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TMI Tax Updates - e-Newsletter
April 29, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
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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Eligibility for registration u/s 12A (1)(a) - whether Greater Noida Industrial Development Authority ("GNIDA"); Yamuna Expressway Industrial Development Authority ("YEIDA"); and New Okhla Industrial Development authority ("NOIDA") are eligible for registration u/s 12A(1)(a)? - Held Yes - HC
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Recognized system of accounting - maintain its accounts according to AS-7 or AS-9 - the system of accounting followed by it for the last many years as per AS-9 - Department cannot reject the said system followed by it for the reason that it ought to have followed the other recognized system AS-7 system i.e. percentage completion system - HC
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Reopening of assessment u/s 147 - Company had no cash balance in the last year for the purchase of property in cash as well as the Company cannot take unsecured loan or advance from customer in cash - it cannot be said that there was no tangible material with the A.O. to form an opinion that income chargeable to tax has escaped assessment - HC
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Territorial jurisdiction of AO - As soon as the ITO realized that he lacked pecuniary jurisdiction over the assessee, the case was immediately transferred to the file of the DCIT who again issued a notice u/s 143 (2) - Since one of the Officers who has concurrent jurisdiction over the assessee have issued notice u/s 148, we are satisfied that the proceedings u/s 147 have been validly initiated - AT
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Disallowance for warranty expenses - assessee is entitled to change the method of accounting with respect to claim of warranty expenses from ‘actual basis’ to ‘provision basis’ - AT
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Penalty levied u/s 271(1)(c) - it is a case of misunderstanding the statutory provision by the assessee and the officers. The assessee understood the provision of exemption u/s 10B in a particular manner and the Assessing Officer has understood the same in another manner - No penalty - AT
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The Managing Director of the company is personally responsible for meeting the expenditure of his son’s education. The expenditure incurred by the assessee for providing higher education to the Managing Director’s son cannot be considered as business expenditure - AT
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MAT - When a part of the said provision is reversed in the subsequent year and credited to the profit and loss account, that should not go to add to the book profits u/s 115JB of the Act. If it is so done, then the assessee would be unwarrantedly be invited with double taxation u/s 115JB - AT
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Disallowance of compensation paid on account of Employee Stock Option Plan (ESOP) - Business expenditure - The Circular issued by the CBDT is binding on the tax authorities and the same could be used by the assessee if proved beneficial to the assessee. - AT
Customs
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Revocation of CHA licence - IEC number has been found to be correct as also the address of the importer - all the importers have joined in the investigations and have given their statements. In such a scenario, it cannot be said that the Customs Broker has not adhered to KYC norms - revocation set aside - AT
Service Tax
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Presence of mens rea - immediately after initiation of investigation and upon service of notice of investigation by respondents No.1 and 2, the petitioner had already discharged its tax liability before issuance of show cause notice and paid the service tax liability - There is no willful suppression of facts to evade tax - No penalty - HC
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Supply of tangible goods - appellants got manufactured 60 Railway Wagons and supplied the same to the Railways - the right of position and effective control is with the Railways - no service tax liability - AT
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Reversal of CENVAT credit - Rule 6(3A)b(iii) - the demand raised beyond the normal period is time barred and requires to be set aside - the period is transitional period and also because the appellant has reversed the amount, no penalty is to be imposed - AT
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VCES-1 declaration - VCES cannot be rejected where the documents like the balance sheets, profit and loss account etc. are called for, by the Department in the enquiries of roving nature - Subsequent SCN after the VCES scheme cannot be the ground for rejection of VCES - HC
Central Excise
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Remission of duty - fire broke out accidentally - loss and destruction of goods because of accidental fire which took place in the appellant factory falls within the meaning of the phrase "goods have been lost or destroyed for natural causes or by unavoidable accident for the purposes of remission duty under Rule-21 of CER, 2002 - remission allowed. - HC
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Cash Refund - unutilized CENVAT credit - closure of factory - there is no provision in Central Excise Act or in that CENVAT credit rules to give cash refund of accumulated credit - the subject refund claim of the CENVAT amount lying in the appellant’s account is not admissible - AT
VAT
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Input Tax Credit (ITC) - BVAT - The problems on account of the mismatch is a Pan India problem and to my mind, the procedure adopted under the Delhi VAT Act regime and the circulars issued under the said Act, appear to be a more transparent system and assessee friendly. - HC
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Imposition of entry tax - even imposition of tax more than once cannot be prevented nor prohibited under the Constitution - HC
Case Laws:
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Income Tax
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2017 (4) TMI 1154
Eligibility for registration under Section 12A (1)(a) - whether Greater Noida Industrial Development Authority ("GNIDA"); Yamuna Expressway Industrial Development Authority ("YEIDA"); and New Okhla Industrial Development authority ("NOIDA") are eligible for registration under Section 12A (1) (a)? - Held that:- It is true that ''IDAs' being not very clear about provisions under which they are exempted, made attempts to refer and rely one or other provisions but a mistake of law in pleading status or claiming a particular advantage under a provision is neither an admission nor will attract principle of estoppel or acquiescence. When law requires something and provides a particular status with particular description, it is to be treated accordingly. A mistaken claim will not make any difference, either for affirmence or denial. When CIT (E) was required to consider application for registration, in our view, it should have concentrated only to the requirement of Section 12A and 12AA, as the case may be, and not other provisions like Section 10(20) or 10(20A) etc. The factum that ''IDAs' would be covered or not, under Section 10(20), would make no difference for the reason, if these authorities satisfy requirement of Section 12A(1), then are entitled for registration after following procedure laid down under Section 12AA. A mere wrong claim on the part of these authorities will not be of any disadvantage to them. The consideration on the part of CIT (E), it appears, is more influenced by concept of first three heads of charitable trusts. Apparently, it has lost objectivity in looking into thrust, ambit and spirit of 4th head i.e. advancement of any other object of "general public utility". This is a sheer ignoring scope and ambit of statutory provisions of UPID Act, 1976 beyond which respondents-authorities cannot function, being statutory bodies constituted under said Act. They have to function within the provisions of said Act. Mere recital of objects or activities without cogent or corroborative evidence are not sufficient by themselves to enable a registering authority to arrive at the satisfaction mandated by law. The applicant, in this case is primarily carrying out its business activities for making profit, just like any other private builder/developer. The applicant is neither a local authority, nor carrying out any charitable activity, as such. Like any other private builder or developer is acquiring land at a very low price and then developing the land along with other public utilities, in order to attract the buyers and sell the developed plots/flats with high margin or profit. In the instant case, the documents on record do not suffice to establish the genuineness of activities. The Applicant did not file any specific reply to queries raised and Books of accounts and Vouchers etc were also not produced under the pretext of being "Voluminous", so the claim of the Applicant regarding charitable activities could not be ascertained or verified. As such the findings of fact regarding its charitable activities or rather the lack thereof arrived at on the basis of the evidence filed and arguments addressed stand uncontroverted. This is fatal to the claim of the applicant. Observations made in para-11 of the order passed by CIT (E), in our view, are nothing but an irrational, illogical and misconceived approach so as to exclude respondents-authorities from the ambit of definition of "charitable purposes". Therefore, in all the matters, where appeal is provided to Tribunal, its power is coextensive with the authorities whose orders are appealed before Tribunal. There is no reason to read power of Tribunal, in a manner so as to linger on a matter between different authorities, particularly when there is no such restriction under the statute and on the contrary, statute confers widest power upon Tribunal. Looking from all angles and giving our serious thoughts and utmost consideration to the arguments advanced on behalf of both sides and in the light of discussions made above, we have no hesitation in answering questions 1 and 2 in favour of respondents-authorities and against appellant-Revenue.
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2017 (4) TMI 1153
Recognized system of accounting - maintain its accounts according to AS-7 or AS-9 - Held that:- Held that:- There is no dispute that the nature of business of the respondent-assessee from the inception is same and that it had been filing its returns as a Real Estate Developer since 2003 by adopting AS-9 system of accounting, which were all through accepted by the Department without any reservation. In view of the fact that the Department itself in the past had accepted the respondent-assessee as a Real Estate Developer, it cannot be permitted to shift the stand at this stage so as to contend that the respondent-assessee is actually not a Real Estate Developer but a Contractor. In the case at hand, there is no finding or even an averment that the system of accounting followed by the assessee is unable to show the true and correct profits or that it results in distortion of the profits. At the same time, we do not find any statutory provision or a Rule, which may compel the respondent-assessee to follow the AS-7 system of accounting alone. In view of the above, as the respondent-assessee is a Real Estate Developer and not a Contractor simplicitor, the system of accounting followed by it for the last many years is in accordance with recognized procedure, the Department cannot reject the said system followed by it for the reason that it ought to have followed the other recognized system AS-7 system i.e. percentage completion system. The Act or the Rules nowhere mandates for following a particular accounting system by the respondent-assessee, therefore, if any of the recognized mode of accounting has been followed, we find that no illegality has been committed by the respondent-assessee. In view of the aforesaid facts and circumstances as well as findings as returned by the Income Tax Appellate Tribunal, there is hardly any question of law, which arises for our consideration.
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2017 (4) TMI 1151
Reopening of assessment - unexplained source of income for purchasing the property in question - Held that:- It is required to be noted that in the original assessment the return was processed under section 143(1) of the Act and there was no detailed scrutiny to the return filed by the assessee. However, subsequently, on the basis of the returned filed by one Mr.Bhavin Patel for A.Y. 2014-15 and the statement of said Mr.Bhavin Patel, from whom the petitioner assessee and one another co-owner has purchased the property in cash total amounting to ₹ 5,29,76,600/- and considering the fact that in the earlier assessment years, the assessee had shown cash on hand a very meager amount i.e. the assessee had shown cash in hand in return of income for A.Y. 2012-13 ₹ 0/- and therefore, the A.O. had noted that the Company had no cash balance in the last year for the purchase of property in cash as well as the Company cannot take unsecured loan or advance from customer in cash. Therefore, the A.O. has reopened the assessment for A.Y. 2014-15 in which the petitioner has purchased the property by paying ₹ 2,64,88,300/- in cash. Under the circumstances, it cannot be said that there was no tangible material with the A.O. to form an opinion that income chargeable to tax has escaped assessment for the A.Y. 2014-15 within the meaning of section 147 of the Act. - Decided against assessee
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2017 (4) TMI 1150
Bogus purchase/sale of shares - sham share transactions - Held that:- AO was not able to contradict the facts regarding purchase of shares and sale thereof. Further, it was recorded that the assessee had sold shares through MTL shares and Stock Broker limited which is a SEBI registered Stock Broker. The payment for sale of shares was received through banking channels. All the documentary evidence being in favour of assessee, the deletion of the addition made by the CIT(A) was correctly upheld by the Tribunal. The findings recorded by the CIT (A) and the Tribunal are pure findings of fact which have not been shown to be illegal, erroneous or perverse by the learned counsel for the appellant. He has also not been able to produce any material on record to controvert the said findings. - Decided against revenue
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2017 (4) TMI 1149
Reopening of assessment - territorial jurisdiction of officers over the assessee - Held that:- It is not clear from the records whether the Income Tax Officer was aware of the quantum of income returned by the assessee as the return of income was filed with the DCIT. The copy of the reasons recorded for reopening of the assessment is not filed before us and therefore, we are not able to come to any conclusion as to whether the AO has reopened the assessment on the basis of any information received by him or it is on the basis of the return of income filed by the assessee. If the return of income was not before the AO, it cannot be presumed that he was aware of the jurisdiction of the DCIT over the assessee and inspite of that have initiated proceedings u/s 148 of the Act. It is also not in dispute that as soon as the Income Tax Officer realized that he lacked pecuniary jurisdiction over the assessee, the case was immediately transferred to the file of the DCIT who again issued a notice u/s 143 (2) of the Act. Since one of the Officers who has concurrent jurisdiction over the assessee have issued notice u/s 148 of the Act, we are satisfied that the proceedings u/s 147 have been validly initiated. The assessee’s additional ground of appeal is thus rejected. Disallowance of eviction charges in respect of three persons in computing the capital gains - Held that:- The undisputed facts are that the assessee’s husband along with his brothers has sold the land to M/s. Metro Cash & Carry India Pvt. Ltd, Bangalore and has gained LTCG therefrom. As regards the expenditure claimed by the assessee for getting the illegal occupants evicted from the land, the AO has accepted the payment to one of the occupants of the land, since he was produced before him. Therefore, it is clear that the land was not in peaceful possession of the assessee’s husband and AO has accepted this fact. The assessee has claimed that she has claimed to have paid to 5 persons out of which, payment to one person has been allowed. The disallowance of payment to others is on the ground that the assessee has not been able to produce those parties for cross verification. No doubt, the onus is on the assessee to produce the parties. We find that the assessee has filed the affidavits of two persons but the AO has not accepted the same but also has not held that the payment is genuine. Therefore, to the extent of payment which is supported by affidavits, we direct the AO to allow the same. Similarly it is also not uncommon that village elders intervene and settle the land disputes to safeguard the law and order and protect the peaceful atmosphere of the village. The assessee has claimed to have paid for the village development. Therefore, we direct that 50% of the claim i.e. up to ₹ 1.50 lakhs be allowed. The assessee gets relief accordingly. Assessee’s appeal is partly allowed.
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2017 (4) TMI 1148
Addition u/s 68 - source of cash deposits - credit for agricultural income - Held that:- By using the words “may be charged”, instead of “shall be charged, it is clear that addition u/s. 68 is not mandatory. On the other hand the Assessing Officer has to apply his mind on facts of each case and decide whether the addition is warranted. As mentioned earlier, the assessee is an aged person, who had settled down in his native place. He was engaged in agricultural activities on his retirement and there is nothing on record to suggest that the assessee alongwith his wife were in a position to generate unaccounted income of ₹ 39 lakhs other than on-money on account of sale of agricultural land. The payment of on-money is an unfortunate practice in most part of our country, and none can deny this factual situation. It is the case of the assessee that the buyers were insisting on reducing the sale consideration to be disclosed in the sale deed for the purpose of reducing stamp duty payment. This contention of the assessee cannot be totally brushed aside. Place reliance on the order of the Cochin Bench of the Tribunal in the case of ITO vs. Dr. Koshy George (2009 (6) TMI 121 - ITAT COCHIN), wherein it was held by the Tribunal that any surplus money arising to an assessee on sale of agricultural land would partake the character of agricultural income itself. - Decided against revenue.
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2017 (4) TMI 1147
Claim of receipt of corpus donations - whether the said anonymous donations are liable to be taxed u/s 115 BBC of the Act? - accumulation u/s 11(2) - Held that:- We have observed that the assessee-trust is registered u/s 12A of 1961 Act with DIT(E) , Mumbai bearing No. TR/25225 and also registered with Charity Commissioner , Mumbai. The assessee in the instant case could not provide addresses, father s name and PAN of the donors and the assessee is also not a religious trust to be covered under exception. The assessee has come forward with a request that if an opportunity is given to the assessee, the assessee can produce the donors before the AO as directed by the AO. It is also submitted that PAN and addresses of all the donors for verification by the A.O. will also be furnished for verification by the AO. Considering the factual matrix of the case , keeping in view the provisions of Section 115BBC of 1961 Act and in the interest of justice and fair play, we are of considered view that this matter needs to be set aside and restored to the file of the A.O for necessary enquiry and verification of the said donations so received by the assessee as to genuineness and also for verifying compliance of the relevant section 115BBC of 1961 Act.
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2017 (4) TMI 1146
Disallowance for warranty expenses - addition of the said disallowance while computing total income under the normal provisions of the Act and also book profits u/s 115JB - Held that:- In the facts of the case before us, there is no allegation that the change in the method of accounting of making the claim by way of provision as against on actual basis was not bonafide or it was due to some ulterior motive of evasion of tax. It is also noted that Hon’ble Supreme Court in the case of Rotork Controls India (P) Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA) has held that assessee is entitled to make claim on account of warranty expenses by way of provisions by estimating the amount on some scientific basis. Further, the Hon’ble Delhi High Court in the case of CIT vs Vinitec Corporation (2005 (5) TMI 54 - DELHI High Court) has held that assessee is entitled to change the method of accounting with respect to claim of warranty expenses from ‘actual basis’ to ‘provision basis’. Thus, taking into account the facts and circumstances of the case and legal position as discussed above, we find that assessee was entitled to make claim on account of provision for warranty expenses in the year before us. However, the amount quantified for the provision is also under dispute and rightly so. It is brought before us that computation made by the assessee for estimating the provision was incorrect. Ld. Counsel has also fairly agreed to this position. We have verified the facts and figures. It is informed that the basis for making provision in this year was on the basis of actual claim booked in FY 2007-08 as compared to the turnover of FY 2006-07. It is informed that the amount of actual claim booked in financial year 2007-08 was ₹ 5,03,93,000 and the amount of turnover for the FY 2006-07 was to the tune of 825,30,47,487 (i.e. ₹ 825.31 crores). Thus, the ratio of the two comes to around 0.61%. Now if we apply the ratio of 0.61% to the turnover of FY 2007-08 which is ₹ 900.52 crores, then we get an amount of ₹ 5,49,85,586 as per the chart provided by the assessee. The said figure has been accepted as correct by Ld. CIT-DR also. Thus, we find it proper that amount of provision should be allowed for the said figure of ₹ 549,85,586. The AO is accordingly directed to delete the disallowance to this extent and the balance of disallowance, if any, is upheld. The assessee gets part relief. With regard to the adjustment in book profit u/s 115JB is concerned, it is noted that this issue is squarely covered in favour of the assessee by the judgment of Hon’ble Delhi High Court in the case of CIT v. Becton Dickason India (P) Ltd. (2012 (12) TMI 210 - DELHI HIGH COURT), wherein it has been held that the provision for warranty cannot be treated as provision for diminution in value of any assets so as to be covered by Explanation 1(i) to section 115JB (2) and thus no additions to book profit can be made. Further, Hon’ble Supreme Court in the case of Rotork Controls India (P) Ltd. (supra) held that amount of provision made on account of warranty expenses cannot be said to be unascertained liability. Thus, taking into account both these decisions, we find that no addition could have been made u/s 115JB for this amount. Therefore, addition to book profit is directed to be totally deleted. Denying benefit of deduction u/s 80IC on the amount of scrap sales - Held that:- It is clear that the Tribunal on considering the facts of the case and various judgements held that assessee is eligible for deduction u/s 80IC on the amount of sale of scrap. Therefore, we direct the AO to grant the benefit of deduction u/s 80IC on the amount of sale of scrap. Denying deduction u/s 80IC on the interest income - Held that:- Tribunal for AY 2009-10 held that the claim of deduction u/s 80IC benefit shall not be allowed on the interest income. Therefore, respectfully following the order of the Tribunal for AY 2009-10 this ground is decided against the assessee and the action of AO is upheld.
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2017 (4) TMI 1145
Unsecured foreign currency loan amounting to USD 500 million from its associated enterprise - tpa - Held that:- It is not proper to benchmark both the transactions of payment of interest with respect to two different loans which are governed by two different agreements which has different terms and conditions as “one transaction‘. Regarding the claim of the Assessee with respect to the quotations of the bank, the 1st quotation is dated 10/10/2011 wherein vide letter dated 22/02/2012, a quote was provided from Citibank which says that quote for the currency is LIBOR +285 – 300 basis points and does not include withholding taxes. Assessee with respect to other banks also took similar quotations. However, from the reading of the quotation it is not known that these quotes are with respect to both the transactions of loan of US dollar 500 million and US dollar 300 million where there are different terms and conditions of repayment prepayment. Most importantly, the Ld. Transfer Pricing Officer has not looked at these evidences produced by the Assessee in the form of quotations of various banks, comparable search by the Assessee on LPC/ dealscan database. The Ld. Dispute Resolution Panel has also brushed aside the provision of section 92C of the Income Tax Act, which prescribes methodology for computation of arms length price of an “international transactions‘. It has merely reiterated whatever has been stated by the Ld. Transfer Pricing Officer without applying the provisions of law to the facts of the case before them. In view of this we set aside the whole matter of determination of ALP of interest paid by the Assessee to its associated enterprise back to the file of the Ld. Transfer Pricing Officer with a direction to examine the computation of ALP by the Assessee of above transaction strictly in accordance with the provisions of section 92C of the Income Tax Act Disallowance of the production cost - Held that:- Assessing Officer as well as the Ld. Dispute Resolution Panel, despite having the necessary details of the expenditure did not point out the single instance that these expenditure are not incurred by the Assessee for the purposes of its business. Merely making references to the various judicial precedents without putting to the facts on record about incurring of the expenditure by the Assessee or non-business purposes disallowance made by the Ld. and Assessing Officer cannot be upheld. Instead, despite full details available with them they have denied the claim to the Assessee. Neither the assessing officer and nor the Dispute resolution Panel point out nature of details which was not submitted by the Assessee when part of the expenditure has already been considered in detail at the time of determining Arms; Length of the transaction. In view of no adverse inference from the lower authorities on the details submitted, we are constrained to allow the claim of the Assessee of deductibility of the above expenditure of ₹ 316786095/- Disallowance of exploration cost - Held that:- Assessee explained that as it needs to safeguard its interest in the blocks it has employed technical experts for which time writing charges are incurred. Further, for the support functions. It also hires several other persons and necessarily has to incur other expenditure with respect to its finance and accounting activities, its human resource activities and legal compliance and litigation activities. These expenditure are though incurred in support to the PSC contracts executed by the Assessee at may not be necessarily shared by the other joint-venture partners. Merely because it is not shared by others, which may be for many reasons, it cannot be said that the Assessee has not incurred these expenditure wholly and exclusively for the purposes of business of the Assessee. With respect to the details available with the Assessing Officer, It was not pointed out a single instance that any of the expenditure are not incurred by the Assessee for the purposes of its business. In fact, out of the total expenditure The Ld. Assessing Officer has partly allowed the expenditure and partly disallowed the expenditure by using the single yardstick that if expenditure are shared by the JV same are allowable and if same is not shared by JV partners, then it is not allowable. We failed to see any such provision in the act that if the other party in the joint-venture do not agree to share the particular cost, the cost incurred by one of the partners of that joint-venture becomes the expenditure not for the purpose of the business of that partner. No such provision has also been brought to our notice by the revenue. It is also not the case of the revenue that details of those expenditure are not available before them or Assessee has furnished incomplete information for its allowability. Therefore according to us the expenses incurred by the Assessee cannot be disallowed Disallowance of purchase of seismic data and general and administrative expenses in connection with the proposed NELP VIII - Held that:- Neither the Ld. Assessing Officer nor the Ld. Departmental Representative could press any other judicial precedent which shows that amount spent by the assessing is not allowable as revenue expenditure under section 37 (1) of the act. It is also not the argument of the revenue that such expenditure incurred by the Assessee is capital in nature. Furthermore, the Ld. AR has also pressed into several decisions which say that that expenses incurred towards extension of business which was subsequently abandon or did not fructify, are allowable. Therefore in view of the above decisions wherein it is been held that the expenses for purchase of this kind of data is unnecessary revenue expenditure required to be incurred by the Assessee for the purpose of its business and hence is allowable as revenue expenditure, we also direct the Ld. Assessing Officer to allow the expenditure incurred by the Assessee on purchase of data and other relevant expenses amounting to ₹ 220983295/–. In the result ground of the appeal of the Assessee is allowed. Not allowing credit of tax deduction at source - Held that:- Assessee has submitted that the Ld. Assessing Officer may kindly be directed to grant credit for the aforesaid tax deduction to the appellant. Ld. Departmental Representative submitted that if the Assessee has proper tax credit certificates available with it then only the credit for tax deducted at source can be granted, and if those are available then there is no objection against this. In view of these arguments, we set aside ground No. 7 of the appeal of the Assessee to the file of the Ld. Assessing Officer with a direction to verify the tax credit certificates submitted by the Assessee of ₹ 52358137/– and then to grant credit for such taxes if they are found in order and in accordance with the law. Credit for self-assessment tax paid - Held that:- The Assessee has submitted that the Ld. Assessing Officer may kindly be directed to grant credit for the aforesaid tax to the appellant. Ld. Departmental Representative submitted that if the Assessee has proper tax challan available with it then only the credit for it can be granted, and if those are available then there is no objection against this. In view of these arguments, we set aside ground No. 8 of the appeal of the Assessee to the file of the Ld. Assessing Officer with a direction to verify the self-assessment tax paid as submitted by the Assessee of ₹ 63128093/– and then to grant credit for such taxes if they are found in order and in accordance with the law. Charge interest under section 234B - Held that:- We direct the Ld. Assessing Officer to not to charge interest under section 234B of the act on the income of the Assessee which is subject to or liable to tax deduction at source. In view of this we set aside ground No. 9 of the appeal of the Assessee back to the file of the Ld. Assessing Officer to recompute the interest under section 234B of the act accordingly. Disallowance of legal and professional expenses - Held that:- Assessing Officer has stated that Assessee has been delaying the submission of the details during assessment proceedings as it was asked to submit the breakup of expenses on 27th of March 2014 whereas the query was raised on 12/03/2014 and then again on 25/03/2014, this itself shows that Ld. Assessing Officer started questioning the allowability of these expenses in the last fortnight of the month of March 2014 only, whereas the notice under section 143 (2) was issued on 30th of August 2011. It is always for Assessing Officer to observe time limit for completion of the assessment proceedings and manage it for completing it properly in time. The provisions of Income Tax Act, 1961, has empowered him to tackle situations where Assessee is delaying submitting the requisite detail on time. However, if the Assessing Officer himself start acting late when the time has raced against him, the fault cannot be put on the head of the Assessee. In view of this, without going into the merits of the case about the allowability or otherwise of the above expenditure, We set aside this ground of appeal to the file of the Ld. Assessing Officer with a direction to examine the details furnished by the Assessee and call for such further evidence as it is required for him for such examination and then to decide the issue on merit. Disallowance of depreciation on global IT & T expenditure - whether the Assessee has properly demonstrated before the Ld. Assessing Officer that the Assessee has used the assets for the purposes of the business? - Held that:- Only issue now remains is to be seen . It is better to look at what kind of assets the Assessee are owned by and used by it. Assets are production database management system, SAP up gradation, budgeting and forecasting system, training programs, simulations software, asset modeling systems and email facilities. When the Assessee is participating in such a huge production sharing contract, It is too naïve to think that production database management system and SAP, training programs, simulations programme and email facilities have not been used by the Assessee. Issues have also been examined at the time of determining Arm‘s length price of these expense. The actual cost of these assets are not doubted by the Ld. Assessing Officer. In view of this we are of the opinion that these assets are beneficially owned by the Assessee and are used for the purposes of the business of the Assessee, therefore entitles Assessee to claim the depreciation on these assets Intra Group Services - TPA - Held that:- With respect to the clubbing of the transaction it was held that when the transactions are closely interrelated it is but natural to club such transaction and benchmarked it together. The Ld. dispute resolution panel at page No. 30 – 31, has considered the suspect and agreed with the contention of the assessee that intragroup services received from its associated enterprise are closely linked to the main business activity of the assessee company placing reliance on the US regulations, OECD regulations and OECD draft notes on comparability. In view of this we do not find any infirmity and none was pointed out before us by the Ld. departmental representative in the order of the Ld. dispute resolution panel. Consequently, after verifying that assessee has demonstrated need for those services, benefit derived from those services, evidence of receipt of such services and submitting that those services are neither duplicative in nature and nor are share holder activities, the DRP directed the Ld. transfer pricing officer to delete the adjustment proposed with respect to the intragroup services of ₹ 3329766244/–, deserves to be upheld. Further, no evidences have been led before us by revenue stating that these services are duplicative in nature and also serves only the interest of the shareholder. According to the information supplied by the assessee and examined by the Ld. dispute resolution panel does not give any such indication. Further regarding non-sharing of the cost by the joint-venture partners we have given our findings while deciding the appeal of the assessee that such an action of the joint-venture partners cannot be the reason to determine the arm‘s length price of the services which is been received by the assessee at nil. In view of this we uphold the finding of the Ld. dispute resolution panel holding that transactions of intragroup services are interlinked, therefore, they should be benchmarked together by adopting TNMM as the most appropriate method , hence, directing the Ld. transfer pricing officer to delete the adjustment proposed of ₹ 3329766244/–. In the result ground of the appeal of the revenue are dismissed. Depreciation to the assessee on wellhead platforms at the rate of hundred percent allowed. Club entrance and subscription fee for its employees - Allowable business expenditure - Held that:- In view of the submission of the assessee that assessee has considered these expenses for purpose of FBT which AO has also accepted. In such a case, this expenditure has to be treated as business expenditure of the assessee. The binding nature of Jurisdictional High Court and numerous decisions from various Tribunal, holding that club expenditure for its employees incurred by the assessee as expenditure incurred wholly and exclusively for the purposes of the business of the assessee. In view of this we find no infirmity in the order of the Ld. dispute resolution panel in allowing the claim of the assessee of the stability of expenditure on account of the club expenses. In the result ground No. 5 of the appeal of the revenue is dismissed.
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2017 (4) TMI 1144
Penalty levied under Section 271(1)(c) - claiming deduction under Section 10A and 10B - selection of assessment year - Held that:- It is not a case of unearthing the income during the course of search or survey proceeding. The assessee claimed deduction under Section 10B of the Act by furnishing all the particulars of income. Claim under Section 10B of the Act is a statutory claim under the scheme of Income-tax Act. The Assessing Officer found that the manufacturing activity of the assessee was commenced from the assessment year 2000-01. Therefore, the assessee, at the best, can make claim under Section 10B of the Act from the assessment year 2000-01 to 2009-10. The Assessing Officer has also found that the assessee obtained approval as 100% Export Oriented Unit on 16.03.2005. Therefore, the assessee can claim only from assessment year 2005-06 till 2009-10. The assessee’s main contention is that there are two amendments to Section 10B of the Act one made in the year 2008 and another in the year 2009. It is not in dispute that the Sunset Clause for exemption was extended. In view of the confusion in the mind of taxpayer and officers, the CBDT also clarified by issuing circular. Therefore, it is a case of misunderstanding the statutory provision by the assessee and the officers. The assessee understood the provision of exemption under Section 10B of the Act in a particular manner and the Assessing Officer has understood the same in another manner. There was a real confusion as stated above in view of extension of Sunset Clause and amendment made in Finance Act, 2008 and 2009. Therefore, the claim made by the assessee being a bona fide one, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the penalty levied by the Assessing Officer. As found by the Apex Court in Reliance Petroproducts (P.) Ltd. (2010 (3) TMI 80 - SUPREME COURT) mere making a claim under Section 10B of the Act after furnishing all the particulars of income, cannot be a reason for concluding that the assessee has furnished inaccurate particulars or concealed any part of income. - Decided in favour of assessee
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2017 (4) TMI 1143
Disallowance of expenditure under section 37(1) - car expenses - Held that:- There is no merit in the plea of the assessee as the element of personal use out of the car expenses incurred cannot be ruled out, however, the said disallowance is restricted to 10% of the total expenditure under section 37(1) of the Act. Disallowance u/s 14A - Held that:- On the perusal of the record and the ratio laid down by the Special Bench of the Tribunal in the case of Vishnu Anant Mahajan Vs. ACIT (2012 (6) TMI 297 - ITAT, Ahmedabad) while working out disallowance under section 14A of the Act, no disallowance is to be made on account of car depreciation claimed as deduction under section 32 of the Act. However, in respect of the interest expenditure on the car loans raised by the assessee there is no merit in the claim of the assessee. Accordingly, 50% of the balance expenditure is to be disallowed in the hands of assessee. In the paras hereinabove, we have already restricted the disallowance to 10% out of the total expenses for personal use and after excluding the same 50% is to be disallowed under section 14A of the Act. Disallowance made on account of interest paid against the interest income earned by the assessee on FDRs and other deposits - Held that:- As assessee referred to pages 9 to 13 of the paper book to establish the link between the amounts borrowed and the investments thereof. A perusal of the said details reflect the nexus between the amount borrowed by the assessee and the amount being deposited in various concerns. Admittedly the assessee had made investment in FDRs with banks but the same were not encashed for several reasons while the assessee made borrowals from different concerns in order to make investment with various concerns. In the totality of the present facts and circumstances where the assessee had earned interest income from bank FDRs at ₹ 2,95,750/- and against deposit with other concerns at ₹ 5,23,500/-, the interest expenditure claimed at ₹ 5,62,761/- merits to be allowed in the hands of assessee. Accordingly, the Assessing Officer is so directed. Appeal of the assessee partly allowed
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2017 (4) TMI 1142
Reopening of assessment - Non-deduction of tax at the time of payment - omission to disclose correct fact in the report prepared under Section 44AB - Held that:- The entire TDS certificates, opening stock, gross receipts from contractors, details of purchase, list of shareholders, copy of current account, copy of sales tax, general expenses claimed by the assessee, vehicle hire charges were available before the Assessing Officer. Preparation of audit report is the exclusive function of auditor, therefore, if at all there was any negligence and omission to disclose correct fact in the report prepared under Section 44AB of the Act, this Tribunal is of the considered opinion that the assessee cannot be found fault. If the assessee suppresses any material either before the auditor or before the Assessing Officer, then we may say there was negligence on the part of the assessee. In this case, the Assessing Officer himself called upon the entire details of gross receipts, TDS certificates, details of opening stock, work in progress, payment of wages, payment of interest, payment of vehicle hire and machinery charges, copy of sales tax order, etc. Therefore, when the assessee has furnished all the details which are required in completing assessments, this Tribunal is of the considered opinion that mere omission of auditor to mention certain items in the audit report prepared under Section 44AB of the Act, that alone cannot be a reason to say that there was negligence on the part of the assessee. This Tribunal is of the considered opinion that when the assessees furnished all the details, there was no negligence on the part of the assessees, hence, proviso to Section 147 of the Act would come into operation. In view of the above, the order passed by the Assessing Officer is barred by limitation. Therefore, it cannot stand in the eye of law. - Decided in favour of assessee. Disallowance of travel expenses - Held that:- The expenditure said to be incurred by the assessee for travelling to Singapore, USA, etc. Even though the assessee claims that the Managing Director’s travel to Singapore was for purchase of machinery, no material was produced either before the lower authorities or before this Tribunal. The travel of Shri Devarajan, MD along with his wife for a holiday cannot be construed as business expenditure at all. The claim of expenditure on Shri Surendra P. Shah cannot be construed as business expenditure at all. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee. Disallowance of electricity charges - Held that:- The assessee now claims that the intimation of adjustment of electricity charges against the deposit was received during the year, therefore, the liability crystalized during the year. This Tribunal is of the considered opinion that the liability was for the year 2010. Merely because it was adjusted during the year under consideration, it cannot be said that the liability accrued during this year. This Tribunal is of the considered opinion that the same cannot be allowed during the year under consideration. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.- Decided against assessee. Disallowance of expenditure incurred for higher education of the employee - Held that:- It is not in dispute that one Shri S. Kathirvel joined the assessee-company on 03.08.2011 and he was sponsored for higher education for the academic year 2012-14. The assessee could not produce any material to show that the said Shri Kathirvel agreed to work for the company even after completion of higher education. No bond was produced either before the Assessing Officer or before the CIT(Appeals) or before this Tribunal and no agreement was also produced. Therefore, as rightly observed by the Assessing Officer, the expenditure incurred by the assessee in the higher education of Shri S. Kathirvel was not for business purpose. When there was no compulsion on the part of Shri S. Kathirvel to serve the assessee after completing higher education, this Tribunal is of the considered opinion that the expenditure cannot be construed as revenue expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. - Decided against assessee. Disallowance towards marriage reception of son of Managing Director - Held that:- We have heard Sh. Philip George, the Ld.counsel for the assessee and Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative. The assessee admittedly incurred ₹ 7,79,899- towards setting up of subsidiary in Oman. Expenditure for setting up of subsidiary is capital expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.- Decided against assessee. Disallowance for setting up of subsidiary - Held that:- The assessee admittedly incurred ₹ 7,79,899- towards setting up of subsidiary in Oman. Expenditure for setting up of subsidiary is capital expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. - Decided against assessee. Expenditure incurred on water connection - Held that:- In the absence of any material evidence / receipt for payment for getting water connection for new office at Bangalore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.- Decided against assessee. Disallowance towards higher education of Vice President (Operations) of the company - allowable business expenditure - Held that:- Even though the assessee claims that the Managing Director’s son Shri P. Ramprasad was working as Vice President of the assessee- company, during the relevant period, he was not allowed to continue as employee of the assessee-company. The matter may stand differently in case Shri P. Ramprasad was granted study leave and salary was being paid during the study period. In this case, admittedly, no salary was paid to him and he was not treated as employee of the assessee-company during that period. This Tribunal is of the considered opinion that it is the responsibility of the respective parent to provide education to his son. Therefore, the Managing Director of the company is personally responsible for meeting the expenditure of his son’s education. The expenditure incurred by the assessee for providing higher education to the Managing Director’s son cannot be considered as business expenditure. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.- Decided against assessee. Disallowance u/s 40A(3) - Held that:- AO disallowed the payment made by the assessee-company exceeding ₹ 20,000/-. However, the CIT(Appeals) restricted the claim of the assessee to 50%. This Tribunal is of the considered opinion that when the payment was made exceeding ₹ 20,000/- per day, the same has to be disallowed. However, the CIT(Appeals) restricted it to 50%. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee.
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2017 (4) TMI 1141
TDS deducted but not remitted into government account - Short deduction of TDS - assessee in default u/s 201(1) & 201(1A) - Held that:- We find force in the arguments of the assessee for the reason that the assessee being a public sector bank normally comply with TDS as per the provisions of the Act. As claimed by the assessee, its TDS aspect has been taken care by centralised core banking system, which will automatically deduct TDS as per the provisions of the Act. Though, there are few technical issues, like nons-ubmission of declaration forms within due date, the same cannot be a valid reason for treating the assessee as an assessee in default u/s 201(1) of the Act, particularly when assessee explains the reasons for such mistakes. We further observe that the assessee has furnished all details and requested for one more opportunity to explain its case. Therefore, keeping in view overall facts and circumstances of the case, we deem it appropriate to remit the issue back to the file of the A.O. and direct the A.O. to examine the case with reference to the details furnished by the assessee and re-compute the short deduction of tax, TDS deducted but not remitted into government account and interest as per the provisions of the Act. Needless to say, the assessee is directed to furnish the necessary information without seeking any adjournments. Appeal filed by the assessee is allowed for statistical purposes.
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2017 (4) TMI 1140
TPA - selection of comparable - Held that:- Assessee company is engaged in the pure software development services thus companies different with that of assessee need to be deselected from final list of comparability. Exclude the traveling expenditure from the export turnover for the purpose of calculation of benefit under 10A - Held that:- As regards portion of the expenses incurred in foreign exchange towards insurance, travelling and communication is concerned, in the case of CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] held that the same is required to be reduced from export turnover as well as total turnover. Respectfully following the ratio of the decision of the Hon'ble jurisdictional High Court we direct that expenses incurred in foreign exchange towards insurance, travelling and communication are to be reduced both from export turnover as well as total turnover. Therefore, the grounds of appeal filed by the Revenue in this regard is dismissed.
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2017 (4) TMI 1139
Stay on collection/ recovery of the disputed demands - Held that:- Coming to our view so far as prima facie merits of the appeal, about which we must be satisfied before granting a stay on related demands impugned before us, are concerned, suffice to say that, on the face of it, the appeal before us does not appear to be frivolous appeal, and based on our understanding, on the basis of this limited discussion, the assessee, therefore, has a prima facie arguable case. The assessed income in this case is more than seventy times the returned income, and the impugned additions are in respect of contentious points. In our considered view the balance of convenience is in favour of partial stay on collection/ recovery of disputed demands. We, therefore, deem it fit and proper to grant a stay on collection/ recovery of the disputed demands, for a period of six month from the date of this order, till pronouncement of the order on the related appeal, or till further orders- whichever is earlier, on the condition that (a) the assessee will deposit a sum of ₹ 60 crores within two weeks from the date of this order being pronounced in the open court, the assessee will pay further amount of ₹ 20 crores within four further weeks, i.e. six weeks from the date of this order, and yet another ₹ 20 crores in four more weeks, i.e. ten weeks from the date of this order; (b) the assessee will give a corporate guarantee, to the satisfaction of the Assessing Officer, within the two weeks from the date of this order, for the balance amount; and that (c) the assessee, as also the revenue, will fully cooperate in expeditious disposal of the appeal, and will not seek any adjournment on any grounds whatsoever, other than the grounds on which the bench is satisfied about the grounds being wholly unavoidable and bonafide.
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2017 (4) TMI 1138
Disallowance of compensation paid on account of Employee Stock Option Plan (ESOP) - Business expenditure - CBDT circular - Held that:- In the instant case, the shares of Caterpillar Inc. U.S.A. has been allotted to the employees and the price differential is debited to the assessee company by way of a debit note and as stated supra, since the employees were under the control of the assessee company on deputation and more so the ESOP scheme also provided for allotment of shares under ESOP to deputed employees also, the assessee had debited the price differentials as ESOP expenditure in its profit and loss account. This in our considered opinion, is an allowable expenditure and is in tune with the reply given in the Frequently Asked Questions (FAQ) in the CBDT Circular No. 9/2007 dated 20.12.2007. The Circular issued by the CBDT is binding on the tax authorities and the same could be used by the assessee if proved beneficial to the assessee. We also find that the issue under dispute is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs PVP Ventures LTd [2012 (7) TMI 696 - MADRAS HIGH COURT ] wherein it had been held categorically held that ESOP expenditure is in the nature of staff welfare expenses and is squarely allowable as deduction in computing the taxable income of an assessee. Thus we hold that the compensation paid in the form of ESOP expenditure is an allowable deduction as an expenditure incurred wholly and exclusively for the purpose of business. - Decided in favour of assessee Adding back the provision for wealth tax while computing the book profits u/s 115JB - Held that:- We find that Explanation 2 to Section 115JB of the Act provides the amounts that would constitute income tax for the purpose of section 115JB of the Act, which contemplates dividend distribution tax, interest, surcharge, primary and secondary education cess. In fact this amendment was introduced in the statute vide Finance Act 2008 with retrospective effect from 1.4.2001. Hence it was never the intention of the legislature to include wealth tax within the ambit of income tax so as to fall within the mischief of Explanation 1. We hold that the provision made towards wealth tax amounting to ₹ 66,600/- would be an ascertained liability. Provision for wealth tax need not be added back to the book profits u/s 115JB of the Act and accordingly the grounds raised by the assessee in this regard are allowed. See CIT vs Echjay Forgings (P) Ltd [2001 (2) TMI 56 - BOMBAY High Court ] - Decided in favour of assessee Non reducing the reversal of product support expenses from book profit - Held that:- In the instant case, admittedly, the ld AO had duly added back the sum of ₹ 35,43,000/- towards provision for product support expenses in Asst Year 2006-07 vide his order u/s 143(3) dated 29.12.2009 while computing book profits u/s 115JB of the Act. When a part of the said provision is reversed in the subsequent year and credited to the profit and loss account, that should not go to add to the book profits u/s 115JB of the Act. If it is so done, then the assessee would be unwarrantedly be invited with double taxation u/s 115JB of the Act for the same amount. In view of explicit provisions of the Act as reproduced supra, we have no hesitation in directing the ld AO to grant reduction of sum towards reversal of provision for product support expenses while computing book profits u/s 115JB of the Act for the Asst Year 2007-08. Accordingly the Grounds raised in this regard are allowed.
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Customs
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2017 (4) TMI 1161
Imposition of redemption fine and penalty - import of new Mercedes Benz Sprinter 315 CDI Traveliner with an engine capacity of 2148 cc - case of Revenue is that the importer has not produced a valid certificate of compliance as per the provisions of Rule 126 of the Central Motor Vehicle Rules (CMVR), 1989. This resulted in the said import becoming improper and liable to confiscation - Held that: - the vehicle imported is a brand new vehicle and the appellant has produced a certificate from the dealer that the said vehicle conforms to the EC Emission Regulation - the imposition of fine and penalty is not justified - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1160
Revocation of CHA licence - forfeiture of security deposit - Mis declaration - violation of Regulation 11 (d) of CBLR, 2013 - Customs Broker had taken delivery of the excess skid/ pallets - Held that: - Regulation 11 (e) requires the Customs House Agent to exercise due diligence to ascertain the correctness of any information which he imparts to clients with reference to work relating to clearance of cargo / baggage. Merely because the importer have accepted their mistake of mis-declaration of brand and quantity and have shown their willingness to pay differential duty, fine and penalty, it cannot be concluded that Customs Broker did not exercise due diligence to ascertain correctness of the information - IEC number has been found to be correct as also the address of the importer. Further, all the importers have joined in the investigations and have given their statements. In such a scenario, it cannot be said that the Customs Broker has not adhered to KYC norms - revocation set aside - Appeal allowed - decided in favor of appellant-CHA.
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2017 (4) TMI 1159
Refund claim - excess duty paid ₹ 6,32,175/- on the short quantity of 128.68 MTs - denial on the ground that appellants did not provide any documentary evidence to prove that the cargo weighed less than the declared quantity of 236.5 MTs when the same came into their possession - Held that: - this case needs to be remanded back to the original authority with a direction to decide the claim of the appellant afresh after providing an opportunity to produce the evidence in support of their claim and thereafter the original authority after complying with the principles of natural justice will pass a reasoned order - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2017 (4) TMI 1156
Initiation of Corporate Insolvency Resolution process - Petition under section 8 & 9 of the I&BP Code r/w Rule 6 of Insolvency and Bankruptcy (Application to adjudicating authority) Rules, 2016 - Held that:- As to the Petition filed by the Operational Creditor, this Bench, on perusal of this documents filed by the Creditor, it is evident that the Corporate Debtor defaulted in making payments as mentioned above, the disputes raised by the Corporate Debtor are not sustainable, therefore the petition under sections 8 & 9 are taken as complete, accordingly this Bench hereby admits this petition declaring Moratorium with the directions as mentioned below: 1. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 2. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. 3. That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. 4. That the order of moratorium shall have effect from 6.3.2017 till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be. 5. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code. 6. That this Bench hereby appoints CA Hashmukh Bhavanji Dedhia, Level 19, Sunshine Tower, Senapati Bapat Marg, Elphinstone Road, Mumbai - 400013, Mah. Email: [email protected], Registration No.IBB/IPA-01/2016-17/64 as interim resolution professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
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Service Tax
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2017 (4) TMI 1181
Construction of civil structures as the Park Villa - classified under the head Works Contract Service or Industrial Commercial Construction - Held that: - the nature of the activities carried out by appellant was civil construction. As work contract was not liable to tax prior to 1.6.2007, there shall not be taxability on this aspect of the adjudication - once there is no liability on works contract, therefore there shall be no penalty. Repair and Maintenance activity - Held that: - for no agitation against that by appellant, there shall be demand of service tax on that count. Penalty on repair and maintenance service - Held that: - there is contract between the appellant and the residents that soon after residents association is formed, the deposits shall be transferred to the association, If realization of above has gone to the association, appellant shall not be liable to penalty - On the aforesaid limited issue, appeal is remanded to the Adjudicating Authority. Appeal disposed off - part matter allowed and part matter on remand.
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2017 (4) TMI 1180
Presence of mens rea - imposition of penalty u/s 78 of FA - Investigation was initiated against the petitioner on the basis of intelligence report that the petitioner is engaged in supply of tangible goods on hire basis without obtaining service tax registration - case of petitioner is that they did not obtain service tax registration under bona fide impression that since the petitioner is a goods transport agency under Section 65 (50b) of the FA, 1994, which is exempted from service tax liability under Section 66D of the FA - Held that: - It is settled law that an order imposing a penalty for failure to carry out a statutory obligation is the result of quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged has either acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct, or acted in conscious disregard of its obligation. A penalty will not also be imposed merely because it is lawful to do so - presence of mens rea is absolutely necessary ingredient for imposing penalty under Section 78 of the FA, 1994. It is true that agreement between the petitioner and respondent No.3 clearly provides that the petitioner would produce the service tax registration certificate and likewise, reimbursement of service tax was limited to the production of demand regarding payment of service tax. But, it is not in dispute that the petitioner did not produce the service tax registration certificate to respondent No.3, however, immediately after initiation of investigation and upon service of notice of investigation by respondents No.1 and 2, the petitioner had already discharged its tax liability before issuance of show cause notice and paid the service tax liability on 25-7-2014 and discharged interest liability on 26-8-2014. There is no willful suppression of facts to evade tax on the part of the petitioner and it was bona fide on the part of the petitioner, it was not deliberate and in absence of finding relating to mens rea recorded by the Settlement Commission, the penalty imposed upon the petitioner under Section 78 of the FA, 1994 deserves to be quashed. Petition allowed - decided in favor of petitioner.
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2017 (4) TMI 1179
Wrong availment of Cenvat Credit twice - duty paying invoices - demand of duty with interest and penalty - appellant immediately reversed the Cenvat Credit availed twice - Held that: - when the appellant is having sufficient balance in their Cenvat Credit account therefore, it cannot be alleged that there was a mala-fide intention to take inadmissible Cenvat Credit on invoice twice. It is the inverdent mistake - the charge of mala-fide intention is not sustainable. Period of interest - Held that: - the SCN were issued by invoking extended period of limitation and charge of mala-fide intention is not there, therefore, SCN were issued to the appellant are the barred by limitation. The appellant has not disputing the payment of Cenvat Credit taken twice, therefore, same is confirmed but they will not be the demand of interest and penalty on the appellant are also set aside - appeal allowed - decided partly in favor of appellant.
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2017 (4) TMI 1178
Refund claim - unutilised CENVAT credit - export of output services without payment of service tax - Held that: - as the services provided by the respondents fall under Export of service, the services provided by the respondent are not liable to be taxed - the respondents are entitled for refund claims - appeal dismissed - decided against Revenue.
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2017 (4) TMI 1177
Composite works contract - The appellant carried out construction of external/internal works for electrical sub-stations and also laying overhead cables along with various other connected activities - Revenue entertained a view that the activities carried out by the appellant are liable to be taxed under the category of “Erection, Commissioning or Installation” services in terms of Section 65(39a) of FA, 1994 - Held that: - it is clear that these contracts are of composite nature involving both supply of materials as well as provisions of service. In such situation, these activities cannot be categorized as simple service contract to be subjected to service tax prior to 1.6.2007 - there is no liability for the appellant to pay service tax on these composite works contract prior to 1.6.2007. Extended period of limitation - Held that: - there is ground for the appellant to have bonafide belief regarding non-liability as to service tax - there is no ground for invoking demand for extended period - the penalties imposed on the appellant are to be held as non-sustainable. Jurisdiction - Held that: - The appellants are having registered office at Bhopal and they are registered with the Service Tax Department at Bhopal. They do have a branch office at Jhansi but were not registered in Jhansi. The contracts were executed in the name of registered office and work executed by the appellant. The Jhansi office dealt with the billing or other connected activities does not have impact of shifting of jurisdiction regarding the appellant’s liability as a party to the contract of service. The liability of the appellant to service tax shall be restricted to the normal period under Works Contract Service. The same shall be worked out by the jurisdictional officers based on the documents and the bills submitted by the appellant - appeal allowed by way of remand.
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2017 (4) TMI 1176
Liability to tax - supply of tangible goods - appellants got manufactured 60 Railway Wagons and supplied the same to the Railways - Held that: - the appellant supplied wagons in terms of agreement dated March, 1996. The agreement and the supply of wagon were much prior to the tax entry introduced in 2008. The tax entry talks about supply of tangible goods. When such supply has occurred when there was no tax liability, there is no question of service tax payment on the same - the right of position and effective control is with the Railways and as such, the tax entry has no application for the present transaction - appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1175
Refund claim - input services used in connection with providing the output services to foreign clients - rejection mainly due to non-submission of certain documents and inability of Revenue to identify the taxable nature of the service rendered by the appellant - Held that: - the rejection of claims is not substantially on any legal issue. It is mainly on account of non-submission of certain documents or lack of correlation in realization of export proceeds - on the very same set of facts, the Revenue allowed the refund claims for the previous period - the original authority are directed to examine the issues afresh, especially referring to the documents submitted by the appellant with reference to their refund claims - appeal allowed by way of remand.
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2017 (4) TMI 1174
Reversal of CENVAT credit - Rule 6(3A)b(iii) - credit availed on common input services used for taxable services as well as trading activities which are exempted services - Held that: - prior to 01.04.2011 the formula given in Rule 6(3A)b(iii) cannot be applied to trading activities for the reason that these are not exempted services. Since a computing method has been introduced w.e.f. 01.04.2011 the same can be adopted to arrive at the proportionate credit that has to be reversed when common input services are used for taxable services and trading activities prior to 01.04.2011 also - applying the judgment in the case of M/s TFL Quinn India Pvt. Ltd.[2016 (6) TMI 230 - CESTAT HYDERABAD], the appellant is liable to pay/reverse the amount of credit arrived at by applying the formula brought forth by the amendment w.e.f. 01.04.2011 - the demand raised beyond the normal period is time barred and requires to be set aside - Taking into consideration that the period is transitional period and also because the appellant has reversed the amount, no penalty is to be imposed - appeal allowed - decided partly in favor of appellant.
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2017 (4) TMI 1171
Rejection of VCES-1 declaration - the case of the Revenue that the declaration was liable to be rejected under the provisions of Section 111 of the FA, 2013 as an enquiry was initiated against the respondent–assessee by the DGCEI - Held that: - The Board Circular, dated 25.11.2013 clarifies that in cases where the documents like the balance sheets, profit and loss account etc. are called for, by the Department in the enquiries of roving nature, while quoting the authority of Section 14 of the Central Excise Act in a routine manner, the Commissioner concerned would be entitled to take a view on merit, taking into account the facts and circumstances of each case, as to whether the enquiry is of roving nature or whether the provisions of Section 106 (2) of the Act are attracted to such cases - The appellant cannot rely on the SCN, dated 17.10.2014 to substantiate the case of the appellant as the said sSCN was served on the respondent assessee after the assessee had tendered the declaration on 31.12.2013 - appeal dismissed - decided against Revenue.
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2017 (4) TMI 1168
Pre-deposit - a sum in excess of ₹ 2,00,000/- has already been paid by the appellant/ Assessee; a fact, which also finds mention in the SCN - the appellant says that the order is erroneous in law, as none of the parameters, which had to be applied, while passing an order on an application seeking waiver of pre-deposit were brought into play by the Tribunal - Held that: - The Tribunal, was in fact required to examine in terms of Section 35 F of the Central Excise Act, 1944, (in short "the Act") as to whether or not, in its opinion, deposit of the tax demanded or penalty levied, would cause undue hardship to the appellant, and thus, based on the result of enquiry to determine to what extent waiver of demand, if at all, had to be directed - the Tribunal failed to examine whether or not the Assessee had a prima facie case to seek abatement of tax to the extent of ₹ 61 lakhs or, whether the Assessee could be called upon to pay service tax, vis-a-vis, services rendered on behalf of the main contractor, who had, as indicated above, deposited the tax - appeal allowed - decided in favor of assessee.
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Central Excise
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2017 (4) TMI 1173
Principles of natural justice - denial of cross-examination of the supplier / manufacturer / dealer / transporters whose statements were relied upon while adjudicating the SCN - Held that: - the record of the proceedings before the adjudicating authority would indicate that at no stage any request was made to summon a particular person for cross-examination whose statement was attempted to be used by the Revenue - he reasons assigned so as to confirm the finding of the adjudicating authority cannot be termed as perverse or vitiated by any error of law. CENVAT credit - denial on the ground that it availed cenvat credit on the strength of invoices without receiving duty paid scrap under the invoices - Held that: - it is established and proved that the appellant received bazar scrap and not scrap under the invoices. The names of those entities who supplied the bazar scrap are also set out in the Tribunal's order - the appellant's role has been pinpointed and with specific details regarding not accounting for those inputs which are mentioned in the invoices while availing of the cenvat credit - This was a systematic fraud and detected during the course of the investigation in which the appellant was clearly involved. The findings of fact are not perverse or vitiated by any error of law apparent on the face of the record raising any substantial question of law - appeal dismissed - decided against appellant.
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2017 (4) TMI 1172
Remission of duty - Rule 21 of the CER 2002 - Whether the loss and destruction of goods because of accidental fire which took place in the appellant factory falls within the meaning of the phrase "goods have been lost or destroyed by natural causes or by unavoidable accident" for purposes of remission of duty? - Held that: - The goods have been destroyed in fire and there is no evidence that no preventive measures were taken by the appellant then it can be safely assumed on the basis of evidence brought on record by the appellant which included FIR, report of City Magistrate and District Magistrate and grant of insurance claim, that fire broke out accidentally - loss and destruction of goods because of accidental fire which took place in the appellant factory falls within the meaning of the phrase "goods have been lost or destroyed for natural causes or by unavoidable accident for the purposes of remission duty under Rule-21 of CER, 2002 - remission allowed. Whether in the facts and circumstances of the case, learned Tribunal was legally justified in rejecting the claim of remission of duty under Rule 21 of the Central Excise Rules, 2002 even though the cause of accident in the appellant factory was accidental fire? - Held that: - Tribunal has not at all considered the material evidence available on record and jumped to the conclusion that fire took place due to the negligence of the appellant, on the basis of findings of Commissioner appeals, no independent application of mind is there by the Tribunal. So, finding of the Tribunal in rejecting the claim, cannot be said to be justified. Appeal allowed - decided in favor of appellant.
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2017 (4) TMI 1170
Maintainability of petition - statutory appellate remedy - the petitioners seek indulgence of this Court to entertain these writ petitions by contending that the first respondent has not applied a binding decision of the Tribunal made in "Butterfly Gandhimathi Appliances vs. Commissioner of Central Excise, Chennai III" case, since the issue involved in the said case and the facts and circumstances of the present case are one and the same - Held that: - the petitioners are not questioning the jurisdiction of the respondent in any manner. It is well settled that in fiscal matters, short circuiting the proceedings by way of filing the writ petitions cannot be entertained, unless the order passed was without jurisdiction or the same is erroneous on the face of it. It is held in those cases that when an alternative remedy is available, more particularly, in the cases of fiscal nature, invoking of the jurisdiction under Article 226 of the Constitution of India, is not permissible. When the petitioner is having an alternative remedy of appeal to file the appeal before the CESTAT, it is for them to file such appeal and canvass all the points. This Court exercising discretionary jurisdiction under Article 226 of the Constitution of India, is not inclined to entertain these writ petitions only on the reason of availability of alternative remedy. The present writ petitions are not maintainable before this Court as the petitioners have to avail the alternative appellate remedy of appeal before the Appellate Tribunal - petition dismissed - decided against petitioner.
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2017 (4) TMI 1169
CENVAT credit - outdoor caterer - Whether the outdoor caterer providing refreshment to the employees of the appellants is eligible to be an input services used by the manufacturer, directly or indirectly, in or in relation to the manufacture of final products? - Held that: - the issue is squarely covered by the decision in the case of I.P.Rings Limited in C.M.A.No.3185 of 2010, where it was decided in favor of assessee - appeal allowed - decided in favor of assessee.
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2017 (4) TMI 1167
Refund claim - unjust enrichment - section 11A - Held that: - Section 11A of the Act shall not be applicable as it was not the case of recovery of duty on erroneous refund - The matter was remanded to the adjudicating authority by giving one additional opportunity to the appellant – assessee to produce the requisite certificate from the Government and the appellant – assessee failed to produce the certificate from the Government and failed to satisfy the adjudicating authority that there was no unjust enrichment and the duty paid was not passed on to the purchasers, and therefore, it cannot be said that all the authorities below have committed any error - appeal dismissed - decided against appellant.
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2017 (4) TMI 1166
Clandestine manufacture and removal - maximum capacity on the basis of maximum speed of machines - the speed of the machines who are manufacturing Chewing Tobacco except Khaini - Held that: - As the manufacturer of the machines itself has stated in the technical literature that the maximum speed of the machines is 280 PPM and on physical verification of the machines it was found that the speed of the machines is similar. In that circumstances, the observation made by the Chartered Engineer that the capacity of each machine could be operated to run at a speed of beyond 350 PPM provided the locking i.e. presetting for maximum number of pouches which the machines could be produced rest to higher value by the company or manufacturer of the machines through password and logical sequencing is without any positive evidence - The maximum speed at which machines declared by the appellant in Form-I and Form-II can operate in terms of Rule 6 of the Rules is about 280 PPM at present, till any deviation/alteration is not done in the machines. The appellant is also directed to inform at least 3 days in advance to the Divisional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, as and when any alteration in machines regarding maximum speed at which machines can be operated is to be carried out by the appellant - appeal disposed off.
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2017 (4) TMI 1165
Clandestine removal - MS ingots - sponge iron - power consumption in the factory has been varying throughout the period - incriminating documents and evidences available in the form of loose slips - Held that: - sales invoices in respect of 346.100 MT of sponge iron and 268.320 MT of MS ingot had not been issued by the assessee. The details of the transportation of such goods were recorded in the books of Noticee No. 2, M/s Purwanchal Road Carriers, i.e. of the goods which had been removed by the assessee from their factory without payment of duty and without the cover of a Central Excise invoice - The documents which were submitted before the lower authority, not examined as alleged by the ld. Counsel for the appellants. Hence, the matter is remanded to original adjudicating authority, who shall examine all the evidence on record. Penalty - Held that: - As the main demand of ₹ 5,35,10,728/- is being remanded, the penalty against them are hereby set aside and their matters are remanded back to the original adjudicating authority for fresh examination. Appeal allowed by way of remand.
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2017 (4) TMI 1164
Classification of goods - HDPE strips, HDPE knitted fabrics, HDPE knitted bags - whether classification of products namely HDPE strips, HDPE knitted fabrics, HDPE knitted bags are classifiable under sub-heading No.392010.92, 392690.90, 392329.90 of CETA, 1975 or under sub-heading No.540490.20, 540720.90, 630533.00 of CETA, 1985? - The main contention of Ld. A.R for Revenue is that the products are not manmade fibre but are strips and so amendment brought forth vide Note 1A in Chapter 54 is not applicable - Held that: - A specific entry in the CETA, 1985 has to be the proper classification than a general entry in Chapter 39 of the CETA, 1985, as per the Rules of interpretation to the CETA, 1985 - The Synthetic & Art Silk Mills Research Association (SASMIRA), Mumbai SASMIRA is linked to the Ministry of Textiles, Govt. of India, SASMIRA and after giving the definitions of Synthetic Textiles, warp knitted fabric etc., opined in their letter, dated 18-4-2012 & 15-3-2013 that the product manufactured by the appellant is Warp Knitted Fabrics Technical Textile made up of man-made synthetic yarn of width less than 5 mm - reliance placed in the case of CCE, Tirunelvi Versus M/s. Sunpak And Vice-Versa [2016 (1) TMI 919 - CESTAT CHENNAI], where it was held that the width of the tape is of 1.5 mm and the goods manufactured by the appellants are classifiable as textile fabrics and articles of fabrics rightly classifiable under chapter heading 60059000 and the strips (HDPE) not exceeding 5mm is classifiable under 54049020. Appeal allowed - demand withheld - decided in favor of assessee.
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2017 (4) TMI 1163
Cash Refund - unutilized CENVAT credit - closure of factory - Held that: - law of Central Excise which includes Central Excise Rules and CENVAT Credit Rules does not permit cash refund of CENVAT credit amount except for in case of the exports - The Tribunal in the case of Scan Synthetics Ltd Vs Commissioner of Central Excise, Jaipur-I, [2016 (6) TMI 316 - CESTAT NEW DELHI] also held there is no provision in Central Excise Act or in that CENVAT credit rules to give cash refund of accumulated credit - the subject refund claim of the CENVAT amount lying in the appellant’s account is not admissible - appeal dismissed - decided against assessee.
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2017 (4) TMI 1162
Clandestine removal - It is the contention of the department that with the help of M/s R.M., the appellant has sold clandestinely excisable goods without making any payment - case of assessee is that For the distribution of the trade products, the territorial jurisdictions were earmarked among themselves. All the entities were partnership firms where family members i.e wife and sons were partners and no outsider was involved in any business entity - Held that: - It is on record that the incriminating documents were recovered under the proper panchnama signed by the independent witnesses and the entries in the documents were explained by the buyer of the excisable goods in his voluntary admittal/statements recorded on different dates - present appellants have no defence against the case made out against them. It is made clear that the mere voluntary deposition of duty may not be the sole basis for arriving at the conclusion against the assessee. When there are enough evidences corroborating the fact that the appellant M/s RM was an active partner along with Shri Suresh Kumar Garg, who is authorized signatory of M/s R.M. in evasion of duty of Central Excise by the assessee M/s PZFC along with assessee’s partner (Shri P.K. Arya) and Manager (Shri K.N. Mehrotra), there cannot be two opinion that the penalties imposed on both of them namely M/s R.M. and Shri Suresh Kumar Garg deserve to be sustained - the charges and penalties imposed by the impugned order against the appellants, M/s R.M. and Shri Suresh Kumar Garg stand sustained. Appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2017 (4) TMI 1158
Validity of assessment order - mismatch in the details obtained from the Web report - purchases were made from the dealers, whose registration was cancelled with retrospective effect - Held that: - with regard to mismatch is concerned, reliance placed in the case of M/s. JKM Graphics Solutions Private Limited Versus The Commercial Tax Officer [2017 (3) TMI 536 - MADRAS HIGH COURT], where it was held that The problems on account of the mismatch is a Pan India problem and to my mind, the procedure adopted under the Delhi VAT Act regime and the circulars issued under the said Act, appear to be a more transparent system and assessee friendly. This can be borne in mind by the Revenue for necessary follow up action - matter remanded for de novo decision. Retrospective cancellation of registration of dealers - Held that: - the Assessing Officer has to find out, as to whether the cancellation of registration was made retrospectively and if so, whether the petitioner can be imposed with tax liability. Therefore, for both purpose the matter has to be remitted back to the Assessing Officer for fresh consideration. Appeal allowed by way of remand.
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2017 (4) TMI 1157
Imposition of entry tax - It is a case of the petitioner that for the periods in question, they had submitted the returns as per the statutory provisions well within the time period prescribed, assessments were completed and all tax dues paid. Appellant claimed that by virtue of the powers available under Section 33 of the VAT Act read with Section 8 of the Entry Tax Act, the demand raised is wholly illegal, the action is contrary to certain judgments and challenge was made to the show cause notice - vires of Section 3(2) of the Entry Tax Act - Whether the second proviso to Section 3(2) of the Entry Tax Act is ultra vires to the Constitution? - Held that: - It has been held in the matter of taxing provision, simple inequality or unequal is not sufficient to interfere but hostile treatment or hostile discrimination should be established showing unreasonable, discriminatory attitude of the State between the persons similarly situated - The learned Court took note of various principles in this regard and held that even imposition of tax more than once cannot be prevented nor prohibited under the Constitution. If that be the position, we see no reason or ground to hold the provision to be ultra vires or unreasonable. Whether interest can be levied in the matter of late payment of entry tax under the Entry Tax Act, by virtue of the provisions of the Bihar Finance Act, and, with the aid of Section 8 of the Entry Tax Act? - Held that: - If Section 8 of the Entry Tax Act is analyzed, it would be seen that it makes applicable the provisions of the Bihar Finance Act to the Entry Tax Act in the matter of assessment, reassessment, collection and enforcement of payment of tax and penalty payable by a dealer under the Bihar Finance Act. Nowhere in the provisions of Section 8 is there any mention of recovery or imposition of interest - in the absence of there being any specific provision authorizing the revenue to assess interest under the Entry Tax Act and in the absence of Section 8 of the Entry Tax Act contemplating a provision for recovery of interest, recovery of interest is not permissible and to that extent, relief has to be granted to the petitioner. We hold that charging of interest and proposing to recover interest on the duty or the tax determined is unsustainable. Whether based on audit objection as contemplated under the provisions of Section 33 of the VAT Act, assessment can be re-opened with the aid of Section 8 of the Entry Tax Act? - Held that: - the authority empowered to assess, reassess, collect and enforce payment of tax and penalty by a dealer under the Bihar Finance Act is also empowered under the Entry Tax Act to assess, reassess, collect and enforce payment of tax and penalty payable under the Entry Tax Act and for that purpose, they are further empowered to exercise all the powers assigned under the Bihar Finance Act and the Rules framed thereunder pertaining to provisions relating to returns, assessment, reassessment, escaped assessment, escaped assessment, recovery of tax, special mode of recovery, maintenance of accounts etc. The provisions of assessment, reassessment, escaped assessment as is applicable under the Bihar Finance Act and the Bihar VAT Act having been made applicable, the provisions of reassessment under Section 33 of the VAT Act would apply and, therefore, to that extent, we find no error in the act of the respondents. Whether entry tax is liable to be paid when the goods only enter the local area and after such entry is subjected to sell only without there being any use of consumption of the goods in the local area? - Held that: - To attract liability for payment of entry tax, apart from the fact that there is entry of goods into the local area, there has to be sale, use and consumption in the local area. Mere entry or sale of the goods into the local area without its consumption or use in the local area will not make the goods liable for payment of entry tax and to that effect, we are of the considered view that there is no dispute with regard to the legal principles applicable - this issue is a mixed question of law and fact and cannot be interfered into this proceeding. In case, the petitioner has remedy of assailing the assessment order on factual aspect before any statutory appellate authority, liberty may be available to the petitioner to raise this ground and, if permissible, the appellate authority may go into this aspect of the matter - no relief can be granted to the petitioner. Whether the assessment undertaken under Section 33 of the VAT Act is permissible after a period of four years in view of the provision of Section 31 of the VAT Act? - Held that: - Section 31 of the VAT Act contemplates a provision for assessment or reassessment of tax which has escaped turn over and Section 33 provides for assessment of tax based on audit objection. However, a perusal of Section 31 would go to show that when proceedings are held under Section 31, period of limitation of four years from the expiry of the date of original order is indicated therein, but the last part of the Section provides that in a case where the dealer has concealed, omitted or failed to disclose such sale or purchase or input tax credit, so far as may be applicable, the same shall be decided in accordance to as if the proceeding under this sub- section was a notice under Section 27. This Section 27 provides for assessment of a dealer not filing return. It is a case where the proceedings were held against the petitioner after issuing notice under Section 27 and in this provision, there is no provision for issuing notice within four years. This Section only contemplates that the proceedings shall be completed within a period of two years from the date of initiation. Accordingly, we see no reason to interfere on this ground - The question of delay in initiating a proceeding again being a mixed question of law and fact, we are of the considered view that it cannot be permitted to be raised now at this stage in these proceedings. Accordingly, this ground is also rejected. Petition allowed - decided partly in favor of petitioner.
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Indian Laws
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2017 (4) TMI 1155
Arbitral dispute - claiming payment/consideration on account of non-lifting of the minimum quantum of gases, by Diesel Locomotive Works - Held that:- Having perused the documents furnished by the appellant, at the asking of the Diesel Locomotive Works, and having perused the findings recorded with reference to the statement made by Shri A.N. Jha, before the Arbitrator (extracted above), we are satisfied, that on each occasion, before the shortfall of the gases were blown off, the appellant duly informed the Diesel Locomotive Works, and in that view of the matter, it is not possible for us to concur with the findings recorded by the High Court, that due intimation was not furnished by the appellant – Kamrup Industrial Gases Ltd., to the respondent - Diesel Locomotive Works, before carrying on the exercise of emptying their cylinders, by blowing off the unlifted gases. It is also relevant in this behalf to make a reference to the determination recorded by the Arbitrator, again based on the statement of the aforesaid Shri A.N. Jha, that on different occasion, relevant bills were raised by the appellant – Kamrup Industrial Gases Ltd., indicating payments claimable by the appellant. The bills raised also denoted the amounts deducted on account of the sale proceeds of the gases which the appellant could sell in the open market. For the reasons recorded above, we are satisfied, that the impugned order passed by the High Court deserves to be set aside. The same is accordingly set aside. We hereby affirm the determination recorded by the Arbitrator in his award, dated 18.4.2004. The civil appeal is allowed, in the above terms.
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2017 (4) TMI 1152
Final demand notice concerning property tax in respect of the Petitioners' cellular sites situate within the municipal limits of the Respondent Corporation - penalty levied under Section 267A - Held that:- Subsection (2) inter alia provides that no such appeal shall be entertained in the case of an appeal against any tax including interest and penalty imposed in respect of which provision exists under the Act for a complaint to be made to the Commissioner against the demand, unless such complaint has previously been made and disposed of. That clearly gives away the intention of the legislature to treat penalty as tax for the purposes of Section 406 and make any fixation or charge of penalty appealable. Mr.Tulzapurkar contends that this provision merely deals with those cases where a provision exists under the Act for a complaint to be made to the Commissioner against the demand of interest or penalty charged. That is not the point. The provision is clearly to provide for the cases suggested by Mr.Tulzapurkar. But the corollary is that interest or penalty charged under the Act, by definition, comes within the expression 'tax' used in subsection (1) of Section 406. Appeals merely lie against the matters provides for in subsection (1), which include 'tax'. Subsection (2) carves out certain cases from out of the larger class of appealable matters, where special conditions for filing of appeals are provided. There is no reason to specially provide for cases of appeals from interest or penalty charged (where there is a provision of complaint to the Commissioner), if such cases were not to fall, in the first place, in the category of appealable cases. For all these reasons, it is obvious that any interest or penalty charged is included in the expression 'tax' used in Section 406(1) and is appealable as such. Once we come to the conclusion that penalty charged under Section 267A is appealable, we see no reason not to relegate the aggrieved assessee to the statutory appellate forum. We have already discussed this aspect in the order above whilst dealing with conservancy tax under Section 131 of the Act. All contentions of the Petitioner on merits of the levy, some of which have been noted above, are open to it, to be urged before the appellate forum. We express no opinion on them.
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