TMI Tax Updates - e-Newsletter
April 25, 2016

Case Laws in this Newsletter:

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

TMI SMS

• State Govt has no power to levy VAT exceeding 5% on iron & steel used in the same form in the works contract falling u/s 14 of CST Act - HC

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Articles

1. A SERVICE NOT COVERED IN DEFINITION OF ‘TAXABLE SERVICE’ IS AN EXEMPTED SERVICE UNDER CENVAT CREDIT RULES, 2004

   By: DR.MARIAPPAN GOVINDARAJAN

2. RUBBER TREES BEING DURABLE PLANT BEING BASIC APPARATUS, HAVING FUNCTIONAL ROLE, LIMITED USEFUL LIFE ARE DEPRECIABLE ASSETS BEING ‘PLANT’ for the purpose of S.32 read with S.43(3) of the Income-tax Act,1961

   By: DEVKUMAR KOTHARI

News

1. Parliament session from April 25 to complete financial business

2. The Central Government constitutes a sub-committee of the High Level Committee under Dr. Ashok Lahiri, to interact with the trade and industry on the imposition of Central Excise Duty on jewellery

Notifications

Income Tax

1. 27/2016 - dated 7-4-2016 - IT

Notification u/s 35(1) (ii) - Approved organization - Central Power Research Institute Bengaluru

Indian Laws

2. G.S.R. 438(E) - dated 22-4-2016 - Indian Law

Indian Revenue Service (Customs and Central Excise ) Group ‘A’ Rules, 2016

SEZ

3. S.O. 1471(E) - dated 19-4-2016 - SEZ

De-notification to certain specified area from the sector specific Special Economic Zone for aluminium and aluminium related industry at Shendre Industrial Area, District Aurangabad, Maharashtra

4. S.O. 1462(E) - dated 6-4-2016 - SEZ

Additional Area notified to a sector specific Special Economic Zone for information technology and information technology enabled services at SIPCOT IT Park, Siruseri and Kazhipattur Villages, Chennai, Tamil Nadu

Circulars / Instructions / Orders

DGFT

1. TRADE NOTICE NO. 1/2016 - dated 5-4-2016

Open House for Applicant on every Wednesday in all RA offices

Central Excise

2. 1026/14/2016-CX - dated 23-4-2016

Imposition of Central Excise duty on jewellery Constitution of sub-committee of the High Level Committee

Highlights / Catch Notes

Income Tax

• University Denied Tax Exemption u/s 10(23C)(iiiab) Due to Lack of Government Funding.

  Case-Laws - SC : Appellant University is neither directly nor even substantially financed by the Government so as to be entitled to exemption under the provisions of Section 10(23C)(iiiab) - SC
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• Leasing Equipment Income Not 'House Property Income' Despite TDS u/s 194-I; Impacts Tax Categorization.

  Case-Laws - AT : Income from house property V/S Profits and gains of business or profession - Just because TDS was made u/s. 194-I, it cannot be treated as ‘house property income’ as the rent definition includes lease of equipment, lease of furniture, fittings which cannot be considered as ‘house property’- AT
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• Assessee's claim that one acre equals 4000 sq meters rejected for deductions under Income Tax Act Section 80IB(10).

  Case-Laws - AT : Deduction under section 80IB(10) - no merit in the claim of assessee that one acre is equal to 4000 sq. mtrs.- AT
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• Cooperative Bank Fund Expenditure Allowed as Deduction for Income Tax Calculations Under Relevant Tax Laws.

  Case-Laws - AT : Expenditure incurred towards fund - allowed as deduction while computing income of the assessee-co-operative bank - AT
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• Erection of Wooden Police Booths Deemed Revenue Expenditure; No New Asset Created, Assessee Lacks Ownership.

  Case-Laws - AT : Expenditure on erection of police booths which is made of wood - no new asset has come into existence nor the assessee has the ownership of the police booths so it should be treated as revenue expenditure - AT
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• Electricity expenses for Directors' residences should be taxed as a perquisite, not disallowed for the company.

  Case-Laws - AT : Disallowance on account of electricity expenses of Directors’ residence - personal use by Directors, expenditure cannot be disallowed in the hands of the assessee company although the claim may be added in the hands of the concerned Directors/ employees as perquisite- AT
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• Admissions in Tax Searches Need Corroboration: Statements Alone Insufficient Without Supporting Evidence for Validation.

  Case-Laws - AT : Admission by assessee during the search or survey proceedings cannot be considered as conclusive unless it is supported by corroborative evidence - AT
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• Taxpayer Wins Deduction: Section 54F Applies as Semi-Finished House Completed Within Three-Year Legal Limit.

  Case-Laws - AT : Deduction u/s. 54F - allowance of claim as assessee has purchased a semi-finished house and completed construction before the three years period as prescribed - AT
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• No Expenditure Incurred: Section 14A Disallowance Nullified for Dividend Income; No Notional Deduction Allowed.

  Case-Laws - AT : Disallowance u/s. 14A - no expenditure is incurred by the assessee in earning the dividend income no notional expenditure could be deducted from the said income - AT
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• Re-assessment Order Invalid Without Section 143(2) Notice After Section 148 Notice by Assessing Officer.

  Case-Laws - AT : Reopening of assessment - In the absence of notice under section 143(2) pursuant to notice under section 148, the re-assessment order passed by the Assessing Officer is rendered bad in law - AT
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• Section 50C of the Income Tax Act not applicable to share transfers, only to land transactions.

  Case-Laws - AT : Cpital gain - What in law has transpired is the transfer of shares, and not of land and, accordingly, section 50C will not come into picture - AT
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Customs

• High Court: Writ Petition Denied if Alternative Appeal Exists and No Breach of Natural Justice Occurs.

  Case-Laws - HC : If a petitioner has got an alternative remedy by way of an appeal and there is no violation of principles of natural justice, the Writ Petition cannot be entertained without exhausting an alternative remedy - HC
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• Customs Law: Entire Statements Must Be Accepted or Rejected, Ensuring Fairness in Evaluating Evidence.

  Case-Laws - AT : Only a part of the statement, favorable to the department, cannot be considered as acceptable but the entire statement has to be accepted or rejected - AT
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Wealth-tax

• Authorities Accept Government's Valuation of Taxpayer Properties, Rejecting Approved Valuer's Assessment for Wealth Tax Purposes.

  Case-Laws - AT : Adoption of value of the properties declared by the assessee as per Govt. ready reckoner by rejecting the valuation given by the Approved Valuer for the Wealth Tax allowed - AT
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Service Tax

• Party Admits to Unpaid Service Tax, Cannot Dismiss Summons for Liability Settlement.

  Case-Laws - HC : After giving voluntary statements admitting the non-payment of Service Tax and giving an undertaking to discharge the outstanding Service Tax liability, one cannot seek for quashing of summons - HC
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• Writ Petition Denied: Petitioner Must Exhaust Alternative Appeal Remedy After Utilizing Personal Hearing Opportunity.

  Case-Laws - HC : If the opportunity of personal hearing is awarded and utilised by the petitioner, there is no violation of principles of natural justice - Writ Petition cannot be entertained without exhausting alternative remedy by way of an appeal - HC
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• Entitled to File Refund: Appellant Can Apply u/s 11B of Central Excise Act, 1944 for Service Tax.

  Case-Laws - AT : If the appellant in the capacity of recipient of service files the refund application before the Central Excise Authorities, it should be proper and maintainable under Section 11B of the Central Excise Act, 1944 - AT
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Central Excise

• Supreme Court: Fresh Show Cause Notice Required for New Tax Classification Cases Under Central Excise Law.

  Case-Laws - SC : No new case could have been set up or decided contrary to the show cause notices regarding classification of goods, without issuing a fresh show cause notice to the assessee in this regard - SC
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• Tetmosol Soap: Medicated for Scabies, Also Suitable for General Use Under Excise Tariff Heading 3401.11.

  Case-Laws - SC : Tetmosol soap primarily used for treatment and prevention of scabies, therefore a medicated soap but nothing prevents it to be used for toilet purpose - Classifiable under CET Heading 3401.11 - SC
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• High Court Rules Limitation Period for Refund Claims Starts When Supporting Documents Are Provided by Department.

  Case-Laws - HC : Refund - Limitation is to be considered in the light of availability of requisite documents and should be taken to begin when documents necessary for substantiating the claim of refund are furnished by the department, which, in our considered view, should be the starting point for computation of limitation - HC
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• Automobile Cess Rules: No Penalties Imposed u/s 173(Q) of Central Excise Act, 1944.

  Case-Laws - HC : Automobile Cess Rules creates liability for the payment of automobile cess, but, it creates no liability for any penalty and hence any penalty cannot be levied under Section 173 (Q) of the The Central Excise Act, 1944 - HC
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VAT

• State Legislature Cannot Tax Iron & Steel Over 5% in Civil Works Contracts, Per Section 14 of CST Act.

  Case-Laws - HC : Rate of tax on iron and steel - Execution of civil works contract - State Legislature has no competence to levy tax at more than 5% on iron and steel used in the same form in the execution of works contract which falls under Section 14 of CST Act - HC
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Case Laws:

• Income Tax

• 2016 (4) TMI 874
  Exemption from payment of tax under the provisions of Section 10(23C)(iiiab) - direct grant from the Government - Purpose of University – Held that:- Having regard to the text and the context of the provisions of Section 10 (23c) (iiiab), 10 (23c) (iiiad) and 10 (23c) (vi) it will be reasonable to reach a conclusion that while Section 10 (23c) (iiiab) deals with Government Universities, Section 10 (23c) (iiiad) deals with small Universities having an annual “turnover” of less than Rupees One Crore (as prescribed by Rule 2 (BC) of the Income Tax Rules). On a similar note, it is possible to read Section 10 (23c) (vi) to be dealing with Private Universities whose gross receipts exceeds Rupees One Crore. Receipts by way of fee collection of different kinds continue to a major source of income for all Universities including Private Universities. Levy and collection of fees is invariably an exercise under the provisions of the Statute constituting the University. In such a situation, if collection of fees is to be understood to be amounting to funding by the Government merely because collection of such fees is empowered by the Statute, all such receipts by way of fees may become eligible to claim exemption under Section 10 (23c) (iiiab). Such a result which would virtually render the provisions of the other two Sub-sections nugatory cannot be understood to have been intended by the Legislature and must, therefore, be avoided. It will, therefore, be more appropriate to hold that funds received from the Government contemplated under Section 10(23c)(iiiab) of the Act must be direct grants/contributions from governmental sources and not fees collected under the statute. The situation before us, on facts, is different leading to the irresistible conclusion that the appellant University does not satisfy the second requirement spelt out by Section 10 (23c) (iiiab) of the Act. The appellant University is neither directly nor even substantially financed by the Government so as to be entitled to exemption from payment of tax under the Act. - Decided against assessee

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• 2016 (4) TMI 873
  Income from house property V/S Profits and gains of business or profession - nature of income - head of income - Held that:- The definition of rent includes any payment by whatever name called, for use of buildings including factory buildings, equipment, furniture or fittings. Even if machinery was leased, the consequent rent comes under the definition. But machinery lease can not be considered under ‘income from House property’. That indicates that just because TDS was made u/s. 194-I, it cannot be treated as ‘house property income’ as the rent definition includes lease of equipment, lease of furniture, fittings which cannot be considered as ‘house property’. AO’s opinion that since TDS made u/s. 194-I, incomes are to be assessed under head ‘income from house property’ can not be accepted. Moreover, even if assessee has let out property but, when the Memorandum of Association permits the business of letting out of properties as such, the income cannot be brought to tax as ‘income from house property’ as held in the above said case of Chennai Properties & Investments Ltd., Vs. CIT [2015 (5) TMI 46 - SUPREME COURT]. Therefore, both on facts of the case and also on law, as established by the Hon'ble Supreme Court in the above said case, receipts of assessee cannot be brought to tax under the head ‘house property’. The same is to be assessed under the head ‘Profits and gains of business or profession’ only. Allowance of expenditure - assessee’s contention that AO has arbitrarily, without giving opportunity, restricted the expenditure - Held that:- Since this issue was not examined by the CIT(A) in his order and since we are of the opinion that AO arbitrarily arrived at disallowance at a certain percentage, we are of the opinion that allowing of expenditure is to be re-examined by the AO. Assessee is directed to furnish necessary evidence in support of its claims. To that extent, orders of AO and CIT(A) are set aside.

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• 2016 (4) TMI 872
  Claim of deduction under section 80IB(10) - connotation of meaning of one acre i.e. the size of plot of land on which the housing project has to be developed in order to avail the deduction under section 80IB(10) of the Act - Held that:- Where 1 acre is equal to 4840 sq. yds. and one sq.yd. is equal to 0.83612736 sq. mtrs., so, one acre is equal to 4046.8564224 square meters. In the entirety of the above said facts and circumstances and information available in public domain and the unit measurement prevalent in the State of Maharashtra i.e. Guntas, we hold that the unit measurement of one acre is equal to 4046.8726 sq. mtrs. Even the information on Wikipedia in Marathi shows one acre is equal to 4046.8726 sq. mtrs. In the totality of the above said facts and circumstances, we find no merit in the claim of assessee in this regard that one acre is equal to 4000 sq. mtrs. Coming to the claim of the assessee that PCNTDA in the layout plan has mentioned 2500 + 1500 P.C and in Devnagari one acre is also written. In other words, the area of 4000 sq. mtrs. is equivalent to one acre. In the first instance, PCNTDA has communicated that it had leased out 4000 sq. mtrs. of land to the Lessee of plot which was developed by the assessee. The layout plan which is annexed to the Lease Deed, perusal of the same reflects the plots were demarcated into bulk lands of various measurements and one portion of the land in the middle of the layout plan is allocated to the Lessee Mr. Patil. On one side of the said plot was written as 2500 + 1500 P.C. i.e. 4000 sq. mtrs. + a road has been demarcated next to it, which is 172 roads 40s, etc. The assessee before us has pointed out that only portion of the land measuring 4000 sq. mtrs. was allotted and the roads were developed by PCNTDA itself. Even the garden was developed by PCNTDA itself. Accordingly, we hold that where the land allocated to Mr. Patel was only 4000 sq. mtrs. and the balance land had been marked for the development of side road out of original demarcation for one acre, but after allocation of 4000 sq. mtrs. and demarcation of land for roads, total plot was not one acre. Where the unit measurement for land is to be recognized as square meter and the assessee has developed its housing project on a plot of land measuring 4000 sq. mtrs., we find no merit in the claim of the assessee that it had fulfilled the conditions laid down in section 80IB(10) of the Act. Since the requirement of the Act is minimum area of one acre, which is equivalent to 4046.8726 sq. mtrs., the conditions laid down in section 80IB(10) of the Act are not fulfilled in the case of assessee and hence, it is not entitled to the said claim. Thus Claim of the assessee with regard to the area of row house No.1. having not been fulfilled the first condition of minimum area of land not entitled to the claim of deduction under section 80IB(10) - Decided against assessee

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• 2016 (4) TMI 871
  Expenditure incurred towards fund - Held that:- The amounts spent cannot be disallowed. We, direct the AO to allow the amount spent on the above fund as deduction while computing income of the assessee-co-operative bank. Allowance of additional claim on account of loss on sale of securities - Held that:- It is undisputed fact that this claim was made only in the return of income filed in response to notice u/s 148. The issue is whether the assessee is entitled to agitate the issues which were concluded in the original assessment proceedings? This additional claim was obviously not made in the original assessment proceedings nor this issue is one of those issues which is sought to be reconsidered by the AO during the course of re-assessment proceedings. Therefore, concluded issue in the original assessment proceedings cannot be re-agitated during the course of re-assessment proceedings. The ratio laid down by the Hon’ble Supreme Court in the case of Sun Engineering (1992 (9) TMI 1 - SUPREME Court ) is squarely applicable to the facts of the case. Even assuming that it is only re-adjustment of claim already made, such re-adjustment is not possible in the proceedings of re-assessment. The assessee can have recourse to any other provisions of the Income-tax Act, 1961.

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• 2016 (4) TMI 870
  Nature of expenditure - expenditure on erection of police booths which is made of wood - revenue v/s capital expenditure - Held that:- Neither any new asset has come into existence nor the assessee has the ownership of the police booths so it should be treated as revenue expenditure. We are also putting our reliance on the decision of Hon'ble Supreme Court in the case of Madras Auto Services (P) Ltd. (1998 (8) TMI 1 - SUPREME Court ). - Decided in favour of assessee

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• 2016 (4) TMI 869
  Disallowance of of "advertisement and circulation expenses" - Held that:- Assessing Officer has observed that in the course of checking of the claim, it transpires that significant portion of the claim incurred was incurred in cash and further instances were noticed where the expenses were apparently found to be not allowable. He has further noted that it was explained by the assessee that the expenditure claimed as mentioned here in before were incurred wholly for the business purpose but as per the Assessing Officer, the submission of the assessee were not found convincing as very nature of the expenses mentioned above establishes beyond doubt the same were personal in nature. After making these observations, the Assessing Officer has made adhoc disallowance of Rs. 10.00 lakh but it is surprising that even after stating this that the nature of expenses is personal in nature as per various instances noticed of the Assessing Officer, the Assessing Officer has not mentioned even a single instance of the expenses which are personal in nature. Ld. CIT(A) has deleted the disallowance made by the Assessing Officer to the extent of Rs. 8.00 lakh out of Rs. 10.00 lakh but he confirmed the disallowance of Rs. 2.00 lakh on this basis that Assessing Officer has mentioned that some of the expenses claimed were found to be not allowable or were personal in nature. Ld. CIT(A) has also not pointed out even a single instance of expenses which is not allowable or which is personal in nature. Under these facts, in our considered opinion, adhoc disallowance confirmed by the Ld. CIT(A) is not justified - Decided in favour of assessee Disallowance on account of electricity expenses of Directors’ residence - Held that:- Regarding the expenses incurred in respect of electricity expenses for the residence of the Directors, the judgment of the Hon’ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. Vs. CIT [2001 (7) TMI 70 - GUJARAT High Court ] supports the case of the assessee because it was held in this case that for the alleged personal use by Directors, expenditure cannot be disallowed in the hands of the assessee company although the claim may be added in the hands of the concerned Directors/ employees as perquisite. Respectfully following this judgment of the Hon’ble Gujarat High Court, we delete the disallowance Disallowance in respect of insurance premium paid for mediclaim policy of the Directors - Held that:- This much amount was incurred on account of payment to New India Assurance Co. Ltd. on behalf of the Directors in respect of insurance premium for personal accident policy and Mediclaim Policy. The Assessing Officer disallowed this claim by holding that these are personal expenses. This is not the case of the Revenue that such insurance premium was not payable by the assessee company as per the terms of appointment of the Directors. Hence, as per this judgment of the Hon’ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. Vs. CIT (Supra), this amount also cannot be disallowed in the hands of the assessee company although the same may be considered for taxation in the case of concerned Directors as per law and therefore, this disallowance is also deleted. Disallowance of expenses incurred on education and training of Shri Rahul Gupta for his education of MBA course in UK - Held that:- After returning to India after completion of study abroad, Mr. Rahul Gupta is providing consultancy to the assessee company free of charge and therefore, respectfully following this judgment of the Hon’ble Allahbad High Court in the case of CIT Vs. U.P. Asbestos Ltd. [2012 (9) TMI 1021 - ALLAHABAD HIGH COURT ], we delete the addition made by the Assessing Officer

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• 2016 (4) TMI 868
  Unexplained investment - addition made simply on the basis of the statement recorded u/s. 133A - Held that:- An admission by assessee during the search or survey proceedings cannot be considered as conclusive unless it is supported by corroborative evidence. With regard to investments on which, the statement was taken, there is no material identified during the survey operations so as to determine the unexplained investment at Rs. 70 Lakhs in the hands of the firm and Rs. 25 Lakhs in each of the partners hands. From the facts, it can be seen that except relying on the answer given by the Managing Partner to a question posed by the AO in the course of survey, no independent information/evidence/material was brought on record so as to support the additions made. Since there is no evidence corroborating the so called admission by assessee, we are of the opinion that the addition cannot be made simply on the basis of the statement recorded u/s. 133A. Discrepancies in respect of expenses and the percentage of net profit on estimation basis - disallowance of expenses - Held that:- The addition made is on adhoc basis. Considering the submissions of the Counsel and facts of the case, we are of the opinion that unverifiable vouchers cannot be avoided in this line of business. Keeping that in view, we are of the opinion that a disallowance of Rs. 5 Lakhs will meet the ends of justice. Consequently, we restrict the disallowance to an amount of Rs. 5 Lakhs. Treating of the agricultural income as ‘income from other sources’ - Held that:- Assessee has offered an amount of Rs. 6.98 Lakhs from 17.25 acres of land and AO took agricultural income per acre Rs. 15,000/- per acre and allowed agricultural income to an extent of Rs. 2.58 Lakhs. Balance of the amount was treated as ‘income from other sources’. Ld. CIT(A) confirmed the same considering the facts of the case. 13.1. After considering the rival contentions, we do not see any reason to interfere with the order of the CIT(A). Assessee has not justified earning so much of agricultural income and the estimation by the AO is reasonable. Since no contradictory evidence is filed before us, we see no reason to interfere with the orders of the AO and CIT(A) on the issue. In the result, the grounds pertaining to agricultural income as ‘income from other sources’ are rejected

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• 2016 (4) TMI 867
  Deduction u/s. 54F - Held that:- In the present case, assessee has purchased a semi-finished house and completed construction before the three years period as prescribed. Revenue has not cited or placed on record any contrary judgment. Therefore, respectfully following the ratio laid down by the Hon'ble Karnataka High Court in the case of CIT Vs. K. Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT], we direct the AO to allow the capital gains exemption as claimed. Claim of cost of acquisition - Held that:- AO as stated earlier has not considered the cost of acquisition or indexation and brought the entire sale consideration to tax. Before the Ld. CIT(A), additional evidence in the form of purchase deeds were filed. Ld. CIT(A) failed to adjudicate the ground. We notice that assessee is entitled to cost of indexation as claimed as a deduction while computing the capital gains. Even otherwise, since assessee’s investment in new house is more than the sale consideration, the ground may become academic. However, we direct the AO to allow cost of indexation as claimed and arrive at the correct capital gains and allow deduction u/s. 54F/54 thereon.

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• 2016 (4) TMI 866
  Disallowance made u/s. 14A r.w. Rule 8D - Held that:- The Hon'ble Karnataka High Court in the case of CCI Ltd. Vs. Joint Commissioner of Income Tax (2012 (4) TMI 282 - KARNATAKA HIGH COURT ) has held that when no expenditure is incurred by the assessee in earning the dividend income no notional expenditure could be deducted from the said income. The Hon'ble High Court further held that when the assessee has not retained shares with the intention of earning dividend and the dividend income is incidental to the business of sale of shares, no disallowance u/s. 14A of the Act is to be made. - Decided in favour of assessee

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• 2016 (4) TMI 865
  Validity of reopening of assessment - Held that:- In the absence of notice under section 143(2) pursuant to notice under section 148, the re-assessment order passed by the Assessing Officer is rendered bad in law and therefore requires to be quashed. - Decide in favour of assessee

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• 2016 (4) TMI 864
  Capital gain - transfer of shares - applacability of section 50C - Held that:- What in law has transpired is the transfer of shares, and not of land and, accordingly, section 50C will not come into picture. This consideration, which appears to have prevailed with the Revenue authorities, is not valid. Find no infirmity in the assessee’s claim for legal expenses u/s.48(i), and uphold the same, in principle. However, it is not clear if the takeover agreement dated 13.4.2006, evidencing the transaction, and which constitutes the prime evidence, was before the Revenue authorities, whose finding as to the sale of land being the prime motive and the driver of the transaction has been affirmed by us. The said agreement would however have to be examined, if only to verify if the transaction as executed is in agreement therewith. The same states the total consideration (in the hands of both the assessee-transferors) at Rs. 890 lacs, while we observe the stated price, which is with reference to and in terms of unit of land, works to Rs. 925.75 lacs (88,843 sq. ft. x Rs. 1042 per sq. ft.). Subject to the A.O.’s verification, returning positive findings, we confirm the deductibility of the impugned expenses. We may however clarify that any apparent mistake/s, if any, could be rectified following the due process of law.

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• 2016 (4) TMI 863
  Addition on account of capital gain - year of assessment - Held that:- There is merit in the propositions and contentions raised by the assessee. Transfer of the ownership of property based on a on a contract registered or otherwise is to be ascertained from the intention, documents and volition of the parties to the transaction. A different stand cannot be adopted by revenue authorities on one hand not to question about the genuineness of the documents and then hypothecate over the covenants. In our view the unconditional transfer of ownership and possession took place in FY 2011-12 relevant to AY 2012. We uphold the order of ld. CIT(A) holding that transfer of ownership and possession of the impugned land took place in FY 2011-12 relevant to AY 2012-13 the year in which assessee has offered the LTCG her return of income and are liable to be taxed in AY 2012-13. Since we have held the LTCG to be taxable in AY 2012-13 the grounds raised in CO filed by assessee become infructous.

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• 2016 (4) TMI 862
  Addition representing cash/cheque deposits in undisclosed bank account maintained with ICICI Bank - Held that:- The transactions in the undisclosed bank account maintained with ICICI Bank has to be brought to tax by adopting the peak credit method. Thus, the assessee is hereby directed to furnish the workings of the peak credit, which needs to be verified by the ld.AO about its veracity. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the ld.AO, to frame this addition based on the workings of peak credit as would be given by the assessee and of course, after verification by the ld.AO. - Decided in favour of assesseefor statistical purpose. Deemed dividend u/s. 2(22)(e)- Held that:- We find from the said documents that the lending company at the outset does not possess any accumulative profit. We also find that there are some discrepancies with regard to the names of the shareholders. We also find that the lower authorities have not examined the aspect of availability of accumulated profits of the lending company. In these circumstances, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the ld.AO to verify the register of the shareholders of the lending company and other relevant documents in order to ascertain the true shareholding pattern of the said company during the financial years 2007-08 and 2008-09 and to give a definite finding with regard to availability of accumulated profits of the lending company and decide the issue in accordance with law.- Decided in favour of assessee for statistical purpose. Addition on account of alleged director’s remuneration - Held that:- As find from the relevant page of the paper book that the assessee had borrowed loan and also repaid the same by cheques to said M/s. G.S Fertilisers Pvt. Ltd to the tune of Rs. 1,45,000/-. We find that this aspect has also not been examined by the ld.AO. Accordingly, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the ld.AO to verify the same. - Decided in favour of assessee for statistical purpose. Addition on reimbursement of taxes - Held that:- The assessee indeed had received the monies from the said companies, which were duly credited in the bank account of the assessee maintained with State Bank of Hyderabad and immediately the same were indeed paid towards tax payment of the said companies through on line banking facility. We also find from the tax remittance challan as produced before us that the version of the assessee is correct. We further find that the bank account maintained with State Bank of Hyderabad is already disclosed bank account by the assessee in the return of income. While this is so, there is no need to make any addition on this issue.- Decided in favour of assessee Addition representing cash deposits in the bank - Held that:- There is cash withdrawal of Rs. 34,000/- on 13-10-2008. The revenue had not not brought any contrary material/evidence to prove that this sum of Rs. 34,000/- was spent by the assessee for some other purpose. Accordingly, this would definitely remain as source for the assessee to explain the cash deposit in part. Hence, we deem it fit, appropriate and in the interest of justice, to grant relief to the extent of Rs. 34,000/- and confirm the balance of addition of Rs. 16,000/- as unexplained cash deposit in the bank. - Decided in favour of assessee in part

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• 2016 (4) TMI 861
  Addition u/s. 69C towards unexplained expenditure for house hold expenses - Held that:- We find that the assessee has shown total drawings of Rs. 35,38,395/-, which included the amounts incurred towards personal expenses of the assessee. This includes withdrawals made by the assessee by cheques for his personal expenses towards rent paid amounting to Rs. 13,80,000/- for residential accommodation and telephone expenses etc. We also find that sum of Rs. 2,82,728/- has been treated as perquisite in the salary income disclosed by the assessee. We also find that the ld.AO had also stated that the assessee had made cash withdrawals of Rs. 50,000/- p.m from the Axis Bank, Mumbai and the same were lying as closing cash balance, among others, which ought to have been incurred towards household expenses. This very fact explains the source for incurring household expenditure, if any, over and above the drawings as reported by the assessee (stated supra). Hence, there cannot be any addition by invoking the provisions of section 69C of the Act. We also find that the ld.AO had not brought any material/evidence on record to prove that the assessee had personal expenses over and above the disclosed sum of Rs. 35,38,395/- towards drawings. We also find that the ld.AO had also not brought any material/evidence to prove that the cash withdrawals made from said Axis Bank, Mumbai have been spent elsewhere by the assessee thereby the said cash is not available to remain as closing cash balance. - Decided against revenue. Unexplained cash credit u/s. 68 - Held that:- We find that the wild allegation is made by the ld.AO that the assessee has laundered his unaccounted money/income and the same is brought back in the form of loan. We find from the entries of the bank statement of the loan creditor that no cash was deposited in the account of the loan creditor immediately before issuing the cheques to the assessee. On the contrary, there were other high value transactions reflected in the bank statement of the loan creditor. Hence, the basic allegation that the assessee has laundered his unaccounted income is not prima facie proved by the ld. AO even during the remand proceedings when the ld.AO got the second opportunity to make necessary verification by using his statutory powers vested on him and provided to him in the statute. We find that the facts of the case clearly proved that the assessee had completely discharged his onus by filing all the documentary evidences in support of the loan transaction from M/s. Bright Impex & Agencies Pvt. Ltd in terms of section 68 of the Act. Hence, it is fully covered by the decision of the Hon’ble Supreme Court in the case of CIT Vs. Orissa Corporation reported in (1986 (3) TMI 3 - SUPREME Court ). The facts before the Hon’ble SC and the facts of the case before us are exactly similar. Hence, the addition made on this count u/s. 68 of the Act based on mere surmises and suspicion is hereby deleted. - Decided against revenue

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• 2016 (4) TMI 860
  Reopening of assessment - Held that:- The proceedings u/s 147 were initiated after recording necessary reasons and after obtaining approval from the Additional CIT. The reasons were recorded on the basis of statement of Shri Kripa Shankar who accepted having indulged in the accommodation entry in respect of M/s. B.C. Purohit & Company by way of affidavit in which the names of Shri Sunil Verma and Smt. Anar Devi find mentioned. Thus the information received by the AO was based on department channel duly supported by affidavit of intermediary. In view thereof, the ground for reopening of assessment has been rightly rejected. Addition on account of gifts and commission paid - Held that:- The assessee was not provided an opportunity to cross examine the statement of Shri Kripa Shankar which is not in conformity with principles of natural justice. In view thereof, grounds relating to addition of Rs. 2,00,000/- and Rs. 1,000/- are set aside. Addition u/s 68 - Held that:- There was no reason for reopening of assessment in this behalf. The assessee has submitted confirmations along with names, address and PAN numbers of the creditors. In my considered view the assessee has discharged its initial onus to explain the cash credits relying on cases of CIT vs. Heeralal Chagan Lal (2002 (1) TMI 19 - RAJASTHAN High Court ). Addition under section 41(1) - Held that:- The liability in question remains outstanding in the books of the assessee merely because the postal notice came back unserved. It cannot reach an inference that assessee’s liability has shifted in terms of section 41(1). In view thereof, the addition made is deleted. Disallowance of interest - Held that:- It has not been disputed that assessee has income from shares and also trading of clothes. The interest has been paid on earlier liabilities during the course of business. Merely because there was a lull in the business which cannot be assumed that the payment of interest is not in the course of business. Therefore, the same is allowable under section 36.

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• 2016 (4) TMI 859
  Penalty levied under section 271(1)(c) - Held that:- It is a clear case of concealment of income. The assessee has admitted an income of Rs..1,46,232/- in the return filed on 15.09.2009 for the assessment year 2007-08. But the profit and loss account shows the income at Rs..2,17,794/-. In view of the above, the submission of the ld. Counsel for the assessee that the assessee has filed the return in time for the assessment year 2007-08 and no penalty should be levied is not acceptable since filing of return under section 139(1) or 139(4) are not subject matter under section 271(1)(c) of the Act. Whether the assessee has concealed the particulars of income and furnished inaccurate particulars of income is the subject matter under section 271(1)(c) of the Act. In this case, the assessee is not regularly assessed to income tax. But for survey under section 133A of the Act, the assessee would not have filed the return of income, therefore, the question of filing the return of income in time or not does not arise and moreover, penalty under section 271(1)(c) of the Act was levied by the Assessing Officer for a clear case of concealment of income and furnishing of inaccurate particulars of income. Under the above facts and circumstances, the penalty levied under section 271(1)(c) and restricted to the extent of 100% by the ld. CIT(A) for the assessment year 2007-08 stands confirmed - Decided against assessee.

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• 2016 (4) TMI 858
  Disallowance of deduction u/s.80IB(10) - Held that:- From the details on record it is not disputed that the assessee is entitled to be allowed deduction under section 80 IB(10) in respect of its business income derived from its building, construction and development activities from the earlier assessment year 2006-07 itself. We find from a perusal of the decision of the Co-ordinate Bench in the case of M/s. Meha Medicure [2012 (3) TMI 517 - ITAT MUMBAI] that the assessee would be entitled to enhanced deduction under section 80 IB(10) of the Act to the extent the assessed business income of the assessee is enhanced by virtue of disallowances that go to enhance its profits and would be eligible for full deduction under section 80 IB(10) of the Act, which provides for deduction from the profits and gains from the eligible business. Thus we hold and direct that the assessee would be entitled to deduction under section 80 IB(10) of the Act to the extent of the assessee’s assessed business income of Rs. 2,64,65,160/-, determined in the order of assessment dated 14/12/2009 for assessment year 2007-08 and which has been enhanced thereto by virtue of the disallowance of compensation of Rs. 8,85,750/-, which would go to enhance the profits of the assessee’s eligible business. - Decided in favour of assessee

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• 2016 (4) TMI 857
  Disallowance u/s.14A - Held that:- Since in the instant case the own capital and free reserves of the assessee company is much more than the investment in shares of group companies and associate concerns and since the assessee has not received any dividend income during the year, therefore,we are of the considered opinion that no disallowance u/s.14A on account of interest can be made. We accordingly set aside the order of the CIT(A) on this issue. However, the incurring of administrative expenses for investment in the share cannot be ruled out. The AO has already made an addition of Rs. 12,000/- on estimate basis, therefore, the same has to be upheld. Accordingly, the addition sustained by the CIT(A) to the extent of Rs. 1,90,70,249/- u/s.14A is directed to be deleted. - Decided partly in favour of assesse Disallowance of depreciation, interest and administrative expenses - purchase of flat in the name of director by the company - Held that:- AO has accepted the ownership of the property in the hands of the company and for the purpose of business. - Claim of the assessee allowed - Decided in favor of assessee.

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• 2016 (4) TMI 856
  Addition on account of disallowance of claim of purchases u/s 40A(3) - CIT(A) deleted the addition - Held that:- Terms of Section 40A(3) of the Act are not absolute and that the genuine and bonafide transactions are not taken out of the sweep of the Section 40A(3) of the Act and it is open to the assessee to furnish to the satisfaction of the AO, the circumstances under which the payment in the manner prescribed u/s 40A(3) of the Act was not practicable or would have caused to the genuine difficulty to the payee. In the present case, the seller of the potatoes insisted for cash payments because he doubted the credibility of the assessee who required the purchases to be made for smooth running of its business. The purchases were made through the agent Sh. S.K. Tiwari who procured the potatoes from M/s R.A. Traders and this fact was not doubted by the AO that the purchases were made by the assessee through its agent Sh. S.K. Tiwari from M/s R.A. Traders, Moradabad in cash. In the instant case, the cash payments were made by the assessee to the agent Sh. S.K. Tiwari who in turn made the purchases in cash for the assessee and charged the commission for the said transaction which has been accepted as genuine and allowed to be set off against the income in the profits and loss accounts, by the AO. Therefore, the transaction relating to the purchases of potatoes was clearly covered by the exception laid down in Rule 6DD(k) of the I.T. Rules, 1962 and was outside the purview of the provisions of Section 40A(3) of the Act. We are of the view that the ld. CIT(A) rightly deleted the addition made by the AO . As regards to the remaining addition made by the AO and deleted by the ld. CIT(A) is concerned, the contention of the assessee was that those purchases were made directly from the small farmers, the said contention has not been doubted at any stage. Therefore, this transaction is covered under Rule 6DD(e) of the I.T. Rules, 1962 wherein cash payments made for purchase of agricultural produce is kept outside the purview of Section 40A(3) of the act. Therefore, we do not see any infirmity in the order of the ld. CIT(A) on this issue. - Decided against revenue

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• 2016 (4) TMI 855
  Assessment under Section 153 - addition u/s 50C - Held that:- AO has made addition by invoking deeming provision of section 50C of the Act and addition for A.Y 2005-06 has been made on the basis of facts and evidence which was already available with the AO at the time of original assessment proceedings as well as subsequent assessment proceedings which were completed on 26.12.2007 u/s 143(3) r.w.s. 153A of the Act. It is pertinent to note that the AO has not made any addition in the other A.Ys which fall within the block of A.Ys as well as in the A.Y wherein search and seizure operation was conducted. In this situation, when there was no incriminating material with the AO, found during the course of search and seizure action u/s 132 of the Act on 19.1.2009 which was second search operation in sequence, then no addition can be held as sustainable de hors incriminating material found during the course of search. On the basis of foregoing discussion, we are inclined to held that the addition made for the year under consideration, which is not based on any incriminating material found during the course of search is not sustainable and respectfully following the precedent laid down by the Hon'ble High Court, in the case of Kabul Chawla [supra] addition made by the AO and upheld by the ld. CIT(A) is demolished. - Decided in favour of assessee

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• 2016 (4) TMI 854
  Denial of deduction u/s 80P(2)(a)(i) - Held that:- Assessee is eligible for deduction u/s 80P(20(a)(i) of the Act for the interest income earned on unutilized idle funds kept for business purposes of the society being deposited with Banas bank . In the result, the impugned additions of the appeals of assessee are deleted. See TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED Versus THE INCOME TAX OFFICER, WARD-1, TUMKUR [2015 (2) TMI 995 - KARNATAKA HIGH COURT] - Decided in favour of assessee

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• 2016 (4) TMI 853
  Addition u/s 68 - Held that:- The addition made by the AO and deleted by the learned CIT (A) represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. No hesitation to conclude that the assessee has provided necessary details including the ward/circle where the share applicants were assessed to income tax and discharged the onus cast on it. The share applicants were also allotted shares and the details were made available. The AO has not brought anything on record to dispute the facts/details furnished by the assessee. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee. Thus, in our considered opinion, in views of facts as narrated above and the judicial pronouncements, the share capital to the extent of Rs. 24.00 lacs stands explained - Decided in favour of assessee

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• 2016 (4) TMI 852
  Receipts in cash from the allottee newspapers and periodicals - Estimation of income - rejection of books of accounts - Held that:- We find that the assessee had shown receipts in cash from the allottee newspapers and periodicals, it does not mean that the assessee himself was selling the newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of search. On perusal of ledger account of these parties it is observed that the newsprint was supplied to them and payment was also received by the assessee. The said ledger account clearly mentioned the authorization number and date, date of receipt, size of paper, number of reels, weight, number and date of memo of delivery and amount etc. Hence, we are of the view that it cannot be said that either these parties did not make the payment to the assessee or did not lift the newsprints. Therefore, on the basis of 3-4 parties out of about 200 allottees, the adverse inference cannot be drawn in the hands of assessee. In the case of assessee, he had maintained proper books of account and there is no material on record to show that the he had made sale of newsprints in unauthorized market. Hence, the books of account of the appellant cannot be rejected by invoking section 145(2) and the turnover/profit cannot be estimated. In view of above, in the absence of any evidence of selling the newsprints in unauthorized market by the assessee, the CIT(A) had rightly held that the AO was not justified in rejecting the books of account and estimating either the turnover or the profit of the assessee for the year under appeal. Accordingly, we confirm the order of CIT(A) - Decided in favour of assessee Unexplained cash credit - Held that:- CIT(A) after taking loan confirmations and other documents deleted the addition respect to loan creditors to the extent of Rs. 86,000/- in the names of Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick and Shri Biman Behari Saha. In respect to loan creditor M/s. Mamoni Films of Rs. 7,00,000/- there is a categorical finding recorded by CIT(A) that the loan pertains to AY 1988-89 and not to the relevant AY 1987-88. Once this is the position, the same was confronted to Ld. Sr. DR whether he has some material to controvert the same, he could not reply. In such circumstances, we are of the view that CIT(A) has rightly deleted the addition in respect to cash credits and we confirm the same - Decided in favour of assessee Addition u/s 68 - Held that:- We have heard rival submissions and gone through facts and circumstances of the case. We find that the entire addition is based on a provisional order passed u/s/. 132(5) of the Act estimated the income of the assessee and by virtue of which holding that M/s. Industrial Papers was benami of the assessee instead of Shri Ram Balak Singh. No doubt certain books and documents of Shri Ram Balak Singh were found from the premises of the assessee but it does not prove that this business belongs to assessee or assessee is benamider of the same. The onus is on revenue to prove that the assessee is benamidar of the Industrial Papers. In view of the above, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same - Decided in favour of assessee

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• 2016 (4) TMI 851
  Penalty u/s 271(1)(c) - unexplained investment under section 69 - Held that:- From the facts of the case it is apparent that the assessee has agreed to purchase the land at Rs. 1,28,86,000/- as per sale agreement dated 15.03.2004. Subsequently, in the sale deed only Rs. 49,53,978/- is mentioned as the sale consideration. The assessee has explained before the Revenue that the difference between the amount ie., as per the sale agreement and the registered deed, was due to certain considerations for future commitments such as to assist the assessee in purchasing additional land adjacent to the land purchased. It was further explained that, since the vendors failed to carry out their commitments, no additional amount was paid. We do not find this reason submitted by the assessee to be genuine which is neither based on any evidence or admissions of the vendors. Hence, we do not find any merit in the order of the learned Commissioner of Income Tax (Appeals) for deleting the penalty. It is apparent from the transaction that the assessee has paid on-money of Rs. 79,32,020/-. The assessee has not come out with any reasonable explanation with cogent evidence to prove his case otherwise. Hence, it is evident from the transaction that additional investment made by the assessee amounting to Rs. 79,32,020/- has been concealed in the return of income filed by the assessee. Therefore, we hereby reinstate the order of the learned Assessing Officer by confirming the penalty levied by him and thereby set aside the order of the learned Commissioner Of Income Tax(Appeals).- Decided against assessee.

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• 2016 (4) TMI 850
  Penalty u/s.271(1) (c) - assessee has voluntarily accepted and agreed for addition and paid taxes - Held that:- Additions are made on the submissions recorded during the survey operations u/s.133A of the Act and does not have evidential value without any incriminating documents supporting the statements and we rely on the jurisdictional High Court decision of CIT vs. S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT] and the assessee in penalty proceedings submitted that it a regular practice as the textile business for the seller to send the goods first and invoice would be received in weeks time. The survey was conducted during the Diwali season and the firm has ordered large quantity of stocks and such stock of goods were received only one day prior to the date of survey and due to which the assessee could not tally the stock on date of survey and also assessee voluntarily offered additional income of 1,50,000/-. In order to buy peace with the department and avoid protracted litigation the assessee has paid taxes and not filed appeal against the order u/sec.143(3) of the Act, the penalty proceedings are not automatic and they are separate and distinct. We draw support from the principles laid down in case of case of CIT vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] and Accordingly direct the Assessing Officer to delete the penalty. - Decided in favour of assessee

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• 2016 (4) TMI 849
  Disallowance u/s 14A - Held that:- earlier noticed that the dividend received/receivable from PCIL and VBL alone are exempt. These investments have been made in the earlier years and further the investment made in PCIL was a strategic investment. The assessee has received dividend income of Rs. 2,000/- only during the year under consideration and the said dividend income has also been directly credited to the bank account of the assessee. Considering the smallness of the dividend income and also considering the fact, that the investment in shares have been made in the earlier years, we are of the view that there is merit in the contentions of the assessee that it did not incur any expenditure in relation to the dividend income. Further, as contended by Ld A.R, the AO did not reject the contentions of the assessee by having regard to the accounts of the assessee. Hence, we find no reason for invoking the provisions of Rule 8D of the I.T. Rules in the hands of the assessee for the year under consideration. Accordingly, we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made u/s. 14A - Decided in favour of assessee Rejection of deduction claimed u/s. 80IA - Held that:- We have earlier noticed that both the AO as well as the Ld CIT(A) has made some more observations to support the rejection of the claim for deduction u/s 80IA of the Act. The Ld A.R submitted that the assessee shall be in a position to satisfy the AO with regard to those observations also. Accordingly, we are of the view that the entire matters relating to the deduction u/s 80IA including the various adverse features noted down by the AO/CIT(A) requires fresh examination.

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• Customs

• 2016 (4) TMI 834
  Seeking direction for modification in rules governing availability of morphine and other opioids required for pain control in accordance with Circular issued by the Central Government - Held that:- the Government appear to have taken the issue regarding the availability of narcotic drugs for palliative care seriously and not only amended the statutory provision to make availability of the drugs easy but also to regulate the use thereof for medical and non-medical purpose In that view, therefor, the present petition does appear to have served its purpose and led to an improvement in the system that was earlier prevailing. There may still be certain areas of concern which according to the petitioners need to be addressed by the competent authority but the petitioner shall be free to seek such other redress as may be warranted under the law before the authorities. - Petition disposed of

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• 2016 (4) TMI 833
  Seeking direction to renew and activate Custom House Agents License - Cancelled for non-compliance of obligations - Respondent contended that inspite of granting three opportunities of personal hearing, the petitioner neither appeared for the personal hearing nor submitted any reply to the respondent, therefore, the contentions raised by the petitioner that the Writ Petition is maintainable inspite of having an alternative remedy of appeal for the reason that the order passed by the respondent is in clear violation of principles of natural justice, cannot be accepted. Held that:- the petitioner has got an alternative remedy by way of an appeal and without exhausting the same, when there is no violation of principles of natural justice, the Writ Petition cannot be entertained. Since an alternative remedy by way of an appeal is available to the petitioner, it is open to the petitioner to challenge the impugned order before the Appellate Authority by way of an appeal in accordance with law. - Decided against the petitioner

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• 2016 (4) TMI 832
  Seeking direction to draw fresh samples from the consignment and to send them for lab test - Import of wet dates - Petitioner contended that packing lapse is only curable defect, the crops are very fresh and new crops, the wet Dates will be fit for human consumption for about 2 years and due to scarcity of PP bags, the foreign supplier might have packed them in old bags and it is only an agricultural produce - Held that:- the petitioner is directed to submit fresh representation to the second respondent, for the above claim, along with a copy of this order and shall produce all the relevant documents, including the Origin Certificate to the authorities for consideration, within a period of one week from the date of receipt of a copy of this order. On receipt of such a representation, the second respondent is directed to draw the samples from the Consignment(s)/goods/Containers in question and forward them to the Notified Laboratory for their report, within a period of one week thereafter. The Notified Laboratory is directed to submit a report to the concerned authority within a period of one week thereafter. After receipt of the report to be given by the Laboratory Authorities, the respondents are directed to consider the above claim of the petitioner and pass appropriate orders. - Petition disposed of

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• 2016 (4) TMI 831
  Whether Betel Nuts, seized are smuggled across Indo-Nepal Border - Confiscation and imposition of penalties - Revenue contended that the documents were pertaining to Betel Nuts loaded on a different truck bearing registration No.RJ-2G-4000 and not truck No.RJ-14-2G-4000 and none of the appellants have claimed the ownership of the goods seized from truck No.RG-14-2G-4000 - Held that:- the argument taken by Appellant No.1 that Betel Nuts were sent through truck having registration No.RJ-14-2G-4000 and in the grounds of appeal also it has been taken that digits “14” not getting mentioned in the transport documents was a clerical omission has some weight because truck registration number must have been communicated through phone/mobiles where some digits can get omitted. Such an omission is plausible in view of the omissions, where inspite of truck No.RJ-14-2G-4000 being as record, a different number is written by various persons including the Adjudicating authority and the first appellate authority. The first two alphabets of a vehicle registration number indicate the state of registration. The next two digits represent the Area/District of the vehicle registration authority. Therefore vehicle No.RG-2G-4000 is not the complete registration number of a vehicle and could be same as RG-14-2G-4000. The contradiction in the statement of transporter of Appellant No.1 and the Driver Shri Jagroop Singh clearly brings out that entire story narrated by the Driver/Khalasi, in their statements recorded after interrogation for three days, is not entirely correct. It is now a well accepted legal principle that only a part of the statement, favorable to the department, cannot be considered as acceptable and that the entire statement has to be accepted or rejected. There is no other evidence that Betel Nuts seized were not obtained by the Appellant No.1 from legalized channels. Appellant No.1 has not given any confession statement at any stage. Reliance of third party statements without extending cross-examination is not acceptable as evidence when the entire facts of the statement are not true. Minor procedural irregularities in the documents produced by the Appellant No.1 cannot be considered sufficient to hold that Betel Nuts seized were different than the Betel Nuts procured by Appellant No.1 and were of smuggled nature.Also no investigations have been done whether any truck having registration No.RJ-2G-4000 also exists. Mobile calls of the Appellants made before the seizure have also not been investigated by the department which could have given vital clue regarding movement of persons and vehicle No.RJ-14-2G-4000. Therefore the order-in-appeal is set aside. - Decided in favour of appellant with consequential relief

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• Service Tax

• 2016 (4) TMI 847
  Seeking quash of summons - Section 14 of the Central Excise Act, 1944 r/w Section 83 of the Finance Act, 1994 - Non-payment of Service tax by the company - Held that:- having given voluntary statements before the respondent, the petitioners cannot now take a stand that the summons are vague and they are liable to be set aside. It is also pertinent to note that the petitioners have appeared before the respondent for enquiry pursuant to the summons issued and explained their case before the respondent. The petitioners could have produced all the relevant records before the respondent and made their submissions, instead, after giving voluntary statements admitting the non-payment of the Service Tax and giving an undertaking to discharge the outstanding Service Tax liability, they cannot seek for quashing of the summons. It is open to the petitioners to produce all the relevant records before the respondent and file their objections and contest the matter in accordance with law. - Decided against the petitioner

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• 2016 (4) TMI 846
  Imposition of penalty - Services provided as marketing agent - non-payment of Service Tax for the commission payments received - Held that:- it is clear that the 2nd respondent has given an opportunity of personal hearing to the petitioner and he was also represented by his counsel before the 2nd respondent. The petitioner also filed his reply before the 2nd respondent, which was also considered by the 2nd respondent. Therefore, from the above, it is clear that there is no violation of principles of natural justice committed by the respondents Therefore, it is clear that the 2nd respondent has given an opportunity of personal hearing to the petitioner and he was also represented by his counsel before the 2nd respondent. The petitioner also filed his reply before the 2nd respondent, which was also considered by the 2nd respondent. Therefore, it is clear that there is no violation of principles of natural justice committed by the respondents. That being the case, the impugned order being an appealable order, the Writ Petition cannot be entertained. Therefore, without exhausting the alternative remedy by way of an appeal, the Writ Petition cannot be entertained. Therefore, it is open to the petitioner to challenge the impugned order before the Commissioner (Appeals) by way of an appeal. - Decided against the petitioner

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• 2016 (4) TMI 845
  Rejection of refund claim - excess service tax paid on the transmission charges - Jurisdictional Service Tax authority competent to decide the refund application - Held that:- since the appellant in the capacity of recipient of service has filed the refund application before the Central Excise Authorities at Kota, the same is proper and maintainable under Section 11B of the Central Excise Act, 1944. Also, since the incidence of service tax has been borne by the appellant itself, the refund claim can very well be lodged by him claiming refund of excess service tax paid to the supplier of goods which was ultimately deposited into the Government Exchequer. Therefore, as the issue is squarely covered by the decision of this Tribunal in the case of Jindal Steel & Power Ltd. vs Commr. of Customs and Central Excise [2015 (9) TMI 1277 - CESTAT NEW DELHI], and by the decision of Hon'ble Allahabad High Court in the case of Commissioner of Customs, Central Excise and Service Tax vs. Indian Farmer Fertilizers Coop. Ltd. [2014 (7) TMI 891 - ALLAHABAD HIGH COURT], by applying the same, recipient of the services can file the refund application claiming refund of excess service tax paid. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 844
  Liability of Service tax - Manpower recruitment or supply agency services - Held that:- the appellant was awarded the work of wheel assembly in the factory premises of M/s. Endurance Technologies Pvt. Ltd. The purchase order specifically states that an amount of Rs. 1,700/- per unit of wheel assembly will be paid on specific dimension for which appellant has to engage their own manpower to work in the factory premises of Endurance Technologies Pvt. Ltd.. From the entire agreement, which has been entered, it is found that the appellant is required to pay wages of the employees who were detailed to work in the factory premises and appellant is required to comply with all the statutory laws in respect of employees working for him. According to us, the purchase order placed on the appellant is for giving an output per piece rate basis which is nothing but lump-sum awarded to him and cannot be considered as manpower recruitment agency or supply agency services. Therefore, in view of the decision of this Bench in the case of Manish Enterprises Vs CCE [2016 (1) TMI 620 - CESTAT MUMBAI] and in the case of Shivshakti Enterprises Vs CCE [2015 (12) TMI 682 - CESTAT MUMBAI], the impugned order is unsustainable and set aside. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 843
  Demand - Differential Service tax liability - Whether the Service tax liability needs to be discharged by the appellant as per the prevailing Service tax rate during the entire period of hire purchase of contract or else - Appellant has discharged the Service tax liability at the applicable rate when they entered into contract with their client on hire purchase agreement - Held that:- by following the decision of this bench in appellant's own case on identical issue reported in [2014 (7) TMI 155 - CESTAT MUMBAI], the impugned order is unsustainable and set aside. - Decided in favour of appellant with consequential relief

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• Central Excise

• 2016 (4) TMI 842
  Classification - Tetmosol soap - whether falls under CET Heading 3401.11 or CET Heading 3401.19 - Held that:- there is no dispute that the soap is a medicated soap and it contains monosulfiran B.P. 5% w/w. It is primarily used for treatment and prevention of scabies which is a contagious skin affliction that is characterized by itching and sores. There is nothing to prevent anybody from using medicated soap for toilet purposes but it is not what the soap is intended for. Clearly, the product in dispute is classifiable under CET Heading 3401.11 which is the more appropriate CET Heading rather than the residuary CET Heading 3401.19. Tribunal's order is set aside. - Decided in favour of appellant

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• 2016 (4) TMI 841
  Classification - Synthetic Rubber Aprons and Synthetic Rubber Cots - Whether to be classifiable under Chapter Heading 4009.99 or Chapter Heading 4016.99 - Held that:- it is the case of the Revenue in the show cause notices that the goods are classifiable under Chapter Heading 4016.99. Therefore, no new case could have been set up or decided contrary to the show cause notices that the goods fall under Chapter Heading 8448.00 without issuing a fresh show cause notice to the assessee in this regard. By following the decision of this court in the case of Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd. [2007 (8) TMI 10 - SUPREME COURT OF INDIA] and reiterated in the case of Commissioner of Central Excise v. Gas Authority of India Ltd. [2007 (11) TMI 276 - SUPREME COURT], Revenue is permitted to issue a fresh show cause notice to the assessee seeking to classify the goods under Chapter Heading 8448.00. However, due to the passage of time, it would not be advisable (or permissible under the provisions of the Central Excise Tariff Act) to permit the Revenue to reopen the entire proceedings and classify the goods under Chapter Heading 8448.00. The matter is remitted back to the Tribunal to take a decision on whether the goods manufactured by the assessee are classifiable under Chapter Heading 4009.99 as claimed by the assessee or 4016.99 as claimed by the Revenue. - Appeal disposed of

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• 2016 (4) TMI 840
  Penalty - whether there is no provision for penalty under the Automobile Cess Rules, 1984 which were enacted under Section 30 of the Industries (Development and Regulation) Act, 1951, the Penalty imposed under Section 173(Q) of the Central Excise Rules, 1944 is not leviable for the periods for which the penalty is imposed, i.e. from December, 1998 to December, 2001? - Held that:- Looking to Rule 3 of the Automobile Cess Rules, 1984, there is no provision for penalty at all envisaged under this Rule and as stated herein above, penalty partakes the character of additional tax, looking to the Article 265 of the Constitution of India, no tax can be levied or collected except authority of the law. Such authority has to be specific and explicit in the Acts or the Rules. The Automobile Cess Rules creates liability for the payment of automobile cess, but, it creates no liability for any penalty and hence any penalty cannot be levied under Section 173 (Q) of the The Central Excise Act, 1944.

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• 2016 (4) TMI 839
  Refund/rebate claim rejected - Computation of limitation - Held that:- There is no quarrel with proposition that if Statute provided for limitation, it has to be adhered to. What however is being claimed by the petitioner is different. The question which arises in the present case is as to what should be the starting point for computation of this period of one year. We are persuaded to follow the view taken by the Gujarat High Court in Cosmonaut Chemicals [2008 (7) TMI 228 - HIGH COURT GUJARAT ] that any procedure prescribed by a subsidiary legislation has to be in aid of justice and procedural requirements cannot be read so as to defeat the cause of justice. The claimant cannot be asked to tender deficient claim within limitation period and claim cannot be simultaneously treated as not filed till documents furnished, if the manual of supplementary instruction indicating that refund or rebate claim deficient in any manner to be admitted when delay in providing document is attributable to the Department. Where the lapse as to non-availability of requisite document is on account of Central Excise Department or Customs Department, this would be mitigating circumstance flowing from the aforesaid legislative scheme. Limitation is to be considered in the light of availability of requisite documents and should be taken to begin when documents necessary for substantiating the claim of refund are furnished by the department, which, in our considered view, should be the starting point for computation of limitation. In view of the above, present writ petition succeeds and the same is allowed. The impugned judgment is set aside. The respondents are directed to allow the refund/rebate to the petitioner together with statutory rate of interest, applicable as per the Rules. - Decided in favour of assessee

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• 2016 (4) TMI 838
  Clandestine removal of Polyester Texturised Yarn - Whole case is founded on the statement of the authorised officer of the respondent without verification of any other independent evidence - Respondents submitted that it had produced the technical opinion of the chartered engineer which has been analysed by the High Court in extenso that there has been no differential quantity and hence, the question of clandestine removal does not arise. Held that:- the revenue should have been afforded an opportunity to counter the technical report filed by the assessee by filing its technical report, for the whole controversy hinges upon the differential quantity and if there is any differential quantity, the issue of removal would arise. Regard being had to the same, the order passed by the High Court and that of the tribunal is set aside and the mater is remitted to the tribunal to permit the Revenue to file a technical report. If the tribunal forms the view that there has to be further technical opinion, it may call for it or it may permit the parties to adduce further evidence to substantiate the plea. We may hasten to clarify that while dealing with the matter, the tribunal shall not take into consideration the statement of the authorised officer alone. If there will be any differential quantity on the analysis of the aforesaid aspects, then the said statement can be pressed into service. - Decided in favour of revenue

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• 2016 (4) TMI 837
  Restoration of appeal pending before CESTAT - Respondent submitted that it has deposited Rs. 50,00,000/- and has accounted the remaining Rs. 50,00,000/- towards the CENVAT credit which is due to the first respondent - Held that:- provided the first respondent remits the balance amount of Rs. 50,00,000/- (Rupees fifty lakhs only) which is still due in terms of Ext.P5 judgment by making payments of Rs. 25,00,000/- (Rupees twenty five lakhs only) within a period of three weeks from today and the remaining amount of Rs. 25,00,000/- (Rupees twenty five lakhs only) within a further period of three weeks. The time frame fixed herein shall be treated as peremptory. If remittances as directed herein are not made, the Tribunal would not be obliged to take up the restoration application. Further proceedings on the basis of Ext.P9 notice will be kept in abeyance, initially for a period of three weeks awaiting deposit of Rs. 25,00,000/- as aforesaid, and if such amount is deposited, the same will be kept in abeyance for a further period of three weeks awaiting further deposit of Rs. 25,00,000/-. If both such amounts are deposited, Ext.P9 will stand deferred and would thereafter be guided by any decision that the CESTAT may issue on Ext.P7 restoration application or on the appeal, if it is, ultimately, restored by the CESTAT. - Appeal disposed of

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• 2016 (4) TMI 836
  Seeking quashing of order-in-original - Demand of duty with interest under Rule 6(3) of the CCR, 2004 - alleged use of common input services in the manufacture of exempted goods - export of various engineering equipment and machinery and claiming rebate on payment of appropriate duty - Held that:- the course adopted by the Assistant Commissioner is legally impermissible. By relying on the judgment of Hon'ble Bombay High Court in the case of M/s. Larsen & Toubro Ltd. vs. Union of India & Ors [2016 (4) TMI 781 - BOMBAY HIGH COURT], the impugned order is quashed and set aside. The refund claim shall now be granted and the respondent shall not insist on compliance with clause (b) of the operative order. That direction and to this extent stands quashed and set aside. - Petition disposed of

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• 2016 (4) TMI 835
  Demand of Cenvat credit - Rule 14 of the CENVAT Credit Rules read with Section 11A - Availed credit of service tax paid on the out door catering services as input services and utilized the same towards payment of duty on the final products. Held that:- in a batch of appeals, a Bench of this Court held the issues arising in this appeal in favour of the assessees on the basis of the decision of the Bombay High Court in C.C.E. Vs. Ultratech Cement Limited [2010 (10) TMI 13 - BOMBAY HIGH COURT] and the decision of the Supreme Court in Maruti Suzuki Limited Vs. C.C.E. [2009 (8) TMI 14 - SUPREME COURT]. Though a notification was issued in Notification No.3/2011 dated 1.3.2011 excluding the outdoor catering services, it came into effect on 1.4.2011. The period in question in this case relates to a period prior to 1.4.2011. - Decided against the revenue

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• CST, VAT & Sales Tax

• 2016 (4) TMI 830
  Imposition of penalty in lieu of immune from prosecution - Petitioner has already paid sizeable amount of duty libility and interest and availed CENVAT credit - Held that:- the Commission considered both the grievances of the petitioner but did not find merit in the same. When the petitioner itself had obtained central excise registration and claimed manufacturing activity, to contend that certain goods which may have been cleared by the petitioner as manufacturer but the value thereof should not be counted for considering the petitioner's SSI exemption limit, would not be correct. The argument, that the petitioner did not have any manufacturing activity, as would be borne out from the Chartered Engineer's certificate or even the panchnama drawn by the department, would be venturing into examination of factual aspects wholly impermissible in exercise of writ jurisdiction against the order of Settlement Commission. We do not find that order of Settlement Commission can be stated to be against the law or the provisions of the Central Excise Act. - Decided against the petitioner

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• 2016 (4) TMI 829
  Rate of tax on iron and steel - Execution of civil works contract - Appellant contended that the declared commodities are used in execution of works contract liable to be taxed at 5% under Section 4(1)(c) of the VAT Act but department taxed it @ 14.5% - Held that:- by following the judgment of this court in the case of State of Karnataka vs. Reddy Structures Pvt. Ltd., Bangalore [2012 (10) TMI 1088 - KARNATAKA HIGH COURT], the State Legislature has no competence to levy tax at more than 5% on iron and steel used in the same form in the execution of works contract which falls under Section 14 of the CST Act. - Decided partly in favour of petitioner

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• Wealth tax

• 2016 (4) TMI 848
  Reference the matter to the DVO for proper valuation of the properties - Whether the Commissioner of Wealth Tax (Appeals) has erred in placing reliance on the valuation given by the assessee in the return based on Govt. ready reckoner by rejecting the valuation given by the Approved Valuer? - Held that:- No error has been committed by the Commissioner of Wealth Tax (Appeals) in directing the Assessing Officer to obtain the report of DVO to ascertain the fair market value of properties under question. The assessee has offered his properties as co-lateral security for securing the loan from the bank. The value of the properties shown in the valuation report given by the Approved Valuer were deliberately taken on the higher side so as to obtain higher loan. This fact was disclosed by the assessee during the assessment proceedings. However, the Assessing Officer brushed aside the contention of the assessee and in an arbitrary manner adopted the value of the three properties mentioned hereinabove, as per the Approved Valuer’s report. The DVO in his report has valued the properties after considering the sale consideration of the properties in the vicinity and the total built up area of the properties. Whereas, the approved valuer without considering any sale instances and the prevailing rates estimated the value at much higher unrealistic rates. The Commissioner of Wealth Tax (Appeals) after considering the report of DVO and comparing it with the value declared by the assessee as per Govt. ready reckoner accepted the value of properties declared by the assessee. The value declared by the assessee as per Govt. ready reckoner and the valuation report submitted by the DVO are almost in the same range, barring minor variations. We concur with the findings of the Commissioner of Income Tax (Appeals) in adopting the value of the properties declared by the assessee as per Govt. ready reckoner and excluding Agri. Land from the list of assets assessable under Wealth Tax Act.

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• Indian Laws

• 2016 (4) TMI 828
  Complaint under Section 138 of the Negotiable Instruments Act, 1881 - dishonor of cheques - Held that:- Once the appellant files a complaint on the basis that he was holding the cheques as holder in due course which were admittedly given by the respondent to the appellant and the said cheques were dishonoured when they were presented for encashment to the Bank and he, further, is able to establish that due notice of the dishonour of the said cheques was given to the respondent as provided in law, there was a clear presumption in favour of the appellant that the money was due under the said cheques.It may be noted that there is no defence to the effect that the cheques were not issued by the respondent or the cheques do not bear its signatures or they were not presented properly for encashment. It was not even necessary for the appellant to produce any document to the effect that it had fulfilled the obligation under the agreement which was entered into between the parties.The case was founded on the dishonour of the two cheques and not on the basis of the said agreement.Further, it was not a civil suit which was filed on the basis of the said agreement or any demand was raised for money on the ground that the agreement had been fulfilled.The case is that the payment was not released.It is here where the High Court has fell in legal error. We are, therefore, of the opinion that the dishonour of the aforesaid cheques in the aforesaid manner clearly establish that the amount was due to the appellant and it is the respondent which has failed to discharge its obligation. This is more so, when in the legal notice, specific averment was made by the appellant that the appellant had discharged its obligation under the contract and only thereupon, the cheques were issued and the respondent had not even replied to the said notice. We, thus, set aside the orders of the courts below and hold that the respondent has committed an offence in terms of the provisions under Section 138 of the Act.The respondent shall pay to the appellant the amount due with interest at the rate of 9 per cent from the date of filing of the complaint within two months

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