Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 12, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Rectification of mistake u/s 254 - when the Revenue or the Tribunal was modifying or substituting the method of valuation of closing stock of the assessee in a particular year as a necessary corollary, the same methodology would have to be applied for the purpose of computation of the opening stock for that year also. - HC
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Linking of Aadhaar with PAN - Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of section 139AA(2) - Those who still want to enrol are free to do so. - However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being. - SC
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Taxability of Interest earned on funds - belong to the assessee or not - amount / funds contributed by subsidiaries towards the shifting and rehabilitation fund - the assets generated from such money cannot be treated as assets of the assessee company - not taxable - AT
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Addition u/s 68 - if the depositor a partner or any other individual owns the entry then the burden of the assessee firm is discharged. It is immaterial whether credits in the name of partners are reflected in the partner’s capital account or current capital account. - AT
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Eligibility to relief u/s. 54 - disallowance on the ground that payment for purchase of new house property has not been made within one year from the date of transfer of original asset - where the cheques issued by the assessee before filing of ITR but encashed by the builder belatedly, there is no fault on the part of assessee - exemption allowed - AT
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Penalty imposed u/s 271B on the assessee is not justifiable as the audit report was to be uploaded by the Chartered Accountants who audited the books of account and the assessee was low educated and assessee had under bona fide belief that the same had been uploaded in the system developed by the Department - AT
Service Tax
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BSS - providing of storage tanks and other accessories - - The renting of immovable property or the supply of tangible goods as services liable to tax, appear to have direct relevance to the transactions now under examination - the present transactions which are sought to be taxed by the Revenue cannot be considered as covered by the scope of business support service during the material time. - AT
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Levy of service tax on job-work - N/N. 8/2005-ST is a conditional notification and its availment was not mandatory - the job workers were not obliged to avail the said exemption. - AT
Central Excise
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Valuation - installation charges - includibility - after manufacturing of goods, charges collected for installation at the customer's premises is not to be included in the value - AT
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Classification of Tooth Brush, inter-dental brushes - Once Tariff sub-heading 96032100 is mentioned with the description tooth brush, one cannot arrive at the conclusion that inter-dental brush or dental plate brush is not part of that entry or the said description, when dental-plate brush is also a kind of tooth brush - AT
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Classification of goods - The items in dispute are Battery Cages, Poultry Top/Bottom/Partition as poultry keeping machines to be classified under Chapter Heading 84369100 of CETA - AT
Case Laws:
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Income Tax
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2017 (6) TMI 478
Requirement of AADHAAR number in filing return of income and obtaining PAN - Failure to link Aadhaar with PAN - such person or class or classes of persons - constitutional validity of Section 139AA - Proviso to sub-section (2) of Section 139AA of the Act stipulates the consequences of failure to intimate the Aadhaar number. In those cases, PAN allotted to such persons would become invalid not only from July 01, 2017, but from its inception as the deeming provision in this proviso mentions that PAN would be invalid as if the person had not applied for allotment of PAN, i.e. from the very beginning. Sub-section (3), however, gives discretion to the Central Government to exempt such person or class or classes of persons or any State or part of any State from the requirement of quoting Aadhaar number in the application form for PAN or in the return of income. Held that:- Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act. Those who still want to enrol are free to do so. However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being. It is only to facilitate other transactions which are mentioned in Rule 114B of the Rules. Parliament was fully competent to enact Section 139AA of the Act and its authority to make this law was not diluted by the orders of this Court. There is no conflict between the provisions of Aadhaar Act and Section 139AA of the Income Tax Act inasmuch as when interpreted harmoniously, they operate in distinct fields. Section 139AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution. Section 139AA is also not violative of Article 19(1)(g) of the Constitution insofar as it mandates giving of Aadhaar enrollment number for applying PAN cards in the income tax returns or notified Aadhaar enrollment number to the designated authorities. Further, proviso to sub-section (2) thereof has to be read down to mean that it would operate only prospective. Regarding penal provisions - Held that:- One of the main objectives is to de-duplicate PAN cards and to bring a situation where one person is not having more than one PAN card or a person is not able to get PAN cards in assumed/fictitious names. In such a scenario, if those persons who violate Section 139AA of the Act without any consequence, the provision shall be rendered toothless. It is the prerogative of the Legislature to make penal provisions for violation of any law made by it. In the instant case, requirement of giving Aadhaar enrolment number to the designated authority or stating this number in the income tax returns is directly connected with the issue of duplicate/fake PANs.
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2017 (6) TMI 456
Revaluation of closing stock of the polished diamonds - addition to income - rectification application - as per assessee the Revenue as well as the Tribunal having discarded the assessee's method of valuing closing stock and substituted such methodology by another formula, same principle must apply for valuing the opening stock - Held that:- This was a case where the Revenue's contention about correct formula for valuing closing stock became final. If that be so, the same principles would apply also for valuing the opening stock. Only then the correct tax liability of the assessee could be ascertained. Merely decreasing the closing stock valuation by ₹ 66.90 lakhs, the Revenue cannot categorize it as the additional income of the assessee. In plain terms, same exercise would have to be undertaken for revaluing the opening stock and whatever the difference would reflect the true computation of the assessee's income for the year under consideration. when the Revenue or the Tribunal was modifying or substituting the method of valuation of closing stock of the assessee in a particular year as a necessary corollary, the same methodology would have to be applied for the purpose of computation of the opening stock for that year also. The issue being absolutely clear, perhaps the Tribunal on its own, could also have provided for it while disposing of the Tax Appeal itself whether specifically so argued by the assessee or not. When the assessee therefore applied for rectification at that stage, at least, the Tribunal could have accepted the request of the assessee. The Tribunal therefore, committed the serious error in rejecting the rectification application on the ground that no such argument was advanced at the time of hearing of the appeal. Thus impugned order of the Tribunal dated 09.02.2012 is set aside. Petitioner's request for rectification of the Tribunal's order dated 30.04.2008 is granted to the extent of directing that valuation of the opening stock of polished diamonds of the assessee for the assessment year 2003-04 shall be done on the same basis as the Assessing Officer has applied for the purpose of valuation of the closing stock of that year.
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2017 (6) TMI 455
Violation of the principles of nature justice - CIT-A accepting additional evidence - Held that:- In the over all facts and circumstances of the case, there is no violation of the principles of nature justice or fair play by the CIT (Appeals) in accepting the additional evidence in the form of the statement of one of the directors of the respondent-assessee. The CIT (Appeals) had given sufficient opportunity to the Assessing Officer confronting him with the said evidence and had given sufficient time to him to respond to the same, but the Assessing Officer failed to avail the opportunity so accorded to him. We answer the above substantial question of law in favour of the respondent-assessee and against department and hold that the CIT (Appeals) had not committed any error of law, in considering the statement of one of the directors of the respondent-assessee as recorded before him and that there was no violation of Rule 46-A of the Rules or of the principles of natural justice in accepting/relying upon the said statement as part of evidence.
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2017 (6) TMI 454
Disallowance of interest on loan - lesser rate of interest - income from other sources - Held that:- Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Limited (2009 (1) TMI 4 - BOMBAY HIGH COURT) wherein held that if there were funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments. In the instant case it is not in dispute that assessee was having her own interest free funds of ₹ 1,51,65,341/- which she advanced to her husband and which she is not supposed to charge any interest. The Revenue Authorities wrongly presumed that assessee should have charged interest on the entire amount of loan given to the husband irrespective of the fact that assessee was having her own interest free funds which was given without interest to her husband. Thus no merit for disallowance / addition to the income of the assessee under the head “Income from Other Sources”. - Decided in favour of assesse
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2017 (6) TMI 453
Addition on account unexplained perks u/s 17(2)(iii) - employee v/s directorship - unexplained expenditure incurred on foreign travels - as per AO assessee had undertaken foreign travel tour to UAE, Singapore etc. but could not furnish the reasons/ purpose - Held that:- Since the authorities below simply noted that assessee was a director in the aforesaid company therefore conditions of section 17 (2)(iii) would not apply in the case of assessee. Therefore, on this reason itself the addition of ₹ 5 lacs would be deleted. Assessee filed certificate and Board resolution of M/s. Design & Development India Pvt. Ltd. in which it is clarified that Board has sent the assessee to foreign trip for business purposes and all the expenditure are borne by the company. It is also certified that assessee was a non-employee director and share holder in the company and no salary or director’s fees was paid to her by the company during the year under consideration. These evidences on record clearly prove that assessee undertaken foreign visits for the purpose of business of company and is not a perquisite within the meaning of section 17(2)(iii) of the I.T. Act. Further the authorities below made addition of ₹ 3 lacs in respect of foreign visit undertaken by assessee on 1st July, 2011. Ld. Counsel for assessee referred to PB 62 which is certificate of foreign visit issued by the company to show that assessee has visited foreign country from 30th June, 2012 to 1st July, 2011. Therefore, this visit was already part of the foreign visit of the assessee. Therefore, no separate addition should have been made on estimate in a sum of ₹ 3 lacs. - Decided in favour of assessee.
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2017 (6) TMI 452
Penalty u/s 271(1) (b) - undisclosed bank account - assessments u/s 153A - Held that:- The assessee was subjected to such assessments u/s 153A in respect to alleged maintenance of un-disclosed HSBC, Switzerland Bank Account. The facts about the Bank Accounts and other circumstances are in the exclusive knowledge of the assessee and non co-operation leads to derailment of investigation. It is the duty of every assessee to duly respond to statutory notices failing which the law provides imposition of penalty u/s 271(1) (b) of ₹ 10,000/- each default. In this case, assessee’s non compliance of statutory notice is for more than 3 times in each A. Y. CIT(A) has properly taken note of all these relevant facts, legality of notices, nature of noncompliance and its adverse impact on investigations related to alleged undisclosed HSBC bank account. We find no infirmity in the order of Ld. CIT(A) confirming the imposition of penalty of ₹ 30,000/- each in above assessment years as defaults are more than 3 times. It has been rightly held that there is no law that for each default separate notice u/s 27(1)(b) should be issued on defaulting assessee. The orders of ld. CIT(A) being justified on proper appreciation of facts and law and based. In the result, assessee’s appeals are dismissed.
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2017 (6) TMI 451
Addition u/s 68 - genuineness of gift - eligibility of donor - occasion for gifting - Held that:- Since, the donor is an NRI, it may be practically impossible for him to travel to India for the recording of a statement and the assessee cannot be made to suffer on that account. The donor has referred in his affidavit to the help extended to the donor’s family in his childhood by the father of the donee as a reason for the gift but the Ld. CIT (A) has confirmed the addition on the footing that there was neither any occasion for the gift nor was there any quid pro quo on the part of the assessee- donee. This again, in our opinion, is not a cogent reason for disbelieving the assessee. Further, the department has not demonstrated with any cogent evidences as to how the contentions of the assessee were incorrect. Thus, it is our considered opinion, that on the facts of the case, the assessee had discharged his onus and the onus was on the department to demonstrate with ample evidence as to why the contentions of the assessee were to be disbelieved. Therefore we set aside the order of the Ld. CIT (Appeals) on this issue and direct the AO to delete the addition. - Decided in favour of assessee Disallowance of mould repairs and maintenance - Held that:- The assessee has produced copies of invoices/bills of the various amounts debited to the head ‘mould repair and maintenance’ and it is evident that most of the bills pertain to welding charges. The amounts paid towards welding charges range between ₹ 3000/- and ₹ 12,000/-. The assessee has also produced a copy of the ‘Moulds’ ledger account under fixed assets which shows purchase of ₹ 1,08,000/- against Bill No. 1264 on 15th of June 2004 which has been duly capitalised by the assessee. The assessee has also filed copies of assessment orders for assessment years 2013 – 14 and 2012 – 13 passed under section 143 (3) and has submitted that no such disallowance was made in these respective assessment years. Thus this addition also needs to be deleted as the assessee has been able to demonstrate that these expenses were essentially of revenue in nature and pertained to day to day repairs of the mould and not in the nature of capital expenditure as contended by the Department. - Decided in favour of assessee
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2017 (6) TMI 450
Penalty u/s 271(l)(c) - short disclosure of interest on Income tax refund - Held that:- Admittedly there is a mistake committed by the assessee in not adding interest on the refund to his sources of income. There is no disputing the fact that the tax payer duly and diligently must necessarily in its return of income disclose all avenues of his income. The assessee in its defence has consistently maintained that the mistake has occurred as the information in regard to the said interest was not available in the public domain namely 26AS form of the assessee firm downloaded from the system and lack of any other intimation also available to the assessee from the Income Tax Department. These facts are not rebutted by the Revenue as CIT(A) has confirmed the penalty holding that it was the duty of the assessee to check and recheck the avenues of his income. The fact that it was the duty of the tax payer to follow due diligence cannot be over emphasized. Assessee is not a habitual defaulter and as per the assessment order, is shown to be “trading in wood”. There is nothing on record to show that it was an act of concealment nor is there any fact on record that there was a deliberate filing of inaccurate particulars of income. No doubt the assessee is expected to show due diligence and is mandatorily required to disclose all avenues of income before filing of his return. The mistake in the peculiar facts as considered in the decision of Apex Court in the case of Price Waterhouse Coopers (P.) Ltd. (2012 (9) TMI 775 - SUPREME COURT) being a bonafide or inadvertent mistake cannot be the basis for levying or upholding the penalty - Appeal of the assessee is allowed.
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2017 (6) TMI 449
Reopening of assessment - foundational addition - Held that:- the reasons which persuaded the AO to reopen the reassessment proceedings and on the basis of which additions were made were not found valid or justifiable as those additions were deleted by the Tribunal. Appeal of the Revenue was dismissed. In further appeal, the Hon’ble High Court upheld the order of the tribunal by holding that : `Since the grounds for reopening the reassessment do not exist any longer and no additions were ultimately made on that account, the additions in respect of other items which were not part of "reasons to believe" cannot be made.’ On going through the ratio decidendi of the above judgment, it is vivid that if the `foundational addition’ is finally deleted in appeal, then `other addition’ also can’t stand. The Assessing Officer initiated reassessment proceedings and made addition of ₹ 22.57 lac. When the ld. CIT(A) held that the addition of ₹ 22.57 lac was not sustainable, it meant that the jurisdiction of the Assessing Officer was lacking in initiating the reassessment proceedings. As a consequence of his deletion of the addition, not only the assessment order but all the proceedings flowing therefrom had the effect of becoming null and void. As such, he could not have gone ahead with any other issue and made enhancement of income. Making an enhancement in such circumstances would mean that though the jurisdiction of the Assessing Officer in initiating the reassessment was lacking, still, the assessment would be valid and ex consequenti, the addition would be sustainable. - Decided in favour of assessee.
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2017 (6) TMI 448
Treatment of licence fee, IT recharge and 50%of management services as head officer expenditure covered by section 44C - Held that:- We find that issue of licence fee was deliberated upon and decided by the Tribunal in the case of Lloyds Register Asia [2015 (6) TMI 423 - ITAT MUMBAI] thus hold that royalty/licence fee is covered by the provisions of section 44C of the Act. IT recharge - On a combined reading of the Explanatory Memorandum explaining the provisions of the Finance Bill, 1976, introducing section 44C in the Income-tax Act, 1961, as well as Circular No. 202 dated 5/07/ 1976, issued by the Central Board of Direct Taxes, it is clear that the section is intended to be made applicable only in the cases of those non-residents who carry on businesses in India through their branches. The section was introduced with a view to getting over difficulties in scrutinising and verifying claims in respect of ‘general administrative expenses’ incurred by the foreign head office in so far as such expenses can be related to their business or profession in India having regard to the fact that foreign companies operating through branches in India sometimes try to reduce the incidence of tax in India by inflating their claims in respect of head office expenses. In our opinion, the FAA has rightly held that IT recharge does not fall under the head administrative expenses and therefore provisions of section 44C will not be applicable. Management fees - We find that the FAA had bifurcated the expenses claimed under the said head and had held that part of the expenses were to be limited by the provisions of section 44C of the Act, that he had relied upon the order of his predecessor for the earlier year, that in that order the then FAA had held half of the management charges had to taxed as same was fee for technical services. In our opinion, order of the FAA does not suffer from any legal or factual infirmity as the issue was decided after analysing the schedule 3 of the management services agreement. So, confirming his order we decide the issue against the AO. Levy of interest u/s. 234B - Held that:- Hon’ble Jurisdictional High Court in case of NGC Network Asia LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT) has decided the issue in favour of the assessee as held that when a duty was cast on the payer to deduct the tax at source, on failure of the payer to do so, no interest could be imposed on the assessee. Decided against the AO. Application of section 40(a)(ia) to management charges - Held that:- As decided in case of Herbalife International India P. Ltd. [2016 (5) TMI 697 - DELHI HIGH COURT] held that on a plain reading of Section 90 (2) of the Act, makes it clear that the provisions of the DTAA would prevail over the Act unless the Act is more beneficial to the Assessee. Therefore, except to the extent a provision of the Act is more beneficial to the Assessee, the DTAA will override the Act. This is irrespective of whether the Act contains a provision that corresponds to the treaty provision. In light of the above discussion, is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue by holding that Section 40 (a) (i) of the Act is discriminatory and therefore, not applicable in terms of Article 26 (3) of the Indo-US DTAA. - Decided in favour of the assessee. Exchange rate to be applied - excess claim on account of difference in the currency rates - as per CIT-A conversion rate of remittance in foreign currency for TDS purpose was the rate at which such currency was made available to banks through TT - Held that:- We find that the assessee had calculated the licence fee expenditure, in the debit notes, at a particular rate, that the AO and the FAA has ignored the provisions of Rule 115 and 26 of the Rules, that the difference in buying and selling rate was rightly calculated by the assessee. Therefore, reversing the order of the FAA, we decide ground in favour of the assessee.
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2017 (6) TMI 447
Addition towards alleged difference in investment in partnership firm - Held that:- There is no evidence to the fact as to how much was generated from ASA & Co and from Dutta Trading Co. We find that the ld AO had made addition only on account of unexplained investment in Nature View Restaurant in the instant case. Hence we confine our opinion only on the point whether an addition could be made in the hands of the assessee towards undisclosed investment in Nature View Restaurant. In our considered opinion, the excess amount of ₹ 34,20,000/- , being the difference in capital account, as reflected in Nature View Restaurant vis a vis investment reflected in assessee firm’s books, is found credited only in the books of Nature View Restaurant. Hence if at all any addition that could be made, the same could be made in the hands of Nature View Restaurant u/s 68 of the Act. Alternatively, it could also be made in the hands of the respective partners who had deposed that the undisclosed income has been generated from two partnership businesses and the same has been ploughed back by them as investment in Nature View Restaurant. There is absolutely no case for making an addition in the case of the assessee firm in the instant case. Hence we have no hesitation in deleting the addition of ₹ 34,20,000/- made in the hands of the assessee. - Decided in favour of assessee. Disallowance of partners’ remuneration - addition u/s 40(b) - Held that:- It was held that the Circular No. 739 dated 25.3.1996 would be applicable where neither the amount has been quantified nor the limit of total remuneration has been specified in the deed, but the same has been left to be determined by the partners at the end of the accounting year. Only in such cases, the payment of remuneration cannot be allowed as deduction. It further held that when the manner of computation of remuneration is provided in the partnership deed and the same is in accordance with the provisions of section 40(b) then no disallowance of remuneration could be made. In the instant case, as stated supra, the partnership deed clearly mentions the manner of computation of remuneration. Hence respectfully following the ratio laid down in the said decision, we direct the ld AO to allow deduction towards partners remuneration in the sum of ₹ 1,57,735/-.
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2017 (6) TMI 446
Taxability of Interest earned on funds - belong to the assessee or not - amount / funds contributed by subsidiaries towards the shifting and rehabilitation fund - Held that:- The addition has been framed without understanding the purpose of creation of fund/legal ownership of money lying with the fund etc. It was specifically stated that in respect of ‘shifting and rehabilitation funds’, contribution by subsidiaries along with interest earned on such funds does not belong to the assessee. The assessee company is merely the custodian of such fund. It was also stated that in the earlier years, the Ld. AO had treated the contribution received from subsidiary as income from the assessee and the same was deleted by the Ld. CIT(A) for A.Y. 2007-08. It was also argued that it is well settled law that to treat any amount as an income, one should have the legal right to receive the same and also one will have all the authority to expend the money as per her/his wishes. In the instant case, the money (contribution and interest thereon) received by the company will be used as per the directions of the concerned Ministries and the Company had no control to use the money. The Company is merely acting as a custodian of such money and is required to release the same as per the directions of the concerned Ministries. However, the assets generated from such money cannot be treated as assets of the assessee company. Pending utilisation of the funds, the money was kept in the bank account which has resulted into interest income. - Decided in favour of the assessee
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2017 (6) TMI 445
Penalty u/s 271(1)(c) - Held that:- It is evident from the record that the returned income and assessed income under normal provisions have been computed as ‘Nil’ after set-off of unabsorbed depreciation and brought forward business losses. The quantum addition of ₹ 69.63 Lacs has resulted into adjustment in the figures of unabsorbed depreciation & brought forward business losses. The tax payable figures of ₹ 1.07 crores on book profits u/s 115JB has been accepted by the revenue as evident from ‘Income Tax Computation Form’ issued pursuant to assessment u/s 143(3). Thus penalty deleted. - Decided in favour of assessee.
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2017 (6) TMI 444
Bogus purchases - genuineness of transaction - Held that:- In this case the assessing officer has made the addition due to the reason that the persons to whom the payment for the expenditure were claimed to be made could not be located. Despite several opportunities the assessee has failed to substantiate the claim. Upon assessee's appeal learned CIT-A has obtained a report from the assessing officer. After detailed finding from the assessing officer regarding the additional evidences learned CIT-A has deleted the part of the addition and sustained the rest as the assessee could not substantiate the rest of the claim. In our considered opinion there is no infirmity in the order of learned CIT-A. It is based upon correct appreciation of the facts and the evidences brought by the Assessing Officer on record. Hence we uphold the order of learned CIT-A. - Decided against assessee.
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2017 (6) TMI 443
Rejecting registration u/s. 12AA and approval u/s. 80G - Form 10A is not submitted in the format as prescribed in the Rules and application u/s. 80G has been rejected because the institution is not registered u/s. 12AA - Held that:- Form 10A was filed by the assessee trust along with the copy of PAN of the trust. Merely because the assessee trust has omitted to mention the Permanent Account No. of the trust in column no. 2 of Form 10A, the Ld. CIT(E) concluded that application is void ab initio without giving an opportunity to the assessee to rectify the mistake is fragile for violation of natural justice. We note that when an action which has got civil consequences is taken or any action adversely affecting the rights of the assessee is taken an opportunity of hearing has to be given to the assessee. Here, in this case, merely because the assessee has not entered the PAN details in column no. 2 of Form 10A, the application has been dismissed, which action of the Ld. CIT(E) smacks of arbitrariness and there is naked violation of natural justice. Thus we remit the application back to the file of Ld. CIT(E) to give an opportunity to the assessee to rectify the mistake, if any, and direct Ld. CIT(E) to pass orders on its applications u/s. 12A as well as 80G of the Act on merits - Decided in favour of assessee for statistical purposes.
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2017 (6) TMI 442
Disallowance of exemption claimed by the assessee under Section 54 - Held that:- Under the common law, for transfer of immovable property value of which is exceeding ₹ 100/-, a registered sale deed has to be executed. However, in view of the special provisions of Section 2(47) such a requirement under the common law, may not be applicable while interpreting Section 2(47) of the Act. Therefore, even though the assessee executed registered sale deed on 06.06.2012, this Tribunal is of the considered opinion that there was a transfer of property within the meaning of Section 2(47) of the Act on 09.04.2012 when the assessee entered in to an agreement for sale and handed over the physical possession. If the transfer of property took place on 09.04.2012, the payments were made on 23.04.02012 and 05.05.2012 are after the sale of the property. Even otherwise Section 54 clearly says that if the assessee, within a period of one year before or two years after the date on which the transaction took place, purchased or within a period of three years after that date, constructed a residential house in India, then the assessee is eligible for deduction under Section 54 of the Act. In this case, the investment was admittedly made one year before the date of sale of property. In view of language employed by Parliament in Section 54 of the Act, it is not the requirement that the sale consideration has to be invested in purchase of property. It is immaterial whether the assessee invested the sale consideration in purchasing of new flat on receipt of the money after the date of sale or one year before the sale of property. In this case, the assessee invested the sale consideration one year before the sale of property, therefore, the assessee is eligible for deduction under Section 54 of the Act - Decided in favour of assessee.
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2017 (6) TMI 441
Unsecured loans - identity and creditworthiness of the creditors and genuineness of the transaction - non existence company - Held that:- Merely because of the fact that the payment was received by cheque or that the lender company appears on the file of Registrar of Companies, registered with the stock exchange of the company, it is not proved that the transaction is genuine unless creditworthiness of the lender company is proved. Even during the assessment proceedings as well as first appellate proceedings before the ld. CIT (A), the assessee has not opted to get the physical existence of M/s. Khoobsurat Limited established by moving any application. So AO/CIT(A) have rightly reached at the conclusion that M/s. Khoobsurat Limited is a company existing on paper only and its physical existence has never been established and it also remained unexplained on the file as to why a company in Kolkata would advance unsecured loan of more than ₹ 40,00,000/- to a proprietorship concern of transport contract situated in Orissa. So, we find no illegality or perversity in the findings returned in the impugned order passed by the CIT (A) so far as addition of ₹ 40,06,198/- is concerned. So, the findings returned by the ld. CIT (A) in this regard are hereby affirmed. In view of above the addition made by AO/affirmed by ld. CIT (A) to the tune of ₹ 7,00,000/- (in case of Smt. Usha Agarwal, Ellora Mohanty, Ashutosh Mohapatra & Smt. Urmila Modi of ₹ 2,50,000/-, ₹ 1,50,000/-, ₹ 1,00,000/- & ₹ 2,00,000/- respectively) is hereby ordered to be deleted, however appeal of the assessee qua the remaining addition of ₹ 40,06,198/- made on account of unsecured loan from M/s. Khoobsurat Limited is hereby dismissed. Resultantly, the appeal of the assessee is partly allowed.
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2017 (6) TMI 440
Estimation of income by application of the profit rate on gross total receipt after rejecting books of 4 accounts u/s 145(3) - Held that:- It is just fair and reasonable to estimate income of the assessee at the Net Profit rate of 4.0% of the gross total receipts for the year under appeal. While estimating net profit at 4.0% on the gross total receipt; the assessee shall not be eligible for deduction of expenses under the head depreciation, payment of salary and interest on capital to the partners. Thus, the assessee gets relief of 2.0%, in estimation of net profit rate on the gross total receipts as against the 6% net profit rate estimated by the ld. CIT (A). Accordingly, this ground of appeal of the assessee is partly allowed and that of the revenue is dismissed. Addition u/s 68 - Held that:- Hon'ble Telangana and Andhra Pradesh (High Court) [2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT] wherein it is held that if there is a deposit in the partners' account with the firm, same has to be considered in the hands of the partners. The Juridictional Madhya Pradesh High Court in the case of CIT vs. Metachem Industries (1999 (9) TMI 21 - MADHYA PRADESH High Court) held if the depositor a partner or any other individual owns the entry then the burden of the assessee firm is discharged. It is immaterial whether credits in the name of partners are reflected in the partner’s capital account or current capital account. - Decided against revenue
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2017 (6) TMI 439
Eligibility to relief u/s. 54 - disallowance on the ground that payment for purchase of new house property has not been made within one year from the date of transfer of original asset - Held that:- the provisions of section 54(1) allow purchase of new house within two years from the date of transfer of asset and hence the view taken by the Assessing Officer is not in accordance with the law and hence the same is liable to be quashed. Refereeing to the contention of the assessee that he had issued cheques on the date of agreement itself i.e. 26.7.2012, which is before the date of furnishing of return of income. However those cheques have been encashed by the builder belatedly and hence the assessee should not be penalized for that and that once cheques have been issued, assessee’s liability gets fulfilled and the same constitute utilization of sale proceeds of the old house, we find merit in the submissions of the assessee. There is not dispute that the assessee has issued cheques to the seller of house property on 26.7.2012, which is prior to the date of furnishing of return of income of the instant year. Accordingly, we are of the view that there is no requirement to comply with the provisions of section 54(2) of the Act in the facts and circumstances of the case. - Decided against revenue.
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2017 (6) TMI 438
Deduction under section 80P - income by way of interest earned from its members on the loan advanced to them - Held that:- The assessee is a cooperative society registered under cooperative societies Act which claimed deduction under section 80P on an income by way of interest earned from its members on the loan advanced to them. The AO denied the deduction under section 80P(2)(a)(i) of the Act claimed by the assessee on the ground that the assessee is engaged in banking activities. But the CIT(A) re-examined the claim of the assessee and was of the view that the assessee’s income earned in the course of providing credit facilities to its members is eligible for deduction under section 80P(2)(a)(i) of the Act. During the course of hearing, the learned DR could not specifically point out any specific defect in the order of the CIT(A). Since the CIT(A) decided the issue following the judgment of Hon’ble jurisdictional High Court, find no infirmity therein - Decided against revenue
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2017 (6) TMI 437
Addition u/s.69A - unexplained money - Held that:- Assessee has been able to prove the identity, genuineness and creditworthiness of the cash credits of ₹ 57,00,000/- received from following four parties who appeared before the assessing authorities and accepted to have provided cash to the assessee with the documents showing agriculture land ownership. Except the above said five parties, assessee has been unable to satisfy genuineness and creditworthiness of cash creditors of ₹ 12,48,000/-. We therefore in the given facts and circumstances of the case partly allow the assessee’s appeal by deleting addition of ₹ 57,00,000/- and confirm the remaining addition of ₹ 12,48,000/- u/s. 69A of the Act.
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2017 (6) TMI 436
Addition u/s 36(1)(v) - payment to gratuity fund in the revised return - Held that:- It is the case of the Assessing Officer that the payment is made to unapproved gratuity fund is not an allowable expenses as per provisions of section 36(1)(v) of the Act. Assessee has not placed any material on record suggesting that the gratuity fund is approved. However, the issue is restored to the file of the Assessing Officer for deciding the issue, afresh after verifying whether the fund has been approved or not and decide the issue in the light of Tribunal’s order in assessee’s own case pertaining to the A.Y 2011-12. Disallowance on a/c of PF & ESI - Held that:- Assessing Officer rejected the claim merely on the basis that the department has preferred Special Leave Petition against the judgment of the Hon’ble Rajasthan High Court in the case of Commissioner of Income Tax vs. State Bank of Bikaner & Jaipur [2014 (5) TMI 222 - RAJASTHAN HIGH COURT]and Commissioner of Income Tax vs. Jaipur Vidyut Vitran Nigam Ltd. [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT]. However, ld. CIT(A) in the appeal following the judgments of Hon’ble Jurisdictional High Court allowed the claim of the assessee and deleted the disallowance. We do not see any infirmity in the order of the Ld. CIT(A). Therefore, we uphold the same. The judgment of the Hon’ble Jurisdictional High Court which admittedly has not been overruled by the Hon’ble Supreme Court. - Decided against revenue
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2017 (6) TMI 435
Addition of bogus purchases - Held that:- We find that the facts of the case do not justify full disallowance against the impugned purchases particularly when the assessee was in possession of invoices, payments were though banking channels, quantitative details were available on record and sales turnover were not doubted by the revenue. The Tribunal, invariably, in all such cases, have taken a stand that even if presuming that all purchases were bogus, entire addition thereof was not warranted for particularly when the sales were not in dispute and the addition, if any, which has to be made in all such cases is to account for profit element embedded in such purchase transactions. Therefore, we restrict the said disallowance to 12.5% of alleged bogus purchases of ₹ 39,18,195/- which comes to ₹ 4,89,774/-. The assessee’s appeal stands partly allowed.
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2017 (6) TMI 434
Rejecting the assessee's application u/s. 10(23C)(vi) - assessee is a college of girls engaged in imparting education - whether CIT (E) has wrongly disregarded the Board's Circular No. 14/2015, dated 17.08.2015? - Held that:- So far as regards the present applicant, its existence for over the last 100 years as an educational institution has not been questioned. Its affiliation with GNDU remains undisputed. The factum of its being an aided college is patent. It's past history of having been granted exemption under different provisions of the Act is irrefuted. The position that it exists solely for educational purposes and not for any profit motive, stands accepted by the Department while granting exemption u/s. 10(23C)(iiiab). The only aid to the volte face challenged before us comes from the provisos to section 10(23C), recourse to which has expressly been barred by “American Hotel & Lodging Association Educational Institute (2008 (5) TMI 17 - SUPREME COURT OF INDIA),” which mandate of the Hon'ble Supreme Court has been conveyed by the CBDT by way of its Circular. Further, as noted above, the mandate of section 119(1) comes with a rider, i.e., that no order, instruction or directions of the Board shall be as to interfere with the discretion of the Appellate Authority in exercise of his appellate functions. In the case at hand, however, the order under appeal nowhere states that the issuance of Circular No. 14/2015, dated 17.08.2015 interferes with his appellate functions in any manner, whatsoever. Thus, evidently, the ld. CIT (E) is not correct in holding that the CBDT Circulars are merely “guidelines to be normally followed”. We are sanguine that the authorities and officers employed in the execution of the Act, shall follow the mandate contained in section 119(1) of the Act in letter and spirit. Considering the above undisputed facts, the ld. CIT (E) is also found to have erred in observing in para 12, i.e., the concluding para of his order, that the application filed u/s. 10(23C)(vi) was, “at best infructuous”. In view of the preceding observations, it, obviously, is not so. For the foregoing discussion, the grievance of the assessee is found to be justified. It is accepted as such. The order under appeal is reversed. Approval u/s. 10(23C)(vi) of the Act is directed to be granted to the assessee forthwith. - Decided in favour of assessee.
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2017 (6) TMI 433
Penalty u/s 271B r.w.s. 274 - delay in filing the audit report obtained u/s 44AB - default - Held that:- As decided in case of Smt. Raj Kumar Bafna vs. ITO [2016 (12) TMI 952 - ITAT JAIPUR] Penalty imposed by the lower authorities u/s 271B of the Act on the assessee is not justifiable as the audit report was to be uploaded by the Chartered Accountants who audited her books of account and the assessee was low educated and she had under bona fide belief that the same had been uploaded in the system developed by the Department. In such a situation, penalty need to be deleted - Decided in favour of assessee.
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Customs
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2017 (6) TMI 462
Maintainability of appeal - Classification of imported vessel - classified under CTH 89059090 or otherwise - benefit of N/N. 12/2012-Cus, dated 17-03-2012 - Held that: - the said question, in the peculiar facts and circumstances of the case, may have to be adjudicated by the CESTAT first, before a regular appeal is filed before this Court under Section 130 of the Act - petition disposed off by remitting the matters back to CESTAT - matter on remand.
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Corporate Laws
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2017 (6) TMI 458
Oppression and mismanagement - Whether the reduction in the shareholding of the Petitioners whereby they signed the share transfer forms and the subsequent resignation of the Petitioners from the Board of Director proves the existence of the understanding between the Respondents and the Petitioners, and whether the alleged acts of Respondents in the Petition constitute oppression against the Petitioners? - Held that:- The claims that the Petitioners have made regarding the signatures, on the share transfer forms and the resignation letters being forged, merit scarce attention; as the claims have not been substantiated with any pieces of proof because the burden of proof relating to the proving or disproving the aforementioned signatures is on the party who claims forgery. Regarding the exclusion of oral evidence in presence of documentary evidence relating to the same, Section 91 of the Indian Evidence Act, 1872 contemplates evidence of terms of contracts, grants and other dispositions of property reduced to form of documents which lays down that when the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained. Section 92 of the Indian Evidence Act, 1872 excludes evidence of any oral agreement or statement, when the terms of a contract, grant or disposition of property or any matter required by law to be in writing have been proved as per Section 91 of the Indian Evidence Act, 1872 for the purpose of contradicting, varying, adding to or subtracting from its terms. The principle lays down that when the terms of any such document have been proved by the primary or secondary evidence of the document, no evidence of any oral agreement or statement shall be admitted. In the present petition the Petitioners have themselves contended that consequently in terms of the arrangement and understanding, ₹ 25 Lakhs was refunded to the Petitioners by the Respondents. The role of the Petitioners in running the Company and their involvement in the day-to-day affairs of the Company is also lacking and without any significance. Therefore, it is concluded that there is no case of oppression against the Petitioners and the company petition deserves to be dismissed. Therefore, the issue no. 1 of whether the reduction in the shareholding of the Petitioners whereby they signed the share transfer forms and the subsequent resignation of the Petitioners from the Board of Directors, prove the existence of the understanding, is decided in affirmative in favour of the Respondents. Furthermore, the issue whether the alleged acts of Respondents in the present Petition constitute oppression against the Petitioners, is decided in negative. Therefore, the subsequent acts of the Petitioners thereby proved the existence of the understanding between the Respondents and the Petitioners and furthermore after careful consideration of the facts, contentions and arguments in the present case, the Tribunal is of the opinion that there is no proof of any acts of oppression committed against the Petitioners.
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2017 (6) TMI 457
Oppression and mismanagement - family company - increase of the shareholding of the company - Held that:- The petitioner is unsuccessful in challenging the validity of increase of the shareholding of the company in order to pay the debt of the Bank, and also the transfer of the shares of Shri S.K. Khemka in favour of R-2. During his lifetime, Late Shri S.K. Khemka never challenged the transfer of shares in favour of R-2, despite the Annual Returns for the years 2004-2005 and 2005-2006 having been filed in the year 2006. If Shri S.K. Khemka himself did not claim any right over the shares during his lifetime, there is no question of accrual of fresh cause of action to the petitioner after the death of Shri S.K. Khemka The record relied upon by R-2 in support of his defence version would reveal that R-2 made all efforts to revive the sick company and further those proceedings were being pursued with the active participation of Late Shri S.K. Khemka. The instant petition was filed only after the death of Shri S.K. Khemka and there cannot be any challenge on the ground of oppression or mismanagement on the basis of past and concluded acts. Thus we hold that the petitioner has not been able to prove the acts of oppression and mismanagement on the part of R-2. The acts complained of in the instant petition are very old and those were reflected in the Annual Returns filed in the year 2006, but the instant petition has been filed after more than 5½ years. There is thus a huge delay and the petition would be clearly barred by time. This issue is also held against the petitioner. The petitioner is not entered in the record of R-1 company as shareholder/member. The present case also does not involve rectification of the register, but only the oppression and mismanagement. In the absence of the aforesaid relief, the petitioner would not have the locus standi to file the petition, as she is not eligible under Section 399 of the Act. We would also observe that if there is any delay in filing of the Annual Returns or if the transfer statedly made in the year 1995 was not reported to the Registrar of Companies till the year 2006, that will not provide any support to the petitioner's claim. As already observed, the petitioner claims to have inherited the estate of her father who himself did not challenge the transfer of his shareholding in the name of R-2. In view of the aforesaid discussion, the challenge to the appointment of R-3 as a Director on the basis of a document filed with the Registrar of Companies under the signatures of Late Shri S.K. Khemka is a matter, which cannot he questioned by the petitioner. In case, the petitioner still has the right over the preferential shares, she may have a remedy before the Civil Court, but not in the summary proceedings before the Tribunal.
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Insolvency & Bankruptcy
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2017 (6) TMI 459
Insolvency Resolution Process - proof of outstanding financial debt - petitioner claims to be a financial creditor, claiming a financial debt of ₹ 30,69,000/- from the Corporate Debtor - Held that:- The case of the petitioner was one for purchase of any immovable property to be developed and for which assured returns were undertaken to be given. The Principal Bench, in the matter of Nikhil Mehta & Sons and others Vs. M/s AMR Infrastructures Ltd. [2017 (3) TMI 151 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI ] has already elucidated that the liability towards assured returns in matters of booking commercial flats would not fall within the definition of a financial debt which essentially means a debt disbursed against consideration for the value of money, or money borrowed against payment of interest, while the concept of Assured Returns typically requires full payment towards the property to be developed, and perhaps leased out for the owner by the developer on rentals, but pending that stage, the developer pays a Return on the property from day one. As pending completion it cannot be termed as Rent, the return is given and taxed under the Head “Interest”. The petitioner's claim herein is more encumbered and complex than a plain and simple claim against assured returns. The present transaction is based on multiple contractual novated agreements. The initial foundation was with one entity, the liability of which was taken over by another. The payment was made towards development and delivery of a property changed for another. The agreement relied upon contained the provision for appointment of a named arbitrator which though invoked, did not materialize. Further, dispute with respect to the liability has been raised and as the return of the principal amount is not disputed, the liability towards any interest/assured returns on the proposed property in terms of the agreements, essentially towards for purchase of a piece of property, would not fall within the purview of the financial debt as defined under the Code for initiating Insolvency Resolution Process. Merely because an assured amount of return has been promised, which is termed as interest under Section 194A of the I.T. Act, for the period till the property is developed and handed over, it would not acquire the status of a financial debt as it is not money loaned to be recovered with interest. This Bench is of the opinion that the aforesaid transaction between the parties would not fall within the definition of a “financial debt” so as to invoke Insolvency Resolution Process against the Corporate Debtor.
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Service Tax
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2017 (6) TMI 477
Penalty - even before a SCN could be issued, the respondent-assessee paid the duty involved together with interest on the duty short-paid by them - Held that: - It is true that sub-section (4) of Section 73 keeps the operation of sub-section (3) out of the purview, in cases where the service tax has not been levied, paid, short-levied or short-paid by reason of fraud, collusion, willful mis-statement, etc. But nevertheless, the law does not treat all cases of fraud, collusion, willful mis-statement, suppression of facts, etc., alike. It is only in Paragraph-15 (iii) and 15 (iv) that the adjudicating authority has recorded a finding that the respondent-assessee willfully suppressed the true and correct value of the freight incurred. But, the findings recorded in Paragraph-15 (iii) and 15 (iv), in our considered view, are not sufficient to enable the Department to fall back upon sub-section (4) of Section 73, so as to keep the application of Section 73(3) out of the reach of the respondent-assessee. Penalty rightly deleted - appeal dismissed - decided against Revenue.
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2017 (6) TMI 476
Business support service - providing of storage tanks and other accessories - receipt of ‘facilities service charges’/ ‘rental charges’/ ‘facility fees’ as consideration - Revenue entertained a view that such charges collected by the appellant shall be liable to service tax, considering the said activity as providing infrastructural support covered under tax entry ‘business support service’ w.e.f. 01.05.2006 - whether or not the appellants are liable to service tax in respect of the consideration received from the clients for putting up machinery/ storage facilities for gas and connected accessory in their premises? Held that: - the storage facility are closely linked with sale of gas by the appellant. In other words, the creation and maintenance of such facility in the client’s premises is in furtherance of facilitating such sale of gas, by the appellant and purchase of same for industrial use by the client. It is a beneficial arrangement for both. In such situation it will not be correct to consider the amount received towards lease rent/ facility fee etc. as consideration for providing business support to the client. Though the activities of the appellant, can be brought under very generic understanding of infrastructure support, when examined with statutory scope as per explanation indicating nature of services which are to be brought under tax net than it would appear that the present activity will not get covered under the said tax entry. The renting of immovable property or the supply of tangible goods as services liable to tax, appear to have direct relevance to the transactions now under examination - the present transactions which are sought to be taxed by the Revenue cannot be considered as covered by the scope of business support service during the material time. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 475
Refund claim - rejection on the ground that respective input services (pertaining to terminal handling charges, wharfage charges, inspection and certification) were not specified service under N/N. 41/2007 ST dated 6/10/2007 - Held that: - matter is covered by the Tribunal’s decision in case of Angiplast Pvt Ltd Vs. CCE [2012 (10) TMI 913 - CESTAT, AHMEDABAD], where it was held that Since, there is no dispute nor there is any record or observation to show that service tax was not paid under the category of Port Service for Terminal Handling Charges and Port Services, admittedly are notified in the N/N. 41/2007-ST, refund is admissible. Refund claim rejected also on the ground of time bar - Held that: - The matter is covered by the Tribunal’s decision in case of CCE Pune Vs Chandrashekhar Exports [2015 (11) TMI 1112 - CESTAT MUMBAI], where it was held that it is settled principle as to Rules and Notifications are issued from to time to supplement the provisions of main Act and grant of relief of refund of service tax paid on services used in export of goods has to be sanctioned to the respondent when conditions prescribed in the main Act are fulfilled - refund allowed. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 474
Refund claim - rejection on the ground of time bar - N/N. 41/2007 ST dated 06/10/2017 - Held that: - the matter is covered by Tribunal’s decision in case of CCE Pune Vs. Chandrashekhar Exports [2015 (11) TMI 1112 - CESTAT MUMBAI], where it was held that it is settled principle as to Rules and Notifications are issued from to time to supplement the provisions of main Act and grant of relief of refund of service tax paid on services used in export of goods has to be sanctioned to the respondent when conditions prescribed in the main Act are fulfilled - refund allowed. Refund claim also rejected on the ground that input services pertaining to ‘terminal handling charges’, ‘wharfage charges’, ‘loading unloading’ and ‘technical testing and analysis’ are not specified in the N/N. 41/2007 - Held that: - matter is covered by the Tribunal’s decision in case of Angiplast Pvt Ltd Vs. CCE [2012 (10) TMI 913 - CESTAT, AHMEDABAD], where it was held that Since, there is no dispute nor there is any record or observation to show that service tax was not paid under the category of Port Service for Terminal Handling Charges and Port Services, admittedly are notified in the N/N. 41/2007-ST, refund is admissible. The appellant is entitled to the refund claim - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 473
Penalty u/s 76 and 78 of FA - appellant has paid the entire amount of service tax along with interest, before issuance of SCN - Held that: - the appellant is liable to penalty only u/s 78 of the Act, in terms of the decision of the Hon'ble Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Pannu Property Dealers [2010 (7) TMI 255 - PUNJAB AND HARYANA HIGH COURT], wherein it has been held that simultaneous penalties cannot be imposed u/s 76 and 78 respectively - penalty u/s 76 set aside. Considering the fact that appellant had paid the entire amount of service tax along with interest before issuance of SCN and no option has been given in the impugned order to pay penalty to the tune of 25% of the amount of service tax confirmed, in terms of proviso to Section 78 of the Act, the penalty is required to be reduced to 25% of the service tax confirmed against the appellant. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 472
Refund claim - Terminal Handling Charges - denial on the ground that Terminal Handling Charges are not port service and not covered under the said notification as specified services - Held that: - the Terminal Handling Charges falls under the category of port services and on port services the appellant is entitled for refund claim under N/N. 41/2007 - refund allowed. Custom House Agent Service - Goods Transport Agency Service - denial on the ground that the appellant is claiming drawback against the exported goods - Held that: - the said refund claim cannot be rejected on the ground that as the services used in export of goods have not been taken care to calculate the amount of drawback, the amount of service availed by the exporter is not included in drawback, the same has been clarified by the Director of Drawback, Ministry of Finance, Department of Revenue - refund allowed. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 471
Waiver of pre-deposit - Commercial and Industrial Construction Services - case of applicant is that as the services which have been provided by the applicant to Balaji Medical and Diagnostic Research Centre (BMDRC) is for the construction of charitable hospital, therefore, in the light of the decision of this Tribunal in the case of Mankeshwar Enterprises Vs. CCE, Pune [2014 (1) TMI 91 - CESTAT MUMBAI], the applicant is entitled for waiver of pre-deposit at this stage - Held that: - the activity undertaken by the applicant falls under the category of works contract, therefore, demand under the category of Commercial and Industrial Construction Services is not sustainable - the applicant has made out a case for complete waiver of Service Tax, interest and penalties - stay granted.
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2017 (6) TMI 464
Cenvat Credit - Levy of service tax on job-work - The Revenue felt that the process at the job workers end involved complete manufacture of excisable goods and Service Tax was not applicable in terms of N/N. 08/2005-ST dt. 01.03.2005 as amended by the Notification No.19/2005-ST dt.07.06.2005 - whether the assessment at the end of supplier/job worker can be contested or reopened at the receiving end? - Held that: - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS Versus MDS SWITCHGEAR LTD. [2008 (8) TMI 37 - SUPREME COURT ], where it was held that quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be challenged by revenue in charge of recipient unit. N/N. 8/2005-ST is a conditional notification and its availment was not mandatory - the job workers were not obliged to avail the said exemption. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (6) TMI 470
Confiscation of Indian currency from the father of sole proprietor of assessee - confiscation with redemption fine and penalty - shortage of cpooer-scrap from factory premises of appellant-assessee - case of Revenue is that the said currency was the sale proceeds of goods cleared clandestinely - Held that: - it is not clear as to whether actually a physical weighment has been made of the stock of raw-material. Admission of the authorized representative by signing the Panchnama is the sole reason recorded by the original authority to uphold the shortage of raw-material. Even considering that there is such shortage, that cannot be automatically converted into a charge of un-accounted manufacture and clearance of excisable final product. - The appellant – assessee indicated that the records maintained by Shri Girish Chand as a labour contractor is with reference to number of labourers working per heat in the appellant - assessees’ unit. We find that these basic facts were not examined in right prospective and commented upon by the original authority. This has significantly weakened the case of Revenue. The case of un-accounted manufacture and clearance is built upon certain sketchy evidences as narrated above, without any concrete corroboration. While the cases of clandestine removal cannot be precisely proved with 100% corroborative evidences, it is essential to have at least standard evidence which will clearly show the existence of un-accounted manufacture and clearance - In the present case, whatever evidences formed basis for the case of the Revenue are falling short of minimum requirement of credible case of clandestine removal. Since the case against the appellant-assessee could not be established regarding un-accounted clearances, the seizure and confiscation of Indian Currency and penal proceedings against the appellant – assessee will also fail. Demand for un-accounted clearance of copper wire rods - Held that: - It is clear that on physical verification of the premises of the appellant – assessee on 21.05.2005, no rolling mill was installing in the factory. No evidence has been placed in the proceedings before the lower authority to the effect that the appellant – assessee got wire rods manufactured by using some other’s facility. As such, we find no merit in the appeal by the Revenue. Appeal allowed - decided in favor of appellant-assessee.
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2017 (6) TMI 469
Quantum of redemption fine - 2025 kilogram of copper valued at ₹ 6,48,000/- carried in the tempo, without any valid transport document, and, therefore, was placed under seizure - Held that: - the impugned Order in Appeal has ignored the fact that on the day of the visit to the factory the shortage of raw material was recorded along with the excess of finished goods - When the goods are lying in the factory itself the Revenue has treated them as excess mainly on account of non recording of said goods in RG-1 register. Thus, the lapse on the part of the appellant is only of non-recording of goods in RG-I register and it is not the case of clandestine removal of goods. The revenue has not given any evidence where the goods went, how they were removed. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 468
CENVAT credit - area based exemption - recovery of credit on the ground that such capital goods were utilized in the manufacture of fully exempted finished products - Held that: - at the time of procurement of the capital goods, the Appellants were manufacturing and clearing the finished products on payment of duty. Consequently, the CENVAT Credit on capital goods is allowable during the said period - The fact that from a subsequent date i.e. 07.08.2003 the Appellants opted for and started availing area base exemption will not disentitle them to the Cenvat Credit already availed - appeal allowed - decided in favor of appellant-assessee.
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2017 (6) TMI 467
CENVAT credit - manufacture of Sheet Glass and Float Glass - declarations not filed as prescribed under Rule 57 Q or 57 T of the said Rules, 1944 - whether appellant are entitled to CENVAT Credit on certain capital goods acquired by them during the period April 1996 to June 1996 or thereafter? - Held that: - the capital goods in question have been received in the factory and put to use for production of taxable output, the CENVAT Credit cannot be denied for the reason that declarations have not been filed as prescribed under Rule 57 Q or 57 T of the said Rules, 1944. The objections that some of the documents are mutilated or marked as extra copy instead of duplicate copy for transfer ‘as transporter’ are not tenable - there is no contumacious conduct or suppression of fact on the part of appellant. Credit allowed - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 466
Valuation - installation charges - includibility - Held that: - CBEC vide circular No.643/34/2002-CX dated 01/07/2002 clarifies that if the expenditure on installation and commissioning has been incurred to bring into existence any excisable goods then such charges should be included in the assessable value of the goods - In the instant case the goods were not coming into the existence at the premises of purchaser but they had already come into existence at the manufacturing premises of appellant who has paid Central Excise Duty on the same before the clearance of the same from the factory - the said clarification is not applicable in the present case. The decision in the case of Greysham & Company [2014 (10) TMI 443 - CESTAT NEW DELHI] is squarely applicable in present case wherein it was held that installation of the Air Break Equipment has nothing to do with the manufacturer of the said equipments and hence the charges for installation of the same are not includable in the assessable value of Air Break Equipment. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 465
Classification of Tooth Brush, inter-dental brushes - classified under CTH 96032100 or otherwise? - the assessee is emphasizing that the items tooth brushes and inter-dental brushes are in separate category. The tooth brush is available on any grocery shop whereas inter-dental brush is available only at a chemist shop - Held that: - inter-dental brush of any kind is also a tooth brush and is used as an item for cleaning teeth. It is true that the item inter-dental brush or dental plate brush is not easily available at any grocery shop; the same is available only at a chemist shop. However, both are tooth brushes and both are covered by the Central Excise Tariff heading no. 96032100. Once Tariff sub-heading 96032100 is mentioned with the description tooth brush, one cannot arrive at the conclusion that inter-dental brush or dental plate brush is not part of that entry or the said description, when dental-plate brush is also a kind of tooth brush - subject item is covered by entry at Sr. No.97A of Third Schedule to C.E. Act, 1944. Extended period of limitation - penalty - Held that: - where it is a question of interpretation for correct clarification duty is payable only for ‘normal period.’ - subject matter is interpretation of law and extended period of limitation is not invokable - penalty also set aside. The subject matter is remanded for limited purpose to original adjudicating authority, who shall quantify the duty payable for the normal period along with interest payable u/s 11 AB CEA 1944 - appeal allowed by way of remand.
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2017 (6) TMI 463
Classification of goods - Welded Wire Mesh - classified under Chapter Heading 73 of Central Excise Tariff Act 1985 or otherwise? - Welded Wiremesh has been cleared by the appellant by classifying under Chapter Heading 73 on payment of duty thereon but the Poultry Keeping Machinery parts namely Poultry Top, Poultry Bottom, Poultry Partition, Battery Cages etc. have been classified by the appellant under Chapter Heading 8436 and cleared without payment of duty on these items - Held that: - As the items in dispute are Battery Cages, Poultry Top, Poultry Bottom, Poultry Partition and Poultry Keeping which have been cleared by the appellant to poultry farms by classifying under Chapter Heading 84369100, as the Poultry Keeping Machinery are classified under Chapter Heading 84369100 of CET Act, 1985 - the correct classification of the impugned goods is under Chapter Heading 84369100 of CETA - the demands are not sustainable - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (6) TMI 461
Refund claim - C-Forms - Held that: - refund allowed, subject to production of C-Forms. As regards the interest for the period during which the ‘C’ Form was not furnished, learned counsel for the Department states that the amount will be paid immediately subject to the outcome of the decision of the Supreme Court in the case of Vizien Organics v. Commissioner, Trade & Taxes [2017 (1) TMI 1168 - DELHI HIGH COURT]. Petition allowed - decided in favor of petitioner.
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2017 (6) TMI 460
Release of seized goods upon deposit of cash security to the extent of 40% of the estimated value of the goods - case of assessee is that the Tribunal has affirmed the seizure of goods, misinterpreting the ratio of law laid down by this Court in The Commissioner, Commercial Tax U.P. Lucknow Vs. S/s Bihar Carrying Corporation [2017 (1) TMI 1060 - ALLAHABAD HIGH COURT] - It is submitted that law has subsequently been clarified by this Court in The Great Punjab Transport Company Delhi Vs. Commissioner of Commercial Tax, U.P. Lucknow [2017 (6) TMI 432 - ALLAHABAD HIGH COURT] but the same has not been taken into consideration. Held that: - The judgment in Bihar Carrying Corporation had been examined at length in the subsequent judgment in The Great Punjab Transport Company Delhi and it has been clearly held that the existence of consignor and consignee could be examined in case there are other materials to suspect the claim of the revisionist about the goods being transported from out side the State to beyond the State, but where transaction is otherwise explained and declaration/ documents in term of section 52 are available, the issue of consignor and consignee ought not be given unnecessary primacy. Matter remitted to the Tribunal for a fresh consideration in light of the decision in the case of The Great Punjab Transport Company Delhi - revision allowed by way of remand.
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