TMI Tax Updates - e-Newsletter
July 9, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Leasing out the power plant with ancillary equipments without removing the capital goods - CENVAT Credit not required to be reversed - HC

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• Guidelines regarding detailed scrutiny of Service Tax Returns (ST-3) w.e.f. 01/08/2015. - Circular

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• Instructions regarding maintenance of Records in Electronic Form and authentication of records by Digital Signature–manner of verification

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News

1. RBI Reference Rate for US $

2. FAQ about T-2

3. FAQs about Modalities For E-II Branch

4. FAQs about enforcement survey/inspection of business premises

5. Shri Sriram Kalyanaraman appointed as Managing Director and Chief Executive Officer, National Housing Bank for a period of Five Years

6. Forms DPT-3, LLP-4, CRA-2, MSC-3 and FC-1 are modified w.e.f 7th July 2015.

Circulars / Instructions / Orders

SEZ

1. No. D.12/25/2012-SEZ (Pt.) - dated 30-6-2015

Digitization of various approvals/intimations/reporting by SEZ Units/Developers (Phase-II) w.e.f. 01/07/2015.

Highlights / Catch Notes

Income Tax

• Entity's Loan Business: Share Trading Profits Exempt from Speculation Tax Assessment u/s 73.

  Case-Laws - AT : Profits arising from purchase and sale of shares - The principal business of the assessee was granting of loans and advances. - assessee’s income was not assessable as speculation profit either - AT
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• Pond Excavation and Material Costs Classified as Revenue Expenses, Deductible as Repairs Under Tax Rules.

  Case-Laws - AT : Addition of repairs for excavation of pond, purchase of wood shaft, ply, Burma teak wood, tiles etc. - revenue v/s capital expenditure - the impugned repair expenditure would amount to a revenue expense and it would qualify for deduction as repairs and maintenance - AT
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• Depreciation on Employee Cars Should Be Recognized as Business Expense, Not Personal Use.

  Case-Laws - AT : There no rationale in treating the amount of depreciation on cars as for personal use, when admittedly these have been provided to employees. A company is a separate legal entity distinct from its directors or employees. - AT
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• Clarification: +/- 5% Variation in Transfer Pricing Justifies Price in International Transactions, Not for Pricing Adjustments.

  Case-Laws - AT : Transfer pricing adjustment - as per the above amendment, it is clear that the +/- 5% variation is only to justify the price charged for international transactions and not for adjustment purposes. - AT
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• Taxpayer's Revised Depreciation Claim Acknowledged; AO Not Required to Form Opinion on Legal Permissibility.

  Case-Laws - AT : Reopening of assessment - the revised claim represents, by the assessee’s own admission, the correct claim of depreciation. Whether legally permissible or not, the AO is not constrained to take cognizance thereof or form an opinion on its basis; the sole criteria being its relevancy and credibility - AT
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Customs

• Import Coal Classification Dispute: Bituminous vs. Steam Coal; Larger Bench Waives Pre-Deposit Requirement per Mohit Minerals Case.

  Case-Laws - AT : Waiver of pre deposit - Classification of import - bituminous coal or steam coal - Held that:- First, this bench on in the case of Mohit Minerals Pvt. Ltd, has taken a view that once the issue has been referred to a Larger Bench, as a convention of waiver of pre-deposit of amount involved needs to be allowed and secondly, the bench presided over by the Hon'ble President of CES - AT
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Corporate Law

• Plaintiffs must file trademark or copyright suits where they live, work, or where the issue occurred.

  Case-Laws - SC : Jurisdiction of High Court - Infringement of the Trademark / Copyright - No doubt about it that a suit can be filed by the plaintiff at a place where he is residing or carrying on business or personally works for gain. - However, if the plaintiff is residing or carrying on business etc. at a place where cause of action, wholly or in part, has also arisen, he has to file a suit at that place. - SC
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• Appellants Liable for Penalties Due to Long-Term Non-Compliance with SEBI Act Section 15A(b) Disclosure Requirements Since 1998.

  Case-Laws - AT : Penalty under Section 15A(b) of the SEBI Act - Having failed to make yearly disclosures year after year from 1998, appellants cannot escape penal liability merely because in the year 2011 they had filed suo moto consent applications seeking consent order - SAT
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Indian Laws

• Supreme Court Rules No Interest Payable Despite Arbitral Tribunal Award; Upholds Contract Clause Against Interest Payments.

  Case-Laws - SC : Validity of Arbitral award - whether the appellant is liable to pay interest to the respondent though there was a provision in the contract that no interest should be paid on the amount payable to the contractor - Held No - Arbitral Tribunal was not justified in awarding interest - SC
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Service Tax

• Legal Case Explores Service Tax Applicability on Scholarships and Fee Concessions; Focus on Transaction Nature, Not Labels.

  Case-Laws - AT : Valuation - Service tax on the amount of scholarship / fee discounts / fee concessions given to certain students - Deduction from assessable value - what is relevant is the actual nature of the transaction and not the name given to it ( i.e. transaction). - appellant has been able to make out a strong prima facie case in its favour - AT
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• Tribunal Accepts 10% Duty Payment as Sufficient for Appeal, Waives Pre-Deposit Requirement for Commissioner (Appeals) Hearing.

  Case-Laws - AT : Waiver of pre deposit - appellants have already paid 10% duty while filing this appeal before this Tribunal. Therefore, it is treated that this 10% duty would be sufficient to hear their appeal on merits by the Commissioner (Appeals) - AT
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Central Excise

• No Need to Reverse CENVAT Credit if Capital Goods Are Not Physically Removed, Rules High Court.

  Case-Laws - HC : Reversal of CENVAT Credit - leasing out the power plant with ancillary equipments to KPPL without removing the capital goods - There is no removal of goods under cover of invoice - credit not required to be reversed - HC
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• Court Rejects Argument Against Extended Limitation Period for Pre-August 1996 Cases Due to Lack of Suppression Evidence.

  Case-Laws - HC : Invocation of extended period of limitation - The plea of the appellant is that if there is no suppression post August, 1996, no extended period could be invoked post August, 1996 and, therefore, the same analogy will have to be applied for the period prior to August, 1996 as well cannot be accepted - HC
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• Appellants Avoid Penalty for Not Reversing CENVAT Credit After Closing and Dismantling Lead Plant in 1999-2003.

  Case-Laws - AT : Non Reversal of CENVAT Credit on Closure of factory - appellants have closed down their Lead plant in July 1999 and dismantled the same in December 2003 and have not reversed the credit of Cenvat availed on lead concentrate lying in stock - penalty waived - AT
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VAT

• Karnataka VAT: Penalty Imposed u/s 53(12) Without Needing Mens Rea for Statutory Contravention.

  Case-Laws - HC : Penalty u/s 53 - Karnataka VAT - Once statutory contravention is established, then section 53(12) is attracted which provides for levy of penalty - presence of Mens Rea is not required - HC
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Case Laws:

• Income Tax

• 2015 (7) TMI 275
  Addition made u/s. 41(1) - cessation or remission of liability - assessee has not filed confirmation and ID proofs or PAN of the creditors - Held that:- As relying on case of CIT Vs. Bhogilal Ramjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT ] wherein held that even where the debt itself was found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act, there is no cure for it and where there was no remission or cessation of liability during the year under consideration, no addition could be made to the income of the assessee. Thus addition delted - Decided in favour of assesse. Disallowance of of unpaid expenses - Held that:- The assessee has not produced the evidences for which the assessee has shown the amount of expenses of Rs. 13,51,347/- as outstanding payable as at the end of the year. It is also not the case of the assessee that the outstanding amount in the case includes or represents opening balance brought forward from the earlier years. Thus, it is observed that the liability claimed relates to the year under consideration. Further, it is also observed that the addition was made by the lower authorities on account of expenses of which genuineness could not be established by the assessee. In the above circumstances, the decision relied upon by the Authorized Representative of the assessee which relates to section 41(1) of the Act is found to be not of any help to the assessee. Further, as no material to establish the genuineness of the above expenditure and genuineness of its liability during the year could be brought before us by the assessee, we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) - Decided against assessee. Addition u/s. 68 - treating the loan as unexplained cash credit - Held that:- As find from the assessment order that the assessee also contended before the Assessing Officer vide his letter that opening balance of the loan creditors should not be added as income of the year under consideration. However, the plea of the assessee was not dealt with by the Assessing Officer before making entire addition of the loan of Rs. 4,64,592/-. The Commissioner of Income Tax (Appeals) also had not adjudicated upon this plea of the assessee by passing a speaking order. In our considered opinion, no addition could be made on account of unexplained cash credit u/s. 68 of the Act for opening balance brought forward during the year under consideration because the same was not a fresh credit entry of the year under consideration. The Departmental Representative has also not controverted the submission of the assessee that out of the unsecured loans as at 31st March, 2007 of Rs. 4,64,592/-, Rs. 3,82,228/- was the opening brought forward balance. In respect of balance Rs. 95,000/-, no specific submission was made before us which represents the fresh credit by the assessee in the books of account of the year under consideration. Therefore, we delete the addition to the extent of Rs. 3,82,228/- being balance brought forward from earlier years and confirm addition of Rs. 95,000/- being unsubstantiated credit of the year under consideration - Decided partly in favour of assessee.

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• 2015 (7) TMI 254
  Eligibility for deduction u/s. 80IA - interest income earned by the assessee on fixed deposits with the bank and other interest income - ITAT allowed claim - Held that:- the question raised by the Revenue stands concluded by an order of this Court in the Revenue's own case for the Assessment Years 1997-98 and 1998-99 in CIT v/s. Jagdishprasad M. Joshi (2008 (11) TMI 326 - BOMBAY HIGH COURT ), we do not see any reason to entertain the proposed question of law. - Decided in favour of assessee.

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• 2015 (7) TMI 253
  Addition on deemed dividend u/s.2(22)(e) - ITAT deleted the addition - Held that:- The Tribunal recorded finding that it was not a loan given by Amigo Brushes Pvt Ltd. to the assessee company and it was intercorporate deposits. However, we need not go into various questions raised by learned counsel for the parties as admittedly the assessee was not shareholder in the Amigo Brushes Pvt. Ltd. The Division Bench of this Court in Commissioner of Income Tax vs. Ankitach(P) Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT]. The Delhi High Court has held that if the assessee company does not hold a share in other company from which it had received deposit then it cannot be treated tobe a deemed dividend under Section 2(22)(e)of the Act. In view of this admitted position that assessee is not a shareholder in Amigo Brushes Pvt. Ltd. and therefore, the deposit received by the assessee of Rs. 25 lacs from Amigo Brushes Pvt Ltd. was an intercorporate deposit and not a deemed dividend and, therefore, though this aspect has not been considered by the Tribunal but since the order of the Tribunal can be supported by another legal reason on the admitted facts, we need not send the matter back. - Decided in favour of assessee.

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• 2015 (7) TMI 252
  Rectification of order - Held that:- The words “against the assessee in favour of the department”, be deleted, and the words “in favour of the assessee and against the department”, be substituted. [2015 (7) TMI 253 - GUJARAT HIGH COURT] The deposit received by the assessee of Rs. 25 lacs from Amigo Brushes Pvt Ltd. was an intercorporate deposit and not a deemed dividend - Decided in favour of assessee.

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• 2015 (7) TMI 251
  Transfer pricing adjustment - whether foreign exchange fluctuation should be considered as operating item while computing operating profit? - Held that:- The issue is no longer res-integra and stands decided in the case of M/s. SSP India Pvt. Ltd. 2015 (7) TMI 214 - ITAT DELHI ] wherein held that foreign exchange gain/loss should be treated as as an operating item. Rejection of M/s. B2B Software Technologies Limited and M/s. Cressanda Solutions Ltd. as comparables by adopting the filter of the sales turnover less than 5 crore - Held that:- No justification for the TPO/DRP to adopt Rs. 5 crore as the threshold turnover for the purpose of a selection of comparable when the assessee which has been adopted as a tested party has a turnover of Rs. 12.50 crores. Once, there is no dispute that two companies selected by the company though having turnover less than 5 crores are functionally comparable with the assessee, the basis adopted to reject the same is not tenable. However, from the order of TPO, it is evident that M/s. B2B Software Technologies Ltd. was also excluded on the ground that it had also failed export filter which filter has not been challenged before us and has been accepted by the taxpayer. Thus, having regard to the above, we direct the inclusion of M/s. Cressanda Solutions Ltd. as a comparable for the purpose of determining the arm s length price. - Decided partly in favour of assessee. Tata Elxsi Limited erroneously considered in the final set of comparable companies - Held that:- As relying on case of Adaptech India (P) Ltd. vs. ITO [2014 (12) TMI 50 - ITAT HYDERABAD] Tata Elxsi is engaged in development of niche product and development services, which is entirely different from the assessee company. We agree with the contention of the learned AR that the nature of product developed and services provided by this company are different from the assessee.Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company fit for comparability analysis for determining the arms length price for the assessee, hence, should be excluded from the list of comparable parties - Decided in favour of assessee. Rejection of M/s. CG VAK Software & Exports Limited from final set of comparables as not passing the filter of employee cost to total cost less than 25%. - Held that:- As relying on case of Kenexa Technologies Pvt. Ltd. vs. DCIT [2014 (11) TMI 587 - ITAT HYDERABAD ] we set aside the said issue of comparables with M/s. CG VAK Software & Exports Limited to the TPO for correct application of employee cost filter. - Decided in favour of assessee for statistical purposes.

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• 2015 (7) TMI 250
  Understatement of investment - Assessing Officer had treated the difference between the purchase consideration shown by the assessee and the fair market value as on the date of purchase determined by the DVO as unexplained money paid by the assessee for the purchase or the property - CIT(A) deleted the addition - Held that:- There was no reference whatsoever made by the AO to any material/evidence/information on the basis of which it could be said that the said that the investment shown by the appellant was understated and that anything above what was disclosed by the appellant. Thus, the condition precedent for making reference to the DVO by invoking the provisions of Sec. 142A was not satisfied in the present case. Moreover, on perusal of the assessment order, it is noted that nowhere the AO has mentioned that what are the mistakes and unreliability has been found out by the AO in the books of accounts of the appellant. Thus, the AO has not pointed out any defects in the books as far as related to the investment made by the appellant. Assessing Officer has erred in referring the matter to the DVO and consequently the DVO's report on the value of investment in the property cannot replace the actual purchase value shown in the purchase deed of the aforesaid property at J-1/161, Rajouri Garden, New Delhi. Hence, the Assessing Officer has erred in adopting the value of the property at J-1/161, Rajouri Garden, New Delhi estimated by the DVO by replacing the value shown in the purchase deed. Ld. First Appellate Authority has rightly appreciated the all evidences as well as the relevant provisions of law and deleted the addition in dispute. It is further observed that even after the receipt of the valuation report from the DVO, the Assessing Officer had given only one day time to the appellant to explain the difference in the value of the property as estimated by the DVO and the value shown by her in the purchase deed. This is against the principle of natural justice. In this regard it is seen that the AO had issued a show cause notice dated 21-03-2013 for submitting reply on 22-03- 2013 i.e. immediately next date, Therefore, assessing officer has not given sufficient opportunity of being heard to the assessee. It cannot be said that by giving opportunity of being heard for hearing immediately one day assessing officer has discharged his obligation of giving opportunity of being heard. Thus Ld. CIT(A) was right in observing that the AO has erred in making the addition Rs. 3,53,30,000/- on account of unexplained income of the assessee and accordingly rightly directed the AO to delete the addition in dispute - Decided against revenue. Additional evidence without giving the opportunity to AO under Rule 46A - Held that:- No additional evidence have been filed by the Assessee before the Ld. CIT(A), which required to be sent to the AO under Rule 46A and also in the Ld. CIT(A)’s order there was no mention about the admission of additional evidence - Decided against revenue. Claim of assessee u/s. 54 - CIT(A) rightly directed the AO to consider the claim u/s 54 - Held that:- As during the relevant assessment year, the assessee has sold a property at 20C/72, West Punjabi Nagar, New Delhi for the consideration of Rs. 95,00,000/- as per the registered value of the property (whereas during the course of survey, the same property was found to be valued at Rs. 3,87,00,000/- by a registered valuer). The assessee has claimed that the sale proceed of the aforesaid property at 20C/72, West Punjabi Bagh, New Delhi was invested in the purchase of property in the same assessment year at J-1/161, Rajouri Garden, New Delhi. We observed that the assessee was entitled for deduction u/s. 54 of the I.T. Act in respect of capital gain on the sale of property at 20C/72, West Punjabi Bagh, New Delhi. We further note that the assessee has also relied upon the decision of the Hon’ble Supreme Court of India in the case of National Thermal Power Co. Ltd. vs. CIT [1996 (12) TMI 7 - SUPREME COURT]. The AO has not considered the claim of exemption of the assessee u/s. 54 in respect of the capital gain arose in respect of the sale of property at 20C/72, West Punjabi Bagh, New Delhi. In view of the above, in our considered opinion, the Ld. CIT(A) rightly directed the AO to consider the aforesaid claim of the assessee of exemption u/s 54 of the I.T. Act, while computing the income of the assessee. We also find considerable cogency in the assessee’s counsel that Ld. DR itself was saying that the assessee has sold one property and purchased another, then there is no question why exemption u/s. 54 should not be given.- Decided against revenue.

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• 2015 (7) TMI 249
  Profits arising from purchase and sale of shares - Capital gain or business income - assessee is showing these shares in its investment portfolio in the books of accounts - Held that:- These shares have been valued at cost. At page 130 of the paper book, copy of Form No. 3CD-tax audit report is contained in which at Serial N. 8a in regard to nature of business or profession, it is stated that, assessee is in the business of share trading investments, financing and power generation and in Column No. 8b,it is stated that there is no change in the assessee’s business from earlier year. The assessee has given details of long term capital gain (STT) exempt u/ 10(38) (own) to demonstrate that the period of holding of the shares was more than one. The details of short term capital gains are given at pages 168 to 178 of paper book. From the above details it is evident that there is no change in the facts obtaining in the current year as compared to earlier years and, therefore, the decision of Tribunal in earlier years applies mutatis mutandis to the facts in the present assessment year, particularly because assessee has primarily sold the shares which have been treated as investments in earlier year. It is pertinent to observe that Assessing Officer has also followed the reasoning for A.Ys 2006 & 2007-08 in arriving at his conclusion that the shares were held as business asset and not as investment which has not been accepted by Tribunal as noted earlier. However, one aspect which needs clarification is in regard to Ld. CIT(A)’s finding in earlier years that gain arising out of sale of shares within 30 days is to be treated as business income which finding has been confirmed by Tribunal in earlier years. However, in the current year there is no such finding by Ld. CIT(A). Therefore, sale from all shares held as investment is to be assessed as short term or long term capital gain - Decided against revenue. Whether assessee case is squarely falls under speculative transactions as defined in sub section (5) of Section 73? - Held that:- It is evident from the balance sheet that loans and advances granted by assessee aggregated to Rs. 292,189,865/-on which assessee earned interest amounting to Rs. 40,56,653/- which is the main source of Assessee’s income. Thus, the principal business of the assessee was granting of loans and advances. Further, we find from the computation contained at pages 126 that the gross total income consists mainly of income which is chargeable under the head capital gains and income from other sources. Therefore, respectfully following the decision of Tribunal for earlier years, we uphold the order of Ld. CIT(A) in holding that the assessee’s income was not assessable as speculation profit either. - Decided against revenue.

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• 2015 (7) TMI 248
  Disallowance of bad debts and advances written off - Held that:- Since the facts before us are also similar to the facts in the assessment year 2006-07 wherein held that the submissions and evidences placed by the assessee before the authorities below, viz., both the Assessing Officer and learned CIT (Appeals) have not been considered properly in the light of the principles laid down in the decisions of the Hon'ble Apex Court in the case of TRF Ltd. (2010 (2) TMI 211 - SUPREME COURT ) and Rallis India Ltd. (2010 (3) TMI 164 - BOMBAY HIGH COURT). We are of the view that it was essential for the Assessing Officer to consider the submissions and evidences placed on record by the assessee both in respect of write off of bad debts and write off of advances and find that he has not done so. In this factual matrix, we are of the opinion that it would be in the interest of equity and justice that it is absolutely necessary for the Assessing Officer to re-examine all the facts of the matter regarding the assessee's claims for write off of bad debts and write off of advances so that there is clarity while deciding the issue, we remand this issue also to the file of the AO with similar directions for de novo consideration of the issue after giving the assessee a fair opportunity of hearing. - Decided in favour of assessee. Disallowance of interest u/s 14A read with rule 8D - Held that:- In cases where there has been substantial investment for strategic purposes wherein the intention has been the expansion and support of the assessee's business, and not for the purpose of earning dividend, the provisions of section 14A of the Act ought not to have been invoked even if such expansion has occurred out of interest bearing borrowed funds. Ruling to this effect has been rendered by the Hon'ble Karnataka High Court in the case of CCI Ltd. (2012 (4) TMI 282 - KARNATAKA HIGH COURT ) relied on by the assessee. This is the proposition put forth in this case by the assessee, apart from its averments that its own funds are more than the investment in equities. We also find that the Assessing Officer has not considered the above arguments of the assessee and his finding that the assessee's net worth is negative suffers from lack of factual clarity, as the assessee's averments to the contrary are that its net worth is positive at Rs. 896 Crores. In view of the fact that the orders of the authorities below suffer from nonconsideration of arguments, details and evidences put forth by the assessee, we, in the interest of equity and justice, set aside the disallowance under section 14A of the Act and restore the matter to the file of the Assessing Officer with the direction to consider the matter afresh in detail - Decided in favour of assessee for statistical purposes. Disallowance of set off of brought forward business loss - Held that:- This issue is consequential to the findings of the AO on the first two issues i.e. bad debts and advances written off and disallowance u/s 14A of the Act read with rule 8D of the Rules. Further, the grounds relating to interest u/s 234C and 234D are also consequential in nature. Therefore, these grounds also set aside to the file of the AO for de novo consideration and for giving consequential effect, if any, to the assessee.- Decided in favour of assessee for statistical purposes. Disallowance of foreign exchange loss - CIT(A) deleted the addition - Held that:- As decided in the assessee's own case for Assessment Year 2005-06 the assessee has been able to establish its working capital requirements as was not related as otherwise noted by the Assessing Officer claimed as interest on forward contracts for investment in shares of companies which investment increased from Rs. 102 crores to Rs. 380 crores. Justifiably the learned counsel pointed out the issue in accordance with the provisions of section 43A distinguishing the capital / revenue nature imbibed therein to result in consideration thereof as were claimed by the assessee before the authorities below. The assessee himself rendered income on gain from exchange fluctuation on identical nature of revenue from loans remaining unpaid. The same is to be allowed on the facts and circumstances of the case. Thus we uphold the action of the learned CIT(A) in deleting the disallowance of foreign exchange loss - Decided against revenue.

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• 2015 (7) TMI 247
  Addition of agricultural income as undisclosed income of the assessee - comparing the total actual crop yield of the assessee with the average crop yield from the information available on the website of the Haryana Government submitted by the AO along with remand report - Held that:- The authorities below have not denied and fact that there was agriculture land of 8.32 hectare in the hands of the assessee and agricultural activities were carried on and crops were grown/produced on the agriculture land which were sold in the grain market through commission agents. As per the assessee, the wheat and paddy were sold between Rs. 850 to Rs. 870 and Rs. 1400 to Rs. 1950 respectively and the CIT(A) adopted the rates shown on the website of Haryana Government and determined the average sale rate as Rs. 800 for wheat and Rs. 1500 per qtl. for paddy. From careful reading of the assessment order and appellate order, we note that authorities below have not brought out any fact or allegation on record to dispute or raise any doubt regarding papers available at page no. 1 to 51 which contain land ownership proof of the assessee, Master Akhil Garg and Master Aman Garg, confirmation copy of accounts and purchase vouchers/bills for the sale of timber by Master Akhil Garg, proof of ownership of agricultural land of both minor sons of the assessee, copy of the auction (Boli) Registers of the commission agent, clarification/confirmation from commission agent about continuity/usage of ‘J’ Form bill book, bill/confirmation pertaining to agricultural expenses.On the basis of critical analysis of documentary proof submitted by the assessee supporting to proof of ownership of agriculture land, proof of sale of agriculture credit and timber and receipt of consideration through banking channel, we observe that the assessee submitted all possible documentary proof supporting his claim of agriculture income from sale of agriculture crop and timber. The assessee has also submitted proof of trees which were recorded in the revenue records on the agricultural land in the name of assessee and his minor sons. CIT(A) wrongly adopted average yield and sale price of wheat and paddy as shown in the website of Government of Haryana. The CIT(A) was not correct in dismissing the claim of the asessee regarding income from sale of timber without further verification and examination. We may point out that the issue of sale of timber was also not properly examined by the AO at his level and the AO dismissed entire documentary evidence of the assessee without any deliberation and adjudication. As we have already observed that the authorities below did not properly consider claim of the assessee about agriculture income and AO dismissed the claim of the assessee at the threshold on the basis of incorrect and wrong observations. During the first appellate proceedings, the CIT(A) allowed a part of the claim and restricted the disallowance to Rs. 8,16,153/- without any logical basis and sustainable reasoning and by taking a hyper technical and incorrect approach and data. In this situation, we dismiss the observations of the AO that the assessee did not furnish any iota of document to support her claim about agriculture income because as we have already noted above that the assessee submitted all possible documents including revenue records, purchase bills/vouchers, bank statement and other relevant documents showing agriculture activities which brought agriculture income to the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of interest - Claim of payment of interest remained unsubstantiated - The stand of department for rejection of the claim of the assessee is that the assessee had been allowed interest on loan account of HDFC Bank and EMI paid includes interest component therefore, the interest on current account of Bank of Baroda cannot be allowed - Held that:- If we analyse the facts, then we clearly observe that the first instalment of HDFC loan was paid by the assessee on 29.11.2007. Prior to that, there are number of transactions which are related to the agriculture and other economic activities of the assessee including amount of loan advanced to M/s Des Raj Ram Kumar and other firms. In the peculiar facts and circumstances when the interest received from M/s Des Raj Ram Kumar has been offered to tax by the assesse under the head of income from other sources, then the amount of entire interest paid on current account out of which loans were advanced cannot be disallowed at the threshold merely because instalment of property loan to HDFC bank approximately Rs. 3.5 lakh has been paid by the assessee and the entire interest paid on current account cannot be disallowed. However, we make it clear that the AO may disallow the interest amount which is related to the payment of EMIs on HDFC loans by the assessee between the period 29.11.2007 to 28.3.2008 and remaining amount of interest paid by the assessee on Bank of Baroda current account deserves to be allowed and we direct the AO to allow the same accordingly. With these directions, ground no. 3 of the assessee is deemed to be allowed for statistical purposes with the limited direction to the AO as mentioned hereinabove. - Decided in favour of assessee for statistical purposes. Addition on low household withdrawals - CIT(A) upheld the addition on the basis of facts mentioned in the remand report of the AO that the address mentioned in the assessee’s ration card and assessee’s father-in-law’s ration card were different, therefore, it cannot be said that the assessee’s father-in-law and mother-in-law were sharing their withdrawals for meeting the household expenses - Held that:- from the copies of the ration card placed before us, we note that the address of the assessee and her in laws is the same and any withdrawals made by her in laws cannot be ignored for the purpose of calculating the total withdrawals by the joint family and its sufficiency to meet household expenses during the period under consideration. The lower authorities also ignored this very fact that the assessee is living in a joint family with her in laws without any air-conditioning, generator set facility or any domestic help/servant facility. The AO has not disputed this fact that the assessee holds agriculture land and cattle out of which maximum needs of household, grocery, vegetables, fruits, milk etc. are fulfilled and in this situation, total withdrawals of Rs. 3,80,200 cannot be held as insufficient for meeting the household expenses, specially when the assessee is living a normal life without any expensive luxury and supported by agriculture produce. In this situation, addition made by the AO and partly upheld by the CIT(A) on account of low household withdrawals cannot be held as justifiable and we direct the AO to delete the same - Decided in favour of assessee.

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• 2015 (7) TMI 246
  Transfer pricing adjustment - adjustment in arm’s length price on account of export of motor cycle - Held that:- The assessee is a loss making unit suffering continuously loss for more than 10 years. On having making such a submission the Bench queried whether any purpose would be served if the above appeals are adjudicated subsequently when the admitted position is that the TPO has not made similar adjustment in any of the subsequent assessment years. The ld counsel for the assessee fairly admitted that the loss claimed and allowed to the assessee could not be carried forward as the period of 8 years elapsed and under those circumstances the adjudication of the issues listed in these appeals would be academic in nature. Nevertheless, he submitted that on principle, the assessee company cannot be concede such additions and on merits the assessee company has a very strong case as both the TPO as well as AO and the ld CIT(A) had misdirected themselves, requests for adjudication of the appeals. The ld Departmental representative on the other than, though not leave his ground, but agreed with the bench that adjudicating these contention would be academic exercise. After hearing the rival contention we deem it fit to dismiss all these cases as no useful purpose would be served by adjudicating the same. Similar adjustment has been made in any other assessment years even if it is made, when the matter is not adjudicated by us, it cannot be abinding precedent. We are also informed that no penalty proceedings have been initiated in these cases. Even otherwise penalty proceedings are independent and the issues can be contested on merit. Under this circumstance we dismiss all the appeals filed both by the assessee and the revenue as academic in nature.On a query from the Bench, it transpired that in subsequent years, the TPO has accepted the Transfer Pricing study made by the assessee and the assessee is running in heaving loss up to year 2008. So the decision in either way is not going to affect the assessee. We find that the adjudication will be mere academic and thus dismissal of the appeals will not be treated as a precedent by either side in case any issues regarding the assessee is concerned. - Decided against assessee and revenue.

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• 2015 (7) TMI 245
  Non deduction of TDS - interest paid to members - assessee is a co-operative society - Held that:- Following the decision of the co-ordinate bench of this Tribunal in the case of The Bagalkot District Central Co-operative Bank (2015 (1) TMI 1005 - ITAT BANGALORE), we hold that the assessee, which is a co-operative society carrying on the business of banking, need not deduct tax at source under Section 194A of the Act when it pays interest to a member both on time deposits and deposits other than time deposits kept with such co-operative society, by virtue of the exemption granted vide clause (v) of sub-section (3) of Section 194A of the Act. As submitted by the learned Departmental Representative and observed by the learned CIT (Appeals), it is not clear whether the entire interest in question relates to interest paid to members or whether a part of the interest is also paid to non-members. In this view of the matter, we uphold the decision of the learned CIT (Appeals) in directing the Assessing Officer to verify whether any portion of the interest in question relates to payments to non-members and to restrict the disallowance only to the extent of payment of interest to non-members without deduction of tax at source. -Decided against revenue.

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• 2015 (7) TMI 244
  Addition made u/s 2(22)(e) for deemed dividend - advance received from sister concern - CIT(A) deleted the addition - Held that:- We are not inclined to interfere in the order of ld. CIT(A) who has deleted the impugned addition of Rs. 58,12,248/- made u/s 2(22)(e) on account of advance received from sister concern. The assessee company does not hold a share in lender company from which it had received deposit then it cannot be treated to be a deemed dividend under section 2(22)(e) of the Act. It is an undisputed fact that assessee is not a shareholder of lender company, therefore, the deposit received by the assessee from said lender companies was an inter corporate deposit and not a deemed dividend, therefore, CIT(A) was justified in deleting the addition - Decided in favour of assessee. Disallowance of foreign travel expenditure - CIT(A) deleted the addition - Held that:- As decided in case of Jewel Consumer Care Pvt. Ltd. vs. ACIT [2010 (10) TMI 1013 - ITAT AHMEDABAD] from the facts of the case that the assessee submitted two reports which contained that the assessee visited Germany to negotiate supply of spares for the company’s machines and also understand certain technical issues related to the operations of the machines. In view of these facts, the assessee incurred this foreign traveling expenditure. We find no evidence that these tour expenditures are not for the purpose of the business rather it is for negotiating for spares and purchases of manufacturing machinery of tooth brushes, the visit was undertaken by the Managing Director. We find that the tour expenditure incurred by the assessee company was for the purpose of business wholly and exclusively. CIT(A) was justified in deleting the addition - Decided in favour of assessee. Addition of repairs for excavation of pond, purchase of wood shaft, ply, Burma teak wood, tiles etc. - revenue v/s capital expenditure - CIT(A) deleted the addition - Held that:- Some important principles have been culled out on the issue on the basis of various judicial pronouncements. An expenditure which involves mere replacement of a part of the machine and not the entire machine, or does not result in the creation of any new asset, cannot be termed as capital expenditure. Therefore, the impugned repair expenditure would amount to a revenue expense and it would qualify for deduction as repairs and maintenance. In view of this, we find no infirmity in the order of CIT(A).- Decided in favour of assessee. Deduction under section 80IA - CIT(A) allowed claim after considering the report of Chartered Engineer - Held that:- The issue is covered in favour of assessee by the decision of the Tribunal in assessee’s own case [2010 (11) TMI 935 - ITAT AHMEDABAD] and in the case of Baroda Precimould Pvt. Ltd. vs. ACIT [2010 (9) TMI 1053 - ITAT AHMEDABAD] wherein held the assessee must not be denied the claim of deduction under Section 80IA merely on this technical ground. We hereby direct the AO to allow the claim as per the law.- Decided in favour of assessee.

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• 2015 (7) TMI 243
  Disallowance of depreciation on ITG Networking equipments - reducing the rate of depreciation from 60% claimed by the assessee to 25% - Held that:- It is noticed that similar issue came up for consideration before the Tribunal in the assessee’s own case for the immediately preceding assessment year, i.e., 2006-07. [2014 (12) TMI 757 - ITAT DELHI] wherein the Tribunal has accepted the applicability of higher rate of depreciation by relying on the case DCIT vs. Data Craft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI]. The Hon’ble Delhi High Court in the case CIT vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT ] has approved similar view by holding that depreciation on computer peripherals should be allowed at 60% instead of the regular rate of depreciation applicable to machinery. No distinguishing feature was pointed out by the ld. DR in the facts of the instant year vis-à-vis the preceding year. - Decided in favour of assessee. Disallowance of depreciation on company owned vehicles - Held that:- The Delhi Bench of the Tribunal in DCIT vs. Haryana Oxygen Ltd. [1999 (12) TMI 107 - ITAT DELHI-D] as held that the use of cars by directorsemployees of a company cannot be characterized as user for non-business purpose and, hence, no part of such car expenses can be disallowed. The Hon’ble Gujarat High Court in Sayaji Iron and Engineering Company vs. CIT (2001 (7) TMI 70 - GUJARAT High Court ) has held that once the directors of the assessee company are entitled to use the vehicles of the company for personal use as per the terms and conditions of their appointment, it cannot be said that there was a personal use of cars. The Hon’ble High Court further held that such user of vehicles by the employees of the company cannot even be considered as ‘non-business user”. There are innumerable judgments on this point holding that there can be no disallowance of depreciation or other expenses on maintenance of the vehicles used by the directors/employees by treating it as personal user or non-business user of the company. We fail to see any rationale in treating the amount of depreciation on cars as for personal use, when admittedly these have been provided to employees. A company is a separate legal entity distinct from its directors or employees. As such, there can be no question of treating the use of vehicles by the directors/employees as a personal use by the company.- Decided in favour of assessee. Disallowance of running and maintenance expenses of the vehicles used by the employees of the assessee company - Held that:- The analogy which applies for not making any disallowance on account of depreciation for personal or nonbusiness use, equally applies for not making any disallowance on account of running and maintenance expenses of the vehicles used by the employees of the company. Similar view has been taken by the tribunal in assessee’s own case for the preceding year. Following the same, we, order for the deletion of the addition.- Decided in favour of assessee. Transfer pricing adjustment - determination of ALP of the international transaction of ‘Provision of marketing support services - selection of comparables - Held that:- TSR Darashaw (Segmental) company has three segments, which inter alia include: ‘Pay Roll and Trust Fund activity (Pay Roll).’ It is this segment which has been considered by the assessee as comparable. This company on an overview is a broking and investment banking house. Its other segments are : ‘Registrar and Transfer Agent activity (R clinical reference lab services to address the specialties and central lab services for clinical trials; clinical trials phase-I-IV and BA/BE studies; pre-clinical safety assessments; and environmental assessments. A cursory look at the nature of services provided by this company divulges that the same is functionally dissimilar from the assessee. How a company conducting clinical trials on foods and drugs can be considered as comparable with the assessee undertaking marketing support services, is anybody’s guess. This company being in the nature of business totally alien to that of the assessee, cannot be considered as a comparable. Similar view has been taken by the Tribunal in the case of the assessee for the immediately preceding assessment year. We, therefore, direct the exclusion of this company from the list of comparables. WAPCOS company operates in two segments, namely, `Consultancy & engineering products’ and ‘Lumpsum turnkey projects’. It is noticed that the TPO has considered only `Consultancy and engineering products segment’ for the purposes of comparison and has not taken into consideration the other segment of `Lumpsom turnkey projects’. The company, under the alleged comparable segment, provides consultancy services, such as, pre-feasibility report of hydroelectric projects, field investigation drilling of tube wells, etc. From the above description of the activities performed by the company under this segment, it is vivid that the same is engaged in providing engineering and consultancy services, which can be no match to the assessee’s marketing support services. Similar view has been taken by the Tribunal in the case of the assessee for the immediately preceding assessment year. This company is also directed to be excluded from the list of comparables. IDC Ltd., and ICRA Management Consulting Services Ltd. - A careful perusal of the nature of business done by IDC (India) Ltd. transpires that this company is an Information technology research and advisory firm. This company earns all its income in the form of research and survey. We fail to appreciate as to how this company can be considered as comparable with the international transaction of `Provision of marketing support services’ rendered by the assessee to its AE. Similar is the position regarding ICRA Management Consulting Services Ltd., which is providing ‘Advisory services.’ Despite this clear mismatch of the functional profile of the assessee’s international transaction of `Provision of marketing support services’ with the IT research/Advisory services provided by these two companies, we are unable to accept the contention of the ld. DR to order a de novo adjudication. It is patent that the assessee in the instant appeal is aggrieved against the inclusion of the afore discussed four companies from a total set of six companies. It has no issue with the inclusion of IDC Ltd., and ICRA Management Consulting Services Ltd. The Revenue is not in appeal before us. In such circumstances, we are unable to remedy the situation to the advantage of the Revenue inasmuch as it is the TPO who has accepted the comparability of these two companies with the assessee’s marketing support services. As such, our hands are tied to hold that the two surviving companies in the final list of comparables which are, in fact, not comparable, be also excluded and a fresh determination of the ALP be done.

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• 2015 (7) TMI 242
  Disallowance u/s 36(i)(iii) on account of interest payment - Held that:- Once admittedly borrowings have been used for the purpose of business and interest has been paid on such borrowing then such interest is eligible for deduction u/s 36(1)(iii) of the Act. The contention of the ld. DR that asset were not put to use i.e. namely the property at 141, First Floor, DLF South Court Yard, Saket was not put to use is an irrelevant consideration. The issue is confined to use of the borrowed funds which have been held to have been used for business then such interest undeniably has to be allowed as deduction. We therefore decline to interfere in the conclusion of the CIT(A) that the disallowance of interest of Rs. 12,95,595/- on the loan availed on mortgage of this property cannot be upheld as the appellant has not utilized the interest bearing funds for purchase of property. As regards interest of Rs. 14,90,373/- it is undisputed that out of the borrowed of Rs. 1,25,00,000/- sum of Rs. 68,00,000/- was utilized for purchase of shop No. GS 0122, First Floor, DLF Grand Mall, Gurgaon. It is also not denied that the property has not been actually used for the purpose of the assessee. All what has been contended is that it is kept as an alternative premise in view of the ceiling drive of residential premises by MCD at Delhi. No evidence has been led to support the aforesaid claim of the appellant. Mere assertion unsupported by any evidence cannot be accepted. On the contrary it has been found as a matter of fact that the said premises is used by M/s Origin Overseas, a sister concern and an internet search showed that the property is presently listed as the branch office of ‘Queens Furniture’ and ‘Affaire’ with the contact number of M/s Shikha Birla, spouse of the appellant. In such circumstances we are unable to accept the claim of assessee that property was an alternative premise. However, since the amount utilized for the purchase of property was Rs. 68,00,000/- therefore the CIT(A) was justified to direct the AO to re-compute the disallowance of interest expenses to the extent relatable to the utilization of interest bearing funds for the purchases of property i.e. Rs. 68,00,000/- out of total loan of Rs. 1,25,00,000/- . - Decided partly in favour of assessee for statistical purposes. Disallowance of interest on service tax penalty - CIT(A) deleted the addition - Held that:- We are of the considered opinion that it is well settled law that the interest is compensatory and not penalty. See Mahalakshmi Sugar Mills Co. v CIT [1980 (4) TMI 1 - SUPREME Court ] - Decided in favour of assessee.

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• 2015 (7) TMI 241
  Transfer pricing adjustment - Exclusion of M/s. Oil Field Instrumentation India Ltd., Celestial Labs, Ltd., and Agile Electric Technologies Pvt. Ltd. as comparables - Held that:- The learned CIT(A) has rejected the aforesaid three companies as comparables based on functional differences vis-a-vis the assessee also relying on the decision of the ITAT, Mumbai Bench in the case of Tevapharm India Pvt. Ltd. [2011 (12) TMI 284 - ITAT MUMBAI] for Assessment Year 2007-08 wherein these three companies were rejected as comparables in respect of an R&D Service Provider. Before us, no material evidence has been brought on record by revenue to justify the inclusion of these three companies in the list of comparables. Whether assessee is eligible for standard deduction of 5% from the ALP under the proviso to section 92C(2)? - Held that:- The Income Tax Act, 1961 has been amended with retrospective effect from 1.4.2002 by the introduction of a clarificatory amendment in which Section 92C(2A) was inserted by Finance Act, 2012. This new section mandates that if the arithmetical mean price falls beyond +/- 5% from the price charged in the international transactions, then the assessee does not have any option referred to in Section 92C(2) of the Act. Thus, as per the above amendment, it is clear that the +/- 5% variation is only to justify the price charged for international transactions and not for adjustment purposes. The aforesaid amendment brought about by Finance Act, 2012 has settled the issue and accordingly the 5% standard deduction benefit is not allowable to assessees. Thus the decision of the learned CIT(A) in the impugned order on this issue is reversed. - Decided in favour of revenue.

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• 2015 (7) TMI 240
  Validity of ssessment u/s 153 - Addition u/s 68 - Held that:- No addition can be made for this assessment year u/s 153A since no incriminating material was unearthed during the course of search and admittedly original assessment has not abated as on date of search. So we are inclined to follow the view of the Coordinate Bench in the assessee s group company M/s Aggarwal Plaza Pvt. Ltd Vs. DCIT. [2014 (7) TMI 1133 - ITAT DELHI] As we have upheld the ground of the assessee in CO that de-hors any incriminating material no addition can be made while computing “Total income” under section 153A of the Act, we are not inclined to adjudicate the appeal of the Revenue as it would be an academic exercise only so we dismiss it. - Decided in favour of asseessee.

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• 2015 (7) TMI 239
  Depreciation on computer accessories and peripherals - @60% OR 25% - Held that:- As relying on case of CIT vs. BSES Rajdhani Powers Limited [2010 (8) TMI 58 - DELHI HIGH COURT ] Computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60%. - Decided in favour of assessee. TP adjustment - CIT(A) deleting the addition made by the AO u/s. 92CA(4) on account of TP adjustment - Held that:- CIT (A) had taken note that the arm's length margin of finally selected comparable companies is 15.95% against the assessee's margin of 12% for provision of contract software development services. The ld. CIT (A) found that the OP/TC of 12% earned by the appellant falls within the range allowed by Proviso to Section 92C(2) of the Act. Accordingly, the ld. CIT (A) rightly found that the assessee's international transactions with its AE's with respect to provision of contract software development services during the FY 2004-05 is at arm's length. CIT(A) has rightly held that the assessee s international transaction was at arm s length and thus no addition as directed by the TPO was warranted. In the background of the aforesaid discussions and respectfully following the precedent as aforesaid as laid in Agnity India Technologies (2010 (11) TMI 852 - ITAT DELHI ), we do not find any infirmity in the impugned order of the Ld. CIT(A) on the ALP issue, which does not need any interference on our part, hence, we uphold the same - Decided in favour of assessee.

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• 2015 (7) TMI 238
  Disallowance of loss under section 115JB(2)(iii) as computed by the assessee in its return of income - CIT(A) directing allowed commission - Held that:- CIT(A) directed the AO to allow deduction under section 115JB(3)(iii) as per the working made by the assessee. However, we find that the working made by the assessee has not been brought on record either by any of the lower authorities, or by either of the parties before us. From the order of the CIT(A), it is not clear as to how the CIT(A) has verified the working made by the assessee. We, therefore, set aside the orders of the lower authorities, and remit the matter back to the file of CIT(A) for adjudicating the issue afresh by passing a speaking order.- Decided in favour of revenue for statistical purposes. Re computation of the deduction under section 80HHC for the purpose of deduction under section 115JB(2)(iv) on the book profit declared by the assessee - Held that:- The Mumbai Special Bench of ITAT in the case of DCIT vs. Syncome Formulations (I) Ltd., [2007 (3) TMI 288 - ITAT BOMBAY-H ] held that the deduction under section 80HHC in a case of MAT assessment is to be worked out on the basis of the adjusted book profits and not on the basis of the profit computed under the regular provisions of law applicable to the computation of profit and gains of business or profession. However, subsequently, Hon'ble Bombay High Court in their aforesaid decision in CIT Vs. Ajanta Pharma Ltd.,(2009 (5) TMI 7 - BOMBAY HIGH COURT) overruled the decision in the case of Syncome Formulations (I) Ltd.(supra). On further appeal by the assessee, Hon'ble Apex Court in the case Ajanta Pharma Ltd. vs. CIT, [2010 (9) TMI 8 - SUPREME COURT] while referring to the relevant provisions of sec. 115JB and sec. 80HHC of the Act upheld the view taken by the Special Bench in the case of Syncome Formulations (I) Ltd.(supra). Thus CIT(A) did not erred in directing to recomputed the deduction under section 80HHC of the Act for the purpose of deduction under section 115JB(2)(iv) on the book profit declared by the assessee.- Decided against revenue.

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• 2015 (7) TMI 237
  Entitlement to exemption claimed under Section 80P(2)(a)(i) - whether interest income earned by the co-operative societies from bank deposits cannot be regarded as income earned from business of providing credit facilities to its members and are therefore not entitled to deduction under Section 80P(2)(a)(i)? - Held that:- Respectfully following the order in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (2015 (2) TMI 995 - KARNATAKA HIGH COURT) we hold that the learned CIT (Appeals) erred in refusing to allow the assessee's claim for deduction under Section 80P(2)(a)(i) of the Act in respect of interest income of Rs. 5,95,037 for Assessment Year 2009-10 and Rs. 7,58,464 for Assessment Year 2010-11 earned by the assessee. The judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT ) relied on by the learned CIT (Appeals) has been considered and distinguished by the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (supra). We find that the facts of the case on hand to be similar to the facts of the aforesaid case decided by the Hon'ble High Court of Karnataka. Thus we hold that the assessee is entitled to deduction under Section 80P(2)(a)(i) of the Act in respect of interest income earned on fixed deposits with banks out of surplus funds from business, as it forms part of the business income earned by the assessee and the same is not to be taxed under the head “Other Sources”. In this view of the matter, the deduction claimed by the assessee under Section 80P(2)(a)(i) of the Act in respect of interest earned form investment in fixed deposits with banks and government securities out of surplus funds from business is allowed. - Decided in favour of assessee.

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• 2015 (7) TMI 236
  Reopening of assessment - whether CIT(Appeals) erred in confirming the addition of depreciation amounting to Rs. 4,20,24,089/- in computing total income under normal provisions of the Act? - Held that:- We are unable to see any validity; rather, basis, for the Revenue to claim that the decapitalization of interest and commitment charges (hereinafter referred to as ‘the interest component’) ought to be from the opening WDV of the relevant block of assets. When the addition to the same, which is for the completed projects, is only during the current year, separately for the first half and the second half thereof, how and why the reduction on account of the interest component of the said addition be from the opening WDV? The reason, though has a live link with the claim of depreciation, is without basis in facts and, hence, not valid in law. The assessee’s objection to this reason recorded, communicated vide its letter dated 05.11.2007, merits being upheld. As regards the second reason, the validity of which is self-evident, the assessee claims that the figures per the TAR are in fact per the ‘revised’ TAR, filed on 20.11.2003, which were however omitted to be considered by the AO while framing the assessment. In our clear view, there has been thus no consideration of the material being now relied upon by the A.O., i.e., in recording the reasons for the reopening and in issuing the notice u/s.148. We are unable to read any further limitation in law in the A.O. proceeding to initiate the reassessment under such a situation, except of course of ‘reason to believe’, on which aspect there is again no doubt, as discussed earlier (refer: Asst.CIT v.Rajesh Jhaveri Stock Brokers [2007 (5) TMI 197 - SUPREME Court ]. Though the ld. CIT(A) has made out a case of there being no provision in law in filing a revised TAR and, therefore, the assessee’s claim of having furnished fully and truly all material facts, as not correct, we are not inclined to dwell on that aspect of the matter inasmuch as, without doubt, the revised claim represents, by the assessee’s own admission, the correct claim of depreciation. Whether legally permissible or not, the AO is not constrained to take cognizance thereof or form an opinion on its basis; the sole criteria being its relevancy and credibility Disallowance of depreciation - Held that:- Even as conceded during the hearing, and in any case of the matter, the assessee has no case; the depreciation allowed on assessment being only in terms of its revised TAR, representing the correct statement of depreciation. Where, then, is there any scope for dispute, with we having rather observed that inasmuch as omission to consider the revised deprecation claim, being in a sum lower than its original claim by Rs. 420.24 lacs, the assessee ought to have itself pointed out the same to the AO, even if post assessment, being clearly in the nature of a ‘mistake’ in not taking cognizance or account of the corrected claim. The same would have also enabled the assessee to bring any other aspect of the matter, where apparent from the record, beneficial to it, to the fore. This is as the scope of the reassessment proceedings is restricted only to bringing the under-assessed income to tax (refer: CIT v. Sun Engineering Works (P.) Ltd. [1992 (9) TMI 1 - SUPREME Court]. The asessee accordingly fails on this ground. Adjustment made in determining the books profit u/s. 115JB - Held that:- A company can provide for depreciation at different rates, adopting a different method of computing depreciation in books, which is to be consistent with the mandate of the Companies Act. If, as it appears, no part of the interest component stands charged to the operating statement (P & L a/c), there is no occasion to or question of decapitalizing the same in the assessee’s books of account, necessitating an adjustment to the book profit on account of revision in the book depreciation. We, accordingly, restore the matter back to the file of the assessing authority to allow the assessee an opportunity to satisfy the AO that the adjustment to book profit on account of the revised depreciation, as made, is either in excess or that no adjustment, in terms of its claim of book depreciation, to the book profit, was called for. The AO shall decide the matter by issuing definite findings of fact in accordance with law. We decide accordingly. - Decided in favour of assessee for statistical purposes.

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• 2015 (7) TMI 235
  Expenses claimed by the assessee as application of income u/s. 11 - CIT(A) allowed claim - assessee is a company registered u/s 25 of the Companies Act and is also registered u/s 12A - Held that:- With respect to the defects pointed out by the AO that the company was not able to submit any details of the work undertaken or the amounts spent in places affected by natural calamities the assessee is unable to give a reason for the same which is satisfactory even before us. We notice that through the show cause letter issued the AO had asked the assessee company to submit all copies relevant documents for expenditure incurred with respect to the relief to the poor affected by natural calamities which was not responded by the assessee, hence we deem it fit to restore the issue to the file of the AO and give one more opportunity to the assessee to produce the same to the satisfaction of the assessing authority who shall decide the issue in accordance with law. The AO also had come out with a point that the assessee company was granted registration u/s 12A of the Act, based on MOA approved by the Registrar of Companies and any change in the objects of the MOA as per the Companies Act became operative from the date of such approval given by the concerned authorities for Corporate Affairs and approval is given prospectively and therefore it is only when modified objects are intimated and approved by the DIT (E) that these modified objects can be implemented and the works can be undertaken in pursuance of the objects. Hence the AO was of the view that the expenditure which was not in accordance with the object mentioned in the MOA is to be disallowed. Since we have remitted the issue with respect to the application of income u/s 11 in order to give an opportunity to the assessee to produce the necessary details before the AO, the AO shall also examine the issue with respect to the change in the objects of MOA as per the Companies Act and the date of approval by the DIT (E) of the modified objects as this fact is relevant for the implementation in pursuance of the objects and also in deciding whether expenditure is allowable when it is not in accordance with the objects mentioned in the MOA as on that date. - Decided in favour of revenue for statistical purposes.

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• Customs

• 2015 (7) TMI 261
  Under-valuation of goods - Imported computer parts - penalties imposed upon the CHA and its Managing Director separately - Held that:- As regards M/s. Indam Recycling Pvt. Ltd., we find that the demand of duty to the extent of Rs. 63.46 lakhs stand confirmed on the finding of under-valuation of the computer parts. Learned AR brings it to our notice that the appellant, during the course of investigations, have accepted the under-valuation. Further one of the live consignments, where the investigations were started by the DRI, stand abandoned by the appellant. As such at this prima facie stage, we are of the view that the said M/s. Indam Recycling Pvt. Ltd. has not made out a good prima facie case in its favour so as to dispense with the condition of predeposit of entire duty. Accordingly, we direct M/s.Indam Recycling Pvt. Ltd. to deposit an amount of Rs. 10 lakhs as a condition of hearing of its appeal. - Penalty imposed on the CHA is reduced - Decided partly in favour of Appellant.

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• 2015 (7) TMI 260
  Waiver of pre deposit - Demand of differential duty - Held that:- First, this bench on in the case of Mohit Minerals Pvt. Ltd, has taken a view that once the issue has been referred to a Larger Bench, as a convention of waiver of pre-deposit of amount involved needs to be allowed and secondly, the bench presided over by the Hon'ble President of CESTAT in Hyderabad in the case of NSL Sugars Ltd., has also noted the matter has been referred to Larger Bench and stay has been granted. We find that when the matter was referred to Larger Bench, the referral Bench has granted stay and then referred the issue to the Larger Bench, which we need to follow. Since the issue of demand of differential customs duty on the coal imported as to whether bituminous coal or steam coal has been referred to Larger Bench, we allow the application for waiver of pre-deposit of amount involved and stay recovery thereof till the disposal of the appeal. - Stay granted.

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• 2015 (7) TMI 259
  Extension of stay order - Appellant contend that their appeals has not come up for disposal for no fault of theirs - Held that:- as the stay in the present case was in force beyond 07.08.2014, the same would continue till the disposal of the appeal. - Decision in the case of M/s. Venketeshwara Filaments Pvt. Ltd. & Ors. Vs. CCE & ST., Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] followed - Stay extended.

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• Corporate Laws

• 2015 (7) TMI 277
  Jurisdiction of High Court - Infringement of the Trademark / Copyright - Interpretation of section 62 of the Copyright Act, 1957 - Interpretation of section 134(2) of the Trade Marks Act, 1999 - Place of initiation of suit Delhi vs Mumbai - Head office situated at Mumbai while branch office at Delhi - Held that:- In our opinion, the provisions of section 62 of the Copyright Act and section 134 of the Trade Marks Act have to be interpreted in the purposive manner. No doubt about it that a suit can be filed by the plaintiff at a place where he is residing or carrying on business or personally works for gain. He need not travel to file a suit to a place where defendant is residing or cause of action wholly or in part arises. However, if the plaintiff is residing or carrying on business etc. at a place where cause of action, wholly or in part, has also arisen, he has to file a suit at that place. In order passed by the delhi high court [2008 (11) TMI 658 - DELHI HIGH COURT] , it was held that if the cause of action has arisen at a place where the Plaintiff actually and voluntarily resides or carries on business or personally works for gain, that place is not only the appropriate but also the only place where a suit can be instituted ventilating a grievance of violation of copyright, (and since the provisions are similar) to an infringement of the trademark. In holding so we are not ignoring the provisions of either the Copyright Act or the Trade Marks Act; we are only imparting a pragmatic interpretation to them.Thus, for the aforesaid reasons mentioned by us in the judgment, we are not inclined to interfere with the orders passed by the High Court. - Decided against the appellant.

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• 2015 (7) TMI 258
  Penalty under Section 15A(b) of the SEBI Act - Violation of Regulation 8(3) of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations (SAST), 1997 - whether no trading in shares on stock exchange or filing of suo moto consent or no loss occured to any investor due to non disclosure have any impact on penalty amount - Held that:- In case of Comfort Fincap Ltd. vs. SEBI [2015 (6) TMI 791 - SECURITIES APPELLATE TRIBUNAL MUMBAI] decided on June 25, 2014) it was contended that during the relevant period there were no trading in the shares on the stock exchange and hence imposition of penalty for not making disclosure under Regulation 8(3) is unjustified. Rejecting that contention it was held that making disclosure under Regulation 8(3) is mandatory and that obligation is not dependant on the actual trading on the stock exchange. In view of the aforesaid Larger Bench decision of this Tribunal in case of Comfort Fincap Ltd. [2015 (6) TMI 791 - SECURITIES APPELLATE TRIBUNAL MUMBAI] , first contention of the appellants that the AO was not justified in imposing penalty for not making disclosure under Regulation 8(3) inspite of there being no trading on account of the Stock Exchanges being non functional, cannot be accepted. Second contention of the appellants is that they had filed suo moto consent applications before SEBI. Filing of suo moto consent applications do not enhance their case, because, what was required under Regulation 8(3) of SAST Regulations, 1997 is to make yearly disclosures suo moto within 30 days from the financial year ending March 31, and not filing suo moto consent applications after a decade. Having failed to make yearly disclosures year after year from 1998, appellants cannot escape penal liability merely because in the year 2011 they had filed suo moto consent applications seeking consent order. Third contention of the appellants is that no loss has occurred to any investor due to non disclosure under Regulation 8(3). Very same argument was raised in case of Mrs. Komal Nahata [2015 (6) TMI 792 - SECURITIES APPELLATE TRIBUNAL MUMBAI] and the said argument was rejected by recording a finding that the mandatory disclosures under the respective regulations framed by the SEBI have to be complied with, irrespective of the fact that the investors have actually suffered on account of non disclosures or not. In view of the aforesaid decision of this Tribunal, above argument of the appellants cannot be sustained. Argument of the appellants that penalty of Rs. 7 lac on each appellant is excessive and unreasonable is also without any merit. Calculated at the rate of Rs. 1 lac per day for each year subject to a maximum of Rs. 1 crore per year, penalty for each year from 1998 till 2011 shall be Rs. 1 crore per year. However, after taking into consideration all mitigating factors, the AO has imposed composite penalty of Rs. 7 lac on each appellant which cannot be said to be unreasonable or excessive. - Decided against the appellants.

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• 2015 (7) TMI 257
  Penalty under section 15HA of the SEBI Act, 1992 - Violation of PFUTP regulations, 2003 - Artificial volume and price manipulation in the scrip - Self trade through various brokers - Increase in price of about 31.77 percent in 163 trading days - Held that:- The learned AO has himself, while considering the question of imposition of penalty, observed that it was difficult to quantify any gain or unfair advantage which might have accrued to the two Appellants due to the trades in question or any loss to the investors. Moreover, no action has been taken against the persons who acted as a group along with Appellants. In view of this finding in paragraph 25 of the impugned order, we are of the considered opinion that the ends of justice would be duly met by reducing the penalty to Rs. 10 lakh on each of the two Appellants in the facts and circumstances of the case. - Decided partly in favour of appellants.

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• PMLA

• 2015 (7) TMI 255
  Maintainability of appeal - Availability of alternate remedy - Held that:- Even aggrieved by the order of the Appellate Tribunal the Statute under Section 42 of the PML Act provides for an appeal on any question of law or fact to the High Court. Thus, even accepting the version of the petitioner that the impugned order is a non-reasoned order and the Appellate Court would not have the benefit of reasoning before it however such order is also an appealable order and wherein the Appellate Court on appreciation of facts and law can form its opinion. There is no denial that giving reasons is one of the fundamentals of good administration and failure to give reasons amounts to denial of justice. However, it is not a principle of law that if an order of a competent authority is bereft of reasons, the appellate authority is denuded of its statutory jurisdiction to entertain the appeal. However, brevity of reasoning cannot be understood in legal parlance as absence of reasoning. While no reasoning in support of order whether judicial/quasi-judicial order is impermissible, the brief reasoning would suffice to meet the ends of justice at least at interlocutory stages and would render the remedy of appeal purposeful and meaningful. - without dwelling into the merits of the matter since the case of the petitioners do not fall in the exceptions as laid down in Whirlpool Corporation (1998 (10) TMI 510 - SUPREME COURT), the writ petitions and applications are dismissed with liberty to the petitioner to avail the alternative efficacious remedies available under Section 26 of the PML Act - Decided against Appellant.

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• Service Tax

• 2015 (7) TMI 273
  Power of revisionary authority - Option to pay 25% service tax, interest and penalty - Held that:- The provisions relating to extension of option and availability of option in respect of Commissioner (Appeals) and the Tribunal cannot be applied to the order of the Commissioner and this is the ground taken by the Revenue. It cannot be said that this observation is not correct. - According to Section 84 of Finance Act 1994 as it existed during the relevant time, The Commissioner can call for the records and after enquiry, pass an order as he deems fit in respect of orders passed by adjudicating authorities subordinate to him. The section also specifically provided that no order under Section 84 shall be passed by the Commissioner in respect of any issue, if an appeal against the said issue is pending before the Commissioner of Central Excise (Appeals). What emerges from the provisions of Section 84 is that Revenue has two options when it is found that the decision or order is not acceptable. One is to file an appeal before the Commissioner (Appeals) and the other one is to take up revision as per the provisions of Section 84 of Finance Act 1994. There are two views possible. The first view is that the Commissioner is in fact just revising the order or modifying the order. When I see the order passed by the Commissioner in this case, it is seen that the Commissioner in the concluding portion has stated that the order-in-original is modified to the extent mentioned by him. In the second scenario, the order is only a modification or a revision. In such a case it is possible to take a view that while modifying the order passed by the original authority, Commissioner has the liberty to modify the portion relating to the option also. Since the Commissioner has modified the order and is not considering an appeal, it can be considered as continuation of original proceedings and therefore the action taken by the Commissioner to extend the option cannot be found fault with. I consider the second view a better alternative view and therefore, I find no merit in the appeal filed by the Revenue - Decided against Revenue.

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• 2015 (7) TMI 272
  Waiver of pre deposit - Disallowance of CENVAT Credit - service tax was not paid on the amount of scholarships / fee discounts / fee concessions - Held that:- Appellant has paid service tax on the entire amount received for providing commercial training or coaching service. The so-called scholarship was nothing but a fee discount granted to certain students. In other words, it collected discounted fee from certain students and so in relation to those students the gross amount charged for providing commercial training or coaching service was the discounted fee. Thus what is called scholarship in the present case is not any amount that was paid to the students from whom fee at full rate was collected; it was just a fee discount. It is well settled that for legal analyst what is relevant is the actual nature of the transaction and not the name given to it (i.e. transaction) - appellant has been able to make out a strong prima facie case in its favour. Therefore we grant full waiver of pre-deposit and stay recovery of the impugned liability during pendency of the appeal - Stay granted.

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• 2015 (7) TMI 271
  Valuation - Service tax on the amount of scholarship / fee discounts / fee concessions given to certain students - Deduction from assessable value - Held that:- Prima facie find that the appellant has paid service tax on the entire amount received for providing commercial training or coaching service. The so-called scholarship was nothing but a fee discount granted to certain students. In other words, it collected discounted fee from certain students and so in relation to those students the gross amount charged for providing commercial training or coaching service was the discounted fee. Thus, what is called scholarship in the present case is not any amount that was paid to the students from whom fee at full rate was collected; it was just a fee discount. It well settled that for legal analysis what is relevant is the actual nature of the transaction and not the name given to it ( i.e. transaction). - appellant has been able to make out a strong prima facie case in its favour. Therefore we grant full waiver of pre-deposit and stay recovery of the impugned liability during pendency of the appeal. - Stay granted.

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• 2015 (7) TMI 270
  Waiver of pre deposit - Appeal previously dismissed for non compliance with pre deposit order - Held that:- Imposing 100% duty and penalty as pre deposit is too harsh a measure, especially when the merits of the issue are not considered. Rejecting the appeal on the ground that appellants have not complied with the said pre deposit order would amount to denial of Justice. It is also noted that the Government in its wisdom have subsequently stipulated 7.5% of the duty and penalty as the pre deposit amount at the first appeal stage. In the present case, the appellants have already paid 10% duty while filing this appeal before this Tribunal. Therefore, it is treated that this 10% duty would be sufficient to hear their appeal on merits by the Commissioner (Appeals). - Matter remanded back - Decided in favour of assessee.

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• Central Excise

• 2015 (7) TMI 276
  Cenvat Credit - reasonable steps before availing credit - original manufacturer of fabrics were alleged to be fictitious - endorsed invoices - Supreme Court permitted the appeal to withdrawn filed against the decision of High Court [2012 (12) TMI 979 - GUJARAT HIGH COURT], wherein High Court followed the previsous decision of Prayagraj Dying & Printing Mills Pvt. Ltd. & Ors. Vs. Union of India & ors (2013 (5) TMI 705 - GUJARAT HIGH COURT) and decided in favour of assessee.

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• 2015 (7) TMI 274
  Recall of order - Tribunal demand 25% pre deposit to hear the matter on merits - Held that:- Since Tribunal akready decided the appeal in second round of litigation [2015 (7) TMI 192 - CESTAT MUMBAI], and it is apparent from the records that the revenue is unaware about the disposal of the appeal - application filed by the revenue is infructuous - Decided against Revenue.

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• 2015 (7) TMI 267
  Reversal of CENVAT Credit - leasing out the power plant with ancillary equipments to KPPL without removing the capital goods - Held that:- Rule 3 (5) only speaks about the removal of goods under cover of invoice referred to in Rule 9 on inputs or capital goods on which cenvat credit has been taken and if such goods are removed as such from the factory or premises of the provider of output service, the manufacturer of the final products or provider of output service, shall be liable to pay an amount equal to the credit availed in respect of such inputs or capital goods. There is no removal of goods under cover of invoice as provided under Rule 9 of the Cenvat Credit Rules, 2004 and there is nothing in Rule 3 (5) of the Cenvat Credit Rules, 2004 to invoke the deeming fiction as insisted by the adjudicating authority. The language of Rule 3 (5) is plain and simple. When the inputs or capital goods on which cenvat credit has been taken are removed as such from the factory, then subject to compliance of other requirements, the credit availed in respect of inputs on capital goods shall be paid. This situation has not arisen in the present case, as no invoice has been issued for removal of the goods from the factory premises and, therefore, the said rule is not applicable to the case of the assessee. - no reason to interfere with the well considered findings of the Tribunal on the questions of law as raised - Decided against Revenue.

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• 2015 (7) TMI 266
  Invocation of extended period of limitation - Intention to evade payment of duty - valuation - service charges had not been included in the assessable value of housing containers and freight containers - Held that:- It has been held by the Tribunal that there is a clear case of suppression for invocation of extended period of limitation for the period prior to August, 1996, as the activities of the appellant/assessee came to light subsequent to an investigation by the Department. However, insofar as the period post August, 1996, on the plea of suppression, the Tribunal was correct in setting aside the demand on the ground that the department was aware of the activities of the appellant/assessee and, therefore, post August, 1996, the case of suppression, as held by the adjudicating authority, cannot be sustained. The plea of the appellant is that if there is no suppression post August, 1996, no extended period could be invoked post August, 1996 and, therefore, the same analogy will have to be applied for the period prior to August, 1996 as well. That plea cannot be sustained as all the activities of the appellant/assessee came to light based on investigation by the Department and recording of statement in August, 1996. - Therefore, for the period prior to August, 1996, the department was justified in invoking the plea of suppression for larger period - there is no error on record warranting interference with the well considered finding of the Tribunal. - Decided against assessee.

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• 2015 (7) TMI 265
  Waiver of pre deposit - Held that:- Since vires of enactment is under challenge, let copy of petition along with documents annexed thereto be separately served in the office of learned Additional Solicitor General, who is representing Union of India. - In the meanwhile, the appeal preferred by the petitioner shall not be dismissed provided the petitioner comply with the condition of pre deposit in terms of amending Section 35F introduced with effect from 06.08.2014 within a period of two weeks. - Decided conditionally in favour of assessee.

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• 2015 (7) TMI 264
  Area based exemption - Exemption under Notification No. 50/03-CE dated 10/6/03 - whether or not the commercial production had commenced on or before 31/03/2010 - Held that:- For being eligible for the exemption notification, it is necessary that the commencing of the commercial production should have been taken place on or before 31/03/2010. Though the appellant had intimated the Jurisdictional Central Excise officers about availment of this exemption under their letter dated 23/03/2010, their unit was not visited by the Jurisdictional Central Excise Officers during the last week of March, 2010, which was the crucial period for determining as to whether the plant was in position to commence commercial production or not. If the plant had been visited by the Jurisdictional Central Excise officers on 31/03/2010 and got surveyed by a Chartered Engineer and his opinion on the point of commissioning taken, there would have been no scope for dispute on this point. In this regard, the certificate dated 15/07/2010 given by the Member Secretary, Single Window Clearance Agency, Kala Amb, H.P., is in the appellant s favour as it certifies that the commercial production had commenced on 31/03/2010. However, it is not clear from this certificate that this certificate had been given after actually visiting the plant on 31/03/2010 or only on the basis of the records. As regards the allegation that sale of 3.48 MT of Aluminium Coils had been shown to M/s Shirdi Sales on 31/03/2010, who were only a dealer in Particle Boards and whose Director, Shri Sanjay Bajaj on inquiry had stated that they had not placed any orders for these goods, the statement dated 31/05/2010 of the Director, Shri Sanjay Bajaj stating that he had not placed any orders for Aluminium Sheets is not an evidence in support of the allegation that the goods produced on 30/03/2010 were not of the desired quality and were of non-saleable and sub-standard quality. The crucial question to be decided for determining as to whether or not the commercial production had commenced on or before 31/03/2010 is whether the statement of Shri Dinesh Sharma is correct or whether the certificate given by the Board Secretary, Single Window Clearance Agency, Kala Amb, H.P., is correct. For this purpose, in our view, Shri Dinesh Sharma and the person issuing the certificate regarding commencement of the commercial production on 31/03/2010 have to be examined as per the provisions of Section 9D (2) read with Section 9D (1) of the Central Excise Act, 1944, which has not been done. - impugned order is set aside - Matter remanded back - Decided in favour of assessee.

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• 2015 (7) TMI 263
  Rectification of mistake - SSI exemption under Notification No 7/97-CE dt 1.3.1997 - Admissibility of Modvat Credit - Held that:- It is observed from Para 2 of the order [2014 (11) TMI 75 - CESTAT AHMEDABAD] passed by this Bench that Advocate of the appellant during the course of hearing has raised the issue of admissibility of credit on raw materials and also eligibility of exemption under Notification No 7/97-CE dt 1.3.1997. The issue has not been deliberated by this Bench, therefore, there is an apparent mistake from the face of the record and need rectification. The other two issues of upholding the benefit of cum-duty price and 25% reduced penalty are also related to the outcome of the issues on admissibility of credit on raw materials and exemption under Notification No 7/97-CE dt 1.3.1997. So far as admissibility of cenvat credit on the raw materials used in the manufacture of finished goods, during the relevant period is concerned, the same is required to be examined with respect to the duty paying documents and private/statuary records maintained by the appellant to the effect that such inputs are received in the factory premises and used This can only be done by the Adjudicating Authority for which the appellant has to produce cenvatable documents alongwith the records maintained by them. So far as eligibility under Notification no 7/97-CE dt 1.3.199 is concerned, it is observed that this issue has also not been raised by the appellant before the lower authorities and has to be examined by the Adjudicating Authority based on the satisfaction of the conditions specified in the exemption Notification. - Similarly, option of granting 25% of the reduced penalty under Section 11AC of the Central Excise Act will also depend upon the amount of short levy, if any, quantified by the Adjudicating Authority. ROM filed by the appellant is allowed by way of remand to the adjudicating Authority to decide the issues of admissibility of cenvat credit on inputs received during the relevant period, admissibility of exemption under Notification No. 7/97-CE dt 1.3.1997 and thereafter allow the benefit of cum-duty price and 25% reduced penalty as per provisions contained in Central Excise Act 1994. - Decided in favour of assessee.

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• 2015 (7) TMI 262
  Non Reversal of CENVAT Credit on Closure of factory - allegation that appellants have closed down their Lead plant in July 1999 and dismantled the same in December 2003 and have not reversed the credit of Cenvat availed on lead concentrate lying in stock - Held that:- Lead concentrate was recovered at the time of dismantling of the plant and it cannot be said that the assessee had intention to evade duty or avoid payment of tax and there is no clandestine removal. The appellant's claim is that the lead concentrate was received prior to 1994. Subsequently, finding no evidence for the same, they dropped the claim. Having regard to the facts and circumstances of the case, I consider that since the duty liability is not contested and even if it is not paid, learned counsel for the assessee has accepted the liability, the penalty can be waived. The reversal of credit is specifically under Rule 3 itself and instances where credits suffer reversal have been specified there itself. The Rule, as it exists after amendment of 2009, provides for reversal of credit when inputs where cleared 'as such' or written off in the books of account because the inputs became unfit for use. Another provision for recovery of Cenvat credit is available under Rule 14 of Cenvat Credit Rules. This Rule provides for recovery of Cenvat credit wrongly taken or erroneously refunded. The Commissioner (Appeals) has discussed the provisions of Rule 3 relating to reversal and explained that situation in this case is not covered by the provisions. Rule 14 is not applicable since when the credit was taken on Zinc concentrate it was taken correctly and, it cannot be said that the credit was wrongly used since there is no such allegation. In this case, the provisions of Rule 14 are also not applicable. - penalty imposed on the appellant equal to the amount of confirmed duty of Rs. 8,96,325/- is set aside. The demand for Cenvat credit on the inputs cleared 'as such' is sustained and the assessee should pay the same with interest - Decided partly in favor of assessee assesssee.

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• CST, VAT & Sales Tax

• 2015 (7) TMI 269
  Demand of interest on delayed payment of tax - Held that:-Petitioner has been manufacturing the Indian Made Foreign Liquor (IMFL) and selling the same only to the Tamil Nadu State Marketing Corporation Limited (TASMAC) and also further taking note of the fact that the petitioner had cleared the entire tax liability, except a sum of Rs. 68,00,000/- as demanded in the impugned notice, instead of granting ten equal installments as prayed for by the petitioner, is inclined to grant four equated monthly installments to the petitioner to clear the above said liability. Accordingly, by setting aside the impugned notice, the petitioner is directed to pay the sum of Rs. 68,00,000/- in four equal monthly installments - Decided partly in favour of assessee.

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• 2015 (7) TMI 268
  Penalty u/s 53 - Mens Rea - Whether the initiation of suo moto revisional proceedings against the appellant under section 64(1) of Karnataka Value Added Tax Act is erroneous in law and as such, same is liable to be set aside - Held that:- Since the driver did not produce any document pertaining to the goods under transport, the vehicle as well as goods were detained and Goods Consignment Endorsement vide No.GCE-18/10-12 dated 29.07.2010 was issued to the driver. It is also not in dispute that one Sri.Rilesh who was calling himself as authorised officer of appellant company came to the spot within half an hour of interception and obviously after getting information from the driver of the vehicle. He also did not produce any records pertaining to the goods under transport. It was only in the evening on 29.07.2010 at about 5 P.M. it seems appellant company faxed copy of invoice bearing No.139 dated 29.07.2010 in which it is contended that 240 bags of Pan Parag were to be delivered to M/s.Lovely Enterprises, No.7, G.S.Market, O.T Pete Cross, Bengaluru-53 in which the company has stated that the copy of invoice is with the driver and it continues to be with the driver who was afraid of the inspecting officer and hence he could not speak and satisfy the authorities by producing the bill. Said fax message further requested for early release of the vehicle. All the aforementioned admitted facts clearly reveal that the person in-charge of the vehicle or the person who came within half an hour after interception of the vehicle calling himself as authorised officer of appellant company did not produce any record or documents pertaining to the goods under transport. The legislature in detail has prescribed procedure for carrying goods under section 53 of the Act. The said provisions are mandatory in nature and having regard to the legislative intention, if those provisions are not complied then there is non compliance of statutory requirement. As the provisions do not anywhere disclose or indicate that the intention to evade tax is necessary for levy of penalty, same cannot be read in section 53 of the Act to find out whether statutory contravention is established or not. Once statutory contravention is established, then section 53(12) is attracted which provides for levy of penalty. - revisional authority is justified in setting aside the order passed by the appellate commissioner and restoring the order passed by the original authority - Decided against assessee.

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• Indian Laws

• 2015 (7) TMI 256
  Validity of Arbitral award - whether the appellant is liable to pay interest to the respondent though there was a provision in the contract that no interest should be paid on the amount payable to the contractor - Held that:- Section 31(7) of the Act, by using the words "unless otherwise agreed by the parties", categorically specifies that the arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to date of the award is concerned. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest. - if there is a bar against payment of interest in the contract, the arbitrator cannot award any interest for such period. In view of the specific bar under Clause 13(3) of the contract entered into between the parties, we are of the view that the Arbitral Tribunal was not justified in awarding interest from the date of entering upon the reference to the Arbitral Tribunal till the date of the award. - We set aside the impugned judgment and the award so far as it pertains to payment of interest pendente lite and direct that no interest would be paid on the amount payable under the contract to the respondent from the date of the reference till the date of the award. - Impugned order is set aside - Decided in favour of Appellant.

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