TMI Tax Updates - e-Newsletter
June 1, 2016

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Claim for any debt or part thereof in any previous year, shall be admissible u/s 36(1)(vii), if it is written off as irrecoverable

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• CBEC notified the Indirect Tax Dispute Resolution Scheme Rules, 2016

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News

1. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified

2. India Signs Grant Agreement with IBRD, acting as an Implementing Agency of the Global Environment Facility for US $ 9.20 million for Efficient and Sustainable City Bus Service Project

3. RBI Reference Rate for US $

4. The Direct Tax Dispute Resolution Scheme 2016 & Equalisation Levy to come into effect from 1st June 2016; Relevant rules and forms in this regard notified and are available on http://www.incometaxindia.gov.in

5. Sale (re-issue) of Government Stocks through price based auction

Notifications

Central Excise

1. 29/2016 - dated 31-5-2016 - CE (NT)

Indirect Tax Dispute Resolution Scheme Rules, 2016

Customs

2. 78/2016 - dated 31-5-2016 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Gold and Sliver

Circulars / Instructions / Orders

VAT - Delhi

1. 8/2016-17 - dated 30-5-2016

New Composition Scheme for Restaurants and Halwais

Income Tax

2. 12/2016 - dated 30-5-2016

Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961

DGFT

3. 14/2015-2020 - dated 30-5-2016

Amendment in Appendix - 6H [Procedure to be followed for reimbursement of Central Sales Tax (CST) on supplies made to Export Oriented Units (EOUs) and units in Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP)] and ANF 7A [Application for claim of TED Refund/Duty Drawback/Brand Rate Fixation] as contained in the Appendices and Aayat Niryat Forms of FTP 2015-20

Customs

4. 21/2016 - dated 31-5-2016

Security under section 59 (3) of the Customs Act

5. 22/2016 - dated 31-5-2016

Procedure regarding filing of ex-bond bill of entry

Highlights / Catch Notes

Income Tax

• Debt Claim Admissible u/s 36(1)(vii) If Written Off as Irrecoverable in Books, Meeting Subsection 36(2) Conditions.

  Circulars : Claim for any debt or part thereof in any previous year, shall be admissible u/s 36(1)(vii), if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act.
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• High Court Rules Payment for Landlord's Consent to Reconstruct Building as Revenue Expenditure, Affects Tax Allowability.

  Case-Laws - HC : Allowability as revenue expenditure - payment made by the appellant to the landlord for his consent to the reconstruction of the building - held as Revenue in nature - HC
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• Education at Cost Still Charitable: Court Affirms Tax Exemption for Society u/s 2(15) of Income Tax Act.

  Case-Laws - HC : Exemption u/s 11 - Charitable purpose u/s 2(15) - Merely because education is provided at cost does not result in the Society ceasing to carry on its activities for a charitable purpose. - HC
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• Section 50B Update: Tea Estate Sale Classified as Slump Sale, But Asset Transfer Suggests Split Sale Instead.

  Case-Laws - AT : Addition made u/s.50B holding the tea estate as slump sale - Only those assets which were enumerated in the Schedules and Annexures were sold to the vendee. Therefore, the instant case was one of split sale and not a case of slump sale. - AT
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• Ruling on Section 115JB: Temporary Investment Fluctuations Excluded from Book Profit; Only Permanent Changes Count for Tax.

  Case-Laws - AT : Addition to the book profit u/s.115JB being Provision for NP and Provision for Dimunition in value of investments - the diminution and appreciation in the value of investment unless it is not permanent in nature should not be considered - AT
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• Assessee Not Required to Deduct Tax at Source for Client Payments u/s 194C of Income Tax Act.

  Case-Laws - AT : TDS u/s 194C - The assessee having made the payments on behalf of its clients, there is no liability to deduct tax at source on the assessee - AT
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• Interest u/s 220(2) Not Applicable for Assessment Years 1991-92 and 1992-93.

  Case-Laws - AT : Levy of Interest u/s. 220(2) - When this demand was raised the same is required to be payable in accordance with law and not from the period of relevant assessment year i.e.1991-92 and 1992-93 - AT
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• TDS u/s 194D Excludes Service Tax on Insurance Commission Payments.

  Case-Laws - AT : TDS provisions u/s 194D are not applicable on Service Tax element in respect of ‘insurance commission‘ - AT
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• Gas and Electricity Deposit Write-Offs Deemed Business Losses, Affecting Taxpayer Deductions.

  Case-Laws - AT : Disallowance of writing off of deposit given for gas and electricity - loss suffered as a result of non-recovery of the said deposits was a loss incidental to the business of the assessee. - AT
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• Expat Employees' Salary: No Need for Additional TDS Deduction u/s 194J After Section 192 Deduction.

  Case-Laws - AT : Reimbursement of salary paid to expatriate employees - assessee had already deducted TDS u/s 192 - The assessee was not liable to deduct TDS under section 194J on the reimbursement of salary of seconded employees. - AT
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Customs

• Court Rules Against Unjustified Transfer or Re-export Requirement for Petitioner's Vessels Used Over Three Years.

  Case-Laws - HC : SFIS - there is no justification for the DoR to insist that the vessels of the Petitioner that have completed more than three years after import should be transferred only by sale within group companies or managed hotels or be re-exported. - HC
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Service Tax

• Penalty under Finance Act Section 78 waived due to bona fide belief; no fact suppression found in audits.

  Case-Laws - AT : Imposition of penalty - Section 78 of the Finance Act, 1994 - the non-payment of tax was on account of bonafide belief and the Revenue had conducted Audits which would go to show that there was in fact no suppression of facts - penalty was rightly waived u/s 80 - AT
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Central Excise

• CBEC Introduces Indirect Tax Dispute Resolution Scheme Rules 2016 to Streamline Dispute Settlement and Promote Taxpayer Compliance.

  Notifications : CBEC notified the Indirect Tax Dispute Resolution Scheme Rules, 2016
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• Cenvat Credit Must Be Granted on Input Services Used Outside Factory to Prevent Tax Cascading Effect.

  Case-Laws - AT : Whether the eligibility for credit on input services is to be denied since the same was used outside the factory - Cenvat being a beneficial piece of legislation, which was enacted for removing the cascading effect, the denial of credit sighting procedural irregularities is unsustainable - AT
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• Court Upholds Duty Adjustment on Final Provisional Assessment; Refund Process Valid Under Central Excise Law.

  Case-Laws - AT : Refund - the order cannot be faulted as such adjustment of duty on finalization of provisional assessment is held to be legally valid - AT
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• Appellants Exceed SSI Exemption Limit; Demand Set Aside Due to Time-Barred Limitation Per Notification No. 8/2003-CE.

  Case-Laws - AT : SSI Exemption - Wrong Valuation - appellants exceeded the SSI exemption limit prescribed under Notification No.8/2003-CE, dated 01.03.2003 - Demand set aside as beyond the normal period of limitation / time barred - AT
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• Cenvat Credit Valid Despite Excess Duty Payment by Input Manufacturer; No Refund Issued by Authorities.

  Case-Laws - AT : Eligibility of Cenvat credit - excess payment of duty by the Input manufacture - the jurisdictional officers of Suppler have not disputed the duty paid and the alleged excess payment has not been granted as refund - credit cannot be denied at receiving end - AT
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Case Laws:

• Income Tax

• 2016 (5) TMI 1272
  Validity of assessment as barred by limitation - is the period of limitation of two years to be reckoned from November 21, 2000? - Held that:- The fact that the restraint order was not extended after January 15, 1999 is a pointer to show that the search was at an end on January 15, 1999 itself. It is not within the power of the revenue to keep a matter pending for as long as they desire. The object is to dispose of the proceedings as expeditiously as possible. In this case, almost two years after January 15, 1999, the officers of the revenue called at the house of the assessee for the purpose of recording that the search was at an end. Question may be raised, could they have done it after ten years? The answer has to be in the negative. The question as to when did the search come to an end has to be answered on the basis of the attending facts and circumstances of each case. The restraint order was not extended after a period of three months. That means, the search was also abandoned. Therefore, the search came to an end. The search did not stand revived when the officers called at the house of the assessee merely for the purpose of recording that the search was at an end. We, therefore, find that the order passed by the learned Tribunal is a perfectly justified order. Therefore, the appeal fails. - Decided in favour of the assessee.

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• 2016 (5) TMI 1271
  Allowability as revenue expenditure - payment made by the appellant to the landlord for his consent to the reconstruction of the building - whether was a revenue expenditure to be allowed as a deduction on proportionate basis over a period of 11 years? - Held that:- Revenue, did not dispute that the payment was made by the assessee in consideration of the landlord agreeing to signify his consent to the reconstruction of the building which had been demolished by fire. The expenditure was made so that the assessee was able to carry on its business. Following the view expressed in the case of Bikaner Gypsums Ltd. –vs- Commissioner of Income Tax [1990 (10) TMI 2 - SUPREME Court ] , we are inclined to hold that this was a revenue expenditure. The assessee, though has claimed it on a deferred basis, the claim should be allowed as prayed for. - Decided in favour of assessee.

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• 2016 (5) TMI 1270
  Disallowance from the commission received from the BSNL out of an amount as commission paid - Held that:- The examples were taken of certain bills bearing No. 4877 dated 19.1.2006 in the name of Shri Raj Kumar Samna, No. 5018 dated 'nil' in the name of Tanisk Singla, Sirhind, bill No. 4992 dated 21.10.2006 in the name of Aggarwal Enterprises, Patiala etc. where complete addresses of the retail customer/sub dealers had not been mentioned so that the same could be verified and it was also recorded that in view of the incomplete particulars, the parties were not locatable in such big cities. It was in the totality of facts and circumstances that the addition of Rs. 50,000/- was sustained by the Tribunal. The view taken by the Tribunal in the given facts and circumstances is plausible and also reasonable in upholding the addition of Rs. 50,000/- only.

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• 2016 (5) TMI 1269
  Deemed dividend under Section 2(22)(e) - Held that:- As held in Creative Dyeing and Printing P. Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT ), it is only if the advance paid is for the benefit of the shareholder/director, can it be said to be “deemed dividend” within the meaning of Section 2(22)(e) of the Act. The Tribunal has rightly held that the subject transaction is not for the benefit of the assessee, but is for the benefit of the company; and it is a transaction in the ordinary course of business. The conclusion of the Tribunal, that such transactions would not fall within the definition of deemed dividend under Section 2(22)(e) of the Act, is in accordance with law. No substantial question of law arises for consideration in this appeal - Decide against revenue

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• 2016 (5) TMI 1268
  Deduction under Section 80IB(10) denied - date of completion - selection of relevant date - ITAT held that the assessee should be deemed to have commenced the work of development and construction, from the time even when the preliminary works started - Held that:- From the finding recorded by the Tribunal it is clear that certain expenses incurred by the assessee in removing the hut dwellers, digging of bore well, getting electricity connection, putting up compound walls and security cabins, etc. have all been taken by the Tribunal to be part of construction activity. If the Tribunal was of the concrete opinion that all these activities would constitute an activity of construction, the Tribunal ought to have first disallowed the findings recorded by CIT (Appeals) that the actual date of commencement of construction was 15.10.1998. But, unfortunately, the Tribunal agreed in paragraph 14 of its order that the actual date of commencement of construction was 15.10.1998. However, the Tribunal held that all pre-construction activities should be taken to be part of development, so as to pre-pone the date of development and construction. This, in our considered view, is not the correct interpretation to be offered to the composite expression "development and construction"of the housing project. - Decided in favour of assessee

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• 2016 (5) TMI 1267
  Reopening of assessment - claim of deduction under Section 36(1)(viia) - Held that:- On being satisfied with the basis of the petitioner's claim for deduction under Section 36(1)(viia) of the Act, the Assessing Officer passed orders dated 29th January, 2013 for Assessment Year 201011 and 12th March, 2014 for Assessment Year 201112. On the date when the Assessing Officer passed the orders under Section 143(3) of the Act, the decision of the Apex Court in Catholic Syrian Bank Ltd. (2012 (2) TMI 262 - SUPREME COURT OF INDIA ) was very much available. Thus, prima facie, the Assessing Officer would have formed a necessary opinion taking a view that the decision of the Apex Court in Catholic Syrian Bank Ltd. (supra) would not militate against the view canvassed by the respondent assessee and allow the claim of the petitioner for deduction under Section 36(1)(viia) of the Act. In the above view, prima facie, this is a case of change of opinion. Consequently, without jurisdiction.

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• 2016 (5) TMI 1266
  Estimation of gross receipts - Held that:- In the present case, the gross receipts, no doubt, are far in excess of Rs. 40 lakhs and, as such, Section 44AD of the Act is not attracted. The Tribunal, however, held that Section 44AD of the Act serves as a guidance in estimating net profit even in cases where the gross receipts exceed Rs. 40 lakhs also. The Tribunal has referred to the earlier orders passed in several other cases where profits were estimated at 8% of the gross receipts for the main contract, and at between 5% to 7% for sub-contracts. As has been rightly held by the Tribunal, estimation of profits would depend on several factors, and would vary from one case to another. As the manner in which profits are to be estimated would depend on the facts of a given case, no question of law arises on such estimation either by the Commissioner of Income Tax (Appeals) or by the Tribunal, unless such an estimation is perverse. In the present case, we are satisfied that the order of the Tribunal does not suffer from any such infirmity

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• 2016 (5) TMI 1265
  Liquidated damages received for delay in supply of a boiler - whether was in the nature of a capital receipt or revenue receipt - Held that:- Determination of liquidated damages was not based upon the calculation made in respect of loss of profit on account of supply of the boiler, but was directly linked with the procurement of a capital asset. Delay in supply would result in delay in the coming into existence of a profit making apparatus, rather than a receipt in the course of profit earning process. See Commissioner of Income Tax vs. Saurashtra Cements and Chemicals India Limited [2010 (7) TMI 11 - SUPREME COURT] Tribunal correctly held that the liquidated damages received by the respondent-assessee, for delay in supply of a boiler, was in the nature of a capital receipt.

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• 2016 (5) TMI 1264
  Registration under Section 12AA cancelled - existence of Charitable purpose - Held that:- Charitable purpose, under Section 2(15) of the Act, is defined to include education. The order of the D.I.T.(E) records that the Society has been sponsoring diploma course in banking sections with the Osmania University and full-fledged post-graduate course-M.Tech. (Information Technology) with specialisation in banking technology and information security with costs with the University of Hyderabad. Sponsoring educational courses would fall within the ambit of “education” as defined under Section 2(15) of the Act. Merely because education is provided at cost does not result in the Society ceasing to carry on its activities for a charitable purpose. There is no material on record, nor has any finding been recorded by the D.I.T (E) referring to particular instances, to hold that the respondent-assessee was carrying on its educational activities with a profit motive or on commercial lines. The Tribunal has rightly held that the reasons assigned by the D.I.T.(E), in cancelling registration of the respondent-assessee, was vague and without reference to any particular instance.

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• 2016 (5) TMI 1263
  Addition of unaccounted income based on the seized document - ITAT deleted the addition - Held that:- Addition was made by the Assessing Officer only relying upon the draft MOU which is an unsigned one. There is no other corroborative evidence brought on record either as a result of search or enquiry made by the Assessing Officer, which could establish the fact that the contents of the draft MOU were true and the MOU was in fact acted upon. Therefore, in the absence of any such evidence, the MOU is merely a dumb document having no evidentiary value and hence cannot be made the basis for making an addition. That apart, as has been elaborately discussed by the CIT(A), even assuming the draft MOU to be correct, there is neither mention of the consideration paid nor mode of such payment. Moreover, when as per the draft MOU, the consideration has to be paid both to the assessee and M/s.Radha Realty Corporation Ltd., the entire payment being the differential amount could not have been assessed in the hands of the assessee alone. It is also a fact to take note of that the final sale deed dated 22.08.2007 in favour of DLF with regard to sale of land in dispute, does not mention about any payment being made to the assessee or his nominees. That being the case, it cannot be said that the assessee has received the amount of Rs. 13.81 crores in cash towards the sale of land merely on the basis of the draft MOU. Thus additions deleted confirmed - Decided against revenue

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• 2016 (5) TMI 1262
  Addition made u/s.50B holding the tea estate as slump sale - CIT(A) deleted the addition - Held that:- We find that assessee has sold two tea estates as going concern but after assigning the value to the individual asset and without transferring all the liabilities. We find that similar issue was also decided by this Tribunal in the case of DCIT v. M/s Tongani Tea Co. Ltd. [2015 (11) TMI 925 - ITAT KOLKATA ] wherein Tribunal has decided the issue in favour of assessee wherein held that the items sold did not include liabilities. The sale agreement did not include investments and deposits. Accordingly, all the investments, deposits, receivables, stock and such other current assets in the form of financial and other assets remained with the assessee-company along with the liabilities. Only those assets which were enumerated in the Schedules and Annexures were sold to the vendee. Therefore, the instant case was one of split sale and not a case of slump sale. Folooe=wing the same parity of reasons the present case is decided in favor of assessee.

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• 2016 (5) TMI 1261
  Reopening of assessment - Held that:- We find that the assessee is having a sugar mill factory and for which it purchased new machinery. It has also leased out its plant & machinery to M/s. Eastern Sugar & Industries Ltd. During the re-assessment proceedings the AO did not find any new material, which could suggest to make any addition u/s. 147 of the Act. The AO did not bring any new material for reopening the assessment u/s. 147 of the Act. In the present case, the material evidence relating to additions said to have been during Section 147 of the Act proceedings were very much available with AO as reflected in the schedules attached to the balance sheet of the assessee, in our opinion, the AO relied only on the existing facts to reopen the assessement, since there was no new material brought on record by the AO to re-open the assessment u/s. 147 of the Act, therefore, the reassessment, is not justified.- Decided in favour of assessee.

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• 2016 (5) TMI 1260
  TDS u/s 194H - Held that:- AO found under examination of the details submitted by the under remand proceedings that all the payments were paid to various persons , particularly in cash between Rs. 1000/- to Rs. 2300/- and CIT-A having examined the paper book filed before him by the assessee observed that the assessee has paid commission of Rs. 4,60,152/- to a number of parties for securing orders from twelve companies located at various places. Further noted that the assessee failed to produce any kind of evidence in respect of appointment of such commission agents either before AO or CIT-A. Mere stating that the assessee has appointed persons as commission agents for each company to follow-up its affairs in support of which no sufficient evidence, whatsoever, filed in this regard. In our opinion, as per the procedure established the assessee shall produce all the details before the authorities, after due verification of the material available on record which are filed by the assessee without any supporting evidence both the authorities below arrived to a conclusion that the said payments made to various persons are self made and non-verifiable. Therefore, we hold that the assessee had clearly failed to prove genuineness of expenditure, consequently, the addition made on this issue stands confirmed - Decided against assessee TDS u/s 194H - Non TDS on Disallowance made on account of bill discounting and Invoice charges - Held that:- In the present case at page no-23 the discounting charges said to have received by the Bank of Baroda also, though the addition was not on account of interest, in this case also, but, however, incidentally includes interest. Therefore, no tax can be charged on any such payments. It is pertinent to note as discussed above the assessee did not pay any amounts to bank so as to deduct the tax at source. Thus, the section 194H is not applicable to the case on hand and addition made thereon by the AO is not maintainable. - Decided in favour of assessee Non deducting TDS on account of payments made towards consulting charges - Held that:- It is observed from the remand report that the AO verified the paper book as produced by the assessee containing details of payments made to various parties, which are admittedly less than Rs. 20,000/- and the ld. CIT(A) also confirmed the same. The same has been noticed at page 34 of the paper book, wherein it shows that the name of persons, their complete addresses and respective amounts mentioned therein paid to them. The AO further observed that the assessee did not produce any one of such parties before him for confirmation of the genuineness of the transaction. As submitted by the ld.AR above, in our opinion, the AO could have resorted to the proceedings u/s. 133 of the Act to secure the presence of such 15 persons for examination. But the AO failed to do so. That it is open to the AO to consider the relevant factors for determining as to whether the said consultancy charges were paid to the parties mentioned at page 34 of the paper book or not. In the present case, the AO totally failed to consider the same. The AO did not bring anything contrary to the claim of the assessee. Therefore, we hold that in view of the proviso (B) (i) to subsection (1) of Section 194J of the Act the addition does not stand, therefore, it is deleted - Decided in favour of assessee

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• 2016 (5) TMI 1259
  Addition of interest income as per CASS - assessee failed to include a sum of Rs. 1.50 lakh as interest income in its total income as shown in the CASS - Held that:- Assessee was following the mercantile system of accounting but the real income should be liable to tax irrespective method of accounting system followed by assessee. Unless the assessee actually charged the interest or interest in real terms accrued to the assessee, it cannot be brought to tax merely on the ground that the assessee follows mercantile system of accounting. - Decided in favour of assessee. Addition of the expense including the interest disallowed u/s. 14A r.w.s 8D of the IT Rules in computing the book profit u/s. 115JB - Held that:- No addition to the book profit shall be made on account of alleged expenditure incurred to earn exempt income while computing income u/s115JB of the Act. See Quippo Telecom Infrastructure Ltd. case [2011 (2) TMI 1400 - ITAT DELHI ] - Decided in favour of assessee. Non reducing the lower of loss brought forward or unabsorbed depreciation as per books of account while computing the book profit u/s 115JB - Held that:- As per the provision of law, assessee is entitled to claim the deduction for lower of the amount either loss brought forward or unabsorbed depreciation. We accordingly direct the AO to allow the loss brought forward or unabsorbed depreciation whichever is less as per books of account of the assessee in terms of clause (iii) u/s 115JB of the Act. This ground is allowed in favour of assessee Charging interest u/s 234B/C - Held that:- Additions have been made to the total income of assessee as a result of retrospective amendment in the Statute and assessee paid the tax. But there will be no interest on the aforesaid addition made u/s 234B and 234C in view of the aforesaid judgment of jurisdictional High Court in the case of Emami Ltd. (2011 (6) TMI 163 - CALCUTTA HIGH COURT ). Accordingly we reverse the orders of Authorities Below and delete the addition made by AO.- Decided in favour of assessee. Addition to the book profit u/s.115JB being Provision for NP and Provision for Dimunition in value of investments - Held that:- We find that the diminution in the value of investment is not permanent in nature. The value of investment made in the shares and securities keep on changing depending upon the market rate. Therefore, there can be a case for a particular year that there will be diminution in the value investment but in the next year but there will be appreciation in the value of investment. So we should not consider the diminution and appreciation in the value of investment unless it is not permanent in nature. In this connection, we find that the Institute of Chartered Accountant of India in terms of its Accounting Standard 13 has recommended to identify the loss in the books on account of diminution in the value of investment until and unless it is permanent in nature. The action taken by Authorities Below in connection the diminution in the value of investment is correct and within the ambit of law. Hence, we confirm the order of lower authorities with regard to addition made by Authorities Below under clause (i) to the Explanation of Sec. 115B of the Act as far as Investment is concern. This ground of assessee’s appeal is partly allowed.

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• 2016 (5) TMI 1258
  TDS u/s 194C - non deduction of TDS on payments made to a contractor/sub–contractor for services rendered - Held that:- The assessee having made the payments on behalf of its clients, there is no liability to deduct tax at source on the assessee. Consequently, no disallowance under section 40(a)(ia) can be made for alleged failure of the assessee to deduct tax at source on the payment made on behalf of the importers / clients. Therefore, finding no infirmity in the order of the learned Commissioner (Appeals), we uphold the same by dismissing the ground raised by the Department. - Decided in favour of assessee.

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• 2016 (5) TMI 1257
  Estimation of profit on the sales @ 0.5% - Held that:- As per information received in pursuance to enquiry made under section 133(6) with the parties to whom the assessee claimed to have sold goods, all of them are not only existing entities but are having PAN and all of them confirmed of having transacted with the assessee. It is also found that one of the parties is a listed company. The learned Commissioner (Appeals) also found that the assessee is of a man of small mean and in fact an employee of Shri Ashok Jain. That being the case, in our view, 5% net profit rate adopted by the Assessing Officer for a non–existent business is on a very higher side. Moreover, it is observed by us in assessee’s own case for assessment year 2008–09, the Assessing Officer has estimated the net profit from the very same business at 0.03%. Taking that as an indicator, in our view, the estimation of profit @ 0.5% by the learned Commissioner (Appeals) is reasonable, hence, calls for no interference. - Decided against revenue Addition on account of unexplained outstanding balance of creditors - CIT(A) delted the addition - Held that:- Commissioner (Appeals) felt it necessary to conduct enquiry himself and obtain information for enabling him to dispose off the appeal, in our view, no fault can be found with such procedure adopted by the learned Commissioner (Appeals). A reading of the statutory provisions referred to above makes it clear that not only the learned Commissioner (Appeals) is empowered to conduct such enquiry for obtaining information but there is also no need for him to confront the same to the Assessing Officer. Therefore, in our view, the learned Commissioner (Appeals) was not required to obtained a remand report from the Assessing Officer on the basis of information obtained by him under section 133(6) before deciding the issue. Moreover, the learned Commissioner (Appeals) after examining the evidence brought on record having found that the creditors appearing in assessee’s books are genuine there was no logic in again remanding the matter to the Assessing Officer. In the aforesaid facts and circumstances, we do not see any reason to interfere with the order of the learned Commissioner (Appeals) in deleting the addition made under section 68 - Decided against revenue

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• 2016 (5) TMI 1256
  Disallowance of benefit of substantial expansion under section 80IC - CIT(A) confirming the deduction under section 80IC of the Act to the extent of 25% as against 100% - Held that:- Assessee is entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years. See Hycron Electronics V ITO. [2015 (6) TMI 725 - ITAT CHANDIGARH ] - Decided against assessee.

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• 2016 (5) TMI 1255
  Interest charged u/s.220(2) - CIT(A) deleted the addition - order passed by the Settlement Commissioner - Held that:- Apparently the demand was raised in pursuance of order dated 17.11.1994 u/s. 245D(1) of the Act and in pursuance of final order dated 245D(4) of the Act determining the income to the tune of Rs. 21,91,030/- for the A.Y.1991-92 and Rs. 21,19,492/- for the A.Y.1992-93 had already been paid which is not in dispute. Subsequently, the demand was raised in pursuance of order dated 03.05.2011 u/s 245D(4) of the Act and this demand was not in knowledge of the assessee. When this demand was raised the same is required to be payable in accordance with law and not from the period of relevant assessment year i.e.1991-92 and 1992-93. Nothing new material brought before us to which it can be assumed that the learned CIT(A) has passed the order wrongly and illegally. The learned departmental representative nowhere produced any law before us, contrary to the finding of the learned CIT(A) in question. No tangible material was produced before us which may speak about the in-genuineness of the order passed by the learned CIT(A). In view of the above said circumstances we are of the view that the learned CIT(A) has passed the order judiciously and correctly which does not require to be interfere with at this appellate stage. - Decided against revenue

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• 2016 (5) TMI 1254
  TDS u/s 194J OR 194C - nature of services received by the assessee by incurring data storage expenses - Held that:- CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. The ld CIT(A) examined the contract with Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification. On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and we are inclined to opine that the order of CIT(A) is correct and deserved to be upheld - Decided against revenue TDS u/s 194J OR 194C - event management expenses - Held that:- The assessee has paid Rs. 1,69,08,818/- to M/S Reliance Transport and Travel Pvt Ltd as reimbursement expenses and tour leader expenses. These reimbursements were made by the assessee to the said company for arranging tickets, hotel bookings and providing leaders to see the arrangement at Agra. As is seen from the nature of services availed , we do not find any sort of professional or technical or consultancy but rather routine services which are provided by the travel agents in the normal course of business which were purely of contractual nature. It can be seen from nature of reimbursement for the services availed that these are in the nature of simple contractual case where only the provisions of 194C could be applied to deduct and deposit TDS and not 194J which deals with the deduction and deposit of TDS in case of technical, professional and consultancy services. Looking to the facts in the light of provisions of section 194C vis a vis 194J we find that the order of FAA is correct and needs to be upheld. - Decided against revenue Applicability of TDS provisions u/s 194D of the Act on Service Tax element in respect of ‘insurance commission‘ - Held that:- TDS is required to be deducted and paid to the Govt Treasury on the income payable only which means that certainly the service tax component on the commission is not liable to TDS as the same is not an income of the assessee. The provisions of section 194D and 194I have to be seen in the light of the two circulars no 4/2008 dated 28.04.2008 and circular no 1/2014 [F.No. 275/59/2012-IT(B)] dated 13.1.2014. In circulars no. 4/2008 dated 28.04.2008 CBDT has clarified that TDS is not required to be deducted on service tax on rent u/s 194I.- Decided against revenue

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• 2016 (5) TMI 1253
  TDS u/s 192 - reimbursement of salary of seconded employees - Disallowance under section 40(a)(i) for want of TDS - payment made by the assessee to M/s. RBESL-UK towards expatriate fees - Held that:- Claim of the assessee of having paid and deducted tax at source from the amount in question as salary income is duly supported by TDS certificates issued in Form No. 16 and the same, in our opinion, is sufficient not only to establish that the amount in question is already subjected to TDS but also that there was employer-employee relationship between the assessee-company and the concerned two employees. Keeping in view that the assessee had already deducted tax under section 192 on entire salary reimbursed by him, it was held by the Tribunal that there was no case of disallowance under section 40(a)(i). The assessee was not liable to deduct TDS under section 194J on the reimbursement of salary of seconded employees. Thus we are of the view that the assessee was not liable to deduct tax at source from the amount in question paid to M/s. RBESL-UK towards reimbursement of salary paid to expatriate employees and the disallowance made by the Assessing Officer under section 40(a)(i) for the alleged failure of the assessee to deduct tax at source is not sustainable. See M/s. Nagase India Pvt. Limited (2014 (5) TMI 44 - ITAT MUMBAI) and Temasek Holdings Advisers India Pvt. Limited [2013 (9) TMI 48 - ITAT MUMBAI] - Decided in favour of assessee Disallowance on account of provision made for marketing expenses - Held that:- It is pertinent to note here that out of the total provision of Rs. 19.90 crores made by the assessee for marketing expenses, a sum of Rs. 18.20 crores was required to settle the obligation and only the balance amount of Rs. 1.69 crores, which is less than 10% of the total provision made by the assessee remained excess. Moreover, such excess provision was subsequently reversed by the assessee and offered to tax as the same rate as submitted by the ld. counsel for the assessee resulting into no loss with the Revenue. Having regard to all these facts of the case, it cannot be said that the estimate made by the assessee of the provisions for marketing expenses was not reliable. In our opinion, the provision for marketing expenses was rightly recognized and made by the assessee being its liability for the expenses of its business and the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) merely on the basis that such provision is found to be finally excessive is not sustainable. We, accordingly, delete the disallowance made on this issue - Decided in favour of assessee Disallowance on account of cost of films produced by the assessee for the purpose of business promotion - Held that:- There is no dispute that the expenditure in question incurred by the assessee on production of Ad-films is revenue expenditure and the same is disallowed on pro-rata basis by the authorities below only on the ground that the resultant benefit was not confined to the year under consideration and the same was partly available even in the subsequent year. The ratio of the decision of Core Health Care Limited (2008 (10) TMI 74 - GUJARAT HIGH COURT ) and Ashima Syntex Limited (2008 (10) TMI 298 - ITAT AHMEDABAD-B) thus is squarely applicable in the facts of the present case and respectfully following the same, we delete the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of cost of Ad-films on pro-rata basis - Decided in favour of assessee Disallowance of claim for deduction under section 80IA - Held that:- The ld. counsel for the assessee has very fairly and frankly admitted that the relevant details as required by the Assessing Officer to justify the allocation of indirect expenses are not available with the assessee and in the absence of the same, there is nothing to dispute the allocation of indirect expenses made by the Assessing Officer in the ratio of sales of each unit. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) confirming the disallowance made by the Assessing Officer on account of assessee's claim for deduction under section 80IA to the extent of Rs. 47,34,361/- - Decided against assessee Transfer Pricing Adjustment - Held that:- As rightly submitted by the ld. D.R., the fact that the export of PCMX, which constituted about 1/3 r d of the export made by the assessee to its AE, resulted in a loss as shown in the cost audit report clearly creates doubt about the reliability of the segmental financials taken by the assessee to work out the OP/TC of its export with AEs at 7.96%. It is pertinent to note here that nothing has been brought on record either before the authorities below or before us to shows that the figures reported in the cost audit report showing the loss in the export of PCMX are not correct. In reply to a specific query raised by us, the ld. counsel for the assessee has not been able to explain the basis on which these segmental financials showing OP/TC of the export of the assessee-company to its AE at 7.96% are taken. In our opinion, the OP/TC of the relevant transactions worked out by the assessee, therefore, cannot be taken as basis for bench marking the relevant transactions by adopting TNMM and it would be more appropriate to take the OP/TC at the entity level by taking into consideration the entire transactions of the assessee. The entity level OP/TC thus taken is required to be compared with the OP/TC of the entities which are functionally similar by taking the financial data of only the relevant year and not on the basis of multiple year data as taken by the assesese in the Transfer Pricing Study Report, which is not permissible as per the relevant Rules. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer/Transfer Pricing Officer with a direction to do afresh the exercise of determining the ALP of the relevant international transactions of the assessee-company with its AEs by following TNMM and by taking OP/TC at entity legal as PLI. - Decided in favour of assessee for statistical purposes. Determination of rate of tax payable by the assesese on capital gain arising from the sale of flats - Held that:- Although the ld. counsel for the assessee has relied on certain judicial pronouncements, it is observed that the same are not applicable in the present context involving the issue relating to rate of tax applicable to the capital gain arising from sale of depreciable assets. On the other hand, the relevant provisions of section 50 as applicable in the present context are very clear and specific as rightly held by the ld. CIT(Appals) and as per the said provisions, which are overriding in nature, the capital gain arising from the sale of depreciable assets is chargeable to tax at the rate applicable to short-term capital gains irrespective of the holding period. Disallowance u/s 14A by applying Rule 8D - Held that:- Rule 8D is applicable only prospectively from AY 2008-09. As further held by the Hon'ble Bombay High Court in the case of Godrej & Boycee Manufacturing Co. Limited (2010 (8) TMI 77 - BOMBAY HIGH COURT ), disallowance under section 14A for the years prior to 2008-09 is required to be determined on some reasonable basis. In this regard, it is observed that the Coordinate Benches of this Tribunal has taken a consistent view by holding that disallowance under section 14A to the extent of 1% of the exempt income would be fair and reasonable. Following this consistent view taken by the Tribunal, we modify the impugned order of the ld. CIT(Appeals) on this issue and direct the Assessing Officer to restrict the disallowance under section 14A to the extent of 1% of the exempt income earned by the assessee. Deductibility of loss suffered by the assessee on abandoned capital WIP - Held that:- The issue involved therein relating to the deductibility of loss suffered by the assessee on abandoned capital WIP is squarely covered in favour of the assessee by the decision of the Hon'ble Calcutta High Court in the case of Benani Services Limited -vs.- CIT [2015 (3) TMI 849 - CALCUTTA], wherein it was held that expenditure incurred for construction/ acquisition of new facility, which was subsequently abandoned at work-in-progress stage is allowable in order to write off as incurred wholly and exclusively for the purpose of business. Respectfully following the said decision of the Hon'ble jurisdictional High Court, we direct the Assessing Officer to allow the loss claimed by the assessee on account of abandoned capital WIP. - Decided in favour of assessee Disallowance of writing off of deposit given for gas and electricity - Held that:- Deposits towards gas and electricity were paid by the assessee during the course of its normal business and the loss suffered as a result of non-recovery of the said deposits was a loss incidental to the business of the assessee. The ld. CIT(Appeals), in our opinion, therefore was fully justified in allowing the claim of the assessee for the said loss and we find no infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue - Decided in favour of assessee

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• 2016 (5) TMI 1252
  Penalty u/s 271(1)(c ) - Held that:- Penalty u/s 271(1)(c ) cannot be imposed in case where no specific charges are mentioned in the penalty notice. - Decided in favour of assessee

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• 2016 (5) TMI 1251
  Disallowance of deduction of interest income under section 80IC - AO held that this interest income was not derived from the eligible business because for falling in the term “derived from” - Held that:- The interest income earned from the fixed deposit pledged with VAT Department was not having any first degree nexus with the eligible business of the assessee and therefore not a profit derived from the eligible business and accordingly not entitled for deduction under section 80 IC of the Act - Decided against assessee. Disallowances of preoperative expenses written off during the year - non-furnishing of details of the expenses before the AO - Held that:- There is no doubt that the assessee is entitled for deduction for the preoperative expenses amortized at the rate of 20% as per section 35D of the Act, but it is the responsibility of the assessee to furnish the details and bills and vouchers of the expenses before the Assessing Officer in scrutiny proceedings, therefore, we find it appropriate to restore the issue back to the file of the Assessing Officer and direct the assessee to produce the details and bills/vouchers in respect of the preoperative expenses and the Assessing Officer is directed to decide the deductibility of the expenses in accordance to law. We also direct the Assessing Officer to provide sufficient opportunity of hearing to the assessee. Decided against assessee for statistical purpose.

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• 2016 (5) TMI 1250
  Taxability of assessee's income 44BB - assessee submitted that the gross receipts of assessee are taxable u/s 44BB because insertion of section 44DA in the proviso to sec. 44BB w.e.f. 1.4.2011 has been held to be prospective in nature - Held that:- Assessee in our case is carrying on seismic surveys the receipts from which have been held taxable u/s 44BB in various decisions noted in the submissions advanced by ld. counsel for the assessee. Further, the decision relied upon by ld. CIT(DR) has not considered the effect of insertion of sec. 44DA in the proviso to section 44BB. On the other hand, we find that Tribunal in the case of Baker Hughes Asia Pacific Ltd. (2014 (7) TMI 601 - ITAT DELHI ) has relied on the decision of Hon’ble Jurisdictional High Court (Uttrakhand) in B.J. Services [2011 (8) TMI 477 - UTTARAKHAND HIGH COURT] for rejecting the department’s contention that section 44DA inserted by Finance Act 2010 w.e.f. 1.4.2011 in section 44BB is retrospective. Moreover, we find that Hon’ble Supreme Court in the case of ONGC [2015 (7) TMI 91 - SUPREME COURT ] has set at rest the entire controversy by holding that provisions of various services in connection with the prospecting for, or extraction or production of mineral oils, is taxable on presumptive basis u/s 44BB of the Act. The services carried on by assessee are in connection with the prospecting for mineral oils and, therefore, following the decision of Hon’ble Supreme Court, the assessee’s appeal deserves to be allowed

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• 2016 (5) TMI 1249
  Transfer pricing adjustment - best method for determining the value of developing the intangible property - Held that:- “Bright line test” would be the best method for determining the development of an intangible property. Advertisement expenses as an international transaction - Held that:- The concept of bright line test has to be applied in the case of the assessee for determining the ALP on advertisement expenses and accordingly remit back the matter to the file of the learned TPO for computing the ALP with respect to the advertisement expenses incurred by the assessee company on behalf of its holding company. Disallowance of royalty - Held that:- In the present case before us no arguments was advanced for justifying the stand of the assessee that during the relevant assessment year also the average rate of royalty on sales in the industry is more than 3.47%. In this situation, we do not find it necessary to interfere with the orders of the Revenue who had made elaborate finding in their respective orders that the average rate of royalty on sales prevalent during the relevant assessment year amongst the comparable companies is only 2.54%. Therefore, this ground raised by the assessee is decided against it. Disallowance of depreciation by reducing the cost of asset in lieu of the subsidy received from SIPCOT - Held that:- Authorized Representative submitted that the Tribunal on the earlier occasion on this identical matter has remitted the case back to the file of the learned DRP with certain directions. He therefore pleaded that for the relevant assessment year also the matter may be remitted back with similar directions. The learned Departmental Representative could not controvert to the submissions of the learned Authorized Representative. Addition on account of export incentives towards target plus scheme and focus market scheme - Held that:- Notional income computed by the assessee cannot be treated as taxable income of the assessee during the relevant assessment year; however the same shall be taxed in the relevant assessment year in which the assessee receives the license and derives such income. It is ordered accordingly. Additional depreciation on the assets deployed in the corporate office for office use - Held that:- Issue is covered by the earlier order of this Tribunal in assessee’s own case for the assessment year 2007-08 wherein held that the assessee is entitled to additional depreciation if it has satisfied the condition that it is engaged in the business of manufacture or production of any article or thing. There is no condition stipulated in the Act that additional depreciation shall be allowed only if the asset is deployed in the factory of the assessee and not the office of the assessee. Therefore, we accept the argument of the Ld. A.R. and reject the observations of the Revenue on this regard and accordingly direct the Ld. Assessing Officer to allow the claim of additional depreciation Disallowance of excess depreciation on UPS - Held that:- UPS forms part of data processing equipments and accordingly the assessee would be entitled for the claim of depreciation @ 60%

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• 2016 (5) TMI 1248
  Disallowance made under section 14A r.w.r 8D - Held that:- The assessee borrowed money from its group Companies and Firms and given loans to its own group companies and firms and the investments also in its group companies only. In the balance sheet, the firm shown Rs. 69,39,16,000/- as share application money. Till 31.03.2010 no shares were allotted to the firm. In the profit and loss account, the firm has shown Rs. 95,41,875/- as interest paid to others. Similar pattern of investment in share application money and incurred huge expenditure on interest, but no shares were allotted and the firm had not taken any effort to get the shares or to take back the money given as share application money. Therefore, the Assessing Officer was of the opinion that it is a clear diversion of interest bearing funds to other group companies. The assessee would be entitled to claim deduction of interest under section 36(1)(iii) of the Act on the borrowed funds utilized for the acquisition of shares only if shares were held as stock-in-trade and that would arise only if the assessee was engaged in trading in shares. So far as the acquisition of shares was in the form of investment and the only benefit the assessee derived was the dividend income which was not assessable under the Act, we are of the opinion that the disallowance under section 14A of the Act was squarely attracted and the Assessing Officer has rightly disallowed the claim - Decided against assessee

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• 2016 (5) TMI 1247
  Penalty u/s. 271(1)(c) - Held that:- There is no dispute that assessee as well as his employer have been stating that this undisclosed income is in fact an expenditure limit allowed to be incurred to the respective employees. There is no evidence quoted in the shape of incriminating material or otherwise which could prove that assessee’s employer has not booked the corresponding sum as expenditure in its accounts maintained. The assessee’s case is that he has spent the impugned sums for the purpose of the business of his employer. He fails to substantiate the same. This has led to assessment of the impugned sum in his hands as undisclosed income. We reiterate that he already admitted the same as income before the Settlement Commission. The Revenue strongly draws support from this action. There can hardly be any dispute about the settled legal position that quantum and penalty proceedings stand on different footing and each and every addition of undisclosed income does not lead to imposition of penalty. The present case is an instance where assessee has not been able to substantiate his explanation of having spent the impugned expenditure limit for his employer company for the purpose of the business and also the Revenue has failed to refer to the employer’s books so as to negate the same by holding that the very sums have not been claimed as expenditure. We reiterate that this is a penalty case liable to be strictly interpreted. This factual position leads us to a conclusion that the authorities below have wrongly imposed the impugned penalty of Rs. 11,010/- u/s. 271(1)(c) of the Act. The same stands deleted - Decided in favour of assessee.

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• Customs

• 2016 (5) TMI 1238
  Period of limitation - Suspension of CB licence - Violation of Regulation 11 of CBLR 2013 - Imposition of penalty under Regulation 22 read with Regulation 20 of the CBLR 2013 - Held that:- the Court is unable to agree with the submission for the simple reason that the SCN dated 19th September 2015 was not issued under the CBLR 2013. Further, it was not issued to the Petitioner. By adding the name of the Petitioner to the said SCN dated 19th September 2015 issued under the CA by way of a corrigendum dated 1st February 2016, it cannot be said that an SCN was issued to the Petitioner under the CBLR 2013 on 19th September 2015. It bears reiteration that in terms of Regulation 20(1) of the CBLR 2013, the SCN had to be issued to the Petitioner within ninety days from the date of the receipt of offence report, i.e., within 90 days from 18th February 2015. Clearly the SCN under Regulation 20(1) of the CBLR 2013 was not issued within ninety days after 18th February 2015. Therefore, the Petitioner not having been issued the SCN within ninety days of receipt of the offence report by the Customs, the SCN dated 2nd February 2016 issued to it by the Commissioner of Customs (General) is clearly unsustainable in law. The order dated 23rd March 2015 confirming the suspension of the Petitioner's CB licence cannot also be continued on account of the failure to issue the SCN and therefore complete the enquiry within the time limit specified in Regulation 20. Consequently the said order dated 23rd March 2015 is hereby declared to be invalid and set aside on that basis. Suspension of licence - Alleged illegal imports - Held that:- the name of M/s Universal Enterprises in respect of one B/E does not find mention in the table of the said order. Therefore there is an obvious error in the impugned order. It is not clear as to the precise nature of the alleged violation committed by the Petitioner and whether it was qua the transactions involving M/s Universal Enterprises or the transactions involving Chaman Lal & Sons and Shyama Corporation. What appears to have happened is that in drafting the suspension orders qua each of the 10 CHAs/CBs there has been a mix up of facts. This by itself is sufficient to show that there was a total non-application of mind to the facts involving the Petitioner as far as the decision to suspend its CB licence was concerned. Therefore, the suspension order is set aside. - Petition disposed of

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• 2016 (5) TMI 1237
  Validity of Customs Notifiaction No. 91/2009 dated 11th September 2009 - restricting the transfer/sale of goods imported using the Served From India Scheme ('SFIS') duty certificates/scrips for the purpose of payment of customs duty - Held that:- it is obvious in the instant case that the impugned notification dated 11th September 2009 issued by the DoR under Section 25(1) of the CA on the one hand and the amendment to the FTP 2009-2014 with effect from 1st August 2013 and the HBP cannot co-exist. The notification dated 11th September 2009 issued by the DoR takes away what the amended para of the FTP 2009-14 and the HBP permits. It also takes away what para 3.6.4.6 of the FTP 2004-09 read with para 2.43 of the HBP permits. On the contrary, the DoR should have on its own have issued a fresh notification consistent with the changes brought about to FTP 2009-14. In the event of conflict of views between two ministries of the central government, the view taken by the ministry that is primarily responsible for the policy in question, which in this case is the FTP, should prevail. The SFIS was introduced by the Ministry of Commerce and its instrumentality, i.e. the DGFT has been statutorily entrusted with the final word on the interpretation of the FTP. The letter dated 6th September 2013 from the Commerce Secretary to the Revenue Secretary is instructive. It refers to Circular No. 837/14/2006 dated 3rd November 2006 issued by the CBEC under the Ministry of Finance which acknowledged that payment of customs duty could be made by using the duty credit scrips. The Court posed a query to the learned ASG whether denying permission to alienate goods imported under the SFIS when the FTP 2004-09 was operational while permitting such alienation if goods were imported under the SFIS under FTP 2009-14 was based on any rational criteria or was designed to achieve any legitimate objective. The learned ASG was unable point out any. Indeed denial of permission to transfer vessels imported more than three years ago only because they were imported under FTP 2004-09 serves no useful or rational purpose. The stand taken by the DoR appears to be unjustified. The result of such a stand would be that while the transfer of vessels that were imported three years after 1st August 2013 do not require any permission, vessels that were imported more than three years earlier to 1st August 2013 would not be permitted to be transferred except by way of re-export or within the group or to managed hotels, come what may. While it is not clear what revenue is sought to be protected in that process, it surely subjects the importer of goods that fall in the latter category to discrimination. Such denial of permission would attract the vice of impermissible discrimination in terms of Article 14 of the Constitution particularly since it is based on no rational criteria. In fact it contradicts the intent expressed in the relevant paras of the FTP 2004-09 and the HBP which have been adverted to. There is also nothing in the FTP which prohibits the sale of vessels that have completed more than three years after import from being sold in the domestic market. In other words, there is no justification for the DoR to insist that the vessels of the Petitioner that have completed more than three years after import should be transferred only by sale within group companies or managed hotels or be re-exported. Therefore, the impugned Customs Notification No. 91/2009 dated 11th September 2009 under Section 25(1) of the CA to the extent it restricts the transfer/sale of goods imported using the SFIS duty certificates/scrips for the purpose of payment of customs duty, even where such goods satisfy the criteria for transferability under the FTP and HBP, is in violation of the FTDR Act, the FTR Rules as well as FTP 2004-2009 and FTP 2009-2014. It is further held that the letter dated 12th June 2013 issued by the DoR asking the DGFT to keep in abeyance the NOC granted by the PRC is contrary to the legal position explained above and can have no binding effect on the DGFT. On questions of interpretation of the FTP, it is the DGFT whose views will prevail. For the same reason, the stand of the DoR conveyed to the Court through the letter to the DoR, and recorded in the Court's order cannot prevail. Hence, the DoR is restrained from objecting to the transfer/sale of the vessels Greatship Aarti, Greatship Ahalya, Greatship Amrita, Greatship Anjali and Greatship Asmi belonging to the Petitioner since each of the said vessels has been imported more than five years ago. - Petition disposed of

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• Service Tax

• 2016 (5) TMI 1245
  Cenvat Credit - Nexus between output service and input service - Whether the Tribunal did not examine the aspects as to the output services could be said as service or not and whether the Tribunal ought not have remanded the matter - Held that:- at the relevant point of time, the service was not a service reckoned for the purpose of CENVAT credit followed by the decision of Karnataka High Court in the case of PR. Commissioner of Service Tax Versus Mportal (India) Wireless Solutions Pvt. Ltd. [2016 (4) TMI 409 - KARNATAKA HIGH COURT] but the Tribunal did not consider the said aspect. Under the circumstances, we do not find that the matter would call for interference as sought to be canvassed. Also the Tribunal has relegated the matter for finding/ascertaining the nexus between input service and the output services which would be required to be examined by the authorities. When the Tribunal was satisfied that the matter deserves further examination on facts for finding out the nexus, by exercise of discretion, it cannot be said such exercise of discretion is perverse. As there is no substantial questions of law arise for consideration, no case is made out for our interference. - Decided against the revenue

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• 2016 (5) TMI 1244
  Imposition of penalty - Section 78 of the Finance Act, 1994 - Banking and other Financial Services and Sponsorship Service - received from foreign firms who do not have any office in India - liable to pay tax under reverse charge - Held that:- in the instant case the non-payment of tax was on account of bonafide belief and the Revenue had conducted Audits which would go to show that there was in fact no suppression of facts. On the other hand it is found that the judgement of the Tribunal in the case of Atwood Oceanic Pacific Ltd. -Vs- CST [2012 (12) TMI 425 - CESTAT, AHMEDABAD] is more akin to the facts of the present case and therefore the Commissioner (Appeals) has rightly applied the said judgement for waiver of penalty under Section 78. Moreover a mere pendency of Civil Appeal in Atwood's case before the Supreme Court is no ground not to follow a binding precedent. One more aspect to be noted is that during the relevant period, Section 80 was in operation which does not figure in the Central Excise Act, where there is a discretion not to impose penalty when reasonable cause is shown. Therefore, the ends of justice would be met by upholding the order of the Commissioner (Appeals) for the reasons stated above. - Decided against the revenue

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• Central Excise

• 2016 (5) TMI 1243
  Whether the eligibility for credit on input services is to be denied since the same was used outside the factory - Held that:- as per definition of input services there is no requirement in law that the credit can be taken only on the service tax paid on the services received in the factory premises supported by the Tribunal's decision in the case of L.G. BALAKRISHNAN & BROS. Ltd. Vs. CCE, Coimbatore [2010 (6) TMI 211 - CESTAT, CHENNAI]. By following the decision of Tribunal in the case of Ramgarh Chini Mills Vs. CCE, Kanpur [1998 (2) TMI 278 - CEGAT, NEW DELHI], the Cenvat credit will be admissible to them if the bills are in the name and address of their Corporate Office, LAB (R& D Unit) and the marketing Office and not in their factory. In the instant case, there is no dispute about the genuineness of the transaction and the duty paid documents are not doubted, therefore, credit cannot be denied. Cenvat being a beneficial piece of legislation, which was enacted for removing the cascading effect, the denial of credit sighting procedural irregularities is unsustainable. Hence the impugned order is set aside. - Decided in favour of appellant

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• 2016 (5) TMI 1242
  Denial of refund - Unjust enrichment - Held that:- The Commissioner (Appeals) in the impugned order held that the Original Authority is bound to follow the earlier appellate order, which allowed the adjustment of excess with short payment during the finalization of provisional assessment. On this issue, the impugned order cannot be faulted as such adjustment of duty on finalization of provisional assessment is held to be legally valid by the Tribunal in Hindustan Zinc Ltd. [2015 (11) TMI 953 - CESTAT NEW DELHI (LB)]. The Tribunal followed the decision of the Hon’ble Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE,LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT]. Considering the ratio followed by the Tribunal, no merit found in the present appeal filed by revenue. - Decided against the revenue

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• 2016 (5) TMI 1241
  SSI Exemption - wrong valuation - Tread rubber cleared by the appellant was not valued at the rate of 115% (or 110% with effect from 05.07.2003) of the cost of production and when so done, the appellants exceeded the SSI exemption limit prescribed under Notification No.8/2003-CE, dated 01.03.2003 - Willful mis-statement or suppression of facts. - Period of limitation - Demand of duty alongwith interest and imposition of penalty - Held that:- in the case of Uniworth Textiles Ltd. Vs. CCE, Raipur [2013 (1) TMI 616 - SUPREME COURT] it was held that mere non-payment of duties is not equivalent to collusion or wilful mis-statement or suppression of facts, otherwise there would be no situation for which ordinary limitation period would apply. Inadvertent non-payment is to be met within the normal limitation period and the burden is on Revenue to prove allegations of wilful mis-statement. The onus is not on the assessee to prove its bona fides. In the case of Chemphar Drugs Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA], the Supreme Court held that some positive other than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when assessee knew otherwise, is required before it is saddled with the liability the extended period. In the case of Continental Foundation Joint Venture [2007 (8) TMI 11 - SUPREME COURT OF INDIA], Supreme Court went to the extent of ruling that mere omission to give correct information is not suppression of facts unless it was deliberate and that an incorrect statement cannot be equated with wilful mis-statement. In the case of Vivek Re-rolling Mills Vs. Collector [1995 (8) TMI 317 - SUPREME COURT], Supreme Court held that extended period is not invokable when assessee had reason to believe that its goods were exempted. Bombay High Court in the case of CC Vs. Star Entertainment [2015 (2) TMI 1050 - BOMBAY HIGH COURT] in effect held that extended period is not invokable in the case of unclear or doubtful legal position. In view of the above, the allegation of wilful mis-statement or suppression of facts cannot be sustained. It is found that the Show Cause Notice was issued on 22.03.2006 where the demand pertains to the period 2001-02 to 2003-04 and therefore the entire demand is beyond normal period of one year. We may point out that the Notification No.8/2003-CE, dated 01.03.2003 cited in the Show Cause Notice was effective from 01.04.2003 while part of the demand pertains to the period prior to the date of issuance of the said Notification. However, we need not dwell upon this point as the entire demand has been held to be time barred. By following the judgment of High Court of Allahabad in the case of CCEST Vs. Monsanto Manufacturer Pvt. Ltd. [2014 (4) TMI 505 - ALLAHABAD HIGH COURT], once the demand is held to be time barred there is no occasion for the Tribunal to enquire into the merits and such act of Tribunal was outside of its jurisdiction. Therefore, we refrain from discussing the merits of the case. - Decided in favour of appellant

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• 2016 (5) TMI 1240
  Admissibility - Cenvat Credit of GTA Services availed by the Appellant from the factory gate to their godown/depots - Held that:- the goods are sold from the godowns/depots of the Appellant and no sales are effected at the factory gate. Reliance placed by the department on the wording of Notification No.20/2007-CE dated 25.04.2007, to the effect that place of removal and point of clearance will be the factory gate of the Appellant, is mis-placed and is not the correct appreciation of law made by the First Appellate Authority. In the light of definition of input service given in Rule 2(l) of CCR read with the definition of place of removal , as defined in Section 4(2)(c) of the Central Excise Act, it is held that input service credit of the services availed upto the place of removal is admissible and in the present Appeals filed by the Appellant the place of removal will be godown/depots from where goods are sold and not the factory gate. - Decided in favour of appellant

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• 2016 (5) TMI 1239
  Eligibility of Cenvat credit - received material from HMIL and had paid duty which was indicated in the invoice - took credit based on the proper invoice issued by HMIL - HMIL paid the said duty and the goods were cleared under the cover of the said invoice - Held that:- the appellant’s contention is that there is nothing on record to show that the assessment of HMIL has been questioned by their jurisdictional officers, it would not be proper for any other officer to comment on the said payment has not been stated to be wrong or an erroneous proposition of law by the Revenue and therefore accepted. Therefore, by applying the decision of Hon'ble Supreme Court in the case of CCE Vs. MDS Switchgear Ltd. [2008 (8) TMI 37 - SUPREME COURT], the impugned order is liable to be set aside. It is found from the original authority's order that he is not able to ascertain the correct amount of credit taken by HMIL and the correct amount which is required to be reversed by HMIL, when that is the position, it is not known as to how he can come to a conclusion that the appellant is not eligible to take credit of the amount mentioned in the invoice. As rightly pointed out by the appellant that the jurisdictional officers of HMIL have not disputed the duty paid and the alleged excess payment has not been granted as refund. Therefore, both the lower authorities have erred in denying the credit to the appellant. Period of limitation - Invokation of proviso to Section 11A(1) of the Central Excise Act, 1944 - appellant availed the credit based on the duty amount paid by HMI as mentioned in the invoice - Held that:- when there is no dispute with regard to the payment of duty by HMIL, the same cannot be denied to the appellant. The instant case pertains to a situation where there is an excess payment of duty. Extended period can be invoked only when there is an intentional failure to pay duty which is not the case here. The appeal succeeds on limitation also as no credit in excess of the amount mentioned in the invoice was taken by them. - Decided in favour of appellant

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• CST, VAT & Sales Tax

• 2016 (5) TMI 1236
  Re-assessment proceedings - Imposition of tax - Period prior to 2013 - Period after 2013, petitioner himself started paying tax - claiming exemption from tax on sales effected under SEZ policy announced by the State of M.P. - Held that:- by considering the law laid down by the Apex Court in the case of Assistant Collector of Central Excise, Chandan Nagar Vs. Dunlop India Ltd. and others [1984 (11) TMI 63 - SUPREME Court], as the huge amount of more than Rs. 98.18 crores is dues against the petitioner, the petitioner is directed to pay 10 % of the total amount within a period of four weeks from today and furnish Bank Guarantee for the remaining dues within a period of six weeks from today. - Stay granted partly.

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• Wealth tax

• 2016 (5) TMI 1246
  Agricultural lands within the ‘Urban agglomeration’ or within the notified area limits - whether would not falll within the ‘Scope & Domain’ of the terminology ‘Asset” as contemplated u/s 2(ea)(v) of the W.T.Act, 1957? - Held that:- The legislature has, by virtue of the Finance Act, 2013, introduced the amendment to section 2(ea)(v) with retrospective effect from 01.04.1993. This amendment by way of Explanation 1(b)(ii) – section 2(ea)(v), is as follows (relevant extract) “but does not include land classified as agricultural land in the records of the government and used for agricultural purposes….” The appeals pending before us pertain to assessment years 2004-05 to 2006-07. In view of the above, all the appeals of the assessees are squarely covered by the aforesaid retrospective amendment brought in by the legislature in the Wealth Tax Act. Therefore, agricultural lands are no longer ‘assets’ (within the amendment of section 2(ea)(v) of the Act), because of the retrospective amendment brought in. As such, they are not exigible to Wealth Tax Act. Action of the AO in including the value of the assessees lands in their net wealth, is reversed. Accordingly, the orders passed by the ld. CWT(A), confirming this action are also reversed.- Decided in favour of assessee.

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• Indian Laws

• 2016 (5) TMI 1234
  Penal interest for late deposit of excise duty on wastage of Beer in excess of 10% - sale of Beer and Indian made foreign liquor - Held that:- When the High Court quashed the demand notice, it was wiped out from the face of the earth. Once the demand order was quashed, it was no longer in existence and, therefore, there was no valid demand for payment of excise duty during the period when the order of the High Court prevailed. It is only when the Supreme Court reversed the decision of the High Court that the excise demand became payable upon a fresh notice of demand. Penal interest becomes payable when the fresh demand is not paid within the stipulated period. In the instant case, the excise demand was paid within the stipulated period and, therefore, the question of demand of penal interest does not arise.

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• 2016 (5) TMI 1233
  Calculation of arrears to the bank - SARFAESI Act - Held that:- We vacate the direction that no other expenses like legal expenses, publication of notice in the newspaper will be added in calculating the arrears. In other words, it will be open to the Bank to include all the expenses, which it actually incurred as per law. The first installment is to be paid by the writ petitioners/respondents on or before 20.03.2016 in a sum of Rs. 25 Lakhs. We record the undertaking of the writ petitioners/respondents that they will not transfer the property consisting of plant, machinery and the building to anyone nor will they create any third party interest till the entire amount due to the appellants is cleared off. In case of default, we further direct that it will be open to the Bank to take possession as provided in law. The judgment of the learned Single Judge stands modified as above

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