TMI Tax Updates - e-Newsletter
June 10, 2016

Case Laws in this Newsletter:

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

Articles

1. Tax Provisions on Income of Investment Funds and Income Received From such Fund

   By: esha agrawal

2. No Service tax on sale of under construction flats if contract price includes value of land

   By: Bimal jain

News

1. Memorandum of Understanding (MoU) signed between National Investment and Infrastructure Fund (NIIF) Ltd. and Qatar Investment Authority (QIA) for facilitating Investment from Qatar in the infrastructure sector in India

2. RBI Reference Rate for US $

Notifications

Customs

1. 83/2016 - dated 9-6-2016 - Cus (NT)

Amendment to Notification No. 61/94-Customs (N.T.) dated 21.11.1994

Circulars / Instructions / Orders

FEMA

1. 75 - dated 9-6-2016

Exim Bank's GoI supported Line of Credit of USD 24.00 million to the Government of the Republic of Cote d’Ivoire

Customs

2. 25/2016 - dated 8-6-2016

Maintenance of records in relation to warehoused goods in electronic form, filing of Returns and acknowledgement of receipt of goods

Highlights / Catch Notes

Income Tax

• Amendment to Income Tax Act Sec. 201(1) in 2014 doesn't revive expired cases; notices after March 31, 2012, are invalid.

  Case-Laws - HC : TDS liability - period of limitation - The limitation for initiating action under section 201(1) of the Act, therefore, expired on 31st March, 2012 whereas the amendment in section 201 of the Act as amended by Finance Act No.2 of 2014 came into force with effect from 28th May, 2012 - the notices are clearly barred by limitation - HC
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• Section 40(a)(ia) Inapplicable for Short Tax Deductions; No Disallowance for Payments with Tax Deduction Shortfalls.

  Case-Laws - AT : Provisions of section 40(a)(ia) are not attracted where there is short deduction of tax. Accordingly, no disallowance under section 40(a)(ia) in respect of payments made - AT
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• Assessee Not Default for Non-Deduction of Tax if Recipient Declares Income and Pays Taxes.

  Case-Laws - AT : Where the amount of sub-contract payments made by the assessee though without tax deduction at source, has been included by the recipient in his return of income and the said recipient had paid taxes on the income relatable to such receipts, then there is no merit in holding the assessee to be in default for not deducting tax at source - AT
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• Discrepancy in Closing Stock Value Resolved: Evidence Confirms Accuracy, No Addition Made to Accounts.

  Case-Laws - AT : Addition on account of variation in the value of closing stock between the value declared in the accounts and the value declared to the Bank - The assessee demonstrated with evidence that the closing stock declared in the books of account is correct - No addition - AT
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• Software Receipts Not Taxable as Royalty, Even When Linked to Hardware Supply, Says Court; Assessing Officer Incorrect.

  Case-Laws - AT : Receipts on account of supply of software were integrally connected to the supply of hardware and, therefore, AO was not right in taxing such receipts as royalty - software supplies could not be taxed even under the amended law. - AT
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• Firm to Company Transition: Original Acquisition Cost Remains Unchanged Despite Asset Revaluation.

  Case-Laws - AT : The firm is succeeded by the company, therefore, the cost of acquisition of the company would be as that of acquisition of the firm. The valuation of land and assets of firm though valued by the valuer will not change or alter the cost of acquisition of the firm despite valuation of assets of the firm and would remain the same, and therefore the cost of acquisition of the company would be cost of acquisition of the firm - AT
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Customs

• Provisional Goods Release Under Customs Act Sec 110-A Doesn't Affect Right to Unconditional Release Per Sec 110(2.

  Case-Laws - HC : Merely because a request has been made for provisional release of goods u/s 110-A of the Customs Act and the same has been acceded to by the respondent, the same would not take away the right of the petitioner for unconditional release of the goods u/s 110(2) of the Customs Act - HC
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• High Court Confirms Exporters Can Claim Duty Drawback Despite Duty Paid via DEPB, No Restrictions in Section 75 or Rule 3.

  Case-Laws - HC : Availability of benefit of duty drawback - Export of final product - neither section 75 of the Customs Act, nor rule 3 of the Rules of 1995, provide any restriction on claim of drawback, if the basic duty of customs is paid through DEPB. - HC
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Service Tax

• Company Acting as Chhattisgarh Gov Agent Liable for Service Tax Under Companies Act, 1956.

  Case-Laws - AT : Service Tax Liability - the appellant is a company incorporated under Companies Act, 1956 and acted as agent on behalf of the Chhattisgarh Govt. which authorised it to lease out land to prospective entrepreneurs for setting up industry, etc. and to provide various services on behalf of State Govt. and it accordingly is covered under the definition of assessee. - AT
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• Service Provider Allowed to Adjust Overpaid Service Tax Against Future Liabilities, Easing Compliance Burden.

  Case-Laws - AT : Self Adjustment of excess service tax paid with the service tax liabilities for subsequent period - Service tax amount paid at higher rate for the service tax liabilities - adjustment allowed - AT
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Central Excise

• High Court Overturns Settlement Commission Penalty; Department's Manufacturing Claim Against Petitioner Rejected.

  Case-Laws - HC : Imposition of penalty by the Settlement Commission - department took the stand that the job work activity undertaken by the Petitioner amounts to manufacture and not service and that the Petitioner was required to pay excise duty - penalty imposed by Settlement Commission is set aside. - HC
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• Tribunal Dismisses Revenue Appeal Lacking Committee on Disputes Approval; Revival Sought Due to Significant Public Funds Involved.

  Case-Laws - HC : Seeking revival of appeals - tribunal dismissed the revenue appeal for requirement of approval/clearance of the Committee on Disputes (COD) - the delay is required to be condoned, more particularly because huge amount of public money is involved. - HC
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• Quasi-judicial authorities must decide rebate claims using current laws, without indefinite delays for related outcomes.

  Case-Laws - HC : Eligibility of Rebate claim - SCN still pending adjudication - When a case comes up before a quasi-judicial authority, it is bound to decide the same in accordance with law as per the situation as prevailing at the relevant time. An adjudicating authority cannot keep a matter in abeyance indefinitely to await the outcome of one proceeding after another - HC
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Case Laws:

• Income Tax

• 2016 (6) TMI 338
  Short deduction of tax at sources - disallowance of bad debts - ITAT deleted the addition as done by CIT(A) - Held that:- As pointed out the assessee had purchased the aforesaid shares on behalf of the sub-broker and, in fact, paid the amount of Rs. 1,06,10,247/-. As against this amount, he received only a sum of Rs. 64 lakhs. The brokerage which was received in the aforesaid transaction was shown as income by the assessee in the previous year, which was taxed as such as well by the assessing authority. Under the circumstances, only because shares were not delivered for want of full payment, which was to be made by the subbroker to the assessee, it cannot be said that there was no transaction between the assessee and the sub-broker and the assessee had to make payment on behalf of the sub-broker, which he could not recover to the extent of Rs. 41,37,881, that sum has to be treated as “debt”. We notice from the decision of the CIT (Appeals) that the judgment of the Delhi High Court in Commissioner of Income-Tax vs. D.B.(India) Securities [2009 (7) TMI 894 - DELHI HIGH COURT] wherein held that as the assessee had not sold the shares to anybody else in the market and in the absence of such a sale, the assessee could not claim the aforesaid amount as “bad debt”. - Decided against revenue

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• 2016 (6) TMI 337
  Reopening of assessment - payment of interest to the partners on the capital investment and the remuneration to the working partners - as opined by AO by not providing for either of these two payments, the firm had artificially increased its profit which was otherwise exempt under Section 80(IA) - Held that:- To begin with, we fail to see how even if such facts are established, it can be said that income chargeable to the tax of the assessee had escaped assessment. The artificially inflated profit and what in the opinion of the Assessing Officer would be the correct profit; both were fully exempt under Section 80(IA) of the Act. Quite apart from these prima facie observations, we notice that it is not observed by the Assessing Officer in his reasons recorded for issuance of the notice that there was any failure on the part of the assessee to disclose true and full material facts. In fact, in the reasons recorded itself, he himself has stated “subsequently on verification of the case record and material available on record, it is found that.”. This would clearly demonstrate that all necessary facts were already on record and it was only on the basis of the case record that Assessing Officer formed the reason to believe that income chargeable to tax had escaped assessment. Thus we cannot uphold the notice for re-opening which was issued beyond period of four years without there being even remote element of failure on the part of the assessee to disclose true and full facts necessary for assessment - Decided in favour of assessee.

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• 2016 (6) TMI 336
  Computation of deduction u/s 14A - whether the ITAT was justified in relying on the judgment of this Court in Maxopp Investment Ltd. v. CIT (2011 (11) TMI 267 - Delhi High Court) to hold that AO is required to record reasons why he was not accepting the expenditure as calculated by the Assessee for the purposes of Section 14A? - Held that:- The Court does not propose to re-visit the decision of the co-ordinate Bench in Maxopp Investment Ltd. (supra). The ITAT cannot be faulted for following the said decision. Indeed, in the present case the AO has not recorded the reasons for concluding that the expenditure as claimed by the Assessee for the purposes of Section 14A of the Act is not acceptable. No substantial question of law arises for consideration.

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• 2016 (6) TMI 335
  Limitation for initiating proceedings under section 201(1) - TDS liability - period of limitation - Held that:- The present case relates to financial year 2008-2009. The petitioner had filed statements as required under section 200 of the Act. The limitation for initiating proceedings under section 201(1) of the Act would, therefore, be governed by section 201(3)(i) of the Act as it stood at the relevant time which provided for a period of limitation of two years from the end of the financial year in which statement was filed in a case where the statement referred to in section 200 has been filed. The limitation for initiating action under section 201(1) of the Act, therefore, expired on 31st March, 2012 whereas the amendment in section 201 of the Act as amended by Finance Act No.2 of 2014 came into force with effect from 28th May, 2012. The impugned notices, therefore, are clearly barred by limitation and, therefore, cannot be sustained - Decided in favour of assessee

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• 2016 (6) TMI 334
  Rectification of mistake - period of limitation - assessment of income u/s 115JA - Held that:- In the present case, limitation would begin to run from the date i.e 30-03- 2001 on which the original order of assessment was passed U/S 143(3) of the Act for the reason the jurisdiction under s. 154 is sought to be exercised in respect of issues which did not form the subject-matter of the rectification proceedings under s. 154 dt. 11.01.2005 and 18.02.2005 and the AO also failed to make any reference of Sec 115JA in the notice dt:23-02-2005 issued sought to rectify the order dt:28-02-2005, but, however, made computation under book profit U/S 115JA of the Act for the first time vide Sec 154 notice dt:16-02-2009. As stated above AO has passed subsequent rectification orders and he has not made any reference on the said issue but he resorted to rectify the mistake while passing the subsequent order passed u/s 143(3)/251/154/154/251/251/154 of the Act. We find that from the end of the financial year i.e. 1997-98 the AO is bound to make the rectification order within four years and in this case the AO has passed rectification order u/s 154 on 30-03-2009 is barred by limitation as it is beyond four years from the original assessment order dated 30.03.2001. Therefore, we are of the opinion that the impugned order dt: 30-03-2009 passed by the AO is held to be invalid by treating the same as barred by limitation - Decided in favour of assessee.

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• 2016 (6) TMI 333
  Disallowance under section 14A r.w Rule 8D - Held that:- CIT(A) has not given any proper basis for working out the disallowance under section 14A r.w. Rule 8D; specifically when the disallowance is far in excess of the exempt dividend income earned in the year under consideration. In this view of the matter, we set aside the impugned order of the learned CIT(A) on this issue and restore the matter to the file of the AO to decide the issue afresh - Decided in favour of assessee by way of remand Disallowance of Corporate Club Membership Fee - Held that:- The issue of allowability of payment of club membership fee by the company on behalf of its employee as a business expenditure has been settled in favour of the assessee by the decision of the Hon'ble Apex Court in the case of CIT, Bangalore vs. United Glass Mfg. Co. Ltd. [2012 (9) TMI 914 - SUPREME COURT ]. Thus we hold that the expenditure of Rs. 1,00,000/- incurred by the assessee on club membership fees for employees is admissible business expenditure and therefore direct the AO to delete the disallowance of Rs. 1,00,000/- made in this respect.- Decided in favour of assessee. Foreign Exchange Losses - Held that:- The orders of the learned CIT(A) for assessment years 2009-10 and 2010-11 holding that foreign exchange losses for assessment years 2009- 10 and 2010-11 respectively were business losses and directing the AO to allow the same calls for no interference from us and we therefore confirm an uphold the same. See Commissioner of Income-Tax Versus Badridas Gauridu (P.) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] Disallowance under section 40(a)(ia) - non payment of TDS before the end of the financial year, by which time it was due to be paid - Held that:- The Hon'ble Calcutta High Court in the case of CIT vs. Virgin Creation (2011 (11) TMI 348 - CALCUTTA HIGH COURT ) has held that the amendment to section 40(a)(ia) of the Act by Finance Act, 2010 w.e.f. 01.04.2010 was retrospective and therefore TDS has to be paid on or before the due date specified for filing the return of income under section 139(1) of the Act; in this case 30.09.2009. In view of the fact that in the case on hand, the assessee has admittedly made the payments of TDS in the next financial year but before the due date for filing the return of income under section 139(1) of the Act the assessee’s case is squarely covered in its favour by the aforesaid decision of the Hon'ble Calcutta High Court. Thus we uphold the order of the learned CIT(A) directing the AO to delete the disallowance under section 40(a)(ia) of the Act - Decided in favour of assessee.

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• 2016 (6) TMI 332
  Additions u/s 40(a)(ia) due to Short deduction of tds - Held that:- Provisions of section 40(a)(ia) are not attracted where there is short deduction of tax. Accordingly, no disallowance under section 40(a)(ia) in respect of payments made to M/s Mangalmurti Roadlines wherein the assessee had made short deduction of tax can be made. See Apollo Tyres Ltd. vs. DCIT [2013 (11) TMI 209 - ITAT COCHIN] - Decided in favour of assessee

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• 2016 (6) TMI 331
  Non-deduction of tax at source on sub-contract payments - applicability of proviso to section 40(a)(ia) - Held that:- The assessee has furnished on record the complete particulars in this regard which established the case of assessee. The return of income filed by Mr. Anil Patil relates to assessment year 2012-13 and in the totality of the above said facts and circumstances, where the amount of sub-contract payments made by the assessee though without tax deduction at source, has been included by the recipient in his return of income and the said recipient had paid taxes on the income relatable to such receipts, then there is no merit in holding the assessee to be in default for not deducting tax at source. Accordingly, we hold so. Once the assessee is not in default by non deduction of tax at source, then the said payment on account of sub-contract amounting to Rs. 1.52 crores is to be allowed as deduction in the hands of assessee. We direct the Assessing Officer to allow the claim of assessee after verifying the claim of assessee that the payer has included the sub-contract payments as part of its receipts. The grounds of appeal raised by the assessee are thus, allowed as directed. - Decided in favour of assessee.

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• 2016 (6) TMI 330
  Ad-hoc disallowance of conveyance expenses - Held that:- The assessee has paid the entire amount of expenses related to conveyance and collection in cash. The assessee before the Assessing Officer made written submissions that the disallowance of this expenses were made on estimated basis but the same are incurred for business purpose by the assessee. The assessee submitted that the supporting evidence towards incurring expenditure was produced before the Assessing Officer. It is seen from the paper book that the evidence to the extent of expenses incurred on conveyance and collection was before the adjudicating and appellate authorities but the same was not taken into account by both the authorities. The disallowance was on ad-hoc basis. This is in our view arbitrary. Hence we delete the disallowance - Decided in favour of assessee Disallowance of interest for utilizing bank loan for making interest free advance - Held that:- As per assessee's submission the loan was taken for business purpose and thus the interest was paid / incurred for business. The relevant documents before the authorities, but the same was not taken cognizance. The Assessing Officer and the CIT (A) proceeded on the premise that the assessee has failed to produce any evidence in support of his claim. This is not a correct position as the paper book submitted by the assessee along with the loans statement for the period 1/4/2008 to 31/3/2009 was produced before the Assessing Officer as well as CIT (A). Both the authorities failed to take cognizance of the said loan statement. It is not in dispute that the loan was taken for business purpose. The money was also advanced for business purpose. Hence the disallowance is bad in law - Decided in favour of assessee Disallowance of interest on account of not utilizing cash available in hand for business purposes and resorting to payment from bank cash credit limit - Held that:- CIT (A) has simply stated that there was no evidence produced by the assessee. We find that there is no merit in the disallowance. The said statement is incorrect. It is not for the Assessing Officer to decide how an assessee can use a cash credit limit with the Bank. - Decided in favour of assessee Addition of house hold expenses - Held that:- We find that Rs. 90,000/- is not a reasonable amount for monthly expenses of any person and his family. The addition in our view is not warranted. - Decided in favour of assessee TDS u/s 194C - Non deduction of tds on payment made to transporters - Held that:- Before us the assessee demonstrated that the payments are covered under the exceptions specified under Rule 6DD. A chart is filed. We are convinced with the same. Hence we delete the disallowance - Decided in favour of assessee Addition on account of variation in the value of closing stock between the value declared in the accounts and the value declared to the Bank - Held that:- The Assessee has given the books at the relevant time to the Assessing Officer to verify the same and the books were also subjected to the audit under Section 44AB of the Act to support the value of closing stock. The finding of the CIT(A) that the assessee has not produced complete sale vouchers and also quantity wise details of opening and closing stock, is not factually correct. It was clear from the records that the same was produced before the Assessing Officer at the relevant time. The assessee submitted month wise purchase and sale details before the Assessing Officer. It was clear from the records that the same all quantitative details were produced before the Assessing Officer. The rejection of books is bad in law as no defects are pointed out. The assessee demonstrated with evidence that the closing stock declared in the books of account is correct. Hence no addition can be made on this account. - Decided in favour of assessee

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• 2016 (6) TMI 329
  Attribution of profits to the PE in India in respect of hardware components of the telecom equipments and the mobile handsets as business profits under article 7 of the Indo-China DTAA - Measurement of profit - AO had invoked Rule 10(ii) and attributed 20% of net global profits arising out of revenues realized from India - CIT(A) attributed 2.5% of entire sales revenue as per Rule 10(i) Held that:- In the present case we have earlier reproduced paras 6.2.2 and 7.2.3 from ld. CIT(A)'s order and also findings from AO's order for AY 2009-10 which give a clear picture of the level operations carried out by ZTE India, the assessee's PE. Ld. CIT(A) has pointed out that ZTE India is doing preparatory work, negotiating the contract and price and answering specified queries of the customers on behalf of the assessee. These are all vital functions which are revenue generating. The AO in AY 2009-10, as noted earlier, has elaborated in detail the functions carried out by PE in connection with sale in India We find that the level of operations carried out by assessee through its PE in India are considerable enough to conclude that almost entire sales functions including marketing, banking and after sales were carried out by PE in India and, therefore, keeping in view the decision of Hon'ble Supreme Court in the case of Ahmedbhai Umarbhai & Co. (1950 (5) TMI 1 - SUPREME Court) we are of the opinion that it would meet the ends of justice if 35% of net global profits as per published accounts out of transactions of assessee with India are attributed to PE in India in respect of both hardware and software supplied by assessee to Indian customers. At this juncture we may point out that while deciding the department's appeal in subsequent part of this order, we have upheld the findings of ld. CIT(A) to tax the income from sale of software as business income and not royalty. We may point out that in AY 2009-10 the AO estimated the operating profits at 7.5% as against the weighted average of net operating profit at 2.53% as per the global accounts. We are not inclined to accept this mode of computation resorted by AO, particularly in view of Rule 10 of the IT Rules, which mandates the AO to go by the published accounts of assessee. CIT(DR) has very rightly pointed out that all the sums paid for market support service are for pre sale activities and, therefore, for post sale activities performed by ZTE India, which surfaced on account of survey operations, profits have to be attributed. The AO in his findings for AY 2009-10, as reproduced earlier, very rightly pointed out that the functions performed in respect of transactions on account of supply of equipments and handsets with customers in India were not the subject matter of TP analysis before the TPO. Since all the functions were not the part of TP study, the assessee's contention that if a correct arm's length is applied then nothing further will be left to be taxed in the hands of foreign enterprise in light of the decision in the case of Morgan Stanley (2007 (7) TMI 201 - SUPREME Court ), cannot be accepted because in that decision itself Hon'ble Supreme Court has, inter alia, observed that if the TP analysis does not adequately respect the functions performed and risk assumed by the enterprise then in such a case there would be need to attribute profit to the PE for those functions/ risks that have not been considered.- Decided in favour of assessee Income from supply of software - business income instead of royalty - Held that:- This issue stands settled by the Hon'ble Delhi High Court in the cases of DIT v. Ericsson AB (2011 (12) TMI 91 - Delhi High Court) Receipts on account of supply of software were integrally connected to the supply of hardware and, therefore, AO was not right in taxing such receipts as royalty. In view of the decision of Hon'ble Delhi High Court in the case of DIT v. Nokia India (2012 (9) TMI 409 - DELHI HIGH COURT), software supplies could not be taxed even under the amended law. Further, as per the provisions of Article 12(5) of the DTAA the supply of software being integral to the supply of hardware and the finding of existence of a PE of assessee in India, Article 12(5) of the DTAA would cease to apply and the provision of Article 7 would be applicable and, therefore, the income from software is to be taxed as business income.- Decided in favour of assessee Levy of interest u/s 234B - Held that:- We find that the facts are almost identical to the facts as obtaining in the case of GE Packaged Power Inc. (2015 (1) TMI 1168 - DELHI HIGH COURT ) which is the latest decision of Hon'ble Jurisdictional High Court on this issue and, therefore, respectfully following the decision of Hon'ble Delhi High Court, we hold that assessee was not liable to pay interest u/s 234B.- Decided in favour of assessee

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• 2016 (6) TMI 328
  Capital gain - Transactions not regarded as transfer - succession of company - cost of acquisition of the company - indexation on the cost of acquisition - converting the Short Term Capital Loss into Long Term Capital Gain and taxing the same - Held that:- The firm is succeeded by the company, therefore, the cost of acquisition of the company would be as that of acquisition of the firm. The valuation of land and assets of firm though valued by the valuer will not change or alter the cost of acquisition of the firm despite valuation of assets of the firm and would remain the same, and therefore the cost of acquisition of the company would be cost of acquisition of the firm. The firm is being succeeded by the company and the company is not buying or purchasing the assets of the firm. The element of sale and purchase of the assets of the firm were not involved in the case of succession of the firm to the company. In view thereof, we decide the issue against the assessee and held that the cost of acquisition of the company (assessee) would be the cost of acquisition of the firm (M/s. Sarju Cold Storage). Therefore, the assessee would only be entitled to the indexation on the cost of acquisition of the firm on the amount of Rs. 2,50,000/-. The argument of the assessee that the AO has wrongly calculated the cost of acquisition of the assessee u/s 49(1)(iii)(a), in our view, is not correct as both the AO and ld. CIT (A) have applied the cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm. The assessee, in our view, has wrongly got confused with the principles laid down under section 47 which talks about the transaction which are not regarded as transfer, with that of principles for determining of cost of acquisition under section 49. Section 49(1)(iii)(e) was introduced by the Finance Act, 2012 with effect from 1.4.1999. The said section, in our view, is only clarificatory in nature and has specifically provided the cost of acquisition in case of succession of firm to the company. However, the said cost of acquisition was already in existence under section 49(1)(iii)(a) of the IT Act. Therefore, in our view no fresh charge has been created on account of succession of a firm to the company. It has only clarified the existing basis of calculating the cost of acquisition in case of succession of the firm to the company. - Decided against assesssee Levy of interest under section 234B - Held that:- Since we have dismissed the ground of the assessee relating to cost of acquisition on the basis of principles stated herein above i.e. cost of acquisition of the firm, therefore, levy of interest u/s 234B is rightly confirmed by the ld. CIT (A). - Decided against assesssee

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• 2016 (6) TMI 327
  Deemed dividend u/s. 2(22)(e) - Held that:- In the present case, the assessee is holding 10,99,300 shares in M/s. Mega Resources Ltd as per register produced by the assessee before the lower authorities. This fact was examined by the Tribunal in the above case. When the assessee is holding the shares as indicated above, which comes to less than 10% of total equity shares of M/s. Mega Resources Ltd., the reasoning of the AO as it is noticed from the assessment order that both the assessee and M/s. Mega Resources Ltd are closely holding shares belonging to same to avoid the tax. But, no contrary evidence brought on record against to the assessee’s claim. In the light of the observations made by the Tribunal in assessee’s own case and also following the principle laid down by the Special Bench, ITAT, Mumbai in the case of Bhaumik Color P.Ltd (2008 (11) TMI 273 - ITAT BOMBAY-E ), we are of the view that the CIT was not justified in confirming the order of the AO in making additions. - Decided in favour of assessee TDS u/s 194A - Addition made u/s. 40(a)(ia) - interest paid to a party without deducting TDS - Held that:- Considering the case of the assessee that the interest paid to M/s Methoni Tea Ltd on unsecured loan and debited to the P/L account and did not deduct the tax U/Sec 194A of the Act, we hold that the assessee cannot be a defaulter in view of the first proviso to section 201(1) r/w second proviso to section 40(a)(ia) of the Act. The second proviso to Section 40(a)(ia) is declaratory and curative in nature having retrospective effect from 01-04-2005 and the case on hand being for A.Y 2005-06, in our view, the matter shall go back to AO. Therefore, we remand ground no. 3 to AO for examination and for verification of the required details of the resident i.e M/s Methoni Tea Ltd and direct the assessee to cooperate in completing the assessment.- Decided in favour of assessee for statistical purposes.

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• 2016 (6) TMI 326
  Long term capital gain - dis allowance of cost of acquisition of proportionate land area sold during the year and cost of improvement incurred to the proportionate sale of flats - Held that:- The main issue is, the assessee had built the five flats, two flats were sold during the current AY, two flats were sold in the subsequent AY and retained one flat for self occupation. AO, based on the statement of joint developer, treated the whole building as complete and ready for sale whereas the assessee controverted and submitted that only two flats were completed and sold. The balance flats were not completed, only the super structure of the building was completed with the interior work like flooring of tiles, kitchen and plastering etc. were not completed. AO has relied only on the statement of the joint developer and has not brought anything on record to prove that the building was completed in AY 2007-08 itself. Hence, we have no option but to rely on the submissions of the assessee.- Decided against revenue Determination of sources of funds to the above investment in the building for construction of the flats up to the end of the financial year 31/03/2007 - Held that:- We find that the assessee has made investment in the building to the extent of cost involved. The assessee had sufficient funds to finance the investment in the building. There may be mismatch on the micro level but at the outset, it is established that the assessee had sufficient funds to make the investment. - Decided against revenue

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• 2016 (6) TMI 325
  Addition under section 69 of the Act on account of deposits in the bank accounts - Held that:- The assessee has failed to appear before us though several opportunities have been given. In the absence of any explanation filed by the assessee and in the absence of assessee having produced the books of account to substantiate his claim, we find no merit in the stand of assessee in this regard. The onus was upon the assessee to produce his witnesses and establish the sources of amount in two savings bank accounts with HDFC Bank and other documents, which the assessee has failed to do so. - Decided against assessee Addition under section 69 - deposit in the bank account was out of business of his spouse - Held that:- We take note of the claim of assessee that his wife was running a sample collection centre at Tawade Hotel . Undoubtedly, the wife of assessee appeared during the course of assessment proceedings and confirmed that she was running the said business, but when she was asked to substantiate her claim, she failed to do so. The said witness is that of assessee and the onus was upon the assessee to prove the veracity of statement by her. The report which was submitted by the Inspector of Income Tax Department was vis-à-vis fact of collection of samples near Tawade Hotel, where the employee said that it was a collection centre of M/s. Vedant Path lab. In view of the assessee having not discharged his onus, we find no merit in the claim of assessee and addition of Rs. 4,15,411/- is upheld.- Decided against assessee Undisclosed investment - Held that:- The assessee first claimed that it had received Rs. 13 lakhs from his father, which was cash available with him. However, no evidence of the source of cash was produced nor the father was produced for verification. Since the claim was made by the assessee, the onus was upon the assessee to produce his father vis-à-vis investment in the land totaling Rs. 5,93,610/- also. The assessee claimed that it was purchased by his father and was part of HUF. However, the assessee failed to produce and fi le the source of said investment and merely stating that it belongs to the HUF does not absolve the assessee of his duty, where the asset stands in his name. In the absence of assessee having discharged his duty, we find no merit in the claim of assessee and the same is rejected. - Decided against assessee Adhoc disallowance of expenditure - Held that:- Assessing Officer noted that the assessee in his Profit & Loss Account has claimed various expenses, against which it had neither produced books of account nor any bills or vouchers to establish that the claim was for business purpose. Accordingly, a n adhoc disallowance of Rs. 50,000/- was made out of total expenditure claimed by the assessee. The assessee failed to furnish any information before the Assessing Officer or CIT(A) or even before us vis-à-vis expenditure claimed under various heads and in the absence of same, we find no merit in the ground of appeal raised by assessee.

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• 2016 (6) TMI 324
  TDS u/s 194C - payments on account of transportation expenses to the seven transporters w/o deduction on TDS - Held that:- We find that this issue is covered by the decision of coordinate Bench of the Tribunal in the case of ITO vs. Bhadreh Yarh Traders [2014 (1) TMI 864 - ITAT AHMEDABAD] wherein the Tribunal has decided the issue in favour of the assessee. Addition on account of household expenses - Held that:- Looking to the cost inflation raised now a days for kitchen/domestic items, school fees for two children, book, copies and other incidental charges, clothing, social obligations/festivals etc., we are of the view that the ld. CIT (A) was fair enough to confirm the estimation of household expenses made by the AO. We, therefore, confirm the order of ld. CIT (A). - Decided against assessee Disallowances on account of Telephone/Mobile expenses - Held that:- The assessee has not maintained any details for usage of telephone/mobile. Therefore, personal use of telephone cannot be ruled out. It will be reasonable to make disallowance @ 10% of the expenses. We therefore restrict the disallowance to Rs. 2833/- - Decided partly in favour of assessee Disallowance on account of shop expenses - Held that:- Looking to the facts and nature of business of the assessee, we do not find it reasonable to make disallowance of this petty amount of Rs. 5124/- on account of shop expenses. We, therefore delete the addition. - Decided in favour of the assessee. Disallowance out of Vehicle expenses/depreciation on vehicles - Held that:- Since the assessee has not maintained log book/details in maintenance of these vehicles, therefore, personal use of the vehicles/car cannot be ruled out. Therefore, we are of the view that it will be reasonable to restrict the disallowance @ 10% which comes to Rs. 17,358/-. Assessee will get relief of balance amount.- Decided partly in favour of assessee

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• Customs

• 2016 (6) TMI 351
  Seeking unconditional release of absolutely confiscated goods - Seizure of goods not having been declared in the bill of entry - attempted to clear the undeclared goods by way of concealment at the rear portion of the container - Non-issuance of SCN to the petitioner within six months from the date of actual detention or atleast the date of examination and sealing of the goods - Section 110 (2) of the Customs Act, 1962. Held that:- the goods were seized under the mahazar dated 03.12.2013 and the time was extended by the Commissioner of Customs till 03.12.2014, for the issuance of show cause notice. Therefore, it cannot be said that the extension of time by the authority is against the provisions of the Customs Act. The respondents rightly contended that without exhausting the appeal remedy provided under sections 128 and 129A of the Customs Act, 1962, the petitioner has approached this court by way of writ petitions challenging the impugned orders. When specific provisions are available to the petitioner for filing an appeal against the impugned orders under sections 128 and 129A of the Customs Act, 1962, without exhausting the alternative remedy, the petitioner cannot approach this court by way of writ petitions. It could be seen that opportunity of personal hearing was also given to the petitioner before passing the impugned orders. Therefore, when there is no violation of principles of natural justice and when an alternative remedy by way of appeal is available to the petitioner, the writ petitions cannot be entertained. In these circumstances, it is open to the petitioner to challenge the impugned orders by way of an appeal before the Commissioner (Appeals), in accordance with law. - Petition dismissed

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• 2016 (6) TMI 350
  Seeking direction for unconditional release of goods imported - seized under panchnama - Non-issuance of SCN to the petitioner till date rather it should have been issued within six months from the date of seizure of goods - Section 110 (2) of the Customs Act, 1962 - Held that:- in view of the various decisions various Courts, the action of the Department in continuing to retain the seized goods of the Petitioner, in respect of which the Petitioner has paid customs duty as assessed, without issuing a SCN within the mandatory time limit in terms of Section 110 (2) of the CA, is unlawful. The Court accordingly directs that the goods seized shall be released unconditionally to the Petitioner immediately and in any event not later than two weeks from today. However, this will not preclude the Department from proceeding to take any further action as permissible to it in law including proceeding against the Petitioner under Section 124 of the CA. - Petition disposed of

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• 2016 (6) TMI 349
  Seeking unconditional release of imported goods - Section 110 (2) of the Customs Act, 1962 - Import of LED Spare Parts for lighting fixtures, Spare Parts for lighting fixtures and Capacitor for lighting fixtures from China - Detention of goods - Non-issuance of SCN to the petitioner till this date rather it should have been issued within six months from 15.04.2015 (i.e.) on or before 15.10.2015 as per Section 124(a). Held that:- when no action is initiated by way of issuance of show cause notice under Section 124(a) of the Act within six months or extended period stipulated under Section 110(2) of the Act, the person from whose possession the goods were seized, becomes entitled to their return. The remedy of provisional release is independent of remedy of claiming unconditional release in the absence of issuance of any valid show cause notice during the period of limitation or extended limitation prescribed under Section 110(2) of the Act. Therefore, merely because a request has been made for provisional release of goods under Section 110-A of the Customs Act and the same has been acceded to by the respondent, the same would not take away the right of the petitioner for unconditional release of the goods under Section 110(2) of the Customs Act. The right under Section 110(2) of the Customs Act is absolute and cannot be curtailed or prevented by the Department. That apart, the Circular issued by the Ministry of Finance dated 19.02.2013 also supports the case of the petitioner. Hence, the petitioner is entitled to get release of the goods unconditionally. - Decided in favour of petitioner

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• 2016 (6) TMI 348
  Period of limitation - Revokation of Customs Broker licence and forfeiture of bank guarantee - Illegal import by M/s NGR International - SCN was issued beyond the period of 90 days from the date of receipt of offence report by the Respondent - Held that:- it appears that an enquiry report dated 4th March 2015 was forwarded by the Inquiry Officer only on 10th March 2015 which was 13 months after the suspension of the licence. It is thereafter that the impugned order dated 1st June, 2015 was passed after affording the Petitioner an opportunity of being heard. Hence, there has been a violation of the time limits set out in Regulation 20 of the CBLR (corresponding to Regulation 22 of the CHALR). Recently this Court in the case of HLPL Global Logistics Pvt. Ltd. v. The Commissioner of Customs (General) [2016 (5) TMI 1238 - DELHI HIGH COURT] had reiterated that the time limits in Regulation 20 of the CBLR/Regulation 22 of the CHALR are sacrosanct. In the present case, the SCN under the CHALR/CBLR was issued only on 9th December 2013, i.e., beyond the mandatory period of 90 days from the date of receipt of the offence report by the Respondent, i.e., 31st January, 2013. Consequently, all proceedings pursuant thereto are held to be invalid. Further, even the enquiry report was not submitted within a period of 90 days of the issuance of the SCN. Therefore, the impugned order is set aside by revoking the licence of the petitioner. - Decided in favour of petitioner

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• 2016 (6) TMI 347
  Revokation of Custom Broker licence - Importation of components of DVD players using various IECs at highly undervalued price - Revenue submitted that notwithstanding the fact that the SCN was not issued within 90 days of the receipt of the offence report as mandated by the Regulation 20 (1) of the CBLR 2013, the period during which the suspension of the CB licence was operational and the time taken in forwarding the DRI's report to the New Delhi Commissionerate should be excluded for the purpose of computation of the period of limitation. Held that:- the Court is unable to agree with the above submission. As already held by this Court in several orders including the recent order of this Court in the case of HLPL Global Logistics Pvt. Ltd. v. The Commissioner of Customs (General) [2016 (5) TMI 1238 - DELHI HIGH COURT], the time limit specified in Regulation 20(1) of the CBLR 2013 is sacrosanct, i.e., the SCN had to be issued to the Petitioner within ninety days from the date of the receipt of the offence report. It is plain that the SCN was issued for the purpose of revocation of the CB licence of the Respondent and was not issued within 90 days of the date of receipt of the offence report which admittedly in this case is 7th October 2013. The question of exclusion of the period during which the suspension of the licence continued is not contemplated in Regulation 20 (1) of the CBLR 2013. If there are no grounds for revocation of licence then obviously the suspension cannot be maintained. Consequently, there is no legal infirmity in the impugned order of the CESTAT which calls for interference. - Decided against the revenue

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• 2016 (6) TMI 346
  Availability of benefit of duty drawback - Export of final product - Importer utilises DEPB scrip for the purpose of customs duty on inputs and raw materials - Held that:- in exercise of powers under section(2) of section 75, the Drawback Rules of 1995 have been framed. In terms of rule 3 of the said Rules of 1995, drawback is allowed on export of goods at such rates as may be determined by the Central Government. Under further proviso to rule 3 however, such drawback would not be available in various categories specified therein. None of these categories include the payment of customs duty on the goods through DEPB scrip. In other words, rule 3 does not prohibit a claim of drawback as per the specified rates if the duty on the imported goods is not paid in cash but by surrendering credit in the DEPB scrip. Thus neither section 75 of the Customs Act, nor rule 3 of the Rules of 1995, provide any restriction on claim of drawback, if the basic duty of customs is paid through DEPB. - Decided in favour of petitioner

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• 2016 (6) TMI 345
  Seeking direction to decide appeal without any further delay - Refund claim - amount appropriated against dues in terms of Detention Notice which are subject matter of appeals before the Commissioner of Customs (Appeals), Kandla and before the CESTAT at Ahmedabad - Held that:- merely because the existing position of law is adverse to the revenue, the matter cannot be kept in abeyance till the outcome of some other decision on a similar question of law. In the present case, the appeal preferred by the petitioner relates to the order-in-original passed by the Assistant Commissioner (Refund) and has no relation to the proceedings which are referred to in the affidavit-in-reply filed by the respondents as a ground for not deciding the present appeal. Under the circumstances, merely because of the pendency of such proceedings, the third respondent is not justified in not deciding the appeal preferred by the petitioner. The third respondent is also not justified in transferring the appeal against the Order-in-Original dated 30.05.2013 to the Call Book, despite the fact that it does not fall under any of the categories enumerated in the above circular, and keeping the matter pending for years together causing immense prejudice to the petitioner. Hence, the third respondent is directed to forthwith decide the Appeal without any further delay and not later than three months from the date of receipt of a copy of this judgment, after affording a reasonable opportunity of hearing to the petitioner. - Decided in favour of petitioner

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• FEMA

• 2016 (6) TMI 341
  Offence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act - Held that:- The tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law. Thus we allow the appeals, set aside the judgments and order passed by the High Court as well as by the learned Additional Sessions Judge and direct that the order passed by the learned Magistrate discharging the accused persons shall stand restored.

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• Service Tax

• 2016 (6) TMI 367
  Repair and Maintenance Service - liability of the agent or principal - leasing of Govt. land and consideration received towards Maintenance Charges and Street Light Charges - Demand of Service tax alongwith interest - Held that:- there is no doubt that the service was provided by the appellant in relation to maintenance or repair of immovable property in terms of the written agreement ('lease deed') and therefore is covered under Section 65(64) ibid both prior to 01.05.2006 and with effect therefrom. Thus, the service rendered by the appellant is squarely covered in the definition and we, therefore hold that the activities carried out by the appellant are taxable under MMR (or MR) service [Section 65 (64) ibid]. The charges collected by the appellant are on account of the said taxable service provided by it and therefore constitute consideration for taxable service. Once the taxable service is being provided against a consideration, service tax becomes payable. Thus the liability to pay service tax is either on the assessee himself or the agent of assessee. In the present case, the appellant is a company incorporated under Companies Act, 1956 and acted as agent on behalf of the Chhattisgarh Govt. which authorised it to lease out land to prospective entrepreneurs for setting up industry, etc. and to provide various services on behalf of State Govt. and it accordingly is covered under the definition of assessee. Invokation of extended period of limitation - Imposition of penalty - Section 76 & 78 of the Finance Act, 1994 - Wilful mis-statement of facts - Held that:- mere non-disclosure of the facts to the department can sustain the said allegation. In view of various case laws, the extended period of limitation is not invocable in the present case, which renders (part of) the demand pertaining to the 'extended' period beyond the normal period time-barred and penalty under Section 78 ibid non-imposable. The adjudicating authority has clearly held that penalty under Sections 76 and 78 ibid are imposable but penalty under Section 76 is not imposed as penalty under section 78 is imposed. As a corollary it follows that if penalty under section 78 ibid is not found imposable, penalty under section 76 would spring bad to life. However, we also note that the adjudicating authority waived the penalty prescribed under Section 76 ibid under Section 80 of Finance Act, 1994 by invoking extended period of limitation. - Decided partly in favour of appellant

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• 2016 (6) TMI 366
  Business Auxiliary Services rendered to various contracted CBU's - Whether or not the appellant have provided taxable services to the bottling units - Contract between appellant and various distilleries - Held that:- in terms of the agreement the contract bottling units are actually manufacturing the branded liquor as job workers for the appellant for which they are getting fixed amount as per the rate approved in terms of the said agreement. The CBU has no freedom of marketing the manufactured products. The sale and distribution of manufactured product is in control of the appellants. Full sale proceeds are received by the appellants and the CBUs are paid amount as per the pre fixed rates. It is relevant to note here that after the amendment carried out w.e.f. 01.10.2009 in the definition of Business Auxiliary Services the CBUs are paying service tax under the said category. This will shows that it is the CBUs who are providing services to appellant not the other way around. It cannot be said that the appellants are promoting the business of bottlers. Therefore, by considering the applicability of Boards circular dated 27.10.2008, the various decided case and also the tax liability on CBUs introduced with effect from 01.09.2009 under Business Auxiliary Services category, it is clear that the impugned order is not sustainable and is set aside. - Decided in favour of appellant

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• 2016 (6) TMI 365
  Rectification of mistake - Tribunal in its finding recorded that no benefit of payment of 25% of penalty was extended to the appellant but it was extended by the corrigendum issued by the Commissioner - Held that:- it is found that while disposing the appeal, the duty amount was reduced and the matter was remanded for redetermination of penalty accordingly. Therefore, after redetermination of penalty, the appellants would be eligible to the benefit of payment of 25% penalty on fulfilment of the conditions mentioned under the relevant provisions. Thus, in our view, there is no mistake apparent on the face of record. - ROM dismissed

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• 2016 (6) TMI 364
  Period of limitation - Appellant did not received the order and came to know about the same when Revenue approached them for recovery of dues - Appeal filed within period of limitation from date of receipt of order - Held that:- the examination of the dispatch register as produced before us which shows incomplete address of the consignee as also the fact that the valued stamp fixed on the same was only Rs. 12/-. It would negate the Revenue s contention of the order having been sent either under speed post or registered AD. In the absence of any other documentary evidence that the order being sent either under speed post or registered AD, we agree with the learned Advocate that the date of the receipt of the order has to be taken as 26/4/2012, when the same was delivered by hand under the cover of letter dated 25/4/2012. If that be so, the appeal filed on 04/6/2012 is within the period of limitation. Impugned order is set aside. - Matter remanded back

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• 2016 (6) TMI 363
  Recovery of Refund erroneously sanctioned - liability of service tax under reverse charge mechanism for the period 16.11.1997-02.06.1998 under goods transport operator services. - Held that:- as the order passed by this Tribunal in the case of Commissioner of Central Excise, Jaipur Vs Mangalam Cement Ltd. [2007 (5) TMI 71 - CESTAT, NEW DELHI] has been set aside by the Hon’ble High Court of Rajasthan reported in [2015 (2) TMI 1111 - RAJASTHAN HIGH COURT], in that circumstances, the impugned order have no legs to stand. Therefore, we hold that the refund claim sanctioned to the appellant by Ld. Commissioner (A) was correct and the proceedings initiated against the appellant by way of show cause notice become non est. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 362
  Self Adjustment of excess service tax paid with the service tax liabilities for subsequent period - Service tax amount paid at higher rate for the service tax liabilities - Held that:- it is found that Rule 6(3) of the Service Tax Rules clearly provides for such adjustment. Therefore, the impugned order is set aside. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 361
  Dismissal of appeal - failure to make pre-deposit of Rs. 5 lakhs as per the order of Commissioner (Appeals) - CESTAT declined to interfere - Appellant on subsequent to the dismissal of appeal deposited a sum of Rs. 2 lakhs as pre-deposit and prayed to take it sufficient for a pre-deposit amount for the appeal to be heard on merits - Held that:- this court set asides the impugned order of the CESTAT as well as the order of the Commissioner (Appeals). The sum of Rs. 2 lakhs deposited by the Appellant shall be treated as being in compliance of the pre-deposit order of Commissioner (Appeals), which will stand modified to that extent. Resultantly, the Appellant’s appeal before the Commissioner (Appeals), Delhi-II shall stand restored to the file and be now disposed of on merits in accordance with law. - Appeal disposed of

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• Central Excise

• 2016 (6) TMI 359
  Imposition of penalty by the Settlement Commission - Job work activity undertaken by the Petitioner - Paying service tax for the said period - department took the stand that the job work activity undertaken by the Petitioner amounts to manufacture and not service and that the Petitioner was required to pay excise duty - Held that:- there was no justification for the Settlement Commission to have imposed a penalty of Rs. 30,000 on the Petitioneras per advice of Service Tax Department. The Petitioner acted bona fide on the advice of the Service Tax Department and initially got itself registered with the said Department. Later, again on the insistence of the Excise Department, the Petitioner got registered under the CE Act. There was no attempt by the Petitioner to deliberately evade payment of tax. Accordingly, the penalty imposed by Settlement Commission is set aside. The said penalty amount, which has been adjusted against the penalty already paid by the Petitioner, shall be refunded to the Petitioner within one month from today. - Petition disposed of

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• 2016 (6) TMI 358
  Seeking revival of appeals - tribunal dismissed the revenue appeal for requirement of approval/clearance of the Committee on Disputes (COD) - Now as per decision of Supreme Court in the case of Electronics Corporation of India Limited v. Union of India and others [2011 (2) TMI 3 - Supreme Court], the approval/clearance is no longer required - COD had not taken any decision either for granting or rejecting the application. Held that:- while it is true that there is a considerable delay in filing the present applications, in the opinion of this court, the reasons put forth by the applicant in the affidavit-in-rejoinder for the delay caused in filing the applications, are plausible and acceptable. In the present case, strictly speaking, the question of invoking the bar of limitation would not arise, inasmuch as, the appeals had been disposed of with liberty to the applicant to move for revival once the approval of the COD was obtained. However, for the reasons set out hereinabove, the COD does not appear to have decided the applications filed by the applicant and now in the light of the decision of the Supreme Court in the case of Electronics Corporation of India Limited v. Union of India (supra), such requirement is no longer necessary. Insofar as the applicant is concerned, it was only when a similar appeal came up for hearing before the Tribunal and the Tribunal followed the earlier decisions which were subject matter of challenge in the captioned appeals, that it came to the notice of the concerned officer that the present appeals are required to be revived and accordingly, the present applications for revival came to be moved before this court. Considering the overall facts of the case and the fact that huge amount of revenue is involved in the present appeals, as rightly submitted by the learned counsel for the applicant, the delay is required to be condoned, more particularly because huge amount of public money is involved. - Decided in favour of applicant

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• 2016 (6) TMI 357
  Eligibility of Rebate claim - adjudicating authority is not deciding the matter since the SCN is still pending adjudication - Held that:- having regard to the nature of the directions issued by the revisional authority in its order, no fault can be found in the approach adopted by the second respondent in not deciding the rebate claim till the investigation by DGCEI is concluded and the CCE, Vapi decides the adjudication pending before him. However, the rebate claims of the petitioners which are filed way back in the year 2011 cannot be kept pending till the outcome of other proceedings. Each case has to be decided on the basis of the law and facts as prevailing at the relevant time. The claim cannot be kept pending indefinitely to await the decision in some other matter. While the order of the revisional authority, to the extent the case is remanded for verification is concerned, the same cannot be faulted with. But further verification could not have been contingent upon the outcome of the other proceedings, namely, the investigation by the DGCEI and the final decision in the classification matter by common adjudicator CCE, Vapi, more so, in the light of the submissions advanced by the petitioners that the revenue has taken two contrary stands as regards classification of the product of Unicorn Industries. In the opinion of this court, when a case comes up before a quasi-judicial authority, it is bound to decide the same in accordance with law as per the situation as prevailing at the relevant time. An adjudicating authority cannot keep a matter in abeyance indefinitely to await the outcome of one proceeding after another. Period of limitation - Impugned order barred by limitation, estoppel and acquiescence - Held that:- considering the approach of the DGCEI in not concluding the investigation for a considerable period of time and the conduct of the CCE, Vapi in sending the matter to the Call Book to await the decision of the Supreme Court in the SLP filed by the Supreme Court, no fault can be found in the conduct of the petitioner in waiting for a reasonable time for the remanded proceedings to be concluded and then challenging the same in the light of the above facts. For this reason, the above contention does not merit acceptance. - Decided in favour of petitioner

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• 2016 (6) TMI 356
  Seeking cancellation of bail - Offence punishable under Section 9 of the Central Excise Act, 1944 - Evasion of duty - Serious economic offence - Held that:- no infirmity found in the observations made by the Sessions Judge in applying the principle of prospectivity in the matter of interpretation of an amendment. Even if for the sake of arguments, it is presumed that the offence qua the respondent is non-bailable and cognizable, there is no bar for a Court to grant concession of bail in non-cognizable offence, as per the provisions of sub-sections (1) or (2) of Section 437 Cr.P.C. There does not appear to be any reason to interfere in the order passed by the Sessions Court. There does not appear to be any requirement to adjudicate on the question raised by the petitioner that offence under Section 9 of the Act should be held non-bailable and cognizable with retrospective effect with an objective to maintain stringency of grant of bails in offences under the Excise Act. The power to exercise discretion in non- bailable offences is guided by the provisions of law and a Judicial Officer is required to objectively consider the circumstances to consider whether the discretion of bail is to be exercised in non-bailable offence in a particular case or not. - Decided against the Revenue

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• 2016 (6) TMI 355
  Imposition of penalty - Rule 26 of the Central Excise Rules, 2002 - Benefit of Notification No.08/2003-CE dated 1 March 2003 - Held that:- the order was assailed by the Department in Central Excise Appeal, Commissioner of Central Excise, Agra Vs. M/s Capston Rubber (India), which has been dismissed by us by order of date. Thus, no penalty could have been imposed upon a partner of M/s Capston Rubber (India). - Decided against the revenue

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• 2016 (6) TMI 354
  Whether the bar imposed under Rule 57G(5) of the Central Excise Rules, 1944 for availment of credit within a period of six months would be applicable in relation to deemed credit availed under Rule 57G(5) and Notification No.29/96 issued thereunder - Held that:- Rule 57G(5) of the rules provides for a period of limitation of six months from the date of issue of any document specified in sub-rule (3) thereof for the purpose of taking credit. Adverting to Notification No.29/96, it may be noted that the same specifically provides that credit of the declared duty deemed to have been paid shall be allowed to the manufacturer of final products, without production of documents evidencing payment of duty on the said inputs at the time of clearance of final products. Thus, under the scheme of the notification, deemed credit can be availed of without production of documents evidencing payment of duty on the inputs. Thus, for the purpose of applicability of sub-rule (5) of rule 57G, the limitation would commence from the date of issuance of the documents specified in sub-rule (3) thereof, whereas, insofar as the availment of deemed credit under Notification No.29/96 is concerned, provision is made for availing the same without any document evidencing payment of duty on the inputs. Under the circumstances, in the absence of any documents specified in sub-rule (3) of rule 57G of the rules being available for the purpose of availment of deemed credit, the limitation would not commence to run insofar as the deemed credit is concerned. Consequently, it would not be possible to apply sub-rule (5) of rule 57G of the rules to the facts of the present case. Sub-rule (5) of Rule 57G of the rules postulates that credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) thereof and where intermediate products manufactured by the user of inputs specified under rule 57 are received by the manufacturer, after nine months. But neither sub-rule (5) of rule 57A of the rules under which Notification No.29/96 has been issued provides for any limitation for availment of the benefit under the notification, nor does Notification No.29/96 provide for any such limitation. However, merely because rule 57A(5) or Notification 29/96 do not provide for a limitation for availing of the benefit of deemed credit, the limitation under rule 57G(5) of the rules cannot be read into the scheme of rule 57A(5). Therefore, the Tribunal, in the impugned order, has rightly held that rule 57G of the rules would not be applicable to the facts of the present case. - Decided against the Revenue

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• 2016 (6) TMI 353
  Claim for refund of Cenvat credit of Additional Duties of Excise [Textiles and Textile Articles] - AED [T&TA] rejected - eligibility of the appellant for refund of AED [T&TA] lying in their Cenvat account from the date of exemption notification - applicability of time limit for the claim under Rule 5 - Held that:- The amount of Rs. 22,54,910/- taken credit in November 2010 the books resulting in their eligibility to claim for which the claim is filed on 18/5/2011 cannot be considered as hit by time bar. The said claim is within one year, which is a general time limit, from the date of credit. The consideration that the claim should have been filed within one year of export is not applicable to the present case as the amount was claimed as rebate initially well within time. Regarding the remaining amount of the claim for which also the present refund claim relates, it is seen that the claim filed on 18/5/2011 cannot be extended to cover a credit available in the books of appellant on 09/7/2004. Even if it is considered that no specific time limit is prescribed for refund claim under Rule 5 in terms of Section 11B, the present claim for this amount after a period of more than six years cannot be covered even applying the provisions of General Clauses Act, 1897. We find that the appellant is, in principle, eligible for refund of AED [T&TA] under Rule 5 of Cenvat Credit Rules, 2004. However, considering the facts of the case and the applicability of time limit for such claim, as discussed above, the claim shall be restricted to the AED [T&TA] re-entered in the Cenvat credit account by the appellant in November 2010 and falling under the eligibility under Rule 5. As such the matter has to go back to the Original Authority to examine and quantify the eligible amount of refund in terms of above finding

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• 2016 (6) TMI 352
  Demand of duty and imposition of penalty - Section 11AC of the Central Excise Act, 1944 - Texturised Yarn - Clandestine removal of goods - 100% EOU - Non-fulfillment of obligation of export of finished goods and the goods have been cleared without permission of the competent authority - Appellant submitted that even if it is held that finished goods were removed by the assessee without requisite permission from the Development Commissioner, central excise duty is leviable in terms of Section 3(1) of the Act. Held that:- on a careful scrutiny of the authority in CCE v. NCC Blue Water Products Ltd. [2010 (9) TMI 13 - Supreme Court of India], we are of the considered opinion that it concurs with the view expressed in SIV Industries Ltd. v. CCE & Customs [2000 (3) TMI 162 - SUPREME COURT OF INDIA]. The circular dated 05.01.2004 came into existence after the Larger Bench decision in Himalaya International Ltd. v. Commissioner of C.Ex. Chandigarh [2003 (5) TMI 79 - CEGAT, NEW DELHI]. There was no justification for distinguishing the decision in SIV Industries Ltd. (supra). The Technical Member who authored the judgment after the decision in NCC Blue Water Products Ltd. (supra) was brought to the notice of the tribunal has absolutely improperly noted that the circular dated 05.01.2004 was not brought to the notice of this Court. The Court in NCC Blue Water Products Ltd. case had not based its conclusion on the basis of the circular dated 13.02.2002. It is clear as day that it has concurred with the ratio laid down in SIV Industries Ltd. (supra). It has been clearly opined that the expression “allowed to be sold in India” used in proviso to Section 3(1) of the Act would be applicable only to sales made in DTA of the production by 100% EOUs, which are allowed to be sold into India as per the provisions of the Exim Policy. The said authority has also made it clear that the circular issued in 2002 is in consonance with the authority in SIV Industries Ltd. (supra). Thus, the view expressed by NCC Blue Water Products Ltd. (supra) has given the stamp of approval to the circular. It is a binding precedent on all the courts and the tribunals under Article 141 of the Constitution of India. The Larger Bench of the Tribunal, as stated earlier, could not have distinguished the judgment in SIV Industries Ltd. (supra). The later circular issued on 05.01.2004 on which reliance was placed by the revenue before the tribunal which has been taken note of in the impugned judgment is clearly indicative of an erroneous approach. The decision in NCC Blue Water Products Ltd. (supra) was bound to be followed and the tribunal could not have stated that 2004 circular was not taken note of. The tribunal should have appropriately appreciated that this Court was interpreting the statutory provision and it is also worthy to note that after the judgment delivered in SIV Industries Ltd. (supra) an amendment was brought into the provision. Therefore, the transaction prior to the date of amendment would be governed by SIV Industries Ltd. (supra) which has been followed in NCC Blue Water Products Ltd. (supra). Be it clarified that we are not concerned with the amended provision in this case. Therefore, the judgment and order passed by the tribunal and that of the adjudicating authority are set aside. The assessee shall be liable to pay the excise duty as per Section 3(1) of the Act. The competent authority is directed to compute the duty accordingly and proceed thereafter as per law. - Decided in favour of appellant

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• CST, VAT & Sales Tax

• 2016 (6) TMI 344
  Computation of tax - as per operative portion of the order - Appeallant conceded that the matters are covered by the earlier decision of this Court in appellants own case - Held that:- as there is no dispute that the matters are covered by this court in the appellant's own case reported in [2016 (4) TMI 618 - KARNATAKA HIGH COURT], in our view, similar order can be passed. Hence, the impugned order passed by respondent-authority deserves to be set aside with a further direction that the revision/s shall stand restored to the file of Additional Commissioner of Commercial Taxes-respondent herein. Respondent shall consider the matter again in light of the observations made by this Court in the present order and after giving an opportunity of hearing to the appellant, appropriate order shall be passed in accordance with law as early as possible preferably within three months from the date of receipt of certified copy of this order. - Appeal allowed by way of remand

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• 2016 (6) TMI 343
  Final order passed during pendency of assessment order on the recommendation of higher authority in the earlier order - Escaped assessment order - Direction to pay 15% as if suppression is made - Amount increased without any notice to the petitioner - Held that:- by following the order of the Honourable Division Bench of this Court and the learned Single Judge of this Court this Court finds that when the authorities passed an order on the basis of the recommendation or the finding of a superior officer, the order passed without application of mind independently, is vitiated. Here, now the petitioner paid the tax to the tune of Rs. 10,00,000/- and the demand made by the bank account and further agreed to pay another sum of Rs. 5,00,000/-. In view of the same, this Court is of the view that the matter could be remitted back to the original authority for fresh consideration and the original authority shall pass appropriate orders after giving a notice to the petitioner and will decide the matter independently de hors the decision of the appellate authority. Accordingly, the order impugned in the second writ petition is set aside. - Matter remitted back

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• 2016 (6) TMI 342
  Seeking acceptance of requisite declarations in Form F - Violation of principles of natural justice - while levying tax at the rate of 5% on the turnover of Rs. 53,99,88,582/-, the respondent had wrongly imposed at Rs. 7,69,99,429/- instead of correct amount of Rs. 2,69,99,429/- - patently a clerical and calculation error - Held that:- in the light of the order passed by this Court in the case of State of Tamil Nadu Versus Arulmurugan and Company [1982 (11) TMI 143 - MADRAS HIGH COURT], following the Full Bench's Judgment of this Court also the circular dated February 1, 2000 issued by the Commissioner of Commercial Taxes, Chennai, the impugned orders are set aside and respondents are directed to accept form "F" filed by the petitioner for the assessment year 2014-2015 and pass orders afresh in accordance with law. - Decided in favour of petitioner

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• Wealth tax

• 2016 (6) TMI 360
  Penalty on the assessee u/s 18(1)(c) of the Wealth Tax Act - Held that:- The show cause notice u/s. 18(2) of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the order imposing penalty has to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee

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• Indian Laws

• 2016 (6) TMI 340
  Offence of criminal conspiracy and the offences under the Prevention of Corruption Act - requirement of sanction under Section 197 Cr.P.C - charge under Section 120-B IPC and Sections 7, 12 contention regarding non-holding of preliminary enquiry by the CBI before registration of FIR; contention regarding the manner in which the raid was conducted; contention regarding absence of demand and acceptance of bribe by the petitioner; contention regarding the fact that the alleged conversation attributed no role to the petitioner; contention regarding statement of approver Pankaj Bajaj cannot be used against the petitioner; contention regarding missing chain of circumstances in the present case and the contention regarding the fact that despite having no evidence against the petitioner, the charges have been framed against him by the Trial Court culminates into non-interference in the order passed by the Trial Court as the disputed facts cannot be made the basis for quashing, the order on charge and the charge framed, in a petition under Section 482 Cr.P.C. as the same are subject matter of the Trial Court to be determined on the basis of evidence led by the parties.

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• 2016 (6) TMI 339
  E-auction - Power of the petitioner or its Recovery Officer to lift the corporate veil - maintainability of appeal - Held that:- Piercing of corporate veil, even if permitted to the petitioner / its Recovery Officer, has to be in public interest. It is of the view that it is not in the larger public interest to stall any further the auction scheduled for today by the respondent no.1 Bank.It cannot be lost sight of that the dues for recovery whereof the respondent no.1 Bank is proceeding to auction the properties aforesaid are also public dues and the said auction has been stalled at the instance of the petitioner for the last nearly five years. The petitioner even now has merely attached the properties and if were to proceed with the sale of the property, it may take another five years or so and of which there is no certainty also as of now. On the contrary, the respondent no.1 Bank is on the threshold of selling the property and realization of sale proceeds thereof. It is not deemed appropriate to at this stage interfere with such sale. The petitioner if aggrieved from the measures taken by the respondent no.1 Bank under the SARFAESI Act had the remedy available of approaching the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act and which the petitioner has again failed to do. It is a well settled principle that jurisdiction under Article 226 will not be exercised when an alternative efficacious remedy is available. Reference in the said regard can be made to the recent judgment of the Supreme Court in Joshi Technologies International Inc. Vs. Union of India (2015 (5) TMI 521 - SUPREME COURT ). Liberty is however given to the petitioner to, if is able to make out a case and if permitted in law, make a claim against the respondent no.1 Bank with respect to the sale proceeds of the aforesaid two properties. To the said extent, none of the observations contained in this order shall come in the way of the petitioner.

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