Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 31, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Transfer pricing adjustment - the TPO was required to give reasons for discarding the CUP method qua each of the transactions as all the 12 international transactions entered into by the appellant were distinct. - HC
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Industrial gala sold - taxation as STCG or LTCG - The entire payment as per the agreement was in fact made before financial year 1998-99. Occupation certificate was also issued on 10.03.1998 - the keys were taken back by the assessee on 01.01.2005 - sale of the property in the year 2005 has to be treated as sale of long-term capital assets and gain has to be assessed as long-term-capital-gain - AT
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Expenditure on Cost Guard day function & seminar - whether allowable expenditure u/s. 37(i) - Held Yes - The expenditure has been incurred towards discharge of corporate social responsibility - AT
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TDS u/s 194C - non tds on Vehicle / dumper Hire Charges - No contract, either verbal or written, is entered into with the owners / drivers in these cases of purely temporary transporting arrangements - No disallowance - AT
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Reopening of assessment - at the time of issuing notice, it is not incumbent upon the AO to prove conclusively that there is escapement of income - AT
Service Tax
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Taxability of collection of development fee from the passengers – operational, management and development of airport - it cannot be said that the amount so collected is by way of service charge. - not taxable - AT
Central Excise
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Refund claim - reduction in value - credit notes raised by the Assessee subsequent to the sale/removal of goods - trade discounts given to its buyers including the component of excise duty - refund allowed - SC
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Duty liability - parts of dumpers and others imported, further repacked and labelled by the appellant and sold - whether the items/parts which are repacked are parts of automobiles to fall under Third Schedule and/or Section 4A Notification or not - held yes - AT
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Invokation of extended period of limitation - appellant has wrongly arrived at the valuation of the pipes cleared by them on the cost construction method rather the appellant should have paid duty on the value of pipes as indicated in the contract - Having failed to raise this issue at the material time it cannot be said that the appellants had suppressed or mis-declared anything to enable the revenue to invoke extended period of limitation - AT
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Classification - Lever Ayush Poshak Rasayan and Lever Rakshak Rasayan - based on the quotes from Explanatory Notes to HSN, it is clear that the subject items are in the category of food supplements and are rightly classifiable under Chapter Heading 2106.90 99. - AT
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The process of mixing base paint with tinter amounts to manufacture and is liable to payment of duty at the depot. - AT
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Cenvat credit - excess electricity sold to state govt. - The factum of consumption of electricity generated within the factory partly and sold out partly is an accepted proposition in the law and cenvat credit cannot be denied is also decided by various case laws - AT
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Cenvat credit - Since lubricants are not falling under the negative list of goods mentioned in the definition clause, credit cannot be denied to the appellant - AT
VAT
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Classification - Product prawn feed - The legislature providing for exemption of such product from payment of tax does not necessarily and by itself imply that the product was otherwise exigible to tax. - HC
Case Laws:
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Income Tax
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2016 (8) TMI 1049
Transfer pricing adjustment - discarding the CUP method - Held that:- Section 92-C(1) of the Act pertains to the determination of the arm's length price in relation to “an” international transaction. Section 92-F (ii) defines arm's length price to mean a price, which is applied or proposed to be applied in “a” transaction between persons other than associated enterprises, in uncontrolled conditions. If, for determination of the arm's length price, the assessee had applied more than one of the permissible methods, as recognized under Section 92-C (1), then qua each of the transactions, to determine the arm's length price, the TPO is required to give reasons as to why one of such methods is being preferred over the others. In the case in hand, as observed earlier, for 09 of the 12 international transactions, the order of the TPO is completely silent as to why for determining arm's length price qua them, he has preferred to discard the CUP method, when the same had been applied by the assessee. For the remaining 03 international transactions also, the reasons so given are found by us to be vague and non-specific. In the light of the observations made above, the TPO was required to give reasons for discarding the CUP method qua each of the transactions as all the 12 international transactions entered into by the appellant were distinct. The order of the TPO, having been found to be lacking as above, we find no fault with the order of the Tribunal remitting the matter to the TPO for fresh assessment in accordance with law.
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2016 (8) TMI 1048
Industrial gala sold - taxation as STCG or LTCG - consequent deduction under section 54EC - Held that:- It is an undisputed fact from the perusal of the record that, assessee had acquired the industrial gala by way of ‘registered sale agreement’ dated 27.03.1994 for a total consideration of ₹ 6,90,000/-. As per the payment of demand schedule, the entire payment of ₹ 8,74,000/- including the sale consideration as well as other outgoings was to be done upto financial year 1998-99. The entire payment as per the agreement was in fact made before financial year 1998-99. Occupation certificate was also issued on 10.03.1998. Thus, the property was not only complete but also occupation certificate was issued. It has been submitted by the assessee that, only for the maintenance purpose, the keys were handed over to the builder with whom the contract for maintenance was signed for the period of 3 years which later on was not renewed. When the builder was unable to cooperate with the maintenance, the keys were taken back by the assessee on 01.01.2005. On these facts, it cannot be held that the effective date of ownership and right in the property in the assessee should be reckoned from 01.01.2005, that is, when the keys were given by the builder to the assessee. In fact, when the registered sale agreement was executed on 27.03.1994, the assessee had acquired the right in the property and such right got further fortified by the fulfillment of the covenants in the agreement by making the payment as per the time schedule. This further the possession was also given by issuance of occupation certificate on 10.03.1998. Thus, in all the aspect, the assessee not only became the owner of the property but also had all the rights in the said property much prior to 01.05.2005 in fact even prior to financial year 1998-99. Mere handing over the keys by the builder to the assessee does not in any manner prejudice or jeopardized the assessee’s right in the property when the builder has received the full consideration in FY 1998-99 and handed over the property with all rights and possession and was merely caretaker of the property. Thus, on the facts of the case, we hold that the assessee not only had right in the property for more than 3 years, but also was actually owner of the property, therefore, the sale of the property in the year 2005 has to be treated as sale of long-term capital assets and gain has to be assessed as long-term-capital-gain and the computation of long-term-capital-gain as shown by the assessee has to be accepted. Once the computation of LTCG is being accepted then consequently deductions will follow. - Decided in favour of assessee.
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2016 (8) TMI 1047
Non treating the receipts in foreign currency from M/s. Akorn Inc., USA towards development of the products as ‘Income from Business’ for the purpose of allowing deduction u/s. 10AA - Held that:- In the present case, the assessee has claimed deduction u/s. 10AA of the Act on receipts from M/s. Akorn Inc., USA in lieu of granting exclusive marketing rights of its new product in North, Central and South America. The said receipts are not in relation to export of its products. The meaning of expression ‘derived from’ has got only a limited import and therefore the expression ‘derived from’ as used in section 10AA must be understood as profit directly arising from the export of goods and not incidental to the export. Thus, the expression ‘derived from’ would exclude receipt from sources other than actual export of article or things or services. Thus, from perusal of documents on record and the expression ‘derived from’, the amount of ₹ 3,87,57,400/- received by the assessee from M/s. Akorn Inc., USA cannot be held to be gain or profit derived from export of its product. Therefore, the assessee is not eligible to claim deduction u/s. 10AA of the Act on the aforesaid receipts. We do not find any infirmity in the well reasoned findings of Commissioner of Income Tax (Appeals) in rejecting the claim of the assessee. Disallowance of deduction u/s. 10B with reference to export invoice for want of ‘extension letter’ in spite of subsequent realization of export proceeds - Held that:- We observe that in the assessment year under appeal disallowance has been made for similar reasons. No material has been placed on record to show any variation in the facts. Therefore, respectfully following the order of Co-ordinate Bench, we accept the prayer of the assessee and direct the Assessing Officer to allow deduction u/s. 10B on the aforesaid amount of delayed export realization. Provision for leave encashment pertaining to DTA unit decided against the assessee Disallowance of contribution towards Manjari Gram Panchayat’s project for supply of drinking water where employees/workers of assessee company are also staying - Held that:- The present case the contribution has been made by the assessee for the benefit of its employees/workers, although in the process general public would also be benefited. The Govt. is seeking contribution from various corporate houses for strengthening infrastructure facilities by creating awareness of social corporate responsibility. - Decided in favour of assessee. Capitalization of expenditure incurred on purchase of Microsoft XP and Microsoft Office 2007 software - Held that:- It is an undisputed fact that the softwares acquired by the assessee would require regular up-gradation in view of fast changing technology. The Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs. G.E. Capital Services Ltd. (2007 (7) TMI 185 - DELHI HIGH COURT) has held that the software which requires regular up-gradation due to technology changes cannot be said to be the software or enduring in nature. The Hon'ble High Court dismissing the appeal of the Department observed that the software MS Office, which is not a custom built software of the assessee requires regular up-gradation. Therefore, no error is committed by the Tribunal is treating the expenditure incurred on acquiring the same as revenue expenditure. Thus, in view of the facts of the case and decision of Hon'ble Delhi High Court we hold that expenditure incurred by the assessee for acquiring Microsoft XP license software and Microsoft Office 2007 license software is revenue in nature. No infirmity in the findings of Commissioner of Income Tax (Appeals) in accepting the product development expenditure as revenue in nature. Exclusion of freight and insurance charges both from export turnover and total turnover while allowing deduction u/s. 10B and 10AA of the Act. Expenditure on Cost Guard day function & seminar - whether allowable expenditure u/s. 37(i) - Held that:- The assessee contributed ₹ 2,00,000/- towards celebration of Indian Cost Guard’s 31 years of service to the Nation. The intention of celebrating ‘Cost Guard Day’ is to spread awareness of the service which operates with Indian Navy during external aggression and independently guards Indian cost line from intruders during peace. The business motive behind contributing the fund was the assessee has taken godowns on lease from M/s. Sovereign Pharma Pvt. Ltd. at Daman for storage of vaccines and Indian Cost Guard has its huge base at Daman. The expenditure has been incurred towards discharge of corporate social responsibility. No infirmity in the order of Commissioner of Income Tax (Appeals) in allowing the expenditure.
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2016 (8) TMI 1046
TDS u/s 194C - non tds on Vehicle Hire Charges - disallowance u/s. 40(a)(ia) - Held that:- We find from the facts and circumstances of the case that the provision of section 194C(2) could not be made applicable as there was no contract between the assessee and the individual dumper owners and hence, the invocation of provision of section 40(a)(ia) cannot be made applicable. We find that the invocation of provisions of section 40(a)(ia) is to be decided on the scope and ambit of such enactment. It is not in dispute that the assessee had indeed deducted tax at source wherever it had duly entered into contracts for transportation of goods to the tune of ₹ 11,18,33,299/- out of the total hire charges of ₹ 16,17,19,641/-. In respect of remaining hire charges of ₹ 4,98,86,342/- , depending on the exigencies of circumstances, the assessee had made payments towards hire charges on temporary basis on various occasions which was done from the market mostly through brokers. We find that there was no material to suggest that the other dumper owners / drivers who were arranged through brokers by the assessee were involved in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risk associated with the main contract work. No contract, either verbal or written, is entered into with the owners / drivers in these cases of purely temporary transporting arrangements. - Decided in favour of assessee Tax on trade credits in respect of balance outstanding in three creditors - Held that:- A.O.'s action implies that a part of the transaction, in fact the major part judging by the amount paid, has been held to be genuine whereas the outstanding balances are not. No logic behind allowing payments made during the year as genuine while simultaneously holding outstanding credit balances due to the same parties as ingenuine. Furthermore, the A.O. is not seen to doubt the identity of these parties or the genuineness of the transactions. Details of the parties were available with him. On that there is no dispute. If the A.O.has any doubt regarding the creditworthiness of these parties he could have made requisite enquiries. No such enquiry appears to have been done. In view thereof , without conducting such enquiries, to hold that the concerned parties have no creditworthiness, as the A.O. has done, cannot be justified.- Decided in favour of assessee
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2016 (8) TMI 1045
Reopening of assessment - no business activity carried - Held that:- The contention of the assessee-company that the re-assessment proceedings were initiated during pendency of the original proceedings cannot be accepted, as the facts emerge from the assessment order, the original return of income was filed on 28/3/2008 and therefore, notice u/s 143(2) should have been issued by 31/3/2009. Obviously, there was no notice issued u/s 143(2) against original return of income. Notice u/s 148 was issued on 21/12/2009 on which date admittedly there was no pending proceedings. Therefore, the contention of the assesseecompany that the re-assessment proceedings were initiated during the course of pendency of the original assessment is bald without any substance and devoid of any merit and therefore, dismissed as such. From the reasons recorded, it is clear that the AO had information that no return of income has been filed for several assessment years and this fact goes to show that there was no business activity carried on by the assessee-company. Obviously, this information could have enabled the AO to believe that no business was carried on by the assessee-company so as to entitled it to business loss which could be set off against capital gains. In our considered opinion, this information would have enabled the AO to believe that income got escaped assessment. It is also trite law that at the time of issuing notice, it is not incumbent upon the AO to prove conclusively that there is escapement of income As regards merits of the addition, the assessee-company has not brought any evidence in support of the contention that the assessee-company had undertaken any business activity during the previous year relevant to assessment year under consideration. The findings of the AO that sales tax bills or invoices and transport details plus details of granites extracted were not produced, has not been controverted by the assessee-company either before the CIT(A) or before us. In the result, it cannot be accepted that the assessee-company is engaged in the business activity during the previous year relevant to assessment year under consideration. Therefore, business loss returned can neither be accepted nor can it be allowed to be set off against capital gains. As regards, grounds relating to bifurcation of consideration between land and buildings, assessee-company had not demonstrated before us as to how the working done by the AO is wrong. Therefore, we do not find any reason to interfere with order of CIT(A).- Decided against assessee.
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2016 (8) TMI 1044
Penalty u/s 271-D and 271-E - Held that:- On perusing the judgment of the High Court [2006 (7) TMI 163 - RAJASTHAN High Court] it is found that penalty imposed on the respondent herein was also set aside on the ground that the provisions of Section 271-D and 271-E of the Income Tax Act were invoked after six months of limitation and, therefore, such penalty could not have been imposed. Since the outcome of the judgment of the High Court can be sustained on this aspect alone, it is not even necessary to go into other aspects. Leaving the other questions of law open, the appeal is dismissed.
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2016 (8) TMI 1043
Addition made on account of inflated purchase - Held that:- The assessee was manufacturing pharmaceutical medicines which are being exported. The assessee was maintaining the norms which are prescribed by the Government of India for a particular pharmaceutical medicine which is to be exported. Since there was a variation in the ratio, the Assessing Officer made addition based on the statement of the General Manager, in-charge production. In our view, the Assessing Officer has based his addition on the basis of the documents which are not available on the record and based on the statement of the General Manager, in-charge Production. Whether the assessee has followed the prescribed norms is not within the purview of the Income-tax Authority. In our view, the Tribunal has rightly held that the CIT(A) was wrong in relying on the input out consumption ratio.In our view, the Assessing Officer and the Commissioner of Income-tax (Appeals) have gone on different directions. - Decided in favour of the assessee.
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2016 (8) TMI 1042
Penalty under section 271(1)(c) - Held that:- The assessee in one of the appeals is a government company engaged in the business of providing loans, leasing and hire purchase services and providing financial services whereas in the other appeal, the assessee is a partnership firm running education institution. From the assessment order it is clear that there is no satisfaction recorded by the Assessing Officer regarding concealment of income or for furnishing any inaccurate particulars. Therefore, from the plain reading of the assessment order itself it is clear that the assumption of jurisdiction to levy penalty is lacking in the present case. The notice issued by the Assessing Officer has also not stated whether the penalty proceedings are initiated for concealment of income or for furnishing inaccurate particulars. The revenue is not in a position to show the mens rea in the present cases. Disallowance of certain claims neither amounts to concealment nor deliberate furnishing of inaccurate particulars of income. As unless and until there is some evidence or some circumstance to show that the omission was attributable to an intention or desire on the part of the assessee to conceal the income so as to avoid imposition of tax thereon. Thus, jurisdiction u/s 271(1)(c ) of the Act cannot be assumed. In the present case, we are of the view that the impugned orders passed by the Tribunal as well as CIT(A) are erroneous with regard to levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee
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2016 (8) TMI 1041
Foreign exchange fluctuation loss - whether the Tribunal is justified by allowing foreign exchange fluctuation loss to set off against the taxable income without considering the CBDT's instruction No.3 of 2010 dated 23.03.2010? - Held that:- In the present facts, we find that the loss was not on account of derivatives but are in fact losses and gains in foreign exchange relating to the purchase and sales transactions i.e. creditors and debtors outstanding as on 31st March, 2010. Therefore, the Instruction no.3 of 2010 issued by CBDT would have no application to the facts of the present case. In fact, the issue arising herein would be covered by the principles laid down by the Apex Court in Woodward Governor India (P) Ltd. (2009 (4) TMI 4 - SUPREME COURT ). Accordingly, as the impugned order of Tribunal followed by the decision of the Apex Court in Woodward Governor India (P) Ltd. (supra) which governs the issue, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
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2016 (8) TMI 1040
Reopening of assessment - Held that:- The petitioner is not guilty of not disclosing fully and truly all material facts necessary for the relevant assessment year. In such circumstances, hold that invocation of provision of Section 148 by the Assessing Officer is unwarranted for the relevant assessment year.
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2016 (8) TMI 1039
Deduction of cost indexation value of building allowability - CIT(Appeals) directing AO for allowing deduction - Held that:- The rental income from Building was offered for income tax and produced copy of income tax return for assessment year 2004-05 and copy of Residential Electricity bill and Drew our attention to the copy of Income Tax Return of assessment year 2004-05 were the assessee has offered rental income under the house property and disclosed property tax receipts. The ld. Commissioner of Income Tax (Appeals) has elaborately discussed on the existence of Building in his order and having satisfied with Building existence applied PWD rates and calculated index cost of acquisition. We found from the order of assessment and Commissioner of Income Tax (Appeals) that At the request of the buyer/Builder, the property was demolished and sale deed was executed. The ld. Authorised Representative drew our attention to the copies of the Electricity bill of residential to support that the building was in Habitation and rental income was derived. So, considering the apparent facts and material on record and evidence, we found the Commissioner of Income Tax (Appeals) based on examination of the facts of existence of building and Income Tax Returns was of the opinion that the building was in existence and the assessee was offering income from house property in the income tax return. Hence, we are not inclined to interfere with the order of Commissioner of Income Tax (Appeals) and dismiss the Revenue appeal. Determination of sale consideration - Commissioner of Income Tax (Appeals) has adopted the value determined by the DVO - Held that:- We found that the ld. Assessing Officer has adopted the Sub-Registrar value as per provisions of Sec. 50C of the Act.Rs. 1,81,87,296/-. The ld. Commissioner of Income Tax (Appeals) on the basis of the submissions of the assessee referred to the valuation cell and District Valuation Officer has estimated the value of the property of ₹ 1,63,69,000/-. This valuation report was communicated to the assessee and the assessee filed submissions on 04.03.2013 in respect of cost adjustment for the deficiencies attached to the property allowed at 5% and the ld. Commissioner of Income Tax (Appeals) has calculated capital gains which is not disputed, so considering the apparent facts, we confirm the order of Commissioner of Income Tax (Appeals) on this issue. Cost adjustment made by the DVO at 5% and the claim of the assessee being 25% - Held that:- We found that the DVO has calculated the value of property based on the information and details submitted. The contention of the assessee for claim of 25% adopted was argued. The ld. Commissioner of Income Tax (Appeals) could not understand the reasons envisaged by the assessee how such deficiencies attached to the property will adversely affect the value of the property. The ld. Commissioner of Income Tax (Appeals) has rejected the cost adjustment of 25% and we found the ld. Commissioner of Income Tax (Appeals) considered these fact and DVO report and directed the ld. Assessing Officer to adopt value as per DVO for calculation. Therefore, we do not find any infirmity and dismiss the ground in Cross Objection filed by the assessee. Non accepting the plea of the cost of building and estimated cost of allowance at 5% towards cost adjustment by CIT(A) - Held that:- We on perusal of the Commissioner of Income Tax (Appeals) found the probable value of cost of construction of building in financial year 1981-82, 1995-96 and 1996-1997 based on the PWD rates was applicable to the state of Tamil Nadu was calculated at 50% of probable cost of construction adopted for building existing as on 01.04.1981 falling in financial year 1981-1982 as the building being old. We found the reasons recorded by the ld. Commissioner of Income Tax (Appeals) that the assessee could not submit any details of cost of construction incurred for the financial year 1995-96 and 1996-1997 nor assessee was able to file any details of method on methodology in arriving at fair market value of land and building ₹ 14,00,000/-. We are of the opinion that the ld. Commissioner of Income Tax (Appeals) has rightly considered the facts with basic reasons in respect of cost of construction of old building and we dismiss the ground of the assessee. Proceedings of u/s.263 - Held that:- We on perusal of the calculation of Long Term Capital Gains on sale of property at page 9, the ld. Commissioner of Income Tax (Appeals) has made a note in respect of revisionary proceedings and proportionately allowed the claim. Subsequently, the ld. Authorised Representative explained that the order of Sec. 263 on appeal was dismissed and the appeal has been admitted in the High Court and the ld. Assessing Officer has passed the consequential revisionary order on 31.03.2013 giving effect to the direction excluding deduction u/s.54F of the Act and the disputed Revisionary proceedings are pending before High Court. Therefore, we are of the opinion that the ld. Commissioner of Income Tax (Appeals) was correct in his order to make observations and we dismiss the ground of the assessee. Penalty 271(1)(c) - whether the assessee is guilty or submitted inaccurate particulars in the assessment proceedings - Held that:- It was explained that the assessee is the owner of the land and building before 01.04.1981 and subsequently undertook construction works as extension of Building and as per terms of sale with purchaser, the building was demolished and sale deed was executed by the assessee. The fact that the penalty order arised out of the assessment order passed u/s.143(3) r.w.s. 147 of the Act dated 31.12.2009 and the ld. Commissioner of Income Tax (Appeals) in the quantum proceedings having satisfied that there is existence of Building and allowed index cost acquisition as deduction from sale consideration. The proceedings under Sec. 263 of the Act are being contested at higher forums and has not attained finality. The Revenue before us argued on the basis of Revision order passed u/s.263 of the Act which is not appropriate. The facts of the assessment proceedings have been considered by the ld. Commissioner of Income Tax (Appeals) and satisfied with evidence and also there is no concealment or furnishing of inaccurate particulars as the assessee has claimed exemption u/s.54Fof the Act and also disclosed Rental income from the building in earlier assessment years
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2016 (8) TMI 1038
Re-opening of assessment u/s.147 - Held that:- The reassessment proceedings have rightly been initiated after forming opinion that some income chargeable to tax as escaped assessment u/s.147 of the Act, after amendment to sec.147 of the Act with effect from 01.04.1989, wide power has been given to the AO, even to reopen the cases where the assessee has fully disclosed material facts. The only condition for reassessment is that the AO should have reasoned to believe that income chargeable to tax had escapement. Such belief can be reached in any manner and is not quantified by precondition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended section 147(a) of the Act. In the instant case, AO reopened the assessment, after recording reasons mentioned hereinabove in para-3.1 of this order. As such in our opinion, there is no infirmity in the order of Ld.CIT(A) and the same is confirmed. This ground of assessee is rejected. Treatment of sale of agricultural land as income from business - Held that:- In this case, the assessee had no record of carrying on agricultural operations. The size of the land also suggests that it was not intended to carry on agricultural operations. The assessee is engaged in trading PVC Flex Sheets, SS Coils & Other Trading, Finance, Derivatives which throws light on the intention of the parties for the purpose of trading or investment. There is no evidence on record to suggest that the said purchase of land was to enjoy the 'pride of possession' of agriculture, which are some of the factors enumerated by the apex Court to facilitate a judicial body to analyse the nature of transaction of sale. At any rate, as against the contention of the assessee that the property was retained for investment, the fact remains that it was sold within short time. Thus, the attendant circumstances of the case, the process of purchase of land jointly, and also sale of purchased land jointly, compel us to come to the conclusion that the purchase of land, in itself, was with an intention to sell at a profit in the form of an 'adventure in the nature of trade' and hence though it is an isolated transaction the income thereon can still be considered as business income. - Decided against assessee
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2016 (8) TMI 1037
Revision u/s 263 - allowably of expenditure - Held that:- The assessee has stated that he was partner in various partnership firms. In respect of the expenses, the assessee also stated in that reply about the expenditures incurred and deduction claimed. The AO after considering the submissions allowed the claim of the assessee in respect of deduction/expenditure. Now the question arises is whether the AO erred in allowing the expenditure. The ld. Counsel for the assessee has placed reliance on the judgment of the Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Jabarmal Dugar (1971 (7) TMI 17 - RAJASTHAN High Court ). We find that the Hon’ble High Court has held that the expenditure was allowable. The Hon’ble Calcutta High Court in the case of CIT vs. S.B. Ghose (1980 (6) TMI 27 - CALCUTTA High Court ), after considering various judgments held that – When the income of a partnership is allocated t the different partners of a firm, the partners are entitled to have their income assessed in accordance with law, that is to say, under section 28 of the I.T. Act, 1961. In making that assessment, a partner of the firm, being an assessee, is entitled to all the deductions allowable under the Act. In order to earn the income as a partner of a firm, a partner of a firm has to do some work and he has to incur certain expenses, e.g., holding consultation for the work of the firm at one’s residence or acts done in order to facilitate or earn the income as a partner of the firm. Such expenditure was allowable. In view of these judgments, the act of the AO cannot be termed as erroneous. Therefore, on this ground invoking of provisions of section 263, in our considered view was not justified. Excessive claim of deduction under section 80C allowed - Held that:- From the details filed in the paper book, it transpired that the assessee has claimed deduction on gross amount paid to the school. However, out of this gross amount, the assessee was entitled for deduction to the extent of tuition fee alone. Therefore, the AO erred in allowing the deduction on gross amount. But looking to the amount involved, in our considered view, the ld. CIT should have given direction to the AO as he is empowered to do so to restrict the claim to the extent of allowable deduction instead of setting aside the assessment order. As per section 263, the ld. CIT is empowered to modify the assessment. Thus the direction issued by the ld. CIT is modified. The AO is directed to restrict the deduction to the extent of ₹ 56,749/- claimed under section 80-C.
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2016 (8) TMI 1036
TDS u/s 194C OR 194H - contract for supply of labour - Held that:- The contract between the assessee and the agencies is a mere contract for supply of labour for execution of work contract as defined under the provisions of section 194C, but not a commission as defined under the provisions of sec. 194HAs decided in assessee’s own case for the assessment year 2009-10, we are of the view that the impugned payments are covered under the provisions of section 194C of the Act, but not under the provisions of section 194H of the Act. The CIT(A) after considering relevant facts and circumstances, rightly deleted the additions made by the A.O. We do not see any error or infirmity in the order of the CIT(A). Hence, we inclined to upheld the CIT(A) order and reject the appeals filed by the revenue.
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2016 (8) TMI 1035
TDS u/s 194A - lease premium / lease charges paida to M/s. New Okhla Industrial Development Authority (NOIDA) for the purpose of acquiring land - Held that:- Respectfully following the ratio laid down by Hon’ble Allahabad High Court in case of Canara Bank (2016 (5) TMI 570 - ALLAHABAD HIGH COURT), we hold that the assessee is not liable to deduct TDS u/s 194A of the Act as NOIDA would be a local authority and is a corporation established by the State Act. TDS u/s 194I - rent paid - Held that:- It is observed that a sum has been paid during the A.Y. 2009- 10 and the sum so paid are presumed payment towards purchase of industrial plot and stamp duty for the instrument entered into. In our considered opinion that payment cannot be considered as rent, in any event, these payments pertain to A.Y. 2009- 10 and from the financial statement filed in the paper book, no rent has been paid during the year under consideration. We, are therefore, of the considered opinion that in such a case, Section 194-I cannot be made applicable as no rent has been paid or credited. Accordingly, this ground filed by the Revenue stands dismissed.
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2016 (8) TMI 1034
Profits from sale of shares - capital gains OR business income - qualification for deduction u/s 111A - Held that:- The assessee has indulged in purchase & sale of shares, no doubt with the intention of making profit but intention and timing of holding of investments determines the nature of transactions. It is worth to note that assessee also entered into ‘F&O’ transactions, which clearly demonstrates that the intention was to make quick money/profit. The frequency of transactions are such that the minimal holding was 1 day and maximum was 77 days. This also demonstrates that the intention of the assessee was not for making investment but rather making quick profit, which is nothing but indulging in business. There is no doubt that all the transactions are conducted with the profit intention only. But, the intention to invest for holding as investment will qualify for deduction u/s 111A whereas the intention is to make quick profit, will definitely gives the impression that it was carried on as short term business to make quick money. As held in the case of CIT Vs. Rewa Shankar A. Kothari [2006 (1) TMI 80 - GUJARAT High Court] where on finding that there was a long gap between date of acquisition of shares and their sales, also shares having been shown as investments in Wealth Tax returns right from its purchase, it was held that profits from sale of shares were required to be taxed under capital gains and not as business income. In the present case, it is quite opposite to the above discussion. Hence, we are inclined to conclude that the transactions are in the nature of business and not as investment. Accordingly, we hold that the action of the AO in this case is appropriate and the appeal of the assessee is dismissed.
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2016 (8) TMI 1033
Validity of assessment - Settlement Commission u/s 245D(4) - period of limitation - whether the period commencing from the date of order passed by the ITSC u/s 245D i.e. final order to the date of stay granted by the single judge of the Hon’ble Madras High Court should not be excluded while computing period of limitation - Held that:- Where abatement of assessment proceedings u/s 245HA consequent upon admission of application by the Settlement Commission after exclusion of the period under sub-sec.(4) of sec.245HA i.e. the period during which the proceedings are pending before the Settlement Commission, period available for assessment shall not be less than one year and where such period of limitation is less than one year it shall be deemed to have been extended to one year for the purpose of determining period of limitation. In this case, final order by the Settlement Commission u/s 245D(4) was passed on 21/5/1998. The stay has been granted by the Hon’ble Madras High Court on 1/12/1998 that means 194 days, thus leaving a period of 171 days. Final order by the Division Bench of the Hon’ble Madras High Court was passed on 16/7/2009 and received by the CIT on 4/8/2009. The assessment was completed on 11/1/2010 i.e. within 160 days from the final order of the Hon’ble Madras High Court. Thus, as against available days of 171 days, the assessment passed is well within the period of limitation. The contention of the assessee is dismissed.
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Customs
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2016 (8) TMI 1074
Notice for penalty under Customs Act for wrongful import of a car - Held that:- The charge on the appellant in the show-cause notice was that he had aided and abetted Shri Ashok Kumar Dhanak and finalise the import of car in a fraudulent manner resulting in evasion of duty. The sequence of events as narrated by the appellant in his first statement clearly shows that he was the one who organized the import of the car and used the passport of Shri Ashok Kumar Dhanak for import of the car. It was him who had identified the car imported. The statement of Shri Ashok Kumar Dhanak dated 30/07/201 corroborated the initial version of the statement of the appellants. From these circumstances, it is apparent that the retraction made by the appellant is an afterthought and therefore, needs to be discarded.In view of the above, there is a clear role of the appellant in the wrongful import of the car and charges under Section 112B are sustainable. The appeal is therefore, dismissed.
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2016 (8) TMI 1073
Revocation of registration - Held that:- Registration was revoked alongwith forfeiture of ₹ 10,00,000/- security deposit, is that they are not "authorized courier" as per Regulation 3 (a) of CIER, 1998/Regulation 3 (1) (b) of CIER, 2010. We note that both these are definition clause of "authorized courier". We note that the registration in 2009 has been granted by the Competent Authority, apparently after due process. The review of the registration has been done prompted by guidelines for improved monitoring of cargo movement issued by the Board in September 2010. It is an admitted fact that the appellant have not filed any bill for clearance of any import or export package and are yet to start their operation as "authorized courier" in terms of the registration granted. In such situation, we find forfeiture of ₹ 10,00,000/-security deposit without any contravention by the appellant is not justifiable. Such punitive action has to have a premise of violation of certain provision of law. The same is not demonstrated in the present case. Regarding revocation of registration, we find the action of the lower Authority is preemptive though aimed at enforcing certain revised guidelines for improved monitoring and better compliance of cargo movement across the border. We find that taking into consideration the submissions made by the appellant and also the fact that they are yet to commence the operation that and are pleading the financial difficulty as a reason for delay in improving the infrastructure, we find it fit and proper to direct the learned Commissioner for re-verification of the facilities in December 2016 by which tinie the appellant has undertaken to put up all the required infrastructure in place and thereafter to take a fresh decision about the continuation of the appellant as authorized courier in terms of the above Regulations.
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2016 (8) TMI 1072
Enhancement of the redemption fine imposed by the adjudicating authority - Held that:- We find that in all the cases, the fact is that the respondents have imported Marble Blocks without obtaining Special Import Licence and there is also mis-declaration of the value. We observe from the impugned order that though the redemption fine was not to the extent of margin but the penalty was substantially enhanced. If both penalty and redemption fine are taken together it is more or less equal to the margin therefore principle that the margin should be wiped out stand complied with. Therefore, we do not see any reason to interfere in the imposition of penalty and fine ordered by the adjudicating authority. Moreover, this Tribunal in the case of Stonemann Marble Industries Vs. Commissioner (2002 (1) TMI 1254 - CEGAT, MUMBAI) on the identical case the redemption fine and penalty was reduced to 20% and 5% of the CIF value respectively. This decision of the Tribunal was upheld by the Hon’ble Supreme Court in the case of Commissioner of Customs (Import) Vs. Stonemann Marble Industries (2011 (1) TMI 15 - SUPREME COURT OF INDIA ). In view of above position, firstly we find that taking into consideration the total amount of penalty and redemption fine imposed by the adjudicating authority which is equal to the margin, no further enhancement is required. We, therefore upheld the impugned orders and dismiss the appeals filed by the Revenue.
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2016 (8) TMI 1053
Permission to withdraw the present petition and application with liberty to make a detailed representation - promotion of the petitioner - grade of Assistant General Manager - Communication Assistant - Electronics Assistant - Senior Manager - Held that: - petitioner to make detailed representation and the same shall be decided by respondent No.1. The decision thereof shall be communicated to the petitioner. - petition and application dismissed - decided in favor of petitioner.
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Corporate Laws
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2016 (8) TMI 1052
Scheme of Arrangement in the nature of amalgamation amongst the Petitioner Company and the Transferor Companies and their respective shareholders and creditors deserves to be granted. The Scheme of Amalgamation is hereby sanctioned. The same shall be binding upon all the Equity Shareholders, Secured Creditors, Unsecured Creditors of the Petitioner Company and all other agencies, departments and authorities of the Central, State and any other local authorities.
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2016 (8) TMI 1051
Sanction of a Scheme of demerger - Held that:- The Court is of the view that the observations made by Regional Director do not prevent the Court from sanctioning the Scheme of Demerger. The petitioner-Company have filed affidavit on 19.8.2016 which clearly demonstrates that the observations made by the Regional Director in his affidavit are taken care of. Moreover, there are no other objections to the scheme by anybody, as is clearly borne out from the affidavit of the Regional Director. The Court therefore is of the view that the Scheme of Demerger as proposed is in the interest of the company and their members and is not otherwise prejudicial to public interest. This Court doth hereby sanction the Scheme of Demerger set forth in the petition and this Court does hereby declare the same to be binding on the petitioner-Company and all the members and creditors of the petitioner-Company and all other concerned parties and does hereby approve the said scheme of the demerger with effect from the appointed date i.e. 1st April 2016
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Service Tax
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2016 (8) TMI 1056
Cenvat credit - service tax paid on the freight incurred for movement of goods from their depot to another depot of their own - Held that:- it is found that the place of removal in respect of the goods sold from depot is the depot from which the goods are sold. Therefore, the services received prior to sale from a depot, like transportation from one depot to another would be admissible as the credit by referring the decision of Tribunal in the case of Brakes India Ltd. Vs. CCE [2005 (1) TMI 211 - CESTAT, CHENNAI]. Accordingly, the credit of service tax paid on transportation of goods from one depot to another is allowed. Cenvat credit - service tax paid on maintenance of garden service - Held that:- it is noticed that the appellants are not in a position to clarify the details asked by the Commissioner (Appeals). Even in the Tribunal they were unable to point out the exact nature of services used. In these circumstances, the decision of the Commissioner (Appeals) to remand the matter to the original adjudicating authority is upheld. - Decided partly in favour of appellant
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2016 (8) TMI 1055
Demand of service tax - Goods Transport Agency Service - trucks were driven by drivers of the appellant - Held that:- in the light of the judgments of Hon’ble High Court of Madras in CCE, Salem Vs Suibramia Siva Co-operative Sugar Mills Ltd. [2014 (11) TMI 925 - MADRAS HIGH COURT] where it was held that the use of the word 'any person' in the definition of 'Goods Transport Agency' includes individual truck owners also and the judgment of Tribunal in the case of Sree Balaji Transport Vs CCE & ST, Tirupathi [2015 (10) TMI 53 - CESTAT BANGALORE] where Tribunal observed that under Section 60(506), Goods Transport Agency means any person who prides service in relation to transport of goods by road and issues consignment note, by whatever name called. The language of the section is unambiguous and that any person (including individuals) who provides service in relation to transport by road is liable to service tax. The appellant does not succeed on merits. Period of limitation - freight charges - duty having been paid on FOR basis - no suppression with intention to evade payment of service tax - Held that:- it is the case of the appellant that the freight charges were shown in the invoices and that these invoices were signed by the jurisdictional officer. As per the agreement the appellant has agreed to bear the transportation charges. The appellant is registered for Goods Transport Agency Services. In the invoices, the appellant has shown the freight charges separately. But the appellant failed to discharge the service tax liability on the freight charges collected. In such score, the invocation of extended period of limitation is legal and proper. - Decided against the appellant
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2016 (8) TMI 1054
Taxability of collection of development fee from the passengers – operational, management and development of airport - section 65(3c) of Finance Act, 1994 – definition of taxable service - section 65(105)(zzm) of Finance Act, 1994 – fundamental requirement of the demand of tax - Held that: - Section 67 defining value of taxable services for charging service tax says that the value of service shall be gross amount charged by the service provider for the service provided to the recipient. Since collection of development fee is not for any specific service rendered by them, but is a flat rate of charge to passengers, it cannot be said that the amount so collected is by way of service charge. Further, no additional benefit accrued to the passenger during the period of levy of ‘development fee.’ These are basic facilities that is inherent in the civil aviation sector – appeal disposed off – appellant not required to pay tax on development fee – decided in favor of appellant.
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Central Excise
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2016 (8) TMI 1071
Refund claim - excise duty paid on additional discounts and turnover discounts - eligibility for deduction from the wholesale price for determination of value under Section 4 of the Central Excises & Salt Act, 1944 - Held that:- this Court by its judgment dated 11.03.1997 in Addison & Co. Ltd. Vs. Collector of Central Excise, Madras Vs. Collector of Central Excise, Madras [1997 (3) TMI 98 - SUPREME COURT OF INDIA] held that the turnover discount is an admissible deduction. This Court approved the normal practice under which discounts are given and held that the discount is known to the dealer at the time of purchase. The Additional Solicitor General submitted that any credit note that was raised post clearance will not be taken into account for the purpose of a refund by the Department. We do not agree with the said submission as it was held by this Court in Union of India Vs Bombay Tyre International Pvt. Ltd. [1983 (10) TMI 51 - SUPREME COURT OF INDIA] and [1983 (11) TMI 70 - SUPREME COURT OF INDIA] that trade discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. It is the submission of the Assessee that the turnover discount is known to the dealer even at the time of clearance which has also been upheld by this Court. It is clear from the above that the Assessee is entitled for filing a claim for refund on the basis of credit notes raised by him towards turnover discount. Unjust enrichment - incidence of duty was originally passed on to the buyer - Held that:- there is no material brought on record to show that the buyer to whom the incidence of duty was passed on by the Assessee did not pass it on to any other person. There is a statutory presumption under Section 12-B of the Act that the duty has been passed on to the ultimate consumer. It is clear from the facts of the instant case that the duty which was originally paid by the Assessee was passed on. The refund claimed by the Assessee is for an amount which is part of the excise duty paid earlier and passed on. The Assessee who did not bear the burden of the duty, though entitled to claim deduction, is not entitled for a refund as he would be unjustly enriched. Refund claim - on the basis of credit notes raised by the Assessee subsequent to the sale/removal of goods - trade discounts given to its buyers including the component of excise duty - Held that:- the appeals were allowed, as being squarely covered by the judgment of the Madras High Court in Addison and Company Ltd., Madras Vs. Collector of Central Excise, Madras [1997 (3) TMI 98 - SUPREME COURT OF INDIA]. Refund claim - job-work - prior to 11.06.2001 the CENVAT credit admissible on the declared inputs used in the manufacture of process of man-made fibre was 45 per cent and the net duty payable on the fibre was 55 per cent of the effective duty - Assessee continued to pay the effective duty at 55 per cent for a short period between 11.06.2001 to 13.06.2001 after being a notification was issued on 11.06.2001 increasing CENVAT credit from 45 per cent to 50 per cent which resulted in the net duty payable being 50 per cent - effective duty of excise is 16 per cent and the duty payable from the personal ledger account prior to the notification dated 11.06.2001 was 8.8 per cent and after 11.06.2001 the duty payable is 8 per cent - Held that:- we have already held that in the claim for refund of excess duty paid can be allowed only in case where the burden of duty has not been passed on to any other person, which includes the ultimate consumer as well. The findings in the Order-in-Original and the Order-in-Appeal are that the excise duty paid originally at the rate of 8.8 per cent was passed on from the Assessee-processor to the owner of the fabric and later to the customers. The point in this Appeal is also identical to that of Civil Appeal No. 7906 of 2002. The above appeal of the Revenue is allowed. Refund claim - excess excise duty paid at the rate of 18.11 per cent instead of 9.20 per cent - Assessee initially passed on the duty incidence to its customers. Later the Assessee returned the excess duty amount to its buyers which was evidenced by a certificate issued by the Chartered Accountant - Held that:- except for a factual dispute about the genuineness of the certificate issued by the Chartered Accountant and the credit notes raised by the Assessee regarding the return of the excess duty paid by the Assessee, there is no dispute in this case of the duty being passed on to any other person by the buyer. As it is clear that the Assessee has borne the burden of duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In view of the facts of this case being different from Civil Appeal No. 7906 of 2002, the appeal preferred by the Revenue is dismissed. - Decided partly in favour of Revenue
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2016 (8) TMI 1070
Refund claim of interest paid for the delay in discharging adjudication levies imposed on them - liability to pay interest under Section 11AB of the Central Excise Act 1944 - Held that:- the impugned order is not sustainable in law on the ground that interest cannot be demanded from the appellant under Section 11AB which was never resorted to in the show-cause notice and in the Order-in-Original. All along the proceedings the case of the department was that the appellant is liable to pay interest under Section 11AA and not liable to pay interest under Section 11AB of the Central Excise Act 1944. The impugned order setting up a new case on behalf of the Revenue is not permissible under law as held by various judgments. Similarly the Board's circular dated 26.08.2002 also clarified that Section 11AB can be invoked only in respect of the clearances made after 28.09.1996 irrespective of the date of passing of the adjudication order and admittedly the clearances in the present case were made during the period 1984-85 to 09.05.1989 which is much before 28.09.1996. Further the Board’s Circular is binding on the Revenue in view of the various judgments. - Decided in favour of the appellant with consequential relief
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2016 (8) TMI 1069
Invokation of extended period of limitation - appellant has wrongly arrived at the valuation of the pipes cleared by them on the cost construction method rather the appellant should have paid duty on the value of pipes as indicated in the contract - Held that:- the audit report contains a specific reference to the contract and on that basis it has arrived at the conclusion that the value of gunniting needs to be included in the assessable value. We find that the DGCEI in the impugned show-cause notice has also primarily relied on the contract. It has sought to recover duty on the basis of value of the goods shown in the contract. In these circumstances, we find that the documents on the basis of which the demand has been raised, i.e., the contract, was produced before the audit and examined by them. Having failed to raise this issue at the material time it cannot be said that the appellants had suppressed or mis-declared anything to enable the revenue to invoke extended period of limitation. Hence, it is not open to Revenue to invoke extended period of limitation. - Decided in favour of appellant
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2016 (8) TMI 1068
Validity of revisionary order passed by the revisionary authority - Exercise of revisionary powers - Whether can be exercised by the officer of same rank or not - Held that:- in view of the decision of Punjab and Haryana High Court in the case of M/s NVR Forgings vs Union of India and others [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT] which was followed by this Court M/s Kent Malleables Private Limited vs Union of India and others, the Revisionary Authority had to be an officer of a higher rank than the appellate authority, whose order is impugned before the Revisionary Authority. Therefore, the impugned order passed by the Revisionary Authority is set aside. - Petition disposed of
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2016 (8) TMI 1067
Seeking provisional release of seized goods - modification in conditions imposed - Held that:- it is directed that the Petitioner shall be permitted to provisional release of the goods upon furnishing a bond for 100% of the full assessment value and, in view of the statement of the Petitioners, upon payment of the full duty, without prejudice to their rights and contentions in the further proceedings if any. - Petition disposed of
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2016 (8) TMI 1065
Whether Appellant M/s.Sai Electrocasting Ltd. (Now M/s.Super Smelters Ltd., Unit-2) has correctly taken Cenvat Credit on certain capital goods received in their factory premises along with duty paying documents - Held that:- in view of the settled proposition of law it cannot be held that Respondent had any mala fide intention to take wrong Cenvat Credit when both capital goods and the duty paying documents, bearing the registration number of the supplier, were received by the Respondent and recorded in their statutory records credit was rightly taken. Further as Respondent did not have any mala fide intention while taking credit, therefore, extended period in demanding Cenvat Credit is not sustainable. Show cause notice in this case was issued on 22.09.2009 whereas the Cenvat Credit was taken in the month of May, 2007. Accordingly demand is also time barred. Therefore, there is no reason to interfere with the Order-in-Appeal. - Decided against the Revenue
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2016 (8) TMI 1064
Cenvat credit - Service tax paid on outward transportation - Whether the transportation of inputs/semi-finished goods/intermediaries by the appellant assessee to their manufacturing units falls under the ambit of the definition of input service defined in Rule 2(l) of CCR, 2004 or otherwise - Held that:- the decision of the Tribunal in the assessee's own case squarely covers the disputed issue. There cannot be a different view with regard to the eligibility of Cenvat credit of outward transportation is concerned. I also find from the CBEC letter cited by the appellant that in case of depot sale of goods, credit of service tax paid on the transportation of goods upto such depot would be eligible. The amount of transportation charges passed on to the receiving unit is only ₹ 4,62,597/- which is a very small fraction of the total amount in dispute and the resultant service tax demand is only ₹ 13,848/- which can be disallowed in the hands of the appellant and the credit can be availed by the respective receiving unit. The impugned order passed by lower authorities are set aside except confirming demand of ₹ 13,848/- representing service tax amount passed on by appellant to the recipient unit. - Decided partly in favour of assessee
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2016 (8) TMI 1063
Duty liability - parts of dumpers and others imported, further repacked and labelled by the appellant and sold - whether the items/parts which are repacked are parts of automobiles to fall under Third Schedule and/or Section 4A Notification or not - Held that:- the appellant has no case on merits as the Tribunal in the case of Larsen and Toubro Ltd. vs. CCE [2015 (12) TMI 224 - CESTAT MUMBAI] has held that these items are liable for central excise duty as per Section 2(f)(iii) of the Central Excise Act, 1944. - Therefore, by applying the same appellant is liable to pay excise duty. Cum duty benefit - goods considered as manufactured - duty demanded under old Section 4 as well as Section 4A of the Central Excise Act, 1944 - Held that:- there is no abatement given to the appellant in respect of the demands raised under Section 4A and no deductions have been given for the demands raised under Section 4 as the annexures indicate that the demands have been raised on the transaction value only. On this point, we agree with the appellant that the value which has been considered, if it is, the transaction value as per the invoice, then the benefit of cum duty has to be extended to the appellant, is the law settled by various High Courts and even in the case of Larsen and Toubro Ltd., the Bench had extended such a benefit. Having held so, we find that the quantification of the duty after extending cum duty benefit needs to be redone by the lower authorities. Cenvat credit - CVD paid by the appellant on goods imported - Held that:- if the appellant is saddled with the central excise duty on the ground of deemed manufacture , the pars which have been imported by the appellant in bulk, if they have suffered CVD, the benefit of cenvat cannot be denied as the same parts are considered as manufactured on repacking and central excise duty is paid. Therefore, the appellant is eligible for cenvat credit of the CVD paid, subject to production of duty paying documents/bills of entry on the parts which were imported, repacked and sold. Requantification of demands - Held that:- the adjudicating authority will also work out the interest liability on the main appellant. Since the penalty imposable is on the main appellant is dependent upon the quantum of duty liability, we also direct the adjudicating authority to consider the quantum of penalty to be imposed on the appellant after requantification of the duty liability. Imposition of penalty - suppression of correct and germane facts concerning the manufacture of excisable goods - Held that:- we do not agree with the bland findings recorded by the adjudicating authority. As regards the appellant, T. Laxmi Narayana, General Manager (Finance) and Company Secretary of the main appellant, no role seems to have been attributed to him in any form in the impugned order for visiting him with personal penalty. In any case, we find that the issue involved in this case being in the nature of interpretation of the provisions of the Central Excise Act, personal penalty under Rule 26 is not imposable on the individual. Accordingly, we set aside the penalty imposed on the individual. - Appeal disposed of
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2016 (8) TMI 1062
Whether on conversion of DTA unit into a 100% EOU, the CENVAT credit lying as balance at the time of conversion can be availed and utilized by the 100% EOU or not - Held that:- in view of the various judgments which squarely covers the case of the appellant and this Tribunal has consistently held that the appellant is entitled to transfer the unutilized CENVAT credit on conversion from DTA to 100% EOU. therefore, in view of the settled position of law, the impugned order is not sustainable in law. - Decided in favour of appellant with consequential relief
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2016 (8) TMI 1061
Eligibility for ssi exemption - brand name - word 'Swadeshi' appearing on the packing/wrapper of the soap manufactured by the respondent is the logo/brand name of Swadeshi Trading & Network Marketing Co. - Notifications 8/2001, 8/2002 and 8/2003 - Held that:- in the absence of any evidence which contradicts the factual finding of the first appellate authority, we have to hold that the first appellate authority was correct in coming to a conclusion of setting aside the order-in-original. - Decided against the Revenue
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2016 (8) TMI 1060
Cenvat credit - services availed for construction and repair of the workers quarters - Held that:- Hon’ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur vs. Manikgarh Cement [2010 (10) TMI 10 - BOMBAY HIGH COURT] has held that rendering taxable services at the residential colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee, therefore, do not constitutes input service so as to claim credit of service tax paid on such services under Rule 2(l) of the CENVAT Credit Rules, 2004. In view of the above observations Cenvat Credit of services used in maintenance, repair and civil construction used in the residential colony of the appellant is not admissible. Cenvat credit - utilization of items in making of support structures of the machinery - Held that:- in view of the decision of Hon’ble Allahabad High Court in the case of Bajaj Hindusthan Ltd. v. UOI [2013 (9) TMI 24 - ALLAHABAD HIGH COURT], the Appellant is not eligible to credit on the items used in making of the support structures for the machines. It has also been admitted by the Appellant before the first appellate authority that Appellant does not have any evidence to the effect that items are used in the maintenance and repairs of capital goods. Imposition of penalty - Held that:- it is observed that admissibility of Cenvat Credit on the impugned inputs and services has remained a disputable point. Therefore, penalty imposed by the lower authorities upon the appellant is not justified and is set aside when on the issue contrary case laws were existing. - Decided partly in favour of assessee
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2016 (8) TMI 1059
Classification - Lever Ayush Poshak Rasayan and Lever Rakshak Rasayan - Whether to be classified under chapter heading 2104.10 and/ or 2104 20 00 as per appellant or under chapter heading 2106 90 99 as the Food Supplement as per Revenue - Held that:- based on the quotes from Explanatory Notes to HSN, it is clear that the subject items are in the category of food supplements and are rightly classifiable under Chapter Heading 2106.90 99. Invokation of extended period of limitation - Demand - differential duty for the period of five years preceding the relevant date - Held that:- Revenue has not produced any specific evidence(s) to prove that there has been deliberate suppression on the part of the assessee appellant with intention to evade payment of Central Excise duty. Therefore, the Revenue can charge differential duty only for the period of one year preceding to the relevant date and for quantification of said differential duty for period of one year chargeable from the appellant the matter deserves to be remanded to the original adjudicating authority. - Appeal partly disallowed and partly remanded back
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2016 (8) TMI 1058
Demand - clearance of final products i.e. base paints along with tinters and ready colour shades on stock transfer basis to the various depots on payment of duty on the MRP affixed on the packages - Whether process of mixing base paint with tinter amounts to manufacture - Held that:- there is no dispute that commodity paint is specified in the 3rd Schedule and assessed to duty under Section 4A on MRP basis. It is also not in dispute that the appellant is undertaking the process of mixing of paints with tinters and re-packing the same in unit containers and are labeling the same with MRP at their depots before dispatching them for sale to the ultimate consumers. These processes are clearly covered by sub-section (iii) of Section 2(f). Consequently, the process undertaken by the appellant would amount to manufacture and excise duty will need to be paid, at the stage of the depot. Therefore, the process of mixing base paint with tinter amounts to manufacture and is liable to payment of duty at the depot. - Decided against the appellant
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2016 (8) TMI 1057
Cenvat credit - parts, components and accessories of Turbo Generators-3 purchased for captive power plant - electricity generated from Turbo Generator was used in the manufacturing of dutiable goods for the two years; subsequently the excess electricity was sold to the State Government of Madhya Pradesh as per the contract - Held that:- the fact of Turbo Generator-3 being installed in the factory premises and electricity generated from therein having been consumed in the manufacturing of dutiable goods, denying cenvat credit of the Central Excise duty paid on such Turbo Generator-3 is not in consonance with the law. The factum of consumption of electricity generated within the factory partly and sold out partly is an accepted proposition in the law and cenvat credit cannot be denied is also decided by various case laws as cited by the appellant. - Decided in favour of appellant with consequential relief
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CST, VAT & Sales Tax
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2016 (8) TMI 1077
Classification - Product prawn feed - Whether Product prawn feed would be covered under Entry 14 of the First Schedule pertaining to cattle feed - Held that:- In the present case all that the legislature has done is to provide for a specific exemption for all aquatic products with effect from 31.03.2012. This exemption entry in no manner, amended any provisions of the First Schedule to the VAT Act, which continued to carry Entry 14 pertaining to the cattle feed, and thus whether before or after 31.03.2012, all cattle feed continued to fall within the list of goods, the sale or purchase of which are exempt from tax. The exemption entry pertaining to aquatic feed did not change this position. This change therefore, had no material effect on the order of determination passed by the Deputy Commissioner. We may recall, under such order, the Deputy Commissioner had held that the prawn feed would fall within the meaning of cattle feed for the purpose of entry 11 to the Schedule-I to the Sales Tax Act. The Assessing Officer, thus, proceeded entirely on the wrong premises and assumed jurisdiction not vested in it. It was bound by the order of determination passed by the Deputy Commissioner unless, by virtue of exemption notification, entire basis of such determination was rendered invalid. The legislature providing for exemption of such product from payment of tax does not necessarily and by itself imply that the product was otherwise exigible to tax. Question of relegating the petitioner to the alternative remedy therefore would not arise, when we find that the Assessing Officer has gone against an order of determination which was binding on him and when we find that his reasons for discarding such order of determination are wholly invalid. In other words, in our opinion, there was no material change in the relevant taxing entries insofar as the product in question is concerned. The Assessing Officer therefore, could not have ignored the order of determination. His order therefore was wholly without jurisdiction.
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2016 (8) TMI 1076
Application for remission and claim for refund - Held that:- The sum of ₹ 50 lakhs, ordered to be deposited by the petitioner, must be seen in the light of the petitioner’s possible liability of tax, which may be ascertained at a future date. Till this is done, such amount would remain in the nature of a deposit, which the Government would hold in trust. Till the Government framed the remission scheme on 18.11.2014, no such tax liability was ascertained through any order of assessment. The same therefore could not have been treated as a payment of tax. May be, the petitioner’s request for adjustment of such amount at the stage of considering the petitioner’s request for remission, was turned down, however, this would not conclude the issue since the petitioner did not accept such verdict of the authority. The petitioner merely applied afresh and made cash deposit of the petitioner’s liability under the remission scheme which application was accepted upon the remaining liability being satisfied by the petitioner. The petitioner’s application for remission and the petitioner’s claim for refund of ₹ 50 lakhs deposited pursuant to the Courts directions, thus were segregated. The stand of the authorities that such amount of ₹ 50 lakhs was deposited by way of tax prior to the scheme and, therefore, cannot be refunded, cannot be accepted. In fact, we have some doubt about the correct interpretation of para-13 of the scheme which refers to no refund of a tax, interest or penalty already paid. One way of looking at this provision could be that the scheme prohibits refund of tax already paid. Does it also prohibit adjustment of tax for the past period paid, but which is now covered by the amnesty scheme, is a question we need not answer.Be that as it may, the respondents cannot withhold the petitioner’s deposit of ₹ 50 lakhs when for the very same period, the petitioner applied and was granted remission on conditions, which the petitioner fulfilled. Under the circumstances, the respondents shall refund a sum of ₹ 50 lakhs to the petitioner with simple interest at the rate of 7% per annum from the date of the deposit till refund, which shall be done latest by 30th September, 2016.
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2016 (8) TMI 1075
Purchase Price computation - whether the customs duty paid by the Respondent herein (M/s Bajaj Tempo Ltd.) on goods imported by it from out of the country, and which are used in the manufacture of their vehicles, should be included in the definition of the words “purchase price” as set out in section 2(22) of the BST Act? - Held that:- The term “purchase” has been defined in section 2(28) with reference to the definition of the term “sale”. From the aforesaid definition, it would thus be clear that the term “purchase” for the purposes of the BST Act is a purchase made within the State. This is made further clear by the fact that whilst computing the turnover of purchase for ascertaining the liability for registration under section 3, or for ascertaining the leviability of additional tax under section 15AI, or the turnover tax under section 9, only the purchases which are effected within the State have to be taken into consideration.Section 75 clearly stipulates that nothing in the BST Act or the Rules made thereunder shall be deemed to impose or authorise the imposition of tax on any sale or purchase of any goods of which sale or purchase takes place inter alia in the course of import of the goods into the territory of India or the export of the goods outside such territory If the situs of the inter-State purchases and imports is not within the State then such purchases are not a “purchase” as defined under section 2(28) of the BST Act. This being a case, it would therefore logically follow that the term “purchase price” as defined in section 2(22) is applicable only to purchases made within the State and would not be applicable to purchases which take place in the course of import of the goods into the territory of India or export of the goods out of such territory (section 75 of the BST Act). This being the clear position, as can be discerned from the statutory provisions as set out in the BST Act, the customs duty paid on the goods imported into the territory of India by the Respondent herein, cannot be held to be a part of the import purchase price for the purposes of deduction or set off under Rule 41D. BST Act is a State Legislation and does not have extra-territorial jurisdiction. This is clear from the preamble of the Act which clearly states that this is a law (BST Act) relating to the levy of tax on the sale or purchase of certain goods in the State of Bombay. Section 1(2) of the BST Act clearly stipulates that it extends to the whole of the State of Maharashtra. This is yet another factor which would persuade us to hold that the customs duty paid on purchases which take place in the course of import of goods into the territory of India can never be included in the definition of “purchase price” of the said goods. Accordingly questions of law referred to this Court by the MSTT and more particularly set out in paragraph 1 above, are answered in the affirmative and in favour of the Respondent.
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Indian Laws
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2016 (8) TMI 1050
Seeking to cancel the bail granted to the respondent by the learned Additional District and Sessions Judge (Special Court for E.C. and NDPS Act cases - bail granted on medical terms - Held that:- From the materials available on record, it is seen that the respondent has committed a heinous crime against the society. As per Section 37 of NDPS Act, there is a bar for grant of bail to accused person, who is in possession of commercial quantity. The learned Additional District and Sessions Judge has not considered the gravity of offence and provisions of Section 37 of NDPS Act and the fact that the allegation against the respondent is, he was dealing and making arrangement for transporting contraband for more than commercial quantity. The learned Additional District and Sessions Judge has not considered these aspects and enlarged the respondent on bail on the sole ground that he is suffering from diabetes and he needs treatment and personal care by his wife. The Hon'ble Apex Court in a number of judgments, especially in the judgments reported Kanwar Singh Meena Vs. State of Rajasthan and another [2012 (10) TMI 1114 - SUPREME COURT] and Neeru Yadav Vs. State of Uttar Pradesh and another [2015 (9) TMI 1430 - SUPREME COURT ] has held that the order enlarging the accused person on bail or granting anticipatory bail without considering the serious allegation made against the accused person and without considering as to whether any prima facie case has been made out and quantum of punishment that may be imposed, then the said order is illegal. The ratio in the above judgments and the judgments relied on by the learned Special Public Prosecutor appearing for the petitioner is squarely applicable to the facts of the present case. Hence, the order of the learned Additional District and Sessions Judge enlarging the respondent on bail, is illegal and non-est in law. Therefore, this criminal original petition is liable to be allowed. Accordingly, the criminal original petition is allowed and the bail granted to the respondent by the learned Additional District and Sessions Judge (Special Court for E.C. and NDPS Act cases), Pudukottai is cancelled.
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