TMI Tax Updates - e-Newsletter
June 10, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Exemption u/s 10(23C)(iv) & 2(15) - filing of a revised return goes against the assessee - principle of consistency cannot be followed - Tri

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• Refund - Revenue cannot withheld tax paid under self assessment since the revised return filed was declared as Invalid, refund allowed - HC

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Articles

1. Applicability of rate of Service tax for the taxable services provided prior to 1st June 2015, but billed and received payments at a later date – An analysis

   By: Indian Commerce

News

1. Clarification on service tax rate on air-conditioned or air-heated restaurants, post increase in rate of service tax

2. Visit of World Bank Group to Collect Data and Information for Doing Business Report, 2016

3. RBI Reference Rate for US $

4. Auction for Sale (Re-Issue) of Government Stocks

5. CBDT clarification on Prosecution of Tax Evaders

Notifications

Central Excise

1. 17/2015 - dated 8-6-2015 - CE (NT)

Centralized registration facility to manufacturers of aluminium roofing panel subject to condition of consumption at the site of manufacture.

Companies Law

2. F NO 01/01/2009 CL-V - dated 18-5-2015 - Co. Law

Rescinding of notifications GSR No. 179(E) dated 3rd March, 2011 and GSR 650(E) dated 29th August, 2011

Customs

3. 57/2015 - dated 4-6-2015 - Cus (NT)

Appointment of Principal Commissioner of Customs, Jamnagar

DGFT

4. 10/2015-2020 - dated 8-6-2015 - FTP

Amendment in Import policy of Areca Nut - Revision of CIF value

Income Tax

5. 124/2015 - dated 26-5-2015 - IT

Notified Eligible institutions ,Projects or Schemes along with estimated cost and maximum amount of available deduction u/s 35AC of Income Tax Act, 1961

Circulars / Instructions / Orders

Income Tax

1. 09/2015 - dated 9-6-2015

Comprehensive guidelines to be followed for Condonation of delay in filing refund claim and claim of carry forward of losses u/s 119(2)(b) of the Income-tax Act

Customs

2. 18/2015 - dated 9-6-2015

Appointment of common adjudicating authority

Highlights / Catch Notes

Income Tax

• Entity Denied Tax Exemption Due to Ineligibility u/s 10(23C)(iv) and Section 2(15); Consistency Principle Not Applied.

  Case-Laws - AT : Entitlement to exemption u/s 10(23C)(iv) r.w.s. 2(15) - assessee itself has entertained doubts about its exemption and filed a revised return, which itself shows that the assessee was not eligible for exemption - assessee is not entitled for exemption, therefore, the principle of consistency cannot be followed - AT
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• Payer companies not required to deduct TDS on loans to non-shareholders u/s 2(22)(e) due to impracticality.

  Case-Laws - AT : TDS u/s 194 - Deemed dividend u/s 2(22)(e) - when the loans/advances have been given to a non shareholder, then it is impossible for a payer company to ascertain whether it will attract the provisions of section 2(22)(e) or not - provisions of section 2(22)(e) and 194 do not require the payer assessee company to deduct TDS u/s 194 - AT
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Indian Laws

• Petitioner aims to cut costs by terminating applicants' services for contractor labor, but applicants are already casual workers.

  Case-Laws - HC : Termination of service - The petitioner want to remove the original applicants from service just to have labour through contractor with a view to reduce expenditure but that object, as already stated, cannot be served as the applicants too are working on casual basis only - HC
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Service Tax

• Cenvat Credit Disallowed for Business Auxiliary Services and Trading Activities; Demand and Penalty Confirmed by Authority.

  Case-Laws - AT : Demand of Cenvat Credit - Business Auxiliary Services - Trading activity - amount of credit to be disallowed was correctly computed by the adjudicating authority - demand with penalty confirmed - AT
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• Appellant Entitled to Service Export Refund Despite ST-3 Return Error; Refund Based on CENVAT Credit Account Balance.

  Case-Laws - AT : Refund - Export of services - Non unutilized CENVAT Credit - mere mistake in ST-3 return does not disentitle the appellant for refund - Refund is to be granted on the basis of the cenvat credit available in the Cenvat Credit Account and not on the basis of the closing balance of Cenvat credit shown in ST-3 Return - AT
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• Penalties Waived u/s 80 After Tax and Interest Settled Pre-Adjudication, Avoiding Show-Cause Notice Penalties.

  Case-Laws - AT : Penalty under Sections 76, 77 and 78 - before issue of show-cause notice, the entire amount of tax was paid and before issue of adjudication order, interest was also paid - Penalty waived u/s 80 - AT
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• Refund Claim Partially Approved for Banking Services; Rejection of Rebate on Exported Services CENVAT Credit Deemed Incorrect.

  Case-Laws - AT : Refund claim - Banking and other Financial Services - Partial sanction of rebate claim - Refund filed prior to date of raising invoice - Rejection of the rebate claim of the amount debited by the appellant in CENVAT credit register for the export of services is incorrect. - AT
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Central Excise

• Aluminum roofing panel makers get centralized registration; panels must be used where manufactured per Central Excise regulations.

  Notifications : Centralized registration facility to manufacturers of aluminium roofing panel subject to condition of consumption at the site of manufacture. - Notification
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• Carbon Dioxide in Beer Production Not Marketable, Excise Duty Not Applicable Under Central Excise Laws.

  Case-Laws - AT : Levy of duty on bi-product - Manufacture of beer - e carbon dioxide purchased from the carbon dioxide manufacturers is not comparable with the gas which was being produced in their factory. - goods in question are not marketable - AT
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Case Laws:

• Income Tax

• 2015 (6) TMI 272
  Addition on account of suppression of sale price - CIT(A) deleted addition - reopening of assessment - rejection of books of account u/s. 145 - Held that:- On the basis of material available on record Revenue authorities were of the opinion and have reason to believe that income chargeable to tax of more than Rs. 1 lac has escaped assessment for the year under consideration due to failure of assessee to disclose fully and truly all materials facts necessary fro assessment. Therefore, proceedings were initiated u/s.148 and consequential additions were made. In sum and substance, the stand of learned Authorized Representative is that proceeding which initiated at the strength of investigation conducted by DGCEI, Ahmedabad are basis for addition in income tax proceeding as well. It was submitted that proceeding with regards to evasion of exercise was pending before concern Tribunal and which will have bearing on the issue at hand. So, in the interest of justice, matter should be restored to CIT(A) with direction to decide the same as per fact and law in light of final outcome in the Excise proceeding as discussed above. Finding force in the contention of assessee, we set aside the order of CIT(A) and restore the matter to him with direction to decide the same as per fact and law including final outcome in Excise case, which was initiated at the strength on investigation by DGCEI, Ahmadabad and has bearing on the issue of additions in income tax proceeding as discussed above. Since we are restoring the matter to CIT(A) with preliminary issue as discussed above, so, we are refraining to comment on merit of issue at hand. - Decided in favour of revnue and assessee for statistical purpose

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• 2015 (6) TMI 255
  Reopening of assessment - suppression of sales - CIT(A) deleted the addition - Held that:- the failure of the assessee to produce books of account on the ground that the books of account were stolen from factory premises cannot be ignored because in absence of books of account the A.O. was left with no alternative but to estimate the turnover and the suppressed income and undisclosed investment on the basis of specific information received from the BOI. It is also observed that the assessee has accepted the decision of the AO. regarding addition of undisclosed income from suppressed turnover so far as no cross objection has been taken before the ITAT on this issue despite the fact that the Ld. CIT (A) has not dealt with the specific ground taken by the assessee before the Ld. CIT (A) on this issue. It was contended by the Ld. counsel that since the addition to business income on suppressed profit was covered by deduction u/s. 80-IA the addition was not pursued in appeal before us, cannot be considered correct because despite deduction u/s. 80-IA specific grounds were taken before the Ld. CIT (A) challenging the estimation of suppressed sales and undisclosed profit. The Ld. CIT (A) has failed to deal with this ground of appeal and the assessee has not raised this issue which implies that estimation of suppressed turnover and profit thereon is acceptable. Once that estimation of suppressed turnover and undisclosed profit thereon is accepted, it is very logical that unexplained investment in purchases is estimated for the purpose of relevant assessment. CIT(A) could have exercised his coterminous powers and should have caused the enquiries to be made documents requisitioned and provided proper opportunities to the assessee and decided the issue on merits rather than deleting the addition on technicalities. In the interest of justice and fair play we are therefore, of the opinion that the issue is required to be restored to the file of the Ld. CIT (A) for fresh adjudication after making necessary enquiries or causing the enquiries made from the BOI requisitioning the relevant documents and providing proper opportunity to the assessee. - Decided in favour of revenue for statistical purposes.

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• 2015 (6) TMI 254
  Entitlement to exemption under section 10(23C)(iv) - AO as per the section 2(15) treated the assessee as business entity - printing and publication of newspaper. - CIT(A) allowed the exemption - Held that:- assessee has definitely earned profits - even if the approval has been granted, income can still be assessed if it is found that the proviso to the first provision of clause (15) of section 2 is applicable. Further, the assessee itself has entertained doubts about its exemption and filed a revised return, which itself shows that the assessee was not eligible for exemption. If a person is eligible for exemption under clause (23C)(iv) of section 10 or is registered under section 12AA or is a charitable organisation then such persons could not be called employer. If the assessee was clear in its mind that it is entitled for exemption under clause (23C)(iv) of section 10, then there was no need for assessee to treat itself as employer and file return under the fringe benefits tax provisions. In regard to these facts, learned counsel gave only evasive reply and we are not satisfied with the same as assessee trust is a large organisation employing lot of qualified people including chartered accountants and is being advised by the best of advocates, then how can it make such a slip of filing the return under fringe benefits tax on the one hand and claiming exemption under section 10(23C) on the other hand ? This order has been passed though the Assessing Officer himself was in doubt about the exemption. It seems that the Assessing Officer was not aware of the last proviso to section 10(23C) that notification itself will not grant exemption. Therefore, it is a not factual position. It is a legal issue as we have seen in the abovenoted paras, the law is very clear and the assessee is not entitled for exemption, therefore, the principle of consistency cannot be followed. - Decided in favour of revenue.

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• 2015 (6) TMI 253
  Long term capital gain - selection of AY - when transfer of a property under the I T Act happens ? - Held that:- In the instant case the conveyance deed was registered only on 29-5-2008, it can be safely concluded that the transfer of property for the purposes of capital gains took place on 29-5-2008 and the consequent conclusion that the gain or loss therefrom shall only be available for taxation in FY 2008-09 relevant to AY 2009-10. Thus the action of the AO in taxing the impugned capital gains of Rs. 2,490,78,280/- in AY 2009-10 was a legally correct decision which also finds strength from the decision of Hon'ble Apex Court in the case of Suraj Lamps [2011 (10) TMI 8 - SUPREME COURT OF INDIA ] - Decided against assessee. Adoption of cost of acquisition of Shahwadi Property - whether the adoption of FMV by the registered valuer of the impugned property at Rs. 13,72,0007- is a correct value or not? - Held that:- Facts on records, indicate that physical inspection of the property was done by the valuer on 26-9-2008 and the report was submitted by him on 29-9-2008 i.e. within a short period of three days. The valuation report further indicates that the comparable sale instances adopted by the valuer are in respect of properties which are not located in the immediate vicinity. Thus, the valuation report, prepared by the registered value M/s/ K C Engineers, cannot be accepted as a true and correct estimation of the FMV of the property as on 1-4-1981. The impugned property has not been disclosed in any wealth tax returns by the appellant which could have been helpful to estimate its FMV. Considering the peculiar aspect and the infirmities and deficiencies in the valuation of the registered valuer, it is considered reasonable, if the FMV of the property as on 1-4-1981 is restricted to Rs. 8,00,000/- as against Rs. 13,72,000/-. The A O is accordingly directed to recalculate LTCG taking the value of property as on 1-4-81 at Rs. 8,00,000/-. - Decided partly in favour of assessee. Part allowance of claimed deduction u/s. 54F - Held that:- In the case in hand, the agreement to sell dated 31/03/2008 had already been acted upon the parties by delivery possession and registering sale-deed. Therefore, for this reason also, the judgement of the Hon’ble Apex Court rendered in the case of Suraj Lamp and Industries Pvt.Ltd. vs. State of Haryana and Another (supra), would not help the Revenue. - Decided in favour of assessee.

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• 2015 (6) TMI 252
  Revision u/s 263 - CIT was of the view that Assessing Officer admitted the income declared by the assessee under the head ‘business’ without examining the nature of the lease agreement and thus the nature of the lease charges earned remained to be examined - Held that:- We do not find any support for the stand of the Commissioner that the income from the impugned lease rentals was liable to be assessed as income from house property. Be that as it may, it is quite clear that a possible view on the issue has been taken by the Assessing Officer in the assessment order dated 11.10.2010 (supra) and therefore even on this count there does not appear to be sufficient ground for the Commissioner to assume jurisdiction u/s 263 of the Act merely because he held a different view. In this context, we may refer to the judgement of the Hon’ble Delhi High Court in the case o1f8 CIT vs. DLF Power Ltd., (2009 (10) TMI 63 - DELHI HIGH COURT) and CIT vs. Mepco Industries Ltd., (2006 (11) TMI 164 - MADRAS High Court). - Decided in favour of assessee.

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• 2015 (6) TMI 251
  Addition made u/s 68 and 69A – CIT(A) has referred to the additional evidence filed by the assessee and the matter is required to be remitted back to the AO for fresh adjudication [2014 (5) TMI 989 - ITAT DELHI] – Held that:- It is evident that not only did the CIT(A) weigh the evidence filed but even sought for a remand report and on an appreciation of the merits of the material before him, rendered findings against the assessee. In these circumstances, the ITAT's further order remitting the matter again to the CIT(A) was unwarranted. The impugned order is hereby set aside. The ITAT is hereby directed to consider the assessee's appeal on its merits, including the evidence produced before the CIT(A) and after hearing the parties, render its final order. - Decided in favour of revenue.

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• 2015 (6) TMI 250
  Disallowance of management fee - CIT(A) allowed the claim - Held that:- As to whether the expenditure was wholly laid out for the business purpose and was driven by commercial expediency cannot be viewed from a narrow lens of revenue officer's perspective. The element of business activity or expenditure cannot be subjected to objective reasonable standard as the AO sought to impose upon it. To that extent, the CIT(Appeals) decision, in the considered view of this Court cannot be faulted. Since the ITAT reconsidered these aspects, no question of law arises - Decided against revenue. Disallowance of advertising expenditure - CIT(A) allowed the claim - Held that:- AO allowed depreciation only to the tune of 25% and disallowed Rs. 21,56,211/-. The CIT(A) took note of the judgment of the Supreme Court on how capital expenditure had to be treated (Empire Jute Co. Ltd. V. CIT on 124 ITR 1, K.T.M.T.M. Abdul Kayoom V. CIT (1980 (5) TMI 1 - SUPREME Court). On this ground, the ITAT was of the opinion that the relief as claimed was warranted. So the ITAT too confirmed these findings. No substantial question of law is made out. - Decided against revenue.

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• 2015 (6) TMI 249
  Eligibility for deduction under section 80IB in respect of Daman unit as well as Goa unit - income derived from FDR Interest - Held that:- The assessee has filed certain papers to prove nexus of borrowed funds and FDR interest income. Since these documents were not filed before the AO and the CIT(A), we deem it proper to admit these documents since it goes to the root of the issue, and therefore, this issue is restored to the file of the AO to decide the same in accordance with law, after considering the additional evidences filed by the assessee. - Decided in favour of assessee for statistical purpose. Eligible for deduction U/s.80IB - assessee failed to commence the production before the cut-off date for commencement of production i.e. on or before 31.03.2004 - CIT(A) allowed claim - Held that:- Since the deduction has been allowed in the first year of operation i.e. in the Asstt.Year 2005-06, therefore, more so, when no material is placed on record by the Revenue suggesting that the order of the Tribunal is set aside or reversed by Hon’ble High Court or Hon’ble Apex Court, we do not find any infirmity in the order of the CIT(A), the same is hereby confirmed and the ground nos.1 and 2 of the Revenue are rejected. - Decided against revenue. Eligibility for exchange rate difference - Held that:- Difference on account of exchange rate fluctuation is liable to be allowed u/s.80IB. The exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking. Respectfully following the decision of the Hon’be Bombay High Court I the case of CIT Vs. Rachna Udyog (Bom) [2010 (1) TMI 38 - BOMBAY HIGH COURT ] also followed in in the case of CIT Vs. Liberty India (2009 (8) TMI 63 - SUPREME COURT) - Decided in favour of assessee. Disallowance of deduction on the sundry balance written back - CIT(A) deleted the addition - Held that:- There is no dispute that the amount in question was treated as expenditure related to the manufacturing activity. Therefore, we do not find any good reason to interfere with the order of the CIT(A) on this issue, which is hereby confirmed - Decided against revenue. Addition of under valuation of scrap sale - CIT(A) deleted addition - Held that:- Excise Department has not adjudicated the case. Therefore, following the order of the Co-ordinate Bench of Tribunal ACIT Vs. Santro Tiles Ltd. [2015 (6) TMI 272 - ITAT AHMEDABAD] we deem it proper to restore this issue to the file of the AO with direction to decide the issue afresh, after the adjudication order is passed by the Central Excise department - Decided in favour of revenue for statistical purpose.

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• 2015 (6) TMI 248
  Registration under S.12A refused - Held that:- The ratio of the decision of the Delhi High Court in the case of India Trade Promotion Organization (2015 (1) TMI 928 - DELHI HIGH COURT ) is directly applicable to the issue involved in the present case wherein held Merely because a fee or some other consideration is collected or received by an institution, it would not lose its character of having been estebtishea for a charitable purpose. It is also important to note that one must examine as to what is the dominant activity of the institution in question. If the dominant activity of the institution was not business, trade or commerce, then any such incidental or ancillary activity would also not fall within the categories of trade, commerce or business. The' introduction of the proviso to s. 2(15) by virtue of the Finance Act, 2008 was' directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb 'of an activity with the object of a general public utility. It was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions Thus respectfully following the above, we set aside the impugned order of the learned Director of Income-tax (Exemption), with a direction to grant registration to the assessee society under S.12A of the Act. - Decided in favour of assessee.

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• 2015 (6) TMI 247
  Computation of deduction u/s 80-HHC - AO not treating interest income as business income but as income for other sources - Held that:- As decided in assessee's own case for AY-2001-02 [2012 (12) TMI 682 - ITAT, Mumbai] and AY-2002-03 [2014 (4) TMI 926 - ITAT MUMBAI] to hold that 90% of net interest income is required to be reduced after deducting expenses incurred having nexus with earning of interest income. Exclusion of profit on foreign exchange and miscellaneous sales of scrap and cocoa shells for computation of deduction u/s 80HHC - Held that:- As decided in own case for the assessment years AYs-1995-96 to 1998-99 that [2010 (10) TMI 1010 - ITAT MUMBAI] the miscellaneous income on account of scrap sales and cocoa shells were found to have direct nexus with the product manufactured by the assessee as it has generated out of manufacturing activities of the assessee, therefore, the same is eligible for deduction u/s 80HHC.As regard foreign exchange gain, the Tribunal has decided this issue against the assessee. Following the earlier years’ order of this Tribunal, the income on account of miscellaneous sale and scrap of cocoa shells is allowed as eligible for deduction u/s 80HHC, whereas the issue of deduction u/s 80HHC in respect of foreign exchange gain is decided against the assessee. - Decided partly in favour of assessee. Deduction in respect of provision of additional duty payable to Third Party Manufactures (TPM) - Held that:- This issue has arisen due to the dispute of excise duty payable by the assessee on the product got manufactured from third party manufacture. The assessee claimed that the excise duty payable on such products should be computed on the price on which the assessee received the product from the manufactures and not on the sale price. Accordingly, the assessee made the provisions in respect of difference between the demand made by the excise department and the claim of the assessee. The Tribunal in the earlier year has decided this issue by holding that the assessee is entitled for deduction only in respect of actual excise duty paid by the assessee. Thus we decide this issue against the assessee as the assessee is entitled for deduction only in respect of actual payment of excise duty. - Decided against assessee. Disallowance of depreciation on marketing knowhow - Held that:- The controversy of allowbility of depreciation on other tangible assets when the AO has accepted the payment in question for goodwill then in view of the judgment of the Hon’ble Supreme Court in the case of M/s SMIFS SECURITIES LTD (2012 (8) TMI 713 - SUPREME COURT), the depreciation is allowable on the marketing knowhow. - Decided in favour of assessee. Capital Gains derived from 'depreciable asset' - whether the deeming fiction created under section 50 is restricted to section 50 only or is it applicable to section 54E of the Income-tax Act as well ? - Held that:- As relying on Sate Bank of India v. D. Hanumantha Rao [1998 (3) TMI 679 - SUPREME COURT] the fiction created under section 50 is confined to the computation of capital gains only and cannot be extended beyond that. Thirdly, section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under section 54E cannot be denied by referring to the fiction created under section 50. Section 54E specifically provides that where capital gain arising on transfer of a long-term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under section 54E of the Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50. The gain arising from the sale of business asset held by the assessee for more than three years would be eligible for deduction under section 54EC of the Act. - Decided in favour of assessee. Interest u/s 234D is applicable to the year under consideration as relying on CIT V/s INDIAN OIL CORPN. LTD [2012 (9) TMI 517 - BOMBAY HIGH COURT] - Decided against assessee. Technical Knowhow Royalty - AO proposed the adjustment of payment of royalty by restricting the amount of royalty for technical knowhow to 1% as against 1.25% claimed by the assessee - CIT(A) deleted the addition - Held that:- As decided in assessee's own case AY-2002-03 [2014 (4) TMI 926 - ITAT MUMBAI] the assessee, in fact is paying a lesser amount, if the payments are compared with the payments towards trademark usage, by the other group companies using the Brand Cadbury in other parts of the world. On the other hand, if we examine the argument taken by the TPO with regard to OECD guidelines. On this point the assessee’s payment is coming to a lesser figure, as discussed in detail by the CIT(A), therefore, sustain the order of the CIT(A) and reject the grounds as claimed by the department. - Decided in favour of assessee. Deduction of Loss on Exchange Fluctuation in respect of Export Earners Foreign Currency Account - Held that:- It is clear from the facts recorded by the ld.CIT(A) that the amount lying in EEFC account represents export proceeds, credited to the said account. The ld.CIT(A) has decided this issue by following WOODWARD GOVERNOR INDIA P. LTD 2009 (4) TMI 4 - SUPREME COURT ). Having regard to the undisputed facts that the balance in the said account represents the amount realised on export sale proceed, therefore, we do not find any error or illegality in the findings of the ld. CIT(A) qua this issue.- Decided in favour of assessee. Disallowance made under section 14A - Held that:- AO has allocated Head office expenses in the ratio of net profit and exempt income which cannot be accepted as there is no basis of such allocation of the Head office expenses in proportionate of the income the administrative expenses cannot be apportioned equally on the regular business income and exempt income because the exempt income is earned from mere investment which does not require the same degree of attention and regular administrative management as in the case of regular business activity of the assessee. Thus reasonable basis should be adopted for making disallowance of expenditure under section 14A, we are of the opinion that the reasonable disallowance would be 2% of the exempt income. Accordingly, we modify the orders of authorities below. - Decided partly in favour of assessee.

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• 2015 (6) TMI 246
  Addition of closing work in progress - CIT(A) deleted the addition - Held that:- Similar issue arose in Assessment Years 2004-05, wherein the CIT(A) has granted the relief to the assessee on similar issue by deleting the addition for closing work-inprogress amounting to Rs. 8,37,568/-. Facts being similar, so following the same reasoning as mentioned in the case of Bajaj Fashions Pvt Ltd ( 2009 (7) TMI 1214 - ITAT AHMEDABAD), this issue in the appeal for Assessment Year 2004-05 is also decided in favour of assessee. Addition of excess payment of interest to sister concern - CIT(A) deleted the addition - Held that:- Following the same reasoning as mentioned in the order of Hon'ble Gujarat High Court in assessee's own case (2015 (1) TMI 663 - GUJARAT HIGH COURT) wherein held if the Tribunal was satisfied that the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the assessee there was no reason why the full amount expended should not have been allowed. It is open to the Tribunal to come to a conclusion either that the alleged payment is not real or that it is not incurred by the assessee in the character of a trader or that it is not laid out wholly and exclusively for the purpose of the business of the assessee and to disallow it. But it is not the function of the Tribunal to determine the remuneration which in their view should be paid to an employee of the assessee , we are not inclined to interfere with the findings of the CIT(A) who has rightly deleted the addition of excess payment of interest to sister concern amounting to Rs. 13,65,558/-; accordingly, the same is upheld. - Decided in favour of assessee.

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• 2015 (6) TMI 245
  Disallowance u/s 40(a)(ia) - invoking section 80A(4) - Held that:- There is no claim under any of the provisions covered in section 80A(4) of the Act. Therefore, invoking section 80A(4) of the Act in the present case to deny assessee's claim is anyway not justified. So however, even if for a moment, we accept the invoking section 80A(4) of the Act by the Revenue yet it would cover a situation if multiple deductions are claimed for same profits in the same assessment year. Ostensibly, that is not the case in the present situation because there is no multiple deductions claimed by the assessee qua the impugned amount in the assessment year under consideration i.e. 2010-11. Therefore, we find that there is no relevance of section 80A(4) of the Act in order to test the efficacy of the claim for deduction of Rs. 70,35,997/- made by the assessee on the strength of the proviso to section 40(a)(ia) of the Act. Thus, this stand of the Revenue is liable to be rejected. Whether the assessee would derive double benefit if the claim was allowed because in the earlier year such income has not suffered tax on account of the deduction u/s 10B ? - Held that: - We are unable to find any statutory support to the plea of the Revenue. It is a well-settled rule of law that where language is clear and not capable of any other construction then the same has to be applied. In this context, the assessee had placed reliance on the parity of reasoning laid down in the case of Elphinstone Spinning And Weaving Mills Co. Ltd. vs. CIT (1955 (9) TMI 52 - BOMBAY HIGH COURT) held that the claim of the Revenue was unsustainable, as where the language is clear and not capable of any other construction, then however illogical the position, however absurd the result, however much the construction put may defeat the object of the Legislature, the statute must be construed according to the plain language used by the Legislature, and the more so, if that plain language supports the subject against the taxing department. Therefore, in conclusion, we uphold the plea of the assessee for deduction u/s 40(a)(ia) of the Act of a sum of Rs. 70,35,997/-. - Decided in favour of assessee.

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• 2015 (6) TMI 244
  Disallowance of commission paid - CIT(A) deleted the addition - Held that:- It is evident from the statements recorded by the AO and reproduced in his order and the confirmations sent by various parties that all the parties have recognized Sh. Nawal Khanna and some of them stated that they were thinking that Sh. Nawal Khanna was an employee of the assessee-company and some were thinking he is representing the assessee-company. The middleman Sh. Nawal Khanna was not acting like independent agent has rightly been observed by the ld. CIT(A) and it is the way of doing business by the assessee to procure orders, cheques etc. It is not a case of the AO that Sh. Nawal Khanna has been paid commission only in the impugned year, as mentioned by the ld. CIT(A) in his order referred to hereinabove. Sh. Nawal Khanna has been paid commission since assessment year 2001-02 to 2007- 08 and the same has been allowed by the Income tax Department except in the impugned year. It is also not the case that only Sh. Nawal Khanna has been paid commission and nothing has been paid as commission to others, as mentioned in the order of the ld. CIT(A) referred to hereinabove i.e. to Sh. Harminder Benipal of M/s. Marlik Seam and others were paid commission and the said commission has been allowed as expenditure by the Income Tax Department is not under dispute. The said Sh. Nawal Khanna is not relevant person as provided u/s 40A(2)(b) of the Act. Further, no basis brought on record by the AO to hold that the commission so paid is bogus. It is fact on record that all the parties knew Sh. Nawal Khanna and about the services carried out by him like procurement of orders and cheques etc. In the facts and circumstances, the said commission paid to Sh. Nawal Khanna is allowable under section 37(1) of the Act. We find no infirmity in the order of the ld. CIT(A), who has rightly allowed the claim of the assessee. - Decided against revenue.

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• 2015 (6) TMI 243
  Transfer pricing adjustment - CIT(A) deleting the addition made on account of adjustment of arm s length price - Held that:- The assessee in this case has created a provision for obsolete stocks. Admittedly, such the provision for obsolesce stock has not been made by any of the companies, which are taken as comparables as per the TPO s order, except for Kirsolkar Oil Engines Ltd. where the provision for stock obsolesce / non moving inventory is only 1.03% of sales as against the provision for stock obsolesce or non moving inventory made by the assessee at 8.98%. There is no dispute that such a provision for stock obsolesce and non moving inventory is an extraordinary time. Ld. CIT(A), has rightly made suitable adjustments by eliminating the said provision from the financial statements of the assessee and thereafter arriving at the operation margin for the purpose of comparability and benchmarking with the other comparables companies. Thus no infirmity in the well reasoned order passed by the Ld. CIT(A) on the issue in dispute - Decided against revenue.

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• 2015 (6) TMI 242
  TDS u/s 194H - Disallowance u/s 40(a)(ia) - assessee had wrongly claimed the amount of consolidation fee under the wrong head of purchase of land in the P & L account in order to avoid tax liability - Held that:- It is seen that clause 3.2 of ht MOU between the assessee and Vikram Electric Equipment P. Ltd. makes it clear that Vikram Electric Equipment P. Ltd. or its agent agreed to assign their rights to purchase the land in favour of the assesse. The above clause also makes it evident that unless the assessee decided to procure less than 27 acres of land through Vikram Electric Equipment P. Ltd., Vikram Electric Equipment P. Ltd., was to procure 27 acres of land for ht assessee, failing which, no payment was to be made by the assessee to Vikram Electric Equipment P. Ltd.This clearly shows that Vikram Electric Equipment P. Ltd. was transacting on a principle to principle basis and it cannot be said that the payment was made by the assessee to Vikram Electric Equipment P. Ltd. for rendering of any service. The provisions of section 194H of the Act are, therefore, not at all applicable. Moreover the amount paid to Vikram Electric Equipment P. Ltd. was duly reflected by the assessee in the purchases closing stock. No sales had been made during the year under consideration. It has not been shown to be otherwise. In such a scenario, in our considered opinion, no disallowance is called for. See case of Finian Estates Developers Pvt. Ltd [2012 (6) TMI 705 - ITAT, Delhi] - Decided in favour of assesse.

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• 2015 (6) TMI 241
  Validity of reopening u/s 147 - proceedings initiated after the expiry of four years - Held that:- Such an assessment is being sought to be reopened without their being any failure on the part of the assessee to disclose folly and truly all material facts necessary for the assessment. Even in the “reason recorded”, the assessing officer has not ascribed any failure on the part of the assessee as to what is the failure on the part of the assessee in making the full disclosure. If the assessee has made full disclosure as contemplated under the law then, it is upon the assessing officer to draw correct inference of law from the primary facts. Once there is no failure on the part of the assessee to disclose all the material facts then, statute provides that no action can be taken for reopening the case beyond the period of four years from the end of the relevant assessment years, where order has been completed u/s 143(3). Reopening notice quashed - Decided in favour of assesse.

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• 2015 (6) TMI 240
  Validity of reopening of assessment - transactions of sale and purchase of shares was assessed to tax as capital gain @ 10% instead of income from speculative transaction to be taxed at 30% - Held that:- When there is no addition made by the A.O. on the issue of treatment of short term capital gain as speculative transaction by accepting the fact that it was not really speculative transaction then the additions made by the A.O. by way of reassessment of short term capital gain as business income is not permissible in the proceeding u/s 147 of the Act. Accordingly by following the decision of Hon’ble jurisdictional High Court in the case of Jet Airways (I) Ltd. (2010 (4) TMI 431 - HIGH COURT OF BOMBAY) we hold that the reassessment in the case of the assesse is not valid and the same is set aside. - Decided in favour of assesse.

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• 2015 (6) TMI 239
  TDS u/s 194 - Deemed dividend u/s 2(22)(e) - loan/advance given to a non-shareholder entity - liability to deduct tds - Held that:- As per scheme of statutory provisions of the Act, the payment or advances to non shareholders does not require TDS u/s 194 of the Act and the appellant company cannot be held to be a defaulter u/s 201 of the Act so as to attract interest u/s 201(1A) of the Act. It is also pertinent to note that under provisions of Companies Act, every company is expected to maintain a Register of shareholders u/s 150 of the Companies Act 1956 and the company is not obliged to maintain any other register wherein details of such concern may be maintained to which provisions of section 2(22)(e) of the Act apply. Under the factual matrix of the present case, we observe that when the loans/advances have been given to a non shareholder, then it is impossible for a payer company to ascertain whether it will attract the provisions of section 2(22)(e) of the Act or not. - provisions of section 2(22)(e) and 194 of the Act do not require the payer assessee company to deduct TDS u/s 194 of the Act. - Decided in favour of assesse.

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• 2015 (6) TMI 238
  Disallowance on account of additional depreciation - CIT(A) deleted the disallowance - Held that:- Since the assessee was engaged in the activities of production/ manufacturing of an article or thing, therefore, was eligible for additional depreciation. - Decided against revenue. Disallowance on account of capitalization of continuing fees/ royalty expenses @ 25% - CIT(A) deleted the disallowance - Held that:- Since the facts are identical with earlier years for AYs 2006-07, 2007-08 and 2008-09 therefore, we do not find any reason to interfere with the findings of ld. CIT(A) on this issue, particularly because the assessee got a limited license to use the system for specified outlet only and the assessee did not have any right to transfer the license nor could sublicense. Further, the licensor had the right to entry to safeguard the system licensed to the assessee. Further, the assessee was liable to pay a fixed percentage of its sale as license fee to the licensor. Thus, ld. CIT(A), considering these facts, rightly observed that assessee had not received any permanent or enduring benefit through such license, which was limited to use by the assessee in the prescribed manner and liable to be rescinded by the licensor in certain conditions - Decided against revenue.

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• 2015 (6) TMI 237
  Rejection of books of accounts - estimation of net profit rate at 7% - Held that:- We find merit in the arguments of ld. DR that it is incomprehensible that such a voluminous and diverse business can be profitably conducted by assessee without proper record and stock registers. Thus the books of account of the assessee have been rightly rejected by the lower authorities. Now coming to the estimate of NP, the facts and circumstances of assessee's business remained same as in the preceding year where various additions were made by the AO. In first appeal, the ld. CIT(A) restricted the estimation of net profit rate at 4.46% subject to depreciation and interest which is reasonable. Looking at the entirety of the facts and circumstances of the case, we are of the view that estimate of NP rate of 7% is on higher side looking at the past history of the assessee. Thus, we restrict the net profit rate at 4.46 % as adopted in preceding year instead of 7% determined by the ld. CIT(A). - Decided partly in favour of assesse.

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• 2015 (6) TMI 236
  Liability to TDS u/s 194J - payment of service charges to Chhattisgarh State Industrial Development Corporation Ltd - whether the nature of the payment is Professional fee? - CIT(A) deleted tds liability as the service charges paid by treating the same as payment to govt. - Held that:- As decided in assessee's own case wherein on similar issue on perusal of the remand report by the AO, find no mention about to whom the lease rentals were paid. It only deals with payment of service charges. Even so far as payment of service charges are concerned, it is the contention of the ld AR that it has been paid to the District Administration as per Rule 10 of the Industrial Policy of Govt. of Chattisgarh. In fact, the CIT (A) has also totally ignored this remand report submitted by the AO. Considering the totality of facts and the circumstances of the case, we deem it just and proper to remit these matters to the file of the AO for verifying the fact to whom the lease rentals and services charges have been paid. Thus respectfully following the decision of the Coordinate Bench, we deem it just and proper to remit these matters to the file of the AO for verifying the fact to whom the lease rentals and services charges have been paid - Decided in favour of revenue for statistical purposes

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• 2015 (6) TMI 235
  Depreciation claim - assessee is a charitable trust - according to the AO, allowing such a claim would amount to allowing double deduction - Held that:- The issue raised by the revenue in the ground of appeal is thus no longer res integra and has been decided in the case of CIT v. Market Committee, Pipli,(2010 (7) TMI 374 - Punjab and Haryana High Court) after considering several decisions on that issue and also the decision of of Escorts Ltd. (1992 (10) TMI 1 - SUPREME Court), came to the conclusion that depreciation is allowable on capital assets on the income of the charitable trust for determining the quantum of funds which have to be applied for the purpose of trusts in terms of section 11 of the Act. The Hon’ble Court thereafter held that a trust claiming depreciation cannot be equated with a claim for double deduction. The Hon’ble Punjab & Haryana High Court has also made a reference to the decision of CIT v. Society of Sisters of Anne,(1983 (8) TMI 44 - KARNATAKA High Court), wherein it was held that u/s. 11(1) of the Act, income has to be computed in normal commercial manner and the amount of depreciation debited in the books is deductible while computing such income. - Decided in favour of assesse. Whether the CIT(Appeals) was justified in holding that assessee, a trust, is entitled to carry forward expenditure incurred in excess of its income for setting off against income of the succeeding years? - Held that:- Section 11(1)(a) does not contain any words of limitation to the effect that the income should have been applied for charitable or religious purpose only in the year in which the income has arisen. The application for charitable purposes as contemplated in section 11(1)(a) takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. Hence, even if the expenses for such purposes have been incurred in the earlier years and the said expenses are adjusted against the income of a subsequent year, the income of such subsequent year can be said to be applied for charitable or religious purposes in the year in which such adjustment takes place. The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other - Decided against revenue.

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• 2015 (6) TMI 234
  Addition u/s 69 - money is credited are the alleged benami accounts of the assesse - CIT(A) confirmed part addition - Held that:- AO has not made any logical enquiry and made addition of entire amount to order of settlement commission and during first appellate proceedings the CIT(A) deleted the part addition of Rs. 24,59,600/- in respect to M/s Samar Organics Pvt. Ltd. and since there is no appeal by the department about this part relief, therefore, it can be safely presumed that this deletion has been accepted by the Revenue The addition made by the AO and partly confirmed by the CIT(A) in respect of 10 entities amounting to Rs. 25,54,150/- was subject to decision of the Settlement Commission and when the Settlement Commission has held that no addition can be made then impugned addition in the hands of assessee is not warranted and deserve to be deleted. We order accordingly. - Decided in favour of assesse.

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• 2015 (6) TMI 233
  Disallowance of expenses on the basis of ‘Application of Income’ - AO treating the whole of the amount of the grant received from Ford Foundation as income of the assesse - Held that:- We find considerable force in the other argument of the assessee’s counsel i.e. the income should be computed on commercial principles, as we have held that the assessee-society is eligible for exemption under section 11 of the Act and we have also held that the objects of the society were of charitable nature within the meaning of section 2(15) of the Act, and as we have further held that there is no violation, whatsoever of the provisions of section 13(1)(c) and (d) of the Income-tax Act, 1961. Respectfully following the above we set aside the matter to the file of the Assessing Officer to compute the income of the assessee for the assessment years 2002-03 and 2003-04 afresh in view of the above direction of the ITAT after affording proper opportunity of being heard to the assessee. - Decided in favour of assesse for statistical purposes.

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• 2015 (6) TMI 232
  Addition on cash deposits in bank account - CIT(A) deleted the addition - Held that:- CIT(A) has followed the orders of the ITAT in the case of ACIT vs. Baldev Raj Charla [2008 (12) TMI 241 - ITAT DELHI-C] and Moongipa Investment Ltd. vs. ITO [2011 (8) TMI 1067 - ITAT DELHI] and deleted the addition in dispute wherein held that simply because there was a time gap between the cash withdrawal and cash deposits in bank the explanation of the assessee cannot be rejected, unless there is a finding that the amount was used somewhere else. In the instant case also it is observed that there is no finding of by the AO that the cash withdrawals had been used anywhere else by the appellant. Moreover, the appellant has also submitted details from which it can be observed that the appellant had substantial withdrawing for its household expenses. - Decided in favour of assesse. Accepting of additional evidence - Held that:- CIT(A) has deleted the addition of made by the AO by following the ITAT orders in the case of ACIT vs. Baldev Raj Charla and Moongipa Investment Ltd. vs. ITO [supra]. Hence, the question of providing an opportunity to rebut as per the provision of Rule 46A is concerned, does not arise and as such is dismissed - Decided in favour of assesse.

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• Customs

• 2015 (6) TMI 260
  Waiver of pre deposit - Evasion of duty - Fabrication of TRA to omit GSM - Held that:- It is prima face case of Revenue that TRAs were fabricated to omit GSM with intent to evade duty which cannot be ruled out at this stage. Revenue's submission that GSM decides the duty liability is appreciable. Prima facie , all the appellants had hand in glove to cause loss to Revenue without mentioning the GSM in TRAs when DFRC specifically mentioned GSM with appropriate description of the goods. The TRAs fabricated without GSM mentioned therein were used to cause evasion of duty to the extent of Rs. 29,92,424/-. Therefore, considering financial difficulties expressed, prima facie , and noticing that the balance of convenience tilts in favour of Revenue, to protects its interest and without expressing any opinion at this stage, predeposit as under is directed to be made by the appellants noted against each within 8 weeks - Partial stay granted.

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• Corporate Laws

• 2015 (6) TMI 259
  Delisting of the equity shares - Regulation 5 of the SEBI (Prohibition of Fraudulent and Unfair Practice Relating to Securities Market) Regulations, 2003 - Held that:- The allegation of the petitioners that the proposed delisting would cause heavy financial loss cannot be accepted for the reason that in the instant case, acquiring shares or divesting their holding from a company is a voluntary act which is carried out at the option of a shareholder. Neither Spice nor the seventh respondent, have not concededly, forced the petitioners to divest from the company. Spice in its letter dated 06.02.2015, has stated that the delisting and the consequent determination of the offer price, floor price and the final offer price would be in accordance with the extant SEBI regulations, i.e. through book building process and that the shareholders including the petitioners have a right to participate in the same (Regulation 14(1), SEBI (Delisting of Equity Shares) Regulations, 2009). Since the Petitioners have represented to the SEBI, which has not made any order in that regard, it would be inappropriate for this court to assume that the said body would not act, act improperly or act in a manner contrary to the Regulations. Any direction in exercise of judicial review at this stage would be based on the assumption of objective facts. All that this court can do is to require the SEBI to deal with the Petitioners representation, in accordance with law within a reasonable time, having regard to the facts presented to it. It is open to the petitioners to seek appropriate remedies in accordance with law. - Decided against the appellant.

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• Service Tax

• 2015 (6) TMI 271
  Demand of Cenvat Credit - Business Auxiliary Services - Trading activity - Held that:- The appellant is not an output service provider in respect of trading. - Mercedes Benz judgment [2014 (4) TMI 12 - CESTAT MUMBAI] also held that the formula introduced in Rule 6 in 2011 cannot be applied retrospectively. Following this judgment, I hold that the amount of credit to be disallowed was correctly computed by the adjudicating authority. The reliance by the learned Counsel on the case of Sai Sathya Said Inst. (2003 (9) TMI 94 - SUPREME COURT OF INDIA) is inappropriate. The department is not imposing a condition which is not in the Rules. Department is merely saying that input credit is available under Service Tax law for providing output services in terms of the definition of input service in the Cenvat Credit Rules whereas the trading activity is outside the purview of service tax law. Bar of limitation - appellant have not declared in their ST-3 returns that the input service credit was used in relation to trading. This amounts to suppression of facts. Therefore, the extended period of limitation is correctly invoked as the appellants are following self assessment procedure and taking credit on their own against the provisions of law. Therefore, the present case is distinguishable from the case of Landis +GYR Ltd. Reliance is placed on the case of Mercedes Benz (supra) as that judgment involved the same circumstances as far as the issue of time bar is concerned. Reducing penalty to 50% of amount confirmed under proviso to Section 78(1) is bad in law because the proviso became effective from 08/04/2011 whereas the period in the present case is from 2006-2007 to 2010-2011. I am also inclined to agree with the learned AR that the department was not put to notice on application of Rule 6(3A) by the Commissioner (Appeals) when the show-cause notice did not state this. I find that principles of natural justice have been violated. However, I have already decided the issue on merits in favour of Revenue. In view of applicability of extended time period for suppression of facts, I uphold the penalty equivalent to amount of Cenvat Credit demanded as held by the adjudicating authority. - Decided against assessee.

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• 2015 (6) TMI 270
  Denial of refund claim - No unutilized CENVAT Credit - Export of software - STPI unit - Held that:- Refund is to be granted on the basis of the cenvat credit available in the Cenvat Credit Account and not on the basis of the closing balance of Cenvat credit shown in ST-3 Return. - even after adjusting the amount of refund of Rs. 56,58,994/- towards the cenvat credit amount of Rs. 68,27,559/-summarily held to be inadmissible, no action has been initiated for recovering the remaining amount of Rs. 11,68,565/-as noted earlier. - total amount of Rs. 56,58,994/- (rupees fifty six lacs fifty eight thousand nine hundred ninety four only) is the amount of refund of untilised CENVAT Credit admissible to M/s Serco Global Services Private Limited for the quarters April 2008 to June 2008, October 2008 to December 2008 & January 2009 to March 2009. However, an amount of Rs. 68,27,559/- which has been wrongly added by them to their Cenvat credit account is ordered to be deducted so as to correctly reflect the CENVAT availed utilized and carried forward in subsequent returns. Adjudicating authority has come to a clear finding that for the quarters October 2008 to December 2008 and January 2009 to March 2009, Rs. 56,58,994/- is the amount of refund of unitilised Cenvat credit admissible to the appellant. As regard the refund for the quarter April 2008 to June 2008, in view of the fact that Cenvat credit account had balance and a revised ST-3 return was also submitted (although as stated earlier, mere mistake in ST-3 return does not disentitle the appellant for refund) the amount of refund is required to be recomputed in the light of the fact that credit taken before 16.5.2008 is to be disallowed and therefore, the question of refund of the same (i.e. of the credit taken prior to 16.5.2008) would not arise. - matter remanded back - Decided in favour of assessee.

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• 2015 (6) TMI 269
  Penalty under Sections 76, 77 and 78 - before issue of show-cause notice, the entire amount of tax was paid and before issue of adjudication order, interest was also paid - Held that:- appellant was not aware of the provisions of law and as a result, continued to operate as they were operating earlier. The fact is that both the Revenue as well as the assessee are relying upon the balance sheet and the Profit & Loss Account for arriving at the quantum of service charges received and no other documents are admittedly available either with the assessee or with the Department. There is no dispute about the total liability or the total service amount received. The Accountant also promptly stated that they have made a mistake and they would pay the tax and interest. The intention behind introduction of provisions of Section 80 is precisely to ensure that assessees who did not pay the tax can make the payment with interest and lenient view can be taken as regards penalty in cases where there is lack of knowledge and reasonable cause. The very fact that the section continues to be in existence for a long time shows that the intention of the Government is to provide relief where there is a reasonable cause for failure to make payment and Hon'ble High Court of Allahabad in the case of CCE Vs. Muniruddin [2013 (10) TMI 95 - ALLAHABAD HIGH COURT] has taken a view that even ignorance of law can be one of the reasons, though cannot be sole ground for invoking Section 80. - appellant has made out a case for waiver of penalty by invoking Section 80 of Finance Act. Accordingly, penalties imposed under various sections of Finance Act, 1994 are waived - Decided in favour of assessee.

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• 2015 (6) TMI 268
  Refund claim - Banking and other Financial Services - Partial sanction of rebate claim - Refund filed prior to date of raising invoice - Held that:- Invoice which has been raised by the appellant on 30/06/2012 clearly indicates that the said invoice is for the services rendered by them to an entity situated in Mauritius. It is undisputed that the said services are exported and the appellant is eligible for the refund of the amount of service tax paid by them by debiting the amount in CENVAT credit account. It is noticed by us that the appellant had debited the CENVAT Credit register on 29/06/2012 indicating therein that the CENVAT credit is utilised for payment of service tax on services exported to Bain Capital Mauritius. In our considered view, when the facts are very clear and when there is export of services and the amounts have been debited in CENVAT credit register; there was no reason for the lower authorities to reject such a valid rebate claim. Only reason given by the first appellate authority for rejecting this claim was that it was filed on 29/06/2012, whereas the invoice was raised on 30/06/2012 and cannot be correlated. Invoice can be raised on any date but the debit of the amount towards service tax liability was on the date when the rebate claims were filed. On a specific query from the bench, as to the certificate of foreign inward remittance not tallying with the amount indicated in the ST-3 returns, the learned counsel would submit that he would file the invoices and the correct reconciliation. It was filed by the appellant on 16/01/2015. On perusal of the said reconciliation and the documents like FIRCs and the invoices raised by the appellant, we find that the entire amount, which has been billed by the appellant to Bain Capital Mauritius, has been received by them through banking channel. - Rejection of the rebate claim of the amount debited by the appellant in CENVAT credit register for the export of services is incorrect. The order to that extent is liable to be set aside and the rebate claims filed by the appellant needs to be allowed - Decided in favour of assessee.

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• Central Excise

• 2015 (6) TMI 265
  Imposition of penalty - Clearance of sugar - whether all the three appellants are required to be visited with penalties imposed under Rule 26 of the Central Excise Rules 2002 - - Held that:- penalty can be imposed on any person who acquires possession of excisable goods which he knows or has reason to believe that the goods are liable for confiscation. In the cases in hand it is not in dispute that the sugar which has been cleared for export purpose was cleared on examination and on debiting of B-1 Bond AR-4 documents. If the bond amount (which is executed for undertaking discharge of duty liability), is debited, and the goods are cleared; the question as to they may be confiscated may not arise and in my considered view all the three appellants could not have any reason to believe that sugar cleared for export is liable for confiscation. Accordingly, in view of the foregoing penalties imposed by the adjudicating authority are set aside

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• 2015 (6) TMI 264
  Penalty u/s 11AC - availment of cenvat credit on various capital goods during the establishment of the new unit - whether penalty can be imposed under the facts and circumstances of the case - Held that:- Appellant was setting up a new unit and in that context, they have availed the cenvat credit on many items and even though initially the demand was issued for an amount of Rs. 60,27,939/-, finally the Commissioner has confirmed only an amount of Rs. 13,34,445/-. It is also seen that the items on which the credit has been denied are undoubtedly used in the factory. It is only due to interpretation of whether the said items would be covered within the definition of capital goods that they are being denied the credit. It is also seen that the items are falling under Chapter 73 and are in the nature of inputs used in the manufacture of supporting structures of capital goods and few items are used in the installation work outside the factory limits. - Ingredients of Section 11AC are missing in the case and, therefore, penalty imposed is set aside - Decided in favour of assessee.

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• 2015 (6) TMI 263
  Leviability of interest - Held that:- Adjudication order which gave rise to the demand of duty to the extent confirmed by Tribunal, becomes enforceable demand. Only if that demand is not paid, then there shall be levy of interest. But that is not the case in the present appeal. The demand which was ultimately reduced by Tribunal having been discharged by appellant there shall be no interest liability. - Proposition of law stated by learned counsel, fortified by the decision of Hon'ble High Court of Chhattisgarh does not call for any different proposition. - Decision in the case of Raiur Bright Steel & Wire Weld Industries Ltd. Vs. Union of India - [2014 (9) TMI 240 - CHHATTISGARH HIGH COURT] - Decided in favour of assessee.

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• 2015 (6) TMI 262
  Levy of duty on bi-product - Manufacture of beer - Whether carbon dioxide which comes into existence in the respondent's unit is marketable and hence, excisable - Held that:- Carbon dioxide which is generated during fermentation process would have certain impurities of methane, alcohol, etc. and for making it marketable as carbon dioxide gas, the same would have to be purified for which a separate plant is required. In this case it is not the allegation of the department that there was a separate plant in the respondent's unit for purification of the carbon dioxide. It is a well settled law that marketability of the goods in the form in which the same are cleared for captive use has to be proved. In this case, it is not the allegation of the department that the respondent were purchasing carbon dioxide from other breweries. The carbon dioxide being purchased by the respondent was from carbon dioxide manufacturers and there is merit in the respondent's plea that the carbon dioxide purchased from the carbon dioxide manufacturers is not comparable with the gas which was being produced in their factory. Therefore, just because, the respondent were purchasing carbon dioxide from other suppliers, it cannot be presumed that the carbon dioxide generated in their unit was of the same character and properties as the gas being purchased from outside and hence, would be marketable. - it is the decision of the Tribunal in the case of Mohan Breweries & Distilleries Ltd. (1999 (1) TMI 153 - CEGAT, MADRAS) which would be applicable to the facts of this case. - Decided against Revenue.

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• 2015 (6) TMI 261
  Rectification of mistake - Tribunal held that when there is a default in payment of excise duty which continues for a period beyond thirty days from due date then the assessee has to pay excise duty on each consignment at the time of removal without utilising the Cenvat credit till the date the assessee pays the outstanding amount including interest thereon envisages under Rule 8(3A) of the Central Excise Rules, 2002 - Held that:- Supreme Court has not passed any law stating that Rule 8(3A) of Central Excise Rules, 2002 is ultra vires. It is only the Gujarat High Court [2014 (12) TMI 585 - GUJARAT HIGH COURT] which has taken that particular view. This view of the Gujarat High Court is also contrary to the decision of the Hon'ble Karnataka High Court [2013 (4) TMI 534 - KARNATAKA HIGH COURT] and the Madras High Court [2013 (12) TMI 1398 - MADRAS HIGH COURT] wherein it has been held that in case of default in payment of duty within due date and the defaults continues for a period beyond thirty days from the due date, the utilisation of Cenvat credit is nullity in law and therefore, the duty liability has to be discharged on the subsequent clearance in cash. Further in the Kashmi Conductors case cited [1997 (7) TMI 186 - CEGAT, COURT NO. II, NEW DELHI], another Large Bench of this Tribunal has held that the decision of a High Court is applicable only within the jurisdiction and not outside the jurisdiction. In these circumstances, we are not inclined to agree with the contentions raised by the appellant. - Adjudicating authority has committed an error and therefore, we remanded the matter back to the adjudicating authority for fresh consideration and to pass an order in accordance with the law. Therefore, such a direction canoe be said to be a mistake or an error apparent on the face of the record. - Rectification denied.

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• CST, VAT & Sales Tax

• 2015 (6) TMI 267
  Validity of Tribunal's decision - Tribunal refrained from deciding the question on the basis that the ground had not been raised at all - Held that:- It was observed that the amended grounds were not on record. There was an inadvertent error. The amended grounds had been furnished to the department. The same were, however, annexed with the proceedings in the appeal filed under the Central Sales Tax Act, 1956 although they ought to have been annexed in the proceedings under the Haryana Value Added Tax Act, 2003. That was an error on the part of the department of the Tribunal itself. Even if it was not, it would make no difference. - Matter remanded back - Decided in favour of assessee.

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• 2015 (6) TMI 266
  Validity of impugned order - Violation of principle of natural justice - Held that:- conduct of the petitioner in not filing his objections within the time granted by the first appellate authority, I am of the view that the challenge in the writ petition, against Ext.P7 order, on the ground that it has been passed in violation of the rules of natural justice, cannot be entertained. Thus, without making any observations as regards the merits of the petitioner's case, I relegate the petitioner to the alternate remedy of filing an appeal against Ext.P7 order of the 1st respondent before the appellate authority under the KVAT Act. - Decided against assessee.

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• Wealth tax

• 2015 (6) TMI 256
  Penalty u/s 18(1)(c) of W.T.Act, 1957 - Held that:- The penalty is leviable on the date on which the concealment of wealth is committed i.e. the date of offering the return of wealth. Therefore in the present case it will not be justified to refer to the returned wealth u/s 14(1) of the Act for the initiation of penalty u/s 18(1)(c) of the Act. Therefore when there is no concealment there is no question of penalty u/s 18(1)(c) of the Act. - The concealment of income is to be determined with regard to the return of income in response to notice u/s 153A of the Act. Therefore in the present circumstances and facts of the case once the returned wealth is accepted by the AO u/s 153A of the Act then there cannot be a case of concealment of income or furnishing inaccurate particulars of income. In the circumstances and facts of the case the decision in the case of Prem Arora vs DCIT (2012 (6) TMI 480 - ITAT DELHI) is squarely applicable in the present case, since in the present case the assessee has disclosed gold and diamond in the statement recorded u/s 132(4) of the Act during the search operation itself, in the wealth tax return the Tribunal has approved the findings in quantum with regard to the genuineness of the declaration of gold and diamonds. Accordingly the assessee is not liable to have penalty u/s 271(1)(c) of the Act. - Decided against Revenue.

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• Indian Laws

• 2015 (6) TMI 258
  Termination of service - Held that:- Government of India under the office memorandum dated 23.11.2005 desired to curtail unwarranted expenses and further emphasised not to regularise casual labourers, but that cannot be a reason to terminate the original applicants from service who are working on casual basis only and not claiming for regularisation of their service. The continuance of such employees shall in no case put any extra economic burden upon the employer. The persons who shall be employed through service providers shall also be entitled for same remuneration and the service provider too shall claim its commission, therefore, that will in no manner satisfy desire of the petitioner respondent to curtail expenses. On the other hand, removal of the respondent original applicants who are in service of the petitioners from several years shall be quite arbitrary as they will be thrown out of employment without any wrong on their part. The position would have been different if the petitioner would have been going to have regular recruitment against the posts occupied by the original applicants but that is not the case of the petitioner. The petitioner want to remove the original applicants from service just to have labour through contractor with a view to reduce expenditure but that object, as already stated, cannot be served as the applicants too are working on casual basis only. - Decided against Revenue.

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• 2015 (6) TMI 257
  Authority to withhold grant of inspection certificates - Alleged violation on the part of the petitioner in respect of past export consignments - Held that:- In the present case, it is apparent that the action of respondent Nos. 1 & 2 in withholding the certificates is patently without authority of law and thus, warrants interference under Article 226 of the Constitution of India. The Supreme Court in Rajasthan State Industrial Development and Investment Corporation [2013 (2) TMI 673 - SUPREME COURT] had, inter alia, held that writ discretion must be exercised by the court on grounds of public policy, public interest and public good. The writ is equitable in nature and thus, its issuance is governed by equitable principles. Refusal of relief must be for reasons which would lead to injustice. Applying the aforesaid principles, in the given facts and circumstances, it is apposite that this Court exercise its jurisdiction to enforce the respondents to perform their duty. In my view it is not necessary for this Court to refrain from exercising its jurisdiction under Article 226 of the Constitution of India on account of existence of an alternate remedy. - Decided in favour of appellant.

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