Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 11, 2015
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Levy of Penalty - appellant's contention that there was no default in furnishing e-IDS returns has no force and is accordingly rejected. - The action of the Addl. CIT(IDS) in imposing penalty u/s 272A(2)(k) of the Act is upheld in principle - AT
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Penalty levied u/s. 271D and 271E - The assessee has filed affidavits of the lenders who are agriculturist to substantiate that they have advanced cash loan for the purpose of repayment of arrears of loan to Geeta Sanstha - The circumstances under which cash loan was accepted and repaid have been explained - No penalty - AT
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TDS u/s 194I - payment made for use of property of the member of the Joint Venture (JV) - assured return - Not in the nature of rent - No TDS is required - AT
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Disallowance u/s 40(a)(ia) - Non deduction of TDS - reimbursement of expenses do not consist the income of the recipient and the payments are not governed by the provisions of section 194C of the Act - AT
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Even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 - AT
Corporate Law
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Penalty u/s 15A(b) of the SEBI Act, 1992 - Non-disclosure of acquisition and/or sale of shares - the imposition of above said penalties can neither to be termed as discriminatory nor disproportionate to the admitted violation - SAT
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Resignation of Director - Company refused to accept the resignation - resignation will not relieve the petitioner from any liability if any, which he may have incurred while in office - company directed to file Form 32 with the concerned Registrar showing cessation of the petitioner from the post of director w.e.f. 25.04.2012 - CLB
Service Tax
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Maintainability of appeal - Delay in filing appeal - Since the appeal has been filed within one month of the actual date of receipt according to the CA, the appeal has to be considered to have been filed in time. - AT
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Job Work - chilling of milk does not amount to the activity of processing or manufacture falling under Business Auxiliary Service- AT
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Recovery of service tax - merely on issuance of show cause-cum-demand notice, the bank account could not have frozen and attached. More so, when the petitioner claims to have made some payments - HC
Central Excise
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Denial of exemption claim - manufacturer cleared the exempted goods on payment of duty during the period in dispute - the erroneous payment of duty would not render the goods other than exempted goods. - HC
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Provisional assessment - no legitimate ground exists for the department to disallow the petitioner company to pay excise duty on provisional basis on the concerned goods as per Rule 7 of the Central Excise Rules, 2002 since the actual transaction value cannot be determined at the time of removal of the goods from the factory - HC
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Valuation - Method of valuation - non-inclusion of profit marging in the assessable value of semi-finished goods cleared to their other unit - no demand being revenue neutral situation - HC
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Transfer of Credit of SAD - Transfer of balance amount of credit to the new Unit especially when the sale is not unit-wise but the entire company was sold, is in accordance with the provisions of Rule 10A - stay granted - AT
VAT
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Denial of exemption claim - sales tax exemption - non-maintenance of average production after the expiry of the benefit period inasmuch as it had drastically come down to ₹ 9.06 crores from 17.52 crores. - clubbing of turnover of other unit is not permissible - SC
Case Laws:
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Income Tax
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2015 (7) TMI 352
Disallowance of expenditure - CIT(A) deleted the addition - Held that:- We are not inclined to interfere in very well reasoned finding of the learned CIT(A). As he rightly observed, in the absence of Assessing Officer having pointed out any specific cases of non verifiable expenses or any specific cases where such expenses are not incurred for the purpose of business, the disallowance is indeed unsustainable in law. We approve learned CIT(A)’s order on this issue. - Decided in favour of assessee. Appropriation of the cash seized during the course of search against the advance tax liability - CIT(A) delete the statutory interests charged u/s 234A, 234B & 234C - Held that:- We are inclined to confirm and approve very well reasoned conclusions arrived at by the CIT(A). This issue, as rightly observed by the learned CIT(A), is now covered in favour of the assessee by a series of judicial precedents, including, such as in the cases of CIT Vs. Ashok Kumar (2010 (9) TMI 771 - Punjab and Haryana High Court ), and CIT Vs. Kesar Kimam Karyalaya (2005 (5) TMI 58 - DELHI High Court ). It is also important to bear in mind that Explanation-2 to Section 132B of the Act, which restricts the scope of existing liability to liabilities other than tax payable, is specifically enacted with effect from 1st June, 2013, whereas at present dealing with Assessment Year 2010-11. Learned Assessing Officer’s reliance on Explanation-2 to Section 132B of the Act, as made out in the ground of appeal, is, therefore, ill-conceived. This provision was not in force at the relevant point of time. On this view of the matter, as also bearing in mind entirety of the case, we approve the stand of learned CIT(A) and decline to interfere in the matter. The assessee was entitled to adjustment of seized cash against advance tax liability and therefore, no interest could be charged u/s 234A & 234B in the event of the department no responding to assessee’s request for adjustment of cash seized against advance tax liability - Decided against revenue.
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2015 (7) TMI 336
Penalty u/s. 271(1)(c) - disallowance of deduction u/s. 10A of the Act and disallowance of ₹ 10 lakhs of administrative selling and other expenses - filing return of income belatedly - Penalty imposed was cancelled by the CIT(A) - Held that:- The conduct of the assessee in filing return of income belatedly is sufficiently explained before the CIT(A). Perusal of the orders of the AO while concluding assessment u/s.143(3) of the Act shows that it was only the director who attended proceedings of assessment before the AO. In our view, the explanation so offered by the assessee deserves to be accepted. In this regard, the CIT(A) has also noticed the fact that the IT industry was undergoing a recession phase at the relevant point of time. The complaint that there was non-cooperative attitude on the part of the assessee is also not true. The non-cooperative attitude is cited by the Revenue in the context of assessee not having furnished any reply to the show cause notice issued u/s. 274 of the Act before imposing penalty u/s. 271(1(c) of the Act. In our view, this cannot be the basis to impose penalty as the penalty is with reference to concealment of particulars of income or furnishing of inaccurate particulars of income with reference to the original assessment proceedings. As far as the complaint of the Revenue that the assessee furnished inaccurate particulars by making wrong claim of deduction u/s. 10A of the Act is concerned, we find that this is not the basis on which deduction u/s. 10A was denied to the assessee. As rightly contended by the assessee, deduction u/s. 10A was denied only for technical reasons viz., return of income not having been filed on or before the due date u/s. 139(1) of the Act. In our view, therefore, the contentions put forth by the Revenue before us is unsustainable. In our view, the CIT(A) has rightly come to the conclusion that mere making of a claim for deduction u/s. 10A which is not allowed, cannot lead to the conclusion that assessee is guilty of having furnished inaccurate particulars of income or having concealed particulars of income. The CIT(A) has rightly placed reliance on the decision of the Hon’ble Supreme Court in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ). Even with regard to adhoc disallowance of administrative selling and other expenses of ₹ 10 lakhs, disallowance has been made only for want of bills & vouchers. There is nothing on record to suggest that the expenditure disallowed was bogus, excessive or personal in nature. No adverse inference can be drawn against the assessee in respect of disallowance of ₹ 10 lakhs. - Decided against revenue.
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2015 (7) TMI 335
Disallowing deduction u/s 80HHC on sale of DEPB - Held that:- This issue is covered in favour of assessee by the decision of Hon’ble Supreme Court Court in the case of Topman Exports vs. CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein reversing the decision in the case of CIT vs. Kalpataru Colours & Chemicals (2010 (6) TMI 63 - BOMBAY HIGH COURT ) has been decided in favour of assessee by observing as the DEPB credit has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessee over and above the DEPB credit on transfer of the DEPB credit would represent profit on the transfer of the DEPB credit. Thus, while the face value of the DEPB credit will fall under clause (iiib) of section 28 of the Act, the difference between the sale value and the face value of the DEPB credit will fall under clause (iiid) of section 28 of the Act. The cost of acquiring the DEPB credit is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB credit which accrues to a person against exports has a cost element in it. The DEPB credit represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB credit is not utilized by the exporter but is transferred to another person, the credit continues to remain as a cost to the exporter. When, therefore, the DEPB credit is transferred by a person, the entire sum received by him on such transfer does not become his profit. It is only the amount that he receives in excess of the DEPB credit which represents his profits on transfer of the DEPB credit - Decided in favour of assessee. Disallowing the adjustment under section 145A - CIT(A) added excise duty u/s 145 (a) while valuing the closing stock - Held that:- The issue of Asst. Year 2005-06 travelled upto the Tribunal and the Tribunal decided the issue in favour of assessee held Sec. 145A was inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, notwithstanding anything to the contrary contained in Section1 45. The explanation to section 145A provides that for the purposes of this section, any tax, duty, cess or fees (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. In this circumstances the appellant has no choice but to include the excise duty liability for the inventory. Therefore, this ground of appeal is dismissed. Nothing contrary was brought to our knowledge so we hold that CIT(A) erred in disallowing the adjustment under section 145A of ₹ 5,23,379/-. The Assessing Officer failed to refer to his order for previous year. The same practice was followed for all preceding assessment years. As in the closing stock of current year excise duty of ₹ 5,23,379/- was not included also excise duty of ₹ 5,22,238 was not included in opening stock of current Assessment Year. The Assessing Officer has not considered the same consistent policy, being followed for all preceding Assessment Years. So, he has not followed the same principles while considering the value of opening stock. In this background, addition made on this ground is required to be restricted to ₹ 1,141/- considering the valuation of opening stock, which is also exclusive of excise duty. - Decided in favour of assessee.
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2015 (7) TMI 334
Disallowance of foreign travel expenditure - FAA deleted the addition on the ground that the assessee has filed all the details of foreign travel expenses along with the purpose of visit before the A.O. - Held that:- The assessee had also paid Fringe Benefit Tax on expenditure including on foreign travel. He observed that the A.O. after examining the details of vouchers and books, could not point out any specific expenditure, which in his opinion, is personal in nature. He relied on certain case laws and deleted the addition. We do not find any infirmity in this factual finding of the First Appellate Authority. The Ld.Sr.D.R. could not controvert the same. Thus this adhoc disallowance, in our view has been made by the A.O. on presumptions and surmises and is not based on any evidence. - Decided against revenue. Disallowance of freight and cartage expenses - CIT(A) deleted the addition - Held that:- The First Appellate Authority in this case also recorded that all the payments were made through account payee cheques. Regarding the bill dated 31.3.2009 on Tulsi Impex Pvt.Ltd. amounting to ₹ 2,45,536/-, the First Appellate Authority observed that total payments during the year to M/s Tulsi Impex P.Ltd. was ₹ 30,45,050/- and this particular bill was produced before him. He relied on number of case laws and on the ground that the A.O. has not pointed out to any infirmity in the bills, vouchers and books of accounts, the disallowance of expenditure incurred for the purpose of business was held as allowable. We do not find any infirmity in this order. All the books are audited and details were produced before the A.O. No infirmity in the evidences produced has been pointed out. Under these circumstances the question of disallowance that the expenditure that too on adhoc basis cannot be allowed. Hence we uphold the detailed and speaking order of the First Appellate Authority on this issue - Decided against revenue. Disallowance on account of sample expenses - CIT(A) deleted the addition - Held that:- These are no grounds to disallow the said expenditure. The expenditure incurred on marketing and advertisement and promotional activities may not result in immediate jump in sales. On a sale of ₹ 33 crores the expenditure incurred is only ₹ 10.74 lakhs. It is not the case of the A.O. that the assessee has not incurred this expenditure or that he failed to substantiate with evidence, its claim of having incurred this expenditure. There is no defects pointed out in the evidence by the A.O. Thus we uphold the contentions - Decided against revenue. Disallowance being employees’ contribution to P.F - CIT(A) deleted the addition - Held that:- The undisputed fact is that the deposit was made after the due date prescribed in the Act, but well before the due date of filing of the return. The First Appellate Authority applied the decision of the Jurisdictional High Court in the case of CIT vs. PM Electronics P.Ltd. [2008 (11) TMI 3 - DELHI HIGH COURT ] and allowed this ground of the assessee. We find no infirmity in the same. In the result this ground is dismissed.- Decided against revenue. Disallowance of expenditure related to goods destroyed - Held that:- In the bill of entry for ex-bond clearance for home consumption, the details have been mentioned, wherein expiry date of the product is also mentioned. Evidence has been filed on payment of excise duty and a stamp which reads as “DEFACED”. The Ld.Sr.D.R. could not convince us that this disallowance has to be made for lack of evidence. In view of the evidence lead before us, we agree with the submissions of the assessee and allow this ground of appeal of the assessee. - Decided in favour of assessee.
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2015 (7) TMI 333
Penalty u/s.271(1)(c) - non fulfilment of conditions u/s. 271AAA(2)(i) and manner of deriving of the impugned undisclosed income was neither specified nor substantiated in this case - CIT(A) deleted the addition - Held that:- It is evident that the assessee has attributed this undisclosed income to be on-money on sale of residential properties throughout. The CIT(A) holds that the Assessing Officer accepted the above stated source and undisclosed income in assessment framed without making any comment or observation. This case file comprises of the assessment order as well. The Revenue fails to refer to any such query being put up to the assessee doubting the source and manner of deriving of the impugned undisclosed income. We find that a coordinate bench in The D. CIT, Cent. Cir-3, Surat Versus Smt. Sulochanadevi A. Agarwal [2012 (12) TMI 21 - ITAT AHMEDABAD] has quoted the hon’ble jurisdictional high court decision in case of CIT vs. Mahindra C. Shah (2008 (2) TMI 32 - GUJARAT HIGH COURT) in holding that when an assessee admits undisclosed income in course of search, offers it to be taxed in the return, pays tax thereupon, no penalty can be levied particularly in the absence of any question being raised in respect thereof by the Assessing Officer. The Revenue fails to point out any exception to the same. It also does not rebut the CIT(A) crucial findings that the assessee had not been put to specific question specifying and substantiating the manner of having derived the impugned undisclosed income. - Decided against revenue.
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2015 (7) TMI 332
Penalty order under sec. 272A(2)(k) - as a result of survey/verification exercise carried out by the ITO(TDS), serious default on TDS payment were unearthed - assessee had not filed e-TDS return in form No. 24Q, 26Q and 27EQ and also could not provide any reasonable cause for such to furnish the e-TDS returns by the due date - whether penalty order barred by limitation? - Held that:- FAA for the assessment year 2006-07 on similar issue held that legally the limitation starts from the issue of first notice by the Addl.CIT(TDS)[ competent authority] dated 25-02- '2010. The penalty has been imposed before 30-08-2010 i.e. on 16-03-2010. Therefore, it cannot be said that the penalty order passed U/S 272A(2)(k) of the Act is barred by limitation. It appears that the appellant had taken the date of initiation of penalty U/S 272A(1)(c) of the Act from the date of order passed u/s 201(1)/201(1A) of the Act on 27-06-2008 which is legally incorrect. On the other hand, the action of ITO, (TDS) in initiating proceedings U/S 272A(2)(k) of the Act is not correct in view of the relevant provisions of the Act. The ITO(TDS) instead of initiating proceedings U/S 272A(2)(k) of the Act should have mentioned that " the case is being referred separately for imposition of penalty u/s 272A(2)(k) of the Act to the Addl.CIT(TDS)" who was the competent authority. Thus it is held that the order passed by Addl.CIT(IDS) u/s 272A(2)(k) of the Act dated 16-03-2010 is held as fully valid. Submissions made by the appellant on the issue of matter being barred by limitation are hereby rejected. A perusal of the aforesaid statement reveal that there is definitely delay in furnishing e-1DS returns in Form Nos.24Q, 26Q and 27EQ for the relevant accounting period. Thus the appellant's contention that there was no default in furnishing e- IDS returns has no force and is accordingly rejected. Thus the action of the Addl.CIT(IDS) in imposing penalty u/s 272A(2)(k) of the Act is upheld in principle. - Decided against assessee.
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2015 (7) TMI 331
Penalty levied u/s. 271D and 271E - assessee accepted the cash deposits and repaid the same in cash in violation of the provisions of section 269SS and 269T - CIT(A) deleted the penalty levy - Held that:- It is an undisputed fact that the assessee accepted cash loan of ₹ 7,73,000/- and has repaid the same in cash to the lenders. Thus, the assessee has violated the provisions of section 269SS and 269T of the Act. For the violations of aforesaid sections the assessee had made itself liable for penalty u/s. 271D and 271E, respectively. However, the provisions of section 273B provides an exception, that no penalty shall be imposed u/s. 271D and 271E if the assessee proves that there was reasonable cause for not complying with provisions of the Act. The assessee has given detailed reasons for accepting the loan amount in cash from its Members/Office bearer and repayment of the same in cash. Further, in support of its submissions, the assessee has placed on record letter dated 28-04-2006 from Geeta Sanstha making an offer to settle the loan account by paying an amount of ₹ 6,11,000/- on 12-06-2012 before the Co-operative Court. The assessee has also placed on record the translated copies of the Resolution dated 31-03-2006 and 15-08-2005 to substantiate that the assessee had to repay loan to Geeta Sanstha. The assessee has filed affidavits of the lenders who are agriculturist to substantiate that they have advanced cash loan for the purpose of repayment of arrears of loan to Geeta Sanstha on 12-06-2012. The assessee has also placed on record affidavit of Shri Ramchandra Shivaji Jadhav, Manager, Geeta Sanstha giving the detailed sequence of events that transpired on 12-06-2006 in the Co-operative Court. The Revenue has not disputed the outstanding amount payable by assessee to Geeta Sanstha which is duly reflected in audited balance sheet of the assessee as on 31-03-2007 under the head Loans. The Assessing Officer had summoned the lenders of the cash amount and recorded their statements on 14-10-2009. All the three lenders supported the cause of the assessee. The genuineness of the transactions have been verified. The persons who have advanced cash loans have been identified. They had filed affidavits and their statements were recorded by the Assessing Officer. The Revenue has not been able to controvert the contents of the statements or the affidavits. The circumstances under which cash loan was accepted and repaid have been explained. We are of the considered view that the cash transactions were genuine and bonafide. See CIT Vs. Laxmi Trust Co. (2006 (12) TMI 124 - MADRAS HIGH COURT) and Sharda Educational Trust Vs. ACIT (2005 (1) TMI 309 - ITAT AGRA) . Thus no penalty u/s. 271D and 271E of the Act is leviable. - Decided in favour of assessee.
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2015 (7) TMI 330
Penalty Section 271AAA r.ws. 271(1)(c) - CIT(A) deleted penalty levy - Held that:- CIT (A) while deleting the penalty has noted that the disclosure made by the assessee of undisclosed income of ₹ 2 crore was covered under the definition of “undisclosed income” as per the Explanation (a) to Section 271AAA r.ws. 271(1)(c) of the Act, the assessee had specified the manner in which the undisclosed income was earned and had substantiated the manner in which unaccounted income was earned. The CIT (A) while relying on the decision of High Court in the case of CIT vs. Mahendra C. Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT] and CIT vs. Radha Kishan Goel [2005 (4) TMI 47 - ALLAHABAD High Court] has held that the principles laid down by the aforesaid decision squarely applies to the facts and circumstances of the present case. Before us the Revenue as not brought any contrary binding decision in its support nor could demonstrate as to how the principles laid down by the decisions relied upon the CIT (A) are not applicable to the facts of the aforesaid case. - Decided against revenue.
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2015 (7) TMI 329
Penalty u/s 271(1)(c) - Condonation of delay rejected by CIT(A) and deciding the appeals on merits - Held that:- The quasi judicial authorities are being respected not on account of their power to legalise the injustice on technical ground but because, they are capable of removing injustice and is expected to do so. The contention of the assessee is that he being a lay man has handed over the papers to tax consultant who did not file appeals in time. This belief is to be tested on consequential result i.e. by making the appeal time barred what the assessee will achieve. He cannot adopt a dilatory tactics by filing the appeal late because that will ultimately harm him. Therefore, looking to the facts and circumstances and the punishment in the shape of tax liability of ₹ 48,86,903/- including interest as well as penalty of more than ₹ 24 lacs, we are of the view that the punishment is disproportionate to the ultimate negligence of the assessee. Therefore, we condone the delay in filing the appeals before the CIT(A). The assessment order and the penalty order are ex parte orders. The moment, the assessee will file any application for permission to adduce additional evidences then, as per sub-rule -3 of Rule 46A of IT Rules, 1962, the ld. first appellate authority will have to call for a remand report from the AO. The second proceeding would commence at the level of AO. Therefore, with a view to avoid multiple proceedings, we deem it appropriate to set aside the orders of CIT(A) as well as the orders of AO and remit the issues in quantum appeal to the file of AO for re-adjudication. As observed earlier we do not appreciate the conduct of assessee also. He is directed to co-operate with the AO and appear before him. He shall file all necessary details for the assessment of his income. The observations made by us will not impair or injure the case of AO and will not cause any prejudice to the defence/explanation of the assessee. The ld. AO shall provide due opportunity of hearing. As far as penalty appeal is concerned, since we have set aside the assessment order, there are no additions on which it can be alleged that assessee has evaded the taxes. After passing the assessment order, it is for the AO to assess whether penalty proceedings are to be initiated against the assessee or not. This factor would come out after completion of the assessment proceedings. Therefore, the penalty appeal is allowed and the penalty order is quashed. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 328
TDS u/s 194I - payment made for use of property of the member of the Joint Venture (JV) - assured return - In the nature of Rent or not - Held that:- the said company provided the property for the purpose of joint venture business alongwith assessee, the payment made by the assessee cannot be said to be rent, so as to make the assessee liable for deduction u/s 194I. - Decision in the vase of Commissioner of Income-tax - II Versus Tirupati Organisers (P.) Ltd. [2013 (7) TMI 540 - GUJARAT HIGH COURT] followed. TDS u/s 194J - annual maintenance charges - payment for technical services or not - Held that:- On going through the facts with regard to services rendered by various concerns, find no point/clue on the basis of which the nature of these services can be characterized as professional of technical in nature. The services rendered are nothing but for maintenance of various types of machines already installed. Only because technical persons are involved in rendering the said services does not mean that services become technical or professional in nature. Hence, the A.O.’s action in this regard is not approved. - Decided on favour of assessee. Disallowance of allowing exemption for the office Wear Allowance (‘OWA’) under section 10(14) - Held that:- In this case, the assessee is unable to satisfy any of the conditions. When there was no dress code and the employees were free to wear any dress, how the wear-allowance can be said to be granted to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office. Moreover, the CIT(A) has recorded the finding that the assessee was unable to establish that the expenditure was actually incurred. In view of above, we do not find any justification to interfere with the order of the CIT(A) in this regard - Decided against assessee.
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2015 (7) TMI 327
Reopening of assessment - disallowances of deduction claimed u/s.80P(2) - CIT(A) directing re-computing the total income after deduction u/s.80P of ₹ 10,81,712/- as against ₹ 50,04,034/- determined by the A.O - Held that:- The appellant had wrongly reduced the items of' Municipal Taxes pertaining to house properties as against adding it back. This would increase the income from business activity further by ₹ 56,400/-. Therefore the income determined from its business and profession would be ₹ 77,598/- (Loss) as against loss of ₹ 2,88,873/- shown by the appellant [ - ₹ 2,88,873/- + Rs.l,54,875/- + ₹ 56,400/-]. The gross total income of the appellant would be higher by an amount of ₹ 211275/- than what has been shown by the appellant in its computation of income submitted in response to the show cause. The gross total income of the appellant is therefore taken at ₹ 1555407/- as against ₹ 1344132/- determined by him. Coming to the deductions claimed by the appellant in its revised computation before me, the deductions of ₹ 28,224/- u/s. 80P(2)(a)(iv), ₹ 50,000/- u/s. 80P(2)(c) and ₹ 395471/- u/s. 80P(2)(d) are held as admissible to the appellant. Its claim of deduction of ₹ 539379/- u/s. 80P(2)(iii) of the act in respect of vegetable commission is inadmissible as there was no profit from this activity. This activity has resulted in a loss which has wiped out the profits generated by the CNG and Petrol business. The appellant is therefore not eligible for any deduction u/s. 80P(2)(a)(iii) of the act. Its claim that no expenditure relating to commission income received from members is debited in the P. & L. account is untenable. All expenses pertaining to all other activities have been accounted for separately, i.e. in the accounts maintained individually for each activity. The expenses in the P. & L. account pertained only to the vegetable commission activity. The total deduction u/s. 80P of the act is admissible to the appellant is only ₹ 473695/- [ ₹ 28,224/- + ₹ 3,95,471/- + ₹ 50,000/-]. The total taxable income of the appellant which is gross total income less deduction u/s. 80P(2) of the act works out to ₹ 10,81,712/- [ ₹ 15,55,407/- - ₹ 4,73,695/-). The total taxable income is determined at ₹ 1081710/-. The A.O. is directed to consider this as taxable income of the appellant The aforesaid findings of the ld.CIT(A) is not controverted by the Revenue by placing any material contrary to the finding on record, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby confirmed. - Decided against revenue.
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2015 (7) TMI 326
Levy of penalty under section 271D - violation of the provisions of section 269SS - Held that:- In the instant case the assessee was categorically denying from the very beginning regarding acceptance of such cash loan from Shri K.N. Mutha and since there is no direct evidence to substantiate that the assessee has in-fact accepted the said cash loan and since no statement was recorded from either of the parties, therefore, following the decision of the Co-ordinate Bench of the Tribunal under identical facts and circumstances in the case of Late Shri Madanlal N. Singalkar (2015 (7) TMI 196 - ITAT PUNE), we hold that this is not a fit case for levy of penalty under section 271D of the I.T. Act. We accordingly set-aside the order of CIT(A) and direct the Assessing Officer to cancel the penalty. - Decided in favour of assessee.
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2015 (7) TMI 325
Disallowance of deduction u/s 80IB(10) - appellant ineligible to claim deduction in absence of project completion certificate from VMSS in totality - Held that:- the assessee is eligible for deduction under section 80IB(10) in absence of project completion certificate from VMSS in totality because the project was completed within four years, the time prescribed. The CIT(A) was not justified in upholding the action of A.O. when the assessee not only submitted the project completion report but also paid drainage and water line connections to the local authority within the time limit prescribed under the Act. Following the decision of the Tribunal in assessee’s own case for AY 2007-08 which has been upheld by Hon’ble Gujarat High Court vide order dated 05/05/2015 (2015 (6) TMI 460 - GUJARAT HIGH COURT ), we set aside the orders of lower authorities and allow the claim of assessee on this issue. - Decided in favour of assessee.
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2015 (7) TMI 324
Unexplained deposit in bank account - CIT(A) after applying the peak credit theory on the bank account restricted part addition - Held that:- On an analysis of the account ld. first appellate authority had arrived at a conclusion that the account was used for the purpose of some business, because there are debit and credit entries in a systematic manner. The debit of equal or more or less of the same amount of the cash deposit in the bank account at regular interval is available. The total of the cash deposits in such circumstances cannot be considered as unexplained income of the assessee. The ld. CIT(A) has worked out the peak credit in both the accounts. These credits are on 14th July, 2006 in the current account and 27th January, 2007. He worked out the total of the cash deposits and thereafter computed the GP on turnover of cash deposits after 14th July, 2006 in current account and after 27th January, 2007 in savings account. The CIT(A) has worked out the GP element in these transactions. He has added the profit earned by the assessee in the business after working out the peak credit. In other words the maximum amount of the peak deposits is ₹ 3,82,688/-. This was considered as representing the investment in this activity which has been carried out with these two bank and thereafter worked out the profit element. He made an addition of ₹ 9,41,557/- which is total of Rs, 5,58,872/- + ₹ 3,82,685/- i.e. profit on the turnover + alleged initial investment in the shape of peak credit. This factor can take care of both these issues. The assessee in his C.O. has submitted that net profit shown by him is 3.36% in AY 2007-08. The maximum profit shown by him is 5.05% in AY 2010-2011 whereas the lowest is 1.94% in 2014-2015. Considering this subsequent history of the assessee the profit ought to be worked out by adopting a reasonable figure and not as high as 15.50% considered by the CIT(A). However, we do not see any merit in this contention of assessee because he is unable to support his claim with any authentic books of account. It is not discernible whether these net profits have been accepted in the scrutiny assessment or not. Considering the facts and circumstances of the case we do not find any reason to interfere in the order of CIT(A) - Decided against revenue and assessee. Disallowance of telephone and mobile expenditure,vehicle expenses, depreciation and petrol expenses - Held that:- assessee has failed to submit the supporting evidence in respect of these expenditures. The ld. AO has made an ad hoc disallowance at 20% of the expenses. The ld. first appellate authority has confirmed the disallowance. Since the assessee is running a proprietorship concern, element of personal benefits out of the use of these facilities i.e. phone(s) and car cannot be ruled out. The assessee was not maintaining any log book nor produced any other details, in support of his claim. Therefore, ld. revenue authorities have rightly disallowed the expenditure on an estimate basis - Decided against assessee.
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2015 (7) TMI 323
Levy of penalty u/s. 271(1)(c) - unexplained jewellery found - whether the saving of Explanation 5 to section 271(1)(c) is attracted in the facts and circumstances of the case, which would prima facie apply inasmuch as the impugned jewellery was found during the course of search? - Held that:- The assessee has not been able to; rather, has not even attempted to substantiate her explanation of the jewlery having been gifted on the occasion of weddings in the family, which would in the very least require the names of the donors, besides confirmations from the donors. Rather, how could gift to another form part of her income, i.e., going by her explanation. The same is no more than a bald plea, contradicted by the assessee’s own stand of returning the same as her income, albeit consequent to search. The same, however, cannot be regarded as voluntary by any stretch of imagination, being in consequence of a search and findings thereat, i.e., detection and, in fact, seizure of the relevant assets. Both Explanation (1A) and (1B) to section 271(1)(c) shall, resultantly, apply in the facts of the case. It may be argued that the Revenue has not invoked the said Explanation. The same is not required to be separately invoked when the assessee is show-caused on section 271(1)(c) (CIT v. Prabhu Dayal Lallu Ram [2005 (1) TMI 39 - PUNJAB AND HARYANA High Court]; CIT v. K.P. Madhusudanan [2000 (1) TMI 15 - KERALA High Court]. The law, through Explanation 1, shifts the onus of the explanation for not returning/disclosing the impugned income on the assessee, so that the penalty follows the non-discharge of that onus. In the present case, the assessee seeks shelter of Explanation 5 to the provision, which we have, for the reasons afore-stated, found as not applicable. No further burden lies on the Revenue; it restricting itself to the assessee’s case as advanced before it, i.e., entitlement to the benefit of Explanation 5 to the provision.There is, further, no plea of the disclosure per the return as made to purchase peace of mind and/or avoid litigation. The plea would even otherwise be inconsistent with the facts of the case; wholly unsubstantiated and, accordingly, not maintainable either on facts or in law. We confirm the levy of penalty imposed at the minimum sum thereof, i.e., at 100% of the tax sought to be evaded. In this regard, the assessee states of the correct amount of income disclosed and assessed being at ₹ 29,13,895/-, and not ₹ 29,31,895/-, i.e., on which amount the penalty stands levied. We find the assessee’s claim as correct, so that a consequential relief is directed. - Decided partly in favour of assessee.
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2015 (7) TMI 322
Penalty u/s 271(1)(c) - expenditure claimed by the assessee u/s 35D - CIT(A) deleted addition - Held that:- In accordance with the provisions of section (5A) of section 35D the resulting company was eligible for deduction but no deduction was claimed by the resulting company i.e. Consolidated Photo Products Ltd. as per computation of income for the year under consideration. In view of above noted facts, we are inclined to agree with the conclusion of the CIT(A) that the impugned claim of deduction u/s 35D of the Act in the hands of Consolidated Photo Products Ltd. would have reduced the aforesaid income and consequential payment of taxes and hence, the assessee company was not at all in any advantageous position to make a false claim of deduction u/s 35D of the Act as the assessee company and the transferee company belong to the same group of companies. At this juncture, we respectfully take note of decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT) and Pricewaterhouse Coopers Pvt. Ltd. vs CIT (2012 (9) TMI 775 - SUPREME COURT ) wherein it was held that penalty is not imposable merely on the ground that the assessee submitted the claim under a bonafide belief and due to inadvertent mistake which was not found to be acceptable or was not accepted by the revenue. Respectfully following the ratio of these judgements of Hon’ble Apex Court, we finally hold that the view taken by the CIT(A) is justified and reasonable and we are unable to see any valid reason to interfere with the same. - Decided in favour of assessee.
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2015 (7) TMI 321
Unexplained cash credits - creditworthiness and genuineness of the creditor was not proved by the assessee - loan is not appearing in the balance sheet and the assessee had not declared any loss from sale trading as claimed in the statement recorded on oath U/s 131 - CIT(A) deleted the addition - Held that:- It is undisputed fact that the assessee had disclosed derivative transaction loss at ₹ 10,14,308/- through the broker namely M/s Mangal Keshav Securities Ltd. The payments and receipts for these transactions were made through ICICI Bank account No. 5075. All the transactions have been recorded in the books of account maintained by the appellant. There was a mutual agreement with Sh Praful Patel that he was to bear all the losses which were incurred in the derivative transaction, which has been received in cash at ₹ 9,36,240/- and balance amount of ₹ 78,068/- had been shown as receivables. Due to this reason, the assessee had not claimed any loss on account of derivative transaction in computation of income. Even it is presumed that the assessee had introduced own cash it has been shown as income and it could be adjusted against the business loss. The ld DR has not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A) - Decided against revenue. Disallowance U/s 40A(3) - the assessee had adjusted the creditors against the debtors on 31st March, 2008, which is covered U/s 40A(3) - CIT(A) deleted the addition - Held that:- As per record, these entries were made with the consent of creditor and debtors. These creditors were pertained to earlier year, which has been debited in A.Y. 2007-08 whereas the year under consideration is 2008-09. The ld CIT(A) also relied upon the decision of Coordinate ITAT, Ahmadabad Bench in the case of Anand Kumar Rawatram Joshi Vs. ITO (2011 (11) TMI 98 - ITAT, Ahmedabad) and Tushar A Sanghvi (HUF) Vs. ITO (2012 (6) TMI 594 - ITAT AHMEDABAD ), on identical issue, which has not been controverted by the ld DR. The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Kishan Chand Maheshwari Dass [1979 (9) TMI 58 - PUNJAB AND HARYANA High Court] wherein identical issue has been decided in favour of the assessee and held no violation U/s 40A(3) of the Act. - Decided against revenue.
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2015 (7) TMI 320
Addition on account of non-accounting of receivable warehousing charges on accrued basis - CIT(A)deleted the addition - Held that:-.CIT(A) has decided the issue following the earlier orders for A.Y. 2003-04 and A.Y. 2004-05 wherein seen that the appellant did not receive the increase in storage rent ultimately and the godowns were vacated by the Post Master General subsequently on 31-10-2005. It was an increase made unilaterally by the appellant which was not accepted by the tenant. The increase in rent became disputed, so it cannot be held that the rent has accrued to the appellant. In view of the facts of the case as the disputed income has not been received by the appellant and the same has been written off in the F.Y. 2005-06, there is no question of accrual of additional rental income therefore the addition of the said amount is deleted. The Revenue has not placed any material on record suggesting that the facts in the present case are different than the earlier years. - Decided against revenue. Addition on account of prior period expenses - CIT(A)deleted the addition - Held that:- Since there is no change into the facts and circumstances of the case as the Tribunal restored this issue to the file of ld.CIT(A), therefore this year also, we deem it proper to restore this issue back to the file of ld.CIT(A) to decide the same afresh in the light of the decision of the Coordinate Bench passed [2012 (4) TMI 567 - ITAT AHMEDABAD]. - Decided in favour of revenue for statistical purposes.
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2015 (7) TMI 319
Disallowance u/s 40(a)(ia) - Non deduction of TDS - In so far as air liting is concerned, the goods are transported through GBR Freight Forwarders Private Ltd and in so far as shipments are concerned, they are through Balaji Shipping Services - Held that:- As far as GBR Freight Forwarders (P) Ltd is concerned, assessee has made a short deduction. Neverthless, the decision in the case of CIT vs. S.K. Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT) is applicable and hence no disallowance can be made invoking the provisions of section 40(a)(ia) of the I.T. Act. With respect to the payments made to Balaji Shipping Services, the amounts paid are only towards reimbursement of shipment charges and therefore, no tax was deducted at source. Assessee did not attract the provisions of section 40(a)(ia) of the Act as reimbursement of expenses do not consist the income of the recipient and the payments are not governed by the provisions of section 194C of the Act. We also rely on the decision of the Coordinate Bench in the case of Ushodaya Enterprises [2015 (1) TMI 510 - ITAT HYDERABAD ] Decided in favour of assessee.
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2015 (7) TMI 318
Validity of reopening of assessment - Held that:- The assessee was duly provided the copy of reasons recorded for issuance of notice under section 148 of the Act on 16.04.2013. In para 4.2 of the assessment order, it has also been mentioned that the AO had specifically asked the A.R. of the assessee whether he has any objection for issuance of notice under section 148 of the Act, and in reply to that the Ld. A.R. has stated that he was not taking any objection in relation to reopening of the assessment under section 147 of the Act. Thereafter, a notice under section 142(1) was issued to the assessee to furnish the required details. In this case, a specific information was received by the Income Tax Authorities that certain parties were engaged in issuing bogus bills for the supply of material. During the survey action, the assessee was found to have made purchases from the said parties. There were certain discrepancies noted by the AO in the bills. The AO therefore, had reasons to believe that the income of the assessee relating to the purchases made from the above three parties had escaped assessment. Moreover, as stated above, the assessee had not raised any objection relating to reopening of the assessment during the assessment proceedings. We, therefore do not find any infirmity in the order of the Ld. CIT(A) in upholding the action of the AO for reopening of the assessment under section 147 of the Act. - Decided against assessee. Addition on bogus purchases - Held that:- Solely on the basis of unconfronted and general statements of alleged suppliers made before sales tax authorities, purchases of the assessee can not be held to be bogus. We find that the contention of the assessee that the payments for the purchases were made by cheque which was further confirmed by bank statement of the parties, bills of the transporter supported with proof of payment by way of bank statement, quantitative details of the stock, corresponding sales made, increase in sales, gross profits and net profits and there being no incriminating material or discrepancy in stock found at the time of survey have not been examined by the AO. The matter is therefore restored to the file of the AO for the purpose of verification of the above documents and if the above contentions of the assessee are found to be correct from the evidences submitted, the additions in this case on account of bogus purchases will not be warranted.- Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 317
Rectification application u/s 154 rejected - assessee claiming of a mistake in reducing the loss of its pension business in-as-much as the same was also a part of its insurance business and, thus, liable to be taken into account in computing income from the same u/s. 44 of the Act r/w First Schedule citing the decision of CIT vs. Life Insurance Corporation of India Ltd. (2011 (8) TMI 47 - BOMBAY HIGH COURT) in support. - Held that:- The proposition that a subsequent decision by the jurisdictional high court renders an order by the subordinate court under its jurisdiction mistaken, liable for rectification, is well accepted, The object of inserting section 10(23AAB) as per the Board Circular No. 762, dated 18-2-1998 was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10(23AAB) was not with a view to treat the pension fund like Jeevan Suraksha Fund outside the purview of insurance business but to promote insurance business by exempting the income from such fund. Therefore, in the facts of the present case, the decision of the Income-tax Appellate Tribunal in holding that even after insertion of section 10(23AAB), the loss incurred from the pension fund like Jeevan Suraksha Fund had to be excluded while determining the actuarial valuation surplus from the insurance business under section 44 of the Income-tax Act, 1961 cannot be faulted. our purview in the present proceedings is only to see if the issue under reference is the same as arising before and answered by the hon'ble high court, so that, where so, an order (by a court under its jurisdiction) inconsistent therewith is liable to be deemed as mistaken. This would also meet the argument by the ld. CIT(A) to the assessment having attained finality; we having already found an identity of the issue under reference. The Revenue when confronted therewith was unable to controvert the same, i.e., the said proposition as well as the identity of the issue. As regards the other contention raised by the Revenue, i.e., of the assessee having taken a well considered stand in the matter, the same would again be of no consequence. True, both the assessee and the Revenue in the instant case were of the considered view that 'income' including 'loss', the loss of the pension fund had to be excluded in determining the business income under Chapter IV-D, i.e., in terms of section 44, of the Act. However, it is the correct legal position that is relevant and not the view that the parties may take of their rights in the matter. See CIT v. C. Parakh & Co. (India) Ltd. (1956 (3) TMI 1 - SUPREME Court ). - Decided in favour of assessee.
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Corporate Laws
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2015 (7) TMI 338
Penalty u/s 15A(b) of the SEBI Act, 1992 - Non-disclosure of acquisition and/or sale of shares - Violation of Regulation 13(4) read with 13(5) of SEBI (PIT) Regulations, 1992 - Violation of Regulations 7(1) and 7(2) of SAST Regulations, 1997 - Held that:- Penalty cannot be considered unreasonable in the facts and circumstances of the present case. The principle of proportionality would come to the rescue of an appellant only when the penalty sought to be imposed by SEBI is highly, and rather shockingly, disproportionate to the gravity, nature and extent of the violation involved in a given case, including any illegal profits which might have been earned by a person as a result of such violation or any loss which might have been caused to the innocent investors directly due to such violation. Similarly, penalty of ₹ 5 lac each on the 5 promoters is justified and not unreasonable considering the nature of violation and maximum penalty of ₹ 1 crore imposable under law on each of them. Appellants in Appeal No. 167 of 2014, and Appeal No. 170 of 2014, namely, Mr. P V Ravi Kumar and P Leela Madhuri Devi are husband and wife and they undertook sale and purchase of 4,51,750 shares between themselves. None of them made any disclosure as required by Regulation 13(1) read with 13(5) of PIT Regulations as also under Regulation 7(1) and 7(2) of SAST Regulations, 1997 in as much it led to change in their shareholding pattern by 2%. Even in case of appellant in Appeal No. 174 of 2014, namely, Mr. P Suresh Gandhi, he did not make any disclosure in respect of sale of 2,83,500 shares of the company in violation of PIT Regulations in question. He being a public investor, the learned AO has imposed a penalty of ₹ 3 lac only as against ₹ 1 crore imposable under law. Therefore, the imposition of above said penalties can neither to be termed as discriminatory nor disproportionate to the admitted violation, particularly in the facts and circumstances of the case as enumerated above. - Decided against the appellants.
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2015 (7) TMI 337
Resignation of Director - Company refused to accept the resignation - The Board of Directors responded to the petitioner's letter by not accepting his resignation and seeking his co-operation in resolving the issues facing by the Company, which were, admittedly of his creation. The petitioner however, refused to communicate with the Company. Held that:- From the plain reading of the provision of the Act, it is crystal clear that if the company made default in complying with any provisions of this Act which requires it to file or register with or deliver or send to, the Registrar any return, account or other documents, or to give notice to him of any matter, fails to make good the default within 14 days after the service of notice on the company requiring it to do so, the CLB on an application made to it by any Member or Creditor or by the Registrar, make an order directing the company and any officer thereof to make good the default within such time as may be specified in the order. Admittedly, the present petition is filed by the petitioner who is a member (shareholder) for seeking direction from this Bench to the company and any officer thereof to make good the default. Hence the petitioner entitled to file the present petition and the petition is maintainable. In the present case the petitioner tendered his resignation to the Board of directors in writing vide his letter dated 25.04.2012 therefore the intention is explicit and clear and the resignation takes effect from 25.04.2012. The only objection of the company in taking note of the resignation of the petitioner and filing Form 32 with the concerned Registrar is that the company incurred certain liabilities at the behest of the petitioner during October 2010 and April 2012. As stated supra the resignation will not however relieve the petitioner from any liability if any, which he may have incurred while in office as alleged by the respondents. I am of the view that the company and its officers made default by not filing Form 32 intimating the resignation of the petitioner from the post of director despite receipt of 14 days' notice requiring it to do so. In view of the aforesaid reasons and in exercise of powers conferred under section 614 of the Companies Act, 1956, I hereby direct the company to file Form 32 with the concerned Registrar showing cessation of the petitioner from the post of director w.e.f. 25.04.2012 within a period of 15 days from receipt of copy of this order. - Decided in favour of appellant.
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Service Tax
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2015 (7) TMI 351
Denial of refund claim - refund of unutilized the accumulated credit available - Notification No. 5/2006-CE N.T dated 1.3.2006 - bar of limitation - Revenue while allowing the refund of only 1 invoice took a view that claim has to be calculated by treating the number of days available in November as the difference between the date of invoice and the last date of the month - Commissioner allowed full refund - Held that:- Refund should be limited to 3 days period as done by the original authority has no support from the statute. Accordingly, the appeal deserves to be rejected and is rejected. - Decided against Revenue.
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2015 (7) TMI 350
Maintainability of appeal - Delay in filing appeal - Denial of CENVAT Credit - Rent a cab service - Held that:- Even though speed post is considered as equivalent to registered post, recently the Tribunal has rendered another decision wherein it has been held that mere proof of dispatch is not sufficient and according to provisions of Section 37C(2), only when a decision, order, summons or notice is tendered or delivered by post, the provisions of statute can be considered to have been fulfilled. Admittedly in this case department does not have the acknowledgement and in view of the fact that subsection (2) of Section 37C provides that any decision or order can be considered as served when it is tendered or delivered by post, prima facie unless the proof of delivery is available, it cannot be said that obligation cast on the department has been fulfilled. Therefore, even if the order is sent by speed post, if the evidence is available with the department that it has been delivered, the decision of Hon'ble High Court of Orissa would be applicable. Since the appeal has been filed within one month of the actual date of receipt according to the CA, the appeal has to be considered to have been filed in time. All the decisions relate to the availment of credit before registration by the receiver of inputs and not by the supplier. Since in any case the matter is proposed to be remanded, I would not like to express any opinion on this issue and the original authority will be free to consider the issue in the light of the decision which may be cited before me and law applicable. - none of the documents have been verified as to the correctness and eligibility because the credit has been rejected on the ground that the inputs were supplied by unregistered dealers. This is another reason why matter is required to be remanded. - Decided in favour of assessee.
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2015 (7) TMI 349
Construction of residential complex - Penalty u/s 76, 77 & 78 - Held that:- During the relevant period, if the builder and developer constructed a residential complex himself and sell the flats to individuals, such activity is not liable for tax. However appellant has paid the tax. In my opinion, this itself is sufficient to take a view that the original authority's decision not to impose penalty is appropriate. However in the case of CST, Bangalore Vs. Motor World [2012 (6) TMI 69 - KARNATAKA HIGH COURT], Hon'ble High Court has taken a view that the revision/review power under Section 84 of Finance Act, 1994 cannot be exercised to review the discretion used by the original authority for waiving the penalty. This decision is applicable to the facts of this case also - Decided in favour of assessee.
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2015 (7) TMI 348
Waiver of pre deposit - Business Auxiliary Service - Penalty u/s 76 & 77 - chilling of milk - Held that:- chilling of milk does not amount to the activity of processing or manufacture falling under Business Auxiliary Service. - Decision in the case of Sharma Ice Factory vs. C.C.E., Jaipur I [2014 (6) TMI 493 - CESTAT NEW DELHI] followed - Stay granted.
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2015 (7) TMI 347
Recovery of service tax - Freezing of bank accounts - Held that:- there was no reason for the authority to hastily freeze and attach the bank account. If the Petitioner has a huge liability and which is towards taxes due to the Government, then, the least that was expected is that the competent authority decides the adjudication proceedings and by an appropriate order. It is only thereafter that the dues could be said to be crystallized and adjudicated. Presently, merely on issuance of show cause-cum-demand notice, copy of which is at Annexure ‘B’, the bank account could not have frozen and attached. More so, when the petitioner claims to have made some payments - Decided in favour of assessee.
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Central Excise
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2015 (7) TMI 345
Denial of MODVAT Credit - exemption under Notification No.214/86 CE - Held that:- On fact that the Commissioner (Appeals) as well as the Tribunal have taken a clear finding that the respondent/assessee had not wrongly availed the credit and therefore there appears to be a question of fact. Further more, in view of the preliminary objection raised by the learned counsel for the respondent that the monetary limit to prefer an appeal is pegged at ₹ 2,00,000/- by the litigation policy of the Government issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs vide Instructions dated 20.10.2010 in F.No.390/Misc./163/2010-JC, we are not inclined to entertain the appeals. - Even as per monetary limit - Appeal is not maintainable - Decided against assessee.
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2015 (7) TMI 344
Denial of exemption claim - Whether the Tribunal is right in law in holding that the first respondent is entitled to the exemption under the notification No.62/95 CE dated 16-03-1995 and No.89/95 CE dated 18-05-1995 when such notifications stipulate certain conditions which were admittedly not complied with by the first respondent - Held that:- The assessee availed the benefit of this Notification in respect of clearance of waste scraps arising out of manufacture of exempted goods. Though exemption in respect of manufactured goods is available in S.No.16(i) of the Table annexed to Notification No.62/95-CE dated 16.3.1995 (as amended), the problem arose because the first respondent cleared the exempted goods on payment of duty during the period in dispute. The erroneous payment of duty caused the Department to hold that the goods are other than exempted goods and therefore demand was made. On adjudication, the demand was sustained. The Tribunal came to hold that the show cause notice as well as the adjudication order proceeds on the misconception of the term 'exemption'. In otherwords , the Tribunal relying upon the Explanation to Notification No.89 of 1995-CE dated 18.05.1995 came to the conclusion that since the manufactured goods are exempted goods, the benefit of Notification No.89 of 1995 dated 18.5.1995 would be applicable. The Tribunal rightly held that proviso to this Notification would not apply to the facts of the case and the erroneous payment of duty would not render the goods other than exempted goods. So long as the goods manufactured are exempted goods, waste parings, scrap arising in the course of the manufacture of exempted goods would be entitled for exemption as per Notification No.89 of 1995 CE dated 18.5.1995. we approve this finding of the Tribunal as correct. - Decided against Revenue.
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2015 (7) TMI 343
Provisional assessment - applications of the petitioner company have not been responded to by the respondent (revenue) - As a result, the petitioner company is being forced to clear the goods manufactured by it on final assessment basis without taking into account the trade discounts made available by it to its customers, thereby ending up paying excess central excise duty than what is actually payable under the 1944 Act. - Held that:- value of the goods cannot be determined at the time of removal of such goods from the factory. This is for the reason that the normal transaction value is not available for such removals at that time as the assessee at that time cannot determine the quantity of discount being extended to the buyers. This can be done only at a later stage, precisely at the end of discount scheme period offered to the dealers which is usually after four months. As per Central Board of Excise and Customs circular dated 30th June, 2000, discount of any type made known prior to the clearance of the goods but quantified subsequently and passed on to the customers is an admissible deduction from the transaction value and as such the assessment for such transactions may be made on a provisional basis. - no legitimate ground exists for the department to disallow the petitioner company to pay excise duty on provisional basis on the concerned goods as per Rule 7 of the Central Excise Rules, 2002 since the actual transaction value cannot be determined at the time of removal of the goods from the factory. Denying such permission to the petitioner company would result in forcing the petitioner company to pay more excise duty than it is actually liable to pay - Decided in favour of assessee.
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2015 (7) TMI 342
Valuation - Method of valuation - Whether on facts and circumstances of the case, the 2nd respondent Tribunal was right in holding that revenue neutral situation as the reason for allowing the 1st respondent's appeal irrespective of the fact that the 1st respondent has wilfully suppressed the maintenance of dual accounting system and non-inclusion of profit marging in the assessable value of semi-finished goods cleared to their other unit - Hel that:- similar question has been considered by the Gujarat High Court in the case of Commissioner of Central Excise and Customs, Vadodara II, vs. Indeos Abs Ltd. reported in [2010 (3) TMI 656 - GUJARAT HIGH COURT] and the issue raised was answered in favour of the assessee. It is not in dispute that, in an identical matter where a similar issue was raised, the Supreme Court, in the case of Nirlon Ltd. vs. Commissioner of Central Excise, Mumbai, reported in [2015 (5) TMI 101 - SUPREME COURT], affirmed the view taken by the concerned High Court. - Decided against Revenue.
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2015 (7) TMI 341
Restoration of appeal - Appeal dismissed for non prosecution - Held that:- section 35C deals with the orders of the Appellate Tribunal. In that section, there is no power conferred upon the Tribunal, according to the Hon'ble Supreme court, of dismissing the appeal for want of prosecution. The judgment of the Hon'ble Supreme Court [2014 (11) TMI 531 - SUPREME COURT] construed subsection (1) of Section 35C of the Act and holds that the larger or wider power will not include the situation where an appeal can be dismissed without adjudication on merits or for want of prosecution. A reference is also made to Rule 24 of the Appellate Tribunal Rules,1946 under the Income Tax Act,1922 and equally Rule 20 of the subject Rules. Though the rule may be giving power to the Tribunal to dismiss in its discretion an appeal for default yet, construing its wording the Hon'ble Supreme Court holds that when the Act enjoins upon the Tribunal to pass order on the appeal confirming, modifying or annulling the decision or order appealed against or it may remand the matter, then, that power under the Section does not include dismissal of appeal for default or for want of prosecution. - Opportunity should have been granted to assessee - Impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 340
Validity of impugned order - Violation of principle of natural justice - Held that:- appeal preferred by the petitioner was finally heard on 26.8.2014 and the same is decided on 27.11.2014. If the impugned judgment and order is perused, it emerges that the Tribunal has relied upon its own decision dated 27.10.2014. It is equally true that the petitioners had no opportunity to plead their case before the Tribunal whether his case is covered as per the Tribunal’s decision dated 27.7.2014 or not. Therefore, in our considered view, the Appellate Tribunal ought to have given an opportunity of hearing to the petitioner before deciding the matter when the Tribunal has relied on its subsequent decision. - Impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 339
Waiver of pre deposit - Credit of SAD - Held that:- Admittedly the inputs were received on which duty was paid and credit was availed. It is also seen that the Revenue is not disputing the transfer of other unutilized accumulated credits to the new Unit by operation of Rule 10A. SAD was transferred to Unit No-2 and was no longer in the records of Unit No.1. Transfer of balance amount of credit to the new Unit especially when the sale is not unit-wise but the entire company was sold, is in accordance with the provisions of Rule 10A. As such irrespective of the fact whether the credit was lying with Unit-1 or Unit-2, we are of the view that the same is entitled to the transferred to the appellant. Denial of such credit to the appellant is not warranted. - appellant has a good prima facie case in its favour so as to allow the stay petition unconditionally - Stay granted.
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CST, VAT & Sales Tax
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2015 (7) TMI 346
Denial of exemption claim - sales tax exemption - Violation of Rule 28A (11) (a) (i) - failure to maintain, without convincing reasons, the requisite production - non-maintenance of average production after the expiry of the benefit period inasmuch as it had drastically come down to ₹ 9.06 crores from 17.52 crores. - Held that:- The concept of exemption has been introduced for development of industrial activity and it is granted for a certain purpose to a unit for certain types of good. Exemption can be granted under the Rules or under a notification with certain conditions and also ensure payment of taxes post the exemption period. The concept of exemption is required to be tested on a different anvil, for it grants freedom from liability. In the case at hand, as we understand, it is ‘unit’ specific. The term ‘unit’ has not been defined. The grant of exemption unit wise can be best understood by way of example. An entrepreneur can get an exemption of a unit and thereafter establish number of units and try to club together the production of all of them to get the benefit for all. It would be well nigh unacceptable, for what is required is that each unit must meet the condition to avail the benefit. A statutory rule or an exemption notification which confers benefit to the assessee on certain conditions should be liberally construed but the beneficiary should fall within the ambit of the rule or notification and further if there are conditions and violation thereof are provided, then the concept of liberal construction would not arise. Exemption being an exception has to be respected regard being had to its nature and purpose. There can be cases where liberal interpretation or understanding would be permissible, but in the present case, the rule position being clear, the same does not arise. - clubbing is not permissible. It amounts to a violation of the conditions stipulated under Rule 11(a)(i) of Rule 28A and, therefore, the consequences have to follow and as a result, the assessee has to pay the full amount of tax benefit and interest. The approach of the High Court is absolutely erroneous and it really cannot withstand close scrutiny.- Decided in favour of Revenue.
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