TMI Tax Updates - e-Newsletter
June 27, 2016

Case Laws in this Newsletter:

Income Tax Customs Central Excise CST, VAT & Sales Tax

TMI SMS

• Applicability of TCS where the bill amount exceeds Rs. 2 lakhs, when part of the bill is paid in cash & part through cheque - CBDT clarifies

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Articles

1. No KKC if invoice is raised and services are rendered on or before May 31, 2016

   By: Bimal jain

2. KKC Not Payable on transactions prior to 01/06/2016

   By: Monarch Bhatt

Notifications

Customs

1. 90/2016 - dated 24-6-2016 - Cus (NT)

Rate of Duty Drawback on gold jewellery and silver jewellery/articles - RAte increased subject to conditions - Amendments in Notification No.110/2015-Customs (N.T.), dated the 16th November, 2015

Circulars / Instructions / Orders

Customs

1. 30/2016 - dated 24-6-2016

Increase in All Industry Rates (AIR) of Duty Drawback on gold jewellery and silver jewellery/articles

Highlights / Catch Notes

Income Tax

• Assessee Avoids Penalty for Not Collecting TCS on Scrap Sales; Buyers Already Paid Taxes, No Demand Left.

  Case-Laws - AT : Failure to collect tax at source (TCS) u/s on the sales - whether the material is scrap or not - assessee failed to collect TCS @ 1% - Since taxes have already been paid by the buyers and there was no tax demand remained. - No penalty - AT
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• Assessment Officer's Unjustified Additions Based on Low Profit Ratio Without Addressing Taxpayer or Identifying Defective Claims.

  Case-Laws - AT : Low net profit ratio - AO has not pointed out any defect or deficiency in the claim of expenditure nor any expenditure has been held as bogus by the AO. AO asked financial results of the last three years and proceeded to make addition in this regard without confronting the issue to the assessee which is not a justified approach. - AT
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• Reopening of Assessment Challenged Due to Lack of Clarity in AO's Conclusion on Accommodation Entries.

  Case-Laws - AT : Reopening of assessment - The conclusion of the A.O. is unhelpful in understanding as to whether the AO applied his mind to the material, particularly when he did not describe how and in what manner it came to his knowledge that the assessee received the accommodation entries. - AT
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• Taxpayer Not Penalized for Auditor's Error in Excess Claim u/s 80-IB; Section 271(1)(c) Penalty Not Applicable.

  Case-Laws - AT : Excess claim u/s 80-IB made by the assessee was on the basis of the bonafide mistake of the Auditor and the assessee cannot be held for furnishing inaccurate particulars of income - no penalty u/s 271(1)(c) - AT
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• Ignoring High Court rulings is a rectifiable error u/s 154 of the Income Tax Act.

  Case-Laws - AT : Rectification of mistake - non-consideration of a judgment of a jurisdictional High Court is also a mistake apparent on record, which can be rectified u/s. 154 of the Act. - AT
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Customs

• Duty Drawback Rates Increased for Gold and Silver Jewellery to Boost Export Competitiveness and Reduce Production Costs.

  Circulars : Increase in All Industry Rates (AIR) of Duty Drawback on gold jewellery and silver jewellery/articles - Circular
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• Department Cannot Recover Redemption Fine from Petitioner Due to Lack of Involvement in Show Cause Notice.

  Case-Laws - HC : Recovery of redemption fine from the petitioner - petitioner was not party to the SCN - In absence of any proposal in the show cause notice for imposition of fine in lieu of confiscation relatable to the petitioner and in absence of any directions contained in the order-inoriginal that such fine would be borne by the petitioner, it was simply not open for the department to seek recovery thereof from the petitioner- HC
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• Claim for Export Duty Refund Denied Due to Late Filing; Shipping Bill Canceled Over a Year After Order Issued.

  Case-Laws - AT : Claim of refund of export duty paid where goods could not be exported - Period of limitation - even though on payment of export duty, the Let Export Order (LEO) was received on 09.12.2011 - shipping bill was allowed to be cancelled only on 23.01.2013 and they had filed the refund claim on 10.05.2013. - Refund is beyond the normal period of limitation - AT
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• Court Rules Interest Due on Delayed Customs Duty Refund; Notification Holds Legislative Authority.

  Case-Laws - AT : Claim of interest on delayed refund of additional duty of customs - Held that:- the notification flowing from the law gets its colour as legislation - AT
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Central Excise

• Duty Demand Violated Section 9D by Relying on Unadmitted Statements; Case Remanded for Further Review.

  Case-Laws - HC : Demand of duty based on statement recorded u/s 14 of the Central Excise Act, 1944 - flagrant violation of Section 9D by relying upon statements without admitting them in evidence by following the prescribed procedure contained therein - Matter remanded back - HC
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VAT

• High Court Rules Sales to Bombay High Are Exports, Exempt from Sales Tax/VAT in Exclusive Economic Zone.

  Case-Laws - HC : Demand of Sales Tax / VAT - contract with ONGC for the commission of turnkey projects at Bombay High which is situated in exclusive economic zone of the coast of India - Whether sale to Bombay High was an export - Held Yes - HC
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• High Court Orders Reconsideration of Assessment Orders Due to Denied Personal Hearing Request, Violating Commissioner's Circular.

  Case-Laws - HC : Challenge to the revised assessment orders pursuant to Audit Inspection - the specific request made by the petitioner for an opportunity of personal hearing, has not been granted. This amounts to violation of the Circular issued by the Commissioner - Matter remanded back- HC
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• Court Rules Selling Dealer Liable for Non-Filing of Returns, Exonerating Petitioner-Dealer Under TNVAT Input Tax Credit Case.

  Case-Laws - HC : Input tax credit - TNVAT - non-filing of return by the selling dealer - The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made - HC
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• Challenge to Show Cause Notice on VAT for Set-Top Boxes Under KVAT; Awaiting Merits Decision After Hearing Opportunity.

  Case-Laws - HC : Challenge to the show cause notice demanding VAT on sale of STB (set-top boxes) - KVAT - No demand notice nor any coercive steps has been initiated pursuant to the notice issued. The endorsement issued makes it clear that petitioner has been given time to file reply. - Matter is to be decided on merit after affording proper opportunity of being heard - HC
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Case Laws:

• Income Tax

• 2016 (6) TMI 944
  Rectification of mistake - addition of interest - Held that:- As mistake on page 3 of the order of the Tribunal as pointed out by the Ld. Sr. Counsel with regard to ground No.XII that the amount of interest has been mentioned as Rs. 36,09,016/- instead of the correct amount of Rs. 36,09,31,016/-. The Ld. D.R. to this contention had nothing to say in rebuttal. Accordingly, the said rectification is hereby allowed. As a result of the modified portion of the order, the interest amount will be treated as Rs. 88.86 crores for the financial year 2001-02 which has been offered to tax by the applicant-assessee in the assessment year 2004-05. The learned Tribunal was not shown to have been unjustified in rectifying its mistake. We as such are unable to hold that the learned Tribunal exceeded its jurisdiction under section 254(2) of the I.T. Act.

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• 2016 (6) TMI 943
  Unexplained investments on account of demand drafts allegedly purchased by the appellant in cash - Held that:- Perusing the statement of Hasmukhbhai Shah dated 19.08.2003 before CIT(A) and as per questions no. 19 and 21 the revenue has not been able to prove that the demand drafts purchased in cash belong to the assessee. Even if the onus in respect of the two DDs amounting to Rs. 1,61,527/- is discharged in assessment year 1993-94 in absence of any evidence for the remaining DDs added in assessment year 1993-94 and all other DDs added in other years there is absolutely no manner of justification. The CIT(A) erred in casting negative onus on the assessee when it observed that the the onus is on assessee to submit the necessary details and evidence that those DDs were not purchased by the assessee. Thus, the department has not been successful in proving that the DDs were purchased by the assessee. In that view of the matter, the questions raised in the present appeals are required to be answered in favour of the assessee

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• 2016 (6) TMI 942
  Reopening of assessment - Held that:- ITAT has committed an error travelling beyond the scope of its jurisdiction.Commissioner of Income-Tax Versus Bokaro Steel Limited [1998 (12) TMI 4 - SUPREME Court]

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• 2016 (6) TMI 941
  Short Term Capital Gains (STCG) on sale of equity shares on which STT was paid - amount taxed twice as the assessee has wrongly showed the income from business by wrongly including the STCG in the profit and loss account and also showing it under the head capital gains (others) instead of under the head short term capital gain u/s 111A - Held that:- We find that the assessee has income from business of Rs. 2,93,474/- and the income from STCG from sale of equity shares which are covered under the provisions of section 111A amounting to Rs. 22,61,528/-. However, at the time of filing the return, the amount of capital gains of Rs. 22,61,528/- was wrongly included in the business income and thus the business income was showed at Rs. 25,55,002/- instead of Rs. 2,93,474/- thereby wrongly returned the income from STCG under the head income from the business and thus business income was overstated by Rs. 22,61,528/-. Secondly, we also find that short tax gain on sale of shares on which STT was paid which was liable for tax at the rate of 10% was wrongly shown under the head STCG (others), thereby offering the tax at the rate of 30%. Since the assessee has wrongly returned the income under the wrong heads and also at wrong rate of tax it is an apparent mistake on the face of record which should have been rectified by the authorities below upon being pointed out by the assessee. However, the submissions of the assessee did not find favour with the Income Tax Authorities and hence the matter is in appeal before us. It is a trite law that any income cannot be taxed twice and this amounts to double taxation of the same income which is not permissible under the Income Tax Act. We, therefore finding merits in the submissions of the ld.AR, set aside the order of ld.CIT(A) and direct the AO to assess the income from business at Rs. 2,93,474/- and also the income from STCG on sale of shares of Rs. 22,61,528/- under the head STCG under section 111A. We direct the AO to assess the STT at the rate of 10% as the STT was paid on the sale of shares. - Decided in favour of assessee

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• 2016 (6) TMI 940
  Revision u/s 263 - low profit shown - Held that:- Assessing Officer carried out the enquiries and investigation on the relevant aspect of the matter, which is clear from the order sheet entries, query raised and submission of the assessee filed in the course of assessment proceeding and thus the assessment order cannot be termed as erroneous or prejudicial to the interest of Revenue on the issue of low net profit shown by the assessee. We, therefore, set aside the action of the learned CIT in making an addition by applying net profit rate of 5% in ad-hoc manner.- Decided in favour of assessee Non verification of TDS applicability on the rent payment - Held that:- We find that the details in respect of rent account was filed by the assessee in its reply dated 07/09/2010.We find that each rent payment made is less than the statutory limit provided in the provisions of the Act related to the TDS. This fact has also been verified by the Assessing Officer in proceedings consequent to 263 proceedings, and amount of the rent paid to single person was below Rs. 1,20,000/- and, therefore, not liable for TDS. Therefore, the findings of the learned CIT on the issue was without proper appreciation of the facts available on record. - Decided in favour of assessee

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• 2016 (6) TMI 939
  Penalty levied u/s. 271(1)(c) - provision for loss of stock claimed - Held that:- Explanation filed by the assessee, about the disputed amount plays a vital role in deciding the justification of levying concealment penalty. In the matter before us, the assessee had disclosed all the necessary details. In our opinion, explanation filed by the assessee in that regard was bona fide. Secondly, it is an accepted principle of tax-jurisprudence that additions made during assessment proceedings cannot result in automatic levy of penalty. A patent wrong and inadmissible claim, made against the clear cut provisions of the Act, falls under the category of filing of inaccurate particulars of income resulting in concealment. In the matter before us, no wrong claim was made. The assessee had made entries in the books of accounts as per the mandate of AS-2. So, it cannot be held that it had concealed its particulars of income. It is not the case of the AO that the assessee had not disclosed the fact of obsoleteness of the stock or notice from the state government authorities. Therefore, there was no justification of invoking the provisions of section 271(1)(c)of the Act. Making additions or disallowing certain expenses during the assessment proceedings is totally different from invoking penal provisions. There is no provision in the Act of automatic levy of penalty for the additions/disallowances made. So, we are of the opinion that there was no furnishing of inaccurate particulars and that the explanation given by the assessee was bonafide. - Decided in favour of the assessee.

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• 2016 (6) TMI 938
  Penalty under section 271CA - assessee had not deducted TCS @ 1% on the sales and failed to explain any reasonable cause for non deduction of tax at source - Held that:- CIT(Appeals) has recorded specific finding of fact that assessee furnished complete details of sales of scrap made to various traders alongwith copies of their Income Tax returns of relevant assessment year proving that payment of due taxes have been made by the respective purchasers. It was also recorded that no demand on account of non-deduction of tax at source has been raised by the Assessing Officer and only interest has been charged. It is, therefore, clearly established that Revenue Department has not treated the assessee as assessee in default as far as TCS is concerned. The ld. CIT(Appeals) was, therefore, justified in following decision of Banglore Bench in the case of Wipro GE Medical Systems Ltd. [2005 (1) TMI 609 - ITAT BANGALORE ] in which the Tribunal has considered reasonable cause for not levying the penalty when sufficient compliance was made because of the tax demand had already been paid. Since taxes have already been paid by the buyers and there was no tax demand remained. Therefore, ld. CIT(Appeals) correctly held that there was reasonable cause for failure to comply with provisions of law. - Decided against revenue

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• 2016 (6) TMI 937
  Low net profit ratio - assessee had not provided any justification regarding reduction in N.P. during the period under consideration. - Held that:- We have found that the A.O. has nowhere rejected the books of account of the assessee either impliedly or expressly. Therefore, without pointing out any defects in the book results of the assessee and without rejecting the books of account by invoking the provisions of section 145 of the Act, it is not permissible for the AO to proceed to estimate the N.P. rate @ 10.78 of the turnover without any basis. The AO has not pointed out any defect or deficiency in the claim of expenditure nor any expenditure has been held as bogus by the AO. AO asked financial results of the last three years and proceeded to make addition in this regard without confronting the issue to the assessee which is not a justified approach. In view of the above explanation of the assessee for reduction of N.P. rate is that the assessee follows cash system of accounting, wherein it is possible that expenses have been incurred on a particular work but the payment has not been received till 31.3.2008 and actually received and accounted as revenue after 31.3.2008 during the next financial period which resulted in to increase in N.P. rate for A.Y 2009-10 to 10.19% of turnover. The assessee also explained that he operates from his residence and due to cut throat competition, the N.P. reduced during the relevant period, above explanation has not been controverted by the AO or by the co and thus their findings are not sustainable. On the basis of the foregoing discussion, we are satisfied that the explanation given by the assessee to justify the fall in N.P. rate, as noted above, is acceptable and we are inclined to accept the same. Consequently, addition made by the AO and upheld by the ld. CIT(A) on account of N.P. rate is not sustainable and we direct the AO to delete the same. - Decided in favour of assessee Addition u/s 69 - Held that:- On careful consideration of all we have no hesitation to hold that the assessee could not establish that the cash deposits to ICICI Bank was from the cash in hand of new business of the assessee and no details of cash book and cash flow has been furnished. However, we are in agreement with the contention of the ld. AR and agreed by the ld. DR that in these set of facts and circumstances of the case, only peak balance can be taken for making addition and we order accordingly. Consequently, Ground No. 2 of the assessee is allowed on alternative prayer of the assessee and thus the AO is directed to take peak balance of deposits for making addition u/s 69 of the Act. Disallowance of short and excess expenses - Held that:- The assessee operates electrical repairing and maintenance business from his residence and he follows cash system of accounts. In these circumstances, we are in agreement with the contention of the ld. AR, also noted by the ld. CIT(A) that any stage of assessment proceedings the assessee was note asked to substantiate the debit of Rs. 2,67,234/- in the profit and loss account under the head short and excess The ld. CIT(A) also observed that the term short and excess suggest, any amount small or big, less received or paid in the day to day course of business may be debited/credited under this account. However, the ld. CIT(A) did not agree with factual position placed by the ld. AR during the appellate proceedings and confirmed the addition.From careful reading of the first appellate order, we clearly observe that the ld. CIT(A) also not raised any query in this regard nor made any investigation or verification about this claim of the assessee. Hence, in our considered opinion, this issue requires proper examination and verification at the end of the AO and thus the issue is restored to the file of the AO for fresh adjudication after affording the assessee due opportunity of being heard.- Decided in favour of assessee for statistical purposes.

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• 2016 (6) TMI 936
  Reopening of assessment - receipt of accommodation entries - AO reopened the assessment on the basis of information of other persons - Held that:- AO in the reasons recorded mentioned that it had come to his knowledge that the persons from whom amount was received were entry operator and provided the entries to the assessee after receiving the amount in cash, however, nothing was brought on record that how and in what manner the persons from whom the assessee received the loans were entry operator and that as to how the cash was paid by the assessee. In fact the aforesaid conclusion of the A.O. is unhelpful in understanding as to whether the AO applied his mind to the material, particularly when he did not describe how and in what manner it came to his knowledge that the assessee received the accommodation entries. Thus the reopening done by the AO u/s 147 of the Act was not valid and accordingly the subsequent assessment framed by the AO was void-ab-initio and therefore the same is quashed - Decided in favour of assessee

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• 2016 (6) TMI 935
  Penalty u/s. 271(1)(c) - unexplained creditors - Held that:- As the addition on which the penalty in dispute was levied, which has been deleted by the ITAT [2013 (9) TMI 8 - ITAT DELHI ] , therefore, the penalty in dispute will not survive. Therefore, Ld. CIT(A) has rightly deleted the penalty in dispute. - Decided in favour of assessee

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• 2016 (6) TMI 934
  Penalty under section 271(1)(c) - excess deduction claimed under section 80-IB - bonafide mistake - Held that:- We find from the facts of the case that the Auditor computed deduction @ 100% in respect of the two units in reference and the assessee claimed the same deduction in the return of income filed. According to us, it is a very much likelihood that a normal person will claim the deduction in the return of income what has been computed by the Auditor, who has been authorized by the Act to submit a audit report in form No. 10 CCB in respect of the claim of deduction. In the circumstances, it cannot be said that there was a malafide intention behind the claim of excess deduction and it occurred due to the wrong claim computed by the Auditor. On perusal of the assessment order, we find that the Assessing Officer has mentioned only the letter dated 01/12/2006 submitted by the assessee on 04/12/2006 revising its claim of deduction under section 80-IB of the Act and accordingly allowed the claim at the rate of 30% and nowhere held that the mistake was pointed out by the Assessing Officer to the assessee. When the assessee itself noticed the mistake and came forward and offered the income for taxation, the assessee cannot be held in default for furnishing inaccurate particulars. Thus we are of the opinion that the excess claim under section 80-IB of the Act made by the assessee was on the basis of the bonafide mistake of the Auditor and the assessee cannot be held for furnishing inaccurate particulars of income and, accordingly, the penalty levied under section 271(1)(c) of the Act on the incorrect claim of deduction under section 80-IB is deleted - Decided in favour of assessee Penalty levied on disallowance of deduction under section 80-IB on account of higher allocation of head office/common expenses - Held that:- We find that facts of allocation of common expenses are identical to the facts of the case of Dharmpal Premchand Ltd (2010 (9) TMI 155 - DELHI HIGH COURT ), thus respectfully following the ratio of the said decision wherein held that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271 (1)(c)- Decided against revenue Levy of penalty on unexplained cash credit under section 68 - Held that:- In the case in hand, the assessee has failed to prove the identity and creditworthiness of the creditor as well as genuineness of the transaction. In view of the facts of the case, the assessee is liable for furnishing inaccurate particulars of income in respect of the issue in dispute and accordingly we uphold the penalty levied in respect of disallowance of interest of Rs. 19,200/- paid in respect of the loan taken from Mr. Ravi Kapoor which has been held as unexplained cash credit under section 68 of the Act in the assessment year 2001- 02. - Decided against assessee

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• 2016 (6) TMI 933
  Eligibility for exemption u/s. 11 - whether the assessee was involved in trade, commerce or business as the assessee was receiving fees from the students? - Held that:- We find considerable cogency in the finding of the Ld. CIT(E) in reversing the action of the AO by relying on the judgment of the Tribunal in assessee’s own case for the AY 2009-10 and also relying upon the judgment of the Hon’ble Jurisdictional High Court in the case of India Trade Promotion Organisation vs. DGIT(E) (2015 (1) TMI 928 - DELHI HIGH COURT ) and has rightly held that the proviso to section 2(15) is not applicable to the assessee as the assessee is not involved in any trade, commerce or business. - Decided in favour of assessee.

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• 2016 (6) TMI 932
  Disallowance u/s 14A applying Rule 8D - non recording satisfaction that there is no expenditure disallowable u/s 14A as claimed by appellant in his return of income - Held that:- On reading of the assessment, order we do not find that AO has recorded any satisfaction on the claim of the assessee that no expenditure has been incurred which is disallowable u/s 14A of the Act

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• 2016 (6) TMI 931
  Revision u/s 263 - Determination of loss to be carried forward - loss represented unabsorbed depreciation which was to be carried forward to the subsequent assessment year along with the earlier year’s unabsorbed depreciation - CIT(A) held that unabsorbed depreciation cannot be carried forward without set off beyond a period of 8 years and AO ought to have held that unabsorbed depreciation which remained without set off ought to have been treated by the AO as not eligible for carry forward - Held that:- From the language of the sub-s. (2) of s. 32 it is manifest that it is a substantive provision and not a procedural one. It is settled legal position that the amendment to substantive provision is normally prospective unless expressly stated otherwise or it appears so by necessary implication. In the light of the judicial precedents on the issue especially that of the Hon’ble Gujarat High Court in the case of General Motors India Pvt.Ltd. (2012 (8) TMI 714 - GUJARAT HIGH COURT )wherein held that unabsorbed depreciation from AY. 1997-98 up to AY. 2001-02 got carried forward to AY. 2002-03 and became part thereof and it came to be governed by the provisions of sec. 32(2) as amended by the Finance Act, 2001 and were available for carry forward and set off against income of subsequent years without any limit and which has the effect of overruling the decision of the Special Bench in the case of Times Gurantee (2010 (6) TMI 516 - ITAT, MUMBAI ) as relied upon by CIT(A) and also on the basis of other decisions referred by the Assessee before us, the order of the CIT cannot be sustained. Section 263 requires the satisfaction of two conditions viz. (i) the order sought to be revised is erroneous; and (ii) it is prejudicial to the interests of Revenue. If one of them is absent i.e. if the order sought to be revised is erroneous but not prejudicial to the interest of Revenue or if it is not erroneous but is prejudicial to the interests of Revenue, the provisions of section 263(1) of the Act are not attracted as the phrase ‘prejudicial to the interests of Revenue’ is to be read in conjunction with an ‘erroneous’ order passed by the Assessing Officer. When an Assessing Officer adopts one of the courses permissible in law and it has resulted in loss of Revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of Revenue. Every loss of Revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of Revenue. This was the view held by the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court ). - Decided in favour of assessee

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• 2016 (6) TMI 930
  Estimation of net profit @ 0.75% - rejection of trading & profit and loss account - business of export of rice and mustard cake - Held that:- The assessee had not produced any books of accounts and supporting documents before the Learned AO. Under these circumstances, we find that net profit of the business had to be determined only on estimated basis. We find that the Learned CITA in the absence of past history of the assessee, had resorted to refer to subsequent year’s net profit which was disclosed at 0.60% by the assessee. The Learned CITA had determined the net profit @ 0.75% . We find, in the facts and circumstances of the case and the line of business in which assessee is engaged, that the determination of net profit @ 1% would cover up all the other deficiencies in the business of the assessee and we direct accordingly . All other additions made by the Learned AO would stand deleted once income is determined at 1% of turnover. Hence the grounds raised by the revenue are partly allowed.

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• 2016 (6) TMI 929
  Rectification of mistake - benefit of exemption u/s. 10(10C) denied - non-consideration of the judgment of Hon’ble Calcutta High Court and the Third Member decision - Held that:- We find that the Third Member decision of this Tribunal in the case of Krishnagopal Saha, [2009 (7) TMI 173 - ITAT CALCUTTA-B ] had held that in respect of an assessee who was a former employee of Standard Chartered Bank were admittedly voluntary retirement scheme offered by Standard Chartered Bank was not in conformity with Rule 2BA of the Rules held that assessee was eligible for exemption u/s. 10(10C) of the Act to the extent of Rs. 5 lacs. We also find that the Hon’ble Supreme Court in the case of Saurashtra Kutch Stock Exchange Ltd., [2008 (9) TMI 11 - SUPREME COURT ] had held that non-consideration of a judgment of a jurisdictional High Court is also a mistake apparent on record, which can be rectified u/s. 154 of the Act. We hold that the provisions contained in the Rules cannot override the provisions contained in the Act. Rule is only a subordinate piece of legislation. The Act specifically provides for granting exemption u/s. 10(10C) of the Act to the extent of Rs. 5 lacs and applying the ‘purposive test’ of those provisions, we hold that the assessee should be given the benefit of exemption u/s. 10(10C) of the Act to the extent of Rs. 5 lacs. Hence, non-consideration of the judgment of Hon’ble Calcutta High Court in SAIL DSP VR. EMPLOYEES ASSOCIATION 1998 Vs. UNION OF INDIA & OTHERS (2003 (2) TMI 46 - CALCUTTA High Court ) and the Third Member decision of this Tribunal by the Ld. CIT(A) and also by the Ld. AO automatically results in mistake apparent on record, which ought to have been rectified u/s. 154 of the Act by the Ld. AO and the Ld. CIT(A). Hence, we have no hesitation in allowing the ground raised by the assessee. The aforesaid decision will apply in all the other appeals of the assessee.- Decided in favour of assessee

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• 2016 (6) TMI 928
  Additions u/s 41(1) - cessation of Trading liability - Held that:- We find that the provisions of section 41(1) of the Act could be invoked towards cessation of liability only in the event of revenue proving the fact of assessee deriving some benefit out of this transaction. In the instant case , the assessee claims that the liability has been settled in the subsequent financial year which fact has not been verified by the Learned AO. Hence in the facts and circumstances, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO , with a direction to verify the subsequent settlement made by the assessee to the concerned sundry creditor and if proved, no addition need to be made by the Learned AO. - Decided in favour of revenue for statistical purposes. Disallowance of brokerage payment - Held that:- We find from the confirmation letters of 5 suppliers that they had categorically stated that the assessee was introduced to them through a broker. The broker in the instant case needs to be understood only as M/s Timespac India Ltd. The revenue was not able to produce any contrary evidence in this regard. However, we agree with the contention of the Learned DR that these confirmations were dated in the fag end of December 2011 from different locations in India, it would not have reached the Learned AO before the completion of assessment proceedings. Hence, in these facts and circumstances, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO, with a direction to the Learned AO to verify the confirmations filed by the 5 suppliers and decide the issue in accordance with law. - Decided in favour of revenue for statistical purposes.

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• 2016 (6) TMI 927
  Penalty us/ 271(1)(c) - defective notice - Held that:- The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Hon’ble Karnataka High Court [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] we hold that the order imposing penalty has to be held as invalid and consequently penalty imposed is cancelled.

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• 2016 (6) TMI 926
  Additional depreciation - plant and machinery acquired during the year which was utilized in the sales outlet of the assessee - Held that:- We find that installation of new plant and machinery in sales outlet/retail office would fall under clause (B) of proviso to section 32(1)(iia) of the Act. We are in complete agreement with the arguments advanced by the Ld. DR. Needless to mention that the assessee is entitled for the benefit of having its written down value increased due to additional depreciation getting disallowed. The Ld. AO is directed to rework the written down value accordingly and give benefit of increased depreciation in the subsequent years as a consequential impact - Decided partly in favour of assessee for statistical purposes. Enhanced depreciation rate of 80% on Genset - Held that:- We find that the issue in dispute is squarely covered by the decision of the Hon’ble Rajasthan High court in the case of Agarwal Transformers Pvt. Ltd [ 2002 (2) TMI 34 - RAJASTHAN High Court ] wherein it was held that electric generator clearly falls under renewal energy device and thereby eligible for enhanced rate of depreciation. - Decided in favour of assessee

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• 2016 (6) TMI 925
  Taxability of credits in the undisclosed bank account jointly held with assessee and her daughter - Held that:- Learned CITA had given categorical findings that the entire credits in the Indian Bank account have been duly considered by Smt. Rita Bagaria (daughter) with proper explainable sources and there is no case for making any addition in the hands of the assessee in the sum of Rs. 42,44,508/-. He had also categorically held that an addition of Rs. 3,06,041/- is also included in the amount already added in the sum of Rs. 42,44,508/- and hence in any case would only result in double addition. Accordingly he had deleted the additions of Rs. 42,44,508/- and Rs. 3,06,041/-. The Learned DR had prayed for setting aside of this appeal to the file of the Learned AO for verification of returns of Smt. Rita Bagaria. We feel that this is not necessary as we are thoroughly convinced that the entire credits in the bank account have been duly considered in the hands of Smt. Rita Bagaria and it would not advance the case of the revenue in any manner. Hence we find no infirmity in the order passed by the Learned CITA in this regard. - Decided against revenue

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• Customs

• 2016 (6) TMI 955
  Provisional release of seized goods - seizure of Cigarettes and restricted R-22 Gas, which were admittedly imported by the petitioner company by concealment in aluminium scrap and mis-declaration of material particulars in the three Bills of Entry - It is submitted that although the R-22 Gas is a 'restricted' item for import, and the goods Cigarettes and the R-22 Gas were imported by concealment, however, none of these goods are expressly notified as 'prohibited' for importation. Imported Goods can only be seized under Section 110 of the Act, when there exists a reasonable belief that the same are liable to confiscation under Section 111. Held that:- In the instant case the Cigarettes and restricted R-22 Gas were admittedly imported by concealment. None of the two goods are expressly “prohibited” for importation. Therefore, ultimately the petitioner company who is owner as well as importer would be entitled for an option to redeem the goods even upon adjudication. In such case, Section 110A concerning provisional release would be applicable. Although the petitioners have raised a substantial question of law regarding applicability of section 4(2) of the Code, which has prima facie merits. However, since the petitioners have shown their willingness to adopt the route of settlement and to discharge their duty liability even before issuance of notice under Section 28, we deem it appropriate to dispose of the petition at this stage - Goods allowed to be released with direction.

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• 2016 (6) TMI 954
  Recovery of redemption fine from the petitioner - confiscate the goods of 22 bales which could not be located and seized - petitioners submitted that the initial action of the show cause notice was against 10 persons and since the petitioner himself was not the ultimate importer, atleast, the issue of redemption of fine cannot be proposed against him. - Held that:- Neither in the body of the show cause notice, nor in the ultimate proposal noted above, there is anything to suggest that the petitioner trust was called upon to state why for non-availability of the goods for confiscation, redemption fine should not be imposed. There was no indication that the petitioner trust is liable to pay the fine of Rs. 7.25 lacs in lieu of confiscation. In absence of any proposal in the show cause notice for imposition of fine in lieu of confiscation relatable to the petitioner and in absence of any directions contained in the order-inoriginal that such fine would be borne by the petitioner, it was simply not open for the department to seek recovery thereof from the petitioner. - Decided in favor of petitioner.

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• 2016 (6) TMI 953
  Request for release of goods - valuation - import of Black Wire Rice Light from China - After the payment of duty, the petitioner was informed by the respondents that the goods have to be examined by the Investigating Agencies due to an unanimous letter received with regard to declaration of the goods. Thereafter, the SIIB Officers along with other Investigating Agencies Officers wanted to examine the goods and the container was opened and de-stuffed fully and examined more than twice by damaging all the cartons and found nothing more than what was declared by the petitioner with regard to quantity and description. Held that:- the goods detained by the respondents can be released to the petitioner on payment of differential duty of Rs. 6,73,803/-. The learned counsel for the petitioner submitted that liberty may be given to the petitioner to challenge the levy of differential duty and also the release of the goods before the second respondent in accordance with law. In view of the submissions made by the learned counsel for the petitioner, I give liberty to the petitioner to challenge the differential duty levied by the respondents and also give liberty to the petitioner to challenge the detention of goods by the respondents in accordance with law. - Decided partly in favor of assessee.

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• 2016 (6) TMI 952
  Claim of refund of export duty paid where goods could not be exported - Period of limitation - even though on payment of export duty, the Let Export Order (LEO) was received on 09.12.2011, but since they were not able to get any buyer, the shipment was delayed and they requested for cancellation of the shipping bill and for permission to file fresh shipping bill to export their goods. It is his contention that the shipping bill was allowed to be cancelled only on 23.01.2013 and they had filed the refund claim on 10.05.2013. Held that:- A plain reading of the aforesaid provision reveals that the period of limitation starts from the date of payment of duty. Exceptions are mentioned in the said provision viz. duty paid under protest, duty paid during provisional assessment, etc. In the present case, the duty has been finally assessed and paid by the Appellant following self assessment procedure on 05.12.2011 and Let Export Order was issued thereafter. Therefore, in view of the principle laid down by the Hon'ble Calcutta High Court in the case of Vedanta Ltd (2016 (5) TMI 437 - CALCUTTA HIGH COURT), the period of limitation would start from the date of payment of duty i.e. 05.12.2011. Consequently, in our view, the refund claim filed by the Appellant on 10.05.2013 is beyond the time limit prescribed under Section 27 of the Customs Act, 1962 hence barred by limitation. - Decided against the assessee.

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• 2016 (6) TMI 951
  Claim of interest on delayed refund of additional duty of customs - Held that:- the notification flowing from the law gets its colour as legislation - the learned AR having no materials in his hand to examine whether there was a delay or not, the matter is remanded to the adjudicating authority to examine the delay chart filed by the appellant and going through the judgment of Hon’ble High Court Delhi as well as Hon’ble High Court of Madras shall pass appropriate order. It is needless to mention that the appellant is entitled to reasonable opportunity of being heard. - Matter remanded back.

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• Central Excise

• 2016 (6) TMI 957
  Demand of differential duty of excise - admissibility of statement recorded u/s 14 as evidence - flagrant violation of Section 9D of the Central Excise Act, 1944 - Held that:- Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. - Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 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 Show Cause Notice issued to the petitioner is remanded to respondent no.2 for adjudication de-novo by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial Authorities in this regard including the principles of natural justice - matter remanded back - Decided in favor of assessee.

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• 2016 (6) TMI 956
  Demand of duty based on statement recorded u/s 14 of the Central Excise Act, 1944 - flagrant violation of Section 9D by relying upon statements without admitting them in evidence by following the prescribed procedure contained therein. - Held that:- In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. - , respondent no. 2 is directed to adjudicate the Show Cause Notice issued to the writ petitioners by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial authorities in this regard, including the principles of natural justice. - Matter remanded back.

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• CST, VAT & Sales Tax

• 2016 (6) TMI 950
  Demand of Sales Tax / VAT - Whether sale to Bombay High was an export - contract with ONGC for the commission of turnkey projects at Bombay High which is situated in exclusive economic zone of the coast of India. - Held that:- The Tribunal followed the decision of the Division Bench of this Court in the case of Larsen and Toubro Ltd. vs. Union of India and others [2014 (7) TMI 277 - GUJARAT HIGH COURT] - transaction of works contract with ONGC is an export sale not liable to CST. - Decided against the revenue.

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• 2016 (6) TMI 949
  Waiver of pre-deposit - Input Tax Credit - genuineness of purchases - GVAT - Held that:- Tribunal while passing impugned order has required the appellant to deposit a sum of Rs. 1.02 crores. The apellant had first approached the Appellate Authority who had also dismissed the appeal on pre-deposit and not on merits. Considering such factsand other relevant aspects of the matter, we find that pre-deposit requirement of more than Rs. 1.02 crores is excessive. - the appellant has already deposited Rs. 25,00,000/- before the Government. - The appellant company is directed to deposit an amount of Rs. 50 lacs with the department within a period of six weeks from today and upon such deposit, the Deputy Commissioner, Commercial Tax is directed to hear and dispose of the appeal of the appellant on its own merits - Decided partly in favor of appellant.

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• 2016 (6) TMI 948
  Challenge to the revised assessment orders pursuant to Audit Inspection - TNVAT - no opportunity was granted to the petitioner - revision of the turnover and re-determination of the taxable turnover on grounds not pointed out in the show cause notices - Held that:- It has to be pointed out that in the show cause notices, though there was a proposal to disallow and assess the related documents at appropriate rates, there was no specific direction for production for records which were referred to in the impugned order. In any event, the petitioner sought for time to produce the records and their definite plea is that their turnover is below the turnover prescribed under the Act and they have not collected tax or availed input tax as contemplated under the Act and they have not effected any inter-state purchase. That apart, the specific request made by the petitioner for an opportunity of personal hearing, has also not been granted. This amounts to violation of the Circular issued by the Commissioner - Matter remanded back. - Decided in favor of assessee.

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• 2016 (6) TMI 947
  Input tax credit - TNVAT - non-filing of return by the selling dealer - challenge to the proceedings initiated by the AO where the Input Tax Credit (ITC) availed by the petitioner, has been reversed, on the ground that, it is in excess of what the petitioner is entitled to avail - Held that:- The ratio deducible from the decisions are that, ITC shall not be disallowed for the reasons that the seller had not been assessed, since the selling dealer has not filed returns. - Section 19 (1) states that input-tax credit can be claimed by a registered dealer, if he establishes that the tax due on such purchase has been paid by him in the manner prescribed and that was accepted at the time when the self-assessment was made. The pre-revision notices and the orders clearly stated that the petitioner-dealer had paid the tax to the selling dealer. If that be the case, it was held that the petitioner's case therein squarely fell under the proviso to Section 19 (1) of the Act. The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made. - Decided in favor of assessee.

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• 2016 (6) TMI 946
  Input Tax Credit - purchases from the unregistered dealers - UP VAT - production of genuine duty paying documents - alternative remedy - Held that:- when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory remedy. - In the instant case the petitioner has a statutory and efficacious alternative remedy of filing an appeal under Section 55 of the VAT Act against the order of assessment in which all the reliefs can be granted to the petitioner as have been sought in this petition. - Decided against the petitioner.

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• 2016 (6) TMI 945
  Challenge to the show cause notice demanding VAT on sale of STB (set-top boxes) - KVAT - providing an opportunity of hearing - It was contended that there was no violation of the provisions contained in the Act, particularly Section 74 and that petitioner never sold any of the set-top boxes as alleged and therefore they were not liable to pay any tax. - Held that:- No demand notice nor any coercive steps has been initiated pursuant to the notice issued. The endorsement issued makes it clear that petitioner has been given time to file reply. Therefore, direction issued by the Deputy Commissioner calling upon the petitioner to discharge tax liability has to be read-down as a notice and the endorsement Annexure-D shall be treated as pure show-cause notice calling upon the petitioner to submit its reply. Petitioner is given three weeks’ time from today to file detailed objection regarding the jurisdiction and competence of the Deputy Commissioner to make such an assessment or to issue such a show-cause notice. - Decided partly in favor of petitioner.

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• 2016 (5) TMI 1274
  Input tax credit - proposal to revise the audit assessment order and disallow input tax credit on the ground that the registration certificate of M/s. Om Incorporation, who was one of the vendors of the petitioner, had been cancelled with retrospective effect. - Held that:- input tax credit cannot be denied to a party in the absence of the Department having established that the transactions in question are not genuine or that they are bogus etc. In the facts of the present case as emerging from the record, no such material has been brought on record by the respondent. In the facts of the present case, the revisional authority had initiated the revision proceedings by calling upon the petitioner to show-cause as to why the input tax credit on the purchases made by it from M/s. Om Incorporation for the period after 1st January, 2007 should not be disallowed. The petitioner, at no point of time, was called upon to establish the genuineness of such transactions or to produce any documentary evidence in support of such transactions. In the facts of the present case, when the authorities below have not called upon the petitioner to establish the genuineness of the transactions, in the opinion of this court, the Tribunal was not justified in brushing aside the documentary evidence produced by the petitioner by stating that the same had been subsequently created - Credit cannot be denied - Decided in favor of assessee.

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