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TMI Tax Updates - e-Newsletter August 31, 2015 Case Laws in this Newsletter: Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Re-assessment - it cannot be held that receipt of the notice u/s 148 by the brother, amounted to service of notice on the assessee - Tri Articles Benefits of filing income tax returns Highlights / Catch Notes Income Tax Nature of Income disclosed during the survey - assessee admitted the same and surrendered the amount as its income from Ornate House project - there was no justification to hold that the amount was the income from other sources and not the income from Ornate House project - Deduction u/s 80IB(10) to be allowed - AT Visit to Get Source TDS liability - purchase of telecast rights from the film producers - Payments made by assessee towards acquiring satellite rights of films are not ‘royalty’, hence provisions of section 194J would not apply. - AT Visit to Get Source Eligibility to claim exemption u/s 11 - Contribution to chit fund in this case is not an investments or deposit as specified u/s 11(5), it is, as submitted, only an arrangement for better management of funds of the assessee - exemption allowed - AT Visit to Get Source Claim of deductions against escaped income - where the claims of the assessee durng the course of re-assessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed - AT Visit to Get Source Entitlement to deduction under section 80-IB - Held that:- Since the assessee had filed the return of income belatedly on September 20, 2010, the assessee was not entitled for deduction u/s 80-IB - print out of the e-return of the assessee clearly show that there was an attempt to mislead the Department. - AT Visit to Get Source Unexplained investment/deposit found in the bank deposits - addition u/s 69 - the property/ money which stands in the name of the assessee has to be considered only in the hands of the church, if at all an addition has to be made. There cannot be any addition in the hands of the present assessee - AT Visit to Get Source Re-assessment - Validity of Notice - it cannot be held that receipt of the notice u/s 148 by the brother of the assessee, amounted to service of notice on the assessee, irrespective of the fact that the assessment order passed u/s 144 had been challenged in appeal by the assessee within limitation - AT Visit to Get Source Deemed dividend u/s 2(22)(e) - assessee has claimed that the amount received was not in the nature of loan/advance, but, towards purchase of land in the name of company, however, assessee has not produced even a single evidence to justify the aforesaid claim - Additions confirmed - AT Visit to Get Source Indian Laws Power of Tribunal to condone delay - delay in filing an appeal under Section 18 (1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI Act. - SC Visit to Get Source Service Tax Business Auxiliary Services - Denial of refund claim - Unjust enrichment - the accounting treatment given to M/s. Narwenkar may be of no consequence to the appellant for filing refund claim as taxes paid on exported goods - AT Visit to Get Source Central Excise Refund - Whether or not, the refund of Central Excise duty is admissible u/s 11B of CEA, 1944, if the same is invoiced and collected and thereby passed on to the purchasers and sought to be claimed on the basis of the credit notes issued to the buyers - Held No - HC Visit to Get Source Demand u/s 11AA - SCN not issued - impugned order is only a communication and not a demand to pay the Excise duty together with interest as stated by the respondent - HC Visit to Get Source VAT Condonation of delay – Invalid service of notice – Well settled that party should not be condemned unheard and case should not be rejected on technical grounds, rather should be decided on merit unless delay is attributable to gross negligence of party - HC Visit to Get Source Taxability of Compact Disc – Electronic good or not – There is no utility of compact disc independently – It become useful only in music system/equipment – Hence, same will have to be treated under category of “electronic goods” - HC Visit to Get Source Case Laws: Income Tax 2015 (8) TMI 1164 Undisclosed income added by the AO on account of cash shortage - CIT(A) confirmed part addition - Held that:- The bank authorities have certified that assessee has withdrawn ₹ 8,90,000/-on 20.11.2005 which was entered in the bank register on 21.11.2005. The Standard Chartered Bank on these days were working for 365 days. It is normal practice of Bank that any transaction made by 365 days working branch on holidays is reported on Monday in case transaction is made on Sunday or on subsequent working day. This aspect was also admitted by Shri Nitin Gupta, Manager (Operations) in his statement dated 10.09.2008 before the AO. The AO used the statement recorded under section 131 of Shri Nitin Gupta in piece meal not in its entirety and also has not given copy to the assessee which is against the principles of natural justice as any evidence collected by the revenue that is to be confronted with the assessee before its use. The assessee asked to supply copy of the statement which was supplied by the AO at the appellate stage. Further assessee also filed the evidences of cash payment to M/s. Jai Hanumant on 20.02.2006 that on same day assessee received ₹ 8,00,000/- from M/s. Goodwill Fincom Pvt. Ltd. against an agreement to sale his shop situated at B-22, Transport Nagar, Jaipur for ₹ 21 lacs entered on 20.02.2006. These evidences were produced before the AO but ld. AO doubted these evidences without any adverse material brought on record. The company is a legal entity under the law. The evidences furnished before the AO which had not been appreciated properly. The ld. CIT (A) also passed a cryptic order. No specific finding has been given by her in her order dated 31.01.2013. She simply reduced ₹ 8,00,000/- from ₹ 12,85,082/- and confirmed the addition of ₹ 4,85,082/-, but no finding regarding the cash received by the assessee from the Standard Chartered Bank on 20.11.2005 has been given by her. Therefore, we reverse the order of ld. CIT (A) and allow the assessee’s appeal. - Decided in favour of assessee. 2015 (8) TMI 1163 Trading addition - Justification of Gross Profit Rate - bogus purchases - Held that:- This Bench has already decided identical issue in the case of Shri Anuj Kumar Varshney Vs. ITO & others gems and jewellery cases [2015 (4) TMI 533 - ITAT JAIPUR ] wherein detailed findings are given on bogus purchases. Therefore, by respectfully following our own decision the above case on same identical facts and circumstances, we apply 15% N. P. on bogus purchases claimed by the assessee. It is clarified that by applying 15% N. P., the addition is worked out at ₹ 17,39,682/-. However, we do not have any power to enhance the addition under the law, therefore, we confirm the addition made by the ld Assessing Officer at ₹ 16,08,982/-. - Decided in favour of revenue. Disallowance made on account of ad hoc addition - CIT(A) deleted addition - Held that:- Hon’ble ITAT, Jaipur Bench in the case of Triveni Pharma [2004 (9) TMI 331 - ITAT JAIPUR] had deleted the ad hoc addition. The assessee had filed reasonable explanation before the Assessing Officer and relied on the decision in case of Lal Chand Bhagat Ambica Ram Vs. CIT (1959 (5) TMI 12 - SUPREME Court) and Harish Kumar Vs DCIT (2002 (5) TMI 218 - ITAT HYDERABAD-B ) and prayed to confirm the order of the ld CIT(A).The addition under the head bogus purchases has already been confirmed by this Bench and the ld DR had not controverted the findings of the ld CIT(A). The depreciation is a statutory deduction, therefore, we uphold the order of the ld CIT(A) - Decided against revenue. 2015 (8) TMI 1162 Unexplained cash credits - identity and credit worthiness of the creditors and the genuineness of the transactions had not been established - CIT (Appeals) denying the admission of additional evidence submitted by the assessee in appellate proceedings under Rule 46A - Held that:- It appears from a plain reading of the order of assessment that the Assessing Officer at this stage, instead of putting the assessee on notice by affording the assessee an opportunity of being heard and to adduce evidence to rebut the Assessing Officer’s view and buttress its own stands that the aforesaid four loans were genuine, proceeded to render an adverse finding in the matter thereby violating the principles of natural justice by not affording the assessee adequate opportunity to present evidence in this regard. On appeal too, the CIT (Appeals) in the impugned order, declined to admit the additional evidence sought to be admitted by the assessee u/R 46A of the Rules on the ground that the assessee was unable to establish reasonable cause since it was afforded adequate opportunity by the Assessing Officer. Thus we are of the view that the assessee was prevented by reasonable and sufficient cause from presenting the details, sought to be filed and admitted as additional evidence, since it had no opportunity to do so before the Assessing Officer and was not allowed to do so before the learned CIT (Appeals). We, therefore, in the interest of justice and equity, admit the additional evidence, filed by the assessee for consideration and adjudication. Decided in favour of assessee. 2015 (8) TMI 1161 Reopening of assessment - AO invoked the provision of section 40(a)(ia) r.w.s. 194C - Held that:- From the facts and circumstances of the instant case and respectfully following the judicial precedents [2010 (1) TMI 11 - SUPREME COURT OF INDIA] in the impugned subject including that of the Hon’ble Supreme Court, Jurisdictional High Court and other High Courts, it is held that the assumption of jurisdiction u/s 147 of the Act by the Learned AO, is based only on “ change of opinion”; made without any tangible material that constituted new information and hence reopening of the assessment u/s 148 of the Act and consequential reassessment order passed u/s 147 is bad in law and accordingly the reassessment proceedings stand quashed. See CIT vs Kelvinator India Limited (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) - Decided in favour of assessee. 2015 (8) TMI 1160 Income disclosed during the survey - treated as Income from Other Sources or Business Income - disallowance of deduction u/s 80IB on the income disclosed during the survey - Held that:- We do not find any justification for the different stand of the Revenue authorities - one at the time of survey and another at the time of regular assessment. During the course of survey, the Revenue authorities themselves have considered the receipt noted in the diary to be on-money received for booking of the flats in Ornate House. The assessee admitted the same and surrendered the amount as its income from Ornate House project. Admittedly, the assessee did not have any other business activity during the year under consideration. Considering the totality of these facts and the arguments of both the sides, in our opinion, there was no justification for the Assessing Officer to hold that the amount was the income from other sources and not the income from Ornate House project. Similar issue is considered by the ITAT, Ahmedabad Bench in the case of M/s. Nilkanth Developers [2014 (12) TMI 928 - ITAT AHMEDABAD] to hold that the amount was the receipt from developing and building of housing project in the name and style of ‘Ornate House’ which was eligible for deduction u/s 80IB(10) - Decided in favour of assessee. 2015 (8) TMI 1159 Addition made by following the valuation method u/s.50C - Held that:- In the present case, the AO had made addition on the basis of the difference in value of the property declared by the assessee as sale consideration and the value that was adopted by the Stamp Valuation Authority. The submission of ld.AR that in the case of co-owners, the matter has been restored to AO by the Tribunal has not been controverted by ld.DR. We find that in the case(s) of S/Shri Ajay Hasmukhlal Jariwala and Dhanesh K.Jariwala HUF, the other co-owners, the Coordinate Bench of this Tribunal [2015 (8) TMI 454 - ITAT AHMEDABAD] had set aside the issue to the file of AO, by holding in view of the provisions of section 50C(2) of the Act, we are of the considered view that the AO was not justified in adopting the value of the property as adopted by the “stamp valuation authority” without referring to the DVO for ascertaining the fair market value of the property. Therefore, the orders of the authorities below on this issue are hereby set aside and the additional ground raised by the assessee is restored back to the file of AO to decide the same in accordance with law. Needless to say that the AO would afford reasonable opportunity of being heard to the assessee before passing the order. Thus, additional ground raised by the assessee is allowed for statistical purposes 2015 (8) TMI 1158 Set off of loss from trading in shares against profit earned - whether CIT(A) erred in holding that provisions of section 43(5), clause (d) is applicable from 25.01.2006 being the date of notification of Bombay Stock Exchange (BSE) & National Stock exchange(NSE) as recognized stock exchange, ignoring the fact that the provisions of section 43(5), clause (d) is inserted w.e.f. 01.04.2006? - Held that:- In the light of the decision of DLF Commercial Developers Ltd. (2013 (7) TMI 334 - DELHI HIGH COURT) wherein in respect of the applicability of explanation to Sec. 73 vis-à-vis derivative transaction u/s. 43(5) of the Act, the Hon’ble High Court has held as under: “Section 43 defines, for the purpose of Sections 28 to 41, certain terms. These latter provisions fall in Chapter IV, in Section D, which deal with computation of business income. The said provisions provide for matters relating to computation of such income, rent taxes, insurance of buildings, repairs of plant and machinery, depreciation, reserves for shipping business, rehabilitation fund, expenditure on certain eligible objects or schemes, deductions, amounts not deductible, profits chargeable to tax, etc. The assessee is no doubt correct in contending that the only definition of derivatives is to be found in Section 43 (5); yet the Court cannot ignore or overlook that the definition ' to the extent it excludes such transactions from the mischief of the expression "speculative transactions" is confined in its application. Parliamentary intendment that such transactions are also excluded from the mischief of Explanation to Section 73 (4), however, is not borne out. It is no doubt, tempting to hold that since the expression "derivatives" is defined only in Section 43 (5) and since it excludes such transactions from the odium of speculative transactions, and further that since that has not been excluded from Section 73, yet, the Court would be doing violence to Parliamentary intendment. The stated objective of Section 73- apparent from the tenor of its language is to deny speculative businesses the benefit of carry forward of losses. As no distinguishing decision has been brought on record by the Ld. DR in favour of the Revenue, respectfully following the decision of the Hon’ble High Court of Delhi and for the sake of completeness of adjudication, we direct the AO to allow the set off of loss against the gains. - Decided in favour of assessee. Rebate u/s. 88E - Held that:- A perusal of the assessment order shows that the claim has been denied merely because the AO has treated the transaction as speculative loss. In our considered opinion, this cannot be any reason for declining the claim of rebate u/s. 88E of the Act as the claim is allowable from the business income be it speculative or not. We, therefore, decline to interfere with the findings of the Ld. CIT(A).- Decided in favour of assessee. 2015 (8) TMI 1157 Revision u/s.263 - sufficient opportunity non granted - Held that:- U/s.263 CIT is empowered to call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Therefore, the ld.CIT is empowered to call for the record and examine the record and make inquiry as he deems proper before passing the order thereon as the circumstances justify. It is expected from the ld.CIT in the event of invoking the provisions of section 263 of the Act he would afford sufficient opportunity to the assessee for representing and defending his case. In the case in hand, the assessee was given two opportunities of seven days each including the period taken for service of notice/letter. Under these facts, we are of the considered view that the assessee was not granted sufficient opportunity to defend his case. It is settled principle of law that revisionary power is required to be exercised with a great caution because it affects the taxpayer’s rights and it is not expected that the concluding assessment proceedings be reopened on the whims and fancies of the authority who is bestowed with power to revise the order, but such exercise of power should be in accordance with settled principle of law and procedure prescribed by law. Thus we are of the considered view that the assessee was not given sufficient opportunity and the explanation with regard to the issues on the basis of which the provisions of section 263 of the Act were invoked requires re-consideration at the end of the ld.CIT. Therefore, the impugned order is hereby set aside and the ld.CIT is directed to consider the explanation of the assessee and decide the matter afresh in accordance with law. - Decided in favour of assessee for statistical purposes. 2015 (8) TMI 1156 Loss on the loan borrowed in foreign currency due to exchange rate fluctuation - CIT(A) allowed claim as revenue loss - Held that:- This Tribunal after referring to the judgment of Apex Court in Sutlej Cotton Mills Ltd. (1978 (9) TMI 1 - SUPREME Court ), found that the CIT(Appeals) has taken a correct view. Apparently, the very same foreign exchange loan availed by the assessee from IDBI considered for the year under consideration also. Therefore, the observation of the Assessing Officer that irrespective of utilization of the borrowed funds, the loss cannot be allowed may not be justified. In view of the judgment of Sutlej Cotton Mills Ltd. (supra), if the foreign currency was held by the assessee on conversion into another currency, ordinarily it has to be treated as trading profit or loss in case the foreign currency is held on the revenue account or as a trading asset or as a part of circulating capital embarked in the business. In this case, admittedly, the borrowed loan was used as a working capital / circulating capital. Therefore, the loss suffered by the assessee has to be allowed on the revenue account. Therefore, this Tribunal do not find any infirmity in the order of the CIT(Appeals) and accordingly, the same is confirmed. - Decided against revenue. Computation of deduction under Section 80HHC - Held that:- Tribunal found that the Kerala High Court in Baby Marine (Eastern) Exports v. ACIT [2002 (4) TMI 19 - KERALA High Court] held that premium or service charge was part of the price settled by the assessee for sale of its merchandise. Therefore, it is neither brokerage nor commission. The Tribunal accepted the claim of the assessee since no contrary decision was brought to its notice. In the case before us, it is not the premium or service charges paid by the assessee, it is a case of insurance claim received on account of loss of stock and loss of machinery due to fire accident. The insurance claim relating to loss of stock may be on the revenue account, it would form part of total turnover. However, the insurance claim in respect of loss of machinery has to be treated as capital account, therefore, that will not form part of total turnover. The break-up details with regard to loss on account of machinery and loss on account of stock are not available on record. Therefore, the orders of the lower authorities are set aside. The issue with regard to deduction under Section 80HHC of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue and find out the actual insurance claim for loss of machinery and loss of stock and thereafter decide the issue in accordance with law after giving a reasonable opportunity to the assessee. Computation of deduction under Section 80HHC of the Act without reducing the foreign exchange gain - Held that:- The assessment order says that the assessee explained before the Assessing Officer that the profit was a negative figure, therefore, 90% of the export incentive should be considered for deduction under Section 80HHC of the Act. In view of the above, there is a confusion whether there was any profit on export or there was a loss. This Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer to find out whether there was any loss or profit in the business of the assessee. Accordingly, the orders of the lower authorities are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh in the light of the material that may be provided by the assessee, in accordance with law, after giving reasonable opportunity to the assessee. 2015 (8) TMI 1155 Disallowance u/s 40(a)(ia) - applicability of provision of section 44AD - whether the provision of section 40(a)(ia) of the Act can be made applicable for the assessee when his income is determined in accordance with the presumptive scheme u/s 44AD of the Act? - Held that:- CIT(A) had called for the copies of the bills and had given a categorical finding that the material portion cannot be bifurcated from the total bill so as to get out of the ambit of the provision of section 194C of the Act. Admittedly, this finding was not refuted by the ld. DR during the course of hearing. - Decided against assessee. The legal provision of section 44AD of the Act shows an overriding effect over other provisions contained in section 28 to 43C of the Act, to hold that the provisions of section 40(a)(ia) of the Act cannot be invoked in the instant case as the income is directed to be determined on presumptive basis u/s 44AD of the Act. Decided in favour of the assessee. Whether section 40(a)(ia) of the Act, in fact and circumstances of the instant case, are applicable in respect of amounts payable on the date of balance sheet and not on the amounts paid before the end of the previous year does not warrant any deliberation as held in the facts and circumstances of the case, the provisions of section 40(a)(ia) per se are not applicable as the income of the assessee is directed to be determined u/s 44AD on presumptive basis. Accordingly, this ground becomes infactuous. 2015 (8) TMI 1154 TDS liability - purchase of telecast rights from the film producers - whether is not in the nature of ‘royalty’ payment and therefore not liable for TDS u/s 194J - Held that:- What the assessee has paid to the producers is consideration towards acquisition of satellite rights over the films for a period of 99 years, which is also irrevocable. This finding of fact recorded by the ld CIT (A) has not been controverted by the ld DR by bringing any evidence on record. Thus, once it is established that the assessee has acquired an irrevocable right over the exhibition of films for a period of 99 years, it cannot be said that payments made for acquiring such rights is in the nature of royalty. Rather it is a consideration paid towards outright purchase of feature films to be exhibited through Television. Payments made by assessee towards acquiring satellite rights of films are not ‘royalty’, hence provisions of section 194J would not apply. In the aforesaid view of the matter, we uphold the order of ld CIT (A) by dismissing the grounds raised by the Department. See Mrs. K. Bhagyalakshmi Versus The Deputy Commissioner of Income Tax [2013 (12) TMI 1215 - MADRAS HIGH COURT ] - Decided in favour of assessee. 2015 (8) TMI 1153 Revision u/s 263 - errors in the orders passed by the A.O. under section 143(3) read with section 153A for all the five years - agricultural income was accepted by the A.O. without making necessary enquiries - Held that:- It is observed that in the common questionnaire issued by the A.O. on 30th July, 2012 for all the five years under consideration, the assessee vide point No.43 was required by the A.O. to furnish details of agricultural income along with the documentary proof of ownership of the land cultivated, agriculture produce sold and agricultural inputs used. In reply filed vide letter dated 24.09.2012 the assessee not only furnished the year-wise details of net agricultural income earned during all the five years under consideration but also pointed out that the said agricultural income was earned by him by cultivating and selling Ground Nuts, Bengal-grams, Sunflower Seeds and Cotton Kappas. Copies of the relevant pass books were also filed by the assessee as proof of agricultural lands owned by him. This enquiry made by the A.O. and reply given by the assessee thereto clearly show that the claim of the assessee for agricultural income as declared in the returns of income for all the five years under consideration was examined by the A.O. after making specific enquiries and after having satisfied himself, the claim of the assessee was allowed by him. In our opinion, there was thus no error in the orders passed by the A.O. under section 143(3) read with section 153A and even if the Ld. CIT was of the opinion that the enquiries made by the A.O. on this issue were not sufficient, the same could not be a ground for revision under section 263 as held in the case of Spectra Shares & Scrips Pvt Ltd. vs. CIT (2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT ). - Decided in favour of assessee. Non initiating penalty proceedings under section 271D/271E for the violation of the provisions of section 269SS and 269T - Held that:- As it is observed that this issue is squarely covered in favour of the assessee by the decision of Kolkata Bench of this Tribunal in the case of M. Dhara & Broters vs. CIT-XVI, Kolkata (2015 (8) TMI 693 - ITAT KOLKATA) wherein it was held by the Tribunal by following the decision of Hon’ble Calcutta High Court in the case of CIT vs. Linotype & Machinery Ltd., (1989 (7) TMI 9 - CALCUTTA High Court) that the failure of the A.O. to initiate proceedings under section 271D for violation of section 269SS could not be considered as an error calling for revision under section 263. We therefore, find merit in the contention of the Ld. Counsel for the assessee that there were no errors in the orders passed by the A.O. under section 143(3) read with section 153A of the Act for all the five years under consideration which were prejudicial to the interests of the Revenue calling for revision by the Ld. CIT(A) under section 263. - Decided in favour of assessee. 2015 (8) TMI 1152 Eligibility to claim exemption u/s 11 - whether the transactions with Kapil Chit Funds are in violation of the provisions u/s 11(5) of the I.T.Act? - Held that:- The assessee has spent the entire income earned in the year for the objects of the trust. As has incurred excess amount, there is no surplus amount which needs to be invested u/s 11(5). Section 11(5) comes in to operation only when Trust has accumulated or set part the amount u/s 11(2). In the case of the assessee, there is a no surplus fund and hence, the question of investment or deposit as specified u/s 11(5) does not arise. Contribution to chit fund in this case is not an investments or deposit as specified u/s 11(5), it is, as submitted, only an arrangement for better management of funds of the assessee. The assessee has been complied with the provisions of section 11(1)(a) by applying entire amount for the objects of the trust. Therefore, respectfully following the Co-ordinate Bench decision of Vishakhapatnam reported in Sri Sivani Educational Society case (2015 (8) TMI 405 - ITAT VISAKHAPATNAM) it is concluded that there is no violation of section 11(5) and the assesse is eligible to claim exemption u/s 11. - Decided in favour of assessee. 2015 (8) TMI 1151 Disallowance u/s.14A - assessee earned dividend income which was claimed as exempt under sec.10(34) - AO observed that funds for a company come in a common kitty. and they compromise of borrowed funds, share capital and retained earnings (reserves and surplus) - Held that:- AO made he disallowance by invoking the provisions of sec.14A read with Rule 8D. Rule 8D was inserted by the IT (Fifth Amdt.) Rules, 2008, w.e.f. 24.3.2008. Since, Rule 8D has no retrospective effect, it cannot be applied for the assessment year 2007-08. Further, there is every chance of incurring expenditure towards maintaining of investment which yields exempt income and this cannot be ruled out. Therefore, we direct the AO to allow ₹ 10 lakhs of expenditure attributable towards exempted income. The ld. AR relied on the order of the Tribunal in assessee’s own case for the A.Y. 2008-09, which is for the subsequent year and it cannot be applied for this assessment year. Decided partly in favour of assessee. Disallowance on account of syndication charges/guarantee fee paid u/s.40A(2)(b) - CIT(A) deleted addition - Held that:- Similar issue was considered in the case of M/s. AIG Home Finance India Ltd. [2011 (5) TMI 408 - ITAT, Chennai] wherein held 0.5% of guarantee fee paid by the assessee is not excessive or unreasonable but is well within the range as paid by the assessee to third parties and much lower than the percentage fixed by National Housing Board, which itself is an undertaking promoted by Reserve Bank of India. Therefore, we are of the view that the findings of the ld. CIT(Appeals) on this issue in deleting the disallowance is on right footing. - Decided against revenue. Disallowance under sec.36(1)(viii) - processing and other administrative charges - CIT(A) deleted addition - Held that:- Similar issue was considered in the case of M/s. AIG Home Finance India Ltd. [2011 (5) TMI 408 - ITAT, Chennai] wherein held that securitization amount is nothing but the interest on the housing loan which is discounted to the present net value. This amount would obviously be the income of the assessee from the long term housing loan disbursed by the assessee. In the circumstances, we are of the view that the securitization income is an income from business of long term housing finance. We are of the view that the same is eligible for deduction under Section 36(1)(viii) of the Act. Therefore, we uphold the finding of the ld. CIT(Appeals) in deleting the disallowance of the claim of deduction under Section 36(1)(viii) of the Act, which is on right footing and does not call for any interference - Decided against revenue. 2015 (8) TMI 1150 Waiver of principal loan amount claimed as capital receipt in the revised computation of income - CIT(A) directed the AO to compute the correct figure of brought forward losses and give credit to the assessee wherever the law so demands - Held that:- Assessee has filed the revised computation of income and has failed to file the revised return. The AO has also given assessee enough time by taking up the scrutiny proceedings and issued notice u/s 143(2) and 142(1) to respond to the assessment and for filing a revised return. The Hon'ble Apex Court in the case of Goetz India Ltd vs. CIT [2006 (3) TMI 75 - SUPREME Court] has clearly stated that the assessing authority has no power to entertain claim made otherwise than by way of revised return. Hence, the CIT (A) erred in following the decision of GVK Industries Ltd vs. ACIT (2012 (6) TMI 573 - ITAT HYDERABAD ) as the facts in this case are not similar to that as in the case of GVK Industries. The fact is that the assessee has not filed revised return and hence the ratio of the decision in the case of Goetz India Ltd vs. CIT (Supra) is applicable. In fact the proceedings are u/s 147, which are for assessing undisclosed income. Further, the Apex Court in the case of CIT vs. Sun Engineering Works (P) Ltd (S.C) (1992 (9) TMI 1 - SUPREME Court ) wherein held where the claims of the assessee durng the course of re-assessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income, for purposes of “re-assessment” cannot be reduced beyond the income originally assessed. Hence, we are of the opinion that the CIT (A) had erred - Decided in favour of revenue. Provision of service fee made by the company in earlier years deleted while computing book profits - Held that:- In the course of assessment proceedings assessee has filed revised computation of income stating that the brought forward losses as per books of accounts has not been calculated correctly for the purpose of section 115JB. The brought forward business loss reduced from the book profit were stated to be ₹ 20,99,67,903 as against ₹ 14,86,71,093 claimed in the return of income. AO rejected this claim of carry forward loss in the books of accounts on the ground that it was not claimed in the return of income. The CIT (A) directed the AO to compute the correct figure of brought forward losses as per the law. We do not find any infirmity in the order of the CIT (A) as he has rightly directed the AO to compute the correct figure of brought forward losses. We, therefore, set aside this issue of computation of book profit u/s 115JB as well as set off of the book losses against such book profit to the file of the AO for being done denovo in accordance with the law. Reopening of assessment and reduce the cost of assets to the extent the loan which has been waived and to rework the depreciation as directed by CIT(A) - Held that:- The entire cost of machinery has been paid by the assessee to the suppliers. Therefore, there is no question of reduction in the cost of acquisition of assets on which depreciation has been granted. The issue is with regard to the treatment of waiver of the principle portion of the loan. The waiver of loan does not reduce the cost of acquisition of the plant and machinery. The waiver is for reduction on the liability which has arisen on the liability incurred on purchase of plant and machinery and cannot be adjusted against the cost of acquisition of machinery. In Mahinddra and Mahindra Ltd vs. CIT (2003 (1) TMI 71 - BOMBAY High Court) it has been held that the amount of waiver is not assessable u/s 28(iv) and hence there is no remission of liability and the amount is not assessable u/s 41(1). Hence following the decision of the Hon'ble Bombay High Court, the decision given by CIT (A) is not correct. - Decided in favour of assessee. 2015 (8) TMI 1149 Income from purchase and sale of shares - Long Term Capital Gain as well as Short Term Capital Gains V/S business income - Held that:- We uphold the finding of fact given by the first appellate authority, based on the period of holding, the income derived by the assessee by way of dividends, the fact that there are no borrowings for investment in shares, the volume of transactions which as per the learned CIT(Appeals) was not high and the fact that the assessee has diversified portfolio and has not indulged in repetitive purchase and sale of shares of the same company and the order u/s 143(3) of the AO in the assessee's own case for the earlier two assessment years, the fact that the assessee has invested substantial amounts in mutual funds etc., held that the assessee is an investor in shares and not a trader. Facts of the case of the appellant are better than issue decided in favour of the assessee by Hon. ITAT for YA 2006-07 [2010 (10) TMI 1018 - ITAT MUMBAI]. Therefore respectfully following the decision of coordinate bench in case of assessee herself for AY 2006-07 it is held that long term capital gain and short term capital gain is not the business income of the appellant but is chargeable to tax under the head “capital gains”. - Decided in favour of assessee. 2015 (8) TMI 1148 Deductions u/s 80IB(10)(10) - whether the assessee constructed residential cum commercial complex in violation of the Act? - CIT(A) allowed claim - Held that:- If the totality of facts available on record is kept in juxtaposition with the order of the Hon'ble jurisdictional High Court in Brahma Associated vs JCIT (2011 (2) TMI 373 - BOMBAY HIGH COURT), we find that the cases of the assessee falls within the parameters set out by Hon'ble High Court. Our view is further fortified by the decision of the Special Bench in Brahma Associated vs JCIT (2009 (4) TMI 215 - ITAT PUNE). The Hon'ble High Court held that in a case of a housing project which includes commercial area, permitted under the rules of a local authority. Since, the housing project/commercial area is within the parameters laid down by the Hon'ble jurisdictional High Court, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided in favour of assessee. 2015 (8) TMI 1147 Entitlement to deduction under section 80-IB - Held that:- Since the assessee had filed the return of income belatedly on September 20, 2010, the assessee was not entitled for deduction under section 80-IB of the Act. The assessee has made a plea before us, that there was an error in filling e-return of income which is too technical is to be ignored. In our opinion, this was considered by the Tribunal on the earlier occasion and the Tribunal had given the findings in the assessee's own case for this assessment year [2015 (8) TMI 692 - ITAT CHENNAI] which is staring at the assessee wherein it observed that reading of the print out of the e-return of the assessee clearly show that there was an attempt to mislead the Department. The assessee after working out tax dues, showed taxes paid as 1,38,84,356 when the total even as per the assessee's figure itself ought to have been more. In such a situation, we cannot say that claim for granting deduction under section 80-IB was unjustly rejected by the Assessing Officer. The assessee had preferred no such claim in its return at all. This seems to be the right decision taken by the Assessing Officer. - Decided against assessee. 2015 (8) TMI 1146 Disallowance under section 36(1)(iii) - utilisation of interest bearing funds for non-business activities - Held that:- The entire thrust of the assessee's submissions from the very beginning was that the amounts were advanced to group concerns, keeping in view the restrictions imposed by the Land Acquisition Act and this aspect we find has not at all been addressed by the lower Revenue authorities. If the advances were given out of commercial expediency then it is settled law that no disallowance is called for. From the details reproduced from balance-sheet as above it appears that the amounts were advanced for various purchases and, therefore, it could not be concluded that the interest-free advances given to group concerns, were not for business purposes. We find that these aspects have not at all been examined by the lower Revenue authorities and no findings have been recorded as to the purpose for which interest-free advances were given to group companies. The assessee's submissions are quite convincing that considering the restrictions imposed by the Land Acquisition Act, it had entered into various collaboration agreements. The Assessing Officer is required to record specific finding on these aspects before coming to the conclusion that the entire interest-free advance given to group concerns were not for business purposes. Thus restore the matter back to the file of the Assessing Officer to examine the issue de novo - Decided in favour of assessee for statistical purpose. 2015 (8) TMI 1145 Unexplained investment/deposit found in the bank deposits - addition under section 69 - CIT(A) delted the addition - Held that:- The bank account standing in the name of the assessee does not belong to the assessee in his individual capacity and he was holding the account in his fiduciary capacity as metropolitan/bishop of the church. Therefore, all the monies credited in the bank account, which stands in the name of the assessee, belong to the church. If the money credited in the bank account of the assessee is not accounted in the books of account of the church or diocese addition could be made only in the hands of the church or diocese and not in the hands of the individual, who is the metropolitan/bishop of the church. By executing an oath of affirmation under the constitution of Marthoma Syrian Church of Malabar, the assessee renounced his all movable and immovable properties, assets, bank deposits held by him and he does not own anything except his patrimony. Therefore, the property/ money which stands in the name of the assessee has to be considered only in the hands of the church, if at all an addition has to be made. There cannot be any addition in the hands of the present assessee. This Tribunal is of the considered opinion that the Commissioner of Income-tax (Appeals) has rightly deleted the addition. - Decided in favour of assessee. 2015 (8) TMI 1144 Validity of reopening of assessment - whether notice u/s 148 was not served in accordance with the provisions of section 282 of the Income Tax Act, 1961 as such the proceedings initiated are void ab-initio and deserves to be quashed? - Held that:- In the present case, the department has not brought anything on record to establish that the brother of the assessee, namely Harcharan Singh, had been authorised by the assessee to accept service of notice on behalf of the assessee. Harcharan Singh, brother of the assessee, also not been shown to be an agent of the assessee, entitled to receive the notice u/s 148 of the Act. In these facts, it cannot be held that receipt of the notice u/s 148 of the Act by Harcharan Singh, brother of the assessee, amounted to service of notice on the assessee, irrespective of the fact that the assessment order passed under section 144 of the Act had been challenged in appeal by the assessee within limitation. - Decided in favour of assessee. 2015 (8) TMI 1143 Disallowance of respect of mark to market loss - Held that:- It is an undisputed fact that the assessee has made the valuation of interest rate Swap contracts as at the end of the year. It is also an undisputed fact that assessee had incurred losses on such valuation. The said losses have been claimed as deduction in the P&L Account. It is also an undisputed fact that the assessee has made the entries following Accounting Standard, AS-11 of the ICAI. Such losses being treated as mark to market the losses have been allowed by the Tribunal in series of cases following Special Bench decision in the case of Bank of Bahrain & Kuwait ( 2010 (8) TMI 578 - ITAT, MUMBAI ). The Hon’ble Supreme Court in the case of Woodward Governor India Pvt. Ltd.( 2009 (4) TMI 4 - SUPREME COURT ) has considered such losses as allowable and not of contingent in nature. We find that the observations of the AO that the assessee has never accounted for the gains on such transactions is totally misplaced and against the facts of the case. As we find in the P&L Account at page 49 of the paper book when the assessee had gains of ₹ 25.57 lacs the assessee has included the same in its income. Considering the facts in totality and in the light of judicial decisions, we set aside the findings of Ld. CIT(A) and direct the AO to delete the addition - Decided in favour of assessee. Disallowance of non-deduction of tax at source on payment made to Bombay Stock Exchange amounting - Held that:- This issue is squarely covered in favour of the assessee and against the Revenue except that the transaction charges have been considered to be subject to TDS by the decision of Hon’ble Bombay High Court in the case of Kotak Securities Ltd [2011 (10) TMI 24 - Bombay High Court ]. The Hon’ble High Court further observed that in these circumstances if both the parties for nearly a decade proceeded on the footing that section 194J is not attracted, then in the assessment year in question, no fault can be found with the assessee in not deducting tax at source under section 194J of the Act and consequently, no action could be taken under section 40(a)(ia) of the Act. Return of income for the year under consideration was filed on 14/08/2009 and this decision of the Hon’ble was pronounced on 21/10/2011. Thus, the assessee had already filed the return of income and the time period for deducting tax at source was also lapsed. Thus no disallowance on this account should be made for the year under consideration - Decided in favour of assessee. Disallowance made under section 14A - Held that:- As the assessee stated that even if section 14A r.w. Rule 8D is applicable the AO has worked out the disallowance not in consonance with the spirit of section 14A r.w. Rule 8D. It is the say of the Ld. Counsel that the AO erred in including in average investment even then investment income from which is not exempt. We have given thoughtful consideration to these submissions of the Ld. Counsel. In our considered opinion this issue needs to be verified at the assessment stage. We accordingly, restore this issue to the file of the AO. The AO is directed to consider this issue afresh in the light of the provisions of section 14A r.w. Rule 8D keeping in mind that investment from which the income is taxable should not be included in computation of the average investment. - Decided in favour of assessee for statistical purposes. 2015 (8) TMI 1142 Reopening of assessment - Held that:- There is no merit in the contentions of the assessee. As pointed out by the ld. DR that the AO has reopened the assessment, inter-alia, with regard to the income arising on sale of other assets. The AO has also made addition with regard to the sale of assets, and hence, we are of the view that the reopening has been done in accordance with law. Accordingly, we reject the contention of the assessee in this regard. - Decided against assessee. Disallowance out of electricity charges - Held that:- We notice that the electricity charges of ₹ 7980/-pertain to residence of the assessee. Though the assessee has contended that he was using the residence as his office, yet no proof whatsoever was placed before us to substantiate the same. Under these circumstances, we are of the view that the ld. CIT(A) was justified in confirming the addition of ₹ 7980/- towards electricity charges.- Decided against assessee. Disallowance of telephone expenses - Held that:- We notice that the assessee has claimed a sum of ₹ 1,03,939/- in aggregate as telephone expenses, which included residential phone also and the AO has disallowed 20% of the same towards personal use. Considering the activity of the assessee, we are of the view that the disallowance of 20% of the aggregate amount of telephone expenses is on higher side. Accordingly, we modify the order of ld. CIT(A) on this issue and direct the AO to restrict the disallowance to 10% of the telephone expenses claimed by the assessee. - Decided partly in favour of assessee. Assessment of profit on plot no.42 - Held that:- The undisputed facts remains that the assessee has completed the project carried on plot no.42. However, while estimating the profit on the said project, the AO allocated administrative expenses equally on all the three projects viz Plot No.42 (which is completed), Plot No.57 and Plot No.76 (under progress). Under these set of facts, we are of the view that the AO was not justified in allocating the administrative expenses equally between all the three projects. Since the assessee has been selling flats constructed on Plot No.42, naturally he would have spent more time and energy in respect of this project. Accordingly, we are of the view that the major portion of the administrative expenses should be allocated to Plot No.42. Considering the status of each of the project, we are of the considered view that the allocation of administrative expenses would meet ends of justice, if it is allocated in the following manner, Plot No.42 70%, Plot No.57 20% and Plot No.76 10% Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the AO to recompute the profit on construction of flats on Plot No.42 by adopting the administrative expenses in the ratio cited above.- Decided partly in favour of assessee Profit from construction on flats on plot Nos. 57 and 76 - assessment of profit at 11 % - Held that:- AR submitted that both the projects are at initial stages and hence no profit need to be estimated. However, the ld. AR failed to show about the stage of completion of project. In the absence of the details, we are not able to appreciate the contention of the ld. AR. At the same time, we notice that the estimate of profit from WIP made by the AO at 11% is on the higher side. Accordingly, we modify the order of ld. CIT(A) and direct the AO to estimate the profit from WIP of Plot Nos.57 and 76 at 8% of the WIP. While computing the WIP, the AO should adopt the figure of administrative expenses as per our direction given in the earlier paragraph. - Decided partly in favour of assessee. 2015 (8) TMI 1141 Addition u/s 68 - Held that:- Considering the fact that assessee before us has produced relevant bank statements and explained the source of deposits in the bank account of Shri Ankit Singh and subsequent transfer to assessee’s bank account, we are inclined to remit the matter back to the file of AO for verifying this aspect after examining the relevant bank accounts and decide the issue after due opportunity of being heard to assessee. We make it clear if on verification of the bank statements, assessee’s claim is found to be correct, then, no addition can be made on this count. - Decided in favour of assessee for statistical purposes Addition as deemed dividend u/s 2(22)(e) - Held that:- There is no dispute to the fact that assessee on different dates during the relevant FY has received an amount of ₹ 45 lakh from M/s Euro Constructions Pvt. Ltd. wherein assessee is the Managing Director and majority shareholder. It is also not disputed that the said company is a company wherein public are not substantially interested. It is also a fact on record that during the year the company had accumulated profits. Therefore, all the conditions of section 2(22)(e) are satisfied. Though, assessee has claimed that the amount received was not in the nature of loan/advance, but, towards purchase of land in the name of company, however, assessee has not produced even a single evidence to justify the aforesaid claim. In these circumstances, assessee’s claim that the amount received was not in the nature of loan/advance cannot be accepted. However, as can be seen from assessee’s account in the books of M/s Euro Construction Pvt. Ltd. there is a credit balance of ₹ 7,55,896.50 in February, 2009. Therefore, assessee deserves to get credit for the said amount by setting it off against total advance of ₹ 45 lakh. In the aforesaid view of the matter, we direct AO to reduce the amount of ₹ 7,55,896.50 from the total loan/advance of ₹ 45 lakh and treat the balance amount as deemed dividend u/s 2(22)(e) of the Act. - Decided partly in favour of assessee. 2015 (8) TMI 1140 Investment from undisclosed sources - CIT(A) deleted addition holding that the deposits made in cash were related to HUF of assessee - Held that:- The appellant had not invested any amount for the transfer of agricultural land in his name from Sh. S.N. Thakur, as the land always remained belonging to M/s. KTC Dev. Pvt. Ltd. This is reflected in the audited balance sheet and P & L A/c of M/s. KTC Dev. Pvt. Ltd. and the fact of payment of stamp duty and registration fee by the company and receipt of sale consideration vide sale deed dt. 16.10.2010 by the company. The addition made by the A.O. towards unexplained investment in the lands of the appellant is therefore, deleted and the ground of appeal is allowed - Decided in favour of assessee. Customs 2015 (8) TMI 1171 Attempt to export goods improperly – Imposition of Penalty – Respondent was alleged to have filed shipping documents to export red sanders, which was prohibited, under guise of natural slate stone – Tribunal vide impugned order set aside order of Adjudicating Authority imposing penalty – Whether Tribunal was justified in setting aside penalty imposed under Section 114 of Customs Act – Held that:- seen from order of Tribunal that finding of Tribunal was that there was no material evidence or finding by Adjudicating Authority to come to conclusion that first respondent was having knowledge of export of goods improperly – Tribunal further held that there was no evidence to indicate that first respondent had knowledge of export of red sanders in consignment in guise of natural slate stone and that provisions of Sec.114 of the Customs Act was not attracted – In view of finding of Tribunal, no interfere was required – Decided in favour of Assesse. 2015 (8) TMI 1170 Import of paver finisher machine of only 6m - Benefit of duty exemption under notification no. 12 of 2012-Cus – Assistant Commissioner rejected claim for exemption sought by petitioner under Notification No.12 of 2012-Customs on ground that duty exemption under Customs Notification is applicable only for Electronic Paver Finisher for laying bituminous pavement of 7m size against petitioners imported paver finisher machine of only 6m – Held that:- petitioner pointed out that non-consideration of certain areas relates to classification of machinery being called as Electronic Paver Finisher for laying bituminous pavement 7m size and above, and this aspect has not been originally considered by Tribunal – Petitioner also submitted that without being influenced by any of findings of Tribunal, Commissioner of Appeals may be directed to consider issue independently and decide issue on merits – In order to give quietus to issue, appellate authority directed to dispose of appeal of petitioner, on its own merits and in accordance with law – Petition disposed of. 2015 (8) TMI 1169 Classification of Dry (Betel) nuts under CTH 08129090 or CTH 08028020 – Mis-declaration of Goods – Imposition of redemption fine, duty and penalty – Tribunal vide impugned order reported in [2015 (8) TMI 1069 - CESTAT KOLKATA] held that goods imported by appellant were liable for confiscation – Once imported goods were found to be classifiable under CTH 0802 8020, their import is not allowable if their CIF value is below ₹75 per kg. as provided in DGFT Notification - Supreme court found no reason to interfere with impugned order of tribunal - Accordingly, appeal dismissed. 2015 (8) TMI 1168 Confiscation of goods – Breach of principles of natural justice – High court vide impugned order reported in [2014 (12) TMI 228 - BOMBAY HIGH COURT] dismissed appellant’s appeal contending breach of principle of natural justice – Supreme court after hearing counsel for appellant and carefully perusal of material available on record held that there is no any good ground to interfere with judgment and order passed by High Court – Accordingly, Civil Appeal dismissed. 2015 (8) TMI 1167 Recovery of incineration charges - Tribunal vide impugned order reported in [2014 (12) TMI 859 - CESTAT MUMBAI] relating to issue of recovery of incineration charges held that there is no provision under Custom Act to stay recovery of such charges - Further that, recovery was sought to be made in terms of Apex Court order - Therefore, Tribunal has no jurisdiction, whatsoever, to deal with that matter - Supreme court Dismissed appeal. 2015 (8) TMI 1166 Classification of glass beads (cone shape) – Tribunal vide impugned order reported in [2015 (8) TMI 1065 - CESTAT BANGALORE] classified glass beads (cone shape) under chapter sub-heading No. 7018 10 20 of Customs Tariff - Supreme court found no merit in appeal of revenue against said impugned order of tribunal - Appeal dismissed. Service Tax 2015 (8) TMI 1193 Manpower recruitment and supply agency services - Held that:- Issue involved in this case is now squarely settled by the Hon’ble High Court of Gujarat in the case of Arvind Mills Ltd. as reported in [2014 (4) TMI 132 - GUJARAT HIGH COURT] upholding the decision of the Tribunal in the case of Arvind Mills Ltd [2013 (10) TMI 821 - CESTAT AHMEDABAD]. This bench has followed the ratio in the appellants own case [2015 (8) TMI 593 - CESTAT MUMBAI] in an identical issue for earlier period held in the favour of appellant. The reliance placed by the departmental representative to canvas the case of Daurala organics - [2009 (3) TMI 99 - CESTAT NEW DELHI] may not carry the case of revenue any further as the judgement of Honourable High Court of Gujarat in the case of Arvind Mills Ltd. (supra) was delivered subsequently - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. 2015 (8) TMI 1192 Business Auxiliary Services - Denial of refund claim - Unjust enrichment - Held that:- Iron ore, which was purchased by appellant as a merchant exporter, was exported. If the appellant has exported the consignment, it is a settled law that any tax paid on such exports needs to be refunded. We find that the first appellate authority has arrived at the conclusion of unjust enrichment looking at the accounting treatment given by the person who has paid service tax to the Government i.e. M/s Narvenkar. In our view this proposition is totally incorrect appreciation of the fact as no unjust enrichment arises appellant having paid service tax liability to M/s. Narwenkar as in our view, the accounting treatment given to M/s. Narwenkar may be of no consequence to the appellant for filing refund claim as taxes paid on exported goods. In view of the foregoing, we find that the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. 2015 (8) TMI 1191 Construction Service of Residential Complex - Penalty u/s 76 - Held that:- Appellant having accepted before the adjudicating authority that they are rending the service and the said findings are not contested before first appellate authority, we are unable to accept the contentions of the learned Counsel that show-cause notice does not indicate as to which type of services were rendered by the appellant therefore we upheld the demand of service tax liability and interest thereof. Appellant is directed to pay interest on the said amount within four weeks - appellant being from rural area of the State would have entertained a bonafide belief as to that they are not required to discharge any service tax liability as the services rendered by them is towards construction of residential complex. In our view that this is a fit case to invoke the provisions of Section 80 of the Finance Act, 1994 - Decided partly in favour of assessee. 2015 (8) TMI 1190 Waiver of pre deposit - Penalty u/s 77 & 78 - Commercial or Industrial Construction Services - Held that:- Appellant had neither filed reply to the show cause notice nor appeared for personal hearing before the adjudicating authority in spite of sufficient opportunities had been accorded to them. The claim of the appellant before us is that the confirmation of demand for receiving the taxable value against services rendered to M/s. SEPCO is incorrect as during the relevant period they have already paid appropriate service tax against receipt of the taxable value and disclosed in their periodical ST-3 returns filed with the jurisdictional Superintendent of Service Tax. In the interest of justice, we are of the view that the appellant be given a fair chance to establish the said claim. Accordingly the offer to deposit ₹ 13.50 Lakhs, at this stage, seems to be reasonable. - Matter remanded back - Decided in favour of asessee. 2015 (8) TMI 1189 Denial of CENVAT Credit - Capital goods - Free issue of material - Held that:- Claim of the appellant before the adjudicating authority was free of issue of material cannot be considered for inclusion in value for discharging service tax liability and had produced some documents. In our view the claim of the appellant regarding non-avilment of CENVAT Credit by reversing the amount availed also needs to be appreciated by the lower authority, a law which has been settled in various cases. In short, we find that the entire issue needs to be gone into detail by the adjudicating authority by appreciating various points raised by the appellant in reply to the show-cause notice as well as various submissions made by them during personal hearing. Without expressing any opinion on the merits of the case, keeping all the issues open, we set aside the impugned order and remand the matter back - Decided in favour of assessee. 2015 (8) TMI 1188 Erection, Commissioning and Installation service - Penalty u/s 76 - Held that:- Appellants are rendering Erection, Commissioning and Installation service to various customers under turnkey projects across India and to arrive monthly service tax liability they need to collect the data from all their sites. This is not the case of default payment and the appellants remitted the interest amount on 20.12.2007 during the audit. The Hon'ble High Courts and the Tribunal have held in number of decisions that benefit of Section 73 (3) to be extended and no penalty can be imposable. This Tribunal in the case of Shriram EPC Ltd. (2014 (2) TMI 713 - CESTAT CHENNAI) has allowed the appeal by relying the decision of the Hon'ble High Court of Karnataka in the case of CCE, LTU, Bang. Vs. Adecco Flexione (2011 (9) TMI 114 - KARNATAKA HIGH COURT). - penalty imposed by the adjudicating authority under Section 76 is not sustainable. Accordingly, the impugned order imposing penalty under Section 76 of the Finance Act is set aside - Decided in favour of assessee. 2015 (8) TMI 1187 Tour operators service - whether the appellants are liable for service tax for the contract carriage operated for carrying passengers from one city to the other - Held that:- The Govt. exempted the contract carriage permit operators under tour operator service from service tax by Notification No. 20/2009-ST dated 07.07.2009. This notification has been given a retrospective effect vide Finance Act, 2011. The case is now stand covered by retrospective amendment introduced in the Finance Act, 201 w.e.f. 08.04.2011. - exemption had been given with retrospective effect from 01.04.2000 . On perusal of records I find that the appellants had operated contract carriage for carrying passengers from point to point as is evident from the photocopies of tickets issued by the appellant to the individual passengers which shows the destination from Coimbatore to Chennai, Coimbatore to Ernakulam and Coimbatore to Pondicherry etc. Therefore, by virtue of exemption given by the Govt. with retrospective effect from 01.04.2000, the service provided by the appellant as a tour operator having a contract carriage permit for inter-State or intra-State transportation of passengers are exempted from service tax. Accordingly, the impugned order is set aside - Decided in favour of assessee. 2015 (8) TMI 1186 Denial of CENVAT Credit - Goods Transport Agency Service - Invocation of extended period of limitation - Held that:- There is no suppression in taking of credit. I also hold that under the facts and circumstances, construction of hostel/quarters for employees is in relation to the manufacturing business of appellant. Accordingly, the input service tax credit is available for construction of hostel/quarters. I also find that the appellant has taken the credit in March, 2009, whereas the show-cause notice has been issued on 25.11.2011 after a period of more than two and half years. Accordingly, I hold that the demand is hit by time bar. Since there is no suppression on part of the appellant and the appellants have disclosed the facts in relevant EA-3 returns about availment of CENVAT Credit, the extended period is not invocable. - Decided in favour of assessee. Central Excise 2015 (8) TMI 1181 Valuation of goods - inclusion of facility charges and cylinder holding charges to the assessable value - Held that:- period of dispute involved in these appeals are from September 2000 to August 2001 and from September 2001 to July 2002. This Tribunal vide Final Order [2007 (2) TMI 424 - CESTAT, CHENNAI] and Final Order No. [2015 (8) TMI 1066 - CESTAT CHENNAI], in an identical case, remanded the matter to the lower appellate authority. - In view of the Apex Court decision [2009 (7) TMI 155 - SUPREME COURT OF INDIA] to refer the issue to Larger Bench of Supreme Court and in the present appeals the issues are identical in nature i.e. rental charges collected as facility charges and cylinder holding charges while supplying the gas, it is appropriate that the appeals to be decided only after the final outcome of the Apex Court s Larger Bench decision. - Matter remanded back - Decided in favour of Revenue. 2015 (8) TMI 1180 Denial of CENVAT Credit - Determination of place of removal - Inclusion of freight - Held that:- High Court of Madras in the cases of CCE, Chennai Vs. M/s. Borg Warner Morse TEC Murugappa Pvt. Ltd. (2015 (4) TMI 254 - MADRAS HIGH COURT), has relied on the decision of the Hon’ble Karnataka High Court in the case of CCE, Bangalore Vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] which was rendered on the appeal filed by the Department as against the decision of the Larger Bench of the Tribunal and it was held that whether services availed by the manufacturer of outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(l)(ii) of the CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax on the value of such services. - in view of the decisions of the Hon’ble High Courts, it is clear that CENVAT credit can be availed for the outward transportation upto the place of removal. The Board s Circular has elaborately dealt with the issue of determination of place of removal and as per the terms of the purchase order delivery is upto the place of destination and freight was paid by the appellants, they are eligible for availing input service credit on outward transportation. - Impugned order is set aside - Decided in favour of assessee. 2015 (8) TMI 1179 Eligibility of CENVAT credit - Steel plates, angles, channels, parts, components and accessories of capital goods, welding electrodes and storage rack - penalty under Rule 15(1) of CENVAT Credit Rules, 2004 - Held that:- The steel plates, angles are used for fabrication of raw mill hooper, fabrication of belt conveyor systems, fabrication of transfer tower, parts of boiler, fabrication of grating material for belt conveyor bottom etc. Further, as per the capital goods are concerned, they are used as parts and components. I find that the Bangalore Bench of this Tribunal in the appellant s own case, allowed the credit on these items. - The ratio of the Hon’ble Madras High Court [2014 (10) TMI 637 - MADRAS HIGH COURT] squarely applies to the present case and the decisions relied on by the learned AR for Revenue are not applicable to the present case. Respectfully following the judgment of the Hon’ble Supreme Court [2006 (11) TMI 551 - SUPREME COURT OF INDIA] and the Hon’ble High Court of Madras, I hold that the appellants are eligible for CENVAT credit on MS Steel plates, channels, angles, welding electrodes, storage racks which are used for manufacture of various capital goods and also parts and components which are used in the capital goods. Accordingly, the impugned orders are set aside - Decided in favour of assessee. 2015 (8) TMI 1178 Confiscation of goods - Imposition of redemption fine - Held that:- A Division Bench of this Court in the case of Commissioner of Central Excise & Customs v. Stovec Industries Ltd., reported in [2013 (1) TMI 72 - GUJARAT HIGH COURT] held that in view of instruction dated 17-8-2011, tax appeal below ₹ 10 lakh is not maintainable and this instruction also applies to the pending appeal. Following the aforesaid decision of the Division Bench, we dismiss this tax appeal as not maintainable - Decided against Revenue. 2015 (8) TMI 1177 Duty demand - Clandestine removal of goods - whether the goods found stored in the various outside godowns are the goods clandestinely manufactured and cleared by the respondents M/s. Kuber Tobacco Products Pvt. Ltd. and M/s. Kuber Khaini Pvt Ltd. - Held that:- findings of the Commissioner(Appeal)s show that he has elaborately discussed the evidence. This approach can hardly be characterised as perverse or unreasonable appreciation of evidence to warrant interference or to impel to conclude that substantial question of law arises. - appeal is therefore meritless - Decided against Revenue. 2015 (8) TMI 1176 Denial of benefit of notification - whether Intravenous Fluids having a therapeutic value stood covered under Exemption Notification No. 3/2001 - Held that:- Decision in the case of Uniflex Cables Limited vs. Commissioner, Central Excise, Surat-II [2011 (8) TMI 63 - SUPREME COURT OF INDIA] followed - CESTAT has rightly set aside the order of imposition of penalty. No case to interfere with the impugned order - Decided against Revenue. 2015 (8) TMI 1175 Demand of duty, interest and penalty - Condonation of delay - Tribunal as well as Supreme Court declined to condone the delay - Held that:- The challenge having failed right up to the Hon’ble Supreme Court because the proceedings were belated - Mr. Motwani’s, arguments overlooked the fact that an order which is erroneous, cannot be claimed to be a nullity. The difference between these two concepts have been noted long back. We cannot rely on the Madras High Court’s order/judgment in the case of Beauty Dyers (2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS) and now set at naught a complete adjudication. We do not see any merit in the writ petition. - Decided against Assessee. 2015 (8) TMI 1174 Duty demand - Validity of Tribunal's order - Tribunal remanded matter back to Commissioner - Held that:- Both sides conceded that recording of reasons by this Court may tantamount to expression of opinion either way. They do not therefore insist on any reasons being assigned. The Tribunal shall now re-hear the Appeal of the Assessee on merits and in accordance with law - Matter remanded back - Decided in favour of assessee. 2015 (8) TMI 1173 Denial of refund claim - Whether or not, the refund of Central Excise duty is admissible under Section 11B of the Central Excise Act, 1944, if the same is invoiced and collected and thereby passed on to the purchasers and sought to be claimed on the basis of the credit notes issued to the buyers after clearance of the goods thereby post transaction credit notes - Held that:- excise duty paid by the Industry or assessee and it has been passed on to the consumers or the purchasers of the goods, then the assessee is not entitled to claim any refund of the amount from the Central Excise Department, as such a claim would amount to unjust enrichment. This decision has been followed by the Apex Court in the case of SAHAKARI KHAND UDYOG MANDAL LTD. VS. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS reported in [2005 (3) TMI 116 - SUPREME COURT OF INDIA]. In this view of the matter, we are of the considered opinion that the view taken by CESTAT in directing refund of the amount to the assessee is illegal and deserves to be set aside - Decided in favour of Revenue. 2015 (8) TMI 1172 Demand u/s 11AA - SCN not issued - Held that:- impugned order is only a communication and not a demand to pay the Excise duty together with interest as stated by the respondent, it is open to the respondent to issue a fresh notice to the petitioner under the provisions of the Central Excise Act and after receipt of a reply within a stipulated time, affording an opportunity of being heard to the petitioner, it is open to the respondent to pass appropriate orders on merits and in accordance with law. - Petition disposed of. CST, VAT & Sales Tax 2015 (8) TMI 1185 Re-assessment of turnover escaping assessment – Production as per SIB standards – Books of accounts of petitioner were duly audited and assessment order was passed –Thereafter, AO seek permission of Additional Commissioner under Section 21(2) of U.P. Trade Tax Act to make reassessment on reason of report received from SIB authorities after assessment order, which was permitted and subsequent notices were issued to petitioner – Held that:- As per section 21 reassessment proceedings can be initiated only on basis of material on which belief can be formed that some turnover has escaped assessment – Apparently clear that words "reason to believe" in Section 21 conveys that there must be some rational basis for assessing authority to form belief that whole or any part of turnover of dealer has for any reasons escaped assessment – Sole ground for forming reason to believe is that as per settled norms production should be 94%, whereas petitioner has indicated lesser production –This belief of assessing authority is patently perverse and against figures shown in assessment order and/or balance sheet – Balance sheet indicates that out of total brass scrap, finished goods have been produced and that there was only melting loss of approximately 4% that is to say, there was production of 96% – Standards indicated in confidential report of SIB authorities that there should be production figure of 94% – Very basis for making ground for reassessment and for having reason to believe that some turnover had escaped assessment is lacking – Consequently, impugned notice quashed – Decided in favour of petitioner. 2015 (8) TMI 1184 Condonation of delay – Invalid service of notice – Appellant seeks to set aside impugned order of Tribunal-VAT dismissing its application filed for condonation of 907 days’ delay in filing appeal as well as appeal, being barred by limitation – Held that:- Admittedly revenue instead of sending order at address of appellant had sent same to Branch Office of appellant, which as per appellant was never received – Tribunal has wrongly drawn presumption of service upon appellant under Section 27 of General Clause Act, 1897 – Appellant never requested revenue to send copy of order upon address of its branch office –Revenue could not give any satisfactory explanation for not sending copy of order to appellant, upon its address given in memorandum of appeal – Well settled that party should not be condemned unheard and case should not be rejected on technical grounds, rather should be decided on merit unless delay is attributable to gross negligence of party – Therefore order of Tribunal liable to be set aside – Delay of 907 days’ in filing appeal hereby allowed – Tribunal directed to decide appeal of appellant on merit in accordance with law – Decided in favour of Assesse. 2015 (8) TMI 1183 Taxability of Compact Disc – Electronic good or not – AO levied tax at 10% by treating compact discs as unclassified items – Assesse claimed that compact discs are electronic goods, so tax leviable at 5%, as per Office Memorandum No. 2-2375/11-9(251)-97– Order of AO was upheld by tribunal – Held that:- In list, at item Nos. 28 and 29, audio cassettes (blank) and audio cassette (duplicate) are mentioned – When audio cassette is electronic item, then certainly, compact disc is also electronic item – Moreover, in both items, electronic magnetic has been used – There is no utility of compact disc independently – It become useful only in music system/equipment – Hence, same will have to be treated under category of “electronic goods” – Impugned orders hereby set aside – Decided in favour of assessee. 2015 (8) TMI 1182 Imposition of Penalty – Legality – Authority found that there was intention to evade tax and no documents were available in vehicle when vehicle was checked, therefore imposed tax and 3.5 times penalty – Appeal against said order was dismissed – Held that:- No reasons have been assigned for imposing penalty – Supreme Court in Hindustan Steel Ltd. v. State of Orissa reported in [1969 (8) TMI 31 - SUPREME Court] – Order imposing penalty will not ordinarily be imposed unless party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest – In quasi-judicial function application of mind to facts as well as to requirement of law was necessary – However authority has not assigned any reason that why penalty of 3.5 times was imposed against petitioner – It was necessary for authority to assign proper reasons in imposing penalty – Thus, imposition of tax hereby upheld, however, order of penalty set aside – Matter remanded back to authority to pass proper order in regard to penalty after considering all facts of case – Decided partially in favour of Assesse. Indian Laws 2015 (8) TMI 1165 Power of Tribunal to condone delay - Applicability of proviso to Section 20(3) of the RDB Act to the disposal of an appeal by the Appellate Tribunal under Section 18(2) of the SARFAESI Act - Whether the Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has the power to condone delay in filing an appeal under Section 18(1) of the said Act. - Held that:- The change intended in SARFAESI Act has to be seen from the statute and not from beyond it. No doubt the period of limitation for filing appeal under Section 18 of the SARFAESI Act is 30 days as against 45 days under Section 20 of the RDB Act. To this extent, legislative intent may be deliberate. The absence of an express provision for condonation, when Section 18(2) expressly adopts and incorporates the provisions of the RDB Act which contains provision for condonation of delay in filing of an appeal, cannot be read as excluding the power of condonation. As already observed, the proviso to Section 20(3) which provides for condonation of delay (45 days under RDB Act) stands extended to disposal of appeal under the SARFAESI Act (to the extent that condonation is of delay beyond 30 days). There is no reason to exclude the proviso to Section 20(3) in dealing with an appeal under the SARFAESI Act. Taking such a view will be nullifying Section 18(2) of the SARFAESI Act. Even if power of condonation of delay by virtue of Section 29(2) of the Limitation Act were held not to be applicable, the proviso to Section 20(3) of the RDB Act is applicable by virtue of Section 18(2) of the SARFAESI Act. This interpretation is clearly borne out from the provisions of the two statutes and also advances the cause of justice. Unless the scheme of the statute expressly excludes the power of condonation, there is no reason to deny such power to a Appellate Tribunal when the statutory scheme so warrants - no hesitation in holding that the Appellate Tribunal under the SARFAESI Act has the power to condone the delay in filing an appeal before it by virtue of Section 18(2) SARFAESI Act and proviso to Section 20(3) of the RDB Act. - delay in filing an appeal under Section 18 (1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18 (2) of the SARFAESI Act. - Decided in favour of Appellants.
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