TMI Tax Updates - e-Newsletter
June 25, 2016

Case Laws in this Newsletter:

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

TMI SMS

• TDS on payment for interconnect access charges not deductible u/s 194J since no managerial, technical or consultancy services involved - Tri

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• Provisions of GENERAL ANTI-AVOIDANCE RULE (GAAR) shall now be applicable w.e.f. 1.4.2017 - Income-tax (16th Amendment) Rules, 2016

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• Exemption granted to Krishi Kalyan Cess leviable on taxable services with respect to which invoice for the service has been issued 31.5.2016

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News

1. National Pension System (NPS) to observe Service Fortnight from June 27 to July 9, 2016; Fortnight long campaign aims at awareness creation, service orientation and information dissemination along with subscribers registration

2. CAG of India Formulates Big Data Management Policy to Meet Future Challenges

3. RBI Reference Rate for US $

4. Text of the Statement by the Union Finance Minister Shri Arun Jaitley on the United Kingdom Referendum; FM: We are well prepared to deal with the short and medium term consequences of Brexit;. Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position

Notifications

Customs

1. 27/2016 - dated 23-6-2016 - ADD

Seeks to impose definitive anti-dumping duty on "Poly Vinyl Chloride (PVC) Paste Resin" originating in or exported from Korea RP, Taiwan, China PR, Malaysia, Thailand and European Union for a period of five years

2. 89/2016 - dated 24-6-2016 - Cus (NT)

Exchange Rate Notification with effect from 25th June, 2016 thereby amending Notification No. 87/2016-Cus (NT)

DGFT

3. 12/2015-2020 - dated 24-6-2016 - FTP

Prohibition on import of milk and milk products from China

Income Tax

4. 52/2016 - dated 23-6-2016 - IT

Corrigendum - Notification Number 46/2016, dated the 17th June, 2016

5. 51/2016 - dated 23-6-2016 - IT

Central Government notifies the Core Settlement Guarantee Fund set up by National Securities Clearing Corporation Limited (NSCCL), Mumbai

6. 50/2016 - dated 23-6-2016 - IT

Central Government notify the Core Settlement Guarantee Fund, set up by Indian Clearing Corporation Limited (ICCL), Mumbai

7. 49/2016 - dated 22-6-2016 - IT

Income-tax (16th Amendment) Rules, 2016 - Provisions of GENERAL ANTI-AVOIDANCE RULE (GAAR) shall be applicable w.e.f. 1.4.2017

Service Tax

8. 36/2016 - dated 23-6-2016 - ST

Seeks to exempt service tax on taxable services by way of transportation of goods by a vessel from outside India upto customs station in India with respect to which the invoice for the service has been issued on or before 31st May, 2016

9. 35/2016 - dated 23-6-2016 - ST

Seeks to exempt taxable services from the whole of Krishi Kalyan Cess leviable thereon with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition that the provision of the service has been completed on or before 31st May, 2016

Circulars / Instructions / Orders

Income Tax

1. 23/2016 - dated 24-6-2016

Applicability of TCS where the bill amount is exceeding ₹ 2 lakhs and when part of the bill is paid in cash and part through cheque - CBDT clarifies

FEMA

2. Press Note No. 5(2016 Series) - dated 24-6-2016

Review of Foreign Direct Investment (FDI) policy on various sectors

Customs

3. 29/2016 - dated 23-6-2016

Grant of reward to informers and Government Servants – amendment to existing Guidelines issued vide Circular No.20/2015 dated 31-07-2015

Highlights / Catch Notes

Income Tax

• CBDT Clarifies TCS Applicability: Tax Required on Cash Payment Over Rs. 2 Lakhs, Even with Partial Cheque Payment.

  Circulars : Applicability of TCS where the bill amount is exceeding ₹ 2 lakhs and when part of the bill is paid in cash and part through cheque - CBDT clarifies
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• GAAR Provisions Effective April 1, 2017, Target Tax Avoidance in Arrangements Lacking Commercial Substance under Income-tax Rules 2016.

  Notifications : Provisions of GENERAL ANTI-AVOIDANCE RULE (GAAR) shall be applicable w.e.f. 1.4.2017 - Income-tax (16th Amendment) Rules, 2016
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• Revenue Cannot Contest Orders Once Accepted by Tribunal; State Must Avoid Selective Appeals.

  Case-Laws - HC : Earlier order of the Tribunal has been accepted by the Revenue - subsequent decision based on such earlier decision of the tribunal cannot be challenged - The State cannot act arbitrarily to pick and chose the orders from which appeals would be filed. - HC
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• Assessee Must Provide Evidence to Offset BCCI Income Expenses Against Other Sources, Says Tax Authority.

  Case-Laws - AT : Addition on account of expenses claimed against income received from the BCCI - Since the assessee himself has claimed certain income earned from other sources and claimed set off of expenditure incurred for earning such income, it was incumbent upon the assessee to furnish supporting evidence qua its claim for expenditure. - AT
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• Interconnect or port access charges not subject to TDS u/s 194J unless services are managerial, technical, or consultancy.

  Case-Laws - AT : TDS u/s 194J OR 194C - TDs on payment for interconnect/port access charges - Provisions of section 194J of the Act would be applicable only if any managerial, technical or consultancy services are provided to an assessee and that mere use of technology would not make any service managerial/technical or consultancy service - AT
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• Software Purchase from Nonresidents Not a Royalty; No Withholding Tax or Disallowance u/ss 40(a)(i) and 195.

  Case-Laws - AT : TDS u/s 195 - assessee purchased software from two nonresidents companies - Purchase of software is not in the nature of Royalty and no disallowance u/s.40(a)(i) of the Act is warranted. - AT
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• Interest Mandatory u/s 201(1A) for TDS Delay Even If Payee Filed Return and Paid Taxes.

  Case-Laws - AT : Non deduction of tds - payee has filed the return and paid the taxes - There might not have been any loss to the revenue in terms of tax but the revenue have to be compensated for the delay in payment of taxes to the exchequer. The charging of interest u/s 201(1A) since is mandatory - AT
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• AO Fails to Add Unexplained Expenditure u/s 69C Due to Overlooking Section 44AD Provisions.

  Case-Laws - AT : Unexplained expenditure u/s 69C - AO could have made the addition under section 69C, once he had carved out the case out of the glitches of the provisions of section 44AD. No such exercise has been done by the Assessing Officer in this case - No addition - AT
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Customs

• Revised Guidelines for Rewarding Informers and Government Servants in Customs Sector: Updates to Circular No. 20/2015.

  Circulars : Grant of reward to informers and Government Servants – amendment to existing Guidelines issued vide Circular No.20/2015 dated 31-07-2015 - Circular
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• Appellant Challenges Legality of Confiscated Second-Hand Video Cameras Classified as Capital Goods.

  Case-Laws - AT : Restriction on Import of second hand goods - import of second hand video cameras - According to the appellant, the imported goods would fall within the definition of capital goods - The goods fall into the category of second hand capital goods. - the confiscation of the goods is not legal and proper - AT
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Service Tax

• Scientific Consultancy Grants Exempt from Service Tax; Sanctioned on Behalf of President of India.

  Case-Laws - AT : Taxability of Grants-in-Aid Projects (GAP) - Scientific and Technical Consultancy Services - The sanction of grants are seen issued for and behalf of the President of India - prima facie no service tax is leviable on such Grant-in-Aid - AT
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• Service Tax Dispute: Manpower Supplier Challenges Extended Limitation Period Over 3% Commission Payments.

  Case-Laws - AT : Man power supply service - asessee was paying service tax on the commission received at the rate of 3% of the wages and man power supplied by them to their customers - extended period of limitation - prima facie case is against the assessee - AT
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• Service Tax Demand Case from Rohtak to be Heard by CESTAT Principal Bench in New Delhi.

  Case-Laws - AT : As the appellants are located in New Delhi the cause of action to demand of service tax has arisen in New Delhi. In the circumstances although the Commissioner of Central Excise & Service Tax, Rohtak and adjudicated the matter, the appeal lies with the Principal Bench located at CESTAT, New Delhi. - AT
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• Krishi Kalyan Cess exemption granted for services invoiced and completed by May 31, 2016.

  Notifications : Exemption granted to Krishi Kalyan Cess leviable on taxable services with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition that the provision of the service has been completed on or before 31st May, 2016 - Notification
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Central Excise

• High Court Orders Adjustment of Excise Duty Payment Errors Despite Closed Accounts for the Year.

  Case-Laws - HC : Payment of duty excise under wring accounting code - rectification of error - Assistant Commissioner of Central Excise conveyed to the petitioner that the error in payment cannot be rectified as accounts of the years are closed - HC directed the respondent to adjust the payments with the dues - HC
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• High Court Rules: Statements u/s 9D of Central Excise Act Require Mandatory Procedure Compliance for Legal Relevance.

  Case-Laws - HC : Relevancy of statements under certain circumstances u/s 9D of CEA, 1944 - It was not open to the department to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. - HC
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• Interest Demand on Additional Duty Allowed; No Action Until Larger Bench Decision.

  Case-Laws - HC : Demand of interest on additional duty payable after submission of supplementary invoices - revenue allowed to raised the demand - however, since the issue having been referred to the Larger Bench, the revenue would not take coercive action against the assessee till the issue referred to the Larger Bench of the SC is decided - HC
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• Electrolytes and Micro Porous Vent Plugs Excluded from Dry Charged Battery Parts Under Chapter 8507.00 Tariff.

  Case-Laws - AT : Valuation - Items namely “electrolytes” and “micro porous vent plug with float” are not to be treated as parts/components of dry charged batteries, covered under Chapter 8507.00 of Central Excise Tariff, for the purpose of computation of assessable value for payment of duty of central excise - AT
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• Proving Market Recognition Essential for Intermediate Products in Captive Consumption Cases, Marketing Not Required.

  Case-Laws - AT : Captive consumption - manufacture of sugar solution/ syrup as intermediate product - It may not be necessary to show that the respondent actually marketed such product. However, such product is known in the market and it is capable of being bought and sold has to be established with certain positive evidence - AT
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• Cenvat Credit Approved for Service Tax on Custom House Agent Services for Export of Goods.

  Case-Laws - AT : Cenvat credit of service tax paid on the input service viz. "Custom House Agent Services" availed by the respondent in relation to export of goods allowed - AT
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VAT

• Tribunal Orders Tax Refund During Appeal; Questions Raised on Authority to Summon Government Officials for Contempt Explanation.

  Case-Laws - HC : Withholding of Refund - Appeal pending before the Apex Court - Tribunal ordered refund - The question of asking the Commissioner to remain personally present explaining why contempt proceedings should not be initiated, simply did not arise. We have serious doubt whether the Tribunal has the power to summon personal presence of a Government authority. - HC
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• High Court Upholds Penalty Under KVAT for Not Applying Clear Formula; Tribunal's Decision Deemed Reasonable.

  Case-Laws - HC : Levy of penalty - mens-rea - KVAT - When the formula was so clear as found by the Tribunal, and if it was not applied, the view taken by the Tribunal that the action was not unintentional cannot be said to be an impossible view - levy of penalty confirmed - HC
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• Court Upholds Tax Exemption Transition from KST Act to KVAT Act, 2003; Refund Granted Despite Initial Denial.

  Case-Laws - HC : Refund of tax deposited - Continuation of exemption after migration from KST Act to KVAT Act, 2003 w.e.f. 1.4.2005 - refund was denied on the ground that if the unit collects any amount by way of tax, it shall become ineligible for exemption - the petitioner cannot be denied the benefit on technical grounds. - Refund allowed - HC
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Case Laws:

• Income Tax

• 2016 (6) TMI 900
  Reopening of assessment - assessee ought to have included CENVAT and VAT amounts lying in balance in the accounts of the assessee for the purpose of valuation of closing stock - Held that:- As during assessing process itself, the assessee had pointed out the method of accounting which was exclusive of excise duty and other taxes. The Assessing Officer had not made any additions on this ground. Permitting re-opening would be on mere change of opinion. Additionally, it also appears that valuation of stocks, opening as well as closing, non-inclusion of CENVAT/VAT which remained in the account of the assessee at the relevant time, would not alter tax liability. Be that as it may. On the first ground itself, we are convinced that reassessment is not permissible. - Decided in favour of assessee

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• 2016 (6) TMI 899
  Reopening of assessment - failure to produce share application form details of shares allotted to the so called share holders and proof of attendance of Annual General Board Meeting of the said so called share holders. - Held that:- The Assessing Officer has recorded detailed reasons recording that during the survey proceedings, the company failed to produce share application forms, details of shares allotted to the share holders, proof of attendance of annual general meeting of the share holders etc. During such survey, the Director of company verified the identity of the so-called share holders and it was found that the company and its persons did not exist at the address available with the assessee-company. The assessee-company had forfeited the share capital and share premium but failed to produce any details to show the action taken by the company regarding forfeiture. It was on the basis of such reasons the Assessing Officer has recorded the reasons to believe that income chargeable to tax has escaped assessment. We do not find such reasons lacked validity or a live link with the material on record enabling the Assessing Officer to form such a belief. As held by the Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court ) at this stage, it is not necessary for the Assessing Officer to conclusively establish that income would be invariably taxed. The inquiry of the Court while examining notices for re-opening, where original assessment is not framed after scrutiny is necessarily extremely narrow. The question whether said income can be taxed in the hands of the assessee or the department can proceed only against the investors would also depend on various facts and circumstances and only on such an assertion the reopening proceedings cannot be terminated. Undoubtedly, when share investment is made by the large number of persons, the company, in whose shares such investments are made, cannot be held responsible for unaccounted investments of such investors even if so found to have been made since it would be unaccounted investment of the investors not of the company. Nevertheless, if it is found that the entire transaction of the so called investment is wholly bogus, routing unaccounted income of the company itself through large scale allotment of shares to bogus entities and so-called investors, the question of taxing the company itself may arise. - Decided against assessee.

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• 2016 (6) TMI 898
  Power of tribunal - Whether the Tribunal had the power to pass such an order whereby the total income of the assessee was far much more than the total income assessed by the Assessing Officer and that too, in absence of any grounds of appeal taken by the revenue praying for such decision and without hearing the assessee on such proposed result Held that:- Tribunal has no power under the Income Tax Act to enhance the assessment in Appeal in view of the statutory provisions. See MCorp Global Pvt. Ltd. Versus Commissioner of Income-tax, Ghaziabad [2009 (2) TMI 5 - SUPREME COURT]

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• 2016 (6) TMI 897
  Application of AS-2 of ICAI in valuation of the inventories of the damaged goods - ITAT held that the entire loss or difference in valuation will not be allowable in the year under consideration - Held that:- Learned Counsel for the respondent has taken us to the evidence and contended that the appellant – Company had gone into liquidation and therefore, the Tribunal has not committed any error in arriving at the conclusion as stated above. We have heard learned Counsels appearing for the respective parties and perused the records of the case. Considering the facts of the case, the issue raised in both the Appeals is answered in favour of the assessee

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• 2016 (6) TMI 896
  Deduction u/s 10A - telecommunication and insurance expenditure is not to be reduced from the export turnover as per ITAT - Held that:- As provision mandates reduction of telecommunication and insurance charges if it is incurred in foreign exchange for providing of software outside India. We find that the Assessing Officer has in the order not given any finding with regard to respondent's contention that this expenditure had been incurred only in India and not with regard to export of software outside India. The CIT (A) as well as the Tribunal have rendered finding of fact that this telecommunication and insurance expenses have been incurred in local currency in India and not with regard to providing software services outside India. This concurrent finding of fact has not been shown to be perverse in any manner. On the above finding of fact, it is evident that exclusion part of Explanation 2(iv) of Section 10A of the Act will not apply to the present facts. In the above view, the question as framed does not give rise to any substantial question of law. - Decided against revenue Disallowance u/s 14A - Tribunal held that Rule 8D is not retrospective and restricting the disallowance to 2% of the dividend received - Held that:- This issue is concluded against the revenue by virtue of decision of this Court in Assistant Commissioner of Income Tax Vs. Godrej and Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided against revenue

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• 2016 (6) TMI 895
  Booking of expenses against the receipt of Escalation of price of supply of goods - mercantile system of accounting - Held that:- We accept the principle which has been sought by learned advocate Mr. Shah for the appellant but on the facts of the present case when the assessee has shown the expenses, ultimately the assessee has not shown the amount which he is entitled to receive in the books of account. The assessee has not even shown the outstanding balance anywhere in the books of account. The assessee has relied on clause 12 of the contract as referred to above and subsequently it has credited the escalation payments after the claims sanctioned and payments have been received from the railways. Though the expenses are claimed at the relevant year, the assessee has not shown the same in the books of account. In our view the principles sought to be relied on by the assessee are for the expenses incurred and not for the income. The assessee has to show in the books of account the expenses incurred or future income or bill outstanding from the railway. This has not been done. We are, therefore, in complete agreement with the view taken by the Tribunal. - Decided against assessee

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• 2016 (6) TMI 894
  Validity of proceedings under section 158BD - proceedings initiated on the basis of satisfaction made from the seized materials found as a result of search conducted on the assessee - Held that:- In the present case, the Tribunal being a final fact finding authority had not recorded any finding with regard to the recording of satisfaction note on 31.5.2005. Further, nothing was observed whether the satisfaction note dated 31.5.2005, if any, produced by the revenue was antedated or not. In such circumstances, the matter requires to be remanded to the Tribunal to examine it afresh and record a reason based finding. It shall be open to the parties to raise all the points before the Tribunal who shall adjudicate the matter expeditiously. The substantial questions of law are answered accordingly

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• 2016 (6) TMI 893
  Validity of decision of tribunal based on its earlier decision - Revenue unable to show whether appeal against the earlier decision of the tribunal has been filed or not - Capital gain computation - date of the transfer of an asset to determine LTCG or STCG - whether the Tribunal was correct in concurring with the CIT(A) that only the date of the first holding i.e. the date of acquisition of shares as stock in trade and not the subsequent period of holding as capital asset is to be accepted? - Held that:- One of the basic feature of Rule of Law is certainty of law and uniform application of law amongst all the assessees i.e. equal treatment. Thus, where the Tribunal has taken a view on a legal issue and the Revenue has in turn either accepted it or challenged it in a higher forum, then where a subsequent order of the Tribunal follows the earlier order of the Tribunal, then the assessee must be treated in the same manner in which the assessee in the earlier case has been treated. However, there could be valid reasons for the Revenue to take a different view in this case, then that taken in the earlier case, then the reasons for the same must be set out in the memo of appeal or at least before the hearing in an affidavit filed by the Officer of the Revenue before the Court. The State cannot act arbitrarily to pick and chose the orders from which appeals would be filed. In the circumstances of the present case, we are constrained to dismiss the appeal on the inference that the earlier order of the Tribunal in Bright Star Investment (2008 (7) TMI 442 - ITAT BOMBAY-H ) has been accepted by the Revenue. This for the reason that as the Officer of the Revenue has not filed any affidavit pointing out the reasons why the impugned order is being challenged in the face of no appeal in the case of Bright Star Investment (supra). Thus, we see no reason to interfere with the impugned order. Accordingly, we dismiss the appeal of revenue.

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• 2016 (6) TMI 892
  Rejection of books of accounts - N.P. adoption - Held that:- The Assessing Officer has rightly rejected the books of account, since various discrepancies have been pointed out in the books of account maintained by the assessee. As rightly pointed out by the CIT (Appeals), the rejection of books of account was not solely for the reason that the stock register was not maintained. The Assessing Officer has elaborated upon inflation of expenses on account of lack of vouchers, etc. The Assessing Officer had also pointed out that commission payments were about five times more compared to the commission paid in the last year. It was stated by the Assessing Officer, that the commission payments are excessive, when sale turnover was less than the previous year. Thus Assessing Officer has correctly rejected the books of account of the assessee. As regards the estimation of income CIT (Appeals)'s finding that the assessee is dealing in retail trade of pharmaceutical is erroneous. Section 44AF of the Act prescribes presumptive rate of taxation for retail traders. In this case, the assessee being in the business of wholesale trading, adopting the same rate that is prescribed under section 44AF of the Act, is not justified, since the net margin in wholesale trade is much less than in the retail trade. Moreover, taking into account the assessee's case, we find that due to the losses, the business of the assessee had closed down in the succeeding assessment year. Therefore, the rate adopted by the CIT (Appeals) at 5% of the net profit is excessive in the facts and circumstances of the case. In the interest of justice and equity, Net profit rate of 3% of the total turnover would suffice. - Decided partly in favour of assessee

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• 2016 (6) TMI 891
  TDS u/s 194J OR 194C - Fees for technical services - TDS on enrollment expenses and AMC charges - TDs on payment for interconnect/port access charges - Held that:- “Fees for technical services” in section 194J of the Incometax Act, 1961, has the same meaning as given to the expression in Explanation 2 to section 9(1)(vii) of the Act. , that in the Explanation the expression “fees for technical services” means any consideration for rendering of any “managerial, technical or consultancy services”, that the word “technical” is preceded by the word “managerial” and succeeded by the word “consultancy”, that the expression “technical services” is in doubt and is unclear, that the rule of noscitur a sociis is clearly applicable, that it would mean that the word “technical” would take colour from the words “managerial” and “consultancy”, between which it is sandwiched, that Both the words “managerial” and “consultancy” involve a human element, that both, managerial service and consultancy service, are provided by humans, that applying the rule of noscitur a sociis, the word “technical” in Explanation 2 to section 9(1)(vii) would also have to be construed as involving a human element. In that matter the AO was of the opinion that interconnect/port access charges were liable for tax deduction at source in view of the provisions of section 194J of the Act and that these charges were in the nature of fee for technical services. Provisions of section 194J of the Act would be applicable only if any managerial, technical or consultancy services are provided to an assessee and that mere use of technology would not make any service managerial/technical or consultancy service. In the case under consideration use of technology is there, but, it does not mean that it was not a contract. The assessee had rightly deducted TDS as per the provisions of section 194C of the Act. We do not find any legal or factual infirmity in the order of the FAA. So, confirming her order, we decide effective ground of appeal against the AO.

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• 2016 (6) TMI 890
  Capital subsidy received under the Bihar Incentive package - whether not to be deducted from WDV of the plant and machinery? - Held that:- Instant appeal is identical to the ground raised in the appeal for assessment years 2008-09 and 2009-10 which was also allowed by learned CIT(A) in the instant assessment year following the afore-stated decisions of the Tribunal in assessee company’s own case for the assessment year 2008-09 and 2009-10, hence, Respectfully following the decisions of the co-ordinate benches of this Tribunal in assessee company’s own case as set out above, we hold that the capital subsidy received under the Bihar Incentive Package 2006 is not required to be deducted from WDV of plant and machinery - Decided against revenue Reimbursement of commercial taxes(VAT) on Molasses under Bihar Incentive Package 2006 - Held that:- t the reimbursement of commercial taxes (VAT) on purchase of Molasses under Bihar incentive Package 2006 is given to promote establishment of new units and for expansion of capacity of existing units. As per this scheme, the distillery is entitled for reimbursement of commercial taxes(VAT) paid on purchase of molasses for production of alcohol and the said benefit will be available for five years from the date of establishment of distillery unit. We do not find any reason to interfere with the order of the learned CIT(A) with respect to this issue also as this scheme of reimbursement of commercial taxes(VAT) on purchase of Molasses under Bihar Incentive Package 2006 is similar to scheme of reimbursement of excise duty under Bihar Incentive Package 2006 and we hold that this is a capital receipt which is not chargeable to tax MAT computation - Held that:- Non entitlement to AO to add the capital subsidy and excise duty reimbursements received by the assessee company under Bihar Incentive Package 2006 to the book profit computed u/s. 115JB

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• 2016 (6) TMI 889
  TDS u/s 195 - applicability of provisions of Sec. 201(1) and 201(1A) - assessee purchased software from two nonresidents companies being in Singapore and Australia and made payments on acquisition of software - AA disallowed the said amount u/s.40(a)(i) of the Act for non deduction of TDS as the transaction is in the nature of Royalty payments - Indo-US DTAA - Held that:- Purchase of software is not in the nature of Royalty and no disallowance u/s.40(a)(i) of the Act is warranted. We set aside the order of ld. Commissioner of Income Tax (Appeals) concurred with the Assessing Officer in passing order u/s.201(1) and 201(1A) of the Act and allow the ground of the assessee. See Financial Software & Systems (P.) Ltd. Versus Deputy Commissioner of Income-tax/Assistant Commissioner of Income-tax, Company Circle II (1), Chennai [2014 (10) TMI 463 - ITAT CHENNAI] - Decided in favour of assessee

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• 2016 (6) TMI 888
  Penalty u/s 271CA - waiver of penatly u/s 273B - failure with respect to TCS liability - Held that:- Levy of penalty under section 271C of the Income-tax Act, 1961, for failure To deduct tax at source, is not automatic. In order to bring in application of Section 271C, in the backdrop of the overriding non obstante clause in section 273B, absence of reasonable cause, existence of which has to be established, is A sine qua non. Before levying penalty, the concerned officer is required to find out that even if there was any failure to deduct tax at source, the same was without reasonable cause. The initial burden is on the assessee to show that there exists reasonable cause which was the reason for the failure. There- after, the officer has to consider whether the explanation offered by the assessee or other person as regards the reason for failure, was on account of reasonable cause. See Wood ward Governor India P. Ltd. Vs CIT [2001 (4) TMI 34 - DELHI High Court ] - Decided in favour of assessee

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• 2016 (6) TMI 887
  Non deduction of tds u/s 195 - Interest under section 201(1) - sole contention of the assessee had been that since return have been filed by the payee/deductee and taxes/interest under section 234A, B and C have been paid, therefore, department have been compensated. Hence, no interest should be charged - Held that:- The contention of the assessee is not tenable because charging of interest under section 201(1A) and interest charged under section 234A, 234B and 234C of the Act operate in under different fields of the Income Tax Act. There might not have been any loss to the revenue in terms of tax but the revenue have to be compensated for the delay in payment of taxes to the exchequer. The charging of interest under section 201(1A) since is mandatory therefore, no interference is required in the matter. - Decided against assessee

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• 2016 (6) TMI 886
  Levy penalty u/s 271(1)(c) - surrender of income - Held that:- The assessee has placed on record copy of the statement of the assessee recorded on 3.10.2007 in which entire surrender of 69 lacs was made in all the assessment years under appeals, in which no incriminating material was referred to the assessee while recoding her statement to conclude that assessee had concealed\ any income. The assessee made a surrender of 69 lacs as per letter of surrender. Therefore, Ld. Counsel for the assessee is justified in contending that even in the absence of any incriminating documents found against the assessee during the course of search, the provisions of explanation 5A of section 271(1)(c) would not apply in the case of the assessee. This issue was considered in detail by the ITAT, Hyderabad Bench in the case of Dilip Kedia Vs. ACIT (2013 (7) TMI 934 - ITAT HYDERABAD ) which squarely apply to the facts and circumstances of the present case. Thus no justification to sustain the penalty u/s 271(1)(c) of the I.T. Act - Decided in favour of assessee. Levy penalty u/s 271(1)(c) - assessee had not filed its return of income u/s 139(1) of the Act within the due date and disclosure was made subsequently in response to the notice u/s 153A - Held that:- The assessment year under appeal is 2007-08 and due date of filing of the return was 31.7.2007 u/s 139(1) but no return has been filed by the assessee by the due date. The due date u/s 139(1) was extended upto 31.3.2009, which was actually extension of due date under section 139(4) of the Act. Therefore, due date had not expired for filing of the return u/s 139(1) (4) of the I.T. Act on the date of search. The assessee in response to the notice u/s 153A declared entire income including the Short Term Capital Gain and Misc. income which have been accepted by the Assessing officer as it is. Therefore, Explanation 5A introduced by the Finance Act 2009 would not apply in the case of assessee because the return u/s 153A was already filed on 31.12.2008 which have been accepted as it is by the Assessing officer. Further, as is held in assessment year 2005-06, no material was referred to in the statement of the assessee while making a total surrender of 69 lacs. Therefore, in the absence of any material against the assessee, deeming provision of concealment would not apply in the case of the assessee. - Decided in favour of assessee.

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• 2016 (6) TMI 885
  Validity of assessment - non issue of notice -Held that:- If notice u/s 143(2) is not served on the assessee within the period prescribed in proviso to section 143(2), no valid assessment can be framed. Adverting to the facts of the instant case, it is found as an admitted position that the notice was affixed at the wrong address, which was never served on the assessee, as a consequence of which assessment was completed u/s 144 of the Act. Since the jurisdictional condition for making assessment, namely, the issue of notice u/s 143(2) was not satisfied,no valid assessment cannot follow. See Commissioner of Income Tax-II Versus M/s. Salarpur Cold Storage (Pvt.) Ltd. [2014 (8) TMI 732 - ALLAHABAD HIGH COURT] - Decided in favour of assessee

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• 2016 (6) TMI 884
  Disallowance made under section 14A on shares and securities held as stock–in–trade - Held that:- Shares and securities held as stock–in–trade cannot be considered for the purpose of disallowance under section 14A r/w rule 8D. See R.R. Chokhani Stock Broker Pvt. Ltd. [2016 (6) TMI 879 - ITAT MUMBAI]

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• 2016 (6) TMI 883
  Unexplained expenditure u/s 69C - whether addition is unwarranted and not sustainable in the eyes of law as the profit from the execution of works contract @8% had been returned by the appellant under section 44AD? - From an analysis of section 44AD of the Act contained hereinabove, we have already held that the assessee had not incurred the expenses to the extent of 92 % of the gross receipts. Therefore, in the present case, the provisions of section 69C of the Act cannot be applied. Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses, the Assessing Officer could have made the addition under section 69C of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD of the Act. No such exercise has been done by the Assessing Officer in this case - Decided in favour of assessee Addition on account of unexplained cash credits - Held that:- It is a fact on record that inspite of stating the donor to be a close relation, the assessee did not file any evidence other than confirmation in order to corroborate the assertion contained therein. - Decided against assessee Addition on undisclosed capital gains - Held that:- The whole amount of sale consideration has been taxed by the Assessing Officer as capital gains without giving assessee any benefit with regard to cost of acquisition or cost of construction. It can be nobody's case that the assessee had acquired the property without paying any cost. Some value for cost of acquisition has to be given to the assessee. We observe that even in cases of properties acquired through gifts, etc. the cost of acquisition as incurred by the previous owner is given to the assessee. The fact of acquiring the plot from Dr.Rajan Sushant is evident from the office order of Himachal Pradesh Housing 10 lacs and made the payments through account payee cheque. However, no evidence in this regard was shown to us. In view of this, we direct the Assessing Officer to give an opportunity to the assessee to produce the evidence in this regard and given resultant benefit of cost of acquisition as per law. With regard to the cost of construction it is observed that in all the three years, while adjudicating another issue, the Assessing Officer himself has accepted the cost of construction in very clean terms. In the Assessing Officer's order for assessment year 2006-07, an amount at 4 lacs as cost of construction has been accepted at page 4. Similarly, in assessment year 2007-08, and in assessment year 2008-09 the cost of construction at 16 lacs and 4 lacs respectively have been accepted by the Assessing Officer. Since the Assessing Officer himself has accepted these costs of construction, no different stand can be taken by him while making the addition. In view of this, we direct the Assessing Officer to delete the addition made on account of construction cost being taken at nil and also direct him to consider the cost of construction at 24 lacs while computing the capital gain. - Decided partly in favour of assessee for statistical purposes.

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• 2016 (6) TMI 882
  Deemed dividend u/s 2(22)(e) - whether the amount advanced by the company M/s Cosmo Tribology (I) Private Limited was a trade advance or not? - Held that:- AR during the hearing of the case, also produced original bill books of the proprietary concern of the assessee, i.e., M/s Flair Impex. On examination of the bill books, we found that the assessee has maintained separate bill books for paraffin wax and slack wax and due to that bills of the same date are not having running serial numbers. We also agree with the other contentions raised by the learned Authorized Representative of the assessee that the assessee was registered to VAT and transport expenses were borne by the purchase parties. We also find from he assessee’s paper book dated 21/04/2016 that the purchases made by the company M/s Cosmo Tribology (I) Private Limited were duly mentioned in the notes to annual statement of the company for the year under consideration. In view of above facts, we are of the opinion that the transaction between the assessee and company was a commercial transaction and the payments advanced were in the nature of trade advance and in such a case respectfully following the findings of the Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Rajkumar (2009 (5) TMI 17 - DELHI HIGH COURT ), we hold that the money advanced to give effect to a commercial transaction would not fall within the ambit of the provision of section 2(22)(e) of the Act. - Decided in favour of assessee

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• 2016 (6) TMI 881
  Disallowance u/s 14A - CIT (A) has deleted the disallowance on the ground that it has been held by the coordinate Bench in assessee’s own case pertaining to A.Y. 2002-03 that provisions of section 14A are not applicable - Held that:- Since the facts are identical in the year under appeal also, the contention of the assessee throughout has been that the investment wherefrom it has earned exempt income were made for the purpose of maintaining the controlling interest. Therefore, in view of the decision of the Tribunal, provisions of section 14A would not be applicable. The coordinate Bench in assessee’s own case in the assessment year 2002-03 had deleted the addition on the basis that provisions of section 14A would not be applicable in the case of the assessee as the investment has been made solely for the purpose of having the controlling interest. There is no change into the facts in this year as well. - Decided in favour of assessee Addition on account of expenses claimed against income received from the BCCI - Held that:- We find that ld. CIT (A) has deleted the disallowance merely on the basis of presumption that the assessee might have incurred certain expenditure. In our considered view, this approach of ld. CIT (A) is not justified. Since the assessee himself has claimed certain income earned from other sources and claimed set off of expenditure incurred for earning such income, it was incumbent upon the assessee to furnish supporting evidence qua its claim for expenditure. Therefore, on this issue, we hereby set aside the order of ld.CIT (A) and sustain the disallowance made by the AO - Decided in favour of revenue

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• 2016 (6) TMI 880
  Eligibility to rebate claim u/s. 88E - Held that:- The assessee’s self transactions are to the tune of 41% and brokerage/clients’ transactions pertained to 59%. The proposition of law laid down by this Coordinate bench in the case of M/s. Millennium Stock Broking (P) Ltd.,[2015 (12) TMI 141 - ITAT KOLKATA], if we go by that then at the best revenue can disallow rebate u/s. 88E of the Act qua brokerage income at 10%, both on indirect expenses as well as interest - Decided partly in favour of assessee

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• 2016 (6) TMI 879
  Disallowance under section 14A - quantification of disallowance under section 14A of the Act on account of expenditure incurred by the assessee in relation to income in the form of dividends, which is exempt from tax - Held that:- the shares and securities treated as stock-in-trade cannot be considered for the purposes of working of disallowance under section 14A of the Act r.w. Rule 8D of the Rules. Accordingly, the disallowance under section 14A of the Act quantified by the income tax authorities at 17,45,347/- is untenable and the working of the disallowance furnished by the assessee during the assessment proceedings at 2,80,797/- is hereby affirmed. See M/s. India Advantage Securities Ltd [2015 (6) TMI 140 - BOMBAY HIGH COURT ]

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• Customs

• 2016 (6) TMI 911
  Seizure of foreign marked gold biscuits - demand of duty - the aforesaid items were absolutely confiscated; penalties under section 112 in respect of the said goods. The minor discrepancies in the statements are not material. - the appellants have been able to establish the source of the cash which was seized. - appellants have been able to prove that the gold and cash confiscated were not smuggled goods/sale proceeds of smuggled goods. - the confiscation is unjustified - Decided in favor of appellant.

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• 2016 (6) TMI 910
  Renewal application of CHA license - subletting of the license - allegation that blank documents duly singed were handed over by CHA to other person for transacting business with customs for purely monetary consideration - when the respondent filed application for renewal of license, he was asked to show cause why his application for renewal should not be rejected. Shri K.Vijaya Kumar, G.Card holder was also issued Show cause notice, why action should not be initiated for misuse of G Card. Held that:- On appreciating the facts, we are able to see that no evidence is put-forth by department to prove that the handing over of blank signed and shipping bills were not done by respondent for the sake of convenience, but for receipt of consideration. We therefore are of the considered opinion that this is a matter fit for remand to the original authority for denovo adjudication. The original authority shall give reasonable opportunity to the respondent to furnish any further evidence if necessary. - Decided partly in favor of revenue.

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• 2016 (6) TMI 909
  Rectification of mistake in the order - request for release of the goods - It is noticed that this Bench has not passed the order in the appellate side. Learned counsel explains that the Technical Member who was the author of the order has retired in the meantime. However, the Judicial Member is continuing in this Bench. Therefore, he prays that as expeditiously as possible, MA(ROM) may be listed for hearing without causing any detriment to the interest of justice since goods are lying in the custody of the customs for five years. Held that:- To the aforesaid propositions, Revenue's objection is that the application for rectification of mistake prays for restoration of the appeal for re-hearing which is not permitted by law for which Revenue shall file reply if one month time is allowed. - We make it clear that we do not propose to deprive Revenue from filing its reply. But in all fairness, Revenue should come up within two weeks to file its reply so that the Tribunal may make alternative arrangement for hearing the MA (ROM) as expeditiously as possible when the live consignment is in the custody of customs.

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• 2016 (6) TMI 908
  Restriction on Import of second hand goods - import of second hand video cameras - confiscation - Foreign Trade Policy - FTP para 2.17 that it deals generally with second hand goods. Para 2.17 has two parts viz. second hand capital goods group and all other second hand goods. In the free category, the second sub-clause deals with all other second hand capital goods - According to the appellant, the imported goods would fall within the definition of capital goods. Para 2.33 of the HBP Vol.I lays down that import of second hand capital goods including refurbished / reconditioned spares except those of personal computers / laptops shall be allowed freely. Held that:- The appellants vide their letter dt. 29/08/2012 has submitted to the original authority that the video cameras were imported for the purpose of renting them out to those companies which make movies, television serials and documentary. That the equipment imported by them is their basic infrastructure and machinery for revenue generation. The authorities below have reached the conclusion that the activities proposed to be carried out by the appellant with these goods (cameras) are not covered within the scope of the definition of services as mentioned in para 9.52 of FTP. That therefore they would not fall into the category of capital goods. It is to be noted that the second para of the definition of capital goods say that it includes goods used for service sector. The description of goods as per Bill of Entry is “digital still image video cameras transmission apparatus for radio broadcasting or television (used equipment)”. The authorities below have assumed without any basis that the activities proposed to be carried out using the imported goods cannot earn any foreign exchange. The goods fall into the category of second hand capital goods. - the confiscation of the goods is not legal and proper - Decided in favor of appellant.

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• Corporate Laws

• 2016 (6) TMI 902
  Scheme of Arrangement in the nature of Demerger and Transfer of Investment Business - Held that:- This court is of the view that that the observations made by the Regional Director, Ministry of Corporate Affairs, do not survive. No directions are required to be issued to the petitioner company. This court is of the view that based on the material on record it can be concluded that the present scheme of arrangement is in the interest of the shareholders and creditors of both the companies as well as in the public interest, therefore, the same deserves to be sanctioned and the same is hereby sanctioned.

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• Service Tax

• 2016 (6) TMI 923
  Taxability of Grants-in-Aid Projects (GAP) - Scientific and Technical Consultancy Services - The assesse is paying service tax in respect of activities except Grants-in-Aid Projects (GAP) - Held that:- appellant appears to have a strong case on merits. The sanction of grants are seen issued for and behalf of the President of India. Certain documents show that the funds are for meeting R&D expenses. - prima facie case is in favor of assessee - Stay granted.

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• 2016 (6) TMI 922
  Man power supply service - asessee was paying service tax on the commission received at the rate of 3% of the wages and man power supplied by them to their customers - extended period of limitation - Held that:- the work assigned to the applicant is in the nature of verifying of certain work for which the applicant is required to employ some workers. The applicant is not supplied the man power to M/s. Milk Specialities Ltd. In the circumstances, prima facie the applicant is failed to make out a case for complete waive of pre-deposit. - Stay granted partly.

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• 2016 (6) TMI 921
  Jurisdiction of Chandigarh Bench of the tribunal - order was passed by the Commissioner of Central Excise & Service Tax, Rohtak - Held that:- As the appellants are located in New Delhi the cause of action to demand of service tax has arisen in New Delhi. In the circumstances although the Commissioner of Central Excise & Service Tax, Rohtak and adjudicated the matter, the appeal lies with the Principal Bench located at CESTAT, New Delhi.

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• 2016 (6) TMI 920
  Business Auxiliary service (BAS) - As per the agreement, the applicant is entitled to use spaces retained by APIL on lease and licence basis and retain licence fee - applicant submitted the from May,2006/June, 2007 the applicant is paying service tax on sale of spaces and advertisement/renting service. Therefore, for the period prior to that the applicant is not liable to pay service tax under the category of business auxiliary service - Held that:- Prima facie, we are of the view that the applicant has not been able to make out a case for complete waiver of pre-deposit - stay granted partly.

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• Central Excise

• 2016 (6) TMI 924
  Payment of duty excise under wring accounting code - rectification of error - the petitioner made payment of such sum through electronically. However, due to the error of the clerk instead of putting excise code of 0038 of such payment, service code of 0044 was inserted - Assistant Commissioner of Central Excise conveyed to the petitioner that the error in payment cannot be rectified as accounts of the years are closed. - Held that:- Whatever be the internal instructions of the department, the amount not due under a head cannot be appropriated leaving the actual dues unpaid. The department cannot appropriate sum towards the head where there was no liability for the petitioner to pay the tax. If the petitioner is now made to pay said sum of 5,04,700/, that would be double recovery by the Government, which would be wholly unauthorised. The respondents are directed to adjust the petitioner's payment of 5,04,700/for its excise liability for the month of March 2014 - Decided in favor of assessee.

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• 2016 (6) TMI 919
  Demand of duty of excise - Relevancy of statements under certain circumstances u/s 9D of CEA, 1944 - Wrong availment of Area Bases Exemption at Jammu - Concededly, all the 4 petitioners, claimed, and were granted, the benefit of Notification 56/2002-CE - investigations were stated to have revealed that they were not engaged in the manufacture of finished products at all. Held that:- the case of the petitioners is essentially premised on Section 9D of The Central Excise Act, 1944 - the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. The order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. If none of the circumstances contemplated by clause (a) of Section 9D (1) exists, clause (b) of Section 9D (1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word “shall” in Section 9D (1), makes it clear that, the provisions contemplated in the sub-Section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. It is clear, from a reading of the Orders-in-original dated 19.05.2016 and 01.06.2016 supra, that Respondents No.2 has, in the said Orders-in-Original, placed extensive reliance on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause (a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No.2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original, dated 19/05/2016 and 01/06/2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. - Demand set aside - Decided in favor of petitioner.

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• 2016 (6) TMI 918
  Demand of interest on additional duty payable after submission of supplementary invoices - Held that:- while accepting the appeal of the revenue in reference to the judgments in the cases of SKF India Ltd. [2009 (7) TMI 6 - SUPREME COURT] and International Auto Ltd. [2010 (1) TMI 151 - SUPREME COURT OF INDIA], the impugned order is set aside. The issue is ordered to be governed by the judgment in the case of International Auto Ltd. [2010 (1) TMI 151 - SUPREME COURT OF INDIA]. We make it clear that if the reference is answered in favour of the assessee in the case of M/s. Steel Authority of India Ltd. (supra), it would apply to the present case also and in that case, right of the assessee and the revenue would be governed by the outcome of the judgments of the Apex Court in the case of M/s. Steel Authority of India Ltd. [2015 (12) TMI 594 - SUPREME COURT]. We further make it clear that the issue having been referred to the Larger Bench, the revenue would not take coercive action against the assessee till the issue referred to the Larger Bench is decided in the case of M/s. Steel Authority of India Ltd. [2015 (12) TMI 594 - SUPREME COURT]. - Decided in favor of revenue.

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• 2016 (6) TMI 917
  Valuation - manufacture and sale of Dry Charged Batteries - inclusion of products viz., electrolyte and micro porous vent plug with float supplied as bought out items - whetehr electrolyte can be treated as a part of the battery - Held that:- HSN notes for the Chapter Heading 8507 clearly make a mention that electric accumulators (storage batteries) remain classified under Chapter 8507 even if they are presented without the electrolyte. This proves that the subject item could be manufactured without the electrolytes and could be bought without electrolytes. In other words it is a choice of the customer to buy the said item namely dry charged batteries without the electrolytes; and the customer(s) can buy electrolytes, if choose to do so, separately. We find on record that there has not been any cenvat credit taken for the electrolytes supplied separately and the electrolyte has been supplied by the respondent in separate packing as a bought out item only. Items namely “electrolytes” and “micro porous vent plug with float” are not to be treated as parts/components of dry charged batteries, covered under Chapter 8507.00 of Central Excise Tariff, for the purpose of computation of assessable value for payment of duty of central excise. - No demand - Decided against the revenue.

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• 2016 (6) TMI 916
  Captive consumption - manufacture of sugar solution / syrup as intermediate product - marketability - During the course of manufacture of fruit drink the respondent also manufactured sugar syrup / solution which is captively consumed - Held that:- It is necessary for the Revenue to show positive evidence regarding marketability of the product. It may not be necessary to show that the respondent actually marketed such product. However, such product is known in the market and it is capable of being bought and sold has to be established with certain positive evidence. In the present case no such evidence is available. Further, the demand was not sustainable on time limit also. It is an admitted fact that the classification and excise liability of sugar syrup has been subject matter of many clarifications by Board and litigation. - Demand of duty set aside on merit as well as period of limitation - Decided in favor of assesse.

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• 2016 (6) TMI 915
  Application for Rectification of order (ROM) - Claim of exemption from duty on production of gold bars - Earlier while dictating order on the ROM , it was felt by the Bench that as the majority order has been challenged before the Hon'ble Supreme Court, the order of the Hon'ble Supreme Court be awaited, before taking any decision on the ROM application. - Held that:- We find that the principal issue in the decided Appeals has been whether the Appellant are eligible to the benefit notifications stated above to their final product gold bar manufactured out of anode slime/dore anode. This issue has travelled up to Hon’ble Supreme Court for decision and finally settled by the Hon'ble Supreme Court in favour of the appellant, reported as CCE, Vadodara vs. Birla Copper Limited [2015 (11) TMI 901 - SUPREME COURT]. - the present application for rectification of mistake becomes infructuous and does not merit consideration.

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• 2016 (6) TMI 914
  Denial of cenvat credit of service tax paid on the input service viz. "Custom House Agent Services" availed by the respondent in relation to export of goods. - Held that:- these services were utilised for purpose of export of final products and exporters could not do business without them and hence service tax paid on these services availed till goods reached port was admissible and that the input service cannot be given restrictive meaning in view of means and includes used in definition in Rule 2(l) of Cenvat Credit Rules, 2004. - Decided in favor of assessee.

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• 2016 (6) TMI 913
  Cenvat Credit - proceedings initiated by the show cause notice issued alleging wrongful availement of credit without actual receipt of goods - Held that:- This Tribunal in the final Order dated 20-01-2016, in the case of M/s Sri Lakshmi Industries Ltd and another [2016 (6) TMI 823 - CESTAT HYDERABAD] has analyzed the very same evidence and has set aside the demand raised on the allegation of fraudulent availment of credit on invoices issued by KMC. After examining the evidences presented by this case, I do not find any ground to take a different view. The whole case is founded on statements and private records of third party, Shri Prabhakar. - Demand set aside - Decided in favor of assessee.

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• 2016 (6) TMI 912
  Cenvat Credit - fraudulent availment of Cenvat credit on invoices obtained from a registered dealer, without actual receipt of goods - assumptions / presumptions - Held that:- This Tribunal in the final Order dated 20-01-2016, in the case of M/s Sri Lakshmi Industries Ltd [2016 (6) TMI 823 - CESTAT HYDERABAD] and another has analyzed the very same evidence and has set aside the demand raised on the allegation of fraudulent availment of credit on invoices issued by KMC. After examining the evidences presented by this case, I do not find any ground to take a different view. The whole case is founded on statements and private records of third party, Shri Prabhakar. The allegation of duty evasion cannot be made basing upon private records and statement of a third party unless cross examination of such person is allowed. It is settled law that confessional statements have to be supported by independent evidence to establish the charge of clandestine manufacturer and evasion of duty. - Demand set aside - Decided in favor of assessee.

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• CST, VAT & Sales Tax

• 2016 (6) TMI 907
  Withholding of Refund - refunds payable to the respondent out of the orders passed by the Tribunal - department appeal is pending before the Supreme Court - Held that:- For multiple reasons, we simply cannot approve the approach of the Tribunal. When the Supreme Court has issued notice not only on the application for condonation of delay but also on special leave petition and on the prayer for interim relief, it was, in our opinion, more than a command to the Tribunal not to bring any further pressure on the department to release the refund. The question of asking the Commissioner to remain personally present explaining why contempt proceedings should not be initiated, simply did not arise. We have serious doubt whether the Tribunal has the power to summon personal presence of a Government authority. In any case, there was no tarrying hurry or mighty urgency owing to which, despite the Supreme Court being cognizant of the department's appeal and having issued notice for interim relief, the Tribunal should have issued such strong directions for release of the refund. The approach and the order of the Tribunal to put it mildly simply baffles us. - Decided in favor of the revenue.

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• 2016 (6) TMI 906
  Disallowance of input tax credit in revision proceedings to the petitioner on purchases made from one M/s. Om Incorporation whose registration certificate was cancelled with retrospective effect from 01.01.2007. - GVAT - Held that:- the very initiation of the revisional proceedings was itself without jurisdiction, inasmuch as, the same was based upon material extraneous to the record of order of the officer appointed under section 16 of the Act to assist the Commissioner - Decided in favor of assessee.

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• 2016 (6) TMI 905
  Reversal of Input Tax Credit on the estimated invisible loss of input used in the course of manufacture as per Section 19(5)(ii) of the TNVAT Act. - Reversal of credit towards interstate sales without C forms - Held that:- The Assessing Officer did not embark a fact finding exercise to ascertain the quantum of loss of the goods which were purchased on which the tax was paid vis-a-vis the goods manufactured from and out of the goods purchased. No endeavor was made in this regard. Therefore, this Court has to necessarily interfere with the said finding with regard to the invisible loss in the process of manufacture which has now been fixed by the Assessing Officer at 4%. - AO has committed an error by adopting an Adhoc percentage. - Matter remanded back. Reversal of credit towards interstate sales without C forms - Held that:- AO directed to comply with the direction issued by the revisional authority viz., the Joint Commissioner (CT)

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• 2016 (6) TMI 904
  Levy of penalty - claim of input tax credit applying the wrong formula - whether the act of the petitioner would fall in the category of ‘unintentional act or not’ - Section 72 of the KVAT Act - purchases of petroleum products including furnace oil - Held that:- first appellate authority in the present matter, has found that the action was not unintentional and therefore, the benefit of circular would not be available to the assessee. The question of non- applicability of correct formula could be said as unintentional if there is ambiguity in the applicability of such formula. When the formula was so clear as found by the Tribunal, and if it was not applied, the view taken by the Tribunal that the action was not unintentional cannot be said to be an impossible view, which may call for interference by us. - Levy of penalty confirmed. - Decided against the assessee.

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• 2016 (6) TMI 903
  Refund of tax deposited - Continuation of exemption after migration from KST Act to KVAT Act, 2003 w.e.f. 1.4.2005 - a tax holiday of ten years was to be granted to information technology units from the date of commencement of commercial production. - refund was denied on the ground that if the unit collects any amount by way of tax, it shall become ineligible for exemption. Held that:- The notification providing for such ineligibility was under the KST Act, which was followed in the case of CST Act up to March 31, 2005. When the subsequent notification dated April 18, 2005 (effective from April 1, 2005) issued under the KVAT Act itself provides for collection of tax, and such benefit of exemption is granted for Karnataka value added tax even when the assessee collects tax, then the same cannot be denied to the same assessee under the CST Act, as admittedly, the procedure provided under the general sales tax law of the State (which presently would be KVAT Act), would be applicable for the purpose of Central sales tax, but the substantive provisions of the CST Act were to be followed. The finding given by the Tribunal with regard to ineligibility of the assessee/petitioner for being granted exemption only because it had collected tax, cannot bejustified in law. As we have already noted above, the procedure under the KVAT Act was to be followed for Central sales tax also and thus, the refund given to the petitioner/assessee was fully justified and ought not to have been reversed. The law is thus clear that once an assessee is found entitled to grant of exemption, the procedure for the same is to be construed liberally in favour of, and for the benefit of the assessee. In the present case, the petitioner is admittedly eligible for grant of exemption. As such, the petitioner cannot be denied the benefit on technical grounds. - Refund allowed - Decided in favor of assessee.

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• Indian Laws

• 2016 (6) TMI 901
  Auction purchaser wants to cancel the bid and claim refund of money deposited - Sale of the property by the SIDBI after taking possession of the mortgaged assets - Mortgage of the lease-hold property was subject to the condition that the plot demise in perpetuity cannot be sold without the prior permission of the lessor - The petitioner wanted to wriggle out of the sale and filed an application in SA No.311/2011. It prayed that 2 crores deposited by it with SIDBI be returned because the State of Himachal Pradesh raised a demand towards unearned increase and other outstanding dues payable by the lessee. Held that:- In the instant case, as noted above, there was a clear indication to the prospective bidders that encumbrances if any in the form of government dues have to be paid and thus the bidders knew very well that if there were encumbrances on the property the same had to be borne by them. The fact that the bidders knew that there are encumbrances has been captured very well by the learned DRT with reference to the post tender submission and bid opening date, when the bidders were requested to increase the bid offer and they informed that they cannot do so because infrastructure in the industrial area was not conducive and additionally the highest bidder would have to pay to the government authorities, before the title would be transferred in their name, and they estimated the final costs to the highest bidder to be within the range of 2.25 to 2.5 crores.

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