Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 12, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TPA - during the year under consideration the assessee had done a reasonably good business - The resultant profit was offered for taxation in India. Therefore, transferring of profit from India, the basic ingredient to invoke the provisions of section 92, remains unproved. - AT
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The income from derivative trading in the present case being of the nature of income from speculative business can be set off from the loss incurred on own trading in shares suffered by the Assessee - AT
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Reopening of assessment - notice u/s 148 on the basis of audit objection - reopening on the basis of audit objection is as per law in the given facts and circumstances of the case - HC
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Capital gain - taking over of the assets from the firm to the company - it is clear that the vesting of the property in the private limited company is not consequent or incidental to a transfer. There is no transfer of capital assets as contemplated by section 45(1) - HC
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LTCG - Computation of capital gain - there is no justification in the order of lower authorities for enhancing capital gains by not allowing deduction paid to partner to remove encumbrance. - AT
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TPA - Unless the consideration for services is finalised between the parties, income from such services cannot even be quantified, and obviously quantification of income must precede it’s accrual - No adjustment is required - AT
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Cash Credit - The provisions of the section 28 (iv) can be invoked if the benefit or perquisite is not in form of cash. It cannot be said that the loan received by the assessee could be termed as benefit/perquisite. No justification in invoking the provisions of section 68 - AT
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Disallowance of leasehold improvement expenditure - the repair expenses incurred by the assessee, which have been termed as leasehold improvement, are revenue expenditure in nature - AT
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Sale consideration determined by Stamp Duty Authority for value determined by DVO - A.O. erred in referring the matter to the DVO u/s 55A as reference can only be made if the stamp duty value is higher than the agreement value. - AT
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Merely because the possession of the property has been taken back by the seller on account of non payment of part of the consideration cannot save capital gain in the hands of the assessee when subsequently the same agreement was honoured. - AT
Customs
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Eligibility for duty drawback - Export of Flanges - a benefit granted by a statutory notification cannot be withdrawn with retrospective effect and that too by a device of a public notice. - HC
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Refund - The law recognizes only the importers and by setting aside the redemption fine and penalties imposed upon them, it is the importers only who are recognized by law for the purpose of refund of the amounts in question - AT
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Imposition of penalty - Appellant submitted that he has resigned from the company and hence no penalty should be imposed on him - in the absence of any inculpatory statement of the appellant, penalty on the appellant is not imposable - AT
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Refund claim - Appellant filed a shipping bill declaring “that all particulars given herein are true and correct” and thus the goods were self-assessed - not entitled for refund by saying that goods were provisionally assessed - HC
Indian Laws
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India and Mauritius sign the Protocol for amendment of the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains
Service Tax
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Advertising agency service on commission basis - Model (1) Placement of advertisement in traditional media on behalf of the advertiser - Modes (2) Buying and selling of advertisement inventory in non-traditional media, on its own account - In both Models, there is no service tax liability - AAR
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Exemption form service tax on the activity of Testing & Commissioning, Integrated Testing & Commissioning and Trial runs of Trains to be undertaken under the contract is available - AAR
Central Excise
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Imposition of penalty - Declaration of lesser price for the goods which were cleared for home consumption - Diffrential amount claimed was paid by the appellant - Levy of penalty confirmed - SC
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Classification - structural components which are to be used as parts of Boiler System would be classifiable as parts of Boiler only under Heading 8402 of the Tariff. - SC
VAT
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Detention of goods in transit - detention order passed under section 70A of the GVAT Act suffers from the breach of principles of natural justice as well as lack of application of mind and therefore, stands vitiated. - HC
Case Laws:
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Income Tax
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2016 (5) TMI 454
Mumbai has a Chief Principal Commissioner of Income Tax at the helm of all the Chief Commissioners in Mumbai. Thus they must be having a system in place of keeping a record of question of law which have been admitted or dismissed by this Court so that a consistent stand is taken by the Revenue when a similar questions arises before the same or different bench of this Court.
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2016 (5) TMI 453
Taxability of dividend income received from Bank of Barhad , Malaysia - Held that:- , it could be safely be concluded that the new treaty is effective only from 1.4.2004 and hence not applicable for Asst Year 2004-05. Accordingly, for Asst Year 2004-05, the taxability of foreign dividend income would be governed only by the old treaty entered into on 25.10.1976. - Dividend received from foreign company in Malaysia by the assessee is not liable to be taxed in India.
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2016 (5) TMI 431
Transfer pricing adjustment - advertisement, marketing and sales promotion expenses(AMP expenses) including the mark-up adjustments - Held that:- In the case under consideration, the AO/TPO has not brought anything on record that there existed and agreement, formal or informal, between the assessee and the AE to share/reimburse the AMP expenditure incurred by the assessee in India. In absence of such an agreement the first and primary precondition of treating the transaction in question an international transaction remains un - fulfilled. Conducting FAR analysis or adopting an appropriate method is the second stage of transfer pricing adjustments. The first thing is to find out whether the disputed transaction in is international transaction or not. Without crossing the first threshold second cannot be approached. In the case under consideration, we are of the opinion that AMP expenditure is not an international transaction and therefore we are not inclined to restore back the issue to the file of the AO. Thus the additions made by the AO, including the mark-up adjustments, are directed to be deleted. - Decided in favour of assessee Set of off unabsorbed depreciation - Held that:- Assessee is entitled to claim set off of unabsorbed depreciation against business income of the assessment years under consideration. See Associated Cables case [2013 (10) TMI 1363 - ITAT MUMBAI ]
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2016 (5) TMI 430
Losses in speculation business - adjustment with profit from non speculative business - Held that:- We are in agreement with the argument of Ld. counsel for the assessee that the income from derivatives is defined in section 43(5) of the Act and since it excludes such transactions from the nature of speculative transaction and AO treats that the transaction has not been excluded from section 73 of the Act, therefore, the assessee was entitled to claim the loss of shares against the income of derivatives. The income from derivative trading in the present case being of the nature of income from speculative business can be set off from the loss incurred on own trading in shares suffered by the Assessee. - Decided against revenue
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2016 (5) TMI 429
Disallowance of exemption u/s 54EC - Treatment to capital gains - LTCG or STCG - Held that:- As per agreement of sale deed executed on 7.3.1973 which has been duly registered with the Sub-registrar of Assurance, Mumbai under S-2489/82 in the name of the assessee, the assessee has acquired right in the property from the date of agreement to sale dt. 7.3.1973. We also find that on 24.1.1983 assessee obtained an order and injunction against the vendor preventing the vendor from alienating, encumbering, transferring parting with the possession of the suit property. The order of the Hon'ble Court clearly evidences that the court accepted assessee’s claim, right title and interest in the property conferred upon vide agreement dated 1973. In view of the above, it is clear that right of assessee in the property is existed since from 1973. Clause 2(a) of Consent Term in the Suit before Hon'ble Bombay High Court also clarifies that agreement of 1973 was valid. Accordingly, we do not find any infirmity in the action of CIT(A) for treating capital gains as long term capital gains. Accordingly, we do not find any infirmity in the action of CIT(A) for treating capital gains as long term capital gains. Indexation - deduction paid to partner to remove encumbrance disallowed - Held that:- CIT(A) has allowed indexation from 19.7.1981 in place of date of acquisition of property in the year 1973. Since the property was acquired vide agreement of sale deed executed on 7.3.1973 which was duly registered with the Sub-registrar, we direct the AO to allow indexation by taking fair market value as on 1.4.1981. As per Sec. 2(29A) and 2(42A) holding period will be counted from the date from which assessee held the asset i.e. when right in capital asset was vested to assessee which is from the date of allotment or agreement for sale. It does not require that property should be conveyed. Even if the land was purchased, but not conveyed in the name of the assessee it will not affect the holding period of asset. As per Sec. 48 if the expenditure is incurred wholly and exclusively in connection with transfer of capital asset, in that situation expenditure is allowable. The above condition is satisfied in present case because one can sell the property only when the property is free from encumbrance. In the instant case, in a firm, if any partner disagrees to sell the property, the firm cannot sell the property which it is intending to sell. To sort out such a problem and to make property, which is intended to be sold, without any encumbrance, it is necessary to settle the difference between the partners by either convincing the partner for selling the property or to retire the said partner by paying his dues and claim. Thus, the assessee firm in order to clear the encumbrance on property has paid Smt. Sushila Devi ₹ 54 lakhs in addition to credit balance in her capital. Only after that assessee been able to file the consent term before the Hon'ble High Court on same day i.e. 21.12.2005. otherwise neither consent term will be filed nor assessee before court gets the property conveyance. Hence, it is paid wholly and exclusively for the purpose of sale of capital asset. In view of the above, there is no justification in the order of lower authorities for enhancing capital gains by not allowing deduction paid to partner to remove encumbrance.
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2016 (5) TMI 428
Non accepting the claim that the rate of tax applicable to domestic companies and/or co-operative banks for Assessment Year 2004-05 is also applicable to the Appellant, in accordance with the provisions of Article 26 (Non-discrimination) of the double taxation avoidance agreement between India and the Republic of France ('India - France tax treaty'- Held that:- The issue is covered, against the assessee as relying on Chohung Bank vs. DDIT [2005 (11) TMI 372 - ITAT MUMBAI ] and JCIT vs. Sakura Bank Limited [2005 (12) TMI 465 - ITAT MUMBAI] Principles for determining the profits of the PE - interest paid by the Indian branches to the head office and overseas branches - India- France tax treaty - Held that:- The separate profit centre accounting approach for the HO does not hold good in the treaty context, because, even if it is an income of the GE as a profit centre, all that is taxable as business profits of the GE is the income attributable to the PE. As regards its being treated as interest income of the assessee, arising in the source jurisdiction, i.e. India, can only be taxed under Article 12 but then as provided in article 12 (5), the charging provisions of Article 12(1) and (2), which deal with taxability of interest in the source state, will not apply “if the beneficial owner of the interest of the interest, being a resident of a contract state, carries on business in the other contracting state in which the interest arises, through a permanent establishment situated therein” and that in such a case the provisions of Article 7, which deal with taxability of profits of the permanent establishment alone will apply. In plain words, when interest income arises to a GE even if that be so, the taxability under article 12 will not apply, and it will remain restricted to taxability of profits attributable to the permanent establishment under article 7. The profits attributable to the PE have anyway been offered to tax. As regards the theory, as advanced by learned Assessing Officer in considerable detail, that for taxing the GE, the taxability has to be in respect of (i) income attributable to the permanent establishment as a profit centre; and (ii) income of the GE in its own capacity by treating it as another independent separate profit centre, for the detailed reasons set out above and particularly as the fiction of hypothetical independence does not extend to the computation of GE profits, we reject the same. The authorities below were, therefore, clearly in error in holding that the interest of ₹ 1,59,32,854 paid by the Indian PE to the GE, or its constituents outside India are taxable in India. We may also add that in the case of Sumitomo Mitsui Banking Corp (2012 (4) TMI 80 - ITAT MUMBAI ), a five member bench has held that interest payment by PE to the GE is a payment by a foreign company’s Indian PE to the foreign company itself, it cannot give rise to any income, in the hands of the GE, which is chargeable to tax under the Income Tax Act, 1961 itself, and, as such, treaty provisions are not really relevant. We humbly bow before the conclusions arrived at in this judicial precedent. - Decided in favour of assessee Remuneration received for marketing services rendered as income accruing to the Appellant - Held that:- CIT(A) was completely in error in proceeding on the basis that income accrues when the services are rendered – even in situation in which consideration for services so rendered is not finalised. Unless the consideration for services is finalised between the parties, income from such services cannot even be quantified, and obviously quantification of income must precede it’s accrual. It is an undisputed position that the arrangements, which include the consideration for which services were rendered, were finalised only on 28th March, 2005. Such being the undisputed position, income could not have been quantified or accrued earlier. The very foundation of impugned addition is thus devoid of legally sustainable foundation. As for the levy of interest, or ALP adjustment for interest, there cannot be any occasion to levy interest unless there is an unreasonable delay in realisation of debts. The question of delay comes into play when liability to pay has crystallized. The liability of interest on account of delay in payment will arise only when there is a liability to pay, and the liability to pay will arise, only when the liability has crystallized. The liability had not even crystallized at the material point of time. The order passed by the Transfer Pricing Officer does not give any reasons as justification for such a levy does not even recommend this adjustment. Accordingly, addition for marketing services and levy of interest on in delay in realisation of the dues is deleted. - Decided in favour of assessee
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2016 (5) TMI 427
Addition on unsecured loans - Held that:- Assessee had not received any fresh loan during the year under consideration, that all the loans were appearing on the first date of the assessment year are older loans. In the earlier years, the assessee had filed confirmation letters or other documentary evidences to show the genuineness of the transaction. In those years, the AO. s had dealt the loans independently. Either they had not made any addition u/s. 68 of the Act by holding that the loan transactions were fictitious or they have made additions in that particular year. In our opinion, the AO can invoke the provisions of section 68 of the Act for the loans taken during a particular assessment year. But, if a loan is received in earlier years and accepted by him in those year/(s) or not doubted in those year/(s), then in the subsequent years, he cannot add said amount, while computing the total income of an assessee. In short, opening balances of loans of earlier years cannot be added to the income of the assessee, under section 68 of the Act, in subsequent years. In the case, under consideration, all the loans are of earlier years, as stated earlier. In the cases of Manju Bafna, Praveen Bafna, Shailesh Bafna additions were made in earlier year . Therefore, in our opinion no addition can be made for the year under appeal, as it would result in double addition of the same amount. As far as the provisions of section 28 (iv) of the act is concerned we are of the opinion that the FAA had wrongly applied the section. The provisions of the section can be invoked if the benefit or perquisite is not in form of cash. It cannot be said that the loan received by the assessee could be termed as benefit/perquisite. No justification in invoking the provisions of section 68 - Decided in favour of assessee
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2016 (5) TMI 426
Disallowance of leasehold improvement expenditure - Held that:- We have noted from the details of expenses produced before us that the expenditure in question pertains inter alia for interior designing, for metal, cement & bricks for mockup, for replacing of tiles and allied expenses. In our considered view, these expenses cannot be treated as capital expenditure, particularly when, given facts of this case, they have limited useful life. As regards the Assessing Officer’s reliance upon Explanation-1 to section 32, it could come into play only when the capital expenditure is incurred in connection with a leased premises, but then, merely because it is an expense incurred in connection with the leased premises, it cannot be inferred that it is a capital expenditure. The authorities below have been thus swayed by the considerations which are not relevant. Section 30(a) categorically provides that when a premises used for the purposes of the business or profession, is occupied by the assessee as a tenant and when the assessee has undertaken to bear the cost of repairs to the business, the amounts paid on such repairs is to be allowed as deduction under section 30(a)(i) of the Act. As regards the restriction to the effect that only current repairs can be allowed, it is set out in section 30(a)(ii). It refers to a situation when the premises are occupied by the assessee otherwise than as a tenant. Clearly section 30(a)(ii) does not apply to the facts of the case. The assessee was occupying the premises as a tenant. In this view of the matter, it cannot be said that the repair expenses which are to be allowed as deduction when the assessee is restricted to only current repairs. As stated earlier, on a careful perusal of the material before us, we are satisfied that the repair expenses incurred by the assessee, which have been termed as leasehold improvement, are revenue expenditure in nature. - Decided in favour of assessee
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2016 (5) TMI 425
Sale consideration determined by Stamp Duty Authority for value determined by DVO - Held that:- We have observed that for the purpose of computation of capital gain, the full value of consideration received has to be taken based upon the actual value of sale of property which is higher than the stamp duty value in accordance with the provisions of section 50C of the Act. In this case the full value of the property is comprised of land and building amounting to ₹ 40 crores while the stamp duty value determined. In our considered opinion, the A.O. erred in referring the matter to the DVO u/s 55A as reference can only be made if the stamp duty value is higher than the agreement value. We do not find any infirmity in the order of the ld. CIT(A) and we confirm the same. In our considered view, the addition made by the A.O. cannot be upheld. - Decided in favour of assessee.
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2016 (5) TMI 424
Chargeability of capital gain on sale of property through unregistered documents - Held that:- According to the provisions of section 2(47) (v) of the act transfer includes any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882.Therefore, in the transaction entered into by the assessee. All the ingredients of transfer are satisfied, and therefore we are of the view that though assessee might not have received the full consideration but transfer of property has occurred in view of handing over the possession of the property to the buyer. For repossession of property assessee produced a an undated notarised understanding on stamp paper of ₹ 10/-.Merely because the possession of the property has been taken back by the seller on account of non payment of part of the consideration cannot save capital gain in the hands of the assessee when subsequently the same agreement was honoured. Furthermore for taking back the possession of the property assessee produced an undated notarised understanding on stamp paper of ₹ 10/-. For repossession of the property assessee produced an undated notarised understanding on stamp paper of ₹ 10/- between the buyer and seller However subsequently the transaction of sale has happened at the agreed price between the parties. Further it is difficult to appreciate that when assessee has received substantial consideration and only meagre consideration is outstanding how assessee has taken possession of the property back from the buyer without returning any payment to the buyer.- Decided against assessee Denial of deduction under section 54B - denial of claim as assessee is not an individual, but an HUF - Held that:- The impugned assessement year is AY 2012-13 and assessee is HUF which is not entitled to deduction u/s 54 B of the act. - Decided against assessee
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2016 (5) TMI 423
Reopening of assessment - notice under section 148 of the Act on the basis of audit objection - Held that:- On appreciation of evidence on record and relevant case law on the point, it has been categorically recorded by the Tribunal that the audit party had raised an objection that certain expenses which pertained to earlier years had been claimed in the current assessment year. Reliance was placed on the judgment of the Apex Court in CIT vs. P.V.S.Beedies Pvt. Limited, (1997 (10) TMI 5 - SUPREME Court ) holding that reopening on the basis of audit objection could be done if some factual error was pointed out by the audit party which had been overlooked by the Assessing Officer but no reopening on the basis of audit objection could be done if the objection pertained to some interpretation of law. The error pointed out by the audit party in the present case was held to be factual. Detailed reasons had been recorded by the CIT(A) justifying reopening on the basis of the audit objection. While concurring with the findings recorded by the CIT(A), it was concluded by the Tribunal reopening on the basis of audit objection is as per law in the given facts and circumstances of the case and the learned CIT(Appeals) has very aptly analyzed the validity of notice under section 148 of the Act and we do not find any infirmity in the findings recorded by the learned CIT(Appeals). - Decided against assessee
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2016 (5) TMI 422
Capital gain - transfer of assets from the firm to the company - whether there is a "transfer" as contemplated under sections 2(47) and 45(4) of the Income-tax Act, 1961? - Held that:- The Finance Act, 2001, has amended clause (xiii) of section 47 of the Income-tax Act to provide that any transfer of a capital asset, from an association or persons or body of individuals to a company, under a scheme of corporatisation of a recognized stock exchange, shall not be regarded as transfer for the purpose of capital gains tax. The proviso to clause (xiii) has also been amended to provide that this one time exemption from capital gains tax is available only if all the assets and liabilities of stock exchange immediately before the succession, become the assets and liabilities of corporatised stock exchange, and the scheme of corporatisation is approved by the Securities and Exchange Board of India. This case is concerned, there is no transfer of asset as (a) no consideration was received or accrued on transfer of assets from the firm to the company ; (b) the firm has only revalued its assets which will not amount to transfer ; (c) the provision of section 45(4) of the Act is applicable only when the firm is dissolved. In the instant case, there is no distribution of asset, but only taking over of the assets from the firm to the company. Therefore, it is clear that the vesting of the property in the private limited company is not consequent or incidental to a transfer. There is no transfer of capital assets as contemplated by section 45 (1) of the Income- tax Act. - Decided in favour of assessee.
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2016 (5) TMI 421
Addition made on account of alleged suppression of production - rejection of books of account - GP rate application - Held that:- As during the year under consideration, neither investigation by the DGCEI nor any suppressed production has been detected and admitted by the assessee. Further, the assessee has not moved any petition before the Settlement Commission or any other Excise authorities. In the totality of the above said facts and circumstances and in the absence of any evidence collected by the Assessing Officer of alleged removal of goods without payment of Excise duty, merely on the basis of estimation of alleged suppressed production on account of erratic consumption of electricity, there is no merit in making any addition in the hands of assessee. The Tribunal in Shree Om Rolling Mills Pvt. Ltd. Vs. Addl. CIT [2015 (10) TMI 2316 - ITAT PUNE ] has deleted the addition made in the hands of assessee on account of alleged suppression of production on account of electricity consumption. In the totality of the above said facts and circumstances, we delete addition made in the hands of assessee by the CIT(A) to the extent of 4% of the said alleged production. Accordingly, ground of appeal raised by the assessee against rejection of books of account and confirming the addition made on account of suppression of production by applying GP rate of 4% on the alleged production of sale are allowed. - Decided in favour of assessee
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2016 (5) TMI 420
Suppression of production on account of electricity consumption - rejection of books of account - GP rate application - Held that:- As during the year under consideration, neither investigation by the DGCEI nor any suppressed production has been detected and admitted by the assessee. Further, the assessee has not moved any petition before the Settlement Commission or any other Excise authorities. In the totality of the above said facts and circumstances and in the absence of any evidence collected by the Assessing Officer of alleged removal of goods without payment of Excise duty, merely on the basis of estimation of alleged suppressed production on account of erratic consumption of electricity, there is no merit in making any addition in the hands of assessee. Further, the Tribunal in Shree Om Rolling Mills Pvt. Ltd. Vs. Addl. CIT [2015 (10) TMI 2316 - ITAT PUNE ] has deleted the addition made in the hands of assessee on account of alleged suppression of production on account of electricity consumption. In the totality of the above said facts and circumstances, we delete addition made in the hands of assessee by the CIT(A) to the extent of 4% of the said alleged production. Accordingly, ground of appeal raised by the assessee against rejection of books of account and confirming the addition made on account of suppression of production by applying GP rate of 4% on the alleged production of sale are allowed. - Decided in favour of assessee
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2016 (5) TMI 419
Condonation of delay - Held that:- Delay in filing the appeal was not wanton as per condonation petition filed in appellate proceedings. Further on perusal of record of the events from the assessment proceedings to the Tribunal, the company seems to be passing through serious business irregularities and also Managing Director was detained. The submissions of ld. Authorised Representative on genuine and sufficient reasons for delay can not be ignored. The Managing of Director was detained by the Andhra Pradesh Police and ld. Authorised Representative produced copy of order of Metropolitan Sessions Judge, Vijayawada dated 30th May, 2014 as supportive evidence of dentation. So, considering the reasons and also detention of the Managing Director during the period of assessment, we find there is sufficient cause in the factual circumstances. We condone the delay and direct the ld.Commissioner of Income Tax (Appeals) to adjudicate appeal on merit.
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2016 (5) TMI 418
Addition u/s 68 - un-explained cash credit - Held that:- The primary onus is on the assessee-firm to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the loans of ₹ 48,23,752/- raised by the assessee-firm and stood credited in its books of accounts as per mandate of Section 68 of the Act which in our considered view , the assessee-firm has failed to discharge the burden cast on it as per provisions of Section 68 of the Act despite sufficient opportunities given to the assessee firm during the course of assessment proceedings u/s 143(2) read with Section 143(3) of the Act before the AO and the appellate proceedings before the CIT(A) and also before the Tribunal. Thus keeping in view the peculiar facts and circumstances of the case, we have no hesitation in confirming the orders of the CIT(A) sustaining the additions to the income of the assessee-firm as un-explained cash credit u/s 68 of the Act. - Decided against assessee Additions made u/s 41(1) with respect to ceased liability - Held that:- CIT(A) has passed a well reasoned order making an rational and reasonable estimate of disallowance @10% of purchases towards disputes of the assessee-firm with creditors for purchases towards rate overcharging claim , claims for expired products etc which is very rational and reasonable estimate , more-so keeping in view that unfortunately the assessee-firm has consistently chosen a path of non cooperative attitude during assessment proceedings as well appellate proceedings. The assessee-firm again chose not to avail opportunity of being heard before the Tribunal. We have no hesitation in confirming the well reasoned order of the CIT(A) dated 12.04.2011 making rational and reasonable estimate of disallowance of ₹ 6,14,124/- @10% of purchases of ₹ 61,41,240/- during the year - Decided against assessee
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2016 (5) TMI 417
Revision u/s 263 - allowability of expenditure challenged by CIT (A) - Held that:- CIT had not given a concluding finding about allowability of the expenditure but has observed that the AO has not examined the issue from the point of allowability and the nature of expenditure. Even genuineness of the expenditure has not been examined by the AO while passing the impugned order. Thus it is clear that it is a case of lack of inquiry on the part of the AO while passing the impugned assessment order u/s 143(3). Further, neither the AO has raised any query nor the assessee furnished the relevant record and details pertaining to the issue under consideration. There is no quarrel that complete lack of inquiry on the part of the AO renders the order of the AO erroneous and so far as prejudicial to the interest of the revenue. Thus, in the facts and circumstances of the case, we find that when there is a lack of inquiry on the part of the AO as well as non-application of mind while passing assessment order and particularly on the issue which is the subject matter of the revision proceedings, then the CIT was justified in invoking the jurisdiction u/s 263 of the Act The CIT has not given any concluding finding on the allowability of the said expenditure for want of complete details and record therefore, the issue was remitted to the AO with the direction to be decided in accordance with law. When the assessee has not furnished complete details of this expenditure, we do not find any error or illegality in the impugned order of the CIT remanding the issue to the record of the AO for making proper inquiry and verification. - Decided against assessee
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2016 (5) TMI 416
Penalty u/s 271E - Held that:- We found that amount of ₹ 41 lacs is not a loan or deposit but appropriated out of booking advance of ₹ 1.49 crores. There is no liability to return the amount in question. In this case, refund is of part of booking amount, not included in loans & deposits as per Sec. 269T. Thus, penalty u/s. 271E is not leviable. - Decided in favour of assessee.
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2016 (5) TMI 415
Penalty u/s 271(1)(c) - withdrawal of claim for deduction of interest expenditure / financial charges - Held that:- The complete terms and conditions along with copies of loan agreements, of the loans so obtained by the holding company which are stated to be at the behest and on behalf of the assessee company should have been brought on record with the Revenue along with details of terms of cancellation( deed of cancellation ) of the MOU with the said HDIL as the loans have been obtained by holding company on behalf and at behest of the assessee company to pay funds earlier received by the assessee company which was stated to have been advanced to HDIL and are now been recalled from HDIL pursuant to cancellation of MOU dated 15-10-2007 with HDIL and instead of bringing complete and true facts on record to substantiate its claim of allowance of interest/financial charges expenditure, the assessee company chose to take plea of withdrawing its claim to buy peace and that the losses in any case will not be allowed to be carried forward and set off in subsequent years in view of provisions of Section 79 of the Act of 1961 as the holding company has divested its shareholding in the assessee company in the year 2011 while return of income in which said claim of allowance of interest/ financial charges expenditure was made , was filed on 22.09.2009 , so it is incumbent on the part of the assessee company to explain that the claim of the allowance of interest / financial charges expenditure was legitimate and bona-fide within the four corners of the Act of 1961, when the return of income was filed in the year 2009 and not the later developments happening in the year 2011. Thus, keeping in view all these peculiar facts and circumstances of the case, in our considered view and in the interest of justice, one more opportunity needs to be given to the assessee company to bring all the relevant and cogent material on record with the revenue to substantiate that its claim of allowance of interest/financial charges expenditure was bona-fide and legitimate, the matter is now hereby set aside to the file of the A.O. to decide the issue of leviability of penalty u/s 271(1)(c ) of the Act , de-novo after considering all the relevant facts and evidences to be filed by the assessee company in its defense , after affording adequate opportunity to the assessee company of being heard. - Decided in favour of assessee for statistical purpose.
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2016 (5) TMI 414
Deduction u/s.80HHC - exclusion of profit on sale of DEPB licence for computing the deduction u/s.80HHC - Held that:- en a court interprets a provision, it decides as to what is the meaning and effect of the words used by the Legislature. It is a declaration regarding the statute. In other words, the judgment declares as to what the Legislature had said at the time of the promulgation of the law. The declaration is - This was the law. This is the law. This is how the provision shall be construed. The Hon’ble Supreme Court in the case of Topman Exports Vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA ] has declared the law on the issue regarding exclusion or inclusion of value of DEPB licence on its sale for computing the deduction under section 80HHC. According to the Hon’ble Supreme Court, the entire sale proceeds of DEPB licence is not to be excluded from the profit of the business for computing deduction under section 80HHC, but only profit arising out of the sale of the DEPB licence is to be excluded. Therefore, in view of subsequent decision of the Hon’ble Supreme Court, which has explained the position of law, when it was brought on the statute book, resulted an apparent error in the order of the Tribunal, which requires rectification. Therefore, we recall the finding of the Tribunal on ground no.3 also, and restore this ground for adjudication afresh.
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2016 (5) TMI 413
Condonation of delay - Held that:- the assessee has been vigilant and has been pursuing the legal remedy but under a wrong provision. We find that the efforts of the assessee have been bonafide and the assessee has not been insolent, negligent or lethargic in pursuing its legal remedies/appeal. The Cochin Tribunal in the case of Kadakkal Educational Trust (2014 (9) TMI 959 - ITAT COCHIN) has also taken note of the bonafide pursuit of the appeal before wrong Forum as a reasonable cause for condonation of the delay. Respectfully following the above judgments, we are inclined to condone the delay of 62 months 24 days and remit the issue to the file of the Ld. CIT(A) for reconsideration on merits.
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2016 (5) TMI 412
Apportionment of common expenses/indirect expenses between section 10(23A) segment and section 11 segment in a rational manner - Held that:- On perusal of the scrutiny assessment orders framed u/s. 143(3) of the Act by the ld.AO for the A.Ys 2010-11, 2011-12 & 2012-13, it is seen that both the revenue as well as the assessee institution had arrived at a consensus with regard to apportionment of common expenses/indirect expenses in the ratio of direct expenses incurred by section 10(23A) and section 11 segments. We find that both the revenue and assessee had tried to resolve this ongoing dispute by arriving at a consensus. Hence, by placing reliance on subsequent assessment orders passed for the A.ys 2010- 11, 2011-12 & 2012-13, we deem it fit and appropriate to follow the same as rationale for apportionment of common expenses/indirect expenses and accordingly, direct the ld.AO to follow the same for this assessment year also, which would resolve the dispute under appeal before us. - Decided in favour of revenue for statistical purpose. Provisions for arrear salary as application of income - Held that:- It is not in dispute that the assessee institution is following the mercantile system of accounting. We find that the assessee had provided for provision of salary arrears in its books based on the recommendations of the 6th Pay Commission, which got crystallised somewhere in February 2009 and treated the same as an ascertained liability by providing in its books of account. The assessee claimed the same as an application of income u/s. 11(1) of the Act. We agree with the arguments of the ld.AR that payment of salary arrears in 3 yearly installments commencing from Ays. 2009-10 to 2011-12 does not matter as far as the applicability of application of income u/s. 11(1) especially when the assessee is following the mercantile system of accounting. In view of aforesaid finding, we find no infirmity in the impugned order of the ld.CIT(A) in this regard. - Decided against revenue
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2016 (5) TMI 411
Interest incurred on acquisition of land for expansion of business - allowability of expenses - It has not been disputed that the assessee had her own capital to the extent of ₹ 3.04 crores. The assessee’s claim that the land was acquired for business purposes and shown as business asset in the Balance Sheet has not been disputed and only on assumption it has been held that it is not business purposes. In our considered view, such type of assumption cannot be sustained when in books of accounts assessee has treated the investment as business investment for future expansion. The interest incurred on acquisition of land for expansion of business is allowable as business expenditure in terms of sec. 36(1)(vii). In view of the facts, we see no justification to disallow the interest and brokerage charges paid by assessee as mentioned above which is wholly and exclusively incurred for the purpose of business and is allowable under section 36(1)(vii) besides, the assessee having own interest free funds more than ₹ 3.04 crores which is more than the investment in question. Even alternatively the assessee’s claim for interest and finance charges cannot be disallowed. - Decided in favour of assessee
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2016 (5) TMI 410
Depreciation on a new tank lorry purchased - Held that:- We concur with the contention of the assessee that when an asset is mingled in a block it completely loses its individual identity. In its audit report, the assessee had included the lorry in question in block of assets, thus, it should not have been isolated for making the disallowance of the depreciation claimed on it. Besides, it is an undisputed fact that the tank lorry in question was ready to use. Considering these material facts, we are of the view that the authorities below were not justified in making and upholding the depreciation in question disallowed. The Assessing Officer is thus directed to allow the claimed deprecation on the oil lorry - Decided in favour of assessee Disallowance of interest - Held that:- Making the disallowance the Assessing Officer has ignored some important aspects of the matter. Firstly, the interest free advance in question was not made during the year under consideration and secondly assessee was having sufficient interest free funds to make the advance. The disallowance made by the Assessing Officer was not justified. We thus while setting aside orders of the authorities below in this regard direct the Assessing Officer to delete the disallowance in question made on account of advance given to Dr. Rajbir Singh. - Decided in favour of assessee Disallowance on account of shortage in diesel - Held that:- Since it is not the case of the Revenue that this year, facts on the issue of shortage of diesel on account of handling were different, the Revenue was supposed to maintain consistency on the issue as held in other assessment years. We thus while setting aside orders of the authorities below in this regard direct the Assessing Officer to delete the disallowance made on account of shortage in diesel.- Decided in favour of assessee
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2016 (5) TMI 409
Reopening of assessment - estimation of income in the hands of assessee on account of alleged suppression of production on account of variation in consumption of electricity - assessee Karta, HUF had admitted to the clandestine removal of goods without payment of Excise duty and had paid additional Excise duty on the said amount - Held that:- The assessee had shown total disregard to the provisions of the Act. As against the notice issued under section 148 of the Act on 30.03.2010, where the return of income was to be filed within 30 days and assessment was getting time barred on 30.12.2010, the assessee furnished the alleged return of income on 10.11.2010 which is not maintainable and the same is rejected being non-est. Further, we also dismiss the plea of assessee that reassessment is bad in law as the notice under section 148 of the Act was not issued in name of assessee but its sole proprietary concern. The action by Excise authorities was taken against the sole proprietary concern in which clandestine removal of goods without payment of Excise duty were detected and after recording of reasons for reopening under section 147 of the Act, notice under section 148 of the Act was issued and assessment competed, which is as per the provisions of the Act and hence valid. Further, the assessee had participated in assessment proceedings, though had not furnished complete details and / or produced books of account, no prejudice is caused to assessee. We dismiss the plea of assessee in this regard. Accordingly, we find no merit in the grounds of appeal raised by the assessee against re-assessment proceedings The admission of assessee before the Excise authorities that it had made purchases to the value of ₹ 73,84,150/- from its other concern for unaccounted production, we find merit in the claim of assessee that the payments were made to the suppliers of raw material after receiving the sale receipts. This is the plausible explanation and can be accepted in the hands of assessee since the assessee is making the said purchases of Ingots from its concern itself, which was controlled and run by him. However, in respect of other items required for manufacturing in addition to raw material, we find merit in the order of CIT(A) in working out the addition to the extent of ₹ 9,06,132/- and the same is upheld. But no such separate addition was made by the Assessing Officer since the addition was made on account of unaccounted production. However, the CIT(A) had confirmed addition of ₹ 9,06,132/- separately and the same is confirmed. The facts and issues arising in the present appeal are identical to the facts and issue in Shree Om Rolling Mills Pvt. Ltd. Vs. Addl. CIT [2015 (10) TMI 2316 - ITAT PUNE ] and following the same parity of reasoning, we direct the Assessing Officer to verify from the records for the respective years and include in the hands of assessee, the additional income @ 4% or actual G.P. rate declared by the assessee for that year, whichever is higher, on value of such admitted clandestine removal of material without payment of Excise duty, by the assessee before the Excise authorities. Thus, the assessee is directed to file the requisite details of proceedings before the Excise authorities, before the Assessing Officer in order to compute the additional income in the hands of assessee in the respective years. - Decided partly in favour of assessee
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2016 (5) TMI 408
Reopening of assessment - exemption u/s. 54F disallowed - Held that:- As from the provisions of section 54F(4) of the Act that in any case the claim of exemption u/s. 54F could not be disturbed in A.y 2005-06 even if the construction of residential house has not been completed by the assessee within 3 years from the date of transfer. Accordingly, the basic reason on an issue for which the assessment was re-opened fails. Hence, any addition made other than the reason for which the assessment was reopened would also automatically fail as the assumption of jurisdiction itself fails on the part of the ld.AO. This issue is now well settled by the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd reported in (2010 (4) TMI 431 - HIGH COURT OF BOMBAY ) Respectfully following the aforesaid judicial precedents, we have no hesitation to quash the re-assessment proceedings on the ground that there was no tangible material with the ld.AO for initiation of re-assessment proceedings. We also find that in view of provisions of section 54F(4) r.w. proviso thereon, there is no scope for making any addition in A.y 2005-06. Hence, there could not be any reason to believe that income has escaped assessment for the A.y 2005-06. - Decided in favour of assessee
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2016 (5) TMI 407
Reopening of assessment - reason to believe and concealment of fact that i.e. Sales and stock transfer - Held that:- As during the assessment proceeding the assesse produced all the books of a/c with detail require by A.O., which have been dully examined & checked and discussed in the original assessment order. The detail chart of sale with stock transfer along with consolidate Audit balance sheet of Company head office Delhi and branch office / factory Pondicherry, which was dully filed during the assessment proceeding. The sale and stock transfer declare in the detail chart were dully verified from the Audit balance sheet of consolidated as well as individual of the company that is Head Office Delhi and branch office / factory Pondicherry. Even During the original assessment proceeding it was duly explained the difference in the stock transfer to branch and vice-versa and credited in the books of accounts There was difference of stock transfer to branch in the books of branch office which has shown credited their stock less by ₹ 29,65,101/-. We find force in the assessee’s counsel version that because this unit is covered under Excise Act therefore to claim MODVAT as per excise law in the stock transfer. It segregated excise duty and CST in separate head in their books of account. We also find that a notice dated 4.4.2008 u/s 154/155 of I.T. Act was received for clarification of sales assessment year 2004-05 including stock transfer shown in the Balance Sheet and Profit & Losses Account filed from Delhi to branch Pondicherry, which contain element of stock transfer from Delhi to branch Pondicherry and vice- versa and in response thereto the assessee has filed the reply of the notice on 30.4.2008 explaining the detail of sale which contain detail element of transfer of stock and credited in the books of accounts which has been accepted by the Department and no further query was asked by the AO and sent the notice u/s. 147 on account of income escaping assessment when there is no reason to believe and concealment of fact i.e. Sales and Stock transfer it mere change of opinion after the original assessment completed. We find that all the facts were duly discussed and verified, hence, there is no new facts or concealment of any facts as per section 147. - Decided in favour of assessee
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2016 (5) TMI 406
Reopening of assessment - reasons to believe - Held that:- We find from the facts of the assessee that not only the notice was containing wrong address but the reasons recorded clearly showed that no satisfaction of having income escaped assessment, was recorded by the AO and the proceedings were initiated only for carrying out enquiries in respect of credits in the bank accounts. We agree with the finding of the ld. Commissioner of Income-tax(Appeals) that the information which was received from another Income-Tax Officer was only to be verified at the end of the AO, and the bank statement obtained from bank could not be the basis of reopening of the assessment. It is not discernible from the reasons recorded whether any income escaped the assessment. The order of the Ld. Commissioner of Incometax( Appeals) on the issue in dispute is well reasoned and no further interference is required from our side. Accordingly, we uphold the finding of the learned Commissioner of Income-tax(Appeals) in annulling the assessment passed by the AO being not in accordance to law. The ground of the appeal is, thus dismissed. - Decided against revenue.
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2016 (5) TMI 405
Addition on account of bogus purchase - Held that:- Since the AO has merely proceeded to make an addition of ₹ 26,86,130/- on the basis of letter dated 19.12.2011, wherein M/s. Sumit Agriculture Industries denied business transaction with Smt. Suman Jain, the same is not sustainable in the eyes of law because Smt. Suman Jain transacted with M/s. Sumit Agriculture Industries only as proprietor of M/s. Sandip Enterprises and not in her individual capacity. This fact has been got rectified by the assessee during the appellate proceedings by producing the entire record of M/s. Sandip Enterprises referred hereinbefore. In the given circumstances, there is no question of issuance of second letter dated 28.12.2011 by M/s. Sandip Enterprises confirming all the business transaction with assessee under pressure. Had the notice u/s 133(6) of the Act been issued to M/s. Sumit Agriculture Industries seeking complete business transaction with M/s. Sandip Enterprises, the incorrect information would not have been filed by M/s. Sumit Agriculture Industries. - Decided against revenue Disallowance of interest paid on borrowed capital - CIT(A) allowed the claim - Held that:- In the instant case, when from the document produced before the AO, CIT (A) as well as in the additional evidence before the Tribunal by the assessee, it is proved that the loan amount borrowed by the assessee in individual capacity was utilized for earning profit from M/s. Sandip Enterprises, a proprietorship concern of the assessee, a direct link has been established and as such, the interest cost incurred on the said personal borrowing was integral part of the earning profit in the said business. Moreover, when assessee has proved that borrowings taken in individual capacity was on lower bank interest of 0.25% BPLR as against regular rate of 1.75% BPLR it has certainly enhanced the profit of M/s. Sandip Enterprises also and in such circumstances, the interest amount of ₹ 35,43,206/- has been rightly allowed to be deducted by the CIT (A). So we find no illegality or infirmity in the finding returned by the CIT (A) and consequently, grounds determined against the revenue.
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2016 (5) TMI 404
Reopening of assessment - income from speculation - Held that:- Learned AO had duly applied his mind on the impugned issue on the taxability of share trading profits as ‘income from speculation’. To this extent, the reasoning given by the Learned CIT(A) for upholding the validity of reassessment is not justified. We also hold that the Learned AO by his judicial behaviour in the original assessment proceedings u/s 143(3) of the Act had indeed formed an opinion on proper application of mind. We also agree with the arguments of the Learned AR that there is no fresh tangible material available with the Learned AO to justify the impugned action of resorting to reopen the assessment. We hold that where there was no new material or information which came to the knowledge of the Learned AO to re-initiate proceedings and since he had derived the facts and materials placed by the assessee itself during the original assessment proceedings , that did not constitute new information. Hence subsequent action on the part of the Learned AO in reopening the assessment based on the same materials available on record would only amount to re-appreciation of existing facts already on record which would amount to review and would only tantamount to change of opinion. Moreover we find that the proviso to section 147 of the Act would come into play in the facts of the instant case as admittedly the reopening is done after the end of 4 years from the end of the relevant assessment year. Then it is the duty of the Learned AO to prove as per the proviso that the reopening is warranted due to failure on the part of the assessee by not making full and true disclosure of material facts necessary for assessment. This crucial condition is conspicuously absent in the facts of the present case and hence reopening beyond 4 years could not be done even as per the statute. - Decided in favour of assessee.
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2016 (5) TMI 403
Penalty u/s 271(1)(c) - bogus write off of bad debts and interest claimed as deduction which is attributable towards the interest free loan advanced to sister concern - Held that:- It is apparent from the orders of the Revenue that the assessee has not established the genuiness of its claim of bad debts. If the assessee had genuine debtors arising from the sale of steel, it would have been easy for it to establish so. The assessee has also not made any attempt to prove that its earlier admissions are erroneous. From these facts it is apparent that the assessee’s claim of bad debts has no merits. More so when it is apparent that the assessee during the earlier assessment years has credited in its books of accounts with income stating it to be earned from Aqua culture while as those income related to earnings from unaccounted sale of steel and correspondingly debited the same in fictitious debtors accounts because the assessee in the earlier proceedings has admitted that no expenditure was debited in the books of accounts for earning such income. Hence it is abundantly clear that these debtors are bogus. Further, the assessee has transferred its interest bearing funds to its sister concerns as interest free advances and thereby erroneously absorbed the interest pertaining to that funds in its books of account. This amount of interest can be computed arithmetically with accuracy and cannot be termed as estimation and has been rightly disallowed. Therefore, the reliance placed by the assessee and the learned Commissioner of Income Tax (Appeals) in the decisions of higher judicial are not applicable to the facts of this case. Further the assessee has not succeeded in its quantum appeal on these issues before the appellate authorities as conceded by the learned Assessees Representative. From the above facts and circumstances of the case, it is clearly established that the assessee has concealed its income by furnishing incorrect particulars. Hence, the learned Assessing Officer is justified in levying penalty on the assessee - Decided against assessee.
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2016 (5) TMI 402
Selection of comparable - transfer pricing adjustment - whether comparable can be rejected on the ground that they have exceptionally high profit margins or fluctuation profit margins, as compared to the assessee in transfer pricing analysis? - Held that:- Hon'ble Bombay High Court in the case of CIT v. Pentair Water India Pvt. Ltd. [2016 (5) TMI 137 - BOMBAY HIGH COURT] has taken the view that turnover is a relevant criteria for choosing companies as comparable companies in determination of arm's length price in transfer pricing cases. we uphold the order of the Dispute Resolution Panel excluding 6 companies from the list of comparable companies chosen by the Transfer Pricing Officer on the basis of turnover and size. Treatment on gain on account of foreign exchange fluctuation as part of the operating revenue for the purpose of working the profit margins - Held that:- Foreign exchange fluctuation gains are required to be added to operating revenue. Following the same, the Assessing Officer is directed to accept the claim of the assessee in this regard. As far as the provision for bad debts are concerned, the Transfer Pricing Officer has accepted that the same would be part of operating expenses provided the same is incurred every year for at least three years and the manner in which provision is made is consistent. The assessee in reply to the query of the Transfer Pricing Officer on the above aspect has not furnished any details. We are of the view that the assessee should be afforded opportunity to explain its position on the above and the Assessing Officer is directed to consider the same in accordance with law. As far as fringe benefit tax (FBT) is concerned, the same was not considered by the Transfer Pricing Officer as part of operating cost in the case of comparables and therefore the same should also not be considered as part of operating cost of the asses see. We hold, accordingly, and direct the Assessing Officer to compute the operating cost of the assessee Computation of arithmetic mean - Held that:- We find that the detailed submissions as made by the assessee before the Dispute Resolution Panel and before us, were not made before the Transfer Pricing Officer. It was the stand of the assessee that the Transfer Pricing Officer did not confront the assessee with the various queries that were raised in his order and, therefore, the answers to those queries were provided before the Dispute Resolution Panel. The Dispute Resolution Panel has not considered those submissions. We are of the view that there has been a complete failure on the part of the Dispute Resolution Panel to have considered these submission made by the assessee before it. We are also of the view that the Transfer Pricing Officer should also have the benefit of going into the submissions made by the assessee before us, as there was lack of opportunity of being heard afforded to the assessee both by the Transfer Pricing Officer and the Dispute Resolution Panel. We, therefore, deem it fit and proper to remand this issue to the Transfer Pricing Officer/Assessing Officer for fresh consideration in the light of the submissions made before us. The Transfer Pricing Officer/Assessing Officer will decide the issue in accordance with law after giving the assessee opportunity of being heard. The Transfer Pricing Officer/Assessing Officer is directed to compute the arithmetic mean of the remaining comparable companies and allow adjustment of plus or minus 5 per cent. of the net margin as contemplated by the provisions of section 92C of the Act, if the assessee is entitled to such adjustment as a result of exclusion of the comparable companies. The Transfer Pricing Officer/Assessing Officer will also rework the operating cost while determining the arm's length price after considering the submissions of the assessee. Benefit of set off of brought forward losses and unabsorbed depreciation allowances against the transfer pricing adjustment while computing total income of the assessee - Held that:- We find that the Dispute Resolution Panel has directed the Assessing Officer to allow set off as permissible in law. We are of the view that the above direction will be sufficient as the Assessing Officer is bound to give the benefit of set off, if the other requirements of law are satisfied. We, accordingly, direct the Assessing Officer to give effect to the directions of the Dispute Resolution Panel.
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2016 (5) TMI 401
Release of seized ornaments - Recovery of the outstanding dues - Held that:- The seized ornaments have been got valued through the Government approved valuer and it is not the case of the Department that the valuation made by the approved valuer at the instance of the Department is not proper. The ornaments have been lying with the Department since 1996, however, till date, no steps have been taken to auction them to recover the outstanding dues, which lends support to the submission advanced by the learned counsel for the petitioner that the Department thought it wiser to call upon the petitioner to pay the market price of the ornaments instead of auctioning the same. It can, therefore, be safely presumed that auctioning the seized ornaments does not appear to be a very feasible option to the Department. In these circumstances, when the circular dated 21st January, 2009 provides that replacement of the seized assets with cash makes it easier for the Department to adjust the cash against the tax liability and also provides for release of ornaments subject to payment of the price as per the valuation of the assets, it would be in the interest of the revenue to retain the amount and release the ornaments, inasmuch as, at least to that extent, the dues of the petitioner would stand recovered. Otherwise, the ornaments would keep lying in distraint with the Department without getting any revenue therefrom. Thus, though the above referred steps have been taken by the respondents on a misunderstanding of the instructions of the Commissioner of Income Tax-III, no prejudice would be caused to the revenue if the ornaments are released and the equivalent amount paid by the petitioner is appropriated towards the outstanding dues of the petitioner. The petition succeeds and is accordingly allowed. The respondents are directed to forthwith hand over the seized ornaments to the petitioner as expeditiously as possible. A grievance has been raised by the Department that the petitioner is not duly cooperating with the revenue authorities in recovery of the outstanding dues. It is hoped and expected that the petitioner will extend full cooperation to the Department in this regard.
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2016 (5) TMI 400
Allowability of business expenditure u/s 37 - Held that:- Since no expenditure was incurred in respect of purchase of gold coins and therefore expenditure could not be allowed under Section 37(1) of the Act - Decided against assessee
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2016 (5) TMI 399
Disallowance of interest under section 36(1)(iii) - Held that:- In the light of the judgment of the Apex Court in Hero Cycles (P) Limited vs. CIT, Ludhiana, (2015 (11) TMI 1314 - SUPREME COURT OF INDIA ) and judgment of this Court in Commissioner of Income Tax vs. Kapsons Associates, (2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT ) the matter is remanded to the Tribunal to decide afresh in accordance with law. In Hero Cycles (P) Limited's case (supra), the Apex Court was considering the issue with regard to interest on borrowed capital (interest free loans). It was held that once it is established that there is nexus between the expenditure and purpose of business, revenue cannot justifiably claim to put itself in arm chair of businessman or in position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to the circumstances of the case
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2016 (5) TMI 398
Addition u/s 68 - Held that:- The assessee could not produce any evidence regarding source of deposit of Rs. 25 lacs by Shri Ashok Bansal with him. Under Section 68 of the Act, onus was upon the assessee to prove the identity of the creditor, his credit worthiness and genuineness of the transaction in the matter. Since the assessee failed to produce any documentary evidence regarding the source of the deposit of the amount, the addition was held to be justified
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2016 (5) TMI 397
Additions made on account of provision for arrears of salary being as prior period expenses and contingent liabilities - Held that:- Tribunal after examining the matter that as per notification dated 7.1.2009 issued by the State Government, the arrears of pay revision were to be paid by the assessee in two instalments i.e. 40% during the financial year 2008-09 and 60% in the next financial year. The liability was thus not in the nature of any contingent liability. Since the method adopted by the assessee was mercantile system of accounting and the provision on account of arrears for salary payment was made in the accounts on accrual basis, the disallowance made by the Assessing Officer was not held to be justified. The findings recorded by the Tribunal are pure findings of fact which have not been shown to be illegal or perverse by the learned counsel for the appellant-revenue. - Decided against revenue
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2016 (5) TMI 396
Stay of demand exceeding 365 days - Held that:- Wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases
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2016 (5) TMI 395
Courts territorial jurisdiction to adjudicate the matter - Held that:- The initial order dated 21.12.2006, Annexure A.1 under Section 92CA(3) of the Act which was rectified under Section 154 of the Act on 28.12.2006 was passed by the Additional Commissioner of Income Tax (Transfer Pricing), Hyderabad. The final assessment order dated 29.12.2006, Annexure A.2 was passed by the Deputy Commissioner of Income Tax, Circle 2(1), Hyderabad. Even the appeal was filed by the assessee before the CIT(A) at Hyderabad. Further appeal by the assessee and cross appeal by the revenue were filed before the Tribunal at Hyderabad. Since the initial process of assessment was started at Hyderabad and the final assessment was framed by the Assessing Officer at Hyderabad, this court lacks territorial jurisdiction to adjudicate the matter. In view of the above, this court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer, i.e. Deputy Commissioner of Income Tax, Circle 2(1), Hyderabad, the complete paper book of appeal
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Customs
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2016 (5) TMI 441
Refund claim - Import of water dispensers - Adjudicating authority in his order in original, had clearly stated that the appellant had paid excess duty and the entry 8418 covered only refrigerators and not water dispensers is an unassailable finding . The Adjudicating Authority had passed a reasoned and speaking order and in the first order passed by the Ld. Commissioner (Appeals) in order, directed the Adjudicating Authority to consider the issue in terms of Section 27 of the Customs Act, which was also upheld by the Tribunal. Held that:- the Assistant Commissioner in his order, had no other option except to decide the refund application. Based on such an order, the Assistant Commissioner has granted relief. The impugned order cannot be sustained for the reason that the Ld. Commissioner (Appeals) has merely stated that the appellant has not challenged the assessment. In the absence of any ground on merit, that the classification arrived at by the Adjudicating Authority is erroneous, which has not been done in the instant case, the impugned order is liable to be set aside and the order passed by the Original Authority granting refund is restored. - Decided in favour of appellant
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2016 (5) TMI 440
Eligibility for duty drawback - Flanges manufactured by the process of forging and exported from the country - Not availed CENVAT in relation to the inputs used for manufacturing the Flanges - Petitioners contended that Flanges manufactured by them and exported during the period 10th December, 2002 to 6th April, 2003 are covered under SS No. 73.29 under Chapter 73 of the Table of Drawback Rates 2002-03 notified by Custom Notification No. 33/2002 (NT) as amended by Notification No. 80/2002 (NT) dated 10th December, 2002 and the Flanges exported by them after 6th April, 2003 till 30th June, 2003 are covered under SS 73.28 of the Table of Drawback Rates 2003-04 as notified by Notification No. 26/2003 (NT). Held that:- insofar as exports made under shipping bills prior to the notification dated 1st April, 2003 are concerned, the Respondents are seeking to deny the benefits solely on the basis that the data related to the said products was not considered while fixing the All Industry Rates of duty drawback. Although, it was also mentioned that the Petitioners have not provided proof of payment of duties, the said line of argument was not pressed. Thus, the only question to be addressed in respect of claims made under the Drawback Schedule 2002-03 is whether the benefit of duty drawback could be denied to the Petitioners on the ground that the data relating to Flanges had not been provided by EEPC and, therefore, was not considered by the Central Government while fixing the All Industry Rates. Insofar as the exports made under shipping bills after the Drawback Schedule 2003-04 was notified are concerned, the Respondents have sought to deny the benefit, additionally on the basis of the Corrigendum dated 13th May, 2003 issued by the Central Government. Thus, it is also necessary to consider whether the Central Government could rectify the notification dated 1st April, 2003 with retrospective effect by a public notice issued on 13th May, 2003. It cannot be disputed that the Flanges exported by the Petitioners conformed to the description as specified in SS 73.29 of Drawback Schedule 2002-03 and SS 73.28 of Drawback Schedule 2003- 04 inasmuch as, (i) the Flanges were manufactured from carbon steel; (ii) they were manufactured by the process of forging; and (iii) CENVAT credit on the inputs had not been claimed. Thus, the Petitioners would clearly be entitled to duty drawback at the notified rates in respect of the Flanges exported by them. All Industry Rates for duty drawback as notified by the Central Government are in pursuance of the powers of delegated legislation conferred under Section 75 of the Act read with the Rules. The All Industry Rates of duty drawbacks as fixed by the Central Government are statutory. Thus, we find it difficult to accept that such statutory notifications could be whittled down or amended by an executive circular. It is not open for a Court, while interpreting any statute, to examine the material which weighed with the authority while framing that law if the provisions of the statute are clear and unequivocal. The scope of the entries in question have to be interpreted on the plain language of the entries, if the same is unambiguous, and it is not open for a Court to interpret the entries in the light of data which may or may not be collected by the Central Government in framing those entries and fixing the All Industry Rates. In the present case, it is found that the language of the entries is clear and unequivocal and, thus, there is no room to attempt to discover the intention of the Central Government by taking recourse to any other external aid. Therefore, the clarification dated 8th April, 2003 has no statutory force. The express language of the Drawback Schedules as notified by Central Government in exercise of statutory powers cannot be diluted or whittled down by the letter dated 8th April, 2003 and, accordingly, the same is liable to be set aside. It is well established that the devices of public notice or circulars cannot be adopted for modifying the substantive provisions of a statutory notification. Therefore, a benefit granted by a statutory notification cannot be withdrawn with retrospective effect and that too by a device of a public notice. The Petitioners, here, claim to have made exports and priced their shipments on the basis of the Drawback Schedules notified by the Central Government. Thus, the benefit of duty drawback cannot be denied to them. Maintainability - Respondents submitted that this Court had no jurisdiction to entertain W.P.(C) inasmuch as the Petitioner therein had impugned two show cause notices of even date i.e. 20th June, 2003, which were issued by the Assistant Commissioner of Customs, Ludhiana. Also the Petitioner was also located at Ludhiana and, therefore, no part of cause of action had arisen within the jurisdiction of this Court. Since the authority issuing the show cause notices was at Ludhiana, the cause of action for filing the petition lay entirely outside the territories of Delhi. Held that:- although, there is merit in Respondent's contention that situs of passing a legislation would not give rise to a cause of action to file a writ petition challenging its validity. However, in the present case, the Petitioner has also impugned the letter dated 8th April, 2003 which is not in the nature of a legislative instrument but is an executive direction. Hence, it is apparent that a part of the cause of action has arisen within the territorial jurisdiction of this Court. Consequently, we are unable to accept that the W.P.(C) is not maintainable. Hence, the Respondents are directed to process the Petitioners' claims for duty drawback in accordance with law. - Decided in favour of petitioner
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2016 (5) TMI 439
Admissibility of refund of redemption fine and penalty - Redemption fine and penalties have been paid by the appellant and not by the 11 importers, and technically speaking the TR-6 challans have been issued in the name of the 11 importers - Revenue submitted that in terms of the provisions of Section 27 of the Customs Act, duty and interest, if any, paid on the goods can be claimed in a refund by any person who has paid or borne it. Held that:- the order was passed against the importers (whether right or wrong) and the redemption fine and penalties were deposited by the importers by various TR-6 Challans in their name and the appeals were also filed by the importers before the Tribunal. Even before the Tribunal, the appellant never took a stand that redemption fine and penalties should not have been imposed upon them and the same should have been directed towards exporter of the goods. The appeal stands allowed on the merits of the case only. In such a scenario, the refund arising out of the said order of the Tribunal would be available to the importers only and the fact that whether the money for the said deposits were provided by the exporters or not, would make no difference. Section 27 of the Customs Act which relates to the refund of any duty and interest paid by an assessee, in terms of an order of assessment relates to payment of duty and interest only and does not cover the redemption fine and penalties. As such even if the redemption fine and penalty amounts were provided by the appellant to the various importers for further deposit of the same with the Revenue, it has to be considered as an internal arrangement between the exporter and importers and filing of the refund of the same by the exporter, even though the amounts were deposited by the importers, cannot be held to be justifiable inasmuch as there is no provision in the Customs Act to find out as to who has actually provided money to the person depositing the same. The law recognizes only the importers and by setting aside the redemption fine and penalties imposed upon them, it is the importers only who are recognized by law for the purpose of refund of the amounts in question. Therefore, no reason to interfere in the impugned orders. - Decided against the appellant
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2016 (5) TMI 438
Imposition of penalty - Appellant submitted that he has resigned from M/s. Infocall Solutions Pvt. Ltd. on 4-7-2006 and is no way concerned with the activity of said company, therefore, penalty on the appellant is not imposable in the absence of any statement of appellant is recorded and moreover, no examination of the witnesses has been given to the appellant to impose penalty. - Section 112 of the Customs Act - Period of dispute is 8-2-2006 to 11-3-2006 Held that:- appellant has resigned from the assessee-company on 4-7-2006 although import took place before that date but no statement of the appellant has been recorded for imposition of penalty. Moreover, if statement of other persons have been relied upon, the cross-examination was required to be given to the appellant which is also not given. Hence, principle of natural justice has been violated by the adjudicating authority. Therefore, in the absence of any inculpatory statement of the appellant, penalty on the appellant is not imposable. Impugned order qua imposing penalty is set aside. - Decided in favour of appellant
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2016 (5) TMI 437
Entitlement for refund of duty paid - Respondent submitted that since the goods were assessed provisionally and not finally and duty paid was in the nature of advance deposited, the prayer for refund cannot be within the scope and ambit of refund of duty - Held that:- it is evident that the appellant had filed the shipping bill declaring “that all particulars given herein are true and correct” and thus the goods were self-assessed. On the basis of the said bill duty was paid, shipments were allowed and the goods were exported. Therefore, as on the basis of the declaration, duty was paid by the appellant, the argument that the goods were provisionally assessed and the appellant is entitled to refund, is without substance. Moreover refund of duty was sought for after 6½ months. - Decided against the appellant
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2016 (5) TMI 436
Seeking withdrawal of special leave petition - Misuse of Advance license – Goods diverted to domestic market - High Court held that even though personal hearing was granted twice to appellant, appellant did not appear before Authorities, hence no error found in order of Tribunal ordering pre-deposit. Adjudicating Authority has considered involvement of appellant in illegal import of goods by indulging in act of misusing advance licence and evading customs duty on imported goods reported in [2015 (9) TMI 456 - MADRAS HIGH COURT] - Apex Court granted the permission to the petitioner to withdraw the petition and disposed of special leave petition as withdrawn.
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Service Tax
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2016 (5) TMI 456
Advertising agency service on commission basis - promotion or marketing services to the Media Owners or not - Revenue submits that as far as proposed Business Model-1 is concerned, the volume discount received by the applicant for the services provided to the Media Owner is liable to Service Tax. - Two business models - Model (1) Placement of advertisement in traditional media on behalf of the advertiser - Modes (2) Buying and selling of advertisement inventory in non-traditional media, on its own account. Held that:- In proposed Business Model 1, while the applicant shall be appointed by its clients i.e. the advertiser to provide services, incidental receipt of incentives/volume discounts from Media Owner shall not be considered to be providing a service, as defined under the Finance Act, 1994, to the Media Owner and shall not be liable to Service Tax. In proposed Business Model 2, while the applicant shall buy and sell the media inventory on its own account to the advertiser, incidental receipt of incentives/volume discounts from Media Owner shall not be considered to be providing a service, as defined under the Finance Act, 1994, to the Media Owner and shall not be liable to Service Tax. In both the Models, there is no service tax liability.
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2016 (5) TMI 455
Benefit of exemption notification no. 25/2012-ST is available or not - Activity of Testing & Commissioning, Integrated Testing & Commissioning and Trial runs of Trains under contract - Installation and commissioning of EMU and the platform - whether in the nature of erection, commissioning or installation of plant, machinery or equipment pertaining to metro - Whether in nature of original work - Held that:- the General Conditions of Contract/ Conditions of Contract mention that tests on completion shall include Integrated Testing, wherein the contractor (applicant) shall follow satisfactory completion of tests on his equipment, sub-systems or systems to verify and confirm the compatibility and compliant performance of his equipment/subsystem/ system with the equipment/sub-system/system provided by others Therefore, based on said compatibility and compliant performance, trial runs for the metro are undertaken. Therefore, this whole process is nothing but commissioning i.e. bringing Rolling stocks into operation. Therefore, we agree with the applicant that the services provided i.e. in relation to testing & commissioning, integrated testing and commissioning, trial runs of trains, are by way of commissioning. Works Contract - original work - Held that:- “original work” inter-alia means erection, commissioning or installation of plant, machinery or equipment or structures, whether fabricated or otherwise. - Rolling stock is at least plant and machinery and same would be commissioned by the applicant. Therefore, the applicant would satisfy this condition also i.e. providing services by way of commissioning of original work. Applicant is eligible for claiming exemption from payment of Service Tax in terms of Notification No. 25/2012-ST dated 20.06.2012 for the activities in relation to Testing & Commissioning, Integrated Testing & Commissioning and Trial runs of Trains to be undertaken under the contract. - Decided in favor of assessee.
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2016 (5) TMI 452
Seeking release of bank accounts - Unascertained and uncrystallized dues - Petitioner admitted the Service tax liability for the period 2010-11 till 2014-15 - Held that:- the petitioner has to deposit sum of ₹ 5 crores with the respondents on or before 10th June, 2016 and produce proof of the same before the Registrar, of such deposit on that day. Time to make payment shall not be extended and no application will be entertained even during vacation by this Court. To enable petitioner to pay an amount of ₹ 5 crores in terms of our order, three bank accounts of the petitioner shall be released temporarily forthwith. Any default in compliance with the order shall result in the writ petition being dismissed without any further reference to this Court and these accounts can be reattached and refrozen.
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2016 (5) TMI 451
Waiver of pre-deposit - Service tax confirmed under the category of commercial or industrial construction services - Appellant pleaded that its none of its 4 construction projects would be covered under the service tax category - Held that:- we are of the prima facie view that NRDA engaged in commercial activity of land development and sale for profit. They are primarily engaged in commerce and building for such work may be correctly categorized for tax purpose as done in the impugned order. It is recorded that the applicant has not submitted any compelling documentary evidence to substantiate that NRDA is not primarily engaged in commercial activity. As such we find the tax liability on that, prima facie, may stand. It is also found that tax liability on the office building of NRDA is, prima facie, sustainable and the financial position of the applicant is not in such bad shape in order to consider for total waiver of pre deposit. Therefore it is fit and appropriate to order for a pre deposit of ₹ 7 crore within a period of 8 weeks. - Stay granted partly
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2016 (5) TMI 450
Waiver of pre-deposit - Demand of service tax along with interest and penalty - Franchise services - Consideration received by the applicant from the various accredited registrars of domain names - Applicant prays that they are not covered by the franchise services as they do not permit any other person to represent them in any of their rights..IN domain name does not belong to them and they are only managing the allocation of various domain names with this top level domain. Held that:- the applicant may not fall under the category of franchiser (Section 65 (48)). The applicant is not holding exclusive rights or ownership of domain name so that he can be made liable for giving representational right for consideration. The domain.IN is the Government of India’s right and that the appellant claims arising in terms of clear agreement. The impugned order does not throw light on how the applicant can be said to have provided representational right when the domian name is not exclusively owned or controlled by the applicant. It is found that the decision of the Tribunal in Directi Internet Solutions Pvt. Ltd. VS. CST Mumbai [2014 (8) TMI 591 - CESTAT MUMBAI] prima facie applies to the present case also. - Waiver granted
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2016 (5) TMI 449
Demand of Service tax - Deposits made by the appellant’s customers, in anticipation of the services to be received by them throughout the year - Appellant submitted that the deposits/advances made by the customers have fully discharged the service tax on the same either in the year of deposit or in the subsequent year, thus not calling for any further service tax. Also the part of the said demand is on the account of interest and to the extent of around ₹ 28 lakhs, the said interest stands confirmed on the ground that in terms of section 67 of the Finance Act any advance received from the customers for the services to be provided are required to be discharged service tax liability at that point of time only. Held that:- in respect of interest we are of the view that in terms of provision of Section 67 the service tax liability was required to be discharged at the time of the receipt of advances itself. The delayed discharged of such service tax as rightly, at this prima facie stage, accrued as interest liability against the appellant. In as much as, the appellant has not pleaded any financial hardship and we have observed against the assessee on the said legal issue for payment of interest the applicant is directed to deposit an amount of ₹ 60 lakhs towards the said liability within a period of six weeks from today. Demand of Service tax of ₹ 2.34 crores - Appellant was paying service tax as per the agreement under the category of renting of immovable property w.e.f. 01.06.2007 but the Revenue took the view that prior to 01.06.2007 the said service tax would fall under the category of franchisee services and raised the demand by invoking the longer period of limitation - Held that:- the appellant was paying service tax under the said agreement in respect of the said agreement. The appellant's contention is noted in as much as the entire facts were before the revenue and the payment of service tax under the category of renting of immovable property was being accepted by the Revenue without any objection, no malafide can be attributed to the appellant. Otherwise also it is found that the appellant is a central Government undertaking in which case it cannot be said at this prima facie stage that they were indulging in evasion of duty by suppressing any facts or by misstatement, with an intention to evade payment of duty. On this ground also prima facie case is found in favour of the appellant and accordingly dispense with the condition of pre deposit of the said amount. Demand of Service tax - Manpower recruitment or support agency services - Held that:- the said demands can be dealt in detail at the time of final disposal of the appeal. The appellant is directed to deposit an amount of ₹ 60 lakhs within a period of six weeks subject to such pre deposits and balance amount of duty and interest and penalty shall remain waived and its recovery stayed during the pendency of the appeal.
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Central Excise
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2016 (5) TMI 448
Classification - Whether the steel fabricated structures manufactured by the assessee in its factory and subsequently cleared in unassembled condition to the customer's site and erected there would merit classification as parts of boilers under chapter sub heading 8402.90 of the Central Excise Tariff Act, 1985 - Held that:- Department itself has come out with the clarification that those structural components which are to be used as parts of Boiler System would be classifiable as parts of Boiler only under Heading 8402 of the Tariff. This clarification, thus, vindicates the stand which was taken by the assessee throughout by rightly classifying the parts of the boilers under Chapter sub heading 8402.90 of the Central Excise Tariff Act, 1985. Therefore, the impugned order is set aside. - Decided in favour of appellant
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2016 (5) TMI 447
Imposition of penalty - Declaration of lesser price for the goods which were cleared for home consumption - Diffrential amount claimed was paid by the appellant - CESTAT held that there was a deliberate under-valuation which is discerned from the Resolution dated 2nd August, 1996 passed by the appellant itself, therefore the penalty is imposable - Apex Court dismissed the appeal
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2016 (5) TMI 446
Period of limitation - Delay of more than one and half years in filing the appeal - Tribunal dismissed the appeal on the ground that once a decision was taken by the two Commissioners for not filing an appeal, the said matter had attained a finality and could not be reopened on the basis of a subsequent judgment given by a Tribunal - Held that:- the reasoning adopted by the Tribunal does not suffer from any error of law. The appellant cannot take advantage of a subsequent decision and reopen a matter which had attained a finality especially after a lapse of one and half years. The delay can be condoned in exceptional matters and while condoning the delay a discretion is given to the Tribunal or to the Court to condone the delay on sound reasoning. In the instant case, we find that the Tribunal has given sound reasoning in rejecting the application of the Department for condoning the delay. - Decided against the revenue
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2016 (5) TMI 445
Maintainability - in the light of the Instruction dated 17th December, 2015 issued by the Ministry of Finance, the subject matter involved in this case is less than ₹ 15/- lakhs , therefore not maintainable - Held that:- after going through the instruction dated 17th December, 2015 and the communication dated 1st January, 2016 issued by the Ministry of Finance. Department of Revenue, Central Board of Excise & Customs, New Delhi, the instant appeal filed by the appellant is not maintainable. - Appeal dismissed
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2016 (5) TMI 444
Clandestine removal of goods - Evasion of Central Excise duty - Held that:- it is found that the goods removed from the Mohan Nagar factory was sent to three units of the appellant and the appellant had three other units have not been disputed. Therefore, it cannot be said that there was a case of clandestine removal of the goods. - Decided against the revenue
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2016 (5) TMI 443
Whether the judgment relied upon by the Appellate Tribunal to remand the matter back to the adjudicating authority for allowing the respondent to cross-examine the witness is correct - Held that:- the appellant is unable to place any judgment holding a contrary view on the proposition of law as has been relied by the respondent as well as the law relied upon by the Appellate Tribunal in its judgment. Once the position of law is settled and a contrary view is not put forth by the appellant, we are of the considered opinion that the judgment rendered by the Appellate Tribunal does not suffer from any illegality which may call for an interference under the appellate jurisdiction of this Court by virtue of Section 35G of the Central Excise Act, 1944. Therefore, the impugned order passed by the Appellate Tribunal is hereby confirmed. - Decided against the revenue
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2016 (5) TMI 442
Maintainability - Entitlement to avail Modvat credit on inputs - received from Kudremukh Iron Ore Company Ltd., in spite of the restrictions laid down regarding availment of credit - first proviso to Notification No. 5/94-C.E. (N.T.), dated 1-3-1994 under which the credit of duty to be availed shall be restricted to the extent of duty which is equal to the additional duty leviable on the goods under Section 3 of the Customs Tariff Act, 1975 paid for such inputs - High Court held that the question with respect to rate of duty or to the value of goods for the purposes of assessment, cannot lie to the High Court. Therefore, as the question raised is clearly concerning the rate of duty to be applied, this Court cannot exercise its jurisdiction and the appeal is not maintainable reported in [2006 (7) TMI 673 - BOMBAY HIGH COURT] - Apex Court dismissed the appeal with a view that the High Court has rightly dismissed the appeal on the ground of maintainability.
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CST, VAT & Sales Tax
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2016 (5) TMI 435
Validity of detention order - passed under Section 70A(2) of the Gujarat Value Added Tax Act, 2003 - Violation of principles of natural justice - Goods were in transit - No notice issued - Held that:- there is nothing therein to indicate as to what is the nature of information in respect of the goods that was sought for by the second respondent, nor is it the case of the respondent that he has sought permission to inspect the goods. The only explanation called for from the driver of the vehicle was to explain his statement that the goods were required to be offloaded at Changodar. While the notice was issued calling upon the driver to explain his statement as to why the goods were required to be offloaded at Changodar, the impugned detention order is totally silent in that regard and proceeds on some other footing that the transporter could not produce the required information called for under section 70A of the GVAT Act. In the opinion of this court, the impugned detention order purportedly made under section 70A of the GVAT Act, leaves a lot to be decided and speaks a volume about the conduct of the officers under the GVAT Act or their lack of knowledge of the statutory provisions. It is not the case of the second respondent that any procedure as envisaged under sub-section (7) of section 67 of the GVAT Act has been followed in the present case. Thus, the vehicle does not appear to have been stopped under section 67(6) of the GVAT Act. From the impugned notice, it is difficult to cull out as to what is the nature of the information sought for by the second respondent. All that is stated by the second respondent in the notice is calling upon the driver to explain his statement that the goods were required to be off loaded at Changodar. Evidently therefore, the requirements for invocation of the powers under section 70A of the GVAT Act have not been satisfied in the present case. Therefore, the impugned detention order passed under section 70A of the GVAT Act suffers from the breach of principles of natural justice as well as lack of application of mind and therefore, stands vitiated. The impugned detention order is quashed and set aside. Since the truck in question has been released during the pendency of the petition, the respondents are directed to forthwith release the goods seized from the truck as well as other documents which have been seized by them. Since in the meanwhile, the transit pass issued in Form 405 has expired and the vehicle in question has also been released, the goods would be required to be carried in another vehicle and therefore, the second respondent is directed to do the needful for issuance of a fresh transit pass in Form 405 for transit of the goods. - Decided in favour of petitioner
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2016 (5) TMI 434
Grant of stay - condition to deposit 30% of the demand amount and furnishing of bank gurantee for the remaining amount - Appellant contended that once the concluded re-assessment was there, it could not be reopened merely because, subsequently, Supreme court has held that charger is not a part of mobile for the purpose of levying VAT. Also that even section 39(2) was not on the statue, which has been invoked since section 39, which is invoked has come into force in the year 2013, whereas reassessment is concluded in the year 2012. Held that:- it appears that the learned single Judge while granting the interim relief ought to have considered the aspects. We are conscious of the fact that in normal circumstance, there would not be any stay against the recovery of tax. But in the peculiar circumstances of this case where there was a concluded assessment is based on the subsequent of this case and the reopening of the assessment is based on the subsequent decision of the supreme court and the point as to jurisdiction under section 39 is under consideration, it would be just and proper to modify the interim order passed by the learned single judge and since the matter is pending before the learned single judge, the parties should be relegated to agitate the contentions before the learned single judge who is seized of the matter. Therefore, the interim order passed by the learned single judge shall stand modified to the effect that there shall be stay against recovery of the demanded amount on condition that the appellant furnishes bank guarantee equivalent to 30% of the demand on or before 06-06-2016 and further gives an undertaking also to be given before that date to this court through its managing director for the remaining 70% of the demanded amount declaring that, in the event the appellant fails in the petition and the demand is confirmed, ultimately, the amount equivalent to 70% with accrued interest shall be paid within a period of three months from the date of final order. - Appeal disposed of
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Indian Laws
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2016 (5) TMI 433
Confiscation of motor vehicle u/s 67B of the Abkari Act - Petitioner's vehicle being used by another person as an escort vehicle for another vehicle carrying certain contraband - Petitioner contended that his vehicle has not been used for committing any offence per se and he had no knowledge of or complicity in the alleged crime - Held that:- essentially going by the ratio of Assistant Excise Commissioner v. Paulson, which is a decision rendered by a learned Division Bench, I am of the view that Exts.P3 & P4 orders cannot be sustained. Further, since the petitioner's vehicle has not actually been used for committing the alleged offence, it may not assume any significance whether the petitioner has discharged his burden under Section 67(C) of the Act as regards his alleged knowledge of or complicity in the crime. Therefore, Exts.P3 and P5 orders cannot be sustained and are accordingly quashed. The respondent authorities are directed to refund forthwith to the petitioner the amount deposited by him at the time of his securing the interim custody of the vehicle. -Decided in favour of petitioner
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2016 (5) TMI 432
RTI application - Held that:- Pursuance of CIC order dated 25-11-2014 information has been furnished and the complainant has also accepted its receipt. CPIO expressed his appreciation for the complainant that his RTI application helped the public authority to improve functioning of RTI system and maintaining of records. Having heard the submission and perused the record, Commission holds the required information has been provided and the Complainant is also satisfied with the same, hence the present complaint is closed.
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