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TMI Tax Updates - e-Newsletter
August 25, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Unexplained gifts Donee denied to make gifts transaction is not genuine but colorable money is routed indirectly from the firm to the assessee's account under the garb of the gifts - HC
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The income received by the assessee by letting out fully furnished office premises and furniture is required to be assessed under the head income from other sources - HC
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Genuineness of gift - The gifts were found to have been made without any occasion or out of love and affection and it were rightly considered by the AO as not genuine - HC
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Exemption to be granted as provided u/s 13(1)(d) or total denial u/s 11 there is a vital difference between eligibility for exemption and withdrawal of exemption/forfeiture of exemption for contravention of the provisions of law - HC
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Foreign gifts received - NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - HC
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Doctors to be treated as employees or not Tribunal rightly found that there is no employer and employee relationship and the payment cannot be treated to be salaries and deduction cannot be made u/s 192 - HC
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Assessee has immediately sold the shares after the conversion - CIT(A) was justified in confirming the gains arising on sale of shares as the business income of the assessee by disregarding the claim of Long term Capital gain and Short term Capital gain - AT
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Since manual return of income was furnished well before the due date, the assessee has complied with the substantive provisions of the Act - deduction u/s.80-IC cannot be denied for the reason that return of income in e-mode is not filed in time - AT
Customs
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Prohibited goods - redemption of confiscated goods - import of Car Radial Tyres - absence of valid BIS certificate with reference to the Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order, 2009 - matter remanded back - HC
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Preference of charge / recovery - secured creditors or customs duty payable - the petitioner being a secured creditor had the first charge to recover the amount - HC
Service Tax
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CENVAT Credit - input services - scope of the term 'include' and 'such as' - decided partly in favor of assessee and partly in favor of revenue - HC
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Import of services - if a branch of an Indian bank is situated abroad, Section 66A does not envisage treating the foreign branch as a separate entity so far as the internal transactions are concerned, if the head-office reimburses to the foreign branch expenses incurred by them abroad - AT
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During the period of dispute, the renting of plant & machinery by the appellant under lease agreement/licence agreement was not taxable as Banking and Financial Services - AT
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Works Contract service - activity for implementing water supply projects which included in certain cases construction of water treatment plant etc. to various municipalities and local authorities - prima facie not taxable - AT
Central Excise
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Cenvat Credit - Export to Nepal - if such exporters are allowed to utilize the credit availed on the inputs exported under Bond to Nepal this would result into a dichotomy wherein the exporters who opt for export to Nepal under bond procedure could be put to advantage over the exporters opting for export to Nepal under claims of rebate - AT
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Mega Power project - Exemption to sub-contractor - the benefit of exemption cannot be denied to the appellant in the present case so long as they fulfil the terms and conditions of the exemption Notification - AT
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Valuation - related parties - extended period of limitation - It is difficult to appreciate that the first audit team, which audited the unit in 1998, failed to see all these documents in order to know the sale of pattern adopted by the respondent - AT
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Invocation of extended period of limitation - respondent-assessee suppressed the information in spite of knowledge that the amortised cost of moulds/dies did not form part of the value of the motor vehicle parts manufactured and supplied by them - AT
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CENVAT Credit - input services - services used for construction of the railway siding - Nexus with manufacturing activity - credit allowed - AT
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CENVAT Credit - Remission of duty - Loss of goods in dacoity - even if this is treated as a case of dacoity, the remission of duty cannot be allowed - AT
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Denial of refund claim - Unjust enrichment - Duty paid twice - e appellants are entitled for refund claim for duty paid on Ethanol - unjust enrichment is not applicable - AT
Case Laws:
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Income Tax
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2014 (8) TMI 693
Exemption u/s 80G(5)(vi) Registration u/s 12AA granted Section 12AA and 80G operate under different fields or not Held that:- The Tribunal in its judgment has wrongly proceeded on the basis that the sole reason for refusing an exemption u/s 80G was the denial of the registration u/s 12AA and since the Tribunal had already ordered the grant of registration under Section 12AA, an exemption u/s 80G should be allowed - there is a basic fallacy in the judgement of the Tribunal which proceeded on the basis that the only reason for refusing exemption u/s 80G was the refusal of the registration u/s 12AA - Since this premise is erroneous, the matter is to be remitted back to the Tribunal for fresh adjudication Decided in favour of Revenue.
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2014 (8) TMI 692
Unexplained gifts - Donee denied to make gifts - burden to prove - ITAT deleted the addition only on the ground that no opportunity was provided for cross-examination - gifts given to brother's children - Held that:- Shri Surendra Bihari Agrawal was having own minor children, when it is so, then why he will give the gifts to the children of his brother - no cheque was received from the firm and he has not given any gifts to anybody - Regarding the cross-examination, the assessee has not availed the opportunity as stated by the AO - On the basis of the statement made by the donor, the burden has shifted upon the assessee as decided in Sumati Daya Vs. CIT [ 1980 (9) TMI 3 - SUPREME COURT] - the gifts are not genuine as stated by the AO as well as by the FAA - The Tribunal has deleted the addition merely only on the ground that no opportunity was provided for cross-examination - fact remains that assessee never availed it - transaction is not genuine but colorable thus, the Tribunal has wrongly deleted the addition, it is not desirable in the circumstances of the case - The money is routed indirectly from the firm to the assessee's account under the garb of the gifts Decided in favour of Revenue.
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2014 (8) TMI 691
Income from investment company Income from other sources or income from house property -Whether income received by an investment company in the course of its business, towards letting of a fully furnished office premises, is not to be assessed as "business income", failing which "income from other sources" as claimed by the Assessee, but as "income from house property" as assessed by the revenue Held that:- Assessees income is required to be assessed u/s 56 as contended by the assessee - The Agreement makes the intention of the assessee clear to let out the office premises along with furniture - letting of the office premises was intended to be inseparable from the letting of the furniture - Following the decision in Sultan Brothers Private Limited Versus Commissioner Of Income-Tax, Bombay City II [1963 (12) TMI 4 - SUPREME Court] - the income received by the assessee by letting out fully furnished office premises and furniture is required to be assessed under the head income from other sources Decided in favour of Assessee.
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2014 (8) TMI 690
Computation of deduction u/s 10B - Foreign currency provided for software development services outside India Held that:- The consideration in respect of computer software received in or brought into India by the assessee in convertible foreign exchange is deducted from the profits of the business - the assessee is not liable to pay any income tax on consideration received from export of computer software - the proceeds on the assumption that the assessee is a company engaged in rendering technical services outside India in connection with production of software - the expenditure incurred in foreign exchange in providing technical services outside India of ₹ 62.7 lakhs was excluded in computing the export turnover and total turnover for arriving at deduction u/s 80HHE of the Act - The software Engineers deputed abroad who among other things have to do testing, installation and monitoring of software supplied to the client - the expenditure cannot be excluded in computing export turn over Decided against Revenue. Computation of deduction u/s 10B - Expenses in foreign currency of telecommunication expenses Held that:- Following the decision in Commissioner of Income-Tax And Another Vs. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] - if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator - The reason being the total turnover includes export turnover - The components of the export turnover in the numerator and the denominator cannot be different - there is no definition of the term 'total turnover' in Section 10-A, there is nothing in the said Section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator - If what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible - If that were the intention of the legislature, they would have expressly stated so - If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover Decided against Revenue.
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2014 (8) TMI 689
Rectification of order u/s 154 Effective date for interest u/s 244A - Whether the assessee is entitled to be paid interest u/s 244-A of the Act from the date on which the application in respect of that amount was made or any date anterior to that Held that:- A perusal of the order dated 26.05.1999 discloses that the revenue did not put the assessee on notice before taking such a view - he rectified the order, dated 15.03.1999 in exercise of power u/s 154 of the Act - He did not make any attempt to undertake the corresponding rectification in the order of assessment, dated 15.03.1999 revenue seems to have felt that once the order dated 15.03.1999 is rectified, the effect would automatically fall upon the order of assessment - The figure was arrived at by calculating the interest from the relevant date in the AY which is referable to 1996 - once the revenue allowed the interest from that date, valuable rights accrued to the assessee - the exercise can be redone by the revenue after issuing notice, only on the limited aspect of the interest, payable u/s 244-A of the Act Decided in favour of assessee.
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2014 (8) TMI 688
Genuineness of gift - Whether the Tribunal is right in holding the gifts as genuine from 26 parties who were merely passing on the accommodation entries not only for the assessee but for other persons also Held that:- An enquiry into the matter was got conducted and it was found that the donors were not financially capable to make the gifts of such huge amounts in favour of the assessee and they had no relations nor was there any occasion to make the gift - unaccounted cash of the assessee was first deposited in different accounts in an organized manner, from where transfer entries were given to the donors, who at the same time made entries in favour of the assessee by way of bank drafts - the cash was paid by the assessee for depositing the same in the respective accounts of the donors and the cheques/ demand drafts were obtained for the amounts claimed as gifts - The gifts were found to have been made without any occasion or out of love and affection and it were rightly considered by the AO as not genuine - The capacity of the donors had not been established because they were found to be persons of small means as compared to the assessee. Relying upon Tirath Ram Gupta v. CIT [2006 (9) TMI 166 - PUNJAB AND HARYANA HIGH COURT] - a gift cannot be accepted as such to be genuine, merely because the amount has come by cheque or draft through banking channels, unless the identity of the donor, his creditworthiness, relationship with the donee and the occasion are proved - Unless the recipient has proved the genuineness thereof, the gift can very well be treated to be an accommodation entry of the assessee's own money, which is not disclosed for the purpose of taxation - the Tribunal has fallen into error while ordering the deletion - the addition of the gift amount is maintained Decided partly in favour of Revenue.
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2014 (8) TMI 687
Rectification of order Set off and carry forward of Long Term Capital Loss - Whether the Tribunal was justified in confirming the action of the authorities below in allowing the rectification of subsequent orders without rectifying the initial order from where the dispute in question arose Held that:- A business loss cannot be carried forward unless it has been determined in pursuance of a return filed u/s 139(1) of the Act - In order to be entitled to carry forward a business loss, the assessee must submit a return u/s 139(3) of the Act which is required to be in terms of section 139(1) of the Act - the assessee had not filed the return for the AY 1996-97 within the time allowed for the return to be filed u/s 139(1) of the Act as the return was filed on December 24, 1996. The Tribunal was rightly of the view that the assessee was not entitled to carry forward and set off of long-term capital loss suffered in the AY 1996-97 in so far as the return of income for that assessment year was not filed within the time allowed u/s 139(1) and, consequently, not in accordance with the provisions of section 139(3) - the long-term capital loss disclosed in the return of income filed for the AY 1996-97 was not permissible to be carried forward and set off in accordance with the relevant provisions of Act. The AO in exercise of his powers u/s 154 modified the unabsorbed depreciation and carry forward of losses pertaining to earlier years - in the AY 1996-97 the figure of loss/unabsorbed depreciation determined earlier could not be modified without modifying the earlier orders in which such loss or unabsorbed depreciation was determined by the AO - There is no mistake alleged in the computation of long-term capital loss in the AY 1996-97 the loss determined in the AY 1996-97 cannot be modified in the AY 1997-98 - the assessee had sought set off of capital loss suffered in the AY 1996-97 against the long-term capital loss suffered in the AY 1996-97 against the long term capital gain in the assessment year 1997-98 and in the assessment year 1999-2000 - when the mistake was discovered the AO promptly effected rectification u/s 154 for both the AYs after giving opportunity to the assessee, modified the assessment orders for the AYs 1997-98 and 1999-2000 Relying upon Sirsa Industries v. CIT [1983 (4) TMI 29 - PUNJAB AND HARYANA High Court]- a mistake of law which was glaring and obvious, could be rectified under section 154 the AO had committed a mistake of law which was glaring and obvious thus, the AO was justified in rectifying the assessment orders for the AYs 1997-98 and 1999-2000 giving effect to the provisions of section 74 read with section 80 and section 139(3) Decided against Assessee.
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2014 (8) TMI 686
Allowability of depreciation to charitable organization u/s 32 Income does not include income from business Held that:- Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word "income" should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise - the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust - the business income of the trust as disclosed by the accounts plus its other income computed will be the "income" of the trust for purposes of section 11(1) - the trust must spend at least 75 per cent, of this income and not accumulate more than 25 per cent., thereof. The excess accumulation, if any, will become taxable under section 11(1). Relying upon CIT v. Jayashree Charity Trust [1984 (12) TMI 30 - CALCUTTA High Court] and CIT v. Bhoruka Public Welfare Trust [1999 (7) TMI 50 - CALCUTTA High Court] - The object of section 11 of the Income-tax Act, 1961, is to feed the public charity - By permitting computation of income in a commercial manner, the object of feeding the public charity is achieved - The amount deducted by way of depreciation is in that case is ploughed back for user on account of charity - a building used for the purpose of charity diminishes in value over the time like any other building - providing for diminution of value would keep the corpus of the trust intact otherwise the corpus of the trust itself in course of time may get dissipated - as such , there is no reason to refer the matter to any larger Bench Decided against Revenue.
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2014 (8) TMI 685
Income from undisclosed sources u/s 68 Amount advanced through proper channel or not Held that:- The amounts advanced are not substantial and in most of the cases, the amounts are ranging from 25,000 to 90,000 and in some cases, it is exceeding ₹ 1,50,000 - in some of the cases even the karta of the HUF had produced the cash book and their ledger account before the AO - though u/s 68, the AO is free to show with the help of the enquiry conducted by him into the transaction which has taken place between the creditor and the sub creditor that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that loan advanced by the sub-creditor to the creditors was income of the assessee from undisclosed sources unless there is evidence direct or circumstantial, to show that the amount which had been advanced by the sub-creditor to the creditor had actually been received by the sub-creditor from the assessee. All the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts - when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, such an addition cannot be sustained the order of the Tribunal is upheld Decided against Revenue.
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2014 (8) TMI 684
Advertisement and sales promotion expenses u/s 37 Incurred wholly and exclusively for business purposes or not Held that:- The Tribunal was rightly of the view that the assessee did not furnish any details and evidence regarding the assets written off and receivables and in the absence of any basis the order of the CIT(A) cannot be interfered Decided against Assessee. Claim of depreciation on warehouse - Held that:- The Tribunal rightly upheld the order of the order of the CIT(A) that the assessee claimed depreciation on Central Warehouse at Saharanpur office in the light of the submissions for the assessment year 2004-05 - However, in the preceding year, no such disallowance was made - the assessee itself in terms of the agreement leased out all its assets to Liberty Shoes Ltd. while no material has been placed in order to controvert the findings of the CIT(A) nor any evidence reflecting use of the premises by the assessee so as to enable to take a different view Decided against Assessee. Payment of property tax Held that:- The Tribunal was rightly of the view that the assessee had paid the property tax for the buildings which had been hired out to Liberty Shoes Ltd. and this fact had been admitted by the assessee - no evidence was that the properties were used for the purpose of the business of the assessee - There is no material to show that the assessee is the owner of the properties nor any such claim was made before us nor appears to have been made before the lower authorities Decided against Assessee.
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2014 (8) TMI 683
Reopening of assessment u/s 147 - Guidance value for stamp duty - Whether the Tribunal was justified in holding that the Government Circular prescribing the guidance value for stamp duty cannot be placed reliance by the AO to reopen the assessments u/s 147 r.w. section 148 Held that:- The assessment was reopened by the AO and he ultimately called upon the assessee to pay tax on the difference of the acquisition value of the property and the price received by him on sale of the property in the year 1999-2000 - The Tribunal did not go into the merits of the case and allowed the appeal solely on the ground that the AO was wrong in reopening the assessment after 16 years on the basis of the Circular dated November 10, 1982 - the view taken by the Tribunal was wrong - Though the Circular was issued 16 years ago, it was showing the guidance value prevailing at the relevant time - the Tribunal ought to have recorded its finding on the merits also - the assessee did not and could not produce on record any authentic material to show the purchase price of the property in the year 1981 or, when he actually purchased the property- Tribunal ought to have considered the case on the merits also to find out whether the valuer's report was authentic and acceptable Decided in favour of Revenue.
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2014 (8) TMI 682
Sale of detachable warrants (DW) - assessee claimed that since the cost of acquisition of detachable warrants is not ascertainable, the sale proceeds of these detachable warrants constitutes 'capital receipts not liable to tax - tribunal found that the assessee incurred cost of ₹ 9,94,356 for DWs allotted to it under the scheme New Ground in appeal before High Court - Held that:- the first question, the third and the fourth questions framed at the time of admission, are on the question as to whether the findings of the learned Tribunal are perverse. We have enquired of Mr. Murarka to show that as to how are the findings perverse, to which his reply was that the relevant evidence was ignored. We requested Mr. Murarka to find out from the memorandum of appeal any ground alleging that any particular piece of evidence was ignored by the Tribunal. He replied that there is no such ground taken in the memorandum of appeal. He has even otherwise not been able to satisfy us that the view taken either by the Income-tax Officer or by the learned Appellate Tribunal is otherwise than on the basis of the evidence. The view taken both by the Income-tax Officer and the Income-tax Appellate Tribunal is a reasonable view in the facts and circumstances of the case. Decided against Assessee.
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2014 (8) TMI 681
Exemption to be granted as provided u/s 13(1)(d) or total denial u/s 11 Investment made in MIOT Hospitals Ltd. Contravention of section 11(5)/13(1)(d) or not Held that:- Following the decision in DIT (Exemptions) v. Sheth Mafatlal Gagalbhai Foundation Trust [2000 (10) TMI 26 - BOMBAY High Court] - violation of section 11(5) r.w.s. 13(1)(d) by the assessee would result in the maximum marginal rate of tax only on the dividend income on shares, which was not the recognised mode of investment and that the assessee would not be vested with marginal rate of tax on the entire income - the income other than dividend income has to be taxed only to the extent to which the violation was found by the AO - there is a vital difference between eligibility for exemption and withdrawal of exemption/forfeiture of exemption for contravention of the provisions of law Decided against Revenue.
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2014 (8) TMI 680
Foreign gifts received - Whether the Tribunal was correct in law in deleting the additions allegedly received by the assessees as foreign gifts Held that:- Narinder Kumar Sekhri had received foreign gifts from one S. P. Amar with whom he had no relation while the other donor Mohinder Handa was his brother's brother-in-law - the donee, Chaman Lal Sekhri, received foreign remittance from Mohinder Handa who is his son-in-law while Subhash Chander Sekhri is brother-in-law of Mohinder Handa - search and seizure operation was conducted on the firms of the assessees, but at the same time the AO took into account the fact that the assessee still kept on investing in land year after year the family had adopted a modus operandi of creation of capital by the NRI gifts without there being any occasion, the gifts cannot be held to be genuine transaction - Relying upon CIT v. Udham Singh and Sons, decided on December 20, 2013, [2014 (3) TMI 467 - PUNJAB AND HARYANA HIGH COURT] NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor The order of the Tribunal set aside - Decided in favour of Revenue.
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2014 (8) TMI 679
Penalty proceedings u/s 271(1)(c) r.w Explanation 1(1A) Addition u/s 68 onus to establish the genuineness of transaction Credit entry in account books Held that:- It is for the assessee to prove the genuineness of the transaction by identifying the creditor and its capacity to advance money - The onus lies upon the assessee to explain the credit entry but it shifts upon the Assessing Officer under certain circumstances - Where the assessee shows that the entries regarding credit in a third party's account were in fact received from the third party and are genuine, he has discharged the onus - it cannot be charged as the assessee's income in the absence of any material to indicate that they belong to the assessee. Relying upon Orient Trading Co. Ltd. v. CIT [1962 (8) TMI 69 - BOMBAY HIGH COURT] - If the AO had any doubts about the entry, instead of drawing any inference, the AO could have summoned the proprietor of the firm - No attempt was made by the AO to ascertain the factum of clearance of cheque from the bank and subsequent refund of the amount thus, the assessee had sufficiently discharged the burden which lay upon it to explain the nature and source of the credit entry appearing in its accounts and the burden clearly shifted on to the Department to prove to the contrary and hold that in spite of the assessee's explanation, the entries could still be held to represent the assessee's income - The AO failed to invoke the provisions u/s 131 of the Act, the Tribunal has rightly concluded that it was sufficient to delete the addition Decided against Revenue.
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2014 (8) TMI 678
Doctors to be treated as employees or not Application of section 192 - Whether the doctors are employees of the assessee or not, if so, payment made to the doctors are treated to be salaries so as to attract the provisions of section 192 of the Income-tax Act Held that:- Reading the agreement as a whole, both the authorities below observed that the existence of one prohibitory clause does not change the basic character of the relationship between the assessee and the doctors concerned - the Tribunal rightly found that there is no employer and employee relationship and the payment cannot be treated to be salaries and deduction cannot be made u/s 192 - the application of law depends upon the appreciation of facts the order of the Tribunal is upheld Decided against Revenue.
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2014 (8) TMI 677
Payment made to PF in ESI fund amount to be added u/s 36(1)(va) r.w. section 2(24)(x) or not Held that:- The CIT(A) as well as Tribunal was rightly of the view that where the payments on account of contribution to the provident fund, employees' State insurance, etc., are made within the due date of filing the return, such deductions are allowable - the provident fund contribution and the employees' State insurance was deposited before the due date of filing the return - Following the decision in CIT v. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] - if the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Funds Act as well as the Employees' State Insurance Act Decided against Revenue.
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2014 (8) TMI 676
Assessment of gain on sale of shares Held that:- The entry passed in the books of account to convert stock in trade into investments is not substantiated with any document - the examination of the applicability of various tests is not required, since the assessee has clearly brought out its intention by classifying the shares as its "Stock in Trade" - the assessee is a legal person and its intention can be ascertained only through the documents, resolutions passed in Board meetings etc. - the assessee has decided to convert the stock in trade into Investments on 1.4.2005 only when it took the decision to sell the shares immediately thereafter and the purpose is very clear, i.e., to avail the benefit of exemption and concessional rate of tax - since the assessee has shown the shares as its stock in trade and further it has also declared the gains arising on sale of shares as its business profit only - the assessee has immediately sold the shares after the conversion - CIT(A) was justified in confirming the gains arising on sale of shares as the business income of the assessee by disregarding the claim of Long term Capital gain and Short term Capital gain Decided against Assessee. TDS not deducted before prescribed due date u/s 40(a)(ia) Held that:- The assessee has paid the TDS amount before the due date prescribed for filing return of income u/s 139(1) of the Act relying upon COMMISSIONER OF INCOME TAX, KOL-XI, KOL Versus VIRGIN CREATIONS [2011 (11) TMI 348 - CALCUTTA HIGH COURT] - the amendment brought out by the Finance Act 2010 in sec. 40(a)(ia) providing for non-disallowance if the TDS amount is paid before the due date prescribed for filing return of income u/s 139(1) is retrospective in nature - the order of CIT(A) is set aside and the AO is directed to delete the disallowance made u/s 40(a)(ia) of the Act Decided in favour of Assessee.
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2014 (8) TMI 675
Power to exercise revisional jurisdiction by CIT u/s 263 Claim of depreciation on assets not examined Amount deducted for the purpose of application towards charitable purpose Held that:- The AO has not at all examined the issue of claim of depreciation on account of assets the cost of which has been claimed as application of income for charitable purpose - the CIT was justified in issuing the notice u/s.263 to the assessee asking it to explain as to why the order should not be set aside under the provisions of section 263 Relying upon CIT Vs. Institute of Banking Personnel Section [2003 (7) TMI 52 - BOMBAY High Court] - the income relating to claim of depreciation on assets, the entire amount of which was claimed as deduction on account of application for charitable purposes the assessee is entitled to depreciation on assets, the entire amount of which was claimed as deduction on account of application for charitable purposes thus, the order passed by CIT u/s 263 is set aside Decided in favour of Assessee. Award of cost on the department u/s 254(2B) Held that:- As decided in assessees own case it has been rightly held that the CIT has passed an order during the course of discharge of her duty as CIT - While discharging her duty, her action might have caused some hardship to the assessee due to error of judgement but that in our opinion does not warrant levy of cost on the department Various decisions relied on by the assessee relate to levy of cost by the courts against administrative orders and not against judicial/quasi-judicial orders following the assessees own case Decided against Assessee.
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2014 (8) TMI 674
Allowability of deduction u/s 80IC E-return filed after due date u/s 139(1) Held that:- The manual filing of return before 30-09-2010 has not been denied by the Revenue - The AY. 2010-11 was the first AY from which furnishing of return in electronic mode was made mandatory - The accountants/tax consultants of the assessee may be due to oversight missed the amendment in the Rules - Since manual return of income was furnished well before the due date, the assessee has complied with the substantive provisions of the Act - deduction u/s.80-IC cannot be denied for the reason that return of income in e-mode is not filed in time - the assessee is entitled to claim deduction u/s.80-IC of the Act, if otherwise it has complied with the conditions laid down u/s.80IC - the authorities below have not examined genuineness of the claim of the assessee u/s.80-IC thus, the matter is remitted back to the AO for re-consideration of the claim of the assessee u/s.80-IC. - Decided in favor of assessee. For the AY 2011-12 - AY.2010-11 was the first year in which, furnishing of return electronically under digital signature was made mandatory. There were chances that the tax consultants may not be aware of the amended provisions in the first AY. The benefit of ignorance of tax consultants was given to the assessee in AY.2010-11. After committing the mistake once, if the same mistake is committed again in the next AY, it is un-pardonable. We are of the opinion that the assessee does not deserve any clemency. The assessee has not complied with the provisions of section 80AC and is thus not eligible to claim deduction u/s.80-IC. - The Income Tax Rules have been amended thereafter in the year 2010 - As per the amended provisions of Rule 12(3)(ab) w.e.f. 09-07-2010, a company is required to furnish return of income for AY.2010-11 and subsequent AYs electronically under digital signature Decided in favour of Revenue.
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Customs
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2014 (8) TMI 697
Waiver of pre deposit - Company declared as sick unit by BFIR - Held that:- against a total outstanding dues of around ₹ 11.72 Crores confirmed against all the Applications a pre-deposit of ₹ 1.14 Crores would meet the ends of justice. As already mentioned above, the said amount of ₹ 1.14 Crores is around 10% of the total dues which in our opinion, would not result in any undue hardship to the Applicant, in the circumstances, when the total revenue of the Applicant is ₹ 4.06 Crores; total assets of ₹ 16.79 Crores and there is overall profit of ₹ 52.82 Lakhs for the financial year ending 31.03.2013. In the result, we direct the Applicant M/s.RSI Private Ltd. to deposit ₹ 1.14 Crores within 8 weeks - Following decision of Sagarika Acoustronics Pvt.Ltd. vs. UOI [2007 (3) TMI 723 - Supreme Court of India] - Partial stay granted.
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2014 (8) TMI 696
Prohibited goods - redemption of confiscated goods - import of Car Radial Tyres - Whether the Tribunal has committed an error of law in accepting and upholding the clearance for home consumption allowed by the Commissioner (Appeal) of goods otherwise prohibited for clearance for home consumption in absence of valid BIS certificate with reference to the Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order, 2009, read with 2.2 of the Foreign Trade Policy and General Note 2A of the import policy regarding mandatory compliance with regard to BIS certification as per Schedule III to the import policy - Held that:- Definition of the expression 'prohibited goods' covers any goods where the import or export is subject to a prohibition under the Customs Act or any other law for the time being in force. However, the definition does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. Section 125 (1) of the Customs Act confers a discretion upon the Adjudicating Officer to allow an option for the payment of a redemption fine in lieu of confiscation where it is found that the importation or exportation is prohibited under the Customs Act - Commissioner (Appeals) has missed the central aspect of Section 125 of the Customs Act, which is the discretionary element in the exercise of jurisdiction under Section 125 of the Customs Act. Since the Commissioner (Appeals) proceeded to apply a misconceived test under Section 125 of the Customs Act and has failed to consider this aspect, we are of the view that the ends of justice would warrant that the proceedings be restored back to the file of the Commissioner (Appeals). We, accordingly, dispose of the appeal by restoring the proceedings back to the Commissioner (Appeals), who shall decide the appeal afresh after hearing the Assessee and the Department. Since, we are remanding the matter to the file of the Commissioner (Appeals) for a fresh decision on the basis of the view which we have taken, it is not necessary for the Court to answer the question of law as framed - Decided in favour of Revenue.
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2014 (8) TMI 695
Rejection of bail application - Possession of psychotropic substance - prosecution under the provisions of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Application of the Drugs and Cosmetics Act, 1940 - whether persons accused of committing an offence under the Act could be enlarged on bail in view of the stipulations contained under Section 37 - Held that:- Section 8(c) in no uncertain terms prohibits the DEALING IN any manner in any narcotic drug or psychotropic substance. However, an exception to such prohibition is also contained in the said Section - DEALING IN narcotic drugs and psychotropic substances is permissible only when such DEALING is for medical purposes or scientific purposes. Further, the mere fact that the DEALING IN narcotic drugs and psychotropic substances is for a medical or scientific purpose does not by itself lift the embargo created under section 8(c). Such a dealing must be in the manner and extent provided by the provisions of the Act, Rules or Orders made thereunder. The Act does not contemplate framing of rules for prohibiting the various activities of DEALING IN narcotic drugs and psychotropic substances. Such prohibition is already contained in Section 8(c). It only contemplates of the framing of Rules for permitting and regulating any activity of DEALING IN narcotic drugs or psychotropic substances. - conclusion reached by the various High Courts that prohibition contained under Section 8 is not attracted in respect to all those psychotropic substances which find a mention in the Schedule to the Act but not in Schedule-I to the Rules framed under the Act is untenable. Analysis of the implications of Section 80. Application of the Drugs and Cosmetics Act, 1940 not barred.The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Drugs and Cosmetics Act, 1940 (23 of 1940) or the rules made thereunder. of the Act is not really called for in the instant case. It is only required to be stated that essentially the Drugs & Cosmetics Act, 1940 deals with various operations of manufacture, sale, purchase etc. of drugs generally whereas Narcotic Drugs and Psychotropic Substances Act, 1985 deals with a more specific class of drugs and, therefore, a special law on the subject. Further the provisions of the Act operate in addition to the provisions of 1940 Act. - Matter remitted to High court - Decided in favour of Revenue.
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2014 (8) TMI 694
Preference of charge / recovery - secured creditors or customs duty payable - Central Excise department initiated proceedings against the respondent no.2-company for payment of excise duties and, an order imposing a demand of duty along with interest and penalty - Central Excise department initiated proceedings under Section 142 of the Customs Act, 1962 and under the Attachment of Property of Defaulters for Recovery of Government Dues Rules, 1995 - Based on the said attachment order, the Assistant Commissioner, Central Excise, Allahabad by an order intimated the petitioner-bank that in view of Section 11 the land, plant and machinery and also any property in the name of respondent no.2-company should not be brought/sold/leased/transferred by the petitioner without the permission of the Assistant Commissioner of Central Excise, Division Allahabad. Held that:- petitioner, who has granted loan to respondent no.2-company is a secured creditor under Section 2(2d) of the said Act and that recovery of the loan granted could be recovered as the first charge in preference to recovery of other dues - On the other hand, Section 11 of the Central Excise Act and Section 142 of the Customs Act, 1962 only provides for recovery of sums due to the government. We do not find that these provisions indicate that the Central Excise department has any preferential charge. The learned counsel for the Central Excise department has failed to show any provision by which government dues could be recovered as the first charge - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, being a special enactment and the petitioner being a secured creditor had the first charge to recover the amount - respondent no.1 had no authority of law to restrain the petitioner-bank from proceeding with the recovery of the amount from the assets of respondent no.2 over which the petitioner had the first charge - Decided in favour of Petitioner.
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Service Tax
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2014 (8) TMI 713
CENVAT Credit - input services - scope of the term 'include' and 'such as' - Whether the Hon'ble Tribunal was correct in holding that Credit of Service tax paid on Customs House Agents Services, Shipping Agents and Container Services and Services of Overseas Commission is admissible to the manufacturer as "input Service Tax credit", by overlooking the Statutory provision of Rule 2(1) of the Cenvat Credit Rules, 2004 - Held that:- Tribunal has taken a stand that where the exports are Free on Board (FOB) basis, the place of removal has to be taken as port and, therefore, services availed by the respondent-assessee till the goods reach the port would be admissible. The manufactured goods since cannot be sold without the assistance of clearing agents, such input service on commission also has been considered necessary and, therefore, any CENVAT credit availed by the petitioner, according to the Tribunal, relating to the clearance of finished goods upto the place of removal, which is the port in the present case, would fall under the criteria and such amount shall be admissible. Clearing and forwarding agent is an agent of the principal. The goods stored by him after clearance from the factory would therefore, be stored on behalf of the principal, and as such the place where such goods are stored by the C & F agent would fall within the purview of sub-clause (iii) of clause (c) of section 4(3) of the Act and as such would be the place of removal. Viewed from that light the services rendered by the C & F agent of clearing the goods from the factory premises, storing the same and delivering the same to the customer would fall within the ambit of rule 2(l) of the Rules as it stood prior to its amendment with effect from 1.4.2008, namely clearance of final products from the place of removal. However, this court is not in agreement with the view adopted by the Tribunal that such services would amount to sales promotion and is, therefore, an input service. For the reasons stated while discussing the issue as regards service commission paid to foreign agent, the services rendered by the C & F agents cannot be said to be in the nature of sales promotion. This issue stands answered accordingly, in favour of the assessee and against the revenue. Considering the role of Customs House Agent and Shipping Agent for rendering Customs House Agent Service and Shipping Agents and Container Services, the decision of this Court referred to in the case of Clearing and Forwarding Agent would apply and the definition of "input service" would also cover both these services, considering the nature of services rendered by them and the place of removal being the point in this case, the answer shall favour the Revenue. With regard to the commission paid to the overseas agents and service tax paid on the value of commission paid to the overseas agents under the business auxiliary category, under the definition of "business auxiliary service" which is a taxable service, the services are provided by the Commission Agent. The assessee took CENVAT credit of service tax paid on commission paid to the overseas agents for the goods exported. The eligible category of service for availing the credit is that the service should be used directly or indirectly in the manufacture or clearance of final product, as neither for the purpose of sales promotion, the service of overseas commission agent has been used. - This is required to be answered in favour of the Revenue and against the assessee. Extended period of limitation - Held that:- the extended period of limitation would not be available to the Revenue in absence of any material to indicate suppression on the part of the respondent-assessee. It is not in dispute that there was no suppression nor any misrepresentation in respect of CENVAT credit availed by the respondent- assessee in respect of these services. - Decided partly in favor of assessee.
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2014 (8) TMI 712
Waiver of pre deposit - Franchise service or not - sub-license agreement - penalties under Section 76, 77 & Rule 7C read with section 70 - Held that:- Assessee was given the right to book, deliver, transshipment, handling, loading, unloading etc. and to carry out the business of courier by the ordinary buses of MSRTC. The said agreement by no stretch of imagination can be considered as a franchise services because MSRTC is not a courier service provider but merely transporter of goods. Further, the sub-licensee M/s ShriSai Transport and Courier Pvt. Ltd. cannot be considered as franchisee of Baba Trading Company as he is not representing M/s Baba Trading Company but MSRTC who is actually undertaking the transportation of the parcels/goods. As per the clarification issued by the CBE & C, classification under business support service will be effective from 01/05/2011 and not prior to that. Thus, as per the department itself, prior to 01/05/2011, there is no liability to pay service tax on the said activity. If a service is classifiable under business support service from a given date and the said service is not carved out of any of the existing services, it cannot be construed that service was taxable prior to that date. In the present case, therefore, the question of levying any service tax on the activity under the category of franchise service would not arise at all, inasmuch as the business support service has not been carved out of franchise service. In these circumstances, the appellant has made out a strong case for waiver of pre-deposit of the dues adjudged - Stay granted
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2014 (8) TMI 711
Import of services - Whether a branch of a corporate body situated abroad can be said to have rendered a service to the head office of the body corporate situated in India - Software Development and Consultancy Service - Held that:- Section 66A in our prima facie view, does not provide for such a situation. In the facts of the case before us, the branch situated abroad has rendered service to the foreign clients and tax liability has been discharged abroad. The branch situated abroad has incurred certain expenditure which has been reimbursed by the head-office to its branch office. Such reimbursements of expenditure by way of salaries or other expenses cannot be said to be consideration paid for any service rendered by the branch to the head office. The purpose of Section 66A is for taxing the import of services and not for taxing monetary transactions between the branch and head-office. For e.g. if a branch of an Indian bank is situated abroad, Section 66A does not envisage treating the foreign branch as a separate entity so far as the internal transactions are concerned, if the head-office reimburses to the foreign branch expenses incurred by them abroad. It cannot be said to be a consideration for any services rendered. The reason is that the service provider, service recipient and place of performance of service are all located abroad. The purpose of Section 66A is not to tax service transactions taking place abroad. Such transactions are beyond the taxing jurisdiction of the Indian authorities - certain expenditure incurred abroad, the adjudicating authority has granted relief holding that they are not taxable in India. If that be so, we do not understand, why in respect of the some other items of expenditure, the same treatment cannot be accorded. Thus, there is an inherent contradictions in the findings of the adjudicating authority - Thus, the appellant has made out a prima facie case for grant of stay - Stay granted.
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2014 (8) TMI 710
Banking and other Financial Services - taxability of lease rent - finance lease agreement - Held that:- According to the Accounting Standards for Financial Lease published by ICAI, a lease is classified as a financial lease, if there is an option for transfer of asset to the lessee at the end of the lease period. Besides this, in a financial lease, lease period is almost the entire economic life of the asset. Though during the period of dispute, the term, "Financial Lease" was not defined in Section 65(12) of the Finance Act, as held by the Tribunal in the case of Commissioner of ST Vs. Lufthansa Technik Service India Pvt. Ltd. reported in [2013 (12) TMI 968 - CESTAT NEW DELHI] in absence of the definition of this term, the same must be interpreted in the sense it is understood in the common parlance or trade parlance and accordingly, this term is to be understood according to its meaning in the ICAI Accounting Standard or International Accounting Standards. There is absolutely no element of financing and the agreements, in question, are purely the agreements of renting of immovable property(plant & machinery) which became taxable under Section 65(105)(zzzz) of the Finance Act, 1994 w.e.f 1.6.2007. Therefore, during the period of dispute, the renting of plant & machinery by the appellant under lease agreement/licence agreement was not taxable as Banking and Financial Services under Section 65(105) (zzm) read with Section 65(12) and as such, the impugned order is not sustainable - Decided in favour of assessee.
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2014 (8) TMI 709
Waiver of pre deposit - Works Contract service - whether activity of the applicant for implementing water supply projects which included in certain cases construction of water treatment plant etc. to various municipalities and local authorities would come under Explanation (ii) (b) of Section 65 (105) (zzzza) of the Finance Act 1994 or under Explanation (ii) (e) of Section 65 (105) (zzzza) - Held that:- applicant entered into contract for implementing water supply projects of the various municipalities and local authorities and the agreement particularly shows that it is to construct intake chamber providing ESR laying and jointing of MS HDPE pipeline, RCC/UG Sump, Filter plant, Stand Post, CT etc. It appears that Engineering, Procurement, Construction and Commissioning (EPC) project on the basis of turnkey basis are incidental to laying of pipeline. In the case of Megha Engineering (2014 (2) TMI 149 - CESTAT BANGALORE), the Tribunal granted unconditional stay holding that it is a case of pipeline construction. We have also noticed that after the case of Megha Engineering & Infrastructure Ltd. (supra), in the case of Sudhakar Polymers [2014 (8) TMI 708 - CESTAT BANGALORE], Tribunal granted unconditional stay on similar situation. It is a fit case for waiver of predeposit of dues arising from the impugned order. - Stay granted.
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2014 (8) TMI 708
Waiver of pre deposit - works contract - Turnkey Projects including engineering, procurement and construction or commissioning (EPC) projects. - interest under Section 75 - penalties under Sections 77 and 78 - Held that:- works were for pipe-line construction since the pipe-line construction was for provision of drinking water supply and irrigation, the works were outside the ambit of the taxable service enumerated in 65 (105)(zzzza)(b) - prima facie case in favour of the petitioner and grant waiver of pre-deposit in full and stay of further proceedings, pending disposal of the appeal - Stay granted.
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2014 (8) TMI 707
Consulting Engineer Service - Collection of supervision charges - construction of Navodaya Vidyalaya building - Held that:- There is not even a single line describing as to what is the actual services rendered by the appellants which are sought to be covered under the Consulting Engineer Service. This itself arguably can to be fatal. It is further seen from the agreement between Navodaya Vidyalaya Samiti and the appellants that the appellants were engaged for execution of works based on the architectural drawings, specification etc. given by the Samiti or their consultants. The agreement also states that the appellants would be entitled to supervision charges for supervision of the works done by contractors engaged by the appellants. These supervision charges are sought to be taxed under the Consulting Engineer Service. A company or body corporate was not covered in the scope of Consulting Engineer before the amendment to the definition of Consulting Engineer with effect from 01.05.2006. It is seen that the demand period involved in the present appeal is prior to 01.05.2006. Thus, the appellants being a company or body corporate were outside the ambit of Consulting Engineer during the relevant period and consequently the service rendered by them was outside the scope of Consulting Engineer Service - Decided in favour of assessee.
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Central Excise
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2014 (8) TMI 705
Cenvat Credit - Export of M.S. Billets as such to Nepal - Billets were not exported directly from the factory of manufacturer - procedure prescribed under Notification 45/2001-NT for export under bond to Nepal was not followed by the Applicant - penalty under Rule 15 (2) of CENVAT Credit Rules, 2004 and Rule 25 of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944 - Held that:- there are various provisions in the Central Excise Act and Rules made thereunder to facilitate the export. The different procedures prescribed in this regard are however mutually exclusive and covered different exigencies. In case of export to Nepal, rebate shall be granted to his Majesty, Govt. of Nepal as per conditions of the Notification No.40/2001. Both these rules are silent regarding availment of Cenvat credit which is governed by the provisions erstwhile Modvat Rules. CENVAT Credit Rules provide for taking the credit on inputs/input services used in or in relation to manufacture of final products for payment of duty on such final products. Board issued the impugned Circular to bring the export under 'claim of rebate' and 'export under Bond' at par. In case of export of goods to Nepal under the claims of rebate, the exporter is not allowed any rebate and therefore if such exporters are allowed to utilize the credit availed on the inputs exported under Bond to Nepal this would result into a dichotomy wherein the exporters who opt for export to Nepal under bond procedure could be put to advantage over the exporters opting for export to Nepal under claims of rebate. Under these circumstances Indo-Nepal Treaty would be redundant. - in case of export to Nepal, Board's Circular is of no help to the Applicant as implementation of the said Circular would unduly enrich those who opt for export under bond over those who export under bond - prima facie applicant is not able to make out a case for full waiver of pre deposit. - stay granted partly.
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2014 (8) TMI 704
Denial of interest on refund claim - Interest @12% - Pre deposit made by assessee in 1998 - Appeal decided in favour of assessee - Amount deposited by assessee became refundable - Held that:- Section 11BB providing for interest on delay in refund was introduced w.e.f. 26/05/95 and specific provision for interest for the period of delay in the refund of the amount of pre-deposit was introduced by inserting Section 35FF w.e.f. 10/05/08. Though during the period of dispute, there was no provision for interest for the period of delay in refund of the pre-deposit, the Apex court in the case of ITC Ltd. (2004 (12) TMI 90 - SUPREME COURT OF INDIA) has held that when the amount of pre-deposit paid in terms of the Tribunals order becomes refundable on the final decision being in the assessees favour, the pre-deposit must be refunded within three months and the interest @ 12% would be payable for the period of delay beyond the three months. On the basis of Apex courts judgment the Board also issued a Circular. Calcutta High Court in the case of Madura Coats Pvt. Ltd. vs. CCE, Kolkata - IV reported in [2012 (7) TMI 512 - CALCUTTA HIGH COURT] has held that during the period prior to 10/05/08 interest for the period of delay beyond three months in refund of pre-deposit would be payable @ 12% per annum in accordance with the Apex courts judgment in the case of ITC Ltd. (supra) and not @ 6% per annum specified in the Notification No. 67/03-CE (NT). - Decided against Revenue.
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2014 (8) TMI 703
Mega Power project - Exemption to sub-contractor - Benefit of duty exemption under Notification 6/2006-CE dated 01/03/2006 - Revenue contends that as a sub-contractor, assessee had not been awarded the contract under ICB process and the goods which the appellant supplied did not qualify for Customs duty exemption under Notification 21/2002-Cus dated 01/03/2002 - Held that:- Notification 6/2006 nowhere stipulates that the supplier of the goods should participate in the tariff based competitive bidding. The only condition stipulated is that the ultra mega power projects for which the goods are supplied and from which the power procurement had been tied up should be through tariff based competitive bidding and an officer not below the rank of Chief Engineer in Central Electricity Authority certifies that the goods are required for the ultra mega power project and the Chief Executive Officer in the Project gives an undertaking. In the present case, there is no dispute that the Chief Engineer in the Central Electricity Authority has given the required certification and the Chief Executive Officer has given the requisite undertaking. Certificates against which the supplies made, have not been produced before the adjudicating and appellate authorities for their consideration. Benefit of Notification 6/2006 would be available even for a sub-contractor whose name figures in the contract, in respect of the goods to be supplied giving the details of the quantity, description, etc. so long as the contract is awarded under international competitive bidding process and there is no requirement of the sub-contractor participating in the international competitive bidding. Therefore, the benefit of exemption cannot be denied to the appellant in the present case so long as they fulfil the terms and conditions of the exemption Notification - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 702
Valuation - related parties - extended period of limitation - monthly/quarterly returns filed by respondent regularly - Respondent was selling its goods predominantly at the factory gate to independent buyers and merely 25% of its clearances were made through sister concern M/s. Patel Brothers. Respondent did not dispute the duty liability for the entire period and the same was paid before the issue of show cause notice - Held that:- it may be correct that along with monthly/quarterly returns filed with the Revenue documents like invoices and balance sheets are not required to be enclosed. However, while doing desk review under risk management details regarding pattern of sale etc. are obtained from the manufacturer for study to decide areas of audit. Statutory documents like RG-1 register, invoices and balance sheet are available with the manufacturer for the inspection of audit team. It is difficult to appreciate that the first audit team, which audited the unit in 1998, failed to see all these documents in order to know the sale of pattern adopted by the respondent. It has been specifically noted by the first appellate authority that the invoices and the RG-1 register were specifically brought to the notice of the audit. The first appellate authority has given a detailed reasoning as to why extended period is not applicable in the present facts and circumstances. As the documents like sales invoices, RG-1 register and balance sheets were available with the respondent for inspection by the audit team, it cannot be said that there was any intention on the part of the assessee to evade Central Excise duty. - there is no substance in the appeal filed by the Revenue - Decided against Revenue.
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2014 (8) TMI 701
Invocation of extended period of limitation - Suppression of facts - Malafide intention - whether extended period of time could have been invoked to confirm the demand in the instant case where the respondent-assessee had not included the cost of dies in the value of the motor vehicle parts manufactured and supplied by them to M/s. Bajaj Auto Limited - Held that:- From the statements of the concerned officials of M/s Bajaj Auto Ltd., who got the vehicle parts manufactured through the respondent-asssessee, it is seen that the respondent were receiving dies/moulds on loan/returnable basis from M/s. Bajaj Auto Limited for manufacture of different motor vehicle parts. The amortised cost of these dies was not considered while finalizing purchase orders and determining the terms and conditions of supply. This it is evident from the statement of Shri S.R. Malpani, and Shri S.G. Naniwadekar, Thus, it is clear that the respondent-assessee knew that the cost of the dies had not been included in the value of the motor vehicle parts mentioned in the purchase orders. Yet they never took any action to ascertain in these costs and include the same in the assessable value of motor vehicle parts manufactured and cleared by them to M/s. Bajaj Auto Ltd. As per the provisions of Rule 173F of the Central Excise Central Excise Rules, 1944, it was the responsibility of the assessee to ascertain the correct value of the goods and discharge duty on such value. There is also no evidence available on record to show that the assessee disclosed to the department the non-inclusion of the amortised cost of moulds/dies in the value of the motor vehicle parts manufactured and supplied by them. In these circumstances, the only conclusion that can be drawn is that the respondent-assessee suppressed the information in spite of knowledge that the amortised cost of moulds/dies did not form part of the value of the motor vehicle parts manufactured and supplied by them. It is in this context, the decisions of the hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd. (2010 (4) TMI 631 - GUJARAT HIGH COURT) and Salasar Dyeing & Printing Mills (P) Ltd. (2013 (8) TMI 151 - GUJARAT HIGH COURT) become relevant. - Decided in favour of Revenue.
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2014 (8) TMI 700
CENVAT Credit - input services - services used for construction of the railway siding - Nexus with manufacturing activity - Held that:- During the period of dispute, that is, during period from June 2008 to March 2010, the definition of input service covered the services used in relation to - procurement of inputs and also the activities relating to business. It is not disputed that the appellant have a captive power plant in their factory which uses coal and coal is transported to the factory by railways and for this purpose only, a railway siding was constructed at railway station Namli on Ratlam - Chittor Section. The construction of railway siding at railway station Namli is only to facilitate the transportation of coal to the appellants factory and, therefore, this service has to be treated as service used in or in relation to procurement of input. The transportation of coal, which is necessary for generation of electricity in the captive power plant, is in my view, integrally connected with the business of manufacturing of the final product and therefore the services received for construction of railway siding have to be treated as services used in or in relation to procurement of inputs and also the activities relating to Business of manufacture of the final product. In view of the above discussion, I hold that the service in question is covered by the definition of input services and would be eligible for Cenvat credit - Decided in favour of assessee.
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2014 (8) TMI 699
CENVAT Credit - Remission of duty - Loss of goods in dacoity - Held that:- There is no dispute that the goods in respect of which the remission of duty is being claimed are reported to have been lost on account of dacoity, which is claimed to have taken place in the night on 24-25th July, 2004. Though the appellant had lodged an FIR with the police authorities, the police authorities in their report have reported that the FIR was lodged on false grounds and that no dacoity had taken place. Keeping this fact in view, the Commissioner had rejected the appellants application for remission of duty filed under Rule 21 of the Central Excise Rules, 2002. Moreover, even if this is treated as a case of dacoity, the remission of duty cannot be allowed in view of Larger Bench judgment in the case of Gupta Metal Sheets vs. CCE, Gurgaon (2008 (10) TMI 60 - CESTAT NEW DELHI). Since, the remission of duty on the goods claimed to have been lost is not admissible and for this reason only, the Commissioner had rejected the appellants claim for remission of duty, the duty demand has been correctly confirmed against the appellant and in the circumstances of the case, penalty has also been correctly imposed - Decided against assessee.
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2014 (8) TMI 698
Denial of refund claim - Unjust enrichment - Duty paid twice - Notification No. 62/2002-CX dated 31.12.2002 - Held that:- Appellants have paid duty on Ethanol and did not take credit thereof. It is also not in dispute that the appellants cleared EBMS on payment of duty at the rate fixed by the Govt. of India. The fact that the duty has been paid twice on Ethanol is also not in dispute. The dispute in this case is on issuance of letter by the department on 21.11.2002 wherein their activity on blending was held that the same does not amount to manufacture. If, at that time, the appellants were told that their activity amounts to manufacture, the dispute could not have arisen as on today. In this context of that it cannot be said that the appellants are required to pay duty twice. As the appellants have claimed refund of excess duty paid on Ethanol portion at the time of clearance of EBMS or they are entitled for CENVAT credit at the time of procurement of Ethanol, the consequences will be the same as they are entitled to get the refund of excess duty borne by them. As the facts of double payment of duty on Ethanol is not in dispute at any stage and the dispute has been arisen on the wrong understanding of the Revenue while granting them permission for blending the Ethanol with MS. Therefore, following the principles of natural justice we hold that the appellants are entitled for refund claim for duty paid on Ethanol - unjust enrichment is not applicable to the facts of this case - appellants are entitled for refund claim - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 706
Writ of Certiorarified Mandamus to call for the records - Detention notice - demanding tax together with compounding fee goods were sent for trial - Held that - The petitioner is willing to pay the tax under protest in terms of Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006 and the authorities are bound to release the same as the provision of law provides for release of goods on payment of tax - Following decision of Volvo India Pvt. Ltd. Versus The Deputy Commercial Tax Officer [2013 (4) TMI 100 - MADRAS HIGH COURT] - Decided conditionally in favour of assessee.
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