Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 13, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment - expenses under the head "management fees" undisclosed - Assessee had disclosed what was relevant and necessary for the purpose of making assessment - this is a clear case of change of opinion - HC
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Deemed dividend u/s 2(22)(e) - Advance against sales - the payments received by the assessee from AIL are receipt against sales made during the course of commercial transactions and therefore, provision of Section 2(22)(e) is not applicable. - AT
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Non deduction of tax at source on conversion charges under section 194C - no disallowance can be made under section 40(a)(ia) as the assessee has paid the amount during relevant previous year - AT
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Restriction on cash expenditure u/s 40A(3) - activity of supply of food grains, sugar & kerosene under Public Distribution System - payments has been made to dealer authorised by the Govt. and not to the Government itself. - disallowance confirmed - AT
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Gain arising on sale of plots - agricultural land - The continued organized efforts of the assessee and the value addition to the agricultural land is sufficient proof of the intention of the assessee to venture into trading activity in land - AT
Customs
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Classification of projectors imported by the appellant - Just because the explanatory notes shows that monitors which are capable of accepting a signal only from the CPU of an ADP machine are included under monitor heading, does not mean that other items are not includible - AT
Service Tax
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Recovery of service tax u/s 87 without adjudication on the basis of raid - Unless the proceeding u/s 73 is completed recovery notice under Section 87 could not have been issued by the respondents - HC
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Eligibility to avail Cenvat credit for providing Cellular services - towers and pre-fabricated buildings/shelters - Capital goods - extended period cannot be invoked - demand confirmed for the normal period of limitation with interest - penalty waived - AT
Central Excise
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Refund claim - capital goods - Captive consumption - principle of unjust enrichment is applicable even when the goods are used for captive consumption - SC
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Assessee admits taking of cenvat credit and contrary to the condition No. 41 of the Exemption Notification, which enables it to claim or remove the goods at nil duty. Knowing fully well, the Assessee could not have availed of the benefit of such exemption Notification - HC
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Denial of refund claim - Unjust enrichment - Since Department itself having admitted the fact that the appellant is controlled, funded and monitored by the State, it cannot be said that the appellant is unjustly enriching itself - refund allowed - HC
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Challenge to the show cause notice - Valuation of goods - alternate remedy - supply of cement to their own ready-mix concrete units for captive consumption - captive consumption - Adjudicating Authority to decide the issue in accordance with law - HC
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CENVAT Credit availed wrongly on Capital goods - there is no sufficient evidence to prove Mens rea or guilt on the part of the assessee - no penalty - HC
VAT
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Whether a University/Institution, whose dominant activity or the main activity is imparting education to the students merely, by providing cement, iron and steel by it to its contractors for execution of civil work and providing prospectus to the prospective students by it, can be said to be a business activity or otherwise and could the institution be a dealer - Held No - HC
Case Laws:
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Income Tax
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2015 (4) TMI 376
Reopening of assessment - expenses under the head "management fees" undisclosed - Held that:- There was no failure to disclose material facts and failure to place a version favourable to the Revenue cannot be a reason to reopen the assessment. The conclusion that the Assessing Officer never applied his mind on this issue and therefore change of opinion is not the basis on which the assessment is sought to be reopened cannot be sustained. In the light of the undisputed factual material and referred by us extensively, it is apparent that the reopening was fully impermissible in law. Rather we do not find any reference to the specific stand taken by the Petitioner while objecting to the notice under section 148 of the IT Act. The Petitioner pointed out as to how the assessment was finalized. Reference has been made to the letter dated 16th July, 2009 from the Assessing Officer and the response thereto on 5th August, 2009. There is no denial of the fact that the Assessing Officer has applied his mind to the expenditure debited to the profit and loss account and not disallowed it. The facts and which are taken from the director's report itself would indicate that the Assessee had disclosed what was relevant and necessary for the purpose of making assessment. The Assessee did not hold back any document nor failed to supply any information in addition to the explanation given by it in writing concerning the said management fees expenses. In the circumstances, this is a clear case of change of opinion and based on which, the reassessment is proposed. That being impermissible in law, the Writ Petition must succeed - Decided in favour of assessee.
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2015 (4) TMI 375
Entitlement to deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (4) TMI 374
Liability on urban co-operative Bank to deduct the TDS - Held that:- It is a settled proposition of law that various sub-sections in a provision have to be read in harmony. A head on collision between sub-sections of the same provision has to be avoided. They cannot be read in a matter which render one provision superfluous of a dead letter. Reading clause (viia) and clause (v) conjointly and in harmony the only irresistible conclusion that can be drawn is that interest above ₹ 10,000/- credited on time deposits by urban co-operative Bank in the account of the payee would be liable for deduction of the tax at source, meaning thereby that an interest credited below ₹ 10,000/- by urban co-operative Bank will not be liable for the tax deducted at source. Even the learned Asstt. Solicitor General conceded to the position that for amount below ₹ 10,000/- TDS is not required to be deducted by the urban co-operative Bank. The Circular dated 23.10.2003, issued by respondent no.3, thereby directing deduction of tax at source on the deposits does not clarity the aforesaid aspect. The Circular will have to be read in a manner that if the amount more than ₹ 10,000/- is credited as an interest on time deposits. Then the urban co-operative Bank is liable to deduct the TDS as is laid down in said provisions of section 194A and that urban co-operative Bank is not liable to deduct TDS if the interest accrued on time deposits is less than ₹ 10,000/-.
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2015 (4) TMI 373
Transfer pricing adjustment - improper selection of comparable - Held that:- Respectfully following the decision of Trilogy E-Business Software India Pvt.Ltd.(2013 (1) TMI 672 - ITAT BANGALORE) we direct that KALS Information Systems Limited and Accel Transmatics Ltd., be excluded from the list of 20 comparable arrived at by the TPO. Tata Elxsi and Infosys Limited has to be excluded from the list of comparable chosen by the TPO as relying on case of Logica Pvt.Ltd. [2015 (3) TMI 401 - ITAT BANGALORE] Aztec Software Limited and Geometric Software Ltd. (Seg.) and Megasoft Ltd., are concerned, it is not in dispute before us that the related party transaction in the case of companies exceeds 15% and in view of the decision of the Tribunal in the case of 24 X 7 Customer.Com Pvt. Ltd. [2013 (1) TMI 45 - ITAT BANGALORE ] followed by this Tribunal in the case of Logica Private Ltd. (supra) wherein it was held that where the RPT exceeds 15%, such companies should not be taken as comparable companies. Following the said decision, we hold that said companies should be excluded from the list of the comparable companies chosen by the TPO while working out the ALP. After excluding the aforesaid comparable from the list of comparable chosen by the TPO, the arithmetic mean of profit margin of the remaining 7 comparable would be 11.30% (unadjusted) and 9.87% after working capital adjustment. The Assessee’s profit margin operating profit on cost is 10.15% which is within the + / - 5% range permitted under second proviso to Sec.92CA(2) of the Act and therefore the addition made by the TPO and confirmed by the DRP needs to be deleted. Accordingly the same is deleted - Decided in favour of assessee. Disallowance of deduction claimed u/s.10A in respect of profits of the Assessee’s Bangalore unit - Held that:- the Bangalore unit was not formed by reconstruction of an existing unit or the business of the new unit had not commenced prior to registration with the STPI and therefore deduction u/s.10A of the Act ought not to have been denied on the profits of the Bangalore unit. The deduction claimed by the Assessee is directed to be allowed - Decided in favour of assessee. Exclude telecommunication charges and insurance charges incurred both from export turnover and total turnover - Held that:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT ], we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude telecommunication charges and insurance charges incurred be excluded both from export turnover and total turnover, as has been prayed for by the assessee in the alternative - Decided in favour of assessee.
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2015 (4) TMI 372
Deemed dividend u/s 2(22)(e) - Advance against sales - whether the advance payments are purely an advance/loan made to the assessee, attracting the provisions of section 2(22)(e) of the Act? - Held that:- The debit balance in the account of the assessee has not been treated as deemed dividend under Section 2(22)(e) which also impliedly proves that in the preceding year, the Revenue accepted the transactions to be in the nature of trading transactions and has not charged the debit balance as deemed dividend under Section 2(22)(e). In view of the above factual position and relying upon the decisions of Hon'ble Delhi High Court in the case of Ambassador Travels (P.) Ltd. (2008 (4) TMI 428 - DELHI HIGH COURT), Raj Kumar (2009 (5) TMI 17 - DELHI HIGH COURT) and Creative Dyeing and Printing (P.) Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT), answer question No. l in favour of the assessee and hold that the payments received by the assessee from AIL are receipt against sales made during the course of commercial transactions and therefore, provision of Section 2(22)(e) is not applicable. - Decided in favour of assessee. Allotment of shares - whether benefit accrued to the assessee on allotment of shares attracts provisions of section 2(22)(e) - Held that:- When in the books of account the assessee has also credited the AIL and debited to the investment account for the allotment of the shares, it cannot be claimed by the assessee at the stage of the ITAT for the first time that the shares were allotted unilaterally by AIL. The assessee is a substantial shareholder in AIL and it is improbable to believe that the company would allot the shares to the assessee without her knowledge. Moreover, the assessee has not objected to the allotment of shares by the company, on the other hand, made the payment in the month of December. The learned counsel for the assessee has not given any evidence to support his contention that the shares were allotted by the company to the assessee unilaterally without her knowledge and the reply furnished before the Assessing Officer was factually incorrect. In view of the above question No.2 is answered in favour of the Revenue and hold that the addition of ₹ 10 lakhs was correctly made under Section 2(22)(e) in respect of debit entry for allotment of shares. - Decided against assessee.
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2015 (4) TMI 371
Validity of assessment u/s 153A - Held that:- We find merit in the contentions of ld DR that considering the statement of assessee dtd. 21-10-2008 it has been admitted that assessee was regularly engaged in unrecorded purchases and sales; no exception of any year has been claimed. Consequently the statement and the seized record for other year unambiguously become incriminating material for valid issue of notices u/s 153A. It is admitted by the appellant in his statement dated 21/10/2008 that it has been indulging in unrecorded purchase and sales; no year of exception is stated. This leads to a clear indication the assessee as a regular policy indulged in such clandestine maintenance of books and avoided taxes. Therefore, the notices issued U/s 153A for all the years by the Assessing Officer are valid and CIT(A) has rightly upheld them. Further reassessment proceedings were abated in A.Y. 2003-04, 2004-05 and 2005-06 as the assessee's case were only processed U/s 143(1) of the Act. Therefore, we confirm the order of the learned CIT(A) on issuance of notice U/s 153A of the Act in all the years.- Decided against assessee. G.P. rate as well as total sales turnover estimated challenged - Held that:- The learned Assessing Officer applied comparable case of M/s Rajan Fireworks and Emporium Prop. M/s Sunder Dass Hasani HUF, who is wholesalers/retailers of fireworks, who has shown G.P. rate ranging G.P. from 17% to 18%. The learned AR argued that the case of M/s Rajan Fireworks and Emporium Prop. M/s Sunder Dass Hasani HUF is not a comparable case hence distinguished on various facts and figures and nature of trading activity in quantum and experience. The assessee has shown G.P. in 2009-10 @ 14.99% on recorded sales of ₹ 21,57,817/-, therefore, we apply G.P. rate in A.Y. 2003-04 @ 13%, in A.Y. 2004-05 @ 14%, in A.Y. 2005-06 @ 13% and in A.Y. 2006-07 @ 13.5% in the interest of justice. The Assessing Officer is directed to recalculate the income of the assessee on the basis of G.P. rate decided by this Court in year wise on estimated total turnover by the learned CIT(A).- Decided in favour of assessee.
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2015 (4) TMI 370
Non deduction of tax at source on conversion charges under section 194C - CIT (A) deleting the disallowance made under section 40(a)(ia) - Held that:- Contention of the Department, that the ratio laid down by the ITAT Visakhapatnam Special Bench in case of Merilyn Shipping & Transports vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] is not applicable, cannot be accepted. Since the Department has not controverted the fact that the entire amount of ₹ 5,98,13,357 was paid by the assessee during the relevant previous year and nothing remained payable on the last day of the previous year, in our view, as per the ratio laid down in case of Merilyn Shipping & Transports vs. ACIT (Supra), no disallowance under section 40(a)(ia) can be made. Accordingly, the CIT (A)’s order on this issue deserves to be upheld. Since we have held that no disallowance can be made under section 40(a)(ia) as the assessee has paid the amount during relevant previous year, we do not find it necessary to go into the issue whether or not provisions of section 194C is at all applicable to the payments made by assessee claimed to be in the nature of reimbursements. - Decided against revenue. Revision u/s 263 - non consideration of applicability of section 40(a)(ia) to payment made to M/s. Aditya Spinners Ltd. has made the assessment order erroneous and prejudicial to the interests of the Revenue - Held that:- in the impugned assessment year also, no disallowance can be made under section 40(a)(ia) of the Act as the entire payment, as claimed by the assessee was made during the relevant previous year and nothing remained payable. Therefore, as there cannot be any disallowance under section 40(a)(ia) of the Act, assessment order cannot be held to be erroneous and prejudicial to the interest of the Revenue. Moreover on a perusal of the assessment order, it appears the Assessing Officer after conducting enquiry and applying his mind to the materials brought on record, as far as it relates to conversion expenses, has passed the assessment order. Whether provisions of section 194C will be applicable to conversion expenses claimed to be in the nature of reimbursement, in our view, is a debatable issue on which more than one view is possible. That being the case, assessment order passed cannot be considered to be erroneous and prejudicial to the interests of the Revenue so as to empower learned CIT to revise it under section 263 - Decided in favour of assessee.
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2015 (4) TMI 369
Transfer pricing adjustment - CIT(A) deleted the addition - revenue arguing against the inclusion of ITDC and non-inclusion of National Research Development Corporation Ltd., Panacea Biotech and Suven Life Science, which were initially chosen by the TPO as comparable - Held that:- As regards the reliance of the ld. CIT(A) on the DRP’s inclusion of ITDC in the list of comparables for the AY 2007-08, we find that the same does not merit acceptance for two reasons. First, the direction given by the DRP for a later year can have no binding force in the context of an earlier year. The second reason is that the Department, even if aggrieved by the direction given by the DRP on 12.7.2011 for the assessment year 2007-08 could not have filed appeal against the order passed by the AO giving effect to such direction. Sub-section (2A) to section 253 empowering the Revenue to file appeal against the order passed by the AO pursuant to the direction given by the DRP u/s 144C(5), has been inserted by the Finance Act, 2012 w.e.f. 1.7.2012. It is, therefore, abundantly clear that the direction given by the DRP for the AY 2007-08 could not have been challenged by the Revenue before the Tribunal and was binding. Thus ITDC cannot be considered as a comparable company to qualify for inclusion in the final set of comparables for determining the ALP of the assessee’s international transaction. The impugned order on this issue is set aside. - Decided against assessee. National Research Development Corporation Ltd., Panacea Biotech and Suven Life Science - Once the TPO selected the three companies in his original order, which were not adversely commented in the remand report, it implied that they survived for the consideration of the ld. first appellate authority. In such a situation, it became the duty of the ld. CIT(A) to either include the same in the final set of comparables or give reasons for their exclusion. Since there is no whisper in the impugned order about the comparability or otherwise of these three companies, we consider it appropriate to remit this matter to the file of the ld. first appellate authority for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Depreciation - CIT(A) allowing depreciation for full year as against half year allowed in respect of assets shown to have been purchased on 30.9.2004 - Held that:- The assessee contended before the ld. CIT(A) that no physical movement of assets was required since the assessee company was operating from the same premises as that of the L.O., whose assets were purchased and put to use on 30.09.2004. After recording this submission, the ld. CIT(A) returned a finding that the assessee produced invoices raised by Writer Relocations which had transported the assets from New Delhi to Gurgaon. It is beyond our comprehension as to how the assets could have required transfer from New Delhi to Gurgaon, when no physical movement of assets was required as per the assessee’s version since the assessee and LO were operating from the same premises. It is further worth noting that though the ld. CIT(A) called for a remand report from the AO on the question of comparables, but he did not consider it expedient to admit the additional evidence on this issue without seeking the comments of the AO. In our considered opinion, the Department has also rightly challenged the admission of additional evidence by the ld. CIT(A) in contravention of the provisions of Rule 46A of IT Rules. As the fact about the date of putting to use of such assets is not borne out from the material on record, we consider it necessary to set aside the impugned order on this issue and remit the matter to the file of ld. CIT(A) for rendering a fresh decision, - Decided in favour of revenue for statistical purposes. Disallowance of Repairs and maintenance of residential apartment and international travel holiday trip of the expatriate employees - CIT(A) deleted the disallowance - Held that:- it is patent from the assessment order that the repair expenses amounting to ₹ 11.61 lac were incurred in respect of rented accommodation provided by the assessee to its employees. We fail to appreciate as to how this expenditure cannot be allowed as deduction when the employees to whom such rented premises were allotted, on which the repair work was carried out, were discharging duties for the assessee company. This is an expenditure incurred for the welfare of its employees and deserves to be allowed. As regards the other expenses amounting to ₹ 23.56 lac, we again find that the assessee allowed international travel holiday trip to its employees. This is nothing but a part of package to the employees. By no standard, these two expenses can be considered as not allowable. - Decided in favour of assessee.
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2015 (4) TMI 368
Disallowance u/s 40A(3) - as per assessee kerosene is bought for supply under PDS system to BPL families, and it is a no profit business to the society as well as to suppliers who insisted on cash payment The assessee is running rationing business under Central Govt. Scheme - Held that:- The assessee has carrying on the activity of supply of food grains, sugar & kerosene under Public Distribution System. The public distribution system (PDS) is an Indian food security system. Establishment by the Government of India under Ministry of Consumer Affairs, Food, and public Distribution and managed jointly with state governments in India, it distributes subsidized food and non-food items to India’s poor. The major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through a network of public distribution shop established in several states across the country. The Central and State governments share the responsibility of regulating the PDS. This shop is used to distribution rations at a subsidized price to the poor. Hence, there is no element of profit. The assessee has distributed Kerosene to various fair price shops as per the orders of Chief Executive Officer of Taluka Panchayat and the assessee as per the order three distributors have distributed kerosene to the appellant society. We find that the assessee has made payment to three agencies but that agencies are nominated by Govt but it cannot be said that this payment is made to Government. Therefore, we are of the view that A.O and CIT(A) is justified in holding that payments has been made to dealer authorised by the Govt. and not to the Government itself. Therefore, AO and CIT(A) is justified in their action and our interference is not required. - Decided against assessee. Deduction u/s 80P(2)(a)(i) claimed - Held that: - The assessee is a Primary Co-operative Agriculture and Rural Development Bank registered under the Karnataka Co-operative Society Act. Therefore, entire income should be deductible u/s 80P(2)(a)(i) of the Income Tax Act. We find that assessee has taken this ground for the first time before us and the CIT(A) has not executed this ground, therefore, in the interest of justice and fair play, we restore this issue to the file of CIT(A) to decide the issue as per law after giving due opportunity of hearing to the assessee. - Decided in favour of assessee by ay of remand.
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2015 (4) TMI 367
Disallowance u/s 14A read with rule 8D - Held that:- Assessee has clearly proved, with reference to its accounts that the investment under reference (Rs. 30.15 lacs) was in fact made in the past. The assessee has, as at 31.3.2008, i.e., at the beginning of the relevant previous year, a capital base of ₹ 13,291.58 lacs, as against a miniscule investment portfolio of ₹ 30.15 lacs, and which continues for the current year as well. Even excluding the fixed assets thereat (Rs. 8508.51 lacs), i.e., net of that financed by term loans (Rs. 3,500 lacs), or ₹ 5008.51 lacs, would yet leave a surplus of ₹ 8,283.07 lacs (13291.58 - 5008.51). The Cash Flow Statement (PB pg. 8), forming part of the annual accounts, clearly depicts the movement of funds for the current year, indicating nothing adverse qua the sufficiency of the surplus capital, i.e., with reference to the investment, which in fact flow from an earlier year. Under these conditions of abundance of capital, i.e., even considering the deployment toward business assets, the presumption in law, as explained in the case of Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] would only be of the investment as having been financed out of own funds, toward which we find valid basis on facts. Thus the investment in shares, etc., is funded by the assessee out of own capital. Consequently, no disallowance of interest cost u/s. 14A r/w rule 8D shall arise in the facts and circumstances of the case. Coming to the disallowance in respect of indirect, administrative expenditure, worked out at ₹ 15,075/- by following the prescription of rule 8D(2)(iii), i.e., at 0.5% of the average investment for the year, the assessee did not raise any argument before us nor do we find any such before the authorities below, i.e., towards non-application of the said estimate or at a lower sum. Thus no reason or any basis in law to interfere therewith. - Decided partly n favour of assessee. Disallowance under the MAT provisions - disallowance made under Sub section (2) and (3) of Section 14A added to the book profits computed under section 115JB - Held that:- The deletion of the disallowance of interest component (at ₹ 1,43,865/-) of the total disallowance of ₹ 1,58,940/-, would consequently cause deletion of the corresponding adjustment under section 115JB r/w Explanation 1(f) below sub-sec. (2) thereof. As regards the balance disallowance of ₹ 15,075/-, i.e., toward adjustment qua the corresponding administrative expenditure, we have already clarified the assessee as having not made out any case at any stage, i.e. either in principle or on quantum, and which position continues before us as well. We accordingly decline to interfere with the corresponding adjustment for book profit purposes as well - Decided partly in favour of assessee. Reopening of assessment - assessee had claimed excess deduction u/s 80HHC - Held that:- unable to agree with the ld. CIT(A) that the AO did not consider the said aspect of the deduction u/s. 80HHC. True, no query was put by the AO during the assessment with regard to excluding 90% of the processing charges, i.e., toward computing 'profits of the business'. However, it cannot be said that he overlooked the said matter, or had not applied his mind to it. In our view, he was in conscious agreement with the said exclusion by the assessee, which is patent from the detailed computation of deduction u/s. 80HHC, furnished twice, as noted above, during the course of the assessment proceedings. The processing charges were considered by him as a part of the assessee's operational income and, thus, a constituent of the turnover. There was, accordingly, no question of deduction of 90% thereof, which is only in respect of independent incomes, which had no relation with an assessee's turnover. Clearly, therefore, the AO regarded the processing charges as a part of the assessee's turnover, while the exclusion under Explanation (baa) to s. 80- HHC was only qua incomes which had no element of turnover We have held that the matter had been, as a matter of fact, considered by the AO in the original assessment. The question of the assessee therefore not disclosing fully and truly all the facts in relation to processing charges earned for the year, or of the manner in which the same had been considered by it in computing the deduction u/s. 80HHC, i.e., which constitutes the reason for reopening, which has been abundantly referred to hereinabove and, thus, of any improper disclosure by it, does not arise. The obligation of the assessee's extends to only disclosing the primary facts, and not in the manner in which the same is to be pursued or otherwise utilized in assessing the total income by the assessing authority. The reassessment proceedings are without jurisdiction, and the resulting assessment, therefore, void in law. - Decided in favour of assessee.
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2015 (4) TMI 366
Accrued interest not credited to P&L account - CIT(A) deleted the addition - Held that:- Issue in question is covered in favour of the assessee by the order of the Tribunal in the case of ACIT Vs. The Jhajjar Central Coop. Bank Ltd [2013 (10) TMI 1291 - ITAT DELHI] wherein held that the submission of the assessee which is well supported by RBI/NABARD circular dated 17.8.2002 vide para No. 3.1 clearly states that the policy of income recognition should be based on record of recovery and therefore unrealized income should not be taken into profit and loss account by State Co-op Bank / Central Co-op Banks and that the provisions of Section 43D of the Act are clear regarding the recognition of interest income on NPA. The Ld. CIT(A) in our view has thus rightly held that overdue interest not realized during the year and credited to suspense interest account cannot be taken to be the income of the assessee. - Decided in favour of assessee. Disallowance of expenses - CIT(A) deleted the addition - Held that:- The expenditure which are disallowed as prior period were expenses relatable to month of March, 2006 for which the payments were made in the month of April, 2006. These expenses become due only after the management examines the expenses and authorizes the payment of the same. Therefore, these expenditures become due in the current assessment year and same is to be allowed as deduction. Hence, the order of CIT(A) is correct and no interference is called for.- Decided in favour of assessee. Addition on account of suspense individual and societies - CIT(A) deleted the addition - Held that:- If the amount deposited in the said account belong to the various depositors, who intended to open the bank account with the assessee, then the said amount cannot attain the character of ‘income’ in the hands of the assessee unless it is shown that the said amount has become the income of the assessee. If the said amount does not belong to the assessee and the assessee has utilized the same until the said amount is refunded back, no notional interest can be added to that amount as either the assessee has to pay interest if the said amount is credited to the saving account or the amount itself has to be refunded back in case the account is not opened. There is no question of assessing any notional interest on the said amount. Therefore, we find no fault or infirmity in the findings recorded by the ld. CIT (Appeals) vide which the impugned addition and interest thereon is deleted, we decline to interfere.- Decided in favour of assessee. Disallowance u/s 40(a)(ia) - non deduction of TDS on interest payment - CIT(A) deleted part addiion - Held that:- The interest payment of ₹ 2,12,600/- is to an education institution, whose income is exempt u/s 10(23C) of the Act. Therefore, as per Circular No.4/2002 no TDS is required to be made on such interest payment. Hence, we uphold the order of the CIT(A) - Decided in favour of assessee. Addition on account of printing and stationary supplied to branches by the head office - CIT(A) deleted the addition - Held that:- Revenue has not been able to controvert the finding of the CIT(A) by placing on record any material/documents as the net amount charged to P&L a/c under this head is only ₹ 2,37,966/- and closing stock of ₹ 4,47,310/- has already been shown. The AO worked out the said disallowances without appreciating the facts properly.- Decided in favour of assessee.
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2015 (4) TMI 365
Gain arising on sale of plots - treatment as adventure in the nature of trade - Held that:- It is the case of the assessee that there was later realization about scarcity of water and labour, but it is the case of Assessing Officer and CIT(A) that the assessee had not furnished any evidence in support of its claim of scarcity of water and labour. Further, it is undisputed that Kolhapur district is fertile and irrigated land and sugar cane is one of the highest yielding cash crops grown in abundance in this area. The CIT(A) has given a finding in this regard which has not been rebutted by the assessee. The assessee has failed to furnish any evidence of any agricultural activity being undertaken before the land was put to development and plotting. Both before the Assessing Officer or the CIT(A) and even before us, the assessee has not furnished any evidence in this regard. Further, the assessee has not even disclosed the location of land. Though the claim of the assessee was that it was not receiving a good price for the agricultural land, but the assessee has failed to bring on record any evidence to suggest that there was ever any intention to sell the said agricultural land as such. On the contrary, the assessee obtained the permission from the Collector, Kolhapur for the conversion of landholding from agricultural to nonagricultural and also plotting and development activities were carried out over the years which establish the intention of the assessee to enter into trading activities. In the absence of the assessee having failed to substantiate its intention to carry out the agricultural activities on the said land and / or the circumstances which prevented him from carrying on the said activity and / or the claim of scarcity of water and labour having been established by the assessee, we are in agreement with the inference drawn by the Revenue authorities. The continued organized efforts of the assessee and the value addition to the agricultural land is sufficient proof of the intention of the assessee to venture into trading activity in land. - Decided against assessee.
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Customs
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2015 (4) TMI 381
Revalidation of Duty Free Import Authorization Licenses (DFIA) - DFIAs could not be debited (utilized as the department had not permitted duty free import of Sodium Saccharin, Ascorbic Acid by importers against DFIA Licences in terms of benefit under Customs Notification No. 40/2006 - could not be utilized due to the ongoing litigation - Held that:- Lower authorities have misread the provisions of law. As per the Handbook of Procedures, only the licensing authorities can permit the revalidation of freely transferable DFIAs. There is no dispute on this. But it should be fairly understood that adequate justification for revalidation has to be made available to DGFT. And this information can only be made available by Customs. The appellant has merely sought a statement for issue by Customs to the DGFT certifying that the admissibility of import of Saccharin/Ascorbic Acid against the DFIAs licenses remained in litigation. In fact the Commissioner (Appeals) acknowledges this position but comes to a conclusion that there are no express provisions for issue of certificates for revalidation. - Commissioner (Appeals) accepts the fact that the licenses are to be revalidated by the licensing authority but does not acknowledge that the licensing authority has no information about the prolonged litigation through the importer went while importing the said goods under DFIAs. This information only, can help DGFT to allow revalidation. It is for DGFT to revalidate the Licenses. The fact remains that the Licenses were presented to the Customs Authorities for debit but the goods were cleared on provisional basis. Due to ongoing litigation licenses were also not presented for debit for obvious reasons. The appellants cannot be expected to present Licenses for debit when the department continued to refuse duty free import against the said Licenses. - Commissioner (Appeals) himself held that "once matter is in litigation it is not in the hands of the importer or the Customs Authorities to finalize the issue" within the time frame of the licenses. In fact, the licenses remained in constructive custody of customs because customs refused to debit the licenses for duty free import of such goods by all importers. - Decided in favour of assessee.
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2015 (4) TMI 380
Waiver of pre deposit - classification of projectors imported by the appellant - Classification under Customs Tariff sub-heading 85286100 or under customs tariff sub-heading 85286900 - Held that:- From the description in the tariff heading, it can be seen that the projector has to be of a kind solely or principally used in automatic data processing system. If the projectors are principally used in automatic data processing system. If the projectors are principally used with a computer, the item will be classifiable under this heading. The department has entirely relied upon brochures and technical specifications provided by the appellants and used for the sale of the imported projectors to come to the conclusion. There is no dispute that the projectors can be used with the computers - Just because the explanatory notes shows that monitors which are capable of accepting a signal only from the CPU of an ADP machine are included under monitor heading, does not mean that other items are not includible. After going through brochures, submissions and records, we find that prima facie , at this stage we are unable to find a strong reason to differentiate from the decision of this Tribunal taken earlier that the classification adoption by the appellant is appropriate. In our opinion, when the Revenue is relying upon the trade parlance, some evidence as to how the trade considers the item should have been brought out. We were not able to find any such evidence lead by the Revenue in the submissions of the learned A.R. or in the summary of the case filed by the appellant. In view of the above discussion, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal - Stay granted.
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2015 (4) TMI 379
Classification of goods - Classification of leggings - Classification under CTH 6104 as "Trousers" or under CTH 6115.21 as "leggings" - Held that:- On a plain reading of Heading 6104, we find that it would cover the Women's or Girl's Suits, Ensembles, Jackets, Blazers, Dresses, Skirts, Divided Skirts, Trousers etc. As per Chambers Dictionary [12 th Edition], the word "Trousers" means garments worn on the lower part of the body with lose tubular for each leg. The word "tights" means close knit garments, often made of nylon, covering lower part of the body and is worn by women and girls, which is an alternative to "Stockings". - The sequence of the description under Heading No.6115 would cover inner garments, namely, tights, stockings, socks and other hosieries. There is no any indication in the Tariff that sub-heading 6115 would cover only the inner garments. Hence in our view, "leggings" are akin to "tights" and covered under sub-heading 6115. - Following decision of Meredian Apparels Ltd. Chennai reported in [2011 (6) TMI 573 - GOVERNMENT OF INDIA, MINISTRY OF FINANCE] - No reason to interfere with the order of Commissioner (Appeals) - goods imported by the respondent are "leggings" classifiable under Customs Tariff Heading 6115.21 of the Schedule to the Customs Tariff Act, 1975. - Decided against Revenue.
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Corporate Laws
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2015 (4) TMI 378
Application under section 397, 398 and 402 & 403 of the Companies Act, 1956 - No proof that acts committed were oppressive and prejudicial to the interest of company - Held that:- In a petition under sections 397 & 398 of the company petition, it does not matter whether the acts are legal or illegal, it matters under these sections when the acts committed by the party reflects that they are oppressive and prejudicial to the interests of the petitioner. This petitioner has not shown even a single act showing that the appointment of R-3 did something causing oppression or prejudicial to the interest of the petitioner. The petitioner asked only three reliefs, one for appointment of R-3 ,ls director as invalid, second for increase of authorised share capital as invalid, third showing him resigned as invalid, Since the petitioner has not placed any material showing appointment of R-3 as director and increase of authorised capital led to cause prejudice to him, then such acts could not become grounds to seek reliefs under sections 397 & 398 of the Companies Act. As to his removal as director, mere removal or appointment of anybody as Director in a company will not become a grievance unless it is coupled with some act prejudicial to the interest of the petitioner. At the most, it could be a directorial complaint. Since the petitioner has not shown anything in the Company Petition filed u/s 397 & 398 of the Companies Act that these were acts caused prejudice to him, the remedy lies elsewhere not under these sections. Even assuming that he was not present in those meetings, the acts said to have committed by R-2 will not be treated as acts oppressive and prejudicial to the interests of the petitioner, when the petitioner does not show oppression and prejudice against him. The respondent counsel reported the company business closed three years ago. As the petitioner failed to attribute any malafide to second respondent with proot this Bench could not assume that second respondent commltted these acts with a malafide to cause prejudice to the petitioners. Since the allegations made in this petition do not fall within the ambit of Sections 397 & 398 of the Companies Act, this petition is hereby dismissed without costs. - Decided against the appellant.
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Service Tax
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2015 (4) TMI 396
Recovery of service tax u/s 87 without adjudication on the basis of raid - show cause notice issued later - more than admitted amount by this petitioner has been deposited - Held that:- Unless the proceeding under Section 73 of the Act is completed recovery notice under Section 87 could not have been issued by the respondents - Following decision of Technomaint Contractors Pvt. Ltd Vs. Union of India, as reported in [2014 (4) TMI 882 - GUJARAT HIGH COURT], R.V. Man Power Solution vs. Commr. of Cus. and Central Excise, as reported in [2013 (4) TMI 294 - UTTARAKHAND HIGH COURT] - Orders at Annexure 5 dated 11.08.2014 as well as order at Annexure 6 dated 01.09.2014 are hereby quashed and set aside as the respondents have already issued demand-cum-show cause notice under Section 73 (1) dated 17.10.2014, covering the disputed amount at ₹ 4,45,97,399/- is directed to be adjudicated upon as early as possible and practicable - Decide in favour of assessee.
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2015 (4) TMI 395
Eligibility to avail Cenvat credit for providing Cellular services - towers and pre-fabricated buildings/shelters - Capital goods - whether the appellants are to be saddled with the demands of reversal of Cenvat credit by invoking extended period or otherwise and whether penalties are to be imposed on them or not - Held that:- High Court in the case of Bharti Airtel Ltd. [2014 (9) TMI 38 - BOMBAY HIGH COURT] has held that The subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellants. When the high courts have already held that towers would become immovable property, the argument which was led by the learned Counsel that the Hon'ble High Court of Bombay has not considered the definition of immovable property as it is envisaged in the Transfer of Property Act and General Clauses Act, is incorrect and will not carry the case of appellants any further. - appellants therein were providers of storage and warehousing services; immovable property service and business auxiliary service, for which they need to have infrastructure in its place. In the cases in hand, with which we are dealing with are the telecommunication companies providing cellular services, we find that basically all the appellants herein are providers of telecommunication/cellular services and the facility created by them in form of towers and pre-fabricated buildings are for their own use. Predominantly, the towers and pre-fabricated buildings/shelters were utilised by the appellants herein for rendering their own telecom/cellular services. In view of this ratio laid down in the case of Sai Sahmita Storages Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT], SG Navratna [2012 (7) TMI 316 - CESTAT, AHMEDABAD ] and GTL Infrastruture Ltd., (2014 (9) TMI 647 - CESTAT MUMBAI) may not apply, as the facts in those cases are totally differen than the facts in these bunch of appeals. Be that as it may, we find that as the issue involved in this case is covered by the direct judgement of the jurisdictional High Court, judicial discipline demands that ratio of jurisdictional High Court is to be followed by this Bench. Extended period of limitation - Held that:- It is evident and not in dispute that not only returns were filed periodically but audit was also conducted by the department. Even in the audit through returns were available, issues raised herein were not raised in few cases. In one of the cases Tribunal cannot lose the sight of the vital fact that final audit report during the concerned period did not indicate wrong availment of Cenvat credit on towers and pre-fabricated buildings. The omission which is subsequently alleged therefore, cannot be said to be beyond the department's knowledge. The facts in all these cases clearly show that appellants conduct was bonafide and there was no design to commit any fraud or to evade any duty. - allegation of suppression of material facts with intent to evade tax cannot be sustained. The demands within the limitation period as confirmed are upheld along with interest. Levy of penalty - Held that:- as the issue was of are interpretative nature i.e., as to eligibility of Cenvat credit or otherwise on the towers and the building and had to be settled in the hands of the Hon'ble High Court, the appellants could have entertained a bonafide belief. Hence, all the penalties imposed on all the appellants herein are set aside by invoking the provisions of Section 80 of the Finance Act, 1994. - Decided partly in favour of assessee.
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2015 (4) TMI 394
Denial of refund claim - SEZ - Held that:- Under Section 7 and 26 of the SEZ Act 2005, the taxable service provided to developer or unit to carry out authorized operation in SEZ is exempted from service tax. The Notification No.9 /2009- ST, cannot disentitle the immunity enjoyed by SEZ Act. - Advocate placed a statement/chart before the Bench. But, all other issues are not clear from the said statement, as stated by the ld.Authorised Representative. Both sides failed to demonstrate and clarify the other issues, where the refund claims were denied and it is difficult for the Bench to decide the other issues. - other issues should be examined by the Adjudicating Authority in the light of the decisions placed by ld. Advocate . It is seen that in the impugned orders, the Commissioner (Appeals) also had not split up the issues pertaining to admissibility of refunds in respect of individual service for reason other than the reasons covered in the judgment of CST Vs Zydus Technologies Ltd (2014 (5) TMI 100 - GUJARAT HIGH COURT) and Intas Pharma Ltd Vs CST [2013 (7) TMI 703 - CESTAT AHMEDABAD] and Tata Consultancy Services Ltd. [2012 (8) TMI 500 - CESTAT, MUMBAI] - Matter remanded back - Decided in favour of assessee.
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Central Excise
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2015 (4) TMI 389
Refund claim - doctrine of unjust enrichment - Capital goods - Captive consumption - Whether the doctrine of unjust enrichment is applicable in respect of raw material imported and consumed in the manufacture of a final product - Held that:- principle of unjust enrichment is applicable even when the goods are used for captive consumption. - if a particular material is used for manufacture of a final product, that has to be treated as the cost of the product. Insofar as cost of production is concerned, it may include capital goods which are a part of fixed cost as well as raw material which are a part of variable cost. Both are the components which come into costing of a particular product. Therefore it cannot be said that the principle laid down by the Court in Solar Pesticides would not extend to capital goods which are used in the manufacture of a product and have gone into the costing of the goods. In order to come out of the applicability of the doctrine of unjust enrichment, it therefor becomes necessary for the assessee to demonstrate that in the costing of the particular product, the cost of capital goods was not taken into consideration. Tribunal has observed that capital goods viz. ESPs have been only used captively for pollution control purpose and the same is not used for processing or manufacturing of any final product and therefore there is no question of passing on the burden of duty to any one. These observations are clearly erroneous in law in view of the judgment of this Court in Indian Farmers Fertilisers COOP. Ltd. - Accordingly, the judgment of the Tribunal is set aside. - Decided in favour of Revenue.
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2015 (4) TMI 388
Demand of additional duty - Demad on Grieg fabric was demanded on the ground that the Signature Not Verified - Held that:- Court dispose of these appeals with direction to the Commissioner to decide all the laid down issues afresh after giving opportunity to both the parties to produce whatever evidence/material they want to rely upon in support of their respective contentions. As a result, the impugned order of the Tribunal and the consequential orders passed by the Commissioner will stand set aside - matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 387
Clandestine removal of goods - Whether Tribunal was right in granting the benefit of duty exemption under Notification No. 3/2001C. E. Dated 1.3.2001 to assessee since it has not fulfilled the inbuilt condition no. 41 of the notfn. i.e. the assessee has not reversed the Cenvat Credit availed on certain inputs like glasses, paints etc. used in the manufacture of vehicles before availing the said exemption - Held that:- if the said goods or products, if manufactured out of chassis falling under Heading No. 87.06 on which duty of excise has been paid and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicle has been taken under rule 57AB or rule 57AK of the Central Excise Rules, 1944, the exemption is admissible. - this was an admitted position of a clandestine removal. There was no payment of excise duty by the manufacturer on excisable goods. The payment was not made by claiming exemption and entitlement under Notification No. 3/2001C. E. which is a conditional exemption. This is a case of admitted Modvat Credit taken on glasses used in the manufacture of buses and tempo travelers. The Assessee did not reverse the Modvat Credit at the time of removal of goods or after removal. No efforts were made by the Assessee to reverse the same. In the circumstances, when there is an admitted position emerging from the record, we are of the view that the Tribunal erred in law in reversing such a conclusion in the order-in-original. Assessee admits taking of credit and contrary to the condition No. 41 of the Exemption Notification, which enables it to claim or remove the goods at nil duty. Knowing fully well, the Assessee could not have availed of the benefit of such exemption Notification. The activity or process in this case amounts to manufacture is undisputed. That the goods have been removed without payment of duty is the conclusion reached in the order-in-original. Such a conclusion, which was not perverse and neither vitiated in law should not have been interfered with by the Tribunal. - Decided in favour of Revenue.
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2015 (4) TMI 386
Denial of refund claim - Unjust enrichment - Applicability of doctrine of unjust enrichment to State undertaking - Held that:- Cursory reading of the order passed by the Tribunal, reveals that the Department itself has accepted that the appellant is a State funded, State controlled and State monitored organisation supplying goods to Civil Supplies Corporation, which is another organ of the State. The order further reveals that the goods supplied by the appellant to the Tamil Nadu Civil Supplies Corporation are used in relation to Public Distribution System. In such a backdrop, this Court is unable to understand as to the basis on which Tribunal has held that there is nothing in the nature of activity of the appellant that is relatable to "State" for the benefit of the people and, thereby, the scope of unjustly enriching themselves gets squarely attracted and that the appellant falls outside the said purview. It would not be out of context here to state that Public Distribution System is a primary concern of the State and the appellant is supplying goods to the Tamil Nadu Civil Supplies Corporation and that both the entities are State funded, State controlled and State monitored organisations and are discharging duties for the welfare of the people of the country. - appellant will well fall within the definition of "State". Since Department itself having admitted the fact that the appellant is controlled, funded and monitored by the State, it cannot be said that the appellant is unjustly enriching itself to the detriment of the people and, thereby, the "unjust enrichment" attributed to the appellant has to necessarily fail and, accordingly, the finding of the Tribunal on the abovesaid aspect deserves to be set aside. - Decided in favour of assessee.
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2015 (4) TMI 385
Challenge to the show cause notice - Valuation of goods - alternate remedy - supply of cement to their own ready-mix concrete units for captive consumption - captive consumption - Held that:- The duty of excise is chargeable on excisable goods with reference to their value then on each removal of the goods the value shall be determined. In a case where the goods are sold by the assessee for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for sale, it would be the transaction value for the purposes of computation of duty chargeable on the excisable goods. In any other case, including where the goods are not sold, the value has to be determined in accordance with the manner prescribed. Adjudicating Authority will bear in mind the clear language of these Rules and the sub-rules, if any. There is nothing and after the clarification by Mr. Kantharia , by which the petitioners cannot expect a fair adjudication. Once there are circulars in place which also take into consideration the situation which may have to be dealt with and for guiding the Revenue officials and particularly clauses like clause 29 of the circular dated 30th June, 2000, devise some scheme, then that is bound to be taken note of. In the circumstances, we do not think that the respondents will be only guided by the view taken in the larger Bench decision of the Tribunal. That may have been referred to in the show cause notice, but it is always open for the petitioners to contend that the Tribunal decision cannot have any application to their case. Further, it can be urged that the Tribunal decision cannot be said to be running contrary to or overriding any circulars which , according to the petitioners, bind the department or Revenue. All contentions of the petitioners, including based on the grounds in the writ petition are, therefore, kept open and for being raised - Petition disposed of.
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2015 (4) TMI 384
Denia of CENVAT Credit - Bogus invoices - Non verification of records - Held that:- Since appellant had made the payment of invoice price by cheque and thereafter it had manufactured finished goods and paid duty thereof, as evident from production dely shown in RG-1 Register as also the demand of duty on goods by taking into account the evidence if any to be produced by the appellant in respect there to and in case the appellant succeeds in proving that the payment of price of goods received against invoice had been paid by cheque and that there was no link or corelation even from the details of the bank account of M/s Shivalik International and M/s Neelkanth relied upon in the notice to suggest that there was a flow back of funds from Sh. R.K. Gupta to the appellant or from any other material and further taking into account the record produced / to be produced by the appellant in support of its plea that it had manufactured goods and shown the manufacture of the finished goods as well as the payment of duty on the said finished goods out of the goods purchased against the invoices and shown the same in the RG-1 Register etc - Matter remanded back to CESTAT to consider these aspects - Decided in favour of assessee.
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2015 (4) TMI 383
Waiver of pre deposit - Manufacture of gutkha and pan masala - if one machine was used for packaging of pan masala having two RSP and the appellant have to pay double duty by treating the machine as being two machines. - Held that:- Waiver from pre-deposit and unconditional stay on the realisation of the adjudicated liability has been granted by the Tribunal since a prima facie case was found in favour of the assessee. The Tribunal has also observed that the appeal could not been disposed of only on account of the pendency of several older appeals and not on account of any delay on the part of the assessee. - the ends of justice would be met if the Tribunal is requested to dispose of the appeal expeditiously and preferably within a period of six months from today. The waiver of pre-deposit and stay will continue to remain valid for a period of six months - Appeal disposed of.
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2015 (4) TMI 382
CENVAT Credit availed wrongly on Capital goods - presence of Mens rea or guilt - Imposition of penalty - Held that:- In cases where the CENVAT credit in respect of capital good has been taken or utilized wrongly on account of fraud, willful misstatement, collusion or suppression of fact or contravention of any provision of the Act or Rules made thereunder, with an intention to evade payment of duty then only penalty is liable to be imposed. - It is the case of the assessee that by taking benefit of this judgment the credit facility was availed of. However, in doing so, it cannot be said that the credit facility in respect of the capital good was wrongly used on account of fraud, willful misstatement, collusion or suppression of fact. It is also not an intentional contravention of any statutory provision. At best it may amount to misunderstanding the law and its applicability and in the absence of any mens rea on the part of the assessee, if two Appellate Authorities namely the Commissioner and the Appellate Tribunal found that imposition of penalty in the instant case is not called for as there is no sufficient evidence to prove Mens rea or guilt on the part of the assessee, we see no reason to interfere with such a reasonable approach adopted by Appellate authorities concurrent in nature. Imposition of penalty that also equal to the amount of the credit facility availed of in a penal consequence and a penal consequence is to be enforced only when the conduct of the assessee shows certain positive action indicating fraud, misstatement collution etc.. This action of the assessee may be in contravention to the statutory provision but it was with a bonafide reason or belief by interpretation of a judgment of a High Court, then the imposition of penalty in such circumstances was not warranted. The Appellate Authority and the Appellate Tribunal in para 5 of the impugned order has dealt with the matter in detail and when the discretion has been exercised finding there to be no ill intention, malafide or collusion on the part of the Assessee in availing of the facility, we are not inclined to interfere into the matter as no substantial question of law is involved in the matter. - no case made out for interferring with the concurrent findings recorded by the authorities, the appeal is dismissed at the stage of admission itself. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (4) TMI 393
Business Activity or not - Imparting of education - Whether a University/Institution, whose dominant activity or the main activity is imparting education to the students merely, by providing cement, iron and steel by it to its contractors for execution of civil work and providing prospectus to the prospective students by it, can be said to be a business activity or otherwise and could the institution be a dealer - Held that:- A reading of all the Sections, shows that it prescribes that a person, may be a University or an Institution/Society or otherwise who may carry on any trade, commerce or manufacturing activity or in the nature of trade, commerce or manufacturing and whose even incidental or ancillary activity is in the nature of trade, commerce and manufacturing or even occasional transaction in the nature of such trade, commerce, manufacturing, then it comes within the definition of a business. A dealer has been defined to be any person who carries on business in any capacity of buying, selling or supplying and distributing goods directly or otherwise or making purchases or sales as defined in clause 35 for himself or others, a factor, broker, commission agent etc. etc.. A dealer is one who also can be said to be an importer of goods or manufacturer. If the main activity is not business, then the connected, incidental or ancillary activities would not normally amount to business unless an independent intention to conduct business in these connected, incidental or ancillary activities is established by the revenue. (See Board of Trustees of the Port of Madras) (1999 (3) TMI 500 - SUPREME COURT OF INDIA). In such cases the onus of proof of an independent intention to “carry on 'business” connected with or incidental or ancillary would rests on the department. Banasthali Vidyapeeth is also a deemed University and publication of 'prospectus' contains activities of the University, courses, syllabus, applications, fees etc. Making it available to the students for their information, knowledge,consideration and applying for admission to the course found suitable is ancillary, incidental and essential to its main and predominant object to impart education. It is well known that Banasthali Vidyapeeth is first in the State of Rajasthan for girls education and a pioneer institution serving for the last several decades. Its activity of printing and selling of prospectus is not main activity and would not amount to “business”. Imparting of education cannot be said to be in the nature of business activity, a trade, commerce or manufacture and once the assessee is not carrying on business or a trade or commerce or manufacture and the predominant and main activity is that of imparting education, it cannot be said to be a dealer and once this Court comes to the conclusion that the assessee does not carry on any business and is not a dealer then it is not required to get itself registered under the provisions of RVAT Act and therefore, in view of what has been expressed herein above, the Tax Board was right in coming to the conclusion that the respondent was not required to be granted “Obligatory Registration” under Section 11 of the RVAT Act - Decided against Revenue.
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2015 (4) TMI 392
Condonation of delay - Inordinate delay of 8 years in filing appeals - Held that:- Admittedly there was a delay of more than 8 years in filing the appeals before the Deputy Commissioner against the orders passed by the Adjudicating Authority. The petitioner thus had the onus of rendering reasonable and satisfactory explanation for such delay. The petitioner's main explanations were that the appeals though prepared by the consultant and duly signed by the petitioner were never presented. - This was not to the knowledge of the petitioner. The petitioner realized that the appeals were not filed only in the year 2013 when the department issued notice for recovery. All these aspects were proved to be wrong on record. The memo of appeals contained the address of the Deputy Commissioner where his office was not situated in the year 2005 but much later. It is also come on record that in the year 2009 also the department had sent notices indicating that the Orders in Original were final and no appeals were pending. At least from that point the petitioner should have taken appropriate steps, which, admittedly, was not done. Additionally, even if the petitioner was under the belief that the appeals were filed in the year 2005, it was their duty to inquire with their legal consultant as to the progress in such appeals. Admittedly, for more than 8 years, the petitioner simply forgot about the proceedings. For all these reasons, the Tribunal, in our opinion, committed no jurisdictional error in dismissing the appeals. - Decided against Assessee.
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2015 (4) TMI 391
Maintainability of appeal - Alternate remedy available - Held that:- The facts of the case would reveal that the petitioner was afforded an opportunity and notice was issued under Section 22(4) of the TNVAT Act and the petitioner was also given an opportunity to file their objections and date was also fixed for personal hearing. The petitioner filed their objections, but, did not appear on the date fixed for personal hearing and the petitioner sought for adjournment on the ground that the sales tax practitioner was not available. The request made by the petitioner was accepted and the fresh date was assigned and even on that date also, the petitioner did not appear. Therefore, the authority proceeded to examine the objections and passed the impugned assessment orders. Therefore, it is not a case of violation of principles of natural of justice. But, it is a case where the petitioner failed to avail the opportunity granted. Therefore, on this ground, the petitioner cannot be permitted to bypass the appellate remedy available under the Act. Further, notices issued to the petitioner itself were under Section 22(4) of Act, wherein, the authority came to the conclusion that the returns filed by the petitioner were incomplete and incorrect. Therefore, before proceeding to assess the petitioner in best of its judgment, notices were issued. In such circumstances, the writ petitions held to be not maintainable - Decided against assessee.
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2015 (4) TMI 390
Violation of principles of natural justice - levy of penalty at the rate of 150% under Section 27(3) of the TNVAT Act, for the alleged wrong claim of ITC and alleged payment of tax lesser than the tax due - opportunity of personal hearing to the petitioner not granted - Held that:- in a case where the question involved was one of determination of certain factual disputes which were a bit complex and not free from controversy, the Principles of fairness would encompass personal hearing within the concept of reasonable opportunity to show cause under Section 16(1)(a) of the Act. Further Section 16(1)(a) of the Act had to be construed in accordance with the circular dated April 20, 2001 providing for oral hearing where the dealer demanded it by way of contemporanea expositio. Therefore, the order passed by way of revision of assessment without giving the petitioner an opportunity of personal hearing was liable to be quashed. - opportunity of personal hearing ought to have been afforded to the petitioner/dealer before finalizing the proposal in the notices dated 31.10.2012 and 02.11.2012. Since personal hearing was not afforded to the petitioner despite request made by the petitioner, this Court is constrained to hold that there is a violation of principles of natural justice, hence, on this ground alone, the petitioner is entitled to succeed. - Following decision of SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai and another, reported in [2008 (9) TMI 914 - MADRAS HIGH COURT] - Decided in favour of assessee.
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Indian Laws
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2015 (4) TMI 377
Contravention of provisions related to car maintenance and repairing services - Section 19(1)(a) of the Competition Act, 2002 - Held that:- The Commission has perused the information available on record including written submissions and heard the counsel of the Informant. The Commission notes that the matter is related to deficiency in services provided by OP 3 and OP 4 in repairing the engine of the car owned by an individual. Therefore, in the opinion of the Commission the subject matter of the present information does not fall within the domain of the competition law. In light of aforesaid observation, an assessment of the alleged abusive conduct of the Opposite Parties is not required.The Commission further notes that the Informant has made some vague allegations of collusion against all the Opposite Parties but there is nothing on record to substantiate such allegations. In the light of the above facts and situation, the Commission finds that no, prima facie, case is made out against the Opposite Parties. Therefore, the case deserves to be closed down under Section 26(2) of the Act.
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