Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 29, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
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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Disallowance of purchases- Only on account of non-filing of the confirmations from the farmers who sold the paddy to the assessee, adhoc disallowance cannot be made - AT
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Levy of penalty u/s.271(1)(c) - assessee has wrongly computed the deduction u/s. 80-IA by showing the wrong depreciation - levy of penalty confirmed - AT
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TDS u/s 192 - Salary - Payments of collected tips made in the manner would not be payments made “by or on behalf of” an employer - appellants are outside Section 192 - SC
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Apportionment of expenses to determine the Foreign Income for the purposes of deduction u/s 80-O - method of apportionment of expenses between domestic business and income from foreign commission is clearly unacceptable - HC
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Provisions of section 50C of the Act cannot be invoked to compute the capital gains arising on transfer of leasehold rights - AT
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Addition u/s 50C - Whatever compensation received would be for relinquishment of right to obtain a sale deed, which is also a “capital asset” within the meaning of section 2(14) of the Income Tax Act but not akin to land or building. Therefore, in this case, no addition can be made with the aid of section 50C in the hands of the assessee - AT
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Penalty u/s 271(1)(c) - incorrect valuation of scrap - Apart from the estimation made by the Assessing Officer, there is nothing to show that the assessee had valued the scrap incorrectly - AT
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Loss from speculation business of sale of shares - the assessee by virtue of being an NBFC is authorised to invest in shares and such a terminology does not indicate that the loss or gains from investments made by assessee is to be treated as business income. - AT
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Sale of flat and plots of land - the profit derived from sale of plots and flat should be assessed only as income from business and not as capital gains. Accordingly the adoption of value determined by stamp valuation authorities u/s 50C of the Act does not arise - AT
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TDS u/s 192 - Non deduction of TDS - liability to deposit sum, not deducted or collected, with the Govt. treasury does not arise under Chapter XVII-B of the Act read with Rule 30(2) of the Income Tax Rules 1962 - action of the AO u/s 201(1) & 201(1A) imposing liability towards unpaid salary is without authority of law - AT
Customs
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SCN suffers from the fatal flaw and has been issued overlooking the COOs produced by the said importer verified by Issuing Authority. Since the SCN has been issued on the basis of an invalid Circular, held to be invalid and unsustainable in law - HC
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High Court having jurisdiction to entertain writ petitions against orders passed by the appellate authorities under the Customs Act, would be the High Court having jurisdiction over the original authority, that passed the first order in adjudication proceedings under the Act - HC
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Time limit prescribed under the CHALR/CBLR are to be strictly adhered to - Delay in proceedings, in any stage, will have a bearing on the legality of the proceedings - AT
Corporate Law
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The amended Accounting Standards should be used for preparation of accounts for accounting periods commencing on or after the date of notification - Circular
Service Tax
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Value of supply of free material should not be included for arriving at gross value for charging service tax liability - AT
Central Excise
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As per substituted definition of inputs with effect from 1/4/11, electrodes admittedly used by appellant in the factory of production, allowable for Cenvat credit - AT
VAT
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Bihar VAT - it is not permissible for the person making the deduction of tax at source to continue to make deduction of the entire amount from the bills without giving the benefit as provided under the Rules which is couched in the form of injunction and violation of the same - HC
Case Laws:
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Income Tax
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2016 (4) TMI 1057
Disallowance of purchases - disallowance on the ground that the assessee has not produced confirmation letters from the paddy farmers - Held that:- Assessee has submitted quantitative details of purchases of paddy along with registers maintained by him and VAT returns and Cess levied by Agricultural Market Committee in respect of paddy purchased. He made a detailed submission before the Ld. CIT(A). The Ld. CIT(A) again asked the assessee to produce the documents maintained by the assessee in respect of purchases and corresponding credits in respect of the transactions. The same were produced before the Commissioner on 26.7.2013. The Ld. CIT(A) after considering the details submitted by the assessee, he gave a categorical finding that no discrepancy has been found in the purchases made by the assessee and for want of confirmations, adhoc disallowance cannot be made. We find that the assessee has submitted all the details before the A.O. even before the Ld. CIT(A). Only on account of non-filing of the confirmations from the farmers who sold the paddy to the assessee, adhoc disallowance cannot be made. In view of the above, we find no reason to interfere with the order passed by Ld. CIT(A). - Decided against revenue.
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2016 (4) TMI 1056
Levy of penalty u/s.271(1)(c) - Held that:- The assessee has wrongly computed the deduction u/s.80-IA of the Act by showing the wrong depreciation. Had the Assessing Officer not verified it, it would have gone out of the taxation. Being so, in the present case in hand also there is furnishing of inaccurate particulars of income.Accordingly, we are inclined to confirm the levy of u/s.271(1)(c) of the Act. - Decided against assessee.
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2016 (4) TMI 1055
TDS u/s 192 - short/non deduction of tax at source on account of banquet and restaurant tips collected and paid by it to its employees - assessee in default - Held that:- Payments of collected tips made in the manner would not be payments made “by or on behalf of” an employer. We agree with the statement of law that there is no ground for saying that these tips ever became the property of the employers. Even if the box were kept in the actual custody of the employer he would have no title to the money as he would hold such money in a fiduciary capacity for and on behalf of his employees. In the said circumstances, it is clear that such payments would be outside the purview of Section 15(b) of the Act. It is well settled that a case is an authority, for what it decides, and not for what logically follows from it. This case in no manner supports Shri Kaul’s submission on Section 17(3) (ii) that the moment any amount is received from an employer by an employee, without more, such amount becomes a profit in lieu of salary. In the Karamchari Union judgment [2000 (2) TMI 11 - SUPREME Court] CCA and HRA arose directly from the employer – employee relationship. The question the Court had to answer was whether a pecuniary advantage in the form of CCA and HRA would be covered by Section 17, which the Court answered in the affirmative. This Court’s decision cannot be understood to mean that even de hors the employer – employee relationship, any amount received from the employer by an employee would become ‘salary’ under Section 17. We are, therefore, unable to subscribe to the High Court’s view in understanding this decision to mean that so long as the employer pays an amount to an employee, even in a fiduciary capacity and de hors the employer – employee relationship, the amount so paid would come within the head “salary”. A great deal of argument was made by both sides on the nature of interest contained in Section 201(1A) of the Act. We find it unnecessary to go into this question for the simple reason that as held in Commissioner of Income Tax, New Delhi v. Eli Lilly and Company (India) Private Limited, (2009 (3) TMI 33 - SUPREME COURT) interest under section 201(1A) can only be levied when a person is declared as an assessee-in-default. Having found that the appellants in the present cases are outside Section 192 of the Act, the appellants cannot be stated to be assessees-in-default and hence no question of interest therefore arises.
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2016 (4) TMI 1054
Computing the income received or brought into India in convertible foreign exchange for the purposes of deduction under Section 80-O - whether the conclusion of the ITAT with regard to the apportionment of expenses to determine the Foreign Income for the purposes of deduction under Section 80-O of the Act, is inconsistent with the evidence on record? - Held that:- Although, the ITAT ought to have discussed the method of apportionment as urged by the Assessee and articulated its reasons for rejecting the same, we are not inclined to remand the matter as the method of apportionment of expenses between domestic business and income from foreign commission is clearly unacceptable in the given facts of the case. Further, the ITAT has concurred with the view of the AO that the method provided by the Assessee was not acceptable as the expenses would vary from year to year. Finally, the ITAT had accepted the methodology adopted by the AO to compute Foreign Income to be reasonable and scientific and we find no infirmity with this view. - Decided in favour of the Revenue and against the Assessee.
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2016 (4) TMI 1053
Invocation of the provisions of section 50C - Held that:- We do not find any justification in the orders of the authorities below in invoking the provisions of section 50C of the Act and adopting the value of property as determined by the stamp valuation authority, for the purpose of computing the capital gain on transfer of the assessee’s leasehold rights in the said foreshore land at Napean Sea Road, Mumbai. We direct the AO to compute the capital gains on the transfer of the leasehold rights of the aforesaid foreshore land at Napean Sea Road, Mumbai by adopting the value of the property at ₹ 1,35,00,000/- as offered by the assessee. It is accordingly ordered. The additional grounds raised by the assessee, by holding that the provisions of section 50C of the Act cannot be invoked to compute the capital gains arising on transfer of leasehold rights, the assessee’s grievance in this appeal has been addressed. In this view of the matter, the ground raised at S. No. 2, seeking a direction to be issued to the AO for making a reference to the Departmental Valuation Officer (DVO) would not now require adjudication.
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2016 (4) TMI 1052
Addition u/s 50C - Computation of capital gain - difference in sale price in sale deed and valuation by the stamp valuation authorities - Held that:- No doubt section 50C contemplates replacement of full value of consideration received as a result of such transfer. But a transfer of capital asset should be either land or building. It does not authorize the AO to replace the full value of the consideration in each and every case, where capital gain is to be computed. This deeming fiction is applicable only when the land or building is being transferred. Whatever compensation received would be for relinquishment of right to obtain a sale deed, which is also a “capital asset” within the meaning of section 2(14) of the Income Tax Act but not akin to land or building. Therefore, in this case, no addition can be made with the aid of section 50C in the hands of the assessee - Decided in favour of assessee
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2016 (4) TMI 1051
Penalty u/s 271(1)(c) - incorrect valuation of scrap - Held that:- It is an admitted position that the assessee accepted the addition and did not challenge it further. But the mere fact that an addition has been accepted or is confirmed in quantum proceedings cannot be conclusive for the imposition of penalty. Further, the only basis of addition is the estimate of weight made by the Assessing Officer in valuing the scrap. Apart from the estimation made by the Assessing Officer, there is nothing to show that the assessee had valued the scrap incorrectly. It is a settled legal position that when income is estimated, there can be no question of imposing penalty u/s 271(1)(c) of the Act. The Hon'ble Delhi High Court in CIT vs Aero Traders (P) Ltd. (2010 (1) TMI 32 - DELHI HIGH COURT ) has held that no penalty u/s 271(1)(c) can be imposed when income is determined on an estimate. It is apparent that in the instant case, the bedrock of penalty is estimation of scrap, hence, the penalty on this issue cannot be sustained. As far as the penalty on difference in VAT account is concerned, it is seen that the amount of ₹ 1,01,922/- disallowed as expenditure pertains to difference in VAT rates in Delhi and U.P. It is not the case of the Department that the assessee had made a bogus claim of the expense. The disallowance was made on the basis that since the assessee followed mercantile system of accounting, the amount remaining outstanding could not be written off as an expense. The assessee’s act of debiting the outstanding amount as discount/rebate at worst can be termed as ‘a claim not accepted’ but the inference of concealment of income or furnishing of inaccurate particulars of income does not hold good. The other two items on which the penalty has been imposed are late deposit of PF & ESI dues and on account of charity and donation remaining unverifiable. In our opinion, additions on these two accounts also do not justify imposition of penalty as no case of furnishing of inaccurate particulars or concealment is made out. Hence, imposition of penalty on these two issues also cannot be sustained. - Decided in favour of assessee
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2016 (4) TMI 1050
Loss from speculation business of sale of shares - long term capital gain or short term capital gain - Held that:- We find from the facts of the case that the assessee is NBFC as per section 45-IA of the RBI Act, 1934. The assessee has always taken the value of investment at cost and categorized the investment in shares under the head investment and not as current assets. The assessee has earned dividend income of ₹ 2,87,49,687/- during the year and the same was claimed as exempt u/s. 10(34) of the Act. The assessee during the course of assessment proceedings produced contract notes for sale as well as for purchase of shares of Oriental Bank of Commerce from where the assessee has earned substantial loss on account of short term and long term. The assessee’s details in respect of holding period, purchase price, sale price, date of sale, date of purchase is enclosed in assessee’s paper book at pages 71 to 76 wherein it can be seen that the period of holding by the assessee of shares of OBC ranged between 556 days to 213 days i.e. between 18 months to 7 months. We also find from the orders of the lower authorities that none of the authorities below has doubted the genuineness of sales or purchases or genuineness of transaction and source of payment, whether received or paid. From these facts we can analyze that the assessee by virtue of being an NBFC is authorised to invest in shares and such a terminology does not indicate that the loss or gains from investments made by assessee is to be treated as business income. The assessee has established that the shares held by it as investment are capital asset and sale of capital asset being shares held as investment for a considerable period i.e. either little less than one year or more than one year are assessable as short term capital gain/loss or long term capital gain/loss and not business income. CIT(A) has rightly deleted the disallowance of loss by holding the assessee as investor and we confirm the same. - Decided against revenue Disallowance u/s. 14A - Held that:- For attracting Section 14A, there has to be a proximate cause for disallowance, which is its relationship with the tax exempt income. Pay-back or return of investment is not such proximate cause, hence, Section 14A is not applicable in the present case. Thus, in the absence of such proximate cause for disallowance, Section 14A cannot be invoked. In our view, return of investment cannot be construed to mean “expenditure” and if it is construed to mean “expenditure” in the sense of physical spending still the expenditure was not such as could be claimed as an “allowance” against the profits of the relevant accounting year under Sections 30 to 37 of the Act and, therefore, Section 14A cannot be invoked. Hence, the two asset theory is not applicable in this case as there is no expenditure incurred in terms of Section 14A - Decided against revenue
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2016 (4) TMI 1049
Sale of flat and plots of land - assessed as capital gains OR business income - Held that:- We hold that the revenue has been assessing the profits from the housing projects derived by the assessee as income from business and it cannot deviate its stand in the assessment year under appeal in respect of profits of the same project merely because there is no closing stock of plots and flat shown in the books of the assessee and merely because no sale of plots had been offered as business income in the immediately preceding previous year by the assessee. Hence we hold that the profit derived from sale of plots and flat should be assessed only as income from business and not as capital gains. Accordingly the adoption of value determined by stamp valuation authorities u/s 50C of the Act does not arise. Moreover, the amendment in section 43CA of the Act applying the value determined by stamp valuation authorities for stock in trade is applicable only from Asst Year 2014-15 and not earlier. Hence upto the Asst Year 2013-14, the decision rendered by the Hon’ble Madras High Court in the case of CIT vs Thiruvengadam Investments P Ltd reported in (2009 (12) TMI 48 - MADRAS HIGH COURT ) would hold the fort during the assessment year under appeal. In the said case, the Hon’ble Madras High Court held that the property in the hands of the assessee was treated as a business asset and not as capital asset, and hence there is no question of invoking the provisions of section 50 C of the Act. - Decided in favour of assessee Disallowance of expenditure for purchase of construction materials - Held that:- We have already held in the previous ground that the assessee is engaged in the business of real estate developer and promoter during the assessment year under appeal. The assessee has also shown income from business on sale of plots and sale of flat during the assessment year under appeal. We find from the ledger account of purchase of construction materials amounting to ₹ 4,60,858/- , the same were incurred on various dates by the assessee. We deem it fit and appropriate, in the interest of justice and fair play, to set aside this to the file of the Learned AO to verify the bills and vouchers submitted by the assessee in support of its claim and direct the Learned AO to allow the same as deduction if the same are found to be genuine - Decided in favour of assessee for statistical purposes. Addition on account of labour charges - Held that:- We have already held in the previous ground that the assessee is engaged in the business of real estate developer and promoter during the assessment year under appeal. The assessee has also shown income from business on sale of plots and sale of flat during the assessment year under appeal. We find from the ledger account of labour charges together with the muster roll, that the labourers had affixed their thumb impression on various dates while receiving the labour charges from the assessee. Hence we find that the observation of the Learned CIT(A) that all the vouchers were signed by one person with identical hand writing is unjustified. We deem it fit and appropriate, in the interest of justice and fair play, to set aside this to the file of the Learned AO to verify the genuinity of the labour charges paid by the assessee together with the evidences submitted thereon and direct the Learned AO to decide this issue based on the evidences filed by the assessee in this regard - Decided in favour of assessee for statistical purposes.
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2016 (4) TMI 1048
TDS u/s 192 - Non deduction of tds - assessee in default in respect of salary remaining unpaid to its employees till the end of the relevant assessment year - Held that:- In view of the express provision of S. 192, the Assessee cannot be deemed to be in default under S. 201(1) and S. 201(1A) to this extent. The liability to deposit sum, not deducted or collected, with the Govt. treasury does not arise under Chapter XVII-B of the Act read with Rule 30(2) of the Income Tax Rules 1962. Thus, the action of the Assessing Officer under section 201(1) & 201(1A) imposing liability towards unpaid salary is without authority of law. As a sequel to these aforesaid observations, We do not find any merit in the plea of the Revenue that liability to deposit the tax arises simply because provision thereof has been made in the books of account. It is trite that the determination of tax liability depends upon the provisions of law relating to it and mere book entries made in this regard are not conclusive. As a corollary, patent mistake has been committed by the AO in applying the statutory provisions of S. 192 while framing impugned order which is rectifiable under S. 154. In this view of the matter, we direct the Assessing Officer not to hold the assessee as assessee in default under section 201(1) & 201(1A) of the Act in respect of TDS liability attributable to unpaid salary. While computing the revised liability for default under S. 201(1) & 201(1A), however, the Assessing Officer shall be at liberty to satisfy himself about the arithmetical correctness of quantum of outstanding salary remaining unpaid at the end of the year qua the total salary expenditure incurred by the Assessee in pursuit of its own business for the year in consideration and shall give suitable relief in terms of direction above.
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2016 (4) TMI 1047
Royalty disallowance under the provisions of section 40A(2)(a)/(b) - Held that:- Find no reason to differ from decision on this issue in the appellant’s own case for the A.Y. 2007-08 and also agree with the contention of the Ld. AR that reduction in the rate of royalty from 5% to 2.5% on the sales made to M/s Suzuki India Ltd. during the year also indicates the genuineness of commercial arrangement and it is not an attempt to pass profits from the appellant to M/s Minda Industrial Ltd. and further that the AO’s reasoning to invoke section 40A(2)(b) do not have legal backing because both the entities are taxable in the same tax bracket. - Decided against revenue
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2016 (4) TMI 1046
Penalty u/s 271(1) (c) - claim of TDS was found wrong - Held that:- Withdrawal of the credit of TDS in respect of which the income is not offered/assessed in the relevant AY in view of provisions of section 199(3) and Rule 37BA(3) or otherwise being wrong claim as in this case would not be termed as 'the amount of tax sought to be evaded' as defined in Explanation-4 to section 271(1)(c). Therefore, after considering the conspectus of the material on record and the rival submissions, we are of the considered view that the presumption of concealment as contained in explanation (1) of section 271(l)(c) read with the explanation (4) of section 271(l)(c) has been rebutted by the assessee and that all the facts relating to this explanation and material to the computation of total income have been duly disclosed. Under the circumstances, it is held that explanation of the appellant was bona-fide and all the facts relating to the same and material to the computation of total income have been duly disclosed by it. Penalty deleted - Decided in favour of assessee
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2016 (4) TMI 1045
Addition u/s 69 - Held that:- Assessee has enough funds to repay the sundry creditors to the extent of ₹ 11.63 lakhs. Therefore, we are of the view that assessee has already submitted the confirmations from the creditors and they are from the small farmer community and the assessee is hailing from a small village and moreover no involvement of bank. In our view, the assessee has already established the genuineness of the creditors and the transaction may be under scrutiny due to the fact that in villages, funds are settled in cash. Since it is a small village and involvement of small farmers, we are inclined to accept the submissions of the assessee in this regard. Accordingly, we delete the addition made on this count With regard to advance received for sale of land of ₹ 6.5 lakhs, the assessee has submitted agreement for sale executed in favour of Smt. Y. Nalini, who is stated to be residing in USA. We are not in a position to accept the genuineness of the transaction as the assessee has claimed to have received ₹ 6.5 lakhs and also continue to hold the land. There is no evidence to show that the above land was transferred or the money taken as advance is returned. Also in the sale agreement clause, it was stated “that it is agreed between the parties that the balance sale consideration shall be paid within three years from the date mentioned above or at the time of registration whichever is earlier” and also “that if the purchaser fails to pay the agreed balance payment on or before agreed period, the vendor is agreed to repay 6 lakhs by retaining ₹ 50,000 towards termination of this sale agreement. We have not come across any refund or cancellation of this agreement to show that the transaction is genuine, hence, we reject the claim of the assessee on this count. Past rental income and house hold savings - Held that:- CIT(A) could have allowed the balance of ₹ 3.2 lakhs also as the assessee was in the possession of residential property from 1983 onwards i.e. for a period of 19 years and on an average, five portions of the house property were on lease, therefore, assessee could have made the savings to the extent of ₹ 6.2 lakhs over this period. Hence, we delete the total addition of ₹ 6.2 lakhs. Past salary savings - Held that:- The assessee had not brought any cogent materials before us to prove that he had made the above savings out of the salary income. The assessee also had to meet the domestic expenses. As per records, the only reported income was salary. In our considered view, it is not possible to make savings to that extent of ₹ 8.80 lakhs. The CIT(A) had properly considered the addition and we sustain the findings of the CIT(A). Addition of GPF amount - Held that:- CIT(A) categorically held that the assessee received the GPF amount on 05/05/2003 relevant to AY 2004-05 and hence the same was not available for AY 2003-04. We, therefore, reject the submissions of assessee and confirm the action of the CIT(A). Addition towards unexplained expenditure u/s 69 C - Held that:- Assessee has not brought anything on record to show that any additional income to cover payment of interest to bank. Therefore, we confirm the action of the CIT(A) in sustaining the addition made by the Assessing Officer.
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2016 (4) TMI 1044
Penalty levied u/s 271C - non TDS u/s 194H on commission/discount/handling charges paid to sub agents - Held that:- . CIT(A) considered the submissions, reasons and the explanation of the assessee and then noted that the sale in respect of which commission was payable did not materialize and the commissions was also written back. The ld. CIT(A) also observed this fact that the assessee has already paid the TDS and interest thereon and respective party accounts were debited by the said amounts as no commission was paid to them and the TDS refund received by them [payee sub agents/brokers] was undue benefit enjoyed by them. After noticing above mentioned facts, on careful consideration of submissions of the assessee the ld. CIT(A) rightly held that imposition of penalty u/s 271(C) of the Act is not justified. - Decided in favour of assessee
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2016 (4) TMI 1043
Penalty u/s 271(1)(c ) - entitlement for relief u/s 80 IA - Held that:- The assessee has made a claim u/s 80 IA of the Act. Along with the return of income the assessee filed report from a Chartered Accountant in form no.10 CCB as required u/s 80 IA(7) of the Act. The claim was made on the advice of the auditors. A perusal of this audit report demonstrates that the auditors of the assessee also believed that the assessee was eligible for deduction u/s 80 IA of the Act. It was a conscious claim made by the assessee supported by an audit report. The assessee has also made an application to STPI for setting up the infrastructure facilities under the STPI Scheme. All details of the claim made u/s 80 IA are filed by the assessee, along with the return of income. Under these circumstances we are of the considered opinion that the explanation given by the assessee that it was under a genuine belief that it was entitled for relief u/s 80 IA of the Act is bonafide. The assessee acted under the guidance and advice of a Chartered Accountant. Hence in our view it was under a bonafide belief that it is entitled to the claim for deduction under provisions of s.80 IA of the Act. The provisions under the Income Tax Act are highly complicated and its different for a layman to understand the same. Even seasoned tax professionals have difficulty in comprehending these provisions. Making a claim for deduction under the provisions of S.80 IA of the Act which has numerous conditions attached, is a complicated affair. It is another matter that the assessing authorities have found that the claim is not admissible. Under these circumstances we hold that it cannot be said that this is a case of furnishing of inaccurate particulars of income. - Decided in favour of assessee.
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2016 (4) TMI 1042
Determination of income - assessee is a commission agent derived income from real estate activities - Held that:- From the record, it is clear that no commission agent or even the person dealing with the real estate can earn @ 25% as income from the business. On careful evaluation of the return of income, assessee had offered to tax 25% as net income from the commission earned from real estate activities and not from gross receipts. First we need to arrive what will be the income earned from the real estate business as commission. AO has treated 25% as commission, which cannot be proper in the normal course of business. Moreover, the assessee has used the joint account to carry out the business, activities of accepting money from purchasers and paying to the sellers and the net balance shown as commission income. The similar business activities were also carried by his wife, who has shown commission income. We are not in a position to allocate the funds movements in business activities of assessee and his wife. In principle, there is movement of funds in the bank account of assessee as well as joint account. We are of the view that we need to determine the reasonable of income from the real estate i.e. the line of business activities of the assessee. In our view, AO should estimate the income of the assessee after evaluation of the business of the assessee and similar business in the real estate. Such percentage can be adopted to determine the gross income of the assessee and arrive at net taxable income @ 25% of the gross income by giving proper opportunity of being heard to assessee. Accordingly, we direct the AO to arrive the net income along with the other declared income as taxable income - Decided in favour of assessee for statistical purposes.
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2016 (4) TMI 1041
Revision u/s 263 - AO has not examined the genuineness of the trust and application of fund for charitable purposes - reference to DVO - Held that:- We find that there is no whisper in the notice issued by the Commissioner of Income Tax under sec. 263 of the Act for the same. No material has been brought before us to show that the assessee was allowed any opportunity of hearing in respect of the above issue before passing the impugned order. The Commissioner of Income Tax has nowhere recorded in the impugned order that the assessee was allowed any opportunity of hearing in respect of the above issue and what was the submissions of the assessee, if any, in respect of the said issue. In the above circumstances, we find force in the contention of the assessee that the order of the Commissioner of Income Tax in respect of the above issue is bad in law. Our view finds support from the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Contimeters Electricals P. Ltd. [2008 (12) TMI 4 - HIGH COURT DELHI ], where it was held that the issue which did not form part of the show-cause notice and the assessee was not confronted with it, the same cannot form basis for revision of assessment order under sec. 263 of the Act. The order under sec. 263 cannot travel beyond the show-cause notice. Coming to the issue of investment in construction, we find that the construction was not completed during the year under consideration. The construction was continued in the next Financial Year relevant to the Assessment Year 2010-11 also. The Assessing Officer in the assessment made for the Assessment Year 2010-11 under sec. 143(3) on 14/03/2013, discussed his finding in respect of DVO’s report. The contention of the assessee that this Assessment Year of 2010-11 has become final, and was before the Commissioner of Income Tax while passing the impugned order on 10/02/2014, is not disputed by the Revenue. From the records available before us, it is obvious that the DVO inspected the property after 31/03/2010 and the expenditure was incurred by the assessee in the construction in Financial Year 2009-10 also. Therefore, it was not possible on the part of the DVO to quantify the exact expenditure which was incurred in the Financial Year 2008-09. Moreover, we find that no defect in the books of account maintained by the assessee for the year under consideration could be pointed out either by the Assessing Officer or by the Commissioner of Income Tax. In our considered view, the reference made to the DVO itself was not valid in the instant case. Still further, we find force in the contention of the Authorized Representative of the assessee that the issue involved in this appeal is Revenue neutral. The contention of the assessee is supported by the finding of the Assessing Officer recorded in the assessment of the Assessment Year 2010-11. The Assessing Officer quoted with approval, the submission of the assessee, to the effect that the investment made in the construction qualifies as exemption under sec. 11 of the Act being utilized for charitable purposes. The Departmental Representative could not controvert the above contention of the assessee and could not show how the issue under appeal resulted in any prejudice to the interest of the Revenue. - Decided in favour of assessee
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2016 (4) TMI 1040
Disallowance u/s 14A - Held that:- AO has wrongly disallowed the total expenditure by applying the provisions of Section 14A read with Rule 8D of the I.T. Act and similarly, Ld. CIT(A) has also wrongly restricted the disallowance on account of administrative expenses in spite of the fact that assessee has not received any exempt income during the relevant previous year. Therefore, respectfully, following the decision of the Hon’ble High Court in the case of Cheminvest Limited vs. Commissioner of Income Tax-VI (2015 (9) TMI 238 - DELHI HIGH COURT ), we allow the Appeal of the Assessee and dismiss the Appeal filed by the Revenue by holding that the provisions of Section 14A is not applicable in the case of the assesse, because the Assessee Company has not claimed any exempt income during the relevant assessment year and therefore, no disallowance u/s 14A of the Act is permissible. - Decided in favour of assessee
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2016 (4) TMI 1039
Penalty under section 271(1)(c) - Held that:- In the case under consideration although both the lower authorities have alleged that the assessee had furnished inaccurate particulars with a mala fide intention, the same has not been substantiated convincingly by the department so as to attract penalty. The only finding against the assessee is that she could not produce the relevant vouchers after a lapse of ten years. Even the Income Tax Act requires maintenance of records for only eight years. So it is harsh on the assessee to expect her to produce records for a period falling beyond the statutory prescribed limit. Moreover, the assessee has any way been taxed on the amount remaining unsubstantiated. However, drawing an inference as to the malafide intention of the assessee in this regard is a mere presumption. Hence, we are unable to concur with the observations of the Ld. Commissioner of Income Tax (Appeals) and set aside his order and direct that the penalty imposed be deleted. - Decided in favour of assessee
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2016 (4) TMI 1038
Reopening of assessment - Held that:- In the present case, the Assessing Officer is bestowed with the powers to reopen an assessment subject to satisfaction of conditions laid down in Sections 147 and 148 of the Act. The petitioner has chosen to submit itself to his jurisdiction and the objections to the reasons are made in the course of reassessment proceedings. The petitioners in this case having participated in the proceedings, do not deserve our exercising extraordinary jurisdiction under Article 226 of the Constitution of India. The petitioners are not remedyless. They have an effective alternative remedy available under the Act. All contentions left open to be urged before the Authorities. In the aforesaid facts and circumstances, the petition is dismissed.
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Customs
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2016 (4) TMI 1032
Validity of circulars under Section 151A of the Customs Act - Whether ultra vires or not - Import of gold jewellery from Indonesia - Held that:- the impugned Circulars dated 6th October 2015 and 20th January 2016 do in fact whittle down the scope of the exemption available for import of gold jewellery from Indonesia, across the board, only because, according to the Department, the COOs issued by the Issuing Authority in Indonesia could not be verified. The Circular dated 6th October 2015 requires an Officer of the Customs who has issued a SCN not to pass orders of provisional assessments. It requires the original COOs along with “appealable orders” to be sent to the CBEC. Clearly the Circular does not, as was sought to be explained by Mr Dubey, merely elaborate the procedures. It interferes with the discretion to be exercised by the customs officer who is performing a quasi-judicial function. Para 7.1 of the said Circular requires the importers to present facts in support of the COOs, which is not a requirement in the original exemption notification. There is considerable merit in the contention that this goes beyond the mandate of the Customs Tariff Origin Rules and constitutes an unreasonable and onerous condition as far as the importers are concerned. As far as the circular dated 20th January 2016 is concerned, Regulation 2 (2) of the CPDA Regulations provides for a maximum payment of only 20% of duty differential in the case of a provisional assessment. The insistence on a bank guarantee for the entire differential duty appears to be contrary to Regulation 2 (2). The Court is unable to accept the plea of Mr Dubey that the above Circular emerges from the Regulation 4 and is intended to adequately secure the Revenue and ensure uniformity of provisional assessments across all ports. The said Circular does not leave the issue of what conditions should be imposed for provisional assessment to the concerned customs officer. It requires the officer to demand 100% bank guarantee even in respect of those B/Es which have been provisionally assessed under Section 18 of the Act. It certainly is contrary to proviso (a) to Section 151A inasmuch it dictates to the customs officer in what manner he should complete a provisional assessment. The consequent impugned letter dated 22nd January 2016 came to be issued to M/s. J.B. Overseas only on the basis of the said Circular. Therefore, the Circular dated 6th October 2015 issued by the CBEC and the instructions issued on that basis on 20th January 2016 by the CBEC addressed to the customs officers are in violation of Section151A of the Act and are hereby quashed. A perusal of the SCN issued to M/s. J.B. Overseas on 26th November 2015 reveals that it is a virtual reproduction of the impugned Circular dated 6th October 2015. SCN suffers from the fatal flaw and has been issued overlooking the COOs produced by the said importer verified by Issuing Authority. Since the SCN has been issued on the basis of an invalid Circular, relegating the Petitioners to the alternative remedy of statutory adjudication and consequent appeal would be a pointless exercise, the said SCN and the proceedings consequent thereto are held to be invalid and unsustainable in law. The proceedings consequent thereto the circulars including the communication dated 22nd January 2016 issued to M/s. J.B. Overseas requiring it to furnish a bank guarantee of 100% of the duty differential while making provisional assessment are hereby set aside. It is made clear that any SCN or any application for provisional release of goods by members of the Petitioner Association and similarly placed importers would be decided by the customs officers in accordance with law uninfluenced by an of the abovementioned circulars, instructions or directions.
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2016 (4) TMI 1023
Validity of High court order - Appellant contended that consideration of High Court that 'circumstances in which the recovery of articles is stated to be made from the respondent herein is doubtful' could not be dislodged, therefore, High Court has discarded the version of the prosecution by observing that the same appears to be totally unnatural - Held that:- In view of the findings which appear to be without any blemish and those findings are recorded after deep and thorough analysis of the evidence on record, it is found that the respondent herein was rightly and justifiably acquitted of the charges by the High Court. - Decided against the appellant
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2016 (4) TMI 1022
Validity of impugned order - EODC Certificate not been placed before the Commissioner because of non-receipt from the DGFT - Petitioner submitted that now he has received the EODC Certificate - Held that:- the impugned order is set aside and matter is remitted back to the original adjudicating authority for examining the matter afresh after taking into consideration the EODC Certificate which has now been obtained by the petitioner. The Adjudicating Officer shall issue a notice to the petitioner indicating the date on which the hearing is to be conducted and by which date the petitioner has to file the EODC Certificate. - Petition disposed of
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2016 (4) TMI 1021
Territorial jurisdiction to entertain the petition - Refund of Customs duty - paid at the time of import of the goods - Non-establishment of precondition i.e. there was a non-availment of CENVAT credit for the sanctioning of refund under the Customs Act - Held that:- the appellate authority rejected the appeal filed by the petitioner against Ext.P2 order of the 2nd respondent. Both the 2nd respondent, original authority as well as the 3rd respondent, appellate authority are situated in Chennai, within the jurisdiction of the Madras High Court. Going by the decision of the Hon'ble Supreme Court in Ambica Industries v. Commissioner of Central Excise [2007 (5) TMI 21 - SUPREME COURT OF INDIA], the High Court having jurisdiction to entertain writ petitions against orders passed by the appellate authorities under the Customs Act, would be the High Court having jurisdiction over the original authority, that passed the first order in adjudication proceedings under the said Act. By applying this test, the jurisdictional High Court in the instant case would be the Madras High Court and not the Kerala High Court. It is noted that the petitioner has an effective alternate remedy by way of an appeal before the CESTAT, under Section 129E of the Customs Act. Thus, in any view of the matter, I do not see any reason to entertain this writ petition, challenging Ext.P7 order of the 3rd respondent. - Decided against the petitioner
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2016 (4) TMI 1020
Cancellation of CHA licence - Export of Inorganic Chemical through Pipavav Port - On examination, goods found to be Muriate of Potash (MOP) instead of Cobalt Sulphate as declared in the shipping bills. Held that:- the various statutory time limits prescribed have not been followed in the proceedings, which resulted in the cancellation of the licence. We find that the licensing authority was informed of the offence vide order received on 31.05.2011. The licence was suspended on 17.06.2011 which was confirmed on 26.07.2011. A show cause notice was issued on 11.10.2012. Such notice has been issued after more than 16 months of offence report, that too after the intervention of the Tribunal. Even after issue of such show cause notice, the inquiry report was not submitted within 90 days as required by the provisions of Regulation 22(5) of CHALR 2004- Regulation 20(5) of CBLR 2013. Even the impugned order dated 27.06.2013 was issued to the appellant on 3.7.2013 -beyond the period of 90 days of submission of inquiry report. We find that the Tribunal as well as Hon’ble High Courts held that the time limit prescribed under the CHALR/CBLR are to be strictly adhered to. Delay in proceedings, in any stage, will have a bearing on the legality of the proceedings. In Sanco Trans Ltd. [2015 (7) TMI 455 - MADRAS HIGH COURT], the Hon'ble Madras High Court held that the show cause notice should be issued within the period stipulated under the Regulations. Notice issued beyond the time limit cannot be sustained for want of jurisdiction. Similar views were expressed by the Tribunal in Eltece Associates [2014 (11) TMI 695 - CESTAT CHENNAI]. In S.K. Logistics - [2015 (11) TMI 1155 - CESTAT NEW DELHI], it was held that the time limits prescribed for submission of inquiry report are to be followed. In view of the above the order of cancellation of licence issued without following the prescribed time limits cannot be legally sustained, accordingly, set aside. - Decided in favour of appellant
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Corporate Laws
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2016 (4) TMI 1017
Scheme of Arrangement in the nature of Amalgamation - Held that:- This Court considers that the observations made by the Regional Director, Ministry of Corporate Affairs, have been redressed satisfactorily. It appears that the present Scheme of Arrangement is in the interest of the shareholders and creditors of all the companies as well as in the public interest, therefore, the same deserves to be sanctioned. The modification sought regarding the amendment of the Scheme with regard to clause 1.2, referring to the Appointed Date as 1st April 2016, is granted. The Modified Scheme, as placed on record at page 97, is hereby sanctioned. The prayers in terms of paragraph 16 (a) of the Company Petition No. 36 of 2016 and paragraph 16 (a) of the Company Petition No. 37 of 2016 are granted.The petitions are disposed of, accordingly. So far as the costs to be paid to the Central Govt. Standing Counsel is concerned, the same are quantified at ₹ 7,500/per petition. The same may be paid to Mr.Devang Vyas, learned Assistant Solicitor General of India. Cost of ₹ 7,500/be paid to the Office of the Official Liquidator, by the Transferor Company.
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2016 (4) TMI 1016
Scheme of Arrangement - Held that:- The queries of the Regional Director have been met with by the petitioner. It is, therefore, ordered that, the Scheme, at Exhibit “C" to the petition, is sanctioned and the prayers as prayed at paragraph12 (a) in the petition are granted. This order of sanction is subject to any order that shall be made by the High Court of Kolkata in the proceedings taken out by the Transferor Company. The petitioner is directed to pay fees amounting to ₹ 7,500/to Mr.Devang Vyas, learned Assistant Solicitor General of India. Filing and issuance of drawn up orders are dispensed with. All the concerned authorities to act on this order along with the Scheme as shall be authenticated by the Registrar, High Court of Gujarat. The petitioner is directed to lodge the copy of this order as on the date of this order and Scheme duly authenticated by the Registrar, High Court of Gujarat. The Registrar, High Court of Gujarat shall issue the authenticated copy of this order along with the Scheme, within 7 days of the passing of this order.
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Service Tax
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2016 (4) TMI 1037
Period of limitation - Demand for recovery of short paid Service tax - Rent-a-cab services provided under contract upon pro-rata kilometer basis - Held that:- the issue is no more res integra in view of the recent judgment of Hon'ble Gujarat High Court in the case of Commissioner of Service Tax Vs Vijay Travels [2015 (1) TMI 809 - GUJARAT HIGH COURT]. In the present case, the extended period of limitation is rightly invoked and confirmed against the appellant, as the appellant had suppressed the correct value received from their customers during the relevant period and the leviability of Service Tax had not been disputed by the appellant at any point of time. Imposition of penalty - Demand for recovery of short paid Service tax - Period involved is 2002-03 to 2006-07 (upto Sept. 2006) - Rent-a-cab services provided under contract upon pro-rata kilometer basis - For the initial period of one year, the duty was calculated on the basis of invoices issued by the Appellant, whereas for the subsequent period, the Service Tax liability was determined on the basis of balance sheet figures as the Appellant failed to produce the relevant invoices on the plea that the same were destroyed in flood. Held that:- the learned Commissioner (Appeals), in the impugned order, after deliberating various pleas of the Appellant, observed that the Chartered Accountant's certificate produced by the appellant in support of their claim that the gross receipts shown in the balance sheets include the value of materials supplied to the customers, could not be accepted, as it has no relation to their plea that the figures shown in the balance sheet are inflated for various business purposes. Therefore, there is no reason to interfere with the specific findings of the learned Commissioner (Appeals). However, we find force in the contention of the learned Advocate that in view of the principle laid down in Krishnaram Dyeing and Finishing Works case [2013 (8) TMI 539 - GUJARAT HIGH COURT], on compliance of the condition of Section 78 of Finance Act, 1994, they would be eligible to pay 25% of the penalty, which has not been objected to by the learned Authorised Representative for the Revenue. - Decided partly in favour of appellant
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2016 (4) TMI 1036
Validity of circular of the Central Board dated 10.2.2012 - Liability of Service tax - Agreement for development entered into between the petitioner and his siblings with the fifth respondent - Held that:- the agreement that the petitioner had, cannot be separated into two portions. The agreement gave rise to a bouquet of rights for the fifth respondent builder. One was to put up a construction of an area, a part of which could be sold by them to third parties. They could be sold not only as such, but also along with the undivided share of land. Those parties had certainly availed the services of the fifth respondent as a service provider. The petitioner did not stand on a different footing than those persons. Therefore, the challenge of the petitioner to the circular, apart from the question of locus standi, does not merit acceptance. - Decided against the petitioner
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2016 (4) TMI 1035
Includability - Cost of free supply of the materials for rendering 'Commercial or Industrial Construction Services' - Appellant availed benefit of Notification No. 1/2006-ST - First appellate authority has tried to hair-split the facts and hold against the appellant by recording that provisions of Section 67 has under gone change w.e.f. 18-04-2006 - Held that:- the arguments put for by the departmental representative and the findings recorded by the first appellate authority are not in consonance with the law as settled by the Larger Bench. The Larger Bench of the Tribunal considered the scope of pre and post amended provisions of Section 67 of the Finance Act,1994; and more specifically the substitution of section w.e.f. 18-04-2006 and came to a conclusion that value of free supply need not be included for discharge of service tax. Therefore, by following the judgment of Larger Bench in the case of Bhayana Builders (P) Ltd. VS. CST [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] and decision of Principal Bench in the case of Hindustan Steel Works Construction Ltd. [2015 (6) TMI 378 - CESTAT NEW DELHI], the value of supply of free material should not be included for arriving at gross value for charging service tax liability. - Decided in favour of appellant
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2016 (4) TMI 1034
Service tax liability - as recipient of service under Rule 2(1)(d)(iv) of Service Tax Rules, 1994 - Consultancy Engineering Services, Technical Consultancy Services and Technical Test & Analysis Services - Held that:- the entire amount had been received by the appellant prior to 18/4/2006 i.e. the date of enactment of Section 66A of the Finance Act, 1994. Hence, the issue is covered by the decision of the Hon'ble Bombay High Court in the case of Indian National Ship Owners Association Vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT] against which the Department's SLP was dismissed by the Hon'ble High Court reported as UOI & Others Vs. Indian National Ship Owners [2009 (12) TMI 850 - SUPREME COURT OF INDIA] and the said principle of law has been accepted by the Board vide its instruction dated 26/9/2011. Therefore, the impugned order is set aside. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 1033
Sustainability of refund claim - provisions of Notification No.41/2012-ST dated 29.6.2012 - Service tax remitted by the appellant - Appellant utilized certain services like Goods Transport Agency and Warehousing Agency services at the port of export of its goods claiming that the place of removal of exported goods is the factory gate and that on 'input services' used at the port, it was entitled to rebate as per the Notification. Held that:- the contention of appellant that since the delay was not considerable, the authorities below should have exercised discretion and condoned the same is not acceptable. Paragraph 3(g) of the Notification 41/2012-ST clearly indicates the period of limitation and provides no discretion for condonation of the delay. In the circumstances, it cannot be gainfully contended that the authority had a reservoir of discretion to condone the delay , if satisfied with reasons for the delay for making an application for refund. In so far as the finding that the services were not used beyond the place of removal, it is clear that the place of removal is not the factory gate as claimed by the appellant but is the port from where the goods were removed for export. Therefore, the impugned orders as to the unsustainability of refund claims submitted by the appellant, are impeccable and warrant no appellate interference. - Decided against the appellant
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Central Excise
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2016 (4) TMI 1031
Disallowance of Cenvat credit and imposition of penalty under Rule 15 of CCR - Welding electrodes used in repair and maintenance of already manufactured goods - Appellant contended that "input" as per definition means -all goods used in the factory by the manufacturer of the final product. Accordingly as electrodes have been admittedly used by the appellant-manufacturer in the factory of production, the Cenvat credit is allowable - Held that:- the appellant is entitled to take Cenvat credit on welding electrodes in view of the substituted definition of inputs with effect from 1/4/11. - Decided in favour of appellant with consequential relief
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2016 (4) TMI 1030
Seeking permission for the applicant to join as party respondent No.8 in Special Civil Application No.2194 of 2005 in the interest of justice - Interested party in the dispute / claim which is being considered by this Court - Held that:- at this stage, it cannot be said that the applicant may not heard and any right of hearing and right to have an opportunity to put forward his claim for consideration, subject to objections by other interested parties / respondents, may not be given. The right of audience can not be denied to the applicant so that it can place on record, for consideration, its claim(s), which allegedly arise from and on account of statutory obligation imposed by virtue of provisions under the Central Excise Act, 1944. Therefore, this application deserves to be granted. The applicant is allowed to join, at its cost, the proceedings related to Special Civil Application No. 2194 of 2005 and shall be impleaded as party respondent No.8. - Decided in favour of revenue
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2016 (4) TMI 1029
Maintainability of the revisions application - Respondent nos. 1 and 2 are objecting to the contentions of the petitioner that these respondents had tried to delay the proceedings before the trial Court - Held that:- these objections pertain to the maintainability of the revision application and merits of the issues involved and not to the application filed for condonation of delay, as such. These objections can be kept open so that they can be decided on their own merits at appropriate time. Therefore, the impugned order is quashed and set aside. Revision application be registered and disposed of in accordance with law. - Decided in favour of revenue
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2016 (4) TMI 1028
What is the true scope and intend of Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002 and whether discharge of the licencee from the crime for the alleged offences under the provisions other than Section 56 of the Act entails him to the preference even after the conclusion of the proceedings concerning granting the privilege - Held that:- an analysis of the provision of Rule 5(1)(a) reveals the following: (1) While extending the privilege to vend toddy, preference shall be given to those licencees who have conducted the toddy shops during the preceding three consecutive years; (2) The incumbent licencee shall not have any crime registered against him under any provision of the Act other than Section 56 thereof; and (3) If the incumbent licencee has not been preferred because of his facing criminal charges, any subsequent exoneration should revive his claim to preference. In the present instance, the fifth respondent admittedly is the incumbent licencee, who, nevertheless, has a crime registered against him for the alleged offences under Sections 56(b) and 57(a) of the Act. Indeed, indisputably a crime registered under Section 56(b) of the Act does not disentitle the licencee from claiming privilege. The crime registered against the fifth respondent is also for the alleged offence under Section 57(a) of the Act. A perusal of the above provision makes it manifestly clear that the offence made punishable is adulteration in its various nuances. If a person mixes with the liquor sold or manufactured by him any other drug or ingredient likely to add to its actual or apparent intoxicating quality, etc., the liquor thus mixed and sold by the licencee is an adulterated one attracting the penal provision. In both the crimes registered against the fifth respondent, the allegation is that the toddy being sold by him is adulterated. In other words, a foreign substance has been added to enhance the intoxicating potency of the toddy. Prima facie, it cannot be denied that the allegation in the crime attracts Section 57(a) of the Act, and consequently the crime falls within the mischief of Rule 5(1)(a) of the Rules. On 05.03.2014, the department put in auction the privilege to vend toddy. On the same day, this Court at the instance of the fifth respondent, issued an interim direction that there should be no confirmation of the licence in petitioner's favour. This Court, through common judgment, directed the Excise Commissioner to consider the rival claims of the petitioner--a new allottee--and the fifth respondent, the incumbent licencee. Rule 5(1)(a) contemplates registration of a crime to be a pre-condition to disentitle an existing licencee to the privilege of renewal. However, the crime thus registered ought to be under any other provision than Section 56 of the Act. Indeed, crime was registered for the alleged offences under not only Section 56 but also Section 57. The pre-condition provided in Rule 5(1)(a), therefore, has come to be fulfilled. Following the last limb of Rule 5(1)(a), It may further be observed that exoneration of the previous licencee may enure to his benefit in the following year to re-claim his privilege as if no crime had been registered. For the principal needs no reiteration that any acquittal or discharge relates back to the date of the crime. In the same breadth, It is observed further, especially in the light of the ratio laid down in Exhibit R5(c) judgment, that the second analysis report is in favour of the previous licencee, and by that time the privilege had not been confirmed in favour of the new licencee. What bolsters the fifth respondent further is that he has earned a clean discharge. Whether the provisional licenceee who has been extended the privilege because the existing licencee has faced criminal proceedings has got any vested right, said to be indefeasible, even after the incumbent licencee is exonerated of the criminal charges before the proceedings of granting the privilege could attain finality - Held that:- it emerges that the existing licencee has a privilege conferred on him to have his licence renewed or his right to preference reckoned subject to his fulfilling all the conditions. In the same reckoning, it follows that the right of any other person is dependent on, if not subservient to, the right of the existing licencee. The legislature is conscious that once a policy of preference is to be operational, until the right under the said policy has been conclusively rejected, the right of any other person is only contingent. In other words, if there is any dispute, bona fide, concerning the preference denied to an existing licencee, until the issue is resolved conclusively, the subsequent allottee can have licence unhindered so long as the cloud on the previous licencee's right has not been dispelled. To that extent alone his right is indefeasible. Even after the finality of the proceedings confirming the privilege in the new licencee's favour, if the previous licencee is exonerated or acquitted at a later point of time, his right to preference gets restored. In sum and substance, viewed from any perspective, it cannot be held that new licencee has any indefeasible right and that the confirmation can be denied only on account of his failure rather than the success of the previous licencee. - Decided against the petitioner
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2016 (4) TMI 1027
Territorial jurisdiction to entertain the petition - Seeking direction for refund of central excise duty - Petitioner purchased coal from respondent No.5 and being a SEZ Unit, claimed exemption from payment of excise duty on such coal - Held that:- whatever be the ground for challenging the adjudicating authority and appellate order, the fact remains that both the Excise Authorities are situated at Orissa. Further appeal against the order of the Appellate Commissioner would be competent before the jurisdictional CESTAT. Any further proceedings would, therefore necessarily lie before the High Court at Orissa. Merely because in the case of Messrs Anita Exports & anr vs. Union of India and ors [2014 (12) TMI 361 - GUJARAT HIGH COURT] export, this Court has given its expression on interpretation of statutory provisions which may be applicable in the present case would not permit us to examine the orders of the Excise Authorities situated at Orissa. Quite apart from that, therefore, the question of alternative remedy being available before the concerned CESTAT, on the question of territorial jurisdiction, we are not inclined to entertain this petition. - Petition disposed of
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2016 (4) TMI 1026
Interpretation of certain exemption notifications for the purpose of levy of auxiliary duty - Incorrect method of calculation was adopted by the petitioner for the purpose of calculating the auxiliary duty - High Court held that after the exemption as provided in Notification No. 213/63 dated 28-12-1963 was given, chargeability of the auxiliary duty should have been calculated in terms of Notification No. 61/75 dated 1-3-1975, which was subsequently replaced by Notification No. 127/75 dated 12-5-1975 reported in [2004 (9) TMI 129 - RAJASTHAN HIGH COURT] - Apex court is not inclined to entertain the appeal as the tax effect is negligible - Apex Court dismissed the appellant's appeal
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2016 (4) TMI 1025
Seeking directions for renewal of passport and for permission to travel abroad for a period of six months - Alleged evasion of duty against the company in which he is a director - Respondent contended that petitioner is involved in a serious offence of evasion of Central Excise duty and if he is granted permission to go abroad, he may not return - Held that:- prosecution has been launched against the petitioner and his company and others for commission of offences punishable under Section 9 & 9AA of the Central Excise Act for evasion of excise duty to the tune of ₹ 65 crores. It has been mentioned that the Director General, Central Excise had given sanction vide order dated 25.05.2015 for launching prosecution. Since it has come on record that the prosecution has been launched against the petitioner and his company and the case has been filed in the Court of Chief Judicial Magistrate, Meerut, Uttar Pradesh, this Court is of the considered opinion that this Court ceased to have any jurisdiction as this Court is having no territorial jurisdiction to deal with the matter. Therefore, no case is made out to direct the respondent to release the passport or to grant permission to the petitioner to go abroad. - Petition disposed of
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2016 (4) TMI 1024
Validity of assessment order - Clearance of runners and risers of Stainless Steel Grade EN-55 to their own unit at Bhandara and Nasik - Copy of enquiry report submitted by AD (cost) was not given to the appellant - Held that:- the “suggestion” of AD (costs) that the value of production in question should be done at “110 - 115% of the highest market price” was considered reasonable and the assessment was finalised under the provisions of Rule 11 of the Valuation Rule 2000. It is seen on the report of the AD (cost) has not been provided to the appellant before finalizing the assessment resulting in miscarriage of justice. Further more there is no reason forwarded for adopting “110 -115% of the highest market price” as assessable value. Under these circumstances, the impugned order is set aside being non-speaking and passed without following principles of natural justice and the matter is remanded to the original authority for denovo adjudication after giving a copy of the report of the AD (cost) to the appellant.
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CST, VAT & Sales Tax
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2016 (4) TMI 1019
Payment of VAT - Invisible loss of yarn pursuant to manufacturing activity - Held that:- by following the earlier orders of the Principal Bench of this Court in the case of M/s. Asian Fabrix Private Ltd. Versus The Principal Secretary/Commissioner of Commercial Taxes And Others [2016 (4) TMI 1014 - MADRAS HIGH COURT], the petition is disposed of. Therefore, the directions given therein shall be followed by the respondents while passing fresh orders in respect of the issue related to invisible loss. - Petition disposed of
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2016 (4) TMI 1018
Seeking direction for refund an amount - Excess amount deducted from the sixth and seventh running account bills of the petitioner for execution of work pertaining to an agreement and further Accountant General, Bihar, restraining them from making deduction of sales tax under the Bihar VAT Act, 2005 from the gross amount of running account bills and to do so strictly in accordance with Section 41 ibid read with Rule 29 of the Bihar Vat Rules, 2005. Held that:- the issue is squarely covered by the directions of this Court in the case of M/s. Debashree Constructions (India) Pvt. Ltd. Vs. Ircon International Limited & ors. [2015 (7) TMI 1081 - PATNA HIGH COURT] and its analogous cases. It has been clearly held by this Court in the said order that it is the obligation of the authorities to comply with the provisions of the Bihar VAT Act and the Rules and if the Act and the Rules provide that deduction shall not be made with regard to certain items, it is not permissible for the person making the deduction of tax at source to continue to make deduction of the entire amount from the bills without giving the benefit as provided under the Rules which is couched in the form of injunction and violation of the same is legally impermissible. The deducting authorities were, accordingly, directed to strictly comply with the provisions of Section 41 of the Bihar VAT Act and Rule 29 of the Bihar VAT Rules in the matter of making deduction and wherever the details were provided to them by the petitioner-contractor or were available to them then they were obliged not to make deduction with regard to the heads mentioned therein and the TDS was to be deducted with respect to the remaining part of the bills. In view of the aforesaid directions of this Court it is not open to any person deducting tax at source under the Bihar VAT Act to do so otherwise than directed and doing so would be a clear attempt to override the direction of this Court. In view of the aforesaid directions of this Court it is not open to any person deducting tax at source under the Bihar VAT Act to do so otherwise than directed and doing so would be a clear attempt to override the direction of this Court. The stand of the Accountant General is that they have done so on the basis of the circular issued by the Department and also the decision of this Court in the case of Abdul Majeed Khan vs. The State of Bihar & Ors.. In the aforesaid view of the matter, the impugned letter of the Accountant General (Audit), Bihar, in so far as it directs the deduction on the gross amount of the bill, is quashed. The respondents are further directed not to make any deduction contrary to the provisions of Section 41 and Rule 29 of the Rules as have been explained by this Court in M/s Debashree Constructions case (supra). Any excess amount deducted by the respondents shall be refunded to the petitioner. - Decided in favour of petitioner
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Indian Laws
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2016 (4) TMI 1015
Exemption under Section 8(1)(h) of the RTI Act - Held that:- The Commission observes that the CPIO has wrongfully claimed exemption under Section 8(1)(h) of the RTI Act as the same would not be applicable since no inquiry was pending and hence, the question of investigation on inquiry does not arise. The Commission further observes that though the CPIO has provided misleading and incorrect information to the appellant there was no malafide intent on the part of the CPIO. In view of this, the CPIO is cautioned to be more careful in future, so that such lapses do not recur. The CPIO is also directed to ensure that the provisions of the RTI Act are implemented in letter and spirit.
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