Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 13, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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One of the ways of generating fund is by maintaining the auditorium under trust. In this case, the auditorium was held under trust of the society for the purpose of generating funds. The income generated out of the auditorium was used to the objects of the trust. - Exemption u/s 11 allowed - AT
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Continuance of registration u/s 12AA - The beneficiaries are only the members and benefit is not passed on to the public at large in any way. - Therefore, the objects and activities of the applicant cannot be called as “charitable” within the definition of main provision of section 2(15) - AT
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TDS u/s 194C OR 194H - nature of contract - supply of manpower/labour for execution of works contract - there is no element of contract in the nature of principle to agent so as to invoke the provisions of sec. 194H of the Act. It is merely a contract for supply of labour for execution of work contract as defined u/s 194C - AT
Customs
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Claim of refund of duty paid in excess whereas the goods were entitled for concessional rate of duty - non-filing of the appeal against the assessed bill of entry does not deprive the appellant to file its claim for refund under Section 27 of the Customs Act, 1962 - AT
Corporate Law
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The appellant cannot successfully maintain an action for oppression and mismanagement against the respondents, merely on the strength of the sale transactions relating to the properties of the company, especially when those transactions were entered into at a time when the company was in financial crisis. - HC
Service Tax
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Taxability of photography service provided for carrying works of preparation of Elector’s Photo Identity Card (EPIC) i.e. Matdan Pahchan Patra. - It was a sovereign activity of the State/Union and accordingly, the said activity is held not taxable. - AT
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Valuation - Claim of abatement of 67% availed without including the value of the material supplied free of cost by their customers in the gross amount charged. - Commercial or Industrial Construction Service - Demand set aside - AT
Central Excise
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Refund - The exemption available was not availed, which resulted in claim for refund later. Such claims are rightly covered under the provisions of Section 11B. - Refund beyond the prescribed period rejected - However interest on delayed refund to be granted - AT
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Yearly Claim of refund of unutilized cenvat credit - Notification number 27/2012 contemplates for filing of refund claims of unutilised Cenvat credit quarterly, but it does not bar an assessee from filing refund claim for the entire period which may be more than a quarter. In the absence of any explicit bar, refund claims, if otherwise eligible, cannot be rejected on the ground that they are not filed quarterly. - AT
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Cenvat Credit on capital goods - The case of the Revenue is that these capital goods are becoming part of the existing generator sets which belong to another legal entity and hence credit on such capital goods is not available to the appellant. - the contention of revenue rejected - credit allowed - AT
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Classification - manufacture of calendar/panchang - The predominant features are details of Tithi, Nakshatra, Vara Yoga and Karana which are linked to the dates in a calendar month. - the impugned items can not be categorized as calendars and classified under C.E.T.H. 4910. - AT
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There is no reason to deny the credit taken on a triplicate copy of the bill of entry when the connected provision in the MODVAT rules refers merely to ‘bill of entry’. Thus, disallowance is without any basis and is set aside. - AT
VAT
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Attachment of immovable property and stock of the petitioner and other family members. - Denial of input tax credit - Under the circumstances , the request of the petitioner for unconditional lifting of the order of attachment cannot be granted. - HC
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Rejection of application for VAT registration - residential area - when there is no dispute with regard to the genuineness of the business that is going to be carried on at the place of business, it is not for the Revenue to suggest the extent of the land that is necessary to carry on the business and it is for the businessman to decide the same. - HC
Case Laws:
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Income Tax
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2016 (7) TMI 521
Cancellation of registration granted under Section 12AA - whether income generated out of the auditorium was used to the objects of the trust? - Held that:- After going through the provisions of Section 11(4) and 11(4A) of the Act, this Tribunal is of the considered opinion that trade or commerce is not totally prohibited. A trade or commerce or any property can be held under Trust for the purpose of carrying on the objects of the trust. In other words, for funding charity or carrying out the objects of the trust, the assessee-trust has to be necessarily generate funds. The funds can be generated in several ways. One of the ways of generating fund is by maintaining the auditorium under trust. In this case, the auditorium was held under trust of the society for the purpose of generating funds. The income generated out of the auditorium was used to the objects of the trust. Whether the assessee was charging heavy fees from medical students? - Held that:- The CIT(Appeals)has not referred any quantum of fees charged by the assessee-society. Charging fee by itself cannot be a reason to disallow the claim of the assessee. A charitable institution is not expected to do charity at free of cost. A charitable institution is entitled to collect a reasonable fee for meeting the expenditure. Even a charitable society needs money for the purpose of carrying out its charitable objects. Therefore, this Tribunal is of the considered opinion that letting out the auditorium for conducting coaching classes for Post graduate entrance exams cannot be considered to be outside the objects of the assessee-society. This Tribunal is of the considered opinion that letting out the auditorium for the purpose of conducting coaching classes for Post Graduate entrance exams is in furtherance of its objects. Therefore, the income generated out of letting out the auditorium has to be necessarily considered as income generated from the property held under the trust.. The orders of the authorities below are set aside and the Assessing Officer is directed to allow exemption under Section 11 of the Act. - Decided in favour of assessee
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2016 (7) TMI 520
Continuance of registration under section 12AA denied - commercial v/s charitable activity - Held that:- By introduction of proviso to section 2(15) of the Act with effect from 01.04.2009, the “Charitable purpose” has been well defined and includes relief of the poor, education, medical relief, preservation of environment including water sheds, forests and wildlife and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. While carefully going through the object of the applicant, the objects of the applicant are neither charitable in nature nor advancement of any general public utility but for the only benefit of the members of the company. With regard to principles of mutuality, the AR of the applicant has very well accepted in person before the ld. DIT(E) and also in the written submissions that the activities of the applicant was primarily aimed at benefitting the members and their sponsored persons. Before the ld. DIT(E), the ld. AR of the applicant has also accepted that there is no question of continuance of registration under section 12AA of the Act since the beneficiaries are only the members and benefit is not passed on to the public at large in any way. Therefore, the objects and activities of the applicant cannot be called as “charitable” within the definition of main provision of section 2(15) of the Act. Also in the written submissions before the ld. DIT(E), the applicant has very clearly accepted that catering charges, hall charges, etc. are given to members for their staff on commercial basis and, in fact, these activities are commercial in nature and on verification of records, such receipts exceeded ₹.10 lakhs in the financial year 2008-09 relevant to the assessment year 2009-10, which attracts first and second proviso to section 2(15) of the Act. In view of the above, the applicant’s case is covered under the above said proviso and loses the character of charitable purposes. - Decided against assessee.
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2016 (7) TMI 519
TDS u/s 194C OR 194H - nature of contract - whether the contract between the assessee and the agencies, is one for supply of manpower/labour for execution of works contract attracting TDS provisions of section 194C of the Act, or is the contract for agency attracting provisions of section 194H? - Held that:- The instant case consideration is paid in terms of remuneration payable to the personnel deployed in to the work plus service charge of 14% on the total remuneration payable to the personnel employed. Therefore, we are of the view that the contract between the assessee and the agencies is a mere contract for supply of labour for execution of work contract as defined under the provisions of sec. 194C, but not a contract of agency as defined under sec. 194H of the Act. As on perusal of the nature of work and contract between assessee and agencies, there is no element of contract in the nature of principle to agent so as to invoke the provisions of sec. 194H of the Act. It is merely a contract for supply of labour for execution of work contract as defined under sec. 194C, having all the ingredients of a contract of principle to principle basis. The assessee has rightly deducted TDS @ 2.266% under the provisions of sec. 194C of the Act. The CIT(A) has rightly deleted the additions. - Decided in favour of assessee
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2016 (7) TMI 518
Reopening of assessment - exemption under section 54F not allowable - petitioner had pointed out that he had purchased two plots of land under a deed dated 20.6.2008 - Held that:- Quite apart from the assessee's placing full material at the disposal of the Assessing Officer, the claim was also examined by the Assessing Officer during assessment proceedings. Having accepted the claim in law, but having made partial disallowance considering the facts, it was thereafter not open for the Assessing Officer to issue notice for reopening, that too, without any additional material which would suggest that the assessee had made a false declaration or provided inaccurate particulars. - Decided in favour of assessee.
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2016 (7) TMI 517
Assessment u/s 153 - time barred or not - Held that:- The assessing officer had 60 days to complete the assessment from 25th November, 2002, that would give him time till 25th January, 2003 whereas the assessment was completed on 31st March, 2003. Therefore, the assessment was hopelessly barred by limitation and that is the view taken by the learned Tribunal. Mr.Nizamuddin, learned advocate appearing on behalf of the revenue has not been able to find any fault with the view taken by the learned Tribunal. - Decided in favour of the assessee.
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2016 (7) TMI 516
Revision u/s 263 - whether the appellant is entitled to claim deduction under section 80P(2)(a)(i) in respect of the interest earned on the deposits placed with the State Bank of India? - Held that:- In case of a credit society like the present one, the business of the society is limited to providing credit to its members and the income that is earned from providing such credit facilities to its members is deductible under section 80P(2)(a)(i) of the Act. However, investing its surplus funds with the State Bank of India is no part of the business of the appellant of providing credit to its members and hence, it cannot be said that the interest income derived from depositing surplus funds with the State Bank of India is profits and gains of business attributable to the activities of the appellant society. The character of the interest is different from the income attributable to the business of the society of providing credit facilities to its members. The interest income derived from investing surplus funds with the State Bank of India must be closely linked with the business of providing credit facilities for it to be held that it is attributable to the business of the assessee. In the present case there is no obligation upon the appellant to invest its surplus funds with the State Bank of India. Investing surplus funds in a bank is no part of the business of the assessee of providing credit facilities to its members. Therefore, it is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India not being attributable to the business carried on by the appellant, cannot be deducted under section 80P(2)(a) (i) of the Act. If the appellant wants to avail of the benefit of deduction of such interest income, it is always open for it to deposit the surplus funds with a co-operative bank and avail of deduction under section 80P(2)(d) of the Act. It is one of the activities of the Society engaged in carrying on the business of banking or providing credit facilities to its members as provided in section 80P(2)(a) of the Act and gains of business attributable to such activity is exempt from taxable income and that based on the above, interest income of fixed deposits with S.B.I. has been treated as business income of the Society engaged in the business of banking or providing credit facilities to its members and accordingly income derived from this activity has been claimed exempt under section 80P(1) and 80P(2)(a). Having regard to the stand adopted by the appellant in response to the notice under section 263 of the Act, this court is of the view that it cannot, in any manner, be said that the Commissioner of Income-tax has travelled beyond the scope of the notice under section 263 of the Act, inasmuch as, he has only dealt with the contention raised by the appellant. The contention that the Commissioner of Income Tax has not held that interest income derived from parking the funds with the State Bank of India is income from other sources, in the opinion of this court, does not merit consideration for the reason that it is for the Assessing Officer, pursuant to the order under section 263 of the Act to examine the nature of the income and tax it accordingly. Insofar as the order under section 263 of the Act is concerned, in the light of the above discussion, it is not possible to state that the same suffers from any legal infirmity. The Tribunal was, therefore, wholly justified in upholding the same. ITAT was justified in upholding invocation of powers under section 263 by the Commissioner of Income Tax.and holding that interest income on deposits placed with State Bank of India was not exempt under section 80P(2)(a)(i) - Decided against assessee.
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2016 (7) TMI 515
Reopening of assessment - accommodation entries receipt - Held that:- It may be also noted that while in the reasons recorded, it has been stated that M/s Glamour Sales Pvt. Ltd. is not existing at the given address and therefore, the identity and creditworthiness and genuineness of the transaction could not be established, whereas in the order disposing of the objections, the Assessing Officer has travelled much further and observed that M/s Glamour Sales Pvt. Ltd. of Kolkatta is a fictitious entity just created to give accommodation entries to beneficiaries on commission basis; that the above investor company is not actual one but it is a paper company created for giving benefit to the beneficiaries; that any transaction with such bogus company is considered to be non-genuine and therefore, the share capital with share premium received from the so called bogus company is nothing but the assessee’s own fund circulated through M/s Glamour Sales Pvt. Ltd. via its bank accounts. In this regard, it is by now well settled that the validity of the reopening has to be examined on the basis of the reasons recorded and the reasons recorded cannot be supplemented either by the order disposing of the objection or by filing an affidavit in that regard. In the present case, the Assessing Officer has examined the claim and not made any additions and has not discussed anything therein. However, once he has examined such claim, it is not permissible to reopen the assessment even within four years on the very same grounds. It is evident that the Assessing Officer has, therefore, formed an opinion on the issue in question though not reflected in the assessment order passed under section 143(3) of the Act. Thus, reopening of the assessment to examine the very same claim is, therefore, clearly based upon a change of opinion. The assumption of jurisdiction on the part of the Assessing Officer by issuance of notice under section 148 of the Act on a mere change of opinion is, therefore, clearly without jurisdiction. The impugned notice under section 148 of the Act, therefore, cannot be sustained. - Decided in favour of assessee.
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2016 (7) TMI 514
Reopening of assessment - reasons to believe - change of opinion - deductions under section 80IA wrongly claimed - Held that:- It does not appear to be the case of the then Assessing Officer at the time of framing the original assessment that the details were confusing, inasmuch as, the Assessing Officer at the relevant time, could have very well called upon the assessee to explain the details which were confusing. Thus, once the Assessing Officer, at the relevant time while framing the assessment under section 143 of the Act, has been satisfied with the details provided by the assessee and did not find the same to be confusing, the successor Assessing Officer cannot be permitted to contend that such details were very confusing and complicated the matter. Whether the assessee had deliberately presented the facts in such a manner so that it is not understood by the Tax Authority easily? - Held that:- Here, the Assessing Officer who framed the original assessment under section 143(3) of the Act, has not found the facts to have been presented in such a manner that the same cannot be understood easily, inasmuch as, he has, after hearing the assessee, framed the assessment. Besides, if any facts are put in a manner which the Assessing Officer cannot understand, it is always permissible for the concerned Assessing Officer to call upon the assessee to explain the same. Thus, when the Assessing Officer who passed the original assessment order did not find the facts to be difficult to understand, it is not permissible for the successor Assessing Officer to seek to reopen the assessment on the ground that the facts were presented in a manner which could not be easily understood. Insofar as the claim of deductions under section 80IA of the Act, which according to AO have wrongly been claimed by the assessee are concerned, it is an admitted position that at the time of framing the original assessment, deductions under section 80IA of the Act had been computed by the Assessing Officer and the claims of the assessee had been partly allowed, against which, the assessee had approached the Commissioner (Appeals), who had partly granted the reliefs. Under the circumstances, as rightly submitted by the learned counsel for the respondent – assessee, the order passed by the Assessing Officer stood merged with the order passed by the Commissioner (Appeals) insofar as the claim of deduction under section 80IA of the Act is concerned and hence, it did not have any independent existence in the eyes of law. It was, therefore, not permissible for the Assessing Officer to reopen the assessment in respect of those items which had already been examined by the Assessing Officer while framing the assessment under section 143(3) of the Act. In Cliantha Research Ltd. v. Deputy Commissioner of Income Tax, (2013 (7) TMI 452 - GUJARAT HIGH COURT ), has held that when a claim was processed at length and after calling for detailed explanation from the assessee, the same was accepted, merely because a certain element or angle was not in the mind of the Assessing Officer while accepting such a claim, cannot be a ground for issuing notice for reassessment. In the present case, the claim of deduction under section 80HHC and 80IA of the Act had been processed at length by the Assessing Officer. The mere fact that such claim was not examined from a particular angle, therefore, cannot be a ground for reopening the assessment. Allocation of expenditure - according to the Assessing Officer, there is intermixing of R&D expenses of all the products, therefore, the best way to allocate the expense under these circumstances should be on the basis of profitability ratio of various units - Held that:- In the opinion of this court, once the Assessing Officer while framing the assessment under section 143(3) of the Act has accepted the R & D expenses of all products, the successor Assessing Officer cannot claim to be wiser and seek to reopen the assessment merely because according to him there is a better way of allocation of expenses. Grant of deduction under section 80HHC and 80IA which is not correct - Held that:- As in effect and substance, the Assessing Officer wants to sit in appeal over the order passed by the predecessor Assessing Officer and seeks to disallow the deductions which have already been granted by him. Assessee has inflated its profit and at the same time shown reduced profit because the same is exempt under section 80IA, by giving more interest on overdue bills by Aditya Medisales Ltd - Held that:- In the opinion of this court, one fails to understand as to how it can be stated that the income chargeable to tax has escaped assessment if the assessee had shown inflated profits. Thus on overall perusal of the reasons recorded for reopening the assessment, it is evident that the Assessing Officer seeks to correct the mistakes which according to him had been made by the earlier Assessing Officer while framing the original assessment, which is nothing but a mere change of opinion. As decided in the case of Commissioner of Income Tax v. (1) Kelvinator of India Ltd., (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) an assessment cannot be reopened on a mere change of opinion. - Decided in favour of assessee
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2016 (7) TMI 513
Addition u/s. 69C - determination of value - sale of capital asset after conversion into stock in trade - applicability of section 50C - Held that:- While computing the business income, assessee has claimed certain cost of construction and most of the amounts were spent in earlier years. Instead of verifying the expenditure incurred during the year, the AO undertook the exercise of referring the cost of construction to valuation itself which indicated certain differences in valuation. As rightly opined by the Ld. CIT(A) as against the books values shown by assessee, the total valuation by the Valuation Officer on all the three projects has resulted in a difference of 0.1% which is very negligible considering the ₹ 27 Crores value shown by assessee. - Decided against revenue Determination of cost of acquisition - capital gains computation - Held that:- Assessee has made an agreement with the parties for acquisition of the undivided portion of the share from two different unrelated parties at a value which is not disputed. Since the sale occurred during the year, assessee has offered Long Term Capital Gain and business profits on the total project including the portions which are acquired to fulfill the sale and the assessee has reduced the values correspondingly to arrive at the market value on the day of offering the gains. As seen from the agreement of sale and the amounts paid by assessee which are not disputed by the Revenue for the purpose of determination of capital gains, we are of the opinion that the rates adopted by assessee are reasonable. Moreover, in determining the value at ₹ 550/-, the AO adopted only the value of cost of construction on the structure, ignoring the corresponding land value. Therefore, the very premise on which AO has restricted the amount is not correct. As seen from the order of the CIT(A) also, he has determined the amount of ₹ 625/- without any justification which the Revenue is also contending in its appeal. After considering the evidences placed on record and the working as adopted by assessee, we are of the opinion that the rate 2,000/- and 1100/- adopted by assessee in arriving at the cost of acquisition for the purpose of capital gains is reasonable and accordingly, the grounds raised by assessee are allowed - Decided against revenue Revision u/s 263 - Non consideration of provisions of Section 50C while determining the capital gain - Held that:- As noticed in the appeals considered earlier on the orders u/s. 143(3), AO was very much aware that assessee has converted the fixed asset into stock-in-trade as on 01-01-2008 and he has computed the Long Term Capital Gain on that day by making certain adjustments to the cost claimed by assessee. Not only that, AO also has brought to tax the business profits of subsequent sale and in doing so, he has restricted the cost of the building. Even though those issues were subject matter of earlier appeals, it is noticed that AO is very much aware about the conversion of fixed assets to work-in-progress on 01-01-2008 and subsequent sale on 31-03-2008, consequently the transaction does not attract the provisions of Section 50C as directed by Ld.CIT. It is also to be noted that assessee adopted the valuation as certified by the authorities in taking the sale consideration on the date of conversion which was accepted by the AO. In view of this, question of invoking the provisions of Section 50C as on 31- 03-2008 does not arise. Moreover, as seen from the registered document, the value of ₹ 14.51 Crores pertain to the date of registration which was in the year 2009 but not on 31-03-2008. On that fact also, the valuation of ₹ 14.51 Crores cannot be adopted as on 31-03-2008. Since the asset sold on 31-03-2008 is no longer a fixed asset and being stock-in-trade, the Ld. CIT erred in invoking the provisions of Section 50C. We are of the opinion that it is the CIT who erred in considering the facts and therefore, we have no hesitation in setting aside the order of the CIT as the order of AO is not erroneous and prejudicial to the interest of Revenue - Decided in favour of assessee
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2016 (7) TMI 512
Unexplained investment in the pawning business by the assessee - Held that:- CIT(A) has recorded that the assessee was engaged in the pawning business over the last 35 years and therefore, the entire investment cannot be attributed to one year. He, therefore, opined that only 1/10th of the investment can be considered as attributable to the year under consideration which he worked out at ₹ 3,92,506/-. To this extent, we entirely agree with the finding of learned CIT(A). Thereafter, the CIT(A) did not sustain the addition of ₹ 3,92,506/- also on the ground that it was made out of the income from pawning business which the Assessing Officer has determined at ₹ 8,24,263/-. We also agree with the Assessing Officer that the income from pawning business can be reinvested in the pawning business in the subsequent year. CIT(A), while deciding the second ground, has reduced the income from interest of the pawning business determined by Assessing Officer at ₹ 8,24,263/- to ₹ 2,55,634/-. However, while considering the availability of funds for investment in the pawning business, he considered the income from interest as determined by the Assessing Officer. In our opinion, when he has reduced the interest income from pawning business, the funds available for investment in the pawning business would be the interest income as determined by learned CIT(A) and not the interest income as assessed by the Assessing Officer. It would not be out of place to mention that neither party is in appeal against the interest income determined by the CIT(A). Therefore, the interest income at ₹ 2,55,634/- as determined by the CIT(A) has become final. Therefore, in our opinion, the credit for the interest income as determined by the CIT(A) at ₹ 2,55,634/- only can be given for considering the investment during the year under consideration. We, therefore, sustain the addition of ₹ 1,36,872/- i.e., ₹ 3,92,506/- minus ₹ 2,55,634/-. - Decided partly in favour of revenue
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2016 (7) TMI 511
Revision u/s 263 - loss from house property which was set off from income of business and profession need to disallowed as there was no scope for taking possession of the flat in the financial year 2011-12 and claiming the loss in-house property - Held that:- We find that the assessee had purchased a residential unit, vide agreement dated 08/09/2011, for ₹ 1. 06 corrodes, that he had taken a loan of ₹ 90. 54 lakhs from a bank, that he had submitted the copies of agreement for purchase of the flat along with the loan agreement and the confirmations of the family members who had advanced loan to him , that during the assessment proceedings the AO had directed the assessee in his notice issued u/s. 142 (1) to file details of investments made during the year, that the AO had also directed the assessee to explain as to why disallowance should not be made in respect of the income from house property where the assessee had declared the loss of ₹ 3, 00, 990/-(page 16 of PB). We find that the AO had made proper enquiries about the house property income and the loss claimed by the assessee during the assessment proceedings. After considering the available material the AO had arrived at a definite conclusion. In our opinion, the assessment passed by the AO with regard to house property income and loss claimed by the assessee cannot be termed as erroneous or prejudicial to interest of revenue. Revision order dismissed - Decided in favour of assessee
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2016 (7) TMI 510
Entitlement for registration u/s 12AA - non carrying any activities as per its objects - CIT(A) denied the exemption as no worthwhile activities are conducted by the society since its inception except plan approval for building construction, bank charges and society registration - Held that:- The objection raised by the Ld. Commissioner is not correct for the reason that the assessee society is existed very recently and therefore it will take some time to start its operations to achieve the objects as per the Trust deed. It is not possible for the assessee to achieve all the objects. In this case, the assessee wanted to construct a building for the purpose of establishment of library for which the trust has applied for approval before the competent authority that it has incurred certain expenditure. The Ld. Commissioner himself has accepted that the objects of the assessee are charitable in nature. However, he has rejected the registration u/s 12AA of the Act for the reason that the society has not commenced its operations. In our opinion, having accepted the assessee trust as charitable in nature, rejecting on the ground of non- commencement of operations and not granting registration u/s 12AA of the Act by the Ld. Commissioner is prematured. Also see Sanjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income-Tax (Exemptions) [2006 (3) TMI 91 - KARNATAKA High Court ] - Decided in favour of assessee
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2016 (7) TMI 509
Disallowance being 50% of travelling expenditure - Held that:- CIT(A) has noted the facts that the husband of the assessee is actively involved in carrying on the business of the assesee and further authorised signatory of the proprietary concern. Further facts brought to our notice that during the year opening of three showrooms by the assessee and therefore the travelling expenses have been incurred. Furthermore merely because the expenses of the husband of the assessee have been shown same cannot be disallowed unless there is a specific finding that these expenses are not incurred by the assessee wholly and exclusively for the purpose of the business. In the present case it is not controverted that husband of the appellant is actively engaged in the business of the assessee. In view of this we confirm the finding of the Ld. CIT(A) in deleting the disallowance.- Decided in favour of assessee Disallowance being repairs and maintenance of three new shops - Held that:- According to the provisions of section 30 (a)(ii) any expenditure on repairs and maintenance of the premises not owned by the assessee are allowable as deduction . Ld. CIT(A) has categorically held that expenditure towards electrical work, wooden flooring, AC fittings and other professional charges, which are of revenue nature and no advantage of enduring nature, has been obtained by the assessee as these are routine expenditure. On verification of expenditure by CIT (A), he has deleted the disallowance. Revenue did not controvert or could not point out specifically any expenditure resulting in to capital assets. In view of this we do not find any infirmity in the order of the Ld. CIT(A) and we confirm the order of the Ld. CIT(A) in deleting the disallowance - Decided in favour of assessee Addition on account of lower GP - Held that:- Addition has been deleted because of the reason that assesee is maintaining regular books of accounts and no defects could be pointed out by the AO. Furthermore in case of the payment of job work charges assessee has submitted the details showing the name, address, permanent account number of the job workers and the payment made to them is through banking channels. Furthermore, out of the four job workers two job workers responded and confirmed the transactions. In view of the above facts and in absence of any defect in the books of accounts and merely because two job workers did not respond to notices 133(6) , no addition on account of books results can be made. We are of the view that Ld. CIT(A) has rightly deleted the addition - Decided in favour of assessee Addition on unsecured loan which is outstanding for many years - Held that:- We agree with the views of the Ld. CIT(A) that merely because the outstanding unsecured loan is carrying in the books of accounts for many years same cannot be added to the income of the assessee during this year. Further the arguments of the Ld. DR that provisions of Section 41(1) of the Income Tax Act are applicable can also not be accepted by us and it is not reason for which addition has been made by the AO and further it is also not the cessation of any trade liability for which deduction in earlier years have been granted to the assessee. In view of this we confirm the finding of the Ld. CIT(A) in deleting the addition - Decided in favour of assessee
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2016 (7) TMI 508
Unexplained cash credit u/s 68 - Held that:- It is assessee’s submission that the assessee had furnished the details to prove the genuineness of transaction and if given one more opportunity, the assessee would present Shanti Metals Pvt.Ltd. before the AO and also furnish all the other necessary details required and also prove that the transactions with Shanti Metals Pvt.Ltd. was genuine and therefore no addition u/s.68 was required. Considering the aforesaid request of the assessee’s ld.AR, in the interest of justice, we are of the view that the assessee be granted one more opportunity to prove the transactions. We therefore restore the issue back to the file of AO to decide afresh the issue of addition u/s.68 of the Act with respect to the amount received from Shanti Metals Pvt.Ltd.- Decided in favour of assessee for statistical purposes. Net Profit estimation - rejection of books of account - Held that:- It is assessee’s contention that it had produced the books of account before AO and other required vouchers.On the other hand, it is AO’s contention that the required details were not furnished by the assessee. Ld.CIT(A) while upholding the action of AO has inter alia noted that details called for by AO were neither furnished before AO nor during appellate proceedings and further assessee had also not explained the basis for revising the returned income to NIL as against returned loss of ₹ 38,90,070/- after selection of the case for scrutiny and issuance of notice u/s.143(2) of the Act. In view of the contrary submissions by the assessee and the AO, we are of the view that one more opportunity be granted to the assessee to produce the entire books of account, vouchers, and such other details required by the AO, more so when the ground No.1 with respect to unexplained cash credit is also remitted back to the file of AO. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 507
Addition u/s 68 - unexplained cash credit - Held that:- CIT(A) has granted relief to the assessee by following the order of his predecessor for A.Y 2006-07, which has been confirmed by the Tribunal vide order dated 31.3.2010. It is also pertinent to mention that the ld. CIT(A), in last operative para 4.6 has categorically noted that the assessee company ahs duly discharged the initial burden cast upon it by filing detailed copies of accounts of both the parties by authorized signatories and by showing that there is no question where by means of account payee cheques/drafts and by providing that the identity and existence of both the parties was not in doubt. The ld. CIT(A) finally concluded that no addition was called for in this case because the factual situation reveals that the genuineness of the transactions and credit worthiness and identity of the creditors cannot be doubted in view of the earlier first appellate order of the ld. CIT(A) and the Tribunal for A.Y 2006-07. In the light of the above, we are unable to see any ambiguity or perversity or any other valid reason to interfere with the impugned order and thus we uphold the same. - Decided against revenue Addition on account of under-statement of subscription fee and on account of pay channel expenses - Held that:- he issue requires detailed examination and verification at the end of the AO regarding actual amount of subscription claimed by the assessee by raising bills against SITI for entire financial period i.e. from April to 2006 to March 2007 because the assessee is following Mercantile system of accounting. Further verification of actual expenses claimed by the assessee also requires verification at the end of the AO, which could not be done during the assessment proceedings and thereafter any conclusion as per the provisions of the Act may be drawn by the AO after verification of relevant bills/vouchers and other documents about the claim of expenses placed by the assessee. In view of the above order of the AO making addition and enhancement by the ld. CIT(A) are set aside and issue of verification of expenses claimed by the assessee and Revenue recorded by the assessee pertaining to subscription fees/ charges by way of raising bills against distributor SITI is set aside to the file of the AO for fresh adjudication and examination after affording due opportunity of being heard to the assessee and without being prejudiced from earlier assessment and impugned order and ld. CIT(A) - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 506
Penalty U/s. 271AAA - undisclosed income surrendered by the assesssee during the course of search - Held that:- Finding considerable cogency in the assessee’s counsel contention that during the search, cash of ₹ 35,00,000/- was seized from the locker of the assessee which was surrendered as income for the current financial year 2008-09 as income earned from advance received against sale of property. The assessee declared this sum as undisclosed income in the return filed for assessment year 2009-10 which was accepted by the AO while passing the order and returned income is accepted as it is which means that AO is satisfied about the manner and its substantiation during assessment and hence assessee should not be charged penalty u/s. 271AAA of the I.T. Act. As the assessee filed his income tax return for the assessment year 2009-10 within the time stipulated under section 139 and has disclosed therein all the income earned by him during the previous year 2008-09, therefore, there is no question of penalizing the assessee under section 271AAA of the Income Tax Act, 1961 for non disclosure of income. Hence, the penalty levied by the AO and affirmed by the ld. CIT(A) is not sustainable in the eyes of law. Therefore, penalty deleted. - Decided in favour of assessee
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2016 (7) TMI 505
VDIS declarations - genuity of gold sold - Held that:- A glance at the bill issued by M/s. Balaji Refinery does show that it was holding a licence. A Look at the purchase bill issued by MLJ show that it was having KST and CST registration numbers. These registrations were effective from 23.10.1997. In our opinion, these evidence do tilt the case in favour of the assessees. Assessees had done whatever possible, within their means to show that the gold jewellery sold by them were the same gold declared in VDIS, after converting it into bullion. Assessees had submitted copies of bills issued by M/s. Balaji Refinery which did show similar details of gold jewellery as returned in the VDIS. In such situation we are of the opinion that assessees had discharged their onus to show that the gold sold by them were the same which were declared by them in the VDIS declarations, after conversion. Reasoning given by the AO that antique jewellery would not have been sold by the assessees is only a surmise and cannot dislodge the evidence filed by the assessee. Further there is nothing on record to show that the gold jewellery which were sold by the assessee were antique in nature. In such circumstances, it is of the opinion that the lower authorities fell in error in disbelieving the source for credits shown by the assessees concerned. No hesitation in deleting the additions made in the hands of the assessee. - Decided in favour of assessee
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2016 (7) TMI 504
Revision u/s 263 - Rental income received - treated as income from business or house property - Held that:- There is no break-up of the rent between facilities and shop area rented out. Obviously the lease deeds were composite. No doubt consistent view taken by various courts including Hon’ble Apex Court is that an assessee, even if it was in the business of real estate, income earned from letting out of property was to be assessed under the head ‘ income from house property’. Exception to this rule is where letting of the building was inseparable from letting of the plant, machinery and furniture in which case circumstance alone, it could be treated as income from business. This position of law has been clearly enunciated by the Hon’ble Madras High Court in the case of Keyaram Hotels (2014 (11) TMI 633 - MADRAS HIGH COURT ), after considering its own judgment in the case of Chennai Properties & Investments Ltd, (2003 (3) TMI 28 - MADRAS High Court ). AO was aware that assessee was in the business of real estate development and leasing of commercial space. This mentioned in the first sentence of the assessment order passed u/s.143(3) of the Act, which was the subject matter of the revisionary proceedings. So it is not a case where AO had not made enquiries. He was aware that assessee was into real estate development and leasing of commercial space. Assessee was required to file copies of lease deeds, specifically mentioning the types of services to be given by the assessee. AO thereafter assessed thes income of the assessee was to be considered under the head ‘income from business’. We cannot say that it is an illegal or unlawful view which was not possible in the facts and circumstances of the case. - Decided in favour of assessee
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2016 (7) TMI 503
Penalty u/s 271(1)(c) - assessee has failed to offer short term capital gains derived from the property given for development and called the explanation - Held that:- We find that though the assessee has not disclosed short term capital gains in the original return filed, however, the assessee along with the return of income filed a balance sheet as on 31.3.2009, wherein he specifically mentioned, the amount received from the developer (paper book page no.14) and the same was explained before the A.O. (paper book page no.35). It is also the case of the assessee that notice u/s 148 of the Act was served on the assessee on 20.7.2012. However, the revised return of income filed on 16.7.2012 before receiving the notice issued by the A.O. u/s 148 of the Act and it is submitted that the revised return filed by the assessee is voluntary. The A.O. has acted upon the return filed by the assessee accepted the capital gains. Therefore, the A.O. cannot initiate the proceedings on the ground that assessee has concealed the income. We find that there is a lot of force in the argument of Ld. Counsel for the assessee. That apart the assessee has disclosed the amount received by him along with the return of income, which was also explained to the A.O. Keeping in view of the above, by considering the facts and circumstances of the case, we are of the opinion that it is not a fit case to impose penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee
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Customs
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2016 (7) TMI 486
Power of Commissioner (Appeals) to remand the matter back to the Original Adjudicating Authority. - Refund - Held that:- Commissioner (Appeals) has power to remand the matter back to the Original Authority with direction for de-novo adjudication. We dismiss the appeal filed by Revenue. We direct the Original Adjudicating Authority to follow the direction given in impugned order and dispose of the mater, within 60 days of receipt of this order. - Decided against the revenue.
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2016 (7) TMI 485
Request for Release of consignment of gold jewellery imported by it from Indonesia without being asked to furnish a BG for 100% of the differential duty. - Preferential rate of duty on import of gold jewellery by the members of the said Association from Indonesia - Earlier the Court has quashed a Circular dated 6th October 2015 [2016 (4) TMI 1032 - DELHI HIGH COURT] - Held that:- The impugned order dated 8th June 2016 which requires that in addition to the bond and deposit of 20% of the provisional duty, the Petitioner should either deposit or furnish a BG for 50% of the provisional duty, must itself set out the reasons for such a decision. In other words, the requirement of the law is not satisfied if the reasons are not contained in the order communicated to the Petitioner but in the file notings which are not communicated. The inescapable conclusion is that the impugned order dated 8th June 2016 to the extent of requiring the Petitioner to furnish a BG for 50% of the provisional duty in terms of Regulation 4 of the CPDA Regulations is without reasons and therefore unsustainable in law. Although the Petitioner may be justified in insisting on unconditional release of the goods in question, considering that the Respondents intend filing an appeal against the said judgment and the Petitioner has by way of a demurer agreed to furnish a bond for 100% of the differential duty and deposit 20% of the provisional duty for the provisional release of the goods, the Court considers it appropriate to modify the impugned order dated 8th June 2016 only to the extent of deleting the condition that the Petitioner should additionally deposit or furnish a BG for 50% of the provisional duty. - Decided partly in favor of petitioner.
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2016 (7) TMI 484
Misdeclaration and Under-valutation of imported goods - classification - “High Speed Steel Scrap” Tools - on examination it was found that, consignment consist of three types of items i.e (i) Old & used (Damaged) HSS Tools, (ii) old & used HSS Tools and (iii)New Butt Weld Tools - Levy of penalty - Held that:- Lower authorities ignored the second examination report stating that these tools cannot be sold in the market as the new tools price list value, as most of them are non-standard tools and cannot be used on Indian machine. - the impugned Order-in-Appeal & Order-in-Original, are both cryptic and are in violation of principles of natural justice. Accordingly, we set aside the impugned order and allow the appeal. Thus, we hold that the declaration made in the B/E No. 501649 dated 17.07.2009 filed by the appellants, does not suffer from any mis-declaration. The appellant will be entitled to consequential benefit in accordance with law. - Decided in favor of appellant.
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2016 (7) TMI 483
Claim of refund of duty paid in excess whereas the goods were entitled for concessional rate of duty - refund was rejected on the ground that appellant is not entitled to grant of refund of the excess duty paid unless he had filed an appeal against the order, by which he had deposited the duty on filling of the Bill of Entry. - Held that:- non-filing of the appeal against the assessed bill of entry does not deprive the appellant to file its claim for refund under Section 27 of the Customs Act, 1962 - we allow the appeal by way of remand upholding that the appellant is entitled to refund claim under Section 27 of the Customs Act, 1962 as it provides for claim of refund by any person, who has borne the duty. We further hold that the refund claim was made within the limitation period of six months. We remand the matter to the adjudicating authority for the limited purposes of examining the issue of unjust-enrichment. - Decided in favor of appellant.
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Corporate Laws
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2016 (7) TMI 476
Oppression and mismanagement - main grievance of the appellant is the sale of the property of the company - necessity of sale transaction - whether the sale transactions were fraudulent in nature and that they were entered into with the son of one of the Directors for a consideration lesser than the market value? - failure of the respondents to produce the dispatch register to show that they sent the notices - Held that:- The company in question was a private limited company at the time when the sale transaction took place. Therefore, even assuming that no notices were issued for the General Body Meetings, such failure would not vitiate the sale transaction that could have been validly approved in the meeting of the Board of Directors. Hence, the first ground of attack to the order of the Company Law Board cannot be sustained. There is no dispute about the fact that the company in question had borrowed money from Dena Bank and State Bank of India. Dena Bank filed an application before the DRT for recovery of money against a company by name Akkammal Steels Private Limited, which was also held by the members of the very same family. In the said case, the present company was impleaded as the fourth respondent. There was yet another application by State Bank of India against G.K.Alloy Steels Private Limited for recovery of money. The proceedings under the SARFAESI Act were also taken against Akkammal Steels Private Limited. A petition in C.P.No.70 of 2002 was filed against the company in question for winding up. By an order dated 22.3.2006, the Company Court ordered winding up. Therefore, there was a dire necessity for procuring finances. Hence, the argument that there was no necessity to sell the properties, is completely misconceived. The Directors were actually facing an emergency to save the company from being wound up. The appellant, who was mostly out of India, does not appear to have contributed anything to save the company. In the proceedings before the DRT, he was actually set ex parte. The bank could not even serve notices on him. Therefore, the Company Law Board was right in holding that the sale transactions are not proved to be fraudulent, warranting an inference of oppression and mismanagement. The appellant cannot successfully maintain an action for oppression and mismanagement against the respondents, merely on the strength of the sale transactions relating to the properties of the company, especially when those transactions were entered into at a time when the company was in financial crisis.
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2016 (7) TMI 475
Execution of a recovery certificate issued by the Debt Recovery Tribunal under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Held that:- Having held that this Court has no jurisdiction to entertain a challenge to the order passed by the Recovery Officer rejecting the objections to an auction sale and confirming the bid of the highest bidder at an auction held by him following a recovery certificate issued by the DRT resulting from an adjudication of an application under Section 19 of the Act of 1993 filed by the secured creditor or seek to appropriate the Recovery Officer's power to confirm a bid at an auction sale held by the Recovery Officer, even on permission being granted by a Company Court to a secured creditor to stay outside winding up in respect of a company in liquidation having suffered a certificate of recovery under the Act of 1993, the inevitable consequence will be to remit the applicants before this Court M/s. Bhawani Stone Crushers Pvt. Ltd. as also the Commercial Taxes Department to their remedy of appeal under Section 30 of the Act of 1993 against the order dated 11.12.2015, passed by the Recovery Officer, DRTJ. In the facts of the case, the delay in filing the appeals for the period during which the objectors have been before this Court i.e. from the date of filing of applications for impleadment and counter application till the date of this order would stand excluded a la Section 14 of the Limitation Act. The appeals be filed within a period of two weeks from today. In the event of appeals being so filed and held to be within limitation or limitation being otherwise condoned under Section 5 of the Limitation Act, 1963, the Appellate Authority is directed to dispose them of within a period of three months of their presentation. The claim of the applicants-M/s. SPC Infrastructure Ltd. and Delhi Tax-Mac Traders to possession of the properties purchased at the auction of 19.01.2015 would abide the decision in the appeals. All applications stand disposed of accordingly.
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PMLA
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2016 (7) TMI 474
Whether the services of the Show Cause Notices u/s. 8[1] of Prevention of Money Laundering Act, 2002 (PMLA) on the minor sons of the petitioner, were proper or not? - Held that:- A careful perusal and scrutiny of PMLA, Rules and Regulations, framed thereunder, do not prohibit the application of the Code of Civil Procedure to the proceedings except certain exceptions. As per the own admission of the 1st respondent complainant, the defendants 2 to 5 in the Original Complaint No.552/2016, are minors and the Cause Title insofar as they are concerned, is not in proper form. This Court, vide order dated 23.06.2016, has asked the learned Standing Counsel appearing for the respondents for production of acknowledgments and according to the counter affidavit and the additional counter affidavit, notices were sent by speed post and to evidence the service of the same, the Detailed Track Events have been furnished. However, acknowledgment cards have not been produced. Therefore, this Court is unable to arrive at any definite conclusion as to whether notices addressed to the minor defendants were received by whom. It is also not clear from the counter affidavit as well as the additional counter affidavit sworn to on behalf of the 1st respondent. Be that as it may, the four sons of the petitioner did not join with the petitioner challenging the legality of the procedure adopted by the 1st respondent as to their array as parties in the complaint and to the services of notices. Therefore, this Court is not in a position to grant the relief to them. Insofar as the petitioner is concerned, this Court is of the opinion that the notice u/s.8[1] of PMLA has been properly served on him and his counsel had also entered appearance. - Writ petition dismissed - Decided against the petitioner.
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Service Tax
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2016 (7) TMI 502
Taxability of photography service provided for carrying works of preparation of Elector’s Photo Identity Card (EPIC) i.e. Matdan Pahchan Patra. - Held that:- the work done by the appellant in respect of preparation of EPIC under agreement with the Governor or the State functionaries, was a sovereign activity of the State/Union and accordingly, the said activity is held not taxable. Similar views have been expressed by the CBEC in their Circular dated 18.12.2006 - Demand set aside - Decided in favor of assessee.
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2016 (7) TMI 501
Valuation - Claim of abatement of 67% availed without including the value of the material supplied free of cost by their customers in the gross amount charged. - Commercial or Industrial Construction Service - Held that:- Following the aforesaid ratio of the Larger Bench of the Tribunal [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], the impugned order passed by the learned Commissioner confirming the demand of Service Tax by including the value of free issue material in gross taxable value and imposition of penalty cannot be sustained.
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2016 (7) TMI 500
Restoration of appeal - ex-parte order allowing appeal in favour of Revenue - the concerned person, Mr. R.S. Dwivedi, was suffering from cancer and was repeatedly going to Hospital during that period. - Held that:- After going through the records and with the assistance of the Id. A.R. for the Revenue, we find that the Respondent Assessee had also filed Cross Objection bearing Nos. ST/Cross/39/2010 & ST/Cross/38/2010, which were not listed and hence, the same were not considered at the time of hearing and disposal of Appeals. Thus, there is a miscarriage of justice. - Appeal restored.
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Central Excise
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2016 (7) TMI 499
Refund of terminal excise duty (TED) where goods were exempted from duty - Period of limitation - Section 11B - supply of goods under the category of International Competitive Bidding on payment of duty - Though the goods cleared were eligible for exemption, they have paid duty and claimed refund - Held that:- The short point for decision is the eligibility of appellants for refund claims in terms of notification no.12/2012-CE read with Section 11 B of the Act. The admitted facts of the case are that the appellants supplied the goods in pursuance of 'International Competitive Bidding' on payment of duty. Since these goods are exempt, they filed claims for refund initially with the office of DGFT. The TED was processed and sanctioned by the office of DGFT. As noted earlier, the policy was changed vide notification dated 18.04.2013 of Ministry of Commerce by taking note that these goods were exempt ab initio and will not be eligible for refund of TED. This policy change resulted in return of their claim. The appellants approached the jurisdictional Excise Officer for refund. These refund claims are to be processed necessarily in terms of Section 11 B. The impugned orders examined the legal issue and allowed the claims, which are within time limit and disallowed those claims filed beyond the period stipulated under the said Section. The exemption available was not availed, which resulted in claim for refund later. Such claims are rightly covered under the provisions of Section 11B. - Refund beyond the prescribed period rejected - However interest on delayed refund to be granted - Decided partly in favor of assessee.
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2016 (7) TMI 498
Claim of refund of unutilized cenvat credit - clearances made to International competitive bidding (ICB) - Adjudicating authority has rejected the said refund claim on the ground that the assessee respondent has filed a single claim for the period January 2014 to December 2014, while notification number 27/2012 stipulates for filing of quarterly refund claims under Rule 5 of Cenvat Credit Rules; also rejected the refund claim on the ground that shipping bill which is a document indicated as per rule for evidencing export, duly certified was also not produced. Held that:- the show cause notice did not require the respondent assessee to show cause for rejection of the claim on the ground that clearances made to International competitive bidding cannot be considered as exports. In the absence of such allegation, revenue cannot take this as a ground for setting aside the impugned order. Notification number 27/2012 contemplates for filing of refund claims of unutilised Cenvat credit quarterly, but it does not bar an assessee from filing refund claim for the entire period which may be more than a quarter. In the absence of any explicit bar, refund claims, if otherwise eligible, cannot be rejected on the ground that they are not filed quarterly. Refund allowed - Decided in favor of assessee.
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2016 (7) TMI 497
Cenvat Credit on capital goods - capital equipments were installed for the purpose of generation of electricity by heat energy recovery which is exhausted by the three natural gas fired generator sets already working. - The case of the Revenue is that these capital goods are becoming part of the existing generator sets which belong to another legal entity (M/s. OPG Energy Pvt. Ltd.) and hence credit on such capital goods is not available to the appellant. Held that:- the department has not disputed the duty-paid nature of the capital goods, discharge of duty by the appellant, usage of capital goods for generation of electricity and consumption of such electricity by the appellant in the manufacture of dutiable final products. - Credit cannot be denied - Decided in favor of assessee.
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2016 (7) TMI 496
Delay in filing an appeal before Commissioner (Appeals) - Determination of period of limitation - Held that:- the petitioner had challenged the order-in-original dated 29.08.2013 which came to be corrected and amended by virtue of corrigendum issued by the competent authority on 29.11.2013. It was only then that the period of limitation would start to run against the petitioner. The conclusion of the Commissioner that the petitioner's appeal was beyond such total period of 90 days is not borne out from the record. Counting from the date of corrigendum 29.11.2013, the petitioner's appeal which was filed on 17.02.2014 was well within the period of 180 days and, in other words, beyond the statutory period of 60 days for filing appeal. Petitioner's appeal was belated barely about 19 days. The explanation rendered by the petitioner was perfectly valid and delay ought to have been condoned. In the result, the petition is allowed. Impugned order dated 18.11.2015 passed by the Tribunal as well as dated 20.06.2014 passed by the Commissioner are set aside. The petitioner's appeal is restored to the Commissioner (Appeals) after condoning delay. - Decided in favor of petitioner.
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2016 (7) TMI 495
Clandestine removal of manufactured M.S. Ingots - confiscation - redemption fine and penalty - Held that:- While there is a basis to proceed with further investigation to establish clandestine manufacture and clearance, the case is not complete as no element of evidence has been unearthened which can even indirectly indicate clandestine manufacture and clearance thereafter without payment of duty on M.S. Channels. Even the quantum of un-accounted clearance of M.S. Channels is arrived at by derivative calculation based on comparable figures for a particular month. Ld. Commissioner (Appeals) observed that the admitted facts need not be proved. Here, it has to be noted that there is no admission by the appellants regarding procurement, manufacture or clearance of any excisable items. Applying an admission of third party to demand duty from the appellant without any corroboration of manufacture and clearance will not be legally justifiable. In fact, the impugned orders admit that the Department was not in a position to investigate the case at the buyers end of the appellants as details were not disclosed by the appellants. Since the appellants are denying any such clearance, it is for the Department to adduce evidence of clandestine manufacture and clearance. The evidences alleged are not sufficient enough to sustain the case of the Department and accordingly, the impugned orders are not sustainable. - Demand set aside - Decided in favor of appellant.
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2016 (7) TMI 494
Valuation - sale of manufactured manmade fiber and yarn through depot - inclusion of freight - Held that:- The Original Authority is fixated at adding the cost of transportation from factory to depot at rates equivalent to the equalized freight charged by the appellant from depot to the customer. He has disregarded the submission made by the appellant before him that the cost of transportation from factory to depot already stands included in the price. Without undertaking verification of the claim and bringing any other material on record to disapprove the claim of the Assessee, he has gone ahead and loaded the value without any basis. In the remand proceedings, this Tribunal specifically directed him to exclude the cost of transportation from the depot to the customer out of the amounts already confirmed in the original proceedings. Instead of complying with the directions, he has gone ahead and confirmed the same amount of duty considering the same as the cost of transportation from factory to depot. Original Authority has travelled beyond the terms of remand and such an order passed by him cannot be upheld. - Demand set aside - Decided in favor of appellant.
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2016 (7) TMI 493
Excise duty liability - char /dolochar emerging in the manufacturing process of sponge iron as a residue / refuse - Held that:- We find that the issue is no more res integra Union of India vs. Ahmedabad Electricity Company Ltd. [ 2003 (10) TMI 47 - SUPREME COURT OF INDIA] has set aside the demand on char /dolochar. - Decided in favour of assessee.
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2016 (7) TMI 492
Rectification of mistake (ROM) - issue involved is a refund matter - Revenue argued that there is no mistake apparent on the subject order of the Tribunal dated 30.12.2015. He submits that the applicant is trying to reopen the issue to have a rehearing of the matter which will amount to review of the order of the Tribunal, which is not permitted by the law. Held that:- the issue has a chequered history and has passed through many rounds of litigation. We find that the applicants are seeking re-appreciation of the evidences and findings of the Tribunal on facts and law, which would amount to review of its own order which is not permitted by law. - the ROM application cannot be sustained. - Decided against the appellant.
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2016 (7) TMI 491
Extended period of limitation invoked - Disallowance of credit on service tax paid on input services for the period February, 2008 to June 2009 - main contention raised by appellant/Revenue is that the Commissioner(Appeals) has no powers to accept or consider additional evidence and delete the disallowance - Held that:- The evidence produced by the respondents before the Commissioner(Appeals) is nothing but originals of the invoices/bills of which photocopies were already produced before original authority. The Revenue has no case that there was discrepancy in the photocopies or originals produced. So also there is no dispute that service tax was paid and accounted for as per the invoices. Rule 5 of the Central Excise Rules 2001 referred by appellant/Revenue deals with production of additional evidence before Commissioner(Appeals). Sub-clause (4) of the said rule states that nothing contained in this rule shall affect the power of Commissioner(Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal . Needless to say, this rule gives necessary powers to accept and consider additional evidence. The Commissioner(Appeals) being a fact finding authority, is competent to peruse, verify and appreciate evidence adduced by parties. Therefore, no merits in the contention raised by Revenue. - Decided against revenue
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2016 (7) TMI 490
Denial of credit on welding electrodes used for repair and maintenance - appellants are manufacturers of cement and cement clinker and are availing credit on inputs and capital goods - Held that:- Relying upon the judgments laid in Bhushan Steel Ltd (2015 (10) TMI 1370 - CESTAT NEW DELHI) and Kisan Cooperative Sugar Factory Ltd (2013 (8) TMI 98 - CESTAT NEW DELHI ), hold that credit is admissible. Welding electrodes used for repair and maintenance of plant and machinery eligible for Cenvat Credit - Decided in favour of assessee
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2016 (7) TMI 489
Classification - manufacture of calendar/panchang - whether or not the impugned publications are more appropriately categorized as calendars (CETH 4910) or as panchang or almanac (CETH 4901) - Held that:- We find that calendars are specifically covered by name under C.E.T.H. 4910. We have perused the 'Panchang' published by the appellants. The ld. Counsel claimed that it contained almost 99 types of information covering a wide range of subjects. He submitted a list of such information. While we take note that the distinction between a calendar and almanac is not categorical and perfect, certain salient features and the actual nature of the publication will indicate the basic use. Firstly, we find that the impugned publication is named and marketed as Panchang. Less than 50% of the page space displays the date sequence of the calendar month. The page contains many details of auspicious times, grihasthithi Rashiphal other information of planetary position etc. We find on perusal, that the impugned items marketed as 'Panchang' is not a simple calendar but essentially a publication containing large number of various information not incidental only to sequence of dates alone. The predominant features are details of Tithi, Nakshatra, Vara Yoga and Karana which are linked to the dates in a calendar month. After careful evaluation of the facts and nature of impugned publication we find that the impugned items can not be categorized as calendars and classified under C.E.T.H. 4910. The findings of the lower authorities are not sustainable. As such, the appeals are allowed in favour of assessee
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2016 (7) TMI 488
Recovery of wrongly availed cenvat credit on the goods transport agency service utilized for outward transportation of goods which is beyond the place of removal i.e. factory gate - Held that:- As find from available records that the cenvat credit taken irregularly has not been utilized for payment of Central Excise Duty on removal of the finished goods. Thus, there is no loss of Revenue, and as such, interest demand for late reversal of cenvat credit is not proper. In this context, the Honble Karnataka High Court in an identical set of facts in the case of Bill Forge (2011 (4) TMI 969 - KARNATAKA HIGH COURT ) have held that the assessee have not taken or utilized the credit but only availed wrong credit in their account book and on pointing out the mistake, since the assessee reversed the entry, it cannot be said that any benefit of such wrong entry was taken, and thus, the interest is not payable. Interest cannot be demanded from the appellant, since the credit taken has not been utilized for payment of Central Excise duty.
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2016 (7) TMI 487
Disallowance of MODVAT credit - carbon copy of the bill of entry produced - Held that:- No justification for the Commissioner (Appeals) to have come to a conclusion that the document against which the credit was taken was a carbon copy. It would appear that the first appellate authority refers to copy of the bill of entry in which the entries are found to have been imprinted using carbon interleaves that was the practice in the customs during the period referred to. The original and duplicate copies of the bill of entry are retained in the Customs House for its own closure transactions and the importer is in custody of the triplicate and quadruplicate copies. Since these were, by nature, carbon imprints and the original remains with the Customs House, there is no reason to deny the credit taken on a triplicate copy of the bill of entry when the connected provision in the MODVAT rules refers merely to ‘bill of entry’. Thus, disallowance is without any basis and is set aside. Appellant has paid the amount of duties held as liable on account of erection, commissioning and installation charges. These were paid before issuance of the show cause notice. Accordingly, we find no reason for invoking the penal provisions and imposition thereof. We therefore, modify the impugned order to the extent of dropping the penalties and setting aside the disallowance of MODVAT credit. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (7) TMI 482
Attachment of immovable property and stock of the petitioner and other family members. - Denial of input tax credit - dealers had not shown such sales in favour of the petitioner nor paid tax to the Government on such transactions. - Held that:- At the stage where the petitioner's assessment is yet to be completed, we would not permit the department to recover any further possible tax or penalty. However, the order of attachment which has been passed to protect the interest of Revenue with minor modification, needs to be preserved. It is not in dispute that the department under Section 45(1) of the Gujarat Value Added Tax Act, 2003 has sufficiently wide powers to order attachment of dealer's properties in order to safeguard the interest of Revenue. When it is pointed out, as is done in the affidavit in reply dated 07.10.2015, that the purchases made by the petitioner from various dealers were never shown by them in their returns nor obviously tax on such transactions paid, immediately question would arise whether the petitioner itself was also involved in bogus billing activities? Under the circumstances the request of the petitioner for unconditional lifting of the order of attachment cannot be granted. - Further recovery proceedings stayed - Decided partly in favor of petitioner.
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2016 (7) TMI 481
Waiver of pre-deposit - assessee submitted that the assessee has already deposited ₹ 40 lacs by way of predeposit. Its financial condition would not permit any further pre-deposit. In any case, the department has attached six offices and one open plot belonging to the partners of the firm which could provide adequate security for the departmental dues. He therefore, requested that the Commissioner be directed to hear appeals on merits. - Input tax credit - credit was denied on the ground that the dealers from whom the goods were purchased were engaged in bogus billing activities and on that ground their registrations were cancelled ab initio. - GVAT - Held that:- we are of the opinion that the department's interest would be sufficiently safeguarded by securing possible dues through immovable properties of the partners of the firm - We are informed that some of the properties belong to the relatives of the partners of the firm. The partners as well as such relatives-owners shall file undertaking before this Court that they have no objection to the attachment continuing and in the eventuality of the tax dues of the firm remaining unpaid, they would raise no objection to the department selling said properties for recoveries thereof. - Matter remitted back before appellate authority for decision on merits.
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2016 (7) TMI 480
Seeking relief from payment of fixed tax amount - Prayer on the ground that for certain reasons, beyond his control, he could not run Brick Kiln and, therefore, tax liable should be waived. - Held that:- once such an agreement has been entered into between parties, it is binding on both and no estopple or any other principle of administrative law or otherwise can help assessee to wriggle out from said liability under composition scheme - the prayer made by petitioner that respondents be restrained from realizing tax from petitioner for Assessment Year 2014-15 and waive tax amount, cannot be accepted. The writ petition is thoroughly misconceived.
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2016 (7) TMI 479
Rejection of application for VAT registration - application has been rejected by the respondent stating that the proposed place of business is a residential area and that the petitioner having applied for registration as a dealer of granite commodity, such business cannot be carried on in a residential premises. - TNVAT - Held that:- when there is no dispute with regard to the genuineness of the business that is going to be carried on at the place of business, it is not for the Revenue to suggest the extent of the land that is necessary to carry on the business and it is for the businessman to decide the same. The writ petition is allowed, the impugned order is set aside and the respondent is directed to re-consider the application for registration, after taking into consideration the law laid down by this Court in the decision [2012 (7) TMI 865 - MADRAS HIGH COURT], call for appropriate documents to establish that the petitioner proposes to be only a retailer and upon satisfaction, the respondent shall grant a registration certificate to the petitioner subject to the condition that the petitioner complies with other formalities. - Decided in favor of petitioner.
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2016 (7) TMI 478
Waiver of pre-depsoit - 1st respondent, while granting an order of interim stay, directed the petitioner to pay 25% of the disputed tax and to file Bank Guarantee to the satisfaction of the Assessing Officer for the balance tax - Held that:- In view of the submissions made by the learned counsel on either side, the order dated 07.04.2016 is modified by directing the petitioner to pay 25% of the disputed tax and to give Personal Bond for a sum of ₹ 10,71,752/- being the balance tax payable by the petitioner, within a period of two weeks from the date of receipt of a copy of this order.
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2016 (7) TMI 477
Refund of amount deposited with the court against the purchase of property under auction - Cancellation of tax deferment certificate of the seller - violation of the scheme since the business was discontinued during the subsistence of the deferment period - Held that:- the first question that arises for consideration is the character of the amount deposited by the petitioner pursuant to the order passed by this court, as to whether it can be said to be payment of tax or penalty as envisaged in the proviso to section 73 of the GVAT Act. In the opinion of this court, the answer would be in the negative because in view of the order passed by the Tribunal granting stay against further recovery, the question of payment of any amount under the orders impugned before the Tribunal would not arise. Therefore, such amount would not partake the character of tax or penalty, as contemplated under the proviso to section 73 of the GVAT Act. The court is of the view that the respondents having elected to prefer stay applications against the impugned order passed by the Tribunal and having invited an order on merits, there was no justification in thereafter invoking the provisions of section 39(1) of the GVAT Act for withholding the refund which arose in the light of the order of the Tribunal. The impugned order dated 11.01.2016 passed under section 39(1) of the GVAT Act, therefore, cannot be sustained.
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