TMI Tax Updates - e-Newsletter
April 2, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. RELEVANT DATE FOR INTEREST WHEN CENVAT CREDIT WRONGLY TAKEN

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Auction for Sale (re-issue) of Government Stock

2. Macroeconomic and Monetary Developments 2014 (An Update)

3. First Bi-monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G. Rajan, Governor

4. Significant changes in the proposed Direct Taxes Code, 2013

5. Proposed Direct Taxes Code 2013

6. CBDT Signs the First Batch of Five (5) Unilateral Advance Pricing Agreements (APA); Agreements Cover a Period of Five (5) Years from AY 2014-15 to AY 2018-19 and Specify the Arm’s Length Price for the Covered International Transactions Entered into by the Taxpayers

Notifications

Companies Law

1. File No. 01/12/2013 (Part-I) CL-V - dated 31-3-2014 - Co. Law

Chapter XIV- The Companies (Inspection, Investigation and Inquiry) Rules, 2014.

2. File No. 01/05/2013 CL-V - dated 31-3-2014 - Co. Law

Chapter XIII- The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

3. F. No. 1/25/2013-CL-V - dated 31-3-2014 - Co. Law

Chapter XXIX - The Companies (Miscellaneous) Rules, 2014.

4. F. N. 1/23/2013-CL-V - dated 31-3-2014 - Co. Law

Chapter XXII- The Companies (Registration of Foreign Companies) Rules, 2014.

Customs

5. 09/2014 - dated 1-4-2014 - Cus

Seeks to amend Notification No. 69/2011-Customs, dated 29th July, 2011 ( India-Japan CEPA)

6. 08/2014 - dated 1-4-2014 - Cus

Seeks to amend Notification No. 96/2008-Customs, dated 13-08-2008 (DFTP scheme for LDCs)

DGFT

7. 78 (RE – 2013)/2009-2014 - dated 31-3-2014 - FTP

Extension of prohibition on export of Pulses (except Kabuli Chana and 10,000 tonnes of organic pulses) till further orders.

VAT - Delhi

8. No.F.5(54)/Policy/VAT/2013/PF/1401-1413 - dated 31-3-2014 - DVAT

Notification No.F.5(54)/Policy/VAT/2013/PF/ 1123-1135 dated 26/12/2013, the word “entry Nos” appearing in second para and in the heading of table of ‘Part A- List of Embassies’ and ‘Part-B List of International Organisations’ of Entry No.1 of Sixth Schedule, may be read as “Sl.No.”

Circulars / Instructions / Orders

Income Tax

1. 51 OF 2014 - dated 31-3-2014

DISTRIBUTION OF ZONES & WORK ARRANGEMENTS OF SPECIFIED MEMBERS OF CBDT W.E.F. 1-4-2014

FEMA

2. 116 - dated 1-4-2014

Advance Remittance for Import of Rough Diamonds

Highlights / Catch Notes

Income Tax

• Satisfaction Note by AO Mandatory Before Transferring Records in Block Assessment Cases to Another AO.

  Case-Laws - SC : Block Assessment - satisfaction note is sine qua non and must be prepared by the AO before he transmits the records to the other AO who has jurisdiction over such other person - SC
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• Court Upholds Taxability of Interest Income u/s 2(24), Reinforcing State's Financial Stability and Obligations.

  Case-Laws - HC : Taxability of income – Scope of section 2(24) of the Act – Interest income - State Government is not so defunct that it may knee down before the purchasers of the property under Deferred Payment Plan - additions confirmed - HC
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• Court Rejects Revenue's Argument to Ignore Provident Fund and ESIC Disallowance in Section 10A Deduction Calculation.

  Case-Laws - AT : The contention of the Revenue that in computing the deduction u/s 10A the addition made on account of the disallowance of the provident fund/ESIC payments ought to be ignored could not be accepted - AT
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• Taxpayer Must File Return Before Challenging Reassessment Jurisdiction Under Income Tax Act Sections 147 and 148.

  Case-Laws - HC : Jurisdiction to continue reassessment u/s 147/ 148 - instead of filing return, challenge to the jurisdiction on the ground that it had no taxable income cannot be entertained - HC
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• Taxpayers: No Notional Rent on Vacant Properties; Annual Letting Value Set to Nil.

  Case-Laws - AT : Notional rental income vacant/leased properties - in case of the assessee where the property remained vacant then the ALV of such property will be Nil- AT
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• Indexation Cost Should Reflect Original Agreement Date, Not Transfer Year, for Fair Assessment of Flat Transactions.

  Case-Laws - AT : Indexed Cost – assessees right to receive the flats have been accrued to them on 26.09.1986 itself i.e., the original date of agreement - no justification in adopting the indexation cost from the year 2003 on the ground that transfer has taken place in the said year - AT
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• Declaring Less Income Post-Deductions Isn't an Income Declaration Shortfall, Clarifies Legal Interpretation.

  Case-Laws - AT : Just because there is a shortfall in declaring the income after claiming statutory deductions, the same cannot be considered as shortfall in declaration of the income - AT
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• Court Upholds Disallowance of Discounts Due to Lack of Evidence on Turnover and Service Discounts in Other Years.

  Case-Laws - AT : Allowability of Turnover discount and Service discount – Assessee has not produced any evidence to show that the discounts was also allowed to other parties in the past or in subsequent years - disallowance confirmed - AT
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Customs

• Refund Granted for Unreceived Goods Despite Unchallenged Bill of Entry Assessment.

  Case-Laws - AT : Refund - Assessment of bill of entry has not been challenged - it is case where the Bill of Entry was assessed but the goods have not been received by the appellant - refund allowed - AT
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• Regulation 23: Tribunal Lacks Jurisdiction Over Appeals Against Prohibition of Customs Broker Under CBLR 2013.

  Case-Laws - AT : Prohibition to function as a Customs Broker within his jurisdiction - Regulation 23 of CBLR, 2013 - the appeal against the order of prohibition does not lie before this Tribunal - AT
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Service Tax

• Appellant's Manpower Services Subject to Service Tax Since June 16, 2005, Under Tax Regulations.

  Case-Laws - AT : Demand of service tax - Supply of manpower - Appellant's activity comes within the purview of supply of manpower on or after 16/06/2005 - AT
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Central Excise

• Tribunal Lacks Discretion to Reduce Penalties Once Conditions of Section 11AC Central Excise Act Are Met.

  Case-Laws - HC : Jurisdiction of Tribunal - Reduction of penalty - Penalty u/s 11AC - In a case where penalty is leviable under section 11AC on fulfilment of the conditions as enumerated in Section 11AC, the penalty equal to the amount of duty determined is mandatory - HC
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• Court Rules on CENVAT Credit: Is Trading an Exempt Service with Manufacturing? Extended Limitation Period Applied.

  Case-Laws - AT : CENVAT Credit - simultaneous manufacturing and trading activity - whether trading activity is exempt service - demand confirmed invoking the extended period of limitation - AT
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• Company Penalized for Misusing SICA to Delay Excise Duty Recovery, Misleading BIFR on Financial Troubles.

  Case-Laws - AT : Quantum of penalty - Company had not approached the BIFR for honest purpose, but sought to pursue the proceedings under SICA 1985 as a cover to stall the legitimate recovery of the due amount in Central Excise duty - penalty levied - AT
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• Reversal of CENVAT Credit Not Required for Partially Written-Off Goods, Rules Didn't Mandate During Relevant Period.

  Case-Laws - AT : Reversal of CENVAT Credit - Value of goods written off in books of accounts - during the relevant time rules did not require reversal of credit when value of inputs was only partially written off. - AT
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• CENVAT Credit Eligible for Service Tax on GTA Services if Goods Delivery to Sale Location is Verified.

  Case-Laws - AT : CENVAT Credit - GTA services - the credit of the Service tax paid on the transportation up to such place of sale would be admissible, if delivery of goods at destination is proved - AT
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• CENVAT Credit Denial Challenged: Activities on Batteries Might Qualify as Manufacturing, Supporting Assessee's Claim for Credit.

  Case-Laws - AT : Denial of CENVAT Credit - Denial on the ground that the activity undertaken by them on the said batteries does not amount to manufacture - prima facie case is in favor of assessee - AT
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VAT

• Court Rules Rs. 10 Lakh Security Deposit Excessive for Assessee's Turnover Under VAT Act Section 28(2.

  Case-Laws - HC : Heavy condition of Security – Considering the turnover of the assessee and the probable tax liability, condition of security deposit of Rs. 10 lakhs is too harsh in terms of section 28(2) of the VAT Act - HC
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• Court Rules 'Sale Price' Not Equal to 'Value of Goods' for Entry Tax on Natural Gas Imports.

  Case-Laws - HC : Imposition of entry tax - Importation of natural gas - ‘Sale price' of the goods by importer, inside the local area, cannot be identified as “value of goods“ under Act - HC
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Case Laws:

• Income Tax

• 2014 (4) TMI 33
  Block Assessment - Requirement to record the satisfaction – Notice to be issued u/s 158BD of the Act - Notice for undisclosed income of any other person - At what stage of the proceedings under Chapter XIV-B does the assessing authority require to record his satisfaction for issuing a notice u/s 158BD of the Act – Held that:- The provisions of section 158BD is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under Sections 132 or 132A of the Act - Under Section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to a other person other than the searched person u/s 132 or 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc. to the assessing officer having jurisdiction over such other person - Relying upon In Prakash Nath Khanna v. C.I.T. [2004 (2) TMI 3 - SUPREME Court] - the language employed in a statute is the determinative factor of the legislative intent - The legislature is presumed to have made no mistake - The presumption is that it intended to say what it has said - Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency - Where the legislative intent is clear from the language, the Court should give effect to it. Before initiating proceedings u/s 158BD of the Act, the AO who has initiated proceedings for completion of the assessments u/s 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132A of the Act - This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non – u/s 158BD the existence of cogent and demonstrative material is germane to the assessing officers’ satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. For the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person - the assessing officer had not recorded the satisfaction note as required u/s 158BD of the Act - thus, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority –the matter is remitted back to the HC for consideration - Decided against Revenue.

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• 2014 (4) TMI 32
  Taxability of income – Scope of section 2(24) of the Act – Interest income - Whether the income of interest is virtually the income fall within the meaning of Section 2(24) of the Act – Held that:- The decision in Commissioner of Income Tax Vs. M/s Excel Industries Ltd.[2013 (10) TMI 324 - SUPREME COURT] followed - income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount - Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee - the assessee had not actually received any amount of interest income but it actually accrues to the appellant within the provisions of the Act - it makes no difference whether income was actually received by the assessee in the relevant year or not. The Corporation is virtually a state owned corporation having 99.9% shares and as such a State Government Undertaking which has been constituted by the State Government to promote the cinematic activities and exhibition of popular cinemas throughout the State - in absence of any notification or instructions issued by CBDT under Section 119 of the Act, the income shall become due for the relevant assessment year and as such the same accrued to the assessee - This income was based on contractual corresponding obligation and liability to pay the interest accrued on unpaid amount of sale consideration by the purchaser to the appellant - The rate of interest is fixed - The realization/recovery of income of interest is not time barred in the relevant assessment year - The State Government is not so defunct that it may knee down before the purchasers of the property under Deferred Payment Plan – there is no substance in the appeal and no substantial question of law arises for consideration – Decided against Assessee.

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• 2014 (4) TMI 31
  Claim of deduction u/s 10A and 10AA of the Act – Held that:- The decision in Gemplus Jewellery Mfg. Co. Ltd., Vs. ITO [2010 (6) TMI 65 - BOMBAY HIGH COURT] followed - the assessee had deposited both the employer’s and the employees’ contribution towards provident fund and ESIC, though beyond the due date including the grace period - The disallowance which was effected by the AO had not been challenged by the assessee - The plain consequence of the disallowance and the add back that had been made by the AO was an increase in the business profits of the assessee - The contention of the Revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ESIC payments ought to be ignored could not be accepted - No statutory provision to that effect having been made, the plain consequence of the disallowance made by the AO must follow - The Tribunal was justified in directing the AO to grant the exemption u/s 10A of the Act on the assessed income, which was enhanced due to disallowance of the employer’s as well as employees’ contribution towards PF/ESIC –thus, the order of the CIT(A) upheld - Decided against Revenue. Communication charges excluded from the export turnover – Held that:- The decision in ITO Vs Saksoft Ltd [2009 (3) TMI 243 - ITAT MADRAS-D] followed - expenses excluded from export turnover should also be excluded from the total turnover – Decided against Revenue.

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• 2014 (4) TMI 30
  Disallowance of deduction u/s 80IB(10) of the Act – Works contractor - Development and construction of housing project - Whether the Tribunal is right in upholding the decision of CIT(A) of deleting the additions made on account of disallowance of deduction claimed u/s.80IB(10) of the IT Act – Held that:- The decision in Commissioner of Income-tax Versus Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] followed - Section 80IB(10) provides for deductions to an undertaking engaged in the business of developing and constructing housing projects under certain circumstances - It does not provide that the land must be owned by the assessee seeking such deductions - from the terms and conditions that the assessee had taken full responsibilities for execution of the development projects and have not acted only as a works contractor. For the purpose of income derived from such property, the assessee would be the owner of the land for the purpose of the Act - the title in the land had not yet passed on to the assessee - the Tribunal committed no error in holding that the assessees were entitled to the benefit u/s 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – thus, the assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – Decided against Revenue.

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• 2014 (4) TMI 29
  Jurisdiction to continue reassessment u/s 147 - There was No reply to notice u/s 142(1) to file return - The petitioner pointed out that the jurisdiction to assess a non-resident company is determined either on the basis of the location of the “permanent establishment” (PE) of the non-resident company or the location of a source of income accruing to the company in India and that the petitioner did not have any source of income in Noida as none of its clients in India were located there, nor did the petitioner have a PE in India. It was accordingly submitted that the notice issued by the Noida officer was without jurisdiction. Held that:- The question whether the initiation of reassessment proceedings by the Noida officer was valid or not would depend upon whether the petitioner had a PE within the jurisdiction of the Noida officer in which case the notification No.263 issued on 14-9-2001 would apply. Whether this jurisdictional fact existed or not cannot be examined in these proceedings taken under Article 226 since the question is hotly contested, the revenue alleging that the petitioner did have a PE at Noida by the name Adobe India and the petitioner emphatically denying the same. In the absence of any evidence unmistakably and indisputably establishing the existence or otherwise of the PE, we would hesitate to enter this prohibited arena in writ proceedings. It needs no citation of authority to support the proposition that the Court exercising its jurisdiction under Article 226 of cannot enter into disputed questions of fact which is best left to be resolved in the alternative remedies available to the petitioner. The conduct of the assessee has been one of defiance - mere filing of the return can never amount to submitting to the jurisdiction - The filing of the return in response to the notice under Section 148 defines the stand taken by the assessee - Section 148 says that the return called for by the notice issued under that section shall be treated as if such a return were a return required to be furnished under Section 139 of the Act - a return of income conveys the position taken by the assessee to the assessing authority. The petitioner, not having made the Noida officer aware that no income chargeable to tax had escaped assessment and having merely told him that he has no jurisdiction to issue reassessment notices, was not acting strictly in accordance with law - The writ remedy being a discretionary remedy, the discretion can be exercised in favour of the writ petitioner only if his conduct has been in conformity with law- Decided against Assessee.

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• 2014 (4) TMI 28
  Deletion made on account of bogus liabilities – AO made the additions on the ground that these relate to opening balances whereas on the contrary the two parties have confirmed nil balance. - Held that:- From the order of the AO, it is clearly emerges that there was litigation between assessee and KLCI - there appears to be a confusion as to in whose accounts the cheques issued by the above persons were credited i.e. whether it was M/s Greentex Mining Co. or Kabini Mineral Co. - The assessee claims that there is intermixing of entries which has not been properly verified by the lower authorities - The assessee has not filed any paper book to demonstrate the actual position - the reluctance of KLCI in providing information is obvious - What type of disputes were there is neither looked into nor emerge from the record - the books of both proprietary concerns of the assessee are to be considered and reconciliation of accounts is to be carried out - both the creditors are genuine parties having business transactions with the assessee – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Revenue.

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• 2014 (4) TMI 27
  Transfer pricing adjustment Loans given to subsidiaries – Held that:- The decision in Siva Industries & Holdings Ltd. [2011 (5) TMI 451 - ITAT, CHENNAI ] Followed – The assessee has given the loan to the Associated Enterprises in US dollars - The assessee is also receiving interest from the Associated Enterprises in Indian rupees - Once the transaction between the assessee and the Associated Enterprises is in foreign currency and the transaction is an international transaction, then the transaction would have to be looked upon by applying the commercial principles in regard to international transaction - LIBOR rate which has to be considered while determining the arm's length interest rate in respect of the transaction between the assessee and the Associated Enterprises - no addition on this count is liable to be made in the hands of the assessee. Few of loans provided in AY 2003-04 and 2004-05 in the case of Arubindo and Arubindo Farmo industria Farmaceutica Ldta and loans obtained from Axis bank and Federal Bank where the rate of interest paid was LIBOR +2.1% and LIBOR +3.25% - Assessee seems to have advanced at LIBOR +3% to Aurbindo whereas rate of interest received in Aurobindo Farmo industria Farmaceutica LTDA is 13.06% - to the extent of advances which were given at a rate lesser than the rate at which those are obtained, the AO is directed to examine, and the rate of interest paid should be considered as ALP in order to determine the interest received – Decided partly in favour of Assessee. Claim u/s 35D of the Act – Loans obtained in foreign currency convertible points – Held that:- Both legally and factually the addition cannot be sustained – the AO is bound to follow the directions of the DRP - AO cannot pass the order against the directions of DRP as per the provisions of law - Assessee’s claim is allowable as decided in M&M Ltd. Vs. JCIT [2009 (10) TMI 639 - ITAT MUMBAI] – debentures when issued is a loan, whether it is convertible or non- convertible, does not militate against the nature of the debenture being loan - the expenditure incurred would be admissible as revenue expenditure – Decided in favour of Assessee. Claim u/s 10B of the Act – Exclusion of freight charges - Held that:- In case any amount is excluded to be from export turnover, the same is required to be excluded from the total turnover as well – The decision in Income-Tax Officer Versus Sak Soft Limited [2009 (3) TMI 243 - ITAT MADRAS-D] followed - for the purpose of applying the formula u/s 10B(4), the freight, telecom charges or insurance attributable to delivery of articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing technical services outside India are to be excluded both from the export turnover and from the total turnover, which are numerator and denominator respectively in the formula – the AO is directed to exclude that amount from total turnover, if the same is excluded from the export turnover. Unrealized export proceeds – Held that:- RBI as a part of foreign trade policy in September, 2004 announced by Government of India had issued a general Circular on 01-11-2004 as Circular No. 25 wherein it has been decided that 100% export oriented units (EOUs) and units set up in Hardware Technology Parks (HTPs) and Software Technology Parks (STPs) and Bio Technology Parks (BTPs) should be allowed to realize and repatriate the full value of export proceeds within a period of 12 months from the date of export - RBI is the authority as far as the foreign trade is concerned and income-tax Act also permits such extended period, if duly authorized - thus, the AO is directed not to exclude the export proceeds received from the export turnover as well as from the total turnover, as they were received with in time permitted by RBI. Denial of benefit u/s 35 of the Act – Held that:- Principally the amount is allowable u/s 35 even though weighted deduction is not allowable as Assessee could not furnish relevant forms - AO/DRP however did not consider the actual claim of Assessee i.e. first R&D expenditure and then weighted deduction - While allowing weighted deduction on some of the amounts, the balance amount was totally ignored, which is to be considered u/s 35(1)(iv) - Relying upon Ayushakti Ayurved (P) Ltd. Vs. ACIT [2010 (2) TMI 761 - ITAT, Mumbai] – both the AO/DRP did not even consider the objections raised by Assessee in this regard – thus,the matter is remitted back to the AO for fresh examination – Decided in favour of Assessee.

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• 2014 (4) TMI 26
  Deletion of disallowance on account of Internal Development Expenditure – Held that:- The AO had disallowed the claimed expenditure with this observation that out of the total development expenditure incurred on internal development, expenditure on the maintenance, billing services could not be treated as expenses for construction and development – Relying upon assessee’s own case for the previous assessment year, the addition made by the AO on account of disallowance of internal development expenditure is set aside and the amount is allowed to be debited to work in progress account - the order of the first appellate is comprehensive and reasoned – thus, there is no reason to interfere in the findings of the CIT(A) – decided against Revenue. Deletion made of reclassification of income from house property – Held that:- CIT(A) was of the view that the income received from the properties owned by the appellant and shown in the balance sheet as income from house property - there was no dispute on the fact that the assessee is owner of all the properties and that the rental income was derived from such properties and section 22 of the I.T. Act does not say anywhere that property should be held as investments as the basis of assessing the income from other sources – Relying upon assessee’s own case, the CIT (A) has rightly decided the issue in favour of the assessee with direction to treat the income from such properties as income from house property and to allow deduction u/s 24(a) of the Act – the order of the CIT(A) upheld – Decided against Revenue. Deletion on account of notional rental income vacant/leased properties – Held that:- CIT(A) followed M/s DLF Office Developers vs. ACIT [2008 (4) TMI 530 - ITAT DELHI ] - where there was an intention to let out the house property and assessee took steps to let it but could not get suitable tenant, in such cases the annual value have to be worked out u/s 23(1)(c) of the IT Act and according to this clause if the actual rent received/ receivable during the year is Nil then that has to be taken as annual value of the property in order to compute the income from property - in case of the assessee where the property remained vacant then the ALV of such property will be Nil - the notional addition made by the AO under the head "income from house property" on account of notional income u/s 23(1)(a) of the Income Tax Act is deleted – Decided against Revenue.

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• 2014 (4) TMI 25
  Validity of reopening of assessment u/s 147 of the Act - Whether the CIT(A) has erred in holding the reopening of assessment as bad in law – Held that:- The reopening of assessment u/s 147 and 148 of the Act is not permissible beyond four years of limitation as per provisions of the Act – Held that:- The CIT(A) was of the view that the reopening of completed assessment on the issue of testing and coordination charges and third party inspection charges and accreditation charges was only on change of opinion on these issues by the subsequent AO because these issues were already examined and looked into by the AO who completed the original assessment u/s 143(3) of the Act - these two issues were already examined and looked into by the A.O. who completed the original assessment order u/s. 143(3) of the Act. The belief formed by subsequent AO on these two issues was nothing but mere change of opinion – Relying upon Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - the reopening on the basis of change of opinion is not permissible under the Act and Law - the notice of reassessment u/s 148 of the Act issued on 28.03.2008 was issued after the four year limitation time as stipulated in section 149(1)(a) of the Act - notice of reopening of assessment u/s 148 of the Act was also not sustainable and without jurisdiction – thus, the order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (4) TMI 24
  Deletion made u/s 14A of the Act – Invocation of Rule 8D of the rules – Held that:- The decision in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] followed - the matter is required to be sent back to the file of the Assessing Officer for re-computation of disallowance under Section 14A, without applying Rule 8D – but, the assessee’s requested to sustain the addition due to smallness of the amount – thus, the disallowance made by the AO is upheld – Decided in favour of Revenue. Deletion made on expenses – Expenses incurred on foreign travelling of directors – Admission of additional evidences – Held that:- CIT(A) was of the view that primary purpose of directors’ visit was to meet Senior Vice President of Fairbank Morse in support of which copies of relevant e-mails were produced before the CIT(A) - The assessee had also produced before the CIT(A) the evidence of other business meetings in Indianapolis and Munich - the foreign travel undertaken by the two directors who were actually engaged in the business of the assessee was for the purpose of business – thus, there is no need to interfere with the order of CIT(A) – Decided against Revenue.

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• 2014 (4) TMI 23
  Determination of year of acquisition of the capital asset – Capital asset transferred – Determination of Indexed cost of acquisition - Whether the right to receive the flats on the fourth and fifth floor of the building has accrued to the assessees by virtue of the operation of the agreement dated 26.09.1986 or by the modification agreement dated 23.07.2003 – Held that:- As per the original agreement, the assessees are entitled for the second/third floor flats and the subsequent modification allowing the assessees to receive the flats on fourth/fifth floor instead of second/third floor flats will only substitute the assessee's existing right to receive the constructed property - the assessees right to receive the fourth/fifth floor flats have been accrued to them on 26.09.1986 itself i.e., the original date of agreement - the authorities below are not justified in adopting the indexation cost from the year 2003 on the ground that transfer has taken place in the said year - thus, both the assessees are entitled for claiming the indexed cost of acquisition from the year 1986 onwards – the order of the CIT(A) set aside – Decided in favour of Assessee.

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• 2014 (4) TMI 22
  Disallowance of 50% of hamali charges and local loading charges – Held that:- The assessee's business definitely calls for engagement of labour and hamali - the assessee has maintained self-made vouchers which by themselves may not offer any credibility but if the same is verified with the Acquittance Register, it might prove the veracity of the assessee's claim – thus, the addition made is set aside and the matter is remitted to the AO for fresh reconsideration – Decided in favour of Assessee. Commission from local sales – Held that:- Neither the AO nor the CIT(A) have been able to bring on record any evidence in support of such addition - the statement of a partner alone cannot form the basis for any addition, but corroborative evidence has to be found to make and sustain an addition - In the absence of any corroborative evidence, the statement of a partner alone cannot form the basis for making the addition – Decided in favour of Assessee. Difference in sundry credits – Documentary evidences not considered - Held that:- The issue also should be remitted back to the AO for verification of the assessee's contentions and if it is found that it is a double addition and is on account of a mistake occurring in the books of account, then the AO is directed to delete the addition – Decided in favour of Assessee.

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• 2014 (4) TMI 21
  Eligibility for deduction u/s 80P(2)(d) of the Act- Interest receipts from deposits – Held that:- The assessee has neither offered to tax the interest income and therefore, there is no question of the assessee claiming deduction u/s 80P(2) - If interest income is offered for taxation and then deduction is not claimed, section 80A(5) would have application - The AO had added the interest income which otherwise would have been allowed as a deduction – thus, on the principles of equity, the Assessing Officer was duty bound to give the assessee a change to claim deduction u/s 80P(2). In CIT vs. Mahindra Mills [2000 (3) TMI 3 - SUPREME Court] it has been held that the Department should not take advantage of ignorance of an assessee and every assessee should be made known of his/its tax liability as well as benefits, reliefs and deduction available under the statute - also in Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] – the provision of Income Tax Act, 1962 restricted the power of the assessing authority to entertain a claim of deduction otherwise than by way of filing a revised return - such restriction did not extend/impinge on the power of the Appellate Tribunal u/s 254 of the Act – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (4) TMI 20
  Addition made u/s 68 of the Act - Unaccounted cash payments – Assessment u/s 153A of the Act - Held that:- The denial by both the parties, consequent to impounding of the cash receipt from the assessee's premises was only self- serving - It is a business practice of paying amounts in cash in real estate transactions and evidencing them is generally not possible, unless there are receipts given by the parties affirming the receipt of cash - More so when cash was paid outside books of accounts. As seen from this transaction, even though a development agreement was entered in October, 2006, the transaction was not concluded and the owners who were supposed to get developed area towards their share could have asked for as compensation or for further payment in view of the enhanced values in the market. There could be re-negotiations and as part of that assessee could have paid the amounts - Since assessee admits that there was re- negotiations/settlement at that point of time, it has to be considered that assessee indeed paid the amount to the owners/consenting parties at that point of time and denial subsequently was certainly a self-serving one - The details of payments he could not confirm - paying amount to the owners by way of cash even when it is only a development agreement was not ruled out - a cash receipt was found in the course of proceedings in the assessee's premises, the assessee could have paid the amount out of its unaccounted sources and the receipt has to be believed as genuine payment of money – thus, the order of the CIT(A) upheld – Decided against Assessee. Addition made on account of low profitability – Held that:- As seen from the computation of income filed by the assessee there was no denial of rental income - The AO admitted the later figure while arriving at the income declared by the assessee whereas, according to the assessee, the gross income from the rental of the property was to be taken at Rs.1,54,65,736/-, as per the statement recorded in the course of search - Since the difference arose due to payment of municipal tax and statutory claim, the basis for making the addition by the A.O. itself was wrong - There is no other issue to be considered as the assessee has shown the profits and loss from various projects and also admitted an amount of Rs.70,00,000/- in the course of search - Just because there is a shortfall in declaring the income after claiming statutory deductions, the same cannot be considered as shortfall in declaration of the income when AO did not find any other shortfall or mistakes in the accounts maintained by the assessee – thus, the contentions of the assessee are accepted and addition made by the AO set aside – Decided in favour of Assessee.

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• 2014 (4) TMI 19
  Allowability of Turnover discount and Service discount – genuineness of discount - Held that:- CIT(A) held that the terms and conditions submitted by the Assessee does not inspire any confidence and has no mark of genuineness - the Assessee has not brought any material on record to show as to how Mak Pump Industries failed to qualify for discount whereas M/s Jai Balaji succeeded in getting discount - assessee could not bring any material on record to controvert the findings of AO and CIT(A) - the Assessee has not produced any evidence to show that the discounts which were allowed to Jai Balaji was also allowed to other parties in the past or in subsequent years - CIT(A) has held the expenses to be non-genuine and there is no reason to interfere in the findings of the CIT(A) – Decided against Assessee.

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• Customs

• 2014 (4) TMI 18
  Denial of refund claim - Assessment of bill of entry has not been challenged by the appellant - Held that:- it is case where the Bill of Entry was assessed but the goods have not been received by the appellant. Therefore, they have filed a refund claim for duty paid for which they have not received any goods. In these circumstances, the reassessment of Bill of Entry is not required in the light of the case of Aman Medical Products Ltd. [2009 (9) TMI 41 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2014 (4) TMI 17
  Waiver of pre deposit - Mis-declaration of goods - Mis-declaration in value of goods - Held that:- From the records, it is evident that the Revenue has accepted the FOB prices declared by the appellant and also sanctioned the DEPB credit on the basis of such declaration. Therefore, the mis-declaration of PMV can only be considered a as an error without any intent to contravene the law. In these circumstances, the appellant should have been only warned rather than imposed with penalty - appellant has made out a case for waiver of pre-deposit of the penalty imposed. Accordingly, we grant unconditional waiver from pre-deposit of the penalty adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.

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• 2014 (4) TMI 16
  Prohibition to function as a Customs Broker within his jurisdiction - Regulation 23 of CBLR, 2013 - Held that:- Clause (f) of sub-section (2) deals with the appeals. The said section specifically says that appeal against an order of suspension or revocation of a licence is only admissible if the Regulations so provide. Thus, there is no specific provision for provided in the Regulations to hear an appeal against an order of prohibition. Therefore, so long as the section 146(2) does not provide for appeal against an order of prohibition, it cannot be presumed that CBLR, 2013 provides for an appeal against the order of prohibition to be heard by this Tribunal. The entire CBLR, 2013 has been framed under the powers conferred under section 146(2). Therefore, the provisions of CBLR, 2013 cannot be interpreted in such a way so as to override the provisions of section 146(2). In this view of the matter, we are of the considered view that the appeal against the order of prohibition does not lie before this Tribunal. Accordingly, the same is dismissed as not maintainable - Decided against assessee.

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• Service Tax

• 2014 (4) TMI 38
  Waiver of pre deposit - Valuation of goods - Whether the valuation of the services provided by the appellant has been correctly taken by the appellant - Whether the disputed contracts entered into by the appellant can be vivisected and whether the sale value of the goods charged by the appellant from its customers represent only the price of the goods or also include consideration for performing a service also - Held that:- The issue is contentious one and needs deeper consideration, which can be gone into detail at the time of final hearing of the matter - Conditional stay granted.

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• 2014 (4) TMI 37
  Demand of service tax - outdoor catering service - Adjudicating Authority failed to correlate records with the service tax returns, and amount shown towards outdoor catering with the TISCO - Held that:- It is a case where the actual liability of service tax payable has not been considered by both the authorities. In the absence of that, matter needs examination at the end of the Adjudicating Authority on the basis of ST3 returns provided by the Respondent as well as the books of accounts and thereafter to arrive at a decision in accordance with law - Matter remanded back - Decided in favour of assessee.

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• 2014 (4) TMI 36
  Demand of service tax - Supply of manpower - Penalty u/s 76 & 78 - Held that:- Appellant has not undertaken any recruitment activity for M/s. Bajaj and, therefore, for the period up to 16/06/2005 the activity of the appellant does not come within the purview of service tax under the category of 'manpower recruitment agency service' as defined in law. However, w.e.f. 16/06/2005 the scope of the taxable service was widened bringing within the purview not only recruitment but also supply of manpower and the taxable service was also amended so as to levy on the activity of supply of manpower. Therefore, supply of manpower would be exigible to service tax effective from 16/06/2005. Appellant's activity comes within the purview of supply of manpower on or after 16/06/2005 and the appellant would be liable to discharge service tax liability on the consideration received w.e.f. that date along with interest. The appellant would also be liable to penalty under the provisions of Section 76 of the Act for the default/delay in payment of service tax. No penalty under Section 78 is warranted - Decided partly in favour of assessee.

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• 2014 (4) TMI 35
  Rectification of mistake - Duty demand - SCN issued beyond period of limitation - Held that:- show cause notice was issued by invoking the proviso to Section 73 of the Act, which provides that demand for five years can be made in the case of suppression or misstatement of facts. Therefore, we find no merit in the contention of the applicant that the show cause notice is served not within one year. Further, we find that though the demand in the show cause notice is by invoking extended period of limitation, however while passing the final order, the Bench set aside the demand beyond the normal period. In these circumstances, we find no error apparent on record in the final order - Decided against Appellant.

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• 2014 (4) TMI 34
  Scope of the term Export - Money transfer business – Location of the consumer - Whether the issue as to what constitutes export of services is to be determined with reference to provisions in Export of service Rules, 2005 only – held that:- Following decision of Paul Merchant Ltd. vs. CCE, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] - Decided in favour of assessee.

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• Central Excise

• 2014 (4) TMI 15
  Jurisdiction of Tribunal - Reduction of penalty - Penalty u/s 11AC - Whether the appellate Tribunal on the facts and circumstances of the case could reduce the penalty amount, which is less than the amount of penalty specified under section 11 AC of the Central Excise Act, 1944 - Held that:- quantum of the penalty equal to the duty determined as contemplated by Section 11AC is mandatory and there is no discretion in the adjudicating authority or the Tribunal to impose different amount of penalty. In a case where penalty is leviable under section 11AC on fulfilment of the conditions as enumerated in Section 11AC, the penalty equal to the amount of duty determined is mandatory and there is no discretion in the Tribunal to reduce the said penalty - penalty under section 11AC can be imposed only when conditions mentioned in Section 11AC exist. The authorities have no discretion in fixing the quantum of penalty and penalty equal to the duty must be imposed once section 11Ac is made applicable - Decided in favour of Revenue.

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• 2014 (4) TMI 14
  Restoration of appeal - Non appearance of counsel - Held that:- The restoration application was filed on the same day. There is no finding in the order impugned that the appellant was delaying the matter. The non-appearance of the counsel at 3.25 P.M. in the Tribunal was explained by stating that the counsel had to rush to the High Court where another case was called out in the afternoon. The circumstances in which the counsel for the appellant could not appear was beyond the control of the appellant, and we are of the view that the explanation give for non-appearance was sufficient enough to restore the appeal and hear the appeal on merits - Appeal restored.

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• 2014 (4) TMI 13
  Duty demand - equivalent penalty u/s 11AC - Undervaluation of ‘Frit’ manufactured - No opportunity for cross examination granted - clandestine removal of frit - gas consumption of the main appellant - Held that:- Adjudicating authority has written eleven pages from Para 10.1 to 10.3 on the aspect as to why appellants request for cross-examination is not justified, however, one fails to understand as to how one entry of Transparent -2 quality Frit, in a pen drive maintained by an employee of ‘Sanyo’ can be applied to the entire period for determining undervaluation during which different varieties of frit are manufactured. There could be variation in the sale prices of the same product as per the transaction price and market negotiations. To test this piece of the evidence, it is perfectly justified on the part of the appellant to seek cross-examination of the persons who maintained the record in the pen-drives. Further, there are factual irregularities in the Panchnamas prepared by the investigation justifying cross-examination of the panchas. Gas consumption varied from season to season, from one quality of frit to other quality of frit, use of better technology etc. It has also been brought on record that after change in the management in Oct 2007 and installation of new furnaces and new refractories, the gas consumption has reduced. Further appellant has also brought on record that due to expert consultations and use of certain fluxes also the gas consumptions per MT of frit have come down. Evidences were also brought on record during the course of hearing regarding installation of an Electricity Generator and replacement of better quality refractories in the kilns by the main appellant. Under the above factual matrix, the method used by the investigation cannot be a sound method to demand duty on assuming 318 SCM of gas required for manufacturing one MT of any quality of frit. The improper method adopted by the Revenue for calculating duty was agitated by the appellants before the adjudicating authority. During conducting of gas consumption studies on 23/ 24.02.2010 by investigation only frit product code ‘OP 202’ was being manufactured. It has been contested by the appellant that different frit product codes may consume different quantities of gas. As the appellant is not undertaking the manufacture of one standard product, in the interest of justice, it will be appropriate to conduct a few more representative studies of different frit product codes in order to arrive at a more realistic gas consumption PMT of frit manufactured - matter is required to be remanded back to the adjudicating authority to extend the opportunity of cross-examination of the persons - and also to conduct a few more representative studies on the gas consumption on the pre-dominant frit codes manufactured by the appellant during the relevant period - Following decision of Basudev Garg vs. Commissioner of Customs [2013 (5) TMI 350 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2014 (4) TMI 12
  CENVAT Credit - simultaneous manufacturing and trading activity - whether trading activity is exempt service - appellant assessee undertakes trading of motor vehicles in as much as they import motor vehicles from their principals abroad and sell such motor vehicles in India - availment of credit on input services in relation to trading of motor vehicles/cars. Held that:- trading was not a service and therefore, cannot be considered as an exempted service during the period prior to 1.4.2011 and the amended provision with effect from 1.4.2011 will not have retrospective effect. Appropriation of credit between manufacturing and trading and import of cars - Held that:- though clause (c) of Explanation I added with effect from 1.4.2011 and are of the view that perhaps the said new method has been adopted to encourage the trading of the goods rather than the manufacturing of the goods (otherwise criterion should have been same viz. based upon turnover or value addition) - for the period under dispute the credit of service tax paid on the common input services should be apportioned in the same ratio as the turnover of the manufactured and traded cars. Extended period of limitation - Held that:- The assessee is following the self assessment procedure and taking credit on its own. They were even taking the credit in respect of input services which were exclusively used in the trading activity. It is also observed that the fact that the appellants were taking credit of service tax in relation to the trading activity has not been disclosed in return or in other document and therefore, the extended period of limitation is correctly invoked. These reasons would be applicable even for penalty under Section 11AC read with Rule 15 of Cenvat Credit Rules including the demand of the normal period issued in the first show-cause notice - Decided against the assessee.

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• 2014 (4) TMI 11
  Waiver of pre-deposit of duty - Whether freight charges incurred by the applicant in transferring the goods from their factory to the premises of buyer during the period from 2004-05 to September, 2008 are includible in the assessable value of the finished goods - Held that:- applicants are showing both ex factory price as well as freight charges separately in the excise invoices. In view of the judgment of this Tribunal in Haldia Petro Chemicals case &Nav Bharat’s case (2008 (12) TMI 47 - CESTAT KOLKATA), we are of the opinion that the applicants could able to make out a case for total waiver of pre-deposit. Accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the appeal - Stay granted.

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• 2014 (4) TMI 10
  Quantum of penalty - Lower appellate authority has reduced the penalty imposed - Held that:- Only ground taken by the lower appellate authority for reduction of penalty is that the company was registered with the BIFR and since duty along with interest have already been paid, he took a lenient view and reduced the penalty - respondent in the present case, initiated proceedings under SICA 1985 on malafide grounds with an intention to default legitimate recovery of excise duty and accordingly, the hon'ble High dismissed the application of the respondent - company had not approached the BIFR for honest purpose, but sought to pursue the proceedings under SICA 1985 as a cover to stall the legitimate recovery of the due amount in Central Excise duty. In these circumstances, the ground taken by the lower appellate authority for reduction in penalty is clearly unsustainable - Decided in favour of Revenue.

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• 2014 (4) TMI 9
  Waiver of pre deposit - Duty demand - Invocation of extended period of limitation - Held that:- applicants had already deposited Rs. 27 crores in cash. We also note that in the case of JCB vs CCE, Pune (2014 (2) TMI 632 - CESTAT MUMBAI) the issue is held in favour of the assessee by the Commissioner of Central Excise and the Tribunal allowed the appeal filed by Revenue and upheld the demand of normal period of limitation. In these circumstances, particularly in view of the contention of the applicants regarding availability of credit, we find that amount already deposited is sufficient for hearing of the appeals. Pre-deposit of the remaining dues is waived and recovery thereof stayed for hearing of the appeals - Stay granted.

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• 2014 (4) TMI 8
  Reversal of CENVAT Credit - Value of goods written off in books of accounts - Held that:- Goods have been used in the manufacture of excisable goods, subsequent to issue of impugned order - during the relevant time rules did not require reversal of credit when value of inputs was only partially written off. In respect of work in progress also we see merit in the argument of the appellant because the goods are used in manufacturing activity once it reaches the stage of work-in progress - In view of subsequent developments claimed by the appellant, which are relevant for determining liability, the impugned order is set aside and the matter is remanded to the adjudicating authority for verification of claims on facts and deciding afresh on the legal issues raised - Decided in favour of assessee.

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• 2014 (4) TMI 7
  Duty demand - Non cross examination of parties - Held that:- appellants had made a specific request for cross examination of all these persons in his reply to the show cause notice and there is no whisper in the said order dealing with the appellant’s request. We note that inasmuch as the Revenues entire case is primarily based upon the statement of Shri Roshan Lal and his son Pawan Kumar, it was obligatory on the part of the adjudicating authority to tender these persons for cross examination so as to test the veracity of the correctness of their statement, especially when said two persons have been changing their stand. The statement of said two persons is different when they are before the authorities and subsequent retraction when they are free and away from the officers. In these circumstances, it was required that these persons were tendered for cross examination. As such, we set aside the impugned order and remand the matter to original adjudicating authority to re-adjudicate the issue after allowing cross examination of Shri Roshan Lal as also of Shri Pawan Kumar. Appellant is free to make a request for cross examination of other persons, whose statements are being relied upon by the revenue in support of their case - Decided in favour of assessee.

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• 2014 (4) TMI 6
  Condonation of delay - Delay in receiving order - Held that:- there is delay of 845 days in filing of appeal. The reason explained by the applicant is that the applicant received the notice for hearing in respect of the appeal filed by Revenue and subsequently, the applicant filed this appeal. I find that notice of hearing in the appeal filed by Revenue is dated 24.5.2010 and as per provision of Section 35B (4) of the Central Excise Act, 1944, the assessee can file cross-objection within 45 days from the date of receipt of notice of hearing. In the present case as the notice of hearing in the appeal filed by Revenue was received in the month of April 2010 and the present appeal was filed on 31.7.20102 hence there is delay of more than 2 years. Even in the present case, the appeal be treated as cross-objection in the appeal filed by Revenue. There is delay of more than 2 years. In these circumstances, I find that as per provision of Section 35B(4) the Tribunal has power to condone the delay in filing of appeal or any cross-objection in case reasonable cause is explained for not filing appeal/cross-objection within period of limitation. In the present case, the appellant has failed to explain the reasonable cause in filing of appeal or cross-objection within the period of limitation - Condonation denied.

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• 2014 (4) TMI 5
  Penalty under Rule 15 of Cenvat Credit Rules 2004 - Suppression of fact - Intention to evade duty - Held that:- respondent claiming cenvat credit in respect of capital goods along with monthly return specifically took the plea that the items were used for manufacturing frame on the top brass section of the plant. In these circumstances, the allegation of suppression of fact with intent to evade duty is not sustainable - Decided against Revenue.

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• 2014 (4) TMI 4
  Entitlement to CENVAT Credit - GTA services - Revenue contends that respondents have wrongly availed the credit on the services of GTA for outward transportation of goods beyond place of removal - Held that:- freight is a part of the price as this fact is not in dispute. The Board therefore, issued a Circular No.97/8/2007 dated 23.8.2007 - However, there may be situations where the manufacturer/consignor may claim that the sale has taken place at the destination point because in terms of the sale contract/agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the Service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods occurred at the said place - Decided against Revenue.

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• 2014 (4) TMI 3
  Denial of CENVAT Credit - Denial on the ground that the activity undertaken by them on the said batteries does not amount to manufacture - Held that:- Issue is directly covered by umpteen numbers of decisions of the Tribunal, confirmed by the various High Courts. At this stage, we also take note of the Supreme Court’s decision in the case of CCE Vs. Narayan Polyplast [2004 (11) TMI 112 - SUPREME COURT OF INDIA] as also the confirmation of Gujarat High Court decision in the case of Creative Enterprises confirmed by the Supreme Court. As such, we find that the issue is settled. Reliance by ld. Jt. CDR on the decision of the Tribunal in the case of Printo India Graphics (P) Ltd. [2011 (4) TMI 899 - CESTAT, NEW DELHI] is not appropriate inasmuch as the same deals with interest on wrong availment of credit and does not deal with the issue involved in the present matter - Stay granted.

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• 2014 (4) TMI 2
  Waiver of pre deposit - Valuation - Duty demand on the ground that freight expenses incurred by the appellant for transporting the goods to their buyers premises are required to be included in the assessable value inasmuch as the place of removal gets extended to the buyers premises on account of FOR sales - Held that:- Prima facie case not in favour of assessee - Conditional stay granted.

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• CST, VAT & Sales Tax

• 2014 (4) TMI 41
  Effect of Repeal and reenactment – Reopening of assessment - Non – disclosure of returns and escapement of assessment - legislative intent - Section 6 of the General Clauses Act - Held that:- judgment in Gammon India Ltd. Versus SPL. Chief Secretary and others [2006 (2) TMI 278 - SUPREME COURT OF INDIA] followed - Whenever there is a repeal of an enactment and simultaneous reenactment, the reenactment is to be considered as reaffirmation of the old law and provisions of the repealed Act which are thus reenacted continue in force uninterruptedly unless, the reenacted enactment manifests an intention incompatible with or contrary to the provisions of the repealed Act - Such incompatibility will have to be ascertained from a consideration of the relevant provisions of the reenacted enactment and the mere absence of saving clause is, by itself, not material for consideration of all the relevant provisions of the new enactment - In other words, a clear legislative intention of the reenacted enactment has to be inferred and gathered whether it intended to preserve all the rights and liabilities of a repealed statute intact or modify or to obliterate them altogether. The argument that the proceedings were not initiated under the Repealed Act, and thus no proceedings for reassessment can be undertaken is entirely misconceived - Where assessment under the old Act is to be reopened the proceedings have to be withdrawn under the old Act - The provisions of Section 6 of the General Clauses Act have effect on repeal and such effect is enumerated u/s 81 of the U.P. VAT Act, 2008 - The proceedings drawn for reassessment in accordance with the provisions of the old Act - The petitioner has alternative remedy of filing appeal against the order u/s 55 of the U.P. VAT Act, 2008 - The writ petition is dismissed on the ground of alternative remedy – Decided against assessee.

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• 2014 (4) TMI 40
  Sales tax Amnesty Scheme - Whether the authority was justified in rejecting the application w.r.t. Circular - Liquidation of liability - Entitlement for Scheme – application was rejected referring to Circular No.13/08 pointing out that the value of the assets was more than the settlement liability - Held that:- Circular was issued with reference to proposal in the Bill disappeared, when the Bill got transformed into the 'Act' - the stipulation on which circular was based, has Section 23B of the 'Act' does not contain any such adverse stipulation/circumstance, which bars the way of the petitioner in availing the benefit of Amnesty Scheme - The Court does not require any further thought to hold that Ext.P5 Circular has become redundant and it is not liable to be acted upon by any of the authorities of the respondent State - It is declared accordingly. After introduction of the Amnesty Scheme in the year 2008, it was not extended for the next year - But by virtue of the provisions of the Finance Act 2013, it was decided to be extended - Though the time originally stipulated got expired on 31.12.2013, it now stands extended till 31.03.2014 -The Court finds that the petitioner is entitled to have the benefit of Amnesty Scheme and the application filed in this regard is liable to be reconsidered - Ext.P4 order set aside - The first respondent directed to reconsider Ext.P3 application and inform the petitioner as to the amount to be satisfied under the Scheme - The proceedings as above shall be finalised within two weeks and petitioner to satisfy the due amount in terms of the Scheme on or before the last date for effecting the deposit – Decided in favour of assessee

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• 2014 (4) TMI 39
  Heavy condition of Security – Genuineness of transactions – Ab initio cancellation of registration - Held that:- The only ground on which the authority imposed the heavy condition of security of Rs. 10 lakhs was that the assessee had certain transactions with the dealers whose registrations were cancelled ab initio – From the record of this order it emerges that assessee did not indulge in any bogus billing activity - The assessee had no bogus dealing with such dealers, in some of the cases dealers had also questioned the cancellation of their registration and that the assessee had never defaulted in filing returns or paying tax. Considering the turnover of the assessee and the probable tax liability, condition of security deposit of Rs. 10 lakhs is too harsh in terms of section 28(2) of the VAT Act - Condition imposed by VAT authority is modified by requiring the assessee to give security of Rs. 2 lakhs - The appellant would have time upto 20.4.2014 to do so - Both the tax appeals allowed partly - No opinion expressed on the action of the authority in cancelling the registration ab initio for which separate proceedings parallely have gone on - It is further clarified that this order shall have effect only if such cancellation is set aside – Decided partly in favour of Assessee.

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• 2014 (4) TMI 1
  Imposition of entry tax - Importation of natural gas - identification of "value of goods" under Entry of Goods into Local Areas Act, 2007 – Held that:- Judgment in State of Karnataka Vs. Hansa Corporation [ 1980 (9) TMI 273 - SUPREME COURT ] followed - The dealer has some specific price of the scheduled goods which are being brought within the local area at the time of entry in the local area and the entry being the taxing event that would be the price which alone can be taken into account for computing the tax ad valorem - The expenses incurred by assessee after transporting the goods inside the local area where it has to be consumed, used or sold, would not be a part of "value of goods" for the purpose of tax liability under Act, but it shall confine upto the stage where the goods are brought inside the local area – ‘Sale price' of the goods by importer, inside the local area, cannot be identified as "value of goods" under Act - The price on which the goods are sold by assessee to its ultimate consumers inside local area cannot be taken as "value of goods" for the purpose of taxability under Act, 2007 – Judgment of Tribunal set aside - Matter remanded back to Tribunal for passing of fresh order - Decided in favour of assessee.

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