TMI Tax Updates - e-Newsletter
June 18, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

Articles

1. PRESENTING OFFICER MAY BE A WITNESS IN A DOMESTIC INQUIRY

   By: DR.MARIAPPAN GOVINDARAJAN

2. NEW PENAL PROVISIONS IN SERVICE TAX (PART -2) - Change in section 78

   By: Dr. Sanjiv Agarwal

News

1. Formation of 2 Committees named Steering Committee and another Committee, for facilitating implementation of GST from 1.4.2016. Goods and Services Tax Network (GSTN) is taking steps for preparing the IT infrastructure for roll out of GST.

2. Government approves 16 proposals of FDI amounting to ₹ 6750.86 Crore approx. based on the recommendations of FIPB.

3. A Small comparison of guidelines issued by CBDT with previous one to deal with Condonation of delay in filing returns claiming refund and returns carry forward of loss and set-off.

4. RBI Reference Rate for US $

5. Promulgation of THE NEGOTIABLE INSTRUMENTS (AMENDMENT) ORDINANCE, 2015 by the President of India - Now court jurisdiction will be as per city where payee's branch is located.

6. Finance Minister Shri Arun Jaitley to Leave for Nine Day Visit to United States Tonight - Major Agenda to hold various meeting with FIIs, interaction with Mgmt of NYSE and TOP CEOs of US financial companies, progress on economic reforms and address the International Yoga day.

7. Announced Additional Assistance Towards Immediate Relief and Reconstruction Work in State of Jammu & Kashmir by GOI

Notifications

Customs

1. 39/2015 - dated 16-6-2015 - Cus

Amendment in Notification no. 12/2012 - Customs,dated 17/03/2012 - Change in scope of entry No. 330 & 334 in given table related to certain scrap of iron and steel products.

Circulars / Instructions / Orders

VAT - Delhi

1. 13/2015-16 - dated 16-6-2015

Modification in Circular No. 15 of 2014-15 - Change in Nodal officer for restoration of Registration Certificate of the dealers in respect of Zone–I.

Customs

2. 48/2015 - dated 15-6-2015

Direction to keep a vigil on illegal export of Pharmaceutical drugs like Tramadol from India to UAE.

3. 47/2015 - dated 11-6-2015

Instruction for DEEC monitoring cell to select cases on random basis where verificaiton is not prescribed by DFGT - Selected license holder to furnish the required documents for verification of exports and consequent cancellation of BG/LUT.

4. 45/2015 - dated 1-6-2015

DGFT endorsed the proposal of RBI to make declaration of foreign exchange remittance a part of the Shipping Bill.

5. 36/2015 - dated 29-4-2015

Implementation of ZapIn programme - Used to include Photographs of cargo with scanned copy of dockets.

Highlights / Catch Notes

Income Tax

• Carbon Credit Sale Income Classified as Non-Taxable Capital Receipt Due to Environmental Concerns, Not Business Operations.

  Case-Laws - AT : Income from sale of carbon credits - Capital receipts vs Revenue receipts - No asset is generated in the course of business but it is generated due to environmental concerns. - The receipt is in the nature of capital receipt - not taxable - AT
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• Tax Authority Rules Wedding Expense Addition Unjustified; Assessee's Savings and Assets Acknowledged.

  Case-Laws - AT : Addition on account of expenses relating to marriage of the daughter of the assessee - C.I.T.(A) had accepted that the assessee had some past saving and jewellery & utensils, personal effects etc., the addition on estimate basis was not justified - AT
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• Section 263 Revision Incorrect: AO Not Required to Examine Expenditure When Books Are Unreliable and Profit Estimated.

  Case-Laws - AT : Revision u/s 263 - once the books of account are found to be unreliable and rejected resulting in estimation of profit, AO is not required to enquire or examine the individual items of expenditures or other issues - revision order is not correct - AT
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• Valuation Officer's report crucial for fair market value; sale deed consideration can't be ignored without it u/s 50C.

  Case-Laws - AT : Reference to Valuation Officer to determine the fair market value - actual sale consideration shown in the sale deed cannot be disregarded unless and until the valuation report obtained by the Assessing Officer as required under Section 50C - AT
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• Land Sale Income Ruled as Capital Gain, Not Business Income; Agricultural Land Sale Not a Trade Adventure.

  Case-Laws - AT : Income from sale of Land - Capital Gain or business income – agriculture land - activity of the assessee of purchase and sale of the said land was not an adventure in the nature of trade as alleged by the AO - AT
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Customs

• Senior Intelligence Officer's Power to Halt Account Withdrawals u/s 110 Requires Actual Seizure During Investigation.

  Case-Laws - HC : Jurisdiction of Senior Intelligence Officer - Section 110 - Power to stop withdrawal from account of the petitioners because an investigation was being carried out by the office after issuing summons - without seizure, such power cannot be exercised - HC
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• Appellate authority cannot impose 5% Extra Duty Deposit during remand; requires full reconsideration by original authority.

  Case-Laws - HC : While remanding, appellate authority has no authority to direct the petitioner to pay EDD equivalent to 5% of the Assessable value since the entire issue has to be revisited by the original authority afresh - HC
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• Court Orders Refund of Special Additional Duty Within Six Weeks if No Further Appeal Filed.

  Case-Laws - HC : Denial of refund claim of SAD - amount not released despite favorable order - if no further appeal is filed, the third respondent is hereby directed to refund the SAD amount within a period of six weeks - HC
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Indian Laws

• Legal Precedents Bind Specific Issues, Not Logical Deductions; Distinction Between Dicta and Obiter Dicta Crucial.

  Case-Laws - SC : A decision, it is well settled, is an authority for what it decides and not what can logically be deduced therefrom. The distinction between a dicta and obiter is well known. Obiter dicta is more or less presumably unnecessary to the decision. It may be an expression of a viewpoint or sentiments which has no binding effect.
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Service Tax

• Court Rules Penalties Apply u/ss 76 & 77 Even if Taxes Paid Before Show Cause Notice Issued.

  Case-Laws - HC : Penalty u/s 76 & 77 - taxes has been paid even before the issuance of show cause notice - penalty is imposable even in cases where tax is paid before issuance of show cause notice - HC
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• Erroneous Refund Recovery Requires Show Cause Notice as Per Section 73(1); No Action Without SCN Issuance.

  Case-Laws - AT : Recovery of erroneous refund claim allowed earlier - Section 73(1) specifically lays down the procedure and time period within which Show Cause Notice must be issued for recovery of erroneous refunds - no recovery without SCN - AT
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• Court Rules Service Tax Not Applicable on Unspecified Contractual Expenses for Clearing Agents; Statute Provisions Essential for Tax Demand.

  Case-Laws - AT : Clearing and forwarding agent - Valuation - inclusion of actual expenses received by the appellant as per the contract, chargeable of service tax or otherwise - the provisions which were not in statute cannot be applied for the demand of tax - AT
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Central Excise

• Excise duty hike on cigarettes effective from May 28, 2012, post Presidential assent to May 8 amendments.

  Case-Laws - AT : Effective date of enhancement of duty - As the levy of excise duty on cigarette at enhanced rates, as contemplated in the amendments moved on 08.05.2012, is concerned, the amended provisions will have effect only from the date of assent of President i.e. from 28.05.2012 - AT
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• Interest Allowed on Delayed Refund Due to Authority's Failure to Request TR6 Challan Copies in Time.

  Case-Laws - AT : Refund claim - Interest on delayed refund - if the sanctioning authority is of view that the departmental attested copies of TR6 Challan are required, he could have asked the same well within the time period of three months which he failed to do - claim of interest allowed - AT
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Case Laws:

• Income Tax

• 2015 (6) TMI 512
  Income from sale of carbon credits - Capital receipts vs Revenue receipts - Amount credited in p&l a/c of sister concern, SRGS - SRGS was not registered with UNFCCC, the international body for accreditation for carbon credits - Held that:- The Commissioner of Income-tax (Appeals) has followed the order of the jurisdictional High Court in the case of CIT v. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] in which it was held that 'carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns.' We agree with this factual analysis as the assessee is carrying on the business of power generation. The carbon credit is not even directly linked with power generation. On the sale of excess carbon credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. - Decided against the revenue.

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• 2015 (6) TMI 497
  Reopening of assessment - assessee had not furnished the details relating to working of MODVAT which resulted in failure on the part of the assessee by not disclosing fully and truly all material facts - Held that:- Having furnished the details of the working of the MODVAT Credit in Annexure 1(A) to the Tax Audit Report, which is a mandate as per the provisions of the Act and the Assessing Officer has considered the said issue in the order passed under Section 143(3) of the Income Tax Act, the Commissioner of Income Tax (Appeals) has given a clear finding that the details of MODVAT credit working were considered by the Assessing Officer during the assessment proceedings under Section 143(3) and the re-assessment is initiated on a mere change of opinion on the same material on record. When the Assessing Officer had failed to record anywhere his satisfaction or belief that the income chargeable to tax had escaped assessment on account of the failure of the assessee to disclose truly and fully all material facts necessary for assessment, the notice issued under Section 147 of the Income Tax Act beyond the period of four years was wholly without jurisdiction and cannot be sustained.Hence, we have no hesitation in holding that reopening is bad. Accordingly, we uphold the findings of the Tribunal that it is a case of mere change of opinion on the same material already available on record, which has been submitted by the assessee in Annexure 1A of the Tax Audit Report at Point No.12(b) of the return of income. - Decided in favour of assessee.

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• 2015 (6) TMI 496
  Claim of deduction u/s.80HHC on the DEPB income - Held that:- Respectfully following the judgment of Topman Exports vs. CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) and Avani Exports and Others vs. CIT (2012 (7) TMI 190 - GUJARAT HIGH COURT ), we hereby set aside the order of the ld.CIT(A) and direct the AO to allow the claim of the assessee u/s.80HHC of the Act in respect of DEPB income and re-compute the deduction in the light of the above judgements of the Hon’ble Apex Court and Hon’ble Jurisdictional High Court. - Decided in favour of assessee.

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• 2015 (6) TMI 495
  Addition made by the AO on account of expenses relating to marriage of the daughter of the assessee - CIT(A)sustained addition of 1 lac on estimate basis - Held that:- In the present case, it is noticed that the assessee was having five daughters and had given good education to all of them. He claimed to have spent an amount of 50 to 75,000/- and jewellery between 8 to 10 tolas on the marriage of her eldest daughter in 1989 which is not doubted by the department, for the 2nd daughter, he claimed to have spent about 1,00,000/- and given jewellery of 8 to 10 tolas in the year 2000, the said spent amount was also not doubted. For the third daughter the assessee claimed that expenses of 50 to 75,000/- were incurred on account of marriage in 2004. Those were also not doubted and accepted while framing the assessment u/s 143(3) of the Act. The 4th daughter was married in November, 2005 but some dispute arose with the in-laws and the assessee filed a complaint to the Women Cell of Police, on the basis of the said complaint, the AO presumed that the assessee might have incurred an expenses of 50,62,370/-. However nothing was brought on record to substantiate that the said expenditure was in fact incurred by the assessee. The assessee later on clarified to the AO that actual expenses for cloth accessories and Barat Kharcha were at 50,000/- and 80,000/- respectively and jewellery worth 1,40,000/- purchased in earlier years was given. The said explanation appears to be plausible considering the expenses incurred by the assessee on the occasion of the marriages of his other daughters in the earlier years. Therefore, we are of the view that the AO was not justified in making the addition of 39 lacs and the Ld. CIT(A) also sustained the addition of 1,00,000/- on estimate basis without bringing any material on record. In our opinion when the ld. C.I.T.(A) had accepted that the assessee had some past saving and jewellery 1 lac on estimate basis was not justified. Thus we deem it appropriate to delete the addition sustained by the Ld. CIT(A). - Decided in favour of assessee.

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• 2015 (6) TMI 494
  Penalty u/s 271(1)(c) - CIT(A) cancelled penalty levy - disallowance u/s 14A - Held that:- Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under Section 271 (l)(c). A mere making of a claim, which is not sustainable in law by itself will not amount to furnishing inaccurateparticulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.See Commissioner of Income tax vs. Reliance Petroproducts Pvt. Ltd. reported in [2010 (3) TMI 80 - SUPREME COURT ] Thus in the present case, the penalty under section 271(1)(c) is not leviable and it deserves to be deleted, hence, Ld. CIT(A) has rightly deleted the penalty made by the Assessing Officer. - Decided in favour of assessee.

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• 2015 (6) TMI 493
  Determination of income u/s 44BB - Receipts on account of service tax - whether includible in the gross receipts for the purpose of determining income under section 44BB - Held that:- Keeping in view the case of Ensco Maritime Limited vs. Asstt. Director of Income Tax (Int. Taxation) [2015 (1) TMI 355 - ITAT DELHI ] in which one of the Members was the party wherein the issue in dispute was decided in favor of the assessee. Respectfully, following the precedent of the Coordinate Bench as aforesaid, we quash the orders of the authorities below and direct the AO to exclude service tax from the gross receipts for the purpose of determining the income under section 44BB of the Income Tax Act, 1961 - Decided in favor of the assessee.

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• 2015 (6) TMI 492
  Transfer pricing adjustment - addition on account of interest on the deemed loan, determined as a result of the issue of shares at value lower than their fair value estimated by the Transfer Pricing Officer (TPO) - whether the transaction of issue of share capital leads to generation of any income chargeable to tax in the hands of a company issuing shares, warranting the substitution of such income with income determined on the basis of its ALP? Held that:- Since the transaction of purchase of asset is on capital account, there can be no addition of 200 (Rs.300 minus 100), being the difference between the ALP and transacted value. However this international transaction of purchase of asset on capital account having impact on the income of the assessee by means of transaction of claim of depreciation is to be adjusted to the ALP price. Consequently, the TPO will be within his jurisdiction to determine the ALP of the transaction of claim of depreciation by reducing it to 10 on the basis of the ALP of the international transaction on capital account, for which no addition of 200 is maintainable. Similar is the position as regards the under reporting of interest on an international transaction on a capital account. The Hon’ble High Court in Shell India Markets Pvt. Ltd. Vs. ACIT [2014 (11) TMI 897 - BOMBAY HIGH COURT] following the judgment in Vodafone India Services Pvt. Ltd. (2014 (10) TMI 278 - BOMBAY HIGH COURT) held that there can be no addition by applying the provision under Chapter-X on account of less share premium received and also the consequential interest on the resultant deemed loan. The learned DR has not drawn our attention towards any contrary judgment not mandating the determination of ALP of interest on deemed loan consequent upon issue of shares by an Indian company to its non-resident AE at lower price than its fair market value. Respectfully following the precedent, we hold that the addition of 6.63 crore on account of interest on the deemed loan due to under-receipt of share premium, upheld by the learned CIT(A), cannot be sustained. Accordingly, the addition is deleted - Decided in favour of assessee.

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• 2015 (6) TMI 491
  Deduction under S.80IA - CIT(A) allowed claim - Held that:- The learned CIT(A) after considering the submissions of the assessee and being made aware of the decision of the ITAT in assessee’s own case for the immediately preceding year correctly found that as far as the bridge project is concerned, the Income Tax Appellate Tribunal in assessment years 2009-10 and 2010- 11 has held the assessee as eligible for deduction under S.80IA(4). Accordingly, following the decision of the Tribunal in assessee’s own case, she allowed the assessee’s claim of deduction under S.80IA on the bridge project. As far as the road work is concerned, the learned CIT(A) also followed the principles laid down by the ITAT in assessment years 2009-10 and 2010-11 in assessee’s own cases and allowed the assessee’s claim of deduction o the effect that the assessee has undertaken the risks and liabilities itself in executing the infrastructure project, we are of the view that the conclusion drawn by the learned CIT(A) deserves to be upheld. - Decided against revenue.

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• 2015 (6) TMI 490
  Revision u/s 263 - CIT has considered the assessment order to be erroneous and prejudicial to the interests of revenue appears to be the rate of profit adopted by AO, which according to ld. CIT, should have been 12.5% on main contract and 8% on sub-contract works as against 10% and 7% respectively by AO - Held that:- When AO is of the opinion that books of account are unreliable, the discretion is with him to reject the books of account and estimate the profit at a rate which is according to AO is reasonable considering the nature of business carried on by assessee. Once such decision is taken by AO, who is the best judge of the situation, then, ld. CIT cannot interfere with such decision of AO to substitute his own opinion on the rate of profit adopted by exercising power u/s 263 of the Act. Moreover, once the books of account are found to be unreliable and rejected resulting in estimation of profit, AO is not required to enquire or examine the individual items of expenditures or other issues as pointed out by ld. CIT since estimation of profit usually takes care of such deficiencies in the books. In the aforesaid circumstances, ld. CIT cannot hold the assessment order to be either erroneous and prejudicial to the interests of revenue so as to revise the same u/s 263 of the Act. Accordingly, we set aside the impugned order of ld. CIT and restore the assessment order. - Decided in favour of assessee.

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• 2015 (6) TMI 489
  Late deposit of employee's contribution towards provident fund - disallowance of Claim u/s 43B - Held that:- In the assessment order AO has categorically stated the amount due for which month in respect of EPF and ESI deposits and has stated the due dates for these deposits to have been deposited and on which date actually these deposits were made by the assessee. The dates of deposits are mentioned between 05th July 2001 to 26th April 2002. We find that the latest payment is made on 26th April 2002 and assessee being a limited company had filed its return on 20th October, 2002, so the assesse had deposited the amount before the due date of filing of the return. Thus, it is clear beyond doubt that all the payments which have been disallowed were made much earlier to the due date of filing of the return. The disallowance is not made by the AO on the ground that there is no proof of making such payment but disallowance is made only on the ground that these payments have been made beyond the due dates of making these payments as stipulated under the respective statute. Thus, it was not an issue that the payments were not made by the assessee on the dates which have been stated to be the dates of deposits in the assessment order. In such a scenario, according law clarified by Hon'ble Supreme Court in the case of CIT Vs Vinay Cement Ltd,[2007 (3) TMI 346 - Supreme Court of India ] that no disallowance could be made if the payments are made before the due date of filing the return of income. - Decided in favour of assessee.

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• 2015 (6) TMI 488
  Profit resulted from share dealings - short term capital gains or business income - Held that:- Assessee company was originally engaged in the business of investment and financing. The assessee has converted the trading stock into investment by passing a resolution on 30.07.2004. The net value of closing stock of shares as on 30.07.2004 was at 25,97,534/- and the credit value was at 35,20,077/-. The company offered the difference of 9,22,543/- for taxation but the AO treated the entire conversion of stock into investment at 35,20,077/- as business income in view of the provisions of section 45(2) of the Act. We find that this issue is covered by the decision of ACIT Vs. Bright Star Investment Pvt. Ltd.,[2008 (7) TMI 442 - ITAT BOMBAY-H]. In view of the above, we find no infirmity in the order of CIT(A) deleting the addition made by AO on account of profit arising from sale of share dealing as business income as against declared by assessee as Short term Capital Gains - Decided in favour of assessee. Disallowance of Foreign travel expenses of Director - CIT(A) deleted addition - Held that:- since domestic and foreign travelling of Mrs. Madhurika Khaitan an executive and employee of the company was for the purpose of business promotion. Therefore, the addition made by the A.O. on this ground is not sustainable. - Decided in favour of assessee. Addition on account of donation - CIT(A) deleted addition admitting fresh evidence - Held that:- the assessee has submitted ATG Certificate of the donee Durga Prasad Khaitan Charitable Trust along with a receipt of donation of 50,000/-. According to us, this is new evidence, which requires verification. Ld. Counsel for the assessee also not objected to the same. In term of the above, we set aside this issue to the file of AO for verification and decide the issue as per law. - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 487
  Services for geophysical and geological interpretation of 3D and 2D seismic data - Whether are in the nature of fees for technical services (FTS) or should fall under sec. 44BB of the Act? - Held that:- In the present case, there is no dispute that the assessee is having PE in India as it is evident from the assessment order wherein the Assessing Officer has noted as “the PE of assessee in India is not disputed as the assessee has filed the return under sec. 44BB offering its income as taxable in India”. So far as the other conditions that the Revenue of the assessee is effectively connected with PE in India is concerned, it is found that the Assessing Officer has already examined the effective connection of the Revenue of the assessee with the PE in India while holding that the income of the assessee is taxable under sec. 44DA of the Act. The Delhi Bench of the ITAT in the case of Fugro Geoteam AS vs. ADIT (2015 (6) TMI 436 - ITAT DELHI) has noted that the ruling of AAR in the case of Geophzika Torun SP. GO. [2009 (12) TMI 4 - AUTHORITY FOR ADVANCE RULINGS] has been confirmed in the case of DIT vs. OHM Ltd. (2012 (12) TMI 422 - DELHI HIGH COURT). The said judgment was followed in the assessment year 2008-09 in the case of PGS Geophysical AS (2014 (7) TMI 723 - DELHI HIGH COURT ). In the light of above judgments held that for the relevant assessment year i.e. 2008-09, the assessee is entitled to declare its income under the provisions of sec. 44BB of the Act. The Learned CIT(Appeals) was thus justified in holding so. - Decided in favour of assessee.

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• 2015 (6) TMI 486
  Disallowance of club expenditure - subscription / membership fees - Held that:- Perusing the order of the Tribunal in one of the assessment years 2005–06 of assessee's own case wherein the issue is covered in favour of the assessee by the decision of Otis Elevators Co. Ltd. (1991 (4) TMI 53 - BOMBAY High Court) which has been followed by the Tribunal in assessee’s own case for the earlier assessment years. - Decided in favour of the assessee. Disallowance of debts written off as irrecoverable in the accounts - Held that:- There is a need for examining the statement of the assessee’s write–off on the Profit 65,93,498, the assessee successfully reconciled to the extent of 52,93,803 that constitute 80% of the entire transaction. Regarding the balance of 12,99,690, the Assessing Officer did not provide the necessary details to enable the assessee to reconcile the same. It is a settled issue that merely non–reconciliation of the AIR data and does not lead to sustainable addition in the assessment. In our opinion, there is a need for remanding this issue to the file of the Assessing Officer. Consequently, we set aside the impugned order passed by the learned CIT(A) on this issue and restore the issue back to his file with a direction to furnish requisite specific information to the assessee calling for reconciliation. Normally, the AIR data is generic as well as general in nature. The Assessing Officer is required to first examine the specific of the transaction that require reconciliation - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 485
  Addition under section 68 - CIT(A) deleted the addition - Held that:- As could be seen from the confirmation from the director of the lender company confirmed that lender has advanced loan of 50,00,000/- to the assessee through RTGS, out of which 25,00,000/- was repaid through demand draft by the assessee and they are assessed to income-tax department and PAN details were also provided. In the confirmation new address of the lender was also provided. The lender company also provided its bank account establishing that loan was transferred through RTGS. All these go to show that lender has advanced monies through RTGS to the assessee and the assessee in fact repaid half of the loan to the lender company. It is not in dispute that assessee has not provided confirmations in the course of assessment proceedings. In fact, Assessing Officer has given a finding that assessee also provided confirmation letters from the creditors including M/s. Aditicon Services India Pvt. Ltd. This confirmation letter was not placed before the lower authorities where the lender has given new address. Therefore, subject to verification of the Assessing Officer, as to whether the lender is operating from the said address and this confirmation letter is given by one of the directors of the lender, we uphold the order of the CIT (Appeals) treating the loan transactions as genuine, the identity of the creditor is proved and creditworthiness of the assessee is established as the transaction was routed through banking channels. - Decided partly in favour of revenue for statistical purposes.

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• 2015 (6) TMI 484
  Computation of short-term capital gain - non inclusion of cost of acquisition of the asset and the cost of any improvement thereto - Held that:- FAA has made a detailed analysis of each item of expenditure claimed by the assessee towards the improvement of the asset as well as incurred in connection with the transfer. It is to be appreciated that assessee has claimed expenses of 1,55,750/- incurred towards fertilizer and matipuran. The total land is measuring 2675 sq.mtrs. which is just equivalent to half acre of land. Even somebody wants to put warmi-post or cowdung as fertilizer it cannot cost 1,55,750/-. The land has been sold as an agricultural purpose. This is highly exaggerated amount which has been claimed by the assessee without submitting any evidence. Similarly the assessee has claimed that he must have filled the land with sand for leveling purposes though no direct evidence has been placed on record. The assessee could only produced his account as well as account of his sons wherein their books, they have claimed incurred expenditure but the assessee could not bring any demonstrative evidence exhibiting that some physical changes were brought in the asset. Considering the well reasoned finding of the CIT(A) vis-à-vis the claim made by the assessee, we are of the view that ends of justice would meet if a sum of 1,50,000/- is allowed to the assessee on an estimate basis for leveling and putting some fertilizer etc. towards improvement of the asset. The ld. AO shall recomputed the capital gain after allowing the improvement cost of 1,50,000/- to the assessee. - Decided partly in favour of assessee.

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• 2015 (6) TMI 483
  Non-deduction of tax under section 194H - AO treating the discount offered by the assessee to pre-paid distributors in the nature of "commission" - 'ássessee in default’ - Held that:- There is divergence of opinion on this issue amongst Hon’ble High Courts. The controversy would ultimately be silenced by the Hon’ble Supreme Court. Therefore, we deem it appropriate to set aside the impugned orders and restore these issues to the file of ld. AO for re-adjudication. The ld. AO shall take into consideration the decision of in assessee’s own case for Delhi Circle or another case law available at that point of time - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 482
  Denial of exemption u/s 54 - deposit of net consideration into capital gain account scheme on 31-03-2009 - Held that:- Section specific reference to sec. 139 cannot be construed only to sec. 139(1) alone but it includes all the sub-section of 139 including 139(4). Therefore, if the sale consideration is utilized for the construction or purchase of a new residential house before due date of filing of return u/s 139(4) i.e. 31-3- 2010 in this case, the same will be eligible for exemption u/s 54. Thus the assessee’s claim for exemption is eligible u/s 54 of the Act. See CIT vs. Jagriti Agarwal (2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT) - Decided in favour of assessee. Mode of computation of capital gain - LTCG computed by AO on the basis of value adopted by the stamp valuation authority, in terms of Section 50C as against the Long term capital gain computed by the assessee, on the basis of actual sale consideration - Held that:- While computing exemption u/s 54, the actual sale consideration is to be taken into consideration and not the stamp duty valuation u/s 50C. Thus, assessee’s claim of exemption as made in the return of income as raised is allowed. See CIT vs. Smt. Nilofer Singh (2008 (8) TMI 165 - DELHI HIGH COURT ) and Gyan Chand Batra vs. ITO [2010 (8) TMI 528 - ITAT JAIPUR] - Decided in favour of assessee. Cost of construction of a room and boundary wall disallowed - Held that:- No infirmity in the orders of lower authorities as there is no mention of boundary wall in the sale deed. Besides, no evidence was furnished by the assessee before the AO to substantiate its claim of having constructed the boundary wall. - Decided against assessee.

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• 2015 (6) TMI 481
  Reference to Valuation Officer to determine the fair market value - Whether in view of Section 50C when the fair market value is less than the registration value adopted by the registering authority, the matter has to be referred to the Valuation Officer? - Held that:- When the fair market value is less than the value adopted by the registering authority, Section 50C of the Act clearly says that the matter has to be referred to the Valuation Officer to determine the fair market value. In this case, both the authorities below have not referred the matter to the Valuation Officer. When the assessee shows the sale consideration at 5,58,25,000/- in the sale deed, it would not be correct to say that the assessee did not object to the value adopted by the Assessing Officer at 9,73,58,800/-. In order to avoid dispute with registering authority and for early registration of the document, stamp duty might have been paid for the value determined by the registering authority. However, the actual sale consideration shown in the sale deed cannot be disregarded unless and until the valuation report obtained by the Assessing Officer as required under Section 50C. Therefore, this Tribunal is of the considered opinion that the matter needs to be referred to the Valuation Officer. - Decided in favour of assessee for statistical purposes. Allowability of TDS - Held that:- The ground relating to TDS certificates to the extent of 3,83,236/- was not disposed of by the CIT(Appeals). This Tribunal is of the considered opinion that when the tax was deduced at source as per the scheme of the Income-tax Act, the Assessing Officer is bound to give credit for the tax deducted at source, otherwise, the very purpose of deducting tax would be defeated. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall reconsider the issue after verifying the TDS certificates that were said to be filed by the assessee. Accordingly, the matter is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Assessability of surplus on the sale of land - Held that:- It is not the case of the Revenue that the order of the Tribunal was stayed by the High Court for assessment year 2004-05. In those circumstances, the mere pendency of appeal before the High Court cannot be a reason to take a different view. Therefore, by following the order of this Tribunal for assessment year 2004-05 in the assessee's own case the CIT(Appeals) has rightly directed the Assessing Officer to assess the surplus on the sale of lands under the head “capital gains”. We do not find any infirmity in the order of the CIT(Appeals) and accordingly confirm the same. - Decided against revenue.

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• 2015 (6) TMI 480
  Income from sale of Land - Capital Gain or business income – Whether land sold by assessee was agricultural land or capital asset – Whether the transaction was an adventure in the nature of Trade ? - Held that:- As relying on case of Smt. M. Vijaya and others [2014 (6) TMI 587 - ITAT HYDERABAD] we uphold the impugned order of the Ld. CIT(A) holding that the land in question being agricultural land situated beyond 8 K.Ms from the limits of Hyderabad Municipal Corporation, is not a capital asset within the meaning of section 2(14) and the profit arising from the said land is not chargeable to tax in the hands of the assessee as capital gains. We also uphold the impugned order of the Ld. CIT(A) holding that the activity of the assessee of purchase and sale of the said land was not an adventure in the nature of trade as alleged by the Assessing Officer. - Decided in favour of assessee.

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• 2015 (6) TMI 479
  Reopening of assessment - lease equalisation charges, provision for nonperforming assets and provision for diminution in the value of investments - CIT(A) quashed reopening order - Held that: - On the item of lease equalisation charges the Tribunal has decided the matter in favour of the assessee in assessment year 1997-98 in assessee’s own case. Provision for nonperforming assets and provision for diminution in the value of investments - Held that:- The reopening is on the basis of retrospective amendment made by Finance No. 2 Act, 2009 in section 115JA in respect to proposed additions on account of provisions for nonperforming assets and provisions for diminution in the value of investments. This issue is covered in favour of the assessee and against revenue in view of the decision in the case of IOT Infrastructure & Energy Services Ltd. Vs. ACIT (2010 (6) TMI 64 - BOMBAY HIGH COURT) wherein it is observed that the reassessment based on retrospective amendment is bad in law. In the present case the notice u/s. 148 of the Act was issued prior to the amendment and once this is the position, the issue is squarely covered in favour of assessee. The reassessment u/s. 147 of the Act has rightly been quashed by CIT(A) and we confirm the same. - Decided against revenue.

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• 2015 (6) TMI 478
  Unexplained low gross profit rate - CIT(A) deleted the addition - Held that:- Considering the judicial precedent laid down by the ITAT in assessees own case wherein the M.A. filed by the Revenue stands allowed on similarity of facts wherein held as Tribunal did not consider this contention of the Revenue based on the findings in the assessment order that assessee failed to justify the market rate vis-`-vis the purchase price paid to sister concern and this was one of the main reasons for fall in GP., we find that the impugned order deserves to be set aside. Ordered accordingly. The issue is restored back to the file of the CIT(A) with the direction to decide the issue again after considering the relevant points brought out by the AO in his order. Needless to say that the assessee shall be afforded a reasonable opportunity of being heard. - Decided in favour of revenue for statistical purposes.

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• Customs

• 2015 (6) TMI 501
  Jurisdiction of Senior Intelligence Officer - Section 110 - Power to stop withdrawal from account of the petitioners because an investigation was being carried out by the office - Held that:- Section 110 A of the Act provides that any goods, documents or things seized under Section 110 may pending order of the Adjudicating Authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the Adjudicating Authority may require. Thus the precondition stipulated under Section 110 A is that goods, documents or things must have been seized under section 110 of the Act. We have already held that the power under section 110 of the Act could not have been exercised for passing an order that the petitioners should not be permitted to make any withdrawal from the account. In such circumstances, the respondents cannot insist that the petitioners should furnish adequate security bond. - Decided in favour of appellant.

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• 2015 (6) TMI 500
  Demand of EDD - at the instance of the Department, the Appellate Commissioner, while accepting the case of the Department, remanded the matter. - while remanding, he has directed the petitioner to pay EDD equivalent to 5% of the Assessable value - Held that:- There is an effective alternative remedy available, as provided under Section 129(A) of the Customs Act, the ultimate conclusion reached by the Appellate Authority directing the petitioner to pay EDD equivalent to 5% of the Assessable value till the issue of the fresh order, in my considered opinion, is not maintainable for the reason that when the matter is remanded back to the file of the Original authority, all the issues are to be adjudicated afresh, without being influenced by any of the observation. While so, viewing the impugned order, direction given to pay EDD equivalent to 5% of the Assessable value, against the petitioner, in my view will prejudice the mind of the original authority while deciding the issue. Therefore, this Court, deleting only that portion of the order directing the petitioner to pay EDD equivalent to 5% of the Assessable value, directs the adjudicating authority to determine the issue after giving reasonable opportunity to the petitioner. - Appeal disposed of.

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• 2015 (6) TMI 499
  Denial of refund claim of SAD - non-fulfillment of the conditions against paragraph 2(e)(ii) of the Notification No.102/2007-Customs dated 14.9.2007 - Held that:- Admittedly, the petitioner had preferred appeals against the Order-in-Original passed by the third respondent and after granting an opportunity of personal hearing, the second respondent allowed the appeals filed by the petitioner. Pursuant thereto, the petitioner has made a request for refund of the SAD amount. In the light of the above, recording the submission of the learned counsel for the respondents, if no further appeal is filed, the third respondent is hereby directed to refund the SAD amount of 20,672/- and 1,36,427/- vide representation dated 15.7.2014, within a period of six weeks - Decided in favour of assessee.

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• Corporate Laws

• 2015 (6) TMI 498
  Condonation of delay - Sick Industrial Companies (Special Provisions) Act, 1985 - Whether under Section 25 of SICA, the delay in filing the appeal to AAIFR can be condoned beyond the period of 60 days - Whether high court has power under Article 226 to condone the delay and remit the matter - Held that:- The combined reading of various provisions contained clearly points out that the legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. Being a complete code by itself, the nature of remedy provided therein would be governed by the said Act. If, on an examination of the relevant sections, it is clear that the provisions of Limitation Act, 1963 are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. Wherever the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act,1963 by an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subject-matter and scheme of the special law exclude their operation. The power conferred under Articles 226/227 is designated to effectuate the law, to ensure that rule of law is enforced and the statutory authorities and other organs of the State act in accordance with law. It is not to be invoked whereby authorities are directed to act contrary to law. Wherever, the extent of condonable period is specifically prescribed by a statute, it would not be appropriate even under Articles 226/227 of the Constitution to entertain the writ petition so as to breach the express provision in the statute and act contrary to the mandate of the legislature. It is for the legislature to prescribe the limits or not to do so for condoning the delay. Exercise of extraordinary writ jurisdiction under Articles 226/227 of the Constitution of India would amount to doing violence to the statutory provision and rendering the same otiose. Same views expressed in M/s Nitco Tiles Limited vs. Gujarat Ceramic Floor Tiles Mfg. Assn. And others [2005 (2) TMI 159 - SUPREME COURT OF INDIA] , Union of India and another vs. Kirloskar Pneumatic Company Limited [1996 (5) TMI 87 - SUPREME COURT OF INDIA ] , M/s Raj Chemicals vs. Union of India [2012 (3) TMI 307 - BOMBAY HIGH COURT ] , Sheetal Enterprises vs. Union of India [2005 (10) TMI 107 - HIGH COURT OF JUDICATURE AT BOMBAY]. Having expounded the legal position, it may be noticed that there was delay of 354 days in filing the appeal by the appellant State before the Appellate authority. The appellate authority as well as the learned Single Judge had dismissed the appeal as time barred. The delay being beyond the condonable period prescribed in Section 25(1) of SICA, there is no merit in the Letters Patent Appeal. - Decided against the appellant.

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• Service Tax

• 2015 (6) TMI 511
  Penalty u/s 76 & 77 - taxes has been paid even before the issuance of show cause notice - Held that:- The benefit of Section 80 of the Finance Act, 1994 should be extended. In the absence of such a substantial plea and there being no bonafide justification for exemption, penalty was imposed. We find no reason why the Authorities should depart from imposing such penalty as mandated by the provisions of the Act. - issue is covered by the decision[2015 (1) TMI 812 - MADRAS HIGH COURT] in the case of Dhandayuthapani Canteen - Vs - Customs, Excise and Service Tax Appellate Tribunal, wherein this Court, while considering the issue whether the penalty is imposable where the tax is paid before issuance of show cause notice held that penalty is imposable even in cases where tax is paid before issuance of show cause notice. - Decided against assessee.

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• 2015 (6) TMI 510
  Recovery of erroneous refund claim allowed earlier - Assessee provides telecom services sold recharge vouchers (RCV) to distributors at a discount to the printed MRP - since the value realised on sale of RCVs was less than the MRP, they claimed refund of excess service tax paid - Held that:- Revision proceedings initiated by the Commissioner must be completed by passing an order within two years from the date on which the order sought to be revised has been passed. In this case the order sought to be revised was passed on 9.07.2008 and therefore order of Commissioner is required to be passed before 8.7.2010 which was done. However the requirement of clause (1) that the Order is subject to the provisions of Section 73 has to be met simultaneously. That is, the requirement of Section 73 has to be fulfilled. Section 73 (1) of the Finance Act is the provision in service tax law with regard to, inter alia, recovery of amounts erroneously refunded. The Section specifically lays down the procedure and time period within which Show Cause Notice must be issued for recovery of erroneous refunds. Show cause notice as contemplated under section 11A of the Central Excise Act is required to be issued for recovery of erroneously refunded amounts within the time limit as provided in that Section from the relevant date and not through proceedings under section 35E. Although these decisions were rendered in the context of the Central Excise Act, the ratio will apply in the context of Service Tax law because the provisions of recovery and review under sections 11A and 35E of the Central Excise Act are identical to the provisions under Section 73(1) and erstwhile Section 84 of the Service Tax law. - Decision in the case of Best and Crompton Engg. Ltd. vs Commissioner C.EX. Chennai [2000 (9) TMI 91 - CEGAT, NEW DELHI] - Decided against Revenue.

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• 2015 (6) TMI 509
  Extension of stay order - Extension of the further period of 365 days - Held that:- Perusal of Section 35C (2A) clearly reveals that the said sub-section did not grant any power to grant stay; it only sought to put fetters on the power of the Tribunal to grant stay beyond a certain period. Consequently its abolition can only have an effect that fetters which the said sub-section sought to place on the Tribunal with regard to the duration beyond which CESTAT could not grant stay no longer exist. In other words, with the abolition of Section 35C(2A) ibid with effect from 06.08.2014, the power of the Tribunal with regard to grant of stay in no way got attenuated. Even during the existence of sub-section 35C(2A) of the Act (i.e. prior to 06.08.2014), the Tribunal in the case of Halidram India Pvt. Ltd. Vs. CCE, Delhi [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)] held that the Tribunal had power to extend the stay beyond the period of 365 days in cases where appellant was ready and willing to pursue the appeal, but the Tribunal owing to the older pendency was unable to take up the appeal. - Stay extended.

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• 2015 (6) TMI 508
  Clearing and forwarding agent - Valuation - inclusion of actual expenses received by the appellant as per the contract, chargeable of service tax or otherwise - Held that:- As per Rule 6(8) of Service Tax Rules, 1994, the service tax liability which has to be discharged by service provider was the value received for the taxable service in relation to the services rendered by clearing and forwarding agent. From the perusal of the records, we find that there is no dispute as to the service tax discharged by the appellant on an amount received as compensation for the service rendered as clearing and forwarding agent; the additional amount which are received by the appellant are for computer stationery charges, godown rent and establishment charges is not disputed that the said amounts are paid to the appellant as per the agreement in contract which talks about the reimbursement of expenses to the appellant. In the order-in-Review the learned Commissioner has not controverted the said facts by adducing evidences against the same. - Commissioner in the Review Order relies upon the provisions of Rule 5 of Service Tax (Determination of Value) Rules, 2006 which were not in statute during the material period involved in this case. Suffice to say that the provisions which were not in statute cannot be applied for the demand of tax, the impugned order is on this point non-est. - Decided in favour of assessee.

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• Central Excise

• 2015 (6) TMI 507
  Effective date of enhancement of duty - Whether the excise duty levied on cigarettes at higher specific rates by virtue of the Government amendments to the Finance Bill, 2012 would be applicable w.e.f. 17.03.2012, immediately on the expiry of the day on which the Finance Bill, 2012 was introduced or w.e.f. 28.05.2012, when the Finance Bill, 2012 received the assent of the President - Held that:- excise duty as provided through said Bill will have the force of law from the date on which the Finance Bill was introduced i.e. 17.03.2012. Since the amendments proposed to the Finance Bill were in the form of official amendments and no separate Bill was required for the said purpose, no declaration under the PCT Act is permissible. However, in view of the provisions of section 4(2)(a) of the PCT Act, the declaration made ceases to have force of law once the enactment comes into operation. - as the amendments were proposed to the Finance Bill, 2012 only on 08.05.2012 and assented by the President on 28.05.2012, the same will have its applicability only from the date of assent by the President. Thus, insofar as the levy of excise duty on cigarette at enhanced rates, as contemplated in the amendments moved on 08.05.2012, is concerned, the amended provisions will have effect only from the date of assent of President i.e. from 28.05.2012. - Decided in favour of assessee.

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• 2015 (6) TMI 506
  Waiver of pre deposit - 100% EOU - CENVAT Credit - Held that:- In terms of this proviso, though the excise duty paid by the 100% EOU on its DTA clearances, has a basic custom duty component also, the cenvat credit is admissible only of the Additional Customs Duty portion payable on the goods under section 3(1) of the Customs Tariff Act, 1975 plus the special additional customs duty payable under section 3(5) of the Customs Tariff Act and Secondary and Higher Education Cess. Thus the DTA unit would not be entitled for the cenvat credit of the basic custom duty. Thus, the appellant have not been able to establish a prima facie case in their favour. - Partial stay granted.

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• 2015 (6) TMI 505
  Maintainability of appeal - Remission of duty - Loss of goods in flood - Held that:- When the case involved issue of loss of goods, the appeal does not lie before this Tribunal. However, the assessee is required to make revisions application before the Revisionary Authority, Government of India, in terms of Section 35EE of the Central Excise Act. Therefore, the appeal is dismissed as non-maintainable. However, the appellant is granted liberty to file revision application before the Revisionary Authority in terms of Section 35EE of the Central Excise Act. - Decided in favour of assessee.

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• 2015 (6) TMI 504
  Refund claim - Interest on delayed refund - Held that:- Refund claim was filed on 19/2/2009 and same was sanctioned on 30/9/2009. Hence there is apparent delay in sanctioning refund claim. It is observed that the refund is against pre-deposit of amount as directed by the Tribunal in some other matter. Appellant filed refund claim alongwith self-attested copies of TR-6 Challan and same was sufficient for sanctioning the refund claim for simple reason that the pre-deposit was ordered by the Tribunal and the same was deposited and Tribunal has accepted the compliance of such deposit. Therefore there is absolutely no dispute as regard deposit of such amount. In such circumstances the self attested copy of TR 6 Challan were sufficient for sanctioning of refund claim of pre-deposit amount within the stipulated time period of three months. - Moreover, if the sanctioning authority is of view that the departmental attested copies of TR6 Challan are required, he could have asked the same well within the time period of three months which he failed to do. - appellant is legally entitled for interest on the refund claim for the period beyond three months from the date of filing of application of refund till the sanction of refund claim in terms of 11BB of Central Excise Act, 1944 - Decided in favour of assessee.

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• 2015 (6) TMI 503
  Denial of CENVAT Credit - Gardening service - Held that:- As gardening is essential under Pollution Control laws, to maintain quality of ambient air, the same is necessary business related expenses for the manufacturer/assesse, credit allowed - Decided against Revenue.

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• 2015 (6) TMI 502
  Duty demand u/s 11A - Interest u/s 11AB - Penalty u/s 11AC - Bar of limitation - Held that:- Issue is already covered by the judgment of hon'ble Supreme Court in the case of Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur - [2007 (12) TMI 11 - SUPREME COURT OF INDIA]. In the said case, the hon'ble Supreme Court has held that when the statute prescribes a particular period of limitation the same cannot be condoned even by the Supreme Court as that would render a specific provision providing for limitation rather otiose. In view of the said decision of the hon'ble Supreme Court, we do not find any reason to interfere with the order passed by the Commissioner (Appeals). - Decided against assessee.

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