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TMI Tax Updates - e-Newsletter
June 4, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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'Royalty' receipt - Revenue was not able to show that the Petitioner had a PE in India, the income earned by the Petitioner from the contract with IOCL cannot be brought to tax in India in terms of Article 7 of the DTAA - Decision of AAR reversed - HC
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Validity of reopening of assessment - accommodation entries - the reasons to believe as recorded by the AO did not satisfy the requirement of Section 147(1)as regards the formation of opinion that the income of the Assessee had escaped assessment. - HC
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Reopening of assessment - reason to believe recorded by the AO are based on the information that was gathered by the Excise Department from the statements of the two partners of the firm during the search and the material found during further investigation - reopening upheld - HC
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Claim to write off on account of advance disallowed - year in which bad-debts crystallized - mercantile system of accounting - only the assessee has determined finally that the amount is irrecoverable - No addition - HC
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Exemption u/s 11(1)(a) - n the absence of any specific prohibition, there is no reason why excess application of money, for charitable and religious purposes, (deficit) of the earlier year should not be set off against the income for the subsequent year. - HC
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Addition u/s 68 - assessee claiming the income from long term capital gain (LTCG) on sale of listed equity shares and subjected to STT as exempt under section 10(38) - transaction was duly disclosed in the audited Balance Sheets filed with the return - No addition - AT
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Admission of additional evidence - Merely because a document was not filed before the Assessing Officer, the same cannot be rejected on surmises and in the totality of the facts and circumstances - AT
Customs
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Doctrine of unjust enrichment was embedded to the customs law with effect from 13.7.2006. The law in force at the time of import was not subject to such provision. - Refund allowed - AT
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Demand of duty - Appelalnt sought the grant of inspection of the investigation file and the non-relied upon documents (Non-RUDs) - appellant allowed to investigate the file and non- RUDs - HC
Service Tax
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Demand of service tax - Period of limitation - once the audit of the records of the assessee takes place no objection is taken on a issue in dispute, the demand raised by invoking the extended period is unsustainable. - AT
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Cenvat credit - various input services - all the services pertain to the manufacturing activity and the respective services were input for the said activity for which that was utilised - AT
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Levy of penalty - appellant has already been spared from non-imposition of penalty u/s 78 by the adjudicating aurhority - What is not alleged in the show cause notice, cannot be traversed at a later point of time in any proceedings - No penalty - AT
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Imposition of penalty - Advertisement Agency Service - non-payment of Service tax - Section 78 - when the first SCN was issued, the subsequent SCN cannot allege suppression of facts - No penalty - AT
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Refund claim - payment of service under protest - Merely on requesting the Superintendent to refund the service tax, without even quantifying the same and without even referring to the period during which the same was deposited, especially when they continued to pay in future awaiting the decision of the HC cannot be considered to be a refund application - AT
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Claim of rebate / Refund in cash - rebate claim sanctioned by way of credit to Cenvat account - Export of Services - Cash refund allowed - AT
Central Excise
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Eligibility for refund of unutilized Cenvat credit - deemed export - Rule 5 of the Cenvat Credit Rules 2004 - clearances to an EOU is to be treated as export - refund of unutilized credit is allowed - AT
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Clandestine removal - Estimation of production - Denial of SSI Exemption - demand is not sustainable on the basis of Comparison of the power consumption during two periods, i.e., one, when the assess was not using the electric motors and second, when they were admittedly using - AT
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Refund claim - Period of limitation - claim was filed on 29.07.2004 which was returned on the ground of pre-mature inasmuch as investigation about the valuation work was still going on, accordingly, appellant resubmitted their claim on 28.10.2005 - refund allowed - Provision of unjust enrichment not applicable where the amount is deposited during the investigation - AT
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Leviability of duty on samples drawn - there is not duty liability on drawal of samples to the extent that those are retained or tested within the factory of production even though they are lost - AT
VAT
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Restriction on input tax credit - The State only wished to provide the benefit of ITC in a limited manner even in respect of raw materials used for production of finished goods, which are stock transferred. We cannot deny the right of the State with its plenary powers of legislation within the field of legislation, which is admittedly and legitimately exercised by it otherwise, the right to raise taxes. - HC
Case Laws:
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Income Tax
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2016 (6) TMI 137
'Royalty' receipt - assessment under Section 9(1) (vi) of the Act or under Article 12 of the DTAA - existence of PE in India - Re-characterization of contract - Held that:- The clauses of the contract make it clear that at all times during the execution of the contract the control over the equipment brought by the Petitioner was to remain with the Petitioner. While the SPM system was supplied by IOCL, the task of installation, testing and pre-commissioning was the work of Petitioner. The system was to be capable of satisfactorily functioning as a complete terminal for discharge of crude oil from vessels to the onshore tankfarm. Clause 3.1.2 made it clear that it was the Petitioner which had to supply “all marine spread specialized manpower and equipments, installation tools and tackles, consumables, labour, logistic supplies, planning, engineering, documentation etc”. Further under Clause 3.1.3 the Petitioner was made responsible for taking over all the IOCL supplied project materials from the place designated by the IOCL which was required for installation of complete CALM SPM system including their sub systems. In the circumstances, the Court is unable to appreciate how the AAR could conclude that the de facto control of the equipment was with IOCL. This Court is unable to concur with the finding of the AAR that in the instant case the consideration received for mobilisation/demobilisation should be considered as royalty paid by IOCL to the Petitioner. The Petitioner is right in contending that the services rendered by it to IOCL under the contract fell under the exclusionary portion of Explanation 2 viz., “consideration for any construction, assembly, mining or like project undertaken by the recipient” This has been unable to be denied by the Revenue. Therefore, on two counts the finding of the AAR on FTS cannot be sustained. The first being that the installation services are not incidental to the mobilisation/demobilisation service. The contract was in fact for installation, erection of equipment. Mobilisation/demobilisation constituted an integral part of the contract. Secondly, the AAR has proceeded on a factual misconception that the dominion and control of the equipment was with IOCL. It was erroneously concluded that the payment for such mobilisation/demobilisation constitutes royalty. In that view of the matter, the consideration for installation cannot not be characterized as FTS and brought within the ambit of Article 12.4(a) of the DTAA. Revenue was not able to show that the Petitioner had a PE in India, the income earned by the Petitioner from the contract with IOCL cannot be brought to tax in India in terms of Article 7 of the DTAA. - Decided in favour of assessee.
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2016 (6) TMI 136
Validity of reopening of assessment - accommodation entries - Held that:- The reasons for the reopening of the assessment have been perused by the Court. Mr Manchanda tried to impress upon this Court that since Mr. Gupta was the Director of the Assessee company, he was responsible for the money earned by it as commission for providing accommodation entries and, therefore, it should be taken to be money earned by the Assessee company. The Court is unable to agree with the above submission. The statement made by Mr Gupta in response to question No.24 and the illustration given by him show that the commission was earned by Mr Gupta and not the Assessee. The addition of the commission amount, if at all, had to be made substantively in the hands of Mr Gupta and of the amount of investment in the hands of the beneficiaries of the accommodation entries. Consequently, the Court is of the view that the reasons to believe as recorded by the AO did not satisfy the requirement of Section 147 (1) of the Act as regards the formation of opinion that the income of the Assessee had escaped assessment. - Decided in favour of assessee
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2016 (6) TMI 135
Reopening of assessment - reason to believe recorded by the Assessing Officer are based on the information that was gathered by the Excise Department from the statements of the two partners of the firm during the search and the material found during further investigation - Held that:- The facts constitutes a relevant material for the purpose of invoking the provisions of Section 147 of the Act. At the stage of issue of notice, what has to be seen is whether there was relevant material upon which a reasonable person could have formed the requisite plea. The contention of learned counsel for the petitioner that proceedings under Section 147 of the Act should be kept in abeyance till the Customs Excise and Service Tax Appellate Tribunal decides the appeal cannot also be accepted. The petitioner would have to furnish requisite material information to the Assessing Officer in proceedings initiated under Section 147 of the Act.
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2016 (6) TMI 134
Claim to write off on account of advance disallowed - year in which bad-debts crystallized - mercantile system of accounting - Held that:- Though the amounts relate to the period April 1998 to March 1999, the dispute of liability was ultimately crystallized during the period under consideration by the report of the Chartered Accountant referring, inter alia that the CBL has insured amount during that period and it was declared as sick industry by BIFR and any amount from such industry is not recoverable as there is prohibition contained in the Sick Industries Act. Then only the assessee has determined finally that the amount is irrecoverable from CBL and accordingly it is written off in the P&L Account under the head “advances of doubtful recovery written off”. This claim can never be comprehended by the scope of section 36(1)(vii) of the I.T. Act. As per the mercantile system of accounting and principles of Real Income Theory, the claim of the assessee during the period under consideration though related to the period April 1998 to March 1999 is allowable as the claim is finally crystallized during the period under consideration. In that view of the matter, the view taken by the department in disallowing the claim of the assessee is not sustainable for legal scrutiny and the same is hereby directed to be deleted. - Decided in favour of assessee
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2016 (6) TMI 133
Exemption u/s 11(1)(a) - deficit adjusted against the surplus - Held that:- CBDT circular dated 24.01.1973 enables a trust, which had taken a loan for incurring expenditure for charitable and religious purposes, to repay the said loan from out of its income in the subsequent year; and such repayment of loan is to be treated as application of income for charitable and religious purposes under Section 11 (1) (a) of the Act. Money for charitable and religious purposes, beyond the income of a trust, can be applied, for charitable and religious purposes, either by taking a loan or utilizing a part of the corpus of the Trust. As the CBDT circular dated 24.01.1973 enables repayment of a loan for the previous year utilizing the income of the subsequent year, and for such utilization to be treated as application of income under Section 11 (1) (a) of the Act, there is no reason why excess application of money, for charitable and religious purposes, (deficit) of the earlier year should not be set off against the income for the subsequent year. In the absence of any specific prohibition in the Section 11 (1) (a) of the Act in this regard, and in the light of the CBDT circular dated 24.01.1973 we find no error in the order of the Tribunal, much less a substantial question of law, necessitating interference in this appeal.
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2016 (6) TMI 132
Addition u/s 68 - assessee claiming the income from long term capital gain (LTCG) on sale of listed equity shares and subjected to STT as exempt under section 10(38) - Held that:- The authorities below, i.e. AO/CIT(A) have made the addition under section 68 of the Act merely on presumptions, suspicions and surmises in respect of penny stocks; disregarding the direct evidences placed on record and furnished by the assessee in the form of brokers contract notes for purchases and sales of the ‘said shares’ of M/s. Shukun Constructions Ltd., copies of the physical share certificates and her D-MAT account statement establishing the holding of the shares in her name prior to the sale thereof; confirmation of the transactions of buying and selling of the ‘said shares’ by the respective stock brokers, receipt of sale proceeds through banking channels, etc. We are also of the view that the ratio and the factual matrix of the decisions in the cited case, i.e. Jatin Chhadwa (2012 (8) TMI 1007 - ITAT MUMBAI ) and Harkhchand K. Gada (HUF) & others (2012 (8) TMI 968 - ITAT MUMBAI) would be applicable and support the case of the assessee since no adverse finding has been rendered in respect of the direct material evidence placed on record in respect of her transactions of purchase and sale of the ‘said shares’ of M/s. Shukun Constructions Ltd. which stand duly disclosed in her audited Balance Sheets filed with the return of income of assessment years 2004-05 and the current year under consideration. In this factual and legal matrix of the case, as discussed above, we find that the addition of ₹ 32,94,982/- under section 68 of the Act made and confirmed by the authorities below to be unsustainable and therefore direct the AO to delete the said addition and accept the LTCG income of ₹ 31,96,507/- shown as exempt under section 10(38) of the Act. - Decided in favour of assessee
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2016 (6) TMI 131
Income from lease rent - assessability of income - taxable under the head "Income from other sources" OR "Income from Business and Profession" - admission of additional evidence - Held that:- CIT(A) has taken note of the partnership deed executed between the parties. Merely because the document was not filed before the Assessing Officer in the original assessment proceedings but was filed before the CIT(A) during the course of appellate proceedings by way of additional evidence, the provisions of the Act provided that under certain circumstances, the CIT(A) can admit the same as evidence and decide the issue accordingly. Here the CIT(A) has decided the issue after referring to clauses of the partnership deed and accordingly, we hold that once the same has been considered by the CIT(A) elaborately, the same should have been admitted as additional evidence for deciding the issue in the present appeal for dispense of justice. Merely because a document was not filed before the Assessing Officer, the same cannot be rejected on surmises and in the totality of the above said facts and circumstances, we consider the issue in the light of deliberations of CIT(A) on the said so called additional evidence, since the powers of CIT(A) are co-terminus with the Assessing Officer. Accordingly, we hold that the income received by the assessee merits to be assessed in its hands as income from business and corollary to the same, brought forward losses on account of depreciation would form part of current depreciation in the hands of assessee and the same merits to be adjusted against income of the current year and in case of any balance, merits to be carried forward to the succeeding year. Lease rent received by the assessee from M/s. Deccan Bottling & Distilling Industries Ltd. - the said income is to be taxed as income from business and not income from other sources. - Decided in favour of assessee Disallowance under section 43B - Held that:- Since the income is assessed as income from business, relevant provisions of section 43B of the Act are attracted. The Assessing Officer is directed to verify the same and decide the issue.
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2016 (6) TMI 130
Receipts on account of services tax - whether not includible in gross revenue of the assessee for the propose of computation of profits under the presumptive provisions u/s 44BB? - Held that:- The issue of includibility of service tax in the gross receipts is squarely covered by the judgment of the Hon'ble Delhi High Court in the case of Mitchell Drilling International Pty Limited (2015 (10) TMI 259 - DELHI HIGH COURT ) wherein the Hon'ble Delhi High Court has held that service tax being statutory levy should not form part of gross receipts as per provisions of section 44BB of the Act - Decided in favour of assessee Levy of interest u/s 234B/234 C - Held that:- We restore the issue to the file of the Assessing Officer to examine the liability of the assessee in light of the fact that all receipts are to be assessed u/s 44BB of the Act after giving effect to relief confirmed for the assessee in this appeal
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2016 (6) TMI 129
Refusal to grant registration u/s 12AA - Held that:- Sufficiency or some irregularities in bringing the initial corpus fund would not automatically make the trust as not to have come into existence. The charitable objects of the trust are not disputed by the Learned CIT. What is to be seen at the time of granting registration by the Learned CIT is only whether the objects of the trust are charitable and activities carried out are genuine in nature , which conditions have been duly satisfied by the assessee in the instant case. In any case, the order passed by the Learned CIT refusing registration u/s 12AA of the Act is beyond the stipulated period of six months as per section 12AA(2) of the Act and hence the assessee cannot be denied the benefit of registration u/s 12AA of the Act . - Decided in favour of assessee
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2016 (6) TMI 128
Addition made on account of capital gains on protective basis - adoption of sale consideration - Held that:- In the facts of the present case, where the land though on the date of sale deed was in the name of assessee, which fact has been accepted by the Assessing Officer, Chiplun Municipal Council did not pay the consideration for sale to the plot holder, but paid the amount by account payee cheque to Shri A.F. Patel, who was a GPA holder, except for ₹ 7,50,000/-, no other amount has been paid to the assessee. The assessee has filed a civil suit in the Civil Court of Ratnagiri against Shri A.F. Patel and Chiplun Municipal Council claiming that the GPA holder had acted fraudulently and had received the consideration of ₹ 51,58,560/- after TDS which should be refunded to the assessee. The said civil suit is pending before the Civil Court. In the above said facts and circumstances, the CIT(A) held that in the hands of assessee, the capital gains is to be taxed by adopting sale consideration at ₹ 7,50,000/-. It is further held by the CIT(A) that in case the assessee recovers some amount of sale consideration from Shri A.F. Patel, then the same is to be considered as capital gains in the hands of assessee on protective basis. However, the CIT(A) has further clarified this by saying that where the assessee receives additional consideration in future from Shri A.F. Patel, then the same is to be assessed in the hands of assessee on substantive basis by taking necessary action under section 150 of the Act in accordance with law. The final conclusion of CIT(A) in this regard is that since the civil suit for recovery of the consideration is pending, then whenever if any amount is received by the assessee, then the same is includable in the hands of assessee under section 150 of the Act. We find no error in the said directions of CIT(A). The grounds of appeal raised by the assessee that the addition has been made in the hands of assessee on protective basis has no merit since the CIT(A) has directed that pursuant to the decision of Civil Court, the necessary action should be taken under section 150 of the Act in accordance with law - Decide against assessee. Non-issue of notice under section 143(2) - Held that:- Notice under section 143(2) of the Act was issued on 16.10.2006 which was duly served upon the assessee on 20.10.2006. In response to which, the assessee personally attended on 21.10.2006 and thereafter, on various dates up to August, 2007. Further, the assessee attended along with the learned Authorized Representative for the assessee from 28.09.2007 to 20.12.2007. In view of notice under section 143(2) of the Act being issued to the assessee and the assessee having failed to substantiate his claim we find no merit in the ground of appeal - Decide against assessee.
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2016 (6) TMI 127
Assessment u/s 153A - Held that:- Section 153A does not authorise the making of a de novo assessment in this particular assessment year. While under the first proviso, the AO is empowered to frame assessment for six years, under the second proviso only assessments which are pending on the date of initiation of search abate. The effect is that completed assessments do not abate. The assessments can be said to be pending only if the AO is statutorily required to do something further. If the section 143(2) notice has been issued, the assessment can be said to be pending. However the assessment in respect of a return processed u/s 143(1) is not pending because the AO is not required to do anything further about such a return. The power given by the first proviso to assess income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. It is seen on facts that as the return for the year had been processed u/s 143 (1) the assessment was not pending and as no material was found during the search, the addition has no feet to stand. Hon’ble High Court of Delhi in CIT Central –III vs. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) we find that the addition of ₹ 4 lacs has been wrongly added to the income of the assessee.- Decided in favor of assessee
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2016 (6) TMI 126
Addition on unexplained investment u/s 69B - Held that:- Here is a case in which the assessee claimed to have purchased the property for a sum of ₹ 40,00,000/- and the Assessing Officer has made addition of ₹ 90,64,575/- on the basis of difference between the market price and apparent sale consideration. No attempt has been made for verifying the price from the seller of the property. In other words, there is no positive material evidencing the making of actual investment by the assessee over and above ₹ 40,00,000/-. Under such circumstances, there can be no point in making any addition towards unexplained investment u/s 69B of the Act. - Decided in favour of assessee.
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2016 (6) TMI 125
Transfer pricing adjustment - exclusion of income from annual maintenance charges from the total income - treatment to expenditure for earning the annual maintenance income - Held that:- TPO has proposed to exclude the income from annual maintenance charges from the total income. Once the income was excluded, the expenditure for earning the annual maintenance income also needs to be excluded. As rightly submitted by the Ld. D.R., it is not clear either from the assessment order or TPO’s order. This aspect was not considered by the Dispute Resolution Panel in their order. Therefore, this Tribunal is of the considered opinion that the matter needs to be verified by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to refer the issue of expenditure for maintenance charges to the Dispute Resolution Panel. In such reference, the DRP shall examine whether the expenditure said to be incurred by the assessee for earning income from annual maintenance is to be excluded or not? The Assessing Officer after receiving the report from the DRP, shall pass order in conformity with the direction of the DRP as provided in Section 144C(13) of the Act. Disallowance towards sales commission - Held that:- On perusal of the direction of the Dispute Resolution Panel, it shows that the assessee has not produced the details of the service rendered, the names and address of the commission agents and the details of the commission paid, etc. Even before this Tribunal, the details of the agents, the payment of commission are not available. The assessee claims a lump sum payment of ₹ 10,50,000/-. In the absence of any details with regard to names and address of commission agents and the commission paid, this Tribunal is of the considered opinion that the disallowance has rightly been made. It is not in dispute that an identical disallowance was made in the earlier assessment year 2010-11 on identical set of facts. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against assessee TDS u/s 194-I - non deduction of tds - Disallowance under Section 40(a)(i) - Held that:- This Tribunal is of the considered opinion that since the payment does not partake the character of interest, it would naturally be a business profit for the parent company. In the course of its business activity, the parent company of the assessee gives guarantee to Indian customers for performance in case the assessee-company fails to perform its obligations. The agreement, namely, performance guarantee agreement, is silent in respect of dispute resolution. An Indian company or customer naturally cannot be expected to travel all the way to Denmark for enforcing this guarantee. This guarantee agreement does not provide for any arbitration in India. Therefore, it has to be examined whether the guarantee said to be given by the parent company is enforceable in India? If it is not enforceable in India, whether such kind of agreement is for business purpose or not? It also needs to be examined when the parent company gives guarantee to Indian customers in respect of the product sold by the assessee-company in India, whether the assessee-company can be considered as permanent establishment in India in respect of the income earned by the assessee in the form of guarantee performance fee? These aspects were not considered either by the Transfer Pricing Officer or by the Dispute Resolution Panel. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, the orders of the lower authorities are set aside. The issue of performance guarantee fee is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter to the DRP. The DRP shall examine the issue in the light of the material available on record and thereafter decide the issue after giving reasonable opportunity to the assessee. Thereafter, the Assessing Officer shall pass necessary order under Section 144C(13) of the Act. - Decided partly in favour of assessee for statistical purposes.
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2016 (6) TMI 124
Claiming deduction u/s 80IB - Deduction u/s 10B - Held that:- The pre-condition for claiming deduction u/s 80IB is (i) manufacturing activity, (ii) employed more than 10 workers, and (iii) usage of brand new machinery for the new industrial undertaking. Admittedly, the assessee has established a new industrial unit at Pondichery. The Assessing Officer disallowed the claim of the assessee on the ground that the assessee’s activities do not amount to manufacturing. The Assessing Officer has also found that the assessee employed less than 10 workers. The Assessing Officer further found that the old machinery exceeded 40% and the prescribed limit is only 20%. The CIT(A) found that the assessee has employed two sets of workers. The first set of workers are permanent employees and another set of workers and contract employees. The CIT(A) found that the permanent employees are 6 in number and contract employees are 15 in number totalling to 21 employee. This fact is not available before the Assessing Officer. Referring to the old plant and machinery and the new one, the Assessing Officer came to the conclusion that the old plant and machinery was 40% which is more than the permitted limit of 20%. The CIT(A) found that the observation of the Assessing Officer was factually incorrect by saying that the Assessing Officer adopted the opening written down value as on 1.4.2005 and compared with the addition of plant and machinery made during the financial year 2005-06. The Assessing Officer came to the conclusion that the new machinery claimed to be purchased by the assessee is only a storage tank. The CIT(A), without referring to the nature of the plant and machinery said to be purchased, found that the machinery purchased upto 31.3.2005 are new machineries. The fact that the storage tank is a machinery or not was not considered by the CIT(A). From the materials available on record, it appears that the assessee-company is engaged in the business of producing varnish, thinner and wood polish. It also needs to be considered whether producing, varnish, thinner and wood polish would amount to manufacturing activity or not. The assessee appears to have produced new material for evidencing the payment of PF before the CIT(A). The CIT(A), without calling for any remand report from the Assessing Officer, accepted the details filed by the assessee. In those circumstances, this Tribunal is of the considered opinion that the matter needs to be reexamined by the Assessing Officer after considering all the material facts which are relevant. Accordingly, the orders of the lower authorities for the assessment years 2006-07 and 2007-08 are set aside and the entire claim of deduction u/s 10B of the Act is remitted back to the file of the Assessing Officer - Decided in favour of revenue for statistical purposes.
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2016 (6) TMI 123
Transfer pricing adjustment - international transaction of 'Payment of royalty’ - whether no addition on account of transfer pricing adjustment is permissible as the AO has not made any disallowance u/s 37(1)? - Whether application of the TNMM on entity level should be upheld covering the international transaction of payment of royalty? - MAM - Held that:- Coming to the determination of ALP of this international transaction under the CUP method, we find that the assessee chose three companies as comparable, which, in our considered opinion, have been rightly rejected by the TPO on several cogent reasons tabulated vide para 14 of his order including difference in type of technology and different geographical locations inasmuch as both the payers and payees were foreign parties. However, the fact remains that if the assessee’s comparables are not correct and the assessee is not forthcoming with a new set of comparables, then, it becomes the duty of the TPO to find out relevant comparables and proceed to determine the ALP accordingly. Coming back to the TPO’s opinion about nil ALP of the payment of royalty, we find that the DRP has accepted the marginal use of technical know-how by the assessee from its AE, for which it directed to adopt 0.25% on sales as the ALP of royalty payment in respect of this model. It is this ad hoc approach of the DRP which has been turned down by the Tribunal for the earlier years leading to the restoration of the matter to the file of AO/TPO for a fresh determination of the ALP of this transaction by using the transaction by transaction approach, which the assessee has done for this year by applying the CUP method in respect of the international transaction of payment of royalty. As the facts and circumstances for the instant year continue to remain similar vis-à-vis the preceding years, respectfully following the precedent, we set aside the impugned order and remit the matter to the AO/TPO for a fresh determination of the ALP of the international transaction of 'Payment of royalty’ for model 3DX by applying the CUP method after affording a reasonable opportunity of being heard. - Decided in favour of assessee for statistical purposes.
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2016 (6) TMI 122
Claim of deduction under section 80IB(10) - Held that:- The issue arising before us is identical to the issue before the Tribunal in assessee’s own case in assessment year 2008-09, where the deduction claimed under section 80IB(10) of the Act was denied to the assessee on account of area of flats in building F including balcony exceeding 1500 sq.ft. and further in respect of 4 flats adjacent were merged and the area exceeded 1500 sq.ft. and also because of commercial shops / establishments in buildings J & K. The assessee initially had not claimed the deduction under section 80IB(10) of the Act in respect of above said flats and commercial shops. However, additional grounds of appeal were raised before the CIT(A) in assessment year 2008-09 that it was entitled to the claim of deduction under section 80IB(10) of the Act. The said additional plea raised by the assessee was considered at length and after considering the additional evidence filed by the assessee and admitting the same under Rule 46A of the Rules, the CIT(A) held the assessee to be eligible to claim the deduction under section 80IB(10) of the Act. Similar claim has been made by the assessee in the instant assessment year relating to assessment year 2009-10 and where the factual aspects and issue raised are identical to the issue in assessment year 2008-09, following the same parity of reasoning and also because of reason that the CIT(A) in allowing the claim of deduction, had in turn relied on the order of CIT(A) relating to assessment year 2008-09, which has been upheld by the Tribunal in assessment year 2008-09, we allow the claim of assessee. Upholding the order of CIT(A) in this regard, we dismiss the grounds of appeal raised by the Revenue. - Decided in favour of assessee.
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2016 (6) TMI 121
Denial of registration under section 12AA - charitable activity - Held that:- In view of finding of the Commissioner that the objects of present trust are charitable i.e. relief of the poor and further the genuineness of activities having been accepted that the assessee was running old age home, then on other surmises that the assessee has claimed exemption under sections 11 and 12 of the Act without the trust being registered under section 12A of the Act, does not stand. Further, the assessee was a public trust registered under the provisions of BPT Act, 1950 and where such recognition has been given to the trust, then it is established that the assessee is carrying on its charitable activities. The assessment proceedings or determination of income in the hands of assessee stands on a different footing and for that, provisions of the Act are there. Merely because the assessee had filed its return of income and claimed certain exemptions will not jeopardize the case of assessee as far as the grant of registration under section 12AA of the Act. The assessee having moved an application for registration, which was found to be in order and where the objects of the trust are charitable and activities of the trust are genuine, for the reason that surplus has been generated by the said trust does not merit its rejection. Further, we find no merit in the order of Commissioner in denying registration under section 12AA of the Act on the ground that there was delay in filing of initial application for registration under section 12A of the Act. The perusal of objects of the trust, clearly establish that the trust was established for carrying on charitable activities and as per clauses 5 and 6 of the Trust Deed, it was provided that the income of the trust fund or any part or parts of the trust fund or residue of the income would be applied for the benefit of all the persons irrespective of caste, creed, nationality or religion. Even if the said activity takes the colour of religious activity, the registration under section 12AA of the Act cannot be denied, where the assessee is engaged in both charitable and religious activities - Decided in favour of assessee.
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2016 (6) TMI 120
Deduction u/s. 10B computation - Held that:- The assessee is entitled to the claim of deduction under section 10B of the Act before setting off of brought forward depreciation losses. The Assessing Officer is directed to compute the said deduction under section 10B of the Act, accordingly. - Decided in favour of assessee.
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2016 (6) TMI 119
Addition on difference in freight charges - difference in disclosure by the assessee in its return of income vis-à-vis TDS Certificate - CIT(A) accepted assessee’s contention that this receipt was not disclosed in the return, because the exact amount was spent by the assessee and no profit was earned on this receipt - Held that:- We do not find any merit in this observation of CIT(A) insofar as even if the assessee had incurred expenditure equal to the amount of receipt, both receipt and expenditure are required to be shown in the audited profit and loss account as income and expenditure respectively along with supporting evidence of expenditure so incurred for earning the concerned revenue. Accordingly, the addition deleted by the CIT(A) has no legs to stand. In the interest of justice, we restore this matter to the file of AO for deciding afresh after verifying assessee’s contention that it has incurred equal amount of expenditure with regard to labour charges received so as to reach to the conclusion that no income has been generated out of it. The AO is also directed to verify whether in the audited P&L account the assessee has included both income and expenditure and to decide the issue afresh. - Decided in favour of revenue for statistical purposes. Accrual of income - Income accounted for in the next financial year - Held that:- The amount of ₹ 4,11,234/- was deleted by CIT(A) on the plea that this income pertains to the bills raised by the assessee in the month of March, which has been taken by the assessee as its income in its account in the month of April, 2008. However, nothing was placed on record by the assessee to justify CIT(A)’s conclusion that this income was accounted for in the next financial year. In the interest of justice, we restore this amount of ₹ 4,11,234/- to the file of AO to verify as to whether the assessee has accounted for this income in the subsequent year, so as to justify its of not including the same in the year under consideration. Decided in favour of revenue for statistical purposes.
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2016 (6) TMI 118
Disallowance under section 14A - Held that:- It is an undisputed fact that, the assessee has not earned any exempt income during the year on the investment made in the subsidiary company, stated for the business purpose, that is, for acquiring controlling interest and in the nature of strategic investment. Once there is no exempt income during the year, then in wake of latest Delhi High Court decision in the case of Cheminvest Ltd. vs. CIT, reported in [2015 (9) TMI 238 - DELHI HIGH COURT ], no disallowance under section 14A can be made. Thus we hold that, no disallowance under section 14A is called for - Decided in favour of assessee Disallowance of expenditure incurred on repairs and maintenance on household premises by treating the same to be capital expenditure - Held that:- From the perusal of the details furnished before the authorities below as well as before us, we find that it is mainly in the nature of exterior works done like electrical work, P0P and false ceiling work, painting, plumbing, aluminum, partition cum door, vertical blinds, sun control films, fire alarm systems etc. The expenditures which have been incurred on the premises does not belong to the assessee, albeit has been taken for a temporary period for conducting its business, that is, to work efficiently in the premises looking to the needs and requirements of modern business premises. The Department has referred to Explanation 1 to section 32, which only refers to any capital expenditure incurred. It does not speak about the revenue expenditure. Thus, reference of Explanation 1 to section 32 in the grounds of appeal may not be relevant. The section 30(a)(i) on the other hand provides that, if repairs have been carried out in the premises occupies as a tenant then it has to be allowed as deduction under section 30 as ‘repairs’ that is, as cost of repairs to the premises. Thus the expenses should be looked upon as having been made for the purpose of conducting the business more profitably. Thus, if the expenditure has been incurred for carrying on business more efficiently on day-to-day basis then it has to be reckoned as revenue expenditure. - Decided in favour of assessee
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2016 (6) TMI 117
Reopening of assessment - validity of service of notice u/s 148 which was never served upon the assessee - Held that:- Whenever a reassessment is sought to be made u/s 147, issuing and serving of a valid notice u/s 148 is a mandatory precondition. The onus lies on the Revenue authorities to prove that the notice was served on the assessee within the stipulated period. It is only if the said notice is served on the assessee that the assessing officer would be justified in taking up proceedings against the assessee. If no notice is issued, or if the notice issued is shown to be invalid, then the proceedings taken up by the assessing officer would be illegal and void. In this case, it is very much apparent that the notice u/s 148 had not been served on the assessee. The Assessing Officer can assume jurisdiction to complete the assessment only after valid and legal service of the notice in accordance with law. Unless such notice has duly been served, the Assessing Officer cannot be said to have been clothed with the jurisdiction to pass the assessment order. The mandate of section 148 is that notice should be served on the assessee, by prescribed mode of service, which has undeniably not been carried out in this case. In the absence of a valid service of notice u/s 148, the reassessment order passed by the Assessing Officer is illegal and void ab initio. See CIT vs Chetan Gupta [2015 (9) TMI 756 - DELHI HIGH COURT ] - Decided in favour of assessee
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2016 (6) TMI 116
Addition of unexplained credits under Section 68 - Held that:- Mere filing of confirmation is not enough to prove the genuine credit, would clearly prove that the assessee failed to prove the genuine credit in the matter. The assessee failed to prove the identity of the creditors, their capacity and genuineness of the transaction in the matter. Whatsoever additional evidences were produced before the learned CIT(Appeals) are not sufficient to discharge the onus upon the assessee to prove the genuine credit in the matter. Further the assessee failed to explain why the same were not filed before the Assessing Officer. Therefore, the learned CIT(Appeals) was justified in refusing to admit this additional evidence in the case Shri Guljari Lal for loan of ₹ 2,50,000/-. Even before us no confirmation or any evidence have been filed to prove the genuineness of the credit. It was observed that the additional evidence produced before CIT(A) was not sufficient to discharge the onus upon the assessee to prove the genuine credit in the matter and further that the assessee had also failed to explain as to why the additional evidence could not be produced before the Assessing Officer. It has also been recorded that no independent confirmation of the creditors had been filed by the assessee. Thus, it was concluded that the assessee had booked bogus purchase of construction material in the profit and loss account as no purchase vouchers for a sum of ₹ 5,80,100/- had been produced. Therefore, the learned CIT (Appeals) was justified in confirming additions - Decided against assessee
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2016 (6) TMI 115
Addition u/s 68 - whether the receipt has satisfactorily been established to be on account of advance payment? - Held that:- As held by ITAT the advance money, in the present case before us, is adjusted the sale price of the motor cycle and sale is disclosed in the return of income i.e. the trading account of the assessee. Accordingly, we find no ambiguity in the system followed by the assessee. The aforesaid finding was recorded by the learned Tribunal on the basis of evidence disclosed before them which is also found in the paper book filed before us by Mr. Khaitan. It cannot, therefore, be said that the view taken by the Tribunal is perverse. The question essentially is a question of fact and the learned Tribunal on the basis of evidence was satisfied that the money had in fact been received by way of advance and therefore, no question of any bogus liability being created was there as held by the Assessing Officer. Section 68 in the facts of the case had no applicability. - Decided in favour of assessee.
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2016 (6) TMI 114
Expenditure incurred on repairs disallowed - Held that:- All the three authorities under the Act that the expenses claimed for repairs were inflated cannot be said to be perverse so as to warrant interference. As far as the judgment cited by Ms. Mehta on behalf of the assessee is concerned, the Tribunal's conclusion that the deduction claimed was unreasonable because the assessee's income would be reduced and that there was no evidence of reduction pursuant to the expenditure stated to be incurred is not of much assistance to the assessee inasmuch as that is not the ground on which the tribunal has upheld disallowance. The partial acceptance of disallowance cannot be lost sight of during its fact finding mission. The revenue authorities have appropriately disallowed an amount of ₹ 2,00,000/- out of ₹ 10,33,547/- on account of inflated cost of repairs. This is a possible view on the facts before it. Thus tribunal was right in disallowing repair expenditure to the extent of ₹ 2,00,000/- out of ₹ 10,33,547/- claimed as repairs expenditure - Decided in favour of the revenue
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2016 (6) TMI 113
Reopening of assessment - 90% of the mining franchise fee in computing the tax liability of the assessee - Commissioner of Income Tax (Appeals) has categorically held that the deduction under Section 80HHC of the Act was the subject matter of scrutiny in assessment proceedings under Section 143(3) of the Act; re-computation of the same deduction, on the basis of existing information, is only a change of opinion also affirmed by ITAT - Held that:- As the jurisdiction, which this Court can exercise under Section 260-A of the Act, is only if a substantial question of law arises for consideration, and as the findings recorded by the Commissioner of Income Tax (Appeals) and the Tribunal, on the inapplicability of the proviso to Section 147 of the Act to the case on hand, are findings of fact, we are satisfied that no question of law, much less a substantial question of law, arises for consideration necessitating the present appeal being entertained under Section 260-A of the Act. - Decided against revenue
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2016 (6) TMI 112
Addition of unexplained cash credits - Held that:- Section 68 of the Act stipulates that, where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. In the present case, the assessee is a partnership firm. The cash credits of ₹ 94,46,903/- have been explained by the firm as capital introduced by Sri Ch.Rajendra Kumar. If Sri Ch.Rajendra Kumar was unable to explain the source of funds, for his investment as capital in the partnership firm, the Assessing Officer would have been justified in adding these unexplained cash credits to the income of Sri Ch.Rajendra Kumar in his individual assessment. That, however, did not justify adding these cash credits of ₹ 90,46,903/- to the income of the firm as these credits have been explained by the firm as having been introduced as capital by Sri Ch.Rajendra Kumar, a partner.
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2016 (6) TMI 111
Reopening of assessment - reasons to believe - long term capital loss set off against the short term capital gain claimed by the assessee necessitated re-computation and re-determination - Held that:- Exercise of jurisdiction under Section 147 of the Act, in the present case, is not for the failure of the assessee to disclose fully and truly all material facts necessary for his assessment, but because the Assessing Officer was of the opinion that the set off claimed by the assessee earlier, and which was accepted by him while passing an assessment order earlier under Section 143(3) of the Act, necessitated re-computation and re-determination. As has been rightly held by the Tribunal such an exercise could not have been undertaken beyond the period of four years in view of the limitation prescribed under the proviso to Section 147 of the Act. The exercise undertaken by the Assessing Officer not only amounted to a change of opinion, but also a review of the earlier assessment order passed under Section 143(3) of the Act. - Decided in favour of assessee
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2016 (6) TMI 110
Reopening of assessment - addition on capital gain - Held that:- Both by the Commissioner of Income Tax (Appeals) and the Tribunal, the order passed by the assessing officer, under Section 143 (3) of the Act, records the claim of the assessee that the sale of land was liable to tax as capital gains. It is not even the case of the assessing officer that the assessee had failed to disclose all material and necessary facts and, as a result, income has escaped assessment. The assessee’s claim that the income was liable to be taxed, under the head capital gains, could have been disallowed by the assessing officer while passing an assessment order under Section 143 (3) of the Act, and the said income could have been treated as business income. Having failed to do so, the assessing officer could not have exercised jurisdiction under Section 147 of the Act beyond a period of four years. Even otherwise, as has been rightly held by the Tribunal, jurisdiction under Section 147 of the Act cannot be exercised for a mere change of opinion. We find no error in the order of the Tribunal, much less a substantial question of law, necessitating interference in this appeal. - Decided in favour of assessee.
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2016 (6) TMI 109
Penalty under Section 271(1)(c) - contributions for investment by the assessee which were treated as unexplained income - Held that:- Penalty under Section 271(1)(c) of the Income Tax can be levied only in cases where the Assessing Officer, or the Commissioner of Income Tax (Appeals), are satisfied that any person has concealed the particulars of his income, or has furnished inaccurate particulars of such income. The penalty proceedings initiated against the respondent-assessee was on the ground that he had concealed the particulars of his income. Both the Commissioner (Appeals) and the Tribunal have recorded a finding that the assessee had not concealed the income, and the Assessing Officer had merely disbelieved his version. The Tribunal is a final court on fact and, save a perverse finding or a finding based on no evidence, no substantial question of law can be said to have arisen necessitating interference under Section 260-A of the Act. Both the Commissioner of Income Tax (Appeals) and the Tribunal have assigned reasons for arriving at the satisfaction that there was no concealment of income on the part of the assessee and, based on such findings, held that no penalty could be levied on the additions made - Decided against revenue
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2016 (6) TMI 108
Penalty under Section 271(1)(c) - addition made on recomputation of income under the head ‘income from house property' - Tribunal held that levy of penalty under Section 271(1)(c) of the Act, in respect of this addition, was not warranted - Held that:- An appeal under Section 260A of the Act can be entertained only if a substantial question of law arises for consideration. It is only if the appellants are able to satisfy the Court that the finding recorded by the Tribunal is based on no evidence or the finding is perverse, can a substantial question of law be said to arise necessitating interference in appeal under Section 260A of the Act. In the present case, the Tribunal has held that the addition made by the Assessing Officer was on recomputation of the income under the head ‘income from house property’ and “loss on sale of fixed assets”; the assessee had neither concealed any income nor furnished inaccurate particulars of income for the year under consideration; and that the addition was merely technical in nature. It is not even the case of Sri J.V.Prasad, learned Standing Counsel for the Income Tax Department, that the above referred findings of the Tribunal are either perverse or are based on no evidence. We see no reason, therefore, to interfere with the order of the Tribunal in the exercise of jurisdiction under Section 260A of the Act. - Decided against revenue
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2016 (6) TMI 107
Difference in brokerage receivable shown in the assessee’s accounts and sellers accounts - Addition to the income returned by the assessee on the ground that the amounts correspond to the TDS certificates having been offered for tax - method of accounting followed - Held that:- CIT(A) while accepting the claims of the assessee with regard to the returned incomes for th years under appeal, also held at the same time that the assessee is eligible to claim credit for TDS only in respect of income offered for tax in the relevant year. In that process, the CIT(A) also upheld the view taken by the Assessing Officer that the assessee cannot claim credit for the TDS unless and until the income in relation to which TDS, was made was offered to tax in the relevant year. Since the assessee is found to be a del cre dere agent, the role of the asessee, as observed by the CIT(A) in the impugned order, does not cease simply on booking the order for the seller or the delivery of goods to the purchaser, but extents till the time the sale proceeds are realized by the seller from the buyer. Considering the nature of the assessee’s business, as a del cre dere agent, in which actual receipt of the brokerage would depend on the actual realization of the sale proceeds by the seller from the purchaser, as claimed by the assessee and accepted by the CIT(A), assessee is justified in following cash system of accounting, finding it to be appropriate for its business. When the assessee claims to be following that method of accounting consistently, and it has been recognized by the statute, there is no justification for the Assessing Officer to disturb the book results disclosed by the assessee. - Decided against revenue
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2016 (6) TMI 106
Computation of income - sales computation - reference to special audit u/s.142(2A) - Held that:- In the present case, the books of the assessee cannot be accepted due to the complexity of the nature of business and maintenance of books of account at the same time the recasted profits & loss computed by the special auditor also has reliability issue, which were computed based on presumptions. This is the fit case to estimate the income of the assessee. In this given situation, the presumptive rate available in the section 44AD may be adopted even though the turnover of the assessee is more than the turnover of the eligible assessee as prescribed in the section 44AD. This is the rate which is near to the percentage arrived after factoring the reliability and the income computed by the special auditor. Hence, we direct the AO to adopt 8% of the sales as determined by the special auditor, to compute the income of the assessee year to year basis for AY 2000-01 to 2006-07. - Decided against revenue
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Customs
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2016 (6) TMI 148
Refund claim - Department reduced the amount of refund to the extent the amount was paid utiliziing the Cenvat credit representing DEPB and not in cash - Held that:- Once such proposition is accepted there arises a refund of ₹ 1,66,990/- which was paid in cash as part of ₹ 6,27,213/- earlier paid towards duty liability. At this juncture, appellant says that there is no formula in the Customs law to reduce the refund by any proportion, adjusting duty liability arbitrarily, a part form DEPB scrips and part from cash. He is correct in his statement for the reason that there is no law in that regard. Therefore, appellant is entitled to refund of ₹ 1,66,990/-. If there is any interest payable that shall also be taken care by the Adjudicating Authority. - Matter remanded back
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2016 (6) TMI 147
Period of limitation - Maintainability of ROM application - filed after the prescribed time limit of six months from the date of the order - Held that:- the impugned order is dated 18.08.2015 and hence the time limit for filing any ROM application expired on 17.02.2016. However, the ROM application has been filed on 04.03.2016, after six months from the date of impugned order. The Hon'ble Karnataka High Court in the case of CCE, Pune -III vs. GE Medical Systems [2009 (11) TMI 676 - KARNATAKA HIGH COURT] has examined exactly the same issue and has considered whether the CESTAT is correct in rejecting the ROM application filed beyond the period of six months, especially in view of the fact that the ROM application was filed within six months from the date of receipt of the final order by relying upon the decision of the Hon’ble Supreme Court in the case of Commissioner of Customs and Central Excise vs. Hongo India (P) Limited [2009 (3) TMI 31 - SUPREME COURT] and held that the ROM application filed after the prescribed time limit of six months is liable for rejection. Therefore, the subject ROM application is not maintainable. - ROM application rejected
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2016 (6) TMI 146
Mis-declaration of goods imported - goods declared as old and used petrol engines claimed as scrap by the appellant - Revenue on inspection found that the goods are not scrap and hence, held as second-hand machinery, which requires license from DGFT as per EXIM Policy 2002-2007 - Confiscation in lieu of redemption fine and imposition of penalty - Section 111(d) and 112(a) of the Customs Act, 1962 - Held that:- The report of Rane Engineers and Surveyors, government registered chartered engineers states that the consignment is in damaged condition and none of the engine can be used as it is not re-conditioned nor do the engines have any residual life even if they are overhauled. On the face of such categorical observation of the government registered chartered engineers, there is nothing on records to show that the imported consignment is second-hand machinery. Therefore, the declaration made by the appellant in the Bill of Entry also indicates that they had imported the consignment as scrap which is obvious from the fact that Bill of Entry indicates the quantity in Kgs. Hence, the impugned order of the lower authorities, is incorrect and unsustainable. Accordingly, the order of confiscation and penalty is set aside. At the same time, the order directing the re-export of the said consignment is upheld as it was on request of the importer. - Decided in favor of assessee.
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2016 (6) TMI 145
Withholding of refund due - Unjust enrichment - Held that:- Doctrine of unjust enrichment was embedded to the customs law with effect from 13.7.2006. The law in force at the time of import was not subject to such provision. - when the law on levy and the remedial measure of law at the time of import was known to both sides at the time of occurrence of the event i.e. import, in absence of provision to the contrary, respondent was out of purview of test of unjust enrichment. - Decided against the revenue
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2016 (6) TMI 144
Recovery of Duty Drawback refunded - 100% EOU cannot claim any duty drawback - Seeking grant of inspection of the investigation file and the non-relied upon documents (Non-RUDs) - Held that:- a fair procedure should be followed by the Adjudicating Authority. Having permitted the Petitioner to collect the non-RUDs from the office of the DRI, after issuing notice “on any working day with prior appointment”, it is surprising that by the impugned letter, the Adjudicating Authority informed the Petitioner that its request for inspecting the non- RUDs is rejected. Clearly there has been a change of mind by the Adjudicating Authority on this aspect. The fact that no reasons have been given in the said letter for such rejection makes it even more suspect. As far as other request for inspection of the investigation file is concerned, Mr Satish Kumar points out that there could be documents in the investigation file which cannot be shown to the Petitioner and other co-noticees on account of their nature. The Court is of the view that this by itself cannot be a reason to refuse inspection of the investigation file. If there are documents in the investigation file which, according to the Adjudicating Authority, cannot be shown to the Petitioner, the Adjudicating Authority should give reasons in writing for refusing inspection of such documents. Therefore, the rejection of Petitioner’s request by the impugned letter by the Adjudicating Authority is untenable in law and is, accordingly, set aside. - Appellant allowed to investigate the file and non- RUDs.
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2016 (6) TMI 143
Leviability of Custom duty - High Court refused to interfere with the findings of the Tribunal that goods which were totally unsuitable and rejected as waste were received by the manufacturer and put to use including those damaged during transit and therefore on the damaged goods, which could not be put to any further use, no custom duty was payable - Apex Court dismissed the appeal being bereft of any merit
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Corporate Laws
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2016 (6) TMI 139
Composite Scheme of Arrangement - Held that:- On consideration of all the relevant facts and the procedural requirements in terms of Section 391-394 of the Act and the relevant Rules and on due consideration of the reports of the Regional Director, Ministry of Corporate Affairs, New Delhi and the Official Liquidator, the Composite Scheme of Arrangement is hereby sanctioned and as a result thereto, the Assets and Liabilities of the Petitioner-Amalgamating Companies No.1 to 3 shall stand vested in Petitioner-Company No.4/Amalgamated Company/Demerged Company, and the Amalgamating Companies No.1 to 3 shall be dissolved without being wound up and “Investment Business Undertaking” of Petitioner-Company No.4/Amalgamated Company/Demerged Company shall demerge into Petitioner-Company No.5/Resulting Company and the Assets and Liabilities of “Investment Business Undertaking” of Petitioner-Company No.4/Amalgamated Company/Demerged Company shall stand vested in Petitioner-Company No.5/Resulting Company. The Petitioner-Companies shall be required to comply with the procedural requirement with regard to Accounting Standard 14 issued by the Institute of Chartered Accountants of India. The Composite Scheme of Arrangement shall be binding on the Petitioners-Companies, their respective Shareholders, Creditors and all concerned.
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2016 (6) TMI 138
Appointment of auditor - Held that:- There is no material produced on record to contend that the appellant herein-original respondent No.3 and his group are having no confidence in the statutory auditor. No material is produced to show that the statutory auditor was appointed by the original petitioners No.1 and 2 still act or that the auditor is acting as per the directions of petitioners No.1 and 2. However, at the same time confidence in the enquiry for examination of the record to be made by the Auditor is required. Hence, we find that if there is joint consensus amongst original petitioners No.1 and 2 as well as original respondent No.3, for a particular auditor, he can be assigned the work for examination of the record of the Company as per the direction No.(h) but in the absence thereof, the matter should be left to the Registrar of the Companies to nominate an auditor for examination of the record of the Company. Petitioners No.1 and 2 and respondent No.3 will be the joint signatories of the bank account of respondent No.1-Company and such shall be required for incurring expenses on behalf of the Company, excluding the routine expenses for payment of salary of the staff and for payment of any statutory dues of the Company. In case of routine expenses such as payment of salary of the staff and statutory dues, signature of any of the two persons from amongst the aforesaid three shall be sufficient for the operation of the bank account; The Auditor, who is to be nominated by the Registrar of Companies, in case there is no consensus between the parties, shall examine the allegations of misappropriation of money in the process of audit and the findings, if any, be reported in the auditor’s report and the balance sheet.It is observed that, if within a period of two weeks, original petitioners No.1 and 2 as well as original respondent No.3 give a common name of any auditor, the Registrar of Companies shall assign the work to such auditor, failing which, within a period of two weeks therefrom the Registrar of Companies shall exercise his power for nominating the auditor as referred to herein above. It is observed that, if within a period of two weeks, original petitioners No.1 and 2 as well as original respondent No.3 give a common name of any auditor, the Registrar of Companies shall assign the work to such auditor, failing which, within a period of two weeks therefrom the Registrar of Companies shall exercise his power for nominating the auditor as referred to herein above
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Service Tax
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2016 (6) TMI 162
Demand of service tax - Period of limitation - Business Auxiliary Service and Business Support Service - Appellant received commission paid by banking and insurance companies, subvented commission to its customers and provided infrastructural support services for which having received some amount not discharged tax liability - Held that:- the issue of discharge of service tax liability on the commission received from the financial institutions and the insurance companies by an automobile dealer is taxable is the law now settled by the larger bench in the case of Pagariya Auto Centre Vs CCE, Aurangabad [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)]. It is also found that the Hon’ble High Court of Karnataka in the case of CCE, Bangalore Vs MTR Foods has held that once the audit of the records of the assessee takes place no objection is taken on a issue in dispute, the demand raised by invoking the extended period is unsustainable. Therefore, in view of the authoritative judicial pronouncement, the demand is barred by limitation. The impugned order is set aside. - Decided in favour of appellant
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2016 (6) TMI 161
Entitlement of Cenvat credit - input services - Rule 2(l) of the cenvat credit Rules, 2004 - Financial service - Held that:- this service is a covered service under Rule 2 (l) of CVR, 2004. Added to that finance being the necessary input for the purpose of carrying out the manufacturing activity and money is invested to carryout manufacture, credit cannot be denied for such services availed. Clearing and Forwarding and Customs Clearing Services - Held that:- these services are integrally connected to the business. Procurement of raw materials and finished goods are essence of business. Therefore, the appellant cannot be denied to avail credit in respect of this service. Insurance Service - Held that:- this service protects the raw materials and finished goods in transit as well as the assets of the company, for which credit cannot be denied for availing this service. Auction service - Held that:- this service is also integral part of the manufacturing activity since, clearance of the dumped goods having no utility is necessary to be removed in order to store raw materials or finished goods. Therefore, this service cannot be said to be not integrally connected and credit cannot be denied. Legal services - Held that:- such services are availed for statutory compliance which is the duty of the assessee to comply and the credit cannot be denied for such services since it has relevancy to the activity of manufacture. Once there is legal obligation and the assessee has to discharge the same irrespective of the manufacture being done but, business to be carried out, cenvat credit of service tax paid on such count is undeniable. Courier service - Held that:- such service is considered necessary for the business because without such service, there may not be possibility of movement of documents as well as goods with least cost. Therefore, the appellant is entitled to cenvat credit on this count. Information Technology service - Held that:- this is an integral part of the business activity to reduce the paper work and to carryout business efficiently and effectively. Maintenance of software is also integral part of activity of business. Therefore, this service is inseparable from the business activity of the appellant for which appellant cannot be denied cenvat credit. Photography service - Held that:- this service is used to issue ID cards to the employees and for other different business activity, which is used in relation to the manufacturing of final products. Therefore credit of service tax on such input service is not deniable. Rent a cab service - Held that:- this is found to be essential for the transportation of the employees in the adjudication order itself. When such a service is not found irrelevant to the business or manufacturing activity, credit of input tax cannot be denied since rent a cab service is essential for the movement of the employees to factory and to carry out business activity. Travel booking service - Held that:- it is explained in the record that it is attributable to the transportation of the employees to different customer places and for business promotion activities. Therefore credit of service tax on this service cannot be denied. Designing services - Held that:- such services pertained to the tools used in the manufacture of finished products, logos, graphics, corporate identity designing etc., This has nexus to the manufacture and clearance of goods for which cenvat credit cannot be denied on these services. Construction service - Held that:- it is explained to be used in modernization, renovation and repairs of the factory and for construction of temporary sheds made to store raw materials and other assets of the company. Once there is no evidence found on record demonstrating that such expenses relate to different activity, the appellant is eligible to cenvat credit for this service also. CHA service - Held that:- it is also indispensable to carryout clearance of finished goods for which no cenvat credit on this count can be denied. Business Auxiliary Service and Warehouse service - Held that:- BAS is explained to be relating to supply of labour service for manufacture and included in the definition of input service as per Rule 2(l) of CCR, 2004, which is relevant to the manufacturing activity and therefore, appellant cannot be denied credit thereon. So far as the warehouse service is concerned, that related to storing of raw materials as well as finished goods either before clearance or after clearance. This itself is indication of its relevance to the manufacturing activity and therefore, credit cannot be denied thereon. All the services pertain to the manufacturing activity and the respective services were input for the said activity for which that was utilised - - Therefore, the decision of the adjudicating authority denying Cenvat Credit on above counts is reversed and the appellants are entitled to cenvat credit on all the services. - Decided in favour of appellant
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2016 (6) TMI 160
Waiver of penalty - Imposed under Section 78 of the Finance Act, 1994 - Services of Storage and Warehousing to various industries - non-payment of tax during the period Sept'2008 to Dec'2009 - entire demand along with interest paid before issuance of SCN - Held that:- both the OIO and OIA have justified the imposition of penalty under Section 78 of the Act without appreciating the fact that the ingredients have not been incorporated in the show cause notice. The findings given by the first appellate authority in his order is to the effect that the payment of service tax, whether before or after the issue of show cause notice cannot alter the liability of penalty, as per Section 78 of the Finance Act and that the appellant has already been spared from non-imposition of penalty under section 78 of the Act. This is clearly an erroneous finding as the penalty under section 78 can be imposed only under the circumstances mentioned in the section. As per Judgment of Hon'ble Supreme Court in the case of CCE, Nagpur Vs Ballarpur Industries Ltd. [2007 (8) TMI 10 - SUPREME COURT OF INDIA], the show cause notice is the very foundation in any proceedings. What is not alleged in the show cause notice, cannot be traversed at a later point of time in any proceedings. Therefore, by following the same the penalty under section 78 of the Finance Act is unsustainable which is proved by the judgment of the Tribunal in the case of CST, New Delhi Vs Independent News Services P.Ltd. [2011 (3) TMI 173 - CESTAT, NEW DELHI]. Accordingly penalty is set aside. - Decided in favour of appellant
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2016 (6) TMI 159
Imposition of penalty - Section 78 of the Finance Act, 1994 - Advertisement Agency Service - non-payment of Service tax - entire demand along with interest paid before issuance of SCN - Held that:- if the tax payable stands paid based on assessee's own ascertainment or on the basis of Central Excise Officer, before service of notice on an assessee, no notice shall be served in respect of the amount so paid. In this case, no notice ought to have been issued as the appellant is coming within the regress of Section 73(3). It is found that this is a repetitive show cause notice and therefore by applying the decision of Hon'ble Supreme Court in the case of Nizam Sugar Factory Vs CCE - [2006 (4) TMI 127 - SUPREME COURT OF INDIA], when relevant facts are in the knowledge of the authorities, when the first SCN was issued, the subsequent SCN cannot allege suppression of facts. The penalty under Section 78 can be imposed only when there is fraud or collusion or wilful misstatement or suppression of facts but in the instant case when the tax along with interest stands paid, the need for imposition of penalty is unsustainable. - Decided in favour of appellant
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2016 (6) TMI 158
Eligibility of refund claim - payment of service under protest - rejection of refund for the period 01/4/2006 to 23/4/2007 as barred by limitation and for the period post 24/4/2007, on account of non-submission of documentary evidence indicating that refund claim was related to payment of service tax for Construction of Residential Services - Service tax paid under protest - Held that:- the respondent’s claim of refund of service tax cannot be held to have been made by the said letter dated 24/4/2007 and the same is clearly relatable to future service tax which they started paying under protest in terms of the said letter. There is no mention of the period for which the refund of service tax is being sought. Merely on requesting the Superintendent to refund the service tax, without even quantifying the same and without even referring to the period during which the same was deposited, especially when they continued to pay in future awaiting the decision of the Hon’ble Allahabad High Court cannot be considered to be a refund application for the payments already made by them in the past. As such, we fully agree with the Revenue that the said letter cannot be considered to be a refund application. It is well settled law that the Authorities working under the Act are bound by the provisions of the Act and no general limitation period can be adopted for grant of refund even in those cases where it was not required to be paid. The provisions of Section 11B of the Central Excise Act, 1944 lays down the limitation period of one year from th4e relevant date for claim of refund to be made by an Assessee unless the same has been paid under protest. It is well settled law that the Authorities working under the Act are bound by the provisions of the Act and no general limitation period can be adopted for grant of refund even in those cases where it was not required to be paid. The provisions of Section 11B of the Central Excise Act, 1944 lays down the limitation period of one year from th4e relevant date for claim of refund to be made by an Assessee unless the same has been paid under protest. Accordingly, the refund of ₹ 72,21,075/- is barred by limitation as held by the Original Adjudicating Authority. In respect of the remaining amount of ₹ 32,67,569/-, which falls within the limitation period, we note that the fact the service tax was deposited by the Assessee in relation to the services of Residential Complex Construction is required to be examined. The factual position is required to be ascertained irrespective of the fact as to whether the Assessee was registered under the said services or not. Further, the principle of unjust enrichment is also required to be examined. Such factual verifications can be done only at the level of Original Adjudicating Authority, for which purpose we remand the matter to him. - Revenue’s appeal is partially allowed and partially remanded
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2016 (6) TMI 150
Claim of rebate / Refund in cash - rebate claim sanctioned by way of credit to Cenvat account - Export of Services Rules, 2005 - providing and exporting Consulting Engineering Service - Held that:- appellant was correct in emphasizing that the rebate claim should be paid in cash. It is settled law that the debit of an amount in Cenvat account is considered as discharged of tax liability. Our views are fortified by the judgments of Hon’ble High Court of Uttarakhand in the case of Apco Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT]. The impugned order is set aside. - Decided in favour of appellant with consequential relief
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Central Excise
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2016 (6) TMI 157
Confiscation in lieu of redemption fine and imposition of penalties - possession of excess stock of copper rods and copper ingots - not accounted for in statutory records - Held that:- when this Court dismissed the appeal against the decision of the Full Bench of the CESTAT in Commissioner of Central Excise, Delhi v. Ganpati Rolling Pvt. Ltd. [2014 (6) TMI 234 - CESTAT NEW DELHI] as withdrawn, there was obviously no occasion to consider any of the decisions of the Gujarat High Court in the case of Commissioner of Central Excise & Customs v. Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT] and in the case of Prince Multiplast Pvt. Ltd. v. Union of India [2012 (5) TMI 474 - GUJARAT HIGH COURT] , which in the considered view of the Court merit acceptance. Therefore, the court is unable to find any infirmity in the impugned order of the CESTAT. - Decided against revenue
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2016 (6) TMI 156
Attachment of Bank Account - Account was frozen since 2007 despite the Petitioner having succeeded in its appeal before the CESTAT on 13th January, 2016 - Fraudulent availment of central excise portion of drawback incentives. - Held that:- the Respondent is not justified in continuing to keep the Petitioner’s account frozen for nearly five months after the Petitioner succeeded before the CESTAT. If the Respondent was keen that the Petitioner's account should continue to remain frozen, it should have taken immediate steps to file an appeal. Therefore, the Court directs that the Petitioner’s account shall be de-frozen forthwith. The Petitioner is permitted to approach the Manager of the concerned branch of the Punjab National Bank, with a certified copy of this order, and the Manager will proceed to forthwith de-freeze the said account. - Petition disposed of
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2016 (6) TMI 155
Cenvat Credit - Nexus between input services and manufacturing activity - deemed export - Whether the input credit availed on various services by the respondent would fall under the definition of input services/input as per the definition existing prior to 01.04.2011 and whether there is a nexus between input services and the final product exported - Held that:- by examining the definition of input service as per Rule 2(l), it is found that it has a very wide scope as held by the Hon’ble Bombay High Court in the case of Coca Cola Vs. CCE, Pune-III and further while allowing the cenvat credit with regard to input services involved in these appeals, the learned Commissioner has relied upon various decisions of the Courts and the Tribunals and has also mentioned about the nexus. Therefore in view of the well reasoned finding of the Commissioner (Appeals), I am of the considered opinion that the findings given by the Commissioner (Appeals) are sustainable and there is no infirmity in it and the same is upheld. Eligibility for refund of unutilized Cenvat credit - Rule 5 of the Cenvat Credit Rules 2004 - clearances made to other 100% EOU on inter unit transfer - Held that:- this Tribunal has allowed the refund claim filed by the respondent in its own case reported in [2015 (6) TMI 377 - CESTAT BENGLALORE]. Further the Hon’ble Supreme Court in the case of Virlon Textile Mills Ltd. Vs. CCE, Mumbai [2007 (4) TMI 6 - SUPREME COURT OF INDIA] has held that deemed export are equivalent to physical export. The Hon’ble High court of Gujarat in the case of CCE Vs. NBM Industries [2011 (9) TMI 360 - GUJARAT HIGH COURT] has held that refund could not be denied on the ground that it was case of deemed export. Since the Apex Court as well as the High Courts have specifically held that deemed exports are equivalent to physical export and therefore keeping in view the precedents of the High Court and the Supreme Court, I hold that clearances to an EOU is to be treated as export and refund of unutilized credit is allowed to the respondent-assessee. As far as application seeking additional grounds by the Revenue is concerned I allow the same on the ground that it is only an additional ground which is sought to be added in the existing grounds of appeal. - Decided against the revenue
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2016 (6) TMI 154
Clandestine removal - Estimation of production - Denial of SSI Exemption - Comparison of the power consumption during two periods, i.e., one, when the assess was not using the electric motors and second, when they were admittedly using - Manufacture of Tin Containers with the aid of power prior to May, 2002 as also with the Hand Operated Plants - Held that:- there is nothing on record to reflect upon the electricity consumption per motor, per month and the number of motors being used by the assessee during a particular month. It is simplicitor picking up of the unit's consumption of the assessee from the electricity bills and based upon that, trying to come to the conclusion that electric motors were being used by the assessee. As rightly observed by Commissioner (Appeals) such use of electricity can be on account of several other factors and cannot have a direct connection or nexus with the use of electric motors in the assesse's factory. Further, the respondents have also placed on record before the authorities below that electric motors being used by them prior to May, 2001, stands sold by them under the cover of invoices. The same were re-purchased in the December, 2002 under the cover of the invoices. Revenue has not bothered to examine the purchaser in the first case and seller in the second case so as to controvert above the fact. If there is no dispute by the Revenue in respect of sale and purchase of electric motor, we find that the respondents have made out their case on merits in their favour. We find no reason justifiable enough to interfere in the impugned order of Commissioner (Appeals). - Decided against the revenue
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2016 (6) TMI 153
Refund claim - Period of limitation - claim was filed on 29.07.2004 which was returned on the ground of pre-mature inasmuch as investigation about the valuation work was still going on, accordingly, appellant resubmitted their claim on 28.10.2005, after the completion of the investigation - Held that:- there is no date available on record with regard to completion of the investigation. Otherwise also we note that when an assessee deposits the amount by making a debit entry in their PLA account during the course of investigation, when some dispute on the valuation is going on, such debit has to be held as deposit and not as duty. In any case the assessee has no legal obligation to make a deposit of said amount during the pendency of the investigation which dispute ultimately got resolved in their favour. As such application filed by the respondent on 29.07.2004 in respect of the deposit made by them on 22.03.2004, is required to be taken into consideration for the purpose of limitation. Inasmuch as the same was within the period of limitation, we agree with the views of the Commissioner (Appeals). Unjust enrichment - deposit was made by the appellant as a lumpsum amount by making debit entry in their PLA account without raising any supplementary invoice or any other document - Held that:- if no invoice was ever raised by the respondent, the question of recovery of the said amount from any other person does not arise. Further, the Commissioner (Appeals) has also observed that the goods were cleared to their sister unit who has not availed any cenvat credit of the same. This fact reflect upon the fact that no invoice was raised, nor was any amount recovered from the customer and no credit of the same was availed. In such a scenario the appellate authority was right that refund claim was not hit by unjust enrichment. Payment of interest on account of delay in payment of refund amount - original claim filed on 29.07.2004 in terms of the provisions to Section 11BB of the Act - Held that:- it is found that there was no order on the valuation and it is during the investigation itself , the valuation was found in favour of the assessee. Otherwise also, the assessee was under no legal obligation to make the deposit during the investigation. As such we agree with the order passed by the ld. Commissioner (Appeals) that having filed the refund application on 29.07.2004, the respondent would be entitled to the interest. Therefore, no reason found to interfere in the order of the Commissioner (Appeals). - Decided against the revenue
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2016 (6) TMI 152
Maintainability or revenue appeal - Whether the appeal filed by the Revenue was not maintainable as there was no proper review or authorization in accordance with Section 35 B(2) of the Act, 1944 - Held that:- the issue is no more res integra and the same High Court of Chattisgarh in a latter decision answered the question of law now referred to this Tribunal for decision. Therefore, by following the decision of the Hon'ble High Court in the case of M/s. Sidhi Vinayak Sponge Iron Pvt. Ltd. [2013 (7) TMI 924 - CHHATTISGARH HIGH COURT] and also of various other decisions of the High Courts, referred by the Revenue, it is found that in the present case the appeal filed by the Revenue is maintainable and did not suffer from any infirmity of not having proper authorization. Considering the amount involved in the present issue well below ₹ 10 lakhs , the appeal is dismissed on this ground. - Appeal dismissed
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2016 (6) TMI 151
Denial of refund claim - Unjust enrichment - appellants working under Maharashtra State Electricity Distribution Co. Ltd. and are a State Government Undertaking argued that the electricity tariffs are determined by Maharashtra State Electricity Regulatory Commission and neither generating company nor the distributing company can load the electricity tariff, so the question of passing on the burden of duty to anybody else does not arise - Held that:- by following the earlier decision of Tribunal in the case of Maharashtra State Electricity Board Vs CCE, Pune-I [2007 (8) TMI 566 - CESTAT, MUMBAI],the benefit is denied to Maharashtra State Electricity Board. - Decided against the appellant
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2016 (6) TMI 149
Leviability of duty on samples drawn - Manufacture of toilet soaps and detergents required to be tested at certain prescribed stages of the manufacturing process and samples, drawn from each batch, are to be retained for prescribed periods - samples for test purpose has been further segregated as those drawn for 'in-house laboratory testing' and for 'preservation for investigation of complaints' as well as samples which are drawn for sending outside the factory premises for testing. Held that:- in the absence of a specific exemption for samples taken outside the factory premises, they are liable to duty in a manner similar to goods removed from the factory of production. However, samples which are retained in the factory of production for a prescribed period for conformity with standards as well as those which are tested within the factory are not, in effect, removed from the factory and it would appear that these should not be held liable to excise duty at that stage. It would appear that the adjudicating authority has been over-zealous in interpreting the provision relating to duty liability on removal to be applicable to all samples because of juxtaposition of sentences. We have no doubt in our mind that drawing of samples and removal of samples are two different events and it is only the latter that calls for discharge of duty liability. To the extent that samples are reintroduced into the production process, they would, undoubtedly, make their way into stock of finished goods and would, in due course, be removed on payment of duty. Even if the samples were to lose their identity and characteristics in testing, the cost of such samples would, in the normal course of business, be absorbed into the finished products which are subject to duty. There is, therefore, no logic in concluding that there is a loss of revenue on account of drawal of samples to the extent that those are retained or tested within the factory of production. Therefore, in view of instruction prescribing duty payment only upon removal from the factory, the ultimate inclusion of the samples or the costs in goods that are cleared from the factory of production and the decision of Tribunal in the case of Thermax Cullgian Water Technologies Ltd. v. Commissioner of Central Excise [2013 (12) TMI 977 - CESTAT MUMBAI] and the decision of Hon'ble High Court of Bombay in the case of Commissioner of Central Excise v. RPG Life Sciences Ltd. [2010 (12) TMI 52 - BOMBAY HIGH COURT], it is found that levy of duty on samples is without authority of law. - Decided in favour of appellant
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CST, VAT & Sales Tax
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2016 (6) TMI 142
Imposition of penalty - Section 78(5) of the RST Act - Import of certain electrical goods from Singapore - Declaration form ST-18A was not found with the driver - Held that:- the penalty has rightly been deleted by the DC(A) and the said order has been upheld by the Tax Board which is just and proper. Admittedly, the goods were being imported directly from Singapore as per bill of entry and builty etc. produced at the time when the vehicle was intercepted. It is also admitted that the said goods had directly come after custom clearance from New Delhi International Airport and such a finding of fact has been noticed by all the three lower authorities. In my view, there is a difference in between the goods coming in the state of Rajasthan from other States as against the goods being directly imported from foreign countries as in the instant case. No occasion would arise for carrying a declaration form in such a case as the foreign seller may not be aware of such eventualities of filing of declaration form ST-18A. Needless to mention it will be detrimental to even imports from foreign countries as the foreign seller may not be aware of Indian Laws (Tax) and filling such declaration form as and when goods are sold to Indian Traders/Businessman and which came after custom clearance. Though Rule 53 prescribes that declaration form ST-18-A is required to be carried but in my view, not at least in such an eventuality where the goods were directly imported from the foreign countries. It is also a finding of fact recorded even by the AO that the claim of the respondent-assessee was that the goods were brought into India for self use (for own use) and consumption and not for sale. Taking into consideration these finding of fact recorded by the DC(A) and such finding of fact upheld by the Tax Board, in my view, the order impugned is just and proper and is not required to be interfered with. - Decided against the revenue
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2016 (6) TMI 141
Seeking release of seized goods - Form 16, contemplated under Section 48 of the Act read with Rule 30 of the Uttarakhand VAT Rules, 2005, was not accompanying the goods - appellant/writ petitioner is not a registered dealer, as he is not doing any intra-State sale in the State of Uttarakhand - Held that:- when there is a disputed question of fact, ordinarily, the relegating of a party to an alternate forum is not to be faulted. In such circumstances, particularly when a learned Single Judge has exercised his discretion to relegate a party to alternate forum, the appellate court will be slow to interfere. In this case, another important development is not to be overlooked. Apart from the order passed by the learned Single Judge, this court also had passed orders, the final outcome of which was that the appellate Tribunal has become fully functional. Therefore, we would see no reason why we should interfere with the judgment passed by the learned Single Judge. - Decided against the assessee
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2016 (6) TMI 140
Power of state of restrict or deny input tax credit (ITC) claim, circular bearing no. 4411 dated 23.01.2013 and Section 6(3)(d) of the UKVAT Act - Admissibility of ITC claim - packaging material, containers etc. - finished goods are removed by way of branch transfer - Held that:- since an alternate remedy is available to the petitioners before Joint Commissioner (Appeals) in respect of impugned order denying ITC claim, therefore, the petitioners can avail the statutory remedy available to them. So far as reliefs relating to setting aside circular dated 23.01.2013, Section 6(3)(d) of the UKVAT Act, does not restrict/deny ITC claim on packaging material, containers etc. purchased locally, used in the manufacture of goods in Uttarakhand and sent outside the State otherwise than by way of “sale”, Section 6(3)(d) of the UKVAT Act denies ITC on packaging material etc. in case of transactions other than by way of sale; issue any writ, order or direction striking down Section 6(3)(d) of the UKVAT Act as being ultra vires or Article 301 and 304 of the Constitution of India, directing the respondent no. 2 to continue to issue Form XVI as provided under Rule 26(3) of Uttarakhand VAT Rules which are required by the petitioner for import of raw material as well as finished products and direction declaring that the respondent no. 2 has no authority in law to stop issuance of Form XVI as provided under Rule 26(3) of Uttarakhand VAT Rules are concerned, those reliefs have been dealt with by learned Single Judge while deciding WPMS no. 532 of 2013, WPMS no. 1526 of 2014 and WPMS no. 2282 of 2014 on 06.04.2015. The State only wished to provide the benefit of ITC in a limited manner even in respect of raw materials used for production of finished goods, which are stock transferred. We cannot deny the right of the State with its plenary powers of legislation within the field of legislation, which is admittedly and legitimately exercised by it otherwise, the right to raise taxes. It has already been mentioned that special appeals were filed on behalf of Hindustan Unilever Limited against the judgment and order of learned Single Judge without meeting any success. Furthermore, when the SLPs were preferred before the Hon’ble Supreme Court, the same were also dismissed on 07.12.2015. Since the propositions of law have already been dealt with and discussed by learned Single Judge and Hon’ble Division Bench of this Court and SLPs against which have also been dismissed, therefore, no useful purpose will be served by discussing those provisions again. There is no merit in the aforementioned writ petitions. - Decided against the petitioner
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