TMI Tax Updates - e-Newsletter
June 29, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

TMI SMS

• Independence of Tax Auditor - New Rule 51A to prohibit an Auditor (CA) to have business relationship with the client other than specified

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Articles

1. How to make new section 76 and 78 attractive?

   By: vasudevan unnikrishnan

News

1. Updated FAQs on Non-Banking Financial Companies (NBFCs) (as on April 10, 2015)

Notifications

DGFT

1. 13/2015-2020 - dated 26-6-2015 - FTP

Export Policy of Onions- Increase in Minimum Export Price (MEP) till US$ 425 F.O.B. per Metric Ton.

Income Tax

2. 50/2015 - dated 24-6-2015 - IT

Independent Tax Auditor - Rule 51A Notified by the CBDT to prohibit an Auditor (Chartered Accountant) to have business relationship with the client other than those specified in the Rule.

Law of Competition

3. F. No. 5/41/2014-CS - dated 4-6-2015 - Competition Law

Competition Commission of India (salary, allowances, other terms and conditions of service of the Secretary and officers and other employees of the Commission and the number of such officers and other employees) Amendment Rules, 2015

Circulars / Instructions / Orders

Customs

1. F.No.609/31/2015-DBK - dated 28-4-2015

Constitution of Committee for formulation of All Industry Rates of Duty Drawback for the year 2015- reg.

Highlights / Catch Notes

Income Tax

• Penalty u/s 271(1)(c) Overturned: No Inaccurate Income Statement by Taxpayer After Deduction Withdrawal.

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessee withdrew its claim of deduction us/ 80IB of the Act before initiation of assessment proceedings - we disagree with the conclusion of the AO that the assessee had furnished either inaccurate particulars of income or submitted wrong statement of its income - AT
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• Tax Authorities Reject Books, Estimate Income Ad Hoc for Assessee Accused of Accommodation Entries.

  Case-Laws - AT : Estimation of income - rejection of books of accounts - income earned by the assessee by indulging in providing accommodation entries of purchase and sale of goods - some expenses on the basis of reasonableness being the essence of any assessment, on an ad hoc, estimate basis allowed - AT
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• Registered Sale Deed is Key in Calculating Capital Gains for Co-Owners, Ensures Accurate Property Documentation.

  Case-Laws - AT : Computation of capital gains - co-owners - Registered sale deed to be a more authentic document evidencing the details of the property transferred with the relevant khasra nos. etc. - It is impermissible to take full value of consideration for the higher area and cost of acquisition for the lesser area - AT
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• Deemed Dividend Issue u/s 2(22)(e) of Income Tax Act: Shareholder Can Challenge Direction for Addition.

  Case-Laws - AT : Deemed dividend u/s.2(22)(e) - The shareholder against whom the direction has been issued for addition is not before us in appeal. If the shareholder feels that the impugned direction is illegal or unjustified, the legal recourse is available to him under the Act. - AT
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• Company's Closing Stock Undervalued Due to Exclusion of Job Work Charges, Leading to Suppressed Stock Value.

  Case-Laws - AT : Addition made on account of undervaluation of closing stock - cost of job work charges have not been included - thus the closing stock of the assessee company is suppressed - AT
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• Mutual Associations Cannot Claim Tax Exemption on Interest Income Under the Principle of Mutuality.

  Case-Laws - AT : Exemption from payment of income tax on interest earned - the concept of mutuality shall not be extended to the interest incomes earned by a mutual association or a society. - AT
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• No Penalty for Bona Fide Belief in Agricultural Land Claim u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - when the assessee made a claim on the bona fide belief that the subject land was an agricultural land, merely because the same was rejected, that cannot be a reason to levy penalty - AT
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• New Rule 51A Bars Chartered Accountants from Business Ties with Clients to Ensure Auditor Independence and Integrity.

  Notifications : Independence of Tax Auditor - Rule 51A Notified by the CBDT to prohibit an Auditor (Chartered Accountant) to have business relationship with the client other than those specified in the Rule - Notification
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Customs

• Appellants' Scheme to Evade Anti-Dumping Duties by Splitting CFL Consignments Deemed Fraudulent.

  Case-Laws - AT : Levy of anti dumping duty - the appellants intended to import complete CFL and they deliberately played a subterfuge to split the consignments and importing them under different consignments or through different ports. Such action on the part of the appellants is a fraud perpetrated on the exchequer - AT
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• Judicial Process in Customs Law: Internal Disagreement Among Members on Handling Parties' Contentions Based on Facts.

  Case-Laws - HC : Rectification of mistake - We are not impressed by the attitude of one Member finding fault with the other while dealing with the contentions of the parties and essentially on facts. - HC
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Corporate Law

• Court Considers Winding-Up Application Despite Respondent's Admission of Debt and Ongoing Arbitration Proceedings.

  Case-Laws - HC : Application for winding up - Default in repayment of debt - respondent has admitted its liability to pay the bills - the mere pendency of arbitration proceedings does not constitute a ground to reject the petition for winding up - HC
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Service Tax

• Refund Claim for Service Tax on Sub-Lease Rejected; No Need for Exact Input-Output Service Correlation.

  Case-Laws - AT : Rejection of refund claim - Claim for refund of service tax of renting of immovable properties taken on sub-lease - there is no requirement of a precise or a one-to-one correlation between an input service leading to an output service. - AT
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• Refund Granted Despite Missing Export Invoice Details in Lorry Receipts Under Notification 14/07-ST; Connection Established Successfully.

  Case-Laws - AT : GTA services - export of goods - Notification 14/07-ST - export invoice details could not be mentioned in respective lorry receipts. However, they are in a position to establish the link between the lorry receipt and the respective export invoices - refund allowed - AT
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• Court Reviews Service Tax Implications on City Construction Services, Including Rentals and Club Memberships; Appeal Lacks Merit.

  Case-Laws - AT : Construction of city - Services rendered for providing preferential location, "club or association service", "renting of immovable property service" and "short term accommodation service - prima facie appellant has no merit - AT
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• Appellant Granted Penalty Waiver After Paying Tax and Interest u/s 73(3) of the Finance Act, 1994.

  Case-Laws - AT : Levy of penalty - appellant realizing its liability, on being so pointed out by the Revenue, have deposited the admitted tax along with interest - appellant is entitled to benefit under Section 73(3) of the Finance Act, 1994 - penalty waived - AT
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Central Excise

• Appellant Qualifies for Duty Remission Due to Fire Destruction; Accidents Recognized as Unintentional and Naturally Occurring.

  Case-Laws - AT : Remission of duty - Destruction due to fire - it is well settled that nobody intentionally invites such accidents and they happen on account of various natural causes - appellant is eligible for claim of remission of duty - AT
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• ONGC Sub-contractors in Petroleum Ops Can Avail Tax Exemption Without Directorate Certification Under Notification No. 6/06-CE.

  Case-Laws - AT : Exemption to goods required for petroleum operations of ONGC - Benefit of Notification No. 6/06-CE - production of a prescribed certificate for Directorate General of Hydro Carbons is not applicable to the sub-contractors who are domestic manufacturers - AT
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Case Laws:

• Income Tax

• 2015 (6) TMI 873
  Deemed dividend - Common shareholders having substantial interest - Held that:- In the case of Hon’ble Bombay High Court in the case of CIT Vs. Impact Containers Pvt. Ltd. and others [2014 (9) TMI 88 - BOMBAY HIGH COURT], it was held that since assessee company is not a share holder of the lender company, the addition in the hands of the assessee is not called for and therefore, is liable to be deleted. Accordingly we delete this addition in the hands of the assessee. However, we have gone through the decision of Hon’ble Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT ] , as this decision of Hon’ble Delhi High Court has been concurred with by the Hon’ble Bombay High Court. In the case of CIT Vs. Ankitech Pvt. Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT ] , their Lordships have observed that since the conditions stipulated in section 2(22)(e) of the Act treating the loan and advances as deemed dividend are establish in such cases, therefore it would always be open to the revenue to take corrective measure by treating this dividend income at the hands of the share holders and tax them accordingly. As otherwise it would amount to escapement of income at the hands of those shareholders. - Decided in favour of assessee with observations in above para.

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• 2015 (6) TMI 856
  Eligibility to claim exemption u/s 11 denied - assessee has advanced a sum of Rs. 47.71 lakhs to a sister-Trust so diverted by the assessee is liable to be taxed as income of the assessee as held by AO - Held that:- the assessing officer has failed to refer to any of the provisions of the Act, under which he is forming such an opinion, i.e., he has not shown as to how the assessee has violated any of the provisions of the Act, which would warrant rejection of claim of exemption made u/s 10(23C)(iiiad) of the Act. On the contrary, the contention of the assessee is that the amount so advanced to another educational institution falls within its object of the assessee society. The said contention of Ld A.R could not be rebutted by the revenue. Hence the said reasoning given by the assessing officer also fails. Thus the assessing officer has brought to tax the amount of Rs. 47,71,058/- in the hands of the assessee without the authority of law. Accordingly, we are of the view that the Ld CIT(Appeals) was not justified in confirming the assessment of the above said amount. Hence, we are unable to sustain the order of Ld CIT(Appeals) on this issue. Accordingly, we set aside the order of Ld CIT(Appeals) and direct the Assessing Officer to delete the assessment of Rs. 47,71,058/- referred above. - Decided in favour of assessee.

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• 2015 (6) TMI 855
  Reopening of assessment - disallowance under Section 14A - Held that:- In the present case the reasons for re-opening indicate that the re-opening has been initiated on two grounds namely disallowance u/s. 14A and on account of non addition of FBT to determine the book profit for the purpose of computing tax u/s. 115JB. With respect to the disallowance u/s. 14A we find that A.O at para 5 of the original assessment order passed on 26.12.2008 after considering the submissions of the Assessee had come to the conclusion that as against nil expenses said to have been incurred by Assessee and therefore no disallowance u/s. 14A, A.O worked out the disallowance u/s. 14A at Rs. 1.43 crores. Thus it can be seen that the A.O in the course of original proceedings and on the basis of submissions made by the Assessee had formed an opinion about the disallowance to be made u/s. 14A and had accordingly made the disallowance and in such a situation the reopening on account of disallowance u/s. 14A would be in our view a case of change of opinion. With respect to the addition of FBT to book profit, we find that CBDT in Circular No. 8/05 dated 29.08.2005 has opined that FBT is allowable deduction in computation of book profit u/s. 115JB and in such a situation in the present case, it cannot be said that the assessee’s action in not adding the FBT to book profit has resulted into escapement of income. Further, before us Revenue has not brought any material on record to demonstrate that the aforesaid Circular issued by CBDT has been withdrawn by the appropriate authorities. Thus in the present case, the re-opening is not permissible as per law. - Decided in favour of assessee.

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• 2015 (6) TMI 854
  Disallowance 40(a)(ia) - non-deduction of TDS - whether the appellant assessee could make a claim for deduction other than by filing a revised return? - Held that:- From the decision of Hon'ble Supreme Court in the case of Goetez (India) Ltd.,[2006 (3) TMI 75 - SUPREME Court] it is clear that the deduction can be made before AO by way of revised return and not otherwise but this does not apply to the powers of Income Tax Appellate Tribunal u/s. 254 of the Act as is clarified by Hon'ble Apex Court in this very judgment. Hence, on the facts of the present case before us the assessee's claim is legally sustainable on facts of the case and now we direct the AO to allow the same but after verification of dates of payments of TDS. - Decided in favour of assessee.

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• 2015 (6) TMI 853
  Penalty u/s 271(1)(c) - assessee accepted that he had furnished inaccurate particulars of income u/s 80IB of the Act and withdraw the claim - Held that:- The assessee has withdrawn its claim of deduction filed u/s 80IB of the Act at the very outset of assessment proceedings prior to issuance of notice u/s 142(1) of the Act and the reason as explained by the assessee was that their claim was valid but as they are not in possession of excise certificate indicating date of commencement of business, therefore, they agreed for addition in this regard. As relying on CIT vs Reliance Petroproducts Ltd.(2010 (3) TMI 80 - SUPREME COURT) wherein their Lordships held that merely because the claim of the assessee was not accepted or not found to be acceptable by the revenue authorities, that by itself would not attract penalty u/s 271(1)(c) of the Act. In the present case, we disagree with the conclusion of the AO that the assessee had furnished either inaccurate particulars of income or submitted wrong statement of its income during assessment proceedings and as we have noted above the assessee withdrew its claim of deduction us/ 80IB of the Act before initiation of assessment proceedings. Therefore, we approve the conclusion of the CIT(A) deleting the penalty - Decided in favour of assessee.

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• 2015 (6) TMI 852
  Revision u/s 263 - CIT(A) direction to AO to recompute the deduction allowable under S.10B, after excluding other income from the profit of the business - Held that:- In the present case, the other income in the question earned by the assessee was treated by the Assessing Officer as business income of the assessee and this position is not disputed even by the learned Commissioner in his impugned order passed under S.263. This being so and keeping in view the ratio of the judicial pronouncements discussed in Sterling Foods (1999 (4) TMI 1 - SUPREME Court ), Mysodet (P) Ltd. V/s. CIT [2008 (9) TMI 7 - SUPREME COURT ] & Maral Overseas Ltd [2012 (4) TMI 345 - ITAT INDORE] we hold that the other income in question received by the assessee, which was assessed to tax under the head 'profits and gains of business or profession', is not liable to be excluded from the profits of the business of the eligible undertaking for the purposes of computing deduction under S10B of the Act, as per the formula given in sub-section (4) of that section. There was thus no error in the order of the Assessing Officer passed under S.143(3) on this issue, as alleged by the learned Commissioner, calling for any revision under S.263. We, therefore, set aside the impugned order of the learned Commissioner of Income-tax passed under S.263 and restore that of the Assessing Officer. - Decided in favour of assessee.

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• 2015 (6) TMI 851
  Reopening of assessment - while calculating deduction allowable under section 80HHC the turnover of 80IB unit was not included which resulted into under assessment of income - Held that:- Since we have upheld that the first contention that the total turnover would include turnover of 80IB unit, hence, the AO had reasons to believe that the income of the assessee had escaped assessment, hence, reopening of the assessment is held to be valid. - Decided against assessee. Reducing the receipts of DEPB from deduction claimed under section 80IB - computation of deduction under section 80HHC and chargeability of income in relation to export incentives received by the assessee in the form of DEPB - Held that:- The cost of customs duty is neutralized under the DEPB scheme, by granting a duty credit against the export product and this credit can be utilised for paying customs duty on any item which is freely importable. DEPB is 'cash assistance' receivable by a person against exports under the scheme of the Government of India and falls under Section 28(iiib) of the Act. Accordingly, DEPB is chargeable to income tax under the head 'Profits and Gains of Business or Profession' even before it is transferred by the taxpayer. Under Section 28(iiid) of the Act, any profit on transfer of DEPB is chargeable to income tax under the head 'Profits and Gains of Business or Profession' as an item separate from cash assistance under Section 28(iiib) of the Act. The face value of the DEPB will fall under Section 28(iiib) of the Act, the difference between the sale value and the face value of the DEPB will fall under Section 28(iiid) of the Act. The cost of acquiring DEPB is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB which accrues to a person against exports has a cost element in it. Accordingly, we direct the Assessing Officer to make assessment a fresh on this issue in view of the law laid down by Hon'ble Bombay High Court in the case of Vijaya Silk House (2012 (9) TMI 263 - BOMBAY HIGH COURT ) and further, if need be, as per the law laid down by Hon'ble Supreme Court in the case of Topman Exports (2012 (2) TMI 100 - SUPREME COURT OF INDIA ). - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 850
  Disallowance of sales-tax liability u/s.43B - CIT(A) deleted the disallowance - Held that:- Ministry of Law has opined that if the State Governments make an amendment in the Sales Tax Act to the effect the sales tax deferred under the scheme shall be treated as actually paid, such a deeming provision will meet the requirements of section 43B. This circular has been explained by the Tribunal in the case of Morvi Horologial Industries v. ITO (1990 (9) TMI 121 - ITAT AHMEDABAD-C), CIT v. K.N.Oil Industries (1996 (7) TMI 101 - MADHYA PRADESH High Court) and CIT v. Gujarat Polyerete Pvt. Ltd. (1999 (3) TMI 17 - SUPREME Court) Reading of these decisions suggests that provisions of Circular No.496 would apply only if a State Government had amended its Sales Tax Act to provide that the sales tax that the deferred under an incentive scheme framed by it would be treated as actually paid, so as to meet the requirements of section 43B of the Income-tax Act. The facts undisputed are that the assessee is having manufacturing unit in Karnataka. Karanataka Government had amended the Sales Tax Act for providing deferment of the Sales Tax liability and to treat the said sales tax collected as loan for use of the assessee Company, CIT(A) is perfectly justified in deleting the addition on account of deferment of sales tax. - Decided against revenue.

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• 2015 (6) TMI 849
  Challenge to the re-opening of assessment - Held that:- In the present case, on examination of the reasons given for reopening of the impugned assessment, the allegation of the AO was not that the assessee had not made true and complete disclosure or that the AO had come across certain material facts which were not filed at the time of filing of the return. But the reason assigned was that there was wrong claim of cost of acquisition in respect of the Long Term Capital Gain disclosed by the assessee. Due to this distinction, the decision of Sun Pharmaceuticals Industries [2012 (10) TMI 403 - Gujarat High Court] is not applicable on the facts of this appeal. Same ratio of judgments of Vipin Kumar P. Khandcliya [2013 (1) TMI 19 - GUJARAT HIGH COURT] and Dish man Pharmaceuticals and Chemicals [2012 (9) TMI 58 - Gujarat High Court] are not applicable here. Since the reopening of the assessment itself held as bad in law, therefore, rest of the grounds on merits need not to be adjudicated upon. - Decided partly in favour of assessee.

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• 2015 (6) TMI 848
  Bogus capital gain returned - CIT(A) charged the same as unexplained cash credit on the grounds that the capital gains the appellant neither satisfactorily explained the purchases of shares nor the sales thereof - Held that:- We first agree with the submissions of the DR that since the assessee changed his stand from LTCG to normal gain in itself would amount to incriminating. This is so, because, the assessee was forced to change his statement and claim in the return, after the search. This can only mean that what has been claimed in the ROI was not the complete truth. In such a circumstance, we reject the additional ground. Coming to the original GOA, though we appreciate the amount of spade work that the revenue authorities did to come to certain conclusion, but on the other hand, nowhere in either of revenue authorities orders, do we find the negation of the details and evidences filed by the assessee, so that the revenue authorities could clinch the initiative. We find that the certificates of brokers, i.e. Action Financial Services (India) Ltd. and District Securities Pvt. Ltd. along with complete details have not been considered in completeness. We find that the references were made, to those documents, which were at the disadvantage to the assessee.In such a circumstance, we are of the opinion that the case needs fresh adjudication. - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 847
  Reopening of the assessment u/s. 147 - addition being interest income accrued on fixed deposits and addition being expenditure on capital spares consumed being capital in nature - Held that:- AO has no fresh material to form his opinion regarding escapement of assessment and he has also ot found any tangible material to record the reasons for reopening of the assessment of the assessee. It is merely a change of opinion which is not permissible under the law as well as according to the various decisions rendered by the Hon’ble Supreme Court of India in the case of CIT vs. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] and in the case of CIT vs. Foramer France (2003 (1) TMI 101 - SUPREME Court) and Sita World Travels (India) Ltd. vs. CIT (2004 (5) TMI 23 - DELHI High Court ) - Decided in favour of assessee.

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• 2015 (6) TMI 846
  Undervaluation of shares - CIT(A) deleted addition out of short term capital gains on sale of 17500 shares Minda HUF Ltd. on the ground that the difference cannot be brought to tax unless. there is documentary evidence that there has been understatement of consideration - adoption of fair value of shares of Minda HUF Ltd. against the sale consideration - Held that:-CIT(A) decided the issue in dispute by respectfully following the order in the case of CIT v. Sivakami Co. P. Ltd. [1986 (3) TMI 2 - SUPREME Court] and has rightly held that in the case of the assessee, the Revenue has made no attempt to establish that there was any understatement though it might be that shares were sold at an under value. He has also held that even if for the sake of argument, it is accepted that market price of the assessee was different from the sale consideration, the difference cannot be brought to tax unless there is documentary evidence that there has been understatement of consideration. - Decided in favour of assessee.

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• 2015 (6) TMI 845
  Estimation of income - rejection of books of accounts - income earned by the assessee by indulging in providing accommodation entries of purchase and sale of goods - CIT(A) has confirmed the assessment at 1% of the aggregate of the purchase and sales for the year - Held that:- The assessee has, apart from making bald statements, not advanced any material or set up any case to exhibit or show that the estimation at 1% of the aggregate of purchases and sales for the year is not reasonable or is excessive, which, for the foregoing reasons, we find it as not. We are conscious that the assessee has shown to have been allowed quality rebate by its supplier/s, effectively reducing the trading loss claimed by it. That, however, would have no bearing or impact in-as-much as the loss or its quantum is not in issue; the quality rebate being not a factor for VAT credit. Rather, the assessee stands to gain directly, i.e., to the extent of VAT credit, in case of ‘loss’ in-as-much as its stands to be allowed credit on its purchases, which are therefore higher than the sale value, on which VAT credit would stand to be passed on by it, and which also explains, or perhaps so, the reason for the unsubstantiated and unexplained trading loss being regularly booked by the assessee in its’ accounts. Finally, as regards the assessee’s plea for being allowed expenses some expenses would inevitably be incurred, we consider it proper that the same be allowed; reasonableness being the essence of any assessment, on an ad hoc, estimate basis, at Rs. 1 lac and Rs. 1.20 lacs for A.Y. 2007-08 and 2009-10 respectively, so as to cover all sundry expenses that may be incurred in the activity of raising bills. Before parting, we may also add that the assessee’s assessment u/s.23(5) of MVAT, 2002 dated 22.03.2013 for the financial year 2008-09 (copy of the order on record, at PB pgs. 3-7) shows the assessment of tax payable under the said Act at Rs. 15,98,735/-. The same, though allowable, being a tax, its deductibility would be subject to section 43B. - Decided partly in favour of assessee.

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• 2015 (6) TMI 844
  Computation of capital gains - co-owners - Addition on account of cost of improvement - CIT(A) deleted addition - Held that:- On the transfer of his 1/5th share in the total area of land, what the assessee actually transferred was not only the lesser area under his exclusive ownership, but also the common area on which he had joint ownership rights. Sale consideration amounting to Rs. 27 crore received by the assessee is in respect of higher area of 44 Bighas, 15 Biswas and 4 Biswans. It is not the case of the Revenue that the assessee transferred his entire 1/5th share in the agricultural land and received Rs. 27 crore in respect of lesser area and some other amount of consideration for the remaining area which was commonly used. When there is a sale of the assessee’s 1/5th share in total land area covering both the exclusive ownership/possession as well as the joint ownership/possession, the cost should also be taken for the both, including that of joint ownership. It is impermissible to take full value of consideration for the higher area and cost of acquisition for the lesser area. Insofar as the mention of a lesser area in the Registered valuer’s report and Court decree is concerned, we find the Registered sale deed to be a more authentic document evidencing the details of the property transferred with the relevant khasra nos. etc. We, therefore, prefer to go with the Registered sale deed in preference to the other documents in so far as the question of determining the assessee’s share in land is concerned. If we so proceed by taking the higher area of the land transferred, the assessee’s claim for deduction for increase in the indexed cost of acquisition by a further sum of Rs. 38.76 lac merits acceptance. We countenance the impugned order on this issue - Decided against revenue.

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• 2015 (6) TMI 843
  Validity of assessment u/s 143 - whether notice u/s 143(2) having been served beyond the limitation period? - Held that:- Since notice under section 143(2) of the Act was not validly issued upon the assessee within the prescribed period, the Assessing Officer could not assume jurisdiction to frame the assessment under section 143(3) of the Act. Therefore, the assessment framed consequent to the invalid assumption of jurisdiction is not sustainable in the eyes of law. We accordingly annul the assessment and delete the additions made by the Assessing Officer - Decided in favour of assessee.

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• 2015 (6) TMI 842
  Disallowance made on account of bad debt written off account - CIT(A) allowed part claim - Held that:- No infirmity in the order of the ld.CIT(A) as he has given a finding on fact that the condition has envisaged u/s.36(1)(vii) of the Act is not complied with by the assessee and the finding of the ld.CIT(A) on fact is not controverted by the assessee by placing any material contrary on record suggesting that the conditions for ‘writing off’ has been fulfilled. Therefore, in our considered view, the judgement of of TRF Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT) as relied upon by the ld.counsel for the assessee would not help to the assessee. Under these facts, we see no reason to take a different view than taken by the ld.CIT(A). - Decided against assessee.

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• 2015 (6) TMI 841
  Addition u/s 68 - Held that:- The assessee deposited cash totaling Rs. 2,55,000/- in her bank account, which she claims to be out of her savings and also partly out of agricultural produce. Our attention was drawn to the cash flow statement furnished by the assessee in which, even the expenditure relating to agricultural activities was debited. In the totality of the above said facts and circumstances, we delete the addition of Rs. 2,55,000/- being the amount raised by the assessee from her savings and partly out of agricultural proceeds. Accordingly, we direct the Assessing Officer to delete the addition of Rs. 2,55,000/- made under section 68 of the Act. - Decided in favour of assessee. Indexation of the cost of acquisition of the assets sold - Held that:- he contention of the assessee was that it had initially purchased the land along with a small built up area in financial year 1999-2000 and had constructed building in financial year 1995-96. We find that the necessary details in this regard are not available on record and hence, it needs to be verified. Accordingly, we direct the Assessing Officer to carry out the verification exercise and compute the long term capital gain by adopting the cost of acquisition relatable to the acquisition i.e. the cost of land with built up area in financial year 1999-2000 and the additional cost of construction in the financial year 1995-96. - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 840
  Depreciation on computer peripherals and accessories - 60% or 25% - Held that:- The issue has been settled by the Hon'ble Delhi Tribunal in the case of Expeditors International India (P) Ltd. vs Addl. CIT [2008 (8) TMI 399 - ITAT DELHI-F ], wherein it has been held that the peripherals such as printers, scanners, NT server, etc. form integral part of the computer and the same, therefore, are eligible for depreciation at a higher rate as applicable to a computer @ 60%.- Decided in favour of assessee. Expenses incurred on advertisement - Treated as capital in nature by AO being 30% of Rs. 26,56,245/- as it would give enduring benefit to the assessee - CIT(A) deleted the disallowance - Held that:- There was no infirmity in the order of the CIT(A), who relied on the ratios laid down by the Hon’ble Supreme Court in the cases of Empire Jute Co. Ltd. vs CIT [1980 (5) TMI 1 - SUPREME Court] and Alembic Chemicals Works Company Ltd. vs CIT, [1989 (3) TMI 5 - SUPREME Court] - Decided in favour of assessee.

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• 2015 (6) TMI 839
  Penalty u/s 271(1)(c) - disallowance of alleged fictitious payment of commission to various persons - Held that:- , it cannot be conclusively said that the employees of the assessee-company had arranged such accommodation entry and assessee was in dark up to the time when A.O. cornered the assessee. Rather the assessee was trying to justify by falling uncorroborated confirmations. Even if it is presumed that these employees were involved for such a bogus claim of fictitious payments, then the assessee was very well aware much before the scrutiny proceedings and at that time it should have come with a clean hand before the department. Under these facts and circumstances, we hold that the levy of penalty on the disallowance of Rs. 11 lakh has rightly been confirmed by the CIT(A). However it is noted that the A.O. has levied penalty of more than 200% of the tax sought to be evaded which in our opinion should be restricted to 100%. Accordingly, we hold that penalty should be levied at 100% of the tax sought to be evaded, which comes to Rs. 3,70,260. Thus, the penalty is reduced from Rs. 7,50,000 to Rs. 3,70,260 - Decided partly in favour of assessee.

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• 2015 (6) TMI 838
  Jurisdiction of the Assessing Officer under Section 153A - addition on deemed dividend u/s 2(22)(e) - Held that:- On the facts of the case, as pointed out by the learned CIT(A), the details of loans / advances were not directly reflected in the assessee's individual books of accounts and therefore it can be inferred that this issue came to light only pursuant to search action and therefore it is not incorrect to state that this issue came to light/arose on account of the search action under Section 132 of the Act. In this view of the matter, respectfully following the decision of the Hon'ble Karnataka High Court in the case of Canara Housing Development Co. (2014 (8) TMI 642 - KARNATAKA HIGH COURT), we concur with and uphold the finding of the CIT(A) that the Assessing Officer had validly invoked the jurisdiction under Section 153A of the Act. - Decided in favour of revenue. Addition towards Deemed Dividend - Held that:- In terms of section 2(22) (e) of the Act, dividend includes any payment by a company of any sum by way of advance or loan to a shareholder; being a person who is the beneficial owner of shareholding of not less than 10% of the voting power or to any concern in which such shareholder is a member / partner and in which he has a substantial interest or any payment by any such company on behalf of any such shareholder. A plain reading of this section would seem to indicate that the payment of loan / advance should be to the shareholder, to come under the purview of deemed dividend. From the shareholding pattern, as recorded in the order of assessment, it appears that CPIPL is not a shareholder of CPPL. It is not clear as to how the Assessing Officer determined the applicability of the provisions of section 2(22) (e) of the Act to the facts of the case on hand. Also if additional evidence submitted to substantiate the assessee’s claim, it would be in the interest of equity and justice if the additional evidence is admitted and adjudicated, particularly when the addition is made because the assessee did not submit evidence to substantiate his claim. Thus we deem it fit to remand the matter back to the file of the Assessing Officer for de novo examination of this issue - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 837
  Disallowance of bad debts - whether Sundry Credit/Debit balance written off accounts instead of the account “Bad Debts Written Off”? - Held that:- We do not find any infirmity in the order of the ld.CIT(A) as he has given a finding on fact that the condition has envisaged u/s.36(1)(vii) of the Act is not complied with by the assessee and the finding of the ld.CIT(A) on fact is not controverted by the assessee by placing any material contrary on record suggesting that the conditions for ‘writing off’ has been fulfilled. Therefore, in our considered view, the judgement of Hon’ble Apex Court in the case of TRF Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT ) as relied upon by the ld.counsel for the assessee would not help to the assessee - Decided against assessee.

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• 2015 (6) TMI 836
  Claim for deduction u/s. 80IB(10) - CIT(A) allowed the claim - Held that:- As per clause 15 of the development agreement, the developer was entitled for the profit of the difference between the gross amount received from the members towards construction of bungalows (+) development of basic common infrastructure amenities and the total cost incurred by the developer towards building material, labour, construction, interest, other charges. Meaning thereby the developer was required to bear all costs and expenditure for the completion of the scheme. In one of the clause, it was agreed upon that all the finances for the purpose of construction shall be arranged by the said developer. With this background of the agreement, with the ledger account of the society as maintained in the books of accounts of the assessee to demonstrate that on 12th of February, 2005 a sum of Rs. 10 lac was paid to the society through cheque of Bank of India. Thereafter regular payments were made; that too through account payee cheques and on 30th March, 2008 by a JV entry under “Land Account” a sum of Rs. 92,61,613/- was transferred. Also one of the schedule of the balance sheet to demonstrate that the cost of land was reflected in the account. Learned AR has also informed that the assessee had arranged the finances but simultaneously also received the development charges from the members of the society. There is a difference between a “developer” and a “contractor” which was elaborately explained to learned CIT(A) who has considered those legal aspect in the light of the facts of this case. We have noted that in the case of Radhey Developers, (2011 (12) TMI 248 - GUJARAT HIGH COURT ) the Hon’ble Court has opined that ownership of the property is not the only condition precedent, especially under the circumstances when an agreement is executed to develop a property and the developer has full authority to execute the project but side by side also undertaken the risk as well as the responsibilities. Respectfully following the decision of the Hon’ble High Court in the background of the facts of this case, we hereby uphold the view taken by learned CIT(A) and dismiss the ground of the Revenue. - Decided in favour of assessee.

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• 2015 (6) TMI 835
  Deemed dividend u/s.2(22)(e) - CIT(A) has deleted the addition made by the AO by accepting one of the contentions of the assessee that the assessee-company is not a shareholder of M/s.Abhishek Engineers Pvt.Ltd., therefore the addition cannot be made in the hands of the assessee-company - Held that:- The ld.counsel for the assessee could not demonstrate as to how the assessee-company is aggrieved by the direction of the ld.CIT(A). The only contention of assessee that in the Memorandum of Association of the M/s.Abhishek Engineers Pvt.Ltd. that company had Object to advance, deposit or lend money, securities and properties to or with any company, body corporate firm, person or association. Therefore, the amount so received in the course of the business of that company. The ld.counsel for the assessee admitted the fact that the said company is not a non-banking finance company and it was also not demonstrated as to how the loan transaction as effected by the said company are permissible under the Banking Regulation Act, the regulations framed by the Reserve Bank of India and also the Companies Act, 1956. The business of banking and finance is regulated by the Reserve Bank of India and in case a corporate entity, permission from RBI and other Regulatory Authorities is required for carrying out such business. In the absence of such permission, we are of the considered view that the loan transaction is not made during the course of business. Therefore, no merit in the contention of the assessee, same is hereby rejected. Moreover, the addition made by the AO has been deleted by the ld.CIT(A). The shareholder against whom the direction has been issued for addition is not before us in appeal. If the shareholder feels that the impugned direction is illegal or unjustified, the legal recourse is available to him under the Act. - Decided against assessee.

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• 2015 (6) TMI 834
  Addition on account of difference in creditors account - Held that:- The admitted fact remains that the assessee has not recorded the transaction in its books of accounts in the year under consideration. The assessee has made alternative submission that a direction be issued to the CIT(A) to exclude the amount from the total income of the assessment year 2008-09. Since the present appeal is related to AY 2007-08, the admitted facts are that the transactions were not recorded during the year under consideration. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A) on this issue. - Decided against assessee. Addition made on account of undervaluation of closing stock - Held that:- From the bills of job charges issued to the assessee company by process houses, produced by the assessee company, it was seen that the average rate of job charges at the end of the year is Rs. 7.25/mtr. Thus the average value of finished goods per meter works out to Rs. 18.10. As such, the value of the closing stock of 16,847.90 mts of finished goods lying with the assessee as on 31.03.2007 works out to Rs. 3,04,947/- (16,847.90 mts x Rs. 18.10). As such, the total value of closing stock with the assessee works out to Rs. 26,67,345/- (Rs.23,62,398/- + Rs. 3,04,947), as against the value of Rs. 22,26,598/- disclosed by the assessee company in its return of income. In other words, the closing stock of the assessee company is suppressed by an amount of Rs. 4,40,747/- (Rs.26,67,345 (-) Rs. 22,26,598).The aforesaid finding of the Assessing Officer is not controverted by placing any material on record by the assessee. Therefore, we see no reason to interfere with the order of the authorities below. - Decided against assessee.

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• 2015 (6) TMI 833
  Exemption from payment of income tax on interest earned - principles of mutuality - Held that:- The business activities predominantly involve banking and financing activities, which has resulted in substantial profits and includes interest income. The Hon'ble Supreme Court in the case of Bangalore Club Vs CIT reported at [2013 (1) TMI 343 - SUPREME COURT ], has held that the concept of mutuality shall not be extended to the interest incomes earned by a mutual association or a society. Accordingly, it was held that the interest incomes are exigible to the tax in the hands of the recipient. As observed, in this case, the appellant’s income predominantly consists of interest income and profits from financing activities. In view of these distinguishing factors, this ground of appeal is hereby dismissed.- Decided against assessee. Eligibility for deduction under section 80P(2)(a) - Held that:- The assessee shall place the bye-laws and other documentary evidences before the AO to support its claim that it was eligible for deduction under section 80P of the Act. Assessee has to prove that it has undertaken primary level agricultural development activities. Both the parties admitted that the issue stands covered by the decision in the case of Kerala Sate Co-operative Agricultural Rural Development Bank Ltd.[2011 (3) TMI 1011 - ITAT COCHIN ]. In line with the view taken therein we set aside the matter to the file of the AO with a direction to him to consider as to whether the assessee is entitled to deduction under section 80P of the Act. - Decided in favour of assessee for statistical purposes.

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• 2015 (6) TMI 832
  Allocation of interest and expenditure on the basis of the utilization of loan amount among various units for the purpose of direction under section 80IA - Held that:- The issue regarding allocation of interest expenditure on the basis of the utilization of loan amount among various units for the purpose of deduction u/s. 80IA is squarely covered by the decision of the ITAT, Delhi ‘G’ Bench passed in assessee’s own case(A.Y. 2004-05) AND (A.Y. 2004-05). Respectfully, following the order of the Tribunal as aforesaid, we allow the appeal of the assessee on the similar lines and the impugned order is cancelled. - Decided in favour of assessee.

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• 2015 (6) TMI 831
  Penalty u/s 271(1)(c) - assessee has not disclosed any capital gain on sale of the land at Kakkanad as claim of the assessee is that the land sold by the assessee is an agricultural land, therefore, it is exempted from taxation - Held that:- The classification of land as agricultural land the certificate issued by the village officer and the local bodies assumes more significance. Therefore, this Tribunal is of the considered opinion that the claim of the assessee that he was under the bona fie impression that the land was an agricultural land is justified. This Tribunal is of the considered opinion that there was a reasonable cause on the part of the assessee in not disclosing the gain arising on sale of such land. Moreover, when the assessee made a claim on the bona fide belief that the subject land was an agricultural land, merely because the same was rejected, that cannot be a reason to levy penalty in view of the judgment of the Apex Court in Reliance Petro Products Pvt Ltd (2010 (3) TMI 80 - SUPREME COURT). Hence, this Tribunal is of the considered opinion that levy of penalty u/s 271(1)(c) is not justified in view of section 273B of the Act. - Decided in favour of assessee.

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• 2015 (6) TMI 830
  Validity of assessment u/s 143(2) - non issue of notice - Held that:- The Assessing Officer was supposed to issue notice u/s 143(2) within a period of 12 months from the end of the month in which the return was filed by the assessee. In the present case, the return was filed on 15/09/2006 by way of filing of letter before the Assessing Officer to the effect that the original return filed by the assessee should be treated as return filed in compliance to notice u/s 148 of the Act. Hence, it has to be taken that the return in question was filed by the assessee on 15/09/2006 and therefore, notice issued by the Assessing Officer u/s 143(2) on 05/09/2006 cannot be considered as notice after filing the return of income. Since no further notice u/s 143 (2) was issued by the Assessing Officer, we are of the considered opinion that this issue is covered in favour of the assessee by the judgment of Hon'ble Apex Court rendered in the case of ACIT vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA]. - Decided in favour of assessee.

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• Customs

• 2015 (6) TMI 862
  Levy of anti dumping duty - import of complete CFL - split the consignments and import through different ports - whether with the expiry of Notification 138/2002-Cus dated 10/12/2002 w.e.f. 20/12/2006, recovery proceedings for escaped anti-dumping duty could be initiated or continued or not - Held that:- A similar issue came up for consideration by a Larger Bench of this Tribunal in the case of Surana Metals & Steels (I) Ltd. [2007 (9) TMI 288 - CESTAT, CHENNAI] . Section 159A of the Customs Act is identical in its wordings and scope to Section 38A of the Central Excise Act, 1944 and was inserted into the Customs Act, 1962 vide Section 113 of the Finance Act, 2001 and vide Section 114 of the said Finance Act, 2001, the action taken were validated as if the provisions of Section 159A were in force at all material times w.e.f. 01/02/1962 onwards till the enactment of Finance Act, 2001, notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or authority. Anti-dumping duty Notification expired. Expiry is also one form of supercession or recission or repeal, the effect being the same as the latter. Therefore, the contention of the appellants that adjudication proceedings cannot continue after the expiry of anti-dumping duty Notification for recovery of any escaped duty liability or imposition if any penalty, is without any merit and we reject this contention totally. With the retrospective application of sub-section (8) of Section 9A of the Customs Tariff Act, the provisions of Section 159A of the Customs Act would apply in respect of the proceedings relating to anti-dumping duty as well and, therefore, the argument that after expiry of the anti-dumping notification proceedings cannot be initiated has no legal basis and we reject this contention. The clarification has been issued in 2006 in respect of a levy imposed in 2002. Therefore, the said clarification is not contemporaneous as to have any persuasive value. It is a settled position that the law has to be interpreted strictly in accordance with the language employed. Nothing has to be read in or nothing has to be excluded while interpreting the plain terms of the statute. Therefore, no reliance can be placed on the said circular for interpretation of the anti-dumping duty notification. - Merely because the levy of customs duty under Section 12 of the Customs Act, 1962 arise on the importation on the articles into India, it does not mean that the Customs Tariff Act cannot provide for the charging of any duty which is independent of the Customs duty leviable under the Customs Act. Anti-dumping duty is one such levy, which is independent of the duty of Customs charged under Section 12 of the Customs Act or the duty levied under Section 3 of the Customs Tariff Act. Goods have to be classified under the Customs Tariff Act first before levying anti-dumping duty. General Rules of Interpretation of the Schedule to the Import Tariff says "classification of the goods in the schedule would be governed by the following principles" - for the purposes of classification, an incomplete or unfinished article, if as presented, has the essential character of a complete or finished article, it would be covered by the heading pertaining to the complete or finished article. The second part of the Rule makes it clear that the reference would also include to the article presented unassembled or disassembled. Thus, for the purpose of Customs classification, these Rules shall apply and if by applying these Rules, the imported goods become classifiable under Chapter 85, the provisions of anti-dumping notification shall also apply, as per the clear and unambiguous wordings of the notification levying anti-dumping duty. Anti-dumping duty is levied on articles dumped into country of the description specified in the notification and falling under the corresponding tariff items mentioned against them. The General Rules of Interpretation of the Tariff would apply equally for the levy of basic customs duty under the Customs Act, Additional Duty of Customs under Section 3 of the Customs Tariff Act as well as Anti-dumping duty under section 9A of the Customs Tariff Act. Therefore, the contention of the appellant about the inapplicability of Rule 2(a) of the general interpretative rules for levy of anti-dumping duty has to be rejected as it is contrary to the statutory provisions, which are loud and clear. From the documents seized and the statements recorded, it is clear that the appellants intended to import complete CFL and they deliberately played a subterfuge to split the consignments and importing them under different consignments or through different ports. Such action on the part of the appellants is a fraud perpetrated on the exchequer. An act of fraud on Revenue is always viewed seriously. Argument that demand is hit by limitation is not tenable. - The ordinary meaning of circumvention is ‘to go around, to by-pass or to avoid’. It is different from tax evasion. There is a world of difference between tax avoidance and tax evasion. Tax avoidance implies complying with the provisions of law but defeating the intention of law by taking advantage of the loopholes in the law. Tax evasion means avoidance of tax through illegal means or fraud and is undertaken by employing unfair means. We have already noted that the transactions involved fraud or unfair/illegal means by manipulation of documents and by artificial splitting of consignments with a clear intent to evade anti-dumping duty. Therefore circumvention and evasion cannot be equated. Fine can be imposed only when goods are available for redemption. In case the goods are not available for redemption, the question of imposing any fine would not arise at all. Accordingly, we set aside the redemption fine imposed by the adjudicating authority in respect of the goods which are not available for confiscation. However, in respect of goods which have been seized and released provisionally to the appellant under bond and bank guarantee, fine is leviable and accordingly, in those situations, the imposition of fine has to be upheld. As regards the penalties imposed, once the demand is confirmed under section 28 read with section 9A on account of fraud, penalty under section 114A is mandatory and cannot be waived. Therefore, the imposition of penalty on the appellants can not be faulted. In as much as penalty has been imposed on the importing firm under section 114A, which is quite substantial, we are of the view that separate penalties on the partner/Director/employees of the appellant firm is not warranted. - Decided partly in favour of assessee.

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• 2015 (6) TMI 861
  Rectification of mistake - One member finding fault with another - Held that:- both, the main Appeal as also the rectification application have not been dealt with satisfactorily and there was extensive difference of opinion that we direct a rehearing of this Appeal. We once again emphasise the need for harmony, coordination and cooperation between the Members of the Bench, particularly in dealing with revenue matters. We expect that hereinafter, the differences of opinion would me minimal. They ought to be on issues and essentially on construction of legal provisions and interpretation of law. With regard to recording of facts and matters in connection therewith, we do not see how Members can repeatedly differ. If the facts are undisputed and agreed upon by parties and they present legal issues for resolution of the Tribunal, then, those deserve prominence. We are also not impressed by the attitude of one Member finding fault with the other while dealing with the contentions of the parties and essentially on facts. - Decided in favour of assessee.

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• 2015 (6) TMI 860
  Levy of penalty and redemption fine - Classification of goods - Non-alloy melting scrap or Non-alloy steel re-rollable scrap - Held that:- We find that this is an old appeal of 2003 and the appellant before us is a small scale industry on whom penalty of rupees six lakhs has been levied. Without going into any further details, we find that since the goods (post confiscation) have since been sold, it would be in the interest of justice to set aside the penalty of rupees six lakhs while otherwise maintaining the order of the learned technical Member and the learned third Member. This is also in the fitness of things considering that the National Metallurgical Laboratory had differed from the other expert opinions and therefore there were two views possible. - redemption find confirmed - penalty waived - Decided partly in favour of assessee.

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• 2015 (6) TMI 859
  Claim of waiver of demurrage charges - Policy of the Airport Authority of India exists under which waiver is permissible under certain circumstances - Held that:- From the reading of the judgment in the case of Modern Rubber Industries [2002 (12) TMI 92 - HIGH COURT OF JUDICATURE AT BOMBAY] that the said case pertains to the dispute between the Customs authorities and the importer. Therefore, it has no application as far as instant case is concerned, inasmuch as in the present case there is a policy of the Airport Authority of India itself under which waiver is permissible under certain circumstances. As contended by the appellant, the dispute is as to whether the goods would be covered by clause 10.2.3(h) of the said policy, or it is clause 10.1.10(b) of the said policy, which would be attracted. Therefore, the High Court was completely in error in dismissing the writ petition in limine by referring to the case of Modern Rubber Industries. - Matter remanded back to High court to decide the writ petition on mertis.

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• Corporate Laws

• 2015 (6) TMI 858
  Suspension of trading - Non compliance with clause 41 of the Listing agreement and/or Regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 - Serious financial difficulties - Held that:- If due to severe financial crisis appellant is unable even to submit the unaudited financial statements for three quarters inspite of repeated penalties imposed against the appellant, then, it is all the more necessary to suspend the trading in the securities of the appellant immediately, because, any delay in suspending the trading in the securities of appellant may harm the interests of investors. Assuming that the financial crisis of the appellant is genuine, permitting the investors to trade in the securities of the appellant without disclosing the unaudited financial status of the appellant would be hazardous to the interests of the investors as well as the securities market and contrary to the policy decision of SEBI. - Decided against the appellant.

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• 2015 (6) TMI 857
  Application for winding up - Default in repayment of debt - Held that:- The law is well-settled that the jurisdiction under section 432 of the Act is a special jurisdiction conferred only on the High Courts. One of the grounds for ordering winding up 433(e) read with section 434(1)(a) of the Act. It is the specific case of the petitioner that cheque bearing No. 944769 was issued in the name of M. Venkat Rao for Rs. 8,60,03,488 towards the bills payable to the petitioner and that the same was dishonoured. When the petitioner has caused legal notice issued to M. Venkat Rao on November 23, 2009, in this regard, a reply notice was issued both on behalf of M. Venkat Rao and also the respondent. This reply notice is significant for it contains a clear and categorical admission of liability and the intention of the respondent to settle the bills of the petitioner. With regard to the cheque, the stand of the respondent is brazenly inconsistent. Having claimed that the cheque leaves were stolen by the managing director of the petitioner in reply to its notice dated December 29, 2009, in its counter-affidavit the respondent has abandoned the said stand and admitted that the cheques were issued to the petitioner by M. Venkat Rao, the erstwhile proprietary concern. In the face of this admission that the cheque was issued by M. Venkat Rao and the same was dishonoured, the burden heavily lies on the respondent to explain the circumstances under which the cheque was issued. The statement of account dated April 30, 2008, which was not controverted by the respondent by any contemporaneous correspondence coupled with the fact that M. Venkat Rao, the erstwhile proprietary concern, has issued the cheque which was admittedly dishonoured, would prima facie prove the debt of the petitioner owed by the respondent. In the light of the legal position discussed and the finding that the respondent has admitted its liability to pay the bills to the petitioner rendered above, the mere pendency of arbitration proceedings does not constitute a ground to reject the petition for winding up. The company petition is therefore admitted.

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• Service Tax

• 2015 (6) TMI 872
  Waiver of pre deposit - Export service - Held that:- issue is squarely covered by the decision of CESAT Larger Bench in the case of M/s.Paul Merchants Ltd. & Others. Vs. CCE, Chandigarh- [2012 (12) TMI 424 - CESTAT Delhi (LB)] in terms of which, such services are held to be export of service not liable to service tax. Ld. AR concedes that the issue no longer res integra having been decided in favour of the appellant in terms of the said judgment of the CESTAT in the case of M/s.Paul Merchant Ltd. - Decided in favour of assessee.

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• 2015 (6) TMI 871
  Rejection of refund claim - Claim for refund of service tax of renting of immovable properties taken on sub-lease - Held that:- It is axiomatic and this position follows from Explanation (c) of Section 67 of the Finance Act, 1994, that M/s HCL Technologies Limited would be liable to remit service tax on the mere recording of a debit or credit notes in respect of a transaction with an associated enterprise, such as the appellant. As a corollary thereof, the payment of rent including the service tax component thereon by the appellant to M/s HCL Technologies Limited evidenced by the debit note constitutes proof of the appellant having incurred in service tax liability in respect of the lease of immovable property from M/s HCL Technologies Limited as a sub-lessee. The burden therefore shifts to the Revenue to establish that the debit note recorded by M/s HCL Technologies Limited is a fraudulent instrument not reflecting the true transaction between the parties. This principle of law, that a suspicion however grave cannot be a foundation for a logical conclusion of fact, is well settled. Board Circular No. 120/01/2010-ST dated 19.01.2010, vide paragraphs 3.1.1 and 3.3 clearly enjoins that there is no requirement of a precise or a one-to-one correlation between an input service leading to an output service. The decisions of this Tribunal in Commr. of C. Ex. Vadodara vs. Transatlantic Packaging Pvt Ltd. [2011 (11) TMI 226 - CESTAT, AHMEDABAD] ; Capiq Engineering Pvt. Ltd. vs. CCE, Vadodara - [2008 (10) TMI 84 - CESTAT, AHMEDABAD] and in CCE, Mysore vs. Chamundi Textiles (Silk Mills) Ltd. [2011 (3) TMI 193 - CESTAT, BANGALORE ] uniformally expound the same principle, of the absence of a need for a one to one correlation between an input or output service. In the light of the fact that the premises in issue was the premises from which the appellant was operating is established by the debit note, by the lease deed of M/s HCL Technologies Limited and the sub-lease deed of the appellant, the preponderance of probabilities legitimises the conclusion that renting of immovable property was the input service utilised for the exported output service provided by the appellant. - Decided in favour of assessee.

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• 2015 (6) TMI 870
  GTA services - export of goods - Notification 14/07-ST dated 6.10.07 - export invoices numbers are not mentioned In the lorry receipt - held that:- service tax should not be exported along with services, service tax refund has been allowed to the exporter on the amount of service tax paid services used in or in relation to the export of goods. In the present case, there is no dispute on fact of export of the goods by the appellant nor there is any dispute that GTA services had been used in the export of the said goods. - the details of export invoices are reflected in the shipping bills. But, export invoice details could not be mentioned in respective lorry receipts. However, they are in a position to establish the link between the lorry receipt and the respective export invoices under which the goods were exported. There is no need to examine whether the said condition is substantive or otherwise as I find that on similar issue, this Tribunal in the case of M.R. Organization (2009 (10) TMI 402 - CESTAT, AHMEDABAD) after interpreting the said Notification - Matter remanded back - Decided in favour of assessee.

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• 2015 (6) TMI 869
  Construction of city - Services rendered for providing preferential location, "club or association service", "renting of immovable property service" and "short term accommodation service - Held that:- Pharma city is nothing but a commercial complex where Pharma industries have set up their units. The learned CA also relied upon the letter from the TRU dated 26.2.2010 to submit that in paragraph 8, the TRU has explained the service. However while going through the clarification, we find that para 8.1 (b) covers the activities undertaken by the appellant and, in our opinion, the activity under consideration in this case is covered by the clarification taking a view that service tax is leviable. Therefore, we find that prima facie appellant has no merit - Prima facie amounts collected by the appellant for the services rendered are covered by the decisions cited in [2012 (6) TMI 636 - Jharkhand High Court ]. Therefore, appellant has prima facie merit in their favour. - Partial stay granted.

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• 2015 (6) TMI 868
  Levy of penalty - appellant realizing its liability, on being so pointed out by the Revenue, have deposited the admitted tax along with interest - Goods Transport Agency Services - Works contract service - Held that:- there is no finding either in the Order-in-Original or in the Order-in-Appeal indicating any action or inaction on part of the appellant indicating towards collusion, fraud, active concealment of tax under the Finance Act, 1994. However, it appears that the appellant had turn over above Rs. 40 lakhs per annum under some of the financial year during the disputed period. In such circumstances, as provided under Section 44AB of Income Tax Act, the Books of Account were subject to tax audit and accordingly, it appears that the appellant was receiving the service of professionals like C.A. understanding tax obligations. But, there is no finding of any contumacious conduct on part of the appellant. - appellant is entitled to benefit under Section 73(3) of the Finance Act, 1994 and it appears that the show-cause notice was issued without proper consideration of the facts on record. In this view of the mater, penalty as reduced by the first appellate authority is dropped and set aside and the appellant will be entitled to refund or adjustment of the excess tax paid, which shall be calculated and granted by the adjudicating authority. - Decided in favour of assessee.

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• Central Excise

• 2015 (6) TMI 867
  Refund claim - Unjust enrichment - Held that:- Appellant has filed refund claims in March/April,2002. No Deficiency memo was issued to the appellant for different refund claims and the same has been accepted by the department. Only on 11.10.2002, a show cause notice has been issued whereas refund claim has been required to be entertained within three months from the date of filing of the refund claim. But nothing was done in three months therefore, the argument advanced by the Ld. AR that appellant has not supplied required documents is not tenable. - issue is no more res integra wherein it has been held that for delayed refunds, interest is payable after three months from the date of filing the refund claim till its realization. Therefore, I hold that the appellant is entitled to claim the interest after three months from the date of filing of the refund claim till its realization. The impugned order is set aside. - Decided in favour of assessee.

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• 2015 (6) TMI 866
  Remission of duty - Destruction due to fire - Held that:- Every fire accident including the present one could have been avoided in the same manner in which every fire incident or accident could have been or are capable of being avoidable. - it is well settled that nobody intentionally invites such accidents and they happen on account of various natural causes. - appellant is eligible for claim of remission of duty as the case is squarely covered by the judgment of Hon'ble High Court of Rajasthan in the case of Hindustan Zinc Ltd. (2008 (10) TMI 63 - HIGH COURT RAJASTHAN) and the Tribunal's decision in the case of M. Kumar Udyog (P) Ltd. (2013 (12) TMI 223 - CESTAT NEW DELHI). Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (6) TMI 865
  Exemption under Notification No. 04/2006 dated 01.03.2006 - Non maintenance of separate accounts - Interest u/s 11AB - Penalty u/s 11AC - Held that:- Appellant have disclosed the clearance of 'mill scale powder/iron ash' clearly in ER-I returns and claimed exemption under Notification No. 04/2006 dated 01.03.2006. There is no suppression of fact established on part of the appellant. It is the duty of department to verify the exemption claimed by the appellant and to determine whether the credit has been reversed or not. In the circumstances, it is held extended period is not attracted. I allow the appeal in part and set aside the penalty under Section 11AC. - Decided in favour of assessee.

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• 2015 (6) TMI 864
  CENVAT Credit - Assessee cleared its manufactured footwear on payment of excise duty - Held that:- Issue herein is squarely covered by earlier order of the Tribunal in assessee's own case [2008 (1) TMI 155 - CESTAT, MUMBAI], relating to the same issue. I further find that the Ld. Commissioner (Appeals) have allowed the appeal of assessee in terms of the ruling of this tribunal in assessee's case. - Decided against Revenue.

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• 2015 (6) TMI 863
  Exemption to goods required for petroleum operations of ONGC - Benefit of Notification No. 6/06-CE - Non fulfillment of condition regarding production of certificate from Directorate General of Hydro Carbon - Held that:- Appellant had supplied the goods, in question, by availing full duty exemption under Notification No. 6/06-CE (SI. No. 19) against international competitive bidding to M/s Essar Offshore Subsea Ltd. who were to use these goods for petroleum operations of ONGC in ONGC - Neelam Heera Reconstruction Project. There is also no dispute that the same goods if imported into India would be exempt from basic customs duty as well as additional customs duty in terms of SI. No. 214 of the table to the notification subject to the fulfillment of the certain conditions prescribed - condition No. 29 referred of the Notification No. 21/02-CUS (SI. No. 214) regarding production of a prescribed certificate for Directorate General of Hydro Carbons is not applicable to the sub-contractors who are domestic manufacturers. In view of this, the impugned order is not sustainable. The same is set aside. - Decided in favour of assessee.

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