TMI Tax Updates - e-Newsletter
May 23, 2016

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

TMI SMS

• Exemption with respect to Services provided by Govt./ local authority to a business entity with a turnover up to Rs. 10 lakh is restricted

  ---

• The officials of the petitioner summoned by the respondent shall be entitled to be accompanied by the advocate(s) during investigations - HC

  ---

Articles

1. Anamoly - Pre-deposit

   By: CA Akash Phophalia

2. INDIRECT TAX DISPUTE RESOLUTION SCHEME (PART-1)

   By: Dr. Sanjiv Agarwal

Notifications

Income Tax

1. S.O.1511 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Karuna Trust, Ahmedabad

2. S.O.1510 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Ramakrishna Mission Sevashrama, Mathura, Uttar Pradesh

3. S.O.1509 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Sevalaya, Kasuva, Tamil Nadu

Service Tax

4. 26/2016 - dated 20-5-2016 - ST

Seeks to amend Notification No. 25/2012- Service Tax dated 20.06.2012

Circulars / Instructions / Orders

Customs

1. 20/2016 - dated 20-5-2016

Amendment to Ch IX of the Customs Act, 1962 – Insertion of Section 58A – clarification regarding transitional provisions relating to Duty Free Shops/Ship stores/Airline Stores/Diplomatic Stores

Highlights / Catch Notes

Income Tax

• Capital Gains Deduction: Full Investment in New Home Qualifies, Even with Mixed Funding, u/s 54.

  Case-Laws - AT : When the capital gain is assessed on notional basis, whatever amount is invested in the new residential house within the prescribed period u/s 54, the entire amount invested, should get benefit of deduction irrespective of the fact that the funds from other sources are utilised for new residential house - AT
  Visit to Get Source

  ---

• Taxpayer's Incorrect Deduction Claim u/s 11; Assessing Officer Must Recalculate Income Per Legal Standards.

  Case-Laws - AT : The assessee wrongly claimed deduction U/s 11 as he did not have registration U/s 12AA of the Act but the ld Assessing Officer has to calculate the real income on the basis of material available with him and is duty bound to assess the correct income as per law. - AT
  Visit to Get Source

  ---

• Income from Selling Shops/Flats Classified as Long-Term Capital Gains, Not Business Income, u/s 50C.

  Case-Laws - AT : Sale of shops/flats - Capital gain v/s business income - There was no intention of the assessee to enter into real estate business. The assessee has also shown sale consideration on the basis of valuation of stamp authority U/s 50C - Thus, the assessee rightly claimed long term capital gain on sale of shops/flats during the year under consideration. - AT
  Visit to Get Source

  ---

• Section 206C(1C) of Income Tax Act: Toll Fees by NHAI Not Subject to Collection if Not for Consolidated Fund.

  Case-Laws - AT : TCS u/s 206C - If no amount of toll fees is recovered by NHAI to be remitted to the consolidated fund of India or otherwise then naturally the impugned deposits of toll fees by OPPL is out of the ambits of the provisions of section 206C(1C) of I.T. Act. Otherwise on the payment of Re.1/- we have already held that it is not practicable to invoke the provisions of section 206C(1C). - AT
  Visit to Get Source

  ---

• Section 80IB(10) Deduction Valid Without Completion Certificate for Assessee.

  Case-Laws - AT : Merely because the completion certificate was not received by the assessee, the deduction allowable under section 80IB(10) of the Act cannot be denied. - AT
  Visit to Get Source

  ---

• Income from Software Sales to Indian Entity Not Classified as "Royalty" for Tax Purposes.

  Case-Laws - AT : TDS - In the present case, income towards sale of software to the Indian “AE” cannot be treated as “Royalty”. - AT
  Visit to Get Source

  ---

• Assessee's Rs. 50.12 Crores Consideration Deemed Taxable: Includes Cash and Shares Settled by MTAIC.

  Case-Laws - HC : Assessee had received only ₹ 32.48 crores in terms of the Scheme and the balance amount of ₹ 17.64 crores was discharged by MTAIC by directly issuing fully paid shares to the shareholders of the Assessee - entire consideration is taxable in the hands of assessee - HC
  Visit to Get Source

  ---

• Assessee's Sale of School and Non-Educational Activities Deny Tax Exemption u/s 11.

  Case-Laws - HC : Educational activity - Once it is found that the assessee had sold away the school and what was carried on by them later do not qualify, they cannot claim exemption u/s 11 - HC
  Visit to Get Source

  ---

• Court Upholds Addition of Undisclosed Income Based on Search Evidence, Rejects Retraction of Statements by Assessee.

  Case-Laws - HC : Addition of undisclosed income on the basis of loose sheets found at the time of search - Though there was a retraction of those statements by the assessee, those retractions were rightly rejected on the appreciation of the return filed - HC
  Visit to Get Source

  ---

• Taxpayer Penalized for Evading State Taxes by Misrepresenting Income as Gift u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Levy of penalty - assessee has tried to deprive the State by showing taxable income as not taxable in the garb of Gift. Such an action justifies invoking of the provisions of section 271(1)(c) - AT
  Visit to Get Source

  ---

• Income Additions from Unverified Papers in Searches Not Sustainable in Tax Cases, Rules Court.

  Case-Laws - AT : Additions made on the basis of papers found in the course of search - additions made on the basis of papers found in the course of search without bringing any corroborative evidence is not factually sustainable - AT
  Visit to Get Source

  ---

• Milk Supplies to Distributors Ruled as Sale, Not Requiring Tax Deduction at Source u/s 194H.

  Case-Laws - AT : TDS u/s 194H - Supply of milk and milk products by assessee to the distributors was a sale agreement on principal to principal basis not liable for deduction of tax at source u/s 194H - AT
  Visit to Get Source

  ---

• Courses in Travel & Tourism Approved by Civil Aviation Deemed Charitable u/s 2(15), Qualify for Tax Exemptions.

  Case-Laws - AT : Charitable activity / Purpose or not - Section 2(15) - The specific courses conducted by the assessee admittedly pertaining to travel and tourism industry were having the approval of Director General, Civil Aviation Department - Exemption u/s 11 & 12 allowed - AT
  Visit to Get Source

  ---

Customs

• Crude Palm Kernel Oil Eligible for Duty-Free Import Under Notification No. 46/2002-Cus.

  Case-Laws - AT : Crude Palm Kernel oil is covered under the duty free replenishment certificate - benefit of Notification No. 46/2002-Cus allowed - AT
  Visit to Get Source

  ---

• Court Decides Pre-License Exports Don't Count Towards Obligations Under Advance Licence.

  Case-Laws - HC : Export effected by the petitioner prior to the date of issuance of Advance Licence cannot be considered in fulfillment of Export Obligation under the Advance Licence - HC
  Visit to Get Source

  ---

• Appellants Face Penalties for Fraudulently Obtaining DEPB License u/s 113(i) and Section 114 of Customs Act.

  Case-Laws - AT : DEPB license obtained through fraudulent means - the appellants have knowingly committed offence as specified under Section 113(i) and made themselves liable for penalty u/s 114 of the Customs Act - AT
  Visit to Get Source

  ---

• CBEC Clarifies Transitional Rules for Duty-Free, Ship, Airline, and Diplomatic Stores Impacting Tax and Compliance.

  Circulars : CBEC issues clarification regarding transitional provisions relating to Duty Free Shops/ Ship stores /Airline Stores/ Diplomatic Stores
  Visit to Get Source

  ---

Indian Laws

• High Court Affirms Right to Legal Representation for Petitioner's Officials in CCI Proceedings.

  Case-Laws - HC : The officials of the petitioner summoned by the respondent shall be entitled to be accompanied by the advocate(s) in a matter before the CCI - HC
  Visit to Get Source

  ---

Service Tax

• CESTAT Rules for Assessee: Amended Section 78 Applies, Reduces Penalty from 100% to 50% for Recorded Transactions.

  Case-Laws - AT : Whether the unamended provision of Section 78 according to which 100% penalty or amended provision of Section 78 according to which 50% penalty is applicable in the case where transactions are recorded in the books of the assessee, when the offence was taken place during the period of unamended Section 78. - CESTAT applied the amended provisions in favor of assessee - AT
  Visit to Get Source

  ---

• Penalty Waived as Appellant Shows Reasonable Cause for Not Reversing Cenvat Credit Due to Exempted Service Ambiguity.

  Case-Laws - AT : In view of lack of clarity on the inclusion of Trading Activity under exempted service w.e.f. 1/4/2011, the appellant has shown a reasonable cause for non reversal of the Cenvat credit attributed to the trading activity. - Penalty waived - AT
  Visit to Get Source

  ---

• Appellant qualifies for immunity u/s 73(3) of the Finance Act after paying service tax and interest promptly.

  Case-Laws - AT : Penalty - the appellant, immediately after pointing out by the department regarding non-payment of service tax, discharged the service tax along with interest before issuance of show cause notice. Therefore, the appellant is clearly entitled for the immunity provided under Section 73(3) of the Finance Act, 1994 - AT
  Visit to Get Source

  ---

• Service Tax Credit Allowed for Cell Phone, Courier, Travel Agent, and Telephone Operator Services Per Case Laws.

  Case-Laws - AT : Allowability of service tax credit - Input credit relates to cell phone service availed, courier service as well as service of travel agent availed and telephone operator services allowed - AT
  Visit to Get Source

  ---

• Small Businesses Exempt from Service Tax on Govt Services, Except for Property Rental, Insurance, Transport, and Postal Services.

  Notifications : Exemption with respect to Services provided by Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year is restricted and shall not available in case of renting of immovable property, speed post, express parcel post, life insurance and agency services, transport of goods or passengers and services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport.
  Visit to Get Source

  ---

Central Excise

• Refund Claim Denied: Duty Paid Twice, Suo-Motu Credit Not Allowed Without Formal Refund Application.

  Case-Laws - AT : Rejection of refund claim - duty was paid twice, once from cash and again from cenvat credit - suo-motu credit of duty paid excess / twice can not be taken & a refund claim was required to be filed - AT
  Visit to Get Source

  ---

• Revenue Claims Furnace Oil Unnecessary for Manufacturing; Lacks Evidence to Support Allegations Against Appellant's Usage.

  Case-Laws - AT : Cenvat Credit - The allegation of the revenue that the furnace oil is not required for manufacturing by the appellant but the same was available in the factory premises of the appellant, in that circumstances, the revenue is failed to prove their case by cogent evidence to show that the furnace oil has not required by the appellant - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2016 (5) TMI 881
  Application of Section 10(22) rejected - Held that:- We do not think that the assessee can take advantage of the etymological meaning of the word 'education' to gain the benefit of Section 10(22). In the philosophical sense, every acquisition of knowledge can be termed as 'education'. One learns even by experience. Every form of entertainment can also be termed as 'education'. That is what is contemplated by Section 10(22). The expression 'educational institution' is ejusdem generis with the word 'university' appearing in Section 10(22). Therefore, the first question of law is to be answered against the assessee. As a consequence, the second question of law as to whether the interpretation given by the Tribunal to the objects clause of the assessee, was correct or not, should also be answered against the assessee. The bylaws of every society or the deed of trust of every trust contains innumerable clauses relating to the objects of the society of the trust. These objects do not make the institution an educational institution existing solely for educational purposes. Therefore, the second question of law is also answered against the assessee. Computation of capital gains on the transfer of the school - This question is raised on the basis that the transfer took place on 17.5.1996 and that therefore, it could be adjudicated for assessment only during the previous year relevant to the assessment year 1997-98 - Held that:- All that the assessee claimed even in their miscellaneous petitions under Section 254(2) was that the assessee was compelled to sell the school to the SBOA Trust, since they were unable to meet their obligations to the Canara Bank. In the miscellaneous petitions, the assessee further claimed that they handed over the school with all the students and teachers to SBOA school with a condition to clear the dues of the Canara Bank and the dues of Shri Ram Capital Trust Private Limited. Since SBOA School insisted for a registered sale deed to enable them to get a loan from the State Bank of India, the assessee executed a sale deed. Such a plea was taken for the first time by the assessee, in the miscellaneous petitions under Section 254 for recalling the earlier order. Therefore, we hold on the third substantial question of law that the assessee cannot be allowed to change its stand now. - Decided against the assessee Rejection of exemption contemplated in terms of Section 11 - Held that:- To qualify for the exemption under Section 11, the income should have been derived from property held under trust wholly for charitable or religious purposes and only to the extent to which, such income is applied to such purposes in India. Once it is found that the assessee had sold away the school and what was carried on by them later do not qualify, they cannot claim exemption under Section 11 - Decide against assessee

  ---

• 2016 (5) TMI 880
  Computation of capital gains arising from transfer of an undertaking by the Assessee to a new company in terms of a scheme of arrangement - Assessee had received only 32.48 crores in terms of the Scheme and the balance amount of 17.64 crores was discharged by MTAIC by directly issuing fully paid shares to the shareholders of the Assessee Held that:- If we look at the Scheme in the context in which it belongs, it would be plainly evident that it is an instrument for effecting sale of the Assessee’s assets (the Panasonic Division) where the owner selling its assets (the Assessee) has called upon the buyer to pay a part of the consideration to a third party (its shareholders). Indisputably, the seller would be entitled to the entire consideration for the sale and the fact that at its instance a part of the consideration is diverted to a third party would not absolve the seller from recognizing the entire consideration. We are unable to accept Mr Kapoor's contention that merely because part of the consideration for the transfer of the Panasonic Division had been paid to the shareholders of the Assessee by issue of fully paid-up shares, the same could not be stated to have been “received or accruing” in favour of the Assessee. The expression “accruing” as used in Section 48 of the Act is synonymous to entitlement. If the Assessee is entitled to the consideration, then the same must be taken into account for the purposes of computation of capital gains in terms of Section 48 of the Act. The consideration for the transfer of Panasonic Division is real and not hypothetical. The fact that the Assessee had agreed for part of the same being directly received by its shareholders would not make the consideration unreal in its hands; the income sought to be taxed cannot be stated to be hypothetical. - Decided in favour of the Revenue and against the Assessee.

  ---

• 2016 (5) TMI 879
  Addition of undisclosed income on the basis of loose sheets found at the time of search - Held that:- In the light of the definition of the expression 'document' and in the light of admissibility of the said document based upon the statements made by the assessee, the additions made by the assessing officer cannot be found fault with. Though there was a retraction of those statements by the assessee, those retractions were rightly rejected on the appreciation of the return filed on 27.9.2002 where admittedly, a particular amount was shown as undisclosed income. Therefore, the retraction is of no avail in the light of section 132(4) and its Explanation. In view of the above, the question of laws are answered in favour of the appellant/Department

  ---

• 2016 (5) TMI 878
  Penalty under section 271(1)(c) - non genuineness of the gift - Held that:- The assessee had not, during the penalty proceedings, filed any explanation about the genuineness of the gift. The FAA surprisingly states that the AO had not made any new material or did not make inquiries. In our opinion, he was shifting the burden of proof from the assessee to the AO. We agree that assessment and penalty proceedings are different proceedings, but it does not mean that the assessee is absolved of filing an explanation rather a plausible explanation about the claims made by him in the return that have been questioned by the AO. Explanation 1 to Sec. 271(1)(c) of the Act, raises a presumption of concealment, when a difference is noticed by the AO, between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. The Hon’ble Supreme Court in MAK Data (P. ) Ltd. 's case (2013 (11) TMI 14 - SUPREME COURT), has held that the assessee should first show by cogent and reliable evidence that there was neither concealment of particulars of income nor furnished inaccurate particulars of income. Because of the failure of the assessee to file ‘cogent and reliable evidence’ we are of the opinion that the order of the FAA has to be reversed. Secondly, penalty proceedings are not criminal in nature and the rationale behind the provisions of section 271(1)(c)of the Act is to compensate the State exchequer for the revenue loss caused due to commission or omission of an assessee. In the case before us, the assessee has tried to deprive the State by showing taxable income as not taxable in the garb of Gift. Such an action justifies invoking of the provisions of section 271(1)(c)of the Act. - Decided in favour of revenue

  ---

• 2016 (5) TMI 877
  Additions made on the basis of papers found in the course of search - Held that:- The finding of the learned CIT(A) that the additions of 54,63,230/- for A.Y. 2006-07 and 9,17,200/- for A.Y. 2007- 08, in the case of hand are factually unsustainable since the said scored out entries on the right side of the diary are not in the handwriting of Shri Narendra Jain (partner of the appellant firm) who has disowned knowledge of their context and that they were recorded by Shri Kartik, a former employee of the assessee firm who was not examined by the AO. In these factual circumstances and placing reliance on the decisions of the ITAT, Pune Bench in Prabhat Chandra S. Jain (2015 (11) TMI 402 - ITAT PUNE ) and S.K. Gupta (1998 (2) TMI 164 - ITAT DELHI-C ), in support of the proposition that additions made on the basis of papers found in the course of search without bringing any corroborative evidence is not factually sustainable, we uphold the order of the learned CIT(A) in holding that the additions of 54,63,230/- in A.Y. 2006-07 and 9,17,230/- in A.Y. 2007-08 are unwarranted and unjustified Allowance of telescopic benefit - Held that:- As find from the record that the learned CIT(A) after factually examining the claims of the assessee, and the findings of the AO has correctly upheld the AO’s action in treating the proportionate sale proceeds of 36,81,818/-, including 26.40 lakhs said to have been received from Shri Nazar, as income of the assessee for A.Y. 2006-07 and at the same time allowing the assessee’s plea that telescoping is to be allowed in respect of income of 26.40 lakhs admitted by the assessee in A.Y. 2007-08, on account of sale consideration received from Shri Nazar from out of the addition of 36,81,818/- under section 68 of the Act in A.Y. 2006-07. We find that apart from raising the above grounds, the learned D.R. for Revenue has not been able to bring on record any material evidence to controvert the above findings of the learned CIT(A), and with which we concur. In this factual matrix of the case, as discussed above, we find no reason to interfere with or deviate from the factual findings recorded by the learned CIT(A) and therefore uphold his order allowing telescoping of 26.40 lakhs in this year on account of income of 26.40 lakhs admitted by the assessee in A.Y. 2007-08 on account of sale consideration received from Shri Nazar.

  ---

• 2016 (5) TMI 876
  TDS u/s 194H - whether payment of milk purchase price difference to the milk societies (DCS and PDCS) is a payment of commission/brokerage liable for deduction of tax at source? - Held that:- The Coordinate Bench has considered the identical issue in A.Y. 2008- 09 and 2011-12, which is squarely applicable on the facts and circumstances of the case for the years under consideration as the assessee’s transaction with distributor is sale. The risk and reward is with the distributor. The transaction is principal to principal basis. The distributor is not the agent of the assessee. From the side of assessee, no amount has been paid in form of commission or brokerage and the case laws referred by the assessee are squarely applicable. Supply of milk and milk products by assessee to the distributors was a sale agreement on principal to principal basis not liable for deduction of tax at source u/s 194H of the IT Act, 1961. See Ajmer Zila Dugdh Utpadak Sangh Limited V. ITO [2009 (7) TMI 827 - ITAT JAIPUR-B] and ACIT (TDS) V. M/s Jaipur Zila Dugadh Utpadak Sahakari Sangh Limited [2011 (9) TMI 1080 - ITAT JAIPUR] - Decided in favour of assessee TCS U/s 206C - Non collection of tax at source on sale of scrap - Held that:- The Coordinate Bench has considered this issue in earlier years and held that this scrap has not been generated during the manufacturing process and circular noted by the ld CIT(A) is also not applicable on the given facts and circumstances of the case. Accordingly, we delete the addition made by the ld Assessing Officer and confirmed by the ld CIT(A) - Decided in favour of assessee

  ---

• 2016 (5) TMI 875
  Denial of exemption u/s 11 duration of the course; the course fee and the assessee’s explanation and instead of examining and considering the same which evidently was filed and made available he has instead jumped to the conclusion based on decisions whose facts also he failed to consider. The specific courses conducted by the assessee admittedly pertaining to travel and tourism industry were having the approval of Director General, Civil Aviation Department of the Government of India and meeting specific requirements and following a course program as approved and recognized A perusal of the finding arrived at by the CIT(A) makes it clear that the details of the various courses conducted by the assessee alongwith rules and regulations adhered to by it depicting its operating procedures were all considered and examined in extenso and neither these findings have been upset in the present proceedings nor anything upsetting these has been referred to by the Revenue in the Remand Report filed by the AO before the CIT(A). We further find that the objections of the AO that the courses conducted by the assessee do not have recognition from the Govt. and further that there is no regulatory Authority to exercise check on its fee structure is no longer a valid objection as not only considering the aforesaid decision but also considering the approvals/recognition of sector specific competent Authority like DGCA at the national level and IATA at the global level who are presumed to have given their giving approvals as per industry standard requirements by way of their Agreements/approvals etc on a year to year basis after due care and diligence, considering the adherence of standards and requirements to be met in the industry specific skill/qualification requirements. Considering the peculiar facts and circumstances of the case and the position of the law which is further found supported by the decision of the Hon’ble Bombay High Court in the case of DIT vs. Women’s India Trust (2015 (4) TMI 976 - BOMBAY HIGH COURT ) the challenge posed by the revenue that exemption u/s 11 & 12 of the Act was not warranted is found to be not sustainable. - Decided in favour of assessee

  ---

• 2016 (5) TMI 874
  Exemption under section 54F - whether the deemed consideration under section 50C of the I.T. Act is to be taken into consideration or the consideration mentioned in the sale deed only is to be taken into consideration? - Held that:- The ultimate object and purpose of section 50C of the I.T. Act is to see that the undisclosed income of capital gains received by the assessee should be taxed and that the law should not encourage and permit the assessee to peg down the market value at their whims and fancy to avoid tax, but when the capital gain is assessed on notional basis, whatever amount is invested in the new residential house within the prescribed period under section 54 of the I.T. Act, the entire amount invested, should get benefit of deduction irrespective of the fact that the funds from other sources are utilised for new residential house Since the facts in the case of the assessee herein are similar to the facts in the case of Raj Babbar (2013 (1) TMI 237 - ITAT MUMBAI ), respectfully following the decision of the Coordinate Bench, we do not see any reason to interfere with the order of the CIT(A).

  ---

• 2016 (5) TMI 873
  Disallowance of exemption claimed U/s 10(23C)(iiiad)/ 10(23C)(iiiab) - Capital Subsidy grant received from State Government of Rajasthan - whether treated as Revenue Receipt and included in calculation of total receipts for calculation of the exemption limit prescribed u/s 10(23C)(iiiad)? - Held that:- It is undisputed fact that the assessee is a charitable institution covered U/s 10(23C)(iiiab) as well as 10(23C)(iiiad) of the Act. The assessee substantially financed by the State Govt., which is also not part of the total receipts as held by the various ITATs as well as Hon'ble High Courts. The actual receipt for the purposes of Section 10(23C)(iiiad) is to be earned out from the educational activity. The case law referred by the assessee are squarely applicable. We have considered view that the capital subsidy received from the State Govt. is not part of total receipts. The assessee wrongly claimed deduction U/s 11 as he did not have registration U/s 12AA of the Act but the ld Assessing Officer has to calculate the real income on the basis of material available with him and is duty bound to assess the correct income as per law.

  ---

• 2016 (5) TMI 872
  Sale of shops/flats - Capital gain v/s business income - Held that:- The assessee had constructed area in form of shops and flats. Originally this land was belonged to his grandmother Rani Sahiba Smt. Rajkanwar Nathawat Ji, who made agreement in 1995 with the builder namely M/s Krisha Pratap & Co. Pvt. Ltd. to build and construct the mall. They made agreement to share the constructed area on 50-50 basis. All the cost was borne by the builder. This land has not been shown as a stock in trade in the books of account by the assessee. The assessee is not in the activity of regularly purchasing and selling the flats/shops and it is not organized business activity of the assessee. There was no intention of the assessee to enter into real estate business. The assessee has also shown sale consideration on the basis of valuation of stamp authority U/s 50C of the Act. Thus, the assessee rightly claimed long term capital gain on sale of shops/flats during the year under consideration. Addition n account of deduction U/s 24(a) - Held that:- The assessee, undisputedly, has disclosed the rental income from shops of mall under the head income from house property. The deduction U/s 24(a) is mandatory, therefore, we uphold the order of the ld CIT(A).

  ---

• 2016 (5) TMI 871
  Non collection of TCS from Toll Plaza - TCS u/s 206C(1C) - determination of amount payable - whether TCS was to be deducted on amount payable by the concessionaire was only Re. 1/- per year - Held that:- On plain reading of section 206C, it leaves no room for doubt, that the quantum of the amount on which the tax is to be collected at source by the seller has to be only that amount which is to be paid to the seller as price at the time of sale and cannot by any stretch of reasoning be held to include that amount which has not been recovered or paid directly to the seller. Later on by an insertion of sub-section (1C) the toll plaza has also been included. Therefore, by the insertion of toll plaza, isco facto the term “seller” is to be read in that context also. In the light of the discussion made herein in a situation when the concessionaire has retained the toll fees collected and the said concessionaire was under obligation to make the payment of Re.1/- annually to NHAI then on this very very minimal as well as insignificant amount the provisions of section 206C(1C) cannot be applied because it is not practicable. As far as the doubts raised by the Revenue Department that the deposits made in the escrow account would have been used by NHAI to remit to the “consolidated fund of India”, this fact can easily be verified from the said escrow account. If no amount of toll fees is recovered by NHAI to be remitted to the consolidated fund of India or otherwise then naturally the impugned deposits of toll fees by OPPL is out of the ambits of the provisions of section 206C(1C) of I.T. Act. Otherwise on the payment of Re.1/- we have already held that it is not practicable to invoke the provisions of section 206C(1C). - Decided against revenue

  ---

• 2016 (5) TMI 870
  Claim of deduction under section 80IB(10) - non receipt of completion certificate - Held that:- No reason in the disallowance made by the authorities below in denying deduction under section 80IB(10) of the Act. The assessee before us has furnished evidence to the effect that the individual flat owners have occupied the respective flats, against which municipal taxes have been levied by the State authorities and even electricity connections have been made to the flats, against which the charges have been paid. Further, the assessee had applied for completion certificate before due date i.e. 17.03.2008 and merely because the completion certificate was not received by the assessee, the deduction allowable under section 80IB(10) of the Act cannot be denied. We hold so. Accordingly, we direct the Assessing Officer to allow the claim of assessee in this regard. - Decided in favour of assessee.

  ---

• 2016 (5) TMI 869
  Adjustment made by the TPO on account of AMP expenses deleted Disallowance u/s 40(a)(i) - Held that:- The export commission was neither royalty nor fees for technical services and as such the assessee was not required to deduct tax at source on payment of export fee and thus, no disallowance under section 40(a)(i) could be sustained. Respectfully following the order of the Coordinate bench in assessee’s own case where no change in facts or circumstances has been pointed out, the additions made by applying section 40(a)(i) are directed to be deleted. Disallowance of relocation expenses on transfer of factory of the assessee company from Rudrapur to Greater Noida - Held that:- Expenses on relocation and shifting are revenue in nature and would be allowed as business deduction and the disallowance made by the AO on this count is deleted. Disallowance of provision for slow moving inventory - Held that:- Where the provision is made on a scientific and reasoned basis year after year and such provision would be reduced completely when the obsolete stock is written off in subsequent years, no disallowance can be made on the assessee company. provision for slow moving inventory would be allowed as revenue deduction and therefore, the disallowance made in the assessment order for A.Y. 2010- 11 on this account has to be deleted.

  ---

• 2016 (5) TMI 868
  Ad hoc disallowance of processing of material and handling charges - Held that:- It is undisputed fact that the assessee’s expenses under the head processing and handling had gone up twice compared to preceding year but during the year under consideration, a new product namely Nickel Plated Dument Wire had been started by the assessee, for which the assessee had taken services from its sister concerns namely M/s Gem Electro Mechanical Pvt. Ltd. and M/s New Age Alloys Pvt. Ltd. The assessee’s sale has slightly gone down but in quantity production has gone up. This fact has not disputed by the revenue even GP as well as NP has gone up compared to preceding year. The assessee’s new product was got manufactured from M/s Gem Electro Mechanical Pvt. Ltd. who has facility of platting and oxidizing, which was not available with the assessee. It was claimed by the assessee that it is an import substitute item and no one was manufacturing in the India. Therefore, the assessee had to pay these charges to it to get the services done. The remaining payments were made to other sister concern namely M/s New Age Alloys Pvt. Ltd. for wire drawing, annealing and spooling processing work made per kg whereas platting and oxidizing, the payments were made in per meter. The assessee did not have sufficient capacity for drawing, annealing and spooling, therefore, he had outsourced this work to M/s New Age. The assessee’s manufacturing activities are under the supervision of the excise department. The ld Assessing Officer had not brought on record any evidence that payments made to the sister concerns were more than fair market value, as such no comparable case has been considered by the Assessing Officer or ld CIT(A). The recipient company also paying maximum marginal rate of tax, as such there is no revenue loss. A similar claim was also allowed in subsequent years by the Assessing Officer even in scrutiny assessment. - Decided in favour of assessee Addition of staff welfare expenses - Held that:- There is a substantial increase in the staff welfare expenses during the year under consideration but the assessee has justified the increase under this head. There is an agreement between the assessee and the worker regarding staff welfare is to be incurred on the employee. Accordingly, the assessee had provided uniform and shows during the year under consideration. The assessee has produced all the bill and vouchers but the Assessing Officer made disallowance on surmises and conjecture, which is not justified. Therefore, we delete the addition confirmed by the ld CIT(A).- Decided in favour of assessee Disallowance under the head prior period expenses - Held that:- AR of the assessee had not been able to prove these expenses were crystallized during the year under consideration. - Decided against assessee Addition on account of additional interest income from bank on the basis of TDS certificate - Held that:- It is undisputed fact that the interest has been shown as income by the assessee in earlier year on FDRs and these FDRs were encashed by the appellant, therefore bank has charged interest on premature FDRs. The AR tried to explain on the basis of evidence that how the bank had debited the interest expenses on FDRs. Accordingly, this issue is required to verify from the record with reference to disclosure of the interest income of FDRs and claiming interest expenses on premature of the FDRs. It appears that the liability is pertained to F.Y. 2007-08 whereas the assessee has claimed this expenditure in A.Y. 2009-10. Therefore, Assessing Officer is directed to verify the claim of the assessee and decide the issue as per law. Accordingly, this ground of appeal is set aside to the Assessing Officer for denovo.

  ---

• 2016 (5) TMI 867
  Addition on account of transfer pricing adjustment - determination of the most appropriate method - non availability of comparable uncontrolled transaction - computation of adjusted gross margin of distributors - Held that:- RPM is quite a useful method where the goods purchased by the Indian AE are sold without doing any value enahncement. We, therefore, approve the application of RPM as the most appropriate method. The term ‘uncontrolled transaction’ has been defined in Rule 10A(a) to mean: ‘a transaction between enterprises other than associated enterprises whether resident or nonresident.’ When we substitute the definition of the term ‘uncontrolled transaction’ in Rule 10B(1)(b)(ii), the relevant part would read that the resale price of the enterprise is reduced by the amount of normal gross profit margin accruing in a comparable transaction between enterprises other than the associated enterprises. ALP of an international transaction of purchase of goods is always determined on the basis of the gross profit margin on the resale price charged in a comparable transaction between enterprises other than the associated enterprises. It cannot be anything else. Only when some gross profit margin in comparable transaction between two independent enterprises is available, sub-clause (ii) of Rule 10B(1)(b) works. The existence of a comparable uncontrolled transaction giving gross profit margin accruing from purchase and resale of similar goods is an essential condition for determining the ALP under RPM. Adverting to the facts of the instant case, we find from the calculation of the ALP under RPM as extracted above that the TPO has taken arm’s length margin of GP on sales at 50%, which has been considered for determining the ALP of this international transaction at 4.24 crore leading to transfer pricing adjustment of 1.05 crore. This 50% arm’s length gross profit margin on sales has been taken by the TPO on the basis of what the assessee stated before the Customs Authorities in a generalized manner. The TPO has not brought on record any comparable uncontrolled case and thus has not eventually determined gross profit margin from purchase and resale of similar goods in a comparable uncontrolled transaction. In the absence of availability of any comparable uncontrolled transaction, we cannot approve the action of the AO in making such an addition, as the same has not been done in the manner prescribed under the rule. As we have upheld the application of RPM as the most appropriate method and found the view point of the ld. CIT(A) in deleting addition to be untenable, we consider it expedient to set aside the impugned order and remit the matter to the file of TPO/AO for a fresh determination of the ALP - Decided in favour of assessee for statistical purposes.

  ---

• 2016 (5) TMI 866
  Penalty levied u/s.271(1)(c) - undervaluation of WIP - Held that:- Merely because the assessee company in the instant case has accepted the addition in the quantum assessment proceedings which had attained finality , will not make the assessee automatically liable for penalty u/s 271(1)(c) of the Act whereby proper and bonafide explanations backed by sound reasoning and declarations as set out above are furnished by the assessee company , and more-so the revenue impact in quantum additions is tax neutral as the closing WIP of relevant previous year shall be opening WIP of immediately succeeding financial year and any adjustment to closing WIP has to be necessarily followed by corresponding adjustment to opening WIP of immediately succeeding financial year making it tax neutral whereby no prejudice is caused to the Revenue. Moreover, the claim of the assessee company is being made by following Accounting Standard AS-2 which requires closing inventory to be valued at cost or net realizable value whichever is lower and the closing WIP being valued on net realizable value which was lower than the cost in the instant case . The ratio of the decision of Hon’ble Supreme Court in the case of Reliance Petro products Private Limited [2010 (3) TMI 80 - SUPREME COURT ] is squarely applicable in the instant case. We do not find any infirmity in the well reasoned and detailed order dated 04-01-2013 passed by the learned CIT(A) deleting the penalty levied by the A.O. and we uphold the same. - Decided in favour of assessee

  ---

• 2016 (5) TMI 865
  Depreciation on license fees paid for the use of computer software @25% of written down value - rejection of assessee’s claim of depreciation @ 60% on “License Fees" - Held that:- Matter restored back to the file of the Assessing Officer to examine the question whether the expenditure on computer software was capital or revenue in the light of the criteria laid down above after giving an opportunity of being heard to the assessees. If on such examination, the Assessing Officer would come to the conclusion that the expenditure was capital expenditure, then the question regarding allowing depreciation would be decided in accordance with the principles laid down in the subsequent paragraphs. - Decided in favour of assessee for statistical purposes.

  ---

• 2016 (5) TMI 864
  Reopening of assessment - Non Providing opportunity of being heard - determination of capital gain and/ or imposition of tax and interest with reference thereto - Held that:- We are of the considered view that without going into the merits of the case, proper opportunity of being heard is required to be provided to the assessee by the AO, who being a quasi judicial authority was under obligation to follow the rule of natural justice. Resultantly, cross appeal filed by the revenue is also not sustainable because when the assessment order is not sustainable in the eyes of law, the impugned order passed by the CIT (A) is also a nullity. Consequently, present appeal filed by the assessee is hereby allowed for statistical purposes

  ---

• 2016 (5) TMI 863
  Disallowance u/s. 14A - Held that:- It is admitted fact that the assessee has diverted interest bearing funds to the subsidiaries and the Bench asked a specific question with the ld.A.R to show whether there is any case wherein decided the similar issue in favour of assessee, when the assessee has diverted interest bearing funds to the subsidiaries while invoking the provisions of the section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962. For which the ld.A.R expresses his inability. Hence, in our opinion when the assessee diverted the interest bearing funds to subsidiaries, and there is no commercial expediency, provisions of the section 14A r.w.Rule 8D is applicable - Decided against assessee

  ---

• 2016 (5) TMI 862
  Rejection of CUP as most appropriate method for determining ALP - Held that:- We find that while adjudicating the appeals for the assessment years 2002-03 and 2003 -04, the Tribunal had rejected the cup method adopted by the TPO, that he had not proposed adjustment in the subsequent years i. e. assessment years 2010-11 to 2012-13. - Decided against revenue Adjustment on account of allocation of e-connectivity cost - TPA - Held that:- The assessee had entered into agreement with its AE for econnectivity, dt. 1. 1. 2004, to received SAP services, e-connectivity services and people soft services, that in the TP study the cost incurred by the AE in providing services by the AE. s to the assessee on the basis of number of users, that the Operating margin of the assessee from all other transaction was higher than of the comparables, that the assessee claimed that transaction was at Arm’s Length because of the cost allocation methodology adopted by AE, that the TPO made an adjustment of 4. 73 crores by determining the ALP as Nil, that he held that the assessee did not furnish copy of the agreement or any proof of requesting for such services, that he further held that assessee did not demonstrate as to how the cost benefited it, that it did not provide any proof of any exact number of users and their allocation, that the DRP called for a remand report from the TPO after admitting additional evidence, that DRP directed the TPO/AO to delete the proposed adjustment. We are of the opinion that TPO is not empowered to determine the ALP of an IT at NIL, that in the case under consideration he had made adjustment without adopting any of the prescribed methods. It is a fact that the assessee had satisfied all the necessary tests for the purpose of availing services from its AE. In these circumstances, we hold that the approach of the assessee in benchmarking the transaction under the head availing e-connectivity services under combined transaction approach was at arm’s length. Considering the above, we confirm the order of the DRP and decide ground against the revenue. Treatment to expenditure incurred for e-connectivity - Revenue or capital expenditure - Held that:- The expenditure incurred by the assessee on econnectivity is incurred for day-to-day running of its business without creating any asset and therefore same is allowable as revenue expenditure. - Decided in favour of assessee

  ---

• 2016 (5) TMI 861
  Release of a sum seized while transporting cash from the customers of HDFC Bank - entire cash amount seized was attributed to the income of Mr. R.K. Seth - Held that:- There was failure on the part of the Department to discharge its basic responsibility of tracing the source of the cash. The Department was aware that Mr. Seth, one of the employees of SIPL had not accompanied the armoured vehicle. He reached the police station subsequent to the seizure and that too upon the insistence of the JDIT that someone from SIPL should be present before the JDIT to make a statement. In the circumstances, there was no occasion for the Department to assume that Mr. Seth himself was carrying the cash. To compound the error, the Department refused to admit to the mistake even when the full facts were placed before it. SIPL was performing a perfectly legitimate and legal task of collecting and transporting cash from the customers of HDFC to the Gandhi Nagar branch of HDFC. The entire service was being performed under a valid agreement. The HDFC also issued a confirmation letter. Despite this the Department made no enquiries with the HDFC Bank. Inexplicably the Investigation wing of the Department abdicated its basic responsibility and simply passed the buck to the AO. Mr R K Seth was only an employee of SIPL. He was not carrying the cash as was wrongly presumed by the AO. His statements offered a plausible explanation which could easily be verified. The Court fails to understand how the said sum could ever be added to the returned income of Mr Seth. The Court agrees with the learned counsel for SIPL that the indifferent and callous approach of the Department's officials has resulted in grave injustice to SIPL. It has had to have its account debited for the entire amount and the seized cash remained in the Department's account. The Court has, in the circumstances, no hesitation in holding the actions of the Department, in refusing to release the cash seized from the armoured vehicle to the Petitioner, to be invalid and illegal. The Department is directed to return to SIPL the entire seized amount of 60,48,748 together with interest @ 12% per annum from the date of seizure of the cash i.e., 9th January 2012 till the date of return which in any event shall take place not later than two weeks from today. The Department will also pay SIPL 1 lakh as costs within the same period. - Decided in favour of assessee

  ---

• 2016 (5) TMI 860
  Admission of additional evidence by ITAT - Held that:- When Rule 18(4) is read with Rule 29 of the aforementioned Rules, there would not be any difficulty in holding that in terms of Rule 29, the additional evidence can also be produced before the Tribunal. In this view of the judgment rendered by this Court earlier in the aforementioned case, the first objection of the learned counsel for the appellant may not detain us any further. Insofar as the fact as to whether it is the assessee who has commissioned the Chartered Engineer and secured a report or the purchaser of the sale indulged in by the assessee who commissioned a Chartered Engineer, also may not be really relevant. It is now for the assessing authority to apply his mind independently as to whether for upholding the claim of the assessee that it has indulged in "slump sale" or not, the same is required to be examined and answered. For that very purpose, the Tribunal has remanded the matter for consideration afresh. As a matter of rule of prudence, whenever an appellate forum remands a case back for consideration afresh, the primary authority or the original authority has to proceed afresh in the matter by treating the same as a clean slate basis. Now, for achieving that objective, the appellate forum could be recording a statement that "uninfluenced in any manner by the observations contained in the remand order, the matter be decided afresh". Not that its absence would make any difference when every quasi-judicial or judicial authority is required to decide a question afresh, he has to independently apply his mind to the facts and circumstances of the case and the materials available on record. But however, to put the matters beyond any pale of doubt, we proceed further and clearly make an observation by saying that the assessing authority shall now proceed further in the matter without in any manner being influenced by the observations contained in the order of remand passed by the Tribunal. Opportunity of leading evidence afresh to the assessee, denied - We find that no such attempt was made by the Tribunal and it has not been done either. Therefore, the assessing authority will provide a fair and reasonable opportunity to the assessee to produce any evidence, all the more so, to the contra, insofar as the additional evidence let in by the Department/Revenue and consider the same before taking a final decision in the matter

  ---

• 2016 (5) TMI 859
  Penalty under Section 271 (1) (c) - bogus purchases - Held that:- Having examined the impugned order of the ITAT and having considered the submissions of the learned counsel for the Revenue, the Court is unable to discern any legal infirmity in the analysis or conclusion reached by the ITAT. Once the assessment order of the AO in the quantum proceedings was altered by the CIT (A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT (A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271 (1) (c) of the Act. - Decided in favour of assessee

  ---

• 2016 (5) TMI 858
  Taxation of income from Short Term Capital Gain and Long Term Capital Gain at special tax rate u/s 111(A) & 112 - business of activities in shares and securities - Held that:- The intention of the circular is clearly to reduce the litigation and maintain consistency. The submissions of the Ld. DR that the transaction was very much voluminous and, therefore, Assessing Officer by taking into the modus operandi of the assessee treated the same as business income but the Assessing Officer has not given the day to day transaction in its entire order and that for how much period the assessee was holding the shares and selling the same is missing in the assessment order. In-fact, in earlier assessment years, the Revenue allowed the Long Term Capital Gain to the assessee and thus the same was treated as capital gain during the earlier years by taking cognizance of circular dated 4/2007 dated 15/6/2007. The assessee has also shown Short Term Capital Gain in this particular year. The case law which was cited by the Ld. DR is not applicable to the facts of the present case because in that case the shares were held for only two to three days period but the assessee’s situation in the present case is totally different. The CIT (A) has taken into cognizance of these factors and rightly treated the same as short term capital gain and in fact CIT(A) has taxed certain amount after examining all the transactions related to share trading. The assessee’s profit and loss account clearly states that the assessee was having two portfolios. Therefore, this ground of Revenue is dismissed. - Decided against revenue Disallowance u/s 14A - CIT(A) restricted the disallowance to 10% of the exempted income - Held that:- The Assessment Year involved in 2007-08 therefore Rule 8D is not applicable in this year as per the ratio laid down in the judgment of Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company (2010 (8) TMI 77 - BOMBAY HIGH COURT ). In our opinion, the CIT(A) has rightly taken into cognizance that the said judgment also held that where investment has been made and the income from the same was exempt from tax thus, the A.O is duty bound to make the disallowance u/s 14A by adopting a reasonable basis. The CIT(A) has rightly restricted the disallowance to the extent of 10% of exempted income. Thus, this ground of the Revenue is also does not survive.- Decided against revenue

  ---

• 2016 (5) TMI 857
  Levy of penalty u/s. 271(1)(c) - Held that:- There was neither furnishing of inaccurate particulars of income nor concealing the particulars of income. The assessee had filed all the details of transaction in the return of income itself. There was difference of opinion between the AO and the assessee as to under which head the sale proceeds of transaction should be taxed. The assessee had offered income under the head ‘capital gain’ whereas the AO taxed the same as ‘business income’. In our opinion, in such cases, no penalty should be levied u/s. 271(1)(c ) of the Act. Confirmation of an addition by Appellate Authority do not justify levy of penalty u/s. 271(1)(c), as the assessment proceedings and penalty proceedings are different so decision taken during the assessment stage would not and should not lead to automatic levy of concealment penalty. It has to be seen that what explanation was offered by the assessee while filing reply to the penalty notice. After going through the explanation filed by the assessee, we are of the opinion that it was one of the plausible explanation. The issue of taxing a particular income under the head business income or income arising of capital gains is a debatable issue. In our opinion no penalty should be levied in such circumstances. Therefore, upholding the order of the FAA, we decide the effective ground of appeal against the AO. - Decided in favour of assessee

  ---

• 2016 (5) TMI 856
  Applicability of explanation to Sec. 73 - Held that:- The ambit of sub-section (1) of section 73 is only to prohibit the setting off of a loss which has resulted from a speculation business, save and except against the profits and gains of another speculation business. In order to determine whether the exception that is carved out by the Explanation applies, the Legislature has first mandated a computation of the gross total income of the company. The words "consists mainly" are indicative of the fact that the Legislature had in its contemplation that the gross total income consists predominantly of income from the four heads that are referred to therein. Obviously, in computing the gross total income the normal provisions of the Act must be applied and it is only thereafter, that it has to be determined as to whether the gross total income so computed consists mainly of income which is chargeable under the heads referred to in the Explanation. Consequently, in the present case, the gross total income of the assessee was required to be computed, inter alia, by computing the income under the head of profits and gains of business or profession as well. Both the income from service charges and the loss in share trading would have to be taken into account in computing the income under that head, both being sources under the same head. The assessee had a dividend income (income from other sources). The Tribunal was justified, in coming to the conclusion that the assessee fell within the purview of the exception carved out in the Explanation to section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of section 73(1). See CIT Vs. Middleton Investment & Trading [2014 (1) TMI 1410 - CALCUTTA HIGH COURT ]

  ---

• 2016 (5) TMI 855
  Premium amount receipt - Nature of receipt - revenue’s view is that the same is a business receipt chargeable under the head Income from business - assessee’s contention is that it is a capital receipt not taxable at all, even though it initially offered the same as goodwill chargeable under the head Capital Gains - Held that:- Joint Venture would give benefits to the new company due to the large scale presence of Birla Group in the Indian Markets, since the Birla group is also well versed with the nuances of the Indian Markets. Hence, in our view, the impugned premium amount of 12.92 crores is nothing but a payment given by M/s Sunlife in exploit the business expertise held by M/s Birla group, which is nothing but a payment towards “good will” only. We have taken this view on account of one more reasoning, i.e., in the case of joint venture agreements, normally the parties to the agreement share the responsibilities in proportion to their respective share. The responsibilities shared would depend upon the core expertise of each of the parties and the difference, if any, is usually compensated through the variation in the profit sharing ratio. Under this principle of business, a prudent businessman would not agree to give any amount to a novice on account of strategic relationship. In fact, the all joint venture agreements are various types of strategic relationship only and they are normally entered for carrying an activity jointly by using expertise of each of the parties. M/s Sunlife Canada is aware of the strengths of M/s Birla group and hence the impugned amount has been given by it as premium for establishing strategic relationship. The undisputed fact remains that M/s Sunlife Canada is a new entrant in the Indian markets and it would take considerable time for it to under the complexities of the Indian market. On the contrary, M/s Birla group is an established player with interests in various types of financial markets and other field. Further, it has got branches all over the India and hence it is specifically provided in the joint venture agreement that the business expertise in all the fields shall be contributed by the Birla group to the Joint venture. Hence, the Birla group was considered to have an edge over M/s Sunlife, Canada. The business expertise, experience or edge, in our view, is considered as good will. Accordingly, we are of the view that the impugned payment of 12.92 crores received by the assessee is in the nature of goodwill only and hence we uphold the decision rendered by Ld CIT(A) on this issue. - Decided in favour of assessee Disallowance of bad debts claimed - Held that:- AO as well as Ld CIT(A) took the view that this claim is not allowable as the assessee has not disclosed the same as income in any of the years. In the first round of proceeding, the ITAT has taken the view that the facts relating to this claim are identical with the claim relating to Mafatlal securities Ltd and accordingly allowed the claim. We notice that the assessee has given the advance to various parties for purchase of securities in the course of carrying on business of non-banking finance company. Accordingly, we are of the view that this claim is allowable as trading loss, if not as bad debts. Accordingly we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the claim. Disallowance of claim relating to TDS certificates - Held that:- Non-allowance of TDS credit for want of TDS certificates can be claimed as normal business loss. Consistent with the view taken therein, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow this claim also. Disallowance of share issue expenses claimed u/s 35D - Held that:- We notice that this disallowance was confirmed by the Tribunal relating to AY 1994-95 and also in AY 1995- 96 on the reasoning that the provisions of sec. 35D are not applicable to a finance company and further the same is capital in nature in view of the decision of Hon’ble Supreme Court rendered in the case of Brooke Bond India Ltd (1997 (2) TMI 11 - SUPREME Court ).

  ---

• 2016 (5) TMI 854
  Addition for the amounts received against allotment of the share capital - Held that:- In the present case, the ld. CIT(A) observed that nothing was apparent from the assessment order that any adverse material existed in the assessment folder for the relevant period, on the other hand, claim of the ld. DR is that the additions were made by the AO on the basis of the documents found during the search. Thus, there is contradiction in the facts. On merit also the ld. CIT(A) without bringing on record the figures & statistics came to the conclusion that the companies had enough resources to make the impugned investment. Therefore, by keeping in view the aforesaid facts, we are of the opinion that the issues under consideration require a fresh adjudication. As the principles of natural justice demand that opportunity is to be given to both the parties, we, therefore, deem it appropriate to set aside these issues raised vide additional grounds to the file of the ld. CIT(A) to be adjudicated expeditiously in accordance with law after providing due and reasonable opportunity of being heard to both the parties. The assessee is also directed to co-operate and not to seek any unwarranted or undue adjournment.

  ---

• 2016 (5) TMI 853
  Addition on account of agriculture income as income from other sources - Held that:- It is undisputed fact that ownership as well as agricultural activities done on own land and on leased land are not in dispute. Only the mater remained to be adjudicated that the agricultural income earned by the assessee. The ld CIT(A) has considered all the submissions made by the assessee, therefore, we confirm the part addition out of addition confirmed by the ld CIT(A) at 10 lacs in pace of 13,41,674/-. - Decided in favour of assessee partly Addition U/s 68 - Held that:- The assessee filed requisite evidences/affidavits before the ld Assessing Officer at the time of assessment proceedings. Additional evidences were also filed before the ld CIT(A), on which he has taken remand report from the Assessing Officer. The assessee has proved identity of the depositor, genuineness of the transactions and creditworthiness of the creditor. All the credits in the bank account were out of deposits made with these parties. There are copies of the registered deeds, which cannot be doubted and payments were received by the assessee through banking channel. When the assessee transferring the immovable property through these agreements, there is no reason to doubt on the amount received by the assessee. Therefore, we reverse the order of the ld CIT(A). - Decided in favour of assessee.

  ---

• 2016 (5) TMI 852
  Addition on account of undisclosed income u/s 69 - CIT(A) has not provided any opportunity to the assessee before using coterminous power given under the law to him - Held that:- Recently, the Hon'ble Supreme Court in the case of Andaman Timber Industry Vs. Commissioner of Central Excise [2015 (10) TMI 442 - SUPREME COURT] has held that not allowing the assessee to cross examine the witnesses by adjudicating the authority, though the statement of those witnesses were made the basis of impugned order is a serious flaw, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. This to be borne in mind that the order of the CCE was based upon the statement given by two witnesses. - Decided in favour of assessee.

  ---

• 2016 (5) TMI 851
  Penalty levied u/s 271(1)(c) - addition u/s 68 - Held that:- Assessing Officer imposed penalty under this Section on the basis of finding given in assessment order only no separate inquiry has been conducted to disprove the explanation furnished by the assessee. The case laws relied upon by the assessee are squarely applicable on the facts of the case. There is no material on record to show that surrendered income was concealed income of the assessee. Therefore, we have considered view that the ld CIT(A) was not justified in confirming the penalty U/s 271(1)(c) of the Act. Accordingly, we reverse the order of the ld CIT(A). - Decided in favour of assessee

  ---

• 2016 (5) TMI 850
  Unexplained cash credit u/s 68 - Held that:- The assessee had brought the loan balances from these three parties to Nil as on 31.3.2009 in its books of accounts. It is not in dispute that the assessee was indeed carrying on money lending business in the past and had derived interest income thereon. This is quite evident from the copy of audited balance sheets filed by the assessee for the years ended 31.3.1998 and 31.3.1999, wherein the interest income is admitted by the assessee as income from business. It is also not in dispute that the revenue had also accepted the same as income from business in the past. It is not in dispute that the assessee had continued to carry on its money lending business. It is also not in dispute that the lending to these parties were made in the ordinary course of money lending business of the assessee. Since the assessee has claimed that the monies have been realized from these parties, it is estopped from proceeding against these parties from making any recoveries. It is also not in dispute that the assessee had brought the balances of these parties to Nil as on 31.3.2009 in its books of accounts. Hence the assessee is entitled to claim the balances of these three parties as a trading loss u/s 28 of the Act. Thus we find lot of force in the alternative argument of the assessee that the non-recovery of the loan dues , according to Learned AO, should be allowed as a deduction as regular business loss from money lending activity , which in turn would only go to increase the business loss of the assessee for the year under appeal and the same would in turn be available for set off against the alleged income from other sources u/s 68 of the Act. Hence in any case, no addition could be made in the hands of the assessee - Decided in favour of assessee

  ---

• 2016 (5) TMI 849
  Existence of PE in India - Held that:- Respectfully following the order in assessee’s own case for the assessment year 2008-09, the issue agitated is decided against the assessee by holding that the services PE of the assessee is established in India. Charging of interest u/s 234B is decided in favour of the assessee and for the remaining issue relating to charging of interest u/s 234A, 234C and 234D of the Act, we hold that it is consequential in nature.

  ---

• 2016 (5) TMI 848
  Levy of penalty u/s. 158BFA(2) - Held that:- As additions have been upheld on estimation basis no penalty is leviable in the present case - Decided in favour of assessee

  ---

• 2016 (5) TMI 847
  Deduction u/s. 54B - Held that:- The assessee had merely created his right in the land by entering into an agreement for purchase with M/s. Saldol Industries and obtained power of attorney dated 06-06-2005 in his name. In the balance sheet as on 31-03-2007 the above mentioned land is shown as M/s. Saldol Industries (Advance paid). At the time of sale on 15-02-2008 the assessee transferred the land to the purchaser to M/s. MTC Business Pvt. Ltd. on the basis of the power of attorney. Thus, the intention of the assessee was never to retain the land and use it for agricultural purposes. The ld. Counsel has not been able to rebut the aforesaid findings of the authorities below. Since, there is no sale of any capital asset, there is no question of allowing deduction u/s. 54B of the Act to the assessee. - Decided against assesseegr33222112 Addition u/s 68 - Held that:- The assessee has not been able to explain the amount. Neither the assessee was able to prove the identity of the creditors/lenders nor their creditworthiness. The onus was on the assessee to prove the genuineness, identity and the creditworthiness of the transactions and the creditors. Except for furnishing the name and address of the persons no further details were given by assessee. Thus, the assessee was not able to discharge his onus. The ld. Counsel for the assessee has not been able to controvert the well reasoned and detailed findings of the Commissioner of Income Tax (Appeals) in rejecting the claim of the assessee - Decided against assessee

  ---

• 2016 (4) TMI 1134
  Validity of block assessment - Held that:- CIT(A) ought to have taken the panchnama dated15/12/1997 as the last panchnama within the meaning explanation 2 to section 158BE of the Act. Contrary to this, the Ld. CIT(A) has upheld the findings of the AO treating the so called panchnama dated 06/01/1998 as the last panchnama and also held the assessment order passed on 31/01/2000 as a valid order. Hence, in our considered opinion, the impugned order passed by the ld. CIT(A) is apparently erroneous and contrary to the settled law. We, therefore, hold that in the present case since the limitation period had started, for passing block assessment order, on 15/12/97, the assessment order passed on 31/01/2000 is barred by Block Assessment period: 1988-89 to 1998-99 limitation. Accordingly, we set aside the impugned order being not sustainable in law and allow all the effective grounds of the appeal of the assessee.

  ---

• Customs

• 2016 (5) TMI 893
  Crude Palm Kernel oil -Whether it is vegetable fat and whether benefit of Notification No. 46/2002-Cus can be extended or otherwise - Revenue contended that Crude Palm Kernel oil is not used as raw material, but it is an intermediate for manufacturing biscuits, it is not a raw material, hence not covered by DFRC licence - Held that:- the issue is squarely covered by the decision of Tribunal in the case of Good Health Agro Tech Pvt. Ltd [2010 (11) TMI 1013 - CESTAT BANGALORE], where the identical issue was considered and held that Crude Palm Kernel oil is covered under the duty free replenishment certificate. - Decided against the revenue.

  ---

• 2016 (5) TMI 892
  Imposition of penalty - Section 114A and 112 of the Customs Act, 1962 - Diversion of imported polyester fabrics/cotton fabrics/HDPE - False declaration of manufacturer-exporter as Sahil industries - Held that:- the adjudicating authority has considered all the evidences on record and therefore, correct in setting aside or dropping of the proceedings initiated for imposition of penalties on Shri Kiran Choksi and Shri Pragnesh Jain. - Decided against the revenue

  ---

• 2016 (5) TMI 891
  Imposition of penalty - 100% default in fulfillment of export obligation - export obligation period of the petitioner expired on 21st June, 2001 and the petitioner not submitted export details in the requisite manner supported with the bank certificate/ documents. Held that:- nothing on record leads to the conclusion least suggest that export obligation has indeed been fulfilled. Rather the case of the petitioner is of having fulfilled the export obligation even prior to the date of issuance of the Advance Licence. I fail to see how the exports effected prior to the date of Advance Licence, imposing obligation to effect export within 18 months thereof, can be said to be against the Advance Licence. A perusal of the Advance Licence shows that against the column “category of licence” the words “Quantity Based Advance Licence” were entered. Customs Notification No.48/99-Customs, dated 29th April, 1999 and 50/2000-Customs and 51/2000-Customs, both dated 27th April, 2000 providing that in order to ensure proper monitoring and utilisation of inputs imported against Advance Licences, a DEEC book is issued along with Advance Licence and at the time of import and export against the Advance Licence entries are made in the DEEC book by Customs to keep record of import/export made against it. Obviously the petitioner, even before the Advance Licence was issued, could not have the DEEC book and it is clear as sky that the exports even if made were not against the Advance Licence and the petitioner is clearly in violation of its obligation thereunder and there is no reason for interference with the orders impugned. Therefore, it is clear that the export effected by the petitioner prior to the date of issuance of Advance Licence cannot be considered in fulfillment of Export Obligation under the Advance Licence. The whole case of the petitioner was premised on said edifice and fails. There is no error in the factual finding of the Statutory Authorities, of the petitioner having not fulfilled the Export Obligation. Resultantly, the impugned demand is justified. - Decided against the petitioner

  ---

• 2016 (5) TMI 890
  Waiver of penalty - DEPB license obtained through fraudulent means were used by the various importers for importation of the goods - Confiscation of goods - Undue rebate of Central excise duty - malafide intention - Held that:- the appellants have declared the manufacturer as a supporting manufacturer and the goods so procured from the so called supporting manufacturer were not manufactured by the said manufacturer. If this is so then all the material particulars mentioned in the ARE-1 and subsequently declared in the shipping bills and other documents for export, obviously, do not correspond to the goods shown to have been manufactured by the supporting manufacturer. Therefore, the appellants have knowingly committed offence as specified under Section 113(i) and made themselves liable for penalty under Section 114 of the Customs Act. Shri Rajendra Doshi, General Manager of appellant co. has admitted in his statement, that he visited the factory of M/s. Siddhi Creative, who has issued the invoices and found that M/s. Siddhi Creative did not have the manufacturing unit. Knowingly this fact, he has mis-declared the bogus ARE-1s in the shipping bills. Thus, he was indulged in entire offence committed by the appellant colluding with M/s Siddhi Creative. It is found that the equal amount of penalty was imposed each on the appellant company as well as Shri Rajendra Doshi. Taking into consideration that Shri Rajendra Doshi is an employee of the appellant company equal amount of penalty of 5,03,000/- is very harsh. Therefore, in respect of Shri Rajendra Doshi, if the penalty is reduced from 5,03,000/- to 2,00,000/- the interest of justice can be met. - Decided partly in favour of appellant

  ---

• Corporate Laws

• 2016 (5) TMI 885
  Reduction of Equity Share Capital - Held that:- This Company Petition is ordered: (i) confirming the reduction of the paid-up equity share capital of the petitioner Company duly approved in terms of the Special Resolution passed by the equity shareholders at the Extra Ordinary General Meeting held at Mumbai on 4th December, 2015 ; (ii) approving the proposed Minute marked as Annexure-10; and (iii) not requiring the petitioner Company to add the words "and reduced" to its name as the last words thereof. A certified copy of the order including the minutes as approved be delivered to the Registrar of Companies within twenty one days and the notice of the registration order by the Registrar of Companies and of the said minutes as approved by this Court be published in one issue of English Daily Newspaper viz., Business Standard and in one issue of Tamil Daily Newspaper viz., Malai Malar within four weeks from the date of receipt of copy of the order.

  ---

• 2016 (5) TMI 884
  Winding up - failure to replay the loan and interest thereon - Inter Corporate Deposits (ICD) Agreement as a subject matter of Arbitration - Held that:- In view of the chronology of events in respect of arbitration application file under Section 11, it can be seen that the Respondents herein were not impleaded as party to the arbitration application and had not accepted that there was arbitration agreement between the Appellants herein and the Respondents and further had not accepted that the claim of the original Petitioners that the winding up Petition was required to be adjudicated upon by the Arbitrator. No decision was given by the Apex Court in the said application since it was withdrawn and, therefore, it cannot be said that the Apex Court had given any ruling on the basis of the judgment in Chloro Controls (India) Pvt. Ltd. vs. Severn Trent Water Purification Incorporated and Others (2014 (1) TMI 830 - SUPREME COURT ). The contention of Mr. Dwarkadas, the learned Senior Counsel appearing on behalf of the Appellants therefore cannot be accepted. The question No.(i) is therefore answered in the negative. Whether ICDs form part of the larger transaction of investment by the Urban Group in the joint venture business and therefore amounts under ICDs are payable only out of the profits earned by the joint venture business or whether it is a standalone transaction? - Held that:- The fact, that supplemental agreement which contained all these clauses of there being a web of transactions which was delivered by the Appellants to the Respondents was, in fact, not signed, which fact indicates that from the beginning understanding between the parties was that the ICDs were to be treated as separate and distinct transaction. Moreover, if the contention of the Appellants was to be accepted then there was no need to enter into new ICDs. The flow chart and the correspondence between the parties does not establish the case of the Appellants. Defence of the Appellants is neither bonafide nor substantial defence. We are of the view that finding given by the learned Single Judge on this issue is neither perverse nor unreasonable and, therefore, we do not propose to interfere with the said finding while exercising our appellate jurisdiction under Clause 15 of the Letters Patent Act. In our view, there was no suppression of fact by the Respondents/original Petitioners since the ICDs were separate and independent agreements. There was no occasion the Respondents/original Petitioners to mention the facts which, according to the Appellants, were allegedly suppressed. The question No.(ii) is therefore answered in the negative. Whether the impugned order directing the Company to pay a sum of 23,04,59,942/- amounts to a decree when the Company Court was not justified in passing the said Order? - Held that:- The learned Single Judge in his order has clearly observed that he is not deciding the case on merits but having held that the defence of the Company is sham and bogus has given an opportunity to the Company to pay the amount, failing which the Company Petition would stand admitted. The learned Single Judge therefore has not passed any decree in favour of the Respondents/original Petitioners. It is now well settled that such an order could be passed by the Company Court directing the Company to make payment of money to the petitioning creditor. Whether any interference is called for with the order passed by the learned Single Judge in an appeal filed under Clause 15 of the Letters Patent Act? - Held that:- This Court therefore while exercising its appellate jurisdiction under Clause 15 of the Letters Patent Act is not expected to interfere with the order passed by the learned Single Judge, unless it comes to the conclusion that the finding is perverse or is based on material which is not part of the record. As mentioned hereinabove we are of the view that finding of the learned Single Judge is neither perverse nor is based on the material which is not there on record. The question is therefore answered in the negative.

  ---

• 2016 (5) TMI 883
  Shares acquired in open offer - Whether SEBI by its communication was justified in permitting respondent no. 2 to 4 (‘acquirers’) to acquire shares of respondent no. 6 i.e. Network 18 Media 41.04 per share as against the open offer price of 5,68,430.32 per share claimed by the appellants? - Held that:- Appellants while challenging the decision of SEBI dated 17.11.2014 have deemed it fit not to challenge the decision of SEBI dated 09.02.2015, wherein, various allegations made by the appellants against the acquirers (respondent no. 2 to 4) and respondent no. 5 have been rejected. Without challenging the decision of SEBI dated 09.02.2015 appellants are not justified in making grievances against the acquirers and respondent no. 5 which are covered under the decision of SEBI dated 09.02.2015. In these circumstances, we decline to consider grievances of the appellants against the acquirers and respondent no. 5 which are covered in the decision of SEBI dated 09.02.2015. Argument of the appellants that SEBI by its communication dated 17.11.2014 ought to have approved the open offer price at 5,68,430.32 per share of the target company instead of approving the open offer price at 41.04 per share of the target company is without any merit. Under SPA dated 29.05.2014 acquisition of 60,000 shares of the six holding companies by respondent no. 2 from the Bahl Group constituted acquisition of 100% shares of the six holding companies, because as on that date the six holding companies had not issued any equity shares under the ZOCD agreement on account of respondent no. 2 not exercising its option to seek conversion of ZOCDs into equity shares of the six holding companies. Since acquisition of 100% shares of the six holding companies amounted to the respondent no. 2 indirectly acquiring the shares of the target company from the Bahl Group (through the six holding companies) which entitled the respondent no. 2 to exercise voting rights in the target company in excess of twenty-five percent, obligation to make public announcement of an open offer under the Takeover Regulations, 2011 got triggered. In such a case, if the gross amount paid under the SPA dated 29.05.2014 for acquisition of the shares of the six holding companies and RBHPL and consequently acquiring shares of the target company and TV 18 from the Bahl Group (through six holding companies) is segregated, it is seen that the respondent no. 2, under the SPA dated 29.05.2014 has paid much less than 41.04 per share of the target company. Therefore, in the facts of present case, decision of SEBI in approving the open offer price at 41.04 per share, by taking into consideration the amount invested under the ZOCD agreement cannot be faulted. Decision of the acquirers to consider the amount invested under the ZOCD agreement while determining the open offer price, led us to consider the clauses contained in the ZOCD agreement. Perusal of various clauses contained in the ZOCD agreement as more particularly set out in para 16 above, led us to believe, prima facie, that by executing ZOCD agreement on 27.02.2012 the Bahl Group sought to divest its control over the six holding companies and consequently sought to divest control over the target company and TV 18 without receiving any consideration which is rather strange and unusual to say the least. In our opinion, divesting the control over the target company in the facts of present case, prima facie falls within the meaning of the word ‘control’ defined under regulation 2(1)(e) of the Takeover Regulations, 2011. In such a case, whether the obligation to make a public announcement of an open offer under the Takeover Regulations, 2011 has triggered or not is a question which needs consideration. Although SEBI claims to have considered that question in its communication dated 09.02.2015, there is nothing in the said communication to suggest that various clauses contained in the ZOCD agreement have been considered by SEBI. In any event, since SEBI has failed to give reasons as to why various clauses contained in the ZOCD agreement do not amount to divesting control over the target company from the Bahl Group to the respondent no. 2, we in public interest direct SEBI to reinvestigate the question as to whether the respondent no. 2 in the guise of executing ZOCD agreement, indirectly acquired control over the target company without following the procedure prescribed under the Takeover Regulations, 2011 and if so, take appropriate action against the concerned person or persons for violating the provisions contained in the Takeover Regulations, 2011 so that such violations are not committed again. SEBI is directed to complete the reinvestigation and submit the action taken report to this Tribunal within six months from today.

  ---

• Service Tax

• 2016 (5) TMI 903
  Recovery of Service tax credit - Business Support Services - availed credit in respect of services received upto the Port of clearance and beyond that as well - Appellant argued that Ministry has clarified the issue vide its Circular No. 999/6/2015-CX dated 28.2.2015 - Held that:- so far as the services received up to the Port clearance, which is the place of removal for the purpose of manufacturer-exporter as per CBE&C Circular, the credit of Service Tax cannot be denied. However, in respect of services availed at the destination, which is not only beyond the place of removal but also outside India, the same is not admissible. Therefore, the demand for recovery of credit in respect of Terminal Handling Charges and Documentation charges is dropped. Rest of the demand in respect of Destination Terminal Handling Charges, Destination Documentation Charges & Destination Haulage and Shutout charges is confirmed. The penalty is also revised accordingly to the amount equal to the demand confirmed. Invokation of extended period of limitation - Demand - Held that:- in respect of services availed beyond the territory of India and obviously outside the place of removal, there can be no doubt regarding its inadmissibility. Availment of such credit is obviously without authority of law and mala fide. In such circumstances, extended period for the purpose of demand is correctly invoked. - Decided partly in favour of appellant

  ---

• 2016 (5) TMI 902
  Whether the unamended provision of Section 78 according to which 100% penalty or amended provision of Section 78 according to which 50% penalty is applicable in the case where transactions are recorded in the books of the assessee, when the offence was taken place during the period of unamended Section 78. Held that:- neither there was any intention to save the tougher provisions of Section 78 of the Act after 8/4/2011, nor Section 38A of the CEA is legally capable of saving the provisions of erstwhile Section 78 of the Act, as Section 78 is not piece of the delegated legislation. Further, the erstwhile Section 78 of the Act does not exist after 8/4/2011 in view of its substitution by new Section 78 of the Act. In the present case, the Principle of Beneficial Construction also does not allow imposition of higher penalty under the provisions of erstwhile Section 78 of the Act. Thus, the imposition of penalty equal to 50% of the Service Tax amount not paid, is found legal and proper. It is found that it was held that there is no saving clause in Section 38A of the Central Excise Act, for saving erstwhile Section 78 of the Finance Act, nor even anything provided in the amended Section 78 regarding the non applicability of the amended provisions in the case pertaining to the period prior to amendment. In such situation amended Section 78 shall clearly apply at the time of Adjudication of the show cause notice. Therefore, no infirmity found in the impugned order hence the same is upheld. As regard assessee's appeal for waiver of 50% penalty imposed under Section 78. It is found that admittedly the assessee have collected the service tax and not deposited to the Government exchequer. They have also not filed return in respect of the transaction for which service tax was collected and not deposited. In this fact, it is a clear case of suppression of fact with intent to evade payment of service tax, therefore no reasonable cause has been shown by the assessee in order to invoke the Section 80. The penalty was rightly imposed under Section 78 by the lower authority which is upheld. - Decided against the revenue

  ---

• 2016 (5) TMI 901
  Eligibility of refund claim - Rule 5 of Cenvat Credit Rules, 2004 - period April 2012 to June 2012 - time barred - Refund claim rejected by interpreting the amended provision as per Notification No. 18/2012-CE(NT) dated 17.03.2012, as though the FIRC received in the month of April 2012, the export has to be considered in the month of March 2012, hence there is no export during the quarter from April 2012 to June 2012. Held that:- it was not open for the Commissioner (Appeals) to go into the issues, which is not arising out of the adjudication order. Since, refund was rejected only on time bar and the appellant filed appeal challenging the same, the Commissioner (Appeals) was suppose to decide the appeal of the appellant only on the issue of time bar. The Commissioner (Appeals) has held that the refund is not time bar. As regard, the refund of 2,093/- the appellant have produced the corrected invoice wherein the correct address of the appellant is appearing. Therefore, it is found that refund of the appellant being filed within 1 year from the quarter ending is within time limit, hence they are entitled for the refund. - Decided in favour of appellant

  ---

• 2016 (5) TMI 900
  Waiver of penalty imposed under Section 78 of the Finance Act, 1994 and late fee - Section 80 ibid - Trading of goods i.e. sale of empty cartons - Availed Cenvat credit on input services used in or in relation to provision of said services as well as in trading of goods - No separate accounts for receipt, consumption and inventory of input and input services used for providing taxable and non-taxable services as envisaged in Rule 6(2) of the CCR, 2004 were made. Held that:- the reversal of credit was sought by the Revenue on the ground that the appellant is engaged in providing taxable service as well as non taxable activity i.e. Trading Activity. It is found that prior to 31/3/2011 there was no clarity whether the Cenvat credit in respect of services used for trading activity is required to be reversed or otherwise. Trading activity is included in the exempted services w.e.f. 1/4/2011 since then appellant was reversing the credit attributed to the Trading Activity. However for the period before 31/3/2011 appellant paid entire amount alongwith interest. In view of lack of clarity on the inclusion of Trading Activity under exempted service w.e.f. 1/4/2011, the appellant has shown a reasonable cause for non reversal of the Cenvat credit attributed to the trading activity. Therefore the penalty imposed under Section 78 by invoking Section 80 of the Finance Act, 1994 is waived of. - Decided in favour of appellant

  ---

• 2016 (5) TMI 899
  Waiver of penalty imposed under Section 78 of the Finance Act, 1994 and late fee - Section 80 ibid - Commercial Construction service - Delayed payment of Service tax - Held that:- the appellant is not a regular defaulter on payment of service tax. The liability arose only due to crossing the exemption limit of 10lakhs in the year 2011-12 and prior to that the appellant was working under exemption being the turnover remained below 10 lakhs. Therefore, no mala fide intention found on the part of the appellant. Moreover, the appellant, immediately after pointing out by the department regarding non-payment of service tax, discharged the service tax along with interest before issuance of show cause notice. Therefore, the appellant is clearly entitled for the immunity provided under Section 73(3) of the Finance Act, 1994. The appellant has also made out a case for waiver of penalty in terms of Section 80 of the Finance Act, 1994, therefore the penalty imposed under Section 78 of the Finance Act, 1994 is waived of. The order of the Learned Commissioner on the issue of late fee is maintained. - Decided partly in favour of appellant

  ---

• 2016 (5) TMI 889
  Allowability of service tax credit - Input credit relates to cell phone service availed, courier service as well as service of travel agent availed and telephone operator services - Held that:- so far as services related to cell phone, courier agency as well as telephone operator services are concerned, it is quite possible as to the use of those services for the purpose of manufacturing and commercial activity of the appellant. Therefore, CENVAT credit claimed in respect of service tax paid thereon are allowed. So far as travel agency service is concerned, appellant has not at all the explained the reason as to where such service was utilized and for what purpose and whether in relation to manufacture or not. Therefore, on this limited count, the matter is remitted to the adjudicating authority to satisfy him with the evidence as to the use of such service in taxable service activity or manufacturing activity. - Appeals disposed of

  ---

• Central Excise

• 2016 (5) TMI 898
  Demand of differential duty - Incorrect determination of assessable value of finished goods - failed to include the cost of drawing and design charges in the assessable value of the Seamless Rings - Appellant contended that after this Tribunal remanded the matter to the adjudicating authority they had filed a refund clai seeking refund of the duty deposited pursuant to this Tribunal's Order in disposing their stay application. Held that:- pursuant to this Tribunal's Order refund has been allowed by the Asst. Commissioner, albeit a pre-deposit refund, but, on scrutiny of the fact relating to drawing and design charges attributable to machined and unmachined rings. It is found that the Assistant Commissioner's order sanctioning refund on the same issue was not before either of the authorities below; thus, we are of the opinion that the matter be remanded to the Adjudicating authority for reconsideration of all issues afresh taking into consideration all the evidences placed by the Appellant before the Assistant Commissioner while claiming the refund, the evidences now produced before this Tribunal, and the evidences that would be produced during the course of denovo proceeding. - Appeal allowed by way of remand

  ---

• 2016 (5) TMI 897
  Imposition of penalty - Cenvat credit wrongly taken - M.S. Angle, M.S. Channel, G.C. Sheet and Welding Electrodes are used for making support structures for the capital goods - Held that:- there were conflicting judgments regarding admissibility of Cenvat Credit on such items before Larger Bench delivered judgments in the case of Vandana Global Ltd. Vs. CCEx., Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)]. When conflicting judgments with respect to an issue were available then it cannot be said that appellant had malafide intention to fraudulently take inadmissible credit. Accordingly, penalty imposed by the adjudicating authority, and upheld by the first appellate authority, is set aside. Classification - Copper Bonded Grounding Rods - Held that:- product manufactured by the appellant has undergone specific processes to make the same usable solely and principally for lightning arrester system. Reliance placed by the appellant on the drawback schedule published by the Department and export made by other appellants is not of any help because it is not coming out of the list of other exporters whether any specific processes were also undertaken by those exporters on the “Copper Bonded Grounding Rods” exported. Accordingly, it is held that classification of the goods manufactured by the appellant will be CETH 8538.00 as parts of lightning arrester. Period of limitation - Demand and imposition of penalty - appellant has exported the entire quantity of “Copper Bonded Grounding Rods” manufactured and would have been entitled to 100% rebate of duty paid on the finished goods - Held that:- there was no reason for the appellant to deliberately mis-declare the classification under CETH 7215.00. Thus, it cannot be said that appellant had any intention to evade payment of Central Excise duty. Demand is, therefore, required to be restricted within the period of one year from the date of issue of show cause notice and penalty imposed upon the appellant under Section 11AC is required to be set aside. - Decided partly in favour of appellant

  ---

• 2016 (5) TMI 896
  Whether amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 can be demanded under Section 11D of the Central Excise Act, 1944 when such amounts paid by the appellant are reimbursed by the Indian Railways Board - Held that:- in view of the decision of Larger Bench in the case of Unison Metals Ltd. Vs. CCE, Ahmedabad -I [2006 (10) TMI 171 - CESTAT, NEW DELHI] which was accepted by the Department as per CBEC Circular No. 870/8/2008-CX dated 16/05/2008, under Section 11D of the Central Excise Act, 1944 with respect to amounts reimbursed to the appellant, equivalent to the payments made under Rule 6 (3) (b) of the CENVAT Credit Rules, is not justified. - Decided in favour of appellant

  ---

• 2016 (5) TMI 895
  Rejection of refund claim - duty was paid twice, once from cash and again from cenvat credit - Whether suo-motu credit of 3,46,820/ taken by the appellant on 28/2/2011 was legally correct or appellant was required to file a refund claim under Sec 11B ibid - Held that:- by relying on the decision of Larger Bench of the CESTAT in the case of BDH Industries Ltd. Vs. CCE (Appeals) Mumbai-I [2008 (7) TMI 78 - CESTAT MUMBAI] whose decision was taken by relying upon the ratio laid by Supreme Court in the case of Mafatlal Industries Ltd Vs UOI [1996 (12) TMI 50 - SUPREME COURT OF INDIA], suo-motu credit of duty paid excess / twice can not be taken & a refund claim was required to be filed. However, as the issue was disputable & conflicting views were expressed by the court's penalty imposed upon the appellant is not justified and is set aside. Period of limitation - Whether “relevant date” for the purpose of calculating period of limitation under Sec 11B of the Central Excise Act 1944 should be calculated from 16/3/2012 (the date appellant paid the amount at the instance of the department) or 31/1/2011 when duty was paid twice by the appellant - Held that:- by respectfully following the ratio laid down by the CESTAT Ahmedabad in the case of Neptune Industries Ltd Vs CCE Ahmedabad [2011 (12) TMI 368 - CESTAT, AHMEDABAD] and Raj Petro Specialties P. Ltd Vs CCE Vapi [2009 (5) TMI 603 - CESTAT, AHMEDABAD], it is held that 'relevant date' for filing the refund claim in the existing facts will be 16/3/2012 and accordingly refund claim was not time barred. - Decided in favour of appellant with consequential relief

  ---

• 2016 (5) TMI 894
  Denied cenvat credit on the evidence as no entry of vehicle no. at ICC, the statement of transporter/suppliers and the expert opinion of NISST - Availed cenvat credit on Bura scrap and furnace oil without actual receipt in their factory premises - Held that:- merely, the vehicles in question were not entered at ICC does not dis-entitle to the appellant to avail cenvat credit on the inputs in question. As the appellant has produced the certificate issued by Excise & Taxation Officer of Punjab certifying that these goods have been received in their factory, therefore, the cenvat credit cannot be denied. The revenue has also relied on the various statements of supplier/transporters and also relied on the statement of Parveen Kumar Garg of M/s LOT initially made on 25.02.2005. This same was retracted by him on from next date 26.02.2005 which was despatched on 28.02.2005 thereafter, various summons have been issued to Sh. Praveen Kumar Garg but Sh. Praveen Kumar Garg never appeared nor the cross examination of Sh. Praveen Kumar Garg was granted in that circumstances, statement of Sh. Praveen Kumar Garg have no evidentially value in the light of the decision in the case of CCE, Delhi-I Vs. M/s Vishnu & Co. Pvt. Ltd. [2015 (12) TMI 593 - DELHI HIGH COURT]. Some kachaa ledger was also recovered from Sh. Praveen Kumar Garg, the same cannot be relied upon as evidence in the matter as these records have been recovered from third party whose cross examination has not granted to prove the truth, therefore these Kucha Ledger is not admissible as evidence. It is found that revenue has relied on the opinion obtained from the NISST to the extent that furnace oil is not required for the appellant for operation of their furnace or induction furnace. In fact the person gave the opinion have never visited the factory premises to the appellant and made a general statement. On the other hand, the appellant has produced the certificate issued by the chartered Engineer who has physically visited the factory and stated that furnace oil is required for the running of induction furnace of the appellant. The said chartered engineer was not cross examined by the revenue, on the contrary, he affirmed the contents of the certificate issued by him therefore the said certificate is having evidential value. In the absence of any contrary evidence produced by the revenue, the certificate issued by the chartered engineer who has visited the factory is admissible. Further, I find that during the course of investigation the furnace oil was found in stock of the appellant. The allegation of the revenue that the furnace oil is not required for manufacturing by the appellant but the same was available in the factory premises of the appellant, in that circumstances, the revenue is failed to prove their case by cogent evidence to show that the furnace oil has not required by the appellant. - Decided against the revenue

  ---

• CST, VAT & Sales Tax

• 2016 (5) TMI 887
  Condonation of delay - 120 days - Section 5 of the Limitation Act, 1963 - Whether the Ld. Tribunal was justified in not condoning the delay wherein there exists a sufficient cause for the same - Held that:- the appellant submitted that the order dated 31.1.2013 passed by the Assistant Excise and Taxation Commissioner (Mobile Wing) was received by the appellant on 14.5.2013 and the appeal was to be filed on or before 14.6.2013. The appellant after receiving the order handed over the complete file to Shri Subhash Chander Satija, Advocate, who at that time was undergoing the treatment of liver transplant at Chennai. He remained admitted there from 23.5.2013 to 7.8.2013 and ultimately died on 7.8.2013. The appellant collected the papers from the office of the said counsel after two months from his death and filed the appeal against the order, on 17.10.2013. The appeal was filed late by 120 days. In such circumstances, delay in filing the appeal before the DETC(C) was unintentional and due to the circumstances beyond the control of the appellant. The explanation furnished by the appellant appears to be plausible and, therefore, leads to the conclusion that there was sufficient cause for delay in filing the appeal. Once that was so, the delay in filing the appeal before the DETC(A) deserves to be condoned and appeal heard on merits by the DETC(A). Appeal allowed by way of remend

  ---

• 2016 (5) TMI 886
  Seeking directions to pass a fresh assessment order - Assessment order passed without providing the opportunity to the petitioner to prove their case, without verifying the books of accounts and also without conducting an enquiry as contemplated under Section 27(2) of the TNVAT Act - Held that:- this Court is of the considered view on the basis of the detailed findings of the respondent that it is crystal clear that the petitioner with an intention to evade payment of tax produced the bogus bills obtained from the so-called dealers, who were not in existence and that their registrations have been cancelled and as there was no transaction of goods, the respondent has passed the impugned order in a detailed manner, after affording an opportunity of being heard to the petitioner. In these circumstances, it is the duty of the petitioner to substantiate their claim by producing their books of accounts and to prove that the dealers from whom purchases were made were in existence and the goods were moved from the place of purchase to the place of the petitioner. Since the petitioner has miserably failed to prove the same, the respondent has passed the impugned order. Also the petitioner without availing the statutory remedy of appeal, has filed this writ petition, which is not maintainable in the absence of any violation of principles of natural justice or where the order under challenge is wholly without jurisdiction or the vires of the statute, is under challenge. Validity of impugned order - passed in violation of principles of natural justice - denied the opportunity of being heard to the petitioner - Held that:- on perusal of the averments, the contention of the learned Counsel for the petitioner that no opportunity of personal hearing was given to the petitioner cannot be accepted and in the well-considered opinion of this Court that the impugned order was not passed in violation of principles of natural justice. Further, when the alternative statutory remedy is available, the writ petition cannot be entertained, except for the enforcement of any of the fundamental rights or where there has been a violation of the principles of natural justice or where the order under challenge is wholly without jurisdiction or the vires of the statute is under challenge. Further, if effective and adequate opportunity was given to the dealers before passing the final assessment orders and principles of natural justice are not violated, the dealers can very well put to challenge the assessment orders of the authority concerned only before the appellate authority. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. Therefore, since the petitioner has approached this Court by way of this writ petition without exhausting the alternative statutory remedy of appeal, while dismissing the writ petitions, liberty is granted to the petitioner to approach the appellate authority, if they desire so, within 30 days from the date of receipt of a copy of this order. - Decided against the petitioner

  ---

• Wealth tax

• 2016 (5) TMI 888
  Urban land - nature of land - whether any error was committed by the learned Tribunal while coming to the conclusion that the subject land is not urban land - Held that:- The relevant Assessment Year in the present case is admittedly much before the coming in force of the said amendment and as such the distance of examining whether such land is urban land or not an aerial distance or crow's flight based on such amendment would not arise. There is no infirmity in the findings of the learned Tribunal in view of the said observations of the Division Bench of this Court.

  ---

• Law of Competition

• 2016 (5) TMI 882
  Entitlement to officials of the petitioner summoned to be accompanied by the advocate(s) - case before the Competition Commission of India (CCI) under Section 26(1) of the Competition Act, 2002 wherein the petitioner was one of the opposite parties in the case related to a cartel/bid-rigging; - Held that:- Section 30 of the Advocates Act confers on an advocate a right to practice inter alia before any person legally authorized to take evidence. The DG, by the Competition Act, has been legally authorized to take evidence. Once that is so, in the light of dicta aforesaid of the Division Bench in Kingfisher Airlines Limited supra, has but to be held that an advocate has a right to practice before DG and which right to practice would include accompanying a person who has been summoned before the DG for investigation. As before the Inspectors condemned or criticised, they must give the person a fair opportunity of correcting or contradicting what is said against the person. In my opinion the aforesaid is true of the role of the DG also and as a part of the duty to act fairly, DG ought to allow the officials of the petitioner summoned, if so desire, to be accompanied by Advocates. The fear of the DG of the Advocates is also not understandable. DG has full discretion to regulate its proceedings and ensure and control that the presence of the advocates does not delay its proceedings, as was the apprehension expressed. Sachs L.J., in his opinion in the aforesaid judgment observed that there must be “fairplay in action” though it may be “flexible” depending upon the situation so that the same does not result in “unsuitable procedures”. It was also noted that many men have deep rooted fear of becoming involved as defendants in actions arising out of their depositions and that it is difficult to even persuade a citizen to give evidence in road accident cases and that the Inspectors must in public interest take into account the fears of potential witnesses. Buckley L.J. in his opinion in the said judgment held that fair treatment required the Inspectors to give to persons being investigated the material against him and must put to him their proposed conclusions therefrom to give him fair opportunity to explain. The objection of the respondent CCI/DG, to the officials of the petitioners summoned by the DG being accompanied with an advocate is thus overruled and it is declared that the officials of the petitioner summoned by the respondent shall be entitled to be accompanied by the advocate(s).

  ---