Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 7, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Highlights / Catch Notes
GST
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GST Rates - HSN Code - Sausages and similar products, of meat, meat offal or blood; food preparations based on these products fall under heading 1601 and attract 12% GST.
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GST Rates - HSN Code - Instant Coffee falls under heading 2101 and attracts 28% GST.
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GST Rates - HSN Code - However, meat of sheep or goats (including mutton leg), frozen and put up in unit container, falling under heading 0204 attracts 12% GST..
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GST Rates - HSN Code - Meat of sheep or goats (including mutton leg), fresh, chilled or frozen (other than frozen and put up in unit container) falling under heading 0204 is exempt from GST
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GST Rates - HSN Code - Soft drinks i.e. aerated drinks - All goods [including aerated waters), containing added sugar or other sweetening matter or flavoured falling under heading 2202 10 attract 28% GST and 12% Compensation Cess.
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GST Rates - HSN Code - Goods of man-made fibres (including those yarns of two or more monofilaments of Chapter 54) measuring more than 10,000 decitex are classifiable under heading 5607 as twine and attract 12% GST.
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GST Rates - HSN Code - goods of man-made fibres (including those yarns of two or more monofilaments of Chapter 54) measuring 10,000 decitex or less are Classifiable under Chapter 54 or 55 as yarn and attract 18% GST.
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GST Rates - HSN Code - Bangles of base metal, whether or not plated with precious metals, falls under tariff item 7117 19 10 and attract 3% GST.
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GST Rates - HSN Code - Glass bangles (except those made from precious metals) falling under heading 7018 are exempt from GST.
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GST Rates - HSN Code - Plastic bangles falling under heading 3926 are exempt from GST.
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GST Rates - HSN Code - Vegetables provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that State for immediate consumption are classifiable under heading 0711 and attract 5% GST - Thus, chilli soaked in butter milk with salt (mor milagai in Tamil) falls under 0711 and attracts 5% GST
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GST Rates - HSN Code - Roasted grams fall under heading 2106 90 and attract 12% GST.
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GST Rates - HSN Code - NCCD Shall continue to be levied on tobacco and tobacco products at the rate as applicable prior to 1st July, 2017 - Since NCCD is a duty of excise, the valuation for the purposes of charging NCCD Shall be as per the Central Excise Law read With the Valuation Rules under Central Excise Law.
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GST Rates - HSN Code - ‘Khakhara’ (traditional food) - Khakhra falls under “Narnkeens. bhujia, mixture, and chabena and similar edible preparations in ready for consumption form” which is classifiable under heading 2106 90 and attracts 12% GST.
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GST Rates - HSN Code - Raw and processed wood of Malaysia saal and Marandi wood - Wood in the rough, whether or not stripped of bark or sapwood or roughly squared, is Classifiable under heading 4403 and attracts 18% GST.
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GST Rates - HSN Code - Railway wagons are classifiable under heading 8606 and attract 5% GST. with no refund of unutilised ITC - used railway wagons also attract 5% GST.
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GST Rates - HSN Code - Woven fabrics of jute are classifiable under heading 5310 and attract 5% GST, with no refund of unutilised ITC
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GST Rates - HSN Code - jute bags - Sacks and bags, of a kind used for the packing of goods are classifiable under heading 6305 and attract 5% / 12% GST, depending on their sale value not exceeding or exceeding ₹ 1000 per piece.
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GST Rates - HSN Code - Goods of jute fibres measuring more than 20,000 decitex are classifiable under heading 5607 as twine and attract 12% GST.
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GST Rates - HSN Code - goods of jute fibres measuring 20,000 decitex or less are classifiable under heading 5307 as yarn and attract 5% GST.
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GST Rates - HSN Code - Sterilisation pouches are different than aseptic packaging paper - Sterilisation pouches fall under heading 3005 and attract 12% GST
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GST Rates - HSN Code - Electric accumulators, including separators therefor, whether or not rectangular (including square) fall under heading 8507 and attract 28% GST.
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GST Rates - HSN Code - GST on Procurement of raw cotton - Where the supply of raw Cotton is by an agriculturist to a registered person, GST will have to be paid by such registered parson on reverse charge basis.
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GST Rates - HSN Code - sugarcane procured by the sugar mills which is generally fresh and procured directly from the farm - Fresh or chilled sugarcane, falling under heading 1212, attracts Nil GST
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GST Rates - HSN Code - Hand Made Branded Biri - All biris attract 28% GST - In addition, handmade biris attract NCCD of Re, 1 per thousand. Machine made biris attract NCCD of ₹ 2 per thousand.
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GST Rates - HSN Code - Sabai Grass (a kind of grass used for making of rope, baskets. etc.) - Sabai grass is used as plaiting material and is classifiable under heading 1401 and attracts 5% GST.
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GST Rates - HSN Code - Sal Leaves which is used for making plates - classifiable under heading 0604 and attract Nil GST.
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GST Rates - HSN Code - Mohua flowers fall under heading 1212 and attract 5% GST.
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GST Rates - HSN Code - Sandesh, whether or not containing chocolate, attract 5% GST.
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GST Rates - HSN Code - Readymade garment - if a wholesaler supplies readymade garments for a transaction value of ₹ 950 per piece to a retailer, the GST chargeable on such readymade garments will be 5% - However, if the retailer sells such readymade garments for ₹ 1100 per piece, the GST chargeable on such readymade garment will be 12%
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GST Rates - HSN Code - Readymade garments of sale value not exceeding ₹ 1000 per piece attract 5% GST. Readymade garments of sale value exceeding ₹ 1000 per piece attract 12% GST. - The sale value referred to in the notification refers to the transaction value and not the retail sale price of such readymade garments
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GST Rates - HSN Code - Footwear having a retail sale price not exceeding ₹ 500 per pair [provided that such retail sale price is indelibly marked or embossed on the footwear itself] attracts 5% GST. - Thus retail sale price declared on the package is inclusive of GST. - The GST rate will be 18% if the RSP exceeds ₹ 500 per pair. - GST however, will be payable on the transaction value.
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GST Rates - HSN Code - Coconuts, fresh or dried, whether or not shelled or peeled fall under heading 0801 and attract Nil GST. As per the HSN Explanatory Notes, the heading excludes copra, the dried flesh of coconut used for the expression of coconut oil (1203) - Copra falls under heading 1203 and attracts 5% GST
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GST Rates - HSN Code - Isabgol husk falls 1211 and attracts 5% GST.
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GST Rates - HSN Code - Isabgol seeds fall under heading 1211. - Fresh isabgol seeds attract Nil GST. - Dried of frozen Isabgol seeds attract 5% GST
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GST Rates - HSN Code - Tobacco leaves falling under heading 2401 attracts 5% GST on reverse charge basis in respect of supply by an agriculturist.
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GST Rates - HSN Code - For GST rate of 5% tobacco leaves means leaves of tobacco as such or broken tobacco leaves or tobacco leaves stems
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GST Rates - HSN Code - Cartons, boxes and cases of corrugated paper or paper board, fall under heading 4819 and attract 12% GST - Folding cartons, boxes and cases, of non-corrugated paper and paperboard, falling under heading 4819 attract 18% GST under the residual entry S. No. 453
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GST Rates - HSN Code - Khoya/mawa being concentrated milk fall under 0402 and attracts 5% GST.
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GST Rates - HSN Code - Khari and hard butters fall under heading 1905 and attract 18% GST
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GST Rates - HSN Code - Hair rubber bands fall under heading 4016 and attract 28% GST
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GST Rates - HSN Code - Tamarind kernel falls under heading 1207 and attracts Nil GST.
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GST Rates - HSN Code - Tamarind(fresh) falls under 0810 and attract Nil GST. - Tamarind (dry) falls under 0813 and attract 12% GST.
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GST Rates - HSN Code - Battery for mobile handsets falls under heading 8506 and attracts 28% GST.
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GST Rates - HSN Code - Imported coal will attract GST compensation cess @ ₹ 400 per tonne.
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GST Rates - HSN Code - Prefabricated buildings, including portable and mobile toilets, fall under heading 9406 and attract 18% GST.
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GST Rates - HSN Code - Cotton seed oil cakes for use as aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed attract Nil GST - Cotton seed oil cakes for other uses attract 5% GST.
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GST Rates - HSN Code - Fresh areca nut / betel nuts fall under heading 0802 and attract Nil GST - Dried areca nut / betel nuts fall under heading 0802 and attract 5% GST
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GST Rates - HSN Code - Articles of marble [including those made of marble powder, stone and unsaturated resin] fall under heading 6802 and attract 28% GST [Hand Decorative Figurines and Hand Decorative Artefacts]
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GST Rates - HSN Code - Fabric 1.2 MT cut for pant and 2.5 MT cut for a shirt? - Specified fabrics attract 5% GST, whether or not in form of cut pieces.
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GST Rates - HSN Code - sale of Export Incentives Licences like MEIS, SEIS and IEIS - MEIS etc. fall under heading 4907 and attract 12% GST.
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GST Rates - HSN Code - Dog or cat foods fall under heading 2309 and attracts 18% GST under the residual entry S. No. 453.
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GST Rates - HSN Code - Wet dates fall under heading 0804 and attract 12% GST.
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GST Rates - HSN Code - Nail Polish [whether in large quantities say 50 to 100 litres or in retail packs] falls under heading 3304 and attracts 28% GST
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GST Rates - HSN Code - Puja samagri, including kalava (raksha sutra) attracts Nil GST. - Rakhi, which is in form of kalava [raksha sutra] will thus attract Nil GST. - Any other rakhi would be classified as per its constituent materials and attract GST accordingly.
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GST Rates - HSN Code - Soaps; organic surface active products and preparations for use and soaps, in form of bars, cakes, moulded pieces or shapes falling under heading 3401 [except 3401 30] attract 18% GST. - Other organic surface active products and preparations falling under sub-heading 3401 30 and organic surface active agents and preparations falling under heading 3402 attract 28% GST.
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GST Rates - HSN Code - Filters or Water Purifiers fall under heading 8421 and attract 18% GST.
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GST Rates - HSN Code - Sarees and dhoti - of Silk, Woven fabrics of silk sarees (HSN code 5007) - of Cotton, Of not more than 200 gsm (HSN code 5208) - of Cotton, Of more than 200 gsm (HSN code 5209) - of Manmade filaments yarn, Of any gsm (HSN code 5407 or 5408) - All attracts GST rate @5%
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GST Rates - HSN Code - Maize [of seed quality] fall under heading 1005 and attract Nil GST.
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GST Rates - HSN Code - Idli Dosa Batter (Wet Flour) [as food mixes] falls under heading 2106 and attracts 18% GST.
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GST Rates - HSN Code - Structures of iron or steel fall under heading 7308 and structures of aluminium fall under heading 7610 and attract 18% GST. - Solar Panel Mounting Structure, depending on the metal they are made of, will fall under 7308 or 7610 and attract 18% GST.
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GST Rates - HSN Code - Kulfi is classifiable under heading 2105 and attracts 18% GST.
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GST Rates - HSN Code - Lac or shellac bangles are classifiable under heading 7117 and attract 3% GST.
Income Tax
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Entitlement to deduction u/s 35 (2AB) - expenditure incurred for its R&D Centre at Rohtak - approval was granted in 2015 - assessee claim the deduction since inceptin i.e. AY 2011-12 - DSIR directed to allow the claim - HC
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Deductible / Exempted income u/s 10(29) - depreciation to be excluded from the income or not - irrespective of the provision in which the word ‘depreciation’ is used, owing to the very nature of the word, it is not a loss or an expenditure or a trading liability - not to be excluded - HC
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Validity of reopening - Validity of notice u/s 148 when scrutiny assessment was made but same was annulled - doctrine of merger is not applicable - reopening of the case sustained - HC
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Legal expenditure incurred by the assessee to defend the writ petitions filed to quash the Government notification and lease deed is not a capital expenditure and deduction is allowable revenue expenditure u/s 37 - HC
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If the AO finds that the recipient-assesses, i.e., SAL was not liable to pay any tax during the relevant assessment year or has actually paid tax, the assessee cannot be held to be "assessee in default" merely for the reason that it has failed to deduct tax or has short deducted tax - HC
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Interest on refunds u/s 244A - unpaid portion representing tax as well as interest - The assessee is entitled for interest on unpaid interest.
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MAT computation u/s 115JB - unabsorbed depreciation adjustment - the brought forward loss or unabsorbed depreciation as per the books and as per the provisions of section 115JB of the Act.
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Nature of receipt from the trust - distribution of surplus by the trust - as per scheme of assessment of private discretionary trust, the Department has to opt whether to assess the income in the hands of trust or beneficiaries.
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Revision u/s 263 - tds credit issue non examination by AO - non examination of an issue by the AO renders the assessment erroneous and prejudicial to the interests of the revenue
Customs
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Jurisdiction - power to allow refund of the warehousing charges - There is no provision in the CA or any other law that enabled the CESTAT to grant such a relief - HC
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Classification of imported goods - CD Rom drive / CD-RW - CD Rom being distinguishable by its very existence in the CTH 84717090 from 84717060 - benefit of exemption not allowed.
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Suspension of CHA licence - after more than a year of receipt of offence report proceedings against the CHA having been initiated, dehors the law, action of the authority shall be said to be an empty formality and shall not see the light of the day.
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Benefit of Advance Licence - Mere availment of credit is not sufficient to invoke the provisions of section 111 of Customs Act, 1962. The goods could not have been held to be liable for confiscation without evidence of post-importation conditions having been breached
Service Tax
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Refund claim - Rule 5 of CCR, 2004 - rejection on the ground that the appellants have not debited cenvat amount in their cenvat account before filing the refund claim - Belated debit cannot come in the ways of sanctioning the refund claim
Central Excise
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Benefit of N/N. 64/95-CE dated 16.3.1995 - steel bars and rods were supplied to Vikram Sarabhai Space Centre (VSSC) - mere reliance of the appellant on the certificate of VSSC, shall not grant exemption from duty to the appellant.
Case Laws:
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Income Tax
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2017 (8) TMI 250
Additions u/s 68 - statements made by the assessee's Directors in the course of search under Section 132 - Held that:- The statement of Director cannot be used against the assessee because: (i) His statement was recorded behind the back of the assessee and the assessee was not allowed any opportunity to cross-examine him. (ii) There is no corroborative evidence in support of the statement of Shri Tarun Goyal. On the other hand, the material found during the course of search and other evidences placed on record by the assessee are contrary to the allegation made by Shri Tarun Goyal in his statement.”in favour of the Assessee and against the Revenue by holding that the additions made under Section 68 of the Act on account of the statements made by the Assessee's Directors in the course of search under Section 132 of the Act were rightly deleted by the ITAT. Assessment u/s 153A - Held that:- The statements of Mr. Anu Aggarwal, portions of which have been extracted hereinbefore, make it plain that the surrender of the sum of ₹ 8 crores was only for the AY in question and not for each of the six AYs preceding the year of search. Secondly, when Mr. Anu Aggarwal was confronted with A- 1, A-4 and A-11 he explained that these documents did not pertain to any undisclosed income and had, in fact been accounted for. Even these, therefore, could not be said to be incriminating material qua each of the preceding AYs. ITAT was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessees herein was not justified in law. The question framed is answered in the affirmative i.e. in favour of the Assessee and against the Revenue by holding that having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the Assessee, the assumption of jurisdiction under Section 153 A of the Act and the consequent additions made by the AO were not justified. Assessee appeal allowed.
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2017 (8) TMI 249
Validity of assessment - lack of notice under Section 143 (2) - Held that:- Factually the Assessee filed a return pursuant to notice issued under Section 148 of the Act, notwithstanding that it may not have filed a return in the first place under Section 139 of the Act for the AY in question. Once a return is filed notice under Section 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment. The question of framing an assessment ex parte without even issuing a notice under Section 143(2) of the Act did not arise. The mandatory nature of that requirement is settled not only by the decision of the Supreme Court in the case of ACIT v. Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA) but also by a decision of this court in Commissioner of Income Tax-08 v. Jai Shiv Shankar Traders Pvt. Ltd. (2015 (10) TMI 1765 - DELHI HIGH COURT) For all the aforementioned reasons, the question framed does not arise in the present appeal and is declined to be answered
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2017 (8) TMI 248
Entitlement to deduction u/s 35 (2AB) - expenditure incurred for its R&D Centre at Rohtak - approval was granted in 2015 - assessee claim the deduction since inception i.e. AY 2011-12 - Held that:- Both the R&D Centres, at Gurgaon and Rohtak have been granted recognition and the entire R&D expenditure was certified for AY 2011-12, but in the certification dated 9th March, 2015 only the Gurgaon R&D Centre found a mention. The Petitioner merely sought addition of the Rohtak R&D Centre in the said certification by providing the separate figures for each of the Centres. The non-addition of the Rohtak R&D Centre and instead deletion of the expenditure incurred on the same by way of issuance of the Corrigendum dated 7th May, 2015, from the certification dated 9th March, 2015, is clearly unsustainable. Such an act on behalf of the DSIR results in completely depriving the Petitioner from claiming deductions of R&D expenses qua its Rohtak R&D Centre. Section 35 (2AB) clearly provides that any expenditure incurred by a party on its R&D facility except, insofar as it relates to land and building is liable to be allowed to be claimed as deduction (twice the amount of expenditure). A perusal of the scheme of the Act especially Sections 35 (2AB), 35A and 35AB reveals in no uncertain terms, that the purpose behind these provisions is to provide impetus for research, development of new technologies, obtaining patent rights, copyrights and know-how. In the present case, it could be true that there are some errors in the Petitioner's application dated 31st October, 2011, however, one cannot ignore that since 2011, the Petitioner has been candid with the DSIR about its expenses for the Gurgaon and Rohtak R&D Centres and has given the break-up of the expenditure incurred thereupon; has submitted the Auditor's certificate required for the same; has entered into an agreement with the DSIR as required for sharing of technologies; and has also repeatedly requested for certification of the expenditure incurred by it. Under such circumstances, an isolated error in an application cannot result in the entire benefit itself being refused to the Petitioner resulting in it being deprived of the deduction as permissible under Section 35 (2AB). Thus this Court holds that the Petitioner is entitled to deduction under Section 35 (2AB) of the Act for the expenditure in respect of its Rohtak R&D Centre as per the provisions of Section 35 (2AB) for AYs 2011-12, 2012-13 and 2013-14. - Decided in favour of assessee.
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2017 (8) TMI 247
Grant registration u/s 12AA - decline of claim as charitable activities had not still been commenced - Held that:- At the time of registration under section 12AA of the Income-tax Act, which is necessary for claiming exemption under sections 11 and 12 of the Act, the Commissioner of Income-tax is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under section 12AA cannot be refused, on the ground that the trust has not yet commenced the charitable or religious activity. Any enquiry of the nature would amount to putting the cart before the horse. At this stage, only the genuineness of the objects has to be tested and not the activities, which have not commenced. The enquiry of the Commissioner of Income-tax at such preliminary stage should be restricted to the genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under section 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. SEE Hardayal Charitable & Educational Trust Versus Commissioner of Income Tax-II, Agra [2013 (3) TMI 377 - ALLAHABAD HIGH COURT]- Decided in favour of assessee.
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2017 (8) TMI 246
Period of limitation - sufficient cause for not preferring the appeal within the time before CIT(A) - Held that:- When the tax consultant of the assessee had filed an affidavit suggesting that the order of assessment was served on him and he had not supplied the copy to the assessee, ordinarily, this should have been treated as sufficient cause preventing the assessee from filing appeal within the period of limitation. To that extent, the Commissioner was not correct in holding that the explanation was frivolous or that it lacks credence. If the Revenue is able to prove and produced the supporting documents that order was served, the onus would have then been on the assessee to rebut the same. If the order of assessment was duly served on the partner of the firm as far back as on 26.03.2013, i.e. barely four days after passing of the order, the affidavit of the tax consultant of the assessee that he had received the order but had not passed on a copy thereof to the assessee, would be of no consequence. Matter remanded back.
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2017 (8) TMI 245
Reopening of assessment - retrospective effect on amendment to provisions of Section 115JB - Held that:- The assessment was completed on 22.02.2006. The reassessment under Section 143(3) r/w Section 147 was completed on 26.12.2008. The claim of the assessee was allowed in the original assessment and the decision of the Assessing Officer was supported by various judicial pronouncements. The Tribunal relied upon the judgment of this Court in case of Rallis India (2010 (3) TMI 164 - BOMBAY HIGH COURT) to state that retrospective amendment could not have been the sole ground for reopening of the assessment. Clause (i) of the Explanation I to Section 115JB of the Act was brought into force by Finance Act, 2009 with retrospective effect from 01.04.2001. The probable view was taken by the Assessing Officer. It is observed that the judgment of this Court in case of Rallis India (supra) would apply to the present case also. No substantial question of law
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2017 (8) TMI 244
Deductible / Exempted income u/s 10(29) - depreciation to be excluded from the income or not - CIT(A) allowed the computation after excluding depreciation as part of the expenditure and taking gross receipts from warehousing and Inland Container Depot/ Container Freight Station (‘ICD/CFS’) - Held that:- As evident form the supreme court case in Nectar Beverages Pvt. Ltd. [2009 (7) TMI 5 - SUPREME COURT] while explaining the rationale behind insertion of Section 41(2) of the Act, delved into the aspect as to what was the nature of ‘depreciation’. It has been emphasized by the Supreme Court that ‘depreciation’, by its very nature and as used in Section 41(1) of the Act, is neither loss, nor expenditure, nor trading liability’. In other words, irrespective of the provision in which the word ‘depreciation’ is used, owing to the very nature of the word, it is not a loss or an expenditure or a trading liability. The Court is satisfied that neither the CIT (A) nor the ITAT has committed any legal error in concluding that for the purposes of Section 10(29) of the Act ‘depreciation’ is not an expense but allowance. No substantial question of law
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2017 (8) TMI 243
Reopening of assessment - Allowability of addition made on account of closing stock - change in accounting policy of the company - Held that:- The reopening of the assessment in the present case is sought to be made after four years after the original assessment order was passed under Section 143(3) of the Act. The first proviso to Section 147 is straightaway attracted. It mandates that there must be failure on part of the Assessee to make a full and true disclosure of all material facts necessary for the assessment. With regard to the addition sought to be made by the impugned order, the Petitioner did make a full and true disclosure of all material facts. Note-2 to the accounts which explained the change in the method of valuation of the closing stock. In fact, the AO himself acknowledged the mistake of overlooking that note. He, therefore, accepted the application filed by the Petitioner under Section 154 of the Act and rectified the assessment order by the subsequent order dated 4th March, 2013. These facts have been completely overlooked by the AO while seeking to reopen the assessment. The observation that the Assessee did not make a disclosure of the changed method of valuation is plainly contrary to the records. On the face of it, the reopening is unsustainable in law. There is another question urged by the Petitioner regarding the failure of the AO to comply with the procedure explained by the Supreme Court in GKN Driveshafts (India) Ltd v. Income Tax Officer [2002 (11) TMI 7 - SUPREME Court] is left open for decision in an appropriate case. Reopening set aside. - Decided in favour of assessee.
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2017 (8) TMI 242
Scope of Sections 201(1) & (IA) - sufficient cause for determining assessee in default - Tribunal held that Sections 201(1) & (IA) were penal in nature and that sufficient cause was a relevant consideration while holding the assessee as an assessee in default - Held that:- Revenue has drawn the attention of this Court to the decision of the Supreme Court in Commissioner of Income Tax v. M/s Eli Lilly & Company (India)(2009 (3) TMI 33 - SUPREME COURT) in which it was held that interest under Section 201 (1A) is a compensatory measure for withholding the tax which ought to have gone to the exchequer. It has further been observed that the object underlying Section 201(1) of the Act is to recover the tax. In the case of short deduction, the object is to recover the shortfall. The impugned order of the ITAT which holds that Section 201 (1) and 201 (1A) of the Act are 'penal' in nature is plainly contrary to the above decision of the Supreme Court. Accordingly, Question (1) above is answered in negative i.e. in favour of Revenue and against the Assessee.
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2017 (8) TMI 241
Validity of reopening - Validity of notice u/s 148 when scrutiny assessment was made but same was annulled - doctrine of merger - Held that:- on same subject matter, there cannot be parallel consideration by the Assessing Officer in the reopened assessment and by higher officer or authority in appeal, reference or revision. For applicability of this proviso and the principle of merger flowing from such proviso, what is necessary is that there has to be income involving the matter which is the subject matter of any appeal, reference or revision and in such a case, it would not be open for the Assessing Officer to make any assessment or reopening with respect to such income. The stress here is on the income involving the matters which are the subject matter of further proceedings. The reopening is based on the belief of the Assessing Officer that the sale proceeds should be taxed as the business income and not as capital gain. This subject matter was not a part of the order of the Commissioner (Appeals). The Commissioner (Appeals) having entertained only part of the assessee's appeal, the principle of merger as flowing from the proviso to section 147 of the Act would not apply. Validity of notice u/s 148 when scrutiny assessment was made but same was annulled - re-appreciation of facts - Held that:- Nothing contained in the language of section 147 would permit us to hold that even if all the parameters to enable the Assessing Officer to assess or reassess the income by reopening the assessment are present, same may not be permitted in cases where the original assessment framed by the Assessing Officer has failed on any technical ground, such as in the present case i.e. want of service of notice under section 143(2) of the Act. Once the original assessment is declared as invalid as having been completed without the service of notice on the assessee within the statutory period, there would be thereafter no assessment in the eye of law. Following the decisions of the various High Courts, notice u/s 148 sustained - Decided in favor of revenue.
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2017 (8) TMI 240
Right of secured creditors - Attachment orders - properties initially mortgaged with the Indian Bank by the borrower - rights of the a secured creditor to realise secured debts due and payable by sale of assets over which security interest - Held that:- The petitioner being the successor would step into the shoes of the financing Bank, which admittedly, is a secured creditor. Further more, the document has been valid by stamped for the purpose of stamp duty as assignment deed as could be seen from the endorsement in the reverse of page No.1 of the Assignment agreement dated 07.02.2017. Thus, in the light of the decision of the Full Bench, taking note of the Amendment Act, 2016, the order of attachment made by the Income Tax Department should yield to rights of the petitioner, secured creditor. Therefore, they are required to be set aside. The petitioner would have priority over all other debts and Government dues including taxes, cesses, etc., due to the Income Tax Department, Central Government, State Government or Local Authority. Therefore, the impugned orders of attachment are liable to be set aside.
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2017 (8) TMI 239
Legal expenditure - nature of expenditure - revenue or capital - allowability of business expenditure - Held that:- Payment of money made by the assessee therein was in order to perfect his title to the capital asset. It was a lump sum payment for acquisition of a capital asset and therefore, Hon'ble Supreme Court in case of Mangalore Ganesh Beedi Works v. CIT [2015 (10) TMI 1283 - SUPREME COURT] held that the amount should be treated as capital payment and the assessee was not entitled to exclude from the income sought to be assessed in his hands any portion of that amount. But having regard to the facts in the present case noted above and by applying the decisions in the aforementioned judgments, we find that the Tribunal was justified in holding in favour of the assessee and thereby, dismissing Department's appeal. The substantial question of law sought to be raised by the Department is answered by holding that the legal expenditure incurred by the assessee to defend the writ petitions filed to quash the Government notification and lease deed is not a capital expenditure and deduction is allowable within the meaning of Section 37 of the Act, as it is revenue expenditure. - Decided in favour of assessee.
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2017 (8) TMI 238
TDS u/s 194C - assessee in default - failure to deduct tax or short deducted tax - Held that:- It is an important aspect to be examined whether recipient-assessee has directly paid tax or has no liability of tax at all. Since this aspect was not examined by the assessing authority, therefore, in our view, the Tribunal has rightly remanded the matter to the assessing authority to examine this aspect. If the assessing authority finds that the recipient-assesses, i.e., SAL was not liable to pay any tax during the relevant assessment year or has actually paid tax, the assessee cannot be held to be "assessee in default" merely for the reason that it has failed to deduct tax or has short deducted tax and for that reason alone the assessing authority cannot raise demand of tax from the assessee. We find that similar question has also been considered recently by this court in Ghaziabad Development Authority v. Union of India (2016 (8) TMI 1240 - ALLAHABAD HIGH COURT). - Decided against the Revenue
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2017 (8) TMI 237
Interest on refunds u/s 244A - unpaid portion representing tax as well as interest - Held that:- The assessee is entitled for interest on unpaid interest and accordingly dismiss the grounds raised by the revenue in this regard. See Union Bank of India v. Asst. CIT [2016 (8) TMI 688 - ITAT MUMBAI] As decided in the assessee's own case for the very same assessment year 2002-03 had upheld the order of the learned Assessing Officer granting interest under section 244A of the Act. The subsequent rectification proceedings and the consequent appellate orders thereon have been reversed by the hon'ble Calcutta High Court in the assessee's own case. Hence the Revenue should not have any grievance in the impugned appeal before us as the learned Commissioner of Income-tax (Appeals) had addressed the entire issue in the same lines in which the hon'ble High Court had addressed the issue. In our considered opinion, if at all the Revenue is aggrieved against the order of the hon'ble Calcutta High Court [2015 (7) TMI 780 - CALCUTTA HIGH COURT ], they should have preferred a special leave petition before the hon'ble Supreme Court. We feel that the Revenue should not be aggrieved by preferring an appeal before us against the order of the learned Commissioner of Income-tax (Appeals) dated September 30, 2008. Hence the Revenue's appeal deserve to be dismissed on that count also.
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2017 (8) TMI 236
Adding back excess deduction under the provision of Sec. 115JB(2) - MAT computation - unabsorbed depreciation adjustment - Held that:- Neither the brought forward loss nor the unabsorbed depreciation has been written off in the books of the accounts. Both are appearing in the books of accounts in-spite of the facts that the unabsorbed depreciation was adjusted in the immediate preceding year to the extent of ₹ 107.47 while determining the book profit under section 115JB of the Act. It is because the aforesaid adjustment was not made in the books of accounts but in the computation of income while determining the book profit as per the provisions of section 115JB of the Act. Thus, law on this issue is fairly clear that the effect has to given for the brought forward loss or unabsorbed depreciation as per the books and as per the provisions of section 115JB of the Act. Respectfully following the order of this co-ordinate Bench in the case of Binani Industries Ltd. (2016 (3) TMI 873 - ITAT KOLKATA) we reverse the order of Ld. CIT(A) in this regard and direct the AO to delete the addition - Decided in favour of assessee.
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2017 (8) TMI 235
Levy of interest on late deposit of tax deducted at source - Held that:- Undisputedly the amount of TDS was debited from the bank account of the assessee on the due date i.e. October 7, 2009 and the delay in deposit of such tax by a day was on account of system and connectivity issues at the bankers' end, which was beyond the control of the assessee. The learned Commissioner of Income-tax (Appeals) was thus not justified in holding the levy of interest on the alleged late deposit of tax deducted at source under section 201(1) read with section 201(lA) of the Act. He was, however, justified in deciding the issue of delay in payment of TDS in favour of the assessee questioned by the Revenue in view of the decision of the hon'ble Supreme Court in the case of CIT v. Ogale Glass Works Ltd. [1954 (4) TMI 3 - SUPREME Court]. In the present case the amount of TDS was debited from the bank account of the assessee on the due date instead of payment by cheque - Decided in favour of assessee.
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2017 (8) TMI 234
Penalty under section 271(1)(c) - addition of gift - Held that:- We have examined the details and noticed that the notice under section 143(2) of the Act became time barred on August 31, 2004 at the time when the search took place much later on August 3, 2006. Therefore, it follows that as on the date of search, there was an assessment completed or processing of return of income of the assessee under section 143(1) of the Act. Subsequently, the Assessing Officer initiated proceedings under section 153A and in the assessment completed under section 143(3) read with section 153A, the Assessing Officer has brought to tax a sum of ₹ 10,00,000 being the amount of gift received from Shri Gayanchand Jain without any incriminating material found during the course of search. Once this is the position the issue is clearly covered in favour of the assessee and against the Revenue by the decision in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT]. Respectfully, following the same and in the given said of facts, we are of the view that this gift received from Shri Gayandhand Jain for an amount of ₹ 10,00,000 disclosed in the return of income as evidence by the capital account and which has not been abated, the amount of gift cannot be added. Accordingly, we reverse the orders of the Commissioner of Income-tax (Appeals) as well as that of the Assessing Officer and delete the addition in all these eleven appeals of the assessee. Penalty deleted. - Decided in favour of assessee.
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2017 (8) TMI 233
Penalty under section 271(1)(c) - taxability of the assessee in India partially - DTAA effect - Held that:- The explanation of the assessee was that being a tax resident of UK it had opted to be taxed in India under the provisions of the India-UK Double Taxation Avoidance Agreement (Tax Treaty) for the previous year relevant to the assessment year under consideration. It was explained that under the provisions of the Tax Treaty, income derived by it from supply of network equipment to Indian customers qualify as "business profits" and, therefore, not liable to taxation in India under the provisions of article 7(1) of the Tax Treaty in the absence of a permanent establishment of the assessee in India. The assessee did not offer the revenue from supply of network equipment to tax in India. It was a debatable issue hence failure to voluntarily file return of income under the above bona fide belief cannot be construed to be concealment of income and furnishing inaccurate particulars of income by the taxpayer. Also because the learned Commissioner of Income-tax (Appeals) and the Tribunal upheld the taxability of the assessee in India partially cannot lead to an inference that the assessee had furnished inaccurate particulars of income. - Decided in favour of assessee.
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2017 (8) TMI 232
Assessment u/s 153A - Held that:- Hon'ble Supreme Court in the case of Pooran Mal (1973 (12) TMI 2 - SUPREME Court) in which it has been laid down that even though search and seizure was in contravention of the provisions of section 132 but the material seized can be used against the person from whose custody it was seized. This judgment, again, does not support the case of the Revenue any further for the reason that no incriminating material worth the name could have been seized from the assessee as the search itself was not conducted. Ergo, it is abundantly clear that the view canvassed by the learned Commissioner of Income-tax (Appeals) in validating the issue of notice under section 153A followed by the assessment under this section, cannot be countenanced. In view of the foregoing discussion, it is clear beyond any shadow of doubt that the notice under section 153A of the Act was issued without any jurisdiction. The natural corollary, which therefore, follows is that all the proceedings flowing from such invalid notice, including the resultant assessment order, are bad in law and hence liable to be quashed. - Decided in favour of assessee.
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2017 (8) TMI 231
Nature of receipt from the trust - distribution of surplus by the trust - reward for employment - Addition on account of 'profit in lieu of salary u/s 17(3)(ii)' - assessee is a beneficiary of private discretionary trust - assessment of income - Held that:- The fact that distribution is not denied by Ld. DR or authorities below. Also from computation of income and returns filed by the trust placed in the paper book, it eminates clear that trust has already been assessed to tax, in terms of section 161 to 166 of the Act. Assessee’s stand is correct that as per scheme of assessment of private discretionary trust, the Department has to opt whether to assess the income in the hands of trust or beneficiaries. In the present case, option has been clearly exercised in the hands of the trust as demonstrated from computation of income and income and expenditure account placed in the paper book in the case of trust. The action of Ld. AO is again contrary to settled scheme and interpretation of section 161 to 164 lead in consonance with the CBDT circular No. 157-F. No. 228/8/73-IT (A-II), dated 26.12.1974 and CBDT instruction F Nos. 45/78/66-IT J(5), dated 24.02.1967. See CIT vs. Kamalini Khatau [1994 (5) TMI 1 - SUPREME Court] - Decided against revenue
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2017 (8) TMI 230
Eligibility to deduction u/s 80IA - belated return filed - whether return so uploaded by 20 seconds late by the Income-tax Department will be treated as valid return to have been filed on 30.09.2012, when the facts on record are that the assessee has filed E-return on 30.09.2012 and digital signature was also put on 30.09.2012? - Held that:- The claim of the assessee cannot be denied on the basis of technicalities when the assessee is otherwise entitled to deduction. Accordingly, under the facts and circumstances of the present case, as decided hereinabove, the return filed by the assessee is treated to have been filed in time and claim of the assessee is directed to be allowed. Grounds raised by the assessee are allowed.
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2017 (8) TMI 229
Addition on account of sub-contract work - additional evidence - Held that:- The additional evidences furnished by the assessee before the ld. CIT (A) were not available to the AO, therefore, he had no occasion to examine the same during the course of assessment proceedings. However, the said additional evidences were forwarded to the AO for his comments by the ld. CIT(A) but AO did not comment and furnish the remand report. The ld. CIT (A) also did not appreciate the facts in the right perspective, particularly this submission of the assessee that the net provision shown was already included in the gross value of VWD which was credited in the profit and loss account. We, therefore,remand this issue back to the file of the AO for re-adjudication. Disallowance u/s 40(a)(ia) - TDS figures brought forward from earlier years - Held that:- CIT (A) after proper verification of the details furnished by the assessee came to the conclusion that the assessee could not explain the deposit of TDS of ₹ 54,867/- in respect of Durgapur unit, so disallowance of ₹ 54,86,700/- was justified on account of non-deposit of TDS. He also observed that the assessee did not press for disallowance of ₹ 56,96,440/-. In our opinion, the ld. CIT (A) was justified in sustaining the disallowance to the extent of ₹ 1,11,83,140/- (Rs.54,86,700/- + ₹ 56,96,440/-). The ld. CIT (A) also directed the AO to verify as to whether TDS of ₹ 4,07,901/- was deposited in the Government Account before the due date of the filing of the return. Disallowance u/s 43B - CIT-A reduced the addition - Held that:- In the present case, it appears that the ld. CIT (A), after proper verification, accepted the claim of the assessee, the ld. DR could not rebut the aforesaid findings of the ld. CIT (A). We, therefore, do not see any valid ground to interfere with the findings given by the ld. CIT (A).
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2017 (8) TMI 228
Revision u/s 263 - Payment made to M/s. Tahir Engineering Works - Held that:- In appeal before the ld CIT it has been categorically held by the ld CIT in his order dated 04.08.2015 that the addition made by the AO merely on the basis of conjectures and surmises. He held so because of the reason that the assessee has got job work done through M/s. Tahir Engineering Works for ₹ 620000/-. The assessee submitted the complete details with respect to payment made to M/s.Tahir Engineering Works for ₹ 620000/- with exhaustive details and therefore the addition was deleted. The ld DR could not confront the fact that the order of CIT has not been further agitated before higher forum by the revenue. Hence on this ground it cannot be said that order of the AO is erroneous and prejudicial to the interest of the assessee. Addition u/s 68 - lack of enquiry v/s no enquiry - Held that:- As found that before the ld AO the assessee filed the confirmation of the Modern Chemicals stating PAN, amount of outstanding as on 31.03.2008 of ₹ 1367088/-. Such confirmation is placed at Page 138 of the Paper Book dated 02.06.2010 identically with M/s. Paswara Chemicals Ltd also the assessee submitted the confirmation stating its PAN No. Therefore there is definitely an inquiry made by the ld AO with respect to outstanding creditors. Therefore it cannot be said that it is a case of no enquiry by the AO and further when the confirmation is filed the AO has not asked for the account of that particular party, therefore, it can be said to be a case of inadequate enquiry but not at all a case of no enquiry. Decided in favour of assessee.
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2017 (8) TMI 227
Additional evidences under Rule 46A of the Income Tax Rules, 1962 admission - Held that:- AO adjourned telephonically the case to 17.11.2010. On the said paper, the mobile number of the Counsel for the assessee namely, Sh. R.K. Malik, CA is also mentioned. It is therefore, clear that the AO adjourned the case to 17.11.2010, but in the body of the assessment order, he has mentioned that the assessee has not complied on 15.11.2010 when the case was fixed for hearing. It is noticed that in the body of the impugned order, nothing has been mentioned about the above said facts and the CIT(A) had also not dealt with the additional evidences which were admitted by him under Rules 46A of the Income Tax Rules, 1962. We, therefore, by considering the totality of the facts, deem it appropriate to set aside this case back to the file of the AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard. The assessee is also directed to cooperate and not to seek undue or unwarranted adjournments. - Appeal filed by the assessee is allowed for statistical purposes.
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2017 (8) TMI 226
Addition on account of excessive commission paid to agents - Held that:- Irrespective of the price at which the Assessee sold the soda ash to the customer, the rate of the commission payable to the agent was constant at INR 200/MT. During F.Y. 2010-2011, the Assessee sold a total of 5205 MT of soda ash. During the relevant period of December 2010 to March 2011 (i.e. when agents were hired), the Assessee sold 1085 MT of soda ash and therefore made a total payment of INR 2,17,000 (1085 MT x INR 200/MT) as commission. In F.Y. 2011-2012, the Assessee continued to use the agents it had hired for the entire year as opposed to the 4 month period in the previous year and the Appellant sold 4959 MT of soda ash and continued to make payment at the pre-agreed commission rate of INR 200IMT, which amounts to INR 9,91,800/- as commission. As evident from above, the hiring of agents resulted in an increase of approximately INR 45 Lakhs. In fact, during F.Y. 2010- 2011 (including December 2010 to March 2011), the average return of the Appellant on each MT of soda ash was approximately INR 11,066 (i.e. INR 5.76 Crore earned for the sale of 5205 MT). In contrast, due to the services provided by the agents, the average return of the Appellant on each MT of soda ash was approximately INR 12,522 (i.e. INR 6.21 Crore earned for the sale of 4959 MT). This is an increase of about INR 1,450 per MT of soda ash. From the above, the A.O. used a wholly baseless and erroneous calculation to determine the percentage of commission by dividing the commission paid by the total sales and not take into account the factors mentioned above. In view of the above there is no ground or basis for any disallowance - Decided in favour of assessee.
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2017 (8) TMI 225
Transfer pricing adjustment - difference in Arm’s Length Price (ALP) of the international transaction relating to IT enabled services - selection of comparabale - Held that:- The assessee is wholly owned subsidiary of Exl Holdings and was engaged in business of rendering of transaction processing services and internet & voice based customer care services for its worldwide clients. The assessee furnished TP study and selected TNMM as the most appropriate method to benchmark its international transaction, namely, Information Technology enabled (ITes) services, thus functionally dissimilar with that of assessee need to be deselected from final list of comparability. Transfer pricing adjustment on interest on delay in receipt of receivable from associated enterprises - Held that:- In the present case, it is an admitted fact that the receivable represented continuing debit balances and revealed that the payment, even though due had not be made by the debtor. However, the exact nature of the receivables is not clear. It is not clear as to whether these receivables represented lending or guarantee or these were against the sales or advance or represented the deferred payments. So, in the absence of clear facts on record, we are unable to reach at a just conclusion. We, therefore, deem it appropriate to remand this issue back to the file of the AO/TPO for fresh adjudication in accordance with law by providing due and reasonable opportunity of being heard to the assessee and by considering the various decisions cited by both the parties, mentioned in the former part of this order. Disallowance of differential depreciation of Voice Recording Software License- Held that:- Direct the AO to allow the claim of the assessee for depreciation @ 60%. See CIT Vs BSES Yamuna Powers Ltd.[2010 (8) TMI 58 - DELHI HIGH COURT] Addition u/s 14A - Held that:- In the present case, it is not clear as to whether the AO had considered the only investment which yielded the exempt income or the entire investment made by the assessee. It is also not clear as to whether the investments were made by the assessee in the shares of subsidiary company out of commercial expediency. We, therefore, in the absence of the clear fact on record, deem it appropriate to set aside this issue back to the file of the AO/TPO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. MAT computation - addition u/s 14A - Held that:- We direct the AO to exclude the amount of adjustment made u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962 while computing the book profits u/s 115JB of the Act See Pr. CIT Vs Bhushan Steel Ltd. [2015 (9) TMI 1424 - DELHI HIGH COURT] Addition u/s 69C - Held that:- In the present case, it appears that during the course of assessment proceedings, the assessee was unable to produce the relevant documents in support of its claim. However, during the course of proceedings u/s 201(1)/201(1A) of the Act, the transaction was fully explained and clarified in detail. We, therefore, deem it appropriate to set aside this issue back to the file of the AO for verification and adjudication afresh. Deduction u/s 10A/10B in respect of income from sale of scrap - Held that:- The receipt from sale of scrap beng part & partial of the activity and being proximate thereto would also be within the ambit of gain derived from the industrial undertaking. We, therefore, do not see any infirmity in the directions of the ld. DRP on this issue and as such do not see any merit in the appeal of the department on this issue. See CIT Vs Sadhu Forging Ltd. [2011 (6) TMI 9 - DELHI HIGH COURT ] Disallowance proposed by the AO on account of depreciation on goodwill - Held that:- In the present case, it is noticed that the DRP directed the AO to allow the depreciation on the goodwill by following the decision of the ITAT wherein the case of CIT Vs Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] and the of Areva T&D India Ltd. Vs DCIT [2012 (4) TMI 79 - DELHI HIGH COURT] has been followed. We, therefore, by considering the totality of the facts, do not see any valid ground to interfere with the findings given by the ld. DRP on this issue.
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2017 (8) TMI 224
Validity of reopening of assessment - proof of tangible evidence or material in respect of any undisclosed income - non application of mind by AO - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. The reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Income Tax Department. Thus the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. See Signatures Hotels (P) Ltd. Vs. ITO (2011 (7) TMI 361 - Delhi High Court) and CIT vs. G&G Pharma India Ltd. (2015 (2) TMI 104 - ITAT DELHI) - Decided in favour of assessee.
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2017 (8) TMI 223
Revision u/s 263 - tds credit issue non examination by AO - Held that:- In the present case when the AO had noticed that there was a claim for credit of TDS on a sum of ₹ 74,19,860/- he is duly bound to examine whether the said sum has been offered to tax or not. Failure to do so by the AO renders the assessment order erroneous and prejudicial to the interest of the revenue and it is not the case of the appellant that this issue was examined by the AO during the course of regular assessment proceeding nor the appellant made any effort to demonstrate before us that any enquiry was caused by the AO during the course of assessment proceedings on this aspect. Therefore, it was held by the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd., Vs. CIT [2000 (2) TMI 10 - SUPREME Court] that non examination of an issue by the AO renders the assessment erroneous and prejudicial to the interests of the revenue and even in the decision of the jurisdictional High Court in the case of CIT Vs. Infosys Technologies Ltd. [2012 (1) TMI 76 - KARNATAKA HIGH COURT ] is squarely applicable to the fact of the case. We may add here that the learned CIT had only set aside the issue for denovo examination by the AO, which is permissible as per the decision of the jurisdictional High Court in the case of Infosys Technologies Ltd. - Decided against assessee.
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Customs
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2017 (8) TMI 207
Jurisdiction - power to allow refund of the warehousing charges - Whether the CESTAT was justified in holding that the Respondent was not liable to pay rent/warehousing charges in view of the fact that the ownership of the goods remained with it? Held that: - It is plain from the impugned order of the CESTAT, that there is no mention of the provision of law in terms of which the CESTAT has granted relief to the Respondent. This is a matter for concern since the CESTAT is a statutory tribunal. It derives its powers and jurisdiction from the specific provisions of the statutes it deals with, one of which, in the context of the present appeal, is the Customs Act 1962 (CA). Likewise, the Assistant Commissioner of Customs (Preventive) and the Commissioner of Customs (Appeals), have all to function within the scope of their powers as conferred by the CA. It is possible that in the exercise of such powers, they may have to refer to and/or apply other relevant statutory provisions. It is also possible that in terms of the specific provisions of the CA, they may have certain discretionary powers. But even these have to be exercised reasonably and within the ambit of the CA. In no instance can they perform their adjudicatory functions outside the scope and ambit of the enumerated powers under the concerned statutes. There appears to be no specific provision in the CA or the rules thereunder which contemplates refund of warehousing charges. The Court has also not been shown any regulation or circular which permits an application to made to an officer of the Customs exercising powers of adjudication powers, to entertain and grant the prayer for refund of warehousing charges. There is no provision in the CA or any other law that enabled the CESTAT to grant such a relief - appeal allowed - decided in favor of Revenue.
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2017 (8) TMI 206
Confiscation - valuation - job-work - Held that: - The adjudication held that the goods were confiscable under Section 113 of the Customs Act, 1962, when mis-declaration of value of export was established under Section 50(2) of the Customs Act, 1962. Accordingly, adjudication holding overvaluation is established. Penalty - Held that: - there is no basis for reduction in the quantum of penalty. Redemption fine - Held that: - When there is confiscation directed under Section 113 read with Section 50 of Customs Act, 1962, redemption fine is imposable and that shall be ₹ 3 lakhs. Appeal allowed - decided in favor of Revenue.
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2017 (8) TMI 205
Classification of imported goods - CD Rom drive - classified under CTH 84717060 or under sub-heading 84717090 - N/N. 6/2002-CE dated 01/03/2002 - Held that: - law is well settled that grant of the notification calls for coverage of goods strictly within the scope of the entry embracing the goods within its fold - In the present case the appellant imported CD-RW of different specifications, which is the storage device falling under heading 84717090. The family of CTH 8471.70 comprise seven goods of the nature described therein from CTH 84717010 to 84717060. CD-Rom drive is only eligible to exemption under the notification aforesaid. This being a specific grant, its scope cannot be expanded to cover an alien within its fold. The appellant fails to succeed because of the specific coverage of prescribed goods by the notification not covering the goods imported. Therefore, CD Rom being distinguishable by its very existence in the CTH 84717090 from 84717060 - appeal dismissed - decided against appellant.
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2017 (8) TMI 204
Suspension of CHA licence - limitation prescribed by CBLR 2013 - SCN for enquiry has been initiated on 20/04/2017 i.e. after two year of receipt of the offence report - Held that: - Time is essence to complete proceeding initiated under the CBLR 2013 - Hon'ble High Court of Madras analysing the basic provisions relating to limitation, in the judgment of Saro International Freight System v. Commissioner of Customs [2015 (12) TMI 1432 - MADRAS HIGH COURT] came to the conclusion in para 23 to 28 of the judgment that adherence to the time-limit prescribed by the CBLR 2013 was mandatory - It is the anxiety of the Court that when the limitation prescribed by Regulation is not followed, that causes prejudice to the interest of justice. The date-chart depicted at the outset inevitably leads to the conclusion that after more than a year of receipt of offence report proceedings against the CHA having been initiated, dehors the law, action of the authority shall be said to be an empty formality and shall not see the light of the day. Order of suspension is revoked - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 203
Benefit of Advance Licence - denial of benefit on the ground that transferor availed CENVAT credit on inputs procured from the domestic market for manufacture of export goods - Held that: - Mere availment of credit is not sufficient to invoke the provisions of section 111 of Customs Act, 1962. The goods could not have been held to be liable for confiscation without evidence of post-importation conditions having been breached - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (8) TMI 200
Oppression and mismanagement - petition under Sections 397, 398, 402, 403 and 405 of the Companies Act, 1956 - Held that:- We find that the acts of respondents were neither burdensome nor harsh. Even suppose that there were lack of confidence between the Petitioner (Minority) and the Respondents (Majority), but the said lack of confidence did not spring from oppression by the respondents against the petitioner. Moreover, it was the petitioner who left the company at his own will. The respondents have not flouted the provisions of the Companies Act, 1956/2013 and they have been able to refute appropriately the allegations levelled by the petitioner pertaining to sale of the web portal of the 1st Respondent Company. It is well settled that a single act of financial mismanagement does not have the continuous effect which is necessary for granting relief under the provision of Sections 397 and 398 of the Companies Act, 1956. Moreover, the commercial mismanagement does not amount to oppression, therefore, the same does not require judicial interference.herefore, it would not be just and equitable to declare that the acts of the Respondents are oppressive and constitutes mismanagement. In connection with the allegations of shifting of Registered office of the 1st Respondent company, the Respondents have given a plausible explanation i.e. Office was housed on the basis of lease and licence agreement that expired in October, 2014, and further to curtail the cost, the office was relocated for cheaper accommodation and the same was intimated to the concerned Registrar of companies. Therefore, a bona fide shifting of the registered office of a company causing no loss to the company does not amount to mismanagement
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Service Tax
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2017 (8) TMI 222
Reverse Charge mechanism - service received by them from the foreign based service provider - taxability - Held that: - For the purpose of levying service tax on the services provided from outside India and received in India, section 66A was enacted wherein Taxation of Services (Provided from outside India and received in India) Rules, 2006 was issued. In the present case the technical testing and analysis was provided wholly in a country outside India, therefore by virtue of Rule 3 clause (ii) the said service is not liable to service tax. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 221
Business Auxiliary Services - whether the sale and purchase of SIM cards, recharge coupons, starter packs would amount to business auxiliary service? - Held that: - similar issue settled by the judgment in the case of The Commissioner of Central Excise Versus M/s. Bharat Cell [2015 (10) TMI 1111 - MADRAS HIGH COURT], where Decision made in the case of G.R. Movers vs. Commissioner of Central Excise, Lucknow [2013 (6) TMI 339 - CESTAT NEW DELHI] followed and it was held that there is no business auxiliary service and the demand is set aside. Amount reflected in the credit notes issued by M/s. VCL to appellant - demand - Held that: - these are nothing but reimbursable expenses - issue stands covered by the decision in the case of Commissioner of Service Tax Versus M/s. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission. Margin earned by the appellant for outright purchase and sale of pepsico products - demand - Held that: - It is not disputed that the appellants in these appeals have discharged VAT on the products sold by them. Therefore, the department cannot demand service tax basing upon the distribution agreement entered into with M/s. Pepsico Holdings (India) Pvt. Ltd. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 220
Commission received - business of providing service of booking air travel tickets - basic fare - interpretation of the word basic fare - The basic allegation is that appellant has not discharged service tax on the supplementary commission received by them. Held that: - It is not seen stated either in the show cause notice or in the Order-in-Original whether the appellant has received from the Customer ₹ 13,500. On behalf of the appellant the Learned Counsel has explained that such basic fare is not the price at which the ticket is sold to the customer and that appellant has not received any amount in the manner of supplementary Commission. The worksheet produced by the appellant also shows that the appellant has not received any such supplementary commission. However, this aspect has to be verified with the accounts/records of appellant before entering into a conclusion. For this, the matter requires to be remanded. Section 67 of the Finance Act, 1994 provides that value of taxable services includes the commission received by air travel agent from the airline, and does not include the airfare collected by air travel agent in respect of service provided by him - N/N. 20/97 dated 26.06.1997 makes it clear that basic fare means, that part of the fare on which commission is normally paid to the travel agent by the airlines. Therefore it needs to be verified as to what is the actual commission received by the appellant. In a similar issue the Tribunal in the case of Aero World Travels Vs CCE, Jalandhar [2005 (2) TMI 7 - CESTAT (NEW DELHI)] observed that Revenue was in error in treating the printed fare on the tickets as basic fare. This indicates that the word basic fare used by IATA in their BSP statement and the basic fare used in Notification 20/97 dated 26.06.1997 may not be the same. The matter requires to be remanded to the original authority who shall verify as to the quantum of actual commission received by appellant - appeal allowed by way of remand.
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2017 (8) TMI 219
Refund claim - N/N. 41/2007-ST dated 06.10.2007 - Transportation Charges - denial on the ground that these are not used for export of goods - Held that: - the goods which has been exported by the appellant are required to be stuffed in the containers only and containers are available at port, therefore, the transportation of empty containers from port to their factory is a service received by the appellant for export of goods, therefore, on the said services, the refund claim cannot be denied as the same has been used by the appellant for export of goods. Refund claim - Inland Haulage Charges - denial on the ground that the condition of Rule 4(A) of the Service Tax Rules has not been met out by the appellant - Held that: - as per CBEC circular No.112/6/2009 dated 12.03.2009, it has been clarified that merely, the procedural lapse on behalf of the service provider, the refund claim cannot be denied to the exported of goods when it has been established that the service has been used by the appellant for export of goods, therefore, the refund claim on this ground cannot be denied. Refund claim - Terminal Handling Charges - storage - denial on the ground that these are not port services - Held that: - services has been used by the appellant at port for export of goods, therefore, any services received at port is covered under port services, therefore, the appellant is entitled to the benefit of refund claim on the above services. Refund claim also denied on the ground that the appellant is claiming drawback on the goods exported - Held that: - similar issue decided in the case of M/s Shahi Exports Pvt. Ltd. Versus CCE, Delhi-IV [2017 (3) TMI 1543 - CESTAT CHANDIGARH], where it was held that the refund claim filed by the appellant cannot be rejected on the ground that the appellant has claimed drawback on specified services - refund allowed. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 218
Refund claim - Rule 5 of CCR, 2004 - rejection on the ground that the appellants have not debited cenvat amount in their cenvat account before filing the refund claim - Held that: - it is not under dispute that the appellants on 29.01.2016 intimated to the department after debiting the said amount - if the condition is complied with before disposal of the refund claim, there was no reason for rejecting the claim only on the ground that the amount debited subsequently to the filing of the refund claim. The accumulated cenvat credit for which the refund was sought for was very much lying unutilized in the cenvat account. Belated debit cannot come in the ways of sanctioning the refund claim - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (8) TMI 217
Clandestine removal - undervaluation - plastic bags - The main allegation raised against the appellant is that they received orders from their customers for supply of plastic bags and such orders were placed on weight basis after specifying the size, thickness of the bag. Though the orders were placed on the basis of size and thickness and weight of the bags which was noted by appellants on chits, the appellants raised invoices to customers for lesser value on the basis of the quantity shown in numbers. Held that: - it is pertinent to mention that the appellants have not come forward with a plausible explanation as to why they have not mentioned the size and thickness of the plastic bags in the invoices/cash bills when they have mentioned the size and thickness of the bags in the chits. It is admitted by appellants that they were noting down the size and thickness and the corresponding value while orders are placed by the customers. Such chits have been recovered by the department from the sale office of appellant unit. These when compared with the invoice have brought to light that there is much undervaluation by not mentioning the size and thickness of the bags. The appellants have mentioned the quantity of the bags in numbers and have applied the rate for number of bags thereby showing a lesser value for the bags cleared by them. It is also brought out from the evidence from dealers / purchasers like Jegan and MR Plastics that the appellants have cleared plastic bags by issuing chits only and not issuing any invoice or cash bills at all. Such clandestine removal of finished product is unearthed from the evidence collected at the end of transporters also. Thus, we have to say that the department has been able to establish clandestine clearance on the part of the appellants. Quantification of clearances - Held that: - the demand is confirmed for the period 2003 04 to 2004 05 (upto 1.11.2005) when the value of clearances exceeded one crore. Therefore, we do not find any ground to doubt or interfere with the quantification of duty also. Extended period of limitation - Held that: - The facts and evidence establish that appellants have indulged in undervaluation and unaccounted clearances with an intention to evade payment of duty. The same would not have come to light but for the investigation conducted by department - invocation of extended period justified. Appeal dismissed - decided against appellant.
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2017 (8) TMI 216
Valuation - MRP Based valuation - it was seen that the appellant had adopted different prices for different branches / areas where the washing machines are to be sold and thus appellants had discharged duty liability on different assessable value - Held that: - The consumer cannot be charged a price higher than the MRP. Assessment value of such commodities for the purpose of discharge of Central Excise duty is governed by the provisions of Section 4A of the CEA, 1944. There is no allegation in the SCN that the appellants have altered the MRP. There is also no allegation or evidence that the goods which were transferred from lower MRP to higher MRP branches, they were sold to customers only on the higher MRP. This being so, there is a clear observation and finding in the impugned order by Commissioner (Appeals) that the appellants have altered the MRP and therefore is liable to pay differential duty which in our view is factually wrong - where retail sale price declared on the packet is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price. The said amendment having come into effect on 14.5.2003, the demand made for the period prior to 13.5.2003 is not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 215
Penalty u/s 11 AC - demand of duty with interest - valuation - MRP Based valuation on the basis of retail sale price - It is the case of the department when four litre cartons are sold to restaurants and canteens, the valuation has to be adopted under section 4 of Central Excise Act, 1944 and the provision of section 4A would not be applicable - valuation as per section 4 of Central Excise Act, 1944 or under section 4A of Central Excise Act, 1944? - Held that: - during the relevant period, the decision in the case of Jayanti Food Processing Pvt. Ltd. [2002 (1) TMI 104 - CEGAT, COURT NO. I, NEW DELHI] was in favor of the assessee as per the decision rendered by the Tribunal. There was also doubts and confusions with regard to the valuation to be made in case of goods which are sold on the basis of MRP - the appellant had adopted valuation under section 4A relying upon the decision of the Tribunal prevailing at the time. SSI exemption - use of brand name of others - Held that: - The Trademark belongs to Shri Pichai Rajagopal who is also partner in M/s. Saravana Dairy Products since the appellants are not eligible for exemption as the value of clearances exceeds one crore when assessed under Section 4 of Central Excise Act, this issue is not dealt with. The learned consultant did not advance any argument on this second issue. There are no sufficient grounds for imposition of penalty under section 11AC of the Central Excise Act - duty demand with interest upheld - appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 214
Job-work - N/N. 214/86 dated 25.03.1986 - Jurisdiction to issue SCN - M/s RIBL who is located at parwanoo in the state of Himachal Pradesh have filed an undertaking in terms of N/N. 214/86 dated 25.03.1986 before the Assistant Commissioner having jurisdiction over M/s Triveni and sent the raw material to M/s Triveni who after doing job work cleared the plastic bottles to M/s RIBL without payment of duty - Whether duty be demanded from M/s RIBL through M/s Triveni or not? - Held that: - we do not find any provision in Central Excise law to demand duty from M/s RIBL through the job work - demand set aside. Whether The Additional Commissioner of Central Excise, Rohtak is having jurisdiction to issue SCN? - Held that: - the show cause notice has been issued by the Additional Commissioner of Central Excise, Rohtak, who is not having jurisdiction over M/s RIBL. Whether the extended period of limitation is invocable or not? - Held that: - As the demand is not sustainable on merits as well as on jurisdiction. Therefore, we are not going into the issue of limitation. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 213
Valuation - freight and transportation charges - includibility - Held that: - whether the transportation cost shown separately in the invoice or charged separately by way of commercial invoice or debit note, the nature of the transportation cost is not under dispute - merely because the transportation cost is not shown separately in the invoice cannot be the reason for denying the exclusion of the same from the assessable value - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 212
Requirement of pre-deposit - clandestine removal - broken rice, rice bran and basmati rice - Whether this Tribunal has inherent power to grant interim protection against imposition of such condition of mandatory pre-deposit for hearing the appeal on merits under section 35F of the Act or not? - Held that: - the provisions of Rule 62(5) of Punjab VAT Act, 2005, and Section 35(F) of Central Excise Act, 1944 are pari materia and the Hon'ble High Court held that the appellate authority has the inherent power to entertain the prayer of waiver of pre-deposit despite mandatory provisions of pre-deposit - this Tribunal is having inherent power to grant interim protection to the applicant - decided in favor of applicant. Whether the applicants are having prima facie case for waiver of pre-deposit or not? - Held that: - there are significant differences in the wording, scheme of pre-deposit and onerousness between Section 62 of the Punjab Vat Act and Section 35F of the Central Excise Act. Besides, object, incidence of duty and scheme of law of the two Acts are different - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member. Matter placed before Hon'ble President.
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2017 (8) TMI 211
Clandestine removal - opportunity to cross-examine - Held that: - From the reading of the above Section 9D, it is observed that even if the assessee does not seek a cross-examination but if he does not accept the statement given by some other person. It is incumbent on the adjudicating authority to conduct cross examination of the persons whose statements are to be used against the assessee. Without cross-examination the statements cannot be used for establishing a charge of clandestine removal - matters remanded to the adjudicating authority for passing a fresh order after cross-examining the witnesses - appeal allowed by way of remand.
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2017 (8) TMI 210
Benefit of N/N. 64/95-CE dated 16.3.1995 - steel bars and rods were supplied to Vikram Sarabhai Space Centre (VSSC) - case of appellant is that the goods in question being the components of the assembly of the system and sub-system of the launch vehicle, the exemption cannot be denied - Held that: - When the order of the Commissioner (Appeals) is perused, it is very clear that he has understood what were the goods cleared by the appellant while recording the categorical facts in para 6 of his order. He has understood the object of Sr. No. 7 in the Table appended to the Notification No. 64/05-CE dated 16.3.1995. He has further understood that the bars and rods cleared by the appellant does not subscribe to the Entry No. 7 of the Notification. He therefore opined that mere reliance of the appellant on the certificate of VSSC, shall not grant exemption from duty to the appellant. Time limitation - Held that: - Grant of benefit of a notification is made at public cost. Grant of benefit is an exception. Therefore entry of exemption is strictly construed. A claimant does not get liberal consideration without satisfying primary condition of grant. Without strict compliance to the legislative mandate, appellant has liberally claimed exemption. Therefore, finding of the appellate authority on the time bar is confirmed. Order of the learned Commissioner (Appeals) upheld - appeal dismissed - decided against appellant.
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2017 (8) TMI 209
CENVAT credit - whether the CENVAT Credit on the capital goods at the time of debonding can be allowed to the appellants or not? - Held that: - The Commissioner has given the finding that it would have been a case of premature debonding had the debonding been done before the dates indicated in the LOP issued by the Development Commissioner. We find that this interpretation of Ld. Commissioner is erroneous because once DGFT had given extensions in both the cases, extended period for bonding was relevant for this purpose and the debonding has to be viewed in terms of the duly extended date by the competent authority. Board Circular 185/19/96-CES dt. 19.03.1996 was superseded by the N/N. 35/2008-CE (NT) dt. 24.09.2008 - In these appeals, the debonding took place in July, 2007 and credit was taken in November, 2007. Hence, they are eligible for the benefit of the circular. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 208
CENVAT credit - GTA Service - place of removal - It was alleged by the department that the service of outward transportation of GTA was rendered beyond the factory gate which is the place of removal in the appellant’s case and therefore the said outward transportation of GTA service was not the input service for the purpose of taking CENVAT Credit - Held that: - the issue of input service credit on the output transportation for the period prior to 01.04.2008 is no longer res integra and is squarely covered by the judgment of the Hon’ble Karnataka High Court in the case of CCE & ST Vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT], where it was held that Credit of service tax paid on outward transportation allowed prior to 1.4.2008 In para 7, it is mentioned that the period is 01.01.2007 to 31.07.2007, for which the appellant has produced the transit insurance policies. The insurer has certified that the two policies cover the risk of raw material as well as the finished goods removed from the appellant’s factory. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (8) TMI 202
Revision of assessment - change of opinion - burden to prove - Held that: - the notice proposing to revise the assessment dated 29.04.2004 is selfish on account of change of opinion as there was a change of the Assessing Officer - the objections given in the instant case is sufficient to discharge the initial burden of proof and if the respondent displaces the documents, then the burden is on the respondent to prove the same. The petitioner cannot be called upon to prove the negative - petition allowed - decided in favor of petitioner.
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2017 (8) TMI 201
Revision of assessment - Section 55 of the TNGST Act - 'C' Forms - petitioner preferred an appeal before the appellate authority and when the appeal was heard, the petitioner produced two 'C' Form declarations covering the taxable turnover of ₹ 1,64,790/- and requested to direct the assessing officer to accept the same and pass fresh orders allowing concessional rate of tax on the said turnover - whether the respondent could have invoked the powers under Section 55 of the TNGST Act for issuing the impugned notice? - Held that: - Section 55 of the TNGST Act deals with powers to rectify any error apparent on the face of the record. This power is exercisable by the assessing authority or the appellate authority or the revisional authority within five years from the date of any order passed by it and rectify any error apparent on the face of the record. The proviso provides that if the rectification has the effect of enhancing the assessment or any penalty, notice to the dealer has to be issued and he should be allowed reasonable opportunity of being heard. The scope of the said Section was under considerable debate in a long line of decisions and as of now, it is a fairly well settled proposition that the scope of review is different from that of rectification as the review permits re-writing of the order for re-hearing of the case and in that, the important facts not available earlier, could be taken into account - the mistakes which will not fall within the parameters mentioned above, can only be rectified by filing an appeal or revision and this would equally apply when the matter pertains to the jurisdiction of the authority or validity of law. In certain cases, the writ Courts have entertained challenge to such orders in exercise of its powers under Article 226 of the Constitution of India. Equally well settled is the legal position that a mere change of opinion or facts even if new facts come to notice, cannot be a ground for reopening much less a case for rectification - decided in favor of the dealer and against the revenue. What is the other remedy available to the revenue in case they are of the opinion that the revised assessment orders are prejudicial to the interest of revenue? - Held that: - The only power available for the Department is to invoke Section 32 of the TNGST Act, which deals with special powers of the Deputy Commissioner which gives suo motu jurisdiction to the Deputy Commissioner and the Joint Commissioner, respectively to scrutinize the orders of the assessing officer passed under various Sections subject to the conditions which are stipulated in the said provision. This Court has no hesitation to hold that the impugned notice issued by the assessing officer invoking Section 55 of the TNGST Act is without jurisdiction - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (8) TMI 198
Offence under Negotiable Instrument Act - scope of the enquiry carried on by this Court under Section 482 of Cr.P.C - Held that:- In view of the factual matrix of the case and admissibility of the certain documents alleged to have been executed by the accused namely legal notice dated 03.05.2013 issued by the first accused wherein, he admitted the liability and the truth and genuineness of the letter of undertaking which is alleged to have been given by the second accused for the first accused are all can be gone into only by the trial Court and therefore, this Court is of the considered view that the contention of the learned counsel for the petitioner that the present being petitioners are not signatory to be cheque and hence, the proceedings against that needs to be quashed cannot be entertained at this stage, in view of factual matrix of the case. In view of the aforesaid of the facts of the case and documents relied upon by the respondent/complainant herein. The truth and genuineness of the documents relied upon by the respondent/complainant can only be gone into at the time of trial before the trial Court and with these observations, this Court is of the considered view that this Criminal Original Petition as devoid of merits and same is rejected. It is open to the petitioners/accused 3,4,and 6 to raise objections as to the admissibility and reliability of the documents filed by the respondent/complainant before the trial Court and it is hereby made clear that observations made in the preceding paragraphs is only for a limited extent to determine the issue involved in this case and trial Court shall proceed with a trial without being influenced by the observation of this Court in the preceding paragraphs.
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