Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 12, 2016
Case Laws in this Newsletter:
Income Tax
Benami Property
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Central Excise
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30/2016 - dated
10-8-2016
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CE
Seeks to further amend notification No.12/2012-Central Excise, dated 17.03.2012 so as to withdraw the excise duty exemption on ethanol produced from molasses generated in the sugar season 2015-16 (i.e. 1st October, 2015 to 30th September 2016), for supply to the public sector OMCs for blending with petrol
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42/2016 - dated
11-8-2016
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CE (NT)
Specification of 17th August, 2016 as the date on which clause (v) of rule 5 and rule 6 of Central Excise (Amendment) Rules, 2016 notified by Notificaton No. 8/2016- Central Excise (NT) dated 1st March, 2016, shall come into force
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41/2016 - dated
10-8-2016
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CE (NT)
Seeks to amend CENVAT Credit Rules, 2004 so as to withdraw the facility to avail of CENVAT credit of duty paid on molasses generated in the sugar season 2015-16 (i.e. 1st October, 2015 to 30th September 2016) which is used for producing ethanol for supply to public sector OMCs for blending with petrol by omitting rule 6 (6) (ix) of the CENVAT Credit Rules, 2004
DGFT
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21/2015-2020 - dated
11-8-2016
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FTP
Special Advance Authorisation Scheme for export of Articles of Apparel and Clothing Accessories. Amendments in FTP 2015-2020
SEZ
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S.O. 2667(E) - dated
5-8-2016
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SEZ
Central Government authorises the jurisdictional Officers
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S.O. 2666(E) - dated
5-8-2016
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SEZ
Central Government authorises the Additional Director General, Directorate of Revenue Intelligence
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S.O. 2665(E) - dated
5-8-2016
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SEZ
Central Government notifies the offences contained in the under-mentioned sections of the Customs Act, 1962 (52 of 1962), the Central Excise Act, 1944 (1 of 1944) and the Finance Act, 1994 (32 of 1994)
Highlights / Catch Notes
GST
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GST - Enabling Provisions
Income Tax
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TDS on roaming charges paid to other service providers - the roaming process between participating company cannot be termed as technical services and, therefore, no TDS was deductible - HC
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Set off un-absorbed depreciation against the deemed income under section 69, 69A, 69B and 69C allowed - AT
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Allowability of various expenses claimed by the appellant against the professional receipts - it is clear case of adhoc disallowance of expenses which cannot be sustained in the eye of law. - AT
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Non deduction of TDS u/s 194C - subscription charges paid to pay channels - expenditure incurred is in the nature of direct expenses, adjustable against the revenue for determination of profit u/s 28(1), but not an expenditure covered u/s 30 to 38 - therefore, disallowance u/s 40(a)(ia) is not attracted - AT
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LTCG - transfer of goodwill - the goodwill receipt is only an advance and can be chargeable to tax as part of total sale consideration, when the ownership get transferred. - AT
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There is no distinction between discount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be revenue expenditure - AT
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According to the section 37, the expenses incurred to preservation and protected the assets of the company are liable to be deducted. - AT
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Addition on account of non-charging of interest - the TPO re-characterized the whole transaction and this is not permissible without any materials or evidence suggesting that such advance is only a loan. - AT
Service Tax
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Cenvat credit - The fact that the guest house is located right next to the factory implies that it is used in relation to the manufacturing activity. Therefore, the credit of repair and maintenance services of the guest house is allowed. - AT
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In the absence of any evidence produced by revenue that the manpower supplied by respondent carried out any work outside the factory premises it is to be held that the manpower was shifting the goods within the factory premises. services rendered in the present case do not fall under Cargo Handling Service - AT
Central Excise
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Classification - worn out Silver Targets are classifiable under chapter subheading No. 7010.31 attracting NIL rate of duty.- AT
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Admissibility of suo-moto re-credit which was debited by them earlier under protest - there is no impediment in the appellant taking suo motto credit - AT
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When there are separate contract for sale of the goods and for transportation etc., it is held that the said transportation charges can not be included in the assessable value of the goods for the purposes of computation of Central Excise duty. - AT
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Appropriation of interest on refund - Whether the amount of interest sanctioned to the Appellant can be appropriated towards outstanding arrears of revenue - Held no - AT
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Clandestine removal of sponge iron - once the statements of the transporters and commission agent are ignored, there is nothing much left to sustain the allegation against the appellant - AT
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Cenvat credit - entitlement - Whether the Commission Agent Services would be classifiable as Business Auxiliary Service as per Department or Sales Promotion service as per appellant - credit allowed as sales promotion activity - AT
VAT
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Withholding of refund - GVAT - period fo limitation to revise the order has not expired - Unless such order is passed, the refund cannot be automatically withheld. - HC
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Withholding of refund - GVAT - There is no provision, where in addition to the order of assessment which results into refund being payable to the assessee, refund order has to be separately passed - HC
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Adjustment of refund with outstanding demand which was not confirmed - Due to the careless action of the VATO an interest burden of nearly ₹ 56 lakhs is now placed on the exchequer - Appropriate actions directed to be taken against the VATO - HC
Case Laws:
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Income Tax
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2016 (8) TMI 422
Non-deduction of tax at source on roaming charges paid to other service providers - whether the Tribunal is right in law in holding that the assessee could not have been deemed as one in default for non-deduction of tax at source on roaming charges paid by it to other service providers? - Held that:- Revenue contention is not only misconceived, but is on non existent premise, because the subject matter of the present appeals is not roaming services provided by mobile service provider to its subscriber or customer, but the subject matter is utilization of the roaming facility by payment of roaming charges by one mobile service provider Company to another mobile service provider Company. Hence, we do not find that the observations made are of any help to the Revenue. As such, even if we consider the observations made by the Apex Court in the case of Bharti Cellular Limited [2010 (8) TMI 332 - Supreme Court of India] whether use of roaming service by one mobile service provider Company from another mobile service provider Company, can be termed as “technical services” or not, is essentially a question of fact. The Tribunal, after considering all the material produced before it, has found that roaming process between participating entities is fully automatic and does not require any human intervention. Coupled with the aspect that the Tribunal has relied upon the decision of the Delhi High Court for taking support of its view. In our view, the Tribunal is ultimately fact finding authority and has held that the roaming process between participating company cannot be termed as technical services and, therefore, no TDS was deductible. We do not find that any error has been committed by the Tribunal in reaching to the aforesaid conclusion. Apart from the above, the questions are already covered by the above referred decision of the Delhi High Court, which has been considered by the Tribunal in the impugned decision. - Decided in favour of assessee.
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2016 (8) TMI 421
Set off unabsorbed depreciation against the deemed income under section 69, 69A, 69B and 69C - deemed income - Held that:- The issue is, therefore, covered in favour of the assessee by the order of the ITAT Chandigarh Bench in the case of M/s Liberty Plywood [2013 (1) TMI 510 - ITAT CHANDIGARH ] wherein held that the adjustment of current year or unabsorbed depreciation can be made against such deemed income - Decided against revenue Disallowance u/s 36 (1)(iii) - DR contended that no details are filed before the Assessing Officer regarding availability of the funds - Held that:- CIT(Appeals) recorded specifically that there is no finding of the Assessing Officer on fulfillment of the conditions of proviso to Section 36(1)(iii) of the Act. Term loans raised were found old and against machinery installed in earlier years which fact was not disputed by the Assessing Officer. There was no finding of the Assessing Officer to the effect that asset is for the expansion of the existing business. The assessee explained that it is constructing a building at Doraha and the place is used for storage. The Assessing Officer has nowhere held that building being constructed is for expansion of the existing business. Therefore, provisions of Section 36(1)(iii) and 43(1) would not be attracted in this case. Further, the assessee explained that it has sufficient funds available for raising the construction on which no interest has been paid. The ld. CIT(Appeals) has given a specific finding that in the absence of any finding by the Assessing Officer regarding any term loan having been raised for building construction, the ld. CIT(Appeals) was justified in deleting the addition. There is no merit in this ground of appeal of the revenue - Decided against revenue
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2016 (8) TMI 420
Allowability of various expenses claimed by the appellant against the professional receipts - Held that:- Nature of the expenses such as depreciation, interest on car loan, audit fee etc. once purchase of assets in the nature of computer, car, books etc. and the utilization thereof for the purposes of earning professional income has been accepted, where is the question of disallowing 40% of the depreciation claim or interest on car loan. Similarly, once the books of accounts have been audited and audit fee is payable, there is no basis for disallowing 40% of the audit fees. Similarly the duty of the appellant require lot of research and analysis of time bound delivery on study material and guidance note and all these works requires involvement of staff and related office space. Even though the appellant has access to the infrastructure and office space at the Institute, the appellant has submitted that he has maintained office and hired staff at his own cost to assist him in discharge of his consulting engagement which cannot be refuted in absence of any contrary evidence on record. In our view, the expenses incurred on space for ₹ 7000/- per month and on staff ₹ 30,000/- per month and other related travel and other expenses appears to be reasonable. Further, the ld. CIT(A) has not specified any specific transactions or the expenses which the appellant has claimed and the same has not found favour with the ld. CIT(A). In our view, it is clear case of adhoc disallowance of expenses which cannot be sustained in the eye of law. We accordingly delete the disallowance of 40% of the expenses of ₹ 5,28,250/- claimed by the appellant hence ground of the assessee’s appeal is allowed. Unexpalined source of cash - Held that:- On perusal of the capital account which is available on record, it is noted that the appellant has an opening balance of 11,34,013 and introduced fresh capital of ₹ 2,52,609/- during the year under consideration in his professional consultancy business. The appellant introduced a sum of ₹ 7,05,500/- in his profession on various dates and he has withdrawn a sum of ₹ 4,52,891 from his capital account on various dates. Thus the net capital amounting to ₹ 2,52,609/- was introduced in the profession consultancy activities. In our view, the addition, if at all, is required to be made should therefore be restricted to ₹ 2,52,609 as the appellant has demonstrated the clear linkage between the deposits and the withdrawals of the same amount in his capital account. Further, regarding the source of ₹ 252,609/- introduced in the profession, a perusal of estimated personal state of affairs shows the appellant had cash in hand of ₹ 6,30,581 at the beginning of the year which is sufficient to demonstrate the deposit of ₹ 252,609 as fresh capital in his consultancy activities. In light of above and given the past professional earnings and household withdrawals and availability of cash standard of living. In the light of above, we are of the view that the appellant has adequately demonstrated the source of cash deposits and the explanations are found to be reasonable and supported by the professional and personal statement of accounts and we hereby delete the amount of ₹ 7,05,500/- treated by the AO as undisclosed income of the appellant. Hence the ground of the appellant is allowed.
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2016 (8) TMI 419
TDS u/s 194C - whether expenditure incurred by the assessee towards subscription charges paid to pay channels is in the nature of direct expenditure coming under the provisions of section 28(1) of the Act or an expenditure coming under the general deductions under the provisions of section 37 of the Act - Held that:- The expenditure incurred is in the nature of direct expenditure, therefore, not coming under any of the provisions of section 30 to 38 of the Act, therefore, no disallowance can be made for want of non deduction of tax at source. We find that the Ld. CIT(A) after considering the explanations furnished by the assessee categorically held that the expenditure incurred by the assessee is in the nature of direct expenses, adjustable against the revenue for determination of profit u/s 28(1) of the Act, but not an expenditure covered u/s 30 to 38 of the Act, therefore, disallowance provided u/s 40(a)(ia) of the Act is not attracted. The revenue has failed to brought on record any evidences to prove that the findings of the fact recorded by the Ld. CIT(A) is incorrect. Therefore, we are of the view that the CIT(A) has rightly deleted the additions made by the A.O. under the provisions of section 40(a)(ia) of the Act, by holding that the expenditure incurred by the assessee is not coming under the provisions of section 30 to 38 of the Act, hence no disallowance can be made u/s 40(a)(ia) for non deduction of TDS. We do not see any error or infirmity in the order passed by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue. - Decided in favour of assessee.
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2016 (8) TMI 418
Long Term Capital Gain arising out of the transfer of "goodwill" - Held that:- The assessee has entered into development agreement with M/s Krishna Reddy Constructions to develop the land under their families disposal. In that process, they agreed to receive developmental goodwill of ₹ 65 lakhs, out of which ₹ 10 lakhs were received during previous AY and balance ₹ 55 lakhs during the current AY 2009-10. The main issue before us is, whether these receipts of ₹ 55 lakhs are in the nature of advance or goodwill. Also, whether the goodwill is separate from the development of land. It is fact that the assessee had received ₹ 65 lakhs as goodwill, (not refundable). Whether mere receipts of ₹ 65 lakhs as goodwill amounts to transfer as separate assessable asset is the main query. In our considered view, the goodwill is generated only because the assessee had entered into the development agreement not otherwise. Hence, the assets under consideration are composite assets linked to development of land. Hence, it cannot be separated. In this case, assessee had received the goodwill and handed over the land for development. The payment of goodwill is prior condition for handing over of land for development. This being the case, the expression goodwill is nothing but part performance towards development of land. It has to be part and parcel of the purchase consideration accepted for the whole project. Till the project is complete, the payment will remain as advance towards the project. As explained, the term goodwill cannot be viewed or assessed separately. It can be assessed along with the other purchase consideration received by the assessee, when the actual ownership passes to the buyers. In this situation, payment received as goodwill cannot be charged to tax even though it is received during this AY. We need to consider the actual performance of the whole contract rather than actual receipt of part payment. In view of the above discussion, in our considered view, the goodwill receipt is only an advance and can be chargeable to tax as part of total sale consideration, when the ownership get transferred. Hence, addition made by the AO is deleted. As regards the addition towards income from other sources AR has not argued during the appeal proceedings on this addition and, therefore, this ground is dismissed as not pressed.
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2016 (8) TMI 417
Revision u/s 263 - Expenditure incurred for raising the debenture - revenue or capital - Held that:- It is settled law that while making assessment on assessee, the ITO acts in a quasi-judicial capacity. An assessment order is amenable to appeal by the assessee and to revision by the Commissioner under Sections 263 and 264. Therefore, a reasoned order on a substantial issue is legally necessary. If the Assessing Officers are allowed to make assessments in an arbitrary manner, as has been done in the case before us, the administration of revenue is bound to suffer. If without discussing the nature of the transaction and materials on record, the Assessing Officer had made certain addition to the income of the assessee, the same would have been considered erroneous by any appellate authority as being violative of the principles of natural justice which require that the authority must indicate the reasons for an adverse order. We find no reason why the same view should not be taken when an order is against the interests of the revenue. As a matter of fact such orders are prejudicial to the interests of both the parties, because even the assessee is deprived of the benefit of a positive finding in his favour, though he may have sufficiently established his case. In view of the foregoing, it can safely be said that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under Section 263. In view of this, exercising jurisdiction u/s.263 of the Act by CIT is justified. However, on merit, the issue in dispute with regard to the expenditure incurred for issue of debenture was come before the Madras High Court in the case of CI Vs. FIRST LEASING CO. OF INDIA LTD. reported in [2006 (2) TMI 151 - MADRAS High Court] wherein held that there is no distinction between discount and premium, the discount on debentures as well as the premium payable on actual redemption on debentures in future years and the expenditure incurred for issue of such debentures are all held to be revenue expenditure, entitled to be spread over the period of debentures and consequently, allowable as deduction in a particular assessment year.
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2016 (8) TMI 416
Addition u/s. 41(1) - Held that:- The case of the assessee is not within the ambit of remission or cessation liability exist upon the assessee which is not waived by the assessee as well as the creditors.We are of the view that the said amount is not required to be added to the income of assessee u/s.41(1) of the Act. Therefore, these issues are decided in favour of the assessee against the revenue. Disallowance of expenditure - business was not running - CIT(A) allowed the claim - Held that:- Assessing Officer has allowed the expenditure to the tune of ₹ 17,94,594/- on account of interest, finance, depreciation, rate and taxes and audit fees whereas denied the administrative and general expenses and depreciation which has been allowed by the CIT(A). The said expenses are in the nature of preserved and protected the assets of the company and according to the section 37 of the Act the expenses incurred to preservation and protected the assets of the company are liable to be deducted. See CIT Vs. Malayalam Plantations Limited (1964 (4) TMI 9 - SUPREME Court ) Therefore, in view of the said circumstances we are of the view that the CIT(A) has passed the order judiciously and correctly which does not require to be interfere with at this appellate stage - Decided against the revenue.
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2016 (8) TMI 415
Addition on account of non-charging of interest on advance given towards supply of equipment by the assessee to its AE - Held that:- The assessee has made advance of 10% of the contract price to its AE for offshore supply contract. The TPO was of the view that interest should be charged on such advances to AE. The TPO charged interest on advance paid by the assessee against supply of machinery as if such advance is loan to its AE, therefore interest is to be charged on such advance. The TPO has not brought any material on record to suggest that this is only a loan and therefore interest is to be charged. The TPO re-characterized the whole transaction and this is not permissible without any materials or evidence suggesting that such advance is only a loan. The assessee has made advance of 10% of the contract price to its AE for offshore supply contract. The TPO was of the view that interest should be charged on such advances to AE. The TPO charged interest on advance paid by the assessee against supply of machinery as if such advance is loan to its AE, therefore interest is to be charged on such advance. The TPO has not brought any material on record to suggest that this is only a loan and therefore interest is to be charged. The TPO re-characterized the whole transaction and this is not permissible without any materials or evidence suggesting that such advance is only a loan. - Decided in favour of assessee.
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2016 (8) TMI 414
Reopening of assessment - while computing deduction u/s.10A for the purpose of computing export turnover, telecommunication charges for export of computer software have not been considered as the same are fixed in nature and not incurred specifically for export of software - Held that:- The impugned notices have been issued beyond the period of 4 years from the end of relevant assessment year. In the present cases the question of telecommunication expenses and freight and insurance charges was minutely scrutinized by the Assessing Officer during the original assessment. - Decided in favour of assessee.
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2016 (8) TMI 413
Rectification of mistake - Tribunal in its original judgment held that the assessee had not established a new power plant so as to qualify for deduction under section 80IA of the Act but recalled this order in exercise of powers of rectification on the ground that this view is not in consonance with in case of Gujarat Alkalies and Chemicals Ltd. (2012 (3) TMI 267 - GUJARAT HIGH COURT ) - Held that:- High Court in case of Gujarat Alkalies and Chemicals Ltd. (supra) while laying down certain broad propositions for ascertaining whether a new industrial undertaking in the given set of facts was established, did not lay down ratio which can be straightway applied to the facts of the present case. In the present case, the view adopted by the Revenue authorities which was upheld by the Tribunal was that by mere installation of turbines, the assessee did not install a new industry, since turbines themselves would not be sufficient for power generation, without generation of steam. When the High Court in case of Gujarat Alkalies and Chemicals Ltd. (supra) referred to the issue depending on the nature of technology and mechanism of production, it left this question open to be judged case specific. This was therefore not a case where by virtue of the judgment of the case of High Court in case of Gujarat Alkalies and Chemicals Ltd. (supra), it can be stated that the Tribunal had committed an error apparent on record which needed rectification. At best, the High Court propounded that mere dependence of a new industry on an existing industry, would not disqualify itself from claiming deduction. Tribunal orders set aisde - Decided in favour of revenue
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2016 (8) TMI 412
Receipt of labour charges - difference in amount offered for taxation - assessee filed reconciliation - Held that:- We find that during the assessment proceedings, the AO had observed that the assessee was in receipt of labour charges of ₹ 9. 35 crores for the year under consideration and had offered ₹ 9. 29 crores only for taxation, that the assessee filed reconciliation in that regard, that he directed the assessee to file further reconciliation of the receipts in the cases of NLL and HAJ(Rs. 4. 78 crores and ₹ 2. 47 crores, respectively), that the AO concluded that there was difference in the receipt to the extent of ₹ 33. 82 lakhs, that the assessee had argued before the FAA that the AO had wrongly considered the labour-charges-TDS certificates, that service tax, VAT were considered as income while calculating labour-charges receipts, that the assessee had filed detailed reconciliations before the FAA with regard to NLL and HAJ, that it had filed debited notes containing the details of service tax and TDS, that it had also explain as to how the retention money was affecting the bill amounts, that while deciding the appeal the FAA did not consider the debit notes and the Ledger accounts in proper perspective, that it had also explained as to why there was difference between the ledgers of both the parties and the ledgers maintained by it, that the FAA ignored the submissions made by it. In our opinion, the reconciliations submitted by the assessee along with the debit notes the Ledger accounts of NLL and HAJ and the final bills(page 109 of the PB. )have to be considered for arriving at final conclusion. Thus, there is a need of further verification of the matter under consideration. So, in the interest of justice, we are restoring back the issue to the file of the AO for fresh adjudication. He is directed to afford a reasonable opportunity of hearing to the assessee and to consider the material submitted by the it before us. - Decided in favour of the assessee in part.
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2016 (8) TMI 411
Disallowance u/s 14A - Held that:- AO is directed to restrict the administrative disallowance to 5% of the dividend income. Effective ground of appeal is decided in favour of the assessee in part. Disallowance under the head interest expenditure - Held that:- While deciding the appeal of the assessee, we have held that assessee had sufficient own funds to make investments and therefore, there was no justification for disallowance under the head interest expenditure. Following the order of the Tribunal for the earlier years, we decide the effective ground of appeal against the AO.
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2016 (8) TMI 410
Applicability of provisions of section 50C on the basis of circle rate at the time of execution of sale deed - Held that:- Circle rate prevailing at the time of agreement to sell has to be considered for applying the provisions of section 50C. See ITO vs. Modipon Ltd [2015 (1) TMI 609 - ITAT DELHI] Claim of deduction u/s. 54B - Held that:- There is no requirement that the investment in agriculture land has to be made out of sale proceeds and as such the assessee is eligible to claim deduction u/s. 54B for purchase of lands even presuming that payment for purchase of land was not made out of receipt of sale proceeds on sale of asset. Therefore, there is no justification for restricting claim of exemption u/s. 54B of the Act, thus we reverse the finding of the Ld. CIT(A) on this issue and allow the deduction as accepted by the AO at ₹ 81,05,300/-, as a result the ground raised by the Assessee is allowed.
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2016 (8) TMI 409
Disallowance of deduction claimed u/s 10A - Held that:- As noticed that for the year under consideration, the assessee is not hit by section 10A (9) of I.T. Act, as it stood omitted by the Finance Act 2003 w.e.f. 1.4.2004. Respectfully following the decision of this Tribunal in assessee’s own case, for asstt. year 2001-02 and circular No. 1 of 2005, we hold that the assessee is eligible for claim u/s 10A of I.T. Act for asstt. year 2005-06. Loss relates to the STPI unit - treating the loss on sale of assets as business loss and to be considered for computation of deduction u/s 10A - Held that:- We find that Ld. CIT(A) has upheld the action of the AO in adding back the loss on sale of assets. Additionally, the Ld. CIT(A) directed the AO to verify claim that the loss related to STPI unit and if the claim was found verifiable, the claim u/s 10A be recomputed on enhanced profits. We have already held , while deciding ground No. 1 of appeal filed by the revenue, that the assessee is eligible for claim u/s 10A of I.T. Act. Therefore we find no infirmity in the direction of the Ld. CIT(A)’s direction to AO to recompute benefit u/s 10A of I.T. Act.
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2016 (8) TMI 408
Violation of provisions of section 194A read with section 197A - short deduction of TDS - Held that:- Revenue has disputed the deletion of liability of ₹ 30,01,627/- (correct figure ₹ 29,90,256) on account of TDS of interest paid in respect of depositors for whom Form 15G and 15H were not furnished at the time of survey but certainly made available during the appellate / assessment proceedings for which, no adverse observations made in the Remand Report of the AO. Moreover, there is no loss to the Revenue. Revenue has not challenged the admission of additional evidence before the Tribunal and therefore, once the admission of additional evidence has not been challenged, the solitary issue which remains for consideration is whether delay in furnishing of Form 15G to the Department can be a ground to impose liability under section 201(1) of the Act on account of alleged default for non-application of TDS under section 194A read with section 197 of the Act, which as submitted above in light of the judgment is absolutely not tenable. In view of the aforesaid discussions and precedent relied upon, as aforesaid, Ld. CIT(A) has passed a well reasoned and speaking order and rightly held that assessee did not wilfully or contumaciously act in disregard of its objection under the law and the mistake was bonafide and no loss to revenue occurred for failure in submission of the Form 15G/15H in time. Hence, the order of the Ld. CIT(A) does not require any interference on my part, therefore, uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue. - Decided against revenue
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2016 (8) TMI 407
Additions on account of cash and credit deposits into the Bank account - Held that:- The assessee has regularly deposited the amounts into these two bank account and simultaneously making withdrawals on regular basis. In view of the submissions of the ld.AR and bank statements of the assessee, we find that the assessee is a small entrepreneur who deposited the cash and cheques into his bank account and also made withdrawals regularly for the purpose of business. We further find from the records that the AO made assessment u/s 144 of the Act also and assessee could not appear before the AO to explain the deposits made therein and cash withdrawn from the bank accounts. We, therefore, are of the considered view that ends of justice would meet if the case of the assessee is restored back to the file of the AO to decide afresh after allowing the opportunity of being heard to the assessee, and no prejudice would be caused to the revenue thereby. Accordingly, we set aside the order of ld CIT(A) and restore the case back to the file of the AO. The assessee is also directed to produce relevant supporting documents before the AO and co-operate with the AO for speedy disposal of the issue. - Decided in favour of assessee for statistical purposes.
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2016 (8) TMI 406
Penalty levied by AO u/s 271(1)(c) on the deemed dividend income - addition made u/s 2(22)(e) - Held that:- In the case before us, the assessee has declared full facts qua the loan raised from a company in which he has substantial shareholding and the explanation offered by the assessee was bonafide and not false and therefore the penalty cannot be levied in such a case. The FAA has confirmed the action of AO just on the basis that quantum was confirmed by predecessor CIT(A), which is not correct and proper. In our view the addition made u/s 2(22)(e) under the deeming provisions of Act is made and confirmed by the ld. CIT(A), in that case the penalty is not attracted specially when the assessee has offered an explanation which is bonafide and has disclosed full facts in the return of income qua the said unsecured loans raised from the sister concern in which the assessee has substantial interest. In view of the above facts, we set aside the order of ld. CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee.
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2016 (8) TMI 405
Addition of sundry balances written off as falling outside the purview of section 36(2) r.w.s.36(1)(vii) of the Act and also not allowable u/s 37(1) - Held that:- The security deposit has to be adjusted against the rent payable by the assessee and this has already been done by entering into cancellation agreement wherein clause 2 of the cancellation deed specifically mentioned about adjustment of security deposit against the rent payable by the assessee. The details filed by the assessee also suggest that the rent payable by the assessee far exceed security deposit and hence no disallowance is required to be made by the AO. Thus, we directed the AO to delete the disallowance - Decided in favour of assessee.
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2016 (8) TMI 404
Disallowance of expenses u/s.14A - Held that:- On perusing the copy of the Balance Sheet as at 31/03/2008 it seen that the total interest-free funds as at 31/3/2008 comprising of Share Capital and Reserves and Surplus is ₹ 25,39,21,834/- as against Investment of ₹ 15,84,13,764/-. Further the investments have reduced from ₹ 19,10,66,009/- as at 31/03/2007, meaning thereby that there are no new investments at the year end and the interest-free funds in the form of Share Capital & Reserves & Surplus are much in excess of the investments. We find that the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. vs. Deputy Commissioner of Income-tax and Others reported at [2016 (3) TMI 755 - BOMBAY HIGH COURT ] and after referring to the decision of Bombay High Court in the case of CIT vs. Relince Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) has held that where interest-free funds are available with the assessee which are more that the investments made in the tax free securities, then a presumption arises that the investments were made from its interest-free funds. Before us, Revenue has not placed any contrary binding decision in its support. In view of the aforesaid facts and relying on the decision of Hon’ble Bombay high Court referred to hereinabove, we are of the view that no disallowance of expenditure u/s.14A other than that offered by assessee is called for in the present case. - Decided in favour of assessee
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Benami Property
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2016 (8) TMI 423
Cancellation of the auction - whether the application seeking for directions to set aside the auction purchase is time-barred? - Held that:- The applicant was aware and presumably advised as to his rights when the previous application was filed. Yet, no relief that the auction sale was invalid, because the title vested in the applicant, was sought. Having abandoned the relief at the relevant time, the said applicant cannot now seek it. It was held that Section 31 of the Specific Relief Act, 1963 regulates suits pertaining to cancellation of an instrument. It enacts that any person against whom a written instrument is void or voidable and who has a reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, can sue to have it adjudged void or voidable and the court may in its discretion so adjudge it and order it to be delivered or cancelled. Ownership of a property is transmitted by a registered sale deed as per Section 54 of the Transfer of Property Act, 1882. Every sale deed has an effect of divesting the transferor of the ownership of the property and the vesting of the ownership in the transferee. A sale deed by which ownership in an immovable property are transferred can be ignored only where it is void ab initio. In all other cases where it is pleaded that sale deed is a voidable document because it ought not to have been executed or that there is a fraudulent transfer of title by means of the particular sale deed or for any reason which makes the transfer voidable, it is necessary that a claim has to be filed for cancellation of such a sale deed within a period of three years from the date a person comes to know of execution and existence of the sale deed which goes against the interest of such person. This is the enacted by Article 59 of the Limitation Act, 1963. The Supreme Court in the judgment reported as Prem Singh vs. Birbal [2006 (5) TMI 517 - SUPREME COURT ] has held that Article 59 applies to voidable transactions and not void transactions. If the said ratio were to be applied to this case, it is evident that the applicant should have sought for recall and setting aside of the auction sale, immediately after his dispossession. In not doing so, within the time (3 years from date of knowledge) and in preferring an application in that regard after 5 years, the applicant sought a relief that was time-barred in law. As regards other grounds, the SFIO report itself clarifies that the applicant/appellant was unable to show that he had sufficient sources of income to purchase the suit lands. Though the company did not list the suit properties in the returns and annual reports filed by it, nevertheless the address of the GPA holder is shown to be that of the company s office in Bangalore. The Court is also of the opinion that there is merit in the company s contention that the money for purchasing the property was defrayed by it; the sale deeds of the suit property too were with Shri V.K. Sharma- over 11 years after purchase. If indeed the applicant s claims were genuine, he would have taken steps to secure back such title deeds.
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Customs
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2016 (8) TMI 433
Classification - Section 3(1) of the Customs Tariff Act, 1975 (CTA)- payment of excise duty in respect of tyre scrap cut into two to three pieces produced from used and old tyres - clarification dated 2nd January 2015 issued by the Tax Research Unit (“TRU”) of the Department of Revenue, Ministry of Finance - availability of exemption - Crumb Rubber Modified Bitumen - the cutting and punching of tyres unfit for consumption or marketing - whether CVD can be levied on the cut tyre pieces imported by the Petitioner - case law reffered is Modi Rubber Limited v. Union of India 1986 (12) TMI 41 - HIGH COURT OF DELHI AT NEW DELHI - Held that: - Modi Rubber Limited v. Union of India [1986 (12) TMI 41 - HIGH COURT OF DELHI] case need to be reconsidered regarding Whether the process to which old tyres are subject to produce two or more pieces of cut tyre is “manufacture” within the meaning of Section 2 (f) of the Central Excise Act, 1944 and whether the decision of this Court in Modi Rubber Limited v. Union of India 1987 (29) ELT 502 (Del) requires to be reconsidered. This will in turn determine if CVD can be levied on the cut tyre pieces imported by the Petitioner - petition placed before the Hon'ble Chief Justice.
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2016 (8) TMI 432
Exemption Notification No.12/2012-Customs, dated 17.3.2012. - import of garment accessories in the name of Apparel Exporters - cross-examination of witnesses - articles 226 of the constitution - Section 124(a) of the customs Act - alternate remedy under Section 129-A of the Customs Act, 1962 - Held that: - it is a settled legal position that the Customs Act and other Taxation Statutes are a complete Code by themselves. The enactment provides for a hierarchy of remedies and an aggrieved person should not be permitted to bypass the statutory remedy available under the Act, especially when the matter relates to a taxation Statute. On the grounds raised by the petitioner, the Court cannot exercise its extraordinary jurisdiction to interfere with the impugned order and allow the petitioner to bypass the appeal remedy - writ petition dismissed - decided against petitioner.
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2016 (8) TMI 431
Cancellation of licence - Forfeiture of security deposit – penalty – proportionately of punishment - Held that: - when the discretion has been exercised, and considering the facts and circumstances, such discretion exercised cannot be said to be per verse, which would be a case for interference in exercise of power with this Court. It is required to be stated that when two views are possible and if one is opted by the lower authority, such would not call for interference. It is found that even if the principles observed in the said decision are considered, it cannot be said that the discretion exercised by the Tribunal in the impugned order is perverse, as sought to be canvassed – no case found for interference.
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2016 (8) TMI 430
Classification - Silicon Electrical Steel Strip Scrap – scrap - Silicon Electrical Steel – confiscation – redemption fine – Held that: - similar goods obtained by dismantling of old and used transformers will be considered as scrap and not as old and used CRGO sheets requiring a licence. Therefore, no misdeclaration of description by the Appellant in respect of the present consignment as held in the case [2009 (10) TMI 717 - CESTAT KOLKATA] Assessable value – enhancement - There is no iota of evidence that appellant has repatriated any excess money to the foreign supplier over and above the invoice value. Under the existing factual matrix it cannot be held that relied upon documents of imports were of contemporary nature – enhancement not sustainable. Appeal allowed – decided in favor of appellant.
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2016 (8) TMI 429
Restoration of appeal – 100% EOU – imported without payment of duty for manufacture – cleared manufactured product without payment of duty - investigation – demand –appeal - non-compliance with direction of pre-deposit – appeal dismissed for non-prosecution – Held that: - the appellant admitted the clearance of goods without payment of duty. Affidavit – belated unsubstantiated explanation of the appellant – Held that: - It is a cardinal principle of evidence that the facts admitted need not be proved. In the present case, the Director of the appellant, responding to the investigation of the DGCEI officers about the imported raw material, not only accepted the clearance of the imported fabrics without payment of duty to one Shri Iqbalbhai before the panchas but also reiterated the said fact in his subsequent statements collected on 20.10.2000 and 20.8.2001.These statement are never retracted in clear terms. Therefore, the allegation that the statements were obtained under duress is also not substantiated.
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2016 (8) TMI 428
Permission to file manual shipping bill –advance authorization scheme –Held that: - the Customs Duty subsequently paid by the appellant is also the Customs Duty paid upon importation – appellant entitled to file manual shipping bill. Imported goods re-exported – drawback under section 74 – Held that: - The Customs authority directed to examine the goods under export in order to satisfy themselves that the goods are the same which were imported earlier by the appellant and make such verification of the goods as deemed fit with respect to the claim under Section 74 of the Customs Act – drawback granted – appeal disposed off.
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Service Tax
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2016 (8) TMI 452
Condonation of delay - investigation - recovery of tax - wilful suppression and mis-statement - Section 73(1) of the Finance Act - delay of 148 days in filing appeal - Held that: - It is a settled legal position of law that substantial justice is pitted against the technical consideration, the said technical consideration should not be given a predominance. Technicality should not be allowed to come in the way of appellant to prosecute the appeal which has been filed - Delay condoned - appeal to be dealt on its own merits - Delay condoned - appeal disposed off.
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2016 (8) TMI 451
Section 35F of the Central Excise Act, 1944 pre-deposit - Held that: - On and after the enforcement of the provision of Section 35F of the Act, as amended, an appellant has to deposit the duty and penalty as stipulated and unless the appellant were to do so, the Tribunal shall not entertain any appeal. This provision would, therefore, indicate that it would apply to all appeals which would be filed on and from the date of the enforcement of Section 35F of the Act. Thus, If the appellants deposit the sum mandated by section 35F(1) with its provisos within a period of three months from the date of receipt of a copy of this order, the Tribunal shall entertain the said appeal and decide it on merits and in accordance with law. Once we broadly agree with Ms. Cardozo that the prescription as is carved out by section 35F would apply to all such appeals and stay applications as are referred to in the second proviso, then, it is not possible to agree with the appellant's senior counsel. More so, when the order-in-original was challenged in appeal which is filed in this case after 6th August, 2014, and the stay application was also after this date. Hence, the amended section is rightly applied to the above undisputed factual position. appeal allowed with a direction
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2016 (8) TMI 450
Cenvat credit - input services - shipping fees, technical testing and certification and cleaning services for Vessels and Barges - Held that:- the Service Tax credit in respect of shipping fees and services availed in respect of vessels and barges is covered by the order of Tribunal in the appellant's own case vide order dated 11.3.2014 and 08.03.2013. Hence, credit of these services is available and is allowed. Cenvat credit - insurance services - Held that:- the insurance is in respect of vehicles and other assets owned by the appellant. Therefore, by relying on the decision of Hon'ble High Court of Delhi in the case of DSCL Sugar Vs. CCE, Lucknow [2012 (12) TMI 830 - CESTAT NEW DELHI], the credit of the insurance services is allowed. Cenvat credit - repair and maintenance of guest house - Held that:- the guest house is located right next to the factory premises. It is not the case of the Revenue that these services are used for personal consumption of the employees. The fact that the guest house is located right next to the factory implies that it is used in relation to the manufacturing activity. Therefore, the credit of repair and maintenance services of the guest house is allowed. - Decided in favour of appellant
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2016 (8) TMI 449
Cargo handling services – Services under contract for loading, unloading and shifting of sugar bags from the floor of the mills to godown, from one godown to another godown or as desired by their clients – Circular dated 01.08.2002 states if the cargo handling service is provided by individual that does not come under the preview of taxability. Held that: - In the absence of any evidence produced by revenue that the manpower supplied by respondent carried out any work outside the factory premises it is to be held that the manpower was shifting the goods within the factory premises. services rendered in the present case do not fall under Cargo Handling Service - Decision in the case of Gaytri Construction Co. [2011 (9) TMI 481 - CESTAT, New Delhi] followed – appeal dismissed – decided against the Revenue.
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2016 (8) TMI 448
Levy of penalty - valuation - extended period of limitation - taxable services - claim of cum tax benefit - deduction of Bonus and PF contribution - Held that:- the issue of valuation in Service Tax matters was issue of interpretation of statute under litigation. - Therefore levy of penalty set aside. Subsequent demand - Held that:- the show cause notice dated 08.10.12 was issued on the same set of facts for the period from 2007-08 to 2011-12. The facts of the case were known to the department and on the basis of facts show cause notice dated 06.10.10 was issued. Therefore, contention in the show cause notice dated 08.10.12 that there was suppression of material facts is not tenable in Law. Decided partly in favor of assessee.
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Central Excise
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2016 (8) TMI 447
Whether the benefit of Sl.No.158 of the table annexed to Notification No.6/2002-CE dated 01.03.2002 can be extended to the Pozzolona pipes manufactured by the appellant - Held that:- as per this exemption notification if percentage of fly ash by weight is more than 25% then the benefit of exemption notification is admissible to the appellant subject to the condition prescribed at Sl.No.36 of the conditions to exemption notification no.6/2002-CE. It is observed that declaration made by the appellant for the period from 23.08.2007, on which sample was drawm by the department, has not been found to be correct in as much as percentage of fly ash was less than 25%. Accordingly, demand raised for the period from 23.08.2007 is required to be confirmed, along with interest, and penalty under Section 11AC of the Central Excise Act is imposable. Since the duty demand from 23.08.2007 is not separately quantified in the proceedings and was also not made available to the bench by either sides, therefore, Adjudicating Authority is directed to quantify such amount of duty on AC pipes, claimed as Pozzolona pipes, for the period from 23.08.2007 till the end of demand period involved in these proceedings. For this purpose appellant should be given an opportunity to explain their case on quantification of demand and thereafter calculation of amount of penalty under Section 11AC will stand imposed upon the appellant on the re-determined duty demand. Appellant should also be given an option of paying reduced penalty under Section 11AC of the Central Excise Act. Interest on the above confirmed demand is also required to be paid by the appellant. - Appeal partly allowed
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2016 (8) TMI 446
Classification - worn out Silver targets - Whether to be classifiable under Chapter Subheading No. 7101.80 attracting 16% rate of duty as per Department or under Chapter Subheading No. 7101.31 which attracts NIL Rate of Duty - Held that:- the decision of Tribunal in the case of OEN (I) Ltd. Vs. CCE Cochin [1997 (7) TMI 249 - CEGAT, NEW DELHI] is squarely applicable to the present case where the remnants of silver strips have lost only their original shape and the remaining portion after being punched had not lost the purity and therefore is classifiable under chapter subheading No. 7101.31. It was also held that scrap is normally understood in common parlance as waste having less or no intrinsic value and that the said punched Silver Strips on re-melting and re-rolling are converted again into Silver Strips. Therefore, remnants of silver strips are not waste and scrap. By applying the same, we hold that worn out Silver Targets are classifiable under chapter subheading No. 7010.31 attracting NIL rate of duty. - Decided in favour of appellant
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2016 (8) TMI 445
Refund claim - Section 11B of Central Excise Act, 1944 - differential duty paid under protest - Duty recovered on molasses contained in the Ethyl Alcohol cleared during March 2005 to April 2005 at the rate of ₹ 1000/- PMT - Captive consumption of molasses - Held that:- the Ld. Commissioner (Appeals) had initially remanded twice to the Assistant Commissioner and on third round allowed the appeal of the respondent giving a clear finding on the fact that the molasses so manufactured, on which the duty at the rate of ₹ 1000/- PMT paid was manufactured during the period December 2004 to February 2005. He also given the finding that there is no manufacturing of molasses from 1.3.2005 to 30.4.2005. From this finding, I do not find any force in the submission of the Revenue that on such production of molasses the duty is payable as per the revised rate of ₹ 1000/- PMT instead of ₹ 500/- PMT which was prevailing prior to 1.3.2005 therefore, I agree with the finding of the Ld. Commissioner and hold that the respondent have paid excess duty on the molasses used captively. Unjust enrichment - Held that:- since the Commissioner (Appeals) given finding on the law point, no verification was done at any stage, on the facts that whether incidence of refund amount has been passed on to any other person or otherwise. As regard other Appeal No. E/1662/2010, it is found that this appeal was filed against the Commissioner (Appeals) order. Since the original order the Assistant Commissioner had sanctioned the refund implementing the earlier Order-in-Appeal dt. 27.2.2009, this appeal proceeding is consequential to the proceedings of appeal No.E/145/2009. Therefore I do no find it necessary to give a separate finding on the Appeal No. E/1662/2010. Both the impugned orders are set aside and the matters are remanded to the original adjudicating authority to verify the aspect of unjust enrichment and to pass a fresh order. - Appeals disposed of by way of remand
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2016 (8) TMI 444
Admissibility of suo-moto re-credit - Whether the appellants could avail the re-credit of ₹ 18,95,888/- which was debited by them earlier under protest - Held that:- the issue stands covered by the judgments laid in Stumpp, Schedule & Somappa (P) Ltd. [2015 (9) TMI 1375 - CESTAT BANGALORE] and KMC Corporation Ltd. Vs. CESTAT, Chennai [2014 (1) TMI 1473 - MADRAS HIGH COURT]. There is no stipulation in the Cenvat statute that an assessee is required to obtain prior permission from the jurisdictional Central Excise authorities for making any debit entry in the Cenvat records. Hence, in absence of any specific prohibition to that effect, it is not appropriate to disallow the Cenvat benefit, to which the respondent is statutorily entitled to. Therefore, there is no impediment in the appellant taking suo motto credit of ₹ 18,95,888/-. - Decided in favour of appellant
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2016 (8) TMI 443
Includibility - Freight element or cost of transportation - incurred after the point of removal of goods from the factory gate - two separate contracts, one is for sale and another is for transportation, packing, forwarding and insurance purposes - Held that:- in view of the decision of Tribunal in the case of CCEx., Allahabad Vs. Chandra Metals Pvt. Ltd. [2014 (5) TMI 678 - CESTAT NEW DELHI], and in view of the decision of Supreme Court in the case of Commr. of Customs & Central Excise, Nagpur Vs. M/s Ispat Industries Ltd [2015 (10) TMI 613 - SUPREME COURT], the actual cost of transportation from the place of removal, upto the buyer’s place is to be excluded for valuation of goods for the purposes of computation of Excise duty, provided it is charged separately to the buyer in addition to the price of goods. Therefore, when there are separate contract for sale of the goods and for transportation etc., it is held that the said transportation charges can not be included in the assessable value of the goods for the purposes of computation of Central Excise duty. - Decided against the revenue
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2016 (8) TMI 442
Imposition of penalty on partner - wrong availment of Cenvat credit by partnership firm - steel scrap received by the partnership firm is not capable of being used for re-rolling purpose - partnership firm have without contesting the matter, reversed the entire Cenvat Credit and did not litigate the matter. Held that:- it is found that the present appellant has shown his ignorance about the nature of the product. From the statement it is revealed that though he has not admitted regarding the nature of the goods but when the question was put up before him regarding the statements of various dealers. He has admitted that they are not verifying documentary evidences which show that whether the waste and scrap received by them is re-rollable scrap. The appellant could not give satisfactory reply to the facts of the nature of the input on which they have taken the credit. Accordingly, as per the thickness of the material the same is not capable of being used in the manufacture of the final product, it is also fact that the partnership firm of the appellant admittedly paid the entire amount of Cenvat Credit and have not contested. Therefore, the penalty of ₹ 2 lakhs imposed on the appellant is on higher side and be reduced to ₹ 50,000/-. - Decided partly in favour of appellant
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2016 (8) TMI 441
Eligibility for interest - expiry of three months from the date of filing of the refund i.e. from 17.06.2001 to 13.05.2008 and not from 13.09.2001 to 13.05.2008 - Held that:- in view of the decision of this Tribunal in the case of Balmer Lawrie & Co. Ltd. vs. Commissioner of C.Ex., Kolkata-VI [2014 (8) TMI 977 - CESTAT KOLKATA], for computing interest, the date of filing of refund claim be considered as the relevant date and not the date when the returned claim has been re-submitted after removal of defects. Therefore, the interest is admissible to the Appellant on expiry of three months from the date of filing of the refund claim. Rate of interest - eligible for interest @ 6% or 12% - Held that:- by taking note of the Judgment of Hon'ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad vs. ITC. Ltd. [2004 (12) TMI 90 - SUPREME COURT OF INDIA], the rate of interest would be 6% not 12% as claimed by the Appellant. Appropriation of interest - Whether the amount of interest sanctioned to the Appellant can be appropriated towards outstanding arrears of revenue - Held that:- in view of the decision of Hon'ble Gujarat High Court in the case of Anand Steel Rolling Works Pvt. Ltd. vs. Union of India [2009 (10) TMI 551 - GUJARAT HIGH COURT], the amount of refund calculated cannot be adjusted against the arrears of revenue. - Appeal partly allowed
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2016 (8) TMI 440
Cenvat credit - admissibility - goods not specified under the definition of capital goods under Rule 2(a) of Cenvat Credit Rules 2004 and also these goods were used in the machine which have immoveable in nature - Held that:- the ratio of judgments are directly applicable in the facts of the present case. Though the items are falling under Chapter 72 or 39 but all the items were used in the machines, therefore the same are parts of the machine. In the definition of capital goods under Rule 2(a) of Clause A (iii) the components, spare and accessories of the goods specified at item (i) & (ii) of Rule 2(a)(A) are also covered under the definition of capital goods. All the items were used as part in the machines which are covered under Rule 2(a) (A) (i). Therefore as per the clear language of the definition the appellant are entitled for the credit irrespective the Chapter Heading of the components, spares etc. does not fall under Rule 2(a)(A) (i). Therefore, the appellant has correctly availed the Cenvat Credit on the goods such as MS Round, PM Plate, MS Joist, Industrial Laminates, Plumbing Pipe etc. - Decided in favour of appellant
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2016 (8) TMI 439
Whether there is a case for modification of Final Order dated 28.11.2014 of the Tribunal ordering for pre-deposit of ₹ 7,50,000/- for admission of appeal before the Commissioner (Appeals) or not - Availability of amended provisions of Section 35F introduced w.e.f. 6.8.2014 - Held that:- the amended provisions of Section 35F has come into force only we.f. 6.8.2014 but the impugned order was passed by the Commissioner (Appeals) on 26.03.2014 and the appeal before the Tribunal was filed on 4.7.2014. The Hon'ble Delhi High Court in the case of Anjani Technoplast Ltd. Vs. Commissioner of Customs [2015 (10) TMI 2446 - DELHI HIGH COURT], considered the same issue and held that what is to be seen is the date of filing of the appeal. If the appeal is filed on or after 6.8.2014, then the conditions stipulated in the amended Section 129E of the Act (Customs Act) has to be fulfilled for the appeal to be entertained. Section 35F of the Central Excise Act now under consideration is on the same footing as Section 129E of the Customs Act. - Decided against the appellant
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2016 (8) TMI 438
Notification 10/97 CE dated 01.03.1997 - Entitlement for benefit - manufacture of Screened Conduction Cooled Video Cards for OAC (Open Architecture Computers); ii) Environment Control and Fuel Management Electronic unit; iii) Cockpit Interface Unit to Aeronautical Development Agency (ADA); iv) Automated Test Equipment (ATE) for Compact Electronic Unit (‘CEU’) to Combat Vehicles Research and Development Establishment (CVRDE); and v) Hardware Simulator to Laser Science & Technology Centre (‘LASTEC’) as per the specifications and diagrams furnished by Aeronautical Development Agency. Held that:- it is very much obvious that items in question are meant for research projects. There has been specific certificate issued by an authority not below the rank of Deputy Secretary to the Govt of India certifying that the said goods mentioned under scientific and technical description therein are meant for research purposes only as a condition mentioned in Column 4 of the table attached to the Notification No. 10/97CE dated 10.3.1997. Therefore, these items are covered by the Notification No. 10/97 and they fulfill all the conditions for claiming the benefit of exemption Notification No.10/97 (supra). Without iota of any doubt, the subject goods are entitled to the benefit of Notification 10/97. - Decided in favour of appellant
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2016 (8) TMI 437
Imposition of penalty - Rule 173(Q) of the Central Excise Rules, 1944 - Held that:- imposition of penalty on the assessee is not correct and is against the Final Order dated 20.7.2005 passed by this Tribunal. Therefore, the penalty of ₹ 1,00,000/- imposed under Rule 173(Q) deserves to be set aside. Reworking/re-quantification of duty - Period of limitation - re-examining the aspect pertaining to availment of Modvat credit - Held that:- the Commissioner in the impugned order has held that Modvat credit of ₹ 1,96,083/- is admissible with which we agree. When there has been no suppression of facts on the part of the manufacturer the matter is remanded back to the Commissioner of Central Excise, Belgaum to decide the same within next four months after seeking a report on the subject matter from the Assistant Commissioner of Central excise in-charge of the assessee unit.
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2016 (8) TMI 436
Whether or not the appellants are liable to pay an amount equal to 10% of the value of tractors of engine capacity below 1800 CC when they have availed Cenvat credit of educational cess on common inputs without maintaining separate records - Held that:- in the present case there is no credit of Central Excise duty availed by the appellants on the common inputs. The only credit availed is education cess paid on such common inputs. The final products are of two categories - tractors with engine capacity of above 1800 CC or below 1800 CC. Industrial cess is leviable on the tractors with capacity of above 1800 CC. Education cess is payable on such industrial cess. The appellants utilized the credit of education cess availed on inputs to discharge education cess on tractors of above 1800 CC. There is no industrial cess or education cess on the tractors of below 1800 CC. Accordingly they calculated the proportionate credit of education cess availed on common inputs and reversed the same. It is found that there is no dispute on the fact of such reversal which has been admitted in the show cause notice itself. In spite of such reversal, the appellants were called upon to pay an amount equal to 10% of the total price of exempted tractors invoking Rule 6(3)(b) of the Cenvat Credit Rules, 2004. Therefore, such a demand is not legally sustainable as already held in various decisions of this Tribunal and as affirmed by the Hon'ble Supreme Court. - Decided in favour of appellant
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2016 (8) TMI 435
Clandestine removal of sponge iron - Demand of duty alongwith interest and penalty - period involved is 2005-2006 to 2006-2007 - no statement of appellant admitting clandestine removal - Held that:- the appellant never confessed having removed any goods clandestinely. As the cross examination of transporters and the commission agent was denied and having regard to the fact that such denial certainly caused prejudice to the appellant as their statements were relied upon for the purpose of sustaining the allegation against the appellant by the primary adjudicating authority, the minimum consequence of denial of such cross examination is that their statements cannot be used for the purpose of sustaining allegation. Therefore, once the statements of the transporters and commission agent are ignored, there is nothing much left to sustain the allegation against the appellant. - Decided against the Revenue
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2016 (8) TMI 434
Cenvat credit - entitlement - Whether the Commission Agent Services would be classifiable as Business Auxiliary Service as per Department or Sales Promotion service as per appellant - Held that:- the services in question cannot be called commission agency services for sales. When all the activities of M/s. Francis Klein & Co. Pvt. Ltd., are considered, it is clear that they are engaged in promotion of sales for the products manufactured by the appellants. Here the agreement says that appellants would provide them complete catalogue instruction books, circulars for promoting sales. It also says that the appellants will execute orders promptly placed by said Francis Klein & Co. Pvt. Ltd. We cannot say that said M/s. Francis Klein & Co. Pvt. Ltd. are only primarily concerned with sales not with the sales promotion. It is to be noted that without any sales promotion there cannot be any final sale. Hence, the input services in question are in the category of Sales Promotion, which would be covered by definition of input services given in Rule 2(l) of Cenvat Credit Rules 2004. Therefore the appellants would be entitled to the cenvat credit for the service tax paid for these input services in question. - Decided in favour of appellant
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CST, VAT & Sales Tax
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2016 (8) TMI 427
Delhi VAT - imposition of penalty by OHA - business of marketing of petroleum products - merger with Indian Oil Corporation Ltd. - definition of the ‘sale price’ in terms of the proviso to Section 2(1)(zd) of the DVAT Act. - assessment of tax, interest and penalty - Held that: - penalty levied by the VATO under Section 86(10) of the DVAT Act affirmed by the OHA by the order dated 20th June 2013 is affirmed. The AT will now consider the said issue afresh particularly in light of the AT’s earlier order dated 1st December 2011 which dealt with a similar issue for the month of November 2006. The AT will pass a fresh order within a period of eight weeks from the date of receipt of a certified copy of this order - appeal disposed off.
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2016 (8) TMI 426
Refund – input tax credit - adjustment of refund with outstanding demand - there was no outstanding demand that had been determined for the aforementioned period for which the refund was claimed - In terms of Section 38 (4) of the DVAT Act, it was open to the Commissioner, if he sought to make inquiries while processing the refund, to go in for an audit of the business affairs of the Petitioner under Section 58 of the DVAT Act or seek additional information under Section 59 of the DVAT Act. In the present case, none of these steps were taken by the Respondent/Department of Trade & Taxes (“DT&T”). Held that:- This Court has in a series of judgments emphasised the mandatory nature of the time limits under Section 38 of the DVAT Act for processing of the refunds. - Due to the careless action of the VATO in the present matter, who issued the issued the 'adjustment order' dated 30th December 2010 unmindful of the law, an interest burden of nearly ₹ 56 lakhs is now placed on the exchequer. A question then arises as to who should be made responsible for this and whether any action on the disciplinary side is not called for? Consequently, the Commissioner, VAT is directed to seek an explanation from the VATO who issued the above 'adjustment order' and to pass appropriate orders on the disciplinary side as he deems fit not later than four weeks from today. A copy of this order be delivered forthwith to the Commissioner, VAT by the Registry through a Special Messenger for compliance with the above direction. – decided in favor of petitioner.
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2016 (8) TMI 425
Withholding of refund - Assessing Authority held that the petitioner is entitled to refund - revenue stated that mere passing of the order of assessment resulting into refund, would not be sufficient for the assessee to claim such refund and a separate order of refund has to be passed. - power to revise of the order - period fo limitation to revise the order has not expired - Held that: - In addition to the order of assessment which results into refund being payable to the assessee, refund order has to be separately passed. If the order of assessment results into refund, the assessee would be entitled to receive the same, of course after due verification and passing through other legal processes. Refund allowed. Held that: - we do not find any provision where in addition to the order of assessment which results into refund being payable to the assessee, refund order has to be separately passed. If the order of assessment results into refund, the assessee would be entitled to receive the same, of course after due verification and passing through other legal processes. The Commissioner has full period of three years from the date of the order to take the same into suo motu revision. Surely, the department cannot withhold the refund arising out an order of assessment for such full period of three years without any reason. The period of limitation for taking an order in revision cannot be related to the right of the assessee to seek refund arising out of an order of assessment. Such right can be curtailed in terms of Section 39 of the VAT Act by withholding the refund in the interest of revenue. - Unless such order is passed, the refund cannot be automatically withheld. In facts of the case, looking to the considerable revenue implications involved, at the same time, on the basis of materials produced by the respondents on record, we direct that the respondents shall release the refund of ₹ 2 crores latest by 31.08.2016. For the remaining amount, the authority referred to in sub section (1) of Section 39 shall, if wishes to withhold such amount beyond 30.09.2016, grant hearing to the petitioner before passing appropriate order in this respect. - Decided partly in favor of petitioner.
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2016 (8) TMI 424
Stay of demand - validity of consolidated order passed by the Tribunal – failure to make pre-deposit – scope of jurisdiction – Held that: - while considering the issue of pre-deposit, the learned Tribunal cannot travel its scope beyond this issue and cannot decide the case on merits without deciding the question of pre-deposit. The learned Tribunal has committed serious error of jurisdiction – impugned order set aside – matter remanded back – appeal disposed off.
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