Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 21, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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For issuing notice for reopening, the Assessing Officer herself ought to have recorded the satisfaction that income chargeable to tax had escaped assessment. Even the revenue's audit party cannot prevail over such opinion of the Assessing Officer. - HC
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Disallowance of business expenditure - When appropriate evidence has been adduced, it is not in the power of the Assessing Officer to arbitrarily disallow any item of expenditure on the ground that the sums are not verifiable. - HC
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Penalty u/s 271E - repayment in cash - The purpose of introduction of the penal provisions in the legislature were to curb black money and benami transactions. The purpose of legislature can never be to impose penalty in case of genuine transactions. - Even if the relevant provisions of law prescribe levy of a minimum penalty, it does not mean that penalty must necessarily be imposed in every case falling within Sections 269SS and 269T - AT
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Reimbursement of travelling expenses of expatriates received from its clients and also “living allowance” paid by the clients to expatriates (employees deputed by the assessee) - whether such receipt do not constitute income in the hands of the assessee? - Held No - AT
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Section 10A is an exemption provision and therefore, the deduction u/s 10A of the I.T. Act has to be allowed from the total income of the assessee and the question of un-absorbed business loss of non 10A Units being set off prior thereto would not arise. - AT
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Taxability of Arrears of leave encashment - As there is not much difference in the language of section 10(10)(i) and 10(10AA)(i) and the view taken in respect of arrears of gratuity u/s 10(10) should be followed for arrears of leave encashment u/s 10(10AA). - AT
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Disallowance of fuel expenses - Stating that purchases have been made in cash cannot be the basis for making disallowance . For cash purchases exceeding specified monetary limit is disallowable u/s 40A(3) of the act. No such disallowance has been made by the ld AO. - AT
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Disallowance of market development expenses - revenue v/s capital - looking to the tenure of the contract, right of termination with the parties and conditions attached on termination of the contract , it does not suggest in any manner that assessee has acquired any benefit which is of enduing nature except the services. - AT
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Unaccounted investment in house property - forced disclosure - no attempt should be made to obtain the confession, which is not based on incriminating document/assets found during the course of search - AT
Customs
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Classification of import of Marine Gas Oil - what was imported was Marine Gas Oil and not Light Diesel Oil and hence the benefit of exemption under CN 21/2002, Sl.No.217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons, will be available to said Marine Gas Oil. - AT
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Claim of refund of excess duty of customs paid - exemption from customs duty - assessee has not challenged the assessment before any appellate Forum - refund allowed - AT
Indian Laws
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Major impetus to job creation and infrastructure: Radical changes in FDI policy regime; Most sectors on automatic route for FDI
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Offence u/s 138 - Cheque bounce - Vicarious liability in case of a company - No doubt the law makes the principal liable for the acts of his agent, but unless there is some absolute duty cast upon the principal, he cannot be held responsible for the acts of his agent. - HC
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Condonation of delay in filing an appeal - Length of the delay is a relevant matter to be taken into account while considering whether the delay should be condoned or not. It is not open to any litigant to fix his own period of limitation for instituting proceedings for which law has prescribed periods of limitation. - SC
Service Tax
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Refund - Cenvat Credit - Export of services - nexus of input service with the output services - services were used for fixing doors etc. which is nothing but renovation, repair of premises of the service provider. - subject services qualify as input services and that they do not fall in the exclusion portion of the definition - AT
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Valuation - inclusion of reimbursement of expenses for providing clearing and forwarding service - Demand of service tax confirmed - levy of penalty waived - AT
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Extended period of limitation - demand of service tax - invocation of Section 80 ibid cannot necessary imply that there was no suppression or wilful mis-statement. Once there is suppression, extended period is invocable even if Section 78 ibid penalty is not imposed by virtue of Section 80 ibid. - AT
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Rejection of declaration under VCES, 2013 - whether an appeal under Section 86 of the Finance Act, 1994 against the order of rejection of declaration under VCES, 2013 filed by the assessee is maintainable. - Apex Court recalls its earlier decision.
Central Excise
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Valuation - Mutuality of interest - merely because the key persons of all units are related or are members of a HUF it cannot be said that they are related persons under the Excise law - AT
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Cenvat Credit - Since, the inputs have suffered duty and used in the factory of the appellant for the intended purpose, non-mention of mode of transport etc. in the invoices cannot be the defensible ground for denial of cenvat benefit in terms of the Second Proviso to Rule 9 of the Cenvat Credit Rules. - Credit allowed - AT
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Denial of refund - proof of export - loss of documents ( ARE-1) in transit - the procedures are subordinate to the legislative mandate but not tyrant to law. - AT
VAT
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Refund - process of pre-audit before granting refund to the petitioners - directions to pass the order in a particular manner came to be issued by an authority who was a party in the appeal and therefore was a person interested in tax litigations - This would be in grossest breach of natural justice and the order would be tainted by bias. - HC
Case Laws:
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Income Tax
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2016 (6) TMI 703
Reopening of assessment - report of audit party relied upon - Held that:- Identical circumstances, in case of this very assessee for the assessment year 2010-2011 wherein held that the recorded portion of the noting of the Assessing Officer shows as not accepted the point of view of audit party at all. AO in fact, recorded that the objections raised by the Revenue's audit party is not acceptable. However, for some strange reasons, later on proceeded to issue the notice for reopening on the ground that action is getting time barred and that remedial action is being initiated within four years. It is by now well settled for issuing notice for reopening, the Assessing Officer herself ought to have recorded the satisfaction that income chargeable to tax had escaped assessment. Even the revenue's audit party cannot prevail over such opinion of the Assessing Officer. The audit party can bring to the notice of the Assessing Officer an element which might have escaped her notice, nevertheless, once she was convinced that the objection of the revenue party was not valid, her act of issuing notice for reopening was simply not permissible. - Decided in favour of assessee.
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2016 (6) TMI 702
Settlement on account of non-compliance with the provisions of Section 245D(2D) - undeposited tax of the assessee in terms of the amended provisions of Section 245B - Held that:- The department was not correct in raising shortfall of ₹ 48,086/- in case of the assessee. The assessee, way back in the year 1994, had surrendered the entire amount of ₹ 1,60,000/- unconditionally and had also authorized the department to adjust the same against any of his tax dues. The contention of the counsel for the Revenue, that the order passed by the Assistant Commissioner under Section 132(5) of the Act does not partake character of assessment though the assessee was willing to surrender the amount, would not change the position insofar as the petitioner's liability to deposit tax is concerned. We are referring to the said order only for the purpose of recording the Assistant Commissioner's views on the declaration made by the assessee concerning such amount. Declaration itself made by the assessee in his letter dated 10.01.1994. The contention that since no final assessment was framed, there was no question of adjustment of the amount towards any assessed income tax liability of the assessee also would not change the position. The question of depositing the tax in the context of the settlement proceedings arose by virtue of amended Section 245D of the Act. The amount of ₹ 1,60,000/- lying with the department had to be adjusted towards such liability.
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2016 (6) TMI 701
Reopening of assessment - non issue of notice - reason recorder belatedly - Held that:- There is prima facie materials produced by the department to demonstrate that the envelope was in fact, handed over to the postal authorities on 31.3.2015 itself for delivery. If that be so, it would be sufficient compliance with the requirement of issuance of notice as discussed by this Court in case of Kanubhai M. Patel (HUF) v. Hiren Bhatt or his successors to office and others (2010 (7) TMI 704 - Gujarat High Court ). The second issue pertains to recording of reasons before issuance of notice. In this context, we have perused the original files. We notice that relevant material was placed before the Assessing Officer on 30.3.2015. Upon perusal of such material, considering the fact that the process of reopening would get timebarred soon, on the very same date, he recorded his reasons which are also contained in the file along with a letter of the same date written by him to the Principal Commissioner seeking approval. In the file, we also find the approval granted by the Principal Commissioner of the Income tax also on 30.3.2015. In fact, the suggestion placed by Assessing Officer was first screened by the Joint Commissioner of Income-tax which was then placed before the Principal Commissioner who recorded as under : “After perusal of the reasons given by the Assessing Officer in the annexure, I am satisfied that that this is a fit case for issue of notice in lieu of section 148” This was written by the Principal Commissioner Shri Sandeep Kapoor in his own handwriting below which he signed putting the date of 30.3.2015. Such materials on record would therefore, destroy the petitioners' theory that reasons were recorded later but notice was issued prior in point of time. On this count also, petitions must fail. - Decided against assessee
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2016 (6) TMI 700
Reopening of assessment - reasons to believe - assessee had purchased two immovable properties - non disclosure of income - Held that:- AO's opinion that when assessee had purchased two properties at such sizable cost, he could not have shown income of only ₹ 2.44 lacs and conclusion that 'income to the extent of huge transaction of ₹ 1,16,35,500/- had escaped assessment for AY 2008-09 ' lacks logic. There is no direct corelation between the purchase of properties by the assessee and his disclosure of the income during a particular period. The reason is vague and relies on the presumptions on the part of the Assessing Officer. He seems to be presuming that when the assessee had made purchase worth such huge amounts, he must disclose sizable income. Additionally, these purchases had come up for discussion by the Assessing Officer in the original scrutiny. With respect to the assessee's sale of land valued at ₹ 33.97 lacs, it is true that the same was not disclosed in the returns filed. The assessee had however, shown the sale in the earlier assessment year 2007-08. Such transaction was examined and duly taxed during such period. Apart from this, with respect to this transaction also the Assessing Officer has not recorded any reasons pointing out as to in what manner he formed a belief that the income chargeable to tax had escaped assessment. He merely stated that the assessee had indulged in transaction of sale of immovable property valued at ₹ 33.97 lacs, but shown income only of ₹ 2.44 lacs and therefore, he had reason to believe that income concerning huge transaction cost had escaped assessment. Once again, the reasons are vague and imprecise and lack invalidity. If the Assessing Officer was primafacie of the opinion that sale transaction invited capital gain which the assessee had avoided by nondisclosure, the same has not come on record in the reasons. Thus merely because the assessee failed to disclose the sale transaction would not by itself give authority to Assessing Officer to reopen the assessment. - Decided in favour of assessee
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2016 (6) TMI 699
Reopening of assessment - incorrect /excess deduction under section 80IB which is required to be disallowed - Held that:- The petitioner has not made any claim under section 80IB of the I.T. Act which is clear from his income-tax return at page No. 22, paragraph No. 2. As per income tax return of the assessee at page No. 19, the assessee has not claimed any deduction under Chapter VI-A of the I.T. Act. Therefore, the reason for reopening of the assessment is bad in law in view of the decision of this court in the case of Aavkar Infrastructure Company v. Deputy Commissioner of Income-tax [2015 (11) TMI 1313 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2016 (6) TMI 698
Reopening of assessment - non eligibility for the deduction under section 80IB - Held that:- As gone through the assessment order where the Assessing Officer has recorded that “since all the conditions laid down in the provisions of section 80IB(10) of the Income-tax Act have been fulfilled by the assessee, it is eligible for the deduction under section 80IB at 100% of profit shown during the year i.e. ₹ 59,26,427/-.” For reopening of the assessment, notice should be issued within a period of four years from the end of the assessment. In the present case, we notice that the Assessing Officer has issued notice under section 148 of the I.T. Act on 10.8.2009 which is beyond the period of four years from the end of the assessment year. Even otherwise, no reasons are assigned by the respondent authority to claim that the earlier Assessing Officer has wrongly allowed the claim of the assessee. In that view of the matter, the petition deserves to be allowed and is allowed accordingly. Notice issued under section 148 of the Income-tax Act dated 10.8.2009 and the preliminary order dated 30.11.2010 for proceeding and completing the reassessment proceedings are hereby quashed and set aside - Decided in favour of assessee
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2016 (6) TMI 697
Addition on account of interest income on alleged advances treating the same as accrued interest -ITAT deleted the addition - Held that:- 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 - Decided against revenue
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2016 (6) TMI 696
Disallowance of long-term capital loss on sale of the capital asset, being silver utensils - Held that:- The silver utensils, according to the assessee, were purchased in the year 1966-67. The occasion to use the silver utensils for the purpose of business of the assessee arose at least 30 years after the silver utensils were allegedly purchased. Therefore, the silver utensils can by no stretch of imagination be said to have been purchased for the business of the assessee. - Decided in favour of revenue Disallowance of business expenditure under different heads incurred by the appellant wholly and exclusively for the purposes of his business - Held that:- It is not the case of the Assessing Officer that the assessee was unable to adduce satisfactory evidence that the expenditure was incurred for the purpose of his business. When appropriate evidence has been adduced, it is not in the power of the Assessing Officer to arbitrarily disallow any item of expenditure on the ground that the sums are not verifiable. There is no indication as to what step was taken by the Assessing Officer to have those expenses verified. If the Assessing Officer takes no pains to have the expenses verified he cannot resort to disallowing any portion of the expenditure on the ground that they are not verifiable. This was a sheer act of arbitrariness which the Assessing Officer could not have done. The learned Tribunal did not realise the aforesaid position. They chose to bring down the amount of disallowance without any reasons. The question always shall be whether the assessee has been able to prove the expenditure alleged to have been incurred by him for the purpose of his business. If the answer is in the affirmative, no part of the expenditure can be disallowed. But if the answer is in the negative, the entire expenditure may be disallowed. - Decided in favour of assessee
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2016 (6) TMI 695
Allowance of exemption u/s 10B denied - assessee has not received the ratification by the Board of Approval as per section 14 of the Industries Development and Regulation Act - Held that:- DR is relying upon the CBDT instructions requiring the approval to be ratified by the Board of Approval, while the learned Counsel for the assessee is relying upon the letters of clarifications issued by the Director of STPI. We find that this Tribunal in the case of ACIT vs. Smt. K. Sudha Rani [2010 (9) TMI 1093 - ITAT HYDERABAD] has held that once the STPI has approved a unit as 100% EO Undertaking, it should be allowed deduction u/s 10B subject to the other conditions as specified in that section. The Tribunal also followed the decision of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd vs. CIT (1992 (4) TMI 4 - SUPREME Court) to hold that section 10B being a special incentive provision should be considered liberally. This decision of the Tribunal in the case of Smt. Sudha Rani has been confirmed by the Hon'ble High Court of Andhra Pradesh [2013 (6) TMI 783 - ANDHRA PRADESH HIGH COURT] Since the Tribunal and the Hon'ble High Court have taken cognisance of the relevant provision of law as well as the CBDT instructions and also letters of the STPI, we are of the opinion that the said decision is biding on us. Further, we also find the A.Y 2007-08 is the first year of claim of exemption u/s 10B and the AO was required to verify the assessee’s eligibility in the said year. The AO allowed the exemption u/s 10B during the assessment proceedings u/s 143(3) for both A.Ys 2007-08 and 2008-09 and Revenue has also accepted the CIT (A) finding for 2009-10 and 2010-11. Thus, even as per the principle of uniformity and consistency, the AO cannot take a different stand in the 6th year of the claim. In view of the same, we do not see any reason to interfere with the order of the CIT (A) in allowing the claim - Decided against revenue
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2016 (6) TMI 694
Penalty u/s 271E - violation of provisions of Section 269 T - Held that:- We find that the genuineness of repayments of depositors has not been doubted by the authorities below and the repayments of depositors in view of hardships of depositors is a reasonable cause for failure to comply with any provisions of the Act. The purpose of introduction of the penal provisions in the legislature were to curb black money and benami transactions. The purpose of legislature can never be to impose penalty in case of genuine transactions. The penal provisions of section 271D and 271E confer a discretion on the authorities to levy or not to levy penalty and such discretion needs to be exercised with wisdom and in a fair and just manner. Even if the relevant provisions of law prescribe levy of a minimum penalty, it does not mean that penalty must necessarily be imposed in every case falling within Sections 269SS and 269T. Even if the minimum penalty is prescribed the higher authorities will be justified in refusing to impose penalty when there is a technical breach or violation of the provisions of the Act - Decided in favour of assessee
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2016 (6) TMI 693
Addition u/s 68 - Held that:- Section 68 talks of any sum found credited in the books of an assessee maintained for any previous year. As per this section, if the assessee offers no explanation, the section would apply. But this explanation has to be with regard to any sum found credited in the books. It remains undisputed that the. assessee has not maintained any books during the year. Thus, the provisions of section 68 of the Act are not at all attracted and they have been wrongly applied by the authorities below. - Decided in favour of assessee.
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2016 (6) TMI 692
Reimbursement of travelling expenses of expatriates received from its clients and also “living allowance” paid by the clients to expatriates (employees deputed by the assessee) - whether such receipt do not constitute income in the hands of the assessee? - CIT(A) deleted the addition - Held that:- It is an admitted fact that the DRP has held in AY 2006-07 and 2007-08 that these receipts, viz., reimbursement of travelling expenses and living allowance paid to expatriates, are not to be considered as forming part of fees received by the assessee. The co-ordinate bench of Tribunal has held in AY 2003-04 and 2004-05 that these items are not taxable in the hands of the assessee. However, we notice that the Tribunal has held so in AY 2003-04 and 2004-05 on the understanding that the assessee herein and Indian companies are not related parties. The Ld D.R has pointed out that they are related parties, which fact was not disputed by the assessee. We have noticed that the addition made by the assessing officer has been deleted by DRP in AY 2006-07 and 2007-08. Identical additions made in AY 2003-04 and 2004-05 have also been deleted by the Tribunal, even though there was misunderstanding about the facts. But the fact remains that the order of the Tribunal passed for AY 2003-04 and 2004-05 remains in operation as of now. We are dealing with AY 2005-06, which falls in between the above said years. Even though there is merit in the contentions of the Ld D.R yet, in order to maintain consistency in the matter, we are inclined to uphold the view taken by the Ld CIT(A), since the same is consistent with the view taken by the DRP in the succeeding years. Accordingly, we uphold the order of Ld CIT(A). - Decided against revenue
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2016 (6) TMI 691
TDS u/s 194J - Non deduction of Tax at Source on consultancy & accounting charges - genuineness of expenses - Held that:- Expenditure claimed by the assessee under the head consultancy & accounting charges does not represent the professional services as explained under section 194J of the Act. Merely the assessee has claimed the nomenclature under the head consultancy will not amount to professional services. No doubt the services given by the CA firm to its clients in the instant case amounts to professional services but the services availed by the firm from outside for the physical verification of stock do not amount to professional services. Hence the payments made are covered under the provisions of section 194C of the Act. We also further find that in none of the case, the payment has exceeded ₹ 50,000/-, We also find that 28 persons had made representation before Income Tax Authority and the ld. AR has submitted the copies of income tax returns along with PAN of various persons. We accordingly, considering the totality of the facts of the present case, we are inclined to reverse the orders of Authorities Below. - Decided in favour of assessee Disallowance out of office expense - Held that:- Assessee has shown reimbursement of expense for an amount of ₹ 8,39,858/- exactly as against the receipt of ₹ 8,39,858.00. The AO during the assessment proceeding observed that in support of the expenditure self-made vouchers were available and in some cases there was no voucher available. The AO accordingly opined that personal expense cannot be ruled out and he made the addition @ 20% at ₹ 8,39,858/- which was reduced by Ld. CIT(A) at 10%. From the facts of the case, we find that AO has not brought out any specific ground so as to disallowing the expense as claimed in assessee’s profit and loss a/c. He has disallowed the expenses on ad hoc basis without appreciating the fact that income shown by assessee in the form of reimbursement of expense and expenditure claimed in the form of reimbursement expenses are equal. Therefore, in our considered view, the question of having any income out of reimbursement of expense does not arise. Therefore, we are inclined to reverse the orders of Authorities Below - Decided in favour of assessee
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2016 (6) TMI 690
Revision u/s 263 - CIT(A) directing AO to set off the brought forward depreciation and loss before allowing the deduction u/s 10A of the I.T. Act. - Held that:- We find that the assessee during the relevant financial year, had brought forward business losses and depreciation of earlier years pertaining to the non 10A units. It is also not in dispute that this is the final year of the exemption u/s 10A of the I.T. Act. The decision relied upon by the learned DR is the decision of the Coordinate Bench of the Tribunal dated 21.05.2010 for the A.Y 2004-05, whereas the decisions relied upon by the assessee’s Counsel are of the Hon'ble Karnataka and Delhi High Courts for the A.Ys 2001-02 to 2006-07 and 2002-03 respectively. The Hon'ble High Courts have taken into consideration the amendment to section 10A and 10B and also that the earlier exemption provision has been converted into a deduction and even in the present form, section 10A is an exemption provision and therefore, the deduction u/s 10A of the I.T. Act has to be allowed from the total income of the assessee and the question of un-absorbed business loss of non 10A Units being set off prior thereto would not arise. See CIT Versus TEI TECHNOLOGIES PVT. LTD. [2012 (9) TMI 47 - DELHI HIGH COURT] and CIT vs. Yokogawa India Ltd [2011 (8) TMI 845 - Karnataka High Court ] - Decided in favour of assessee
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2016 (6) TMI 689
TDS u/s 194I - non deduction of tds on amount paid for lease - demand u/s 201(1) and 201(1A) - Held that:- We have observed that the assessee along with his wife Mrs. Kavita Vikram Shah purchased a plot of residential land whereby lease deed for a period of 60 years will be executed in favour of the assessee and his wife for which lease premium has been paid for a sum of ₹ 1,05,80,528/- to CIDCO. Initially , the assessee entered into an agreement to sell dated 24th November, 2009 and the agreement to lease which was registered on 25th November, 2009. After completion of construction of residential building within four years, the lease deed will be executed in favour of the assesse and his wife whereby ownership title/rights shall be granted in favour of the assessee. It is observed that the lease deed will be entered into by the assessee for a period of 60 years for which the payment has been made. See ITO v. Navi Mumbai SEZ Private Limited [2013 (8) TMI 598 - ITAT MUMBAI ] wherein held lease premium paid by assessee is not in the nature of rent as contemplated u/s 194-I of the Act - Provisions of section 194-I of the Act to deduct TDS on the lease premium paid by the assessee is not attracted - Decided in favour of assessee
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2016 (6) TMI 688
Commission income determination on the bogus bills issued - Estimation of commission income - Held that:- We find that AO while framing the assessment order u/s.144 of the Act had estimated the commission income of 5% of the total bogus sales bills which was reduced to 1% by the ld.CIT(A). We find that the Coordinate Bench of Tribunal while deciding the issue in the case of Madanlal L.Chandak (2014 (5) TMI 191 - ITAT AHMEDABAD ), wherein additions for similar amounts were made, had restricted the addition at around 50% to the additions that were made by the ld.CIT(A) Considering the fact that the issue in the present case is identical that of Madanlal L.Chandak (Shah)[supra] and respectfully following the decision of Coordinate Bench and for similar reasons, we direct the addition made on account of commission income from issuance of bogus bills be restricted to ₹ 2 lacs as against ₹ 4,06,852/- that were sustained by the ld.CIT(A) for AY 2007-08. - Decided partly in favour of assessee
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2016 (6) TMI 687
Denial of exemption in respect of the amount received by the assessee towards arrears of gratuity - Held that:- As the assessee is found to be an employee holding a civil post under a State, the provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for the amount under consideration. Once a case falls under clause (i) of section 10(10), the same cannot be brought within the purview of clause (iii) of section 10(10). Therefore, hold that the assessee is entitled to exemption u/s 10(10)(i) in respect of gratuity amount received in total upto ₹ 10 lac, which covers a sum of ₹ 6,50,000/- received during the year. Overturning the impugned order on this score, allow exemption u/s 10(10)(i) to the arrears of gratuity received by the assessee at ₹ 6,50,000/- during the instant year. Arrears of leave encashment - denial of benefit - Held that:- As there is not much difference in the language of section 10(10)(i) and 10(10AA)(i) and the view taken in respect of arrears of gratuity u/s 10(10) should be followed for arrears of leave encashment u/s 10(10AA). The ld. DR supported this proposition. As both the sides are consensus ad idem on the position that the view taken in the context of section 10(10) as applicable to leave gratuity be followed here in the context of section 10(10AA) in the context of leave encashment, thus desisting from independently examining the later provision. In view of the fact it is held the assessee to be entitled to exemption u/s 10(10)(i) in respect of arrears of gratuity, following the same, I extend the benefit of exemption u/s 10(10AA)(i) in respect of arrears of leave encashment Appeal decided partly in favour of assessee
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2016 (6) TMI 686
Addition on account of freight expenditure - sales have increased by 100% such expenses have increased only by 40% and these expenses are directly linked with turnover of sales and purchases - Held that:- As the disallowance not specific and Ld. AO has not pointed out a single instances of the expenditure, which are not, supported by the vouchers and bils. Further, the estimated amount of disallowance by applying the percentage is also not proper. Therefore, we confirm the order of the Ld. CIT(A) in deleting the disallowance on account of freight and cartage expenses. - Decided in favour of assessee Disallowance of tools and consumables expenses - Held that:- You cannot be stock of the material when it was purchased on need basis. Further in previous year also there is no opening stock therefore it cannot be said that explanation of the assessee is not proper. In any way the closing stock of this year becomes opening stock of next year and therefore at the most there would be shifting of profit from one year to another year and tax rates being same for both the years the issue would be tax neutral. Furthermore reading purchases of fuel it was not the case of ld AO that the bils of the material are not available or material has not been procured. Stating that purchases have been made in cash cannot be the basis for making disallowance . For cash purchases exceeding specified monetary limit is disallowable u/s 40 A (3) of the act. No such disallowance has been made by the ld AO. In view of this , We do not find any infirmity in the order of the Ld. CIT(A) hence, we confirm the order of Ld. CIT(A) in deleting the disallowance on account of expenses of tools and fuel expenses. - Decided in favour of assessee
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2016 (6) TMI 685
Allowability of franchise expenses - Held that:- As decided in the assessee’s own case for AY 2007-08, it has been held that these franchise expenses is held to be revenue in nature. Revenue did not cite any other decision contrary to the above or did not point out any change in the facts and circumstances of the case. In view of this respectfully following the order of coordinate bench in assessee’s own case we hold that franchise fees debited under the head “Market Development Expenses” is a revenue expenditure in nature. - Decided in favour of assessee. Disallowance of market development expenses - revenue v/s capital - depreciation claim - Held that:- For the purposes of determining whether the expenditure incurred on services is capital expenditure or revenue one needs to look at the nature of services received by the assessee and not the other terms and conditions attached therein. Further looking to the tenure of the contract, right of termination with the parties and conditions attached on termination of the contract , it does not suggest in any manner that assessee has acquired any benefit which is of enduing nature except the services. We do not find any support on reading of that definition that market support services and customer support services creates any right in favour of the assessee. Further, in assessee’s own case for AY 2003-04 as well as in AY 2005-06 and AY 2006-07 the similar expenditure are allowed as deduction. To prove this ld AR submitted that copies of the Assessment orders passed u/s 143(3) of the Act where no such disallowance have been made. These facts are not controverted by revenue. Though the provisions of res judicata does not apply to income tax proceedings, however, rule of consistency provides that unless there is change in facts and circumstances of the case there has to be consistency in approach of the revenue as well as assessee. Hon’ble Supreme Court in case of Excel Industries Vs. CIT [2013 (10) TMI 324 - SUPREME COURT] has once again reiterated the above principles, therefore even on that principal the disallowance of market development expenditure of customer relation management services cannot survive. In view of above we reverse the finding of the ld CIT(A) confirming disallowance holding that payment made for services rendered by CRMI are capital expenditure.However, the depreciation allowance granted by the lower authorities on franchise fees and market development expenditure considering them as intangible asset is directed to be withdrawn.- Decided in favour of assessee.
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2016 (6) TMI 684
Unaccounted investment in house property - Addition on the basis of statement recorded U/s 132(4) - rejection of books of account U/s 145(3) - Held that:- Additional income of ₹ 1.00 crore, which includes disclosure of ₹ 75 lacs on account of unaccounted investment in house property constructed at 4-5, Shubham Enclave, C-Scheme, Jaipur. The addition made by the Assessing Officer on the basis of statement recorded U/s 132(4) are not on the basis of incriminating documents found during the course of search, as such no reference has been made by the Assessing Officer in assessment order. He simply gave general observation of the group that during the course of search, various assets/books of account were found and seized as per annexure prepared during the course of search. Thereafter, he analysed the expenses under the head consultancy charges, sales promotion, travelling expenses, purchases material for advertisement and also considered not maintaining stock register and commission payment not verifiable but no specific bills vouchers have been referred by the Assessing Officer that the expenses claimed and commission paid is bogus on the basis of seized material. Whatever addition made by the Assessing Officer on the basis of statement recorded during the course of search U/s 132(4) which have evidentiary value but it is rebuttable. The CBDT also issued instruction on forced disclosure during the survey and search, which has been referred by the ld CIT(A) wherein it has clearly directed by it to the authorized officer, no attempt should be made to obtain the confession, which is not based on incriminating document/assets found during the course of search. The ld DR has not controverted the findings given by the ld CIT(A) - Decided against revenue.
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Customs
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2016 (6) TMI 710
Restoration of appeal - condonation of delay - earlier application was dimissed ex-parte - Held that:- Record reveals that principal appeal No.C/308/2010 is on the records of the Tribunal. It appears that appeal is alive. If the appellant is not given opportunity, throwing the appeal at its threshold stage, this appellant maybe aggrieved and becomes a fate accompli for the principal case to prevent such miscarriage of justice, it would be at the interest of justice that this present appeal should also be heard along with principal appeal. In view of aforesaid difficulties and to do justice to both sides, the present application to restore the restoration application is allowed and also considering the grievance of the appellant as to 34 days in seeking appeal remedy for reasons attributable to it and also for no malafide reason, the application for condonation of delay is allowed.
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2016 (6) TMI 709
Classification of import of Marine Gas Oil - department took the view that the imported Marine Gas Oil can only be treated as Light Diesel Oil, and cannot be granted exemption under CN 21/2002, Sl No 217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons. - Held that:- what was imported was Marine Gas Oil and not Light Diesel Oil and hence the benefit of exemption under CN 21/2002, Sl.No.217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons, will be available to said Marine Gas Oil. - Decided in favour of appellant.
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2016 (6) TMI 708
Import of Diesel Generating set for captive consumption - Request was made to the Commissioner, Customs to declare Nadendlavari Kandriga Village also as a customs warehousing station in terms of Section 9 of the Customs Act. - The said application was not taken up for consideration. The officers, during the pendency of the application seized the D.G.set and issued show cause notice dated 31-01-2000 proposing to confiscate the D.G.set. - Held that:- The Tribunal already set aside the order (which is impugned in the present appeal) and allowed the request of respondents to declare Nadendlavari Kandriga village as a warehousing station with effect from the date of their application, ie. 05-11-1997. On such score, the contention of the appellants that the D.G.Set is liable for confiscation etc. is without any merits - Decided against the revenue.
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2016 (6) TMI 707
Import of currency and gold - The passengers were intercepted even before they could declare the gold. The allegation against appellant and Sri Neelakanta Rao is that they abetted the importation of gold which is liable for confiscation. Admittedly the gold was not in their possession. The appellant & Sri Neelakanta Rao were found to possess foreign currency. They had explained that the currency was given by one Nusrat. There is no contra evidence placed before us by the department. The Revenue has also not placed any evidence about the person named Nusrat who gave the foreign currency and piece of paper containing names to Sri Neelakanta Rao. This being material to establish the allegation against appellant and his colleague, we have to conclude that department has failed to establish the allegations levelled against the appellant or his colleague Sri Neelakanta Rao. - the penalty imposed on the appellant is therefore unsustainable - Decided in favor of appellants.
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2016 (6) TMI 706
Claim of refund of excess duty of customs paid - exemption of customs duty granted vide Notification No.12/2012-Cus, dated 17-03-2012 as amended - The claim was rejected by the Original authority stating that appellant has not fulfilled Section 27 of Customs Act, 1962 and also has not challenged the assessment before any appellate Forum - Held that:- appellant is eligible for refund. - Decided in favor of assessee.
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Corporate Laws
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2016 (6) TMI 705
Scheme of Demerger - Held that:- Having heard Mr.Navin K. Pahwa, learned Counsel for the petitioner companies, Mr.Kshitij Amin, Learned Central Government Standing Counsel on behalf of Mr.Devang Vyas, Learned Assistant Solicitor General of India for the Regional Director and upon perusal of the report of the Regional Director, the reply filed on behalf of the petitioner Demerged Company and having considered the Scheme of Arrangement together with relevant documents on record, the Court finds it appropriate to grant sanction to the present Scheme of Arrangement. The petitioners are permitted to correct the Clauses No.38 to Clause No.28. It is, however, directed that the petitioner Transferor Company shall preserve its books of accounts, papers and record and shall not to dispose of the records without the prior permission of the Central Government under Section 396-A of the Companies Act, 1956. It is further observed that the petitioner Transferor Company shall ensure statutory compliance of all applicable laws. It is also observed that the sanction of the present Scheme would not absolve the company from any of its statutory liability, if applicable.
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Service Tax
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2016 (6) TMI 725
Validity of ex-parte order - principles of natural justice - Confirmation of service tax with levy of penalty u/s at the rate of 1% of the demanded service tax on the said amount which was not paid till the date of payment of service tax subject to 50% of the service tax of the said amount - A further penalty of ₹ 10,000/- was also imposed for failure to pay the aforesaid determined amount. Held that:- The fact that there was some proceedings pending before the Apex Court filed by the petitioner is also not in dispute. In such circumstances, we find that in case the respondent no.4 felt it expedient to proceed to adjudicate the demand raised by the respondents by rejecting the request of the petitioner to keep the matter in abeyance, it would be appropriate and in the interest of justice to give an opportunity to the petitioner of being heard before proceeding to pass the final order. It is not the contention of the respondents that the petitioner have been deliberately delaying the adjudication of the alleged claim put forward by the respondents. Matter restored before the adjudicating authority subject to payment of costs of ₹ 15,000/-
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2016 (6) TMI 724
Architect Services or Management or Business Consultant services - Extended period of limitation - Activity of providing construction or supervising of construction of building for Government institutions like Government hospital alongwith various activities - Held that:- the appellant was correctly covered under Architect/Management or Business Consultants services. In November 2007, if not prior thereto, the Revenue was in the knowledge of the nature of the services rendered and therefore, the appellant does have an arguable case to contend that at least after November, 2007 it would have been in no position to indulge in suppression or willful statement. Therefore, the appellant does have prima facie a reasonable ground on the aspect of time bar which will make substantial part of the demand hit by bar of limitation. - prima facie case is in favor of assessee - Stay granted partly.
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2016 (6) TMI 723
Business Auxiliary Service (BAS) - Activity of getting investments in mutual funds on commission basis - the contention that the appellant was an individual and hence not liable to service tax during the relevant period - commercial concern - Held that:- the appellant was a proprietary concern and not an individual. It is trite to say that a proprietary concern rendering the said service is a commercial concern. Validity of demand beyond normal period where the penalty was waived invoking section 80 - Held that:- invocation of Section 80 ibid cannot necessary imply that there was no suppression or wilful mis-statement. Once there is suppression, extended period is invocable even if Section 78 ibid penalty is not imposed by virtue of Section 80 ibid. Demand of service tax with penalty confirmed - Decided against the assessee.
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2016 (6) TMI 722
Levy of penalty - it was contended that in case of contract carriage, the Government issued a Notification No. 15/2007-ST under Sec. 11C of Central Excise Act, 1944 which clearly shows that there was a practice generally prevalent where no such service tax was being paid and therefore the appellant justifiably had reasonable belief that the tax was not payable and therefore penalty should not be imposed. - Held that:- the appellant has already remitted the impugned amount of service tax which supports its contentions that it did not have any malafide intention and had genuine bonafide belief that it was not payable - , the contention of the appellant that it genuinely thought that it was not liable to pay service tax gets sustainable support from the aforesaid Notification which makes it a deserving candidate for the benefit of Section 80 of the Finance Act 1994. - Penalty waived.
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2016 (6) TMI 721
Valuation - inclusion of reimbursement of expenses for providing clearing and forwarding service - Held that:- when the reimbursements are part and parcel of the services provided and depress the value of consideration that shall be taken into consideration while determining the gross value of the services - Demand of service tax confirmed - levy of penalty waived - Decided partly in favor of assessee.
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2016 (6) TMI 720
Refund - Cenvat Credit - Export of services - nexus of input service with the output services - works contract services and various other input services - Held that:- Rule 2(l) excludes service portion in the execution of a works contract and construction services including service listed under clause (b) of Sec. 66E of the Finance Act, 1994, in so far as they are used for (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods. That in the present case, the works done as per the invoice though classified as works contract services in the invoices would not fall in the exclusion portion as it is not for construction of building, civil structure or part thereof or for laying foundation or structures for capital goods. These services were used for fixing doors etc. which is nothing but renovation, repair of premises of the service provider. - subject services qualify as input services and that they do not fall in the exclusion portion of the definition. Refund of cenvat credit of various input services including works contract service allowed - Decided in favor of assessee.
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2016 (6) TMI 719
Rejection of declaration under VCES, 2013 - whether an appeal under Section 86 of the Finance Act, 1994 against the order of rejection of declaration under VCES, 2013 filed by the assessee is maintainable. The appeal was disposed on the basis of incorrect facts, the Review Petition is only to be allowed - Apex Court recalled its order [2015 (4) TMI 119 - SUPREME COURT] for re-hearing and fresh decision.
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Central Excise
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2016 (6) TMI 718
Rectification of mistake - Held that:- Section 35C (2) of the Central Excise Act, 1944 provides that the Tribunal may rectify any mistake in order, apparent from the records. On a query from the Bench, the learned Advocate submits that at the time of passing the order, the legal position was against the assessee. It is further submitted that that this issue was challenged before the Hon'ble Supreme Court and the Hon'ble Supreme Court subsequently decided the issue in favour of the assessee, in the case of Mangalore Refinery & Petrochemicals Limited (2015 (9) TMI 245 - SUPREME COURT ). We find that, at the time of passing the final order, the issue was against the assessee. Hence, we do not find any error in the Final Order passed by the Tribunal. It is not a case that at the time of passing the Final Order, the Tribunal had not considered the decision of the apex court and therefore, the decision of the Larger Bench in the case of Hindustan Liver Limited (2006 (8) TMI 9 - CESTAT, MUMBAI ) would not be applicable. In view of the above discussions, we do not find any merit in the application for rectification of mistake
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2016 (6) TMI 717
Valuation - Mutuality of interest - duty demand, interest and penalty on the observation that all the companies and firms have interest in the business of each other as the key persons of all the units are members of a family and are related persons - Held that:- Merely because the shareholders of the two companies are relatives (the directors here), or the director of the private limited company and partners of the firm are relatives or the directors of the private limited company and the proprietor are relatives can it be said that the two limited companies are also “related” to each other. That it is not so has been so held in various pronouncements of the Courts and the Tribunal The Department has not been able to adduce any evidence to establish mutuality of interest in the above units. The observations of the Commissioner (Appeals) that merely because the key persons of all units are related or are members of a HUF it cannot be said that they are related persons under the Excise law is correct. We do not find any infirmity in the impugned order - Decided in favour of assessee
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2016 (6) TMI 716
Valuation of processed grey fabrics for excise duty - period of dispute is March, 2000 to December, 2000 - Held that:- The Revenue built their case against Respondents based on balance sheet for the year 1997-98. On this ground alone, the proceedings against the Respondents have to fail. The Respondents have submitted detailed work sheet with costing details. The various components for arriving at cost of grey and cost towards process - loss, processing/packing charges have been specified. The cost of yarn is said to be based on prevailing market rate. The Original Authority held that the costing should have done only on actuals. However, while arriving at the figures for purported undervaluation the Revenue relied on Profit & Loss Account and Balance Sheet of second Respondent for cost of grey fabrics. Further, addition to the cost thus arrived was made towards freight, tax, insurance, commission, etc. again based on the said Balance Sheet. We find such exercise to arrive at assessable value for the impugned period is without any legal basis and arbitrary. We find that during the relevant period, there was no statutory requirement or Boards guidelines regarding submission of CAS-4 Certificate. The standards were incorporated through the Circular dated 13.02.2003 of the Board for future guidelines.
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2016 (6) TMI 715
Commissioner (Appeals) act in accordance with the mandate of section 35A(4) of Central Excise Act, 1944 - Held that:- The present order which is impugned is suffers from legal infirmity for no issues framed nor cogent reason stated. Therefore, that is returned to the appellate Commissioner to carry out his duty in accordance with section 35A(4) of Central Excise Act, 1944 and granting full length of opportunity of hearing to the appellant shall frame the issue, state the reason of his decision and his decision to meet judicial scrutiny.
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2016 (6) TMI 714
Availment of cenvat credit on improper invoices - Held that:- Duty paid character of the goods covered under the disputed invoices, their receipt and utilization in the factory of manufacture of the final product, are not in dispute. Since, the inputs have suffered duty and used in the factory of the appellant for the intended purpose, non-mention of mode of transport etc. in the invoices cannot be the defensible ground for denial of cenvat benefit in terms of the Second Proviso to Rule 9 of the Cenvat Credit Rules. Therefore, do not find any merits in the impugned order, and thus, the same is set aside and the appeal is allowed in favour of the appellant. - Decided in favour of assessee
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2016 (6) TMI 713
Cenvat credit taken on the disputed goods - demand raised - Held that:- As per the unambiguous definition of capital goods contained in Rule 2(a)(A) of the Cenvat Credit Rules, the disputed goods shall be considered as input in terms of Rule 2(a) of the said rules for the purpose of the cenvat benefit. As find the goods when used for manufacture of machines installed in the factory shall be eligible for cenvat credit, under the head input. Therefore there is no merit in the impugned order in disallowing the cenvat benefit to the appellant. With regard to the findings that in the year of receipt of the capital goods, the appellant had taken 100% cenvat credit, and thus, the same is not permissible the authorities below have not addressed the issue properly in their respective orders. If the submissions of the Ld. Advocate are to be taken into consideration, then for receipt of the disputed goods in 2005, taking of cenvat credit in 2007 is in conformity with the cenvat statute. However, since this particular aspect has not been properly addressed the matter should be remanded back to the original authority for verification of the duty paid documents for ascertaining the fact regarding date of receipt of the capital goods and taking of cenvat credit.
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2016 (6) TMI 712
Cenvat credit availed and utilised on H.R.Plates, shapes and sections - disallowance only for the reason that capital goods do not include goods and commodities falling under chapter 72 of the Central Excise Tariff, 1985 - Held that:- Capital goods or inputs utilised in maintenance of plant and machines being capital goods, the same is eligible for Cenvat credit. As no production can take place without proper upkeep of the plant and machinary. Further plant and machines also includes the loading platforms and inspection platforms. As the impugned order is silent on the exact usage of the inputs in question I set aside the same to the extent inputs relating to the amount of ₹ 87,211/- and remand the matter to the adjudicating authority for fresh determination in accordance with law after ascertaining the utilization of the said inputs. See CCE Versus Rajasthan Spinning Mills Ltd [2010 (7) TMI 12 - SUPREME COURT OF INDIA]
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2016 (6) TMI 711
Denial of refund - proof of export - loss of documents ( ARE-1) in transit - Held that:- Record does not reveal any dispute on eligibility of the appellant to the refund. It is only the technicalities which has prevented the department to deny the refund. Such hardship can be mitigated if the department causes an enquiry from its records to ascertain the veracity of the contents of the ARE-1 documents from the copies of in ARE-2 and also test genuinity of the transaction do reduce the dispute at the grassroot. There is also no dispute on the record that the loss of documents in transit was man-made and was within the control of the appellant. Therefore, when such loss was beyond control of the appellant, the appellant cannot be compelled to become victim thereof. Once the process of law comes into motion, fair play is to be given the provisions to effectuate the same following the ratio laid down by apex court in the case of Sambhaji Vs Gangbhai (2008 (11) TMI 393 - SUPREME COURT OF INDIA ) for the reason that the procedures are subordinate to the legislative mandate but not tyrant to law. Appeal is, therefore, remanded to Adjudication authority to cause enquiry as above and affording reasonable opportunity of hearing, shall pass appropriate order.
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CST, VAT & Sales Tax
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2016 (6) TMI 727
Refund - process of pre-audit before granting refund to the petitioners - Held that:- On all counts, the procedure adopted by the department was wholly unauthorised and impermissible in law. To be bound by an order of higher authority in an administrative set up is entirely different from the discretion of a statutory authority being governed by an outside agency. In effect the directions to pass the order in a particular manner came to be issued by an authority who was a party in the appeal and therefore was a person interested in tax litigations. He disapproved the draft order passed by tax appellate authority and asked him to modify his order and forward a copy of fresh order to him. This would be in grossest breach of natural justice and the order would be tainted by bias. The Joint Commissioner had already passed a draft order which contained detailed discussion, reasons and ultimate conclusions including directions to be issued. It is true that an order which is not yet signed by the competent authority would remain as a draft and ordinarily and for valid reasons it would always be open for the authority to pass another or different order before it is signed. However, in the present case, the order remained at a draft stage only on account of wholly unauthorised interference by the external authority. We therefore, direct the Joint Commissioner to proceed to pass the order in terms of the draft order dated 26.2.2010 latest by 10th July, 2016. We are informed that the then Joint Commissioner who had framed the draft order has retired and he has been replaced by another officer. For our purpose this would make no difference. The Government agencies are not without any remedy in case an erroneous or even palpably wrong order being passed. Statute provides for sufficient safeguards in terms of the appeals and revisions. It is always open to the Government to have any such order legally scrutinised and resort to such legal remedy as is provided in the statute. - Decided in favor of petitioner.
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Indian Laws
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2016 (6) TMI 726
Offence under Section 138 of Negotiable Instruments Act - Cheques were dishonoured by the bank on the ground that the drawer’s signatures were incomplete or that no image was found or that the signatures did not match. - Vicarious liability - Liability of the authorized signatory or every person who were in charge in case of a Comapny including office bearer and nominated directors. Held that:- ‘Vicarious liability’ in legal parlance means the liability of the master for the acts of the servant or agent done in the course of employment. Section 141 makes a natural person vicariously liable for the contravention committed by a company provided such person has some nexus with the crime either because of his connivance with it or due to by criminal negligence which had resulted in its commission. No doubt the law makes the principal liable for the acts of his agent, but unless there is some absolute duty cast upon the principal, he cannot be held responsible for the acts of his agent. [Sheo Prasad 1956 (5) TMI 33 - ALLAHABAD HIGH COURT] In K.K. Ahuja [2009 (7) TMI 758 - SUPREME COURT OF INDIA], the Supreme Court has explained the vicarious liability of persons of the company. In view of the aforesaid dictum of law explained by the Supreme Court, the other accused who have been arrayed as accused by virtue of Section 141 of the N.I. Act could not be held liable. In complaints filed for the offence under Section 138 of the N.I. Act, all the Directors of the company and even the Office Bearers are routinely being proceeded against by invoking the provisions under Section 141 of the N.I. Act by glibly repeating the words in the section that certain Director “was incharge of and responsible to the company for the conduct of business of the company”. It is necessary to emphasis that Section 141 of the N.I. Act where an offence under Section 138 of the N.I. Act has been committed by a company, the complainant is required to give a serious thought and make enquiries and ascertain the fact as to whether a particular Director was incharge of and responsible to the affairs and conduct of the business of the company. Routinely roping in all the Directors by merely repeating the words used in Section 141 of the N.I. Act without ascertaining the facts is a serious matter which has to be deprecated. Some of the applicants before me are indisputably nonexecutive Directors of the company. A nonexecutive Director is no doubt a custodian of the governance of the company, but does not involve in the daytoday affairs of the running of its business and only monitors the executive activity. There is no cogent material on record to fasten any vicarious liability so far as the other accused are concerned who are NonExecutive Directors including the Office Bearers concerned with the Accounts Department of the company. Whenever a blank cheque or postdated cheque is issued, a trust is reposed that the cheque will be filled in or used according to the understanding or agreement between the parties. If there is a prima facie reason to believe that the said trust is not honoured, then the continuation of prosecution under Section 138 of the N.I. Act would be the abuse of the process of law. It is in the interest of justice that the parties in such cases are left to the civil remedy. All the petitions succeed and are allowed. The order of the issuance of the process under Section 138 of the N.I. Act is hereby quashed. Rule is made absolute accordingly. - Decided in favor of petitioners.
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2016 (6) TMI 704
Liability to pay luxury tax - manner of calculation - department contends that when the petitioner accepts consolidated payment basis, the tax is to be calculated on the basis of 50% of the occupancy as per the average declared tariffs and not on the basis of the actual occupied number of rooms. - Held that:- Accepting the petitioner's interpretation would render the expression “on the basis of” meaningless. Quite apart from the two expressions being used in the same provision, obviously for different effect, accepting interpretation of the petitioners would lead to plain absurdity as may be demonstrated presently. We may recall, under clause (a), on consolidated payment basis, the proprietor would pay 8 per cent of the 50 per cent occupancy. If this occupancy is understood as actual occupancy as suggested by the petitioners, the assessee would have tax burden of 8 per cent calculated on the basis of half of the actual tariff collected during the period under consideration. On the other hand, for a proprietor opting for clause (b), he would pay tax at 12.5 per cent on the basis of actual occupancy i.e. 12.5% of the total tariff. We are informed that now the rates prescribed for clauses (a) and (b) are 6 per cent and 12.5 per cent respectively. In plain term thus, proprietor governed by clause (b) would pay more than 4 times tax payable by one governed under clause (a). There is no earthly reason why the Legislature should provide for two options; one inviting tax four times, the other option. Petition dismissed - Decided against the assessee.
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