Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 12, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
-
Nature of expenses – Capital OR Revenue – GPA registration charges - The entire expenditure is completely revenue in nature since it is incurred for carrying out the development activity of the construction project - AT
-
Reassessment - date of notice is 30-1-2004 and the reasons recorded are clearly dated 4-2-2004, i.e., the reasons are not recorded before the issue of notice but afterwards, the assumption of jurisdiction is clearly bad - HC
-
Addition made on account of unaccounted cash receipts – Cash receipts of brokerage – Sale of car parking charges - the assessee’s purchases cannot be doubted on ad-hoc basis - AT
-
Disallowance u/s 40(a)(ia) r.w section 194H - the distributor / stockists were the persons to whom the product was sold, no services were offered by the assessee and what was offered by the distributor was a discount - No TDS - HC
-
Assessability of capital gain on property - transfer - Mere receipt of refundable deposit cannot be termed as receipt of consideration - AT
-
Penalty u/s 221(1) – Return filed without paying the tax liability - AO has power to not impose penalty if assessee proves to the satisfaction of the AO that the default was for good and sufficient cause - penalty waived - AT
Customs
-
Levy of Customs duty - Valuation – Importation of LNG - Assessable value in the present imports was correctly determined on the basis of quantity of LNG discharged in India at the contracted price arrived at on the basis of an agreement - AT
-
When an issue is not the subject matter of the show cause notice first issued and was not agitated before the lower authorities, it has to be held that Revenue has no justification in agitating an issue before this Bench - AT
Service Tax
-
Online database access or retrieval service - whether the appellant is a mere participant or the appellant access or retrieves data from the computer system maintained by the CRS Companies - stay granted partly - AT
-
Export of services or not - The services being in relation to business or commerce, the question of their export would be decided on the basis of location of the person using these services for his business, not on the basis of place of performance - AT
Central Excise
-
Valuation - area based exemption - allegation of payment of duty on higher value - once the department accepts that appellant’s sales are on FOR basis, Rule 5 of CE Valuation Rules, for exclusion of freight, has no application to this, has been wrongly invoked. - AT
-
Refund of cenvat credit - export - Period of refund claim is January 2004 to March 2004 and the claim was filed on 29.3.2005 - refund allowed - AT
-
Irregular blocks of polyurethane form which is an intermediary product manufactured by the appellant requires to be classified under Tariff Heading 39.21 as clarified in the Circular and is therefore entitled to exemption under Notification No. 50/2003-CE. - AT
VAT
-
The fact that the sale had taken place in the premises of M/s.Food World Super Market Limited outlet does not mean that the sale was in a eating house to fall under Section 3-D of the Tamil Nadu General Sales Tax Act. - HC
-
Whether Tribunal was justified in holding that the exemption from furnishing ‘C’ forms cannot be granted by application u/Rule 7(3) of the Delhi Sales Tax Rules, 1975 r/w Section 9(2) of the CST, Act 1956 - Held yes - HC
Case Laws:
-
Income Tax
-
2014 (4) TMI 359
Suppressed production of sponge iron – Unaccounted sales – Held that:- Month to month basis quantitative details are tallied with the books of account - consumption iron ore on day to day basis is entered in the Central Excise Records - The assessee has declared yield at 33% on average basis - This is supported by the survey report of Joint Plant Committee. As per their report 2.5 MT of iron ore lump is required for production of 1 MTA of calibrated lump ore and producing 1 MT of sponge iron, 1.4 MT of calibrated lump ore is required - CIT(A) was of the view that once the authorities accepted the quantitative details furnished by the assessee which tallied with the books of account the same cannot be rejected unless there is conclusive evidence to suggest that the assessee made any unaccounted sales. The lower authorities accepted that purchases are supported by bills and also it is in conformity with the Excise records - Sales also tallied with the books of account and purchases and sales are fully vouched and furnished for verification - The assessee has been following the same method of accounting consistently - There is no variation of in accounting of any expenses or receipts - Unless and until the books of account of the assessee are impeached by any authority, it is incumbent upon the authorities to accept the books of account as it reflects true and correct profit of the assessee - There may be deficiency in closing stock - The reason for deficiency in closing stock is that sponge iron used for manufacturing MS Ingots and AO assumed that only MS scrap is used for manufacturing sponge iron and took the percentage based on previous six months consumption - If both MS scrap and sponge iron consumption are taken together no variation will be there in determining production of sponge iron - Thus, there will be no variation in the closing stock. The AO having got verified from the Inspector regarding consumption of sponge iron/ melting scrap, he cannot reject the same as the Inspector's report is in favour of the assessee - the addition made by the AO towards suppressed production of sponge iron cannot be sustained – Decided in favour of Assessee.
-
2014 (4) TMI 358
Nature of expenses – Capital OR Revenue – GPA registration charges - Held that:- CIT(A) rightly held that the AO has failed to appreciate the legitimate expenditure incurred on registration of GPA for commencing the works in the site - The expenditure incurred to facilitate rights to the firm for commencing the work and is wholly incurred for the business which is not a capital expenditure since it is intimately related to the construction activity in which the firm is engaged - The entire expenditure is completely revenue in nature since it is incurred for carrying out the development activity of the construction project in which the firm is engaged - the entire amount spent was claimed in earlier years also and the one claimed in this is the remaining amount – thus, CIT(A) correctly allowed the expenditure as revenue expenditure – there is no reason to interfere with the order of the CIT(A) – Decided against Revenue. Deletion of interest on loan – Loans granted to related persons – Violation of section 40(a)(2b) of the Act – Held that:- CIT(A) rightly was of the view that, it has become inevitable to consider the request for temporary advance, on which no interest was charged - The transaction has a business nexus and business connection – amount advanced was in view of commercial expediency, that too after examining the assessee’s submissions and remand report from AO, there is no reason to interfere with the decision –AO should have invoked the provisions of section 36(i)(iii), if there are any diversion of borrowed funds but cannot bring notional interest to tax on the so-called advances made, without establishing that the borrowed funds are diverted for non-business purposes - The entire addition made by the AO itself is bad in law - thus, charging of notional interest is not warranted and he AO is directed to delete – Decided against Revenue.
-
2014 (4) TMI 357
Claim of deduction u/s 80P(2)(a)(i) of the Act - Whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) and whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007 – Held that:- The provisions of Sec. 80P(4) mandates that the provisions of Sec. 80P will not apply to any co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank but as per the provisions of Sec. 80P(2)(a)(i), a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members is entitled for deduction. After the insertion of Sec. 80P(4), the provisions of Sec. 80P(2)(a)(i) were not amended, rather the co- operative society engaged in carrying on business of banking facilities to its members continued to be entitled for deduction u/s 80P(2)(a)(i). This pre- supposes that every co-operative society engaged in carrying on business of banking cannot be regarded to be a co-operative bank. If a co-operative society is engaged in carrying on the activities/facilities for the persons other than its members, the co-operative society will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilities to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to such co- operative societies in respect of business relating to its members. Whether the Assessee is a co- operative bank or not – Held that:- It is not necessary that the co-operative society should have a banking licence as per the definition under the Income Tax Act for carrying on banking business - If licence is not obtained it may be an illegal banking business under the other statute - the Assessee has not to be regarded to be a primary co-operative bank as all the three basic conditions are not complied with – thus, it is not a co-operative bank and the provisions of Sec. 80P(4) are not applicable in the case of the Assessee and Assessee is entitled for deduction u/s 80P(2)(a)(i) – the orders of the CIT(A) is set aside in not allowing deduction u/s 80P(2)(a)(i) to the assessee – the AO is directed to allow deduction to the assessee u/s 80P(2)(a)(i) on the income generated for providing banking or credit facilities to its – Decided in favour of Assessee.
-
2014 (4) TMI 356
Validity of Notice u/s 148 of the Act – Reasons not recorded - Whether the notice issued by the AO u/s 148 of the Act without recording reasons as contemplated by sub-Section (2) of Section 148 of the Act would vitiate the whole proceedings – Held that:- The AO is obliged to record reasons before issuing notice u/s 148 of the Act - The Tribunal rightly was of the view that revenue failed to produce such a document - Since the Department produced the original print out copy by the computer of the reasons recorded which are identical as are filed by the assessee containing identical correction by hand with no signature on the correction, it is apparent that the reasons were not recorded at the time of issue of notice - the date of notice is 30-1-2004 and the reasons recorded are clearly dated 4-2-2004, i.e., the reasons are not recorded before the issue of notice but afterwards, the assumption of jurisdiction is clearly bad - The Tribunal noted that notice was issued even before the reasons were recorded – there is no reason to interfere in the order of the Tribunal – Decided against Revenue.
-
2014 (4) TMI 355
Allowability of Deduction u/s 80P of the Act – Held that:- The assessee has not claimed the deduction of the section 80P of the Act in the return of income but claimed the same only during the course of the assessment proceedings - the claim of the assessee is not admissible as decided in Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] also in CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] it has been held that the appellate authorities have the power to consider the claim not made in return of income - CIT(A) giving relief to the assessee at the appellate stage on the claim of deduction not made in the return of income is justified – thus, CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act – the order of the CIT(A) upheld – Decided against Revenue.
-
2014 (4) TMI 354
Addition made on account of unaccounted cash receipts – Cash receipts of brokerage – Sale of car parking charges - Held that:- The decision in M/s. Sai Shiv Developers [2014 (4) TMI 153 - ITAT MUMBAI] followed – Without any evidence in the year for receipt of on-money the addition cannot be sustained –there is no documentary evidence with respect to the sale of car parking area except the document no.15 of the documents - there is no basis for making addition for each flat for car parking - The AO had not made any inquiry or verification to examine the facts regarding the rate of sale, area, on money payment of brokerage charges and car parking charges from any of the available sources including the buyers of flats as none of the buyers of the flats was examined by the department to verify the involvement of on-money payment and other charges as alleged by the revenue - Even the understatement of area is not examined by the AO at any stage of proceedings - it cannot be presumed that all the flats were sold by the assessee through the real estate agent and involved brokerage charges. When the statements u/s 133A were recorded at back of the assessee and were subsequently retracted by the witnesses have no evidentiary value to the extent of contents whichever corroborated by documents impounded during the survey proceedings – thus, no addition is warranted with regard to the area, parking charges and brokerage - The addition regarding rate is sustainable only to the extent of rates mentioned in the documents – thus, the order of the CIT(A) upheld – Decided against Revenue. Ad-hoc Deletion made - Material, transport and labour charges – Held that:- The CIT(A) has analysed the ledger account of material purchases wherein the entire details like name of the parties, bill number, date and item purchases were mentioned - most of the payments have been made through cheques and in case of labour payments to the contractors, TDS has also been deducted - The AO has neither identified any specific details nor asked the assessee to produce specific bills or vouchers for any particular items of purchase and in the absence of such exercise being done by the Assessing Officer, no ad-hoc disallowance can be made – CIT(A) has also analysed the working of the profit to highlight the fact that the assessee had shown a high margin of profit in this year - the assessee’s purchases cannot be doubted on ad-hoc basis – the items of expenditures are direct expenses and once the high margin of net profit has been accepted, then such a disallowance will go to enhance the profit by further percentage – thus, there is no reason to interfere in the findings of the CIT(A) - when all the details of direct expenses have been maintained and no discrepancies therein have been found, then any kind of estimate or ad-hoc disallowance should not have been made – Decided against Revenue. Deletion of travelling expenses – Held that:- CIT(A) was of the view that the travel to Rajasthan may be justified in connection with purchase of marbles but no specific arguments to justify the travel to other places like Ahmadabad and Bangalore has been given - Considering the fact that FBT has also been paid and visits to Rajasthan do appear to be for business purposes, entire disallowance of travelling expenses is highly excessive - the reasoning given by the CIT(A) for restricting the disallowance of expenditure @ 20% is quite reasonable and no further disallowance is called for – Decided against Revenue.
-
2014 (4) TMI 353
Deletion of disallowance u/s 40(a)(ia) r.w section 194H of the Act – Explanation to section 194H not properly interpreted – The Assessee had undertaken sales promotional scheme viz. Product discount scheme and Product campaign under which the Assessee had offered an incentive on case to case basis to its stockists /dealers/agents - Held that:- The relationship between the Assessee and the distributor / stockists was that of principal to principal and in fact the distributors were the customers of the assessee to whom the sales were effected either directly or through the consignment agent - the distributor / stockists were the persons to whom the product was sold, no services were offered by the assessee and what was offered by the distributor was a discount under the product distribution scheme or product campaign scheme to buy the assessee's product. The distributors / stockists were not acting on behalf of the assessee and that most of the credit was by way of goods on meeting of sales target - it could not be said to be a commission payment within the meaning of explanation (i) to Section 194H of the Income Tax Act, 1961 - the application of the provision is required to be considered to the relevant facts of every case - as regards sales promotional expenditure, the provisions of Explanation (i) below Section 194H of the Act are rightly held to be not applicable as the benefit which is availed of by the dealers / stockists of the Assessee is appropriately held to be not a payment of any commission – thus, no substantial question of law arises for consideration – Decided against Revenue.
-
2014 (4) TMI 352
Proceeds of the bank account attached – Stay already granted – Held that:- The assessee's application for stay was granted and the interim order was made for the period of 180 days – the contention of the revenue that the concerned AO was not intimated, cannot be accepted - it clearly amounts to overreach of the interim order of the Tribunal – the revenue should lift the attachment and ensure that the amounts recovered are deposited back in the petitioner's account – Decided in favour of Assessee.
-
2014 (4) TMI 351
Assessability of capital gain on property - transfer - Whether it is assessable in the year in which the development agreement was entered into or in the relevant subsequent year in which the area duly developed and constructed coming to the share of the assessee-owner has been handed over to the assessee – Held that:- As on date there was no developmental activity on the land which is subject matter of development agreement - The process of construction has not been even initiated and no approval for the construction of the building is obtained - Thus, the sale consideration in the form of developed area has not been received - Mere receipt of refundable deposit cannot be termed as receipt of consideration - the AO calculated the capital gain on the entire land, even though the assessee has retained 38% share to itself. There is no accrual of income in favour of the assessee as per section 48 of the Act - Due to lapse on the part of the transferee, the construction has not taken place in the year under consideration, and it has not commenced even now - the assessee has fulfilled its part of the obligation under the development agreement, the developer has not done anything to discharge the obligations cast on it under the develop agreement, the capital gains cannot be brought to tax in the year under appeal, merely on the basis of signing of the development agreement during this year – Relying upon M/s. Fibars Infratech Pvt. Ltd. Versus The ITO, Ward-1(2), Hyderabad [2014 (1) TMI 344 - ITAT HYDERABAD] - the capital gains on the property cannot be brought to tax – Decided in favour of Assessee.
-
2014 (4) TMI 350
Claim of exemption from tax – Interest earned on fixed deposits – Principle of mutuality – Held that:- The decision in CIT Vs. Secunderabad Club [2011 (8) TMI 752 - Andhra Pradesh High Court] followed – if an incorporated entity is engaged in trade, the profit from it, even if they are transactions with members, would be taxable and the principle of mutuality would have no application – the interest income earned from deposits with member banks is taxable in the hands of the assessee – Decided against Assessee. Exemption from rental income – Principle of mutuality – Held that:- The AO has simply added the rental income without any discussion on the issue - It is also not discernible under what head he has assessed the rental income - CIT(A) rightly held that the rental income like interest income from corporate members cannot be exempt on principles of mutuality - but the assessee contended that once it is treated as rental income, it should be coming under the head ‘income from house property and, consequentially, the deduction available u/s 24 of the Act has to be allowed to the assessee – thus, rental income derived has to be assessed under the head ‘income from house property’ - Once it is assessed as income from house property, the assessee is eligible for deduction u/s 24 of the Act – Decided partly in favour of Assessee. Claim of set off - Operational loss to be set off against other income – Held that:- As decided in assessee’s own case, it has been held that, Section 71 allows set off of loss under any head of income, other than capital gains, against income assessable for that assessment year under any other head - Only restriction is that, there should not be any income under the head capital gains - if the assessee has sustained loss underany head, except capital gains, and the assessee has no income from capital gains during the year, then loss can be set off against income assessable under any other head – the assessee has not raised this issue before the first appellate authority – thus, the matter is remitted back to the CIT(A) for adjudication – Decided in favour of Assessee.
-
2014 (4) TMI 349
Taxability of capital gain on transfer of property u/s 50C of the Act – Computation of LTCG – Held that:- There is no evidence regarding payment of consideration by the transferee and also taking possession of the immovable property immediately after the execution of the agreement - The transferor had at any time not ceased to be the owner of the property by virtue of any agreement entered by the assessee and Smt. Neeraja Reddy - the assessee executed Special Power of Attorney in favour of Smt. Neeraja Reddy by her nominee, the transfer of the immovable property is not completed as on date and evidence brought on record by the assessee does not suggest transfer of property took place in the year 1994. The assessee miserably failed to prove the transfer of property in the year 1994 - the immovable property is sold only on 23rd October, 2007 to Sri G. Srinivasa Reddy by way of sale deed - Smt. Neeraja Reddy has not derived any control over the ownership of the property in the year 1994 through the Special Power of Attorney executed by the assessee - The Special Power of Attorney is only a facilitator to perform certain actions and things on behalf of the assessee - the transfer took place vide sale deed executed on 23.10.2007 in favour of Sri G. Srinivasa Reddy and the lower authorities are justified in invoking the provisions of section 50C to determine the sale consideration and to bring the capital gain to tax – there was no infirmity in the order of the CIT(A) – Decided against Assessee.
-
2014 (4) TMI 348
Rectification of mistake u/s 254 of the Act – Typographical error - Disallowance of expenses u/s 37(2) of the Act – Held that:- A typographical error has occurred which needs to be rectified – the AO is directed - to allow the business meeting expenses and expenses on AGM which expenses cannot come under the category of entertainment expenses - We direct the AO to add only Rs. 2,00,000/- out of total canteen expenses and lunch expenses on employees during the course of outdoor duty – Decided partly in favour of Assessee. Allowance of proportionate amount - Premium paid on non-convertible debentures – Held that:- As decided in assessee’s own case for the previous year, it has been held that the decision in Madras Industrial Investment Corporation Limited Versus Commissioner of Income-Tax [1997 (4) TMI 5 - SUPREME Court] followed - the Tribunal allowed proportionate claim of the premium payable on the debentures to be spread over to the period of debenture -the AO is directed to allow proportionate claim of the premium payable – Decided in favour of Assessee. Disallowance of depreciation on WDV – Foreign visitor’s expenses disallowed as capital expenses – Held that:- As decided in assessee’s own case for the previous year, it has been held that the expenditure incurred on foreign visitors form part of the cost of the project therefore would be eligible for depreciation as per Sec. 32 of the Act – thus, the AO is directed to allow the claim of depreciation – Decided in favour of Assessee. Disallowance of VRS expenses – Held that:- :- As decided in assessee’s own case for the previous year, it has been held that the liability is well supported by the actuary valuation and the agreements between the company and the employees were not examined by the AO - The Tribunal’s direction relates to the verification of the liability of VRS, being supported by actuary valuation certificate, viz-a-viz agreements with the company and the employees – Decided partly in favour of Assessee. Disallowance of provision of expenses at year end – Held that:- There is no error in the finding of the Tribunal which needs rectification - In so far as an excess provision is concerned, the assessee has rightly reversed the excesses in subsequent years under respective head of expenditure - In so far as shortfall in provisions is concerned, considering the method of accounting which is mercantile, it is the duty of the assessee to make proper provisions and if the assessee has fallen short on certain heads of expenditures the same cannot be allowed – Decided against Assessee. Depreciation in respect of Kantla plant – Held that:- There is an apparent mistake in the directions of the Tribuna - The AO is directed to verify whether the plant was actually in use in earlier years and if satisfied, the depreciation will be allowed – Decided in favour of Assessee.
-
2014 (4) TMI 347
Rectification of mistake u/s 254 of the Act - Allowability of deduction of interest – Held that:- The tribunal has taken a conscious decision in the matter based on the remand report by the AO - though the assessments for the years were not originally made u/s 143(3), as was the case for the other three years also decided by the tribunal, the tribunal did not consider the same as material, and decided the issue at hand following its earlier order for A.Y. 2001-02 - the Revenue claiming it as not so, could only be decided in the review proceedings, which could only be before a higher appellate forum and fall outside the ambit of section 254(2) or the rectification proceedings before the tribunal – Decided against Revenue. Entitlement for set off of STCL against income u/s 153A of the Act – Held that:- There was no reference to the ground or aspect in any of the appeals by the assessee before the first appellate authority – thus, the subject matter of the Revenue’s grievance does not arise either out of the order/s by the first appellate authority or by the tribunal – Decided against Revenue.
-
2014 (4) TMI 346
Rectification of order u/s 254 of the Act – Recall of order - Jobbing loss treated as speculation income u/s 43(5) of the Act – Held that:- The contention of the assessee challenges the order on its merits, and which is even otherwise outside the scope of the rectification proceedings u/s 254(2), so that the same would stand ousted on that ground as well - The decision under reference rests on the interpretation of section 43(5)(c) - the decision is not applicable in deciding the issue under reference - the matter having been restored by the tribunal back to the file of the AO - the decision, if and to the extent relevant, would become binding in-as-much as there is no estoppel against law - The onus to show that the same is applicable though would only be on the assessee – there is no merit in the assessee’s contention – Decided against Assessee. Non-disposal of grounds by the Tribunal – Non-grant of depreciation on BSE card – Held that:- The assessee's contention is correct, and the ground was pleaded by the assessee with reference to Techno Shares and Stocks Ltd. vs. CIT [2010 (9) TMI 6 - SUPREME COURT OF INDIA ] - There is no mention of 'not pressing' the ground in the order – thus, the recall of appeal is allowed – Decided in favuor of Assessee.
-
2014 (4) TMI 345
Deletion made u/s 69 of the Act – Unexplained investment – Held that:- CIT(A) rightly held that the AO has not independently established that any such transaction has in fact, taken place - From the perusal of the seized material, it is also not clear whether the same pertained to an asset, liability, loan, advance or any other detail - There is no other document or evidence to suggest that the assessee has advances/ paid a sum of Rs.31,68,750/- to one Kalubhai - there is no justification for presuming that the appellant must have paid a sum of Rs.31,68,750 - The AO has also not carried out any inquiry with the other party of the transaction to find out the facts and has simply rejected the explanation of the appellant and addition has been made on estimate basis – thus, there is no justification for making the addition on merely presumptive basis - Revenue could not point out any specific error in the order of CIT(A) – revenue could not bring any material to show that Rs 31,68,750/- was any actual transaction made by the assessee during the year under consideration and the relevant seized document was dumb document having no corroborative material found – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Revenue. Deletion u/s 69B of the Act – Unaccounted investment – Held that:- CIT(A) rightly held that the AO had not pointed out any single defect in the books of accounts of the assessee and had accepted the payment made to seller of bungalow as genuine transactions - the difference in the cost shown and the cost estimated by the DVO is minor and is less than 15% - Revenue could not point out any specific error in the order of the CIT(A) - No material could be brought on record to show that the assessee has made any payment over and above the amount mentioned in the registered deed which was also accepted by the State Government for the purposes of levy of stamp duty – thus, there is no reason to interfere in the findings of the CIT(A) – Decided against Revenue. Addition on account of unaccounted business receipts – Held that:- Merely from the document it cannot be concluded that the assessee in fact received Rs 10,00,000/- on 03.06.2005 from any unspecified person and that too in respect of his business on revenue account - no material could be brought on record by the revenue by making a proper inquiry in respect of the said seized document to show that the seized document shows business receipt of Rs 10,00,000/- by the assessee on 03.06.2005 - In absence of any such material having been brought on record by the AO by making specific inquiry –there was no reason to interfere with the order of the CIT(A) – Decided against Revenue.
-
2014 (4) TMI 344
Deletion of disallowance – Foreign travel expenses – Whether there was business necessity or business connection in undertaking the foreign travels by the directors or relative of the directors of the assessee company - Held that:- The AO has disallowed 100% of claim and in some cases 50% of the case – the AO has changed his view on the claim of foreign travel expenses in assessment year 2009-10 - there is business connection in undertaking foreign travels – the AO has also expressed the view that the claim that the trips were undertaking solely for business purposes is not convincing - Since the tours have been undertaken with family members mostly to the places of tourist attractions and since the purpose of tour stated by the assessee was too general in nature, the AO has held that the personal element in these expenses cannot be ruled out. The AO has taken contradictory stand with regard to the quantum of disallowance - In assessment year 2008-09, the AO has disallowed 100% of expenditure relating to certain tours and 50% of the expenditure of other tours – but, in assessment year 2009-10, he has disallowed 20% of the total expenditure incurred on foreign tours - Since the AO, in assessment year 2009-10, has taken the view that the business purpose involved in foreign tours cannot be altogether ruled out, the same position should be extended to the assessment year 2008-09 also - the involvement of personal purpose and incurring of personal expenses during foreign travels undertaken by the key personnel cannot be altogether ruled out - The absence of details of expenses incurred out of foreign exchange coupled with the fact that the key personnels are covered by sec. 40A(2) of the Act - the disallowance of 20% of the foreign tour expenses made by the AO in assessment year 2009-10 is quiet reasonable – thus, the order of the CIT(A) set aside and the order of the AO restored – also, the disallowance of foreign travel expenses should be maintained at the same level in assessment year 2008-09 also – the AO is directed to restrict the disallowance to 20% of the claim – Decided partly in favour of Revenue.
-
2014 (4) TMI 343
Deletion of addition u/s 69 OR 69A of the Act – Opportunity to admit fresh evidences u/r 46A of the Rules - Declaration of Long term capital gain - Conversion of capital asset into stock-in-trade u/s 45(3) of the Act – Held that:- AO has rightly was of the view that the assessee had not shown any purchase during the year - The stock shown was the net figure of Rs.85.15 lakhs - there were no sundry debtors or creditors or any loans - on verification of return of previous years filed with the department, it was found that the assessee has been holding closing stock of jewellery - assessee has not been able to support his claim since no details of conversion of personal jewellery into stock-in-trade has been filed with supporting evidence. Both returns of income of partners do not indicate any GIR Number or PAN Number - The basic claim of assessee firm is that their partners were owning gold ornaments, which they had introduced as their respective capitals of the firm after offering capital gains/loss on conversion of such ornaments belonging to their respective Hindu undivided family into stock-in-trade in the A.Y.2002-03 – there was violation of Rule 46A by CIT(A) – thus, the matter is required to be remitted back to the AO for examination of the documents so as to substantiate that HUF partners were having jewellery which they have converted into stock-in-trade by offering capital gains in their respective income tax return and same was introduced as capital in the assessee’s firm – Decided in favuor of Revenue.
-
2014 (4) TMI 342
Estimation of income at 7% of turnover – Held that:- The assessee had not produced supporting documentary evidences during the assessment proceedings – the AO had to estimate the taxable income - after issuing a show-cause notice and considering the submissions of the assessee, he estimated the income @ 7% of the turnover - during the year, assessee had received Rs. 14. 18 lakhs on settlement of earlier years’claims - AO has estimated the profit @ 7% on turnover - the order do not suffer from any infirmity considering the peculiar facts of the case under appeal - the assessee had not produced the supporting evidence, the AO had to adopt some estimate - his estimation was reasonable Decided against Assessee. Enhancement of income vis-a-vis disallowance u/s 40(a)(ia) of the Act – Held that:- The decision in Teja Constructions Versus ACIT [2009 (10) TMI 593 - ITAT HYDERABAD] followed - 40(a)(ia) is applicable only in respect of TDS defaults when amount is “payable There is difference between the word ‘paid or payable the legislature used the word very carefully in section 40(a)(ia) - Sec. 40(a)(ía) has to be subjected to strict interpretation - Going by the rule of strict interpretation the default with reference to actual ‘payment’ of expenditure would not entail disallowance - Decided in favour of Assessee.
-
2014 (4) TMI 341
Cancellation of penalty u/s 271(1)(c) of the Act – Jurisdiction to impose penalty - Held that:- The assessment order was passed u/s 143(3) of the Act - the Addl. CIT of the concerned range, in exercise of power u/s 120 of the IT Act transferred the case of the assessee from the jurisdiction of ACIT, Circle 10(1), Hyderabad to the ITO, Ward -10(2), Hyderabad vide order No. Addl.CIT/R-10/2011-12, dated 26/03/2012 - the penalty order u/s 271(1)(c) of the Act has been passed on 29/06/2012 - it is abundantly clear that when the penalty order was passed the concerned officer did not have the jurisdiction over the assessee, which stood transferred to ITO, Ward -10(2), Hyderabad with effect from 26/03/2012 - the penalty order could not have been passed by the ACIT, Circle -10(1) as she had no jurisdiction over the assessee on the date penalty order was passed - there is no infirmity in the order of the CIT(A) in declaring the order passed u/s 271(1)(c) of the Act, to be a nullity due to lack jurisdiction and consequently cancelling the penalty – Decided against Revenue.
-
2014 (4) TMI 340
Deletion of penalty u/s 221(1) of the Act – Return filed without paying the tax liability - Held that:- The fact is evident from the provisions of section 221(1) of the Act, wherein, not only the opportunity of being heard has been provided to the assessee but also the AO has been vested with power to not impose penalty if assessee proves to the satisfaction of the AO that the default was for good and sufficient cause - the assessee has explained the cause for not paying the admitted tax at the time of filing of return. -The cause shown by the assessee cannot be brushed aside - the assessee has paid a total amount towards admitted tax liability and interest u/s 234B & 234C of the Act – thus, there is no prejudice to the department since the assessee has not only discharged the tax liability but has also paid the interest - the action of the CIT(A) in deleting the penalty upon considering the explanation of the assessee cannot be faulted with, as there was a reasonable cause for not paying the admitted tax liability at the time of filing of return of income – thus, there is no reason to interfere with the order of the CIT(A) – Decided against Revenue.
-
Customs
-
2014 (4) TMI 339
Levy of Customs duty - Valuation – Importation of LNG - Contract price – Held that:- As per the contracts between the buyer and seller transaction value has to be calculated on the basis of the quantity of LNG discharged and Brent rate - There is no evidence on record that any amount over and above the transaction value has been repatriated by asseessee to the seller of the LNG abroad - Relied upon Mangalore Refinery & Petrochem Ltd. Vs Commissioner of Customs, Mangalore [2006 (2) TMI 518 - CESTAT, BANGALORE] Whether there would be any requirement for determination of the quantity of the goods as the basis for levy of customs duty would be the transaction value, i.e. invoice price and not the quantity – Circular No. 96/2002-Customs, dated 27-12-2002 - Amendment in circular – Levy of duty at specific rate - Held that:- Board’s Circular No. 96/2002-Customs, dated 27-12-2002 was amended to the extent where customs duty is leviable at specific rate - Wherever the customs duty is leviable at specific rate the assessment of bulk liquid cargo should be based on the determination of quantity for levy of customs duty - The European Countries are also following the valuation system based on GATT - Assessable value in the present imports was correctly determined on the basis of quantity of LNG discharged in India at the contracted price arrived at on the basis of an agreement - Accordingly, appeal filed by the Revenue is rejected – Decided against Revenue.
-
2014 (4) TMI 338
Classification - Imported ‘Palm Kernal Acid Oil - order beyond the scope of show cause notice - Whether classification of the imported goods Palm Kernal Acid Oil can be made under CTH 1515 of Customs Tariff Act, 1975 when the original contest was for classification of the imported goods under either CTH 38231900 or CTH 15132910 before the Adjudicating authority and the first appellate authority – Jurisdiction of revenue - Held that:- The dispute taken before the first appellate authority by asessee was decided under CTH 38231900 after getting further testing of the sample of imported goods - Even after receipt of the subsequent test report, as per the directions of first appellate authority it was not agitated by the Revenue that classification of the imported goods could be other than CTH 38231900 or CTH 15132910. When an issue is not the subject matter of the show cause notice first issued and was not agitated before the lower authorities, it has to be held that Revenue has no justification in agitating an issue before this Bench which was not agitated before the lower authorities - Therefore, the lower authorities cannot be directed to go beyond the scope of the show cause notice - Relying upon NTB International Pvt. Limited vs. CCE, Mumbai-III [2014 (1) TMI 4 - CESTAT NEW DELHI] - There is no merit in the appeal filed by the Revenue and the same is rejected – Decided against Revenue.
-
2014 (4) TMI 337
Suspension of CHA license - Issuance of notice – Duty of Custodian to issues notice to CHA – Notice u/s 48 of the Customs Act - Held that:- Section 48 requires a notice to be issued to the importer and permission of the proper officer to be obtained - The learned A.R. could not show any statutory provision which requires the CHA to ensure that cargo is cleared within a specified period and in the absence of any statutory provision requiring CHA to ensure clearance of cargo, action against the CHA is not warranted - The only negligence on the part of CHA is that he has lost the docket of bill of entry and the concerned person dealing with the bill of entry had left them - However, it cannot be said that CHA should suffer such serious punishment for the lapses on the part of the custodian who has failed to fulfill the statutory obligation - The punishment of suspension till date and forfeiture of security is sufficient for the omissions on the part of CHA in this case but otherwise impugned order uphold - Appeal is decided in the above terms – Decided in favour of appellant.
-
Service Tax
-
2014 (4) TMI 363
Waiver of pre-deposit - online database access or retrieval service - whether the appellant is a mere participant or the appellant access or retrieves data from the computer system maintained by the CRS Companies - Held that:- services received by Jet from CRS companies fall under the category of online database access and/or retrieval service. Since the service provider is situated abroad, in terms of Section 66A the appellant is liable to discharge the service tax liability on reverse charge basis and we hold accordingly - Following decision of Thai Airways International Public Company Ltd. [2013 (8) TMI 48 - CESTAT NEW DELHI] - Decided against assessee. Interpretation of the scope of Section 66A - reverse charge - Whether the service tax has to be demanded for the appellant airline or from a group company of the foreign service provider in India - Held that:- It is the contention of the appellant that the CRS companies have their own group entities in India and therefore, it is those group entities who are liable to pay service tax on the services provided by the foreign entity and not the appellant. The contention of the appellant in this regard is mis-placed. First of all, the service provider and the group companies in India are distinct and different legal entities. The group entities in India are not a branch office or agency of the foreign service provider. Further, they are not involved in any way in providing the service of online data access or retrieval service. Therefore, they clearly fall outside the purview of section 66A read with the Explanation thereto - Prima facie case not in favour of assessee. Extended period of limitation - Held that:- The question of time bar is both a question of fact as well as a question as well as a question of law. Even according to the appellant, out of the total service tax demand of ₹ 187 core, an amount of ₹ 147 crore (approx) is within the normal period of limitation; therefore, the question of time bar can be gone into at the time of final hearing of the appeal. Financial difficulty / hardship - Held that:- appellant has not established any prima facie case at all. - The service tax demand confirmed against the appellant is also substantial to the extent of ₹ 187 core and the demand for the normal period (as per appellant's contention) itself is about ₹ 147 crore. Therefore, the plea of financial hardship at best can be considered only for waiver of interest and penalties imposed and the tax demand beyond the normal period of limitation. - Conditional stay granted.
-
2014 (4) TMI 362
Rectification of mistake - valuation - Penalty u/s 76 - Held that:- for imposition of penalty under Section 76, no mens rea is required. Penalty is imposable if there is default or delay in payment of tax. Therefore, we do not accept the argument that we have committed the error in upholding the imposition of penalty under Section 76 of the Finance Act, 1994. Regarding cum-tax treatment - Held that:- appellant should be given cum-tax treatment in respect of consideration received, this argument is also misplaced. The Hon'ble Apex Court in the case of Amrit Agro Industries - [2007 (3) TMI 14 - SUPREME COURT OF INDIA] in the context of Central Excise duty has held that unless it is shown by the manufacturer that he price of goods included excise duty payable, no question of exclusion of duty element will rise for determination of value under Section 4(4)(d)(ii) of the Central Excise Act, 1944 and one cannot go by general implication that wholesale price would always mean the cum-duty price. The same ratio would apply to the facts before us. The appellant has not led any evidence before us to show that price charged by them was cum-Service Tax - Rectification denied.
-
2014 (4) TMI 361
Waiver of pre-deposit of Service Tax - Commission, brokerage and consultancy charges - nature of receipt - Held that:- Prima facie, we find that the major portion of the taxable value i.e. 1.8 crores is claimed to have been received against surrender of tenancy agreement but the applicant could not able to produce any evidence in this context to show that the said amount has been incorrectly included under the brokerage and commission services. No Chartered Accountant’s certificate has been produced nor any evidence adduced before the adjudicating authority or before this Tribunal. We also find that the Ld. Commissioner has given a categorical finding about the claim relating to non-receipt of the taxable value of Rs.80.00 Lakhs in the impugned order. Prima facie, we do not find any contradictory evidence placed by applicants before us. However, at this stage, the claim of the applicant on exclusion of value of services relating to drawing and designing charges received before 1/6/2007 and service tax levied on such services after that date carries some weight. Also, we take note of the fact that the applicant has paid an amount of Rs.3.3 Lakhs during the course of adjudication proceeding - Conditional stay granted.
-
2014 (4) TMI 360
Business Auxiliary services - Place of business is India - export of services or not - Held that:- Appellant procured sales orders in India on commission basis for the goods manufactured by M/s. Coperion Werner pfleiderer Gmbh Co. KG, Germany and M/s. Coperion Waeschle Gmbh, Germany, the manufacturers of bulk handling systems and the service provided by the Appellant is Business Auxiliary Service covered by Section 65 (105)(zzb). This service provided by a person in India is treated as export of services out of India if it has been provided in relation to business or commission to a recipient located outside India, the service has been used outside India and payment for the same has been received in convertible foreign exchange. Prima facie, we find that all these three conditions have been satisfied in this case. The services being in relation to business or commerce, the question of their export would be decided on the basis of location of the person using these services for his business, not on the basis of place of performance - appellant have prima facie case in their favour - Stay granted.
-
Central Excise
-
2014 (4) TMI 336
Valuation - area based exemption - allegation of payment of duty on higher value - Exemption under notification no.56/2002-CE dated 14.11.2002 - Whether the appellant were required to pay duty on the FOR price which would include the element of freight from the factory gate to the customer’s premises, or the appellant were required to pay duty on the value of the goods at the factory gate i.e. FOR price minus freight charges from the factory gate to the customer’s premises - Held that:- The show cause notice while mentioning in para-6 that the sales of the appellant are on FOR basis, still invokes Rule 5 of the Central Excise Valuation Rules, 2000 for excluding the element of freight from the factory gate to the customer’s premises from the assessable value and on this basis alleges that the appellant in order to avail higher quantum of exemption have deliberately paid duty on the higher value. Stand taken by the department is contradictory, as once the department accepts that appellant’s sales are on FOR basis, the sales would take place at the customer’s premises and in such a situation, in accordance with the provisions of Section 4(3)(c) of the Central Excise Act, 1944, it is the customer’s premises, which would be the ’place of removal’ and accordingly, the assessable value of the goods would include all the expenses incurred upto the customer’s premises including the freight charges. Rule 5 of the Central Excise Valuation Rules, which provides of exclusion of freight from the place of removal to place of delivery, has no application to this case and as such, has been wrongly invoked. The appellant, therefore, have correctly paid the duty on the FOR price and have correctly availed the exemption - Decided in favour of assessee.
-
2014 (4) TMI 335
Denial of refund claim - Bar of limitation - refund of cenvat credit - export - Held that:- Period of refund claim is January 2004 to March 2004 and the claim was filed on 29.3.2005 - Commissioner (Appeals) also observed that refund claim was filed within a period of one year from the quarter ending March 2004 - An attempt was made by the Ld. AR that decision of JCT Ltd. (2013 (12) TMI 583 - CESTAT NEW DELHI) would not apply in this case as in that case, it was related to EPCG scheme and he submits that both the case laws related to Rule 57F of the erstwhile Central Excise Rules and therefore it is not applicable in the present case. I find that Rule 57F is pari materia to Rule 5 of the Cenvat Cedit rules, 2004. It is noted that both the cases, JCT Ltd. (supra) and STI India Ltd. (2008 (10) TMI 246 - HIGH COURT OF MADHYA PRADESH AT INDORE) are related to refund of unutilized credit on the exported goods. In the present case, I find that refund claim was filed on the unutilized credit on the export goods - Decided in favour of assessee.
-
2014 (4) TMI 334
Denial of exemption Notification No.50/2003-CE dated 10.6.2003 - manufacture of polyurethane foam - Denial on the ground that the manufactured goods are covered under Annexure - I to the Notification - area based exemption - Classification - Held that:- Board Circular clarified that if the polyurethane foam products obtained are in the form of blocks of regular geometric shape, that is to say, are similar to each other in dimension like height, breadth, length and curvature whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even when not cut, they become articles ready for use), then by virtue of note 10 of Chapter 39, such products would merit classification under Heading No.39.21, from 28.2.86 onwards. Despite the above Board Circular, having been brought to the notice of the adjudicating authority, the said authority failed to analyze the clarification and even to refer to it. - The Board circular is clear. Irregular blocks of polyurethane form which is an intermediary product manufactured by the appellant requires to be classified under Tariff Heading 39.21 as clarified in the Circular and is therefore entitled to exemption under Notification No. 50/2003-CE. - Decided in favour of assessee.
-
2014 (4) TMI 333
Waiver of pre-deposit - demand of duty on Captive consumption of agarbathi masala for manufacturing of agarbathi - valuation - Penalty under Rule 25 - Held that:- in the absence of any proof to show that the earlier data was as per CAS-4 requirements and whether revised figure is not as per CAS-4 has not been considered. In our opinion, since the issue has heavy implication, these aspects need to be considered by the Commissioner in greater detail and if necessary the verification of details or whatever data required by the Commissioner can be called for and we feel that if the appellant has made a mistake while replying to the earlier show-cause notice and while defending the earlier show-cause notice and if the mistake is genuine, they should not be made to suffer and be liable for paying duty for mistake throughout their existence. Therefore, we remand the matter with a request to the Commissioner to consider the matter afresh and give an opportunity to the appellant to present their case and also requiring the appellants to produce whatever information is required for coming to a proper conclusion - matter remanded back.
-
2014 (4) TMI 332
Waiver of pre deposit - Packing of pouches of unmanufactured chewing tobacco bearing brand name ' Laxmi Chhap ' falling under chapter 24 of Central Excise Tariff Act, 1985 - Machines not working - Held that:- Difference of opinion - Matter referred to larger bench with following questions:- Whether as per findings of learned Member (Judicial), full waiver of pre-deposit is to be granted in view of the facts that machines were not in working condition based on commissioner's observation in para 99 in his adjudication order and provisions of deeming fiction was not attracted as per Chewing Tobacco & Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010. Or Whether as per findings of Member (Technical), partial pre-deposit of Rs.One crore is to be ordered based on the findings that there was clear admittance by Shri Rajesh Goyal, director, his wife and other key personnel such as manager and accountant of manufacture and running of machines. Further it is also a fact on record that these machines were earlier working under old premises and later shifted to present premises. Furthermore, premises were not registered thus inviting deeming provisions of Chewing Tobacco & Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010.
-
2014 (4) TMI 331
Duty demand - job worker - area based exemption - non filing of declaration - Notification No. 50/2003-C.E., dated 10-6-2003 read with Notification No. 76/2003-C.E. – Held that:- identical issue was the subject matter in the stay petition in the case of M/s. Shivam Enterprises vs. CCE Chandigarh [2012 (11) TMI 821 - CESTAT, NEW DELHI] wherein it stand held that once the above option stand exercised by the appellant, the technical objection of proper application having been filed subsequently cannot stand in the way of grant of substantial benefit - Stay granted.
-
2014 (4) TMI 330
Valuation of goods - Inclusion of pre-delivery inspection charges as also after sale charges in the assessable value of the cars sold by the appellant - Held that:- Following the decision of assessee's own previous case [2013 (1) TMI 329 - CESTAT, NEW DELHI] - Stay granted.
-
CST, VAT & Sales Tax
-
2014 (4) TMI 368
Inter-State transfer – All documents except Delivery note present – Penalty for alleged movement of goods within State - Held That:- The provisions of Section 53 of the KVAT Act applied to a transfer of goods inter-states i.e. from place to place in the state – It is not disputed by Revenue that is a inter-state transport and the assessee has produced sufficient material to show that the transport was genuine transport from branch to branch - The Contention that there was no delivery note, the assesse should suffer penalty, appears to be untenable contention - The check post is almost on the border of the Karnataka State Boundary - There was no possibility to divert the goods inter- state - The goods were accompanies by the authenticated documents - It is evident from the material that it is a inter-state movement and branch to branch transfer in which event the question of liability U/s 53. of the KVAT Act does not arise - Section 53 is applied when there is a movement of goods within the State itself - When it is a inter-state transport, the provisions of Section 53 do not apply - Therefore, the order of the appellate authority is sound and proper - The order passed by Addl. Commr is set aside – Decided in favour of assessee.
-
2014 (4) TMI 367
Whether ‘Sale in the outlet’ would be a ‘sale in the eating house’ - sale of branded food items - Interpretation of Statute - Classification – Rate of Tax - Exemption from Tax - It is stated that the raw puffs were stored in its own freezer and whenever the customers approached M/s.Food World Super Market Limited, the frozen puffs were fried and delivered. - Held That:- the fact that the sale had taken place in the premises of M/s.Food World Super Market Limited outlet does not mean that the sale was in a eating house to fall under Section 3-D of the Tamil Nadu General Sales Tax Act. There is no ground to admit that the sale in the outlet would be a sale in the eating house for the reason that the assessee did not dispute the fact that it did not sell the puffs directly to the consumer; on the other hand the sale was directly only to M/s.Food World Super Market Limited, which provided the facility for the customer to eat the puff therein - The fact that the assessee had its frying unit therein, however, does not make the outlet as its eating house to sell puff directly to the consumer - As it is stated in the letter addressed to the Special Commissioner, all that the assessee did was collecting the voucher from the cash counter of M/s.Food World Super Market Limited and thus based on the payment made by the customer to M/s.Food World Super Market Limited, the assessee merely supplied the food products to the ultimate consumer - So, the materials placed before clearly pointed out that it was an outright sale by the assessee to M/s.Food World Super Market Limited and this was not "sale" by the assessee to the ultimate consumer in the retail place, and above all in a eating house to attract Section 3-D of the TNGST Act, 1959. Rate of Tax – Classification - Food items – Items under Brand name - Name not being registered - Liability u/s 3(2) of the TNGST Act, 1959 r/w Serial No.4 (iii) of Part E of the First Schedule to TNGST Act - Held that:- The reading of the Entry in Part E of First Schedule, any food item or a preparation sold under the brand name, whether or not registered under the Trade and Merchandise Mark Act, would fall for consideration under the said entry – What was sold by the assessee in the retail outlet to M/s.Food World Super Market Limited were of preparations with the mark of the assessee, which was a distinct one from what one would find otherwise in the case of food fried with stuff sold either in street or in any other outlet of a similar nature - The assessee admitted that the puff prepared by them had their own dressing done by the staff, served with ketchup, paper napkin etc - It is not the case of the assessee that what was sold by the assessee had no character or distinctiveness of the assessee's preparation to identify this with the assessee; thus, when what were sold had the mark of it being a assessee's product, the mere fact of the name not being registered or imprinted on the product, by itself would not come to the aid of the assessee to contend that assessment would not fall for consideration under Part E of the First Schedule - Order of Tribunal confirmed and Revisions rejected – Decided against assessee.
-
2014 (4) TMI 366
Deduction of Tax at source – Levy of Penalty – Can it be said that the action of the assessee demonstrated animus or ill will or deliberate refusal to discharge its statutory obligation – Opportunity of being heard – Section 35(8) of Uttarakhand VAT Act, 2005 - Held that:- The provision permitting imposition of penalty is u/s 35(8) of the Act - Before a penalty is imposed the person to be penalized must be heard - Person concerned gets an opportunity to explain his conduct - Having regard to such conduct, a discretion has been granted to impose penalty - That can be as much as twice the amount deducted, but not so deposited in Government Treasury – Here amount deducted was deposited into Government Treasury - Before that simultaneously with the deductions an attempt was made to deposit the deducted amount, but the same could not be deposited as the banker of the AO did not agree to accept an outstation bankers draft - The fact remains that for delayed payment, assessee has already paid statutory interest. Authorities below did not exercise their discretion of imposing penalty, this court set aside the order of the AO imposing penalty, the appellate order as well as the order of the Tribunal – Matter could have been remit, but since it is pending since 2006, we apply the thumb rule and assess the penalty at ₹ 25,000/- - The revision is disposed of – Decided partly in favour of assessee.
-
2014 (4) TMI 365
Entitlement for Deduction – Whether Tribunal was justified in holding that the exemption from furnishing ‘C’ forms cannot be granted by application u/Rule 7(3) of the Delhi Sales Tax Rules, 1975 r/w Section 9(2) of the CST, Act 1956 – Interpretation of statute - Held that:- Held that:- Judgemnt in Khemka & Co. (Agencies) Pvt. Ltd. Versus State of Maharashtra & State of Mysore Versus Guldas Narasappa Thimmaiah Oil Mills [1975 (2) TMI 91 - SUPREME COURT OF INDIA] followed - Whilst substantive right and liabilities are to be located within the main enactment, i.e. the Central Sales Tax, the procedure to be followed for assessment, collection of duty etc. is dictated by the local, prevailing State law – If penalty is not specifically provided in regard to certain matters, the local enactment cannot be relied upon for that purpose – Relying upon Orissa Cement Ltd. v. State of Orissa and Anr, [1970 (4) TMI 130 - SUPREME COURT OF INDIA] - If in the absence of interest under CST, a local law could not be enforced through Section 9(2) - If one were to keep this aspect in mind, then Orissa Cement (supra), on the other, suggests that rebate for timely payment – provided for in the State law – can be extended by virtue of Section 9(2) as it is intrinsically linked to the concept of tax collection which falls properly within Section 9(2) - The condition for grant of benefit, i.e., the benefit u/s 5(3) and 5(4), subject to production of prescribed declarations, is engrafted within the main statute, i.e. Central Sales Tax. Relying upon Kedarnath Jute Manufacturing Company [1965 (4) TMI 91 - SUPREME COURT OF INDIA] - SC even went to the extent of saying that occurrence of events such as fires cannot be covered expressly by Section 5 and that in the absence of any Rules under the CST Act, local State laws cannot be used to give relief - To take the logic further, permitting such relief in the absence of statutory authorisation would not only transgress the extent of jurisdiction allowed to State authorities by Section 9(2) to lead to diverse and probably contradictory results - In the administration of a concededly Central law, such as the Central Sales Tax Act, despite the statutory injunction contained in Section 5(3) and 5(4), each State of the Union would be free to carve-out myriad exceptions that would only undermine the object of the rule embodied in the substantive provisions - Therefore, Tribunal order does not call for any interference – Decided against assessee.
-
2014 (4) TMI 364
Limitation period – Prescription period for submission of Form-E - Rule 5 of U.P. Tax on Entry of Goods Rules – Held that: - A perusal of the rule only shows that it talks of transactions of purchase and sale to be entered into in the form concerned, which must be of same financial year or such as made during two financial year immediately preceding and succeeding that financial year – Here, for assessment year 2005-06 and 2006-07 transactions of purchase and sale made during the same financial year were mentioned in Form-E, and to that extent there was no flaw but the only dispute is that he submitted those forms after more than two years of the relevant assessment year - For that purpose, no period of limitation could be shown within which these forms must have been submitted otherwise would be barred by limitation – Accordingly, Tribunal has not erred in law in admitting Form-E so as to confer benefit thereunder upon dealer - No question of law is involved in this matter – Revision is dismissed – Decided against Revenue.
|
9911796707
