TMI Tax Updates - e-Newsletter
April 5, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Provisions pertaining to acceptance and giving of loans by Companies under Companies Act 2013

   By: namrata gupta

2. Service Tax on Rent-A-Cab Service – A Guide

   By: Manoj Agarwal

3. Companies Acceptance of Deposit Rules 2014.

   By: namrata gupta

News

1. RBI Reference Rate for US $ and Euro

2. Shri R. Gandhi appointed RBI Deputy Governor

3. Rate of exchange of conversion of each of the foreign currency with effect from 4th April, 2014

Notifications

Customs

1. 26/2014 - dated 3-4-2014 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 4th April, 2014

Circulars / Instructions / Orders

FEMA

1. 117 - dated 4-4-2014

Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999

Companies Law

2. 08/2014 - dated 4-4-2014

Commencement of provisions of the Companies Act, 2013 with regard to maintenance of books of accounts and preparations/adoption/filing of financial statements, auditors report, Board's report and attachments to such statements and reports- Applicability with regard to relevant financial year.

3. 07/2014 - dated 1-4-2014

Dissemination of Information with regards to provisions of the Companies Act,2013 as notified till date vis-a-vis the corresponding provisions of the Companies Act, 1956

Highlights / Catch Notes

Income Tax

• High Court Dismisses Petition; Clarifies Difference Between 'Review' and 'Re-assessment' in Income Tax Law.

  Case-Laws - HC : Reassessment - there is a distinction between the ‘power of review’ and ‘power to re-assess’ - The source of information were not in possession of the AO at the time of framing assessment - petition dismissed - HC
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• Tribunal Overlooked Amended Section 94(7) in LTCG Claim on Mutual Funds, Applied Old Law Instead.

  Case-Laws - HC : Claim of LTCG on sale of Mutual Funds - Tribunal committed an error in ignoring the fact that the decision in the case of the assessee for the earlier year was rendered in the background of un-amended section 94 – here, amended section 94 and in particular sub-section(7) had to be applied - HC
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• Assessee Not a Primary Co-operative Bank, Section 80P(4) Inapplicable, Eligible for Deduction u/s 80P(2)(a)(i.

  Case-Laws - AT : Assessee has not to be regarded to be a primary co-operative bank as all the three basic conditions are not complied with –thus, it is not a co-operative bank and the provisions of Sec. 80P(4) are not applicable – the Assessee is entitled for deduction u/s 80P(2)(a)(i) - AT
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• Withholding Tax (TDS) Exemption: Expertise Alone Doesn't Classify Services as Technical for Tax Purposes.

  Case-Laws - AT : Withholding Tax (TDS) - just because expertise, knowledge, technology and experience is possessed by the said party and the same has been utilized for rendering the services, it cannot be said that the services so rendered are in the nature of technical and consultancy services - AT
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• Taxpayers Must Prove Source of Ornaments Sold u/s 69A; Inheritance or Past Acquisition Must Be Demonstrated.

  Case-Laws - AT : Additions u/s 69A - Once the assessee has sold the ornaments in this year, the onus was on the assessee to prove that it has been acquired either by way of inheritance or by her in the earlier years - AT
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• Dispute Over Including Unexplained Expenditures u/s 69C Within Section 142A's Scope, Lacks Legislative Clarity.

  Case-Laws - AT : Addition made u/s 69C – Reference made to DVO u/s 142A - If the intention of the Legislature to include unexplained expenditure as contemplated in Sec.69C of the provision of Sec.142A should have been specifically mentioning the same - AT
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• Income Tax Assessment Invalidated Due to Lack of Evidence for Unaccounted Cash from Car Parking Area Sale.

  Case-Laws - AT : Addition made on account of unaccounted cash receipts – Sale of car parking area - Without any evidence in the year for receipt of on-money the addition cannot be sustained - AT
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Customs

• Court Rules Petitioners Can Appeal Terminal Excise Duty Refund Rejection u/s 15(1) as Aggrieved Persons.

  Case-Laws - HC : Application against rejection of Terminal Excise Duty refund - The scope and width of Section 15(1) of the Act is extremely wide and the petitioners are certainly aggrieved persons at whose instance an appeal would be maintainable - HC
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• Court Upholds NDPS Act Sentence; Weight Discrepancy in Sample Not Enough for Acquittal Without Supporting Case Law.

  Case-Laws - HC : Validity of Judgment & sentence - Conviction and sentence - ppellant has not drawn my attention even to a single case where discrepancy in the weight of the sample was the sole ground for acquittal of the accused in a case under NDPS Act - HC
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• Court Rules Additional Bank Guarantee Unnecessary for Software Seizure; Service Tax Authorities Already Collected Duty Liability.

  Case-Laws - HC : Software seizure - demand of customs duty - When service tax authorities have already collected nearly three crores of rupees towards possible duty liability, insisting that the petitioner provides further bank guarantee would not be appropriate. - HC
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Service Tax

• High Court ruling in separate case fails to secure tax refund for payments not legally required. Claim denied.

  Case-Laws - AT : Denial of refund claim after favorable decision of HC in another case - in case the tax has been paid which is not payable under the authority of law, the same can be challenged by way of refund. - AT
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• Revised Classification for Works Contract Services Remanded for Review, Impacting Ongoing Contracts as of June 1, 2007.

  Case-Laws - AT : Classification of Works Contract Services - Revision of classification - ongoing Works Contracts as on 01.6.2007 - matter remanded back - AT
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• Refund Denied: Unutilized CENVAT Credit Hinges on Actual Export Date as Relevant Date for Claim.

  Case-Laws - AT : Denial of refund claim of unutilized cenvat credit- Date of export - the relevant date should be the date on which the export of the goods was made - AT
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Central Excise

• Interest Granted on Delayed Refund After Pre-Deposit Adjusted Against Outstanding Demand.

  Case-Laws - AT : Refund of pre-deposit - Interest on delayed refund - Though the said refund was sanctioned but the same was adjusted against the outstanding demand. - Interest of delayed refund allowed - AT
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• Interest Demand Confirmed for Late Reversal of Wrongly Availed CENVAT Credit After Over a Year Delay.

  Case-Laws - AT : Interest on CENVAT Credit - There is no dispute by the appellant that it had wrongly availed such credit. But there was a reversal done after lapse of more than one year. - Demand of interest confirmed - AT
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• Steel Used in Pollution Control Equipment Qualifies for Cenvat Credit, Even if Embedded in the Earth.

  Case-Laws - AT : Steel items used in fabrication of pollution control equipment would be eligible for Cenvat credit and the Cenvat credit cannot be denied just on the ground that the pollution control equipment is embedded in the earth. - AT
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• CENVAT Credit Denied Due to Invoice Endorsement by Job Worker, Unfavorable Situation for Assessee.

  Case-Laws - AT : Denial of CENVAT Credit - duty paying document - endorsement on the face of Invoice by the Job workder - prima facie case is against the assesee - AT
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• Court Rules Duty Cannot Be Demanded Twice on Imported Goods u/s 11D of Central Excise Act.

  Case-Laws - AT : Duty demand - collection excess duty from customers on sale of import goods - duty under Section 11D of the Central Excise Act cannot be demanded on imported custom duty paid goods - AT
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VAT

• Court Rules Earth-Moving Machinery Not a Motor Vehicle Under Motor Vehicles Act; Affects VAT and Sales Tax Application.

  Case-Laws - HC : Goods in question are motor vehicle or not - earth moving machinery - Merely because machinery sold by the petitioner is mounted on the wheels for mobility would not make it a ‘vehicle’ as defined in the Motor Vehicles Act - HC
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• Court Rules Non-Registration Under Gujarat VAT Act Section 41(1) Not a Bona Fide Error; Tax and Penalty Upheld.

  Case-Laws - HC : Remission of tax and penalty – Whether non-registration is a bona fide error u/s 41(1) of Gujarat VAT Act – all contentions of the petitioner rejected - HC
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Case Laws:

• Income Tax

• 2014 (4) TMI 180
  Depreciation claimed on parts of Wind Mill at rate of 80% - evacuation equipments - civil work of foundation - electrical supply line and others – CIT(A) deleted entire addition by allowing depreciation at rate of 80% - Held that:- all items are part and parcel of Wind Mills, as discussed in decisions relief on by ld. AR in his Written Submission - No reason to deviate from decision taken by ld. CIT(A) - Confirm impugned deletion and cannot allow appeal of revenue – Decided against Revenue.

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• 2014 (4) TMI 172
  Reassessment - reason to believe - Notice for re-assessment u/s 148 of the Act – Incriminating documents found - Held that:- It is not a case for intervention in the re-assessment proceedings at this stage - the record shows that during search and seizure operation conducted on Sh. S.K. Jain on 04.09.2010, certain incriminating documents such as cash books and cheque books leading to unaccounted transport were taken in possession by the Department - The cash book contains the names of the middlemen through whom cash was received by Sh. S.K. Jain and in lieu of this cash, he used to provide cheques to the beneficiary company which included the assessee as well – Relying upon Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] - mere change of opinion is not a “reason to believe” to re-open the assessment – there is a distinction between the ‘power of review’ and ‘power to re-assess’ - The reasons recorded have a link with the belief that income has escaped income - The source of information to frame an opinion to reassess the income is the documents seized from S.K. Jain – the documents were not in possession of the AO at the time of framing assessment - The relevancy of the documents is required to be inquired into –Decided against Assessee.

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• 2014 (4) TMI 171
  Maintainability of petition – Appeal pending in the Tribunal – Penalty proceedings - Held that:- Assessee contended that the AO and other authorities are claiming that the petitioner’s appeal against the penalty order dated 28.11.2013 has been dismissed/disposed of by the CIT(A) but copy of the order is yet to be received - the petitioner has got an alternative remedy to approach the ITAT – thus, there is no need to interfere in the matter and the CIT(A) is directed to supply copy of the order passed in the penalty matter – Decided against Assessee.

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• 2014 (4) TMI 170
  Stay application – Entitlement for benefit u/s 10(37) of the Act - Compensation received on acquisition of land - Whether the assessee is entitled to the grant of unconditional stay of recovery of demand - Held that:- The assessee received a total amount as compensation out of which TDS was deducted as per provisions of Section 194LA of the Act - The assessee showed long term capital gain on the amount of compensation in the income tax return - The agricultural income shown was nil whereas in the computation chart, agricultural income has been shown to be Rs. 4900/- only. On a query being put to the learned counsel for the petitioner as to whether the land which was acquired was not capital asset within the meaning of Section 2(14) of the Act, he was unable to dispute that it was falling within the limits of the Municipality of Amritsar. In such a situation, it cannot be conclusively held that agricultural activities were being carried on the land and thus, the petitioner was entitled for the benefit under Section 10(37) of the Act. - it is not a fit case for grant of stay of recovery of entire demand. - stay granted equal to 50% of tax liability.

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• 2014 (4) TMI 169
  Sick company - Director General of Income Tax declined the reliefs sought by the petitioner company - Draft Rehabilitation Scheme (DRS) was devised and eventually sanctioned on 14.01.2003 - The complaint of the petitioner is that the previous order dated 26.09.2012 requires determination and such determination was to be based on materials called for, and particulars given to the writ petitioner – Held that:- The pleadings do not anywhere disclose that the revenue called for the views or granted any opportunity to the assessee to present its views –it is necessary to examine whether the liability u/s 41(1) and capital gains liability etc. is confined to one year and if so the quantum, and whether such liability enured in respect of further ass essment periods – the revenue should grant hearing and consider all materials on record, in respect of which assessment orders have been made as well as wherever the returns were made by the assessee – Decided in favour of Assessee.

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• 2014 (4) TMI 168
  Deduction u/s 80HHC of the Act – Exclusion of excise duty and sales tax from computation – Held that:- The decision in Commissioner of Income-tax vs. Pogagen AMP Nagarsheth Powertronics Ltd. [2014 (3) TMI 934 - GUJARAT HIGH COURT ] followed – Decided against Revenue. Relief u/s 80HHC of the Act - Gain of forward currency contract – Speculative Transaction - Held that:- The decision in Commissioner of Income-tax-I vs. Friends and Friends Shipping Pvt.Ltd. [2013 (5) TMI 458 - GUJARAT HIGH COURT] followed -the assessee was entitled to claim deduction as a business loss – Decided against Revenue. Deduction u/s 80HHC of the Act – Receipts arising out of fluctuation of rate of foreign exchange – Held that:- The decision in Commissioner of Income Tax Versus M/s. Priyanka Gems [2014 (3) TMI 938 - GUJARAT HIGH COURT ] followed - The foreign exchange gain arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee - once export is made, due to variety of reasons, the remission of the export sale consideration may not be made immediately – Decided against Revenue.

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• 2014 (4) TMI 167
  Deduction u/s 8O-HHc of the Act – Computation of total turnover – Held that:- The decision in Pogagen AMP Nagarsheth Powertronics Ltd.[2014 (3) TMI 934 - GUJARAT HIGH COURT ] followed – The tax under the Act is upon income, profits and gains. It is not a tax on gross receipts - Under Section 2(24) of the Act the word "income" includes profits and gains - Decided against Revenue. Claim of LTCG on sale of Mutual Funds - Whether the Tribunal is right in directing to allow the claim of Long Term Capital Loss on sale of units of Mutual Funds – Held that:- The decision in CIT., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] has to be followed - after 1.4.2002, also the Parliament had not treated the dividend stripping transactions as sham or bogus and in that view of the matter by applying section 94(7) of the Act also loss to be ignored would only be to the extent of dividend received and not the entire loss - The Tribunal committed an error in ignoring the fact that the decision in the case of the assessee for the earlier year was rendered in the background of un-amended section 94 – here, amended section 94 and in particular sub-section(7) had to be applied – the AO is directed to compute the loss – Decided partly in favour of Revenue.

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• 2014 (4) TMI 165
  Addition u/s 40A(2)(b) of the Act – Suppression of sale receipts - Difference between SRO rate and purchase consideration paid treated as expenditure - Levy of interest u/s 234B of the Act - Penalty u/s 271(1)(c) of the Act – Held that:- The assessee has booked excess expenditure - this expenditure not gone into the Profit and Loss A/c - Unless and until the assessee claimed it as an expenditure in the assessment year under consideration, the provisions of section 40A(2)(b) have no application - The AO was of the opinion that had the assessee is in real estate business and on making plots in the land, the assessee is going to derive benefit - unless and until expenditure is debited to the Profit and Loss A/c. and claimed it as an expenditure while computing income in the assessment year under consideration, provisions of the section cannot be applied - there cannot be any addition in the assessment year under consideration u/s. 40A(2)(b) of the Act - the addition is set aside - the issue relating to levy of interest u/s. 234B and initiation of penalty proceedings u/s. 271(1)(c) does not survive as we have deleted the addition itself – Decided in favour of Assessee. Assessee contended that the AO has not brought anything on record to show that any extra consideration passed between the parties - In the absence of any material to show that extra consideration passed between the parties in respect of the properties of the assessee it is not appropriate to consider the price shown in the website in respect of the properties –Relying upon K.P. Verghese vs. ITO [1981 (9) TMI 1 - SUPREME Court] - section 52(2) of the Act can be invoked only where the consideration for the transfer of a capital asset has been understated by the assessee, or, in other words, the full value of the consideration in respect of the transfer is shown at a lesser figure than that actually received by the assessee, and the burden of proving understatement or concealment is on the Revenue - the sub-section has no application in the case of a bona fide transaction where the consideration received by the assessee has been correctly declared – thus, the order of the CIT(A) upheld – Decided against Revenue. Proper bills and vouchers not produced – Held that:- The assessee's books of account are not verifiable - Certain payments are made by self-made vouchers only and there is every chance of inflating the expenditure –thus, the AO is directed to disallow 5% of cash payments supported by self-made vouchers. – Decided partly in favour of Revenue.

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• 2014 (4) TMI 164
  Disallowance u/s 40(a)(ia) of the Act – Subscription paid to M/s Baker Tilley International – Held that:- The decision in M/s KS Aiyar & Co. Versus The Asst. CIT Rg. 11(2), Mumbai [2013 (6) TMI 570 - ITAT MUMBAI] followed - The relevant clause, specifies that the company shall not constitute any partnership, joint venture or agency relationship with its members - the subscription paid to BTI does not involve any income element and therefore, the provisions of TAS shall not be applicable – the order of the CIT(A) is upheld for deleting the disallowance made by the A.O. u/s 40(a)(ia) of the Act – Decided against Revenue. Disallowance u/s 40(a)(ia) of the Act - Payment made to sub-contractor and international affiliates - Short deduction of TDS – Held that:- The decision in CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] followed - the disallowance by invoking the provisions of section 40(a)(ia) of the Act can be made only when there is failure on the part of the assessee to deduct the tax at source and not in case where there is only short deduction of tax at source – the order of the CIT(A) is upheld in deleting the disallowance made by the A.O. u/s 40(a)(ia) of the Act for short deduction of tax at source – Decided against Revenue. Addition on account of un-reconciled entries of AIR – Held that:- The contention of the assessee is accepted that the addition on account of un- reconciled difference in AIR should be restricted to Rs. 10,830/- as the assessee is admittedly following cash system of accounting – thus, the addition made by the AO and confirmed by the CIT(A) is restricted to that extent – Decided partly in favour of Assessee. Disallowance on payment to legal heir of the deceased partner – Held that:- The decision in M/s KS Aiyar & Co. Versus The Asst. CIT Rg. 11(2), Mumbai [2013 (6) TMI 570 - ITAT MUMBAI] followed - the payment has been made by the firm to the legal heir of its deceased partner, as per the clauses of the partnership deed dated 1.4.2000 having unequivocal covenants – thus, the amount paid to the legal heir of the deceased partner is an allowable expense – Decided in favour of Assessee. Disallowance of 1/5th of telephone and conveyance expenses – Held that:- some disallowance on account of personal use of the telephones and conveyance of the assessee firm by its partners is very much called for and it would be fair and reasonable to make such disallowance at 1/10th of the total expenses claimed by the assessee towards telephone and conveyance expenses – thus, the order of the CIT(A) modified – Decided partly in favour of Assessee. Deduction u/s 80G of the Act – Held that:- The claim of the assessee for deduction u/s 80G of the Act made in the form of revised return was not considered by the AO and the CIT(A) did not give any direction to the AO to consider the same as sought by the assessee on the ground that the proof of filing of revised return was not filed by the assessee before him - assessee has filed such proof and made a request that the matter may be restored to the file of the AO for considering the claim of the assessee for deduction u/s 80G of the Act on merit as made in the revised return – thus, the matter is remitted back to the AO for fresh consideration – Decided in favour of Assessee.

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• 2014 (4) TMI 163
  Disallowance on account of mark to market loss – Foreign exchange contracts – Held that:- The decision in CIT v/s Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] followed - the loss suffered by the assessee is on revenue account towards foreign exchange difference as on the date of balance sheet and is an item of expenditure deductible u/s 37(1) - an enterprise has to report outstanding liability relating to import of raw material using closing rate of foreign exchange and any difference, loss or gain, arising on conversion of said liability at closing rate should be recognized in profit and loss account for reporting period - unrealized loss due to foreign exchange fluctuation in foreign currency transactions on revenue item as on the last date of the accounting year is deductible - thus, order of the CIT(A) set aside and the AO is directed to allow the loss claimed by the assessee on account of marked to market loss on foreign exchange contract – Decided in favour of Assessee. Disallowance of write off of 1/10th of non-compete fee – Held that:- As decided in assessee’s own case for the previous assessment years that there was no merit in the ground raised by the assessee – Decided against Assessee.

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• 2014 (4) TMI 162
  Deletion u/s 2(22)(e) of the Act – Deemed dividend – Held that:- The CIT(A) has gone by the presumption that the AO has considered that the assessee has made investment in Hegde Hotels India Pvt. Ltd., which is not correct - he has gone by the presumption that the AO has based his calculation on the fact that Hegde Hotels India Pvt. Ltd. had given loan to Mr. Sudhakar Hegde, which in turn, has advanced to the assessee, which fact is also not correct - he has not analysed as to what is the amount invested by Hegde Hotels India Pvt. Ltd. for the share application money in the assessee company and how much was the unsecured loan received by the assessee from the Hegde Hotels India Pvt. Ltd., and whether it was loan or not, or if loan, then what was the nature of the loan - He has also not analysed, whether the assessee is a substantial shareholder in Hegde Hotels India Pvt. Ltd. or not - All these facts are necessary for coming to any conclusion on merits - without going into the merits of the issue, the order of the CIT(A) is set aside and the matter is remitted back for fresh adjudication – Decided in favour of Revenue.

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• 2014 (4) TMI 161
  Deduction u/s 80P(2)(a)(i) of the Act - Whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) and whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007 – Held that:- Sec. 80P(2)(a)(i) provides two types of activities in which the co-operative society must be engaged to be eligible for deduction under sub-clause (i) - These two activities are not alternates ones because the section allows deduction to the co-operative society on the whole of profits and gains of business attributable to any one or more of such activities - This pre-supposes that eligible co-operative society can carry on either one of these two businesses or can carry both these businesses for the members - If the Assessee co-operative society carries on one or both of the activities, it will be eligible for deduction. Where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilities to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of business relating to its members. Whether the Assessee is a co-operative bank or not – Held that:- In case, the assessee does not comply with the three conditions of being a cooperative society, it cannot be regarded to be a co-operative bank and the provisions of Sec. 80P(4) will not be applicable in the case of the Assessee - Once, the Assessee will not fall within the provisions of Sec. 80P(4), the Assessee, will be eligible to get deduction u/s 80P(2)(a)(i) in respect of whole of the income which the Assessee derives from carrying on the business of banking or providing credit facilities to its members. The Assessee has not to be regarded to be a primary co-operative bank as all the three basic conditions are not complied with –thus, it is not a co-operative bank and the provisions of Sec. 80P(4) are not applicable – the Assessee is entitled for deduction u/s 80P(2)(a)(i) – thus, the order of the CIT(A) set aside and the AO is directed to allow deduction to the assessee u/s 80P(2)(a)(i) on the income generated for providing banking or credit facilities to its members – Decided in favuor of Assessee.

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• 2014 (4) TMI 160
  Withholding Tax (TDS) u/s 195 - FTS u/s 9(1)(vii) - Levy of demand u/s 201 and 201(1A) of the Act – Payments made to foreign companies – Held that:- The payments received by it from foreign clients for exactly the similar work executed by it have not been subjected to withholding tax nor was it called upon to file its return by the several countries from the residents of which assessee received payments for services rendered by it -there was no element of any Technical Services in the production of animation films nor in the production of a part or certain episodes of an animation film so to attract the provision of Section 9(1) (vii) read with Section 5(2)(b) of the Act - just because such expertise, knowledge, technology and experience is possessed by the said party and the same has been utilized for rendering the services, it cannot be said that the services so rendered are in the nature of technical and consultancy services without making any technology available to the other party - The payment paid by the assessee-company or any part could not be treated as 'fees for included services' within the meaning of 'fees for technical services' defined in section 9(1)(vii) of the Act". The AO’s attempt to raise demands u/s 201 is not correct - Even explanation-1 to section 9(1) excludes the income pertaining to operations carried out outside India - The foreign parties have not done any activity in India nor they have any PE in India - As there is no liability to deduct tax on the amounts paid u/s 195, it is not correct on the part of AO to raise demands - The AO it seems had issued notice u/s 201 (1) in respect of payments by assessee to TV Arts also and on explanation by the assessee that it was the payments resulted in income from business, the proceedings were dropped - The submission of the assessee that regard to T.V. Arts relied on Article 7 of DTAA between India & Philippines which applies to business income of non-residents i.e T.V. Arts and submitted that tax was not deducted as it was not taxable is accepted - Non-liability to TDS was not because of lack of article for FTS in DTAA, but because of application of Article 7 – the order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (4) TMI 159
  Provision for loss on mark to market treated as notional loss - Whether the CIT(A) was justified in deleting the addition on account of provisions for loss on mark to market, on derivatives by treating it as notional loss – Held that:- The decision in Edelweiss Capital Ltd., Mumbai Versus Income Tax Officer 3(1) (1), Mumbai [2012 (10) TMI 223 - ITAT, MUMBAI] followed - the loss due to a fall in price below cost is allowed even if such loss has not been actually realized - The derivatives have been treated as stock-in-trade then there is nothing unusual in the assessee valuing each derivative by applying the rule cost or market whichever is lower - ICAI in its guidelines have also approved of the rule of prudence which really means that while anticipated losses can be taken note of while valuing the closing stock, anticipated profits cannot be recognized - The anticipated loss cannot be treated as a contingent liability – Decided against Revenue.

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• 2014 (4) TMI 158
  Addition made u/s 68 of the Act – Unexplained cash credits - Claim u/s 10(38) of the Act – Held that:- The shares and mutual funds the LTCG on sale of shares comes to Rs.47,71,191 - the same has been claimed as exempt at Rs.46,27,742 - the claim has been denied only on the ground that it was not made through a revised return of income - The decision in Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] followed – thus, the AO is directed to allow the claim of exemption u/s.10(38) of the Act in respect of LTCG on sale of shares – Decided in favour of Assessee.

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• 2014 (4) TMI 157
  Reopening of assessment u/s 147 of the Act – Disallowance u/s 14A of the Act – Held that:- The assessment order is quashed by the CIT(A) as invalid on the ground that proviso to section 14A prohibits re-opening of the assessment under section 147, for the purpose of disallowing any expenditure under section 14A – the conclusion of the CIT (A), on the very face of it, is unsustainable, because the proviso is applicable only for the assessment year beginning on/or before 1st April 2001 – the proviso will not be applicable for the assessment years beginning from 1st April 2002 - the assessment year involved is A.Y. 2005-06 and hence, the proviso will not bar the re-opening u/s 147 and will not be applicable – the entire issue of deciding the validity of re-opening and on merits, is required to be remitted back to the CIT(A) – thus, the matter is remitted back to the CIT(A) for fresh consideration – Decided in favuor of Revenue. Appeal not decided on merits – Reopening u/s 148 not proper – Held that:- Since the matter is already remitted back to the CIT(A) to decide the issue of validity of re-opening u/s 147 on other objections of the assessee and also to deal and decide the issue on merits – thus, the assessee’s grounds are also remitted back to the CIT(A) – Decided in favour of Assessee.

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• 2014 (4) TMI 156
  Disallowance u/s 14A of the Act – Invocation of Rule 8D of the Rules – Whether or not the CIT(A) was justified in confirming the disallowance u/s 14A for the assessment year 2002–03, 2004–05, 2005–06 and 2007–08 - Held that:- The decision in GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed – No deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income under the Act, by virtue of the provisions of Section 14A(1) - The provisions of Rule 8D of the Income Tax Rules as inserted by the Income Tax (Fifth Amendment) Rules 2008. The AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act – thus, the matter is remitted back to the AO for fresh consideration as to the analysis of administrative expenses shown by the assessee and to examine the nature of interest expenditure and if the interest expenditure does not pertain to any investment which has yielded or is capable of yielding any exempt income, then such interest expenditure cannot be allocated or can be considered for making any disallowance and if general administrative expenditure cannot be properly allocated or attributable for the purpose of exempt income, then while arriving at the 0.5% average investment, the Assessing Officer shall remove those investments which are not capable of earning exempt income – Decided in favour of Assessee.

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• 2014 (4) TMI 155
  Sale proceeds of inherited articrafts and Jewellry – personal effects - Capital gain OR income from other sources - Held that:- The assessee had sold some decorative vases and display plates, etc., which do not come within the purview of “capital assets” as defined in section 2(14)(ii) - the assessee had submitted the valuation report of household artifacts and furnitures wherein such decorative vases and display plates have been mentioned - it is not a capital asset and these are only household decorative items which are mentioned in the valuation report dated 8th January 1975 – thus, there is no reason to sustain the addition on account of sale proceeds of artifacts, under the head “income from other sources”. Sale of jewellery – Held that:- There is no rebuttle of the findings of the AO and the CIT(A) that the assessee could not produce any corroborative evidence to show that the assessee has initiated the same jewellery from her late father, as shown in the valuation report dated 7th June 1972 - The onus is upon the assessee to show nexus of the inheritance of the jewellery and the sale of jewellery in this year - The explanation offered by the assessee, has not been found to be satisfactory and is not corroborated by any credible evidence on record. Once the assessee has sold the ornaments in this year, the onus was on the assessee to prove that it has been acquired either by way of inheritance or by her in the earlier years - provisions of section 69A, clinches the issue and it has to be treated as deemed income of the assessee, if there is no satisfactory explanation with regard to the source of acquisition – Decided partly in favour of Assessee.

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• 2014 (4) TMI 154
  Addition made u/s 69C of the Act – Reference made to DVO u/s 142A of the Act - Difference between cost of construction and valuation made by the DVO – Held that:- The assessee has produced the books of account but the AO has not rejected or no defect was pointed out in the books of account regarding cost of construction of the project before reference to the DVO - Without causing any defects in books regularly maintained and without rejecting the books u/s.145, of the Act there is no reason to add any amount on the presumption that the cost/investment in construction is low - thus, without rejecting the books of account regularly maintained, the addition cannot be made only on the basis of the DVO’s report - the assessee has supplied requisite information to DVO and also produced before AO which he has seen and verified but has not commented on the genuineness of the bills and not pointed out any defects in the bills and hence not rejected the records maintained and produced by assessee. Reference to valuation cell u/s.142A can be made during the course of assessment and reassessment and not for the purpose for initiating assessment – the decision in Umiya Co-operative Housing Society Ltd. v ITO 2005 (3) TMI 382 - ITAT AHMEDABAD-B] followed - the provisions of Sec. 142A cannot be read in isolation to Sec.145 - if books of account are found to be correct and complete in all respect and no defect is pointed out and cost of construction of building is recorded, then the addition on account of difference in cost of construction could not be made even if a report is obtained within the meaning of Sec.142A from the DVO - thus, when AO has not rejected the books of account by pointing out any defects reference to the DVO will not be valid – thus, DVO’s report could not be utilized for framing assessment even if such a report is considered to be obtained u/s.142A - reference to DVO being held as invalid, the assessment/ reassessment framed thereafter would also be invalid. The decision in COMMISSIONER OF INCOME-TAX Versus AAR PEE APARTMENTS P. LTD. [2009 (8) TMI 256 - DELHI HIGH COURT] followed - Except the report of DVO, there was nothing on record to suggest that there was any Of the evidence to disbelieve the expenditure shown by the assessee - the Legislature has not included unexplained expenditure stipulated in Sec.69C of the Act for invocation of provisions of Sec.142A of the Act - even the CBDT Circular issued by it, explaining the Finance Bill, 2004, specifically omitted the word ‘expenditure’ as well as Sec.69 from the ambit of Sec.142A of the Act as inserted in the form as it appears on the statue book - If the intention of the Legislature to include unexplained expenditure as contemplated in Sec.69C of the provision of Sec.142A should have been specifically mentioning the same - the cost of flat being shown by the assessee as current assets not as an investment, it cannot be subject matter of reference u/s. 142A – Decided in favour of Assessee.

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• 2014 (4) TMI 153
  Addition made on account of unaccounted cash receipts – Cash receipts of brokerage – Sale of car parking area - Held that:- Without any evidence in the year for receipt of on-money the addition cannot be sustained –there is no documentary evidence with respect to the sale of car parking area except the document no.15 of the documents - there is no basis for making addition for each flat for car parking - The AO had not made any inquiry or verification to examine the facts regarding the rate of sale, area, on money payment of brokerage charges and car parking charges from any of the available sources including the buyers of flats as none of the buyers of the flats was examined by the department to verify the involvement of on-money payment and other charges as alleged by the revenue - Even the understatement of area is not examined by the AO at any stage of proceedings - it cannot be presumed that all the flats were sold by the assessee through the real estate agent and involved brokerage charges. When the statements u/s 133A were recorded at back of the assessee and were subsequently retracted by the witnesses have no evidentiary value to the extent of contents whichever corroborated by documents impounded during the survey proceedings – thus, no addition is warranted with regard to the area, parking charges and brokerage - The addition regarding rate is sustainable only to the extent of rates mentioned in the documents – thus, the order of the CIT(A) upheld – Decided against Revenue.

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• Customs

• 2014 (4) TMI 152
  Validity of DGFT order – Scope of Section 15(1)(b) of the Foreign Trade Act, 1992 - Entertainment of the appeals u/s 15(1)(b) of the Act - Application against rejection of Terminal Excise Duty refund - Held that:- The scope and width of Section 15(1) of the Act is extremely wide and the petitioners are certainly aggrieved persons at whose instance an appeal would be maintainable - The present writ petitions are allowed to the extent that the impugned orders dated 23rd August, 2013 are set aside - Matters remanded back to the DGFT to decide the matters afresh – Decided in favour of appellants.

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• 2014 (4) TMI 151
  Validity of Judgment & sentence - Conviction and sentence - Tampering with samples – prove beyond reasonable doubt - Section 21(c) r/w Section 29 and Section 23(c) r/w Section 28 of the NDPS Act - Held that:- A perusal of the reports of CRCL PW5/A, that the sample marked B1/S1 had four intact seals of Custom seal No.6 on them whereas the sample marked B2/S1 had three such intact seals - The report Ex.PW5/B would show that the sample C1/S1 had four intact seals on it, samples C2/S1 & C3/S1 had five and report Ex.PW5/C shows that the samples A1/S1, A2/S1 and A3/S1 had three intact seals on each of them - It is quite evident that there was no possibility of the samples having been tampered with - According to PW4 had collected the samples from PW2 on 15.9.2005 and at that time the seals were intact on all the samples - The seals were intact on the samples when they were received in CRCL on 15.9.2005 - When PW3 received the samples from Shri Surender Pal Singh, the seals were intact on them - Considering the above referred evidence coupled with the report of testing by field kit and the statement made by the appellants under Section 67 of the NDPS Act is sufficient to prove beyond reasonable doubt that there was no reasonable possibility of the samples having been tampered with at any time before they were examined in the CRCL. Different weight of the samples - Held That:- Judgment in CBI Vs. Dilbagh [2003 (1) TMI 689 - SUPREME COURT] followed - The case of the complainant is that eight (8) samples weighing 5 gms each were drawn - It is not known whether the balance used by PW1 for weighing the samples was a manual balance or electric balance - Even if it was an electric balance, the accuracy of the balance would not be the same since the extent of accuracy of the balance would depend upon the quality and sensitivity of the balance used for the purpose of weighing - The excess weight was not more than 1.59 gms and the short weight was not more than 2.5 gms - The variation of 2-3 gms can be easily attributed to the fact that the balance used in CRCL would not be the same which the seizing officer had used at the time of seizure of the narcotic drug. An IO need not have a balance of a high accuracy in order to draw the samples - He can draw sample weighing approximately 05 gm using ordinary balance. If the same sample is weighed at an accurate scientific balance used in CRCL, the weight of each sample is bound to differ - The difference in weights of samples rather shows the genuineness of the case - If the case had been a made up or a false case, the IO might have used more accurate balance and weighed the samples with accuracy - Such difference in weight is natural - No malafide can be drawn by the appellant by this difference of weight - Thus the weight difference in the sample cannot be considered as a ground for acquittal - Moreover, though an unexplained variation in the weight of the sample, along with other shortcomings and discrepancies in the case of the prosecution may lead to acquittal of the accused, it cannot be made the sole basis of acquittal in a case where the prosecution produced the entire link evidence to rule out any reasonable possibility of the sample having been tampered with before it is examined in the laboratory - The learned counsel for the appellant has not drawn my attention even to a single case where discrepancy in the weight of the sample was the sole ground for acquittal of the accused in a case under NDPS Act - No good ground to interfere with the conviction of the appellants - However, sentence is reduced to ten (10) years each and fine is reduced to Rs.1.00 lakh each - The appeals stand disposed of – Decided against Appellants.

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• 2014 (4) TMI 150
  Release of the seized goods – Software seizure - diamond cutting and polishing machineries would require sophisticated software for operation - Appropriate condition of release – Whether bank guarantee required if three crores of rupees already recovered - Held that:- Use of the software should be allowed to the petitioner by relaxing the rigourous conditions imposed by the authorities in the said two orders permitting provisional release - When service tax authorities have already collected nearly three crores of rupees towards possible duty liability, insisting that the petitioner provides further bank guarantee would not be appropriate. When a sizeable sum of Rs. 3 crores is already recovered by one arm of the Union of India, further condition of bank guarantee merely for using the software pending further investigation and possible adjudication would not be justified - It is directed that the petitioner would be allowed to utilize such seized machinery along with the installed software for its manufacturing activity in the machines imported and installed at its Surat unit on conditions - Remaining conditions of supratnama as well as the provisional release orders except furnishing bank guarantee shall remain in operation. Territorial jurisdiction – Held that:- The petitioner has manufacturing unit at Surat - It has its machinery and software at Surat - The goods were seized at Surat by the DRI, Surat - The goods have been returned under supratnama also at Surat – Thus it cannot be said that no part of cause of action had arisen within the territorial jurisdiction of this Court - The petition is disposed of with the given directions – Decided in favour of Petitioner.

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• 2014 (4) TMI 149
  Reduction of sentence - Conviction u/s 135 of the Customs Act – First time offender – Bail not misused – Confiscation 18 years before - Protracted trial - Already served substantive sentence awarded – Meeting ends of justice – Imposition of Fine - Held that:- Judgments in R.K.Jaleel v. Assistant Collector of Customs & Anr. [2004 (8) TMI 115 - SUPREME COURT OF INDIA] and Udai Kant Jha v. Union of India [1999 (12) TMI 78 - SUPREME COURT OF INDIA] followed - The ends of justice would be met if the sentence awarded to the petitioner is reduced to the period already undergone - The petitioner was a first time offender and there are no other criminal proceedings pending against him - Even the currency and other articles in the nature of Kranti dhotis that were confiscated relate to the year 1996 - Even the concession of bail granted to the petitioner in the year 2003 has not since been mis-used - The petitioner has already faced a protracted trial of more than a decade - He has already undergone a period of two months and eleven days out of the substantive sentence of one year rigorous imprisonment awarded to him - The conviction of the petitioner is upheld and the revision petition to such extent is dismissed - However, the sentence awarded to the petitioner is reduced to the period already undergone by him subject to deposit of fine as imposed by the trial Court, if not already deposited - Petitioner, who is on bail, is discharged from the liability of bail bonds - Revision petition disposed of in the aforesaid terms – Decided in favour of Petitioner.

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• Service Tax

• 2014 (4) TMI 176
  Denial of refund claim - foreign agency commission - Reverse charge mechanism - Unjust enrichment - Held that:- There is no show cause notice issued to the appellant nor any adjudication order has been passed for appreciation of the amount. The Service Tax was paid on 20.03.2009 and the decision of Hon'ble Bombay High Court in the case of Indian National Shipowners Association (2008 (12) TMI 41 - HIGH COURT OF BOMBAY) is subsequent to the deposit of the amount. In view of the law laid by Bombay High Court which is upheld by Hon’ble Supreme Court, we find that the appellants are not liable to pay Service Tax in respect of the services received prior to 18.04.2006 from the foreign service provider. The Hon'ble Karnataka High Court in the case of CCE Bangalore Vs KVR Constructions - [2012 (7) TMI 22 - KARNATAKA HIGH COURT] held that in case the tax has been paid which is not payable under the authority of law, the same can be challenged by way of refund. Hence, on merit, the appellants are entitled for refund claim. In respect of unjust enrichment, we find that the adjudicating authority has not gone into the issue and the Commissioner (Appeals) held that the appellants have not furnished any evidence that the burden of duty has not been passed on - As the issue of unjust enrichment has not been gone into by the lower authorities, therefore the impugned order is set aside and the matter is remanded to the adjudicating authority to decide the issue of unjust enrichment - Decided in favour of assessee.

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• 2014 (4) TMI 175
  Valuation under service tax - inclusion of TDS (withholding tax) where burden born by the recipient (payer) in the gross value - Levy of service tax on reverse charge bases - Appellant has deposited a total sum of Rs. 88,18,811/- which covers the service tax liability as observed in paragraph 22(2) of the tribunal [2012 (7) TMI 191 - CESTAT, CHENNAI] - Matter remanded back.

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• 2014 (4) TMI 174
  Classification of Works Contract Services - Revision of classification - Commercial or Industrial Construction Services to Works Contract Services - Held that:- The first show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009, were mainly targeted to deny the benefit of Composition Scheme to the appellant and to determine the taxable value as per Rule 2A of the Service Tax (Determination of Value) Rules, 2006 read with section 67 of the Finance Act, 1994. The provisions of Rule 2A and Composition Scheme deal only with the Works Contract Service under Section 65 (105) (zzzza). There was thus no doubt in the authority issuing show cause notice dated 22.10.2008 and its corrigendum dated 29.09.2009 that the classification of the services being dealt was ‘Works Contract Services’ with effect from 01.7.2006. Admissibility of composition scheme for ongoing Works Contracts as on 01.6.2007 has since been decided by Hon’ble Apex Court in the case of Nagarjuna Construction Company Limited vs. GOI [2012 (11) TMI 404 - SUPREME COURT] which was not available before the Adjudicating authority at the time of passing the adjudication order in 2010. Secondly Adjudicating authority has not considered Para 2 of the CBEC Circular No. 128/10/2010-ST dated 24.08.2010 which is binding on the filed formations. Further the issue of free supply of goods/ sale of goods in a works contract and its inclusion in the assessable value, is required to be examined in the light of judicial pronouncement of Delhi High Court in the case of G.D. Builders vs. UOI [2013 (11) TMI 1004 - DELHI HIGH COURT], read with Rule -2A of the Service Tax (Determination of Value) Rules, 2006. In the light of these observations and in the interest of justice, therefore, the matter is required to be remanded back to the Adjudicating authority to decide the cases afresh in de-novo proceedings - Decided in favour of assessee.

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• 2014 (4) TMI 173
  Denial of refund claim of unutilized cenvat credit- Date of export - whether the refund claims rejected by the lower authorities holding the same as hit by limitation is correct as per the provisions of Rule 5 of the Cenvat Credit Rules read with notification No.05/2006-CE(NT) - Held that:- the relevant date should be the date on which the export of the goods was made - Decision in the case of Swagat Synthetics [2008 (7) TMI 208 - HIGH COURT GUJARAT] distinguished - Following decision of Commissioner of C. Ex., Coimbatore Vs. GTN Engineering (I) Ltd. [2011 (8) TMI 960 - MADRAS HIGH COURT] - Decided against Revenue.

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• Central Excise

• 2014 (4) TMI 148
  Waiver of pre deposit - Quantum of pre deposit - manufacture of tractor parts - Held that:- Pre deposit amount requested by appellnt is reduced to Rs 12 Lacs from Rs. 25 lacs - However, time period to make pre deposit is extended - Decided partly in favour of assessee.

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• 2014 (4) TMI 147
  Waiver of pre deposit - Quantum of pre deposit - manufacture of tractor parts - Held that:- Amount requested by tribunal to make pre deposit is reduced to 1.5 Lacs from 3 lacs - However, time period to make pre deposit is extended - Decided conditionally in favour of assessee.

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• 2014 (4) TMI 146
  Condonation of delay - Jurisdiction of tribunal - whether in case of delay in filing the appeal where the Committee of Chief Commissioner of Central Excise takes a decision to file an application to the Tribunal beyond the period of one month from the date of communication of the order in terms of section 35E( 4) of the Act, the Tribunal is competent to condone the delay for sufficient cause under Section 35B(5) of the Act - Held that:- where an application is made by the Commissioner to the Tribunal in pursuance of an order under sub-section (1) within a prescribed period from the date of communication of that order, such application shall be heard by the Tribunal as if it was an appeal made against the decision or order of the adjudicating authority and the provisions regarding appeals under Section 129A to the Tribunal, in so far as they are applicable, would be applicable to such application. The crucial words and expressions in Section 129D(4) are, "such application", "heard", “as if such application were an appeal” and “so far as may be”. The expression “such application”, inter alia, is referable to the application made by the Commissioner to the Tribunal in pursuance of an order under sub-section (1) of Section 129D. The period prescribed in Section 129D for making application does not control the expression “such application”. It is difficult to understand how an application made under Section 129D (4) pursuant to the order passed under sub-sections (1) or (2) shall cease to be “such application” merely because it has not been made within prescribed time. If the construction to the words “such application” is given to mean an application filed by the Commissioner before the Tribunal within the prescribed period only, the subsequent expressions “heard”, “as if such an application were an appeal'” and “so far as may be” occurring in Section 129D(4) of the Act may be rendered ineffective. The clear and unambiguous provision in Section 129D(4) that the application made therein shall be heard by the Tribunal as if it was an appeal made against the decision or order of the adjudicating authority and the provisions of the Act regarding appeals, so far as may be, shall apply to such application leaves no manner of doubt that the provisions of Section 129A (1) to (7) have been mutatis mutandis made applicable, with due alteration wherever necessary, to the applications under Section 129D(4). - Following decision of COMMISSIONER OF CENTRAL EXCISE, MUMBAI Versus AZO DYE CHEM [2000 (7) TMI 107 - CEGAT, COURT NO. III, NEW DELHI] - Matter remanded back - Decided in favour of Revenue.

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• 2014 (4) TMI 145
  CENVAT Credit - Fraudulent CENVAT Credit taken - CENVAT credit taken was deposited before the issue of show cause notice - Penalty u/s 11AC - Bar of limitation - Held that:- appellant was a party to the fraud committed in availing CENVAT credit on grey fabrics which was never received. Accordingly, CENVAT credit has been correctly denied by the lower authorities by invoking extended period - So far as extending the option of 25% reduced penalty under Section 11AC to the main appellant is concerned, it is observed that neither the adjudicating authority nor the first appellate authority has allowed this option to the main appellant. Accordingly, main appellant is allowed to avail the option of payment of 25% reduced penalty under Section 11AC of the Central Excise Act, 1944 if the entire amount of duty and interest along with 25% reduced penalty is paid within one month from the receipt of this order - there was clear-cut knowledge of the Partner Shri Biren H. Vekharia that credit is being taken fraudulently. Therefore, penalty imposed upon him has been correctly upheld by the first appellate authority - Decided partly in favour of assessee.

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• 2014 (4) TMI 144
  Denial of CENVAT credit - Original authority denied the credit holding that "welding electrode" used for repair and maintenance of machinery is not an eligible input to avail credit - Held that:- appellant availed credit of duty paid on 'welding electrodes' used for maintenance of their machinery. The Commissioner (Appeals) observed that they have not stated the usage of the goods. It is also observed that the original authority rightly denied the credit on 'welding electrodes' used for repairs and maintenance of machinery. The learned consultant submits that they have stated the use of the goods in their reply to the show cause notice. In view of that, I find it is appropriate and proper in the interest of justice that the matter should be remanded to the Commissioner (appeals) to examine the usage of the goods. Accordingly, the impugned order passed by the Commissioner (Appeals) is set aside and the matter is remanded back to the Commissioner (Appeals) to decide the matter afresh in accordance with law - Decided in favour of assessee.

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• 2014 (4) TMI 143
  Refund of pre-deposit - Interest on delayed refund - Held that:- appellant was entitled to refund of pre-deposit within a period of 3 months from the passing of favorable order. Though the said refund was sanctioned but the same was adjusted against the outstanding demand. As such, for all practical purposes the amount of Rs. 75,000/- deposited by the appellant was not returned to them. Hon’ble Gujrat High Court in the case of Nijrang Print Pack Pvt. Ltd. Vs. UOI reported as [2002 (10) TMI 113 - HIGH COURT OF GUJARAT AT AHMEDABAD] has in an identical circumstances held that the interest would be liable to be paid within a period of 3 months from passing of favorable orders. To the same effect is the decision of the Tribunal in the case of L & T Ltd. Vs. CC Ahmedabad [2005 (8) TMI 158 - CESTAT, NEW DELHI] as also in the case of Steelco Gujarat Ltd. Vs. CCE, Vadodara [2008 (7) TMI 248 - CESTAT, AHMEDABAD] - Decided in favour of assessee.

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• 2014 (4) TMI 142
  Availment of CENVAT Credit - Whether the appellant was entitled to take cenvat credit in respect of capital goods which was subjected to depreciation - Held that:- Thus adjudicating authority was right to order inadmissibility of cenvat credit of Rs.3,72,349/-. It appears that on being pointed out there was reversal of the said credit in the account of the appellant. Adjudication order does not disclose whether the credit recorded in the books were at any time availed. In absence of any finding in that aspect there shall be neither interest nor penalty chargeable. There is no dispute by the appellant that it had wrongly availed such credit. But there was a reversal done after lapse of more than one year. Such huge period calls for payment of interest to Revenue because in the meantime the appellant must have availed the benefit of credit recorded in the gooks. Accordingly, interest shall be payable on this amount but no penalty be chargeable - Decided partly in favour of assessee.

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• 2014 (4) TMI 141
  Availment of CENVAT Credit - Held that:- From the findings of the Assistant Commissioner, which have been upheld by the Commissioner (Appeals), it is clear that the steel items, in question, have been used for fabrication of various items of sugar mill machinery. There is also no dispute that sugar mill machinery is covered by Chapter 84 and hence its components would also be covered by the definition of capital goods, as given in Rule 2 (a) of Cenvat Credit Rules, 2004. It is not the finding of the Commissioner (Appeals) that each and every item of machinery had come into existence as fixed to the earth structure. From the description of various items of component and machinery, as given in the order, it is clear that these items has been fabricated and thereafter the same were installed. I, therefore, do not agree that the various items of the components of sugar mill machinery, fabricated by the appellant were fixed to the earth structures. Just because an item of machinery or its component after being fabricated has been installed in course of which it has become fixed to the earth, the Cenvat credit cannot be denied - Decided in favour of assessee.

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• 2014 (4) TMI 140
  Availment of CENVAT Credit - Held that:- user of the steel items, in question, in fabrication of evaporation plant to reduce the quantity of affluent is not disputed and thus use of the steel items, in question, for fabrication of pollution control equipment stands accepted by the department. I find that in identical circumstances Hon’ble Karnataka High Court in the case of CCE, Bangalore II vs. SLR Steels Ltd. (2012 (9) TMI 169 - KARNATAKA HIGH COURT ) and the Apex Court judgment in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. (2010 (7) TMI 12 - SUPREME COURT OF INDIA) has held that the steel items used in fabrication of pollution control equipment would be eligible for Cenvat credit and the Cenvat credit cannot be denied just on the ground that the pollution control equipment is embedded in the earth. In any case, any item of machinery or equipment which has either been fabricated in the factory or has been brought to the factory, would after installation, become fixed to the earth and, therefore, in my view on this ground, the Cenvat credit cannot be denied - Decided in favour of assessee.

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• 2014 (4) TMI 139
  Waiver of pre deposit - Interest on differential duty - Held that:- amount of interest stands appropriated towards arrears of Revenue as per Order-in-Original passed by the Assistant Commissioner of Central Excise, Palakkad-I Division. He has also produced a copy of the said Order-in-Original. On a perusal of the said order, I find that an amount of Rs. 5,14,846/- demanded towards interest vide Order-in-Original No. 71/2010-CE dated 31.12.2010 read with corrigendum thereto dated 31.1.2011 has been appropriated towards other arrears of Revenue under Section 11 of the Central Excise Act. It is also pointed out that Order-in-Original No. 25/2012 is presently under challenge before the Commissioner (Appeals) but its operation has not been stayed - present application for waiver of pre-deposit and stay of recovery in respect of the aforesaid amount of interest is infructuous and is dismissed as such - Stay denied.

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• 2014 (4) TMI 138
  Waiver of pre-deposit - Denial of CENVAT Credit - duty paying document - endorsement on the face of Invoice by the Job workder - Denial of the credit is on the ground that the relevant invoices were not issued to the appellant by the manufacturer of inputs - Held that:- I have perused Rule 9 of the CCR, 2004 and have found no mention of endorsed invoice in the list of documents prescribed under the Rule. I am not oblivious of the need to interpret the provisions harmoniously. But any provision so interpreted should be squarely applicable to the given factual situation so as to enable the appellant to claim CENVAT credit. If the manufacturer of inputs had issued the invoices to the appellant (principal manufacturer of final product) while sending the goods to the latter’s job worker, it would have been consistent with the established trade practice. In the instant case, the manufacturer of inputs sent the goods along with invoices to the appellant’s job worker and the latter made endorsements on the documents. The invoices so endorsed do not figure in the list of documents prescribed under Rule 9. Therefore, the appellant has failed to make out a case on merits - Conditional stay granted.

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• 2014 (4) TMI 137
  Waiver of pre deposit of duty - Denial of benefit of Cenvat credit of service tax paid on GTA services - Denial on the ground that appellants are directly selling their goods to their customers - Held that:- there is a Board’s circular No. 97/8/2007 ST dated 23.8.07 clarifying that the place of removal refers to depots / premises of the consignment agents or any other place or premises from where excisable goods are sold after their clearance from the factory. If the place of removal refers to the above places, the assessee would be entitled to avail Cenvat credit of service tax paid on the GTA services used for the said purpose - Stay granted.

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• 2014 (4) TMI 136
  Waiver of pre deposit - Clearance of goods on which cenvat credit was availed without reversing the entire amount of the cenvat credit that has been availed by assessee when he purchased the capital goods - Held that:- appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. Accordingly, application for the waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Following decision of the case of Raghav Alloys (P) Ltd. [2010 (4) TMI 294 - PUNJAB & HARYANA HIGH COURT] - Stay granted.

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• 2014 (4) TMI 135
  Duty demand - collection excess duty from customers on sale of import goods - It was noticed by the departmental officers that the appellants were charging excess amount from their customers on duty paid stocks though the duty earlier paid by them at the lower rate. Since the excess amount was not paid by the appellants to the department the same is recoverable from the appellants under Section 11D of the Central Excise Act along with interest under Section 11AB of the Act - Held that:- duty under Section 11D of the Central Excise Act cannot be demanded on imported custom duty paid goods - Following decision of Hindustan Petroleum Corpn. Ltd. Vs. CCE, Chandigarh [2012 (6) TMI 246 - CESTAT, MUMBAI] - Decided in favour of assessee.

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• 2014 (4) TMI 134
  Denial of certain cenvat credit on the basis of debit notes issued against duty paid invoices - less payment was made to supplier of inputs - Held that:- It is not disputed by Revenue in their memo of appeal that respondent took the credit of duty paid by the manufacturer and the manufacturer have not claimed refund of any duty. In such a scenario, I am of the view that Commissioner (Appeals) order relying upon Board’s Circular is appropriate and no infirmity is found in the order of the appellate authority - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2014 (4) TMI 179
  Quashment of Demand notice - Genuineness of assessment – Whether assessee was defaulter - Seeking of opportunity to produce the books of account for fair determination of tax – Held that:- the process of determining tax was initiated and has culminated in passing of Annexures-F and G - Though there is mention that the petitioner had not produced books of account, but as could be seen petitioner has already submitted returns and has paid tax as calculated by it - Thus it cannot be said petitioner is totally at fault or is a defaulter - All that the petitioner seeks is opportunity to produce the relevant books of account for fair determination of tax against the tax determined by the authorities. Only legally imposable tax could be recovered in the manner known to law - Any erratic assessment would certainly not be in the interest of the tax payer - Court was satisfied that assessee had made out a case to grant permission to it to produce all relevant books of account and documents to support its assessment against the proposition of tax issued by revenue - Two week`s time is granted to the petitioner to produce all books of account as required by the respondent - The impugned notice at Annexure-F and the proposition notice at Annexure-G are quashed only on the ground it is vitiated for denial of opportunity – Decided in favour of Assessee.

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• 2014 (4) TMI 178
  Goods in question are motor vehicle or not - earth moving machinery, parts and accessories - Rectification of order – Submissions not considered – Examination of nature of goods – Held that:- Revenue had formed an opinion that the goods in question attracted tax at 14% there had to be realistic determination as to whether capital goods noted in the Third Schedule and notified by the Government as per notification at Annexure-A, includes the goods sold by the petitioner and then he had to take a decision on it - The Commissioner has already issued the clarification u/s 59(4) of the KVAT Act, it was necessary that the revenue should have taken into consideration that clarification to consider the rectification application filed by the petitioner - Merely because machinery sold by the petitioner is mounted on the wheels for mobility would not make it a ‘vehicle’ as defined in the Motor Vehicles Act - It has not been done in the present case the revenue is directed to consider the clarification issued by the Commissioner and examine the nature of goods – Decided in favour of Assessee.

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• 2014 (4) TMI 177
  Remission of tax and penalty – Whether non-registration is a bona fide error u/s 41(1) of Gujarat VAT Act – Whether right to personal hearing provided u/s 41(1) - Held that:- Section 41 (1) the VAT Act permits the State Government remit by an order either generally or specially, the whole or any part of the tax, penalty or interest payable in respect of any period by any dealer or a class of dealers of any specified class of sales or purchase - For exercise of power u/s 41(1) what is essential is that the Government should think fit that it is necessary to do so in the public interest in case of double taxation or to redress an inequitable situation or for sufficient and reasonable cause - All that the petitioner offered by way of explanation for his non-registration was a bona fide error which was even otherwise not acceptable - If under such circumstances, the Government did not find it appropriate to exercise power u/s 41 (1) of the Act - No need for interference - The contention that there was a breach of natural justice also cannot be accepted - It was not a case where the Government without putting the petitioner to notice passed an order which resulted into adverse civil consequences - It was a case where the petitioner made a representation which was not accepted by the Government - The insistence on personal hearing also has no legal base - It is well settled that requirement of hearing as a part of natural justice does not in all cases include a right to personal hearing - Decided against assessee.

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