TMI Tax Updates - e-Newsletter
August 13, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Benami Transactions (Prohibition) Amendment Act, 2016

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Articles

1. GST - Definitions - An analysis

   By: Balasubramanian Natarajan

2. POWER AND FUNCTIONS OF PRESIDENT, REGISTRAR AND SECRETARY OF NATIONAL COMPANY LAW BOARD

   By: DR.MARIAPPAN GOVINDARAJAN

3. Section 133- power to call for information- an analysis

   By: DEVKUMAR KOTHARI

News

1. Donation to National Fund

2. Revenue Earned from Foreign Companies

3. Foreign Exchange Fraud by PSBs

4. Credit from Cooperative Sector

5. Premature Closure of PPF Account

6. Brick and Mortar Bank Branches

7. Benami Transactions (Prohibition) Amendment Act, 2016

8. RBI Reference Rate for US $

Notifications

Customs

1. 108/2016 - dated 11-8-2016 - Cus (NT)

Amending Import Manifest (Aircraft )Regulations, 1976

2. 107/2016 - dated 11-8-2016 - Cus (NT)

Amending Export Manifest (Aircraft) Regulations, 1976

Circulars / Instructions / Orders

Service Tax

1. 197/7/2016 - dated 12-8-2016

Service tax on freight forwarders on transportation of goods from India

Highlights / Catch Notes

Income Tax

• Development Charges Not Classified as Rent u/s 194I; No Tax Deduction at Source Required.

  Case-Laws - AT : Tds u/s 194I - failure to deduct tax at source on payment made to RIICO - development charges can not be read as rent within the purview of the section 194-I. - AT
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• Tax Case: Sections 271D & 271E - Assessee's Amounts Seen as Advances, Not Loans; Revenue's Claims Lack Evidence.

  Case-Laws - AT : Penalty levied u/s 271D and 271E - whether the amount received by the assessee were advances and not loan or deposits? - allegation of the Revenue of manipulation are baseless and without any supporting evidence - AT
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• Travel Expenses Deducted from Capital Gains Due to Direct Link with Property Transfer in India.

  Case-Laws - AT : Deduction of traveling expenditure from Capital gains - appellant has proved the direct linkage/nexus between her travel to India and the corresponding travel expenditure with the transfer of the property, capital gains arising out of which has been duly offered to tax - deduction allowed - AT
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• Section 68: No Addition Allowed as No New Credits Accepted; Only Previous Year Credits Regrouped.

  Case-Laws - AT : Addition u/s 68 - there is no fresh credit accepted during the current financial year. All the credits are transferred from the previous financial year - no addition can be made merely because various loan account has been re-grouped during the current year - AT
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• A.O. Cannot Disallow Expenditure Without Concrete Evidence; Assumptions About Contractor's Experience Insufficient.

  Case-Laws - AT : Bogus expenditure - Guinness of expenditure - A.O. cannot disallow the expenditure simply on assumption or surmises basis by holding that the contractor does not have requisite experience in handling this kind of contracts - AT
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Customs

• E-bikes in CKD form gain tax exemption under Sl. No. 35 of Notification No. 06/2006-CE as electrically operated bikes.

  Case-Laws - AT : Classification – importation of e-bykes in CKD condition - once the goods have been classified to be electrically operated bikes, they clearly get covered under the scope of entry at Sl. No.35 of the table appended to the Notification - exemption under Notification No.06/2006-CE allowed - AT
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• Oleo Pine Resin Classification Dispute: Appellant's Bona Fide Belief Supported by Sri Lankan Forest Department Certificates Requires Substantial Revenue Evidence.

  Case-Laws - AT : Classification - Oleo Pine Resin - Bonafide belief of appellant on the basis of certificates issued by forest department of sri lanka cannot be ruled out without Revenue leading to any cogent evidence to the contrary - AT
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Indian Laws

• The Benami Transactions (Prohibition) Amendment Act, 2016 strengthens penalties and enforcement against benami transactions and tax evasion.

  News : Benami Transactions (Prohibition) Amendment Act, 2016
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Service Tax

• High Court Rules State Has Sole Power to Tax Luxury Hotel Stays, Deems Service Tax Unconstitutional.

  Case-Laws - HC : Short-term accommodation in hotel - State government has exclusive power to levy luxury tax - levy of service tax is unconstitutional - HC
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• High Court Strikes Down Finance Act 1994's Section 65 (105) (zzzzw) as Unconstitutional; Service Tax on Short-Term Stays Voided.

  Case-Laws - HC : HC strikes down Section 65 (105) (zzzzw) of the Finance Act 1994 pertaining to levy of service tax on the provision of short-term accommodation and the corresponding instructions/circulars seeking to operationalise the levy as unconstitutional and invalid
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• High Court affirms service tax on air-conditioned restaurant services, including food and beverages, under Finance Act Section 65 (105) (zzzzv).

  Case-Laws - HC : HC uphold the Constitutional validity of levy of service tax on services provided by a restaurant, by having the facility of air-conditioning in any part of its establishment serving food or beverage, including alcoholic beverages or both, in its premises has been made amenable to service tax - Section 65 (105) (zzzzv) of the Finance Act, 1994
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• Early Payment Incentive Commission Based on Advance Days, Not Linked to Business Auxiliary Services Revenue.

  Case-Laws - AT : Classification – commission received – early payment incentive received is linked to the number of days by which payment is made early and has no relation with the consideration received for rendering the service in the form of commission under the category of “Business Auxiliary Services” - AT
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• Employee Deployment by Appellant Not Taxable Under Manpower Recruitment or Supply Services.

  Case-Laws - AT : Deployment of employees – manpower recruitment or supply services – employees continued to remain employee of appellant and their salary being provided by appellant - The activity is not taxable - AT
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Central Excise

• Excise Duty Required on Transaction Value of Superior Kerosene Oil Sold to Oil Marketing Companies via Commercial Invoices.

  Case-Laws - AT : Valuation - SKO (PDS) cleared to Oil Marketing Companie - excise duty is required to be paid on the transaction value collected from the OMCs by issuing commercial invoices. - AT
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• Cenvat Credit Allowed on Inputs in By-Products; Rule 6(3)(b) Applies to Clearance Under Exemption.

  Case-Laws - AT : Whether Cenvat credit is admissible on the input contained in by-product or whether Rule 6(3)(b) is applicable in respect of clearance of by-product under exemption - Held Yes - AT
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• Cenvat Credit Approved for Goods Used in Manufacturing Boilers at Respondent's Premises.

  Case-Laws - AT : Cenvat credit - entitlement - goods purchased by M/s CVL Sonepat but consigned to respondent which were ultimately used in manufacture and supply of boilers and other capital goods in the premises of the respondent - credit allowed - AT
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• Refund Approved for Excise Duty on Discounts via Credit Notes Post-Clearance, Despite Lack of Initial Disclosure to Stockists.

  Case-Laws - AT : Refund claim - excise duty paid through credit notes on the discounts passed on to the dealers and stockists, subsequent to clearances - quantum of discount not disclosed to the stockists at the time of clearance - refund allowed - AT
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• Cenvat Credit Approved for A.C. Corrugated Sheets in Boilers Crucial for Manufacturing Excisable Goods.

  Case-Laws - AT : Cenvat credit - A.C. corrugated sheets - the same have been used in the boiler, without the use of which there can be no generation of steam in the boiler which is essential for manufacture of excisable products - credit allowed - AT
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• Tax Demand Dismissed Due to Revenue Department's Delay in Issuing Show Cause Notice Beyond Limitation Period.

  Case-Laws - AT : Demand - after receiving the information, the revenue has been in its bureaucratic slumber for more than a year to issue the show cause notice - demand set aside on the ground of period of limitation - AT
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VAT

• Retrospective Cancellation of Dealer Registrations Doesn't Affect Tax Rights u/s 19 of TNVAT Act, 2006.

  Case-Laws - HC : Input tax credit - The retrospective cancellation of the registration certificates issued to the selling dealers cannot affect the right of the petitioners/assessees, who have paid the tax on the basis of the invoices and thereafter claimed the benefit u/s 19 of the TNVAT Act, 2006 - HC
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• High Court Rules SEZ Works Contracts Exempt from Gujarat VAT Duty u/s 5A, Upholding Petitioner's Exemption Claim.

  Case-Laws - HC : Exemption u/s 5A of GVAT - work contract service - SEZ - the works contract of the petitioner executed in SEZ area is not dutiable - HC
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• High Court Dismisses Petition Challenging Reduced Entry Tax/VAT on Stone Products in Bihar as Unfounded Claims.

  Case-Laws - HC : Recovery of loss of revenue – Whether reduction in rate of Entry Tax/ VAT is against the interest of State of Bihar – stone chips, stone boulders and stone ballasts - the allegations of the writ petitioner are wholly unfounded - writ petition dismissed. - HC
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Case Laws:

• Income Tax

• 2016 (8) TMI 472
  Tds u/s 194I - failure to deduct tax at source on payment made to RIICO - assessee in default u/s 201(1) - development charges paid by the assessee to Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) towards allotment of land on lease of 99 years - Held that:- As decided in case of M/s. Gupta Fabtex (P) Ltd. vs. DCIT (TDS) [2016 (1) TMI 664 - ITAT JAIPUR] lease document has used the "Development charges" and "Economic rent" to be payable by the assessee. As the document has used two different phrases to connote different obligation therefore in our view development charges can not be read as rent within the purview of the section 194-I. further lease document has provided the consequences of non-payment of the development charges by the assessee, if the assessee failed to pay the development charges, as mentioned in the agreement, the possession was liable to be taken over by the RIICO, therefore the development charges can not be considered as rent.- Decided in favour of assessee Payment to M/s Rajasthan Technical University (RTU) on account of affiliation fee on which TDS was not deducted - appellant has claimed that the income of RTU is exempt under section 10(23C)(iiiab) - Held that:- The CBDT Circular No 4/2002 dated 16.7.2002 has been issued in the context of self-declaration by entities/institutions whose income is exempt under section 10 of the Act. In the said circular, the CBDT has clarified that in case of those funds or authorities or Boards or Bodies, by whatever name called, whose income is unconditionally exemption u/s 10 of the IT Act and who are statutorily not required to file return of income as per section 139 of the Income Tax Act, there would be no requirement for tax deduction at source since their income is anyway exempt under the Income Tax Act. The appellant has claimed that the income of RTU is exempt under section c(iiiab) of the Act. Where the income of RTU is exempt, in light of CBDT Circular, there is no requirement to deduct tax at source. In light of above, the AO is directed to verify from the concerned AO of RTU as well as independently from RTU whether the income of RTU is exempt under section 10(23C)(iiiab) of the Act. If the AO finds the same to be in order, the AO is directed not to treat the assessee in default u/s 201(1) of the Act and thereby not to recover any tax and interest u/s 201(1A) on payments to RTU. - Decided in favour of assessee for statistical purposes.

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• 2016 (8) TMI 471
  Penalty levied u/s 271D and 271E - whether the amount received by the assessee were advances and not loan or deposits ? - CIT(A) delted penalty - Held that:- Commissioner of Income-tax( Appeals) has decided issue in dispute on the basis of the agreements to sale of the inherited property between the assessee and Sh OmPrakash Dhama. He has also mentioned that it was brought on record by the assessee that the agreements could not be executed because of dispute about ownership of the inherited properties which was ultimately settled by the courts order dated 05/07/2009. Whereas, the Revenue has failed to bring anything on record which could contradict the evidences submitted by the assessee and therefore the allegation of the Revenue of manipulation are baseless and without any supporting evidence. In view of the above, we do not find any infirmity in the order of the Ld. Commissioner of Income-tax( Appeals) in treating the amounts in dispute as advance and not as loans or deposit and we uphold the same, accordingly the grounds raised in both the appeals are allowed in favour of assessee

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• 2016 (8) TMI 470
  Deduction of traveling expenditure from Capital gains - whether travelling expenditure is an allowable deduction u/s 48(i) of the Act while computing capital gains in connection with transfer of property - assessee is a non-resident Indian and residing in Japan - Held that:- The appellant is living in Japan and has filed her return of income in the status of an NRI disclosing the capital gains on sale of the property. She has travelled to India from Japan on number of occasions in connection with transfer of the subject property. The detail breakup of such visits in terms of travel dates, purpose and place of visits has been submitted during the course of assessment proceedings and is on record. Regarding travelling to Bombay and Jaipur is concerned, the appellant has submitted that she has to meet her advisors and prospective buyers from time to time requiring her to travel to these two places. Being the Co-owner and holding 1/3rd share in the property, she was present in India to execute various documents such as execution of MOU, conveyance deed sale deed etc. The necessity of her presence in India and execution of the various documents related to sale of the property have not been disputed by the lower authorities. It is thus seen that the appellant has proved the direct linkage/nexus between her travel to India and the corresponding travel expenditure with the transfer of the property, capital gains arising out of which has been duly offered to tax. We accordingly delete the disallowance of the travelling expenditure of Rs. 850,000 and hold the same as an allowable deduction under section 48(i) of the Act. - Decided in favour of assessee.

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• 2016 (8) TMI 469
  Addition u/s 68 - addition towards credits brought forward from last year - Held that:- A plain reading of section 68 of the Act makes it clear that any sum found credited in the books of accounts of the assessee, assessee offers no explanations about nature and source of the credits, then the sums found credited in the books of accounts is taxable during that financial year. In the present case on hand, on perusal of the facts available on record, we noticed that the assessee has accepted loans from various individuals during the previous financial year 2008-09. During the financial year 2009-10 the assessee has re-grouped the various loan accounts into these 5 creditors’ accounts by passing necessary journal entries. We further noticed that there is no fresh credit accepted during the current financial year. All the credits are transferred from the previous financial year. Therefore, we are of the view that the A.O. was not correct in making additions towards brought forward credits during the financial year 2009-10. The CIT(A) after considering the relevant details deleted the additions made by the A.O. We do not see any error or infirmity in the order passed by the CIT(A). - Decided against revenue

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• 2016 (8) TMI 468
  Bogus expenditure - Guinness of expenditure - Held that:- Once the assessee has proved with necessary evidences that the expenditure incurred is genuine, the A.O. cannot disallow the expenditure simply on assumption or surmises basis by holding that the contractor does not have requisite experience in handling this kind of contracts. Whether the contractor itself do the work or get the work done by others was not a matter of subject with the assessee as long as there was no interruption with the work. The assessee is concerned whether the contractor has executed the work or not? In the present case on hand, on perusal of the facts available on record, we find that the assessee has furnished all the details necessary to prove the expenditure claimed is genuine. There is no reason for the A.O. to disbelieve the evidences filed by the assessee. The A.O. simply harping upon the fact that the contractors does not have experience, therefore, opined that the expenditure claimed by the assessee is bogus and cannot be allowed. But the assessee has categorically proved that the expenditure claimed is genuine in nature and also furnished necessary evidences before the A.O. to prove his case. Another important point to be noted here is that the A.O. during the course of assessment proceedings recorded statement from the Managing Director of the company and also Managing Partner of the firm wherein both the parties have confirmed that they have supplied or rendered the services to the assessee. Therefore, we are of the view that the A.O. without any reasons simply disbelieved the evidences filed by the assessee and disallowed the expenditure. The CIT(A) without appreciating the facts confirmed the additions made by the A.O. Hence, we set aside the order passed by the CIT(A) and direct the A.O. to allow the expenditure claimed by the assessee. - Decided in favour of assessee

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• 2016 (8) TMI 467
  Penalty levied u/s 272A(1)(c) - period of limitation - GP rate determination - Held that:- In the face of the fact that penalty order dated 26.11.2012 has been passed after about one year and five months from the date of passing order by the Appellate Tribunal, the same is hopelessly time barred. Though date of receipt of order dated 17.06.2011passed by ITAT by the Principal Chief Commissioner / Commissioner is not available on record but factual position as to passing the penalty order after expiry of the six months from the receipt of the order of the ITAT has not been disputed by the ld. DR. So, we hereby quash the penalty order having been passed beyond the period of limitation u/s 275(1)(a) of the Act. Also on merits so far as question of applying the gross profit rate of 10%, further reduced to 4% by the Appellate Tribunal, after rejecting the books of account by the AO on estimation basis is concerned, the same does not amount to concealment of income by the assessee because the assessee during the assessment proceedings put forth book results, audited balance sheets, etc. before the AO but the same has been rejected by AO by invoking the provisions contained u/s 145(2) of the Act. In case, books of account have been rejected, the AO has to assess the income on the basis of comparative study and not on the basis of guesswork and estimation. So, to our mind, this cannot be concealment of income by any stretch of imagination even. Disallowance of expenditure for argument sake even if assumed to be wrongly claimed by the assessee, does not amount to concealment of income in any manner, because allowability of expenditure claimed by the assessee is to be examined by the AO and mere claim of assessee is not concealment. Thus penalty order affirmed by the ld. CIT (A) is not sustainable - Decided in favour of assessee

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• 2016 (8) TMI 466
  Revision u/s 263 - Eligibility of exemption u/s.11 - Held that:- Income from earned from use of the club facilities by non members for purpose of playing cards and use of permit room, catering etc., was held to be hit by the proviso to Sec.2(15) of the Act. In the present case, we have already seen that use of club facility by non members is prohibited by the Rules of the Assessee. The use by outsiders of the facilities of the club is in connection with promotion of sports which is a charitable purpose and which is well within the main objects of the Assessee. Therefore the decision relied upon by the learned DR before us is not of any assistance to the case of the revenue. The principle of res judicata is no doubt not applicable in income tax proceedings, but the admitted position in the past assessments have not been shown by the CIT in the impugned order as unsustainable. The whole approach of the CIT in the impugned order has been on the basis of decision in the case of Bangalore Club (2013 (1) TMI 343 - SUPREME COURT ). As we have already explained, that decision is applicable only in respect of income earned by the Assessee from investments. We have already held that the income in respect of which principle of mutuality is not applicable, would nevertheless be entitled to exemption u/s.11 of the Act, subject to satisfaction of other conditions laid down in that section. We have also held that predominant purpose for which the Assessee exists is for charitable purpose and that the proviso to Sec.2(15) of the Act would not be applicable in the facts and circumstances of the present case, which we have discussed in the earlier paragraphs. Thus we hold that the order passed by the AO u/s.143(3) of the Act dated 25.3.2014 for AY 011-12, which was revised by the CIT u/s.263 of the Act by the impugned order was not erroneous and prejudicial to the interest of the revenue and therefore the exercise of jurisdiction by the CIT u/s.263 of the Act is held to be not sustainable. Consequently, the order u/s.263 of the Act is hereby quashed and the appeal of the Assessee is allowed.

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• 2016 (8) TMI 465
  Deduction u/s.80P(2)(a)(i) - interest income earned from transactions with non-members and nominal members and interest income earned from non-SLR (Statutory Liquidity Ratio) investments - Held that:- CIT(A) was justified in allowing deduction u/s.80P(2)(a)(i) of the Act on interest income earned from transactions with non-members and nominal members and interest income earned from non-SLR (Statutory Liquidity Ratio) investments, i.e., investments made not owing to any compulsion of Reserve Bank of India regulations to maintain Statutory Liquidity Ratio (SLR).

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• 2016 (8) TMI 464
  Addition on account of surrender made by the assessee under section 132(4) during the course of search as well as during post search proceedings - CIT(A) deleted the addition - Held that:- Neither the Investigation Wing nor the Assessing Officer has correlated any seized document with the surrender of unaccounted receipt. After considering entire facts and circumstances of the case and respectfully follow the judicial pronouncements, as discussed in the group cases of DCIT vs. Ramprastha Builders Pvt. Ltd. & Ors. case [2016 (3) TMI 20 - ITAT DELHI ] we uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the Appeal filed by the Revenue. - Decided in favour of assessee.

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• 2016 (8) TMI 463
  Additions/disallowances of the income - non defend of case by assessee - Held that:- A perusal of the orders of authorities below show that the assessee has been recalcitrant and has no respect for the law of land. The assessee choose not to defend his case despite repeated opportunities. The assessee has not appeared before the authorities below, even before the Tribunal, the assessee has not appeared in spite of the fact that several notices of hearing issued by the office registry were duly received by him. The law does not come to the rescue of those, who slumber over their own cause. We do not find any error in the findings of authorities below in making additions/disallowances in the income returned by the assessee. The impugned order is upheld and the appeal of the assessee is dismissed.

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• 2016 (8) TMI 462
  Penalty u/s.271(1)(c) - assessee has maintained combined profit and loss account without bifurcating the income/loss of its share trading business and its normal share brokerage business - Held that:- From the various details furnished in the paper book we find the assessee has given full details of income from share trading activity and income from brokerage activity for all the years. The AO has allocated the expenses to the above income and therefore some element of estimation is definitely there while computing the income. Since the business of the assessee company is that of trading in shares, therefore, in view of the above decision of the Mumbai Bench of the Tribunal Fiduciary Shares & Stock P. Ltd. Versus ACIT, Circle 4 (2) , Mumbai [2016 (5) TMI 814 - ITAT MUMBAI] the assessee is out of the purview of Explanation to section 73. Although the quantum addition has been sustained by the Tribunal, however, it is the settled law that the penalty proceedings are independent proceedings and the assessee always can raise new plea during the penalty proceedings. The Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. In view of the above discussion, we are of the considered opinion that this is not a fit case for levy of penalty. We therefore set aside the order of the CIT(A) and direct the AO to cancel the penalty levied u/s.271(1)(c) of the I.T. Act, 1961. The grounds raised by the assessee are accordingly allowed.

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• 2016 (8) TMI 461
  Addition u/s 68 - undisclosed bank account - Held that:- Admittedly, the bank account maintained with HDFC Bank Ltd., which was not disclosed by the assessee in the impugned assessment year, was also not disclosed by the assessee in the immediately preceding assessment year. During the course of assessment proceedings in the preceding assessment year the AO had confronted the same to the assessee and the assessee had prepared a profit and loss account on the basis of those deposits in the said bank account and had disclosed net profit of Rs. 2,99,273/-. The AO had determined the income at Rs. 5,21,990/- on account of such bank deposits of Rs. 48,39,641/- by making disallowance of Rs. 2,22,717/- being 5% of the purchases. Therefore, when the very same bank account was not disclosed for this year also, we do not find any reason as to why the AO has taxed the entire deposit of Rs. 75,44,655/- especially when the bank account contains both debit entries and credit entries. Therefore, we are of the considered opinion that those debit entries cannot be ignored altogether. Since the Ld.CIT(A) after considering the totality of the facts of the case has sustained addition of Rs. 15,30,602/- which is the peak credit in the bank account as on 29-12-2009, therefore, we do not find any infirmity in the order of CIT(A)

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• 2016 (8) TMI 460
  Validity of jurisdiction of AO under sec. 153A - addition on account of unexplained source of investment in cash in a project on the basis of material found during the search at the premises of Aerens group - Held that:- A huge addition of Rs. 3,21,00,000 cannot be made in a casual manner without having corroborative evidence in support. It is a prevailing practice in the dealings of immoveable properties that cash amount, if any, out of the agreed consideration is paid during the course of execution/registration of the sale deed and admittedly in the present case no sale deed or other mode of transfer has been effected. Merely because name of the assessee is appearing in the said hard disc and amongst other investors are investor Shri I.E. Soomar appearing in the said hard disc has admitted payment of cash amount, cannot be a basis for arriving at a definite conclusion, in absence of corroborative evidence in support, that the assessee had also paid the amount of Rs. 3,21,00,000 in cash. Assessing Officer was not justified in assuming jurisdiction under section 153A and authorities below were also not justified in making and sustaining the addition in question merely on the basis of a hard disc found during the course of search at the premises of Aerens Group without any corroborative evidence in support. We thus hold that the assessee/appellant succeeds on both the above issues i.e. on validity of assumption of jurisdiction under sec. 153A and the addition in question. The grounds involving the above issues are accordingly allowed in favour of assessee

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• 2016 (8) TMI 459
  Disallowance u/s. 14A - Held that:- The balancesheet reflects an adequate balance of net working capital, i.e., current assets less current liabilities, both as at the beginning and the close of the year, being at Rs. 52.80 crores and Rs. 43.76 crores respectively. That leaves only unsecured loan/s, which continues at the opening balance of Rs. 101.37 lakhs during the year. No part of it can therefore be said to finance, even if partly, the increase of Rs. 222.39 lakhs in the investment in shares and mutual funds during the year. The opening investment of Rs. 21.06 lakhs pales into insignificance in light of the interest-free under capital of Rs. 2722.22 lakhs at the beginning of the year, and which stands increased by Rs. 1.40 crores during the year. The decision by the Hon’ble jurisdictional High Court in CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] holding that where sufficient interest-free capital is available, the same must be set off or allocated against investment, is thus clearly applicable in the facts and circumstances of the case. As regards administrative expenditure, the disallowance for the same has been restricted to the ratio (0.5% of the investment) in terms of rule 8D(2)(iii) of the Rules. We find the same as reasonable and, accordingly, confirm the same. Activity of purchase and sale of scrips - in the nature of trade or business transaction, or in the nature of an investment - Held that:- The activity, which in the instant case is systemic and regular, is a manifestation of this intent and, thus, relevant, clearly reflecting a trading activity, i.e., a regular activity of trade. This finding of fact by the Assessing Officer, has not been, as afore-stated, disputed or controverted in any manner. We, accordingly, are in no manner of any doubt that the assessee’s activity of purchase and sale of scrips is, as in the case of speculation business, which is admitted to be business activity (resulting though at a loss of Rs. 42.68 lakhs for the current year) as well as the trading in derivatives, only a business activity. Rather, the said activities, which are allied and pari materia, being in the same market and in the same scrips, reinforce and endorse the Revenue’s stand of the assessee’s activity of buying and selling of shares as being regular trading activity. The assessee has reported the income on such activity through its profit and loss account which, by definition, reflects the result of the operations of the company (for the account period). As such, regardless of shares held (for the time being) being classified as investment in the assessee’s final accounts (balance-sheet), we confirm the purchase and sale therein as being only a business activity, so that the impugned income is liable to be assessed as business income Invocation of section 145(3) - quantum of the estimated income - Held that:- With regard to the invocation of section 145(3), we do not find or observe any infirmity therein; the company or Shri Sunil Aggarwal failing to furnish any satisfactory reply to the several queries raised by the Assessing Officer in the matter. We may though clarify that the Bhillai unit being a unit of the assesseecompany, it’s books of account form part of the accounts of the company. The provision of s. 145(3) would, accordingly, apply to the assessee’s accounts, even as the same may result in the Assessing Officer disturbing the book results only of the said unit, with the accounts of which he is essentially dis-satisfied with, i.e., finds as not reliable and as not reflecting correct income. With regard to the claim for depreciation, we observe that the same stands allowed by the Assessing Officer himself, with the ld. CIT(A) only directing likewise, i.e., for allowance of depreciation as per law. Without doubt, the allowance of depreciation can only be in terms of the provisions of law, so that the Assessing Officer has rightly reduced the sale consideration (of Rs. 128.40 lakhs) in respect of the fixed assets sold during the previous years relevant to A.Ys. 2004-05 & 2005-06 in computing the written down value (WDV) of the relevant block of assets. As regards sale of fixed assets, even if unauthorized, being not challenged by the company (which has presumably ratified the sale) and no longer its’ property, depreciation thereon could not be allowed. The Revenue’s claim is accordingly allowed.

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• 2016 (8) TMI 458
  Addition u/s 68 - undisclosed cash credits and investments - Held that:- Most of the withdrawals from the Bank of Baroda and other banks were held to be available for investment in the land and accordingly, the deposits made in Vijaya Bank were accepted by the Ld. CIT(A). With regard to hand loans taken from 14 persons, the assessee has not even given PAN etc., and in the absence of maintenance of books of account it was difficult for the tax authorities to crossverify the genuineness of the loans. Even before us, no material whatsoever was filed by the assessee to prove the availability of the loan amounts from 14 parties. We are therefore, of the view that the Ld. CIT(A) was justified in confirming the addition to the extent of the amount referable to the alleged loans taken from 14 parties. However, personal savings to the tune of Rs. 13,000, having regard to the value of transactions carried out by the assessee, it could not have been disputed by the Ld. CIT(A). Similarly, separate addition of Rs. 3,84,400 is also not warranted since it is a running account having cash deposits. No doubt there are some instances which prove that some of the amounts were utilised for monthly credit card bills or repayment of loans but in the absence of any proof that assessee utilised the entire income earned from the business only for payment towards credit cards bills etc., it is not a fit case for making separate addition of Rs. 3,84,400. As regards the unexplained investment in the land, the Ld. CIT(A) has confirmed the addition of Rs. 1,35,644 for which the assessee could not furnish any evidence. Under these circumstances, we are of the view that the addition of Rs. 1,35,644 sustained by the Ld. CIT(A) is in accordance with law. In short, the cash loans taken from 14 persons were rightly added by the A.O. and confirmed by the CIT(A).

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• 2016 (8) TMI 457
  Revision u/s 263 - AO holding Loss incurred to be “Speculative Loss” - Held that:- It is an admitted case that the assessee is not the member of NCDEX and it is also admitted case that during the 263 proceedings before the ld Commissioner that the profit of physical delivery of the commodities were not received by the assessee. However during this proceedings, the assessee had produced the bills of purchase and sale of the commodities case and had also filed an affidavit support of his case, the effect of these documents and affidavit shall be dealt by us in the separate proceedings in the matter in Appeal number 446/14. In our view, the observation of the ld CIT that loss caused to the assessee on account of speculative business as concluded by the ld CIT on the basis of the material available with him, cannot be permitted to be set off U/s 72 of the Act. Therefore, in our view, the order of the assessing officer, whereby he kept the speculation loss as business loss is erroneous and prejudicial to the interest of the revenue as the ld Assessing Officer has allowed the setting of the speculative loss of Rs. 18,31,596/- against the business income of the assessee - Decided against assessee.

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• 2016 (8) TMI 456
  Levy of penalty u/s 271(1)(b) - Held that:- While levying the penalty u/s 271(1)(b) of the Act the assessee was issued notice u/s 142(1) of the Act on 04/09/2012, fixing the compliance by the assessee on 10/09/2012. It has not been mentioned as to when the notice was served upon the assessee. It is also noted that during that period, as explained before us, the assessee was suffering from ailment, meaning thereby, sufficient time/opportunity for compliance was not provided to the assessee. This is clearly violation of principle of natural justice on the part of the Revenue. If we exclude the Saturday and Sunday, falling within the given time in the notice, time taken for dispatch and delivery of the notice hardly two or three days left with the assessee. It is noted that the ld. Assessing Officer has not made a good case for non compliance on the part of the assessee. Considering the totality of facts and the circumstances narrated before us, we direct the ld. Assessing Officer to delete the penalty, imposed upon the assessee. Thus, the impugned appeals are allowed in favour of assessee.

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• 2016 (8) TMI 455
  Loss on account of Fire - claim of quantum of loss - Held that:- The undisputed fact is that the assessee was having both excisable and non-excisable goods. It is also not in dispute that both categories of goods were gutted in fire. We find that the A.O. was carried away with the quantification of loss by the Excise Department and completely ignored the loss of nonexcisable goods. Since, there was no bifurcation of goods, excisable and non-excisable. The ld. CIT(A) restricted the disallowance to 50%. In our considered opinion, the allowance of 50% of the claim on account of loss of non-excisable goods should meet the ends of justice Entitlement to deduction u/s. 80IA - Held that:- An identical issue was decided by us in favour of the assessee and against the revenue in assessee’s own case wherein we have held that the ratio laid down by the Hon’ble Madras High Court in the case of Velayuddhaswamy Spinning Mills Pvt. Ltd (2010 (3) TMI 860 - Madras High Court) squarely apply on the facts of the case. Employees’ Contribution to Provident Fund, ESI - A.O. added the amount so paid/deposited after the due date - Held that:- This issue has to be decided in favour of the Revenue and against the assessee in the light of the decision of the Hon’ble Jurisdictional High Court given in the case of Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT ] - Decided in favour of revenue. Addition u/s 41 - creditors outstanding for more than 3 years - Held that:- Before us, the ld. D.R. could not bring any demonstrative evidence which could show that the liabilities have ceased to exist merely because the creditors were outstanding for more than 3 years would not ipso facto justify the additions made u/s. 41(1) of the Act. Moreover, the assessee has successfully demonstrated that part of the outstanding creditors have already been taken as income. No justification in the additions made u/s. 41(1) of the Act, the ld.CIT(A) has rightly deleted the impugned addition which requires no interference. - Decided in favour of assessee.

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• 2016 (8) TMI 454
  Addition on account of foreign exchange loss - whether assessee has not suffered any actual loss during the year under consideration? - Held that:- The allegation of the AO that assessee entered into a currency swap with the bank for an instrument involving a swap of a liability of Japanese Yen vs. Rupees is against the facts on record. The observation made by the AO in the assessment order in this regard demonstrate the indulgence into surmises without considering the fact that this is an advance received against export and such export has been actually effected in the subsequent year. It is an undisputed fact that assessee has received the advance in Japanese Yen and Japanese Yen has got appreciated from 34.11 to 40.03 during the year. The assessee having received the advance and having suffered the loss, the AO cannot sit over the judgment of the assessee to decide why the advance was received in Japanese Yen and why it was not received in Euro or Swiss Franc. Observation of the learned CIT(A) is correct that the AO has gone on to elaborate the principle of derivatives from Pages 4 to 14 of the assessment order but the whole discussion is on theory of derivatives of mark to market losses. It is also evident from the facts on record that the AO has not disputed the advance received as trading advance towards supply of soya bean meal. It is also a fact that there were several other transactions in foreign exchange fluctuation account which has been treated similarly. The assessee all along has treated this advance in accordance with Accounting Standards AS-11. This also has been followed in earlier assessment years as well as in subsequent assessment years. As regards the contention of the learned DR that the corresponding purchase for this export are more than the value of the sale, we are of the view that this cannot be a consideration for disallowing the loss suffered on account of the foreign exchange fluctuation in the year under consideration. The assessee having followed the system of accounting regularly for accounting foreign exchange fluctuation in accordance with accepted method of accounting and the same have not been inconsistent with any provisions of the Income Tax Act any profit or loss arising on this account has to be taken into consideration and the same cannot be rejected. CIT(A) was justified in holding that the AO was not correct in picking one transaction and treating the same as derivative and disallowing the loss by considering the same as mark to market losses. - Decided in favour of assessee.

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• 2016 (8) TMI 453
  Addition of unexplained expenditure - Held that:- The finding of the CIT-A examined the profit and loss account and schedules annexed thereto, wherein he agreed with the contention of the assessee that an amount of Rs. 1,94,03,13,928/- includes the value of crude oil and other related items such as chemicals and hydrogen gas and found the same in schedule –P which was annexed to the profit and loss account. In this regard we may refer to chart of particulars as reflecting in the page no-4 of CIT-A where it shows the raw material as per Schedule-P and raw material as per notes on accounts wherein we found that an amounts Rs. 2,17,81,926/- and 82,80,116/- to be purchase values of chemicals and Hydrogen gas respectively totaling to 3,32,75,131/- and regarding MODVAT, which can be availed towards payment of excise duty on finished goods and it is pertinent to state that the balance will be entered directly to the balance sheet as per the procedure prescribed by the Institute of Chartered Accountants of India.

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• Customs

• 2016 (8) TMI 481
  Classification – importation of e-bykes in CKD condition - Notification No.06/2006-CE providing concessional rate of 4% ad valorem only on electrically operated vehicles – interpretation – whether e-bikes in CKD condition to be interpreted as parts and components required to be assembled to make e-bikes or to be interpreted as electrically operated vehicles – Held that: - there is no basis to treat the impugned goods as e-bikes for the purpose of classification and as parts (and not as e-bikes) for the purpose of exemption Notification. Notification No.06/2006-CE, at Sl. No.35 of the table appended thereto allows concessional rate of duty of 4% ad valorem to electrically operated vehicles including two and three wheeled electric motor vehicles. In this scenario, once the goods have been classified to be electrically operated bikes, they clearly get covered under the scope of entry at Sl. No.35 of the table appended to the said Notification - the impugned goods are entitled to the benefit of Notification No.6/2006-CE – decided in favor of appellant.

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• 2016 (8) TMI 480
  Demand of tax, interest and penalty - clearance under EPCG scheme - export obligation to be fulfilled - Held that: - appellant failed to fulfill export obligations. When case called, no representation on behalf of the appellant nor was there any request for adjournment. Case decided on merits - appeal dismissed.

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• 2016 (8) TMI 479
  Export incentive – drawback – section 75 of the Customs Act – all industry rate-2% of F.O.B. – enquiry - quantum of frozen meat exported – Slaughtering – upto 500 buffaloes a day approved from APEDA – Held that: - As per the registration certificate of APEDA, the slaughter permission approved was 500 animals or buffaloes per day whereas as per the processing capacity (170 MT per day of boneless buffalo frozen meat), the appellant could have utilized the meat of more than 500 buffaloes in view of its installed capacity. It is an admitted fact that the Pollution Control Board had not refused consent nor made any further suggestions for compliance to be made. Thus, there was deeming consent in favour of the appellant to slaughter and process more than 500 animals/buffaloes on the expiry of four months from the date of application being 26/9/11. In this view of the matter, we find that the whole case of the revenue is misconceived as the same is based on presumption that the appellant could not have processed more than 500 buffaloes per day in view of the Certificate of APEDA. There is no dispute that the slaughtering capacity has to be, prima-facie, approved by the State Pollution Control Board. section 50(2) of the Customs Act 1962 – contravention – inadmissible drawback – Held that: - there is no dispute of export of packing material along with the frozen meat. In this view of the matter, there is no irregularities in the drawback granted to the appellant pursuant to export of frozen meat for which, the remittance is admittedly been received in convertible foreign exchange - drawback on packing material allowed. The concerned authority is directed to immediately refund within a period of 45 days the amount of duty drawback deposited by the appellant in the course of investigation and/or recovered from the appellant with interest as per Rules. Appeal allowed.

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• 2016 (8) TMI 478
  Classification – import or Oleo Pine Resin – classifiable under CTH 1301.90 or CTH 1301.10 - exemption denied by revenue - burden of proof on department – Held that: - The case rested on the evidence if any whether available on record to show that the goods came to India were processed with the aid of power. In absence of any enquiry by Revenue or any evidence received from the Mission abroad., it is difficult to conceive that the goods were processed abroad with the aid of power. Bonafide belief of appellant on the basis of certificates issued by forest department of sri lanka cannot be ruled out without Revenue leading to any cogent evidence to the contrary – appeal allowed.

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• Service Tax

• 2016 (8) TMI 502
  Constitutional validity of levy of service tax - Section 65 (105) (zzzzv) of the Finance Act 1994 (FA) whereby the provision to any person by a restaurant, by having the facility of air-conditioning in any part of its establishment serving food or beverage, including alcoholic beverages or both, in its premises has been made amenable to service tax. - constitutional validity of Section 65 (105) (zzzzw) of the FA whereby the provision by a hotel, inn, guest house, club or camp-site by whatever name called to any provision, accommodation for a continuous period of less than three months has been made amenable to service tax. Held that:- For good measure the Supreme Court held: "The concept of catering admittedly includes the concept of rendering service. The fact that tax on the sale of the goods involved in the said service can be levied does not mean that a service tax cannot be levied on the service aspect of catering." What the decision therefore does is to highlight the possibility of splitting up of the composite transaction into the provision of service element and the supply of food. The Respondents are justified in contending that as far as the interpretation of Article 366 (29A) (f) of the Constitution is concerned, the decision in Tamil Nadu Kalyana Mandapam Association v. Union of India (supra) fully supports their stand. The Parliament has further made the legal position explicit by inserting Section 66 E (i) of the FA read as it were with Section 65 (22) and 65 (44) of the FA. It states that the "service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity” is a 'declared' service. The legislative carving out of the service portion of the composite contract of supply of food and drinks has sound constitutional basis as explained in the aforementioned decisions of the Supreme Court. Even if this is viewed as Parliament deploying a legal fiction, it is legally permissible. Thus it is not possible to accept the contention of the Petitioners that Parliament lacks the legislative competence to enact Section 65 (105) (zzzzv) of the FA with a view to bringing the service component of the composite contract of supply of food and drinks by an air-conditioned restaurant within the service tax net. - Decided against the assessee and in favour of revenue. Short-term accommodation in hotel - Held that:- Provision of short-term accommodation in hotels etc. envisaged in Section 65 (105) (zzzzw) of the FA read with Section 65 (44) of the FA is a taxable event that is entirely covered by the term 'luxuries' in Entry 62 of List II of the Seventh Schedule to the Constitution and therefore outside the legislative competence of Parliament. The exemption from service tax on the provision of accommodation for a room having a declared tariff of less than Rs. 1,000 per day or equivalent is by Notification No. 12/2012 dated 17th March 2012. This is not provided in the Act or the Rules. - Taxation by way of administrative instructions which are not backed by any authority of law is unreasonable and is contrary to article 265 of the Constitution of India. The court accordingly, strikes down Section 65 (105) (zzzzw) of the Finance Act 1994 pertaining to levy of service tax on the provision of short-term accommodation and the corresponding instructions/circulars seeking to operationalise the levy as unconstitutional and invalid. - Decided in favor of assessee and against the revenue.

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• 2016 (8) TMI 500
  Deployment of employees – manpower recruitment or supply services – employees continued to remain employee of appellant and their salary being provided by appellant - Held that: - the service of manpower recruitment or supply agency has to be in relation to the supply of manpower and by professional engaged in the business of supply of manpowers and a mere sending its own employees on deputation to another group companies cannot be held to be a taxable service involving the recruitment or supply of manpower. - Decision in the case Commissioner of Central Excise Vs. Computer Sciences Corporation India Pvt. Ltd. [2014 (11) TMI 125 - ALLAHABAD HIGH COURT] followed – appeal allowed – decided in favor of appellant.

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• 2016 (8) TMI 499
  Review order – direction to Assistant Commissioner to file the appeal before the Commissioner (Appeals) of Central Excise in terms of sub-section (4) of Section 35E of the Central Excise Act, 1944 – Held that: - 35E of the Central Excise Act, 1944 is not finding a place in Section 83 of the Finance Act, 1984. Thus, order passed by the Jurisdictional Commissioner in terms of Section 35E of the Central Excise Act, in directing the Assistant Commissioner to file the appeal before Commissioner (Appeals) concerning the service tax issue is not in conformity with the statutory mandates. Appeal by the assistant commissioner before Commissioner (Appeals) – Held that: - Section 84 of the Finance Act, 1994 at the relevant time provides for revision of orders by the Commissioner of Central Excise and nowhere there is any mention about filing of appeal before the Commissioner (Appeals) against the order passed by the officers subordinate to the Commissioner. The said provision of filing appeal was incorporated in Section 85 w.e.f. 19.08.2009. In the present case, since the appeal was preferred by the Assistant Commissioner prior to the date of substitution of the clause in Section 84 of the Act w.e.f. 19.08.2009 for filing the appeal, the appeal filed before the Commissioner (Appeals) is not maintainable . Appeal allowed – decided in favor of appellant.

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• 2016 (8) TMI 498
  Recall of the order - order passed without hearing the appellant - hearing notice not served - failure to attend hearing - repeated default in complying with earlier notices also as notices did not reach the appellant address - Held that: - The principles of natural justice require that a person should be given an opportunity of being heard. When the person is not found at the address given in the appeal papers, not once, not twice, but repeatedly, it cannot cry foul and claim violation of principles of natural justice. The appellant cannot create a situation where it becomes impossible to contact him on the given address in spite of repeated attempts and then turn up to claim violation of principles of natural justice. One cannot kill both of one’s parents and then claim to be an orphan. Thus the appellant’s contention that it was not given an opportunity of being heard is totally untenable. We find that CESTAT vide order dated 4.12.2015 had clearly stated that the appeal stood dismissed in terms of the default clause in the order dated 21.9.2015 - no justifiable reason to interfere with the order of CESTAT - application rejected - appeal dismissed.

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• 2016 (8) TMI 497
  Classification – commission received – early payment incentive received – whether to be classified under “business auxillary service” – requantification of demand – imposition of penalty – Held that: - early payment discount in this case are cash discount and received in view of early payments made to the principles and are linked to the number of days by which payment is made early and has no relation with the consideration received for rendering the service in the form of commission under the category of “Business Auxiliary Services” – appeal allowed – decided in favor of appellant.

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• Central Excise

• 2016 (8) TMI 496
  Valuation - Whether the SKO (PDS) cleared to Oil Marketing Companies has to be valued on the basis of transaction value on which the goods are sold to OMCs or the price at which the OMCs sold the goods to the ultimate customers - clearance of SKO (PDS) reflecting two prices on the excise invoices but paid excise duty on the lower price i.e. the price at which OMCs sold the goods to the consumers - Held that:- by relying on the judgment of Tribunal Larger Bench in the case of Oil and Natural Gas Corporation Limited vs. CCE, Raigad [2015 (11) TMI 1038 - CESTAT MUMBAI (LB)] wherein after detail analysis of principle of law on the subject and relevant circulars issued by the Board from time to time held that excise duty is required to be paid on the transaction value collected from the OMCs by issuing commercial invoices. Invokation of extended period of limitation - Demand of duty shortly paid - Held that:- as the facts were fully disclosed in respective invoices mentioning two prices and the duty had been discharged on the lower price, hence, we do not find merit in the contention of the Revenue that in all the invoices both the prices were not reflected. - Appellant's as well as Revenue's appeal rejected

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• 2016 (8) TMI 495
  Whether Cenvat credit is admissible on the input contained in by-product or whether Rule 6(3)(b) is applicable in respect of clearance of by-product under exemption - Held that:- the Spent Acid is generated unavoidably during the course of manufacture of Linear Alkly Benzene Sulphonic Acid (LABSA). The main product is LABSA and the Spent Acid generates unintentionally and unavoidably in the process therefore by nature itself the Spent Acid is a by-product. The issue has been settled by various judgments. Moreover as per para 3.7 of Chapter 5 of CBEC Manual of Supplementary Instruction, it is clear that Cenvat Credit is admissible on the input contained in by-product/waste refuse. As, the Spent Acid is undoubtedly a by-product therefore, by the virtue of above provision as well as the issue does not remain as res-integra, in the light of the judgments, the demand of 10% of the value of the exemption goods in terms of Rule 6(3)(b) is not sustainable. - Decided in favour of appellant

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• 2016 (8) TMI 494
  Cenvat credit - entitlement - goods purchased by M/s CVL Sonepat but consigned to respondent which were ultimately used in manufacture and supply of boilers and other capital goods in the premises of the respondent - Held that:- Commissioner (A) held that the ownership of the goods is not a pre-condition for the manufacture to be entitled to the credit of duty paid on the inputs. The only condition is that the goods should be duty paid and they are intended for use in or in relation to the manufacture of finished excisable goods. Further to enable the manufacture the credit there should be a duty paying document. In this case there is not dispute about the duty paid document wherein the name of the respondent is appearing as consignee. Thus the fact that ownership was with M/s CVL is not an impediment to avail the cenvat credit. Therefore on this count the appeal fails. I do not find any infirmity in the observation made by the Ld. Commissioner (A) in the impugned order. Therefore, the impugned order is upheld. - Decided against the Revenue

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• 2016 (8) TMI 493
  Refund claim - excise duty paid through credit notes on the discounts passed on to the dealers and stockists, subsequent to clearances - quantum of discount not disclosed to the stockists at the time of clearance - appellant did not opt for provisional assessment - Held that:- the appellant paid duty on the value including the discount that is to be allowed and therefore opting for provisional assessment is not required. The department does not dispute the discounts given and that appellant had paid duty on higher value. The purpose of provisional assessment is to safeguard revenue. The appellant has paid duty on higher value. In the impugned order, the Commissioner(Appeals) referring to the Circular F.No.354/81/2000-TRU dt. 30/06/2000 has observed that the appellant has satisfied the first three parameters in the suppl'mentary instructions at para 2.5)iv) of Part III, but did not opt for provisional assessment. Therefore, by following the Hon ble High Court of Andhra Pradesh judgment in the case of A.P. Paper Mills Ltd.Vs. CCE, Vishakapatnam [2014 (3) TMI 671 - ANDHRA PRADESH HIGH COURT], assessee is eligible for refund of excess duty paid on account of discounts offered after clearances. Unjust enrichment - incidence of duty has been passed on to buyers - appellant submitted a Chartered Accountant certificate showing that in the credit note, duty has not been recovered and had not been passed on to the buyers - Held that:- The Hon ble High Court of Karnataka in Sudhir Papers Ltd. Vs. CCE, Bangalore [2011 (3) TMI 1443 - KARNATAKA HIGH COURT] observed that if credit notes are raised and benefit is passed on to the customer, thus not passing on the burden of excise duty, the assessee is entitled to refund of the same. Therefore, the appellants are entitled to refund. - Decided in favour of appellant

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• 2016 (8) TMI 492
  Cenvat credit - A.C. corrugated sheets, HR SS sheet - violation of the provisions of Rule 2 and 3 of CCR's - Held that:- it is found that HR SS plates have been used in the fabrication of storage tank of Ethyl Acetate. Further storage tank is a specified capital goods under Rule 2(a)(A)(vii) and as such the same is eligible for Cenvat credit. So far as AC corrugated sheet is concerned it is found that the same have been used in the boiler, without the use of which there can be no generation of steam in the boiler which is essential for manufacture of excisable products. Accordingly, the Cenvat credit is allowable on the A.C. Corrugated Sheets also. Penalty levied is also set aside. - Decided in favour of assessee

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• 2016 (8) TMI 491
  Job-work - Invokation of extended period of limitation - recovery of duty on finished goods destroyed - allegation of suppression as there was delay on the part of appellant to furnish details - Held that:- it is apparent that the appellants did not possess the requisite information called for by the department. In spite of their best efforts they could not get the information from NCCL. It is seen that only after issuance of summons by the Department, has NCCL woken up to supply the necessary details. Again though details were received on 06-04-2010, the show cause notice is issued after more than one and a half year, invoking extended period of limitation. As rightly pointed out by the appellant, there is no allegation raised in the show cause notice with regard to fraud or wilful suppression. The appellant being only job worker is not in a position to supply the details requested by the department. Further the show cause notice has accepted the figures taken as basis for claim of insurance made by NCCL for raising the demand of duty. In such circumstances, the appellants cannot be attributed with any intention to evade payment of duty. Further after receiving the information, the revenue has been in its bureaucratic slumber for more than a year to issue the show cause notice. As there is no evidence in the present case to establish willful suppression with intention to evade payment of duty, the demand is time barred, and unsustainable. - Decided in favour of appellant with consequential relief

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• 2016 (8) TMI 490
  Cenvat credit - HR plates, MS angles, MS flats , MS beams, HR coils and MS channels, plates, GP coils, welding electrodes etc. - used in work shops meant for repair and maintenance of machinery which are used in manufacture of final products - no documentary evidence has been produced as to which goods are used for maintenance of machinery and which goods are used in or in relation to manufacture - Held that:- appellant has filed a certificate of Chartered Engineer to the effect that the iron and steel articles as per the statement have been directly used in the manufacturing process only and he has also confirmed that without these articles, manufacturing process is not complete. Along with the certificate he has also produced number of photographs of the various items of inputs and its use in the machinery which is used for manufacture of final products. The certificate of Chartered Engineer was not filed before the authorities below and has been filed before this Tribunal only. Further, it is found that this certificate is vital for determination of the dispute as to whether the goods fall in the definition of inputs or not. In view of this certificate and the case laws cited by the appellant, the impugned order is not sustainable in law and therefore I set aside the order and remand the case back to the adjudicating authority with a direction to decide the case afresh after considering the certificate of Chartered Engineer and the various case laws cited by the appellant. - Appeal allowed by way of remand

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• 2016 (8) TMI 489
  Refund claim - rejected on the ground that assessment order/determination of annual capacity of production was not challenged before the appropriate forumduty paid under protest - inclusion of gallery in the length of chambers for determination of annual production capacity - Held that:- the issue is no more res integra and is squarely covered by the judgment of jurisdictional Hon'ble Gujarat High Court in the case of Premraj Dyeing & Printing Mills Pvt. Ltd Vs UoI [2013 (6) TMI 118 - GUJARAT HIGH COURT]. Therefore, by applying the same, for allowing refund of duty paid under protest by the Appellant consequent to the Order pertaining to determination of annual capacity of production by inclusion of length of gallery, the said Order need not be separately appealed. - Decided against the Revenue

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• 2016 (8) TMI 488
  Cenvat credit - Steel items - MS channels, MS beams, MS angles, HR coils/sheets and MS Joists used for construction and maintenance of structures for supporting capital goods and for construction of gypsum shed used for storing gypsum - Held that:- in view of the ratio of Supreme Court decision in the appellant's own case where it was held that the goods which are used in construction of concrete structure and foundation on which the various heavy machineries in a cement plant was to be erected are entitled for CENVAT Credit. Therefore, the appellant is entitled to CENVAT credit on the disputed items. - Decidde in fvaour of appellant

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• 2016 (8) TMI 487
  Abatement of duty - Rule 10 of Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 - machine lying sealed during the period 10.11.2011 to 30.11.2011 - intimation for closure of the machine was given just two days prior to the actual closure whereas the Rules require intimation of 3 days. Held that:- it is found that intimation was admittedly given, the appellant's factory was admittedly visited by the officers and the machine was admittedly sealed on 09.11.2011 and admittedly continued to remain sealed during the period 10.11.2011 to 30.11.2011. In such a scenario, the raising of objection by the Revenue cannot be appreciated. It is also found that in terms of Rule 10 the requirement for abatement claim is closure of the factory itself. The appellant started working on their second installed machine w.e.f. 27.11.2011 and with such working factory, cannot be held to be closed. As such the complete closure of the factory was only for the period 10.11.2011 upto 26.11.2011. All the other conditions of rule 10 having been satisfied by the appellant for the view of the abatement claim of the assessee is required to be given for the period 10.11.2011 to 26.11.2011. The same would be requantified by the adjudicating authority and allowed to the assessee. - Appeal disposed of

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• 2016 (8) TMI 486
  Cenvat credit - appellant is non-existence - invoices received instead of goods - no investigation conducted at the end of manufacturer/ supplier or the transporter to reveal the truth whether manufacturer/ supplier has supplied the goods in question to M/s S. K. Garg & Sons or the transporter has transported the goods to the premises of the appellants. Held that:- M/s S. K. Garg & Sons was registered dealer during the impugned period and all the ST-3 returns were filed by M/s S. K. Garg & Sons which were accepted by the department. Therefore, in the absence of any corroborative evidence to show that the appellants have not received the goods, it cannot be alleged against the appellant that they have received the invoices and not the goods. The same issue was decided by this Tribunal in the case of CCE, Ludhiana vs. M/s Dhawan Steel Industries [2015 (10) TMI 1325 - CESTAT NEW DELHI]. Therefore, by relying on the same, it is held that in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the appellants. - Decided in favour of appellant

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• 2016 (8) TMI 485
  Benefit of exemption of duty - Notification No. 01/2011-CE dated 01/03/2011 - Instant food mixes - Appellant manufacturing two category of goods namely packing material (printed laminated /metalized film and pouches) and Instant Food Mixes, Ready to Eat Food Product, etc. - Held that:- the appellants are not claiming any CENVAT credit for the inputs used in the manufacture of second category of goods (Instant Food Mixes, ready to eat food product etc.), so the appellants would be entitled to the benefit of Notification No. 01/2011-CE dated 01.03.2011. It is to be noted that the appellants have not taken any CENVAT credit for any of inputs including the input of packing material (printed laminated /metalised film and pouches) in respect of manufacture of Instant Food Mixes, ready to eat food, etc. Commissioner of Central Excise, when deciding the SCN issued to the appellants has not rightly appreciated the facts on the ground. There has been misconstruction on the part of Commissioner deciding the SCN notice, when he wrongly linked the CENVAT credit taken on the inputs for manufacture of packing material (printed laminated /metalized film and pouches), which actually is a different product altogether and has no direct link with the product, instant food mixes, etc. It is to be noted that the appellants are paying full duty on the manufacture of other product namely packing material falling chapter 39. CENVAT credit taken in case of inputs, for the manufacture of packing material (Chapter 39) can’t be wrongly linked with the manufacture of another category of goods namely Instant Food Mixes, Ready-to-eat food product, etc. - Decided in favour of appellant with consequential relief

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• 2016 (8) TMI 484
  Cenvat credit - Irregular availment of Cenvat credit - steel items namely MS angles, HR plates, HR sheets, beams, MS joists etc. used for supporting structures to capital goods - Held that:- it is crystal clear from the invoices that the supply of goods are parts of boilers. The circulars also have clarified that the items used for support structure of such boiler/capital goods are eligible for credit. There is no evidence adduced by the department to show that the boiler can function without the support structures. So also apart from a vague contention that Range Officer visited the premises and found that the MS items are used for laying foundation there is no such report placed as part of RUD. In India Cements Vs. CESTAT, Chennai [2015 (3) TMI 661 - MADRAS HIGH COURT], the Hon ble High Court of Madras held that credit is admissible on MS items used for fabrication of structure support which forms the integral part of machinery. Therefore, by following the same, the impugned order calls for no interference. - Decided against the Revenue

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• 2016 (8) TMI 483
  Demand - differential duty on freight - freight amount not shown separately in the invoice but indicated in the commercial invoices and collected the same from customers - not included in the assessable value - Held that:- merely because in excise invoice, the amount of freight not shown, the excise duty cannot be charged on the freight amount. As per Rule 5 of Central Excise Valuation Rules, 2000 the purpose for showing freight amount is to ascertain the amount of freight. Here though the appellant has not shown freight amount in the excise invoice but it is admittedly shown in the commercial invoice. On the basis of commercial invoice the freight amount can be identified. It is not the case of the Revenue that the amount of freight shown in the commercial invoice is not correct or it is not on account of freight therefore only for not showing the freight in the excise invoice, excise duty cannot be charged thereon. The adjudicating authority, in the adjudication order has accepted that the sale is at factory gate therefore place of removal is the factory gate and as per Rule 5 of Central Excise Valuation Rules, 2000 freight amount is not chargeable to excise duty. Moreover during the period in question i.e. 1.7.2000 to 31.3.2003, the definition of place of removal was restricted to the factory gate or the depot. The premises of the buyer could not have been the place of removal. The costs incurred beyond the place of removal could not be included in the assessable value. Thus cost of transportation beyond the factory gate or the depot could not possibly form part of assessable value. Freight was incurred beyond the factory gate and therefore could not be part of assessable value. - Decided in favour of appellant

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• 2016 (8) TMI 482
  Cenvat credit - 'Rent-a-Cab' service for engaging cabs for carrying staff from residence to the factory and back - Commissioner (A) denied credit on the ground which was not mentioned in the SCN that appellant recovered cost of transportation from its employees - ground mentioned in the SCN was that the impugned service was not an input service as it had no nexus with the manufacture of the final product. Held that:- apart from the fact that the Commissioner (Appeals) has taken this new ground which was not mentioned in the Show Cause Notice and thus traversed beyond the Show Cause Notice, it is also noted that the appellant categorically stated that it did not recover any part of the service tax from its employees and the entire service tax was paid by the appellant only. Therefore, the Cenvat credit is admissible. - Decided in favour of appellant with consequential relief

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• CST, VAT & Sales Tax

• 2016 (8) TMI 477
  Input tax credit – transactions with registration cancelled dealers - effect of cancellation of registration certificate of the selling dealers on the purchasing dealers – Tamil Nadu Value Added Tax – principles of natural justice - Held that: - The retrospective cancellation of the registration certificates issued to the selling dealers cannot affect the right of the petitioners/assessees, who have paid the tax on the basis of the invoices and thereafter claimed the benefit under Section 19 of the TNVAT Act, 2006. At the time when the sale was made, the selling dealers had valid registration certificates and the subsequent cancellation cannot nullify the benefit that the petitioners/assessees availed based on valid documents – lots of confusion also existed on factual aspect – personal hearing granted – matter remanded – writ petition allowed.

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• 2016 (8) TMI 476
  Revision of assessment – judicial power of respondent – web report – failure on the part of petitioner to give reply to notices and annexures – Held that: - . Despite many opportunities granted to the petitioner, he has not come forward to thwart the case of the respondent. Impugned order holds good. The reasoned order cannot be thrashed out under Article 226 of the Constitution of India – alternative remedy available is appeal or revision - writ petition dismissed.

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• 2016 (8) TMI 475
  Exemption under section 5A of the VAT Act - work contract service - SEZ - identical issue decided earlier - futile to relegate the petitioner to appellate authority which involve pre-deposit or waiver - Held that: - there is no reason to relegate the petitioner to the appellate remedy. Even the assessing authority in the impugned order after referring to the petitioner's contention that the issue is covered by the judgment of the High Court in case of Shandong Tiejun Electric Power Engineering Company Ltd 2015 (11) TMI 1496 - GUJARAT HIGH COURT observed that against such judgment, the department has decided to file Special Leave Petition and therefore in case of the present assessee, the works executed within SEZ area are treated to be taxable. Writ petition allowed. Direction to the assessing authority to modify his order of assessment in terms of the ratio laid down by the High Court in the case of Shandong Tiejun Electric Power Engineering Company Ltd 2015 (11) TMI 1496 - GUJARAT HIGH COURT. The decision to treat the works contract of the petitioner executed in SEZ area as dutiable is set aside - petitioner's tax liability to be computed - writ petition disposed off.

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• 2016 (8) TMI 474
  Recovery of loss of revenue – Whether reduction in rate of Entry Tax/ VAT is against the interest of State of Bihar – stone chips, stone boulders and stone ballasts – omission to register FIR - Held that: - petitioner had drawn the attention of this Court to the alleged illegality in the entire process of issuance of notifications and also noting that such actions were causing loss of revenue to the State, which was detrimental to the public interest. Original records were called to ascertain the truth of the allegations as issue of such vital importance ought to have been placed before the Cabinet for its approval. It was clear from the file placed that the Government, after preparation of the draft notifications, had placed the matter for obtaining legal opinion from the Government Advocate and the Advocate General, Bihar, and it was only after obtaining the same that the matter was placed before the Cabinet and the Cabinet, in its meeting, dated 11.9.2007, accepted the proposed draft notifications and accorded approval for issuance of the same. It was only thereafter that impugned notifications, contained in Annexures 1, 2 and 3, were issued. Thus, the allegations of the writ petitioner are wholly unfounded - writ petition dismissed.

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• Indian Laws

• 2016 (8) TMI 501
  Offence under Section 120B IPC - need for previous sanction from the Central Government under Section 197 of CrPC for issuing summons - Held that:- For the purpose of obtaining previous sanction from the appropriate government under Section 197 of CrPC, it is imperative that the alleged offence is committed in discharge of official duty by the accused. It is also important for the Court to examine the allegations contained in the final report against the Appellants, to decide whether previous sanction is required to be obtained by the respondent from the appropriate government before taking cognizance of the alleged offence by the learned Special Judge against the accused. In the instant case, since the allegations made against the Appellants in the final report filed by the respondent that the alleged offences were committed by them in discharge of their official duty, therefore, it was essential for the learned Special Judge to correctly decide as to whether the previous sanction from the Central Government under Section 197 of CrPC was required to be taken by the respondent, before taking cognizance and passing an order issuing summons to the appellants for their presence. Thus we set aside the impugned judgment and order of the High Court and quash the proceedings taking cognizance and issuing summons to the appellants by the Special Judge, Anti Corruption (CBI), Ghaziabad, U.P. in absence of previous sanction obtained from the Central Government to prosecute the appellants as required under Section 197 of CrPC

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• 2016 (8) TMI 473
  Violation of norms - Re-location of liquor shop at national highway - petitioner alleged that liquor shop is situated within the prohibited distance from the schools/educational institutions - Held that:- in so far as the location of the liquor shops on all the State Highways is concerned, the Hon'ble Supreme Court is already in seizing of the issue emanating from different High Courts, though there can be no difference of opinion that on National Highways, no liquor shop can be located.

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