Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 11, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Fraudulent issuance of tax invoices under GST - allegation of business of generating and selling of fake tax invoices to various entities without supplying the underlying goods or services - Bail granted subject to deposit of 39 crores.
Income Tax
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Addition on account of revenue expenditure u/s 37(1) - The fee is paid for the purpose of business to settle a dispute with the regulator SEBI and to be able to conduct its business without interruption - claim of expenditure allowed.
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Capital gains or Income from other sources - transaction of sale of furniture - the personal effects would not be included in the capital asset u/s 2(14)(ii) of the I.T. Act. Therefore, it shall have to be considered under the residuary clause “Income from other sources”.
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If the property was acquired on behalf of another person and thereafter transferred to such another person, then there cannot be any capital gain in the hands of the assessee - Commission income on this transaction is to be estimated at 2%.
Customs
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Revocation of CHA License - Merely, that the appellant has filed appeal against earlier invocation of licence, could not extend statutory time limit as prescribed under the CBLR Rule, 20(1).
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Valuation of imported goods - inclusion of discount in assessable value - In the light of the status of the appellant as "exclusive commercial agent", the 25% discount enjoyed by them is reasonable and the same cannot be termed as abnormal discount
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Refund of excess Customs Duty paid - Fe content in the export of iron ore - Allowing a refund claim on the basis of test reports of the samples which have been drawn and put to test without any authority or justification, will lead to complete anarchy and arbitrariness
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Provisional release of the goods - Since the Tribunal is adequately clothed with appropriate powers to consider and decide an interim application including the application for grant of provisional release of the goods and since the appeal is pending, there is no reason to interfere by way of a writ petition.
Service Tax
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Rejection of declaration under VCES Scheme - The said amount is not the part of ST 3 returns as these amounts have not been paid for the services shown in ST3 return - If the same has been taken into consideration, their VCES Declaration would have been accepted
Central Excise
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CENVAT Credit - credit on retained amount - Rule 4(7) of CCR 2004 - The credit of full service tax paid by the service provider in respect of services provided would be available even if amount payable to the service provider has been withheld so long as the service tax paid by the service provider has not changed.
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Clandestine removal - The charge of clandestine removal cannot be established merely on the ground of difference in the balance sheet and the statutory record unless the same is corroborated by any other evidences.
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Valuation - As soon as the appellant came to know that the value of F.O.C. products has been revised on higher side for past years by M/s F.I.P.L. the appellant has immediately deposited the excise duty short paid alongwith interest - No penalty
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CENVAT credit - duty paying documents - rejected goods - although the original duty liability on the inputs payable by the supplier is yet to be paid, but Cenvat credit availed under Rule 8(2). - This shows the mala fide intention of the Appellant. - extended period has been rightly invoked.
VAT
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The credit in the “Dealers Spare Part Account” received by the Petitioner can be treated as actual Sale price received by the Appellant for replacement of spares during the manufacturer's warranty scheme, since no reimbursement is received from MUL.
Case Laws:
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GST
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2018 (7) TMI 589
Fraudulent issuance of tax invoices under GST - allegation of business of generating and selling of fake tax invoices to various entities without supplying the underlying goods or services - Arrest of persons - Grant of Bail - "reasons to believe" - Based on such reasonable belief, the Additional Director General directed the officers concerned to arrest the petitioners in terms of the provisions stipulated under Section 69 of the said Act and they were arrested on 12.05.2018 - Held that:- ‘Reasonable belief’ or reason to believe as a standard to arrest requires that arresting officer subjectively believe that the suspect has committed the offence and that objectively reasonable person would reach the same conclusion. Reasonable grounds do not require as much evidence as a prima facie case but do require that thing believed to be more likely than not. It is settled position of law that grant of bail is a rule and rejection of bail is an exception. Maximum punishment provided in the Act is for a term of five years. The accused persons were arrested on 12.5.2018 and investigation has to be concluded within 60 days from the date of arrest as per provision of Section 167(2) of Cr.P.C. While granting bail, the Court has to keep in mind the nature of the accusations, the nature of evidence in support thereof the severity of the punishment which conviction will entail, the character of the accused, reasonable apprehension of the witnesses being tampered with, the larger interest of the public/ State and others similar consideration are requied to be taken into consideration. Bail granted subject to deposit of ₹ 39 crore to the Government Exchequer.
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Income Tax
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2018 (7) TMI 590
Bogus purchase - Purchases duly supported by bills and payments were made by Account Payee cheque - Held that:- SLP dimsissed.
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2018 (7) TMI 588
Addition on account of undisclosed income - estimation of rental income and chadawa income - Held that:- In so far as chadawa income is concerned, estimation made by the Assessing Officer is without any basis and without going into the fact that the assessee was entitled for chadawa once in 18 years and, therefore, there was no reason for estimating the chadawa income for the year in which the assessee was never entitled to receive chadawa income. Therefore, the addition on account of chadawa income is uncalled for and the ld. CIT(A) has rightly deleted the same. Rental income - other family members was residing in the temple premises - assessment made by the Assessing Officer that once the premises was rented out, the same must have been rented out in the earlier assessment years also - Held that:- No doubt, the basis of estimation of the rental income is the actual rent shown by the assessee as found in the rent agreement. What is taxed under the head ‘income from house property’ is the Annual Let Out Value [ALV] of the house property and the ALV is determined as per section 23 of the Act wherein it has been provided that the ALV shall be the sum for which the property might reasonably be expected to let from year to year or the actual rent received/receivable. Thus, in the case in hand, the ALV has been estimated on the basis of actual rent received by the assessee in subsequent assessment years. But, at the same time, there is no evidence on record which could suggest that the properties were actually let out in the earlier assessment years. But the ALV has to be taxed and, therefore, to this extent, we agree with the ld. DR. Since the letting out of the property was discovered during the course of search and seizure proceedings, therefore, in our considered opinion, the ALV of the properties have been rightly treated as income of the assessee. We, accordingly, set aside the findings of the ld. CIT(A) to this extent and restore that of the Assessing Officer. - Decided partly in favour of assessee.
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2018 (7) TMI 587
TDS deposited delayed to the account of the Central Government - assessee in default u/s 201 - tax deducted was remitted beyond the respective due dates prescribed under Chapter XVII B of the Act read with relevant rules thereon - period of limtation - Held that:- Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd [2007 (8) TMI 12 - SUPREME COURT OF INDIA] had held that if the payee had disclosed the subject mentioned transaction as his receipts and in his return, then the assessee payer should not be treated as assessee in default u/s 201 of the Act. Even in that scenario, the assessee would be eligible to be levied with interest u/s 201(1A) of the Act till the date of payment of taxes by the payee thereon. Hence when the assessee payer himself delays the remittance of TDS which has been deducted by it, there is no reason why the interest u/s 201(1A) of the Act should not be charged on it. Looking into the facts of the case from this angle and by placing reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Bhura Exports Ltd [2011 (8) TMI 449 - CALCUTTA HIGH COURT] which is binding on us, we hold that when there is no time limit stipulated in the statute for passing an order u/s 201(1A) of the Act upto 31.3.2010. for all the assessment years falling prior to 31.3.2010, the order could be passed at any time by the ld AO . - Decided against assessee
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2018 (7) TMI 586
Addition on account of revenue expenditure u/s 37(1) - expenditure on account of consent fee charged by the Security Exchange Board of India [SDEBI] - CIT-A held it as allowable as legitimate revenue expenditure - Held that:- Consent fee paid by the assessee was for non compliance of certain bye-laws/guidelines of SEBI. The fact of payment of consent fee cannot be treated as violation of statutory law. The charges levied by SEBI were in the ordinary course of business of the assessee and it cannot be construed that the payments were made in violation or infringement of any central or state laws. The consent fee paid cannot be equated to a penalty which must necessarily be a punishment for infraction of a law or a regulation having statutory force. The fee is paid for the purpose of business to settle a dispute with the regulator SEBI and to be able to conduct its business without interruption - no infirmity in the findings of the CIT(A) - decided against revenue Allowance of long term capital loss - Loss was on account of liquidation of its foreign subsidiary company - Held that:- Findings of the AO given in A.Y 2005-06 clearly shows that it was during the year under consideration the assessee could make final realisation and, therefore, the difference of actual investments made in the foreign subsidiary company and actual amount realised materialised during the year under consideration and, therefore, the claim of long term capital loss is definitely allowable during the year under consideration. No reason to interfere with the findings of the CIT(A) - Decided against revenue
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2018 (7) TMI 585
Income from other sources - transaction of sale of furniture - sale of personal effects under section 2(14)(ii) - sale consideration of the property at Mohan Garden included an amount towards sale of furniture available in the house at the time of sale of property - Held that:- Contention of the Assessee is not acceptable because the personal effects would not be included in the capital asset under section 2(14)(ii) of the I.T. Act. Therefore, it shall have to be considered under the residuary clause “Income from other sources”. CIT(A) noted that since the value of the house hold items i.e., Sofa etc., which were genuinely found to be at ₹ 3 lakhs only as against the inflated amount of ₹ 10 lakhs, therefore, ₹ 7 lakhs shall have to be considered as income from other sources. Since the transaction of sale of furniture etc., was sham and to inflate the value of the furniture etc., to evade stamp duty and evade long term capital gains, therefore, no benefit could be given to assessee on such agreement to sale. The assessee is not able to explain as to for what consideration ₹ 7 lakhs have been received by assessee, therefore, it was correctly treated as income from other sources. - Decided against assessee
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2018 (7) TMI 584
Scrutiny assessment - whether the case was properly selected for scrutiny in accordance with the Scrutiny Guidelines prescribed by the CBDT vis-à-vis by obtaining proper approval thereon? - Held that:- It is not in dispute that the Additional CIT-Haldia is the Range Head of Haldia and accordingly the approval for manual selection of case for scrutiny given by ACIT-Haldia on 29.09.2012 is in order and consequentially the assessment framed thereon is not liable to be quashed as void ab initio. The financial year 2012-13 mentioned by the AO in the order sheet appears to be only typographical error as admittedly the papers were indeed moved by him through proper channel for obtaining approval for manual selection of case for scrutiny before the ld. Additional CIT -Haldia for the assessment year 2011-12 only, which is evident and apparent from the assessment records. Hence this error committed by the ld. AO in the order sheet is construed as typographical error and is hereby condoned. In view of the aforesaid observations the ground no.1 raised by the assessee is dismissed. Dsallowance made towards prior period expenses - Held that:- We find that there is no mala fide intention on the part of the assessee in respect of this bill and not accounting the same in the earlier year. We find that the Co-ordinate Bench of this Tribunal in the case of Hindusthan Gum and Chemicals Ltd. vs. ITO [2007 (12) TMI 307 - ITAT KOLKATA] had allowed the claim of prior period expenses in similar circumstances. Addition of administration charges - Held that:- As gone though the statement raised by the concerned parties to the tune of ₹ 15,18,662/- towards administration charges we find that opening stock as on 01.04.2010 was ₹ 2,06,70,213/- and bills raised during the financial year 2010- 11 was ₹ 6,32,538/- and amount adjusted against the total bills was ₹ 15,18,662/-. The closing balance as on 31.03.2011 was accordingly arrived at ₹ 11,80,919/- which was shown as liability in the balance sheet of the assessee. Ledger account of the assessee as appearing in the books of Novel Engineering (i.e. sub-contractor) wherein it is evident that the assessee had indeed realized administration charges from the sub-contractor. So these facts conclusively prove that there is absolutely no case made out by the revenue for making an addition in the sum of ₹ 15,18,662/- on account of administrative charges. Accordingly, ground raised by the assessee is allowed.
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2018 (7) TMI 583
Validity of reopening of assessment - proof of escapement of income - possession of ‘tangible material’ - Held that:- Reopening was merely on a change of opinion, it is noticed that the case of the assessee was also that there was no fresh tangible material in the possession of AO at the time of recording of reasons for initiating proceedings u/s.147 of the Act. A perusal of the ‘Reasons’ recorded by the AO in this case reveals that at the time of recording of these ‘Reasons’ the AO had examined original assessment records only and report of the auditor filed in those proceedings and no fresh material had come in the possession of the AO. In response to our specific query also, Ld DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted. - Decided in favour of assessee
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2018 (7) TMI 582
Addition u/s 14A r.w. rule 8D(ii) - availability of own funds - Held that:- The facts available on records does not reflect the availability of own funds as at the beginning of the previous year as at 01-04-2010 as also at the end of the previous year as on 31-03-2011. The assessee has stressed on the availability of own funds being higher than the investments made in the year of making investments in securities capable of yielding exempt income but no reference or reliance is placed on the availability of own funds in the year under consideration. For limited verification by the AO as to the availability of own interest free funds during the year under consideration vis-a-vis investments made by the assessee in the securities capable of yielding exempt income in context with books of accounts and audited financial statements of the asssessee for the year under consideration, we are restoring the issue to file of the AO - Decided in favour of revenue for statistical purposes
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2018 (7) TMI 581
Capital gain computation - section 50C applicability - valuation adopted by the stamp duty authority - Challenge valuation before the Tax Board - Held that:- Assessee has objected to the valuation adopted by the stamp duty authority before the Assessing officer during the course of assessment proceedings and the same is not in dispute and even, the ld CIT(A) has returned a similar finding. Therefore, the first condition as envisaged under section 50C(2) is satisfied in the instant case. The assessee having objected to the valuation so adopted before the Assessing officer and no information available regarding any challenge of such valuation before the Tax Board, the AO should have ordinarily referred the matter to the valuation officer. As during the appellate proceedings, the ld CIT(A) is ceased of this development that the assessee has moved a revision petition challenging the valuation by the Collector (stamps) before the Tax Board, Ajmer, the second condition as envisaged under section 50C(2) is not satisfied in the instant case. There is no way, she would have ignored such a revision petition as brought to her knowledge by the assessee himself and referred the matter to the valuation officer u/s 50C(2) of the Act exercising her coterminus powers as that of the Assessing officer. Given that the value so adopted by the Collector (stamps) is subject to outcome of the revision petition filed before the Tax Board, Ajmer, the value finally assessed as so envisaged under section 50C shall therefore be subject to the outcome of the revision petition - remand the matter back to the file of the Assessing officer to take into consideration the decision of the Tax Board, Ajmer in respect of revision petition filed by the assessee and determine the valuation of the property for the purposes of calculating the capital gains, after providing reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.
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2018 (7) TMI 580
Valuation of property sold - Capital gain - provisions of section 50C applicability - CIT(A) confirming the sale consideration at ₹ 66,29,838/- as valued by the Sub - Registrar as against declared sale consideration of ₹ 32,71,000/- - Held that:- Clause (a) of sub- section (2) of section 50C provides that where the assessee claims that the value adopted by the stamp value authority exceeds the fair market value of the property as on the date on the transfer, and value so adopted by the stamp valuation authority has not been disputed in any appeal/ revision or no reference has made before any authority, Court or the High Court, the Assessing Officer may refer the valuation of the capital assets to the Valuation Officer. In the instant case, we find that during the course of assessment proceedings, the assessee has specifically objected before the Assessing Officer that the valuation adopted by the stamp valuation authority exceeds the fair market value of the property and given the undisputed fact that the said valuation has not been disputed in any appeal or revision, the Assessing Officer is required to refer the matter to the Valuation Officer - remand the matter to the file of the Assessing Officer who shall determine the valuation of capital asset so transferred, after calling for the report from the valuation officer and after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2018 (7) TMI 579
TPA - claim of the appellant for the Glazing Loss in the commodity exported rejected - price list published by MPEDA relied - Held that:- TPO made adjustment after examining the invoice produced by the assessee that it has exported products having glazes ranging from 15% to 25%. The product of the assessee is having various glazes ranging from 15% to 25%, as such, the assessee’s product could be compared with the price list published by MPEDA which is for 20% glaze after making suitable adjustment which the TPO has done. Further, the assessee has not brought on any evidence to show that the assessee’s product is having 25% glazes so that it cannot be compared with the price list published by MPEDA. Being so, we do not find any merit in the argument of the Ld. AR and the same is rejected. Disallowance of EIA Monitoring fee paid to Export Inspection Agency, for non deduction of tax - Held that:- AR was not able to show that the payment to Export Inspection Agency is not liable for deduction of TDS so as to attract the provisions of section 40(a)(ia) of the Act. In view of this, we do not find any merit in the argument of the Ld. AR and uphold the order of the lower authorities. Thus, this ground of appeal of the assessee is dismissed.
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2018 (7) TMI 578
Unexplained investment in the bank accounts - Held that:- The amount was advanced for purchase of landed properties by the assessee’s relatives out of their NRE bank accounts, the same was received back by the present assessee. However, this fact has not been verified by the lower authorities. In our opinion, the assessee has to place the copies of NRE bank accounts of his relatives along with the details of refund received on cancellation of the agreements with various parties for purchase of landed properties. Accordingly, we remit this issue to the file of the AO for de novo examination of the documents mentioned above after affording opportunity of hearing to the assessee. If there is no agreement entered with the various parties, the payments made by the assessee’s relatives to the vendor and refund from them is to be substantiated by the assessee. Thus, this ground of appeal of the assessee is partly allowed for statistical purposes. Addition towards receipt of commission on real estate business - Held that:- If the assessee has actually acquired the property for himself, then only the question of computation of capital gain arises in the hands of the assessee. Accordingly, we remit this issue to the file of the Assessing Officer to re-examine the issue afresh and bring to tax only short term capital gain, if so, after giving deduction of cost towards acquisition and transfer of the said property. If the said property was acquired on behalf of Shri Anil Kumar Sharma and thereafter transferred to Shri Anil Kumar Sharma, then there cannot be any capital gain in the hands of the assessee and income on this transaction is to be estimated at 2% on this also. Accordingly, we direct the Assessing Officer to compute the income of the assessee as above. Thus, this ground of appeal of the assessee is partly allowed.
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2018 (7) TMI 577
Revision u/s 263 - income relating to the PSF security component not declared - debatable issues - Held that:- Having gone through the OMDA Agreement, SOP and the escrow Agreement in the light of other relevant papers furnished in the paper book we are convinced that prima facie there appears to be no control for the assessee over the security component of the PSF collected by the airliner and deposited into the escrow account meant to make the security purposes. The security component of the PSF amount does not constitute income in the hands of the assessee whereas such an issue has been remanded back to the Ld. AO by the Delhi tribunal. It is, therefore, clear that the question whether or not the security component of the PSF constitutes income in the hands of the assessee has not yet finally been decided authoritatively. It still remains a contentious issue and a debatable one. We are of the considered opinion that in view of the decision of the Hon’ble apex court in M/s Malabar Industries Co Ltd. Vs. CIT [2000 (2) TMI 10 - SUPREME COURT] such contentions or debatable issues are not available for revision under section 263 of the Act. With this view of the matter, we find that in this set of facts and circumstances, the exercise of jurisdiction under section 263 of the Act by the Learned CIT cannot be sustained - decided in favour of assessee.
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2018 (7) TMI 576
Exemption u/s 54 entitlement - gain is long term capital gain and reinvestment happened within the stipulated time - Held that:- It is not in dispute that the said allotment letter conferred right on the assessee to nominate any other person in her stead. The said right was subsequently transferred by the assessee in favour of Mrs Nitu Chowdhury and Mr Santosh Kr. Chowdhury on 10.12.2013 . This is nothing but a transfer of nominees in the subject mentioned property. There was no deed of conveyance executed either in favour of the assessee or in favour of Mrs Nitu Chowdhury and Mr Santosh Kr. Chowdhury. Section 2(14) of the Act clearly stipulates that ‘right in a property' is a capital asset. Since this right has been acquired by the assessee pursuant to allotment letter dated 12.4.2008 and the same has been held by the assessee up to 9.12.2013 (i.e for more than three years), the gain arose pursuant to such transfer would have to be construed only as long term capital gain, which has been rightly considered by the ld CIT-A. See VINOD KUMAR JAIN VERSUS COMMISSIONER OF INCOME TAX [2010 (9) TMI 850 - PUNJAB AND HARYANA HIGH COURT ] It is not in dispute that the assessee had duly reinvested the sale consideration in new property proposed to be purchased for ₹ 3,70,00,000/- and out of which ₹ 2,33,14,159/- was paid on 10.12.2013 itself ( i.e the date of agreement). Hence the resultant gain is long term capital gain and since the reinvestment had happened within the stipulated time, the assessee would be entitled for exemption u/s 54 of the Act. - Decided against revenue
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2018 (7) TMI 575
Assessee trust entitlement for exemption u/s 11 or taxable as an AOP - whether Mr Manas Dasgupta would be entitled for 20% of profits of the said concern as per Explanation 3 to section 13 of the Act so as to state that he is holding substantial interest in the said trust - Held that:- In the instant case, the two trusts i.e PCSD and Lok Kendra Trust are admittedly not registered u/s 12AA of the Act and hence they would be assessed to income tax only in the capacity of ‘Association of Persons’ (AOP) and income would be assessed by applying the regular commercial business principles. Once it is determined, Mr Manas Dasgupta, being the President of those two trusts, would be entitled to share of profits of the said AOP and if the said share is more than 20%, then he would be deemed to be holding substantial interest in that AOPs as per Explanation 3. We find that the details of beneficiaries together with their respective holdings of other two trusts i.e PCSD and Lok Kendra Trust are not available on record - remand this limited aspect of the issue to the file of ld AO for factual verification - grounds raised in this regard by the revenue are allowed for statistical purposes. Receipt of Government Grants - Held that:- CITA had merely stated that the grants received by the assessee trust had been utilized during the year. We hold that without examining the purpose of grant together with supporting evidences, the nature of grant cannot be understood. We find that there is no finding in this regard in the orders of the lower authorities. Hence we deem it fit and appropriate in the interest of justice and fairplay, to remand this issue to the file of ld AO for factual verification - appeal of the revenue is allowed for statistical purposes.
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2018 (7) TMI 574
Denial of exemption claimed u/s.10(38) - long term capital gains on sale of certain shares - Held that:- As disputed that statements recorded from these persons and records relied on by the Revenue for disbelieving the claim of the sale of shares, were not put to the assessee. Undisputedly, the sale of shares were through recognized stock exchange and through a recognized stock broker. Question regarding genuineness of the claim of long term capital gains requires to be restored to the ld. Assessing Officer for reconsideration after granting assessee adequate opportunity to substantiate its case. Revenue has to furnish to the assessee all the statements relied on by them. Appeal of the assessee is allowed for statistical purpose.
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2018 (7) TMI 573
Penalty u/s 271(1)(c) - defective show cause notice without specifying the charge against the assessee - Held that:- Imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee
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2018 (7) TMI 572
Estimation of income - Held that:- During the course of examination on oath of the Directors of M/s. Safeco Projects, it was recorded that commission paid in such transactions was 1% of gross receipts inclusive of TDS. This gives the percentage of commission that the assessee charges. When the Assessing Officer relies on these statements to reject the contentions of the assessee, then the entire statements have to be considered as evidence. The estimation of commission at 5% of the turnover, in our view is excessive and has not basis. It is an arbitrary figure. The assessee had shown income of 2.4%, in this case inclusive of TDS. This is reasonable. Hence no further addition on this account needs to be made. Thus, the addition of ₹ 50,96,291/-, as sustained by the ld. CIT(A) is hereby deleted. Write off of bad debts u/s 36(1)(vii) - Held that:- The assessee has written off debts receivable from M/s. Vivek Steels, Pawan Jhunjhunwala, in this bank account. It had also written off advance TDS deposit u/s 194C and u/s 194J of the Act. The entire amount was claimed as a deduction. Apparently, the write off of advance TDS deposit cannot be allowed u/s 36(1)(vii) of the Act. As regards write off of loans from Vivek Steels and Pawan Jhunjhunwala, in view of the judgement of the Hon’ble Supreme Court in the case of T.R.F. Ltd vs Commissioner of Income Tax (2010 (2) TMI 211 - SUPREME COURT) the deduction should be allowed. Accordingly, this ground of the assessee is allowed in part. Income from lease of factory premises is to be assessed under the head “income from property” or under the head “income from other sources - Held that:- The factory building, is a part of the plant and building of the assessee. This is let out for commercial use. When the assessee earns income from utilization of this factory building, the income from the same is assessable under the head “income from business”. This entitles the assessee to claim depreciation on the factory building. Even otherwise, the block of assets concept was brought into the statute by the Finance Act, 1998. After the introduction of this block of assets concept, depreciation on written down value has to be allowed irrespective of the fact whether individual items of machinery has been introduced or not. We uphold this contention of the assessee. Hence this ground of the assessee is allowed. Disallowance of commission payment - Held that:- Assessing Officer has without any basis estimated the expenditure incurred by the assessee at 50% and disallowed 50%. If the payment is not genuine then the entire expenditure claimed has to be disallowed. In this case, the assessee has produced evidence and discharged the burden of proof that lay on it and whereas the revenue has not controverted this evidence. Under these circumstances, such estimated disallowance cannot be sustained as the same is arbitrary. Hence this ground of the assessee is allowed.
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2018 (7) TMI 571
Disallowance on account of infrastructure and referral fee treating the same as non business expenses - Held that:- There is no evidence that the assessee has used any other infrastructure facility located at such other places. It is also evident that the assessee till the preceding assessment year was able to do same nature of business activity from its place of business. It is also undisputed fact that the assessee did not get any referral client. There is no detail available on the record about the number of branches owned by both the companies and which the assessee was entitled to use. The assessee claimed to have used the office premises to the extent of 1800 sq feet along with other facilities of the said companies. But there are no individual details of the facility used by it has been furnished, e.g. how the area was determined, how the sitting arrangement of the assessee staff was made, how many telephone line was allotted to the assessee, what was the basis of the sharing of the expenses. Since assessee company is an NBFC registered with RBI, and it is carrying its business activity from a place other than its registered office. There was no detail filed by the assessee whether this fact was communicated to RBI intimating that it is carrying on its financial activities from a place other than its registered office. But no such detail was available on record. AO should re-examine the entire issue and therefore to verify the genuineness of the transaction, we remit the issue to the file of AO for fresh adjudication - Derided in favour of revenue for statistical purposes.
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2018 (7) TMI 570
Penalty u/s. 271(1)(c) - non specification of charge - Held that:- We find that the notice dt. 30-03-2015 issued u/s. 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. Penalty deleted - decided in favour of assessee.
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2018 (7) TMI 569
Validity of the invocation of Section 153A - Habitual concealing of income and indulging in clandestine operations - additions of franchisee commission - Held that:- SLP dismissed.
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2018 (7) TMI 568
Deduction u/s.80IB (10) - Interpretation of section 80-IB(10)(d) - project approved by the Pune Municipal Corporation which is the local authority - Effect of amendment w.e.f. 01.04.2005 - Held that:- The High Court has dismissed the appeal - petitioner permitted to approach the High Court by way of review petition.
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2018 (7) TMI 567
Disallowance u/s 14A - disallow the expenditure even there is no income i.e., dividend by taking recourse to Rule 8D - Held that:- Special Leave Petition is dismissed on the ground of delay as well as on merits.
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2018 (7) TMI 566
Constitutional validity of provisions of Section 245D(4A) and 245HA - automatic abatement of settlement application if no final order is passed by the Settlement Commission before 31.03.2008 - cause of delay - Held that:- SLP dismissed.
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2018 (7) TMI 565
Loss on account of actual cancellation of forward contracts - Addition pertains to loss on account of the reversal of the MTM gain on revaluation of pending forward contracts and this could not be even deleted. - Held that:- Since the tax effect of the aforesaid amount would be much less, leaving the question of law open, the special leave petition is dismissed.
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2018 (7) TMI 564
Addition on account of sundry creditors - CIT-A deleted aforesaid addition, which has been reversed by Tribunal restoring order of Assessing Authority - Findings of facts have been recorded by Tribunal - Held that:- SLP dismissed.
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2018 (7) TMI 563
Validity of proceedings under Section 153C - addition u/s 69C - non satisfaction of the condition precedent viz. the seized document - Held that:- SLP dismissed.
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2018 (7) TMI 562
Deduction under Section 80-IA - Manufacturing activity - preparing of designs and drawings - number of workers employed - Section 80-IA(2)(V) of the Act - Held that:- SLP dismissed.
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2018 (7) TMI 561
Disallowance of loss on foreign exchange forward contract loss - whether the said loss was a notional loss and hence cannot be allowed? - Held that:- SLP dismissed.
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2018 (7) TMI 560
Condonation of delay - delay of 257 days in filing the appeal - affidavit of Chartered Accountant was required to be filed - Held that:- The Special Leave Petition is dismissed.
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2018 (7) TMI 559
Interest on refund - Expression ‘in any other case’ occurring in Section 244A (1) (b) - whether would include the amount of refund which constitutes the interest that has been waived by the Income Tax Department (‘Department’) under Section 220 (2A) of the Act? - Held that:- Special leave petitions are dismissed.
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2018 (7) TMI 558
Amount received by way of exemption of sales tax payments - trading receipt OR capital receipt hence not liable to tax? - Held that:- Issue notice. In the meantime, the operation of the impugned order shall remain stayed. Tag with SLP(C) [2017 (12) TMI 477 - SUPREME COURT OF INDIA]
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2018 (7) TMI 557
Investment write off - whether could be characterised on the Revenue side or did it fall in the Capital side as loss? - Held that:- SLP dismissed.
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2018 (7) TMI 556
Penalty u/s 271(1)(c) - certain amounts ought to have been deducted by virtue of Section 194J and non compliances of which, resulted in an adverse order and disallowance under Section 40(a)(i) - Held that:- SLP dismissed.
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2018 (7) TMI 555
Revision u/s 263 - Deductibility of expenses u/s 37(1) of the Act – Fluctuation in rate of exchange - Held that:- As submitted by the learned ASG that the assessee had taken up the ground of jurisdiction of Commissioner of Income Tax under Section 263 of the Act. However, this ground was ultimately not pressed and the ITAT did not allow the appeal on this ground but on merits. Therefore, there was no finding of ITAT that the exercise of power under Section 263 of the Act by Commissioner of Income Tax was erroneous and, thus, there was no question for challenging that aspect of the matter. In the aforesaid circumstances, we permit the Revenue to file an application for review before the High Court and when such a review application is filed within one month from today the same shall be decided on merits. In case the High Court decides the review application against the appellant, the appellant while challenging that order would be at liberty to challenge the impugned order as well.
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Customs
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2018 (7) TMI 554
Grant of Bail - Smuggling - “Zol Fresh” tablet containing “Zoipidem” as a psychotropic substances - Held that:- there are no ground to interfere with the impugned order - SLP dismissed.
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2018 (7) TMI 553
Provisional release of the goods - pending adjudication of an appeal - power of appellate authority to grant interim order - Held that:- Rule 4 of the Rules of 1982 empowers the appellate authority to hear and determine appeals and applications made under the Customs Act, 1962 before it. Noticeably, the Tribunal is empowered to determine applications apart from appeals by Rule 4 and application for interim relief for release of the goods will come within the definition of an application contemplated in Rule 4 of the Rules of 1982 - In a given case, when the tests for grant of interim order are satisfied, the Tribunal can proceed to grant the same. Non-grant of the same might result in the failure to secure the ends of justice. Since the Tribunal is adequately clothed with appropriate powers to consider and decide an interim application including the application for grant of provisional release of the goods and since the appeal is pending, there is no reason to interfere by way of a writ petition. Petition disposed off.
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2018 (7) TMI 552
Penalty u/s 112(a) of the Customs Act, 1962 on CHA - mis-declaration of goods - Held that:- The appellant have declared the goods as per the document, therefore, the mis-declaration cannot be alleged against the appellant. As regard the penalty imposed under section 112 (a), entire discussion is on the violation of Regulation of CHALR 2004. For any violation of CHALR 2004, penalty cannot be imposed under the Customs Act, for the reasons that the CHALR 2004 in itself is the complete Regulation for proceeding against the CHA for any violation of Regulation. Penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 551
Benefit of Concessional rate of duty - N/N. 51/96-Customs dated 23.07.1996 - Essentiality Certificate - denial on the ground that the computers were being used by students and faculty members for preparing articles/projects which did not appear to be research work Held that:- In the instant case, the Essentiality Certificate has been issued and the importer is affiliated to Bangalore University and Bangalore University is registered with the DSIR. Therefore, the importer is eligible to import the said items under concessional rate as the conditions of the Notification have been satisfied. No fraud was alleged. In fact, it is seen that no investigation is made and no statements are recorded. The Essentiality Certificate was not withdrawn by the authority who has issued it. Under these circumstances, demand notice for an extended period only on strength of a letter written by the university to the A.G., Audit party is not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 550
Refund of excess Customs Duty paid - The primary basis of the appellants for claiming the refund is test report, which is given by M/s Mitra S. K.Pvt. Ltd., wherein they have claimed that Fe content in the impugned export of iron ore was 61.83% and as the export duty on iron ore fines having contents of 62% Fe, is leviable to export duty @ ₹ 50/- per M.T. and since they have paid export duty @ ₹ 300/- per M.T. on the subject export consignment, the additional amount of export duty is refundable to them as per the provisions of Section 27 of the Customs Act, 1962. Held that:- It is a matter of record that the exporter has neither requested for drawal of samples in presence of the Customs authorities for undertaking re-test of the export consignment nor they have paid the export duty provisionally. Without suspecting the veracity of the samples, which have been put for re-test, it is inappropriate to draw the samples from the export consignments and got the same chemically tested without knowledge of the authorities for claiming the refund of the Customs duty, which have already been finally assessed and deposited by the appellants. It is also seen from the various documents submitted along with appeal that all along in all the documents, it has been declared by the appellants that Fe content in the consignment of the iron ore fines, is having Fe of 63%. Allowing a refund claim on the basis of test reports of the samples which have been drawn and put to test without any authority or justification, will lead to complete anarchy and arbitrariness - the refund claim filed by the appellants is not admissible as per the provisions of Section 27 of the Customs Act, 1962. The appellants are not entitled for refund under Section 27 of the Customs Act, 1962 - appeal dismissed - decided against appellant.
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2018 (7) TMI 549
Penalty u/s 112 of CA - Misdeclaration of quantity of imported goods - Held that:- It is a matter of record that in all the statements which have been recorded during the course of investigation, it has not come out that the appellants were any way connived, compires with the importer or abated the mis-declaration of the seized imported consignment. Section 112 is invocable only in the circumstances, whereas a person is involved in abetting of smuggling or mis-declaration or evasion of Customs duty or in cases where he deals with any prohibited or otherwise offensive goods in any way - There are no evidences which indicate in any way, about willful involvement of the appellant in mis declaration of impugned import consignment. The appellant has handled the consignment in normal course without any conscious knowledge or connivance etc. regarding mis-declaration of quantities etc. - penalty cannot be sustained - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 548
Valuation of imported goods - inclusion of discount in assessable value - related party transaction - Held that:- The appellant has been appointed as the exclusive commercial agent - the original authority i.e., AC, SVB has considered the agreements in its entirety and has observed that the appellant is a distributor, who is handing imports at a different commercial level when compared to other Indian buyers - the appellant is also required to carry out various sales promotion activities as well as minimum order quantity and inventory levels. In the light of the status of the appellant as exclusive commercial agent , the 25% discount enjoyed by them is reasonable and the same cannot be termed as abnormal discount - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 547
Revocation of CHA License - mandatory time limit as prescribed under Regulation 20 of CBLR 2013 not complied with - the Show Cause Notice was issued on 30/05/2016 in spite of the offence report being received by the Commissioner on 1/06/2015 from DRI - Held that:- It is accepted by the Adjudicating Commissioner that the Show Cause Notice has been issued after the prescribed time limit of 90 days under the Section 20(1) of the CBLR 2013. Merely, that the appellant has filed appeal against earlier invocation of licence, could not extend statutory time limit as prescribed under the CBLR Rule, 20(1). Also at the time of the receipt of the offence report the fact that CB licence of the appellant stood revoked, it was felt that there was no need for issuing the fresh notice as held by the Commissioner in the impugned order is contrary to the provisions of Rule20(1) of the CBLR-2013 - The conclusion of the Commissioner in the impugned order that no prejudice is caused to the appellant is contrary to the provisions of the CBLR-2013. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 546
Classification of imported goods - Aluminium Composite Panels - benefit of N/N. 21/2002 - whether the goods are classifiable under CTH 7606 or under CTH 7610? - Held that:- A sample plate of impugned goods is produced - It is in the form of a sheet and definitely is not a structure, or part of structure falling under 7610. It cannot be used as structure or part of structure and is only plates that are generally used for cladding the surfaces. These are sheets which are cut and grooved to clad surfaces, walls etc. They cannot be termed as structures or parts used for construction. The Commissioner (Appeals) has rightly classified the same under 7606 - appeal dismissed - decided against Revenue.
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2018 (7) TMI 545
Seizure of goods - Smuggling - silver bullion and ornaments - commercial quantities of mobile phones - original owner did not come forward to claim release of such goods - Held that:- It has been claimed on behalf of the appellants that Shri Nand Kishore Singh has already submitted the consignment notes which are said to cover the payment of the seized goods. But the fact remains that neither the consignee nor the consignor has come forward and claimed the goods after satisfying the Customs Authority about the licit nature of the goods - goods cannot be released - appeal dismissed - decided against appellant.
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2018 (7) TMI 544
Penalty u/s 114(i) of the Customs Act, 1962 - Smuggling - Red Sanders Wood - allegation based on the statement of driver - Held that:- It is seen from the record that the Drivers of the seized vehicles in their statement stated that they had loaded Red Sanders Wood from one place in Rajasthan and reached Ghoshpukur on 07.02.2011 afternoon - also, the statement of two Drivers are more elaborate to show the involvement of the appellant. Quantum of penalty - Held that:- It is significant to note that the appellant is the key person on the export of the Red Sanders wood to Nepal - however, the amount of penalty would be reduced to ₹ 15,00,000.00. Appeal disposed off.
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2018 (7) TMI 543
Interpretation of statute - Drawback Rules - demand of Interest - Rules 16 and 16A of the Drawback Rules - Held that:- While the ld. consultant has been seeking to interpret the Drawback Rules, it is to be noted that they have been framed only under Sections 75 and 75A of Customs Act, 1962 - Section 75A ibid particularly makes it amply clear that when drawback becomes recoverable under the Act or Rules made therein, claimant shall be liable not only to repay the drawback amount but also to discharge interest liability at the rate fixed under section 28AA of the Customs Act. Demand upheld - appeal dismissed - decided against appellant.
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2018 (7) TMI 542
Classification of imported goods - Benq and Viewsonic Projectors - whether classified under CTH 85286900 or under CTH 85286100? - benefit of N/N. 24/2005-Cus. Sl. No. 17 - the respondents points out that the Commissioner (Appeals) order was in respect of 24 consignments imported through Air Cargo Complex and 3 imported through Sea Port, Chennai; that however, the department has come in appeal only against the latter; that in respect of remaining consignments imported at Air Cargo Complex, department has accepted the order of the Commissioner (Appeals). Held that:- Department having accepted the decision of the Commissioner (Appeals) in respect of 24 consignments, they cannot now turn around and express a grievance only against a portion of the impugned order relating to remaining three consignments which have been imported through Seaport, Chennai - The Hon’ble Apex Court in the case of Marsons Fan Industries [2008 (1) TMI 290 - SUPREME COURT] has categorically held that when the Department has accepted a decision pertaining to same assessee itself on similar goods, that decision has attained finality. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 541
Import of Crude Palm Oil - concessional rate of duty - N/N. 21/2002-Cus dated 1st March 2002 - Case of appellant is that the denial of the benefit of concessional notification is improper as the test result determining content of beta carotene below the lower in the said notification was not valid because that samples were tested belatedly, during which time the beta carotene disipates - Held that:- The imported goods are crude palm oil. Considering that the appellant had laid claim to eligibility for the concessional rate of duty, it was not the responsibility of the assessee to draw samples and to send it promptly for testing to ascertain the correctness of the declaration of intimation. That was the responsibility of the assessing officer. Having failed to do so, it cannot transfer the liability of ascertainment to the appellant and, on the basis of result of an invalid test, to fasten the duty liability on the importer - the reliance placed on the test report which emanated long after the date of import does not sustain in the absence of any other evidence that imported goods were refined palm oil. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 540
Deemed manufacture - import of marble slabs and its processing with resin filling, grinding and cutting and polishing - Benefit of N/N. 04/2006-CE dated 01.03.2006 - Department has denied the benefit of the said Notification and brought the imported marble slabs under Chapter sub-heading No.68022190 - Held that:- The identical issue has come up before the Tribunal in the case of Classic Marbles Vs. Commr. of Central Excise, Vapi [2013 (9) TMI 648 - CESTAT AHMEDABAD], where it was held that this activity would not amount to manufacture during the relevant period on the imported marble slabs - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 539
Restoration of appeal - case of appellant is that the case [2017 (7) TMI 1160 - CESTAT KOLKATA] was passed ex-parte - Circular dated 18.11.2013 - Held that:- On perusal of the circular, I find that the circular is pertaining to all matters regarding Clearing agents and CHAs and shall be heard by a Division Bench. In the present case, the appellant filed the appeal against imposition of penalty of ₹ 1 lakh u/s 112 of the Customs Act, 1962. Hence, it is not a case of CHA under the Customs Brokers Licensing Regulations, 2013. The contention of the ld. Counsel cannot be accepted. It is contended that the SCN was issued by the DRI officer who was not competent to issue the notice under the Customs Act - the main noticee had already accepted and acted upon the purported show cause notice and had settled the case before the Settlement Commission as narrated in detail in the order of the Tribunal. The main noticee has already acted upon the notice and in such circumstances the plea of the appellant herein who is a co-noticee has no substance - application for restoration of appeal dismissed.
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Service Tax
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2018 (7) TMI 538
100% EOU - recovery of Refund of unutilized CENVAT Credit - whether for recovery of refund already sanctioned, the SCN under Section 11A is necessary in each and every case? - Held that:- The vital aspects that whether the refund was erroneous or otherwise was not examined by the Ld. Commissioner (Appeals), therefore, in order to the recovery of refund, this aspects has to be examined then only it can be decided that whether by order of Commissioner (Appeals) itself recovery can be made or the entire process of Section 11A such as issuance of SCN, adjudication is required - the matter on this aspect should be reconsidered by the Ld. Commissioner (Appeals) - appeal allowed by way of remand.
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2018 (7) TMI 537
Extended period of limitation - Reverse charge mechanism - Broadcasting services - case of Revenue is that the said services were received by the appellant and service provider did not have any office in India and therefore, under ‘Reverse Charge Mechanism’ appellants were required to pay service tax in respect of services so received - Held that:- There was no intention of the appellant, not to pay said service tax and therefore, demand under the extended period is not sustainable - the demand under the category of Business Support Service not covered by normal period is not sustainable. Information Technology Software Service - Reverse charge mechanism - Held that:- The agreement for Information Technology Software Service in the nature of right to use software was entered into on 29.12.2006. The said nature of activity continued beyond 16th May, 2008 till March, 2011 and revenue have raised demand only for the period for which the tax entry was introduced w.e.f. 25.06.2008 - demand upheld. Management, Maintenance or Repair Service - Held that:- The appellant have accepted its levy after 01.03.2008 i.e. the period after the issue of Import of Services Rules and we, therefore, do not find any force of law for confirmation of demand under the said category for the period prior to 01.03.2008. Penalty - Held that:- Since there was no intention to evade duty for the reason that under Reverse Charge Mechanism the appellants are entitled for credit of service tax paid under Cenvat Credit Rules, 2004 - penalty not warranted. Appeal allowed in part.
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2018 (7) TMI 536
Import of services or not - STARL have rendered broadcasting service to the appellant in India and the former do not have an office in India - Held that:- The very same in respect of the same appellant for a previous period had come up before this Tribunal in VIJAY TELEVISION (P) LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2017 (8) TMI 838 - CESTAT CHENNAI], where it was held that the appellant cannot be held as a service recipient since foreign broadcaster is engaged in up-linking signals to a satellite outside India and down-linking of signals is done by MSOs/COs in India and appellant technically does not receive any broadcasting service - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 535
Rejection of declaration under VCES Scheme - rejection on the ground that the Appellant has failed to provide the proof of payment for the Service Tax liability under VCES Scheme - Held that:- As is evident from the records, the Appellant has paid Service Tax as per VCES declaration in time. Therefore, VCES Declaration is accepted. The Appellant has filed declaration in terms of VCES Declaration Scheme, 2013 on 26.12.2013 by declaring the taxable services to the tune of ₹ 32,53,350/- on which the Service Tax liability works out to ₹ 4,02,114/-. 50% of the said amount has been paid by the Appellant on 30.12.2013 and remaining amount was paid on 17.2.2014 - The said amount is not the part of ST 3 returns as these amounts have not been paid for the services shown in ST3 return and the authorities below have not considered these amounts having been paid separately by the Appellant for the amount declared in VCES Scheme. If the same has been taken into consideration, their VCES Declaration would have been accepted. Admittedly, both the authorities below have not considered these facts, therefore, the impugned order deserves no merits. Appeal allowed.
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2018 (7) TMI 534
Extended period of limitation - suppression of facts or not - CENVAT Credit on various input services - Held that:- There is no positive act of suppression established by the department. The period involved is September 2004 and March 2009. The show cause notice is dt.11.9.2009. Undeniably the departmental audit was conducted from 22.05.2006 to 24.05.2006 and 24.9.2007 to 27.9.2007. The audit party has not raised any objection on the credit availed by the appellant - extended period of limitation cannot be invoked - appeal dismissed - decided against Revenue.
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2018 (7) TMI 533
Liability of Service Tax - incentive received for use of AMADEUS CRS software - demand of service tax with interest and penalty - time limitation - Held that:- The issue has been decided in the case of D. PAULS CONSUMER BENEFIT LTD. VERSUS CCE, NEW DELHI [2017 (3) TMI 1019 - CESTAT NEW DELHI], where it was held that the service provided by the assessee-Appellants has rightly been covered under the heading “Business Auxiliary Service” as defined u/s 65(19) of the FA, 1994 - demand of tax upheld. Penalties - Held that:- The issue was under litigation and being an interpretation one, the appellant had put forward reasonable cause for not discharging the service tax - penalty not warranted. However, there are no grounds to accept the argument of the counsel on the issue of limitation. Appeal allowed in part.
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2018 (7) TMI 532
Penalty - Reverse Charge mechanism - Banking and other Financial services - maintaining Nostro and Vostro accounts with foreign banks to help their customers dealing in Export and Import business - utilisation of services of SWIFT, Belgium, for securely and reliably exchanging financial information relating to Banking transactions - Held that:- During the relevant period, the issue whether an assessee is liable to pay service tax under reverse charge mechanism was under much litigation - This Tribunal in the case of Indian Overseas Bank Vs CST, Chennai, [2018 (7) TMI 513 - CESTAT CHENNAI] has considered the very same issue and set aside the penalties, observing that the issue is interpretational in nature. There being no evidence that the appellants is guilty of deliberate suppression of facts with intent to evade payment of service tax, the penalties imposed is unwarranted - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 531
Commercial Training or Coaching Service - conducting training / coaching programme on personality development as well as English speaking course - whether the appellant is liable to pay service tax under ‘Commercial Training or Coaching Service’ for the courses which include personality development course, English speaking course and human resource development course? - Held that:- The Tribunal in the case of C.S. Natarajan [2018 (6) TMI 792 - CESTAT CHENNAI] has considered identical facts wherein it has been held that the said courses would fall under the category of vocational training course - the demand in respect of ‘Commercial Training or Coaching Service’ cannot sustain. Penalty - franchisee service - Held that:- appellant had failed to discharge service tax in respect of franchisee service due to the confusion in the change of the definition of franchisee service. The period involved is 1.7.2003 to 30.9.2006 when the definition of franchisee service underwent changes for more than one time - penalty set aside by invoking section 80 - demand of tax with interest upheld. Appeal allowed in part.
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2018 (7) TMI 530
Restoration of appeal - Penalty u/s 11AC - Interior Decorators/Design Service - Manpower Supply Recruitment /Supply Service etc - Held that:- There is no material available on record for suppression of facts with intent to evade payment of duty. Hence, the imposition of penalty under Section 11AC of the Act is unwarranted - penalty set aside - application of restoration of appeal is also allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (7) TMI 529
CENVAT credit - duty paying documents - rejected goods - it appeared that the appellant have availed suo motu credit without the cover of documents specified in Rule 9 of CENVAT Credit Rules - it was alleged that appellant availed CENVAT Credit twice in respect of the same inputs - case of appellant is that the entire exercise is Revenue neutral - suppression of facts. Whether the appellant can avail CENVAT credit on their own invoices issued in the name of their vendor rejecting the inputs, which were actually not cleared from the plant but remained inside the plant and whether the appellant has availed double CENVAT Credit on some goods? - whether the extended period of limitation has been rightly invoked by the department? Held that:- There is no doubt that the appellant have adopted a completely wrong practice. If the inputs were urgently required for production of two wheelers, the appellant need not prepare Invoice for sending the rejected materials back to the vendors and instead ought to have rectified the same in-house. They were also not required to reverse the credit and re-credit in their accounts. Even if they prepared the invoices, they ought to have cancelled the same and have to inform it to the jurisdictional commissioner. The Appellant after receiving the inputs from their suppliers availed Cenvat credit of Central Excise duty mentioned in the invoice as payable on such inputs, although it was not yet paid, in terms of Rule 8(2) of the Central Excise Rules, 2002. After the rejection of inputs, invoice was prepared for return of these inputs to its supplier creating liability of reversal of Cenvat credit availed on such inputs. However, the inputs remained in the plant itself and after due rectification, were again taken into their inventory and again Cenvat Credit on these inputs is availed in terms of Rule 16 (1) of the Central Excise Rules, 2002 on the basis of their own invoices. This shows that although the original duty liability on the inputs payable by the supplier is yet to be paid, but Cenvat credit availed under Rule 8(2). The fact about the availment of credit in respect of the rejected inputs on the basis of Appellant’s own invoices issued in the name of their vendors was never brought to the knowledge of the department. I have been informed that the Appellant in their monthly ER-1 returns had only shown the quantity of rejected material and duty debited against the same. They never disclosed the fact about in-house rectification of the Inputs by the Appellant and second time credit in respect of such Inputs. The said fact came into the knowledge of audit team at the time of audit only, otherwise the Appellant would have continued with this practice. This shows the mala fide intention of the Appellant. - extended period has been rightly invoked. Liability of Interest and penalty - held that:- Since the extended period has rightly been invoked by the department, therefore the appellant is also liable to pay interest and penalty - the matter is remanded for re-quantification of interest and penalty. Appeal allowed by way of remand.
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2018 (7) TMI 528
Valuation - transmission and power shift transmission elements and parts thereof - inclusion of value of free of cost components/raw materials supplied by M/s Ford India Private Ltd. (M/s FIPL) - demand of duty with interest and penalty u/s 11AC - Extended period of limitation - intent to evade present or not? - Held that:- There is no denial of the fact that M/s FIPL has revised the value of free of cost raw material supplied by them to the appellant retrospectively and since the value of F.O.C. raw materials was the basis for determination of assessable value of the manufactured products for payment of central excise duty. It was the responsibility of the appellant to revise the price of his manufactured products as soon as they came to know of revision of value of the F.O.C. raw materials - It is seen that Hon’ble Supreme Court in its various pronouncements has held that only non-payment of Central Excise Duty because of certain innocuous omissions cannot be compared with collusion or willful misstatement or suppression of facts etc. as provided under Section 11A of Central Excise Act, 1944. Whether the appellant has willfully done certain proactive acts which can lead to the invocation of elements such as fraud, collusion, willful misstatement or suppression of facts under Section 11AC? - Held that:- The appellant was not in a situation of control in this case and revision of prices of his manufactured product, squarely depended on M/s F.I.P.L. providing the correct value of their F.O.C. components. As soon as the appellant came to know that the value of F.O.C. products has been revised on higher side for past years by M/s F.I.P.L. the appellant has immediately deposited the excise duty short paid alongwith interest. The short payment of Central Excise duty on account of re-revised prices of F.O.C. products was neither deliberate nor with any malafide intentions and it was because of the facts that the circumstances of the matter were beyond the control of the appellant and therefore in our opinion though Central Excise duty is certainly leviable on the revised value of the appellants products supplied to M/s F.I.P.L. but the case is certainly not made out for levy of penalty under Section 11AC of Central Excise Act, 1944. The Central Excise duty short paid on the clearances effected with the assessable value which was determined on the basis of re-revised value of F.O.C. components/raw material is recoverable under Section 11A of Central Excise Act, 1944 alongwith interest as leviable under Section 11AA/11AB of Central Excise Act, 1944 - penalty set aside - appeal allowed in part.
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2018 (7) TMI 527
Refund of unutilised CENVAT Credit - Time Limitation - Whether the refund claims filed by the appellant for the period October, 2014 to March,2015, can be said to be within limitation as per Section 11B of the CEA 1944, despite the fact that the same was filed by the appellant on 18/05/2016? - N/N. 27/2012-CX. (N.T.) dated June 18, 2012. Held that:- Subsequent upon order dated 08/05/2015 having been received by them on 25/05/2015 which cleared the confusion involved in the matter, the appellant had filed the claims pertaining to the period July, 2014 to March, 2015 (which is subject matter of present Appeal) on 18/05/2016 i.e. within one year of receipt of the order from the Central Excise Authorities for the earlier period - the refund claims filed by the appellant is within limitation prescribed under Section 11B of the CEA, 1944, if the period spent in pursuing remedies before wrongful authorities is excluded. Since the appellant has raised new grounds before this Tribunal for the first time which needs verification and determination and for that matter the appeal has to be remanded back to the original authority for denovo adjudication of the issues raised in the light of new facts - appeal allowed by way of remand.
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2018 (7) TMI 526
CEVAT credit - common input services for manufacture of dutiable as well as exempt goods - 'trading goods' - Held that:- In this case, prior to 1.4.2011, no demand is sustainable against the appellant as prior to that, the trading activity was not an exempted service. Therefore, the demand pertaining prior to 2011 is set aside. For the demand post 1.4.2011, for export of goods whatever inputs service credit pertaining to export, appellant is not required to pay 6% of the value of goods exported as held in the case of M/s. Cap & Seal (Indore) Pvt. Ltd. vs. CCE, Ujjain [2018 (3) TMI 410 - CESTAT NEW DELHI], where it was held that the appellant is not required to pay 6% of the value of traded goods for export. Penalty - Held that:- The appellant has already reversed the cenvat credit pertaining to the trading activity related to home consumption, along with interest - demand not sustainable - As demands are not sustainable, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 525
Penalty u/s 11AC of CEA read with Rule 15(2) of the CCR 2004 - CENVAT credit - input used in the manufacture of exempted goods as well as dutiable goods - appellant have reversed the proportionate cenvat credit attributable to manufacture of cotton yarn on being pointed out - Held that:- On pointing out by the Audit, they reversed the cenvat credit attributable to inputs namely, coal used in the manufacture of exempted goods. Therefore, there was no requirement to issue show cause notice to the appellant in terms of Section 11A(2) of the Central Excise Act, 1944 - no penalty is imposable on appellant - appeal allowed.
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2018 (7) TMI 524
Clandestine manufacture and removal - copper wire - third party evidence - Held that:- There was a complete admission on the part of the appellant about the documents as were seized by the Department from premises of M/s.Hind Metals and from his own premises and were put to the appellant, that all those pertains to his business and to the companies with whom he has business relations. Despite the retraction of Mr. Alok Aggarwal that too vide a letter dated 19 June, 2012, there has been three more subsequent statements acknowledging the correctness about the goods seized to be meant for clandestine removal and for the documents recovered from residential and factory premises to be related to his company. Thus, there seems no reason for rejecting the 4 statements acknowledging guilt in the light of one letter of retraction - There is sufficient corroboration qua the document recovered from the cabin of the vehicle which was found parked in the factory premises of the appellant at the time of raid. There is sufficient corroboration to the correctness of the contents thereof in the statement of the driver of the said vehicle itself with simultaneous corroboration from the statement of the worker of appellant namely Mr.Jagat Singh that Mr. Subash Yadav was the driver of the said vehicle who used to deliver goods from appellant’s factory at the instance of the appellant. The said vehicle was seized from the factory of the appellant loaded with material but with no bill for the same. There is a clear admission for the alleged clandestine removal by the appellant, who could not produce any evidence on record to prove his innocence. Oral grounds of defence could not be corroborated by any documentary evidence - Since the clandestine removal of metal wires stands established on record and there can be no other objective for the same except, the evasion of duty, the penalty as imposed is also not found to have any infirmity. Appeal dismissed - decided against appellant.
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2018 (7) TMI 523
Clandestine removal - mis-match in respect of quantity of finished goods namely, PVC compound and master batch for the financial year 2012- 2013 - Held that:- Apart from the mis-match of quantity, there is no corroborative evidences - Although the appellants claimed that Chartered Accountant made a clerical mistake of entering figures of raw materials instead of finished goods, while preparing the balance sheet and filing of form 3CD, but since it is not supported by any corroborative evidence, therefore, it did not find favour with the department - The charge of clandestine removal cannot be established merely on the ground of difference in the balance sheet and the statutory record unless the same is corroborated by any other evidence showing receipt of raw material, consumption of the same, production and removal of the final product in excess of statutory records. It is settled legal position that charge of clandestine removal and clearance is serious charge against the manufacturer which is required to be discharged by the Revenue by production of sufficient and tangible evidence. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 522
CENVAT Credit - credit on retained amount - from each of the progressive bills raised by the contractors during the execution of the contract, the respondents used to deduct certain percentage as retention amount and made the balance payment to the contractors - whether CENVAT Credit is allowed on this retained amount - Rule 4(7) of CCR 2004 - Circular No. 122/3/2010-ST dated 30.4.2010 - Held that:- There is no dispute regarding the fact that though the respondent retained a part of the value of services, however, no part of the service tax reflected in the invoices was ever retained by the Respondent. Respondent has paid the service tax on entire invoice value - The credit of full service tax paid by the service provider in respect of services provided would be available even if amount payable to the service provider has been withheld so long as the service tax paid by the service provider has not changed. Therefore, the credit is admissible to the respondent. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 521
Clandestine removal - raw-material as well as of the finished goods - tangible evidences not present - Held that:- There is a plethora of judgments to hold that to stand upon the charges as that of clandestine removal, there has to be some clinching evidence and the demand cannot be confirmed based on presumptions and assumptions. In the present case the allegations against the appellants have been levelled on the basis of some documents recovered from the premises of M/s. PIL. There is nothing on record which may show any effort of the Department that the recovered documents ever got tallied from the documents available with the appellants - Apparently or admittedly, there is no raid conducted in the premises of the appellant nor any documents got recovered from their premises. It is also evident on record that appellants were not given any opportunity to cross-examine Mr. Pankaj Agrawal, Director of M/s. PIL. These facts are sufficient for us to arrive at a firm opinion that the documents recovered from a third premises were never got corroborated, hence can not be lead into evidence at least for proving the alleged guilt of the appellants beyond reasonable doubts. The authorities have wrongly held lack of evidence on the part of the appellant - the burden to prove the allegations of clandestine removal was very much upon the Department - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 520
CENVAT Credit - input services - operation and maintenance of wind mill - denial on account of nexus - Held that:- It is in the interest of justice to remand this matter to the Adjudicating Authority because if the power generated with wind mill is exclusively used in relation to the manufacturing activity, then it is squarely covered within the definition of ‘input service’ - appeal allowed by way of remand.
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2018 (7) TMI 519
Valuation - inclusion of VAT / CST subsidy in assessable value - Held that:- The issue decided in the case of M/S. UNIVERSAL CABLES LTD. APPELLANT VERSUS COMMISSIONER OF GST, CENTRAL EXCISE, CUSTOMS, JABALPUR [2018 (3) TMI 1229 - CESTAT, NEW DELHI], where it was held that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 518
CENVAT credit - Cement - Supplies to SEZ from DTA - exempt goods or not - common input services used in manufacture of dutiable as well as exempt goods - Rule 6(3)(b) / 6(3)(i) of CENVAT Credit Rules - Held that:- The issue settled in appellant own case ULTRA TECH CEMENT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TIRUPATI [2015 (2) TMI 181 - CESTAT BANGALORE], where it was held that after enactment of Special Economic Zones Act, 2005 w.e.f. 10-2-2006, supplies to SEZ from DTA are treated as export of dutiable goods and entitled to benefits as such, including that of exception in Rule 6(6) of CENVAT Credit Rules, 2004, of not requiring separate accounts of dutiable and non-dutiable inputs/services to be maintained - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 517
CENVAT credit - inputs/capital goods - rails and rail sleeper - Held that:- The impugned goods have been used for laying of railway line for transportation of inputs inside the factory for manufacture of the final products. Therefore, the impugned goods seem to have nexus with the manufacture of final goods and are covered under the definition of inputs as per the Cenvat Credit Rules. In the case of Aditya Cement [2007 (3) TMI 190 - HIGH COURT RAJASTHAN], the Hon’ble Rajasthan High Court had held that the railway track along with locomotive used by a cement factory for the purpose of transporting its material is a conveyor system and accordingly, the assessee was entitled to benefit of credit. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 516
CENVAT Credit - denial of credit based on third party records - principles of natural justice - Held that:- It appears that the Central Excise Officers had not examined the documents placed by the appellant. In such situation, the denial of credit on the basis of 3rd party report is not justified - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (7) TMI 515
Extension of time to comply with the impugned order - Held that:- The Special Leave Petition is dismissed both on the ground of delay as well as on merits.
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2018 (7) TMI 514
Whether the Tribunal was justified in holding that the credit in the “Dealers Spare Part Account” received by the Petitioner from Maruti Udyog Ltd. amunting to ₹ 30,52,192/ can be treated as actual Sale price received by the Appellant for replacement of spares during the manufacturer's warranty scheme and therefore liable to Tax under the provisions of the MVAT Act? Held that:- The manner of using the credit does not detract from the fact that the amounts credited to the account of the Appellant by M/s. Maruti Limited is on account of sale of parts as replaced during the warranty period - the decision in the case of Chowgule Industries Pvt. Ltd. v. State of Maharashtra [2018 (4) TMI 939 - BOMBAY HIGH COURT] do not apply to the facts of present case, the assessee therein was replacing parts during the warranty period of Maruti vehicles sold. The cost of the parts was reimbursed by M/s. Maruti Limited. It was the aforesaid amount that was brought to tax. In this case the distinction is that though during the warranty period, the parts of Maruti vehicle were replaced by it, M/s. Maruti Limited do not reimburse the same in cash but credit it the Appellant's account in its books. Appeal dismissed - decided against appellant.
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