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TMI Tax Updates - e-Newsletter
May 5, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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TDS on hiring of pipeline for transportation of gas - TDS u/s 194C or u/s 194I - wherever transportation of gas is made by third person apart from seller of gas, transportation charges paid by buyer to transporter shall be governed by provisions of section 194C - AT
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TDS u/s 194I - it needs to be examined whether tax at all was required to be deducted at source when the payee was not having taxable income or in other words payee's income is exempt. - provisions contained u/s 201 and 40(a)(ia) have to be read together to come to a appropriate conclusion - AT
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Addition under Section 69 - presumption u/s 134(4A)/292C is available only in the case of the person from whose possession and control the documents are found and it is not available in respect of a third party. - Further presumption u/s 132(4A)/292C is a rebuttable one - HC
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Depreciation on 'goodwill' - In the present case, though termed as goodwill, what was actually parted with by STL was a commercial right, i.e., exclusivity to the network which would not have been otherwise available but for the terms of the arrangement - claim allowed - HC
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Terms and conditions of Exit Option Scheme of RBI - Voluntary retirement scheme - exemption u/s 10(10C) - whether Exit Option Scheme of RBI were different from the terms and conditions of Exit Option Scheme framed by SBI as held by ITAT - exemption allowed - HC
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Addition of surplus amount received by the assessee from jewellery auction - claimed to be returnable to the concerned borrowers - CIT has rightly deleted the addition arising from surplus of jewellery auction - AT
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Wrong section quoted while claiming deduction u/s 54 - merely because the assessee had made a claim under a wrong section instead of the correct section, the same, should not be a ground to deny the benefit of deduction otherwise allowable to the assessee. - AT
Service Tax
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Denial of refund claim - Bar of limitation - In the Notification No.41/2007, there is no condition that if the services availed prior to the date of notification, the appellant are not entitled to refund claim - refund allowed - AT
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GTA service - if consignor pays the freight towards the GTA services, he is that person who is liable to discharge the service tax even if he got the reimbursement from the consignee - AT
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Extended period of limitation - Real Estate Agent - the appellant was procuring the land from the other small land owners and without getting the same registered in his own name, was passing on the same to the developers, is indicative of the absence of bonafides on the part of the assessee - AT
Central Excise
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Extended period of limitation - Valuation - captive consumption - when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty - SC
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Rate of duty on Ethanol Blended Petrol (EBP) - it would be too technical a default to penalise the Corporation on the ground that the duty should have been paid prior to the mixing and therefore, deny it the benefit of exemption - HC
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SSI Exemption - Clubbing of clearances - Clandestine removal - Case has been made out against the appellant on the basis of the documents resumed from the residence of employees and third party. There were no incriminating documents recovered from the custody of the appellant or Managing Director thereof - revenue failed to substantiate its case - demand set aside - AT
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Denial of refund claim - Unjust enrichment - respondents paid duty on the intermediate goods which are used in the manufacture of power driven pumps which are exempted from duty. There is no change in the price of the final product - refund allowed - AT
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Denial of cenvat credit - Revenue put an allegation that suppliers had included the freight and insurance charges upto the point of delivery and passed on higher duty amount - no merit - credit allowed - AT
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SSI Exemption - mutual interest - the registered offices of both the companies being at the same address or that plant and machinery of one company having been pledged to the Bank as a security for the loan sanctioned by the bank to the another, by themselves cannot be treated as the evidence that both the units are owned by the same person or that the appellant have all purvasive financial operational and management control over MBPL or vise versa. - AT
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Reversal of credit - Once the inputs are issued for manufacture of the final product and are further used and are found defective in the assembly line, the assessee cannot be asked to reverse the credit. - AT
VAT
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KVAT - The clarification issued u/s 59 is different from the clarification or advanced ruling given u/s 60. In the latter case, the ruling of the authority would be binding only on the applicant which seeks such clarification, whereas in the former case (u/s 59), it would be applicable to all registered dealers liable to pay tax. - HC
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Classification of goods -whether the Hooka, (brass/iron base) manufactured and sold by the petitioner is a "utensil" - Hooka and its parts manufactured/sold by the petitioner partake the nature of a "utensil" - Haryana sales tax - HC
Case Laws:
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Income Tax
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2015 (5) TMI 114
Denial of exemption being an income of mutual concern - Principle of mutuality - Income from the transaction of non members is outside the purview of the mutuality - Taxability of Bank interest Interest and Interest u/s 234D of the Act - Interest received from FD with the bank does not cover in Mutuality, hence taxable under the head income from other sources - Held that:- On a perusal of the orders of the authorities below as well as the material available on record, we find that this issue has been discussed in detail in assessee’s own case [2012 (11) TMI 948 - ITAT MUMBAI] in the order for the assessment year 1996-97, vide order dated 26th September 2012. This decision has been followed in the subsequent years also upto the assessment year 2006-07. Thus, respectfully following the earlier year’s precedence we hold that the income of the assessee in relation to the transactions entered with the members are covered by the “Principles of Mutuality” and, hence, the same is exempt from taxation and only the income from the transaction of non-members is outside the purview of “Principles of Mutuality”. Accordingly, all the grounds raised by the Department stand dismissed. Respectfully following the earlier year’s order [2012 (11) TMI 948 - ITAT MUMBAI] of the Tribunal, we do not find any reason to deviate from such findings and the grounds no.1 and 2 of the cross objection stand dismissed. In ground no.9, the assessee has challenged that the interest income comprising of bank interest and interest on income tax refund received by the assessee is also covered by the “Principles of Mutuality”.As admitted by both the parties, this issue also stands decided against the assessee in view of the judgment of the Hon'ble Jurisdictional High Court in CIT v/s Common Effluent Treatment Plant, (Thane-Belapur) Association, [2010 (6) TMI 52 - BOMBAY HIGH COURT ], wherein it has been held that interest received from F.D. with the bank does not possess the same character of “Mutuality” and the interest income would, therefore, be taxable under the head “Income From Other Sources”. In the latest judgment, the Hon'ble Supreme Court in Bangalore Club [2013 (1) TMI 343 - SUPREME COURT], had settled this issue and held that the amount of interest earned by the assessee on the deposits made in the bank will not fall within the ambit of “Principles of Mutuality” and is exigible to tax in the hands of the assessee. Thus, in view of the law settled by the Hon'ble Supreme Court, ground no.9 raised by the assessee stands dismissed. - In the net, Revenue’s appeal and assessee’s cross objection are dismissed.
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2015 (5) TMI 113
Denial of exemption being an income of mutual concern - Principle of mutuality - Income from the transaction of non members is outside the purview of the mutuality - Treatment of reimbursement cost as income - Estimation of profits at 5% of gross amount recovered from non-members - Applicability of provisions of section 44C - Interest u/s 234D of the Act - Held that: Following the earlier order [2015 (5) TMI 114 - ITAT MUMBAI] of this Tribunal, we hold that the assessee is covered by the principle of mutuality to the extent of its transaction with the members only and the income from the transaction of non members is outside the purview of the mutuality. Following the earlier order [2015 (5) TMI 114 - ITAT MUMBAI] of the Tribunal, we find no merit in the ground no 1 to 9 of the CO raised by the assessee; accordingly, the same are dismissed. Regarding interest u/s 234D , We have heard the ld AR as well as the DR and considered the relevant material on record. At the outset, we find that this issue is covered against the assessee by the decision of the Honble jurisdictional High Court in the case of Indian Oil Corporation Ltd. [2014 (10) TMI 262 - BOMBAY HIGH COURT ] dated 12th Sept 2012. Following the decision of the Hon’ble jurisdictional High Court, we decide this issue against the assessee. - In the result, the Revenue’s appeal and the assessee’s cross objection stand dismissed.
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2015 (5) TMI 112
Bogus transactions - Addition on expenditure for purchase of packing material - Unexplained share application money - Applicability of revised monetary limits for filing appeal to Tribunal at ₹ 4 Lacs - Instruction No. 5/14 issued by the CBDT on 10.7.2014 - Held that:- It is indisputable fact during the course of assessment proceedings, the Assessing Officer had issued summon to M/s S.R. Enterprises (seller of packing material). The notices were returned unserved and same was duly intimated to the assessee. The two Inspectors who carried out local enquiries on 18.10.2010 also could not locate the address of M/s SR Enterprises given by the assessee. None of the outlets in the area had ever heard of M/s SR Enterprises. In the course of appellate proceeding, the assessee had given an affidavit of Sri Rajnish Tyagi, detailing the dealings of the assessee with that of M/s SR Enterprises. It was categorically found by the Assessing Officer in the course of remand proceeding that Sri Rajnish Tyagi was no way connected with either of M/s SR Enterprises nor the assessee. The Bank account of M/s SR Enterprises also was verified by the Assessing Officer. It was noted the amount that was received from the assessee was withdrawn immediately by cash. Though the goods were sold in beginning of the financial year by SR Enterprises no payment was made by the assessee during the entire financial year. Some payments were made in the subsequent year to M/s SR Enterprises and as mentioned earlier the beneficiaries of these payments could not verified. The findings of the Income Tax authorities have clearly established that so called purchases made by the assessee from M/s SR Enterprises are nothing but bogus transactions, just to inflate the expenses. - Decided against the assessee. Applicability of revised monetary limits for filing appeal to Tribunal at ₹ 4 Lacs by revenue - In view of the order of the Tribunal in the case of Sushila Saraogi [2014 (11) TMI 294 - ITAT KOLKATA] which have elaborately considered the identical issue, we hold that instruction No. 5/2014 issued by the CBDT on 10.7.2014 is applicable to the pending appeals. In the instant case, the tax effect being below ₹ 4 lacs, without going into the issue on merit, we dismiss the appeal of the revenue in liminee. It is to be mentioned that Ld. DR was unable to point out any exceptional circumstances /situation (mentioned inboard instruction No. 5 /2014) for filing an appeal despite the monetary limit being below the prescribed limit. - Revenue appeal dismissed.
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2015 (5) TMI 111
TDS on hiring of pipeline for transportation of gas - TDS u/s 194C or u/s 194I - Issue clarified in Circular no. 9/2012, dated 17-10-2012 - Held that:- It is an undisputed fact that Assessee has used the pipeline owned by GSPL for the transportation of gas. It is also a fact that the ownership of the pipeline always remained with GSPL and in possession of GSPL. We find that ld. CIT(A) while allowing the appeal of the Assessee has given a finding that the pipeline was used only for transmission of gas and did not give any inclusive right or interest to the Assessee. We further find that Circular No. 9/2012 dated 17.10.2012 issued by CBDT in the context of deduction of tax at source on payment of Gas Transportation Charges has clarified that in case transportation charges paid to a third party transporter of gas, either by the owner/ seller of the gas shall continue to be governed by the appropriate provisions of the act 1.e. 194C shall be deductible on such payments at the applicable rates. In the case of Kribhco Shyam Fertilizers Ltd. [2015 (3) TMI 490 - ITAT LUCKNOW], it was held that from Circular No. 9/2012 issued by CBDT it was clear that whenever gas is transported by seller to point of delivery, transportation charges of gas would be embedded in cost of gas, though transportation charges are claimed separately or along with cost of gas in sale bill and nature of such contract essentially remains a contract for sale and not a works contract - But wherever transportation of gas is made by third person apart from seller of gas, transportation charges paid by buyer to transporter shall be governed by provisions of section 194C - TDS shall be deductible on such payment to third party by buyer at applicable rates. Revenue has not brought any material on record to controvert the findings of CIT(A) nor has brought any contrary binding decision in its support. In view of the these facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. - Decided against the revenue.
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2015 (5) TMI 110
Revision of assessment order - Dis-allowance of rental income due to non deduction of TDS - Dis-allowance of Securities transaction tax (STT) & Brokerage expenses as related to exempted income - Rent received by a charitable trust registered u/s 12A of Income Tax Act,1961 - Held that:- We are of the view that exercise of power u/s 263 of the Act in the present case is justified. In fact, the assessee has also accepted such position by only contesting the direction of the CIT in respect of disallowance to be made u/s 40(a)(ia) of the Act. So far as the direction of the CIT in respect of disallowance of deduction claimed towards STT and brokerage and considering the issue of proportionate disallowance of finance charges the assessee has accepted the view of the CIT. Therefore, CIT's observation that the assessment order passed is erroneous and prejudicial to the interests of the revenue and consequent exercise of power u/s 263 has to be upheld. Even so far as the issue of disallowance u/s 40(a)(ia) is concerned, on a perusal of the assessment order as well as other materials on record, we are of the view that the AO has not at all examined the issue of applicability of section 194-I to the expenditure claimed towards rent paid and consequential disallowance whether to be made u/s 40(a)(ia) of the Act. Hence, to that extent, there is not only failure to make any enquiry by the AO, but, also total non-application of mind on the part of the AO. Therefore, the CIT was correct in holding that the assessment order passed u/s 143(3) is erroneous and prejudicial to the interests of the revenue for not considering the applicability of section 194-I and issue of disallowance u/s 40(a)(ia) of the Act. However, we are of the view that CIT was not correct in straightaway directing the AO to make disallowance u/s 40(a)(ia) of the Act without properly considering the contentions raised by the assessee. It is a fact on record that the payee Kamma Sangham at the relevant time was a charitable trust registered u/s 12A of the Act. It is also a fact on record that it has filed its return for the AY 2008-09 claiming exemption u/s 11 of the Act though it has shown the rental income. It is also an uncontroverted fact that no order has been passed u/s 201(1) of the Act treating the assessee as a assessee in default. Therefore, in the aforesaid perspective it needs to be examined whether tax at all was required to be deducted at source when the payee was not having taxable income or in other words payee's income is exempt. In this context, the provisions contained u/s 201 and section 40(a)(ia) have to be read together to come to a appropriate conclusion. We modify the order of the CIT by directing the AO to examine the issue of disallowance u/s 40(a)(ia) of the Act in so far as the payment of rent to Kamma Sangham is concerned after carefully considering assessee's submissions and keeping in view the relevant statutory provisions as well as ratio laid down in the PEC Electricals Ltd. [2015 (2) TMI 889 - ANDHRA PRADESH HIGH COURT] & Thomas Muthoot [2012 (12) TMI 641 - ITAT COCHIN] , which assessee may rely upon. The AO must decide the issue independently without being influenced by the observations of the CIT. Accordingly, we set aside the order of the CIT on the issue of disallowance u/s 40(a)(ia) of rent paid to Kamma Sangham and remit the matter back to the file of the AO for deciding afresh and in accordance with law after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee.
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2015 (5) TMI 88
Reopening of assessment - long term capital gain was to be added to the income of the said assessee firm or not? - reopening of the assessment for AY 2005-06 seems to be on the basis of the directions issued by the learned CIT (Appeals) in the case of one M/s Devrekha Engineers [another assessee] - Held that:- The basis on which the reassessment proceedings were sought to be initiated to reopen the assessment for AY 2005-06 itself has been set aside by the learned Tribunal and further confirmed by this Court. It is true that the assessment proceedings can be reopened even after a period of six years as per section 150 of the Act to give effect to any finding or direction contained in order passed by any authority and in any proceedings under the Income Tax Act by way of appeal, reference or revision in any proceedings under any other law. Therefore, at the time when the reassessment proceedings for AY 2005-06 by impugned notice dated 30.7.2013 was initiated, it can be said that it can be argued that to give effect to direction issued by the learned CIT (Appeals) in the order dated 25.6.2013 in the case of M/s Devrekha Engineers considering section 150 of the Act, assessment/reassessment might be permissible. However, when the direction of which the effect was to be given while initiating assessment/ reassessment proceedings for AY 2005-06 itself has been set aside, there was no question of giving any effect to the said direction which has been set aside by the learned Tribunal. Under the circumstances, on the aforesaid ground alone, the impugned reassessment proceedings/notice under section 148 to reopen the assessment proceedings for AY 2005-06 deserves to be quashed and set aside. - Decided in favour of assessee.
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2015 (5) TMI 87
Necessity of dissolution clause in the deed of the charitable trust - Commissioner refusing to grant registration certificate under Section 12 AA as trust deed do not provide any "dissolution clause" and / or any provision for distribution of the properties in the event of closure / dissolution of the trust - it is the case on behalf of assessee trusts that the Trust are in existence / prior to 1965 and in fact was regularly filing his return of income since, many year even claiming exemption u/s 12 AA - Held that:- From the orders passed by the Commissioner refusing to grant registration certificate under Section 12 AA and even from the order passed by the learned Tribunal, it appears that none of the authorities belows have considered the material and relevant aspect with respect to the satisfaction of the Commissioner with respect to genuineness of the trust. In a given case even in absence of any provision in the trust with respect to "dissolution clause" if on facts the trust is found to be genuine and / or genuineness of the trust is established, the trust may be entitled to registration under Section 12 AA of the Act, however subject to fulfillment of conditions under Section 12 AA of the Act i.e. when the Commissioner is satisfied about the genuineness of the activities of the trust or the institution. As observed herein above, both the Commissioner as well as learned Tribunal have not addressed themselves on the aforesaid relevant aspect, we are of the opinion that matters are required to be remitted back to the file of the Commissioner and remanded to the learned Commissioner to consider the issue /grant of registration certificate under Section 12 AA afresh in accordance with law and on merits and to consider the genuineness of the trust / institution / genuineness of the activities of the trust after giving an opportunity to the trust to make submissions and / or produce on record any material in respect of their case that there is no reason to doubt the genuineness of the activities of the trust. - Decided in favour of assessee for statistical purposes.
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2015 (5) TMI 86
Addition under Section 69 - ITAT’s confirmation of the CIT (A)’s order cancelling the addition - justification to reference to Section 132 (4A) and Section 292C - Held that:- It is quite evident that what materially persuaded the AO to make the addition were the extracts from documents - in the form of handwritten ledger entries seized from Shri S.K. Gupta. These mentioned Shri Khandelwal’s name as against which certain amounts were indicated. The other material was the statement of Shri S.K. Gupta recorded on 13.12.2006. Shri S.K. Gupta was further examined on 5.4.2011. The AO took recourse to the presumption permissible under Section 132 (4A) on the basis of these two statements. It is a matter of the record - duly noted by the CIT (A) as well as ITAT that the three companies or business concerns whose monies were supposed to have been reflected in the handwritten ledgers (Bondwell Insurance Brokers, E-Synergy Infosystems Pvt. Ltd. and Paradigm Advertising) were all concerns in which the assessee’s family members or relatives were alleged to have been interested. In the absence of any corroborative evidence found during the search at the premises of the appellant, no adverse inference can be drawn against the appellant merely on the basis of the seized documents as found and seized from the premises of the third party. As has been held in a number of judicial pronouncements relied on by the appellant and extracted in para 2.2.2 hereinabove, presumption u/s 134(4A)/292C is available only in the case of the person from whose possession and control the documents are found and it is not available in respect of a third party. Even in the case of such a person from whose possession and control any incriminating document is found, the presumption u/s 132(4A)/292C is a rebuttable one. Since in the case of the appellant, no corroborative documents or evidence has been found from the control or possession of the appellant, thus hold that the legal presumption as incorporated u/s 132(4A)/292C will not be available to the Assessing Officer in the appellant's case. - Decided in favour of assessee.
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2015 (5) TMI 85
Depreciation on 'goodwill' - whether nature of the marketing rights were such that there was no similarity or identity with the enumerated rights set out in Explanation 3 (b) and having regard to these facts, unless the assessee demonstrated and proved that such rights were akin to the intangible assets mentioned, it could not claim depreciation? - CIT(A) allowed claim also confirmed by ITAT - Held that:- The structure of the definition, or rather expanded definition, which by Explanation 3 spells out what are intangible assets (know-how, patents, copyrights, trademarks, licences, franchises etc.), being of a peculiar nature, the claim which the Court would necessarily have to consider is whether the item claimed to be eligible for depreciation confirms to “other business or commercial rights of similar nature”. In the facts of the present case, a reading of the agreement between STL and the assessee clarifies that a specific amount, i.e., ₹ 9 Crores was paid by the assessee to the transferor who owned commercial rights towards the network and the facilities. The consideration was a specific value but for which the network would not have been otherwise transferred. In that sense, it constituted business or commercial rights which were similar to the enumerated intangible assets. In so concluding, however, this Court does not lay down the general or particular principle that every such claim has to be necessarily allowed as was apparently understood by the ITAT. The circumstance that the declaration of law in Smifs Securities (2012 (8) TMI 713 - SUPREME COURT) envisions inclusion of goodwill as an asset and, therefore, entitled to depreciation, in other words does not necessarily mean that in every case the goodwill claim has to be allowed. In the present case, though termed as goodwill, what was actually parted with by STL was a commercial right, i.e., exclusivity to the network which would not have been otherwise available but for the terms of the arrangement. So viewed, this Court is satisfied that the conclusions arrived at by the CIT (A) and the ITAT cannot be faulted. No substantial question of law arises - Decided in favour of assessee.
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2015 (5) TMI 84
Rectification of mistake - whether the assessee could not point out any apparent mistake in the order passed under Section 264 which could be rectified and therefore, the revision petitions filed were rejected? - Held that:- The assessee has raised a legal objection in his communications dated 26.02.2004 and 27.02.2004 before respondent No.1, pertaining to the assessment years 1996-97 and 1997-98 wherein he has raised the objection of jurisdiction under Section 149(1)(b) and specified that the income chargeable would be the income that escaped tax, which is the relevant factor. Thus, the quantum of tax which has escaped assessment was to be kept in mind. Admittedly, the interest income was only ₹ 2,54,659/- which had, supposedly, escaped income and the return had not been filed. The income chargeable to tax on the said amount was, thus, relevant factor which was sought to be agitated but never dealt with by respondent No.1, solely on the ground that the return had not been filed. The objections having not been dealt with solely on the ground that return had not been filed inspite of being asked to, would, thus, violate the mandate of the Apex Court laid down in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & others [2002 (11) TMI 7 - SUPREME Court] wherein it has been held that the Assessing Officer is bound to dispose of the objections by passing a speaking order. The petitioner had filed the revision petitions under Section 264 and thereafter, the rectification application was filed under Section 154 of the Act. Admittedly, the rectification application was also within limitation and solely on account of the fact that it was filed just before the limitation coming to an end, would not be a ground for respondent No.2 to deny the relief. Merely on the ground that the amount of demand on conclusion of the reassessment proceedings was more than ₹ 1 lac, on the income which is chargeable and which had escaped assessment would have to be seen at the time of issuing notice under Section 149 of the Act and not at the time of the conclusion of assessment proceedings and therefore, the reasoning arrived at by respondent No.2 is also without any justification. Also there was sufficient material before respondent No.1 regarding the amount of compensation received by the deceased-assessee which had been supplied by the LAC vide letter dated 08.03.2004 and therefore, the respondent No.1 was not justified in coming to the conclusion that the deceased-assessee had not supplied the material facts. It was also the bounden duty of respondent No.1 to take into consideration the fact that the land fell within the notified area of the Panipat Municipality or not. Thus the matter is liable to be remanded to respondent No.1 for fresh decision and to take into consideration the returns filed for each assessment years, separately, and also take into consideration the TDS certificates issued by the banks regarding the interest element. The issue of jurisdiction for the 2 years pertaining to the years 1996-97 and 1997-98, as arising under Section 149(1)(b) also be specifically dealt with. - Decided in favour of assessee.
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2015 (5) TMI 83
Re-assessment proceedings - ITAT set aside the re-assessment proceedings on the ground that without rejecting the books of account of the assessee and by making reference to only the report of DVO addition was not justified - Held that:- In the present case, the proceedings have been sought to be opened by way of re-assessment, during the subsequent assessment proceedings, without following the prescribed procedure of rejecting the books of account which had been maintained by the assessee and thus, the questions of law necessarily have to be decided against the Revenue. Tribunal was correct in deleting the additions made by the AO who never rejected the books of account before referring the matter to the DVO and on the basis of her report, the re-assessment proceedings could not have been initiated, the present appeals are dismissed. - Decided in favour of assessee.
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2015 (5) TMI 82
Rejection of books of accounts - G.P. addition of 1% on uniform basis for AY 2002-2003 to 2007-2008 - Held that:- It is not disputed that the assessee's yield commensurate to the industrial GP disclosed by the assessee is comparable and satisfactory. In our considered view, when no palpable inconsistency in the books of account they cannot be rejected merely on the basis of assumption that assessee is not producing quantitative tally. Had there been any quantitative tally, assessee has produced stock register but in the absence of day-to-day stock tally at various places of business by itself cannot be a conclusion to give that assessee is shine away from producing the day-to-day tally. In view of these facts, we see no justification in rejection of books of accounts. The assessee has demonstrated that its yield of rice, bran and faak is as per the industry norm and the GP rate in all the years is favourably comparable. Under these circumstances, it cannot be held that the assessee's book results are unsatisfactory. Merely because a search is carried on it is not automatically meant that assessee is indulging in some nefarious activities. This is the burden of the revenue to prove in this behalf with material and cogent reasons. The ad hoc disallowance, rejection of books and taking support of this fact which we are not able to subscribe the ad hoc addition of 1% of sales is again without any basis whatsoever. Stock tally cannot lead to an ad hoc assumption that 1% of sales are liable to be added in the income of the assessee. - Decided in favour of assessee.
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2015 (5) TMI 81
Reopening of assessment - unaccounted loans - revenue submitted that all the four parties concerned had facilitated accommodation entries to assessee - Held that:- Unable to agree with revenue since the Petitioner has clearly stated that all the payments were made by account payee cheques which were encashed in the bank account of the Petitioner in the regular course of business. We find that the Petitioner has also paid interest on this loans after deduction of tax at source and TDS returns are also accordingly filed. There is no dispute in regard to the above. We find nothing to support the said contentions of the revenue. The revenue's contention in the affidavit in reply has no merit. On the other hand, the loans appear to be taken in the regular course of business and were found amongst the 45 members in respect of which all particulars have already been furnished by the assessee to the Assessing Officer No such reasons for the Assessing Officer or the revenue to come to a conclusion that income had escaped assessment. All the communication and evidence provided by the Petitioner to the revenue authorities disclosed that the loans were bonafide, taken in the regular course of business through account payee cheques. Thus the proposed reopening lacks justification and the impugned notice deserves to be quashed had set aside. - Decided in favour of assessee.
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2015 (5) TMI 80
Disallowance u/s 36(i)(vii) - assessee has not fulfilled the conditions as per section 36(2)with respect of claim of Bad Debt - ITAT allowing the assessee's claim for Bad Debts - Held that:- There was no occasion for the AO to disallow the write off on the ground that no attempts have been made to recover the same. The assessee acquired a proprietory concern M/s.Sharda International and the assets in the form of advances of the balance sheet of two entities were part of the acquisition. These advances were bad debts and were written off under the provisions of Section 36(1)(vii) as amended and effective from 1st April, 1989. Prior to 1st April, 1989 Section 36(1)(vii) provided that for an amount of debt or part thereof to be written off it would have to be established that it became a bad debt in the previous year. Therefore, the fact that the said debt had become irrecoverable should have been established. However, after 1st April, 1989 the amended section provided that the amount of bad debt or part thereof which is written off as irrecoverable could be claimed as deduction. Accordingly no fault can be found with the order of the Tribunal. - Decided in favour of assessee.
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2015 (5) TMI 79
Deduction under Section 80-IA - ITAT allowed claim - Whether ITAT was right in holding that the second unit of the respondent-assessee located at A-10, Sector 59, Noida was not formed by splitting up, or reconstruction, of a business already in existence? - Held that:- The order of the CIT(A) in the present case took note of the fact that the AO denied altogether the benefit of Section 80-IA on the terms that there was no manufacturing activity at all in Unit-II. The AO apparently completely ignored the fact that Section 80-IA benefit was enjoyed by the assessee for 1998-99 and 1999-2000. In this view, the CIT(A) - we think - quite correctly too - directed the AO to compute the portion of the benefits arising out of the manufacturing activities carried out in Unit-II and execute the component of job work in the process and the income attributable to the job work performed by Unit-I. The assessee was not aggrieved by this. - Decided in favour of the assessee
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2015 (5) TMI 78
Deduction under section 36(1)(va) - provident fund contribution made by the assessee beyond the period specified in Employees Provident Fund Scheme, 1952 - ITAT allowed the claim - Held that:-Before the Tribunal, we find that the department's representative fairly conceded that the case at hand was covered against the revenue by the decision of Marubeni India (P) Ltd. V/s. CIT ( 2006 (6) TMI 143 - ITAT DELHI-A) and Kanoi Paper & Industries Ltd. V/s. JCIT (2001 (5) TMI 139 - ITAT CALCUTTA-E) and especially in view of this position, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) by observing that the payment of contribution although made beyond the statutory period of 15 days from the end of the month in which wages are paid was made within the grace period of five days. The facts do not admit of any wanton negligence in complying with statutory requirements. The payment was in fact made within the grace period allowed to the assessee. The payment having been made within the grace period of five days, we are of the view that there is no reason to interfere. In the facts of the present case, the appeals do not raise any substantial question of law - Decided in favour of assessee.
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2015 (5) TMI 77
Determination of the market value of immovable property as on 01.04.1981 - valuation of the said property has been made on the basis of an alleged agreement of sale dated 12.12.1978 by tribunal - Held that:- We find substance in the submissions made by learned Counsel for the appellant, as the very basis for valuation of the property, which was the agreement for sale, was itself held not to be a valid agreement. The fair market value of the property as assessed by the Tribunal cannot be said to be a proper mode of assessment. We therefore hold that the fair market value of the property as determined by the Tribunal, was without any proper basis. Matter should be decided afresh by the Assessing Officer after ignoring the agreement for sale dated 12.12.1978 and on the basis of the other factors relevant, for consideration of the fair market value. We thus answer the question of law in favour of the assessee
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2015 (5) TMI 76
Addition under Section 41(1) - CIT(A) restricted the addition also confirmed by ITAT - Held that:- What is apparent is that the AO based its conclusion on the basis of a narrow premise i.e. lack of response by the three parties i.e. M/s A.L. Metal & Methods Pvt. Ltd., M/s Laxmi Enterprises and M/s Komal Forging. The CIT (Appeals) noticed the inherent contradiction in the AO’s action - on the one hand, accepting the higher GP Rate, which in turn was based upon the total turnover of the assessee, while on the other disallowed the entire amount of purchases from the three parties and not only with respect to the amount outstanding. Thus the CIT (Appeals) was justified restricting the addition to ₹ 28,87,305/- in the facts of the case, since that was the amount indicated as outstanding as on 31.03.2003. No substantial question of law arises. - Decided against revenue.
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2015 (5) TMI 75
Terms and conditions of Exit Option Scheme of RBI - Voluntary retirement scheme - exemption u/s 10(10C) - whether Exit Option Scheme of RBI were different from the terms and conditions of Exit Option Scheme framed by SBI as held by ITAT - Held that:- The object of enacting section 10(10C) of the Income Tax Act, 1961 was to reduce employees strength so that unwanted personnel could seek voluntary retirement thereby enabling the public sector to achieve the true object for which it was established. The guidelines for implementing the scheme under section 10(10C) are laid down in Rule 2BA of the Income Tax Rules, 1962. The Reserve Bank of India had formulated one Optional Early Retirement Scheme and the amounts paid under this scheme, therefore, were eligible for exemption. Judgment in the case of Chandra Rangnathan & Ors. vs. Commissioner of Income Tax (2009 (10) TMI 498 - SUPREME COURT OF INDIA) rendered by the Hon'ble Supreme Court would conclude the issue- Decided in favour of the assessee.
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2015 (5) TMI 74
Regularization of service - whether the services of the petitioner were engaged on contingent basis and it was not a regular appointment and the petitioner has no right to seek regularisation of services, and a writ of mandamus cannot be issued to regularise services of the petitioner - Held that:- Petitioner was engaged to work for the respondent may be in different capacities and since the year 2000 work has been extracted by the office of the respondent may be initially on a contingent basis but further on regular basis as is reflected in the internal communication dated 15.11.2007 in which, office of the Addl. Director of Income Tax, Belgaum has forwarded the names of four persons with regard to regularization of their service and communicated to the Chief Commissioner of Income Tax, Bangalore. There was move of regularization of services of such employees when the respondents have proceeded to regularise the services of similarly situated persons, and have regularised the services of only two persons by not extending the same benefit to petitioner, the said action is to be inferred as an arbitrary one. After putting nearly fifteen years of service, at this juncture if it is denied, it is violation of the human right also. In the result Respondents are directed to pass appropriate orders, more particularly, keeping in view the internal communication dated 15.11.2007 Annexure-D. Time to comply with the order is months from the date of receipt of a certified copy of this order.
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2015 (5) TMI 73
Revision u/s 263 - Deduction in respect of profits and gains from Industrial undertaking or enterprises engaged in infrastructure development etc - AO finalised the assessment proceedings with a final conclusion that on the facts of the case, the assessee is eligible for deduction u/s 80IA(4) - Held that:- The assessee company is in the business of developing, operating and maintaining infrastructure facility project since its incorporation w.e.f. 5.4.2007. We also observe that the development of the toll road with controlled access and exit points and right to collect toll from the users clearly put the Expressway within the ambit of road which is a toll road. We further hold that the development of the Expressway between Noida and Agra and development of Five land parcels adjacent to Expressway are inseparable and integral part of one project and the assessee is entitled and eligible for deduction u/s 80IA (4) of the Act on the income earned and derived from the business of development of Infrastructure facility for AY 2009-10 after commencement of its business w.e.f. 5.4.2007 at the option of the assessee which cannot be denied by wrongly putting the case of the assessee in clause (b) of Explanation to section 80IA(4)(i) of the Act. The view taken by the AO while granting deduction u/s 80IA(4) of the Act, in respect to income from sale/ sub lease of land for development, is reasonable, plausible and the same cannot be held as unsustainable and not in accordance with law and therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the Revenue. The revision of the assessment order on the issue of allowability of deduction u/s 80IA(4) of the Act in regard to the income of interest accrued to the assessee from the deposit of surplus funds in the fixed deposit banks accounts and allowability of depreciation is also not valid because these issues had not been raised or pointed out in the notice issued u/s 263 of the Act and thus, it is not open and permissible for the Ld. CIT to revise the assessment order on these grounds. Since assumption of jurisdiction u/s 263 of the Act was not valid on these two issues, the grounds raised by the assessee on merit become academic and infructuous. Ld. CIT has not conclusively decided the issue with a conclusion in one way or the other and has left it midway, which covers this case in favour of the assessee by the recent judgment of Hon'ble Delhi High Court in the case of Globus Infocum Ltd. vs. CIT (2014 (9) TMI 18 - DELHI HIGH COURT ). Thus the impugned order u/s 263 of the Act was not valid and the same was void ab initio. - Decided in favour of the assessee.
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2015 (5) TMI 72
Disallowance u/s 14A - CIT(A) directed AO to restrict the disallowance in this regard to 2 per cent. only on tax-free bond reasonably as some expenditure element is definitely involved in earning this tax-free bond - Held that:- It is evident that in the assessment proceedings, the assessee had raised the claim of exempt income without attributing any expenditure which was determined by the Assessing Officer by following apportionment formula. Thus disallowance of expenditure in earning exempt income at 2 per cent. based on estimation is reasonable - Decided against assessee. Depreciation on leased out assets - Held that:- Merely because for the first year for the purpose of claiming depreciation is 1996-97 regarding which the assessee's appeals are pending before the Commissioner of Income-tax (Appeals), it itself cannot a ground to restore the issue back to the Assessing Officer. We also deem it proper to observe that in case the assessee is held entitled for the relief of depreciation in question in the first assessment year, it would get the same relief in subsequent years. Since the assessee has been held entitled for the units in question for the assessment year 1996-97, we see no reason as to why it is not entitled for the same very assets in the impugned assessment year. The argument raised by the Revenue that the assessee led no evidence or material to prove its case also does not inspire any confidence as there is no cogent material placed before us to accept the Revenue's contention that the assessee is not entitled for the relief granted by the Commissioner of Income-tax (Appeals). - Decided in favour of assessee. Disallowance of payment to non approved pension fund - Held that:- In the instant case as well, the vital aspect of application of the legal principle of "commercial expedience" under section 37(1) of the Act has escaped the consideration of the Assessing Officer as well as the Commissioner of Income-tax (Appeals). Hence, we observe that the Assessing Officer in this case shall pass a fresh order in accordance with law by taking into consideration the above case law after affording adequate opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes. Cost of software purchase expenditure - Revenue v/s capital expenditure - Held that:- The concerned claimant has to prove by leading cogent evidence that the software in issue does not give any enduring benefit. In this case, no such explanation of the assessee is forthcoming. It is also not the assessee's case that it had not been afforded adequate opportunity of hearing by the Assessing Officer or the Commissioner of Income-tax (Appeals) so as to prove the software's use and utility by leading cogent evidence. Hence, we are unable to concur with the assessee's claim on the premise that purchase of software by the assessee is necessarily liable to be termed as revenue expenditure. Although the authorised representative has taken pains to refer the abovesaid case law, but as already observed hereinabove, on facts itself the assessee's case has failed to convince us for want of details of expenses. - Decided against the assessee Filing fees paid to the Registrar of Companies - Revenue v/s capital expenditure - Held that:- In the instant case as well, the assessee had made the payment to the Registrar of Companies to embroaden its capital base. Thus the payment in question made by the assessee to the Registrar of Companies is an instance of incurring capital expenditure - Decided against the assessee. Arrears of wages on account of pay revision of its employees disallowed - Held that:- in view of the fact that the issue pertaining to the same very bipartite settlement and pay revision in respect of similar undertaking alike the assessee has been decided in favour of the Revenue, we subscribe to the same observations of the coordinate Bench and hold that the liability on account of pay revision as claimed by the assessee is not ascertained one. Hence, we affirm the finding of the Commissioner of Income-tax (Appeals). - Decided against assessee. Cash excess disallowed - cash excess as on March 31, 1996, an amount of ₹ 1,03,674 stood transferred to miscellaneous account - CIT(A) deleted addition - Held that:- Since the Assessing Officer himself had allowed the cash excess as on March 31, 1996, in view of the said findings only, the Commissioner of Income-tax (Appeals) has proceeded to delete the addition. The factual position as it emanates from the orders of the lower authorities is that the assessee offers cash excess once in every fourth year, therefore, we see no reason to affirm the disallowance in question because the four year time period includes the impugned assessment year as well. Accordingly, we hold that the Commissioner of Income-tax (Appeals) has rightly deleted the addition. - Decided against revenue. Re-depreciation on investment - Held that:- Since the Assessing Officer himself has held the disallowance to be inappropriate by rectifying the assessment order, there is no locus standi on the part of the Revenue to raise the instant ground. Hence, we reject this ground agitated by the Revenue. - Decided against revenue. Interest amount paid on securities as "revenue expenditure" - Held that:- the issue deserves to be redecided by the Assessing Officer by way of a detailed order in accordance with law after affording an opportunity of hearing to the assessee. We also make it clear that we have not expressed any opinion on merits of the issue. Therefore, the Assessing Officer would be at liberty to examine the issue afresh in the light of judgment of CIT v. Karur Vysya Bank Ltd. [2004 (7) TMI 52 - MADRAS High Court ] as well as various orders of co-ordinate Bench of Income- tax Appellate Tribunal, Chennai in the earlier assessment years and the case law of CIT v. ING Vysya Bank Ltd. [2013 (6) TMI 43 - KARNATAKA HIGH COURT] Disallowance of bad debts write off under section 37(1)(vii) - Held that:- In the instant case, none the less the assessee is entitled to write off the debts. At the same time and in the light of the hon'ble Supreme Court's observations in Catholic Syrian Bank Ltd. v. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA ], we also feel that while writing off the bad debts, the concerned assessee is not entitled to double deduction. It is also noticed that even the hon'ble Supreme Court has remitted the matter back to the Assessing Officer with specific directions. In view thereof and more so, since we have restored preceding issue back to the Assessing Officer, we also deem it proper to restore the ground back to the Assessing Officer, who shall pass a speaking order in accordance with law by taking into consideration the judgment of the hon'ble Supreme Court abovesaid. - Decided in favour of assessee by way of remand. Addition of surplus amount received by the assessee from jewellery auction - Held that:- The facts are not disputed, i.e., the assessee had shown surplus amount received from the auction of jewellery which had claimed to be returnable to the concerned borrowers which is disputed by the Revenue. We find that in the case law of City Union Bank Ltd. (supra) ; the co-ordinate Bench, after considering case law of T. V. Sundaram Iyengar and Sons [ 1996 (9) TMI 1 - SUPREME Court] had decided the issue of surplus arising from "stale drafts" to hold that it is true that this liability has occurred due to ordinary business (trading) transac tions of the assessee-bank. - Thus Commissioner of Income-tax (Appeals) has rightly deleted the addition arising from surplus of jewellery auction. - Decided in favour of assessee. Revision u/s 263 - Held that:- we are of the view that since the revision order under section 263 dated March 30, 2009 passed by the Commissioner of Income-tax, Trichy itself does not exist, the order of the Commissioner of Income-tax (Appeals) and that of the Assessing Officer have no legs to stand. Therefore, we hold that both these appeals have become infructuous as the additions in question made by the Assessing Officer no more hold ground. - Decided in favour of assessee. Disallowance on account of pooja expenses - Held that:- These expenses have been incurred only in respect of the workers, it is clear that the expenses have been rightly held to be ones incurred for the welfare of the workers. Thus we accept the assessee's ground and delete the disallowance on account of pooja expenses - Decided in favour of assessee. Business expenditure for developing business by gifting small mementos and gifts on special occasions - Held that:- The assessee has been able to prove the case with preponderance of probability if not beyond reasonable doubt that the gift articles as mentioned in the return were purchased and the same were utilised for promotion and growth of the business . Thus there is no issue between parties on facts, we hold that the assessee is entitled for the relief in question. - Decided in favour of assessee. Ex gratia payments disallowed by CIT(A) - Held that:- Admitted the relevant facts are that the assessee claims that the payment in question is made for earning more profit. This, in our opinion is nothing but bonus which is only in appropriations of profit. Hence, we see no reason to interfere in the findings of the Commissioner of Income-tax (Appeals). - Decided against assessee.
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2015 (5) TMI 71
Revision of assessment order - CIT finding that the relevant assessment order to be both erroneous and prejudicial to the interests of the Revenue - Denial of exemption u/s 54F - Addition on account of additional sale consideration - Rejection of expenditure related to cost of acquisition of shares - Held that:- Ground No.2 is against the order of the CIT in assuming jurisdiction u/s 263. We find that the AO has passed cryptic, non speaking order and hence we are of the opinion that the jurisdiction assumed u/s 263 by the CIT is justified. Our opinion is based on the decision of Apex Court in Toyota Motor Corpn. [2008 (8) TMI 56 - SUPREME COURT]. Exemption u/s 54F - The ld Counsel for the assessee has pointed to the page No.72 of the Paper Book wherein the lease agreement has been produced. Since the assessee has treated one property as commercial property and the other property is the only residential house in the possession of the assessee, the assessee is entitled to exemption u/s 54F. Further the incomes of the properties owned by the minor daughters were clubbed in the hands of the assessee, but the investment for purchase of the said properties has come from the independent sources of the daughters and hence it cannot be presumed that assessee is the owner of the properties. Hence in our opinion the assessee having only one residential house is eligible for claiming exemption u/s 54F. We are of the opinion that the CIT erred in determining the short term capital gain on the entire property while computing deduction under the head "capital gain". The long term capital gain has to be calculated on the undivided interest in land i.e. on the land component. Hence we set aside this issue to the file of the AO to rework the capital gain computation. The assessee may be given an opportunity to represent her case, since the assessee has elaborately submitted before us. Denial u/s 54F on ground of that possession of new asset is beyond three years - Respectfully following the decision [2013 (11) TMI 415 - ITAT HYDERABAD ] of the Coordinate Bench of the ITAT, Hyderabad Bench, we set aside the issue to the file of the AO, with a direction to follow this decision of the ITAT in the instant case before us. Addition on account of additional sale consideration - Assessee reiterated its submission that the amount of ₹ 20.00 lakhs received as deposit from the developer and the same had been refunded back, copy of the confirmation letter in this regard from Lumbini Constructions Ltd was enclosed. Hence no amount can be added on this count. We have perused the evidence for return of the amount of deposit and are satisfied with the assessee's claim that no amount can be added on this count. This ground of appeal is allowed. Addition on account of additional sale consideration in short term capital gains - In our opinion, the ld CIT erred in directing to bring to tax an amount of ₹ 18,50,000/- as additional sale consideration without appreciating the fact that this amount was not sale consideration, but was towards society corpus fund, water and electricity connection charges, cost of solar water heating system, which was in turn to be defrayed to respective agencies. Hence, the same cannot be considered as sale consideration. The ld CIT (A) seems to have ignored the statement of sale consideration received, which was filed before him. The assessee did include amount received towards electricity and water charges (Rs.1,10,000 per flat) from 8 flat owners, amount of ₹ 1,62,500 received towards solar system from 8 flat owners and ₹ 1,50,000 towards corpus fund from three flat owners which in turn, were defrayed to respective agencies. Those flat owners who have not paid their contribution to the assessee have directly paid their respective shares to the concerned agencies. Hence these amounts should not form part of sale consideration of the flats sold. Hence this ground of appeal preferred by the assessee is allowed. Rejection of expenditure related to cost of acquisition of shares - We find no infirmity with the order of the CIT (A). We are of the opinion that the deduction is permissible only when (i) Expenditure is incurred wholly and exclusively in connection with such transfer and (ii) Expenditure is towards the cost of acquisition of the asset and the cost of any improvement thereto. The assessee has not proved that it comes under any one of the permissible deduction as stated above and hence is eligible. Also no evidence has been produced with regard to the advice rendered. Hence the deduction is unavailable to the assessee. Disallowane of deduction u/s 54F on the ground that assessee's deposit in Bank a/c made in October 2006 is beyond the due date for filing of ROI - Since the AO has allowed the exemption u/s 54F of the Act as claimed by the assessee after examining the pass book produced by the assessee and verifying the details also, the assessee had made substantial investment within 3 years from the sale of original asset. We also find that the date of filing the return was extended and the amount was deposited. The assessee has produced the notification for extension by the CBDT at page 34 of the paper book. Hence, we are of the opinion that the assessee is eligible for deduction u/s 54F. - Decided partly in favour of appellants.
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2015 (5) TMI 70
Transfer pricing adjustment - Aggregated price charged by the assessee from AE was not accepted by the TPO and the TPO has selected only those prices which are found less than the arm’s length price - Disallowance of bad debts written off on account of non receipt of TDS Certificate from debtors - Disallowance of staff advances written off - Disallowance of advances given to Australian branch by US branch - Exclusion of certain expenses incurred in foreign currency from the total turnover for the purpose of computation of deduction u/s 10A of the Act - Transfer pricing adjustment on account of notional interest on free advance granted to the AE - Held that:- The case of the assessee is at better footing than the various closely linked and continuous nature of transactions because the man hour rates are only the bais of price charged by the assessee and not the independent price for an independent service. Accordingly, we are of the view that the price charged by the assessee for rendering the final composite work of software development service is the aggregate price and cannot be bifurcated on the basis of the man hour rate of each member of the team. As we have already observed that the assessee is providing the software development services and not the man hour to its clients, thereore, in view of the facts and circumstances of the case as well as the above discussion, we set aside the orders of authorities below and direct the Assessing Officer/TPO to recomputed and determine the ALP in respect of software development services by taking into consideration the aggregated price charged by the assessee from AE as well as non AE and not by selecting the independent man hour rate based on which, the assessee charged price from AE and non AE. Disallowance of bad debts written off on account of non receipt of TDS Certificate from debtors - The non realization of the sum represented by the TDS receivable is clearly a loss suffered in the course of business and, therefore, is an allowable claim of the assessee. An identical issue has been considered by the Delhi Benches of this Tribunal in the case of Kelly Services India Pvt. Ltd.[2013 (1) TMI 83 - ITAT DELHI]. Disallowance of staff advances written off - We are of the view that if the advances were given by the assessee under some specific scheme or for specific purposes as per the policy of the assessee and, thereafter, if the recipient employee has left the service of the assessee then the said advance which becomes irrecoverable and consequently is an allowable claim. Since the fact on this point has neither been recorded nor discussed by the authorities below, therefore, this issue requires proper verification and examination. Accordingly, we set aside this issue to the record of Assessing Officer to verify whether the advances in question were given to the staff who has already left the service of the assessee and further whether the claim of the assessee is allowable in view of the decisions relied upon by the assessee. Needless to say the Assessing Officer should give a proper opportunity of hearing to the assessee. Alternatively, the assessee has also submitted that even if the claim of the assessee is disallowed then the said amount is eligible for deduction u/s 10A. Since this issue has not been examined by the authorities below, therefore, the alternative plea of the assessee shall also be considered and examined by the Assessing Officer. Disallowance of advances given to Australian branch by US branch - The assessee claimed to have given a loan of ₹ 7,20,886/- to its Australia based subsidiary. The assessee claimed that the said loan was given for meeting the working capital requirement of the assessee subsidiary which was also engaged in the same business of software development as of the assessee. The subsidiary has suffered a huge loss and consequently the business was closed. Accordingly, the assessee written off the amount and claimed as bad debt. We find that the facts of the said loan was given by the assessee to meet the requirement of working capital of the subsidiary and the subsidiary was engaged in the same business as of the assessee has not been considered and discussed by the authorities below. The issue has been considered by the various decisions as relied upon by the assessee and found to be an allowable claim when the amount was given for expenses and working capital of the subsidiary which was considered to be for commercial expediency of the assessee’s business. Accordingly, we direct the Assessing Officer to verify the fact as claimed by the assessee that the amount in question was advanced to the subsidiary of the assessee for meeting the working capital requirement and the subsidiary was also engaged in the same business and then decide the matter in the light of various decisions as relied upon by the assessee. Transfer pricing adjustment on account of notional interest on free advance granted to the AE - We note that this issue has been considered by the Tribunal in the number of decisions where the arm’s length rate of interest is considered as LIBOR +2%. In the case of Aurionpro Solutions Ltd.[2013 (11) TMI 806 - ITAT MUMBAI], the Tribunal has held that the loan given to the AE is an international transaction. however, by following the various Judgments of the Tribunal on the issue of rate of interest being arm’s length interest. Exclusion of certain expenses incurred in foreign currency from the total turnover for the purpose of computation of deduction u/s 10A of the Act - The view which we have taken is consistent with the view which was taken, though in the context of section 80HHC, by a Division Bench of this Court in Sudarshan Chemicals Industries Ltd. [2000 (8) TMI 73 - BOMBAY High Court].This decision has been cited with approval by the Supreme Court in Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] . The same view has been taken by the Supreme Court in Catapharma (India) (P.) Ltd. [2007 (7) TMI 203 - SUPREME Court ] in which the decision of the Division Bench in Sudarshan Chemical Industries Ltd.'s case has also been adverted to. Accordingly, in view of the judgment of Hon’ble Jurisdictional High Court, we do not find any error or illegality in the impugned order of CIT(A). - In the result, appeals of the assessee are partly allowed.
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2015 (5) TMI 69
Wrong section quoted while claiming deduction u/s 54 or u/s 54F - Conditions relevant to sections fulfilled - Held that:- From the various details furnished by the assessee, it is obvious that the assessee is otherwise entitled to deduction u/s.54. The Ld. Departmental Representative also fairly conceded that the assessee is entitled to claim deduction u/s.54. However, since the assessee had made a claim under the wrong section and proper claim was not made before the AO, therefore, the same was denied to him. Since the assessee fulfils the conditions prescribed in section 54 for claiming the deduction, therefore, merely because the assessee had made a claim under a wrong section instead of the correct section, the same in our opinion, should not be a ground to deny the benefit of deduction otherwise allowable to the assessee. Although, in the instant case, the assessee is a practicing Chartered Accountant and who is supposed to be conversant with the law, however, he has made the claim under the wrong section 54D instead of the correction section 54. However, he is otherwise entitled to deduction u/s.54 as per the facts of the case. Therefore, in view of the various decisions, Paramjeet Singh Chhabra [2015 (4) TMI 939 - ITAT INDORE] relied on by the CIT(A) and in view of the CBDT Circular No. 14 (XL-35) dated 11-04-55, we are of the considered opinion that the relief which is otherwise due to the assessee should not be denied. In this view of the matter and in view of the detailed reasoning given by the CIT(A) and in absence of any distinguishing features brought to our notice, we do not find any infirmity in the order of CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. - Decided against the revenue.
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Customs
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2015 (5) TMI 94
DEPB Benefit - Overvaluation of goods - appellant have overvalued the export consignments to reduce their profit margin - Held that:- Though the Commissioner by invoking section 9D(1) (a) read with Section 9D(2) of Central Excise Act, 1944 has relied upon the statements of the suppliers which did not turn up for cross examination, he while doing so, has not followed the directions of Hon'ble Delhi High Court on this issue in para 28 to 32 its judgement in the case of J & K Cigarettes vs. Commissioner of Customs, Delhi reported in [2009 (8) TMI 64 - DELHI HIGH COURT] and has not given a finding that on the point as to whether the two witnesses, who did not turn up for cross examination are dead or cannot be found or are incapable of giving evidence or are being kept out of the way by the appellant or their presence cannot be obtained without an amount of delay or expense , which is unreasonable. Just because the witnesses did not appear for cross examination, their statements cannot be used against the appellant by invoking section 9D(2) read with section 9D(1) (a). For invoking these provisions, a finding by the adjudicating authority after hearing affected party that the circumstances enumerated in clause (a) of section 9D(1) exist, has to be given, while this has not been done in this case. - impugned order is set aside and the matter is remanded back to the Commissioner for de novo adjudication - Decided in favour of assessee.
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2015 (5) TMI 92
Clandestine removal of the imported goods - violation of the EXIM Policy 1997 - 02 - goods were removed and sold in the open market - Contravention of Section 45(2)(b) of the Customs Act, 1962 - Held that:- adjudicating authority has given detail finding on this issue - Partial stay granted.
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Corporate Laws
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2015 (5) TMI 91
Cooperative Societies registered under the provisions of the Gujarat Cooperative Societies Act, 1961 - Exclusion of names of the members of the Managing Committee of the petitioner Societies from the Voters’ list of Agriculturist Constituency for the election of Agricultural Produce Market Committee - Only interim order of Liquidation / Winding up passed - Held that:- On conjoint reading of Sections 107, 108 and 20 of the Cooperative Societies Act, after the interim winding up/liquidation order passed under Section 107(1) of the Cooperative Societies Act and before the final order of winding up is passed under Section 107(3) of the Cooperative Societies Act, the Officers shall continue to hold their offices and even the registration of the Society continues. Under the circumstances, when the registration of the Society continues, the members of the Managing Committee of such society dispensing with agricultural credit shall have a right to exercise their powers as officer bearers of the society i.e. to have their names included in the voters’ list of Agriculturist Constituency of the APMC, Siddhpur, considering Rule 5 of the Agricultural Produce Market Committee Rules. As such the aforesaid issue is now not res integra in view of the decision of the learned Single Judge of this Court in the case of Mansangbhai Dalsang Chaudhary. It is required to be noted that in the present case as observed herein above as such specific prayers were made by the respondent No.5 in aforesaid Special Civil Application No.190/2015 and other allied matters for directing the Authorized Officers not to include the names of the members of the Managing Committee of the petitioner Societies, however no such relief has been granted by the Division Bench while deciding and disposing of the aforesaid Special Civil Applications. Be that as it may, for the reasons stated herein above, we are of the view that the Authorized Officer has materially erred in excluding the names of the members of the Managing Committee of the petitioner Societies from the voters’ list of Agriculturist Constituency of the APMC, Siddhpur on the ground that interim orders of winding up/liquidation have been passed, the members of the Managing Committee of such societies have no right to include their names in the voters’ list. - Decided in favour of appellants.
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2015 (5) TMI 90
Winding up petition - Recalling of order - Ex parte order of admissiopn of winding petition passed - Advertisement of petition already done - Held that:- I have considered the arguments advanced by the learned counsel for the parties and I have also considered Judgments relied upon by the parties. Considered judgements Anil kumar Sachdeva [1978 (11) TMI 125 - HIGH COURT OF DELHI], Kerala State Industrial Development Corpn. Ltd. [1987 (7) TMI 500 - HIGH COURT OF KERALA] does not support or help the applicant in any manner. The order of admission was passed on 21.03.2013. The advertisement was made on 19.04.2013. On 24.03.2013, the applicant through Advocate Shri Kantak had come to know that the Company petition was listed for admission on 21.03.2013 and order admitting and advertising the petition in terms of the rules came to be passed. Nothing had prevented the applicant from immediately moving the Court requesting to direct that the advertisement may not be made by informing the Court that they intend to file an application for recalling the ex parte order of admission. The applicant has stated that on 25.03.2013, the applicant sought for the information as to the date and time in the additional board on which the Company Petition was displayed and that such information was received by the applicant on 09.04.2013. From 09.04.2013 till 18.04.2013, the applicant had ample time to move the present application or at least an application to request the Court to direct that the advertisement may not be made as they were to file an applicant to recall the order of admission. As already stated above, the advertisement was done on 19.04.2013.The applicant filed the present application on 25.04.2013. There is no sufficient cause shown for such delay. The applicant has, otherwise, made various averments on merits running in at least 22 pages and has also produced various documents. In answer to that, the respondent has filed a detailed reply containing at least about eight pages on merits. The applicant has filed affidavit-in-rejoinder of 14 pages and one more document along with the same. The respondent has filed affidavit-in-sur-rejoinder and has produced the balance sheet. The learned counsel for the parties also made several submissions on merits. It can be said that there was prima facie case for admitting the petition. - Decided against the appellant.
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Service Tax
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2015 (5) TMI 109
Denial of refund claim - Bar of limitation - some invoices do not contain requisite details as prescribed in rule 4A of Service Tax Rules, 1994 - No evidence of payment made against the invoices on which refund is sought - Held that:- adjudicating authority has taken the new ground to adjudicate the refund at the time of verification of certain documents which is also not permissible in law. As the show cause notice was issued to the appellant in the matter has already attained finality by the order of the Commissioner (Appeals) on 02.09.2011. If at all, the adjudicating authority wanted to re-examine all the refund claims, the adjudicating authority is required to be issue fresh show cause notice which the adjudicating authority has failed to do so. In the circumstances, the order dated 02.09.2011 has attained finality as held by the Apex Court in the case of ITC Ltd. [2006 (9) TMI 34 - SUPREME COURT OF INDIA], Revenue has not preferred any appeal against that order. In the circumstances, the adjudicating authority has no right to re-examine the refund claim but only can verify the documents as directed by the Commissioner (Appeals). In the Notification No.41/2007, there is no condition that if the services availed prior to the date of notification, the appellant are not entitled to refund claim as held by the Hon ble Bombay Court in the case of WNS Global Service Pvt.Ltd. (2008 (1) TMI 94 - CESTAT, MUMBAI). - Impugned order is set aside - Decided in favour of assessee.
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2015 (5) TMI 108
Business Support Service - transmission and distribution of electricity - Benefit of Notification No.45 /2010 ST dt . 20.07.2010 - Held that:- Notification has been interpreted by this Tribunal in the case of M.P.Power Transmission Co. Ltd. (2011 (2) TMI 982 - CESTAT, NEW DELHI) and later followed in the case of Noida Power Co.Ltd . Vs. Commissioner of C.Ex . Noida [2013 (8) TMI 746 - CESTAT NEW DELHI] wherein it has been held that no service tax is required to be paid for rendering services in relation to transmission and distribution of electricity during the period mentioned in the said Notification. We have no reason to disagree with the said decisions of the co-ordinate Bench of this Tribunal. Besides, in view of the clarification issued by the Board, the Appellant- assessee are eligible to the benefit of the said Notification. In the result, the impugned Order is set aside to the extent of confirming the demand against the Appellant - Decided in favour of assessee.
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2015 (5) TMI 107
GTA service - liability to pay service tax on freight is on the consignee or consignor - consignor get the reimbursement from the consignee - penalty under Section 77 & 78 - Held that:- If the person is covered under the category (a) to (g) of clause (v) of Rule 2(1)(d) above and if that person pays the freight towards the GTA services, he is that person who is liable to discharge the service tax. In the present case, it is undisputed fact that the GTA services were provided by the transporter for transportation of the goods to the appellant through its consignee. For the said GTA services it is the appellant who has paid the freight to the transporter. - they have taken reimbursement from the consignee after paying freight to the transporter. The argument that, since they were not liable to pay the freight to the transporter, they are not liable for service tax is not acceptable - appellant is legally responsible to discharge the service tax. - decision of S.R. Drugs [2011 (6) TMI 493 - CESTAT, MUMBAI] distinguished - Decision in the case of Essar Logistics [2014 (6) TMI 763 - CESTAT AHMEDABAD] followed - Decided against assessee.
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2015 (5) TMI 106
Waiver of pre-deposit - Extended period of limitation - Real Estate Agent - Suppression of facts - Penalty imposed under Section 76, 77 & 78 - Held that:- Mentioning of different amounts in the first agreement to sale, one attributable to the sale of the land and the other to the nomination charges itself is indicative of the fact that the entire consideration mentioned in the agreement was not towards the value of the land. Further, reducing the sale value to ₹ 4.25 lakhs again raises doubts about the bonafides of the contract. Further, the fact of payment of consideration in the bank account of the appellant's wife, as also a part of the consideration in the appellant's bank account without giving details of the quantum of land owned by the appellant and also by his wife individually or jointly lead to the factual position, that the appellant was procuring the land from the other small land owners and without getting the same registered in his own name, was passing on the same to the developers, is indicative of the absence of bonafides on the part of the assessee. Issue has come to the knowledge of the Revenue by initiation of investigation in 2009 onwards. As per the learned advocate, the investigations which were started in February 2009 were completed in March 2009 and as such the show-cause notice issued in June 2011 has to be held as barred by limitation. Apart from the fact that the appellant did not came forward himself to place all the facts before the service tax authorities, we find no merits in the appellant's plea that the investigations were completed by March 2009. The appellants not being a part of the department, would not be in a position to say, with force, as to the conclusion of the investigations. The non-production of documents post March 2009 is not indicative of the fact that no further investigations were being carried out by the Revenue. Otherwise also, once suppression is attributed to the assessee, longer period of limitation is available to the Revenue. - Decided against assessee.
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Central Excise
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2015 (5) TMI 115
Demand of interest - Provisional assessment - Held that:- Liability becomes enforceable from the date of demand. Therefore, during provisional assessment when the liability is in fluid stage nothing is crystal till finalization. Only from the date of finalisation of assessment the ultimate demand become enforceable. - if there is a default in payment of enforceable demand, interest flows thereon. - Decided in favour of assessee.
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2015 (5) TMI 101
Extended period of limitation - Valuation of Tyre Cord Yarn (TCY) and Tyre Cord Fabric (TCB) - captive consumption - difference between the goods which were cleared at the factory gate to be sold to the third parties and removed for captive consumption by the appellant itself - held that:- the two kinds of goods were not comparable with each other and therefore, the goods which were removed for captive consumption to be used by Tarapur Factory were to be valued under Rule 6(b)(ii) of the Rules and the price declaration given by the appellant applying Rule 6(b)(i) of the said rules was erroneous. We also find that the appellant had even admitted some variations in the two types of goods in its reply to the show cause notices itself. In these circumstances, insofar as the opinion of the authorities with regard to different nature of the goods is concerned, that does not call for any interference by this court. Imposition of penalty - Held that:- It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty. - Therefore, it was not permissible for the respondent to invoke the proviso to Section 11A(1) of the Act and apply the extended period of limitation. In view thereof, we confirm the demand insofar as it pertains to show cause notice dated 25.02.2000. However, as far as show cause notice dated 03.03.2001 is concerned, the demand from February, 1996 till February, 2000 would be beyond limitation and that part of the demand is hereby set aside. Once we have found that there was no mala fide intention on the part of the appellant, we set aside the penalty as well. - Decided partly in favour of assessee.
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2015 (5) TMI 100
Rate of duty on Ethanol Blended Petrol (EBP) - Benefits of Exemption Notification No.6/2002- CE dated 01.03.2012 and the Notification No.15/2003-C.E., dated 01.03.2003 - held that:- Benefit is given to the final product, i.e., 5% ethanol doped petrol (EBP) which is a blend of 95% motor spirit(petrol) and 5% ethanol. Both the said products were being stored in the premises of the refinery of the assessee and on the ethanol, the excise duty had been paid whereas on the motor spirit, the excise duty was not paid at the time of mixing the two, before the EBP was taken out from the factory/refinery premises. However, it is common case of the parties that as per Rule 8, the said duty has been paid on motor spirit (petrol) also, within the required period by 5th day of the following month. Once that is so and the duty has also been paid, it would be too technical a default to penalise the Corporation on the ground that the duty should have been paid prior to the mixing and therefore, deny it the benefit of exemption. It is not the case of the appellant-Department that thereafter, there was non-payment of the excise duty upon the motor spirit and therefore, the Tribunal was right in following its earlier view of the co-ordinate Bench of Ahmedabad, wherein it has been held that as per Rule 8, the duty liability shall be deemed to have been discharged and the amount payable is credited to the account of the Central Government by the specified date. - Decided against Revenue.
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2015 (5) TMI 99
SSI Exemption - Clubbing of clearances - Clandestine removal of goods - Held that:- Allegation against the appellant is that both the companies were promoted by Shri D.V. Khanna himself as Managing Director of both the companies and Director in both the companies are same. It is also found that by the Adjudicating Authority, the salesman/dealers to be decided mutually and marketing of both the companies were commonly and salary of employee of M/s. Nova was paid from M/s. DSA and commission of employees of M/s. NOVA was paid from M/s. DSA s account. The annual incentives were given to the dealers on the basis of combined sales of both the units. Moreover, the shareholding in both the units by the Directors is almost common. Sometimes, money was given to each other but nothing was shown in the balance sheet. Therefore, clearance of both the units are to be clubbed as the same are managed by Shri D.V. Khanna, Managing Director in the clearance of NOVA. - both the units are separately located having separate registrations and dealing separately. We also find that there is no financial flow back, therefore, there is no mutuality of interest between the units. Accordingly, clearances of both the units cannot be clubbed together. Case has been made out against the appellant on the basis of the documents resumed from the residence of employees and third party. There were no incriminating documents recovered from the custody of the appellant or Managing Director thereof. On the basis of the investigation conducted, the matter was referred to the Income-tax department also and the Income-tax Department after further investigating the case found that the some parties are manufacturing the duplicate goods and some employees of the appellant were in league with the parties who are manufacturing duplicate goods. On the basis of that investigation, the case booked by the Income-tax Department has been dropped. Cross-examination of Shri Suresh Anand was not granted from whose possession certain records were recovered which were relied upon by the Adjudicating Authority. Moreover, the production capacity of the appellant has not been considered. It has not been proved with supportive evidence that the appellant has used electricity/procured excess raw material, etc. In rebuttal, there is an evidence on record that some parties are manufacturing duplicate goods under the brand name of NOVA/ DSA are owned by the appellant. The case looked by the Income-tax Authority has been dropped for clandestine removal of goods, also supports the case of appellants. No efforts were made to comply with tests laid down by this Tribunal in the case of Arya Fibres (P) Ltd. (2013 (11) TMI 626 - CESTAT AHMEDABAD). Therefore, as discussed above and in view of the decision of Arya Fibres (P) Ltd. (2013 (11) TMI 626 - CESTAT AHMEDABAD), the charge of clandestine removal is not sustainable against the appellant. Accordingly, demands confirmed against the appellant on the account of clandestine removal, is not sustainable. Therefore, the same is set aside. - Decided in favour of assessee.
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2015 (5) TMI 98
Denial of refund claim - Unjust enrichment - Whether refund sanctioned allowed in the impugned order is hit by unjust enrichment or not - Held that:- Respondents opted for provisional assessment for the intermediate product manufactured by them and supplied to their own sister unit for manufacture of the final product "Power Driven Pumps" which is exempted from payment of excise duty. The period involved in both the cases is from 1.4.2000 to 31.3.2002. The Revenue has not brought any clear arguments against the impugned order but only stated that there was no clear evidence of enhancement in price and there is no evidence to show that the price remained constant. They have only stated that Chartered Accountant certificate is not acceptable whereas I find from the impugned order dt. 11.11.2005 that the LAA has dealt the issue in detail and passed an elaborate order extending reasons in para 6 to 8 and came to the conclusion that price of the final product cleared by the sister unit remained constant as the goods was exempted from excise duty - it is clear that respondents opted for provisional assessment for want of cost of raw materials consumed in the manufacture of exempted goods and placed much reliance on the certificate of the Chartered Accountant - respondents paid duty on the intermediate goods which are used in the manufacture of power driven pumps which are exempted from duty. There is no change in the price of the final product - Decided against Revenue.
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2015 (5) TMI 97
Denial of cenvat credit - Revenue put an allegation that suppliers had included the freight and insurance charges upto the point of delivery and passed on higher duty amount. - Held that:- As the issue is identical and the input suppliers are also same, the ratio of the above Hon'ble High Court order is applicable to the facts of the present case. By respectfully following the ratio of the decisions rendered in Hon ble Tribunal s decision (2008 (12) TMI 595 - CESTAT, NEW DELHI) and Hon ble High Court order (2010 (7) TMI 227 - PUNJAB AND HARYANA HIGH COURT), the appellants correctly availed the credit and the demand on reversal of credit is not sustainable. Consequently, the imposition of equal penalty on the main appellant and imposition of penalty on M/s.Guwahati Carbon Ltd. and M/s. Brahmaputra Carbon Ltd. under Rule 13 of CCR does not survive and liable to be set aside. Accordingly, the impugned orders are set aside - Decided in favour of assessee.
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2015 (5) TMI 96
SSI Exemption - mutual interest - Clubbing of clearances of two companies - Held that:- MBPL for the purpose of determining their eligibility for SSI exemption, and the quantum of SSI exemption, the show cause notice should have been issued to MBPL also, whose clearances are sought to be clubbed with the clearances of the appellant company. But we find that no SCN has been issued to MBPL. In our view on this ground alone the department's case against the appellant company would not be sustainable. Clearances of two or more units can be clubbed for determining their eligibility of the exemption only if those units are owned by the same person. In this case, the evidence relied upon by the Department, at the most indicates the mutuality of interest, but it does not prove that the appellant company and MBPL. are owned by the same person. Moreover, since there is no shareholding of the appellant company in MBPL, on the basis of individual shareholding of the Directors of the appellant company in MBPL, the latter cannot be treated as subsidiary company of appellant company. Similarly, the registered offices of both the companies being at the same address or that plant and machinery of one company having been pledged to the Bank as a security for the loan sanctioned by the bank to the another, by themselves cannot be treated as the evidence that both the units are owned by the same person or that the appellant have all purvasive financial operational and management control over MBPL or vise versa. - even on merits also, there is no justification for clubbing the clearance of the appellant company with the clearance of MBPL for determining the eligibility for SSI exemption of the appellant company. - Decided in favour of assessee.
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2015 (5) TMI 95
Waiver of pre deposit - Availment of SSI Exemption - Use of other company's brand name - Held that:- So far as the brand names "Ultra White", "Korean", "Samsung" Champion" and "Diamond Gold" are concerned, the department has not identified as to whom these brand names belong while according to the Appellant these brand names do not belong to anybody. In view of this position, we are of the prima facie view that the goods on which these brand names have been used, cannot be denied the benefit of the SSI exemption. - As regards the goods on which the brand name "Decotouch" and "Diamond Gold" have been used, the department's case against the appellant is that these brand names do not belong to Appellant but are registered in the name of M/s. Diamond Water Proof Compound Ltd., who have assigned these brand names under two assessment deeds to M/s. Diamond Retail Mart and M/s.Diamond Retail Mart, in turn, has assigned these brand names to the appellant. The Apex Court in the case of Primella Sanitary Products (2005 (4) TMI 70 - SUPREME COURT OF INDIA) has upheld the Tribunal's order allowing the SSI exemption under notification no.175/86-CE and 1/93, when the assessee was using the brand name registered in the name of another person under a bona fide assignment deed. We find that the same view has been taken by the Apex Court in the case of Vikshara Trading & Invest P. Ltd. (2003 (8) TMI 49 - SUPREME COURT OF INDIA). - amount already deposited by the appellant is sufficient for hearing of this matter and as such, the requirement of pre-deposit of the balance amount of duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.
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2015 (5) TMI 93
Reversal of credit - removal as such - parts, which were originally imported, and subsequently found defective, consequently re-exported. As per Revenue, the same amounts to clearance of the inputs, as such, thus, invoking the Provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004 - Held that:- Findings of the Adjudicating Authority that the inputs are found defective or damaged prior to their issuance from the store are factually incorrect. It stands described in the show cause notice dated 21.03.2012 that the appellants factory was visited by the Officers and the process of manufacture of finished goods was examined. It stands mentioned in the show cause notice that the components were issued from the store room to the production floor where assembly of the components/finished products takes place. Further, the notice referred to the statements of various senior personnels of the assessee company clearly deposing that the testing is done either during the manufacturing process or after the assembling of the components. The conclusion in the show cause notice is also to the effect that the practice of the component being followed is known to the assessee only during the process of testing in the assembly line, as prior testing of the component before assembling is not being done by the assessee. As such, we are of the view that the findings of fact arrived at by the adjudicating authority in the impugned order are incorrect. Once the inputs are issued for manufacture of the final product and are further used and are found defective in the assembly line, the assessee cannot be asked to reverse the credit. Reference in this regard can be made to the Hon ble Delhi High court decision in the case of Asahi India Safety Glass Ltd. vs. Union of India reported in [2004 (9) TMI 118 - HIGH COURT OF DELHI]. In-fact, the following decisions deal with an identical situation, where the inputs originally imported were subsequently, re-exported on being detected as damaged or faulty. - Impugned order is set aside - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (5) TMI 105
Exemption from tax - Whether the commodity in question, i.e., White Oats would be exempted under Entry 16 of the First Schedule of the Karnataka Value Added Tax Act, 2003 or would be subjected to tax under the Act - Held that:- First clarification dated 03.06.2006 was issued by the Commissioner itself on a query made by another dealer with regard to the sale of White Oats, which was a product similar, if not identical to the product being dealt with by the assessee herein. When along with the query, the sample of the product had also been furnished by the dealer, it would be presumed that only after examining the said sample, the Commissioner had issued the clarification dated 03.06.2006. Once such clarification had been issued for exempting the product White Oats from payment of tax (even though the clarification order may have mentioned only Oats and not White Oats), then the question of payment of tax on the same would not arise. In fact, not only the assessee but the department itself was under a genuine belief or impression that the product in question was exempted from tax, as the department did not raise any question with regard to the monthly returns filed by the assessee right from April 2006 onwards and it accepted the same, which would amount to ‘deemed assessment’. Where the Commissioner itself had issued a clarification dated 03.06.2006 with regard to the commodity in question, the assessee/dealer would be presumed to have a genuine belief that it was exempted from tax and thus, it cannot be said to be a case where the assessee had furnished any wrong information or concealed any material information. It is not the case where the sale of White Oats had not been disclosed by the assessee. It is not the assessee alone but, in the facts of the present case, we can safely say that even the department was under the genuine belief that the commodity in question was exempted from tax, until the second clarification dated 20.01.2010 was issued. After the issuance of the said clarification, the assessee (instead of getting into litigation by raising a dispute regarding the White Oat flakes being subjected to tax or not) started paying taxes on sale of the said commodity. Clarification dated 03.06.2006 was issued under Section 59(4) of the Act. Such clarification is not applicable merely in the case of the applicant seeking clarification, but, to all registered dealers which are liable to pay tax under the Act. The clarification issued under Section 59 is different from the clarification or advanced ruling given under Section 60. In the latter case, the ruling of the authority would be binding only on the applicant which seeks such clarification, whereas in the former case (under Section 59 of the Act), it would be applicable to all registered dealers liable to pay tax. - Impugned orders are set aside - assessee/petitioner shall not be held liable for payment of tax with regard to the commodity in question (i.e., White Oats) till 20.01.2010 i.e., the date when the second clarification was issued by the Commissioner - Decided partly in favour of assessee.
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2015 (5) TMI 104
Classification of goods - whether the Hooka, (brass/iron base) manufactured and sold by the petitioner is a "utensil", for purposes of payment of sale tax under the Haryana General Sales Tax Act, 1973 - Held that:- A Hooka, particularly in rural areas of the State of Haryana, is admittedly used to smoke tobacco at home. A hooka is also an integral part of social interactions in rural areas and is, therefore, used at home and in social and public interactions. A Hooka has a brass base fitted with two pipes. The first pipe is attached to an earthen pot where coal and tobacco are placed and the second pipe is used to puff tobacco smoke. The brass base is a receptacle used for storing water and for fixing the pipes of a Hooka. A Hooka, as referred to above, is used in rural societies, at home or outside and as it is a receptacle/container used for storing water, through which smoke is passed before it is inhaled it would necessarily partake the nature of a utensil. We are, therefore, inclined to hold that in the absence of any legislative intent to confine the meaning of the word "utensil, to any particular place, mode or manner of user, the hooka manufactured by the petitioner must necessarily fall within the meaning of the word "utensil". - Hooka and its parts manufactured/sold by the petitioner partake the nature of a "utensil", liable to sales tax at the rate of 3 paise in a rupee. - Decided in favour of assessee.
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2015 (5) TMI 102
Imposition of penalty - declaration Form ST 18-A was incomplete - Held that:- If the declaration Form ST 18-A is incomplete or material particulars are lacking then the penalty is required to be imposed but in the instant case, the penalty is not leviable on an entirely different fact, noticed by this court, though the matter deserved to be restored for further verification and finding of fact but then it is a matter pertaining to the year 1998, it was thought prudent to decide the issue as facts are verifiable on perusal of the orders and the appeal can be decided. - crucial date is 21.2.1998 on which date the goods were being carried by the assessee from the Bombay Office to its Kota office and admittedly on stock/branch transfer, therefore the judgment relied upon by the revenue in the present case may not hold good and inapplicable on these facts found. It is an admitted position that as per the Notification issued by the Government of Rajasthan, bearing No./F.4 (1)FD/Tax/Div/2000-314 dated 30.3.2000 there was no requirement to carry the declaration Form ST 18-A prior to 30.3.2000 in case where goods were being transmitted/carried on stock/branch transfer. - since the issue involved in the instant case has already been settled and decided in the Case of Assistant Commercial Taxes Officer Vs.I.C.I. (India) Ltd. (2013 (5) TMI 764 - RAJASTHAN HIGH COURT), no penalty in law is leviable and penalty is not sustainable - Decided against Revenue.
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Indian Laws
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2015 (5) TMI 89
Violation of principle of natural justice - Opportunity of hearing not granted - Disciplinary proceedings - Whether the proceedings before the Disciplinary Committee of the ICAI fall foul of the principles of natural justice - Held that:- It is also necessary to observe that the Disciplinary Committee had not accepted the medical certificate which was sent by the petitioner along with his request for an adjournment of the hearing scheduled on 25.11.2011 since it did not mention any particular ailment that required the petitioner to be put on bed rest. - A plain reading of Rule 18(1) of the Rules indicates that the Disciplinary Committee is to be guided by the principles of natural justice. Rule 18(7) of the Rules indicates that at the first hearing, the Disciplinary Committee is to read out the charge or charges to the respondent alongwith a summary of the prima facie opinion arrived at by the Director and ask the concerned member whether he/she pleads guilty of the charges. The proviso to Rule 18(7) of the Rules indicates that if the concerned member does not appear “even after one adjournment, the reading out of charge or charges along with the summary of prima facie opinion shall be made in his absence”. This, clearly, indicates that it would be necessary for the Disciplinary Committee to at least grant one adjournment on account of non appearance of the concerned member. It is also important to note that under Rule 18(9) of the Rules if the concerned member does not enter the plea of guilty, the Disciplinary Committee would fix a date for examination of witnesses and production of documents. Admittedly, in the present case the charges alongwith summary of prima facie opinion were not read as required under proviso to Rule 18(7) of the Rules. Rule 18(13) of the Rules indicates that after the Director has presented the evidence against the concerned member, he was to be called upon to enter his defence and produce his evidence. A perusal of the notes of the hearing held on 25.11.2011 indicate that the entire procedure was compressed in a single hearing as the petitioner was absent on that date. As the petitioner has an equally efficacious remedy of appeal under Section 22G of the Act. Undoubtedly, the petitioner would have an equally efficacious remedy by way of appeal under Section 22G of the Act and in normal circumstances Courts would be reluctant to interfere in proceedings under Article 226 of the Constitution of India where an equally efficacious remedy is available to the petitioner. However, it is well established that existence of an alternate remedy would not bar the jurisdiction of this Court under Article 226 of the Constitution of India. Having been persuaded to accept the view that a fair hearing ought to have been granted to the petitioner, I am unable to accept the contention that the petitioner be relegated to file an appeal under Section 22G of the Act. - Accordingly, the impugned report is set aside and the matter is remanded to the Disciplinary Committee to afford the petitioner an opportunity to be heard - Decided in favour of appellant.
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