Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 19, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
Highlights / Catch Notes
Income Tax
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Penalty levied u/s.271(1)(c) - Valuation of Goodwill - the I.T. Act does not clothe the taxing authorities with any power or jurisdiction to rewrite the terms of the Agreement arrived at between the parties with each other at arms length and with no allegation of any collusion between them. - HC
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Power of the Commission to reopen its proceedings - even as per the amendment made by Finance Act, 2011, power of review is not conferred on the Settlement Commission. - HC
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Deemed dividend - issue of bonus shares does not amount to deemed dividend within the meaning of provisions of Section 2(22)(a) of the I.T.Act. - AT
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Levy of penalty u/s. 271D - The transaction in question does not fall in the mischief for which the section was brought on statute. It is clearly covered by the exceptions provided in the section 273B of the Act. There existed the a reasonable cause for accepting cash in loan in the month of July, 2007 - No penalty - AT
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A mere omission or negligence would not constitute a deliberate act of either suppressio veri or suggestio falsy. By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty. Imposition of penalty is not at all automatic. - AT
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Levy of penalty u/s 271(1)(c) - wrong claim of set off of loss of father - there is no revenue loss to the Department for the reason that both the assessee as well as her father are under same tax bracket/slab of tax - No penalty - AT
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Penalty under section 271(1)(c) - an unsigned order has no legal sanctity, hence, invalid in law. Penalty imposed under section 271(1)(c) deleted - AT
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Deemed dividend u/s.2(22)(e) - payments made through inter-se transactions between the companies cannot be termed as any gratuitous payment to the assessee shareholder and, thus, the provisions of Section 2(22)(e) are not applicable in this case - AT
Service Tax
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Taxability of GTA service - consignment note was not issued - tax liability under Goods Transport Agency service cannot be sustained against the appellant. - AT
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Scope of show cause notice - demand was raised under the category of BAS - demand was confirmed under the different category - Demand set aside in toto - AT
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Nature of composite works contract - w.e.f. 01/6/2007 when the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/2007 the same activity cannot be classified under site formation service. - AT
Central Excise
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Cenvat credit - the credit taken on the basis of the bill of entry endorsed by the Head officer was valid document u/R.3 and 9 of the Cenvat Credit Rules, 2004 cannot be faulted - HC
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Legality of adjustment of amount against the arrears out of the refund amount - at the time when the impugned demand with interest and penalty was adjusted from the refund, there was not only no stay against the recovery of the said dues nor was any stay application pending with regard thereto - adjustment confirmed - AT
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Cenvat credit - Rule 16 of Central Excise Rules 2001/2002 - it is found that on 07.12.2005, the Appellant had received the rejected quantity of 577.11 MT at 23.45 hrs whereas the same was shown to have been cleared on the same day at 20.55 hrs. This leads to support the case of the Revenue and the Appellant could not rebut the charges of non-receipt by adducing sufficient evidences. - AT
VAT
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Waiver of pre-deposit - what would be the disputed turnover to be reckoned for the purpose of arriving 25% of the disputed tax to be deposited as pre-deposit for entertaining the appeal - part of the demand contested in the appeal and part of the demand contented in writ petition? - HC
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Scope of the term Dealer - a public charitable trust running and maintaining a public hospital - it is not engaged in business activity and therefore, the appellant is not a dealer - HC
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Suppression of sales turnover - estimation suppressed turnover - AO was wrong in estimating the additions which was solely based on one day sales - HC
Case Laws:
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Income Tax
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2016 (8) TMI 658
Penalty levied u/s.271(1)(c) - Valuation of Goodwill - ITAT deleted penalty levy - Held that:- It is an undisputed fact that all transactions were supported by duly executed legal Agreements, having been acted by both the parties. Under the circumstances, the Revenue had no right or legal justification to doubt its genuineness, particularly when, there was no material on record to support the stand of Revenue. In the case of Mangalore Ganesh Beedi Works (2015 (10) TMI 1283 - SUPREME COURT ), the Apex Court has categorically held that the I.T. Act does not clothe the taxing authorities with any power or jurisdiction to rewrite the terms of the Agreement arrived at between the parties with each other at arms length and with no allegation of any collusion between them. Thus the Tribunal has not committed any error in allowing the appeal filed by assessee.- Decided against the Revenue.
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2016 (8) TMI 657
Power of the Commission to reopen its proceedings - Rectification application - whether the Settlement Commission could have entertained a miscellaneous petition at the behest of the Department for rectifying its orders dated 16.7.1998, 15.10.1998 and 16.7.1998, under Section 245D(4) of the Act - Held that:- When the statute does not provide power of review with the authority and if it is done, it has to be termed as wholly without jurisdiction. Sub section (1) of Section 245(F) which states that Settlement Commission shall have all powers which are vested in Income Tax Authority under the Act cannot be read in isolation but it should be read in tandem with Section 245(I) and if it is done, then it is to be held that there is no power of review conferred on the Commission to reopen the proceedings. This position held the field till an amendment was inserted under Section 6(b) of Section 245D by Finance Act 2011 with effect from 1.6.2011. Even the said provision is not a power of review. But the phraseology used by the legislation is “rectification” and such rectification can be done on any mistake apparent from the record. Therefore, such power exercisable under sub Section 6D of Section 245D can be exercised only to rectify a mistake and such mistake should be apparent from the record. Thus, even as per the amendment made by Finance Act, 2011, power of review is not conferred on the Settlement Commission. Rudimentary legal principle is that subsequent development of law cannot be a ground to exercise review jurisdiction and that cannot be taken into consideration as an error apparent on the face of the record. Hence, on that ground also, the Department should be non suited. Hence for all the above, order of the Settlement Commission is held to be unsustainable and it is accordingly quashed. Consequently, the orders dated 19.1.2005, 13.12.2004 and 19.1.2005 and order dated 14.7.2005, 4.2.2005, insofar as it relates to the computation of terminal date for charging the interest under Section 234B alone and the order passed by the Settlement Commission dated 8.8.2007 are quashed. After the above order was dictated, the learned Standing Counsel for the respondent Department submitted that if the order passed by the third respondent is quashed, then it would amount to setting aside the rate of interest as ordered by the Commission. The Revenue need not have any apprehension in this regard and this Court has held that the order passed by the Commission dated 16.7.1998,15.10.1998 and 16.7.1998 under Section 245D(4) has become final and the Department will be entitled to interest only as ordered by the commission.
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2016 (8) TMI 656
Deemed dividend - whether the issue of bonus shares does not entail release of assets of the company to attract provisions of sec. 2(22)(a) of the Act requiring dividend distribution tax to be paid by the assessee? - Held that:- The issue of bonus shares by the assessee company does not entail the release by the assessee company to its shareholders all or any part of the assets of the company. The Hon’ble Supreme Court in the case of CIT v. Dalmia Investment Co. Ltd. (1964 (3) TMI 17 - SUPREME Court ) held that the conversion of reserves into capital does not involve the release of profit to the shareholders; the money remains where it was, that is to say, employed in the business. Furthermore, the Supreme Court in the case of Hansur Plywood Works Ltd. v. CIT (1997 (11) TMI 1 - SUPREME Court ) held that issuance of bonus shares does not amount to distribution of accumulated profit of a company. The Authority for Advance Rulings in the case of Briggs Burton (India) Pvt. Ltd (2005 (4) TMI 9 - AUTHORITY FOR ADVANCE RULINGS ) held that at the stage of issue of bonus shares there was no release of assets of the company and therefore, the Legislative intent in section 2(22)(a) and (b) is that the issue of bonus/preference shares to equity shareholders should not be treated as deemed dividend at the time of issue. Thus we do not find any infirmity in the order of CIT(A) for holding that issue of bonus shares does not amount to deemed dividend within the meaning of provisions of Section 2(22)(a) of the I.T.Act. - Decided in favour of assessee. Cessation of liability - Held that:- The litigations commenced by the assessee company by filing a writ petition in respect of the unutilised MODVAT Credit of ₹ 98,19,113/was still pending in the Supreme Court and therefore, the liability to pay the sum of ₹ 60,47,226/by the assessee company to M/s. Colgate Palmolive India Ltd. was still subsisting. After applying the proposition of law laid down by the decision of Hon’ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. (1999 (2) TMI 5 - SUPREME Court ) to the facts of the instant case, the CIT(A) has correctly came to the conclusion that the unilaterally right back of the amount by M/s. Colgate Palmolive India. Ltd. does not amount to cessation of liability in the hands of the assessee company. Detailed finding recorded by CIT(A) are as per material on record, therefore, do not require any interference on our part. - Decided in favour of assessee.
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2016 (8) TMI 655
Levy of penalty u/s. 271D - accepting cash loan - Held that:- In the case under appeal the assessee had taken loan from one of its share holder and that share holder had withdrawn the money from its bank account. Thus, there was no introduction of cash on part of the shareholder. The assessee had to make the EMI payment and for that purpose it had taken a cash loan. In our opinion, it can be considered a reasonable cause looking in to the facts and circumstances. Section 269SS were introduced with specific purpose. The transaction in question does not fall in the mischief for which the section was brought on statute. It is clearly covered by the exceptions provided in the section 273B of the Act. There existed the a reasonable cause for accepting cash in loan in the month of July, 2007. So, reversing the order of the FAA, we decide the effective ground of appeal in favour of the assessee.
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2016 (8) TMI 654
Penalty under section 271(1)(c) - Held that:- There are no two opinions about the settled position of law that regular assessment proceedings and penalty proceedings are two entirely different subjects which operate in distinct and separate spheres so much so that entirely different parameters are applicable for making quantum addition and for levying penalty under section 271(1)(c) of the Act. There can be no dispute with regard to the position of law that under section 271(1)(c) penalty can be levied only if either the act of "concealment of particulars of income" or "furnishing of inaccurate particulars of income" is found to have been committed by the assessee. These are two different omissions or defaults albeit they refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of either suppressio veri or suggestio falsy. By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty. Imposition of penalty is not at all automatic. Meaning thereby, any addition in quantum would not lead to automatic levy of penalty and this is also true in respect of furnishing of inaccurate particulars of income. Not only is the levy of penalty discretionary in nature but the discretion has to be exercised keeping the relevant factors in mind and the approach of the taxman must be fair and objective. This subject has been a matt1er of great controversy. We are satisfied that the penalty u/s 271(1)(c) of the Act on the issue of VAT paid to the Sales tax department and disallowed by the AO cannot be imposed and thus explanation of the assessee in this regard cannot be brushed aside at the threshold and action of the AO and impugned order on this issue is not sustainable. On the basis of foregoing discussion, to reach to a logical conclusion that the CIT(A) did not provide due opportunity of being heard to the assessee and passed an order without proper adjudication and she simply upheld the penalty order which is not a proper and justified approach of a first appellate authority. On merits, as per discussion in the earlier part of this order, we are inclined to hold that the penalty imposed by the AO u/s 271(1)(c) of the Act and upheld by the CIT(A) is not sustainable on all the three counts and thus we demolish the same and the AO is directed to delete the entire penalty. - Decided in favour of assessee.
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2016 (8) TMI 653
Levy of penalty u/s 271 (1) (c) - wrong claim of set off of loss of father - loss on account of earlier year’s long term capital gains or short term capital gains - Held that:- We find from the records that the penalty is levied on wrong claim of set off of earlier year’s long term capital gains or short term capital gains, which is a genuine claim but claimed under wrong understanding that henceforth assessee has to claim these losses instead of father of the assessee in whose hands assessee’s income used to be clubbed prior to earlier assessment year 2003-04. Moreover, the assessee was under bonafide belief about the claim of this loss, because the AO himself has allowed the claim of loss for assessment year 2003-04 although u/s 143 (1) of the Act. And once the Revenue has itself allowed the claim, the assessee was under bona fide belief that it is allowable loss. Even otherwise, there is no revenue loss to the Department for the reason that both the assessee as well as her father are under same tax bracket/slab of tax as is evident from the above chart. Hence we are of the view that this penalty levied u/s 271(1)(c) of the Act cannot sustain and hence, the same is deleted for both the years
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2016 (8) TMI 652
Penalty under section 271(1)(c) - unsigned penalty order - Held that:- Undisputedly, on verification of the original penalty order under section 271(1)(c) communicated to the assessee, which was produced for verification of the Bench, it is noticed that though it bears the official seal of the Assessing Officer but there is no signature of the Assessing Officer on the body of the order. The assessee has also filed an affidavit clearly and categorically stating therein that the unsigned penalty order is the only order received by him from the Assessing Officer. The claim of the assessee appears to be correct considering the fact that the assessee on more than one occasion has requested the Assessing Officer to supply a signed copy of the penalty order. When the assessee has repeatedly requested the Assessing Officer to supply a signed copy of the penalty order, we see no reason why the Assessing Officer should be adamant and stubborn in his attitude in communicating a signed copy of the penalty order. In fact, the Department has failed to conclusively prove the fact that the penalty order communicated to the assessee was signed by the Assessing Officer, whereas the assessee not only has produced the original unsigned penalty order received from the Assessing Officer but also filed an affidavit in support of such claim. In our view, in the absence of any contrary evidence brought to our notice, we are inclined to accept the assessee's version that the penalty order received by him from the office of the Assessing Officer does not bear the signature of the Assessing Officer. Therefore, in our opinion, an unsigned order has no legal sanctity, hence, invalid in law. Penalty imposed under section 271(1)(c) deleted - Decided in favour of assessee.
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2016 (8) TMI 651
Deemed dividend u/s.2(22)(e) - assessee was having major shareholding - nature of loan received from the company - inter-se transactions between the companies - Held that:- In this case the facts reveal beyond doubt that the transactions in question were out of business requirements between the said three companies which were having running accounts with each other. The assessee has not received any direct or indirect individual benefit out of these transactions. The Hon’ble Supreme Court in the case of “S.A.Builders Vs. CIT” [2006 (12) TMI 82 - SUPREME COURT ] held that it is not necessary that loan amount should be exclusively used in the business of the assessee. However, requirement is that it should be used for the purpose of business expediency. Though, the above observations have been made by the Hon’ble Supreme Court in the context of Section 37 of the Act, yet, the proposition as to when the amount was advanced or paid in the case was out of any commercial expediency or in the course of business and were not gratuitous payments for the benefit of the shareholders, then, applying the same analogy, such payments made through inter-corporate transactions between the parties cannot be treated deemed dividend at the hands of the assessee-shareholder. The coordinate Visakhapatnam Bench in the case of “M. Amareswara Rao Vs. DCIT” [2016 (2) TMI 379 - ITAT VISAKHAPATNAM ] has observed that a careful study of the provisions of Section 2(22)(e) make it clear that the Legislature wanted to bring to tax the amount paid by closely held companies to their principle shareholders to avoid dividend distribution tax and that the provisions of section 2(22)(e) of the Act must be made applicable, wherein the dividend is paid in the guise of loan or advance to avoid tax. But to apply the provisions of Section 2(22)(e) of the Act, an honest attempt is to be made to understand, whether the impugned amount is a loan or advance within the meaning of said section. Thus payments made through inter-se transactions between the companies cannot be termed as any gratuitous payment to the assessee shareholder and, thus, the provisions of Section 2(22)(e) are not applicable in this case. - Decided in favour of assessee
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2016 (8) TMI 650
Review of the orders passed by the Division Bench - Monetary limit for filling appeal - High Court [2012 (4) TMI 376 - BOMBAY HIGH COURT] has dismissed the Review Petition filed by the Revenue holding the same to be not maintainable against the order passed under the provisions of Section 260A of the Income Tax Act, 1961. Held that:- Before this Court, an affidavit has been filed by the Revenue explaining how the notional tax effect is far beyond the amount of ₹ 2,00,000/- (Rupees two lakh). Moreover, in Commissioner of Income Tax Vs. Meghalaya Steels Ltd., [2015 (8) TMI 525 - SUPREME COURT ] a view has been taken by this Court that the review would be available in respect of the orders passed under Section 260A of the Income Tax Act, 1961. In view of the above, we allow the appeals and set aside both the orders passed by the High Court and request the High Court to decide the review petition and thereafter the appeal itself, if so required, on merits. We also make it clear that we have expressed no opinion on the merits of any of the contentions of the parties.
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2016 (8) TMI 649
Rectification of mistake - entitlement to the benefit of Section 80HHC - Held that:- In the present facts, we find that the issue of Section 80HHC of the Act was a subject matter for consideration by the Assessing Officer while passing an order dated 31st March, 1995 relating to A.Y. 1992-93. Thereafter, in an appeal filed by the petitioner, the CIT(A) in its order dated 5th October, 1995 also dealt with the issue of Section 80HHC of the Act while allowing the appeal for A.Y. 1992-93 of the petitioner. The order of the CIT(A) has been accepted by the Revenue in respect of the A.Y. 1992-93, as no further appeal from the order of CIT(A) was filed. Thus, the issue of grant of deduction under Section 80HHC of the Act stands settled by the Appellate Authority into which the order of the assessment dated 31st March, 1995 has merged. Therefore, even if we assume that impugned notice is not barred by limitation, yet such a notice would be barred by virtue of Section 154(1A) of the Act. It is not open to the Authority under the Act to rectify an order on an issue of Section 80HHC of the Act which has undisputedly merged with the order of the Appellate Authority. Thus, on the aforesaid ground itself, the impugned notice is without jurisdiction. Issue of benefit of Section 80HHC of the Act was debatable one and, therefore, could not be a subject matter of rectification proceedings. Any issue that requires debate and is not self evident as it requires examination and consideration, would be beyond the scope of rectification. Thus, on the above ground also the impugned notice is without jurisdiction.
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2016 (8) TMI 648
Release of jewellery to the petitioner seized during the course of search - Held that:- As could be seen from the statement given by the 4th respondent on 25.05.1996 in reply to question no.30, the 4th respondent would state that out of 1,241 grams of jewels, 600 grams belongs to his wife and the remaining belongs to his sister and mother (petitioner) and it does not include the 20 grams of gold jewellery owned by his sister, apart from the 400 gms of jewellery held by his wife. The other son of the petitioner, Thangamani in his statement dated 25.09.1996 among other things while replying to question no.6 has stated that his jewellery weighing 80 grams has been kept in safe custody in the bank locker standing in the name of the petitioner. Thus this Court is unable to consider granting the relief to the petitioner in this Writ Petition nor can this Court out rightly draw a presumption as put forth by the learned counsel for the petitioner. Therefore, the petitioner has to necessarily avail the remedies which are available to her under the provisions of the Act, more so in the light of the statements given by her kith and kin namely, sons, daughter and daughter-in-law. Therefore, this Court is not inclined to issue a Writ of Mandamus as sought for. Accordingly, the Writ Petition stands dismissed. However, there shall be a direction to the 1st respondent to consider the petitioner's representation dated 09.12.2013 along with the letter given by the 4th respondent dated 26.02.2014 and further the representation of the petitioner dated 04.08.2015 and appropriate orders shall be passed on merits and in accordance with law within a period of six weeks from the date of receipt of a copy of this order. No costs.
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2016 (8) TMI 647
Eligibility of deduction u/s. 80 IB (10) - date of approval - Competence of issuing authority to issue commencement certificate - Held that:- The housing project in question was approved on 21/09/04 when the plan was approved by the Thane Municipal Corporation. The correspondence between the assessee and the Thane Municipal Corporation prior to the approval of the building is not relevant to decide the date of approval as per the explanation to section 80 IB (10). All the permissions with regard to construction of housing projects are given by the Commissioner of the Corporation, that there is delegation of powers by him to his officers, that delegated powers were used by his junior officers. In our opinion, what is material is the approval of the municipal authorities and not the person signing the permission letter/CC. We do not find any precondition in the Act or the Income Tax Rules, 1962 that prescribes that for availing deduction u/s. 80 IB (10) a certificate has to be signed by a particular officer only. The purpose to introduce the section was to encourage the construction of affordable houses for common man. The AO has tried to raise super/hyper technical objections to deny the deduction to the assessee. The stand taken by him is against the spirit and intent of the provision. We also agree that the issue is not arising out of the order of the FAA. However, we have decided the issue on merits. As stated earlier, effective first ground (GOA 1-7 &11-17)stands decided against the AO. Allowability of expenditure incurred prior to receipt of commencement certificate - Held that:- Tribunal has decided the issue in favour of the assessee and in the subsequent AY. s. the AO himself has not disallowed the deduction in that regard. In our opinion, expenditure incurred by an assessee for developing the housing project was an integral part of the project and hence allowable.
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2016 (8) TMI 646
TDS u/s. 194H - Disallowance made u/s. 40(a)(ia) - Held that:- We find that the assessee had entered into an agreement with the principal on one hand and on the other hand agreements were signed with the subagents, that the subagents were to file monthly bills of travel expenses to the assessee, that she had to submit the bills to the principal, that the principal, on being satisfied about the genuineness of the expenditure, had to make a payment to the assessee, that assessee would be making the payments to the subagents as per the agreements entered into with them, that the AO had made some independent enquiries, that the subagents had admitted to have received the reimbursement, that the AO did not consider the said fact while passing the assessment order. The agreements, entered in to by the assessee with the principal and the agents, clearly indicates that the assessee was to reimburse the actual expenditure incurred by her subagents. In our opinion, there is no need to quote any authority to hold that no tax is to be deducted for reimbursing an expenditure. The AO had not brought on record that the reimbursement had income element embedded in it. It was pure and simple case of reimbursing the expenditure incurred by the sub-agents. We find that the FAA had clearly brought out the distinction between the commission received from the principal and the reimbursement received by the assessee, in his order. He has specifically held that provisions of section 194H of the Act would be applicable for the commission payment. In our opinion, his order does not suffer from any legal or factual infirmity. Therefore, upholding his order we decide the effective ground of appeal against the AO.
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2016 (8) TMI 645
Subsidy amount received - revenue or capital receipt - Held that:- The assistance was not for setting up new unit but the object of the scheme necessarily was to revive the sick units which could only be done by modernization and putting further infrastructure in the form of investment in plant and machinery. The Hon’ble Supreme Court in the case of CIT vs. Ponni Sugar Mills and Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT ) after considering the case law of Sahney Steels (1997 (9) TMI 3 - SUPREME Court ) has held that while determining the nature of subsidy the purpose test has to be applied. The Hon’ble Supreme Court has also held in this case that the amount received as subsidy for making repayment of term loans has also to be treated as a capital receipt. The Hon’ble Court has further held that it is the object for which subsidy assistance is given which determines the nature of the subsidy. In the present case receipt of subsidy was capital in nature as the assessee was obliged to utilize the subsidy amount only for making investment in fixed assets and for making repayment of term loans. In a recent decision the Hon’ble Supreme Court has also dismissed an appeal of Revenue in the case of Sh. Balaji Alloys & Ors. Vs. CIT (2011 (1) TMI 394 - Jammu and Kashmir High Court ), wherein the Hon’ble Court relied on its earlier judgment in the case of CIT vs. Ponni Sugars & Chemicals (supra). Therefore, keeping in view the facts and circumstances of the present case and relying on the judgments of Hon’le Supreme Court we hold that the subsidy amount received by assessee was indeed a capital receipt. Grant in aid for making and driving silage pits for cattle - Held that:- The silage pits were to be constructed on the land provided by respective societies and the assessee was only a facilitator for the construction of silage pits. The scheme for construction of silage pits in various parts is placed at (PB page 21 to 27). The scheme was formed to ensure availability of green fodder in kandi area of Dist. Hoshiarpur. We further find that it has not been disputed by authorities below that silage pits had not been constructed by the selected societies. We further find that assessee was not having any beneficiary interest in the amount received as it was acting as a facilitator only. The assessee has implemented the scheme of Govt. for the welfare of the small farmers located in the kandi area of Dist. Hoshiarpur and Gurdaspur. At (PB page 30-31) is placed a copy of ledger account of assessee wherein it has declared an amount of ₹ 61.50 lacs as having received from the Govt. for making payments to various societies, who had constructed the silage pits. As per this ledger account the assessee had received ₹ 61.50 lacs and had spent the same amount by making cheque payments to various societies for constitution of silage pits. Therefore, the assessee had not derived any benefit from this grant and therefore, the finding of the authorities below is not correct and is not justified. In view of the above facts and circumstances we delete the addition confirmed by learned CIT(A) on this account. Penalty levied u/s 271(1 )(c) - Held that:- Assessee had not furnished inaccurate particulars as it had declared the amount received as subsidy in its balance sheet and it was only the nature of subsidy which was disputed by the Assessing Officer and therefore, he had rightly held the penalty was not imposable. While arriving at the conclusion of deleting the penalty, the learned CIT(A) has relied upon the case law decided by Hon’ble Punjab & Haryana High Court in the case of Gurdaspur Cooperative Sugar Mills (2013 (3) TMI 175 - PUNJAB AND HARYANA HIGH COURT) where under similar facts and circumstances, the Hon’ble Punjab & Haryana High Court had deleted the penalty. In view of the above facts and circumstances, we did not find any infirmity in the order of learned CIT(A), therefore, the appeal filed by Revenue is dismissed.
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2016 (8) TMI 644
Transfer pricing adjustment - capacity utilization adjustment - Held that:- DRP in principle has accepted that adjustment on account of capacity utilization is to be allowed to assessee. However, in the absence of non-availability of item wise expenses, in the case of comparable companies, restricted the adjustment only to depreciation. In our opinion, this is not the correct approach because unutilized capacity has direct bearing on the operational profits of the company, because in initial years there is over-absorption of fixed costs leading to losses. The fixed cost is not limited to depreciation only but there are other elements of fixed costs also. Therefore, proper adjustment has to be allowed to assessee. We, therefore, restore this issue to the file of ld. AO/ TPO to compute the quantum of capacity adjustment. The assessee is directed to provide necessary details in this regard. In the result, this ground is allowed for statistical purposes. Working capital adjustment - Held that:- It is now well settled that in order to arrive at correct comparability criteria, it is necessary that the working capital employed by comparables vis a vis working capital employed by tested party has to be examined and necessary working capital adjustment has to be made in order to arrive at level playing field. We, therefore, restore this matter to the file of ld. TPO to consider the working capital adjustment as claimed by assessee as per pages 313 to 315 of appeal set and allow the capital working adjustment, if so required. In the result, this ground is allowed for statistical purposes. Disallowance of service charges paid to AE - Held that:- We are of the opinion that entire service charges paid to AE by assessee could not be disallowed. It is true that assessee is required to maintain the information and documents as per Rule 10D requirements but once assessee has furnished the information and documents as maintained by it, then ld. TPO has to consider the same and if he finds that same cannot be relied upon for determining the ALP, then he can resort to his own search process in order to find out the ALP of the transactions. We, therefore, restore this matter to the file of ld. TPO to find out local comparables which had undertaken similar service as the assessee. In the result, this ground is allowed for statistical purposes.
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2016 (8) TMI 643
Addition made on account of claiming of interest expense u/s 57(iii) - CIT(A) deleted the addition - whether there was no direct nexus between the loan borrowed by the assessee and the interest bearing loan advanced by the assessee? - Held that:- . We find that the assessee has advanced money out of the funds borrowed from the bank and therefore there is direct nexus between money raised and money lent. We are in agreement with findings of the ld.CIT(A) that the interest to bank is admissible deduction against the interest earned by the assessee from lending such money. The fact has been admitted by the AO while recording the finding of facts that those interests have been earned on the money borrowed from the banks but the same was not allowed as deduction as the purpose of borrowing was different. Since there is direct nexus between the lending out of borrowed funds and thus the interest paid on borrowings from banks is allowable deduction u/s 57(iii) of the Act against the interest income liable to be assessed u/s 56 of the Act. In our opinion the CIT(A) has passed a very reasoned order which requires no interference on our part. - Decided in favour of assessee. Nature of expenses - revenue or capital - Held that:- On perusal of the records including the orders of authorities below, we find that the expenses incurred by the assessee under various heads as has been mentioned herein above are more of revenue in nature than the capital ones. The AO without going into the real nature of the expenses, described the same as capital in nature whereas as a matter of fact, the ld. CIT(A) has gone into the nature of expenses purpose of expenses and business expediency and accordingly treated the same as revenue expenditure. We, therefore finding no fault with the findings of ld.CIT(A) on this issue, dismiss the ground taken by the revenue by upholding the order of CIT(A) on this issue and direct the AO accordingly. Repairs and maintenance of plant and machinery for purchase of software - allowable revenue expenditure. Addition made by the AO towards Stamp Duty and Registration Fee - Held that:- We find that the ld. CIT(A) after going into the matter and facts of the case came to the conclusion that these expenses were of revenue nature which were incurred for the purpose of lease transactions and not for the purchase of capital assets . The ld. CIT(A), decided the issue in favor of the assessee by following the decision rendered in the case of Richardson Hindustan Ltd (1987 (3) TMI 44 - BOMBAY High Court ) and CIT vs. Cinecia P. Ltd.(1982 (2) TMI 58 - BOMBAY High Court ) and rightly followed the ratio laid down in the said decisions. The ld. CIT(A) further observed that the AO has not disputed the fact that the lease is Long term lease/licence and is not of recurring in nature. In view of these facts and the ratio laid down in the above said decision, we find no infirmity in the order of ld. CIT(A) and accordingly upheld the same by dismissing the appeal of the revenue. Addition u/s 14A - Held that:- From the record before us, we find that the assessee has made huge investments as stated above on which it has not received any exempt income by way of dividend during the year. Similarly from the record, we observe that the investments were made in the subsidiary companies with a motive to gain control over these subsidiaries companies and not for the purposes of earning tax free income or dividend. Having regard to the above facts and circumstances of the case, we find merit in the arguments of the ld.AR that the provisions of section 14A r.w.r 8D are not applicable to the present case of the assessee, where no exempt income is earned during the year and also where the investment are strategic in nature and not made with the motive of earning the tax free dividend.
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2016 (8) TMI 642
Disallowance made under section 40A(3) - Held that:- Assessing Officer has observed that the assessee failed to produce any evidence in support of his claim however the recording of the expenses in the unaccounted cash book maintained in the laptop has not been disputed by the Assessing Officer. Further the Assessing Officer has not examined the correctness of the claim by verification of the entries maintained in the laptop as well as by examining the recipient of the said amount. Since the corresponding addition has been made by the Assessing Officer in respect of ‘on money’ received by the assessee then the claim of ‘on money’ payments by the assessee also required to be examined by considering the fact whether the recipient has accepted this amount and offered the same as income for tax. Accordingly, in the facts and circumstances of the case when the Assessing Officer prima facie accepted the payment while making the disallowance under Section 40A(3) of the Act then for making a disallowance of the said amount under Section 37(1) of the Act a detailed and proper enquiry is required to be conducted. Accordingly, we are of the view that this issue requires a proper enquiry and consequently set aside to the record of the Assessing Officer for proper enquiry and verification and then decide the same. We make it clear that so far as the disallowance made under Section 40A(3) of the Act the same is found to be proper and therefore issue of enhancement for the balance amount made by the CIT (Appeals) is set aside to the record of the Assessing Officer. Enhancement of assessment inter alia on account of suppression of profit - Held that:- Prima facie it appears that this amount of ₹ 16 lakhs was part of the opening balance of the land purchased and was not part of the expenditure claimed during the year. The CIT (Appeals) has made this addition on the basis of the reply filed by the assessee without verification of the books of accounts whether this amount was paid by the assessee in the earlier year which was already accounted for in the books of accounts or not. Further it was also not verified whether while computing the profit the assessee has suppressed this amount on account of wrong claim or this amount was not part of the expenditure during the year under consideration. Accordingly in the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer to verify the relevant record and facts as explained by the assessee and then decide this issue as per law after affording an opportunity of hearing to the assessee.
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2016 (8) TMI 641
Revision u/s 263 - Held that:- It is not necessary for a CIT to specifically say that the order passed by the AO was erroneous and prejudicial to the interests of Revenue when such order was passed without application of mind. This is for the simple reason that an order passed without enquiry by itself makes such order erroneous and prejudicial to the interests of Revenue. It does not matter much that CIT did not specifically mention the AO’s order as erroneous and prejudicial, when he had opened his mind and made observations which are pregnant enough to show such a state of affairs. When an assessing officer who is duty bound under law to carry out certain enquiries on a return filed by an assessee, does not do it in a manner a prudent person would have done, if placed in such a authority, this in our opinion, would definitely make the order erroneous and prejudicial to the interests of Revenue. The CIT had only set aside the assessment and directed the AO to pass a fresh order after giving an opportunity to the assessee. Considering all these, we have no hesitation in upholding the order of CIT. Disallowance as capital expenditure - Held that:- Disallowance made by the AO was for a reason that advances written off by the assessee were for purchasing capital assets. Similar issue had come up in the case of Khoday India Ltd, which was a sister concern of the assessee. The claim was allowed by the Tribunal on assessee’s appeal and the matter was carried to the Hon’ble jurisdictional High Court wherein held that since Section 37 does not incorporate such a condition and it expressly excludes all expenditure in the nature of capital expenditure, the contention raised by the learned counsel for the respondent cannot be accepted and hence, the substantial questions of law raised in this appeal have to be answered in favour of the appellant. Accordingly, the order of the tribunal is set aside by allowing his appeal and answering the questions of law in favour of the revenue. Disallowance of expenditure incurred in an earlier year - Held that:- AO has listed the items of expenditure at page 3 of the assessment order. The dates of expenditure clearly show that all these pertained to an earlier year. Another contention taken by the assessee is that some of the amounts were shown twice. The amounts seen as repeating are ₹ 292/- paid to Ernakulam Sales Tax and ₹ 8,553/- paid at Jaipur as sales-tax. One other argument taken by the assessee is that Customs Duty of ₹ 4,08,419/- is included another sum of ₹ 5,29,000/- paid on behalf of another party. In our opinion assessee was unable to produce evidence for any of the above claims before any of the lower authorities. When a claim that an expenditure normally not allowable, has to be allowed, there lies a strict onus on the assessee to prove its claim. Assessee having not done so AO in our opinion was justified in dismissing the claim. As for the decision of coordinate bench in the case of Khoday Breweries Ltd for A. Y. 1998-99 relied on by the assessee, facts were different. Resultantly, ground.2 of the assessee is dismissed.
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Customs
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2016 (8) TMI 674
Refund - payment towards demurrage under protest - (i) whether the goods in question are easily identifiable and distinguishable (ii) whether delay in clearing or taking delivery of the consignment is attributable on the part of the petitioner or the respondents 1 to 3 and (iii) whether the respondents 1 to 3 are justified in slapping demurrage charges payable by the petitioner. Held that:- It is the case of the petitioner that though the goods of the petitioner as well as the fourth respondent are easily distinguishable, the official respondents restrained the petitioner from taking up the delivery of the goods on the ground that the goods have been mixed-up and therefore, they are not in any liable or responsible for the delay in clearing the goods. But this allegation of the petitioner is emphatically denied by the respondents 1 to 3. It appears that there is a dispute between the petitioner and the fourth respondent and therefore, the petitioner has obtained a No Objection letter from the fourth respondent 15.11.2014 and only thereafter the goods were released on 24.11.2014. Whether the delay is attributable on the part of the petitioner or respondents 1 to 3 cannot be gone into by this Court in this writ petition. They are disputed questions of fact. In fact, the petitioner also paid the demurrage claimed by the respondents 1 to 3 under protest. The petitioners would mainly contend that the goods imported by the importers, to whom the petitioner and fourth respondent are working as customs agent, are easily identifiable and having distinct feature with each other and therefore the question of mixing up of the cargo does not arise. This averment has been denied by the respondents 1 to 3 in the counter by contending that the consignment handled by the petitioner itself are of different dimensions as that of the fourth respondent and the fact of mixing up of the cargo had also been admitted by the petitioner in the letter dated 09.09.2014. In any event, such disputed questions of fact cannot be gone into by this Court by conducting a roving enquiry in exercise of jurisdiction conferred under Article 226 of The Constitution of India. However, the petitioner is given liberty to agitate their claim for refund of the demurrage amount before the appropriate Civil forum. Writ petition dismissed - Decided against the appellant.
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2016 (8) TMI 673
Import of Silicon Electrical Steel Scrap - whether classifiable as old and used Silicon Electrical Strips under CTH 72261100 and not as scrap as claimed by the appellant. - Held that:- As per the above provisions of Section 24 mutiliation of imported goods, if any can be made only at the request of the owner of the imported goods. Secondly, the goods should ordinarily be used for more than one purposes which has not been proved by the department. Thirdly, appellant has been importing the said goods for nearly 15 years and department did not feel the necessity to mutiliate the imported scrap imported earlier. Adjudicating authority while passing Order-in-Original dated 9/10/2015 has thus gone beyond the scope of show cause notice, thus violating the principles of natural justice. - Decided in favor of assessee.
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2016 (8) TMI 672
Whether confirmation of suspension order under Order-in-Original dated 16.05.2016 is justified as per the provisions of Regulation 19(2) of CBLR, 2013. - Period of limitation - Held that:- No evidence is brought on record by the department that notice for revocation of appellant s licence has been issued to the appellant within 90 days of receipt of Order-in-Original dated 23.03.2016. No irregularity on the part of the appellant has been brought on record from 2011 to the date of confirmation of suspension. - confirmation of suspension of CHA licence No.C-34 of the appellant under Order-in-Original dated 16.05.2016 is not justified and is set aside - Decided against the revenue.
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Service Tax
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2016 (8) TMI 677
Taxability of GTA service - consignment note was not issued - revenue submitted that slips/challans issued by the appellant to monitor the movement of vehicles and ascertain the performance of the contractor for payment, can be considered as consignment note to bring in tax liability of the GTA. - extended period of limitation - Held that:- tax liability under Goods Transport Agency service cannot be sustained against the appellant. The ratio laid down by the Tribunal in various decisions discussed above are to be followed as there is no reason to differ with the same. We also note that appellant is correct regarding their contention on the issue of interpretation with reference to time bar of the demand also. - Demand set aside - Decided in favor of assessee.
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2016 (8) TMI 676
Scope of show cause notice - demand was raised under the category of BAS - demand was confirmed under the different category - Held that:- Admittedly, the show cause notice proposed demand of duty under Business Auxiliary service and it is only during adjudication by considering the appellants stand that the demand may fall under the category of "Information technology Software Services" stand confirmed. As per declaration of law in the above decisions, allegations are required to be made by the Revenue very clearly in the show cause notice and adoption of classification of service under the heading different than the one proposed in the show cause notice amounts to passing the order beyond the scope of show cause notice which is not permissible and the impugned order is required to be quashed on the said ground itself. Demand set aside in toto - Decided in favor of assessee.
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2016 (8) TMI 675
Nature of composite works contract - drilling, cross cutting, conventional raising, ramp excavation, long hole blasting, withdrawal of blasted ore etc. w.r.t. underground mines - mining service - It was contended that, after the introduction of mining as taxable service w.e.f. 01/6/2007, the appellants have discharged service tax on these services. It is not legally sustainable to tax the same activity under different category for different periods unless the pre-existing definition for site formation has been changed to create a new taxable service out of that. - inclusion of value of free items supplied by Hindustan Zinc Limited in the taxable value Held that:- in such situation the activities of site formation and clearance are to be treated as an activity ancillary to mining and since the overall contract for mining the contract being indivisible the same should be treated as mining contract. It was also held that w.e.f. 01/6/2007 when the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/2007 the same activity cannot be classified under site formation service. Value of free supply items cannot be held to be charge for services provided by the appellant. Hence following the ratio of decided cases we find the impugned order cannot be sustained on this ground also. Regarding the service tax payable by the appellant under the category of mining services w.e.f. 01/6/07, the admitted fact is that appellants discharged the service tax in full before the issue of show cause notice. - No penalty. Demand set aside - Decided in favor of assessee.
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Central Excise
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2016 (8) TMI 667
Cenvat credit - availed irregularly - assessee replied that it had availed the Cenvat Credit correctly and the Head office had issued ATDs (Advise of Transfer) for transferring of central excise duty paid on inputs and capital goods rather centralized at CTSD and that inputs and capital goods are transferred to them by their Head Office under the ATDS - Held that:- the assessee fall in the same Jaipur Circle where their Head Office transferred the ATDs on the capital goods transferred to them. The Tribunal, taking into consideration the fact that transfer of goods from one place to another is a case of transfer of goods from one place to another unit and therefore, the credit taken on the basis of the bill of entry endorsed by the Head officer was valid document u/R.3 and 9 of the Cenvat Credit Rules, 2004 cannot be faulted. - Decided against the Revenue
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2016 (8) TMI 666
Legality of adjustment of amount against the arrears out of the refund amount - demand alongwith interest and penalty had been confirmed against the appellant which were outstanding to be recovered - Held that:- appellant had filed appeal against the impugned demand and CESTAT dismissed the appeal as the appellant had not filed the requisite permission from the Committee of Disputes of Cabinet Secretariat required to file an appeal by public sector units. Indeed even in its appeal, the appellant has admitted that its request for permission to file appeal against the order in terms of which the said demand was confirmed along with the interest and penalty was pending before the Committee on Disputes (COD). From this it is evident that at the time when the impugned demand with interest and penalty was adjusted from the refund, there was not only no stay against the recovery of the said dues nor was any stay application pending with regard thereto. Indeed the appeal against the order in terms of which the said dues were recoverable had been dismissed by CESTAT. In these circumstances, the lower authority is completely justified in holding that such adjustment was totally legal and proper in terms of Section 11 of Central Excise Act, 1944. - Decided against the appellant
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2016 (8) TMI 665
Cenvat credit - Rule 16 of Central Excise Rules 2001/2002 - finished goods returned to the factory for rectification - non-production of proper documents/records in establishing the return and processing of the said goods in their factory - Held that:- it is found that on 07.12.2005, the Appellant had received the rejected quantity of 577.11 MT at 23.45 hrs whereas the same was shown to have been cleared on the same day at 20.55 hrs. This leads to support the case of the Revenue and the Appellant could not rebut the charges of non-receipt by adducing sufficient evidences. Therefore, the Appellants are not eligible to avail CENVAT Credit on the invoices under which the goods initially cleared and claimed to have been received by them in their factory for reprocessing. - Decided against the appellant
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2016 (8) TMI 664
Validity of impugned order - passed by the Revisionary Authority - officer was of the same rank as is the appellate authority - Held that:- the impugned order was passed by the Joint Secretary to Government of India who was also Commissioner of Central Excise and Customs. For the detailed reason that the order in appeal as well as revisionary order had been passed by the officers of the same rank is not permissible as per law. Hence, the impugned order dated 21.11.2012, passed by the Revisionary Authority is set aside, however, with liberty to the revenue to proceed afresh in accordance with law. - Writ petition disposed of
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2016 (8) TMI 663
Cenvat credit - wrong availment - inputs used in the manufacture of exempted as well as dutiable finished goods - failed to maintain separate records - Held that:- since there was no proposal for recovery/appropriation of said credit in the Show Cause Notice, therefore, its confirmation is incorrect, in as much as in the Show Cause Notice there has been specific proposal in this regard. Recovery of 8%/10% of the value of the exempted product - Rule 6(3) of CENVAT Credit Rules, 2004 - Held that:- it is found that in the two statements, the Managing Director has categorically stated that they did not avail CENVAT Credit on the input Dextrose anhydrous , the principal raw material used in or in relation to the manufacture of final products, but availed only on input packing material. However, in view of the retrospective amendment to the relevant Cenvat Credit Rules by virtue of Section 70 to 73 of Finance Act, 2010, the Appellant are eligible to reverse proportionate CENVAT Credit for the disputed period attributable to the inputs used in the manufacture of exempted product. Therefore, to ascertain the above facts and to apply the retrospective amendment by allowing the Appellant to reverse the proportionate credit, it is necessary to remand the case to the Adjudicating authority. Accordingly, the Appeal is remanded to the Adjudicating authority to ascertain the proportionate credit attributable to exempted products and allow its reversal in the light of the retrospective amendment. Imposition of penalty on Director - Held that:- No specific reason has been recorded by both the authorities below narrating the Director's role for non-reversal of the CENVAT Credit. Accordingly, the penalty on the Director is not sustainable. - Decided in fsvour of appellsnt
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2016 (8) TMI 662
Restoration of appeal - Seeking recall of Tribanal's order - appellant also did not made pre-deposit even during the period extended by the Hon’ble High Court and the Hon’ble Supreme Court - now claimed to have deposited the amount as ordered vide CESTAT- non-compliance of stay order passed by the Hon’ble CESTAT - Held that:- restoring the appeal in these circumstances would be tantamount to extending the time allowed for pre-deposit by the High Court and the Supreme Court which will be unbecoming of CESTAT and disrespectful to the Superior Court. - ROA application dismissed
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2016 (8) TMI 661
Demand alongwith interest and penalty - cleared power cables claiming the exemption Notification No.6/2002-CE without satisfying the conditions thereof - certificate from D.G.H.S. required in terms of para (c) (i) of condition 29 of Notification 21/02-Cus. was not produced - Held that:- the DGHS Certificate has since been produced. The said certificate was issued by DGHS on 02.03.2009 and clearly mentions the purchase order which is the same purchase order under which the appellant supplied the cables. The quantity mentioned in the certificate ‘2500 KMtrs. 2 numbers’ can be given a reasonable interpretation that quantity covered was 2500 Metres under each of two invoices because there are only 2 invoices which were issued for supply of power cables for quantities 2499 K.Ms. under each of them. Demand alongwith interest and penalty - power cables are not covered under list No.12 of Notification No.21/02 -Cus. dated 01.03.2002 - Held that:- the contention of appellant that power cables would certainly be qualified to be covered under the scope of Sl. No.24 of list which covers interalia, stores, spares, materials for running, repairing or maintenance of goods specified in the said list is accepted. Also it is found that in Sl.No.20 of the said list 12 apart from CDP cable and logging cable, connectors are also covered and power cables can also qualify arguably as connectors. Further this issue was tilted clearly in favour of the appellant when the certificate issued by DGHS covered the impugned goods. The said certificate has been issued by DGHS for the purpose of Notification which implies that power cable covered in the certificate was eligible for coverage under list 12 of Notification. - Decided in favour of appellant
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2016 (8) TMI 660
Clandestine removal of goods - shortage found of finished goods during physical verification - Held that:- there is no other corroboration regarding clandestine manufacture or clearance or transportation of goods or receipt of sale proceeds. While such clandestine activities need not be proved stage by stage with precision, it is necessary to have a clear preponderance of probability which will shift the burden to the assesse to defend his case against non-payment of duty. Here, the very basis of shortage is doubted and as such, any admission of such shortage is of no relevance in the absence of any corroboration. Therefore, the case of clandestine removal cannot be sustained against the appellant. In view of non-availability of very basis of stock taking and physical impossibility of going through the process of weighment of about 250 MTs of M.S. Bars within 2 hours and also arriving at the physical stock upto Kg. level without explaining how measurement was made creates serious lacunae and seriously affected the very basis of revenue's allegation. - Decided in favour of appellant
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2016 (8) TMI 659
Cenvat credit - availment of second 50% of credit on various capital goods - non-maintainance of proper records and non-production of relevant documents in support of these credits - Held that:- it was admitted in the show cause notice itself out of 173 invoices, 161 invoices were found in original. Out of remaining 12, 5 invoices are available in photocopies. Keeping in view that the credit has not been disputed on merit and also the first 50% of the credit was also not disputed on the ground of improper documents etc., I find no justification to deny the second 50% of credit on the grounds alleged in the proceedings before the lower Authorities. The appellants claim that certain documents were taken over by DGCEI/Income Tax Department. The correctness of the credit availed can be verified with other corroborative evidences. In such situations summary denial of credit of all the second 50% is not justified. It is to be noted that credit on all these items were not disputed when the first half of the credit was taken spread over a period of many years from 2001 to 2009. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (8) TMI 671
Waiver of pre-deposit - what would be the disputed turnover to be reckoned for the purpose of arriving 25% of the disputed tax to be deposited as pre-deposit for entertaining the appeal - part of the demand contested in the appeal and part of the demand contented in writ petition - Held that:- the peitioner was fully justified in contending that he is entitled to pay 25% of the tax on the disputed turnover which has been calculated by them excluding the turnover which is the subject matter of challenge in the the earlier writ petitions filed by the petitioner. In the light of the above interpretation, the observation made in the impugned audit calls for interference. Accordingly, the writ petition is allowed and the impugned audit is set aside and the petitioner is directed to re-present the appeal before the second respondent, who is directed to take the same on file and proceed in accordance with law as the petitioner has already effected appropriate pre-deposit. - Decided in favor of petitioner.
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2016 (8) TMI 670
Scope of the term Dealer - a public charitable trust running and maintaining a public hospital - Held that:- Since the appellant being a charitable trust, is doing the activity of purchasing, selling and supplying medicines to patients in order to achieve its avowed objects, it is not engaged in business activity and therefore, the appellant is not a dealer within the meaning of Exception (iii) to section 2(10) of the Act. In that view of the matter, we answer the question in favour of the appellant and against respondent.
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2016 (8) TMI 669
Deemed sales turnover - Nature of contract receipt shown in the balance sheet - the petitioner submitted that the contract receipt shown in the balance sheet actually does not represent any contract receipts from prospective flat buyers for construction of flats and hence, such contract receipt amount shown in the balance sheet cannot be taken for the purpose of arriving deemed sales turnover liable to tax under the Act. Held that:- the respondent does not accept the deemed sales turnover as assessed by the petitioner, then the respondent should conduct an enquiry and examine the books of accounts and thereafter pass a speaking order and the respondent should not have completed the assessments as done in the instant cases. Hence, this Court is not inclined to direct the petitioner to make any further payments, as the petitioner is entitled to an opportunity. In the light of the above, the impugned orders are held to be non speaking orders and are in violation of the principles of natural justice. Writ petitions are allowed - Matter remanded back.
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2016 (8) TMI 668
Suppression of sales turnover - estimation suppressed turnover - ad-hoc addition of 20% - Held that:- Mere one day sales could not be attributed to estimate the whole year without considering the festival season, rainy season and other natural calamities. It is also seen that the first Appellate Authority as well as the second Appellate Authority had considered all the relevant materials and came to the correct conclusion. The Assessing Officer had only relied on the one day sale for making estimation. The Tribunal is correct in holding that the Assessing Officer was wrong in estimating the additions which was solely based on one day sales. - Decision in the case of New Kamaliya Hotel's [2006 (3) TMI 689 - MADRAS HIGH COURT] followed - Decided against the revenue.
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