TMI Tax Updates - e-Newsletter
April 4, 2015

Case Laws in this Newsletter:

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

TMI Short Notes

1. Whether Service tax paid by back calculations i.e. service tax separately not charged will be covered under the scope of Sec.73A? Whether unjust enrichment provision will be applicable on such service tax payment?

  Service Tax:

2. Whether assessee is liable to pay collected service tax as per provision of Sec.73A even if his turnover is below the taxable turnover i.e. if assessee is availing small service provider exemption?

  Service Tax:

3. Whether ignorance of law can be a factor for not to revoke extended period of limitation?

  Service Tax:

4. In what circumstances extended period of limitation is not enforceable? Whether SCN can be issued for period beyond 18 months even if assessee has bona fide belief regarding service tax liability?

  Service Tax:

5. Whether show cause notice related to period beyond 18 months or 5 years as the case may be, is valid in law ?

  Service Tax:

6. Whether it is mandatory to mention specific head / sub head of services in SCN in which demand of service tax has been raised?

  Service Tax:

7. Whether issuance of SCN under section 73 is mandatory to fix the liability of the assessee? Whether demand of service tax and interest is not sustainable in absence of SCN?

  Service Tax:

Articles

1. Summary of First 2 ICDS issue by CBDT

   By: Deepak Aggarwal

News

1. RBI celebrates 80th Anniversary: Prime Minister urges Banking Fraternity to set Goals for Next 20 Years to remove India's Poverty

2. GST - FTP Statement - Foreign Trade Policy 2015-20

3. Summary of ICDS -III- Consturction Contracts

Notifications

Income Tax

1. 48/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Notified Eligible Projects or Schemes - DR. Lalmohan Memorial Trust, Manipur, Etc.

2. 47/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Bhil Seva Mandal Dahod, Gujarat

3. 46/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Iskcon Food Relief Foundation, Mumbai

4. 45/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Kailash Charitable Trust, Noida

5. 43/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Dignity Foundation, Maharashtra

6. 41/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Blind People's Association, Ahmedabad

7. 40/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Narayan Seva Sanstha, Rajasthan

8. 39/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Vidya Pratishthan, Maharashtra

9. 38/2015 - dated 6-1-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On –Shri Shanishwar Devasthan Trust, Ahemadnagar

Highlights / Catch Notes

Income Tax

• Government Securities: Premium and Discount Deductions Allowed as Expenses, Must Be Spread Over Security Period.

  Case-Laws - AT : Deduction of premium written off on Govt. Securities - discount on bonds and premiums on redemptions of debentures are allowable as expense proportionately spread over the period of security. - AT
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• Family Share Transfers Avoid Capital Gains Tax, Seen as Wise Move to Avert Disputes, No Fraud Involved.

  Case-Laws - AT : Transfer of shares by way of family arrangement would not attract capital gains tax, as the same was a prudent arrangement to avoid possible litigation among the family members and was made voluntarily and not induced by any fraud or coercion and therefore, could not be doubted. - AT
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• Stone Crusher Operations Not Considered Manufacturing for Section 80IB Tax Deductions; Sham Transactions Also Ineligible.

  Case-Laws - AT : Deduction u/s 80IB - The running of stone crusher is a business involving converting of boulders into smaller stones like bajri, etc which is not considered manufacturing for the purpose of 80IB. - A sham transaction in no way can be eligible for deduction u/s 80IB. - AT
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• Tax Revision u/s 263: AO's Failure to Inquire Makes Order Erroneous Despite No Inherent Error.

  Case-Laws - AT : Revision u/s 263 - AO failed to make inquiry on the basis of particulars stated in the return - The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order - AT
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• Charitable Income Used Abroad Qualifies for Tax Exemption u/s 11(1)(c) If It Promotes International Welfare Beneficial to India.

  Case-Laws - AT : Charitable purpose - subject to the provisions of section 11(1)(c) wherein the income applied outside India is also eligible for exemption, if the activities tend to promote the international welfare in which India is interested and the approval has been granted by the Board for such application of income - AT
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• Taxpayer's Deduction Claim Denied; Application for Rectification u/s 154 Rejected Due to Lack of Apparent Mistake.

  Case-Laws - AT : Deduction u/s.80GGA/35(1) denied - filing of an application u/s 154 for rectification of mistake to make alternate claim u/s 35(1)(i)/(ii) as an alternate claim - the issue cannot be rectified under the provisions of Section 154 as it is not a mistake apparent from record - AT
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Customs

• Valuation of Imported Second-Hand Goods: NIDB Data Not Reliable for Obsolete Models Due to Lack of Comparability.

  Case-Laws - AT : Valuation of imported goods - for determining the value of the old and used capital goods, which are of obsolete models, the NIDB data is not relevant at all as no two consignments of second hand goods and that too of obsolete models would be comparable - AT
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Service Tax

• Tribunal Rules Fly Ash Removal Process Exempt from Service Tax; Suggests Stay Instead of Dismissal for Non-Deposit Cases.

  Case-Laws - HC : A Co-ordinate Bench of the Tribunal has prima facie held, in similar circumstances, that the mechanical process of removing fly ash does not fall within the ambit of service tax - tribunal should have granted stay instead of dismissing the appeal for non-deposit - HC
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• Service Tax Not Applicable on Loan Repayments, Classified as Non-Service Payments by Public Limited Company.

  Case-Laws - AT : Nature of receipt - repayment of loan or advance towards services to be rendered - RCM being a public limited companies, have clearly indicated in their balance sheets that the amounts have been shown as received and loans repaid - service tax cannot be levied - AT
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• Interpretation of Law on Penalties and Limitation Periods for Pre-2003 Service Contracts Questioned.

  Case-Laws - AT : Management, Maintenance and Repair service - The contracts were signed before 1.7.2003 and bills were raised prior to 1.7.2003. But actually services may have been rendered by them prior to and after 1.7.2003. - the issue relates to interpretation of provision of law, imposition of penalty and extended period of limitation are not warranted- AT
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• Denial of 67% Abatement Unjustified After Reversal of Cenvat Credit; Initial Rejection Overturned.

  Case-Laws - AT : Denial of benefit of Abatement Notification of 67% on the ground that Cenvat Credit has been availed - since the cenvat credit has been reversed, benefit of abatement cannot be denied - AT
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• Refund of Service Tax Deposit During Investigation Not Limited by Section 11B of Central Excise Act 1944.

  Case-Laws - AT : Refund of amount deposited as service tax during investigation - not hit by limitation under Section 11B of the Central Excise Act 1944 - refund allowed - AT
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Central Excise

• Confusion Over CESTAT's Decision on Refund Period Start Date Following Retrospective Excise Duty Amendment.

  Case-Laws - SC : Refund claim - retrospective amendment reducing rate of excise duty - The applications for refund were clearly within limitation. We do not understand the logic or rationale behind the order of the CESTAT counting the period from July, 1999 for which the excess amount was sought to be refunded - SC
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• Rebate Claim u/r 18: Court Permits Refund Beyond One-Year Limit Due to 2004 Notification Absence.

  Case-Laws - HC : Rebate under Rule 18 of Central Excise Rules 2002 - Bar of limitation - the notification of the year 1994 prescribed a time limit for filing claim. But, the 2004 notification did not contain the prescription regarding limitation - refund allowed after after one year - HC
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• Exporter Fails to Prove Export Due to Lost Documents; Duty Demand Confirmed as Valid in Absence of Proof.

  Case-Laws - CGOVT : Duty demand - Export of goods - Loss of documents - applicant exporter has failed to submit valid proof of export and therefore demand of duty is rightly confirmed in this case. - CGOVT
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• Rebate claims submitted within one-year limit of Section 11B, Central Excise Act, 1944, not time-barred. Processing underway.

  Case-Laws - CGOVT : Transfer of rebate claim to proper authority - rebate claims cannot be treated as time barred since it was originally filed before department on 8.9.2019 which is well within the limit period of one year stipulated in section 11B of Central Excise Act, 1944 - CGOVT
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• Union of India fails to explain delay in filing review application within 30 days; Special Leave Application not viable.

  Case-Laws - HC : Condonation of delay - Union of India has failed to give any satisfactory answer as to what prevented them from filing the application for review within 30 days when there was no dispute that Special Leave Application could not be filed at the instance of the Revenue - HC
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VAT

• High Court Rules Composite Contract as Single Entity for VAT and Sales Tax; Emphasizes Holistic View Over Segmentation.

  Case-Laws - HC : Nature of works contract - composite or not - The entire contract, if perused as a whole, is in the nature of composite single integrated contract, though designed as it is four separate work orders. - HC
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• Court Rules KVAT Compounded Tax for Primary Crusher at 50% of Total Tax on Three Secondary Crushers.

  Case-Laws - HC : Compounded rate of tax - producing granite metals with the aid of mechanized crushing machines - KVAT - the compounded tax for the primary crusher has necessarily to be at 50% of the aggregate of the tax payable on the three secondary crushers that are employed by the petitioner - HC
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Case Laws:

• Income Tax

• 2015 (4) TMI 132
  Capital receipt or Revenue receipt - carbon credit receipts or CDM receipts - Held that:- The co-ordinate Bench of the Tribunal in the case of Ambika Cotton Mills Ltd. v. Deputy CIT [2014 (3) TMI 428 - ITAT CHENNAI] while dealing with an identical issue followed the decision of the Hyderabad Bench of the Tribunal in the case of My Home Power Ltd. v. Deputy CIT reported as [2012 (11) TMI 288 - ITAT HYDERABAD]. Respectfully following the decision of the co-ordinate Bench, we hold that the CDM receipts are capital receipts. - Impugned order set aside - Decided in favour of assessee.

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• 2015 (4) TMI 106
  Rejection of the books of account - addition to income - estimation to turnover - Held that:- The Tribunal has found that though the present assessee is a limited company, but it is associated with Pravin Kumar Jain group. Pravin Kumar Jain and his brother Pankaj Kumar Jain were Directors in the assessee company. However, the assessee was engaged in the business of trading of goods. The books of account of the assessee were audited. No defect or discrepancy was found. In these circumstances and when there was no material other than the statement of Pravin Kumar Jain, then, the books of account of the assessee could not have been rejected only by relying on the same. There is no specific defect which was pointed out by the assessing officer in the books of account. In the circumstances, the Commissioner s order, sustaining the estimation of the turnover by the assessing officer partially, was rightly set aside by the Tribunal. - Decided against revenue.

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• 2015 (4) TMI 105
  Revision u/s 263 - disallowance if the deduction under section 80IB(10) - The Tribunal has concluded that the assessee had offered an explanation that the plan was approved by the Pune Municipal Corporation on the condition of making available an approach road - Held that:- In the circumstances and with this stand that the assessee was supported by the Tribunal s order, then, we do not see as to how the Commissioner could have exercised powers under section 263 of the I.T. Act. It was not open to the Commissioner then to have taken into consideration the same documents and to arrive at a different conclusion. The Tribunal has explained in the impugned order that as to how the issue raised before the Commissioner and prior thereto before the assessing officer is debatable. If there was a view on the issue taken by the Tribunal itself, then, the Commissioner cannot invoke powers under section 263 of the I.T. Act only to record a different view. Thus such finding of the Tribunal and being consistent is not required to be gone into under section 260A of the I.T. Act as it is clear that the orders of the assessing officer and the Commissioner, do not raise any substantial question of law. The Tribunal has applied its mind to the entire issue and found that the assessee had placed necessary and requisite material before the assessing officer. The assessing officer took a view on the basis of these material and that view cannot be questioned in an exercise under section 263 of the I.T. Act only because the Commissioner does not agree with the same. We are of the opinion that neither is there any perversity in the order of the Tribunal on this issue nor its conclusion can said to be vitiated by any error of law apparent on the face of the record - Decided in favour of assessee.

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• 2015 (4) TMI 104
  G.P. Rate addition - Tribunal agree with the submission of assessee that assessee’s taxable income from business should be computed on the basis of comparison of net profit rate shown by the assessee in the immediate previous year and shown in the current year, taxable income from business for this year by applying the net profit rate as accepted in the immediate previous year. - Held that:- The findings of facts in the peculiar facts and circumstance of the case, go to show that there was fall in gross Profit rate and the justification of profit ought to have been seen from the angle and not net profit rate. Thus, we are in complete agreement with the findings of facts by the Tribunal and the decision of the CIT(Appeals) which is placed reliance on certain authoritative decisions of the Tribunals were misplaced and were misreading of the provisions of law as they were not applicable in the present case. In the facts and circumstances of this case, we hold that the Tribunal was right in coming to the conclusion that addition made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals)-II, Surat, on G.P. rate is not correct. - Decided in favour of the assessee

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• 2015 (4) TMI 103
  Closure of business - disallowance of interest paid for only one year - waiver of interest for the remaining four years as per the settlement - Held that:- In the instant case, the borrowed funds were utilized exclusively for the purpose of business and interest was capitalized thereupon and it was the business liability of the assessee to pay the same. The assessee, being the prudent businessman, has entered into settlement to clear the debt by paying the interest only for one year. The remaining interest was waived off by the creditors, so we are of the view that the amount of 1,22,134/- was paid exclusively for the purpose of business and the same is allowable deduction. The interest paid on the borrowed capital for the purpose of business is deductable under Section 36(1)(iii) as per the ratio laid down in the case of CIT vs. L.G. Balakrishnan & Bros (P.) (1973 (9) TMI 5 - MADRAS High Court ) - Decided in favour of assessee.

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• 2015 (4) TMI 102
  Quantification of exact amount of undisclosed income chargeable to tax in the hands of the assessee - Whether Commissioner of Income- tax (Appeals) has gone beyond the scope of the direction given by the Tribunal in determining the exact quantum? - assessee has submitted that the amount of 10.80 lakhs taken by the learned Commissioner of Income-tax (Appeals) as cash outgoing on account of personal expenditure including repairs and renovation is without any basis - Held that:- Matter was restored by the Tribunal to the file of the learned Commissioner of Income-tax (Appeals) for the purpose of correct determination of quantum of addition on account of unexplained cash/assets/interests. Keeping in view this specific direction given by the Tribunal, we do not find ourselves in agreement with the contention of learned counsel for the assessee that the learned Commissioner of Income- tax (Appeals) has gone beyond the scope of the direction given by the Tribunal in determining the exact quantum of addition made on account of unexplained cash. We therefore overrule the objection raised by him in this regard and proceed to decide the issue relating to quantification of undisclosed income on merit. Cash of 10.80 lakhs was stated by the assessee himself to have been spent on personal expenditure as per the seized documents. As regards the other contention raised by learned counsel for the assessee in this regard that the cash of 7.50 lakhs received as interest and distributed amongst the partners was used to meet the personal expenditure of 10.80 lakhs, it is observed that the learned Commissioner of Income-tax (Appeals) has specifically noted in the working given above that the amount of 7.50 lakhs was distributed to the partners excluding the assessee whereas the personal expenditure of 10.80 lakhs was found to be incurred by the assessee. We, therefore, find no mistake in the working made by the learned Commissioner of Income-tax (Appeals) while quantifying the unexplained cash found during the course of search at 5,28,500. It is also noted that if the said amount of unexplained cash is added to the other undisclosed income of the assessee as computed by the Assessing Officer including cash sale of scrap/machinery, total undisclosed income of the assessee would come to 46,04,348 as computed by the Commissioner of Income-tax (Appeals) and since the same is more than the undisclosed income of the assessee assessed by the Assessing Officer at 45,83,737, we are of the view that no further relief to the assessee is warranted after the quantification of correct undisclosed income as per the direction of the Tribunal as rightly held by the learned Commissioner of Income-tax (Appeals). We therefore find no infirmity in the impugned order of the learned Commissioner of Income- tax (Appeals) - Decided against assessee. Undisclosed income on account of unexplained fixed deposits and interest received in cash from the builder - notice under section 158BC - penalty imposed under section 158BFA(2) - Held that:- As decided in CIT v. Splender Construction [2011 (1) TMI 879 - DELHI HIGH COURT] admission of substantial question of law by the hon ble High Court by itself would not be sufficient to hold that the issue was debatable on which levy of penalty could not be attracted. It was held that the additions made to the undisclosed income of the assessee had been confirmed by the Tribunal in the quantum proceedings showing clearly that the assessee had furnished inaccurate particulars of its income and after admission of the appeal of the assessee filed against the order of the Tribunal, the said appeal was dismissed by the hon ble High Court. Keeping in view the said decision of the hon ble Delhi High Court,[Supra] we reject the contention raised by learned counsel for the assessee being devoid of merit. The issues involving the two additions made to the undisclosed income of the assessee on account of unexplained fixed deposits and receipt of interest from the builder in cash thus have been decided against the assessee by the Tribunal whereby the different stands taken by the assessee as an afterthought with an intention to create a dispute have not been accepted and the explanation/submission made in this regard by the assessee has been rejected after having found the same to be unsatisfactory/unacceptable. As decided in Kandoi Bhogilal Mulchand v. Deputy CIT [2011 (11) TMI 460 - Gujarat High Court ]the income which is detected as a result of search operation under section 132 is undisclosed income of the assessee within the meaning of section 158BFA(2) of the Act and penalty provision under section 158BFA(2) would arise when the Assessing Officer has assessed the income in the block period in excess of the income declared by the assessee. Thus no justifiable reason to interfere with the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act - Decided against assessee. Unaccounted interest received in cash from the builder and unexplained jewellery found during the course of search - penalty under section 158BFA(2) - Held that:- No justifiable reason to interfere with the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) in respect of addition of 7,71,000 made to the undisclosed income of the assessee on account of interest received in cash from the builder. As regards the penalty imposed in respect of addition made on account of unexplained jewellery the explanation of the assessee in respect of jewellery found during the course of search thus has been substantially accepted in the quantum proceedings and keeping in view the estimations and appropriations involved in the valuation of jewellery as made at different stages, we are of the view that the marginal difference of 41,305 added to the total income of the assessee on account of unexplained jewellery cannot be treated as concealment in order to attract penalty under section 158BFA(2) of the Act. - Decided partly in favour of assessee.

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• 2015 (4) TMI 101
  Disallowance u/s. 14A - CIT(A) deleted the disallowance - Held that:- CIT(A) while deleting the addition has noted that assessee has received only two half yearly interest warrant bonds during the year under appeal and which were collected in routine through bank account. He has further noted that the investments were made in the year 1995 and there have been no transactions in bonds during the year under review. We further find that on identical facts, the Co-ordinate Bench of Tribunal while deciding the assessee’s appeal for A.Y. 2005-06 and after relying on the decision in the case of CIT vs. Hero Cycle Ltd (2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT) decided the issue in favour of the assessee by holdingthat it is not in dispute that in respect of exempt income warrants the assessee had only received two interest warrants and four dividend warrants. No material was brought on record by the Revenue to show that any specific expenditure was incurred for earning exempt income - Decided in favour of assessee. Computation of deduction u/s. 80HHC - CIT(A) directing the A.O not to exclude other income being bad debts recovered, Insurance claim, Sundry Creditors, Forfeiture of advances and Exchange rate fluctuation from the business profits, for the computation of deduction u/s 80HHC - Held that:- As decided in assessee s own case in A.Y. 2004-05 [2010 (10) TMI 974 - ITAT AHMEDABAD] Commissioner of Income Tax (Appeals) was justified in holding that 90% of such receipts are to be excluded for arriving at eligible profits of business. No specific error in the order of the Learned Commissioner of Income Tax (Appeals) could be pointed out by the Learned Departmental Representative. - As far as the issue with respect to exchange fluctuation and forefeiture of advances are concerned, we find that Ld. CIT(A) has considered the aforesaid items as being eligible for deduction u/s. 80HHC in view of the fact that those amounts have been assessed as business income by the AO. Before us, Revenue has not brought any material to controvert the findings of Ld. CIT(A). - Decided in favour of assessee. Addition u/s. 40(a)(i) - TDS short deducted on Royalty payment - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that assessee has correctly deducted the TDS as per the rates provided in DTAA entered between the Government of India and Government of USA and therefore AO was not justified in disallowing the expenditure. Before us, Revenue has not brought any material on record to controvert the findings of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus ground of Revenue is dismissed - Decided in favour of assessee. Disallowance of pre-paid excise duty - CIT(A) deleted the addition - Held that:- CIT(A) after considering the decision of Hon’ble Gujarat High Court in the case of Lakhanpal National Ltd [1986 (3) TMI 42 - GUJARAT High Court] and Berger Paints India Ltd [2004 (2) TMI 4 - SUPREME Court] has deleted the addition. Before us, Revenue has not brought any contrary binding material in its support. We further find that the assessee’s submissions of having followed the same method of accounting and claiming deduction of excise duty in earlier and subsequent years also have not been controverted by Revenue. - Decided in favour of assessee. Disallowance on account of provision for gratuity - CIT(A) deleted the addition - Held that:- CIT(A) after considering the submissions of the assessee has noted that the non-deductable provision of gratuity was disallowed by the assessee suo moto and accepted in the original assessment and no further disallowance was warranted as it would be a double disallowance. Before us, Revenue has not brought any material on record in support of its contention. We therefore find no reason to interfere the order of Ld. CIT(A) and thus this ground of Revenue is dismissed. - Decided in favour of assessee. Unpaid sales commission - CIT(A) deleted the addition - Held that:- CIT(A) after considering the submissions of the assessee has given a finding that the allowability towards sales commissions arose during the year and has been paid during the year and therefore the same was rightly claimed as expenditure. Before us, Revenue has not brought any contrary material on record in its support. We therefore find no reason to interfere with the order of Ld. CIT(A). - Decided in favour of assessee. Disallowance of bad debts - CIT(A) deleted the addition - Held that:- CIT(A) after considering the submissions of the assessee and following the order of his predecessor granted relief to the assessee. We further find that Ld. CIT(A) has noted that AO has not come out with any specific finding for making disallowance in respect of any particular bad debt but had made estimated disallowance. Before us, Revenue has not brought any contrary binding material in its support nor could controvert the finding of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus this ground of revenue is dismissed. - Decided in favour of assessee.

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• 2015 (4) TMI 100
  Reopening of assessment - Chargeability of capital gain - transfer of ownership rights over the property - capital gains arising out of sale of the property as there is a transfer within the meaning of section 2(47) of the Act by virtue of the agreement of sale and joint development entered into by the assessee in the assessment year 2003-04 as per assessee - Held that:- Following the decision of Asst. CIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007 (5) TMI 197 - SUPREME Court] we uphold the order of the Assessing Officer in invoking the provisions of section 147 of the Act as the return was processed only under section 143(1) and no assessment was made under section 143(3) of the Act and the Assessing Officer came to possession of information of escapement of income during the course of assessment proceedings for the assessment year 2006-07. - Decided against assessee. Whether procedure laid down under the proviso to section 151(1) for issue of notice has not been complied with? - Held that:- Ongoing through the provisions of section 151(1), we find that the said provisions have no application to the facts and circumstances of the case as the said provisions of section 151(1) applies only to cases where assessments were completed either under section 143(3) or 147 of the Act. - Decided against assessee. Whether there is a transfer within the meaning of section 2(47) or not in respect of property given for development? - Held that:- Ongoing through the order of the Commissioner of Income-tax (Appeals) and the clauses of the agreement of sale and joint development agreement dated December 30, 2002 read with supplemental agreement dated February 15, 2003 and power of attorney dated December 30, 2002 executed by the assessee in favour of the builder authorising the builder to sell and register the flats in the name of prospective buyers, we are of the view that there is a transfer within the meaning of section 2(47) by virtue of entering into an agreement of sale and joint development. Though the assessee submits that the possession was given at later point of time, i.e., after March 31, 2003, there is no evidence on record to suggest that possession was given at a later point of time, even though the construction permit was given by the municipal authorities on July 11, 2003 and planning permit was given on May 26, 2003 and demolition certificate on February 19, 2003. As per clause 21 of the agreement, the promoter shall pay the owner, i.e., the assessee a sum of 15,000 per month from the date of getting vacant possession of the schedule "C" property, till the date of completion of the flat for her alternate accommodation. Supplemental agreement was entered into on February 15, 2003 by the assessee with the promoter, wherein the assessee authorises the promoter to sell the other flats allotted to her share fully described in Schedule "C" . The promoter is also authorised to receive advance, sale consideration, etc., and other amounts and to sign sale deeds and other documents in respect of the flats mentioned in schedule "C". The assessee also gave power of attorney to the promoter Mr. J. Rajkumar Balsingh on December 30, 2002 registered in the office of the Sub-Registrar, Anna Nagar vide document No. 1560/2002 empowering the promoter to sell the flats on behalf of the assessee. All these go to show that there is a transfer within the meaning of section 2(47) of the Act by virtue of entering into an agreement of sale and joint development by the assessee with Mr. J. Rajkumar Balsingh in the assessment year 2003-04. In the circumstances, we uphold the order of the Commissioner of Income-tax (Appeals) in holding that there is a transfer within the meaning of section 2(47) of the Act in respect of the property. Decided against assessee. Invoking the provisions of section 50C and considering the guideline value of registration department for the purpose of computing capital gains - Held that:- We are unable to endorse the view of the Commissioner of Income-tax (Appeals) in accepting the decision of the Assessing Officer in invoking the provisions of section 50C of the Act. AS decided in Navneet Kumar Thakkar v. ITO [2007 (3) TMI 317 - ITAT JODHPUR unless the property transferred has been registered by sale deed and for that purpose value has been assessed and stamp duty has been paid by the parties section 50C inserted by the Finance Act, 2002 with effect from April 1, 2003 cannot come into operation. Also when the agreement is not registered, the provisions of section 50C have no application - Decided in favour of assessee. Deduction towards cost of building existing on the land with indexation benefit for the purpose of computation of long-term capital gains - CIT(A) allowed the claim - Held that:- The Commissioner of Income-tax (Appeals) taking note of the principles of the decision of Dhun Dadabhoy Kapadia v. CIT [1966 (10) TMI 52 - SUPREME Court] allowed the claim of the assessee in respect of indexation on building existed on land as on the date of entering into an agreement observing as per the agreement of sale and joint development what is transferred is only the land, but the fact that on executing the said agreement the appellant also cedes right over the building located on the said land and hence for the purpose of working out capital gain the cost of the building and indexation of benefit thereon should also to be deducted to arrive at the cost for the purpose of computing taxable capital gain. Capital gain tax is assessed in the hands of the transferor and the transfer is to be seen from the point of view of transferor and statutory deductions are to be provided. - Decided against revenue. Reopen the assessment under section 147 - denying benefit under section 54F - Held that:- In this case, as the notices under section 148 were served on March 18, 2009, assessments under section 143(3) read with section 147 should have been completed on or before March 31, 2010. However, the assessments were completed for both these assessment years on December 31, 2010 which is beyond the time limit specified under section 153(2) of the Act. Therefore, the assessments made for both these two assessment years under section 143(3) read with section 147 are barred by limitation and bad-in-law. Therefore, the reassessments made for both these assessment years beyond the period of limitation are liable to quashed. - Decided in favour of assessee.

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• 2015 (4) TMI 99
  Disallowance of deduction of premium written off on Govt. Securities - CIT(A) deleted the addition - Held that:- Assessee invests in Govt. Securities and other financial documents as other co-operative banks as per the guidelines of the RBI and so as per the RBI Master Circular No.DBOD.BP.BC.13/21.04.141/2012-13 dated July 2,2012, containing consolidated instructions/guidelines issued to banks till June 30, 2012, on matters relating to prudential norms for classification, valuation and operation of investment portfolio by banks, Investments classified under HTM (Held To Maturity) need not be marked to market and will be carried at acquisition cost, unless it is more than the face value, in which case the premium should be amortized over the period remaining to maturity. The book value of the security should continue to be reduced to the extent of the amount amortized during the relevant accounting period. And as held in the case of CIT Vs. Himachal Finance Corporation [2008 (5) TMI 633 - HIMACHAL PRADESH] and Indian Rayon and Industries Ltd. [2010 (3) TMI 299 - BOMBAY HIGH COURT] it was held that discount on bonds and premiums on redemptions of debentures are allowable as expense proportionately spread over the period of security. So therefore we are of the considered view that this issue needs to be remanded back to the file of the AO to verify whether the assessee has claimed the expenses proportionately i.e. the premium amount which is in addition to the face value proportionately spread over the life of security and if it is so computed and claimed it be allowed. - Decided in favour of revenue statistical purposes. Provision for bad 3,66,33,543/- for bad and doubtful debts in its Profit 1,35,28,498/- instead of 3,66,33,543/-. We find that section 36(1)(viia) was amended by Finance Act, 2007, with effect from 01.04.2007, by which the words “or a cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank” were inserted. This amendment is applicable to assessment year 2007-08 onwards and for the year under consideration. Accordingly, it applies to the case of the assessee for this year. We find that this issue has not been adjudicated on merits by the AO. Therefore, we think it fit to restore the matter back to the file of the AO to adjudicate the admissibility of the amount u/s 36(1)(viia) on merits - Decided in favour of revenue statistical purposes. Accrued interest on NPA - CIT(A) deleted the addition - Held that:- We find considerable cogency in the finding of the Ld. CIT(A) regarding the notional interest income that the same has not been received by the assessee and as such the AO was not justified to make the addition on the basis of notional interest because of the mercantile system of accounting only and accordingly, the addition was rightly deleted by the CIT(A). In the background of the aforesaid discussions and precedent relied upon, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting this ground of appeal raised by the Revenue in the aforesaid manner. - Decided against revenue.

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• 2015 (4) TMI 98
  Disallowance of interest paid on borrowed capital u/s 14A r.w.s. Rule 8D - Held that:- This issue is set aside to the file of the assessing officer, to verify whether any exempted income has been earned by the assessee during the previous year relevant to assessment year under consideration on the investment towards share application money and decide the issue in accordance with law, after giving an opportunity to the assessee to present its case. As for the balance amount of interest free advance of 4.37 crores advanced by the assessee, we find that the assessee company, which is having experience and expertise in running a star hotel is interested in the new venture in as much as it was felt that the assessee would be benefitted maximum by being a part of a hotel chain. The running of a chain of hotels belonging to a group is quite in vogue and the advance has been prompted on the principles of business prudence and commercial expediency. Hence, in the light of the decision of the Apex Court in the case of SA Builders (2006 (12) TMI 76 - SUPREME COURT OF INDIA), interest is deductible as the amount is advanced to a subsidiary company/sister concern, as a measure of commercial expediency. Thus we delete the disallowance relatable to balance amount of interest free advances of 4.37 crores - Decided in favour of assessee for statistical purposes. Disallowance of finance charges/interest expenditure debited to the P s own case for the AY 2005-06 [2011 (10) TMI 573 - ITAT HYDERABAD] - Decided against revenue. Sale of let out shops - long term capital gains v/s business income - Held that:- The shops let out by the company were shown as investment in the books and when the investment were sold the same were offered as capital gains. An amount of 1,34,83,600 was shown under the head “investment capitalized”. Relying on the decision of Radhaswamy Satsang (1991 (11) TMI 2 - SUPREME Court) wherein it was held that consistency is a virtue to be followed both by the assessee and the Revenue and applying the ratio of the decision supra and taking into consideration that the shops have been reflected in the books of accounts from the very beginning, we are of the opinion that the income generated on the sale of the same should be treated as capital gain and not as business income. - Decided in favour of assessee. Additions made towards profit on sale of ground floor and shops in 2nd, 3rd and 4th floors - According to the assessee, members of Malpani family had come to an understanding of settling their properties and it is in pursuance of this settlement they had some transactions/exchange of properties and those arrangements should be viewed from this angle and not as a general transaction - Held that:- We have perused the copy of the deed of family arrangement filed by the assessee evidencing the arrangement entered into by the family members of Malpani family. According to this agreement, Directors of the assessee company exchanged some properties and in the process the ground floor is to be given to Shri Ahok Kumar Malpani and 2nd, 3rd and 4th floors were to be handed over to Shri Girish Malpani, Shri Manish Malpani and Shri Ashish Malpani respectively. The CIT (A) has correctly held that when an arrangement is made between the family members, being Directors of the company, the rate so adopted for this purpose cannot be compared to prevailing market rate and the difference in rate cannot be adopted for the purpose of capital gains. In fact, the CIT (A) relied on the decision of CIT vs. KAY ARRT Enterprises ( 2007 (7) TMI 171 - MADRAS HIGH COURT), wherein held that the transfer of shares by way of family arrangement would not attract capital gains tax, as the same was a prudent arrangement to avoid possible litigation among the family members and was made voluntarily and not induced by any fraud or coercion and therefore, could not be doubted. The Tribunal was justified in arriving at the conclusion that the family arrangement among the assessees did not amount to any transfer and hence was not exigible to capital gains tax. - Decided in favour of assessee.

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• 2015 (4) TMI 97
  Deduction u/s 80IB - Whether unit is a new undertaking and qualifies for deduction u/s 80IB as held by CIT(A) when the new machinery has not been installed in place of and the appellant has made substantial investment in the plant and machinery? - Held that:- In the assessment order, the AO observed that none of the above conditions of Section 80IB of the Act stood fulfilled by the assessee. It was observed that the stone crusher/industrial unit under consideration has been set up way back in 1971 as is evident from the registration granted by Industries Department in the name of one Sh. Jatinder Kumar Sharma S/o Sh. Amar Nath R/o Birwah Bridge Dhanari Udhampur. The assessee has in fact purchased this old stone cursher in 2006 from Sh. Jatinder Kumar. The unit is not a new one and thus eligible for 80IB deduction. The assessee has not produced any satisfactory material on records to prove the newness of the unit in terms of the provisions of section 80IB. The undertaking is a reconstructed business unit already in existence and not a new one. The original business in this case has not ceased functioning and its identify is not lost. There has been some P&M installed in the old stone crusher and the assessee has not been able to give details of such P&M and continued to argue that the Old P&M was worth nothing but only a scrap. Sh. Jatinder Kumar has admitted to have made heavy repairs and renovation to the P&M few years back of the transfer which negates the claim of the assessee. The running of stone crusher is a business involving converting of boulders into smaller stones like bajri, etc which is not considered manufacturing for the purpose of 80IB. The case is squarely covered by the decision given by in the case of ITO Vs Jitendra Stone Crushing Co [2006 (3) TMI 210 - ITAT CHANDIGARH-A ] wherein held that breaking of boulders into small stones or bajri is not a manufacturing activity. In respect of new Industrial Unit, once completed and ready for production, a Certificate of Registration is grated by the district DIC authorities certifying the date of production etc. The registration granted by the DIC authorities in this case dates back to 1971 and the date of commencement of the production is to be treated some around 1971 in this case. The stone crusher has been in the name of Sh. Jatinder Kumar Sharma R/o Birwah Bridgem Dhanori Udhampur upto Mar,2006. In March, 2006, the assessee became a partner in the business concern and after a few days became the sole proprietor by shunting out Sh. Jatiner Kumar. No satisfactory documentary evidence has been furnished by the assessee regarding the sale/transfer of this working unit. No sale deed has been produced nor any disclosure of the purchase of the unit/stone crusher has been made, thereby casting a doubt on the genuineness of the transaction/purchase itself. Thus it is fairly a sham transaction in which an existing unit has been acquired/purchased in the guise of partnership. A sham transaction in no way can be eligible for deduction u/s 80IB. The ld. CIT(A), as correctly submitted by the ld. DR, has not considered any of the above said observations of the AO, muchless dealt with then. Therefore, the order under appeal is a non speaking order - remit this issue to the file of the ld. CIT(A), to be decided afresh. - Decided in favour of revenue for statistical purposes. Disallowance of carriage expenses,Wages, Machine Running & Maintenance., Tipper expenses, Staff welfare, Establishment, etc. - CIT(A) has reduced the disallowance - Held that:- Evidently, no reason for reducing, the disallowance has been given by the ld. CIT(A), rendering the order under appeal an non-speaking order in this regard. Such an order is unsustainable in law, as it is well settled that all orders of quasi-judicial Authorities must be speaking and reasoned orders. Accordingly, this issue is also remanded to the file by the ld. CIT(A), to be decided afresh by passing an speaking order, on providing due opportunity of hearing to the assessee. - Decided in favour of revenue for statistical purposes.

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• 2015 (4) TMI 96
  Disallowance of foreign travel and foreign exchange purchase - Held that:- Assessee has not been able to improve its case even before the ITAT as the assessee has failed to meet out the objections raised by the Assessing Officer to justify the claimed expenses. We thus do not find reasons to interfere with the first appellate order upholding the disallowance. - Decided against assessee. Disallowance of consultancy expenses - Held that:- There is no dispute on certain material facts that the assessee for the payment of consultancy charges to Shri Arvind Khanna against the services rendered by him, had complied with the provisions of sec. 314 of the Companies Act, 1956 as the assessee had taken due permission from the shareholder before appointing Shri Arvind Khanna as the consultant and the resolution was registered with the Office of the Registrar of the Company by filing Form No. 23. The copy of the agreement for consultancy services has been also made available. As per this, the consultant had to provide consultancy services to the company in the field of investment in shares, debentures and immoveable properties, management consultancy, business development and stratagistic alliance, overall business development and marketing assistance to the assessee while using his best business capability. Besides in the assessment years 2010-11 and 2011-12, the revenue had allowed similar claim of payment of consultancy fee to Shri Arvind Khanna. We, thus do not find any reason with the revenue to deviate from its stand taken in other assessment years under similar facts and circumstances. The disallowance in question is thus directed to be deleted - Decided in favour of assessee. Unsecured loan under sec. 68 - It was explained that both the companies i.e. Neelgiri Infra-structure Dev. Ltd. and Nobleese Obliged Estates Pvt. Ltd. had advanced the amount for purchasing shares of the assessee company - Held that:- Assessing Officer had not denied the identity of the above two parties. Genuineness of the transaction is also established as the amount in question have been paid through account payee cheques. So far as creditworthiness of these parties are concerned, the Assessing Officer himself has mentioned that Neelgiri Ltd. had 110 crores of loan as on 31.3.2009 which itself proves the creditworthiness of Neelgiri to invest 7.5 crores with the assessee. Nobeleese Ltd. in response to the notice issued by the Assessing Officer had furnished its income tax return for the assessment year 2009-10, bank statement and confirmed copy of account with the A.O. There is no dispute that both the above companies are assessed to tax. Thus, we find that the assessee had discharged its primary onus by furnishing all the necessary documents and information to establish identity, creditworthiness of the creditors and genuineness of the transaction.We thus while setting aside the orders of the authorities below in this regard, direct the Assessing Officer to delete the addition of 12,20,00,500 made on account of unsecured loan under sec. 68 of the Act. - Decided in favour of assessee.

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• 2015 (4) TMI 95
  Disallowance of trading purchases - CIT(A) restricted the disallowance to 25% instead of deleting the entire disallowance - Held that:- Seen in the light of the mandatory disclosure requirements of the Companies Act 1956, it is seen that the impugned purchases and sales have not been disclosed by the Assessee in its audited account and therefore the submission of the assessee that it had entered into trading transactions and had maintained the quantitative records does not carry any force and therefore, no disclosure of sales and purchases on the part of the Assessee goes to prove, that no such sale and purchases were made. We are of the view that the facts in the case of Vijay Protiens (1996 (1) TMI 144 - ITAT AHMEDABAD-C) as relied upon by CIT(A) are different and therefore the ratio is not applicable to the present facts because in the case of Vijay Protiens (supra) goods were found to have been purchased and sold which remained unaccounted, the goods which were purchased were used by the assessee in the production activity and therefore in those circumstances 25% of the purchases were disallowed. However in case in hand the Assessee could not prove the sale and purchases by placing any credible material on record. Thus CIT(A) s action of restricting the addition cannot be upheld and therefore in the present facts, the AO was justified in making the addition and therefore we uphold the action of the AO. - Decided against assessee.

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• 2015 (4) TMI 94
  Revision u/s 263 - AO has overlooked the provisions of s. 80P(2)(d) and has also failed to conduct any enquiry in respect to interest received by Assessee from SBI and thus there was no application of mind by the AO and thus AO has erred in treating interest received from SBI as deductible u/s 80P(2) of the Act which has resulted in loss to Revenue - Held that:- Here it will be relevant to note that Section 80P(2)(d) provides that interest and dividend received by a cooperative society from investments with other cooperative society is exempt from tax. It is also an undisputed fact that SBI is not a cooperative society and therefore the interest received from SBI cannot be considered to be exempt u/s 80P(2)(d) of the Act. In the present case, the interest income earned on extending credit facilities by the Assessee to its members will be business income as there exists nexus between the income and the business of the society, which is extending credit facility to its members but it cannot be said that there is such nexus between the interests earned on deposits made with the SBI. It may be true that deposits are made in banks so that the funds are not kept idle but we are of the view that the motive for making deposits with SBI cannot change the character of interest income earned on deposit made from SBI to be one arising from business of providing credit facility to its member We are not in agreement with the submission of the Ld AR for the reason that though we find that AO had raised a query with respect to claim with respect to deduction u/s 80P but neither there was any query of the AO, with respect to the claim of deduction 80P(2)(d) and therefore no submission of the Assessee, with respect to interest earned from SBI and therefore it cannot be said that there was application of mind by the AO on that issue and for which we also find support by the decision in the case of Gee Vee Enterprises vs. Addl CIT & ORS (1974 (10) TMI 29 - DELHI High Court) wherein observed that the 1TO is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in s. 263 emerges out of this context. It is because it is incumbent on the ITO to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in s. 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Thus order of the AO which was revised by the CIT in his order u/s 263 was erroneous and therefore exercise of jurisdiction u/s 263 by ld. CIT was justified. - Decided against Assessee.

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• 2015 (4) TMI 93
  Charitable purpose u/s 2(15) - Application for registration under section 12A rejected - application of funds of the trust outside India which renders it ineligible for exemption - Held that:- The objects of the trust suggest that the trust has been formed to promote art and culture of India within India and globally which, in our view, fall in the definition of ‘any other object of general public utility’ and hence included in the definition of charitable purposes. So far as the application of income outside India is concerned, the Ld. A.R. has vehemently stressed that the projects, conferences and seminars had been carried out by the trust to promote Indian culture and art at international level, further that the activities such as to host artists-inresidence programmes for national as well as international artists for the benefit of society are the objects that promote international welfare in which India is interested. He has further stressed that the trust has received permission from the Home Ministry, Government of India, to carry out such activities outside India. Considering the overall discussion as made above, it is to be held that the activities of the trust would fall in the definition of charitable purposes. However, so far as the application of income outside India, as claimed to have been applied to promote international welfare in which India is interested is concerned, it is to be proved with necessary evidences and also subject to approval of the Board for entitlement of exemption from tax on such income. However, the registration cannot be refused on the ground that the income is applied for charitable purposes outside India. Applicant trust had made payments of salary to its trustees/persons covered under section 13(3) of the Act - Held that:- If the activities otherwise are charitable and fall in the definition of charitable purposes as defined under section 2(15) of the Act and further the property is held wholly and exclusively under trust for charitable and religious purposes as provided under section 11 of the Act, then such a trust subject to the fulfilment of other conditions as laid down by the different provisions of the Act, will be entitled to registration and it cannot be denied registration because of the fact that its activities are extended outside India. However, while computing the income as per the provisions of section 11 of the Act, the income which is applied on such an activities in India only, will be eligible for exemption and subject to the provisions of section 11(1)(c) wherein the income applied outside India is also eligible for exemption, if the activities tend to promote the international welfare in which India is interested and the approval has been granted by the Board for such application of income. However, so far as the second ground regarding the salary received by the trustees in excess of what may be reasonably paid for such services is concerned, the matter is restored to the file of the Ld. DIT(E) for decision afresh after granting proper opportunity to the appellant trust to present its case and produce necessary evidences, if any, in this regard. - Decided in favour of assessee for statistical purposes.

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• 2015 (4) TMI 92
  Pre-operative income - Held that:- Assessee was in receipt of 38 lacs prior to commencement of operation which was adjusted against the capital expenditure. By applying the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. (1997 (7) TMI 4 - SUPREME Court), the A.O. has taxed the same as ‘income from other sources’. The ld. A.R. has relied on the decision of Triveni Engineering Works Ltd. vs. CIT,[1997 (11) TMI 77 - DELHI High Court], CIT vs. Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court) and Indian Oil Panipat Power Consortium Ltd. vs. TO (2009 (2) TMI 32 - DELHI HIGH COURT) and contended that such pre-operative receipt was liable to be adjusted against capital receipt. However, the nature of such receipt whether intrinsically connected with the assets acquired for implementation of project has not been explained. In the interest of justice, we restore this issue back to the file of A.O. for deciding the same afresh after considering the nature of receipt vis-à-vis intrinsic connection with the capital expenditure incurred by the assessee. - Decided in favour of assessee for statistical purposes. Provident fund dues - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) has allowed the claim by applying the provisions of section 43B of the Act wherein deduction n respect of provident fund was allowed on payment basis. The ld. CIT(A) held that the amount has been paid during the year under consideration and therefore deduction has to be allowed during the year itself. We do not find any infirmity in the order of ld. CIT(A) deleting the addition made by the A.O. - Decided in favour of assessee. Disallowance of club entry fee - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) for allowing club fees by following the decision of Otis Elevators [1991 (4) TMI 53 - BOMBAY High Court] and the decision of Gujarat Estate Export Corporation Ltd. ( 1993 (9) TMI 52 - GUJARAT High Court). As the expenditure was incurred was revenue in nature as held by the Hon’ble High Court, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance - Decided in favour of assessee. Disallowance of brand service fees treated as capital expenditure - Held that:- brand servicing fee was paid by the assessee since last several years and in the earlier assessment orders, this expenditure has been held to be revenue in nature by the A.O. himself. No distinguishing feature was brought on record by the A.O. during the year under consideration to justify the disallowance of assessee’s claim. Accordingly, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of brand servicing fee paid by the assessee insofar as findings recorded by the ld. CIT(A) had not been controverted by the ld. CIT - DR by bringing any positive materials on record. - Decided in favour of assessee. Disallowance of interest for interest free loans advanced to subsidiaries - CIT(A) deleted the disallowance - Held that:- found that Tata Group were promoters of idea Cellular Ltd. and they were in land line telephone service in area of Madhya Pradesh. Because of this operation of Tata’s in Madhya Pradesh and because of connection between Tata’s and assessee company, assessee could not have entered into Mobile telephone services in the area of Madhya Pradesh. However, assessee wanted to enter into Madhya Pradesh for providing Cellular facilities. They have therefore given funds to its own subsidiary. Thus the advances to subsidiaries were out of this commercial consideration. The decision of Hon’ble Supreme Court in the case of S.A. Builders [2006 (12) TMI 76 - SUPREME COURT OF INDIA] is applicable to the facts of the case. The findings recorded by the ld. CIT(A) with regard to the fact that there was direct commercial expediency in advancing funds to subsidiaries have not been controverted by the Revenue by bringing any positive material on record, therefore do not find any reason to interfere with the order of ld. CIT(A) deleting the disallowance of interest attributable to funds advanced to subsidiaries - Decided in favour of assessee.

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• 2015 (4) TMI 91
  Assessment under section 153A - absence of satisfaction note - Held that:- As relying on Pepsi Foods Pvt. Ltd. Versus. Assistant Commissioner of Income Tax [2014 (8) TMI 425 - DELHI HIGH COURT] since there was no ‘satisfaction Note’ by the AO of searched person prior to initiation of proceedings u/s 153C of the Act, the assessments concluded on the assessee u/s 153C of the Act r.w.s 153A of the Act lack jurisdiction and the same are hereby quashed. - Decided in favour of assessee.

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• 2015 (4) TMI 90
  Rejection of books of account and adopting net profit @ 2.50% of sales - Held that:- During the course of assessment proceedings, the assessee admitted that even if there were any defects in the books of account, the sales made by him were fully supported. In the entirety of the above facts and circumstances, where the assessee had failed to maintain proper record and the expenses not being backed by proper details, we hold that the provisions of section 145(3) of the Act are attracted and the book results declared by the assessee cannot be relied upon. After dismissing books of account, next resort was to estimation of income. The assessee during the year under consideration had disclosed turnover of 1,93,02,933/- on which, it had declared net profit of 3,00,754/-. The Assessing Officer however, applied NP rate at 2.5% on total sales and computed the income at 4,82,573/-. We uphold the order of Assessing Officer in this regard - Decided against assessee. Unexplained investment in purchase of land - whether AO erred in adding 21,30,000/- as income from undisclosed sources representing un-explained investment in the purchase of land at Nandurkhi, which has been confirmed by the CIT(A)- Held that:- We find merit in the plea of the assessee that out of total investment of 21,30,000/- made during the year under consideration, a sum of 2,00,000/- has been paid by way of cheque dated 04.04.2008 drawn on Andhra Bank. The balance cheques in the preceding year were also drawn on Andhra Bank which is the business bank account of the assessee, hence, there is no merit in making any addition on account of said payment of 2,00,000/-. For balance payment perusal of audited financial statements relating to the financial year 2008-09 reflects that the assessee had declared the investment in plot at 39,00,500/- in its balance sheet as on 31.03.2009. Once the amount has been declared by the assessee in the balance sheet as on 31.03.2009 as investment in the purchase of plot, then investment to that extent merits to be accepted in the hands of the assessee. One point also be clarified herein that the sum of 2,00,000/- paid by cheque drawn on Andhra Bank, dated 04.04.2008 stands covered in the investment of 39,00,500/-. The assessee had declared the investment upto 29,00,000/- in the financial year 2007-08 and the balance of 10,00,500/- was declared as the investment made during the year under consideration. Accordingly, investment to the extent of 39,00,500/- merits to be accepted in the hands of the assessee as being made out of declared source of income. Balance investment of 13,29,500/-. Though the assessee claims that the said investment had been made by his family members and himself out of agricultural income, but except to filing the evidence of 7/12 extract of agricultural land at Shirdi, the assessee has not furnished any evidence as to the quantum of agricultural proceeds received by the assessee in the preceding year or in the year under consideration. In the absence of the same, we find no merit in the claim of the assessee in this regard. The perusal of the assessment order reflects that the assessee had only declared income of 2,91,150/- and no agricultural income had been offered to tax. In the absence of the same, we find no merit in the plea of the assessee that the balance investment totaling 13,29,500/- was made out of agricultural income. Additional income assessed in the hands of the assessee under the head ‘income from business’ i.e. 1,81,819/- being set off against the balance addition made in the hands of the assessee i.e. 13,29,500/- finds merit. Accordingly, we direct the Assessing Officer to give the benefit of set off of the additional income against the source of investment in the purchase of plot. Accordingly, the addition in the hands of the assessee on account of undisclosed investment in the purchase of plot of land is restricted to 13,29,500/- - 1,81,819/- = 11,47,681/-. - Decided partly in favour of assessee.

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• 2015 (4) TMI 89
  Transfer pricing adjustment - whether the issue of equity shares by the assessee to its non resident Associated Enterprise, would attract the provisions of Chapter X of the Act? - Held that:- As decided in case of Vodafone India Services P.Ltd. vs. UOI [2014 (10) TMI 278 - BOMBAY HIGH COURT] the jurisdiction to apply Chapter X of the Act would occasion only when income arises out of International Transaction and such income is chargeable to tax under the Act. The entire exercise of determining the ALP is only to arrive at the real income earned i.e. the correct price of the transaction, shorn of the price arrived at between the parties on account of their relationship viz. AEs. In this case, the revenue seems to be confusing the measure to a charge and calling the measure a notional income. We find that there is absence of any charge in the Act to subject issue of shares at a premium to tax. Issue of shares at a premium by the Petitioner to its non resident holding company does not give rise to any income from an admitted International Transaction – there is no occasion to apply Chapter X of the Act Thus we set aside the assessment order to the extent it seeks to bring to tax the ALP of the share issued by the petitioner to its non resident AE s and also deemed interest which is sought to be brought to tax on the ground of non receipt of the consideration equivalent to the ALP by the petitioner on issue of equity Shares - Decided in favour of assessee.

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• 2015 (4) TMI 88
  Deduction u/s.80GGA/35(1) denied - filing of an application u/s 154 for rectification of mistake to make alternate claim u/s 35(1)(i)/(ii) as an alternate claim - Payment to Research Foundation - Revenue is aggrieved and preferred present appeal contending that CIT(A) erred in considering the assessee s claim u/s.35(1)(i)(ii) and (iia) directing to examine the issue with regard to the provisions of section 35 and if, all the conditions specified are satisfied, to allow deduction u/s.35(1)(i)(ii) s claim u/s.80GGA is otherwise allowable but for the provisions of 80GGA(3) which was invoked. Assessee having accepted the order u/s.143(3) cannot seek relief u/s.35(1) in the proceeding u/s 154. Had he preferred appeal of the order u/s.143(3), the CIT(A) could have examined/directed the Assessing Officer to examine whether alternate claim can be entertained. We are of the opinion that the same cannot be done in an appeal u/s.154, which has limited scope and jurisdiction. As held in the case of T.S. Balaram, ITO, Company Circle-IV Bombay Vs. Volkart Brothers and Others [1971 (8) TMI 3 - SUPREME Court] a mistake apparent on record must be an erroneous and evident mistake and not same thing which can be established by a long drawn process of reasoning on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from record. view of this, we are of the opinion that the subsequent direction of the CIT in examining the Assessing Officer to consider the provisions of Section 35(1)(i),(ii) is beyond the jurisdiction. Therefore, to that extent, the order is set aside.We uphold the order to the extent that the issue cannot be rectified under the provisions of Section 154 as it is not a mistake apparent from record. - Decided in favour of revenue. Denial of deduction u/s 80GGA challenged - Held that:- In view of the specific bar created under sub-section (3) of section 80GGA, the assessee is not entitled to avail deduction u/s 80GGA of the Act. The matter was pending before the Hon ble High Court. Since the issue is already considered against assessee in regular proceedings u/s.143(3) r.w.s.147, there is no need to consider the issue again in this year as assessee has accepted the order u/s.143(3) and no proceedings are pending on that. Further, the fact that the matter was contested before the Hon ble High Court itself shows that it is a debatable one, therefore, the same cannot be considered in proceedings u/s.154. In that view also assessee s grounds cannot be entertained. - Decided against assessee.

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• 2015 (4) TMI 87
  Unexplained income - Held that:- issues in the appeal of the Revenue for A.Y. 2007-08 in [2015 (4) TMI 83 - ITAT AHMEDABAD] has already been restored to the file of Assessing Officer for fresh adjudication and therefore we are of the view that the issues in the present CO of the Assessee may also be restored to the file of AO. - Matter remanded back - Decided in favour of assessee.

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• 2015 (4) TMI 86
  Deletion of additions made by the assessing Officer being unexplained cash, undisclosed income and undisclosed investment - Violation Rule 46A of the Income-tax Rules - Admission of additional evidence - Held that:- While deciding the appeal of Revenue (2015 (4) TMI 83 - ITAT AHMEDABAD) the issue was restored to the file of CIT(A). Since the main appeal has been restored to CIT(A), we are of the view the CO filed by the Assessee should also have been restored before CIT(A) instead of restoring it before A.O - Matter remanded back - Decided in favour of Revenue.

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• Customs

• 2015 (4) TMI 114
  Condonation of delay - Inordinate delay of 1346 days - Power of Commissioner to condone delay u/s 128 - Held that:- the appeal has been filed with a delay of 1346 days. It is to be noted that the proviso to Section 128 (1) enables the Commissioner (Appeals) permits the filing of the appeal beyond the sixty days provided that he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the sixty days prescribed. In fact, while exercising such discretionary power, the authority can condone the delay upto 90 days on sufficient cause shown by the petitioner for not filing the appeal in time. The present appeal was beyond the statutory period of 90 days and the authority has rightly rejected the same, since he cannot be expected to exercise his discretionary power beyond the permissible period that was prescribed by the statute. - Decided against assessee.

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• 2015 (4) TMI 113
  Classification of goods - Demand of differential duty - Detention of goods - Held that:- Since the petitioner has paid the admitted amount and that the balance amount is only minimal, this Court, directs the petitioner to pay 20% of the differential amount and produce Bank Guarantee for the remaining amount. On such payment and production of Bank Guarantee, the respondents are directed to consider the case of the petitioner for release of the goods. Depending upon the outcome of interim order or final order that may be passed passed by the authority concerned, it is open to the respondents to proceed further in the matter. - Decided conditionally in favour of assessee.

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• 2015 (4) TMI 112
  Valuation of goods - Redemption fine - Penalty - whether the declared value of goods can be accepted in terms of the provisions of Section 14 of the Customs Act, 1962 - Difference of opinion - Majority order - Held that:- The declared transaction of the value of the goods is 10,13,256/- and the Department wants to reject the same and enhance it to 20,13,120/- based on the Chartered Engineer s report on the ground that as per the NIDB data the declared value is too low. In my view for determining the value of the old and used capital goods, which are of obsolete models, the NIDB data is not relevant at all as no two consignments of second hand goods and that too of obsolete models would be comparable. The value of a consignment of second hand machines would depend upon the years for which the machinery has been used, present condition and also whether the model is obsolete or whether such machines are still being manufactured. In this case as per the facts recorded in the impugned order-in-original, market inquiry indicated that the models of the photocopiers are obsolete models and the manufacturers have discontinued the manufacture of these models. If this is so, a supplier may sell such old and used goods of obsolete model even at throw away price. It is not the allegation of the Department that the appellant and the foreign supplier were related person or that there were circumstances as enumerated in the proviso to sub-Rule (2) of Rule 3 of the Customs Valuation Rules, 2007 on account of which the declared transaction value cannot be accepted. Another situation in which the declared transaction value can be rejected is that covered by Rule 12 of the Cenvat Valuation Rules when the proper officer has reason to doubt the correctness of the declared transaction value. But Rule 12 of the Cenvat Valuation Rules also provides that if after inquiry by the proper officer, the proper officer doubts the correctness of the declared transaction value and rejects the same, he is required to intimate the importer about rejection of the declared value after giving reasonable opportunity of being heard. But no such inquiry has been done in this matter. Merely on the basis of NIDB data which, as discussed above, is not relevant in this case, the declared transaction value could not be rejected. As regards of quantum of redemption fine and penalty, it is settled law in the cases of import of restricted goods without import licence, the quantum of redemption fine should be sufficiently high to neutralin the entire margin of profit. Member (Judicial) has reduced the fine to 10%. According to the Department it should be 50% of the declared value. However, if the Department seeks imposition of higher redemption fine, the evidence of higher profit margin should be produced in form of landed cost of the goods and the market price of the goods but no such evidence has been produced. In view of this, I agree with the decision of Member (Judicial) regarding reduction of redemption fine and penalty and in my view the redemption fine of 10% of the value and penalty of 5% of the value is sufficient. - Decided partly in favour of assessee.

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• Corporate Laws

• 2015 (4) TMI 111
  Refusal of the Company Law Board to entertain a counter reply - The appellant who is only a co-respondent, to the reply filed by another respondent - Principles of natural justice - Held that:- The co-respondent before the Company Law Board is not seeking any relief as against the appellant herein. Though the co-respondent is supporting the case of the main company petitioner, the main company petition cannot be decided by the Company Law Board on the strength of the averments made by the co-respondent in support of the main petitioner s case. In other words, the Company Law Board cannot today draw any adverse inference against the appellant, on the basis of the averments made by the co-respondent against the appellant. Once it is clear that the appellant, as a respondent, cannot file a counter reply to the reply of one of the respondents, I do not think that the appellant can be made to suffer by the Court drawing any adverse inference against the appellant and holding him guilty. This safeguard is available to him even under common law. Therefore, holding that the refusal of the Company Law Board to entertain a counter reply from the appellant who is only a co-respondent, to the reply filed by another respondent, is perfectly justified in terms of Regulation 23, this appeal is dismissed. However, I make it clear that the Company Law Board cannot hold the allegations made against the appellant by the co-respondent to have gone uncontroverted. It should be pointed out that the fundamental principle of natural justice is that a man shall not be condemned unheard. Once I have ensured that the allegations made against the appellant cannot be held against him without permitting him to file a counter reply, the question of condemning the appellant unheard may not arise. Appeal dismissed.

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• 2015 (4) TMI 110
  Petition for winding up under Section 433(e) - Goods found defective and returned - Rejection note, Debit note and Carrier s receipt - Held that:- Since disputed questions of fact arise in the present petition which would require the parties to lead evidence on the issue of genuineness or otherwise of the Rejection note, Debit Note and the Carrier s Receipt, in my view, the present petition would not be maintainable and the parties would have to prove their respective case before a competent civil forum. The Petitioner has already filed a suit for recovery. These aspects would be considered by the Civil Court before whom the said suit has been filed.The Petition is accordingly dismissed as not maintainable. The Petitioner would be at liberty to pursue its remedy before the Civil Court. - Petition dismissed.

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• Service Tax

• 2015 (4) TMI 130
  Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - Whether the Tribunal was justified in dismissing the appeal on account of the failure of the appellant to deposit the amount of 50 lacs inspite of the fact that sufficient cause had been shown that the appellant was not undertaking any cleaning service and was only lifting the fly ash for M/s National Fertilisers Ltd. - Held that:- After hearing counsel for the parties and keeping in view the fact that out of the total demand of service tax of 74,88,396/- raised, the Tribunal itself has given benefit of 21,49,623/- and therefore, the penalty element also would not be payable. Similarly, keeping in view the fact that a Co-ordinate Bench of the Tribunal has prima facie held, in similar circumstances, that the mechanical process of removing fly ash does not fall within the ambit of service tax, the appellant is not liable to deposit 29,60,791/- on the said head along with the penalty which has been levied. - appeal was not liable to be dismissed on account of noncompliance of the earlier order dated 06.05.2013. Accordingly, the stay order dated 02.09.2013 (Annexure A-6) is set aside - Decided in favour of assessee.

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• 2015 (4) TMI 129
  Business Support Services - nature of receipt - repayment of loan or advance towards services to be rendered - whether the sum of 1,493/- crores received by the appellant from RCM is an advance for the taxable services rendered or to be rendered by the appellant to M/s. RCM or is it a loan by way of Inter Corporate Deposits given to the appellant - Held that:- On details scrutiny of the balance sheets produced by the learned Counsel for appellant, we find that accounts of the appellant as well as RCM do not indicate any co-relation in the repayment of the loan and receipt of the service charges by the appellant. The emphasis of the Revenue that the agreement between the appellant and RCM very clearly indicates that an amount of 283/- crores was to be adjusted against the service charges would also not carry the case of the Revenue any further as the appellant as well as RCM being a public limited companies, have clearly indicated in their balance sheets that the amounts have been shown as received and loans repaid. - provisions of Section 67 of the Finance Act, 1994 refers to gross service charges paid or payable for the services rendered or to be rendered has to be read as it is. In our view, the entire sum of 1,493/- crores does not qualify as an advance towards the services to be rendered by the appellant to RCM. - Decided in favour of assessee.

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• 2015 (4) TMI 128
  Denial of benefit of Abatement Notification of 67% on the ground that Cenvat Credit has been availed - Credit was reversed subsequently - Notification No.15/2004-ST dated 10.6.2004 as amended by Notification No.1/2006-ST dated 1.3.2006 - Held that:- since the cenvat credit has been reversed, benefit of abatement cannot be denied - demand and penalty set aside - However interest is imposed from date of availment upto the date of reversal of credit - Decision in the case of Chandrapur Magnet Wires pvt. ltd. (1995 (12) TMI 72 - SUPREME COURT OF INDIA) followed - Decided partly in favour of assessee. Management, Maintenance and Repair service - Invocation of extended period of limitation Held that:- The contracts were signed before 1.7.2003 and bills were raised prior to 1.7.2003. But actually services may have been rendered by them prior to and after 1.7.2003. No delineation of services rendered before 1.7.2003 and after 1.7.2003 has been made. During the arguments, it appeared that such categorization is not available in the records. - On merits there appears to be no doubt the service rendered after 1.7.2003 will be leviable to service tax. However, relying on the case of PT Education and Training Services (2008 (12) TMI 82 - CESTAT, NEW DELHI), we hold that as the issue relates to interpretation of provision of law, imposition of penalty and extended period of limitation are not warranted. - demand alongwith interest and penalties are set aside on limitation. - Decided in favor of assessee.

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• 2015 (4) TMI 127
  Refund of amount deposited as service tax during investigation - period of limitation - unjust enrichment - Business Auxiliary Service - Held that:- Appellant during investigation, deposited an amount of 6,85,200.00 through TR6 challan - Commissioner (Appeals) modified the adjudication order and reduced the demand of duty and accordingly the proportionate deposit was appropriated against the said demand - Adjudicating authority returned the deposit amount as per claim of the appellant. By the impugned order, the Commissioner (Appeals) allowed the appeal of the Revenue on the ground that the appellant has not filed their claim within one year from the date of order of the Commissioner (Appeals) and it is hit by limitation under Section 11B of the Central Excise Act 1944. I find that there is no dispute that the appellant deposited the amount during investigation. - decision in the case of Bajaj Auto Ltd (2007 (1) TMI 408 - CESTAT, MUMBAI) is directly applicable in the present case, as there is no issue of unjust enrichment. I also find that the decision of Hon’ble Supreme Court in the case of M/s Mafatlal Industries Ltd (1996 (12) TMI 50 - SUPREME COURT OF INDIA) as relied upon by learned Authorised Representative has already been considered by the Tribunal in the case of M/s Foods, Fats & Fertilizers Ltd (2010 (6) TMI 344 - CESTAT, BANGALORE ). - mpugned order is not sustainable. - Decided in favour of assessee.

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• 2015 (4) TMI 119
  Rejection of declaration under VCES , 2013 - whether an appeal under Section 86 of the Finance Act, 1994 against the order of rejection of declaration under VCES , 2013 filed by the assessee is maintainable - Held that:- Court was under the impression that the appeal filed by the respondent-assessee was pending. In the counter affidavit filed by the respondent, it is brought to the notice of this Court that the appeal had already been decided on 23.12.2013 and that the order had already been accepted and implemented by the Revenue - it is necessary to go into that issue in the case of respondent herein, since in the case of the respondent, the issue has become academic - Appeal disposed of. This matter was recalled vide order dated 28-4-2016.

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• Central Excise

• 2015 (4) TMI 131
  Denial of Refund claim - CENVAT Credit - Held that:- First appellate authority has held that all most of the services are eligible for the benefit of cenvat credit and refund can be granted to the appellant. In my considered view, despite such a clear cut findings, the impugned order remanding the issue back to the adjudicating authority is incorrect. In my view the first appellate authority should have disposed of the appeal on merits by directing the appellant to produce any additional evidence, if required. - As regards the rejection of the refund claim in respect of Public Relation Services, consulting services, I find that the first appellate authority has not considered this claim in its correct perspective in as much as it is the claim of the appellant that these service are utilised in the manufacturing facility created by them. In my view, the entire issue needs re consideration by the first appellate authority. - Matter remanded back - Decided in favour of assessee.

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• 2015 (4) TMI 122
  Refund claim - retrospective amendment reducing rate of excise duty - Period of limitation - Unjust enrichment - sanctioned claim was ordered to be credited to the Consumer Welfare Fund on account of unjust enrichment - Held that:- The notification revising the rate of excise duty was issued on 31.10.2000 and given retrospective effect that is, w.e.f., 01.07.1999. Thus, only on the issuance of this notification, the excise duty was reduced. It would, therefore, be clear that 31.10.2000 is the trigger point which entitled the appellant to claim the refund. In the absence of any such notification there was no cause of action in favour of the appellant to make any such application for refund. As a natural consequence, therefore, the period of limitation has to be reckoned from 31.10.2000. It is not in dispute that application for refund was filed on 19.06.2001 and the period of limitation at that time was one year. The applications for refund were, therefore, clearly within limitation. We do not understand the logic or rationale behind the order of the CESTAT counting the period from July, 1999 for which the excess amount was sought to be refunded. The order of the CESTAT is, therefore, palpably wrong and erroneous in law - appellant is entitled to succeed in the claim of entire amount of 26,23,366/-. The aforesaid amount shall carry interest of nine per cent per annum (to be calculated from the date when the refund became payable till the date when the amount is actually paid) shall be paid to the appellant within a period of two months - Decided in favour of assessee.

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• 2015 (4) TMI 121
  Valuation - appellant/assessee is the manufacturer of Earth Moving equipments which they are supplying to Bharat Earth Movers Limited - material is supplied by the BEML free of cost and after manufacturing the equipments the same are supplied to the BEML by the assessee - whether that cost is to be included in the value for the purpose of excise duty in the hands of the assessee - Held that:- CESTAT has allowed the appeal of the respondent herein relying upon the judgment of this Court in case of International Auto Limited Vs. Commnr . of Central Excise, Bihar, reported in (2005 (3) TMI 132 - SUPREME COURT OF INDIA) - we agree with the conclusion of the Tribunal that the case is covered by the judgment of this Court in International Auto Ltd. Thus, we do not find any merit in this appeal - Decided against assessee.

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• 2015 (4) TMI 120
  Exemption under the Notification 88/88 C.E . dated 1.3.1988 - village industries i.e. where such goods are manufactured in rural areas by registered co-operative societies, or by women's societies or by the institution recognised by village Industries Commission or Board on certain conditions which are laid down in the said Notification - Held that:- it has been established by the respondent that the conditions contained in the exemption Notification are satisfied. Not only this, the respondent is armed with a certificate issued by the Department of the Electronic to the effect that the individual components were assembled in the factory of the respondent which is in a rural area. - No question of law which arises for consideration - Decided against Revenue.

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• 2015 (4) TMI 118
  Denial of refund claim - rebate under Rule 18 of Central Excise Rules 2002 - Bar of limitation - Held that:- The rebate of duty under Rule 18 should be as per the notification issued by the Central Government. The Notification bearing No.19/2004 dated 6.9.2004 prescribes the conditions, limitations and procedures for considering the claim for refund. Under Clause 2(d) of the notification, the rebate claim may be allowed from such place of export and such date, as may be specified by the Board, by filing electronic declaration. This Notification dated 6.9.2004 superseded the previous notification bearing No.41/1994 dated 12.9.1994. At the time when the 1994 notification was issued, the procedure for filing electronic declaration had not been made. Since everything was made manually at that time, the notification of the year 1994 prescribed a time limit for filing claim. But, the 2004 notification did not contain the prescription regarding limitation. This was a conscious decision taken by the Central Government and hence, the view taken by the learned Judge is fair and reasonable. Therefore, the understanding of the Ministry of Finance itself is quite different from what the appellant now contends. Moreover, the Department, many a times, invokes the theory of unjust enrichment. This is seen even from para 6 of the Circular of the Ministry dated 28.4.2004. In the case on hand, there is no dispute about the fact that the first respondent actually exported the goods. Their entitlement to refund is not at all in doubt. The factum of their having exported the goods is borne out by ARE-1 forms. After the advent of online filing of applications, it is very easy to check up whether the exports have taken place and whether duty had been paid or not. Therefore, in the absence of any prescription in the scheme, the rejection of the application for refund as time barred, is unjustified. - Decided against Revenue.

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• 2015 (4) TMI 117
  Denial of CENVAT Credit - Whether in the facts and circumstances of the case, the first respondent Appellate Tribunal is right in holding that the second respondent is entitled to Cenvat credit on the capital goods/inputs used in the manufacture of goods which are exempted and which are cleared without payment of duty on Job work basis - Held that:- Following decision of Commissioner Versus Hwashin Automotive India Pvt. Ltd. [2014 (9) TMI 444 - Madras High Court] - Decided against Revenue.

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• 2015 (4) TMI 116
  Duty demand - Non submission of original and duplicate of ARE-1 duly certified by the Customs Authority - Loss of documents - Imposition of penalty under Rule 25 - Held that:- Applicant had exported goods valuing 30,60,964.20 vide ARE-1 No. 1/09-10 dated 16.09.2009 under bond. Since no proof of export was submitted, Range Supdt. vide letter dated 22.03.2010 asked the exporter to submit proof of export. Applicant vide letter dated 25.07.2010 claimed to have exported the goods vide shipping bill No. 7154864 dated 15.09.2009 and contended that ARE-1 original 2,52,223/- along with interest and also imposed penalty of 2,52,223/- under rule 25 of Central Excise Rules 2002. Commissioner (Appeals) upheld the said order-in-original. - It is quite clear that department had made efforts to ascertain whether said goods were exported but it could not be confirmed by Assistant Commissioner Customs CFS Mulund. It is the responsibility of exporter submit valid proof of export in time which he failed to submit. Rather he has blamed the department for failure in internal communication. Government observes that applicant exporter has failed to submit valid proof of export and therefore demand of duty is rightly confirmed in this case. The penalty equal to the duty involved, imposed in this case is quite harsh. Therefore, Government reduces the penalty to 20,000/- under rule 25 of the Central Excise Rules, 2002 - Decided partly in favour of assessee.

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• 2015 (4) TMI 115
  Transfer of rebate claim to proper authority - Request denied as time barred - Held that:- there are catena of judgment wherein it has been held that time limit to be computed from the date on which refund / rebate claim was originally filed. High Court and CESTA Tribunal, have held in precedent cases that original refund/rebate claim filed initially within prescribed time limit laid down in section 11B of Central Excise Act, 1944 and the claim resubmitted along with some required documents/prescribed format on direction of department after the said time limit cannot be held time barred as the time limit should be computed from the date on which rebate claim was initially filed. - rebate claims cannot be treated as time barred since it was originally filed before department on 8.9.2019 which is well within the limit period of one year stipulated in section 11B of Central Excise Act, 1944. Government is of considered view that case is required to be remanded back for denovo consideration, for deciding the case on merits. - Matter remanded back - Decided in favour of assessee.

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• 2015 (4) TMI 109
  Condonation of delay - Civil Applications for review against the order [2013 (5) TMI 705 - GUJARAT HIGH COURT] - Cenvat Credit - reasonable steps before availing credit - original manufacturer of fabrics were alleged to be fictitious - endorsed invoices - Held that:- Union of India has failed to give any satisfactory answer as to what prevented them from filing the application for review within 30 days when there was no dispute that Special Leave Application could not be filed at the instance of the Revenue in this type of cases against our order dated 28th September 2012 where the revenue-effect involved was less than 25 lakh - applicants have failed to prove sufficient cause for not filing the applications for review within the period of limitation. There was also no justification at the instance of any reasonable person, none other than Union of India to wait till the permission for withdrawal of application for Special Leave was permitted by the Supreme Court with liberty to file application for review in a different matter inasmuch as on expiry of the period of limitation, a valuable right has accrued in favour of the respondent before us on the subject-matter of the present litigation. - Following decision of Office of the Chief Post Master General v. Living Media India Ltd. and Another reported in [2012 (4) TMI 341 - SUPREME COURT OF INDIA] - Condonation denied.

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• CST, VAT & Sales Tax

• 2015 (4) TMI 126
  Stay application - Recovery of tax dues - Issuance of garnishee order - order issued by the Deputy Commissioner of Commercial Taxes - Held that:- Since there is an effective statutory remedy available to the petitioner, we do not propose to go into the merits of the contentions raised by the petitioner in the writ petitions. Mr. Sumit Kumar, Senior Manager (Finance), BHEL, Bokaro Thermal Power Station is present in the Court and the learned Senior counsel on instruction submitted that the petitioner has sufficient funds with the DVC and the statement is recorded. Having regard to the submissions of the petitioner that the petitioner s source of finance is only DVC and consequent to the garnishee order issued to the DVC, the petitioner - which is a public sector undertaking is not in a position to make day to day payment of salary, statutory liability and other legal obligations and keeping in view the interest of the petitioner - a public sector undertaking and also the employees, we are inclined to grant interim stay of the garnishee order on conditions stated hereunder. - interim Stay granted subject to conditions.

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• 2015 (4) TMI 125
  Levy of tax on activities considering the agreement as an integrated single composite contract - Composition tax under Section 15(1)(b) of the Karnataka Value Added Tax Act, 2003 - Held that:- It is clear that in a works contract involving transfer of goods and labour, tax is payable under Section 15(1)(b) on the total consideration of the works contract. If the labour contract is an individual contract involving only labour, no tax is payable. In the case on hand, the assessee has segregated the activities as per the work orders executed against the offer for erection and installation of WTGs. It is not the case of receiving labour related charges for executing pure labour work without transferring any property in goods. The entire contract, if perused as a whole, is in the nature of composite single integrated contract, though designed as it is four separate work orders. All the segregated activities are related to the very same project with the very same customer involving transfer of goods and labour. Apex Court while considering an identical provision in the case of Builders Association of India (1996 (11) TMI 355 - SUPREME COURT OF INDIA) under the provisions of Kerala General Sales Tax Act has categorically held that the alternate method of composition provided under composition tax is optional, there is no compulsion upon any contractor to opt for the alternate method of taxation and by opting to this alternate method, the contractor saves himself the botheration of book keeping, assessment, appeals and all that it means. The assessee having opted for the composition benefit voluntarily and with the full knowledge of the features of the alternate method of taxation, is liable to make the payment of tax on the total consideration of the works contract involving both labour and transfer of goods. Segregation of composite contract is not permissible under Section 15(1)(b) of the Act. Even if any segregation is made for the purpose of billing and separate invoices are raised towards each portion, it does not alter the nature of composite contract. - Tribunal on proper appreciation of the terms of the contract recorded a plausible finding that the contract executed by the assessee is a composite, single, integrated contract and all the four activities mentioned in the work orders as individual activities are intrinsically linked with each other and the main object is for the installation and commissioning of WTGs as per the offer letter. Thus, no interference is called for with the well-reasoned order passed by the Tribunal. - Decided against assessee.

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• 2015 (4) TMI 124
  Enhancement in total turnover - invocation of the provisions of Section 35 of the KGST Act - Held that:- original assessment orders were carried in appeal by the petitioner before the First Appellate Authority. The First Appellate Authority modified the assessment orders in appeal. The original orders therefore merged in the orders of the Appellate Authority. The revenue authorities, who were aggrieved by the mistake or discrepancy in the appellate order, did not choose to carry the said appellate order in appeal or revision before the higher authorities. The appellate order therefore attained finality. In such an event, when consequential orders are passed by the Assessing Authority, pursuant to the directions in the appellate order, I do not think that the power of the Deputy Commissioner under Section 35 of the KGST Act can be invoked to modify or vary the consequential orders passed by the Assessing Authority pursuant to the appellate order of the Appellate Authority. To permit the 2nd respondent to do so would tantamount to ignoring the order of the appellate authority that had already attained finality. The action of the 2nd respondent in invoking the provisions of Section 35 of the KGST Act to modify Exts.P12 to P16 orders of the 1st respondent are therefore wholly without jurisdiction and are necessarily to be set aside. - Decided in favour of assessee.

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• 2015 (4) TMI 123
  Payment of tax at compounded rates by dealers producing granite metals with the aid of mechanized crushing machines - Section 8(b) of the Kerala Value Added Tax Act - secondary crusher - primary crusher - It is the specific case of the petitioner that when it came to the application of the compounding provision for the assessment year 2009-2010, the respondents took the stand that while computing the liability in respect of the primary crusher in the first unit, the secondary crusher in the second unit would also be reckoned - Held that:- The provisions of Section 8(b) clearly indicate that the facility to pay tax at compounded rates is one that is available, as an option, to a dealer producing granite metals with the aid of mechanized crushing machines. It is optional in the sense that there is nothing preventing a dealer from paying tax, as per the normal method, in terms of Section 6 of the Act. The precondition for payment of tax at compounded rates is that the dealer is obliged to reckon the primary crushers and the secondary crushers which he employs in the business of producing granite metals while paying tax at the compounded rate. As per the scheme of S.8 therefore, the mere fact that the petitioner dealer has two separate units with varying numbers of crushers in them will not be of any significance since the computation of tax under the provision is not with reference to the crushers in a unit but with reference to the crushers employed by the dealer in the course of his business. Since the petitioner admittedly has one primary crusher and two secondary crushers in one unit and a third secondary crusher in the second unit, the computation of tax in terms of Section 8(b) of the Kerala Value Added Tax Act must necessarily be by reckoning all the crushers and, consequently, the compounded tax for the primary crusher has necessarily to be at 50% of the aggregate of the tax payable on the three secondary crushers that are employed by the petitioner in the pursuit of his granite metal business. - The challenge against the said orders in the writ petition therefore fails. - Decided against assessee. Several place of business as single unit or not - Held that:- In the instant case, while the petitioner had preferred an application under Section 20(3) for treating the various places of his business as separate units, the 3rd respondent acceded to the request of the petitioner with regard to the different businesses carried on by the petitioner, save the granite metal business, by treating those premises as separate units. When it came to the granite metal business carried on by the petitioner, the 3rd respondent found that there were two units where the said business was carried on and accordingly, he took the view that both these units should be treated as a single unit since it pertained to the same line of business. - The exercise of discretion by the 3rd respondent cannot be said to be either arbitrary or illegal. - Decided against the assessee.

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• Indian Laws

• 2015 (4) TMI 108
  Disallowance of substantial portion of the expenditure - Addl. Commissioner of Commercial Taxes invoked the power under Sec. 35 of the Act on the ground that the order passed by the First Appellate Authority is erroneous and prejudicial in the interest of the revenue and decided matter in favour of assessee - Commissioner of Commercial Taxes initiated suo-motto proceedings under Sec.35A of the Act and set aside the said order and restored the order of the First Appellate Authority, the effect of which is the Assessing Authority has to consider the case on merits afresh - Held that:- When a power is conferred on the revision authority to initiate suo-motto proceedings on the ground that the order is erroneous and prejudicial in the interest of revenue in that jurisdiction, the only order that could be passed is to set aside the erroneous order and restore the order of the Assessing Authority. Unfortunately, without keeping this basic principle in mind, the order of the First Appellate Authority is set aside. The order of the Assessing Authority is also set aside. The revision authority frames the assessment for the first time, granting benefits to the assessee. It is totally impermissible in law. Therefore, rightly, the Commissioner of Commercial Tax, in a suo-motto proceedings, has set aside the said order. In that view of the matter, we do not see any justification to interfere with the well-considered order passed by the revision authority. - Decided against Assesseee.

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