Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 30, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Capital Gain - The mere fact that the company and the firm were subjected to tax, on additions made for unexplained cash credits, would not absolve the appellants herein of their liability to pay tax on capital gains on the consideration received on the sale of the subject property. - HC
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Accrual of interest on advance made by the assessee to the Haryana State Electricity Board - as the assessee was following cash system of accounting, no income on this account had been received in the year in question and therefore, it was not liable to be assessed - HC
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It is true that the question of capital gain came up for consideration before Assessing Officer. It is also true that the assessee had placed the materials with respect to sale of land before Assessing Officer during such assessment proceedings - But the AO cannot ignore the correct value / consideration received for sale of land - HC
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Penalty u/s. 271D - cash receipt in violation of conditions of section 269SS - The transaction was between a father and son, to meet the urgent requirement of depositing the margin money in the bank account for buying a vehicle for personal use and thus, it was neither a loan nor deposit nor had anything to do with evasion of tax - HC
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Bogus purchases - possible inflation of purchase price - 25% of the payments made to the parties shall be disallowed on account of possible inflation of purchase price. - HC
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Confirmation of allowing deduction of interest paid on borrowed funds which have been found to have direct nexus with the investment made for acquisition of shares - HC
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Interest income - The deposit of money in the present case is directly linked with the purchase of plant and machinery. - Interest income in the present case must be viewed as capital receipt which shall go to reduce the cost of the asset - HC
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Reopening of assessment - Obviously, in the garb of purported exercise of the power to reassess, the AO cannot be permitted to review his own order or the order passed by his predecessor. - HC
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Principle of mutuality - 'Transfer fee' received from outgoing member of co-operative society - whether is not taxable on the basis of concept of mutuality? - even though it is received towards Common Amenity Fund the principle of mutuality applies - HC
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Disallowances under section 30(1) - expenditure incurred on repair and renovation of renting premises allowed - HC
Customs
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Import of restricted goods being secondary and defective C.R. Coils at ICD Ludhiana - goods are liable for confiscation - redemption fined reduced to Rs. one lakhs - Penalty waived - AT
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Import of metallic waste and scrap - The consignment was accompanied by a Pre-shipment Inspection Certificate(PSIC) issued by Asia Globe Trade Ltd. which was not authorized to issue pre-shipment inspection certificate with regard to Norway - since the goods are not prohibited goods, redemption fine and penalty set aside - AT
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Mis-declaration of goods - import of scull/ slag - import of hazardous waste - levy of redemption fine and penalty - Benefit of doubt goes in favor of importer - Redemption fine and penalty set aside. - AT
Corporate Law
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Rectification in the register of members - transfer of shares - execution of valid transfer deeds within the meaning of Section 108 is a mandatory requirement of a valid transfer of shares - HC
Service Tax
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Job work - activity of processing of chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - AT
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Cenvat Credit - The department cannot construe the services provided to Jammu & Kashmir as exempted services and press into application, in such situations, Rule 6 of CENVAT Credit Rules 2004 - demand set aside - AT
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Waiver of pre-deposit - Export of services or not - services have been provided by the applicant to their foreign principal located outside India or the services rendered by the applicant on the instruction of their foreign principal to the consumers of services in India - Prima facie the case is in favor of assessee - stay granted - AT
Central Excise
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Cenvat Credit - the activity of printing/laminating of BOPP films which were used as laminated wrapper for packing of biscuits by the appellant shall amount to manufacture - the appellant has rightly availed the credit on BOPP films and other inputs used in making printed laminated sheets. - AT
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Manufacturing activity or not - activity of cutting marble blocks into slabs / tiles - deemed manufacture - The said deeming fiction was created with effect from 1.3.2006, not before that - AT
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Valuation - inclusion of design and engineering charges - these design and engineering charges do not pertain to the plant and equipment manufactured by the appellants in their factory and sold as part of the turnkey project - AT
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Extended period of limitation - Apart from a bald allegation there is no evidence adduced by department to establish supression or mis-statement of facts. The relied upon documents as stated in the show cause notice itself, establishes that appellant is not guilty of suppression of facts or mis-statement. - Demand set aside - AT
VAT
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Maintainability of writ petition before the high court - three question of laws involved - transfer of business - eligibility of exemption - Section 2(41) of the Tamil Nadu Value Added Tax Act, 2006? - HC directed to hear the petition - SC
Case Laws:
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Income Tax
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2016 (6) TMI 1051
Penalty u/s. 271D - cash receipt in violation of conditions of section 269SS - whether the transaction of accepting ₹ 2 lacs from appellant's son was non-commercial and personal in nature? - Held that:- The transaction was between a father and son, to meet the urgent requirement of depositing the margin money in the bank account for buying a vehicle for personal use and thus, it was neither a loan nor deposit nor had anything to do with evasion of tax. Default if any was of a technical or a venial breach of the provisions of law and therefore no penalty could be imposed under section 271D of the Act. See Commissioner of Income Tax v. Bombay Conductors & Electricals Ltd.[2008 (2) TMI 114 - GUJARAT HIGH COURT ] - Decided in favour of assessee
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2016 (6) TMI 1050
Revision u/s 263 - whether profit on sale of shares by the assessee company was rightly shown as Long Term Capital Gain? - Held that:- As decided in COMMISSIONER OF INCOME TAX Versus N.K. ESTATE DEVELOPERS PVT. LTD. [2006 (2) TMI 659 - GUJARAT HIGH COURT] merely because the assessee had acquired shares from the promoters' quota that by itself would not be sufficient to come to the conclusion that the acquisition was for the purpose of having control of the company. That while deciding the case of a shareholder the principal requirement for determining whether the investment of the borrowed funds was for the purpose of making or earning income has to be judged in light of the facts of the case available on record, and therefore the Tribunal has come to the conclusion, on facts, that so far as the assessee was concerned it had not made the acquisition for the purpose of obtaining control of the company but was an investment simplicitor. Confirmation of allowing deduction of interest paid on borrowed funds which have been found to have direct nexus with the investment made for acquisition of shares - Decided in favour of assessee
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2016 (6) TMI 1049
Interest income - taxability - amount of deposit kept with the bank for the purpose of opening of Letter of Credit (LC) used for the purchase of Plant & Machinery - whether would be taxable as ‘income from other sources’ and the same shall not got to reduce the preoperative expenses or the fixed assets of the appellant? - Held that:- Considering the decision of the Hon’ble Supreme Court in the case of Karnal Cooperative Sugar Mills Ltd (1999 (4) TMI 7 - SUPREME Court), the question which is raised in the present appeal is required to be answered in favour of the assessee as observed that it is not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest. The deposit of money in the present case is directly linked with the purchase of plant and machinery. Hence, any income earned on such deposit is incidental to the acquisition of assets for the setting up of the plant and machinery. - Interest shall go to reduce the cost of the asset - Decided in favour of the assessee
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2016 (6) TMI 1048
Bogus purchases - possible inflation of purchase price - Held that:- Assessing Officer’s action in treating the purchases as bogus and adding the entire cost of purchases in the assessment ought not to have been restored by the Tribunal. The view taken by the Tribunal in the case of Vijay Proteins Ltd. vs. CIT reported in [1996 (1) TMI 144 - ITAT AHMEDABAD-C ] has been approved. In that view of the matter, keeping in mind the fact that not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax, we find that it shall be appropriate to restrict the disallowance made in this regard to 25% of the cost of such purchases in each year. Thus 25% of the payments made to the parties shall be disallowed on account of possible inflation of purchase price. In view of the above, the question raised in the present appeals is answered partly in favour of the assessee and partly in favour of the revenue.
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2016 (6) TMI 1047
Reopening of assessment - reasons to believe - capital gain on sale of land - Held that:- Few facts are not disputable. The petitioner sold land to Kamal Gohil under registered deed dated 4.2.2007 at a sale consideration of ₹ 98 lacs. The land was re-sold by Kamal Gohil barely three months later for a sale consideration of ₹ 7.09 crores. Thus, there was more than seven times jump in the value of the land in about three months. As per the department, such amount was withdrawn by Kamal Gohil from his bank account through Shroffs under different cheques. The department has prima facie information at its command to believe that Kamal Gohil was also used by Iscon group of companies for routing cash sale considerations to the original land owners-sellers reducing their capital gain tax liability and that Kamal Gohil is absconding. In our opinion, the reasons cannot be said to be not germane to the question of assessable capital gains in the hands of the petitioner for the sale of the land in question. The Supreme Court in the case of Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers Pvt.Ltd. reported in [2007 (5) TMI 197 - SUPREME Court ] in the context of “reason to believe” held that if the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. It is true that the question of capital gain came up for consideration before Assessing Officer. It is also true that the assessee had placed the materials with respect to sale of land before Assessing Officer during such assessment proceedings. However, the question of true value of the land not being reflected in the sale consideration and the transaction itself not reflecting the correct value received by the petitioner, obviously were not part of assessment proceedings. At that stage, the Assessing Officer cannot be said to have applied his mind to these aspects of the matter which emerged lateron. The sale of land by Kamal Gohil three months after his purchase from the petitioner at a value more than seven times of the purchase cost was also not before the Assessing Officer. - Decided against assessee
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2016 (6) TMI 1046
Principle of mutuality - 'Transfer fee' received from outgoing member of co-operative society - whether is not taxable on the basis of concept of mutuality? - it was contended that, the amounts credited to the common amenity fund was payable prior to the transfer of the premium to the society, thus covered by the principle of mutuality - Held that:- Though the revenue seeks to contend that contribution to Common Amenity Fund is transfer fees and the Assessing Officer in his order added the amount to the respondent-assessee's income on the ground that it is contribution received from members towards Common Amenity Fund, to our mind, the issue stands concluded in favour of the respondent-assessee and against the revenue by the decision of this Court in Darbhanga Mansion CHS Ltd [2014 (12) TMI 1112 - BOMBAY HIGH COURT ]
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2016 (6) TMI 1045
Reopening of assessment - claim of additional depreciation and also in respect of claim for grant of deduction under Section 80 IA - Held that:- The assessee had made true and full disclosure of all relevant facts relating to the claim of additional depreciation and also in respect of claim for grant of deduction under Section 80 IA. A separate audit report in the prescribed form 10CCB in support of the claim for deduction under Section 80IA/80IB was also duly submitted. The assessee had also submitted reply pursuant to all queries made by AO during the assessment proceedings under Section 143(3) of the Act. In this view of the matter, the contention sought to be raised by the Revenue about non-disclosure on the basis of the failure on the part of the assessee in mentioned bifurcated amount of additional depreciation allowable in the depreciation chart is absolutely baseless. It is to be noticed that all that has been said by the AO is that after scrutiny assessment, it was observed that assessee has made incorrect claim of additional depreciation on CPP whereas, the claim for additional depreciation on CPP was allowed by the AO while framing the assessment under Section 143(3) after conscious consideration of the material on record. It is not even the case of the Revenue that the formation of the belief regarding the escapement of the assessment by the AO is based on any new material coming on record. Apparently, the formation of the belief by the AO regarding escapement of the assessment is based on re-appreciation of the material already available on record at the time of scrutiny assessment which amounts to mere change of opinion. Obviously, in the garb of purported exercise of the power to reassess, the AO cannot be permitted to review his own order or the order passed by his predecessor. Thus, the finding arrived at by the ITAT that the reassessment proceedings initiated by the AO by mere change of opinion is patently illegal, cannot be faulted with. The ITAT having arrived at the categorical finding that reopening of the completed assessment without any fresh material, merely on the basis of change of opinion of the AO, is without jurisdiction and erroneous, the appeal preferred by the Revenue has rightly been dismissed as having become infructuous. - Decided in favour of assessee
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2016 (6) TMI 1044
Depreciation claim allowablity to assessee trust - Held that:- It is not disputed by the learned counsel for the appellant-revenue that amended questions of law are covered against the revenue by judgment of this Court in Commissioner of Income Tax vs. Market Committee, Pipli, (2010 (7) TMI 374 - Punjab and Haryana High Court ), wherein after considering the relevant case law on the point, it was held that there was no double deduction claimed by the assessee as canvassed by the revenue. As the income of the assessee being exempt, the assessee was claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. Unexplained payment to Haryana State Agricultural Marketing Board (in short HSAMB) for capital works - Held that:- The issue is covered by the judgment of this Court rendered in ITA No.151 of 2010, Commissioner of Income Tax, Hisar vs. Market Committee, Narwana [2010 (7) TMI 573 - PUNJAB AND HARYANA HIGH COURT ] Accrual of interest on advance made by the assessee to the Haryana State Electricity Board - Held that:- The assessee was following cash system of accounting. Moreover, section 145 of the Act was amended w.e.f 1.4.1997 whereby only one out of the two systems could be followed i.e. either mercantile or cash. The finding recorded by the Assessing Officer and the Tribunal that as the assessee was following cash system of accounting, no income on this account had been received in the year in question and therefore, it was not liable to be assessed, has not been shown to be illegal or perverse in any manner by the learned counsel for the revenue.
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2016 (6) TMI 1043
Disallowances under section 30(1) - expenditure incurred on repair and renovation of Lajpat Nagar Hospital - Held that:- In the instant case, there is nothing to distinct from the plea set up by the assessee that the impugned expenditure has not resulted in demolition of old structure and construction of a new structure. The assessee has, therefore, been successful in establishing that the impugned expenditure was revenue in nature. The case laws referred to by the learned DR are primarily in the context of the expression 'current repairs' as appearing in section 30(a)(ii) of the Act whereas the instant case is to be considered in the light of section 30(a)(iv) of the Act. Infact, the distinction between the presence of expression 'repairs' in section 30(a)(ii) which covers the case of rented premises and the expression “current repairs” in section 30(a)(ii) has been elaborately brought out by the Hon'ble Delhi High Court in the case of High Line Pens (P) Limited (2008 (9) TMI 25 - HIGH COURT DELHI) - Decided against revenue Disallowance of interest under Section 36(1)(iii) - Held that:- Once it is established that there is nexus between the expenditure and purpose of business, revenue cannot justifiably claim to put itself in arm chair of businessman or in position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to the circumstances of the case.- Decided against revenue
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2016 (6) TMI 1042
Eligibility for deduction u/s 48 on account of loan replaying - Escaped sales consideration from capital gain tax - Held that:- No deduction can be claimed under Section 48 of the Act, even if the said amount had been utilised for repayment of the loan extended by the bank to the company and the firm. The assessment orders passed in the case of the company and the firm, and certain transactions of the company and the firm being treated as unexplained cash credits, are not in issue in the present appeals. The circumstances under which additions were made to the income of the company and the firm, treating certain amounts received by them as unexplained cash credits, are also not known. The mere fact that the company and the firm were subjected to tax, on additions made for unexplained cash credits, would not absolve the appellants herein of their liability to pay tax on capital gains on the consideration received on the sale of the subject property. The fact that the Tribunal took a lenient view subsequently, by its order dated 09.10.2015, would not justify setting aside the earlier order of the Tribunal dated 14.01.2015 upholding the assessment order. Viewed from any angle, we see no error in the order of the Tribunal, much less a substantial question of law, necessitating interference in these appeals.
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2016 (6) TMI 1041
Addition on account of low gross profit - Held that:- As decided in assessee's own case for the assessment year 2001-2002 [2015 (1) TMI 615 - GUJARAT HIGH COURT] there were no discrepancies or defects pointed out in the books of account and further that they were regularly maintained and also on the finding that there was no material brought on record to establish that purchases or expenses were inflated or sales suppressed and also in view of the finding that this was not a case that there was no method of regular accounting employed, the Tribunal was fully justified in coming to the conclusion that the provisions of Section 145(2) could not be invoked. - Decided in favour of assessee
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2016 (6) TMI 1040
Interest paid on the nonconvertible debentures portion disallowed - ITAT deleted the addition - Held that:- the issue involved in these two matters is squarely covered by a decision of this Hon'ble Court in case of Deputy CIT V. Core Health Care Ltd., [2001 (4) TMI 46 - GUJARAT High Court ] which has been confirmed by the Hon'ble Apex Court as reported in case of Deputy Commissioner of Income Tax v. Core Health Care Ltd., [2008 (2) TMI 8 - SUPREME COURT OF INDIA ] wherein the interest paid on the nonconvertible debentures portion has considered to be an expenditure and therefore the deletion made by the tribunal is just and proper. - Decided in favour of assessee
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2016 (6) TMI 1039
Addition of unexplained transportation cost of coal - Held that:- The Tribunal has held that if the claim of the Assessing Officer that such unaccounted coal is sold by the assessee, then the transportation cost is usually borne by the person who has purchased the coal and it is not the assessee who incurred such expenditure. We agree with the said finding. In support of the additions of transport expenses nothing has been brought on record by the Assessing Officer. It is required to be noted that Section 69 is attracted where an assessee incurs any expenditure, the source of which he cannot explain satisfactorily. The condition precedent as to incurring of the expenditure must be conclusively established by cogent material on record. We are of the opinion that the question in this regard is required to be answered in favour of the assessee and against the revenue. Addition made in respect of salt washing loss - Held that:- The Tribunal in the present case has gone into the details of the method and procedure and come to the conclusion that the loss claimed by the assessee is required to be allowed. We have also considered the fact that Central Salt & Marine Chemical Research Institute which is an authorised institution on this subject has certified the salt loss to be up to 10%. The Insurance Company has also recognized the salt loss while settling claims of the parties and the Superintendent of Salt has also approved the salt loss. Decided in favour of the assessee Disallowance of expenditure incurred for the presentation articles/gifts - Held that:- Tribunal has rightly considered the decision of CIT vs. Allana Sons Pvt. Ltd [1993 (4) TMI 13 - BOMBAY High Court ] wherein it is held that presentation articles bearing neither the name of the company nor its logo could not be said to be meant for company’s advertisement Rule 6B(1)(a) is not attracted. Therefore, the question is answered in favour of the assessee
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2016 (6) TMI 1038
Assessment of commission under the head income from business or profession - dis allowance of proportionate expenses delted by ITAT - Held that:- Revenue, was unable to point out any infirmity in the views expressed by the learned Tribunal. He is unable to show any reason as to why the income of a sum earned by the assessee on account of commission should not have been treated to have been earned from business or profession. He is also unable to show as to why the expenditure was not admissible, whereas the order passed by the learned Tribunal concurring with the views of the CIT(A) is a well reasoned order. - Decided against the revenue.
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2016 (6) TMI 1037
Assessment order passed u/s 143(3) deemed to have been abated after initiation of section 153C proceeding - Held that:- We would have been inclined to consider such a question, but for the fact that we gather that the addition of ₹ 94.80 lacs made by the assessing officer under section 69 of the Act formed part of the larger addition of ₹ 1.57 crores made in the block assessment order. If both the orders are therefore, allowed to operate, the same income would be taxed twice. When the assessee has accepted the order of block assessment in facts of the case, additions made in the regular order of assessment must give way.
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2016 (6) TMI 1036
Disallowance u/s 14A - Held that:- We find the Tribunal in assessee’s own case for A.Y. 2009-10 had restricted such disallowance to ₹ 76,951/- which includes ₹ 26,951/- towards Demat charges. Since the facts of the impugned assessment year are identical to the facts decided by the Tribunal in case of the assessee for different assessment years, therefore, respectfully following the decision of the Tribunal as well as the order of the AO for A.Yrs. 2005-06 and 2006-07, we restrict such disallowance to ₹ 50,000/-. We accordingly set aside the order of the CIT(A) and direct the AO to sustain addition of ₹ 50,000/- u/s. 14A. Taxability of interest on Non Performing Assets - whether provisions of RBI Act cannot override the provision of Sec.145 of I.T ACT? - Held that:- We find the issue of taxability of interest on Non Performing Assets has been decided in favour of the assessee by the order of the Tribunal in assessee’s own case for A.Y. 2007-08 Disallowance u/s.43B - Held that:- Disallowance u/s.43B cannot be made on account of delayed payment of Employees’ contribution to PF and ESI, if the same has been deposited before the due date of filing of the return u/s.139(1) of the I.T. Act. Since the assessee in the instant case has admittedly deposited the Employees’ contribution to PF before the due date of filing of the return u/s.139(1) of the I.T. Act, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO
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2016 (6) TMI 1035
Penalty u/s 271(1)(c) - disallowance of expenditure under Section 40(a)(ia) - Held that:- The assessee had made a claim of deduction in the return of income. No finding has been recorded by the authorities below that the claim made by the assessee is malafide. It has been categorically recorded by the Tribunal after examining the entire material on record that the CIT(A) had rightly cancelled the penalty against the assessee. It was further recorded that the assessee made a bonafide claim of deduction of the expenditure and even though it was not acceptable to the revenue would not lead to the conclusion that the assessee had concealed the particulars of income or filed inaccurate particulars of income. In CIT vs. Reliance Petroproducts (P) Limited, (2010 (3) TMI 80 - SUPREME COURT ) held that under section 271(1)(c) of the Act, there has to be concealment of income of the assessee or the assessee must have furnished inaccurate particulars of his income. In the present case, the claim made by the assessee has not been shown to be suffering from any of these conditions. In the absence of any finding recorded by the CIT(A) or the Tribunal with regard to the claim of the assessee that it was malafide, there is no error in cancelling the penalty imposed by the Assessing Officer. - Decided against revenue
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Customs
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2016 (6) TMI 1069
Mis-declaration of goods - import of scull/ slag - import of hazardous waste - levy of redemption fine and penalty - Held that:- in this case on first check it was found that the HMS imported by the appellant having slag but after drawing the samples test cannot be done to ascertain the fact that the alleged scrap is actually slag or not and if it is slag whether it is of iron or steel and hazardous. As same is not found by any test report or by any expert opinion. In that case, the allegation of the Revenue that it was slag and hazardous waste is not sustainable as the said finding of the adjudicating authority is only on the basis of assumption and presumption which is not sustainable in the eye of law. - Benefit of doubt goes in favor of importer - Redemption fine and penalty set aside.
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2016 (6) TMI 1068
Import of metallic waste and scrap - The consignment was accompanied by a Pre-shipment Inspection Certificate(PSIC) issued by Asia Globe Trade Ltd Hong Kong which is an agency authorized for whole of USA, Canada, South Africa, Australia, UK, Malaysia, UAE, Mozambique Kuwait, Singapore and European Union. It appeared that M/s Asia Globe Trade Ltd was not authorized to issue pre-shipment inspection certificate with regard to Norway. Held that:- there is no prohibition against import of the goods in question. Paragraph No.2.32 of the Handbook itself specifies this. Only, the import is subject to fulfillment of stipulated conditions which are to be complied with by the exporter. Noncompliance thereof may entail an importer to undergo 100% inspection of the entire consignment. That would not tantamount to improper import of goods as required by Section 111 of the Act - Levy of redemption fine and penalty set aside - Decided in favor of appellant.
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2016 (6) TMI 1067
Import of restricted goods being secondary and defective C.R. Coils at ICD Ludhiana - levy of redemption fine and penalty - appellant has paid duty @ 10% which is payable on defective and secondary material - Held that:- the secondary and defective goods cannot be imported through the ICD Ludhiana - goods are liable for confiscation - redemption fined reduced to Rs. one lakhs - Penalty waived. - Decided partly in favor of appellant.
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2016 (6) TMI 1066
Classification and rate of duty in import of MP3 player / CD players - classification under the tariff item 85198990 or 85198940 - MRP based duty / CVD - rate of abatement - appellant in the bill of entry classified the goods under 85198890 and paid BCD @ 10% while the BCD to MP3 Player is 5% as per Notification No. 21/2008-Customs - appellant categorically classified the goods as other than MP3 Player - Serial No. 90 of the table appended to Notification No. 49/2008 –CE (NT) dated 24.12.2008 allows 35% abatement from MRP for charging CVD on all goods other than MP3 player or MPEG 4 player - Subsequently, the differential duty has been demanded on the ground that the goods were MP3 player and therefore the abatement would be only 30% Held that:- We fail to understand as to on what ground/ basis it has been alleged/ asserted after the goods were cleared that those were MP3 players when the goods were not available for examination nor was there any evidence/ material on the basis of which it could be alleged/ asserted that the goods were MP3 players. - there is sustainable ground to hold that the goods cleared were MP3 players - demand set aside - Decided in favor of assessee.
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Corporate Laws
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2016 (6) TMI 1061
Rectification in the register of members - transfer of shares - Held that:- Determination by the CLB of the illegality of the transfer itself under Section 111 read with Section 108 of the Act, it is pertinent to note that there are two transfers in the present case one, from the four joint holders, namely, Dr. Kalyani, Sulochana, DGK and SNI, to Dr. Kalyani as a sole holder and two, from Dr. Kalyani to Gaurishankar. These transfers were admittedly accomplished on different dates. The share certificate placed on record shows in the memorandum of transfers overleaf that the first transfer in favour of Dr. Kalyani was effected on 17 September 2007, whilst the second transfer from Dr. Kalyani to Gaurishankar was effected on 22 November 2007. There is no explanation, however, on record as to how the names of Sulochana and DGK were replaced by the names of Rohini and Gaurishankar as 'holders' of the shares on the face of the share certificate. No such transfer is recorded in the memorandum of transfers overleaf. There is no share transfer form for transfer of shares between the original holders to the new four joint holders (said to be the cotrustees of the trust after the purported resignations of Sulochana and DGK and cooption of Rohini and Gaurishankar in their place), as required by Section 108 of the Act. Apart from this glaring lapse, the CLB has also noted the following admitted position for holding the transfers to be in contravention of Section 108 : (i) There is no instrument of transfer as required by Section 108 produced on record by the answering Respondents; (ii) The answering Respondents did not produce the register of members of the company to controvert the Petitioner's case that the transfers did not actually take place; (iii) No minutes of the Board of Directors or of any transfer were placed on record in respect of the impugned transfers; (iv) The purported annual returns filed with the Registrar of Companies did not relate to the transfers claimed to have been executed; Based on these facts and applying the law laid down by the Supreme Court in the case of Mannalal Khetan Vs. Kedar Nath Khetan [1976 (11) TMI 135 - SUPREME COURT OF INDIA ] holding that execution of valid transfer deeds within the meaning of Section 108 is a mandatory requirement of a valid transfer of shares, the CLB held the impugned transfers to be invalid and not in compliance with the provisions of Section 108. There is no error of law to be found in this analysis and the finding arrived at by the CLB on the basis thereof.
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2016 (6) TMI 1060
Composite Scheme of Arrangement in the nature of Demerger and Transfer of the demerged Undertaking - Held that:- Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, undertakings provided vide the additional affidavit dated 21st June 2016, the observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed and hence do not survive. This court has come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 16 (a) of the Company Petitions No. 177, 178 and 179 of 2016 are hereby granted.
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2016 (6) TMI 1059
Scheme of Arrangement in the nature of Amalgamation - Held that:- Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, undertakings provided vide the additional affidavit dated 11th June 2016, we are satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, do not survive. The present Scheme of Arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned and the same is hereby sanctioned. The Reduction of Preference Share Capital of the Transferee Company as set out in Clause 14 of the Scheme and paragraph 11 of the petition is hereby confirmed. The minutes under Sec. 103(1) as per paragraph 12 of the petition is hereby approved.
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Service Tax
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2016 (6) TMI 1072
Job work - activity of processing of chilling of milk - deemed manufacturing or not - Business auxiliary service - revenue argued that Chapter Note 6 to Chapter 4 ibid is to be interpreted keeping in view the principles of noscitur sociis by virtue of which the expression ‘any other treatment’ appearing in the said chapter note has to be only such treatments which are similar to labelling or relabeling of containers or repacking from bulk packs to retails packs and seen in this context chilling would not be the treatment covered within the scope of the expression ‘any other treatment’ mentioned in the said Chapter Note 6. Held that:- There is no doubt that chilling of milk is a treatment which renders the milk marketable. For example chilling of milk makes it possible to market/sell it to the consumers at places which are located at considerable distances. That chilling of milk is a treatment is too obvious to warrant any explaining/discussion. Consequently by virtue of the said chapter note, chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax. - Demand of service tax set aside - Decided in favor of assessee.
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2016 (6) TMI 1071
Cenvat Credit - Input services - providing output services to State of Jammu & Kashmir and to other parts of India - The department is of the view that when the Finance Act, 1994 itself is not applicable to Jammu & Kashmir, the services rendered in that State are exempted services. - CENVAT credit on service tax paid on insurance premium in respect of dependants / family members of the employees. Held that:- The department cannot construe the services provided to Jammu & Kashmir as exempted services and press into application, in such situations, Rule 6 of CENVAT Credit Rules 2004. As the services provided to Jammu & Kashmir are not subject to levy of service tax, whether such services would fall into the definition of output service during the relevant period is itself doubtful. As per the definition of input service, only if the service provider uses for providing output service will the service be qualified as input service. In any case, the services rendered to Jammu & Kashmir do not fall in the category of exempted services. - Rule 6(3)(1) of CENVAT Credit Rules will not apply. Further, the group insurance services availed for the benefit of employees qualify as input services. The period involved is prior to 01/04/2011 when the definition of input service had a wide ambit. -disallowance of credit on insurance services is illegal and unjustified. Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1070
Waiver of pre-deposit - Export of services or not - services have been provided by the applicant to their foreign principal located outside India or the services rendered by the applicant on the instruction of their foreign principal to the consumers of services in India - applicant contended that their services qualify under the category of business auxiliary service as well as support services but these services covered under Export of Services Rules. Held that:- in case of services in relation to business or commerce covered by Rule 3(1)(iii), the term ‘service recipient’ has to be understood in the sense as explained in para 8.3 of the decision in the case of M/s GAP International Sourcing (India) Pvt. Ltd. Versus CST, Delhi [2014 (3) TMI 696 - CESTAT NEW DELHI] and Blue Star Limited [2014 (12) TMI 25 - CESTAT MUMBAI]. - Prima facie the applicant has been able to make out a case for complete waiver of pre-deposit - Stay granted.
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Central Excise
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2016 (6) TMI 1058
Manufacturing activity or not - activity of cutting marble blocks into slabs / tiles - deemed manufacture - Held that:- the activity of cutting and polishing, sizing of marble slabs, other stones for cutting of marbles into slabs and tiles of Marble was conferred deeming character, which amount to manufacture by way of insertion of Note 6 of Chapter 25 of the Central Excise Act with effect from 1.3.2006. This fact also leads us to hold that the activity of cutting or polishing or conversion of blocks into tiles was held to be deemed manufacturing process by way of introduction of such chapter, inasmuch as they were otherwise not covered by the definition of manufacture as appearing in section 2(f) of the Central Excise Act. The said deeming fiction was created with effect from 1.3.2006. Inasmuch as the period involved in the present appeal is January, 2004 to October, 2004, i.e. prior to 1.3.2006 - No demand - Decided against the revenue.
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2016 (6) TMI 1057
Valuation - inclusion of design and engineering charges - receipt of additional consideration in the guise of transportation charges - manufacturers of equipment and machinery item - Held that:- The appellants did the designing and engineering for the civil structure at the premises of M/s. SAIL, BSP where the erection and installation of walking beam cooling bed etc. was done on turnkey project basis. - these design and engineering charges do not pertain to the plant and equipment manufactured by the appellants in their factory and sold as part of the turnkey project. When that is the case, there is no question of inclusion of such designing and engineering charges in working out the assessable value of the goods manufactured by the appellants. - Demand is not maintainable As regards the consideration received for storage, handling, erection, commissioning and P G test of plant and equipment charges, Commissioner (Appeals) has set aside the demand by observing that the same are the activities relatable to erection of plant and machinery at the site of M/s. SAIL. The erection and installation is done out of goods supplied by the assessee as well as by others and which ultimately results into coming into existence of immovable rail mill. Demand cannot sustain - Decided against the revenue.
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2016 (6) TMI 1056
Cenvat credit on steel structural items as capital goods - manufacture of inorganic chemicals, organic chemicals, and miscellaneous chemical products - Held that:- The contention of the appellant that they availed credit on bonafide belief that it is admissible is not without substance, if one examines the chequered history of the issue under consideration. Apart from a bald allegation there is no evidence adduced by department to establish supression or mis-statement of facts. The relied upon documents as stated in the show cause notice itself, establishes that appellant is not guilty of suppression of facts or mis-statement. - Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1055
Cenvat Credit - inupts used for manufacture of printed laminated sheets - Some of these printed laminated wrappers are consumed by the appellants captively and some produce is cleared to the contract manufacturing units of the appellant on payment of excise duty. - The Revenue was of the view that since the printing and laminating of a plain Polyester film does not amount to manufacture, no excise duty was payable on the printed wrappers cleared by the appellant to their contract manufacturing units. - Therefore, the appellant is not entitled to take credit. On the basis, the cenvat credit availed in respect of BOPP film, polyester film and other inputs used in making printed laminated sheets was sought to be recovered alongwith the interest by way of issue of a shoe cause notice. Held that:- the appellant after printing and laminating the wrappers are to be used packing the biscuits manufactured by the appellant only - the activity of printing/laminating of BOPP films which were used as laminated wrapper for packing of biscuits by the appellant shall amount to manufacture. Therefore, the appellant has rightly availed the credit on BOPP films and other inputs used in making printed laminated sheets. In these circumstances, the appellant has correctly taken the credit. - Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1054
Appeal for release of seized goods - furnishing of security - SSI exemption - two units are using common brand name - appellants are not maintaining any registers with regard to account of raw material and finished goods, that they manufacture goods bearing common brand name without obtaining Central Excise registration. - Held that:- Rule 24 of Central Excise Rules, 2002 lays down the requirement of return only of seized books and other documents, but not of finished or other excisable goods. We have to say that the Supplementary Instructions relied upon by the Commissioner are only advisory in nature and do not have any statutory binding effect. Even in Section 110A of Customs Act, 1962 referred above, does not mandate or lay down any fixed percentage of security, merely laying down that seized goods etc., be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require ( emphasis added). Therefore, while imposing condition for provisional release, the Commissioner has to use the discretion in a judicious manner basing upon the facts and circumstances of each case. In the case before us, the goods ordered to be released are finished goods which were placed under seizure within the factory premises. Thus, when clearance is effected of such goods after release, the duty liability thereof will necessarily be discharged; this is one of the conditions in the impugned order also. - Appellants have deposited part amount during investigations. Taking all these aspects into consideration we are of the opinion that the circumstances do not require imposition of security of 25% of Bond amount (Value of goods) and that security of 10% of Bond amount would meet the ends of justice while taking care of the interest of Revenue. Ordered accordingly.
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2016 (6) TMI 1053
Cenvat Credit / Modvat Credit - duty paying documents - appellants availed credit of duty paid on inputs on the strength of carbon copies of challans extended period of limitation - Held that:- The duty paid on the inputs is also not disputed. This apart, we have to say that when the duty paid documents are defaced by the Range Superintendant, thereby approving the documents to be correct and proper, then the department cannot later turn around and contend that the documents do not satisfy the requirements for availing credit and that appellant is guilty of suppression of facts. - The issue of limitation is answered in favor of the appellant/assessee. - Demand set aside - Decided in favor of assessee.
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2016 (6) TMI 1052
Exemption under the notification No. 108/95-CE - there was difference between Revenue and the appellant on the ground that the goods supplied were not covered in the specified list approved by the funding agency and also the appellant was stranger to the project. - Held that:- The appellant is directed to make an application before the adjudicating authority by 27th May, 2016, praying for fixing the date of hearing. Once such an application is filed, the authority shall fix the date of hearing in the month of June and hear the appellant. Upon hearing, he shall examine the pleadings, evidence and law and shall pass a reasoned and speaking order within three months from the last date of hearing. - Matter remanded back.
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CST, VAT & Sales Tax
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2016 (6) TMI 1065
Levy purchase tax under Section 12 of the TNVAT Act on the turnover of goods sold to the dealer located in a SEZ - contradiction with the provisions of Tamil Nadu Special Economic Zones (Special Provisions) Act, 2005 - Held that:- Admittedly, the notification granting exemption issued by the Government of Tamil Nadu vide G.O.Ms.No.75, dated 28.06.2005, continued to be in force on the date immediately before the commencement of the TNVAT Act and therefore, it shall continue to be in force. Unless, it is stated that the notification is inconsistent with the provision of the TNVAT or the Rules framed thereunder and even in such cases, it shall continue in force till, it is repealed or amended. There is nothing on record to show that the said notification in G.O.Ms.No.75, stood amended or rescinded. In fact, this legal position was rightly construed and the Secretary to the Commercial Taxes and Registration Department issued a Government letter, dated 29.12.2006, to the first respondent stating that by virtue of Section 88(3)(i), the notification, granting exemption already issued under TNGST shall continue to be in force under TNVAT Act. - Benefit of exemption to be granted - Decided in favor of assessee.
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2016 (6) TMI 1064
Pre-deposit - petition against the direction of pre-deposit of 25% of the disputed tax and to furnish bank guarantee for the remaining amount - Held that:- the Writ Petitions filed by petitioners are partly allowed, and the first condition, requiring the petitioners to pay 25% of the disputed tax in each of the cases are set aside, and the second condition, requiring the petitioners to furnish bank stands modified and the petitioners are hereby, directed to furnish personal bond for the entire disputed tax before the Assessing Officer. It is made clear that this order is passed considering the peculiar facts and circumstances of the case, and not be treated as precedent.
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2016 (6) TMI 1063
Maintainability of writ petition before the high court - HC dismissed the petition for want of alternate appellate remedy - three question of laws involved - transfer of business - eligibility of exemption - Section 2(41) of the Tamil Nadu Value Added Tax Act, 2006? - Held that:- In our considered opinion the questions that have been raised by the appellant being absolutely pure questions of law, the High Court should have decided these matters. We may hasten to clarify that as far as these issues are concerned and the facts brought on record which include documents are not disputed. When we say that facts are not disputed it is meant that some transactions have taken place inside the State while the towers are located outside and the documents which are brought on record their existence is not disputed. - High to entertain the writ petition and decide the matter.
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2016 (6) TMI 1062
Refund of VAT paid earlier - proposal to withheld the same - failure to furnish 'C' form and 'F' form - Forms were furnished before commissioner (appeal) - Held that:- Section 57 of the OVAT Act has been violated but the violation of Section 60 is yet to be found out. When there is notice to show cause issued to a proposal to withhold the refund but there is no order of withholding refund, the natural justice cannot be said to have been violated. The petitioner directed to attend the personal hearing before the learned Commissioner of Sales Tax on 6.6.2016 at 11.00 A.M. and the opposite party No.2 would pass order either to withhold the refund or payment of refund within two weeks from that date according to law and with the parameters as observed in the aforesaid paragraphs.
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