Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 23, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Capital receipt not chargeable to tax - bifurcation of income - The negative covenants therein are not at all unusual in such cases. There is nothing to indicate that they were introduced to avoid tax.The submission that there was no consideration for the negative covenants is therefore rejected - HC
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TP adjustment - disallowance of referral fee - the details and specifics were unavailable despite repeated queries in that regard, ipso facto could not have been a circumstance for the disallowance - HC
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Payment of interest on the money seized - the order of the ACIT insofar as it refuses to make payment of interest u/s 132B on the ground that Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. had not been encashed, cannot be legally sustained - HC
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Entitlement to claim deduction u/s. 10B - whether assembling of instruments and apparatus for measuring and detecting ionizing radiators is a manufacturing activity producing an article or thing? - Held Yes - HC
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Expenditure on LED video display board - Deduction under section 80-IA - . When such structures are put on land not belonging to the assessee, the expenditure is held to be the nature of revenue - AT
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Article 8 of India-USA DTAA - income derived by the assessee by booking of seat/space under code sharing agreement cannot be said to be income derived from operation of aircraft/ship in international traffic through owned/leased/chartered aircraft/ship - AT
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Registration granted to the assessee U/s.12A (a) withdrawn with retrospective effect - Such Act of the Revenue will only affect the poor students who are studying in the institution by paying nominal and normal fees and also other students thereby defeating the very purpose of these provisions of the Act - AT
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Penalty levied u/s 271(1)(c) - merely on the basis of additions, AO would not ipso facto lead to the conclusion that the assessee has concealed the particulars of income or furnished inaccurate particulars of income when there is no such allegation by the AO that the assessee has not furnished all relevant particulars and details in respect of this claim - AT
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Addition u/s. 68 - AO cannot extrapolate 50 and interpret 50 as 50,00,000, 575 as 575 lakhs without any corroborative/demonstrative evidence - additions made merely on the basis of some illogical and irrelevant entry/jotting on a piece of paper cannot justify the actions of the AO - AT
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Exemption u/s 80-IC - transport and other subsidies granted by the Government to the assessee for promoting economic growth in the North East Region has direct nexus of the normal activities - exemption allowed - AT
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Disallowance expenditure u/s 40A(3) - assessee has paid cash for purchase of land to certain persons - Payment has been made on March 28, 2010 which falls on a Sunday and is squarely covered by the exception provided under rule 6DD(j) - AT
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Withdrawal of registration u/s 12AA - Charitable activity u/s 2(15) - CIT has not pointed out any specific instance of any activity, income or expenditure being non-genuine. Sec. 293C is not applicable to approvals which specifically provide manner of withdrawal of approval - AT
Customs
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Valuation - import of goods - neither the fees paid under the Licence Agreement nor under the Basic Engineering, Training and Technical Services Agreement related to the import of the capital goods nor was it a condition of sale - the amount cannot be loaded into the value of the goods - no addition - SC
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Tariff Classification - Whether Continuous Ambulatory Peritoneal Dialysis Fluid (CAPD fluid) is medical equipment which attracts nil rate of custom duty - Held yes - SC
Service Tax
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Denial of refund claim - marketing support services - Service provided and consumed in India - recipient of the services is not Indian customer of the foreign supplier but it is the foreign principal qualifies to be an export of services - AT
Central Excise
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Classification - Caldhan suspension, Livfit Vet and Ayucal premix - Government's own laboratory has classified them as animal feed supplement and not veterinary medicament. - SC
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Manufacturing process or not - dyes & dye bases, napthols & fast bases - the repacking of bulk was not into retail packing as the goods after repacking were supplied to industrial consumers on wholesale basis - Not amounting to manufacture - SC
Case Laws:
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Income Tax
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2015 (5) TMI 706
Loss from transactions in foreign currency futures - Applicability of clause (d) of the proviso to section 43(5) of the Income Tax Act, 1961 - Business loss or Speculation loss - “Derivative” indicates that it has no independent value, i.e. its value is entirely “derived” from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else - Held that:- It can be seen that the derivatives also includes securities. The definition of eligible transaction mentioned herein above clearly show that the transaction must have been carried out electronically in accordance with the provisions of Securities Contracts (Regulation) Act and the Rules and Regulations or bye laws made or directions issued under this Act or by banks or mutual funds on a recognized stock exchange and which is supported by time stamped contract note issued by such stock broker or sub-broker or intermediary to every client indicating in the contract note the unique client identity number and permanent account number. It would be pertinent to consider the decision of Hon’ble Madras High Court in the case of Rajshree Sugar & Chemicals Ltd. vs. Axis Bank Ltd. [2008 (10) TMI 594 - MADRAS HIGH COURT], wherein the term derivative has been defined to include foreign currency as an underlying security of the derivative. Further, the SEBI website in its section ‘frequently asked questions’ has explained the meaning of derivative. It explains - The term “Derivative” indicates that it has no independent value, i.e. its value is entirely “derived” from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words, Derivative means a forward, future option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfilment to the value of a specified real or financial asset or to an index of securities. With Securities Laws (Second Amendment) Act,1999, Derivatives has been included in the definition of Securities. Considering the relevant provisions of the relevant Acts, discussed herein above in the light of Hon’ble Madras High Court and the answers given to frequently asked questions by the SEBI and the incorporation of exchange traded currency derivative from August, 2008, there remain no iota of doubt that the transaction of the assessee cannot be treated as speculative transaction. We have also gone through the copies of the contract notes incorporated in the paper book filed before us. A perusal of the contract note shows that the assessee has either entered into call option or put option and on the settlement day the transaction has been settled by delivery, either the assessee has paid US dollar on the settlement day or has taken delivery of US dollar.To sum up, the derivatives include foreign currency and call option/ put option, are transactions of derivative markets and cannot be termed as speculative in nature. Considering the totality of the facts and in the light of the judicial discussion herein above, we have no hesitation in setting aside the order of Ld. CIT(A). - Decided in favour of assessee.
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2015 (5) TMI 690
Capital receipt not chargeable to tax - bifurcation of income - Whether ITAT is justified in law in treating a sum of ₹ 100/- per share as capital receipt not chargeable to tax because as per provisions of Section 48, the entire receipts on sale of shares are chargeable to tax? - Whether there being no bifurcation in the agreement as regards the value of the share and the value of the negative covenants, the respondent/assessee was not entitled to apportionment thereof for the purposes of assessment under the Income Tax Act? - Held that:- Ms. Dhugga’s, absolute proposition that the assessee is not entitled to seek bifurcation of the consideration stipulated in the Share Purchase Agreement merely because the agreement does not provide for the same is not well founded. In our view, an assessee is entitled to seek bifurcation of the consideration mentioned in the agreement. We see no reason in principle to prevent the assessee from doing so. The value to be ascribed to each transaction must obviously depend upon the evidence and the facts in each case. The tax of whatever nature, must be levied on the basis of the true value of the asset of the transaction and not merely on the basis of the value ascribed to it by the assessee. Indeed, the view to the contrary could cause severe prejudice to the revenue itself. To accept the contention would enable assessees to ascribe artificial values to assets enabling them to avoid tax.The first contention therefore stands rejected. The Tribunal was right in coming to the conclusion that the consideration ought to be bifurcated and a part thereof apportioned towards the restrictive covenants. - Decided in favour of the respondents/assessees Whether there was infact no consideration payable in respect of the negative covenants? - Held that:- According to the Groz Beckert group, the application for registration of that trade mark was made without prior consultation and it objected to the registration thereof. Groz Beckert Saboo Ltd. ultimately withdrew its application on the condition that Groz Beckert group would register its trademark in its own name and Groz Beckert Saboo Ltd. would be permitted to continue to use the trade mark in India. Accordingly, lawyers of Groz Beckert Saboo Ltd. withdrew the application for registration and the said R.K.Saboo confirmed the same.There were prolonged negotiations in this regard. There is nothing to indicate that there was no such dispute. Infact, there obviously were several disputes. This is clear from the fact that the dispute is reflected in the petition filed before the Company Law Board whereas the Share Purchase Agreement was entered into much later namely after the appeal under Section 10-F before the Delhi High Court. It is obviously in view of these various disputes that various clauses were introduced by the parties in the Share Purchase Agreement. Anyone familiar with such matter would know that the agreement is consistent with an exercise for the resolution of such disputes in corporate matters. The negative covenants therein are not at all unusual in such cases. There is nothing to indicate that they were introduced to avoid tax.The submission that there was no consideration for the negative covenants is therefore rejected. - Decided in favour of the respondents/assessees Whether Tribunal order is perverse - whether tribunal failed to take into consideration that even assuming that a sum of ₹ 100/- could be considered to be the consideration for the negative covenants contained in the Share Purchase Agreement, there was no further bifurcation and apportionment of the consideration towards each of the covenants/negative covenants contained in the various clauses of the Share Purchase Agreement? - Held that:- There is no justification for allowing the appellant to raise this point for the first time in the appeal before us. Had the contention been raised before the C.I.T. (A) or before the Tribunal, the respondent could conceivably have had several answers to it. If we allow the appellant to raise this contention before us we would be depriving the respondents the opportunity of adducing evidence to deal with the same. - Decided in favour of the respondents/assessees The Tribunal accepted the value of the shares at ₹ 60.24 per share. The Tribunal, therefore, rightly held that the value of ₹ 100/- apportioned towards the negative covenants was not such as to warrant interference. We agree. The Chartered Accountant valued the shares in three different ways. The valuation at ₹ 106.90 per share was arrived at on the basis of Rule 14 of Schedule-III of the Wealth Tax Act, 1957; of the business as a whole, at ₹ 118.90 per share on the yield basis and at ₹ 93.12 on the basis of Rule 11 of Schedule III of the Wealth Tax Act i.e. breakup value. There is nothing to indicate that the valuation report was dishonest or malafide for any reason. Nor is there anything to indicate that it is unsustainable for any reason. It is important to note that there is no ground of appeal before us against the Tribunal’s acceptance of the valuation report. The appellants themselves have not valued the shares. In that event even assuming that some valuation is to be attributed to the covenants/negative covenants contained in the Share Purchase Agreement other than Clause 5.5, it would make no difference. The apportionment of sum of ₹ 100/- out of ₹ 400/- towards clause 5.5 would in any event be reasonable. We agree with the findings of the Tribunal that in view of the above facts the apportionment of 25% of the value of shares towards the negative covenants was on conservative basis. -Decided in favour of the respondents/assesses Whether consideration for the negative covenants under Clause 5.5 is assessable to tax under section 28 of the Act? - Held that:- Section 28 (ii) (a) & (b) are inapplicable to the facts of this case. The members of the Saboo group held only 40% of the equity shares in Groz Beckert Saboo Ltd. Their share holding even together did not give them the right to manage the whole or substantially the whole of the affairs of Groz Beckert Saboo Ltd. The terms of the collaboration agreement are important. Under the collaboration agreement, the general administration and management of Groz Beckert Saboo Ltd. was to be in the hands of the two Managing/Executive Directors with equal powers, one to be nominated by the Groz Beckert group and the other to be appointed by the Saboo group. Both the groups were entitled to nominate three Directors each. It is important to note that the Chairman of the Board of Directors was always to be one out of the three nominees of the Groz Beckert group and the Chairman was to have a casting vote. Further in respect of ten specified matters, no decision could be taken by the Board of Directors or by the company except by the unanimous consent of all the Directors. It cannot be said, therefore, that the Saboo group managed the whole of the affairs of Groz Beckert Saboo Ltd. Thus it is not necessary to consider whether section 28(ii)(a)(b) of the Act applies in view of other certain aspects raised by Ms. Suri. - Decided in favour of the respondents/assessees
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2015 (5) TMI 689
Entitled for deduction under section 80 HHC on interest income - Held that:- It is the settled proposition in interpretation of the statutes, that while ascertaining the true scope of a provision in a statute, attention must necessarily be paid not only to the text, but also the context. In Commissioner of Income-Tax Vs. Shri Ram Honda Power Equip(2007 (1) TMI 86 - HIGH COURT, DELHI), the Delhi High Court held that the word "interest" in clause (baa) of the Explanation to Section 80HHC of the Act, is indicative of net interest i.e. gross interest as reduced by expenditure incurred by the assessee in earning such interest.While applying the direct and proximate nexus test, we are of the view that where the interest earned does not have direct and proximate nexus, with the income from the business of export, the interest cannot be deducted as income from export under Section 80HHC (3)(a) of the Act, and has to be given the same treatment for tax, as "income from other sources" under Section 56 of the Act. - Decided in favour of revenue. Affect of amendment in section 80 HHC, by way of insertion of sub-section (4B) excluding interest income for the purpose of deduction under section 80 HHC on the deduction of interest income under section 80 HHC for the period prior to amendment - Held that:- The amendment in Section 80HHC, by way of insertion of sub-section (4B), excluding interest income for the purposes of deduction under Section 80HHC of the Act, will also affect the deduction of interest income under Section 80HHC of the Act, for the period prior to the amendment, inasmuch as the applicability of the principle of direct and proximate nexus to the business income, will apply both, to the provisions of the Act prior to, and after the amendment, which came into effect by the Finance Act, 1992, with effect from 01.04.1992. - Decided in favour of the Revenue. Eligibility for deduction under section 80 HHC assessee is not earning income in convertible foreign exchange by way of an interest on the money advanced - Held that:- The earning of the income convertible from foreign exchange by way of interest, is not necessary so long as the interest is derived from business of export, and has direct and proximate nexus, with the income earned out of the profits retained for the export business. The earning of the income convertible from foreign exchange, is not a test for determining, as to whether deduction is allowable in respect of the income derived from the profits retained for export business. - Decided against the assessee.
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2015 (5) TMI 688
TP adjustment - disallowance of referral fee - Revenue argued that the assessee was unable to support the claim of having incurred any expenditure at all - Tribunal accepting the assessee's argument that the referral fee in the given facts of the case was not subject to ALP adjustment - Held that:- The ITAT in the light of its discussion with regard to the legal position arising from the amendment of 2007, was of the opinion that the assessee “had submitted ample evidence to support its expenditure and it was shown that such expenditure is incurred with respect to the revenue earned”. The Revenue’s submissions in appeal to this Court - concededly without any discussion or hearing on this aspect in the first instance when main judgment was delivered - that the details and specifics were unavailable despite repeated queries in that regard, ipso facto could not have been a circumstance for the disallowance which ultimately resulted in the present instance. The AO plainly and facially adopted a differential standard when he considered non-AE international transactions (which yielded substantial revenue of ₹ 4,68,98,175/-) as opposed to AE driven transactions that yielded ₹ 6,27,45,515/-. The AO also ignored the fact that the arm’s length transactions in the present case in fact led to lower referral fee of 27.65% as opposed to the non-AE international transactions where the identical outgoing was up to 30.97%. Given these set of circumstances, the undue emphasis placed upon lack of certain particulars which did not fit into the mould as to suit the understanding of the AO could not have led to the disallowance. Having regard to this background, the Court is of the opinion that the ITAT’s findings on this aspect are entirely factual and cannot be characterized as perverse calling for interference.- Decided in favour of assesse.
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2015 (5) TMI 687
Payment of interest on the money seized - assessee has prayed for a direction for renewal of seized investments in shape of Indira Vikash Patras and Kishan Vikash Patras and deposits with the banks with interest on the prevailing rates on the maturity value till the assets were appropriated/released - Held that:- The Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. would have earned interest in normal course of things, if they had been revalidated/encashed as per the option available to the Revenue. If the Revenue has failed to do so and the money all along continued to remain deposited with the Union of India and the available for utilization by the Revenue itself, we see absolutely no reason in the facts of the case as to why the Revenue may not be asked to pay interest on the aforesaid Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc., at part with the interest, which money would have earned, on the face value of the aforesaid documents, under the provisions of the Income Tax Act had the investments revalidated/renewed been encashed by the department. In the facts and circumstances of the case on record we are satisfied that the order of the Assistant Commissioner of Income Tax insofar as it refuses to make payment of interest under Section 132B of the Act, 1961 on the ground that Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. had not been encashed, cannot be legally sustained and is hereby quashed. The Assistant Commissioner of Income Tax is directed to redetermine the interest as per the representation dated 28th September, 2010, in light of what has been recorded above and in light of the judgment of the Apex Court in the cases of Chironjilal Sharma Huf, Sandvik Asia Ltd. (2013 (12) TMI 71 - SUPREME COURT ) strictly in accordance with the provisions of the Income Tax Act. Let necessary calculation of interest be done within four weeks from the date a certified copy of this order is filed before him. All consequential action shall be taken immediately thereafter. So far as the refund of the interest paid under Section 220 of Act, 1961 is concerned, we find no reason to interfere with the order of the Commissioner of Income Tax dated 21st May, 2007. - Decided partly in favour of assesse.
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2015 (5) TMI 686
Entitlement to claim deduction u/s. 10B - whether assembling of instruments and apparatus for measuring and detecting ionizing radiators as admitted in column 8(a) of Form-3CD is a manufacturing activity producing an article or thing? - Held that:- The finished product which is sold by the assessee, is different from the material which are procured for making such a finished product. A series of processes are carried out and a new product is arrived. After going through the said process, the product which comes under that process is different from that which originally existed, in the sense that the thing produced is by itself a commercially different commodity. The moment there is transformation, a new commodity commercially known as distinct and separate commodity having its own character, use and name, whether it be the result of one process or several processes, manufacture takes places and duty is attracted. Therefore, the Tribunal was justified in holding that the process undertaken by the assessee constitutes manufacture and that they are entitled to the benefit of Section 80(ia) of the Act. Accordingly, the substantial question of law is answered in favour of the assessee - Decided against the Revenue
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2015 (5) TMI 685
Expenditure under Section 36 (1) (iii) - whether was not linked to earning of dividend income? Entitlment to deduction under Section 80M in respect of net dividend and not gross dividend - Held that:- This Court, therefore, is of the opinion that the law as declared by the Supreme Court in Cocanada Radhaswami Bank and United Commercial Bank [1965 (4) TMI 11 - SUPREME Court], Western States Trading (P) Ltd. v. CIT [1971 (1) TMI 11 - SUPREME Court] and Brooke Bond & Co. Ltd. v. CIT [1986 (9) TMI 2 - SUPREME Court] in such cases is that if the expenditure is incurred for the purpose of promotion of business- more specifically as in the facts of this case to retain control or as part of a strategic investment of the assessee/company, such expenses – by way of interest outgo would have to be treated under Section 36 (1) (iii) and not under Section 57. The matter is, therefore, remitted to the AO for full appraisal of the fact situation and findings in the light of our conclusions. If, as a result of the AO’s determination, it is found that such expenditure is incurred, the net expenditure is obviously to be taken into consideration under Section 80M of the Act in the facts of the present case. - Decided in favour of assesse for statistical purposes.
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2015 (5) TMI 684
Settlement application under Section 245C(1) - rejection was sought by revenue of application on the ground that no additional income has been declared in the application, so far as assessment year 2011-12 is concerned no proceedings were pending before the Assessing Officer on the date of the application and that there has been failure on the part of the applicant to make a full and true disclosure in its application, etc. - Held that:- No reasons are indicated as to why the objections raised by the petitioner are not acceptable to the Settlement Commission. This Court in Commissioner of Income Tax V/s. ITSC reported [2014 (8) TMI 630 - BOMBAY HIGH COURT ] has held that an application under Section 245D(2C) of the Act has to be disposed of after considering the objections raised by the Revenue supported by some modicum of reasons. In the absence of some consideration of the objections, the entire exercise under Section 245D(2C) of the Act would render the provisions redundant. Mere recording of submissions without considering why the submissions are acceptable or not, would clearly exhibit nonapplication of mind. Assessee very fairly submits that he has no objection if the impugned order is set aside and the issue is restored to the Settlement Commission for fresh disposal at the stage of 245D(2C) of the Act. Revenue, on instructions, accepts the position and states that no further proceedings would be taken in respect of penalty notices already issued and no further penalty notices would be issued to the petitioner. This position she fairly states will continue till the Settlement Commission either rejects the application under Section 245D(2C) of the Act or finally disposes off the application under Section 245D of the Act. The statement made on behalf of the Revenue is accepted. Thus restoring the application before the Settlement Commission for fresh disposal under Section 245D(2C) of the Act in accordance with principles of natural justice.
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2015 (5) TMI 683
Additions on account of non refundable deposits, interest on non refundable deposit, the Indira Vikas Awas Nidhi, Earthquake fund, Chief Minister's fund, Area Development fund, Cane Development fund, Small Savings etc. - Held that:- The non refundable deposits and interest thereon cannot be added to the income of the Sahakari Karkhana. To that extent the Revenue's stand has been negatived by this Court. Indira Awas Nidhi and Earthquake fund, the matter has been restored back to the Tribunal for being decided afresh and in the light of the judgment of this Court in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited (2000 (5) TMI 22 - BOMBAY High Court). Chief Minister's fund, Area Development fund, Cane Development fund, Small Savings etc., insofar as the Chief Minister's fund is concerned, the question will have to be answered in favour of the assessee and against the Revenue in the light of the Division Bench judgment of this Court in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited (2000 (5) TMI 22 - BOMBAY High Court). Area Development fund is concerned, the matter will have to go back to the Tribunal for being decided afresh and in the light of the authoritative pronouncement of the Division Bench. Cane development fund is a fund which has been said to be capable of treated as an income of the sugar factory and, therefore, the issue stands answered in favour of the Revenue and against the assessee. See CIT vs. Malegaon Sahakari Sakhar Karkhana Limited [2005 (8) TMI 90 - ALLAHABAD High Court ] & Siddheshwar Sahakari Sakhar Karkhana Limited vs. Commissioner of Income Tax,[2004 (9) TMI 6 - SUPREME Court]. Area Development fund etc. are concerned, the matter must go back to the Tribunal for fresh consideration in the light of the Division Bench judgment. Small Savings are concerned, the issue is answered in favour of the assessee and against the Revenue in terms of the Division Bench judgment in the case of Malegaon Sahakari Sakhar Karkhana Limited (supra).
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2015 (5) TMI 682
Deduction under section 80-IA - traffic signals and foot overbridges - Held that:- The Revenue can see the pre-requisite condition for allowance of deduction to an enterprise or an undertaking in the very first year the initial year of claim of deduction. In the present case before us, the assessee claimed deduction under section 80-IA of the Act in the assessment year 2004-05, i.e., that was the initial assessment year and in that year the matter regarding the claim of deduction has become final for the reason that the hon'ble Calcutta High Court has confirmed the allowance of deduction and the Revenue has not carried the matter before the hon'ble Supreme Court. Whereas the Revenue has referred to the decision of hon'ble Karnataka High Court in the case of CIT v. Skyline Advertising P. Ltd. [2015 (5) TMI 669 - KARNATAKA HIGH COURT] but that cannot be considered as precedent because the jurisdictional High Court has taken a view in favour of the assessee and that also in the assessee's own case. That means the initial assessment year i.e., 2004-05, once the claim of deduction in respect to pre-requisite conditions for allowance of deduction has been satisfied, the same cannot be questioned in future years unless and until the Revenue disturbs the initial assessment year . Similar are the facts in the case of sister concerns of the assessee, i.e., Selvel Transit Advertising Pvt. Ltd. In term of the above -Decided in favour of assesse. Depreciation on LED video display board - whether same be treated as temporary structure as held by CIT(A) in allowing the claim - Held that:- LED video display boards are temporary structures and they cannot be equated with plant and machinery for the reason that these structures are displayed outside in temporary locations and on land taken on lease for a temporary period. Once you dismantle these temporary structures, it will reduce its value to almost nil and it cannot be used second time or third time and life span of LED video display boards is also not more than 6 months to 1 year. The land is neither owned by the assessee nor it is held by the assessee on lease basis. The structures put on such land, whatever in nature, are purely temporary structures. Even sometimes, these structures are not taken by the assessee for reuse again. When such structures are put on land not belonging to the assessee, the expenditure is held to be the nature of revenue in view of the judgment of the hon'ble Supreme Court in the case of CIT v. Madras Auto Service P. Ltd. [1998 (8) TMI 1 - SUPREME Court]. In view of the above, we confirm the order of the Commissioner of Income-tax (Appeals) - Decided against revenue. Depreciation on intangible assets - CIT(A) in allowing the claim - Held that:- The assessee has acquired commercial rights and used by it during the relevant year for the purposes of its business. In term of the above, we are of the view that the Commissioner of Income-tax (Appeals) has rightly allowed the claim of depreciation and we confirm the same.- Decided against revenue. Disallowance of expenditure on prior period expenses - CIT(A) allowed the claim - Held that:- The assessee has produced complete details before the Commissioner of Income-tax (Appeals) in respect to expenses debited in the profit and loss account, on receipt of bills in the respective assessment years. Hence, we find no infirmity in the order of the Commissioner of Income-tax (Appeals) and even otherwise the issue is covered by the decision of the Income-tax Appellate Tribunal in the assessee's own case in earlier years. - Decided against revenue. Disallowance of delayed deposit of employees' contribution towards provident fund - CIT(A) allowed the claim - Held that:- Once the issue is decided by the hon'ble jurisdictional High Court in the case of Vijay Shree Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT], wherein it is held that the provident fund and employees State insurance are paid on or before the due date of filing of return under section 139(1) of the Act, deduction in respect to the amount on which provident fund and employees State insurance is so paid, is allowable. In the present case the assessee has paid the provident fund deducted on account of employees contribution before due date of filing of return under section 139(1) of the Act by the assessee and the details are available in the written submission of the assessee, hence, we dismiss this ground of appeal of the Revenue. - Decided against revenue. Addition on account of bogus purchase - CIT(A) allowed the claim - Held that:- The assessee furnished proofs to substantiate the purchases made from M/s. Vijay Industrial Corporation, i.e., his permanent account number, sales tax registration, voter ID card and identity of Shri S. K. Mohta. But the Assessing Officer got enquired through his Inspector and Inspector could not locate the address given by the party in its bills. However, the copy of Inspector's report was not provided to the assessee. But the assessee again on December 29, 2008, submitted copy of trade licence issued by KMC to M/s. Vijay Industrial Corporation, copy of electricity bill in the name of proprietor Shri S. K. Mohta for the month of November 2008, copy of driving licence in the name of proprietor Shri S. K. Mohta and the copy of voter ID card of Shri S. K. Mohta. However, the Assessing Officer ignored all these documents which were produced before him on December 29, 2008 and he passed the assessment order on December 30, 2008 making the addition of ₹ 16,75,875 treating the purchases as bogus purchases. The assessee again produced the same evidences before the Commissioner of Income-tax (Appeals) and even now before us and argued that all the necessary evidences with regard to existence of the party at the given address was produced, and hence, the Assessing Officer was not correct in making the observation that the purchases made by the assessee from M/s. Vijay Industrial Corporation were bogus purchases - Decided against revenue. Invoking the provisions of section 115JB - adding back the provision for diminution in value of investment for computing book profit under section 115JB - Held that:- Commissioner of Income-tax (Appeals) has confirmed the action of the Assessing Officer for the simple reason that Explanation 1 of section 115JB(2) clause (i) was inserted by the Finance (No. 2) Act, 2009 with effect from April 1, 2001 retrospectively in respect to provision for diminution in the value of investment is to be included while computing income under section 115JB of the Act. At the outset, learned counsel for the assessee very fairly conceded that yes there is retrospective amendment by inserting clause (i) in Explanation 1 of section 115JB(2) of the Act by the Finance (No. 2) Act, 2009 with effect from April 1, 2001, the provision for diminution in the value of investment is not allowable while computing income under section 115JB of the Act - Decided against assesse. Short deduction of TDS by invoking the provisions of section 40(a)(ia) - CIT(A) allowed the claim - Held that:- The assessee is deducting TDS qua these payments under section 194C of the Act and the Assessing Officer making assessment under section 143(3) of the Act for the relevant assessment years 2003-04, 2004-05 and 2005-06 before survey and subsequent to survey also in the assessment years 2006-07, 2007-08 and 2008-09 the position was accepted by the Assessing Officer as it is. All the assessments were completed under section 143(3) of the Act. No disallowance of these expenses was made all through. But in this year and in subsequent in the assessment year 2010-11 this disallowance was made. Thus we accept the contention of the assessee's counsel as regards to consistency that once on similar facts the Revenue has accepted the payments as contractual payments now they cannot deviate - Decided in favour of assesse. Disallowance u/s 14A - Held that:- Respectfully following the coordinate bench decision in the case of Garware Wall Ropes Ltd. [2015 (2) TMI 628 - ITAT MUMBAI] we are also of the view that where the primary object of investment is for holding controlling stake in group concerns and not for earning an income out of that investment, then the provisions of section 14A cannot be invoked. Accordingly, we direct the Assessing Officer to recompute the disallowance under section 14A of the Act read with rule 8D of the Income-tax Rules, 1962 qua the non-related parties. Accordingly, the proportionate disallowance will be made - Decided partly in favour of assesse.
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2015 (5) TMI 681
Denial of benefit of Article 8 of India-USA Double Taxation Avoidance Agreement - Held that:- Arrangement of “pool” requires several persons coming together to contribute and combine their resources for a large business and then share the resources amongst them. However in the present case the arrangement was only bilateral arrangements and not several persons have come together. Nothing was brought on record to indicate that the common funds and resources were brought together in a pool which is shared by members of the pool. However, the assessee has only entered into code sharing arrangement, it is also not a case that assessee and third party both are contributing the air craft in a pool which are shared by both. However in the instant case third party is contributing its aircraft and the assessee is only using the resources of third party by booking seats in the aircraft. Thus the arrangement does not meet principle of pool arrangement.In view of the above, we can conclude that income derived by the assessee by booking of seat/space under code sharing agreement cannot be said to be income derived from operation of aircraft/ship in international traffic through owned/leased/chartered aircraft/ship. Furthermore the code sharing agreement cannot be held as space/slot charter in absence of inextricate linkage of both legs of journeys. In the result, the receipts to the extent of code sharing arrangement cannot be said to be profits derived from operation in international traffic under Article 8-(1) read with Article 8-(2). The decision in the case of MISC Berhard (2014 (7) TMI 686 - ITAT MUMBAI) is distinguishable on facts, therefore, cannot be applied to the present case.In the result, the action of the A.O. for denial of benefit under Article 8 of DTAA is confirmed. Enhancement of Global Profitability rate - Held that:- From the record we find that the assessee has shown profitability rate at loss of 3.57%. However, while applying Rule 10, the A.O. enhanced the global profitability rate by disallowing the other expenditure claimed by the assessee in its global accounts which did not have any implication on the profitability from Indian operations. Thus the A.O. estimated the profit on pro rata basis @ 2.52% after excluding the expenditure not related to Indian operation. Article 7(2) of DTAA provides that such profits should be computed which the PE might be expected to make if it were a distinct and separate enterprise, then any expenditure which is required for the AE’s global business point of view as a whole cannot be allowed as deduction unless its utility is proved to be relevant to PE’s activity in India by assuming the PE were a distinct and separate entity. Thus while computing the profits attributable to India, only such expenses which are specific to India can be considered. We find that the assessee has not given any details of such expenditure before the A.O. or DRP to prove any part of such expenditure was attributable to PE in India. The assessee is directed to furnish such details of expenditure. In the interest of justice, we restore this ground back to the file of A.O. for determining the profit attributable to PE. Charging of interest u/s 234B - Held that:- There is no dispute to the proposition that once the income is subject to TDS, it was responsibility of the deductor, there is no liability of interest u/s 234B of the Act for failure to pay advance tax. In the instant case, we found that the assessee was collecting money from its customers on booking of tickets under code sharing arrangement. Nothing was brought on record by the assessee to substantiate its claim that such receipts were subject to TDS. In the interest of justice, this ground is also restored back to the file of A.O. with a direction not to charge interest u/s 234B of the Act if he found that the income of the assessee was subject to TDS. - Appeal decided partly in favour of assesse.
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2015 (5) TMI 680
Registration granted to the assessee U/s.12A (a) withdrawn with retrospective effect - Held that:- the activities conducted by the assessee Trust are only promoting education within the ambit of Section 2(15) of the Act. The Trust was not engaged in any other activity other that promoting Education. The allegations of the Revenue that the Trust was collecting capitation fees, Donations, siphoning of undisclosed income of the Trust for the benefit of the Trustees can at the most be taxed in the hands of the Trust or the Trustees as the case may be and may even trigger penal action against the Trustees in accordance with Law. Moreover no conclusive findings by cogent evidence are established by the Revenue to prove that the Trustees have siphoned out undisclosed income of the Trust. It is also not established before us by the Revenue that the trustees who have received funds by siphoning the undisclosed income of the trust are brought to tax. Based on these facts and case of DIT Vs. Garden City Educational Trust, [2009 (7) TMI 832 - Karnataka High Court] wherein it was held that “where there is no dispute in respect of the objects of the trust, that of imparting education and also when there is no dispute regarding the fact that the trust has actually imparted education and not carrying any other activities, the trust is qualified for getting registration U/s. 12A as a charitable institution and the question regarding the application of funds and allowability of benefit of exemption U/s. 11 & 12 are matters which are to be examined by the assessing authority at the time of assessment and not by the registering authority”. Thus we are of the considered view that the Ld. CIT is not justified in withdrawing the registration granted U/s.12A(a) of the Act by invoking the provisions of section 12AA(3) of the Act. Such Act of the Revenue will only affect the poor students who are studying in the institution by paying nominal and normal fees and also other students thereby defeating the very purpose of these provisions of the Act, which are enacted with the intention of promoting education in the country. Therefore, we hereby quash the order of the Ld. CIT withdrawing the registration granted U/s.12A(a) - Decided in favour of assesse.
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2015 (5) TMI 679
Unexplained cash credits u/s.68 - addition made by the AO being an amounts of share capital and share premium - Held that:- In the instant case there is contradiction between the statement deposed by the directors of the alleged three investment companies and the audited statement, bank accounts, confirmations and share application forms executed by the three investor companies. In the above circumstances, it is to be adjudicated that which is to be believed, the fact revealed by various documents or the facts claimed by three deponents without any corroborative evidences. We find that the Honourable Bombay High Court in the case of ACIT Vs. Miss Lata Mangeshkar [1973 (6) TMI 13 - BOMBAY High Court] held that once the testimony of the witness is unreliable, then the addition on the basis of such testimony cannot be made. In view of the above decision in our considered view the facts disclosed by the documentary evidences on record cannot be ignored merely on the basis of unsubstantiated statement of the directors. Further, we find that the identities of the three investors in the shares of the assessee company are not in dispute and the investment were made through their bank accounts is also established from their bank statements as well as their audited financial statements. The Honourable Supreme Court in the case of CIT versus Lovely Exports (P) Ltd.S.L.P. (CIVIL)[2008 (1) TMI 575 - SUPREME COURT OF INDIA] wherein held that if the share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law. Thus addition made in the instant case cannot be sustained. - Decided in favour of assessee.
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2015 (5) TMI 678
Penalty levied u/s 271(1)(c) - Disallowance of deduction under section 10B in respect of interest income on MSEB deposit- Held that:- It cannot be said that the claim of the assessee is an absolute impermissible claim and does not fall in the category of bonafide claim. It is pertinent to note that in view of the various judgments as relied upon by the assessee there are certainly two possible views on this issue. Thus, we are of the considered opinion that the claim of deduction under section 10B in respect of the interest on deposit with MSEB deposit disallowed by the AO would not ipso facto lead to the conclusion that the assessee has concealed the particulars of income or furnished inaccurate particulars of income when there is no such allegation by the AO that the assessee has not furnished all relevant particulars and details in respect of this claim. Accordingly, we hold that the penalty under section 271(1)(c) is not justified in respect of disallowance of deduction under section 10B on interest income from deposit with MSEB. - Decided in favour of assesse. Weigh Bridge Receipts - Held that:- There is no dispute regarding the fact that weigh bridge is situated in the undertaking itself and therefore the income earned from such asset claimed as profit of business of the undertaking is a bonafide claim of the assessee. Mere disallowance of the claim under section 10B would not constitute concealment of income or furnishing inaccurate particulars of income when the assessee has disclosed all relevant facts and details in the return of income and also furnished the relevant material explaining the facts and source of the income. Accordingly in view of our observation on the issue of levy of penalty in respect of the interest income on MSEB deposit, we hold that the disallowance of claim under section 10B in respect of the income earned from weigh bridge will not attract the penalty provisions under section 271(1)(c) when the assessee has brought on record and explained to the AO the nature of income and source of income.- Decided in favour of assesse. Allocation of Directors’ remuneration - Held that:- When for the last six years the assessee was under the impression that no allocation of expenditure is required while computing the income of eligible undertaking because the AO has accepted the computation of income for deduction under section 10B without any allocation of directors’ remuneration then the claim for the assessment year under consideration is based on good faith and due diligence and therefore the disallowance of the same would not attract the penalty under section 271(1)(c). - Decided in favour of assesse. Transfer Pricing Adjustment- Held that:- When the penalty in the case of the assessee is related in respect of the transfer pricing adjustment and the transactions were duly disclosed by the assessee in the form No.3CEB. Even otherwise prior to the amendment to section 92B vide Finance Act, 2012 whereby the explanation has been inserted with retrospective effect from 01.04.2002 the claim of the assessee is based on good faith and due diligence and therefore we do not find it a fit case for levy of penalty under section 271(1)(c).- Decided in favour of assesse. Transfer pricing adjustment made by the TPO/AO in respect of actual expenditure incurred for securing bank guarantee and towards notional interest - Held that:- It is clear that the AO himself has not treated the actual expenditure incurred by the assessee for furnishing bank guarantee on behalf of the AE as an international transaction but it was disallowed under section 37. In view of the fact that AO has not treated it as an independent and separate international transaction while passing the assessment order for A.Y. 2008-09 the addition of transfer pricing adjustment on this account for the year under consideration does not attract the penalty under section 271(1)(c). - Decided in favour of assesse.
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2015 (5) TMI 677
Unexplained investment in the purchase of land - copy of agreement was seized from the sister concern of the assessee which shows the rate of land was at ₹ 6,50,000 per bigha instead ₹ 1,25,000 per bigha declared, in the registration deed - CIT deleted the addition - Held that:- The Assessing Officer has relied upon the copy of the agreement to sell seized during the course of search operation, which has admittedly been cancelled by the parties by marking cross on the same. It is also admitted fact that the said agreement in question did not have any proper identification of the land proposed to be sold. No specific property is mentioned in the said agreement for the purpose of sale. No evidence has been brought on record if the said agreement to sell was acted upon by the concerned parties. The seller to the agreement to sell or the witnesses to the agreement to sell have not been examined either by the search party or the Assessing Officer. No evidence has been found during the course of search to prove if any over and above consideration have been paid in respect of any property purchased by the assessee. Since the agreement in question is cancelled document and did not relate to the assessee directly or indirectly, therefore, the Assessing Officer has merely inferred that the assessee might have paid some more consideration over and above what is stated in the registered documents. It was merely the suspicion of the Assessing Officer to make addition against the assessee. However, it is well settled law that suspicion, whatsoever may be strong, cannot take place of legal proof. In the absence of any adverse material against the assessee, we do not find any justification to interfere in the order of CIT(Appeals) in deleting the addition. - Decided in favour of assessee.
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2015 (5) TMI 676
Addition u/s. 68 - Held that:- There is no dispute that the assessee has submitted Memorandum/Articles of Association of Companies, Board Resolution of the companies, Loan confirmations, Balance sheet, PAN details & Copies of I.T. returns.A perusal of these documents go to establish that the assessee has prima facie discharged the onus cast upon him by virtue of provisions of Sec. 68 of the Act.The AO drew support from the observations made in other group cases but that cannot be the sole basis for making the additions in the case in hand. We find that the transactions have been made by cheque. There is no direct evidence brought on record in the case of the assessee to show that the transaction is not genuine as no verification has been made in the case of the assessee from the related banks. We also find that all the lender companies are taxpayers and their PAN details are on record alongwith the copies of their income tax return. There is no evidence to show that the AO has made enquiries from the lender companies. Merely because the lender companies were found to be name lenders in other group companies would not empower the AO to make additions u/s. 68 of the Act in the hands of the present assessee. Thus keeping in mind the ratio laid down in the case of CIT Vs Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME Court], we have no hesitation to hold that the assessee has successfully discharged the onus cast upon him by virtue of Sec. 68 of the Act. No addition is therefore called for. We set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition made u/s. 68 of the Act. - Decided in favour of assesse. Addition u/s. 69 - Held that:- AO has simply disbelieved the explanation of the assessee but at the same time has not brought any demonstrative material evidence on record to prove that there is an unexplained investment made by the assessee. The AO did not even care to verify from the said builder. The additions have been made purely on the strength of a piece of paper without any corroborative/demonstrative evidence therefore in our considered view, such additions cannot be sustained - Decided in favour of assesse. Addition holding that the transactions pertain to A.Y. 2007-08 - Held that:- We failed to persuade ourselves to give any logical conclusion/finding in respect of these documents on the basis of which the AO has made the addition. There is not even an iota of evidence to show that the AO has made an enquiry from the said Shri Vikramjee Agarwal. Merely because some figures were found to be written in some document, The AO cannot extrapolate 50 and interpret 50 as 50,00,000, 575 as 575 lakhs without any corroborative/demonstrative evidence. Without there being any corroborative evidence additions made merely on the basis of some illogical and irrelevant entry/jotting on a piece of paper cannot justify the actions of the AO and of the Ld. CIT(A). We, therefore, do not find any merit in the additions made by the AO on the basis of these documents. We direct the AO to delete the entire additions made on the basis of these two documents - Decided in favour of assesse. Addition made u/s. 68 - Held that:- The AO has simply mentioned that ₹ 5 crores in the name of Shri P. Anandam is not found reflected in the books. However, in respect of other entries relating to ₹ 16.75 crores, the AO has not pointed out in whose books these amounts have been found to be recorded. On the one hand, the AO has considered ₹ 5 crores as income of the assessee and on the other hand ₹ 4.85 crores found to be spent on the bungalow, as observed by the AO was not treated as unexplained investment. The AO cannot take two different views on the same set of documents. It is clear that the AO has made additions purely on the basis of surmises and conjunctures. We, therefore cannot sustain such additions made purely on assumption without there being any corroborative evidence brought on record. We set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition of ₹ 5 crores - Decided in favour of assesse.
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2015 (5) TMI 675
Transaction in shares - short term and long term capital gains v/s business income - CIT(A) direct the A.O. to accept the claim of the appellant by accepting the long term and short term capital gain admitted by the appellant - Held that:- From the record, we found that assessee was consistently investing in shares. She has neither traded in the investment securities nor she had any intention to convert her investment into stock-in-trade. Only the intention of the assessee was to earn capital gain on appreciation of value of shares and dividend income. In the assessee’s own case for the A.Y.2006-07, the department has accepted assessee’s claim of capital gain amounting to ₹ 24,79,925/- for the A.Y.2006-07. The assessee was consistently following the method of accounting shares as investment. A categorical finding has also been recorded by the CIT(A) to the effect that shares were shown as investment in the balance sheet which indicated the intention of the assessee to hold the same as investment. It is also not the case of the AO that assessee has valued the shares at the cost of market price at the end of the year. On the contrary, the shares were recorded in the balance sheet on the cost of acquisition only. The intention of assessee, period of holding, frequency of transactions are to be considered in totality while holding that profit arose on sale of shares is capital gain on business income. After applying various judicial pronouncements as well as CBDT Circular No.4/2007, dated 15th June, 2007, the CIT(A) has recorded a categorical finding that profit arose on sale of shares are liable to be taxed as short term and long term capital gains depending on the period of holdings. No reason to interfere in the findings recorded by the CIT(A), which resulted into treatment of profit on sale of shares as capital gains in place of AO’s treatment of business income. - Decided against revenue.
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2015 (5) TMI 674
Exemption claimed u/s 80-IC denied - REVISION U/S 263 - manufacturing of crushed iodised salt carried on by the appellant as an activity not within the purview of section 80-IC(2)(b) as held by CIT(A) - Held that:- Commissioner of Income-tax in his revisional jurisdiction should only set aside the order and direct the Assessing Officer for making fresh assessment instead of himself passing final orders. In the case under consideration the Commissioner of Income-tax has decided the two issues instead of remitting them back to the file of the Assessing Officer by holding that the assessee was not engaged in the manufacturing/production and that second unit was established by the splitting up of its existing business. He had left no option for the Assessing Officer to decide the issue on the merits. The provisions of section 263 of the Act were incorporated in the Act to revise the orders that were found to be erroneous and prejudicial to the interests of the Revenue. The Commissioner of Income-tax as senior officer had to indicate the omissions/commissions of the Assessing Officer while passing the revisionary orders. But, in the case before us, the Commissioner of Income-tax had taken over the role of the Assessing Officer. In our opinion, direction of the Commissioner of Income-tax was not justified. Besides, by directing the Assessing Officer not to give opportunity of hearing he has violated the basic principles of natural justice. Thus, on both counts the order of the Commissioner of Income-tax cannot be endorsed. Therefore, we hold that the order of the Commissioner of Income-tax passed under section 263 of the Act is invalid Transport subsidy and interest subsidy - non eligible for deduction under section 80-IC - Held that:- In the appellate proceedings the first appellate authority referred to the decision of of Asst. CIT v. Maithan Smelters Ltd. [2008 (1) TMI 424 - ITAT CALCUTTA-A] 307 ITR (AT) 225 (Kolkata) and held that transport and other subsidies granted by the Government to the assessee for promoting economic growth in the North East Region has direct nexus of the normal activities and hence were rightly included in the profit and loss account of the assessee and were entitled for deduction under section 80-IB of the Act. Finally, he held that subsidies were received by the assessee were exempt as per the provisions of section 80-IC of the Act. The issue is squarely covered in favour of the assessee by the decision of the hon'ble jurisdictional High Court delivered in the case of CIT v. Meghalaya Steels Ltd. [2013 (7) TMI 175 - GAUHATI HIGH COURT) - decided in favour of assessee.
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2015 (5) TMI 673
Disallowance expenditure under section 40A(3) - assessee has paid cash for purchase of land to certain persons - Held that:- It is not doubted that in the agreement to sell it was agreed that sale deed would be executed, i.e., registered on or before March 28, 2010 and the assessee was required to make full payment before that date. Later on, it was found that March 28, 2010 fell on Sunday, naturally nobody would like to leave the land deal, therefore, the assessee paid cash on that date. We are not impressed by the contention that the assessee should have made the payment before that date. When a particular agreement provides for a payment on or before a particular date, it is not necessary that just to meet the technical requirement of Income-tax provisions, payment should be made earlier. Payment has been made on March 28, 2010 which falls on a Sunday and is squarely covered by the exception provided under rule 6DD(j) which has been extracted by the Assessing Officer above. Further, the sale deed was also executed on March 30, 2010. Therefore, in our opinion, the cash payment would covered by the exception under rule 6DD(j) and accordingly we set aside the order of the learned Commissioner of Income-tax (Appeals) and delete this addition. - Decided in favour of assessee. Disallowance u/s 36(1)(iii) - no interest charged on advance given to sister concern - Held that:- The Assessing Officer has fairly restricted the disallowance at ₹ 4,79,230 which was amount of interest claimed by the assessee. The proportionate disallowance is totally in consonance with the decision of the of CIT v. Abhishek Industries Ltd. [2006 (8) TMI 123 - PUNJAB AND HARYANA High Court) wherein held that the assessee will not be entitled to claim deduction of the interest on the borrowings to the extent those are diverted to sister concerns or other persons without interest, therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and confirm the same. - Decided against assessee.
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2015 (5) TMI 672
Prescribed monetary limits for filing of appeal before ITAT - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a low tax effect case, the appeal of the revenue dismissed in limine without going into merits. - Decided against revenue
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2015 (5) TMI 671
Withdrawal of registration u/s 12AA - whether proviso to Section 2(15) is not applicable to the assessee's case? - Held that:- The conclusion of order of ld. CIT in withdrawing the registration does not appear to conform to the specific conditions laid down in sec 12AA(3). An order withdrawing the registration of trust is a drastic action and the law provided a statutory mechanism of assessment, verification of trust activities, and apportionment of income and expenditure of various activities of the trust. Benefits of sec 11 and 12 can be extended on the basis of scrutiny and verification by the AO. Ld. CIT has not pointed out any specific instance of any activity, income or expenditure being non-genuine. Sec. 293C is not applicable to approvals which specifically provide manner of withdrawal of approval as held in the case of Jaipur Development Authority vs. CIT [2014 (10) TMI 219 - ITAT JAIPUR] Thus the impugned order of ld. CIT (Admn.) withdrawing the registration u/s 12AA(3) is not in conformity with the language of this section. We are of the view that ld. CIT(Admn) should revisit the issue of withdrawal of registration afresh after taking into consideration the legislative scheme of powers, incorporation of proviso, inclusive definition of the Charitable Objet as interpreted by plethora of judicial decisions and decide the issue of registration after giving the assessee an opportunity of being heard. Since we have set aside the issue, the additional ground as admitted by us with other pleadings for proper disposal of the same shall be considered by ld. CIT. - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (5) TMI 696
Valuation under Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - Addition of licence fee and fees paid for basic engineering services to the invoice price of the imported goods for the copper smelting plant - Fees paid under the Licence Agreement and under the Basic Engineering, Training and Technical Services Agreement related to the import of the capital goods was not a condition of sale - Held that:- On going through the order of the CESTAT, it becomes clear that the CESTAT has gone into the various provisions of the three agreements and has come to the conclusion that neither the fees paid under the Licence Agreement nor under the Basic Engineering, Training and Technical Services Agreement related to the import of the capital goods nor was it a condition of sale and on that basis it has recorded the finding that the provisions of Rule 9(1)(b)(iv) or Rule 9(1)(c) or Rule 9(1)(e) of the aforesaid Rules would apply to the facts of the case. That apart, it further finds that both the Agreements, viz., Licence Agreement as well as Basic Engineering, Training and Technical Services Agreement, pertained to the services that were to be provided post import of the aforesaid goods. On this ground also, the value of these services could not have been loaded into the value of the goods at which those were imported. It is also to be borne in mind that the respondent had purchased various capital components from many other parties and the goods for which the agreement was signed with OEC constituted only 16% of the total value.On these facts, we are of the opinion that the matter is squarely covered by the recent judgment of this Court in Commissioner of Customs, Ahmedabad v. M/s. Essar Steel Ltd. [2015 (4) TMI 486 - SUPREME COURT ] decided on 13th April, 2015. - Decided against the revenue.
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2015 (5) TMI 695
Tariff Classification - Whether Continuous Ambulatory Peritoneal Dialysis Fluid (CAPD fluid) is medical equipment which attracts nil rate of custom duty - Held that:- On going through the list 29 we find that in the said list at serial No.46 CAPD fluid is specifically mentioned. It would, thus, clearly fall within the aforesaid nomenclature, namely, medical equipment and that is no duty was to be paid on the import of this equipment. - Decided against the revenue.
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2015 (5) TMI 694
Detention of appellant's husband - Habeas Coprus - Section 3(1) of the Conservation Of Foreign Exchange and Prevention Of Smuggling Activities Act, 1974 (COFEPOSA) - prevention from abatement of the smuggling of goods - Held that:- Division Bench of this Court while deciding the detention matter with respect to the co-detenu - Ajay Kumar Sharma in its judgment and order dated 20th January, 2015 has taken a judicial note with respect to the spacious plea which has been taken by the sponsoring authority que the "holidays" which were intervening in forwarding the reply / comments is concerned - though the sponsoring authority was well aware about the view taken by a co-ordinate Division Bench of this Court while deciding Writ Petition, in case of the co-detenu that it has taken a judicial notice of the plea with respect to "holidays" is concerned, the sponsoring authority did not bother to take its note and improve upon itself. Delay in deciding the representation by the detaining authority between 12th December, 2014 and 2nd January, 2015 of about 20 days has not at all been explained, least satisfactorily explained by the detaining authority. It has further not been explained in the said affidavit that why it took 20 days for effecting the verification of the identity and the address of the Petitioner and the detenu. The affidavit is totally silent on this aspect. - The affidavit is also silent on this aspect and the delay of 6 days is remained unexplained. Thus, there is in all 31 days delay, which has not at all been explained, least satisfactorily explained at the instance of the Additional Chief Secretary i.e. the Respondent No.2. It is also clear from the record that there is unsatisfactory explained delay of about 21 days i.e. from 12th December, 2014 to 2nd January 2015 at the behest of the sponsoring authority in forwarding the parawise comments to the detaining authority and according to us the said delay has not at all been satisfactorily explained by the sponsoring authority. - breach of Article 22(5) of the Constitution of India at the behest of the Respondents has rendered the continued detention of the detenu illegal. We are therefore of the view that the delay as stated herein above is not satisfactorily explained and continued detention of the detenu is in violation of the constitutional mandate of Article 22(5) of the Constitution of India and the order of detention stands vitiated. - Decided in favour of appellant.
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Corporate Laws
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2015 (5) TMI 693
Application for Composite Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 - Regional Director's observations regarding compliance of provisions of the Companies Act, 1956 /2013 regarding name change duly addressed - Held that:- Although no objection has been raised by the Regional Director in his report, but in para 10 of his report, he has observed that as per Clause 11 of Part-V of the Scheme, it has been stated that with effect from the effective date, the name of the transferee company shall stand changed to Mindchampion Learning Systems Limited or such other name as may be approved by the Registrar of Companies, Delhi & Haryana. He, therefore, prays that the petitioner company may be directed to comply with the provisions of the Companies Act, 1956/2013 in this regard. In reply to the aforesaid observation, the transferee company in the affidavit dated 14th April, 2015 of Mr. Ashok Arora, authorized signatory of the transferee company, have undertaken to comply with the relevant procedures under the Companies Act, 1956/2013 with regard to the change of name of the transferee company. The undertaking is accepted and the petitioner company shall remain bound by the same. In view of the above, the observation raised by the Regional Director stands satisfied. No objection has been received to the Composite Scheme of Arrangement from any other party. The petitioner companies, in the affidavit dated 8th April, 2015 of Mr. Ashok Arora, authorized signatory of the petitioner companies, have submitted that neither the petitioner companies nor their counsel have received any objection pursuant to the citations published in the newspapers on 14th March, 2015. Considering the approval accorded by the shareholders and creditors of the petitioner companies to the proposed Composite Scheme of Arrangement and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Composite Scheme of Arrangement, there appears to be no impediment to the grant of sanction to the Composite Scheme of Arrangement. Consequently, sanction is hereby granted to the Composite Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956. - Application for Scheme of Arrangement approved.
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2015 (5) TMI 692
Winding up of society - Sale of property through auction - A Co-operative society registered under the Multi-State Cooperative Societies Act, 1984 - Gujarat Industrial Development Corporation (GIDC) constituted under the Gujarat Industrial Development Act, 1962 (GID Act), applied to the State Government for acquisition of land for the Society, necessary for such public purpose - Land acquired for public purpose - State objection regarding possession of the land in dispute by filing review/ recall application - The entire cost of acquisition expenses and the entire amount of compensation to the land owners was paid by GIDC and the possession of entire acquired land was directly taken by GIDC from the farmers/land owners - Held that:- One thing is clear that the land was acquired by the State Government for GIDC for establishment of petrochemical industry, namely, Petrofils Cooperative Limited and for establishment of township for the employees of the industry. The State Government issued notification under Sections 4 and 6 of the LA Act for acquiring the lands in dispute of villages Ranoli and Undhera. The State Government contributed ₹ 1,000/- towards cost of acquisition and apart from this amount, no amount was spent by the State Government either for acquisition purpose or for payment of compensation. The entire amount of expenses and payment of compensation in pursuance of the consent award was paid by the Society. Contribution of ₹ 1,000/- by the State Government was essential condition for acquisition of land for public purpose and to demonstrate that the cost of acquisition had been borne wholly or in part out of public fund. It could not be disputed by the learned Additional Advocate General appearing for the State Government that the land in dispute was acquired for public purpose for the Society. The Petrofils Cooperative Limited was a joint venture of Government of India and the weavers society known as Petrofils Cooperative Limited for manufacture of polyester filament yarn. The Central Government was holding 84% shares. The argument of learned Additional Advocate General cannot be accepted that merely because the State Government had invested ₹ 1,000/- for acquiring the land for public purpose, would mean that the land belongs to the State Government or the acquired land has vested in the State Government. It only establishes that land acquisition was for a public purpose. Thus, the argument advanced on behalf of State that since it had invested ₹ 1,000/- in acquisition of land, it would become owner of the land is misplaced. The State Government can only become owner if the land in dispute has vested in the State under Section 16 of the LA Act and possession had been taken by the State. In this case, neither the acquired land had vested in the State nor the State ever took possession of the land in dispute. It was clear to GIDC that the land was vested in GIDC free from all encumbrances as entire cost of expenses for acquisition and payment of compensation under consent award passed under Section 11 (2) was paid by the GIDC and the farmers/land holders directly gave possession to the GIDC. At no point of time, possession was taken by the Collector on behalf of the State Government nor there is any material on record to demonstrate that the State Government never took possession or invested any amount except ₹ 1,000/-. Though Section 32 of GID Act was not applicable as the land in dispute had never vested in the State, however, under a bonafide mistake, the GIDC entered into an agreement with regard to Ranoli and Undhera village with the State Government. Almost similar agreement was executed with regard to land situated at village Ranoli. From the agreement extracted above between the State Government and GIDC, it was established that the land had vested in the GIDC free from all encumbrances meaning thereby that the GIDC had become the absolute owner and in possession of the acquired land. The State Government neither in the review petition nor in its affidavits-in-reply filed in this writ petition has produced any evidence or material to demonstrate that possession was taken by the State Government by preparing a Panchnama in the presence of independent witnesses and their signatures were obtained on the Panchnama. As a matter of fact, no evidence with regard to taking over symbolic or actual possession by the State Government or by the Collector, Vadodara has been filed or is on the record. Therefore, the acquired land cannot be deemed to have been vested in the State Government. From the decision in Hari Ram (2013 (3) TMI 596 - SUPREME COURT), it is clear that the land in dispute vested in GIDC under Section 30 (2) of the GID Act free from all encumbrances and the GIDC was in de jura and de facto possession of the land in dispute. The State Government had no right to file a review petition before this Court on the ground that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction sale as it was well aware of the auction sale and as a matter of fact, has issued No Objection to the respondent Nos.16 to 18 as it was well aware of the entire proceedings. However, by way of abundant caution, GIDC was also impleaded as party to the writ petition. However, more than two years have passed and due to the review petition filed by the State Government, the respondent Nos.16 to 18 could not enjoy the fruits of the leasehold rights in the land purchased by them, nor could they construct the industry or residential township, the interest of justice demands that the concerned authority shall complete the formalities expeditiously as the GIDC has leased out the land for public purpose to fulfill the object of GID Act. By judgment dated 22.6.2011, this Court had allowed the Liquidator to withdraw the amount deposited with the Court pursuant to the interim orders passed by this Court. The Registrar General of this Court had been directed to release the amount in favour of Liquidator, and the amount deposited pursuant to the order passed by this Court in the present case, after proper verification had been withdrawn by the Liquidator and paid to the Secured Creditors on pro-rata basis and no one has come up to contest this writ petition except the State Government which has no legal right or title over the land in dispute, in our considered opinion, the dispute having been set at rest, this petition is liable to be disposed of so that the respondent Nos.16 to 18 may use the property for the purpose for which they have purchased it in Court auction. - This writ petition is finally disposed of with a direction to the GIDC and other concerned authorities to expeditiously complete the formalities so that the object of Gujarat Industrial Development Act, 1962 is achieved. The State Government and the Collector, Vadodara are directed not to create any hindrance in implementation of the Project by the auction purchasers.
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Service Tax
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2015 (5) TMI 705
Intellectual property Right services - Non speaking order - Held that:- Paras 28 and 29 of the impugned order which dealt with the impugned demand relating to intellectual property are clearly and admittedly non-speaking. Indeed, the first 6 = lines of the said para 28 are essentially reproduction of para 18 of the order-in-original passed in respect of the appellant in a case relating to a different show cause notice. The said para 28 is also factually misleading inasmuch as it incorrectly states that the noticees have not disputed that they have received taxable services from their associate enterprises and they were liable to pay service tax under reverse charge in terms of Section 66A of the Finance Act, 1994 Thus both sides have rightly agreed that the impugned adjudication order relating to the confirmation of service tax demand under intellectual property service is a non-speaking one. Franchisee service - Invocation of extended period of limitation - whether the appellant gave to the distributors representational right to sell its products i.e. products identified with it - Held that:- appellant does not dispute that it gave right to sell products identified with it to the distributors. To decide this issue, one necessarily has to refer to Amway s Business Starter Guide and Distributor Application and Terms and Conditions . As per the terms and conditions of distributors, an Amway distributor is also governed by Rules of Conduct - ABO/distributor is not merely granted right to sell Amway products but he has the representational rights to sell such products. - ABOs clearly had representational right to sell goods indentified with Amway. The impugned order therefore, cannot be faulted for concluding accordingly on the basis of the Amway Business Starter Guide, Distributor Application and Terms and Conditions etc. Adjudicating authority did not impose penalty under Section 78 of the Finance Act, 1994. As the ingredient for invoking extended period under proviso to Section 73 (1) ibid are identical to those required for imposing penalty under Section 78 ibid., it follows that the extended period is not invocable in this case and the finding of the primary adjudicating authority in para 44 of the impugned order (referred to above) is totally inconsistent with his finding that penalty under Section 78 is not imposable. It is also pertinent to note that Revenue has not filed any appeal against the non-imposition of penalty under Section 78 ibid. Also the impugned demands do not involve extended period in any case and therefore, the finding in para 44 of the impugned order that extended period of limitation is applicable in terms of proviso to Section 73(1) of Finance Act is of no relevance/consequence. - Decided partly in favour of assessee.
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2015 (5) TMI 704
Classification of service - whether the appellant herein is liable to discharge the service tax liability under the reverse charge mechanism under the category of "Manpower Recruitment or Supply Agency Services", on payments made by them to Lear Corporation, USA - Held that:- During the period of the services of the deputed employees, they would be entitled to pension and social services benefits extended to them outside India and the appellant/assessee is required to reimburse the said amounts to Lear Corporation, USA. In effect this would amount to paying social security services of the employees who are working with the appellant in USA, which would mean that the appellant discharge his obligation towards employees who are working with them. - Further reading of clause No. 4 specifically indicates that sole obligation of Lear Corporation, USA is to depute employees and the said obligation would cease on actual deputation of the employees to Lear India and it is specifically mentioned in the said agreement that Lear Corporation, USA is not providing any services to Lear India by deputing the employees. The same clause also talks about the deputed personnel will be taken into employment by the appellant/assessee and shall work under direct Control and Management of the appellant/assessee during the entire period of their employment and; that the deputed employees will be proceeded against in terms of the disciplinary issues on the same terms as the appellant/assessee's own employees. In short, we find that entire agreement, on which reliance has been placed by the Counsel of the appellant indicates that the personnel who are deputed to India are taken on rolls as employees of the appellant/assessee. If that be so, the question of rendering any services to the appellant by Lear Corporation, USA dos not arise by any extent of imagination. - Following decision of Computer Sciences Corporation India Pvt. Ltd. [2014 (11) TMI 125 - ALLAHABAD HIGH COURT], it is held that services rendered cannot be classified as "Manpower Recruitment and Supply Agency Services". - Decided in favour of assessee.
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2015 (5) TMI 703
Architectural services - Receipt of professional fees - Failure to provide details of fees received - appellant were not collecting and paying service tax on the value of taxable services - Held that:- Appellant having discharged the service tax liability and the interest thereof, before the due date as was granted by the Hon'ble High Court of Bombay and two other petitioners who were rendering the same services are entitled for the relief as granted by the Hon'ble High Court., i.e. no penalty be imposed on them. We do not find any reason to deny the relief of setting aside of penalties. We also find strong force in the contention raised by the learned Chartered Accountant having discharged the entire tax liability and the interest thereof in the first place, revenue should not have issued show-cause notice to the appellant. We find that justifiable cause is made out by the appellant for setting aside the penalties imposed on him under Section 76 & 78 of the Finance Act, 1994. Accordingly, invoking the provisions of Section 80 of the Finance Act, 1994 we set aside the penalties imposed on the appellant under this head. Appellant is not able to explain why there are no bill numbers and the description in the bills also do not have any details to come to a conclusion that the architectural services were rendered by the appellant prior to 16/10/98. In all probabilities, few of the bills which were raised before 16/10/98 could also be for the services rendered after 16/10/98. In the absence of any concrete evidence that services were rendered before 16/10/98. We are of the considered view, that appellant has not made out any case in his favour as regards the service tax liability of ₹ 7,83,241. Appellant could have entertained a bonafide belief that the services rendered by him being prior to 16/10/98, the payments received for such services after the date, are not liable for service tax. Accordingly, invoking the provisions of Section 80, we set aside the penalties imposed on the appellant under this head. - Decided partly in favour of assessee.
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2015 (5) TMI 702
Denial of refund claim - marketing support services - Service provided and consumed in India - Held that:-Even though the services provided in India but on behalf of foreign entity and payment is made in convertible foreign exchange, it is clear that services are used by the person on whose behalf of the services are provided. In the present case though the respondent has provided market support services in India but recipient of the services is not Indian customer of the foreign supplier but it is the foreign principal. Therefore the services is used by said foreign entity that is M/s. Cognis Netherland, therefore the condition for treating services as export services i.e. service recipient should be located out side India and commission for such services should be received by the service provider in convertible foreign exchange, have been undisputedly fulfilled. Therefore in my considered view the service provided by the respondent is qualified as export service and consequently, service tax paid on such service is refundable - service is export of service, therefore in case of export refund of service tax does not attract provisions of unjust enrichment. In view of above observations, I do not find any error in the impugned order - Decided against Revenue.
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2015 (5) TMI 670
Waiver of pre deposit - value of the spare parts used in providing authorised service station service has not been included - Held that:- For a similar (impugned) demand of service tax in the appellant s own case [2011 (1) TMI 728 - CESTAT, NEW DELHI], CESTAT has granted full waiver and unconditional stay. As regards CENVAT credit, the services involved are e.g., maintenance and repair service, courier service, mobile phone service, chartered accountant service, cleaning services consultancy service and security agency service. The appellants have an arguable case that these constituted input services. In the light of the foregoing, we grant full waiver from pre-deposit and stay recovery of the impugned liabilities during pendency of the appeal. - Stay granted.
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Central Excise
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2015 (5) TMI 701
Classification - Caldhan suspension, Livfit Vet and Ayucal premix - Animal feed supplements or Veterinary medicament - Classification under sub heading no.2302.00 or sub heading no.3003.39 - Held that:- There are several reasons given by the Tribunal in classifying these products as animal feed supplements. One important reason in support which is noted by the Tribunal is that the Department's own laboratory, namely, CRCL has opined that livfit Vet is not described in authoritative books for Aurvedic medicines and it can be considered animal feed supplement. Insofar as Ayucal premix is concerned, here again, CRCL has opined that it should be animal feed supplement. Thus, insofar as these two products are concerned, Government's own laboratory has classified them as animal feed supplement and not veterinary medicament. Insofar as Caldhan suspension is concerned, the CRCL could not give any opinion either way. Because of this reason the Tribunal went into the certificates which were produced by the assessee from other experts. These certificates demonstrate that none of these products are medicament. No doubt, Indian Veterinary Research Institute (IVRI) has opined otherwise. However, as against that there is an opinion of Dr. Mahesh Kumar, Associate Professor of G.B.Pant University of Agriculture and Technology, stating that Caldhan can be recognized as a tonic or food supplement only which provides low levels of calcium or phosphate to the animals and thereby helps in maintaining tenacity of muscles. It is also stated by him that Caldhan cannot be used for therapy of milk fever as it provides not only 325 mg calcium per 20 ml whereas for the therapeutic management of milk fever, a minimum of 100-150 g calcium should be given intravenously as 20-30% solution. Pertinently even on the printed labels for this product, it mentioned "not for medicinal use". Otherwise also we find that insofar as this product, namely, Caldhan suspension is concerned, the Revenue effect is only ₹ 16,000/- for the period in question and statement was made at the Bar by Mr. Lakshmikumar, Advocate, that the assessee has stopped the production of this product. - Decided against the revenue.
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2015 (5) TMI 700
Manufacturing process or not - Repacking and / or labelling - Products purchased in bulk quantities in bulk packing & thereafter process is undertaken - dyes & dye bases, napthols & fast bases, and chrome pigments - Held that:- It is clear from the plain language of the Chapter Notes which use both the expression 'or' as well as 'and' at different places. Thus, by using the two expressions, the intention of the legislature is manifest that insofar as the process of label or relabeling of containers is concerned, it would amount to manufacture only if the other condition, viz., repacking from bulk to retail pack is also satisfied. The aforesaid view gains credence from other fact, i.e., where the second process is treated as manufacture, viz., "adoption of any other treatment to render the product marketable to the consumer", the expression 'any other treatment' and that too, with intention to render it marketable clearly shows that insofar first part is concerned, both the conditions have to be satisfied. Insofar as the napthols & fast bases is concerned, even from the order of the Commissioner, it becomes clear that though there was repacking and even relabeling, the repacking of bulk was not into retail packing as the goods after repacking were supplied to industrial consumers on wholesale basis. It is specifically stated so by the assessee which fact is not denied by the Commissioner.Therefore, both the conditions mentioned in the Chapter Notes are not satisfied.Insofar as the chrome pigments are concerned, the assessee only obliterated the name which was appearing on containers and the name of the assessee along with the logo is stenciled on such container that may amount to relabeling. However, the process of repacking was not undertaken at all by the assessee. Thus, here also both the eligibility conditions which are to be fulfilled have not been satisfied. - Decided against the revenue.
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2015 (5) TMI 699
Waiver of pre deposit - Denial of CENVAT Credit - Inputs used for job work - Held that:- When there is no physical removal of the cenvated inputs, there is no requirement to reverse the credit under Rule 3(5) of the Cenvat Credit Rules, the appellant have strong prima facie case in their favour. In view of this, amount of ₹ 2.01 crores already paid by the appellant is, in our view, sufficient for hearing of their appeal. As regards Shri Pawan Batra, DGM is concerned, we are of the prima facie view that in the circumstances of this case, there does not appeal to be any justification for imposition of penalty on him under Rule 26 of the Central Excise Rules, 2002. Hence, the requirement of pre-deposit of penalty by Shri Pawan Batra, DGM for hearing of their appeal is waived. Credit had been taken by Bhiwadi Unit on the basis of the supplementary invoices issued by the Chopanki Unit while non-reversal of this credit by the Chopanki Unit was deliberate - Held that:- Following decision of Karnataka Soaps & Detergents Ltd. - [2005 (6) TMI 182 - CESTAT, BANGALORE] it is held that Rule 9(1)(b) is not-applicable in case of inter-unit transfer, the appellant have a prima facie case in their favour and as such, the requirement of pre-deposit of cenvat credit demand, interest and penalty is waived for hearing of their appeal and recovery thereof is stayed. Credit has been taken by the Bhiwadi Unit on the basis of the certain invoices regarding use of the cenvated inputs by Chopanki unit in the job work for Bhiwandi unit which the Chopanki Unit was not required to pay any amount under Rule 3(5) - Held that:- Following decision of MDS Switchgears Ltd. [2008 (8) TMI 37 - SUPREME COURT] - Stay granted.
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2015 (5) TMI 698
Penalty u/s 11AC - Clandestine removal of goods - Held that:- Penalty under section 11AC of the Act is not imposable as in this case as duty demand has already been dropped by the learned Commissioner (Appeals). Further, I find that currency seized is the amount withdrawn from the bank which is not the sale proceed of the goods. Nobody will keep the amount recovered from the clandestinely removed goods in bank, therefore amount seized was not the sale proceeds of the goods which have been cleared clandestinely. In these circumstances, seizure of Indian currency is not correct. Consequently the same cannot be confiscated. In these circumstances, the confiscation of the Indian currency is set aside. Further, I find that for the goods seized at their business premises valued at ₹ 20,27,870/-, the redemption fine was imposed of only ₹ 25,000/- whereas the goods valued at ₹ 91,58,842/-, the redemption fine imposed is ₹ 300,000/- which is highly excessive - Decided partly in favour of assessee.
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2015 (5) TMI 697
Stay application - Waiver of pre deposit - Doctrine of merger of order - Held that:- Tribunal's order [2015 (5) TMI 568 - CESTAT NEW DELHI] directing the appellant to deposit an amount of ₹ 12.00 Crores within a period of four weeks had been upheld by Hon'ble Chattisgarh High Court [2015 (5) TMI 567 - CHHATTISGARH HIGH COURT] and an SLP against the Hon'ble High Court's order had been filed. The Apex Court while dismissing the SLP [2015 (5) TMI 601 - SUPREME COURT] had directed that the amount to be deposited within a period of four weeks from the date of the order. In view of this position, we are of the view that it is the Judgement of Hon'ble Delhi High Court in the case of CCE vs. Lindt Exports reported in [2011 (9) TMI 609 - DELHI HIGH COURT ] which would be applicable and as such the Tribunal has no jurisdiction to modify its order dated 03.06.2014, which in our view, stands merged with the judgment of Hon'ble Chattisgarh High Court, Hon'ble Allahabad High Court in a recent judgement dated 12.11.2014 in case of Kissan Gramudyog Sansthan vs. CCE, Kanpur reported in [Kissan Gramudyog Sansthan] has held that once the appeal against Tribunal's stay order under Section 35F of the Central Excise Act, 1944 is dismissed by a High Court, the Tribunal's stay order mergers with the High Courts order and the Tribunal cannot modify its stay order and extend the period of pre-deposit. - Decided against assessee.
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Indian Laws
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2015 (5) TMI 691
Default in payment of bills for supply of the product - Appointment of an Arbitrator - Application under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Supply agreement contained a specific dispute resolution clause - Held that:- We have heard Shri Chinmoy Pradip Sharma, learned counsel for the petitioner. In spite of due service of notice, the respondent is not represented. Though the petition could have been heard ex parte on the date fixed i.e. 27th April, 2015, a further opportunity was granted to the respondent and the case was adjourned to 11th May, 2015. Even on 11th May, 2015 there is no representation on behalf of the respondent. In the above circumstances, there is no option but to proceed ex parte against the respondent in the matter. On a consideration of the averments made in the present arbitration petition and the oral submissions advanced by the learned counsel for the petitioner, it is clear that disputes and differences have arisen between the parties with regard to the entitlement of the petitioner to receive the amount of bills raised by it i.e. USD 3,212,000. Clause D12 of the Supply Agreement, which according to the respondent, governs the matter specifically provides for reference of all disputes and differences to “the arbitration authority under provisions of the Arbitration and Conciliation Act, 1996”. In the above view of the matter, there can be no manner of doubt that the petitioner is entitled to have its claim to receive the aforesaid amount of the bills adjudicated by an Arbitrator appointed by the Court under Section 11(6) of the Act. Consequently, we allow the present petition and appoint Shri Justice B. Sudershan Reddy, a former judge of this Court as the Arbitrator and request him to resolve the dispute between the parties at an early date. The terms of appointment of Shri Justice B. Sudershan Reddy as the Arbitrator will be settled in consultation with the parties. - Application for appointment of Arbitrator accepted.
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