Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 24, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Refund of excise duty claimed from DGFT - that any refund or drawback would go to ultimately reduce the cost of the project and had therefore to be treated as a capital receipt. - HC
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Rectification u/s 154 - the decision on a question of law on which the judgement is based has been reversed or modified by any subsequent decision of a superior court cannot be a ground for exercise of power under section 154 of the Income Tax Act. - HC
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Non deduction of TDS on Provisions - assessee could not identify the name and address of deductee and and his PAN. The assessee also may not be in a position to quantify the amount required to be paid - TDS is not required to be deducted - AT
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TDS u/s 194C - where the value/consideration of supply of goods is separately given in the invoices and rather separate invoices are placed by the supplier, then the assessee is not liable to deduct any tax at source u/s 194C so far the payment is made for supply of goods - AT
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Registration u/s 12AA rejected - receiving the contribution, donation or gift which is to be used for the stated purpose cannot be termed as a non-charitable object of the assessee. - AT
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Benefit of section 44AE - If the assessee was having more trucks and for that reason, the assessee is not covered u/s 44AE then some evidence should have been brought on record by the AO to show that the assessee was having more trucks AT
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Transfer pricing adjustment - adoption of most appropriate method - selection of comparable - even if the export incentives entitlement is excluded from the operating income of the assessee company, such exclusion has to be made from the operating income of the comparables company also. - AT
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Re-calling of an order - We notice that the Tribunal has deleted the addition sustained by ld CIT(A) by considering the facts relating the Power theft case, which in our view, is a mistake apparent from record - AT
Customs
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Classification - It is difficult to equate Risograph machine with duplicating machine. Duplicating, as opposed to photocopying, requires the preparation of a master sheet which makes duplicates on a machine - covered under sub-heading 84.43 and not 84.72 - SC
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Valuation - import of gods from related party - original copy of the agreement is not available - Non acceptance of the certified copy of the document, namely, Technology Transfer Agreement - Revenue directed to consider the certified copy as per Section 63 of the Indian Evidence Act - HC
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Contempt of court - failure to decide the matter within time directed by the HC - They could be visited with personal costs and consequences such as entering displeasure of this Court in their service record - Proceedings of contempt of court dropped - HC
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Interpretation of Other alloy steel - if one of the element is present in the proportion specified, it would constitute ‘other alloy steel’. If more than one element is present it is not necessary that each of the elements should be present in the proportion. - AT
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Benefit of Notification No. 21/2002 - Import of CR/HR coil - the percentage of manganese was found to be more than 1.65% and the Titanium was more than 0.05% which is as per the proportion prescribed under in the Chapter Note 1(f) of Chapter 72. - goods would rightly fall under the category of other alloy steel and not eligible for the benefit of Notification - AT
Corporate Law
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Clarification with regard to circulation and filing of financial statement under relevant provisions of the Companies Act, 2013-reg. - Circular
Service Tax
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Validity of summons issued - The ground taken by the appellant, that conducting enquiry by the Revenue is unjust, illegal and arbitrary, is without any basis and is required to be dismissed as the powers of investigation given to the Revenue cannot be curtailed on such flimsy reasons - AT
Case Laws:
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Income Tax
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2015 (7) TMI 785
Income recognition - whether monies kept invested by the Assessee in the mutual funds in the name of the Assessee had to be treated as income in his hands - Held that:- The issue of lawyers accepting monies from clients on account to defray the expenses and appropriating fees as income only upon completion of a case has been examined in the past and a consistent view has been taken by the ITAT. This has been adverted to in the impugned order of the ITAT. The principles on the basis of which those decisions were taken are unexceptionable. Given the manner and functioning of the lawyers and law firms, it is correct that the categorisation of a receipt can take place only at the time of appropriation i.e. in case of fees only when the matter is over or as when the Assessee decides on the quantum of fees. This will not be the entire advance received as at the time it is received it does not bear any particular characterisation for the purposes of treating it as income - Decided against revenue. Disallowance under Section 14A - ITAT deleted addition as AO had not recorded any finding that any expenditure incurred by the Assessee was attributable for earning the exempt income - Held that:- In order to disallow the expenditure there must be a nexus between the expenditure incurred and the income not forming part of the total income. Consequently, the disallowance under Section 14A of the Act was rightly deleted by the CIT (A) and affirmed by the ITAT.- Decided against revenue.
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2015 (7) TMI 784
Nature of receipt - Refund of excise duty claimed from DGFT - Business receipt or capital gain - whether is not income under Section 5 read with Section 28(iii)(b) in the hands of Assessee Company as held by ITAT? - Held that:- Character of the receipt of subsidy in the hands of the Assessee under the scheme had to be determined with respect to the purpose for which the subsidy was granted. If the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy would be capital account . It was clarified that the form or the mechanism through which the subsidy is given are irrelevant. This Court concurs with the views expressed by the CIT (A) and the ITAT that any refund or drawback would go to ultimately reduce the cost of the project and had therefore to be treated as a capital receipt. See Challapalli Sugars Ltd. v. CIT [1974 (10) TMI 3 - SUPREME Court] and CIT v. Bokaro Steel Ltd [1998 (12) TMI 4 - SUPREME Court] - Decided against revenue.
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2015 (7) TMI 783
Deduction u/s.80IB - ITAT confirming the order passed by CIT(A) in directing not to exclude the following income, i.e.Interest on delayed payment from debtors,Interest on loan advances to group concerns,Interest on fixed deposits and Income by way of sale of DEPB entitlement from profit of the business for working of deduction u/s.80IB - Held that:- As relying on Nirma Industries Ltd. V/s. Deputy Commissioner of Income-Tax (2006 (2) TMI 92 - GUJARAT High Court) as well as Commissioner of Income-Tax V/s. Nirma Ltd. (2014 (10) TMI 388 - GUJARAT HIGH COURT) wherein it has been held that interest received on delayed payment of sale consideration shall be treated as amount derived from the business and the assessee would be entitled for deduction on such interest on its total income. Decided in favour of the assessee. As far as deduction granted with regard to the income received by the assessee so far as sale received from DEPB is concerned, the Hon'ble Supreme Court in the case of Liberty India V/s. Commissioner of Income-Tax (2009 (8) TMI 63 - SUPREME COURT) has categorically held that such income cannot be treated as income from business activities and, therefore, no deduction can be granted under the provisions of 80-IB. Decided against assessee.
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2015 (7) TMI 782
Reopening of assessment - disallowance of expenditure incurred for receiving services from M/s Inorbit and M/s Nupur as bogus as evidenced by statement of representatives of M/s Inorbit and M/s Nupur - Held that:- There has been a breach of principles of natural justice in as much as the Assessing Officer has in his order placed reliance upon the statements of representatives of M/s Inorbit and M/s Nupur to come to the conclusion that claim for expenditure made by the appellant is not genuine. Thus the appellant was entitled to cross examine them before any reliance could be placed upon them to the extent it is adverse to the appellant. This right to cross examine is a part of the audi altrem partem principle and the same can be denied only on strong reason to be recorded and communicated. The impugned order holding that it would have directed cross examination if it felt it was necessary, is hardly a reason in support of coming to the conclusion that no cross examination was called for in the present facts. This reason itself makes the impugned order vulnerable. Moreover, in the present facts, the appellant had also filed affidavit of the representatives of M/s Inorbit and M/s Nupur which indicates that they had received payment from the appellant for rendering of services to the appellant. These affidavits also have not been taken into account by any authority including the Tribunal while upholding the disallowance of the expenditure. Thus we set aside the order of the Tribunal and restore the issue to the Assessing Officer for fresh disposal after following the principles of natural justice
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2015 (7) TMI 781
Condonation of delay of 712 days in filing appeal - Held that:- Except listing out the dates indicating the manner in which the file pertaining to filing of the appeal moved from one desk to another, there is no explanation for the delay. In fact, as set out above the impugned order 11 September 2006 was received by the department on 21 September 2006 and it was only on 10 January 2007 that the Assessing Officer forwarded his comments to the office of Commissioner of Income seeking approval for filing appeal. Similarly, there is no explanation provided in the affidavit of what happened between the date 16 January 2007 to 5 August 2008. As decided in Post Master General and others Vs Living Media India Limited and another [2012 (4) TMI 341 - SUPREME COURT OF INDIA] in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bonafide, a liberal concession has to be adopted to advance substantial justice, we are of the view that in the facts and circumstances, the Department cannot take advantage of various earlier decisions - Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few - Appeals are liable to be dismissed on the ground of delay - Decided against revenue.
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2015 (7) TMI 780
AO jurisdiction to exercise the power of rectification u/s 154 - Assessing Officer while passing order under section 143(3) allowed interest upon interest. He, however, sought to recall the order granting interest upon interest by resorting to proceeding under section 154 - Held that:- In any event, the fact that the decision on a question of law on which the judgement is based has been reversed or modified by any subsequent decision of a superior court cannot be a ground for exercise of power under section 154 of the Income Tax Act. Under Order 47 Rule 1 of the Code of Civil Procedure there is a provision for review. But the power of Court to review contains the following restriction as to the fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment. Thus Tribunal was justified in reversing the order passed in exercise of section 154 by the Assessing Officer. - Decided in favour of assessee.
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2015 (7) TMI 779
Sale of shares - assessee has sold shares purchased in ‘Stock Option Plan’- whether the transaction is to be treated as in the nature of long term capital gain or short term capital gain - Held that:- Assessee has filed his evidences before the revenue authorities for substantiating his claim before them and the revenue authorities has also gave their opinion which remained under appeal before the Tribunal, Hon’ble High Court and the Hon’ble Supreme Court of India. Finally, the Hon’ble Supreme Court of India has directed the Tribunal to decide the matter on facts as well as on merit without influence by the observations made by the Hon’ble High Court. We have thoroughly examine the issue in dispute alongwith finding given by the revenue authorities and we find that the issue in dispute require detailed examination at the level of the Assessing Officer. Therefore, in the interest of justice, the issue in dispute is remitted back to the file of the AO with the direction to examine the issue in dispute de novo, after giving full opportunity to the assessee of being heard. Appeal filed by the Revenue stands allowed for statistical purposes.
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2015 (7) TMI 778
Non deduction of TDS on Provision for site restoration expenses - Held that:- Assessee had an obligation to incur the expenditure after termination of the lease period. The fact remains that the payment was not made to anyone and it is not credited to the account of any party or individual. The account does not disclose the person to whom the amount is to be paid. The contractor who is supposed to be engaged for dismantling the tower and restore the site in its original position is not identified. As contended by the assessee, the assessee by itself engaging its own labourers may dismantle the towers and restore the site to its original position. In such a case, the question of deducting tax at source does not arise. The assessee has to pay only the salary to the respective employees. Suppose the work is entrusted to a contractor, then definitely the assessee has to deduct tax. In this case, the contractor would be identified after the expiry of lease period. Therefore, even if the assessee deducts tax, it cannot be paid to the credit of any individual as rightly pointed out by the Ld. Sr. counsel. The assessee has to issue Form 16A prescribed under Rule 31(1)(b) of the Income-tax Rules, 1962 for the tax deducted at source. The assessee has to necessarily give the details of name and address of deductee, the PAN of deductee and amount or credited. In this case, the assessee could not identify the name and address of deductee and and his PAN. The assessee also may not be in a position to quantify the amount required for incurring the expenditure for dismantling and restoration of site to its original position. In those circumstances, this Tribunal is of the considered opinion that the provision which requires deduction of tax at source fails. Hence, the assessee cannot be faulted for non-deduction of tax at source while making a provision. - Decided in favour of assessee. Year-end provisions - Held that:- As find from the order of the CIT(Appeals) it appears that apart from identification and address verification, the assessee has also made provision towards ICU charges and lease line expenses, etc. From the order of the CIT(Appeals) it appears that the assessee also has to pay the various other service providers for providing value added service to its subscribers like daily horoscopes, astrology, songs, wall paper downloads, cricket scores, etc. Admittedly, the assessee made arrangement with other service provides for providing these kind of value added services. There may be justification with regard to the expenditure for availing the services of identification and verification for the last month of financial year, since the assessee may not have the exact details on verification done by the concerned persons and the amount required to be paid. However, in respect of the downloads and value added service, etc. the entire details may be available in the system. Therefore, this Tribunal is of the considered opinion that wherever the particulars and details available and amount payable could be quantified, the assessee has to necessarily deduct tax. In respect of value added services like daily horoscopes, astrology, customer acquisition forms are all from specific service providers and these value added services are monitored by system. Therefore, even on the last day of financial year, the assessee could very well ascertain the actual quantification of the amount payable and the identity of the payee to whom the amount has to be paid. To that extent, the contention of the assessee that the payee may not be identified may not be justified. The exact facts need to be examined. However, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer - Decided in favour of assessee for statistical purposes. Roaming charges - contention of the assessee is that human intervention is not required for providing roaming facility, therefore, it cannot be considered to be a technical service - Held that:- This Tribunal is of the considered opinion that human intervention is necessary for routine maintenance of the system and machinery. However, no human intervention is required for connecting the roaming calls. Therefore, as held by the Apex Court in Bharti Cellular Limited (2010 (8) TMI 332 - Supreme Court of India ), the roaming connections are provided without any human intervention and therefore, no technical service is availed by the assessee. Therefore, TDS is not required to be made in respect of roaming charges paid to the other service providers. Accordingly, the orders of the lower authorities are set aside - Decided in favour of assessee.
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2015 (7) TMI 777
Legality of notice issued and order passed u/s 154 - AO disallowed cash purchases made at ₹ 33,70,800/- u/s. 40A(3) of the Act which was added to the income of the assessee vide order dated 17.6.2014 passed u/s. 154 - Held that:- We find considerable cogency in the submissions of the assessee’s counsel that assessment order passed under section 143(3) of the Act after considering the relevant material and after appropriate reasoning hence there is no mistake apparent from record which can be rectified under section 154 of the Act therefore the notice U/s 154 and order passed are illegal, bad in law and without jurisdiction. It is amply clear that the issue in dispute is a legal issue in respect of additions made u/s. 154 without any mistake apparent on record and on debatable issue and we are of the view that the order u/s. 154 passed by the AO and upheld by the Ld. CIT(A) are not sustainable in the eyes of law. See CIT vs. Gayatri Glass Works (2007 (4) TMI 259 - ALLAHABAD HIGH COURT) and T.S. Balaram, ITO, Company Circle-IV, Bombay vs. Volkart Brothers and others [1971 (8) TMI 3 - SUPREME Court] wherein held that “a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on debatable point of law is not a mistake apparent from the record.” - Decided in favour of assessee.
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2015 (7) TMI 776
Agreement to sell non materized - Advance received - litigation occurred due to non approval of map by the GDA and assessee has not returned back the amount - Held that:- Whatever amount has been received by the assessee as advance in aforementioned negotiations for sale and if those amounts are not returned back; the cost of property would stand reduced by such amount. In other words, when this sale does not materialize and the amount stands forfeited/not returned; and assessee makes another sale in future; then for purposes of computing the gain, cost of acquisition would be reduced by respective amount of advances received and not returned. As assessee is one of the legal owners of the impugned land for sale; so the entire theory of the AO (that the trust has been designed for tax evasion and assessee has earned income from other sources), crumbles down. Section 51 is found to be applicable in such cases; the assessee is asked to reduce the amount of advance if forfeited after arbitration, from cost of property while working out gain on any subsequent sale. The AO is also directed to take note of this, for future assessment purposes. We find Ld. CIT(A) has rightly held that for the-time being, there is no basis for any addition of,Rs.75,OO,OOO/- and accordingly he deleted the addition in dispute. - Decided against revenue.
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2015 (7) TMI 775
Disallowance made u/s 14A - Held that:- The assessee was having its own interest free funds which is morethan the investments in question. Further, there was no disallowance on account of interest expenditure u/s 14A for the earlier assessment years. We note that the AO has took the opening balance of investments at 9.30 Crores and closing at 14.85 Crores therefore, keeping in view of the availability of assessee’s own fund we find that the assessee has established the claim that the no borrowed funds was used for the purpose of investments. Therefore, disallowance by the AO on interest expenditure u/s 14A is not justified. Accordingly, we delete the disallowance made by the AO u/s 14A on account of interest expenditure. Disallowance of the general administrative expenses under rule 8D(2)(iii) - AO has computed the disallowance being 0.5% of the average investments - Held that:- It is not disputed that the assessee has received dividend income on which the expenditure incurred by various venture capital funds has already been disallowed and the amount received by the assessee is net amount. Therefore, for the purpose of disallowance u/s 14A expenditure already disallowed from the dividend income prior to the allocation to the assessee is required to be taken into account. In the facts and circumstances of the case, we direct the AO to re-compute the disallowance by reducing the amount of expenditure already disallowed from the dividend income from the amount worked out by the AO at ₹ 6,04,000/-. - Decided partly in favour of assessee.
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2015 (7) TMI 774
Non deducting tax at source under section 194C - remuneration for comprehensive composite deal of setting up of windmill - Held that:- As per the definition of work as contained in the Explanation to clause-4(e) to sec.194C the value of the material purchased from such customer is required to be excluded if such value mentioned separately in the invoice. In the case in hand, there is no ambiguity about the fact that a separate consideration and value of the supply of goods/windmill turbine converter and other equipments is separately given. Therefore, in the facts and circumstances of the case, where the value/consideration of supply of windmill turbine converters and other equipment is separately given in the invoices and rather separate invoices are placed by the supplier, then the assessee is not liable to deduct any tax at source as per the provisions of sec.194C so far the payment is made for supply of the windmill turbine and other equipments. Accordingly, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2015 (7) TMI 773
Registration u/s 12AA rejected - some of the object of the trust mentioned in sub-clauses-(i),(j),(k),and (l)of clause-4 of the trust deed are not charitable in nature - Held that:- Sec.11(1A) permits the income from voluntary contribution made with a specific direction that this shall form part of corpus. Similarly, sec.12(1) permit any voluntary contribution received by the trust created solely for charitable or religious purpose. Thus, receiving the contribution, donation or gift which is to be used for the stated purpose cannot be termed as a non-charitable object of the assessee. Sec.11(1A)(a) further, provides that for the purpose of sub-sec.1 a capital asset being property held under the trust wholly for charitable or religious purpose is transferred and whole or any part of consideration is utilized in acquiring the new capital asset than such capital gain is eligible for exemption. Section 11(5) permits the deposit in any account with a schedule bank or co-operative society engaged in carrying on the business of banking as well as deposit in any account with the post office savings bank. Apart from the other investments as prescribed there under. Thus, we find that the objects under sub-clause-i to l are charitable in nature and cannot be termed as non-charitable The assessee is not found to be involved in the activity of profit and the objects of the assessee are all only to achieve the main objects to provide education, learning, training facilities to the students of all branches of education. Therefore, all these ancillary objects included in the object clause of the assessee are found to be for the purpose of achieving and furtherance of the main objects than, these ancillary objects and acts to attain the main object cannot be held as non-charitable in nature The impugned order rejecting the registration u/s 12AA of the IT Act on the ground that the objects mentioned in the sub-clauses i to l of clause-4 of the trust deed are not charitable in nature is not sustainable and accordingly, the same is set aside. However, the assessee has not filed the relevant record, as required u/s 12AA of the Act to satisfy the authority concerned about the genuineness of the activity. We accordingly, direct the CIT to re-consider the application of the assessee for registration u/s 12AA of the IT Act, in the light of the above observation. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 772
Transfer pricing adjustment -DRP and AO/TPO rejecting the detailed benchmarking analysis conducted by the appellant and embarking on a fresh search for comparables - adopting the financial data for a single year(i.e the financial year 2007-08) of the comparable as against multiple year data considered by the appellant - Held that:- Eclerx Services Ltd - Having regard to the nature of the services provided by the assessee to its group concern in comparison to the nature of services provided by eClerx Service Ltd., to its client we do not find any reason to take a different view that of the Special Bench in case of M/s Maersk Global India Pvt.Ltd. [2014 (3) TMI 891 - ITAT MUMBAI] we hold that eClerx Services Ltd is functionally dissimilar to that of the assessee in sofar as the ITES segment is concerned and therefore, the said Co. cannot be compared with the assessee Co. for the purpose of determining ALP in respect of international transactions of providing ITES to its associated enterprise. Accordingly, we direct the AO/TPO to exclude eClerx Services Ltd., from the set of comparables selected by the TPO. Mold Tex Technologies Ltd. - nature of the functions performed by the Mold Tek which have been examined by the Special Bench in M/s Maersk Global India Pvt.Ltd. [supra] and found is not compared with the low end ITES service provider Co. we hold that this Co. is functionally not comparable with that of the assessee. Accordingly, we direct the AO/TPO to exclude Mold Tek from the list of comparables. In view of the statement and plea of the learned AR we direct the AO/TPO to re-compute the ALP after excluding the above two Co. namely M/s Eclerx and M/s Mold Tek (Supra) and then determine the adjustment, if any after giving the benefit of tolerance range of +=5%. Exclusion of communication expenses/lease line charges from export turnover for the purpose of computation of deduction u/s 10A - Held that:- if the communication expenses are excluded from the export turnover then, the same should also be excluded from the total turnover in view of the judgment of jurisdictional High Court in the case of M/s Tata Elxsi Ltd. reported in [2011 (8) TMI 782 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.
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2015 (7) TMI 771
Addition on account of alleged payment of insurance premium - Held that:- It is the assertion of the assessee that the concerned truck No. UP 78 B 1033 belonged to Shri Rakesh Kumar Chopra, nephew of the assessee and it is also asserted by the assessee before learned CIT(A) that such a fact had been got clarified by the A.O. through enquiries made from the office of R.T.O. This assertion of the assessee could not be controverted by any of the authorities below or by Learned D.R. of the Revenue. In our considered opinion, when the concerned vehicle is belonging to Shri Rakesh Kumar Chopra, this should be accepted that the payment was made by him only and since Shri Rakesh Kumar Chopra is nephew of the assessee, it is not very unusual to find a receipt of the nephew of the assessee at the place of the assessee and under these facts, we feel that the addition is not justified and the same is deleted. - Decided in favour of assessee. Addition made on account of interest on deposit with M/s Sanjay Textiles, Kanpur - Held that:- It is undisputed fact that the amount is standing in the name of Suman Bala Chopra, wife of the assessee, in the books of M/s Sanjay Textiles, Kanpur. The basis of making addition by the Assessing Officer is that Suman Bala Chopra, wife of the assessee, is not assessed to tax and the Assessing Officer has straight away invoked the provisions of section 64 of the Act for making this addition without pin pointing as to which clause of sub section (1) of section 64 is applicable in the present case. As per the copy of ledger account of Suman Bala Chopra with M/s Sanjay Textiles, Kanpur, appearing on page No. 21 of the paper book for the financial year 1996-97, it is seen that the opening balance shown is ₹ 58,764/- and this is admitted by the Assessing Officer in Para 11 that the assessee’s wife had made investment of ₹ 58,764/- prior to block period. Once it is accepted by the Assessing Officer that the investment with M/s Sanjay Textiles, Kanpur was made by the assessee’s wife in the pre block period then income accruing out of such investment cannot be added in the hands of the present assessee. This is also noted by the Assessing Officer in the same Para of the assessment order that no fresh deposit was made by Suman Bala Chopra during block period. As per the ledger account copy available on pages 21 to 27 also, during this period, the addition is only on account of interest for each year and there is no fresh investment by the wife of the assessee. Considering all these facts, in our considered opinion, the addition is not justified and section 64 is not applicable. Hence, this addition is deleted. - Decided against revenue. Addition for deposit in 2 bank accounts - Held that:- We are of the considered opinion that on the basis of suspicion, the addition is not justified. If the assessee was having more trucks and for that reason, the assessee is not covered u/s 44AE of the Act then some evidence should have been brought on record by the Assessing Officer to show that the assessee was having more trucks and therefore, the assessee cannot get the benefit of section 44AE. Even if that is fact that the assessee is not covered u/s 44AE then also it is admitted position that the deposit in the bank accounts is relatable to freight charges and therefore, the total amount cannot be added as income of the assessee because for earning freight charges, expenses are to be incurred and to be allowed and when the assessee itself has shown income in each year on account of operating trucks, which is substantial when compared with these accounts, no further addition is justified because against total deposit of ₹ 3,75,653/- in these bank accounts during financial year 1996-97 to 2002-03, the assessee has shown income from truck plying of ₹ 24,000/- in assessment year 1997-98, ₹ 36,000/- in assessment year 1998-99, ₹ 48,000/- in assessment year 1999-2000, ₹ 48,000/- in assessment year 2000-2001 and ₹ 90,000/- in assessment year 2001-02 totaling to ₹ 2.46 lac in assessment year 1997-98 to assessment year 2001-02. It is also seen that as per the details of deposit in bank account also, as appearing in Para 26 of the assessment order, there was no deposit in bank account after financial year 2000-2001. Hence, in the facts of the present case, the addition is not justified. - Decided in favour of assessee.
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2015 (7) TMI 770
Disallowance of deduction under section 80 IB - exclusion of "duty drawback" from computation of "eligible profit" - Held that:- As per the judgment of Hon'ble Apex Court in Liberty India (2009 (8) TMI 63 - SUPREME COURT) export incentive in any form is not an income derived from industrial undertaking and these judgments of Hon'ble Apex Court in context of deduction u/s 80HHC cannot help the assessee in a case where the dispute is with regard to allowability of deduction u/s 80IB because the allowability of deduction u/s 80IB in respect of export incentive is squarely and directly covered against the assessee by the judgment of Hon'ble Apex Court in Liberty India (supra) and therefore, there is no merit in the synopsis filed by the assessee - Decided against assessee. Disallowance u/s 14A - Held that:- Assessing Officer has added the total investment in share of ₹ 1,86,74,948/- as on 31/03/2009 for working out the disallowance. Admittedly, this investment amount includes two investments in foreign subsidiaries and since the dividend income from these two investments is not exempt, this investment should not be included in the amount of investment for the purpose of making disallowance u/s 14A of the Act. To this extent, we find force in the contentions of Learned A.R. of the assessee and direct the Assessing Officer to recompute the disallowance u/s 14A of the Act after excluding the amount of investment in foreign subsidiaries. In respect of loans, it cannot be said that no part of these loans was used for making investment in shares because overall availability of own funds is different thing and the availability of own fund at the time of making investment in share is altogether different thing and if the assessee does not establish that on the date of making investment in share, own fund was available, it has to be accepted that mixed funds were used for making investment in share and as a consequence, disallowance u/s 14A as per formula prescribed in Rule 8D has to be made. We direct the Assessing Officer to recompute the disallowance after excluding the amount of investment in foreign subsidiaries. Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 769
Exemption under section 80IB(10) - whether he "duty drawback" and other investments as received by the appellant form part of the income derived from the industrial undertaking qualifying for exemption under section 80IB(10)? - Held that:- In the appeal of the assessee for assessment year 2009-2010 [2015 (7) TMI 770 - ITAT LUCKNOW] the issue regarding allowability of deduction u/s 80IB out of Duty Drawback has been decided by us against the assessee by following the judgment of Liberty India [2009 (8) TMI 63 - SUPREME COURT] after considering the arguments of the assessee i.e. regarding the judgment CIT vs. Dharam Pal Prem Chand Ltd. [2008 (11) TMI 231 - DELHI HIGH COURT] and Topman Exports vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] and therefore, in the present case also, this issue is decided against the assessee. Disallowance invoking the provisions of section 14A - Held that:- In assessment year 2009-2010, this issue was decided by us on the basis that the Assessing Officer should recompute the disallowance u/s 14A after excluding the investment in foreign subsidiaries because income from investment in foreign subsidiaries is taxable. In the present year also, there are some investments in foreign subsidiaries; for example, ₹ 1,62,645/- in Super Tannery U.K. (Ltd.). Hence, in the present year also, we decide this issue on similar line and restore the issue to the file of the Assessing Officer for recomputing the disallowance after excluding the investment in foreign subsidiary. - Decided in favour of assessee for statistical purposes. Transfer pricing adjustment - adoption of most appropriate method - selection of comparable - Held that:- CIT(A) has adopted the same comparables which were adopted by TPO in the next year and hence, the selection of comparables is proper. Regarding the exclusion of Duty Drawback from operating profit of the assessee company, this finding is given by learned CIT(A) that export entitlements are an integral part and parcel of the operating profits of a company and therefore, export entitlements are not an extraordinary item of income or an item of income which is unrelated to the ordinary activities of the assessee company. Apart from this, this is also very important that even if the export incentives entitlement is excluded from the operating income of the assessee company, such exclusion has to be made from the operating income of the comparables company also. Without excluding the export incentives entitlement from the operating income, the average PLI of the comparable company in the present case is 7% as compared to 3.67% of the assessee company which is within the tolerance range of 5% as stipulated in the Income Tax Act, 1961. Since this is not the case of the Assessing Officer or TPO that the operating income of the comparable companies is after reducing the export incentives entitlements, such exclusion of export incentives entitlement from the operating profit of the assessee company is not justified and hence, we find no infirmity in the order of learned CIT(A) on this issue. We, therefore, decline to interfere in the order of learned CIT(A). - Decided against revenue. Deleting the adjustment for "transfer pricing" under section 92CA(3) - Whether CIT(A)not have relegated the assessee/respondent to the stage of the Assessing Officer/Transfer Pricing Officer by observing tha the AO/TPO may reverify the above calculations and if found to be correct, give relief to the assessee as directed above? - Held that:- We find force in the contentions of Learned A.R. of the assessee that this direction of CIT(A) is amounting to restoring the matter back to the file of the Assessing Officer which is not permissible and even if he considered that some recalculations of calculations is necessary, he should have done so himself or he should have obtained remand report but after giving this finding that he himself has verified the calculations from the balance sheet of each of the comparables and they are part of the record and also in public domain, this direction of CIT(A) is uncalled for. We, therefore, hold that this unnecessary direction of CIT(A) is not proper particularly when there is no power available with the CIT(A) to remand the matter to Assessing Officer. We, therefore, modify the direction of CIT(A) by holding that since CIT(A) has already verified the calculations on the basis of material available on record and available in public domain, the Assessing Officer should give relief to the assessee as decided by CIT(A) of ₹ 1,00,47,451/- and there is no necessity of recalculation of the calculations. - Decided in favour of assessee.
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2015 (7) TMI 768
Disallowance of claim u/s 54F - Held that:- CIT (A) while rejecting assessee’s claim of deduction u/s 54F has relied upon the order passed by him in group cases of Mohd. Aleemunddin and others, which in turn has been set aside by the Coordinate Bench in the order under reference, we consider it appropriate to remit the issue relating to the assessee’s claim of deduction u/s 54F to the file of the AO with similar direction. Facts and issues being materially same in A.Y 2008-09, except for the amount of deduction of ₹ 51,00,000/-, following our decision for A.Y 2007-08, we also restore the issue relating to assessee’s claim of deduction u/s 54F to the file of the AO for deciding afresh after due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Additions representing the advances received - CIT(A) deleted the addition - Held that:- No nfirmity in the order of the ld CIT (A). The AO himself admits that the commission amount was received by the assessee in case of transaction with Shri V. Ramachandra Rao in the financial year 1999-2000 and in case of Shri Jagat Singh in financial years 1995-96 to 1997-98. Thus when the amount in question was received long back, we fail to understand how they can be taxed in the impugned A.Y, even assuming that the said transaction ultimately fructified in the impugned A.Y. Even, otherwise also the ld DR apart from making submissions has not brought any material on record to controvert the factual finding of the ld CIT (A) that the transactions for which the assessee received the commission is different from the transaction with DLF. In view of the aforesaid, we do not find any reason to interfere with the order of the ld CIT (A) in deleting the addition of ₹ 11.50 lakhs and ₹ 2,19,000. - Decided against revenue. Addition of commission received from M/s Mali Florex on sale of land - CIT(A) deleted the addition - Held that:- Addition of ₹ 2.50 lakhs was made at the hands of the assessee relying upon the statement of Mali Florex that it has paid the amount of ₹ 5.00 lakhs to the assessee and Shri Syed Naseer as commission towards sale of land. Though, the AO had mentioned that the amounts were paid through cheques, but as per discussion made by the ld CIT (A), it appears, that Mali Florex in course of the assessment proceedings stated that the amounts were paid through bearer cheques. As it appears, before making the addition, AO has not made any inquiry to find out whether the cheques were actually encashed by the assessee. Assessee has not only denied of having received the amount in question at the stage of assessment and before the ld CIT (A), it has also submitted that the amount in question is not reflected in the bank account of the assessee. Therefore, the AO having not made any inquiry or brought any material record to prove that the assessee has actually received amount of ₹ 2.50 lakhs, the addition cannot be sustained - Decided in favour of assessee.
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2015 (7) TMI 767
Dismissal of appeal for non-prosecution - whether the assessee cannot be allowed to suffer for the negligence of his counsel? - Held that:- As decided in Rafiq and another Versus Munshilal and another [1981 (4) TMI 255 - SUPREME COURT] innocent party should not suffer for the inaction, deliberate omission, or mis-demeanour of his counsel or when his chosen advocate defaulted. CIT(Appeals) has to dispose the appeals on merit on the basis of the material available on record and that may be produced by the assessees before him. Giving one more opportunity to the assessee to produce necessary material before the assessing officer would not prejudice the interest of revenue. This Tribunal is of the considered opinion that giving one more opportunity to the assessees to produce necessary material would definitely promote the cause of justice. Accordingly, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the assessing officers. The assessing officer shall reconsider the issue afresh in the light of the material that may be filed by the assessees and thereafter decide the same in accordance with law after giving reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 766
Computation of long-term-capital-gains - contention raised by the Department is that purchase date should be treated from the date of dematerialization i.e. when the shares were entered into D’mat Account - Held that:- Before the CIT(A), the assessee have contended that the shares of M/s. Buniyaad Chemicals Ltd. were transferred in the name of the assessee in April, 2001. This fact is also supported by certificate/letter dated 1st April, 2001 issued by M/s. Buniyaad Chemicals Ltd. through the assessee, wherein, 30,000 shares have been transferred in favour of the assessee. This inter-alia means that the assessee was in possession of the shares in April, 2001. Once the source of purchase have not been disputed and long-term-capital-gain is treated as short-term merely on the date of acquisition, then on strength of the certificate itself it goes to show that the assessee was the owner of the shares in the month of April, 2001 and hence, the sale of shares after June, 2002 is nothing but longterm- capital-gain, therefore, treating the gain on sale of shares as short-term-capital-gain by the AO as well as CIT(A) is not correct. The other observations that the source of purchase out of speculation profit is not proved may not be very significant as ultimately nothing has been brought on record as the shares were purchased only in the month of April, 2002 and transfer certificate by the company is not genuine. Accordingly, on merits itself we hold that that the gain in sale of shares is assessable under the head long-term-capital-gain. - Decided in favour of assessee.
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2015 (7) TMI 765
Validity of re-opening of assessments - additions of Gross Profit made by the AO towards suppressed sales on account of suppression of electricity charges - ITAT deleted the addition - whether the Tribunal has deleted the addition on wrong appreciation of facts and the same has resulted in a mistake apparent from record? - Held that:- The power given to the Tribunal u/s 254(2) can be exercised by the Tribunal, even if the order passed by the Tribunal u/s 254(1) has been challenged u/s 260A of the Act before the High Court. We notice that the Tribunal has deleted the addition sustained by ld CIT(A) by considering the facts relating the Power theft case, which in our view, is a mistake apparent from record. The Tribunal, as pointed out by the Revenue, has proceeded to dispose of the issue on wrong appreciation of facts. Hence, we find merit in the miscellaneous applications filed by the revenue. Accordingly, we recall all the grounds relating to the addition of Gross profit made on account of suppression of production/sales. In the miscellaneous petitions, the revenue has not pointed out any mistake on the decision rendered on the issues relating to validity of reopening of assessments. Hence the grounds relating to validity of reopening of assessments need not be recalled - Decided in part in favour of revenue.
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2015 (7) TMI 764
Reopening of assessment - CIT(A) quashed reopening orders - Held that:- In the reasons, the AO has nowhere mentioned about any kind of failure on the part of AO to disclose fully and truly all material facts. The AO adopted the figure of outstanding loan against the directors from audit report at ₹ 17,76,66,492/-, whereas in the balance-sheet it was ₹ 4,13,61,284/-. The reopening solely on the basis of different figures, appearing in the balance-sheet and in form 3CD in respect of same item, could not be done without proper application of mind before recording the reasons. The cardinal principle is that before reopening the assessment the AO should apply his mind and reach a prima facie conclusion regarding escapement of income and should not mechanically record his reasons without due application of mind. The absence of any application of mind is manifest from the fact that while making the assessment, the AO himself did not make any addition on this count. Therefore, reasons recorded on this count, were rightly not sustained by ld. CIT(A). Addition on account of repair and maintenance, building expenses and design and Act work expenses - CIT(A) deleted additions - Held that:- Before AO itself the assessee had pointed out that a query was raised during assessment proceedings in respect of design and art work expenses and the same was specifically replied vide assessee’s letter . Similarly, it was pointed out that in regard to repairs and maintenance of building and plant & machinery, the assessee was asked to furnish explanation for each and every item, which was duly complied with by filing a letter in this regard. Further, it was pointed out tht the details of machinery and building repairs along with the copy of bills were also filed during assessment in compliance to the requirement of questionnaire dated 29-6-2006. All these aspects have not at all been controverted by department. From the above it is evident that there was no failure on the part of the assessee to disclose fully and truly all material facts, necessary for coming to a conclusion, whether the amounts claimed by assessee in its P&L a/c were revenue or capital in nature. The AO had applied his mind during assessment proceedings and after examining in detail the evidence furnished by assessee came to the conclusion that the amounts were allowable as revenue expenditure, after disallowing ₹ 5,88,350/- under the head “Repairs and maintenance”, treating the same in capital field. . Therefore, it is evident that reopening has been done purely on the basis of change of opinion in regard to the items mentioned in the reasons recorded by AO, which is not permissible in view of the decision of Hon’ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] . Also see GKN Driveshaft Ltd. ( 2002 (11) TMI 7 - SUPREME Court ) - Decided against revenue.
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2015 (7) TMI 763
Disallowance u/s 14A r.w.r. 8D - CIT(A) restricted the addition to ₹ 1 lakh - Held that:- We are in agreement with the conclusion of the CIT(A) that as per decision of Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company Ltd. Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) the Rule 8D of the Rules is applicable from A.Y. 2008-09 onwards and the AO was not justified in invoking Rule 8D for making impugned disallowance. We are also in agreement with the conclusion of CIT(A) that even when Rule 8D of the rules is not applicable in the present case of the assessee pertaining to A.Y. 2006-07 but at the same time it cannot be denied that the assessee has a tax free dividend income on which some part of the expenses would have been incurred and which is otherwise disallowable u/s 14A of the Act. With these observations the CIT(A) concluded and restricted the disallowance to the extent of ₹ 1 lakh. While we analyze the chart given in regard to interest paid by the assessee we note that the interest paid to the partners on their capital is ₹ 88,94,929/- and interest paid towards security deposits overdraft facility loan on vehicles late payments and bank charges comes to ₹ 1,01,37,215/- and after deducting interest received by the assessee on fixed deposit of ₹ 21,03,300/- the net interest debited in the profit and loss account comes to ₹ 80,33,915/- and these figures have not been disputed by the ld. DR. In this situation, while the assessee has earned dividend income on equity shares amounting to ₹ 11,32,575/- and on mutual funds of ₹ 9,51,042/- then interest paid to bank on overdraft facility amounting to ₹ 3,38,505/- and bank charges of ₹ 2,46,968/- may be related expenses of business activities of the assessee which also includes investments which brings tax free dividend income to the assessee. Therefore, in totality of the facts and circumstances, we are of the considered view that the invocation of Rule 8D of the Rules by the AO was an incorrect action which was rightly corrected by the CIT(A) restricting the disallowance u/s 14A of the Act to the extent of ₹ 1 lakh. We are unable to see any infirmity or any other valid reason to interfere with the impugned order and we upheld the same in toto. - Decided against revenue and assessee.
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2015 (7) TMI 762
Entitlement to exemption u/s. 80P(2)(a)(i) - CIT(A) allowed claim holding that the assessee is a co operative society and not a co-operative bank and therefore the provisions of section 80P(4) of the Act are not applicable - Held that:- In the judgment of CIT v. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT] the Hon’ble jurisdictional High Court took the view that when the status of the assessee is a co-operative society and not a co-operative bank, the order passed by the AO extending the benefit of exemption from payment of tax 80P(2)(a)(i) of the Act is correct and such an order is not erroneous and therefore, jurisdiction u/s. 263 of the Act cannot be invoked. In view of the aforesaid decisions and decision of the Tribunal in the assessee’s own case for A.Y. 2008-09, we are of the view that the assessee society is entitled to deduction u/s. 80P(2)(a)(i) of the Act. We uphold the order of the ld CIT(Appeals) - Decided in favour of assessee.
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2015 (7) TMI 761
Disallowance of proportionate interest on the funds diverted for non-business purpose - CIT(Appeals) restricted part disallowance - Held that:- What is to be disallowed is in respect of the expenditure which was not incurred for the purpose of business. If the assessee made advance from the funds available with him, then there is no question of disallowance. The availability of funds to the extent of ₹ 15,27,009/- including the current year’s profit of ₹ 3,85,910/- is not in dispute. The opening balance as on 1.4.2006 was ₹ 11,40,100/-. Therefore, the CIT(Appeals) found that to the extent of ₹ 11,40,100/-, there is no question of making any disallowance. In respect of the remaining portion, the CIT(Appeals) found that the interest has to be charged only at 11.5% when the assessee is paying interest at 11.5% on the borrowed funds. This Tribunal is of the considered opinion that the interest has to be considered only at 11.5% and not at 16%. Therefore, the CIT(Appeals) has rightly restricted at ₹ 62,315/-. This Tribunal do not find any infirmity in the order of the CIT(Appeals) and accordingly, the is confirmed. - Decided against revenue. Unexplained cash credit - CIT(A) deleted addition - Held that:- Assessing Officer added ₹ 50,000/- which was claimed to have been received from M/s Khanna Brothers and M/s Khanna & Co. The assessee claims that the advances were made to him. However, the cheque was issued in the name of M/s Spectrum Maruthi Spares. The fact remains that there was a transfer of funds from M/s Khanna Brothers and M/s Khanna & Co. to M/s Spectrum Maruthi Spares where the assessee is a partner. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. This Tribunal do not find any infirmity in the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue. Now coming to the addition of ₹ 2,00,000/- said to have been received from Smt. T. Rajalakshmi, it is not in dispute that the assessee has received the funds through account payee demand draft. The only contention of the Ld. D.R. is that the details were produced before the CIT(Appeals). However, he has not taken any specific ground with regard to violation of Rule 46A. The fact remains that the Assessing Officer made an addition of ₹ 2,00,000/- and the CIT(Appeals) found that the payment was made through DD and therefore, there is no question of any addition. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue. Disallowance of incurred for renovation of hotel - CIT(A) deleted addition - Held that:- It is not in dispute that the Tribunal has fixed unaccounted sales at ₹ 28,00,369/- in the case of M/s Spectrum Maruthi Spares. If that is true, the assessee is entitled for ₹ 14,00,185/-. Therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against revenue.
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Customs
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2015 (7) TMI 790
Classification of goods - Whether Risograph is an office machine having duplicating function and thus to be classified under sub-heading 8472.90 of the Customs Tariff Act, 1975 or is it a printing machine to fall under sub-heading 8443.50 - Held that:- The HSN Explanatory Notes makes it amply clear that small printing machines, even if intended for office use and even duplicators using embossed plastic or metal sheet, which can also operate with stencils, and photocopying etc. are specifically excluded. What follows from the above is that if there is a small printing machine like letterpress, lithographic or offset printing machine, which does the printing work and also, at the same time, performs duplicating work with stencils or otherwise and even photocopying work, it would still be treated as a printing machine and not duplicating machine. Simplest form of printing presses consists of a fixed slab (or bed) to hold the forme, cliché or plate to be reproduced. The ingredient of a plate from which there can be reproduction is, thus, recognised as a process of printing. It would also be pertinent to mention that these very HSN Explanatory Notes clarify that apart from the normal types of printing machines, there are special printing machines which are also covered by this heading. Examples of 7 such machines are specifically given. For the purpose of this case, printing machine described at serial No.7 would be pertinent. A fine distinction between the printing machine on the one hand and duplicating machine on the other has to be borne in mind with specific understanding that in many cases there may be confusion between duplicating machine and specific form of printing machine, namely, screen printing machine. We may point out at this juncture that the endeavour of the appellant is to establish that Risograph machine is nothing but Screen Printing Machine. Risograph printing process is more akin to screen printing - The printing itself takes place when the ink is squeegeed through the stencil onto the screen and ultimately onto the paper. It is the screen which holds the image area, which can carry either a pictorial or typographic material. Similarly, in the case of a Risograph, the long fibre Japanese type paper is the master through which the ink is pressed to reproduce the image or text. The screen printing stencil prepared is equivalent to the plastic film coating on the cellulose fibre of Risograph master. Thus, the principles adopted for printing in the Risograph is akin to that found in screen printing. - It is difficult to equate Risograph machine with duplicating machine. Duplicating, as opposed to photocopying, requires the preparation of a master sheet which makes duplicates on a machine. Risograph machine is in the nature of a screen printing machine and not duplicating machine. It would, therefore, be covered under sub-heading 84.43 and not 84.72. - Decided in favour of assessee.
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2015 (7) TMI 789
Valuation - import of gods from related party - original copy of the agreement is not available - Non acceptance of the certified copy of the document, namely, Technology Transfer Agreement - Held that:- Commissioner of Customs (Appeals) has already come to a definite conclusion against the petitioner that they have not produced the corresponding annexures without which the agreement cannot be said to be complete or implementable. Further more, while dealing with the balance sheet which shows the flow back of ₹ 18,11,20,000/- in the year 2010-11 to the related supplier in the name of fees for shared services, the second respondent-appellate authority has given a finding that the petitioner has not produced any agreement in this regard, on this basis, the assessing officer has been directed to redetermine the value in terms of the Customs Valuation Rules, 2007 for the period commencing from 2010 onwards with a further finding that the declared value cannot be accepted in terms of Rule 3(3)(a) / 3(3)(b) of the Customs Valuation Rules, 2007. Certified true copy of the Technical Transfer Agreement has been filed before this Court with supporting affidavit sworn to by one of the two signatories to the Technical Transfer Agreement dated 1.1.2009 relating to Wind Turbine Model AE 59 / 800 KW on behalf of Gamesa Innovation and Technology, S.L. with Gamesa Wind Turbines Private Limited stating that the original of the Technical Transfer Agreement executed by him as an authorised signatory of Gamesa Innovation and Technology, S.L, Spain is not traceable despite diligent search, however, as per the established internal practice of the company, as soon as an agreement is executed, the original is scanned and the scanned copy is archived and the attached copy of the aforesaid agreement initialed by him is print out of the original agreement so scanned and archived. No embargo or impediment for the second respondent to consider the same as per Section 63 of the Indian Evidence Act, which says that the certified copy of the original, accompanied by a sworn affidavit of one of the signatories to the original Technical Transfer Agreement dated 1.1.2009 relating to Wind Turbine Model AE 59 / 800 KW on behalf of the company, can be taken as secondary evidence - photograph of an original is secondary evidence of its contents, though the two have not been compared, if it is proved that the thing photographed was the original, therefore, there is no impediment for the second respondent to consider the issue afresh. - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 788
Contempt of court - failure to decide the matter within time directed by the HC - Held that:- When there is Court's order and which directs the Authority like the Commissioner of Customs to decide the case within a particular time frame, then, it is his bounden duty to adhere to it. If there are any difficulties in following and abiding by the schedule prescribed in the Court's order, then, appropriate applications have to be made seeking extension of time and the Court must be appraised of all developments and difficulties. It is when the Court extends time, then, the matter can be decided within that extended period, else all such authorities are aware of the consequences of not complying with the Court's order and in time. They could be visited with personal costs and consequences such as entering displeasure of this Court in their service record - Proceedings of contempt of court dropped - Appeal disposed of.
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2015 (7) TMI 787
Benefit of Notification No. 21/2002 - Whether CR/HR coil imported by the appellants is ‘other alloy steel‘ or otherwise - Demand of differential duty - Confiscation of goods - Interest u/s 28AB - Penalty u/s 114A - and 112(a) - Held that:- In order to fall under the category of alloy steel one or more elements is needed in the proportion prescribed vide Chapter Note 1(f) of Chapter 72, in addition to steel which is not complying with definition of steel. Admittedly, one of the elements in the impugned goods is steel and it is not complying with definition of stainless steel also. Further, as recorded in para 3 of the impugned order, the percentage of manganese was found to be more than 1.65% and the Titanium was more than 0.05% which is as per the proportion prescribed under in the Chapter Note 1(f) of Chapter 72. Therefore, the impugned goods would rightly fall under the category of other alloy steel and not eligible for the benefit of Notification. Interpretation of Other alloy steel - One element or more than one element - Difference of opinion - Majority order - Held that:- if any one of the element is present in the proportion specified that would satisfy the requirement of Chapter Note 1(f) even if the other elements are not present in the proportion specified - The expression used in Chapter Note 1(f) is “one or more of the following elements”. This would imply that, if one of the element is present in the proportion specified, it would constitute ‘other alloy steel’. If more than one element is present it is not necessary that each of the elements should be present in the proportion. Duty demand is confirmed along with penalty. However, as the goods are not physically available and not cleared on any bond or bank guarantee, therefore, Redemption Fine is not imposable. - Decided partly in favour of appellant.
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Service Tax
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2015 (7) TMI 796
Waiver of pre deposit - Composite services - Construction service and site formation service - held that:- Adjudicating authority has confirmed service tax demand of ₹ 6,41,198/- under ‘Site formation and clearance, Excavation and Earthmoving and Demolition Services’. It cannot be called as a composite service. Present case it relates to construction of site formation in commercial buildings. Therefore, prima facie, the appellants have not made out a strong case for waiver of predeposit of entire dues - Partial stay granted.
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2015 (7) TMI 795
Extension of stay order - Power of Tribunal to grant stay beyond 365 days - Held that:- Appeal was not taken for hearing by the Tribunal as there is huge pendency of the appeals. It is noted that lot of appeals have already been listed and therefore it is difficult to take up the appeal hearing at this stage. - extension of stay is granted till the disposal of the appeal. Decision in the case of M/s Haldiram India Pvt.Ltd. & others Vs Commissioner, Central Excise & Service Tax [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)]
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2015 (7) TMI 793
Denial of refund claim - Accumulation of CENVAT Credit - service tax reregistration was not obtained prior to export - Notification No. [5/2006-C.E. (N.T.)], dated 14-3-2006 - Held that:- As per para 3(b) of the Appendix to the notification, the provider of output services has to submit an application indicating the registered premises from which export services are provided. This is a procedural formality provided in Appendix to the Notification and nowhere in the Notification condition is laid that refund will be granted only if the Service Tax registration has been taken at the time of export of services. - it can be verified from the records whether the input services were received and utilised for providing the export services. The lower authorities have not done any such verification. - As regards the nexus of input services and output services, I agree with the respondent that all the services are used for providing the output services as held in the case of Ultratech Cement Ltd. - [2010 (10) TMI 13 - BOMBAY HIGH COURT]. The bland statement of the adjudicating authority that input services are not used to provide output services is not supported by any logic and shows non-application of mind. - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 792
Denial of Cenvat credit - Cable Operator and GTA services - Held that:- As regards Registrar and Transfer Agent Service and Cable Operator Service, the learned counsel submits that in respect of both the services credit is admissible. As regards Registrar Service and Computer Networking Service both are specifically covered in the definition itself. Both the lower authorities have confused the service received relating to Computer Networking Service to be the Cable Operator Service. He draws my attention to the work order wherein the scope of work clearly shows that the responsibility of vendor is for network cabling and shifting of the server at MRPL, Mumbai. The work order shows that what is being talked about is Computer Networking Service and not the Cable Operator Service as understood in relation to TV. As regards R & T Service it has been considered as Research & Trial Service. The Commissioner has disallowed the credit on the ground that sufficient evidence has not been produced even if the claim is made under Registrar and Transfer Agent Service. In my opinion the very nature/name of service is clear. As regards G.T.A. service, the credit is admissible to the appellants in view of the fact that goods are sold on FOB basis. - Decided in favour of assessee.
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2015 (7) TMI 791
Validity of summons issued - whether summons issued to the appellant can be treated as an appealable decision or order passed by the adjudicating authority as per provisions of Section 35 of the Central Excise Act, 1944, and whether the summons issued by Superintendent (Prev.) while carrying out an investigation is legal or not - Held that:- Appellant has not appeared for personal hearings on the previous occasions when the case fixed and today also appellant has sought for adjournment. It shows that appellant is not serious in pursuing his case therefore, adjournment request is rejected as well as the appeal is also liable to be rejected for non-prosecution. On merits also it is observed that powers to issue summons by an investigating authority are provided under Section 14 and cannot be considered in the nature of a decision or order as mentioned under Section 35 of the Central Excise Act, 1944 as made applicable to the provisions of Finance Act, 1994. The findings recorded by the first appellate authority clearly discuss the provisions of Section 14 and Section 35 of the Central Excise Act, 1944, while arriving at the point that summons issued to the appellant are neither appealable decisions nor orders passed under Central Excise Act, 1944. The purpose of issue summon during an investigation is to gather information from the appellant. The ground taken by the appellant, that conducting enquiry by the Revenue is unjust, illegal and arbitrary, is without any basis and is required to be dismissed as the powers of investigation given to the Revenue cannot be curtailed on such flimsy reasons taken by the appellant. - Decided against assessee.
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Indian Laws
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2015 (7) TMI 786
Proceedings under section 14B of the PF Act - Independent employer - Held that:- A. Govindaraj is a licenced Contractor and he employed about 15 to 20 contract workmen inside the petitioner factory for doing certain civil work. - Earlier, the petitioner Company was not made a party and in their absence, proceedings were initiated against the Contractor and the petitioner Company came to know about the proceedings only when the Contractor contacted for an advance after having suffered to an order under Sec.7-A. The petitioner Company received a Notice under Section 8-F dated 23.2.2005, calling upon the petitioner to withhold any amount that may be payable to the said Contractor and pay over the same to the respondent. - Contractor was allotted with EPF allotment number vide No.TN/VLR/38789/SDC/2013 in the year 2003 itself. As per the ratio laid down in the judgment of this Court [2011 (9) TMI 944 - Madras High Court], the Contractor viz., Mr.A. Govindaraj should be treated as an independent employer. - proceedings initiated by the respondents against the petitioner Company under Sec.14 B of the Act cannot stand and it is liable to be set aside. - Decided in favour of appellant.
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