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TMI Tax Updates - e-Newsletter
August 5, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Calculation of interest u/s 244A - when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax. This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee's refund by the revenue - HC
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Deemed dividend under section 2(22)(e) - Payment for public issue - mere repayment of money borrowed by the share holder will not escape him from the provisions of sec. 2(22)(e) of the Act. - AT
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Rejection of books result - estimation of NP @5% of gross contractual receipts - assessee firm is entitled for separate deduction of depreciation, interest and salary payment to partners - AT
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Addition on account of Dharmarth Receipts - The consistent acceptance of such receipts by the Department itself, for as many as eight earlier assessment years, mandates the acceptance of such receipts of the assessee during the year under consideration also as Dharmarth receipts, when no change in facts has been pointed out - AT
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Eligibility for deduction u/s 80IB denied - If the assessee could not obtain the approval of the prescribed authority, viz. DGIT (Exemption) for any of the years after started functioning of the hotel, then the assessee may not be eligible for deduction u/s 80IA for those assessment years. - AT
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The transactions carried out through MCX Stock Exchange after 1.4.2006, would be eligible for being treated as non-speculative derivates within the meaning of clause (d) of proviso to section 43(5) - AO directed to allow the loss - AT
Customs
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Denial of project import benefit - power generation project - 1MW plant of the appellant cannot be treated as power generation project - SC
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Denial of benefit of Notification No. 21/2002 - subsequent amendment in the said Notification whereby capacity expansion was also included, would be prospective only as it was not clarificatory in nature. - SC
Corporate Law
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Validation of pledge of shares when winding up was initiated – pledge of shares by Company in liquidation and transfer of shares effected during pendency of winding up were both bona fide and in interest of Company in liquidation - HC
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Section 196(3) of Companies Act, 2013 does not interrupt appointment of Managing Director where at date of such appointment or re-appointment Managing Director was below age of 70 years but crossed that age during his tenure – Word 'continue', therefore, must be read contextually - HC
Service Tax
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CENVAT Credit - input services - professional / legal services were to fulfil the legal requirements relating to the appellants' office in the US - Credit / refund allowed - AT
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GTA services within the mining area - since where admittedly no consignment notes were issued by the 24 transporters for transportation of the appellants coal, the Goods Transport Agency service cannot be held to have been rendered - AT
Central Excise
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Classification of the coconut oil - No evidence has been produced by the Department to show that the addition of anti-oxidants in coconut oil will make the same more suitable for use on hair. - AT
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Denial of refund claim - Pre mature refund claim - appellants are at liberty to file the refund claim even though the matter is still pending before the Apex Court - AT
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Valuation of goods - Whether the advertisement expenses incurred by the appellant would be includible in the assessable value to the extent the same have been recovered from the dealers - Held No - AT
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Classification of goods - the product “printed PVC film” is classifiable under Chapter 490190 chargeable to nil rate of duty. - AT
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Clandestine manufacture and removal of goods - cases of clandestine removal can not be established only on the basis of few statements, especially in this case where the first recorded statement is held to be incorrect and given by a person who is not the author of the diary - AT
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Levy of duty of excise on iron and steel scrap which was obtained by breaking the ship - exemption to particular class of assessees - Merely because with the adoption of one particular method the duty that becomes payable is lesser would not mean that two such persons belong to different categories - SC
VAT
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Reduced rate of VAT on Liquor - Applying the principle of promissory estoppel and doctrine of reasonable expectation, the harmonious interpretation of both the Government Orders, would be that reduced rate of 15% would be applicable w.e.f. 01.04.2014 - HC
Case Laws:
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Income Tax
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2015 (8) TMI 110
Clean development mechanism receipts - revenue v/s capital receipts - Held that:- Amount received on sale of carbon credit is capital in nature and therefore we reverse the orders of Commissioner of Income Tax (Appeals) and the Assessing Officer on this issue. See CIT Vs. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT ] - Decided in favour of assessee.
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2015 (8) TMI 89
Interpretation of Section 11(1) clause ‘a’ of the Income Tax Act, 1961 - whether depreciation allowed on capital assets cannot be treated as application of income under the said clause? - Held that:- Kerala High Court in Lissie Medical Institution vs. CIT [2012 (4) TMI 115 - KERALA HIGH COURT] following the decision in the case of Escorts Ltd. v. Union of India [1992 (10) TMI 1 - SUPREME Court] has stated that the assessee would be entitled to write back depreciation and if done, the Assessing Officer would modify the assessment determining the higher income and allow recomputation of depreciation written back for the purpose of application of income for charitable purposes in future or subsequent years. This may lead to its own difficulties and problems as suddenly the entire depreciation written off would have to be added first and then in one year substantial application of income would be required. This may be impractical and would disturb the working of many a charitable institutions. The legal interpretation which has continued since 1984, if disturbed and implemented, would not appropriately resolved. Consistency and certainty is more appropriate. Decision in the case of Escorts Ltd. (supra) was considered by the Delhi High Court in DIT vs. Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT] decided on 29th March, 2012 and was distinguished. The equally plausible and consistent interpretation of clause (a) of Section 11(1) of the Act is that income derived from property must be calculated as per the principles of the Act. The said clause is not a computation provision and does not disturb the income earned or available but postulates that the income as computed in accordance with the provisions of the Act to the extent of 86% must be applied. Application of income may include purchase of a capital asset. The said purchase is valid and taken into consideration for the purpose of ensuring compliance, i.e., application of money or funds and is not a factor which determines and decides the quantum of income derived from property held under trust. Computation of income is separate and distinct and has to be made on commercial basis by applying provisions of the Act. - Decided against revenue.
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2015 (8) TMI 88
Penalty u/s. 271 (1)(c) - assessee, while computing capital gains, has failed to take into account the value of the property as per stamp duty value, as required u/s. 50C - CIT(A) deleted penalty levy as confirmed by ITAT - Held that:- We find that in the present case, the Respondent-Assessee has made a complete disclosure inasmuch as the higher stamp duty valuation was indicated in the agreement filed along with the Return of Income. Thus, it is not a case of submitting/ furnishing inaccurate particulars. In view of the above, both CIT(A) as well as the Tribunal have come to concurrent findings of fact that no inaccurate particulars have been furnished by the Respondent-Assessee in respect of the sale of its property at Kalol. Thus, the impugned order passed by the Tribunal by following the Apex Court's decision in Reliance Petro Products (2010 (3) TMI 80 - SUPREME COURT ), cannot be faulted with, as it is a settled position. - Decided in favour of assessee.
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2015 (8) TMI 87
Calculation of interest under section 244A - Whether, the Tribunal erred in law in holding that the interest portion of the refund arising out of the order giving effect to appellate authority has to be ignored for the purpose of calculating interest under section 244A? - Held that:- Both the CIT(A) and the Tribunal have on examination of facts correctly held that when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax. This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee's refund by the revenue. It has no element of tax which would justify reducing the same from the refund due while computing the interest payable on the delayed payment of refund. - Decided against revenue.
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2015 (8) TMI 86
Compensation received for delay in commencement of project - revenue v/s capital receipt - Whether Tribunal was right in holding that the compensation received for delay in commencement of project is a capital receipt? - Held that:- Even though this appeal was admitted on the question of law, referred supra, we are not inclined to entertain this appeal in view of the preliminary objection made by the learned counsel for the respondent that the monetary limit to prefer an appeal is pegged at ₹ 4,00,000/- by the Central Board of Direct Taxes vide Instruction No.2 of 2005, dated 24.10.2005 read with Instruction No.5 of 2007, dated 16.7.2007. - Decided against revenue.
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2015 (8) TMI 85
Determination of the value of the land for the purpose of computation of capital gains in the hands of the assessee - Held that:- The value of the land has to be taken only as ₹ 10.50 Crores. In case the value shown in the sale agreement as ₹ 10.50 Crores is less than the value determined by the stamp authorities, then at the best, the guideline value can be taken as value of the land. Therefore, the lower authorities are not justified in estimating the value of the land on the basis of the material relatable to M/s Coromandel Cables Pvt. Ltd. Income-tax proceeding, being a judicial proceeding, the assessment has to be made on the basis of material available on record. Documents relating to other assessees cannot be placed reliance in the case of present assessee unless there is sufficient reason to rely upon that document. This Tribunal is of the considered opinion that there is no material available on record to suggest that the assessee received more than ₹ 10.50 Crores as disclosed in the sale agreement dated 1.04.2008. Therefore, the lower authorities are not correct in estimating the value of the land on the basis of the materials relating to M/s Coromandel Cables Pvt. Ltd. this Tribunal is of the considered opinion that in the absence of any other material, the lower authorities have no other way except to accept the value of the land at ₹ 10.50 Crores as disclosed in the sale agreement dated 1.04.2008. Accordingly the orders of the lower authorities are set aside and the appeals of the assessee are allowed. Sharing ratio of the developed project - CIT(Appeals) reduced it to 40% as against 45% determined by the Assessing Officer - Held that:- By efflux of time, the cost of construction or cost of land might have increased. However, the percentage of the share would not increase. If the assessee entered into an agreement for sharing the constructed area at 37.5% in the year 2005, the same sharing ratio would continue in 2008 also. By efflux of time, the cost may increase, accordingly the price may also increase, it does not mean that the share in constructed area would also increase due to efflux of time. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly reduced the sharing ratio to 40% as against the ratio determined by the Assessing Officer at 45%. Therefore, this Tribunal do not have any reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed. - Decided against revenue. Penalty levied under Section 271(1)(c) - Held that:- As during the course of survey, the so-called incriminating material, including joint development agreement dated 23.11.2005, in respect of M/s Coromandel Cables Pvt. Ltd. was found. In fact, no material was found relating to the present assessee. On the basis of the material found in the case of M/s Coromandel Cables Pvt. Ltd., the value of the land was estimated. In the earlier part of this order, while considering the quantum addition made by the Assessing Officer, this Tribunal found that there cannot be any addition on the basis of the material relatable to M/s Coromandel Cables Pvt. Ltd. In the absence of any material in respect of the present assessee other than the agreement for sale dated 1.04.2008, which discloses the sale consideration at ₹ 10.50 Crores, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the penalty. - Decided in favour of assessee.
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2015 (8) TMI 84
Disallowance made on account of claim of deduction u/s 10A for unit no. II and unit no. III - Held that:- The necessary documents were examined by the ld. AO as well as by the ld. DRP and found that the assessee sought for approval of expansion of old unit no.I and never sought approval to set up of a new units and further STPI granted approval for expansion of unit no.I. Before the AO/DRP, the assessee placed reliance upon the decision of Patni Computers Ltd., which was upheld by Hon'ble jurisdictional High Court [2013 (10) TMI 293 - BOMBAY HIGH COURT]. However, we find that the Hon'ble High Court decide the issue with respect to section 10A on the ground that the Tribunal recorded a finding that the new units, set up by the assessee, had fulfilled all the condition prescribed u/s 10A(2) of the Act. Assessee has not demonstrated before us that the finding recorded by the ld. DRP is perverse or contrary to facts. However, to safeguard the interest of both sides, we remand this issue to the file of AO to examine the claim of the assessee and after providing due opportunity of being heard will decide in accordance with law. - Decided in favour of assessee for statistical purposes. Reallocation of head office expenses - Held that:- The crux of argument advanced on behalf of the assessee is that certain common expenses, amongst all the units, may be made on reasonable basis. On the other hand, the ld. DR, Shri Srivastava, defended the conclusion arrived at in the impugned order. Since, this ground is interconnected with the above ground, therefore, this ground is also remanded back to the file of the ld. Assessing Officer, consequently, The ld. Assessing Officer is directed to look into the allocation part/the claimed expenses and after examination, decide afresh - Decided in favour of assessee for statistical purposes. Disallowance made u/s 14A - Held that:- Without going into much deliberation, we direct the ld. Assessing Officer to decide the case of the assessee in the light of the decision from Hon'ble jurisdictional High Court pronouncing in Godrej & Boyce Mfg. Co. Ltd. vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT ] and also by duly considering the decision of Hon'ble Supreme Court in the case of Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ) - Decided in favour of assessee for statistical purposes. Disallowance of club expenses - Held that:- The assessee paid the membership fee of the club by way of admission fee/corporate membership fee wholly and exclusively in the interest of the business, thus, it has to be allowed as business expenditure. Identical ratio was laid down in CIT vs Samtel Color Ltd. (2009 (1) TMI 26 - DELHI HIGH COURT) . The assessee is directed to ensure that such benefit is only available to the Director/Senior Executive of the assessee company and not to each and every employee of the assessee company. - Decided in favour of assessee Adjustment on account of interest received on loans given to AE - TPO adjustment - Held that:- As decided in assessee's own case [2013 (6) TMI 420 - ITAT MUMBAI ] LIBOR rate has to be adopted in the instant case, since the interest charged by the assessee from its AE is higher than the LIBOR rate, no transfer pricing adjustment in that regard is warranted, therefore, this ground of the assessee is allowed. - Decided in favour of assessee
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2015 (8) TMI 83
Disallowance of depreciation - whether CIT(A) ought not to have upheld that the vehicles were not used for running them on hire so that depreciation @ 40% was not admissible? - Held that:- Revenue could not controvert the submission of the assessee that it has, in fact, given its vehicles to various parties during the relevant accounting period on hire, and has declared income thereof. Merely because, there was no separate lease agreement with various parties, is not decisive of the issue. The vehicles were given to various parties on per trip basis, and therefore, separate agreement for carting income for each trip with various parties is not practicable to be executed and produced before the Revenue authorities. In these facts of the case, we are of the view that the assessee was entitled to higher depreciation at the rate of 40% - Decided in favour of assessee. Disallowance of bad debts - Held that:- We find that admittedly, this claim was not made by the assessee at the time of original assessment, and therefore, there is no justification for making this claim after the search operation carried out in the business premises of the assessee. Accordingly, the claim of the assessee is rejected, and the ground of the appeal of the assessee on this issue is dismissed. - Decided against assessee. Undisclosed income on account of seized diary - Held that:- The peak amount of credit and debit entries on the seized papers amounting to ₹ 14,35,666/- could be validity taxed in the hands of the assessee. In our view, there is no justification for further adding net profit at the rate of 5% on the gross receipts on the seized papers of the assessee. There is also no justification for the AO to add the entire receipts side of these seized paper, and not considering the peak of the credit and debit entries. In this view of the matter, we hold that the addition should be sustained to the extent of ₹ 14,35,666/- as against ₹ 19,42,771/- sustained by the learned CIT(A) - Decided partly in favour of assessee. Excess claim of Ujjain division - Held that:- The assessee has claimed a loss of ₹ 13.23 lakhs in its Ujjain division with regard to the work done for road construction, whereas the exact amount of loss determined by the PWD was for ₹ 10,98,087/-. The difference was claimed by the assessee as business loss. In our view, the actual loss being ₹ 10,98,087/-, the balance loss of ₹ 2,24,982/- was rightly disallowed and the issue is accordingly decided against the assessee.
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2015 (8) TMI 82
Deemed dividend under section 2(22)(e) - Payment for public issue RPL - IPO - HNIR - Held that:- The explanation of the assessee that the IPO of M/s RPL was applied by the assessee for and on behalf of M/s Germstar Constructions P Ltd is hard to believe. It is well established principle of law that mere repayment of money borrowed by the share holder will not escape him from the provisions of sec. 2(22)(e) of the Act. Hence the fact that the assessee has paid back the excess share application money refunded by M/s RPL will not be of any help to the assessee. Hence, we agree with the contentions of the revenue that the decision rendered in the case of Sunil Sethi (2008 (9) TMI 618 - ITAT DELHI) is not applicable to the facts prevailing in the instant case. Accordingly, we are of the view that the AO was justified in assessing the amount of ₹ 62.00 lakhs as deemed dividend in the hands of the assessee - Decided against assessee.
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2015 (8) TMI 81
Rejection of books result - estimation of NP @5% of gross contractual receipts - in A.Ys. '07-08, '08-09 and '09-10 that the A.O. estimated the N.P at 5% by rejecting the book result without allowing depreciation, interest and salary paid to partners - Held that:- In the instant case, we find that the assessee has submitted the audited financial statements in which assessee has basically claimed depreciation and also details of fixed assets mentioning in the balance sheet. The details of depreciation, interest and remuneration paid to partners all are accounted in the books of account and same also claimed in the I.T Returns. We also find that the assessee claimed interest and remuneration to partners as per partnership deed. Therefore, relying upon on the documents, said CBDT Circular no.029D(XIX)-14) dated 31st August, 1965 and the decision and finding in the case of CIT Vs. M/s. Jain Construction Co.& Ors reported in (1999 (9) TMI 26 - RAJASTHAN High Court) we hold that the assessee firm is entitled for separate deduction of depreciation, interest and salary payment to partners. The A.O. is directed to allow the same and then estimate the net profit/income of the assessee after deducting the separate depreciation, partners' salary and interest as shown by the assessee. - Decided in favour of assessee.
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2015 (8) TMI 80
Liability to deduct tax at source - @ 1% or 2% u/s 194C - whether payments made by the assessee to M/s. Max Logistics (P) Ltd. treating it as a subcontractor instead of contractor - Held that:- The nature should not merely be decided on the basis of book entries or use of common terminology. The word ‘Custodian’ is used in the public notice is emphasized by ld. AO to hold that there is no contract between custom and assessee. On reading of the above mentioned clauses, the public notice gives a clear indication that the assessee was in charge of handling of the cargo as sole assignee which in the notice has been referred to as custodian. The purposive reading of terms we hold that the assessee was acting as a contractor for the Commissioner of Customs in this behalf. In order to efficiently discharge its contractual obligation, the eligible assessee further assigned the work to M/s. Max Logistic (P) Ltd. as per their agreement. In consideration of entirety of facts and circumstances we are of the view that the M/s. Max Logistic (P) Ltd. with assessee was that of a sub-contractor. This being so, the TDS liability of the assessee in terms of Section 194C is exigible @ 1% which has rightly been upheld by the ld. CIT(A). Hence, we find no infirmity in order of the ld. CIT(A) which is upheld. - Decided against revenue.
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2015 (8) TMI 79
Disallowance u/s 14A - Held that:- By applying rule 8D, the AO had disallowed the entire business expenditure on the plea that same was incurred for the earning of exempt income, ignoring the fact that assessee was having taxable business income of ₹ 78,48,948/-, as compared to the tax free dividend of ₹ 8,95,949/-. The relevant assessment year is 2006-07, wherein rule 8D is not applicable but at the very same time, reasonable disallowance is warranted as per decision of Godrej & Boyce Mfg. Co. Ltd., [2010 (8) TMI 77 - BOMBAY HIGH COURT ]. Considering the amount of expenditure incurred for earning the total income main part of which was taxable i.e. ₹ 78.48 lakhs as against exempt income of ₹ 8.95 lakhs, we deem it appropriate to restrict the disallowance to the extent of ₹ 20,000/-. Decided partly in favour of assessee. Taxing of interest - business income OR income from other sources - Held that:- If the assessee is engaged in the business of financing in addition to the business of trading in shares, the interest earned on loans and advances are liable to tax as business income. However, where the assessee is having interest income out of the surplus fund deployed with bank or party, the same is liable to be taxed as income from other sources. It is not in dispute that assessee has substantially earned interest income out of the financing business undertaken by it. Accordingly, we do not find any merit in the action of the lower authorities for treating the income earned in its financing business as income from other sources. Loss suffered on account of future and options transactions - whether has to be considered as business loss and not be considered as speculation loss as held by CIT(A) - Held that:- CIT(A) has restored the matter back to the file of AO with a direction to decide the issue as per the order of the ITAT in assessee's own case for the assessment year 2003-04 and to allow the necessary carry forward loss as per law if the assessee is entitled for the same. We do not find any infirmity in the direction so given by the CIT(A).- Decided against revenue.
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2015 (8) TMI 78
Substantive addition to the income u/s 158BC r.w.s. 158BD - Assessee an individual is a doctor by profession - Allegation that assessee has received substantial amount of consultation fee from the hospital - Protective assessment - Held that:- material gathered behind the assessee could not be used by the AO to make addition to the income of the assessee - The assessee had denied to have received professional fees from the hospital and based on the submissions of the assessee the AO had made addition to the income of DTHL. In our, opinion, considering the peculiar facts and circumstances of the case the FAA was not justified in confirming the addition for the AY.s. concerned. For the AY. 1995-96 addition was made by the AO on substantive basis. During the course of hearing before us, the AR stated that considering the smallness of tax effect he would not like to press the issue. Therefore, we confirm the addition made by the AO for the AY.1995-96. - Decided partly in favour of assessee.
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2015 (8) TMI 77
Addition on account of Dharmarth Receipts - whether the receipt is not by a charitable trust, but by the assessee company, which is doing business and trading? - Held that:- Once the receipts are routed as such to a charitable trust by the assessee company and the nature of that trust has not been questioned, we hold that the receipts are Dharmarth receipts and nothing else. The consistent acceptance of such receipts by the Department itself, for as many as eight earlier assessment years, mandates the acceptance of such receipts of the assessee during the year under consideration also as Dharmarth receipts, when no change in facts has been pointed out by the authorities to have come about during the year under consideration. That Dharmarth receipts are not taxable, has been laid down as law by the Hon'ble Supreme Court, way back in the year 1979, in the case of 'CIT Vs. Bijli Cotton Mills (P) Ltd.' (1978 (11) TMI 1 - SUPREME Court). Clause of no. 30 of memorandum and articles of association of the assessee company clearly shows that one of the objectives of the assessee company is charity. The learned CIT(A) has remained oblivious of this specific clause in the memorandum and articles of association of the assessee company, while holding that 'the appellant could not establish before me that the objectives of the company as per memorandum and articles of association was also to carry out charity. Thus addition deleted - Decided in favour of assessee.
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2015 (8) TMI 76
Taxability of profit on sale of investment - Held that:- After the deletion of rule 5(b) of the first schedule, profit on sale of in vestment in case of general insurance companies cannot be taxed under section 44 of the I.T Act. The case of the assessee is identical and therefore respectfully following the decision of Tribunal in assessee's own case ( 2010 (9) TMI 1051 - ITAT MUMBAI), we hold that profit on sale of investment in case of the assessee cannot be brought to tax in assessment year 2004-05. - Decided in favour of assessee. Deduction disallowed on account of amortization of debts securities - CIT(A) deleted the addition - Held that:- Decided in favour of assessee as relying on TATA AIG General Insurance vs. ACIT [2010 (10) TMI 764 - ITAT, Mumbai ] wherein held Expenditure, which is deductible for income tax purposes, is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure - In General Insurance Corporation of India vs. CIT (1999 -TMI - 5762 - SUPREME Court), the Supreme Court held that even if an item of debit is considered as an expenditure, it should further be such an expenditure contemplated in sections 30 to 43A and, therefore, unless there was a specific prohibition for such an allowance, the departmental authorities would not be justified in adding back the amount under rule 5(a) - Decided in favor of the assessee Deduction for pre-operative expenses - CIT(A) has dismissed this ground for the reason that assessee did not make this claim in the return and also did not file revised return - Held that:- If assessee is making a claim it will be within the power of Appellate Authorities to entertain such claim without making such claim in the return of income or without filing revised return. The case law of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd , [2012 (7) TMI 158 - BOMBAY HIGH COURT ] as relied upon by the assessee is applicable to the facts of the case, therefore, in the interest of justice we restore this matter back to the file of AO to examine the claim of the assessee and decide the same as per law after giving the assessee a reasonable opportunity of hearing. - Decided in favor of the assessee for statistical purposes. Disallowance of unabsorbed depreciation and brought forward business loss to be carried forward for set off against the income in the subsequent years - Held that:- The due benefit of set off of brought forward depreciation and business loss has to be granted to the assessee and recording of such unabsorbed depreciation and business loss which is entitled to be carried forward is also necessary for getting such benefit in the subsequent year. Therefore, we restore this issue to the file of AO with a direction to determine such brought forward and carried forward unabsorbed depreciation and business loss as per law after giving the assessee a reasonable opportunity of hearing. - Decided in favor of the assessee for statistical purposes.
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2015 (8) TMI 75
Capital Gains - Determination of value u/s 50C - Calculation of capital gain by adopting the circle rate of the commercial land - petrol pump was installed on the inherited land - AO ignored the loan taken by the assessee for the business of petrol pump - The petrol pump was closed for last ten years - Held that:- the objection is very much necessary in order to give proper justice to the assessee. Hence, in our considered opinion, the issue in dispute requires reconsideration at the level of the Assessing Officer. Therefore, the Assessing Officer is directed to refer the matter to the DVO to decide the aforesaid objections as mentioned in Hindi Language and thereafter the AO may decide the same after hearing the assessee afresh in accordance with law. - matter remanded back.
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2015 (8) TMI 74
Addition on the basis of statement given by assessee at the time of survey - CIT(A) deleted the addition - Held that:- A.O. without giving any reason whatsoever and addition of ₹ 60 lakhs was made by him merely on the basis of statement made by the assessee during the course of survey without giving any basis to corroborate the same. As rightly pointed-out by the assessee and taken note by the Ld. CIT(A), there was a clear down-fall in the sales of the assessee during the course of post survey period. Moreover, net profit of 9% was declared by the assessee on the entire sales for the year under consideration in the return of income filed and the same being fair and reasonable in the facts and circumstances of the case, the Ld. CIT(A) held that there was no justification in making a further addition of ₹ 60 lakhs which would have given an unusual higher net profit rate of 34%. Having regard to all the facts of the case, we find no infirmity in the impugned order of the Ld. CIT(A), deleting the addition of ₹ 60 lakhs made by the A.O. merely on the basis of statement made by the assessee during the course of survey - Decided against revenue. Addition under section 40A(3) on account of cash payments exceeding ₹ 20,000 - CIT(A) deleted the addition - Held that:- . CIT(A) has deleted the said disallowance made by the A.O. on the ground that individual payments did not exceed ₹ 20,000, there is nothing either in his impugned order or even in the details furnished by the assessee in the paper book to establish the same. An opportunity may be afforded to the A.O. to verify this aspect. Since the Ld. Counsel for the assessee has no objection in this regard, we set aside the order of the Ld. CIT(A) on this issue and restore the matter to the file of A.O. for deciding the same afresh, after verifying the stand of the assessee that the individual payments made in cash did not exceed ₹ 20,000 at a time. - Decided in favour of revenue for statistical purposes.
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2015 (8) TMI 73
Expenditure debited without earning any business income - assessee had earned interest income which was assessable under the head "Income from other sources" - Held that:- The Assessing Officer has erred in rejecting the business loss of the assessee admitted in the return of income. The Assessing Officer should have appreciated that there was business activity, though there was no revenue during the previous year under consideration. Hence, in our opinion the expenditure is relatable to the business activity and the same is allowable as a deduction. See CIT (Asst.) v. Lafarge India Holding P. Ltd. [2007 (8) TMI 485 - ITAT MUMBAI] - Decided in favour of assessee.
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2015 (8) TMI 72
Registration u/s 12AA rejected - Held that:- The main object of the assessee trust is to bring together all bankers club of the state under one umbrella. The assessee is organizing lecturers and seminars for the benefit of the employees of the bankers, thus by providing such kind of opportunity to the employees of the bank to listening to seminars and lecturers organized by the trust, the assessee is really rendering service to the banking business. It is not the case of the assessee that the aggregate value of the receipt is less than ₹ 25 lakh rupees. Therefore, this Tribunal is of the considered opinion that the First Proviso to section 2(15) would come into operation. In view of the First Proviso to section 2(15), this Tribunal is of the considered opinion that rendering of any service to the banking business cannot be considered to be a charitable activity or purpose. In this case, as found by this Tribunal, the assessee is rendering services to the banking business by organizing lectures and seminars. There may be an incidental benefit to the customers of the bank, but it does not mean that the assessee is doing charitable activity. This Tribunal is of the considered opinion that the assessee is not rendering any charitable activity other than rendering service to banking business by organizing lectures and seminars. - Decided against assessee.
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2015 (8) TMI 71
Eligibility for deduction u/s 80IB denied - whether the initial assessment year is the year in which the assessee started functioning its business or the year in which the prescribed authority granted approval u/s 80IA of the Act for the claiming deduction u/s 80IA of the Act? - Held that:- The assessee is eligible for deduction u/s 80IA (now section 80IB) for ten assessment years from the initial assessment year, i.e. the year in which the business of hotel started functioning. It does not say that the year in which the approval was granted by the prescribed authority. For the purpose of taking the initial assessment year, the approval of the prescribed authority may not be relevant. The assessee may not be eligible for deduction u/s 80IA if the approval of the prescribed authority was not obtained for the initial assessment year. But that does not mean that the initial assessment year has to be excluded from the provisions of the Act. Taxation statute has to be interpreted on the basis of plain language employed by the legislature. A harmonious reading of the Act clearly says that though the approval of the prescribed authority, viz. the DGIT(Exemption) is a pre-condition, the initial assessment year shall be the year in which the assessee hotel started functioning for the purpose of computing ten assessment years for grant of deduction u/s 80IA of the Act. If the assessee could not obtain the approval of the prescribed authority, viz. DGIT (Exemption) for any of the years after started functioning of the hotel, then the assessee may not be eligible for deduction u/s 80IA for those assessment years. The assessee can claim deduction only in respect of the remaining assessment year from the year in which the approval was granted by the prescribed authority. A harmonious reading of section 80IA as it stood at the relevant point of time and the provisions of section 80IB, as it stands now, this Tribunal is of the considered opinion that the initial assessment year is the year in which the assessee started functioning of the hotel and not the year in which the approval was granted by the prescribed authority. Thus the Administrative Commissioner has rightly exercised his revisional jurisdiction since grant of deduction u/s 80IB was not only erroneous but also prejudicial to the interest of revenue. Hence, the order of the Administrative Commissioner is confirmed. - Decided against assessee.
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2015 (8) TMI 70
Disallowance of loss incurred on trading in commodity derivatives - Held that:- If the amendment is made in procedural mechanism, it will apply to all the proceedings pending or to be initiated. Once in the statute, it has been provided that w.e.f. 1.4.2006, an eligible transaction carried out in a recognized Stock Exchange will not be treated as speculative transaction, then simply because procedural mechanism has taken a long time to recognize the Stock Exchange, it will not lead to an inference that the same would be applicable from the date when the Stock Exchange has been recognized by the Central Govt. The notification issued under Rule 6DDB, does not empower any right or create obligation but only recognizes what is already provided in statute. Thus, the transactions carried out through MCX Stock Exchange after 1.4.2006, would be eligible for being treated as non-speculative derivates within the meaning of clause (d) of proviso to section 43(5). In view of the above, the Assessing Officer is directed to delete the disallowance of loss incurred by assessee company on trade in commodity derivatives. - Decided in favour of assessee.
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Customs
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2015 (8) TMI 96
Denial of project import benefit - power generation project - 1MW capacity - power generated plant is exclusively use for the sister concern of the appellant - benefit of exemption Notification 21/2002 Cus dated 1.3.2002 - Held that:- the Tribunal has rightly held that 1MW plant of the appellant cannot be treated as power generation project. For this purpose, the Tribunal has relied upon the decision of Union of India and Others vs. Indian Charge Chrome and Another - [1999 (8) TMI 69 - SUPREME COURT OF INDIA] wherein the definition between a power project and power plant is drawn - No fault in impugned order - Decided against assessee.
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2015 (8) TMI 95
Valuation - Tribunal has observed that, The market enquiry report is also not available in the records for our perusal. Simply on the basis of the appellant's acceptance of the enhanced value when his statement was recorded, enhancing the assessable value without adhering to the principles of natural justice cannot be sustained. The vague assertion that market enquiries have been made without indicating the details of the same and fixing the duty liability on the importer on the basis of the same cannot be accepted. - Held that:- No merit in the submissions made by the revenue - appeal dismissed - Decided against Revenue.
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2015 (8) TMI 94
Denial of benefit of Notification No. 21/2002 - capacity expansion of an existing caustic soda unit using membrane cell technology or setting up of a new caustic unit soda using membrane cell technology. - Held that:- subsequent amendment in the said Notification whereby capacity expansion was also included, would be prospective only as it was not clarificatory in nature. We, thus, find no merit in this appeal - Decided against assessee.
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Corporate Laws
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2015 (8) TMI 93
Validation of pledge of shares when winding up was initiated – Applicant by liquidating shares supplied raw materials and made payments to some of key contractors of Company - Official Liquidator's Report considered subject transfer of shares violative of Section 531A of Companies Act, 1956 having taken place within six months prior to commencement of winding up - Held that:- Considering agreement of pledge and its enforcement, it transpires that agreement appeared to be in ordinary course of Company's business and bona fide in interest of Company –Had it not been for this agreement, business of Company would have ceased – Once original pledge was held to be valid, its subsequent transfer of shares in favour of Applicant cannot be faulted on ground that it amounts to fraudulent preference or invalid transfer during pendency of winding up – Agreement of pledge as well as transfer of shares by executing transfer deeds in respect thereof evidently happened before winding up order – Mere fact that share certificates along with duly executed transfer deeds were not lodged with Company or that such transfers were not registered in record of Company does not detract from completeness of transfer – Thus, pledge of shares by Company in liquidation and transfer of shares effected during pendency of winding up were both bona fide and in interest of Company in liquidation –Official Liquidator's Report disposed of – Decided in favour of Applicant.
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2015 (8) TMI 92
Scheme of Amalgamation - Dispensing convening of meetings of equity shareholders, preference shareholders, secured and unsecured creditors to consider and approve, proposed Scheme of Amalgamation under Sections 391 & 394 of the Companies Act, 1956 – Held that:- Board of Directors of transferor companies no. 1, 2, 3, 4, 5 & 6 and transferee company in their separate meetings respectively have unanimously approved proposed Scheme of Amalgamation – Consents/no objections of equity shareholders and preference shareholders of all the transferor companies were found in order – Application stands allowed – Decided in favour of applicants.
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2015 (8) TMI 91
Payment of gratuity to director – Having agreed to make payment of gratuity as per content terms, claim that gratuity not admissible was not maintainable – Held that:- Section 4(5) of Payment of Gratuity Act, 1971, makes it clear that nothing shall effect the right of employee to receive better terms of gratuity under any award or agreement or contract with employer –Even if employee does not fall within meaning of definition prepared for Section 4-A, nothing prevents employer company from entering into any agreement with employee for payment of gratuity. Respondent was employed with Appellant and received regular emoluments – No reason not to be treated as employee – Nothing prevents Appellant-company from entering into separate contract for payment of gratuity with whole-time employee who was holding more than 5 per cent voting rights in company – Letter dated 3 January 2014 addressed by LIC show that Respondent was actually included in gratuity scheme and policy taken from LIC in connection with scheme. Where there was unequivocal admission of liability to pay gratuity to Respondent coupled with promise to pay same as per content terms – It was agreed and confirmed by appellant that gratuity shall be paid to Respondent on account of his resignation – No infirmity in order of CLB – Appeal dismissed – Decided in favour of Respondent.
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2015 (8) TMI 90
Setting lower and upper age limit for appointments and 'continued employment' of Managing Directors – Section 196(3)(a) of Companies Act, 2013 - Whether person attaining age of 70 was eligible for continued employment – Held that:- Vested right would arise only if Appellant had actually been appointed – Merely because additional eligibility condition was laid down, it does not mean that any vested right of Appellants was affected, nor does it mean that Regulation laying down such minimum eligibility condition would be retrospective in operation – On closer reading of Section proviso tells us age of 70 is not an absolute bar – Public limited company may well appoint person of 80 years of age as Managing Director; all that is needed is special resolution – Clearly in view of sections 196, 269(2) and 267, there was no 'discontinuance' of Managing Directorship at age of 70; section applied only to his appointment (and that includes his reappointment) – Section 196(3) does not interrupt appointment of Managing Director where at date of such appointment or re-appointment Managing Director was below age of 70 years but crossed that age during his tenure – Word 'continue', therefore, must be read contextually – Decision in the case of P. Suseela & Ors. v. University Grants Commission & Ors. [2015 (8) TMI 69 - SUPREME COURT] followed - Decided against Appellant.
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Service Tax
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2015 (8) TMI 109
Denial of CENVAT Credit - input services - professional / legal services - the services relating to this amount were provided at the premises of M/s. HCL Comnet Systems and Service, USA, which is not registered premises in India - Held that:- permanent establishment in US is not a legal entity and is merely an office of the appellants. The onus to fulfil the legal requirement relating to that office clearly rests on the appellants and it was in the discharge of that onus that they engaged M/s. Ernst & Young Pvt. Ltd. engaged on the service. The definition of input service given in Rule 2(l) of Cenvat Credit Rules, 2004 clearly covers that "any service used by a provider of taxable service for providing "an output service" and specifically includes the "legal services". It is evident that the service rendered by M/s. Ernst & Young Pvt. Ltd. engaged by the appellants were to fulfil the legal requirements relating to the appellants' office in the US. Thus the impugned service tax amount is clearly in respect of input service availed by them. - Decided in favour of assessee.
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2015 (8) TMI 108
Service tax liability on an amount paid by the appellant to the transporter, for transportation of coal within the mining area - Goods Transport Agency service - Held that:- since where admittedly no consignment notes were issued by the transporters for transportation of the appellants coal, the Goods Transport Agency service cannot be held to have been rendered. - Issue is no more res integra as the judgment of the principal bench in the case of South Eastern Coal Fields Ltd. [2014 (8) TMI 857 - CESTAT NEW DELHI] was considering identical/similar issue - we set aside the impugned orders - Decided in favour of assessee.
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2015 (8) TMI 107
Penalty u/s 76 & 78 - Waiver of penalty u/s 80 - GTA Services - service tax on royalty - Revenue neutrality - Held tat:- it may not be possible for the appellant to claim revenue-neutrality in this case since the final products manufactured by the appellants are exempt and even though there is liability to pay service tax on GTA services as a receiver of services, after 01.04.2008, for outward transportation there is no such liability. Imposition of penalty under both the Sections 76 & 78 of Finance Act 1994 is not proper and there are decisions taking a view that even prior to the amendment providing for no imposition of penalty under Section 76 of Finance Act when penalty has been imposed under Section 78, penalty under both the Sections need not be imposed. Therefore penalty under Section 76 in my opinion can be waived in this case - However, penalty u/s 78 is reduced - Decided partly in favour of assessee.
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2015 (8) TMI 106
Waiver of pre deposit - small service provider - wilful misstatement/suppression of facts - Benefit of Notification No. 12/2003-ST dated 26.2.2003 - Held that:- It is seen that the appellants mentioned at Sr. Nos. 1, 5 and 6 involving total amount of service tax in the range more than ₹ 10 lakhs each have paid more than 85% of the amount of service tax demanded in the respective show cause notice - In the remaining cases [except for Sr. No. 2 and 3 of the table) the amount of service tax involved is relatively small and there too substantial amounts vis-a-vis amounts demanded in the show cause notices have been paid. In the case of Shri A.N. Singh, no tax has been paid because the appellants claimed the benefit of SSI exemption on the ground that the value of service rendered was less than the exemption limit if the value of the goods supplied was deducted. The demand at Sr. No. 2 is less than ₹ 5 lakhs out of which ₹ 55,858/- has been paid. - in the totality of the circumstances including the appellants plea that service was rendered to a public sector unit and there was no question of any suppression/mis-statement on their part, we allow waiver of pre-deposit of the remaining adjudicated liabilities staying recovery of the same during pendency of the appeals. - Stay granted.
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2015 (8) TMI 105
Condonation of delay - Delay of 13days - Medial reason - Held that:- Main contention of the applicant is that the impugned order was received by his employee on 21.08.2014 and he had left the job from 15 September 2014; and the proprietor of the applicant firm was not aware of receipt of this impugned order. We find that there is no dispute that the order was served on the applicant on 21.8.2014. The impugned order was misplaced by the employee of the applicant firm. The discretionary powers to condone the delay under the provisions of Finance Act would be exercised when the applicant is vigilant and serious. In the present case, we find that the delay is caused due to negligence and inaction on the part of the employee of the applicant. Hence, the delay of 130 days in filing the appeal can not be condoned. - Condonation denied.
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Central Excise
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2015 (8) TMI 102
Classification of goods - classification of the coconut oil packed in the packings of 200 ml or less - Classification under Heading 1513 or under Heading No.3305 - Edible oil or hair oil - Held that:- there are a series of decisions of the Tribunal wherein the Tribunal after examining the Tariff Heading No.1513 pertaining to Coconut Oil and Heading No.3305 which covers Hair Oil and the relevant Chapter and Section Notes examined the question of classification of Coconut Oil in the packing upto 200 ml, which are not marketed as Hair Oil and held that just because the retail packs are of 200 ml. of less, the same cannot be presumed to be meant for use as Hair Oil and would not be classifiable under Heading No.3305. - As regards the coconut oil packs, in question, containing TBHQ, an antioxidant, its addition is permitted under Prevention of Food and Adulteration Act, 1954 to improve its shelf life by preventing its oxidation and hence rancidity. The addition of antioxidant does not make the coconut oil as suitable for use as Hair Oil. Even in terms of Board s Circular No.166/77/95-CX dated 29.12.95, the use of anti-oxidants as specified under Rule 59 of the Prevention of Food Adulteration Rules, 1955 will not alter the classification if they are meant only for preventing the rancidity of the oil. No evidence has been produced by the Department to show that the addition of anti-oxidants in coconut oil will make the same more suitable for use on hair. Denial of refund claim - Pre mature refund claim - Held that:- even if the writ petition filed by the appellant before Allahabad High Court, challenging the Board s Circular dated 3.6.2009, has now been transferred to the Apex Court where it is still pending and even if at some point of time, the appellant had addressed a letter to the Department that they would file refund claim as and when the matter is decided in their favour, in our view, they are at liberty to file the refund claim even though the matter is still pending before the Apex Court, more so, when the Hon ble Madras High Court in its judgement in the case of VVD & Sons (Pvt.) Ltd. (2014 (12) TMI 653 - MADRAS HIGH COURT) after considering the Board s Circular dated 3.6.2009 has quashed the same observing that the same is arbitrary and contrary to the provisions of Section 37B of the Central Excise Act, 1944 and hence null and void. - Decided in favour of assessee.
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2015 (8) TMI 101
Valuation of goods - Whether the advertisement expenses incurred by the appellant would be includible in the assessable value to the extent the same have been recovered from the dealers - Held that:- when it is not disputed that the advertisement of the appellant's products in the areas of the respective dealers also mention the dealers' name and address and those advertisements have also benefitted the dealers, the amount being recovered by the appellant from the dealers cannot be said to be for the reason of or in connection with the sale of goods, as this amount would be for the advertisement and publicity effort of the appellant which has benefitted the dealer. - in the dealership agreements, there is no such clause requiring the dealers to incur certain specified quantum of expenses on the advertisement and publicity of the appellant's product. The clauses of requiring the dealers to vigorously promote, develop and maintain sales of the product and parts to the satisfaction of and in the manner required by the appellant cannot be treated as the clause which gives an enforceable legal right to the appellant to insist on incurring of certain quantum of expenses on advertisement by the dealers. For this reason also, the advertisement expenses recovered from the dealers would not be includible in the assessable value. - impugned order is not sustainable on merits. - Decision in the case of HERO HONDA MOTORS LTD. Versus COLLECTOR OF C. EX., NEW DELHI [1997 (1) TMI 304 - CEGAT, NEW DELHI] followed - Decided in favour of assessee.
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2015 (8) TMI 100
Classification of goods - Whether product ‘PVC films’ printed with logos is classifiable under Chapter 490190 or 3920.39 - Held that:- Hon’ble Supreme Court in the recent judgment in the case of Holostick India Ltd. Vs. Union of India [2015 (4) TMI 357 - SUPREME COURT] settled the issue of what construes the products of printing industry classifiable under Chapter 4901 of CETA, 1985, wherein it was observed that: It is important to remember therefore, that the primary use of the product is security and not the quality of being adhesive. Here again, a simple example will suffice. Take an adhesive tape with a monogram printed upon it. The primary use of such tape is by virtue of its adhesiveness to bind and package containers in which goods are to be stored and transported. Obviously, in such an example, the printed monogram of such adhesive tape would be incidental to the primary use of the said goods - the adhesive tape. By way of contrast, in the present case, the factor of adhesiveness is incidental to the primary use to which the goods are put, namely, that they are to be used for security purposes. Also, the HSN Explanatory Notes are relevant, which according to the judgment of this Court reported in 'Collector of Central Excise, Shillong v. Wood Craft Products Ltd.' [1995 (3) TMI 93 - SUPREME COURT OF INDIA] Decision relates to product ‘hologram’ and the Hon’ble Supreme Court held that it is a product of printing industry classifiable under Chapter 49. The only difference in the present case is the goods are PVC film printed with logos. - By respectfully following the above decision of the Hon’ble Supreme Court and the Tribunal’s decision in Srikumar Agencies (supra), we hold that the product “printed PVC film” is classifiable under Chapter 490190 chargeable to nil rate of duty. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (8) TMI 99
Demand of excise duty by cash under rule 8(3A) of CER - contravention of Rule 8 (1), 8(3) and 8(3A) of Central Excise Rules, 2002 and Rule 3 (4) of CCR 2004 - appellants defaulted payment of duty on consignment basis through PLA - penalty under rule 25 and Rule 15 - whether appellants have not paid central excise duty on consignment basis during default period and also utilized cenvat credit for payment of duty against the provisions of Rule 8 (3A) of CER - Held that:- Both Hon'ble Gujarat High Court [2014 (12) TMI 585 - GUJARAT HIGH COURT] and Madras High Court [2015 (5) TMI 603 - MADRAS HIGH COURT] have held that condition contained in Rule 8 (3A) of Central Excise Rules 2002 for payment of duty "without utilisation of cenvat credit" is contrary to the scheme of availment of cenvat credit under CCR and the said Rule 8(3A) is arbitrary and violative of Article 14 of the Constitution. Accordingly, the Hon'ble High Court has struck down the Rule 8(3A) as unconstitutional. The jurisdictional Hon'ble Madras High Court's ruling is binding on the jurisdictional adjudicating authority and also binding on this Tribunal. By respectfully following the ratio of the Hon'ble High Court orders referred to supra, we hold that demand of duty under Rule 8(3A) is unsustainable as the said Rule has been struck down by the Hon'ble High Court and the demand of duty and penalty imposed in the impugned orders is liable to be set aside - Decided in favour of assessee.
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2015 (8) TMI 98
Clandestine manufacture and removal of goods - Whether main appellant has manufactured and cleared Hydraulic Jacks clandestinely as per the investigation carried out by officers of Central Excise (AE), Rajkot - Held that:- Main appellant was getting Hydraulic Jacks manufactured from other 15 job workers as per Para 12.6 of the OIA dated 19.02.2010. Nothing is reflecting in the last statement dated 16.05.2006 of Shri Suresh G. Vekaria whether the clandestine clearances recorded in the diary also contained the goods manufactured on job work basis from other job workers mentioned in Para 12.6 of the OIA dated 19.02.2010. For this purpose the cross-examination of the authors of the diaries was essential which has not been allowed to the appellant. Even if it is presumed that appellant was capable of carrying out all the processes leading to manufacture of Hydraulic Jacks then also it has not been established by the Revenue as to how much finished goods were the clandestine clearance made by the main appellant. Observations the fact of manufacture of Hydraulic Jacks and quantification of clandestine clearances by the main appellant fails miserably. Secondly, it is now a well established law that cases of clandestine removal can not be established only on the basis of few statements, especially in this case where the first recorded statement is held to be incorrect and given by a person who is not the author of the diary. Appeal filed by the main appellant is, therefore, required to be allowed as the case of clandestine manufacture and clearance by the main appellant is not established and corresponding penalties are also required to be set-aside. - Decided in favour of assessee.
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2015 (8) TMI 97
Levy of duty of excise on iron and steel scrap which was obtained by breaking the ship - exemption to particular class of assessees - Benefit of exemption Notification 102/87-CE and 103/87-CE - whether the two categories are identical or there is a reasonable classification based on intelligible differentia which has nexus with some objective that is sought to be achieved - Held that:- If the government fails to support its action of classification on the touchstone of the principle whether the classification is reasonable having an intelligible differentia and a rational basis germane to the purpose, the classification has to be held as arbitrary and discriminatory. - Decision in the case of Sube Singh v. State of Haryana [2001 (8) TMI 1374 - SUPREME COURT] followed. It has been accepted without dispute that taxation laws must also pass the test of Article 14 of the Constitution of India. It has been laid down in a large number of decisions of this Court that a taxation statute for the reasons of functional expediency and even otherwise, can pick and choose to tax some. Importantly, there is a rider operating on this wide power to tax and even discriminate in taxation that the classification thus chosen must be reasonable. The extent of reasonability of any taxation statute lies in its efficiency to achieve the object sought to be achieved by the statute. Thus, the classification must bear a nexus with the object sought to be achieved. Two Notifications both dated 27.03.1987 pertain to same goods namely those falling under Heading 72.15 and 73.09 of the second Schedule to the Act. Customs duty is leviable on these goods under Section 3 of the Customs Tariff Act. The said duty can be paid under any of the two methods. When two methods are permissible under the statutory scheme itself, obviously option is that of the assessee to choose in all those methods to pay the custom duty. Duty, thus, paid is to be naturally treated as validly paid. Merely because with the adoption of one particular method the duty that becomes payable is lesser would not mean that two such persons belong to different categories. The important factors for the purposes of parity are same in the instant case, viz. the goods are same; they fall under the same Heading and the custom duty is leviable as per the Act which has been paid. Therefore, the impugned Notification giving exemption only to those persons who paid a particular amount of duty, namely ₹ 1,400/- per LDT, would not mean that such persons belong to a different category and would be entitled to exemption and not other persons like the respondent herein who paid the duty on the same goods under the same Act but on the formula which he opted and which is permissible, which rate of duty comes to ₹ 1,035/- per LDT. Thus, while upholding the view taken by the High Court, we modify the same only to the extent that the respondent herein shall also be entitled to the benefit of the exemption Notification subject to the condition that the duty already paid by the respondent herein on LDT, would be taken into account and only the balance out of it would be subject to excise duty. - Decided against the revenue.
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CST, VAT & Sales Tax
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2015 (8) TMI 104
Reduced rate of VAT on Liquor - Application to enforce the Notification/Government Order dated 23.06.2014, w.e.f. 01.04.2014 - Held that:- Petitioner has supplied the different brands of Indian Made Foreign Liquor at the M.R.P. so fixed by the Government inclusive of 15% Commercial Tax (VAT). It is also not in dispute that neither any other dealer nor petitioner could have recovered any amount from the customer over and above the M.R.P. fixed by the Government. - all the three Government orders dated 28.02.2014, 31.03.2014 and 01.04.2014 were issued by the Competent Officers who were subordinate to the Governor of the State, therefore, every dealer including the petitioner was duty bound to obey the same. The net conclusion of these Government Orders would be that Government has decided to reduce the rate of Commercial Tax (VAT) from 20% to 15% w.e.f. 01.04.2014 and M.R.P was fixed inclusive of Commercial Tax (VAT) @ 15%. In view of Article 154 and 166 of the Constitution of India, all the three above Notifications/Government Orders shall be deemed to be valid. Petitioner and all the dealers were having every reasonable expectation and assurance from the Government that entire Commercial Tax (VAT) on different brands of Indian Made Foreign Liquor has been included in the M.R.P., therefore, petitioner /dealers have to pay the same and if Government would modify Commercial Tax(VAT) in that event M.R.P. shall also be modified accordingly. - Applying the principle of promissory estoppel and doctrine of reasonable expectation, the harmonious interpretation of both the Government Orders, would be that reduced rate of 15% would be applicable w.e.f. 01.04.2014. If Government is allowed to charge Commercial Tax @ 20% w.e.f. 01.04.2014 to 23.06.2014, it would amount to arbitrary exercise and unjustified action on the part of the Government which would be hit by Article 14 of the Constitution of India. - Decided in favour of assessee.
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2015 (8) TMI 103
Delay in submision of statutory declaration forms - appellant contended that it needed time to obtain the statutory declaration forms from the former company consequent to merger - Held that:- Assessing Authority without even giving reply to the request made by the assessee seeking time to produce the declaration forms, whether he is granting time or not, passed the assessment order. For the balance four years, the Assessing Authority granted time to produce the declaration forms. It appears, the petitioner, in terms of proviso to Rule 12(7) of the Central Sales Tax Rules, had shown sufficient cause for not producing the statutory declaration forms at the time of final assessment stating that due to the merger, they were in the process of re-working of the new company; the forms had to be obtained from the former employees of Vista Securities and the persons handling the records left the service. The fact that they have taken all reasonable steps to comply with the requirement of submitting the statutory declaration forms, though belatedly, is evident from the fact that before the first Appellate Authority they had produced the statutory declaration forms, but the same was not accepted by the first appellate authority. But the fact remains that the cause for not submitting the forms at the initial stage is justified in the facts of the present case. There is ample power for the authority to grant extension of time. In the instant case, we find that there is justification for invocation of the powers under the proviso to Rule 12(7). - matters back to the Assessing Authority for passing fresh orders. - Decision in the case of State Of H.P. and others vs Gujarat Ambuja Cement Ltd. [2005 (7) TMI 353 - SUPREME COURT OF INDIA] followed - Decided in favour of assessee.
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