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TMI Tax Updates - e-Newsletter
May 11, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Permanent establishment - business of telecasting of TV channels such as B4U Music, MCM etc - payment of transponder charges - this is not a case of B4U India being an agent with an independent status - No TDS liability u/s 195 - HC
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Reopening of assessment - the formation of opinion without examining the issue (as according to the Assessing Officer, the issue is yet to be examined and the notice under Section 148 of the Act has been issued for examining the issue mentioned in paragraph No.7.2.) has been vitiated - HC
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Non-genuine gifts - additions u/s 68 - The Tribunal has, after appraising the affidavit and the statements, recorded a plausible finding - Revenue is unable to point out any misreading of evidence or perversity in the process of reasoning as would enable us to interfere with the findings of fact recorded by the ITAT - HC
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Commitment charges/guarantee commission - if the property of the sister concern of the assessee is pledged for the business purpose of the assessee, the sister concern is entitled to be given a guarantee commission/ commission charges - expense allowed - HC
Customs
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Waiver of pre deposit - Evasion of custom duty - Tribunal, without taking note of the excess payment made, had ordered pre-deposit of ₹ 60.00 lakhs, which is not in consonance with the above-said provision. - HC
Indian Laws
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Criminal complaint pertaining to offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Dishonour of cheque - if a cheque is dishonoured because of stop payment instruction even then offence punishable under Section 138 of N.I. Act gets attracted. - SC
Service Tax
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Recovery of service tax without making assessment - Impugned communication which demands the Petitioner to make payment of the interest and also threatens them that in the event the said payment of interest is not made, coercive action under Section 87 would be taken against them, would not be sustainable in law. - HC
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Denial of refund claim - SEZ Unit - service tax amount is payable by their client and subsequently on being informed by their clients, they reversed the entries indicating that the service tax paid by them is receivable from Govt. Department - refund allowed - AT
Central Excise
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Manufacture - process of sterilization of medical equipments - Such process of removal of foreign matters from a product complete in itself would not amount to manufacture - Neither the character nor the end use of the syringe and needle has changed post-sterilization - SC
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Validity of Tribunal's order - Tribunal decided issue on merit instead of deciding the stay application - The Tribunal should not act as per its whims and fancies, but apply settled principles of law even at the interlocutory stage - HC
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Demand u/s 11A - Extended period of limitation - there was a general practice in the trade to claim the benefit of exemption - Appellants can not be said to have any malafide intention if the same benefit was availed by them which was also being availed by similarly placed manufacturer- AT
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CENVAT Credit - Credit on materials and capital goods used by for the erection and commissioning of the paint shop - capital goods embedded to earth - nexus with manufacture activity - once capital goods are eligible, the grounds taken by the revenue not valid - AT
VAT
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Provisional attachment of property against the estimated liability - there is no formation of opinion - the exercise of powers by the respondent No.2 under Sections 45 and 44 of the VAT Act is nothing but an abuse of powers by the respondent No.2 and undue harassment to the petitioners - HC
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Denial of input tax credit - by the process undertaken by the dealer, seeds which was initially not marketable and eatable, would become eatable and marketable and, therefore, there will be change in the form - credit allowed - HC
Case Laws:
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Income Tax
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2015 (5) TMI 278
Reopening of assessment - non deduction of tds under section 195, thus disallowance u/s 40(a)(i) - Held that:- Specific questions were asked by the Assessing Officer regarding the expenditure in foreign currency, which shall be inclusive of the amount paid to the aforesaid 5 companies and Bhupendra Singh and even the reasons for non-deduction of tax with supporting evidence and the petitioner assessee furnished necessary documents with supporting reasons why the tax at source has not been deducted and only thereafter, the Assessing Officer finalized the assessment proceedings. In the case of Cliantha Research Ltd (2013 (7) TMI 452 - GUJARAT HIGH COURT), the Division Bench of this Court has specifically observed and held that during the original assessment, assessee's claim was processed at length and after calling for detailed explanation from him, same was accepted, mere because a certain element or angle was not in mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment. Considering the aforesaid facts and circumstances of the case, we are of the opinion that the initiation of the reassessment proceedings is nothing but a mere change of opinion by the Assessing Officer and as per the catena of decision of this Hon'ble Court the impugned notice under section 148 of the Act to reopen the assessment even within a period of four years is not permissible, but deserves to be quashed and set aside. - Decided in favour of assessee.
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2015 (5) TMI 277
Permanent establishment - business of telecasting of TV channels such as B4U Music, MCM etc - Dependent agent of assessee - AO observed that affiliated entities of the assessee are basically an extension in India and constitute a permanent establishment of the assessee within the meaning of Article 5 of the Double Taxation Avoidance Agreement (DTAA). - TDS liability u/s 195 - transponder charges - Held that:- The Tribunal concluded that after referring to the clauses in the agreement between the assessee and B4U that B4U India is not a decision maker nor it has the authority to conclude contracts (see paragraph 29). Further, the Revenue has not brought anything on record to prove that agent has such powers and from the agreement any such conclusion could not have been drawn. Barring this agreement, there is no material or evidence with the Assessing Officer to disprove the claim of the assessee that the agent has no power to conclude the contract. This finding is rendered on a complete reading of the agreement. Thereafter Indo-Mauritius DTAA has been referred to and particularly paragraphs 5.4 and 5.5. and the Tribunal concludes that the requirement that the first enterprise in the first mentioned State has and habitually exercised in that State an authority to conclude contracts in the name of the enterprise unless his activities are limited to the purchase of goods or merchandise for the enterprise is a condition which is not satisfied. Therefore, this is not a case of B4U India being an agent with an independent status. This finding is rendered of the order under challenge. We do not find that the Tribunal's order and which also refers to the Hon'ble Supreme Court decision in Morgan Stanley & Co. (2007 (7) TMI 201 - SUPREME Court ) can raise any substantial questions of law. The requirement and in relation to computation of income from international transactions having regard to arm's length price has been put in place in Chapter-X listing special provisions relating to avoidance of tax by substituting section 92 to 92F by the Finance Act of 2001 with effect from 1st April, 2002. Therefore, such compliance has to be made with effect from assessment years 2002-03 relevant to which is the previous year commencing from 1st April, 2002. In any event, we find that the Tribunal has rightly dealt with the alternate argument by referring to the Revenue Circular 742. There, 15% is taken to be the basis for the arm's length price. Nothing contrary to the same having been brought on record by the Revenue before the Commissioner as also the Tribunal, it rightly concluded that the judgment of the Hon'ble Supreme Court in Morgan Stanley & Co. and the principle therein would apply. Similarly, the Division Bench judgment of this Court in the case of Set Satellite (Singapore) Pte. Ltd. v. Deputy Director of Income Tax (IT) & Anr. [2008 (8) TMI 96 - BOMBAY HIGH COURT] would conclude this aspect. Therefore, we are of the opinion that the Tribunal's conclusions and which are consistent with the factual materials and the principles of law laid down above are neither perverse nor vitiated by any error of law apparent on the face of the record. - Decided in favour of the assessee.
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2015 (5) TMI 276
Disallowance of the interest expenses under Section 14A r.w.r 8D - assessee soumoto disallowed the amount on adhoc basis - ITAT allowed claim - Held that:- We are in complete agreement with the view taken by the learned Tribunal and the reasons given by the learned Tribunal while deleting the disallowance of interest expenses under Section 14A of the Act as Assessing Officer as well as the Commissioner of Income Tax (Appeals) could not pinpoint any error in the computation of disallowance made by the assessee of ₹ 2,00,000/in earning tax free divided income. In the circumstances, in our considered opinion, disallowance of ₹ 6,22,228/could not have been made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals). View finds support from the decision of CIT vs. Consolidated Photo & Finvest Ltd. (2012 (7) TMI 312 - DELHI HIGH COURT ) - Decided in favour of assessee. Disallowance under Section 40(a)(ia) - non-deduction of TDS on overseas freight - ITAT deleting disallowance - Held that:- It is required to be noted that as per section 172 of the Act, payment made to the nonresident shipping company would not be covered in Sections 194C or 194 of the Act. At this stage it is required to be noted that it is not in dispute that the amount in question was infact paid to the nonresident shipping company. Under the circumstances, the learned Tribunal has rightly deleted the disallowance made by the AO under Section 40(a)(ia) of the Act. - Decided in favour of assessee.
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2015 (5) TMI 275
Reopening of assessment - non deduction of TDS on interest, commission or brokerage, fees or any amount payable to resident contractor or sub-contractor for carrying out any work (including labour supply) - Held that:- The assessee has claimed the said expenditure and said had resulted under assessment of income to the tune of ₹ 22,65,048/- in the case of assessee due to the failure on the part of the assessee to disclose truly all material facts necessary for his assessment. However, from the communication dated 19.09.2014 disposing of the objections raised by the petitioner - assesseee, it appears that the Assessing Officer had considered altogether a different and new issue with respect to the status of the petitioner-assessee as SSI unit. It is also required to be noted at this stage and from the profit and loss accounts, it appears that as such, the petitioner-assessee never claimed any deduction with respect to the payment of ₹ 22,65,048/-. Therefore, the ground on which, the Assessing Officer has tried to reopen the assessment i.e. the assessee had claimed ₹ 22,65,048/- as expenditure which was not allowable and, therefore, the said has resulted under assessment, is absolutely and factually incorrect. Therefore, as such, the formation of opinion by the Assessing Officer while reopening the assessment has been vitiated. Even otherwise, it is required to be noted that while disposing of the objections raised by the petitioner raised against the reopening of the assessment, the Assessing Officer has specifically stated that it was only for examining the issue with respect to the petitioner's claim/status as SSI unit, the notice under Section 148 has been issued. For examining the particular issue, the assessment cannot be reopened and that too beyond the period of 4 years. An assessment can be reopened on the reasons recorded and after the detailed examination, the Assessing Officer forms an opinion that there is any under assessment of the income and that too, due to failure on the part of the assessee to disclose truly and fully all the material facts necessary for the assessment, in case, the assessment proceedings are initiated beyond the period of 4 years. Under the circumstances, the formation of opinion without examining the issue (as according to the Assessing Officer, the issue is yet to be examined and the notice under Section 148 of the Act has been issued for examining the issue mentioned in paragraph No.7.2.) has been vitiated. - Decided in favour of assessee.
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2015 (5) TMI 274
Entitlement to deduction under section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 273
Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 272
Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 271
Depreciation claim - AO disallowed claim as the assessee was unable to demonstrate that the machinery claimed to have been used by it was in fact owned or acquired by assessee for its business - assessee's contention was that the machinery was provided to sub-distributor at that site for use by the customers - Held that:- As correctly held by ITAT the assets qua which the depreciation is claimed were not purchased during this year, but in earlier years. Purchases and depreciation thereon have been allowed in earlier years.It is undisputed that they were purchased in earlier years i.e. in A.Y. 2006-07 and 2007-08 besides depreciation was allowed and the assessments were framed u/s 143(3). The impugned assets became part of the block of assets and any question in subsequent year about the ownership is meaning less, therefore, we are unable to sustain the finding of the assessing officer that assets were not owned by the assessee. The subsequent upgradation of the software and machinery etc. though may be with the sub distributor the fact remains that the assessee's assets were also used. The impugned assets were used for the purpose of the assessee's business, therefore, depreciation is to be allowed. Also find force in the argument of ld. Counsel for the assessee that assuming worst against the assessee the assets being the part of the existing block of assets on such presumption also become assets already part of the block of assets kept in readiness for use of the business, the depreciation is to be allowed. No substantial question of law arises - Decided against revenue.
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2015 (5) TMI 270
Actual loss incurred in F & O transaction - Tribunal confirmed the addition to the extent of ₹ 14,19,919/- (Rs.12,31,169.88 + ₹ 1,88,750/-) as income of the assessee in respect of the unaccounted bank account in question - Tribunal making addition of peak credit and also gross profit on cash deposit in bank account? - Held that:- It cannot be said that there is any error committed by the learned Tribunal, which calls for the interference of this Court. Now so far as the contention on behalf of the appellant with respect to the alleged claim of the assessee with respect to the loss of ₹ 56,99,495/- is concerned, as rightly observed by the learned CIT(A), as such the assessee failed to justify the said loss. Before the learned Assessing Officer there was no whisper by the assessee as to how he has arrived at the alleged loss of ₹ 56,99,495/-. Thus, as such, the assessee miserably failed to establish the genuineness of the said transactions regarding the alleged loss. Under the circumstances, for the reasons assigned by the learned CIT(A) with respect to the claim of the assessee with respect to the alleged loss of ₹ 56,99,495/- reproduced hereinabove, we see no reason to interfere with the same. No substantial question of law - Decided against assessee.
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2015 (5) TMI 269
Disallowance of claim of interest payment - interest-free advances made to sister concern - Held that:- Neither the Revenue led any evidence to show how the borrowed funds were utilized by BBPL or the appellant given an opportunity to establish the need of the funds by BBPL for the benefit of appellant-Assesses. In the above view, we set aside the order of the Tribunal disallowing payment of interest to the extent of ₹ 17.27 lakhs and restore the issue to the Tribunal for fresh consideration. It is made clear that the Tribunal would also consider the decision of the Apex Court in S.A. Builders Ltd. (2004 (5) TMI 50 - PUNJAB AND HARYANA High Court ) to decide its applicability to the present facts after letting the parties before it an opportunity to produce evidence in support of their respective cases - Decided in favour of assessee for statistical purposes. Actual loss incurred due to fluctuation in currency rates disallowed - advance received from a foreign buyer and demurrage payable to a foreign buyer - Held that:- Claiming of revenue loss on account of foreign exchange rate fluctuation, is an allowable expenditure on the date of making its balance sheet. This revenue loss is not to be postponed to a future date when the transaction gets crystalised either by performance and/or cancellation of the contract. This is so agreed, as the issue now stands covered by Apex Court decision in Commissioner of Income Tax V/s. Woodward Governor India P. Ltd. reported in (2009 (4) TMI 4 - SUPREME COURT ). Therefore, in view of the above, the impugned order dated 8.8.2007 with regard to question (B) is also set aside. However, the issue is restored to the Tribunal for deciding the quantum of loss on account of foreign exchange fluctuation which is to be allowed to the appellant-Assesse under Section 37 of the Act on the facts of this case. - Decided in favour of assessee.
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2015 (5) TMI 268
Reopening of assessment - whether the Deputy Director of Income Tax, International Taxation-II, Ahmedabad, who has issued the impugned notices, has no jurisdiction? - Held that:- Petitioner does not press the present Special Civil Applications with a liberty to make appropriate claim before the AO calling in question the jurisdiction of the AO. He has stated at the Bar that such claim and/or objection shall be raised before the AO within a period of 15 days from today. However, has requested to make suitable observation that the AO may be directed to consider and decide the claim made by the petitioner calling in question the jurisdiction of the AO in accordance with law and on merits and if he is not satisfied with the correctness of the claim, he may be directed to refer the matter for determination under sub-section (2) of section 124 of the IT Act before the assessment is made. Without further entering into the larger question on merits and/or without expressing anything on merits in favour of either parties, considering the request made by Shri Soparkar, learned Counsel appearing on behalf of the petitioner recorded herein above, both these petitions are dismissed as withdrawn with above liberty. If any claim is made by the petitioner before the AO calling in question the jurisdiction of the AO within the period of 15 days from today, the AO is directed to consider the same in accordance with law and on merits before the assessment is made. Both these petitions are dismissed as withdrawn with above liberty.
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2015 (5) TMI 267
Estimation of net profit rate - CIT(A) estimated the income of the assessee at 8 per cent. of the turnover - assessee's grievance that the estimation by the Commissioner of Income-tax (Appeals) should have been at best at 6.5 per cent - Held that:- Tribunal concluded that the net profit rate had varied from 2.93 per cent. to 9.96 per cent. These are big concerns, who maintain proper accounts and also maintain quality standards. In the case of the assessee, as held earlier, accounts are not reliable and, hence, the estimation of net profit rate of 8 per cent. is justified. No reason to entertain this appeal, when pure findings of fact are being assailed by the Revenue. This court cannot reappreciate and reappraise the said findings of fact. The Tribunal's exercise in upholding the order of the Commissioner of Income-tax (Appeals) and his estimation cannot be interfered with by us at the behest of the Revenue without any perversity being demonstrated. The Revenue's estimation on the higher side and based on the Assessing Officer's order was rightly termed as abnormal and unreasonable. No substantial question of law. - Decided against revenue.
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2015 (5) TMI 266
Transaction in shares - business transaction or investment - Tribunal held that transaction was really in the nature of an investment - Held that:- As relying on CIT v. Sutlej Cotton Mills Supply Agency Ltd. [1975 (7) TMI 2 - SUPREME Court] the view formed by the Tribunal was a possible view in the facts and circumstances of the case. The judgment is not, however, an authority for the proposition that since purchase was made by borrowed funds, it is bound to become a business transaction. The Tribunal in that case had taken a possible view. Therefore, the apex court did not interfere. The view taken by the learned Tribunal in this case is also based on evidence and is a possible view as submission of revenue that the Tribunal ignored the fact that the shares allegedly purchased in July were not taken delivery of till December nor was any payment made when the purchase was allegedly made in the month of July evidently is based on misreading of the evidence as it would appear from the assessment order that payment was made for the shares in the month of July itself through bill accommodation facility. - Decided against revenue.
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2015 (5) TMI 265
Revenue Audit Objection - Maintainability of appeal - Whether it is proper for the Tribunal to dismiss the appeal of the department without going into the merits of the case on the ground of low monetary limit especially when there was a revenue audit objection? - Tribunal dismiss the appeal of the department on the ground that CBDT Circular No.3 of 2011 dated 9.2.2011 in paragraph 8 clearly mention the exception which was not considered while dismissing the appeal - Held that:- There is no document relating to Revenue Audit Objection available in the typed set of documents filed along with this appeal. It is also evident from the order passed by the Tribunal that there is no reference to any document filed by the Department, before the Tribunal, insofar as Revenue Audit Objection in relation to the said transaction is concerned. In such view of the matter, this Court is in agreement with the view taken by the Tribunal that CBDT Circular 3/2011 dated 9.2.2011 will come into play and, therefore, the dismissal of the appeal is entirely justified. No substantial questions of law arise for consideration in this appeal. - Decided against revenue.
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2015 (5) TMI 264
Disallowance u/s 14A r.w.r. 8D - AO was not satisfied with the explanation offered by the assessee that proper disclosures were made with regard to the expenditure incurred for earning income exempt - appellate authority deleted disallowance - Held that:- Whether or not the expenditure incurred for the purpose of earning the exempt income has been properly explained is essentially a question of fact. Both the appellate authority and the learned Tribunal were of the opinion that the expenditure was properly established. There is as such no scope for any interference with the concurrent finding of fact recorded by the learned Tribunal and the appellate authority. There is thus no reason why the appeal should be admitted. - Decided against revenue.
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2015 (5) TMI 263
Employees' contributions made to PF and ESI belatedly - whether in view of the provisions of section 43B deduction in respect of the employees' contributions made to PF and ESI belatedly was an allowable deduction - Held that:- As relying on CIT v. Spectrum Consultants India Pvt. Ltd [2014 (2) TMI 127 - KARNATAKA HIGH COURT] The contributions payable by the employer under the scheme shall be at the rate of 10% of the basic wages, Dearness Allowance - The contribution payable by the employee shall be equal to the contribution payable by the employer in respect of such employee - the payment of contribution by the employer to the fund under the scheme means both employer’s contribution and employee’s contribution - Whether he deducts the employee’s contribution from the salary or not, in law, he is liable to pay the said amount –thus, Section 2(24)(x) of the Act makes it clear that the employee’s contribution which the employer deducts from his salary before it is paid into the fund, is treated as the income of the employer, and the employer by contributing can get the deduction. The payment must be made within the due date i.e. the due date prescribed under Section 139(1) of the Act – Relying upon Commissioner of Income Tax Versus M/s. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] - Though such contributions are not paid within the time prescribed under the relevant act, if those contributions are paid before the due date prescribed under Section 139(1) of the Act, the employer shall be entitled to the deductions as provided under Section 36(1) of the Act - it is for the simple reason, under the provident fund scheme, an employer has to pay both the contribution and then recover from the salary of the employee – Decided against Revenue.
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2015 (5) TMI 262
Reopening of assessment - high level of operating profits and the consequent alleged excessive deduction taken by the petitioner-assessee under section 10A - Held that:- As decided in assessee's own case [2014 (9) TMI 128 - ITAT DELHI] as facts of that case were somewhat similar to the present case the very basis for forming the purported reason to believe that the income had escaped assessment in respect of the assessment year in question does not survive any further. It can be seen from the facts of the instant case that the Assessing Officer has simply treated high profit earned by the assessee as a rea son to summon sub-section (10), without even remotely demonstrating the existence of any 'arrangement' between the assessee and its AEs aimed at producing extraordinary profits in the hands of the assessee. The conclusion drawn by the authorities below in such circumstances cannot be ex consequent sustained. Since the Tribunal, in that case had already deleted the additions in respect of the assessment years 1998-99 and 2001- 02, the very basis for continuing any further with the reassessment proceedings in respect of the relevant assessment year (1999-2000) did not survive any further. It was specifically noted in the said decision in Silver Oak Laboratories (2008 (12) TMI 40 - HIGH COURT DELHI ) that there was no specific allegation with regard to the assessment year 1999-2000 regarding the suppression of the sale figures and that the reassessment proceedings depended entirely on the additions made in respect of the assessment years 1998-99 and 2001-02, which, as pointed out above, had been deleted by the Tribunal. It was also noted in the said decision that the Revenue had not filed any appeal against the decision of the Tribunal deleting the said additions. Thus we direct that the reassessment proceedings stand closed and the present writ petition is disposed of with liberty to both sides to seek revival in case the need arises - Decided in favour of assessee.
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2015 (5) TMI 261
Non- genuine gifts - ITAT holding that the addition made by AO on account of non- genuine gifts was covered by the addition confirmed on account of peak of unexplained credits in various bank accounts - Held that:- Admittedly, ₹ 4,92,325 on account of non-genuine gifts was already included in the addition of ₹ 9,75,333 made by the Assessing Officer. The Tribunal, therefore, rightly deleted this addition. - Decided against revenue. Benefit of past savings of ₹ 4 lakhs granted to the appellant, the Assessing Officer himself held that jewellery belongs to the appellant and was, therefore, required to apportion some amount towards investment or savings. The Tribunal, therefore, rightly granted the benefit of ₹ 4 lakhs as past savings. The plea with respect to shridhan is similarly unfounded as the benefit has been granted on account of shridhan of the assessee's wife, Smt. Surbhi Kohli. The benefit granted to Suresh Kumar Kohli, father of the assessee, pertains to the latter's wife, i.e., mother of the appellant and then also in the assessment pertaining to Suresh Kumar Kohli.- Decided against revenue. Unexplained jewellery found in locker No. 72 - Held that:- After appraisal of the evidence adduced before the Assessing Officer, namely, an affidavit by Harbans Lal and his statement recorded before the Assessing Officer, it was held as a matter of fact that the jewellery does not belong to the assessee. We are not inclined and nor can we while exercising the jurisdiction as a second appellate court reappraise evidence much less the statement made by Harbans Lal, etc., till such time as consideration of this evidence is perverse or arbitrary. The Tribunal has, after appraising the affidavit and the statements, recorded a plausible finding. Counsel for the Revenue is unable to point out any misreading of evidence or perversity in the process of reasoning as would enable us to interfere with the findings of fact recorded by the Tribunal. - Decided against revenue.
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2015 (5) TMI 260
Registration of trust granted under section 12A cancelled - ITAT restored registration - Held that:- The donations received by the society cannot be construed as capitation fee for the admission of students by the KLE University. Providing hostel to the students/ staff working for the society is incidental to achieve the object of providing education, namely, the object of the society. The Revenue appears to have not properly appreciated the legal point that though the chairman and a few members of "the society" are the chairman and members of "the KLE University", they are separate legal entities. There is no violation of any of the conditions stipulated under the Income-tax Act, warranting for cancellation of registration of the society, thus Tribunal on proper appreciation of the grounds urged by the society and the Revenue, has rightly restored the registration. - Decided in favour of assessee.
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2015 (5) TMI 259
Share capital expenses - AO made disallowance of expenses claimed u/s 35D in respect of capital raising expenses being one-tenth on the ground that these were not covered under the said provision - ITAT confirming order of CIT(A) in deleted addition - Held that:- In Multi Metals Ltd. [1990 (10) TMI 55 - RAJASTHAN High Court] and Goa Carbon Ltd.'s cases (1993 (9) TMI 344 - BOMBAY HIGH COURT), it has been held by the Rajasthan and the Bombay High Courts, respectively, that any expenditure incurred by way of fees paid to the Registrar of Companies for enhancement of the authorised capital is deductible over a period of ten years under section 35D(2)(c)(iv) of the Act. We are in agreement with the aforesaid view and do not find any infirmity in the order of the Commissioner of Income-tax (Appeals) or the Tribunal in this behalf. - Decided in favour of assessee. Commitment charges/guarantee commission - pledging of land as collateral security to bank for loans - ITAT confirming order of CIT(A) in deleted addition - Held that:- CIT(Appeals) has considered the issue and has also followed the decision of Indian Aluminium Cables Ltd. (No. 1) [1989 (1) TMI 14 - DELHI High Court ]. It is further noticed that the fact that the loan was taken for which the immovable property of the sister concern of the assessee has been pledged was for the purpose of the business of the assessee is not in dispute. Obviously, if the property of the sister concern of the assessee is pledged for the business purpose of the asses see, the sister concern is entitled to be given a guarantee commission/ commission charges. In the circumstances, the finding of the Commissioner of Income-tax (Appeals) as confirmed by ITAT are correct. - Decided in favour of assessee. Disallowance of maintenance of guest house - ITAT confirming order of CIT(A) in deleted addition - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal concurrently concluded that the expenditure was incurred for maintenance of the place for the employees who visited the factory for official purposes for the purpose of business. In the light of the aforesaid findings, no infirmity is found in the order of the Commissioner of Income-tax (Appeals) and the Tribunal deleting this disallowance. - Decided in favour of assessee. Disallowance of 'inauguration expenses' as per the provisions of section 37(2A) - ITAT confirming order of CIT(A) in deleted addition - Held that:- Respectfully following the decision of this Tribunal in the assessee's own case for the assessment year 1993-94, the finding of the Commissioner of Income-tax (Appeals) & ITAT on this issue stands upheld. - Decided in favour of assessee. Trading addition - ITAT confirming order of CIT(A) in deleted addition - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal have followed the earlier decision in the case of the assessee for the assessment year 1993-94 which was not shown to have been upset by any higher court. Thus, the approach of the Commissioner of Income-tax (Appeals) and the Tribunal cannot be faulted on this deletion. - Decided in favour of assessee. Late deposit of employees' contribution to PF and ESI - disallowance u/s 36(1)(va) - ITAT confirming order of CIT(A) in deleted addition - Held that:- Tribunal, while upholding the finding recorded by the Commissioner of Income-tax (Appeals), observed that the amounts had been paid before the due date of filing the return and, therefore, the same is allowable. The issue raised herein is covered by the decision of this court in the case of the assessee in Nuchem Ltd. v. ITO (2013 (1) TMI 457 - PUNJAB AND HARYANA HIGH COURT) wherein it has been so held. - Decided in favour of assessee. Disallowance of amount paid for market survey - AO disallowed the same on the premise that the assessee had not utilised the survey report in its business activities as the activity of powder quoting for which the report was obtained had not been carried out - CIT(A) allowed the claim also confirmed by ITAT - Held that:- We do not find any error or fault in the approach of the Commissioner of Income-tax (Appeals) or the Tribunal. It was not mandatory that the survey report should have essentially resulted in enhancement of the profits of the company by taking action thereupon except that it was required to be in the course of the business activity. It was not in dispute that the survey report was obtained during the course of business activities of the assessee for exploring the feasibility of powder coatings as the company was manufacturing UF/MF powder. The plea of the Revenue is, thus, rejected. - Decided in favour of assessee.
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2015 (5) TMI 258
Transfer pricing adjustment - addition to the stated value of international transactions entered with the associated enterprises so as to bring the same to the arm's length price - wrong selection of comparable - As per TPO there are no segmental accounts with reference to the AE and the non-AE and therefore the Operating cost has been allocated on proportionate basis and thus no interference is called for - Held that:- We may observe on this point that the Assessing Officer has taken the Operating costs on a proportionate basis considering the respective revenues whereas assessee canvases that the non-identifiable expenses be apportioned on head count basis. Without going into the merits of the two contrary stands, we leave it open for the Assessing Officer to adopt one or the other method, which he shall justify on the basis of a speaking order having regard to the facts and circumstances of the case. Therefore, on the aforesaid limited point, we hereby remand the matter back to the file of the Assessing Officer to carry out the aforesaid exercise. Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard and to put-forth the material and submissions in support of its stand and only thereafter the Assessing Officer shall pass an order afresh on this limited aspect as per law. Thus, on this aspect, assessee succeeds for statistical purposes. Adoption of Kals Information Systems Limited as a comparable - Held that:- Said concern has been sought to be excluded from the list of comparables on account of functional dissimilarities. The Bangalore Bench of the Tribunal in the case of M/s 3DPLM Software Solutions Ltd. (2014 (12) TMI 612 - ITAT BANGALORE) has considered the functions undertaken by the said concern during the previous year relevant to the assessment year under consideration before us, and it has been found that the said concern was engaged in the business of developing and selling software products and was not purely or mainly a software service provider. There is no dispute to the fact position that the appellant before us has undertaken mainly software development services for its associated enterprises and the non-associated enterprises and that such activity is quite distinct from the developing and selling of software products. Thus Kals Information Systems Limited is liable to be excluded from the list of comparables for the purposes of benchmarking international transactions of provision of software development services. E-Zest Solutions Limited is rendering product development services and technology services, and the latter falls in the category of KPO services and the same have not been held by the Bangalore Bench of the Tribunal to be similar to a concern engaged in rendering of software development services, as is the assessee before us. Following the ratio of the decision of the Bangalore Bench of the Tribunal in the case of 3DPLM Software Solutions Ltd. (supra) we hold that E-Zest Solutions Limited is liable to be excluded from the list of comparables for the period under consideration.
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Customs
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2015 (5) TMI 291
Renewal of Customs Broker License - Held that:- Petitioner has already deposited the process fee of ₹ 5,000/- on 08.09.2014 and also produced the Solvency Certificate of ₹ 50,000/- on 11.11.2014 and once again he has deposited ₹ 40,000/- on 19.12.2014. The proceedings dated 06.01.2015 also shows the Commissioner (Chennai VIII Commissionerate) has allowed the petitioner to continue to operate the business of the firm till 29.03.2015. - There cannot be any impediment on the part of the respondents to consider the petitioner's request of renewing the license. Hence, this Court directs the respondents to pass appropriate orders with respect to Customs Broker License and till then, the order passed by the Commissioner (Chennai VIII Commissionerate) allowing the petitioner to continue to operate the firm shall continue. - Decided in favour of appellant.
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2015 (5) TMI 284
Waiver of pre deposit - Evasion of custom duty - question on quantum of deposit amount ordered by the tribunal - Suppression of value of goods - Held that:- It is seen from the orders of the Adjudicating Authority as well as the order of the Tribunal, that on demand, the appellant has paid a sum of ₹ 73,34,856/- towards Anti-Dumping Duty and a sum of ₹ 35,31,843/- was appropriated towards customs duty. It is to be noted that vide final notification No.121/2006-Cus. dated 26.12.2006, the anti-dumping duty was reduced to ₹ 60.00 lakhs. Hence there is an excess payment towards anti-dumping duty. - if anti-dumping duty is reduced and the amount so paid is in excess of the demand, the said amount shall be refunded. Tribunal, without taking note of the excess payment made, had ordered pre-deposit of ₹ 60.00 lakhs, which is not in consonance with the above-said provision. - taking note of the deposit made towards anti-dumping duty at ₹ 73,34,856/- in excess of the final notification dated 26.12.2006 at ₹ 60.00 lakhs, we are inclined to accept the plea of the appellant. However, taking note of the demand of customs duty, at this point of time, the amount shall not be refunded. - Partial stay granted.
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2015 (5) TMI 283
Condonation of delay - Delay of 3 days - Held that:- In terms of the provisions of the General Clause Act, 1877 (Section 10) and Indian Limitation Act, 1963 (Section 4) provides that when the compliance date falls on holidays, and assessee can make compliance on the following working day. Under the facts and circumstances the compliance has been made on following working day by filing the appeal, which is deemed to be filed on the 60 th day. Therefore, in the interest of justice, we set aside the impugned order and remand the matter back to the Commissioner (Appeals) with direction to decide the appeal on merits. We, further take notice that the appellant have already complied with the pre-deposit order given by this Tribunal and have deposited amount of ₹ 25,000/- in terms of the order [2014 (5) TMI 562 - CESTAT MUMBAI] of this Tribunal. - Decided in favour of assessee.
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Corporate Laws
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2015 (5) TMI 282
Interim application seeking certain interim relief - Not to convey or hold or attend any meeting of Board of Directors, from voting threat , to pass any resolution by Circulation - The High Court recorded a conclusion that the respondents would not be able to maintain the proceedings before the Company Law Board - Held that:- The maintainability of a suit is question of law. Though, by virtue of declaration under Section 9 of the Code of Civil Procedure, 1908, all suits of civil nature are maintainable unless barred either by an express provision or by implication of law. In the case on hand, when a specific stand is taken that in view of the provisions of Companies Act the suit is not maintainable, the checkered history between the contesting parties and the chronology of the actions taken by the respondents , in our opinion, do not decide the maintainability of the suit. We find the conclusion recorded by the High Court to be highly unsatisfactory. On the question whether the plaintiffs have a prima facie case, the High Court recorded a cryptic conclusion without recording any reasons (at para 7.2) that they have a strong prima facie case. On the question of the balance of convenience also, the order of the High Court is very equivocal. But the High Court went on to issue certain directions.The High Court at para 7.4 held that in view of the fact that from 31.12.2014 orders of status quo existed, the same is directed to be continued to be considered on the next date of hearing, i.e. 16.03.2015. We are of the opinion that the directions in paras 7.2 and 7.3 are inconsistent with the directions in para 7.4. Apart from that, the fact that the orders of status quo were granted by the Chamber Judge during vacation, which have been continued from time to time without further consideration regarding the tenability of such orders, is no ground for continuing such orders. In the circumstances, we deem it appropriate to set aside the impugned order. Having regard to the various contentions raised by the parties, it is better that the appeal before the High Court itself is disposed of on merits expeditiously. - Decided in favour of appellant.
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2015 (5) TMI 281
Application for Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956 - Observations of Regional director regarding short term unsecured borrowings , insufficiency of authorized share capital of the transferee company, duly addressed - Held that:- In response to the objections raised by the Official Liquidator and the Regional Director, Northern Region with regard to insufficiency of authorized share capital of the transferee company, the petitioner/transferor company has filed the affidavit dated 6th February, 2015 of Mr. Ajay Kumar Maan, Chief Finance Officer and Authorized Signatory of the petitioner/transferor company stating that, upon sanction of the Scheme, the transferee company shall issue and allot 01 equity share of ₹ 10/- each to the shareholders of the petitioner/transferor company holding 24.0205 equity shares of ₹ 10/- each and the fraction, if any, shall be rounded off to the next number. Therefore, in terms of the said share exchange ratio, the transferee company shall issue and allot equity shares amounting to ₹ 53,13,660/- to the shareholders of the transferor company. He, therefore, submits that the increase of ₹ 55,00,000/- in the authorized share capital of the transferee company, as approved in Clause 10.1 of the Scheme of Amalgamation, is sufficient to allot shares to the shareholders of the petitioner/transferor company. In view of the above, the objections raised by the Official Liquidator and the Regional Director, Northern Region do not survive. So far as the objection of the Regional Director with regard to short term unsecured borrowings of ₹ 19.05 crores of the petitioner/transferor company is concerned, the petitioner company in the affidavit dated 6th February, 2015 of Mr. Ajay Kumar Maan, Chief Finance Officer and Authorized Signatory of the petitioner/transferor company has submitted that the unsecured loans with the Deutsche Bank and ING Vysya Bank have been arranged by the group company i.e. Sogefi SpA with their global relation and engagement with the bank. Security has been provided by the Ultimate Holding Company and its subsidiary companies through BNP Paribas Bank and ING Bank NV respectively. It is further submitted that this loan is therefore secured with respect to the company, Sogefi SpA but is unsecured with respect to the transferor company. Copies of the loan agreements entered into by the transferor company with the banks are placed on record. Further, the petitioner company has undertaken to comply with all requirements as may be needed under the Foreign Exchange Management Act, 1999 and any other rules and regulations issued by the Reserve Bank of India. 17. The matter was listed for consideration on 19th February, 2015 when the Regional Director, Northern Region sought and was granted time to file further affidavit in support of the objections raised by him. Pursuant to said order, the Regional Director has filed his additional affidavit dated 4th March, 2015 stating that all the objections/observations that had been raised by him earlier now stand adequately addressed and that he has no further objection in the matter. In view of the above, nothing survives so far as the objection of the Regional Director, Northern Region is concerned. No objection has been received to the Scheme of Amalgamation from any other party. Considering the approval accorded by the equity shareholders, secured and unsecured creditors of the petitioner/transferor company, to the proposed Scheme of Amalgamation and there being no surviving objection to the same by the Regional Director, Northern Region, and the Official Liquidator; and also in view of the order dated 2nd February, 2015 passed by the Karnataka High Court in CP 210/2014 granting sanction to the proposed Scheme of Amalgamation in respect of the transferee company, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. - Application for Scheme of Amalgamation approved.
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Service Tax
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2015 (5) TMI 300
Recovery of service tax without making assessment - Whether, without there being any adjudication in any of the proceedings as provided under Chapter 5 of the Finance Act, 1994 coercive steps can be taken by the Revenue, for recovery of service tax or penalty or interest - Held that:- The benefit that the assessee would get by voluntarily paying service tax under the scheme provided is that he would be saved from the rigours of penalty payable on account of non payment of service tax payable and interest thereon. Similarly, subsection 4A would deal with the situation wherein in the course of any audit, investigation or verification, it is found that service tax is not levied or paid or shortlevied or shortpaid or erroneously refunded. The said subsection would deal with an eventuality when true and complete details of transactions are available in the specified records. In this case, an assessee is again having an option to pay service tax in full or in part, as he may accept to be the amount of tax chargeable or erroneously refunded alongwith interest payable thereon under section 75 and penalty provided therein. It further appears that under the said provision the assessee would be entitled to the benefit, in as much as maximum penalty that would be leviable is only 25 per cent, whereas otherwise it would be 50 per cent. Again under the said provision, the Central Excise Officer is empowered to proceed as provided under subsection (1), if he is of the opinion that the amount so paid by the assessee has not been paid fully and more amount is due and payable by him. Scheme of the act is that the tax would be held to be payable only after adjudication either under Section 72 or subsection 2 of section 73 of the said Act. As already stated by us hereinabove that even when an assessee voluntarily pays tax under subsection (3) and 4A of section 73, even in that case, in so far as disputed amount is concerned, determination as required under subsection 2 of section 73 is required to be done. By now it is settled principle of law that when a law requires a particular things to be done, in a particular manner, it has to be done in that manner alone and not at all. If the Statute permits an authority to make a demand on the basis of the preliminary assessment made by it, even prior to there being adjudication, the matter would have been different. - The Statute vests ample power with the authorities to deal sternly with such of the assessee who either fraudulently or with intention to deprive revenue of its legitimate dues evades payment thereof. Not only that, but if the Central Excise Officer is of the opinion that for the purpose of protecting interest of the revenue, it is necessary to attach provisionally any property belonging to a person on whom notice is served under Section 73 or section 73 of the said Act, he is empowered to do so, however, with previous approval of the Commissioner of Central Excise. However, at the same time, the law enforcers cannot be permitted to do something which is not permissible within the four corners of law. Impugned communication which demands the Petitioner to make payment of the interest and also threatens them that in the event the said payment of interest is not made, coercive action under Section 87 would be taken against them, would not be sustainable in law. - impugned action is not sustainable in law. Rule is made absolute by quashing and setting aside the impugned communication dated 25/3/2015 - Decided in favour of assessee.
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2015 (5) TMI 299
Denial of refund claim which was wrongly - payment of service tax by the land lord - Who is entitle to claim refund, tenant or landlord - for the earlier period prior to 01.07.2012, service tax was not payable if the building was rented to house a Government Organisation - Held that:- It is not necessary to consider the challenge made to letter by going into the contentions advanced by the learned counsel for petitioner. Suffice to observe that both petitioner and 1st respondent shall make appropriate representation addressed to the 2nd respondent bringing to the notice of the 2nd respondent the service tax that has been wrongly paid, whereupon the 2nd respondent shall consider the same and pass appropriate orders and refund the amount, in case it is found that service tax for the period from June 2007 to February 2012 was wrongly paid. - Decided conditionally in favour of appellant.
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2015 (5) TMI 298
Demand of service tax - Commercial or Industrial Construction service - Held that:- Sub-contractor was not required to pay service tax if the main contractor had paid service tax on the entire value had no legal validity. The CBEC itself revised/reversed that clarification in the year 2007 vide circular dated 23.08.2007. However, prior to 23.08.2007, the appellants certainly had a ground not to pay the service tax as sub-contractors in view of the then prevailing clarification of the Board and therefore the extended period with regard thereto is prima facie not invokable making that component of demand time barred as the Show Cause Notice was issued on 18.10.2010. It is however seen that they were rendering service on their own account also but failed to discharge due service tax thereon. While their contention of non-invokability of extended period can be considered only at the time of final hearing, in view of the said contention and having regard to the fact that an amount of ₹ 3.96 lakhs has already been deposited and the demand relating to their liability as sub-contractor is clearly hit by time bar, we order pre-deposit of ₹ 9 lakhs within 4 weeks - Partial stay granted.
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2015 (5) TMI 297
Denial of refund claim - SEZ Unit - benefit of Notification NO. 4/2004-ST dated 31/03/2004 - held that:- Amount which have been paid by the appellant as service tax were not payable as service recipient was situated in SEZ unit and were eligible to avail benefit of Notification NO. 4/2004-ST dated 31/03/2004. - as the ledger account indicates that the service tax amount is payable by their client and subsequently on being informed by their clients, they reversed the entries indicating that the service tax paid by them is receivable from Govt. Department. We also find that the client namely M/s Essar Steel Ltd. (Hazira) has submitted an affidavit, wherein they have categorically stated that the appellant had not charged any service tax nor was paid by them. The C.A.'s certificate produced by the appellant indicates that the amount for which refund is sought is paid out of pocket of the appellant here-in. In our considered view, both the lower authorities have not appreciated these evidences in the correct perspective. In our view, since the appellant here-in shown the entire amount of service tax liability as receivable and in support of which journal entries were produced, we find that the appellant is eligible for the refund of the amount as claimed - Refund granted.
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Central Excise
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2015 (5) TMI 292
Manufacture - process of sterilization of medical equipments - change in the character of the final product - Revenue assumed that the activity is in the nature of manufacturing activity since new marketable commodity emerged and three is enhancement in value - held that:- This is a case of manufacture of disposable syringes and needles which are used for medical purposes. These syringes and needles, like in the J.G. Glass case and unlike the Brakes India case, are finished or complete in themselves. They can be used or sold for medical purposes in the form in which they are. The fact that medically speaking they are only used after sterilization would not bring this case within the ratio of the Brakes India case. All articles used medically in, let us say, surgical operations, must of necessity first be sterilized. If a surgical instrument is being used five times a day, it cannot be said that the same instrument has suffered a process which amounts to manufacture in which case excise duty would be liable to be paid on such instruments five times over on any given day of use. Further, what is to be remembered here is that the disposable syringe and needle in question is a finished product in itself. Sterilization does not lead to any value addition in the said product. All that the process of sterilization does is to remove bacteria which settles on the syringe's and needle's surface, which process does not bring about a transformation of the said articles into something new and different. Such process of removal of foreign matters from a product complete in itself would not amount to manufacture but would only be a process which is for the more convenient use of the said product. In fact, no transformation of the original articles into different articles at all takes place. Neither the character nor the end use of the syringe and needle has changed post-sterilization. The syringe and needle retains its essential character as such even after sterilization. - Decided in favour of assessee.
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2015 (5) TMI 290
Validity of Tribunal's order - Tribunal decided issue on merit instead of deciding the stay application - Denial of CENVAT Credit - Wrongful availment of CENVAT Credit - Held that:- When there is a attempt by the assessee and to demonstrate as to how a arguable case exists and in that process the assessee places reliance on a decision of a High Court and having a bearing of the issue, then, the attempt to not only distinguishes but disregard it cannot be sustained particularly when the Appeal is yet to be heard finally. In that regard, we find that the Tribunal's observations are ex-facie contrary to the settled canons and principles of law. Tribunal's understanding of the principle of per incuriam or stare decisis leaves a lot to be desired. This understanding is completely and totally inaccurate and erroneous. A decision can be said to be per incuriam only when it is rendered disregarding a statutory provision or a binding precedent. Such is not a case which is found. If the Tribunal was of the view that the High Court of Punjab and Haryana's decision was appealed against by the Revenue to the Hon'ble Supreme Court, but though the decision was not interfered with, that Judgment will not bind it because the question of law is kept open by the Hon'ble Supreme Court, then, that is plainly and simply not per incuriam. Tribunal was aware of this settled test namely whether there is a prima facie point or arguable case and whether the appellant assessee or party before the Tribunal had established that there was a financial hardship. However, the Tribunal lost sight of the fact that the tests, as are evolved by the Hon'ble Supreme Court, cannot be taken to such ridiculous extreme or viewed with such rigor that would make it impossible for anybody to obtain an interim stay or a waiver, partial or full, in his favour of the condition of pre-deposit. - Tribunal in reaching the conclusion that the Appellant has not made out any prima facie case extensively dealt with the arguments as if it is called upon to decide the Appeal finally. That it was not called upon by the parties to do so nor was it expected of the Tribunal at the interlocutory or interim stage. All these observations and the entire attempt, is unsustainable in law. - If that right is to be meaningful or purposeful and must be preserved and saved unless there are compelling circumstances, then, imposition of such conditions would vitiate the exercise of the discretionary power by the Tribunal. It lost sight of the fact that the power to grant a stay or waiver of the condition of pre-deposit is discretionary. The discretion must be exercised judiciously and not arbitrarily or capriciously. The Tribunal should not act as per its whims and fancies, but apply settled principles of law even at the interlocutory stage. The Tribunal has completely lost sight of all this, which is evident from the impugned order. It cannot be sustained. It accordingly is quashed and set aside. - Decided in favour of assessee.
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2015 (5) TMI 289
Demand u/s 11A - Extended period of limitation - Denial of the benefit of Sr. No. 6 of Notification No. 30/2004-CE dated 09.7.2004 - whether the benefits of exemption under Sr. No. 6 of the Table to Notification No. 30/2004-CE will be admissible to the appellant or not - Held that:- Facts involved in the present appeals and the facts involved in the appeals before this Bench while passing order dated 27.10.2014, are identical. Further definition of manufacturer and Factorygiven in other enactments cannot be pressed into service, as argued by Revenue, when the same words have been defined in the Central Excise Act, 1944 - appellants were not availing the benefit of Sr. No. 114 of Notification No. 6/2000-CE dated 01.3.2000 before amendment, as was the case in the relied upon case law of Garden Silk Mills (2014 (10) TMI 809 - CESTAT AHMEDABAD) and also that present appellants never disclosed to the Revenue that POY is procured from their sister concern. It was thus the case of the Revenue that extended period for raising demands under Section 11(A) of the Central Excise Act, 1944 is invokable. It is observed from the case records that there was a general practice in the trade to claim the benefit of Sr. No. 6 of table annexed to Notification No. 30/2004-CE. Appellants can not be said to have any malafide intention if the same benefit was availed by them which was also being availed by similarly placed manufacturers. Under the above factual matrix extended period for raising demands under Section 11A of the Central Excise Act, 1944 can not be invoked against the appellants. - Decided in favour of assessee.
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2015 (5) TMI 288
Denial of CENVAT Credit - Bogus transactions - Imposition of penalty - Held that:- Burden of proof on M/s Kisco Casting cannot be treated as discharged by them on the basis of the news paper's report reporting that a number of vehicles are running in the State of Punjab & Haryana under fake registration, and therefore, the Commissioner (Appeals) relying upon such newspaper reports is totally wrong - returns have been assessed finally by the range officer which contain all the details including the details of the invoices under dispute on the basis of which credit have been availed and utilized, is , not correct, as when the burden of proving that the material covered under the invoices issued by the respondent firm had actually been received by M/s Kisco Casting is on them, it is M/s Kisco Casting who has to lead the evidence of having actually received the goods covered under the invoices issued by the respondent firm, and they cannot do so by picking the holes in the Department's case or shifting the burden of proof to the Department. The burden of proof will shift to the Department only when M/s Kisco Casting have produced credible evidence in support of their claim of receipt of the goods covered under the invoices issued by the Respondent. - impugned order is not sustainable - Matter remanded back - Decided in favour of Respondent. As regards penalty on Rajesh Kumar Gupta & Sons - Held that:- penalty had been imposed on the respondent firm, there is no justification for imposition of separate penalty on its proprietor. In this regard, Hon'ble P&H High Court in the case of Vinod Kumar Gupta vs CCE reported in [2012 (5) TMI 173 - PUNJAB AND HARYANA HIGH COURT] has held that the proprietorship firm and its proprietor cannot be treated as two different legal entities and in that view, the second penalty on the proprietor in addition to the penalty on the proprietorship firm would amount to imposition of penalty twice over, which is not sustainable in the eyes of law. - Decided against Revenue.
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2015 (5) TMI 287
Exemption from payment of excise duty under Notification No. 76/86 dated 10/2/86 on Gas produced during the production of Sponge Iron from Blast furnace - Held that:- present case is squarely covered by the decision of the Supreme Court in the matter of decision of Union of India and Ors Vs. M/s. Hindustan Zinc Ltd [2014 (5) TMI 253 - SUPREME COURT] - Decided against Revenue.
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2015 (5) TMI 286
Rectification of mistake - Held that:- It is a matter of interpretation as to the meaning of the words 'juice concentrate', lime etc. On the contention that the PFA criteria was not under consideration in the Order-in-Original, we find that the Tribunal has discussed the matter with reference to a technical note produced by them during the course of arguments. There appears to be no mistake apparent on record. - Tribunal order did considered the judgment of Parle Agro Pvt. Ltd. (2008 (3) TMI 67 - CESTAT NEW DELHI) and distinguished it by stating that in the case of Parle the product 'Appy Fizz contained far more and higher significant percentage of apple juice i.e. 23%.- alone. The decision of the Tribunal is based on the totality of various factors including, most importantly, on the HSN Notes on which the Central Excise Tariff is based. There can be no objection to referring to the description given in the advertisement material because any consumer who buys the product would be guided by the description of the contents given on the packaging of the product. In this case, the description on the product did use the word 'Lemonade'. Similarly when there is doubt as to the classification of a common product reference to a standard encyclopedia such as Britannica may be made for guidance and to remove doubts. - Rectification denied.
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2015 (5) TMI 285
CENVAT Credit - Credit on materials and capital goods used by for the erection and commissioning of the paint shop - capital goods embedded to earth - nexus with manufacture activity - Held that:- there is no dispute about the fact that the items falling under Chapter 85 which are covered by the definition of capital goods were received in the factory and there is also no dispute that those items were used in the factory, the Cenvat credit cannot be denied. The ground on which the department seeks to deny the Cenvat credit is not relevant to the issue. - following the decision in the case of of M/s Omax Auto Limited Versus CCE, Delhi-III [2013 (8) TMI 301 - CESTAT NEW DELHI], credit allowed. Mould and dies are sent to the job workers for manufacturing intermediate product, the appellant is entitled to take Cenvat credit. In these circumstances, the Cenvat credit on the item Nos. 1, 2 and 5 are allowed and item No. 3 & 4 are denied. Consequently demand of ₹ 11,56,087/- alongwith interest is confirmed. As the demand confirmed has already reversed by the appellant, therefore, the appellant are required to pay interest thereon within a period of 30 days from the issuance of this order. - No penalty is imposable on the appellant in the facts and circumstances of the case. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (5) TMI 296
Provisional attachment of property - Excersice of power u/s 45 of the Gujarat Value Added Tax, 2003 - Garnishee order - Held that:- Against the estimated liability of the petitioners under the VAT Act of ₹ 4.5 crores, the immovable property worth ₹ 5 crores is already under attachment. Under the circumstances, the interest of the Government Revenue has been fully protected. Therefore, thereafter, there was no reason whatsoever for the respondent No.2 to pass the order under Section 45 of the VAT Act of provisional attachment of the bank accounts of the petitioners including the personal bank account of the petitioner No.2. Such an exercise of powers is absolutely illegal and most arbitrary which cannot be sustained. There is no justification pointed out to exercise powers under Section 45 of the VAT Act and passing the order of provisional attachment of the bank accounts of the petitioners including personal bank account of the petitioner no.2. There is no formation of opinion by the Commissioner that for the purpose of protecting the interest of the Government Revenue, the impugned order of provisional attachment of the bank account of the petitioners including the personal bank account of the pet No.2 has been passed Impugned order of provisional attachment of the bank accounts of the petitioner including the personal bank account of the petitioner No.2 and the impugned garnishee notice served upon the respondent No.3-Punjab National Bank and the banker of the petitioners are absolutely illegal and most arbitrary. In the present case, the exercise of powers by the respondent No.2 under Sections 45 and 44 of the VAT Act is nothing but an abuse of powers by the respondent No.2 and undue harassment to the petitioners. Under the circumstances, this is a fit case to impose exemplary cost upon the respondent No.2 while allowing the present petition and quashing and setting aside the impugned orders. - Decided in favour of appellant.
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2015 (5) TMI 295
Adjustment of carried forward input tax credit - Levy of penalty - Demand of interest - Held that:- when on assessment the assessee / dealer is held to be entitled to a particular Input Tax Credit, in that case, the assessee/dealer is entitled to the benefit of Rule 18 of the Rules, 2006 and is entitled to adjust such Input Tax Credit against its output tax liability under the VAT Act of the current year under consideration. Merely because while submitting the Form No.108 the assessee/dealer submitted the claim of Input Tax Credit more than which is held to be admissible on assessment may be original assessment or even audit assessment or even reassessment, by that itself is no ground to deny the assessee/dealer to adjust the admissible Input Tax Credit against its output tax liability of VAT Act of the current year under consideration. Dealer can adjust the tax liability out of the amount in the current year of tax liability out of the Input Tax Credit available in the credit of the dealer. - Decision of State of Gujarat Versus Cosmos International Ltd. [2015 (4) TMI 779 - GUJARAT HIGH COURT] followed - Decided against Revenue.
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2015 (5) TMI 294
Demand of interest under Section 47(4A) - Levy of purchase tax - Held that:- Tribunal has relied upon its earlier judgment in the case of M/s. T.J. Agro Fertilizers Pvt. Ltd. and the decision of the learned Tribunal in the case of M/s. T.J. Agro Fertilizers Pvt. Ltd. has been confirmed by the Division Bench of this Court vide judgment and order [2015 (4) TMI 964 - GUJARAT HIGH COURT]. Under the circumstances, following the decision of the Division Bench of this Court - Decided against Revenue. Assessing Officer levied the purchase tax of ₹ 7,84,672/-. However, the same has been deleted by the learned Tribunal by the impugned judgment and order by observing that the dealer was holding exemption, being the manufacture of paints, and, therefore, was not required to pay any tax on sale of the goods while holding exemption certificate. Considering the definition of taxable goods under Section 2(33) of the Act, the learned Tribunal has rightly held that the dealer was not liable to pay purchase tax while holding the exemption certificate. Under the circumstances, no error has been committed by the learned Tribunal in deleting the levy of purchase tax of ₹ 7,84,672/- as during the relevant period, the dealer was holding the exemption certificate. - no question of law, much less substantial question of law, arises in the present Tax Appeal - Decided against Revenue.
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2015 (5) TMI 293
Denial of input tax credit - Whether the process undertaken by the dealer while converting Natural Sesame Seeds (NSS) to Huld Sesame (HS) can be said to be the process of ‘manufacture’ and will tantamount the 'manufacture' within the definition of Section 2(14) of the Act and consequently, the dealer on such process shall be entitled to the input tax credit or not - Held that:- From the order passed by the Assessing Officer as well as the first Appellate Authority and even from the impugned common judgment and order passed by the learned Tribunal, it appears that while converting the NSS to HS, the dealer was required to undertake the process of cleaning, drying and brushing with chemicals and removing the upper layer of NSS. - after undertaking the process, the product NSS will be converted into altogether a new product named Huld Sesame. Thus, not only the form will be changed but the NSS initially which was not eatable, would now become eatable and marketable. Process undertaken by the dealer can be said to be process of ‘manufacture’ within the meaning of Section 2(14) of the Act and, therefore, as such, no error has been committed by the learned Tribunal in holding that the process undertaken by the dealer to convert the NSS to HS can be said to be the process of ‘manufacture’ within the meaning of Section 2(14) of the Act and consequently, the dealer would be entitled to the input tax credit. As observed hereinabove, as such, by the process undertaken by the dealer, seeds which was initially not marketable and eatable, would become eatable and marketable and, therefore, there will be change in the form. - no reason to interfere with the impugned common judgment and order passed by the learned Tribunal - Decided against Revenue.
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Indian Laws
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2015 (5) TMI 280
Criminal complaint pertaining to offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Dishonour of cheque due to stop payment instructions - Held that:- Accused (respondent no.1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties. The High Court further erred in observing that Section 138(b) of N.I. Act stood uncomplied, even though the respondent no.1 (accused) had admitted that he replied the notice issued by the complainant. Also, the fact, as to whether the signatory of demand notice was authorized by the complainant company or not, could not have been examined by the High Court in its jurisdiction under Section 482 of the Code of Criminal Procedure when such plea was controverted by the complainant before it. In the case of Pulsive Technologies P. Ltd. vs. State of Gujarat [2014 (9) TMI 21 - SUPREME COURT] this Court has already held that instruction of "stop payment" issued to the banker could be sufficient to make the accused liable for an offence punishable under Section 138 of the N.I. Act. Earlier also in Modi Cements Ltd. v. Kuchil Kumar Nandi [1998 (3) TMI 632 - SUPREME COURT OF INDIA] this Court has clarified that if a cheque is dishonoured because of stop payment instruction even then offence punishable under Section 138 of N.I. Act gets attracted. - High Court has committed grave error of law in quashing the criminal complaints filed by the appellant in respect of offence punishable under Section 138 of the N.I. Act, in exercise of powers under Section 482 of the Code of Criminal Procedure by accepting factual defences of the accused which were disputed ones. Such defences, if taken before trial court, after recording of the evidence, can be better appreciated. - Decided in favour of appellant.
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2015 (5) TMI 279
Maintainability of appeal - Debt recovery - Held that:- Appellant has already filed an appeal before the Debts Recovery Tribunal at Ahmedabad (DRT), which is pending. Similarly, the Respondent-Bank has also filed an appeal before the Gujarat State Cooperative Tribunal against order, passed by the learned Board of Nominees at Ahmedabad - As both appeals are pending, we would not like to entertain this appeal on merits. We direct the DRT and the Gujarat State Cooperative Tribunal to decide the appeals pending before them within three months from the date of receipt of a copy of this order - During the pendency of afore-stated appeals before the Appellate Authorities, no coercive steps shall be taken for recovery of the amount under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Appeal disposed of.
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