TMI Tax Updates - e-Newsletter
April 1, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI Short Notes

• Service Tax:

  Whether service provided under own brand name or trade name is entitled to the exemption under notification no.33/2012 dated 20-6-2012 w.e.f. 1-7-2012?

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• Service Tax:

  What are the consequences if registration is not granted with in 7 days of the application? Is there any difference if application has been made for Centralised registration?

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• Service Tax:

  Whether Registration of service tax can be refused ? Whether Service tax authorities can issue registration certificate suo moto ? Also whether registration can be granted in category other than applied in registration application?

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• Service Tax:

  Is it mandatory to surrender/ cancel the registration certificate after ceasing to provide taxable service? Is there any specific format for surrender of registration certificate?

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• Service Tax:

  Whether service tax registration certificate is transferable? What are the consequences if business transferred to other party?

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• Service Tax:

  Are there any different guidelines for registration of a single premises? if yes, what are the guidelines for registration of a single premises?

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• Service Tax:

  What are the principles for determining essential character of a product, in case they are naturally bundled?

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Articles

• TIME FOR NOTING CHANGES IN SERVICE TAX EXEMPTIONS - PART II
• Foreign Remittance TDS u/s 195: Case Law Analysis: Series 2
• Outdoor Catering - A Judgement

News

• India Signs Loan Agreements with World Bank for US$ 500 Million for Small Industries Development Bank of India (SIDBI) for MSME Growth Innovation and Inclusive Finance Project

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• Date of Filing Request for Rollback, in Case an Application for Entering into an Advance Pricing Agreement has been Filed Prior to 31.03.2015,

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• India’s External Debt at End-December 2014 stood at US$ 461.9 Billion, Reflecting an increase of US$ 15.5 Billion (3.5 per cent) over the level at end-March 2014; External Debt to GDP ratio stood at 23.2 per cent at end-December 2014 vis-à-vis 23.7 per cent at end-March 2014

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• FAQ's on - Compounding of Contraventions under FEMA, 1999 (As on March 27, 2015)

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• FAQ's on - Liberalised Remittance Scheme (Updated up to March 26, 2015)

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• FAQ's on - Liaison / Branch / Project Offices of foreign entities in India (Updated upto March 26, 2015)

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• FAQ's on - Scheme for Authorized Dealers Category I (AD) banks, Authorized Dealers Category-II and Full Fledged Money Changers Appointing Agents/Franchisees for Undertaking Restricted Money Changing (Updated as on March 24, 2015)

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• RBI Reference Rate for US $

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• Central Government Approves ₹ 1,500 Crore by way of Budgetary Support to Andhra Pradesh for its New Capital

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Notifications

Companies Law

• F. No. A-42011/112/2014-Ad.ll - dated 24-3-2015 - Co. Law
  Appointment of RoCs as adjudicating officers with jurisdiction and their appellate authorities u/s 454 of CA 2013.

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Customs

• 13/2015 - dated 30-3-2015 - Cus
  Seeks to amend Notification No. 69/2011-Customs dated 29th July 2011 so as to notify the next tranche of tariff concessions under the India-Japan Comprehensive Economic Partnership Agreement (CEPA), w.e.f. 01st April 2015

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Income Tax

• 01/2015 - S.O. 812(E) - dated 20-3-2015 - IT
  Formation of two additional benches of the Authority for Advance Rulings (Income Tax)

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• 33/2015 - dated 6-1-2015 - IT
  U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Visamo Kids Foundation, Ahmedabad

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• 32/2015 - dated 6-1-2015 - IT
  U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Polio Foundation, Ahmedabad

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• 31/2015 - dated 6-1-2015 - IT
  U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Bhartiya Shaikshik Sansthan, Madhya Pradesh

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• 30/2015 - dated 6-1-2015 - IT
  U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Bhagwan Mahaveer Viklang Sahayata Samiti, Rajasthan

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• 29/2015 - dated 6-1-2015 - IT
  U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Ekta Shakti Foundation, New Delhi

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Circulars / Instructions / Orders

VAT - Delhi

• 30/2014-15 - dated 31-3-2015
  Filing of reconciliation return for the year 2013-14

Income Tax

• F. No.279/Misc/54/2015-SO(ITJ) - dated 20-3-2015
  Responsibility of CIT to give assistance to Department Counsels-Instruction no 7/2011 reg.
• F.No.279/Misc/54/2015-SO(ITJ) - dated 20-3-2015
  Responsibility of Standing Counsel in Communicating Court’s Decision-reg.

Highlights / Catch Notes

Income Tax

• Non deduction of tds on technical work and related to engineering - unless there is a transfer of technology involved in technical services the “make available” clause is not satisfied. - AT
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• Determination of arms' length rate of interest - PLR rates are not applicable to loans to be re-paid in foreign currency. The interest rates vary and are thus dependent on the foreign currency in which the repayment is to be made - HC
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• Reopening of assessment u/s 147 - notice under Section 148 - The words "reason to believe" indicate that the belief must be that of a reasonable person based on reasonable grounds emerging from direct or circumstantial evidence and not on mere suspicion, gossip or rumour. - HC
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• Once the particular transaction, which is the subject matter of comparison for transfer pricing adjustment, has not even undertaken or has been cancelled, then such a transaction has to be excluded for the purpose of benchmarking the transfer price - AT
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• Liability for TDS u/s 194H - discount on sale of recharge vouchers (RCVs) and the starter kits by the appellant to its channel partners (distributors/ dealers) - discount does not amount to commission in terms of sec. 194H - AT
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• Levy of penalty u/s. 271AA - The two sections, i.e., s. 271(1)( c) and s. 271AAA, are not only worded differently, with thus different concomitant scopes, are rather mandated to operate exclusively (refer section 271AAA(3)) - penalty confirmed - AT
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• When there is a transfer of capital asset being land together with building and where the land is held for a period of more than 36 months and the building held for less than 36 months, the capital gain on land and building has to be bifurcated as one relating to land and the other relating to building - AT
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Service Tax

• Invocation of extended period of limitation - since the agreement between appellants and broadcasting company was known to department the allegation of Suppression of facts cannot sustain - demand and penalty set aside - HC
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• Denial of refund claim - refusal of pay the refund despite no stay granted by the court against hte refund order - respondent would be liable to pay interest @ 12% p.a. may not be interfered - refund allowed - HC
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• 100% EOU - Export of services - Denial of refund claim - period of limitation - relevant date for calculating the time limit for grant of refund would be the date of receipt of consideration and not the date when the services were provided - HC
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Central Excise

• Denial of rebate claim - Supply of goods to SEZ - Revenue denied claim on the ground that applicant did not supply the goods under Bill of Export - the rebate on duty paid as goods supplied to SEZ is admissible under Rule 18 of Central Excise Rules, 2002 - CGOVT
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• Denial of rebate claim - there is no question of re-quantifying the amount of rebate by applying some other rate of exchange prevalent subsequent to the date on which the duty was paid. As such, the rebate amount need not to be changed on account of lower realization in BRCs due to exchange rate fluctuation - CGOVT
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VAT

• Classification of goods - Electrical Insulated Press Board - In the trade parlance, it is understood as electrical goods. Therefore, that may be the reason why the legislature took the pain to expressly state as to what are the types of paper included in the expression 'paper of all kinds'. They have excluded this particular type of paper - tax to be levied @12.5% under KVAT - HC
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Case Laws:

• Income Tax

• 2015 (3) TMI 1052
  Non deduction of tds on technical work and related to engineering - submission of the Assessee that the Services provided by the non- resident were not in the nature of “making available” hence Article 12 of India U.S.A. treaty were not applicable - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has noted that the services provided by Colardo Engineering was with respect to giving the report of correctness of calibration of assessee’s meters. He has further noted that the expertise connected with testing has not been passed on to the Assessee and therefore the aggregate payment of ₹ 52,26,667/- cannot be treated as fee for technical services and is not covered u/s 195. Before us Revenue has not brought any material on record to controvert the findings of CIT(A). Further the case laws relied upon by ld. D.R. are distinguishable on facts and cannot be applied to the facts in present case. We further find that in the case of ITO vs. Veeda Clinical Research (2014 (1) TMI 886 - ITAT AHMEDABAD) the Co-ordinate Bench after relying on the decision in the case of DIT vs. Guy Carpenters and Company Ltd. [2012 (5) TMI 31 - DELHI HIGH COURT ] and CIT vs. Debeers India Pvt. Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT ] has held that the condition precedent for invoking the “make available” clause is that the services should enable the person acquiring the services to apply technology contained therein. It further held that unless there is a transfer of technology involved in technical services the “make available” clause is not satisfied. Before us Revenue has not brought any binding contrary decision in its support. We therefore find no reason to interfere with the order of CIT(A) and we therefore dismiss the ground of Revenue. - Decided in favour of assessee.

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• 2015 (3) TMI 1031
  Determination of arms' length rate of interest - ITAT holding that the interest @ 4% p.a. charged by the respondent assessee from its subsidiary i.e. the Associated Enterprise was arm's length rate of interest and the adjustment made in the Assessment Order determining the arms' length rate of interest at 12.20% was unwarranted - Held that:- We have no hesitation in holding that the interest rate should be the market determined interest rate applicable to the currency concerned in which the loan has to be repaid. Interest rates should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. Interest rates applicable to loans and deposits in the national currency of the borrower or the lender would vary and are dependent upon the fiscal policy of the Central bank, mandate of the Government and several other parameters. Interest rates payable on currency specific loans/ deposits are significantly universal and globally applicable. The currency in which the loan is to be re-paid normally determines the rate of return on the money lent, i.e. the rate of interest. The methodology recommended by Klaus Vogel Klaus Vogel on Double Taxation Conventions (Third Edition) under Article 11 appears to be the reasonable and proper parameter to decide upon the question of applicability of interest rate. The loan in question was given in foreign currency i.e. US $ and was also to be repaid in the same currency i.e. US $. Interest rate applicable to loans granted and to be returned in Indian Rupees would not be the relevant comparable. Even in India, interest rates on FCNR accounts maintained in foreign currency are different and dependent upon the currency in question. They are not dependent upon the PLR rate, which is applicable to loans in Indian Rupee. The PLR rate, therefore, would not be applicable and should not be applied for determining the interest rate in the extant case. PLR rates are not applicable to loans to be re-paid in foreign currency. The interest rates vary and are thus dependent on the foreign currency in which the repayment is to be made. The same principle should apply. Income-Tax Appellate Tribunal was right in in holding that the interest @ 4% p.a. charged by the respondent assessee from its subsidiary i.e. the Associated Enterprise was arm's length rate of interest and the adjustment made in the Assessment Order determining the arms' length rate of interest at 12.20% was unwarranted - Decided in favour of assessee

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• 2015 (3) TMI 1030
  Reopening of assessment - notice under Section 148 challenged - Held that:- The reason to believe recorded by the Assessing officer is not based on any material that had come to the knowledge of the Assessing Officer. There is a mere suspicion in the mind of the assessing officer and the notice under section 147/148 has been issued for the purpose of verification and for clearing the cloud of suspicion. The reasons to believe recorded do not show as to on what basis the Assessing Officer has formed a reasonable belief that the said amount of ₹ 2,00,000/- had escaped assessment. It is apparent the Assessing Officer suspects that the income has escaped assessment. However, mere suspicion is not enough. The reasons to believe must be such, which upon a plain reading, should demonstrate that such a reasonable belief could be formed on some basis/ foundation and had in fact been formed by the Assessing Officer that income has escaped assessment. No such reasonable belief can be inferred from the purported reasons to believe recorded. The words "reason to believe" indicate that the belief must be that of a reasonable person based on reasonable grounds emerging from direct or circumstantial evidence and not on mere suspicion, gossip or rumour. The "reason to believe" recorded in the case do not refer to any material that came to the knowledge of the Assessing Officer whereby it can be inferred that the Assessing Officer could have formed a reasonable belief that the said amount had escaped assessment. The purported belief that income has escaped assessment is not based on any direct or circumstantial evidence and is in the realm of mere suspicion. The requirement of law is "reason to believe" and not "reason to suspect". In the present case, since the purported reasons to believe recorded indicate that the Assessing Officer has acted on mere surmise, without any rational basis, the action of reopening of the Assessment is thus clearly contrary to law and is unsustainable. - Decided in favour of assessee.

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• 2015 (3) TMI 1029
  Penalty imposed under Section 271(1)(c) - Tribunal dismissed the appeal of the Revenue and the penalty imposed under Section 271(1)(c) has been disallowed - Held that:- Additions in respect of which penalty under Section 271(1)(c) of the Act was levied, have been admitted by the High Court for consideration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the Act, was not exigible in the case on hand. The mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty. The Apex Court in Reliance Petroproducts ( 2010 (3) TMI 80 - SUPREME COURT ) also held that "merely because the assessee had claimed the expenditure, which claim was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the legislature - Decided in favour of assessee.

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• 2015 (3) TMI 1028
  Validly of reassessment proceedings - addition on account of sales made to Johnson & Johnson Exports Limited - Held that:- Tribunal noted that the law is that the reasons ought to be supplied on demand by the assessee. The assessee, therefore, had no occasion to note the reasons and could not object to the same. Since the objection to the same could not be raised for want of supply of reasons, the reassessment proceedings are vitiated The Tribunal noted that the Assessing Officer held that in the earlier assessment years assessee had sold the goods to its subsidiary concern at lesser price than the cost of producing those goods and sold to other parties. This was a vital and material fact not disclosed by the assessee in the return of income for the concerned and subject assessment years. That is why the assessment was reopened. The Tribunal has recorded in that these reasons for reopening the assessment are not at all convincing. The Tribunal concluded that in the notice issued under section 148 for reopening the assessment, the Assessing Officer stated that there was omission on the part of the assessee to furnish the true and correct affairs of the company. Apart from the fact that this was not enough for reopening the assessment the Tribunal found that if the Assessing Officer had any reservation about the sale price of the goods sold to the group concerns he should have questioned the genuineness of the transactions in the earlier assessment years 1993- 1994 to 1995-1996. All information regarding the sale by the assessee was before him. Full and true facts of sale price were made available to the Assessing Officer when he passed the orders for the earlier years.The Tribunal has not merely set aside the reassessment for want of notice or for want of supply of reasons though notice was issued. The Tribunal rested its conclusion also on merits of the reasons for reopening the assessments. That the Tribunal found them to be not sufficient or adequate for reopening the assessment - No substantial question of law. - Decided against revenue.

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• 2015 (3) TMI 1027
  Deduction u/s 80HHC on counter sales - whether ITAT as well as the CIT(A) was justified in allowing the deduction u/s 80 HHC when there is no finding to the effect that the goods were cleared at any of the custom station? - Held that:- Apex Court in CIT vs. Silver & Arts Palace [2002 (12) TMI 12 - SUPREME Court] has held that the counter sale to the foreign tourists against convertible foreign exchange in India, is eligible for deduction under section 80HHC of the Income Tax Act. The Apex Court has also approved the decision of the Allahabad High Court in the case of Ram Babu & sons vs. Union of India [1996 (5) TMI 61 - ALLAHABAD High Court]. In the present case the assessee had produced the Sale To Foreign Tourists Voucher, which not only recorded the name and address of the customer (tourist), but also his/her passport number and the declaration given by him that the goods will not be gifted or sold in India. The goods sold at counter at the shop/emporium were sold to be taken out of the country, which necessarily involved clearance of baggage, by the customs authorites. There was no further proof, nor any document in proof of clearance of the goods at the Customs Station by the assessee is required. The declaration in the form of Sale To Foreign Tourist Voucher, for sale made against the convertible foreign exchange with the undertaking that the goods will not be gifted or sold in India, was sufficient proof for export out of India. Unless anything contrary was alleged and proved by the department, it was not necessary for the assessee to have produced the documents of clearance of goods sold by him to the foreign tourists at any Customs Station. The Explanation (aa) is not a rule of evidence, nor raises any presumption. It also does not require any proof of clearance at any Customs Station. The explanation is couched in double negative. It is a rule of exclusion and excludes only those transactions, which do not involve clearance at any Customs Station. It cannot be read in a manner, as suggested by learned counsel appearing for the department that a proof of customs clearance of baggage must be provided to establish the export of goods out of India for the purpose of deduction of profits on such sales under section 80HHC of the Income Tax Act. - Decided in favour of assessee.

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• 2015 (3) TMI 1026
  Disallowances on the loss of shifting classified securities - Held that:- Tribunal in dismissing the revenue's appeal and upholding the order of the Commissioner found that similar exercise was undertaken by another assessee Latur Urban Coop. Bank Ltd. [2015 (3) TMI 920 - ITAT PUNE]. - Once such is the nature of material before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, then, we are of the opinion that the view taken by the Tribunal cannot be termed as perverse. The Tribunal's view is in consonance with the banking policy and the guidelines issued by the Reserve Bank of India. We further feel that a different treatment cannot be given to an identically situated assessee, namely a co-operative bank. In these circumstances, the revenue's appeal has no merits - Decided against Revenue.

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• 2015 (3) TMI 1025
  Transfer pricing adjustment - assessee has challenged the addition on account of transfer pricing adjustment in respect of sale made to the associated enterprise by applying comparable uncontrolled price method instead of transactional net margin method - Held that:- Under a particular description, invoices raised to associated enterprise and non-associated enterprise were similar. Exact difference in invoices have not been brought forth before us. Thus in the case of the assessee, there was availability of the internal comparable uncontrolled price, wherein on similar nature of transaction and similar description of product as given in the invoices, the assessee has been charging prices from the associated enterprise as well as from the third party. Even though there may be some differences of size, carat, weight and other aspects, however the same has not been clearly demarcated or demonstrated by the assessee either before the Transfer Pricing Officer or before the Commissioner of Income-tax (Appeals). In such a situation the presumption can be drawn, that even with the third party customers, similar nature of products have been sold on negotiation and, therefore, the prices of the two transactions can be compared. In a way, we uphold the contention of the learned Commissioner of Income-tax (Appeals) that there was internal comparable uncontrolled price available in the case of the assessee for determining the transfer price. Once a direct method of internal comparable uncontrolled price is available then there is no need to resort to transactional net margin method.- Decided against revenue. Transfer pricing adjustment on account of transactions of sale of diamond with the associated enterprise - CIT(A) deleted the addition - Held that:- Out of the three transactions, which has been adversely viewed by the Transfer Pricing Officer, two transactions pertained to sale made by the assessee to one M/s. Simona NV. Now it has been brought on the record before the Commissioner of Income-tax (Appeals), which has also been a subject matter of remand before the Transfer Pricing Officer that the said transactions have been cancelled, as the said party has returned back/diverted the diamonds sold to them to the assessee's associated enterprise. This is evident from the letter dated October 14, 2010, written by Simona NV. Thus as from the above letter and relevant finding of the Commissioner of Income-tax (Appeals), it is quite conclusive that, the said party has not purchased the diamonds sent on these two invoices and ultimately, it has been sold to associated enterprise only. Thus, such a transaction cannot be considered for benchmarking and determining the arm's length price. Once the particular transaction, which is the subject matter of comparison for transfer pricing adjustment, has not even undertaken or has been cancelled, then such a transaction has to be excluded for the purpose of benchmarking the transfer price. Thus with regard to the non inclusion of such a transaction and also the consequent deletion of adjustment of ₹ 1,28,19,493 on account of such transaction is both factually and legally correct and has rightly been deleted by the Commissioner of Income-tax (Appeals). - Decided against revenue. Adjustment on account of transactions with one of the third party - sale made to the associated enterprise by applying comparable uncontrolled price method instead of transactional net margin method - Held that:- In this particular transaction, the assessee has sold a total quantity of 2773.20 to its associated enterprise with an average rate of 328.89 dollars, whereas to the third party, the assessee has merely sold quantity of 8.50 carats with the rate of 370 dollars. Thus there is a huge difference in volume of sale and it is quite a normal phenomena that if the purchases and sales are made in huge quantity then there is always a chance of negotiation of preferable price by the purchaser and there is difference in the price as compared to the one where very small quantity of sale or purchase takes place. Such difference of volume, definitely has a bearing on the negotiation of the prices and, therefore, adjustment on this factor has to be made. This itself is a material difference. We, also agree with the contention of the assessee that marketing expenses in the case of the associated enterprise are comparatively less as there is quite probability of the transaction being finalised. There is also an element of bad debt risk involved in the case of a third party which is much less probable in the case of the related party. If all these differences, which in our opinion are quite "material differences" are taken into account and adjustment is made then difference of rate, which here in this case is approximately 11 per cent., can be made. Thus, looking to these factors of material difference including huge difference in volume, adjustment of a differential rate of 41.11 in terms of dollars in the transaction of sale price between associated enterprise and third party can be made under the comparable uncontrolled price, which is also permissible under rule 10B. Accordingly, we hold that such a price difference in the aforesaid transaction has to be ignored and adjustment has to be made for comparing the negotiated price charged from the associated enterprise as well as from the third party and if such an adjustment is carried out then there is no requirement for making any kind of upward adjustment in this case. Therefore, the decision of the Commissioner of Income-tax (Appeals) in confirming the adjustment of ₹ 51,32,512 to the arm's length price is reversed and the said addition is deleted. - Decided in favour of assessee. Transfer pricing adjustment on account of notional interest on delayed collection of payment on sale invoices from associated enterprises in comparison to non-associated enterprises - CIT(A) deleted the addition - Held that:- The average days of delay in payment as worked out by the Transfer Pricing Officer is also inappropriate as number of sale transactions with associated enterprise is far more than the non-associated enterprise and will result in improper working of average days. On these facts of the case, we do not find any reason for making any kind of upward adjustment on account of differences in period for realisation of payments in respect of sales made to associated enterprise as well as non-associated enterprises. Such a notional interest cannot be charged for the purpose of making adjustment in the arm's length price. Thus the order of the Commissioner of Income-tax (Appeals) deleting the adjustment of Rs, 4,65,23,007 on this score is upheld - Decided in favour of assessee.

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• 2015 (3) TMI 1024
  Transfer pricing adjustment - Computation of Arms Length Price - selection of comparable - Held that:-Flextronics Software Systems Ltd. 595.12 crores and Infosys Technologies Ltd. 9028.00 crores whose turnover is above ₹ 200 Crores should be excluded from the list of comparable companies. The AO is directed to compute the Arithmetic mean by excluding the aforesaid companies from the list of comparable. Respectfully following the decision of of Tektronix Engineering (2015 (3) TMI 267 - ITAT BANGALORE), we direct that KALS InfoSystems Ltd. And Accel Transmatic Ltd. And TATA Elxsi be excluded from the list of 20 comparable arrived at by the TPO. There is no dispute that RPT filter in the case of Megasoft Ltd. was 17.08%, that of Aztech Software Ltd. was 17.78% and that of Geometric Software Ltd. was 19.34%. Coordinate Benches of the Tribunal are consistently following 15% as cut off mark for applying the RPT filter. Accordingly, we direct exclusion of Megasoft Ltd., Aztech Software Ltd. and Geometric Software Ltd. from the comparables. See Agile Software Enterprise Private Limited, C/o. Oracle India Private Ltd. Versus The Income Tax Officer [2015 (1) TMI 600 - ITAT BANGALORE] Inclusion of the reimbursement of expenses by the AE to the Assessee as part of the operating cost while working the adjustment on account of ALP - Held that:- It is clear from the decision rendered by the co-ordinate bench in the case of L.G.Soft India Pvt.Ltd. (2013 (9) TMI 191 - ITAT BANGALORE) that reimbursement of expenses cannot be considered as receipts for rendering services and should not be added back to the cost base for the purpose of mark up. Following the said decision, we hold that reimbursement of expenses cannot be considered as receipts for rendering services and should not be added back to the cost base for the purpose of mark up. As submitted by the learned DR neither the TPO not the DRP have gone into the question as to whether the receipt in question is reimbursement. We therefore remand the issue to the limited extent of verification regarding the nature of the receipt only and hold that if the receipts are purely reimbursement of expenses they should neither be considered as operating income nor operating expenses for the purpose of calculating margins of the Assessee. - Decided partly in fvaour of assessee for statistical purposes.

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• 2015 (3) TMI 1023
  Liability for TDS u/s 194H - discount on sale of recharge vouchers (RCVs) and the starter kits by the appellant to its channel partners (distributors/ dealers) - Held that:- The relationship between assessee and its distributors qua the sale of impugned products is on principal to principal basis; the consideration received by assessee is sale price simpliciter. There is no relationship of Principal and agent between assessee and distributors as held by authorities below there orders are reversed. Looking at the transaction being of Sale/Purchase and relationship being of principal to principal the discount does not amount to commission in terms of sec. 194H, the same is not applicable to these transactions. Therefore, assessee cannot be held in default; impugned demand raised applying sec. 194H is quashed. See Bharti Airtel Ltd. And Others Versus Deputy Commissioner of Income-tax and Commissioner of Income Tax, Bangalore [2014 (12) TMI 642 - KARNATAKA HIGH COURT] - Decided in favour of assessee. Non providing details of deductee regarding filing of I.T. Returns before the AO (TDS) during the proceedings - whether incomplete and unverified information could not have been considered as additional evidence under Rule 36A of Income Tax Rules? - Held that:- Apropos the revenue appeal since we have held that sec. 194H is not applicable there remains no substance in revenue appeals. In any case there is no infirmity in the order of Ld. CIT(A) in admitting the additional evidence in the light of Hon'ble Supreme Court judgment in the case of Hindustan Coca Cola (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) and following his past orders. - Decided against revenue.

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• 2015 (3) TMI 1022
  Transfer pricing adjustment - selection of comparable - Held that:- Cosmic Global Ltd. company outsourced its activities and the outsourcing expenses constitute 57% of the total expenses. The entire outsourcing is confined to Translation charges paid at ₹ 3.00 crore. We can see from the TPO’s order that he considered the results of this company on entity level, thereby reckoning income from all the three segments. Since Translation charges constitute a larger chunk of this company’s income, for which the services were mainly outsourced, we cannot consider this company as comparable on an entity level. Genesys International falls under serial No. vi. of the Circular with the caption ‘Geographic Information System Services.’ There can be no comparison of the services carried out by this company with those rendered by the assessee to its AEs, which are basically in the nature of Accounts payable services and General accounting for funds, falling under (i) Back office operations; (ii) Call centres; (iv) Data processing; and (xiii) Revenue accounting. By no standard, Genesys International can be considered as comparable with the assessee company. Vishal Information Technologies (Coral Hub) has outsourcing charges constitute 90% of the total operating cost. The business model adopted by this company in outsourcing its activities in contrast to that of the assessee in rendering services at its own, makes the two incomparable to each other. Thus we order for the exclusion of this company from the list of comparables. Accentia Technologies company, apart from being engaged in the business of rendering ITES, is also dealing with software products. As the segmental figures of this company are not available and the TPO has taken its entity level figures, it ceases to be comparable. To what extent the overall profitability of this entity is affected because of software products, is not capable of ascertainment with precision. Also the Annual report of this company that it completed acquisition of Oak Technologies Inc. USA during the year. The Mumbai Bench of the Tribunal in Petro Araldite (P) Ltd. vs. DCIT (2015 (3) TMI 1010 - ITAT MUMBAI) has held that a company cannot be considered as comparable because of exceptional financial results due to mergers/demergers etc. We, therefore, order for the exclusion of this company from the list of comparables. Eclerx Services Pvt. Ltd.being a KPO company, is providing data process solutions to its clients, which activity is a way different from that of the assessee company, which is basically of providing accounts payable services and general accounting services to its AEs alone. Not only that, this company has significant intangibles which its uses for the purposes of rendering KPO services. As the assessee is a captive unit rendering services to its AEs without any intangibles, there can be no comparison between the assessee and Eclerx Services Pvt. Ltd. Allsec Technologies Ltd. If a company fails on one of the filters adopted by the TPO, it has to be excluded. We, therefore, uphold the impugned order in not considering Allsec Technologies as a comparable company. R. Systems International Ltd.from the audited accounts of this company that the audited data for the quarter ending 31.3.2009 and 31.3.2008 has been provided by the company itself. Ordinarily, there should be no difficulty in determining the relevant figures for the year ending 31.3.2009 by excluding the results for the quarter ending 31.3.2008 and including the results of the quarter ending 31.3.2009 to the annual figure for the year ending 31.12.2008. Thus, it is apparent that the figure of profit for the year ending 31.3.2009 is capable of ascertainment. We, therefore, set aside the impugned order on this issue and direct to include R. Systems in the list of comparables by working out the figures relevant to the financial year ending 31.3.2009 from the audited accounts - remit the matter to the file of AO/TPO for calculating the ALP of the international transaction afresh - Decided partly in favour of assessee for statistical purposes.

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• 2015 (3) TMI 1021
  Disallowance u/s 14A - A.R. submitted that the A.O. has made disallowance u/s 14A as per the provisions of Rule 8D without recording satisfaction which is mandatory in law and therefore, the disallowance is not sustainable - Held that:- In the present case the A.O. vide questionnaire dated 22.10.2010 had asked the assessee to explain as to why disallowance in accordance with the provisions of Section 14A should not be made and thereafter holding that reply of the assessee was not satisfactory he proceeded to disallow the amount as calculated as per provisions of Rule 8D. The A.O. did not record as to how the explanation submitted by assessee was not satisfactory. The A.O. should have examined the claim of assessee and then he should have recorded his satisfaction as to why the reply of assessee was unsatisfactory. Therefore, respectfully following the order of Taikisha Engineering India Ltd. (2014 (12) TMI 482 - DELHI HIGH COURT), we delete the disallowance confirmed by Ld. CIT(A). - Decided in favour of assessee.

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• 2015 (3) TMI 1020
  Addition on undisclosed profit - Held that:- A.O. has based his findings on the basis of surmises and conjectures and that too without commenting upon the explanations of assessee. Moreover, in the present year, we find that assessee has not earned any income from lease which fact is verifiable from paper book page 8 where a copy of P & L account is placed and where there is nil other income as compared to earlier year income of ₹ 10,02,511/-. Therefore, facts in the present year are distinguishable as in the present year the assessee had filed documentary evidences with respect to gold rates and in this year there is no lease income. The addition sustained by Ld. CIT(A) is not based upon facts. - Decided in favour of assessee. Addition on account of undisclosed stock - CIT(A) deleted the addition - Held that:- As during appellate proceedings before Ld. CIT(A), the assessee had filed necessary and relevant documents to demonstrate that Jewellery sold to M/s. Swarn Gems P. Ltd. consisted out of opening stock and jewellery received on approval basis from Mehrasons Jewellers (P) Ltd.. The assessee had field copy of stock ledger as well as sale tax assessment order for the year under consideration. We find that findings of Ld. CIT(A) are based upon verification of facts and evidences and, therefore, he had rightly deleted the addition.- Decided in favour of assessee.

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• 2015 (3) TMI 1019
  Concealed sales of scrap - assessee could not give evidence regarding non return of the scrap by the vendors/subvendors doing job work for and it is most unlikely that assessee will allow vendors/sub-vendors to keep scrap with them, on which it is paying excise duty itself. - CIT(A) deleted the addition - Held that:- No infirmity in the order of the learned CIT(A) inasmuch as nothing has been brought on record by learned Assessing Officer that the assessee's job workers returned any scrap to assessee. Nothing has also been brought on record to demonstrate in any way that assessee indulged in any sale of scrap outside the books of account. This is further indicated by new Cenvat Credit Rules, which holds that the scrap was not required to be returned to the assessee. The same is referred to by the judgment in the case of M/s Rocket Engineering Corporation Vs. CCE (2005 (6) TMI 184 - CESTAT, MUMBAI). The assessee further provided evidence from M/s Noble Industries, which has done a job work of 3.56 crores and has shown the income attributable to sales of scrape of ₹ 747109/-, in its books. These facts and observations demonstrate that the assessee did not receive any scrap back from job workers. There being no evidence whatsoever suggesting any unaccounted sales by the assessee, the order of learned CIT(A) on these issues is upheld. - Decided in favour of assessee. Unaccounted sale of scrap - the balance amount to difference shown by the assessee as receivable from SKF and the payable amount in the books of SKF - CIT(A) deleted the addition - Held that:- The assessee has demonstrated that the difference was due to the disputes pertaining to defective and inferior quality of goods. The assessee used to account for the actual invoice value whereas the purchases were accounted by SKF not on the basis of the sales bills but on the basis of settled amounts qua these invoices. All these issues have been discussed in details by the learned CIT(A) as mentioned above. In view thereof, we see no infirmity in the order of the learned CIT(A) on this issue also, which is upheld. - Decided in favour of assessee. Excise duty on sale of scrap paid by the assessee - CIT(A) deleted the addition - Held that:- the assessee demonstrated that as per Rule 4(6) of the Central Excise Rules, the assessee was liable for excise duty on the notional value of nonreturnable scrap. Thus, the assessee has to face the situation where the scrape was not returnable to it and on top of that the excise duty on such scrape was also payable by the assessee as per excise rules. In view thereof, the excise duty in respect of unreturned scrap becomes a statutory/legal liability of the assessee, which is allowable business expenditure. The learned CIT(A) has considered the issue in right perspective and we see no infirmity in its order on this ground, the same is upheld.- Decided in favour of assessee.

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• 2015 (3) TMI 1018
  Levy of penalty u/s.271AA - CIT(A) deleted the penalty levy - Held that:- The ingredients of section 271AAA, for which reference may be made to subsections (1) and (2) thereof, and which provision only is applicable for the current year - the year of search (s. 271AAA(1) r/w Explanation thereto), and in fact applied by the A.O., vary substantially from that of section 271(1)(c) (Explanation 5), noted at para 6.5.4 of the impugned order, inasmuch as the former provides for substantiation of the manner in which the undisclosed income, as disclosed per s. 132(4), is derived by the assessee. In fact, the ld. CIT(A) records the ingredients of Explanation 5 to section 271(1)(c) at para 6.5.4 of his order, while Explanation 5A to s. 271(1)(c) alone is relevant for a search initiated u/s.132 on and after 01.06.2007, as in the instant case; the former applying only in case of a search initiated before 01.06.2007. Even the decision relied upon by him (at para 6.5.5), i.e., Mahendra C. Shah (supra), is only in the context of section 271(1)(c). The two sections, i.e., s. 271(1)( c) and s. 271AAA, are not only worded differently, with thus different concomitant scopes, are rather mandated to operate exclusively (refer section 271AAA(3)). The foregoing, we believe, would bring forth the basis as well as the validity of our initial observation at para 4.1 of this order, i.e., of the ld. CIT(A) having grossly misapplied himself in the matter. We, therefore, accepting the Revenue’s Ground vacate the findings by the ld. CIT(A) as well as his consequent decision as recorded in the concluding sub-para of his order. As explained by the hon’ble courts as well as the official pronouncements explaining the provision, is of plugging the generation of undisclosed income and the consequent leakage of revenue for future, why could the same be not read so as to allow the assessee the latitude for providing the necessary details subsequently, i.e., where the disclosure u/s.132(4) is made under excruciating or difficult circumstances. The same of course would be under oath, making it a part of and refer to the earlier statement u/s. 132(4), complying thus substantially and effectively, with the substantive provision of law. Further, the further condition of ‘substantiation’, as provided u/s. 271AAA(2)(ii), which was not there in the case, being u/s. 271(1)(c), before the hon’ble court in Mahendra C. Shah ( 2008 (2) TMI 32 - GUJARAT HIGH COURT), could only be interpreted to mean of the law casting a further obligation on the assessee to demonstrate the manner of deriving the undisclosed income, as specified per the statement u/s.132(4), as valid and true, i.e., stands validated and is on a firm basis; the presumption as to the truth of the materials found being already provided for u/s. 292C. The said decision would thus be of little assistance to the assessee. - Decided in favour of Revenue’s for statistical purposes

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• 2015 (3) TMI 1017
  Deduction under section 80-IA on windmills - assessee's income being in the negative after set-off of the losses of other units - CIT(A) allowed the claim - Held that:- In view of decisions of CIT v. Macmillan India Ltd. [2007 (2) TMI 128 - HIGH COURT, MADRAS], CIT v. Rathore Brothers [2001 (10) TMI 72 - MADRAS High Court], CIT v. Suresh B. Mehta [2007 (1) TMI 134 - MADRAS High Court] and CIT v. M. Gani and Co. [2008 (2) TMI 129 - MADRAS HIGH COURT] each of the unit had to be separately considered for working out deduction under section 80-IA or 80-IB or 80HHC of the Act, once separate accounts were being maintained and there was no interlacing and interdependence. In the given case before us, the assessee had positive gross total income. Therefore, each undertaking had to be considered separately for working out deduction under section 80-IA of the Act, since the gross total income was positive. We are of the opinion that the Commissioner of Income-tax (Appeals) was justified in giving such directions. The Commissioner of Income-tax (Appeals) had directed the Assessing Officer to treat the windmills as a separate undertaking for the purpose of calculating deduction under section 80-IA of the Act though the power generated was captively consumed. The question of set-off of notional losses prior to the initial year of claim does not arise in view of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2010 (3) TMI 860 - Madras High Court] . The Commissioner of Income-tax (Appeals) had rightly relied on this decision for taking a view in favor of the assessee. The learned Departmental representative was unable to produce order of any higher authority which could disturb the view taken by the hon'ble jurisdictional High Court. - Decided in favour of assessee. Levy of interest under section 234D - Held that:- The assessee's grievance regarding levy of interest under section 234D cannot be accepted in view of the hon'ble jurisdictional High Court's decision in the case of CIT v. Infrastructure Development Finance Co. Ltd. [2011 (9) TMI 591 - Madras High Court] assessments having been completed after first of June, 2003. - Decided against assessee. Disallowance under section 14A - Held that:- Disallowance under section 14A might still be required depending on the facts and circumstances. However, we do not find any discussion on any claim made by the assessee with regard to expenses incurred or not incurred by it for earning the dividend income, in the assessment order. The Assessing Officer had simply made a disallowance taking 6 per cent. of the income as expenditure. We are, therefore, of the opinion that the matter requires a re-visit by the Assessing Officer. We, therefore, set aside the orders of authorities below and remit the issue regarding disallowance under section 14A back to the file of the Assessing Officer for consideration afresh and decide in accordance with law. - Decided in favour of assessee for statistical purposes. Disallowance of claim for additional depreciation under section 32(1)(iia) - Held that:-. In the case before us also, it is not the question of any amount being included as income by inadvertence. The assessee had not chosen to make additional depreciation under section 32(1)(iia) of the Act. Therefore, in the given facts and circumstances, claim having not been made through a revised return cannot be accepted. We are, therefore, of the opinion that the Commissioner of Income-tax (Appeals) was justified in not considering such claim raised by the assessee. - Decided against assessee. Non-exclusion of interest receivable from its Malaysian subsidiary company - Held that:- Without doubt, the assessee had included in its income, interest from its Malaysian subsidiary. The claim that it was not received and if received withholding tax would be deducted by the Malaysian company, were all new pleadings made during the course of assessment proceedings. The assessee never cared to file a revised return. In our opinion, for the same reasons, such a claim could not have been accepted. This was, therefore, rightly rejected by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals). We do not find any reason to interfere with the order of the Commissioner of Income-tax (Appeals). - Decided against assessee.

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• 2015 (3) TMI 1016
  Sale of land and building - short term capital gain as per CIT(A) OR sale of land and building has to be bifurcated inasmuch as sale of land has to be considered as giving rise to long term capital gain and sale of building as giving rise to short term capital gain as per assessee - Held that:- From a perusal of agreement dated 4.10.2004 between the assessee and Concorde Shelters, it is clear that Concorde Shelters agreed to construct a Villa on the plot sold by Concorde Housing. The land was sold by Concorde Housing to the assessee by a registered sale deed dated 21.10.2004. In the said sale deed, Concorde Hosing has affirmed that possession of the site sold to the assessee has been delivered and that the assessee will be in legal possession of the property from the date of sale deed. It is thus clear that the assessee acquired title to the land as early as on 21.10.2004. The possession of Concorde Shelters under agreement dated 4.10.2004, was only a license to carry out construction which cannot be equated to possession as understood in legal parlance. The assessee having acquired title to the land as early as on 21.10.2004 and having sold the land together with Villa under an agreement dated 5.5.2008, it is to be held that the transaction of sale has to be bifurcated as one relating to land and the other relating to building. As far as the transaction of sale of land is concerned, the gain on such sale should be construed as long term capital gain because the assessee held the land for a period of more than 36 months. The conclusions of the CIT(Appeals) that the expression “held” as used in the definition of long term capital asset in the Act means physical possession, in our view, is erroneous and is not contemplated by the provisions of section 2(42A) of the Act. The law is well settled that when there is a transfer of capital asset being land together with building and where the land is held for a period of more than 36 months and the building held for less than 36 months, the capital gain on land and building has to be bifurcated as one relating to land and the other relating to building. If the land is held for more than 36 months, then capital gain on sale of land has to be treated as long term capital gain. Thus bifurcation of capital gain as made by the assessee should be accepted. - Decided in favour of assessee.

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• 2015 (3) TMI 1015
  Unsecured loans - CIT(A) deleted the addition - Held that:- The details of parties from whom the assessee received loans on behalf of Mudra Exports and paid the same to its creditors is available in the paper book. It is apparent from such details that all the amounts were received by means of demand drafts which were directly issued in favour of the assessee’s creditors. Such amounts received by the assessee from the debtors of Mudra Exports are duly recorded by Mudra Exports in its books of account. In view of the above overwhelming evidence filed by the assessee establishing the genuineness of the amounts received by the assessee from or on behalf of Mudra Exports, we have no hesitation in upholding the impugned order deleting this addition. - Decided in favour of assessee. For receipt from S.V. Liquor India Ltd. it is unable to understand as to how the payment of ₹ 46.10 lac made by S.V. Liquor India Ltd. vide cheque dated 4.4.2007 can be received by the assessee before that date on 30.3.2007 and recorded with the narration of ‘the amount received and paid to Railway.’ One can understand if the amount is paid by A to B and the A records transaction in his books of account on the date of making of draft or issuance of cheque and B records the same in his books of account later on at the time of its actual receipt. However, the position in the instant case is converse inasmuch as the payer is claiming to have made payment on 4.4.2007 and payee, that is the assessee, is showing to have received this amount on 30.3.2007. Under such circumstances, we cannot accept the genuineness of loan transaction to the tune of ₹ 46.10 lac unless the facts are properly considered and appreciated. Overturning the impugned order on this score, we send the matter back to the file of AO for verifying the genuineness of credit to the extent of ₹ 46.10 lac claimed to have been received from S.V. Liquor India Ltd. - Decided in favour of revenue for statistical purposes. For receipts from Mudra Ceramics Pvt. Ltd.Though apparently there is no separate entry for any loan and advance of ₹ 15 lac appearing on the asset side of the balance sheet of the assessee, but the ld. AR contended that this amount may have been included in the list of Loans and advances. It was attempted to show that this payment is a part of the several transactions undertaken by the assessee with this party. Unless the position becomes clear about the receipt or payment of the sum of ₹ 15 lac, we cannot accept the view point of the ld. CIT(A) on its face value. The obvious reason is that the auditor of the assessee reported in the tax audit report that a sum of ₹ 15 lac was received as amount of loan or deposit taken by the assessee from Mudra Ceramics Pvt. Ltd. We, therefore, overturn the impugned order on this issue and send the matter back to the file of AO for examining this issue afresh.- Decided in favour of revenue for statistical purposes. For receipts from Anshu Hospital. ld. CIT(A) deleted this addition by accepting the assessee’s contention that the same was in the nature of loan advanced and not loan taken. This amount of ₹ 20 lac claimed to have been advanced to Anshu Hospital is not directly traceable from the face of the balance sheet. The ld. AR gave the same explanation as given for Mudra Ceramics above. Following the view taken hereinabove in the context of Mudra Ceramics Pvt. Ltd., we set aside the impugned order on this issue and send the matter to the AO for deciding it in conformity with our above directions. - Decided in favour of revenue for statistical purposes. Disallowance of freight and transportation charges - non deduction of TDS - CIT(A) deleted the disallowance - Held that:- In so far as payment of ₹ 3,16,50,188/- is concerned, it was directly made by the assessee to Railways for which there can be no default for non-deduction of tax at source. As regards the payment for a sum of ₹ 3,14,414/- paid to Kolkata Port Trust, the same was towards ‘freight for carriage of goods by Railways.’ The assessee filed a copy of bill showing that the payment was made to the Railway Division of the Port Trust for freight charges relating to hired wagons. Since this payment is also towards carriage of goods by Railways, it would not attract section 194C. As regards the remaining amount disallowed by the AO, the assessee filed evidence before the ld. CIT(A) showing deduction of tax at source @ 2.24% amounting to ₹ 8,258/- in respect of freight payment amounting to ₹ 3,68,015/- made to M/s Lakshmi Transport. Since the assessee deducted tax at source from the payments made to Lakshmi Transport, there can be no question of applying section 40(a)(ia) of the Act. The AO did not make any disallowance in respect of transportation charges paid by the assessee to M/s Jyothi Transport. It, therefore, becomes abundantly apparent that the assessee deducted tax at source from the freight payments wherever it was required under law. In view of this position, we uphold the impugned order deleting the disallowance made u/s 40(a)(ia) of the Act. - Decided in favour of assessee. Disallowance of service tax - assessee did not file proof of payment of service tax before filing the return - CIT(A) deleted the disallowance - Held that:- In the absence of any adverse comments made by the AO and the fact that the assessee did pay service tax before the close of the year itself, we hold that the ld. CIT(A) was right in deleting this addition. - Decided in favour of assessee.

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• 2015 (3) TMI 1014
  Exemption u/s 54F - CIT(A) allowed the claim - Plea raised by the the Revenue was that the money was paid earlier i.e. prior to the window year allowed under section 54F of the Act - Held that:- In addition to the reasons for acquisition of two independent 9 flats being one flat, the next contention of the assessee was vis-à-vis the date of purchase of the property and it was admitted by the assessee that the agreements for purchase of flats though were executed on 19.11.2004, but the possession was obtained in April, 2007 in respect of which, the assessee furnished the copies of occupancy certificate issued by PMC in respect of the impugned flats dated 18.03.2008 and the first bill of MSEB dated 14.08.2007 in respect of combined flats i.e. flat Nos.304A and 304B. All these documents, the assessee claims to have filed before the Assessing Officer, but the CIT(A) confronted the same to the Assessing Officer in appellate proceedings and remand report was received from the Assessing Officer. In the remand report, the Assessing Officer mentioned that the occupancy certificate issued by PMC confirms the fact that the construction was completed and building was ready for occupation during the previous year relevant to assessment year 2008-09. Similarly, in respect of electricity bill, the verification carried out by the Assessing Officer reflected that the bill was issued during the previous year relevant to assessment year 2008-09. Another evidence filed by the assessee was the temporary possession letter dated 20.04.2007 issued by the builder which the Assessing Officer admitted that the assessee had furnished during the course of assessment proceedings In view of the evidences and the remand report of the Assessing Officer, it is apparent that the assessee had received the possession of the two flats in City Woods complex during the captioned assessment years though the agreement of purchase of the said flats was executed on 19.11.2004.In view of the above said facts and circumstances and evidences filed by the assessee before the CIT(A), we confirm the observation of CIT(A) in this regard that the assessee had purchased the said flats in instant assessment years under appeal. The next aspect of the issue was the purchase of two separate flats vide two separate sale deeds. In the facts of the case, the assessee had purchased two flats which were joined by the assessee and had a common entrance and a common electricity meter. In view thereof, we find no merit in the order of Assessing Officer and confirming the order of CIT(A), we hold that the assessee in the facts and circumstances, is entitled to the claim of deduction under section 54F of the Act, in view of the following ratio laid down by the Hon’ble Karnataka High Court in CIT Vs. D.Ananda Basappa [2008 (10) TMI 99 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2015 (3) TMI 1013
  Assessment u/s 153C - lack of satisfaction note - Held that:- we set aside the assessment and the impugned orders for the reason that the AO of the persons searched, namely, Sh. B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd. did not record any satisfaction that some money, bullion, jewellery or books of account or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, did not translate into conferring a valid and lawful jurisdiction to the AO of the assessee to proceed with the matter of assessment u/s 153C of the Act for all the years under consideration. In the light of the judgment of the Hon’ble jurisdictional High Court in the case of Pepsi Foods Pvt. Ltd. (2014 (8) TMI 425 - DELHI HIGH COURT) and also the findings of the earlier Benches of this Tribunal (supra), we hold that since there was no ‘satisfaction Note’ by the AO of searched person prior to initiation of proceedings u/s 153C of the Act, the assessments concluded on the assessee u/s 153C of the Act r.w.s 153A of the Act lack jurisdiction and the same are hereby quashed. - Decided in favour of assessee.

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• 2015 (3) TMI 1012
  Assessment u/s 153C - lack of satisfaction note - Held that:- we set aside the assessment and the impugned orders for the reason that the AO of the persons searched, namely, Sh. B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd. did not record any satisfaction that some money, bullion, jewellery or books of account or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, did not translate into conferring a valid and lawful jurisdiction to the AO of the assessee to proceed with the matter of assessment u/s 153C of the Act for all the years under consideration. In the light of the judgment of the Hon’ble jurisdictional High Court in the case of Pepsi Foods Pvt. Ltd. (2014 (8) TMI 425 - DELHI HIGH COURT) and also the findings of the earlier Benches of this Tribunal (supra), we hold that since there was no ‘satisfaction Note’ by the AO of searched person prior to initiation of proceedings u/s 153C of the Act, the assessments concluded on the assessee u/s 153C of the Act r.w.s 153A of the Act lack jurisdiction and the same are hereby quashed. - Decided in favour of assessee.

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• Customs

• 2015 (3) TMI 1037
  Offense of smuggling - Import of prohibited / restricted goods - Levy of penalty - Import of bulk (commercial) quantity of Chinese silk textiles of 81,160 yards in contravention of provisions of Customs Act, 1962 - Held that:- The order of the Commissioner - as well as the CESTAT in each of the case of the appellants before us, has noted exhaustively the dates and time when the conversation between the appellants and the foreign nationals took place. The appellants argued that such conversations ipso facto cannot lead to any inference, much less adverse inference, of guilt. At the same time, the proximity of these conversations with the timing of the flights which landed at the relevant time, containing the consignments and commodities of prohibited items is a matter of record. Furthermore, the statement of Abdul Qahar, said to be generic, is a piece of evidence which weighs in against the appellants. That the appellants were traders in Chandni Chowk area who legitimately dealt in silk no doubt is a circumstance which has to be borne in mind. However, we notice that when confronted with the telephone numbers, either there was denial or refusal to answer the queries of the investigators. In these circumstances, given the nature of the materials which were otherwise established, painstakingly collected evidence such as movement of trucks etc. and the statement of transporters of certain commodities, it cannot be said that the findings of guilt recorded by the Commissioner against the appellants were given in the absence of sufficient evidence. - that no substantial question of law arises - Decided against assessees.

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• 2015 (3) TMI 1036
  Denial of refund claim - Bar of limitation - Duty under protest - similar issue has been considered in the case of Commissioner of Customs Vs Edhayam Frozen Foods (2008 (7) TMI 117 - HIGH COURT MADRAS), and has been answered in favour of the assessee and against the Revenue - Decided against Revenue.

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• 2015 (3) TMI 1035
  Waiver of pre deposit - Misdeclaration of penalty - Imposition of penalty - Held that:- It is a case of misdeclaration of goods. It is seen that the adjudicating authority classified the goods on the basis of materials available in the form of brochure, statement, price list and labels which are recovered from the importer's premises. Prima facie , we find that the demand was raised on the basis of some materials. Hence the importer failed to make a strong prima facie case for waiver of entire amount of duty along with interest and penalty. On a query from the Bench, Ld. AR submits that most of the goods are cleared by the importer. In view of that, we direct the applicant M/s. Cell Code Nutrition India Pvt. Ltd. to make a predeposit of ₹ 30,00,000/- (Rupees Thirty lakhs only) and its Managing Director, Shri M. Sivasakthivelu to make a sum of ₹ 40,000/- towards predeposit. Upon deposit of the said amount, predeposit of balance amount of duty along with interest and penalty against M/s. Cell Code Nutrition India Pvt. Ltd. and balance amount of penalty on Sri M. Sivasakthivelu is waived and recovery thereof stayed till disposal of appeal. Regarding imposition of penalty on M/s.Sass Global Logistics and M/s. Sri Rajeswari International, we find that both are CHAs and their licences have already been suspended. In view of that we waive predeposit of penalty in the case of M/s.Sass Global Logistics and M/s. Sri Rajeswari International. - Regarding imposition of penalty on Shri Venkatesan, Freight Forwarding Agent, prima facie we find from the records that he is the co-ordinator of the operations of the misdeclaration of the goods. Hence we direct Shri S. Venkatesan to make a predeposit of ₹ 25,000. Upon deposit of the said amount, predeposit of balance penalty shall stand waived and recovery thereof stayed till disposal of appeal. - Partial stay granted.

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• Corporate Laws

• 2015 (3) TMI 1034
  Winding up petition under Sections 433(e) & (f), 434 and 439 of the Companies Act, 1956 - Default in refund amount - Substantial amount paid during the proceedings - Held that:- In the present case, it is indisputable that the respondent was liable to refund the amount of ₹ 6,87,500/- to the petitioner. In view of the fact that the project in question had been delayed, the petitioner would, prima facie, be entitled to a refund of the amount paid from the date of payment. However, there can be no dispute that the petitioner would be entitled to interest on ₹ 3,50,000/- from 30.11.2009 and on ₹ 3,37,500/- from 05.12.2009 i.e. the dates on which the respondent promised to refund the said amounts to the petitioner. In the present case, it is undisputable that the respondent has failed to pay its debts despite a notice under Section 434(1)(a) of the Act. Thus, the present petition is liable to be admitted. However, in view of the fact that the respondent has paid substantial amount of debt (Rs. 5,00,000/-) to the petitioner during the course of the present proceedings and has further deposited a sum of ₹ 48,750/- with this Court, I deem it appropriate to give an opportunity to the respondent to pay the balance amount to avoid any adverse order. The respondent shall also pay interest at the rate of 12% on the amount payable to the petitioner w.e.f. 30.11.2009 on ₹ 3,50,000/- and w.e.f. 05.12.2009 on ₹ 3,37,500/-. The amount already paid by the respondent to the petitioner would be adjusted from the principal outstanding. The respondent shall pay the amount as directed within four weeks from today. In the event that the respondent fails to pay the amount as directed (alongwith interest) within a period of four weeks from today, the petition would stand admitted and necessary orders would follow.

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• 2015 (3) TMI 1033
  Application for approval of Scheme of Amalgamation under sections 391 to 394 of the Companies Act, 1956 - Regional Director observation regarding Valuation of shares and Swap ratio , Undertaking from RBI for all NBFC compliances. Held that:- In reply to regional director observation, it is submitted that neither the fair price of the company was ₹ 20 per share at which the buyback was done nor ₹ 309.27 per share is the fair price which has been determined only for the sole purpose of arriving a SWAP Ratio with respect to the Transferee Company. Both the values cannot be painted with the same brush as there are different dates, formula, mechanism and purpose so as to determine and arrive. Further submitted that Since the Transferor Company is being dissolved, the shareholders of the Transferor Company would become of the shareholders of the Transferee Company in the above ratio of 100:53. As the Transferor Company has 99.98% shareholdings in the Transferee Company, the said entire 99.98% shares would be allotted to the shareholders of the transferor company. If the contention and calculation of the Regional Director were to be accepted, the shareholders of the transferor company at the ratio of 100:53 would still have approximately 99.96% shareholding in the Transferee Company. The shareholders of both the transferor and the transferee companies have approved the scheme. As such looked at from any angle, the scheme of amalgamation would not be prejudicial to the interest of the shareholders of the transferor company. In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. - Scheme of Amalgamation approved.

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• Service Tax

• 2015 (3) TMI 1051
  Invocation of extended period of limitation - agreement between appellants and broadcasting company was known to department - Suppression of facts or not - Penalty u/s 76 & 78 - Held that:- Tribunal was of the view that the Slot Sale Agreement between the first respondent and the broadcasting company was very much known to the department and in this regard, gave a specific finding on fact that there was no suppression of material facts by the first respondent before the department with intent to evade payment of service tax. The finding of the Tribunal, which is the final fact finding authority, cannot be overturned merely based on a plea made in the appeal by the department. This view is fortified by a decision of the Supreme Court in Kushal Fertilisers (P) Ltd. v. Commissioner of Customs & Central Excise, Meerut, [2009 (5) TMI 13 - SUPREME COURT]. Tribunal observed that a major part of the demand is covered by the extended period which is not invocable and moreover, there is a dispute on interpretation of the relevant provisions of Section 65 of the Finance Act, 1994. Therefore, the Tribunal, placing reliance on the decision of the Tribunal in Zee Telefilms case [2004 (3) TMI 1 - CESTAT, NEW DELHI], referred supra, vacated the penalty. - there is no suppression of material facts with an intent to evade payment of service tax and education cess, we hold that the Tribunal was justified in vacating the penalty imposed by the adjudicating authority. - Decided against Revenue.

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• 2015 (3) TMI 1050
  Denial of refund claim - refusal of pay the refund despite no stay granted by the court against hte refund order - Held that:- respondent was fully aware that it was liable to refund the service tax deposited by the appellant in terms of the order dated 28.12.2011 and for that reason it had filed the stay application and once the stay application had been rejected, the order dated 28.12.2011 ought to have been implemented, as it is a fact that the order dated 10.9.2012 rejecting the stay application had become final. In such view of the matter, though the observations of the learned Single Judge that the respondent would be liable to pay interest @ 12% p.a. may not be interfered with but, in our view, the writ Court ought to have allowed the writ petition and directed refund of the service tax deposited by the petitioner/appellant. - Decided in favour of assessee.

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• 2015 (3) TMI 1049
  100% EOU - Export of services - Denial of refund claim - period of limitation - Whether the CESTAT is correct in holding that the assessee is eligible to claim refund of CENVAT credit on construction service relying on case of Infosys Ltd. (2014 (3) TMI 695 - CESTAT BANGALORE)? - Held that:- relevant date for calculating the time limit for grant of refund would be the date of receipt of consideration and not the date when the services were provided. If the date of receipt of consideration is reckoned then the claims are perfectly within time limit, and if date of rendering services is taken then obviously most of the claims would be time barred. As regards admissibility of CENVAT credit on construction service, the learned CESTAT relied on the decision in the case of Infosys Ltd. v. C.S.T., Bangalore (2014 (3) TMI 695 - CESTAT BANGALORE) wherein the definition of 'input services' has been considered and admissibility of CENVAT credit in respect of various services and the rationale to take such a view has been discussed. - No infirmity or illegality in the judgment of the learned Tribunal to hold otherwise, because it is a pure case of remand to consider admissibility of CENVAT credit in respect of various services - Decided against Revenue.

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• Central Excise

• 2015 (3) TMI 1044
  Valuation of goods - Captive consumption - Calculation of excise duty - The respondent Department felt that the aforesaid method adopted by the appellant assessee in calculating the excise duty and paying the same in respect of the captive consumption was in-appropriate. As per the Department such a duty should have been paid on the same price at which the unit was sold by the appellant in the market. - period 1.4.1994 to 1.6.1998 - Held that:- As it is clear from the reading of the Section 4, clause (b) which is attracted in the present case stipulates that in a case like this, the value has to be determined in such a manner as may be prescribed. This manner is prescribed in Rule 6 (b)(i) of the Central Excise (Valuation) Rules, 1975. A bare reading of Rule 6(b) manifestly points out that in those cases where the excisable goods are not sold by the assessee but are consumed by assessee himself, namely, in case of the captive consumption, the value of comparable goods produced or manufactured by the assessee or by any other assessee is to be taken into consideration. However, the proviso to this clause (i) of sub-rule (b) provides that in determining the value in the aforesaid sub-clause the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors, and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods. From the process explained by the appellant itself it is clear that up to the stage (iv) above, the process is common in respect of the production of the yarn whether it is to be consumed by the appellant itself or it is to be sold in the market. It is, thereafter, when it comes to process mentioned at serial nos. (v) and (vi), the same is necessitated for the purpose of sale in the open market and therefore costs incurred while undertaking these processes has to be excluded in arriving at the value at which excise duty is payable for the yarn domestically consumed. - appellant shall be entitled to adjust the cost which is incurred as mentioned in process (v) & (vi) of the sales in selling costs. Since this benefit is wrongly denied to the appellant by all the authorities below, for this limited purpose we remand the case back to the adjudicating authority. Before the Adjudicating authority it would be permissible for the appellant to supply the figures of the cost incurred on the aforesaid processees and after verifying the same himself about the genuineness of such cost incurred, the adjudicating authority shall recalculate the value for the purposes of excise duty while giving adjustment of the aforesaid costs and raise fresh demand on that basis. - Decided in favour of assessee.

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• 2015 (3) TMI 1043
  whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services, provided in the factory for its employees, as input service - Held that:- Following decision of CCE V. Ultratech Cement Ltd. reported in [2010 (10) TMI 13 - BOMBAY HIGH COURT] - It is relevant to note that various High Courts have concurred with the above-said principle of the Bombay High Court and followed the above-said decision - Decided against Revenue.

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• 2015 (3) TMI 1042
  Waiver of pre deposit - case of the appellant was that the appellant has not received fair consideration before the Tribunal, inasmuch as, its Application for exemption from pre-deposit has not been considered on merits - Held that:- In the impugned order, there is no reference to the case of the appellant as such or its contentions. We further notice that there is no reference to the order of the Tribunal, which was passed in the year 1999, which, according to the appellant, should have received far greater significance in the decision in Stay Application. - impugned order must be modified and in place of ₹ 1.58 crores, the appellant must deposit a sum of ₹ 80 lacs. - Decided partly in favour of assessee.

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• 2015 (3) TMI 1041
  Denial of rebate claim - the applicant has exported the goods under Advance Licence - Held that:- Supreme Court has held in the case of Mihir Textile Ltd. vs. CCE, Bombay [1997 (4) TMI 75 - SUPREME COURT OF INDIA] that exemption/benefit depending upon satisfaction certain conditions cannot be granted unless such conditions are complied with even such conditions are only directory. Hon'ble Supreme Court has also held in the case of M/s ITC Ltd. Vs. CCE [2004 (9) TMI 103 - SUPREME COURT OF INDIA] and in the case of M/s Paper Products Vs CCE [1999 (8) TMI 70 - SUPREME COURT OF INDIA] that plain and simple meaning of the wordings of statute are to be strictly adhered to. - Commissioner (Appeals) has rightly disallowed the said input rebate claims in view of para (v) of Notification No.93/04-Cus dated 10.9.04 as amended vide corrigendum F.No.605/50/2005-DBK dated 17.5.2005. Government do not find any infirmity in the said orders-in-appeal and therefore upholds the same. - Decided against assessee.

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• 2015 (3) TMI 1040
  Denial of rebate claim - Supply of goods to SEZ - Revenue denied claim on the ground that applicant did not supply the goods under Bill of Export - Held that:- In terms of Board’s Circular No. 29/2006-Cus., dated 27-12-2006, the supply from DTA to SEZ shall be eligible for claim of rebate under Rule 18 of Central Excise Rules, 2002 subject to fulfilment of conditions laid thereon. Government further observes that Rule 30 of SEZ Rules, 2006 prescribes for the procedure for procurements from the Domestic Tariff Area. As per sub-rule (1) of the said Rule 30 of SEZ Rules, 2006, DTA may supply the goods to SEZ, as in the case of exports, either under Bond or as duty paid goods under claim of rebate under the cover of ARE-1 form. Since rebate claim is also export entitlement benefit, the respondent was required to file Bill of export. Though Bill of Export is required to be filed for making clearances to SEZ, yet the substantial benefit of rebate claim cannot be denied only for this lapse. Government observes that Customs Officer of SEZ Unit has endorsed on ARE-1 form that the goods have been duly received in SEZ. As the duty paid nature of goods and supply the same to SEZ is not under dispute, the rebate on duty paid as goods supplied to SEZ is admissible under Rule 18 of Central Excise Rules, 2002. Commissioner (Appeals) has rightly allowed the rebate claims in these cases - No infirmity in impugned Order-in-Appeal - Decided against assessee.

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• 2015 (3) TMI 1039
  Denial of rebate claim - original/duplicate copies of AREs-1 could not be filed along with relevant proof of export - original authority ordered for re-credit in Cenvat account on the ground that transaction value in impugned cases is the lowest of three FOB values given in impugned AREs-1, Shipping Bills and BRCs - Held that:- The FOB value declared on Shipping Bill is exactly same. The difference in BRC value is due to fluctuation in foreign exchange rate and not due to any inclusion of ocean freight value. Government notes that the original authority has not given any finding/reasoning for choosing lowest of the values mentioned in AREs-1, Shipping Bills and BRCs. Such conclusion without any basis is not proper and legal. Once, port of export is not disputed as ‘place of removal’, and sale contract is on FOB basis there is no reason to reject the ARE-1/FOB value as transaction value. - C.B.E. & C. vide Circular No. 510/06/2000-Cx, dated 3-2-2000 has clarified that there is no question of re-quantifying the amount of rebate by applying some other rate of exchange prevalent subsequent to the date on which the duty was paid. As such, the rebate amount need not to be changed on account of lower realization in BRCs due to exchange rate fluctuation. - The contention of the applicant that difference in said values is due to fluctuation in exchange rate has not been considered by lower authorities - Matter remanded back - Decided in favour of assessee.

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• 2015 (3) TMI 1038
  Denial of rebate claim - non-submission of the disclaimer certificate - Bar of limitation - Held that:- assessee filed rebate claim on 14-8-2007. The claim was not complete as required under Section 11B of Central Excise Act, 1944 and therefore a deficiency memo was issued on 30-8-2007. Assessee did not remove the deficiency in r/o ARE-1 No. 50/2007-08, dated 15-5-2007 as he did not submit disclaimer certificate issued by Shree Ram Gravio Marmo Pvt. Ltd., Jalore. Assessee withdraw the said rebate claim in r/o ARE No. 50/2007-08, dated 15-5-2007. However, he filed the said claim again on 29-6-2009 along with disclaimer certificate. Since the original claim was withdrawn by applicant the claim filed on 29-6-2009 has to be treated as a fresh claim and time limit to be computed from 29-6-2009. As per Section 11B of Central Excise Act, 1944, rebate claim is to be filed with one year from the date of export. In this case claim filed after one year on 29-6-2009 is clearly time-barred and rightly rejected by lower authorities. - rebate claim is liable to be rejected and the impugned Order-in-Appeal cannot be faulted with - Decided against assessee.

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• CST, VAT & Sales Tax

• 2015 (3) TMI 1048
  Classification of goods - Applicable rate of tax - Electrical Insulated Press Board - Whether Electrical Insulated Press Board commonly known as High Density Board is not paper and do not fall within the third schedule of serial No.69 of KVAT, 2003 - Whether the goods falls under Serial No.69 or in the residuary Clause of 'other goods' or in other words, whether the tax payable is 4% or 12.5%? - Held that:- it is seen the goods which do not fall in any of the schedules of the KVAT, 2003 were covered u/s 4(1)(b)(ii) under the heading 'other goods' and the rate of tax payable was 12.5%. In the instant case, the goods which is the subject matter of dispute is Electrical Insulated Press Board commonly known as High Density Board. It is also seen that Serial No.69 (i) of the KVAT Act, 2003, deals with 'Paper of all kinds' and 69(ii) deals with 'Waste paper, paper waste and Newsprint'. However, the word 'paper' has not been defined under the KVAT Act, 2003. The word 'paper' in the common parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. From the said various definitions, it is clear that in popular parlance the word "paper" is understood as 'a substance which is used for bearing, writing or printing, or for packing or for drawing on, or for decorating, or covering the walls'. Thus, the word 'paper' in the common parlance or in the commercial sense means 'paper' which is used for writing, printing, packing purposes or drawing or decorating or covering the walls. The legislative history of 'paper' indicates that the expression "paper" has been understood to include all kinds of paper including carbon paper, blotting paper, water proof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. Therefore, the court should not merely be guided either by taking a narrow or common parlance meaning to the expression "paper" as it is used only for the purposes of writing or printing, when there is such legislative history or practice. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors, inter alia are, statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to, the end use to which the product is put to, cannot determine the classification of that product. It is well-established that in a taxing statute, there is no room for any intendment and regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the enactment. If the tax-payer is within the plain terms of the exemption, he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. The item about which there is no scope for doubt or there is comparatively less scope for doubt would accordingly stand automatically covered by the main items in the entry. In the absence of any inclusion or exclusion of words in the expression "paper", it must be held that it includes 'all kinds of paper'. In this background, when we look at serial No.69, 'papers of all kinds' should include all types of paper. In various judgments, the Courts have held that waste paper, paper waste or newspaper are not included in the word 'paper'. The legislature now has consciously included this paper in Serial No.69. However, after using the words 'paper of all kinds', they have used the word 'including', it means, the types of papers set out after the word including was not included in the word 'paper of all kinds'. Therefore, when a particular item falls within the word, description of paper is not in doubt, it is the word 'included' in the phrase 'paper of all kinds'. Goods is excessively used in an electrical industry and not used in common parlance for the purpose of writing, printing, packing, drawing, decorating or covering walls. The process of manufacture of this item indicates that this product is manufactured by imported wood pulp. It is tested for fiber length, moisture content, mechanical and chemical properties. Going through this process, one thing is clear that though the raw material used is a wood pulp or sulphate pulp, the process it undergoes and the purposes for which it is manufactured, clearly demonstrates that it is not used as a paper. Looking at the relevant factors, such as a basic character, function and the use of the goods and the statutory fiscal entry, it is clear that the intention was not to treat it as paper. In the trade parlance, it is understood as electrical goods. Therefore, that may be the reason why the legislature took the pain to expressly state as to what are the types of paper included in the expression 'paper of all kinds'. They have excluded this particular type of paper. Therefore, the paper of all kinds is a comprehensive and an inclusive definition. It is not possible to treat the Electrical Insulated Press Board/High Density Board as a paper, so as to fall within the third schedule of the KVAT Act, 2003. Insofar as the goods mentioned in the third schedule is concerned, the rate of tax is 4%. Therefore, the authorities are justified in levying tax under the heading 'all other goods' and the rate of tax at 12.5%. It is the finding which the Tribunal and suo motu revision authorities have concurrently recorded and therefore, there seems no justification to interfere with the well considered order of the authorities. - Decided against assessee.

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• 2015 (3) TMI 1047
  Validity of Tribunal's order - Whether the Tribunal has erred in adjudicating on merits the appeal despite the fact that the first Appellate Authority had not adjudicated the matter on merits and it was only on the issue of the predeposit - Held that:- Following decision of ANIL KUMAR Versus STATE OF GUJARAT [2014 (4) TMI 730 - GUJARAT HIGH COURT] - Tribunal has committed error in examining the matter on merits instead of examining the question for pre-deposit and, therefore, the order passed by the Tribunal would be required to be quashed and set aside with the further direction that the appeal stands restored to the Tribunal for fresh consideration - Decided in favour of Revenue.

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• 2015 (3) TMI 1046
  Levy of tax u/s 6 of the Karnataka Sales Tax Act, 1957 - assessee are dealing in diamond, gold jewelry studded with diamond, platinum jewelry studded with diamond besides sale of gold jewelry studded with diamond - assessing authority noticed the diamond, which was used in the manufacture of gold jewelry studded with diamond and platinum jewelry studded with diamond were purchased from a unregistered dealer. Therefore, the authority held as these diamonds lose their identity once they have been consumed in the manufacture of jewelry, articles studded with diamond, the said goods are liable to tax under Section 6 - Held that:- every dealer who in the course of his business purchases any taxable goods in the circumstances, in which no tax under Section 5 of the Act is leviable on the sale price of such goods and either consume such goods in manufacture of other goods or sale or consumes otherwise or disposes of such goods in any manner other than by way of sale in the state then he shall be liable to pay tax on the purchase price of such goods at the same rate it would have been leviable on the sale price of such goods under Section 5 of the Act. When the article purchased by the assessee are being used in bringing out a different commodity known as jewelry, article, there is a consumption of diamonds and bullions in the process of manufacture of a different commercial commodity i.e., diamond embedded jewelry article. It is not a case where the diamonds purchased by the assessee is sold as such to a buyer. When once the diamond is used in making the jewelry and it is embedded in the jewelry, it changes into another commercial commodity and therefore, such a commercial commodity has come into existence on absorption of the diamond and therefore, the test prescribed under Section 6 of the Act is attracted and the Commissioner was justified in holding that Section 6 of the Act attracts. - No merit in appeal - Decided against assessee.

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• 2015 (3) TMI 1045
  Condonation of delay - Revision application under section 58 of the U.P. Value Added Tax Act, 2008 - Held that:- It is noticeable that revision under section 58 lies to this Court in special cases involving question of law. The order under challenge should be an order made under sub-section (7) or sub-section (8) of section 57 other than an order under sub-section (4) of that section summarily disposing the appeal. - An order condoning delay in filing the appeal is not an order covered by sub-section (7) or sub-section (8) of section 57. For the said reason as well, no interference is warranted in exercise of revisional jurisdiction. - Decided against appellant.

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• Indian Laws

• 2015 (3) TMI 1032
  Suspension of license - retail sale of country liquor - Held that:- Following decision of Smt. Babita Rai v. State of U.P. and others in [2010 (12) TMI 1120 - ALLAHABAD HIGH COURT] - Gorakh Nath v. State of U.P. and others [1996 (10) TMI 473 - SUPREME COURT] - No merit in appeal - Decided against appellant.

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