TMI Tax Updates - e-Newsletter
August 9, 2016

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Refund of unutilized Cenvat credit - closure of factory - due to suffering heavy losses, production was stopped - refund allowed - Tri

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• Penalty u/s 271F - Co-operative Society will not be fully justified in taking a stand that they will not file their return of Income - HC

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Articles

1. Buyback of Shares – A Judiciary Prospective

   By: Mandar Rane

News

1. Legislative competence of the state to levy Entry Tax on import of goods from outside India - inadequacy of pleadings. - Strong Observations from the Court

2. Surging growth in Electronic filing of Income Tax Returns for Financial Year 2016-2017; Over 226.98 Lakh e-returns filed as on 5th August 2016 in F.Y. 2016-17 as compared to 70.97 Lakh for the same period in FY 2015-16

3. RBI Reference Rate for US $

Highlights / Catch Notes

Income Tax

• Ahmedabad Tax Authority Reopens Assessment Due to Bogus Purchases, Citing Section 148 of the Income Tax Act.

  Case-Laws - HC : Reopening of assessment - information has been received by DGIT (Inv.) branch of Ahmedabad about bogus purchases - the authority is justified in issuing notice under Section 148 of the Act and the reasons based upon it are sufficient enough to permit the authority to exercise jurisdiction to reopen the assessment. - HC
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• Reassessment Justified: Authority Can Reopen Tax Assessment u/s 148 Based on DGIT Investigation Info.

  Case-Laws - HC : Reopening of assessment - reasons to believe - information received from the DGIT, Investigation Branch - it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under Section 148 of the Act to reopen the assessment - HC
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• High Court Rules Against Society for Unjustified Non-Filing of Income Tax Return; Faces Penalty and Prosecution u/ss 271F & 276CC.

  Case-Laws - HC : Penalty proceedings u/s 271F and prosecution u/s 276CC - the petitioner-Society will not be fully justified in taking a stand that they will not file their return of Income - HC
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• High Court Affirms Tax Exemption for Manufacturing By-Products u/s 10B of Income Tax Act.

  Case-Laws - HC : Eligibility for the benefit of Section 10B - the scrap and spent solution are part of the manufacturing process - exemption allowed - HC
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• Forfeited advance exceeding asset cost is taxable in current year; acquisition cost is NIL for capital gains calculation.

  Case-Laws - AT : Forfeiture of advance received against capital asset - Since the forfeiture amount is more than the cost of asset, the excess amount of forfeiture has to be brought to tax in the present year - and in the year of sale of that property, cost of acquisition should be taken at NIL to compute Capital Gain - AT
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• Section 12AA Registration: Dissolution Clause and Fundraising for Main Objectives, No Overseas Activities Indicated.

  Case-Laws - AT : Registration under S.12AA - dissolution clause - incidental objects - such clause primarily enables the assessee to raise funds to attain the main objects of the company. It does not give any impression that the assessee shall carry out its activities outside India. - AT
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Customs

• Pending Demands and Appeals Abated After Company Liquidation; All Related Matters Must Be Closed.

  Case-Laws - AT : Maintainability of demand after the Company wound up – liquidator appointed – company wound up – appeals abated - all matter to be closed. - AT
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Service Tax

• Cenvat Credit Denied for Service Tax on GTA Services Claimed as Reimbursement for Business Auxiliary Services.

  Case-Laws - AT : Cenvat credit – credit of service tax paid on GTA service while claiming the same as re-reimbursement of expenses for providing Business auxiliary services - credit not allowed - AT
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• Cenvat Credit Allowed for Service Tax on Sales Office Rent: Sales Office Qualifies as Place of Removal.

  Case-Laws - AT : Cenvat credit - Service tax paid on immovable property rent on sale office - whether related to post removal of goods or not - place of removal - credit allowed - AT
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• Cenvat Credit Approved for Construction Services Linked to Manufacturing and Product Clearance.

  Case-Laws - AT : Cenvat credit - Commercial and industrial construction service - The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal - credit allowed - AT
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Central Excise

• Court Rules Fabric Clearance with Duty Paid Equals Cenvat Credit Reversal When Processing Isn't Manufacturing.

  Case-Laws - AT : Cenvat Credit - payment of duty where processing is not amounting to manufacture - they had cleared the fabrics cut to required sizes - payment of duty which was not less than cenvat credit taken on the fabrics - whether amount to reversal of credit - Held Yes - AT
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• Factory Closure Leads to Refund of Unutilized Cenvat Credit After Surrender of Registration Certificate.

  Case-Laws - AT : Refund of unutilized Cenvat credit - closure of factory - due to suffering heavy losses, the appellants stopped their production - surrender of registration certificate - refund allowed - AT
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• Duty Payment Required When Business Transitions from Proprietorship to Partnership and Company, Successor Entity Liable for Duty Payment.

  Case-Laws - AT : Who is liable to pay duty - conversion of proprietorship to partnership firm and then from partnership firm into company - when all the liabilities and assets are transferred, succession becomes liable to pay duty - AT
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• Assessee's Cross-Objections Recognized as an Appeal by Commissioner (Appeals.

  Case-Laws - AT : Whether the cross-objections filed by the assessee before Commissioner (Appeals) can be considered to be an appeal or not - Held Yes - AT
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• Central Excise Law: MODVAT Credit Refunds for Exports Face Challenges Due to Undefined Relevant Date in Section 11B.

  Case-Laws - AT : Refund of modvat credit - admissibility - period of limitation - accumulation of credit due to export of goods - u/s 11B, the relevant date for such type of refund, is not specified. - in the absence of any relevant date, limitation period could not have been calculated by the original authority - AT
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• Cenvat Credit Allowed Only If Original Duty-Paying Document Is Shown to Adjudicating Authority for Examination Under ISD Rules.

  Case-Laws - AT : Cenvat credit - Distribution of credit by the ISD - cenvat credit allowed subject to the condition that the original duty paying document, on the basis of which Service Tax credit was taken, should be produced before the Adjudicating Authority for perusal - AT
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• Cenvat credit applies to capital goods used for exempted products; choose the most advantageous notification for eligibility.

  Case-Laws - AT : Cenvat Credit on capital goods - use of capital goods in the manufacturing of exempted goods - when two notifications available to assesse he can opt for most beneficial one - capital goods cannot be treated as having been used exclusively in the manufacture of exempted goods - AT
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• Cigarette Manufacturer Exceeds 50% Capacity, No Need for Physical Control by Jurisdictional Officers per Trade Notice.

  Case-Laws - AT : Applicability of trade notice dated 24.02.2014. - Requirement of physical control on the unit by jurisdictional officers on cigarette manufacturing unit - appellant is working more than 50% capacity in manufacture of cigarettes. Trade notice not applicable. - AT
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• Job Worker Entitled to Cenvat Credit u/r 3 Despite Exemption in Notification No. 214/86-CE.

  Case-Laws - AT : Availability of cenvat credit on the services availed by job worker exclusively manufacturing the goods on behalf of respondent while availing exemption under Notification No. 214/86-CE - Rule 3 of Cenvat Credit Rule 2004 - credit allowed - AT
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VAT

• Goods Transport Premises Sealed for Violating Legal Provisions; Disciplinary Action Ordered Against Involved Officers.

  Case-Laws - HC : Sealing of the premises of the transporters of goods of dealers - There has been a wilful violation of the statutory provisions by the officers concerned. They have acted not only in ignorance of the law but in violation of the statutory requirements - disciplinary action to be taken - HC
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• Manufacturers can claim entry tax credit, but must fulfill tax obligations to argue revenue neutrality.

  Case-Laws - HC : Revenue neutral exercise - Credit of entry tax paid is available to manufactures - Unless the petitioners discharge their tax liability at their instance, no consideration to the plea of revenue neutrality - HC
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• Challenge to Trade Restrictions Under Article 301: High Court Examines VAT and Sales Tax Regulation Amendments.

  Case-Laws - HC : Restriction on freedom of trade - violation of the mandate of Article 301 of the Constitution of India - the petitioners have not anywhere pleaded that even after the State amended the statutes and provided for a scheme of refund / rebate / set off, the so-called barrier still continues, or another barrier has been created - HC
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• Maharashtra's Authority to Levy Entry Tax on Imported Goods Upheld; Constitutional Validity Confirmed.

  Case-Laws - HC : Levy of entry tax - legislative competence of the state of Maharashtra - the State is not denuded of its power to impose entry tax on the import of goods from outside the country - Constitutional validity upheld - HC
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• Entry Tax Applies to Goods for Use, Sale, or Consumption Locally, Regardless of Origin State or Country.

  Case-Laws - HC : Levy of entry tax – so long as the import for consumption, use or sale within the local area attracts the levy, it is immaterial whether the goods originally arrived from outside the country or from another state within the country. - HC
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• Assessment Revision Under HVAT Sections 40, 28, 31 Must Conclude Within 5 Years of Original Order.

  Case-Laws - HC : Revision of assessment after 5 years - period of limitation - section 40 r.w.s. 28 & 31 of HVAT - Revision proceedings must conclude within 5 years from the date of order. - It is not merely initiation of proceedings for revision. - HC
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• Court Orders Re-adjudication of TIN Cancellation Case Due to Violation of Natural Justice Principles, No Notice Given.

  Case-Laws - HC : Validity of cancellation of TIN registration number - merit of the case not examined – principle of natural justice - GVAT - no notice either in form No.104, or any other manner was issued to the petitioner why the registration should not be canceled - matter to be re-adjudicated - HC
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Case Laws:

• Income Tax

• 2016 (8) TMI 281
  Reopening of assessment - information has been received by DGIT (Inv.) branch of Ahmedabad about bogus purchases - Held that:- two survey operations were carried out by the competent authority, Kolkata in case of Vikrant Kayan and Arvind Kayan and the information which has been gathered is that these Kayans are well known entry operators of Kolkata and have been giving entires of bogus share capital, bogus billing entries pertaining and bogus long term capital gains to various beneficiaries across the country and it has been revealed in the said information that this very assessee i.e. present petitioner is also a beneficiary of such entry operation of Kayans to the extent of Rs. 127.94 lacs (accommodating co. Agnes Bruno Ltd.) pertaining to A.Y.2008-09 and based upon this material, the authority has issued notice under Section 148 of the Act for reopening of assessment as from the material, the authority found that there is a reasonable belief that income of the petitioner – assessee has escaped assessment and therefore, it is justified to reopen the assessment. It is also emerging from the order passed by the authority rejecting the objections submitted by the petitioner dated 21.1.2016 that each and every material submitted by the petitioner has been extensively dealt with and a detailed order came to be passed and the said order is supported by cogent reasons, the decision arrived at to reopen the assessment appears to be just and proper. From the material available, the authority prima facie found that petitioner – assessee is also the beneficiary of those Kayans brothers, who are well known entry operators across the country and to the extent of sizable amount, the petitioner has also been benefited and this part of the income appears to have been escaped assessment in the belief of the authority, the said belief cannot intercepted by exercising extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Thus from circumstance available and reflected on record, it appears to this Court that the authority has applied its mind and has rightly relied upon the information available before it while exercising the power to reopen the assessment. Thus the background of facts demand reopening of assessment and the authority is justified in issuing notice under Section 148 of the Act and the reasons based upon it are sufficient enough to permit the authority to exercise jurisdiction to reopen the assessment. - Decided against assessee

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• 2016 (8) TMI 280
  Reopening of assessment - reasons to believe - information received from the DGIT, Investigation Branch - Held that:- We are of the opinion that when the Authority is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad is throughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand a reasonable belief is formed by the Assessing Authority that income of the petitioner has escaped assessment and therefore, once the reasonable belief is formulated by the Authority on the basis of cogent tangible material, the Authority is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion, we are of the opinion that function of the assessing authority at this stage is to administer the statute and what is required at this stage is a reason to believe and not establish fact of escapement of income and therefore, looking to the scope of Section 147 as also Sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing authority to reopen assessment. From the reasons which are recorded, it clearly emerges that the petitioner is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by DGIT Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26.3.2015 from the DGIT, Investigation Branch, Ahmedabad, whereby it has been revealed that present petitioner is also the beneficiaries of those Kayan brothers, who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under Section 148 of the Act to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed. - Decided against assessee.

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• 2016 (8) TMI 279
  Penalty proceedings u/s 271F and prosecution u/s 276CC - Non-filing of return by the co-operative society - Notice calling upon the petitioner-Society to furnish their return of income immediately and produce the copy of the acknowledgement by 13.04.2016 - Held that:- It cannot be disputed that every person who is receiving income, within the taxable limit or otherwise, is statutorily bound to file their returns. Therefore, the petitioner-Society will not be fully justified in taking a stand that they will not file their return of Income. However, this should not automatically lead to a threat being meted out to the Society, at the instance of the respondent by initiating prosecution proceedings and penalty proceedings. In the light of the recent statement made by the Hon'ble Union Finance Minister, that the attitude of the Assessing Officer towards the assessee should have a change, more particularly in the instance case, since the petitioner is a Co-operative Society and it is being controlled by the Managing Director, which is a Government Official in the cadre of Joint Registrar of Co-operative Societies. However, for that reason, the petitioner cannot be permitted to keep quiet in the matter and not subject themselves to the proceedings under the Income Tax Act. Thus the petitioner is directed to appear before the respondent, within a period of four weeks from the date of receipt of a copy of this order and file a detailed representation along with their return of income and on receipt of the representation and the return of income, the respondent is directed to proceed further in accordance with law, after affording an effective opportunity to the petitioner. However, the prosecution which is threatened to be launched in the impugned notice shall remain stayed.

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• 2016 (8) TMI 278
  Eligibility for the benefit of Section 10B in respect of profit from sale of scrap and spent solution - Held that:- As decided in assessee's own case for AY 2000-01 scrap and spent solution have been generated directly from the manufacturing activity and hence, the Assessing Officer is not correct in excluding these items from the profits of EOU and bringing them to tax under the head 'other sources . From the records it is clear that the scrap and spent solution have been generated directly from the manufacturing activity and. hence profit on sale of such items is derived from the 100% EOU only. After considering the explanation given by the Assessee regarding the generation of scrap and spent solution, we are of the considered opinion that the scrap and spent solution are part of the manufacturing process and the C.I.T.(Appeals) was justified in directing the Assessing Officer to recompute the income/loss exempt under sec. 10B of the Act. - Decided in favour of the assessee. Loss incurred from the Aurangabad unit includible in the EOU - Whether loss cannot be considered as a single undertaking of the assessee along with the EOU at Alathur? - Held that:- On the aspect of treating profit/loss from Aurangabad Unit, to be included in the export oriented unit at Alathur, we are not inclined to accept the contentions of the appellant that the Tribunal has committed an error, in holding that the loss incurred from Aurangabad Unit, to be included in the export oriented unit. The findings of the Tribunal that the Unit at Aurangabad was also an integral part of the export oriented unit at Chennai, cannot be interferred with, though the unit at Aurangabad, was purchased only in the year 2000, whereas, the Unit in Chennai, it was existing from 1994 onwards. - Decided in favour of the assessee.

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• 2016 (8) TMI 277
  Legality and validity of reopening of assessment - information received from DGIT - reasons to believe - Held that:- There was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26.3.2015 from the DGIT, Investigation Branch, Ahmedabad, whereby it has been revealed that present petitioner is also the beneficiaries of those Kayan brothers, who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under Section 148 of the Act to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed. As we found that for the exercise of power of reopening of assessment after a period of 4 years, a proper procedure is observed by the Authority, specific approval has been obtained from the competent Authority and upon perusal of original file, we have satisfied ourselves that the approval has been accorded in a proper manner by the competent Authority and since the notice is issued based upon substantial compliance of statutory provision, the Authority has acted well within the bounds of his powers and the Authority has issued notice. We found that the order which has been passed of rejecting the objections raised by the petitioner is also a well reasoned order passed after due exercise of jurisdiction and therefore, same is not, therefore, required to be interfered with. - Decided against assessee

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• 2016 (8) TMI 276
  Reopening of assessment - reasons to believe - information provided by DGIT (Investigation) Mumbai - Held that:- Perusal of the said reasons postulate that an information has been received by DGIT (Inv.) branch of Ahmedabad about bogus purchases wherein, it has been emerged that two survey operations were carried out by the competent authority, Kolkata in case of Vikrant Kayan and Arvind Kayan and the information which has been gathered is that these Kayans are well known entry operators of Kolkata and have been giving entires of bogus share capital, bogus billing entries pertaining and bogus long term capital gains to various beneficiaries across the country and it has been revealed in the said information that this very assessee i.e. present petitioner is also a beneficiary of such entry operation of Kayans to the extent of Rs. 127.94 lacs (accommodating co. Agnes Bruno Ltd.) pertaining to A.Y.2008-09 and based upon this material, the authority has issued notice under Section 148 of the Act for reopening of assessment as from the material, the authority found that there is a reasonable belief that income of the petitioner – assessee has escaped assessment and therefore, it is justified to reopen the assessment. It is also emerging from the order passed by the authority rejecting the objections submitted by the petitioner dated 21.1.2016 that each and every material submitted by the petitioner has been extensively dealt with and a detailed order came to be passed and the said order is supported by cogent reasons, the decision arrived at to reopen the assessment appears to be just and proper. From the material available, the authority prima facie found that petitioner – assessee is also the beneficiary of those Kayans brothers, who are well known entry operators across the country and to the extent of sizable amount, the petitioner has also been benefited and this part of the income appears to have been escaped assessment in the belief of the authority, the said belief cannot intercepted by exercising extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. - Decided against assessee.

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• 2016 (8) TMI 275
  Reopening of assessment - Possible MAT liability - Held that:- The Assessing Officer noted that in the order of assessment, book profit of the assessee was worked out at Rs. 51.85 crores. The MAT liability would work out to Rs. 57.1 crores. Since the tax liability on the assessee as per the normal computations is higher than the tax liability under the MAT provisions, at present there is no tax liability arising. However, if the assessee succeeds in appeal against the order of assessment, the question of applying MAT provisions would arise.Providing the same safeguards as mentioned in the said order, this ground of the Assessing Officer for reopening is turned down. Claim of deduction on account of bad debts - Held that:- In the final order of assessment, the Assessing Officer made no disallowance against this claim. In other words, without giving reasons he accepted the petitioner’s version of written off of the bad debts of Rs. 11.18 crores. The Assessing Officer having scrutinized the claim in the final order of assessment accepted the claim though without stating the reasons. Any attempt on his part to reopen the issue is based on change of opinion. Claim of expenditure under the head of ‘Professional Services and Legal Fees’- Held that:- This amount of Rs. 3.15 crores which the Assessing Officer disputes by way of expenditure was never claimed as such in the original return itself. The audited account referred to a larger sum of Rs. 4.38 crores which was amortised and the break up of premium amortised during the period under consideration includes a total of Rs. 3.15 crores which is a total of premium with respect to 5 different investments. This precise figure which the Assessing Officer wants to take into consideration for the purpose of disallowance as capital expenditure. When we find that no such claim of revenue expenditure was made, the essential requirement of income chargeable to tax having escaped assessment on this ground fails.

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• 2016 (8) TMI 274
  Reopening of assessment - Deduction under section 80IB(10) - Held that:- Whether it was compulsory for the firm to pay interest and remuneration to the partners. In the context of limiting the claim of the partnership firm for reduction under section 80IB(10) of the Act, this issue may become relevant. We are however, not concerned with the question of non payment of interest or remuneration to the partners since the validity of the notice needs to be examined from the vital angle that the same having been issued beyond the period of four years. In this context, the reasons record that upon going through which, it was seen by the Assessing Officer that on the outstanding balance of the capital account of the partners, the firm had not provided any interest nor paid remuneration to the partners. Thus, the Assessing Officer gathered such information from the materials on record. There was no failure on the part of the assessee to disclose material facts. Respective notices for reopening issued beyond a period of four years are therefore, quashed. Both petitions are allowed and disposed of.

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• 2016 (8) TMI 273
  Reopening of assessment - loss suffered by the assessee on sale of gold and silver - Held that:- In the final order of assessment that the Assessing Officer passed, he made no disallowance on this count. It can thus be seen that entire issue of nature of loss suffered by the assessee on sale of gold and silver was examined at length by the Assessing Officer during the original assessment proceedings. His pointed question was why should such loss not be treated as speculative and disallowed in terms of section 43(5) of the Act. On the same ground, therefore, it would not be permissible for the Assessing Officer to reopen the assessment which would be based on change of opinion. TDS 194A - non deduction of tds - Held that:- On the issue of appropriate rate of deduction of tax at source on the usance charges paid by the assessee also, the Assessing Officer had shown sufficient interest in the assessment proceedings. The assessee had made detailed representations why the collection of tax at source as shown by the assessee was in order. Once again in the final order of assessment, Assessing Officer made no disallowance on this count by holding that deduction of tax was deficient. Sale of gold - Held that:- Coming to the last issue, it is undisputed that the same was never gone into by the Assessing Officer during the assessment proceedings since the Assessing Officer was not conscious that Shri Chudasma to whom the sale of gold was allegedly made was not alive on such date. He had no occasion to inquire into such a transaction. In context of notice for reassessment, however, the issue does not rest here. Prime question is, had income chargeable to tax escaped assessment on this count. Only if there is prima facie material to suggest that due to such sale stated by the Assessing Officer to be bogus, income chargeable to tax has escaped assessment, reassessment would be permissible. If we examine the transaction more closely it refers to a cash sale of gold made by the assessee for a sum of Rs. 42.68 lacs to Shri Chudasma Viajysinh Pratapsinh. It was later on found that on the date of sale Shri Chudasma had already expired. However, it is not even the case of the Revenue that the assessee did not offer the sale proceeds of Rs. 42.68 lacs to tax. Obviously, since the assessee claimed that the gold was sold for a sum of Rs. 42.68 lacs, such sum being a revenue receipt would form part of the assessee's total income. Even if there was some cloud about the sale itself or to the person to whom such sale was made, in absence of any basis to hold that the income chargeable to tax had escaped assessment, reopening of assessment would not be permissible. - Decided in favour of assessee

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• 2016 (8) TMI 272
  Reopening of assessment - reasons to believe - information provided by DGIT (Investigation) Mumbai - Held that:- Perusal of the reasons recorded show that the information was provided to the Assessing Officer by DGIT (Investigation) Mumbai, concerning dubious transactions of Rajendra Jain and Surendra Jain who were managing Sparsh Export Pvt. Ltd. These persons were subjected to search during which they had also made certain confessional statements. The assessee had made purchases of cut and polished diamonds worth Rs. 11.99 lacs from Sparsh Export Pvt. Ltd. On the basis of the information available at the command of the Assessing Officer, he noted that Rajendra Jain and Surendra Jain merely provided accommodation entries without actual sale of diamonds. The assessee had thereby claimed higher expenditure and reduced the profit. It cannot be stated that the Assessing Officer did not have tangible materials to form a belief that the income chargeable to tax had escaped assessment. Such information was not available during the original assessment. Obviously the assessee would not make such disclosures. The requirement for reopening of the assessment even beyond a period of four years are therefore, satisfied. Merely because such information was supplied to the Assessing Officer by the investigation wing of the department would not mean that the Assessing Officer cannot rely upon it after of course, perusing the same and form his own opinion on the basis of the same.

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• 2016 (8) TMI 271
  Reopening of assessment - Eligibility for deduction under section 80IA(4) - as per AO assessee was not carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility - Held that:- The petitioner's sole claim that the return was for deduction under section 80IA(4) of the Act, came to be examined by the Assessing Officer during the scrutiny assessment. During such assessment, the Assessing Officer collected full information from the assessee in addition to what was already produced along with the returns. In the assessment order, he made no disallowance. In the order itself, he had noted that this is a partnership firm and is enterprise of two partners Avadh Infrastructure Pvt. Ltd. and Narayan Infrastructure Pvt. Ltd. who had jointly applied to the Executive Engineer Valsad. The assessee's tender was sanctioned by the Government of Gujarat for construction of bridge. Thus full details pertaining to the assessee's activities were at large before the Assessing Officer. Conscious of such details, he had framed the assessment. It would therefore, not be permissible for the Assessing Officer to reopen such issue and that too beyond a period of four years from the end of relevant assessment year. Quite apart from the question of change of opinion, there was simply no failure on part of the assessee to disclose truly and fully material facts. As noted, in the original returns, the assessee had while claiming deduction, provided supporting materials in the form of audit report in Form No.10CCB. During the assessment proceedings, the assessee provided further details as called for by the Assessing Officer. Even the reasons recorded by the Assessing Officer for issuing notice for reopening do not even indirectly suggest that there was any failure on part of the assessee to disclose true and full facts. In fact, the reasons rely solely on the materials already on record. It can thus be seen that the Assessing Officer merely desires to revisit the claim which was granted after full scrutiny in the original assessment. His opinion that the claim was not properly examined during such assessment would not authorise him to reopen the assessment. The reasons are based on materials already on record. - Decided in favour of assessee

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• 2016 (8) TMI 270
  Eligible business for the purpose of deduction under Section 80IA - why certain specific items categorized as 'other income' and 'extra-ordinary item' in the Profit and Loss Account in assessment year 2004-05 should not be excluded from the profit and gains of the Assessee? - eligibility for Extra Ordinary Items, Refund from Universal Service Fund, Interest from others, Liquidated Damages, Excess provision written back and Others including sale of directories, publications, form, waster paper, etc Held that:- Under Section 80IA (1), what is available for deduction are profits and gains “derived by an undertaking or an enterprise from any business referred to in sub-section (4)” whereas in Section 80-IA (2A) what is available for deduction is “hundred percent of the profits and gains of the eligible business”. The orders of both the AO and the CIT (A) to the extent they deny the Assessee, which in this case is in the business of providing telecommunication services, deduction in respect of the above items in terms of Section 80IA(2A) are unsustainable in law and have rightly been reversed by the ITAT. Section 80-IA (2A) treats an undertaking providing telecommunication services as a separate species warranting a separate treatment as is evident from the non-obstante clause with which it begins. The Court sees no reason why such an undertaking would not be able to take the benefit of deduction in terms of Section 80IA(2A) notwithstanding that the enterprise of which it forms part may have other eligible businesses for which the deduction would have to be calculated in terms of Section 80-IA (1) of the Act. - Decided in favour of assessee.

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• 2016 (8) TMI 269
  Recovery proceedings - petition for early hearing - Held that:- Conduct on part of the petitioner filing the petition interalia seeking early hearing of its appeal before the CIT (A) and at the same time when the appeal is fixed for hearing by the CIT (A), the petitioner is seeking adjournment on frivolous grounds indicating that the petitioner is not serious about attending the hearing. It appears to be time delaying tactics and abuse of the legal process. In fact on 11th July, 2016 the last adjournment sought by the petitioner was to fix the hearing of the appeal in August 2016. The very fact that the petitioner has been seeking adjournment time and again before the CIT (A) and filing the petition in this Court seeking early hearing of its appeal is an abuse of the process of law. In the above view the petitioner is directed to pay costs of Rs. 20,000/- by Pay Order to “the Principal Commissioner of Income Tax-13, Mumbai” on or before 4th August, 2016. This payment of cost on or before 4th August, 2016 is a condition precedent for the CIT (A) hearing the petitioner's appeal. The petitioner would satisfy the CIT (A) that the above cost of Rs. 20,000/- has been paid.

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• 2016 (8) TMI 268
  Assessment u/s 153A - Regard of statement recorded under section 132 (4) of the partner of the firm - Held that:- we find from the order passed by the Tribunal that the statement recorded under section 132(4) was attested by two witnesses. The statement was also not retracted in any manner. The assessing officer first appellate authority and the Tribunal were satisfied that Sri.Jabir was actively involved and was fully conversant with the business activities of the firm. In fact, the statement of a salesman of another firm, of which his father himself is the Managing Partner, was to the effect that it was Sri.Jabir who was running the business and even deciding the price of the wooden furnitures that were sold. All these factual findings contained in the order of the Tribunal would therefore indicate that Sri.Jabir was a person who was actively involved in the business and was competent to depose about the business activities of the firm. It may be true that the Managing Partner was not confronted with the contents of the statement made by Sri.Jabir. But having regard to the law laid down in Narayan Bhagwat Rao Gosavibalajiwale v. Gopal Vinayak Gosavi & Others [1959 (9) TMI 53 - SUPREME COURT] relied on by the Tribunal, which lays down that the statement recorded under section 132(4) of the Income Tax Act is the best evidence, absence of confrontation does not necessarily require eschewing or discarding such a statement. Therefore, we do not find any substance in the first question framed by the assessee. Allowance of claim of expenditure by way of interest to the partners on their capital and salary to the working partners - Held that:- It is the conceded case of the assessee that they have not raised any such claim either before the assessing officer or before the first appellate authority. The order of the Tribunal also give an impression that such a claim was raised only when the matter was argued. Secondly, this claim could not have been considered by the Tribunal in the absence of any supporting document, including the partnership deed. The fact that issues relating to sale of branded items and bulk sales are remanded for fresh adjudication by the assessing officer does not mean that the Tribunal should have, as contended by the counsel for the assessee, remitted this claim of the assessee also to the assessing officer. On facts, we are not satisfied that the Tribunal has committed any illegality.

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• 2016 (8) TMI 267
  Income from interest on inter corporate deposit - chargeablility to tax under the Interest Tax Act - Held that:-Commissioner of Incometax v. Visisth Chay Vyapar Ltd., [2011 (8) TMI 783 - Delhi High Court ] wherein, it has been held that the expression ‘advance’ occurring in section 2(7) along with the expression ‘loan’ should take its colour from ‘loan’ and cannot be given wider interpretation to include deposit as well, otherwise, money deposits given for investments, etc., would also qualify as ‘advances’ and interest thereon would become exigible to the Interest-tax Act. Such a situation was never contemplated by the legislature. Hence, intercorporate deposit is not in the nature of loan or advance within the meaning of section 2(7) and therefore, not chargeable to the interest-tax under section 5.

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• 2016 (8) TMI 266
  Revision u/s 263 - Commissioner had held that the shares sold were stock-in-trade and not investment - Held that:- In the present case, the shares and securities were acquired much earlier and all throughout they were treated as stockintrade. It was only on 31.03.1993, viz. when Resolution was passed by the Board of Directors of the assessee company, that they were converted into investment. Therefore, for the purpose of the Act, the relevant date shall be the date on which the asset was acquired, which is 31.03.1993. The Assessing Officer completely lost sight of the aforesaid relevant aspect while passing the assessment order, which was corrected by the CIT(A) in proceedings u/s.263 of the Act and rightly affirmed by the Tribunal. In view of the aforesaid discussion, both the questions are answered in favour of the Revenue and against the assessee.

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• 2016 (8) TMI 265
  Addition on account of unaccounted sale of cattle feed - CIT(A) deleted the addition confirmed by ITAT - Held that:- Commissioner (Appeals) has recorded a categorical finding of fact to the effect that M/s Raghuvir Cotton Company had filed a separate return of income. In the absence of any documentary evidence being produced on record to point out that the finding recorded by the Commissioner (Appeals), as concurred with by the Tribunal, is contrary to the evidence on record it cannot be said that the finding recorded by the Tribunal is in any manner perverse to the record of the case. Under the circumstances, the conclusion of the Tribunal being based upon concurrent findings of fact recorded by it upon appreciation of the material on record does not give rise to any question of law. Addition on account of unaccounted sale of Kapas Shanker (cotton) - CIT(A) deleted the addition confirmed by ITAT - Held that:- AO did not choose to accept the purchase account in which quantity record had been made. It was the case of the assessee that all purchases so recorded were duly supported by the purchase bills and were in consonance with the data contained in impugned books and hence, there was no reason to treat all the purchases as unaccounted. The Commissioner (Appeals) observed that all the purchases were accounted for and that the Assessing Officer was not in a position to deal with the contentions raised on behalf of the assessee in the remand report and, accordingly, accepted the contentions of the assessee and deleted the addition of Rs. 1,23,987/- on account of purchase of Kapas Shanker. The Tribunal, upon appreciation of the material on record, concurred with the findings of fact recorded by the Commissioner (Appeals). Thus, the conclusion arrived at by the Tribunal is purely based upon the concurrent findings of fact recorded after appreciation of the material on record and hence, in the absence of any perversity being pointed out therein, the same does not give rise to any question of law. Addition on account of unaccounted purchase of Shankar Kapasiya (cotton seeds) - CIT(A) deleted the addition confirmed by ITAT - Held that:- Commissioner (Appeals) upon considering the arguments of the assessee as well as the remand report submitted by the Assessing Officer and the material on record, found that the purchases recorded in X-13 pertained to the assessee firm and associate concern M/s Raghuvir Cotton Company which had filed return of income independently showing these transactions and that such a return had been accepted. The Assessing Officer in the remand report had not made any comment against the assessee’s plea. The Commissioner (Appeals) observed that purchases recorded in X-13 and X-26 were identical and that the Assessing Officer had not given any adverse opinion on that point in the remand report. He, accordingly, found that the addition of the entire purchases was not correct and at best addition of the peak amount could have been made and deleted the addition of Rs. 71,89,691/-. The Tribunal, upon appreciation of the material on record, concurred with the findings of fact recorded by the Commissioner (Appeals). On behalf of the revenue, the learned counsel for the appellant is not in a position to point out any material to the contrary so as to dislodge the findings of fact recorded by the Tribunal. Under the circumstances, this ground also does not give rise to any question of law. Addition on account of unaccounted purchase of Kalyan Kapas - CIT(A) deleted the addition confirmed by ITAT - Held that:- Commissioner (Appeals) found that the Assessing Officer had made this addition on the basis of the figures given by the assessee during the survey, while he had made gross profit addition on the basis of sales figure given by the assessee at the time of assessment proceedings and, accordingly, held that the Assessing Officer was not justified in making the addition and deleted the same. The Tribunal has concurred with the above findings of fact recorded by the Commissioner (Appeals). The conclusion arrived at by the Tribunal being based upon the findings of fact recorded by it upon appreciation of the material on record, in the absence of any perversity being pointed out therein, the same does not give rise to any question of law. Addition as unaccounted sale of cotton bales - CIT(A) deleted the addition confirmed by ITAT - Held that:- The amount of sale difference does not represent the income of the assessee who had disclosed the sale. The Commissioner (Appeals), after considering the material on record and the submissions of the assessee, found that the sale of cotton bales was out of accounted stock and at best the profit could be added and not the entire sales. He, accordingly, directed the Assessing Officer to compute profit on sale of cotton bales and make addition of profit on sale of cotton bales and not the entire sales. The Tribunal concurred with the reasoning adopted by the Commissioner (Appeals) based on factual findings recorded by him. Having regard to the findings of fact recorded by the Commissioner (Appeals), as concurred by the Tribunal, it cannot be said that the course of action adopted by the Commissioner (Appeals), in any manner, suffers from any legal infirmity so as to warrant interference. Addition on account of unaccounted sale of Kala - CIT(A) deleted the addition confirmed by ITAT - Held that:- Commissioner (Appeals), upon appreciation of the material on record, found that the assessee mentioned in the survey itself that it was not dealing in Kala and the associate concern M/s Raghuvir Cotton Company was dealing in the same. Moreover, the sale of Kala had been reflected in the transactions of the associate concern for which the return had been filed and that the Assessing Officer had not pointed out anything adverse in the remand report filed by the Assessing Officer. He, accordingly, deleted the addition made by the Assessing Officer. The Tribunal concurred with the findings recorded by the Commissioner (Appeals). The conclusion arrived at by the Tribunal being based upon concurrent findings of fact recorded by it, in the absence of any perversity pointed out therein, does not give rise to any question of law. Addition on account of unexplained stock difference - CIT(A) deleted the addition confirmed by ITAT - Held that:- Commissioner (Appeals) accepted the contention of the assessee and found that the Assessing Officer had already made addition of gross profit of various items and that the same addition cannot be made again and deleted the same. The Tribunal concurred with the reasoning based on factual findings recorded by the Commissioner (Appeals) and upheld the same. Having regard to the fact that the Assessing Officer had already made addition of gross profit of various items, the Commissioner (Appeals) was justified in holding that the same cannot be made again. The Tribunal, therefore, did not commit any error in upholding the findings recorded by the Commissioner (Appeals). Revenue appeal dismissed.

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• 2016 (8) TMI 264
  Disallowance of purchase and professional/ technical fee - Held that:- A cursory glance upon these bills and other evidences shows that these cannot be ignored without their verification. Therefore, with a view to meet the ends of justice, we send both of these issues back to the file of the AO with a direction to give adequate opportunity of hearing to the assessee to file all the details and evidences as may be considered appropriate by the assessee. The AO shall decide this issue afresh after taking into account the same on objective basis. - Decided in favour of assessee for statistical purposes. Ad-hoc disallowance of certain expenses @ of 20% - Held that:- It is noted that on this issue requisite details and evidences have been furnished by the assessee before the lower authorities. There were no basis to make an ad-hoc disallowance as per law and therefore, ad hoc disallowance of Rs. 1,99130/- is directed to be deleted.

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• 2016 (8) TMI 263
  Undisclosed gift receipts - creditworthiness and genuineness - Held that:- Before the ld Assessing Officer assessee could not satisfactorily explained the doubts raised by the Assessing Officer about the genuineness of the transaction. As the assessee could not prove the creditworthiness of the Sh. Jagdish Mangala and genuineness of the transaction before the ld Assessing Officer and further the ld CIT(A) has deleted the addition without giving any reason and merely relying on some other orders and not examining the current impugned transaction of the gift. According to us the assessee has failed to prove the creditworthiness and genuineness of the transaction of gift received from Mr. Jagdish Mangala, we reverse the order of the ld CIT (A) in deleting the above addition of Rs. 20 lacs as gift from Sh. Jagdish Mangala. - Decided against assessee

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• 2016 (8) TMI 262
  Unexplained cash at Bank and cash in hand U/s 68 - Undisclosed bank accounts - undisclosed rental income - Held that:- Assessing Officer had made addition on the basis of closing balance, the assessee also not submitted the details of credit and debit entries of all the bank accounts for the year under consideration, therefore, the assessee was also not came with clean hands after evading tax from F.Y. 1997-98 by acquiring Kirti Nagar, New Delhi flat. Thereafter Bal Mandir house, Kota in A.Y. 2001-02. The assessee disclosed shortage of cash as income at Rs. 8,71,000/- but it is not clear where this amount has gone, which is statutory obligation on the part of the assessee to disclose the true and full particulars of income and investment made during the year under consideration. The assessee has not disclosed the name and address of the tenant who had occupied the flat situated at Kirti Nagar, New Delhi. It is not acceptable that without any deed, he had allowed the property on rent. Even the assessee had not disclosed full particulars of income from where he earned the undisclosed income. This question was asked by the Bench at the time of hearing but no positive reply was given by the ld AR of the assessee. Therefore, in absence of full details, the ld Assessing Officer has to decide the assessee’s case on estimated basis. Further the ld CIT(A) also had not passed reasoned order, so that we can conclude that he was justified in deleting the addition made by the ld Assessing Officer. Accordingly, we set aside the order of the ld CIT(A) to the Assessing Officer. The assessee is directed to cooperate with the Assessing Officer and produce all the evidences of ownership of the properties acquired in F.Y. 1997-98, 2001-02 and also during the year under consideration, so that the Assessing Officer can assess the correct income on the basis of peak theory of the bank account as discussed above. Accordingly, the revenue’s appeal is set aside to the Assessing Officer and the appeal is allowed for statistical purposes only

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• 2016 (8) TMI 261
  Forfeiture of advance received against capital asset - whether the sum has to be reduced from the cost of asset and the same cannot be taxed as income on forfeiture - advance for sale of a capital asset v/s business asset - section 51 applicability - Held that:- As in respect of this project transferred by the partnership firm M/s HM Construction to the assessee, the assessee was declaring profit on sale of property of that project as income from business but it does not mean that the assessee cannot hold any real estate property as a capital asset. If said so, then it will be amounting to saying that a person dealing in shares cannot hold any share as investment. This cannot be said and therefore, in the present case also, this fact alone that the assessee was doing some real estate business cannot lead to this conclusion that this property in dispute was also held by the assessee as a business asset and not as a capital asset unless it is shown that this very property was held as a business asset. The revenue has not brought any evidence on record to even suggest that this property in question was also a business asset and the revenue has proceeded on this basis that since in respect of some property, the assessee is disclosing income as business income and showing the closing stock as business stock/ business asset, it cannot be inferred that each and every property owned by the assessee is a business asset and therefore, hold that the property in question is a capital asset because, the revenue could not bring any material on record to establish that this property is also a business asset. Once hold this that the property in question is a capital asset, Sec.51 of the IT Act is applicable regarding the advance received against sale agreement of this property which is forfeited and therefore, such forfeiture of advance has to be reduced from the cost of this asset. Since the forfeiture amount of Rs. 33.00 Lakhs is more than the cost of this asset Rs. 31,76,160/-, the excess amount of forfeiture i.e. Rs. 1,23,840/- has to be brought to tax in the present year in equal proportion in the case of both these assessees who were the owner of this asset in equal proportion and in the year of sale of that property, cost of acquisition should be taken at NIL to compute Capital Gain. - Decided partly in favour of assessee.

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• 2016 (8) TMI 260
  Registration under S.12AA - dissolution clause - incidental objects - Held that:- A bare reading of the order of the CIT(Exemption) would show that the objections of the CIT(Exemption) to the applications of the assessee for registration under S.12AA and approval under S.80G are two fold. Firstly, as per the dissolution clause specified in the Memorandum of Association, extracted above, there is no intention on the part of the assessee to transfer the assets to any other similar institution having registration under S.12AA of the Act. We find no rationale in this objection of the Commissioner. Relevant dissolution clause clearly specifies that surplus arising on dissolution, after satisfaction of its debts and liabilities shall be transferred to other institutions pursuing objects similar to the those of the assessee company. The second objection of the CIT(Exemption) is based on the reading and interpretation of the ‘incidental objects’ as provided for attainment of main objects in the Memorandum of Association. As per CIT(Exemption), the incidental objects indicate the intention of the assessee to pursue its activities outside India. This objection of the Commissioner for denial of registration is also without any force. We notice from the relevant incidental clause relied upon by the Revenue that such clause primarily enables the assessee to raise funds to attain the main objects of the company. It does not give any impression that the assessee shall carry out its activities outside India. We set aside the impugned order of the Commissioner of Income-tax (Exemption) and restore the matter back to his file with a direction to reconsider the applications of the assessee for registration under S.12AA and approval under S.80G afresh in accordance with law and after giving reasonable opportunity of hearing to the assessee.

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• 2016 (8) TMI 259
  Reduction of the amount of excise duty and sales tax while computing the total turnover for the purpose of deduction under section 80-HHC - Held that:- Tribunal has not committed any error in holding that the components of sales tax and central excise do not form part of sale proceeds for the purpose of Section 80HHC of the Act despite insertion of Section 145 A of the Act See Lakshmi Machine Works (2007 (4) TMI 202 - SUPREME Court ) and Shiva Tex Yarn Ltd. [2012 (9) TMI 658 - SUPREME COURT ] Allowance of trial run expenses - expenses incurred before the commencement of commercial production - revenue or capital - Held that:- The expense was incurred by the assessee for trial run with regard to expansion of present unit, to increase its installed capacity. Therefore the question posed for our consideration is required to be answered in favour of the assessee and against the revenue. Accordingly, it is held that the Tribunal has committed an error in treating the trial run expenditure incurred by the appellant in the process of expansion of its existing manufacturing facilities as capital expenditure. See BELL CERAMICS LTD. Versus DEPUTY COMMISSIONER OF INCOME TAX [2016 (8) TMI 202 - GUJARAT HIGH COURT]

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• 2016 (8) TMI 258
  Treating the loss as Speculation Loss under Explanation to Section 73 - Held that:- The loss incurred by the assessee company on share trading carried on by it on its own behalf shall not be hit by the deeming fiction of explanation to Section 73 of the Act and shall be treated as normal business loss to be set aside against the other non- speculative business income and other income as per provisions of the Act. This disposes of the ground no 1 raised by the assessee company as well additional ground raised by the assessee company. Disallowance u/s 14A - Held that:- Even strategic investment in group concerns for the purpose of control and not for earning dividend attract disallowance u/s 14A of the Act read with rule 8D of the Income Tax Rules, 1962., we hold that the investment made by the assessee company in Bombay Stock Exchange shall attract disallowance u/s 14A of the Act having regards to the accounts of the assessee company as provided u/s 14A(2) of the Act keeping in view Rule 8D(2)(iii) of the Income Tax Rules, 1962.We are therefore inclined to set aside the matter to the file of the AO for de-novo determination and quantification of disallowance u/s 14A of the Act of the indirect expenses incurred by the assessee company in relation to such income which does not form part of the total income having regards to the accounts of the assessee company as provided u/s 14A(2) of the Act and also keeping in view Rule 8D(2)(iii) of Income Tax Rules, 1962. n the case of Cheminvest Limited (2015 (9) TMI 238 - DELHI HIGH COURT ) while in the said case the Hon’ble Delhi High Court has laid down that there can be no disallowance u/s 14A of the Act if there is no exempt income received or receivable by the tax-payer. In the instant appeal, the assessee company did received the exempt income vide dividend income from shares of Rs. 2,81,541/- . This disposes off ground no 2 of the assessee company.

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• 2016 (8) TMI 257
  Cancelling/withdrawing the registration granted to the assessee under section 12A - Held that:- Director erred in not appreciating the difference between the functioning of administrative set-up, which is essential to execute the objects entrusted to the assessee and, the activity of executing the railway component of the MUTP. The administrative set-up and its functions cannot be viewed in isolation to say that assessee company is not carrying out activities in accordance with its objectives, which in the present case is quite clearly being undertaken by the assessee by executing the railway component of the projects under MUTP. Therefore, in our considered opinion, the Director has clearly misdirected himself in coming to conclude that assessee has carried out activities that are not in accordance with its objects. Thus, factually speaking, we find no reason to uphold the inference of the Director that the activities are not in accordance with its objects. Assessee was only leveraging its funds to earn interest income. Before us also, it has been contended that such income cannot be said to be used for a charitable purposes so as to be entitled for exemption under sections 11/12 of the Act. Whether such income is eligible for the benefit of sections 11/12 of the Act or not, in our view, is not a relevant criteria to justify invoking of section 12AA(3) of the Act. Whether or not such incomes are entitled to exemption under section 11 of the Act are matters, which are to be decided in the course of the quantum assessment proceedings by the assessing authorities and do not enter the requisites contained in section 12AA(3) of the Act. Thus, so far as, the present controversy is concerned, in our view, the aforesaid reasons advanced by the Director are extraneous for the purposes of invoking section 12AA(3) of the Act. So, however, we may state here that it would be open for the assessing authorities to examine such aspects in appropriate proceedings, if so advised in law, but certainly the same are outside the purview of the pre-requisites contained in section 12AA(3) of the Act. Another aspect raised by the Director was that some of the clauses in the Memorandum and Articles of Association allowed assessee to do business and, therefore, it is hit by the amended proviso to section 2(15) of the Act. On this point also, it is sufficient to notice that the same is not a relevant criteria for cancellation of registration envisaged in section 12AA(3) of the Act. Of course, as noted earlier, such issues are open for examination by the assessing authority in the quantum assessment proceedings, if so advised in law. Certainly, the same cannot be considered for the purposes of justifying invoking of section 12AA(3) of the Act. Thus, on these aspects also, we find no reason to uphold the finding of the Director. Therefore, we set-aside the order of the Director dated 10/01/2014 and restore the certificate of registration dated 29/10/2001 granted under section 12A of the Act. - Decided in favour of assessee.

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• 2016 (8) TMI 256
  Additional depreciation u/s 32(1) (iia) on items of electric installation, tools, dyes and moulds - Held that:- The finding of the ld Assessing Officer that they are not installed is a contradictory statement as normal depreciation of such assets is already allowed. The normal depreciation is allowable when the assets are put to use, we failed to understand that while allowing the normal depreciation the assets have been accepted as being used and in allowing additional depreciation it is stated that they are not installed. Further, the plant itself exists for the manufacturing of the products and the items purchased by the assessee are also not falling in the negative list such as office equipments etc. we are of the view that the claim of the assessee of additional depreciation is in accordance with the law. Hence, we confirm the order of the ld CIT (A) in allowing the additional depreciation on electrical installation, tools, dies and moulds. Disallowance of wages payment - revenue or capital expenditure - Held that:- CIT (A) correctly deleted the disallowance relying on the order of the ld CIT (A) for AY 2009-10 wherein held that the payment was made for supplying the unskilled and semiskilled labour, which was used for lodging, un-lodging, cleaning of factory and in production process of the appellant. Hence, the amount has to be allowed as revenue expenditure to the appellant and same cannot be capitalized Allowance of deduction on account of order processing charges - Held that:- According to schedule-XV if the audited account of the assessee a sum of Rs. 281827/- was received on account of processing charges. There is no dispute on the amount of total turnover as well as the export turnover. However the only dispute is with respect to profit eligible for deduction shall include the processing charges of Rs. 281827/- or not. According to the provisions of section 10B (4) the profit derived from export of goods is amount which bears to the profit of the business of the undertaking in the same proportion as the export turnover bears to the total turnover. Therefore if the amount of processing charges is the business income of the assessee same is eligible for deduction in ratio of export turnover to total turnover. As ld Assessing Officer himself has taxed the processing charges under the head business income of the assessee the amount of deduction is allowable to the assessee Allowability of insurance claim and discount from suppliers - Held that:- As there is no dispute on the export turnover and total turnover amounts and when both these receipts are taxed with business income the ld CIT (A) has correctly allowed deduction on these two sums u/s 10B of the Act. Disallowance of Swap Charges and Loan processing charges - Held that:- . The brief facts are that earlier the assessee took loan from Oriental Bank of Commerce against foreign currency (FCNRB), which was later on converted into Rupee loan and for this transaction the assessee has incurred financial charges which are in the nature of interest expenditure which are in the nature of interest in view of the provision of section 2(28A) of the Income Tax Act. Such expenditure is allowable in terms of section 36(1) (iii) of the Income Tax Act. It is not the case of the revenue that the assets for which the loan was taken is not put to use. In view of this we find no infirmity in the order of the ld CIT (A) in allowing swapping charges holding them as revenue expenditure and allowing the claim of the assessee. Regarding the loan processing charges it is from shifting of loan from Oriental Bank of Commerce to Axis Bank. This is also allowable to assessee as revenue expenditure as it is an interest and allowability of the same is to be considered u/s 36(1) (iii) of the Act. For the similar reasons as we have explain for swapping charges we also confirmed the order of the ld CIT(A) in deleting the above disallowance. Revenue appeal dismissed.

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• 2016 (8) TMI 255
  Taxability of income - revenues received by the assessee, on account of the provision of slick-line services, wire-line services, well-testing services etc., including provision of technical personnel, to various entities was taxable u/s 44BB or Section 44DA read with Section 9(l)(vii) - Held that:- As decided in assessee's own case AO was not justified in holding that the income of the assessee arising from performance of A1 Mansoori Specialized Engineering associated drilling activity through the provisions of oilfield equipment on hire along with operating personnel, used the exploration/prospecting/extraction of mineral oil were fees for technical services under Section 9(1)(vii) of the Act and was chargeable to tax @ 20% of the gross revenue u/s 115A of the Act and not taxable u/s 44BB of the Act . Thu the income of the assessee taxable u/s 44BB - Decided against revenue

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• 2016 (8) TMI 254
  Deduction u/s. 10B - Held that:- considered the decision of Hon'ble High Court of Karnataka in CIT v. Yokogawa India Ltd. (2011 (8) TMI 845 - Karnataka High Court) wherein it has been held that relief u/s. 10A of the Act is to be computed prior to giving effect to carry forward and set off provisions of the Act. The Hon’ble High Court in paras 10 to 20 of its judgment dealt with this issue and noticed that section 10A(1) of the Act is in pari materia with section 10B of the Act. Hence, we are convinced that the CIT(Appeals) was right in his decision and his order does not call for any interference. Accordingly, we dimiss the Revenue’s appeal on this issue. Exclusion of expenses from export turnover vis-à-vis total turnover for the purpose of calculating deduction u/s. 10B - Held that:- CIT(Appeals) has relied upon the decision of the Hon'ble jurisdictional High Court in the case of Tata Elxsi Ltd. v. ACIT [2011 (8) TMI 782 - KARNATAKA HIGH COURT ] and the subsequent decision in CIT & DCIT v. Motor Industries Co. Ltd. (2015 (7) TMI 876 - KARNATAKA HIGH COURT) and directed the AO to allow the assessee’s claim for reducing the expenditure incurred in foreign currency not only from the export turnover, but also from the total turnover.nothing was brought on record before us to the effect that the decision of the Hon'ble High Court of Karnataka has been reversed /modified by the Hon’ble Supreme Court, even though it is claimed that SLP has been recommended to be filed by before the Hon’ble Supreme Court. In such facts and circumstances, the Tribunal and other authorities under the jurisdiction of the Hon'ble High Court of Karnataka are bound by its decision. Hence, we do not find any infirmity in the order of the CIT(Appeals)

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• 2016 (8) TMI 253
  Profit on transactions of voluminous and frequent purchase and sale of shares - capital gain or business income - two investment portfolio - Held that:- We find from the balance-sheet of the assessee where assessee maintains two portfolios as discussed above. Even the CBDT Circular no. 4 of 2007 dated 15.06.2007 envisages the practice of assessee’s maintaining dual portfolios. We also find that the decision was rendered by the Hon'ble Bombay High Court in the case of CIT vs. Gopal Purohit reported (2010 (1) TMI 7 - BOMBAY HIGH COURT), wherein the assessee had maintained dual portfolios and ultimately the court held that the resultant gains from investment activity would be assessable as capital gains and not business income. We also find that the CBDT in its Instruction No.1827 dated 31.08.1989 has laid down certain criteria to determine whether an activity of purchase and sale of shares is in the nature of trading activity or investment activity. One of the criteria laid down is the treatment given in the books of accounts which is indicative of assessee’s intention whether to hold the shares with a view to earn dividend and long term appreciation or with a view to carrying on as business. We further find the intention of the assessee to maintain two independent portfolios i.e. one for investment purposes and one for trading purposes when he converted his stock in trade into investment on dated 1.4.2004. We hold that surplus is chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolios - Decided in favour of assessee.

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• 2016 (8) TMI 252
  TDS u/s 194C - non deduction of tds on freight paid - disallowance made u/s 40(a)(ia) - Held that:- In view of amendment made to second proviso to section 40(a)(ia) by Finance Act, 2012, the disallowance should not be made by the AO if the payments made to payees have been assessed in their respective hands. Under these circumstances, respectively following the order of the Tribunal in assessee’s own case for A.Y. 2007-08 as well as aforesaid order of Hon’ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd [2015 (9) TMI 79 - DELHI HIGH COURT], we send this issue involved in A.Y. 2008-09 and 2009-10 also back to the file of the AO. The AO shall decide this issue in the light of the legal position as discussed above. The AO is directed to verify this fact after taking requisite guidance from the aforesaid judgments and decide this issue after giving adequate opportunity of hearing to the assessee. In case the need arises, the AO should use appropriate powers under the law to verify these facts directly from the payees and/or respective Assessing Officers of the payees. In case income of the payees are assessed and impugned sum has been included in the accounts of the payees, then no disallowance should be made u/s 40(a)(ia) in the hands of the assessee on account of non-deduction of tax at source. With these directions all appeals are treated as allowed for statistical purposes.

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• Customs

• 2016 (8) TMI 306
  Seizure of imported TVs - LED TV or not – valuation and misdeclaration – no exemption – re-examination of goods – provisional release of goods – Held that: - within a period of two weeks, and in the presence of a representative of the Petitioner and one representative each of the DRI and the Customs, a re-examination will take place of the seized goods which are in the custody of the Petitioner on superdari. A detailed inventory will be drawn up. The cost of engaging additional help for the purposes of preparing the inventory will be borne by the Petitioner. The inventory so drawn up will form part of the adjudication record and can be relied upon by the Petitioner as well as the DRI and the Customs in the adjudication proceedings – writ petition disposed off.

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• 2016 (8) TMI 305
  Penalty – CHA - shipping bills - red sanders - cast articles of iron-Manhole cover - certain containers were found to contain Red Sanders against a declaration of Cast Articles of Iron-Manhole Cover in the shipping bills – Held that: - no where during the investigation it has come out that both the appellants had knowledge that the goods contained in the containers were Red Sanders wood and not the goods actually declared in the Shipping bills. Inability to take precautions by the CHA or its employee could be made the basis of taking action under CHA licencing regulation but can not be the basis for imposing penalty under section 114 of the Customs act, 1962 – no penalty attracted – decided in favor of appellant.

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• 2016 (8) TMI 304
  Revocation of CHA licence – forfeiture of whole security deposit held by the department – authorization from the exporter was not obtained by the appellant - Held that: - Regulation 13(a) A Custom House Agent shall obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs. Authorization letter dated 06.04.2010 was available with the appellants. There is no doubt that appellant should have given a copy of the authorization at the earliest but at the same time the authorization dated 06.04.2010 has not been proved by the Revenue to be forged. Appellant CHA licence was not suspended for nearly five years from the date of detection in April 2010 and no irregularity was committed by the appellant till the impugned Adjudication order was passed - appeal allowed – decided in favor of appellant.

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• 2016 (8) TMI 303
  Maintainability of demand after the Company wound up – liquidator appointed – Held that: - company wound up – appeals abated - all matter to be closed.

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• 2016 (8) TMI 302
  100% EOU – clearance of waste/remnants/scraps – SCN demanding duty on clearance – Notification No. 53/97-CE dated 3.6.1997 - Held that: - the charges made in the show-cause notice cannot be upheld. Demand confirmed on a totally new ground not alleged in the show-cause notice – appeal allowed.

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• Service Tax

• 2016 (8) TMI 310
  Cenvat credit – credit of service tax paid on GTA service while claiming the same as re-reimbursement of expenses for providing Business auxiliary services - commission agent servcies - Held that: - the tax amount on availment of service of “goods transport agency” is, in reality, paid by the appellant; when the appellant is entitled to, and has been claiming, reimbursement of such charges along with the tax thereon from their clients, such activity is not segregatable from other agency functions rendered by the appellant on reimbursement basis. It does not therefore constitute performance of a taxable service insofar as the appellant is concerned. - cenvat credit not allowed. Levy of penalty - Held that: - In the absence of clear evidence of suppression of information with intention to evade tax, scope for invoking section 78 in relation to second period of demand cannot sustain – decided partly in favor of respondent.

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• 2016 (8) TMI 309
  Demand of service tax from the recipient of GTA services - absence of law- law came into force subsequently - section 71 of the finance act, 1994 came into existence at a later date - Held that: - when there was no law in force during relevant period to fasten liability, calling the service recipient to incur liability under law is not permissible. The appellant being recipient of service was not required by law in force during the material period to file return under the Finance Act, 1994. Section 71A of the Finance Act, 1994 having been introduced after the period covered by the show-cause notice, appellant is not liable to service tax decided in case Commissioner of Central Excise, Meerut-II Vs L.H. Sugar Factories Ltd. (2005 (7) TMI 106 - SUPREME COURT OF INDIA) - decided in favor of appellant.

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• 2016 (8) TMI 308
  Denial of Cenvat credit - Commercial and industrial construction service, works contract service and architect service - Services used to bring immovable property - Held that:- The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal - by following the decision of Hon'ble High Court of Punjab & Haryana in the case of Bellosonica Auto Components India Pvt. Ltd. [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT], the credit is allowed. Denial of Cenvat credit - Event Management services - Services used for sale promotion event - Held that:- the arguments of the Commissioner that since the participants of the race already owners of bike, it cannot be considered as sale promotion event is absurd to say the least. The event is witnessed by number of people and therefore is clearly sale promotion exercise which is squarely covered within the definition of input service. Therefore, the credit is allowed. Denial of Cenvat credit - Medical insurance and life insurance service - Held that:- in terms of the decision of Hon'ble Karnataka High Court in the case of CCE, Bangalore-III, Commissionerate vs Sanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT ], so long as the insurance is in terms of section 38 of ESI Act the credit of the service tax paid is allowed. Denial of Cenvat credit - Supply of tangible goods - Cars used by the employees who were not involved in the manufacturing of goods - Held that:- the exact nature of use of the cars and purpose for which they have been used has not been examined and certain bald statements have been made by both sides in respect of such use. Therefore, to determine the exact use, the matter is remanded to the original authority for determination of the facts and re-adjudication. Denial of Cenvat credit - Business support service - data entry service used for host of activities which may not be related to the manufacture - Held that:- the accounting is specifically covered within the definition of input service and therefore the credit on business support service of data entry availed is allowed. Denial of Cenvat credit - Manpower recruitment or supply agency service - Service availed for hiring the drivers used by the directors for personal consumption - Held that:- the issue is squarely covered by the decision of Tribunal in the case of Utopia India Pvt. Ltd. vs CST, Bangalore [2011 (2) TMI 586 - CESTAT, BANGALORE] and Brakes India Ltd. vs CCE, Mysore [2010 (1) TMI 301 - CESTAT, BANGALORE]. It is found that the impugned order does not record any evidence or finding to the effect that the directors and also the employees who used the said services were not involved directly or indirectly in the manufacturing activity, therefore, the demand on this count is not sustainable and the same is set aside. Denial of Cenvat credit - Renting of immovable property - storage of goods required for providing output service of commercial use of exploitation of event service - Held that:- it is not in dispute that the said service has not been availed in respect of manufacture of goods at Manesar and this is only an alternate argument which is not examined at the lower level. Therefore, the demand is set aside and the matter is remanded back. Denial of Cenvat credit - Photography services - taking pictures of manufactured products for use of advertisement and R&D - Held that:- the services are clearly used for development and improvement of manufactured products and therefore the credit of the same is admissible. Denial of Cenvat credit - Hotels, inns, club or guest house services - Held that:- the assertion of the appellants that the said service are used for stay of employees when they are travelling for the purposes of sales promotion has not been challenged and therefore the credit of the same cannot be denied as the activity of sale promotion falls within the definition of input service. Denial of Cenvat credit - Manpower recruitment or supply service - Appellant contended that the entire amount of credit was reversed, therefore, no demand should be confirmed - Held that:- this fact needs verification, therefore, the impugned order is set aside and the matter remanded back. - Appeal disposed of

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• 2016 (8) TMI 307
  Cenvat credit – common input services - credit on capital goods used exclusively for providing exempted services - Held that: - appellant is maintaining separate account as required under Rule 6(2) of the CCR, 2004 and there is no contrary finding save and except as alleged by the Id. Commissioner that in the statement of Senior Manager (finance), he did not state unambiguously. - In view of the clinching documentary evidence, no reliance can be placed on unambiguous statement of the officers. The appellant has fulfilled the condition of Rule 6(2) of CCR. Demand set aside. Interest and penalties set aside. The impugned order is set aside save and except the issue relating to credit pertaining to capital goods used exclusively for providing exempted services which are not contested by the appellant – decided partly in favor of appellant.

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• 2016 (8) TMI 292
  Cenvat credit - Service tax paid on immovable property rent on sale office - whether related to post removal of goods or not - place of removal - Held that:- the appellant's case is squarely covered in the definition of input service and consequently appellant is entitled to cenvat credit of service tax paid on immovable property rent. - Decided in favour of appellant with consequential relief

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• Central Excise

• 2016 (8) TMI 295
  Cenvat Credit - payment of duty where processing is not amounting to manufacture - they had cleared the fabrics cut to required sizes - payment of duty which was not less than cenvat credit taken on the fabrics - whether amount to reversal of credit or not - Held that:- the case is squarely covered by various judgments of the Tribunal. The demand raised by the Revenue does not survive because the credit taken by the appellant was reversed by paying duty at the time of clearance of the goods. That the items were not input is also not of much consequence inasmuch as the appellant could have also dealt with these items as a trader and the cenvat provisions would allow the same treatment. Further since the equal amount of credit has been paid at the time of removal of these goods, the requirement of law of reversing credit at the time of clearance of inputs as such remain satisfied. therefore, the demand and penalties are set aside. - Decided in favour of appellant with consequential relief.

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• 2016 (8) TMI 294
  Cenvat credit - eligibility - duty paid inputs procured indigenously and used in the manufacture of finished goods by the loan licence - export of goods by the principal manufacturer, against DFIA - trade notice issued by the DGFT bearing No.02/AM 07 dt.02.02.2007 - withdrawal of restriction on availing cenvat credit under FTP - whether in the nature of retrospective or prospective - Held that:- it is found from the impugned order of the learned Commissioner (Appeals) that at the time of passing of the said order, the retrospective amendment was not available before him. Besides, except referring to the interim Trade Notices issued by DGFT, detailed analysis of relevant facts and the issues raised by the Appellant in their grounds of Appeal had not been addressed by the Ld. Commissioner(Appeals) leading to a cryptic Order. Therefore, in the interest of justice, the case needs to be remanded to the learned Commissioner (Appeals) to consider the arguments on record in detail and also the retrospective amendment to the notification and provisions of Foreign Trade Policy, while deciding the issue afresh on merit. - Appeal allowed by way of remand

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• 2016 (8) TMI 293
  Refund of unutilized Cenvat credit - closure of factory - due to suffering heavy losses, the appellants stopped their production - surrender of registration certificate - Held that:- in view of the decision of Hon'ble High Court of Karnataka in the case of Union of India V. Slovak Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT] which was affirmed by Supreme Court in [2007 (1) TMI 556 - SUPREME COURT], there is no express prohibition in terms of Rule 5. Also the Tribunal is fully justified in ordering refund partly in the light of the closure of the factory and in the light of the assessee coming out of modvat scheme. Therefore, the refund cannot be denied. - Decided in favour of appellant with consequential relief

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• 2016 (8) TMI 291
  Who is liable to pay duty - conversion of proprietorship to partnership firm and then from partnership firm into company - the offence was committed when the unit was existing as a proprietorship - Whether of predecessor or of present appellant - Held that:- as per assignment of Business agreement, entered between M/s. Laxmi Electronics (Partnership concern) and M/s. Laxmi Electrovision Private Limited (the present appellant), the entire business of M/s. Laxmi Electrovision was taken over by the appellant including liabilities. The words morefully described in Schedule A has to be understood as, including the liabilities specified in Schedule A to this agreement but cannot be limited to only those liabilities. Further all the registrations, licenses of the earlier manufacturers, including machinery stand transferred to the present appellant. Therefore, the present appellant cannot argue that any offence committed by their predecessors cannot be a charge on them. Liability gets fixed on a person who takes responsibility to obtain central excise licence/Registration. - In the present case there is no evidence on record that a new Central Excise licence/Registration was obtained by the present appellant. On the contrary transfer of licence/Registrations to the successor are also transferred which will legally mean the responsibilities/liabilities casted under Central Excise licence/Registration also gets transferred to the present appellant. - Decided against the appellant

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• 2016 (8) TMI 290
  Whether the cross-objections filed by the assessee before Commissioner (Appeals) can be considered to be an appeal or not - Held that:- by following the decision of Hon'ble Karnataka High Court in the case of Southern Auto Products Vs. Commissioner of Central Excise, Bangalore-I [2007 (11) TMI 363 - KARNATAKA HIGH COURT], the cross-objections filed by the assessee before Commissioner (Appeals) are required to be disposed of as an appeal filed by the assessee. Therefore, the impugned order is set aside. - Matter remanded back

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• 2016 (8) TMI 289
  Refund of modvat credit - admissibility - period of limitation - accumulation of credit due to export of goods - Held that:- u/s 11B, the relevant date for such type of refund, is not specified. - in the absence of any relevant date, limitation period could not have been calculated by the original authority. Therefore, the quantum of modvat credit rejected to be refundable on the ground of limitation, is not sustainable in law. Refund of modvat credit - admissibility - non-availability of shipping bills - Held that:- when the first show-cause notice was issued, such ground was not taken. Further, the purpose of shipping bill, is to establish export and the proof of export was accepted. Also the bond was released after proof of export was accepted, the importance of filing of shipping bill, does not remain valid. Therefore, the modvat credit rejected is not sustainable in law. Refund of modvat credit - admissibility - more than one refund claim filed in one quarter - Held that:- by following the precedents decision of this Tribunal in the case of Hotline Teletube & Components Ltd. Vs. Commr. of Central Excise, Indore [1998 (5) TMI 72 - CEGAT, NEW DELHI], more than one refund claim can be filed in a quarter. - Matter remanded back

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• 2016 (8) TMI 288
  Cenvat credit - Distribution of credit by the ISD - duty paying documents - levy of penalty - original duty paying documents in the name of headquarters not produced during adjudication proceedings – Geld that:– cenvat credit allowed subject to the condition that the original duty paying document, on the basis of which Service Tax credit was taken, should be produced before the Adjudicating Authority for perusal - case remanded back to adjudicating authority for verification of original documents – decided in favor of appellant subject to a condition.

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• 2016 (8) TMI 287
  Availability of cenvat credit. - eligible inputs - Structural items such as M.S. Flats, Channels, Plates, Beams etc which are used to fabricate structures to house the coal washing plant are covered within the definition of input given in Rule 2 (k) of the Cenvat Credit Rule, 2004 – Held that:- all the goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for Cenvat Credit. It is not in dispute that the appellant is a taxable service provider on port under the category of port services – decided against revenue.

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• 2016 (8) TMI 286
  Demand of interest on reversal of Cenvat credit - common input service – Held that:- interest required to be paid – appeal dismissed - decided partly in favor of revenue.

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• 2016 (8) TMI 285
  Cenvat Credit on capital goods - use of capital goods in the manufacturing of exempted goods - The Department's contention is that once the appellant have not availed any input duty credit and they have become eligible for Notification No. 30/2004-C.E., they have no option but to avail of the exemption Notification 30/2004-C.E. only and they cannot opt from Notification No. 29/2004-C.E. and pay 4% the duty and in such a situation if any duty payment has been made, it would have to be treated as deposit and the clearances would have to be treated as clearances of fully exempted goods made under Notification Non 30/2004-C.E. and accordingly the appellant would not be eligible for capital goods Cenvat credit. Held that:– when two notifications available to assesse he can opt for most beneficial one – appellant cleared the goods by availing full duty exemption as well as on payment of duty - the capital goods cannot be treated as having been used exclusively in the manufacture of exempted goods - cenvat credit not denied – impugned order set aside – appeal allowed

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• 2016 (8) TMI 284
  Levy of penalty - interest on Differential duty paid on supplementary invoices paid after demand raised – Held that:– non payment of interest was not deliberate. Also when demanded the interest was paid - Penalty not to be imposed – decided in favor of appellant.

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• 2016 (8) TMI 283
  Applicability of trade notice dated 24.02.2014. - Requirement of physical control on the unit by jurisdictional officers on cigarette manufacturing unit – Held that:- the trade notice is applicable to the unit which are working less than 50% of their capacity. Appellant is working more than 50% capacity in manufacture of cigarettes. Trade notice not applicable. No requirement of physical control by jurisdictional officers on unit of appellant – Decided in favor of appellant.

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• 2016 (8) TMI 282
  Availability of cenvat credit on the services availed by job worker exclusively manufacturing the goods on behalf of respondent. Benefit of exemption under Notification No. 214/86-CE dated 25.3.1986 available or not – Held that:– cenvat credit available. Decision in the case of MRF Ltd. (2014 (1) TMI 822 - CESTAT CHENNAI) is applicable to the facts of this case wherein this Tribunal has examined the Rule 3 of Cenvat Credit Rule 2004 for availing the credit on the service availed by the job worker under Notification 214/86-CE dated 25.3.1986 – decided against the Revenue.

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• CST, VAT & Sales Tax

• 2016 (8) TMI 301
  Business of transportation of goods of dealers – survey – sealing of premises - seizure – production of documents – application for de-sealing of premises – re-sealing - writ-petition. - It was pointed out that the Petitioner is a transporter and not a dealer. The Petitioner stated that the goods lying at its premises are value added tax (VAT) paid goods and traceable to bona fide dealers registered under the DVAT Act. Regarding the issue of sealing - Held that: - Mere non-production of documents or books of accounts cannot justify the sealing of the premises under Section 60 (2) of the DVAT Act. Hence, the sealing of the premises of the Petitioner on 2nd July 2016 was illegal. Regarding the issue of re-sealing – Held that: - The premises appear to have been re-sealed only because the DT&T needed the Petitioner to produce 'relevant documents' without specifying what relevant documents were required. This was not a valid reason for re-sealing the premises. In any event, the reasons for re- sealing, consistent with the requirements of Section 60 (2) of the DVAT Act, had to be found in the form of a note in the file by the Commissioner or his authorised delegate. There is no such note. Hence, the re-sealing was illegal. There has been a wilful violation of the statutory provisions by the officers concerned. They have acted not only in ignorance of the law but in violation of the statutory requirements – disciplinary action against officers after opportunity of personal hearing should be taken – rights of petitioner reserved – respondent to pay petitioner damage charges – writ petition disposed off – decided in favor of assesse.

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• 2016 (8) TMI 300
  Proof of export - penultimate sale – production of complete H-forms – purchase of paddy – whether the purchase of paddy was made after and for the purpose of complying with the export order or not - assessment under CST Act,1956 – rebate of tax - Held that: - A perusal of the contents of Form 'H' would show that the sale made by the dealer has to be after the agreement or order and it has to be for the purposes of complying with the terms thereof. The form would further reveal that in case the goods are re-imported the information with regard to the same has to be furnished to the sales tax authorities within a month from the date of the import. This form was furnished by the dealer which has been accepted – revision application accepted. Regarding the issue of rebate - Held that: - The sale has been made to a export house and form 'H' issued under Rule 12(1) read with Section 5 of the CST Act has been placed on record. Rebate granted. Appeal allowed – decided in favor of assesse.

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• 2016 (8) TMI 299
  Levy of entry tax – Low Sulphur waxy residue brought from abroad – low Sulphur fuel oil – legislative competence of the state of Maharashtra – revenue neutral exercise or not - Held that:- so long as the import for consumption, use or sale within the local area attracts the levy, it is immaterial whether the goods originally arrived from outside the country or from another state within the country. The provisions of the Act read together as a whole so also harmoniously lead to the conclusion that the State is not denuded of its power to impose entry tax on the import of goods from outside the country. The words “outside the State” cannot be restricted in their application to the boundaries or territory of a State. That would mean entry tax is not leviable on goods imported from abroad but brought within the local area for consumption, use or sale therein though such a tax is leviable on the goods brought in from other States within the territory. The latter Act of bringing the goods from other parts of the country or from other States within the same country is also an import within the meaning of the Act. We cannot, therefore, restrict the definition of the words “import” and “importer” in the manner suggested by Mr.Dada. His second contention must, therefore, fail. - Constitutional validity upheld - Decided against the assessee. Revenue neutrality - it was contended that the purpose of entry tax is to neutralize difference between sales tax in the importing State and the sales tax in the originating State - Held that:- proviso to Section 3 does not dilute or read down the definition of the terms “entry of goods”, “import” and “importer”, but it only clarifies that if the import is by the importer who has purchased the goods in another State or Union Territory of the country and in that area these goods when purchased attract general sales tax, then, the amount of such tax shall be reduced from the levy of entry tax. - Our conclusion is also reinforced by the language of sub-section (5) of section 3 which states that no tax shall be levied on the specified goods by the dealer registered under the Maharashtra Value Added Tax Act who brings such goods into any local area for the purpose of resale in the State or sale in the course of inter-state trade or commerce or export out of the territory of India. - Therefore, if they are imported from abroad but are not consumed, used or sold within the local areas after being brought in, then, the entry tax is not leviable. Therefore, we do not see any substance in the contentions based on the language of the second proviso to sub-section (1) of section 3 of the Maharashtra Entry Tax Act. - Argument of neutrality rejected - Decided against the assessee. Restriction on freedom of trade - violation of the mandate of Article 301 of the Constitution of India - Held that:- We have not been shown anything from this judgment to enable us to hold that by mere levy of entry tax the mandate of Article 301 is violated. Further, the petitioners have not anywhere pleaded that even after the State amended the statutes and provided for a scheme of refund / rebate / set off, the so-called barrier still continues, or another barrier has been created. - Thus, merely on the strength of the judgment in the case of Eurotex Industries [2004 (1) TMI 651 - BOMBAY HIGH COURT] it would not be possible to consider the question. - decided against the assessee. The petition does not aver in specific words that the petitioner registered themselves for the purposes of the Entry Tax Act and that being liable to pay the entry tax, they filed their returns-cum-challans. Thus, returns-cum-challans were to be verified and scrutinized for the purpose of amount of tax due from the petitionerimporter. Since the petitioner no. 1 is a registered importer that rule 8(1)(iii) would be the applicable rule. It is not open to the petitioner to raise the bar of limitation because the notice for assessment under the Entry Tax Act in Form No. 5 to the Entry Tax Rules was issued to the dealer-petitioner on 11th June 2013. A copy of that notice is termed by the petitioner No.1 itself as a show-cause notice. The notice is in Form No. 5 and must refer to the returns-cum-challans filed by the petitioner. However, if the order of assessment is carefully perused and though made in Form No. 9 it does not refer to the details of the return. Scope of the entry in the schedule - classification - Held that:- When the entire Schedule was substituted retrospectively and there is also Entry No.12 which deals with furnace oil, including heavy furnace oil and residual furnace oil which is also included in petroleum fuel oil, then, NO ONE can enter into this factual controversy. It involved and included the product of the petitioners and if there is entry which takes care of it, then whether it is Entry No.12 or 13 should not be a matter of concern. The entries in the Schedule could describe the product as furnace oil and include therein heavy furnace oil and residual furnace oil, but to rule out any confusion or doubt even in relation to petroleum fuel oils so long as the description of a particular product or goods is of that category, then it would also include heavy furnace oil and residual furnace oil. Thus, no controversy. Unless the petitioners discharge their tax liability at their instance, no consideration to the plea of revenue neutrality – appeal dismissed – recovery of tax not stayed.

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• 2016 (8) TMI 298
  Revision of assessment after 5 years - period of limitation - section 40 r.w.s. 28 & 31 of HVAT - whether the period as provided under the Act is the outer limit for conclusion of revisional proceedings or for initiation thereof. It has to be read in the manner which gives it a true meaning for the reason that an assessee can always delay the proceedings and as a result of which the process initiated will be frustrated. – Held that: - Plain reading of the language suggest that no order shall be revised after the expiry of a period of five years from the date of order. The only meaning which can be assigned to the language used is that the proceedings have to conclude with the passing of the order. It is not merely initiation of proceedings for revision. Second proviso to Section 40(1) of the Act enlarges the limitation, if the revision is a result of any decision of the Tribunal or Court. The proceedings initiated for revision of the orders of assessment having not concluded within the period of five years from the date of order sought to be revised, as envisaged under Section 40 of the Act, the Revisional Authority now does not have any jurisdiction to pass the order – writ petition allowed.

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• 2016 (8) TMI 297
  Levy of purchase tax - ground nut oil cake - Tax paid under section 15B of the Gujrat Sales Tax Act,1969 – demand of tax under section 19A of the Gujrat Sales Tax Act,1969 - Applicability of section 19A for the specified period – Held that: - As per Sub-section (2) of Section 19A, where under any provision of this Act other than this section, any tax has been levied or is leviable on the sale or purchase of oil cakes, no further tax shall be levied under this section on such sale or purchase – no penalty or interest levied – decided in favor of assesse.

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• 2016 (8) TMI 296
  Validity of cancellation of TIN registration number - merit of the case not examined – principle of natural justice - GVAT - Sub-rule (3) of rule 10 postulate a specific mandate to the authority that when the Commissioner intends to cancel or suspend the registration under sub-rule (5) or (5A) of section 27, he shall give a notice to the dealer with form No.104 – Held that: - the authority before canceling the registration of the appellant, has not observed this specific procedure as contained under the relevant rules - In the present case however, no notice either in form No.104, or any other manner was issued to the petitioner why the registration should not be canceled. The reasonable opportunity concept is brushed aside before taking action against the appellant and therefore, the impugned orders are required to be quashed and set aside hereby – matter remanded back - Decided in favor of appellant.

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