TMI Tax Updates - e-Newsletter
July 26, 2014

Case Laws in this Newsletter:

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

Articles

1. INFLATION MUST BE CONSIDERED FOR ALL PURPOSES IN TAX POLICIES AND NOT JUST TO COLLECT MORE TAX- proposed increase in presumptive income vide section 44AE does not recognize ground realities of fall in real income of vehicle owners and operators.

   By: DEVKUMAR KOTHARI

2. REGISTERED OFFICE OF A COMPANY

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Per Capita Income

2. Export Target for Textile Products

3. Promotion of Agro-Processing SEZs

4. Cost Based Study on Petroleum Products

5. Withdrawal of Currencies Issued Prior to 2005

6. Share of States in Central Tax Revenues

7. Representation of Bank and Insurance Employees

8. Participation of India in G-20 Summits

9. Fiscal Deficit and Subsidy Payment

10. National Skill Development Agency (NSDA)

11. Growth Rate Achieved by Agriculture, Manufacturing & Service Sector During 2013-14

12. Steps to Check Irregularities in Banking Activities in Rural Areas

13. C&AG of India Takes Over as Member of UN Board of Auditors

14. Issue of Cartelisation

15. Corporate Frauds

16. RBI Reference Rate for US $ and Euro

Notifications

Companies Law

1. F. No. 01/34/2013-CL-V Part-I - dated 24-7-2014 - Co. Law

Companies (Management and Administration) Second Amendment Rules, 2014.

Circulars / Instructions / Orders

Companies Law

1. F. No. 2/ 14/2014-CL.V - dated 24-7-2014

The Companies (Removal of Difficulties) Sixth Order, 2014

Highlights / Catch Notes

Income Tax

• High Court Rules DVO Must Conduct Thorough Property Valuation for Unexplained Investments, Notices Alone Are Insufficient.

  Case-Laws - HC : Unexplained investment – Valuation of property – The task of the DVO in the circumstances became crucial, he could not have indulged an arm chair exercise by merely issuing notices to the assessee - HC
  Visit to Get Source

  ---

• Trust's 12AA Registration Rejection Overturned; Lack of Dissolution Clause Not a Valid Reason for Denial.

  Case-Laws - AT : Rejection of application u/s 12AA – Dissolution clause not included in Trust deed - DIT(E) has not recorded any adverse comment or dis-satisfaction about the object of the Trust or genuineness of the Trust activities - rejection is not valid - AT
  Visit to Get Source

  ---

• Assessing Officer Must Refer to Valuation Officer if Market Value Claimed Lower Than Stamp Duty u/s 50C.

  Case-Laws - AT : Once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities u/s 50C, it is incumbent upon the AO to refer the valuation of land or building to the departmental valuation officer - AT
  Visit to Get Source

  ---

• Assessee and TPO fail to establish Arm's Length Price for lease rentals; case remanded for further review.

  Case-Laws - AT : Transfer pricing adjustment – - both the Assessee as well as TPO failed to discharge their respective onus and duties to determine the ALP in respect of lease rentals paid beyond the period of project - matter remanded back - AT
  Visit to Get Source

  ---

• Tribunal Rules in Favor of Partners; Unexplained Capital Contributions Not Added to Income Due to Lack of Evidence.

  Case-Laws - AT : Unexplained capital contribution by partners – additions not confirmed - AT
  Visit to Get Source

  ---

• Income from Property Taxable as 'Property Income'; Depreciation Allowed Due to Business Activity Engagement.

  Case-Laws - AT : Depreciation on property – income earned may be assessable to tax under the head ‘property income’ but the fact remains that the assessee was engaged in a business activity - depreciation allowed - AT
  Visit to Get Source

  ---

• Authorities Must Prove Payment to Assessee When AIR Information is Disputed by Assessee.

  Case-Laws - AT : Addition on the basis of AIR information - When the assessee has contradicted the AIR information, it is a duty of the authorities below to prove that the payment has been made to the assessee - AT
  Visit to Get Source

  ---

• Lease Premium to MMRDA Not Considered Rent u/s 194-I; No TDS Deduction Required.

  Case-Laws - AT : Non-deduction of TDS - the lease premium paid by the assessee to MMRDA not being in the nature of rent as contemplated in section 194-I of the Act - TDS not required - AT
  Visit to Get Source

  ---

Customs

• Imported Compact Recessed Down Lights Classified Under CTH 8539, Not CTH 9405, per Harmonized System Nomenclature Notes.

  Case-Laws - AT : Classification - import of Lighting fitting Compact Recessed Down light - goods imported neither being search light nor spot light, according to HSN notes those are covered by CTH 8539 but not by CTH 9405 - AT
  Visit to Get Source

  ---

Service Tax

• CENVAT Credit Cross-Utilization Approved for Service Tax on Business Auxiliary Services Using Input Credits for Excisable Goods.

  Case-Laws - AT : Utilization of cenvat credit by the respondents earned on the inputs received for manufacture of excisable goods towards payment of service tax for Business Auxiliary Service - cross utilization allowed - AT
  Visit to Get Source

  ---

• Effluent Transport via Pipeline Exempt from Service Tax; Effluent Not Classified as Goods Under Tax Law.

  Case-Laws - AT : Transportation of effluent through pipeline or conduit - as the effluent can not be considered as goods, not service tax would be levied - AT
  Visit to Get Source

  ---

• High Court Affirms Refund for Excess Service Tax Paid; Burden Not Passed to Assessee, Refund Validated.

  Case-Laws - HC : Clim of refund by the recipient of services - excess service tax was paid by the service provider - The fact that the assessee has not passed on the burden has been amply established in the order of the adjudicating authority - refund cannot be denied - HC
  Visit to Get Source

  ---

Central Excise

• Waiver of Pre-Deposit Requires Proof of Undue Hardship: Burden Must Exceed Inconvenience for Compliance Benefit.

  Case-Laws - HC : Waiver of pre-deposit - For a hardship to be undue it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. - The word undue adds something more than just hardship - HC
  Visit to Get Source

  ---

• Court Dismisses GPL's Appeal on Duty Refund; Rules Only Supplier Can Claim Refund, Not Buyer.

  Case-Laws - HC : Refund of duty paid by the supplier of goods - locus standi - petitioner (GPL) being buyer of the gas has filed instead of filing refund claim filed an appeal before the tribunal against the order of Commissioner (appeals) passed against the supplier - petition dismissed - HC
  Visit to Get Source

  ---

• Petitioner awarded 8% interest on refund from three months post-initial claim rejection by authority.

  Case-Laws - HC : It is appropriate that interest at the rate of 8% be granted to the petitioner on the refund sanctioned by the authority from the expiry of three months from the date when the claim was first rejected by the concerned Authority - HC
  Visit to Get Source

  ---

• High Court Extends Stay Beyond Limit u/s 35C, Affirming Judicial Authority Over Statutory Constraints in Central Excise Case.

  Case-Laws - HC : Extension of stay - third proviso to sub-section (2A) of Section 35C - power to extend the stay beyond the period that has been prescribed - stay extended - HC
  Visit to Get Source

  ---

VAT

• High Court Rules First Respondent Lacks Authority to Issue Tax Rate Clarifications Under TNVAT Act.

  Case-Laws - HC : Challenge to the clarification of the first respondent in Reference - powers to issue a circular or clarification under the TNVAT Act - respondent has no powers to individually or independently issue any clarification on rate of tax - HC
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2014 (7) TMI 873
  Agriculture income - Bogus capital formation through shares - Rule 7 of the Income Tax Rules, 1962 – Held that:- Following Commissioner of Income Tax-I, Chandigarh Versus Rana Gurjit Singh [2011 (2) TMI 241 - PUNJAB AND HARYANA HIGH COURT] - Calculation made by the AO while working out non-agricultural income in the hands of the assessee, addition/disallowance in the hands of the assessee on account of non-agricultural income is not justified, as the conversion of raw seeds into pea seeds cannot be held as non-agricultural merely on the ground that there was a complete change from raw seeds into pea seeds which was not justified that the assessee changed such raw seeds into pea seeds, observing that the same was a highly perishable item which would have resulted in prospective loss in absence of marketability for the same – Decided against Revenue.

  ---

• 2014 (7) TMI 872
  Deduction u/s 80I – Income from expansion of dispersion unit – Held that:- Unless the deduction is withdrawn or rejected in the initial assessment years, it cannot be withdrawn in the subsequent AYs – Following the decision in Commissioner Of Income-Tax Versus Paul Brothers [1992 (10) TMI 5 - BOMBAY High Court] - Tribunal merely applied the principle laid down in the decision and rightly concluded that the denial of deduction by the AO on the reason of legality cannot be sustained – thus, the Tribunal did not commit any error of law apparent on the face of the record – Decided against Revenue.

  ---

• 2014 (7) TMI 871
  Unexplained investment – Valuation of property – Held that:- The assessee did not cooperate would not absolve the AO from adopting some methodology in arriving at the market value which according to him had not been disclosed by the assessee - The task of the DVO in the circumstances became crucial, he could not have indulged an arm chair exercise by merely issuing notices to the assessee - there was no basis for the AO to determine that the true value of the property was Rs. 1.25 crores, by adopting the return on capital method - The AO was under a duty first to ascertain what was according to him the true cost of the property - error could not have been compounded by adopting a completely different methodology without any positive finding as to the cost of acquisition. The addition made is purely based on estimate and conjecture and there is no substance in the estimate made by the AO, who in any case is not authorized to make any estimate under the provisions of section 142(2A) of the Income-tax Act - section 69/69B are deeming provisions and it is trite law that deeming provisions are to be strictly interpreted - AS there is no invoke section 69/69B therefore for this reason too the addition made is not sustainable in law – the AO is directed to delete the addition made for Rs. 74 lacs on account of unaccounted investment made by the assessee out of undisclosed sources of income – thus, no substantial question of law arises for consideration – Decided against Revenue.

  ---

• 2014 (7) TMI 870
  Deduction u/s 80HHC – Computation of income u/s 115JB – Rectification of order u/s 154 - Tribunal rightly directed to compute the deduction u/s 80HHC for the purpose of determining book profit u/s 115JA only with reference to profit as per the accounts and not to restrict the same to the amount computed and allowed under the normal provisions of the Act - there was no mistake in the order passed by the AO on 24.07.2006 giving effect to the order of the CIT (A) on this issue warranting any rectification u/s 154 - whether deduction u/s 80HHC while computing book profit u/s 115JA is to be allowed with reference to eligible profit as shown by the assessee in the Profit and Loss Account or with reference to the eligible profit as computed under the provisions of the I.T. Act. The exercise undertaken by the Tribunal is with reference to the facts and peculiar to the case - Tribunal rightly held that the powers u/s 154 could not have been resorted to and to initiate and complete an exercise referred in details by it - In effect the initial order of rectification is sought to be further rectified and which is impermissible - when the Revenue did not take the matter further from the initial stage and against the order dated 24.07.2006 - the nature being understood in the factual backdrop and particularly the orders of the Authorities - the order is rendered in the backdrop of the facts peculiar to the Assessee – Decided against Revenue.

  ---

• 2014 (7) TMI 869
  Rejection of application u/s 12AA – Dissolution clause not included in Trust deed - Held that:- The scope of enquiry contemplated u/s 12AA of the Act thus is limited to the extent of Commissioner getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant or refuse the registration u/s 12A of the Act – DIT(E) has not recorded any adverse comment or dis-satisfaction about the object of the Trust or genuineness of the Trust activities – refusal to grant the registration u/s 12A of the Act was on the ground that its Trust Deed does not contain “dissolution clause”- DIT (Exemptions) has clearly gone beyond the scope of enquiry contemplated u/s 12A of the Act and has refused to grant the registration u/s 12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities – order of the DIT(E) set aside – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 868
  Valuation of stock and trading addition u/s 145 - Held that:- The basic contention raised before the CIT(A) that the books of account regularly maintained by the assessee and duly audited by the auditors were not rejected by the AO by pointing out any material or specific defects and in the absence of the same, trading addition made by the AO is not sustainable - the books of account regularly maintained by the assessee and duly audited by the auditors are not rejected by the AO by pointing out any material is specific defects and this position clearly evident from the order of the AO - the book results declared by the assessee cannot be disturbed unless the books of account maintained by the assessee are specifically rejected by the AO by pointing out any specific or material defect – order of the CIT(A) set aside – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 867
  Genuineness of sales consideration of land sold – Price lesser than circle rate as per section 50C – Held that:- The assessee has specifically objected to the adoption of stamp duty valuation rate - mere fact that the assessee has not challenged the stamp duty valuation cannot be put against the assessee – Relying upon CIT v. Chandra Narain Chaudhuri [2013 (9) TMI 646 - ALLAHABAD HIGH COURT] - once the assessee claims that the actual market value of the land or building is less than stamp duty valuation adopted by the authorities, it is incumbent upon the AO to refer the valuation of land or building to the departmental valuation officer - the AO has not done so - matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Rebate of interest paid on security FDR - Whether or not income paid on interest against the fixed deposits can be said to have been incurred "wholly and exclusively" for the purpose of earning interest income from fixed deposits - Held that:- In order to protect the interest earnings from fixed deposits and to meet her financial needs, when an assessee raises a loan against the fixed deposits, so as to keep the source of earning intact, the expenditure so incurred in wholly and exclusively to earn the fixed deposit interest income - assessee could have gone for premature encashment of bank deposits, and thus ended the source of income itself, as well, but instead of doing so, she resorted to borrowings against the fixed deposit and thus preserved the source of earning - expenditure incurred is an expenditure incurred wholly and exclusively for earning from interest on fixed deposits - in the case of a business assessee, and in a situation in which the borrowings against fixed deposits were resorted to for use in business, consideration for end use of funds so borrowed would be relevant because the interest deduction is claimed as a business deduction u/s 36(1)(iii) - the interest on borrowings against the fixed deposits could be said to protect the interest income from fixed deposit interest and incurred wholly and exclusively for the purposes of earning income –Decided in favour of Assessee.

  ---

• 2014 (7) TMI 866
  Transfer pricing adjustment – Determination of lease rentals u/s 92C r.w. Rule 10A - Whether the lease rental paid by the assessee to its AE in respect of various dredging equipments taken on lease can be recorded as closely linked or continuous transactions which cannot be evaluated separately on individual basis – Held that:- The Assessee has taken a number of dredging equipments from more than one associate enterprises - the transactions carried out with different associate enterprises cannot be clubbed or aggregated because they cannot be termed as closely linked or continuous so as to influence the price in aggregate or the profit of the parties arising from these transactions - various dredging equipments hired from the associate enterprises can be aggregated for the purpose of determination of ALP in terms of Rule 10A(d) - the aggregation of the various transactions is possible only with respect to the transactions which are carried out between the Assessee and each associate enterprise - the Assessee has hired these equipments and dredgers from more than one associate enterprise, therefore, the aggregation of the transaction is permitted only in respect of those which are between the Assessee and one enterprise separately - AO/TPO is directed to determine the ALP by aggregating the various transactions between the Assessee and each associate enterprise separately and not by clubbing the transactions with all associate enterprises. Lease rentals paid beyond period of project disallowed – Held that:- The Assessee was required to pay lease rentals even after the project till the vessel was redelivered at the determined port - the Assessee was to pay lease rentals for the period of time spent on demobilization and transportation of dredger and vessel to the port of redelivery - neither assessee has produced any record to show that the payment of rental for the period which was spent for re-delivery of the dredger/equipment is a standard practice in this field of business not the TPO has brought on record any material or transaction entered between the independent parties to show that the rent paid by the Assessee over and above the project period is in excess of the comparable case - both the Assessee as well as TPO failed to discharge their respective onus and duties to determine the ALP in respect of lease rentals paid beyond the period of project - payment is to be compared with the independent and uncontrolled transactions of a similar nature wherein either the payment of rentals for the time period spent on demobilization and transportation for re-delivery of the equipments are accepted as a normal practice or otherwise it is not accepted beyond the period of project – the matter is remitted back to the AO/TPO for re-consideration – Decided partly in favour of Assessee.

  ---

• 2014 (7) TMI 865
  Interest payment – Genuineness of claim not established – Held that:- CIT(A) has mentioned the matter set out in the letter - nowhere in the order of the CIT(A) mentioned that the CIT(A) has made any factual verification of the contents - if the AO has not made necessary examination the CIT(A) is bound to make examination himself – relying upon Kapoorchand Shrimal vs CIT [1981 (8) TMI 2 - SUPREME Court] - it is the duty of the appellate authority to correct the lacunae in the orders of the authorities and if it is required to remit the issue to them – matter remitted back to the AO – Decided against Revenue. Notional interest on advance – Failure to furnish explanation – Held that:- The assessee has made advance to the party and has made purchases - advance made was subsequently adjusted also - CIT(A) right in holding that no notional interest was liable to be charged - it is not the case of the AO that the advance made by the assessee was not trade advance but loan advanced - it is the real income that is taxable and not notional income – Decided against Revenue. Deferred revenue expenses disallowed – Held that:- CIT(A) has deleted the addition and gave a finding that disallowance on account of deferred revenue expenditure was already added back by the assessee in the computation of income - the disallowance made by the AO has resulted in double disallowance, which cannot be sustained – order of the CIT(A) upheld – Decided against Revenue.

  ---

• 2014 (7) TMI 864
  Unexplained capital contribution by partners – Held that:- Regarding this claim of gift, it is noted by CIT(A) that Smt. Leelawati Senani is not income-tax assessee and she is neither having any PAN and nor she could explain the source of giving gift to her daughter-in-law - the source of money in the hands of Smt. Sindhuja Mishra to this extent is not acceptable because nothing more is produced to warrant interference - assessee was also asked to furnish cash flow statement to show deposit in cash in her bank account but no compliance was made in this regard - the source for the capital contribution of Smt. Sindhuja Mishra with the assessee firm have not been found satisfactory and Smt. Sindhuja Mishra failed to prove it – Relying upon Commissioner of Income-tax Vs Jaiswal Motor Finance [1983 (2) TMI 47 - ALLAHABAD High Court] - the source of fund in the hands of Smt. Sindhuja Mishra could not be explained, the order of CIT(A) is not sustainable – Decided in favour of revenue. Money received did not match entries – Held that:- The details filed by assessee during the appellate proceedings regarding money received from M/s IIHT Systems Ltd. and M/s Senani Colonizers & Builders Pvt. Ltd. do not find matching with the entries as found reflected with the sources of capital contribution of Smt. Sindhuja Mishra and Smt. Sindhuja Mishra has also not furnished any documentary evidence in respect of her deposit made in her bank – there was no reason to interfere in the order of CIT(A) – Decided against Assessee. Gross profit increased – Held that:- The assessee has not produced stock register along with details of cash purchases with name and address of the party and vouchers even though number of opportunities were given by the AO - In the absence of stock register and details of cash purchases etc. this small addition of Rs. 4,06,579/- is neither excessive nor unreasonable – AO has made disallowance of 20% of the expenses debited to profit & loss account on the basis that no vouchers have been produced by the assessee in respect of these expenses - no any evidence has been produced, thus, there was no reason to interfere in the order of CIT(A) – Decided against assessee.

  ---

• 2014 (7) TMI 863
  Addition u/s 68 and 69 – Genuineness of claim – Held that:- The assessee has as well filed the documents before the authorities below in support of the claim - These are copies of acknowledge of return of income along with computation, audited balance sheet and profit and loss account, replies of the assessee filed before the AO, ledger account of investment, statement showing details of investment as on 31.3.2002 and 31.3.2003, statement of details of investments sold, statement of bank account for the period 1.4.2002 to 31.3.2003, purchase details of investment sold during the year along with corresponding bank statement, details of parties to whom investments were sold, etc. - CIT(A) has rightly deleted the addition made by the AO u/s 68 of the Act - he was also justified in deleting the addition made on account of commission for providing accommodation entries @ 2% - Decided against Revenue.

  ---

• 2014 (7) TMI 862
  Depreciation on property – Business activity not carried out during year – Held that:- CIT(A) was perfectly justified in holding that the Assessee is entitled to depreciation as well as deduction towards expenditure - the assessee has made a specific claim that the company had used the premises for its business purpose and had earned business conducting charges under the head ‘income from house property’ the nature of the said income does not cease to be business activity - income earned may be assessable to tax under the head ‘property income’ but the fact remains that the assessee was engaged in a business activity – assessee contended that claim of deduction towards depreciation as well as expenditure is directly linked to the earning of income under the head ‘business’ – thus, the order of the CIT(A) is upheld – Decided against Revenue.

  ---

• 2014 (7) TMI 861
  Proportionate interest disallowed – Interest free loans and advances given to sister concern - Held that:- The assessee has taken a plea that the total interest free funds available to the assessee company are sufficient to make the interest free advances and the disallowance of notional interest is un-warranted - the facts have not been taken cognizance by the authorities - the assessee company has sufficient funds to make interest free advances and hence the disallowance made/confirmed by the AO/CIT(A) on the basis of notional interest is not justified – the order of the CIT(A) is set aside – Decided in favour of Assessee. Contractual receipt on AIR information – Held that:- Addition has been made by the AO and the same confirmed by the CIT(A) solely on the basis of the AIR information to which the assessee has contradicted the statement earlier made - When the assessee has contradicted the AIR information, it is a duty of the authorities below to prove that the payment has been made to the assessee - thus, the matter is to be remitted back to the AO for fresh assessment – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 860
  Quantum appeal set aside - Penalty u/s 271(1)(c) - Liquidated damages not declared – Held that:- The Tribunal in earlier assessment year held that liquidated damages had not accrued to the assessee - assessee contended that the addition no longer subsists, thus, the penalty proceedings have no legs to stand - It is not a fit case for levy of penalty u/s 271(1)(c) of the Act since the addition made in the quantum proceedings has been deleted by the Tribunal – decided in favour of Assessee. Interest on liquidated damages – accrual of income - Held that:- The Tribunal in earlier assessment year, it has been held that on account of the letters exchanged between the parties there is an explicit agreement for not charging liquidated damages and interest which amounts to changing the terms of agreement in which event the interest component on the assumed liquidated damages cannot be added - the interest component of liquidated damages did not accrue to the assessee in the year and the AO is directed to delete the addition – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 859
  Dis-allowance of expenditure – Depreciation of motor-car, mobile phone and computers as personal in nature to the extent of 25% - Held that:- The assessee had already filed returns of the income for the AYs - at the time of search, the assessee had already filed returns for the AYs and assessments were completed - during search operations, no incriminating material was seized - The additions on account of dis-allowance of expenses and dis-allowance of depreciation were made from the documents already on record. Relying upon All Cargo Global Logistics Ltd., Vs. DCIT [2012 (7) TMI 222 - ITAT MUMBAI (SB)] - where the assessments are completed and no assessment is pending at the time of assessment u/s.153A, reassessment can be made only if incriminating materials are collected in the course of search and the items included in the earlier AYs cannot be re-considered through re-assessment – re-assessment of the concluded assessment is permitted in assessment u/s.153A only if incriminating material are found in the course of search – no incriminating material was found during search operation so as to dis-allow expenditure – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 858
  Deduction u/s 80IA(4)(iv) of the Act – Computation of income - Unabsorbed depreciation on standalone basis u/s 80IA(5) of the Act – Held that:- The decision in M/s. Easun Reyrolle Ltd. Versus Deputy Commissioner of Income Tax [2014 (7) TMI 497 - ITAT CHENNAI] followed - Revenue has failed to controvert the same - only AY 2000-01 instead of 1995-96 has to be held as the ‘initial assessment year’ for the purpose of sec 80IA deduction –Relying upon M/s. Velayutha Swamy Spinning Mills vs. ACIT [2010 (3) TMI 860 - Madras High Court] - unabsorbed depreciation and carried forward business losses pertaining to AY 1995-96 to 1999-2000 could not have been ordered to be set off against income and profits of the assessment year – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 857
  Inclusion of agricultural income – Held that:- The assessee has explained the amount as realized from the sale of cattle feed (niran), and which has been explained as arising for this year only due to heavy rainfall - assessee has also placed on record the index of the paper-book filed before the CIT(A) furnishing the details of the cash sale there should have been a proper examination of the assessee’s claims by the Revenue, which has however not been at any stage - It is only the additional income of Rs. 1.88 lacs, claimed to be agricultural income in-as-much as it is on account of sale of Niran - the assessee’s claim with regard to agricultural income is not in dispute – thus, the matter is to be remitted back to the AO for examination of the claim of the including its entirety, including the exigibility of the income to exemption u/s.10 – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 856
  Unexplained money – Held that:- CIT(A) has passed a well-reasoned order and out of the total addition of Rs. 13,85,200/-, an addition of Rs. 2,55,500/- has been confirmed and the balance addition has been deleted by him – assessee has allowed his bank account to be used by the students of the coaching centre and the preponderance of human behaviour read with all the evidences establishes this fact in favour of the assessee - assessee being in Australia during the period when assessment proceedings were going on, he was prevented by sufficient cause in producing all the evidences before the AO and the additional evidences were accepted under Rule 46A - amount of opening balance could not be established by the assessee and therefore, the addition of the same was confirmed by the CIT(A) and the balance addition was deleted – the order of the CIT(A) is upheld – Decided against Revenue.

  ---

• 2014 (7) TMI 855
  Estimation of net profit from business of truck plying and transport commission – Proper verifications not made by AO - Held that:- The assessee has initially adopted the figure of turnover shown in the TDS certificate, but during the course of assessment proceedings, the assessee has explained that he has taken the total turnover shown in the TDS certificate wrongly and the turnover for the month of April and May, 2007 were included in the figure of total turnover shown in the TDS certificate - the AO should have verified by making necessary verification from the deductees – there was force in the contentions of the assessee - Since this aspect requires proper verification by the AO, the order of the CIT(A) is set aside and the matter is remitted back to the AO for verification – Decided in favour of Assessee.

  ---

• 2014 (7) TMI 854
  Order passed u/s 201(1)/201(1A) – Non-deduction of TDS and interest - Premium for leasehold rights u/s 194I – nature of rent not defined – Held that:- A payment of lease premium do not fall within the realm of "rent" as contemplated in section 194–I - the assessee is not liable for deducting the TDS on payment - the lease premium is capital expenditure to acquire land with substantial right to construct and cover the building complex – Following the decision in ITO (TDS) 3 (5), Versus M/s. Wadhwa & Associates Realtors Pvt. Ltd. [2013 (9) TMI 261 - ITAT MUMBAI] - the lease premium paid by the assessee to MMRDA not being in the nature of rent as contemplated in section 194-I of the Act, the assessee was not liable to deduct tax at source from the said payment and hence could not be treated as the assessee in default u/s 201(1) & 201(1A) of the Act - payment on account of premium represents transfer price of the land on lease hold basis and no part qualifies to fall within the meaning of "rent" as contemplated in section 194–I and, therefore, no deduction of tax at source is required - Decided against Revenue.

  ---

• 2014 (7) TMI 853
  Claims of Exemption u/s 10A - Transfer of stock – Held that:- FIFO method has to be applied - the profits for the under valuation is required to be disallowed – CIT (A) observed that the assessee followed the FIFO method on the transfer of 200kgs of gold bars is fair and reasonable and it does not call for any interference - considering the low value plant and machinery worth of only Rs. 16 lakhs, the extent of the electricity consumption noted in the books of accounts, in the absence of any adverse material in possession of the revenue to conclusively prove about the absence of manufacturing activity of medallions, presence of documents to support of fact of export activity of the medallions, the argument of the revenue cannot be accepted that the assessee has not manufactured the medallions - there is need for denying the exemption to the extent of Rs. 3,12,71,400 - Regarding the allowing of exemption in respect of the profits attributable to the export of the 109 kgs of the gold medallions, the same needs to be disallowed for want of discharge of onus by the assessee - this part of the disallowance is no way connected to the absence/doubting of manufacturing activity of making of medallions - AO is directed to quantify the proportionate disallowance after granting opportunity of being heard to the assessee – Decided partly in favour of Assessee. Addition u/s 68/69C – Transfer of funds - Held that:- The documents filed are not adequate enough to hold that the assessee has discharged the onus successfully - there is adequate cash balance in the books of the branches and the cash payments are actually made towards the customs duty, the onus is strictly on the assessee to demonstrate the transportation of cash physically by road from all the outstations - the assessee does not have appropriate or convincing answers - it is not only the distance factor that the assessee failed to explain but also the other logical issues relating to mode and method of transportation of cash physically across the interstate borders - the order of the CIT (A) is fair and reasonable and it does not call for any interference – Decided against Assessee. Addition u/s 68 – Amount received from debtors – Held that:- Mr. desai furnished promised information in the tapals to the AO - AO has in fact did not doubt the 'identity' of the creditor - it is the CIT(A), who raised the issue of identity - it is unfortunate that the revenue held that the identity is only partly proved - CIT(A) is proper in coming to the said conclusion - The sum of Rs. 131.25 cr was paid by the Josh Bullion Gems and Jewellery P Ltd (JBGJPL) and the same was received by the assessee - m/s JBGJPL has the ability to pay the amount to asssessee - Valid transfer of the 'actionable claims' qua the assignment deeds are also upheld – there was no reason to invoke the provisions of section 68 of the Act - the CBI has not included the assessee while booking the scamsters – there was no fault with the assessee in effecting recoveries of the eligible debts from the debtors by all means, either direct as well as the indirect methods - the transaction of payment should be considered as genuine transaction for the purpose of section 68 of the Act. The AO made additions by rejecting assessee's arguments based on the assignment agreements and failed to find the 'business sense' in the payments made by the M/s JBGJPL - Other deficiencies include absence of consent of the debtors to the scheme of assignment, the absence of signatures of the witnesses on the documents, failure to serve the notices u/s 131 on a debtor and the express de-recognition of the debtors to the scheme of assignment - the validity of the 'scheme of assignment' is upheld considering the express legal provisions under various Acts - the dissatisfaction of the AO is misplaced. Sources of the Sources/Origin of the origin – Held that:- The revenue already reopened the assessment of JBGJPL for the relevant AY 2009-10 - the assessee filed the copy of the letter to the AO dt 5.12.13 referring to issuance of notice u/s 148 of the Act - it is the case of revenue attempting to area of 'sources of sources' or 'origin of origin' which is not permitted in law - the addition is not justified u/s 68 of the Act. The bipartite agreement constitutes a valid one considering the provisions of section 130 of the TP Act - the service of notice on M/s Space PPL cannot alone be the ground to come to the inference adverse to the assessee - AO ought to have seen the fact that the debtor has made lots of purchases, exports, banking transactions, investigation and finalizing charge sheet by the CBI on the said debtor etc. Regarding M/s Bond Gems Pvt. Ltd, the AO's objection is not sustainable legally – Decided in favour of Assessee. Sale of unaccounted stock – Held that:- There are no transactions from 24.10.2008 to 31.10.2008 - there is no discrepancy so far as the quantum of stock is concerned as on 31.3.2009 - AO does not have any incriminating material to suggest that the assessee has sold the material received from the labourers on 24.10.2008 - the arguments of the assessee about the double addition are dismissed by the CIT(A) giving flimsy reasons - the tallying of the stock register is considered and in the absence of the discrepancies, the decision of the CIT (A) is set aside – Decided in favour of Assessee. Loss incurred on diamond trade disallowed – Held that:- The study of the transactions reveals that the real intention of the assessee was to earn the interest arbitrage difference in rates of interest - The moment the export sales are received, assessee deposited the same with the bank and earned the bank interest @ 8 to 9% - no law is violated by the assessee by these arbitrage transactions and the same is a common practice - the special auditors, on the issue of diamond trading and profit, have found no infirmity in transaction except that there are no purchase orders for purchases - the special auditors have analyzed around 50 transactions and has not given any adverse comments – Relying upon Abbas Wazir (P.) Ltd. v. Commissioner of Income-tax [2003 (9) TMI 50 - ALLAHABAD High Court] - the transaction is genuine as the same have been done to earn arbitrage income and the export/import has been done through due customs clearance - the authorities are not justified in making/confirming the impugned disallowance/addition on this count and the same is deleted – Decided in favour of Assessee. Interest payment made u/s 40A(2) – Held that:- The assessee paid interest on the excess margin money to a couple of its clients – the differentiation clearly attracts the provisions of section 40(A)(2)(b) of the Act - This is a commonsensical approach that if the excess margin money of both the parties have found the way into the FDs of the banks, the disallowance to the extent of amount exceeding 4% should be considered as excessive and unreasonable - The explanation given by the assessee that the sister concern is a HNI is not to be considered favourable to the assessee considering the provisions of section 40A(2)(b) of the Act, which does not provide for any exemption, as attempted to be made out by the assessee - the AO should calculate the excess interest over and above 4% and that should be treated as unreasonable and excessive – Decided partly in favour of Assessee. Net forward contract loss treated as speculation loss – Held that:- The loss amounts to 'hedging loss' and constitutes 'business loss' - Following the decision in Commissioner of Income-Tax Versus Badridas Gauridu (P.) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] - CIT(A) has analysed the issue from the perspective of speculation loss and has rightly held that the loss amounts to hedging loss and a speculation loss –there was no reason to interfere with the decision of the CIT(A) - the benefits of section 43(5) of the Act are to be granted to the assessee – Decided against Revenue.

  ---

• Customs

• 2014 (7) TMI 890
  Suspension of operation of Customs Broker License, under Regulation 19(1) of Customs Brokers Licensing Regulations, 2013 - Forfeiture of security - Earlier hearing of petition - Held that:- it would be suffice to direct the first respondent Tribunal to consider the application for stay at an early date and pass appropriate orders - Tribunal is directed to take up the application for stay first and pass appropriate orders - Decided in favour of assessee.

  ---

• 2014 (7) TMI 877
  Suspension of the licence of the petitioner as custom broker - alleged that the petitioner firm has aided/abetted the importers in evasion of duty - Held that:- it is stated that for want of Judicial Member, the Appellate Tribunal is not functioning and therefore having regard to the urgency involved in this case, the petitioner has filed this writ petition. - petitioner shall prefer an appeal before the Appellate Authority as against the order dated 19.02.2014 passed by the first respondent, within a period of one month from the date of receipt of a copy of this order. - Till such time, the order dated 19.02.2014 shall remain stayed. - decided in favor of petitioner.

  ---

• 2014 (7) TMI 876
  Principle of consistency - Release of goods - 100% EOU - segregation of Ferrous and non-ferrous scrap, mix scrap, electrical motors, transformers, etc. - Foreign Trade Policy 2004-2009 in the meantime was amended and from the definition of 'manufacture', segregation activities came to be excluded. - However, it was specifically provided inter alia that those units set up prior to 1st April 2002 for a period of five years shall not be disturbed. - Held that:- The Tribunal once having held in favour of the assessee on both the issues and having said unequivocally that the unit set up prior to 1st April 2002 is to be treated differently and the activity of segregation of ferrous and non ferrous material shall need to be treated as manufacturing concern and the benefit of Notification No. 21/2002 available for clearance from EOU to DTA, surely resulted into the balance heavily tilting in favour of the petitioner, and therefore, without even waiting for any request on the part of the petitioner to release and return the goods attached by the respondents the same should have been released to give an effect to such order of the second appellate authority. Failure of the department to release of goods despite the decision in favor of assessee - Held that:- For want of such release of attachment and return of the goods and machineries, the petitioner continuously has lamented alleged of having lost substantial business. It is for sure an arrogant way of putting it by way of an affidavit in reply by the respondent that due to expiry of LoP and the green card, return of such goods and machineries would have also served no purpose. Denying any citizen of his due and particularly the articles of his own ownership after second appellate authority held in his favour, surely was an act which needs to be adjudged with a strong disapproval. The respondents therefore are expected to act promptly as ensured by the learned counsel for the Revenue. Extension of LOP - Held that:- Thus, to direct the respondent to grant further LoP without petitioner debonding its unit and also without necessary inspection and scrutiny of the premises would prove to be against the requirements of law on the subject, and therefore, as far as the second ground raised in this petition, the petitioner's claim is not found sustainable. However, petitioner can choose to apply once again on fulfilling the required parameters and if so done, the same shall be considered in accordance with law by the respondents. - Decided partly in favor of assessee.

  ---

• 2014 (7) TMI 875
  Classification - import of Lighting fitting Compact Recessed Down light - classifiable under CTH 94051090 or under Tariff Heading 8539 - It is the observation of the ld. Adjudicating Authority that the laboratory reports proved the goods to be CFL, i.e., Compact Fluorescent Lamp by their character, nature and longevity - Appellant says that the goods being used for light reflection and focusing that proves the goods were spot lights but not mere lamps. - Held that:- appellant did not rebut such aspect of the finding of ld. Adjudicating Authority. The classification under both the entries above show that the goods covered by them are illuminating lamp. The goods imported has the characteristic of spreading light to a defined area according to its beams and rays and the reflector used. The HSN classification speaks that searching lights are used for anti-aircraft operations and spot lights are used for stage sets and in photographic or film studios. Search lights and sport lights throw a concentrated beam of light (which can be regulated) over a distance onto a given point of surface by means of reflector and lenses or with reflector only. This is, precisely, the usage of the search light and spot light. But the goods imported by the appellant was not able to satisfy such usage except spreading its light as CFL. Law is well settled in respect of classification. More specific tariff heading attracts goods akin to its entry but not an orphan to its fold compared to a non-specific tariff entry. - The CTH 85393110 covers Compact Fluorescent Lamp within its fold belonging to the family of electrical filament or discharge lamp including sealed beam lamp units and ultra-violet or infra-red lamps; arc-lamps. CTH 9405 describes its family as family of lamp and light fittings which covers search lights and spot lights. The goods imported neither being search light nor spot light, according to HSN notes those are covered by CTH 8539 but not by CTH 9405 since both entries are altogether different and neither dear nor near to each other in relation. - Decided against the assessee.

  ---

• Corporate Laws

• 2014 (7) TMI 874
  Scheme of Amalgamation - The Petitioner Companies have placed on record communications from Unsecured Creditors to the effect that they shall be opposing the scheme. However, none of these Unsecured Creditors have appeared before this Court or filed objections to the Scheme before this Court. - Held that:- In view of the approval accorded by the shareholders of the Petitioner Companies, the Report filed by the Official Liquidator, Affidavit filed by the Regional Director and the Replies of the Petitioner Companies to the Reports of the Official Liquidator and the Regional Director, there appears to be no impediment to the grant of sanction to the Scheme. - sanction to the scheme granted.

  ---

• Service Tax

• 2014 (7) TMI 895
  Utilization of CENVAT Credit for payment of service tax - cenvat credit by the respondents earned on the inputs received for manufacture of excisable goods towards payment of service tax for "Business Auxiliary Service" - Held that:- the respondents are not only a manufacturer of excisable goods but also the provider of output services and both the activities are carried out in the same premises. Respondents are eligible for availment of input credit, they can utilize the cenvat credit available with them either for payment of excise duty on the final products or for payment of service tax on the output services as stipulated in the sub-rule (4) of Rule 3 of CCR 2004. The restrictions on utilization of cenvat credit stipulated in the CCR relates only for specific type of duties i.e. education cess on excisable goods or payment of educational cess on output services. There is no restriction for utilization of common input credit availed on the inputs and also on input services for payment of excise duty or service tax - there is no infirmity in the order of Commissioner (Appeals) in holding that utilization of input cenvat credit availed by the respondents for payment of service tax on the output service of Business Auxiliary Services rendered by them - Decided against Revenue.

  ---

• 2014 (7) TMI 894
  Cenvat credit - Rent-a-cab service - Revenue contends that rented cabs were not exclusively used for the purpose of providing output service - Held that:- Commissioner has given a categorical finding that the cabs in respect of which credit has been taken were used for providing output service which would clearly make the impugned credit admissible. In the grounds of appeal submitted by the Department they have merely stated that the impugned cabs were not exclusively used for the purpose of maintenance etc. but have not given any evidence to that effect. The Commissioner (Appeals) also observed that Revenue had not given any evidence contrary to the submissions of the appellants - no infirmity in the impugned order - Decided against Revenue.

  ---

• 2014 (7) TMI 893
  Demand of service tax - Transportation of effluent through pipeline or conduit - Whether appellant is liable to payment of Service Tax on the services of transportation of effluent through pipeline or conduit to M/s Heavy Water Project (HWP) on some consideration under Section 65(105)(zzz) - Held that:- As per definition of ‘goods’ given in Section 65 (50) of the Finance Act, 1994 the meaning of ‘goods’ for the purpose of Service Tax law has to be as assigned in Clause (7) of Section 2 of the Sales of Goods Act 1930. As per the provisions of Section 2(7) of Sales of Goods Act 1930 the goods has to be a category of ‘movable property’. Movable property in general trade parlance is considered as a property in goods which can fetch certain price. In the present facts and circumstances of the case the effluent discharge facility is for disposal of a waste which is not being purchased by any person but is only being disposed of by utilizing the services of the appellant. As the relevant facilities/services of transportation provided by appellant are not the ‘goods’ as defined in Section 2(7) of the Sales of Goods Act 1930, the same cannot be considered as a service provided for transportation of goods as per Section 65 (105)(zzz) of the Finance Act, 1994 read with Section 2(7) of Sales of Goods Act 1930 - Decided in favour of assessee.

  ---

• 2014 (7) TMI 892
  Recovery of service tax arrears - challenge to the Show Cause notice on the ground that they have not received the said notices and they have been despatched to different address and they came to know about the same only in the first week of May, when the 2nd respondent declined to pay the amount for the work done by them. - Held that:- it is crystal clear that though the address of the petitioner has been mentioned wrongly in all the correspondence, they have been duly acknowledged by the petitioner with signature and rubber stamp. - Further, it appears that the petitioner themselves have written a letter to the department on 2.5.2014 stating that they are prepared and willing to deposit the necessary service tax within a given time. Therefore, nothing more need to be added. - petitioner directed to remit service tax wi thin 2 months. - writ petition disposed of.

  ---

• 2014 (7) TMI 891
  Clim of refund by the recipient of services - excess service tax was paid by the service provider - difference due to downgrade revision in price - unjust enrichment - period of limitation - The case of the revenue was that it was the service provider, namely RGTIL which alone was entitled to file a claim before the Commissionerate concerned and RGTIL had recovered the service tax amount from various recipients. - Held that:- once the finding of the adjudicating authority that the claim for refund was filed within the period of limitation of one year under Section 11B was not challenged by the revenue before the first appellate authority, such a ground cannot be urged for the first time in an appeal before this Court. As a matter of fact, the ground was not even urged in the form of a cross objection before the Tribunal. The assessee is the recipient of the taxable service provided by RGTIL and had borne the incidence of service tax. Hence, the assessee is entitled to claim a refund of excess service tax paid consequent upon the downward revision of the transmission charges payable by the assessee to RGTIL in terms of the determination made by the Regulatory Board. The fact that the assessee has not passed on the burden has been amply established in the order of the adjudicating authority. - no merit in the case of revenue - Decided against the revenue.

  ---

• Central Excise

• 2014 (7) TMI 885
  Eligibility for duty free procurement - Notification No.1/95 CE - Furnace Oil purchased and consumed by the appellant's unit (Food Processing Industry) - tribunal allowed the he benefit of duty free purchase - Held that:- a similar issue was answered against the Revenue by the Tribunal in Tata Tea Limited v. Commissioner of Central Excise, [2003 (12) TMI 109 - CESTAT, NEW DELHI], and the appeal preferred by the Department as against the said decision stood dismissed by the Supreme Court - decision of tribunal affirmed - Decided against the revenue.

  ---

• 2014 (7) TMI 884
  Condonation of delay - delay of 32 days - Tribunal dismissed the appeal - Held that:- the order -in- original was pasted on the premises of the appellant on 06.10.2010 under a Mahazar before two independent witnesses as required under Section 37C(b) of the Central Excise Act, 1944, since the appellant was not available in the premises and the premises was also locked. That is the effective date of service. However, the appellant construed as if the order was affixed only on 06.10.2011 and filed an appeal before the Commissioner (Appeals) along with a petition to condone the delay of 32 days. However, the Commissioner (Appeals) held that the date of service of summons was only 06.10.2010 and not 06.10.2011 and dismissed the appeal. Commissioner (Appeals) cannot condone the delay beyond the stipulated period. - appeal dismissed - Decided against the assessee.

  ---

• 2014 (7) TMI 883
  Waiver of pre-deposit - SEZ unit - Clearance of goods to DTA units without following the prescribed procedure - duty was confirmed holding that the material, which was cleared are not books within the meaning of Customs Tariff Heading 49.01, and that it will fall under 49.11 and not exempt from duty - notification No.21/2002 - Held that:- there is a prima facie case in favour of the appellant that the goods are not liable to duty in terms of the exemption in Notification No.21/2002 Customs. The above fact, in the light of the Supreme Court decision in Gujarat Prestorp Electronics Ltd.'s case [2005 (8) TMI 657 - Supreme Court of India], was not considered by the Tribunal for deciding the prima facie case. Undue hardship to such person and safeguard the interests of the Revenue - Held that:- It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in Siliguri Municipality v. Amalendu Das, [1984 (1) TMI 63 - SUPREME Court] and CCE v. Dunlop India Ltd., [1984 (11) TMI 63 - SUPREME Court] cases without analysing factual scenario involved in a particular case. For a hardship to be undue it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. - The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. We find much force in the plea of the appellant regarding undue hardship and financial difficulty in pursuing the appeal on payment of the pre-deposit as ordered by the Tribunal. The same, therefore, requires to be modified considering the prima facie case of the appellant. - appellant is granted waiver of the entire amount ordered to be paid as pre-deposit by the Tribunal. - stay granted - decided in favor of assessee.

  ---

• 2014 (7) TMI 882
  Penalty u/s 11AC - whether mandatory - clandestine clearance of goods - Held that:- In view of the categorical statement of law by the Supreme Court in the above-stated decision Union of India V. Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], the question of exonerating the assessee from payment of penalty does not arise. - Decided in favor of revenue.

  ---

• 2014 (7) TMI 881
  Cenvat Credit - capital goods - structural steel items viz., M.S.Plates, Angles, Channels and HR Sheets used for civil construction activity - Held that:- This Court in the case of India Cements Limited [2011 (8) TMI 399 - MADRAS HIGH COURT] applied the principles laid down in the decision of Commissioner of Central Excise Jaipur V. Rajasthan Spinning s contention in respect of the very same assessee. - credit allowed - decided in favor of assessee.

  ---

• 2014 (7) TMI 880
  Refund of duty paid by the supplier of goods - locus standi - claim of exemption for the return stream - claim of IPCL was rejected on the ground that buyer may be entitled to get the refund - the petitioner (GPL) being buyer of the gas has filed instead of filing refund claim filed an appeal before the tribunal against the order of Commissioner (appeals) passed against the supplier - tribunal rejected the claim of petitioner on the ground that the petitioner has no locus standi - Held that:- as such, the refund claims of the petitioner would be barred by the limitation provided under Section 11B(2) of the Act. If, the petitioner would have preferred independent applications for refund of the claim under Section 11B(2) of the Act in that case, the applications of the petitioner for refund of the claim would be required to be rejected on the ground of limitation. Under the circumstances, no error has been committed by the learned Tribunal in dismissing the appeals preferred by the petitioner on the ground that the petitioner has no locus standi to prefer appeals against the order of the Commissioner( Appeals), rejecting the appeals preferred by the IPCL and confirming the order passed by the Asst. Collector, rejecting the refund claim applications of the IPCL. - Decided against the petitioner. Whether the petitioner is aggrieved person - Held that:- as such, by the order passed by the Commissioner (Appeals) no liability would have been fastened upon the petitioner. - By the impugned order, if any, liability would have been fastened, then and then, the petitioner can be said to be a ‘person aggrieved'. Under the circumstance, the contention on behalf of the petitioner that the petitioner can be said to be a ‘person aggrieved', and therefore, his appeals ought to have been entertained by the Appellate Tribunal, deserves rejection. - Decided against the petitioner.

  ---

• 2014 (7) TMI 879
  Claim of interest on delayed refund - export of goods - the claim of the refund of the additional duty deposited by the petitioner was rejected by the Deputy Commissioner of Central Excise by its orders dated 28.11.2008 and 21.10.2008. The claim of the petitioner that it is entitled to rebate of CVD is no longer res integra and the said question has been decided in favour of the petitioner, albeit, after a considerable lapse of time. - Held that:- there has been an inordinate delay in allowing the rebate claims filed by the petitioner considering that the raw materials were imported almost eight years ago. It is appropriate that interest at the rate of 8% be granted to the petitioner on the refund sanctioned by the authority from the expiry of three months from the date when the claim was first rejected by the concerned Authority. - petition allowed - Decided in favor of assessee.

  ---

• 2014 (7) TMI 878
  Extension of stay - third proviso to sub-section (2A) of Section 35C - power to extend the stay beyond the period that has been prescribed - Held that:- The appeal was listed before the Tribunal on diverse dates and it was the inability of the Bench of the Tribunal to dispose of the appeal which has led to the appeal remaining pending on the file. Hence, we are of the view that it would be a travesty of justice to saddle the petitioner with the consequence of the unconditional stay being vacated because of the inability of the Tribunal to dispose of the appeal. - stay extended - department not to pursue recovery proceedings - decided in favor of assessee.

  ---

• CST, VAT & Sales Tax

• 2014 (7) TMI 889
  Challenge to the clarification of the first respondent in Reference - powers to issue a circular or clarification under the TNVAT Act - Input tax credit - Capital goods - Held that:- The definition of capital goods only specifies that the goods which are used for the purpose of manufacture can be categorized as capital goods. The tax paid for the purchase of capital goods used in the case of manufacture is entitled to be claimed back as ITC - The petitioner herein is involved in the manufacturing of industrial boilers. Huge metals can only be carried by crane for manufacturing boilers. When the cranes are exclusively purchased by a dealer to be used for manufacturing activity, the same would definitely fall under the definition of capital goods. However, when the cranes purchased as rented out to others or used for any other purpose other than for manufacturing activity, the same cannot be treated as capital goods. Therefore, the classification of cranes would have to be dealt with on the facts of each case. First respondent had no powers to issue any circular or clarification. Further section 48 A was introduced with effect from 27.09.2011. Any order by the State Level Authority for Clarification and Advance Ruling under Section 48 A can only be made regarding any clarification on rate of tax on an application by a dealer. Even there, the first respondent has no powers to individually or independently issue any clarification on rate of tax. It is also clear that the first respondent does not have any authority to issue circulars or clarifications on any other matters other than rate of tax. The first respondent cannot use the circulars or clarifications to overcome the provisions of the statute. Any interpretation which was not intended by the legislature also cannot be introduced by way of circulars or clarifications. Any change in the statute can be brought in only by way of amendment. The levy of tax must be within the four corners of law and must not be based on surmises and conjunctures. Any act contrary to the provisions of the taxing statute would be hit by Article 265 of the Constitution of India. Therefore, the impugned circular issued without authority is set aside. The petitioner is directed to submit their objections within four weeks from the date of receipt of a copy of this order and the second respondent shall consider the objections and pass orders independently sticking on to the provisions of the Act - Decided in favour of assessee.

  ---

• 2014 (7) TMI 888
  Penalty - Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in treating the invoices produced by the appellant as “Retail Invoices” even though the nomenclature of a document cannot be conclusive to decide as to whether a invoice produced is a Retail Invoice or a Tax Invoice and even though admittedly, the invoice produced contained all the essential ingredients of a Tax Invoice including details of tax charged separately - Held that:- On persual of the statutory notice issued in Form No.309 and considering the same it appears that there is a reference to the penalty u/s 34(7) and u/s 12(7) of the Act only. However, there is no reference of penalty u/s 34(12) of the Act. Thus, before imposing the penalty u/s 34(12) of the Act neither any statutory notice has been served upon the appellant nor the appellant has been called upon to show cause as to why the penalty u/s 34(12) of the Act may not be levied/imposed. Under the circumstances, the order passed by the First Adjudicating Authority, partly confirmed by the First Appellate Authority and confirmed by the Appellate Tribunal imposing the penalty u/s 34(12) of the Act cannot be sustained and the same deserves to be quashed and set aside as the same is in breach of principle of natural justice. Consequently, the order passed by the First Adjudicating Authority imposing penalty u/s 34(12) of the Act, partly confirmed by the First Appellate Authority and further confirmed by the Appellate Tribunal, is hereby quashed and set aside - Decided in favour of assessee.

  ---

• 2014 (7) TMI 887
  Restoring of re assessment order - Exercise of suo moto revisional authority - Held that:- effect of the order passed by the Commissioner in exercising of revisional jurisdiction has virtually left the assessee without remedy of first appeal, as the Commissioner after setting aside the order of the first appellate authority has left the matter at that stage without directing the first appellate authority to examine the merits of the appeal and to pass orders by himself and not by remanding the matter to the original authority. - As there is a statutory bar for the first appellate authority to remand the matter to the assessing authority, to that extent, the order passed by the first appellate authority has undoubtedly committed an error in law - Matter remanded back - Decided in favour of assessee.

  ---

• 2014 (7) TMI 886
  Locus standi - Seizure of equipment - Violation of principle of natural justice - Hearing opportunity not given - petitioner claims to be the financier of an excavator which was purchased by the fourth respondent - Held that:- As far as the plea of the petitioner that orders are vitiated for the reason that the petitioner was not heard in the matter is concerned, I am of the view that in a proceedings under section 47(2) of the Act, the registered owner of the vehicle or the owner of the consignment in question alone are liable to be heard. If that be so, these orders do not call for interference on the ground that the petitioner has not been heard in the matter. - Decided against the petitioner.

  ---