TMI Tax Updates - e-Newsletter
June 17, 2016

Case Laws in this Newsletter:

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

TMI SMS

• CBEC issues instruction for Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004

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Articles

1. GST Impact on Professionals (CA, CS, CMA)

   By: Saurabh Singhal

2. PROCLAIMED OFFENDER

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. PM addresses tax administrators at Rajasva Gyan Sangam

2. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

3. Commerce & Industry Ministry aims to establish India as a hub for world class Designing

4. RBI Reference Rate for US $

5. India’s Foreign Trade: May, 2016

6. India and Switzerland agree to move towards an early agreement for the implementation of AEOI between the two countries; Two sides agreed to pursue the ongoing dialogue on tax and financial matters in a spirit of mutual friendship and cooperation

Notifications

Customs

1. 87/2016 - dated 16-6-2016 - Cus (NT)

Rate of exchange of conversion of the foreign currency with effect from 17th June, 2016

Circulars / Instructions / Orders

Service Tax

1. 195/05/2016 - dated 15-6-2016

Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004

FEMA

2. 76 - dated 16-6-2016

Exim Bank's GoI supported Line of Credit of USD 2 billion to the Government of the People’s Republic of Bangladesh

Highlights / Catch Notes

Income Tax

• Assessee's Section 80IC Deduction Upheld Despite Outsourcing; No Discrepancies Found in Books by Assessing Officer.

  Case-Laws - AT : Deduction of profit u/s 80IC - allegation of the revenue is that assessee did not have sufficient infrastructure and man power to manufacture the entire products on its own in its exempt unit and got it done as job work from units outside specified areas - in the absence of any discrepancy in the books of account pointed out by the AO deduction cannot be denied - AT
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• Corporate Guarantees to Associates Exempt from Tax as International Transactions; No Cost to Taxpayer.

  Case-Laws - AT : Corporate Guarantee or Letter of Comfort given by the assessee to its Associate Enterprise does not involve any cost to the assessee, therefore, it was outside the ambit of international transaction - AT
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• Transfer Pricing Officer Criticized for Unjustified Disallowance Due to Lack of Comparable Cases and Transparency in Assessment.

  Case-Laws - AT : Transfer pricing adjustment - It is not known how the Transfer Pricing Officer came to know that the volume and quality of services received by the assessee was disproportionate to its payment - Without identifying the comparable cases, estimation of the disallowance without any base is not called for. - AT
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• Contract Cancellation Loss Allowed Despite Initial Speculative Classification u/s 43(5) of Income Tax Act.

  Case-Laws - AT : Allowance of loss arising on cancellation of contract due to price fluctuation where no actual delivery of cotton commodity - treating a loss to be speculative in nature u/s. 43(5) - these transactions are only 4% of the total transactions forming part of the regular business - claim of loss allowed - AT
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• Interest Expenditure Allowed as Section 56 Imposes No Conditions on Interest Rate; Appellant Justified Lower Interest on Old Loans.

  Case-Laws - AT : Interest expenditure has been expended to earn interest income. Sec. 56 does not postulate any condition about the rate of charging interest. The appellant explained the reasons and circumstances as to how the lesser interest was charged on old loans - Claim of interest expenditure allowed - AT
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• Assessing Officer's Use of Section 148 Notice Questioned When Ample Time Exists for Broader Section 143(2) Assessment.

  Case-Laws - AT : If the Assessing Officer has time in his hands to issue notice u/s 143(2), why is he issuing notice u/s 148, we do not understand, specifically in the background of the legal position that the scope of assessment made on issue of notice under section 148 of the Act has limited as against the wide scope of assessment available to him by issuing notice u/s 143(2) - AT
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• Structures like wells or sheds don't change land's agricultural status for capital gains.

  Case-Laws - AT : Addition under the head ‘capital gains’- Agricultural land or not - The existence of well, septic tank, compound wall, cattle shed, pump house, a small house etc., would not make any difference to nature of land being agricultural in nature. - AT
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• Assessee's Lack of Evidence Leads to Entire Payment Being Treated as Royalty; Decision Upheld with No Errors Found.

  Case-Laws - AT : Where the assessee has failed to produce the relevant information, details and record to support its case and which is also necessary to segregate such part of the payment which may not be falling under the purview of royalty, we do not find any error or illegality in the impugned orders of authorities below in treating the entire consideration received by the assessee as royalty - AT
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Service Tax

• Service Tax Paid with Interest: No Show Cause Notice or Equal Penalty u/s 78 of Finance Act 1994.

  Case-Laws - AT : Under Sub-section(3) of Section 73 no show cause notice can be issued if service tax along with interest is paid by the assessee. Therefore, there are no circumstances to impose equal amount of penalty under Section 78 of the Finance Act, 1994. - AT
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• Airport Taxes and Passenger Fees Excluded from Service Tax Value, Not Part of Assessable Value Calculation.

  Case-Laws - AT : Valuation - the airport taxes as also the passenger service fees collected by the airlines on behalf of the airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. - AT
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• Interest Demand Not Applicable on Reversed Unutilized Service Tax Credit Under Reverse Charge Basis.

  Case-Laws - AT : Demand of interest - availment of ineligible credit of service tax on reverse charge basis - later on reversed without utilizing the same - the question of demand of interest does not arise. - AT
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• CBEC Accelerates Pending Refunds for Service Exporters u/r 5 of CENVAT Credit Rules, 2004 to Boost Efficiency.

  Circulars : CBEC issues instructions for Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004
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Central Excise

• Deduction for Freight in Excise Valuation Permitted: No Valid Reason to Disallow for FOR Destination Deliveries.

  Case-Laws - AT : Valuation - Disallowancwe of deduction for freight - no valid reason for disallowing the deduction for the freight paid inasmuch as the goods are FOR destination. - AT
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• Interest Cannot Be Charged on Retrospective Duties Before Finance Act 2011 Enactment Date, April 8, 2011.

  Case-Laws - AT : Interest on retrospective levy of duty as per Finance Act, 2011 is not chargeable for the period prior to date of enactment of Finance Act, 2011 i.e. 8.4.2011 - AT
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• Dispute Over CENVAT Credit Reversal: Is 8% Reversal on Body Building Chassis Sufficient? Further Examination Needed.

  Case-Laws - AT : Exemption for manufacturing of body building on the procured chassis - condition on availing credit versus availing credit and reversing the credit @8% - whether the reversal of 8% amounted to full reversal of cenvat credit availed by the assessee or not is still required to be examined. - AT
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• Exemption Denied for Metro Supply Due to Duplicate Certificate; Technical Objection Overruled, Demand Set Aside.

  Case-Laws - AT : Exemption under the Notification no. 6/2002 denied on the ground that only duplicate copy of the certificate was provided and original copy was not submitted - supply of goods to DMRC - Such raising of technical or procedural objection by the Revenue only reflects upon their anxiety to confirm the demands - demand set aside - AT
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VAT

• Waiver of Pre-Deposit Possible if Demand Seems Baseless; Stay Applications Require Careful Consideration of Consequences.

  Case-Laws - HC : Waiver of pre-deposit - if on cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or even substantive part of the demand and the stay application should not be disposed of in a routine manner unmindful of the consequences - HC
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Case Laws:

• Income Tax

• 2016 (6) TMI 564
  Reopening of assessment - validity of notice - Held that:- It had come on record that the department had sent the notice for service to the petitioner through postal department on 26.03.2015 which was duly returned by the department with a remark “left”. The question of wrong address is virtually given-up by the petitioner. In fact, the petitioner contends that at that very address, the petitioner has received multiple communications and, therefore, the endorsement “left” was totally wrong. For multiple reasons, the stand of the petitioner cannot be accepted. Firstly, as noted, the postal dispatch has nothing to do with attempted personal service by the department. Secondly, the petitioner does not dispute that the notice was in fact, dispatched through the postal department on or around 26.03.2015. Thirdly, the petitioner does not at least now dispute the correctness of the address. Lastly, the petitioner has not joined the postal department to question why and under what circumstances, the remarks “left” was made. So far as the Income Tax department is concerned, it was entitled to proceed on the basis of official remark of the Government of India Department that the service could not be effected since the addressee had left the place. Only on the ground of non-issuance of service of notice, we are not inclined to terminate the reopening proceedings since no other contention regarding the validity of the notice was raised.

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• 2016 (6) TMI 563
  Penalty levied u/s. 271(1)(c) - assessee had credited the profit on sale of shares claimed to have been received as a gift by way of family arrangement directly in to the capital reserve account instead of routing it through the profit and loss account which amounts to furnishing inaccurate particulars of income by the assessee and resulting in reduction of book profit U/s. 115JB - Held that:- Undisputed facts are that, all necessary declarations were made by the assessee with respect to the receipt in question. Regarding the tax liability of such receipt, there was a difference of opinion between the assessee and Assessing Officer. That by itself would not give rise to penalty proceedings. We are not concerned with the quantum addition. We are only concerned whether the facts give rise to applicability of Section 271(1)(c) of the Act. Reference can be made to the decision of Supreme Court in case of CIT vs. Reliance Petroproducts Pvt. Ltd .[2010 (3) TMI 80 - SUPREME COURT ] and in case of Price Waterhouse Coopers Pvt. Ltd. vs CIT and anr reported in [2012 (9) TMI 775 - SUPREME COURT] .

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• 2016 (6) TMI 562
  Allowability of depreciation - whether the Appellate Tribunal was right in allowing the depreciation disallowed on Pollution Control Equipments interpreting the word “being” used in Appendix-I of the I.T.Rules as illustrative in nature, ignoring the fact that the assets eligible for depreciation @ 100% are specifically included under the head “Water Pollution Control Equipments” and that except the assets mentioned in (IA), (2) and (3) of Item No.III of Appendix-A, the remaining Plants & Machineries are eligible for depreciation @ 25% ? - Held that:- Tribunal has rightly considered the opinion of the expert, which was placed on record and held that the equipments which are used are integral part of the plant. Therefore, the Tribunal has rightly allowed the appeal by reversing the view of both the lower authorities. If the authorities were not agreeable with the opinion of the expert, then appropriate procedure should have been followed, which is not followed in the present case. In view of this, the view taken by the Tribunal is correct and the question posed for our consideration is answered against the department and in favour of the assessee and it is held that the depreciation allowed by the Tribunal is just and proper and no interference is called for in the present appeal. - Decided against revenue.

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• 2016 (6) TMI 561
  Addition u/s 68 on unexplained cash credit - gift receipt - Held that:- The assessee cannot be asked to prove the source of source. Moreover, Gift Tax Act nowhere provides that a gift by somebody who is not creditworthy is not a gift. The Tribunal instead of addressing itself to the requirement of Section 68 of the Act, has adopted an approach which is unwarranted in law. See SMT. NEELAMBEN GOPALDAS AGRAWAL Versus INCOME TAX OFFICER [2015 (6) TMI 135 - GUJARAT HIGH COURT]. We therefore are of the opinion that the question raised in the present appeal is required to be answered in favour of the assessee

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• 2016 (6) TMI 560
  Subsidy receipt - merely because the subsidy is transferred to the capital account of the partners, the cost of assets could be reduced by the said amount while working out the depreciation allowance? - Held that:- Subsidy which was received against the investment was made in a backward area where industries were not present. The same was for promotion and that will not reduce the value of the assets. In that view of the matter, considering the evidence on record, both the issues, i.e. issue No.1 and 2 are required to be answered in favour of the assessee.

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• 2016 (6) TMI 559
  Disallowance of interest u/s 36(1)(iii) - assessee had advanced the amount to its sister concerns - Held that:- The impugned advance has been made out of interest free funds available with the assessee and there was no question of whatsoever for disallowing interest 36(1)(iii) of the Act. Accordingly, we hold that the disallowance of interest u/s 36(1)(iii) pertaining to the sister concerns upheld by the ld. CIT(A) is not justified, hence, the same is deleted. Thus, the appeal of the assessee is allowed. Deduction of profit u/s 80IC - allegation of the revenue is that assessee did not have sufficient infrastructure and man power to manufacture the entire products on its own in its exempt unit and got it done as job work from units outside specified areas. - Held that:- We are of the considered view that the issue in dispute is squarely covered by the decision of this Bench of the Tribunal, in assessee’s own case for the assessment years 2005-06 to 2009-10 wherein held that no discrepancy in the books of account has been pointed out by the authorities below and each and every purchase has been backed by the vouchers and there is evidence in the shape of GRs and delivery challans for finished products of Gagret which is duly authenticated on the border of Punjab & Himachal Pradesh and this documentary evidence has been admitted by the AO and simply copies were placed. Regarding electricity charges, which have been proved by the assessee beyond any doubt and how it can be assumed that electricity charges in H.P. are far less than electricity charges in Punjab and that finding has not been rebutted by the ld. CIT(A). - Decided in favour of assessee

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• 2016 (6) TMI 558
  Determination of arm's length price with regard to commission for Corporate Guarantee given by the assessee to its Associate Enterprises - Held that:- Tribunal is of the considered opinion that this is a method adopted by the assessee to reduce the tax burden in India by paying interest to the extent of Rs. 10.05 Crores on the borrowed funds. If the equity capital funds raised from its shareholders are not diverted to its Associate Enterprises outside India, there may not be any necessity for the assessee to borrow funds and pay interest of Rs. 10.05 Crores on the borrowed funds. From the material available on record, it is obvious that just to shift the profit outside India and reduce the tax liability in India, the assessee diverted its funds raised through equity capital outside India, and borrowed funds in India. Had the assessee used the equity capital in India, there is no necessity to borrow funds in India and pay interest to the extent of Rs. 10.05 Crores. In such a situation, the profit of the assessee will increase to the extent of Rs. 10.05 Crores in India and the assessee is liable to pay tax on that. By diverting the equity capital raised to its Associate Enterprises, the assessee is claiming the payment of interest on the borrowed funds to the extent of Rs. 10.05 Crores as expenditure. Therefore, this Tribunal is of the considered opinion that it is an attempt on the part of the assessee to reduce the tax burden to that extent. Therefore, this Tribunal is of the considered opinion that interest on the funds advanced to Associate Enterprise outside India has to be computed on notional basis by applying LIBOR rate. LIBOR is one of the internationally accepted rates for the loan advanced in the international market. Therefore, the TPO has rightly determined the arm's length price for the advance made by the assessee to its Associate Enterprises by adopting LIBOR rate of interest. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Corporate Guarantee given by the assessee to its Associate Enterprises - Held that:- It is not in dispute that the assessee has offered Corporate Guarantee to its Associate Enterprises at UK. An identical fact was considered by this Tribunal in Redington (India) Limited (2015 (11) TMI 853 - ITAT CHENNAI ) found that the Corporate Guarantee given by the assessee to its Associate Enterprise does not involve any cost to the assessee, therefore, it was outside the ambit of international transaction. In view of this decision co-ordinate Bench of this Tribunal on identical set of facts in respect of similar Corporate Guarantee, this Tribunal is of the considered opinion that determination of arm's length price may not be necessary.Accordingly, the addition made by the Transfer Pricing Officer is deleted. Disallowance made under Section 14A - Held that:- The assessee has not maintained any separate books of account for the investment made by the assessee. Even though the assessee claims that major investment was made in Associate Enterprise, no details of such investment are available on record. Therefore, the claim of the assessee that major investment was made in Associate Enterprise is not substantiated. The fact remains that the assessee has made investment in the Associate Enterprise and it is also an admitted fact that the assessee has paid interest to the extent of Rs. 10.05 Crores on the loan borrowed for the business. In the absence of any direct link between the payment of interest and the income earned by the assessee, this Tribunal is of the considered opinion that the provisions of second and third limb of Rule 8D(2) of the Income-tax Rules, 1962 have to be applied. In other words, the average of the amount as computed under second and third limbs of Rule 8D(2) has to be notionally taken for the purpose of disallowing the expenditure. In the absence of any other details, the DRP has rightly found that disallowance has to be made by applying Rule 8(2) of Income-tax Rules, 1962. Therefore, we find no infirmity in the order of the lower authority and accordingly the same is confirmed. Letter of Comfort issued by the assessee-company to its Associate Enterprise - Held that:- Letter of Comfort is nothing but a guarantee given by the assessee-company to its Associate Enterprise to avail loan from financial institutions so as to enable the Associate Enterprise to avail loan facility. As rightly submitted by the Ld. D.R., by giving such loan, the assessee exposed itself to the risk of repaying the loan availed by the Associate Enterprise. This said Letter of Comfort is almost a guarantee given by the assessee to its Associate Enterprise. As found by this Tribunal in Redington (India) Limited (2015 (11) TMI 853 - ITAT CHENNAI ), by giving such a guarantee or Letter of Comfort by the assessee-company, it does not involve any cost to the assessee, therefore, it is outside the ambit of international transaction. By following the order of this Tribunal in Redington (India) Limited (supra) and for the reason stated therein, this Tribunal is of the considered opinion that there may not be any need to make any adjustment in respect of Letter of Comfort. Accordingly, the orders of the lower authorities are set aside the and Assessing Officer is directed to delete the addition made with regard to Letter of Comfort on notional basis.

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• 2016 (6) TMI 557
  Transfer pricing adjustment - relevancy of method adopted by the Transfer Pricing Officer for disallowing the claim of the assessee - adoption of transfer pricing study made by the assessee - Held that:- Transfer Pricing Officer called for the details relating to services rendered by the Associate Enterprise item-wise along with costs incurred by the Associate Enterprise. Without examining further the services rendered by the Associate Enterprise, the Transfer Pricing Officer has simply observed that the services rendered are advice and discussion in nature, therefore, volume and quality of services are disproportionate to the payment made by the assessee. It is not known how the Transfer Pricing Officer came to know that the volume and quality of services received by the assessee was disproportionate to its payment. The Transfer Pricing Officer has not taken any pain to identify uncontrolled transaction between two independent entities. In the absence of any comparison of the transaction with transaction carried out in a uncontrolled market, this Tribunal is of the considered opinion that the Transfer Pricing Officer cannot independently come to a conclusion that volume and quality of services was disproportionate to the payment made by the assessee. The matter may be totally different if the Transfer Pricing Officer was able to identify the uncontrolled transaction between the enterprises entering into such transaction which would materially affect the price in the open market. In this case, such an exercise was not made by the Transfer Pricing Officer. The Dispute Resolution Panel has, therefore, rightly found that the method adopted by the Transfer Pricing Officer for disallowing the claim of the assessee was not justified. As rightly observed by the Dispute Resolution Panel, the Transfer Pricing Officer has not brought on record the base on which he estimated the Arm's Length Price at 25%, when Rule 10B(c) provides for method of determining the Arm's Length Price. This Tribunal is of the considered opinion that estimation of the services rendered and costs for such services may be outside the scope of transfer pricing adjustment. Without identifying the comparable cases, this Tribunal is of the considered opinion that estimation of the disallowance without any base is not called for. Therefore, the Dispute Resolution Panel has rightly upheld the transfer pricing study made by the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against revenue.

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• 2016 (6) TMI 556
  Allowance of loss arising on cancellation of contract due to price fluctuation where no actual delivery of cotton commodity - treating a loss to be speculative in nature u/s. 43(5) - Held that:- There is no dispute that this assessee is already in cotton ginning business. It entered into cotton supply contracts. The same would be cancelled in lieu of passing of credit notes due to price fluctuations. The Assessing Officer treated these figures as speculative transactions u/s. 43(5) of the Act not entitled as allowable loss. Learned departmental representative strongly argues that the loss in question is in speculative business not allowable u/s. 73(1) of the Act since the same has to be set off only against profits and gains of another speculative business and not those of the regular business. We are not impressed with this business. Our view is that section 73 of the Act for the purpose of setting off of loss is to be jointly read with section 28 defining categories profits and gains of business and profession as well as section 43(5) of the Act stipulating speculative transactions. Section 28 explanation 2 makes it very clear that where speculative transactions carried on by an assessee are of such a nature to constitute ‘a’ business, the said business is to be taken as distinct and separate from any other business. We repeat that this assessee is already in cotton ginning business. The Revenue fails to dispel the CIT(A)’s findings that these transactions are only 4% of the total transactions forming part of the regular business. We are of the opinion that these transactions do not constitute a separate business but part of the main business itself. We hold therefore that the assessee’s loss in question has been righty allowed in the lower appellate proceedings. - Decided in favour of assessee.

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• 2016 (6) TMI 555
  Short Term Capital Loss on sale of unquoted shares - genuity of expenditure - FIFO method of accounting adopted by AO - Held that:- The undisputed facts are that the assessee was already a share holder in said Inter Active Technologies, and after selling about 1/3 share holding remained owner of about 2/3 rd shares in next year, doubts have been raised by ld. Assessing Officer only in respect of this year’s sale of shares tow2ards the end of the year. It emerges from the record that assessee in order to protect his earlier share holding purchased the new shares at higher rate to save Inter Active from liquidation and to re-strengthen the company's capital and reserves, which is claimed to be a prudent business decision. Assessee’s efforts are proved from the record that the book value of the company went upto Rs. 170/- per share as on 18.12.2010 which was for Rs. (-) 40.23 per share as on 29.12.2007 i.e. before the infusion of funds by the appellant. The aforesaid company had paid the taxes of Rs. 95/- lakhs for the A.Y. 2010-11 after set off of earlier years losses (profit Rs. 614/- lakhs for the A.Y. 2010-11) and also paid advance-tax of Rs. 15/- lakhs for the A.Y. 2011-12. Thus in consideration of all these undisputed facts, ld. CIT(A) rightly observed that the purchase of these shares by the appellant cannot be considered as non-genuine or paper transactions. Assessee produced necessary evidence that Inter Active i.e. company furnished necessary information and no any infirmity was indicated by the ROC qua the impugned purchase and sale of shares and in maintenance of other records relating to share transactions. Thus the adverse inference drawn by ld. Assessing Officer that there were alleged interpolation in the registers of the company are not tenable. The shares were sold by assessee due to crash of the share market adversely resulting in the cascading effect on other investments. In order to minimise the losses as the Inter Active’s net worth was reduced from Rs. 800 lakhs to Rs. 400 lakhs. The book value of share of the company slided down to Rs. 38.21 as on 27/03/2008. This was a conscious business decision of the assessee. Besides, the payments for purchase of shares were made by account payee cheques, similarly the consideration for sale of share was also received by account payee cheques. Assessing Officer was not justified in applying FIFO method instead of adopting specific distinctive numbers of shares for the purchase and sale of shares while computing the impugned STCG. Thus we see no infirmity in the order of ld. CIT(A) allowing the impugned STCG loss. We uphold his order on this issue, this ground of the revenue is dismissed. see Union of India And Another Versus Azadi Bachao Andolan And Another [2003 (10) TMI 5 - SUPREME Court] - Decided in favour of assessee Disallowance of interest expenditure - AO disallowed expenditure as the assessee failed to provide the nexus of utilization of borrowing for earning offered interest income - Held that:- It has been accepted by the Assessing Officer that interest expenditure has been expended to earn interest income. Sec. 56 does not postulate any condition about the rate of charging interest. The appellant explained the reasons and circumstances as to how the lesser interest was charged on old loans. No discernible case for diversion of borrowed funds for non-business purposes has been made out by ld. Assessing Officer. We have carefully considered the submission of the Ld. Counsel as well as the finding of the Assessing Officer recorded in the assessment order. A remand report was also called from the Assessing Officer, which did not impinge on the assessee in effective terms, as the possibility of use of funds in capital investment was not established. Ld. Assessing Officer accepted that the interest expenditure was actually incurred for earning the interest income and loss arose due to charging of lesser rate of interest on old loans and advances and advances given for shorter period. This contention of the appellant was not controverted by the Assessing Officer either during the course of assessment proceedings nor during remand proceedings. Considering all these facts and circumstances ld. CIT(A) deleted the disallowance. In our considered view there is no inconsistency in the order of ld. CIT(A) on this issue, which is upheld.- Decided in favour of assessee

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• 2016 (6) TMI 554
  Addition to surrendered income during the course of survey - sale of property - bifurcation of consideration into two assessment years - Held that:- The records before us reveals that the declaration was made for the entire project and since some shops and flats remained unsold during the assessment year 2007-08 and therefore some money for the flats was not received and therefore the income of Rs. 35 lakhs was credited in the books of the assessee as per the terms of declaration made by the assessee during the course of survey action. The First Appellate Authority has clearly observed that the assessee has not retracted from the statement made during the course of survey proceedings. As noted hereinabove the assessee during the course of survey made the disclosure over a period of two years i.e. AY 2006-07 and 2007-08. In respect of assessment year 2007-08, the disclosure was made on the condition that the entire income would be disclosed if the assessee succeeded in the selling of flats and shops in that year. But if some stocks in the form of shops and flats remain to be sold then the same would be carried forward and the additional income qua those flats and shops as sold in the next year would be shown accordingly. Accordingly, the ld. CIT(A) further observed that the income of Rs. 90 lakhs was further spread over the period of 2 years and Rs. 35 lakhs was offered for tax in the assessment year 2007-08 and the balance addition income of Rs. 55 lakhs declared during the year 2008-09 and thus entire income of Rs. 90 lakhs stood offered to tax in two years. We are in complete agreement with the observations of the ld CIT(A) that unless and until there was a sale of property there could not be a question of payment of any tax on amount of unrealized sale price. Further, the AO in order to bring the amount of Rs. 90 lakhs in the assessment year 2007-08 had to bring on record evidences that the assessee had sold the area of 250000 sq. ft in that year. We therefore after considering the facts and circumstances of the case and the order of first appellate authority are of the opinion that the assessee’s additional income of Rs. 90 lakhs was duly assessed and offered to tax in the assessment years 2007-08 and 2008-09 and therefore, the addition as made by the AO is wrong and unwarranted - Decided in favour of assessee

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• 2016 (6) TMI 553
  Rate of land adopted for the period prior to 1981 for computation of long term capital gain - correct value to arrive at cost of indexation - Held that:- CIT(A) on perusal of the report of survey map submitted before him observed that assessee’s land has locational advantage with regards to the roads, civic amenities like schools, hospitals, offices, markets etc. Transportation in the form of auto-rickshaws and buses is available. Further, the land was on the main road and has its own potential. The land was in the vicinity of developed industrial area and since it is situated on the main road, it would always fetch higher valuation. In these circumstances, determining the land value at Rs. 2.23 per Sq. mtr. was found to be on lower side as assessee’s land as having more potential because of the advantages attached to it as discussed above. Therefore, taking into consideration that the Department had already accepted the value of the land of lesser advantages at Rs. 18/- sq. mtr. in vicinity and also considering the facts and circumstances, CIT(A) rightly estimated the value of the land at Rs. 25/- per sq. mtr. as against the value adopted by the Assessing Officer at Rs. 2.23/- per Sq. mtr. Accordingly, the Assessing Officer was directed to adopt the value of the land at Rs. 25/- per sq. mtr. and compute the long term capital gain. Thus, this reasoned finding of CIT(A) need no interference from our side. We uphold the same.

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• 2016 (6) TMI 552
  Deduction u/s 80IA - whether Container Freight Station can be construed as Inland Port for the purpose of allowing deduction u/s 80IA of the Act? - Held that:- This issue was considered by the Delhi High Court in M/s Container Corporation of India Ltd (2012 (5) TMI 260 - DELHI HIGH COURT ) after referring to the circular issued by the CBDT, the High Court found that Container Freight Station was notified by the Customs Authorities and also customs clearance took place in Container Freight Station. The Office Memorandum issued by the Ministry of Commerce clarified that Container Freight Stations are Inland Ports. Accordingly, the Delhi High Court found that the Container Freight Stations are ‘infrastructure facility’ within the meaning of ‘Inland Ports’. The CIT(A), by following the judgment of the Delhi High Court in M/s Container Corporation of India Ltd(supra), directed the Assessing Officer to allow deduction u/s 80IA(4) of the Act. Since the Delhi High Court considered similar issue and found that Container Freight Station is an ‘infrastructure facility’ and the same would fall within the definition of ‘Inland Port’, this Tribunal do not find any reason to interfere with the order of the lower authority - Decided in favour of assessee Deemed dividend addition u/s 2(22) - Held that:- In case the advance/loan was advanced for the benefit of the registered shareholder or any other person, still the same has to be assessed as deemed dividend in the name of the registered shareholder for whose benefit the advance/loan was given. In the case before us, the assessee is not a shareholder in M/s Indev Logistics P. Ltd. The common shareholders are Shri Xavier Britto and Smt. Vimalarani Britto. Shri Xavier Britto is holding 50% of the shares in the assesseecompany and Smt. Vimalarani Britto is holding 50% of the shares in the assessee-company. In the case of M/s Indev Logistics P. Ltd. Shri Xavier Britto is holding 60% of the shares whereas Smt. Vimalarani Britto is holding 40% of the shares, therefore, as rightly submitted by the ld. DR there are common shareholders in both the companies. The advance received by the assessee-company may be for the benefit of the common shareholders who are holding the shares in the assessee-company. However, for the purpose of assessing the deemed dividend, it has to be assessed only in the hands of the registered shareholder for whose benefit the money was advanced. In the case before us, in fact, the money was advanced for the benefit of the shareholders, Shri Xavier Britto and Smt. Vimalarani Britto, therefore, the assessment, if any, has to be made only in the hands of Shri Xavier Britto and Smt. Vimalarani Britto and not definitely in the hands of the present assessee. - Decided in favour of assessee

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• 2016 (6) TMI 551
  Reopening of assessment - Time limit of initiating scrutiny assessment u/s 143(2) is not expired - reasons to believe - Held that:- Assessing Officer in issuing notice under section 148 of the Act, within the time limit available for issue of notice under section 143(2) of the Act being as per law. The Income Tax Act is a self contained Act, whereby provisions are made for different situations. Every section, sub-section, clause, proviso, Explanation, etc. are put in the Act at their respective places with some specific intention of the Legislature behind such placement. The provision of section 143(2) and Section 148 are placed on a totally different trajectories in the sense that notice under section 143(2) is issued in order to make regular assessment of an assessee on yearly basis, while notice under section 148 is to be issued on satisfaction of certain conditions prescribed therein where the income of the assessee escaped assessment. The escapement of income is not one of the conditions for issue of notice under section 143(2) of the Act. A limited time is available for issue of notice under section 143(2) of the Act and also to complete assessment under section 143(3) of the Act initiated through notice under section 143(2). While an extended period is available for issue of notice under section 148 of the Act and to make assessment initiated by issue of such notice. Apart from this, we also feel that every provision of the Act has a sanctity attached to it, which has to be maintained at any cost. By allowing such leverage to the Department to enter into the territory of any other provision while intending to remain on a specific provision will only lead to a chaotic situation. If the Assessing Officer has time in his hands to issue notice under section 143(2), why is he issuing notice under section 148 of the Act, we do not understand, specifically in the background of the legal position that the scope of assessment made on issue of notice under section 148 of the Act has limited as against the wide scope of assessment available to him by issuing notice under section 143(2) of the Act. CIT Vs. K.M. Pachaiyappan (2007 (7) TMI 229 - MADRAS HIGH COURT ), wherein the Court has held that no reassessment proceedings could be initiated so long as the assessment proceedings pending on the basis of return already filed are not terminated. Respectfully following the above case, we hold that the notice issued under section 148 of the Act by the Assessing Officer in the present case is not as per law and the consequential order made is hereby quashed. - Decided in favour of assessee.

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• 2016 (6) TMI 550
  Addition under the head ‘capital gains’- Nature of land - Agricultural income - Held that:- Agricultural income for the purpose of assessment to agricultural income tax, income derived from any building owned and occupied by the receiver of the rent or revenue of any such land is also regarded as agricultural income under the Act. Such building should be on or in the immediate vicinity of the land and is occupied by the owner by reason of his connection with the land and is required by him for his dwelling house or as a store house or other out building. All these qualifications are satisfied in the case of the house where the assessee by reason of his connection with the land is living. The entire land of 30 cents retains the character of the agricultural land. The assessee is actually cultivating the land with agricultural crops. The land is not within the notified area and admittedly within a Panchayat far away from the notified areas in Cochin Corporation as per Notification No. SO 10/6.1.1994. The assessing officer himself admits that 1/3rd of the land could be regarded as agricultural land. The existence of well, septic tank, compound wall, cattle shed, pump house, a small house etc., would not make any difference to nature of land being agricultural in nature. The assessee had also declared agriculture income and the same have been accepted in the asst. order. For the aforesaid reasons, we are of the view that the Income Tax Authorities was not justified in treating 2/3rd of the subject property as capital asset and bringing the same for tax under the head “income from capital gains”. - Decided in favour of assessee.

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• 2016 (6) TMI 549
  Validity of the assessment order passed u/s. 153A read with Section 143(3) - Held that:- In the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. The gift deeds and the copies of return of income of the donors that were found at the time of search could not be considered to be incriminating material for the purpose of addition in view of the fact that these very documents were the basis of the gifts that were considered by the assessee while crediting the capital account. Thus we are of the view that these assessments framed u/s.153A need to be quashed. Ordered accordingly. Legal issue has been decided in favour of the assessee.

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• 2016 (6) TMI 548
  Deduction under section 80IB(10) - Held that:- In the year under consideration, i.e. A.Y. 2008-09, we find that the learned CIT(A) had examined and found from the report of the Inspector of Income Tax dated 02.03.2007 that with respect to the claim for deduction in respect of the four buildings in Vijay Garden, all requisite documents including the commencement and completion certificates are obtained and placed on record. The learned CIT(A) has also observed that the Occupancy Certificate is issued by the competent authority only after the completion certificate is issued by the Architect and that all the required documentation for issue of the Occupancy Certificate has been placed before the competent authority, and therefore the claim for deduction under section 80IB (10) cannot be denied for the reasons that the completion certificate has not been obtained from the local authorities. It has also been observed by the learned CIT(A) that when the assessee’s return for the year under consideration has been e-filed, the original documents/ annexures, Audit Report, etc. are to be produced before the AO in the coruse of assessment proceedings; which has been done in this case. Before us, except for raising the grounds (supra), the learned D.R. for Revenue has not been able to bring on record any material evidence to contradict the findings of facts rendered by the learned CIT(A) that the assessee has fulfilled the conditions laid down for being allowed deduction under section 80IB(10) of the Act. In this factual matrix of the case, as discussed above, we uphold the order of the learned CIT(A) in holding that the assessee is entitled to be allowed deduction under section 80IB(10) of the Act in this year. - Decided in favour of assessee

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• 2016 (6) TMI 547
  Nature of royalty - whether the payment received by the assessee from TNT India Pvt. Ltd. under Management and Administrative Services (in short “MAS”] agreement is in the nature of royalty as per provisions of section 9(1)(vi) as well as Article 13 of the Indo-UK DTAA? - Held that:- In the case of the assessee, it appears to be a composite agreement for providing various services, some of which are purely business/commercial practice and contract services and others are in the nature of imparting the knowledge, experience and experience, which concern the commercial or business experience. In such a scenario, when the assessee is unable to provide bifurcation of the payment relating to each kind of services, then as per para 11.6 of the OECD Model Tax Convention, where a reasonable apportionment is not possible, then the other part of the services could also be given the tax treatment as given to one part of the services provided, which constitute the principal purpose of the contract and falling under the purview of royalty. In view of the above facts and circumstances of the case, where the assessee has failed to produce the relevant information, details and record to support its case and which is also necessary to segregate such part of the payment which may not be falling under the purview of royalty, we do not find any error or illegality in the impugned orders of authorities below in treating the entire consideration received by the assessee as royalty.- Decided against assessee.

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• 2016 (6) TMI 546
  Trading addition - estimating of profit - rejection of books of accounts - CIT(A) deleted the addition - undisclosed and unexplained expenditure - Held that:- There was a certain payment made to subcontractors M/s Shoora Construction was noted. This was offered for tax in statement recorded during survey. However, in course of assessment proceedings, the assessee explained that the amount so offered is incurred as the expenditure by the assessee with reference to said payment has been recorded in the books of account of the assessee on receipt of claim of such expenditure. Further once trading addition is made by estimating the NP rate, no addition for such payment can be made. Even the ld Assessing Officer has not made any addition for such amount considering the explanation of the assessee. Therefore, this ground of the department is liable to be quashed. Whatever defects pointed out by the Assessing Officer is justified, the rejection of books of account U/s 145(3) of the Act. When books of account has been rejected, the only alternate before the Assessing Officer to estimate the income on the basis of past history of the case, general knowledge about civil contract or by comparing the identical case. As all the civil contract has unique type of contract, which cannot be compared squarely. Therefore, the ld Assessing Officer has to consider the past history of the case including the decision of the Coordinate Bench. As submitted by the ld AR of the assessee, the Coordinate Bench has confirmed the NP rate @ 7% to 7.2% in preceding year. Further the discrepancies found out during the course of survey, has been explained by the assessee as no separate addition has been made by the Assessing Officer. The ld Assessing Officer applied NP rate @ 8.9% subject to depreciation. He has not allowed the interest paid to the third party, which has been allowed by the ld CIT(A) and not challenged before us by the revenue. Therefore, we find NP rate applied by the ld CIT(A) @ 7.5% is reasonable. Accordingly, we uphold the order of the ld CIT(A). - Decided in favour of assessee.

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• Customs

• 2016 (6) TMI 567
  Import of machines for chip placing - Under-valuation of machines - Demand of duty and confiscation of machines - appellant had made payment of US $ 1,03,000 towards the cost of these machines to M/s 'SMART' in December, 2004 when started earning profita - Held that:- it is clear from the observations of the CESTAT that the point was not urged before the Commissioner is palpably wrong. We may record that though no evidence is produced in these proceedings that payment of US$ 1 lakh 30 towards the cost of the machines was made, the reply which is extracted above shows that the documentary proof in this behalf was placed before the Commissioner. In any case the submission of the learned counsel is that the payment was made through banking and the such proof can always be given to CESTAT. Therefore, the impugned order passed by the Commissioner is set aside and the case is remitted to the CESTAT for fresh consideration. - Appeals disposed of

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• Corporate Laws

• 2016 (6) TMI 565
  Scheme of Amalgamation - Held that:- Having heard Mr. Navin K. Pahwa, learned Counsel for the petitioner company, Mr. Kshitij Amin, learned counsel for the Regional Director and upon perusal of the report of the Official Liquidator and the Regional Director, the reply affidavit filed on behalf of the petitioner company and having considered the Scheme of Amalgamation together with relevant documents on record, the Court finds it appropriate to grant sanction to the present Scheme of Amalgamation. In view of the above, the Scheme of Amalgamation is sanctioned. It is, however, directed that the petitioner shall preserve its books of accounts, papers and record and shall not to dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956.

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• Service Tax

• 2016 (6) TMI 582
  Demand of interest - availment of ineligible credit of service tax on reverse charge basis - later on reversed without utilizing the same - Held that:- the interest is not payable as there has been only an availment and no utilization. It is well settled that when there has been only availment and no utilization and when there is no loss to the Revenue, the question of demand of interest does not arise. The contention of the Revenue that UOI and Ors. Vs Ind-Swift Laboratories Ltd. case [2011 (2) TMI 6 - Supreme Court] covers the situation on hand cannot be accepted as this Tribunal in the case of T.V.Sundram Iyengar & Sons Ltd. Vs CCE Madurai [2015 (10) TMI 1256 - CESTAT CHENNAI], has already held that while deciding the Ind-Swift Laboratories case the previous decision of the Supreme Court in the case of Bombay Dyeing was not brought to the notice of the Apex Court. Therefore, the contention of the Revenue on this count is unsustainable. Accordingly the impugned order is set aside. - Decided in favour of appellant

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• 2016 (6) TMI 581
  Valuation - Includability - airport tax and passenger service fee - transport of passengers services - Held that:- the issue stands covered by the Tribunal decision in the case of M/s Continental Airlines Inc. vs. CST, New Delhi [2015 (7) TMI 1079 - CESTAT NEW DELHI]. Its stand held that the airport taxes as also the passenger service fees collected by the airlines on behalf of the airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. By following the said decision of the Tribunal, the service tax demand against the present assessee for the earlier period raised on the same grounds was set aside by the Tribunal in the case reported as Lufthansa German Airlines vs. CST (Adjn.), New Delhi [2016 (4) TMI 780 - CESTAT NEW DELHI]. Therefore, in as much as the issue is decided, the impugned order is set aside. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 580
  Condonation of delay - Violation of principles of natural justice - Appeal dismissed as being time barred, without even giving an opportunity for personal hearing - Date of receiving the order in ST-4 shown wrongly - Held that:- the appellants were not given a chance of personal hearing which is blatant violation of the principles of natural justice. By such an act, the appellants have been burdened with an unnecessary litigation. The appellants filed appeal on 27/03/2013. The appeal ought to have been filed on or before 06/03/2013. The Commissioner(Appeals) if satisfied that appellant was prevented by sufficient cause from presenting the appeal within period of two month, can allow it to be presented within a further period of one month. The appeal is therefore within the time limit by which the Commissioner(Appeals) can condone delay. On such score, I am of the opinion that this is a fit case to be remanded to the Commissioner(Appeals) who may consider the delay application filed by appellants. The appellant submitted that the error committed in Form ST-4 while noting the date of receiving the order has been repeated in the delay petition also. Hence, the Commissioner(Appeals) is directed to give chance to the appellant to amend the delay petition as well as Form ST-4 with regard to the date of receiving the order and also number of days of delay mentioned in the delay petition. - Appeal allowed by way of remand

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• 2016 (6) TMI 579
  Imposition of penalty - Section 77 and Section 78 of the Finance Act, 1994 - Goods Transport Agency and Renting of Immovable Property - appellant failed to take registration and received rents for the godowns - Held that:- the contentions of appellant that it had discharged the service tax liability prior to the issuance of show cause notice. That therefore, as per Sub-section(3) of Section 73 of the Finance Act, the imposition of penalties is unjustified. Further that the issue whether “Renting of Immovable property” is taxable or not was a contentious one. Sub-section (2) to Section 80 was introduced which provided that no penalty shall be imposed if the service tax along with interest on this category is paid within a period of six months from the date of Finance Bill, 2012 receives assent of the President. The appellant had paid the service tax on “Renting of Immovable Property” prior to the introduction of the said sub-section to Section 80 of Finance Act, 1994 are not without merits. Therefore, by following the decision of Tribunal in the case of Sethi Tools Pvt.Ltd Vs CCE & Cus. & ST Vododara [2015 (9) TMI 633 - CESTAT AHMEDABAD], the penalty imposed Under Section 78 is not legal or proper and is set aside. However, the penalty of Rs,5,000/- imposed under Section 77 is sustained as the appellant has failed to establish cogent reason for not taking registration. The demand and interest is confirmed. - Decided partly in favour of appellant with consequential relief

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• 2016 (6) TMI 578
  Imposition of equal amount of penalty - Section 78 of the Finance Act, 1994 - Site Formation and Clearance Service - Allegation of suppression - Held that:- the appellant discharged the service tax liability and interest prior to issuance of the show cause notice. The interest on delayed payment of tax was paid on 10-11-2010. The show cause notice is dated 12-11-2010. The appellant has further paid 25% of the penalty and presently does not challenge this amount of penalty paid by appellant. Under Sub-section(3) of Section 73 no show cause notice can be issued if service tax along with interest is paid by the assessee. Therefore, there are no circumstances to impose equal amount of penalty under Section 78 of the Finance Act, 1994. Hence I hold that equal amount of penalty imposed under Section 78 of the Act is to be set aside without disturbing the confirmation of demand of service tax, the interest thereon and as per the concession by appellant the 25% of reduced penalty already paid by appellant. The impugned order is modified to the above extent. - Decided partly in favour of appellant

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• Central Excise

• 2016 (6) TMI 577
  Valuation - Invokation of extended period of limitation - Inputs cleared to their sister unit on reversal of the credit availing on such inputs - Whether to be valued at the prices at which sale was made to independent buyers - Held that:- by relying on the judgment of Hon'ble Apex Court in the case of Ispat Metallics Industries Ltd., Vs. CCE, Raigad [2005 (10) TMI 129 - CESTAT, MUMBAI], where the goods are entirely transferred to a sister unit, it is reasonable to adopt the value shown in the invoice on the basis of which Cenvat Credit was taken by the assessee i.e. the invoice of the supplier of the goods to the assessee. Therefore, the impugned orders are unsustainable and liable to be set aside. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 576
  Valuation - Under-valuation of goods - Loan license agreement - appellant procured the raw materials himself and discharged the duty liability based upon the cost of production and the profit margin - MAPL clears the same pharmaceutical goods from their depot at higher price - Held that:- it is undisputed that the respondents herein is functioning loan license agreement from MAPL which permits them to manufacture of goods on behalf of MAPL. The respondent has done so as per the agreement entered by them with MAPL. The first appellate authority in his impugned order has recorded very detailed findings after considering the agreement which has been entered into by MAPL and the respondent. Therefore, the findings of the first appellate authority on the issue are no consonant with the law as the contract entered into by the respondent with MAPL was for the supply and sale of the pharmaceutical goods at pre-determined price during the relevant period normal price as well as transaction value were the requirement of the law for discharge of the Central Excise duty, which we find has been correctly applied in the case in hand. - Decided against the Revenue

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• 2016 (6) TMI 575
  Valuation - Disallowancwe of deduction for freight - freight indicated was equalised freight and hence not actual transportation charges - Held that:- since the delivery in this case is FOR destination, the case will fall under Section 4(1)(b) and not under Section 4(1)(a). As per Rule 5 of the Valuation Rules, in order to allow the deduction of the cost of transportation following criterion should be fulfilled : (a) The goods should be sold for delivery at a place other than place of removal, (b) Cost of freight should be in addition to the price for the goods, and (c) Cost of transportation should shown separately in the invoices. As regards the first criterion, the place of removal is factory gate, however the goods were delivered at customer place. Therefore goods were sold for delivery not at the place of removal (i.e. factory gate) but at other place i.e. customer door step. From the sample invoices it is seen that the freight shown in the invoices is in addition to basic price of the goods. It is clear from the terms of the bid documents also that basic price and other components have to be indicated separately. Therefore, there is no dispute that basic price and the freight components are clearly indicated separately in the invoices and therefore criterion i.e. cost of transportation should be in addition to the basic price of the goods stand fulfilled. Therefore, we find no valid reason for disallowing the deduction for the freight paid inasmuch as the goods are FOR destination. We also find that a coordinate Bench of CESTAT in the case of Sterlite Optical Technologies Ltd. vs. CCE &C, Aurangabad [2015 (9) TMI 1023 - CESTAT MUMBAI] has taken a view in identical facts that freight will be allowable as a deduction from the composite price. - Decided against the Revenue

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• 2016 (6) TMI 574
  Eligibility for benefit of exemption - Notification No. 6/2000-CE dated 01.03.2000 - goods supplied on-site to be used in the fabrication of the boilers to the end-users - equipment produced by appellant are in the nature of conversion devices which are going to be ultimately used in conversion of waste into non-conversion energy - Held that:- the issue is no longer res integra, Therefore, in view of the judicial pronouncements made by Tribunal in the case of CCE v. Rachitech Engineers Pvt. Ltd. [2015 (6) TMI 823 - CESTAT NEW DELHI] and M/s. Shree Venkateswara Engg Corporation v. CCE Coimbatore [2016 (2) TMI 65 - CESTAT CHENNAI], the impugned order is not sustainable and is liable to be set aside. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 573
  Chargeability - Interest on duty demanded - payable by retrospective amendment in the Finance Bill 2011 enacted on 8.4.2011 for the period 29.4.2010 to 31.03.2011 which is prior to date of enactment of Finance Act, 2011 - Held that:- when the duty became payable only on 8.4.2011, though it is payable for the period prior to 8.4.2011 the duty is recoverable but interest cannot be demanded for the period prior to 8.4.2011. We find that when the duty itself was not leviable during the period before 8.4.2011 which became payable only on 8.4.2011, how the interest can be demanded for the period when duty was not payable. The appellant admittedly paid interest for the delay from 8.4.2011 till the date of payment which is alone is recoverable and not before the said period. Therefore, as per settled position of law in the case of Commissioner of Central Excise Indore Vs. Premier Industries Ltd. [2009 (2) TMI 695 - CESTAT NEW DELHI], interest on retrospective levy of duty as per Finance Act, 2011 is not chargeable for the period prior to date of enactment of Finance Act, 2011 i.e. 8.4.2011. As regard the submission of the Ld. AR that against the aforesaid decision the Revenue has filed an appeal in the Hon’ble High Court of Madhya Pradesh, the Ld. A.R. could not produce any stay of operation of the Tribunal s above referred decision, therefore as a judicial discipline, we have no option accept to follow the ratio of the decision of Co-ordinate Bench of this Tribunal. - Decided against the Revenue

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• 2016 (6) TMI 572
  Exemption for manufacturing of body building on the procured chassis - condition on availing credit versus availing credit and reversing the credit @8% - notification 4/97 dated 01.03.1997 and subsequent notification no. 5/98 dated 02.06.1998 - whether the assessee was entitled to the exemption or not? - Held that:- As rightly observed by Commissioner (A) the assessee has reversed 8% of the value (whatever value it may be) that is whether inclusive of chassis or not, which would amount to reversal of cenvat credit availed by the assessee. However, we find that though the legal issue held in favour of the assessee by Commissioner (A) is correct but the fact as to whether the reversal of 8% amounted to full reversal of cenvat credit availed by the assessee or not is still required to be examined. It may happen that the reversal of 8% is less than full credit availed by the assessee or in a given case it can be more also. As such it is absolutely necessary for the assessee so as to earn the benefit of the exemption notification to establish that the entire credit availed by them in respect of the inputs used in the manufacture of exempted goods stands reversed by them. If there is shortfall in such reversal, the assessee is required to be given an opportunity to reverse the same. At this stage both the sides submits that it may not be possible for them to exactly find out as to which input has gone into the manufacture of which vehicle that is whether excisable or dutiable. The said exercise of finding out the quantum of input used in the manufacture of inputs and contested quantum of credit availed can be done on proportionate basis for which purpose we set aside the impugned order and remand the matter to original Adjudicating Authority. The adjustment required to be done by him with the corporation of the assessee would be to find out quantum of inputs used in the manufacture of exempted product and consequently quantum of credit availed by the assessee. Subsequently by taking note of the 8% reversal already done by them, the quantum of differential credit, if any, would be arrived at which the appellant would be liable to reverse, so as to set the matter at rest.

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• 2016 (6) TMI 571
  Refund of excise duty paid in excess - period of limitation - Held that:- Duty was paid in December 2006 and March 2007 but the goods were removed in March 2008 and the refund application was filed on 5.1.2010 which means that the refund application in the present case has been filed after more than three years which is beyond the period of limitation as per Section 11B enumerated above. It has been held in the case of Miles India Ltd Vs ACC [1984 (4) TMI 63 - SUPREME COURT OF I] that the provisions of time limit are mandatory and the excise/customs authorities cannot grant refund which is filed beyond the due date. A Statutory Authority cannot traverse beyond the confines of law and cannot grant relief by by-passing the bar of limitation. The refund claim filed after the expiry of period of limitation is not maintainable and this statutory time limit prescribed under Section 11B is not questionable by any Authority. Therefore in view of the clear-cut position of law, the refund claim filed by the appellant is beyond the period of limitation. Further the appellant has also failed to establish that the said burden of duty has not been passed on to its buyer. Simply producing a copy of the ledger would in my opinion will not be sufficient to discharge the onus on the appellant. The learned Commissioner(Appeals) has rightly held that the appellant has not been able to prove that the disputed duty amount has not been passed on to its buyers - Decided against assessee

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• 2016 (6) TMI 570
  Short payment of duty on account of non-consideration of revised parameters - Held that:- As per the provisions of Rule 4 of Capacity Determination Rules, 1997, re-determination of APC and benefit of concessional rate of duty based on d factor is warranted only in case of change in existing parameter. As the change in parameter is made effective w.e.f. 17.10.1997 only, for the period prior to 17.10.1997, Commissioner rightly and correctly fixed APC based on existing parameters. Hence,find that the demand for duty short paid by the Assessee as mentioned in Show Cause Notice sustains on merits and warrants confirmation and recovery Period of limitation - Held that:- Recoveries of amounts under the compounded levy scheme for re-rollers is not covered by the general time limit prescribed under Section 11A of Central Excise Act, 1944. In the light of above decision, the time limit factor does not affect the validity of the Show Cause Notice. See M/s Venus Casting and Raghuvir (India) Ltd [2000 (4) TMI 37 - SUPREME COURT OF INDIA]. Hence no deficiency in the above finding of the learned Commissioner to the extent confirmation of duty. However, penalty and interest under Rule 96ZP of erstwhile Central Excise Rules,1944 cannot be sustained in view of the recent judgment of the Hon ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills Vs.CCE, [2015 (11) TMI 1172 - SUPREME COURT] - Decided partly in favour of assessee.

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• 2016 (6) TMI 569
  Clearance of electrical goods to DMRC - Availability of notification No. 6/2002-CE dated 1.3.2002 as amended by Notification No. 29/2003-CE dated 10.4.2003 denied - exemption denied on the ground that only duplicate copy of the certificate was provided and original copy was not submitted - Held that:- Having gone through the conditions attached to the notification, we find that there is nothing in the said condition to suggest that original copy should be sent to the Revenue. The condition is only to the effect that If before the clearance of the goods, the manufacturer produces to the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, a certificate from the Chairman or the Managing Director of the Delhi Metro Rail Corporation Ltd. to the effect that (i) the goods are procured by or on behalf of the Delhi Metrol Rail Corporation Ltd. for use in the Delhi MRTS Projects; and . “ We agree with the learned advocate that in the absence of any direction in the said condition, requiring the assessee to send the original copy to the Revenue, the technical and procedural objection raised by the Revenue, cannot be upheld. Not only that, it is seen that appellant subsequently produced the original copy of the certificate even before the passing of the order by the Deputy Commissioner. In these circumstances, the Deputy Commissioner could have taken note of the original copy of the certificate and could have allowed the benefit to the assessee. Such raising of technical or procedural objection by the Revenue only reflects upon their anxiety to confirm the demands. We also note that it is not the Revenue's case that certificate produced by the appellant is not reflecting the factual position and is not correct. - Decided in favour of assessee

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• 2016 (6) TMI 568
  Clandestine clearance of receipt of raw materials - Held that:- There is no allegation of any mischief in the shape of clandestine clearance of receipt of raw materials. As find that the case of the appellant is squarely covered by the decision of the Hon'ble Supreme Court in case of Maruti Udyog (2015 (8) TMI 493 - SUPREME COURT ). The only difference is that in case of Maruti Suzuki, value of excess found was greater than the value of shortages, whereas in the instant case the value of shortages is higher than the value of excess. In so far as the value of shortages ranging from 0.01% to 0.21% whereas the excess ranging from 0.01% to 0.08% of the total procurement of parts. As find that the Tribunal in its decision in case of Maruti Udyog Ltd. (2004 (6) TMI 155 - CESTAT, NEW DELHI ) has not relied on quantum of shortages are excess, but has relied solely on minuscule percentage of shortages found. The Hon'ble Supreme Court also has relied on the percentage of shortages found. However, as an additional argument, the Hon'ble Supreme Court has observed that the fact that shortages of input was less than the excess of input found demonstrate the bona fide. In view of the above, find that the issue is squarely covered by the decision of the Hon'ble Supreme Court in case of Maruti Suzuki India Ltd. (supra). The impugned order is set aside and appeal is accordingly allowed.

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• CST, VAT & Sales Tax

• 2016 (6) TMI 566
  Application for stay - Commercial Tax Tribunal, Bench-I, Lucknow granted the interim stay only to the extent of 80% tax directing the appellant to deposit 20% tax during the pendency of first appeal - Held that:- In M/s Pennar Industries Ltd. vs. State of A.P. and others [2009 (2) TMI 457 - SUPREME COURT OF INDIA ] observed that if on cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or even substantive part of the demand and the stay application should not be disposed of in a routine manner unmindful of the consequences. Keeping in view the settled position of law on the point in issue and from the perusal of the appellate order passed by the appellate authority/appellate tribunal thereby passing the impugned orders, the said authorities have not indicated its mind so far as the existence of the prima facie case on merits on appeal as well as the financial condition which are to be considered by them (appellate authority/tribunal) while passing the impugned orders on an application for stay pending in the first appeal. The said mandatory condition is to be taken into consideration while disposing of an application for interim relief moved by the assessee by the appellate authority as well as tribunal during the pendency of appeal. For the foregoing reasons, the present revision is disposed of with a direction to the first appellate authority to decide the appeal filed by the assessee expeditiously say within a period of two months from the date of receiving a certified copy of this order.

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