Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 17, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Allowability of unabsorbed depreciation of amalgamating company – Form No. 62 not filed – filing of form is only directory and not mandatory - claim allowed - AT
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Accrual of income - taxability of advances received - Merely because an amount has been entered into in assessee’s book, is not conclusive proof that income has accrued - AT
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Estimation of income – “best judgment assessment“ is not a provision to penalize the assessee, but is a machinery provision to enable the Revenue to assess a person when situation warrants such an assessment. - AT
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Once the registration u/s 12A continues - it is axiomatic that the income has to be computed in accordance with section 11 and benefit/exemption has to be given - exemption cannot be denied simply on the ground that the matter is subjudice before the Hon’ble High Court - AT
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Section 40(a)(ia) cannot be seen as intended to be a penal provision to punish the lapses of NON-TDS when the recipients have taken into account income embedded in the payments, paid due taxes thereon and filed income tax returns in accordance with the law - AT
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Deduction u/s 80P - ‘Member’ includes ‘Associate Member’ - authorities cannot go beyond their jurisdiction and make classification within a classification of members to deny the benefit of deduction. - AT
Customs
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Penalty u/s 112 - since penalty has been imposed on partnership firm under Section 112 (a), separate penalty on its partner would not be justified - AT
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Revocation of the licence of the appellant-CHA - it is clear that the appellant-CHA sought to get the Customs clearance work done in the Customs area by transacting their business through a non-employee in contravention of Regulation 13(b). - AT
Service Tax
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Waiver of pre deposit - works contract - Valuation - Prima facie, the value of transformers cannot be included in such execution of works contract - AT
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Refund - Bar of limitation - appellant was not required to pay service tax but they paid the service tax wrongly - provisions of Section 11B of the Central Excise Act, 1944 are not applicable - AT
Central Excise
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MRP Valuation or transaction value - tiles - there is no difference in respect of packages of tiles sold to retail consumers or to the so called institutional buyers and all of them are in standard packages, having MRP declared on them. - AT
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CENVAT credit - Duty demand on dealer for passing duty when the goods were actually not received - provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. - AT
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Denial of refund claim - deemed provisional assessment - period of limitation - the assessment in the case of the appellant cannot be considered as provisional or deemed provisional. - AT
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Denial of refund claim - unjust enrichment - price of biris remained same irrespective of the amount of duty paid mainly whether it is Rs. 8/- or Rs. 10/- - refund allowed - AT
Case Laws:
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Income Tax
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2014 (6) TMI 444
Validity of notice u/s 148 of the Act – Change of opinion – Exemption u/s 11 of the Act - Held that:- The reasons for initiating re-assessment proceedings do in fact state that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment - merely making the bald assertion was not enough –Relying upon Hindustan Lever Ltd. v/s R.B. Wadkar, Assistant Commissioner of Income Tax and others [2004 (2) TMI 41 - BOMBAY High Court ] - there are no details given by the AO as to which fact or material was not disclosed by the Petitioner that led to it's income escaping assessment - There is merely a bald assertion in the reasons that there was a failure to disclose fully and truly all material facts without giving any details – the notice is bad in law and on this ground alone the assessee is entitled to succeed. The AO had allowed the provision for doubtful accounts as an application of income for the A.Y. 2005- 2006 - the provision for doubtful accounts consisted of three items viz. (i) general charges which could not be recovered from various members due to various reasons; (ii) amounts relating to valan account and (iii) general charges and valan account balance of members prior to 1996-97 which could not be recovered - The statement has not been controverted while disposing of the objections when the AO passed his order - the initiation of reassessment proceedings is unsustainable. The assessee had fully and truly disclosed all material facts regarding the reduction of ₹ 25,44,889/- from the income from investments and deposits as set out in Schedule K to the Income and Expenditure Account read with Statement enclosed with the computation of income - the initiation of re-assessment proceedings on this ground also was based merely on a “change of opinion”. The income of the assessee is exempted u/s 11 of the Act – assessee is not carrying on any business - section 40(a)(ia) has no application and the notice issued on the basis was wholly misconceived - it was only out of abundant caution that the assessee used to get its books of accounts audited u/s 44AB of the Act and that this practice was being followed since the last 15 years – Decided in favour of Assessee.
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2014 (6) TMI 443
Disallowance made u/s 43B(f) of the Act - Provision for leave encashment – Held that:- The Tribunal being a quasi judicial authority has to decide the appeal only on the basis of the provisions of section 43B(f) of the Act - the provisions of section 43B(f) cannot be ignored as in the case of Exide Industries Limited And Another Versus Union Of India And Others [2007 (6) TMI 175 - CALCUTTA High Court] it was stayed - the claim of the assessee could be allowed only if it is actually paid on the due date for filing the return of income - It is not the case of the assessee that the amount claimed as leave encashment was paid before the due date for filing the return of income - it remains to be paid, the CIT(A) has rightly confirmed the disallowance made by the AO – Decided against Assessee. Disallowance u/s 14A of the Act – Held that:- The assessee specifically claimed before the Tribunal for the AY 2006-07 that the surplus funds were available for making investment – the Tribunal examined the issue and remanded back the matter to the file of the CIT(A) – thus, the matter is required to be remitted back to the CIT(A) – Decided in favour of Assessee. Fringe benefit tax u/s 115WB of the Act – Held that:- When the telephone is installed in the business premises of the assessee for the business purpose it cannot be considered as a privilege, service, facility or amenity to the employee. It is a facility for the purpose of carrying on the business of the assessee - that is a business expenditure - the expenditure incurred by the assessee in respect of telephone installed in the office premises for the purposes of carrying out the business activity cannot be considered as a fringe benefit u/s 115WB of the Act - the matter needs to be verified, whether the telephone installed in the premises of business - If the telephone is installed at the residence of the employee, then it shall be taken as fringe benefit - The assessee has to file the details of expenditure with regard to the telephones which were installed for the benefit of the employee and in respect of the telephones which were installed in the office premises – thus, the matter is remitted back to the AO – Decided in favour of Assessee. Exclusion of depreciation – Value of car for computation of fringe benefits – Held that:- The AO disallowed the claim of the assessee only on the ground that there is no distinction made by the assessee in respect of expenditure made on the cars meant for employees as well as the cars meant for test drive the assessee is maintaining cars for test drive and for employees it is for the assessee to segregate the expenditure made on each vehicle – the matter is required to be remitted back to the AO for adjudication – Decided in favour of Assessee.
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2014 (6) TMI 442
Validity of assessment u/s 153C of the Act – wrong description of the designation in the notice - Held that:- The search was conducted in the premises of Mohiyuddin is none other than the director of both the companies - Shri Mohiyuddin was described as managing director in the assessment order -mere wrong description of the designation cannot be a reason to frustrate the order of assessment - these are rectifiable u/s 292B of the Act - the assessees cannot take advantage on this kind of mistakes. Jurisdiction for assessment – transfer of case - Held that:- The transfer was made after giving due notice to the assesseess as required u/s 127 of the Act for consolidating enquiry / investigation - Once the authorities followed the due process for transferring the case from one city to another for the purpose of effective investigation and completion of the assessments by one AO, the Tribunal is of the considered opinion that the contention of the assesseess has no merit at all - the present AO, who completed the assessment order has jurisdiction in pursuance to the order passed by the concerned authority transferring the case u/s 127 of the Act. Original assessment made u/s 153C r.w. section 153A of the Act – Order not passed u/s 153A of the Act – Held that:- The present assessees are persons other than searched person - the proceedings had to be initiated u/s 153C of the Act - after initiating proceedings u/s 153C of the Act, the assessment proceedings have to be completed only as per the procedure laid down in section 153A of the Act - merely because there was an omission to mention the relevant provision of law or wrong mentioning of the provisions of law that cannot be a reason to invalidate the assessment order passed by the AO. Satisfaction not recorded before transferring the file – Proceedings initiated u/s 153C of the Act – Held that:- Following Manish Maheshwari vs Assist.Commissioner of Income-tax & Anr [2007 (2) TMI 148 - SUPREME COURT OF INDIA] - when the AO is same for the person searched and person other than searched recording of satisfaction may not be necessary since there is no necessity for handing over the assessment records to the other officer - the same AO has completed the assessment in the case of Shri Mohiyuddin – thus, there is no necessity for the AO to handover the document to another AO - recording of satisfaction may not be necessary. Rejection of claim of development expenses – Held that:- The vendor has to fill up the land with red earth and make it clean so as to suitable for measurement, etc. - the obligation of the vendor is to make the land suitable for measurement by the surveyor - It is nothing more than that - when the assessees claim that the land was filled up with red earth and made ready so as to make it saleable one, the claim of the assessee has to be examined on merit - The obligation of the vendor is to make the land suitable for measuring - there is a lot of distinction between the obligation of the vendors - Merely because the vendors claimed much expenditure for filling up the land that cannot be a reason to disallow the claim of the assessees especially when documentary evidences are available which were found during the course of search operation. It is for the revenue to rebut that the material found during the course of search operation does not relate to the expenditure incurred by the assessees - the claim of the vendors was accepted without any verification with regard to source for investment and genuineness of the expenditure - merely because the vendors claimed expenditure @18,000 per cent for filing up the land that alone cannot be a reason for disallowing the claim of the assessees - the expenditure for filling up the land to make it saleable condition was incurred by the assessees, therefore, the expenditure has to be allowed in the hands of the present assessees – there was no justification on the part of the AO in disallowing the claim of the assessees - both the assessees have incurred the expenditure for filling up the land with red earth so as to make it saleable – the AO is not justified in disallowing the claim of the assessees - CIT(A) ought to have allowed the entire expenditure instead of restricting the same – thus, the order of the AO is modified and the AO is directed to set aside the entire addition on account of development expenditure claimed in the hands of both the assessees – Decided in favour of Assessee.
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2014 (6) TMI 441
Amendment of assessment on appeal - Order u/s 267 r.w section 251 of the Act – Validity of trust u/s 6 of Indian Trusts Act – Held that:- It is not on the unfettered discretion of the appellate authority to give any directions and there are strict legal provisions on the scope of what directions or findings can be given in the course of the appellate proceedings – Relying upon Rajinder Nath Vs CIT [1979 (8) TMI 3 - SUPREME Court] - a finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year - it must be directly involved in the disposal of the case - CIT(A) does indeed have the powers to issue such directions - The powers to give such directions is one thing, but relaxation in time limit for completion of assessment u/s 153(3) is quite another thing - That relaxation u/s 153(3), as evident from Explanation 3 to Section 153(3), can only come into play when the person in whose hands income is to be added, as a result of these findings or directions, "was given an opportunity of being heard before the said order (i.e. appellate order) was passed”. The opportunity of hearing to the assessee in whose hands income of the assessee in appeal is to be added, it is condition precedent for giving any finding adverse to such assessee vis-à-vis the time limits for completion of his assessment, reassessment or recomputations are concerned - unambiguous scheme of Explanation 3 to Section 153(3) - an appellate authority does not do so, the affected assessee cannot be put to any disadvantage as far as the statutory time limits for completion of assessments, reassessment or re-computations - An opportunity to be so given should be a specific opportunity and the affected assessee is required to be put to notice on that issue - A general hearing given to the representative of the trusts in question cannot, in our humble understanding, be equated with such specific opportunity to the affected assessee and the affected assessee being put to notice about the conclusions adversely affecting him. Unless the assessee was given a specific opportunity of being heard, before the appellate order in the cases of Gurunanakdevji Trust, Guru Govind Singhji Trust and Guru Teg Bahadurji Trust was passed or unless the order was passed within the time limits set out u/s 153(1) or (2), the order cannot be said to be sustainable in law - The time limit u/s 153(1) and (2) are clearly not satisfied on the facts of this case since it is not a case of serving the notice u/s 148, the assessment year is 2002-03, a valid return was duly filed and processed, and yet the impugned order was passed on 4th December 2006 - The scheme of the Income Tax Act fiercely guards the rule of finality to income tax proceedings, whether in assessment, reassessment, revisions, rectifications or any other proceedings, and once the time limit for that course of action is over, the finality thereto cannot be disturbed except under the specific provisions of the Act - The only thing which can help the cause of the revenue is thus a specific notice of hearing having been given to the assessee before us, as mandated by Explanation 3 to Section 153(3) - It is only when the AO can demonstrate that the assessee was given a specific opportunity of hearing, before the appellate order dated 3.10.2005 was passed in the cases of Gurunanakdevji Trust, Guru Govind Singhji Trust and Guru Teg Bahadurji Trust, that the assessment order can be treated as legally valid. Thus, the matter is to be remitted back to the AO for verification - In case it is found this assessee has not been given any such specific opportunity of hearing, the impugned assessment order shall stand quashed and the matter rests there. - Decided in favour of Assessee.
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2014 (6) TMI 440
Transfer pricing adjustment – International transaction of the provision of agency and marketing support services – Held that:- The findings returned by the TPO - the assessee assuming substantial risks; doing critical functions for its AEs; and allowing the user of its highly-valued intangibles to such AEs - are all in air without any bedrock - there is no reference to the names of such comparables in the TPO’s order - the TPO embarked upon the PSM throughout the length and breadth of his order - The alternative approach of TNMM was not given any serious consideration - Even there is no discussion about the comparables chosen by the assessee and how they were acceptable or not – thus, the matter is to be remitted back to the AO for fresh determination of the ALP of the disputed international transactions of `Provision of Agency and marketing support services’ - the assessee will be allowed a reasonable opportunity of being heard in such de novo determination of the ALP. Disallowance u/s 37(1) of the Act – 50% of club expenses – Held that:- Following CIT vs. Groz Beckert Asia Ltd. [2013 (2) TMI 375 - PUNJAB & HARYANA HIGH COURT] - payment of corporate membership fee has to be allowed as a revenue expenditure in the hands of the company - the amount spent on club membership fee of company’s directors is deductible as business expenditure – Decided partly in favour of Assessee.
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2014 (6) TMI 439
Allowability of unabsorbed depreciation of amalgamating company – Form No. 62 not filed – Statutory requirement under Rule 9C(b) r.w section 72A of the Act – Held that:- The claim of the assessee for the set-off of brought forward losses and unabsorbed depreciation pertaining to the amalgamating company was allowed by the AO in the original assessment completed u/s 143(3) even in the absence of the prescribed form No.62 filed by the assessee – the assessment was set aside by the CIT by exercising his powers u/s 263 and the AO was directed by him to decide this afresh after giving the assessee an opportunity of being heard - availing the opportunity given to it for the first time, the assessee company duly filed the prescribed form No.62 before the AO but the same was overlooked by the AO and the claim of the assessee was disallowed by him - CIT(A) took cognizance of the form and allowed the claim of the assessee – Relying upon Commissioner Of Income-Tax Versus Shivanand Electronics [1993 (9) TMI 30 - BOMBAY High Court] - filing of form is only directory and not mandatory – thus, there was no infirmity in the order of CIT(A) allowing the claim of the assessee for the setting off of brought forward losses and unabsorbed depreciation pertaining to the amalgamating company and upholding the same – Decided against Revenue.
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2014 (6) TMI 438
Deduction u/s 37(1) - pre-operative expenses Scientific research for the purpose of its own business Held that:- True, the assessee cannot be considered as engaged in scientific research related to its business in-as-much as the same is being undertaken in pursuance to an agreement with another, Eisai-Japan, which sponsors the same, so that the discovery, if any, resulting there-from, would vest with the latter. However, why is the same not admissible u/s. 37(1), we fail to fathom. The Revenue has in fact itself assessed the receipt by way of service charges for the three years under reference, claimed to be from Eisai-Japan, as business income u/s. 28. How could then the expenditure on a principal activity carried out be considered, even in part (as it would only be for that incurred and claimed for A.Y. 2006-07), as toward pre-operative expenditure? In-asmuch as the expenditure by way of sponsoring the activity of the NGOs (as ARDSI) also forms part of the Agreement dated 01.01.2005, though, as explained by the ld. AR, not subject to a mark-up of 10%, as is the expenditure incurred directly by the assessee, the same cannot be considered as donation, as considered by the Revenue. There being no finding by the authorities below with regard to a direct nexus of the impugned expenditure with the receipt afore-noted - matter remanded back - decided in favor of assessee.
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2014 (6) TMI 437
Addition of provision for tax recoverable – Reimbursement of income tax - Held that:- Following M/s ESSAR POWER LTD. Versus ADDITIONAL/ DEPUTY COMMISSIONER OF INCOME TAX, RANGE 5(1), MUMBAI [2012 (12) TMI 670 - ITAT MUMBAI] - the amount paid by the power purchasers by way of tax on the amount of tariff charges received by the assessee can be treated as the income of the assessee - payment of tax received by the assessee is a part of tariff charges as per agreements and it is an income in the hands of the assessee and therefore the said amount is to be included in the income of the assessee – Decided against Assessee. Disallowance made u/s 14A r.w. Rule 8D of the Act – Held that:- Rule 8D cannot be held to be applicable as the same would apply only from AY 2008-09 - The issue of disallowance is only with regard to administrative expenses - rule 8D is not applicable, the formula prescribed under the rule shall also not apply - There has to be some reasonable basis for allocating administrative expenses after looking at the nature of expenses and also the expenses which can be said to be attributable for making the investment which are capable of yielding exempt income – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Deletion of interest income – Income from margin deposits, ICDs on Employees loan treated as income from other sources – Whether interest income is business income or not - Held that:- Following M/s ESSAR POWER LTD. Versus ADDITIONAL/ DEPUTY COMMISSIONER OF INCOME TAX, RANGE 5(1), MUMBAI [2012 (12) TMI 670 - ITAT MUMBAI] - CIT(A) has rightly held that interest from the margin money kept with the bank as well the interest on the loans to the employees is to be assessed as the business income – Decided against Revenue. Deletion of provision for income tax recoverable – Purchase of power – Computation of book profits u/s 115JB of the Act – Held that:- Following M/s ESSAR POWER LTD. Versus ADDITIONAL/ DEPUTY COMMISSIONER OF INCOME TAX, RANGE 5(1), MUMBAI [2012 (12) TMI 670 - ITAT MUMBAI] - There is no dispute that under clause (i) of Explanation 1 to section 115JB of the Act there is a retrospective amendment made by Finance (2) Act, 2009 w.e.f. 1-4-2001, therefore, the book profit has to be recomputed in accordance with the above clause (i) of Explanation 1 to section 115Jb of the Act – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Asseessee.
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2014 (6) TMI 436
Accrual of income - taxability of advances received - Addition of advance fee from clients for services – Held that:- Income tax is to be charged at the rate or rates fixed for the year by the annual Finance Act - the subject of charge is the income of the previous year - mere receipt of amount is not taxable unless the same or the part embedded in that receipt partakes the character of income - Section 5 determines the scope of total income depending upon residential status of the assessee - It prescribes the gamut of total income of an assessee – Relying upon ED. Sassoon And Company Limited And Others Versus Commissioner Of Income-Tax, Bombay City [1954 (5) TMI 2 - SUPREME Court] - when the assessee acquired a right to receive that income - Merely because an amount has been entered into in assessee’s book, is not conclusive proof that income has accrued - Section 145 deals with method of accounting and is a procedural section - This section cannot be resorted to for taxing a particular receipt unless the receipts come with section 4 r.w. section 5 partaking character of income - If an assessee may be required to refund the amount then it cannot be treated as assessee’s income in that particular year - unless the assessee can exercise his entire rights over a particular receipt, it cannot be said that income has accrued in his favour - No other person should have any charge over that receipt. The dominion over the amount should be of assessee. The amount will be accrued to the assessee only on rendering of services - receipt by itself is not sufficient to attract tax, but, it is only receipt as “income”, which can attract tax - receipt in advance amount come within the provisions of section 4 or 5 of the IT Act - Every receipt cannot be treated as income in the hands of the assessee, but, it is only when it bears the character of assessee’s income at the time when it reaches the hands of the assessee that it becomes exigible to tax – Relying upon CIT Vs. Tollygunge Club Ltd. [1977 (3) TMI 1 - SUPREME Court] - the assessee received the fee in advance for which no service was rendered in the assessment under consideration and it cannot be held as taxable in the hands of the assessee in the year of receipt even though such income was reflected in the books of the assessee, as not only actual receipt to be seen but constructive receipt to be seen to tax the income in the assessment under consideration - services are not performed in the current assessment year and till the performance of the service by the assessee, the assessee could not be said to be received the amount on accrual as the assessee could not exercise its dominion over the receipt and the impugned amounts should be taxed in the year in which the assessee renders service to the payee. Being so, in our opinion, issue of tax of amount cannot be done in the AY – Decided in favour of Assessee.
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2014 (6) TMI 435
Deletion by estimation of sales at higher value – Estimation of profit rate @ 14.5% - Held that:- The assessee has disclosed gross profit of Rs. 3.28 crores, which works out to 29.97% - in respect of IMFL/Beer, the assessee had shown sales of Rs. 12.07 crores , on which gross profit of Rs. 3.93 crores was declared giving G.P. rate of 25.66% - because of short lifting of country liquor, the assessee was required to pay short license fees of Rs. 79.25 lacs and similarly in respect of IMFL/Beer, short license fee of Rs. 3.10 crores was paid and it is the main reason for declining of net profit - once the AO has rejected books results by applying provisions of Section 145(3) of the Act, best judgment assessment is required to be done - "best judgment assessment" is not a provision to penalize the assessee, but is a machinery provision to enable the Revenue to assess a person when situation warrants such an assessment. There is an element of guess work in "best judgment assessment", it shall not be wild one, but shall have reasonable nexus to the available material and circumstances of each case - While estimating the Gross Profit, the AO should be fair & reasonable and should keep into account the turnover and the Gross Profit of earlier years along with all the facts and circumstances of the case - by rejecting book result, the Assessing Officer does not get absolute and unbridled powers to estimate whatever profit he wants, as per his sweet-will – CIT(A) was rightly of the view that the addition made is not logical, since it is excessive in view of the estimation made in the sales - the difference in the circumstances of the assessee with that of M/s Banna Ali Girdhari & Party has also been shown with this submission that the business of assessee is 5 times larger than them. The assessee had shown better g.p. rate in IMFL & Beer sales, there was no much scope for the AO for interference and the possibility of sales out of books, which held unreliable has already been taken into account by the ld. CIT(A) - the extent of profit in the nature of liquor business depends upon several factors i.e. geographical condition of the area, social and economic condition of the people in the area, mixing habit of the population - rapport amongst the contractors of the area - their experience and economic position; political position and status of the population in area and excise policy of the Government - there were both types of instances of lower and higher G.P. rate than the declared G.P. rate of the assessee - the AO was not justified in applying the higher G.P. rate to work out the income of the assessee on the enhanced estimated sales – thus, there was no infirmity in the order of CIT(A) – Decided against Revenue.
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2014 (6) TMI 434
Allowability of service charges – Services rendered by holding company – Held that:- Following Sonata Information Technology Ltd. Versus Deputy Commissioner of Income-tax [2012 (9) TMI 335 - ITAT MUMBAI] - CIT (A) identified some of the expenditure on electricity, rent advertisements etc., so as to state that most of the expenditure was allocated to increase the profits in the case of SSL which was claiming deduction u/s 10A – the examination by the CIT (A) on few items is selective and not appropriate according to the facts – there is no reason to doubt that assessee has not incurred the expenditure and the other company has not provided any services - assessee is a 100% subsidiary of the principle company SSL and there is exchange of personnel depending on the field of operation and the agreement clearly provided for distribution of service charges on the basis of turnover - The requirement of training is an on-going exercise in the changed scenario of technological up-gradation in the software industry – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Revenue. Allowability of deputation charges - Personal deputed by Sonata Software Ltd. – Reimbursement of various expenses - Held that:- Following Sonata Information Technology Ltd. Versus Deputy Commissioner of Income-tax [2012 (9) TMI 335 - ITAT MUMBAI] - SSL agreed to render some common services in the areas of Finance, Accounts, Taxation, Legal, Administration, HRD, education, Training, Research etc. - the expenses covered by that agreement cannot and do not relate to expenditure incurred on deputing employees to work on specific projects of the Assessee - the expenses on account of deputation charges as well as other expenses are not covered under the agreement – Decided against revenue.
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2014 (6) TMI 433
Stay application - Transfer pricing adjustment – Held that:- The balance of convenience is towards the assessee as he has pleaded of having a prima facie case in-as-much as the comparable relied upon by the Revenue has been held to be a merchant banker - even the order shall have no bearing whatsoever on the merits of the case of the parties in appeal, though it is a fit case for grant of stay, which is granted by a stay for a period of six months or the disposal of its appeal by the tribunal, whichever is earlier – Stay granted.
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2014 (6) TMI 432
Allowability of benefits of exemption u/s 11 of the Act – Held that:- The assessee’s registration u/s 12A granted earlier by DIT (E) was withdrawn u/s 12AA(3) - the order of the DIT (E) has been set aside by the Tribunal and assessee’s registration u/s 12A has been upheld - the very basis and foundation of denying the benefit u/s 11 ceases to exist - once the registration u/s 12A continues - it is axiomatic that the income has to be computed in accordance with section 11 and benefit/exemption has to be given - The exemption cannot be denied simply on the ground that the matter is subjudice before the Hon’ble High Court – Decided against Revenue. Allowability of carry forward of unabsorbed depreciation – Held that:- Following CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT High Court] - the income derived from the trust property has to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year, will have to be regarded as application of income of the trust in the subsequent year in which adjustment has been made - Decided against Revenue.
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2014 (6) TMI 431
Disallowance of partnership insurance premium – Policies to be qualified as keyman insurance policies – Held that:- The assessee has paid the premium to the various insurance companies under the policy taken in the name of its two partners namely Mr. Nilesh K. Patel and Mrs. Jigna N. Patel - the assessee has filed only the receipt of premium paid towards the policies and in the absence of policy documents it is not possible to give a conclusive finding whether the policies in question are truly Keymen policies or not - It makes no difference if the policies are Keymen policy at the time when it was taken and subsequently if the policies are assigned in the name of Keymen/partners - the benefit received by the partners will be treated as income in the hands of the partners otherwise the benefit received by the firm is always taxable and that is why the expenditure of premium paid towards the Keymen policy is allowable u/s 37(1) of the Act being the expenditure incurred for the purpose of business of the assessee - the relevant record i.e. policy document has not been placed – thus, the matter is required to be remitted back to the CIT(A) for examination – Decided in favour of Assessee. Disallowance of transport charges – Relevant details not properly appreciated – Held that:- The AO has disallowed 20% of the expenses made in cash to one party namely M/s Anil Bulk Mover India Pvt. Ltd. - the assessee has placed the details of transport expenses paid to M/s M/s Anil Bulk Mover India Pvt. Ltd and no such cash payment was made to this party - All the payments were made to the party after deduction of TDS - the AO has disallowed 20% of the expenses under wrong assumption of facts, whereas these expenses pertains to the payment made to various parties in small amounts ranging from few hundreds to thousands – thus, the addition of transport charges is to be set aside – Decided in favour of Assessee. Disallowance made u/s 36(1)(iii) of the Act - Interest on vehicle loan – Held that:- Interest expenditure on loan for purchase of car is an allowable business expenses - The interest expenses on loan is relating to the purchase of car and not actual use of car - The expenses which are for the purpose of acquiring a business asset and not incurred for actual use of the asset as it remained constant irrespective of the fact whether the business asset is also use for personal purposes - The assessee has already disallowed the other running expenses of the car at the rate of 20% on account of personal use and the disallowance of 20% of the interest paid on the loan taken for acquisition of car cannot be disallowed on account of personal use of the car because the interest expenditure is pre determined and it does not vary by the reason of actual use of car – thus, the addition of interest expenses on loan for purchase of car is to be set aside – Decided in favour of Assessee.
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2014 (6) TMI 430
Disallowance made u/s 40(a)(ia) of the Act – Applicability of section 194A of the Act – Held that:- Following Rajeev Kumar Agarwal Versus Additional Commissioner of Income Tax [2014 (6) TMI 79 - ITAT AGRA] - The underlying objective of section 40(a)(ia) was to disallow deduction in respect of expenditure in a situation in which the income embedded in related payments remains untaxed due to non-deduction of tax at source by the assessee - deductibility of expenditure is made contingent upon the income, if any, embedded in such expenditure being brought to tax, if applicable - a deduction for expenditure is not allowed to the assessees, in cases where assessees had tax withholding obligations from the related payments, without corresponding income inclusion by the recipient. Section 40(a)(ia) cannot be seen as intended to be a penal provision to punish the lapses of non-deduction of tax at source from payments for expenditure- particularly when the recipients have taken into account income embedded in the payments, paid due taxes thereon and filed income tax returns in accordance with the law - declining deduction in respect of expenditure relating to the payments of this nature cannot be treated as an “intended consequence” of Section 40(a)(ia) - it cannot be subscribe to the view that it could have been an “intended consequence” to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax - That will be going much beyond the obvious intention of the section - the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Disallowance of cash payment for purchase of land – Held that:- Following Jamir Mondal, Kolkata vs. ACIT, Circle-53, Kolkata [2014 (6) TMI 245 - ITAT KOLKATA] - Rule 6DD of the Rules clearly lays down the conditions or exceptions under which the rigor of the provisions of section 40A(3) of the Act may be relaxed and there is no discretion on either of the parties to extend the condition or relax the condition at will. Even the existence, demand or necessity or business expediency does not fall under the provisions of Rule 6DD of the Rules - it cannot be said that the assessee has immunity from the provisions of section 40A(3) of the act - the considerations of business expediency are no longer relevant but this is precisely what constitutes foundation of assessee’s defence – the order of the CIT(A) is upheld – Decided against Assessee.
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2014 (6) TMI 429
Nature of gain – Purchase and sale of shares – STCG or Business income – Held that:- Following ACIT Circle-4(2), Versus Upendra K. Doshi [2014 (2) TMI 505 - ITAT MUMBAI] the assessee is in respect of the shares held and disclosed by him as an investment in his accounts, to be treated as an investor, so that the same are capital assets, yielding capital gains, whether long-term or short-term, i.e., depending upon the period of holding - assessee’s disclosure in accounts is not conclusive by itself, and a number of relevant parameters, viz. regularity, frequency, volume, trading and financing pattern, etc., also specified by the Board per its Circular, are required to be looked into to determine the nature of an asset, which is thus primarily a factual matter – the assessee is to be treated as investor and the shares held as investments - The shares brought forward from the earlier years would only be capital assets – thus, the contention of the assessee is accepted that the shares transferred as representing capital assets, so that the gain/loss is assessable under the head ‘capital gains’ and not as business income – Decided in favour of assessee.
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2014 (6) TMI 428
Claim of repairs and maintenance – renovation or extension of or improvement to the building - revenue or capital in nature - Held that:- There is a confusion in the order of the CIT(A) - the AO has not examined item wise repairs claiming to finally hold that each of them are capital in nature - both the parties mentioned that the issue is required to be adjudicated by the AO once again after granting an opportunity of being heard to the assessee – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Calculation of LTCG – Sale of shares u/s 55(2)(ab) of the Act – Held that:- Following M/s. Parag Parikh Financial Advisory Services Ltd. Versus ITO -4(2) (1), Mumbai [2014 (2) TMI 686 - ITAT MUMBAI] - the shares are deemed to be acquired on the date of acquisition of ‘BSE Card’ and not from the date of their conversion - the cost of acquisition of ‘BSE card’ shall be the cost of acquisition of BSE shares and the shares are deemed to be acquired on the date of acquisition of ‘BSE card’ and not from the date of their conversion - the date of holding/acquisition of an asset being equity shares allotted pursuant to demutualization or corporatization of a recognized stock exchange will be the date of acquisition of original ‘BSE card’ – thus, the order of the CIT(A) is set aside – Decided in favour of Assessee.
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2014 (6) TMI 427
Denial of claim of deduction u/s 80P of the Act – Held that:- CIT(A) was of the view that the assessee-society is not a co-operative bank, therefore, the provisions of section 80(P)(4) are not attracted – CIT(A) has denied the deduction on the ground that the assessee has extended credit facilities to Class-B Members, who are not regular Members of the Society and thus the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) and (iv) - ‘Member’ includes ‘Associate Member’ - The reference of class ‘B’ Members by CIT(A) is with respect to Associate Members - the authorities under the Act cannot go beyond their jurisdiction and make classification within a classification of members to deny the benefit of deduction. Relying upon M/s. SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. Versus The Income Tax Officer [2014 (5) TMI 556 - ITAT CHENNAI] - the ‘nominal’ members or non-voting members are themselves included in the definition of ‘members’, they satisfy the relevant condition imposed by the legislature u/s 80P(2)(a)(i) - thus, the assessee is eligible to claim benefit of deduction u/s 80P(2)(a)(i) & (iv) of the Act – Decided in favour of Assessee.
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Customs
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2014 (6) TMI 447
Penalty u/s 114 - Mis declaration of goods - export of live consignment of Muriate of Potash (MOP) of fertilizer grade - restricted goods - Held that:- Prima facie, the goods attempted to be exported by live consignment and past exports were MOP as proved from CRCL Report. No evidence came to record to rebut the charge of smuggling. The offending goods were restricted as has been held by adjudicating authority. Once the goods exported or attempted to be so, in contravention of law, without obtaining permission or licence from the appropriate authority to export, all the persons involved in the stream of export shall be liable to consequence of law. The goods were confiscable under Customs Act, 1962. The goods remained to be MOP all along without being controverted by any evidence led in that behalf - The acts and omissions of the appellants caused jeopardy to public revenue, and hampered interest of the economy. Both appellants were conduits to facilitate export of MOP to unjustly enrich the exporter at the cost of Public Revenue. Therefore it is difficult to dispense with the requirement of pre-deposit when Revenue has a prima facie case and balance of convenience tilts in its favour. - stay granted partly.
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2014 (6) TMI 446
Confiscation of goods - Redemption fine - Penalty imposed on partnership firm and partner each u/s 112 - import of memory cards of ‘STRONTIUM’ brand Micro SD Memory cards of 2GB capacity - declared as ‘PERSONAL EFFECTS/CLOTHS/SEE INLAY’ - Difference of opinion - Majority order - Held that:- under Notification issued by the Central Government under Section 11 of the Customs Act, 1962 import of dutiable goods through letter, packet or post parcel is restricted to the cases where such letter, packet or post parcel is accompanied by a declaration stating the nature, weight and value of its contents and such declaration is either enclosed therein or is pasted on to the parcel and the Commissioner of Customs is satisfied that the nature, weight and value of the contents of the letter, packet or post parcel had been correctly stated in the declaration. In this case, undisputedly the nature of the contents and the value has been grossly mis-declared and hence this import is in contravention of the prohibitions imposed by the Central Government under Section 111 and hence irrespective of the applicability of Clause (l) and (m) of Section 111, the goods would be liable for confiscation under Section 111 (d). In this case while the Commissioner has imposed redemption fine of ₹ 12,00,000/- and the same has been upheld by Hon’ble Member (Technical), Hon’ble Member (Judicial) has reduced the fine to ₹ 6,00,000/-. No calculation of the margin of profit has been given by the Department and this is the ground on which the redemption fine has been reduced. Since, the redemption fine in lieu of confiscation is dependent upon the profit margin in respect of which there is no evidence, on the question of redemption fine, I agree with the decision of Hon’ble Member (Judicial). Penalty of partner of the firm - Held that:- since penalty has been imposed on partnership firm under Section 112 (a), separate penalty on its partner, Shri Aditya Batra would not be justified under Section 112 (a). Penalty under Section 112 (b) is attracted when in respect of any illicitly imported goods liable for confiscation under Section 111, any person acquires their possession or deals with them in the manner mentioned Clause (b) of Section 112. In this case, the goods imported had not even been cleared and, as such, there was no question of Shri Aditya Batra having acquired their possession or being concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or any other manner dealing with the imported goods. For this reason penalty under Section 112 (b) on Shri Aditya Batra is not justified. Thus, while penalty on Shri Aditya Batra is not imposable under Section 112 (b), penalty on him as imposed under Section 112 (a) is not justified when for the same offence penalty has been imposed under Section 112 (a) on M/s Siddhant Enterprises of which Shri Aditya Batra is a partner - Decided partly in favour of assessee.
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2014 (6) TMI 445
Revocation of the licence of the appellant-CHA - Violation of Regulation 13 - Transacting business through non employee - Held that:- the appellant had authorised Mr. D. Belavendran who was an outsider and not an employee of the CHA to process the export documents filed by the exporter and submit the same to the Customs authorities, to attend the examination of the goods and also get the Customs clearance done. This position has also been admitted by Shri Kamlesh Gandhi during the cross-examination proceedings. Therefore, it is clear that the appellant-CHA sought to get the Customs clearance work done in the Customs area by transacting their business through a non-employee in contravention of Regulation 13(b). Similarly, the appellant did not furnish any authorisation issued by the exporter for transacting the business. In the instant case, the documents were filed in December, 2004 whereas the letter of the exporter showing that they have authorised Mr. Belavendran to represent them came only in April, 2005, i.e., more than four months after the transactions had taken place and, therefore, this cannot be considered as an authorisation as envisaged under the CHALR, 2004. Thus the charge of transacting without proper authorisation from the exporter also stands clearly established which is a confrontation of Regulation 13(a). - all the charges against the appellant, except that of subletting, stand fully established in the present case - No infirmity in the order passed by the Commissioner of Customs (General), revoking the licence of the appellant-CHA. - Decided against the appellant.
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Service Tax
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2014 (6) TMI 461
Waiver of pre deposit - works contract - Valuation - inclusion of value of supply and erection and commissioning of transformers - Cenvat Credit - Penalty - Held that:- the denial of the Cenvat Credit on the inputs which has gone into manufacturing of the said transformers cannot be upheld for the reason that the activity of manufacture of transformers is excisable and the excise duty liability has been discharged by the appellant. Prima facie, the value of transformers cannot be included in such execution of works contract as there is no dispute that M/s. Sunil Hitech Engineers Ltd. had given them two separate contracts for supply of transformers and erection and commissioning of such transformers. Nature of contract - composite contract or separate contract - Held that:- Tender as floated by MSEB/MSDEL, sought quote for supply and erection and commissioning of transformers separately; but while awarding the tender to M/s. Sunil Hitech Engineers Ltd., we find that MSEB/MSDEL had infact executed three separate contracts i.e. one for supply of transformers; one for erection and commissioning of such transformers; one for civil construction of required-for erectioning and commissioning of such transformers. It is also noticed that the said M/s. Sunil Hitech Engineers Ltd. who bagged the contract had given back to back contract to M/s. IMP. Powers Ltd. for supply of transformers and erectioning and commissioning of the same and had given the civil construction contract to somebody else. Prima facie, we are of the view that the ratio of the judgment of this bench in the case of M/s. Essar Projects (India) Ltd. (2013 (12) TMI 796 - CESTAT AHMEDABAD) would apply and hence we hold that the all appellants have made out a prima facie case for waiver of the duties, interest and penalties confirmed by the adjudicating authority. - Stay granted.
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2014 (6) TMI 460
Demand of service tax - Management, Maintenance and Repair Service - Held that:- The appellant’s were providing the service of retreading of tyres, which is a taxable service. The main contention of the appellant is that they paid service tax on labour portion. They are contesting demand on the material portion - in the case of maintenance and repair of transformers entered into agreement with clients in two separate parts, namely, scope of repair work and supply of parts, the value of the goods used in carrying out repair activities is not includible in the taxable value. Service tax can be levied on the service component of any contract involving service with sale of goods etc. Computation of service component is a matter of detail and not a matter relating to validity of imposition of service tax. It is procedural and a matter of calculation. Merely because no rules are framed for computation, it does not follow that no tax is leviable - tax is not leviable on material portion of the contract. But, it is required to examine the record - Matter remanded back - Decided in favour of assessee
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2014 (6) TMI 459
Denial of refund claim - Bar of limitation - Held that:- appellant was not required to pay service tax but they paid the service tax wrongly. Therefore, as held by the Hon’ble High Court of Madras in the case of Natraj & Venkat Associates (2009 (10) TMI 36- Madras High Court) that the provisions of Section 11B of the Central Excise Act, 1944 are not applicable. Therefore, refund claim cannot be held as time barred. - Decided in favour of assessee.
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2014 (6) TMI 458
Service tax liability - Management, Maintenance and Repair services - Held that:- appellant has been making available excess plant capacity available with them for manufacturing of insecticides to one M/s. Gharda Chemicals Limited which is done under the provisions of Rule 4(5) of Cenvat Credit Rules, 2004, i.e. Job Work. In our considered view, the service tax liability on the appellant under the category of Management, Maintenance and Repair, prima facie, may not arise, as it is on record that the plant capacity which has been made available to M/s. Gharda Chemicals was their own plant and which they were not using. Accordingly, we find that the appellant has made out a prima facie case for complete waiver of pre-deposit of amounts involved - Stay granted.
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2014 (6) TMI 457
Man power recruitment - supply services to sugar mill - Held that:- it is undisputed fact on record that the agreements were entered between the appellant and the sugar mill for undertaking various jobs like loading/unloading in trucks, weighment, restacking of sugar bags, removal of sugar bags etc. The labourers employed by the appellants were their own employees meant for doing the agreed job. It cannot be said at this prima facie stage that the appellants have undertaken services of man power supply - Stay granted.
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2014 (6) TMI 456
Cenvat credit - GTA service - Challan as inadmissible document - Held that:- When tax has gone into treasury, unless the depositor is otherwise disentitled, credit thereof cannot be denied for set off against tax/duty liability - Decided against Revenue.
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Central Excise
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2014 (6) TMI 455
Demand of duty - clandestine removal of chhakdo rickshaw - Held that:- appellants having not justified or indicate the reason for seeking the cross-examination before the adjudicating authority, cannot claim that there is a violation of principles of natural justice and more so when he himself remains absent in the adjudication proceedings. On merits, we find that the justification of the appellant that RTO records cannot be sole records to arrive at manufacturing activity is an issue that cannot be decided summarily as the RTO records are State Government records and needs to be given due weightage. In our view, this deeper consideration can be done at the time of final disposal of appeal - stay granted partly.
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2014 (6) TMI 454
Modvat credit - Fraudulent availment - Demand of amount equivalent to the credit of duty taken on Naphtha for the entire period - input used for adulteration of petrol, diesel etc - illegal divertion - appellants have manipulated their records to indicate that said Naphtha have been used in the manufacture for solvents - non-production of final product - 22 out of 45, purported purchasers of solvent were found to be non-existent or if in existence they in their statements have said that they never purchased solvent from the appellant - number of bank accounts were opened in Mumbai/Navi Mumbai on behalf of purported existent and non-existent purchasers (who were located in different parts of the country) and large amounts of cash were deposited which in turn were transferred to appellants account as if receipt of sale amount of solvents - transportation of solvents. Held that:- Whole case is the total silence on the part of the appellants about the financial transactions unearthed by the Revenue. No comments have been made why the bank accounts were opened in Mumbai/Navi Mumbai for the purported buyer in different parts of the country (mostly non existent). How a huge amount were deposited in cash and thereafter transferred to the appellant as payments towards the Beesol, their final product. No meaningful explanation has been given by them in respect of 22 customers who have purported to have purchased Beesol indicated either such customers are non existent or they have not purchased Beesol or any other solvent from the appellant at all baring two cases wherein the customers have stated that they have purchased, except saying that the said units might have closed down or some of them being traders have stopped the business or taking central excise registration was not essential. The details found during investigation and confronted to appellant are required to be refuted on the basis of solid evidence by the appellant. In the absence of any such refutal, the allegations made by the revenue about the non existence or non purchase by these 22 units have to be upheld. In the event of not using the inputs in the manufacture of dutiable final products for whatever reason the credit alongwith interest is required to be paid back to the Government and penalty for misuse of facility/trust. The above proposition were covered under different rules at different point of time. In the present case when the irregularities were done the relevant rule was Rule 57I/57AH of the Central Excise Rules, 1944. However, when the Show Cause Notice was issued separate set of Cenvat Credit Rules has come into existence and it became Cenvat Credit Rules. Thus there was no period when the credit of inputs were not allowed and inputs were not to be used in the manufacture of taxable final product and there was no change in the law (except the Rule number or language of the Rule) for the recovery of credit on inputs which were not used in the manufacturing process was concerned From the investigation it is very clear that the appellants have not used either the whole or part of the Naphtha procured duty free. Naphtha purported to have been used in the manufacture of Beesol and purported to have been sold to 22 customers was definitely not used but diverted. But how much Naphtha has been diverted is not clearly coming out as the appellant did not co-operate in the investigation did not produce ledger account of all the parties so as to enable the Revenue to check up from the banks the money trail. In the circumstances, we are of the view that the ends of justice would be met by (i) disallowing the credit of Naphtha taken which is estimated (based upon input/output ratio) to have been used in the manufacture of Beesols the solvents purported to be sold to the 22 buyers (excluding the few consignments of two of such buyers who have admitted to have purchased one or two consignments); (ii) in respect of the remaining customers, appellants may be given last chance to produce all the invoices as also transport documents and ledger account detailing the banking transaction to enable verification of money trail - matter remanded back - Commissioner to re determine quantum of penalty - Decided against assessee.
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2014 (6) TMI 453
MRP Valuation or transaction value - Clearances of tiles - institution buyer - industrial consumers - appellant is discharging duty on these tiles as per the provisions of Sectin 4A - revenue demanded duty on the basis of transaction value under Section 4 - Held that:- Goods are required to be supplied in standard packages consisting fixed number of specified tiles. These packages are the same in respect of retail sale also and on these packages the appellant has declared the MRP. In other words, there is no difference in respect of packages of tiles sold to retail consumers or to the so called institutional buyers and all of them are in standard packages, having MRP declared on them. It is also not in dispute that, on the packages, the appellant has not made any declaration that "the packages are not meant for retail sale or the packages are meant for use by any specified industry". In the absence of such markings on the packages, it cannot be said that the goods supplied were not in retail packages. In their letter dated 23/02/2012 the Dy. Controller of Legal Metrology, Maharashtra has clarified that according to Rule 3 Packaged Commodity Rules, 2011 the provision regarding mandatory declaration on retail packages are not applicable to the packages meant and marked as industrial/institutional consumers - discharge of duty liability tiles supplied in retail packages to real estate developers / developers, etc. has to be made under Section 4A of the Central Excise Act, 1944. Therefore the impugned demands are not sustainable in law - Following decision of ITEL Industries Pvt. Ltd. vs. Commissioner of Central Excise [2003 (10) TMI 140 - CESTAT, BANGALORE] - Decided in favour of assessee.
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2014 (6) TMI 452
Confiscation of raw materials - penalty under Rule 209 of Central Excise Rules, 1944 - Held that:- Clear cut finding has been given that raw materials were utilized for the manufacture of finished goods and only the finished goods were held to be subsequently cleared illicitly for which duty was demanded separately. Rule 209 of the Central Excise Rules, 1944 talks of the excisable goods when removed from the factory are only liable to confiscation. In the instant case there is no evidence that raw materials were cleared as such from the factory. Secondly, there cannot be a confiscation of goods which are not available for confiscation. There is no indication in the grounds of appeal whether any appropriate bond undertaking executed by the appellant, existed justifying such confiscation or imposition of redemption fine. Duty with respect to the finished fabrics also stands confirmed - Decided against Revenue.
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2014 (6) TMI 451
CENVAT credit - Duty demand on dealer for passing duty when the goods were actually not received - Held that:- Where the CENVAT credit has been [taken and utilised wrongly] or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. Therefore, the duty demand upheld by the lower authorities cannot be sustained. - Once the duty demand cannot be sustained, mandatory penalty under Section 11AC read with Rule 15 or 25 also cannot be imposed. Penalty under Rule 25 CENVAT Credit Rules - Mandatory penalty under Section 11AC - Held that:- The appellant had not chosen to seek cross-examination of both the parties even though their statements were relied upon. Moreover, the appellant has also not rebutted the evidences collected by the Revenue showing that vehicles were either non-existent or transporters fictitious. That being the case, this is a very clear case of supply of invoices and goods source of which is unknown which is something which has not been investigated but learned AR contended that goods from some other source might have been supplied. In any case, what is required to be established by the Revenue is that the appellant-dealer did not receive the goods and this has been established and therefore the contravention of provisions of CENVAT Credit Rules and Central Excise Rules can be said to have been proved. Under these circumstances, there cannot be any penalty on the Managing Director in the absence of a show-cause notice having been issued to him - Decided in favour of assessee.
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2014 (6) TMI 450
Denial of refund claim - deemed provisional assessment - period of limitation - Original authority allowed refund claim - Commissioner disallowed refund claim as time barred - Held that:- there was an Order-in-Original No. 60/2005, dated 28-10-2005 passed by the Deputy Commissioner of Central Excise, Yeshwantpur Division, Bangalore in respect of the very same assessee discontinuing the provisional assessment resorted to as per order passed in 2001. In this case, leave alone deemed provisional assessment, we have an order specifically taking a decision that there shall be no provisional assessment in the case of the assessee. The learned counsel drawing attention to para 6 wherein, the submissions made by the appellant that they would not insist on provisional assessment and they would claim refund in case of excess payment and make payment to the Government if there is short payment and therefore they have no objection to the provisional assessement discontinuation have been recorded. This does not help the appellant at all. If they wanted provisional assessment, an order to that effect should have been insisted upon by them. The order passed by the Deputy Commissioner was an appealable order and in fact I find that it has become a consent order because of the submissions made by the appellant themselves. Under these circumstances, the assessment in the case of the appellant cannot be considered as provisional or deemed provisional. Therefore, the refund claim filed by the appellant for the purpose of limitation under Section 11B of the Central Excise Act, 1944 has to be considered on the basis of the payment of duty at the time of initial clearance and admittedly refund claim was filed beyond the normal period of limitation of one year. Therefore the assessee has failed to make out a case in their favour. - Decided against assessee.
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2014 (6) TMI 449
Denial of CENVAT Credit - Non filing of declaration - Credit utilized for packing of their final product during the course or manufacture - Held that:- There was a declaration though the same may not be detailed and proper declaration. In any case, we find for the provisions of Rule 57G, a new sub-rule (13) was introduced to the effect that credit would not be denied in case of non-declaration if the proper officer is otherwise satisfied about the receipt of the inputs, their duty paid character and utilization in the manufacture of final product. From the records, we note that there is neither allegation much less than any evidence to reflect upon non-duty paid character of the goods nor their non-receipt - Decided in favour of assessee.
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2014 (6) TMI 448
Denial of refund claim - unjust enrichment - Central Excise duty on Biris - excess payment of duty despite the fact that duty was reduced - price inclusive of duty - uniform price - stability in price - sale and purcase between primary societies and central society - Held that:- appellants were not showing the duty separately in their invoices and it is their claim that prior to 1-3-2007 and after 31-7-2007 and also in between the price of biris remained same irrespective of the amount of duty paid mainly whether it is Rs. 8/- or Rs. 10/-. - Following decision of Union of India v. Mulder India (P) Ltd. [2006 (8) TMI 210 - HIGH COURT OF KARNATAKA AT BANGALORE] - Decided in favour of assessee.
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