Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 14, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Nature of royalty expenses - the Agreement in question was crucial for setting up of the plant project in question for manufacturing of the goods, the expenditure in the form of royalty paid would be in the nature of capital expenditure and not revenue expenditure - SC
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Whether development of immovable property is in the nature of trade - period of holding since 1965 - the transaction could not come within the ambit of adventure in the nature of trade - also the gain from sale of such property cannot be held as business income - HC
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Disallowance of compensation paid on breach of contract - Assessee need not to be the owner of the property and still enter into a contract with promoters to sell such property to deliver in future to the buyer of the property - the transaction of development of properties in question cannot be held as a bogus or colourable device - AT
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Bogus purchases u/s 69C - merely because the assessee is able to produce the purchase bills evidencing the VAT charged to the assessee, does not establish the factum of purchases being made by the assessee - the assessee has not maintained any stock details - additions confirmed in certain cases - AT
Customs
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Anti dumping duty - Notification imposing ADD on Acrylonitrile Butadiene Rubber was in the nature of temporary legislation and could not be amended after it lapsed - SC
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Imposition of ADD - retrospective amendment to the notification - When Notification dated January 02, 2009 itself had lapsed on the expiry of five years, i.e. on January 01, 2014, and was not in existence on January 23, 2014 question of amending a non-existing Notification does not arise at all. - SC
DGFT
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All importers / Exporters need to have fresh IEC code which will be same as PAN - Assessee registered with GSTN would be required to quote only GSTIN while import or export of goods
Service Tax
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CENVAT credit - eligible input service - airport services - the CENVAT credit availed by the appellant cannot be called in question since the Revenue has accepted the service tax paid for the services rendered by the GHIAL for the appellants. - AT
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Rule 7 of PoTR, overrules the other Rules and specifically applies to the case in hand and as per the said Rule, the assessee is required to pay service tax under reverse charge mechanism, on 6th of next month of the month in which either they have accounted for or made the payment to service provider whichever is earlier. - AT
Central Excise
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CENVAT Credit - once the duty on the final product has been accepted by the Department, the CENVAT Credit availed need not be reversed even if the activity does not amount to manufacture subsequently. - AT
Case Laws:
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Income Tax
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2017 (6) TMI 524
Technical fee/ royalty payable in five equal installments on yearly basis to be treated as revenue expenditure or capital expenditure - Held that:- There was no existing business which needed to be improvised with the aid of technical know-how - Royalty was not only for running the business but for bringing the business into existenc - whenever a complete new plant with a complete new process, with new technology is brought into existence, payment for such technical know-how is to be treated as capital expenditure - purpose of Agreement between the two companies was to set up a joint venture company with aim and objective to establish a unit for manufacture of automobiles and part thereof - this technical collaboration included not only transfer of technical information, but, complete assistance for establishment of plant, machinery etc. so as to bring in existence manufacturing unit for the products - the Agreement in question was crucial for setting up of the plant project in question for manufacturing of the goods, the expenditure in the form of royalty paid would be in the nature of capital expenditure and not revenue expenditure - Decided against the assessee
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2017 (6) TMI 523
Undisclosed income u/s 69 - activity of giving emeralds to the petitioner on approval basis - money lending activity or not - Whether “peak credit theory”can be applied - validity of order of Settlement Commission - Held that:- If emeralds were given on “Jakad” basis, it cannot be for a long period because if emeralds are not approved, it would be returned - the seized documents were showing transaction for long duration - the books of account of the parties do not show a single entry of purchase of emeralds - petitioner had decoded the figure on the documents with help of Chartered Accountant and submitted that total amount involved in the money lending is ₹ 9,71,400/- with peak amount of ₹ 4,61,000/- - This itself proves that it is a case of money lending Emeralds cannot be given on approval by recording on currency notes but can be on a plain paper - on analysis of the seized materials it was noticed that no date of repayment was available for many advances - The calculation of “peak credit theory” is applied for those entries for which dates of advance and repayment are available - hence advances for which no dates are available are held to be not paid back till date of search - currency notes were recovered having writing and is not a case of unaccounted debit and credit simplicitor, thus “peak credit theory” was not applied - matter is remanded back to the Settlement Commission to decide the issue of decoding afresh, involvement of the petitioner in money lending and other issues - matter remanded back
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2017 (6) TMI 522
Provisions regarding payment of gratuity - held that:- Assessee paid gratuity on 13.09.2001 - gratuity was payable uptill 31.12.2001 and the due date for filing the return was 30.11.2001 - first proviso to Sec 43B as inserted by the FA, 2003 is retrospective in nature and is operative w.e.f. 1st April, 1988 - thus the gratuity was paid within the due date of filing of the return - Decided in favor of assessee
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2017 (6) TMI 521
Whether development of immovable property is in the nature of trade - profit from sale of such property is treated as business income or capital gains - Held that:- This was gain from improvement of the assessee’s property which the assessee held since 1965 and had all along shown in its books as fixed assets - there was no finding on the part of the AO that the assessee was involved in the business of real estate at any point of time - the intention to hold the property was not an adventure in the nature of trade - hence the transaction could not come within the ambit of adventure in the nature of trade - also the gain from sale of such property cannot be held as business income - Decided in favor of assessee Whether the Loan advanced can be treated as deemed dividend u/s 2(22)(e) - Held that:- deemed dividend is to be charged to income tax at the hands of the common shareholder but not at the hands of the recipient of money unless the recipient company is also the shareholder of the company from whom the amount has been received - Assessee had not furnished any explanation in respect of the intention of showing trading of share - AO has also not doubted the genuineness of the documents placed on record by the assessee - hence no disallowance can be made - Decided in favor of assessee
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2017 (6) TMI 520
Disallowance u/s. 14A - calculation of income which does not form part of the total income - Held that:- CIT(A) has reduced the investment made in the partnership firm by considering that the assessee has received interest from the partnership firm and therefore, it is not a exempted income - the issue is restored back to the file of AO to examine that amount of ₹ 84,17,935/- received as interest income from the partnership firm - Restored back for statistical purposes Disallowance on carry forward of long term capital loss incurred by the appellant on winding up of its subsidiary - Disallowance of loan given for buying equity shares of said subsidiary - Held that:- assessee company was holding 49% of the shares of said company - thus CIT(A) restricted the claim of capital loss attributable to investment made in only equity share of the said foreign company keeping in view 49% of the share holding - no examination was made as to for what purpose, the impugned loan was advanced by the assessee company to Mr. Khalid Kazim Mohd. Abdulla, as there is no evidence on record to examine whether the amount was actually sent to foreign country after due approval from RBI - thus matter is restored back to AO for statistical purposes Disallowance of depreciation on UPS systems and data drive @60% - Held that:- Depreciation on UPS and data drive systems @ 60% is allowed if the said equipments were used for more than 180 days and @ 30% in case of their use for less than 180 days - these equipments are used along with the computers and thus, constitutes integral part of computer system - Decided in favor of assessee Disallowance of Commission paid to directors for their personal guarantee - Held that:- Personal guarantee of the directors was given on the insistence of Bank - if the guarantee is not given then the assessee company would have not be able to obtain the credit limit - assessee has failed to submit the original credit facility documentations of the bank - thus the matter is restored back AO to examine from the original bank documentations/agreements/sanction letter and whether any undertaking to this effect was taken from the company or not in terms of RBI guidelines - allowed for statistical purposes Sale of shares - whether to be treated as Capital gain or business income - Held that:- year the appellant has purchased and sold shares through portfolio management scheme - investments in portfolio scheme have been accepted from preceding years as investment - investment in shares is a continuous activity and same has been accepted by the Department in earlier years wherein short term and long term capital gain were declared by the appellant in the return of income - thus there is no change in facts and circumstances of the case with that of earlier years - investment was made in shares with the intention to hold the same for long term appreciation and for earning dividend - appellant has used his own funds and there are no borrowings made for investment - also because of off loading of some shares in short period his entire investments cannot be held as business transactions - Decided in favor of assessee
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2017 (6) TMI 519
Addition on account of bogus purchases - estimation of profit on the alleged hawala purchases - Held that:- The issue arising in the present appeals is identical to the issue before the Tribunal in M/s. Chetan Enterprises Vs. ACIT [2016 (8) TMI 1203 - ITAT PUNE]and following the same parity of reasoning, the addition in the case is restricted to addition by applying the GP rate of 10% on the bogus purchases over and above the GP rate shown by the assessee. The Assessing Officer is directed to re-compute the addition in the hands of assessee in the respective years. Accordingly, grounds of appeal raised in both the appeals are partly allowed.
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2017 (6) TMI 518
Retrospectivity of the second proviso to Section 40(a) (ia) - Held that:- Matter was reconsidered at the level of the AO. The AO shall verify the fact of the payment of taxes on filing return of income by the above parties, in the light of the decision of Hon'ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township P. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT]. AO shall give reasonable sufficient opportunity of being heard to the assessee. Disallowance of Car Expenses and Telephone Expenses for personal use - Held that:- Assessee firm declared income of ₹ 65,820/- therefore disallowance of 1/6 of these expenditures is excessive. Accordingly set aside and modify order of the authorities below and direct the AO to restrict the disallowance on these expenses to 1/10 of the total expenditure claimed instead of 1/6. AO shall re-workout the addition accordingly.
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2017 (6) TMI 517
Reopening of assessment - unexplained investments - assessment year 2006-07 and 2008-09 - Held that:- Assessing Officer was precluded from making the additions to the returned income, considering the fact that the income referred to in the reasons recorded for issuance of notice u/s 147/148 of the Act has not been assessed. Therefore, the additions of ₹ 22,48,808/- made to the returned income during the reassessment proceedings are beyond the jurisdiction of the Assessing Officer and deserve to be set aside. See CIT Versus Jet Airways (I) Ltd.[2010 (4) TMI 431 - HIGH COURT OF BOMBAY ] Addition u/s 68 - non explanation to the source of capital - Held that:- The explanation of the Assessee is purely based on the affidavit of the mother, Mrs Meena Godbole and find that apart from making general averments of having advanced monies to the Assessee during the period 2001 to 2011, no specific details have been provided. It is also not stated as to the manner in which the amounts have been advanced to the Assessee. The affidavit also does not bring out any concrete sources of income available with Mrs Meena Godbole to justify the gifting of amounts to the Assessee. Therefore, it is a case where the explanation furnished by the Assessee is neither amenable to any verification and nor it refers to any specific source of funds. Therefore, the income tax authorities have rightly considered the sum as unexplained cash credit within the meaning of Section 68 of the Act. Thus, on this aspect, Assessee fails. Deemed dividend addition u/s 2(22)(e) - Held that:- As no business considerations have been explained for the giving and receipt of monies from the company. Therefore, we uphold the invoking of section 2(22)(e), in principle. With regard to the quantum of amount assessable u/s 2(22)(e) we have perused the statement of account pertaining to the period under consideration and in terms there of, it is quite clear that the opening balance of ₹ 6,52,674/- cannot be construed an amount received during the year, and thus the same cannot be assessed u/s 2(22)(e) in this year. AO has assessed an amount of ₹ 3,93,445/- which is the closing balance at the end of the year, a part of which is from the opening balance. The only amount which can be assessed u/s 2(22)(e) is a sum of ₹ 1,50,000/- advanced to the Assessee on 17.7.2008 as is evident from the statement of account placed. Therefore, we direct AO to restrict the addition on account of deemed dividend under section 2(22)(e) of the Act to ₹ 1,50,000/- as against ₹ 3,93,445/- made by him. Adhoc disallowance made out of the expenses debited to the Profit and Loss Account on account of the telephones, car, computer expenses etc. - AO disallowed 20% of the total expenses, being ₹ 18,662/- and the same has been reduced by the CIT(Appeals) to 10% - Held that:- It is quite clear from the order of the authorities below that the disallowance is purely adhoc based on mere surmises and conjectures and therefore the same is directed to be deleted in its entirety. Thus, on this aspect also, Assessee succeeds.
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2017 (6) TMI 516
Eligibility for exemption u/s. 54EC - part payment receipt - Held that:- The period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because in the present case the assessee has received part payment after six months at the time of registration of sale deed or even after that in few of instances. If the period is reckoned from the date of agreement and receipt of part payment at the first instance, then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the same. Admittedly assessee received part payments after execution of agreement to sale and handing over of possession thereby completing the transaction in terms of section 53A of Transfer of Property Act but invested in specified bonds i.e. NABARD bonds within one month of the receipt of sale consideration being part payment. Hence, we are of the considered view that the assessee is eligible for exemption u/s. 54EC of the Act on part payment received after completion of transaction on 02.07.2004. Penalty under section 271(1)(c) - sale of plot of land chargeable to tax under the head of capital gains or under the head of business income - Held that:- The issue in respect of the items of sale of land (development rights) to M/s Saytam Builders & sale of land (development rights) of M/s Brahma builders and an amount received as compensation from M/s Wagmare i.e. the surplus of ₹ 49,03,620/- is covered in favour of assessee by Hon’ble Bombay High Court decision in assessee’s own case for 2004-05. Respectfully following the same, we confirm the order CIT(A) deleting the penalty. In respect to the business expenses disallowance we are of the view that mere on confirmation of disallowance of expenses and that also on estimate basis, the penalty for concealment of income u/s 271(1)(c) of the Act cannot be levied and hence, we confirm the order of CIT(A) deleting the penalty. This appeal of revenue is dismissed. Revision u/s 263 - sale of land as business income as against the assessee’s claim accepted by AO as income chargeable as capital gains - Held that:- Admitted facts are that in this year the AO has discussed the facts while framing the assessment under section 143(3) and finally assessed the income arising out of the sale of plot of land by entering into development agreement with Kubix Realities Pvt. Ltd. on 27-04-2006 as long term capital gain. Similarly, in assessee’s own case sale of plot of land was assessed as business income. But, Tribunal finally held that the same should be assessed as long term capital gain for AY 2004-05. However, in AY 2005-06, the Tribunal took a different view in assessee’s own case and held that the profit on sale of plot of land is to be assessee as business income. It means there are two view possible and once there are two views possible, the revision under section 263 of the Act is not possible Entitlement for deduction under section 80IB (10) - assessee had sanctioned lay out plan of eight buildings. But finally obtain completion certificate in respect to seven buildings - Held that:- As in the case of CIT vs. Vandana Properties Section 80IB(10) [2012 (4) TMI 54 - BOMBAY HIGH COURT] held that the deduction is held to be allowable where a new housing project is constructed on a plot of land having minimum area of 1 acre but with existing housing project and entitlement to construction and additional building E on the plot of land. Hon’ble Bombay High Court allowed the claim of the assessee. We are of the view that the facts in the present case are similar and hence, respectfully following the same we allow the claim of the assessee.
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2017 (6) TMI 515
Disallowance of compensation paid on breach of contract - failure to fulfill the sale agreement of property - property was not belonging to the assessee - crystallization of liabiltiy - bogus or colourable device to avoid taxation - Held that:- Assessee need not to be the owner of the property and still enter into a contract with promoters to sell such property to deliver in future to the buyer of the property - this nature of business of assessee has been accepted by AO for the AY 2008-09 - Liability to pay damages arises only on passing award by arbitrator and not on the date of breach of contract and further it has been held that Liability can be said to have crystallized only when the damages is determined and accepted by both the parties as per the decision of Kerala High Court in the case if Asuma Cashew Co. v. CIT 1989 (2) TMI 23] Entries in the books of accounts are not conclusive of matter if the same are not in conformity with the accounting principles - true nature of the transaction and whether it has resulted in profit or loss to the assessee is required - assessee firm has maintained its accounts on mercantile system - the principle of prudence seeks to ensure that provision ought to be made for all known liabilities and losses even though there may remain some uncertainty with its determination - The liability to pay the compensation and damages is also a certain liability as per the terms and conditions of the agreement - the failure of the assessee to fulfill its obligation is in the nature of default of business obligation and therefore the compensation paid by the assessee would become an allowable claim being the business loss - when the assessee has realized in definite terms that it would not be possible for it to honour the commitment and obligation under the agreement then the liability arises under the agreement is a certain liability - therefore the liability to pay the compensation was never disputed by the assessee, only the quantum was settled through Arbitration - liability to pay the compensation was crystallized when the assessee accepted its failure to perform its part under the agreement within the stipulated time period - The assessee has offered the income arising from the project in question to tax and therefore the transaction of development of properties in question cannot be held as a bogus or colourable device - Decided in favor of assessee
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2017 (6) TMI 514
Disallowance of purchases u/s 69C - Held that:- The assessee was one such person to whom the sales were made by the parties who were enlisted by the Sales Tax Department as hawala dealers - AO during assessment asked assessee to produce the said parties for verification alongwith supporting bills along with related details i.e. delivery challans for the goods, receipts from octroi paid - assessee expressed his inability to produce the parties and the bills - since the parties were blacklisted by the Sales Tax Department thus the purchases from them would be treated as bogus and not genuine - merely because the assessee is able to produce the purchase bills evidencing the VAT charged to the assessee, does not establish the factum of purchases being made by the assessee - the assessee has not maintained any stock details Before the CIT(A), the assessee submitted that if most of the purchases are unverifiable GP rate could be applied to make the addition - assessee claims that the purchases were made in the regular course of carrying on the business from parties who were registered with the Sales Tax Department and had VAT number - also VAT collected by the said dealers has not been deposited with the Sales Tax Department, assessee voluntarily revised his return under MVAT Act by withdrawing the set off of claim in the earlier return and paid the taxes with interest - hence CIT(A) is confirmed in estimating the addition @10% of alleged hawala purchases In the case of M/s. Chhabi Electricals Pvt. Ltd - the AO before making the addition has not even supplied the copy of statement to establish that the purchases made by the assessee were bogus thus no additioncan be made in the hands of assessee - assessee has established the trail of goods purchased to the final consumption hence no additions by Ao - Decided in favor of assessee In the case of Maa Saraswati Steel Industries - The assessee was also maintaining inward records of goods purchased and their consumption in items, which are excisable in nature - hence no additions by Ao - Decided in favor of assessee In case of Mahendra Shantilal Chaturmutha - no copy of statement was supplied to establish that the purchases made by the assessee were bogus thus no additioncan be made in the hands of assessee - Decided in favor of assessee In the case of M/s. Anant Chemicals - copy of statement was supplied - The CIT(A) applied higher GP rate to estimate the income in the hands of assessee on account of bogus purchases - Decided against the revenue.
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Customs
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2017 (6) TMI 526
Imposition of ADD - retrospective amendment - Acrylonitrile Butadiene Rubber - import from Korea RP and Germany - sunset review - N/N. 6/2014-Customs dated January 23, 2014 - Section 9A of the CTA, 1975 - relevant date for sunset review - Whether the date of December 31, 2013 or it is January 06, 2014, which would be the relevant date for determining initiation of the sunset review? - Held that: - such a sunset review is to initiate before the expiry of five years period mentioned in the Notification - The High Court has answered the question in favour of the Government and against the writ petitioners on the ground that Section 9A(5) of the Act and its proviso do not mandate a public notice or a Gazette Notification as a pre-condition for initiation of sunset review investigation. The reference to publication by Official Gazette is, significantly, in Section 9A(1) which talks of imposition of anti-dumping duty. First proviso to Section 9A(5) of the Act, when read along with Rule 6 of the Rules, do not lead to the conclusion that the intention to review and extend the anti-dumping duty, in the facts of a given case, have to be necessarily published and made available to all, before the expiry of the original notification. Requirement of Section 9A(5) of the Act is that the sunset review is to be initiated before the expiry of the original period for which the anti-dumping duty prevails. There is no additional requirement of making it public as well, necessarily before the said expiry date. Section 9A(1), which deals with imposition of anti-dumping duty, specifically refers to such an imposition by way of publication in an Official Gazette. Therefore, as far as initiation of review is concerned, once a decision is taken by the Government on a particular date, that would be the relevant date and not the date on which it is made public. Whether such a Notification issued after the expiry date of the original Notification is without any legal authority and is, therefore, null and void? - Held that: - when a review is initiated but final conclusion is not arrived at and the period of five years stipulated in the original notification expires in the meantime, as per second proviso ‘the anti-dumping duty may continue to remain in force’. However, it cannot be said that the duty would automatically get continued after the expiry of five years simply because review exercise is initiated before the expiry of the aforesaid period. It cannot be denied, which was not even disputed before us, that issuance of a notification is necessary for extending the period of anti-dumping duty. When Notification dated January 02, 2009 itself had lapsed on the expiry of five years, i.e. on January 01, 2014, and was not in existence on January 23, 2014 question of amending a non-existing Notification does not arise at all. As a sequitur, amendment was to be carried out during the lifetime of the Notification dated January 02, 2009. The High Court, thus, rightly remarked that Notification dated January 02, 2009 was in the nature of temporary legislation and could not be amended after it lapsed. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (6) TMI 525
Cancellation of resignation of directors - family company - dispute - unreasonable remuneration - Held that:- The Petitioner is seeking direction to restore the Directors who have resigned from the Board of the R-1 Company. However in a situation when the family members are not keeping good relation, rather a Police Complaint was lodged, it is not worthy to force the Directors who have resigned to sit together with the Petitioners to run the company. This proposition is not suitable considering the background of the case. There is no harmony among the family members as is evident from the attempts of settlement made by the learned member of CLB in the past but all such efforts have gone in vain. The Petitioners at present are having control over the affairs of the Company, therefore the prayer for cancellation of resignation and in consequence restoration of the Directors who have resigned is not worthy to accept. The Petitioner is seeking direction that Respondent 7 be ordered to vacate the Office of Directorship. In this regard it is worth to note that the settled legal position is that the sitting Directors of the Company can take appropriate decision for removal of a Director if his presence in the Board is not suitable for the day to day functioning of the Company. As a result the prayer as raised by the Petitioner is left open, rather leave it upon the sitting Directors, to decide the fate of R-7, so as to take due legal steps, if deem fit. However no specific separate order,as demanded, is lawfully required to be passed. That one of the prayer is to direct to make good the amount siphoned by the Respondents. Inter alia, in this regard, the accounts of the Respondents as appearing in the Books of the Company are the only guiding factor, refer pages 240 to 260 of the Reply of the Respondents, to arrive at the accurate conclusion. It is well known that every Corporate litigation, in one way or the other, ha an economic angle causing dispute. So, the prevalent practice is that the contribution of capital/funds in the business should be in equal proportion by all the groups or the participants. However in this case the admitted position is that the financial contribution by the Respondents was much higher than the Petitioners. Rather the Petitioners have not demonstrated their financial involvement as also financial risk in running this business. Undoubtedly, the Respondents have advanced huge amount of loan to R-1 Company which was in fact returned in the phase manner as and when the funds were available in the Company. A common understanding of 'Siphon of funds' is drain off of money from business without having legitimate authority. Conversely, if the transfer of funds is duly recorded in the books of account with legitimate narration and that narration is a rightful explanation which is not found to be fabricated or untruthful than no court of law shall hold such legitimate transfer of money as illicit siphoning of funds. Entries in the accounts have established a direct nexus of adjustment of loan; duly appearing previously; which was undisputedly used for the purpose of the business of the Company. On the face of records this is an unsubstantiated allegation. Consequently, this is not a case of siphoning of funds but simplistically refund of loan. The relief sought is therefore unjustifiable. The Petitioners have also objected to the remuneration paid to R-6 and R-7 side by side demanding payment of remuneration to the Petitioner. According to me this is a trifle issue because the remuneration was not alleged as excessive or unreasonable paid to R-6 and R-7. The demand of payment of remuneration to the Petitioner has become redundant because the decision in this regard henceforth shall be in the hands of the remaining Directors i.e. Petitioners, of the Company. A fundamental question is how to provide Equitable Justice to both the sides, especially when they are closely related to each other. To maintain the harmony as also to maintain status of the Company it is justifiable to suggest one party to exit from the Company. In this case Respondents have already resigned from the Directorship, except R-7. In furtherance of the said decision already taken by the Respondents it is justified to ask them to surrender their Shareholding in favour of Petitioners at the value to be determined by an independent valuer, to be picked- up from the list of empanelled Chartered Accountants. On the basis of the valuation report the shares can be transferred by the Respondents in favour of the Petitioners or their Representatives after receiving the consideration so determined and also to complete other legal formalities required to accomplish the exit plan. Second, to complete the process of handing over by the Respondent and taking over by the Petitioners the existing loan accounts of the Directors should be settled after due adjustment of liabilities.
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Service Tax
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2017 (6) TMI 537
Penalties u/s 76 and 78 of FA - demand on the ground of non-payment of tax - invocation of section 80 - Held that: - the Ld. Commissioner (Appeals) has considered the contention of the respondent that some robbery took placed in their house in June 2005 and some money was also robbed from the respondent - the Ld. Commissioner (Appeals) is fare and reasonable by giving the benefit of Section 80 of the Act considering the reason caused due to robbery for non-payment of Service Tax - appeal dismissed - decided against Revenue.
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2017 (6) TMI 536
CENVAT credit - eligible input service - airport services - case of appellant is that once the Department has accepted the service tax paid by GHIAL under Airport Services, CENVAT credit cannot be denied by changing of classification of the recipient - Held that: - It is un-disputed that appellants employees are transported from various places in the city to registered office. Which is situated in the GHIAL premises and the services rendered by the appellants are taxed, the CENVAT credit availed by the appellant cannot be called in question since the Revenue has accepted the service tax paid for the services rendered by the GHIAL for the appellants. Similar issue decided in the case of Sarvesh Refractories (P) Ltd., Vs. CCE & C [2007 (11) TMI 23 - SUPREME COURT OF INDIA], where it was held that in so far as the classification is arrived at by the manufacturer and discharges the duty liability, the CENVAT credit cannot be denied on such capital goods by re-classifying the same at recipients end. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 535
Reversal of CENVAT credit - common input services used for rendering services which are taxable as well as non taxable - Held that: - the entire case of the appellant is that the trading activity was considered as an exempted service from 01.04.2011, prior to that these was clarity and it was not considered as an exempted service - similar issue decided in the case of M/s. FL Smidth Pvt. Ltd. Versus The Commissioner of Central Excise [2014 (12) TMI 699 - MADRAS HIGH COURT], where it was held that there is no manner of doubt that input service means goods which is used by the manufacturer directly or indirectly in relation to the manufacturing of final product and clearance of final product from the place of removal. Penalties - Held that: - Invoking the provisions of Section 80 in this case is valid as there is a justifiable reason to hold a view that trading activity is not a exempted service at least prior to 01.04.2011 - penalty set aside. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 534
Liability of interest - point of taxation rules (PoTR) - payment of consideration of royalty to their foreign service provider - reverse charge - case of revenue is that as per Rule 3 of Point of Taxation Rules, the appellant was required to pay service tax on 06.7.2012 and 06.10.2012, respectively and therefore they are required to pay interest for intervening period - Held that: - Rule 7 of Point of Taxation Rules, 2011, overrules the other Rules and specifically applies to the case in hand and as per the said Rule, the assessee is required to pay service tax under reverse charge mechanism, on 6th of next month of the month in which either they have accounted for or made the payment to service provider whichever is earlier. Admittedly, in this case, the appellant has accounted the services availed for the period April 2012 to June 2012 on 31 July 2012 and the service tax has been paid on 06.08.2012. Further, in the case of July 2012 to Sept. 2012, it was accounted on 23.10.2012 and service tax has been paid on 04.11.2012, which is in compliance with the Rule 7 of Point of Taxation Rules, 2011. Demand of interest unsustainable - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (6) TMI 533
Valuation - medicaments supplied to the Government hospitals and institutional buyers viz. Railway, BHEL, BPCL etc - case of Revenue is that under Drugs (Price Control) Order, 1995, the Appellants are required to affix the MRP on the medicaments even sold to these buyers, accordingly, the goods are liable to be assessed under Section 4A of Central Excise Act, 1944 - Held that: - in Circular No.625/210/2002-CX, dt.20.02.2002, the Board has already clarified and directed to the field formation to obtain necessary clarification/opinion from the State authorities who are entrusted the task of the administration of the relevant legislation - In the present case, the Adjudicating authority ought to have obtained/collected opinion of the Drug Controller Authority of the respective State Govt. and accordingly proceeded with the matter. Therefore, all these appeals be remanded to the Adjudicating Commissioner - appeal allowed by way of remand.
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2017 (6) TMI 532
Scope of SCN - redemption fine - case of assessee is that the order-in-original inasmuch as it did not impose any redemption fine attained finality. The Commissioner (Appeals) had no jurisdiction to decide an issue which was not before him in the revenue's appeal - Held that: - The appeal of the revenue was only on re-quantification of duty. No issue on non-imposition of redemption fine was raised. The Commissioner (Appeals) also not passed any order on the imposition of redemption fine - in the second round of remand by the Tribunal to the Commissioner (Appeals), it was not open for the Commissioner (Appeals) to re-open the issue which attained finality in the original order - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 531
Clandestine removal - appellant have received the inputs, clandestinely manufactured by M/s Nabha Steels Limited and M/s Pushpanjali Steel Alloys Pvt. Limited - Held that: - In the case of M/s Nabha Steels Limited and M/s Pushpanjali Steel Alloys Pvt. Limited, this Tribunal has already held that they were not involved in the activity of clandestinely removal of the goods to the appellant. In that circumstances, the appellant has not received the inputs clandestinely. As inputs have not been received by the appellant, therefore, the question of manufacturing does not arise. As there is no final goods manufactured by the appellant, the duty cannot be demanded from the appellant - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 530
Classification of goods - whether the goods manufactured by assessee-respondent shall be governed by N/N. 23/2003-CE dated 31.03.2003 or N/N. 7/2003 dated 01.03.2003 CE? - Held that: - Applicability of N/N. 7/2003 dated 01.03.2003 shall be ruled out when a specific matter is dealt by a specific N/N. 23/2003 dated 31.03.2003 in respect of the goods in question - Appellant is directed to satisfy the adjudicating authority as to whether goods fall under Sl. No.5, 6 and 7 of the Table appended to the N/N. 23/2003. The condition of the notification is to be satisfied - appeal allowed by way of remand.
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2017 (6) TMI 529
Provisional assessment or not? - Rule 9B of Central Excise Rules, 1994 - Held that: - The said Rule 9B of Central Excise Rules, 1994 provides for provisional assessments for want of information such as value for assessment. The provision is made under the said Rule 9B of Central Excise Rules, 1994 for provisional assessments only when at a particular point of time the value to be determined for arriving at Central Excise duty payable when the rate of duty is ad-valorem is not known. The date on which the Assistant Commissioner, Central Excise, Division-III, Ghaziabad passed Order-in-Original dated 13/12/2005, the Jurisdictional Central Excise Officer was having entire information in respect of the value of the goods to arrive at duty payable for the Financial Years 1998-99 to 2000-01. Therefore, there was no need on 13/12/2005 to examine the said issue for invocation of provisions of said Rule 9B of Central Excise Rules, 1994. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 528
Area Based Exemption - N/N. 50/03-CE dated 10.6.2003 - denial on the ground that in column (d) of the declaration, the description of specified goods was not mentioned and only sub-heading 3304 was mentioned - Held that: - as per N/N. 50/03-CE, the assessee has not filed declaration before first clearance of the said specified goods. Admittedly, there is no evidence that the appellant has filed the said declaration. In that circumstance, the Commissioner (Appeals) has rightly denied the benefit of exemption N/N. 50/03-CE except the goods falling under chapter heading 3304 - appeal dismissed - decided against appellant.
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2017 (6) TMI 527
CENVAT Credit - N/N. 3/2001-CE, dt.01.03.2001, and 06/2002-CE, dt.01.03.2002 - denial of credit on the ground that Lidoncaine USP/HCL is Anaesthetics and exempted from duty under said notification - Held that: - from the very beginning, the Appellants have been claiming that the product is non-Anaesthetics and in support, they have placed end-use certificate from their customer. Also, I find from the records that the Appellant tried to make out a point before the Adjudicating Authority in support of their case that necessary sample of the product was required to be drawn for testing so as to ascertain the use of their product as Anaesthetics or otherwise, which was not considered. In these circumstances, the Appellant discharged duty and cleared their product for home consumption after availing CENVAT Credit on the inputs that were used in the manufacture of such product which would have been otherwise cleared by them as exempted, if the test result would have shown the product as Anaesthetics. The issue is covered by the judgment of the Tribunal in the case of CCE Pune-III Vs Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT], where it was held that once the duty on the final product has been accepted by the Department, the CENVAT Credit availed need not be reversed even if the activity does not amount to manufacture subsequently. Appeal allowed - decided in favor of appellant.
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