Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 30, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction u/s 57 when there is no income how expenditure which is otherwise a proper expenditure can cease to be a such merely because there is no receipt of income, has not been explained by the revenue at all - HC
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Allowability of deduction u/s 10A - benefit of section 10A would also be available even when an existing unit get converted into a STPII unit - AT
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Deduction u/s 80IA(4) - Joint venture for the purpose of getting a contract substance is more important than the form and thus, failure to draw a separate agreement with NHAI does not disqualify the assessee from claiming the deduction - AT
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Minimum Alternate Tax - Banking company - section 115JB has been amended to bring all the Companies in its ambit vide Finance Act 2012, w.e.f 1.4.2013, however, the amendment is not applicable in the assessment year under consideration - AT
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Penalty u/s 140A(3) - assessee cannot escape from the liability to pay penalty as the intention of the legislature regarding payment of tax is to pay as you earn - relief already granted by CIT(A) is sufficient - AT
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Intangibles like goodwill are eligible for depreciation - non compete fee is in the nature of the payment and is now covered u/s 28(va) of the Act, it would be revenue in nature - AT
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ALP - The authorities have out rightly denied the adjustment on account of difference in capacity utilization the AO/TPO is directed to verify the details and allow the adjustment on account of difference in capacity utilization as per our observation - AT
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U/s 144C(5) AO has to pass the assessment order in conformity with the direction of the DRP AO cannot take a contrary view and exclude the amount of 'interest reversed' for the purpose of computing deduction u/s 10A - AT
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Treatment of income STCG or Business income Trading in shares and securities - It is only the net income so arrived at that would stand to be assessed as 'business income' - AT
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Where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities - AT
Customs
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Import of goods against advance license - DTA clearance of finished goods - respondent has first exported the goods. Against the said export, the respondent obtained advance license for import the raw material duty-free - demand set aside - AT
Service Tax
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Whether, the respondent is liable to service Tax on Flying Training Institute and Aircraft Engineering Institutes under Commercial Training or Coaching Services - demand set aside - HC
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Waiver of pre-deposit - demand based on ST-3 return - this would be a case of demand based on the ST-3 returns and therefore extended period cannot be invocable. - AT
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Waiver of pre-deposit - valuation - goods involved are in the nature of consumables and not in the nature of parts or materials which can be sold and then services provided - prima facie value of the goods to be inlcuded - AT
Central Excise
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CENVAT Credit - transformer which was sent for a short period were cleared on payment of duty and after the repair, the transformer was cleared, the standby transformer comes back to the factory and on which the applicants are taking credit of the duty paid on the same - prima facie case is in favor of assessee - AT
Case Laws:
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Income Tax
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2014 (5) TMI 940
Interpretation of Section 36 and Section 57 of the Act Allowability of deduction on bonds Held that:- Following Commissioner of Income-Tax, West Bengal III Versus Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME Court] - the words in Section 57(iii) speak of purpose of the expenditure and that is relevant - the argument of the revenue that the expenditure would disqualify for deduction only if no income results from such expenditure in a particular assessment year, but if there is some income, howsoever small or meagre, the expenditure would be eligible for deduction - the when a profit and loss account is cast in respect of any source of income, what is allowed by the statute as proper expenditure would be debited as an outgoing and income would be credited as a receipt and the resulting income or loss would be determined - how expenditure which is otherwise a proper expenditure can cease to be a such merely because there is no receipt of income, has not been explained by the revenue at all - Section 57(iii) does not require that the purpose must be fulfilled so as to be expenditure qualified for deduction - The language of the section does not admit of a construction that the expenditure shall be debited only if any income is made or earned - the Tribunal in the facts and circumstances had allowed the deduction, then, the appeal does not raise any substantial question of law Decided against Revenue.
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2014 (5) TMI 939
Revision u/s 263 - Liability to deduct TDS u/s 194C of the Act Payment made to transport contractors ITAT rejected the order of revision u/s 263 passed by the CIT remanding the matter back to AO - appeal of the assesseee against the original assessee is still pending before CIT(A) - Held that:- CIT had in fact by the order under Section 263 remanded the matter directing the Assessing Officer to make the assessment afresh which the CIT was entitled to do. The learned Tribunal erred in not taking into account the order passed by the CIT in its entirety. The CIT has demonstrated reasons as to why is the order of the Assessing Officer erroneous and prejudicial to the interest of the revenue. It is the substance and not the form of the order which is material. We are as such unable to agree with the views expressed by the learned Tribunal. The apprehension expressed by the assessee, that in the event the order of the Tribunal is set aside, the pending appeal by the assessee against the order of assessment would become nugatory, is also without any foundation - The appeal preferred by the assessee stood automatically allowed by the order of the CIT u/s 263 of the Act - the object of the assessee was achieved - order of CIT restored Decided in favour of Revenue.
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2014 (5) TMI 938
Validity of reassessment u/s 144 r.w.s. 147 of the Act Denial of deduction u/s 80IB(10) of the Act Held that:- The CIT(A) was of the view that as per the proviso to section 151(1), the AO ought to have obtained the approval of the CCIT or the CIT before issue of notice u/s 148 of the Act - the notice was issued after obtaining the approval of Jt CIT Range 25(2), Mumbai, the AO did not follow the procedure laid down in proviso to section 151(1) of the Act while reopening the assessment - the entire reassessment proceedings are ab initio void and invalid - the reassessment proceedings are cancelled - the reopening proceedings u/s 148 was not justified and there was no failure on the part of the assessee to disclose the material facts fully and truly revenue could not bring any evidence in support of the grievance of the revenue to show that the approval was taken from the CCIT/CIT before issue of notice u/s 148 of the Act - the assessment was re-opened after four years from the end of the relevant assessment year, which means that the AO ought to have taken the approval of the CCIT/CIT- there was no reason to interfere in the order of the CIT(A) - Decided against Revenue.
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2014 (5) TMI 937
Refusal of exemption u/s 11 of the Act Approval u/s 10(23C)(vi) of the Act Educational institution Held that:- The AO is not correct in denying exemption to the assessee on that ground alone - even in absence of approval u/s 10(23C)(vi) of the Act, the assessee can make an alternative claim of exemption u/s 11 of the Act if, otherwise, it satisfies the conditions laid down - So far as the other direction of the CIT(A) to the AO to verify and allow exemption u/s 11 of the Act, if the assessee has not collected any money by whatever name called over and above the prescribed fees for admission of the student - during the hearing of the appeals assessee pointed out that for subsequent AY 2011-12, the AO himself has allowed exemption u/s 11 of the Act, to the assessee when the AO has himself has granted exemption u/s 11 to the assessee in AY 2011-12, there was no reason to interfere with the order passed by the CIT(A) Decided against revenue.
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2014 (5) TMI 936
Income from sale of shares treated as business income Held that:- During the year assessee has done 71 transactions in 37 shares, which means 6 transactions per month - by any stretch of imagination it cannot be considered as high frequency transactions - The assessee has been showing bonds, debentures, fixed deposits, mutual funds and shares under the head investment Relying upon CIT v/s Madan Gopal Radhey Lal, [1968 (9) TMI 14 - SUPREME Court] - the long term capital gain has been accepted by the AO - If the AO is of the firm belief that the assessee is engaged in trading activities in the shares, then it does not make any difference whether the shares are held for more than 12 months or less than 12 months - the AO has accepted that the assessee as an investor insofar as the long term capital gain is concerned there was reason as to why the profit should not be taxed under the head short term capital gain as returned by the assessee the order of the CIT(A) is set aside and the AO is directed to tax the gains arising from the share transactions under the head Short term capital gain as returned by the assessee Decided in favour of Assessee.
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2014 (5) TMI 935
Income offered for taxation during survey u/s 133A - Deletion being the difference between income disclosed - Unaccounted income out of unaccounted investment Held that:- In a situation when few letters were written by CIT(A) to the AO to submit the remand report but no compliance was made although a final date was given - there was reference of additional evidence but in fact in true sense there was no additional evidence placed before the CIT(A) - The assessees submission was that the correct rate of valuation ought to have been adopted by the AO - there was no infringement of the provisions of Rule 46A of IT Act - The AOs action to adopt the market value appears to be incorrect being in contrast to the consistent method adopted by the assessee, i.e., weighted average cost method - when the valuation of the gold is required a weighted average cost is being taken because of the reason that the rate of the gold keeps on fluctuating frequently - the difference in the weight as found at the time of survey was concerned the same has not been disputed by the assessee - The excess weight was found at 9935.264 gms on which the value adopted by the AO at Rs.7780/- which was found by CIT(A) as excessive and in contradiction of the average cost method consistently adopted by the assessee the order of the CIT(A) is upheld Decided against Revenue. Deletion of bogus purchases Held that:- A chart has been placed according to which the physical stock of gold was found at the time of survey weighing 11481.390 gms - as against that the weight of the gold as per books was only 1540.126 gms, there was a difference of 9941.264 gms - to cover up the difference in weight the assessee has tried to procure the purchase bills from those parties - that attempt had failed because after survey it was detected that those purchase bills were bogus bills and there was no actual delivery of gold ornaments - the assessee had thought proper to reverse the entry in the trading account and simultaneously offered the value of the weight difference in the income tax return - Once, the assessee has accepted the mistake and paid the tax on the difference amount then it is not reasonable on the part of the Revenue to tax the assessee - CIT(A) has rightly held that the amount was not required to be taxed in the hands of the assessee once the corresponding contra entry has been passed in the books of account of the assessee Decided against Revenue.
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2014 (5) TMI 934
Confirmation of FBT - Purchase of gift items Held that:- Deduction is claimed after filing of return, then the AO is not empowered to entertain that claim made otherwise than by way of revised return required to be filed u/s 139(5) of the Act - Although after filing of return, the AO is not empowered to entertain the claim of the assessee for deduction otherwise than by filing a revised return - the observations on the issue are limited to the powers of the assessing authority and do not impinge on the powers of the Tribunal provided u/s 254 of the Act - the Assessing Officer is not empowered to entertain claim for deduction of the assessee, after filing of return otherwise than by filing a revised return but the powers of this Tribunal as an appellate authority u/s 254 of the Act do not impinge upon this decision. The expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D) - the expenditure cannot be categorized as expense incurred for promotion of sales with a view to gain publicity and popularize the product - The assessee offered different schemes through a scratch card and purchaser/customer of a specific item manufactured by the assessee is offered various items as gift - the revenue did not invoke section 115WB(2)(o) of the Act - The AO rightly rejected the claim of the assessee which was filed by way of an application after filing of return because the AO was not empowered to entertain the claim of the assessee otherwise than by filing a revised return - the claim of deduction requires examination and verification at the end of AO thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (5) TMI 933
Computation of value of Fringe benefits Whether the expenses incurred on running and maintenance of motor car being car fuel, oil and lubricants, rent and taxes, insurance on motor car, service charges and driver salary, given on hire as liable to fringe benefit tax or not Held that:- The contention of the assessee is accepted that as per Circular No. 8/2005 dated 29.08.2005 issued by CBDT, employer and employee relationship is a prerequisite for the levy of FBT u/s 115 WB of the Act - when employer and employee relationship is a prerequisite condition for levy of FBT, then value of FBT is to be determined on the basis of presumptive method to be applied to certain heads of expenditure as a measure/indicator of fringe benefit. AO has calculated total value of fringe benefits by following the tax audit report as against the returned value of fringe benefit which was taken by the assessee neither the assessee nor the revenue has placed the copy of tax audit report on the basis of which the AO calculated the higher value of fringe benefit as against the returned value by the assessee due to the reasons best known to them the matter is required to be remitted back to the AO for fresh adjudication as to the proper determination of the value of fringe benefit - Decided in favour of Assessee.
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2014 (5) TMI 932
Allowability of deduction u/s 10A of the Act - Whether the CBDTs Circular no. 1/2005 dated 6.01.2005 with reference to S.10B is equally applicable to S.10A of the Act Held that:- The assessee was originally carrying on business in the domestic tariff area - Later it had shifted to STPI area and was granted registration for the period of 5 years from 20th July,2008 Relying upon Commissioner of Income Tax & Others Versus Maxim India Integrated [2011 (7) TMI 518 - Karnataka High Court] - CBDT Circular no. 1/2005 dated 06.01.2005 grants certain benefits u/s 10B, though the circular is in the context of section 10B, the ratio of the circular equally applies to section 10A also - the benefit of section 10A would also be available even when an existing unit get converted into a STPII unit - no export of computer software was made before the 04.08.2004 - The export commenced only after 4.8.2004 - CIT(A) has rightly allowed the claim of the assessee Decided against Revenue. Reconstruction of business Held that:- CIT(A) rightly was of the view that the claim of the assessee for the Assessment Year was in order and this claim is directed to be allowed - the appellant would be eligible for deduction on the export profits of the year, earned by it after it was granted registration by the STPII and moreover this deduction would be available only up to AY 2012-13, as per third proviso to s.10A(1) Decided against Revenue.
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2014 (5) TMI 931
Deletion made u/s 40(a)(ia) of the Act Failure to deduct TDS u/s 194C of the Act Works contract - Payments made to service provider for carrying out the work of the maintenance services The CIT(A) has adjudicated the issue following the order of the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports and decided the issue in favour of the assessee without adjudicating the appeal on merit the order of the CIT(A) is set aside - the CIT(A) has not given any finding on merit, the matter is required to be remitted back to the CIT(A) to adjudicate the issue on merit as to whether the provisions of section 194C are applicable and as to whether the provision of section 40(a)(ia) is applicable in respect of such amounts, which are payable as on 31st of March of the year - the provision of section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year Decided in favour of Revenue. Applicability of M/s Merilyn Shipping & Transports Vs. ACIT; Range-1, Vishakhapatnam [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] Held that:- The view expressed or the ratio laid down by the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports has been overruled - it cannot be said that the Hon'ble Jurisdictional High Court has approved the view taken by the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports, the same has to be followed by the Tribunal situated within the jurisdiction of Hon'ble Allahabad High Court - The Hon'ble Jurisdictional High Court has not examined the issue at all and simple passing reference was made with regard to the order of the Special Bench of the Tribunal in the case of Merilyn Shipping & Transports and the relief was granted to the assessee on merit - the ratio laid down in the case of Merilyn Shipping & Transports, which has been suspended by Hon'ble Andhra Pradesh High Court has not been approved by the Hon'ble Allahabad High Court - subordinate judicial forum are not required to follow the ratio order laid down in the case of Merilyn Shipping & Transports, as it was overruled by the other High Court. - Decided in favor of revenue.
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2014 (5) TMI 930
Allowability of deduction u/s 80IA(4) of the Act - Joint venture for the purpose of getting a contract Held that:- The assessee is found eligible even after considering the deviations from the original agreement - the "substance" is found more important than the "form" - The contents of the agreement is not important but the joint venture partner, who executed the work in reality is held relatable for deduction - the deduction u/s 80IB(4) is available either to the JV, who is the actual signatory to the agreement or to the constituents of the JV without having separate agreement - the final executor of the contract is relevant for availing benefit u/s 80IB(4) of the Act - The implied principle in matters of granting deduction under these provisions revolves around the concept i.e., "substance" is more important than the "form" and thus, failure to draw a separate agreement with NHAI does not disqualify the assessee from claiming the deduction - the SIIL executed the contract on behalf of M/s. Supreme - MBL JV - the NHAI does not have objections against the assessee executing the contract the order of the CIT(A) is set aside Decided in favour of Assessee. Deletion made u/s 68 of the Act Held that:- The AO has not properly appreciated the facts relevant to the transaction - M/s. Achiever Trading Pvt. Ltd is the supplier to the assessee and they have commercial transactions - assessee gives advances to the supplier of material - The amounts appearing in the bank accounts of the assessee as per the Achiever Trading Pvt. Ltd as a source in the said advances given by the assessee, the same is not reviews by the Revenue - it is not proper to doubt the identity and genuineness of the transactions there was no error in the order of the CIT(A) Decided against Revenue.
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2014 (5) TMI 929
Disallowance of bad debts written off u/s 36(1)(vii) of the Act - Held that:- The proviso to section 36(1)(vii) has been inserted to avoid the double claim in respect of the same amount and the amount of bad debts which exceeds the credit balance in the provisions for bad and doubtful debt account made under clause (viia) shall be allowable u/s 36(1)(vii) Relying upon Catholic Syrian Bank Ltd. v. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA] - the deduction u/s 36(1)(vii) cannot be negated by reading into the limitation of section 36(1)(viia) as it would frustrate the object of granting such deductions as regards the Introduction of Explanation 2 vide Finance Act 2013, it has been made clear in the Finance Act itself that the Explanation will be effective w.e.f 01.04.2014 it cannot applicable for the year under consideration - the AO is directed to allow the claim Decided in favour of Assessee. Disallowance u/s 40(a)(ia) of the Act - Fees paid to Master Card International Held that:- it has been decided in the case of the assessee for the earlier assessment year, that the CIT(A) has directed the AO to verify the claim of the assessee regarding taxes paid in the year in respect of earlier years and allow them as per law - there is no question to verify and deduction should be allowed in assessment year itself Decided against Assessee. Disallowance of expenses u/s 14A of the Act - Expenses incurred in relation to exempt income Estimation on ad hoc basis Held that:- The CIT(A) has accepted the fact that the assessee has purchased the securities by using its own fund - there is no interest expenditure in respect of these securities for disallowance of administrative expenses u/s 14A, CIT(A) has directed the AO to compute the disallowance at 0.5% of the average investment earning tax free income - 0.5% of the average investment is clearly given under Rule 8D which is not applicable for the year under consideration - the securities are maintained by the assessee as stock in trade and the income arising from the sale and purchase of securities is taxable as business income of the assessee - the expenditure if any incurred on account of administrative expenses for maintaining these securities the whole of the said expenditure cannot be attributed to the dividend income when the income arising from the sale and purchase of the securities is taxable - only a reasonable estimate has to be made for disallowance of expenditure u/s 14A in respect of earning of dividend income and tax free interest - 1% of the exempt income will be a reasonable disallowance on account of administrative expenses u/s 14A Decided partly in favour of Assessee. Disallowance of liquidated damages - Delay in delivery of equipment Held that:- The liquidated damage was received on account of delay in delivery of equipment but it was not the case of purchase of new plant so as to sterilization of profit earning source due to delay - the damage was received on account of delay in supply of equipments, it is not revenue receipt but it should be reduced from the costs of the asset for the purpose of depreciation thus, the order of the CIT(A) is set aside and the AO is directed to reduce the amount of liquidated damages from the cost of asset for the purpose of depreciation Decided in favour of Assessee. Applicability of section 115JB of the Act Minimum Alternate Tax Held that:- Following ICICI Lombard General Insurance Vs. Department of Income Tax [2014 (5) TMI 729 - ITAT MUMBAI] - an amendment has been brought into the statute by the Finance Act 2012 whereby sec 115JB has been amended w.e.f 2013 - prior to 1.4.2013, the provisions of sec. 115JB cannot be applied in case of Insurance, banking, electricity, generation and distribution companies and other class of companies, which are not required to prepare their accounts and particularly Balance Sheet and P&L account as per part II & III of Schedule VI of the Companies Act - section 115JB has been amended to bring all the Companies in its ambit vide Finance Act 2012, w.e.f 1.4.2013, however, the amendment is not applicable in the assessment year under consideration Decided in favour of Assessee.
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2014 (5) TMI 928
Penalty u/s 271(1)(c) of the Act Disallowance of deferred revenue expenses - Bonafide inadvertent omission in not adding the book amount in the computation of income No concealment of income Held that:- The assessee is a public section undertaking who on being called forth to explain its claim after offering its explanation accepted that a mistake had crept into its claim which was duly accepted leading to the addition being made Relying upon COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] - making incorrect claim per se does not constitute furnishing of inaccurate particulars of income - all the necessary facts are disclosed merely because an incorrect claim has been made, the action of the CIT(A) in upholding the action of the AO cannot be upheld - the explanation offered by the assessee is a bona fide explanation which in the absence of anything to the contrary ought to have been accepted thus, the penalty imposed is set aside Decided in favour of Assessee.
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2014 (5) TMI 927
Restriction of penalty u/s 140A(3) of the Act Unpaid amount after expiry of period in demand notice Held that:- CIT(A) has rightly determined the appeal to restrict the penalty at 25% tax liability of the assessee and gave relief of 75% of the tax liability - the default is committed the assessee and he became the assessee is default and cannot take shelter under any reason or circumstances - It is quite a vague reason that the appellant was facing financial crises and that too without any proof and evidence - the tax and interest have been paid subsequently that will not cur the defect of assessee in default u/s 140A(3) - the assessee had paid the entire amount of tax before issuance of show cause the intention to pay cannot be doubted and therefore does not deserve the maximum penalty but, the assessee cannot escape from the liability to pay penalty as the intention of the legislature regarding payment of tax is to pay as you earn - the assessee has earned substantial income in the year but he did not pay the due tax within the stipulated time after service of demand notice - Neither any reasonable cause has been shown nor substantiated and CIT(A) appears to have given relief of 75% of the amount of penalty imposed by the AO while taking a very lenient view the relief already granted by CIT(A) is sufficient Decided against Assessee.
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2014 (5) TMI 926
Claim of deduction u/s 35D of the Act Acquisition of manufacturing facility - Disallowance of deduction u/s 37(1) of the Act Legal and professional fees incurred Held that:- The revenue authorities are themselves not sure, as to how the expenditure has to be treated thus, the most reasonable adjudication would be to set aside the findings of the CIT(A) on this issue and restore the issue to the AO with a direction to examine the nature of expense and come to one definite finding, i.e. whether the assessee was correct to invoke section 35D, or the AO was correct to treat it as revenue and in that case, the factum of TAS would be looked into, or the expense is a capital expenditure and if so, depreciation as per law has to be allowed Decided in favour of Assessee. Disallowance on incidental expenses Acquisition of assets capitalized - Excess claim of depreciation Held that:- The acquisition of the machinery from Bilag is not disputed - the machinery is a capital asset and whatever expense is incurred on such outlay, it shall bear the character of capital and added to the cost - Relying upon Ciba Of India Limited Versus Commissioner Of Income-Tax [1993 (1) TMI 35 - BOMBAY High Court] the amount would form part of the cost of the assessment for the purpose of depreciation thus, the additional depreciation, claimed by the assessee on Bilag machinery is to be allowed thus, the order of the CIT(A) is set aside and the AO is directed to allow the depreciation on the machinery that had been acquired from Bilag, and also include incidental expenses incurred on acquisition of assets - This would also include legal and professional expenses as incidental expenses Decided in favour of Assessee. Disallowance of professional fee reimbursed - Services provided by E&Y TDS not deducted - Held that:- The expense is allowable, but the allowability of the expense is dependent on the deduction of TAS or exemption therefrom, is the onus, on the assessee to prove the correct reliance of legal provisions - there are invoices raised by the audit professionals and there upon, requests to the parent company, to make the payment to E&Y and BMR Associates - there is no evidence or agreement has been shown has to make the payment initially and also that there is any correspondence between the assessee and its parent for such an arrangement - The documents are essential to come to viable conclusion - the order of the CIT(A) be set aside and the AO is directed to take definite view Decided in favour of Assessee. Depreciation on goodwill and non-compete fee Held that:- Following Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - intangibles like goodwill are eligible for depreciation - non compete fee is in the nature of the payment and is now covered u/s 28(va) of the Act, it would be revenue in nature the AO is directed to allow the depreciation on goodwill as per law and consider the payment of non-compete fee, in terms of section 28(va) Decided in favour of Assessee.
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2014 (5) TMI 925
Disallowance made u/s 40A(2)(b) of the Act Onus to prove the reasonableness of expenses Held that:- There was no merit in the argument advanced by assessee that there was violation of Rule 46A - CIT(A) has given relief to the assessee by giving a categorical finding that assessee obtained orders of supply of aluminium chrolride which were in excess of its capacity to produce in its own plant and therefore he had to make certain purchases through sister concern - CIT(A) has also considered the fact that sister concern had allowed credit to the assessee was valuable consideration and has resulted in reducing its interest liability to the bank, had this amount was taken as loan from the bank - During the appellate proceedings assessee was asked whether in previous year and subsequent years also assessee was making purchases from its sister concern and whether similar addition has been made in those years - The reply of the assessee being that assessee has made purchases and no addition by invoking the provisions of section 40A(2)(b) was ever made the order of the CIT(A) is upheld Decided against Revenue. Deletion on account of Low GP Failure to explain reasons Held that:- There was no merit in the arguments of revenue that there is any violation of rule 46A AO has estimated the GP of the assessee by rejecting the books of account by invoking the provisions of section 145A of the Act - CIT(A) held that AO was not justified in such rejection of books of account as he has not pointed out any defects in the books maintained by the assessee-company - there is no substance in the AOs contentions that assessee has shown lower GP in respect of its manufacturing activity or trading activity by demonstrating that in the case of manufacturing activities in fact there is increase in GP during the year and marginal decline in GP in trading activities is due to 300% increase in the turnover of the assessee - revenue has not challenged the finding of the CIT(A) that books of accounts were wrongly rejected by AO by taking any ground - GP addition cannot be defended the order of the CIT(A) is upheld Decided against Revenue.
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2014 (5) TMI 924
Adjustment of underutilization of capacity under Rule 10A(1)(e) of the Act Computation of ALP Held that:- The issue of TP adjustment has to be made only in respect of the turnover with the AE, is concerned, the decision in Genisys Integrating Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax [2011 (8) TMI 952 - ITAT BANGALORE] followed - Sec. 92B of the IT Act gives the meaning of 'international transactions' to mean "a transaction between two or more Associated enterprises either or both of whom are non-resident Chapter-X of IT Act relates to special provisions relating to avoidance of tax and sec. 92 relates to computation of income from international transactions having regard to ALP - it can be seen that only international transactions between the associated enterprises either or both of whom are non- resident are to be computed having regard to ALP thus, the AO/TPO is directed to restrict the TP adjustment if any only to the transactions with the AE instead of total turnover of the assessee - Decided in favour of Assessee. Adjustment on account of difference in capacity utilization Held that:- Following Dy. Commissioner of Income Tax Rg. 8(2) Versus M/s Petro Araldite P. Ltd. [2013 (8) TMI 403 - ITAT MUMBAI] - The adjustment as per Rule 10B is permissible only in the margins of the comparables and not in the margins of the assessee - an appropriate adjustment on account of difference in capacity utilization is required to be made by considering the depreciation being the fixed overhead on operating cost instead of sales of the comparables - assessee has furnished the detailed chart of calculation of the adjustment and finally summarized the mean margin of the comparables after the adjustment on account of difference in capacity utilization arrived at 4.68% in comparison to the assessee's own operating profit margin at 0.37% - The authorities have out rightly denied the adjustment on account of difference in capacity utilization the AO/TPO is directed to verify the details and allow the adjustment on account of difference in capacity utilization as per our observation - If the adjusted mean margin of the comparables is within the tolerance range of +/-5% to the assessee's operating profit margin then in view of the proviso to section 92C(2) of the Income Tax Act no TP adjustment is required - Decided in favour of Assessee. Rejection of use of multiple year data in a single year Rule 10D(4) of the Rules Held that:- To determine the ALP in relation to international transactions it has be to be compared with uncontrolled and un-related transactions by using data relating to the financial year in which the international transaction has been entered into - for using the multiple year data there should be existence of abnormal or exceptional circumstances/facts for the current year which could have an influence on the result on the determination of transfer pricing - nothing has been brought on record to show that any abnormal or exceptional circumstances or facts exist for current year which could have any influence on the results as well as determination of transfer pricing Decided against Assessee.
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2014 (5) TMI 923
Transfer pricing adjustment Selection of comparables - Software development services rendered to AE Claim of deduction u/s 10A of the Act Held that:- As decided in assessees own case as well as in Capital IQ Information Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax (International Taxation) [2014 (3) TMI 626 - ITAT HYDERABAD] it has been held that the case of the assessee is not comparable with Infosys Technologies Ltd., the reason being that the company is giant in the area of development of software and it assumes all risks, leading to higher profit - On the other hand, the assessee is a captive unit of its parent company in the USA and it assumes only limited currency risk - the Infosys and the assessee are not comparable at all as seen from the financial data etc. of the two companies mentioned earlier in the order - big companies like Infosys Technologies Limited cannot be considered as comparable to small captive service providers - Infosys Technologies Limited and Wipro Limited cannot be considered as comparable to the assessee - the AO/TPO is directed to compute arms' length price after excluding the two companies from the list of comparables Decided in favour of Assessee. Reduction of communication charges from export turnover Computation of deduction u/s 10A of the Act Held that:- Following CIT v. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - communication charges if reduced from the export turnover is also required to be reduced from the total turnover while computing the deduction u/s 10A of the Act thus, the AO is directed to reduce communication charges both from the export turnover as well as total turnover for computing deduction u/s 10A of the Act Decided in favour of Assessee. Reduction of business profits Reversal of interest accrued Held that:- The DRP in principle has held the reversal of interest accrued as profit and gains of business and in fact has accepted that held that for the purpose of computing deduction u/s 10A, the profits of business would also include the element with regard to the reversal of interest expenses and has directed the AO to verify this and allow the benefit to the assessee thus, the AO was not correct in excluding the amount from the business profit for the purpose of computing deduction u/s 10A of the Act - as per section 144C(5) the AO has to pass the assessment order in conformity with the direction of the DRP the AO cannot take a contrary view and exclude the same for the purpose of computing deduction u/s 10A of the Act thus, the AO is directed to work out the deduction u/s 10A of the Act without excluding the amount from the profit of the assessee Decided in favour of Assessee.
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2014 (5) TMI 922
Disallowance of interest u/s 14A r.w. Rule 8D of the Act Held that:- Following Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] - no disallowance can be made u/s 14A of the Act, if no expenditure is incurred in relation to the exempt income - the assessee has not used loan funds for making investments - there is no interest expenditure that can be said to have been incurred by the assessee for the purpose of making investments, administrative and other expenditure if any incurred has to be quantified and disallowed in accordance with law - the assessee has not given any convincing explanation as to why in its case for earning exempt income, there is no administrative or other expenses and as it has also not come out with any alternate calculations, there was no reason to interfere with the calculation of the Revenue authorities thus, the order of the FAA is upheld Decided against Assessee. Deduction u/s 43B(F) of the Act Held that:- CIT(A) has referred to the Honble Supreme Court decision in the SLP and upheld the order of the Assessing Officer - AO has already disallowed the amount and the CIT(A) has confirmed the same thus, there is no purpose for setting aside the matter to the file of the AO Decided against Assessee.
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2014 (5) TMI 921
Treatment of income STCG or Business income Trading in shares and securities - Held that:- The facts are self-speaking , and leave no manner of any doubt of the assessee being engaged in trade in shares and securities - in all its various aspects, even as for tax purpose a different treatment is to be accorded thereto, viz. speculative or non-speculative - It is this that prevailed with both the authorities below, to in fact no rebuttal by the assessee, with the primary facts being not in doubt or dispute - the treatment accorded in books, which was found to be not in agreement with the activity in-as-much as the assessee has clubbed its entire shareholding under one head, is not conclusive of the matter. The Revenue has rightly considered the income declared by the assessee as STCG as 'business income' - its quantum would require to be reworked - The assessee has claimed interest expenditure at Rs.20.50 lacs it would require being apportioned against different businesses, as well as, where so, investment activity - The AO has considered the entire interest against interest income falling under the head 'income from other sources', which is inconsistent with his own finding of the business being financed, if only partly, by borrowed capital - It is only the net income so arrived at that would stand to be assessed as 'business income' Decided partly in favour of Assessee.
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2014 (5) TMI 920
Cancellation of registration u/s 12AA of the Act Held that:- Registration granted to charitable trust cannot be cancelled, unless and until conditions laid down u/s 12AA are violated Section 12AA (3) stipulates that if the commissioner is satisfied, that the activities of the society are not genuine or not being carried out in accordance with the objects of the society, he shall pass an order in writing for cancelling the registration of the trust - there is no finding by the CIT that admission to students for the various courses conducted by the society are only provided for a particular caste -There is also no finding by the CIT that the activities of the trust/society are not genuine and they are not carried out in accordance with the objects of the trust - if there is some surplus derived from the activities of the institutions that does not mean that the objects of the trust are not charitable. CIT has also raised adverse inference for advertisements made by the society in the leading newspapers and other Medias in order to attract students Relying upon CIT v. Sarvodaya Ilakkiya Pannai [2012 (2) TMI 160 - Madras High Court] and Circular No.11 of 2008 dated 19th December, 2008 - The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of sec 2(15), i.e. relief of the poor, education or medical relief - where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities - the amended provisions of Section 2(15) of the Act clearly provide that charity includes education and the applicability of the proviso to the section excludes education thus, the order of the CIT is set aside and the registration granted earlier by the Revenue is restored Decided in favour of Assessee.
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2014 (5) TMI 919
Disallowance of labour and cash expenses Held that:- The books of the assessee are audited and no adverse remark has been made by the Chartered Accountant with respect to the accounts - CIT (A) was of the view that the assessee was not asked to correlate the rendering of service and expenses by the AO, the assessee had provided detailed evidences of the expenses incurred for labour - The allegation of the AO that the attendance registers have been written in one instance and the thumb impressions seems to be of a single person is not borne out by evidences produced before CIT (A) - CIT (A) has also upheld the disallowance only for the reason that some of the expenses have been incurred in cash and therefore there is likelihood of some portion is not justified - CIT(A) has also not pointed out any specific instance of cash expenditure which is an unjustified expense - the disallowance of Rs.4 lac of the labour expenses is uncalled for Decided against Revenue. Disallowance of travelling and office expenses Held that:- In the absence of complete details AO disallowed 20% of expenses which was scaled-down to Rs.25,000 - the assessee maintains several vehicles such as JCB Machines, Jeep, tractor-trailer for the purpose of business and it has office at Surat and Baroda and has business transactions with Companies stationed outside Surat, the CIT (A) was justified in restricting the disallowance to Rs.25,000 thus, there was no reason to interfere in the order of CIT (A) thus, the order of the CIT(A) is upheld Decided against Revenue. Accrual of interest on Bank FD Held that:- The method of accounting followed by the assessee is stated to be mercantile - There is no mention of different method of accounting being employed for accounting of interest income- CIT(A) was of the view that the Fixed deposits on which the assessee has earned interest are business assets and the income earned therefrom is business income - the assessee has claimed the credit of TDS on the interest income but has not offered the interest income to tax - CIT (A) was right in confirming the action of AO there was no reason to interference in the order of the CIT(A) Decided against revenue.
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Customs
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2014 (5) TMI 945
Eligibility for exemption - Serial No. 184 of Notification No. 20/99 - Essentiality Certificate - Import of seismic data tapes etc. - Valuation of the data tapes and demand notice dated 1-11-1999 Whether certificate or letter issued by Dr. Chandrasekhar can be considered as the certificate issued by a duly authorized officer of the DGH as the essentiality certificate - Held that:- Assessees themselves have addressed their application to Shri Chug who was the authorized officer at the relevant time - It is inconceivable to believe assesse`s contention that according to them, Dr. Chandrasekhar is the duly authorized officer - In any case assessee had cross-examined Dr. Chandrasekhar during the adjudication proceedings wherein he has clarified the position - At this stage, it cannot be disputed that assessee have not been able to obtain essentiality certificate from the duly authorized officer of DGH - Even the impugned order was passed in 2006 and even at the time of hearing before this Tribunal in 2013, they have not been able to obtain the certificate - In the result, the benefit of Notification 20/99-Cus. cannot be extended to in the absence of the said certificate - Demand of duty is therefore upheld - Penalty u/s 112(a) is set aside Decided partly in favour of assessee.
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2014 (5) TMI 944
Valuation of goods - Inclusion of royalty in assessable value of goods - Held that:- it is clear that the department could not bring out that the royalty of 100 Euros and royalty @ 2% per vehicle and 15 million Euros as per Technical Assistance and Engineering of Training Services Agreement are condition for the sale of imported goods. In these circumstances, inclusion of the aforesaid amounts in the assessable value is not sustainable in law. - Decided in favour of assessee.
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2014 (5) TMI 943
Import of goods against advance license - goods manufactured out of such import exported as well as sold in DTA - Denial of benefit of Notification 93/2004 and 94/2004 - Held that:- in this case the respondent has first exported the goods. Against the said export, the respondent obtained advance license for import the raw material duty-free - The Boards Circular No. 4/93, dated 4-9-1993 clarified that word required does not mean that goods imported must be physically incorporated in the export product as export product could be manufactured from inputs procured outside the DEEC scheme. Iit is in the condition precedent of the Notification that the respondent are required to import raw material first and same is to be used in manufacture of the resultant product. Therefore the respondents have fulfilled the condition of the Notification 93/2004 and 94/2004 as they have already discharged the export obligation and EODC has been issued by D.G.F.T. In these circumstances, we hold that the respondents are entitled for benefit of the above said notification - Decided against Revenue.
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Corporate Laws
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2014 (5) TMI 942
Extension of time period to furnish documents - Company already under liquidation - Held that:- day to day affairs of the company were managed by a director, who had resigned from the directorship even before the winding up order. Since the present petitioners had not taken steps to withdraw from the management of the company formally for all purposes, in that, one was old and infirm and was a resident of Mumbai while the other, who was also a resident of Mumbai, is no longer resident of India and is abroad and therefore, had not participated in the management of the affairs of the company for all purposes. It is only by virtue of the said petitioners shown on record as the ex-directors of the company, that proceedings have been initiated. Hence, there would be no purpose served in proceeding against the petitioners, as if they had, in fact, committed default in withholding the records of the company - Decided in favour of appellants.
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Service Tax
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2014 (5) TMI 955
Commercial Training or Coaching Services - Whether, the respondent is liable to service Tax on Flying Training Institute and Aircraft Engineering Institutes under Commercial Training or Coaching Services - Held that:- A similar issue arose before the Delhi High Court in Indian Institute of Aircraft Engineering [2013 (5) TMI 592 - DELHI HIGH COURT] wherein it was held that, the certificate/training/qualification offered by approved Institutes, has by the Act, Rules and the CAR been conferred some value in the eyes of law, even if it be only for the purpose of eligibility for obtaining ultimate licence/approval for certifying repair/maintenance/airworthiness of aircrafts. The Act, Rules and CAR distinguish an approved Institute from an unapproved one and a successful candidate from an approved institute would be entitled to enforce the right, conferred on him by the Act, Rules and CAR, to one year relaxation against the DGCA in a Court of law. The inference can only be one, that the Course Completion Certificate/training offered by such Institutes is recognized by law. Revenue has not been able to persuade the Court to take a different view. The appeal filed by the revenue will not hence, give rise to any substantial questions of law. - Decided against Revenue.
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2014 (5) TMI 954
Waiver of pre-deposit - demand based on ST-3 return - availing abatement under Notification No. 1/2006 while availing cenvat credit - validity of show cause notice where service tax deposited before issuance of SCN - extended period of limitation - Penalty - Held that:- Once, it is reflected in the ST3 returns, suppression cannot be invoked. The second aspect is misdeclaration which would arise only if the figures indicated are wrong. There is no evidence of both in the case. Therefore, this would be a case of demand based on the ST-3 returns and therefore extended period cannot be invocable. As regards the second issue viz. availment of Cenvat credit more than what was allowed by statute, prima facie, it appears, this also would have been incorporated in the ST-3 returns and ST-3 returns would have clearly shown that the appellant had availed excess credit. In this view of the matter, in our opinion, by making payment of the entire amount due with interest, the appellants have discharged their liability as per the provisions of Section 73(3) which provides that where the appellant makes payment of tax with interest, no show cause notice shall be issued unless the case is covered by situations where extended period of 5 years can be invoked for issue of show cause notice such as evasion of duty or non-payment of duty because of suppression of facts, misdeclaration/collusion, etc - appellant has made out a prima facie case in their favour for non-issue of show cause notice and non-imposition of penalty under Section 78 of the Finance Act, 1994 - Stay granted.
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2014 (5) TMI 953
Condonation of delay - Sufficient cause for delay - Held that:- no affidavit has been filed by the concerned employee of the appellant to explain the delay and whether that employee had to proceed on leave suddenly on account of ill health or otherwise. From both the case laws, relied upon by the appellant in those cases, but no such justification / explanation has been given in the present appeals - The sufficient cause should be such as it would persuade the Court, in exercise of its judicial discretion, to treat the delay as an excusable one. - The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention - appellant should take due care and attention in filing the appeals in time. In the present facts and circumstances, it is not coming out that the appellant took due care and attention in filing the appeal and in explaining the delay - Condonation denied.
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2014 (5) TMI 952
Waiver of pre-deposit - valuation - Activities of maintenance works - Revenue was of the view that service tax should have been paid on the value inclusive of value of materials consumed and therefore they issued demand of tax short paid for the period 2005-06 to 2010-11 by three different show cause notices - Held that:- goods involved are in the nature of consumables and not in the nature of parts or materials which can be sold and then services provided. So the principle laid down in the case of Aggarwal Colour Advance Photo System Vs CCE Bhopal [2011 (8) TMI 291 - CESTAT, NEW DELHI (LB)] is applicable to the present case. However, considering the plea regarding limitation and the financial hardship, we order the applicant to make a predeposit of Rs.10,00,000 - stay granted partly.
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2014 (5) TMI 951
Waiver of pre deposit - Demand of service tax - Storage and Warehousing Services - Held that:- In the applicants own case, Bench waived predeposit of penalty and interest after taking into consideration the deposit of entire amount of tax. In that case, the applicant deposited entire amount of tax - facts in the other case are identical to the present case and therefore following the Tribunals decision [2014 (1) TMI 143 - CESTAT BANGALORE] - Stay granted.
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Central Excise
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2014 (5) TMI 949
Denial of CENVAT Credit - confiscation of various capital goods installed - Penalty - Held that:- Revenues entire case is based upon the statements of two deponents of suppliers - apart from the said statement, there is no other evidence on record. Admittedly the appellants have received the capital goods under the cover of invoices issued by the suppliers. The same stand installed in their unit and infact also stand confiscated by the authorities below. The appellants have produced on record the evidence of payment of U P Trade tax as also CST. Further, they have produced material received notes showing that the said material were received by them - there is no evidence on record that the appellant was a party to the non-payment of Central Excise duty by the suppliers. They have followed the procedure correctly and have availed the credit on the basis of invoices issued by the suppliers. The said invoices contain all the particulars required to be mentioned in the invoices and are proper cenvatable invoices - Following decision of Tarsen Polyfab Pvt. Ltd. vs. CCE, NOIDA [2010 (10) TMI 270 - CESTAT, NEW DELHI] - Demand is time barred also - Decided in favour of assessee.
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2014 (5) TMI 948
CENVAT Credit - Guest house facility - Held that:- any service which has nexus with the business activity of the assessee, whether it is manufacturing or rendering service, has to be treated as input service coming within the purview of Rule 2(l) of the CENVAT Credit Rules, 2004. In this case, the respondent being a manufacturer of excisable goods, the Guest House were used and maintained in relation to various business activities. Therefore, I hold that the respondents are entitled for input service credit - Decided against Revenue.
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2014 (5) TMI 947
MODVAT credit - Clearance of the ingots cut end pieces to their sister unit for converting them into ingots by melting without payment of duty under Rule 57F(3) of the erstwhile Rules, 1944 - Assessee revered CENVAT Credit later - Commissioner allowed assessee's appeal - Refund claim - Unjust enrichment - Held that:- The appellant paid the said amount through the CENVAT account for the purpose of filing appeal before the Commissioner (Appeals). It is seen that there are several rounds of litigation on merit as well as on refund claim. Ultimately, the adjudicating authority sanctioned the refund claim and as the appellant s factory was already closed, it was directed to pay in cash and the amount has already been paid to them in cash. Revenue filed appeal before Commissioner (Appeals) on the ground that such refund has to be ordered by way of credit in RG23A Part - II account. If no cash payments towards duty were made through PLA and the credit would have remained unutilized in the said CENVAT account, such credit cannot be allowed by way of cash - adjudicating authority should have examined as to whether after payment of this duty from the CENVAT account, the appellant paid duty from their PLA account as decided in the case of Kochar Sung-up Acrylic Ltd. (2010 (8) TMI 330 - CESTAT, NEW DELHI) and Slovak India Trading Co. Pvt. Ltd. (2006 (7) TMI 9 - HIGH COURT OF KARNATAKA (BANGALORE)). Decided in favour of assessee.
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2014 (5) TMI 946
Waiver of pre-deposit - CENVAT Credit - credit availed on returned transformers by the applicants - Held that:- Applicant is providing the standby transformer for the period of repair of the transformer sold to the customer. The transformer which was sent for a short period were cleared on payment of duty and after the repair, the transformer was cleared, the standby transformer comes back to the factory and on which the applicants are taking credit of the duty paid on the same - Considering the submissions made by the applicant and relying on the above cited judgment, the applicant has made out a case for 100% waiver of pre-deposit - stay granted.
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CST, VAT & Sales Tax
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2014 (5) TMI 950
Whether the revenue was justified in seizing the goods from the godown situate on the "no men's land" on the pretext that the goods have not actually gone out of the State of U.P. within the time of exit mentioned in the transit declaration Forms Seizure of goods Seizure in "no men's land" Legal fiction - Ground of overstay Seizure on the ground of overstay Brief Facts - The goods were accompanied by the requisite documents and the transit declaration Forms - The goods were seized on 2.3.2012 from the aforesaid godown on the ground that they have not been sent to the ultimate destination and have been retained in the State of U.P., giving rise to presumption u/s 52 of the Act that they are meant for sale in U.P. - Held that:- Legislature is quite competent to create a legal fiction by providing assumption of certain facts which does not really exist - Such a legal fiction or assumption of fact may also be created by court as a basis for deciding an issue before it. Therefore, in the peculiar nature of transport business even if the goods have not technically crossed the border of the State of U.P. nonetheless if the goods have reached the godown of the opposite party situate in the area which has been declared to be "no men's land" near the U.P. Delhi border in District Ghaziabad by way of legal fiction, it would mean that they have actually reached the border otherwise the inter-state movement of goods would be impossible and the very purpose of establishing transhipment area would become redundant - Thus, if the goods reaches the godown situate in the said area within the time prescribed, the authorities cannot take any exception to it and seize the goods on the pretext that they have not actually passed out of U.P. - The goods which have reached the godown of the opposite party situate in the "no men's land" at the border within the time prescribed would be deemed to have reached the border for passing out from the State of U.P., and are not liable to be seized on the ground that they have over stayed within the State unless they are actually found to be so sold within the State or there is a finding that they are being removed from there for sale in U.P. - Tribunal has not erred in directing for the release of the seized goods - No merit in the revision and same is dismissed Decided against revenue.
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Indian Laws
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2014 (5) TMI 941
Right to Information - Denial of providing information - Held that:- schools run by the petitioner society are receiving grant in aid from the State Government. The distinction which is tried to be made by the counsel for the petitioner that the petitioner is the Chairman of the Shahada Taluka Cooperative Education Society and the information sought is in respect of affairs of the society and not about the school which are receiving grant in aid directly in the account of the Head Master, and therefore, the petitioner is not obliged to give information sought for. It clearly appears that Shahada Taluka Cooperative Education Society is established for imparting education. The sole purpose of forming such society is for establishing school and imparting education. Therefore, the distinction which is tried to be made by the petitioner, as aforementioned, needs no consideration. Though the Information Officer is appointed, the petitioner, when called upon to furnish the information, it bound to supply the same to the respondent No. 1. By way of impugned order only direction is issued to the petitioner to furnish the information as sought by the respondent No. 1 within fifteen days. Acceptance of the interpretation of the arguments of the petitioner that information sought is in respect of affairs of the society and not in respect of the school receiving grant in aid, would defeat the object of introducing the Right to Information Act, 2005 - Act provides for setting out the practical regime of Right to Information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority, the Constitution of a Central Information Commission and State Information Commissions and for matters connected therewith or incidental thereto. The Constitution of India has established democratic Republic and democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed. - Decided against the petitioner. Division Bench of this Court in the case of Goa Cricket Association (supra) held that the State Information Commission is a multi-member body and commission must consist of State Information Commissioner and at least one more State Information Commissioner, and therefore, any appeal or application is required to be considered by the multi-member body. - In that view of the matter, the impugned order passed by the State Information Commissioner, Bench at Nashik deserves to be quashed and set aside, as the decision given on 27-11-2012 in the appeal is only by one member - matter remanded back to the appellate authority to hear the parties and decide the appeal on its own merits without being influenced by any observations made in this order or in the impugned order of the appellate Court.
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