Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 9, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 271B - when an assessee had furnished the tax audit report in form 3CB then it cannot be said that it has not complied with the provisions of sec. 44AB merely because the report is not in form 3CA which was not possible for assessee to furnish - AT
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Nature of Income – Mutual funds sold - business income or capital gains - units of mutual funds are not freely transferable nor tradable and thus cannot be categorized as Business - HC
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Condonation of delay in filing the income-tax return and refund claim – accounts were audited well in time and the assessee could have filed the return of income within the time stipulated u/s 139(1) - delay not condoned - HC
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Scope of salary for the purpose of TDS – the conveyance allowance is clearly taxable under the head 'Salary' - conveyance allowance paid cannot be excluded from salary, while computing TDS - HC
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Computation of capital gain - transfer of immovable property u/s 2(47) - the claim of the assessee to exclude the cost of acquisition of furniture from sale consideration of house property is not justified - AT
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Deletion of addition of advertisement expenses – AO erred in holding that the advertisement expenses as deferred revenue expenses is not valid in the eyes of law - AT
Customs
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Show cause notice of dredging operation - It remained there for one month and nobody objected the dredging operation of respondent - extended period of limitation cannot be invoked - AT
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Import of Equipment - Transmitter Broadcasting Equipment Sub-system (Data Processing Unit with transmitting capabilities for broadcasting, software and other standard accessories - not a restricted item - AT
Service Tax
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Demand of service tax - Demand u/s 68 or 73 - show cause notice i.e., 06.10.2004 - statutory provision under which the show cause notice issued was not in existence as on that date - demand cannot be made - HC
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CENVAT Credit - Debit notes - input services - Duty payment documents - If documents contain details required under Rule 9 of CENVAT Credit Rules, benefit of Service Tax Credit to be extended. - AT
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Waiver of pre-deposit - appellant is undertaking the verification of digital signatures of the service provider and forwarding the said various authorities to confirm the user as a genuine person - stay granted partly - AT
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Calculation of refund - Formula given in Rule 5(1) of CCR - no exempted service is provided in the domestic tariff area - all the unutilised service tax credit pertaining to exported service will be admissible as refund - AT
Central Excise
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Restoration of appeal - Appeal dismissed more than 16 years ago for non appearance - Petitioners cannot cast away their responsibility of pursuing their own appeal and at least inquiring about it from the Tribunal or their legal representative as to the progress of the matter. - HC
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Option for payment of duty - SSI Exemption - Assessee in our view would have the option either to avail the exemption under the exemption notification or to pay duty on the final product by taking Cenvat Credit - HC
VAT
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Rate of tax - Classification of Industrial cables - When there is clear guidance by the statute the reference through a circular, cannot guide the plain and commercial parlance meaning of the expression attributed to the article or goods in question - HC
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Power of tribunal to decide an appeal on merit without addressing the issue of pre-deposit - tribunal has committed an error - remanded back to Tribunal to be heard afresh - HC
Case Laws:
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Income Tax
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2014 (4) TMI 287
Penalty u/s 271B of the Act - furnishing of form 3CB instead of form 3CA - Whether the assessee is required to wait till completion of statutory audit under the relevant provision of the Act or it has to furnish the tax audit report as contemplated u/s 44AB – Held that:- The assessee is left with no other alternative but to furnish the report in form 3CB along with form 3CD to make substantial compliance with the provisions of section 44AB - proviso cannot expand or limit the construction of principle provision - the assessee had made substantial compliance with the provisions of section 44AB. Report in form 3CB requires the auditor to examine the balance sheet and profit and loss account and certify that the same are in agreement with the books of account maintained by the assessee, whereas form 3CA only requires the audit report along with audited financial statement to be annexed with the report - primarily the only difference in form 3CA and form 3CB is that in form 3CA the Auditors are not required to give separate audit report - when an assessee had furnished the tax audit report in form 3CB then it cannot be said that it has not complied with the provisions of sec. 44AB merely because the report is not in form 3CA which was not possible for assessee to furnish - law does not require an assessee to do impossible - form 3CB, form 3CA are not mutually exclusive but form 3CA is only supplemental to form 3CB – thus, the order of the CIT(A) for levying penalty u/s 271(1)(c) is set aside – Decided in favuor of Assessee.
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2014 (4) TMI 286
Prior period expenses – Held that:- The assessee has not produced evidence either before the AO or before the CIT(A), to substantiate its claim that the expenses had crystallized during the year - the order of the FAA is upheld – Decided against Assessee. Application of section 41(1) of the Act – Held that:- The decision in CIT vs. Shivali Constructions P.Ltd. [2013 (6) TMI 130 - DELHI HIGH COURT] followed - The very first condition for invoking section 41(1) is that an allowance or deduction ought to have been made in the assessment for any year in respect of any loss, expenditure or trading liability incurred by the assessee - it is an admitted position that no allowance or deduction had been made in the assessment of the assessee in any earlier year –thus, there is no question of invoking section 41(1) of the act - CIT(A) were correct in deleting the addition made by the AO – The Assessee is entitled to make a fresh claim before the CIT(A), when no investigation into the facts is required - the FAA admitted the ground and disposed of the same on merits - The Department has not filed an appeal challenging this action of the CIT (A) - decided in favour of Assessee.
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2014 (4) TMI 285
Transfer pricing adjustment – Provision of software development services - Determination of ALP - Non application of CUP/TNMM to internal uncontrolled transactions - Bad debts, reimbursements to be included in the operating cost or not – Held that:- The segmental details have been furnished by the assessee, the TPO should have considered them properly instead of rejecting them with broad and sweeping allegations - the TPO has not properly allocated the segmental expenditures - If the bad debts etc. are not related to AE transactions they cannot be considered as part of operating cost for determining ALP of the transactions with AE - Similarly, reimbursement on cost to cost basis also cannot be included in the operating cost - the DRP without dealing with this issue at depth has finished its job by simply commenting that TPO has dealt with the issue appropriately. The decision in M/s. Four Soft Ltd. Hyderabad Versus The Dy. Commissioner of Income-tax, Circle 1(3), Hyderabad [2011 (9) TMI 634 - ITAT, Mumbai] followed - For computing the net margin of the assessee for the purposes of transfer pricing, only the cost related to the transaction with the Associated Enterprises has to be considered - segmental financials is to be considered for the purpose of arriving at the net margin on the international transaction with the assessee's enterprise in respect of software development services - In that process, bad debts/reimbursements has to be excluded and segmental profitability has to be adopted - the TPO should have determined the Arm’s Length Price for the international transactions with associated enterprises considering only the operating cost allocable to the Associated Enterprises segment – the AO had no occasion to verify the veracity of the segmental financials prepared by the assessee company – thus, the matter is remitted back to the AO/TPO to determine the ALP only considering the receivables and payables in respect of transactions with AEs only. Selection of comparables - Avani Cimcon Technologies Limited – Held that:- The assessee has been categorised as a software development service provider – the company cannot be treated as comparable as the company is also into product development - As segmental details of operating income of software development services and sale of software products are not available, it could not be ascertained whether the profit ratio of this company can be taken into consideration for comparing with the assessee – thus, this company cannot be treated as comparable to the assessee. Infosys Technologies Ltd. & Wipro Limited – Extra-ordinarily high turnover - Held that:- Both these companies cannot be considered as comparable to the assessee due to various factors such as their size, turnover, brand value, scale of operation, diversified activities and owning of intangibles – companies cannot be treated as comparable to the assessee in any manner – the AO/TPO is directed to exclude them while computing ALP. ISHIR INFOTECH LTD – Held that:- The assessee has sought exclusion of the aforesaid company on the ground that this company fails employee cost filter - Ishir Infotech Limited cannot be treated as comparable as it does not qualify the employee cost filter as well as RPT filter - the AO/TPO is directed to exclude this company from the list of comparables. Lucid Software Limited:-Held that:- The main objection of the assessee that it earns revenue both from product development as well as software services for which segmental data is not available is accepted – Relying upon Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] - the company is to be excluded from the comparables because of the segmental data in respect of sale of products and software services are not available – thus, the AO/TPO is directed to exclude this company from the list of comparables. Tata Elxsi Limited – Held that:- Assessee contended that the company cannot be treated as comparable with any other software service provider due to complex nature of its business - thus, the matter remitted back to the AO/TPO for fresh consideration. Megasoft Limited – Held that:- The main objection of the assessee with regard to the company is that this is predominantly a product development company and margin from software development services is 23.11% is accepted – Relying upon Virtusa (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2013 (11) TMI 422 - ITAT HYDERABAD] - The AO /TPO is directed to take only segmental margin of the company for computing ALP. Determination of arm’s length interest rate at 14% for loans provided to Foursoft BV, Netherlands – Held that:- The decision in M/s. Four Soft Ltd. Hyderabad Versus The Dy. Commissioner of Income-tax, Circle 1(3), Hyderabad [2011 (9) TMI 634 - ITAT, Mumbai] followed - The ALP is to be determined for the international transaction, on international loan and not for the domestic loan - Hence, the comparable, in respect of foreign currency loan in the international market, is to be LIBOR based which is internationally recognised and adopted - the DRP rightly directed the assessing officer to adopt the LIBOR plus for the purpose of TP adjustment – arm’s length price of loan transaction with AE should be on the basis of LIBOR + percentage point - the AO/TPO is directed to determine the arm’s length interest on loan advanced by assessee to its AE by applying LIBOR + percentage points. Re-characterisation of equity into loan – Held that:- Assessee contended that the loan was extended in view of FEMA regulations - It is also a fact acknowledged by the TPO that the assessee has obtained approval of the RBI for converting the loan into equity - neither the TPO nor DRP have considered the issue at depth – thus, the matter is remitted back to the AO / TPO for fresh consideration. Determination of ALP at 3.75% - Corporate guarantee provided by the assessee to its AE – Held that:- TPO was rightly held that the ALP of the corporate guarantee has to be determined as it falls within the scope and ambit of an international transaction after the retrospective amendment to section 92B - the TPO has applied the rate of 3.75%, which is applicable to bank guarantee issued by the bank- As the corporate guarantee is not in the nature of bank guarantee, the rate applicable to bank guarantee provided by the bank cannot be applied to corporate guarantee which is provided by a group company – thus, the matter is remitted back to the TPO to decided the quantum of corporate guarantee rate. Disallowance u/s 14A of the Act – Held that:- The decision in M/s. Four Soft Ltd. Hyderabad Versus The Dy. Commissioner of Income-tax, Circle 1(3), Hyderabad [2011 (9) TMI 634 - ITAT, Mumbai] followed – as it was held in Godrej & Boyce vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D read with section 14A(2) of the Act is not arbitrary or unreasonable but can be applied only if assessee's method is not satisfactory - Rule 8D is not retrospective in nature and the same has to be applied from the assessment year 2008-09 - For the earlier assessment years, disallowance has to be worked out on "reasonable basis" under section 14A (2) of the Act – thus, the matter is remitted back to the AO for fresh consideration. Disallowance of expenditure - Purchase of software for third parties – Held that:- The decision in Amway India Enterprises vs. DCIT [2008 (2) TMI 454 - ITAT DELHI-C] followed - certain parameters has been laid down for determining the nature of expenditure incurred in acquiring software - The criteria need to be applied to determine the exact nature of expenditure incurred by the assessees for acquiring different softwares - this exercise is required to be done in respect of each and every software independently having regard to the criteria laid down – thus, the matter is remitted back to the AO for fresh consideration – Decided in favour of Assessee. Computation of exemption u/s 10A of the Act – Reduction of certain expenditures only from the export turnover – Held that:- The AO is directed to reduce such expenses both from export turnover and total turnover while computing exemption under section 10A of the Act
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2014 (4) TMI 284
Entitlement for interest u/s 244A of the Act – Refund of taxes (TDS) deposited in excess – order passed u/s 195 of the Act – Held that:- The language used in section 244A, clearly provides that interest has to be granted on the refund of any amount which becomes due to the assessee - It cannot be construed to mean that such an interest will not be allowed on the refund of TDS, which has been deducted by the payer - The section per–se does not make any distinction on the tax determined in pursuance of orders passed u/s 143(3) or the refund of tax on account of TDS - The section 244A clearly provides right to the assessee to claim interest on the amount of refund which has become due to him under the provisions of the Act. The decision in Union of India v/s Tata Chemicals Ltd. [2014 (3) TMI 610 - SUPREME COURT] followed - Interest on refund is a kind of compensation of use and retention of the money collected unauthorizedly by the Department - When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited - Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded - There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company - the assessee is eligible for interest u/s 244A on the amount of refund due to the assessee worked out on TDS deducted by it – thus, the order of the CIT(A) set aside and the AO is directed to grant interest u/s 244A – Decided in favour of Assessee.
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2014 (4) TMI 283
Nature of Income – Mutual funds sold - Whether the Tribunal fall into error in holding that the sum reported as long term capital gain by the assessee was to be treated as its business income – Held that:- CIT(A) rightly held that the surplus from the sale of the mutual funds had to be treated as long term capital gain and not business income – assessee has employed its own funds out share capital and accumulated free reserves that there was no borrowing at any time – also, Assessee’s is lacking proper infrastructure and is only holding worth of fixed assets - units of mutual funds are not freely transferable nor tradable and thus cannot be categorized as Business - The units can be bought or redeemed with mutual fund itself - the Income Tax Act itself recognized units of mutual funds as a special category of ‘‘investments’‘ as far as trusts were concerned, u/s. 11 (5) which placed this in an entirely separate class - The assessee had kept the amounts separately in an investment account and the mutual funds for about two years, the Tribunal clearly fell into error in holding that the amount was business income and not long term capital gains – Decided in favour of Assessee.
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2014 (4) TMI 282
Rectification of order u/s 254 of the Act - Mistake apparent from the record - Held that:- The Tribunal has rightly observed that by filing an application u/s 254 of the Act the assesse virtually sought review of the order of the Tribunal dated 30th March 2007 which is not permissible - under the provision one can seek rectification of any mistake apparent from the record - assesse could not point out any mistake apparent from the record - The Tribunal has rightly dismissed the application – thus, no substantial question of law is either involved or arise for consideration – Decided against Assessee.
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2014 (4) TMI 281
Allowability of Business expenses and losses - Whether the Tribunal was justified in holding that the business expenditure/ business loss cannot be allowed until and unless the appellant has made an entry in the books of accounts, by write off the amount and charged off in the profit and loss account – Held that:- The question of law at this juncture would not arise for consideration until the appellant establishes before the Assessing Authority that the amount has been actually treated as the business loss based on the instructions issued by the RBI due to the said amount being classified as ‘non-recoverable’ – thus, the matter is remitted back to the AO for fresh reconsideration – Decided partly in favour of Assessee.
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2014 (4) TMI 280
Validity of Reopening of assessment - Treatment of amount – Capital gain OR Business income – Assessee converted the landed property into stock in trade – Claim of deduction u/s 54G of the Act – Held that:- AO gave no reasons for not treating the income as a business income instead of capital gain but gave detailed reasons why assessee’s further claim for deduction under section 54G of the Act should be rejected - the AO had a full innings of complete scrutiny of the question and the manner in which the income should be taxed - In the original assessment having examined the issue fully, any attempt on the part of the AO to reopen the assessment would be nothing but a change of opinion. The Revenue contended that the AO did not scrutinize the issue - This was the main if not the sole issue before the Assessing Officer alongside the question of deduction u/s 54G of the Act - The question of granting or rejecting such deduction would arise only once the petitioner’s claim that such income should be treated as capital gain was accepted – thus, would be wholly irrelevant, when the AO had raised specific queries in writing, elicited the assessee’s response and thereafter, however, silently, accepted the assessee’s stand - Within four years also reopening would not be allowed - the decision in CIT vs. Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI High Court] followed – Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee - Reassessment proceedings in the said cases will be hit by the principle of “change of opinion”. In a situation where the AO during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition – Decided in favour of Assessee.
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2014 (4) TMI 279
Deduction u/s 80HHD of the Act – Held that:- The Tribunal relied upon Hotel and Allied Trades Pvt. Ltd. v. Deputy CIT (Assessment) [2007 (4) TMI 120 - HIGH COURT, KERALA] and the judgment is pending under consideration in civil appeal before the apex court - no interim order of any nature is granted – thus, the order of the Tribunal is upheld – Decided against Assessee. Levy of interest us 234C of the Act – Held that:- The decision in Joint CIT v. Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA] followed - Interest can be charged on the tax calculated on book profit under section 115JA(1). Income from other sources – Disallowance of club expenses – Held that:- The Tribunal was justified in saying that the interest from bank and other dividends need to be assessed only as income from other sources and not the business income of the appellant-assessee u/s 56 of the Act - The matter for disallowance of club expenses is rightly remitted back to the AO by the Tribunal – thus, there is no reason to interfere in any of the grounds raised – Decided against Assessee.
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2014 (4) TMI 278
Rejection of application of condonation of delay in filing the income-tax return and refund claim – jurisdiction of CIT to condone the delay in the matter of effecting refund of TDS - Held that:- The audit of the appellant was done and the report of the audit was submitted on June 19, 2009 – the CIT has rightly held that the accounts were audited well in time and the assessee could have filed the return of income within the time stipulated u/s 139(1) of the Act - change of management cannot be a ground to condone the delay – there is no substance in the appeal – Decided against Assessee.
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2014 (4) TMI 277
Scope of salary for the purpose of TDS – Conveyance allowance - Whether conveyance allowance is given for coming from house to office/factory and back instead of providing a vehicle for transportation is liable to be treated as salary for the purpose of deduction of tax at source – Held that:- The Tribunal rightly was of the view that the amount that is paid not being of wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit - The conveyance allowance paid to defray expenses connected with journeys from residence to office and back cannot be treated as an allowance paid for defraying expenses wholly, necessarily and exclusively in the performance of the duty - amounts are being paid on a lump sum fixed basis without there being any correlation to the expenses actually incurred. Relying upon Dr. Reddy Laboratories Ltd. v. ITO [1995 (12) TMI 93 - ITAT HYDERABAD-A] - the conveyance allowance paid to defray expenses connected with journeys from residence to office and back, cannot be termed as an allowance paid for defraying expenses 'wholly, necessarily and exclusively' in the performance of the duties - it is only to the extent such expenses are actually incurred, that exemption would be available under section 10(14) in respect of even an allowance notified by the Central Government in that behalf - the conveyance allowance is clearly taxable under the head 'Salary' and as such the assessee could not have excluded the conveyance allowance paid, while computing the tax deductible at source, from the salaries paid by it to its employees – Decided against Assessee. Interest debited to recoup the interest - Whether in a case where interest is debited to the account of an Indian company by bank to recoup the interest charged to it by the discounting bank would it entail deduction of tax at source u/s 195 of the Act by the Indian company – Held that:- The assessee had privity of contract only with the Allahabad Bank and the amounts were paid to Allahabad Bank - It cannot be said that the assessee had any obligation to the American Express Bank and in that view of the matter it cannot be said that the transaction would fall within section 9(1)(5) of the Act - In the circumstances there was no obligation on the assessee to make TDS deduction under section 195 of the Act – Relying upon GE India Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA ] - the obligation to deduct the tax with respect to the foreign remittances would arise only when the sum paid is chargeable under the provisions of the Act - there was no payment by the assessee, in the facts of the case neither section 9 nor section 195 of the Act itself has no application – Decided in favour of Assessee. Payment of tax and interest u/s 201 of the Act - Whether items which are subject matter of dispute, controversy and legal interpretation could at all be considered for the purpose of passing order under section 201 of the Income-tax Act demanding payment of tax and interest – Held that:- There was no reference of section 201 of the Act in case of short payment - The first circular No. 685, dated June 17, 1994 categorically states that it is the satisfaction of the disbursing authority whether to take into consideration the conveyance allowance for the purpose of tax deduction at source - satisfaction of disbursing authority is liable for security by the Income-tax Officer during regular assessment proceedings - in the second Circular speaks about interest liability under section 201(1A) of the Act, apart from proceedings under section 221 or prosecution under Chapter XXII of the Act – Relying upon PV. Rajagopal And Others Versus Union of India And Others [1998 (4) TMI 127 - ANDHRA PRADESH High Court] - for the purpose of payment of tax no proceedings u/s 201 of the Act could have been made – Decided against Assessee.
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2014 (4) TMI 276
Disallowance u/s 40(a)(ia) of the Act – TDS not deducted – Held that:- The Tribunal rightly was of the view that the expenses cannot be disallowed to the assessee if MGEPL has deducted and paid TDS on behalf of the assessee without violating the condition mentioned in section 40(a)(ia) - the assessee has proved that amount was paid on behalf of the assessee by its agent - there was sufficient evidence to show and as a matter of fact the Tribunal has recorded that the assessee had proved that MGEPL was acting as an agent – thus, as such no substantial question of law arises for consideration – Decided against Revenue.
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2014 (4) TMI 275
Deduction u/s 40(a)(ia) of the Act – Non-deduction of TDS – Violation of Rule 46 for acceptance of additional evidence – Held that:- There is no violation of Rule 46A, the revenue could bring anything on this account – assessee clarified that the information was already available in view of double Taxation Agreements – CIT(A) rightly held that with respect to the the existence of DTAA with the countries of which the payees are resident photo copies of the order u/s 195/197 in the case of Aeroflot Russia Airlines and certificate in the case of HC Container (S) Pvt. Ltd. Singapore, photo copies of freight bills and other relevant material on record – thus, no TDS was required to be deducted from the payees of the freight and cartage under reference, as neither section 194C nor section195 were applicable – thus, there is no reason to interfere in the findings of the CIT(A) – Decided against Revenue.
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2014 (4) TMI 274
Validity of order u/s 143(3) r.w. section 147 of the Act – Jurisdiction – Bar of limitation – No failure on the part of the assessee to disclose the material facts – Held that:- The AO has referred to the completion of original assessment u/s 143(3) and has pointed out that the tax had been levied at a rate of 10% while it should have been levied at the rate of 20% on some income and 40% on some income - in the reasons recorded, there is no mention by the AO of any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment - the decision in HARYANA ACRYLIC MANUFACTURING COMPANY Versus COMMISSIONER OF INCOME-TAX IV and ANOTHER [2008 (11) TMI 2 - DELHI HIGH COURT] followed – the reopening of assessment beyond four years was barred by limitation in view of the proviso to Section 147 – thus, notice issued u/s 148 is quashed and the assessment order is also set aside – Decided in favour of Assessee.
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2014 (4) TMI 273
Admission of additional evidence – Reduction in quantum of revenue - Exclusion of sales from revenue – Held that:- When the AO was not satisfied with the assessee’s estimate, he should have allowed at least one more opportunity to the assessee intimating it that if it does not furnish the details, then the sale should be estimated at US$ 40 Million - there was no such argument raised either before the AO or before the CIT(A) - Before the AO, the assessee stated that the sales may be taken at Euro 27 Million on estimated basis - The AO did not accept the same and estimated the sales at US$ 40 Million - Before the CIT(A), the assessee itself furnished the complete details of the sales amounting to Euro 27,307,776 and the same was accepted by the CIT(A) – thus, the ground claimed by the assessee is neither arising from the order of the AO nor from the order of the CIT(A) - The sales have been accepted as per the details furnished by the assessee itself before the CIT(A) – thus, there was no merit in the ground – Decided against Assessee. Taxability of Income from sale of software – Article 7 of DTAA – Income taxed as Royalty – Whether the Income from the supply contract can be treated as 'Royalty' under section 9(1)(vi) of the Act - Held that:- The decision in assessee’s own case and in Director of Income-tax Versus Ericsson AB & Ericsson Radio System AB & Metapath Software International Ltd. [2011 (12) TMI 91 - Delhi High Court] followed – the payment made to the assessee was not in the nature of royalty either under the Income-Tax Act or under the DTAA – Decided against Revenue. Leviability of Interest u/s 234B of the Act – Consideration subject to TDS u/s 195 of the Act –Held that:- The decision in DIT-I, International Taxation Vs. Alcatel Lucent USA, Inc. and another [2013 (11) TMI 734 - DELHI HIGH COURT] followed - Even though there may not be any positive or direct evidence to show that the assessee did make a representation to its Indian telecom dealers not to deduct tax from the remittances, such a representation or informal communication of the request can be reasonably inferred or presumed - The Tribunal ought to have accorded due weightage to the strong possibility or probability of such a request having been made by the assessee to the Indian payers since otherwise the denial of its tax liability on its Indian income would have served little purpose for the assessee – Decided against Assessee.
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2014 (4) TMI 272
Deletion of demand raised u/s 201(1)/201(1A) of the Act – Applicability of section 194C of the Act – assessee is making payment to some Indian subsidiaries of foreign shipping company without deducting TDS under Section 194C - Revenue contended that the assessee company is an Indian arm of a multinational company Expeditors International - The assessee is engaged in the business of supplying chain management, logistics and freight forwarding which is related to movement of goods and cargo within India or outside India by road, rail, air or ship - During the course of survey at the assessee’s premises, it is seen that the assessee is making payment to some Indian subsidiaries of foreign shipping company without deducting TDS under Section 194C of the Act. Held that:- Section 194C is applicable to the payment made by the assessee to the subsidiaries of foreign shipping and airline companies - CIT(A) misunderstood the order of the AO and recorded the finding that the AO has accepted the plea of the assessee that Section 194C is not applicable in the case of the appellant and only Section 172 is applicable - In the relied upon by the assessee, the assessee has furnished the confirmation from all the agents for filing of the return u/s 172 of the act - No such confirmations were produced – thus, the order fo the CIT(A) set aside and the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Revenue.
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2014 (4) TMI 271
Computation of capital gain - transfer of immovable property u/s 2(47) - value of furniture not considered as part of Cost of acquisition – Nature of the capital expenses - personal effect u/s 2(14) – Held that:- The assessee sold the property in the form of two sale deeds for a total consideration of Rs.90 lakhs - there is no mention of fact about sale of furniture and fixture and other fittings as contained in the schedule of inventory - when the assessee purchased this property via four registered sale deeds, there is no mention of fact of having purchased furniture and fixture in the purchase deeds - the fact becomes clear that assessee did not sell the furniture items which is apparent from the registered sale deed. The only basis on which the assessee is claiming deduction of Rs.12 lakhs is on account of inventory of furniture purchased by a separate agreement - The description of items clearly indicates that the items consisted of removable woodwork - The sale deed executed by the assessee does not mention about the sale of these items - It is possible that assessee might have sold these items separately through a separate agreement as he had done at the time of purchase - the claim of the assessee to exclude the cost of acquisition of such furniture from sale consideration of house property is not justified – the furniture and fixture are personal affects which has been specifically excluded from the definition of capital asset as contained in section 2(14) of the Act - once it is not a capital asset, its inclusion in the cost of acquisition is otherwise also not correct – the order of the CIT(A) upheld – Decided against Assessee.
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2014 (4) TMI 270
Deletion of addition of advertisement expenses – Assessee engaged in trading of computers and electronic products - Held that:- The assessee had claimed expenditure on account of advertisement and marketing - the assessee furnished ledger account supported by vouchers - Relying upon CIT Vs. Citi Financial Consumer Fin. Ltd. (Delhi) [2011 (3) TMI 622 - Delhi High Court] - expenditure on publicity and advertisement is to be treated as revenue in nature allowable fully in the year it was incurred - the ingredients of section 37 of the Act stand satisfied - normally the expenditure is to be allowed as business expenditure in the year in question in which the same is incurred - there is no advantage which has accrued to the assessee in the capital field - The expenditure was incurred to facilitate the assessee’s trading operations - No fixed capital was created by this expenditure - in the income-tax law, there is no concept of deferred revenue expenditure. Once the assessee claims the deduction for the whole amount of such expenditure, even in the year in which it is incurred, and the expenditure fulfils the test laid down u/s 37 of the Act, it has to be allowed - The AO erred in holding that the advertisement expenses as deferred revenue expenses is not valid in the eyes of law and therefore the CIT(A) has rightly set aside the same – thus, there is no infirmity in the findings of the CIT(A) – Decided against Revenue.
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2014 (4) TMI 269
Disallowance u.s 14A of the Act r.w Rule 8d – Held that:- The cash flow statement reflects cash from operating activities including cash profits - The assessee has also raised an amount by issue of fresh preference shares - it is apparent that assessee had utilized interest free funds for making fresh investments and that too into its subsidiaries which is not for the purpose of earning exempt income and which are for strategic purposes only - no disallowance of interest is required to be made under rule 8D(i) & 8D (ii) as no direct or indirect interest expenditure has incurred for making investments. Disallowance under Rule 8D(iii) – Held that:- Assessee had invested in four debt oriented schemes of DSP Merile Lynch, reliance Liquid Plus, Reliance Monthly Interval Mutual Funds and SBI Liquid Plus Funds - these are not really investments and these are in fact parking of surplus funds in a more tax efficient manner – the decision in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] followed - the calculation of disallowance under Rule 8D(iii) made by the AO and upheld by CIT(A) is not correct In view of the fact that AO had included the value of total investments for calculation of disallowance whereas the value of those investments should have been included which were made for the purpose of earning exempt income – the assessee had made significant investments in the shares of subsidiary companies which are definitely not for the purpose of earning exempt income – thus, the value of strategic investments should be excluded for the purpose of disallowance under Rule 8D(iii) – the AO is directed to calculate the disallowance under Rule8D(iii) by excluding the value of strategic investments in the calculation of disallowance – Decided partly in favour of Assessee.
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2014 (4) TMI 268
Cancellation of assessment u/s 147/148 of the Act – Held that:- The loss sought to be reduced by reopening the assessments of both the assesses, was voluntarily reduced by them by filing the rectification application - as per the provisions of Section 155 (8) of the Act, an Income-tax Authority must pass an order on a rectification application within a period of six months from the end of the month in which such application is received by it - In case it is not so done, the amendment sought through the rectification application shall be deemed to have been made. The AO went entirely wrong in observing that the assesses could not have filed the rectification applications before filing the returns of income - the assessees, by filing the rectification applications, themselves voluntarily reduced the loss proposed to be reduced by reopening the assessments and this being the only reason recorded for reopening the completed assessments, after such reduction of loss, there remained nothing to validate the reopening – the applications were filed prior to the issuance of notices u/s 148 of the Act - CIT (A) has duly taken into consideration all the facts and there was no error in his action of holding the reopening in both the cases to be invalid and cancelling the assessments – Decided against Revenue.
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Customs
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2014 (4) TMI 266
Show cause notice of dredging operation - Invocability of extended period of limitation – Held that:- Admittedly show-cause notice has been issued by invoking the extended period of limitation - The vessel was entered in the port on 18.08.2000 and started dredging operation - It remained there for one month and nobody objected the dredging operation of respondent - Thus, as observed by the Commissioner that these documents have been filed with the customs cannot be doubted – This court holds that extended period is not invokable - There is no infirmity in the impugned order, the same is upheld - Appeal dismissed – Decided against Revenue.
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2014 (4) TMI 265
Import of Equipment - Restricted item or not - Transmitter Broadcasting Equipment Sub-system (Data Processing Unit with transmitting capabilities for broadcasting, software and other standard accessories - The classification of the goods was claimed as "Transmitter Broadcasting Equipment Sub-System" under Heading No.85255030 which as per the Exim Policy, is a freely importable item without any import licence – Revenue of the view that import goods are complete equipment which is used to transmit live audio/video signals for broadcasting and that the same would be correctly classifiable under sub-heading no.85255020 and requre licence. Held that:- The equipment, in question, is merely for transmission of audio and video signals by a reporter from some place to his studio through GSM cellular network and it is from the studio that the audio/video recording is broadcasted to the public – The goods covered under 85255010 and 85255020 are "Radio broadcast treatment" and "TV broadcast transmitter respectively - Every transmitter is not a broadcast transmitter for public reception - The 'equipment' which can merely transmit some audio or video signals from one place to another place and is not capable of transmitting the signals which can be received by general public cannot be called broadcast equipment - What is covered under Heading No.85255010 and 85255020 are the transmitter which can transmit radio or TV programme intended for reception by public and it is such equipment which are restricted for import - Since the equipment imported cannot transmit the signals for reception by general public but is meant only for transmitting the audio or video signals by a reporter from some place to his studio from where the signals are broadcasted for general public, the equipment cannot be classified under Heading no.85255020 and so, the same would not be restricted for import - The impugned order is not sustainable - Thus, the order is set aside - The appeal is allowed – Decided in favour of Appellant.
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Service Tax
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2014 (4) TMI 291
Demand of service tax - Demand u/s 68 or 73 - Held that:- The provision prevailing prior to 10.09.2004 was providing for value of taxable services escaping assessment, while after its substitution vide Finance Act, 2004, it provided for recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. Admittedly, on the date of show cause notice i.e., 06.10.2004, the provisions contained in Section 73(1 )( a) of the said Act, prevailing prior to 10.09.2004, were not in existence. - statutory provision under which the show cause notice issued was not in existence as on that date - Tribunal order cannot be interfered - Decided against Revenue.
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2014 (4) TMI 290
CENVAT Credit - Debit notes - input services - Duty payment documents - Held that:- debit notes issued by the service provider contained the details of service tax payable, description of the taxable service (sales commission), value of the taxable service, registration no. of the service provider, name and address of the service provider. These are the details which are required as per Rule 9(2) of CENVAT Credit Rules, 2004. The observations of the Assistant Commissioner are contrary to the facts noticed by me on the basis of documents submitted before me. Since it is not clear as to whether the same documents which were produced before me were produced before the Assistant Commissioner or not, the matter has to go back to the Assistant Commissioner who shall go through the documents, verify whether service has been received and whether all the particulars as required under the Rules are available in the debit notes and adjudicate the matter afresh. If documents contain details required under Rule 9 of CENVAT Credit Rules, benefit of Service Tax Credit may be extended. Needless to say the appellants shall be given an opportunity to present their case and also the Assistant Commissioner shall be free to get any verification if necessary done - Decided in favour of assessee.
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2014 (4) TMI 289
Waiver of pre-deposit - Business auxiliary services, business support services, IT services - Held that:- The appellant is undertaking the verification of digital signatures of the service provider and forwarding the said various authorities to confirm the user as a genuine person and E-commerce transactions entered into with the entity. It is to be seen that the entire issue of whether the services rendered would be taxable or not needs a detailed analysis in as much as, the deliberation of the Ld. Counsel trying to equate the activities done by him, does not fall under any of the service category based upon CBC letter no.137/76/2008-CX4 dt. 04.06.2008 needs to be understood in its correct perspective. Prima facie it is seen that the appellant is not providing the services as mentioned of verification of the individuals / organization to any certifying authority could be given and he doing for someone situated abroad; at the same time, it has to be kept in mind that the appellant is eligible for availing Cenvat Credit of service tax by him under the reverse charge mechanism and utilize the same for payment of services tax if any. In sum, we are of the view that the appellant needs to be put to some conditions for hearing and disposing of the appeals as the issue is arguable - stay granted partly.
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2014 (4) TMI 288
Calculation of refund - Formula given in Rule 5(1) of the Cenvat Credit Rules, 2004 - Held that:- it was the case of the appellant that 100% of the credit with respect to Services Exported should be refundable under Rule 5 of the Cenvat Credit Rules, 2004. There is no evidence on record that appellant has taken any input service tax with respect to exempted services exported out of India. As per the definition of 'Export Output of Services', given in Clause (D) of Rule 5(1) of the Cenvat Credit Rules, 2004, no distinction is made with respect to payments received from export of services. Further, the logic of giving cash refund of taxes used, in relation to export of goods/ services under Rule 5 of Cenvat Credit Rules, 2004, is to have 'Zero rated' exports. In the case of the appellant, no exempted service is provided in the domestic tariff area. Therefore, even exempted export services will required to be added to the Export turnover of services and all the unutilised service tax credit pertaining to exported service will be admissible as refund under Rule 5 of the Cenvat Credit Rules, 2004 - Following decision of Zenta Pvt. Limited vs. CCE, Mumbai [2012 (6) TMI 606 - CESTAT, MUMBAI] - Decided in favour of assessee.
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Central Excise
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2014 (4) TMI 264
Waiver of pre deposit - CENVAT Credit - Capital goods - user of cement and steel in constructing foundation for a captive power plant - Held that:- issue has been decided not only by Larger Bench of the Tribunal in Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) but also by the Hon’ble Apex Court in the case of Saraswati Sugar Mills Vs CCE Delhi - [2011 (8) TMI 4 - SUPREME COURT OF INDIA]. He also points out that the decision of Madras High Court in India Cements (2011 (8) TMI 399 - MADRAS HIGH COURT) was with reference to steel items which has gone into fabrication of specified machinery or parts of machinery and not for supporting structure. - since the issue has even been decided by Larger Bench and the Hon Apex Court against the appellant, it is proper to call for pre-deposit of entire amount of duty for admission of appeal. - stay granted in respect of interest portion only.
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2014 (4) TMI 263
Availment of CENVAT Credit - Service Tax paid by the insurance company on the group insurance taken by the respondent herein for his employees - Held that:- first appellate authority, in this case, has relied upon the judgment of Division Bench decision of the Tribunal in the case of HEG Limited [2009 (6) TMI 244 - CESTAT, NEW DELHI] and allowed the benefit of CENVAT Credit and also has relied upon the decision of Hon'ble High Court of Mumbai in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT], to hold that the respondent therein are eligible to avail CENVAT Credit of Service Tax paid on the services rendered by insurance company on the group insurance taken by him for his employees - No reason to interfere with decision - Decided against Revenue.
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2014 (4) TMI 262
Option for payment of duty - SSI Exemption - whether the assessee has the option to avail exemption or pay duty on the final product by taking MODVAT credit on inputs in terms of Rule 57A of the Central Excise Rules, 1944 - Held that:- Following decision of COMMISSIONER OF CENTRAL EXCISE Vs. M/S GRAND CARD INDUSTRIES & ORS [2014 (4) TMI 258 - DELHI HIGH COURT] - assessee would have the option either to avail the option in terms of the notification or pay duty on the final product by taking MODVAT credit on the inputs in terms of Rule 57A - decided against Revenue.
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2014 (4) TMI 261
Restoration of appeal - Appeal dismissed more than 16 years ago for non appearance - Assessee contends that no notice was dispatched to them - Lack of knowledge of dismissal - Held that:- after such a long lapse of time, the issues cannot be reopened. Firstly, the dispatch register of the relevant time shows that communications were dispatched to the petitioners. Secondly, the Tribunal in its order dated 27.10.97 records that though served nobody appeared. Sixteen long years passed after this order was passed before petitioners applied to the Tribunal for recalling the order. Under normal circumstances, if the petitioners were not served with the notice of hearing, some delay in enquiring the progress in appeal and thereafter approaching the forum for recalling the order can well be understood - petitioners did not enquire about their own appeal before the Tribunal for more than 16 years. In the meantime, the entire record is lost. Documents, orders, notings, receipt, none of them would be available. At this stage, therefore to put heavy burden on the Registry of the Tribunal to establish that not only the notice of hearing was dispatched, the same was served would be too onerous a burden to be discharged. Petitioners cannot cast away their responsibility of pursuing their own appeal and at least inquiring about it from the Tribunal or their legal representative as to the progress of the matter. Right after 1988 when the pre-deposit order was passed, the petitioner never inquired about the progress in the appeal. More than 25 years thus passed before the petitioners started making inquiries. We would, therefore, go by the official record that the intimation had been dispatched to the petitioners and the Tribunal’s recording that though served no one had appeared before the Tribunal on the date of hearing - Decided against assessee.
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2014 (4) TMI 260
Shortage of finished goods - Clandestine removal of goods - benefit of Cum Duty price - Duty demand - Penalty u/s 11AC - Commissioner allowed credit holding that inputs corresponding to this credit were actually used in the manufacture of clandestinely cleared goods - Held that:- Revenue has not given detailed reasons for rejecting the respondent s plea. The probable reasons could be that the quantity 5,735.550 Kg. (value Rs. 7,85,770/-) of finished goods DASA did not tally with any combination of parallel invoices on record. There is also nothing on record to show that the respondent failed to correlate these details when called upon to do so by the Range Superintendent. The period of dispute is from December, 1999 to 23.03.2001, and in the absence of any documentary evidence total shortage of finished goods detected in the factory on 23.03.2001 has to be attributed to the finished goods removed under the cover of parallel invoices issued up to May, 2000. Input for which credit of Rs 2,27,220/- has been claimed by Shree Chem have also been admitted to be used in the manufacture of the finished goods cleared clandestinely. Onus of proving that goods cleared on parallel invoices were different from the shortages found in the factory lies with the department. So far as the benefit of ‘Cum-duty-price’ to be extended to Appellant ‘Shree Chem’ is concerned, it is relevant to mention that this quantification was not agitated before the lower authorities and has been raised only before this bench. Therefore, for allowing the benefits of ‘Cum-duty-price’ the case is required to be remanded to the Adjudicating Authorities - The allowance of MODVAT Credit of Rs. 2,27,220/- by the lower appellate authority vide impugned Order in Appeal is upheld. Penalty equivalent to the total duty quantified by the Adjudicating Authority after allowing cum-duty benefit, if any; will be impossible upon Appellant Shree Chem under Sec. 11AC of the Central Excise Act 1944. However, if the entire duty, interest and penalty is paid within 30 days from the date of communication of quantified duty by the Adjudicating Authority, the penalty imposed under Sec 11AC will be reduced to 25% of the penalty imposed as per the provisions of Sec 11AC of the Central Excise Act 1944 - Decided partly in favour of assessee.
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2014 (4) TMI 259
Condonation of delay - Non receipt of copy of the OIA - Held that:- appellant has not given any proper address to the lower authorities despite having knowledge that his factory is closed and also did not avail the opportunity of personal hearings, granted by the lower authorities, it seems that he had committed himself of not cooperating with the authorities. Secondly, having been not co-operative with the authorities, today, the appellant/applicant cannot claim that the delay in filing the appeal before the Tribunal be condoned which, in our view, is a prayer which needs to be discarded for the reason that appellant was made aware of the Order-in-Appeal dt. 26.2.2007 by the department on pasting the same at his last known address. Thirdly, we find that the address given by the appellant in an appeal filed before the Tribunal is also the very same address wherein his factory was located to which the Order-in-Appeal was sent by post and it was received back - Condonation denied.
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2014 (4) TMI 258
Option for payment of duty - SSI Exemption - Whether the option is available to the Assessee either to avail the exemption or to pay duty on the final product by taking modvat credit on inputs in terms of Rule 57A of the Central Excise Rules, 1944 - The stand of the Revenue that since the respondent was a SSI Unit and covered under the Notification No.1/93 and clearance of goods upto a value of ₹ 30 lakhs was exempted from payment of duty, the benefit of MODVAT scheme could not be availed in terms of Rule 57C is counter–productive and not beneficial for the respondent Assessee. It works against them and makes them in-competitive and places them at a disadvantage. Held that:- The object of the MODVAT Scheme is to reduce cost of final product by taking credit for the duty paid on the inputs - The object of the Exemption notification is to grant benefit to the SSI Units for clearing goods without payment of duty upto a particular limit - Both the MODVAT scheme and the exemption notifications are beneficial legislation. The beneficial notification have to be strictly initially but liberally interpreted. If the interpretation of the Revenue is to be accepted that there was no choice to SSI Units to either avail the MODVAT Scheme or the benefit of the exemption notification, then the SSI units are prejudiced and may even become unviable. The purpose of the MODVAT Scheme is to prevent and neutralise cascading effect of the duty paid on inputs. If the interpretation of the revenue is accepted then a manufacturer not registered as a SSI unit would be entitled to benefit of the MODVAT scheme for unlimited value and pass on benefit to the purchaser. But an SSI unit covered by the exemption notification would not be entitled to the benefit of the MODVAT scheme but would be entitled to clear goods at nil duty or lesser duty only upto a limit. Because he cannot pass on the MODVAT credit, to the purchaser, he is denied a level playing field and suffers disadvantage. This clearly is not the purpose behind the MODVAT scheme and the exemption notification. Manufacturers are admittedly covered both under the MODVAT Scheme and the exemption notification, if the right to chose is not granted then it would be disadvantageous for a manufacturer to get itself registered as a SSI unit. This would thus be to the detriment of the manufacturer to register as a SSI unit. This consequence is clearly not intended by the legislature/Rule - Respondents admittedly have not claimed or availed of any benefit under the exemption notification but have sought to claim benefit of only the MODVAT Scheme as was available to other manufacturers - Respondents have only sought to forego the benefits of the exemption notification available to SSI units - Assessee in our view would have the option either to avail the exemption under the exemption notification or to pay duty on the final product by taking MODVAT credit on inputs in terms of Rule 57A of the Rules. - Decided against Revenue.
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CST, VAT & Sales Tax
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2014 (4) TMI 294
Rate of tax - Classification of Industrial cables - Did the Tribunal fall into an error in interpreting Entry 40 Schedule-III of the Delhi VAT Act, 2004 in holding that the HSN/CET nomenclature in the circulars issued on 16.09.2005, 17.02.2006 and 20.03.2006 would prevail – Held that:- It was noticed that the express terms of the statute clearly referred to ‘industrial cables’ including other categories of industrial cables such as ‘Industrial Cables/High Voltage Cables, XLPE, Jelly filled Cables, Optical Fibres’ - The circulars in fact add to and also substitute from the main heading “industrial cables” - This is because the Entry nowhere refers to any heading of the CET - Having not done so, the department appears to even cut down the amplitude of the description “industrial cables” by excluding non-industrial cables or wires of a certain width in the last circular No.51 of 2005-06. Relying upon Commissioner of Sales Tax v. Dev Enterprises Ltd. [2011 (6) TMI 657 - BOMBAY HIGH COURT] which referred Green Flashlight Industries Ltd. v. Union of India [1984 (8) TMI 85 - SUPREME COURT OF INDIA] and O.K. Play (India) Limited v. Commissioner of Central Excise [2005 (2) TMI 114 - SUPREME COURT OF INDIA] held that where the statute expressly refers or alludes to other instruments or documents such as CET/HSN classifications, then alone would those classifications have to be looked into for the purposes of interpretation - In the absence of such express reference – in the parent statute – the reference through a circular, cannot guide the plain and commercial parlance meaning of the expression attributed to the article or goods in question. When there is clear guidance by the statute i.e. the DVAT Act as to in respect of which articles or goods the HSN and CET would have to be referred as part of the statute, it is not logical to import, for the purpose of interpretation, HSN/CET references to articles of goods which do not contain any such references - Here “the common parlance test is applicable” - The Indian Electricity Act and the Electricity Supply Act as well as the Rules and Regulations under these enactments would guide and regulate the technical aspects which traders and those dealing with these articles understand - When the statutory determination itself having classified 1100 volts cables as high voltage cables, No difficulty in accepting that the subject goods are industrial cables and are classifiable under Entry No.40 of the Schedule-III – The appeal, therefore, is allowed - Decided in favour of assessee.
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2014 (4) TMI 293
Waiver of pre-deposit - power of tribunal to decide an appeal on merit without addressing the issue of pre-deposit - The scope of appeal before the Tribunal was whether the Joint Commissioner of Commercial Tax was justified in insisting that the appellant should deposit 100% of the amount by way of predeposit. In the process of hearing the appeal, the Tribunal decided several issues pertaining to validity of the assessment order and allowed the appeal in part. - Held that:- In view of section 73(4) of Gujarat VAT Act, 2003, such appeal could not have been entertained unless in terms of proviso, the appellate authority for reasons recorded in writing relaxed the requirement of full pre-deposit - Without expressing any opinion on the AC imposing the condition of part pre-deposit on the appellant, the Tribunal accepted the appellant's Second Appeal as if there was no intermediary stage of the appeal before the AC or any requirement of pre-deposit u/s 73(4) - The appellant himself also contributed to this complication - There was no prayer for setting aside the appellate order of imposing condition and subsequently, dismissing his appeal when he failed to fulfill such condition. His prayers pertained only to the issues on merits about the additions made by the Assessing Officer. There was no prayer for setting aside the appellate order of imposing condition and subsequently, dismissing his appeal when he failed to fulfill such condition. Even if it were so, the Tribunal could have either permitted the appellant to suitably amend the prayer or if the appellant was not willing to do so, dismiss his appeal as not maintainable. In our opinion, the Tribunal could not have bypassed the first appellate authority and statutory requirement of predeposit, unless it was waived by an order in writing. Intention of provision of pre-deposit – Held that:- Judgment in Benara Valves Limited v. Commissioner of Central Excise [2006 (11) TMI 6 - SUPREME COURT OF INDIA] followed - If either side approaches the Tribunal, it is open for the Tribunal to take into consideration the law on the subject and decide the validity of the order of directing or not directing the amount of predeposit - However, that would not ipso facto entitle the Tribunal to give a complete go bye to the well laid down procedures of law as also such requirement of pre-deposit and decide the matter on merit - Relied upon Commissioner of C.Ex., Chandigarh v. Smithkline Beecham Co. Health C. Limited [2003 (9) TMI 82 - SUPREME COURT OF INDIA]. It is not the case of either side that an identical question of law was pending before the Tribunal in some other appeals concerning the very assessee, or identical question of law in respect of very assessee for different assessment year was before the Tribunal, and in such circumstances, with the consent of the parties it chose to conclude on merit - It is chosen not to enter the arena of merit of the case - Judgment of Tribunal is set aside and remanded back to Tribunal to be heard afresh - Decided in favour of Assessee
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2014 (4) TMI 292
Challenge against the communication sent by Assam Industrial Development Corporation – Jurisdiction of High Court - Grant of eligibility certificate under the state policy – Held That:- Assessee sought to challenge the communication dated 30th April, 2010, sent by Assam Industrial Development Corporation Ltd., intimating about rejection of assessee`s claim for grant of eligibility certificate under the policy made by the State for that purpose - Since the issue is now seized of by the State Level Committee (SLC) and thus without expressing any opinion on the merits and demerits of the controversy, it was considered apposite to direct the State Level Committee (SLC) to examine the case of assessee strictly on its merit in view the provisions of the Assam GST Act, 1993 r/w Assam Industries Scheme, 1997 and Assam VAT Act, 2003 and the scheme governing the case of assessee - Petition disposed of – Decided against assessee.
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Indian Laws
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2014 (4) TMI 267
Vacation of interim relief – Registration of the insecticides - It is submitted that the applicants, as importers, are only importing the formulations for which the applicants have sought the registration of the formulations and not registration of the technical grade/ material. - Deemed registration u/s 9(3) of the scheme of the Insecticides Act, 1968 - Discrimination between importer and indigenous manufacturer - Technical material registered or evaluated for impost of formulation or not - Held that:- The provisions of the statute do not refer to or empower any such deeming provision or “deemed registration” which could be granted - The Statement of Objects and Reasons refers to the poisoning cases in Kerala and thereafter in Bombay which has led to the establishment of inquiry commission and the report that how the foodstuff can be contaminated and what would be the measures to be taken. There are subsequent amendments but a few relevant aspects which require consideration have not been placed on record or put to the notice like international conventions and treaties which provide for the minimum use of pesticides - The pesticides, human health and environment are aspects which are interlinked and there are studies and research which has led to such international conventions - The Food and Agriculture Organization of the United Nations has referred to the fact that 95 countries have agreed to new international convention on dangerous chemicals and pesticides - according to the United Nation's Environmental Programme, there are number of highly toxic chemicals that persist in the environment, accumulate in wild life and people. when the statute like the Act has been intended to have some amount of regulation on use of pesticides or import of pesticides which cannot be altogether avoided, some mechanism has to be provided by which the laws are implemented with more effectiveness and transparency - The Act does not provide for grant of deemed registration and it is by way of guidelines or procedure evolved by the Registration Committee such deemed registration is sought to be granted to the importers like the applicants which are intended to create monopoly in their favour - these aspects are also required to be considered. Though sufficient provision is made in the statute referring to the procedure u/s 9(4) of the Act for registration of insecticides, it cannot be said that the legislature is not conscious about such aspects, but what is required is a more sensitive and proper approach to deal with such issues at the time of actual implementation of the law – thus, it would be in the fitness of things to leave larger issues aside for the purpose of deciding the present civil applications for vacating the interim relief - The interim relief may be vacated/modified subject to some of the conditions which takes care of the aspects of safety till fresh guidelines are issued by the Government and the matter is heard and decided finally – thus, the interim relief stands vacated/modified subject to the certain conditions – Decided in favour of Petitoner.
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