TMI Tax Updates - e-Newsletter
April 14, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Merely because there is down fall in profit due to change in accounting policy cannot lead to a conclusion that it is not bonafide - Tri

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• Refund - limitation - Addl. docs. sought by Revenue, cannot be said that required docs were not filed alongwith original refund application

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• When finished goods are supplied to deemed exports area, Refund of accumulated Cenvat credit to be allowed - Rule 5 of CCR 2004 - Tri

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Articles

1. Tax Audit Report (TAR) Certain exceptions and increased limits according to number of partners and considering nature of activity are desirable

   By: DEVKUMAR KOTHARI

2. 1 year time limit to claim refund under Rule 5 of CCR reckoned from the date of receipt of export proceeds and not from date of export of services

   By: Bimal jain

News

1. Interest rates for NSSF loan to Centre and States for FY 2016-17 revised and fixed at 8.8% in place of 9.5%.

2. RBI Reference Rate for US $

3. Amendment of Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015

Notifications

Central Excise

1. 24/2016 - dated 13-4-2016 - CE (NT)

Seeks to amend sub-rule (7) of rule 4 & rule 6 of CENVAT Credit Rules, 2004

Customs

2. 13/2016 - dated 13-4-2016 - ADD

Seeks to levy definitive anti-dumping duty on Normal Butanol or N-Butyl Alcohol, originating in, or exported from the European Union, Malaysia, Singapore, South Africa and USA, for a period of five years

3. 54/2016 - dated 13-4-2016 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

Service Tax

4. 24/2016 - dated 13-4-2016 - ST

Seeks to amend rule 7 of Point of Taxation Rules, 2011

5. 23/2016 - dated 13-4-2016 - ST

Seeks to amend rule 6 sub-rule (2), of Service Tax (Determination of Value) Rules, 2006

6. 22/2016 - dated 13-4-2016 - ST

Seeks to amend Notification No. 25/2012- Service Tax dated 20.06.2012, so as to exempt from Service Tax, certain services provided by Government or a local authority to business entity

VAT - Delhi

7. F.3(30)/Fin(Rev-I)/2015-16/dsvi/121 - dated 12-4-2016 - DVAT

Delhi Value Added Tax (Amendment) Rules, 2016

Circulars / Instructions / Orders

FEMA

1. 59 - dated 13-4-2016

Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director

2. 61 - dated 13-4-2016

Overseas Direct Investment - Submission of Annual Performance Report

3. 62 - dated 13-4-2016

Overseas Direct Investment (ODI) – Rationalization and reporting of ODI Forms

4. 60 - dated 13-4-2016

Issuance of Rupee denominated bonds overseas

Highlights / Catch Notes

Income Tax

• Court Rules No Double Deduction for Depreciation on Trust Assets; Trusts Can Claim Without Tax Compliance Issues.

  Case-Laws - HC : No question of double deduction in allowing of depreciation in respect of assets acquired and used by the Trusts. - HC
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• Court Rules Section 80IC Deductions Must Exclude 'Brand' Value from Eligible Profits for Tax Calculations.

  Case-Laws - HC : Deduction u/s 80IC - No deduction could be made from the eligible profits on account of the 'brand'.- HC
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• Survey Statements Insufficient for Tax Additions Without Evidence According to Income Tax Rules.

  Case-Laws - AT : Statement recorded in the course of survey does not form the sole basis for making additions in absence of supportive evidence - AT
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• Interest does not accrue on a loan when the principal amount itself is considered doubtful.

  Case-Laws - AT : No interest accrues when the principal amount of loan itself becomes doubtful. - AT
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• Assessees can claim loss on written-off advances without proving debts are bad, easing disallowance requirements under tax rules.

  Case-Laws - AT : It is not necessary for an assessee to establish the debts to have actually become bad - Disallowance in respect of loss on advances written off allowed - AT
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• Payment Not Subject to TDS u/ss 194H or 194J; No Commission or Managerial Service Involved.

  Case-Laws - AT : No rendering of any services and the payment is not made for any managerial services to RCDF, therefore, payment can neither be held as liable for TDS u/s 194H of the Act as commission/ brokerage as held by the AO nor u/s 194J for rendering any managerial services as held by the ld. CIT(A). - AT
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• Transfer Pricing Adjustment Requires More Than Comparing Profit Margins; Involves Detailed Analysis of Price Charged.

  Case-Laws - AT : Amount of transfer pricing adjustment cannot be calculated by picking up `profit margin’ of the assessee or comparables and then comparing it with the `price’ charged by the comparables or the assessee - AT
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• Wage Increase Unjustified by Production Growth Alone: No Basis for Disproportionate Salary Hikes Without Clear Explanation.

  Case-Laws - AT : Addition on account of unexplained increase in the wages and salary as compared to the increase in production could not be made merely because of increase in wages was not proportional to increase in production. - AT
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• Income from Singapore and Colombo must be reported in India's tax return; foreign taxes credited against Indian tax.

  Case-Laws - AT : Income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given - AT
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• High Court Rejects Income Addition by Assessing Officer Due to Lack of Supporting Evidence from Survey Statement.

  Case-Laws - HC : The Assessing Officer made the addition on the basis of the statement made during the course of survey, despite the fact that the addition was not based upon any material found during the course of survey - No additions - HC
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• Taxpayer's Valuation Exceeds Authority's; No Need to Refer Plot Valuation to Valuation Officer.

  Case-Laws - HC : Valuation made by the assessee exceeds the value adopted by the stamp valuation authority - No question of referring the valuation of the plots in question to the Valuation Officer - HC
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• Assessee Qualifies for Deduction u/s 80P(2)(c)(ii) for Ambulance Operations and Health Club Fees.

  Case-Laws - AT : Assessee is entitled to deduction under section 80P(2)(c)(ii) of the Act in respect of business activities such as running of Ambulance, Health Club fee etc. which are not eligible for deduction under section 80P(2)(a) or 80P(2)(b) of the Act - AT
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• Assessing Officer Adds Unexplained Share Capital and Loans to Assessee's Taxable Income Due to Lack of Explanation.

  Case-Laws - AT : Once the assessee failed in explaining the share capital and unsecured loans received, there was no option before the Assessing Officer except making addition - AT
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• Court Rules Higher Profits Insufficient to Reduce Deduction Claims Without Evidence.

  Case-Laws - AT : Merely because the industrial undertaking earned higher profits does not call for an inference that claim of deduction is to be willy nilly reduced on presumption. - AT
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• Income from Securities Classified as Capital Gains Due to Consistent Investment Treatment in Past Years.

  Case-Laws - AT : Since the assessee has treated the securities as investment and not as stock in trade in all the earlier A.Ys CIT(A) did't erred in directing the AO to assess the income as income from capital gain as disclosed by the appellant - AT
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• Change in Accounting Policy Causing Profit Drop May Still Be Genuine and Bona Fide.

  Case-Laws - AT : Merely because there is down fall in profit of the company due to change in accounting policy cannot lead to a conclusion that it is not bonafide. - AT
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• Income Tax Ruling: Section 10A Deduction Allowed Without Setting Off Losses or Unabsorbed Depreciation.

  Case-Laws - AT : Claim of deduction u/s 10A of the IT Act,, without setting off of brought forward losses/unabsorbed depreciation allowed - AT
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• Balance-Sheet Discrepancies Don't Equal Income Understatement in Tax Context: Key Principle Explained.

  Case-Laws - AT : Addition on account of balance-sheet difference - difference crept out of the balance-sheet item does not result as understatement of income.- AT
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Customs

• GSM/GPRS/GPS Terminal Classification: Do GPS Transceivers for Taxis Fall Under CTH 85269190? Case Laws Reviewed.

  Case-Laws - AT : Classification - GSM/GPRS/GPS/Terminal with RF ID interface/ 300 MAH Battery/ Audio - the goods enable the taxi company to know where each its vehicles and also enable it to instruct the driver to proceed to a particular spot and the driver of the vehicle is also able to give feedback to the taxi company are GPS trans receiver covered under CTH 85269190 - AT
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• License Revoked for Undeclared Cigarette Import; Regulations 19 & 20 Violated Due to Delayed Suspension Order.

  Case-Laws - HC : Revokation of suspended licence - Imported cigarettes without proper declaration - As per Regulation 19&20, the order either continuing or revoking the suspension must have passed within 15 days of granting personal hearing - Revoked correctly as order not passed for nearly five and half months - HC
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• Penalty u/s 114A applies only if duty or interest liability is determined u/s 28.

  Case-Laws - AT : Penalty - Section 114A - Penalty is attracted only when liability to pay duty or interest is determined under Section 28 - AT
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• Interest Not Applicable on Finalized Provisional Assessments, Even Post-July 13, 2006 Finalization.

  Case-Laws - AT : Demand of Interest - provisional assessment - interest cannot be demanded upon finalisation even if such finalisation was done after 13.07.2006 - AT
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• End Use Certificate Extension Granted for Late Submission Under Notification No. 17/2001-Cus; Benefit Approved for Import Consignment.

  Case-Laws - AT : Notification No. 17/2001-Cus - Mandatory provision of production of end use certificate - produced beyond 3 months - Notification mandates production of end use certificate only for the reason and ascertainment that the imported consignment has been put to use for which it was imported but it also provides for extension of time for production of such certificate - Benefit allowed - AT
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Corporate Law

• Court Dismisses Winding Up Petition Due to Insufficient Admitted Liability Under Company Law Requirements.

  Case-Laws - HC : Winding up petition - Parameters of admitted liability enabling the Court to pass the winding up order not met - HC
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Indian Laws

• SARFAESI Act Section 14 Orders Not Subject to Revisional Jurisdiction u/s 397 of the Code.

  Case-Laws - HC : Order passed under section 14 of the SARFAESI Act is not amenable to the revisional jurisdiction as provided under section 397 of the Code - HC
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Wealth-tax

• Pro-rata Debt Recognition Required for Fair Wealth-tax Assessment Under Wealth-tax Act Provisions.

  Case-Laws - AT : Debts owed by the assessee have to be allowed on pro-rata basis - WTA - AT
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Service Tax

• Contract for Agricultural Produce Storage Classified as Labor Supply Service Due to Unskilled Manpower Provision.

  Case-Laws - AT : Classification - Contract on lump-sum/job basis of "Storage Warehouse and handling of Agricultural Produce" - produce of attendance sheet, proof of actual payment towards statutory obligations like PF, ESIC etc., would mean that the contract entered was for description of work and supply of unskilled manpower, directly comes under the category of "Manpower Recruitment and Supply Agency Services" - AT
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• Extended Limitation Period May Not Apply Fully, But Some Service Tax Demands Still Enforceable Within Standard Timeframe.

  Case-Laws - AT : Extended period of limitation - Even if extended period is held to be inapplicable then also the entire demand of Service tax will not be completely time barred - AT
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• Refund Claims Under Notification No.41/2007-ST: Key Conditions Include Written Agreement & Service Provider Accreditation for Cleaning Services.

  Case-Laws - AT : Refund claim - in terms of Notification No.41/2007-ST - Conditions regarding existence of written agreement and accreditation of service provider in respect of cleaning services and written agreement and invoice to contain the details of export goods in respect of technical testing required to be fulfilled to claim refund - AT
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• Service Tax Imposed on Charges Collected by MSOs from Broadcasting Agencies Effective June 16, 2005, No Prior Liability.

  Case-Laws - AT : The charges recovered from the broadcasting agencies from MSOs for providing the signals had been made specifically liable to service tax from 16.06.2005 - No liability to service tax prior to 16.06.2005 - AT
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Central Excise

• Revenue Limited to Duties and Penalties in Original Order Without Filing an Appeal Against It.

  Case-Laws - AT : Revenue cannot go beyond to the duties demanded and penalties imposed in the order, if it has not filed any appeal against order in original - AT
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• Submitting a valid reference application u/s 256 fulfills conditions for KVSS declaration acceptance, says High Court.

  Case-Laws - HC : If the taxpayer has filed within the statutory time a legally valid reference application under Section 256(1) or 256(2)" of the IT Act (corresponding to Section 35G of the CE Act) 1944 "the condition of pendency of reference could be said to have been satisfied - Sufficient for accepting the declaration filed under the KVSS - HC
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• Lower Authority Cannot Expand Remand Scope on Interest; Liability for Interest Arises Automatically Without Notice.

  Case-Laws - AT : Demand of interest - On remand, the lower authority cannot expand the scope of the remand direction would fit in for any other circumstance as factual position but not with regard to interest as the liability for interest accuses automatically and a separate written notice is not required for its recovery - AT
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• Inputs in Manufacturing Need Not Match Outputs Exactly, Unless Producing Exempt Goods.

  Case-Laws - AT : One to one co-relation - No requirement of one to one co-relation of inputs and output so long as inputs are not used for manufacture of exempted goods - Within the factory, for manufacture, the inputs can be utilised irrespective for whom the goods are manufactured - AT
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• Central Excise Laws: Inputs for Job Work Can Be Used for Self-Manufacturing Without Duty or Credit Reversal.

  Case-Laws - AT : Demand - Inputs inter utilised - No provision in Act or Rules that inputs meant for manufacture on job work cannot be utilised for manufacture on their own account and vice versa - Removal within factory is not removal for home consumption from factory which alone invites reversal of credit or payment of duty - AT
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• Rule 5 of Cenvat Credit Rules Allows Refund for Accumulated Credit on Goods Supplied to Deemed Export Areas.

  Case-Laws - AT : Refund - Accumulated Cenvat credit - When finished goods are supplied to deemed exports area, the refund of accumulated Cenvat credit is allowed in terms of Rule 5 of Cenvat Credit Rules, 2004 - AT
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VAT

• Deadline for VAT Appeal Starts from Certified Order Receipt Date; Timely Submission Crucial for Appellate Process.

  Case-Laws - HC : Period of limitation - Entertainment of appeal - The date on which the certified copy of the assessment order is served to the person, such date shall be taken into consideration for fixing the period of limitation for filing appeal before the Appellate Authority - HC
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• High Court Rules Invalid Cancellation of Registration Certificate Due to Non-Compliance with Sections 39(14) and 39(15) of Tamil Nadu VAT Act.

  Case-Laws - HC : Registration certificate cancelled - Without invoking the provisions under Section 39(14) as well as 39(15) of the Tamilnadu Value Added Tax Act, 2006, the Registration certificate cannot get cancelled - HC
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Case Laws:

• Income Tax

• 2016 (4) TMI 480
  Addition on account of capital gain on the basis of valuation of asset by DVO - ITAT deleted the addition - Held that:- Section 50C of the Act is a special provision for full value of consideration in some cases. What the section provides is that if any land or building or both are transferred at a value less than the value adopted or assessed or assessable by the stamp valuation authority, the value adopted or assessed or assessable by the stamp valuation authority shall be considered to be the full value of the consideration received or accruing as a result of such transfer. Thus, the condition precedent for resorting to the provisions of sub-section (1) of section 50C of the Act is that the land or building should have been transferred for a lesser consideration than that adopted or assessed or assessable by the stamp valuation authority. Adverting to the facts of the present case, undisputedly the valuation made by the assessee exceeds the value adopted by the stamp valuation authority. The condition precedent for invoking sub-section (1) of section 50C of the Act is, therefore, clearly not satisfied. Consequently, there was no question of referring the valuation of the plots in question to the Valuation Officer. The impugned order passed by the Tribunal being in consonance with the provisions of sub-section (1) of section 50C of the Act, does not suffer from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law. - Decided against revenue

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• 2016 (4) TMI 479
  Addition on voluntary disclosure made during the course of survey - Held that:- The Assessing Officer made the addition on the basis of the statement made during the course of survey, despite the fact that the addition was not based upon any material found during the course of survey. The Commissioner (Appeals), upon appreciation of the material on record, found that the addition made by the Assessing Officer was not backed by any supporting material indicating any undisclosed income to the extent of the addition. The Tribunal, upon re-appreciation of the evidence on record, concurred with the findings of fact recorded by the Commissioner (Appeals). There was no evidence on record to establish that there was any other undisclosed income in support of the addition made by the Assessing Officer. Under the circumstances, the conclusion arrived at by the Tribunal being based upon the findings of fact recorded by it upon appreciation of the evidence on record, in the absence of any perversity being pointed out therein, the impugned order does not give rise to any question of law - Decided in favour of assessee

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• 2016 (4) TMI 478
  Transfer pricing adjustment - transfer pricing adjustment has been calculated by reducing the actual gross receipts of the assessee from its AE at 116.95 crore (`Costs’ incurred at 108.89 crore plus 8% markup at 8.06 crore) from the amount of profit margin calculated by the TPO at 176.14 crore (by applying 6% on FOB value of goods exported at 2935.69 crore) - Held that:- Under no circumstance, the amount of transfer pricing adjustment can be calculated by picking up `profit margin’ of the assessee or comparables and then comparing it with the `price’ charged by the comparables or the assessee, as has been done in the extant case. Such calculation of the transfer pricing adjustment by the TPO has resulted into landing in a piquant situation, in which 'ideal profit’ has been compared with the `actual price charged’ for the purposes of making a transfer pricing adjustment, which is patent incorrect. We have noted above that the assessee applied the TNMM under which the ALP can be determined by comparing the adjusted profit margin realized by comparables as per subclauses (ii) and (iii) with the realized profit margin of the assessee as per sub-clause (i) of Rule 10B (1)(e). As the TPO has computed ALP of the international transaction with the help of a method unknown to law, which calculation is again flawed because of making comparison of 'profit’ with the 'gross revenue’, we cannot countenance the same. The right course for the TPO was to compute assessee’s profit margin realized under the TNMM as per Rule 10B(1)(e)(i) from its annual accounts without any adjustment and then compare it with the adjusted net operating profit margin of the comparables with the same base. This would have led to the determination of ALP of this international transaction. In view of the foregoing discussion, we are satisfied that the action of the AO/TPO in making/proposing addition/adjustment on account of transfer pricing, cannot be upheld for the reason that the shifting of the base on which markup has been applied has been turned down by the Hon'ble Delhi High Court in assessee’s own case; the mechanism followed by the TPO for calculating the transfer pricing adjustment has no legal legs to stand on; and further the assessee’s profit margin is at ALP under the TNMM on the basis of figures mentioned in the TPO’s order, whose correctness has not been disturbed by the TPO. Ex consequenti, the addition is hereby deleted. - Decided in favour of assessee

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• 2016 (4) TMI 477
  Addition on account of interest income not offered to tax - CIT(A) deleted the addition - Held that:- We find that the CIT(A) has followed real income principal as per various decisions holding that no interest accrues when the principal amount of loan itself becomes doubtful. The Revenue neither points out any illegality therein nor does it take us to any evidence rebutting factual finding that the assessee’s loan in question has not become doubtful. We accept assessee’s arguments supporting lower appellate findings under challenge. - Decided against revenue Bad debt disallowance - Held that:- There is no dispute that the assessee is already in money lending business as his claim throughout. There can hardly be any dispute that section 36(vii)(2) provide for this deduction subject to the condition that the concerned assessee takes into account the same in computing of his income of the previous year in which the same is written off or any earlier prevision or that representing the money lent in the ordinary course of business of banking or money lending being carried on by the assessee. There is no such condition in case of money lending/finance business as propagated by the Assessing Officer that only interest income not recoverable and written off is to be allowed as bad debt deductions. We find no reason to interfere with the CIT(A)’s findings under challenge. This ground is decided in assessee’s favour. - Decided against revenue Interest disallowance on account of interest expenditure not incurred for the purpose of the business - Held that:- It emerges from the lower appellate findings that the assessee had already available at his disposal interest free funds to the tune of 5,29,93,800/-. The CIT(A) finds that the assessee had only utilized interest bearing funds in the investments in question amounting to 3,30,01,822/- from 27-02-2009 to 31-03-2009. He thereafter reduces the impugned interest disallowances for this time period as 3,47,197/-. This crucial finding has gone un-rebutted in the course of hearing before us. We reject Revenue’s argument on this score. - Decided against revenue

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• 2016 (4) TMI 476
  Disallowance in respect of loss on advances written off - Held that:- There can be hardly any dispute about the legal positions in view of hon’ble apex court decision in TRF Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT ] that after amendment in section 31(vii) of the Act post facto 01-04-1998 that it is not necessary for an assessee to establish the debts to have actually become bad. We find that the assessee has filed all necessary details even before the CIT(A) qua the bad debts in question. There is no evidence much less cogent one with both the lower authorities specifically rebutting assessee’s contentions to have paid the impugned advances in course of its business of civil construction as made to the three parties given above. A shed in Minda (Huf) Limited.[2006 (3) TMI 213 - ITAT DELHI-A ] when advances given in the course of business become irrecoverable and an assessee write off the same as irrecoverable thereby claiming a deduction, the same amounts to trading loss as allowable u/s. 37 of the Act. The Revenue is unable to either point out any distinction on facts or law thereto. We accept assessee’s arguments against the impugned disallowance and hold that its claim of bad debts in question of 20, 40,451/- is allowable as loss u/s. 28/37 of the Act. - Decided in favour of assessee Disallowance of land development expenses - Held that:- As during the course of hearing that neither the Revenue has been able to support the impugned disallowance @ 20% hereinabove after pointing out specific material rebutting contents of the relevant evidence on record nor the assessee leads us to any cogent evidence for having incurred whole of the expenditure for developing its akota land stated hereinabove. We observe in these facts that both the parties have failed to discharge their respective onuses in support of and against the land development claim. We feel appropriate in the larger interest of justice in these facts and circumstances that a lump sum disallowance of 2,50,000/- instead of 24,95,422/- in question would be just and proper - Decided partly in favour of assessee

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• 2016 (4) TMI 475
  Deduction u.s 80IC - Held that:- Merely because the industrial undertaking earned higher profits does not call for an inference that claim of deduction is to be wily nily reduced on presumption. The Tribunal also held that the provisions of section 80IC of the Income-tax Act, 1961 have been introduced by Legislature to promote the industrial activity and their profitability.Therefore, it is vividly clear from the above that the issue stands covered in favour of the assessee

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• 2016 (4) TMI 474
  Additions of share capital 13 lakh made by the assessing officer. Thus we hold that there is no infirmity in the findings of the Commissioner of income tax (Appeals) on the issue in dispute. Also AR could not brought any evidence so as to establish the creditworthiness of the creditors and therefore in our opinion, the assessee has failed to discharge its primary onus of satisfying the requirements of provisions of section 68 of the Act. Once the assessee failed in explaining the share capital and unsecured loans received, there was no option before the Assessing Officer except making addition in the hands of the assessee until and unless, the assessee would have come forward with the name of the person to whom the unexplained cash credit belonged. - Decided against assessee

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• 2016 (4) TMI 473
  Eligibility for deduction under section 80P(2)(a) or 80P(2)(b) - determine eligibility of deduction under section 80P of the Act in respect of income earned from certain allied activities viz. (i) Locker Rent; (ii) Ambulance Rent; (iii) Commission on Collection of MSEB bills; and (iv) Health Club by cooperative credit society carrying on banking business - Held that:- We find that eligibility of the assessee for deduction under section 80P of the Act in respect of locker rent income is covered by the decision of the Hon’ble Supreme Court in the case of Mehsana District Central Co-op. Bank Ltd. (2001 (8) TMI 15 - SUPREME Court ). Therefore, we set-aside the direction of the CIT(A) in this regard and hold that the assessee is eligible for deduction under section 80P of the Act in respect of this income. With respect to the income from running of Ambulance, while holding that the assessee is not eligible for deduction under section 80P(2)(a) or (b), we are in total agreement with the alternate plea of the assessee that the expenses attributable for the purpose operating such activity ought to have to be allowed on actual/proportionate basis. We are of the view that the action of the CIT(A) in restricting the expenses artificially @ 10% of the gross income from such activities is not sustainable in law being devoid of objectivity. The Assessing Officer is accordingly directed to allow the expenses which are attributable to the running of Ambulance and determine the income from the aforesaid activity. The surplus if any, from this activity would be entitled to relief made residuary clause of section 80P(2)(c)(ii). We also notice that the Income from MSEB commission is held to be business activity as per decision cited by the assessee in the case of Ahmednagar District Co-operative Bank Ltd. (1990 (4) TMI 119 - ITAT PUNE ) and other decisions noted above. Accordingly, we hold that the assessee is entitled to relief under section 80P as per law. We also simultaneously find merit in the alternate plea of the assessee that proportionate expenses attributable to earning of such income ought to have been allowed by the authorities below. In view of the fair admission on the part of the assessee, the finding of the CIT(A) in respect of Shop Rent Income is sustained. With regard to other income, namely, Health Club Fees, we once again hold that expenses attributable to the running of the Health Club should be allowed to the assessee while determining the income from such activity on reasonable/proportionate basis. However, we do not find any merit in claim of the assessee for deduction under section 80P(2)(a)/80P(2)(b) of the Act in respect of this activity. As regards withdrawal of deduction of 50,000/- as allowed by the Assessing Officer under section 80P(2)(c), we find merit in the plea of the assessee that a co-operative society engaged in any business activity which is not otherwise eligible for deduction under section 80P(2)(a) or (b), in such a scenario, it is eligible for deduction to the extent of 50,000/- as per plain provisions of the Act. We also find that the action of the CIT(A) in withdrawing the aforesaid deduction without affording the opportunity to the assessee in this regard also offends the provisions of the Act as well as principles of natural justice. In the light of the aforesaid, we hold that the assessee is entitled to deduction under section 80P(2)(c)(ii) of the Act in respect of business activities such as running of Ambulance, Health Club fee etc. which are not eligible for deduction under section 80P(2)(a) or 80P(2)(b) of the Act. - Decided partly in favour of assessee

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• 2016 (4) TMI 472
  Income from capital gain OR business income - whether CIT(A) erred in directing the AO to assess the income as income from capital gain as disclosed by the appellant, as against assessed as business income by the AO - Held that:- Since the assessee has treated the securities as investment and not as stock in trade in all the earlier A.Ys as found by the ld. CIT(A), therefore, in view of the CBDT Circular No. 6/2016 dated 29th February 2016, the revenue cannot be permitted to take a contrary stand this year and claim the securities as “stock in trade”.

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• 2016 (4) TMI 471
  Addition on account of change in the accounting method of the company - Held that:- As from an incorrect and flawed accounting Policy Company has now adopted a sound accounting policy. Secondly, when in subsequent years, the revenue itself has accepted the changed accounting policy of the company on period basis. The assessee being company which is required to maintain its books of accounts in accordance with section 209 of The Companies Act, 1956 on accrual basis. The principle of accrual is violated if the revenue is recognized at the time of raising of the bill irrespective of period of rendition of services. Therefore according to us this policy is also in accordance with the Companies Act 1956. Merely because there is down fall in profit of the company due to change in accounting policy cannot lead to a conclusion that it is not bonafide. Regarding additional evidences filed by the assessee as submitted by the learned DR, we are of the view that the assessee has submitted the copies of those bills only to explain the accounting of the Annual maintenance Income. Further the comparative chart was verified by CIT (A) was to know about any leakage of revenue. Hence, we are of the view that the accounting policy followed by the company is bonafide and consistent with the accounting standard 9 of ICAI on 'Revenue Recognition', Income Tax Act as correct profit would be deduced on following this policy and section 209 of The Companies Act, 1956. Therefore, we confirm the order of CIT (A) in deleting the addition - Decided in favour of assessee Addition on account of provision for license purchases - Held that:- On query by the bench, Ld. AR was asked to show how the purchase provision is made. In response to that he submitted a statement which was before lower authorities, wherein details of the provision of 6154283/- and the details of reversal from that account of 2310623/- was available which was a wrong accounting entry. Therefore actual provision was of 38,43,660/- only. This amount tallies with the statement submitted by the assessee. We have perused statement where the details of sales invoice, date of invoice, party wise amount payable and a product wise bifurcation, amount of sales, name of the supplier, date of payment made to supplier was available. In view of this, we are of the opinion that the liability provided by the assessee is quantified, crystallized and not based on estimates. Hence, we do not see any reason for the confirming the disallowance of this amount. - Decided in favour of assessee Addition on account of provision for commission - Held that:- Agreement assessee was liable to pay 18% of the license fee earned as a commission to that particular party and this commission expenditure is being paid since assessment year 2003-2004, and there is no change in the circumstances of the case. It was further submitted that the moment the sale price is billed to customer commission accrues to the service provider. Therefore, the commission is based on sales effected by the company. CIT (A) also considered that a sale of 1,28,36,798/-has been booked and commission at the rate of 18% calculated and is payable in terms of that particular agreement, therefore, there is a crystallized liability and was not a contingent liability and the fact of payment of commission at the rate of 18% on sales is available with the assessing officer and commission expenditure exactly matches with the agreement. We also could not find that what new evidence were available with the CIT (A) and not with AO when the percentage of commission is fixed and the recipient of income is also fixed. The genuineness of the expenditure is not at all doubted and the facts that commission expenditure is paid to the party since AY 2003-04 is not disputed, therefore, we confirm the order of the CIT (A) deleting the disallowance on account of the commission expenditure - Decided in favour of assessee

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• 2016 (4) TMI 470
  Set off of brought forward losses/unabsorbed depreciation against 10A profits disallowed - Held that:- Following the latest judgment of the Hon’ble High Court in case of M/s Yokogawa India Ltd (2011 (8) TMI 845 - Karnataka High Court ) as well as Co-ordinate Bench decision in case of M/s Safran Aerospace India Pvt. Ltd.,(2015 (1) TMI 773 - ITAT BANGALORE ) we decide this issue in favour of assessee and direct the AO to allow the claim of deduction u/s 10A of the IT Act,, without setting off of brought forward losses/unabsorbed depreciation.

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• 2016 (4) TMI 469
  TDS on account of hire charges - Held that:- Respectfully following the aforesaid decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd., (2015 (9) TMI 79 - DELHI HIGH COURT ) we deem it fit and appropriate in the interest of justice and fair play to set aside this issue to the file of AO to decide the issue afresh in the light of the aforesaid judgment. Accordingly, we direct the AO to verify whether the payees have included the subject-mentioned receipts in their respective returns and paid taxes thereon or not. If that is so, then disallowance u/s. 40(a)(ia) of the Act shall not be made in the hands of assessee. - Decided in favour of assessee for statistical purposes. Addition on account of balance-sheet difference by wrongly treating it as unexplained investment - Held that:- during the course of assessment proceedings AO found the difference of small amount at 20,000/- between ledger provided by party and amount show by assessee its books of account. However, we find from the order of authorities below that the addition was made by the AO on account of the difference in the balancesheet item but without disputing gross income declared by assessee. The difference of 20,000/- is arising from the ledger of the party of assessee which is a regular party and to whom assessee raises the bill for the services provided. In our view the AO failed to bring on record the bill of income which has not been recorded in the books. Therefore, we find that the difference crept out of the balance-sheet item does not result as understatement of income. Accordingly we are convinced by the reasoning adduced by assessee. Accordingly in our considered view, the addition made by AO on account of unexplained investment for Revenue account which subsequently confirmed by Ld. CIT(A) is without any sound basis - Decided in favour of assessee Unexplained expenditure u/s. 69C - Held that:- AO has treated the sum as unexplained expenditure u/s. 69C of the Act as this fuel cost was not reflecting in the accounts of BECML. However the ld. AR submitted that this cost of fuel was paid by the assessee from the premises of the dumper owner to the place of the BECML. Therefore the same shall not be reflected in the statement of BECML. We find that the authorities below have disallowed the difference amount of 2,99,459/- on the ground that it was not reflecting in the statement of BECML. However we find from the ground raised by the assessee that the amount of 2,99,459/- was paid by the assessee directly for the running of the dumper from the place of dumper owner to the work place of BECML and when the dumper was not in the custody of BECML. The lower authorities have not considered this aspect in their order as raised in the ground of appeal by the assessee. Therefore in our considered view this aspect of the fuel cost needs to be verified by the AO

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• 2016 (4) TMI 468
  Addition on account of unexplained increase in the wages and salary as compared to the increase in production - CIT(A) deleted the addition - Held that:- Lease rental were paid and TDS were deducted and in the ledger account, copy of lease rentals were shown under the head service charges. The copy of the account and details were also furnished. These details were sent to the Assessing Officer for his comments vide letter dated 23.03.2010 and 19.08.2010. Before the CIT(A), the assessee has also submitted that revenue stamp was affixed when payment exceeded 5,000/-, the employment of labourers was evident from the PF record as well and there was increase in production and the gross profit rate was better than the last year; and therefore, no addition was called for. Agreed with the contention of the assessee, the CIT(A) granted relief to the assessee by observing that the assessee has taken machines on lease and has been paying lease rentals after deducting TDS. Further, he observed that there was increase in production during the year under consideration and the gross profit rate was also better. The CIT(A) also held that the addition could not be made merely because of increase in wages was not proportional to increase in production. Accordingly, he rightly deleted the addition in question by observing that the Assessing Officer was not justified in disallowing the wages and making such addition in question. - Decided in favour of assessee

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• 2016 (4) TMI 467
  Reopening of assessment - Held that:- The Court considers it appropriate to modify para 27 of its judgment dated 11th February 2016 and substitute it as under: "27. Turning to the notice issued in the instant case to the Petitioner under Section 143(2) (ii) of the Act, it is seen that it is in a standard format which merely states that "there are certain points in connection with the return of income on which the AO would like some further information." In any event the question raised in the applications by the Petitioner before the AAR do not appear to be forming the subject matter of the said notice under Section 143 (2) (ii) of the Act. Consequently, the mere fact that such a notice was issued prior to the filing of the application by the Petitioner before the AAR will not constitute a bar, in terms of clause (i) to the proviso to Section 245-R (2) of the Act, on the AAR entertaining and allowing the application."

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• 2016 (4) TMI 466
  Appeal admitted on substantial question of law as framed at question (b). Whether, on the facts of the case and in law, the Tribunal was right in allowing the assessee's claim of exemption u/s. 10(23C) (via) of the Act without appreciating the fact that the assessee is running separate business activity of Gymansium, Cafeteria and Pharmacy which does not come under the ambit of charity of Hospital and all these activities are business activities and not charitable activity as claimed by the assessee and for these business activities separate books of account were also required to be maintained as per the approval given u/s. 10(23C) (via)?

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• 2016 (4) TMI 465
  Rectification of mistake - capital gain computation - whether there was no sale of property by way of the Developoment agreement? - Held that:- A bare reading of the order which is sought to be rectified it clear that the complete control over the properties was given to the developer. Consideration of the transfer of the rights is fixed and the terms of payment is also fixed. No material is placed before this Tribunal, that the parties did not act upon the development agreement. The only grounds taken by the Revenue for seeking recalling the order is that the assessee had converted the property in question as stock-in-trade and such stock-in- trade was during the block period. We are unable to agree with the contention of the Sr.DR that there was no sale of property by way of the Developoment agreement. The Sr.DR has placed section 45(2) of the Act to buttress the contention that the assessee ought to have offered for taxation of gain arising out of transfer of the property during block period. In our considered view, the transfer of property was complete by way of the development agreement. The Revenue has not disputed the fact that the assessee had given possession of the property to the developer even if it is assumed that it is in nature of stock-in-trade, there is a change of hands as the assessee had given possession of the property to the developer in consideration as described under the development agreement. It is also not disputed that a sum of 1,00,000/- was paid to the assessee by the developer and rest of the sale consideration was to be paid into installments. Keeping these facts, we are of the considered view that modifying or recalling the Tribunal’s order dated 04/04/2014 would tantamount to reviewing of the order. Therefore, the miscellaneous application filed by the Revenue is devoid of any merit.

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• 2016 (4) TMI 464
  Addition on account of interest free loan to sister concern from interest bearing funds - CIT(A) deleted the addition - Held that:- It is evident that the CIT(A) first of all holds that assessee’s sister concern has already paid substantial incentive in the shape of extra discount of 57,86,650/- in the impugned assessment year followed by 1,58,66,599/- in the succeeding assessment year. Coming to the fact as to whether the assessee invested its interest bearing funds in its sister concern or not, the lower appellate findings under challenge read that the assessee’s non-interest bearing funds are much more than the investments in question. The CIT(A) follows hon’ble Bombay high court decision in Reliance Utilities and Power ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] drawing presumption of utilization of non-interest bearing funds in such an eventuality. There can hardly be any dispute on the former aspect that similar investments involving commercial expediency based on facts do not invite any interest disallowance as held in SA Builders’ case (2006 (12) TMI 82 - SUPREME COURT ). The Revenue does not refer to any evidence on record rebut both these factual findings. We find no reason to interfere with the CIT(A)’s order directing to delete the impugned interest disallowance - Decided in favour of assessee Disallowance of claim for bogus/expired and damaged goods - CIT(A) deleted the addition - Held that:- As decided in assessee's own case it is practice in the pharmaceuticals business that some products have to be expired or damages and all the retailers are not able to sell the goods within expiry of date, even branded goods some time expired. The appellant had shown expiry of goods’ percentage more than 4%. During the year, goods expired was 7,94,441/- and goods replaced at 1,46,60,484/- which is 2.46%, is reasonable. Keeping in view the past history of the assessee, the ld. A.O. had not brought on record any evidence that the appellant had made sale outside the books. Even, no evidence during the course of search were found, which was relevant to A.Y. 2005-06. The Settlement Commission also accepted the assessee’s disclosure of further any additional disclosure on this issue. Thus, we do not find any reason to intervene in the order of the CIT(A).- Decided in favour of assessee Excess depreciation allowance - Held that:- The Revenue invites our attention to paper book pages 81 to 92 comprising of the CIT(A)’s order for assessment year 2008-09 allowing assessee’s claim of depreciation @ 10% against that claim @ 15%. Both parties expressed agreement that the same can be followed even in the impugned assessment year as well. We accordingly accept this third substantive ground for statistical purposes and direct the Assessing Officer to pass a consequential order as in tune with the CIT(A)’s order in succeeding assessment year by adopting judicial consistency. - Decided on favour of revenue for statistical purposes.

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• 2016 (4) TMI 463
  Disallowance u/s 14A read with Rule 8D - Held that:- We find that the assessee has earned exempt income to the tune of 17,56,369/- and has suo motu disallowed 61,666/- u/s 14A of the Act. We find that the AO has invoked Rule 8D without pointing out any reason for not being satisfied with the computation made by the assessee in respect of expenditure incurred for earning exempt income. The Hon’ble jurisdictional High Court in CIT vs. Tikisha Engineering India Ltd. (2014 (12) TMI 482 - DELHI HIGH COURT ) has held that without recording the objective satisfaction as required under sub-section (2) to section 14A that the AO is not satisfied with the correctness of the claim of the assessee in respect of expenditure in respect of exempt income, the AO cannot invoke Rule 8D to compute the said disallowance under the said Rule. Therefore, we find substance in the argument of the ld. AR and so, we find that without recording satisfaction as envisaged by the statute before invoking the computation provided for under Rule 8D has vitiated the impugned order. Therefore, we direct deletion of the addition made by the AO and which was sustained by the CIT (A) in his impugned order. - Decided in favour of assessee

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• 2016 (4) TMI 462
  Penalty U/s 271(1)(c) - Held that:- It is undisputed fact that the assessee has disclosed additional income in return filed U/s 153A on the basis of incriminating document found during the course of search. We have considered view that Explanation 5A is not required to be mentioned by the Assessing Officer specifically at the time of initiation or even in the show cause notice issued by the Assessing Officer, but basic defect we found that the ld Assessing Officer has mentioned at the time of initiation of penalty proceeding under both the limbs i.e. concealed the particulars of income and furnished inaccurate particulars of income but at the time of notice U/s 274 he simply has ticked in prescribed proforma concealed particulars of income or furnished inaccurate particulars of income without deleting either limb of penalty even he has not put and in the notice itself between two limbs. In case of two views of the court, favourable view of the assessee would be taken as held in the case of CIT Vs Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) Thus we are of the considered view that initiation of penalty proceedings is not as per law and Assessing Officer did not have any jurisdiction to impose penalty U/s 271(1)(c) of the Act. - Decided in favour of assessee

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• 2016 (4) TMI 461
  Revision u/s 263 - Held that:- We are live to the provisions of Explanation (2) to Section 263 of the Act which has been introduced w. e. f. 1st June, 2015 wherein it has been explained that the order passed by the AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue if, in the opinion of the Principal Commissioner/Commissioner “the order is passed without making enquiries or verification which should have been made”. However, it should be understood that the word used in the said explanation is “opinion” of the Principal Commissioner or Commissioner and such opinion should be in writing or at least discernible from the order of the learned CIT. But, even this explanation would be controlled by the primary section of 263(1) which demands the “making or causing to be made such enquiry as he deems necessary”, before he passes the order u/s 263. In the present case as the said enquiry has not been made by the Commissioner not has it been caused to be made by the learned CIT either before the intimation or after the intimation but more specifically its absence has been recorded by the learned Commissioner before passing his order u/s 263 of the Act, we are of the view that the order passed u/s 263 of the Act by the learned CIT is unsustainable - Decided in favour of assessee.

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• 2016 (4) TMI 460
  Penalty under section 271(1)(c) - claim of deduction under section 80IA(iv) - Held that:- We find merit in the claim of the assessee in this regard, where complete information was furnished by the assessee along with return of income and even during the course of assessment proceedings, the assessee furnished the requisite information. Since the total constructed area of Industrial Park was within limits of proposed area of Industrial Park, the assessee bonafidely believed that it was entitled to the claim of deduction under section 80IA(iv) of the Act and the same was made in the return of income. The said claim was further supported by various evidences filed by the assessee and also the claim was in tune with the audit report given by the Auditors. In the entirety of the above said facts and circumstances and applying the ratio laid down by the Hon’ble Supreme Court in CIT Vs. Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ), we hold that there is no merit in levy of penalty proceedings under section 271(1)(c) of the Act upon the assessee holding the assessee to have furnished inaccurate particulars of income. The conditions for levy of penalty for concealment having not been fulfilled, does not warrant levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee

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• 2016 (4) TMI 459
  Disallowance of sales promotion expenses - Held that:- The Assessing Officer himself has allowed part of the expenditure and had directed to allow the balance in the succeeding years. In the absence of concept of Deferred Revenue Expenditure being recognized by the Income Tax Act, we find no merit in the order of Assessing Officer in this regard. Accordingly, we uphold the order of CIT(A) in allowing the claim of assessee in entirety. The perusal of order passed by the CIT(A) relating to assessment year 2001- 02 reflects that the CIT(A) had observed that the Income Tax Act recognized any expenditure either as capital or revenue expenditure and the concept of Deferred Revenue Expenditure was not supported by provisions of the Income Tax Act, he nce the total expenditure was allowed in the hands of assessee in assessment year 2001- 02. The CIT(A) while deciding the present appeal relating to assessment year 2002-03 has followed the said decision. We find no error in the aforesaid observations of CIT(A) and upholding the order of CIT(A), we dismiss the ground of appeal relating to sales promotion expenses raised by Revenue in the appeals relating to assessment years 2002-03, 2003-04 and 2004-05 before us.- Decided in favour of assessee Disallowance for power and fuel expenses - Held that:- On one hand, the residential colony comprises first the residential accommodation provided to the employees and it is the case of assessee before us that in case any expenditure is incurred vis-à-vis residential quarters of the employees, the same is recovered from them. Even in case the same is not recovered from them, does not merit the disallowance made in the hands of assessee. Further, part of power and fuel expenses were incurred on providing lights to the residential colony and also to the common facilities provided by the assessee to its employees, which was the obligation of the assessee company and hence, expenditure incurred towards discharge of said obligation is business expenditure of the assessee company and is duly allowable in the hands of assessee. Further, the expenditure relatable to residential quarters is no doubt to be recovered from the employees or is to be included as perk in the hands of employees of the assessee company, but merely because no such exercise was carried on, does not merit the disallowance of expenditure in the hands of assessee. - Decided in favour of assessee

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• 2016 (4) TMI 458
  Penalty levied u/s 271(1)(c) - assessee claiming benefit u/s 54 - Held that:- In the present case, in our opinion the assessee has neither concealed his income nor has furnished inaccurate particulars of income. The assessee had disclosed all and furnished the particulars with regard to the said sale of property in the return of income and also declared capital gain after claiming benefit u/s 54 of the Act in respect of flat at Rameshwar Co-Op.Hsg Soc, Santa Cruz (W), Mumbai besides claiming the expenditures on transfer of property and declared long term capital gains for taxation. Besides, the security deposit which was treated as part of sales consideration was refunded to the builder upon handing over of the 1800 sq.ft. flats on first floor of the new property in three installments as agreed. Thus under these facts we are of the considered opinion that the assessee has not furnished any inaccurate particulars of income and order of ld.CIT(A) upholding the penalty u/s 271(1)(c) of the Act cannot be sustained - Decided in favour of assessee

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• 2016 (4) TMI 457
  Addition of assignment fee from HTMT Global Solutions P. Ltd - CIT(A) deleted the addition based on fresh evidence filed by the assessee wereas the Assessing Officer was denied opportunity under Rule 46A - Held that:-The ld. Commissioner of Income Tax (Appeals) has summarized and relied on the submissions of the assessee filed by letter dated 10.10.2008 which are entirely on new dimension and assessment order does not speak on this issue. The pre-conditions and probabilities of entering into agreement and realization of money on happening of event was not discussed or mentioned in the assessment order. The letter filed by the assessee on the issue of crystallization of event as per agreement on obtaining of permission brought on record for the first time before the Commissioner of Income Tax (Appeals) and the Assessing Officer was deprived to verify such vital evidence for taxation purpose. In the hearing proceedings, the ld. Authorised Representative drew attention to the Escrow Account in which amount has been transferred and drew attention to the permit from CPWD dated 01.08.2008 at page no.60 and also drew attention to the income tax return of the assessee firm for the assessment year 2009-2010 were the assignment income was offered. These are the new set of facts which the assessee for the first time brought on record. So, considering apparent facts and circumstances and the agreements and material evidence and also the provisions of Rule 46(A) of the Income Tax Rules were additional evidence has been filed. The opportunity has to be provided to Assessing Officer which the Commissioner of Income Tax (Appeals) overlooked. We are of the opinion that the matter has to be remitted to the file of the Assessing Officer - Decided in favour pf revenue for statistical purposes. Deprecation on Wind Turbine Generators (WTG) - @100% OR @50% - Held that:- There is scope of confusion regarding invoice dated 30.9.2007 on comparison of delivery challans issued much prior to the date of invoice. Further the first meter reading was taken on commissioning on WTG by the territorial field officer on 13.10.2007 explaining the generated units for export and import. The ld. Commissioner of Income Tax (Appeals) has allowed 100% depreciation based on written submissions followed by the evidence supporting the installations and there is no dispute on ownership of units. The assessee submitted commissioning certificate issued by TNEB bills raised by TNEB and installation documents which the Assessing Officer was denied an opportunity to examine the evidence filed before the Commissioner of Income Tax (Appeals). Considering the apparent facts, we are of the opinion that the matter needs to be re-examined by the Assessing Officer with the fresh evidence filed by the assessee on commissioning of WTG. Therefore, we set aside the order of the Commissioner of Income Tax (Appeals) on this ground and remit the issue to the file of Assessing Officer for limited purpose to examine whether the WTG has been put to use for more than 180 days and adequate opportunity of being heard be provided to assessee before passing the order on merits. - Decided in favour pf revenue for statistical purposes.

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• 2016 (4) TMI 456
  Disallowance of claim of short term capital gain/loss on purchase and sale of shares by treating the same as sham transaction - Held that:- The purchase transaction in the case of the assessee is genuine. The assessee has produced complete evidence requires to substantiate the genuineness of the claim of the assessee in respect of purchase transaction. We find that the authorities below have erred in treating the purchase transaction as non-genuine or sham. Since the transaction was off market transaction, it could not be carried through CSE rather it is carried through registered broker which was confirmed. The payment was also made and shares were routed through demat account of the assessee. Even evidences clearly proves that the purchase transaction is genuine transaction and consequential loss cannot be denied - Decided in favour of assessee.

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• Customs

• 2016 (4) TMI 442
  Revokation of suspended licence - Imported cigarettes without proper declaration through respondent - Commissioner after granting personal hearing within 15 days of the date of suspension, did not order either continuing or revoking the suspension for nearly five and half months. So, Tribunal by interpreting Regulation 19&20 of Regulations of 2013 came to conclusion of automatic revokation of suspension. Held that:- proviso to Regulation 19 of the Regulations of 2013 provides that in case of Principal Commissioner of Customs or Commissioner of Customs, as the case may be, passes an order for continuing the suspension, the further procedure thereafter shall be as provided in Regulation 20. As noted, Regulation 20 prescribes procedure for revoking licence or imposing penalty. The proviso to Regulation 19 refers to the further procedure to be undertaken after the competent authority has passed an order continuing the suspension of the broker, which prima facie, in our opinion, is an emphatic way of providing that if the order of suspension of a broker is continued, the authorities would proceed to decide finally on the question of imposing penalty or for revoking the licence. This would not, however, mean that for some reason, authority under Regulation 19(2) decides to not continue the suspension or to revoke it, no further procedure under Regulation 20 can be undertaken. In a given case, the authority may decide not to continue the suspension of the licence of the broker, may nevertheless be advised to undertake proceedings for imposing penalty or some such action under Regulation 20. Likewise, mere lapsing of the order of suspension of licence for want of further continuation in terms of sub-regulation (2) of Regulation 19 may not debar the Department from further action under Regulation 20.

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• 2016 (4) TMI 441
  Extension of benefit of Notification No. 17/2001-Cus - Imported cable for X-Ray equipment and claimed benefit - Appellant produced end use certificate from the jurisdictional Deputy Commissioner of Central Excise which is one of the condition of the Notification but Revenue had not accepted it as it was produced beyond three months of the clearance of the consignment - Held that:- findings of both the authorities are erroneous, as the said Notification No. 17/2001-Cus mandates production of end use certificate only for the reason and ascertainment that the imported consignment has been put to use for which it was imported. The said Notification also provides for extension of time for production of such certificate. Undisputedly appellant had not sought time extension. Therefore, when there is no dispute as to that the appellant has put to use the consignment of cables as was imported by them nor any allegation that the said cables were diverted, the benefit of notification cannot be denied to appellants. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 440
  Demand of Interest - Section 28 of the Customs Act, 1962 - Import of "IS 1000 fibre-optic endoscope surgical system" classifying under Customs Tariff Heading 9018.90 and claimed benefit of concessional rate of duty @ 5% - Adjudicating Authority held mis-declaration of goods and denied benefit of exemption Notification - Held that:- no interest under section 28AB ibid is recoverable because the demand has not raised/confirmed under Section 28 ibid, adding that even if the impugned order is taken to be issued in the context of finalisation of the provisional assessment under section 18 ibid no interest can be demanded as the provision for interest liability was introduced on 13.07.2006 wide insertion of section 18(3) while in the present case, the Bill of Entry was provisionally assessed on 28.10.2002 and that the interest cannot be demanded upon finalisation even if such finalisation was done after 13.07.2006. Imposition of penalty - Section 114A of the Customs Act, 1962 - Held that:- the Show Cause Notice did not raise the demand in terms of Section 28 ibid. The wording of Section 114A ibid makes it expressely clear that penalty under that Section is attracted when liability to pay duty or interest is determined under Section 28 ibid. Thus, penalty under section 114A ibid is simply not attracted. Imposition of penalty - Section 112 of the Customs Act, 1962 - Held that:- by following the judgment of Delhi High Court in the case of CC (I 1 lakh. As regards penalty on Mr. Bhuvander Kaul, it is clearly brought out in the impugned order that he was the one looking after the import of the said equipment and that he was having knowledge of the mis-declaration and was a part of the entire plan to mis-declare the impugned goods. Thus, penalty on him is attracted. But in the given circumstances and having regard to the fact that penalty on M/s. J. Mitra 5 lakhs to 1 lakh, the same principle has to be followed in the case of Mr. Bhuvander Kaul also. As regards the penalty on the CHA, (M/s Elecon Cargo Pvt. Ltd.), it filed a Bill of Entry on the basis of the documents made available to it by the importer and it had duly enclosed the supplier's invoice which described the goods as "Endoscopic Intuitive IS 1000 da Vinci Surgical System". There is nothing on record to show that the CHA was deliberately trying to mislead Customs or was having any mala fide. The very fact that the relevant invoice was duly enclosed along with the Bill of Entry submitted to Customs is indicative enough that it was not the intention of the CHA in any way to hoodwink Customs. Thus, penalty on the CHA is not attracted. - Matter disposed of

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• 2016 (4) TMI 439
  Classification - GSM/GPRS/GPS/Terminal with RF ID interface/ 300 MAH Battery/ Audio - whether the goods to be classifiable under CTH 85256019 or under CTH 85269190 - Held that:- the Commissioner (A) has observed that the goods are meant for controlling the movement of the vehicles. It is also clear that the vehicle user is not aware of his position or is able to communicate / transmit about his position and he cannot navigate to reach a particular destination on his own. He can only be contacted by sending a SMS through service provider. All the data is radioed through service provider. This above observation of the Commissioner (A) does not represent the factual portion in as much as the impugned goods not only enable the taxi company to know where each its vehicles (which are fitted with the impugned goods) was located but also enable it to instruct the driver to proceed to a particular spot and the driver of the vehicle is also able to give feedback to the taxi company. Therefore, the impugned goods are clearly GPS trans receiver rather than mere GPS receiver and would therefore, be covered under CTH 85269190 whose import is restricted requiring import license under EXIM policy 2004-2009. - Decided in favour of revenue

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• 2016 (4) TMI 438
  Interpretation of explanation - Import of software separately along with hardware - Whether the software imported was "Information Technology" software in terms of explanation given in entry 285 read with CTH 85.24 in terms of Notification No. 17/2001-Cus. dated 01.03.2001 or not - Held that:- having examined the scope of the explanation and utility of the above software, in absence of any contrary evidence or authentic literature, from the revenue, to discard the claim of the appellant, it can irresistibly be concluded that the software imported by the appellant was "Information Technology" software. - Decided in favour of appellant

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• Corporate Laws

• 2016 (4) TMI 435
  Scheme of Amalgamation - Held that:- Perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of sections 391 to 394 of the Companies Act, 1956 are satisfied. The Scheme appearing to be genuine and in the interest of the shareholders and creditors. This Court, therefore, allows the Company Petitions and approves the Scheme. The Scheme is hereby sanctioned. The prayers made in the respective Company Petitions are hereby granted.

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• 2016 (4) TMI 434
  Winding up petition - Held that:- The present case does not fall within the parameters of admitted liability enabling the Court to pass the winding up order, much less admit the petition as the defence raised by the respondent company is bonafide and not malafide. The reproduction of the e-mails, ibid, leaves no manner of doubt that the respondent company had placed the Purchase Order vis-a-vis CP 6 MT at the rate of 12,250/-, Kg. whereas the petitioner company had offered the rate at the rate of 12,750/- and ultimately agreed for 12,250/- Kg., but the schedule of payment was deferred month-wise owing to the shortage of BF3 gas, in essence, they have agreed to supply 1 MT spanning over six months. The affidavit filed in pursuance to the order of this Court in view of the correspondences is not correct and rather the aforementioned correspondences leave this Court to an irresistible conclusion that there was a concluded contract for supply of CP. There is no dispute that prior to the placing of the Purchase Order dated 18.8.2010, the respondent company had placed the Purchase Order with regard to CT and had been supplied the material worth 3,20,64,210/-, but owing to the non-supply of CP, the company had purchased the material from other source at a higher price, for which the civil suit is pending and the same shall be proved in those proceedings and the petitioner company shall have a right to rebut the same. In view, at this stage, the petitioner company cannot be permitted to continue, much less seek winding up order of admission.

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• Service Tax

• 2016 (4) TMI 454
  Liability of service tax - for the period April, 2003 to 13.07.2005 - Exclusive distributors of T.V. channels broadcast by the foreign broadcasters in India - Retained 15% of total subscription revenue collected through cable operators and MSOs and remitted the remaining revenue to the foreign broadcasters - Revenue contended that the respondent is not an MSO but a representative or agent for foreign broadcasters. Held that:- it is clear that the respondents were discharging service tax arising out of their role as agent of foreign broadcasters and there is no dispute on that account. It is found that the Board's Circular was wrongly interpreted so as to refer with reference to the services provided by the MSOs. It is also clear from the clarification issued by the Board that the charges recovered from the broadcasting agencies from MSOs for providing the signals had been made specifically liable to service tax from 16.06.2005. Therefore, the charges recovered from the broadcasting agencies from MSOs or Cable Operators were not liable to service tax prior to 16.06.2005. - Decided against the revenue

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• 2016 (4) TMI 453
  Seeking clarification/modification of order dated 22.1.2016 - ICICI bank is construing the order to mean that it will not allow any withdrawal from the account till such time the entire sum of 10,93,45,803/- is not paid from the said account to the STD - Petitioner wants clarification that the arrangement put in place by the order dated 28.5.2014 of this Court will continue means that of the remittances received in the Petitioner’s account with ICICI Bank, 1/3rd should continue to be credited to the account of the STD and 2/3rd retained in the Petitioner’s account. Held that:- the Court takes note of the changed development that in terms of the adjudication order dated 19.2.2016 the disputed service tax dues have been crystallised at over 445 crores. Today, therefore, there is a situation where more than half of the admitted service tax dues (which included the service tax liability of Max Tech taken over by the Petitioner) is yet to be paid and the disputed service tax is yet to be recovered. The Court sees no justification in continuing the interim arrangement put in place by the Court since it will be for the learned Company Judge seized of the winding up petition to examine how, given the financial position of the Petitioner, its remittances should be disbursed to meet the statutory and other priority dues, as well as the dues of its lenders and creditors. These proceedings should not come in the way of the learned Company Judge passing an effective order as regards all of the outstanding liabilities of the Petitioner. Also the STD should not be restrained from proceeding in accordance with law to recover whatever dues are owned to it, including the 'admitted' dues of the Petitioner. Validity of attachment of account - orderd by STD by the impugned order dated 6.2.2013 and the garnishee order dated 22.8.2013 - Held that:- As already recorded by the Court in its orders dated 21.3.2014 and 28.5.2014, the admitted service tax liability of the Petitioner, as reflected in the service tax returns filed by it, was to the extent of 130 crores. Added to this is the admitted service tax liability of 11 crores of Max Tech which has to be discharged by the Petitioner. In the past two years, the Petitioner has managed to pay only around 72 crores towards this admitted sum. Consequently, the Court does not see any reason to vacate the attachment ordered by the STD by its order dated 6th February, 2013 or the garnishee order dated 22nd August 2013. Consequently, the Court vacates the interim arrangement put in place by the orders dated 21.3.2014, 28.5.2014 and 22.1.2016. - Petition disposed of

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• 2016 (4) TMI 452
  Rejection of refund claim - in terms of Notification No.41/2007-ST dated 6.10.2007, as amended by Notification no.42/2007-ST - Port services, GTA services and CHA services - Export of goods - Held that:- by relying on the earlier decisions of High Court and Tribunal, these services are essentially covered under the 'Port Services' and are eligible for refund under the said notification. Regarding documents required for considered refund in respect of GTA Services. The Tribunal also examined admissibility of debit note as a document for refund claim. It is found that as long as the documents issued by the service provider contain essential information to link up the tax payment to the export of the goods, the refund should be held eligible. As such, the debit note issued by the CHA, invoice issued by the GTA Service provider, should be considered as relevant document for claiming refund if they contain all the required particulars. Regarding service tax paid on cleaning and technical testing, it is found that the appellants have not fulfilled the required conditions as mentioned in the notification. The conditions stipulate the existence of written agreement and the accreditation of the service provider in respect of the cleaning services, and in respect of the technical testing, the requirements are written agreement and the invoice to contain the details of export goods. Also it is found that while agreement can be inferred in terms of the transaction also, the conditions of the service provider to be accredited cannot be considered as procedural. As the appellant are not having details of such accreditation, refund of service tax in respect of cleaning activities cannot be considered as eligible. Similarly for technical inspection service also supporting evidence for fulfillment of essential conditions have not been provided. Hence, the claim for refund cannot be considered. - Appeal disposed of

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• 2016 (4) TMI 451
  Classification - Contract on lump-sum/job basis of Storage Warehouse and handling of Agricultural Produce - Whether the services needs to be classified under "Manpower Recruitment and Supply Agency Services" as claimed by Revenue or "Storage Warehouse and Handling of Agriculture produce" as claimed by the appellant - Held that:- the said Works Order, various terms and conditions, indicate that appellant has to produce attendance sheet, proof of actual payment towards statutory obligations like PF, ESIC etc., it would mean that the contract entered was for supply of unskilled manpower, that the bill has been made by the appellant as services charges for "Storage Warehouse and Handling of Agricultural Produce" through Works Order given description of work and supply of unskilled Manpower are directly under the category of "Manpower Recruitment and Supply Agency Services". In view of these facts, the appellant has no case. Tax liability and interest - Held that:- it is not found from the Work Orders which were issued, that appellants need to be extended the benefit of cum tax benefit as the value shown on the bills indicated an amount received by them needs to considered as cum tax value and the Service Tax liability needs to be worked back. For this limited purpose the matter is remanded back to the original adjudicating authority to recalculate the tax liability and the interest thereof. Imposition of penalties - Held that:- appellant could have entertained a bonafide belief that the activity under-taken by them being in respect of "Storage Warehouse and Handling of Agricultural Produce"; Service tax liability may not arises. Extending the benefit of doubt to the appellant, the provision of Section 80 of the Finance Act,1994 is invoked and the penalties imposed on the appellant are set aside. - Appeal disposed of

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• 2016 (4) TMI 450
  Admissibility of Cenvat Credit - on the basis of invoices issued by M/s.ABMCPL to the appellant - where quantum of Service tax paid is determined as per the performance of each company of the appellant and not based on value of services provided - period involved is from April 2007 to September 2011 during which six periodical show cause notices were issued - Held that:- Prima facie Service tax credit of actual Service tax paid by the service provider is only admissible under CCR. Extended period of limitation - Held that:- even if extended period is held to be inapplicable then also the entire demand of Service tax will not be completely time barred. Waiver of pre-deposit - Held that:- Appellant has not been able to make out a prima facie case for complete waiver of the confirmed demands and penalties and is required to be put to some conditions. - Appeal disposed of

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• Central Excise

• 2016 (4) TMI 449
  Demand of Modvat credit - Wrongly availed - Manufacturer of two wheeler scooters - Duty paid on High Speed Diesel oil (HSD) used both for generating electricity and as fuel - Held that:- the order dated 15.9.2003 records the considered stand of the Department in the matter. In other words the statement made by the Department before the Supreme Court that "refund has already been given" to the Petitioner holds good and reflects the position that the Department has accepted the orders of the Dy CE and CCE (A) which were affirmed by the order dated 25.2.2003 of the CEGAT. By the last mentioned order, the CEGAT re-affirmed the earlier orders to the effect that an aggregate amount of 9,31,904/- being the MODVAT credit allowed to the Petitioner for the period prior to 1st March 1998 by the Dy CE by the order dated 30.7.1999 cannot be recovered by the Department. Consequently, the Department cannot, at this stage, seek to enforce any demand viz-a-viz the MODVAT credit availed on HSD by the Petitioner prior to 1.3.1998. Therefore, the Respondent is restrained from seeking to recover from the Petitioner the MODVAT credit on HSD availed by it for the period prior to 1st March, 1998. The impugned demand notices to that effect are set aside. Constitutional validity of Section 112 of the Finance Act 2000 as received the assent of the President - Denial of credit of duty paid on HSD "at any time during the period commencing on and from the 16th day of March 1995 and ending with the day the Finance Act 2000 - Held that:- the above directions have been issued in the peculiar facts of the present case and will not constitute a precedent as regards the constitutional validity or applicability of Section 112 of the Finance Act, 2000. - Petition disposed of

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• 2016 (4) TMI 448
  Validity of order - Manufacturer of various types of motor vehicles - Whether the pendency of the Petitioner's RA before the CESTAT satisfies the requirement for acceptance of the Petitioner's declaration under the KVSS - Respondent did not consider the declaration filed by petitioner because the RA was pending before the CESTAT but not 'admitted - Held that:- it has been clarified even in the circular issued by the CBDT that "If the taxpayer has filed within the statutory time a legally valid reference application under Section 256(1) or 256(2)" of the IT Act (corresponding to Section 35G of the CE Act) 1944 "the condition of pendency of reference could be said to have been satisfied". Further it has been clarified that there could be cases where there may be no procedure for admitting an appeal and in such cases the mere proof of filing an appeal would be sufficient. In other words, as far as the RA filed by the Petitioner is concerned, since there is no procedure of 'admitting' such an RA, the mere proof of pendency of the RA before the CESTAT should be sufficient for accepting the declaration filed by the Petitioner under the KVSS. - Petition disposed of

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• 2016 (4) TMI 447
  Entitlement for refund of accumulated Cenvat credit - Rule 5 of the CENVAT Credit Rules, 2004 - Finished goods supplied to deemed exports areas - Held that:- by relying on the decision of Hon’ble Gujrat High Court in the case of Commissioner of Central Excise and Customs Vs. NBM Industries [2011 (9) TMI 360 - GUJARAT HIGH COURT] which was relied upon their earlier decision in the case of Commissioner Vs. Shilpa Copper Wire Industries [2010 (2) TMI 711 - GUJARAT HIGH COURT], the appellant is entitled to refund of accumulated Cenvat credit when finished goods supplied to deemed exports area. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 446
  Demand of duty and imposition of penalty - Inputs supplied to the job worker and those procured on their own account for manufacture have been inter utilised whenever required - Held that:- inputs meant for manufacture on job work cannot be utilised for manufacture on their own account and vice versa. Such removal according to revenue would be construed as diversion of inputs or removal outside the factory for home consumption inviting reversal of credit or payment of duty but there is no provision in the Act or Rules or in Cenvat Credit Rules treating such inter utilization of inputs as prohibited. Also, Modvat/Cenvat Credit Rules permits utilization of inputs for any final product of the manufacturer. One to one co-relation - Revenue contended that there is no one to one co-relation of input and output - Held that:- under the rules there is no requirement of one to one correlation of inputs and output so long as inputs are not used for manufacture of exempted goods. Within the factory, for manufacture, the inputs can be utilised irrespective for whom the goods are manufactured. Removal within factory is not removal for home consumption from factory which alone invites reversal of credit or payment of duty. Therefore, the impugned order is set aside and also demand and penalty is set aside. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 445
  Demand of interest and penalty - Manufacture of Sodium Hyrochlorite and Bleach Liquor by availing SSI exemption - Exemption limit of 30 lakhs in a financial year exceeded - Appellants have produced only the certificates issued by the suppliers of inputs which did not contain the information regarding the amount of duty and also no claim of Modvat credit of duty paid on such transactions was made. Held that:- the submission that on remand, the lower authority cannot expand the scope of the remand direction would fit in for any other circumstance as factual position but not with regard to interest as the liability for interest accuses automatically and a separate written notice is not required for its recovery. The O in A in so for as it relates to interest is upheld with regard to the imposition of penalty, their APB stated that they have paid 25% of the penalty amount. Since, there is no contrary evidence placed, the penalty imposed under Section 11AC is also upheld but restricted to 25% of the amount already paid by the appellant as the same is endorsed by the statute. - Appeal disposed of

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• 2016 (4) TMI 444
  Demand of duty and imposition of penalty - Revenue has not filed any appeal against order in original - Held that:- the revenue cannot go beyond the duties demanded and penalties imposed in the said order. The Commissioner in the impugned order has gone much beyond that by not only increasing the demand four fold but also enhanced the penalties many fold. Thus the commissioner's order is not proper. Therefore, the impugned order is set aside and the matter is again remanded for fresh adjudication. - Appeal disposed of

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• 2016 (4) TMI 443
  Duty liability - Denial of exemption Notification No.67/95-CE dated 16.03.1995 - Manufacture of Sponge Iron - Char/dolochar produced in the process are captively consumed for generation of electricity but most of the electricity so produced are not used in appellant's factory - Held that:- the electricity generated in the respondent unit is not solely using char/dolochar. Out of three boilers, 2 are working on heat recovery of waste gases coming out of the sponge iron kiln for production of steam, the third one is a combustion type in which solid fuels like coal, coal fires, char/dolochar are used to produce steam. So there is no substance in the demand made by the department to deny the above mentioned exemption. The respondent claims that char/dolochar constitutes only 14-18% of the inputs used for generating electricity. 25% of total electricity is used for manufacture of sponge iron. There is no comment or contest on these assertion by the Revenue in the appeal. The Original Authority and Appellate Authority are right in holding against the demand of duty. - Decided against the revenue

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• CST, VAT & Sales Tax

• 2016 (4) TMI 437
  Cancellation of registration certificate - without providing an opportunity of personal hearing - Provisions under section 39(15) was not complied - Held that:- without invoking the provisions under Section 39(14) as well as 39(15) of the Tamilnadu Value Added Tax Act, 2006, in one line order, the Registration certificate of the petitioner got cancelled by the 2nd respondent. The 1st respondent being the revisional authority also failed to look into the provision of the act and dismissed the revision. This Court in a number of cases, directed the departmental authorities to follow the principles of natural justice as well as the provisions of the Act with regard to the cancellation of registration of dealers but even then, such type of orders are being passed. Blatant violation of the provisions of the act. Therefore, the 2nd respondent is strictly directed to follow the provisions under sections 39(14) and 39(15) of Tamilnadu Value Added Tax Act, 2006 after affording due opportunity to the petitioner. Also the 2nd respondent is directed to restore the registration certificate or registration number of the petitioner forthwith, so as to enable the petitioner to have their on line operations. - Petition disposed of

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• 2016 (4) TMI 436
  Entertainment of appeal - Period of limitation - Held that:- upon verification, it is found that the RPAD was not served on the petitioner and the certified copy of the assessment order was served on the petitioner only on 27.8.2015, which date shall be taken into consideration for fixing the period of limitation for filing appeal before the Appellate Authority. When such is the date to calculate the period of limitation to file appeal, this Court is of the view that the petitioner is will within the time of filing the appeal. - Appeal disposed of

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• Wealth tax

• 2016 (4) TMI 455
  Deduction on pro-rata basis - Held that:- On the overall facts and circumstances of the case and respectfully following the ratio of the judgment in the case of CIT vs. Vaidyanathan (1982 (11) TMI 1 - MADRAS High Court ) we hold that liabilities can be deducted on pro-rata basis. In identical circumstances, it has been held by the ITAT, Mumbai Bench in the case of Lloyds Realty Ltd. vs. DCIT (2003 (7) TMI 264 - ITAT BOMBAY-WT ) that the debts owed by the assessee have to be allowed on pro-rata basis.

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• Indian Laws

• 2016 (4) TMI 433
  Order of SARFAESI Act - Held that:- Order passed under section 14 of the SARFAESI Act is not amenable to the revisional jurisdiction as provided under section 397 of the Code. This Court therefore finds that there is no error much less any error apparent on the face of the record, which warrants interference of this Court in its extraordinary jurisdiction under Article 226 of the Constitution.

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• 2016 (4) TMI 432
  Infringement of trademark - ex-parte ad-interim injunction - Held that:- At on the existing material before the learned Single Judge case was not made out to grant an ex-parte ad-interim injunction because an ex-parte ad-interim injunction in a matter concerning trademark violation should ensue only if a very strong prima-facie case is made out with respect to a trade mark which is inherently distinctive. A serious issue arises for consideration in the instant case concerning whether Split View is descriptive of an essential feature of the computer programme thereby rendering the words, even if used in conjunction with each other, not eligible to be a trade mark. With respect to documents filed by Apple in appeal, we simply observe that proper pleadings are required as to the effect of the documents keeping in view the mandate of Order 6 Rule 9 of the Code of Civil Procedure, so that the respondents have an opportunity to plead as per them as to what is the effect of the document. Vacating the ex-parte ad-interim injunction dated March 01, 2016, we dispose of the appeal directing Apple to file its written statements of defence within two weeks and along therewith file all documents it seek to rely upon. The respondents are granted three weeks' time to file a replication and file such further documents as respondents desire. The next date of hearing before the learned Single Judge is May 09, 2016 and we request the learned Single Judge to hear arguments in the application seeking interim injunction pending disposal of the suit filed by the respondents on said date and try and pronounce judgment before the ensuing summer vacations which commence from June 04, 2016.

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