence, the ground of appeal raised by the revenue is dismissed.
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2017 (3) TMI 1465
Revision u/s 263 - decline in GP rate from 5.19% in AY 2010-11 to 3.17% in the impugned assessment year - Held that:- AO has made relevant enquiries and after being satisfied has accepted the the fall in the GP rate and trading results. The reasons for the fall in GP rate has been explained by the assessee and duly considered by the AO in terms of increase of prices of the raw material. Once the necessary enquiries have been made and the explanation furnished by the assessee explaining its position, it is the discretion of the AO to accept the explanation of the assessee or where he is not satisfied with the assessee’s explanation, to carry out further enquiries in the matter. In the instant case, the necessary enquiries have been made by the AO and accordingly we do not see a reason for the ld. CIT to exercise his revisionary powers u/s 263 of the IT Act. Accretion/addition to Partners capital account - Held that:- Merely raising a query is not sufficient enough to dislodge the revisionary jurisdiction under section 263 of the Act. What is essential is that relevant questions are asked and enquiries are made to examine about a particular transaction, explanation of the assessee is sought and then a final view is formed by the AO taking into consideration all the relevant facts and circumstances of the case. Now given that the assessee has furnished its explanation regarding the source of deposits in the partner’s capital account and having considered the said explanation, the ld. CIT is correct in remanding the matter back to the AO to examine the said explanation of the asessee. Had the assessee furnished the said explanation before the AO, the ld. CIT may not have the occasion to exercise his revisionary powers u/s 263 of the Act. In our view, these are the basic and the relevant enquiries in terms of examining the source of accretion to the capital account which the AO should have been made at the first place and the AO having been failed to do, the ld. CIT was correct in exercising his revisionary powers u/s 263 of the Act. Unsecured loans - Held that:- In the instant case, though the AO has raised the initial enquiry about this test but while concluding the assessment, there is nothing on record to suggest that he has carried out the necessary investigation to test these basic requirements. This clearly shows nonapplication of mind by AO, blindly accepting what is being part- submitted by the assessee, without conducting the necessary enquiry and investigation which are bare minimum to examine the transactions in respect of unsecured loans. As we have stated earlier, merely raising a query is not sufficient enough to dislodge the revisionary jurisdiction under section 263 of the Act. What is essential is that relevant questions are asked and enquiries are made to examine about a particular transaction, explanation of the assessee is sought and then a final view is formed by the AO taking into consideration all the relevant facts and circumstances of the case. We therefore do not see any justifiable reason to interfere with the order of ld CIT in this regard. Appeal decided partly in favour of assessee
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2017 (3) TMI 1464
Allocation of the administrative expenses on proportionate basis towards work in progress - whether expenses in question are directly relatable to the projects - Held that:- The expenses out of the administrative expenses of ₹ 1,11,31,064/- which are related directly to the work in progress in respect of three projects, cannot be decided by apportioning the expenses in the ratio of work in progress to total turnover including work in progress. The Assessing Officer is required to examine the expenses case to case basis, in the light of the decision of the Tribunal in the case of Sutlej Cotton Mills Ltd.(1998 (1) TMI 107 - ITAT DELHI-D ) to ascertain whether same are related directly to the three projects in reference. The expenses on Director’s remuneration have already been held by the learned Commissioner of Income-tax (Appeals) as not relatable to any of the projects and already excluded for the purpose of valuation of work in progress and that finding has not been challenged by the Revenue before us. In view of above, we reject the allocation of the administrative expenses on proportionate basis towards work in progress and restore the matter to the file of Assessing Officer with the direction to examine all expenses under administrative expenses, other than Director’s remuneration on case to case basis, to find out whether same are directly related to any of the three projects in reference and then includes the specific expenses which are directly related to the projects to the work in progress.
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2017 (3) TMI 1463
Addition made u/s. 14A - Held that:- We find that there is no dispute that the assessee was having sufficient interest free funds available with it for making the investments in shares. It is equally true that the assessee could not demonstrate the nexus between the interest free funds and the purchases of shares. In our considered opinion and to meet the interest of justice, the disallowance u/s. 14A should be made to the extent of the exempt income claimed by the assessee. We, accordingly, direct the A.O. to restrict the disallowance to the extent of exempt income. Ground no. 1 is partly allowed. Addition of undisclosed income - AO has calculated the average rate of "on money" charged on the bookings and sale made by the appellant by dividing the entire on money received inrespect of bookings / sales made by the total area sold - Held that:-VThe power of the assessing Officer to raise valid queries on the basis of the facts or unusual features noticed by him must be conceded. The features noticed by him in the assessees’ business certainly constitute a starting point of inquiry. They are, however, not to be taken as evidence or material showing any suppression or understatement of the sale price. If on further probe, the assessing Officer was able to unearth any evidence or material on the basis of which actual suppression of the sale price could be found, then the additions made on that basis would be valid. But it is not open to him, merely on the basis of what he perceives to be the market conditions, to make additions to the sale price or the profits, without any evidence of understatement. In our considered opinion, the Assessing Officer has drawn a presumption that all the units booked after 07.10.2009 must have also fetched on money to the assessee. The A.O. has not made any further enquiry to substantiate or justify his presumption. The A.O. has not pointed out a single transaction in the books of accounts as not properly accounted for in the books vis-à-vis the details furnished by the assessee.No doubt, the assessee has made disclosure of additional income of ₹ 9 crores for the conveyance done and bookings done for the period between 01.04.2009 and 06.10.2009 but this by itself cannot prompt the A.O. to presume that the assessee must have done the same thing which he has done prior to 07.10.2009 - Decided in favour of assessee Disallowance of interest expenditure claimed u/s. 36(1)(iii) - Held that:- A.O. has not disputed the fact that the assessee has sufficient interest free funds, therefore, the ratio laid down by the Hon’ble Supreme Court in the case of Munjal Sales Corporation (2008 (2) TMI 19 - Supreme Court ) squarely apply. Further, we find that the A.O. has questioned the commercial prudence of the assessee which is against the ratio laid down by the Hon’ble Supreme Court in the case of S.A. Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT ) wherein the Hon’ble Supreme Court has held that the businessman alone can decide the reasonableness or business expediency of the expenditure. We, further find identical additions were deleted in an earlier assessment years. - Decided in favour of assessee
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2017 (3) TMI 1462
Addition u/s 68 - un-explained cash deposits by the assessee in Mahila Vikas Co-operative Bank - assessment u/s 153A - Held that:- On perusal of the assessment orders, we find that additions have not been made with the help of any seized material, therefore this judgment of Hon’ble High Court in the case of Saumya Constructions Pvt. Ltd [2016 (7) TMI 911 - GUJARAT HIGH COURT ] is squarely applicable on the facts of the present appeals. The additions in the absence of any seized material are not sustainable. Accordingly we allow the appeals of the assessee and delete additions, in all these assessment years. As far as A.Y. 2004-05 is concern, one of the grievance of assessee is that Ld. CIT(A) has relegated the matter to the assessing officer for verifying the cash book in order to ascertain the source of cash deposit of ₹ 25,15,816. The Ld.CIA(A) has no such power. The Ld. Counsel, for the assessee has pointed that while giving effect to order of Ld.CIT(A) Assessing Officer did not make any additions and therefore otherwise the issue would become an academic one. Considering this development, we do not deem it necessary to upset the order of CIT(A) in A.Y. 2004-05. On this issue, otherwise also additions are not based on seized material and they are not sustainable. - Decided in favour of assessee.
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Customs
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2017 (3) TMI 1432
Classification of imported goods - HP Slate 6’ Voice Tab - whether the Impugned goods are classifiable under 8471 as an automatic data processing machine or under 8517 as telephone for cellular network? - Held that: - It is evident that the goods are capable of use both asset as cellular telephone as an automatic data processing machine (Tablet). With the advances and technology, there is a thin line between a tablet capable of being used as a telephone as well as a telephone capable of being used as a tablet - The WCO guidelines suggest classification of tablet as an Automatic Data Processing Machine under 8471 in cases where the machine has dimensions as mentioned. But, the dimensions of the Impugned goods are smaller in comparison with the WCO guidelines for tablet, computers. Accordingly, in line with the WCO guidelines, the impugned goods may not be classifiable under 8471. Once the classification under 8471 is ruled out, the alternate classification suggested is under 8517 - the goods merit classification under 8517 and not under 8471 - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1431
Classification of imported goods - Alloy Steel Melting at pre-shipment stage - The Revenue’s main arguments are that the DGFT authorised agency who issued certificate at pre-shipment stage was not authorised to issue certificate on the status of the goods - natural justice - Held that: - considering the fact of non-allowing cross-examination to the respondents by the original adjudicating authority and because of lack of cross-examination of experts, Commissioner (Appeals) in the impugned order calls these reports as ‘cannot be relied’ and ‘incomplete’ - However, instead of totally discarding the expert reports given by the Revenue in support, it would be appropriate to allow cross-examination to the respondents of the concerned experts, on whose reports Revenue is relying and thereafter decide on the reliability of the said expert reports, which are supporting the case of mis-declaration against the respondent importer. Consequently, we set aside the impugned order-in-appeal and remand the matter to Commissioner (Appeals), who shall allow cross-examination of the concerned experts to the respondent importer - appeal allowed by way of remand.
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2017 (3) TMI 1430
Revocation of CHA licence - forfeiture of security deposit - non-adherence of time limits in terms of Regulation 20 of CBLR, 2013 - Held that: - admittedly, the enquiry report which is to be submitted within 90 days of issue of show cause notice in terms of Regulation 20 of CBLR has been submitted, in the present case, after 10 months. On this non-adherence of time limit alone the proceedings are to be held as invalid - by now, it is a well settled legal position that the time limits prescribed in the Regulations are mandatorily to be followed. Failure to adhere to the said time limits will make the proceedings without jurisdiction and invalid - appeal allowed - decided in favor of CHA-appellant.
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2017 (3) TMI 1429
Refund of SAD - rejection on the ground that the appellant did not produce the sale invoices and also that the appellant did not establish that they have not taken CENVAT credit on the said SAD - Held that: - The appellant is incapacitated from issuing invoices as per the provisions of composite scheme in VAT Act. While complying with one legislation, the appellant cannot be disadvantaged of the benefit which is otherwise available to them by another legislation. Thus rejecting the refund claim only on the grounds that appellants have not produced invoices to substantiate sale of the imported goods would be putting the appellant to disadvantage merely because they have complied the VAT law - the non-issuance of invoices was not a choice made by the appellant. It was a compulsion while opting for payment of composite scheme under VAT law. The second condition is that the appellant has not established that CENVAT credit has not been taken by the appellant by producing the endorsement on the invoices. Since the appellants have not issued any invoices, there is no question of making of such endorsements. The appellants have fulfilled the conditions to the extend of practically possible and therefore the rejection of refund claim is unjustified - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1428
Whether the duty already paid by the appellant in respect of goods imported by them can be claimed as refund in the case of non-clearance of the same? - section 23 of the Customs Act, 1962 - Held that: - section 23 of the CA, 1962 has no applicability in the facts and circumstances of the case. It is a case where adjudication has already been completed and the goods stand confiscated. In the present case, goods are still with the Revenue and were not cleared prior to adjudication. On the order of confiscation, the appellants have been given an option to redeem the same on payment of Redemption Fine which option the importer has not exercised. The factum of non-exercising of such option by the importer would lead to non-clearance of imported goods, which would continue to rest in the Government. If the goods have not been cleared, the question of payment of duty does not arise at all - Merely because the importer has already deposited the duty instead of waiting for the adjudication order, will not change the legal issue - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (3) TMI 1422
Oppressive conduct against the petitioners - Exercise of the rights of FMO for protecting its economic interest - investment structure conceived by FMO (foreign investor invested ₹ 418 crores in the year 2009) for bringing foreign investment into Amazia and Rubix (both are 100% subsidiaries of Vinca) routing through Vinca is in breach of Foreign Exchange Management Act (FEMA), therefore the rights accrued to FMO on ₹ 418 crores invested in Vinca - Held that:- On having this Bench observed that either seeking a direction not to convert CCDs into shareholding of Vinca or seeking a conversion of OPCDs into shares of Amazia and Rubix will ultimately nothing but taking away the rights of FMO and its Nominee Directors by the Petitioners themselves through Hubtown, therefore, this Bench, having believed such orders could not be passed citing the affirmative right given to the Nominee Directors of FMO as unfair, does not find any merit in these allegations made by the Petitioners. If the entire petition is taken as whole and look for case under section 241 & 242 of the Companies Act 2013, to our knowledge, no cause of action arose for showing the exercise of the rights of FMO for protecting its economic interest is unjust and unfair to the petitioners, moreover the company is managed by the petitioners and it is not the case of the petitioners that the money invested by FMO was spent by FMO, therefore by seeing some ornamental paras recanting unfair, harsh and burdensome slogans, devoid of any material facts will not amount to cause of action because such paras have no material facts warranting this Bench to inquire into, hence this Bench hereby held that this case is liable to be dismissed in limine. If the facts of the case are such that they need no further proof to take into consideration and if those facts do not make any cause of action under the sections relied upon, then we don't believe that this Tribunal has to remain waiting until pleadings of the case are complete, because such waiting will never improve the case of the petitioners except causing inconvenience and sufferance to the answering Respondents and to this Bench and the litigation like this shall not be entertained more specially when litigation is intended to circumvent the directions of other competent courts on the same subject matter. To answer all these points and also to uphold dispensation of timely justice, this Bench for the reasons aforestated, hereby dismissed this Company Petition in limine with a direction to the petitioners to pay exemplary costs of ₹ 50, 000 to NCLT, Mumbai for filing this vexatious and frivolous litigation.
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Service Tax
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2017 (3) TMI 1461
Valuation - erection, commissioning & installation of the electricity transmission towers being supplied by the electricity recipient - whether the cost of the tower supplied by the Electricity Board is required to be added in the assessable value? - Notification No. 15/2004-ST and Notification No. 1/2006-ST dated 01.03.2006. - Held that: - the issue is squarely covered by the larger Bench decision of the Tribunal in favor of the appellant in the case of Bhayana Builders Pvt. Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] where it was held that the value of the goods and material supplied free of cost by a service recipient to the provider of the taxable service, being neither monetary or non-monetary consideration paid or flowing from the service recipient, accruing to the benefit of the service provider, would be outside the taxable value of the goods amount charged under the said notification - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1460
Valuation - includability - out of pocket expenses incurred by the appellant and reimbursed by the service recipient - Held that: - It is fairly well settled that service tax is liable only on the value of consideration received for providing the services. Out of pocket expenses which are in the nature of the conveyance, travel, mobile expenses etc. cannot be included for purpose of levy of service tax - issue needs to be remanded to the original adjudicating authority who is directed to consider the documents which will be submitted by the appellant and extend the benefit of deduction of out of pocket expenses after verification of the original documents - appeal allowed by way of remand.
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2017 (3) TMI 1459
Levy of tax - commission received as sub-broker - Held that: - the sub-broker who received commission from the main broker while main broker has paid the service tax on commission received by him cannot be once again subjected to service tax - reliance placed in the case of Commissioner of Central Excise, Kanpur Vs P.K. Khandelwal & Company and others [2016 (1) TMI 391 - CESTAT ALLAHABAD] where it was held that when the main broker has paid service tax then the commission received by the sub-broker shall not be subjected to levy of Service Tax - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1458
Classification of service - Construction Services - classified under Commercial or Industrial Construction Services or works contract services? - Held that: - it appears that the entire construction services are meant for educational institutions or for the welfare of the State which are not commercial or industrial in nature - the institutions, being established solely for educational, religious, charitable, health, sanitation etc., are exempted from the Service Tax, but, when the Government construction is used for commercial or industrial purposes like shops and houses etc., then the same is within the clutches of the Service Tax - we remand the matter to the original authority for examining the nature of each entity for which the construction was made whether the same falls under the “Commercial or Industrial Construction Services” or not - appeal allowed by way of remand.
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2017 (3) TMI 1457
Short payment of tax - Erection, Commissioning & Installation Service - works contract service - Renting of Immoveable Property - Construction of Residential Complex Service - Held that: - SCN is vague as it does not state the premises on the basis of which demand have been proposed under ‘erection, commissioning and installation service’. Without there being a finding of erection of any such commercial flats/residential complex - The SCN is also vague on account of not giving bifurcation of the demand year wise and category wise - so far demand of ₹ 15,48,599/- is concerned the same relates to laying of cables or electrical wires including poles for the same alongside or under the road and such work was not taxable to Service Tax in view of Circular dated 24-05-2010 - the demand of ₹ 5,88,991/- with respect to work done in the nature of internal and external wiring in the residential houses/duplexes, there is no element of any construction of a commercial/residential complex as defined under the provisions of the Service Tax Act. Accordingly, demand of ₹ 5,88,991/-, is also set aside - for work done for Indian Railway Welfare Organization, in view of the fact that the work had been completed before 30-10-2004, there is no question of levy of any tax for the same under ECIS, which have become taxable with effect from 01-06-2005 - there is no element of suppression, fraud or any mala-fide on the part of the appellant and they have not concealed information or made any misstatement of facts before the Revenue. At the very first instance, the proprietor of the appellant has deposited the admitted tax liability and the issue being wholly interpretational, extended period of limitation is not attracted - appeal allowed - decided in favor of appellant-assessee.
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2017 (3) TMI 1456
Penalty - reverse charge - For the purpose of raising capital, appellant have received the services of non-resident institutions i.e. a person who has established a business or has a fixed establishment in a country other than India - The period in dispute is 18.04.2006 to 30.11.2007 - Held that: - recipient in India became liable to service tax for the service received from abroad only from 18.04.2006, after the enactment of Section 66A - this was the first time, since 18.04.2006, that the services provided by the appellant was brought under the service tax net. This was the initial period and first year, hence, the appellant was not aware of the provisions. However, soon after knowing about the liability, the tax was paid along with interest - Moreover, the appellant is an Agency of the government under Article 12 of the Constitution and no individual interest is involved. When it is so, there is no justification for levy of penalty - reliance placed in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION Versus UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT] - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1455
Business Auxiliary Service - Held that: - this issue had come up for consideration before this Tribunal in the case of Ferro Scrap Nigam Ltd. vs CCE, Raipur, [2014 (1) TMI 1049 - CESTAT NEW DELHI], where it was held that the said activity does not amount to manufacture and such order stands accepted by the Revenue, it has to be held that there was no production of goods. Cargo Handing Service - Held that: - the same is squarely covered in favour of the assessee-Respondents by the ratio laid down in the case of Commissioner of Central Excise vs Manoj Kumar, [2012 (9) TMI 941 - ALLAHABAD HIGH COURT], where The sugar bags were not to be loaded or unloaded for any movement outside the factory on public roads, on any ships, aeroplane or trucks for onward movement to any destination. The activities will fall within the meaning of transportation of goods, and would certainly not be included in the definition of Cargo Handling Service which is the service exigible to Service tax. Appeal dismissed - decided against Revenue.
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2017 (3) TMI 1454
Refund claim - denial on the ground that the appellant has not submitted any document required under Rule 4A of the Service Tax Rules, 1994 and debit notes is not sufficient document for the purpose - Held that: - in the assessee’s own case, on the identical set of facts, the claim was already allowed - matter remanded to the original authority to decide the issue afresh after examining the documents which can be produced by the appellant again - appeal allowed by way of remand.
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Central Excise
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2017 (3) TMI 1453
Refund in cash - the appellants have filed the refund claim in respect of same duty amount which was deposited by M/s Escorts (TED) as per the order of the Settlement Commission - whether the refund claim filed by the appellants would amount to re-opening of the order of the Settlement Commission? - Held that: - during the material time, both M/s Escorts (TED) and Escorts Ltd. (TD), later known as AMG (Tractor Plant), were having common central excise registration and therefore seeking of the refund by Escorts Ltd.-AMG (Tractor Plant) paid by M/s Escorts (TED) would not only nullify the terms of the settlement, it would also be tantamount to re-opening and vitiating the proceedings of the Settlement Commission, which are conclusive in terms of Section 32F(7). Accordingly, the refund claim of ₹ 3,84,01,009/- filed by M/s Escorts Ltd- AMG (Tractor Plant) would be hit by proviso of Section 32F(7) and 32F(9) as also 32M of the Act and is therefore not sustainable on that ground. Whether cash refund is allowed? - Held that: - The refund claim for differential duty was filed in 2005 under Rule 57E but the said Rule was not in existence at that point of time. Hence, the relief sought by appellants under Rule 57E is not available to the appellants even by virtue of provision of Section 38A ibid. Appeal dismissed - decided against appellant.
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2017 (3) TMI 1452
SSI Exemption - clubbing of clearances - Held that: - both the units are separate, so clearance of the goods cannot be clubbed - matter remanded for re-examination of the facts. Valuation - demand u/s Section 4A on the only ground that impugned products were sold through the appointed dealers and there were no direct sale to the industrial consumers - declaration u/r 34 - Held that: - the assessee has failed to file the declaration u/r 34 of the Standard of Weights and Measures (PC) Rules, 1977. When it is so, then in both the appeals, we restore the matter back to the Commissioner to examine the issue in the light of the above observations denovo. Penalty not imposable - matter on remand - appeal allowed by way of remand.
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2017 (3) TMI 1451
Penalty u/s 11AC of CEA,1944 - clearance of Copper Strips, a raw material for manufacture of the Transformer, to their another unit, on reversal of the credit availed on the inputs - Revenue's case is that what cleared by them being input not as such but a processed one, therefore, the duty should be paid - Held that: - it was a mistake on the part of the excise clerk to ascertain the correct duty liability in as much as the inputs which were procured, later processed and became semi-finished goods, even though cleared to their sister unit, did not remain as such, hence the assessment of duty ought to have been made by determining its value applying Rule 8 by adopting CAS-4 method and not by reversing credit availed - the appellant after being pointed out by the audit and issuance of SCN, discharged the entire amount of duty and interest which is recorded by the Ld Commissioner (Appeals) in the impugned order. Thus, in absence of suppression of facts or mis-declaration, penalty u/s 11AC of CEA, 1944 cannot be sustained - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1450
Input service credit - outdoor catering service provided by the canteen contractor to the employees - wilful suppression of facts - penalty - Held that: - there is a positive act on the part of the appellant as they went on collecting the charges from the employees and also availing the Cenvat Credit in respect of the same - The burden of taking Cenvat Credit properly has been cast on the assessee under CCR, 2004 and the same was not discharged properly. In such a situation, the extended period can be invoked. As for the penalty imposed on the appellants, the period involved in these SCN is from April, 2006 to March, 2008 and April, 2008 to December, 2008. The penalty has been proposed u/r 15 read with Section 11 AC in the first SCN and u/r 15(3) for second SCN. As rightly pointed out by the Ld. Advocate, Rule 15(1) and 15(2) ibid are not applicable in their case as the same pertain to inputs and capital goods. Rule 15 (4) of the credit Rules applies to provider or output services. Hence, the appellants are liable to penalty u/r 15 (3) of the CCR. Penalty is therefore, reduced to ₹ 4000/- i.e. ₹ 2000/- each. Appeal allowed - decided partly in favor of assessee.
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2017 (3) TMI 1449
Refund claim - unjust enrichment - the prices were reduced retrospectively, therefore, the appellant's buyer issued debit notes to the appellant for non payment of duty on account of reduction of price - Held that: - the buyer has issued the certificate that they have not availed the cenvat credit of differential duty on account of subsequent reversal of price of the goods and they have not paid any differential duty to the appellant. To that effect the certificate has been issued by the buyer that differential duty has not been paid to the appellant. In the absence of any contrary views, the debit notes issued by the buyer is evidence to pass the bar of unjust of enrichment - reliance was placed in the case of Commissioner of Central Excise, Madras Versus M/s Addison & Co. Ltd. [2016 (8) TMI 1071 - SUPREME COURT] - the appellant is entitled for refund claim and as they have passed the bar of unjust enrichment - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1448
Benefit of N/N. 245/83 dated 13-09-1983 - eligibility for discount - P&P medicines - denial of benefit of notification on the ground that the appellant while claiming the discount of the price list have withheld vital information in as much as they have not submitted the documents showing the medicines has been specified in the DPCO 1987 and not declared at the footnote of the price list that the medicines figured in DPCO - Held that: - the departmental authority have been approving the price list from time to time, despite knowing that, the appellant have shown DPCO prices in the price list and claimed the discount of 15% in terms of Notification No. 245/83. If at all the authority has any doubt regarding the DPCO price, nothing prevented the department to call for necessary documents before approval of the price list. In the notification, there is no condition that price list with reference DPCO 1987 is required to be submitted - there is no suppression of the fact on the part of the appellant in as much as they have correctly declared all the details required in their price lists - Though the department is empowered to re-open the approval of price list, however the same can be done within one year or as the case may be five years depending on the facts whether there is any suppression of fact on the part of the appellant. There is no suppression of fact, therefore it was only normal period of one year available to the department to re-open the approval of price list which the department failed to do so and therefore entire demand raised for the extended period is time barred. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1447
Captive consumption - Valuation of goods - assessable value of the spun yarn at the spindle stage - N/N. 35/1995-CE dated 16.03.95 - Held that: - the issue has already been settled in their favor in their own case JCT LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, JALLANDHAR [2015 (1) TMI 889 - CESTAT NEW DELHI], where it was held that Since doubled/multi folded yarn is cleared for captive consumption within the factory for manufacture of fabrics the cost of widing, singeing and doubling/multi folding gets included the cost of fabrics which is cleared on payment of duty. Duty on cost of these processes cannot be charged at single yarn stage by including the cost of these processes in the value of yarn at the spindle stage - the impugned order qua demanding duty from the appellant is set aside and consequently, that part of the order is allowed. As the appellant has not pressed the issue for consideration of the refund claim, therefore, on the said ground the appeal is dismissed as not pressed. Appeal disposed off - decided partly in favor of assessee.
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2017 (3) TMI 1446
Clandestine manufacturing and removal - manufacturer of Pan Masala & Gutkaha - the appellant was operating their factory for about 12 hours instead of the stated 10 hours in the declaration and accordingly could have estimated the production or excess production during the additional 110 minutes - demand - Held that: - the whole demand have been raised by way of wild guesswork. The SCN does not disclose finding of any excess stock, than declared stock in the statutory records. The whole demand has been raised on the basis of estimated extra minutes of production per day, which is beyond the scope of the scheme of Act and the Rules - demand set aside - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1445
CENVAT credit - inputs which were found short during the course of final appraisal of the stock taking of the assessee - Held that: - there is no allegation against the respondent for diversion of inputs as such, in some cases inputs were found excess and in some cases inputs were found short i.e. to the small variation of 0.05% of the total inputs received - shortage of minor quantities i.e. 0.05% of the total inputs is within permissible limit - similar issue came up before this Tribunal in the case of Maruti Udyog Limited [2004 (6) TMI 155 - CESTAT, NEW DELHI], wherein it was held that If the shortages are within the tolerance limits fixed by an efficient management and certified to as within the norms by qualified accounting professionals, it would be unreasonable and unfair for tax authorities to take a different view - credit allowed - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1444
SSI Exemption - branded goods of other person cleared on payment of duty - Held that: - in the case of CCE, Chennai Vs. Nebulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT], the Hon’ble Apex Court has held that if the branded goods have been manufactured at on behalf of the principle and same has been cleared on payment of duty, in that circumstances, for their own clearances, assessee is entitle for payment of exemption Notification - benefit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1443
Clandestine manufacture and removal of goods - various scooter parts - the sole case of Revenue is that M/s.Vira Scooters were engaged in the manufacture of scooter parts and clearance 9/3rd value of the goods or double quantity shown in the invoices - confiscation - redemption fine - penalty - Held that: - It is an admitted fact that M/s.Vira Scooters was proprietorship firm owned by one Shri Vijay Jain who has expired on 2.11.2011. In that circumstance, the proceedings against M/s.Vira Scooter cannot be continued in view of the decision of the Hon'ble Apex Court in the case of Shabina Abrahma [2015 (7) TMI 1036 - SUPREME COURT] - the proceedings against M/s.Vira Scooters abates. Penalties on all the co-noticees - Held that: - the allegation of clandestine manufacture and removal of the goods by M/s.Vira Scooters cannot be proved in the absence of Shri Vijay Jain of M/s.Vira Scooters, who has expired on 2.11.2011. Therefore, the benefit of doubt goes in favor of the co-noticees - penalties on co-noticees set aside. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1442
Valuation - scrap - job-work - scrap retained by appellant, who is a job-worker, to be included in assessable value or not? - appellant clears the scrap so retained by them and discharges the duty liability on it - Held that: - the appellant has paid duty on the value of scrap retained by them, therefore, the decision of the Ad-Manum Packaging Ltd. [2016 (9) TMI 630 - CESTAT NEW DELHI] is squarely applicable to the facts of this case, where it was held that the appellant has discharged the duty liability on the scrap and again, demanded duty by including the value in job work charges, which will amount to double taxation - In that circumstances, the value of scrap retained by the appellant is not includible in the assessable value of the said goods. Otherwise it will amount to double taxation - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1441
CENVAT credit - manufacture of dutiable as well as exempted goods - Aerated Water and Beverages Syrup i.e. Maaza - non-maintenance of separate set of books - Rule 6(3)(b) of the CCR, 2004 - Held that: - the demand of an amount equivalent to 10% of exempted final product is not justified on the sole ground that separate accounts were not maintained - demand set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1440
Cash refund - unutilized CENVAT credit - N/N. 50/2005-CE dated 10.06.2003 - Held that: - the similar issue came up before this Tribunal in the case of M/s Max Power Infosystems [2017 (1) TMI 1185 - CESTAT CHANDIGARH], where reliance was placed in the case of APCO Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT], where it was held that in a situation where the assessee is not in a position to utilize the Cenvat Credit Account, the refund claim is to be given in cash - refund allowed in cash - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1439
Classification of goods - Keshyog Oil and Keshyog Herbal Powder Hair Wash/Shampoo - Ayurvedic medicine under Chapter 30 or cosmetic/ toilet preparations under CETH 3305? - Held that: - classification of similar product came for examination before the Tribunal in CCE, Chandigarh vs. Saini Hair Products reported in [2003 (11) TMI 403 - CESTAT, NEW DELHI], where it was held that The product is made under a drug licence in accordance with an Ayurvedic Text and from Ayurvedic ingredients. It is packed and distributed in packings and with literature proclaiming it as Ayurvedic medicine. Some instructions are also given on the label about dosage, period, etc. The label also indicates the problems for which it is to be applied. As pointed out by the lower authorities, Tariff and HSN notes also advice classification of the product as a drug - the product, in question, are rightly classifiable under Chapter 30 as Ayurvedic Medical Preparation. Whether the process of labelling, packing undertaken by the appellant (M/s GTM/Global) will amount to manufacture or not? - Held that: - labelling of the products, packing from bulk cartons to combo boxes (with one oil and one shampoo container) and making them ready for retail market is carried out by M/s GTM/Global, in their premises. The cartons with 200 bottles received by GTM/Global are meant for inter-unit transfer in bulk and not for retail consumer. Such bulk consignments are made in to retail packs (combo packs with bottle of oil and powder) in a single retail carton box. This carton box is fit for retail sale undertaken by GTM/Global. Applying the provisions of Note 6 of Chapter 30, we find that the processes undertaken by the appellant will amount to manufacture attracting Central Excise levy. Personal Penalty on Shri Anuj Agarwal is Director of the appellant (GTM) - Held that: - The duty liability in this case arises, even after such classification, in view of deemed manufacture in terms of Chapter Note 6. In such situation alleging malafide intend to violate the provisions of central excise law against an individual, as officer of the appellant company, is not tenable. The original order did not elaborate and justify the penalty imposed on individuals - the personal penalty imposed on Shri Anuj Agarwal is set aside. Penalties imposed on the assessees/appellants are confirmed. Appeal allowed - decided against appellant-assessee.
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2017 (3) TMI 1438
CENVAT credit - benefit of N/N. 50/2003-CE - appellant paid duty for its one unit, and for other 4 units availed area based exemption. In respect of the some common input services, which are common to all the five manufacturing units, appellant took Cenvat credit of the service tax paid - Held that: - There is no dispute that the six services in question, for which Cenvat credit has been taken by ISD and distributed entirely to non duty paying unit Udaipur are specified in Rule 6(5) - in terms of Rule 6(5) of CeCR, the full Cenvat credit will be available to the assessee, if such services were used in a manufacturing unit making both, the exempted as well as dutiable goods. In the present case, the full Cenvat credit has been availed by the ISD who is required to distribute the same to various units as per Rule 7of CCR. The Rule 7 only enforces the condition that credit of service tax attributed to services used in units exclusively engaged in the manufacture of exempted goods or providing exempted services shall not be distributed - there is nothing on record to suggest that any of the services have been used only in the units manufacturing exempted goods. In fact, the nature of services tells us that these are used at the level of corporate of the manufacturing units of the assessee. Under the circumstances, restricting the distribution of Cenvat credit in terms of Rule 7 is not justifiable. The restrictions are there only in distribution of credit in respect of services which are exclusively used in relation to manufacturing of exempted goods. Credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2017 (3) TMI 1437
Clandestine removal - industrial valves - Held that: - The only challenge of the appellant is for re-computation of the duty liability, considering the value arrived at by the department as cum-duty-price. On careful consideration of the findings recorded by the first appellate authority, we find that first appellate authority has not considered the law settled by the Apex Court on this point, wherein the Apex Court has settled that the benefit of cum-duty-price needs to be extended to the appellant even in the case of clandestine removal - while upholding the charge of clandestine removal, we remand the back to the adjudicating authority to reconsider the computation of duty liability considering the value of clandestine removal as cum-duty-price - appeal allowed by way of remand.
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2017 (3) TMI 1436
Export of exempted goods - medicaments - common inputs in dutiable goods and exempted goods - Held that: - the identical issue has come up before Hon’ble Bombay High Court in the case of Repro India Ltd. Vs. Union of India [2007 (12) TMI 209 - BOMBAY HIGH COURT], where it was held that credit is available on “inputs used in mfg. of goods exported” even if goods are exempted - credit allowed - appeal dismissed - decided against Department.
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2017 (3) TMI 1435
100% EOU - SSI exemption - clandestine removal - duty paying documents - parallel/fake invoices - Held that: - it appears that parallel invoice books were found during the course of search. The authorised signatory had admitted that the goods were cleared on the basis of invoices which do not contain the printed serial number. Thus, it is established that it is a case of clandestine removal. Regarding the 100% EOU sales, it appears that the assessee-Appellants have not followed the procedure and condition laid down in the N/N. 22/2003-CE of procuring CT-3 certificate. Hence, the assessee-Appellants are not eligible for the deduction under EOU. Inasmuch as the assessee-Appellants did not follow the CT-3 procedure, the goods will have to be included in the threshold limit of SSI Exemption. Inclusion of job-work in the threshold limit of SSI exemption - Held that: - appellants have failed to show that the goods claimed to be cleared by them for job work have not been further used in the manufacture of dutiable goods. Hence, the lower authorities have rightly denied the benefit of exemption under the N/N. 214/86. Extended period of limitation - penalty - Held that: - The assessee-Appellants did not disclose to the Department that their clearances have crossed the exemption limit and also used the parallel invoices for the clandestine clearance to keep the turnover within the prescribed limit. Under these circumstances, we are of the view that the extended period of limitation was rightly invoked and penalties were correctly imposed. Appeal dismissed - decided against appellant-assessee.
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2017 (3) TMI 1434
Evasion of duty - clandestine removal - CENVAT credit - Demand - Held that: - the demands cannot be confirmed against the appellants without affording the cross examination to the appellant and to give personal hearing with positive evidence, as sought by appellant - matter needs reconsideration. A demand of ₹ 5,92,419/- has sought to be confirmed on the basis of parallel invoices - Held that: - the said demand has not been contested by the appellant - demand upheld. Appeal allowed by way of remand.
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2017 (3) TMI 1433
CENVAT credit - stock transfer - Held that: - the appellants has different units in different parts of the country where different products are manufactured - In the instant case, dutiable goods were manufactured in Ahmedabad or Mumbai, where Cenvat credit on the input service was already availed. When these goods have come to Jaipur, they were called under the heading of the “trading goods”. But fact remains that Cenvat credit pertaining to service has already been availed on the goods at Ahmedabad or Mumbai. When it is so, then again Cenvat credit cannot be provided at Jaipur. In other words, it would amount to double benefit. Thus, the Cenvat credit again cannot be allowed to the appellant - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 1427
Pre-deposit - invocation of revisional power u/s 74A of the DVAT Act, 2004 - petitioner's case is that that such powers could not have been invoked in the peculiar circumstances of the case (with respect to past transactions) which had resulted in finalised assessments prior to enactment of the Act in force - Held that: - the petitioners are hereby allowed the relief in the sense that they are at liberty to deposit 25% of the demanded amount as a condition for pre-deposit - petition disposed off - decided partly in favor of petitioner.
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2017 (3) TMI 1426
Validity of assessment order - the case of the petitioner is that the payments made by the petitioner had not been adjusted by the respondent, while passing the impugned assessment order - natural justice - Held that: - the respondent is directed to dispose of the representation dated 25.10.2016, after affording an opportunity of personal hearing to the petitioner. The petitioner will be at liberty to file documents, if any, before the respondent, on which, he seeks to place reliance - the respondent will pass a speaking order; a copy of which will be served on the petitioner - appeal allowed by way of remand.
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2017 (3) TMI 1425
Validity of assessment order - it is the petitioner's case that the respondent has proceeded to pass the said order on account of the variation in the information - Held that: - there is an contradiction in the impugned order. On the one hand, the respondent says that all monthly returns for the year 2014-2015 were filed by the petitioner and on the other hand, he holds that no monthly returns were filed. Furthermore, the respondent, proceeds to impose tax and penalty based on mismatch in information. This Court, has repeatedly, held that mismatch in information cannot be the sole basis for imposing tax and penalty. In case, respondent was desirous of confirming the proposal, he should have in the very least supplied the material particulars to the petitioner - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 1424
Detention of goods with vehicle - detention is for the purpose to verify whether the petitioner had discharged tax liability for the prior period - subsequently order of attachment was passed - is detention justified? - Held that: - None of the grounds on which an officer-in-charge of a check-post can seize the goods and detain the vehicle include verification of payment of past taxes. It is true that u/s 45(1) of the VAT Act, the competent authority has the power to provisionally attach the goods of a dealer pending any proceedings for assessment or reassessment if he is of the opinion that for the purpose of protecting the interest of the Revenue, it is necessary to do so. However, the powers u/s 68(4) of the Act and of provisional attachment u/s 45(1) of the Act are vastly different in nature - also, the department has already attached other goods worth ₹ 1.60 crores, lying in the petitioner's godown. Additional attachment of the consignment of the goods in question therefore would not be necessary. Goods directed to be released - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 1423
Penalty - whether the appellate authority is entitled to enhance the penalty in an appeal filed by the assessee u/s 14 of the Punjab Excise Act, 1914? - Held that: - Section 14 does not confer a power upon the appellate authority to pass an order more burdensome than the order appealed against. It does not entitle the appellate authority to enhance the penalty - Where the Legislature intends conferring a power upon an appellate or revisional authority to enhance the relief in favour of the respondent, it does so specifically - The impugned order enhancing the penalty was, therefore, without jurisdiction - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 1421
Offence punishable under Section 21 (c) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Held that:- In terms of the affidavits that have been filed by the learned Additional Advocate General, Punjab, it is to be noticed that Avtar Singh alias Tari (appellant No.1) has undergone actual imprisonment of nine years, eleven months and five days as on 27.02.2017. He has availed of parole for a period of one year, two months and twenty-three days. However, he did not misuse the concession of parole that was granted. He was also convicted for the offence under Section 25 of the Arms Act in the same transaction and he filed criminal appeal, i.e. CRA-S No. 1180-SB of 2010, in this Court and he has undergone his sentence in the said case. There is no other case registered against him. Jassa Singh alias Dodhi (appellant No.2) has undergone actual imprisonment of nine years, nine months and nine days as on 27.02.2017. He has availed of parole for a period of one year, four months and nineteen days. The concession of parole that was granted to him was not misused by him. There is no other case registered against him. No remission has been given to the appellants in view of the provisions of Section 32 of the NDPS Act. Therefore, the period of imprisonment that is mentioned is actual imprisonment and despite being in custody for a long period, the appeal of the appellants could not mature for hearing. Therefore, the appellants were only carriers and have not been involved in any other case and during imprisonment they did not misuse the concession of parole that was granted, besides, their appeal has not matured for hearing even though they have undergone substantial period of their imprisonments, it would be just and expedient to reduce their sentences of imprisonments to eleven years and the amount of fine to ₹ 1,00,000/- each and in default of payment thereof, undergo further rigorous imprisonment for one year.
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2017 (3) TMI 1420
Condonation of delay - power of Magistrate - Petition u/s 138 of Negotiable Instruments Act, 1881 - Held that:- Condonation of delay is within the discretion of the Magistrate. Nothing could have been achieved by the complainant by not filing complaint in time. He filed the complaint within eight days from the date of receipt of information from the post office. Thus, even if it is presumed that the complaint was not filed within 30 days from the date of expiry of period of 15 days given to the accused under section 138 of the Act, the fact remains that the delay of around 2 months was caused due to aforesaid circumstances. There is the record and the law is amended in view of the aforesaid probabilities and power is given to the Magistrate to condone the delay. In view of the possibility mentioned, the Court is expected to use this provision liberally. This Court holds that the Sessions Court has not committed any error in holding that there was sufficient cause for condonation of delay.
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