Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 28, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Claim of deduction u/s 80IA - there is no question of setting off notionally carried forward unabsorbed depreciation or loss against the profits of the unit and the assessee is entitled to claim deduction u/s 80IA on the current assessment year on the current year profit - AT
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Nature of receipts Revenue or Capital u/s 28(iv) - he assessees retention out of the sales tax collected on sale of finished products from expanded unit is part of capital receipt under the subsidy scheme of the Govt. of Haryana. - AT
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Depreciation on leased asset - Solar Generating System Once, lease rentals are accepted by the revenue, there is no reason to disallow the depreciation - AT
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Reopening of assessment u/s 147 - There is a difference between the power to review and power to reassess - Placing such a restriction on the power of assessment of the assessing authority is contrary to the scheme of the Act, besides would operate to cause prejudice to the Revenue - AT
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Taxability of ex gratia payment received under Exit Option Scheme of State Bank of India - assessee entitled to exemption u/s 10(10C) of the Act - AT
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TDS on payment of society - there is no contract between the society and the assessee as there is a pure relation of member of the society the assessee was not liable to deduct TDS as per section 194C - AT
Customs
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Import of Ship Unloaders for handling coal - Benefit of Customs Notification No.16/2000 - It is the case of the Department that the importer did not furnish the required documents within the stipulated period - contention of the department is not correct - HC
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Penalty on the appellant who was attending to the day-to-day clearance work of the CHA - appellant has played an active role in import and diversion of imported goods - levy of penalty confirmed but reduced - AT
Service Tax
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Levy of service tax on services provided to associated companies - book adjustment entries - When the service recipient itself is not there, the question of book adjustment would not arise - AT
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Refund of service tax - export of goods - The fact that the C&F agent which had provided this service to the appellant had itemised the total consideration into various components does not detract from the fact that the services provided are C&F - AT
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Trading activity or service activity - tenders floated by Ministry of Chemicals & Fertilizers for receiving, bagging, standardization and distribution of imported urea - held as trading activity - AT
Central Excise
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Waiver of pre-deposit of penalty - default had already been made good by the Appellants much before the show cause notice was issued - prima facie no penalty is leviable - AT
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CENVAT Credit - Prima facie, any services rendered during warranty period which are rendered by the manufacturer of the goods, are in respect of final product and are in relation to the manufacture- AT
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When the process of padding was held to be non-amounting to manufacture, no excise duty would be attracted and, as such, there is no question of denial of any exemption - AT
Case Laws:
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Income Tax
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2014 (8) TMI 808
Effect of amendment to section 40(a)(ia) - Whether amendment to Section 40(a)(ia) of the Income Tax Act brought out by Finance Act, 2010 with effect from 01/04/2010 is having retrospective effect or not Held that:- Following the decision in COMMISSIONER OF INCOME TAX Versus OMPRAKASH R CHAUDHARY [2014 (2) TMI 120 - GUJARAT HIGH COURT] - in Amendment under Section 40(1)(ia) of the Income Tax Act brought out by Finance Act, 2010 with effect from 01/04/2010 is having retrospective effect thus no question of law arises for consideration Decided against Revenue.
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2014 (8) TMI 807
Non-genuine purchases Documentary evidences ignored Supplier declared as hawala dealer Held that:- AO had made the addition as one of the suppliers was declared a hawala dealer by the VAT Department - it was a good starting point for making further investigation and take it to logical end - he left the job at initial point itself - Suspicion of highest degree cannot take place of evidence - He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account - no such exercise was done - Transportation of good to the site is one of the deciding factor to be considered for resolving the issue - The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock - there is nothing, in the order of the AO, about the cash trail - proof of movement of goods is not in doubt thus, the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO Decided against Revenue. Suppression of sales Amount credited in next year - Taxability on the basis of TDS u/s 198 Held that:- Accounting Standard-9 (AS-9) envisages that the revenue from sale/service should be recognized as per the prescribed manner - the advance received by the assessee cannot be treated income and he had correctly shown the balance amount of ₹ 1.14 Crores for the AY-2010-11 - deduction of tax for the payment is one of the deciding facts for recognize the revenue of a particular year - But TDS in itself does not mean that the whole amount mentioned in it should be taxed in a particular year deduction of tax and completion of assessment are two different things while finalizing the tax liability of the assessee and AO is required to take all the facts and circumstances of the case not only the TDS certificate the order of the FAA with regard to the TDS does not suffer from legal infirmity relying upon Income-tax Officer, Ward-4(3), Ahmedabad Versus Hans Road Carriers (P.) Ltd [2010 (8) TMI 756 - ITAT AHMEDABAD] - the FAA had directed the AO to include ₹ 3.21 Lakhs, being TDS on the advance of ₹ 1.41 Crores, to be included as a part of the turnover in terms of section 198 Decided against Revenue.
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2014 (8) TMI 806
Penalty u/s 271(1)(c) - Claim of depreciation Computation of book profits u/s 115JB - Held that:- Even though there was withdrawal of depreciation claimed, it has no effect on the tax computation as the AO determined the tax under the provisions of section 115JB - assessee admitted incomes u/s 115JB - CIT vs. M/s. Nalwa Sons Investment Ltd. [2012 (5) TMI 150 - SUPREME COURT OF INDIA] - penalty u/s 271(1)(c) is not warranted when incomes were accepted u/s 115JB while additions are made in the regular computation - when the computation was made u/s 115JB, the concealment had no role to play and was totally irrelevant - the concealment did not lead to tax evasion at all - penalty could not have been imposed even in respect of the false claim of depreciation made by the assessee - When computation of income was made u/s 115JB, and there was loss under the normal provisions, concealment, if any, did not lead to tax evasion at all and penalty u/s 271(1)(c) could not be imposed - The principles indicated that the withdrawal of a claim in survey proceedings does not attract penalty u/s 271(1)(c) - assessee has bonafide explanation and the assessee tax computation was determined by the AO u/s 115JB, there is no scope for levy of penalty u/s 271(1)(c) Decided in favour of Assessee.
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2014 (8) TMI 805
STCG on sale of flat - Taxability u/s 28(iv) or section 17 - Held that:- The papers were submitted before both the lower authorities - the assessee purchased the flat from DSD Builders and Developers through its director Mr. K. Narayanan - the revenue authorities erred in observing that the assessee bought the flat from Mr. K. Narayanan and sold the same flat to Mr. K. Narayanan - the company though a separate entity for all legal aspects, but it acts through its directors - Mr. K. Narayanan acting for the assessee, purchased the flat from DSD Builders and Developers as the primary transaction - the assessee sold the flat to its director as secondary transaction. Any trace of any connection of Mr. K Narayanan to be associated with the primary seller, i.e. DSD Builders and Developers, to give even a faint hint that the transaction was a collusive transaction - when the assessee sold the property to its director or there was a downward valuation - treading only on macro-economic theory would be unjustified - The burden is squarely on the assessee to prove as to how a loss is justified and acceptable - The assessee sold the property to its director, who actually retained the same and that it did not get eclipsed from the assessee, or its director clearly shows that the impugned flat was meant to be retained thus, the order of the CIT(A) is set aside and the AO is directed for verification of claim of loss on sale of property Decided in favour of Assessee.
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2014 (8) TMI 804
Claim of deduction u/s 80IA - Manufacture of Glaze Frit and generation of wind power energy Held that:- Losses incurred by the assessee were already set off and adjusted against the profits of the earlier years - During the AY 2010-11, the assessee exercised the option u/s 80(IA) During the relevant period, there were no unabsorbed depreciation or loss of the eligible undertakings and it were already absorbed in the earlier years - There is a positive profit during the year - there is no question of setting off notionally carried forward unabsorbed depreciation or loss against the profits of the unit and the assessee is entitled to claim deduction u/s 80IA on the current assessment year on the current year profit the AO is not justified in disallowing the claim of deduction u/s 80IA in respect of company's Jaisalmer wind power unit and the disallowance of claim u/s 80IA is deleted. Higher depreciation in respect of wind mill installed at Coimbatore and Sadiya Held that:- The contention of the is accepted and the AO is not justified in disallowing the total depreciation disallowed which is liable to be deleted as it has already been held in assessees own case for the earlier assessment year - depreciation on foundation work and transformer plinth and depreciation on installation and electrical lines etc. is held to be allowable at which rate depreciation is allowable on wind mill Decided against Revenue.
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2014 (8) TMI 803
Deduction of transport charges u/s 40(a)(ia) - Incorrect PAN furnished by assessee Requirement to deduct TDS u/s 194C Compliance of provisions of section 194C Held that:- On being questioned by the AO the assessee furnished the party-wise details of the truck owners, addresses, truck numbers, PAN numbers, amount paid etc. - the AO on verification of the PAN numbers of the truck owners from the AST on online maintained at the Income Tax Office, noted that in a number of cases of transporters/truck owners, the PAN Nos. were not correct or the PAN Numbers had been given without proper verification and in a casual manner by furnishing either wrong PAN numbers or wrong names - the action of the AO is not justified - When he has accepted the rectified PAN Numbers in case of certain persons due to wrong spelling of names mentioned due to clerical mistakes, wrong spelling of PAN Numbers or change in name due to marriage, it could not be understood as to how he can deny the assessee the same benefit where the assessee had rectified the PAN Numbers of the transport operators subsequently who had given the wrong PAN Numbers originally - from the details furnished by the assessee, Shri Balbir Farman Singh, PAN Number given originally as well in the rectified statement was wrong and therefore the amount paid to Shri Balbir Farman Singh has to be disallowed u/s.40(a)(ia) for not giving the correct PAN Number - the disallowance made at ₹ 28,05,995/- is restricted to ₹ 82,170 Decided partly in favour of Assessee. Transport charges paid by assessee to his relatives disallowed u/s 40A(2)(b) Held that:- The assessee has paid transportation charges to outsiders as well as to related persons - assessee has not given any details to justify trip-wise payment paid to the related parties as compared to the outsiders as reasonable - the contention of the assessee that whenever the payments to family members were made at higher rate the destination of the delivery was difficult or at remote places is not borne out from records or with any evidence - invoking the provisions of section 40(A)(2)(b) of the I.T. Act by the AO is justified - the AO has also not brought out any comparative case and the disallowance made by the AO at 15% of the transportation charges being on adhoc basis appears to be on the higher side, therefore, such disallowance is restricted to 7.5% of the total payment - the disallowance is restricted to ₹ 5,66,222/- as against ₹ 11,32,445/- disallowed by the AO Decided partly in favour of Assessee.
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2014 (8) TMI 802
Penalty u/s 271(1)(c) Additions deleted in quantum proceedings Held that:- CIT(A) had deleted the penalty by considering the order passed by the Tribunal in quantum proceedings deleting the additions, forming foundation for the imposition of penalty assessee was fair enough to state that the Revenues appeal against the Tribunal order in quantum proceedings for AY 2003-04 has been accepted by the Honble High Court to the extent that such order has been set aside by restoring the matter to the lower authorities - No objection was raised by the revenue thus, the order is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue. Variation in the figures of sales as per the trading account and sales tax order Held that:- The AO has categorically recorded that the assessee did not furnish any explanation about the difference in the figures of turnover included in the annual accounts and month-wise details furnished during the course of assessment proceedings - CIT(A) did not call upon for any remand report from the AO thus, the matter is liable to be remitted back to the AO Decided partly in favour of Revenue. Expenses on ad-hoc basis Held that:- The AO observed that during the course of assessment proceedings that the assessee could not produce certain bills/vouchers of the amounts claimed under the heads Advertisement expenses, Conveyance, Furnace repairs, Office maintenance, Packing and forwarding expenses, Printing and stationery, Traveling expenses, Vehicle running and maintenance, Freight and carriage etc. - certain expenses claimed by the assessee were not backed by proper evidence the order of the CIT(A) is upheld Decided against Assessee.
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2014 (8) TMI 801
Maintainability of appeal - Tax effect below prescribed monetary limit - Revision of monetary limits through circular - Whether the appeal of revenue, which is below the prescribed limit of tax effect in view of the Board's Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not Held that:- Revenue is not justified in proceeding with the old references wherein the tax impact is minimal - Following the decision in Commissioner of Income-tax Versus PS. Jain and Co. [2010 (8) TMI 702 - Delhi High Court] - also in Commissioner of Income Tax v. Smt. Vijaya V. Kavekar [2013 (2) TMI 451 - Bombay High Court] it has been held that no appeals would be filed in the cases involving tax effect less than ₹ 4 Lacs notwithstanding the issue being of recurring nature - the main objective of instructions is to reduce the pending litigation, where the tax effect is considerable low or small, the appeal is not maintainable - The recent instruction revising the monetary limit to ₹ 4 lakh for filing appeal before ITAT on income tax matters, as issued vide Instruction No.5/2014 FNo279/Misc.142/2007-ITJ(Pt) dated 10th July, 2014 will apply to pending appeals also for the reason that the same is exactly identical to earlier instructions revenue could not point out any exception to the Circular Decided against Revenue.
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2014 (8) TMI 800
Nature of receipts Revenue or Capital u/s 28(iv) - Whether the sum received on account of sales tax subsidy is revenue receipt or capital receipt Held that:- The assessee was awarded an entitlement certificate under Rule 28C of the Haryana General Sales Tax Rules, 1975 - This certificate entitled the assessee to a tax concession for a period of ten years - Following the decision in Commissioner of Income Tax, Madras Versus Ponni Sugars & Chemicals Ltd.[2008 (9) TMI 14 - SUPREME COURT ] - CIT(A) had correctly came to the conclusion that the subsidy viewed from the angle of the provisions of Section 25A of the Haryana General Sales Tax Act, 1973 read with Industrial Policy 1999 of the Government of Haryana, the subsidy receipt in question are part of capital receipt given by the State Government for the purpose of meeting the objectives of Industrial Policy 1999, viz to attract new investment and to ensure growth of existing industries so that they can generate employment in industrial and allied sector by 20% - The entire package of incentives should be read as focusing on providing incentives for investment of industrial sector to achieve effective, meaningful and speedy development of the state - the assessees retention out of the sales tax collected on sale of finished products from expanded unit is part of capital receipt under the subsidy scheme of the Govt. of Haryana. The subsidy viewed from the angle of provisions of section 25A of the Haryana General Sales Tax Act read with Industrial policy 1999 of the Govt. of Haryana, are part of capital receipt given by the State Govt. for the purpose of meeting the objective of Industrial Policy 1999 to attract investment and to ensure growth of the existing industries so that they can generate employment in industrial and allied sector by 20% It was held that the entire package of incentive and concession should be read as focusing and providing incentive for investment of industrial sector to achieve effective, meaningful and speedy development of the State the AO is directed to allow the claimed sale tax subsidy receipt received by the assessee during the year as capital receipt for the assessment Decided in favour of assessee.
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2014 (8) TMI 799
Depreciation on leased asset - Solar Generating System Held that:- The lease rentals are as it is accepted by the AO during original assessment proceedings and also during giving effect to the order of ITAT - These lease rentals are not at all doubted by the AO but for disallowing depreciation totally relied on the observations made by ITAT without going into the details and without making enquiries treated the transaction as colourable device - Once, lease rentals are accepted by the revenue, there is no reason to disallow the depreciation relying upon Commissioner of Income-Tax Versus First Leasing Co. of India Ltd. & Shaan Finance (P.) Ltd. [1998 (3) TMI 8 - SUPREME Court] - In the case of hire purchase agreements, the Department's Circular No. 9 of 1943 dated March 23, 1943, provides that where, under the terms of the agreement the equipment shall eventually become the property of the hirer or confer on the hirer an option to purchase the equipment, the transaction should be regarded as one of hire purchase - the periodical payments made by the hirer should, for tax purposes, be regarded as made up of consideration for hire to be allowed as a deduction in the assessment and payment on account of purchase to be treated as capital outlay, depreciation being allowed to the lessee on the initial value - the order of CIT(A) is upheld in deleting the disallowance of depreciation Decided against Revenue.
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2014 (8) TMI 798
Invocation of section 36(1)(iii) r.w. section 40A(2)(b) Offering to tax under certain misconception of law Advances and loans given out of own interest free funds or not Held that:- The assessee after giving in writing to the AO regarding the reasons for payment of excess interest @21% to the specified persons has categorically stated that to buy peace of mind he wants to offer the interest paid over and above the bank rate for taxation - it is not a legal issue and is purely a factual issue - The AO had clearly brought on record the rate of interest paid to outside creditors at 9%, to the banks at 14.75% and 21% paid to the related parties - there is no question of any legal misconception which the assessee had foregone by way of concession - the assessee has also obtained loan from private parties and has paid interest @9% - The assessee itself has calculated the interest to be paid to the Directors and related parties @15.60% and offered the balance amount for taxation. It has sufficient interest free funds available which are far in excess of the loans advanced to persons covered u/s.40A(2)(b) - there is no question of disallowance of interest on account of interest free advances given to related parties - It is a reverse case wherein the assessee has obtained the loan from related parties by paying exorbitant rate of interest for which the AO disallowed the excess interest paid to the related parties by invoking the provisions of section 40A(2)(b) - Since the assessee itself has agreed for the addition of ₹ 33,37,059/- to tax being excess interest paid to the related parties covered u/s.40A(2)(b), therefore, the CIT(A) was fully justified in upholding the addition made by the AO Decided against Assessee. Expenses for earning exempt dividend income u/s 14A r.w. section 8D Held that:- Similar disallowances were made in the assessment orders passed for earlier AYs of the assessee by the AO and nothing was brought to notice as to the outcome of disallowance made by the AO - the assessee itself had admitted that it has incurred certain expenses although the same is negligible which cannot be correctly ascertained and since certain additions were made during AY 2006-07 and 2008-09 by the AO u/s14A and nothing has been brought on record as to the outcome of the same including the quantum there was no infirmity in the order of the CIT(A) upholding the disallowance made u/s.14A r.w. Rule 8D Decided against Assessee. Ad-hoc disallowance confirmed Held that:- Certain bills and vouchers were supported by only self-made vouchers and were not amenable for verification for which the AO made adhoc disallowances - similar disallowances were made in the preceding year and the assessee has not objected to the same - none of the parties has brought to notice regarding the amount of disallowance - the disallowance at 10% on adhoc basis appears to be on the higher side thus, the disallowance is restricted to 5% of the expenses Decided partly in favour of Assessee.
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2014 (8) TMI 797
Reopening of assessment u/s 147 Notice issued u/s 148 Disallowance u/s 14A - Held that:- The issue of disallowance u/s. 14A was duly considered by the AO in the original assessment and that the AO formed a view after consideration that the amount so disallowable u/s. 14A is to be taken at ₹ 1,54,559 - Following the decision in RECKITT BENCKISER HEALTHCARE INDIA LTD Versus ASSISTANT COMMISSIONER OF INCOME TAX [2013 (8) TMI 523 - GUJARAT HIGH COURT] - even within a period of four years assessment cannot be reopened - Any permission to the AO to do so would amount to permitting change of opinion - to correct the assessment order passed after a detailed examination by the AO, the succeeding AO cannot resort to the proceedings of reopening - the remedy for mistakes of the AO, if any, may be available under other provisions of the Act, but certainly review of the very same material by the succeeding AO to take a different view is not available with the AO in the garb of reassessment - the reopening of the reassessment in the is unsustainable Decided in favour of Assessee.
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2014 (8) TMI 796
Fees for Technical Services - Business support services rendered - Article 12 Indo-Netherlands DTAA Held that:- Following the assessees own case as decided in Shell International BV. Carel Van Bylandtlaan Versus Income Tax Officer [2013 (8) TMI 446 - ITAT AHMEDABAD] - what were the contents of those documents are yet to be examined - The terms such as "commercial support, Logistic, Public-affairs Human resources etc. as listed by the assessee are very general in nature - it is not clear that what technicality was involved in providing that knowledge - Whether that technical knowledge is so intricate that even in such long period it could not be understood by the recipient - All these questions can only be answered by a thorough investigation at the level of the assessment - The AO shall therefore examine the bills and vouchers prepared by the assessee in support of the claim of expenditure to ascertain the nature of services rendered and then find out that whether could have been made available for the business purpose of those parties thus, the matter is liable to be remitted back to the AO Decided in favour of Assessee. Reimbursement of expenses Scope of criterial of reimbursement Held that:- Following the assessees own case as decided in Shell International BV. Carel Van Bylandtlaan Versus Income Tax Officer [2013 (8) TMI 446 - ITAT AHMEDABAD] - this ground was not decided by CIT(A) and the question of claim of reimbursement of expenditure was not made before the AO - The assessee has required to establish that those expenditures were first incurred out of pocket expenses then only the question of reimbursement can be decided - The assessee is also required to furnish the details of the bills through which the reimbursement was claimed since all those facts were not earlier examined by the Revenue Authorities thus, the matter is to be remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (8) TMI 795
Accrual of income - Sale consideration treated as undisclosed income - Civil construction business - Whether the real income has been offered for taxation by the assessee or not agriculture land was purchased - pending NA clearance, land was plotted and sold but could not registered - later 2.5 times money was returned to allottees - Held that:- The objection of the AO regarding the non-saleability of the land without NA is neither relevant to the issue nor it is against the prevalent business practice - Such schemes where the facts are known to the allottees are much prevalent and it cannot be the case that once the plots are allotted the income should not be shown - assessee correctly showed the income in the earlier years recognizing the revenue from transfer of rights - It cannot be said that the cost to reacquire the rights would not be allowed and only the entire sale proceeds would be taxed - only real income has to be taxed. Payments had started to some of the allottees does not mean that the profits from sale where no sale deed has been finally signed had accrued - The expenses claimed are the development expenses which were already shown in the books of accounts of M/s Maheshwari Builders, naturally as in those years the projects were accounted for in its books - Only real income has to be taxed Relying upon Smt. Jashvidyaben C. Mehta Versus Commissioner Of Income-Tax [1987 (9) TMI 18 - GUJARAT High Court] - CIT(A) has rightly noted that the discrepancies noted by the AO were never confronted to the assessee and therefore he did not get an opportunity to controvert them - total profit of the scheme has been declared by the assessee in earlier years and in AY 09-10 - Revenue has not brought any material to controvert the findings of CIT(A) the order of the CIT(A) is upheld Decided against Revenue.
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2014 (8) TMI 794
Reopening of assessment u/s 147 - Change of opinion - Income from house property - Sahakar Bhavan property Held that:- When a new fact comes into picture, and there is a change in the factual matrix of the case consequent thereto, it cannot be said to be a review, which predicates examining the same factual matrix, which may lead to a view either in agreement or in modification of that formed earlier - even one fact can change the whole complexion and lead to a change of opinion formed in the absence of such fact or its consideration Relying upon Padmasundara Rao (Decd.) v. State of Tamil Nadu [2002 (3) TMI 44 - SUPREME Court] - the information though must come in the possession of the AO after the assessment, but even if it is such that it could have been obtained during the assessment itself, i.e., from an investigation of the materials on record or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the assessing authority is not affected. The matter is purely factual, and it is for this reason that the comparative cases assumed prime relevance - The exercise was made even for the current year - Even though in all the cases so compared there was a deposit by the tenant accompanying the rental arrangement, it was lower than that obtaining so that the rental being higher, the same was adopted in the assessee's case on 'best available information' basis - the rent fetched without or a lower deposit is to that extent more comparable and nearer to the requirement of law, i.e., the fair rental value of the property per se - there is a valid assumption of jurisdiction u/s.147 of the Act. Power to review an order versus Power to reassessment Held that:- There is a difference between the power to review and power to reassess - Placing such a restriction on the power of assessment of the assessing authority is contrary to the scheme of the Act, besides would operate to cause prejudice to the Revenue - Even the CBDT does not under law have the power to interfere with the A.O.'s independence in the matter of making the assessment, being precluded u/s. 119(1)(a) for requiring the A.O. to make the assessment or to dispose of a particular case in a particular manner, as well as in fact the first appellate authority - non-filing of an appeal by the Revenue in one case could not be considered as an acceptance on its part of the issue decided by a lower appellate forum, so that it is at liberty to prefer an appeal before the high court or the apex court on the same issue - Revenue has established that there was no acceptance by it of the view of the first appellate authority, but was constrained in appealing there-against per force s. 268A - a provision prescribing a procedure for preventing repetitive appeals u/s.158A of the Act is made in law only to ease the tedium involved in making repetitive appeals on the same question of law. The AO cannot be bound in any manner in the matter of making the assessments, except where and to the extent regulated and provided for by law - The same, it may be appreciated, does not impinge upon or invalidate the doctrine of merger, which would extend only to the year for which the first appellate authority has passed the order, and for which year, the A.O. has in fact already made the addition/disallowance which is sought to be restrained or estopped -There being no issue with regard to the satisfaction of the conditions for assumption of jurisdiction on this ground, which was not at all a subject matter of consideration at the time of original assessment, there is thus a valid assumption of jurisdiction qua this ground as well - If a material has been considered, there is no question of it being revisited or reconsidered again, as the same would be only a review Decided in favour of Revenue.
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2014 (8) TMI 793
Electricity charges paid to Torrent Power AEC Ltd. Power connected on obtaining inspection certificate - AO treated the expenses crystallized and written off as prior period expense Held that:- The electrical installation was obtained for its project Radhe Kishan Villa which was a multi storeyed building the permissions for electricity was received on 25.01.2007 relevant to assessment year 07-08 which was also supported by the certificate issued by the electricity Inspector the contention of the assessee has not been controverted by the Revenue by placing any contrary material on record - the genuineness of the payment has not been doubted by Revenue - the commencement of supply of energy started on 25.01.2007 and the claim of allowance of expenditure needs to be allowed Decided in favour of Assessee. Borewell expenses Expenses incurred for business purpose or not Held that:- CIT(A) while upholding the disallowance has noted that the expenses were incurred in AY 04-05 and were carried forward as advances and further no evidence was brought on record to demonstrate that the bore well was put to use during the previous year and the location of the borewell - no material has been placed on record to demonstrate that the bore well was put to use during the year assessee could not controvert the findings of CIT(A) there was no reason to interfere with the order of CIT(A) Decided against Assessee.
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2014 (8) TMI 792
Taxability of ex gratia payment received under Exit Option Scheme of State Bank of India - Income do not form part of total income u/s 10(10C) - Exemption Held that:- The assessee declared income which was processed u/s 143(1) of the Act - assessee has claimed exemption u/s 10(10C) of the Act, being the amount received as ex gratia under Exit Option Scheme of State Bank of India - The assessee was asked to explain his stand - the assessment proceedings were attended from time to time and also preferred written submission - The assessee was a bank employee, disclosed income from salary at ₹ 10,50,211/- and claimed exemption of ₹ 5,00,000/- u/s 10(10C) of the Act the AO in view of Circular No. CIRDO/HR/72/2006-07 dated 8.8.2006 of Human Resources Department held that the ex gratia payment will be added to the income of the employee made the addition - CIT(A) also affirmed the stand taken by the AO Relying upon SAIL DSP Vs Employees Association Vs Union of India [2003 (2) TMI 46 - CALCUTTA High Court] - the assessee entitled to exemption u/s 10(10C) of the Act Decided in favour of Assessee.
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2014 (8) TMI 791
Order passed against non-existent entity as the company as merged into another company Jurisdiction of AO Diminution in the value of shares Treatment of stock in-trade Held that:- The assessee company got merged with M/s Slocum Investment Pvt. Ltd. w.e.f. 1-4-2000 vide order dated 27-8-2001 - The notice u/s 143(2) was issued on 28-11-2001 and it was issued against a company which was non-existent - all subsequent proceedings including passing of the assessment order in consequence to the notice were bad in law - Relying upon SPICE ENTERTAINMENT LTD. Versus COMMISSIONER [2011 (8) TMI 544 - DELHI HIGH COURT Ltd.] - the AO was duly informed of amalgamation vide letter dated 15-2-2002, which fact has been taken note by the AO in his assessment order also - the assessment order cannot be sustained because now it is well settled law that on amalgamation a company ceased to exist from the appointed date thus, the order of the CIT(A) is set aside Decided in favour of Assessee.
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2014 (8) TMI 790
Liability to deduct TDS u/s 194C on single payment Held that:- Before the CIT(A) the assessee pointed out that the total payments made to X Press Computer Ltd., Mumbai was for an amount of ₹ 49,270/- and the AO has incorrectly included a payment for ₹ 8561/- made to M/s Richo India Ltd. - the aggregate payment did not exceed ₹ 50,000/- and the provisions of section 194C were not attracted there was no reason to interfere with the finding of CIT(A) because factual finding regarding aggregate payment being not exceeding ₹ 50,000/- has not been controverted by the department Decided against Revenue. TDS not deducted on payment made for office space - payments made to Kakad Chamber of Commerce, Mumbai for maintenance charges Held that:- CIT(A) was rightly of the view that M/s Kakad Chamber & Business Premises Co-op Society Ltd. is a registered society under Maharashtra Society Act - There is no taxable income in the hands of the society towards the amount received from its members, for these monthly & quarterly charges - There is no practice of deduction of TDS throughout Mumbai for the amounts paid by the member to the society towards the monthly/ quarterly chares in respect of the office premises or even residential premises - there is no contract between the society and the assessee as there is a pure relation of member of the society the assessee was not liable to deduct TDS as per section 194C the society to whom the payment had been made was having no taxable income Decided against Revenue. Expenses on replacement of asset Held that:- Assessee has rightly submitted that AO has taken a contradictory stand - On one hand he disallowed the entire expenditure on the ground that no TDS was made u/s 194C and on the other he treated the entire expenditure in the capital field and allowed the depreciation - the finding of CIT(A) regarding TDS made by assessee u/s 194C has not been controverted, therefore, no disallowance was called for u/s 40(a)(ia) - As far as the claim of expenditure is concerned, the main panel was replaced after a gap of 15 years and the entire expenditure was incurred at the business premises which was evident from the copy of I.T. return filed by the assessee Decided against Revenue. Expenses incurred for professional activities - Bill for electrical installation work Held that:- The submissions made before CIT(A) have not been controverted by the department and are duly supported by the extract of income-tax returns filed before the department, it is evident that Shri V. Shridharan was residing at Mumbai and the properties located at Delhi were primarily used for business purpose only and, therefore there, was no question of any disallowance on the ground of personal use of the premises - The genuineness of the expenses has not been doubted by the department Decided against Revenue.
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2014 (8) TMI 789
Deduction u/s 80IB Real estate development business Completion certificate not furnished Held that:- The project was approved before 01.04.2005 and the building was completed on 31.03.2008 - assessee has incurred losses in the next two years when assessee stated to have sold the finished apartments - assessee wanted those losses to be set off to the income assessed in the year, as can be seen from the statements before the AO and CIT(A) - prima facie a doubt arises whether the project was completed before 31.03.2008 or went on in later years also - even though on legal principles insistence of completion certificate is not required for the project which are approved before 01.04.2005, deduction cannot be allowed simply on legal principles without verifying the facts - Since the fact that project was completed before 31.03.2008 could not be verified, the AO is directed to examine the issue and allow deduction if assessee proves that it had completed the project before 31.03.2008 Decided in favour of Assessee.
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Customs
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2014 (8) TMI 811
Import of Ship Unloaders for handling coal - Benefit of Customs Notification No.16/2000 Sl.No.337(iv) under CTH 98.01 - concessional rate of duty on the goods of import - It is the case of the Department that the importer did not furnish the required documents within the stipulated period and, therefore, the assessment was made on merits under CTH 8428.90 with 25% Basic Customs Duty + 10% Surcharge + 16% Countervailing Duty + 4% Special Additional Duty, as against the concessional duty claimed - Held that:- there appears to be no difference between the contents of the two letters issued by the Secretary to Government, Energy Department, Government of Tamilnadu, Chennai to the Customs Department, while recommending the case of the importer for concessional rate of customs duty. - the Tribunal was justified in holding that all necessary materials required for assessment under the Project Import Regulations, 1986 were available at the inception, namely at the time of filing of the Bill of Entry. It has to be noticed that, at the first instance, the importer did not get the assessment under CTH 98.01 based on any mis-statement in respect of information or on the basis of an erroneous document. The Department had declined their request for assessment under CTH 98.01 as Project Import. When it was declined, the importer protested and pursued the matter and the Department thereafter noticing the error rectified the mistake by passing the order of reassessment under CTH 98.01 as Project Import extending the benefit of Notification No.16/2000. If the first assessment, on subsequent examination, is found to be based on documents or information furnished, which is not true, then the question of invoking Section 17(4) of the Customs Act (as it stood then) will arise. As regards the applicability of Board Circular No.64/2000-Cus., dated 26.7.2000, the Tribunal has stated that the circular is clarificatory in nature and is applicable to cases were the benefit under EPCG Scheme was denied on the ground that EPCG licence was neither obtained nor produced at the time of assessment by the importer; and that the importer did not clear the goods for want of the EPCG Licence and only after the importer got the EPCG licence and submitted it to the customs authorities, that the goods were cleared by the importer after reassessment. On such premise, the Tribunal in this case has rightly held that the said Board Circular is not applicable to the facts of the present case, as the required certificate was available at the time of submitting application for Project Import Contract Registration on 24.1.2001, even before the Bill of Entry was filed. We have no hesitation to hold that the reasoning given by the Tribunal on the above stated fact is acceptable and consequently, we hold that the Board Circular No.64/2000-Cus., dated 26.7.2000 is not applicable to the facts of the present case and will not entitled the Revenue to demand interest - Decided against Revenue.
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2014 (8) TMI 810
Penalty on the appellant who was attending to the day-to-day clearance work of the CHA and was authorised by a Power of Attorney for clearance of goods Exemption of Duty diversion of the imported goods - argument that an employee working upon the instruction of the employers cannot be visited with a penalty - Held that:- Shri Dev Kumar Kapta was authorised by the importers and field bills of entry in self on behalf of the importers. He not only filed and cleared the imported goods on behalf of the importers knowing fully well the nature of imports but also fabricated the bills of entry used for diverting the goods meant for free distribution to earthquake victims in Gujarat to places outside Gujarat. Appellant has not merely acted as a paid employee of M/s Kandla Clearing Agency but as an active participant in the act of diverting imported goods meant for free distribution under exemption Notification No. 7/2001-cus. The duty free clearance of goods under this exemption notification was subject to condition (i), (ii), and (iii) of the Notification. As these conditions have not been fulfilled the seized goods become liable to confiscation under Sec. 111(0) of Customs Act 1962, as proposed in the show cause notice dt 26/3/2002 and correctly confirmed by the adjudicating authority. As the appellant has played an active role in import and diversion of imported goods conditionally exempted under Notification No. 7/2001-cus hence penalty is correctly imposable upon the appellant under Sec. 112 of the Customs Act 1962. However, looking to the value of confiscated goods (Rs 49.25 lacs and RS 15.26 lacs), and what could have been the intended benefits out of such diversion, it is felt that penalty of ₹ 25 lakh imposed by the Adjudicating authority is excessive. In the interest of justice, we reduce the penalty imposed upon the appellant from ₹ 25 lacs to ₹ 5 lacs under Se. 112 of the customs Act 1962 - Decided partly in favour of appellant.
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2014 (8) TMI 809
Medical equipments were imported availing the benefit of Notification No.64/88-CUS, dated 01.03.1988 on the basis of certificate of DGHS - allegation that no free services being provided and hence not entitled for exemption - show cause notice was issued on the basis that appellant was charging nominal fee towards registration - Held that:- Law is well settled that adjudication should base only on the allegation made in the show cause notice but not beyond that and denovo adjudication should not travel beyond the scope of the remand. The show cause notice being the foundation of adjudication that is required to expose the allegation in clear terms to enable an assessee to lead defence. Failure to do so, makes the adjudication fatal. Liability being intended to be determined, Show cause notice is the first course of natural justice. That should clearly bring out the allegation. Such proposition of law is laid down in the case of CCE Nagpur vs. Ballarpur Industries Ltd. [2007 (8) TMI 10 - SUPREME COURT OF INDIA] and the CCE Mumbai vs. Toyo Engg. India Ltd. [2006 (8) TMI 184 - SUPREME COURT OF INDIA]. The proposition of law in Brindawan Beverages Pvt. Ltd. Vs. Commissioner reported in [2007 (6) TMI 4 - SUPREME COURT OF INDIA] and Metal Forging vs. Union of India reported in [2002 (11) TMI 90 - SUPREME COURT OF INDIA] is also to the said effect. - Decided in favour of assessee.
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Service Tax
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2014 (8) TMI 826
Tour operator service - Whether the activity of providing services in relation to outbound tours, i.e. tours in locations outside the territory of India, including the operation of tours and the planning, scheduling, organising or arranging of such tours, falls within the ambit of tour operator service and is consequently subject to levy and collection of service tax - Held that:- As a consequence of the interpretation of tour operator vide [a], where a person pursues a composite activity of operating tours and the planning, scheduling, organizing or arranging of such tours, by a mode of transport other than by a tourist vehicle (covered by a permit issued under the provisions of the Motor Vehicles Act, 1988 or the Rules made thereunder), such activity falls outside the scope of the definition of tour operator Following decision of M/s Cox & Kings India Ltd., M/s Travel Corporation of India Ltd. and M/s Swagatam Tours Pvt. Limited Versus CST, New Delhi [2013 (12) TMI 1024 - CESTAT NEW DELHI] - Decided in favour of assessee.
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2014 (8) TMI 825
Waiver of predeposit of service tax - overlapping of demand - it was argued that there has been overlapping of demand relating to show-cause notice issued to them from their Jamshedpur Unit and the present one issued for the Joda Unit - Penalty u/s 76, 77 & 78 - repair and maintenance services - Held that:- Commissioner has recorded the reason in arriving at the liability of the Applicant for their Joda Unit. At this stage, it would be difficult to accept the claim of the Applicant that there is an overlapping demand. Various correspondences were made with the Applicant prior to issuance of show-cause notice in ascertaining the liability. Thus the claim that there is overlapping of demand, at this stage, rest on appreciation of evidences. In these circumstances, the balance of convenience is in favour of the Revenue. No financial hardship has been pleaded nor substantiated by the Applicant - Partial stay granted.
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2014 (8) TMI 824
Levy of service tax on services provided to associated companies - book adjustment entries - period from October 2009 to September 2011 - new subsidiary was formed only on 30.3.2011 and is yet to take over the functions - Held that:- When the service recipient itself is not there, the question of book adjustment would not arise. Even for subsequent years also there is no evidence to show that appellant did recover this amount. Moreover the notes reproduced by us hereinabove, would show that what was proposed in Note 5 was also a proposal to recover expenses and not to recover consideration for services provided. Even assuming that such recoverable cost proposed to be recovered from the subsidiary are for the services rendered, if such amount is not realized and recovered and no book adjustment is carried out, liability for service tax would not arise. Other than a Note showing proposal to recover the cost from the subsidiary, there is no corresponding evidence either documentary or otherwise to show that there was either a book adjustment or recovery of cost. There is no evidence to show that the appellants have recovered cost for the services rendered from the subsidiary or the public limited company which has been formed subsequently either documentary or otherwise. When the cost of services is not recovered question of levy of service tax also does not arise. Therefore, the demand on this count cannot be sustained and has to be set aside. In view of the above, the matter is remanded to the original adjudicating authority to verify the worksheet submitted by the appellant regarding payment of service tax on the amounts as and when received by the appellant - Decided in favour of assessee.
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2014 (8) TMI 823
Refund of service tax - export of goods - terminal handling charges and Customs House Agent service - Notification No. 17/2009-ST dated 07.07.2009 - Held that:- The Appellate Authority is required to record clear and coherent findings while disposing of an appeal. In respect of refund pertaining to service tax paid on C&F services, we notice that the Primary Authority rejected refund on the ground that invoices issued by C&F agent include items such as terminal handling charges, examination charges, loading and unloading charges etc. According to the Primary Authority these do not constitute C&F, a conclusion which is wholly unsustainable. Clearing and forwarding services include components such as the charges incurred for transport of cleared goods and loading and unloading as well. Strapping charges are presumably expenses incurred for strapping the goods on vehicles, so that they are not damaged during transport. Similarly C&F service included unloading of goods at the port and electronic data interface charges incurred for maintenance of records for effective discharge of clearing and forwarding services. The fact that the C&F agent which had provided this service to the appellant had itemised the total consideration into various components does not detract from the fact that the services provided are C&F. The Appellate Authority has not adverted to this aspect of the matter. - Matter remanded back - Decided in favour of assessee.
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2014 (8) TMI 822
Taxability of incentive received for doing appreciable performance - Held that:- incentive received for appreciable performance cannot be held to be a value of the services provided and as such no tax can be levied on the same - Incentive is a receipt for appreciation of performance of services provided. How such forms part of taxable service remained unexplained. We are unable to find how the revenue shall succeed saying that incentive shall be brought to tax when such incentive whether shall be payable was not known to the respondent while providing service. Therefore, the dispute on that count is resolved against the revenue - Following decision of CCE, Chandigarh Vs. Facinate Advertising Maarketing [2012 (8) TMI 286 - CESTAT, NEW DELHI] - Decided in favour of assessee. Levy of interest where Cenvat Credit has been reversed without utilization - Held that:- as the credit was reversed immediately without utilization, there would be no interest liability - Decision in the case of Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] followed - Decided in favor of assessee.
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2014 (8) TMI 821
Trading activity or service activity - appellant had quoted in the tenders floated by Ministry of Chemicals & Fertilizers for receiving, bagging, standardization and distribution of imported urea - cargo handling services or Business Auxiliary Service - Held that:- It transpires that the entire issue is regarding Service Tax liability on the appellant as to the amount received by them from Govt. of India through MOCF for handling and distribution of imported urea - urea is imported by Govt. of India and is being distributed at subsidized price to the farmers in order to further the policy of Govt. of India and also to meet the provisions of Food Control Act and Essential Commodities Act read with the fertilizer policy of Govt. of India. It is not disputed that Govt. of India imports urea from Saudi Arabia. Govt. of India floats tender for unloading, bagging, standardization and distribution of this imported urea for which bid is made by various fertilizers marketing companies. It is also undisputed that the Bill of Lading of goods imported are endorsed in the name of the appellant herein and the appellant herein files Bill of Entry as an importer and discharges the Customs duty as is assessed. Undoubtedly the tender document indicates that Govt. of India is desirous of handling and distribution of imported bulk urea. Though, the wordings of the said tender indicate that Govt. of India wants to appoint a handling and distribution agent, we find that actually entire transaction is of sale and purchase of urea from the following documents. It is seen from the records available that the Govt. of India has imported 27,500 MTs of imported urea for which the appellant herein was required to open a letter of credit (LOC). In the case of ration shop, the authorized ration shops purchases the food grains from the Govt. of India and stores in his godown. Subsequently, the said food grains are distributed to various ration card holders at a price predetermined by the Government. The authorized ration shops pays in advance to the Govt. of India for the food grains which is allotted for public distribution system. The authorized ration shops also engaged in an similar activity Govt. of India which though not identical can be equated to the activity undertaken by this appellant. In our considered view, the said activity cannot be considered as services as the authorized ration shop owners purchases the food grain before distributing the same to the ration card holders. Though the tender documents indicates about the appointment of a handling agent, the invoices issued by Govt. of India for sale of imported prilled urea to the appellant and subsequent clearances made by the appellant to the consumers of fertilizers would also indicate that appointment of handling agent is misnomer, as entire transaction is of purchase and sale of imported urea. - Decided in favour of assessee.
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2014 (8) TMI 820
Renting of immovable property - Coercive measure to recover amount - Held that:- On each of the appellants clearing all the arrears as on the said date in three equated instalments, on or before 1st March, 2012; 1st May, 2012 and 1st July, 2012, no coercive steps shall be taken against the appellants for the recovery of the said arrears. However, in the event of default on the part of the appellants in deposit of any one of the instalments by the due date, it will be open to the respondents to recover the entire amount in arrears forthwith - there is no stay of imposition of service tax under sub-clause (zzzz) of clause (105) of Section 65 read with Section 66 of the Finance Act, 1994 (as amended), insofar as the future liability towards service tax with effect from 1st October, 2011, is concerned.
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Central Excise
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2014 (8) TMI 816
Clandestine removal of goods - Whether the adjudicating authority is correct in confirming the demand raised against the main appellant and imposing penalties on the main appellant as well as other individuals on the charge of clandestine removal of the goods i.e. printed and dyed MMF fabrics - Held that:- adjudicating authority or the investigating authority have not conducted further investigation to come to a conclusion that the figures indicated in the note book at Page No.9 for the period July to September 2002 are not an amount which is shown as receivable for clandestinely cleared goods. In our considered view, there being no other evidence to indicate that these figures were amount due for the clandestine removal of the goods, reliance placed only on the circumstantial evidences may not carry the case of the Revenue any further. To that extent, we find that the appellant has made out a case for holding that the duty liability ₹ 80,89,255/- for the period July to September 2002 is unsustainable and is liable to set aside. In sum, for the period October 2002 to December 2002, we hold that the demand of the duty liability can be confirmed on the main appellant only for the quantity of man made fabrics cleared to M/s Sangam Prints, M/s Neha Prints as recorded at Paragraph No.13 of the Order-in-Original. To that extent, the appeal filed by the appellant is rejected. Lower authorities are directed to calculate the amount of duty liability on the man made fabrics of 9,33,085 LMs and 1,31,309.75 LMs cleared to these two purchasers. Appellant is also required to pay interest at appropriate rate on all these amounts of duty liabilities. Regarding penalties - Held that:- As regards the penalties we find the main appellant is to be penalized with equivalent amount of duty liability as has been worked out by the lower authorities on the clearances made to M/s Sangam Prints, M/s Neha Prints as indicated hereinabove with an option to pay 25% of the duty liability as per Section 11AC of Central Excise Act, 1944, as has been held by Hon'ble High Court of Gujarat in the case of Akash Fashions Prints Pvt.Ltd. [2009 (1) TMI 113 - GUJARAT HIGH COURT]. These our findings are based upon the fact that the adjudicating authority in the impugned order, has not extended this benefit to the main appellant - Decided partly in favour of assessee. Levy of penalty on recipient of goods - Held that:- Since they were aware that the goods are non duty paid, penalty under Rule 26 is imposable on them also, which in our considered view, should be in proportion to the quantity of the goods received by them. The ends of justice will be met by imposing a penalty of ₹ 1 lakh (Rupees One Lakh only) on Shri Brij Mohan Agarwal.
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2014 (8) TMI 815
Waiver of pre-deposit of penalty - suppression or mis-statement of fact - Held that:- Duty for Dec. 07 amounting to ₹ 2905658/- was paid by 5.1.2008 except for an amount of ₹ 495617/- out of which ₹ 487872/- was paid on 11.2.2008 and only a paltry amount of ₹ 7795/- remained unpaid (due to inadvertence/accounting error according to the Appellants) upto 7.12.2009. It is reasonable to believe that the default of mere ₹ 7745/- would have been inadvertent/due to accounting error because no assessee whose liability to duty for December, 07 was of the order of ₹ 29 lacs would knowingly short pay ₹ 7745/- to potentially face such consequences. Further it is not a case where goods were not duly accounted for - Prima facie, the show cause notice in this case was issued (on 8.12.2011) more than one year after the default was made good - default had already been made good by the Appellants much before the show cause notice was issued. Thus, prima facie, the contents of this para are harmoniously applicable to the present case - stay granted.
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2014 (8) TMI 814
Eligibility to avail CENVAT Credit - Repairs & maintenance services - Credit denied on the ground that the maintenance and repair services provided by authorized dealers/ franchisees during the warranty period of the product manufactured by the appellant, are not the services rendered to the appellant - Held that:- Rrepairs & maintenance services are given to the customers of the product manufactured by the appellant; that the appellant is extending the said warranty for a specific period on the sales of goods manufactured by them. On perusal of the definition of Rule 2(l) of CENVAT Credit Rules, 2004 which defines input service, we find that CENVAT Credit is allowed on input services which are used by the manufacturer, whether directly or indirectly, in or in relation to manufacture of final product and clearance thereof. Prima facie, any services rendered during warranty period which are rendered by the manufacturer of the goods, are in respect of final product and are in relation to the manufacture in as much as the assessee improves upon the product quality on the various complaints attended on the product. Be that as it may, we find that the ld. Counsel was correct in bringing to our notice that in a similar issue, on an appeal filed by the Department in the case of Mahindra & Mahindra Ltd [2012 (8) TMI 530 - CESTAT, MUMBAI], the co-ordinate Bench of the Tribunal has taken a view in favour of the assessee. - appellant has made out a prima facie case for the waiver of the pre-deposit - stay granted.
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2014 (8) TMI 813
Modification of stay order - Waiver of pre deposit - certain documents relied upon by the adjudicating authority were not provided to assessee - Violation of principle of natural justice - Held that:- Number of personal hearing dates were fixed by the adjudicating authority as detailed in his order. On being questioned as to whether intimation about the alternate address was made by them to the appellate authority, Ld. Advocate fairly agrees that there is no such intimation, but the DGCEI knew about the residential address. adjudicating authority before whom the matter was pending for decision is entirely different from DGCEI, whose role ends with the completion of investigations. The adjudicating authority cannot be expected to find out the new address of the noticee from the DGCEI. Undoubtedly, it is the duty of the noticee to bring or to place the new address for correspondence before the adjudicating authority, which the applicants have failed to do so. As is clear from the letter, the applicants authorised representative visited the office on 19th, 20th and 22nd July, 2010, but did not take the photocopies of the documents as according to him, the same were not complete and missing in between. We really fail to understand that what prevented the appellants authorised representative to take the photocopies of the documents, which were available in the office. He was within his rights to subsequently refer to the missing documents and to make further request for supply of the same. However, instead, he has chosen not to take the documents at all, in which case, the Revenue authorities cannot be blamed for. We also note that though the impugned order was passed on 27.03.2012, i.e., almost after a period of around two years from the said letter addressed by the applicants, the applicants have not approached the Revenue subsequently for supply of the documents. No efforts stand made by them to procure the documents and to file the detailed reply. This clearly reflects the delaying tactics on their part. - Modification application rejected.
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2014 (8) TMI 812
Exemption under Notification No.40/1995-CE - appellant in their padding process had also used Urea Formaldehyde, Copper Sulphate, Tinopal and Blue Acid Violet - penalty under Rule 173Q (1) - Held that:- Notification No.40/1995-CE exempts "the cotton fabrics subjected to the process of padding, that is to say applying starch or fatty materials on one or both sides of the fabrics". The appellant in this case subjected the cotton fabrics to the process of padding in which in addition to the starch and Polyvinyl acetate, they also used Soap Stone Powder, Urea Formaldehyde, Copper Sulphate/Blue Acid Violet and Tinopal. The Blue Acid Violet, Copper Sulphate and Tinopal are used for padding of the bleached fabrics. The Department's contention is that since Notification No.40/1995-CE exempts only the padding done by applying starch or fatty materials on one or both the sides of the fabrics, use of other chemicals like Urea Formaldehyde, Tinopal, Copper Sulphate etc. would result in above exemption Notification becoming inapplicable. However, the Tribunal in the case of CCE, Coimbatore vs. Coimbatore Pioneer Mills (2008 (3) TMI 210 - CESTAT, CHENNAI) and Amar Processors vs. CCE, Ahmedabad-I (2010 (4) TMI 519 - CESTAT AHMEDABAD) and also in the case of CCE, Coimbatore vs. SSM Processing Mills reported in [2008 (2) TMI 292 - CESTAT, CHENNAI] has held that the process of padding does not amount to manufacture, as it brings only a temporary stiffness to fabric which vanishes after a couple of washes and, as such, it does not bring into existence a new product with distinct name, characteristic and uses. When the process of padding was held to be non-amounting to manufacture, no excise duty would be attracted and, as such, there is no question of denial of any exemption. Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 819
Denial of refund claim - Whether, on the facts in the circumstances of the case, the applicant was entitled to refund of a sum of ₹ 26,40,470/- paid excess of tax due in view of the provisions of Section 29 (1) of the U.P. Trade Tax Act read with Rule 71 of U.P. Trade Tax Rules - Held that:- issues raised in these appeals is squarely covered by the decision of this Court in the case of Commissioner of Sales Tax, Uttar Pradesh vs. Hind Lamps Limited, reported in (2008 (7) TMI 563 - SUPREME COURT OF INDIA) - Decided in favour of Revenue.
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2014 (8) TMI 818
Works contract - nature of transaction done by the petitioner - AO assessed the dealer as works contactor - Held that:- On perusal of the impugned order of assessment, it appears that it is not a mere typographical error but the assessing officer has approved to examine the transaction and state that the dealer having not exercised any option for payment of tax under Section 6(2) of the Act for the year 2009- 2010, the objection of the dealer is not acceptable. This Court is of the view that the specific issue pointed out by the petitioner has to be considered in the matter and the contention of the petitioner that they are not works contract dealer has also to be examined and thereafter, the Assessing Officer has to render a finding as regards the provisions of law which would stand attracted to the transaction made by the petitioner - Court is inclined to interfere with the order of assessment - matter remanded back for passing appropriate orders on merits - Decided in favour of assessee.
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2014 (8) TMI 817
Interest claim on refund - Whether a dealer can make adjustment while depositing tax on the basis of tax, admitted to be payable, out of certain amounts which according to him had been deposited in excess for some other assessment periods - Held that:- Sub-section (1) of Section 29 of UPTT requires the Assessing Authority to refund to a dealer any amount of tax paid in excess of the amount due from him under the Act. Under the proviso, any amount found to be refundable had to be first adjusted towards tax or any other amount outstanding against the dealer under the Act. Sub-section (2) imposes a liability for the payment of interest upon the amount found to be refundable. The liability to pay interest would arise if it is not refunded within three months from the date of the order of refund passed by the Assessing Authority or from the date of the receipt by him of the order of refund, where it is passed by any other Court or competent authority. The Supreme Court in Commissioner of Sales Tax, U.P. Vs. Hind Lamps Ltd. (2008 (7) TMI 563 - SUPREME COURT OF INDIA) has clearly held that the expression an amount to be "found to be refundable" must be as a result of an adjudication. Under the Explanation I to sub-section (2), the date of refund is relatable to the intimation regarding the preparation of the refund voucher. The decision in Commissioner of Sales Tax, U.P. Vs. Hind Lamps Ltd. has been followed in the case of the assessee itself by the Supreme Court on 4 March 2014 while reversing the judgment of the learned Single Judge of this Court in Lucent Technologies. In view of this clear legal position, the conflict between the views taken by the two Division Benches of this Court in Indodan Milk Products [1973 (7) TMI 90 - ALLAHABAD HIGH COURT] and in Ellora Mechanical Products [2006 (1) TMI 557 - ALLAHABAD HIGH COURT] would stand resolved in terms of the law laid down by the Supreme Court, as noticed above. - Decided in favour of assessee.
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