Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 11, 2016
Case Laws in this Newsletter:
Income Tax
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Procedure for registration and submission of statement as per clause (k) of sub section (1) of section 285BA of Income-tax Act, 1961 read with Sub rule (7) of Rule 114G of Income-tax Rules, 1962 - Notification
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MAT - Long term capital gain from sale of shares to be shown to the book profits u/s 115JB - AT
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Transfer of shares without consideration - Transfer without any monetary consideration as per family arrangement cannot be held to be a gift - AT
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Addition on account of lower gross profit in post survey period on sale made to sister concern confirmed since no commercial expediency was demonstrated - AT
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Adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. - AT
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Bogus purchases - addition made on the basis of Maharastra VAT authorities to the effect that assessee’s suppliers have issued bogus invoices without involving any actual delivery of goods deleted - AT
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Addition on undisclosed income cannot be made on the basis of the statement recorded during the survey under section 133A - AT
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Levy of penalty u/s. 271(1)(c) - Merely claiming of expenditure under wrong head would not make the assessee liable for penalty under the provisions of section 271(1)(c) - AT
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TDS u/s 194C - No tds on contractual payments of cutting and transporting of sugarcane from the fields to the factory gate as the payments were not given for carrying out the work of harvesting, cutting and transporting on behalf of the assessee - AT
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Deemed dividend u/s 2(22)(e) - transactions made by the assessee and the company are for business purposes and are not deemed dividend under section 2(22)(e) - AT
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Penalty U/s 271B - Failure to get accounts audited - Penalty confirmed - AT
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Addition on interest income - Article 11(1) of India-Cyprus Double Taxation Avoidance Agreement (DTAA), which covers the instant situation provides for taxation of interest income on payment/receipt basis and not on accrual basis - AT
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Applicable rate of tax - India-Cyprus DTAA - Assessee is entitled to the benefits of the India-Cyprus DTAA and its income is liable to be taxed at the lower rate of 10% - AT
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Exemption u/s 54 on unregistered property purchased from son of the assessee allowed - transferee gets the right over the property and has become the owner of the property, therefore, for the purpose of deduction U/s 54 read with Section 2(47)(V) of the Act, the property has been transferred to him - AT
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Deduction u/s 10B - business of the assessee is proved beyond doubt that it involves in the manufacturing activities, in the result, it is eligible to claim deduction u/s 10B - AT
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Revision u/s 263 quashed - furnishing of proof in the course of assessment on record may not be required in all cases, when AO takes up the scrutiny for examining specific issues since the case has been selected under CASS system - AT
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Powers of CIT(A) to pass any stay order - Appellate Commissioner has got power to modify or set aside or pass any order regarding the demand, that goes without saying that the said Officer without closing the matter has got ample power or incidental power to quash any order, pending disposal of the appeal. - HC
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Deduction u/s 80RR - Income derived from profession as a 'sportsman' - The entire role of the assessee and the activity performed by him for which he was remunerated, have a direct and proximate link with the game of cricket. Assessee is eligible to claim deduction u/s 80RR as the impugned income has been derived by the assessee in the exercise of his profession as a 'sportsman'. - AT
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Disallowance out of interest on loan u/s 24(b) as well as u/s 36(1)(iii) - belief of the assessee that any expense incurred during the course of its business (including interest paid on funds borrowed) should be allowable against the income earned during the course of business, cannot be said to be wholly unfounded and without any basis - AT
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Earnest money received - addition u/s 68 - As per the established principles of taxation jurisprudence, provisions of Section 68 can be invoked if the identity and creditworthiness of the creditor is not established and that the transaction is not genuine - addition deleted - AT
DGFT
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Requirement of Certification regarding export of Betel Leaves - Notification
Wealth-tax
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Declared value of the jewellery while framing the assessment of Wealth tax - Assessee permitted to use the valuation report given by an approved valuer for a particular year for next four years with appropriate adjustment only for the change in value of metal contained in jewellery. No fault for not including appropriate adjustment/appreciation for the change in value of stones. - AT
Service Tax
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Period of limitation - Refund claim - Notification No. 41/2007-ST - Export of printed books - It would appear that the original authority found no ground for rejection of the claims other than an erroneous interpretation of the bar of limitation - AT
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Refund of service tax - Goods exported under claim of drawback - While fixing all industry rate of drawback, the average duties and service tax paid in respect of inputs and input services are taken into account and the condition of Notification No. 41/2007 - ST has to be strictly construed - Refund inadmissible - AT
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Service tax obligation - Reverse charge mechanism - While discharging foreign C & F Agent raised composite bill / invoice liability under reverse charge, Service Tax is chargeable on said bill / invoice excluding expenditure or costs incurred by C & F Agent as a pure agent, if conditions enumerated in Rule 5 ibid are met - AAR
Central Excise
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Valuation of physician samples - since there is a transaction value available at which the goods are sold by the assessee to the distributors, and the same has not been challenged, the same should be assessable value u/s 4(1)(a) of the Central Excise Act - AT
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Classification of Herbal Pet Wash - Whether to be classified under CETH 3307.90 or under 3401.11 - the products namely Herbal Pet Wash are correctly classified under 3401.11. - AT
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Classification - Bio-95 - It is found that 3402.10 is a specific entry in respect of product namely Sulphonated Castor Oil and 3402.90 is for "other". It is a settled law that specific entry prevails over the general entry. - AT
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Payment of interest of deposit - Once no appeal against the adjudicating authority was filed by the Respondent, then it has to be interpreted that they have accepted the clandestine removal of the goods. - AT
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Eligibility of Cenvat credit - Service tax paid on input services - Expenses incurred on services like medical coverage to employees, membership paid to CII and subscription to TN Electricity Consumer Associations at the factory premises are eligible as input service as per definition in rule 2(l) of CCR - Cenvat credit to be allowed - AT
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Cenvat credit - Short received coal - Loss of weight due to removal of ash content, mud, fines occurred due to coal washing process has to be considered as arising during the course of manufacture of final product and credit has to be allowed - AT
VAT
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Validity of survey conducted in the premises of petitioner - DVAT - Only oral discussions between the officers concerned without any written approval of the Commissioner on file is a plain abuse of the process of law by the officers concerned of the DT&T - HC
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Period of limitation - Invokation of Section 61(1) of the Bombay Sales Tax Act, 1959 - an order of court cannot override the legal provision which is specific in nature - period of limitation statutorily prescribed cannot be waived - HC
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Waiver of tax imposed for entertaining the appeal - non-production of proof of payment of pre-deposit - as per the provision of Section 73(4) of the GVAT Act no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of the tax but appellate authority may, if it thinks fit, for reasons to be recorded in writing can entertain an appeal - HC
Case Laws:
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Income Tax
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2016 (4) TMI 353
Addition on account of reduction in gross profit of 6% - sale made to sister concern - Held that:- No infirmity in the order of ld CIT(A) in confirming the addition to the extent of ₹ 3,01,352/- on sale made to sister concern as the assessee could not explain the fall in gross profit on distress sale made by assessee to its sister concern. The plea of safeguarding itself from the clutches of slow down and of wastages is not supported by evidence. Merely disclosure of sales figures and sales tax return does not prove or disprove the gross profit declared by the assessee. The rates charged by the assessee on sale of goods to sister concern at no profit no loss but the sale them at cost is stated the commercial expediency of the assessee. However no commercial expediency was demonstrated before the lower authorizes. Further assessee has debited the whole of the unaccounted purchases to the profit and loss account of ₹ 3,80,50,000/- and claimed it as deduction and AO has allowed it for the reasons best known to him. This fact is apparent from the details of purchases furnished by assessee at paper book page no 13. Therefore the main reason for lower gross profit is also the reasons of the debit of unaccounted purchases by the assessee to the profit and loss account. In the result we confirm the order of ld CIT (A) in confirming the addition of ₹ 3,01,352/- on account of lower gross profit in post survey period on sale made to sister concern - Decided against assessee. Disallowance of depreciation - Unaccounted investment in construction of building - Held that:- During the course of survey the assessee has disclosed ₹ 5 crores out of which the addition to the building was stated to be of ₹ 70 lacs. The moment the disclosure of ₹ 5 crores is accepted then the investment in the building is also required to be accepted. The principle is that the statement of any person should be accepted or rejected in toto. In this statement the assessee has offered income of ₹ 5 crore which has been taxed by the AO. Further the application of this income has not been accepted. Because of the reason that provision of section 69B does not contain identical provision as contained in section 69C of the act. For the purposes of allowance of depreciation AO has not stated that any conditions mentioned in section 32 of the Act has not been met with. Neither AO has put any question to the assessee about the ownership of the assets, user of those assets and consequent allowance of deprecation thereon. In absence of this disallowance of depreciation cannot be made. According to us the ld CIT (A) and AO both erred in applying the provisions of section 69C on the issue of unaccounted investment in construction of building. The addition made is not on account of unexplained expenditure but it is an addition of amount of investment which is not fully disclosed in the books of account. The relevant addition has not been made u/s 69C but u/s 69B of the Act. In view of this the disallowance of depreciation of ₹ 350000 cannot be upheld. In the result we reverse the finding of the ld CIT(A) in disallowing the depreciation - Decided in favour of assessee. Disallowance of repairs and renovation expenditure - Held that:- Assessee has offered income of ₹ 5 crore by crediting this sum as other income and showed in schedule 12 of the profit and loss account. Simultaneously the assessee has debited ₹ 40 lacs in the profit and loss account under the head repair and maintenance expenditure at schedule 16. According to this assessee has agreed the income to credit of profit and loss account and simultaneously debited the expenditure to the profit and loss account and thus nullifying the amount of disclosure made by the assessee. Obviously the disclosure made by the assessee is on account of repairs of show room amounting to ₹ 40 lacs. That means the assessee has incurred an expenditure however it did not offer any explanation about the source of such expenditure then same is required to be added under the provision of section 69C of the act. As the amount is covered by provision of section 69C obviously proviso mentioned therein is applicable which prohibits the allowance of any expenditure as deduction under any head of income which has been taxed u/s 69C of the Act. In view of this we confirm the action of the lower authorities in confirming the disallowance of ₹ 40 lacs as unexplained expenditure. - Decided against assessee.
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2016 (4) TMI 352
Validity of the order passed by the AO u/s. 153A - Held that:- AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted and the ground raised by the assessee in the appeal is allowed. Share transactions - STCG or business income - Held that:- CIT(A) rightly directed the AO to treat the capital gain/loss arising out of share transaction as business income /loss on account of share transaction will remain short / loss for various assessment years where the holding of shares are less than 30 days as a result, this ground of appeal was partly allowed for various assessment years. We do not find any flaw or infirmity to take a contrary decision.
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2016 (4) TMI 351
Earnest money received - addition u/s 68 - Held that:- We find that an FIR was filed on 30. 7. 2008, in pursuance of the order of the Metropolitan Magistrate dt. 27. 5. 2008 with regard to monetary transaction taken place between the assessee and MDC, that in the order of the Metropolitan Magistrate it has been observed that the assessee had received token money ₹ 73. 21 from MDC, that those papers with regard to the FIR were filed during the course of appeal proceedings in the penalty matter. As per the established principles of taxation jurisprudence, provisions of Section 68 can be invoked if the identity and creditworthiness of the creditor is not established and that the transaction is not genuine. In the case under consideration, the genuineness of the transaction stands proved because the money has come from a known source-through banking channels. As far as identity and credit worthiness is concerned, same cannot be doubted. Proprietor of the MDC and the assessee are fighting legal battle in the Court and the order of the Magistrate clearly states that payment of ₹ 23. 00 lacs was made by MDC to the assessee during the under appeal. Therefore, in absence of existence of basic ingredients of Section 68, the FAA was not justified in upholding the order of the AO, who had made the addition of ₹ 23 lakhs. - Decided in favour of the assessee. Disallowance of administrative expenses, employees expenses and depreciation - Held that:- We find that assessee had shown income of ₹ 8. 53 lacs for the year under appeal. (Pg-8 of the paper book), that income from business centre had been shown at ₹ 2. 70 lacs as against the income of ₹ 4. 85 lacs for the previous year, under the head Business-income, that the assessee had shown expenditure of ₹ 29. 80 lacs for the year under consideration as against expenditure of ₹ 48. 13 lacs for the earlier year. In these circumstances, it cannot be stated that assessee was not carrying out any business activity. It is a fact that assessee has closed down its manufacturing unit long back, but it does not mean that he was not carrying out any business activities. We find that while finalising the assessment of the assessee for the AY. 2005-06, the AO had allowed 75% of the identical expenses. On a query by the Bench the AR conceded that assessee had not agitated the issue before the FAA in that matter. Considering the peculiar facts and circumstances of the case, we want to restrict the disallowance to 25% of the expenses disallowed. Effective ground of appeal is decided in favour of the assessee in part.
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2016 (4) TMI 350
Deduction u/s 80RR - Income derived from profession as a 'sportsman' - Held that:- In the facts of the case before us, it is noted that the assessee has derived its income as a result of his agreement with M/s ESPN Star Sports for the services provided by the assessee as a presenter and commentator and other allied activities which have been discussed in the relevant clauses of the agreement. Thus, assignment has been given to the assessee and this role has been performed by him effectively, because of his having been a cricketer of international stature and he was chosen for the skill and knowledge he possessed and the delivery he could have given because of this skill and experience. We can, unhesitatingly, say that the contribution for promotion to the game of cricket is possible not only while playing in the field but also outside the field while performing various other crucial roles, like that of a coach, empire and commentator etc. The entire role of the assessee and the activity performed by him for which he was remunerated, have a direct and proximate link with the game of cricket. In the given facts of this case, one cannot visualise earning of this income, de-horse the assessee having been a cricketer and a sportsman and nor can it be visualised independent of the game of cricket. We have already held in earlier part of our order that assessee falls in the category of a 'sportsman'. Thus, in our considered opinion, the facts of this suggest that the impugned income has been derived by the assessee in the exercise of his profession as a 'sportsman'. Thus, the facts of this case suggest that the assessee is eligible to claim deduction u/s 80RR, and therefore no belief could have been formed for escapements of his income. The claim is allowable on merits also, as discussed above in detail. Thus, the benefit of deduction claimed u/s 80RR was in accordance with law, and therefore, disallowance made by the AO in this regard is directed to be deleted. - Decided in favour of assessee.
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2016 (4) TMI 349
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed and that time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (4) TMI 348
Addition on surplus on sale of shares received as gift to the book profit for taxation U/s. 115JB - Held that:- Respectfully following the decision of the co-ordinate bench in assessee’s own case Assessing Officer has rightly added the long term capital gain from sale of shares to the book profits u/s 115JB of the Act and accordingly, we dismiss the ground of assessee. Transfer of shares without consideration - gift - Held that:- Transfer of shares of Nestle India Ltd and Hindustan Lever Ltd held as investment by members of Bilakhia family to the assessee-company as per family arrangement dated 16-02-2001 claimed to have been transferred without any monetary consideration cannot be held to be a gift and therefore order passed by Ld. CIT(A) holding the transfer of shares as gift is hereby reversed and that of AO is restored.
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2016 (4) TMI 347
Bogus purchases - addition made on the basis of Maharastra VAT authorities to the effect that assessee’s suppliers have issued bogus invoices without involving any actual delivery of goods - hawala dealers - Held that:- It emerges that he is mainly a suppliers of finished goods from purchasers to sellers without involving any stock being maintained at his behest. There is further no dispute that assessee’s sales in question corresponding to the impugned purchases already stand accepted. There is no issue that he has already placed on record all the relevant bills/vouchers, gate passes, delivery challans, proof of mode of payments and relevant confirmations on record in support of the purchases. Both the lower authorities doubt creditworthiness thereof without there being any rebut in all evidence except Maharastra VAT authorities information. The alleged hawala dealers have nowhere been allowed to be cross examined at any staged of the proceedings. Thus to conclude in these facts and circumstances that the CIT(A) has erred in confirming the impugned addition of bogus purchases, See Hiralal Chunilal Jain vs. ITO [2016 (1) TMI 1089 - ITAT MUMBAI], ACIT vs. Ramila P. Shah [2015 (3) TMI 1116 - ITAT MUMBAI] and DCIT vs. Rajiv Jee Kalathil (2014 (8) TMI 807 - ITAT MUMBAI) - Decided in favour of assessee
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2016 (4) TMI 346
Addition on undisclosed income - addition made by the AO on the basis of statement of Mr. Ajay Singhal at the time of survey recorded u/s. 133A - Held that:- We find considerable cogency in assessee’s submissions that addition cannot be made on the basis of the statement recorded during the survey under section 133A of the Act, in view of the various judicial decisions wherein, it has been held that such statement does not have any evidentiary value, especially the decision of the Hon’ble Madras High Court in the case CIT vs. S. Khakder Khan son reported in (2007 (7) TMI 182 - MADRAS HIGH COURT ) wherein, it has been held that “Addition on the basis of statement recorded during survey under section 133A-Sect. 133A does not empower any IT Authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition”. Thus we are of the considered opinion that the addition made on the basis of the statement in the present case recorded u/s. 133A is not sustainable in the eyes of law, hence, we delete the addition - Decided in favour of assessee.
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2016 (4) TMI 345
Levy of penalty u/s. 271(1)(c) - Held that:- The assessee has shown the nature of expenditure in its books of account. Merely claiming of expenditure under wrong head would not make the assessee liable for penalty under the provisions of section 271(1)(c) of the Act. It is not the case of Revenue that the assessee has not disclosed the details of expenditure claimed. The Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Reliance Petroproducts (P.) Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that penalty u/s. 271(1)(c) cannot be levied merely because the assessee had claimed expenditure which was not accepted by the Revenue. - Decided in favour of assessee.
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2016 (4) TMI 344
Deemed dividend u/s 2(22)(e) - whether the advances were loan for business purposes or otherwise - Held that:- The prima facie copy of accounts in the books of the company shows that assessee had paid much more than amount received from the company. The transactions were regular. The assessee produced the evidence before the lower authorities to justify the transaction as a business transaction on the basis of agreement to sale dated 22.7.2009. There were certain conditions as per this Ikrarnama, which could not be fulfilled by the assessee but it does not mean that assessee’s loans and advances are not for business purposes. The ld. A/R of the assessee has explained the reasons for not getting 90B done of agricultural land at village Ajayrajpura, Tehsil Sanganer as Draft Master Plan got changed by the JDA by draft Notification dated 10.11.2009 wherein it has been decided by the JDA that land use under 90B was to be approved not less than 25 acres but in final Master Plan this area has been reduced to 10 hectares. The assessee filed application on 23.08.2012 under section 90B of the Land Revenue Act before the JDA which was rejected by the JDA. The case laws relied on by the ld. A/R are squarely applicable on the facts of the case. Therefore, we hold that transactions made by the assessee and the company are for business purposes and are not deemed dividend under section 2(22)(e) of the Act. - Decided in favour of assessee
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2016 (4) TMI 343
Penalty U/s 271B - Failure to get accounts audited - Held that:- There is no evidence with the assessee to prove that he got account audited on 14/7/2008 by M/s Vimal Geol & Associates. Now law has been amended and not only the assessee got the account audited but audit report is to be submitted before due date in the office of the Assessing Officer. The assessee’s plea is that he has totally dependent on AR for submitting the return as well as audit report but this averment also has not been proved by him with cogent evidence. Therefore, we find that the ld CIT(A) was justified in confirming the penalty U/s 271(B) of the Act. Accordingly, we uphold the order of the ld CIT(A). - Decided against assessee.
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2016 (4) TMI 342
Eligibility for exemption U/s 54 on unregistered property purchased from son of the assessee - Seller has stated that this was only settlement- CIT(A) allowed the claim - Held that:- The assessee had entered into an agreement for purchase of house at B-37, New Lite Colony, Tonk Road, Jaipur on 29/4/2009. The transferee had paid the said consideration of ₹ 75 lacs and is willing to fulfill other conditions and has taken over possession of the same on 29/4/2009. Therefore, the transferee gets the right over the property and has become the owner of the property, therefore, for the purpose of deduction U/s 54 read with Section 2(47)(V) of the Act, the property has been transferred to him The assessee has taken possession of that house from the son and paid the consideration and as per Section 2(47)(v) of the Act, the transfer as per Income Tax Act, has been completed by the assessee. It is undisputed fact that the new property purchased from his son has not registered before the stamp authority. The son also has disclosed the capital gain on sale of residential immovable property to his father in the income tax return and paid the tax on capital gain. These facts have not been controverted by the ld DR, therefore, we uphold the order of the ld CIT(A). - Decided in favour of assessee
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2016 (4) TMI 341
Disallowance of claim of deduction u/s 10B - eligibility of additional depreciation - Held that:- As the business of the assessee is proved beyond doubt that it involves in the manufacturing activities, in the result, it is eligible to claim deduction u/s 10B as well as it is eligible to claim additional depreciation, as the same was eligible to be claimed by those assessee's who are in the business of manufacture or production of any article or thing. Hence, in our opinion, the assessee is eligible to claim additional depreciation as a manufacturer. - Decided in favour of assessee.
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2016 (4) TMI 340
Revision u/s 263 - case selected for scrutiny under Computer Aided Scrutiny Selection [CASS] method for verifying the sources of cash deposits - Held that:- Expenditure claim towards IMFL is either from the sale proceeds of the IMFL or withdrawals from the bank account. It may be true that AO did not leave any notes about the examination of various items. But having completed assessment by recording the above noting, it can be safely presumed that AO has examined the deposits and withdrawals in the course of assessment proceedings. Even otherwise, AO disallowed a round-sum of ₹ 3 Lakhs, out of the expenditure claims which indicate that he has satisfied himself about the other claims made in the P&L A/c. As seen from the P&L A/c, apart from purchases of ₹ 2,05,05,123/-, the other charges are (freight ₹ 1,93,185/-), salaries ₹ 1,80,000/- and other expenses ₹ 1,78,008/-. The major item of expenditure is only rates and taxes of ₹ 38,20,875/-. Therefore, it cannot be stated that AO did not examine this major item. Be that as it may, in our opinion, furnishing of proof in the course of assessment on record may not be required in all cases, when AO takes up the scrutiny for examining specific issues since the case has been selected under CASS system. May be that AO is constrained to examine only the issue on which scrutiny was taken up. In view of this, it cannot be held that order of the AO is erroneous and prejudicial to the interest of Revenue. - Decided in favour of assessee As already stated item No. 4 & 5 ie. advance receipts of ₹ 60,000/- from Reliance tower and rent receivable from Bidar does not even pertain to assessee. This indicates that the notice issued by the CIT on the above issues is erroneous. Be that as it may, there is the first issue only on which the proceedings u/s 263 could have been validly upheld. Consequently, while upholding the proceedings u/s. 263, the directions given with reference to item Nos. 2 to 5 are hereby set aside. We modify the directions of the CIT only to the issue of making the addition of ₹ 24,200/- which should have been added by the AO in the original order - Decided partly in favour of assessee
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2016 (4) TMI 339
Taxability of amount received - year of assessmnt - Held that:- No reason to interfere with the order of the Ld. CIT(A). There is no merit in Revenue’s grounds as the said settlement was entered on 11-02-2008 which falls in AY. 2008-09 and not in 2009-10. Just because a survey was conducted and statement was recorded, the amount cannot be brought to tax in AY. 2009-10. In view of that, we find no merit in the Revenue’s grounds on the issue. With reference to the valuation also, we are of the opinion that Ld. CIT(A) has correctly directed the value to be adopted which itself becomes ‘cost for the plots’ which were sold subsequently. Consequently, we affirm the orders of Ld. CIT(A) and dismiss the grounds.
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2016 (4) TMI 338
Penalty U/s. 271(1)(c) - Disallowance of Business Expenses u/s 37(1) - Held that:- These expenses were of routine nature e.g. Director's Salary, Bank Charges, Filing Fee, Audit Fee etc. Undoubtedly, these expenses were of statutory nature and were necessary for maintaining the existence of the company and thus these can be said to be incurred for the purpose of business of the assessee, and therefore these expenses were claimed under the head "Business". The claim of the assessee was very much plausible not only on facts but it is also supported on the basis of various judgments in favour of the assessee. CIT vs. Ganga Properties Ltd. [1989 (5) TMI 10 - CALCUTTA High Court] so long as a company is in operation, it has to maintain its status as a company and it has to discharge certain legal obligations and, for that purpose, it is necessary to appoint clerical staff and secretary or accountant and incur incidental expenses. In this background, the conclusion of the Tribunal that the expenses incurred were wholly and exclusively for the activities to earn income is preeminently a reasonable conclusion.- Decided in favour of assessee Disallowance out of interest on loan u/s 24(b) as well as u/s 36(1)(iii) - Held that:- The claim of the assessee was that funds were borrowed for the purpose of business on which interest was paid. The income from House Property although was part of business of the assessee but due to specific provisions, the same was assessed under the head "Income from House Property". But, the intrinsic nature of the income remains as income from business, even if it was assessed under a different head. Under these circumstances, the belief of the assessee that any expense incurred during the course of its business (including interest paid on funds borrowed) should be allowable against the income earned during the course of business, cannot be said to be wholly unfounded and without any basis. The claim of the assessee was rejected due to application of particular provisions of law by the AO. It is further noted by us that the AO has himself allowed part of the total claim of interest. The assessee had claimed a sum of ₹ 1,72,79,082/-. Out of the said claim, only a sum of ₹ 55,97,027/- has been disallowed by the AO u/s 24(b) of the Act. Thus, even as per the AO, the claim of the assessee was not wholly disallowable. Rather, substantial amount was allowed by the AO, and disallowance of part of the total claim was made by the AO on the basis of some calculations done by him by alleging that whole of the funds were not utilized for acquiring the property. Thus, an element of guess work was involved while computing and quantifying the amount of disallowance. Further, it is brought to our notice that similar claim has been accepted by the AO in the subsequent year i.e. AY 2010-11, wherein no disallowance has been made by the AO. Under these circumstances, it cannot be said, on 'certain' and 'unambiguous' basis that the claim of the assessee in this year was patently erroneous. Under these circumstances, the AO was not able to make out a case for concealment of income or furnishing of inaccurate particulars of income while initiating the penalty in the assessment order or while levying the penalty in the penalty order. It is noted that penalty has been levied in the manner as if once disallowance has been made, then levy of penalty would be automatic, disregarding the well-settled position of law that penalty proceedings are independent of the assessment proceedings. - Decided in favour of assessee
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2016 (4) TMI 337
Applicable rate of tax - India-Cyprus DTAA - as per revenue the benefit of the lower rate of tax prescribed in India-Cyprus Double Taxation Avoidance Agreement (DTAA) could not be allowed since assessee has failed to file any revised return to show that the non-filling of the schedule of S.I in the return of income was an inadvertent mistake - Held that:- Assessee is entitled to the benefits of the India-Cyprus Double Taxation Avoidance Agreement ('DTAA') and its income is liable to be taxed at the lower rate of 10% as per India- Cyprus Double Taxation Avoidance Agreement (DTAA), mere technical error would not defeat the claim of the assessee, which is otherwise in accordance with law. In the case of CIT vs. Rajasthan Fasteners (P) Ltd., [2014 (6) TMI 291 - RAJASTHAN HIGH COURT] the assessee’s claim for exemption under section 10B of the Act was sought to be denied by the Revenue on the ground that while E-filing the return of income, the claim was wrongly mentioned as being under section 80IB of the Act, which was sought to be explained by the assessee as a mere typographical error. The Hon’ble High Court affirmed the stand of the Tribunal, whereby the claim of the assessee for exemption under section 10B of the Act was allowed considering that a mere typographical error in mentioning section 80IB of the Act in the return of income would not disentitle the assessee’s claim for exemption under section 10B of the Act. - Decided in favour of assessee Addition on interest income - interest income was liable to be assessed on accrual basis or receipt basis - Held that:- As relying on Article 11(1) of the India-Cyprus Double Taxation Avoidance Agreement (DTAA) to mean that the interest income in question is liable to be taxed on payment/receipt basis and not on accrual basis, as sought to be made out by the Assessing Officer. The plea of the assessee that by an inadvertent error such amount has been included as income on accrual basis, such solitary error cannot be construed to mean that assessee has not been following the cash basis of accounting regularly. In our considered opinion, the plea of the assessee is quite justified, and in any case, the applicable legal position on any point has to be arrived at by keeping in mind the relevant provisions of law and not merely by the conduct of the parties. Ostensibly, Article 11(1) of India-Cyprus Double Taxation Avoidance Agreement (DTAA), which covers the instant situation provides for taxation of interest income on payment/receipt basis and not on accrual basis.- Decided in favour of assessee
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2016 (4) TMI 336
Scope of assessment u/s 153A - Addition on account of the undisclosed turnover - Held that:- We find that the issue raised herein is no longer open to debate as it is covered by the decision of this Court in the case of All Cargo Global Logistics Ltd. (2012 (7) TMI 222 - ITAT MUMBAI(SB)). It dealt with both pending assessment as well as completed assessment. In the above case, three years out of six assessment years were pending assessment for the purpose of Section 153A of the Act. Therefore, the decision of this Court in All Cargo Global Logistics Ltd. (supra) would apply to the present facts even if one accepts the stand of the revenue that the assessment is not complete as no notice under Section 143(2) of the Act had been issued. So far as the next submission on behalf of the Revenue viz. of extrapolation of evidence found during search is concerned, this Court in All Cargo Global Logistics Ltd. (supra) had negatived the revenue's submission before it that the assessment under section 153A of the Act is not to be restricted only to the incriminating material found during the course of search but would extend to other material also. Therefore in the facts of present case this issue is covered by the decision of this Court in All Cargo Global Logistics Ltd. (supra) in favour of the respondent-assessee inasmuch as it restricts the assessment to be made only to the incriminating material found during the course of search. The reliance upon the decision of the Supreme Court in H.M. Esufali H.M. Abdulali (1973 (4) TMI 49 - SUPREME Court) is inappropriate. This is so as it was passed under the sales tax law and it proceeded the basis of best judgment assessement i.e. disregarding the assessee's books of account. It is not so in this case. - Decided in favour of assessee
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2016 (4) TMI 335
Estimation of N.P. rate - Held that:- The assessee has claimed third party interest from the net profit rate estimated but on verification of the past history, it is found that the assessee never claimed third party interest against the net profit rate applied by the Assessing Officer. Therefore, we do not find any merit on ground of the assessee’s appeal. Similarly interest on FDR has also been assessed by the Assessing Officer as income from other sources, which has been accepted by the assessee in past. Therefore, we do not find any reason to disturb the consistency of the case. The net profit rate applied @ 11% is higher side even books of account rejected as not produced by the assessee but the business result can be compared from the other cases, which has also not been applied by the lower authority even confirming the addition by the ld CIT(A). Keeping in view of the past history of the case, we apply N.P. rate @ 5.5% subject to interest and remuneration to the partner. The Assessing Officer is directed to calculate the income as per observation made by us.
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2016 (4) TMI 334
Reopening of assessment - Held that:- AO for initiating the reopening of the assessment proceedings beyond the period of 4 years from the end of the relevant assessment year has to establish that there was escapement of income chargeable to tax because of the failure of the assessee to disclose fully and truly the material facts necessary for the assessment. Neither in the reasons recorded for reopening the assessment nor in the order of re-assessment u/s147 of the Act. The AO has not brought out facts to show any omission on the part of the assessee to disclose fully and truly the material facts when the original assessment was completed. We are of the view that the re-opening of the completed assessment u/s 143(3) of the Act beyond the period of 4 years cannot be justified. We hold that the re-opening of the assessment is beyond the time contemplated by the proviso to sec.147 of the Act and therefore, initiation of re-assessment proceedings is held to be bad. - Decided in favour of assessee
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Service Tax
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2016 (4) TMI 332
Service tax obligation on which portion under reverse charge mechanism - While discharging foreign C & F Agent raised composite bill / invoice liability - Foreign C & F Agent would be incurring the expenses which is to be included in the valuation of goods as per Section 14 of the Customs Act, 1962 for the purpose of charging Customs duty on behalf of the applicant with respect to freight, insurance, loading, unloading and handling charges of goods, etc. proposed to be imported. Therefore, charging Service Tax on said component would tantamount to double taxation. Held that:- as per Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, where any expenditure or costs are incurred by the Service provider in the course of providing service, all such expenditure or costs shall be included in the value for the purpose of charging Service Tax on said service. Further, Rule 5(2) ibid inter alia envisages that the expenditure or costs incurred by the service provider as a pure agent of recipient of service shall be excluded from the value of taxable service, if all the following conditions, are satisfied. Therefore, while discharging foreign C & F Agent raised composite bill / invoice liability under reverse charge, Service Tax is chargeable on said bill / invoice excluding expenditure or costs incurred by C & F Agent as a pure agent, if conditions enumerated in Rule 5 ibid are met. - Decided against the appellant
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2016 (4) TMI 331
Admissibility of refund of service tax - Notification No. 41/2007 - ST - Goods exported under claim of drawback under Customs and Excise Duties and Service Tax Drawback Rules, 1995 - Held that:- by applying the ratio of CESTAT judgment in the case of Rajasthan Textile Mills Vs. CCE [2014 (8) TMI 853 - CESTAT NEW DELHI], the refund is not admissible. - Decided in favour of revenue
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2016 (4) TMI 330
Liability of Service tax - Commission received from BSNL for the sale of mobile sim cards - Lower authorities taxed the commission under "Business Auxiliary Service" - Held that:- the issue is no more res integra. By relying on the decision of Principal Bench of the Tribunal in the case of Commissioner of Central excise, Allahabad vs. M/s. Capital TV Service Centre [2015 (10) TMI 576 - CESTAT NEW DELHI], the appellant is not liable for service tax on commission received. Hence, the impugned order is set aside. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 329
Demand of service tax on delivery of RMC at sit - Whether adjudicating authority was correct in dropping the proceeding initiated by show-cause notice - Manufacture and supply of RMC - Respondent charged separate amounts as pumping charges for pumping RMC into desired place - Held that:- the issue is no more res integra as the Tribunal in the case of GMK Concrete Mixing Pvt. Ltd vs CST [2011 (11) TMI 425 - CESTAT, NEW DELHI] in an identical issue held against the Revenue and set aside the demand. Revenue aggrieved by such an order preferred an appeal before the Hon'ble Apex Court and same was dismissed by Hon'ble Apex Court as reported in [2015 (1) TMI 857 - SUPREME COURT]. Therefore by following the same the adjudicating authority was correct in dropping the proceeding initiated by show-cause notice. - Decided against the revenue
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2016 (4) TMI 328
Period of limitation - Refund claim - Exported printed books for which exemption was claimed through a refund route prescribed in Notification No. 41/2007-ST dated 6th October 2007 - Tax paid on services utilized in production and export of goods - Refund claim for the quarter ending September 2008 was filed on 31 st March 2009 and refund claim for the quarter ending December 2008 was filed on 30th June 2009 - Held that:- the appellant had filed the application for refund within the deadlines stipulated in the relevant notification. The goods in the production of which the taxable services were used had been exported. Also the protracted correspondence was with the object of ensuring that all deficiencies in the application were made good. It would appear that the original authority found no ground for rejection of the claims other than an erroneous interpretation of the bar of limitation. That the limitation should be computed with effect from date of original, albeit incomplete, filing being settled law, the appellant is entitled to refund as per claim. - Decided in favour of appellant
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Central Excise
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2016 (4) TMI 327
Demand of duty alongwith interest - Disallowance of Cenvat credit for short received coal as the quantity was not found short in other consignments - Coal was sent to Coal Washery for processing of coal so that it can be used in the manufacturing process - Appellant contended that The loss of weight due to removal of ash content, mud, fines occurred due to such coal washing process has to be considered as arising during the course of manufacture of final product and credit has to be allowed. Held that:- it is found from the records that since the other consignments of coal were not sent for washing, there was no weight loss. However, since the disputed nine consignments were sent for washing, the loss in weight has occurred. Thus, the reasoning advanced by the revenue cannot be a defensible ground for disallowance of Cenvat credit. The coal was sent for washing and the loss in weight occurred due to its processing as apparent from the records of the appellant. It is also found that the certificate issued by the 'Central Institute of Mining & Fuel Research, Bilaspur Unit (Council of Scientific & Industrial Research), Bilaspur (Chhattisgarh) working under Ministry of Science & Technology, Govt. of India clarifies that there is positive correlation between percentage of Ash reduction & loss of coal volume i.e. yield of washed coal and that on 1 % of Ash reduction in Coal there is volume loss of approx. 2.5%. Also as per IEA Clean Coal Centre of International Energy Agency loss in coal washery accounts for 20 - 30% loss through the separation process for mineral matter from the coal. Therefore, the reasons canvassed by the revenue for disallowing cenvat credit is not sustainable and also demand is not sustainable. Imposition of penalty - Held that:- there is no ground to impose penalty under Rule 15 of the Cenvat Credit Rules, 2004 as the demand is itself not sustainable. Further in SCN, no facts have been brought on record which can show the malafide intention or suppression on the part of the appellant. Therefore, that the penalty imposed on the appellant is also not sustainable. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 326
Eligibility of Cenvat credit - Service tax paid on input services - Assessee has stated that the services are input services as per definition in rule 2(l) of CCR and hence eligible to avail credit of the services - Held that:- expenses incurred on services at the factory premises of the appellant-assessee are eligible as input service upheld by Hon'ble High Court of Madras in CCE& ST LTU Chennai Vs Rane TRW Steering Systems Ltd. [2015 (4) TMI 704 - MADRAS HIGH COURT]. Similarly policy taken to provide medical coverage to the employees is also an eligible input service under rule 2(l) of CCR 2004. Regarding Membership fee paid to CII, it is found that the assessee is required to associate with these associations in order to be updated on issues relating to advancement of his business activities. Hence the payments made to these trade and business associations are eligible input service. In respect of subscription of appellant to TN Electricity Consumer Associations, I agree with Commissioner (Appeals). By respectfully following the ratio laid down by the Hon'ble High Courts in various cases, the assessee's appeal in respect of cenvat credit on input services, such as, house keeping services, group medical insurance policy and subscription to CII. Imposition of penalty - Disallowance of credit on input services - Held that:- taking into overall facts and circumstances of the case, the imposed penalty is set aside. - Decided partly in favour of appellant
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2016 (4) TMI 325
Evasion of Revenue - Clearance of the aluminum sulphur powder without invoice - Proceeded to examine various corroborating evidence gathered by investigation - Held that:- above scrutiny shows application of mind by the adjudicating authority to the questionable clearances made by appellant causing loss of Revenue which was not repelled leading any cogent evidence. The way in which the appellant was operating demonstrated unaccounted dealing of finished goods causing evasion of duty. There were cumulative evidence on record that went against the appellant to impeach its conduct proving clandestine removal. Therefore,a reasoned and speaking order is passed by adjudicating authority and nothing is controverted in the grounds of appeal and there is no scope to intervene to the adjudication. - Decided against the appellant
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2016 (4) TMI 324
Refund claim - Manufacture of black and white T.V. Picture Tubes of various sizes - Availed credit of duty paid on various inputs used in the manufacture of these picture tubes - Submission of statements showing daily balance of RG 23 A part II for the period 01.08.1995 to 01.03.1997 where the amount of modvat credit available was never below ₹ 227.20 Lacs - Held that:- the appellant has made out a case for refund of the amount paid by them in cash through PLA debit and taken re-credit immediately during the pendency of first round of adjudication. It is also established that they had all along modvat credit balance much higher than ₹ 227.20 Lakhs, when both the credit registers were taken together as such it is found that they are eligible for the consequential relief of refund of this amount. The appellant also prayed for refund of the said amount with interest. It is found that provision to pay interest has been introduced in the law only from 26.05.1995 vide Section 11BB of the Central Excise Act, 1944. Therefore, interest entitlement will be due from three months after the introduction of the provisions for payment of interest in the Act. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 323
Valuation of physician samples - Duty paid on the basis of 110% of the cost of production but revenue demanded duty at the value to be determined under rule 4 of the CER Valuation Rules - Revenue contended that applicant manufactured physician samples and distributes or sells for distribution free of cost - Held that:- the physician samples are not being distributed free of cost by CRL. They are being manufactured on the job work basis for the principal manufacturer and they are being sent back to the principal manufacturer. Therefore, in view of the decision of Tribunal in the case of Omni Protech Drugs Pvt. Ltd. vs CCE, Pune [2011 (6) TMI 532 - CESTAT, MUMBAI], arrived at as per formula laid down by the Hon'ble Apex Court in the case of Ujagar Prints et. etc. vs. Union of India & others [1989 (1) TMI 124 - SUPREME COURT OF INDIA], it is not open to the revenue to demand duty on the value arrived at in terms of rule 4 of the Central Excise Valuation rules. Demand of excise duty - Duty paid on the basis of 110% of the cost of production but revenue demanded duty at the value to be determined under rule 4 of the CER Valuation Rules - Applicant manufacturing physician samples for itself and selling the same to Cosmae Farma Laboratories - Held that:- the goods are not being distributed free of cost. By following the decision of Hon'ble Supreme Court in the case of CCE vs. Sun Pharmaceuticals Industries Ltd. [2015 (12) TMI 670 - SUPREME COURT] which squarely covers the present case, since there is a transaction value available at which the goods are sold by the assessee to the distributors, and the same has not been challenged, the same should be assessable value under Section 4(1)(a) of the Central Excise Act. - Decided against the revenue
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2016 (4) TMI 322
Classification - Bio-95 - Whether to be classified under CETH 3402.90 as per revenue or under 3402.10 as claimed by appellant - Held that:- the product is 'Organic Surface Active Agent' as per the main tariff entry under Chapter Heading 3402. 'Organic Surface Active Agent' has been divided into two sub-headings, one is under 3402.10 as "Sulphonated Castor Oil, Fish Oil or Sperm Oil" and second is under 3402.90 as "other". It is found that the appellant with effect from 01-12-2004 changed the formula and according to which they started using Sulphonated Castor Oil instead of Ground-Nut Oil. As per the composition, Sulphonated Castor Oil exists in the product to the extent of 95%. On this fact, the product is pre-dominantly preparation of Sulphonated Castor Oil. Therefore, in our view the product Bio-95 is clearly classifiable under the CETH 3402.10. It is found that 3402.10 is a specific entry in respect of product namely Sulphonated Castor Oil and 3402.90 is for "other". It is a settled law that specific entry prevails over the general entry. Therefore, by applying the decision of Tribunal in the case of Unitex Dychem India Vs. Collector of C.Ex., New Delhi [1998 (5) TMI 99 - CEGAT, NEW DELHI], where the Tribunal decided the classification under 3402.10 of product containing 53% water and 47% Sulphonated Castor Oil. The present case of the appellant is on a better footing for the reason that in the captioned product Sulphonated Castor Oil used is to the extent of 95%, hence, the product Bio-95 is correctly classified under 3402.10. Classification - Herbal Pet Wash - Whether to be classified under CETH 3307.90 as per revenue or under 3401.11 as claimed by appellant - Held that:- as per the Drug licence in respect of this product, the product is manufactured out of Neem, soap-nut and shikakai, the product is licensed as 'Ayurvedic Proprietary Medicine', the label of the product highlights that it protect the pet animals from insects & pests. The product is also not used as toilet soap, so with this fact the product is a medicated soap which finds an entry under CETH 3401.11. On the identical product, this Tribunal in the case of Commr. C.Ex., Chennai vs Calcutta Chemical Co. Ltd. [2008 (8) TMI 620 - CESTAT, CHENNAI] decided the classification of the product. Therefore, the products namely Herbal Pet Wash are correctly classified under 3401.11. - Decided in favour of appellant
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2016 (4) TMI 321
Payment of interest of deposit - Section 11BB of the Central Excise Act, 1944 - Short payment on certain goods due to clandestine removal of finished goods - Same admitted, paid and included in total refund amount for month of August, 2009 under Notification No.32/99-CE dated 08.07.1999 - Revenue contended no appeal has been filed by the respondent against the order of clendestine removal of goods of adjudicating authority and also the interest on deposits was brought into the statute books as per Section 35FF of the Central Excise Act, 1944 in the year 2014, hence cannot be levied. Held that:- Once no appeal against the adjudicating authority was filed by the Respondent, then it has to be interpreted that they have accepted the clandestine removal of the goods. Having accepted the fact, Respondent could not have raised the plea before the Lower Authorities that there was no clandestine removal of the goods. In this regard the observations made by the Apex Court in the case of Tractors and Farm Equipment Limited vs. Collector of Customs, Madras [1997 (2) TMI 111 - SUPREME COURT OF INDIA], are very relevant that a stand taken by an assessee during the earlier proceedings cannot be altered by that assessee subsequently. On the similar facts, the ratio laid down by the Apex Court is clearly applicable to the present proceedings. While allowing the appeal of the Respondent the First Appellate Authority went beyond the scope of the proceedings and directed payment of interest under section 11BB of the Central Excise Act, 1944 when the same was not the subject matter of the proceedings. - Decided in favour of revenue
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CST, VAT & Sales Tax
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2016 (4) TMI 320
Validity of survey conducted in the premises of petitioner - Held that:- it is now evident from the report filed by the CVAT that the decision to survey the premises of the Petitioner was based on a study of the profile in the computer system including indicators like High GTO- Low Tax, frequent change in returns etc. There were only oral discussions between the officers concerned without any written approval of the Commissioner on file. This by itself is sufficient for the Court to proceed to award exemplary costs in favour of the Petitioner since there could be no manner of doubt that there was a plain abuse of the process of law by the officers concerned of the DT&T. - Adjourned for another date
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2016 (4) TMI 319
Period of limitation - Invokation of Section 61(1) of the Bombay Sales Tax Act, 1959 - Held that:- an order of the court cannot override the legal provision and which is specific in nature. The court cannot, by recording any concession and of the present nature, waive the period of limitation statutorily prescribed. That binds all, including the Revenue. This court cannot, in its inherent jurisdiction, give a go by to such a statutory prescription and we do not think any judgment needs to be referred to, for, the law is clear. A statutory prescription and under an enactment, which has been enacted by the competent legislature, can only be interpreted by this court. The court cannot prescribe any period of limitation contrary thereto nor can it re-frame or re-word the statutory provision itself. Statute of limitation or a statutory provision prescribing a period of limitation and incapable of two interpretations ought to be construed by its terms. It the language is plain, unambiguous and clear, there is no scope for interpretation. We cannot whittle down or dilute the effect or rigor of the clear provision on some specious, general and vague plea or assumption of hardship and inconvenience to an individual. There is no power in this court to entertain a time barred application as the general power under section 5 of the Limitation Act, 1963 is restricted in its application to proceedings under section 61(1) of the Bombay Sales Tax Act, 1959. Therefore, the review order is of no assistance to the applicant. Whether the attempt is to seek re- appreciation and re-appraisal of the factual findings is one more attempt to delay the recoveries - Held that:- the Tribunal has found that there are no debatable legal issues involved. It has decided the matter by applying the correct legal principles. Also the Tribunal, in the order passed on 30th November, 2009, found that the whole attempt appears to be to revisit the same transactions and the same factual findings. The Tribunal found that all the transactions and which have been noted, either undertaken directly by the applicant or through their agents, were falling in the tax net. There was no proof of any inter-State sale. There was nothing on facts which could determine or enable the Tribunal to conclude that the assessment order and the first appellate authority's order are vitiated on law and facts. The Tribunal found that the applicant, for the period in question, namely, 1990-91, 1991-92, 1992-93, filed second appeals before the Tribunal. These second appeals were dismissed on 30th November, 2009. The Tribunal found that all the issues, which could have been raised, have been already raised and dealt with. Now, in the garb of seeking a reference of certain legal questions to this court for its answer and opinion, the recoveries cannot be delayed. Therefore, the Tribunal is right in concluding that this is one more attempt to delay the recoveries. - Decided against the appellant
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2016 (4) TMI 318
Waiver of payment of tax - Imposed for the purpose of entertaining the appeal - Held that:- as per the provision of sub-section (4) of Section 73 of the GVAT Act which provides that no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred; provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order – (a) without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proof of payment of such smaller sum as it may consider reasonable, or (c) on the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct. In the present case, the petitioner invoked jurisdiction of the appellate authority under the proviso to sub-section (4) of section 73 of the GVAT Act seeking waiver of payment of tax and penalty as contemplated under clause (a) of sub-section (4) of section 73 of the GVAT Act. The first appellate authority was, therefore, duty bound to consider the application and give its reasons, either for allowing or rejecting the same. However, in the facts of the present case, the first appellate authority has completely disregarded the application made by the petitioner seeking waiver of payment of tax, and has dismissed the appeal on the ground of non-production of proof of payment of pre-deposit as contemplated in the main part of sub-section (4) of section 73 of the GVAT Act. Having regard to the decision of this court in the case of Nestle India Limited v. Deputy Commissioner of Commercial Tax [2015 (7) TMI 387 - GUJARAT HIGH COURT], the petitioner had made out a prima facie case for grant of total waiver of the payment of tax and penalty as contemplated under clause (a) of the proviso to sub-section (4) of section 73 of the GVAT Act. Under the circumstances, the first appellate authority was not justified in dismissing the appeal on the ground of non-production of proof of payment of tax. The impugned order, therefore, cannot be sustained. - Waiver granted
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Wealth tax
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2016 (4) TMI 333
Addition to the declared value of the jewellery while framing the assessment - Requirement of obtaining report of registered valuer for value of jewellery exceeding ₹ 5 lakhs - Held that:- It is seen from the records and has also been found by the Assessing Officer as correct that the valuation of stones in the wealth tax return in respect of valuation date as on 31.3.12 has been based on the last valuation report on 31.03.08. Hence, we agree with the contention of the Ld. AR that as per the procedure for valuation spelt out in Circular No. 646 of 1993, the assessee is permitted to use the valuation report given by an approved valuer for a particular year for next four years with appropriate adjustment only for the change in value of metal contained in jewellery. Hence, the assessee cannot be held at fault for not including appropriate adjustment/appreciation for the change in value of stones. No hesitation in holding that Circular No. 646 dated 15.3.93 issued by the CBDT which lays down that where the jewellery includes gold or silver or any alloy containing god or silver, the value of such gold or silver or alloy as on the valuation date relevant to the subsequent year shall be substituted for the value of such gold or silver or alloy on the valuation date relevant to the first Assessment Year. This, in effect, would mean that in the valuation of jewellery, the value of the metal, be it gold, silver or alloy, will have to be substituted every year whereas for the other items in the jewellery, the value as per the valuation report can be continued to be taken for a period of four years at the same valuation.is binding on the revenue authorities. In view of our findings, we delete the addition made to the declared value of the jewellery while framing the assessment. by the Assessing Officer. - Decided in favour of assessee
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