TMI Tax Updates - e-Newsletter
June 20, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Suo-Moto adjustment of excess service tax paid with subsequent liability allowed even if provisions of Rule 6(4A)/ 6(4B) not followed - Tri

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Articles

• Products currently exempt but likely to be taxed under GST - Model GST Law takes care of it
• GST Act 2016, REGISTRATION
• DRAFT – THE INTEGRATED GOODS AND SERVICE TAX ACT, 2016 – PART II
• Key Highlights of Draft Model GST Law

News

• The 2nd Meeting of the Joint Committee at the Ministerial Level under the Korea-India CEPA

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• Launch of Korea Plus Strengthening India – Korea Relations

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• "Rajswa Gyansangam- Annual Conference of Tax Administrators-2016”concludes; Major Take Aways from two day “Annual Conference of Tax Administrators-2016” include further improvement in Tax Payers Services by use of technology and increased human touch; widening of tax base and faster dispute resolution among others

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Notifications

Customs

• 38/2016 - dated 17-6-2016 - Cus
  Seeks to further amend notification No. 12/2012-Customs, dated the 17th March, 2012so as to continue with the imposition of BCD of 25% on wheat beyond 30.06.2016 and without an end date

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SEZ

• S.O. 2137(E) - dated 13-6-2016 - SEZ
  Central Government notifies the 4.05 hectares area for Information Technology and Information Technology Enabled Services at Outer Ring Road, Rachanahalli Village, Nagavara, District- Bangalore, Karnataka

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Circulars / Instructions / Orders

Central Excise

• F. No. 278A/21/2015-Legal - dated 9-6-2016
  Approved panel of Sr/Jr Standing Counsel

Highlights / Catch Notes

Income Tax

• MAT computation - Provisions made for Bad and Doubtful debts - if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted. - HC
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• Additions u/s 69 - The payment of additional stamp duty may be on the basis of the valuation of the valuer of the stamp Act authority but same ipso facto cannot be said to be a valid ground to initiate the proceedings under Section 69 of the Act or to invoke power under Section 69 of the Act on the premise that additional consideration was paid or received. - HC
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• Tax Collection at Source (TCS) - Liability of the assessee to supply the declaration u/s 206C - even if there is a technical breach, sufficient compliance is made by the assessee more particularly, when it was not the case of the appellant- revenue that any false declaration was filed. - HC
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• Application u/s 119(2)(b) for condonation of delay in filing revised return - Claim for exemption u/s 10(10C) denied - the delay on the part of the Petitioner in filing revised return of income would lead to genuine case of hardship as made out by the Petitioner. - HC
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• Exemption u/s 54F - Once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects and as requited under the law, that would not disentitle the assessee from the said benefit - HC
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• TDS - where payments are made to shipping agents of nonresident ship-owners or charterers for carriage of passengers, etc., shipped at a port in India, since the agent acted on behalf of the nonresident ship-owner or charterer, he steps into the shoes of the principal and, accordingly, the provisions of section 172 shall apply and those of sections 194C and 195 will not apply - AT
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• Transfer pricing adjustment - Adjustment for under utilization of capacity - TPO and DRP cannot be faulted for holding that the assessee has not established the quantum of capacity utilization adjustment with evidences and supporting details. - AT
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• Just because an assessee does not claim double taxation relief in respect of an income, it does not entitle the assessee to exclude that income from taxable income. Nothing, therefore, turns on not claiming double taxation relief on an income, so far as taxability of that income is concerned - AT
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Customs

• Valuation - inclusion of demurrage charges paid to the supplier - ship demurrage charges cannot be included in the discharges of custom duty on the imported goods even if the assessments are made provisionally - AT
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• Re-Import of Fuel Injection Pumps (FIPs) - claim of exemption in terms of Notification No. 94/96-Cus - The benefit of the Notification has been rightly denied to the appellants on the ground of non-fulfilment of one of the substantive conditions stipulated under the first proviso to the Notification - AT
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• Inaction of customs Authority - When public officer is required to discharge his public duty, it is mandatory for him to do so without a reminder by public for to discharge such duty. - AT
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Service Tax

• Refund - SEZ unit - The plain language of the notification makes it clear that there is no bar from an assessee from paying tax and then claiming refund as the services are exempted - AT
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• Cenvat Credit - The rent payable for premises is split as rent amount for premises and common area maintenance charges. - the claim in this regard is held to be inadmissible. - AT
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• Cenvat Credit - The insurance of dependants of the employees cannot be considered to be having nexus with providing output services by the appellant - the insurance services availed by appellant for dependants/family members does not qualify as input service. - AT
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• Suo-Moto adjustment of excess service tax paid with the subsequent liability without adhering to provisions of Rule 6(4A) and 6(4B) of Service Tax Rules, 1994 - strict interpretation and denying adjustment would result in unjust enrichment of the Revenue which can never be the intention of the Rule. - AT
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Central Excise

• Clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004 - AT
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• Refund of CENVAT credit remaining unutilized - closure of the unit - The State should not be enriched at the cost of the citizen in such circumstance - Refund allowed - AT
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• SSI Exemption - Notification No. 8/2003-CE dated 01.03.2003 - appellants were using the brand name of another person - a certificate stands issued by the Tahsildar of the village, holding the said area to be a rural area and which certificate does not stand challenged by the Revenue - exemption cannot be denied - AT
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• Classification - goods manufactured by the appellant is single yarn with layers as the core - the goods manufactured by appellant therein shall fail under the sub-heading 5205.11. - AT
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• Entitlement for input service credit - the services in question have been received by the assessee in their various branch office in the course of business of manufacturing - cenvat credit allowed - AT
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• Valuation - Demand of duty on 3% commission given to through whom goods were supplied to the customers - In absence of any evidence and with the fact that 3% service charge was admittedly billed by the appellant to the M/s. MSSIDC, demand confirmed - AT
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• Exemption to goods supplied to the international competitive bidder for use in the Mega Power Project executed by Coastal Gujarat Power Ltd. (CGPL) - Notification No.6/2006-CE dt. 1.3.2006 - It does not grant exemption to any person. - AT
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VAT

• Waiver of pre-deposit - GVAT - pendency of BIFR proceedings - if any proceedings are pending before the BIFR or the appellate authority, that by itself not mean that the predeposit requirement under subsection (4) of section 73 of the VAT Act would be obliterated - HC
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• Sales Tax / VAT liability in Odisha - inter-State sale or local sale - The report says that 176 numbers of cars have been procured from its branch office at Mumbai and sold to consumers at Odisha - Held as inter-state sale - HC
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• Validity of assessment order based on the notice sent the residential address of the Director of the Assessee Company - alternative appellate remedy - the learned Judge has rightly dismissed the Writ Petition, as not maintainable - HC
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Case Laws:

• Income Tax

• 2016 (6) TMI 653
  Addition u/s 68 - ITAT deleted the addition - Held that:- The share application forms, it is in evidence, were destroyed by fire. The point raised by the Assessing Officer is that the FIR lodged by the assessee does not contain any mention to the share application forms allegedly destroyed during the fire. We are unable to attach any importance to the omission pointed out by the Assessing Officer. It is not humanly possible for a person who has suffered an accident by fire to give particulars of all the documents in the FIR, which were or may have been destroyed. Merely on the basis of this omission, it cannot be said that the assessee failed either to offer an explanation as regards the sum found credited in its books or that the explanation offered by it was not satisfactory - Decided in favour of assessee

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• 2016 (6) TMI 652
  Accrual of interest - interest income in the hands of the assessee for allegedly having made advances - Held that:- As decided in assessee's own case the entire issue is based on appreciation of evidence on record. On the basis of the available material, the Tribunal found no justification for sustaining the addition. In fact, there was no reliable material for making the additions. Issue being predominantly in the realm of appreciation of evidence, no interference is called for.

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• 2016 (6) TMI 651
  MAT computation - Provisions made for Bad and Doubtful debts - Held that:- As besides debiting the P&L a/c and creating a provision for bad and doubtful debt, the assessee correspondingly/simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and, consequentially, at the end of the year, the figure in the loans and advances or the debtors on the assets side of the balance sheet was shown as net of the provision for the impugned bad debt. Then the said amount representing bad debt or doubtful debt cannot be added in order to compute book profit. Therefore, after the Explanation the assessee is now required not only to debit the P&L as/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted. See Yokogawa India Ltd.[2011 (8) TMI 766 - KARNATAKA HIGH COURT]

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• 2016 (6) TMI 650
  Reopening of assessment - assessee has wrongly claimed exemption u/s 11(1)(a) of the Act on accumulated income and thereby has failed to disclose truly and fully all material facts - Held that:- From the reasons recorded with the Assessing Officer for issuing notice for reopening, it can be seen that it was only upon verification of case records that he noticed certain discrepancies in the tax liability of the assessee. Neither in the reasons recorded there is any reference that income chargeable to tax escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts, nor such factor can be inferred upon giving all the reasons. In fact, the reasons start with the expression “on verification of the case records, it is noticed that …”. Thus, the relevant facts were very much on record when the original assessment was framed and even according to the Assessing Officer, there was no failure on the part of the assessee to disclose material facts. Appellate Tribunal is correct in law on quashing the order passed u/s 143(3) r.w.s. 147 of the Act - Decided against revenue

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• 2016 (6) TMI 649
  Additions u/s 69 - Valuation made by the District Registrar/Appellate Authority - Held that:- Law is well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of DVO cannot form basis of any addition on the part of the revenue. Since in the said case there was no evidence other than the report of DVO, it could not be relied upon for making addition. The question was decided in favour of the assessee against revenue Addition u/s 69 - Held that:- It appears that it is not a case of the revenue that there was any independent or corroborative material for consideration paid or received in addition to than mentioned in the sale deed. The basis of the addition is only valuation report of the District Registrar under the Stamp Act and the Departmental valuer. As such, there is no independent material which had come on record for such purpose. The payment of additional stamp duty may be on the basis of the valuation of the valuer of the stamp Act authority but same ipso facto cannot be said to be a valid ground to initiate the proceedings under Section 69 of the Act or to invoke power under Section 69 of the Act on the premise that additional consideration was paid or received. Further, if such could not be the basis, subsequent valuation report would also not a ground. In the absence of any independent material, the report of the valuer could not be the basis for making addition. Under such circumstances, we find that the addition made by the Assessing Officer and further modified by the CIT (Appeal) as well as by the Tribunal cannot be sustained.- Decided in favour of the assessee

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• 2016 (6) TMI 648
  Rental income derived from the industrial sheds - ‘income from house property’ OR ‘income from business’ - Held that:- It is not the case of the appellants-Revenue that thedecision of the regular assessment for the assessment year 2007-08 has been carried before the higher forum or a different view is taken. Under the circumstances, when the aforesaid stand of the department in respect of the very assessee for the subsequent assessment year is accepted by the Department itself, the Tribunal has rightly found that the income cannot be treated as the ‘business income’.

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• 2016 (6) TMI 647
  Disallowance of business loss under Section 28 - adavnce on business expediency - Held that:- Simply meeting or reimbursing the expenditure of the controlled company, without anything more, does not afford any nexus between the business of the assessee and the loss. The fact that Castle Breweries was being controlled and managed by the assessee does not take its case any further. We have also perused the authorities cited on behalf of the assessee. Those cases were rendered on their own facts. Whether there was connection between the assessee’s business and the loss is a question of fact to be considered in the background of each case. There can be no dispute with the proposition that if the loss is incidental to the business, it should be allowed. However, it should be established by necessary facts that the loss is incidental to the business. We have before us a case where the assessee made advances to a controlled company and also incurred expenditure and debited these amounts to the account of the controlled company. This, in our opinion, may be prudent business practice or it might have arisen because of the assessee’s anxiety to save its controlled company from facing financial crunch. But, this by itself affords no nexus between the assessee’s business and the loss. In our view, the loss cannot be allowed as business loss u/s.28 of the Act. - Decided against assessee Addition u/s 14A - expenses incurred by the appellant towards interest and others on the loan borrowed for advances made to the subsidiaries in the course of business for its expansion - Held that:- Tribunal after holding in principle the applicability of Sec. 14A, has further directed the Assessing Officer to ascertain from the facts of the case as to how much interest bearing borrowings was utilized to acquire shares in the companies and the matter is relegated to the Assessing Officer. As per the language in Sec.14A, the enquiry has to be undertaken by the Assessing Officer which has been so ordered by the Tribunal. Hence, it can be said that the Tribunal has exercised the discretion where rights of both sides are kept open for admissible deduction under Sec.14A. When such a discretion is exercised and the rights of the appellant –assessee is also kept open to satisfy the Assessing Officer, it cannot be said that any substantial questions of law would arise for consideration, as sought to be canvassed. In our view, at the stage of enquiry under Sec.14A, it is open to the Assessing Officer to independently consider the matter for admissibility of the interest on borrowings and if yes to what extent. Hence, when the question at large is further to be considered by the Assessing Officer, we do not find that any further observations are required to be made in this regard. - Decided against assessee

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• 2016 (6) TMI 646
  Tax Collection at Source (TCS) - Liability of the assessee to supply the declaration u/s 206C - whether Tribunal erroneously did not consider the aspect that as per Section 206-C(1) of the Act such declaration has to be furnished when the payment is made by issuance of the cheque or by debiting the entries in the books of accounts whichever is earlier? - Held that:- Tribunal has interpreted the provisions of Section 206-C(1a) observing that, the assessee can furnish the declaration only when it is so furnished to him by the buyer. As such, the liability of the assessee to supply the declaration to the assessing officer as provided under sub-Section 1-B of Section 206 of the Act is considered. It further appears that the Tribunal thereafter has considered that even if there is a breach on the part of the assessee in not obtaining the declaration from the buyer in the month when the sale was effected, it was only a technical breach and could be condoned as per the earlier decision of the Tribunal which has been interfered with by the Madras High Court in the case of CIT vs. Adishankar Spinning Mills(P) Ltd., (2010 (12) TMI 1084 - MADRAS HIGH COURT ). It appears that thereafter, as in the present case, declaration of the buyer was furnished in response to the show-cause notice and as it was not the case of the revenue that the declaration was false, the Tribunal set aside the order of the lower authorities.. We are unable to accept the contention of the revenue for the simple reason that effecting sale cannot be equated/correlated with the payment made pursuant to sale or by debit entries in the books of account s and therefore, the finding of the Tribunal cannot be considered to be in contravention to the provision of Section 206-C(1) of the Act. In any case, the Tribunal has found that even if there is a technical breach, sufficient compliance is made by the assessee more particularly, when it was not the case of the appellant- revenue that any false declaration was filed. No substantial question of law - Decided against revenue

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• 2016 (6) TMI 645
  Application under Section 119(2)(b) - condonation of delay - Claim for exemption under Section 10 (10C) denied - amount received on voluntarily retirement from the State Bank of India (SBI) - whether the revised return of income though filed beyond a period of limitation, be entertained, as otherwise it would cause genuine hardship to assessee? - Held that:- We note that Section 119(2)(b) of the Act is very clear. Under the above provision, the Authority concerned has to apply his mind to the application before him and if he finds that not granting of the application would result in genuine hardship, than the application is to be allowed by condoning the delay. The merits of the application is not the subject of consideration at this stage. We find that the impugned order has come to a conclusion that not granting of the application to entertain the revised return of income,would lead to a genuine hardship to the Petitioner. This alone is sufficient for the purpose of allowing application under Section 119(2)(b) of the Act, as this is the only requirement. There is no requirement of any specific instructions being issued by the CBDT to the Income Tax Department to entertain the revised return of income in case of exemployee of SBI filed after expiry of period of limitation. In the above view, the delay on the part of the Petitioner in filing revised return of income would lead to genuine case of hardship as made out by the Petitioner. Prohibition to grant of any interest while condoning the delay - Held that:- In this case in the return of income originally filed exemption under Section 10 (10C) of the Act was claimed but disallowed by intimation under Section 143(1) of the Act. The Petitioner had accepted the same. Thus, it would be appropriate that no interest be granted in this case.

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• 2016 (6) TMI 644
  Addition based on the evidences seized during the course of search - Held that:- It is not in dispute that the basis for the addition made is page 1 of loose papers A/1/MKP seized not from the possession of the assessee but from the office premises of M/s. Mookambika Promoters belonging to the S.Chandrasekhar group of concerns. The learned CIT (Appeals) has observed that the document contains entries suggesting money transactions related to a property deal, between the assessee and Shri.S.Chandrasekhar. The person from whose possession the documents were seized, Shri.S. Chandrasekhar has also denied that any such transaction had taken place. Other than the seized document at page 1 of A/1/MKP found in the possession of the other person, the Assessing Officer has not brought on record any substantive material evidence to establish that the transaction had actually taken place. In this factual matrix, we concur with the finding of the learned CIT (Appeals) that the Assessing Officer has failed to substantiate with material evidence his stand that the entries at page 1 of seized material A/1/MKP represent undisclosed advances given by the assessee to Shri.S. Chandrasekhar. In view of the above, we find no reason to interfere with the finding of the learned CIT (Appeals) in deleting the additions made and consequently uphold by ITAT - Decided in favour of assessee

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• 2016 (6) TMI 643
  Entitlement for exemption under section 54F - assessee has re-invested entire capital gains by making payment in full to the builder and builder has not handed over the possession within the time limit prescribed under section 54F - Held that:- The issue is already covered by the decision of this Court in case of CIT vs. Sambandham Udayakumar [2012 (3) TMI 80 - KARNATAKA HIGH COURT ] wherein held that the essence of the said provision is whether the assessee who received capital gains has invested in a residential house. Once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects and as requited under the law, that would not disentitle the assessee from the said benefit. - Decided in favour of assessee

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• 2016 (6) TMI 642
  Rectification of mistake - Whether the Tribunal was correct in holding that prohibition mentioned in section 40(a)(ic) of the act does not apply to the computation of the book profit for the purpose of section 115JB and according to that the FBT is an allowable deduction ? Held that:- So far as Fringe Benefit Tax (F.B.T.) is concerned, the Tribunal has not interfered with the view taken by the CIT(A), which was based on the Board circular dated 29-08-2005. When the Board has issued the circular and the FBT is found to be allowable while computing book profit, we do not see that any substantial question of law would arise on such aspect as sought to be canvassed. Same is the situation for the other two items, one for prior period expenditure and another for Security Transaction Tax, but on a different scrutiny that such amounts were already excluded for the purpose of computation of book profit at the time when the assessment order under Sec. 143 was passed. Thereafter, in the purported exercise of power under Sec. 154, such could not be upset. After hearing him at length, we do not find that such would fall in the arena of mistake on the face of record within the scope and ambit of Sec. 154 of the Act, which is limited to rectification of the mistake or error. When the initial order of rectification is found to be beyond the scope of Sec. 154, as has been rightly held by the Tribunal, everything would fall to ground.The Tribunal has rightly held that such type of rectification is neither permissible under Sec. 154 read with Sec. 115JB. Hence, we do not find that any substantial question of law would arise for consideration. - Decided against revenue

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• 2016 (6) TMI 641
  Condonation of delay - Held that:- The number of days of delay in refiling is 1649. Reasons assigned are simpliciter that papers were lost and could not be traced. Appellant who had taken up to the cause of adjudicating the correctness of the order. has not been diligent in pursuing the appeal. Inaction is per se apparent. Reasons assigned are not satisfactory. Having regard to the principles set out supra, we are not inclined to condone the delay of 1649 days in representing the appeal papers. Hence, the condone delay petition is dismissed

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• 2016 (6) TMI 640
  Disallowance of loss - Intention of shifting the tax liability to charitable institution for the purpose of reducing the tax liability - assessee-company is engaged in the business of providing management and other hospital services to the general hospital run by Rajah Muthiah Chettiar Charitable and Educational Trust - sham transaction - Held that:- As rightly submitted by the ld. Counsel for the assessee, it is the initial year of the agreement between the parties, therefore, the assessee may not anticipate the expenditure that might have been incurred in providing the service. Earning profit is the motive of the company. However, in some circumstances, loss is also inevitable. This Tribunal is of the considered opinion that it is the initial year of providing services, therefore, as observed earlier, the assessee could not have anticipated the expenditure in providing the services. When the assessee entered into the agreement for providing services at Rs. 1 lakhs/Rs. 2 lakhs per month for these assessment years, it is expected that the assessee has to discharge its obligation as per the agreed terms. If there was any breach of agreement, the assessee has to compensate for the breach of the conditions as agreed between the parties. When the agreement entered into between the parties are not in dispute, merely because one of the trustee Smt. Geetha Muthaiah is a director in the assessee-company that cannot be a reason to doubt the genuineness of the transaction between the assessee-company and Rajah Muthiah Chettiar Charitable and Educational Trust. When the assessee carried out its obligations as per the agreement in providing the services and incurred loss, this Tribunal is of the considered opinion that the loss suffered by the assessee is a business loss and therefore, it has to be allowed as claimed by the assessee. Therefore, we set aside the orders of the lower authorities and direct the Assessing Officer to allow the claim of loss as claimed by the assessee for all the three assessment years. - Decided in favour of assessee

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• 2016 (6) TMI 639
  Addition u/s 14A - Held that:- There is a reasonable disallowance to be made u/s 14A of the Act for administrative and other indirect expenses incurred by the assessee company for earning exempt income having regards to the accounts of the assessee company as laid down u/s 14A(2) of the Act. So, far as the contentions of the assessee company are concerned with respect to the investment of ₹ 1,10,30,000/- made in foreign subsidiary company, we are in agreement with the assessee company that such investments in foreign subsidiaries shall not be included for computing disallowance u/s 14A of the Act, as the income by way of dividend is chargeable to tax and is not an exempt income under the provisions of the Act. Thus , the said investments of ₹ 1,10,30,000/- in foreign subsidiary shall not be included for computing disallowance of indirect expenditure under Section 14A of the Act. However, with respect to the contentions of the assessee company regarding other investments in shares and mutual funds, in our considered view, the same shall be included for computing disallowance u/s 14A of the Act having regards to the accounts of the assessee company as contemplated u/s 14A(2) of the Act . The contentions of the assessee company that the investments are made in subsidiaries companies and hence no disallowance of indirect expenditure be made under Section 14A of the Act cannot be accepted. It is also a matter of fact as emerging from paper book/page 11 from Schedule F of audited financial statements that investments as at 31-3-2006 was ₹ 4.23 crores while investments as at 31-03-2007 was ₹ 7.53 crores, i.e. ₹ 3.30 crores net investments were made in the previous year relevant to the instant assessment year. We have observed that there are divergent view of the Tribunal on this issue and matter purely being factual is to be decided on the facts of the case keeping in view mandate of Section 14A of the Act whereby the AO shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the Act having regards to the accounts of the assessee as contemplated u/s 14A(2) of the Act and hence the matter is to be decided on the facts of each case Addition being PMS Management Fee - Held that:- Respectfully following the orders of the Mumbai Tribunal in the case of Captain Avinash Chander Batra v. DCIT [2016 (5) TMI 155 - ITAT MUMBAI] we hold that the assessee company is not entitled for deductions of PMS Management fee paid to portfolio managers from the income computed under the head capital gains. Addition of being Interest Income as per the AIR information - Held that:- being Interest Income as per the AIR information - this issue of reconciliation of the difference in the interest income earned by the assessee company vide ITS database of the Revenue and the books of accounts of the assessee company needs to be set aside and remitted back to the file of the AO for denovo determination of the issue after making necessary enquiries and verifications with both the parties who have supposedly given interest to the assessee company as to the grant of interest in favour of the asssessee company as reflected in the AIR information database ITS. Disallowance u/s 14A - Held that:- Strategic investment in group concerns for the purpose of control and not for earning dividend attract disallowance u/s 14A of the Act read with rule 8D of the Income Tax Rules, 1962., we hold that the investment made by the assessee company in shares and units of mutual funds( excluding investment of ₹ 1,10,30,000/- in foreign subsidiary) shall attract disallowance u/s 14A of the Act having regards to the accounts of the assessee company as provided u/s 14A(2) of the Act keeping in view Rule 8D(2)(iii) of the Income Tax Rules, 1962,.We are therefore inclined to set aside the matter to the file of the AO for de-novo determination and quantification of disallowance u/s 14A of the Act of the indirect expenses incurred by the assessee company in relation to such income which does not form part of the total income having regards to the accounts of the assessee company as provided u/s 14A(2) of the Act and also keeping in view Rule 8D(2)(iii) of Income Tax Rules, 1962.

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• 2016 (6) TMI 638
  Disallowance of the deduction towards provision for gratuity - assessee has not made the said contribution to the gratuity fund through an approved gratuity fund - Held that:- In the case before us, SBI Life is the other insurer as defined in clause (28BB) of section 2 of the I.T. Act and the assessee admittedly has made the payment directly to SBI Life which is registered with IRDA. Admittedly, the assessee obtained the approval of the concerned authority for the gratuity fund w.e.f. 21.03.2011 vide orders dated 23.06.2014. Thus, for the relevant assessment year, the gratuity fund of the assessee was not an approved gratuity fund. The assessee had made payment to SBI Life directly and SBI Life has also accepted the same. Hon’ble Apex Court in the case of CIT vs. M/s. Textool Co. Ltd [2009 (9) TMI 66 - SUPREME COURT ] true that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. (See: Shri Sajjan Mills Ltd. vs. Commissioner of Income Tax, M.P. & Anr. [2008 -TMI - 5911 - SUPREME Court]. From a bare reading of Section 36(1)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees – deduction allowed since the conditions stipulated in Section 36(1)(v) of the Act were satisfied.- Decided in favour of assessee. Disallowance of deduction claimed @ 7.5% of the gross total income under section 36(1)(viia) - Held that:- We find that this issue is now covered in favour of the Revenue and against the assessee by the decision of the Hon’ble High Court of Punjab & Haryana in the case of State Bank of Patiala reported in [2004 (5) TMI 12 - PUNJAB AND HARYANA High Court ] wherein it has been held that it is necessary to make a provision for bad and doubtful debts in the account books in the same previous year in which such provision is claimed as deduction under section 36(1)(viia).- Decided against the assessee

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• 2016 (6) TMI 637
  Reopening of assessment - reasons to believe - whether the proceedings under sec. 147 of the Act were initiated merely on the change of opinion? - Deduction u/s 10B wrongly claimed - Held that:- AO has not applied his mind at all. The order passed by the AO is flimsy and one page order which shows total non application of mind and the assessment order (original) dated 9.10.2009 has not discussed any issue much less the issue under sec. 10B and the basis of calculation giving the benefit of sec. 10 B to the assessee. Even assuming the information which were supplied by the assessee, as per question no. 9 & 25 of the paper book , then also this information was not correct and complete information i.e was not a sufficient disclosure. In our view the assessee has wrongly claimed the deduction of ₹ 22,91,771/- as mentioned by the AO. In our view the AO is required to form his opinion one way or the other and also required to adjudicate on the entitlement and quantum of the assessee for the deduction under section 10B of the IT Act on the basis of complete information. In our view though the information were supplied but that was not sufficient for the AO for completing the assessment u/s 143(3) by applying his mind and form his opinion. In our view, there was no opinion formed, therefore, we do not find any merit in the submission of the ld. A/R that there is a change of opinion. In view thereof, we reject the ground of the assessee that reassessment was bad in law. Deduction u/s 10B computation - Held that:- The total profit of business has been mentioned at ₹ 66,32,853/- and total profit of undertaking was mentioned at ₹ 29,33,736/-. Total turnover of the undertaking as well as export turnover was mentioned as ₹ 46,99,000/- whereas the total turnover of the business has been mentioned as ₹ 8,81,97,775/-. The total profit of the undertaking and total turnover of the undertaking is required to be applied, as per the formula accepted in terms of section 10B(4) of the IT Act. AO has correctly applied the formula but has applied wrong figure. In view thereof, we have no option but to remand the matter to the file of the AO to recalculate the deduction after applying the correct formula as mentioned under section 10B(4) of the IT Act. - Decided partly in favour of assessee for statistical purposes.

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• 2016 (6) TMI 636
  Transfer pricing Adjustment - Adjustment on account of interest on loans advanced to Associated Enterprise (AE) - Held that:- It cannot be open to the transfer pricing authorities to contend that this loan should be treated as a high risk loan on which high interest rate should be charged even within the range of interest rates charged by the Indian banks generally. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete this arms length price adjustment in respect of interest charged on advances to the Associated Enterprise. See UFO Movies India Ltd Vs ACIT [2016 (2) TMI 196 - ITAT DELHI]. Thus we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned arm’s length price adjustment in respect of interest on loan advanced to the AE - Decided in favour of assessee Adjustment on account of Corporate Guarantee (CG) given by MIL to overseas bank in favor of its AE - Held that:- Being a signatory to the tripartite support agreement, on the facts of this case, does not constitute a corporate guarantee akin to bank guarantee and, even if it could be treated as a corporate guarantee for benchmarking purposes, the corporate guarantee does not constitute an international transaction under section 92 B of the Act. In view of these discussions, as also bearing in mind entirety of the case, we are of the considered view that the arm’s length price adjustment is unsustainable in law. We, therefore, direct the Assessing Officer to delete the same.As the basic plea of the assessee has been upheld, we see no need to deal with the alternate pleawhich, given the fact that the assessee has succeeded on the basic plea, is rendered academic and infructuous.- Decided in favour of assessee Disallowance under section 14A - Held that:- As decided in assessee's own case in the immediately preceding assessment year since the assessee has earned the dividend income from the investment in shares and mutual funds and also given the working of disallowance u/s 14A on account of interest expenditure, therefore, so far as the disallowance u/s 14A is concerned, it is not the case of the assessee that no expenditure on account of interest expenditure has been incurred. Further the activity of the investment is stated to have been looked after by the Finance Department of the assessee along with the accounts and finance, therefore, there may not be a separate expenditure incurred for the purpose of earning the dividend income. However the expenditure incurred on the activity resulting taxable and non taxable income has to be apportioned as required under provisions of section 14A. We note that the total investment comprising the investment in mutual fund and growth schemes / growth mutual funds as well as investment in foreign subsidiaries. The Assessing Officer itself has excluded the investment in foreign subsidiaries because the dividend from the foreign companies is taxable. However, the growth mutual fund does not yield any dividend/exempt income, therefore, the provisions of section 14A would not apply on the investment in growth mutual funds. As regards the disallowance of administrative expenses in respect of the investment yielding exempt income the computation made under Rule 8D cannot exceed the total allocable expenditure for earning the exempt income debited the P&L Account. Accordingly, the Assessing Officer is directed to reconsider the disallowance u/s 14A by excluding the investment in the Growth mutual funds scheme and further to earmark and identify the item of expenditure debited by the assessee in the P&L Account which can be allocated in relation to earning the exempt income.. We, therefore, remit the matter to the file of the Assessing Officer for computing the disallowance under section 14A r.w.r. 8D in the light of the above directions which will also apply mutatis mutandis to this assessment year as well. Disallowance of expenses incurred on DRUPA exhibition - Held that:- Here is a case in which expenditure is incurred in the revenue field, though the occasion for incurring such an expenditure comes only once in four years, and the period of its benefit cannot be ascertained with any reasonable degree of certainty. Unless even the precise period of benefit ca be reasonably ascertained, there cannot be any occasion for spreading over the expenditure over the period of benefit.There are large number of judicial precedents that participation costs in the trade exhibitions are inherently in the nature of revenue expenses, as these are marketing expenses in nature, which are allowed in the year in which the expenses are incurred. We are in considered agreement with this school of thought. Entire expenditure on participation in Drupa 2008 should be allowed as revenue expenditure.- Decided in favour of assessee Disallowance of an amount being reimbursement of expenses incurred by subsidiary of the Appellant - non deduction of tds - Held that:- The law in this regard is now well settled in the case of G E Technology Centre Ltd Vs CT [2010 (9) TMI 7 - SUPREME COURT OF INDIA ], and unless the payment is shown to have an embedded income, no tax deduction requirements under section 195 come into play. There is nothing on record to show taxability of these payments. The subsidiary does not have a PE in India, and, therefore, the amounts paid to the subsidiary, even if in the nature of the business profits, cannot be brought to tax in India. The payment is not for any services involving a transfer of technology, and, therefore, it cannot be brought to tax as fees for included services. There is no question of the payment being in the nature of ‘royalty’. The Assessing Officer has not even made out any case of taxability of the income in question. The disallowance under section 40(a)(i), as made out by the Assessing Officer, is also thus legally unsustainable. Thus the disallowance is devoid of legally sustainable basis - Decided in favour of assessee Disallowance of foreign currency transaction loss under section 43A - Held that:- As pointed out by the CIT(A), similar disallowance was confirmed by the DRP for the assessment year 2010-11 which has already come up for scrutiny before a coordinate bench of this Tribunal. On our perusal of the order dated 16th September 2015, however, we did not find any reference to this disallowance. Since it is a factual matter which permeates from year to year, in our considered view, it will be appropriate to take into account the stand taken by the coordinate benches on this issue in the other years, and whether or not the matter has reached finality one way or the other. We, therefore, refrain from making any observations on merits of the matter and remit the matter to the file of the CIT(A) for fresh adjudication in the light of, inter alia, the findings in the other assessment years and such arguments as the assesse may take before him. All issues, including the issue of consistency, the issue of additional depreciation and the impact of ASS 11, are left open. The CIT(A), while so deciding the matter afresh, will give yet another opportunity of hearing to the assessee and shall decide the matter by way of a speaking order, in accordance with the law, on all the points raised by the assessee. Interest under section 234C - Held that:- Interest under section 234C is to be levied on the returned income and not the assessed income. See Bombay Gymkhana Ltd Vs ITO [2007 (10) TMI 461 - ITAT MUMBAI ]

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• 2016 (6) TMI 635
  Inclusion of Royalty as income for the purposes of determination of operating profit - whether it did not form part of the income of the assessee and similarly payment thereof is also requires to be excluded as it is not the operating expense of the assessee - Held that:- As per the Master License agreement and franchises agreement, the assessee has to pass on the entire royalty which it has to receive from franchises and there is no income left to the assessee as per this Master License Agreement and franchises agreement thus while working out PLI of the assessee transaction of Royalty income should not be considered as operating income and royalty reimbursed to the MDC shall not be considered as operating expenses of the assessee. We therefore reverse the finding of CIT (A) that royalty receipt from franchisee, JV is the operating income of the assessee and payment of royalty to MDC shall be the operating expenses of the assessee while working PLI of the assessee Allowing appropriate adjustment of risk assumed vis-a viz-comparable company identified by ld TPO - Held that:- We find considerable force in the argument of the assesse with respect to risk adjustment on account of foreign exchange fluctuation as it is apparent from the account that there is no foreign exchange loss incurred by the assesse therefore we set aside this ground to the file of AO for once again perusing the risk adjustment claimed by the assesse and adjudicate the issue.

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• 2016 (6) TMI 634
  Non deduction of tds in respect of shipping expenses - assessee in default - whether Inland haulage charges, Terminal handling charges, Bunker adjustment factor, Cost adjustment factor, etc., i.e., shipping expenses paid by the assessee regarding exports using non-resident shipping call for TDS? - Held that:- In case of shipping of goods at a port in India , seven and a half percent of the carriage charges shall be deemed to be income accruing in India on account of such carriage; that unless and until the tax assessable u/s 172 is paid or arranged for and the Collector of Customs is satisfied to that effect, the ship shall not be granted port clearance; that the carriage charges, as and envisaged by section 172(2) shall be included in the amount of demurrage charge or handling charge or any other amount of similar nature. In this regard, as per CBDT Circular No.723 dated 19.09.1995 (APB 37-38), where payments are made to shipping agents of nonresident ship-owners or charterers for carriage of passengers, etc., shipped at a port in India, since the agent acted on behalf of the nonresident ship-owner or charterer, he steps into the shoes of the principal and, accordingly, the provisions of section 172 shall apply and those of sections 194C and 195 will not apply. - Decided in favour of assessee Non deduction of tax out of dividend by transfer of funds by the assessee to its sister concerns by way of loans and advances - Held that:- As in ‘MTAR Technologies (P) Ltd. vs. ACIT’ (2010 (4) TMI 871 - ITAT HYDERABAD ), it has been held that payment by a company to a nonshareholder does not require TDS under section 194 and in such a case, the company/assessee cannot be held to be in default u/s 201 of the Act so as to attract interest u/s 201(1A) thereof. While holding so, it was observed that u/s 150 of the Companies Act, every company is expected to maintain a register of shareholders, whereas a company is not obliged to maintain a register wherein details of such concerns, as to which provisions of section 2(22)(e) of the Act apply, may be kept; and that so, that when the payment is made to a non shareholder, it is impossible for the payer company to ascertain whether it will attract the provisions of section 2(22)(e) of the Act or not and it is, therefore, that the law does not expect the payer company to deduct TDS when payment is made to a non-shareholder; that this is the reason why the law expressly provides for TDS requirements only when payment is made to a non-shareholder; that payment to a shareholder would cover both normal dividend as well as deemed dividend; that otherwise also, the deemed dividend will be taxed in the hands of the shareholder and not in the hands of the non ITA shareholder payee; that therefore, section 194 of the Act is synchronized with the requirement under sections 150 and 206 of the Companies Act; and that accordingly, the provisions of section 194C of the Act are not applicable in the hands of the recipient, due to which, the provisions of sections 201(1) and 201(1A) of the Act cannot be applied - Decided in favour of assessee

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• 2016 (6) TMI 633
  Transfer pricing adjustment - Selection of Premier Ltd. as a comparable - Held that:- It is clear that the assessee itself has considered the comparability at the entity level rather than only at the engineering segment level as is being contended now. However, in the interest of equity and justice, it is necessary to examine this issue as to whether only the engineering segment of Premier Ltd., needs to be taken for determining its comparability. It was contended that before us that this issue was raised before the DRP, but the DRP had not adjudicated on the same. Therefore, we deem it appropriate to remand this issue to the file of the Assessing Officer/TPO for fresh consideration as to whether only the engineering segment of this company should be considered for comparability. Needless to add that the assessee shall be afforded adequate opportunity of being heard and submit details required in the matter, which shall be considered by the Assessing Officer/TPO before deciding the matter in accordance with law. T.P. Adjustment made at Enterprise Level - Held that:- TPO ought to have either accepted the explanations furnished by the assessee or adopted the recast segmental details proposed by him after rejecting the explanations of the assessee. Instead of adopting either of the two, the TPO proceeded to consider the financial results at the entity level, without adducing proper reasons. In this factual matrix, we are unable to agree with the stand of the TPO. It is settled principle, upheld in several decisions, that the T.P. Adjustment has to be done only in respect of the assessee's international transactions with AEs and not on the non-AE component of the transactions. We, therefore, direct the TPO to make the adjustments only for the international transactions and not on the non-AE component of such transactions Incorrect Margin - assessee contends that the TPO has wrongly computed the average margin of the comparable companies at 18.76% whereas the average margin of the comparable selected by the TPO works out to 6.40% - Held that:- We find from a perusal of the TPO’s order under Section 92CA of the Act, at para 10.4 / page 10 thereof, the TPO has selected 7 companies as comparables to the assessee, giving the individual margins of each company and has computed the margin of the comparable companies at 13.57%. From the details extracted by the TPO in the table of seven comparable companies at page 10 of the TPO’s order, prima facie, it appears that the average margin is certainly computed wrongly at 13.57% and rather should be 9.618%. The figures of average margin given by the assessee at 18.76% and 6.40% also, prima facie, appear to be at variance with those emerging from the TPO’s Table at page 10 of his order. In this factual matrix, we direct the TPO to examine the margins of comparable companies and compute the margins correctly after affording the assessee adequate opportunity of being heard. Adjustment for under utilization of capacity - as per assessee that its capacity utilization was only to the extent of 14.84% of its installed capacity, mainly due to the economic slow down - Held that:- The capacity worked out by the assessee, is the total installed capacity. However, the optimum capacity that can be utilized is the right figure that needs to be adopted for comparability. It is well known that manufacturing industries cannot always operate to full installed capacity. It will be a wrong assumption to make that the comparable companies are all operating to their full installed capacity. The capacity to which the manufacturing units can be reasonably expected to operate is the optimum capacity and this can / will vary from industry to industry. It is essential to understand the capacity at which the comparable companies operated during that relevant period. The capacity at which the comparable companies operate has to be compared with the capacity utilization of the assessee to evaluate the under-utilisation of capacity, in the case on hand. The underlying principle is that if the manufacturing unit operates at less than optimum capacity, then it will affect the recovery of fixed cost, thereby affecting profitability. However, it is seen that the adjustment has been worked out by the assessee by considering all the non-operating costs also and there is no relation to the capacity utilization of the comparable companies. In view of the above, the TPO and DRP cannot be faulted for holding that the assessee has not established the quantum of capacity utilization adjustment with evidences and supporting details. In this view of the matter, we deem it appropriate, in the interest of justice and equity, to remand the issue back to the file of the TPO to work out the capacity utilization adjustment. Entitlement to the benefit of + / - 5% while computing the ALP of international transactions - Held that:- Prior to the amendment made by Finance Act (No.2) Act, 2009 and Finance Act, 2012, the proviso to Section 92C(2) of the Act provided that the ALP would be taken to be the Arithmetical Mean (‘AM’) or at the option of the assessee, a price which may vary from the AM by on account not exceeding 5% of such AM. Thus, the ALP was + / - 5% from such AM. The new section 92C(2A) mandates that if the arithmetical mean price falls beyond + / - 5% from the price charged in the international transactions, then the assessee does not have any option referred to in section 92C(2). Thus, as per the above amendment, it is clear that the + / - 5% variation is allowed only to justify the price charged in the international transactions and not for adjustment purposes. The aforesaid amendment has settled the issue and accordingly the 5% benefit is not allowable in the assessee's case. The various judicial decisions cited pertain to the period prior to the retrospective amendment in section 92C(2A) of the Act and are not applicable to the facts of the assessee's case. In view of the amendment brought about therein by Finance Act, 2012, this ground raised by the assessee is not maintainable and is accordingly dismissed. Set off of carry forward losses - Held that:- As find from a perusal of the orders of assessment, that this issue has not been addressed by the Assessing Officer, we direct the Assessing Officer to examine and verify the assessee's claim for set off of carried forward losses in accordance with law, after affording the assessee adequate opportunity of being heard in the matter. Treatment of Foreign Exchange Gain as operating in nature - Held that:- As operating revenue should be computed by including the foreign exchange gain which is clearly arising out of the export business; is related to the profit and loss account and is in the revenue field. However in the case on hand, the assessee has stated that the foreign exchange gain is arising out of restatement of receivables/payables which are Balance Sheet items and we do not find any clear finding in this regard in the orders of the authorities below. Therefore, we remand the issue back to the Assessing Officer /TPO to examine / determine whether the entire foreign exchange gain has arisen out of the export business of the assessee and thereafter to that extent treat the same as operating in nature while computing the margins of the assessee and the comparable companies after affording the assessee adequate opportunity of being heard and submit details submissions in the matter.

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• 2016 (6) TMI 632
  Transfer pricing adjustment - DRP determining the arm's length price of the international transaction pertaining to management charges (Area Management Cost/Corporate Management Cost) at Nil - Held that:- The assesse has fairly accepted that the assessee could not lead the necessary evidence, in support of rendition of services, at the assessment stage, and it was only before the DRP that the assessee could produce the evidence. He submits that this was the first year for payment of management services and that there were genuine difficulties preventing the assessee from submission of these details at the assessment stage. He has now submitted voluminous evidences before us but, in our considered with you, the right course of action will be that all these evidences are examined at the assessment stage. The examination of basic evidence at the appellate stage or even at the stage of the DRP is neither appropriate nor desirable, and even doing so, in appropriate cases, calls for the comments from the assessment stage. We donot want to conduct this exercise of appreciating the evidence, for the first time in the case of the assesse, at this level. Learned Departmental Representative has also not seriously opposed this suggestion of the matter being remitted to the assessment stage. In this view of the matter, and with the consent of the parties, the matter stands restored. As the matter is being remitted to the assessment stage, it will be open to the assessee to take all such pleas, as he may be advised, and the TPO shall adjudicate upon the same in accordance with the law, by way of a speaking order and after giving yet another fair opportunity of hearing to the assessee. Disallowance of expenses under section 14 A - whether the investment in Mutual Funds (growth scheme) will be included in the assets yielding tax exempt income, for the purpose of computing disallowance under section 14A r.w.r. 8D, when this investment does not actually yield any tax exempt income - Held that:- There is no dispute that gains on redemption of this investment has been offered to tax, and that no tax exempt income was earned by this investment. On these facts, and bearing in mind the fact that the issue is covered, in favour of the assessee, by decision of the coordinate bench in assessee’s own case for the assessment year 2008-09, we uphold the grievance of the assesse and direct the Assessing Officer to modify the disallowance accordingly. As for the small amount of ₹ 1,307, no arguments were advanced in respect of the same. It is treated as abandoned in view of the smallness of the amount. Taxing foreign receipts on gross basis - Held that:- We are of the considered view that there is no ambiguity on the aspect whether it is the gross amount of foreign income, or the amount net of tax in respect of foreign income, which is to be brought to tax. The tax is on the income, and, as for the tax imposed in the source country i.e. Zambia in this case, double taxation relief is very well admissible under section 90 read with Article 24 of India Zambia Double Taxation Avoidance Agreement. Just because an assessee does not claim double taxation relief in respect of an income, it does not entitle the assessee to exclude that income from taxable income. Nothing, therefore, turns on not claiming double taxation relief on an income, so far as taxability of that income is concerned. As for the relief under section 90, the assessee is entitled to relief for the entire income. When entire income is brought to tax, as a corollary to the same, double taxation relief is to be given in respect of the same. To that extent, grievance of the assessee is justified. Disallowance of software expenses - Held that:- There is no dispute about genuineness of the expenses and the dispute before us is confined to the question whether it should be treated as revenue expenditure or as capital expenditure. We have noted that out of a total expense of ₹ 5,88,62,091, an amount of ₹ 5,29,32,320 is aid to the Aker Norway for actual use of software. Since the amount is paid on the basis of actual use of software, and not for acquisition of software, there cannot be any occasion for treating the same as capital expenditure. As regards the remaining amount also, as evident from the copies of invoices before us, the payment is for the licence fees on annual basis, and not for the entire project period. The fact that the licence is used in a project which has a life span of over one year does not mean that the benefit from the licence fees was more than one year. In our considered view, in the light of these facts evident from material on record, it is unambiguous that the authorities below have wrongly held the software payment to be capital expenditure in nature. We, therefore, uphold the grievance of the assessee and direct the Assessing Officer to treat the software expenses as revenue expenditure in nature. Expenses on sale of capital asset disallowed - Held that:- Wwe find that the expenses pertains to legal expenses in connection with structuring of the transaction and related aspects. These expenses were incurred in the course of the business and for its operations, though the specific issue on which advice was sought pertained to the sale transaction. Merely because the transaction in question is a capital asset, the legal expenses will not also become capital expenditure. See CIT vs Bush Boake Allen India Ltd [1981 (10) TMI 32 - MADRAS High Court] Addition made against the negative contracts margin and prior period expenses to be deleted as relying on assessee's own case for AY

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• Customs

• 2016 (6) TMI 662
  Valuation - inclusion of demurrage charges paid to the supplier on account of detention of the vessel beyond the lay time into the assessable value of the imported LPG - Held that:- ship demurrage charges paid for detention of the ship beyond the lay time was not to be considered as transport cost as it was not ordinarily paid - ship demurrage charges cannot be included in the discharges of custom duty on the imported goods even if the assessments are made provisionally - Decided in favor of assessee.

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• 2016 (6) TMI 661
  Appeal against the letter dated 21.10.2015 addressed by the Assistant Commissioner (RRA), Customs - proper appellate forum - Held that:- mere addressing a letter to the Commissioner , irrespective of whether the commissioner is the proper officer or otherwise, the communication/decision of the Asst. Commissioner, in response to such letter of the Appellant, confer on them the right to file Appeal provided under Section 129A of CA,1962. - Appeal dismissed.

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• 2016 (6) TMI 660
  Re-Import of Fuel Injection Pumps (FIPs) - claim of exemption in terms of Notification No. 94/96-Cus. - appellants originally exported FIPs to France where the said FIPs were fitted on to the diesel engines. The diesel engines were imported into India by the appellant. - Held that:- for purposes of Customs Notification No. 94/96 ibid, these imports do not merit consideration as reimports of the fuel injection pumps and injectors exported by the party. The benefit of the Notification has been rightly denied to the appellants on the ground of non-fulfilment of one of the substantive conditions stipulated under the first proviso to the Notification - Decided against the assessee.

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• 2016 (6) TMI 659
  Improper calculation of the duty liability by Customs applying a wrong rate of exchange - inaction of customs Authority to dispose application filed by it under section 149 read with Section 17 (5) of Customs Act, 1962 - Held that:- It is noticed that appellant had not agreed to the assessment under Section 17 (2) in writing. This situation warranted application of Section 17 (5) of the Act. The authority should have passed a proper order as required by that subsection. But there was a total failure to exercise the power as well as discharge public duty. We are surprised to know how the ld. DR argues that for a proper speaking order, the appellant has to approach the Commissioner. We also fail to understand how that kind of interpretation to be encouraged to defeat the object of the statute and also encourage dereliction of duty. When the provision uses the word 'shall' in the sub-section (5) of section 17, it cannot be read as directory provisions but shall be construed to be mandatory provisions requiring Public Officer to discharge his public duty publicly. It may be appreciated that Court are not powerless to make a litigant remediless. - When public officer is required to discharge his public duty, it is mandatory for him to do so without a reminder by public for to discharge such duty. In view of the appellant's protest which is visible from the application stated above, the authority should rise to the occasion and pass a proper order under Section 17 (5) of Customs Act, 1962 within 15 days from the receipt of this order stating whether inappropriate exchange rate was followed to value the goods and if so, the reasons why the authority acted so. If such an order is passed under section 17 (5) of the Act that shall give rise to a proper order and public duty is said to have been discharged by the Public Authority. - Decided in favor of assessee.

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• 2016 (6) TMI 658
  Revocation of CHA license - nature and scope of offence - gross violation of timeline of 90 days prescribed in Regulation 22(5) - Held that:- It may be observed that the time line in Regulation 19(2) of CBLR for passing the order after hearing is “preceded” by word “may” because of which Delhi High Court did not regard it to be mandatory while the time line in Regulation 22(5) is “preceded” by “shall” because of which Madras High Court held the same to be mandatory. - the impugned order is unsustainable on account of time bar.

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• 2016 (6) TMI 657
  Detention of imported Gold Jewelery - adjudicating authority had given an option of redemption to the petitioners for re-export subject to payment of fine and personal penalty. - Held that:- in the instant case there is no proof to show that the revision petitions have been taken on file and no proof has been produced to show that notice has been ordered to the petitioner. That apart, the order of the Commissioner was passed on 30.06.2015 and the revisions are said to have been presented only on 16.02.2016/05.03.2016. In any event, as on date, the orders which have been passed by the Commissioner (Appeals-I) almost one year back has not been either set aside or modified. Therefore, this Court is of the view that the respondent should comply with the direction subject to certain conditions. - Re-export to be allowed subject to conditions.

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• Service Tax

• 2016 (6) TMI 683
  Refund claim - Information Technology Software Services and Commercial Coaching and Training Centre Service - Service tax paid on specified services like Telecommunication service, Management or Business consultant service, Business Auxiliary service, Air travel agent service, cleaning service and Commercial training and coaching service used for authorised operations in SEZ Zone in terms of Notification No.17/2011-ST, dated 01-03-2011 - Appellant was not required to pay service tax on subject services. Held that:- there is no dispute that the subject services are duly included in the approved list of services and also that they are utilised for the authorised operations of the SEZ unit of the Appellant. The reason for rejection is that as per the notification No.17/2011 dated 01-03-2011, the services are eligible for exemption. That when the appellant need not pay the service tax, they are not eligible for refund. The plain language of the notification makes it clear that there is no bar from an assessee from paying tax and then claiming refund as the services are exempted. The exemption from payment of service tax on wholly consumed services is only optional. Therefore, by following the judgments laid in Zydus BSV Pharma (P)Ltd Vs CST, Ahmadabad [2013 (6) TMI 106 - CESTAT AHMEDABAD] and Credit Suisse Service India Pvt.Ltd Vs CCE, Pune III [2015 (2) TMI 474 - CESTAT MUMBAI], I hold that appellant is eligible for refund of ₹ 1,59,483/-. - Decided in favour of appellant with consequential reliefs.

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• 2016 (6) TMI 682
  Refund claim - Unutilized Cenvat Credit of input services - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.5/2006-CE(NT) dt. 14/03/2006 - Export of Consulting Engineer Services and Information Technology Services to foreign entities - 100% EOU - input invoices are addressed to unregistered premises of appellant - input services do not have nexus with the output services. Held that:- I am convinced of the arguments and explanation put forward by the appellant about each service and their necessity / nexus with the output services. - The Larger Bench of Hon’ble Supreme Court in the case of Ramala Sahakari Chini Mills Ltd., UP Vs. CCE, Meerut-I [2016 (2) TMI 902 - SUPREME COURT] answered the reference stating that the word ‘include’ does not have a restrictive meaning. It is submitted that the authorities below have wrongly applied the judgment laid in Maruti Suzuki case. It is also his submission that Rule 4A of the Service Tax Rules, 1994 does not mandate that the premises of service recipient has to be a registered premises. It is sufficient that the name and address of service recipient is shown in the invoice. Therefore, it is found that the rejection of refund is not just or proper and the appellant is eligible for refund of the amounts shown. - Decided partly in favour of appellant with consequential relief

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• 2016 (6) TMI 681
  Refund claim - Period of limitation - Export of Information Technology Software Services - Service tax paid on various input services viz. Renting of Immovable Property Services, Management Business Consultant Services, Manpower Recruitment or Supply Agency’s Services, Rent-a-cab Services, Works contract / Management, Maintenance and Repair Services, Cleaning Services, Club or Association Services, Banking and Other Financial Services, Outdoor Catering Services, Advertisement Services, General Insurance Services and Supply of Tangible Goods Services.- Rule 5 of CENVAT Credit Rules 2004 read with Notification No.5/2006-CE(NT) dated 14/03/2006 - Held that:- in the appellant’s own case for different period, this Tribunal vide has allowed refund in respect of the above services. Further the issue is settled in the cases of Coca Cola India (P) Ltd. Vs. CCE, Pune [2009 (8) TMI 50 - BOMBAY HIGH COURT] and CCE Vs. HCL Technologies [2014 (11) TMI 663 - ALLAHABAD HIGH COURT]. Therefore, by following the ratio laid in the above judgments, I hold that appellant is eligible for refund of the above services. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 680
  Refund - Export of software services by 100% EOU - eligibility of various input services - From January 2012 to March 2012 - Held that:- the disputed input services as aforesaid, disallowed by the lower authorities, will merit consideration as input services for the purposes of Rule 2(l) of the CENVAT Credit Rules 2004, as amended w.e.f. 01/04/2011 and that these services have clear nexus with the output service provided by the appellant and are very much used by them to provide the output service. - Decided in favor of assessee.

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• 2016 (6) TMI 679
  Refund of cenvat credit - Rule 5 of CENVAT Credit Rules read with Notification No.5/2006-CE(NT) dt. 14/03/2006 - The refund of credit with regard to service tax paid on Telecommunication services, Management, Maintenance or Repair Services, Internet telecommunication service, Security Agency Service, Manpower Recruitment Service, Chartered Accountant Service, cleaning & housekeeping services and Clearing and Forwarding Service were denied holding that the appellant has failed to establish the nexus of these input services with output services provided. Hence the appeal. Held that:- Various services mentioned in the definition 2(l) are only illustrative and other services also when used primarily for personal use or consumption of any employee would not qualify as input services. Cleaning services and housekeeping services are for proper upkeep of the office. These services definitely are not for personal use or consumption of an employee. Therefore in my view, these services are eligible for credit/refund. The rent payable for premises is split as rent amount for premises and common area maintenance charges. Both these fall within the main category of renting of immovable property. Undisputedly the issue has been reconsidered in the de novo proceedings. Hence the claim in this regard is held to be inadmissible. Appellant is eligible for refund in regard to services except common area maintenance charge - Decided partly in favor of assessee.

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• 2016 (6) TMI 678
  Refund - export of services - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.5/2006-CE(N.T.) dt. 14/03/2006 - Various input services - nexus with output services - Held that:- At the outset, it has to be stated that the period involved is from January 2011 to March 2011 (prior to 01/04/2011) when the definition of input services had a wide ambit as it included the words activities relating to business. The services listed in the table have been held to be eligible for credit/refund during the relevant period - Refund allowed - Decided in favor of assessee.

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• 2016 (6) TMI 677
  Levy of penalty - ppellant had paid the service tax along with interest immediately on pointing out by the department and even before issuance of show cause notice. - Held that:- , the Show cause notice has been issued after the prescribed period of time alleging suppression and proposing to impose penalty. Sub-section(3) of Section 73 of Finance Act, 1994, lays down that no notice shall be served if the service tax along with interest is paid and informed to the authorities. - the penalties imposed is not legally sustainable. - Decided in favor of assessee.

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• 2016 (6) TMI 676
  Refund - accumulated Cenvat Credit - export of services - Rule 5 of the Cenvat Credit Rules 2004 eligibility of input services - Held that:- The insurance of dependants of the employees cannot be considered to be having nexus with providing output services by the appellant - the insurance services availed by appellant for dependants/family members does not qualify as input service. Refund on various input services allowed expect Insurance Services of dependants of the employees - decided partly in favor of assessee.

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• 2016 (6) TMI 675
  Suo-Moto adjustment of excess service tax paid with the subsequent liability without adhering to provisions of Rule 6(4A) and 6(4B) of Service Tax Rules, 1994 - The department entertained the view that as the respondents adjusted the excess amount suo-motto, without intimating department and in violation of above said Rules, the respondents have short paid service tax to that extent. Held that:- The assessee is given a option to adjust the excess paid amount to future liability of service tax by the said rules. The assessee can also opt to claim refund of excess paid amount. In that case, the assessee will be eligible for interest also. When the assessee opts for adjustment so as to eliminate the hassles of refund by foregoing the interest, strict interpretation and denying adjustment would result in unjust enrichment of the Revenue which can never be the intention of the Rule. Rule 6(1A) does not impose any restriction - Demand set aside - Decided in favor of assessee.

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• Central Excise

• 2016 (6) TMI 674
  Cenvat Credit refund - Assistant Commissioner had sanctioned credit on the ground that respondent was unable to utilize the said credit on account of duty free clearance made by it to an EOU against CT-3 - Held that:- Clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004. See Apotex Pharachem (I) Pvt. Ltd., Bangalore vs. C.C.E., Bangalore [2015 (10) TMI 2353 - CESTAT BANGALORE] - Refund cannot be denied.

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• 2016 (6) TMI 673
  Refund of CENVAT credit remaining unutilized - closure of the unit - Held that:- When the credit is not questioned as ungenuine and there is no circumstance brought out by Revenue that there is a possibility to utilize the credit and also there being no law to carry forward such credit for future or to transfer the same to others, in such circumstance, it may be considered that the duty element paid by the assessee to the treasury shall serve no useful purpose of the taxpayer in the event of closure of the unit or impossibility of adjustment. The State should not be enriched at the cost of the citizen in such circumstance. In the result, appeal is allowed and refund is admissible.

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• 2016 (6) TMI 672
  Assessable value - Revenue entertained a view that the transport expenditure of the bare pipes from the respondent premises to the job worker premises is to be added in the assessable value - Held that:- In the present case the goods were removed from the premises of the appellant for the purpose of job work and not for subsequent sale from the job workers premises. Since the respondent is adopting the contract price for payment of duty and such value adopted for coated pipes from the premises of the job worker is in accordance with law, there is no ground for any addition towards freight. In view of the above finding on fact by the ld. Commissioner, we find no ground to interfere with the said impugned order. In the grounds of appeal the Revenue emphasized on the applicability of Rule 5 and “place of removal”. It was argued that the place of removal should be considered as job worker’s premises In view of the factual finding as recorded in the impugned order and the fact that the respondents are discharging duty on contract price, there is no merit in the present appeal. - Decided against revenue

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• 2016 (6) TMI 671
  Allowance of abatement - not supported by proper evidence, in as much as, the letters of intimation of closures and commencement of production had not been duly acknowledged by the Department - Held that:- No merit in the said ground after going through the copies of such letters which were produced before the Ld. Commissioner (Appeals) and also produced before this forum. Therefore, there cannot be any doubt that the Respondent is otherwise eligible to the abatement. On the second issue, find that the Respondent has produced relevant TR-6 Challan before the Ld. Commissioner(Appeals) in support of the payment of ₹ 3,52,500.00 against the liability of ₹ 3,31,928.00, leaving excess payment of ₹ 20,572.00, which is refundable to them. However, also find that the Ld. Commissioner (Appeals) in the Order has observed that the Respondents are required to pay interest of ₹ 20,752.00 against the delayed payment of duty of ₹ 2,00,000.00 during the said period, but erroneously directed refund ₹ 20,572.00. The Ld. Advocate for the respondent has fairly accepted that he has no evidence to establish that the interest liability of ₹ 20,572.00 was also paid by them during the course of proceedings before the authorities. In these circumstances, the Order directing refund of ₹ 20,572.00 is thus becomes erroneous and liable to be set aside. - Decided partly in favour of revenue

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• 2016 (6) TMI 670
  Applicability of small scale exemption Notification No. 8/2003-CE dated 01.03.2003 - appellants were using the brand name of another person and the lower authorities sought to deny the benefit of the notification in question - Held that:- Admittedly the village in question has not been notified as an urban area either by the Central Government or a State Government. The Revenue is relying on only upon an amalgamation scheme of local planning area for the city of Hubli and Dharwad where the village in question may be included. Inasmuch as the said explanation defines "rural area" as a village defined in the land revenue records, for which purpose a certificate stands issued by the Tahsildar of the village, holding the said area to be a rural area and which certificate does not stand challenged by the Revenue, we find no justifiable reasons to ignore the said certificate of the Tahsildar. It may not be out of place to mention here that in terms of the definition as contained in the above referred explanation, the area comprised in a village and as defined in the land revenue records is the rural area. Land revenue records are maintained by the Tahsildar, who is the proper authority to give the certificate. We cannot step into shoes of the local Tahsildar to find out as to whether the certificate given by him is correct or not. Otherwise also the Revenue is not assailing the said certificate as incorrect, we cannot ignore the certificate in question. In our view the same stands rightly taken into consideration by the Commissioner. - Decided against revenue

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• 2016 (6) TMI 669
  CENVAT credit denied - input service invoices were tampered by affixing their rubber stamp on the same - Held that:- The consignee address was initially mentioned as the head office of the Appellant but later corrected by the consignor, by mentioning the factory address of the consignee, with due endorsement by affixing the rubber stamp of the consignor. Assuming that the rubber stamp was affixed after providing the service infirmity in the said invoices by which itself could be made the appellant as ineligible to CENVAT Credit, provided the input services were received and utilized in or in relation to the manufacture of the finished goods in the factory premises Revenue claims that the appellant could not establish receipt and utilization of the input services in their factory whereas the claim of the appellant is categorical in this regard. Ld.Consultant Shri B.N.Chattopadhyay for the appellant vehemently argued that they are in possession with all the relevant evidences by which they could establish that the input services mentioned in the respective invoices were received and utilized in or in relation to the manufacture of the final product. To ascertain the said fact, in my opinion, the matter needs to be remanded to the adjudicating authority only for the limited purpose to ascertain whether the input services were received and utilized in or in relation to the manufacture of the final product

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• 2016 (6) TMI 668
  Classification - goods manufactured by the appellant is single yarn with layers as the core falling under sub-heading no.5205.11 OR the goods falling under sub-heading 5205.90 - Held that:- Examining the rival entries as well as the scope and intent of the entries, the Authority came to the conclusion that the claim of the sub-heading by the appellant as 5205.00, does not attract the goods manufactured by the appellant to its fold. Rather that attracts the sub heading 5205.11. Issue as above was before the Tribunal in the case of Arunachala Gounder Textile Mills (P) Ltd. Vs Commissioner of Central Excise, Salem (2010 (12) TMI 195 - CESTAT, CHENNAI ). The Tribunal making a thorough analysis of the process of manufacture as well as examining respective sub-headings held in favour of Revenue that the goods manufactured by appellant therein shall fail under the sub-heading 5205.11.

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• 2016 (6) TMI 667
  Entitlement for input service credit - reason for filing the appeal by the Revenue is that the respondent has no nexus of utilization of the services in the course of manufacturing activity - Held that:- During the relevant period, the law was settled by Hon'ble High Court in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT ] wherein the service received by the assessee in the course of business of manufacturing, the assessee is entitled to take credit. Admittedly, the services in question have been received by the respondent in their various branch office in the course of business of manufacturing, therefore, relying on the decision in the case of Ultratech Cement Ltd., hold that the respondents are entitled to take credit on the input services - Decided in favour of assessee

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• 2016 (6) TMI 666
  Penalty against the appellant company and directors - removal of goods without payment of duty -whether the appellant are eligible to the benefit of 25% of the penalty imposed under section 11AC of CEA, 1944, since the appellant company had undisputedly paid the duty along with interest? - Held that:- This issue is covered by a plethora of cases including by the decision of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Surat-I vs. Krishnaram Dyeing and Finishing Works, (2013 (8) TMI 539 - GUJARAT HIGH COURT ). Accordingly, the appellants are eligible to the benefit of discharging 25% of the penalty imposed. The penalty on the Director is concerned, on going through the orders of the authorities below find that the appellant-Director Sri V.K.Jain had accepted/ratified the statement of their DGM admitting the clearances of goods without payment of duty and the demand has been confirmed on the basis of said statements. In these circumstance, do not see any reason for non-imposition of penalty on the Director as his role on removal of goods without payment of duty has been fairly established. However, keeping in view the amount of duty involved, personal penalty equal to the duty amount imposed on the Director is too harsh. Therefore, in the interest of justice, it is appropriate that the penalty on the appellant Sri V.K.Jain be reduced to ₹ 1,25,000/-. In view of the above, the appellant company is allowed to pay 25% of the penalty imposed under section 11AC of CEA, 1944 and Sri V.K.Jain is directed to pay penalty of ₹ 1,25,000/- under Rule 26 of Central Excise Rules, 2002. The appeals disposed off on the above terms.

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• 2016 (6) TMI 665
  Cenvat credit of the service tax paid - catering services provided to workers - Held that:- Following the judgment of the Madras High Court in the case of Commissioner of Central Excise Chennai-III Vs Visteon Powertrain Control Systems (P) Ltd. [2015 (3) TMI 736 - MADRAS HIGH COURT ] this bench has taken a view that an obligation meant to be discharged under a central statute should not be defeated by another statute when services is to be provided in accordance with the provisions of labour welfare legislation. Therefore, the appellant should not be denied Cenvat credit of catering services provided to workers. However, the recovery if any from the workers should be considered for proportionate allowance of the credit. If the appellant has reversed the credit to that extent, there may not be difficulty. But similarly any default in payment of interest, if any, the authority shall appropriately recover the same. - Decided in favour of assessee

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• 2016 (6) TMI 664
  Valuation - Demand of duty on 3% commission given to through whom goods were supplied to the customers - Held that:- We find that this fact is not under dispute that 3% service charge was billed to M/s. MSSIDC in their commercial invoices in addition to the value shown in the excise invoices therefore it is apparent that 3% service charge was escaped from payment of excise duty. As regard claim of the appellant that the said amount is in form of commission which was passed on to M/s. MSSIDC, the appellant could not produce any piece of evidence as against billing of this 3% service charge, whether the payment was received less to the extent of said service charge, even they failed to produce contract which can put some light on the nature of the 3% service charge and whether it is deductible for releasing the payment to the appellant. In absence of any evidence and with the fact that 3% service charge was admittedly billed by the appellant to the M/s. MSSIDC, we do not have any option except to agree with the lower authority - Decided against assessee

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• 2016 (6) TMI 663
  Duty exemption under Notification No.6/2006-CE dt. 1.3.2006 - bidder to international competitive bid - whether the goods supplied by the appellant to Tata Projects Ltd., the international competitive bidder for use in the Mega Power Project executed by Coastal Gujarat Power Ltd. (CGPL) shall grant duty exemption to such goods under Notification No.6/2006-CE dt. 1.3.2006 or the exemption shall be granted to the person using the goods in the project? - Held that:- The notification in terms of Sl.No.91 read with condition No.19 therein grants excise duty/customs duty exemption to the goods meant for use in the mega power project. It does not grant exemption to any person. This simple interpretation of law attributable to the mandate of the notifications answers the question as above. There is no necessity to go into further detail in the absence of any contrary finding by Revenue that the appellant was not the supplier of the goods meant for use in international competitive bidding project i.e. mega power project. Hon'ble High Court of Madras in the case of CCE Pondicherry Vs Caterpillar India Pvt. Ltd. [2013 (7) TMI 244 - MADRAS HIGH COURT] held that The use of the phrase ‘supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond. - Decided in favour of assessee

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• CST, VAT & Sales Tax

• 2016 (6) TMI 656
  Waiver of pre-deposit - GVAT - pendency of BIFR proceedings - tribunal insisted that the appellant deposits 25% of the tax demand for each year within three months of the date of the order, failing which, the appeals would be dismissed. - Held that:- if any proceedings are pending before the BIFR or the appellate authority, that by itself not mean that the predeposit requirement under subsection (4) of section 73 of the VAT Act would be obliterated. Nevertheless financial condition of the company being one of the prime considerations, the pendency of such proceedings and contents thereof may be relevant. On the basis of such proceedings or independently also, it is always open for the company to establish before the appellate authority that condition of predeposit is required to be waived. Reverting to the facts of the present case, we may recall at one stage the Tribunal had itself remanded the proceedings before the appellate authority for fresh decision without insisting on any predeposit. It was only when the appellant failed to appear before the appellate authority despite sufficient chances that the appellate authority dismissed the appeals for default. In such facts, in order to bring a degree of seriousness on part of the appellant, it was undoubtedly necessary to impose a condition of predeposit. However, directing deposit of 25% of the due tax demand was excessive. In facts of the case, we therefore, direct the appellant to deposit a total of ₹ 50 lakhs with the State authority within a period of four months - part relief granted to appellant.

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• 2016 (6) TMI 655
  Validity of assessment order based on the notice sent the residential address of the Director of the Assessee Company - alternative appellate remedy - notice sent to the registered place of business viz., No.B.23/24 City Centre, No.232, Purasawakkam High Road, Chennai 10 had been returned with the postal acknowledgement 'Left', for the reason that the appellant/assessee had closed down the business in the year 2011 - Held that:- the learned Judge has rightly dismissed the Writ Petition, as not maintainable. - The Writ Appeal is dismissed. Liberty is granted to the appellant to file an appeal, if so advised. No costs. - Decided against the assessee.

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• 2016 (6) TMI 654
  Sales Tax / VAT liability in Odisha - inter-State sale or local sale - The report says that 176 numbers of cars have been procured from its branch office at Mumbai and sold to consumers at Odisha - According to the petitioner, no sale of such cars takes place in Cuttack because a customer desirous of purchasing Padmini car from the Mumbai under direct billing system, gives a letter of authorization in favour of the branch office situated at Mumbai to receive and to appoint a Transporter to drive down the vehicle from Mumbai to the destination mentioned in the letter of authorisation. Held that:- this is an incident of contract where the vehicle is being booked from the Cuttack office of the petitioner by the customers directly to its branch offfice at Mumbai and the Mumbai office after procuring the same, sends the vehicle to the Cuttack office where the customer takes delivery of the same. When the vehicle is sent from one State to another State, being an incident of contract, it is truely an inter-State sale. The facts and circumstances of the above case are very much applicable to the facts and circumstances of the present case and accordingly we are not refrained from observing that the transaction in the present case is inter-State sale. - Decided in favor of assessee.

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