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TMI Tax Updates - e-Newsletter
August 26, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Dispute between counsel (CA) and Tribunal - Issue referred to ICAI with a request to take necessary action as per law against Shri Pradeep Kumar Kapoor for his professional misconduct and also to take corrective measures and necessary steps to educate its members to behave with the judicial authorities befitting to their status and should not be engaged in scandalizing the judicial authority/courts. - AT
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Dispute between counsel (CA) and Tribunal - application for either recall or expunge the order sheet entry dated 08/02/2013 - It is for him to take a decision whether he wants to appear before a particular court or not but the court is not obliged to adjourn the hearing only for the reason that he does not want to appear before it. - AT
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Waiver of interest u/s 215 - if the AO is not diligent enough and does not complete the assessment within the said period of one year, any interest liability for the period beyond that one year cannot be foisted on the assessee unless the delay in not completing the assessment within the period of one year is clearly attributable to the assessee - HC
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When AO had rejected books of accounts u/s 145(3) and this finding of fact has been affirmed consecutively by the two statutory appellate authorities which had then proceeded to deal with the entries in such books of accounts under different heads and had rendered their verdicts which have no potential for exposition of any legal theory or concept, the appeal is not maintainable u/s 260A - HC
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Prima facie adjustments - Scope of section 143(1)(a) - While adjudicating an appeal against intimation under sec.143(1)(a) CIT(A) is not empowered to call for further details at the appellate stage. The CIT(A) is required to see whether on the basis of the return or, the accompanying documents as filed before the assessing officer, any prima facie adjustment could be made. - HC
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Undisclosed income - addition u/s 68 - Undervaluation registration of property - The assessee led substantial evidence to establish that the amount treated to be undisclosed income by the A.O. was the sale consideration of sale of his agricultural land, which he had deposited in the bank and had voluntarily filed return disclosing his income. - No addition - HC
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Undisclosed Capital gain - Scope of block assessment proceedings - AO is concerned only with undisclosed income and he has no power to consider material and evidence not detected as a result of some external information or a survey or some other source other than a search - if it is found that some income had escaped assessment, then it is open for the AO to resort to a regular assessment including re-opening a completed assessment but he cannot drag these items into the block assessment proceedings envisaged under Chapter XIV-B of the Act - HC
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Rectification or order - Revision of order by Tribunal - Block assessment proceedings - Assesse through settlement commission paid excess tax - Settlement commission accepted only partial amount - A.O. and ITAT disallowed rectification of order - Decided against the assessee. - HC
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Deduction u/s 80IB - SSI industry - value of plant and machinery had exceeded Rs.1 crore in subsequent years - The rest of the three conditions are to be fulfilled on year to year basis. The industrial undertaking must show in each subsequent year of claim that these three conditions have not been violated. AT
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Notice issued u/s 148 - Transfer of a case - The order passed by CIT transferring jurisdiction from ITO, New Delhi on 04-01-2010, subsequent action of the AO i.e. ITO New Delhi issuing notice u/s. 148 of the Act dated 25-03-2010 is invalid because the jurisdiction was transferred to ITO Kolkata. - AT
Customs
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Valuation - import of goods - inclusion of value of software in the networking appliance - It is argued that the cost of such updation of software cannot form part of assessable value of goods when imported. No effort seems to have been made to make distinction between the post-import services and the software that is embedded. - matter remanded back - AT
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Import without Payment of Duty for export - failure to export - Penalty u/s 114A was imposable in case duty had not been levied or had been short-levied, etc., by reason of fraud, collusion or wilful mis-statement or suppression of facts or contravention - no such ingredient in the present case - no penalty - AT
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Correct Classification of Imported Goods - Condensate or Crude Petroleum Oil (CPO) - In the absence of establishing the source of origin of gas condensate the classification of the goods imported by the assesses had to be under CTH 2710 - AT
Service Tax
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Nature of Service - Commercial Training or Coaching - non-profit institution - training programmes at the level of individual bank - the explanation to Section 65(105)(zzc) of the Act had very wide scope to encompass the activities of the assesses and render them exigible to service tax under Section 65(105)(zzc) - AT
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Classification of service – transport of cargo throughout the world using ships owned/charted by them - liability was based on the place of residence of the recipient of service and not based on the place of performance of service - taxable as business auxiliary service (BAS) - prima facie case against the assessee - AT
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Classification of Service - Travel by Air services u/s 65 (105) (zzzo) or Supply of Tangible Goods u/s 65 (105) – W when an aircraft was given on charter to other companies, it amounts to supply of tangible goods a taxable service as defined u/s 65 (105) (zzzzj) - prima facie case against the assessee - AT
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Interim Relief – Extension of stay Order – effect of proviso introduced by the Finance Act, 2013 - Since the present appeal could not be disposed of within 365 days, for no fault of the assesse, the assesse should be entitled to waiver of pre-deposit of the assessed demand, during pendency of the appeal - AT
Central Excise
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Determination of weight - Benefit of exemption notification No.6/2001-CE dt.1.3.01 - first clearance upto 3500 MT of paper and paper board or article made therefrom - whether the weight of wrapper (packing paper and paper board) shall be taken into account to determine the quantity cleared in a financial year - matter remanded back - AT
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Benefit of Notification No. 6/02-CE - Refund of duty paid at the time of clearance of the motor vehicle - extended period of three months, as mentioned in the notification, is for registration of the vehicle and not merely for submission of the registration certificate - AT
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Undervaluation of Goods - Rule 8 - clearance to another unit of the assessee - cost plus valuation - captive consumption - the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers - AT
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Nature of Product - Whether cassia meal (husk and germ) of Cassia seeds can be considered as excisable at all – Held yes, goods are excisable - appellant was not eligible for exemption under notification No.23/03 - AT
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The scrap generated in the repair & maintenance workshop of the factory cannot be said to be the scrap generated in a manufacturing process or a byproduct of manufacturing process and hence the same was not excisable - AT
VAT
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Condonation of Delay - Delay in filing appeal by revenue - The applicant had attempted to explain the delay which can be attributed to the administrative reasons and particularly consumption of time at the office of the Government Pleader - delay condoned - HC
Case Laws:
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Income Tax
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2013 (8) TMI 715
Unexplained investment u/s 69 - Ownership of income - Protective assessment - A.O. has concluded that the transaction in question related to purchase of beetel nut made by DTI [Dinesh Tobacco Industries] and not related to Shri Nand Kishore Malani in any manner - A.O. proposed to assess the income in the hands of DTI on the basis of DRI's finding - Held that:- Shri Nand Kishore Malani has made a surrender of the entire money and he has also paid taxes thereon and has also disclosed this income in his return of income. - There is no scope for making any addition either on substantive basis or on protective basis in the hands of the assessee firm or in the hands of M/s Dinesh Pouches Ltd. Accordingly, we set aside the findings of the learned CIT(A) to that extent and order that this income has to be assessed in the hands of Shri Nand Kishore Malani, as individual. - Decided in favour of assessee. Disallowance of DEPB/ DDB - Held that:- when original assessment order was completed before the date of search and any deduction was allowed therein and as thereafter no incriminating evidence was found in the search relatable to this issue, the disallowance in respect of DEPB/ DDB cannot be made or for that matter disallowance can be reduced undertaken in proceedings u/s 153A of the Act - Decided in favour of assessee.
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2013 (8) TMI 708
Dispute between counsel (CA) and contents in the order sheet recorded by the Judicial Member of the Tribunal - Counsel disputed the contents of the order sheet - application is filed by Shri Pradeep Kumar Kapoor, C. A. in his individual capacity and not on behalf of the assessee with a request to either recall or expunge the order sheet entry dated 08/02/2013 - Passing of order by the Tribunal despite adjournment sought by the counsel - order was passed not in the open court - manner in which appeal are listed for hearing and adjournment of the same - Conduct of the professional before Tribunal appearing on behalf of assessee Held that:- No professional has any right to invoke the judicial machinery for his own interest without any reasons. If he does so it would amount to professional misconduct on the part of the professional. Moreover, to dispute the proceedings of the court, without any cogent material, is also an attempt to scandalize the court and also to create hindrance in the proper judicial functioning of the court which cannot be permitted under any circumstances. If it is allowed to be done, the judicial system will collapse. There is hierarchy in the judicial system. If someone is aggrieved with the judicial order passed by any judicial forum, he may approach the higher forum against that order and get the redressal of his grievance but he has no right to make an attempt to scandalize the court by moving such a frivolous application. Not able to understand, what benefit Shri Pradeep Kumar Kapoor will get by moving such type of application as this application has been filed by him in his individual capacity and without the consent of the assessee. It is unheard in the judicial system that some professional can appear before the judicial forum under protest and argue his case. It is for the professional to take a decision in this regard whether he wants to appear before a particular court or judicial forum or not. Shri Pradeep Kumar Kapoor has no right to argue any case under protest even if his contention is accepted. It is for him to take a decision whether he wants to appear before a particular court or not but the court is not obliged to adjourn the hearing only for the reason that he does not want to appear before it. During the course of hearing of appeal on 08/02/2013, Shri Pradeep Kumar Kapoor has not shown any resentment or reservation with the Bench in arguing his case. He happily made the statement that he has no reservation with the Bench and he is ready to argue the case as per instructions from his client. Accordingly, the appeal was heard. Now after the disposal of appeal or even after 48 days from the disputed date of hearing the present application is moved disputing the facts recorded in the order sheet dated 08/02/2013 without any corroborative evidence. Application dismissed with the cost of Rs. 5,000/- to be recovered as arrear of income tax from Shri Pradeep Kumar Kapoor, C. A. as this application was filed in his individual capacity and not on behalf of the assessee. Issue referred the President of Institute of Chartered Accountants with a request to take necessary action as per law against Shri Pradeep Kumar Kapoor for his professional misconduct and also to take corrective measures and necessary steps to educate its members to behave with the judicial authorities befitting to their status and should not be engaged in scandalizing the judicial authority/courts.
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2013 (8) TMI 707
Waiver of interest u/s 215 of the Income Tax Act – Up to 12.01.1987, and, in fact, up to 09.06.1987 the assessing officer did nothing. It is only on 09.06.1987 which is much beyond one year after 13.01.1986 that the assessing officer issued the notice under section 143(2) of the said Act. Therefore, within the period of one year with effect from 13.01.1986, no delay could be attributable to the petitioner - Held that:- Relying upon the principle of law laid down in J.K. Synthetics Ltd v. CIT [2003 (10) TMI 34 - DELHI High Court], it is held if delay is not attributable to the assessee, interest can not be charged on them. In the facts of the present case we find that after the issuance of the notice under section 143(2) the assessment has been completed within a little over eight months. Therefore, had the assessing officer been diligent enough and issued the notice under section 143(2) immediately or shortly after 13.01.1986, when the petitioner filed the first revised return, the assessment could have been completed by 12.01.1987 i.e., within one year. It is obvious that under the provisions, the assessing officer is granted a normal period of one year to complete the assessment and, if he does so, there can be no waiver of interest during that period. However, if the assessing officer is not diligent enough and does not complete the assessment within the said period of one year, any interest liability for the period beyond that one year cannot be foisted on the assessee unless the delay in not completing the assessment within the period of one year is clearly attributable to the assessee. In the present case, the period of one year which is available to the assessing officer for completing the assessment ended on 12.01.1987. For the delay beyond that date, there has to be waiver of interest unless part of that delay is attributable to the assessee. Here, the delay from 18.01.1988 to 18.02.1988 is clearly attributable to the assessee as it chose to file the second revised return on 18.01.1988. - There shall be waiver of interest under section 215 of the said Act in favour of the petitioner for the period 12.01.1987 to 18.01.1988. - Decided partly in favor of assessee.
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2013 (8) TMI 706
Rejection of books of accounts - question of law - Held that:- When questions of law framed by the assessee are mapped on the canvass of facts and circumstances of this case, it turns out to be clearly a case which has no legal implications to be resolved and rather is entirely dependent upon fact situations which have adequately been dealt with by the statutory authorities within the sweep and domain of their jurisdiction. When the questions proposed by the appellant have neither legal contours nor have any legal aspect to be discussed, debated or decided or legal complications to be resolved, these questions framed in this appeal, cannot be termed as questions of law much less substantial questions of law. When Assessing Officer had rejected books of accounts of the assessee under Section 145(3) of the Act and this finding of fact has been affirmed consecutively by the two statutory appellate authorities which had then proceeded to deal with the entries in such books of accounts under different heads and had rendered their verdicts which have no potential for exposition of any legal theory or concept, the appeal is not maintainable under Section 260A of the Act - Decided against assessee.
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2013 (8) TMI 705
Prima facie adjustments - Scope of section 143(1)(a) of the Act - Prima facie adjustment made by the AO in respect of various deductions/exemptions/claims made in the return in Income - Held that:- The scope of section 143(1)(a) of the Act is by now well settled. The assessing officer can make prima facie adjustments only in respect of issues which are not debatable and for which no further information required from the assessee other than that contained in the return of income and the accompanying documents. In other words where the claim admits of more than one interpretation or requires further facts and details, the same is outside the scope of the said section. Power of Commissioner (A) to call for additional evidence under section 143(1)(a) - Ld. CIT (A) call for additional details and also to set aside the claimed deduction to the AO for further verification in a case u/s 143 (I) (a) – Held that:- While adjudicating an appeal against intimation under sec.143(1)(a) of the Act the CIT(A) is not empowered to call for further details at the appellate stage. The CIT(A) is required to see whether on the basis of the return or, the accompanying documents as filed before the assessing officer, any prima facie adjustment could be made. It is further not open to the CIT(A) to remit set aside the matter to the file of the assessing officer. The CIT(A) may either delete or sustain the prima facie adjustment - Decided against the Revenue. Also, reliance is placed upon the case Khatau Junkar Ltd Vs. K.S. Pathania [1992 (2) TMI 67 - BOMBAY High Court ], wherein it was observed that in the absence of any specific provision in the Income Tax Act which disallows a deduction because a specific document specified in that section is not annexed to the return, the Income-tax Officer cannot, under clause (iii) of the proviso to section 143(1)(a), disallow a claim or a deduction because, in his view, adequate evidence in support of such a claim or deduction is not before him. He can disallow a claim for deduction only if he is satisfied, on the basis of the material which is before him, that the assessee is not entitled to such a deduction - Use of the phrases "prima facie admissible" in clause (ii) to the proviso and "prima facie inadmissible" in clause (iii) to the proviso also lend support to this interpretation. In its literal sense, "prima facie" means on the face of it. Hence, on the face of the return and the documents and accounts accompanying it, the deduction claimed must be inadmissible. Only then, can it be disallowed under the proviso to section 143(1)(a). In any further enquiry is necessary, or if the Income-tax Officer feels that further proof is required in connection with the claim for deduction, he will have to issue a notice under sub-section (2) of Section 143.
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2013 (8) TMI 704
Undisclosed income - Undervaluation registration of property - Whether the amount deposited in bank is part of sales consideration or undisclosed income liable to addition u/s 68 - Assessee himself made complaint about it - A.O. applied proceedings u/s 68 - Held that:- assessee as an honest citizen not only made a complaint to the registering authority that the sale deed has been registered at a value much below the amount, which he has actually received, he deposited the entire amount in the bank and voluntarily filed return. There was no material whatsoever or any circumstance, which could have suggested that this amount was received by him from any other source. The deposition of witness of the sale deed, the Bank Manager and the evidence filed with regard to valuation of the property was more than sufficient to discharge the burden, which the A.O. had unreasonably placed on the assessee. The A.O. in disbelieving the evidence has not given any reasons whatsoever to discard the statement of the witnesses, deposit of the entire sale consideration in bank and the deposition of the Bank Manager. The assessee had not only deposited the entire amount in the bank but also informed the registering authority of the deficiency of the stamp in the sale deed - from the facts and circumstances on the record that in the present case the Income Tax Officer did not act in bonafide manner. The assessee led substantial evidence to establish that the amount treated to be undisclosed income by the A.O. was the sale consideration of sale of his agricultural land, which he had deposited in the bank and had voluntarily filed return disclosing his income. Overwhelming evidence led by him was discarded without giving any reasons at all. The assessment was framed only on the ipse dixit of the A.O., which gives us reason to believe that he had exceeded his authority with some ill will or with ulterior motive - Decided against Revenue.
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2013 (8) TMI 703
Undisclosed Capital gain - Scope of block assessment proceedings - Additions due to cross references of entries in the books of account - Transfer of membership of recognized stock exchange - CIT upheld disallowance - Tribunal deleted disallowance - Held that:- Chapter XIV-B deals with the procedure for making assessment in cases of search. This block assessment is distinct and separate and independent of a regular assessment for the reason that in these block assessment proceedings, the Assessing Officer is concerned only with undisclosed income and he has no power to consider material and evidence not detected as a result of some external information or a survey or some other source other than a search, it is found that some income had escaped assessment, then it is open for the Assessing Officer to resort to a regular assessment including re-opening a completed assessment but he cannot drag these items into the block assessment proceedings envisaged under Chapter XIV-B of the Act. Thus, a block assessment proceeding is distinct and different from the regular assessment proceeding and the Chapter deals exclusively with block assessment relating to search and all other proceedings are alien to it. Whether the cross-reference in the balance sheet of the assessee and M/s Aasheesh Securities Ltd., could be treated as material on the basis of which enquiries could be made and the assessee to be reassessed on the source of income for charging income to the capital gain - Held no - decided in favour of the assessee and against the revenue.
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2013 (8) TMI 702
Rectification or order - Revision of order by Tribunal - Block assessment proceedings - Assesse through settlement commission paid excess tax - Settlement commission accepted only partial amount - A.O. and ITAT disallowed rectification of order - Held that:- settlement commission has also given its reasons as to why it is accepting only a part of the amount offered. The settlement commission has also positively declined to give a direction to exclude the assessment of a sum of Rs.20.00 lakhs each in the case of the respondents/assesses on the premise that the applicant M/s MSL was making an offer of Rs.4,84,88,500/- as its undisclosed income for the reason that it cannot issue such directions in respect of persons not before the Commission and insofar as limiting the offer to a sum of Rs.2,65,04,626/- the settlement commission noticed that such alone could have been the undisclosed income of the assesses in the earlier period and it had no income generated beyond this. It is not as contended by Mr Parthasarthy that because the commission was satisfied the other part of the investment in M/s MSIL had been explained, the offer made by M/s MSL before seeking settlement before the commission was accepted only to the extent of unexplained investment in the other company. On the other hand, that was not considered by the settlement commission but the settlement commission only examined the capacity and ability of the applicant before it for generating the income which was not disclosed and later making an offer before a commission for the settlement. For this purpose the settlement commission had examined the past conduct and transactions of the applicant M/s MSL. In the absence of any such discussion regarding the source of investment in M/s MSIL, only offer being made by M/s MSL - a remand for such purpose will be in our considered opinion a futile exercise and more over such an exercise if at all could have been in the case of very company M/s MSIL and not by either the present respondents/assesses or M/s MSL - an applicant and declarant before the settlement commission - Decided in favour of Revenue.
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2013 (8) TMI 701
Disallowance u/s 36(1)(ii) - Interest expenses on borrowed funds - loan/ advances to subsidiary companies - Held that:- AO made disallowance of interest of Rs.5,74,25,564/- in assessment year 2002-03 for similar reasons as stated in the assessment year under consideration. We observe that the ld. CIT(A) confirmed the action of AO. But the Tribunal in further appeal after considering the submissions of the assessee vide para 11 at page 9 of the order allowed the claim of the assessee. It is relevant to state that the Tribunal has stated that ld. CIT(A) in the next assessment year viz assessment year 2003-04 himself allowed the relief to the assessee. Tribunal allowed the claim of the assessee in AY 2002-03 after observing that in case business of subsidiary is collapsed it will have severe repercussions on the assessee company. That the synergies of the business operation of the assessee company and its subsidiaries were re-aligned and the functions of the various companies were made complimentary and supplementary to each other, so as to avoid duplication of interest and deriving maximum value in its operation. That each company is inter dependent on the other. That the survival of assessee is also at stake, if the subsidiaries fail. The Tribunal also observed that section 14A of the Act would also not come in the way for the reasons that the majority of the subsidiaries are foreign subsidiaries and the question of section 14A being applied for dividend received from them does not arise. The Tribunal also held that section 14A and section 36(1) (iii) operate in different fields - investment in shares in e-Capital Solution were through Share Swap and not shares investment were made in cash. That the assessee acquired shares in e-Capital Solution not by payment of cash but by issue of its own shares to the sellers of the said shares after taking approval from Reserve Bank of India. Thus, question of using of borrowed funds for acquiring shares in e-Capital Solution does not arise - there is no infirmity in the order of ld. CIT(A) in deleting the disallowance of interest expenditure made by AO - Decided against Revenue. Transfer Pricing adjustment - CIT deleted addition - Held that:- issue requires reconsideration by TPO and therefore matter be restored to AO to determine ALP including applicability of method to be adopted. Hence, the orders of authorities below is set aside and the matter is restored to the file of AO to determine ALP of transactions of the assessee with Associated Enterprises afresh after giving due opportunity of hearing to the assessee by a reasoned order and in accordance with law - Decided in favour of Revenue.
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2013 (8) TMI 700
Business income or capital gain - Investment portfolio - Whether the profit from the shares is a capital gain or business income - Held that:- It is seen that the assessee has shown all the purchases under the investment portfolio. It is further seen that the long term capital gain shown by the assessee has been accepted by the AO himself. Under the provision of law, it is clearly provided that if the holding of share is more than one year then the gain on account of sale of shares has to be treated as long term capital gain and if holding period of shares are less than one year then the gain on account of sale of shares has to be treated as short term capital gain. No where it is provided that if the transactions are frequent and voluminous then the claim of the assessee is not allowable as short term capital gain or long term capital gain as the case may be. The only question which is to be examined and seen by the AO as to what treatment has been given by the assessee in respect to purchase of shares. Whether the purchase of shares are shown under the head stock-in-trade or under the head investments. If purchases have been shown under the head stock-in-trade then the sale transactions has to be treated as business transactions and if the sales have been effected from investment account then the gain has to be treated as long term capital gain or short term capital gain, as the case may be. In the present case, the assessee has shown all the purchases under the head investment portfolio - Decided in favour of assessee.
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2013 (8) TMI 699
Deduction u/s 80IB - Deduction in SSI industry - withdrawal of benefit - value of plant and machinery had exceeded Rs.1 crore in subsequent years - Held that:- the condition that is not complied with by the assessee is a condition which is to be fulfilled on an year to year basis and not merely in the initial/formative year alone. To elaborate further, the industrial undertaking, to be eligible for the benefit of the claim u/s 80IB of the Act, four conditions mentioned in section 80IB(2) has to be fulfilled. The first condition is that the industrial undertaking must not have been formed by splitting up or reconstruction of a business already in existence with an exception that in case of units specified u/s 33B of the I T Act, this condition will not apply. The second condition is that such undertaking must not have been formed by transfer of machinery and plant previously used must not exceed 20% of the value of the total cost of the plant and machinery of such industrial undertaking. The third condition is that the industrial undertaking must produce or manufacture any article or thing other than any article or thing specified in the Eleventh Schedule. Exception to this third condition is that a SSIU can avail the 80IB benefit even if manufactures or produces articles or things specified in Eleventh Schedule. The fourth condition is that the industrial undertaking running with the aid of power must not have less than 10 employees and if it is run without power, the number of employees must be more than 20 employees. Thus all the four conditions narrated above must be fulfilled if the industrial undertaking desires to avail benefit u/s 80IB of I T Act. For a SSIU, there is also an extra condition i.e. it must be an SSI unit as per explanation (g) given in 80IB(14) of I T Act which refers to Section 11B of the IDR Act, 1951 which in turn prescribes a limit for investment in plant and machinery to designate the industrial undertaking as SSI unit. Thus, out of these give conditions; the first two conditions may be called formative or unchangeable. In other words, if in the initial year of manufacture or production, it is substantiated that it has fulfilled these two conditions, the Assessing Officer cannot on this ground in subsequent eligible years of the block period deny the benefit u/s 80IB. The rest of the three conditions are to be fulfilled on year to year basis. The industrial undertaking must show in each subsequent year of claim that these three conditions have not been violated. Such claims of the assessee have to face the analysis and scrutiny of the Assessing Officer. Thus, since each assessment year is separate and independent, the revenue authorities had every power to examine and analyse the facts and figures as well as relevant law points of each year to find out whether all these three conditions are fulfilled or not - the value of plant and machinery had exceeded Rs.1 crore during the year under consideration which incidentally deprive the assessee to call itself as a Small Scale Industry - Decided against assessee.
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2013 (8) TMI 698
Admission of additional evidence u/s 46A - CIT rejected additional evidence - Held that:- The reliance placed by the the assessee on the ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT V Mukta Metal Works (2011 (2) TMI 250 - PUNJAB AND HARYANA HIGH COURT) is misplaced in view of the facts being at variance. In the facts of the case before the Hon'ble High Court, the additional evidence was in the form of the report of Forensic Science Laboratory and an affidavit dated 27.12.2004 of the searched person. However, in the facts of the present case, additional evidence is by way of books of account being re-written including certain entries relating to sundry creditors, closing stock and even VAT in the provisional balance sheet, which as per the assessee were prepared on the basis of the books of account now written and permission for producing the same was sought from CIT(Appeals) as additional evidence under Rule 46A of IT Rules. - Decided against the assessee. Addition u/s 68 - difference in the account of parties and further addition made by rejecting the books of account and also disallowance of expenses. - Held that:- The AO during the course of assessment proceedings noted that there was a difference in the balance shown in the account of M/s Diwan Steel Industries of Rs.699,980/- and of M/s Regent Steel Industries of Rs.30 lacs, when compared with the copy of account of the assessee in the books of account of the respective parties. The assessee having failed to reconcile the difference except by way of additional evidence, which has not been admitted by us in the paras herein above, the addition made by the AO merits to be upheld in the hands of the assessee. Rejection of books of accounts - application of net profit rate of the earlier year - Held that:- The assessee had failed to produce the books of account before the authorities below and the revised books of account produced by way of additional evidence have been rejected by CIT(Appeals) - there was no alternative left but to estimate the trading income in the hands of the assessee and application of net profit rate to the sales receipts shown by the assessee - Decided against the assessee.
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2013 (8) TMI 697
Transfer pricing - Order of Dispute Resolution Panel (DRP) - Non-speaking order not stating the objections raised by the assessee and the reasons have also not been given, simply the order of TPO and Assessing Officer are referred - Held that:- The matter was referred to the DRP u/s 144C of the IT Act. Under sub-section (1) of Section 144C, the Assessing Officer is under an obligation to forward a draft of the proposed order of assessment to the assessee if he proposes to make on or after the first day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. Under sub-section (2) of Section 144, the assessee within 30 days of the receipt of such draft order can accept the variation made by the Assessing Officer or he can file objections either to Dispute Resolution Panel or to the Assessing Officer. Since the assessee had filed his objections with DRP, then, under sub-section (5) the DRP, upon receipt of objection is under obligation to issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and under sub-section (6) such directions which are put up under sub-section (5) would be further considering the following documents: (a) draft order; (b) the objection filed by the assessee; (c) the evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, valuation officer, or TPO or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be colleted by, it; and (g) result of any inquiry made by, or caused to be made by, it. Under sub-section (7), DRP is also authorized before issuing of direction under sub-section (5) to make such further inquiry, as it think fit or cause any further inquiry to be made by any income-tax authority and report the result of the same to it. Under sub-section (8) the DRP has power to confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further inquiry and passing of the assessment order. Under sub-section (11) no direction u/s sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue respectively. Under sub-section (12) directions under sub-section (5) cannot be passed after nine months from the end of the month in which draft order is forwarded to the eligible assessee. Under sub-section (13), on receipt of directions issued under subsection (5), the Assessing Officer has to pass the assessment order in conformity with the directions without providing any further opportunity of being heard to the assessee within one month from the end of the month in which such directions are received. The rejection of comparables are based on detailed reasoning and after applying reasonable filters. The denial of working capital adjustment as also capacity adjustment is based on cogent reasoning, use of current data has been found more appropriate and fresh search has been rejected as there is no valid reason. Similarly, the DRP has rejected the other grounds. Therefore, the order passed by the ld. DRP is a non-speaking order not stating the objections raised by the assessee and the reasons have also not been given as simply the order of TPO and Assessing Officer are referred - Order restored back to DRP to pass a speaking order stating all the objections of the assessee and disposing them by giving cogent reasons for adjudication of the objections of the assessee - Following decision of Evalueserve Com (P.) Ltd. v. Ward 11(2) [2011 (11) TMI 111 - ITAT, DELHI] - Decided in favour of assessee.
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2013 (8) TMI 696
Revisional order u/s 263 - Held that:- Counsel for the appellant filed three paper books in this case which includes the copy of computation of income, copy of Audit Report, A.O’s. query letter dated 12.08.2009, reply of the assessee dated 02.09.2009, 11.09.2009, 18.11.2009 & 18.12.2009. The appellant had not filed any reply against the query raised by the AO on fall of G.P. Further confirmation in case of M/s. Umiya Finlease Pvt. Ltd., Somabhai Narayandas Patel & Soma Bhai Narayandas Patel HUF filed before CIT not before the A.O. The bank account in case of Bhagwati (Pvt.) Ltd., Moti Polymers (Pvt.) Ltd., Ambica Marbles Store Suppliers, Bhavna Sales Agency and Motidas Jivandas Patel had not been examined by the A.O. The order of the A.O. to that extent is erroneous and prejudicial of interest of Revenue. However, on other issues the ld. CIT had passed order under Section 263 of the I.T. Act without specific observations. The remarks of CIT are general. The Assessee had filed the confirmation in case of cash creditors, copy of return & copy of bank accounts. The Ld. A.O. had satisfied himself with evidences filed before him. Appellant filed three paper books in this case which includes the copy of computation of income, copy of Audit Report, A.O’s. query letter dated 12.08.2009, reply of the assessee dated 02.09.2009, 11.09.2009, 18.11.2009 & 18.12.2009. The appellant had not filed any reply against the query raised by the AO on fall of G.P. Further confirmation in case of M/s. Umiya Finlease Pvt. Ltd., Somabhai Narayandas Patel & Soma Bhai Narayandas Patel HUF filed before CIT not before the A.O. The bank account in case of Bhagwati (Pvt.) Ltd., Moti Polymers (Pvt.) Ltd., Ambica Marbles Store Suppliers, Bhavna Sales Agency and Motidas Jivandas Patel had not been examined by the A.O. The order of the A.O. to that extent is erroneous and prejudicial of interest of Revenue. However, on other issues the ld. CIT had passed order under Section 263 of the I.T. Act without specific observations. The remarks of CIT are general. The Assessee had filed the confirmation in case of cash creditors, copy of return & copy of bank accounts. The Ld. A.O. had satisfied himself with evidences filed before him - Decided partly in favour of assessee.
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2013 (8) TMI 695
Unexplained cash credit - Cash deposit in bank account - Held that:- in view of provisions of section 68 of the Act ,where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the AO, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money. If he fails to rebut, the said evidence being un-rebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee AO has act reasonably. The claim of withdrawal of amounts for purchasing plot of land at Surat and re-depositing the same in the bank a/cs.is not been supported by any plausible explanation. After considering the withdrawals made by the assessee, assessee did not have sufficient funds at the end of the AY. 2006-07, which could be deposited in the banks in the year under consideration. It is not correct that assessee had sufficient funds that were carried forward from the earlier AY and were deposited in the bank a/cs during the year under consideration - Following decision of Sumati Dayal Versus Commissioner of Income-Tax [1995 (3) TMI 3 - SUPREME Court] - Decided in favour of Revenue. Income from House property - Addition on house rent - notional interest on interest free security deposit - if AO finds that the actual rent received is less than the "fair/market rent" because of the reason that the assessee has received abnormally high interest free security deposit and because of that reason, the actual rent received is less than the rent which the property might fetch, he can undertake necessary exercise in that behalf - High Court in the case of Commissioner of Income Tax Vs. J. K. Investors (Bombay) Ltd., [2000 -TMI - 14566 - BOMBAY High Court] categorically rejected the formula of addition of notional interest while determining the "fair rent" - Decided in favor of the assessee Income from House property - whether the annual letting value fixed by the Municipal Authorities under the Delhi Municipal Authority Act can be the basis of adopting annual letting value for the purposes of Section 23 of the Act - Calcutta High Court in Satya Co. Ltd. (1985 -TMI - 60423 - ITAT CALCUTTA-C) that in such circumstances, the annual value fixed by the Municipal Authorities can be a rationale yardstick. However, it would be subject to the condition that the annual value fixed bears a close proximity with the assessment year in question in respect of which the assessment is to be made under the Income Tax laws - Held that: If the assessing officer can show that rateable value under municipal laws does not represent the correct fair rent, then he may determine the same on the basis of material/ evidence placed on record - Following decision of COMMISSIONER OF INCOME TAX, Versus MONI KUMAR SUBBA & Miracle Exporters P. Ltd. [2011 (3) TMI 497 - DELHI HIGH COURT] - Appeal is dismissed.
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2013 (8) TMI 694
Notice issued u/s 148 - Transfer of a case - Jurisdiction to issue notice u/s 148 with AO Delhi or AO Kolkata - Validity of reopening of assessment - CIT sustained notice of reassessment - Held that:- After going through the provisions of sections 120, 124 and 127 of the Act, the plenary powers regarding conferment of jurisdiction has been vested, by delegation by the statute, on the Commissioner having jurisdiction in respect of assessment of the case. This power, in the absence of any prohibition or restriction, empowers the Commissioner of Income-tax to effect realignment of jurisdiction. The Commissioner of Income-tax by order or direction, while divesting these authorities of the power in respect of performance of their duties under the Act conferred earlier, may confer such jurisdiction to other authorities under the Act, as he may direct. As soon as such order or direction is made completely divesting the jurisdiction of the authorities so long so empowered, all proceedings including those which might arise thereafter, before them as also proceedings pending before them, come within the jurisdiction of the newly conferred authorities unless any specific provision is made in respect of any pending proceedings. Such consequence is inevitable when there is withdrawal of jurisdiction, which means automatic extinction of jurisdiction of one authority with simultaneous conferment of jurisdiction on another authority under the Act in respect of all pending and future proceedings. Explanation to section 127 of the Act makes it clear that the word "case" in relation to any person whose name is specified in the order of transfer means all proceedings under the Act in respect of any year which may be pending on the date of the transfer, and also includes all proceedings under the Act which may be commenced after the date of transfer in respect of any year. The word "case" is thus used in a comprehensive sense of including both pending proceedings and proceedings to be instituted in the future. Consequently, an order of transfer can be validly made even if there be no proceedings pending for assessment of tax and the purpose of the transfer may simply be that all future proceedings are to take place before the officer to whom the case of the assessee is transferred. The order passed by CIT-1, Delhi, transferring jurisdiction from ITO, Ward-3(3), New Delhi on 04-01-2010, subsequent action of the AO i.e. ITO, Ward-3(3), New Delhi issuing notice u/s. 148 of the Act dated 25-03-2010 is invalid because the jurisdiction from ITO, Ward-3(3), New Delhi by CIT-1, Delhi to ITO, Ward-6(1), Kolkata. - Decided in favour of assessee.
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Customs
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2013 (8) TMI 693
Valuation - import of goods - inclusion of value of software in the networking appliance - Application for adducing additional evidence – assessee imported networking appliances which had certain embedded software to enable its use – Revenue contended that the equipment, software and services as a single bundle sold in the trade but the assessee had sold the components separately to avoid payment – Held that:- The department had not given adequate opportunity to the assessee to defend its position on the questions of facts - there had been a denial of natural justice during the adjudication proceedings - Assessee should be allowed to cross-examine the persons whose statements are relied upon for proving the case against them. Appellant have a contention that some part of the money is towards updation of the software. A typical example is antivirus software. Even after the initial stage the software has to be updated for newer and newer viruses, spams, spywares etc. that is pumped into the network by criminal and anti-social elements in the society. For this purpose, the software need to be updated continuously and this service has to be paid for. It is argued that the cost of such updation of software cannot form part of assessable value of goods when imported. No effort seems to have been made to make distinction between the post-import services and the software that is embedded. Stay granted - matter remanded back.
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2013 (8) TMI 692
Discrepancy in goods - whether after clearance of goods by customs grievance of discrepancy in quantity of goods delivered entertainable - Held that:- there was no discrepancy in the report as alleged by appellant - for the refund to be admissible in respect of short shipped goods, verification report from Customs is necessary the verification report was not there - no complaint was lodged at the time of clearance – decided against the assessee.
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2013 (8) TMI 691
Stay petition – waiver of pre deposit of penalty u/s 112(a) – department contended that assessee had facilitated in clearing the consignments on the basis of forged/ tampered licenses – Held that:- The forged/ tampered licenses were not available even at the time of investigations and hence could not be produced before the bench - forged/ tampered license were not made available by the department – assessee had made a prima facie case in its favour – application for complete waiver of pre deosit allowed – decided in favour of assessee.
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2013 (8) TMI 690
Waiver of pre deposit of penalty u/s 112 – appellant in his statement denied allegations made by the authorities as regards diversion of imported textile material - statements of the appellant herein are exculpatory – Held that:- Application for the waiver of pre-deposit of the amounts involved is allowed and recovery stayed - the appellant has made out a strong prima facie case for the waiver of the pre-deposit - He had denied that he had any role in diversion of the textile of the goods which were imported and sold - It was also seen from the records that the assessee herein was a high seas seller and had accepted the fact that he had sold the goods on high seas sales basis and had received the payments through cheques – court relied upon the judgement of ASHWIN S. MEHTA Versus COMMISSIONER OF CUSTOMS, MUMBAI(2005 (9) TMI 462 - CESTAT, MUMBAI) – decided in favour of assessee.
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2013 (8) TMI 689
Import without Payment of Duty for export - failure to export - Confiscation of Goods u/s 111(o) – Penalty u/s 114A - Import of capital goods took place without payment of duty in terms of Notifications No. 13/81-Cus., dated 9-2-1981 - Department was of the view that the extension of the period were not in accordance with the provision of Section 61 of Customs Act, 1962 and duty should have been demanded unconditionally - Held that:- The goods had been allowed for export as per the procedure for clearance of the warehoused goods, the goods are not liable for confiscation as per Section 111(o) - Penalty u/s 114A was imposable in case duty had not been levied or had been short-levied, etc., by reason of fraud, collusion or wilful mis-statement or suppression of facts or contravention of Central Excise Act or Rules, 1944 with intent to evade payment of duty - No such ingredients had been brought out by the department - penalty imposed u/s 112 of Customs Act, 1962 and Rule 173Q of Central Excise Rules, 1944 was also not sustainable – the order was sustainable barring the penalty imposed u/s 112 of Customs Act, 1962 and penalty imposed under Rule 173Q. Extension of Warehousing Period - Whether the Extension of the warehousing period was not proper - Held that:- Extension of warehousing period cannot be found fault with - The Unit was not having any control on the circumstances wherein the technology had undergone changes and new Montreal Protocol and they could not cope up with new protocol in this kind of industry - the circumstances in this case were not exceptional in nature - Further Section 69 of Customs Act, 1962, provided for export of warehousing goods without payment of import duty subject to certain conditions - It was not the case of the department that the Unit had not fulfilled the said condition - The export/removal of the goods had been as per the provision of Chapter IX of the Warehousing and the department could not bring out the condition which were not fulfilled or any provision had been contravened - the goods were not liable for confiscation – Decided against Revenue.
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2013 (8) TMI 688
Correct Classification of Imported Goods - What should be the correct classification of the imported goods declared as ‘Condensate or Crude Petroleum Oil’ or CPO imported by the assesses - Department was of the view that the import of refined petroleum products by declaring them as ‘Crude Petroleum Product’ or ‘Crude Petroleum Oil’ - Revenue declared the consignment as ‘Condensate/Crude Petroleum Oil’ that was imported by the assesses - Held that:- In the absence of establishing the source of origin of gas condensate the classification of the goods imported by the assesses had to be under CTH 2710 and duties were required to be discharged accordingly – Relying upon M/s. Pushpal Exports Pvt. Ltd. v. CC, Kandla [2011 (1) TMI 877 - CESTAT, AHEMDABAD]. Condensate hydrocarbon (C4 to C20 approx.) should be obtained from wet natural gas - No documentary evidence had been produced by the assesses that the goods imported were obtained during the stabilization of wet natural gas, immediately upon its extraction – Decided against assesse. Mis-declaration of goods – Confiscation Of Goods – Redemption Fine – Penalties u/s 111(a) - Whether there was a mis-declaration on the part of the appellants inviting confiscation, redemption and imposition of penalties upon the assesses under Customs Act, 1962 – Held that:- The penalties imposed upon the appellants under Section 111(a) of Customs Act, 1962 shall be restricted to the differential duty sought to be evaded after re-calculating the differential duty liability - The assesses had the knowledge of imported goods being good quality petroleum oil but the same was blindly accepted to be a crude oil condensate on the basis of statements given - all the assesses had knowledge of good quality petroleum oil which they agreed to be classifiable under CTH 2710 19 90 and accordingly confiscation of imported goods and imposition of penalties had been correctly made by the adjudicating authorities – When samples of imported goods were shown the same to be good quality petroleum oil and that they agree to pay differential duty - All other assesses who purchased the imported goods on high sea sale basis also admitted the wrong classification done and agreed to pay differential duty – Decided against assesses. Assessable value of Goods - Whether the assessable value of the imported goods was required to be enhanced from USD 240 PMT declared to USA 327.25 PMT - There was no evidence that assesses had repatriated more value in addition to the transaction value paid to the supplier of the goods - The chemical test reports of the relied upon consignments were not made available to the assesses - In the absence of these factors, it cannot be appreciated that the relied upon imports were contemporary imports and will be sufficient to reject the transaction value – Decided in favor of assesses.
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Corporate Laws
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2013 (8) TMI 687
Alternative Statutory Remedy u/s 13 SARFAESI Act – Appeal For making Representation against the order – appellant contended that its Credit facilities were classified as non-performing asset in violation of the guidelines of the Reserve Bank of India – Held that:- The writ petition was filed even prior to making representation u/s 13 (3A) of the SARFAESI Act to the respondent bank - During pendency of the appeal such representation was made and dealt with elaborately by the respondent bank by passing a speaking order which was communicated vide its letter to the appellants - In Mardia Chemicals Ltd. v. Union of India [2004 (4) TMI 294 - SUPREME COURT OF INDIA] - The internal adjudicatory mechanism to deal with objections raised by a borrower with regard to the demand notice including classification of its accounts as NPA appeared to have been effectively complied – Writ Petition rejected – Decided against appellant.
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Service Tax
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2013 (8) TMI 713
Cenvat credit on Rent-a-Cab Services - CENVAT credit on Outdoor Catering Services - The assesse was a business process outsourcing unit substantially exporting their output services - Revenue was of the view that they were not eligible for such credit in respect of many of the input services on which they had taken Cenvat credit - Held that:- Confirmation was not justified in the absence of any material to doubt the veracity of the facts affirmed by applicant - Commissioner had also concurred in principle that credit of tax paid on these services were eligible - But he had gone ahead to confirm the demand stating that no documents had been produced – Following STANZEN TOYOTETSU INDIA PVT. LTD. Versus COMMR. OF C. EX., BANGALORE-III [2008 (12) TMI 118 - CESTAT BANGLORE] and CCE, Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] - Revenue had no evidence to prove anything contrary to their claim and they had not taken any credit - They had no idea as to what type of documents would have convinced the adjudicating authority about the absence of a fact. Waiver of Pre-deposit - No pre-deposit could be demanded - but on Credit availed on the basis of invoices raised by vendors said to be not registered court directed the pre-deposit – conditional Stay Granted.
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2013 (8) TMI 712
Nature of Service - Commercial Training or Coaching u/s 65 (105) (zzc) - non-profit institution - training programmes at the level of individual bank - The department was of the view that the service rendered by the assesse came under the category of ‘Commercial Training or Coaching' - Held that:- The activity undertaken by the assesse falls within the definition of ‘commercial coaching or training' as defined in Section 65(105)(zzc) - The services rendered by the assesse was exigible to service tax under ‘commercial coaching or training service - The assesses were providing to their students "training or coaching" for a consideration and would ipso facto fall within the ambit of "commercial training or coaching centre" envisaged in the explanation to Section 65(105)(zzc) - As this explanation had retrospective effect from 01/07/2003, the activities undertaken by all the assesses during the periods of dispute would get covered within the meaning of the phrase "training or coaching imparted for consideration" occurring in the text of the explanation - the explanation to Section 65(105)(zzc) of the Act had very wide scope to encompass the activities of the assesses and render them exigible to service tax under Section 65(105)(zzc) of the Act. U.P.Gram Panchayat Adhikari Sangh & others v. Dayal Ram Saroj & others [2006 (12) TMI 446 - SUPREME COURT] - It was an inbuilt mechanism in the system itself - Judicial discipline demands that when the decision of a co-ordinate Bench of the same High Court was brought to the notice of the Bench, it was respected and is binding, subject of course to the right to take a different view or to doubt the correctness of the decision and the permissible course then often was to refer the question or the case to a larger Bench - This was the minimum discipline and decorum to be maintained by judicial fraternity. Time-barred Demand - Whether the demand was hit by time-bar – Held that:- Service tax demand shall be restricted to the normal period of limitation inasmuch as the assesse was under the bonafide belief that they are not liable to service tax and evidences on record also support this fact - There cannot be any suppression of facts on the parts of the assesse and, therefore, the service tax demand had to be restricted to the normal period of limitation - the notice had been issued on 06/04/2009, only the demand for the period October, 2007 to September, 2008 would fall within the normal period of limitation and the demand of service tax had to be restricted to this period only. Eligibility for Abatement - Held that:- The assesse was eligible for abatement towards the amounts levied for boarding and lodging expenses charged from the trainees subject to submissions of satisfactory evidences in this regard - on such evidences being furnished the service tax demand shall be re-computed and the assesse shall be liable to pay such recomputed service tax along interest.
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2013 (8) TMI 711
Classification of service – The service provided by the assesse would fall under which of the category - Ship Management Services u/s 65(96), Maintenance and Repair Service u/s 65 (105) (zzg), Technical and Analysis Service u/s 65 (105) (zzh) , Business Auxiliary Service u/ s 65 (105) (zzb) and Business Support Service u/s 65 (105) (zzzq) - Assesses were engaged in transport of cargo throughout the world using ships owned/charted by them – Revenue was of the view that these remittances were made taxable - Held that:- Service provided was classifiable as Business Auxiliary Service and service tax liability would arise because this service also was specified in clause (iii) of Taxation of service (provided from India and Received in India) Rules, 2006 where liability was based on the place of residence of the recipient of service and not based on the place of performance of service – 1.3crores were ordered to be submitted as pre-deposit – on such submission rest of the duty to be waived – Decided against assesse.
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2013 (8) TMI 710
Classification of Service - Travel by Air services u/s 65 (105) (zzzo) or Supply of Tangible Goods u/s 65 (105) – Waiver of pre-deposit - Assesse owned an aircraft which was being given on charter to other companies on payment of charter charges – they were paying service tax under the category of Transport of Passengers by Air u/s 65 (105) (zzzo) - Revenue was of the view that when an aircraft was given on charter to other companies, it amounts to supply of tangible goods a taxable service as defined u/s 65 (105) (zzzzj) - Held that:- The service was more appropriately classifiable as supply of tangible goods rather than as transportation of passengers by air – the aircraft was being charted out to companies who were paying the bills – relying upon Mesco Airlines Ltd. Vs. CST Delhi [2013 (3) TMI 522 - CESTAT NEW DELHI] – 12lakhs were ordered to be paid as pre-deposit – upon such submission rest of the duty to be waived till final disposal – Decided partly in favor of assesse.
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2013 (8) TMI 709
Interim Relief – Extension of the Order – Stay Application – effect of proviso introduced into the provision by the Finance Act, 2013. - Held that:- The incapacity of the Tribunal to dispose of appeals (where an order of stay was granted) within a period of 180 days (earlier) or 365 days (as at present) was not attributable to any dilatory conduct of the assesses – Where the appeal could not be disposed of for no fault of the assesse or for reason not attributable to the assesse, provisions of Section 35C(2A) of the 1944 Act would not be applicable – following IPCL Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA [2004 (6) TMI 52 - CESTAT, NEW DELHI]. Interpretation of Provision – Waiver of Pre-deposit - The interpretation placed by the Supreme Court in Kumar Cotton Mills Pvt. Ltd. [2005 (1) TMI 114 - SUPREME COURT OF INDIA] on the 2nd proviso to Section 35C(2A) of 1944 Act was a fortiori applicable to the proviso introduced into the provision by the Finance Act, 2013 - Since the present appeal could not be disposed of within 365 days, for no fault of the assesse, and a prima facie case in favour the assesse was recorded by the earlier order- the assesse should be entitled to waiver of pre-deposit of the assessed demand, during pendency of the appeal – Stay granted.
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Central Excise
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2013 (8) TMI 686
Eligiblity of Cenvat credit in respect of shapes and sections, Joists, Channels, MS Girders, Tropozodial Sheets, Channels, H.R. Coils etc - Items were used by them in the factory for fabrication of various components of the sugar mill machinery and also the pipeline and only some quantity had been used in making of supporting structures – Held that:- To the extent, the use of the steel is for fabrication of sugar mill machinery or its parts or pipes and tubes, the Cenvat credit would be admissible. The Cenvat credit would be inadmissible only in respect of that quantity of steel which has been used for supporting structures - Matters are remanded to the original Adjudicating Authority for denovo decision. The original Adjudicating Authority in course of denovo decision must examine the evidence produced by the appellant in support of their claim that major quantity of the steel items have been used in fabrication of pipes and tubes and equipment and parts of the sugar mill machinery.
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2013 (8) TMI 685
Determination of weight - Benefit of exemption notification No.6/2001-CE dt.1.3.01 - first clearance upto 3500 MT of paper and paper board or article made therefrom - whether the weight of wrapper (packing paper and paper board) shall be taken into account to determine the quantity cleared in a financial year - Held that:- appellants have not disclosed gross weight and net weight in respect of each packet of the paper in any of the documents occasioning clearance during material period. Normally when a container contains contents, the gross weight and net weight are exhibited on the container. In the present reference weight of contents and container was not exhibited conspicuously. Weights and Measures Act has adopted the rationale of gross weight and net weight for consumer protection and declaration of MRP. This is to save the consumer from exploitation. It is strange how Ld. Commissioner (A) ignored the fact that wrappers cleared were excisable goods and material for the purpose of grant of notification. But he based his decision on irrelevant considerations. If the weight of wrapper in question was also material that needed thorough scrutiny. Ignoring such aspect learned Commissioner buried interest of Revenue. When the appellants did not challenge manufacture of the wrapper by them and those were cleared and were excisable and to be accounted for, appellant should have come out with clean hands to prove the weight of wrappers cleared. But they have chosen a way to avoid such disclosure. - Matter remanded for re-adjudication.
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2013 (8) TMI 684
Benefit of Notification No. 6/02-CE - Refund of duty paid at the time of clearance of the motor vehicle - Authorities denied the refund claim - Held that:- extended period of three months, as mentioned in the notification, is for registration of the vehicle and not merely for submission of the registration certificate - Following decision of Tata Motors Ltd. vs. CCE, Lucknow [2011 (5) TMI 233 - CESTAT, NEW DELHI] - Decided in favour of assessee.
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2013 (8) TMI 683
Rule 6(3) of the Cenvat Credit Rules read with Rule 57CC of the earlier Rules - Applicant is engaged in the manufacture of sugar, availing CENVAT credit benefit - During the process of manufacture of sugar, a by-product "bagasse" (a non-dutiable product) emerges, which was used in the generation of electricity – Held that:- Relying upon the decision in the case of India Potash Ltd. Vs. Commissioner of Central Excise, Allahabad reported in [ 2012 (12) TMI 347 - CESTAT, NEW DELHI] held that the assessee is not required to pay an amount equal to 8% on sale value of bagasse under Rule 6(3) of CENVAT Credit Rule, 2004 - Waiver of pre-deposit of dues allowed and recovery thereof stayed during the pendency of the appeal – Decided in favor of Assessee.
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2013 (8) TMI 682
Undervaluation of Goods - Rule 8 - clearance to another unit of the assessee - cost plus valuation - captive consumption - manufacturing of cement - Held that:- the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers. The provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. - Decided against the assessee. Confirmation of Differential Duty - held that:- the valuation of Bulk cement needs to be valued on the basis of sale value to independent buyers, but differential duty cannot include the clearances effected by NCMU unit of the appellant, after repacking or sale as such of Bulk cement received from the appellant; as NCMU unit is doing so, after availing CENVAT Credit as such Bulk cement, as NCMU unit is not situated in the Bhavnagar Commissionerate. Period of Limitation - Whether the Show Cause Notice which invoked the extended period of limitation was applicable for period beyond one year or not - Held that:- The assesses had every reason to believe that the board’s circular would be applicable to them and hence sought to value of the goods based upon the cost of production and as per provisions of Rule 8 of Central Excise Valuation Rules - the demand of duty prior to the period of one year from the date of issuance of Show Cause Notice dt. 09.11.2009 was hit by limitation and that portion of demand was liable to be set aside.
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2013 (8) TMI 681
Nature of Product - Whether cassia meal (husk and germ) of Cassia seeds can be considered as excisable at all – The cassia gum is exported. - Held that:- the appellants themselves treated this item as a cattle feed supplement/cattle feed and did not consider it as a waste. - The classification of the product was also held to be under the heading 2302 and the goods were excisable. Whether cassia meal can be considered as a waste at all - Held that:- cassia meal was not a waste at all and was excisable, the obvious conclusion that emerges was that appellant was not eligible for exemption under notification No.23/03 which under sl.no.21 exempts waste from food industries arising from purchasing of indigenous raw material. Whether the product is foodstuff - Held that:- the definition of hydrocolloids and use of their product, cassia gum product is basically used as a texturising agent, gelling agent to provide suspension and stabilisation of the end product and to improve end product appearance. Therefore it only improves the quality of food and can by no means by called as food itself. Product Indigenous or Not - Whether the product can be considered to have been manufactured wholly of indigenous raw materials or not - Held that:- The manufacturing process explained and from the records what emerges is that the cassia meal gets segregated and separated and taken out of the product before further processing starts by using imported raw materials - it cannot be said that importer raw materials have been used in the manufacture of waste - The word goods was to be considered as waste from food industry which was what was exempted from payment of duty if the condition was fulfilled - it appears that what was intended was that for manufacture of waste, indigenous raw materials only should have been used. Alternative claim for exemption under notification No.23/03 as waste of oil seeds - Held that:- There was no merit in the alternative claim made by the assesses - assesses own production literature and the details available on their website show that they had described cassia as a new hydrocolloids supplying to the group of galacto mannans like guar, thara and locoest bee gum (LBG) and they had never described it as an oil seed - the chemical examiner also had given a clear opinion that cassia meal was other than waste of oil seeds and during the cross examination of chemical examiner no question was raised on this issue with the chemical examiner. Extended Period - Whether the extended period had been rightly invoked - Held that:- Extended period cannot be invoked – it would be appropriate that no penalty to be imposable on the appellants and therefore penalty imposed was set aside - Subsequent to audit report and investigation, from the records it emerges that appellants did make efforts to prove that their product was waste by getting technical opinion and getting a letter from the Development Commissioner - Relying upon NIRMA CHEMICAL WORKS Versus COLLECTOR OF CENTRAL EXCISE [1992 (9) TMI 196 - CEGAT, NEW DELHI] - It had to be observed that many technical experts had given them the opinion that the product was a waste - All the facts and circumstances would show that this would not be a fit case for invoking extended period. Benefit of Cum Duty Price – Reduced Duty Demand – Interest - Confiscation of Goods - Held that:- There was nothing wrong with the view taken by the Commissioner - Demand duty was reduced and since goods were not available the same cannot be confiscated - relying upon COMMISSIONER OF CENTRAL EXCISE, DELHI Versus MARUTI UDYOG LTD. [2002 (2) TMI 101 - Supreme Court] - cum duty benefit cannot be allowed and in that case duty had been demanded on clandestine clearances by the EOU without payment of duty and without issue of invoices - goods were cleared by EOU without payment of duty under parallel invoices and clearances were made by fraudulently availing exemption - None of the circumstances exist in this case - Interest on the duty demanded within the normal period had to be upheld - the demand for duty was upheld to the extent of duty demanded within the normal period of limitation with interest as applicable - Decided against Revenue.
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2013 (8) TMI 680
Scrap chargeable to duty or not - scrap generated in the repair & maintenance workshop of the factory - The appellants sold the old and worn out parts of the machinery and also the scrap generated in the course of fabrication of parts of the machinery without payment of duty - The department was of the view that this scrap was chargeable to central excise duty - Held that:- The M.S. scrap and Iron scrap cannot be said to be a by-product of the final product - At the best, it was the by-product of the repairing process which uses welding electrodes, mild steel, cutting tools, M.S. Angles, M.S. Channels, M.S. Beams - The metal scrap and waste arise only when the assessee undertakes repairing and maintenance work of the capital goods and, therefore, do not arise regularly and continuously in the course of a manufacturing business of cement. The scrap generated in the repair & maintenance workshop of the factory cannot be said to be the scrap generated in a manufacturing process or a byproduct of manufacturing process and hence the same was not excisable - M/s. Grasim Industries Ltd. Versus Union of India [2011 (10) TMI 2 - SUPREME COURT OF INDIA] - The issue of getting a new identity as M.S. Scrap and Iron Scrap as an end product due to manufacturing process does not arise for consideration - The repairing activity in any possible manner cannot be called as a part of manufacturing activity in relation to production of end product - Order set aside – Decided in favor of assesse.
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CST, VAT & Sales Tax
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2013 (8) TMI 714
Condonation of Delay - Delay in filing appeal by revenue - Held that:- Applications were allowed by condoning the delay of 722 days - Rule issued in each case was made absolute The affidavit - contents rendered reasonable explanation for such delay and gives reasons why appeal could not be presented within the prescribed time limit - It was pointed out that upon receipt of the judgment of the Tribunal, after obtaining opinion of the concerned officers, a decision was taken for filing the appeal - looking to the nature of delay explanation rendered by the appellant in various affidavits and the tax impact in the appeal the delay was condoned Commissioner of Income Tax V. West Bengal Infrastructure Development Finance Corporation Ltd [ 2010 (12) TMI 675 - Supreme Court of India ]. The applicant had attempted to explain the delay which can be attributed to the administrative reasons and particularly consumption of time at the office of the Government Pleader - The Court needed to take into account the interest of justice and particularly public interest and the question raised in the Tax Appeals was a substantive question of law and the stake involved in these Tax Appeals was also high, this additional aspect cannot be disregarded while condoning the delay - the Court needs to be alive to the realities when the matters were decided at every stage administratively and recognize the impersonal and slow moving machinery of the Government and needs to accordingly address the issue of condonation of delay put forth by the State - Giving importance to the substantive justice, rather than to the technicality, the Court shall have to mould its approach accordingly on having found sufficient cause in absence of any deliberate inaction.
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