Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 4, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
-
Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, others Palm Oil, Crude Palmolein, Rbd Palmolein, Others Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
-
RBI imposes penalty on The Chanasma Nagrik Sahakari Bank Ltd., Chanasma, District Patan (Gujarat)
-
RBI imposes penalty on Bijnor Urban Co-operative Bank Ltd., Bijnor, Uttar Pradesh
-
Second Meeting of the India-UAE High Level Joint Task Force on Investments Held in Mumbai
-
Virtual Clusters Launched
-
RBI Reference Rate for US $ and Euro
-
Anand Sharma and UP CM Launch DMIC Project in uttar Pradesh
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
-
The assessee was justified in adjusting the interest earned from the interest payments on term loan and the balance of interest paid was capitalized in the books - AT
-
ALP - the ALP determination under CUP Method on the basis of Daily Export Port Data April 2007- March 2008, by adopting quarterly averages, was wrongly rejected by the TPO and the DRP - AT
-
Change in constitution of firm or on succession Restriction to carry forward losses - Unabsorbed depreciation is carried forward u/s 32(2) and are not brought forward losses which are carried forward u/s 78 - AT
-
TDS u/s 194-H - assessee is sharing a part of commission received as remuneration from HDFC Bank in order to attract customers to improve volume of business, does not constitute commission - AT
-
Disallowance as deduction while computing LTCG - The payment made for removal of encumbrances in respect of the property being relocation of the hutment dwellers falls under the category of expenditure incurred in connection with transfer of the property - AT
Customs
-
Search and seizure - Narcotic drugs - The recovery from the vehicle on a public highway was not as a matter of pure chance but on specific advance information and therefore the requirements of Sections 41 and 42 of the NDPS Act had to be complied with. - HC
-
Search and seizure - narcotic drugs being opium - A joint communication of the right available under Section 50(1) of the NDPS Act to the accused would frustrate the very purport of Section 50 of NDPS act. - SC
Corporate Law
-
Winding up petition - The respondent has stated in its reply that the software applications provided by the petitioner are not being used on account of the defects - the winding up petition for nonpayment of the invoice would not be maintainable. - HC
Indian Laws
-
DRT and not the Civil Court has jurisdiction to determine whether there has been any illegality in the measures taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act - SC
Service Tax
-
When w.e.f. 01/6/07 the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/07, the same activity cannot be classified as site formation and clearance, excavation and earth moving or as cargo handling service. - AT
-
Refund / Rebate claim - export of services - Relevant date for filing refund in the case of export of service is in the date of receipt of payment of the exported service - AT
-
Cenvat Credit is sought to be denied is that the invoices of the service provider mention the old name and address and old registration number of the Appellant company - Since the receipt of the service is not disputed, stay granted - AT
-
Whether the assessable value splited into two parts and one such part is called reimbursement of expneses shall form part of assessable value of the taxable service - prima facie not allowed - stay granted partly. - AT
-
Applicant booked the space for cargo for transporting of their clients goods, which has been utilized by the exporter/importer - the extra amount collected by the applicant is in relation to the procurement of that service - stay granted partly - AT
Central Excise
-
Clandestine clearance of the scrap generated in their factory - Admittedly the clandestine removal charge is a serious allegation and has to be established by adducing some positive and cogent evidence, corroborating the same. - AT
-
Whether accumulated credit of AED (T&TA) can be cross utilized for payment of duty relating to AED(GSI) and for payment of basic excise duty during January 2003 to May 2003 - Held no - AT
-
Valuation - Job Worker versus Related person - Manufacturing confectionary items on behalf of M/s. ITC Limited at their factory premises as a job worker - Valuation to be done under Rule 11 - AT
VAT
-
Classification of goods - many processes were undertaken - By no stretch of imagination, it can be said that the product remained in original form of 'Zeolite', which by itself is an ore - HC
Case Laws:
-
Income Tax
-
2014 (3) TMI 72
Deletion made u/s 69C of the Act Unexplained expenditure Held that:- The case of the assessee all through was that neither the Investigating Wing nor the AO called for certain details as to the mode of operation carried on by travel agents but as a matter of abundant precaution it has filed all the details before the CIT(A) and based on the circumstance the learned CIT(A) thought it fit to admit the same after obtaining a remand report - admission of additional evidence cannot be stated to be in violation of Rule 46A of the I.T. Rules - the assessee has explained the consistent method followed by him, in the absence of pointing out any specific instance of cash payment without availability of cash on the stipulate date - the addition made by the AO under section 69C has no legs to stand there was no infirmity in the order passed by the CIT(A) Decided against Revenue.
-
2014 (3) TMI 71
Surrender of income during search u/s 132 of the Act - Addition made u/s 68 of the Act - Unexplained income - Whether the CIT(A) is justified in deleting the addition made by the AO on the basis of surrender made during the course of search Held that:- CIT(A) has failed to consider the real issues and pecularities of surrender and book entries involved in the case - order of ld. CIT(A) cannot be sustained as there is no case of deleting the addition of ₹ 10 crores as if the effect is given to the CIT(A)'s order, then assessed income comes to a loss of ₹ 79,85,102/- as against income of ₹ 4,63,44,560/-. Even if the issue of percentage completion method is kept aside, there is absolutely no justification in the act of the assessee crediting an amount of ₹ 10 crores towards the surrender in its books of accounts - This is so because it is demonstratively apparent out of cash 'on money' of ₹ 9.41 crores appearing from seized papers an amount of ₹ 9.40 crors stands utilized leaving a meager balance of ₹ 60,350/- in hand as on 31-8-2007 - These figures are demonstratively mentioned by AO in his order - When assessee had only meager cash balance, it is not understandable as to how assessee can credit ₹ 10 crores in his books - Prima facie, there is no justification in the assessee's act of crediting an amount of ₹ 10 crores in its books of accounts - it may amount to income of the assessee as unexplained income in the absence of availability - the issues in question have not been properly considered by the CIT(A) thus, the order set aside and the matter remitted back to the AO for fresh consideration Decided in favour of Assessee.
-
2014 (3) TMI 70
Addition made u/s 40(a)(ia) of the Act - Disallowance of transport expenses Held that:- The assessee had produced a Xerox copy of the certificate evidencing payment of TDS during the remand report proceedings, that FAA declined to admit it as the assessee had not furnished any reasonable cause for not producing it before the AO, that he had not doubted the genuineness of the document the assessee should produce all the available evidences before the AO, but if FAA was of the opinion that Remand Report was required in this regard he should have directed the AO to make complete inquiries-either from the bank or from JTS - original TDS certificate can never remain with the person who deducts Tax-he has to hand it over to the person who is entitled to claim credit of such deduction thus, it was not proper to invoke provision of section 40(a)(ia) of the Act thus, the matter is remitted back to the AO for fresh adjudication Decided partly in favour of Assessee. Addition on account of difference in valuation of closing stock Held that:- The difference in valuation was treated under-valuation of closing stock by the AO and same was added to the income of assessee - As per the assessee it was following the FIFO method for valuation of closing stock - AO had adopted the average cost price of POY for arriving at the closing stock for the year under consideration - while finalising the assessment, AO had not challenged the method of valuation of closing stock adopted by the assessee i.e. the FIFO method - As per the settled principles of tax jurisprudence when the assessing authority does not accept the assessee's method of accounting/valuation then he can exercise power under section 145 of the Act to make such computation in such method as he determines fit for deducing the correct profits and gains, but the power of the AO to choose the basis and manner of computation of income is not an arbitrary power to assess the income-he must exercise his discretion and judgment judicially - From the orders of the AO and the FAA it transpires that they have decided the issue of valuation of stock without considering the method of valuation adopted by the assessee thus, the order of the FAA is set aside Decided in favour of Assessee.
-
2014 (3) TMI 69
Unpaid creditors written off Application of section 41(1) of the Act Held that:- On given addresses of the creditors, the letters were returned back unserved and in one case, namely, M/s. Ashok Trading Company had denied having been any business transaction with the assessee - The creditors had been shown as liability in the balance sheet during the year under consideration as per assessees submission, it was pertained to A.Y. 03-04, whereas the CIT(A) confirmed the addition on account of nonexistence of liability - The facts show that outstanding remained to pay for more than 4 years which is not possible assessee contended that the amount has been paid in A.Y. 09-10 thus, the AO is directed to verify whether the creditors have been paid or not Decided in favour of Assessee.
-
2014 (3) TMI 68
Disallowance of exemption u/s 10B of the Act Scrap sales Incremental turnover & connectivity incentive Subsidy from government - Interest income - - Other income - Exchange rate of fluctuation - Held that:- The decision in Maral Overseas Ltd. Versus Additional Commissioner of Income-tax, Range 5, Indore [2012 (4) TMI 345 - ITAT INDORE] followed - Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Revenue.
-
2014 (3) TMI 67
Addition made u/s 68 of the Act Unexplained credits Held that:- CIT(A) has given relief to the assessee by giving opportunity to the AO to rebut the submission of the assessee which he has failed to do and since all the depositors were holding PAN Nos. - CIT(A) has rightly deleted the addition Relying upon Deputy Commissioner of Income-Tax Verses Rohini Builders [2001 (3) TMI 9 - GUJARAT High Court ] the order passed by him is upheld Decided against Revenue. Unexplained investment in fixed assets u/s 69 of the Act Held that:- CIT(A) after taking into consideration the remand report of the AO and verifying all the invoices filed by assessee in support of purchase of fixed assets held that addition made to the fixed assets were genuine - addition u/s. 69 being 10% of total addition made in fixed assets was not sustainable as the same was made on presumption basis and without bringing any material on record there was no infirmity in the order of CIT(A) as it has been passed after giving opportunity to the AO on the submissions Decided against Revenue. Addition made on account of unexplained purchases Held that:- CIT(A) held that since assessee has furnished all the invoices and ledger accounts during the remand proceedings which were duly examined by the AO and nothing adverse was found by him during this investigation - 10% addition on lump sum basis cannot be made and he deleted the addition there is no infirmity in the order of the CIT(A) Decided against Revenue. Addition made on account of administrative and other expenses Held that:- CIT(A) held that the finding of AO as unreasonable and holding that disallowance made by AO being on higher side restricted the addition to Rs. 1,50,000 - CIT(A) has given relief after going through the nature of the expense which were mainly on account of interest/advertisement expenses, professional charges and audit fees there is no reason to interfere with the order Decided against Revenue. Addition made on account of preliminary expenses u/s 35 of the Act Held that:- CIT(A) had rightly held that preliminary expenses being 1/5th of the total expenses were allowable u/s. 35D and therefore he deleted the addition so made by AO Decided against Revenue.
-
2014 (3) TMI 66
Capitalization of interest income after set off with interest expense - Income earned from other sources Held that:- Assessee had to incur interest expenses on the loan taken from the bank - It was capitalized and the AO has accepted the same - The interest which was received on the fixed deposits was deducted from the capital work in progress of the assessee - fixed deposit was placed as margin in the bank - Relying upon Tuticorn Alkali Chemicals & Fertilizers Limited vs. CIT [1997 (7) TMI 4 - SUPREME Court] - the present case is not one where the assessee has made the deposit of surplus funds lying idle with an intention to earn the interest - On the contrary the amount of interest was earned from fixed deposit which was kept in the bank and marked as lien for furnishing the bank guarantees - Thus, it had an inextricable nexus with securing the contract - the assessee was justified in adjusting the interest earned from the interest payments on term loan and the balance of interest paid was capitalized in the books thus, there is no infirmity in the order of the CIT(A) in directing that the addition made by the AO under the head 'income from other sources' was to be deleted Decided against Revenue.
-
2014 (3) TMI 65
Expenses incurred on valuation of property Held that:- No cross verification from the returns or accounts of Smt. Beena Devi who was the original owner of the property have been carried out to verify as to what amount was spent from her books, bank of account or cash in hand in respective years - This is so because the assessee is claiming 50% of expenses incurred by Smt. Beena Devi in defending and improving her title over the property - This becomes a crucial factor for ascertainment of claim of the assessee - There is no indication as to what has been done by department in the case of Smt. Shakuntla Golyan on these issues i.e. the another co-owner to whom half of the property was gifted by Smt. Beena Devi along with the assessee thus, the matter remitted back to the AO for adjudication. Cash credits Held that:- On one hand the CIT(A) finds fault with assessee's explanation that the documents were not filed before assessing officer and at the same time he has adverted to the merit of the documents that it amounts to giving contradictory findings - Besides, both the companies i.e. M/s Vitir Chattels Pvt. Ltd. and Nulon India Ltd. are claimed to be regularly assessed and family related concerns of the assessee - If the amount of Mr. Yash Golyan is lying in one of the family related concern i.e. Vitir Chattels Pvt. Ltd. and then transferred to another concern i.e. Nulon India Ltd. and both of them are assessed thus, the assessees discharge of onus is to be weighed from the assessment record of these concerns thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
-
2014 (3) TMI 64
Rejection of application for registration of charitable institution u/s 12(a) of the Act Held that:- The adverse inference has been drawn on possible intention, activities i.e. the issues, which, in our view are not germane at the time of grant of registration of trust u/s 12A more so when the assessee's objects are not held to be non-charitable - The non-contribution of membership fee by general members and life members may be paid later inasmuch unless the members makes the necessary contribution rights of membership cannot dwell on them. Genuineness of the activities of the Trust - Income and expenditure Held that:- The adverse inference nothing to reflect on this aspect with regard to, time to raise the funds and donations it is the discretion of the society that can be undertaken in due course, may be the issue of 80G registration which is consequent to 12A registration may be important Thus, mere non-carrying on of the vigorous activities of trust at the time of registration per se cannot be detrimental for registration of the trust u/s 12A when the objects are charitable and there is no adverse comment about them Relying upon Director of Income-tax Vs. Foundation of Ophthalmic and Optometry Research Education Centre [2012 (8) TMI 777 - DELHI HIGH COURT] - the assessee is eligible for grant of registration u/s 12A thus, the order of DIT(E) is reversed and the assessee is held to be eligible for registration u/s 12A of the I.T. Act Decided in favour of Assessee.
-
2014 (3) TMI 63
Arms length price adjustment u/s 92C of the Act Method for determination of ALP - Whether the AO was justified in making an arms length price (ALP) adjustment u/s 92 C of the Act Held that:- The inputs are not the independent quotes , as referred to by the TPO, but only compilation of the data available in public domain - the Transfer Pricing Officer was clearly in error in rejecting these inputs on the ground that such information is not covered by Rule 10D (3) for the simple reason that Rule 10 D(3) is only illustrative in nature and it merely describes the information, required to be maintained by the assessee under section 92 D of the Act - The information furnished by the database used by the assessee is fairly comprehensive information, including description and prices as per invoices presented to customs a fact noted by the TPO himself, which can be cross checked and verified, in case of doubts - As a quasi -judicial authority, and while pursing the goal of justice, one cannot remain at the mercy of the wisdom of representatives of the parties appearing before such an authority - it is bounden duty of every quasi -judicial authority to appreciate the scope of the legal provisions and apply them in letter and in spirit. The TPO himself has noted in his order, the assessee did not have any contractual arrangement and these were market driven prices on which the exports to AEs took place - It is also important to bear in mind the fact that the assessee has taken average of a quarter so as to ensure that day to day variations in prices do not distort the comparability - Neither there is any specific objection to this averaging, nor has the TPO suggested any better alternative to this approach CUP method does provide for a reasonable, even if not perfect, solution to the distortion which may creep in case comparison of prices is done on day to day basis, and due to limited comparables being available for the same Relying upon Serdia Pharmaceuticals Pvt Ltd Vs ACIT [2010 (12) TMI 60 - ITAT, Mumbai] - the ALP determination under CUP Method on the basis of Daily Export Port Data April 2007- March 2008 , by adopting quarterly averages, was wrongly rejected by the TPO and the DRP - the application of CUP has been approved method in principle - Decided in favour of Assessee.
-
2014 (3) TMI 62
Addition made on account of profit on sale of property - Application of section 50C - stamp valuation - Held that:- The decision in CIT Allahabad and Anr vs. Chandra Narain Chaudhri [2013 (9) TMI 646 - ALLAHABAD HIGH COURT] followed - CIT (A) has correctly observed in his order that the provisions of Section 50 C (2) are essentially to be read in conjunction with the provisions of Section 50 C (1) of the Act - both ingredients of provisions of Section 50 C (2) are present, which made it necessary for the AO to refer the matter for valuation to DVO in accordance with provisions of Section 55-A of the Income Tax Act - The contention of the assessee is upheld that reference should have been made by the Assessing Officer to the Departmental Valuation Officer (DVO) thus, the matter remitted back to the AO with a direction that he refer the same to the DVO Decided in favour of Assessee. Denial of brought forward loss excluding depreciation Held that:- The assessee submits that during the financial year 2005-06, there was only re-constitution of the partnership firm by way of admission of partners and that no partner had retired - the assessee is correct in its claim - But as the factual position has not been considered by the Assessing Officer, the matter is remitted back to the Assessing Officer for fresh adjudication decided partly in favour of Assessee. Unabsorbed depreciation u/s 78(1) - change in constitution of firm or on succession Restriction to carry forward losses Held that:- Unabsorbed depreciation is carried forward u/s 32(2) and are not brought forward losses which are carried forward u/s 78 - the orders of the first appellate authority upheld Decided against Revenue.
-
2014 (3) TMI 61
Nature of Expenses Capital OR Revenue expenditure maintenance of market yard - Held that:- The aim and object of the expenditure has to be looked into, which would determine the character of the expenditure, whether it is a capital expenditure or a revenue expenditure - the assessee earns income by making available marketing sites in various marketing yards - The expenses incurred above are incurred for facilitating proper maintenance of the same and thus the assessee earns income by doing so - The decision in CIT Versus AGRICULTURAL PRODUCE MARKETING COMMITTEE [2010 (9) TMI 156 - DELHI HIGH COURT] followed the expenditure incurred by the assessee was absolutely in the realm of revenue expenditure as there has been no construction which had enduring benefit to the assessee - it was difficult to say that the repairs carried out by the asseesee have any enduring benefit to its assets - the expenditure was recurring in nature and the assessee was required to do the same to carry out the business Decided against Revenue. Depreciation on capital expenses not allowed Held that:- The expenditure which is in the nature of capital is entitled to depreciation in accordance to law and the AO is directed to give consequential depreciation to the capital expenditure for which depreciation was not given - Other than that there was no merit in the contention of the assessee that certain items for which expenses was made by them was erroneously held as capital in nature by the CIT(A) there was no infirmity in the order of the CIT(A) Decided partly in favour of Assessee.
-
2014 (3) TMI 60
Determination of indexed cost of acquisition - Increase in capital gains computation Held that:- The AO was of the view that fair value was very high since assessee was holding the property since 1979 - to make a reference under section 55A of the Act, Assessing Officer has to form an opinion that value claimed is less than the fair market value - the opinion of the Assessing Officer here is that the value shown was very high or in other words, more than the fair market value - the reference under section 55A could not have been made the decision in Commissioner of Income-tax Versus Umedbhai International P. Ltd. [2010 (2) TMI 631 - Calcutta High Court ] followed - where there was a substitution of the cost as on 1.4.1981, by value based by DVO on a reference under section 55A of the Act, such a reference could not be made unless and until the Assessing Officer formed an opinion that value shown by the assessee was less than fair market value thus, the substitution of cost of acquisition with the value fixed by the DVO set aside Decided in favour of Assessee. Claim of expenditure while computation of the LTCG Held that:- Payment was directly made to Shri Nikhil Chanda and this was evident - Shri Nikhil Chanda had acknowledged receipt - it was a necessary outgo without which the sale would not have taken place - the computation of capital gains under section 48 of the Act - Sub-clause (i) of that Section states that expenditure incurred wholly and exclusively in connection with the transfer of capital asset has to be deducted from full value consideration received or accruing - Shri Nikhil Chanda was a confirming party who had nominated the buyers to the vendors. The vendors have contracted with the purchaser for sale and transfer of the said premises free from all encumbrances mortgages charges attachments liens lispendens leases tenancies occupancy rights uses debutters trusts acquisition requisition alignment claims demands and liabilities whatsoever or howsoever by the vendors to the purchaser at or for the consideration of Rupees four crores fifty lacs only paid to the vendors by the purchaser in the proportion as aforesaid and the confirming party has agreed to concur confirm and assure such sale - the payment could only be considered as an expenditure incurred only and exclusively in connection with the transfer of the property - thus, It was an allowable one under section 48(i) of the Act Decided in favour of Assessee.
-
2014 (3) TMI 59
Non-compliance of provisions of section 194-H - payment to vehicle dealiers - payment of commission versus grant of discount or rebate - The conclusion of the Assessing Officer is that the assessee made payments to the intermediaries and impliedly the sub-agents of the assessee - Held hat:- the assessee was not getting any services from the vehicle dealer and there was no occasion to make any payment of commission to the vehicle dealers - if the assessee is sharing a part of commission received as remuneration from HDFC Bank in order to attract customers to improve volume of business, then the payment made by the assessee to the customers by issuing cheque in the name of vehicle dealers cannot be said to be a payment of commission. The Assessing Officer made additions on hyper technical grounds which was rightly deleted by the Commissioner of Income Tax(A) after considering the additional evidence, the remand report and explanation of the assessee - there was no occasion for the assessee to make payment of commission to the vehicle dealers who are getting business by the assessee thus, the payment made by the assessee in the form of cheques through vehicle dealers to the customers is a grant of rebate and discount - the assessee was not under any obligation to comply with the provisions of section 194H of the Act - the Assessing Officer wrongly invoked the provisions of section 40(a)(ia) of the Act Decided against Revenue.
-
2014 (3) TMI 58
Disallowance as deduction while computing LTCG - Expenditure incurred in connection with the transfer elocation of hutment dwellers - Held that:- The genuineness of payment has not been disputed by the authorities below and even the purpose of payment is also not question by the AO as well as CIT(A) - The disallowance has been made on the ground that the transfer/development agreement does not speak about such payment - When the payment is undisputedly made towards relocation of hutment dwellers then it is certainly for the purpose of removing the encumbrances in the title of the owners in respect of the land in question it is obligatory on the part of the owners/transferers of the land to ward off any charge and encumbrances arises in the property thus, there was no substance in the argument of the revenue that in the absence of any specific mention in the agreement such payment is not allowable deduction - The payment has been made for removal of encumbrances in respect of the property in question being relocation of the hutment dwellers - this falls under the category of expenditure incurred in connection with transfer of the property Decided in favour of Assessee. Benefit of indexation of cost of acquisition Held that:- The decision in CIT Vs Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] followed The AO has not disputed the fact that the property in question has been inherited by the assessee from his father - for the purpose of determine the indexed cost of acquisition it has to be computed by applying the deeming fiction contained in Explanation 1(i)(b) to Section 2(42A) as well as provisions of section 49(1) of the Income Tax Act - thus, the order of the CIT(A) set aside Decided partly in favour of Assessee.
-
Customs
-
2014 (3) TMI 56
Search and seizure - Narcotic drugs - presence of diacetylmorphine of 60.4% and 57.7% purity respectively - Compliance of Section 50 of the NDPS Act - Session judge acquitted the respondents of the offences under Sections 21 and 27A of Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). - Held that:- a personal search was also made of the body of the accused. A notice under Section 50 NDPS Act had therefore to be mandatorily issued. The notice under Section 50 mentions the time of occurrence as around 11.30 hrs. today which was 6th October 2007. In the absence of any indication that it was p.m. or a.m. it could well be taken to be a.m. Even if it was taken to be p.m., it contradicted the case of the prosecution that the accused was apprehended at around 10.30 p.m. The second factor pointed out is that a typed notice could not possibly have been served at the time and place of apprehension of the accused. There was nothing to show that the raiding party took any computer with them from which a typed notice could have been prepared at the spot. These factors indicate that the notice Ex. PW11/B was a document prepared subsequently. The recovery from the vehicle on a public highway was not as a matter of pure chance but on specific advance information and therefore the requirements of Sections 41 and 42 of the NDPS Act had to be complied with. The Court is unable to find any valid ground for granting leave to appeal against the impugned judgment. Accordingly, the petition is dismissed with no order as to costs. - Decided against the petitioner.
-
2014 (3) TMI 55
Release of foreign currency seized earlier - grant of interest on such seizure as interest on arrears of refund - Held that:- The Customs Department themselves stated before this Court that the amount of US$ 289250 is lying with them while seeking a stay of the order dated 19 October 2010. - the petitioner has not been granted any interest on the amount of refund. It would therefore, be arbitrary and unreasonable to deny the petitioner, both interest on the arrears of refund for the period from 1994 to 2014 on the one hand and the compensation consequential upon variations in the foreign exchange rate between 1994 to 2014 on other hand. - Customs department directed to refund the amount.
-
2014 (3) TMI 54
Search and seizure - narcotic drugs being opium - Issuance of Joint Notice or Individual show cause notice - Offences under Section 8 read with Section 18 and under Section 8 read with Section 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - whether Section 50 of the NDPS Act was complied with or not. - Held that:- the conviction is solely based on recovery of opium from the bag of respondent No.1 - Parmanand. No opium was found on his person. If merely a bag carried by a person is searched without there being any search of his person, Section 50 of the NDPS Act will have no application. But if the bag carried by him is searched and his person is also searched, Section 50 of the NDPS Act will have application. In this case, respondent No.1 Parmanands bag was searched. From the bag, opium was recovered. His personal search was also carried out. Personal search of respondent No.2 Surajmal was also conducted. Therefore, section 50 of the NDPS Act will have application. A joint communication of the right available under Section 50(1) of the NDPS Act to the accused would frustrate the very purport of Section 50. Communication of the said right to the person who is about to be searched is not an empty formality. It has a purpose. Most of the offences under the NDPS Act carry stringent punishment and, therefore, the prescribed procedure has to be meticulously followed. The idea behind taking an accused to a nearest Magistrate or a nearest gazetted officer, if he so requires, is to give him a chance of being searched in the presence of an independent officer. Therefore, it was improper for PW-10 SI Qureshi to tell the respondents that a third alternative was available and that they could be searched before PW-5 J.S. Negi, the Superintendent, who was part of the raiding party. PW-5 J.S. Negi cannot be called an independent officer. The search conducted by PW-10 SI Qureshi is vitiated. We have, therefore, no hesitation in concluding that breach of Section 50(1) of the NDPS Act has vitiated the search. The conviction of the respondents was, therefore, illegal. - Decided against the revenue.
-
Corporate Laws
-
2014 (3) TMI 53
Winding up petition - unable to pay debts - whether the defense raised by the respondent is bonafide or not - Held that:- the dispute between the parties is extant and not illusory. The exchange of emails clearly indicate that the disputes raised by the respondent are bonafide and contemporaneous to the claim made by the petitioner in 2010. The respondent has stated in its reply that the software applications provided by the petitioner are not being used on account of the defects. This clearly would raise a substantial dispute and in the circumstances it cannot be held that the disputes raised by the respondent are not bonafide. Following the decision in IBA Health (I) (P.) Ltd. [2010 (9) TMI 229 - SUPREME COURT OF INDIA], the winding up petition for nonpayment of the invoice would not be maintainable.
-
FEMA
-
2014 (3) TMI 57
Receipt of payment Non-Resident External (NRE) Account from Smt. Sarita Mediratta resident of UK - Making payment to Shri Sunil Narang, a resident of Malviya Nagar, New Delhi on behalf of Smt. Sarita Mediratta - Penalty for Violation of FERA - Held that:- the evidence that has come on record that there is nothing to show that the Appellant made payment of Rs.5.25 lakhs in lieu/as compensation for to the credit of Shri Sunil Narang on behalf of Smt. Mediratta. Neither Shri Hari Ram Aggarwal nor Shri Sunil Narang appears to have any nexus with the Appellant as such. He is not shown to have entered into any transaction with R.K. Verma, an NRI whose name finds mention in the adjudication order. The key element for finding that the Appellant violated Section 9 (1) (d) read with Section 64 (2) FERA is missing in the present case. The statement of Shri Narang regarding arranging the NRE draft from his sisters account does not by any mean implicate the Appellant Suresh Kejriwal. The facts concerning Shri Narang, Shri Aggarwal and their transactions, if any, with Smt. Mediratta cannot be stated to be within the personal knowledge of the Appellant. The so-called admission statement of the Appellant, which was retracted by him, could not be relied upon in the absence of independent corroboration. - Appeal allowed - Decided in favor of appellants.
-
Service Tax
-
2014 (3) TMI 79
Classification of service - cargo handling or site formation and clearance, excavation and earth moving service or mining service - job was clearing the site for mining, excavation of top soil and its dumping at a specified place, removal of the over burden and raising of saleable lignite from Matasukh Mines - period before 16/06/05 and from 16/06/05 to 31/05/07 - Held that:- except for mention of loading of the mined lignite of the desired quantity into the trucks in Clause 4.2.1 (c) of the agreement, there is absolutely no mention of any handling or transportation of coal by the appellant within the mining area. As held by the Tribunal in the case of Sainik Mining & Allied Services Ltd. vs. CCE, CUS & ST, BBSR (2007 (11) TMI 90 - CESTAT, KOLKATA), cargo in commercial parlance means the goods which are to be carried as freight in ships, planes, rail or trucks and cargo handling service is handling of such goods meant for transportation and it is on this basis that the Tribunal in this case held that handling and movement of coal within the mining area is not taxable as cargo handling service under Section 65 (105) (Zr). - service tax demand for the period prior to 16/6/05 is not sustainable at all As regards the service tax demand for the period from 16/6/05 to 31/5/07 - the entire contract has to be treated as a mining contract and not a contract for site formation, clearance, excavation and earth moving. Therefore, for this period also, the appellants activity cannot be subjected to service tax under Section 65 (105) (ZZZa). We find that same view has been taken by the Tribunal in an identical issue involved in the case of M. Ramakrishna Reddy vs. CCE & CUS, Tirupathi [2008 (10) TMI 115 - CESTAT, BANGALORE] Moreover, when w.e.f. 01/6/07 the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/07, the same activity cannot be classified as site formation and clearance, excavation and earth moving or as cargo handling service. The service tax demand for the period prior to 01/6/07 and also the penalty under Section 78 to that extent set aside. - Demand for the normal period of limitation and penalty u/s 76 confirmed - Decided partly in favor of assessee.
-
2014 (3) TMI 78
Refund / Rebate claim - export of services - rebate claim were rejected on the premise that the appellant has contravened the condition of the said Notification, as they were not registered with the department prior to export and they have not filed their service tax returns before the department. Lastly, their claim of refund is barred by limitation - Held that:- Nature of services is they are rendering service on continuous basis without any commencement or terminal pint, and it is difficult to complete with the requirement "prior" to the date of export, except for the description of services. It was further held that if particular declaration are furnished with the service tax authorities along with documentary evidence are found to be correct, object of filing of declaration would be satisfied. In Textech International P. Ltd. [2010 (11) TMI 245 - CESTAT, CHENNAI] this Tribunal held that as per Section 69 of the Finance Act, 1994 a person who is liable for paying service tax is required to apply for registration. Admittedly, the appellant is although providing taxable service but the same is exempted therefore, they are not required to pay service tax, registration is not required. As the appellant is not required to pay service tax, therefore, they are not required to file service tax returns. Relevant date for filing refund in the case of export of service is in the date of receipt of payment of the exported service. as held in the case of Eaton Industries P. Ltd. [2010 (12) TMI 71 - CESTAT, MUMBAI] - Refund allowed - Decided in favor of assessee.
-
2014 (3) TMI 77
Waiver of pre deposit - Business Auxiliary Service - Availment of CENVAT Credit - Held that:- There is no dispute that since the year 2005 the appellant company is operating from Noida and in this regard they had obtained permission from the Company Law Board permitting the change of the name and registered head office. Ongoing though the facts narrated in the impugned order, it is seen that receipt of the service, in question, is not disputed. It is also not disputed that the service of renting of immovable property received by them is in respect of immovable property rented by them in Noida. The only ground on which the Cenvat Credit is sought to be denied is that the invoices of the service provider mention the old name and address and old registration number of the Appellant company and in some cases, while the new name of the Appellant Company -M/s. Drishtee Development and Communication Limited, their address in Noida is not their present address. Since the receipt of the service is not disputed, the impugned order, does not appear to be correct - Stay granted.
-
2014 (3) TMI 76
Assessable value - Whether the assessable value splited into two parts and one such part is called reimbursement of expneses shall form part of assessable value of the taxable service - Held that:- When show cause notice is looked into that leaves ample doubt against the appellant as to its modus operandi and prima facie compels to hold against the appellant. No agreement was made available to us to consider in favour of the appellant. We have gone through anxiety of the revenue and also looked into para 2.5 of the adjudication order. The expenses incurred were directly allocable to generate the service provided and no way can be held to be avoidable to call the same reimbursable for incremental value addition to the service. It appears that revenue lifted corporate veil to go inside the transactions for ascertaining the truth behind the operation. In the entire adjudication process, the Authority noticed evasive practice at different parts of the adjudication order. Appellant has adopted a novel way of splitting the consideration with nomenclature of reimbursement of expenses. Deliberate splitting is not possible to be ruled out when splitting is not intended by law. Once splitting is attributable to a motive, the appellant cannot get any shelter under the purview of law - Service tax to be deposited in installments - stay granted partly.
-
2014 (3) TMI 75
Waiver of pre deposit - Demand of service tax - Previous order passed for pre deposit - Held that:- Since assessee made excess deposit of the amount ordered - Stay granted.
-
2014 (3) TMI 74
Waiver of pre-deposit of tax - Interest u/s 75 - Penalty u/s 78 - Demand of tax - Business Auxiliar Service - Held that:- Business Auxiliary Service would cover any service in relation to procurement of goods or services which are inputs for the clients. The Commissioner observed that the procurement of goods or service by the service provider must be used by the manufacturer or the service provider as the case may be. In this case, the applicant booked the space for cargo for transporting of their clients goods, which has been utilized by the exporter/importer. Prima facie, it appears that the extra amount collected by the applicant is in relation to the procurement of that service - Conditional stay granted.
-
Central Excise
-
2014 (3) TMI 52
Maintainability of appeal - SSI Exemption - Whether the CESTAT was correct in setting aside orders of the Commissioner Appeal when respondent availed both SSI Exemption as well as Cenvat Credit against the manufactured goods which are against the Central Excise Act, 1944 - Held that:- Following decision of Commissioner of Central Excise, Ahmedabad Vs. Ramesh Food Products [2004 (11) TMI 103 - SUPREME COURT OF INDIA] and Nebulae Health Care Limited Vs. Commissioner of Customs, Chennai [2006 (8) TMI 74 - CESTAT, CHENNAI] - appeal is dismissed as not maintainable under Section 35G of the Act before this Court - Decided against revenue.
-
2014 (3) TMI 51
Refund - payment of excess duty - Compounded Levy Scheme - wrong determination of Annual Production Capacity - independent textile processors - whether respondent could file a refund claim of excess duty paid when Annual Production Capacity fixed by the Revenue under Hot Air Stenter Independent Processors Annual Capacity Determination Rules 1998, has not been challenged - Held that:- If the determination was not appealable, in our view, it would be incorrect to hold that without challenging such an order, the manufacturer cannot claim refund of duty erroneously collected. The fact that the galleries were included while determining the Annual Production Capacity and as such, the galleries were otherwise not required to be included by virtue of the decisions of the Tribunal and the Apex Court, there is no dispute. In our view, therefore, the petitioners were justified in filing refund claims in terms of Section 11B of the Central Excise Act claiming refund of excess duty collected on the basis of such consideration of galleries in determining Annual Production Capacity and collecting corresponding excise duty on such capacity. In the show cause notice, three objections were raised. The refund claims were declined only on one ground, namely, that without challenging the determination of annual capacity of production, the processor could not have sustained refund claim. In that view of the matter, the Deputy Commissioner did not go into other aspects. Therefore, even while setting aside the orders passed by the Tribunal and the central excise authorities and holding that the refund claims were maintainable without challenging the determination of Annual Production Capacity, we would still like to remand the proceedings to the Deputy Commissioner for further consideration and adjudication on other two issues raised in the show cause notice. - matter remanded back to original authority - Decided in favor of assessee.
-
2014 (3) TMI 50
Clandestine clearance of the scrap generated in their factory - generation of scrap to the tune of 58% to 82% - Held that:- as per the allegation made by the Revenue, the scrap generated by the appellant would be to the tune of 57% to 88%. In a unit manufacturing electrical goods, generation of scrap to the extent of 86% is not only difficult but is an impracticable approach of business. If the said allegation is accepted, the same would lead to the emergence of finished goods to the tune of 14% only, which no businessmen can afford to do. Entire case of the revenue is based upon the loose slips recovered during the searched. Admittedly the clandestine removal charge is a serious allegation and has to be established by adducing some positive and cogent evidence, corroborating the same. In the absence of any other evidence, allegation of clandestine removal can not be upheld. - Demand set aside - Decided in favor of assessee.
-
2014 (3) TMI 49
Classification of Toys and Games as CSH 9504.90 as games as contended by the Revenue or by CSH 9503.00 as toy/puzzle - matter referred to larger bench with the following qustions:- a) Whether the products (a) Chip N Dale, (b) Duck Tale Disney, (c) Fox and Geese and (d) Rally are classifiable under heading 9503.00 as held by Judicial Member b)Whether the products (a) Chip N Dale, (b) Duck Tale Disney, (c) Fox and Geese and (d) Rally are classifiable under heading 9504.90 as held by Technical Member.
-
2014 (3) TMI 48
SSI Exemption - Brand Name - Manufacturing of Nipple or complete feeding bottles - affixing/assembling of Nipple to other components/accessories bought out from outside or manufactured by others - Valuation - Brand Name - Held that:- the brand name BONNE was used by the appellant company being an assignee of the right assigned to it by Smt. Sarla Aneja. It is an admitted fact on record that M/s Bonny Products ceased to operate with effect from 15.05.1997 after family settlement dated 15.05.1992 and Smt. Sarla Aneja having right over the trade mark BONNE assigned such right to M/s Baby Care Marketing (India) Pvt. Ltd which was renamed as Bonny Baby Care Pvt. Ltd (BBC) with effect from 21.01.1998 as per fresh certificate of incorporation issued by Registrar of companies. The issue of trade mark and availability of the SSI exemption having been decided in the manner aforesaid and in favour of the appellant company, going into other issues framed by the learned adjudicating authority may be redundant exercise for which all the appeals are allowed. - Decided in favor of assessee.
-
2014 (3) TMI 47
Restoration of the ROM application - Held that:- appeal filed by the appellant was dismissed vide order dt. 27.10.1997 thereafter the applicant filed application for restoration of the appeal on 18.2.2013 i.e almost after 16 years. The application for restoration was dismissed in view of the decision of the Hon'ble Bombay High Court in the case of Kirtikumar Jawaharlal Shah vs. Union of India reported in [2012 (10) TMI 228 - BOMBAY HIGH COURT] and the decision of Tribunal reported in [2009 (5) TMI 86 - CESTAT, MUMBAI]. - Tribunal has power to rectify the mistake which is apparent on record. We also note that the Tribunal has no power to review. As the applicant has not pointed out the error apparent on record in the order dt. 18.3.2013, therefore, we find no merit in the application - Decided against assessee.
-
2014 (3) TMI 46
Reversal of CENVAT credit - To manufacture the Springs and Press Pans, the respondents procure S.S. Wire from the market - Whether activity drawing of wires from wire rods amounts to manufacture - Held that:- When the Board itself is saying that drawing wire from wire rod amounts to manufacture and if the supplier has issued Cenvatable invoice by paying duty thereon then it cannot be said that he is not required to pay duty and the respondent cannot take the credit - if the activity does not amounts to manufacture the duty paid by the assesse is equal to reverse of credit. The supplier of the wire has paid duty and as per Rule 9 of CENVAT Credit Rules, 2004, if duty has been paid, the assessee is entitled to take credit - Following decision of AJINKYA ENTERPRISES Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2013 (6) TMI 610 - CESTAT MUMBAI] - Decided against Revenue.
-
2014 (3) TMI 45
Utilization of accumulated credit of AED (T&TA) - whether accumulated credit of AED (T&TA) can be cross utilized for payment of duty relating to AED(GSI) and for payment of basic excise duty during January 2003 to May 2003. - Held that:- appellants could have utilised Cenvat credit of AED (T &TA) only towards payment of the same kind of duty of excise i.e., AED (T &TA) in terms of Rule 3(6)(b) of the Cenvat Credit Rules, 2001. - appellant's appeal in respect of cross-utilization of credit of AED(T&TA) for payment of AED(GSI) is rejected. The appellant is directed to pay the said amount in cash to Revenue. The appellant can take credit of the said amount of AED(T&TA) and can use it, if possible, for purpose allowed under the law. The appellant will pay the total amount including payment in cash along with interest and penalty. The appellant will be free to take credit and utilize, if possible, and in accordance with law. - Decided against the appellant.
-
2014 (3) TMI 44
Valuation - Job Worker versus Related person - Manufacturing confectionary items on behalf of M/s. ITC Limited at their factory premises as a job worker. - whether valuation of the goods manufactured by the appellant for M/s ITC is required to be made under Rule 9 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 read with the provision of Sec. 4(3)(b)(iv) of the Central Excise Act 1944 by treating the appellant and M/s ITC as related persons. - Held that:- though mutuality of interest is not established but it has been correctly held by the adjudicating authority that the judgment of Honble Supreme Court in the case of M/s Ujagar Prints (1988 (11) TMI 106 - SUPREME COURT OF INDIA) cannot be made applicable to the present proceedings because the present case is clearly distinguishable from the facts and the principles laid down by Apex Court for valuation of the goods in case of manufacture of goods on job work basis. Appellant will be interested in getting work from M/s ITC as he is getting more financial gains from M/s ITC but it is not coming out anywhere in the case records as to have M/s ITC has financially gained from the appellant in the transactions. There is a clause in the agreement that M/s ITC at any time can get the work entrusted to the appellant, done from others. Therefore, the provisions of Rule 9 cannot be pressed into service in the present proceeding. The valuation of goods is required to be decided by the adjudication authority under the provisions of Rule 11 of the Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 applicable at the relevant time. - matter remanded back to decide accordingly.
-
2014 (3) TMI 43
Denial of Input service credit - Services utilized in the residential colonies - Qualification as input service as per sub-rule 2(l) of the Cenvat Credit Rules, 2004 - Invocation of extended period of limitation - Held that:- input service credit taken on the services provided in the residential colony is not available. Therefore, the issue is no more res integra. Accordingly, the demands are confirmed, but I find that the show cause notice has been issued by invoking extended period of limitation - demand for normal period of limitation is confirmed. Further, as the extended period is not invokable, therefore mandatory under Section 11AC is waived - Decided in favour of assessee.
-
CST, VAT & Sales Tax
-
2014 (3) TMI 81
Penalty under section 43(3A) of the Gujarat Sales Tax Act, 1969 - Mandatory or Directory - Default of filing declaration or late return - Whether on the facts and in the circumstances of the case, the Tribunal has rightly held that the provision of penalty under section 43(3A) of the Gujarat Sales Tax Act, 1969 is not mandatory to levy penalty per default of filing declaration or late return - Held that:- If a penalty is not mandatory, for variety of reasons, the authority may chose not to impose the penalty. However, whether mandatory or otherwise, the authority for valid reasons decides to impose penalty, the question would be could such penalty be reduced below the minimum prescribed under the law - we are informed that the total effect of reduction of penalty in all three appeals puttogether is less than ₹ 35,000/=. Under the circumstances, keeping this question open to enable the State to urge the same in future in appropriate case, only on the ground of smallness of the claim amount in these appeals - Decided against Revenue.
-
2014 (3) TMI 80
Classification of goods - Whether the product manufactured and marketed by the respondentassessee in the name of ToxiwinES would fall under Entry 48 Schedule I as a Poultry Feed or under Entry 51 Schedule II as Minerals and Ores - Held that:- the product in question was a 'poultry feed' and would fall under Entry 48 of Schedule I. It may be that one of the main ingredients of the product was 'Zeolite', which itself was an ore. Nevertheless, many processes were undertaken before the final product comes into existence and the same was prepared solely for the purpose of using the same as animal feed. This is clear from the voluminous record. As pointed out by the assessee, after extracting the 'Zeolite' from the mines, the same is subjected to detailed procedure for removing the impurities and separating the pure material. The same is also subjected to grinding and pulverizing and various additives such as Protein, Minerals, Vitamins, Amino acids, etc. are added. By no stretch of imagination, it can be said that the product remained in original form of 'Zeolite', which by itself is an ore. An attempt on the part of the State to bring the product within Entry 51 as Minerals and Ores simply cannot be accepted - Decided against Revenue.
-
Indian Laws
-
2014 (3) TMI 73
Jurisdiction of Debt Recovery Tribunal (DRT) or Civil Court to determine whether there has been any illegality in the measures taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act - appellant herein was the auction purchaser - The appellant was not put in possession of the property in question even though the auction was confirmed. - Held that:- the civil court jurisdiction is completely barred, so far as the measure taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal. to determine as to whether there has been any illegality in the measures taken. The bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondent Nos.6 to 8 have been crystalised, before creating security interest in respect of the secured assets. In such circumstances, we are of the view that the High Court was in error in holding that only civil court has jurisdiction to examine as to whether the measures taken by the secured creditor under sub-section (4) of Section 13 of the Securitisation Act were legal or not. - Order of High Court set aside - Decided in favor of appellant.
|
9911796707
