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TMI Tax Updates - e-Newsletter
May 7, 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
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194H - Payment made to TSPs commission or brokerage - in the case of lab results, the TSPs/ collectors / aggregators are not going to be benefited by the test results and it is the patient who is going to be benefitted by the lab results - AO to examine the fact to ascertain true relationship - AT
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Transfer of case u/s 127 - AO, Agra has not complied with the mandatory requirement of Sec. 127 but suo moto transferred the file from Agra to AO, New Delhi as if he has entered into the shoes of the Chief Commissioner or Commissioner of Income Tax - order passed is invalid and void ab initio - AT
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Section 143(2) uses the word ‘service of the notice’, not issuing of the notice but since the Assessee has not rebutted this fact by filing Affidavit, notice u/s 143(3) held as valid - AT
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Claim of deduction under section 80IA - the sales tax benefit is to be taxed as business receipts of the assessee, on which the assessee is not entitled to the claim of deduction under section 80IA - AT
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Unexplained investment - no person would execute the sale deed without receiving the full sale consideration agreed upon as per the agreement or MOU - its claim that the part of the consideration agreed upon as per the MOU was not actually paid is only an afterthought and cannot be accepted. - AT
Customs
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Undervaluation of goods - Revenue has been able to show that the actual transaction value i.e. the payment made for the consignments received to the exporter abroad is more than what was declared and excess amounts were transferred by other means - The evidence can never be 100% accurate - Prima facie case is against the assessee - AT
Service Tax
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Mandap Keeper Service - benefit of Notification No. 1/2006-ST - Simultaneous availment of CENVAT Credit - Once CENVAT credit availed on common inputs/services are reversed, is considered as good as non-availment of CENVAT credit - AT
Central Excise
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Valuation of goods - Non inclusion of value towards the shrinkage and amount of transportation charges - It is a settled law that when the department raises demands on the assesse, the onus has to be discharged by the department by submitting tangible evidences - AT
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Invocation of extended period of limitation - Suppression of facts - Wrong availment of CENVAT Credit - The assessee, in response to the show-cause notice had stated that there is no provision in Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 - HC
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Denial of CENVAT Credit - Clandestine removal of goods - Shortage of goods - Just on the basis of the weight intimated by the appellants' officials and the actual availment of the component, it cannot be presumed that the appellant have inflated the consumption of raw material and have cleared the alleged excess consumption without reversal of the credit. - AT
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Denial of concessional rate of duty - when in this case it is the appellant who is liable to pay duty on the paper and not the job worker who converted pulp into paper rolls on job work basis, the exemption under these notifications cannot be denied to them - AT
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CENVAT Credit - Clandestine removal of goods - If the plastic granules had been cleared to job workers under job work challans on 08.09.2002 there is no explanation as to why the Authorized Signatory of the appellants was not aware about the same. - demand confirmed - AT
VAT
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Clim of interest with Refund claim - the tax levied on the admitted interstate sales of hearing equipments under KVAT Act is to be deleted as the same turnover is levied with CST under the CST Act - refund allowed but interest not - HC
Case Laws:
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Income Tax
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2015 (5) TMI 155
TDS u/s 194H - Payment made to TSPs commission or brokerage - non deduction of tds - whether there is a principal and agent relationship between the assessee company and TSPs? - CIT(A) allowed relief to assessee - Held that:- The TSPs are agents of the assessee company who are allowed to collect necessary charges, from its clients, for collecting samples and delivery test report. The arrangement has been made by the assessee to expand its business throughout the country The sharing of testing charges between the assessee and such TSPs/collectors/aggregators is so arranged to give it colour distinguishable from commission or brokerage as envisaged in section 194H of the Act. In trading of goods, the title to the goods passes from the manufacturer to the wholesaler and from the wholesaler to the retailer and then from the retailer to the ultimate consumers, i.e., each of the parties mentioned above become owners of the goods in their independent capacities and they are entitled to deal with the goods in any manner as he likes. However, in the case of lab results, the TSPs/ collectors / aggregators are not going to be benefited by the test results and it is the patient who is going to be benefitted by the lab results. Hence, we are of the view that the traders of the goods cannot be compared with the TSPs/collectors/aggregators, as they provide only agency services as explained earlier. In our view, the assessing officer should exhaustively examine the relationship between the parties in the light of discussions made supra. The assessee is also directed to extend full co-operation to the assessing officer. In view of these facts, the Assessing Officer is directed to examine the issues afresh, collect the details from such TSPs/collectors/aggregators/assessee and if necessary examine them and decide the issue in accordance with law. We are of the view that the assessee has certainly not discharged the burden and the ld. Commissioner of Income Tax (Appeals) granted relief to the assessee ignoring the true facts and observation made in the assessment order, therefore, the impugned orders are set aside. The Assessing Officer is directed to examine the case afresh with different angles. The assessee be given opportunity of being heard, so that no grievance is caused to either side. - Decided in favour of revenue for statistical purposes.
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2015 (5) TMI 154
Deduction u/s. 10A/10B - Determination of export turnover - Held that:- only grievance of the Revenue is that the decision of Hon'ble High Court of Karnataka in Tata Elxsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT) has not attained finality and a SLP by the department is pending before the Hon'ble Supreme Court. We are of the view that as of today, law declared by the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us. We therefore hold that the order of CIT(A) does not call for any interference and accordingly the same is confirmed - Decided against Revenue.
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2015 (5) TMI 153
Validity of notice u/s 153C - Held that:- The satisfaction note available reveals exfacie that the same has been recorded by the AO in the capacity of the AO of the person other than the person searched, thus, the satisfaction note has been recorded by the AO of the assessee of the present cases but no satisfaction note has been recorded in the case of persons searched. This fact is also apparent from the RTI reply of DCIT, New Delhi dated 10.6.2013 also see that the basis of initiation of present proceedings u/s 153C of the Act is only satisfaction note which was recorded in the file of the person other than the person searched i.e. the assessee. In view of above factum of the present case the legal cross objections of the assessee also find support from the judgment of Hon’ble Jurisdictional High Court of Delhi in the case of SSP Aviation Ltd. Vs. DCIT,(2012 (4) TMI 335 - DELHI HIGH COURT), as relied by the assessee, that satisfaction note is required to be made in the case of the person searched by the AO having jurisdiction over searched person which has not been recorded in the present case by the AO of person searched i.e. Shri B.K. Dhingra & Others and as per RTI reply dated 8.12.2014 (PB page 4-5) the only satisfaction has not been recorded in the file of other person viz. the assessee. In view of above, it can safely be held that no valid and required satisfaction note was recorded by the AO of the persons searched so as to fulfill the requirements of valid assumption of jurisdiction u/s 153C of the Act which is a sinequanon for validly assumed jurisdiction u/s 153C r.w.s. 153A of the Act. - Decided in favour of assessee. Additions u/s 69C - unexplained purchases - disallowance of expenditure - Held that:- AO proceeded to make additions with a predetermine mind without pointing out any defects in the audited books and book results of the assessee. We reach to a logical and fortified conclusion that the AO was not justified in making impugned disallowances and additions pertains to unexplained purchases u/s 69C of the Act and disallowance of expenses in all six assessment years and addition u/s 68 of the Act in regard to share capital for A.Y. 2003-04 without any justified basis and that is too without any incriminating material and thus, we are inclined to hold that the CIT(A) was correct in deleting the same. Thus inclined to hold that the AO made additions without any justify basis and incriminating material which was deleted by the CIT(A). We further hold that the CIT(A) made a vague and unsustainable directions to the AO for making additions to work out peak amount from the entries in the cash book of the assessee for the relevant assessment year and make a singular addition which is also not sustainable. The additions made by the AO in all six assessment years pertaining to unexplained purchase and in pursuant to disallowance of entire amount of expenses were not found to be sustainable by the CIT(A) and we have no reason to interfere with the plausible and correct conclusion of the CIT(A) in this regard and thus, we upheld the same. - Decided in favour of assessee.
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2015 (5) TMI 152
Service of notice u/s 143(2) - jurisdiction of the assessing officer to issue notice - Held that:- Notice in the case of the Assessee has been issued on 13.8.2009 u/s 143(2) by the AO, Agra. Sec. 143(2) uses the word ‘service of the notice’, not issuing of the notice but since the Assessee has not rebutted this fact by filing Affidavit, therefore, we have held in the preceding paragraphs that this is a case where it would be deemed that the notice has been duly served on the Assessee. In view of this fact, after the expiry of 3 days the Assessee should have filed the objection about the jurisdiction within 30 days i.e. upto 15.9.2009 but the Assessee has not filed any such objection. Therefore, we do not find any illegality or infirmity in the order of CIT(A) in this regard but the remote question before is if the AO, Agra was having jurisdiction on the Assessee how can he himself transfer the file to the AO, Ward 5(3), New Delhi merely on the basis of change of address in the PAN. There is a separate provision made u/s 127 in this regard. On perusal of this section it is apparent that u/s 127(2) if the AO from whom the case is to be transferred and the AO to whom the case is to be transferred are not under the jurisdiction of same Chief Commissioner or Commissioner, the Chief Commissioner or Commissioner to whom such AO are subordinate are in agreement, then, the Chief Commissioner or Commissioner from whose jurisdiction the case is to be transferred has to give a reasonable opportunity of being heard to the Assessee before passing the order for transfer. It is not denied in the case of the Assessee that the AO at Agra and the AO at New Delhi were under the jurisdiction of different CCIT as well as different Commissioners. Therefore, the AO, Agra does not have any jurisdiction to transfer the file to AO at New Delhi. The filed could have been transferred only by the Chief Commissioner or the Commissioner of the AO, Agra after giving hearing to the Assessee. In this case, we noted that the AO, Agra has not complied with the mandatory requirement of Sec. 127 but suo moto transferred the file from Agra to AO, New Delhi as if he has entered into the shoes of the Chief Commissioner or Commissioner of Income Tax. A transfer can be made by the Commissioner from one officer to another under section 127 of the Income Tax Act, 1961. But it should be for good reason after a show-cause notice to the assessee, where transfer is from one station to another. Where no reasons were assigned for the transfer and a writ petition was filed against the same before the High Court, it was explained that the Commissioner had recorded his reasons, though he did not communicate the same. The High Court in Deep Malhotra vs. Chief CIT, 334 ITR 232 (P&H) pointed out that there are a number of decisions of the High Court and that of the Supreme Court in Ajantha Industries vs. CBDT, (1975 (12) TMI 1 - SUPREME Court) as to the need for a speaking order. Since the alleged reasons recorded were not part of the order, the orders were held to be invalid, while leaving it open to the Commissioner to pass a fresh order. In the impugned case there is a violation of the provisions of Sec. 127 and in view of there being no transfer order being passed by the Chief Commissioner or Commissioner, we hold that the order passed by the AO, Ward-5(3), New Delhi for the impugned assessment year is invalid and void ab initio - Decided in favour of assessee.
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2015 (5) TMI 151
Disallowance of prior period expenses - Held that:- The assessee is a state government undertaking and therefore it cannot be postulated that there was any deliberateness in not furnishing the relevant details before the departmental authorities. Some details filed before us shows that some bills were received only in August 1996 but they relate to September to December 1994 and March 1995. We therefore set aside this issue to the file of the Assessing Officer who shall take a fresh decision in accordance with law after affording due opportunity to the assessee to substantiate, its claim. - Decided in favour of assessee for statistical purposes. Disallowance of bad debts - Held that:- Claim of bad debts was disallowed by the A.O as he was of the view that the bad debts can only be allowed as deduction when the same are written off in the accounts. Before us, Assessee has not placed any material on record to demonstrate that all the necessary evidence was produced before Ld CIT(A). We further find that Ld. CIT(A) decided the ground of Assessee in its favour subject to verification by AO and further the decision of ld. CIT(A) on the issue to be cryptic. We also find that ld. CIT(A) had directed the A.O to verify the figures and thereafter allow the loss of the amount actually written off in the books. On the issue of setting aside by CIT(A), it is to be noted that the Finance Act, 2001 has w.e.f. 1st June, 2001 withdrawn the power of CIT(A) to set aside the assessment and refer the case back to the AO for making a fresh assessment in accordance with the directions given by CIT(A). In view of the aforesaid amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the bad debts claimed have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re-examination at the end of A.O. - Decided in favour of assessee for statistical purposes. Disallowance of expenditure incurred on rehabilitation and restoration work as a result of cyclone - Disallowance on account of miscellaneous losses - Addition on account of under statement of income determined by C & AG - disallowance u/s. 43B - CIT(A) has remitted the issue to be file of AO - Held that:- In view of the amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the loss claimed have been filed by the assessee and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re- examination at the end of A.O. - Decided in favour of assessee for statistical purposes. Disallowance of employees' cost - Held that:- We find that this ground was not taken by the Assessee before ld. CIT(A) but it arises out of the order of A.O for A.Y. 98-99. Considering the fact that A.O has disallowed the claim in A.Y. 1998-99 for the reason that liability has crystallized in A.Y. 1999-2000, we are of the view that the issue needs to be re-examined at the end of A.O. We therefore set aside this ground to the file of A.O to decide it afresh - Decided in favour of assessee for statistical purposes. Infructuous capital expenses written off and loss of obsolesce of fixed assets - Held that:- The appellant is directed to provide complete details of such revenue items. The rest of loss on capital items is to be adjusted through the block of assets. It is a fact that in the P & L A/c., the loss on obsolescence, loss on sale and loss on sale of scrap of fixed assets, loss on pilferage, loss of small items etc. are claimed. The appellant was specifically requested to explain the various journal entries in this regard and also treatment of such loss for purposes of income-tax but these were not furnished. Further it is likely that miscellaneous losses and write off, loss due to natural calamities etc. would affect the capital stock as well as the revenue items. With a system of block of assets any loss on capital item is allowed with reference to the opening WDV and the asset lost/discarded is not reduced from the opening WDV. In effect the appellant is entitled to higher claim of depreciation instead of loss on assets. Any notional or actual scrap value or sale of assets is to be reduced from the opening WDV for purposes of depreciation. It is also to be appreciated that in case a block is empty or has no WDV, no depreciation is admissible. Although it is emphasized before me that all the items are revenue in nature but in the absence of details, this fact could not be verified. The appellant is directed to provide necessary details to the AO and elaborate that none of the capital items is part of the loss claimed and that the capital items have been suitably considered in the depreciation calculation and is not part of the loss claimed. However if there are capital items which are claimed as loss these would stand disallowed with corresponding higher depreciation as per provisions of sec.32, 2(11), 43(1) and 43(6). - Decided in favour of assessee for statistical purposes. Disallowance of loss on Exchange rate variation - Held that:- The issue is now covered against Assessee by the decision of Apex Court in the case of ACIT vs. Elecon Engg. Co. Ltd. (2010 (2) TMI 23 - SUPREME COURT OF INDIA) and therefore the issue has to be decided against the Assessee. Disallowance of waiver of HBA loans - Held that:- The housing loans are disbursed to the employees at interest as a facility and to earn their loyalties and thus the expenditure is for business purposes. The Appellant is in the business of generation and in distribution of power and the advances are not in the course of the carrying on of the business but these are only having some connection with operational efficiency of the business. Thus the loss claimed is plain and simple capital loss which is not allowable. See Badridas Daga Versus Commissioner Of Income-Tax [1958 (4) TMI 2 - SUPREME Court ] - Decided against assessee. Disallowance of cost of raising finance - Held that:- Amendment made by Finance Act 2001, we are of the view that Ld. CIT(A) does not have power to remand and therefore we do not approve the action of ld. CIT(A) in remitting the issue to the file of A.O. However at the same time, it is also a fact that before us, no details of the expenses have been filed by the assessee before us and therefore we are also unable to peruse the details and decide the issue at our end. Considering the aforesaid facts and in the interest of justice, we are of the view that the factual aspect needs re- examination at the end of A.O. - Decided in favour of assessee for statistical purposes.
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2015 (5) TMI 150
Disallowance of administrative expenses u/s.14A - Held that:- Since the assessee had sufficient profits generated this year and it had mixed funds and no nexus is established by the AO as to whether investment was made out of interest bearing funds, disallowance of interest cannot be made. Similarly no disallowance out of administrative expenditure can be made as there is no direct nexus. As a result, this grounds is allowed. See 2011 (2) TMI 1351 - ITAT AHMEDABAD - Decided in favour of assessee. Disallowance of liquidated damages - CIT(A) deleted addition - Held that:- The issue regarding liquidated damages requires a fresh look by the AO. He would allow the claim on actual basis. Wherever the other party has claimed liquidated damages against the assessee in the current year Asst.Year it should be allowed. The assessee would submit individual account and the AO will examine such accounts and take a decision as per law. See 2011 (2) TMI 1351 - ITAT AHMEDABAD. This ground is allowed but for statistical purposes. Disallowance of bad-debts - CIT(A) deleted addition - Held that:- There is no case for interference in the order of ld.CIT(A). It is admitted position that assessee has actually written off the amounts. Once it is so then matter is squarely covered by the decision of Hon.Supreme Court in the case of TRF Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT) wherein it is held that w.e.f. 1.4.1989 in order to obtain a deduction in relation to bad debts it is not necessary for the assessee to establish that the debt in fact has become irrecoverable. It is enough if the bad debt is written off and the bad debt is irrecoverable in the account of assessee. Following the above decision of Hon.Supreme Court, we confirm the order of ld.CIT(A) and dismiss this ground of Revenue. Disallowance of provision for warranty expenses - Held that:- The assessee has to submit present value of warranty expenses. It has to be properly ascertained and discounted on accrual basis. A proper calculation on this issue will be submitted to the AO who will examine the same and allow the claim as per decision of Hon.Supreme Court in Rotork Controls India (P) ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA) as above. This ground of Revenue is allowed but for statistical purposes. Disallowance of proportionate interest expenses made by the AO u/s.36(1)(iii) - CIT(A) allowed claim - Held that:- .CIT(A) had given a finding on fact that there assessee had sufficient interest free fund and it had not diverted the interest bearing fund same remained unrebutted. Therefore, we do not find any reason to take a contrary view than taken by the Hon’ble Coordinate Bench - Decided against revenue. Disallowance of royalty - CIT(A) allowed claim - Held that:- CIT(A) has given a finding on fact that the assessee has not acquired any ownership rights. It has got the right of user only. Since, AY 1989- 90, the user charges claimed as royalty have been allowed in the assessments, the rate of user charges is 1% of the sales during the year under consideration. TDS has been made in respect of royalty payments. As it is a recurring expenditure payable on the basis of sales and the appellant has not acquired any capital asset or permanent right, the payment of royalty is allowable as business expenditure. The Revenue has not controverted this fact by placing any material on record, therefore, we do not find any infirmity in the order of the ld.CIT(A), the same is hereby upheld - Decided in favour of assessee.
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2015 (5) TMI 149
Computation of deduction under section 10A - AO and DRP excluding expenses incurred on travel expenses in foreign currency and expenses incurred towards telecommunication expenses from export turnover on the ground that these expenses are incurred in rendering technical services rendered to clients outside India - Held that:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude expenses incurred in foreign currency towards travelling and expenses incurred towards telecommunication both from export turnover and total turnover as has been prayed for by the assessee. Addition to total income by way of adjustment to the Arms’ Length Price (“ALP”) to an international transaction - selection of comparables - Held that:- TPO is directed to compute ALP after excluding the 8 comparable companies [Avani Cimcon Technologies Ltd., Celestial Biolabs Ltd.,KALS Information Systems Ltd., Infosys Technologies Ltd., Wipro Ltd., Tata Elxsi Ltd.,Thirdware Solutions Ltd.,. Lucid Software Ltd.] as not functionally comparable with a software development service provider such as the Assessee - Decided in favour of assessee.
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2015 (5) TMI 148
Transfer Pricing adjustment - whether international transaction of provision of software development services of the Appellant does not satisfy the aim's length principle envisaged under the Income-tax Act, 1961? - selection of comparable - Held that:- It quite clear that the activities on account of the Infrastructure Management Services and E-learning and Digital Consulting which constitute 17% and 35% respectively of the total revenue are obviously IT enabled services and are not akin to the software design and development services being rendered by the assessee. On similar considerations, the said concern was found to be incomparable to assessee's segment of Provision of software design and development services in the immediately preceding assessment year 2008-09 (supra) by the Tribunal. Following the aforesaid precedent, which continues to hold the field, in this year also on account of similarity in circumstances, we therefore uphold assessee's plea for exclusion of FCS Software Solutions Ltd. from the final set of comparables. KALS Information Systems Ltd.(Application Software Segment) be excluded from the final set of comparables as the said company was developing software products and was not purely/ mainly a software development service provider. E-infochips Ltd.cannot be excluded from the final set of comparables on the ground that the instant assessment year is an "exceptional year of business". It would not be appropriate to compare each and every single item of income and expense in the financial statements in order to measure its comparability. Moreover, we find that for assessment year 2010-11 also, the said concern has been found to a good comparable by the DRP in terms of order dated 29.12.2014. Thus the said concern is liable to be included in the final set of comparables. Persistent Systems Ltd., IT Services Segment of Mindtree Ltd.and Larsen and Toubro Infotech Ltd., the order of the TPO as well as the show-cause notice issued by him in the course of Transfer Pricing proceedings show that no opportunity was allowed to the assessee before applying the turnover filter - we therefore remand the matter back to the file of the Assessing Officer/TPO for consideration afresh. Sasken Communications Technologies Ltd. n the application of the turnover filter, we have already set-aside the matter back to the file of the TPO while considering the Ground of Appeal No.4.6 of the assessee in the earlier paras. Therefore, the aforesaid aspect of the matter shall be re-visited by the TPO/Assessing Officer in the light of our decision in Ground of Appeal No.4.6. RS Software India Ltd. exclusion from the final set of comparables is liable to be affirmed. Akshay Software Technologies Ltd., Thinksoft Global Services Ltd.and Zylog Systems Limited be excluded from the final set of comparables on the ground that the said concerns were predominantly engaged in providing onsite services whereas assessee was providing services to his clients as an offsite service provider. Helios and Matheson Ltd. the financial data available in public domain does not conform to the financial year in which the international transactions in question have been carried out by the assessee. Therefore, the TPO justifiably excluded the said concern from the final set of comparables, which we hereby affirm. Bodhtree Consulting Ltd. margins of the said concern for the year under consideration does not reflect a normal business trend and therefore the inclusion of the said concern in the final set of comparables would not lend credibility to the comparability analysis. - Thus directing the Assessing Officer/TPO to re- compute the arm's length price of the international transactions - Decided partly in favour of assessee.
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2015 (5) TMI 147
Claim of deduction under section 80IA - whether Sales Tax benefit was inextricably linked to the industrial undertaking and was integral part of the profit derived from power generation by the said undertaking, eligible for deduction? - Held that:- The assessee is in receipt of sales tax subsidy, which undoubtedly, is a revenue receipt in the hands of the assessee, but the said subsidy does not in any manner reduce the cost of production of industrial undertaking. It is a benefit given to the industrial undertaking for establishing the wind energy generation units in the State of Maharashtra, but the same does not have a direct nexus between the subsidy on the one hand and the manufacturing activity of the industrial undertaking on the other hand. In the absence of a direct and first degree nexus between the subsidy on the one hand and profits of the industrial undertaking on the other hand, where such subsidy does not reduce the cost of production, we hold that the sales tax subsidy received by the assessee is not eligible to the deduction under section 80IA of the Act. The sales tax subsidy received by the assessee is an Incentive subsidy and is not an operational subsidy and consequently, does not affect profits of the business and is not linked to the profits of industrial undertaking and hence, is not deductible in terms of provisions of section 80IA of the Act. Thus no merit in the claim of assessee and rejecting the same, we modify the order of CIT(A) to the extent that the sales tax benefit is to be taxed as business receipts of the assessee, on which the assessee is not entitled to the claim of deduction under section 80IA of the Act. - Decided against assessee. Interpretation of provisions of section 80IA(5) - Held that:- Where the assessee has exercised the option of 10 consecutive years as contained in section 80IA of the Act, then the losses beginning from such initial year were brought forward and set off while applying the provisions of section 80IA(5) of the Act and not the losses of earlier years, which had been adjusted against other income of the assessee in the relevant year itself. - Decided in favour of assessee.
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2015 (5) TMI 146
Disallowance of interest u/s 36(1)(iii) - assessee had utilized interest bearing funds for making interest free advances to sister concerns and therefore, the interest attributable to such advances was to be disallowed while computing the business income of the assessee for this year. - Held that:- Where the investments / advances were made to sister concern for business purposes, then there is no question of any disallowance under section 36(1)(iii) of the Act and there would be no necessity to see as to whether the advances made to the sister concern were out of interest bearing borrowings or not. In view thereof, we find no merit in the order of CIT(A) in this regard and the same is set-aside and the Assessing Officer is directed to delete the addition of ₹ 12,67,428/-. - Decided in favour of assessee. Disallowance out of various heads of expenditure - Held that:- We are of the view that where the expenditure has been subjected to fringe benefit tax, the nature of expenditure stands established and the same is to be allowed as business expenditure. In view thereof, there is no merit in making any disallowance out of sales promotion expenditure. Similarly, no disallowance was warranted out of travelling and conveyance expenses, communication expenses as the assessee had paid FBT against the said expenses. We also find no merit in the order of Assessing Officer in disallowing any part of the said expenditure for personal use in the hands of the assessee company being a private limited concern. Further disallowance of 10% out of legal and professional fees paid by the assessee in the absence of any finding that the expenditure has not been incurred for the purpose of business, there is no merit in the said disallowance and the same is deleted. The last head of expenditure is other administrative expenses which include office expenses and other miscellaneous expenses being routine business expenses. The Assessing Officer had made disallowance @ 10% out of the said expenditure, which was restricted to 5% by CIT(A). The expenditure has been disallowed since certain evidences were in the form of self-made vouchers. We uphold the order of CIT(A) to restrict the disallowance to 5% of the total expenditure. - Decided partly in favour of assessee. Order passed under section 143(3) r.w.s. 263 - Held that:- The order passed by the Commissioner under section 263 of the Act has been quashed by the Tribunal relating to assessment year 2008-09, vide order dated 12.08.2013 and consequently, there is no merit in the impugned assessment order passed under section 143(3) r.w.s. 263 of the Act and the appeal filed by the assessee is against the order of CIT(A) in upholding the addition on merits should be allowed. . We find merit in the said plea of the assessee as pursuant to quashing of 263 proceedings in the hands of the assessee by the Tribunal, the consequent order passed by the Assessing Officer under section 143(3) r.w.s. 263 of the Act, does not survive and the same is hereby cancelled. - Decided in favour of assessee. Unexplained investment in land - Held that:- The consideration agreed upon was ₹ 2,80,80,000/- by cheque and cash In the of 80:20 respectively and the amount was to be paid on or before the execution of the sale deed. In the absence of any corroborative evidences to the contrary, the self serving letter now filed by the appellant in support of its claim that the part of the consideration agreed upon as per the MOU was not actually paid is only an afterthought and cannot be accepted. It is also common knowledge that no person would execute the sale deed without receiving the full sale consideration agreed upon as per the agreement or MOU. Moreover, from the details placed on record, it is also observed that the notification for private forestation was issued much earlier i.e. before entering into the MOU and the appellant was aware of such restrictions on a portion of the land and then only appellant agreed for the consideration of ₹ 52,00,000/- per acre. It is also interesting to note that it is only the cash component of 20% in the safe consideration that was claimed to have been withheld till the time the land is deforested and all the disputes are resolved. The assessee has failed to controvert the findings of the CIT(A) in this regard and consequently, we find no merit in the grounds of appeal raised by the assessee and dismissing the same, we uphold the addition of ₹ 56,16,000/- - Decided against assessee. Disallowance of expenditure - Held that:- The expenditure had been incurred in the course of carrying on the business and 90% of the payments in respect thereof were made by cheque. Further, complete vouchers were maintained by the assessee in this regard and there was no merit in disallowing 25% out of the said expenditure. The assessee before us is a private limited company and was engaged in manufacturing of construction machinery and equipment. The impugned expenditure under reference had been incurred by the assessee while carrying on its business. The Assessing Officer had accepted the plea of the assessee that the said expenditure was incurred in the course of business carried on by the assessee by allowing major portion of the expenditure. However, disallowance was made in the hands of the assessee because of increase in ratio of expenditure vis-à-vis turnover. We find no merit in the said stand of the Assessing Officer in the absence of any evidence found to prove that the expenditure is not relatable to the business of assessee. Merely because there is an increase in the quantum of expenditure does not merit the disallowance in the hands of the assessee. - Decided in favour of assessee.
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Customs
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2015 (5) TMI 160
Penalty u/s 112(a) - Detention of goods - Imposition of redemption fine and penalty - Held that:- The appellant being a console agent, filed transshipment bill of entry of transfer of goods to FTWZ on 16.04.2012 before amendment of the bill of entry in the name of the consignee importer. They have voluntarily disclosed. A show cause notice was issued to the importer and the appellant for imposition of penalty under Section 114AA for confiscation and penalty under 112 (a) of the Customs Act. On perusal of the findings of the order at para 61 & 62, I find that the adjudicating authority has held that there is no allegation in the notice that the console agent has made any false declaration, statement or document, merely filing bill of entry before SEZ with revised documents furnished by the supplier is not sufficient enough to impose penalty on them under Section 114AA of the Act. The adjudicating authority has dropped the penalty under Section 114AA of the Act, but imposed penalty under Section 112 (a) of the Act. Considering the findings of the adjudicating authority that there is no false declaration by the console agent and they have only filed the bill of entry and dropped the penalty under Section 114 AA of the Act, there is no justification for imposition of penalty under Section 112. The impugned order imposing penalty on the appellant under Section 112 (a) of the Customs Act is not sustainable and set aside to that extent - Decided in favour of assessee.
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2015 (5) TMI 159
Waiver of pre deposit - Demand of differential duty - Undervaluation of goods - Held that:- Revenue has been able to show that the actual transaction value i.e. the payment made for the consignments received to the exporter abroad is more than what was declared and excess amounts were transferred by other means. The fact that there was no evidence to show that exporter had received the money or the methodology followed for transfer of money and there is no evidence for that, does not mean that appellant had not paid excess amount in addition to what was declared to the customs department. If all the transactions were to be recorded and kept available for recovery, by the officers, investigating officers work would have been very simple. The evidence can never be 100% accurate or there can never be 100% proof. In our opinion, the department has been above to show that transaction value was more than what was declared by producing supporting evidences and by applying principle of preponderance of probability it can be definitely stated that the transaction value was more than what was declared. Invoice value has been under-declared and payments are in black, the profit earned within India if properly accounted increases and therefore the financial position indicated can not be totally disbelieved. In any case when such malafide actions are undertaken, accounts are also not properly maintained and therefore the submissions with regard to financial difficulty have to be taken with a spoon of salt. Moreover, the income tax returns do not show the assets but only the income liable to tax. - Partial stay granted.
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Corporate Laws
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2015 (5) TMI 158
Application under Sections 391 and 394 of the Companies Act, 1956 read with Rules 6 & 9 of the Companies (Court) Rules, 1959 - Dispensation of convening the meetings of equity shareholders, secured and unsecured creditors - Held that:- The transferor company no. 1 has 32 equity shareholders. 06 out of 32 equity shareholders, being 18.75% in number and 98.35% in value, have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meeting of the equity shareholders of the transferor company no. 1 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured or unsecured creditor of the transferor company no. 1, as on 31.01.2015. The transferor company no. 2 has 02 equity shareholders and 01 unsecured creditor. Both the equity shareholders and the only unsecured creditor have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 2 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferor company no. 2, as on 31.01.2015. The transferor company no. 3 has 03 equity shareholders and 02 unsecured creditors. All the equity shareholders have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. As per the certificate dated 18th February, 2015 issued by V. K. Arora & Associates, Chartered Accountants, out of 02 unsecured creditors, 01 unsecured creditor namely Menichetti Glues & Adhesives having an unsecured debt of ₹ 32,578/- has been paid in full on 18.02.2015. The consent of other unsecured creditor has been placed on record. All the consents have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditor of the transferor company no. 3 to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferor company no. 3, as on 31.01.2015. The transferee company has 05 equity shareholders and 02 unsecured creditors. All the equity shareholders and both the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferee company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferee company, as on 31.01.2015. - The application approved.
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2015 (5) TMI 157
Application for Scheme of Amalgamation under Sections 391(1) to 394 read with Section 100 of the Companies Act, 1956 - Regional director observation regarding appointment date duly addressed - Held that:- Although the Regional Director in his report has not raised any objection to the proposed Scheme, but he has pointed out that while the companies have filed their balance sheets upto 31st March, 2014, the proposed appointed date of the Scheme is 1st April, 2015, i.e. after nearly one year, therefore, there is uncertainty with regard to the status of the assets and liabilities that would ultimately stand transferred under the proposed Scheme. In reply to aforesaid, the petitioner companies have filed an affidavit dated 26th March, 2015 of Mr. Anuj Sharma, Director of the transferee company stating that the transferor companies have been carrying on their business in a prudent manner and after filing of their balance sheets, as on 31st March, 2014, there have been no material change in the financial position of the companies. He has further submitted that the petitioner companies shall file their balance sheet as on 31st March, 2015 and shall also file their Schedule of Properties as on 31st March, 2015, which will become a part of the Formal Order required to be filed with the Registrar of Companies. He also undertakes to inform the Court if there is any material change in the financial or other affairs in the companies. In view of the above, the observation raised by the Regional Director stands satisfied. Considering the approval accorded by the equity shareholders and creditors of the petitioner companies to the proposed Scheme of Amalgamation and the affidavits filed by the Regional Director, Northern Region, and the Official Liquidator not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956. The petitioner companies will comply with the statutory requirements in accordance with law. - Application for scheme of amalgamation approved.
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Service Tax
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2015 (5) TMI 176
Refund claim - export of Advisory services - period of limitation - Held that:- In terms of Export of Service Rules, 2005 in respect of financial services, if the service recipient is situated outside India and the consideration has been received in convertible foreign exchange, it would satisfy the definition of export and therefore, in the absence of any dispute relating to the situs of the service recipient and the receipt of consideration in convertible foreign exchange, the contention of the respondent that the transaction is one of exports has to be upheld. Therefore, the lower appellate authority is right in holding that the appellant had, in fact, exported the services and therefore, eligible for the service tax credit paid on the input services. There is also no dispute about the refund being time barred. In the absence of any such reasons, there is no infirmity in the order passed by the lower appellate authority. Accordingly, I find no reason to interfere with the said order. - Decided against assessee.
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2015 (5) TMI 175
Penalty u/s 78 - Duty paid after pointed out by Revenue - Held that:- Respondent had discharged the entire service tax liability and interest thereof as soon as it was pointed out by the departmental officers during the scrutiny of the records. In our view, if an assessee has discharged service tax liability and interest thereof on being pointed out by the departmental officers; the case would fall under the provisions of Section 73(3) of the Finance Act, 1994. - there was no need for issuance of any show cause notice to the respondent. - first appellate authority has used discretionary power granted by the statute under Section 80 of the Finance Act, 1994 to set aside the penalties imposed under Section 78. It is settled law that discretionary powers exercised by the first appellate authority need not be questioned unless such powers are used perversely. In the case in hand, we find that the first appellate authority has used the powers granted under Section 80 very judicially and has correctly set aside the penalty imposed. - Decided against Revenue.
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2015 (5) TMI 174
Discharge of the service tax liability under reverse charge mechanism - Banking and other Financial Services - Penalty u/s 78 - Held that:- If the assessee discharges the service tax and interest liability on his own ascertainment or on being pointed out by the Central Excise Officers, no show-cause notice is required to be issued as per provisions of Section 73(3) of the Finance Act, 1994. We also find that the appellant could have entertained a bonafide belief that such funds which are raised under ECB and amount paid by them to the foreign bank, may not be covered under the tax net. In our considered view, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994. We set aside the penalty imposed by the lower authorities by invoking the provisions of Section 80 of the Finance Act, 1994. - Decided against Revenue.
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2015 (5) TMI 173
Mandap Keeper Service - benefit of Notification No. 1/2006-ST - Simultaneous availment of CENVAT Credit - Held that:- Once CENVAT credit availed on common inputs/services are reversed, is considered as good as non-availment of CENVAT credit. The adjudicating authority sought to distinguish the case law cited before him only on the ground that the case laws were in respect of 'inputs' and not 'input services'. - once the assessee has reversed the CENVAT credit taken benefit of Notification No. 1/2006-ST cannot be denied. Respectfully, following the said ruling, we set aside the impugned order and allow the appeal filed by the appellant is, upholding the reversal of CENVAT credit by the appellant along with interest. - Decided in favour of assessee.
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Central Excise
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2015 (5) TMI 178
Valuation of goods - Non inclusion of value towards the shrinkage and amount of transportation charges - Held that:- show cause notice does not rely upon any documents which indicate the value which is attributed to the transport and octroi in the said show cause notice. The said show cause notice blindly states that transport charges and octroi are to be included in the assessable value of the goods without evidencing that the said transport charges and octroi are paid by the appellant and the amount which in indicated in the show cause notice is the amount which has been deduced from the records maintained in the appellant’s premises. It is a settled law that when the department raises demands on the assesse, the onus has to be discharged by the department by submitting tangible evidences. In the absence of any such evidence which indicates the specific amounts as have been paid by the appellant, the entire fulcrum of the show cause notice is displaced and any order confirming the demand raised on such show cause notice has to go. - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (5) TMI 177
Valuation of goods - Inclusion of transportation cost of input sent to the job worker’s premises and handling charges incurred by the job worker-appellant for un-loading the goods by its own workers - Held that:- Written submissions filed by the appellant does not disclose whether the transportation cost can be disintegrated from the contact between the manufacturer and the job worker appellant. Unless there is a clear disintegration made out by evidence, the appellant fails on this count. - In so far as handling charges is concerned, it is integrally connected with the input coming to the premises of the job worker. This cannot be disintegrated. For no disintegration, appeal fails on this count also. It does not make difference to law as to whether unloading is done by workers from outside or own workers of appellant since every activity involves cost whether expressed for intrinsic. - Following decision of Ujjagar Prints case [1989 (1) TMI 124 - SUPREME COURT OF INDIA] - Decided against assessee.
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2015 (5) TMI 168
Invocation of extended period of limitation - Suppression of facts - Wrong availment of CENVAT Credit - Whether Tribunal was justified in holding that extended period of limitation under Rule 15 of the Cenvat Credit Rules, 2004 and Section 11 (A) (1) of the Central Excise Act, 1944 was not attracted in this case - Held that:- Reasons so disclosed in the order of the Commissioner have completely been ignored by the Tribunal only on the ground that the law on the legality of the Cenvat credit on the items in questions, has been declared by the Larger Bench in the year 2010 in the case of Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)), therefore, no mala fide can be attributed to the assessee, so as to justify the applicability of the longer period of limitation. - Tribunal is not justified in recording such a finding. - under Rule, 2004, a burden is cast upon the manufacturer to ensure that cenvat credit is correctly claimed by them and proper records are maintained in that regard. - The assessee, in response to the show-cause notice had stated that there is no provision in Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty. - facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11 A (1) of the Act, 1944. Therefore, the invocation of the extended period of limitation in the facts of the present case is fully justified. - Decided in favour of Revenue.
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2015 (5) TMI 167
Rectification of mistake - Penalty u/s 11AC - Clandestine removal of goods - Held that:- Member (Judicial) has not given any contrary findings as to the confirmation of demand of ₹ 1,55,105/- in respect of clandestine clearance of Terpene by the appellant or to the imposition of penalty of equivalent amount on the appellant. The said demand has been confirmed under the first proviso to Section 11A (1) of the Central Excise Act, 1944, that is, alleging suppression, wilful mis-statement of facts, etc. with an intent to evade duty. Once the demand is confirmed invoking the said proviso, imposition of penalty under Section 11AC is mandatory and automatic. Further in the summing up portion, the learned Member (Judicial) has clearly agreed that the duty demand of ₹ 1,55,105/- for clearance of Terpene clandestinely is sustainable. If that be so, in the absence of a contrary decision by the Hon'ble Member (Judicial), it cannot be said that he has waived the penalty of equivalent amount on the appellant, which is a mandatory provision. - Rectification denied.
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2015 (5) TMI 166
Under Valuation of goods - Liability of payment of duty - Who is the manufacturer - Held that:- RGR is manufacturing goods on principle to principle basis. Moreover, they are manufacturing goods on behalf of the NPIL but they cannot be said as they are not manufacturer and NPIL is the real manufacturer in the light of decision of this Tribunal in the case of Glenmark Pharmaceuticals Limited reported in [2007 (11) TMI 192 - CESTAT, MUMBAI] - manufacturer is RGR and NPIL is not the real manufacturer. RGR is discharging their duty liability on cost plus job work charges as per the formula prescribed by the Apex Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA] considering and also as per the CBEC Circular no. 619/10/2002 Central Excise dated 19/2/2002, duty demand against RGR on the selling price of NPIL is not sustainable. - Decided in favour of assessee.
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2015 (5) TMI 165
Denial of CENVAT Credit - Clandestine removal of goods - Shortage of goods - Held that:- As regards the short payment of duty demand of ₹ 3,07,354/-on the ground of amortization of the basic custom duty plus interest paid in respect of the moulds and dies, the duty demand is not disputed by the appellant, hence, the same is confirmed along with interest. However, as regards, the penalty for the short payment, the Tribunal in the case of Mark Auto Industries Ltd. Vs. Delhi-Ill [2013 (12) TMI 1027 - CESTAT NEW DELHI] and Rasandhik Engineering Industries Vs. CC Delhi-III [2013 (12) TMI 1027 - CESTAT NEW DELHI] where the identical issue and identical facts are involved has held that penalty would not be imposable on the vendors. Following this judgment of the Tribunal, we hold that the penalty of ₹ 3,07,354/-imposed on the appellant is not sustainable. Thus, while the duty demand of Rs, 3,07,354/- along with interest is upheld, the penalty of same amount is set aside. Just on the basis of the weight intimated by the appellants' officials and the actual availment of the component, it cannot be presumed that the appellant have inflated the consumption of raw material and have cleared the alleged excess consumption without reversal of the credit. More so, when the difference between the ascertained weight of the component and the weight indicated by the companies' officials is less than 1.5 per cent of the total raw material purchased during fast five years. Moreover, we also find that though the impugned order mentions that weight of the component is recorded in the RT -12 Returns, on going through the returns, we find that it is not so as RT -12 returns mention only the number of the different types of the components manufactured and cleared and not their weight. The duty demand of ₹ 25,14,220/- is therefore, not sustainable and has to be set aside along with penalty. Duty demand of ₹ 1,74,015/- in respect of the alleged shortage of plastic granules valued at ₹ 10.87 lakh, it is seen that this shortage has been determined on 4/2/2003 by comparing the stock of the granules actually found with the stock of granules as maintained on the computer. But it is seen that at that time, the record of the raw material maintained in the computer was only up to 31/1/2003 and therefore the stock of the raw material as on 4/2/2003 could not be compared with the stock account of the same raw material as on 31/1/2003 and for this purpose, the stock of the raw material maintained in the computer should have been updated. Since the stock of the raw material actually found as on 4/2/2003 had been compared with the stock of the same raw material maintained in the computer as on 31/3/2003, in our view, the shortage of inputs valued at ₹ 10.87 lakh cannot be said to be real shortage and hence the duty demand of ₹ 1,74,015/- has to be set aside with equivalent penalty. - Decided in favour of assessee.
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2015 (5) TMI 164
Denial of concessional rate of duty - exemption under notification no. 06/02-CE dated 01.03.2002 - SSI exemption - paper not been manufactured in the same factory - Held that:- Notification no. 6/02-CE dated 01.03.2002 (Serial No. 86 and 86A ) and successor notification no. 4/06-CE (Serial No. 90-91) prescribe the concessional rate of duty for paper and paper board or articles made there from manufactured/ starting from the stage of pulp in factory, and the pulp is of a specified specification/ that is, containing not less than 75% by weight of the pulp made from the materials other than Bamboo, hard wood, soft wood/ reed (other than sarkanda ) or rags. This exemption is subject to certain conditions as mentioned in the notification, and one of the condition is that this exemption would be available to papers/ paper board cleared for home consumption from factory in any financial year up to first clearances of aggregate quantity not exceeding 3500 MT and that this exemption shall not be applicable to a manufacturer of the said goods who avails of exemption under notification no. 8/03-CE dated 01.03.2003. - when in this case it is the appellant who is liable to pay duty on the paper and not the job worker who converted pulp into paper rolls on job work basis, the exemption under these notifications cannot be denied to them. In view of this, we hold that the impugned order in not correct. The same is set aside. - Decided in favour of assessee.
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2015 (5) TMI 163
Valuation of goods - Held that:- It is not appropriate on the part of the Revenue to take the material cost as per certificate dated 7.8.2000 and take the "other cost/overheads" on the basis of certificate dated 30.9.2001. In our view, the certificate dated 30.9.2001 represents the correct cost of production and we find that the said cost of production is less than the Assessable value on which the respondent had paid duty. - Decided against Revenue.
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2015 (5) TMI 162
SSI Exemption - CENVAT Credit - Clandestine removal of goods - Held that:- As regards, non-accountal of 780 KG of plastic scrap found in the premises of M/s Annapurna Industries, there is no dispute that the same was not accounted for in the RG-1 Register. However, we are of the view that the appellant s plea that the same being intermediate product was meant for recycling and was exempted from duty under notification no. 67/95 CE and for this reason, the same was not accounted for in the RG-1 Register is acceptable. Accordingly, we hold that the confiscation of 780 KG of Plastic Scrap under Rule 25(1) of Central Excise Rule 2002 and imposition of penalty on M/s Annapurna Industries on that account is not sustainable and has to be set aside. - Decided in favor of assessee. As regards, the alleged removal of plastic containers by M/s Annapurna Industries to M/s Shivam Udyog - goods were not in fully finished condition and had been shifted to the adjacent premises of M/s Shivam Udyog on account of lack of space in M/s Annapurna Industries and as such the same cannot be said to have been cleared to M/s Shivam Udyog without payment of duty. In view of this, the duty demand of ₹ 9,398/- and confiscation of these goods has also to be set aside. Cenvat Credit - If the plastic granules had been cleared to job workers under job work challans on 08.09.2002 there is no explanation as to why the Authorized Signatory of the appellants was not aware about the same. Therefore, we hold that the Commissioner (Appeals) has correctly held that the plea of sending the plastic granules to job workers under job work challan are only an afterthought. However, we find that the amount of ₹ 2,90,613/- from M/s Annapurna Industries and the amount of ₹ 4,46,426/- demanded from M/s Shivam Udyog has been determined by adopting some value of the granules and calculating the duty on the same at rate of 16%, while in our view only the cenvat credit originally taken in respect of Granules would be payable which according to the appellant would be a much lesser amount. The cenvat credit attributable to 4125 KG of plastic Granules found short in the premises of M/s Annapurna Industries and 15,375 KG of Plastic Granules found short in the factory premises of M/s Shivam Udyog can be determined on the basis of the invoices issued by GAIL under which M/s JJ Packagerr had received the consignments. - Decided against the assessee.
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2015 (5) TMI 161
Extension of stay already granted - Held that:- appeal was not taken up for hearing after passing of the Stay Order as there is huge pendency of the appeals. It is noted that lot of appeals have already been listed and therefore it is difficult to take up the appeals hearing at this stage. - Therefore, stay granted.
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CST, VAT & Sales Tax
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2015 (5) TMI 172
Validity of Tribunal's order - Tribunal decided appeal on merits instead of dismissing it for non deposit of pre deposit order - Held that:- Tribunal is bound to obey the decision of the High Court. It is not open for the learned tribunal to ignore the directions, observations or orders passed by the High Court. If instead of the learned tribunal any other person would have ignored the order passed by the High Court it would tantamount to Contempt of Court. However, we refrain ourselves from making any observations - Following decision of State of Gujarat Vs. Tudor India Ltd. [2015 (4) TMI 618 - GUJARAT HIGH COURT] - Decided in favour of Revenue.
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2015 (5) TMI 171
Exemption on payment of exemption fees @ 1.5% - Assessing Officer (AO) was of the view that looking to the nature of the contract i.e. installation of plant & machinery including PSPO water treatment plants, laying of pipe line with material, it falls under the item/category 3 of the above mentioned notification and as such, is liable to charge exemption fees @ 2.25% - Held that:- It is essentially a finding of fact recorded by the lower authorities and the Tax Board, after appreciation of evidence, material on record and looking to the terms of the works contract, has clearly come to a definite finding of fact that the work assigned to the petitioner-assessee cannot be segregated and its main activity was construction/establishing plant & machinery of the sewerage treatment plant and that apart laying down pipelines with material which falls under the item/category 3 of the notification. It is also apparent that the work is a composite one and neither from the contract nor the activity undertaken by the petitioner-assessee, he has been able to segregate for the amount incurred by it on different activities separately. - On reading of the work assigned to the petitioner, and the Notification, in my view, there was composite agreement of contract and the major activity being of laying of pipeline with material, water treatment plant etc., then it would certainly be falling in item/category No.3 of the notification and all the three authorities in unison have come to a finding of fact based on the terms of the contract. Accordingly, once it is a finding of fact based on the terms of the contract, in my view, no question of law can be said to arise out of the order of the Tax Board and this Court does not find any perversity, illegality and impropriety in the order impugned so as to call for interference. - Decided against assessee.
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2015 (5) TMI 170
Validity of Tribunal's order - Tribunal decided appeal on merits instead of dismissing it for non deposit of pre deposit order - Held that:- Tribunal is bound to obey the decision of the High Court. It is not open for the learned tribunal to ignore the directions, observations or orders passed by the High Court. If instead of the learned tribunal any other person would have ignored the order passed by the High Court it would tantamount to Contempt of Court. However, we refrain ourselves from making any observations - Following decision of State of Gujarat Vs. Tudor India Ltd. [2015 (4) TMI 618 - GUJARAT HIGH COURT] - Decided in favour of Revenue.
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2015 (5) TMI 169
Clim of interest with Refund claim - Excess tax paid - Tribunal deleted the levy of tax imposed by the respondent on parts and accessories of hearing aids and accessories effected under both KVAT Act and CST Act as well as the tax levied on the admitted interstate sales of hearing equipments under the CST Act - Held that:- It appears, till the re-assessment order reached finality, the amount is said to be in the custody of the State/respondent. Be that as it may, it is not that the amount is withheld deliberately for some other reason. The Karnataka Appellate Tribunal ultimately determined the amount holding that the tax levied on the admitted interstate sales of hearing equipments under KVAT Act is to be deleted as the same turnover is levied with CST under the CST Act. In that process, the amount so collected becomes excess and the same has to be refunded. In this regard, seeking for payment of interest may not be appropriate. - since from last five years, the amount is lying with the respondent. It appears, the act of the respondent is not deliberate, in the sense, while considering the case of the petitioner, considerable time has been taken and for that State is not responsible to pay interest. - Writ Petitions are disposed of with a direction to the petitioner to collect the cheque which is kept ready by the Government with respect to refund of the excess amount which was remitted to the government by the petitioner.
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Indian Laws
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2015 (5) TMI 156
Exemption of entertainment tax - Benefit of the Gazette Notification dated 22.7.2009 - Held that:- Court is in agreement with the stand taken on behalf of the respondent State. It is evident from the letter of the petitioner dated 11.6.2010 that admittedly she had started the work of upgradation and modernization as early as on 15.5.2010 without making any such application as was required by the Gazette Notification dated 22.7.2009. The petitioner is therefore estopped from claiming any benefit under the said notification and even otherwise the suppression of facts would additionally disentitle the relief to the petitioner by a Court of equity which the Writ Court undoubtedly is. - petitioner is neither entitled to the benefit of the Gazette Notification dated 22.7.2009 nor any relief in the writ jurisdiction of this Court on account of her conduct while approaching this Court. - Decided against assessee.
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