Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 5, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
News
Notifications
Highlights / Catch Notes
Income Tax
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Denial of exemption u/s 10(10) - Once a case falls under clause (i) of section 10(10), the same cannot be brought within the purview of clause (iii) of section 10(10) - gratuity amount received and arrears of leave encasement exempted - AT
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Addition u/s 68 - why a person will purchase the shares of the assessee company at such a huge premium, more so, when there is no payment of any dividend, etc.? - No prudent investor will park his funds at such a high premium without the expected return commensurate with the investment - Additions confirmed - AT
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Nature of receipt - the compensation received by the appellant is purely for non fulfillment of contractual obligations with regard to purchase of built up area in “Mantri Chambers - AO has correctly treated the receipts as revenue receipt and has in no way treated the same as income on account of capital gains - AT
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TPA - the TPO and the DRP were in error in holding that the nature of services rendered by ANPAP were in the nature of stewardship activity or shareholder activity - The charges paid by the Assessee to ANPAP are held to be at Arm’s Length - no additions - AT
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Computation of long term capital gains - value determined by the DVO - application of Sec. 50C - distress sale - merely because the assessee concerned was not able to pay dues to the bank where the property was kept as collateral security it cannot be considered as distress sale - AT
Customs
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Imposition of penalty u/s 112(a) of the CA, 1962 on CHA - In the present case, there is no material available on record that the appellant CHA was involved with the importer of the allged offence committed by the importer - No penalty - AT
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Valuation - rejection of declared price - allowance of discount - loading the assessable value on the basis of other brand of goods not justified - AT
Service Tax
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Recovery of refund - the orders-in-original sanctioning the refund have already attained finality and the Revenue has not filed any appeal against the sanctioning of the refund order and the Revenue wants to recover the erroneously sanctioned refund by parallel proceedings by issue of SCN which is not permitted under law. - AT
Central Excise
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CENVAT credit - Natural Air - Molecular Sieve and activated Alumina - To be treated as Inputs - Cenvat Credit cannot be denied as it was claimed as capital goods - AT
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Interpretation of statute - Section 4A of the Act - Valuation - RSP valuation - quantity discount - There is no scope for deducting the value of M.R.P goods which are supplied along with identical goods in the same packing as quantity discount - AT
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Penalty - Reversal of CENVAT credit - Rule 6(3) of the CCR 2004 - the provisions of Section 11AC of the CE Act are applicable only in respect of short- payment of duty whereas the payment under Rule 6(3)(b) of Cenvat Credit Rules is not duty but an amount - no penalty - AT
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Liability of interest - Since differential duty was voluntarily paid before finalization of assessments which did not result in any dues and payable to the Govt, the interest was not leviable. If the interest was payable on the duty on which the assessee paid differential duty prior to finalization of assessment, then the Central Excise rules 2002 would have specifically said so - AT
Case Laws:
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Income Tax
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2017 (6) TMI 165
Denial of exemption u/s 10(10) - amount received by the assessee towards arrears of gratuity and on account of arrears of leave encasement - Held that:- Respectfully following the order in the case of Ram Kanwar Rana Vs ITO (2016 (6) TMI 687 - ITAT DELHI) the impugned order is set aside and the AO is directed to allow the claim of the assessee on account of gratuity & leave encashment as held the assessee is found to be an employee holding a civil post under a State, the provisions of section 10(10)(i) are fully attracted in this case entitling him to exemption for the amount under consideration. Once a case falls under clause (i) of section 10(10), the same cannot be brought within the purview of clause (iii) of section 10(10). Therefore, hold that the assessee is entitled to exemption u/s 10(10)(i) in respect of gratuity amount received and arrears of leave encasement - Decided in favour of assessee.
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2017 (6) TMI 139
Validity of reopening of assessment - existence of reasons to believe - capitalization of expenses - Held that:- In the present case, the tangible material that the AO came across for the AYs in question that warranted the reopening of the assessments is not clear from the 'reasons to believe' recorded by the AO. The reasons merely record the fact that HML had borne the costs and expenses including professional fee and, therefore, the capitalization of those expenses to the various block of assets was not allowable under Section 43(1) of the Act. After recording the above statement, the AO adds: “I have reason to believe that due to failure on the part of the assesse to disclose all the material facts truly or fully, income of ₹ 7,16,299 have escaped assessment.” This does not satisfy the requirement of law that the reasons to believe should, where the reopening is after the expiry of four years from the end of the FY, specifically state in what manner there was a failure by the Assessee to make a full and true disclosure of material facts. That, again, will have to be preceded by spelling out the tangible fresh material that led the AO to come to that conclusion. None of this is found in the reasons to believe recorded by the AO in the case on hand. The necessity for tangible material to be present to trigger the reopening was emphasized in Commissioner of Income tax v. Orient Craft Ltd. (2013 (1) TMI 177 - DELHI HIGH COURT ). The repeated assertion by Mr. Manchanda that the claim for depreciation for AYs 2006-07 and 2007-08 was disallowed by the AO is not entirely correct. It overlooks the history of the litigation around the claims for those AYs with both ending in the Assessee ultimately succeeding on the point after the remand to the AO by the ITAT for AY 2006-07 and the level of the CIT (A) for AY 2007-08 . Mr. Manchanda has also not been able to counter the submission that for AYs 2011-12 and 2012-13 the same claim for depreciation has been allowed. - Decided in favour of assessee.
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2017 (6) TMI 138
Reopening of assessment - audit objection relied upon - unexplained cash deposits - Held that:- From the very reason recorded by the AO for reopening of assessment, it is clear that the same is on the basis of audit objection and no independent opinion has been formed by the AO while recording reasons. From the audit objection, it is clear that the AO during the course of assessment proceedings has particularly enquired about cash deposit and assessee explained that this cash deposit in bank account is out of the business of sale of scrap on which account the income has been included in the return of income for AY 2009-10. Even the AO in his comments to assessee’s objection to reasons has clearly admitted that the entire information was before him but he could not go into details in view of time barring assessment and workload. - Decided in favour of assessee.
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2017 (6) TMI 137
Reopening of assessment - cost estimated by the DVO - difference in the cost of construction declared by the assessee and estimated by the DVO - Held that:- It is an admitted fact that during the assessment proceedings for assessment year 2010-11, the immovable property of the assessee was referred for valuation to DVO who has given his report which is reproduced in the assessment orders and the difference in cost was taken into consideration as reported by the assessee and the cost estimated by the DVO, there were no other material available with the AO to reopen the assessment in the matter. Hon’ble Supreme Court in the case of ACIT Vs. Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India] held “ The opinion given by the District Valuation Officer is not per se information for the purpose of reopening an assessment under section 147 of the Income-tax Act, 1961.”. Therefore, the issue is covered in favour of the assessee by the above judgment and as such there is no justification for the AO to reopen the assessments in the matter. Reasons recorded under section 148 of the Income Tax Act reflect the arbitrary use of powers conferred under section 147 of the Act. - Decided in favour of assessee.
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2017 (6) TMI 136
Levy of penalty u/s.271D - Period of limitation - Held that:- Admittedly, the Hon’ble Rajasthan High Court decision in the case of Hissaria Bros. [2006 (7) TMI 163 - RAJASTHAN High Court] wherein the Hon’ble High Court of Rajasthan has held that once show cause notice is issued by the AO then the time limit would run from that show cause notice. This view has also be confirmed by the Apex Court in [2016 (8) TMI 1044 - SUPREME COURT ] Penalty Order passed by the Addl. Commissioner of Income Tax, Central Range, Coimbatore on 31.01.2007 was barred by limitation in so far as the show cause notice had already been issued on 26.03.2006 by the Dy. Commissioner of Income Tax, Central Circle, Salem. - Decided in favour of assessee.
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2017 (6) TMI 135
Disallowance of expenses made invoking the provisions of section 14A - sufficiency of funds - Held that:- In the absence of satisfaction recorded by the Assessing Officer vis-ŕ-vis the incorrectness of the claim of the assessee of expenses disallowable u/s 14A of the Act and further on account of sufficient own funds available with the assessee for the purpose of making investments which earned exempt income, the disallowance of ₹ 27,20,584/- made u/s 14A of the Act was unwarranted in the present case. The order of the Ld.CIT(Appeals) is, therefore, set aside on this count and the disallowance made u/s 14A is directed to be deleted. - Decided in favour of assessee.
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2017 (6) TMI 134
Unexplained cash deposits in the bank account - source of advance money receipt - Held that:- Assessee failed to produce any evidence if any genuine agreement to sell was executed for taking advance of ₹ 22,00,000/- and also failed to produce any source of the receipt of advance of ₹ 22,00,000/-. No confirmation from the purchaser was filed and the purchaser was not produce to verify receipt of advance of ₹ 22,00,000/-. The GPA holder has already shown his inability to produce nay documentary evidence of source and mode of payment of advance money. The assessee therefore miserably failed to explain the source of advance money receipt of ₹ 22,00,000/- from Shri Kulbir Singh. No documentary evidence is also filed before the Tribunal to substantiate the explanation filed before the authorities below. The contention and case law relied upon by the Ld. Counsel for the assessee would not support the case of the assessee because the genuineness of the agreement to sell itself is in doubt and assessee also failed to explain the source of the cash deposits of ₹ 21,54,000/- in the bank account of the assessee. No interference is therefore called for in the matter. It may also be noted here that regarding rest of the amount deposited as cash in the bank account of the assessee, Ld. Counsel for the assessee did not argue the appeal and did not produce any evidence in this regard. In my view assessee has failed to explain the source of cash deposits in his bank account to the extent of ₹ 29,12,240/-, therefore, the appeal of the assessee has no merit the same is accordingly dismissed. - Decided in favour of revenue
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2017 (6) TMI 133
On-money received by the assessee over and above amounts stated in the regular books of accounts - Held that:- On account of any reason project could not be completed, then the assessee would be required to refund the money, and in that situation, on-money would also be refunded. Thus, the right to receive or retain this component was subject to the execution of the sale deed or handing over of the possession. This aspect has been clarified by the partners even while admitting the income. The ld.AO has been unnecessarily ignoring that part of the statement. It is also pertinent to observe that the title in the property would be transferred not in the year in which the assessee received part consideration as earnest money, but it is to be construed in the year, when the sales was registered or possession was handed over to the prospective buyers. As decided in Shivalik Buildwell [2012 (10) TMI 1019 - GUJARAT HIGH COURT] as per the accounting standard available, the assessee was entitled to claim the entire income on completion of the project and if such accounting standard was accepted by the revenue in the earlier years, in the present year, the Assessing Officer could not have taken a different stand and that too, without hearing the assessee Apart from the above, the ld.CIT(A) has deleted the addition on the ground that same amount cannot be taxed twice because this very amount has been offered for taxation in different years and the same rate of tax is applicable upon the assessee. Thus, taking into consideration well reasoned finding of the ld.CIT(A) extracted (supra), we do not see any reasons to interfere in it. Appeal of the Revenue is devoid of any merit, hence dismissed.
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2017 (6) TMI 132
Unexplained investment - search under section 132 - joint holder of property - Held that:- We find that the addition was made on the basis of documents found during the course of search, which is purchase deed. The purchase deed was in the name of two persons who have purchased this land in equal shares. Therefore, addition of total investment cannot be made in the hands of the assessee. We direct the AO to treat unexplained investment to the extent of 50% of ₹ 4,85,000/-. Addition to this extent is confirmed and this ground of appeal is partly allowed. Default within the meaning of section 234B - Held that:- CIT(A) has not recorded any finding on the grounds raised by the assessee in the Asstt.Year 2006-07 and 2007-08. Similarly, with regard to the facts stated by the assessee before us that a request was made for adjustment of seized cash against advance tax liability, no finding is discernible from the orders of the ld.CIT(A) in other years. Therefore, we deem it appropriate to set aside this issue to the file of the ld.CIT(A) for fresh adjudication. While dealing with this issue, the ld.CIT(A) shall keep in mind the order of the ITAT in the case of Kanishka Prints P.Ltd. (2013 (7) TMI 14 - ITAT AHMEDABAD ) . This ground of appeal is allowed for statistical purpose in all the assessment years.
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2017 (6) TMI 131
Initiation of reassessment proceedings - not providing the assessee an opportunity of cross examining - denial of natural justice - Held that:- There is no force in the argument of the ld. AR that the assessment be quashed for not providing the assessee an opportunity of cross examining Sh. Mahesh Garg. This being a procedural irregularity, is directed to be made good by the AO by allowing the assessee an opportunity to cross examine Shri Mahesh Garg. - Decided in favour of assessee for statistical purposes
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2017 (6) TMI 130
Addition u/s 68 - proof of genuineness of transaction - accommodation entries - Held that:- Five companies are claiming to have invested a sum of ₹ 5 lac each in the assessee company, but, the facts about their total income vis-ŕ-vis the value of assets, do not prove the genuineness of transaction. It is further relevant to note that the assessee is claiming to have issued its share with face value of ₹ 10/- at a premium of ₹ 90/-. It is beyond my comprehension as to why a person will purchase the shares of the assessee company at such a huge premium, more so, when there is no payment of any dividend, etc. No prudent investor will park his funds at such a high premium without the expected return commensurate with the investment. When all the facts and circumstances are seen in entirety, it becomes evident that the assertion of Shri Surender Kumar Jain group (entry operator) about providing accommodation entries to the assessee was correct as the assessee could not prove the genuineness of transactions. CIT(A) was justified in sustaining the addition. - Decided against assessee.
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2017 (6) TMI 129
TPA - according to the CIT(A), whichever way one looks at it- whether on the basis of CUP or TNMM, the transactions entered into by the assessee are at arms length price. The ALP adjustment was thus deleted - Held that:- So far as back to back transactions at the same price are concerned- whether between the AEs or by the AE to the end customer independent enterprise, these are inherently arm’s length transactions on the basis of CUP analysis. The distinction drawn by the TPO on the basis of FAR analysis of the enterprise rather than the transaction, which is sought to be justified before us by the learned Departmental Representative, is a distinction without any difference. It is also incorrect to proceed on the basis, as has been doen by the TPO, that when TNMM in puts are available, the application of CUP can be rejected. CUP is not a residuary method. As a matter of fact, when perfect CUP inputs are available- as in this case in respect of back to back transaction, that is the best and inherently most suitable method, as it is a direct method and it hardly leaves any scope for distortion of results by extraneous factors. We reject the plea of the learned Departmental Representative on this point. So far as transaction of rendering software development services for US $ 1,57,739 to Calance US is concerned, we have noted that there is only one comparable available, and that too, as learned Departmental Representative rightly points out, was at an exceptionally lower rate as the assessee was trying to enter a new market. This solitary transaction, according to the learned Departmental Representative, cannot be said to be representative of the commercial transactions of this nature in the US market. Learned counsel for the assessee was also fair enough in not contesting these facts, particularly with respect to a single comparables of small size and in respect of a new market that the assessee was trying to enter, but he did state that even if this CUP input is ignored, there will not be any need of ALP adjustment because the margin on this transaction, when computed correctly, will be comparable with the arm’s length margin computed by the TPO. However, we have noted that this aspect of the matter has not been dealt with by the CIT(A) in sufficient detail, by way of a speaking order, and all that the CIT(A) has stated that the total costs of software development comes to ₹ 2,40,57,988. We, therefore, consider it appropriate to remit this limited aspect of the matter for the verification by the TPO.
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2017 (6) TMI 128
Reopening of assessment - addition made u/s 40(a)(ia) - Held that:- In the present case, it is noticed that the assessee acted only as an intermediary and there was no privity of contract between the assessee and client of carriers of goods. The assessee was clearing and forwarding agent and made the payments to the transporters which were reimbursed by the principal who deducted the TDS. On perusing the copy of profit and loss account placed at page no. 30 of the assessee’s paper book. It is noticed that no such expenses were debited in the profit and loss account. The provisions contained in the said Section 40(a)(ia) says that these provisions are applicable when any amount has been debited in the profit and loss account and deducted in computing the income chargeable under the head profits and gains of business or profession. In the present case, nothing has been deducted by the assessee from the income in the profit and loss account. Therefore, provisions of Section 40(a)(ia) of the Act are not applicable to the facts of the present case. See CIT Vs Hardarshan Singh [2013 (1) TMI 314 - DELHI HIGH COURT]. - Decided in favour of assessee.
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2017 (6) TMI 127
Reopening of assessment - Held that:- AR of the assessee filed the written submission on the issue in question but it is noted that the ld. AR of the assessee at the time of hearing of the case could not controvert the observations of the ld. CIT(A) on the issue in question. The ld. CIT(A) has rightly held that the AO was justified in reopening the case of the assessee u/s 147 of the Act as substantial income had escaped assessment within the provision of Section 147 - Decided against assessee. Adoption of value of impugned land sold u/s 50C - Held that:- As noted that at the time of physical inspection of impugned land the DVO observed that the land was neither straight nor square nor rectangular which had several turns after every 50 sq.ft. It is also noted that no comparative sale instance had been given by the DVO as to adjoining land of the assessee. It is noteworthy to mention that there are six co-owners of the land and the land in question cannot be sold without their consents. It is also noted that the AO had taken the case of Ms. Roopali Dhingra, another co-owner of the property with the case of the assessee which case was decided by the ld. CIT(A), Bikaner (camp at Jaipur) vide appeal no. 684/Bikaner/2010-2011 dated 31-03-2015 in favour of Ms. Roopali Dhingra deleting the additions made by the lower authorities (APB page 39 to 60). It is thus observed that although the lower authorities have taken the recourse of Ms. Roopali Dhingra case with the assessee during the assessment order and made the additions yet the case of Ms. Roopali Dhingra has been decided by the ld. CIT(A), Bikaner (camp at Jaipur), supra deleting the additions. Therefore, the question does not arise to make addition in the case of assessee. In this view of the matter and also taking into consideration the decision of ITAT , Hyderabad Bench in the case of ACIT vs. Smt. S. Suvarna Rekha (2010 (10) TMI 1051 - ITAT HYDERABAD ), we find that the ld. CIT(A) is not justified in adopting the value of the impugned land at ₹ 1,67,52,562/- instead of ₹ 1,56,39,110/- u/s 50C of the Act. Thus Ground of the assessee are allowed. Addition made by the AO u/s 55A(a) - Held that:- The assessee and other 5 co-owners obtained a report from registered valuer relating to cost of land as on 01-04-1981. Shri P.N. Bhargava, registered valuer gave his report dated 7-07-2008 and adopted the value as at 01-04-1981 at ₹ 200/- per. Sq. Yd. Accordingly, the valuation of the land comes to ₹ 37.55 lacs. It is also noted that the AO in the case of Ms. Roopali Dhingra applied the rate at ₹ 40/- per. Sq. Yd and made the valuation at ₹ 6,89,747/-. It is also noted that on the basis of the case of Ms. Roopali Dhingra, the case of the assessee was reopened and the AO adopted the same rate as made in the case of Ms Roopali Dhingra and thus worked out the valuation of the land as at 01-04-1981 but the case of Ms. Roopali Dhingra has been decided by the ld. CIT(A), Bikaner (camp at Jaipur) supra deleting the additions, therefore, the question does not arise to make addition in the case of assessee. During the course of hearing, assessee filed the family chart of other assessee's (Co-owners) relating to their additions. From the chart, it is noted in the case of Kavita Bhargava wherein the ld. CIT(A)-II, Jaipur vide order dated 13-05-2016 had deleted the similar addition made by the AO u/s 55A(a) for which the Department has not filed any appeal against the order of the ld. CIT(A). It is also noteworthy to mention that both the ld. CIT(A)’s have decided the similar issue in favour of other co-owners i.e. Ms. Roopali Dhingra and Smt. Kavita Bhargava. It is also noted that such issue has also been decided by the Hon'ble Gujarat High Court in the case of ACIT vs. Hiraben Govindbhai Patel (2014 (3) TMI 153 - GUJARAT HIGH COURT ) and also CIT vs. Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT) in favour of the assessee
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2017 (6) TMI 126
Determination of arms length price with regard to receipt of second line support services - Held that:- TPO has erred in holding that a subsidiary does not have to pay for audit accounting and such other functions performed by the parent company as owner of the subsidiary company and in further holding that if the subsidiary was independent company, it would neither require such services nor it would pay for the same. Hon’ble jurisdictional High Court in CIT vs. EKL Appliances Ltd. (2012 (4) TMI 346 - DELHI HIGH COURT ) followed by the coordinate Bench in assessee’s own case for AY 2007-08, held that, “it would be wrong to hold that the expenditure should be disallowed only on the ground that these expenses were not required to be incurred by the assessee or those expenses have not benefited the assessee.” So, in 13 the instant case also, the duty of the TPO is to examine the quantum of expenditure as per law but the allowability of the expenses as business expenditure is required to be examined by the AO. So, following the decision rendered by the coordinate Bench of the Tribunal in assessee’s own case for AY 2007-08, we hereby restore the issue regarding determination of arms length price with regard to receipt of second line support services to the file of TPO/AO to redetermine the issue. Ad hoc disallowance being 10% of the advertisement and business promotion expenses by treating the same to be capital in nature - Held that:- Despite the fact that in case of Sony India Private Limited vs. ACIT (2008 (9) TMI 420 - ITAT DELHI-H ), coordinate Bench of the Tribunal has deleted similar disallowances on the ground that expenditure incurred by the assessee company on advertisement and sales promotion has not resulted in accrual of any advantage of enduring nature and the same are in the nature of Revenue field and not in the capital field so as to treat the same as capital in nature. Ld. DRP has merely directed the AO to make disallowance of 10% of advertisement expenses only after ascertaining the fact that if the department has accepted the judgment of Tribunal rendered in case of Sony India Private Limited (supra). But till date the department has not come up if findings returned by the Tribunal in Sony India Private Limited (supra) have been overturned. So, in these circumstances, ad hoc disallowance made by the AO is not sustainable. Addition back of provisions for leave encashment and provision for gratuity for computation of income - Held that:- In the face of the undisputed fact that the issue as to the allowability of provision of gratuity and leave encashment for the purpose of section 115JB of the Act has already been determined by the Tribunal in assessee’s own case for AY 2001-02 to 2004-05 and for AY 2005-06, CIT(A) has deleted the addition made by the AO and no such addition 15 has been made in the preceding AY 2007-08, the addition is not sustainable. This addition has only been made as directed by DRP on the basis of assumption that in case, the department has already accepted the Hon’ble High Court and Tribunal’s order in favour of the assessee for earlier assessment years by not filing further appeal the benefit should be extended to the AO otherwise AO shall retain the aforesaid additions. However,the Revenue has failed to bring on record if decisions rendered by Tribunal in assessee’s own case have been overturned by the higher forum. So, the addition is not sustainable in the eyes of law
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2017 (6) TMI 125
Reopening of assessment - Held that:- It is possible that with due diligence of the Assessing Officer would have ascertained this fact at the time of assessment, if any also, but in view of the explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. The assessee has tried to take shelter under the exception provided in that section. But as stated above, when the assessee has not disclosed fully and truly the facts necessary for the assessment and there is no assessment u/s.143(3) of the Act, this proviso will not come to its rescue. Consequently, we hold that the entire reassessment proceeding in this case is valid and therefore, the action of the Assessing Officer is upheld. Nature of receipt - Assessment of compensation received - revenue v/s capital receipt - Held that:- The compensation is only to compensate the loss of rental income, which would have arisen to the appellant had the agreement dated 24.3.2003 been honoured by the developer. A perusal of the purchase and compensation agreements shows that the land sold as per the earlier sale agreements is entirely different from the land on which the appellant is acquiring the property. In view of the above it is very clear that the compensation received by the appellant is purely for non fulfillment of contractual obligations with regard to purchase of built up area in “Mantri Chambers” and in no way linked to the sale of the land at “Begur Hobli” in Bangalore South Taluk as per sale agreement dated 30.10.2000 and supplementary agreement dated 9.1.2003. The assessing officer in his well reasoned order has correctly treated the receipts as revenue receipt and has in no way treated the same as income on account of capital gains. Therefore, the appellants’ claims with regard to cost of acquisition or the extinguishment of rights are not accepted. The compensation was received by the appellant, for loss of revenue. Further, compensation has been awarded only by way of agreement dated 15/3/2004. The mere provision of a compensation agreement dated 24.3.2003, does not presuppose the default by the developer receipt of compensation on that count. The claim of compensation fructifies only when Developer failed is his obligations and that happened only on 15/3/2004.The compensation is to be taxed in assessment year 2004-2005 only. In view of this, we dismiss the ground taken by the assessee on merit also.
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2017 (6) TMI 124
Revision u/s 263 - unexplained investments - reopening of assessment - Held that:- In the instant case, the Assessing Officer has not pointed out how the assessee failed to disclose fully and truly all material facts related to the assessment. In fact, the assessee only submitted details of investment in 8,32,500 shares in first round of reassessment proceedings. We note that in reassessment proceeding the Assessing Officer has mentioned that no information was provided by the assessee and therefore made the addition. However, in appellate proceeding before the Ld. CIT(A), a remand report was called from the Assessing Officer but in the said remand report also, no evidence as regard to the market value of the shares or any evidence of unaccounted money invested by the assessee was brought on record by the Assessing Officer. No material has been brought by the Revenue to rebut the above factual finding of the ld. CIT(A). In such circumstances, we are of considered opinion that in absence of any material to indicate that any unexplained investment has been made by the assessee in purchase of shares, no addition could have been made in the hands of the assessee. We are of the view that the finding of the Ld. CIT(A) on the issue in dispute is comprehensive and well reasoned and we are not inclined to interfere in the same Further, the Ld. CIT-A also observed that the Assessing Officer has not disposed off the objection of the assessee to the reasons recorded in accordance to the decision in GKN Driveshaft (India) Limited (2002 (11) TMI 7 - SUPREME Court ). The Revenue has not brought before us any material to contradict the factual findings of ld. CIT(A). - Decided against revenue
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2017 (6) TMI 123
TPA - whether the consideration paid by the Assessee to ANPAP under the SLA is at Arm’s Length? - Held that:- Assessee has established the nature of services including quantum of services received from ANPAP, that services were provided in order to meet specific need of the assessee for such services, the economic and commercial benefits derived by the assessee from intra group services. In its submission dated 5.11.2012 filed before the TPO, the Assessee filed report dated 30.6.2009 of Pricewaterhouse Coopers LLP, Chartered Accountants. In such a report a search for similar independent service providers providing services that were provided by ANPAP under SLA was identified and it was found on such analysis that similar services provided by and to unrelated parties were at an average margin of cost + 5.1% and it was opined that the cost + 5% margin for similar services paid by the Assessee to its AE should be regarded as confirming to the ALP. The Assessee also filed a certificate of KPMG, LLP, Singapore, an independent third party accounting expert, certifying the basis of cost allocation by ANPAP for the various services rendered by the Assessee based on the evidence of services rendered by ANPAP to the Assessee. The TPO has not disputed the above cost allocation as well as the fact that the comparative cost charged by unrelated parties for similar services was at a margin of 5.1% of the cost. In view of our conclusion that the TPO and the DRP were in error in holding that the nature of services rendered by ANPAP were in the nature of stewardship activity or shareholder activity, we hold that the TPO’s conclusion no charges ought to have been paid by the Assessee. The charges paid by the Assessee to ANPAP are held to be at Arm’s Length. Consequently, the addition made by the revenue authorities in this regard are directed to be deleted and the appeal of the Assessee Services received by the Assessee from “ANDC” - Held that:- SAP system is ERP software which is required for the day-to-day running of the business. In view of the above facts, we are of the opinion that it improves alignment of strategies and operations and helps in' achieving corporate objectives by aligning workforce and organizational objectives. Implementation of SAP. leads to improved productivity and reduce costs through increased flexibility. It also helps in increased profitability, improved financial Control, and management of risk as well as optimization of IT spending. Hence it would be erroneous to classify the services to be in the nature of stewardship services. Hence, it should be judged to be legitimate business expenditure of the assessee. The assessee has undertaken the bench marking study of international transaction, payment of management fee, at a overall company level profitability wherein the assessee has selected itself as the tested party and compared its operating profit level with similar uncontrolled comparable companies. The average of margins earned by functionally comparable companies is 8.29%. The profitability of the company after taking into account the payments for intra-group services is:9.54% which is as per the arm's length standard. The nature of services received from the AE are in conjunction with its primary and only business segment i.e. manufacturing and selling ·of paints. These services are continuous in nature to the primary and only business segment of the assessee. Owning to, this fact and business reality of the assessee it has also benchmarked the prices of this international transaction by undertaking entity level bench marking. Even after considering the payment of management service charge, the, assessee's net margin. is greater than its comparable companies. This panel holds this issue in favour of the assessee. Disallowance of interest expenses in terms of Rule 8D(2)(i) or (ii) - Held that:- No loan funds were in the books of accounts of the company, there cannot be any question of payment of interest against the loan funds and consequently disallowance of interest expenses in terms of Rule 8D(2)(i) or (ii) of the Rules. Since there is no unallocable interest the DRP has rightly held that no interest expenses can be disallowed. We find no grounds to interfere with the order of the DRP. Consequently ground no.1 raised by the revenue is dismissed. Deduction on account of bad debts written off - Held that:- DRP has placed reliance on the amendment to the law and the CBDT Circular. The amendment to the law and CBDT circular which were considered by the DRP was also considered by the Hon’ble Supreme Court in the case of TRF Ltd. Vs CIT [2010 (2) TMI 211 - SUPREME COURT] and it was held by the Hon’ble Supreme Court that w.e.f. 01.04.1987 it is no longer necessary for a claim for deduction on account of bad debts written off that the assessee should establish that the debt in question has become bad. Determination of depreciation treating the sale of rubber chemical business as not slum sale - Held that:- In view of the decision of CIT(A) for A.Y.2006-07 holding that the sale in question was a slum sale, the disallowance of depreciation by the AO in the present A.Y.2009-10 which was a fall out of the finding of the AO in AY 2006-07 was rightly deleted by DRP. We however wish to add that this issue is consequential and dependent on the ultimate outcome on the question whether the same is a slump sale or not in A.Y.2006-07. With these observations we dismiss the additional ground of appeal raised by the revenue.
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2017 (6) TMI 122
Reopening of assessment - sale of land falling within 8Kms of distance from the area limit of Municipal Corporation 'of Coimbatore thus income in the form of LTCG accrued during the year has escaped assessment - Held that:- It may be true that in returns filed assessee’s had not have made a specific claim that agricultural land sold was beyond 8 km from Corporation limit. However, the returns were filed after the above referred reply which was available with ld. Assessing Officer. In the said reply assessee had mentioned that the agricultural land was situated more than 8 Kms from the corporation limit. Further, assessee’s had pressed such a claim before ld. Commissioner of Income Tax (Appeals). Ld. Assessing Officer was aware of the claim of the assessee that land sold was agricultural in nature. It cannot be considered it as an altogether new claim made by the assessee. Assessee in pursuant to notice u/s.148 of the Act had made a specific claim that agricultural land sold were beyond 8km limit of Coimbatore Corporation limits. In the circumstances, whether surplus arising out of sale of agricultural land would be exigible to capital gains tax, in my opinion, requires to be adjudicated by the ld. Commissioner of Income Tax (Appeals). Therefore, set aside the orders of the ld. Commissioner of Income Tax (Appeals) and remit all the appeals back to his file for consideration afresh in accordance with law. Appeals of the assessee partly allowed for statistical purposes.
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2017 (6) TMI 121
Reopening of assessment - Held that:- Assessee had not filed any return voluntarily. First return filed by the assessee was pursuant to a notice issued u/s.148 of the Act on 17.12.2013. The said notice was issued since assessee had alongwith three other co- owners sold land measuring 1 ground 1593 sq.ft, at New No.76, Old No.24, Mandaveli Street, Chennai-28 on 27.12.2006, but had not filed any return for the capital gains arising from such transaction. Thus assessee having not filed any return voluntarily, the proceedings resulted only in a first assessment. Therefore assessee's ground challenging the reopening has no merits Computation of long term capital gains - value determined by the DVO - application of Sec. 50C - Held that:- It is true that there was a pending litigation on the property which was sold by the assessee. This was also brought to the notice of the ld. Assessing Officer/DVO. However, Jurisdictional High Court had not restrained assessee from alienating or dealing with the property. What it directed was only to indicate the pendency of litigation in any transactions relating to the property. Assessee had during the course of the valuation proceedings before ld. DVO, brought to his attention, the existence of the litigation in the objections filed by him. It was after considering such objections that DVO made the valuation. Thus, the value determined by the DVO was after considering the effect of the pending litigation. Assessee thus, was not been able to rebut the case of the Revenue that DVO had considered all the material filed by the assessee including the details of the suit pending on the subject property. Sub Section (3) to Sec. 50C of the Act clearly mandates adoption of the value fixed by the DVO when such value was less than what was adopted by the Revenue authorities for fixing the stamp value. Admittedly, DVO had taken FMV at I74,76,054/- which was less than the value of I78,70,203/- adopted by the Registration authorities. Coming to the decision of Lucknow Bench of the Tribunal in the case of Hari Om Gupta (2016 (1) TMI 486 - ITAT LUCKNOW ) relied on by the ld. Authorised Representative, the sale was considered as done under distress, since assessee concerned was not able to pay dues to the bank where the property was kept as collateral security. It does not lay down a law that in all cases where there is a litigation it would be a distress sale. Therefore, it is of the opinion that lower authorities were justified in applying Sec. 50C of the Act. Enhancement done by recomputing the cost of acquisition - Contention of the assessee is that Sec.55A of the Act had no application where the value claimed by the assessee was more than the FMV - Held that:- As in the instant case there was no reference made to a Valuation Officer by the ld. Assessing Officer or ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) had taken note of the partition deed dated 28.07.1978 through which assessee become the owner of the property, and thereafter adopted the guideline value fixed by the Government for the property. In such circumstances, Commissioner of Income Tax (Appeals) was justified in holding that Sec. 55A of the Act had no application. Appeal of the assessee stands dismissed.
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2017 (6) TMI 120
While admitting the appeal, HC formulated the following questions of law:- (1) Whether the custom duty paid on the purchase of plant and machinery would be a capital or a revenue expenditure? (2) Whether the depreciation on the purchase of plant and machinery is admissible on the actual cost of the plant and machinery excluding the custom duty, which was paid subsequent? and (3) Whether the Income Tax Appellate Tribunal was justified in returning a finding on the question of deduction permissible on account of revenue expenditure even though no such plea was raised before it? The parties have advanced arguments on the above questions of law.
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Customs
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2017 (6) TMI 148
Power of review - Applicability of provisions of the Insecticides Act - whether there exists any 'error apparent on the face of record', to invoke the power of review? - Held that: - there was no omission on the part of the Bench in considering the plea of 'discrimination' as well, but the same was left open, for the reasons mentioned therein. If such a course pursued by the Bench was not correct, for any reason whatsoever, it would become a matter to be agitated by way of 'appeal' and not by review petition. It has been made clear by the Apex Court on many an occasion, that the power of review is not to be misconstrued or misunderstood as a substitute for appeal. Maintainability of the review petition - Held that: - The review petitions are not maintainable, for not having challenged the finding in the common verdict in W.A. Nos. 630 and 649 of 2012, which stands in tact. The petitioner was importing Boric acid, based on the interim orders passed by this Court, which was made subject to the result of the proceedings pending before this Court. Since the petitioner has lost the battle, by virtue of the interference made by the Division Bench, the petitioner is all the more liable to satisfy the liability, as the principle of "actus curiae neminem gravabit" (an act of the Court shall prejudice no man) is attracted. Review petition dismissed - decided against petitioner.
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2017 (6) TMI 147
Imposition of penalty u/s 112(a) of the CA, 1962 on CHA - misdeclaration as to the country of origin and evasion of Anti-Dumping duty - penalty was imposed on the appellant on the ground that the CHA had not bothered to check the authenticity and the genuineness of the declaration in the invoice and the Bills of Entry and simply put their signature on the Bills of Entry as the importer s Agent as per section 46(4) of the Act, 1962 - Held that: - Section 112(a) provides that any person, who in relation to any goods does or omits to do any act, which act or omission, would render such goods liable to confiscation under section 111 or abets the doing or omission of such an act, shall be liable to a penalty - In the present case, there is no material available on record that the appellant CHA was involved with the importer of the allged offence committed by the importer. In absence of the material evidence on record to show that the CHA connived with the importer in misdeclaration with intent to evade payment of duty, penalty on CHA u/s 112 is unwarranted. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 146
Smuggling - gold biscuit of foreign origin - Held that: - in the case of Jai Narain Verma v. Collector of Customs, New Delhi [1994 (2) TMI 171 - CEGAT, NEW DELHI], held that gold biscuits seized by Police and then handed over to the Customs Authorities, the burden of proof to establish involvement of the appellant, in the offence, lies on the department. It has already been observed that the Police officers implicated the appellants on the basis of the accused's own statement. The case was handed over to the Customs Authorities after about one month. There is no explanation given by the Police and/or enquired by the Customs Authorities for such delay. It is well settled that a person cannot be penalized merely on the basis of a circumstantial evidence and assumption and presumption and ignoring the provisions of law. Both the appellants in their interrogatory statements before the Customs officers had disclosed that they know each other. But there is no material available on record that the relationship between the appellants would establish the involvement in the alleged offence - the penalties imposed on the appellants are set aside - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 145
Import of restricted item - Meat - requirement of sanitary import permit for import of meat - Gazette of India Notification dated 7th July, 2001 issued by the Department of Animal and Husbandry of Ministry of Agriculture - Held that: - It may be stated that the Gazette of India is the public document and the restriction as aforesaid imposed was in public domain from 7th July 2001. Therefore in absence of permit from Animal and Husbandry against the imports stated at the outset, the restriction imposed by law was violated by the importer and the persons and agencies connected with such import. Appellants deliberately imported the offending goods without the required permit and cleared the same. Accordingly that became smuggled goods in terms of section 2(39) of the CA, 1962 - restricted goods being imported without permit and such goods became smuggled goods, all the appeals are dismissed - decided against appellant.
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2017 (6) TMI 144
Valuation - rejection of declared price - allowance of discount - loading the assessable value on the basis of other brand of goods - Held that: - in the appellant's own case, M/s. K.R.Srilaxmi Deals Pvt. Ltd. vs. Commissioner of Customs, Kolkata [2016 (9) TMI 1119 - CESTAT KOLKATA], the Tribunal allowed the appeal filed by the appellant, where it was held that loading the assessable value on the basis of other brand of goods not justified - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 143
Rectification of mistake - Section 129B (2) of the CA, 1962 - refund cannot be claimed directly without challenging the assessment order - Held that: - under the garb of rectification of mistake application, appellant wants the review of the whole order for which the Tribunal has no power - the applications for rectification of mistake are not maintainable as there is no error apparent on the record which needs to be rectified - ROM application dismissed - decided against applicant.
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Corporate Laws
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2017 (6) TMI 141
Dissolution of company - application under the provisions of section 481 of the Companies Act, 1956 - Official Liquidator may kindly be discharged as Liquidator of the said Company - Held that:- It has been asseverated by learned counsel appearing on behalf of the Official Liquidator that, looking to the overall circumstances, nothing survives in the accompanying winding up petition, inasmuch as, no assets of the Petitioner Company (In Liqn.) remain with the Official Liquidator. In view of the foregoing, the present application is allowed. The Petitioner Company (In Liqn.) shall stand dissolved under the provisions of section 481 of the Act.The Official Liquidator is exempted from carrying out/filing of the statutory audit of Half yearly/ Annual Accounts of the Petitioner Company (In Liqn.). Let books of accounts of the Petitioner Company (In Liqn.), maintained by the Official Liquidator, be closed. The Official Liquidator is permitted to transfer the aforesaid amount, in the sum of ₹ 1,42,321.36/-, to the Reserve Bank of India in the account of public fund.The Official Liquidator stands discharged qua the Petitioner Company (In Liqn.). A copy of this order be sent to the Registrar of Companies within thirty days.The present application is disposed of accordingly.
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2017 (6) TMI 140
Financial mismanagement - TDTA Company attempting to alienate the properties of TDTA company illegally without adhering to the provision of the Company Act and also without following the procedure laid down in the Memorandum and Articles of Associations of TDTA company - Held that:- A perusal of records shows that already the Deputy Registrar of Companies has initiated action against the TDTA and its Directors by filing cases before the Additional Chief Metropolitan Magistrate, Egmore, Chennai. The grievance of the petitioner has already been looked into and the authorities have initiated proceedings against the TDTA company and others. Apart from that this is not the forum to the petitioner for getting the relief sought for in this writ petitions. It is for the authorities to look into the complaint and to decide the matter in a manner known to law. As far as the appointment of Special Officer is concerned also the power is vested with the 1st respondent namely Registrar of Companies. The Writ Court is not the proper forum to agitate the issues involved in this writ petitions. The petitioner can work out his remedy before the competent court in a manner known to law. Writ petitions dismissed.
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Service Tax
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2017 (6) TMI 164
Imposition of penalty u/s 78 - Valuation - The point of dispute is that during the material time, they were discharging service tax under the category of “commercial or industrial construction service” claiming abatement in terms of notification no.1/06 dated 1.3.2006. The Original Authority reclassified the services under “works contract service”. He also denied the abatement claimed by the appellant as not applicable to the works contract service. Held that: - Provisions of work contract composition scheme as well as Rule 2 A of Service Tax Valuation Rules are specifically made applicable to the works contract service, subject to fulfillment of various conditions so that the tax liability can be restricted only to the service portion of the contract. Admittedly, no service tax can be levied on sale of goods or transfer of goods in property. The eligibility of the appellant/assessee either for the composition or for valuation under Rule 2 A of the Valuation Rules are to be examined afresh for a decision by the Original Authority - appeal allowed by way of remand.
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2017 (6) TMI 163
Refund claim - denial on the ground of non-realization of foreign exchange and treating that the same was sanctioned erroneously - Held that: - the orders-in-original sanctioning the refund have already attained finality and the Revenue has not filed any appeal against the sanctioning of the refund order and the Revenue wants to recover the erroneously sanctioned refund by parallel proceedings by issue of SCN which is not permitted under law. The appellant has also produced a copy of the agreement between his dealers by which the appellants are under obligations to supply parts under free warranty replacement then in that case, no monetary consideration flow from the buyer and therefore the department's view that bank realization certificate has not been produced is not justified ground for denial of refund. Appeal allowed - decided in favor of appellant.
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2017 (6) TMI 162
Non-payment of service tax - The appellant had collected an amount of ₹ 4,60,000/- along with service tax of ₹ 56,304/- but did not deposit the service tax to the Govt exchequer - demand - Held that: - the appellant has collected the service tax but did not deposit the same in the Govt Treasury which itself shows that there was malafide intention to evade payment of service tax. The appellant was registered with the Service Tax Department and was very well aware of their liability to pay service tax to the Govt. The appellant has not been able to give any reasonable explanation as to why the service tax was not deposited in the Govt Treasury - appeal dismissed - decided against appellant.
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2017 (6) TMI 161
Categorization of activity of the appellant for service tax liability - Site formation and clearance, excavation and earth moving and demolition service - Held that: - the appellants are not directly involved in activity of site clearance, excavation, earth moving etc. The first contract is basically for transportation, which also involved loading unloading. The second contract is for hiring out the various special equipments/ machineries to be used by the client in the mining activity - the observation of the Original Authority to the effect that in terms of agreement the appellants are to perform work of excavation is not supported by the documentary evidence as perused in various agreements submitted by the appellant - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 160
Pre-deposit - non-compliance of stay order - Held that: - the stay order has been put to test before the Hon'ble High Court as well as the Apex Court by the applicant. The orders have been upheld and there is no modification of the order of the Tribunal except for granting extension of time, which also expired many years back. We note that in such situation, there is absolutely no legal basis for this Tribunal to entertain the applicant and recall the order of dismissal of the appeals - appeal dismissed - decided against appellant.
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Central Excise
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2017 (6) TMI 159
CENVAT credit - appellant had taken the credit of duty paid on the goods received from their Durgapur unit and subsequently cleared the same after value addition on payment of Central Excise duty, which is well within the provisions of Rule 16 of the CER, 2002 - case of the appellant is that when the duty has been paid on the clearance of the goods, there should not be any difficulty and dispute in respect of availment and admissibility of credit - Held that: - there is a contradiction between the contention of the appellant and the finding of the Adjudicating Authority - the case may be decided without going into the case laws as cited by the ld.Counsel and only on the basis as to whether the appellant had undertaken the process as claimed by the ld.Counsel. So, it is appropriate that the appellant should be given an opportunity to establish the process in any manner before the Adjudicating Authority in the interest of justice - appeal allowed by way of remand.
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2017 (6) TMI 158
CENVAT credit - Iron & Steel items like M.S. Angle, Channels, Joist, Beams, Bar etc., - denial on the ground that these items are neither used in the manufacture of final products nor were used for manufacture of capital goods - Held that: - the verification report of the Superintendent of Central Excise states that the items in question were used in the plant & machinery as reactor systems, Re-actor cooling system etc.. It is categorically stated that these plant & machinery are movable in nature in view of its installation can easily be separated - these items were used for functioning of the machines - credit allowed - appeal dismissed - decided against Revenue.
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2017 (6) TMI 157
CENVAT credit - various input services - Rule 2(l) of CCR, 2004 - structural activity for RBAU line media - Held that: - this service is not eligible input service - credit disallowed. Ticket charges - visa expenses - Held that: - this service fall in the definition of eligible input service and the appellants are entitled to the CENVAT credit of the same - reliance placed in the case of IVY Comptech Pvt. Ltd. vs. CCE, Hyderabad-II [2015 (9) TMI 1090 - CESTAT BANGALORE]. Cable specification preparation - Held that: - credit denied on the ground of lack of nexus between the said service and the output activity - denial upheld. Event management service - Held that: - events are undertaken for advertisement and promotion of the product of the company and therefore it is in relation to the business of the company - event management is covered as an input service - credit allowed. Group mediclaim insurance policy - Held that: - as the same is a requirement under Section 38 of the Employees State Insurance Act, 1948 which mandates that, all the employees in the factory shall be insured and the policy is taken on the life of the employees only and therefore, it is covered as an input service - credit allowed. The demand of interest and imposition of penalty is not justified as the appellant has availed the credit but did not utilize the same and they were having sufficient balance in their CENVAT account during the relevant period. Appeal allowed - decided partly in favor of appellant.
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2017 (6) TMI 156
CENVAT credit - Natural Air - input or capital goods - whether the imported Molecular Sieve and activated Alumina would be treated as capital goods as held by the Adjudicating Authority or input as claimed by the Revenue? - Held that: - Molecular Sieve is a chemical item and is used for purification of Air-Plant. It is used for absorbing Carbon-Di-Oxide and water (moisture) from the Air being processed in the manufacture of Oxygen. There are several decisions of judicial authorities where the various chemicals were treated as inputs under the Modvat/Cenvat Scheme. The Tribunal in the case of Commissioner of Central Excise, Indore v. Flex Chemicals Pvt.Ltd.[2001 (4) TMI 720 - CEGAT, NEW DELHI] observed that the Modvat Credit on inputs cannot be denied on the ground that the assessee has claimed as capital goods - the Molecular Sieve is an input as held by the Adjudicating Authority. But the Cenvat Credit cannot be denied as it was claimed as capital goods. Credit allowed - appeal dismissed - decided against Revenue.
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2017 (6) TMI 155
Interpretation of statute - Section 4A of the Act - Valuation - RSP valuation - quantity discount - whether the assessee is liable to pay duty on the quantity discount offered to dealers/distributes? - Held that: - The taxability of, inter alia, quantity discount has also been reiterated by the CBEC in the circular dt. 30.06.2000 stating that discount of any type made known prior to clearance of goods to normal price subsequently and passed on to such customers is admissible deduction from transaction value - there is no such possibility in provisions of Section 4A ibid to allow for deduction of any such similar quantity discount. As mentioned earlier, there is no scope for reduction in the assessable value deemed to be equal to declared retail price. Only reduction permitted in the said section is that of abatement which would have to be specified/allowed by notification by Central Government. There is no scope for deducting the value of M.R.P goods which are supplied along with identical goods in the same packing as quantity discount - appeal dismissed - decided against appellant.
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2017 (6) TMI 154
CENVAT credit - inputs procured from 100% EOU - credit availed in excess of the amount actually eligible - Held that: - the impugned order is not sustainable in law as the same has been passed based on the original assessable value indicated in the said two invoices No.141 dated 18.7.2007 and Invoice No.197 dated 23.8.2007 and not taking into account the revised assessable value - also, it was found that subsequently during December 2007, a certificate was received from the supplier M/s. Mahima Life Sciences Pvt. Ltd., a 100% EOU and it was duly certified by the jurisdictional Superintendent in-charge of the 100% EOU on 18.12.2007. The appellants have only availed CENVAT credit but have not utilized the same as there was sufficient balance lying in the CENVAT credit during the relevant period and therefore, the appellants are not liable to pay interest and penalty. Since there was some procedural violation committed by the appellant, therefore a nominal penalty of ₹ 5,000/- is imposed under 15 of CCR, 2004 on the appellant - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 153
CENVAT credit - appellants procured copper from M/s Meta Copper and Alloy Pvt Ltd Goa (EOU) - the appellant is availing excess credit in respect of goods procured from the EOU - Held that: - in the case of Metaclad Industries [2012 (11) TMI 244 - CESTAT MUMBAI], the Tribunal in para 5.4 and 5.5 has clearly held that the amendment made in the said Rule in 2009 is only for the purpose of removal of doubt and not for any other reason and the said clarification is applicable retrospectively - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 152
Penalty - reversal of CENVAT credit - Rule 6(3) of the CCR 2004 - it was alleged that the appellants have been clearing the exempted goods to M/s BEML by raising commercial invoices since 21.5.2007 and without maintaining separate accounts as per Rule 6(2) of Cenvat Credit Rules 2004 for receipt, consumption and inventory of inputs meant for use in the manufacture of exempted goods and also not reversed the attributable credit - Section 11AC of the CE Act - Held that: - the Division Bench of the Tribunal in the case of Sangrur Agro Ltd [2010 (2) TMI 438 - PUNJAB & HARYANA HIGH COURT] has held that the provisions of Section 11AC of the CE Act are applicable only in respect of short- payment of duty whereas the payment under Rule 6(3)(b) of Cenvat Credit Rules is not duty but an amount - the penalty imposed on the appellant is not warranted by law - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 151
CENVAT credit - input services - Air Travel Agent Service - Tour Operator Service - Cable Operator Service - Membership of Club or Association Service - manufacture of Machine Rolled Cigarettes and Cut Tobacco - Held that: - the impugned order denying the cenvat credit on Air Travel, Tour Operator, Club Membership fee and Cable Operator is wrong and not sustainable and therefore the impugned order set aside - appeal dismissed - decided against Revenue.
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2017 (6) TMI 150
Liability of interest - valuation in terms of rule 8 of the Valuation Rules 2000 - goods are supplied free but on payment of duty and valuation is arrived at in terms of rule 8 of the Valuation Rules 2000 - appellant declined to pay interest on such differential duty on the ground that in terms of rule 7(4) of CER, 2002 interest is payable from first day of the month succeeding the month for which such amount is determined; that in their case differential duty was paid before finalization of provisional assessment - Held that: - Since differential duty was voluntarily paid before finalization of assessments which did not result in any dues and payable to the Govt, the interest was not leviable. If the interest was payable on the duty on which the assessee paid differential duty prior to finalization of assessment, then the Central Excise rules 2002 would have specifically said so - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 149
Pre-deposit - Section 35F of the CEA, 1944 - irregular availment of CENVAT credit - Held that: - The Section 35F mandates that pre-deposit amounting to 7.5% is required to be paid in the case of first appeal - almost the entire part of the CENVAT credit alleged to have been wrongly taken, stands reversed. Hence, the requirement of Section 35F is fully satisfied and there will be no need for the appellant to pay any further amounts to satisfy the mandatory requirements of Section 35F - the appellant has satisfied the requirements of Section 35F - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (6) TMI 142
Detention of goods - detention on the ground that the driver of the vehicle produced old dated Invoice No.1606187 dated 28.03.2017 and that the vehicle contained lesser number of units, when the invoice referred to the number of unit as 38 - Held that: - the first respondent has erroneously taken the order number as Invoice Number, when such factual aspect is evidently available on the face of the invoice itself. Therefore, the first reason, which is factually wrong, has to go. Alleged discrepancies in the number of units of air conditioners - Held that: - 14 numbers of air conditioners were already delivered by the petitioners on 05.04.2017 itself and the remaining 24 numbers alone are sought to be delivered to the purchaser on the very same day evening. The acknowledgement of receipt of 14 units by the buyer is evidently available in the invoice itself. The letters addressed by the purchaser to the petitioner dated 29.03.2017 and 05.04.2017 would further strengthen the case of the petitioner that the total number of units were intended to be supplied in two spells on the same day. The first respondent is not justified in detaining the goods - petition allowed - decided in favor of petitioner.
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