Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 7, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Clarifications on scope and the procedure to be followed for tax compliance for Undisclosed Foreign Income and Assets in Question and Answer form. - Circular
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TDS u/s 194J - Data Link transfer does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in Section 194J read with Section 9(1)(vii) read with Explanation-2 of the Act - AT
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Employee's Stock Option Scheme (ESOP) - the primary object of this exercise is not to raise share capital but to earn profit by securing the consistent and concentrated efforts of dedicated employees during the vesting period, such discount is construed, both by the employees and the company, as nothing but a part of package of remuneration - claim of deduction allowed - AT
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Unexplained investment - blank cheques found during the search - Though the AO is justified in entertaining doubt that the appellant is engaged in the business of money lending and the cheques have been obtained, only after the amounts were advanced since in the absence of any positive evidence, no addition - AT
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Income from salary - provision of accommodation at concessional rent - difference between the market rent and the rent actually paid by the assessee - no benefit accrued to in the hands of the assessee in the form of perquisite - AT
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Registration as a Charitable Trust under Section 12A cancelled - merely on the ground that the case falls under first proviso to Section 2(15) of the Act , registration cannot be cancelled - HC
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Transfer of capital asset to the developer in terms of section 2(47)(v) read with section 53A - there is nothing on record to prove that the developer was unwilling to perform his part of the contract as provided under section 53A of the Transfer of Property Act, we are of the view that there is a transfer of capital asset - AT
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Eligibility for exemption u/s. 11 - Excessive remuneration/perquisites paid Director General - .There is no bar under the law that charitable trust or institutions should not be efficiently or professionally managed. - AT
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Addition u/s 68 - unexplained share capital /share premium - CIT(A) adopted wrong approach in allowing the appeal by holding that the A.O. had failed to point out source from which money was received by the assessee company before making addition u/s 68. - AT
Customs
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Penalty u/s 114A - allegation of mis-declaring that export product - availing the benefit of VKGUY - Appellant was holding a bonafide belief that the oil is extracted by expelling process, the resultant meal will continue to be classified as expeller variety of oil cake meal - no penalty - AT
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Suspension of custodianship of CFS - illegal removal of seized goods due to failure on the part of custodian not ensuring safety and security of the seized goods kept under the appellant's custody - if appellants are allowed to continue as custodian it will certainly cause jeopardy and hamper the process of investigation - suspension order sustained - AT
Service Tax
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Service Tax on lease of land for 99 years - whether in nature of Renting of Immovable Property or sale - prima facie service tax is leviable since it is not sale per se. - AT
Central Excise
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Demand of interest - interest is chargeable on the differential duty paid through supplementary invoices raised by the appellants. - AT
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Duty demand on the Removal of remnant by appellant to the job worker - Merely because the waste and scrap so generated has been made dutiable when sold, it cannot be said that new excisable product has been manufactured. - AT
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Denial of MODVAT / CENVAT Credit - Department shall not deny the credit of specified duty whether or not such waste or refuse is exempt from whole of the duty of excise leviable thereon or chargeable to nil rate of duty - HC
VAT
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Andhra Pradesh Sales Tax (Settlement of Disputes) Act, 2001 - in the absence of any specific provision for collection of interest on the amount settled, it is not open for the respondent to collect the same from the petitioner. - HC
Case Laws:
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Income Tax
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2015 (7) TMI 196
Penalty u/s.271D - violation of S. 269SS - Held that:- For imposing penalty u/s.271D there must be some direct evidence to substantiate that the assessee has infact accepted cash loan in violation of the provisions of section 269SS. In the instant case, there is no direct evidence brought on record by the Revenue. The assessee was categorically denying of any such cash loan from Shri Kachrulal Nathmal Mutha. There is nothing on record to suggest that any such statement has been recorded from either of the persons so as to prove that such cash loan has been given or taken. The entire process is on the basis of surmises and presumptions. It is also a fact that the assessee is no more and has expired. Considering the totality of the facts of the case, we are of the opinion that it is not a fit case for levy of penalty u/s.271D of the I.T. Act in absence of any direct evidence to show that the assessee, in the instant case, has accepted cash loan in violation of provisions of section 269SS. In this view of the matter, we set-aside the order of the CIT(A) and direct the AO to cancel the penalty levied u/s.271D. Since the assessee succeeds on merit, we refrain ourselves from deciding the legal arguments advanced by the Ld. Counsel for the assessee to the proposition that the penalty order is barred by limitation. - Decided in favour of assessee.
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2015 (7) TMI 195
Agricultural land - whether land located in Khasra No. 319/320 in Sanjharia village on Sanganer Tehsil was not a capital asset U/s 2(14) of the Act? - Held that:- On perusal of evidence submitted alongwith the submission revealed that the Tehsildar, Jaipur Nagar Nigam had certified that both the khasras numbers are outside limit of Jaipur Nagar Nigam and are situated at a distance of 9 Kms from the outer limit of the Nigam. The learned CIT(A) has called remand report from the Assessing Officer who has accepted the fact of the case, therefore, we confirm the order of the learned CIT(A). -Decided against revenue.
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2015 (7) TMI 194
Search and seizure operation undertaken u/s 132(1) - Held that:- The present case, in September 2007 the search was carried out in the premises of Dr. Yogi Raj Sharma. The document Annexure RJ-1 was seized by the respondents. At the relevant time petitioner no. 1 was the Chief Health Secretary and this fact was within the knowledge of the respondents, but why the search was conducted on 30.5.2008 after a period of near about 9 months, there is no explanation in this regard. The document Annexure RJ-1 was seized from the premises of Dr. Yogi Raj Sharma but until and unless there is corroborating evidence the respondents could not have formed the basis of issuing warrant of authorization. It appears that because of the allotment of house to respondent no.4, there was some annoyance of the authorities and as soon as on 20.5.2008 the house was got allotted by Chief Minister, on 28.5.2008 warrant of authorization was issued and on 30.5.2008 search was conducted. If there was some material with the Department that the petitioners had purchased some house or land property, then there could have been definite evidence in this regard, but for a period of 8 months no information was collected and all of a sudden the warrant of authorization was issued. From the perusal of panchnama prepared during seizure it appears that no objectionable document or undisclosed property was found except those which were declared in the earlier return. There is no other evidence available on record that the document Annexure RJ-1 relates to the petitioner and the word 'ch' of which correctness is disputed by the petitioner indicates to the petitioner. In absence of any cogent reasons in the present matter warrant of authorization could not have been issued. Issuance of warrant of authorization is a serious action and for this authorization officer should have recorded his satisfaction. Though normally this Court is not looking to the reasons of satisfaction, but in the present case it appears that the warrant of authorization was issued merely on hypothecated grounds, which is not sustainable under the law. In the present case, we have examined the entire proceedings, satisfaction note, the document Annexure RJ-1, which is the basis for issuance of warrant of authorization and ultimately the seizure memo and find that the entire action which was initiated and taken was based on without any sufficient ground or material and it appears that because of dispute in respect of allotment of house, the respondents could get an opportunity to issue warrant of authorization, resultantly search in the premises of petitioners as conducted. - Decided in favour of assessee.
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2015 (7) TMI 193
Treatment to surplus funds - Held that:- CIT(A) has rightly appreciated the facts of the case and has rightly arrived at the correct conclusion as the funds kept in bank deposits cannot be classified as surplus funds as project was under completion. The argument of Ld. D.R. that facts were not verified by Ld. CIT(A) does not hold any force as Ld. CIT(A) by quoting figures in his order has arrived at the conclusion. - Decided against revenue.
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2015 (7) TMI 191
Non deduction of TDS u/s 194H - discounts allowed to the pre-paid SIM card distributors - penalty u/s 271C - Held that:- No doubt, in so far as the merit or other of the levy of penalty u/s 271C of the Act is concerned, the same shall be a subject-matter of consideration when the corresponding appeals of the assessee shall be heard by the Tribunal. So however, in so far as it is necessary to appraise the prima-facie nature of assessee’s case and the balance of convenience necessary to dispose of the captioned Stay Applications is concerned, the same have been noted by us. Considering the entirety of circumstances and the factual and legal matrix brought out by the Ld. Representative for the assessee, we deem it fit and proper to direct the Assessing Officer not to take any coercive measures to recover the outstanding demands. Meanwhile, the corresponding appeals of the assessee pending with the Tribunal shall be posted for hearing on an out-of-turn basis before the regular Bench on 02nd March, 2015, as announced in the open Court at the time of hearing. Since the aforesaid date of hearing was announced in the open Court in the presence of both the parties, the requirement of issuance of a formal notice of hearing is hereby dispensed with. The above order restraining the Assessing Officer from taking coercive measures shall operate for a period of six months from today or till the date of order of the Tribunal in assessee’s appeals, whichever is earlier.
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2015 (7) TMI 190
Validity of CIT[A] order - Disallowance of unexplained investment - Held that:- CIT(A) observed that the amount of ₹ 10.63 lakhs form part of the regular sales recorded in the books and hence cannot be termed as unexplained receipt/investment in the hands of the assessee. He observed that most of these documents and evidences were submitted before the AO and the AO has not made any adverse comments. No independent enquiry was conducted by the AO. In any event the amount of ₹ 10.63 lakhs comprising of small denomination Demand Drafts of ₹ 19,500/- each were sent back to the AO for verification. The other additions were deleted. - D.R. could not controvert any of the factual findings recorded by the Ld.CIT(A). - Decided against Revenue.
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2015 (7) TMI 175
Non-deduction of tax u/s 194H - transaction of prepaid card sold to distributor and price at which the end customer buys alleging the difference to be payment of commission - Held that:- Recently this Bench has decided similar issue in the case of Tata Tele Services,[2015 (3) TMI 1023 - ITAT JAIPUR] which is identical to the assessee’s case. The facts of the case has been demonstrated by the AR that the assessee was issuing bill on net amount on MRP has been fixed on prepaid card sold. The assessee has not transferred any income to the distributor but the distributor was allowed to avail the airtime to the extent of MRP price. In books of account, the assessee had credited these receipts on net basis. - Decided in favour of assessee. Addition U/s 194J - non deducting TDS on roaming charges paid by the assessee being a fee for technical services - Held that:- For installation/setting up/repairing/servicing/maintenance capacity augmentation are require human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. The term Inter Connecting User Charges (IUC) also signifies charges for connecting two entities. The Coordinate Bench also considered in i-GATE Computer System Ltd. [2015 (1) TMI 236 - ITAT PUNE] the Hon'ble Supreme Court decision in the case of Bharti Cellular Ltd.[2010 (8) TMI 332 - Supreme Court of India] and held that Data Link transfer does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in Section 194J read with Section 9(1)(vii) read with Explanation-2 of the Act. In case before us, the assessee has paid roaming charges i.e. IUC charges to various operators at ₹ 10,18,92,350/-. Respectfully following above judicial precedents, we hold that these charges are not fees for rendering any technical services as envisaged in Section 194J of the Act. Therefore, we reverse the order of the ld CIT(A) and assessee’s appeal is allowed on this ground also.- Decided in favour of assessee.
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2015 (7) TMI 174
Disallowance of claim of additional depreciation - CIT(A) deleted the addition - Held that:- On due consideration of the order of CIT(A)in the light of decision of CIT vs. VTM Ltd. (2009 (9) TMI 35 - MADRAS HIGH COURT ) and CIT vs. Hi Tech Arai Ltd. [2009 (9) TMI 60 - MADRAS HIGH COURT ] wherein held that additional depreciation on windmill will be admissible to the assessee. Thus we are of the view that ld. first appellate authority has appreciated the facts and circumstances of the case in right perspective and the issue in dispute is covered in favour of the assessee by the decision of Hon'ble Gujarat High Court. - Decided against revenue. Depreciation on fans, electrical installations - at 10% OR 15% - Held that:- The AO in the impugned order has nowhere observed that these are not part and parcel of the plant and machinery. The assessee has pleaded that electric cables and fans are being installed in casting department where additional load of electricity is required. These fittings at the location attach moulding and casting at three places. Therefore, they are integral part of the machinery. We allow this ground of appeal and delete the disallowance. The ld. AO shall compute the depreciation admissible to the assessee @ 15% on these electrical fittings and fans. The moment they are treated as a part of plant the assessee will get additional depreciation also - Decided against revenue. Disallowance of Employee's Stock Option Scheme (ESOP) - Held that:- AO was of the view that it is a capital loss. It is not materialized in this year. It would happen only when option is exercised by the employees. All these aspects have been considered by the Special Bench of the Tribunal rendered in the case of Biocon Ltd. Vs. Dy.CIT reported at (2013 (8) TMI 629 - ITAT BANGALORE ) wherein it has been explained that share premium is a capital receipt and not chargeable to tax in the hands of the company. If a company issues shares to the public or to the existing shareholders at lesser than otherwise prevailing premium due to market sentiments or otherwise such share receipts of a premium would be a case of receipt of lower amount on capital amount. Because the object of issuing such share at a lower price is nowhere directly connected with the earning of income but, when the company undertakes to issue shares to its employees at a discounted premium at a future date the primary object of this exercise is not to raise share capital but to earn profit by securing the consistent and concentrated efforts of dedicated employees during the vesting period, such discount is construed, both by the employees and the company, as nothing but a part of package of remuneration, a substitute to giving direct incentive in cash for availing the services of the employees. Therefore, in our opinion ld. first appellate authority is not justified while upholding the disallowance of the assessee's claim.- Decided against revenue. Additional depreciation on Mumbai Display Centre disallowed - Held that:- The AO has to compute the true written down value in this year in view of confirmation of additional depreciation in earlier year. We have duly considered the rival contentions and gone through the record carefully. If claim of depreciation in one year is being disallowed then that would enhance the written down value of the asset by the disallowed amount in the subsequent year, the depreciation is to be computed on this enhanced written down value. The confirmation of disallowance in AY 2007-08 upto the Tribunal has materialized after passing of the assessment order in the present Asst. Year. Therefore, in our opinion this issue requires reconsideration at the level of AO. - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 173
Ownership of property - value of cost of acquisition - unauthorizedly encroached school land for which he has no title/right - whether the assessee could not prove ownership of the property, therefore, have no legal right or title upon the asset, consequently, the income could not be taxed as long term capital gain - Held that:- Mere facts that certain entries were made in the balance sheet would not substantiate or justify the same to be adopted as the cost of acquisition unless such claim is substantiated as and when called upon the assessment proceedings. The assessee has failed to produce the same in the present proceedings despite repeated opportunities on various occasions. As the assessee has shown the sale of the immovable property during the year under consideration, the onus is on the assessee to prove that he is the owner of the property that has been sold. The proof can be substantiated only through the purchase agreement. As such, the value of cost of acquisition is being considered as ZERO or NIL. Totality of facts clearly indicates that the assessee is neither the legal owner of the property nor was having any document showing any right/title in his favour and uncontrovertedly the land was meant for a primary school and the assessee illegally encroached upon such land. Before us, the only argument of the assessee is that ownership of the property is not a pre-condition for the claim of capital gains. We are not agreeing with this proposition because how a gain can be claimed on a illegally occupied property which was a meant for a school and the assessee is not having any title/right over the land. Section 2(14) defines capital asset. The assessee right from assessment stage and till before this Tribunal has not produced any document regarding transfer/purchase of the impugned property in his favour as is evident from para 4.1 of the assessment order also. The assessee did not produce any document in support of the cost of acquisition or investment made for the property/capital asset. The Fatnani family is consisting of three brothers and encroached upon the adjacent plot meant for a primary school. Even in para-2 at page -3 of the impugned order, it has been admitted by the assessee itself that he occupied the school land unauthorizedly and illegally carried out construction. The totality of facts clearly indicates that the ld. Commissioner of Income Tax (Appeals) without appreciating the facts reached to a particular conclusion, therefore, such order cannot be upheld. - -Decided against assessee.
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2015 (7) TMI 172
Reopening of assessment - the assessment orders passed by the AO are illegal and without jurisdiction as no notices u/s.148 of the Act were served on the assessee as submitted by assessee - Held that:- In the instant case, even there is no concrete evidence to prove that notices u/s.148 of the Act, were sent by Regd. post on 31.5.2001. Evidence of such notice even does not establish on record that a separate notice for each assessment year under consideration was issued. Considering the above facts, we hold that no notice u/s.148 was served on the assessee. The revenue has miserably failed to prove that notices u/s.148 of the Act were served on the assessee. It is true that the AO derives his jurisdiction to initiate the proceedings u/s.147 of the Act on the basis of service of notice u/s.148 of the Act. For a proceeding u/s.147 of the Act, to be valid, it is mandatory that the service of notice u/s.148 should be effected. In the case of CIT v. Mintu Kalita [2001 (2) TMI 39 - GAUHATI High Court] held that service of notice prescribed in section 148 for the purpose of initiating proceeding for reassessment is not a mere procedural requirement but it is a condition precedent to the initiation of proceedings for the assessment u/s.147 of the Act. The mere issuance of notice is not sufficient.Thus we have no other alternative except to annul the reassessment orders made by the AO as well as the impugned order of ld CIT(A) for all the five assessment years under consideration. - Decided in favour of assessee.
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2015 (7) TMI 171
Unexplained investment - blank cheques found during the search - AO had concluded that the appellant is engaged in money lending business - Held that:- All the persons have confirmed that cheques have been handed over to the appellant only as a measure of security for supply of scrap or for the purpose of obtaining the loan, but all of them have denied having obtained any loan from the appellant. The statements given by those people remains uncontroverted. Though the AO is justified in entertaining doubt that the appellant is engaged in the business of money lending and the cheques have been obtained, only after the amounts were advanced since in the absence of any positive evidence in support of the appellant having lent money to the above persons, we are not in a position to confirm the addition. Accordingly, the additions are deleted - Decided in favour of assessee. Deduction u/s. 80U - Held that:- As the claim was withdrawn before the AO and therefore, the CIT(A) is perfectly justified in rejecting the claim of the appellant. Hence, this ground of appeal is dismissed.- Decided against assessee.
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2015 (7) TMI 170
Perquisite value for provision of accommodation at concessional rent - income from salary - difference between the market rent and the rent actually paid by the assessee is a perquisite within the meaning of section 17(2)(ii) or a benefit within the meaning of section 2(24)(iv) - CIT(A) appreciating the fact that the assessee has been residing in the bungalow by paying a meager rent in his capacity as a Chairman because of the existence of employer-employee relation and not as a protected tenant, th8s deleted addition - Held that:- After considering the assessee’s reply with respect to each and every aspect, the ld. CIT(A) recorded his findings that the assessee was occupying house as per the independent rent agreement for which the assessee was paying standard rent and no benefit accrued to the assessee in his capacity of employee, when the assessee was independently receiving the HRA from his employer for not providing the accommodation. The findings recorded by the ld. CIT(A) are as per the material available on record which has not been controverted by the Department. The conclusion drawn in the impugned order of the ld. CIT(A), discussion made in the assessment order, contentions of the ld. Counsel for the assessee & Revenue, and material available on record are kept in justaposition and analyses, we find that no benefit accrued to in the hands of the assessee in the form of perquisite. Accordingly, we do not find any reason to interfere with the findings recorded by the ld. CIT(A) which resulted into the deletion of addition made on account of perquisite in the hands of the assessee. - Decided against revenue.
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2015 (7) TMI 169
Registration as a Charitable Trust under Section 12A cancelled - case falls under first proviso to Section 2(15) of the Act - Whether the Tribunal was correct in holding that the assessee is entitled to continue registration under Section 12A? - Held that:- A registration granted earlier under Section 12A of the Act can be cancelled under two circumstances; ( a) If the activities of such trust or institution are not genuine, (b) The activities of trust or institution not being carried out in accordance with the object of the trust or institution. Only on those two conditions being satisfied, the registration granted under Section 12A of the Act could be cancelled by the authorities. It is not in dispute that there is no violation of the said two conditions by the assessee. The activities carried on by the assessee is a genuine one. As could be seen from the profits they have generated, the said profit is earned by carrying on the activities in accordance with the object of the trust. Therefore, the two conditions stipulated in sub- section (3) of Section 12AA of the Act, which empowers the authority to cancel registration, do not exists in this case. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. In fact, sub-section(8) to Section 13 which is introduced by Financial Act, 2012 which came into effect from 1.4.2009 categorically provides that, nothing contained in Section 11 or Section 12 shall operate so as to exclude any income from the total income of the previous year or any receipt thereof. If the provisions of the first proviso to Clause 15 of Section 2 becomes applicable in the case of such person in the said previous year, the Statute has protected the interest of revenue. Not withstanding the fact that the assessee is conferred registration under Section 12A of the Act, unless the assessee falls within Section 2(15) of the Act, excluding the first proviso, the assessee would not be entitled to the benefit of ex emption from the tax. If the case of the assessee falls with first proviso to Section 2(15) of the Act, the benefit of registration which flow from Section 12A of the Act is not available. Anyhow, that is a matter to be considered by the Assessing Authority. But on that ground, registration cannot be cancelled, which is precisely the Tribunal has held. - Decided in favour of assessee.
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2015 (7) TMI 168
Entitlement to deduction u/s 54F - disallowance of expenses on property and interest paid on loan - Held that:- Assessee had advanced claim in regard to computation of long term capital gain after giving the details of purchase cost and the improvement cost over 4 years. The indexed cost of acquisition was accordingly computed. The assessing officer, however, only took into consideration the amount paid as per allotment letter and expenses on conveyance deed. The assessee in its reply, as reproduced earlier, stated that all the payments were made through DD. The AO did not accept the entire cost of acquisition claimed at ₹ 4,20,323/-.Mere disallowance of certain expenses claimed by assessee as cost of acquisition could not lead to the conclusion that assessee had advanced any false claim only because assessee was unable to substantiate the same with reference to specific vouchers. Penalty u/s 271 (1) (c) - Regarding assessee’s claim u/s 54F. Ld. CIT(A) has clearly observed that assessee is entitled to proportionate deduction u/s 54F and, therefore, it cannot be said that assessee had advanced any false claim. It is not in dispute that assessee had been allotted a residential plot in CHD City Sector 45 Karnol on the basis of which he ha advanced claim u/s 54 F which was in principle accepted by Ld. CIT(A) but since the total consideration was only ₹ 5,55,00/- as against ₹ 10,000/- being the sale consideration therefore, he allowed only proportionate deduction. This was solely on account of difference in opinion between assessee and Ld. CIT(A). Under these facts there is no question of levying penalty in view of various case laws relied by Ld. Counsel for the assessee in the written submission. Levy of penalty apropos disallowance of interest paid to Smt. Prem Lata Jain the disallowance has been made only because the capital of the assessee was much lower than the investments made by assessee in properties and shares. However, it is not in dispute that assessee had shown business assets aggregating to ₹ 3,28,856/-. The assessing officer had required the assessee to show as to why interest paid to Smt. Prem Lata Jain ₹ 32,600/- be not disallowed as investment in non business assets, properties and shares was much more than capital. On this basis it was inferred that loan of Smt. Prem Lata Jain had not been utilized for business purpose. The assessing officer has not demonstrated any nexus between the amounts received from Smt. Prem Lata Jain and its utilization for non business purposes. Thus it cannot be a basis for at least levying penalty because there is no finding that loan was actually utilized for non business purposes. - Decided in favour of assessee.
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2015 (7) TMI 167
Unsecured loans - Held that:- Clear evidence and reasons to believe that the assessee's efforts to take over GBES along with land did not materialize. The assessee has received back all the payments made towards membership and also loan to GBES are returned by cheque and recorded in the books of the assessee. Therefore, the contention of the assessee having received cash also in the books on cancellation cannot be rejected. Also scrutinizing the loan confirmation letters from the various parties to GBES, these confirmations are self explanatory giving complete particulars of payment and also of the parties. Thus no reason to believe that these unsecured loans are fictitious. Assessee even though if had taken over GBES, the loans if existed on the date of taking over would have become the loans of the society under the new management. Under no circumstances the assessee can be brought to tax on account of these unsecured loans. The AO has grossly erred in making this addition. The evidence pointed out to the fact there was a negotiation and certain payment for transfer of GB Educational Society to the assessee and that the transaction could not be completed and under those circumstances the finding of the first appellate authority have to be upheld. - Decided against revenue.
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2015 (7) TMI 166
Technical know-how transfer - whether the expenditure incurred for the acquisition in question is in the capital filed or revenue? - Held that:- Perusal of the agreements clearly demonstrate that the assessee has acquired technical know-how by way of transfer from Mr.Trapp. The agreement with Mr.Glenn Trapp is for a period of 04 years. A perusal of this agreement further demonstrates that the expenditure in question was incurred for acquiring know-how with an object of improving the manufacturing process of continuous casting activities. Thus, it is a case of improving the manufacturing process, increasing efficiency and consequent profitability by incurring expenditure for acquiring technical know-how and technical assistance. As regards the issue as to whether there is enduring benefit, the company represented before the A.O. that there was no positive results consequent to this agreement and in fact the expenditure was infructuous expenditure. On facts we are of the opinion that the assessee has not acquired any capital asset nor any enduring benefit in this case. Thus, in our view the expenditure in question is in the revenue field. - Decided in favour of assessee. Disallowance of environmental study expenses - revenue v/s capital - Held that:- The expenditure was incurred for modernisation cum expansion of its existing Rajgangpur Cement Plant. The assessee has to statutorily obtain certain environmental clearances, for which the study has to be made as per the Guidelines of the Ministry of Environment and the Orissa Pollution Control Board. Under these circumstances, we are of the considered opinion, that the expenditure in question is in the revenue field. - Decided in favour of assessee. Disallowance of expenditure incurred on foreign travel - A.O. disallowed 80% of the expenses on ad-hoc basis - FAA making a disallowance of 20% of the total foreign travel expenses on the ground that there is a possibility of personal component in such expenditure - Held that:- adhoc disallowances cannot be sustained, unless there is evidence. The assessee has furnished trip wise details of its Sr.Executives and has also furnished the business transacted in each trip, export details, customer wise details of exports to various countries. Even copies of discussions held and copies of tour reports were furnished. In the face of such overwhelming evidences, to make an adhoc disallowance on surmises and conjectures cannot countenanced. In the result this ground of the assessee is allowed and the disallowance of 20% is deleted.- Decided in favour of assessee.
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2015 (7) TMI 165
Unexplained investment in property - CIT(A) deleted the addition - Held that:- The entire addition is based on the presumption that the assessee must have received an amount of ₹ 18,79,500/- being the difference between the value of the property estimated by the D.V.O. and the amount declared as consideration in the sale deed of the property, which as per the AO is unaccounted receipt of cash for sale of property. There is not even an iota of evidence with the AO to come to a conclusion that the assessee has actually received cash, over and above the amount declared by it for the sale of this property. This is not a case where Sec.50C has been invoked. It is an addition made u/s 68. It is not a case of computation of capital gains. The factual finding of the Ld.CIT(A) could not be controverted by the Revenue. Thus both legally and factually the order of the First Appellate Authority is to be upheld - Decided against revenue. Addition u/s 68- CIT(A) deleted the addition - Held that:- S.68 cannot be invoked under the facts and circumstances of the case. A hypothetical and imaginary addition has been made by the A.O.The departmental Valuation Officer has on reference made u/s 142A of the Act valued the property at ₹ 46.96 lakhs, which is marginally higher than the purchase consideration of ₹ 45 lakhs disclosed by the assessee. The difference is negligible. Taking evaluation report value, arrived at 2 years after the date of transaction and then arbitrarily modified the value and thereafter treating this amount as sale. Under the circumstances no addition can be sustained on the ground that banker’s valuer, after two years after the date of transaction, valued the property at a particular amount when no material is found in support of the AO’s conclusion that the assessee had made unaccounted investments in purchase price. The AO can not ignore the DVO’s report. The addition has been made on conjectures and surmises and without any basis. Hence the First Appellate Authority has rightly deleted the said addition.- Decided against revenue.
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2015 (7) TMI 164
Disallowance of Batta Expenses - CIT(A) deleted addition - Held that:- These payments are governed by a proper internal policy which also includes a proper verification process. In the sample vouchers submitted, we find that the details of the trips like the name of the driver, vehicle number, days of travel, etc. are furnished and the batta are paid as per the trip sheet. The details of the date of travel are corroborated by the final expenses sheet also. In view of the factual matrix of the case on this issue, as laid out above, we concur with the view of the learned CIT(A) that these expenses claimed are reasonable, are incurred for the purposes of business and that the expenses are supported by proper details maintained and verified by the assessee. We, therefore, uphold the decision of the learned CIT(A) in deleting the disallowance made by the Assessing Officer under the head batta expenses. - Decided against revenue. Replacement of tyres and pallets - whether does not come under the definition of word “repair” - revenue v/s capital expenditure - Held that:- the judicial decision cited by the learned Departmental Representative viz. Sarvanna Spinning Mills P. Ltd. (2007 (8) TMI 16 - SUPREME COURT OF INDIA) does not support the case of Revenue. In the case on hand, the object of the expenditure involved, i.e. towards replacement of tyres and pallets, is not to bring into existence a new asset but only to preserve and maintain an existing asset. We also find that in the cited case, there was a clear finding that the ‘Ring Frame’ by itself constituted an independent machine with an independent function which was replaced by a new ring frame giving enduring benefit. However, in the case on hand, it is nobody’s case that the tyres and pallets constituted an independent machine with independent functions. In this view of the matter, the judicial decision cited by the learned Departmental Representative (supra) has no application to the case of the assessee. We, therefore, concur with the view of the learned CIT(A) that the expenditure incurred for replacement of tyres and pallets does not bring into existence any new assets and are only for preserving and maintaining the trucks and as such qualify for deduction as revenue expenditure - Decided against revenue. Loss on consignment - whether relates to prior period expense? - Held that:- We find from the details on record that the assessee has furnished the total stock inventory which is prepared product-wise and location-wise. As the Assessing Officer has not found out any discrepancy in the stock statement, which is for the period relevant to the current year under consideration only, the conclusion of the Assessing Officer that these amounts may relate to prior periods is without any evidence or basis. Further, the difference in stock, which pertains to the current year, has been reconciled between the actual stock with the entries in the Books of Account. In the absence of any evidence to the contrary, it would not be appropriate to disregard the same. In this view of the matter, we concur with the observation of the learned CIT (Appeals) that the assessee's claim under this head is reasonable and agree with her decision to delete the disallowance made by the Assessing Officer. - Decided against revenue. Disallowance of depreciation on motor vehicles - @ 30% or 15% - Held that:- In the case on hand, the assessee is using the motor vehicles for transportation in its own business of refrigerated transporters, and it is not the assessee's case that it is in business of hiring out of motor vehicles. Even in the Memorandum and Articles of Association of the assessee, the business of the assessee is statedly, inter alia, as transportation of goods. Nowhere, therein, is it mentioned that the assessee is in the business of running motor vehicles on hire. If the view of the learned CIT (Appeals) is to be accepted, then any motor vehicle used in any business of the assessee would be eligible for higher depreciation because motor vehicles are always used for transport only. Since Appendix I to the IT Rules, 1962 specifically mentions business of “running them on hire”, in our opinion, it would not be appropriate to extend the same to transportation in any business. In this view of the matter, we are of the considered opinion that the Assessing Officer was right in not allowing higher depreciation @ 30% on motor lorries used by the assessee in its refrigerated transportation business - Decided in favour of revenue.
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2015 (7) TMI 163
Addition on account of Proportionate premium on redemption of debenture - CIT(A) deleted the adition - whether no premium was payable before expiry of 7 years? - Held that:- The issue in the present year in respect of proportionate premium on redemption of debenture is squarely covered in favour of the assessee by the judgment of Madras Industrial Development Corpn. Ltd. vs. CIT [1997 (4) TMI 5 - SUPREME Court] wherein it was held that discount of debentures is revenue expenditure allowable proportionately over the period of debentures. - Decided in favour of assessee. Disallowance on prospecting expenditure under section 35E - CIT(A) deleted the addition - Held that:- It is admitted position that the issue in dispute is covered in favour of the assessee by the Tribunal order in earlier year and since no difference in facts could be pointed out by Learned D.R. of the Revenue, we do not find any reason to take a contrary view in the present year.- Decided in favour of assessee. Disallowance of debentures issue expenditure - CIT(A) deleted the addition - Held that:- the issue is covered in favour of the assessee by the judgment of Hon'ble Supreme Court in the case of India Cements Ltd. vs. CIT (1965 (12) TMI 22 - SUPREME Court). Respectfully following the same, we decline to interfere in the order of CIT(A) on this issue.- Decided in favour of assessee. Disallowance of 100% equity issue expenses - CIT(A) allowed claim - Held that:- This issue is now squarely covered against the assessee and in favour of the Revenue by the judgment of Hon'ble Supreme Court rendered in the case of Brooke Bond India Ltd. vs. CIT [1997 (2) TMI 11 - SUPREME Court] - Decided in favour of revenue. Disallowance of foreign tour expenses - CIT(A) allowed claim - Held that:- his issue is covered in favour of the assessee by the Tribunal order in assessee’s own case for assessment year 1985-86 and Learned D.R. of the Revenue could not point out any difference in facts in the present year and therefore, we do not find any reason to take a contrary view - Decided in favour of assessee. Addition of expenses report at capital expenditure by the special tax auditors - CIT(A) deleted the addition - Held that:- Out of total expenses of ₹ 2,38,09,910/-, the relief was allowed by the CIT(A) for ₹ 1,04,80,843/-. The nature of expenses for which relief was allowed by CIT(A) is telephone expenses, repairs/renovation of building, staff training expenses, freight and handling, transport expenses, insurance premium, office maintenance etc. and a clear finding has been given by learned CIT(A) that these expenses are of revenue in nature. Considering the nature of expenses, we are of the considered opinion that no interference is called for in the order of CIT(A) on this issue because these expenses cannot be stated to be capital expenditure - Decided against revenue. Enhancement of Opening Stock because of closing stock enhanced in A.Y. 1989-90 - Held that:- The claim of the assessee for enhancement in opening stock in the present year is on the basis that in assessment year 1989-90, the closing stock was enhanced by the Assessing Officer. It is also noted by CIT(A) that the addition in that year has been upheld by learned CIT(A) in that year but it is not known as to whether such addition in assessment year 1989-90 was upheld by the Tribunal or not. Therefore, we feel it proper that this aspect has to be ascertained as to whether the addition was ultimately upheld by the Tribunal or not. Hence, we set aside the order of CIT(A) and restore the matter to the file of Assessing Officer for fresh decision. The assessee should submit copy of the Tribunal order for assessment year 1989-90 and if it is found that the addition in closing stock was upheld by the Tribunal then the assessee deserves relief in the present year but if the addition in assessment year 1989-90 has been deleted by the Tribunal then no relief is called for in the present year as has been claimed. CIT(A) Deleting the addition on account of presentation of articles even though the expenditure hit by section 37(2A) - Held that:- in the present year, the CIT(A) has deleted the entire disallowance made by the Assessing Officer on account of presentation articles whereas in assessment year 1993-94 to 1995-96, disallowance was confirmed by the Tribunal to the extent of 30% of such expenses. Accordingly, in the present year also, we hold that the disallowance to the extent of 70% of the expenses should be deleted and in this manner, we confirm the disallowance to the extent of 30% of the expenses Disallowance of In-land Traveling Expenses - expenses relating to the wives of the Directors/employees - Held that:- Out of foreign travelling expenses in respect of four spouses of directors of the assessee company, the expenses of ₹ 17,301/- regarding Mrs. R. Singhania is allowable otherwise also because she is a qualified Doctor and was looking after the hospital for employees at Kota plant of the assessee company. The CIT(A) has confirmed this disallowance in respect of expenses of Mrs. R. Singhania also but in our considered opinion, apart from being spouse of the director, Mrs. R. Singhania is an employee of the assessee company also and moreover while deciding the similar issue in assessment year 1987-88, it is held by the Tribunal in that year as per Para 216 of its order that this issue regarding travelling expenses of spouse of the directors is covered in favour of the assessee by the Tribunal order for assessment year 1983-84 and 1984-85. Since no difference in facts could be pointed out by Learned D.R. of the Revenue, we delete this disallowance by respectfully following the Tribunal order. - Decided in favour of assessee. Disallowance of traveling expenses on guest as reported by Special Tax Auditors - Held that:-This is the claim of the assessee that this is not the finding of the special tax auditors that this much expenses of ₹ 7,40,300/- is of disallowable nature and therefore, without pointing out any single reason for making disallowance, the disallowance made by the Assessing Officer on this basis alone that this is reported by special tax auditors that this much expenditure is incurred on guests is not justified and therefore, we delete this disallowance - Decided in favour of assessee. Disallowance of Kamla Retreat Expenses - Held that:- In assessment year 1987-88, this issue was decided by the Tribunal as per Para 223 of its order against the assessee by following the judgment of Hon'ble Apex Court rendered in the case of Britannia Industries Ltd. vs. CIT [2005 (10) TMI 30 - SUPREME Court] and therefore, by respectfully following this judgment of Hon'ble Apex Court, this issue is decided against the assessee. - Decided against assessee. Disallowance of depreciation on WDV of the expenses offered as being capital expenditure under the head "Licence Fee" in earlier year - Held that:- In the assessment order, it is noted by the Assessing Officer in assessment year 1989-90, the CIT(A) has confirmed the disallowance of depreciation on such capital expenditure. We are of the considered opinion that merely because the assessee has incurred a capital expenditure, the depreciation cannot be allowed unless the assessee is able to establish that such capital expenditure has resulted into creation of a capital asset and what is the nature of such capital asset such as land, building, plant & machinery, furniture etc. and whether capital asset was put into use for business purpose in the relevant year. Unless the assessee is able to establish that the capital expenditure has resulted into creation of capital asset and such asset was put to use for business purposes, depreciation cannot be allowed. We do not find any reason to interfere in the order of CIT(A) on this issue because the assessee has not established these aspects. - Decided against assessee. Disallowance of capital Expenditure debited to Profit & Loss A/c - Held that:- We find that in assessment year 1987-88, the issue in dispute was regarding disallowance without appreciating that the expenditure was allowable u/s 37(1). In that year, this issue was decided by the Tribunal against the assessee by following the judgment of Hon'ble Apex Court rendered in the case of CIT vs. Sri Mangayarkarasi Mills P. Ltd. [2009 (7) TMI 17 - SUPREME COURT]. Accordingly, in the present year also, this issue is decided against the assessee.
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2015 (7) TMI 162
Transfer of capital asset to the developer in terms of section 2(47)(v) read with section 53A - Whether capital gain will not arise in the impugned assessment year there being no transfer of capital asset? - willingness of the developer to perform his part of the contract questioned - Held that:- The developer not only took immediate steps to implement the project by preparing building plan/lay out, but, as per assessee’s own admission, made an application before the competent authority in 2008 seeking building permission. However, the delay in obtaining building permission was firstly because the land was under the growth corridor which required specific clearance from the authorities concerned and secondly, because it was found from the Government order issued on 06.06.2005 that part of the land is treated as Government land. Due to these exigencies necessary permission could not be obtained for starting the development activity. The delay in development of project is not due to either any unwillingness or default on the part of the developer to undertake the development activity but because of extraneous circumstances beyond his control which resulted in delay in obtaining the approval from the competent authority. In fact, the assessee has not brought a single piece of evidence on record to demonstrate that at any point of time the developer has expressed his unwillingness to perform his part of the contract of undertaking the development activity. The Hon’ble A.P. High Court in the case of Potla Nageswara Rao vs. DCIT (2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT) while interpreting the provisions of section 2(47) of the I.T. Act as well as section 53A of the Transfer of Property Act held that transfer in terms with section 2(47)(v) read with section 53A of the Transfer of Property Act takes place in the assessment year in which the development agreement is entered into and possession is delivered. Therefore, there is nothing on record to prove that the developer was unwilling to perform his part of the contract as provided under section 53A of the Transfer of Property Act, we are of the view that there is a transfer of capital asset in the impugned assessment year as envisaged under section 2(47)(v) of the Act resulting in capital gain. Keeping that in view we direct, while computing capital gain the A.O. should look into the observations made by the Ld. CIT(A) with regard to adoption of fair market value and indexed cost of acquisition. He should also decide the issue relating to deduction under section 54 or 54F in accordance with law. - Decided in favour of revenue for statistical purposes.
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2015 (7) TMI 161
Validity of reopening of assessment - The assessee filed the return of income and the same was processed under Section 143(1) of the Act - Held that:- While processing the return under Section 143(1) of the Act, AO is empowered to correct arithmetic error in the return or adjustment of an incorrect claim which is apparent on the information given in the return. The Assessing Officer is not expected to decide in respect of the issue which requires a discussion and examination. Therefore, the Assessing Officer is making a correction of arithmetic error and the claim which is apparent from the information available in the return. In the new scheme of intimation under Section 143(1) of the Act, the Assessing Officer is not expected to express any opinion on the issue raised by the assessee. In other words, the Assessing Officer cannot express any opinion while processing the return under Section 143(1) of the Act. This is a radical change made by the Parliament with effect from 1.4.1989. Since the Assessing Officer cannot make any adjustment with regard to an issue which is debatable in nature, this Tribunal is of the considered opinion that the Assessing Officer cannot express any opinion in a proceeding under Section 143(1) of the Act. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment by issuing a notice under Section 148 of the Act. - Decided against assessee. Business of the assessee is letting out of the properties - Held that:- No material is available on record to suggest that the assessee is carrying on the business of letting out of the properties nor any material available on record with regard to nature of property which was let out by the assessee and the purpose for which it was let out. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer in the light of the judgment of the Apex Court in Chennai Properties & Investments Ltd. (2015 (5) TMI 46 - SUPREME COURT). - Decided in favour of assessee for statistical purposes.
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2015 (7) TMI 160
Disallowance of 50% of the so called bogus purchases - Held that:- The payments have been made by account payee cheques. The suppliers have confirmed to have supplied the goods in response to the notice issued u/s.133(6). The assessee has produced third party evidences such as gate receipts of the respective companies certifying the receipt of goods in their premises. The companies where the assessee has executed the work are well known reputed companies and without the work carried out at their site they would not have made the payment to the assessee. Further, although it is the allegation of the AO that huge cash was withdrawn after the cheques were deposited, however, there is no evidence whatsoever to show that the money has come back to the assessee in some form or other. Even during the course of survey at the premises of the assessee, no incriminating materials were found to show that assessee was involved in accommodation entries. No excess cash was found. Further, the assessee has maintained proper books of accounts. The goods purchased have entered into the books of account and material consumed have also been entered into the books of account giving the quantitative details. Perusal of the orders of the authorities below and the rival submissions made by both the sides indicate that while the entire purchases cannot be treated as bogus, at the same time the entire purchases also cannot be allowed as genuine. If we allow such type of transactions as genuine it will be against assessees who meticulously maintain full records, produce the parties before the AO on being directed and produce the necessary details to substantiate their transactions. We therefore agree with the finding given by the Ld.CIT(A) that there are strengths and weaknesses in the evidences and the arguments of both the sides and it is not possible to hold either the AO or the assessee as fully correct in their claims. From the various details furnished by the assessee we find the assessee has given site-wise profitability statement vis-à-vis the disallowance made by the AO if the addition so sustained by the AO is accepted, then the GP rate in 2 cases is above 99%, in one case it is about 98%, in 2 cases it is almost 93% and in 1 case it is 95% which appears to be absurd as compared to assessees engaged in similar line of business. Considering the totality of the facts of the case, we are of the considered opinion that disallowance of lumpsum amount of ₹ 75 Lakhs (Rupees Seventy Five Lakhs only) for A.Y. 2007-08 and ₹ 50 lakhs (Rupees Fifty Lakhs only) for A.Y. 2008-09 as against disallowance of ₹ 7.12 crores in A.Y. 2007-08 and ₹ 2.48 crores in A.Y. 2008-09 by the AO will meet the ends of justice. - Decided in favour of assessee partly.
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2015 (7) TMI 159
Penalty levied u/s. 271AAA - assessees have not been able to substantiate the manner in which the undisclosed income has been derived - CIT(A) cancelled penalty levy - Held that:- A perusal of questions and answers put to the assessee, show that the undisclosed income and the source of income both were substantiated by the assessee during the course of search. Since, no further query was put to the assessee with respect to undisclosed income the assessee did not elaborate the same. We observe from the impugned orders that the assessees in their submissions before the Commissioner of Income Tax (Appeals) have given the bifurcation and source of income, declared in the hands of various members of the group.It is evident that the total undisclosed income under badla transaction and unaccounted transactions have been offered to tax in the hands of group members. Thus, in our considered view the assessees have been able to substantiate the manner in which undisclosed income has been derived. Since, all the three conditions as laid down in sub-section (2) of section 271AAA are satisfied. The levy of penalty u/s. 271AAA is not warranted. - Decided against revenue.
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2015 (7) TMI 158
Undisclosed income - addition made on the basis of notings on a loose paper - Held that:- Firstly, the loose paper was found in the premises of Shri Sanjay Shah i.e. it was not found in the premises of the assessee. Secondly, it was in the possession of Shri Sanjay Shah so obviously it cannot be in possession of the assessee. Therefore, the provisions of Sec. 132(4A) of the Act is not applicable as the paper was not found from the possession of the assessee. The most important fact to be considered at this point of time is that the assessee was staying in USA for almost 5 years from 29.11.2004 to 19.1.2009. The search was conducted on 21.2.2007 which means that on the date of search, the assessee was not even present in India. Lastly, concluding observations of the AO as mentioned in para-5 (supra) clearly suggest that the additions have been made on protective basis so this is a protective assessment. However, there is no reference about any case/assessee, in whose hands substantive additions have been made. Thus no reason of addition in the hands of the assessee on protective basis. - Decided in favour of assessee. Addition on account of estimated household expenses - Held that:- a similar addition has been made in the hands of the HUF of the assessee. The fate of that appeal is not known. However, it is an undisputed fact that the assessee was staying in USA for almost 5 years and during the impugned assessment year the assessee was in India only for 7 months, considering that the assessee has come from USA, possession of some money cannot be ruled out. We therefore do not find any logic in making the impugned addition. Order of the Ld. CIT(A) is set aside and the AO is directed to delete the addition - Decided in favour of assessee. Unexplained bank deposit on the basis of bank statement - CIT(A) deleted the addition - Held that:- It is an undisputed fact that additional evidences were furnished before the Ld. CIT(A) but it is also an admitted fact that the Ld. CIT(A) has transmitted all the additional evidences to the AO calling for a remand report. Instead of verifying the additional evidences, the AO left the matter at the discretion of the First Appellate authority. We find that after satisfying himself the Ld. CIT(A) deleted the addition. We, therefore, decline to interfere - Decided in favour of assessee. Unexplained investment in silver - Held that:- The undisputed fact is that the silver utensils were found from the bed room of Mrs. Mrtudulaben Shah and even panchanama and seizure memo are also in the name of Shri Sanjay Shah. If the additions have been made purely on the basis of presumptions as laid down in Sec. 132(4A), then the silver was not found from the possession of the assessee. The AO has relied upon the statement of Shri Sanjay Shah. However, the contents of such statement has not been referred to in the assessment order nor in the order of the First Appellate authority. The Ld. CIT(A) has confirmed the addition on the basis of presumption of Sec. 132(4A) which on the facts of the case is not at all applicable - Decided in favour of assessee. Addition of purchase of immoveable properties - Held that:- CIT(A) has given a categorical finding that the property was purchased in the year 2003. That being the fact of the matter, the impugned addition cannot be considered for the year under consideration. - Decided in favour of assessee.
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2015 (7) TMI 157
Transfer pricing adjustment - Selection of comparable - Held that:- CIT(A) was not justified in giving any opinion about the correctness or otherwise of the TPO’s order for Assessment Year 2005- 06, because that was not under appeal before him. However, be that as it may be, we have heard both the parties with regard to the method to be followed while comparing the raw-material component of the assessee as well as comparables. After considering the arguments of both the sides and facts of the case, we find force in the contention of the ld. Counsel of the assessee that the ratio of raw-material/sales would be a proper ratio to compare the consumption of raw-material by the assessee and comparable parties, because sales in the case of the assessee is, admittedly, uncontrolled transaction. Whether purchase from associated enterprises is at arms-length or not? - Held that:- Admittedly, sales by the assessee is not to the associated parties and therefore, is un-controlled transaction. In view of above, in the light of OECD guidelines, while working out ratio of raw-material should be worked out by comparing the raw-material vis-à-vis sales. In this view of the matter, we uphold the finding of the TPO for the year under appeal wherein he arrived at the conclusion that the assessee should be allowed the adjustment of 18.50% because of excess consumption of raw-material. However, in our opinion, while giving the adjustment, the assessee should be allowed the adjustment of 18.50% of the sales and not of the 18.50% of the rawmaterial cost. We, therefore, direct the Assessing Officer to allow the adjustment of 18.50% of the sales while working out the operating profit and if, after the above adjustment, the operating profit of the assessee works out to more than 6.78% i.e. the average of operating profit of comparables, then no adjustment should be made. With this direction, we set aside the orders of the lower authorities and restore the matter back to the file of the Assessing Officer. Set off of part of losses against the income - Held that:- The appellant is entitled to set off of the business loss pertaining to AY 1997-98 in its case against its profit of AY 2004- 05 in view of provisions of section 79 of the IT Act. As regards remaining losses in the case of appellant, the same cannot be denied to be carried forward by the AO u/s.79 of the Act while completing the assessment for AY 2004-05. As stated above in case if remaining losses or part of such remaining losses which are pertaining to different years of GEPCDTA and GEIIPL are claimed by the appellant against the profit of subsequent assessment years (i.e. after AY 2004-05), allowability or disallowability of such claim of losses has to be considered by the AO on merits and subject to fulfillment of conditions as laid down in section 79 and also subject to fulfillment of conditions as laid down in other relevant provisions of the IT Act while completing the assessments in the case of appellant for such subsequent assessment years. - Decided against revenue.
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2015 (7) TMI 156
Eligibility for exemption u/s. 11 - Assessing Officer has acknowledged that the appellant has carried out activities related to the consultancy, public awareness and research in the field of renewable energy, his view that such activities were not of general public utility - Held that:- Activities were not of general public utility, is not a correct as the various activities carried out by the appellate in the field of education training, public awareness, policy advocacy and research in the cause of sustainable development and environmental protection have been discussed and in the absence of the any specific negative finding by the Commissioner of Income Tax-IV, Pune, it has been held that his action in cancelling the registration granted to the appellant trust u/s 12A(a) by invoking the provision of sec. 12AA(3) of the IT Act was not justified. Activities of the assessee extend beyond Indian geographical boundaries - Held that:- The Revenue has not been able to show that the assessee has carried out any of its activities abroad. One of the essential conditions for claiming benefit of exemption u/s. 11 is that the activities have to be carried out by the trust in India. In case the charitable activities of the assessee are beyond India territory, the assessee will not be eligible for the benefit of section 11. The Commissioner of Income Tax (Appeals) in his orders has observed that there is no material on record to show that the activities of the assessee extend outside India. Trustees are the Directors of the companies from which the assessee has purchased windmills - Held that:- when the question of denying the benefit or exemption u/s. 11 to the trust arises, the decision cannot be taken on such assumptions or possibilities. Hard facts and evidences have to be brought on record by the Assessing Officer before invoking sec. 13(1)(c) for denying the benefit of sec. 11. More so when courts are of the opinion that the onus to invoke the exception contained in section 13(1)(c) is on revenue. For the discussions made above and in the law which demands the Assessing Officer to discharge the onus of application of sec. 13(1)(c) for denying the benefit of sec. 11, it has to be held that in the face of the fact that no evidences have been brought on record by the Assessing Officer to hold the payment to Suzlon and Enercon as undue or excessive, the finding that there is some infringement of sec. 13(1)(c) is erroneous. The Assessing Officer has failed to bring on record adequate materials which can support his findings. Excessive remuneration/perquisites paid to Shri G.M. Pillai, Director General of the assessee - Held that:- Undisputedly, Shri G.M. Pillai is an employee of the assessee trust and not its trustee. Therefore, the provisions of section 13(2)(c) are not attracted.There is no bar under the law that charitable trust or institutions should not be efficiently or professionally managed. So long as the institution is not engaged in making private profit or its income has not been diverted for the benefit of interested persons, there is no reason to deny an assessee the benefit of sec. 11, so long as the other statutory provisions are satisfied. Therefore, the Assessing Officer's contentions that the salary and remuneration paid to. the Director General is more than what should have been paid is held to have no basis and cannot be sustained - Decided against revenue.
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2015 (7) TMI 155
Addition u/s 69 A - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that during the assessment proceedings, Assessee had filed replies for each of the items of jewellery and cash seized and had also furnished the addresses of the senders of parcel and cash, the original affidavits of the senders were also filed. A.O had not verified any of the evidence either at the assessment stage or the remand stage. Ld. CIT(A) has further given a finding that Assessee was courier and had explained through evidences that the parcel belonged to its customers and the parcels were received during the course of business. Ld. CIT(A) has further given a finding that there was no evidence to show that the Assessee was the owner of the goods. Ld. CIT(A) has further noted that Assessee was mere custodian of the articles that were handed over to him and which was being transported from Jaipur to Ahmedabad and the parcels were held in the capacity of the courier and there was no question of ownership and Section 69A was not applicable. Before us, Revenue has not produced any material on record to controvert the findings of ld. CIT(A) - Decided against revenue. Addition on account of luxury bus expenses - CIT(A) deleted the addition - Held that:- CIT(A) after considering the submissions and the documents has given a finding that except of ₹ 500 per day which was given to driver for lodging, there was no food expenditure relating to driver salary, food expenses etc which was included under the total vehicle expenditure. He after considering the totality of the facts, deleted 50% of the addition. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A)- Decided against revenue.
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2015 (7) TMI 154
Denial of claim of capital gains computed by the Assessee - capital gain on sale of property - applicability of section 50C - Held that:- It is a fact that assessee had entered into an agreement for sale in 1990 to sell the property for ₹ 3,50,000/- and pursuant to the agreement Assessee was paid only 50,000/- on 17.05.1993. It is also a fact that the possession of the property was handed over by the Assessee on the receipt of earnest money of ₹ 50,000/-. The agreement for sale and Banakat which has been entered into by the Assessee have been placed on record and have not been disputed by the Department. Before us, Revenue has not brought any material on record to demonstrate that the possession of the property was handed over by the Assessee in the year under consideration and not in the year 1990, being the year in which the Assessee had entered into a Banakat. We further find that Section 50C, being the special provision for the purpose of calculation of capital gains in certain cases, was inserted by Finance Act, 2002 with effect from 01.04.2003 and was therefore not applicable to the year when the Assessee had entered into the Banakat. We further find in the case of Chaturbhuj Dwarakadas Kapadja vs. CIT (2003 (2) TMI 62 - BOMBAY High Court) has held that the capital gains would be taxable in the year in which the transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. Before us, Revenue has not brought any material on record to controvert the submissions made by ld. A.R. nor has brought any contrary binding decision in its support. We are therefore of the view that in the present case the provisions of Section 50C could not be applied. We therefore direct the deletion of addition made by A.O. - Decided in favour of assessee Addition on account of unaccounted investment - Held that:- With respect to addition of ₹ 88,050/- on account of interest, we find that Assessee has not placed any material on record to controvert the findings of ld. CIT(A) and therefore to that extent we find no reason to interfere with the order of ld. CIT(A). With respect to the addition on account of remaining amount of 15,85,179/- (Rs. 16,73,229/- less ₹ 88,050/-) is concerned, we find that in the absence of any submission of details by the Assessee before A.O, he considered the aggregate of amounts appearing in the credit side of the bank account with ICICI Bank as unexplained investment. Before us, Assessee has placed on record the copy of the bank statement which shows that various amounts have been debited and credited under “auto-sweep” and “revese-sweep”. We further find that there is no finding with respect to the “auto-sweep and “reverse-sweep” by both the authorities. We therefore restore the issue back to the file of A.O to re-work the amount of addition after considering the explanation of the Assessee with respect to “autosweep” and “reverse-sweep” and in accordance with law. The Assessee is also directed to co-operate by furnishing the necessary evidence as called for by A.O. - Decided partly in favour of assessee for statistical purposes. Addition on account of agricultural income - Held that:- As before A.O, Assessee had furnished the copy of 7/12 extract and Form 8A and from the land Assessee has stated to have earned agricultural income. The holding of agricultural land by the Assessee has not been doubted by the Revenue. Before us, Revenue has also not placed any material on record to substantiate that Assessee could not have earned any agricultural income from the land held by him. Considering the aforesaid and considering the holding of agricultural land and the smallness of amount of agricultural income, we are of the view that no addition is called for in the present case. Decided in favour of assessee.
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2015 (7) TMI 153
Addition u/s 68 - unexplained share capital /share premium - CIT(A) deleted the addition - Held that:- Respectfully following the ratio laid down in the case of Nova Promoters And Finlease (P) Ltd. (2012 (2) TMI 194 - DELHI HIGH COURT ), we hold that Ld. CIT(A) is not justified in deleting the addition of R.30 lacs in as much as the respondent assessee had failed to establish conclusively three essential ingredients ‘identity, genuineness and creditworthiness’ of share applicants. Further, Ld. CIT(A) had also failed to notice that the respondent assessee company failed to produce the Directors of share applicants before the A.O. As held by Hon'ble Jurisdictional High Court in the case of Nova Promoters and Finlease (P) Ltd. that the ratio laid down by Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA ] is not applicable and CIT(A) adopted wrong approach in allowing the appeal by holding that the A.O. had failed to point out source from which money was received by the assessee company before making addition u/s 68. Therefore, we are unable to uphold the order of CIT(Appeals) and hereby confirm the addition made by A.O. - Decided in favour of revenue.
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2015 (7) TMI 152
Ad-hoc disallowance of 2% of transport expenses - Held that:- The disallowance has been made by raising trivial objections. It has not been disputed by the Revenue that the assessee is not maintaining books of account regularly. The accounts of the assessee are subject to audit and no material discrepancy whatsoever has been indicated by the Assessing Officer. The ad-hoc addition of 2% is made merely on surmises and conjectures. Accordingly, the same is deleted. - Decided in favour of assessee. Disallowance u/s. 40(a)(ia) r.w.s. 194C - Held that:- In the facts of the present case, the ratio laid down in the case of CIT Vs. Poompuhar Shipping Corpn. Ltd. (2006 (1) TMI 60 - MADRAS High Court) is squarely applicable. Therefore, we accept the contentions of the assessee that the payments made by the assessee to the owners of the hired truck do not fall within the ambit of section 194C of the Act. Since, the payments made by the assessee to the owners of hired trucks have been held out of the scope of section 194C, the defect in Form No. 15I as pointed by lower Authorities will have no consequences. Accordingly, we direct the Assessing Officer to delete the disallowance u/s. 40(a)(ia) r.w.s. 194C of the Act.- Decided in favour of assessee.
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2015 (7) TMI 151
Interest on deposit with Indian Banks and others - CIT(A) deleted the addition - Held that:- On similar facts and circumstances the E Bench of the Tribunal in the assessee’s own case for the A.Y. 2008-09 [2015 (7) TMI 193 - ITAT DELHI] held that CIT(A) has rightly appreciated the facts of the case and has rightly arrived at the correct conclusion as the funds kept in bank deposits cannot be classified as surplus funds as project was under completion. The argument of Ld. D.R. that facts were not verified by Ld.CIT(A) does not hold any force as Ld.CIT(A) by quoting figures in his roder ahs arrived at the conclusion. Therefore, we do not find any infirmity in the order of Ld.CIT(A) and, therefore, appeal filed by the Revenue is dismissed. - Decided in favour of assessee.
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Customs
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2015 (7) TMI 179
Penalty u/s 114A - allegation of mis-declaring that export product - availing the benefit of export promotion scheme viz. Vishesh Krish & Gram Upaj Yojana Scheme (VKGUY) - export of Oil Cake Meal - Held that:- There is no doubt that in the present proceedings, oil was extracted by a combination of both by expelling process and by solvent extraction. There was thus a bonafide opinion on the part of the Appellant, based on their understanding, that when both the processes of expelling and solvent extraction are used then the resultant meal will continue to be called as expeller variety of oil cake meal. Though the reasoning given by the Appellant was not accepted by the Adjudicating authority, while deciding the classification, but it cannot be said that there was a deliberate act of mis-declaring, knowingly and intentionally, while describing the export product. If an incorrect exemption is claimed by the Appellant, as a matter of belief then it cannot be considered as a declaration intentionally made to evade customs duty. The ratio of the above law laid down by Hon’ble Apex Court will be applicable to the present facts & circumstances as the Appellant was holding a bonafide belief that so long as majority of the oil is extracted by expelling process, the resultant meal will continue to be classified as expeller variety of oil cake meal. In view of the above observations and settled proposition of law, there was no justification for imposing penalty upon the Appellant under Section 114AA of the Customs Act, 1962 - Decided in favour of assessee.
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2015 (7) TMI 178
Suspension of custodianship of CFS - illegal removal of seized goods due to failure on the part of custodian not ensuring safety and security of the seized goods kept under the appellant's custody - Held that:- Commissioner of Customs has rightly exercised the power to suspend the custodianship of appellant. Appellant s reliance on case laws which are related to suspension of CHA licence under CHALR and the appellant s plea is that provisions of CHALR and HCCAR are pari materia not acceptable for the reasons that Container Freight Station (CFS) who is appointed by the Government for handling import and export cargo as Terminal operator cannot be equated with licence issued to Custom House Agent under CHALR. The obligation of custodian of CFS and the role played by them in handling the cargo including safety and security of the cargo are entirely governed by strict conditions as set out in HCCAR whereas the CHA only acts as an agent between customs & importer/exporter in processing of document and clearance of cargo. Therefore, the role of CFS as custodian and role of CHA are far different and cannot be termed as pari materia. Suspension was ordered only in December 2004 and the Custom Department is yet to complete their investigation. We also find that seized containers are recovered by the police the subsequent investigation and filing of charge sheet by the police is still pending. Therefore, by considering the serious nature of offence and breach of conditions of regulations and also taking into account the past adverse instances and conduct of the appellant of identical smuggling of Red Sanders and other goods detected in appellant s own premises, we hold that the bonafide and credibility of conduct of custodian-appellant raises serious doubt and the investigation by Customs and Police authorities is still pending and yet to be completed and if appellants are allowed to continue as custodian it will certainly cause jeopardy and hamper the process of investigation. Accordingly, we hold that appellant s plea for setting aside the suspension order does not merit consideration and the suspension order is liable to be upheld. - Decided against Appellant.
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Corporate Laws
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2015 (7) TMI 177
Annulment of trades - Violation of the norms laid down by SEBI / NSE - Held that:- It was submitted by NSE that the settlement proposal put up by the parties is not in contravention of any of the rules/regulations/bye laws of NSE. However, submitted that in the absence of any power, NSE could not entertain the settlement. since the settlement is bonafide and is not violative of any provisions of SEBI/NSE, without going into the question as to whether NSE had power to take settlement on record or not, in the peculiar facts of the present case, we, in exercise of powers conferred under rule 21 of the Securities Appellate Tribunal (Procedure) Rules, 2000 direct NSE to take on record the settlement proposed by the appellants and release the withheld payment to the parties in terms of the settlement. NSE is directed to release the withheld payment as expeditiously as possible and in any event within a period of two weeks from today. - Decided in favour of appellants.
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2015 (7) TMI 176
Application for scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956 - Held that:- no objection has been received to the Scheme of Arrangement from any other party. Mr NPS Chawla, Advocate for the Petitioner Companies has filed an affidavit dated 11th March, 2013, confirming that he has not received any objection pursuant to citations published in the newspapers. - In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. - Decided in favour of appellant.
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Service Tax
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2015 (7) TMI 197
Service Tax on lease of land for 99 years - whether in nature of Renting of Immovable Property or sale - invocation of extended period of limitation - Held that:- As per Rule 3, the outright sale of the land is actually abandoned and it allows only lease-hold rights. The judgment of Rajasthan High Court in the case of Shri K.P. Sharma [2012 (5) TMI 578 - RAJASTHAN HIGH COURT] only states that 99 year lease is "virtual" sale. In other words, it is not sale per se. Such lease rent is clearly liable to service tax under 'Renting of Immovable Property' service as the definition of renting of immovable property given in Section 65 (90a) of the Finance Act, 1994 includes leasing of immovable property for use in the course or furtherance of business or commerce. - prima facie case is against the assessee. However, there is force in the contention of the appellant that there was confusion with regard to the leviablity of service tax on 'Renting of Immovable Property' and the Delhi High Court in the case of Home Solution Retail India (2009 (4) TMI 14 - DELHI HIGH COURT) actually held that there was no service in renting of immovable property. Though the said Delhi High Court judgment has since been reversed it clearly showed that there was a genuine confusion in this regard. there is a good case to grant stay in respect of the impugned demand pertaining to the period beyond normal period of one year. - Partial stay granted.
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2015 (7) TMI 189
Penalty u/s 70 & 78 - whether, in the facts and circumstances of the case, penalties under Sections 70 and 78 should be imposed or otherwise - Held that:- Commissioner (Appeals) has very consciously considered the facts of the case, interpreted the terms 'reasonable cause' and came to the conclusion that there is a reasonable cause for the respondent in non-payment of service tax at the relevant time and, therefore, exercising the power vested in him, he set aside the penalties. As regards the reliance of the Revenue on the hon'ble apex Court judgment in the case of Dharmendra Textile Processors (2008 (9) TMI 52 - SUPREME COURT ), it is relevant to the penalties imposed under Section 11AC of the Central Excise Act, 1944. However, in the present case, the penalties are under Sections 70 and 78 of the Finance Act, 1994. As regard these penalties there is a clear provision under Section 80 of the Finance Act, 1994 wherein the power is vested in the authority to consider the waiver of penalty on satisfaction of 'reasonable cause' for non-payment of service tax. - there is no infirmity in the order of the learned Commissioner (Appeals) and the same does not require any interference. The impugned order is upheld. - Decided against Revenue.
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2015 (7) TMI 188
Extension of stay order - Power of Tribunal - Held that:- Sub-section (1) of section 35B did not grant any power to grant stay; it only sought to put fetters on the power of the Tribunal to grant stay beyond a certain period. Consequently its abolition can only have an effect that fetters which the said sub-section sought to place on the Tribunal with regard to the duration beyond which CESTAT could not grant stay no longer exist. Tribunal had power to extend the stay beyond the period of 365 days in cases where appellant was ready and willing to pursue the appeal, but the Tribunal owing to the older pendency was unable to take up the appeal. In the light of the foregoing, we reject the contention of ld. Departmental Representative and. having regard to the fact that the delay in taking up these appeals is not attributable to the appellants, extend the stay granted earlier to operate during the pendency thereof. - Stay extended.
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2015 (7) TMI 187
Penalty u/s 78 - Held that:- suppression of facts with intention to evade payment of duty by the appellant has been established beyond doubt, the adjudicating authority has rightly invoked extended period and imposed equal penalty under Section 78 of the Act. Further, I find that the appellant has paid the interest and also 25% of the penalty imposed under Section 78 of the Act within 30 days of receipt of the adjudication order. Therefore, I do not find any merit in the appellant's contention for waiver of penalty under Section 78 of the Act. In the case of Global Facility Management Services Pvt. Ltd. (2013 (5) TMI 230 - CESTAT CHENNAI), the Tribunal upheld the penalty imposed under Section 78 of the Act. - Decided against assessee.
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Central Excise
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2015 (7) TMI 192
Restoration of appeal - Dismissal of appeal for non compliance with pre deposit order - Held that:- in terms of order of the Tribunal, the deposit was required to be made on or before 20.3.2014 whereas the deposit has been made on 25.3.2014 and accordingly, the same was considered as non-compliance with the direction within the time permitted by this Tribunal - It is seen that the delay is about 6 days in depositing the amount of pre-deposit. In the interest of justice, the delay is condoned and the matter is remanded back to the Commissioner (Appeals) to hear the assessee and dispose off the appeal on merits - Decided in favour of assessee.
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2015 (7) TMI 184
Demand of interest - whether the appellant is required to pay interest on the differential duty paid on account of price variation raised through the supplementary invoices before taking into account the provisional assessment availed by the appellant - Held that:- appellant opted for provisional assessment on account of price variation clause in each of the contract. There is no dispute on the fact though they opted for provisional assessment immediately on finalising the price they raised supplementary invoice for recovering the amount from buyers and paid the differential duty. In this regard, I find that the Principal Bench of this Tribunal in the appellant s own case reported in BHEL Vs CCE Bhopal (2011 (6) TMI 396 - CESTAT, DELHI), has discussed the identical issue in depth and held against the appellant. By respectfully following the Supreme Court decision in SKF India Ltd. [2009 (7) TMI 6 - SUPREME COURT] and the Tribunal's Principal Bench decision, I hold that interest is chargeable on the differential duty paid through supplementary invoices raised by the appellants. - Decided against assesssee.
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2015 (7) TMI 183
Duty demand on waste and scrap generated - Whether the remnant material cleared by the appellant to M/s. Shridhar Metal Works is clearance for the home consumption and leviable to excise duty or it is captive consumption and exempted under Notification No. 67/95-CE dated 16/3/1995 - clearance of Aluminium dross, Aluminium turning and Aluminium oily flash - Held that:- Part of the premises of the appellant was given on leave and licence agreement to different entity i.e. M/s. Shridhar Metal Works who is unrelated to the appellant therefore in our view the premises which is used by M/s. Shridhar Metal Works is out side premises of the appellant. Secondly M/s. Shridhar Metal Works is an independent entity who carried out job work on the material supplied by the appellant in such situation M/s. Shridhar Metal Works has independent manufacturer of aluminium ingots therefore removal of remnant material to M/s. Shridhar Metal Works cannot be treated as captive consumption and therefore the same shall not be entitled for exemption under Notification No. 67/95 - if any other person carry out the manufacture, even in the premises of another manufacturer for the purpose of job work basis it cannot be said that job worker is hired labourer therefore job work shall be treated as independent manufacture and not the premises owner It has been alleged in the show cause notice that since the scrap is a finished goods, it is not permitted to be cleared in terms of Rule 4(5)(a) to a job worker. However, it is seen that the scrap so sent to the job worker is returned back to the Appellants in the form of ingots, which is then further processed in the Appellants' unit to manufacture flats, strips, rods, which are cleared on payment of duty. Thus there is absolutely no loss of any revenue to the Government. The waste and scrap generated are the remnants emerging as a necessary consequence of the manufacturing activity of cold rolling and cold drawing of copper bar undertaken by the appellants for bringing out the final product. These waste and scrap generated during the process of manufacture instead of being disposed of in the market, is being recycled and re-converted into copper bars, by following the procedure of Rule 4(5)(a) as the appellants do not have any facility for such reconversion. They further consumed the same captively in the manufacture of excisable final product. Merely because the waste and scrap so generated has been made dutiable when sold, it cannot be said that new excisable product has been manufactured. Removal of remnant by appellant to the job worker is not liable to duty and the adjudicating authority has wrongly confirmed the duty demand and imposed penalties. Since, we have taken view that the removal of remnant is not dutiable - Decided in favour of assessee.
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2015 (7) TMI 182
Evasion of duty - Clandestine removal of goods - No duty paying documents could be produced - Held that:- Allegation against the appellant company, MAPL is that during the period from Jan. 2003 to September, 2003 and from December, 2000to December, 2002, it had indulged in large scale of evasion of duty by receiving huge quantity of unaccounted scrap from certain suppliers of Mumbai, which was used in unaccounted manufacture of Aluminium Sections/Profiles, which were cleared to the various parties including M/s. NE, Mumbai and M/s.TF, Mumbai without payment of duty - it has been alleged that unaccounted Aluminium scrap was being received by MAPL, Pithampur from Mumbai and though the scrap was being transported by the Capital Road Lines and Parcel Services showing M/s.Mallnath Aluminium, New Delhi as the consignee, the goods covered under the LRs were being unloaded at the factory premises of Pithampur and it has been alleged that it is this unaccounted scrap which was used for unaccounted manufacture of Aluminium Profiles/Sections, which has been cleared clandestinely to various parities including Nagina Enterprises and Tarachand Fauzmal, Mumbai. Documents recovered from the residential premises of Shri Mahendra Sethia show the sales to a number of other parties, i.e. other than M/s. Nagina Enterprises, M/s. Tarachand Fouzmal, M/s. G. Gajendra & Company, M/s. Ambika Aluminium Profiles & M/s. Deepak Metals, which are not corroborated by any documents recovered from the premises of the transporter, Capital Road Lines & Parcel Services. These parties are from places other than Mumbai. No inquiry has been conducted with these parties. In our view, in respect of the such entries in the private records maintained by Shri Mahendra Sethia which are not corroborated by any other evidence, in form of transporter s documents or statement of the customers or goods manufactured by MAPL having been recovered from their premises, the duty demand would not be sustainable. According to the appellant duty demand on the quantity of 6,99,851 kgs. of Aluminium Profiles/sections mentioned in Annexure-1 for the period Jan. 2003 to September, 2003 and duty demand on the quantity of 85520 kgs. mentioned in Annexure-1A for the period December, 2000 to October, 2001 is in respect of alleged clearance of Aluminium Profiles and Sections as per the private records maintained by Shri Mahendra Sethai which are not corroborated by any documents of the transporters, and in respect of which absolutely, no inquiry has been conducted. In our view, the duty demand on this quantity would not be sustainable. Duty demand is upheld only in respect of the consignments detailed in Annexure 32 and 33 to the show cause notice which are consigned to M/s. Nagina Enterprises and the same has to be quantified by the Commissioner. Besides this the duty has to be demanded from MAPL in respect of 352 bundles of Aluminium profiles seized from the godown of M/s.NE, Mumbai. The rest of the duty demand has to be set aside. The penalty imposable on the appellant company, MAPL under Section 11 AC and penalty under Rule 26 of the Central Excise Rules, 2002 imposable on Shri Mahendra Sethia, Shri Manish Raj Jain and M/s.Nagina Enterprises would be in proportion to the duty demand which is confirmed against MAPL. As regards penalty on M/s. MM, M/s.FAPL and M/s. PTL since there is no allegation that they had received non-duty paid Aluminium Sections/Profiles cleared from MAPL and their names do not figure in Annexure 32 and 33 of the show cause notice and as such, they have not received non-duty paid goods from MAPL, penalty on them is not sustainable and the same is set aside. - As regards the confiscation of the goods seized from the godown of Nagina Enterprises, Mumbai, the same is upheld - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 181
Denial of MODVAT Credit - exemption in terms of Notification No.8/96-CE dated 23.7.1996 and Notification No.4/97-CE dated 1.3.97 - Whether Tribunal order is correct in rejecting the recovery of Modvat Credit attributable to the inputs relating to final product cleared under the exempted category under Rule 57C of Central Excise Rules, 1944 - Held that:- Insofar as Rule 57D is concerned, the very language of Rule 57D makes it clear that credit of duty shall not be denied or varied on the ground that part of the inputs contained in any waste, refuse or by-product arising during the manufacture of the final product, or that the inputs have become waste during the course of manufacture of the final product. It also states that it is of no consequence whether the by-product such as waste, refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or is specified as a final product. - as the Spent Sulphuric Acid is not a final product, as has been held in the decision of the Supreme Court and assuming it is a waste, refuse or by-product, it is chargeable to nil rate of duty, Rule 57D provides for taking credit. There is yet another factor which needs to be considered is that part of the Spent Sulphuric Acid, which is a by-product in the manufacture of the final product, namely, Acid Slurry, is cleared on payment of duty and part of it is cleared at nil rate of duty under Chapter X procedure in terms of Notification No. 8/96-CE dated 23.7.1996 and Notification No.4/97-CE dated 1.3.97. Therefore, the provisions of Rule 57D get squarely attracted to the present case and the Department shall not deny the credit of specified duty whether or not such waste or refuse is exempt from whole of the duty of excise leviable thereon or chargeable to nil rate of duty. - Decision in the case of Union of India v. Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT] - Decided against Revenue.
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2015 (7) TMI 180
Refund / Abatement of duty - Commissioner (Appeals) was of the view lower Authority had passed an erroneous order while finalising the provisional assessment and failed to consider that Duty paid as per RT12 return - Held that:- Revised demand for higher duty is merely based on a presumption that one or other factor has not been considered by the Original Authority. When the show cause notice itself clearly demanded a sum of ₹ 13,16,071.25, which was based on the records already available, we find no justification how such a demand should be amended without issuing a corrigendum, as rightly pointed out by the Tribunal. When the facts relevant for the purpose of finalising the provisional assessment were already available with the Original Authority and the demand was based on such data, we find justification in the assessee's plea that the Commissioner (Appeals), at the behest of the Department, has proceeded to travel beyond the show cause notice to claim higher duty. The Department's plea that no fresh grounds have been brought in appeal before the Commissioner (Appeals) is erroneous, as we have already pointed out, in the appeal, as a first ground, they have raised a plea that RT12 returns were not considered, which is factually incorrect. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (7) TMI 186
Demand of interest on the settled amount - Andhra Pradesh Sales Tax (Settlement of Disputes) Act, 2001 - Held that:- The Certificate of Settlement issued under Section 12 of the Act is final and conclusive and once such certificate is issued in Form-III, the dealer/applicant shall be discharged from his liability of paying balance amount of arrears of tax, penalty or interest, if any. Even against the orders levying penalty and interest, there is a provision in the Act itself for settlement by payment of 10% of the tax and interest, but for the fact that as there were no demand notices or orders for payment of interest and penalty, there was no occasion for the petitioner to apply for settling the same. Even against the persons from whom there were dues towards interest and penalty, 90% of such dues is waived. In the absence of any claim against the petitioner, respondent cannot be allowed to charge interest on the amount already settled under the scheme. Further, when the claim of the petitioner is considered as per the scheme notified under Act 41 of 2001, in the absence of any specific provision for collection of interest on the amount settled, it is not open for the respondent to collect the same from the petitioner. - Decided in favour of assessee.
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2015 (7) TMI 185
Application for withdrawal of appeal - Held that:- petitioner seeks permission of this Court to withdraw the writ petitions and she has also made an endorsement to that effect. Accordingly, the writ petitions are dismissed as withdrawn.
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