TMI Tax Updates - e-Newsletter
April 4, 2016

Case Laws in this Newsletter:

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

Articles

1. REVERSE CHARGE MECHANISM – AN UPDATE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. E-filing portal of the Income Tax Department provides the utility for online filing and tracking of rectification requests.

2. Government Achieves Fiscal Targets for FY 2015-16

Notifications

Central Excise

1. 23/2016 - dated 1-4-2016 - CE (NT)

Amendment in CENVAT Credit Rules, 2004

Customs

2. 46/2016 - dated 1-4-2016 - Cus (NT)

Customs (Fees for Rendering Services by Customs Officers) Amendment Regulations, 2016

3. 45/2016 - dated 1-4-2016 - Cus (NT)

Bill of Entry (Electronic Declaration) (Amendment) Regulation, 2016

FEMA

4. 5(R)/2016-RB - dated 1-4-2016 - FEMA

Foreign Exchange Management (Deposit) Regulations, 2016

5. 13 (R)/2016-RB - dated 1-4-2016 - FEMA

Foreign Exchange Management (Remittance of Assets) Regulations, 2016

Circulars / Instructions / Orders

Income Tax

1. F.NO.1/04/2016-NS.II - dated 1-4-2016

Discontinuation of physical mode of National Savings Certificate KVP and NSC shall stand discontinued w.e.f. 1-4-2016

Central Excise

2. F. No. 390/Review/36/2014-JC - dated 17-3-2016

Review under Section 129A (2) or Section 129D of the Customs Act, 1962, Section 35B (2) or Section 35E of the Central Excise Act, 1944 and Section 86 (2A) or Section 86 (2) of Finance Act, 1994

Highlights / Catch Notes

Income Tax

• National Savings Certificate and Kisan Vikas Patra went fully digital; physical mode discontinued from April 1, 2016.

  Circulars : Discontinuation of physical mode of National Savings Certificate KVP and NSC shall stand discontinued w.e.f. 1-4-2016 - Order-Instruction
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• Section 68: Tribunal Rules Against Requiring Foreign Creditor's Physical Presence, Citing Sufficient Evidence Presented by Assessee.

  Case-Laws - AT : Addition u/s 68 - creditor from the foreign country - Even the AO has also not disputed the identity, source and genuineness of share capital. We are also of the view that it is unnecessary burden upon the assessee by pressuring it to bring the creditor from the foreign country which is contrary to the facts of the case as well as evidence produced by the assessee - AT
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• Section 40 Excludes Charitable Trusts from Deduction Limits u/ss 30-38 for Business Income Calculations.

  Case-Laws - AT : Section 40 is applicable only when deductions u/s 30-38 are being made in computing income chargeable under the head 'profits and gains of business or profession' u/s 28. Similarly, provisions of section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of section 11 - AT
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• Society and Trustee Exempt from Tax on Additional or Capitation Fees Income.

  Case-Laws - AT : Additional/capitation fees receipt - the income cannot be charged to tax in the hands of society as well as in the hands of trustee cum secretary of the society. - AT
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• Depreciation on software disallowed as taxpayer failed to prove hardware capability and justify waiving compensation for destroyed software.

  Case-Laws - AT : Disallowance of depreciation on software purchased by assessee - assessee could not produce the details whether it has hardware strength of installing such software - It is also not established that what are the compelling reasons for the assessee to waive the compensation of the software destroyed which are not of small value - additions confirmed - AT
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• Taxpayer Advance Write-Offs Cannot Be Taxed Again to Avoid Double Taxation, Ensuring Fair Tax Practices.

  Case-Laws - AT : Once the advance made by the assessee was subject matter of taxation at the time of provision, the same cannot be added to the total income when it was actually written off. - disallowing would amount to double taxation- AT
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• Court Sets Aside Revision Under Sec 263 of Income Tax Act; Conflicting Opinions on Sections 11, 12, and Depreciation.

  Case-Laws - AT : Revision u/s 263 - denial of benefit U/s 11 and 12 and not allowing depreciation -AO has formed one of the view but the ld CIT(Exemption) has formed another view on same facts and circumstances, therefore, change of opinion is not permissible under the law - revision set aside - AT
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• Interest from Matured National Savings Certificates Must Be Taxed in Current Assessment Year.

  Case-Laws - AT : Interest earned on NSCs taxed - Since in the present case the NSCs were due way back on the date of maturity, therefore, the interest earned on the said NSCs are required to be added to the income of the assessee in the current assessment year. - AT
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• Section 54F Exemption: Individual vs. HUF Capacity in Long-Term Capital Gains Transactions and Eligibility for Relief.

  Case-Laws - AT : Exemption u/s 54F - LTCG - transactions was done as a Karta of the HUF OR in his individual capacity - Revenue should equally allow the relief from such taxation where the assessee fulfills all required conditions except that the name in the purchase agreement is that of individual and not assessee HUF - AT
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Customs

• New Amendment Updates Fees for Customs Officers' Services in 2016; Ensures Compliance and Stakeholder Awareness.

  Notifications : Customs (Fees for Rendering Services by Customs Officers) Amendment Regulations, 2016 - Notification
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• 2016 Amendment Enhances Electronic Customs Declarations for Streamlined Processes and Compliance with Updated Regulations.

  Notifications : Bill of Entry (Electronic Declaration) (Amendment) Regulation, 2016 - Notification
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• Supreme Court Rules on Timely Consideration of Detention Representations u/s 3(1) of COFEPOSA Act.

  Case-Laws - SC : Validity of order of detention passed u/s 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act) - if a representation is made and not considered with promptitude and there is inordinate delay that would make the detention order unsustainable- SC
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• Court Rules Red Chilli Chatka and Magic Masala Seasonings Non-Perishable; Section 26(3) of Customs Act, 1962 Not Applicable.

  Case-Laws - AT : Import of red chilli chatka seasoning and magic masala seasoning - the stand taken by Revenue that the goods were perishable seems to be untenable, more so when FSSAI or any other agency did not declare the goods to be so. - Section 26(3) of the Customs Act, 1962 is clearly not invocable - AT
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• Customs Refund Claims: Initial Wrong Filing Doesn't Time-Bar Correct Refiling Within Allowed Period.

  Case-Laws - AT : Period of limitation - Initially Refund was claim filed before wrong authority - if the refund claim for the first time filed within time before different authority it cannot be said that the filing of refund is time barred. - AT
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Service Tax

• Refund Claim for Unutilized CENVAT Credit Allowed u/r 5 After Initial Rejection Due to Non-Taxable Exported Services.

  Case-Laws - AT : Rejection of refund claim on the ground that services exported are not taxable services - Unutilized CENVAT credit filed under Rule 5 of CCR, 2004 - Refund allowed - AT
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• Buses hired on contract by agencies or individuals are exempt from service tax if used by educational bodies.

  Case-Laws - AT : Classification - Providing buses for hire to various agencies/persons on contract basis - tour operator service and Rent-a-Cab service are exempted if the journeys are organized or arranged for use by an educational body. - AT
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Central Excise

• Committee of Commissioners Holds Sole Authority to Review Orders from Commissioner (Appeals) Once, No Second Review Permitted.

  Circulars : Power of review of Commissioner (Appeals) order or order of Principal Commissioner/ Commissioner as an adjudicating authority vests with the Committee of Commissioners and Committee of Chief Commissioners respectively and there is no provision for reviewing the same order twice.
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• Glue/Resin Classification as Primary Resin Deemed Unsustainable per Note-6, Chapter 39, HSN Explanation.

  Case-Laws - AT : Classification of glue/resin manufactured - the classification of the product as primary resin is not sustainable. This is supported by Note-6 of Chapter 39 and HSN Explanation of such note. - AT
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• Goods Valuation on Job-Work Basis: Include Processor's Costs and Profit, Exclude Trader's Post-Manufacturing Profits.

  Case-Laws - AT : Valuation of the goods manufactured on job-work basis - It is necessary to include the processor's expenses, costs and charge plus profit, but it is not necessary to include the trader's profits who gets the fabrics processed, because those would be post-manufacturing profits. - AT
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• Revenue's Evidence Insufficient in Clandestine Clearance Case Involving Double-Cleared Goods and Parallel Invoices.

  Case-Laws - AT : Clandestine clearance - goods cleared twice - it appears that the Revenue have made out a half baked case of clandestine removal and the same is not sufficient save and except the 8 parallel invoices as noticed herein above and accepted by the appellant - AT
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• Central Excise Valuation: Abatement for Cash Discounts Valid Even If Not Passed to Buyer.

  Case-Laws - AT : Valuation - Benefit of abatement - Provisional assessment - cash discount - there is no question of rejecting the benefit of abatement of such discount on the ground that the same is not actually passed on to the buyer. - AT
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VAT

• Court Rejects Delay in VAT and Sales Tax Case; Government Failed to Protect Public Revenue with Due Diligence.

  Case-Laws - HC : Condonation of delay - . It does not demonstrate that the Government or the Department concerned was vigilant, serious and attentive and did its best to protect the public revenue. Therefore, delay cannot be condoned - HC
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Case Laws:

• Income Tax

• 2016 (4) TMI 89
  Pre deposit - stay of demand - Held that:- We direct that till 7 April 2016 by which date the petitioner has been directed to deposit 30% of the balance amount, no coercive steps shall be taken by the Department. However, if the petitioner fails to deposit the balance 30% of the disputed tax by 7 April 2016, the protection granted by the Court shall stand automatically withdrawn and it will be open to the Department to pursue the matter in accordance with law. It is made clear that the Court has not adjudicated on the merits of the First Appeal filed by the petitioner and it will be for the Appellate Authority to examine the same without being influenced by any of the observations made by the High Court in this order or the Principal Commissioner of Income Tax, Muzaffarnagar on the application filed by the petitioner for stay of the demand.

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• 2016 (4) TMI 88
  Appeal admitted on the substantial question of law at question no. (c). Whether on the facts and circumstances of the case and in law, the Tribunal was justified in allowing the payment of Royalty by holding that any payment made with the approval of RBI has to be considered as being at Arm's Length Price ?

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• 2016 (4) TMI 87
  Denial of fair opportunity - Held that:- Denial of a fair opportunity to the assessee through disclosure of appropriate reasons germane to the objective intended to be achieved, at the stage of show cause notice and therefore the consequential order(s) dated 31.8.2015 and 31.7.2015, are found to be unsustainable and the same are quashed. The matter is however remanded back to the respective Principal Commissioners of Income Tax, Guwahati-I and Guwahati-II, who may take fresh steps under Section 127 of the Income Tax Act, after giving fair opportunity to the petitioners and pass appropriate order thereafter, in accordance with law, after recording his reason.

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• 2016 (4) TMI 86
  Transfer pricing adjustment towards international transaction of ‘Job work’ - MAM - Held that:- It is discernible that the Tribunal in the immediately preceding assessment year, after treating the assessee as a job worker, has upheld the CUP as most appropriate method. Since the facts and circumstances for the instant year are admittedly similar to those of the preceding year, respectfully following the precedent, we hold that the CUP is the most appropriate method in so far as the international transaction is concerned. Reducing the amount of insurance receipt by the assessee from its AE - Held that:- Similar issue was there before the tribunal for the immediately preceding year. The Tribunal has discussed it its order by noticing that the loss, if any, would be recovered from the insurance company and paid to the AE. That is how, the tribunal deleted similar addition for the preceding year. Though ld. D.R. relied on the order passed by TPO, but could not point out any distinguishing feature in the facts of the current year vis a vis the immediately preceding year, which has been decided by the tribunal. - Decided in favour of assessee

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• 2016 (4) TMI 85
  Addition u/s 68 - creditor from the foreign country - Held that:- In the light of documentary evidence on record, the burden was on the Assessing Officer to establish that share capital is represented by undisclosed income of the company. As already clarified, Sh. Suveer Arora has been regularly visiting Delhi and which has never been disputed. A copy of the passport was also filed which contains the particulars of his visit to India. Further, verification of remittances in his 'NRE accounts under FEMA are relevant in his personal assessment as NRE account is part of record and as such these technical observations have no relevance or bearing to the issue of share capital. In fact, the Assessing Officer has made only general observation and not disputed or commented on the document including the assessment order and bank statement placed on record. Further, if any query is required in respect to his NRE account, the issue is relevant in his personal assessment as his identity and assessment particulars are not in dispute. From the above, the assessee has already established the identity, source and genuineness of share capital in the light of documents produced and settled legal principles clarified above. Even the Assessing Officer has also not disputed the identity, source and genuineness of share capital. We are also of the view that it is unnecessary burden upon the assessee by pressuring it to bring the creditor from the foreign country which is contrary to the facts of the case as well as evidence produced by the assessee. Thus the assessee has fully proved its burden and discharged the onus upon the Department, however, no contrary evidence was shown by the AO which will prove that the transactions were not genuine, therefore, the addition made by the AO and confirmed by the Ld. CIT(A) is totally unwarranted and the same needs to be deleted. - Decided in favour of assessee Addition as unexplained credit balance - addition on account of difference between confirmations received from the party and balance appearing in the books of the assessee - Held that:- The reconciliation statement was filed during the assessment proceeding vide letter dated 05.02.2013 in which the difference was duly explained and as such the observation of Assessing Officer seems to be factually incorrect and addition made by the AO and confirmed by the Ld. CIT(A) needs to be deleted. - Decided in favour of assessee

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• 2016 (4) TMI 84
  Additional/capitation fees recipt - Registration granted u/s 12AA cancelled - Held that:- It is important to mention here that the department has chosen to bring to tax the same additional/capitation fees collected, both in the hands of society as well as in the hands of Mr. K.T. Mahi. The same amount cannot be brought to tax in the hands of two persons. From this, it is evident that the Assessing Officer is not able to come to any conclusion as the person to whom, this income belongs. The substantive additions in the hands of both the assessees are not sustainable. Shri K.T. Mahi has offered the income in his hands and therefore the revenue had no option but to accept the returned income by Shri K.T. Mahi. Since, the revenue has accepted the income offered by Shri K.T. Mahi in his hands, bringing the same to tax in the hands of the society also by making addition amounts to double taxation of the same amount which is not justified as the principle that is applicable in tax statutes is that an income can be subjected to tax in the hands of one person only. Therefore, we hold that the income cannot be charged to tax in the hands of society as well as in the hands of trustee cum secretary of the society. We are inclined to adjudicate that the additional fees collected should be assessed only in the hands of Mr. Mahi and the same should be deleted to be assessed in the hands of society. With regard to quantification of unaccounted receipts by the Assessing Officer, the Assessing Officer had quantified the same at Rs. 16.62 crores instead of Rs. 16.50 crores as accepted by Mr. Mahi. The calculation is based on the investment made by Mr. Mahi in his individual name as well as in his own companies and the material seized during search. As the Assessing Officer had assessed the same in the hands of Mr. K.T. Mahi, the same cannot be brought to tax in the hands of the society. Assessing Officer cannot estimate the unaccounted receipts for all the assessment years based on the material found in the search proceedings relating to a particular AY without any cogent material available for the other AYs and without any statement/deposition of any of the office bearers of the society that it has collected additional fees in the earlier years also. With regard to pending assessments which abated in view of the provisions of section 153A of the Act, the Assessing Officer had already made addition based on the materials seized during the course of search. Apart from that, revenue has not found anything more to suggest that the assessee had collected beyond seized materials nor it has got any deposition from the office bearers of the society that it had collected beyond seized materials. In the absence of such findings, we delete the additions made based on estimation of additional capitation fees collected. Disallowance u/s 40(a)(ia), as held in the case of Mahatma Gandhi Seva Mandir Vs. DDIT(E) (2012 (5) TMI 396 - ITAT MUMBAI ), section 40 is applicable only when deductions u/s 30-38 are being made in computing income chargeable under the head 'profits and gains of business or profession' u/s 28. Similarly, provisions of section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of section 11. - Decided in favour of assessee

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• 2016 (4) TMI 83
  Disallowance of depreciation on software purchased by assessee - Held that:- Assessee could not prove the facts that assessee has used these software in the business of the assessee except merely stating that These softwares were installed in the company and all the purchases were duly incorporated in the books of account of the company. Merely such a bald statement coupled with evidence against the assessee does not prove that an asset if at all owned by the assessee is used for the purposes of the business of the assessee. It is strongly submitted by the assessee that Shri Tarun Goyal's statement is not given to the assessee and he was also not cross examined by the assessee. In this case assessee has purchased the software therefore it is responsibility of the assessee to prove that assessee has purchased the assets and which are used for the purposes of the business. Statement of Shri Tarun Goyal is not at all relevant for determining the issue of allowance of depreciation on the assets purchased by the company which assessee has failed miserably to prove . Assessee could not prove the strength of the supplier to provide the software mentioned in the bills, assessee could not produce the details whether it has hardware strength of installing such software . it could not also established giving the softwares to sobha developers, It could not establish how the seven other persons have got right to waive the compensations, It is also not established that what are the compelling reasons for the assessee to waive the compensation of the software destroyed which are not of small value. Therefore we are of the view that statement of Shri Tarun Goyal is not at all relevant for claim of depreciation of the assessee which assessee is required to establish independently. In view of above facts we confirm the finding of CIT (A) in confirming the disallowance of depreciation on software purchased by assessee - Decided against assessee.

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• 2016 (4) TMI 82
  Disallowance u/s 36(1)(ii) - payment of commission - Held that:- The commission has not been paid to Rashmi Magazine, other shareholder of assessee company and commission was paid to Anshuman Magazine for services rendered by him as per terms of appointment as a managing director, which has been taxed as salary in his hands in the instant year. - Decided against revenue Disallowance u/s 14A read with Rule 8D - Held that:- Even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the assessing officer will have to verify the correctness of such claim. In case, the assessing officer is satisfied with the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, the assessing officer is to accept the claim of the assessee insofar as the quantum of disallowance under section 14A is concerned. In such eventuality, the assessing officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the assessing officer is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the assessing officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment - Decided against revenue Disallowance of deprecation on computer accessories - Held that:- Since computer accessories have been held to be part of computer, therefore they are also entitled to higher rate of deprecation. Hence, the finding of ld. CIT(A) deleting the disallowance is upheld and ground raised by the revenue is dismissed.- Decided against revenue Disallowance of recruitment and training expenses - Held that:- The clauses of the agreement relating to mode of payment of consideration as well as "termination" clause in the agreement. Thus, as the entire expenditure was incurred which admittedly have a nexus with the business of the assessee, it was treated as business expenditure allowable under section 37 of the Act.- Decided against revenue Disallowance of repair and maintenance of branch offices at Pune and Bangalore - Held that:- Since the expenditure has been incurred for civil work false ceiling, binds, wiring cables, earthing at two leased premises, which are not in the nature of any permanent alterations/changes but were incurred to enable the appellant to carry on its business efficiently is not a capital expenditure but revenue expenditure - Decided against revenue

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• 2016 (4) TMI 81
  Disallowance of deduction u/s 80IA - profit by way of generation of electricity which was actually consumed by the assessee in the production of cement - Held that:- The assessee is eligible for deduction u/s 80IA of the Act even in respect of the power generated and used for captive consumption. By respectfully following the judgment of the Madras High Court in assessee’s own case for assessment year 2001-02, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow deduction u/s 80IA on the profit arising out of generation of power which was used for captive consumption. - Decided in favour of assessee Disallowance of depreciation on the building added in the captive power plant - Held that:- Apex Court in CIT vs Karnataka Power Corporation ( 2000 (7) TMI 72 - SUPREME Court ), found that the assessee is eligible for additional depreciation. In fact, the CIT(A) has granted additional depreciation for assessment year 2003-04. This was challenged by the Revenue before this Tribunal. The Tribunal confirmed the order of the CIT(A) wherein additional depreciation was allowed. In view of the above, this Tribunal is of the considered opinion that the assessee is eligible for additional depreciation as claimed - Decided in favour of assessee Depreciation on goodwill - Held that:- Goodwill is nothing but an intangible asset. Explanation 3 to sec.32 clearly says that intangible assets being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, is eligible for depreciation. The goodwill being a commercial right acquired by the assessee is eligible for depreciation u/s 32 of the Act. Therefore, the CIT(A) has rightly allowed the claim of the assessee - Decided in favour of assessee Provision made for doubtful advances - Held that:- The assessee claims that the provision which was made earlier was added back to the total income and offered for taxation. Once the advance made by the assessee was subject matter of taxation at the time of provision, the same cannot be added to the total income when it was actually written off. This Tribunal is of the considered opinion that disallowing would amount to double taxation. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly allowed the claim of the assessee .- Decided in favour of assessee Additional depreciation on addition made to plant and machinery - Held that:- The additional machinery purchased by the assessee is for running the machinery efficiently, therefore, it has to be considered whether the upgradation made by the assessee would amount to installation of a new machinery. The CIT(A) proceeded on the presumption that the additional claim on upgradation is concerned, it was already on record that the plant and machinery was acquired and used in the immediately preceding year of assessment. In fact, this Tribunal, in assessee’s own case for assessment year 2003-04, considered this issue and found that building for housing thermal power plant is eligible for depreciation at higher rate. The additional plant and machinery used for upgrading the existing machinery is also eligible for additional depreciation. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow additional depreciation on the additional plant and machinery. - Decided in favour of assessee Reopening of assessment - Held that:- The Assessing Officer reopened the assessment on the ground that provision made for bad and doubtful debts was not added back to the book profits. In the original assessment, the Assessing Officer has not discussed anything about the provision made for bad and doubtful debts. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment by issuing notice u/s 148 of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A). Bad and doubtful debts while computing the book profit u/s 115JB of the Act - Held that:- Section 115JB(2) Explanation 1 (c) clearly says that the book profits computed under the Companies Act are to be increased by an amount or amounts set aside for provision made for meeting liabilities other than ascertained liabilities. Since bad and doubtful debts are part of the unascertained liabilities, they need to be added back to the book profits while making adjustment u/s 115JB of the Act

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• 2016 (4) TMI 80
  Nature of land - whether land sold by the assessee is within 8 kms. from Rajahmundry municipal limits or beyond 8 kms? - Held that:- There is a confusion that the Inspector proceeded by four wheeler along side of the approach road of the lay out to some extent. It is not clear that from that extent to land sold by the assessee, what is the distance? That the inspector travelled only to some extent and stopped their vehicle and the meter is showing 7.7 kms. Therefore, it cannot be said that the distance from Rajahmundry municipal limits to the land sold by the assessee is exactly 7.7 kms., for the reason that the inspector by measuring the distance, they reached approach road. Through, they tried to reach the assessee’s lands, they stopped without reaching the assessee’s lands. So based on the speedometer, they came to a conclusion that the distance would be 7.7 kms. without reaching assessee’s land. Thus it cannot be concluded that the land sold by the assessee is within 8 kms. of Rajahmundry municipal limits. The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Lalsingh and others (2009 (11) TMI 63 - PUNJAB AND HARYANA HIGH COURT ) has considered the issue of who is competent to measure the distance and observed that “Tahsildar working under the State Government is more competent than the Inspector of the department”. It is further observed that ”without the help of revenue officials, it is difficult for a person to identify the land and then to measure the distance of said land with municipal limits.” Keeping in view of the above judgement of the Punjab & Haryana High Court, we are of the opinion that the certificate issued by the department of R&B, Government of Andhra Pradesh should be given more weightage. The certificate issued by the department of Roads & Buildings is very clear about the distance of the land from Rajahmundry municipality to assessee’s lands. - Decided in favour of assessee

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• 2016 (4) TMI 79
  Penalty levied u/s 271(1)(c ) - Disallowance of loss - Held that:- A perusal of the documentary evidences take to a conclusion that the assessee has demonstrated the genuineness of the transaction. The enquiry itself was taken up by the revenue authorities many years after the transaction took place. In view thereof, the claim of loss of Rs. 7,42,631.78 incurred by the assessee in purchase and sale of cotton bales through M/s Garg Enterprises has to be allowed. Allowability of loss in respect of transactions with M/s Chandulal Mohan Lal - Held that:- The loss has to be allowed, as the assessee has demonstrated the genuineness of the same Loss in the case of M/s Sita Ram Sher Singh and M/s Mahalaxmi Cotton P.Ltd. - Held that:- As loss claimed should be allowed, though there are certain deficiencies on the part of the assessee. The deficiencies are not such that the assessee’s claim could be disallowed. Thus the penalty has no legs to stand. - Decided in favour of assessee

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• 2016 (4) TMI 78
  Validity of reopening of assessment - Wrong claim of bad debt and foreign exchange gain - Held that:- Re-assessment proceedings u/s.148 in its case are barred by limitation due to the proviso of sec.147 of I.T.Act. It is noted that though the AO has claimed that the income has escaped assessment during the year on account of wrong claim of bad debt and foreign exchange gain, but it is worth noting that during the original assessment the then A.O. has specifically raised both the issues in question in the notice dated 14.12.2007 and in compliance of the said notice in this regard, vide letter dtd. 20/12/2007 details/clarification on both the issues were provided to the AO by the appellant. Therefore, under these circumstances it cannot be held that in the original assessment the A.O has not applied his mind and he has not taken a conscious decision on this particular matter. In the instant case it is noted that both the issues were considered by the A.O. in the original assessment. Therefore, under these circumstances it appears that there has been no omission/failure on the part of the appellant to disclose any material fact. In the reasons recorded by the A.O. also it is not mentioned that the appellant has not disclosed any material facts. - Decided in favour of assessee

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• 2016 (4) TMI 77
  Deduction u/s 50C computation - whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C - Held that:- Once the parties have agreed upon the sale consideration of the property in the year 2005, then it will be immaterial if the final sale deed was executed in the year 2007 when final payment was made to the assessee by the purchaser. It is not the case of the AO that the payment received by the assessee prior to sale deed was not part of the sale consideration. Therefore, when the assessee has received part sale consideration since 11/5/2005, then for the purpose of sec.50C of the Act, the Fair Market Value has to be applied in the year in which the parties have decided and agreed upon the sale consideration and not in the year when the sale deed was executed. Even if stamp duty valuation of the property at the time of registration of sale deed is adopted as full consideration, the same has to be subject to the verification whether the market value of the property at the time of sale consideration agreed upon by the parties is less than the valuation adopted by the stamp valuation authority then as per provisions of sec.50C(2) market value of the property is required to be taken after consideration of relevant facts including prevailing rate at the time of sale consideration agreed upon between the parties. In view of the above facts and circumstances of the case, we are of the considered opinion that the fair market value of the property has to be determined by the AO/DVO after considering all the relevant facts including the prevailing rate in the year 2005. Accordingly, the matter is set aside to the record of the AO for determining the fair market value of the property as per provisions of sec.50C(2) of the Act. - Decided in favour of assessee for statistical purposes.

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• 2016 (4) TMI 76
  Revision u/s 263 - denial of benefit U/s 11 and 12 and not allowing depreciation - Held that:- The scrutiny assessment has been completed by the Assessing Officer on 31/12/2012. The ld Assessing Officer issued detailed questionnaire on 17/10/2012, the assessee furnished requisite details/information/books of account etc. before him. The ld Assessing Officer held that the registration w.e.f. 23/08/2011 U/s 12AA have been granted by the ld CIT, Alwar. The society was working as per its byelaws and carried out charitable activity. All the income of the society was applied for fulfillment of the object of the society. The educational institutions are existing solely for educational purposes and not for the purpose of profit. The aggregate annual receipts of the society during the year under consideration was Rs. 93,70,725/-, which is below Rs. 1 crore. All the annual receipts of the samiti is exempted U/s 10(23C)(iiiad) of the Act. The ld Assessing Officer accepted the assessee’s returned income by order dated 31/12/2012. The ld Assessing Officer issued query letter on 17/10/2012 on both the issues in item No. 3,4 and 8, which was replied by the assessee vide letter dated 19/11/2012 at item No. 3 and 8. Thus, the Assessing Officer made detailed enquiry on both the issues and no adverse inference had been drawn by him. Further both the issues i.e. aggregate annual receipts and depreciation are also covered in favour of the assessee as various ITATs as well as Hon'ble High Courts have held that other receipts, which are not directly related with the receipts of the institution/trust, are not part of aggregate annual receipts. On depreciation also, various ITATs and Hon'ble High Courts have held that the income of the Trust is to be calculated as per Act. The depreciation is allowable even the assessee had applied its receipts against the assets which seems to be double deduction to the Assessing Officer but various courts has decided that the depreciation on assets is allowable. Now the law has been amended on this issue but which is operative prospectively. The case laws relied by the assessee are squarely applicable. We find that the Assessing Officer has formed one of the view but the ld CIT(Exemption) has formed another view on same facts and circumstances, therefore, change of opinion is not permissible under the law. Accordingly, we set aside the order of the ld CIT(Exemption) passed U/s 263 of the Act. - Decided in favour of assessee

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• 2016 (4) TMI 75
  Bogus purchases - assessee submitted that the ld Assessing Officer had not rejected the books U/s 145(3) while enhancing the operating result through disallowance of the entire purchases - Held that:- By considering the smallness of amount of purchase of X-ray films and the Assessing Officer allowed the depreciation of X-ray machine, it is but natural that the assessee had purchased X-ray films. It is a fact that even before us, the assessee has not furnished any purchase bills but in the interest of justice, we allow the assessee’s appeal on this ground. - Decided in favour of assessee Addition U/s 68 - Held that:- we observe that the lower authorities have shown these amounts as credited in the books of account, nowhere, the assessee claimed that these amounts pertained to purchase made by the assessee. The summons issued by the Assessing Officer but had not served on the assessee. The AR of the assessee has not controverted the finding given by the ld CIT(A). The case law referred by the assessee is not applicable on the facts of the case of the assessee. - Decided against assessee

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• 2016 (4) TMI 74
  Excess cash found during the course of survey - Held that:- The material available on record the assessee had made the surrendered during the course of survey but immediately he verified the books of account and retracted from the disclosure. The statement recorded during the course of survey is not binding on the assessee as held by the Hon’ble Supreme Court in Surjeet Singh Chhabra Vs. Union of India [1996 (10) TMI 106 - SUPREME COURT OF INDIA ] as same is not been a taken on oath. Further whatever cash found during the course of survey has been reconciled by the assessee and excess cash of Rs. 5,018/- has been confirmed by the CIT(A).- Decided against revenue Addition on account of unrecorded transaction - addition under the head unaccounted cash - Held that:- It is undisputed facts that both the surrendered were made by the assessee during the course of survey but same had been retracted immediately by the assessee. The assessee disclosed an addition income on account of loose paper/diary found during the course of survey in return. There is no basis of the AO add further amount of Rs. 5.5 lac. Similarly the addition made under the head investment in House property is also based on surrendered admitted by the assessee. The AO had not made this addition on the basis of any incrementing documents of evidences. Thus we uphold the order of CIT(A) in allowing relief. - Decided against revenue

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• 2016 (4) TMI 73
  Addition on account of disallowance of depreciation claim on intangible assets - Held that:- Assessee has not purchased any good will but has purchased license, interest, privilege, franchise etc. from M/s. DKD which are undisputedly covered by section 32(1)(ii) and, therefore, the depreciation is allowable and the ld. CIT (A) has allowed the depreciation on these intangible assets, and we have no hesitation in confirming the order of ld. CIT (A) on this aspect. - Decided in favour of assessee.

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• 2016 (4) TMI 72
  Disallowance of sundry expenses - Held that:- Expenses claimed by the assessee are nominal and incurred under the head telephone, conveyance refreshment and tours expenses etc. Since the assessee was in the business of statue making and for that purposes all these expenses are required to be incurred and going by the nature of these expenses, it is very difficult for the assessee to maintain the vouchers of each items of tea, coffee, refreshments, conveyance etc. In view thereof, we do not find any justification to disallow the expenses. In the light of the above, the order of ld. CIT (A) is set aside and all the expenses claimed by the assessee are allowed. - Decided in favour of assessee Interest earned on NSCs taxed - Held that:- The reasoning given by the ld. CIT (A) is in accordance with law. The NSC along with interest are required to be included in the return of income in the year when it become matured. That should be the year when the income is required to be taken into consideration. Since in the present case the NSCs were due way back on the date of maturity, therefore, the interest earned on the said NSCs are required to be added to the income of the assessee in the current assessment year. However, the amount of investment i.e. Rs. 55,000/-, is not required to be added in the year under consideration. - Decided against assessee

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• 2016 (4) TMI 71
  Penalty under section 271(1)(c) - deemed dividend addition u/s 2(22) - assessment u/s 153A - Held that:- The assessee filed the return under section 139 for all the years and disclosed the particulars of shareholding pattern, advances taken and given by the assessee company/individual in return itself. The accumulated profit also has been disclosed. Thereafter assessee filed return under section 153A of the IT Act wherein also all the detailed facts and figures were disclosed in the return. The assessee’s case is auditable. The assessee at the time of quantum addition as well as at the time of penalty proceedings has reiterated that these advances are in the course of regular business. It is a running account, said advances later on repaid. This issue is debatable and various courts particularly in the case of Creative Dyeing & Printing (P) Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT ) wherein it has been held that business transaction is not covered under section 2(22)(e) of the Act. Various other case laws cited by the assessee has also made this issue debatable. The case relied on by the AO i.e. Mak Data P. Ltd. is not applicable as assessee at every stage had filed the explanation before the AO as well as CIT (A) i.e. these transactions were made for the purpose of business and commercial expediency, is bonafide. Penalty imposed by the AO and confirmed by ld. CIT (A) are not justified. Accordingly we delete the penalty in all the cases. - Decided in favour of assessee

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• 2016 (4) TMI 70
  Disallowance of claim of deduction u/s 54F - transactions done by Shri Ram Gopal Bansal as a Karta of the HUF OR in his individual capacity - Held that:- The assessee has been consistent in its approach in terms of treatment and disclosure of the purchase and sale and subsequent purchase of the properties. It so happened that in the agreements, the name of Shri Ram Gopal Bansal has been mentioned wherein all the relevant facts taken together leads to the conclusion that all these transactions have been effectively done by Shri Ram Gopal Bansal as a Karta of the HUF and not in his individual capacity. In the instant case whether the sale consideration has been brought to tax in hands of Ram Gopal Bansal HUF, the subsequent claim of relief u/s 54 should have been allowed to the assessee knowing fully well that both the original purchase/sale agreements and subsequent purchase agreement, the name has been mentioned as Ram Gopal Bansal and not Shri Ram Gopal Bansal HUF. In the instant case, if it’s the case of the Revenue that capital gains on sale of the property is liable for taxation in hands of assessee HUF even though the sale agreement talks about the individual, in our view, the Revenue should equally allow the relief from such taxation where the assessee fulfills all required conditions except that the name in the purchase agreement is that of individual and not assessee HUF. It t is not in dispute that the sale consideration has been deposited in the bank account of Ram Gopal Bansal HUF and the same has been utilized for purchase of plot of land and the construction of house thereon by utilizing the funds withdrawn from the bank account of Shri Ram Gopal Bansal HUF. The said facts is clearly apparent from the statement recorded by the AO of Shri Ram Gopal Bansal during the course of assessment proceedings which has been totally ignored by the lower authorities. Thus the assessee should be eligible to claim the necessary relief u/s 54 of the Act in respect of investment in plot of land and subsequent construction of house thereon. - Decided in favour of assessee Addition on account of excess cash deposit over the cash withdrawal in the account maintained by the assessee - Held that:- It is noted that the bank statement of both the bank a/cs maintained by the assessee which includes the opening and closing balances were available with the AO. Secondly the details of the agricultural income were also apparent from the return filed by the assessee. Keeping in view the factual position and explanation of the assessee, we hereby delete the addition in the hands of the assessee. - Decided in favour of assessee Income from other sources as against agricultural income - Held that:- As per the ld. CIT(A) no independent evidence is filed which may indicate that agriculture income to such extent was derived by the assessee. The case of the assessee is that the land was irrigated and capable of giving yield which was supported by copy of Kasra Girdhawari and Jamabandi as well as sale contract notes. Further it is noted that in the past the assessee has been consistently showing the agriculture income. Keeping the entirely of the facts and circumstances of the case, income is hereby directed to be treat as agricultural income and not as income from other sources - Decided in favour of assessee

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• Customs

• 2016 (4) TMI 54
  Whether non-communication of the order rejecting the representation in an effective manner would invalidate or vitiate the order of detention - order of detention passed u/s 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act) - Held that:- it is clear as day that while rejecting the representation, a speaking order need not be passed and what is necessary is that there should be real and proper consideration by the Government and the Advisory Board. The detaining authority on the basis of certain material passes an order of detention. The same has to be communicated at the earliest as mandated under Article 22(5) of the Constitution. A period has been determined. Non-communication within the said period would be an impediment for sustaining the order of detention. Similarly, if a representation is made and not considered with promptitude and there is inordinate delay that would make the detention order unsustainable. Order of detention - Appellant contended that detenu was detained on 25.2.2013 and released on 24.10.2013 and in this backdrop, the detenu should not be sent back to undergo the remaining period of detention - Held that:- there exists no proximate temporal nexus between the period of detention indicated in the order for which the detenu was required to be detained and the date when the detenu is required to be detained if the order is set aside. The detenu was initially detained for one year. He remained in incarceration from 25.2.2013 to 24.10.2013. The High Court has quashed the order of detention and he has been set at liberty. So, by keeping in view the principles stated in the case of Sunil Fulchand Shah v. Union of India [2000 (2) TMI 792 - SUPREME COURT OF INDIA] and Chandrakant Baddi v. ADM & Police Commr, the appropriate course for the nature of grounds on which the detention order was passed would be that the detaining authority should re-examine the matter. - Decided in favour of appellant

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• 2016 (4) TMI 53
  Seeking modification in acquittal order - Smuggling of narcotic drugs and receiving about 30kg of heroin, hence truck seized - Held that:- Some serious doubts crept in the prosecution case that (i) whether the contraband was recovered from the truck or from Van, (ii) whether the respondent No.1 and respondent No.2 were actually found present with the contraband in the Van or the contraband was found lying abandoned in the truck having cavity for concealing the articles and the Van driven by respondent No.1 was intercepted separately and (iii) the version of the appellant that the contraband was seized while the delivery was being made by respondent No.2 to respondent No.1 or whether it was seized from respondent No.1 and other accused persons were roped in later on. In view of the settled proposition of law that during the trial proceedings if there are two views possible, the view favouring the prosecution is to be adopted, however, the position is reverse at the final disposal upon conclusion of trial that the view favouring accused charged with any offence has to be granted the benefit of doubt while returning the finding of acquittal in favour of guilty. As the appellant has failed to establish its case beyond reasonable doubt even during trial or in appeal as well, whereas in the present case, there are doubts after doubts.Therefore, the acquittal order passed is correct. - Appeal dismissed

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• 2016 (4) TMI 52
  Attraction of Section 26(3) of the Customs Act, 1962 - Import of red chilli chatka seasoning and magic masala seasoning - not allowed for clearance as the individual packs in which the goods were packed did not have the labelling of the contents and therefore, re-exported after paying redemption find and penalty and sought refund of duty paid but rejected on the ground under Section 26A(3) of the Act - Held that:- the primary adjudicating authority had not rejected the refund claim on the ground of goods being perishable and therefore the stand taken by Revenue that the goods were perishable seems to be untenable, more so when FSSAI or any other agency did not declare the goods to be so. Further, even if this ground is taken for consideration, there is no evidence furnished by Revenue that the goods had exceeded their shelf-life. Therefore, Section 26(3) of the Customs Act, 1962 is clearly not invocable here. Attraction of Section 26A(1) of the Customs Act, 1962 -Held that:- as regards the ground of proviso 3 of Section 26A(1), revenue certainly has a point that an offence appears have to have been committed under this act as goods were re-exported on redemption fine and penalty. However, the provisions of Section 26A(1) apply to situations where the goods are capable of easily identified as imported and cleared on payment of duty for home consumption but here the goods were never cleared for home consumption. Therefore, Section 26A(1) ibid is also not attracted. - Decided against the revenue

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• 2016 (4) TMI 51
  Demand of anti-dumping duty - Import of 4,40,000 pieces of Hard Ring Ferrite - Held that:- the Adjudicating Authority has dropped the proceedings initiated by the show cause notice on the basis of the report dated 26-05-2000 from the Deputy Chief Chemist. It is noticed that anti-dumping duty was imposed on Hard Ring Ferrite Magnets by Notification No. 103/99 dated 06-08-1999. In order to levy anti-dumping duty, it has to be first ascertained that the goods imported were Hard Ring Ferrite Magnets. Here, the Adjudicating Authority has come to the conclusion that imported goods are not so as per the report of Deputy Chief Chemist that goods imported were not Hard Ring Ferrite Magnets. The appeal of the revenue does not indicate any contrary evidence to come to any other conclusion. Therefore, anti-dumping duty cannot be levied. - Decided against the revenue

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• 2016 (4) TMI 50
  Period of limitation - Refund claim filed in terms of Notification No. 102/2007-Cus, dated 02.07.2010 within one year at ICD Dadri instead of CFS Mulund - Customs authority of ICD Dadri forwarded refund application to CFS Mulund but was rejected being time bared on the ground that at the time of receipt of refund application from ICD Dadri to CFS Mulund, the prescribed time limit was expired - Held that:- by following the ratio of order passed by the Tribunal in appellant's own case reported in [2015 (4) TMI 937 - CESTAT MUMBAI] based on the judgment of Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise Vs. AIA Engineering Ltd. [2010 (9) TMI 555 - GUJARAT HIGH COURT], if the refund claim for the first time filed within time before different authority it cannot be said that the filing of refund is time barred. - Decided in favour of appellant

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• Corporate Laws

• 2016 (4) TMI 46
  Winding up petition - Held that:- As regards admission of the debts by the appellant-company payable to the respondent-company, the learned company judge has placed reliance on the agreement between the two companies dated February 24, 2012, whereby the appellant-company has acknowledged an outstanding of US $ 56,16,024.12 plus accrued interest after January 31, 2012. Admittedly the said amount has not been paid within the time provided in the said agreement or even thereafter. Thus, being prima facie satisfied that the appellant-company was unable to pay its debts, company petition has been admitted. In such facts, admission of the petition cannot be faulted. As under the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, there is a prohibition under regulation 3 for establishing branch office in India by a foreign company without prior approval of the Reserve Bank of India. In view of the fact that we have already held above that the appellant has not been able to place any material on record to show that the respondent-company has any office (be it a site office or project office or warehouse or store house) within the territory of India, the provisions of the Regulations of 2000 would not be applicable. No good ground to interfere with the order of admission passed by learned company judge.

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• Service Tax

• 2016 (4) TMI 69
  Seeking extension of time to comply with earlier order and direction - Auction and sale of Aircraft - Authorities realise after a long time that technical services and expert assistance are also required to undertake an auction of aircraft - No steps are taken after the last order passed by this Court - Unsatisfactory to the response that the entire Commissionerate are unaware of the steps that would be required to be taken for conducting an auction of the Aircraft and they have considered this to be any other or routine sale - Held that:- in India when the Aircraft carriers particularly the national carrier acquire a Aircraft on lease or on outright purchase basis, they definitely have technical backup and expert teams with whose assistance the aircrafts would be surveyed and approved and thereafter the deals finalised. Such a mechanism is available in India with two entities i.e. Air India and M/s.Air Work Engineering Pvt.Ltd, It is not understandable that why the Service Tax Commissioner or the deponent of this affidavit has not till today bothered to verify from these entities whether they are ready and willing to offer their services and if so willing, on what terms and conditions. He should have immediately taken up the issue with them and thereafter got in touch with his Superiors and instead of the usual process, straightway engaged these entities on commercial terms. The Air India's Engineering unit or department can definitely assist the Service Tax Commissioner. But this order and direction does not mean that any of the terms and conditions in the earlier orders are relaxed. - Matter disposed of

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• 2016 (4) TMI 68
  Imposition of penalties - Section 76 and 78 of the Finance Act, 1994 - Provider of construction services - Service tax on construction services during the relevant period was newly introduced and the Appellant was ignorant about the prevailing law. Also the service recipient did not guide them properly regarding payment of service tax - Held that:- the service tax on construction services were paid by the appellant on certain months but no service tax liability was discharged for certain other months when considerations were received from service recipient, therefore, the appellant was well aware of the service tax liability on the services rendered by them. Also no financial hardships were explained by the appellant to suggest that service tax could not be paid due to financial hardships. It is also observed that Show Cause Notice in this case was issued on 12.03.2008 which is prior to the date of amendment made in Section 78 of the Finance Act, 1994, therefore both the penalties under section 76 and 78 of the Finance Act, 1994 are imposable upon the appellant. No option for payment of 25% reduced penalty under section 78 ibid was extended. It is a well settled law that 25% option of reduced penalty can even be extended at the appellate stage when no such option was extended by the lower authorities. Accordingly, the appellant is extended the option of payment of 25% reduced penalty under section 78 ibid if the same is paid within one month from the date of receipt of this Order. - Decided partly in favour of appellant

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• 2016 (4) TMI 67
  Rejection of refund claim - Unutilized CENVAT credit filed under Rule 5 of CCR, 2004 read with Notification No.5/2006 CE(NT) dt. 14/03/2008 - Business Auxiliary Service and Information Technology Software Services exported out of India - Refund claim rejected on the ground that services exported are not taxable services, time barred, no one-to-one correlation between the inward and remittances (FICR) and export invoices and no nexus between the input services and the services exported - Held that:- the Commissioner(Appeals) has examined the issue and held that most of the activities/services rendered would fall within the taxable category of ITSS. As per judgment of mPortal India Wireless Solutions Pvt. Ltd., Bangalore Vs. CST, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and KPIT Cummins Infosystems Ltd. Vs. CCE, Pune-I [2013 (7) TMI 124 - CESTAT MUMBAI], even if the IT enabled services i.e. software consultancy services exported during the impugned period, was classifiable as an exempted service, the benefit of refund under Rule 5 of CCR cannot be denied. If the period of one year is computed from the date of receipt of the FICR, the refund claims would be within the time limit followed by the judgment of Jurisdictional High court in the case of CC.CE&ST, Hyderabad-IV Vs. Hyundai Motor India Engg. (P) Ltd. [2015 (3) TMI 1049 - ANDHRA PRADESH HIGH COURT] and in the case of Market Tools Research (P) Ltd. Therefore, the refund claim is not time-barred. There is no dispute with regard to services exported or the inward remittances received. So, there is no requirement that there should be one-to-one correlation between the remittances and the export documents.Therefore, the denial of the refund on the ground that FICR and export invoices did not show one-to-one correlation is not justifiable. Also the period involved is prior to 01/04/2011 when the definition of input services had a wide ambit as the definition included the words 'activities relating to business'. So, the services if necessary for business of the appellant would qualify as input services. therefore, the refund cannot be denied for the reason that input services do not have nexus with the output services. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 66
  Classification - Providing buses for hire to various agencies/persons on contract basis - Adjudicating Auhority classified the services under the category of Rent-a-Cab service but Commissioner (Appeals) covered it under the category of Tour Operator service as the services have been performed in respect of educational trips of schools - Held that:- the grounds of appeal have totally ignored the main finding of the Commissioner that tour operator service and Rent-a-Cab service are exempted if the journeys are organized or arranged for use by an educational body. As the appellants have submitted details wherein it is very clear that the vehicles were hired by schools and colleges for trips and this finding has not been controverted by Revenue. - Decided against the revenue

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• 2016 (4) TMI 65
  Period of limitation - Rejection of refund claim of service tax paid on services received and used for export of goods manufactured during the period from January 2010 to March 2010 Refund claim filed on 07.01.2011 which was returned in order to comply with the statutory requirement and the same was resubmitted on 02.05.2011 and finally on pointing out the defects, the same was rectified and the original documents were submitted on 04.11.2011 - Held that:- there has been an amendment under Section 11 B w.e.f. 26.05.1995, which stipulates that the date of filing the refund claim is the date on which claim was filed initially, so the claim has to be treated as having been filed on 07.01.2011. Therefore, by following the ratio of order in the case of Peria Karamalai Tea and Produce Co. Ltd. Vs. CCE [1996 (3) TMI 537 - SUPREME COURT], the application for refund was filed within time and the same is not barred by limitation. - Appeal allowed by way of remand

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• Central Excise

• 2016 (4) TMI 64
  Cross-examination of the witnesses mentioned in the show cause notice (SCN) - Held that:- The Petitioner will submit a final reply to the SCN, on the basis of what has been made available to the Petitioner, within a period of four weeks from today and in any event not later than 14th March 2016. In the final reply, the Petitioner will indicate the names of the witnesses of the Department whom the Petitioner wishes to cross-examine. The adjudicating authority will examine and decide the aforementioned request of the Petitioner in terms of the Adjudication Manual of the Department and the law explained in Basudev Garg v. Commissioner of Customs ( 2013 (5) TMI 350 - DELHI HIGH COURT ) within two weeks of the receipt of such request. The adjudicating authority will fix a time bound schedule for the cross-examination such of those Department's witnesses in terms of the decision on the Petitioner's request in that behalf. It will be open to the Petitioner to raise a ground of challenge to denial of the cross-examination of any of the Department's witnesses at the stage of challenge, if any, to the adjudication order if the circumstances so warrant. The Petitioner will not seek any unnecessary adjournments and will participate in all the hearings before the adjudicating authority. The adjudicating authority will endeavour to conclude the adjudication proceedings and render a decision within a period of eight months after the commencement of hearing consequent upon the filing of the final reply by the Petitioner to the SCN.

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• 2016 (4) TMI 63
  Hearing of appeals ex parte - Held that:- Rule 20 of the Rules does not expressly states that an order passed in an appeal, which is heard and disposed of exparte on merits cannot be set aside does not mean that the Tribunal has no power to set aside an ex-parte order. Rule 41 of the Rules gives wide power to the Tribunal to make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. In the light of the aforesaid provision, we direct the appellant to file an appropriate application for recall of the order. If such an application is filed, the Tribunal will consider and decide the same after hearing all parties concerned. The appeal is dismissed with the aforesaid observation leaving it open to the appellant to challenge the impugned order of the Tribunal, if necessary, after the disposal of the restoration application.

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• 2016 (4) TMI 62
  Order of stay passed by the Customs, Excise and Service Tax Appellate Tribunal - whether order would continue to be operative after expiry of 365 days as provided under section 35C(2A) of the Central Excise Act, 1944 ? - Held that:- The inherent power to do justice will be exercised depending upon the conduct of the assessee-appellant in individual matters. In the event after obtaining the interim order and relief, the assessee-appellant deliberately and intentionally delays the hearing of the appeals, then, the consequences in the legal provision would follow. In that event, the assessee will have to convince the Tribunal to continue the interim order / relief in his or her favour. Once it is agreed by both sides that such is the statement of law, then, none of these appeals need be entertained. All the more when the proviso to section 35C(2A) styled as the second proviso has been deleted by Finance Act No.2 of 2014. Hence, it is not necessary to entertain any of these appeals. They are disposed of at the stage of admission in the light of the clear legal provision.

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• 2016 (4) TMI 61
  Entitlement to Refund of the CENVAT credit amount paid by reversal - refund claim of the amount of reversed CENVAT Credit - Held that:- Sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed

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• 2016 (4) TMI 60
  Non fulfillment of pre-deposit - Held that:- We would not permit the petitioner to bye-pass the statutory appellate remedy, particularly when factual and legal aspects arise out of the order-in-original. We relegate the petitioner to statutory appellate remedy before the Tribunal. If such an appeal is filed, the Registry of the Tribunal shall not refuse to accept it only on the ground of non fulfillment of pre-deposit requirement. However, till the pre-deposit requirement is fulfilled or some contrary order is passed by the High Court, such appeal shall not be treated as regularly filed nor shall be heard on merits.

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• 2016 (4) TMI 59
  Eligibility of exemption under Notification No.50/2003-CE dated 10.06.2006 in respect of glue/resin made by the appellant denied - Held that:- The appellant have categorically submitted that the impugned goods are prepared for specific need and requirement of bonding of wood fibers /wood particles/coating of papers during the manufacture of final product like MDF Board, Particle Board, etc. The fact is that the preparation of impugned goods is in one stage process under controlled temperature and pH and addition of Ammonium Cloride Formic Acid in the processes, the emerging product being transferred to glue kitchen area for final use in bonding. We find that the classification of the product as primary resin is not sustainable. This is supported by Note-6 of Chapter 39 and HSN Explanation of such note. As such denial of exemption is not sustainable. Considering the above discussion and finding, we allow the appeal by setting aside the impugned order with consequential relief. - Decided in favour of assessee

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• 2016 (4) TMI 58
  Valuation of the goods manufactured on job-work basis - sale at processor's factory-gate needs to be loaded with the trader's profit and discharge excise duty or otherwise - Held that:- The assessable value should be the value worked out based on the cost of the material and the job-work charges. The Revenue's claim that the respondent had collected over and above the job-charges in the form of cutting, checking and packing of the processed fabrics is without any evidence and there is nothing on record to indicate that these charges were not included in the job-work charges which were being paid by the said Risha to the respondent. The goods at which the processing house sells the goods must be the value of the grey cloth or fabric plus the value of the job work done plus the manufacturing profit and the manufacturing expenses but not any other subsequent profit or expenses. It is necessary to include the processor's expenses, costs and charge plus profit, but it is not necessary to include the trader's profits who gets the fabrics processed, because those would be post-manufacturing profits. We also find that the first appellate authority has correctly enunciated the law as to the activity of job-work as to how it should be understood and the valuation of the said goods to be done. - Decided against revenue

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• 2016 (4) TMI 57
  Condonation of delay in filing an appeal / application before Commissioner (Appeals) - Claiming Benefit of Notification No.32/99-CE dated 08.07.1999 as amended - Denial of exemption as Appellants had failed to submit their applications as stipulated under the said Notification, neither by 30th of September of the respective financial year nor within the condonable period of 30(thirty) days - Held that:- In the present Notification, inter alia, it is a condition that the assesse is required to file necessary application by 30th of September in the financial year and also under the first proviso to the said Notification, the Commissioner has been vested with the power to accept the application by condoning the delay to a maximum of 30(thirty) days on finding sufficient cause for the delay. Admittedly, the second condition has not been complied with by the Appellants. Therefore, in view of the aforesaid ratios the Appellants are not entitled to avail the benefit of the said Notification. On the issue of condonation of delay beyond 30(thirty) days, we find that The Hon’ble supreme Court in Singh Enterprises’ case (2007 (12) TMI 11 - SUPREME COURT OF INDIA ) held that the appeal has to be filed within 60 days but in terms of the proviso further 30 days time can be granted by the appellate authority to entertain the appeal. The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period - Decided against assessee

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• 2016 (4) TMI 56
  Clandestine clearance - goods cleared twice - unaccounted acquisition/procurement of inputs - Held that:- Revenue is based on only statement of the proprietors of company, two buyers namely, Jay Enterprises and Krishna Marketing which were subsequently retracted and the stand have been consistently maintained by them in the course of cross-examination to the effect that they have neither received any non-duty paid goods nor they were instructed by the officers of the manufacturer to return invoices/documents. The appellant admitted that there are only 8 invoices available in the relied upon documents, against which it appears that the goods have been cleared twice. The appellant have clearly agreed to confirmation of demand attributable to all these 8 invoices, the clearance value of which totals Rs. 7,31,140,17 along with interest. It is further seen from the record that other than the 8 invoices, there is no evidence produced by the Revenue in support of the allegation of clandestine removal as alleged on the basis of parallel invoices. It is settled law that clandestine clearance as alleged by Revenue, the onus is on the Revenue to produce copies of the invoices etc. in support of its allegation. In the absence of such parallel invoices, the allegation cannot survive. Further, find that the Revenue have not brought anything on record to support any unaccounted acquisition/procurement of inputs(raw materials). Rather the inputs of the appellant are acquired from the PSU and the same are duly accounted for and duty paid. Thus, it appears that the Revenue have made out a half baked case of clandestine removal and the same is not sufficient save and except the 8 parallel invoices as noticed herein above and accepted by the appellant. Further, it is settled law that a confessional statement cannot be the sole basis for establishing clandestine clearance in absence of other corroborative evidence. The duty on the value of clandestine clearance of Rs. 7,31,140.17 have been worked out by the Revenue on the direction of the Tribunal @ Rs. 92,144/-. Accordingly, the balance demand is set aside. The appellant is accordingly ordered to pay the above amount along with interest, which can be adjusted against the amount of pre-deposit of Rs. 20 lakhs and additional amount of Rs. 5 lakhs, lying with the department against encashment of Bank Guarantee. Further, equal amount of penalty of Rs. 92,144/- is retained against the appellant ICCONOL Petroleum Products under Section 11AC read with Rule 25 of Central Excise Rules, 2002. The personal penalty imposed on the Managing Director Mr. Tushar Shah and Mr. D.K. Singh, Director of the appellant under Rule 26 of Central Excise Rules are reduced to Rs. 15,000/- each. The penalties under Rule 26 on Krishan Marketing, Blue Spot Agencies and Jay Enterprises are set aside. The confiscation of the goods valued at Rs. 2,35,650/- at the premises of Krishna Marketing is also set aside. - Decided partly in favour of assessee

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• 2016 (4) TMI 55
  Valuation - Benefit of abatement - Provisional assessment - Denial of cash discount on the ground that the same is not passed on to all the dealers - Held that:- Once the cash discount is allowed in the invoices, irrespective of the eligibility to the said discount, if any, of the buyer, same is passed on in the invoice itself. Therefore, the valuation provision read with the rules would not envisage rejection of such discounts when the same is not recovered later by the Manufacturer. The buyer based on the net price charged in the invoices, pays the amount to the Manufacturer and that becomes the transaction value. Therefore, there is no question of rejecting the benefit of abatement of such discount on the ground that the same is not actually passed on to the buyer. Abatement of Free Service Charges and Pre-delivery Inspection Charges - Held that:- We find that the appellant had resorted to provisional assessment at the time of clearance of the goods to the dealers and claimed abatement of the said charges and did not pay duty on the same. Therefore, when no duty was paid, initially in view of the provisional assessment, the question of issuing credit notes, including the duty amount on such charges, never arose. The Commissioner (Appeals) has not applied the facts of the case to the issue in question. Proper finalization of provisional assessment based upon proper computation of assessable value, taking into account the abatement claimed and the short levy/excess levy involved - Held that:- We find that though this plea has been raised in the Grounds of Appeal, there has been no findings either in the impugned Order in Appeal or in the Order in Original. While finalizing the assessment, the impugned orders do not arrive at the value of each Motorcycle/Moped after taking into account all the abatements allowed/disallowed and arriving at assessable value from cum-duty value. Abatements are applicable for all vehicles cleared and each exclusion or inclusion is applicable for every motor cycle, scooter, moped cleared and the original authority should have determined the assessable value by first deducting the abatement element and thereafter arriving at assessable value for calculating the differential duty/excess duty. Reliance made by the appellants in the case of ACCE & Others Vs. MRF (1986 (12) TMI 35 - SUPREME COURT OF INDIA ), wherein it has been held that abatements should be cumulatively deducted from the cum-duty price to arrive at the cum-duty value and thereafter the assessable value should be arrived at.Accordingly, we direct the authority to recompute after adjusting the excess paid. Vis-`-vis the demand and finally arrive at the differential duty. Abatement towards cash paid under Section 3(4) of TNGST Act - Held that:- The liability to pay this tax on the value of input purchased arises only in the event of transfer of final products outside Tamil Nadu, i.e., on stock transfer. This tax is nothing but a levy on the finished excisable goods cleared from the factory and therefore excludable from value in t terms of Section 4. The event of taxation is the sale of manufactured final products. The appellant paid the tax as a seller of goods, of course, on the purchase value of inputs. Besides, it is a levy on sale of goods. The abatement for this Tax allowed in the impugned order is correct and therefore, the appeal filed by the department merits dismissal. Abatement of Trade Discounts - Held that:- Commissioner (Appeals) in the impugned Order in Appeal, have allowed abatement of discount on the ground that all the factors propounded by the Supreme Court in various decisions have been satisfied by the appellant manufacturer and he has held that the rejection of the abatement of such discounts on the ground that they were not made known prior to the removal of goods is not correct. We also find that the Commissioner (Appeals) relied upon mainly two factors (i) various circulars have been issued by the Manufacturer/Appellant regarding granting of such discounts, much before the removal of goods and (ii) even otherwise, the granting of such discounts were known under established practice to the dealers. The findings of the Commissioner (Appeals) have not been rebutted by the revenue in their grounds of appeal.

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• CST, VAT & Sales Tax

• 2016 (4) TMI 49
  Applicability of Rule 3(2)(c)and its proviso of KVAT Rules to CST Act - Engaged in the business of manufacture and trading of cutting tools - Held that:- the revising authority proceeded to initiate revisional proceedings based on the Judgment of this Court in the case of M/s Southern Motors vs State of Karnataka [2015 (3) TMI 433 - KARNATAKA HIGH COURT], and accordingly, concluded the proceedings following the said Judgment. Also no contentions urged by the assessee are addressed by the revisional authority while concluding the revisional proceedings except M/s Southern Motors. Therefore, the matter is to be remanded back. - Appeal disposed of

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• 2016 (4) TMI 48
  Suspension of electronic generation of C-forms - Rule 110B(1) of the West Bengal Value Added Tax Rules, 2005 - Held that:- the authorities who have found the alleged irregularities pertaining to the petitioning dealer had recommended the suspension of the electronic generation of the C-forms by the petitioner and the State says that the petitioner has been dodging notices from the officers of the Bureau of Investigation, no immediate order is issued for allowing the petitioner the facility of generating C-forms online without the petitioner or a duly authorised representative calling on the Special Officer of the Bureau of Investigation at the beginning of working hours on March 17, 2016 and, failing the Special Officer’s presence on March 17, 2016, at the opening of office hours on March 18, 2016. The Special Officer will afford the petitioner or a duly authorised agent of the petitioner a hearing as to the perceived irregularities recorded at page 37 of the petition. It will be open to the respondent authorities to thereafter indicate an appropriate decision as to whether the petitioning dealer would be entitled to generate C-forms online till an express order prohibiting the petitioner is passed by the appropriate authority. - Petition disposed of

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• 2016 (4) TMI 47
  Condonation of delay - Government pleading condonation on the ground of para 10 and Exhibit 'G' at page 35 to the writ petition - Held that:- if for one and a half years and more the files are lying in Government Pleader's office, then, it is not known why there was no promptness or expediency exhibited in meeting the concerned Government advocates, getting the draft prepared and duly filed. If this is how the Government revenue is sought to be protected, then, we say nothing more. A premium on utter negligence cannot be put, complete callousness and carelessness on the part of the Government officials. They cannot expect discretionary and equitable relief from the court under Article 226 of the Constitution of India when the explanation that they furnish is wholly unacceptable. It is time that Government realises that it is not a special litigant. If its officials, including the advocates appointed, are not working, it must proceed against them and take action. It cannot just request the court to condone the lapses and inefficiency or equally dishonesty and corruption. If the court of law is expected to render justice expeditiously, then, it should not be burdened with cases which have been brought belatedly and without any satisfactory and reasonable explanation for the delay. That these are Government matters and the court cannot condone the delay in movement of files, some inaction and negligence on the part of the Government officials, merely because larger public interest is at stake. Therefore, the explanation for the delay in para 10, with the assistance of Annexure 'G' does not inspire confidence. It does not demonstrate that the Government or the Department concerned was vigilant, serious and attentive and did its best to protect the public revenue. Therefore, delay cannot be condoned. - Decidde against the Government

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• Indian Laws

• 2016 (4) TMI 90
  Seeking consideration of the product under Clause 14(2) of the Indian Food Code - Carl Jung Brand of non alcoholic beverage - Held that:- writ petition stands disposed of by giving liberty to the petitioner to make an application to the first respondent seeking consideration of the product under Clause 14(2) of the Indian Food Code. While doing so, the petitioner will have to include the relevant materials including scientific report. It is also open to the petitioner to contend that the alcoholic content is less than 1% and the consequences would follow. - Petition disposed of

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