TMI Tax Updates - e-Newsletter
May 1, 2014

Case Laws in this Newsletter:

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

Articles

1. Capital gains- meaning and counting of month General- tax payers must avoid last moment action to avoid doubt,contingencies and un-certainities.

   By: DEVKUMAR KOTHARI

2. STATISTICS ON TELECOM SUBSCRIPTION AS ON 28.02.2014

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Index of Eight Core Industries (Base: 2004-05=100), March, 2014

2. Amendment to CESTAT Appeal Forms

3. RBI Reference Rate for US $ and Euro

Notifications

DGFT

1. 80 (RE – 2013)/2009-2014 - dated 30-4-2014 - FTP

Amendment in Notification No 22(RE-2013)/2009-14 dated 18th June, 2013 relating to export of edible oils.

2. 79 (RE – 2013)/2009-2014 - dated 30-4-2014 - FTP

Export to Iran under Para 2.35 (b) of Foreign Trade Policy, 2009-2014.

Highlights / Catch Notes

Income Tax

• Income Tax Act: Only Peak Credit as Income for Unexplained Credits u/ss 68 and 69.

  Case-Laws - AT : Addition of peak credit amount – Unexplained credits – Addition u/s 68 and 69 - only the peak credit can be taken as income out of the deposits made during the year to the bank account of the assessee - AT
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• Section 69B Limits Assessing Officer's Discretion in Quantifying Understated Investments Once Proven.

  Case-Laws - HC : Section 69B does not give the AO the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. - HC
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• Court Rules No TDS Default; Penalty Waived u/s 273B; Section 271C Penalties Inapplicable.

  Case-Laws - HC : Waiver of penalty u/s 273B – assessee cannot be said to be in default in deduction of TDS – thus, the provisions of Section 271 C which make liable for payment of penalty on the event of failure of any deduction of tax are not attracted - HC
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• Assessee Entitled to Interest on Refund from MAT Credit and TDS Deductions.

  Case-Laws - HC : Eligibility for interest on refund out of MAT credit - The assessee became entitled to refund consequent upon the deduction given on MAT credit and the TDS - HC
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• Court Examines if Charitable Trust's Building Fund Donations Qualify as Income Under Income Tax Act Section 68.

  Case-Laws - HC : Exemption u/s 11 – Building fund received as donations to be treated as income u/s 68 of the Act or not – assessee is a charitable Trust and its income is to be exempted u/s 11 - HC
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• Directors of Private Companies in Liquidation Face Personal Liability for Unpaid Taxes u/s 179 of the Act.

  Case-Laws - HC : Liability to pay tax dues u/s 179 of the Act - Liability of directors of private company in liquidation - in the case of a public company or public limited company, the very provision is not applicable - HC
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• Assessee Entitled to Carry Forward Business Loss Despite Positive Income; No Rectification by AO u/s 154.

  Case-Laws - HC : Assessee had shown positive income in the returns, but in the assessment, the business loss was determined by the AO – thus, the assessee is entitled for the benefit of carry forward of business loss - AO cannot rectify the assessment u/s 154 - HC
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• Section 154: Amend Orders on Unaddressed Issues Post-Appeal or Revision; Doctrine of Merger Applies.

  Case-Laws - AT : Rectification of order u/s 154 - doctrine of merger - the authority passing an order may amend that part of the order which has not been considered and decided in any proceeding by way of appeal or revision against order - AT
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• Keyman Insurance Policy Maturity Value Not Taxable u/ss 2(24)(xi) and 10(10D) of Income Tax Act.

  Case-Laws - AT : Assignment of Keyman insurance policy by the firm – Taxability u/s 2(24)(xi) r.w. section 10(10D) – nothing is taxable out of the maturity value of the policy received from the insurance company by the assessee employee - AT
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• Company's Loss Claim Denied: Chapter IV-D Disallows Expenses Before Full Setup Completion.

  Case-Laws - AT : Disallowance of loss claimed under Chapter IV-D - the company is clearly in the setting up stage - it is only the expenditure, post set-up, that could be claimed as a business expenditure - AT
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• No Service Tax Addition Needed u/s 43B: Amount Not Debited or Claimed as Deduction by Assessee.

  Case-Laws - AT : Addition on account of service tax payable u/s 43B - since the assessee did not debit the amount to the P&L A/c as an expenditure nor claim any deduction in respect of the amount, no addition - AT
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Customs

• Simultaneous Penalties on Partner and Firm by CESTAT Questioned; Referred to Larger Bench for Review.

  Case-Laws - HC : Imposition of Simultaneous Penalties - Whether CESTAT erred in imposing simultaneous penalties on both the Partner and Partnership firm – Matter referred to larger bench - HC
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Service Tax

• Service Tax Demand on Beer Manufacture and Sale Not Applicable Under Franchise or Intellectual Property Rights Services.

  Case-Laws - AT : Demand of service tax - manufacture and sale of beer using the brand name and technical know-how of another person - not liable to service tax as Franchise Service or IPR Service - AT
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• CESTAT Nullifies Penalties Under Finance Act Sections 76, 77, 78; Section 80 Allows Waiver of Penalties.

  Case-Laws - HC : Application of Section 80 - waiver of penalties - CESTAT has rightly quashed and set aside the penalties under sections 76, 77 and 78 of the Finance Act. - HC
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Central Excise

• CENVAT Credit Denied on Unspecified Grounds; Case Remanded for Reconsideration Due to Lack of Opportunity to Respond.

  Case-Laws - HC : Denial of CENVAT Credit - adjudicating authority has denied the Cenvat credit on altogether other grounds for which admittedly no show cause notice has been issued and no opportunity has been given - matter remanded back - HC
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• High Court Remands Case on Duty Demand for FOC Kits Sold with JCB Machines Due to Inconsistent Show Cause Notices.

  Case-Laws - HC : Duty demand - FOC kits sold along with JCBs machines - The dropping of similar show cause notices relating to similar demands for duty has led to an anomalous situation - matter remanded back - HC
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• Interest on Central Excise Refunds Delayed Over Three Months: No Interest on Interest Amounts Allowed u/s 11BB.

  Case-Laws - HC : The assessee is entitled for the interest u/s 11BB of the Act on the refunded amount, if the amount has been refunded after three months from the date of receipt of the application, but is not entitled for interest on interest - HC
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VAT

• Entry Tax Adjustment Not Justified for Sales Tax Exclusion u/s 4 of Entry Tax Act.

  Case-Laws - HC : The mere fact that entry tax payment would be adjusted against the sales tax liability as per Section 4 of the Entry Tax Act, would not come to the aid of the assessee to contend that sales tax at 12% was to be levied on the price excluding entry tax - HC
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Case Laws:

• Income Tax

• 2014 (4) TMI 1042
  Deduction u/s 80IB(10) of the Act – Profits from sale of housing projects – Held that:- The decision in CIT v. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] followed - the assessee had taken full responsibilities for execution of the development projects - the assessee had full authority to develop the land as per his discretion - The assessee could engage professional help for designing and architectural work - Assessee would enroll members and collect charges - Profit or loss which may result from execution of the project belonged entirely to the assessee - the assessee had developed the housing project - the Tribunal committed no error in holding that the assessees were entitled to the benefit u/s 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – Decided against Revenue. Sale of unutilized FSI – Construction done only on the portion of FS available – Held that:- Marginal underutilization of FSI certainly cannot be a ground for rejecting the claim u/s 80IB(10) of the Act - Even if there has been considerable underutilization, if the assessee can point out any special grounds why the FSI could not be fully utilized, the case may stand on a different footing - in cases where the utilization of FSI is way short of the permissible area of construction, looking to the scheme of section 80IB(10) of the Act and the purpose of granting deduction on the income from development of housing projects envisaged, bifurcation of profits arising out of such activity and that arising out of the net sell of FSI must be resorted to - none of the assessees have made any special ground for non-utilization of the FSI- Decided in favour of Revenue.

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• 2014 (4) TMI 1019
  Grant of registration u/s 12A of the Act - Agricultural Market Committees - Claim of exemption - Income from local authority – Held that:- Following Commissioner of Income-tax Versus Agricultural Market Committee [2011 (3) TMI 1265 - Andhra Pradesh High Court] - Agricultural Market Committees are entitled for registration u/s 12A/12AA and directed the DIT(E) to grant registration - the orders of ITAT on the issue of granting registration are yet to be implemented by the DIT(E) – thus, the matter is required to be remitted back to the AO to allow exemption u/s 11, after the DIT(E) grants registration u/s 12A – Decided in favour of Assessee.

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• 2014 (4) TMI 1018
  Addition of peak credit amount – Unexplained credits – Addition u/s 68 and 69 of the Act - Held that:- The assessee rightly contended that when there is a small deposit during the whole year in the bank account of the assessee, then total amount of deposits during the financial year cannot be treated as income in the hands of assessee - there was a deposit of Rs.23,12,875/- during the Financial Year to the bank account of the assessee which was deposited in salary amounts of thousands on various dates, then it cannot be justified if entire amount of deposits during the year is considered as income in the hands of assessee – Following Commissioner of Income-Tax Versus Kulwant Rai [2007 (2) TMI 185 - DELHI High Court] - only the peak credit can be taken as income out of the deposits made during the year to the bank account of the assessee – the AO is directed that only peak credit is to be taken as income of the assessee out of the deposits – Decided in favour of Assessee.

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• 2014 (4) TMI 1017
  Discrepancies in valuation of investment – Investment in agricultural property – Fair market value - stamp value u/s 50C - Held that:- Following Commissioner of Income-tax Versus Dinesh Jain HUF [2012 (10) TMI 158 - DELHI HIGH COURT] - the error committed by the income-tax authorities in the present case is to jump the first step in the process of applying section 69B - that of proving understatement of the investment - and apply the measure of understatement. If anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2) - It does not even authorise the adoption of any yardstick to measure the precise extent of understatement - There can be no compromise in the application of the section - It would seem to require the AO even to show the exact extent of understatement of the investment - it does not even give the AO the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. The AO is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement - There is no authority given by the section to adopt some reasonable yardstick to measure the extent of understatement - since it may not be possible in all cases to prove the precise or exact amount of undisclosed investment, it is perhaps reasonable to permit the AO to rely on some acceptable basis of ascertaining the market value of the property to assess the undisclosed investment - It is only to the extent that the rigour of the burden placed on the AO may be relaxed in cases where there is evidence to show understatement of the investment, but evidence to show the precise extent thereof is lacking - mere suspicion cannot take the place of proof - mere reliance upon the report of the Valuation Officer expressing his opinion as to the true value would be inadequate material for the AO to constitute evidence in the absence of positive evidence – thus, no substantial question of law arises foe consideration – Decided against Revenue. Short Term Capital Gain - Stamp duty - Held that:- the Tribunal rightly was of the view that direction to correctly apply the stamp duty rates to the sale price of the plot for arriving at the STCG in view of the provisions of Section 50C of the Act, while holding addition of various amounts towards sale of land over and above the stamp duty rates, to be not justifiable, as per the provisions of Section 50C of the Act - The CIT (A) had in fact directed the AO to re-compute the short term capital gain by taking the cost of plot at Rs.12 lac and to include the stamp duty towards the cost of acquisition - No fault was found with the order by the Tribunal - Decided against Revenue.

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• 2014 (4) TMI 1016
  Validity of jurisdiction u/s 263 of the Act – Held that:- The view taken by the AO was a possible view - The question was debatable - the power u/s 263 could not have been invoked by the Commissioner – the questions cannot be termed as substantial questions of law - It is clearly an attempt to re-appreciate and reappraise the factual materials - After the scrutiny and assessment of all materials placed on record, the facts before the Commissioner did not justify arriving at the requisite satisfaction - it has scrutinized the claims and found that substantial part are covered by the earlier orders of the Tribunal - The truck hire charges claimed have not been found to be worth reopening, particularly because the assessee was in the very (milk and dairy) business – Decided against Revenue.

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• 2014 (4) TMI 1015
  Waiver of penalty u/s 273B – Cancellation of penalty u/s 271C of the Act – TDS at the time of credit of interest or at the time of actual payment – Held that:- The Tribunal rightly held that the tax has been deducted at source at the time of actual payment - the amount has also not been credited of the account of the payee prior to its maturity - main provision of Section 194A is not attracted - the amount has been credited to a separate account - the deduction of tax at source is one of the modes of recovery of the collection of tax - In some cases the tax has to be deducted at source irrespective of the fact whether paid amount was the income of the payee whereas in other cases, the taxes have to be deducted at source for paying the amount as income - the tax was deducted but at the time of actual credit entry made of amount to the account of payee - there was no default on the part of assessee for which he could be made liable for payment of penalty u/s 271(C) of the Act. The account holder was given option to withdraw the interest half yearly but it is not the case of the revenue that any of the account holders exercised this option - the assessee credited the interest in its own account at the end of financial year and on the event of credit of amount of interest in in account of payee (the assessee) it deducted TDS - the AO has given finding that in the entire deposit scheme the interest was being credited on quarterly basis - there is no observation of the AO that in the balance sheet the entries of interest were made on quarterly basis rather the balance sheet shows the credit of interest on annual basis – thus, the assessee cannot be said to be in default in deduction of TDS – thus, the provisions of Section 271 C which make liable for payment of penalty on the event of failure of any deduction of tax are not attracted – the order of the Tribunal upheld - Decided against Revenue.

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• 2014 (4) TMI 1013
  Eligibility for interest on refund out of MAT credit - Whether the assessee would be entitled to interest on the refund as per Section 244A of the Act – Held that:- The assessee became entitled to refund consequent upon the deduction given on MAT credit and the TDS - the assessee is entitled to a refund of Rs. 49,67,917/- and the deduction on TDS itself was before granting or charging any interest under any provisions of the Act - the proper course would be to remand the matter back to the AO to work out interest on the refund payable to the assessee on the sum of Rs. 49,67,917/- as ordered in the order of the Assistant Commissioner dated 28.02.2005 in accordance with Section 244A of the Act – matter remitted back to the AO - Decided against Revenue.

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• 2014 (4) TMI 1012
  Deletion of disallowance u/s 43B of the Act – Sales tax set off – Held that:- As decided in assessee’s own case for the previous assessment year, the question involved in not a substantial question of law – Decided against Revenue. Disallowance u/s 37(2A) of the Act – Entertainment expenses - Held that:- The Tribunal rightly held that the explanation clarifies that "the entertainment expenditure includes expenditure on provision of hospitality of every kind by the assessee to any person, whether by way of provision of food or beverages or in any other manner whatsoever and whether or not any such provision is made by such express or implied contract or customs or usage of trade, but does not include expenditure on food or beverages provided by the assessee to his employees in office, factory or other place of their work" - the view taken by the Tribunal is a possible view and going by the language of Explanation (2) to Section 37(2A) of the Income Tax Act,1961 as then applicable - when the disallowance is of Rs.8,97,241 – the appeal does not raise any substantial question of law – Decided against Revenue. Inclusion of amount of reimbursement of medical expenses – Held that:- The Tribunal found that the matter is squarely falling within the statutory provision u/s 40A(5) of the Act - A direction to the AO to exclude medical expenses/ club subscription /entrance fees from the salary of the employees for computing disallowance u/s 40A(5) of the Act does not give rise to any substantial question of law – Decided against Revenue. Computation of deduction u/s 80HHC of the Act – net foreign exchange receipt relating to export from Kandla Free Trade Zone to be considered as receipt u/s 10A of the Act or not – Held that:- The Tribunal held that sub-section (1) only stipulates that the assessee should be an Indian Company, resident in India and engaged in the business of export out of India of any goods or merchandise to which the section applied - merely because deduction u/s 10A was claimed by the assessee on such exports would not be a reason for dis-entitling it to claim deduction u/s 80HHC(1) (Clause a) of the Act - the relief has been confined to net foreign exchange realization in the form of export from Kandla Free Trade Zone – the issue does not raise any substantial question of law arises for consideration – Decided against Revenue. Deduction of distribution cost – Held that:- The Tribunal has considered the grievance of the assessee that the AO excluded from the total turnover excise duty and recovery of distribution costs credited to the distribution expenses while computing its eligible deduction u/s 80HHC of the Act – thus, the matter does not raise any substantial question of law arises for consideration – Decided against Revenue.

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• 2014 (4) TMI 1011
  Justification for rejection of books of accounts u/s 145(2) of the Act - Sales not verifiable from the accounts – Addition u/s 68 of the Act – Substantial question of law – Held that:- The CIT(A) has observed that all the quantitative details are available in the books of Account and that the accounts are regularly maintained and on those factual findings deleted the addition made by AO, which was confirmed by the Tribunal – as such no substantial question of law arises in respect of deletion of addition made u/s 145(2) - the cash creditors including the ladies creditors appeared before the AO and their income particulars were filed before the AO - The AO disbelieved all those documents and statement of those creditors for one reason or the other - The CIT(A) rightly held that the AO was not justified in making addition as an unexplained credit – the Tribunal was right in confirming the order of deleting the addition of Rs. 9,83,935/- made u/s 68 of the Act - So far as deletion of addition of Rs. 9,83,935/- made u/s 68 of the Act is concerned, there was no substantial question of law arises – Decided against Revenue.

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• 2014 (4) TMI 1010
  Liability to pay tax dues u/s 179 of the Act - Whether the Directors of the company mainly incorporated in the year 1994 are liable for payment of tax dues from the company for the assessment year 1996 - 1997 in accordance with the provisions of Section 179 of the Act – Held that:- Assessee rightly contended that the provision of Section 179 of the Act not being applicable for M/s Asian Finstock Limited not being a private company, but, a public limited company from 05.12.1994 - the revenue neither in show cause notice u/s 179 of the Act nor in the order passed under the provisions has laid any factual foundation thereby disputing the status of such company of that a public limited company - Relying upon Pravinbhai M. Kheni v. Asstt.CIT Assistant Commissioner of Incometax, Central Circle 2 and others [2012 (12) TMI 494 - GUJARAT HIGH COURT] - In absence of any foundational facts and in wake of clear and eloquent evidences reflecting the status of company as that of a public limited company, the contention of the assessee shall need to be regarded that in a case of Director of a public limited company, the provisions of Section 179 cannot be made applicable – thus, the issuance of show cause notice and the consequently proceedings u/s 179 is not valid - Decided in favour of Assessee.

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• 2014 (4) TMI 1009
  TDS u/s 194C / 195 - Additions u/s 40(a)(ia) - Whether payment made to the four several agents or any part of such payments were in fact made to the non-resident foreign carrier – Held that:- Each of the four agents are the agents of the foreign carriers - the airway bill contain the name of the issuing carrier s agents - The name of the agent appearing in the airway bill corresponds with the name of the agents to whom payments were actually made by the assessee - no elaborate reasoning is required to show that each of the four agents was acting for a disclosed principal - Any payment made to any such agent is on behalf of its principal - The agents was merely the collecting hand insofar as the airfreight is concerned - Payment made to such agents is in fact a payment made to the principal. Chargeability of payments made to Non-resident – Airfreight payment – Held that:- Relying upon GE India Technology Centre Private Ltd. Versus Commissioner of Income Tax & Anr. [2010 (9) TMI 7 - SUPREME COURT OF INDIA] - The payer is obliged to deduct tax at source only if tax upon such payment is assessable in the country - Section 195 specifically excludes the liability to deduct tax at source when payment is made to a foreign company which is not chargeable to tax in the country - The payments are as such not chargeable to tax - the assessee had no obligation to deduct any tax – Decided in favour of Assessee. Liability to deduct TDS u/s 194(C) of the Act – Held that:- The assessee was not liable to deduct any tax at source in so far as the payment of airfreight made to the foreign carrier was concerned - But the other payments were in fact made to the resident agent and to that extent tax was deductible - Payments made to the resident agent otherwise than on account of airfreight payable to his principal are open to deduction at source u/s 194(C) – thus, the order of the CIT(A)is set aside and the matter is remitted back to the AO – Decided partly in favour of Assessee.

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• 2014 (4) TMI 1008
  Allowability of exemption u/s 11 of the Act – Building fund received as donations to be treated as income u/s 68 of the Act or not – Held that:- An opportunity was given to the Revenue to substantiate their contentions and asked to verify the Bank Accounts furnished by the assessee- Revenue informed that the details of the donations received through Cheques is in accordance with law – the assessee is the charitable trust - any voluntary contribution received by a Trust created wholly for charitable or religious purpose shall be deemed to be income derived from property held under the Trust wholly for charitable and religious purpose. Relying upon Director of Income-Tax (Exemption) Versus Keshav Social And Charitable Foundation [2005 (2) TMI 84 - DELHI High Court] the amounts were used for charitable purposes even though the assessee failed to disclose the names and addresses of the donors - the amount was utilized by the Trust wholly for the charitable or religious purposes, the assessee has fulfilled the condition imposed u/s 11 of the Act - Section 11 contemplates that any income derived from property held under Trust wholly for charitable or religious purposes, to the extent to which, such income is applied to such purposes is exempted u/s 11(1)(a) of the Act - the assessee is a charitable Trust and its income is to be exempted u/s 11 of the Act – there was no infirmity in the order of the Tribunal – Decided against Revenue.

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• 2014 (4) TMI 1007
  Liability to pay tax dues u/s 179 of the Act - Liability of directors of private company in liquidation - Held that:- Assessee rightly contended that the provision of Section 179 of the Act not being applicable for M/s. Blue Information Technology being a public limited company - the revenue neither in show cause notice u/s 179 of the Act nor in the order passed under the provisions has laid any factual foundation thereby disputing the status of such company of that a public limited company. Relying upon Pravinbhai M. Kheni v. Asstt.CIT Assistant Commissioner of Income tax, Central Circle 2 and others [2012 (12) TMI 494 - GUJARAT HIGH COURT] - The provisions are made in respect of private companies and sub-section (2) of section 179 of the Act makes it abundantly clear that in the case of a public company or public limited company, the very provision is not applicable - the onus of the assessee to establish that non-recovery of the amount of tax due to the Company could not be attributed to any gross negligence, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the private Company, but the action against the assessee u/s 179 of the Act would not lie - Decided in favour of Assessee.

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• 2014 (4) TMI 1006
  Validity of order u/s 154 of the Act – Rectification of order - Benefit of carry forward of business loss u/s 80 of the Act – Original return filed not a loss return u/s 139(3) of the Act - Held that:- The assessee had filed return of income declaring the total income on 6-1-1998 - the Assessing Authority once again determined total loss and allowed it to be carried forward - the order allowing the loss to be carried forward was modified invoking Section 154 of the Act - The reasoning of the Appellate Authority that the assessee has not declared the loss within the time specified u/s 139(1) and 139(3) of the Act is factually incorrect – the business loss was allowed to be carried forward - The assessee has not violated any of the conditions u/s 80 of the Act - The assessee had shown positive income in the returns, but in the assessment, the business loss was determined by the AO – thus, the assessee is entitled for the benefit of carry forward of business loss - Whether loss ultimately determined by the Assessing Officer was liable to be carried forward or not, is a debatable issue – Invocation of section 154 is not available for the AO – thus, the order of the Tribunal is upheld – Decided against Revenue.

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• 2014 (4) TMI 1005
  Admission of fresh evidence under Rule 46A of the Rules – Held that:- The Tribunal had rightly held there was no violation of rule 46A as remand report was obtained by CIT(A) from the AO - fullest opportunity was made available to both the sides – Decided against Revenue. Deletion of un-explained cash credits – Held that:- The names of 52 persons were reflected in the books of assessee - the authorities have found the material on record, confirmed the names and addresses as well as the details of the accounts, as also in the most of the Cases PAN numbers, coupled with the fact that amounts were received by way of account payee cheque, chose not to question the amount- the issue is factual issue thus, cannot be considered – Decided against Revenue. Addition of undisclosed income from safari business – Held that:- The Tribunal also sustained the order of the CIT(A) by holding that Rakesh Thakkar in his individual capacity had accepted that the amounts – it had been offered by way of tax since he was the proprietor of Satya Developers - only on the ground that some loose papers were found from the office premises of the assessee, the AO have concluded that financial transaction concerned the assessee - in absence of any contrary material having been brought either before both the authorities or before the Court, neither CIT nor the Tribunal committed any error in appreciating the facts which were presented before both of them - the amount had already been owned by the proprietor of Satya Developers who had not only accepted the amount but had also offered it for the purpose of tax which were duly recorded in the books of Satya developers, cannot be taxed twice – thus, no question of law arises for consideration – Decided against Revenue.

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• 2014 (4) TMI 1004
  Deduction u/s 80IB(10) of the Act – Development of housing project - Approval by the local authority and completion certificate not granted – Held that:- what is available for deduction u/s 80IB(10) of the Act is the profit of an undertaking derived from developing and building a housing project - Mere sale of open land or unused FSI as part of housing project where utilization of the FSI is way short of permissible limits cannot be said to have been derived from housing project - The AO while denying the deduction to the Assessee u/s 80IB(10) had apart from the fact that Assessee is not the owner of land but had acted as a contractor had also noted that Assessee had not fully utilized the FSI available to it for the construction of project and had utilized only 4068.58 sq. mt. out of the total area of 8900.32 sq. mt. of land - CIT(A) while adjudicating the issue has not dealt with the aspect of FSI - There is no factual finding by CIT(A) with respect to the Assessee’s eligibility of deduction u/s 80IB(10) with respect to utilization of FSI –thus, the factual issue needs re-examination, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Revenue.

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• 2014 (4) TMI 1003
  Rectification of order u/s 154 - doctrine of merger - merger of an order with order in appeal - Disallowance out of welfare expenses – Held that:- The addition of Rs. 23,064/- was mentioned at 3 different places in the assessment order - Section 154(1A) specifically provides that any matter which has not been considered and decided in any proceedings by way of appeal or revision filed against an order referred to in sub-section (1) of Section 154 of the Act may be amended by the authority passing such an order in exercise of its power under sub-section (1) of Section 154 of the Act - the authority passing an order may amend that part of the order which has not been considered and decided in any proceeding by way of appeal or revision against order - the matter of ad-hoc disallowance out of sundry expenses was considered and decided by CIT(A) in appellate proceedings – the AO had erred in framing revision order passed u/s 154 – Decided in favour of Assessee.

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• 2014 (4) TMI 1002
  Rejection of bad and doubtful debts u/s 36(1)(viia) of the Act – Admission of additional ground – No materials produced - Held that:- Relying upon Goetze (India) Limited Versus Commissioner of Income-Tax [2006 (3) TMI 75 - SUPREME Court] - additional claim cannot be made before the AO, as there is no provision under the IT Act to make amendment in the return without filing a revised return - the assessee’s additional ground claiming deduction u/s 36 (1)(viia) has been declined only for the reason that there was no materials placed on record – there was no opportunity forthcoming to have been granted specifically asking to produce the materials - the factual position as it appears is that the assessee had raised additional ground of relief u/s 36(1)(viia) without any material - Nor the CIT(A) has directed it to produce the same - there seems to be some communication gap in lower appellate proceedings – thus, it would be proper to take the paper book filed by the assessee on record comprising of the above said material - the documents have not been examined either by the AO or the CIT(A), the matter is required to be remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (4) TMI 1001
  Revision u/s 263 of the Act – Rectification of mistake u/s 154 of the Act - Carry forward and set off of unabsorbed depreciation – Calculation of interest u/s 234B of the Act – Held that:- The revision order passed by the CIT u/s 263 of the Act is not only confusing but reveals non application of mind - the CIT has sought to revise the rectification order dated 18/08/2010 passed u/s 154 of the Act by the AO, but, actually the CIT has ended up revising the consequential order - The CIT has failed to substantiate with proper reasoning why the amendment made to the provision of section 32(2) of the Act by the Finance Act, 2001 removing time limit of 8 years, would not be applicable to the carry forward of unabsorbed depreciation pertaining to AY 1997-98 - The decision in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] followed - Current depreciation is deductible in the first place from the income of the business to which it relates - If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee - If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year - In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 - once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 up to the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - the order passed by the AO u/s 154 of the Act cannot be said to be erroneous and prejudicial to the interests of the revenue so as to empower the CIT to revise it u/s 263 of the Act - the CIT has committed an error in revising the order passed u/s 154 of the Act - Even the CIT in the order passed u/s 263 has not mentioned that the issue being contentious one cannot be rectified u/s 154 of the Act – thus, the order u/s 263 of the Act is set aside – Decided in favour of Assessee.

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• 2014 (4) TMI 1000
  Assignment of Keyman insurance policy by the firm to its employee – Nature of Keyman insurance policy – Taxability of income u/s 2(24)(xi) r.w. section 10(10D) of the Act – Held that:- Following Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] - once there is an assignment of the employer in favour of the individual employer, then the character of the insurance policy changes and it gets converted into an ordinary policy, that such assignment is duly permitted by law - even the LIC accepted the assignment, then on assignment the policy no longer remains the keyman policy and gets converted into an ordinary policy - as such it is not open to the department to still take a stand that the policy is a keyman policy and when it matures, the advantage drawn therefrom is taxable - on maturity of the policy, it is not the employer but the individual employee who is getting maturity value/benefits of the insurance policy and no doubt the employer as well as the individual take huge benefit by such assignment and at the same time, it cannot be treated as a case of tax evasion - It is a case of arranging the affairs in such a manner as to avail the exemption as per provisions of section 10(D) of the Act – thus, nothing is taxable out of the maturity value of the policy received from the insurance company by the assessee employee – Decided in favour of Assessee.

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• 2014 (4) TMI 999
  Disallowance of loss claimed under Chapter IV-D of the Act – Company only at setting up stage - Whether the assessee company can be said to have set up its business during the relevant year and, if so, when – Held that:- The company claims to have appointed MD as well as Chief Operations Manager, putting the infrastructure in place by acquiring office premises, staff, furniture and fittings, etc. - No grant of any operational lease by the year end should not be of any consequence - if the infrastructure has indeed been set up and the company is in position or is ready to grant operational leases, which is to comprise its principal business and that toward the commencement of which line of business efforts were made, it can be said to have set up its business - the assessee’s case is wholly unsubstantiated - The only material on record is toward the appointment of MD, even though there is some doubt in its respect inasmuch as the resolution by the Board of Directors of the company confirming his appointment is dated 17.02.2007. No proper answers emanate from either the material on record or the assessee’s explanations, with the expenses as incurred itself revealing the state of preparedness of the company toward commencing its business can be taken out - the company is clearly in the setting up stage - it is only the expenditure, post set-up, that could be claimed as a business expenditure, while the company has claimed the entire expenditure incurred by it since inception, including as it appears expenditure on its’ incorporation itself, which are only capital costs - No case for allowance of the assessee’s claim u/s. 37(1) or section 32(1) is made out – Decided against Assessee.

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• 2014 (4) TMI 998
  Addition on account of service tax payable – Held that:- The assessee has been following mercantile system of accounting and service tax collected by it is directly credited to the Service Tax Account from where the payments are deposited with treasury from time to time - No part of receipt of service tax has been taken to the P&L A/c neither any expense on account of deposit of service tax had been debited in the P&L A/c - The AO and CIT(A) had relied upon the provisions of section 43B for making addition – Relying upon COMMISSIONER OF INCOME TAX Versus NOBLE AND HEWITT (I) P. LTD [2007 (9) TMI 238 - DELHI HIGH COURT] - since the assessee did not debit the amount to the P&L A/c as an expenditure nor claim any deduction in respect of the amount and considering that the assessee was following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise – Decided in favour of Assessee.

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• Customs

• 2014 (4) TMI 1025
  Imposition of Simultaneous Penalties - Whether CESTAT erred in imposing simultaneous penalties on both the Partner and Partnership firm – Two conflicting opinions of two Division Benches of this Court - Section 112(a) of the Customs Act, 1962 - Held that:- This Court is not in agreement that two opinions rendered by two Division Benches of this Court are not conflicting - Textoplast Industries [2011 (7) TMI 402 - Bombay High Court]recognizes the settled concept and applies it, namely, a firm cannot be said to have an independent existence than that of partners even when it comes for imposition of penalty - Whereas, Commissioner of Customs (E.P.) v/s Jupiter Exports [2007 (6) TMI 2 - HIGH COURT, BOMBAY] holds that there is no difference between criminal prosecution and adjudication or penalty proceedings - Therefore, even in cases falling under the Customs Act, dealing with imposition of penalty same cannot be confined only on a partnership or its partner - Division Bench, therefore, does not agree with the principles applied in earlier Division Bench judgment and expressly differs from it - This divergence of opinion is apparent and this Court cannot follow judgment in Textoplast Industries. It is difficult to hold that Division Bench in Jupiter Exports is per incuriam or that the law laid down therein is no longer good law in the light of the judgment in Standard Chartered Bank v/s Directorate of Enforcement [2006 (2) TMI 272 - SUPREME COURT OF INDIA] noting that the controversy before Supreme Court was decided in the backdrop of the facts and particularly the legal position and status of a company incorporated and registered under the Indian Companies Act, 1956, this Appeal cannot be dismissed by following judgment in Textoplast Industries - Judgment in Textoplast Industries cannot be said to be either per incuriam or no longer good law - Further, in Director of Settlements, A.P. v/s M.R. Apparao [2002 (3) TMI 909 - SUPREME COURT] as far as a binding precedent is concerned, it cannot be assailed on the ground that certain issues were not considered or the relevant provisions were not brought to the notice of the Court. Matter referred to larger bench referring the following questions for opinion of a Larger Bench: (i) Whether, under Customs Act, and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the Partner and Partnership firm can be imposed and (ii) Whether, judgment in Jupiter Exports holding that separate penalty on a partnership firm and a partner cannot be imposed, lays down the correct law or whether, as held by the later Division Bench in the case of Textoplast Industries, it is permissible to impose penalty separately on a partnership firm and a partner particularly in adjudication proceedings under the Customs Act, 1962. - Referred to larger bench.

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• 2014 (4) TMI 1024
  Bar of Limitation - Condonation of delay of 823 days - Filing of appeal – Sufficiency of reason - Negligent conduct of Assessee - Held that:- Firstly, except for the reason that Accounts Executive left the job, there is no other reason furnished - Even according to assessee, he left the job during January 2013, whereas the order was passed by the Tribunal on 23.06.2011 - Therefore, this could have been hardly taken as an explanation for the inordinate delay - The affidavit is bereft of particulars, the date on which the order passed by Tribunal was served on assessee has not been furnished, which appears to be deliberate - Therefore, it is hold that the explanation offered is wholly unacceptable and assessee were grossly negligent and their plea lacks bonafide - Unless the assessee was able to establish that the assessee was prevented from approaching this Court within the time due to reasons beyond their control or for bonafide reason, there is no reason to exercise discretion in the matter - Therefore, taking note of the conduct of assessee, prayer made for condonation of delay is rejected – Decided against assesse.

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• 2014 (4) TMI 1023
  Validity of Trial Court order - Smuggling of 400 gold biscuits – Prosecution of Carriers - Section 135 of the Customs Act, 1962 - Whether the admission of co-accused u/s 108 of the Customs Act can be the basis of conviction of other co-accused – Held that:- Trial Court has rightly held that statement of co-accused under Section 108 of the Act against the co-accused is a weak type of evidence and conviction of co-accused cannot be based on the uncorroborated statement of co-accused - Counsel for the appellant (Customs) is fair enough to concede that there is no corroborative evidence against Amrik Singh @ Chamku and Balwinder Singh for warranting their conviction u/s 135 of the Customs Act except statements of co-accused under Section 108 of Customs Act - Appeal preferred by the Customs Department stands dismissed being without any merit – Decided against Customs. Validity of Trial Court Order - Unchallenged conviction - Smuggling of gold biscuits – Prosecution of Carriers - Quantum of sentence – Protracted trial of 21 years - Held that:- Learned Senior counsel for the revisionist has not challenged the conviction of both the accused Ajit Pal Singh Sethi and Daljit Singh u/s 135 of the Customs Act - There is concurrent finding of fact recorded by both the Courts below in respect of guilt of revisionists u/s 135 of the Customs Act - So, the conviction recorded by both the Courts below in respect of offence under Section 135 of Customs Act against both the revisionists stands affirmed. Accuseds have already undergone protracted trial of more than 21 years - Even according to the prosecution, the petitioners were simply carriers – Relying upon Jeevraj B. Jain v. Central Excise & Customs Deptt. and another [1999 (2) TMI 625 - SUPREME COURT] – SC had directed the accused to pay a fine of Rs. 1,00,000/- where the occurrence related to the recovery of 600 gold biscuits and the matter was 30 years old – Therefore, keeping in view the ratio of the said authority, the sentence of accuseds stands reduced to the period already undergone - However, their sentence of fine enhanced to Rs. 2,00,000/- each instead of Rs. 10,000/- as imposed by the trial Court – Decided partly in favour of Customs.

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• 2014 (4) TMI 1022
  Validity of Order of acquittal – Sufficient Evidence - Conscious possession of the contraband article – Panch Witness - Charge of commission of offences u/s 135(1)(b)(i) of the Customs Act, 1962 and u/s 85(1)(ii)(a) of the Gold (Control) Act, 1968 - Held that:- It is difficult to accept that the Trial Court had not taken into consideration the relevant facts of the evidence adduced by the prosecution or has not passed the judgment upon the evidence surfaced at the trial - Such a conclusion is inevitable as the matter stated/recorded into few pages clearly reveal that the Trial Court has meticulously considered the evidence of PW 1, PW 3 and PW 4 in the same - On the basis of such a material surfaced during the prosecution evidence, Trial Court had come to the conclusion of their being variance regarding the place at which the seizure panchnama was drawn i.e. whether drawn at the spot of the seizure rear of Pritam Hotel or as claimed by PW 1 in the office of the Customs - It is difficult to find any fault with the observations made by the Trial Court that out of the said witnesses PW 1 being involved in a raid, was an interested witness, while PW 3 was the independent witness. For coming to the conclusion about guilt of the respondent, it was necessary for the prosecution to prove that the respondent was in conscious possession of the contraband article i.e. the gold when he was prohibited by raiding party at the spot - There being paucity of evidence of independent witnesses regarding the said aspect, the Trial Court had declined to draw such inference on the basis of the evidence of the members of the raiding party i.e. PW 1 and PW 4 - The said conclusion drawn by the Trial Court being based upon the relevant facts of the evidence of the members of the raiding party and particularly that of PW 1 and of the panch witnesses and absence of signatures of panch witnesses on the box, can neither be said to be perverse nor can be de hors the evidence of the witnesses - The reasons given also cannot be said to be erroneous or de hors material surfaced at the trial - Thus, finding reached by the Trial Court of the defence version being true also cannot be said to be erroneous or perverse in light of the reasons given for the same - The order of acquittal recorded by the Trial Court cannot be said to be improper upon the possible view of the evidence surfaced at the trial - No case is made out for interfering with the order of acquittal passed by the Trial Court - Resultantly, appeal stands dismissed – Decided against Appellant.

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• Corporate Laws

• 2014 (4) TMI 1021
  Compounding of offense u/s 25(8) and Section 192 of the Companies Act, 1956 - Special Resolution passed at Extraordinary General Body Meeting (EOGM) of the company not been filed with the Registrar of Companies, within the period of 30 days of passing the same - Held that:- Appellant cannot be aggrieved by the impugned order of the Company Law Board compounding certain defaults which are voluntarily disclosed by the company. It is also not in dispute that the Resolution passed in the 36th EOGM had not been registered. Thus, admittedly a default under Section 192 had occurred and the same has been compounded. The appellant cannot make any grievance in this regard. The appellant also cannot be aggrieved by compounding of an alleged offense under Section 25 as it is the case of the appellant that no such offense had occurred. The principal grievance of the appellant is not against the compounding of the alleged offences but against the introduction of a new set of Articles of Association, which the appellant contends is without due sanction of the members of the company. It is not necessary in these proceedings to adjudicate whether a new set of Articles of Association has been filed or whether the same has the approval of the members of the respondent company. The appellant is at liberty to raise such contentions in appropriate proceedings. It is open for the appellant to institute such action as may be advised to challenge the set of Articles which will be considered by the appropriate forum completely uninfluenced by the impugned order passed by the Company Law Board. This clarification would adequately protect the appellant as the impugned order cannot not be considered as legitimising any action of the company which may otherwise be unlawful. The import of the impugned order is only to compound the specified defaults, if any, under the Act. - Decided against the appellant.

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• Service Tax

• 2014 (4) TMI 1041
  Demand of service tax - Held that:- demands issued in the year 2002 for the period 16.11.97 to 1.6.98 are barred by limitation. Apart from the fact that original adjudicating authority has himself not imposed any penalty on the respondents on the ground of absence of any suppression or mis-statement, there are various decisions of the Tribunal as upheld by the High Court, laying down that in such a scenario, the extended period of limitation cannot be invoked. It may be seen that there were number of cases involving more or less identical period till 1.6.98 when the show cause notices were issued after the retrospective amendment. In all such cases, the Tribunal held that no malafide can be attributed to the assessee and the show cause notices are barred by limitation. One such reference can be made to Honble Gujarat High Court decision in the case of CCE Vadodara vs. Eimco Elecon Ltd. [2010 (7) TMI 477 - GUJARAT HIGH COURT] wherein the appeal filed by the Revenue was rejected on merits, as well as on limitation. The Tribunals decision in the case of CCE Raipur vs. Jaiswal Equipment & Holdings P Ltd. [2007 (6) TMI 31 - CESTAT, NEW DELHI] can also be referred - Decided against Revenue.

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• 2014 (4) TMI 1040
  Demand of service tax - Intellectual property service - Franchise agreement - manufacture and sale of beer using the brand name and technical know-how of another person - Held that:- As per the agreement between the parties, the risk of manufacture and sale lies with the appellant in respect of the Foster Brand beer got manufactured by it from FIPL. It is evident from the contract that FIPL is only responsible for bottling, packing and dispatch as per the specification, terms, formula etc. as laid down by the appellant. Further, FIPL is bound to charge the price from the notified Indenter of the appellant as fixed by the appellant. Only for the risks associated with the manufacturing process fastened on FIPL (CBU), it cannot be said that as FIPL is responsible for proper quality, quantity and timely production, they are providing Franchise Service and/or IPR Service - Decided in favour of assessee.

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• 2014 (4) TMI 1039
  Waiver of pre deposit - Mobile telephone services - Held that:- Prima facie, there is infraction of law laid down. However, it is prima facie clear that the services received by the applicant from other service providers to extend roaming facility to applicant's subscribers is an input service for the applicant. Thus the advocate for the applicant has been able to demonstrate that the facts of his case has not resulted in any revenue loss and he has also explained that this happened only for a brief period. Therefore, at this stage, we consider it proper to grant waiver of pre-deposit of dues for admission of appeal. It is so ordered and there shall be stay on collection of such dues arising from the impugned order during pendency of the appeal - Stay granted.

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• 2014 (4) TMI 1038
  Demand of service tax - construction of Commercial or Industrial complexes and also Residential Complexes. - Held that:- In the matter of free supply materials, there is already a decision of the Tribunal in favor of the assessee [2013 (9) TMI 294 - CESTAT NEW DELHI] and the other disputed issue stands referred to a Larger Bench of the Tribunal. In the circumstances, we consider the deposit already made by the applicant is sufficient for admission of appeal and there shall be stay on collection of such dues till the disposal of the appeal - Stay granted.

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• 2014 (4) TMI 1037
  Waiver of pre deposit - Mobile Telephone Services - Held that:- as on date no other company providing similar services has been made to pre-deposit any money on this issue for hearing their appeal. Therefore, we consider it proper to maintain parity among the various parties involved on the same issue. Hence, we order waiver of the requirement of pre-deposit of dues arising from the impugned orders for admission of the appeals and stay collection of such dues during the pendency of the appeals - Stay granted.

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• 2014 (4) TMI 1029
  Penalties under sections 76, 77 and 78 of the Finance Act - Application of Section 80 - Mining Services - CESTAT set aside penalty - Held that:- The respondent was bonafidely adjudicating and/or arguing that the services rendered by them was only pre-mining and exploration activity and cannot be covered under Mining Services. The aforesaid was not accepted by the Adjudicating Authority and it was held that the services provided by the respondent is classified as "Mining Services" liable to pay service tax even prior to 16.05.2008. As stated above, immediately on adjudication proceedings were completed, the Adjudicating Authority held that the service provided by them is "Mining Services" for which the respondent is liable to pay the service tax, the respondent has immediately paid the service tax along with penalty at the rate of 25% - Under the circumstances and considering section 80 of the Finance Act, 1994 which is reproduced hereinabove, the learned CESTAT has rightly quashed and set aside the penalties under sections 76, 77 and 78 of the Finance Act. No question of law much less substantial question of law arise in the present appeals - Decided against Revenue.

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• Central Excise

• 2014 (4) TMI 1032
  Validity of CESTAT Order - Non consideration of relevant material - Held that:- Since the CESTAT did not go into merits of the case and set aside the order of the Commissioner of Central Excise, Bangalore, without examining the effect of non-supply of the documents or without examining whether the said documents have any effect on merits of the case - Matter remanded back - Decided in favour of Revenue.

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• 2014 (4) TMI 1031
  Denial of CENVAT Credit - Interest under Rule 14 of the Cenvat Credit Rules 2004 read with Section 11AB of the Central Excise Act, 1944 - Held that:- while passing the OIO the adjudicating authority has denied the CENVAT credit to the petitioner on various other grounds for which no show cause notice was issued and no opportunity has been given to the petitioner. It appears that the show cause notice for denying the CENVAT credit was issued only on the ground that the petitioner has availed the credit of service tax on commission for sale of finished goods, which cannot be said to be relating to manufacturing activities but relating to sales activities (i.e. after manufacturing activities). However, while passing the OIO though the adjudicating authority has held that Business Auxilliary Service (BAS) on account of sales commission can be considered as Input Service within the definition of rule 2(I)(ii) of Cenvat Credit Rules, 2004 and the service tax paid on the said service is admissible as credit to the manufacturer, subject to certain conditions, the adjudicating authority has denied the Cenvat credit on altogether other grounds (mentioned in para 12.4 to 12.6 of the OIO) for which admittedly no show cause notice has been issued and no opportunity has been given to the petitioner. Under the circumstances, the OIO dated 31.03.2012 can be said to be in breach of principle of natural justice. Under the circumstances, the impugned OIO deserves to be quashed and set aside and the matter is remanded to the first adjudicating authority to consider the issue afresh in accordance with law and on merits - Decided in favour of assessee.

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• 2014 (4) TMI 1030
  Waiver of pre deposit - Held that:- When the legislation has not made any distinction, we cannot make such distinction by judicial order. Therefore, we do not find any error in the order passed by the appellate authority for insisting the payment of the entire amount of duty as a condition precedent for entertaining the appeal. However, at that stage itself the Tribunal appears to have made up its mind to the effect that the appellant is not entitled to the benefit of this input tax, which was erroneous. The appellant is yet to argue the case on merits. The respondent is also to be heard. It is only thereafter the Tribunal can come to the conclusion one way or the other. Therefore, the observations made on the merits of the appeal should not be taken into consideration as a binding precedent while deciding the appeal on merits. The tribunal shall consider the matter on merits and in accordance with law, ignoring the observations made by it in the impugned order, that would meet the ends of justice - stay denied.

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• 2014 (4) TMI 1028
  Waiver of pre deposit - Whether the Tribunal was justified in demanding Rs. Six lacs in compliance of Section 35F of the Central Excise Act, 1944. on the basis of demand which was not raised in the show cause notice and the reasoning given in the notice for raising the demand of Rs. 2,26,80,122/- has not been considered by the Commissioner, plausible and sufficient - Held that:- Duty demand of Rs. 2,13,09,972/- was dropped, except Rs. 13,70,150/- against M/s Sunita Ispat (P) Ltd., and the penalty of like amount. The appellant deposited Rs. 3,35,023/-. The CESTAT required the appellant to make a further deposit of Rs. 6 lacs as a condition for waiver of the remaining amount - when in the show cause notice the duty was not demanded on the basis of unaccounted purchase of scrap, the demand on that basis could not be confirmed in the Order-in-Original. There must be a demand in the SCN to be confirmed in the order - stay granted.

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• 2014 (4) TMI 1027
  Waiver of pre deposit - Held that:- Unit of petitioners was taken over by the concerned authority under the SARFAESI Act and even at the relevant time they could not deposit even 10% of the duty and penalty confirmed and considering the fact that now the petitioners have shown their readiness to deposit 15% of the duty and penalty confirmed - Conditional stay granted.

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• 2014 (4) TMI 1026
  Duty demand - FOC kits sold along with JCBs machines - Held that:- respondents is unable to deny that show cause notices referred to above, relate to the same controversy, i.e., FOC Kits, and have been dropped by the adjudicating authority pursuant to a fresh adjudication ordered by the CESTAT. It is not denied that no further appeal has been filed against the order of CESTAT or the order passed by the adjudicating authority, dropping the notices - The dropping of similar show cause notices relating to similar demands for duty has led to an anomalous situation. The petitioner would be liable to pay duty and penalty with respect to the impugned notice but with respect to similar show cause notices, would not be liable to pay duty and penalty. The dropping of similar show cause notices, by the Adjudicating Authority, in our considered opinion, is sufficient to grant relief to the petitioner and direct adjudication of the show cause notice, afresh - Matter remanded back - Decided in favour of assessee.

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• 2014 (4) TMI 1014
  Claim of refund along with interest u/s 11BB of the Act – Held that:- Relying upon circular no.670/61/2002-CX, dated 01.10.2002 and Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (10) TMI 16 - Supreme Court of India] - Section 11BB of the Act comes into play only after an order for refund is being made - interest u/s 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded - the only interpretation of Section 11BB that can be arrived at is that interest under the section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable - The assessee is entitled for the interest u/s 11BB of the Act on the refunded amount, if the amount has been refunded after three months from the date of receipt of the application, but is not entitled for interest on interest – the Authority is directed to calculate interest u/s 11BB of the Act – Decided partly in favour of Assessee.

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• CST, VAT & Sales Tax

• 2014 (4) TMI 1036
  Condonation of Delay of 1 year and 128 days – Bar of limitation - "sufficient cause" u/s 5 of Act, 1963 – Held that:- Judgment in Collector, Land Acquisition Vs. Katiji [1987 (2) TMI 61 - SUPREME Court] followed - When substantial justice and technical considerations are taken against each other, cause of substantial justice deserves to be preferred, for, the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay - The Court further said that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so - The statute providing limitation is founded on public policy - It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation) – Lapse on the part of litigant in approaching Court within time is understandable but a total inaction for long period of delay without any explanation whatsoever and that too in absence of showing any sincere attempt on the part of suiter, would add to his negligence, and would be relevant factor going against him. Relying upon Vedabai @ Vaijayanatabai Baburao Vs. Shantaram Baburao Patil and others [2001 (7) TMI 117 - SUPREME Court] - The Court said that u/s 5 of Act, 1963 it should adopt a pragmatic approach - A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days - In the former case consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case no such consideration may arise and such a case deserves a liberal approach – Here, if delay has occurred for reasons which does not smack of mala fide, the Court should be reluctant to refuse condonation, will not help the petitioner in any manner since it is found that here is a case which shows a complete careless and reckless long delay on the part of applicant, which has remained virtually unexplained at all - Therefore, this Court do not find any reason to exercise judicial discretion exercising judiciously so as to justify condonation of delay in the present case. Since it is contended that issue raised are substantially in public importance, this Court has also looked into merits of the matter and finds that first Appellate Court as well as Tribunal both recorded findings of fact in favour of assessee and there is no patent or otherwise illegality therein - No question of law has arisen in this case, particularly when findings of fact recorded by first appellate court as well as Tribunal are also not shown perverse or contrary to material on record - This is not a case wherein substantial questions are involved and would go undecided on account of unsatisfactory delay by revisionist - The application seeking condonation of delay is, therefore, rejected – Decided in favour of Revenue.

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• 2014 (4) TMI 1035
  Validity of Tribunal order – Inclusion of entry tax in taxable turnover – Whether in view of Section 4(2) of Entry Tax Act, 1990, the entry tax paid by the assessee form part of their taxable turnover – Held that:- Going by the model invoice produced before the Assessing Authorities, the total consideration charged by the assessee was inclusive of entry tax – The assessee had excluded the entry tax which was part of the consideration and had charged sales tax - assessment was revised to assess the taxable turnover under Section 16(1)(a) of the Act - The mere fact that entry tax payment would be adjusted against the sales tax liability as per Section 4 of the Entry Tax Act, would not come to the aid of the assessee to contend that sales tax at 12% was to be levied on the price excluding entry tax - Tax Cases stand dismissed – Decided against assessee.

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• 2014 (4) TMI 1034
  Payment of predeposit - Option to pay in installments – Meeting the ends of justice – Held that:- As such the appellant ought to have approached the Tribunal for installments at the earliest and ought not to have waited till 2013 - The question is only w.r.t. the predeposit and appellant shall be given an opportunity to submit the case on merits on payment of interest at the rate of 10% p.a. from 9.9.2010 till actual payment is made, the appellant may be given further six months time to make the payment of Rs. 22,96,969/and on that appeal shall be decided by the appellate authority on merits - If the appellant is granted time upto 31.12.2013 to make the payment of aforesaid amount by granting six months EMI with 10% interest on the aforesaid amount from 9.9.2010 till 31.12.2013, it will meet the ends of justice. Appeals succeed in part and the impugned order of Tribunal dated 11.3. is modified and common appellant is granted further time to make the payment on or before 31.12.2013 and to be paid in 6 EMIs with condition that the appellant shall make the payment with 10% interest p.a. from 9.9.2010 till 31.12.2013 and the aforesaid amount of interest shall be paid in last installment - Aforesaid payment of interest shall be irrespective of outcome of the decision of the appellate authority on remand and the same is while granting further six month installments - On deposit of aforesaid amount with interest thereon, the appeals preferred by the appellant shall be decided and disposed of by the appellate authority on merits as ordered by the Tribunal in Second Appeal - If the appellant fails to make the payment of aforesaid amount stated above within stipulated time, it will be open for the Officer/ appropriate authority to recover the amount under the order of assessment which shall be without prejudice to any further proceedings for breach of undertaking - All appeals disposed of – Decided partly in favour of assessee.

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• 2014 (4) TMI 1033
  Bar of Limitation – Claim for Deduction - Requirement to abide by time limit u/s 4-D- Turnover as per Section 2(r) present or not – Held That:- Assessee does not dispute the fact that at least in certain cases it had failed to file the Form within 30 days of the receipt of the goods returned, and even in cases where the same had been filed within 30 days, it failed to give such details, which are required under law to be given - Assessee does not make a dispute on this aspect that the claim for unfructified sale could be entertained only subject to the assessee satisfying those conditions and the question of refund arises only when the assessee satisfies the assessing authority that in fact, there had been an unfructified sale - Assessee had not shown any reasons for the belated filing – Assessee had not filed Form A-4 within 30 days time limit prescribed and even thereafter, before the Appellate Authority without prescribed particulars on the belated filing, there is no justification to grant the relief - Thus, in the absence of any material to show that the assessee had given sufficient cause for not making a claim before the Assessing Authority in the manner prescribed under the law. Relyin upon State of Andhra Pradesh Versus Hyderabad Asbestos Cement Production Ltd. [1994 (4) TMI 302 - SUPREME COURT OF INDIA] an appeal being a continuation of the assessment, the assessee may file Form A-4 before the Appellate Authority and the same would be subject to the assessee showing and satisfying sufficient cause and not otherwise - However, where there lies no dispute on the claim of unfructified sale, the claim must necessarily go by the provision of the Act and the Rules. As for the Forms filed beyond 30 days, in the absence of any satisfactory explanation, case of assessee is not acceptable - Thus, we accept the plea of the assessee for a remand only in respect of cases where the claim was made within 30 days of the receipt of the goods on unfructified sale with the complete details - Revision filed by the assessee stands dismissed in respect of the turnover for which the Forms were filed beyond 30 days' time frame and without assigning any reason before the Appellate Assistant Commissioner - However, in respect of forms filed within time, the Assessing Officer is directed to consider the claim – Decided partly in favour of assessee.

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• Indian Laws

• 2014 (4) TMI 1020
  Maintainability of appeal - Locus standi to file appeal - authorization to file appeal - Held that:- Admittedly authorisation by the Board of Directors of the appellant-Federation was not placed before the Courts below. But, we may notice that a specific averment was made by the appellant-Federation before the learned Judicial Magistrate that the said General Power of Attorney has been filed in connected case, which has neither been denied nor disputed by the respondents. In any case, in our opinion, if the Courts below were not satisfied, an opportunity ought to have been granted to the appellant-Federation to place the document containing authorisation on record and prove the same in accordance with law. In spite of arbitration award against the respondents, there was non-payment of amount by the respondents to the appellant-Federation, and also in the light of authorisation contained in Annexure–P/7, we are of the opinion that, in the facts and circumstances of the case, an opportunity should be given to the appellant- Federation to produce and prove the authorisation before the Trial Court, more so, when money involved is public money - Matter remanded back - Decided in favour of appellant.

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