Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 27, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Expenditure towards after sale service - the expenses for advertisement and after sale services alleged to have been reimbursed by the assessee to the manufacturer/distributor as has been allowed in the past by the tribunal were allowable u/s 37(1) - HC
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Registration u/s 12AA - proof of charitable activities - treatment as registered trust - receipt of land as Donation - the objects of the assessee trust being charitable had not been objected - exemption allowed - HC
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TPA - selection of comparables - challenging the approach of bifurcating single transaction of marketing and after sales support service into the separate transaction of marketing support service and technical support service - AO/TPO directed to address the issues - AT
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Deduction u/s 80-IA(4) - assessee is engaged in the business of operation of Container Freight Station (CFS) - inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - AT
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Lease rent from letting out buildings/developed space along with other amenities in an Industrial Park/SEZ— to be treated as business income - Circular
Customs
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Valuation - Branded cut and polished cubic zirconia of PRECIOSA Brand - the finding of the appellate authority that the goods in question are of ‘star’ quality rather than the MCC grade is not based upon the authentic literature or expert opinion etc. and seems to be his own views on the topic - the enhancement of the value by the Commissioner (Appeals) cannot be held to be justifiable - AT
Indian Laws
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Dishonour of the cheques - VAT liability - In the absence of any adjudication by a competent authority, it cannot be said that on the date when the cheques were drawn there was an existing enforceable debt or liability. - Complain u/s 138 of the Negotiable Instruments Act quashed - HC
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Complain u/s 138 of the Negotiable Instruments Act - dishonour of the cheques - cheque was issued to pay duty of excise - In the absence of any adjudication by a competent authority under the provisions of the Act as regards the liability of the applicants to pay the excise duty, it cannot be said that on the date when the cheques were drawn there was an existing enforceable debt or liability. - HC
Service Tax
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Composite works contract in respect of railways - claim of exemption from service tax - in any case there can be no tax liability on such contracts prior to 1.6.2007 - AT
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Liability of service tax - inspection or examination of seeds in various stages starting from cultivation, harvesting, grading and quality checking in order to arrive at the decision whether the seeds meet the pre-set standards - the activities of the appellant are covered by technical inspection and certification service. - AT
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STPI unit - Rebate claim - N/N. 12/2005-ST - remittance must have been received in convertible foreign exchange in India - learned Commissioner erred in computing the period of limitation from the date of payment of the input tax - AT
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Extension of the date of submission of the Form ST-3 for the period 1st October 2016 to 31st March 2017 from 25th April 2017 to 30th April 2017 - Order-Instruction
Central Excise
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Period for payment of interest u/s 11 AB of the CEA, 1944 - interest on differential duty on additional amount received - price escalation clause - though the decision of Supreme Court rendered in the case of S.K.F. India Limited referred to larger bench, still holds the field and therefore would be binding - HC
Case Laws:
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Income Tax
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2017 (4) TMI 1067
Entitlement to exemption u/s 80-HH and 80-I - Held that:- There is a finding recorded by Tribunal that Assessee conceded and it could not quantify actual amount of expenditure attributable to due unit it is entitled for deduction under Section 80HH and 80-I of Act 1961. That be so, the amount of deduction claimed by Assessee also has rightly been held unacceptable inasmuch as income of new unit cannot be said to have been correctly computed by Assessee. A.O., therefore after making appropriate computation has allowed deduction of modified amount. In view of admission on the part of Assessee's representative that it could not quantify actual amount of expenditure attributable to the new unit, wrong computation of profit of new unit was also evident hence Assessee could not have claimed deduction for the amount it had not correctly computed. The aforesaid question therefore, answered against Assessee. Commission payable to M/s OECC Ltd. - Held that:- In normal course what has been claimed by Assessee justify an answer in its favour but in particular facts and circumstances of the case and that too when it is admitted that even subsequently the amount has neither been claimed by M/s OECC nor paid by Assessee. Hence the factum that it was really shown as accrued itself, become suspicious and doubtful unless Assessee show that the said accrual is genuine and followed. We find no reason to take a view in favour of Assessee. In the present case, at the time of assessment order, it is admitted position that amount of claim towards deduction, though such deduction was neither claimed by OECC nor paid by Assessee. Therefore, Assessing Authority found this amount as ingenuine or fictitious entry or inflated entry.In these facts and circumstances, we are of the considered view that even this question would justify an answer against Assessee
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2017 (4) TMI 1066
Addition u/s 40A(3) - addition on account of payment made in cash More than ₹ 20,000/- - Held that:- The chart of the payments in respect of expenditure incurred by the assessee/ appellant in the aforesaid relevant year as contained in the assessment order itself reveals that all cash transactions are either of ₹ 20,000/- or less though there may be multiple transactions in favour of one and the same party in a single day the aggregate of which exceeds ₹ 20,000/-. However, as in the said assessment year or prior to 1.4.2009 there was no restriction in making cash payment to a single party on the same day of various amounts aggregating to more than ₹ 20,000/- in cash, the same were allowable as deduction towards expenditure under Section 40 A (3) of the Act. Accordingly, the tribunal committed an error of law in confirming the additions of ₹ 1,28,400/- on account of payment made in cash by taking the aggregate of transactions made to one party in a single day to be over ₹ 20,000/-. - Decided in favour of assessee Disallowing the expenses on account of after sale services and advertisement u/s 37 (1) - no agreement for the reimbursement of the said expenses to the supplier or manufacturer - Held that:- The assessee/appellant is only a distributor. The advertisement expenses and after sale services are generally provided to the customers by the manufacturer or supplier through service centres. The cost thereof is realized by the manufacturer/supplier from the distributor irrespective of the fact as to whether any after sale services are actually availed by the customer or provided by the service centre. The payment of charges for after sale services to the manufacturer/ supplier is not linked with the actual after sale services. Therefore, the cost of after sale services in any case is payable to the supplier/manufacturer. We are of the view that the expenses for advertisement and after sale services alleged to have been reimbursed by the assessee/appellant to the manufacturer/distributor as has been allowed in the past by the tribunal were allowable under Section 37 (1) of the Act in the relevant year also.- Decided in favour of assessee
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2017 (4) TMI 1065
Registration u/s 12AA - proof of charitable activities - treatment as registered trust - receipt of land as Donation - Held that:- The assessee was running three educational institutions. It had received donation of agriculture land by a registered gift deed dated 4.12.2006 from Smt. Vasu Devi and three others. The lands were valued at ₹ 1.01 crore. The assessee further received corpus donation of ₹ 15 lacs from three concerns. The registration under section 12AA of the Act had been granted to the assessee by the CIT w.e.f 1.4.2009 which was before the date of the assessment order passed on 30.12.2011 though obtaining registration under Section 12AA of the Act was not mandatory for claiming exemption under section 10(23C)(iiiad) of the Act. According to this provision, any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for the purpose of profit is exempt if the aggregate annual receipt of such university or educational institute does not exceed the amount of annual receipt as may be prescribed. After examining the matter, the Tribunal concluded that the objects of the assessee trust being charitable had not been objected nor it was the case of the revenue that the donation in the shape of land or amount had been utilised for any other purposes except on the objects of the assessee trust. Of course, no educational activity had been started by the assessee during the year but at the same time, this fact had not been doubted that the assets and funds received by it in donation were meant for achieving its objects. Thus, the Tribunal rightly while setting aside the orders of the authorities below directed the Assessing officer to delete the addition treating the assessee as registered trust with charitable objects. - Decide against revenue
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2017 (4) TMI 1064
Addition on account of peak of deposits in the bank account - deemed dividend addition - Held that:- The directors of the assessee company had raised loans from Shri Jagdish Lal. On enquiry from Shri Jagdish Lal, it was found that he was not a man of means. He was residing in a rented house. His income was below taxable limit. His statement was recorded under section 131 of the Act. He deposed that he was not assessed to income tax. He further stated that current account No.6337 in Punjab National Bank was opened by him on behalf of Shri P.R.Gupta and he had not deposited any money of his own in this account. When he was asked to give the source of various advances given by him through cheques, he replied that he suffered heavy losses and had not given any loan or advances to any person. After considering the entire evidence on record, it has been categorically recorded by the Assessing officer that the assessee company had not filed any evidence that the amounts in questions were advanced for purchase of wheat. Further, no evidence had been filed that the wheat was not available and the amounts in question were taken as loans by the directors. No evidence was led as to how the loans taken by the directors from the accounts of M/s Jagdish Lal Karan Singh were utilized. Further Shri Jagdish Lal, proprietor of M/s Jagdish Lal was not produced by the assessee. we find that sufficient reasons have been given by the Assessing Officer for the addition to the income of the assessee. The finding has been recorded after considering the evidence and the material on record. The CIT(A) has reversed the said finding without giving any cogent and convincing reasons. The Tribunal has upheld the said finding as it is. In view of the above, it would be appropriate that the orders dated 2.3.2001 and 15.9.2006 passed by the CIT(A) and the Tribunal respectively are set aside and the matter is remanded to the CIT(A) for considering it afresh after hearing learned counsel for the parties in accordance with law.
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2017 (4) TMI 1063
Allowing raising additional grounds raised by the respondent-revenue - Held that:- After considering the matter, it has been categorically recorded by the Tribunal that as per the provisions of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 (in short, “the Rules”), there is no limitation for raising additional grounds before the Tribunal. It has also been provided that the Tribunal in deciding the appeal shall not be confined to the grounds set forth in the memorandum of the appeal. In the present case, the issues as quoted above being additional grounds were considered to be legal issues which could be decided on the basis of the facts and the material available on the record. Thus, the said grounds are essential for the just decision of the controversy involved. Learned counsel for the petitioner has not been able to produce any material on record to show that the order passed by the Tribunal is illegal or perverse. No ground to interfere with the impugned order passed by the Tribunal allowing the additional grounds raised by the respondent-revenue. Consequently, the petition is dismissed.
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2017 (4) TMI 1062
Deduction u/s 80IC - on the basis of material found in search AO held that 100% of the work of the assessee had not been done at Gagret (Himachal Pradesh) thus allowed deduction @ 20% of the profit from manufacturing - CIT(A) allowed deduction @ 100% also confirmed by ITAT - Held that:- The entirety of the facts was required to be gone into to test the veracity of the plea taken by the assessee. The order dated 28.12.2012 (Annexure A-III) passed by the Tribunal is not a speaking order giving the detailed reasons dismissing the appeal and affirming the findings of the CIT (A). The Tribunal being final fact finding authority was required to deal with all aspects of factual matrix and then record its conclusions based thereon. Mere concurrence with the view expressed by the CIT(A) is not sufficient and the Tribunal was required to record the reasons for dismissing the appeal. In view of the above, the order of ITAT does not satisfy the requirements of being a reasoned order as enunciated by the Apex Court in M/s Kranti Associates Pvt. Ltd's case (2010 (9) TMI 886 - SUPREME COURT OF INDIA), noticed herein above. Thus, the substantial question of law stands answered accordingly. Consequently, after setting aside the order of the Tribunal the matter is remanded to the Tribunal for fresh adjudication after affording an opportunity of hearing to the parties, in accordance with law.
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2017 (4) TMI 1061
Condonation of delay - Held that:- The reasons indicated in the affidavit in support do not inspire confidence. The affidavit is silent about the Advocate to whom the papers were given for preparing to draft the Memo of Appeal. Further, the erstwhile CFO has left the Company in February, 2016 and the affidavit states that the former CFO who left the Company in February, 2016 was somehow under the impression since the amount under dispute had already been deposited that there is no urgency in filing the appeal. The basis of the former CFO's understanding / impression is not supported by any statement / evidence of the state of mind of the former CFO. The present affidavit filed by the Director claims that the present CFO realised that all the appeals have not been filed while reviewing pending Income Tax matters in June, 2016 However, he has also not filed any affidavit in support of the appeal. Moreover, according to the affidavit in support, the draft memo of appeal was already prepared in June, 2015 then why the delay of almost three months in filing the appeal. There is no explanation given for delay in filing the appeal of almost over three months from the discovery / knowledge of the fact that appeals had remained to be filed. No reasons for this delay is even attempted to be explained. It appears on the reading of the affidavit that the applicant assessee had filed these appeals on review of its earlier decision to accept the Common Order of the Tribunal dated 20th February, 2015 relating to Assessment Years 2003-04, 2005-06, 2007-08, 2008-09 and 2009-10. In the above view, we see no reason to condone the delay of 484 days in filing the accompanying appeals in respect of each of the Notices of Motion.
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2017 (4) TMI 1060
TPA - selection of comparables - Held that:- If there is a change in functions carried out, assets employed and risk taken (FAR analysis) of the comparables in the year under consideration viz-a-viz earlier years, the comparables selected in earlier year might be rejected in the year under consideration, but following the observation of the Tribunal in the Thomas Cook (India) limited (2016 (7) TMI 318 - ITAT MUMBAI) the TPO should assign reasons as what are the differences in the FAR analysis of the comparables as compared to the earlier years, which led to rejection of those in the current year. The departmental authorities (i.e. ld. TPO/DRP) are required to bring on record the salient feature of the year under consideration as compared to the facts of the earlier years, in absence of which, the departmental authorities cannot taken opposite view. This issue was taken up by the assessee before the Ld. DRP while challenging the approach of bifurcating single transaction of marketing and after sales support service into the separate transaction of marketing support service and technical support service, however, the issue of consistency was not addressed by the Ld. DRP . Similarly, on the issue of following the rule of consistency in respect of rejection of the comparables in both the segments, the Ld. counsel has submitted that FAR analysis of the assessee as well as comparables was similar in earlier years and therefore there was no reason for rejection of the comparables chosen by the assessee. On the other end, the Ld. CIT(DR) contended that the AO/TPO has given reasons for rejection of the comparables chosen by the assessee. In our opinion, issue before us is if the comparables chosen by the assessee in earlier years were having FAR analysis similar to FAR analysis in year under consideration, how the same were accepted by the TPO in earlier years but rejected in the current year. If there is no change in the FAR analysis of the comparables and the assessee in earlier years viz-a-viz current year, then the rule of consistency demands that comparables chosen by the assessee should be accepted. We find that in absence of records of earlier years, the Ld. CIT(DR) could not address on the issue, and therefore in such circumstances, we feel it appropriate to restore following issues to the file of the Assessing Officer for deciding afresh in the light of rule of consistency: (i) the issue of single transaction of marketing and sales support services viz-a-viz two separate transactions of marketing support services and technical support services, (ii) accepting the comparables chosen by the assessee for marketing and sales support services segment (iii) accepting the comparables chosen by the assessee for technical services segment The learned AO/TPO is directed accordingly to re-compute the arm’s length price of the international transaction carried out by the assessee.
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2017 (4) TMI 1059
Penalty u/s 271(1)(c) - addition made by the AO by estimating the value of three items of stock - Held that:- The findings of the AO for levying penalty that the Assessee failed to offer an explanation and hence, Explanation 1 to section 271(1)(c) was squarely attracted and the addition made in the assessment order in computing the income of the assessee shall be deemed to represent the income in respect of which particulars have been concealed is factually incorrect and legally untenable as explanation alongwith documentary evidence had been filed to substantiate the value of the three items because of which the AO estimated the value of three items at ₹ 59.48 per mtr instead of ₹ 191.57 per mtr estimated by the survey team. Thereafter, the Ld. CIT(A) estimated the value of three items at ₹ 37.96 per mtr instead of ₹ 59.48 per mtr estimated by the AO. Keeping in view of the facts and circumstances of the case, we are of the view that penalty on estimation of valuation of the said items are not leviable and deserve to be cancelled. Our aforesaid view is fortified by the judgment in the case of Naresh Chand Agarwal vs. CIT [ 2013 (6) TMI 68 - ALLAHABAD HIGH COURT] wherein observed that no penalty u/s 271(1)(c) can be imposed with reference to the addition made on estimation basis. The assessee has not furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the Ld. CIT (Appeals) that the details furnished by the assessee in his return are found to be inaccurate or erroneous or false. Accordingly, we delete the penalty in dispute made u/s. 271(1)(c) - Decided in favour of assessee
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2017 (4) TMI 1058
TPA - selection of comparable - Held that:- Assessee company is engaged in the business of providing investment advisory services thus companies different with that of assessee need to be deselected from final list of comparability.
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2017 (4) TMI 1057
Additions on account of stock shortage - Held that:- We find that the lower authorities have summarily rejected the stock reconciliation submitted by the assessee before the AO, as an afterthought without examining the merits of stock reconciliation provided by the assessee. We also find that the lower authorities have not given the reason for making the addition of the entire amount of alleged suppressed sales amounting to ₹ 1,52,538/- without explaining why the addition was not restricted to gross profit on the alleged suppressed sales. In the fitness of things, therefore, we set aside the order of the lower authorities on this issue and restore the matter to the file of the Ld. CIT(A) for fresh order on this issue. The Ld. CIT(A) is directed to examine the stock reconciliation furnished by the assessee on merits and to give a categorical finding. The Ld. CIT(A) is also directed to pass a speaking order giving categorical finding whether the entire amount of the alleged suppressed sales is to be added or only the gross profit earned on such alleged suppressed sales is to be added as assessee’s income. This issue is restored with the aforesaid directions to the file of the Ld. CIT(A) for fresh order as per law. Unexplained investments - loose paper on the basis of which this addition is made - Held that:- The assessee has filed a Paper Book before us containing 10 pages which includes the copy of the assessee’s reply filed before the AO and copy of assessee’s submissions filed to Ld.CIT(A). The order of Ld.CIT(A) is a non-speaking order and does not explain why the explanation/evidences furnished by the assessee before AO and before ld.CIT(A) have been rejected. The order of the Ld.CIT(A) is also silent on why he chose to consider the aforesaid amount of ₹ 4,53,500/- and not the aforesaid net amount of ₹ 3,73,500/-; and from perusal of the order of the Ld.CIT(A) there is no mention that any opportunity was given by him to the assessee for taking this step. In view of these facts and circumstances, we are of the view that the order of Ld.CIT(A) is a nonspeaking order and has been passed without giving reasonable opportunity to the assessee. In the fitness of things, therefore, we set aside the order of Ld.CIT(A) and restore this matter to the file of the Ld.CIT(A) for fresh orders on this issue. The Ld.CIT(A) is directed to pass a speaking order giving reasons for why the explanation/evidences furnished by the assessee before AO and before Ld.CIT(A) have been rejected and why he chose to consider the aforesaid amount of ₹ 4,53,500/- and not the aforesaid net amount of ₹ 3,73,500/-.
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2017 (4) TMI 1056
Deduction under section 80-IA(4) - assessee is engaged in the business of operation of Container Freight Station (CFS) - Held that:- In the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT ), the Hon'ble Bombay High Court has held that profits and gains from infrastructure undertakings (infrastructure facility), set up within precincts of port, then, having considered its proximity to sea-port and its activities, it can be safely concluded that deduction admissible under sub-section (4) of section 80-IA can be claimed by both ICDs and CFSs. Also in assessee's own case [2015 (12) TMI 365 - ITAT Visakhapatnam] having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry, the object of including “inland port” as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - Decided in favour of assessee.
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2017 (4) TMI 1055
Unexplained credit u/s 68 - addition of loan received - proof of identity of the lender and genuineness of transaction made through banking channel - Held that:- We find that a perusal of the bank statement of the lender Mr. Dattu (p-3 of P/B) shows that there were two withdrawals of ₹ 3,00,000/- each on 08.05.2008. The assessee has not furnished the transactions prior to 04.04.2008. In the statement recorded by the AO (point no 7-9 of the statement) Mr. Dattu confirmed that he had given loans of ₹ 6,00,000/- to the assessee. Mr. Dattu stated before the AO that he received the funds from M/s. Suzlon Ltd. who had acquired his ancestral agricultural land for installation of a windmill. However he had not proof of receiving the funds from M/s. Suzlon Ltd. Mr. Dattu has stated before the AO that he was working in Vashi and Khadk, Mumbai as a labourer and was earning ₹ 9,000/- p.m. It is inconceivable that with such meagre income Mr. Dattu could give a loan of ₹ 6,00,000/- to the assessee. As the Hon'ble Supreme Court laid down in Kalekhan Mohammed Hanif vs. CIT (1963 (2) TMI 33 - SUPREME Court), the onus is on the assessee to explain the nature and source of cash credits, whether they stand in the assessee’s account or in the account of a third party. At para 7 here-in-above, we have delineated that the assessee has failed to prove the genuineness of the transaction. - Decided against assessee
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2017 (4) TMI 1054
Income from amenities - whether treated as income from property - Held that:- Identical question of law is pending for adjudication before the Hon'ble High Court and a declaration u/s. 158(A)(1) of the Act has been filed by assessee before us stating that the matter is pending before the Hon'ble High Court for adjudication and assessee would abide by that decision. In view thereof, AO is directed to apply the decision for the impugned assessment year as well as and when rendered by the Hon'ble High Court of judicature at Hyderabad, in view of Section 158(5) of the Act.
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2017 (4) TMI 1053
TDS u/s 194J - non deduction of TDS on the amount towards MTNL on account of lease line charges along with interest and VSAT operating charges and transaction charges - ex-parte order - Held that:- The notice has been issued to the assessee which was duly served to the assessee but the failed to appear before us, therefore, he was proceeded against ex-parte. The assessee as well as his representative nowhere represented the case. No material of any kind was produced before us to which it can be assumed that the finding of the CIT(A) is wrong against law and facts and is liable to be set aside. It is not in disputed that the assessee paid lease line charges, transaction charges and CDSL Charges but failed to deduct the tax u/s.194J of the Act. The Assessing Officer has rightly deduct the tax along with interest as per law, therefore, we nowhere found any wrong order passed by the Assessing Officer which has been confirmed by the CIT(A) in question. Since no material of any kind was produced before us to differentiate the finding of the CIT(A) in question, therefore, we are of the view that the CIT(A) has decided the matter judiciously and correctly which is not required to be interfere with at this appellate stage. Accordingly, all these issues are decided in favour of the revenue against the assessee.
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Customs
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2017 (4) TMI 1077
Criminal appeal - validity of acquittal order given by Trial Court - offence u/s 132 and 135(1)(a) of the CA, 1962 - attempt to smuggle M.S. Sheets/Coils and Stainless steels/Coils in the guise of tin bend circle waste in three containers - certain undeclared cargo were kept concealed underneath the tin bend circle waste - accused was acquitted by trial court on the ground that there is no inculpatory materials available against the respondent/accused - sanction under Section 137 of the CA - Held that: - Even though the court below held that a sanction order passed by the Commissioner of Customs was filed along with complaint, but it was not marked before the Court as an evidence. The existence of valid sanction is pre-requisite to take cognizance of offence alleged to have been committed under the Customs Act. Any case instituted without a proper sanction must fail because this being a manifest defect in the prosecution, and the entire proceedings are rendered void ab initio. It is settled position of law that the Court should not remand the matter to fill up a lacuna deliberately left by the prosecution, and after a long lapse of time the matter cannot be remanded for the purpose of marking the sanction order. The accused has clearly admitted his involvement of the offence. The Court below elaborately considered the statement of the accused and come to a conclusion that there is nothing inculpatory in his statement to connect him with the crime. In an appeal against acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him and the fundamental principle of criminal justice delivery system is that every person, accused of committing an offence shall be presumed to be innocent, unless his guilt is proved by a competent Court of law. Secondly if the accused has secured an order of acquittal, the presumption of his innocence is reaffirmed and strengthened by the trial Court. Even if two reasonable conclusions are possible on the basis of evidence on record, the appellate Court should not disturb the finding of the acquittal recorded by the trial Court. There is no reason to interfere with the order of acquittal passed by the trial Court - appeal dismissed - decided in favor of accused.
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2017 (4) TMI 1076
Detention of certain persons - There is improper communication of the order of detention and this has vitiated the second facet of Article 22(5) of the Constitution as well - non-furnishing of relied upon documents - non-application of mind - applicability of doctrine of severability - COFEPOSA Act - Held that: - The protection under Article 22(5) of the Constitution of India read with Section 3(3) of the COFEPOSA Act requires that the person against whom an order for preventive detention has been passed shall be given the earliest opportunity of making a representation against the order of detention by communicating to him the grounds of detention, thus enabling him to effectively utilise such opportunity. Liberty of individual in terms of the Constitution is not merely a technical matter but a sacrosanct one. The materials disclosed that the detention order and the grounds of detention were served on the respective detenus under due acknowledgment. The list of Relied Upon Documents and copies of the Relied Upon Documents were also served on each detenu. The video footages were also shown to them, as can be seen from the acknowledgments made in writing by each of the detenus in the presence of Jail authorities. The acknowledgment of receipt of the detention order, the grounds of detention, the list of the Relied Upon Documents and the copies of the Relied Upon Documents are signed by each of the detenus and those acknowledgments are counter signed by the Jail authority who was present while those materials were served. If the formalities prescribed by the Constitution and the COFEPOSA Act have been complied with, there would be no further examination by the Court, on an application seeking interference with preventive detention - the orders of detention have been issued on the basis of materials which are not extraneous to the purpose of statutory provisions which have been invoked by the detaining authority and the sponsoring authority. No plea of absence of due application of mind is available on the materials in the cases in hand. No ground exists to interfere with the impugned orders of detention and grant the reliefs as sought for in the writ petitions - petition dismissed - decided against petitioner.
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2017 (4) TMI 1075
Valuation - Branded cut and polished cubic zirconia of PRECIOSA Brand - reasonable belief that value declared on the invoice appears much low in comparison to the goods of other branded company like M/s. Swaroski - the goods imported by the appellant stand described in the invoice as ‘MCC cubic zirconia round white’. The same description stand reflected by the appellant in Bill of Entries - Held that: - the finding of the appellate authority that the goods in question are of ‘star’ quality rather than the MCC grade is not based upon the authentic literature or expert opinion etc. and seems to be his own views on the topic - the enhancement of the value by the Commissioner (Appeals) cannot be held to be justifiable, in the absence of any findings to the contrary. Rule 5 requires valuation at par with the value of similar goods actually imported at or about the same time. As such, the said Rule requires the value of the contemporaneous imports to be adopted. Admittedly, the Commissioner (Appeals) has not referred to any contemporaneous imports on record. Appeal allowed - order of original adjudicating authority restored - decided in favor of appellant.
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2017 (4) TMI 1074
Prohibited goods - confiscation - the import documents did not contain all the attachments to Licence No. 4019041, as endorsed by BIS, New Delhi from time to time. In respect of other brands, the appellant importer could not produce any BIS Certificate as required - Held that: - it nowhere have come in the report of the Customs Officers that such tyres are not of good quality on first check or visual examination. For these tyres, the Adjudicating Authority shall obtain a test report from a scientist of Central Institute of Road transport (CIRT) or some other lab, as acceptable to both the Revenue and the appellant, and if those tyres are found to be of acceptable quality as per the test reports so, obtained, then the Adjudicating Authority shall allow the same to be cleared for home consumption. Otherwise, the appellant will be required to re-export the same on payment of fine. So far redemption fine is concerned, the same shall be re-determined @ of 20% ADV of the tyres found not of acceptable quality as directed above, which shall be available for re-export on payment of redemption fine so determined. Matter on remand.
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Service Tax
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2017 (4) TMI 1089
Condonation of delay - delay not explained properly - Held that: - the reasons furnished do not supply sufficient cause for condonation of delay - application for COD dismissed.
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2017 (4) TMI 1088
Rent-a-cab operator service - principles of natural justice - case of Revenue is that adjudicating authority has not properly appreciated the facts in dropping the demand - Held that: - unsupported factual assertions have been made by the Commissioner (Appeals) like placing the cabs at the disposal of the clients and passing the effective control to the clients. There is no basis for such assertion - the decision of the Tribunal in R.S. Travels [2008 (7) TMI 27 - CESTAT NEW DELHI] is squarely applicable to the present case, where it was held that point has to be decided by the lower authority after ascertaining the facts, for which, this matter has to be remanded to Commissioner for de novo adjudication - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1087
Renting of immovable property service - lump-sum lease premium or periodical rent - The main objects of appellant are to promote and secure the development of Delhi according to plan and for that purpose, the appellant shall have the power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering, mining and other operations, to execute works in connection with supply of water and electricity, disposal of sewage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto Held that: - considering the huge quantum of service tax demand of ₹ 950 crores confirmed against the appellant, we would expect a detailed analysis of factual as well as legal position, before the conclusion was drawn by the Original Authority. The analysis and discussion recorded in the impugned order is rather brief. After reproducing the statutory definitions, the Original Authority has concluded that the appellant is liable to service tax. No analysis was made with break-up figures with reference to commercial or non-commercial property, valuation of taxable service, abatement or exemptions, if any, applicable to the appellant etc. The tax liability has been confirmed against the appellant for receipts w.e.f. 01/06/2007 considering all such receipts under the category “land premia”. As already noted, we are of the view that the impugned order suffers from serious legal and factual infirmities due to non-examination of various relevant facts and also non-consideration of various legal issues before arriving at the tax liability of the appellant. The impugned order as its stand cannot be legally upheld. As already noted, it suffers from serious factual and legal infirmities and non-application of mind, both on the question of determination of tax liability as well as on quantification of such tax liability. Accordingly, we are of the considered opinion that the impugned order has to be set aside and the matter has to go back to the Original Authority for a fresh decision - appeal allowed by way of remand.
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2017 (4) TMI 1086
Composite works contract - The Commissioner held that the appellants rendered taxable service under the category of erection, commissioning and installation service chargeable to service tax w.e.f. 01/07/2003 - case of Revenue is that contracts executed by the appellants are to be classified as works contract and the works contract in respect of railways is excluded from tax liability as per the statutory definition itself. It is well settled legal position that metro work is nothing but railway work - Held that: - a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods is covered under works contract service. Admittedly, in the contracts now under consideration there were transfer of property in goods which are directly involved in the exclusion of work by the appellant. As such, we find that the findings of the Original Authority is without any basis and cannot be legally sustained - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1085
Liability of service tax - fee collected for testing and certifying seeds at the request of the persons in terms of Section 9 of the said Act - Revenue held a view that the appellants are liable to service tax in terms of Section 65 (108) of the FA, 1994 under the category of Technical Inspection and Certifying Agency Service - appellants contended that they are a statutory authority, performing a statutory function and there is no service element to be taxed under the category of technical inspection and certification - Held that: - the appellants have taken the inspection or examination of seeds in various stages starting from cultivation, harvesting, grading and quality checking in order to arrive at the decision whether the seeds meet the pre-set standards. Thereafter, due certification is given. We find that the activities of the appellant are covered by technical inspection and certification service. The appellant’s liability to service tax is to be upheld - demand confirmed pursuant to SCN dated 22/10/2010 shall be restricted to the normal period and the penalties imposed u/s 76 and 78 are set aside - appeal disposed off - decided partly in favor of appellant.
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2017 (4) TMI 1084
STPI unit - Rebate claim - N/N. 12/2005-ST - Service Tax paid on input services utilized in the activity of export of services - rejection on the ground of time bar - Held that: - two conditions have been prescribed for satisfaction of Export of Service. First, being remittance for service of India and its receipts by receiver of services abroad and secondly, remittance must have been received in convertible foreign exchange in India - learned Commissioner erred in computing the period of limitation from the date of payment of the input tax. CENVAT credit - denial on the ground that when services were received some of the premises of the appellant s company were not registered with the Service Tax Department - Held that: - taking notice of the fact that all such unlisted premises had subsequently been registered and recognized for the appellant, and also relying on the ruling of Hon’ble Karnataka High Court in the case of mPortal India Private Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that Registration not compulsory for refund - credit allowed. Rebate claim - Rent-a-cab Operator Service - Held that: - transport expenses (Rent-a-Cab operator service) for holding a conference or training session at any place outside the office premises is allowable and accordingly rebate of the same is also allowable. Appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1083
Overseas Commission - case against appellant is that the appellant had not paid the Service Tax on Overseas Commission credited to the Overseas Commission Agent (OCA) ledger account and that the transaction between them and OCA was between the associated enterprises - Held that: - the SCN dt. 21.04.2009 could not invoke the allegation of associated enterprises when the law at the time did not provide for the same and the relevant provision was introduced on 10.05.2008, without it being made expressly retrospective. Extended period of limitation - Held that: - the facts about payment of commission to OCA were well known to the Department prior to the SCN dt. 21.04.2009, the extended period therefore, could not have been invoked in the third SCN. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (4) TMI 1082
Period for payment of interest u/s 11 AB of the CEA, 1944 - interest on differential duty on additional amount received - price escalation clause - Department, seeks payment of interest in the form of compensation, for the period commencing from the date, when, duty was first paid on the original price of the goods till the period ending with, when duty once again upon receipt of additional consideration by the appellant - Held that: - the decision rendered in the case of S.K.F. India Limited, [2009 (7) TMI 6 - SUPREME COURT], still holds the field and therefore would be binding on this Court, under Article 141 of the Constitution of India - having regard to the fact, that the said decision has been referred for reconsideration to a Larger Bench, we are inclined to dismiss the appeals, with the liberty to the appellant to revive the same - appeal disposed off.
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2017 (4) TMI 1081
Imposition of penalty - whether for violation of provision of Rules 3(5B) of the CCR, 2004. Whether penalty can be imposed u/r 15(1) read with Section 11AC of the Act or not? - Held that: - the provision of Rules, 3(5B) and Rule 6(3) (b) of the Cenvat Credit Rules are similar - penalty is not imposable on the appellant - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1080
Benefit of N/N. 6/2000 - SSI exemption - case of Revenue is that both the units are in the same premises sharing the same main gate, roads, etc., and also have common facility for steam generation, therefore, it is one factory so both the units cannot avail benefit of notification separately - Held that: - in respondent’s own case for the earlier period [2006 (9) TMI 441 - CESTAT, NEW DELHI] this Tribunal has allowed the benefit of SSI Exemption to both the factories in terms of N/N. 6/2000 - benefit allowed - appeal dismissed - decided against Revenue.
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2017 (4) TMI 1079
CENVAT credit - capital goods - appellant has reversed the cenvat credit on inputs which have gone in the manufacturing of final products under exemption N/N. 30/04-CE dated 9.7.2004 - Held that: - in the case of S.T. Cottex Exports Pvt. Ltd. [2010 (1) TMI 1048 - CESTAT NEW DELHI], the facts were similar to the facts of this case in hand wherein this Tribunal has held that the cenvat credit on capital goods is available to the assessee - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1078
Clandestine removal - Department has concluded that without getting itself register with the Central Excise Department and without payment of Central Excise duty, the appellant had cleared the excisable goods from the factory in clandestine manner - Held that: - The department has not produced any tangible evidence to prove that the appellant had in fact indulged in clandestine manufacture and clearance of goods. Further, the appellant was duly registered with the Sales Tax Department for resale of various goods mentioned in the registration certificate - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (4) TMI 1073
Imposition of penalty - Section 45 (7) (a) of the Telangana Value Added Tax Act, 2005 - the petitioners claim that they paid tax @ 5% on the value of the goods as demanded by the respondents, in order to avoid the risk of the goods getting detained and getting exposed to the vagaries of weather - Held that: - the Officer has the discretion to impose a penalty ranging from 1% to 200%. The SCN proposes to levy penalty at 100% - Considering the fact that the dealers have paid the tax at the place where the goods were threatened to be detained and also considering the fact that they have chosen to come up only after the issue of SCN for penalty, the Assessing Officer could be considerate, while considering the objections of the petitioners. This is a small reprieve that could be granted to the petitioners on account of their conduct - petition allowed - decided in favor of petitioner.
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2017 (4) TMI 1072
Levy of penalty - case of petitioner is that it had not availed of any input tax credit (ITC) in the assessment order in issue - Held that: - The judgment delivered by the Division Bench of this Court in The Deputy Commissioner (C.T.), Coimbatore V. S.R.Ramaswami Chettiar and Bros., [1975 (8) TMI 114 - MADRAS HIGH COURT], clearly opine that penalty cannot be imposed by a separate, or, an independent order, which does not form part of the assessment order - petition allowed - decided in favor of petitioner.
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2017 (4) TMI 1071
Initiation of recovery proceedings pending appeal and stay petitions - sub-section (4) of Section 55 of the KVAT Act, 2003 - Held that: - the statute itself provides for a blanket stay on deposit of 20% of disputed amount of tax along with collected tax. The first appellate authorities then cannot go beyond the 20% as indicated in the proviso - the appellate authorities would consider the stay petitions in accordance with the proviso and the directions hereinabove, and pass orders within a period of two months, in which period the recovery proceedings would be kept in abeyance - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (4) TMI 1069
Order passed by the Appellate Tribunal for Forfeited Properties confirming the order of the Competent Authority in terms of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act - Held that:- The wider definition under SAFEMFOPA cannot be pressed into service to bring within the fold of the Act all and every income unless the competent authority draws a link between the same and the detenu. We cannot lose sight of the position that other enactments like the Income and Wealth Tax Acts contain their own mechanisms for addressing undisclosed income/assets and the purpose of the SAFEMFOPA is different as seen from the Preamble of the Act that reads An act to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto. The presence of undisclosed income/wealth has thus to be seen in the context of illegal acts of omission and commission by the detenu only and none other. In the present case, there is not even an allegation made, let alone a link/nexus drawn in this regard. With respect to the house property at Kilakkarai, the explanation by the petitioner was to the effect that the building was gifted to her by her mother and further construction was carried out by her. The competent authority states that there was no evidence to establish that the petitioner's mother had enough funds in this regard and thus assumes that the property is illegally acquired property in the petitioners hands. Jewellery and the bank account with Indian Bank were also held to be illegally acquired on the 'prima facie' consideration that the sources for the acquisition of the jewellery were not proved by the petitioner. Nowhere in the reasons have the properties traced back to the detenu and his acts prohibited/contravening the law. The conclusion of illegal acquisition has been drawn on the mere ipse dixit of the authority. The Reasons recorded by the competent authority do not satisfy the parameters of the Act. As a consequence, the notice u/s 6(1)
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2017 (4) TMI 1068
Complain under Section 138 of the Negotiable Instruments Act for the dishonour of the cheques - Held that:- In order to attract the penal provisions for the bouncing of a cheque, it is essential that the dishonoured cheque should have been issued in discharge, wholly or in part, or any debt or other liability of the drawer to the payee. The explanation to Section 138 of the Negotiable Instruments Act defines the expression “debt or other liability” as a legally enforceable debt or other liability. Unless the two conditions set out in Section 138 of the Act are satisfied, no criminal liability can be fastened. This is also in accordance with the general scheme as laid down in Section 118(a) of the Negotiable Instruments Act. It also enforces the doctrine of consideration as laid down in Section 2(d) of the Indian Contract Act, 1872. The applicants have levelled serious allegations against the officials of the department of exerting undue pressure, threat and duress while obtaining the cheques in question. Indisputably, as on date, the adjudication at the end of the competent authority under the Act is yet to take place. I find it extremely difficult to accept the argument of the learned counsel appearing for the department that the liability was fixed on the basis of the statements made by the applicant no.2 herein dated 7th November 2012 and 8th November 2012 respectively under Section 14 of the Central Excise Act, 1944. It appears that the department construed the two statements recorded under Section 14 of the Act, 1944 as a confession on the part of the applicants of indulging into fraudulent availment of the Cenvat Credit of ₹ 3.27 crore on the basis of phony cenventible invoices issued by the various ship breaking units of Bhavnagar. Let me assume for the moment that at the end of the search operation the officials were able to collect something incriminating against the applicants as regards the evasion of the excise duty. However, it cannot be said that the cheques which were obtained by the department were towards the discharge of the existing enforceable debt or liability. The liability was yet to be determined by the competent authority under the provisions of the Act. In the absence of any adjudication by a competent authority under the provisions of the Act as regards the liability of the applicants to pay the excise duty, it cannot be said that on the date when the cheques were drawn there was an existing enforceable debt or liability. For the foregoing reasons, all the three applications are allowed. The proceedings of the Criminal Cases pending in the court of the learned Metropolitan Magistrate, Court No.36, Ahmedabad, are hereby quashed.
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