TMI Tax Updates - e-Newsletter
June 8, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. ‘TAX DUE’ WOULD MEAN AN ASCERTAINED LIABILITY

   By: DR.MARIAPPAN GOVINDARAJAN

2. MANDATORY PRE-DEPOSIT

   By: Dr. Sanjiv Agarwal

News

1. OPC,Dormant & Small companies and Private Co. having paid up capital less than 100 crore out of twenty company audit limit w.e.f. 05-6-2015

Notifications

Companies Law

1. F.No. 2/11/2014-CL.V - dated 5-6-2015 - Co. Law

Exemptions to Nidhis under section 462 of CA 2013

2. F. No. 1/2/2014-CL.I - dated 5-6-2015 - Co. Law

Exemptions to Section 8 (Non-Profit) under section 462 of CA 2013

3. F. No. 1/2/2014-CL-V - dated 5-6-2015 - Co. Law

Exemptions to Government Companies under section 462 of CA 2013

4. F. No. 1/1/2014-CL.V - dated 5-6-2015 - Co. Law

Exemptions to Private Companies under section 462 of CA 2013

Customs

5. 28/2015 - dated 5-6-2015 - ADD

Seeks to levy definitive anti-dumping duty on imports of Hot Rolled Flat Products of Stainless Steel of ASTM Grade 304 with all its variants originating in, or exported from People’s Republic of China, the Republic of Korea and Malaysia for a period of five years.

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/148/2015-ITA-II - dated 5-6-2015

Expeditious disposal of applications for rectification under section 154 of the Income-tax Act, 1961 (Act) during the Financial Year 2015-16 - reg.

DGFT

2. 19/2015-20 - dated 5-6-2015

Amendment in paragraph 2.55 and 2.56 of Handbook of Procedures of FTP, 2015-20 as notified by Public Notice No.12/2015-2020, dated 18.5.2015 – Pre Shipment Inspection Agency (PSIA).

Highlights / Catch Notes

Income Tax

• Court Rules Revenue's Tax Recovery from Telangana Liquor Business Illegal Due to Missing Notice u/s 156 of IT Act.

  Case-Laws - HC : Recovery of tax due without issuing notice u/s 156 - carrying on business on behalf of the State of Telangana in respect of sale of Indian Made Liquor and Foreign Liquor - actions taken by the Revenue against the writ petitioner are without jurisdiction and wholly illegal - HC
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• High Court Rules Late Filing of Form 15-I/J u/s 194C is a Technical Defect, No Impact on Tax Deduction Duty.

  Case-Laws - HC : TDS u/s 194C - non-filing of Form No.15-I/J within the prescribed time - It is only a technical defect - once the Conditions of Section 194C(3) were satisfied, the liability of the payee to deduct tax at source would cease - HC
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• High Court Rules Excise Duty as Allowable Business Expense; Rejects Tax Evasion Claims by Assessing Officer.

  Case-Laws - HC : Allowable business expenditure - excise duty levied by the Custom & Central Excise Settlement Commission - AO's determination that the payment was made by the assessee on behalf of contract manufacturers as a part of a collusive attempt to evade tax baseless - HC
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• Assessing Officer Approves Salary Apportionment for Directors u/s 10AA for Dual Roles in Business and Manufacturing.

  Case-Laws - AT : Deduction U/s 10AA - apportionment of salary paid to directors among the taxable and non-taxable unit is rightly done by the AO since they not only take the business decision but also involve in the manufacturing proceeding which they performed at Surat - AT
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• Assessee Eligible for Tax Credit in Japan; Revenue's Approach Deemed Absurd Under Article 24 of India-Japan Tax Treaty.

  Case-Laws - AT : Eligibility to claim credit for the tax deducted in Japan - the treatment sought to be given by Revenue in the case of the assessee yields absurd result - Accordingly assessee should be treated to have paid tax in India without giving effect to the provision of section 10A for the reason also of Article 24 of Double Taxation Avoidance Convention between India and Japan. - AT
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Customs

• CHA License Restored: Insufficient Evidence on Single Proven Charge, Revocation Order Overturned by Commissioner.

  Case-Laws - AT : Revocation of CHA License - CHA filed bills of entry as per import documents and during examination no adverse report received - Out of four charges, one has been proved by the respondent but this alone is not enough for continued operation of the Commissioner's order - licencse restored - AT
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• EPCG Scheme Violation Allegation Dismissed: Parking Location Alone Doesn't Prove Breach of Actual User Condition.

  Case-Laws - AT : Violation of Export Promotion Capital Goods (EPCG) Scheme in import of vehicle - Mere parking of the vehicle at a particular place cannot be considered as violation of actual user condition or proof of the usage of vehicle in a particular manner or of transfer of ownership - AT
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Corporate Law

• Audit Limits Exclusion: OPCs, Dormant, Small, and Private Companies Under 100 Crore Not Counted in 20-Company Cap.

  News : Audit Limits - OPC,Dormant & Small companies and Private Co. having paid up capital < 100 crore out of twenty company audit limit
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• High Court Quashes Proceedings for Delay in Interim Dividend Payment u/ss 205 & 205A, Companies Act 1956.

  Case-Laws - HC : Violation of the provisions of Section 205/205A of the Companies Act, 1956 - Delay in payment of interim dividend - petitioners have been able to make a strong case for quashing of proceedings due to delay in filing of complaint and on account of delay of 12 years even the charges have not been framed - HC
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Service Tax

• Service Tax Not Applicable on Converting Black Bars to Bright Bars; Classified as Manufacturing, Not Business Auxiliary Service.

  Case-Laws - AT : Demand of service tax on the job work converting black bars into bright bars for various clients for which they receive processing charges - Business Auxiliary Service - Being a manufacturing activity, demand of service tax cannot be made - AT
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• Exporter Wins Refund Claim for Unused Cenvat Credit; No Restrictions Found on Refund Entitlement.

  Case-Laws - AT : When appellant was an exporter and the Cenvat credit it had earned was not possible to be utilized by it, there was no bar to grant the refund thereof to the appellant, which was found to be genuine claim - AT
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• CENVAT Credit Approved for IPO Finance Services and Business Studies Linked to Manufacturing Activity.

  Case-Laws - AT : CENVAT Credit - Nexus with manufacturing activity - the services received were received for mobilization of finance by IPO and for conducting study of the business plan and study done in relation to anti-collusion devices proposed to be manufactured by the appellants - credit allowed - AT
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Central Excise

• Refund Entitlement for Duty on Export Inputs: Appellant Eligible Due to No Cenvat Credit Taken.

  Case-Laws - AT : Denial of refund claim - duty on inputs used for export goods - appellant is entitled to take Cenvat credit thereof and as the appellant has not taken Cenvat credit of duty paid on the inputs consequently the appellant is entitled for refund of duty paid on the inputs - AT
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• Tribunal Denies Waiver of Pre-Deposit for CENVAT Credit; Rules Unemployment Isn't Lack of Financial Means. Deposit Required.

  Case-Laws - AT : Waiver of pre deposit - CENVAT Credit - It may be true that the applicant is out of job for some period. However, this cannot imply that the applicant has no means. - applicant is directed to deposit an amount of ₹ 5,00,000 within a period of six weeks - AT
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• CD-ROMs with software fall under Heading 8524.20; facts suppressed to evade duty, demand confirmed.

  Case-Laws - AT : Classification of goods - one would conclude that CD-ROM contains some software and would, therefore, be classifiable under Heading 8524.20 - o hesitation in holding that there was suppression of facts with a wilful intention to evade duty - demand confirmed - AT
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Case Laws:

• Income Tax

• 2015 (6) TMI 183
  Recovery of tax due without issuing notice u/s 156 - Challenge to prohibitory orders and warrant of attachment of moveable property - whether any recovery proceedings can be initiated against the writ petitioner for the alleged income tax dues as claimed by the Revenue - carrying on business on behalf of the State of Telangana in respect of sale of Indian Made Liquor and Foreign Liquor - restraining the petitioner from selling the liquor stock, which is the property of State of Telangana Held that:- By virtue of Section 68 read with Section 53 of Act, 2014, successor States of Andhra Pradesh and Telangana have acquired the assets and took over the liability in respect of the Companies and Corporations specified in the ninth schedule of Act, 2014. By virtue of sub-section (2) of Section 68 the assets, rights and liabilities of APBCL now stand apportioned between the State of Andhra Pradesh and State of Telangana in the manner as provided in Section 53 of Act, 2014. Section 53 provides subject to the agreement the aforesaid assets and liabilities of the Corporation, shall stand apportioned on the basis of population ratio. The petitioner has not acquired nor can acquire in view of above legal position any property from APBCL nor the liability thereof. The State of Telangana has acquired these assets and properties and liability of APBCL, being the recorded assessee proportionately. Therefore, it is absurd to contend that the writ petitioner is the successor in interest of APBCL. It does not appear from object clause of Memorandum of Association that it has acquired any rights, assets and properties of APBCL. Thus, the question of shouldering liability by the writ petitioner also does not arise. We are of the view that just because the petitioner paid tax dues on mistaken application of law, it cannot be precedent for recovery for the simple reason that illegal and wrongful action cannot be precedent, furthermore there cannot be estoppel as against provision of law. - actions taken by the Revenue against the writ petitioner are without jurisdiction and wholly illegal. In the event, State of Telangana does not pay the proportionate liability of the tax dues for the assessment year 2012-13 or previous thereto, if any, it would be open for the respondents to recover the same from the State of Telangana, since It is to share the proportionate liability along with assets of the erstwhile APBCL which was again a separate legal entity and an assessee. We are of the view that the writ petitioner cannot be equated with the Government in order to get Constitutional immunity from payment of taxes. - Decided in favour of appellant.

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• 2015 (6) TMI 182
  Addition u/s 69B - ITAT deleted the addition - estimation of the market value of the property - reference to DV0 - Held that:- There is no nexus between the property in Baddi (Himachal Pradesh) and the property in Punjabi Bagh (West). There is undoubtedly no material available to even remotely reflect that consideration over and above what was shown to be paid in the registered sale deed of the West Punjabi Bagh property was made over to the seller. In these circumstances, it was not fair in the first place to refer the said property for estimation of its market value by DVO. The assessment of the value by DVO cannot hold primacy over the consideration for which the property was actually acquired. If there is any difference in the shares in consideration borne by the four brothers, it is a matter of their inter se understanding. Doubts as to the real value cannot arise from such fact alone. The shop in Bhagirath Place is the property of the assessee. It has been found, as a fact, by the CIT(Appeals) that the shop had remained vacant throughout the AY. No evidence was gathered by the AO to refute the claim of the assessee to such effect or to show that rent over and above what was declared was realized. The conclusion of the CIT(Appeals) to the contrary was affirmed by ITAT in the order dated 08.08.2014. Both the said authorities have also found, on factual inquiry, that the assessee had explained the recovery during the search with the help of books of accounts of Wings Pharmaceuticals Pvt. Ltd. There is nothing brought by the Revenue to demonstrate that these pure findings of fact are perverse. - Decided against revenue.

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• 2015 (6) TMI 181
  TDS u/s 194C- non-filing of Form No.15-I/J within the prescribed time - payments made to sub-contractors towards freight charges - Default of provisions of Section 40(a)(ia) - Held that:- Once, the declaration forms are filed by the sub- contractor, the liability of the assessee to deduct tax on the payments made to the sub-contractor would not arise . As we have examined, the sub-contractors have filed Form No.15I before the assessee. Such being the case, the assessee is not required to deduct tax under Section 194C(3) of the Act and to file Form No.15J. It is only a technical defect as pointed out by the Tribunal in not filing Form No.15J by the assessee. See Valibhai Khandbai Mankad’s case (2011 (4) TMI 887 - ITAT, AHMEDABAD ) upheld by the High Court of Gujarat reported in (2012 (12) TMI 413 - GUJARAT HIGH COURT) wherein it is held that once the Conditions of Section 194C(3) were satisfied, the liability of the payee to deduct tax at source would cease and accordingly, application of Section 40(a)(ia) would also not arise. - Decided in favour of assesse.

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• 2015 (6) TMI 180
  Allowable business expenditure - excise duty levied by the Custom & Central Excise Settlement Commission - Held that:- The additional excise duty were to be borne by the contract manufacturers, the contract manufacturers would have accounted for that amount in the purchase price of the goods, resulting in a higher price to be paid by the assessee. Therefore, this situation is, as per the ITAT's own explanation, 'revenue neutral' as well. The AO's determination that the payment was made by the assessee on behalf of contract manufacturers as a part of a collusive attempt to evade tax, is thus, baseless. This sum of additional excise duty, was the differential amount which became payable only upon the passing of the said order and thus, became crystallized in the subject assessment year. Therefore, even though the excise duty was for manufacturing activity that occurred earlier, the liability to pay such additional duty did not exist in the previous years and as a result, could not have been claimed by the assessee as expenditure in the concerned previous years. In arriving at this conclusion, this Court relies upon its ruling in Rattan Chand Kapoor (1984 (2) TMI 60 - DELHI High Court)affirmed by this Court in Shri Ram Pistons & Rings Ltd [2008 (5) TMI 631 - DELHI HIGH COURT]. Thus the sum of Rs. 4,94,09,120/- paid by the assessee towards additional excise duty on behalf of the contract manufacturers constitutes deductible expenditure under Section 37(1) of the Act - Decided in favour of the assessee

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• 2015 (6) TMI 179
  Reopening of assessment - addition u/s. 68 - Held that:- Once the identity of the share holder have been established, even if there is a case of bogus share capital, it cannot be added in the hands of company unless any adverse evidence is not on record. The facts and circumstances of the present case are similar and identical to that of the aforesaid case i.e. ITO vs. Neelkanth Finbuiltd Ltd. (2015 (6) TMI 163 - ITAT DELHI) in which both of the Members were the parties wherein the issues in dispute are decided in favor of the assessee. Respectfully, following the precedent of the Coordinate Bench as aforesaid, we quash the orders of the authorities below and delete the addition of Rs. 30,00,000/- made u/s. 68 of the Act by the AO on the allegation of unexplained credits of share application - Decided in favour of assessee.

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• 2015 (6) TMI 178
  Deduction u/s 36(1)(viii) - income derived from providing long term finance - CIT(A) deleted addition - Held that:- The CIT(A) had accepted and followed the order of his predecessor for previous assessment year i.e. 2003-04 which is the year under consideration in these appeals. The CIT(A) deleted the addition by following the order for preceding year and directed the AO to allow deduction to the assessee as per provisions of section 36(1)(viii) of the Act. We also note that the ITAT “C” Bench Delhi in the order passed for AY 2004-05 in assessee’s own appeal has also restored this issue to the file of AO for fresh consideration with the directions as reproduced hereinabove. The impugned order of the CIT(A) in the present appeal has been passed on the same line i.e. for AY 2004- 05, therefore, in view of submissions of both the sides, this issue is also restored to the file of AO for a fresh adjudication - Decided in favour of assesse for statistical purposes. Addition of filing fees paid to Registrar of Companies (ROC) amounting - Held that:- The facts and circumstances of the present case are similar to the facts and circumstances of the cases as relied by both the AO as well as the CIT(A) viz. judgment of Hon’ble Supreme Court viz. Punjab State Industrial Corporation (1996 (12) TMI 6 - SUPREME Court) and Brooke Bond (India) Pvt. Ltd. vs CIT (1997 (2) TMI 11 - SUPREME Court) and the issue is squarely covered in favour of the revenue by these decisions. Under above noted facts and circumstances, we are unable to see any infirmity, ambiguity or any other valid reason to interfere with the conclusion of the CIT(A) confirming the addition made by the AO. - Decided against assessee. Penalty u/s 271(1)( c) - 100% tax sought to be evaded on ROC fees of Rs. 64,00,000/- paid for increasing the authorized share capital from Rs. 300 crore to Rs. 400 corre - Held that:- AO imposed penalty on wrong premises merely because the claim of the assessee which was fully disclosed in the statement of income was not found to be acceptable by the department but it cannot be held that the assessee either furnished wrong particulars of its income or has concealed particulars of its income to attract penalty u/s 271(1)(c) of the Act. Hence, impugned penalty levied on the assessee is not sustainable - Decided in favour of assesse. Penalty u/s 271(1) (c) - disallowance of deduction u/s 36(1) (vii) (c) - Held that:- since the quantum assessment and appeal order for A.Y 2003-04, on the basis of which penalty was levied do not survive and the order of second round of assessment is awaited, then the issue of sustainability or validity of the penalty order and impugned order becomes academic and infructuous and hence, the same does not survive for adjudication before this Tribunal and thus, we dismiss the sole ground of the Revenue without any detailed deliberations on merit - Decided in favour of assesse.

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• 2015 (6) TMI 177
  Security deposits paid to Electricity Authorities and Sales tax Authorities - CIT(A) deleted the addition - whether advance given is capital in nature and the same cannot be claimed as bad debt as per the provisions of sec. 36(2) r.w.S 36(1)(vii)? - Held that:- It appears that the assessee has transferred the factory premises along with the electricity connection. Therefore, no separate claim of business loss on account of security deposit of electricity connection is allowable when the same is transferred along with the factory premises Similarly, the deposit with the Sales Tax Department cannot be treated as irrecoverable amount. Merely because the assessee decided to written–off these amounts in the books of account would not automatically become an allowable deduction being business loss. We further note that for the assessment year 2007–08, this claim of the assessee has been disallowed by the learned CIT(A) and the assessee has not filed any appeal against the disallowance made by the learned CIT(A). Consequently, the order of the learned CIT(A) qua this issue is set aside and the order of the Assessing Officer is restored. - Decided in favour of revenue. Applicability of section 50C, in respect of the sale of lease hold property - CIT (A) treating the value of the property at Rs. 1,40,00,0001- instead of at its stamp value of Rs. 3,07,71,0001-, as done by the AO - the lease hold rights cannot be equated with the ownership of the land and, therefore, the deemed provisions of section 50C, cannot be applied in case of transfer of lease hold rights as per assesse - Held that:- There is no dispute that what is transferred by the assessee is the lease hold property and, therefore, until and unless the property is converted into free hold the lessee holds only lease hold rights over the property. See ITO v/s Pradeep Steel Re–rolling Mills Pvt. Ltd. [2011 (7) TMI 1101 - ITAT MUMBAI] and Atul G. Pauranik v/s ITO [2011 (5) TMI 576 - ITAT, Mumbai] wherein held since the section 27(iiib) has not been extended to the computation of capital gains under section 45 and is limited to the computation of the income under the head "Income from house property", the conclusion of the CIT(A) that section 50C cannot be invoked where leasehold rights in land or building are transferred, seems to us, to be correct. - Decided against revenue. Advance written–off in respect of old / ex–employees balance - CIT(A) allowed the claim of the assessee - Held that:- CIT(A) has correctly allowed the claim of the assessee by following the orders of the Tribunal as well as the decision of the Hon'ble Jurisdictional High Court in IBM World Trade Corporation v/s CIT, [1988 (12) TMI 23 - BOMBAY High Court]. The amount was paid for procuring the accommodation for the employees who have already left the services of the assessee, therefore, now this amount has become irrecoverable and is allowable deduction as business loss.- Decided in favour of assesse. Deduction on account of written–off amount being deposit made to EGIL - Held that:- The assessee has claimed deduction of Rs. 3,75,880, written–off on account of deposit made for an old premises by EGIL which were merged with the assessee and subsequently the amount was identified as irrecoverable after the merger - Decided in favour of assesse.

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• 2015 (6) TMI 176
  Reopening of assessment - addition of claim of write–off of loans and advances due to non–recovery of amounts - Held that:- As relying on CIT v/s Jet Speed Audio Pvt. Ltd. [2015 (2) TMI 766 - BOMBAY HIGH COURT] wherein held Tribunal has rendered a finding of fact on the basis of material before it, in particular the fact that during original assessment proceedings a query was made with regard to the same issue which was responded to by the respondent - Assessee and on satisfaction of the same, the Assessing Officer had passed an assessment order. Therefore, reopening of assessment on an issue in respect of which a query was raised and responded to by the assessee would amount to a change of opinion. No mention of any tangible material in the reasons recorded for issuing reopening notice under Section 148 of the Act. we set aside the re–opening of the assessment and consequent re–assessment in present case - Decided in favour of assesse.

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• 2015 (6) TMI 175
  LIBOR based interest rate - whether such rate may be applied where Indian entities borrow loans from overseas whereas the position is totally reverse in the present case and the A.O. had correctly applied SBI PLR based interest rate? - Held that:- The issue of adopting the PLR of the public sector banks or LIBOR for the purpose of arm's length interest has been considered by this Tribunal in the series of decisions. See Micro Inc. Ltd. v/s ACIT [2013 (8) TMI 332 - ITAT AHMEDABAD] - Decided against revenue. Transfer pricing adjustment - adjustment of interest levied on selective trade receivables received from related party - Held that:- The Tribunal has taken a view that the transaction of allowing the credit period to the A.E. on realisation of sale proceeds has to be considered along with the main international transaction in respect of sale to A.E. A similar view has been taken by the Tribunal, Delhi Bench, in Kusum Healthcare Pvt. Ltd. (2015 (4) TMI 180 - ITAT DELHI) empirically demonstrates that the differential impact of working capital of the vis-a-vis its comparables has already been factored in the pricing/profitability of the assessee which is more than that working capital adjusted margin of the comparables. Hence, any further adjustment to the margins of the assessee on the pretext of outstanding receivables is unwarranted and wholly unjustified. Thus set aside this issue to the record of the Assessing Officer / Transfer Pricing Officer and direct to re–do the exercise of determination of arm's length price in the light of the above decisions of the Tribunal. - Decided in favour of assessee for statistical purposes

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• 2015 (6) TMI 174
  Validity of the assessment u/sec. 153 - Held that:- it is not the case of the department that the demand raised in the assessment order dated 12-03-2014 was withdrawn by the AO at the time of issuing Corrigendum dated 16-04- 2015. Further, the Corrigendum itself was issued by the AO after the expiry of time limit prescribed under third proviso to sec. 153(2A) of the Act. As per the decision of Hon’ble Madras High Court rendered in the case of Vijay Television Private Ltd (2014 (6) TMI 540 - MADRAS HIGH COURT), the said defect cannot be cured by the Corrigendum issued subsequently after the expiry of limitation period. Hence the assessment order dated 12-03-2014 passed by the AO should be construed as final assessment order passed in violation of the statutory provisions of the Act. Since the AO has failed to comply with the time limit prescribed by sec. 153(2A) of the Act and further failed to follow the mandate of the provisions of sec. 144C, the impugned order is the one without jurisdiction, null and void and unenforceable. Accordingly we set aside the impugned assessment order.- Decided in favour of assessee.

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• 2015 (6) TMI 173
  Disallowance on account of scrap sale for the purpose of deduction u/s 80IB - initiation of proceedings u/s 153A - Held that:- In absence of incriminating material found during the course of search no addition can be made u/s 153A of the Act where the original assessment was already framed on the date of search. In the present case before us that no incriminating material was found during the course of search relating to the assessee for the assessment year under consideration to justify the additions made in the year by the Assessing Officer and assessment based on the original return of income filed under sec. 139 of the Act was not pending as on the date of search, we following the above cited decisions by the learned AR, discussed above, hold that the assessment framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 for the assessment year under consideration is not valid and the same is accordingly held as null and void. See CIT vs. Anil Kr. Bhatia (2012 (8) TMI 368 - DELHI HIGH COURT)- Decided in favour of assesse.

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• 2015 (6) TMI 172
  Non deduction of TDS under section 40(a)(ia) on labour payment - CIT(A) deleted the addition - Held that:- As there is a clear-cut finding given by the ld. CIT(Appeals) that the assessee has duly produced the books of account as well as the bills, etc. before the Assessing Officer and even the evidences were filed to prove that Shri Dilip Kumar Paul was the employee of the assessee to whom the assessee had transferred funds and he was not a sub-contractor. We al so noted that the ld. CIT(Appeals) duly called for the remand report from the Assessing Officer and in the remand report the Assessing Officer did not deny that Shri Dilip Kumar Paul was the employee of the assessee, but only objected the admission of the fresh evidences on the basis that the assessee has not submitted the complete set of books. Since the assessee has made the payment to the labourers through the employee Shri Dilip Kumar Paul, therefore, we do agree with the ld. CIT(Appeal s) that it is not a case where the provisions of section 194C can be applied - Decided against revenue. No deduction of TDS for payment to various parties under section 194C read with section 40(a)(ia) - CIT(A) deleted the addition - Held that:- The second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 1s t April, 2012 will apply in the case of the assesse. In order to rationalize the provisions of disallowance on account of non-deduction of tax from the payments made to a resident payee, it is proposed to amend section 40(a)(ia) to provide that where an assessee makes payment of the nature specified in the said section to a resident payee without deduction of tax and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the payee, the, for the purpose of allowing deduction of such sum, it shall be deemed that the assessee had deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. Thus restore this issue to the file of the Assessing officer with the direction that the assessee shall provide all the details to the Assessing Officer with regard to the recipients of the income and taxes paid by them. See Santosh Kumar Kedia Versus Income-tax Officer, Wd-56 (1) , Kolkata [2015 (6) TMI 123 - ITAT KOLKATA] - Decided in favour of revenue for statistical purposes No deduction of TDS on account of transport charges - CIT(A) deleted the addition - Held that:- It is not denied by the ld. D.R. that the assessee has submitted forms 15J in terms of Rule 29D read with second proviso of sect ion 194C(3)(i). In view of this fact, we do not find that this ground warrants our interference in the order of ld. CIT(Appeal s). - Decided against revenue. Unexplained investment - addition on account of capital gain - CIT(A) deleted the addition - Held that:- It is a case where the value of asset s got decreased. It is not a case where the value of the assets increased so that it can be said that the assessee has made investment. The provisions of sect ion 69 are applicable to unexplained investment. The assessee has made investment s in the financial year, which were not recorded in the books of account and the assessee offers no explanation about the nature and source of the investment or the explanation offered by him is not in the opinion of Assessing Officer satisfactory. The decrease in the value of assets by no stretch of imagination can be regarded to be an investment. - Decided against revenue. Disallowance of diesel and petrol expenses - CIT(A) deleted part addition - Held that:- It is not denied that the site office where the assessee is to carry out the work is too far away and is mainly in South Tripura. The assessee has to maintain vehicles and has to spend on diesel and petrol. The expenses so incurred do not exceed 6.5% approximately of the receipt. In our opinion, once the genuinity of the expenditure is proved, the onus is on the revenue to prove that the expenditure has not been incurred for the purpose of business especially when the expenditure has been incurred during the course of carrying on the business. Ld. CIT(Appeals), in our view, was justified in rest ricting the disallowance to 5% of the expenditure and it cannot be denied that some part of the expenditures might have not been wholly and exclusively incurred for the purpose of business - Decided against revenue. Undisclosed investment in “Kotak Mahindra" - CIT(Appeals) deleted the addition - held that:- As in the Bank account statement of the assessee the amount of Rs. 1,04,800/- was shown as paid to M/s. Kotak Mahindra Bank Ltd. by itself does not establish that such amount was an investment. - Decided against revenue. Disallowance of motor car depreciation - CIT(A) deleted part addition - Held that:- CIT(Appeals) has rightly held that the addition to motor car was, in fact, depreciation calculated at the rate of 15% on the opening balance of Rs. 1,37,236/-. Even the Assessing Officer did not make any comment in the remand report. We, therefore, confirm the order of ld. CIT(Appeal s) on this point - Decided against revenue.

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• 2015 (6) TMI 171
  Reopening of assessment - deduction of “provision for construction” disallowed - Held that:- Sufficiency of reasons for reopening and assessment does not call for determination at the stage of reopening assessment and secondly though the material were available on record, there was no conscious consideration of the same because there was no application of mind by the Assessing Officer at the time of regular assessment proceedings, therefore, there was no change of opinion by the Assessing Officer. As discussed above, the factual finding of the Learned CIT(Appeals) that there was no application of mind by the Assessing Officer is contrary to the record. However, it has been fairly admitted by the Learned CIT(Appeals) that the materials were already available on record. Assessing Officer has initiated reopening proceedings merely on reappraisal of the details forming part of the original assessment proceedings. It is evident from the paper book that vide letter dated 25.3.2003, the assessee had furnished details of provisions made for construction expenses as on 31.3. 2000 with copies of bills submitted by the parties, before the Assessing Officer during the original assessment proceedings. Thus, there is nothing to suggest that any new fact/information had come to the notice of the Assessing Officer subsequent to the original assessment to acquire jurisdiction by him to initiate reopening proceedings under sec. 147 of the Act. Thus reassessment as invalid and the same has been quashed. - Decided in favour of assesse.

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• 2015 (6) TMI 170
  Non deduction of TDS on account of transportation hire charges made under section 40(a)(ia) - no oral contract existed between the assessee and the transporters - whether there is contractual relationship between the assessee and the persons to whom the assessee had made the payment s in the nature of hiring charges for goods carried vehicles? - Held that:- In our opinion, a contract need not be in writing; even an oral contract is good enough to invoke the provisions of Section 194 C. As Hon’ble Karnataka High Court has observed in the case of Smt J Rama Vs CIT (2012 (6) TMI 645 - Karnataka High Court), “Law does not stipulate the existence of a written contract as a condition precedent for ( invoking the provisions of Section 194 C with respect to payment of TDS”. The transporters have received the payments from the assessee towards the transportation charges, therefore, the presumption normally be that one would proceed on the basis that there was a contract for hiring of goods carried vehicles. Therefore, if the assessee has made the payment for hiring the goods carried vehicles, the provisions of section 194C are clearly applicable. In our opinion, the ld. CIT(Appeals) was not correct in law that the assessee will be liable to deduct the TDS if the amount of a single contract exceeds Rs. 20,000/-. The contract has to be looked into party-wise not on the basis of the individual GR. In our opinion, all the payment s made to a t ruck owner throughout the year are to be aggregated to ascertain the applicability of the TDS provision as all the payments pertain to a contract. Thus the order of the ld. CIT(Appeals) has to be reversed. Also find force in submission of the ld. A.R.that the 2nd proviso to section 40(a)(ia) as inserted by Finance Act, 2012 would apply in the case of the assesse. As relying on Santosh Kumar Kedia Versus Income-tax Officer, Wd-56 (1) , Kolkata [2015 (6) TMI 123 - ITAT KOLKATA we restore this issue to the file of the Assessing officer with the direction that the assessee shall provide all the details to the Assessing Officer with regard to the recipients of the income and taxes paid by them. The Assessing Officer shall carry out necessary verification in respect of the payment s and taxes of such income and al so filing the return by the recipient. In case, the Assessing Officer finds that the recipient has duly paid the taxes on the income, the addition made by the Assessing Officer shall stand deleted.

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• 2015 (6) TMI 169
  Disallowance of STT payment - CIT(A) allowed part relief - Held that:- The AO has disallowed the relief to the assessee only on the technical ground of delay in filing the revised return. It is pertinent to note that the AO has to assess the correct income of the assessee on the basis of the provisions of the Act and in case if the assessee inadvertently has offered the higher income the same cannot be taxed by taking the excuse of technicalities. Even otherwise there is no restriction on the jurisdiction and the power of appellate authority to consider a fresh plea in view of the judgment of Hon’ble Supreme Court in the case of “National Thermal Power Co. Ltd. vs. CIT” [1996 (12) TMI 7 - SUPREME Court]. Accordingly, we do not find any error or illegality in the order of Ld. CIT(A) in allowing the correct amount of STT claimed by the assessee in the revised return of income. - Decided against revenue. Disallowance of excess donation paid on the basis of revised return - Held that:- Since on merits the AO has not disputed the claim of the assessee, therefore we do not find any error or illegality in the order of the Ld. CIT(A) in allowing the correct figure of donation paid by the assessee in the revised return of income. - Decided against revenue. Disallowance of bad debts - Held that:- The relevant finding of the AO and submitted that the Board of Directors of the assessee has approved the bad debts in the meeting held on 30.04.07, therefore the resolution is subsequent to the financial year closed on 31.03.07. We further note that the amount of bad debts written off represents the loan in the ordinary course of business of money lending which is carried on by the assessee, therefore when the interest on the said amount is offered to tax, then in view of the judgment of Hon’ble Jurisdictional High Court in the case of “CIT vs. Shreyas S. Morakhia” [2012 (3) TMI 103 - BOMBAY HIGH COURT] the same is allowable as business loss. Accordingly, we do not find any merits in the grounds raised by the Revenue when the bad debts were actually written off by the assessee being unrecoverable and it is regarding the advance given by the assessee in the business of money lending. - Decided against revenue. Disallowance of loss of commodity futures by treating as speculation loss - Held that:- This ground is covered against the assessee by the decision of this Tribunal of “Varsha Corporation Ltd. vs. DCIT” [2015 (6) TMI 124 - ITAT MUMBAI] wherein held provisions of clause (e) of the proviso to Section 43(5) did not exist during the period when the assessee carried out the transactions. Decided against assesse. Adjustment for computing book profit under section 115JB on account of bad debt disallowance - Held that:- In view of our findings on the ground No.3, this ground of the Revenue’s appeal is dismissed. Even otherwise when the assessee has actually written off the bad debts in the books of account, then no adjustment can be made while computing the book profit under section 115JB as this amount does not represent any provision on account of bad debts. - Decided against revenue. Disallowance of depreciation and boat expenses - Held that:- Except the year under consideration the AO has accepted the claim of the assessee on account of depreciation and other expenses on boat. When there is no change in facts and circumstances in this year under consideration, then the AO has to maintain the rule of consistency. Accordingly, we do not find any error or illegality in the order of the Ld. CIT(A) for this issue - Decided against revenue. Disallowance of loss on share trading by treating the same as speculation loss - Held that:- The gross total income for the purpose of explanation to section 73 of the Act shall be the aggregate income prior to giving the setting off under chapter VI of the Act. The authorities below have not dealt with this issue to give an factual finding about the allowable business loss and unabsorbed depreciation as well as the legal point whether the gross total income under the head ‘Business and profession’ has to be computed after giving effect to the setting off of brought forward business loss as well as brought forward unabsorbed depreciation for the purpose of arriving to a decision that the income from other sources is more than the income from business and profession - this issue is set aside to the record of the AO to reexamine and reconsider the same by considering the claim of the assessee and then decide the same as per law. - Decided in favour of assesse for statistical purposes.

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• 2015 (6) TMI 168
  Depreciation on the BSE Membership card disallowed - Held that:- This issue is covered against the assessee by the decision of Hon’ble Bombay High Court in the case of CIT vs. Techno Shares and Stock Ltd. & Others, [2009 (9) TMI 18 - BOMBAY HIGH COURT] wherein held that depreciation is not allowable on the BSE Membership Card as it does not fall in any of the categories specified in section 32(1) of the Income Tax Act 1961 (the Act). - Decided against assesse. Non compete fee - whether non-compete right is intangible asset eligible for depreciation? - Held that:- AR has expressed his satisfaction only with grant of depreciation as has been allowed by Ld. CIT(A)and also in view of the fact that Ld. DR could not cite any decision to contradict that proposition, we are of the opinion that Ld. CIT(A) did not commit any error in holding that assessee was entitled to get depreciation on the amount paid by it as non-compete fee. Accordingly, we decline to interfere in such decision of Ld. CIT(A). - Decided against assesse and revenue. Disallowance of bad debts written off in the P&L account - Held that:- The brokerage having been credited to the P&L account of the assessee, it was evident that a part of the debt was taken into account in computing the income of the assessee. The fact that the liability to pay brokerage may arise at a point in time anterior to the liability to pay the value of the shares transacted would not make any material difference to the position. Both constitute a part of the debt which arises from same transaction involving the sale or, as the case, purchase of shares. Since both form a part of component of debt, the requirement of section 36(2)(i) are fulfilled, where a part thereof is taken into account in computing the income of the assessee. Therefore, it was held that assessee is entitled to deduction by way of bad debt under section 36(1)(viii) r.w.s. 36(2) in respect of amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his clients - Decided against revenue. Bad debts as trading loss being unrecoverable from the clients - Held that:- Right from the assessment proceedings it was the case of the assessee that the impugned loss has occurred to the assessee in respect of error trade. Due to dispute with the clients, for the transaction, it does not change the relation of principal and the agent. The assessee for business consideration chooses not to recover the losses. These losses are in the course of business and should be allowed as such under section 28 of the Act. The AO has not brought any material on record to suggest that these contentions of the assessee are either false or incorrect. No material has also been brought on record that these losses are on account of assessee’s own trading in shares. If it is so, the loss accrued to the assessee will be governed by the aforementioned decisions of Tribunal where consistent view has been taken that loss occurred to share broker on account of client disowning transaction is business loss and not speculative loss. Therefore, we are of the opinion that Ld. CIT(A) did not commit any error in accepting the claim of the assesse - Decided against revenue. Disallowance u/s 14A r.w.r. 8D - assessee earned dividend income which was claimed to be exempt under section 10(33) - held that:- There is no infirmity in the order passed by Ld. CIT(A) vide which he has directed the AO to recompute the disallowance in view of the submissions of the assessee as well as the decision of Hon’ble Bombay High Court in the case of Godrej &Boyce Mfg. Co. Ltd.(2010 (8) TMI 77 - BOMBAY HIGH COURT). - Decided against revenue.

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• 2015 (6) TMI 167
  Addition on account of capital introduction - CIT(A) deleted the addition - Prescribed monetary limits for filing of appeal before ITAT - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a low tax effect case, the appeal of the revenue dismissed in limine without going into merits. - Decided against revenue.

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• 2015 (6) TMI 166
  Penalties under section 272A(2(k) - reasonable cause mising - Held that:- The assessee has miserably failed to prove if there was any reasonable cause for failure to comply with the provisions of law. In the absence of any cause to explain delay in filing of the TDS returns within the time prescribed in law, we do not find any error in the orders of the authorities below in levying and confirming the penalties against the assesse - Decided against assesse.

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• 2015 (6) TMI 165
  Deduction U/s 10AA - CIT(A) allowed claim - Held that:- The word services as mentioned in Section 10AA cannot be construed inconsistently with the definition of services given in the SEZ Act. Under the SEZ act, the trading is included in the services provided the trading is export of imported goods. We therefore, feel that the assessee is entitled to deduction u/s 10AA of the Act and therefore, the ld. CIT(A) was justified in allowing the exemption. - Decided against revenue. Addition of remuneration of Director - apportionment of salary among the taxable and non-taxable unit - Held that:- The company is running various units, which includes head office in jaipur, Mumbai and SEz Unit at Surat. The overall work either trading or manufacturing is responsibility of the Directors when company deals in precious items cannot depend upon only employees and managers. They take the decision what type of rough diamond should be imported, how it should be processed and re-exported. They not only take the business decision but also involve in the manufacturing proceeding which they performed at Surat. Therefore, we find that apportionment of salary among the taxable and non-taxable unit is rightly done by the ld Assessing Officer and confirmed by the ld CIT(A). Accordingly, we uphold the order of the ld CIT(A). - Decided against assesse.

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• 2015 (6) TMI 164
  Mistake rectifiable u/s 154 - order u/s 154 read with section 143(3) and 250 withdrawing the claim for credit of foreign TDS - period of limitation - Held that:- In the instant case, the assessee has sought for rectification in the order u/s 143(3) passed by the A.O. on 26-12- 2008 which is within the period of 4 years from the end of the financial year in which the assessment order was passed. Accordingly we hold that the application u/s 154 of the Act was within the time limit laid down u/s 154(7) of the Act. Eligibility to claim credit for the tax deducted in Japan - whether income on which the assessee was charged tax in Japan was not chargeable to tax in India being exempt under the provision of section 10A? - India Japan DTAA - Held that:- This view of the lower authorities are not in consonance with the provisions of section 10A as amended by Finance Act 2000 w.e.f. 1-4-2001 and do not take into account the sea change made in the provision after the aforesaid amendment. Prior to the amendment by Finance Act 2000, the Act provided that any profits and gains to which the provisions of section 10A apply “shall not be included in the total income of the assessee”. However, after the amendment w.e.f. A.Y. 2001-02 the profits and gains to which the provisions of section 10A apply are not excluded from total income and instead “a deduction of such profits and gains…..” shall be allowed from the total income of the assessee”. It means “total income” must first be determined from which deduction u/s 10A shall be allowed. After amendment by Finance Act, 2000 w.e.f. 1-4-2001 deduction u/s 10A being from the total income leads to the conclusion that there is charge of income tax in India also on the income that has been subjected to tax in Japan. The tax liability of the assessee is equal to the tax payable in India at normal rates. Accordingly assessee qualifies for tax relief under para 2a of Article 23 of Double Tax Avoidance Convention between India and Japan as applicable to the assessment years under consideration. Since here we are concerned with the treatment to be given to the resident of India in relation to taxes paid in Japan., the same is covered by Paragraph 2 of Article 23 and not by paragraph 3 of Article 23 which provides for treatment to be given in relation to taxes paid in India by resident of Japan. On the one hand the assessee is being discriminated against a resident of Japan to whom the incentive of section 10A is expressly passed over in the double taxation relief granted to him against his tax liability in Japan. On the other hand the assessee is being discriminated against an Indian resident who does not earn export income and does business in domestic market only. Thus the treatment sought to be given by Revenue in the case of the assessee yields absurd result. Accordingly assessee should be treated to have paid tax in India without giving effect to the provision of section 10A for the reason also of Article 24 of Double Taxation Avoidance Convention between India and Japan. Thus we direct the A.O. to allow credit for foreign TDS against the tax levied on the corresponding income eligible for deduction u/s 10B of the Act in India for all the three years under consideration i.e. assessment years 2003-04, 2004-05 and 2005-06.

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• Customs

• 2015 (6) TMI 186
  Revocation of CHA License - forfeiture of the full amount of security deposit furnished by the CHA - Violation of Regulation 13(e) - Held that:- CHA was not aware of the fraudulent attitude of the importers and the operators who engaged themselves in fraudulent import of high end cars/SUVs by mis -declaring the same as new vehicle. He has further recorded that the appellant CHA filed bills of entry as per import documents and during examination no adverse report received. - Commissioner has dropped the charges framed against the appellant CHA for violation of Regulation 13(a), 13(b), 13(d) and 19(8) of the CHALR , 2004. These Regulations inter alia provide that the CHA shall obtain an authorization from his client; transact business in the customs stations personally or through their employee; advise his client to comply with the provisions of the act and Regulation and exercise necessary supervision on conduct of his employee. The Commissioner did not find any violation on the part of the CHA in the above matters. We also notice that under para 30 of the impugned order that the CHA was not aware of the fraudulent attitude of the importers and the operators who engaged themselves in fraudulent import of high end cars/SUVs by mis -declaring the same as new vehicle. He has further recorded that the appellant CHA filed bills of entry as per import documents and during examination no adverse report received. - Out of four charges, one has been proved by the respondent but this alone is not enough for continued operation of the Commissioner's order. The CHA has already suffered for over four years on account of revocation of license. In our view, at this length of time, the CHA license needs to be restored. However, for not acting diligently, the Commissioner's order for forfeiture of security deposit has to be upheld. - revocation of licence is set aside, but the forfeiture of security deposit is sustained - Decided partly in favour of apeellant.

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• 2015 (6) TMI 185
  Violation of Export Promotion Capital Goods (EPCG) Scheme in import of vehicle - benefits of exemption from payment of Customs Duty under the EPCG Scheme - Exemption Notification No.103/2009-Cus dated 11.09.2009 - Held that:- The DGFT Policy Circular No. 26/2009-14 dispenses with the production of installation certificate for moveable capital goods such as vehicles imported under EPCG scheme by Service Providers, as they are movable capital assets and cannot be installed at one particular location. All Customs Authorities have been instructed by this Policy Circular no. 26/2009-14, not to insist on the 'installation certificate' for such movable capital assets / goods, if imported under EPCG scheme. Therefore, non-production of installation certificate of the vehicle is not in contravention of the EPCG scheme. There is no condition stipulating to park the vehicle imported under EPCG scheme at a particular place, or to seek its registration only from any particular RTO office. Mere parking of the vehicle at a particular place cannot be considered as violation of actual user condition or proof of the usage of vehicle in a particular manner or of transfer of ownership. - Neither there is any documentary evidence of sale of the vehicle to any other person / entity with any evidence of corresponding payment, nor has the Appellant claimed having sold the vehicle in question. It is not in dispute that the vehicle is still shown as fixed asset in the Balance Sheet of the Appellant Company. Most importantly, no evidence of any change of ownership of the vehicle in the name of any other person / entity is forthcoming from the records of RTO. The record of registration with the RTO conclusively shows that the ownership of the vehicle remains with the Appellant Company and continues to be for "Tourist Purpose". These are not even disputed by the adjudicating authority. It cannot therefore be said that the vehicle has already been sold and transferred in violation of the actual user condition. "Export Item Name" for the Appellant Company as seen from the Condition Sheet attached to their EPCG license is "Hotel and Tourism related services". The vehicle is accordingly registered for "Tourist purpose" in the name of the Appellant Company owning a "Hotel" in State of Karnataka at Bangalore. In view of the above binding precedents in Interglobe Enterprises Ltd (2006 (1) TMI 145 - HIGH COURT OF DELHI), Air Travel Bureau Ltd (2010 (8) TMI 434 - DELHI HIGH COURT ) and the clarification from the office of DGFT, it is not mandatory that the Hotel of the Appellant Company should have charged separately for the use of the vehicle to collect money in foreign exchange specifically under the head of transportation charges with separate accounting of the same. Even if the words 'All India Permit' are not mentioned on the vehicle registered as a Tourist Vehicle with a Tourist Permit, neither it is in violation of any mandatory condition of the EPCG License nor of the Exemption Notification. Neither the person in whose name the visitor pass was issued has been questioned, nor can such a Pass be a conclusive evidence to prove that the vehicle was not being used by the Hotel for providing services - Driver whose statement was recorded has been driving four different vehicles and was not kept to exclusively drive the subject vehicle. He admits having attended to in-house guests, and that since there is no safe and sufficient parking at Hotel, the Rolls Royce car is parked at the residence of the CMD and sometimes at the premises of Hotel. This driver cannot be presumed to be competent to identify the nationality of the guests. Guests of Indian origin from Asian countries do not look different from resident Indians. Further, the non-resident Indians are also bound to spend in foreign exchange during the short periods of stay in India. Hence no conclusive inference can be derived from the version of the driver. None of the statements contain any positive admission that the Appellant Company actually intended to import the car only for personal use of Shri Prakash Shetty. These statements and the records do not dispute the fact that after importation, the vehicle is actually registered in the name of "Goldfinch Hotels Pvt Ltd" and for "Tourist purpose" only. None of these statements even remotely allege any sale or transfer of the vehicle to any other person or entity, and moreover the registration with RTO stands in the name of the Appellant Company. It is also not in dispute that the balance sheet of the appellant company filed with the Registrar of Company also shows the vehicle in the fixed assets of the company. Some statements also positively assert that the vehicle was actually being used by the WIP guests and thus were used for providing Hotel and Tourism related services. Therefore, there is no tangible evidence to support the basic charge in the Show Cause Notice for demanding duty. Some of these statements at the most give room for suspicion, but cannot replace the tangible proof required in such cases. The benefits conferred under the FTP therefore cannot be denied to the Appellant. We find that neither the Foreign Trade Policy nor the Exemption Notification lay down the nature of day to day record to be maintained by the licensee in respect of foreign exchange earned from the imported capital goods. It is nowhere provided that details of each journey undertaken or name of foreign guest who used the car or the amount and mode of payment should be recorded. The service provider has been given the freedom to use the imported capita! goods in whatever way he considers best to earn the incremental foreign exchange. - In any case foreign guests staying in hotels do not pay separately for their travel and the Appellant Company claims to provide complementary facility to their VVIP guests, which is not disproved, by the department. The vehicle has not been sold or transferred to any other person by the importer It is not proved even on preponderance of probability that the vehicle was imported solely for personal use of the CMD of the Hotel. In these circumstances, we find that even if the mandatory conditions of Exemption Notification are construed strictly, there is no violation of any condition of the EPCG license, FTP or the Customs Notification. The appellant has also raised the issue of erroneous rejection of the request for mandatory examination of witnesses as prescribed under section 138B of the Customs Act, 1962 on the issue of the relevancy of statements in the adjudication proceedings. However in view of the above findings we find no need to consider the said issue. - No violation of any condition of the EPCG license, FTP and the Exemption Notification is thus proved. Neither any demand of duty can therefore sustain, nor is any case for confiscation or imposition of penalty thus made out. The impugned Order-in-Original is therefore erroneous and is set aside. - Decided in favour of assessee.

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• Corporate Laws

• 2015 (6) TMI 184
  Violation of the provisions of Section 205/205A of the Companies Act, 1956 - Delay in payment of interim dividend - Complaint filed after a delay of more than three years - Charges not framed for more than 12 years after filing of the complaint - Held that:- It was submitted that Section 5 of the Act provides that the liability in respect of offences committed under the Act devolves upon the officer in default but the respondent No.1 has not mentioned the name of officer in default. It has arrayed all the directors including directors who had resigned before the alleged declaration of dividend for the year 1995-96. Section 207 of the Act mentions that only the directors who are knowingly a party to the default are liable for the offence. There is no allegation as to which director was knowingly party to default. Also In the complaint no averments have been made as to whether the non recipients of the dividend were the shareholders of the Company as the copy of the share certificate were not placed on record. In the absence of primary evidence no offence can be deemed to have been made out. Another valid reason assigned by the petitioner is that the charges have not been framed for more than 12 years after filing of the complaint by respondent No.1.In view of foregoing reasons, the petitioners have been able to make a strong case for quashing of proceedings due to delay in filing of complaint and on account of delay of 12 years even the charges have not been framed. - Decided in favour of appellant.

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• Service Tax

• 2015 (6) TMI 197
  Demand of service tax on the job work converting black bars into bright bars for various clients for which they receive processing charges - Business Auxiliary Service - Held that:- Revenue has not disputed the fact of discharge of excise duty on the very same item manufactured and cleared by the appellant on their account. It is surprising to note that the first appellate authority has not considered this vital submission of the appellant as to when the same goods are manufactured by the same process, how the said process cannot become manufactured out of job working. In our considered view, the self same activity of conversion of black bars into bright bars on their account and clearance of the same on discharging duty as manufactured product cannot become a non-manufactured product when the appellant undertakes jobworking for some other clients. - On bare perusal of the reply to the show-cause notice indicate that there was no response from the department on this query raised by the appellant. The show-cause notice issued in this case is on 13.10.2008 for the period 10.09.2004 to 28.02.2005 which in our view is blatantly time barred and cannot invoke suppression against the appellant. - Decided in favour of assessee.

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• 2015 (6) TMI 196
  Demand of the service tax - club or Association services - Held that:- High Court of Gujarat in the case of Sports Club of India Special [2013 (7) TMI 510 - GUJARAT HIGH COURT] wherein their Lordships have struck down the provisions of section 65(25A), section 65(105)(zzze) of the Finance Act, 1994 in respect of the leviability of service tax by the club on its members. This ratio has been followed by the Tribunal in the case of Matunga Gymkhana in [2015 (1) TMI 1146 - CESTAT MUMBAI]. The ratio of the decisions will squarely apply in this case and in the favour of the appellant. - decided in favour of assessee.

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• 2015 (6) TMI 195
  Denial of CENVAT Credit - Commissioner allowed credit claim - Held that:- When appellant was an exporter and the Cenvat credit it had earned was not possible to be utilized by it, there was no bar to grant the refund thereof to the appellant, which was found to be genuine claim in the absence of any evidence suggesting that the appellant has erroneously earned the credit. Therefore, there is no scope to presume that the Cenvat credit is inadmissible. - Decided against Revenue.

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• 2015 (6) TMI 194
  Denial of CENVAT Credit - Nexus with manufacturing activity - Whether the appellants have satisfied the definition of input service for availing the CENVAT credit and whether the demand is barred by limitation - Held that:- issue involved was eligibility of CENVAT credit on services received in respect of security services etc. provided to the residential colony and not to the factory or the premises of the appellant. In this case, the services are clearly covered by inclusive part of the definition which covers financing as one of the headings under which services are eligible. As already observed by me, the services received were received for mobilization of finance by IPO and for conducting study of the business plan and study done in relation to anti-collusion devices proposed to be manufactured by the appellants. All these activities, in my opinion, are clearly covered by the inclusive part of the definition. - appellant is eligible for the benefit of refund of CENVAT credit taken by them and therefore the impugned order has no merits and has to be set aside. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• Central Excise

• 2015 (6) TMI 191
  Denial of refund claim - duty on inputs used for export goods - appellant has not taken any credit in RG23 A Part II of the input received - appellant is not an independent exporter - Tribunal has remanded matter back only for the purpose to ascertain the fact, that whether the export of goods effected through U.K. Paints has been made under DEEC scheme or not, as in such a situation MODVAT Credit cannot be availed - Held that:- appellant has procured inputs on which duty has been paid and no Cenvat credit has been taken by the appellant. The said inputs have been used in the manufacture of export goods which have been exported through merchant exporter and the said goods have been exported under Bond. As the input is used in the process of manufacture of final product, therefore, the appellant is entitled to take Cenvat credit thereof and as the appellant has not taken Cenvat credit of duty paid on the inputs consequently the appellant is entitled for refund of duty paid on the inputs. Therefore,appellant is entitled for refund claim. - Decided in favour of assessee.

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• 2015 (6) TMI 190
  Waiver of pre deposit - CENVAT Credit - Imposition of penalty - Bogus invoices - Non receipt of goods - Held that:- registration of Muni Group of Companies was done by the applicant and the reports submitted are misleading. It was found that the factories do not exist. It was also observed that huge transactions have been shown. We also note that for processing of the rebate claim, verification about the export as also the verification about the duty payment etc. is done by the range superintendent. We are not able to persuade ourselves that such fraud can be done relating to registration, availment of huge amount of credit and processing of the rebate claims without the tactical support of the range superintendent. There are large number of documents which will have to be gone through before taking a final view, but prima facie we feel that the applicant has not been able to make a case on merits. - since the applicant has processed the registration certificate, permitted the cenvat credit availment and also verified the duty payment particulars of the goods exported, the then Rule 26 will be applicable to the applicant. - It may be true that the applicant is out of job for some period. However, this cannot imply that the applicant has no means. - applicant is directed to deposit an amount of Rs. 5,00,000 within a period of six weeks - Partial stay granted.

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• 2015 (6) TMI 189
  Imposition of interest and penalty - Clandestine removal of goods - Held that:- Commissioner while adjudicating the matter against KIL has held that the CPU/pen drive data is not reliable and on this basis had dropped the entire demand based on such data retrieved from CPUs Pen Drives and Laptops. - Out of the total duty demand of Rs. 95,85,397/- at least the demand of about Rs. 35 lakh may be sustainable - Here also the duty demand is based only on the entries in the purchase files maintained by the employees of KIL which had been recovered from their premises and prima facie, we do not find any other evidence of unaccounted purchase of raw material or evidence of clandestine removal by the appellant. - amount already deposited by the appellant during investigation is sufficient for hearing of their appeal and the requirement of pre-deposit of the duty demand, interest and penalty by the appellant company and the requirement of pre-deposit of penalty - Stay granted.

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• 2015 (6) TMI 188
  Classification of goods - Classification under sub-heading 8524.00 or under sub-heading 8524.90 - Nil Rate of duty or duty @16% - appellant is manufacturing Panasonic MP3 CD-ROM - Held that:- MP3 CD-ROMs contain only audio songs which can be played on any MP3 CD player, these discs are neither interactive nor it is possible to manipulate the details in such CDs. In view of the said position, we have no hesitation in holding that the goods cannot be considered as software so as to classify under Heading 8524.20. Invocation of extended period of limitation - It is seen from the ER-1 returns that the appellant has not given the complete description in the ER-1 return. The ER-1 return indicated the description as CD-ROM. On the other hand, in the corresponding invoices, the description is very clear as Panasonic MP3 CD-ROM. There was no reason for the appellant to give different description in the statutory return. In fact, from seeing the statutory return, one would conclude that CD-ROM contains some software and would, therefore, be classifiable under Heading 8524.20. In view of the said fact, we have no hesitation in holding that there was suppression of facts with a wilful intention to evade duty. Therefore, in our view, the extended period of limitation has been correctly invoked - Decided against assessee.

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• 2015 (6) TMI 187
  Imposition of interest and penalty - Held that:- decision of assessee's own previous case [2010 (11) TMI 287 - CESTAT, MUMBAI] followed - Since that case allowed on merit - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2015 (6) TMI 193
  Input tax credit - respondent has failed to note that the petitioner in inconformity with Section 19(10) (a) of Tamil Nadu Value Added Tax Act of 2006 and Rule 10(2) - Held that:- Petitioner has submitted all the necessary details, more particularly the information such as Registration Certificate Numbers under the TNVAT Act of the sellers and dealers. Therefore, when the petitioner has initially discharged his burden as per Section 19(10)(a) of the TNVAT Act, showing that the goods have been subjected to tax at an earlier stage, the respondent ought to have considered the same. Although he is liable to apply his mind, without doing so, by merely resorting to the alleged demand made by the petitioner before the Enforcement Officer, Enforcement Wing. With regard to the proposal of reversal of Input Tax Credit, over ruling all the objections, without giving any other reasons, has wrongly come to the conclusion - the impugned orders are set aside, as the Assessment Orders are passed without considering the objections and by merely taking note of the proposal of the Enforcement Officer. - Decided in favour of assessee.

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• 2015 (6) TMI 192
  Detention of goods - Transportation of goods without proper documents - Held that:- Petitioner, being a transporter, carrying on business in the State, is hereby directed to pay tax for release of the goods. Insofar as the compounding fee is concerned, the authority will proceed in accordance with the provisions of section 72 of the Tamil Nadu Value Added Tax Act and the amount demanded under the compounding fee shall not be made a pre-condition for release of the goods and the authorities are to proceed in accordance with law for compounding fee following the procedure prescribed and the petitioner is entitled to file revision under section 54 of the Act, if so advised. - Decision in the case of MOHAN SHARMA v. THE DEPUTY COMMERCIAL TAX OFFICER [2013 (4) TMI 244 - MADRAS HIGH COURT] followed - Decided in favour of assessee.

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