TMI Tax Updates - e-Newsletter
September 10, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Highest amount, among all three sources in each year had taken on year-wise taxable value - service tax cannot be levied in such manner -Tri

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• CE -Clearance of goods on provisional price basis without opting for prov. assessment - merely a technical lapse - no interest & penalty -HC

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Articles

1. Service tax under reverse charge mechanism in case of renting of any motor vehicle designed to carry passengers

   By: Ganeshan Kalyani

2. THERE IS RATE CHANGE # RETURN UTILITY # NO MORE UTILITY

   By: Pradeep Jain

3. POT in GST

   By: CA Akash Phophalia

News

1. Director General (Dg) of Safeguards Recommends Imposition of Provisional Safeguard Duty @ 20%, for a Period of 200 Days for Hot-Rolled Flat Products of Non-Alloy and other Alloy Steel in Coils of a Width of 600 MM OR More; Recommendations of the DG Safeguards to be Examined by the Board of Safeguards Headed by the Commerce Secretary

2. Review of Foreign Direct Investment (FDI) Policy - to permit FDI, up to 100 percent, under the automatic route, in White Label ATM Operations

3. Amendment in the First Schedule of Industries (Development and Regulation) Act, 1951 to transfer the authority to regulate 'potable alcohol' to States

4. Preferential Treatment by India to Least Developed Countries (LDCs) in Trade in Services in the WTO

5. Ex-post-facto approval to capital infusion made in Export Import Bank of India (EXIM BANK)

6. Introduction of Sovereign Gold Bonds Scheme

7. Introduction of Gold Monetization Schemes

8. Release of additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners due from 1.7.2015

9. No Extension of Date for Filing of Returns due by 30th September for Assessment Year 2015-16 for Certain Categories of Assessees Including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etc whose Accounts are required to be Audited; Taxpayers are Advised to file their Returns Well in Time to Avoid Last Minute Rush

10. RBI Reference Rate for US $

11. DGFT Launches “Niryat Bandhu@Your Desktop” An Online Certificate Programme in Export Import Business

12. CCI imposes Penalty on Kerala Film Exhibitors Federation (‘KFEF’) and its two office Bearers for Contravening Competition Law

Notifications

Companies Law

1. F. No. 1/19/2013/CL.V - dated 4-9-2015 - Co. Law

Notification regarding sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013)

2. F. No. 1/19/2013-CL-V-Part - dated 4-9-2015 - Co. Law

Notification regarding sub-section (6) of section 129 of the Companies Act, 2013 (18 of 2013)

Customs

3. 47/2015 - dated 8-9-2015 - ADD

Seeks to levy definitive anti-dumping duty on imports of Float Glass of thickness 2 mm to 12 mm (both inclusive) of clear as well as tinted variety (other than green glass) but not including reflective glass, processed glass meant for decorative, industrial or automotive purposes falling under chapter heading 7005 of the First Schedule to the Customs Tariff Act, originating in or exported from the Peoples' Republic of Chinafor a period of five years

Circulars / Instructions / Orders

VAT - Delhi

1. No. F.3(569)/Policy/VAT/2015/658-63 - dated 2-9-2015

Regarding restoration of registration of dealers

DGFT

2. 34/2015-2020 - dated 9-9-2015

Trade in Border Haats across the border in Tripura between Bangladesh and India

3. 04/2015-16 - dated 4-9-2015

Elections to the Committee of Administration for Panel Members, Regional Chairpersons, Vice Chairperson and Chairperson of the Council for the period 2015-17 as per Election Rules duly amended by the Members at the Extra-ordinary General Meeting of the Council held on 20th August 2015

Highlights / Catch Notes

Income Tax

• Debtor Must Promptly Object to Recovery Notice u/r 2 to Avoid Delays and Potential Buyer Withdrawal.

  Case-Laws - HC : Recovery proceedings - Whether notice for recovery, as contemplated by Rule 2 was served upon the debtor ? - They must raise objections at the earliest possible opportunity & can not take recourse to any roving tactics to indefinitely delay recovery forcing the buyer to back out. - HC
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• High Court Rules Timely Investment in REC Bonds Valid for Section 54EC Deduction Without Unreasonable Delay.

  Case-Laws - HC : Deduction claimed under Section 54EC for investment in purchase of REC Bonds - the REC Bonds became available in VIA issue on 22.01.2007 and, therefore, investment made therein cannot be said to be after an undue or unreasonable delay. - HC
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• Court Overturns Writ Petition Approval; Bona Fides of Petitioner in Dues Recovery Case Could Not Be Verified.

  Case-Laws - HC : Recovery of dues from third parties - no discretion ought to have been exercised in favour of the writ petitioner whose bonafide cannot be ascertained and as such, the order of the writ Court allowing the writ petition and quashing the notice dated 3-3-2006 at the behest of the writ petitioner-Bhishma Pithamaha, is liable to be set aside. - HC
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• Section 68 requires assessing donor's capacity when subscribing to RIB Bonds, not at maturity.

  Case-Laws - HC : Additions u/s 68 - capacity of the donor has to be examined with reference to the time when the donor subscribed to RIB Bonds and not its capacity at the time of the maturity of the RIB Bonds. - HC
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• High Court Upholds Assessment u/s 144; Rejects Taxpayer's Claim of Mistaken Section 143(3) Filing.

  Case-Laws - HC : Rejection of books of accounts u/s 145 - AO proceeded to exercise power under section 144. Therefore, it is not possible to accept the submission that the assessing officer really made the assessment under section 143(3) and by mistake he recorded to have passed the same under section 144. - HC
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• Section 68 Gifts Upheld: Assessees Fail to Meet Initial Proof Burden Under the Act.

  Case-Laws - AT : Additions u/s 68 - gift received - both the assessees have failed to discharge the initial burden of proof placed upon them u/s 68 of the Act. - additions confirmed - AT
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• No Tax Deduction on Commission Payments if Last Year's Turnover is Under Rs. 40 Lakh: Section 194H Explained.

  Case-Laws - AT : TDS u/s 194H - Since the amount of total turnover for the immediately preceding year does not breach the limit of ₹ 40 lac, there can be no obligation on the assessee to deduct tax at source on commission paid in the previous year - AT
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• Disallowance of Service Tax u/s 43B: Liability Not Arisen for Billed but Unreceived Tax Amounts.

  Case-Laws - AT : Disallowance of amount of service tax payable u/s 43B - service-tax though billed but not received not having become payable to the credit of the Central Government by virtue of s. 68 of the Finance Act, 1994, r/w r. 6 of the Service-tax Rules, 1994, the same cannot be disallowed u/s 43B - AT
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• Mutuality Principle Not Applicable: Assessee's Interest Received from Non-Member Financial Institutions as Third Parties.

  Case-Laws - AT : Principle of mutuality - financial institutions from whom the interest is received by the assessee are not members of the Assessee Company but third parties. The relation between them is only as clients of the financial institutions and there is no scope of mutuality existing between them - AT
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• Trustee's Car Purchase Under Scrutiny: Section 11 Tax Exemption Challenged Due to Personal Benefit Concerns.

  Case-Laws - AT : Exemption u/s 11 - if a car is purchased in the exclusive name of a trustee, who has complete control over the car and had no personal car of his own, in the absence of any resolution passed by the trust in writing, it has to be assumed that it was made available for use of the trustee irrespective of whether it was actually used or not. - AT
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• Eligibility for Exemption u/s 54F Hinges on Allotment Date in Self-Financing Housing Schemes.

  Case-Laws - AT : Entitlement to exemption under section 54F - allotment of flats through self-financing schemes - date of letter of allotment - A beneficial provision, as section 54F, has even otherwise to be construed liberally. - AT
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• Section 14A Disallowance: Rule 8D Applies to Shares Held as Stock-in-Trade, Not Just Investments.

  Case-Laws - AT : Disallowance u/s. 14A read with rule 8D - shares in different companies, are held by the assessee as stock-in-trade, and not as investment - Rule 8D shall apply qua the shares held as stock-in-trade - AT
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• Section 80E Exemption: Tax Deduction for Business Profits from Taxable Securities Transactions Under MAT, Subject to Section 88E Conditions.

  Case-Laws - AT : Exemption u/s 80E - only as much of tax under the MAT provisions which relates to the income, though based on book profit, attributable to the profits of the assessee's business arising from taxable securities transactions, would stand to be allowed, in view of the qualifying condition of section 88E - AT
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Customs

• Court Quashes Anti-Dumping Duty on USB Drives; Natural Justice Principles Violated by Designated Authority's Investigation.

  Case-Laws - HC : Levy of Anti-dumping Duty on USB Flash Drives - validity of investigation and findings of the Designated Authority (DA) - There is no merit in the contention of the respondent that since, the Final Finding are only recommendatory in nature, the petition is premature, since the principles of natural justice have not been complied with, findings of DA quashed - HC
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• High Court Rules Education Cess Exempt on Imported Goods if Customs Duty is Waived for Assessee.

  Case-Laws - HC : Levy of Education-cess – if customs duty is exempted in favour of assesse, then education cess on imported goods is also not to be levied and collected - HC
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Service Tax

• Taxable Turnover Excludes Relatives' Turnover; Adjudicating Authority Must Issue Show Cause Notice First.

  Case-Laws - AT : Determination of taxable turnover - Clubbing of turnover of the relatives - The relatives are all independent existence - The Adjudicating authority should not pre-determine the issue, without issuing show cause to the relatives. - AT
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• Service tax calculation must be consistent; selecting the highest turnover from various sources is irrational and unfair.

  Case-Laws - AT : Determination of taxable turnover - The highest amount, among all these three sources in each year had taken on year-wise taxable value for determining demand of tax - service tax cannot be levied in such manner, on the basis of pick and choose method of the documents, which is totally inconsistent, misconceived and irrational - AT
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• High Court Overrules CESTAT, Criticizes Failure to Grant Unconditional Stay as per Previous Order for Pre-deposit Waiver.

  Case-Laws - HC : Waiver of pre-deposit - tribunal did not follow the order of similar bench to grant full waiver - CESTAT was not justified in declining to grant an unconditional stay in favour of the Appellant - HC
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• High Court Dismisses Premature Petition on Goods Supply; No Response to SCN; Article 226 Intervention Unwarranted.

  Case-Laws - HC : Supply of tangible goods - assessee did not file reply to the SCN - The instant petition, preferred by the petitioner at this stage, is premature and does not require interference of this Court u/Art. 226 of the Constitution of India - HC
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• Service Tax Exemption on Supervision Charges for Storage Services u/s 28-A of Madhya Pradesh Excise Act.

  Case-Laws - HC : Storage and Warehouse Services - Levy of service tax on supervision charges paid to the Government - For the purpose of deputing staff for supervision of the work, the charges levied at 5% were levied under Section 28-A of Madhya Pradesh Excise Act, 1915 - Not taxable - HC
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Central Excise

• High Court Rules Duty Remission Justified for Flood-Destroyed Goods Due to Department's Inaction After Notification.

  Case-Laws - HC : Remission of duty - Loss of goods due to flood - hese goods were destroyed only after giving intimation to the department - department has not acted in the time-bound programme - department cannot be permitted to take advantage of its own wrong - HC
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• Court Rules No Interest or Penalties on Differential Duty for Goods Cleared Provisionally Without Formal Request.

  Case-Laws - HC : Levy of interest on payment of differential duty - valuation - clearance of goods on provisional price basis without opting for provisional assessment - merely because an application was not moved, which is merely a technical lapse - no interest would be leviable nor penalty can be said to be leviable - HC
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• High Court rules against assessee: Cenvat Credit disallowed on duty paid for captively consumed exempted tractor parts.

  Case-Laws - HC : Cenvat Credit - export of tractors - duty was paid on captive consumption of parts where the parts were exempted unconditionally - it is not possible to accept the arguments of Mr. Sridharan that the exemption is not absolute but conditional. - decided against the assessee. - HC
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VAT

• Roadside Check Officers Can't Determine Item Nature or Tax Rate u/s 51 of the Act.

  Case-Laws - HC : Officers who were authorised to carry out checking on roadside in exercise of powers conferred under section 51 of Act cannot delve into question of nature of item and rate of tax applicable thereto - HC
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Case Laws:

• Income Tax

• 2015 (9) TMI 395
  Power of Commissioner u/s 263 – Held that:- The decision of HC confirmed [2014 (2) TMI 1033 - KARNATAKA HIGH COURT] – commissioner cannot exercise the power of revision solely on the ground that the order passed is erroneous - if one of the requirements for satisfaction of taking action under Section 263 of the Act is absent, then recourse cannot be made to Section 263 of the Act - The Commissioner cannot invoke his revisional power to correct each and every type of mistakes committed by the Assessing Officer – Decided against Revenue. Interpretation of section 13(1)(d) of the Act – Held that:- It is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to denial of exemption under Section 11 on the total income of the assessee - in case of contravention of Section 13(1)(d), maximum marginal rate of tax under Section 164(2), proviso is applicable only to that part of income of the Trust which has forfeited exemption and not the entire income – thus, the entire income of the respondent-Trust cannot be assessed for the tax - decision of HC confirmed [2014 (2) TMI 1033 - KARNATAKA HIGH COURT] – Decided against Revenue.

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• 2015 (9) TMI 394
  Recovery proceedings - Whether notice for recovery, as contemplated by Rule 2 was served upon the debtor ? - The prayer is, as Bank and Recovery Officer failed to comply with the mandatory provisions of Rules 48, 49, 50 and 52 of Second Schedule appended with the Income Tax Act, 1961, and did not adopt fair and proper procedure, the sale of subject property by auction, be quashed and set aside and property should be restored back to the petitioners Held that:- In this case, the petitioners did not move any application within time of thirty days though they could have done so. They have approached this Court in its extraordinary jurisdiction directly, that too without making any deposit. In prayer clause of the petition, they seek time to deposit, but till date have not chosen to deposit a single naya paisa. Period for which such an extension was sought is also not clearly spelt out. Pleadings in petition show that petitioners were always having knowledge of the public notices for sell or of proclamations of sale or of reserved price fixed therein. They do not prove that they became aware for the first time in February or March, 2012. They never raised objections either to fixation of the reserved prices or public notices / proclamations for sale. Scheme of Second Schedule as modified by the DRT Act reveal legislative intent to give the defaulter as much latitude as possible till end. He can, under Rule 60, without assigning any cause but after depositing the sum as mentioned therein within the stipulated time, avoid auction & protect his property. Process becomes difficult & he is asked to meet the ingredients of Rule 61 only thereafter. Thus after stage of Rule 60 is over, right of petitioners/borrowers get diluted & primacy is given to the creditor Bank & interest of the auction purchaser like respondent no. 3 herein. Hence, while approaching this Court directly under Art. 226 of the Constitution of India, it is axiomatic that the petitioners will have to make out an exceptional case. They will have to plead & prove their diligence & also steps taken to warn the bidders of their grievances or of status of subject property. They must see that irregularity, if any, is cured at the earliest & can not indulge in fence-sitting or wait till the proceedings are over & then jump in, in an attempt to unsettle it or to frighten the bidders away. When they want financial institutes like the Respondent no. 1 Bank to give loan to them, they also owe an obligation to it & public to see that in the unfortunate event of forced recovery, it is not unnecessarily obstructed. They must raise objections at the earliest possible opportunity & can not take recourse to any roving tactics to indefinitely delay recovery forcing the buyer to back out. Here, the petitioners have revealed same attitude which is unbecoming on their part. Moreover, their conduct & act of securing another loan from Mahavir Urban Cooperative Bank on the basis of same property dis-entitles them to any relief in extraordinary jurisdiction under Art. 226 of the Constitution of India. There is no justification to warrant dispensing with the fetters employed in the scheme of Rule 61 of the Second Schedule of the Income Tax Act. The intervention by this Court under Art. 226 is neither possible nor desirable in this matter. - Decided against assessee.

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• 2015 (9) TMI 393
  Deduction u/s. 48(1) - ITAT allowed deduction - Held that:- As after expiry of Shri P.M. Moghe on 20.03.1996, the assessee and his three daughters were faced in a peculiar position. They resolved the situation and a family settlement was reduced into writing. It was agreed that at the time of sale, each sister shall be given Rs. 15 lakh and each niece shall be given Rs. Five lakh. Accordingly, when the property was sold on 07.07.2006, this family settlement has been given effect to. It is, therefore, obvious that in the absence of such family settlement and payment, the sale of property on 07.07.2006 by the assessee could not have materialized. The CIT(A) in the Appeal filed by the assessee has not accepted payment of Rs. Five lakh each given to three nieces and that finding has been maintained even by the ITAT. The assessee has not questioned it in further appeal. As such, the only question is whether amount of Rs. 45 lakh paid to his sisters has been rightly accepted as expenditure in connection with transfer of property. The sisters had a title in property and without their cooperation there could not have been any sale. In this situation, we do not find any error in concurrent findings reached by the CIT as also by the ITAT. - Decided against revenue Deduction claimed under Section 54EC for investment in purchase of REC Bonds allowed by ITAT - Held that:- Section 54EC gives assessee an option to invest either in bonds of National Highway Authority of India or then in bonds of Rural Electrification Corporation Limited. The said provision does not stipulate that the investment has to be in any bond whichever is available. Both bonds carry different benefits and hence deliberately the Parliament has given option to the assessee to invest in any one out of two as per his choice. In a given case, the assessee may choose to invest in both. However, discretion is conferred upon the assessee, who is the best judge of his own needs and interests. He cannot be forced to invest in the bond whichever is available because period of six months is about to expire. This option or discretion given by the Parliament to the assessee needs to be honoured here. If said option was available when period of six months was to expire and could have been expressed by the assessee when said period was about to expire, the situation would have been otherwise. In present matter, the REC Bonds became available in VIA issue on 22.01.2007 and, therefore, investment made therein cannot be said to be after an undue or unreasonable delay. The investment has been made at the earliest possible opportunity.- Decided against revenue

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• 2015 (9) TMI 392
  Recovery of dues from third parties - realization of dues of the Math - notice issued by the Tax Recovery Officer (TRO) to the Managers of five banks where one Sri.Ramajanam, the power of attorney holder of the writ petitioner was having his accounts - would it be appropriate for this Court to invoke extraordinarily discretionary jurisdiction under Article 226 of the Constitution of India at the behest of a person who does not have any confirmed right over the properties and his filing of the writ petition challenging certain notices, which were neither addressed to him nor relate to his own Bank accounts, but are with regard to Bank accounts of one Sri.Ramajanam, who may happen to be his General Power of Attorney, but would be an independent person? - Held that:- In the facts and circumstances of the present case, in our opinion, the writ Court was not justified in going into the merits of the correctness of the notices which had been challenged in the writ petition by the writ petitioner who, in our view, would be a stranger to the said notices, and the writ petition, filed by a stranger or a person not named in the notices, should not have been entertained. It is well settled law that while invoking equity jurisdiction of this Court, the bonafides of the petitioner approaching the Court is to be considered and even if the law may be, to some extent, in favour of the petitioner yet, if the bonafides of the petitioner himself is doubtful or the petitioner has not come with clean hands, meaning thereby, the equity is not in favour of the petitioner, this Court will always refuse to exercise its extraordinarily discretionary jurisdiction under Article 226 of the Constitution of India in favour of such petitioner. In the facts of this case, we are of the firm view that no discretion ought to have been exercised in favour of the writ petitioner whose bonafide cannot be ascertained and as such, the order of the writ Court allowing the writ petition and quashing the notice dated 3-3-2006 at the behest of the writ petitioner-Bhishma Pithamaha, is liable to be set aside.

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• 2015 (9) TMI 391
  Rejection to books of accounts - addition to income - AO disallowed the expenses with regard to the purchase of the material by the appellant - assessment also made under Section 68 - Held that:- A notice under Section 131 of the Act had been served upon M/s Rama Enterprises. We are informed that PAN numbers were called for and have now been produced. The vendors appear to have paid tax. The effect thereof would have to be considered. It would now be possible to ascertain in a more satisfactory manner the genuineness of the entries in the assessee’s books of account as well as the genuineness of the transactions. While setting-aside the disallowance of the deductions on account of the purchases, the CIT (Appeals) undertook a detailed analysis of the production figures for the previous assessment years and for the assessment year in question. Having done so, it arrived at the GP ratio and inferred that the appellant had received the material corresponding to the purchases made from the vendors. It was found for instance that the existence of the vendors stood confirmed by the Excise & Taxation Officer. The assessee would rely upon the PAN numbers which were now produced during the course of these appeals. The excise record was also analysed by the CIT(Appeals). The CIT(Appeals) undertook a detailed analysis in coming to this conclusion. However, some of the crucial aspects have not been considered by the Tribunal. The Tribunal for instance held that the detailed enquiry made by the Assessing Officer by issuing summons under Section 131 of the Act to the vendors and also the enquiry made from the bank authorities establishes that the purchases were not genuine. The order does not indicate any reasons in support of this finding and in any event various aspects which have been dealt with by the CIT(Appeals) have not been taken into consideration while arriving at this finding. Further, the effect of the finding that the payments by the assessee to its vendors and of M/s Maa Durga Trading Company having withdrawn the same is not dealt with satisfactorily. Merely because M/s Maa Durga Trading Company withdrew the amount which was paid by the assessee to its vendors would not lead to the conclusion that the transactions between the assessee and the vendors were fictitious. Similarly, the Tribunal noted that the confirmation receipts of the said supplies were signed by different persons while the bank accounts were operated by other persons. This fact has been held against the assessee. This finding would be perverse. There is nothing unusual in different persons operating the bank accounts of a company and signing the confirmation receipts of the supply of goods. As mentioned earlier, Section 68 of the Act has not been considered at all. Had the only question in this appeal involved the interpretation of section 68, we would have dealt with the issue ourselves. However, that is not the only question in these proceedings. Thus the impugned order is set-aside and the matter is remanded to the Income Tax Appellate Tribunal for fresh decision - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 390
  Validity of reopening of assessment - ITAT nullifying the assessment orders on the ground that they were barred by limitation - Held that:- In the present case, the time limit for completing the reassessment proceedings pursuant to the notice issued on 23rd September 2005 was 31st December 2006. As is evident from the narration hereinabove, the reassessment proceedings were in progress and were being adjourned from time to time. Without those proceedings having come to an end a fresh reassessment could not have been initiated by the AO by issuing a notice under Section 148 of the Act on 24th November 2006. The proceedings initiated by the notice dated 23rd September 2005 ought to have been completed within the time stipulated and till such time there was no occasion to initiate fresh reassessment proceedings by issuing notice under Section 148 of the Act. Consequently, the impugned order of the ITAT annulling the assessments for AY 2001-02 to 2004-05 cannot be said to be erroneous. - Decided in favour of assessee.

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• 2015 (9) TMI 389
  Additions u/s 68 - Maturity proceeds of RIB shown as gifts from unrelated Non Resident India - satisfactory explanation with regard to its nature and source questioned - Held that:- Assessee had led evidence to establish the capacity of the donor. This was evident from the fixed deposit certificates as well as bank statements pertaining to the period when subscription was made to RIB Bonds by the donor. Insistence on the part of the revenue seeking to examine the financial capacity of the donor in the previous year relevant to the subject assessment year is in the present facts uncalled for. This is so as his present capacity will not determine his capacity at the time of purchase of the RIB Bonds. Two authorities have come to a concurrent finding of fact that the capacity of the donor to make the gift stands established on the basis of the documents which were placed before the Assessing Officer. This finding of fact with regard to capacity of the donor has not been shown to be perverse. Revenue could not dispute the concurrent finding of the two authorities that the gift was received from an NRI who had originally subscribed to the RIB Bonds. These bonds were transferable and in fact transferred to the respondent assessee by making a necessary declaration in that regard with the State Bank of India. So far as the other objection of the revenue that the decision of the Allahabad High Court in Kanchan Singh [2008 (5) TMI 641 - ALLAHABAD HIGH COURT] would have no application to the facts of the present case is not acceptable. The decision also dealt with gift made of RIB Bonds and it was held therein that capacity of the donor has to be examined with reference to the time when the donor subscribed to RIB Bonds and not its capacity at the time of the maturity of the RIB Bonds. Thus the issue arising for our consideration is essentially a question of fact. Two authorities have reached a concurrent finding of fact on the basis of evidence produced before them that the amount of proceeds on the maturity of RIB Bonds was not hit by Section 68 of the Act. This view is reasonable and possible on the basis of the evidence on record - Decided against revenue.

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• 2015 (9) TMI 388
  Validity of assessment under section 144 - Best judgment assessment - whether it was open to the assessing officer to make the assessment under section 144, otherwise than, on the basis of all relevant materials which the assessing officer had gathered after giving an opportunity to the assessee ? - Held that:- As quoted the relevant part of the order passed by the assessing officer from which it clearly appears that the assessing officer first exercised his power under section 145 and thereafter, he proceeded to exercise power under section 144. Therefore, it is not possible to accept the submission that the assessing officer really made the assessment under section 143(3) and by mistake he recorded to have passed the same under section 144. The submission that in an assessment under section 144 the assessing officer can make disallowances may be correct in the backdrop that the assessee may raise contentions disputing the materials collected by the assessing officer and allowances claimed in the defence to be taken by the assessee the assessing officer may have occasion to make disallowances. He has exercised power under section 145 because the books of accounts are not believable because the books of accounts according to him are neither correct, nor complete. If the assessing officer in such a case wishes to make an assessment under section 144, he has to make such assessment only in accordance with section 144. - Decided in favour of the assessee

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• 2015 (9) TMI 387
  Registration under Section 12A denied - non commencement of activities and therefore, failed to satisfy the conditions laid down in Section 12AA(1)(b) - Tribunal held that the assessee trust must be granted registration under Section 12A and recognition under Section 80G - Held that:- The question involved in these appeals is squarely covered by the judgment of this Court rendered in the case of Director of Income Tax (Exemptions) Vs. Meenakshi Amma Endowment Trust (2010 (11) TMI 853 - KARNATAKA HIGH COURT) wherein held where the trust has approached the authority for registration under section 12A within a span of eight months of its formation, the criteria, namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and the activities of the trust cannot be the criterion, since it is yet to commence its activities - Decided in favour of assessee.

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• 2015 (9) TMI 386
  Addition on account of deemed dividend under section 2(22)(e) - CIT(A) deleted the addition - Held that:- As being a registered shareholder is a condition precedent for invoking Section 2(22)(e) of the Act, and that condition is admittedly not satisfied. For this short reason alone, the impugned additions should have been deleted by the CIT(A). We approve the conclusions arrived at by the CIT(A) in this respect and decline to interfere in the matter so far as the relief given by the CIT(A) is concerned. - Decided against revenue. CIT(A)s directions to bring this deemed dividend to tax in the hands of Shri Mehul P Asnani, director in assesses company challenged - Held that:- The manner in which the appeal has been decided by the CIT(A) gives an impression, which is a wholly inappropriate impression and which has also been reiterated before us by the learned Departmental Representative, that the impugned additions have been deleted in the hands of the assessee as these additions are required to be made in the hands of someone else. The deletion of the impugned addition in the hands of the assessee company has been thus projected to be, though perhaps at a somewhat subliminal level, dependent of the addition being confirmed in the hands of the director. The directions given by the CIT(A) do prejudice interests of the assessee inasmuch as these directions not being implemented may be viewed as detrimental to the interests of the assessee but then the directions suffer from legal infirmities, from glaring procedural flaws, and are incapable of being implemented anyway. In any case, since these directions are given in the case of this assessee and the appellate order by the CIT(A) in the case of this assessee cannot be challenged, in appeal before us, by a third party, the only way to prevent these directions reaching the finality is a challenge by this assessee himself, particularly because, as is the settled legal position, the statutory provisions are to be construed ut res magis valeat quam pereat i.e., in such a manner as to make it workable rather than redundant. The assessee before us, therefore, has, in our considered view, locus standi to challenge legality of these directions. Thus we vacate the directions in questions. - Decided in favour of assessee.

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• 2015 (9) TMI 385
  Disallowance of outstanding labour charges to various contractors - Held that:- The assessee files a chart showing identical unpaid labour charges paid/accepted in assessment years 2008-09 to 2012-13; respectively. We reiterate that these random cases duly confirm to have made available their services at respective BSNL offices. There is no dispute raised about their identity since identity cards form part of the case file. There are many other confirmations in the same backdrop of facts. It transpires from page 100 of the paper book that assesse’s net profits since Assessment Year 2005-06 to Assessment Year 2011-12 read 4.19%, 6.29%, 5.27%, 5.21%, 3.52%, 3.85 and 4.59% respectively. The Revenue seeks to cast doubts on these documents by reiterating the lower authorities’ findings. However, it fails to controvert the above referred specific evidence. We take into account all this material and find that on facts well as consistency, the assessee has been able to prove its claim in question of the outstanding labour charges of Rs. 29,37,728/- to have been incurred in carrying out his contractual assignments. The Revenue’s arguments on mere assumptions and presumptions accordingly stand rejected. The impugned disallowance is deleted. - Decided in favour of assessee.

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• 2015 (9) TMI 384
  Validity of addition made in the assessment proceedings framed u/s 143(3) r.w.s. 153A - abatement of assessment - assessment of gift receipts - Held that:- Admittedly, these assessees have not filed original returns of income prior to the date of initiation of search under the regular provisions of the Act. The return of income filed by them under section 153A of the Act for the assessment year under consideration was the first return of income filed by the assessees. The second proviso to section 153A states that the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years referred to in section 153A(1) pending on the date of initiation of search shall abate. The assessment year under consideration, viz., AY 2006-07 falls within the six assessment years referred to in sec. 153A(1), but the same is not pending as on the date of initiation of search. Hence, the question of abatement of assessment does not arise in the instant cases. Whether the assessment year under consideration would fall in the category of unabated assessments or not? - Held that:- In the instant cases, we have noticed earlier that both the assessees have not filed the return of income for the year under consideration under regular provisions of the Act. There should not be any dispute that the question of assessment shall arise only if the assessees have filed returns of income or if the assessing officer passes any assessment order to the best of his judgement u/s 144 of the Act. Hence, in the absence of return of income filed for the year under consideration and also in the absence of any other proceeding leading to passing of the assessment order, in our view, it cannot be said that there was any proceeding concluded/completed by the revenue for the year under consideration. In the absence of any proceeding, the question of the same becoming concluded also does not arise. In that view of the matter, the question of abatement or otherwise of the proceeding relating to AY 2006-07 also does not arise. Both the assessees have failed to furnish the details relating to the gifts received by them. The gift receipts fall under the category of cash credits falling within the purview of the provisions of sec. 68 of the Act. There should not be any dispute that the initial burden of proof is placed upon the assessees under sec. 68 of the Act to prove the nature and source of cash credit, i.e., the assessees have to prove the three main ingredients in respect of cash credits, viz., the identity of the creditor, the credit worthiness of the creditor and the genuineness of the transactions. In case of gifts, the assessees have also required to prove the nature of receipts. In the instant cases, both the assessees have failed to discharge the initial burden of proof placed upon them u/s 68 of the Act. Hence, we do not find any infirmity in the decision of Ld CIT(A) in confirming the assessment of gift receipts in the hands of both the assessees. - Decided against assessee.

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• 2015 (9) TMI 383
  Non consideration of sale of DEPB as export incentives for deduction u/s. 80HHC - Held that:- In view of the convergence of the stands the rival counsels, and noting that the issue raised are governed by the ratio of the judgment of Hon’ble Supreme Court in the case of Topman Exports vs. CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein the decision of CIT vs. Kalpataru Colors & Chemical (2010 (6) TMI 63 - BOMBAY HIGH COURT) has since been reversed to held that DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 - matter is restored back to the file of Assessing Officer for re-adjudication afresh – Decided in favor of assessee for statistical purposes. Deduction allowable under section 80HHC where the assessee is also eligible for deduction under section 80IB - Held that:- Tribunal following the decision ACIT vs. Hindustan Mint & Agro Products Pvt. Ltd.,(2009 (6) TMI 124 - ITAT DELHI-C ) decided the issue against the assessee in principle which was reversed by Hon’ble Bombay High Court in the case of Associated Capsules vs. CIT (2011 (1) TMI 787 - BOMBAY HIGH COURT) and, therefore, it is no longer a good law.This aspect of the matter has not been contested by the Revenue before us - Decided in favour of assessee.

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• 2015 (9) TMI 382
  Maintainability of appeal - Disallowance of provision made for write off of loans - Addition on account of irrecoverable interest pertain to the provision for bad and doubtful debts - CIT(A) deleted the additions - Held that:- As decided in assessee’s own case for the A.Y. 2002-03 the assessee is a Cooperative Grameen Bank which filed its return of income for loss after claiming various deductions mentioned in the impugned order and the AO has disallowed the same but finally deleted by the ITAT. In view of the Instruction No.5 of the CBDT dated 10.7.2014, the present appeal is not maintainable. As per the records and the grounds raised by the assessee, the assessee was enjoying the benefit of S.80P of the Income Tax Act, 1961 and as such the tax on the income is exempt even if the addition is sustained there will be no tax due as the tax effect would be ‘nil’. Keeping in view the decision rendered by Hon’ble Allahabad High Court in the case of Zila Sahkari Bank Ltd. (2013 (10) TMI 1341 - ALLAHABAD HIGH COURT), the appeals filed by the Revenue are not maintainable. - Decided in favour of assessee.

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• 2015 (9) TMI 381
  Disallowance of wages - CIT(A) deleted part addition - Held that:- Perusal of the remand report shows that the Assessing Officer has examined all the facts and evidences. The assessee submitted Muster Sheet of wages before the Assessing Officer. Nothing adverse therein has been found by the Assessing Officer. Further, it may be seen from the history chart that the ratio of wages in the year under consideration is lowest in four years. There is no prohibition under the law that the wages cannot be paid in cash. It is a widely prevalent practice that wages are usually paid in cash in our country. The workers do not necessarily have bank accounts. The law itself has provided the provision of making payment in cash subject to the limits as have been laid in section 40A(3) of the Act. Thus, something which is permitted by law itself cannot be taken back by the Assessing Officer indirectly. Further, the Assessing Officer had before him complete facts and evidence and he was free to make any further verification if he had any doubts. Thus, in our considered opinion, the learned CIT(A) was very fair in reducing the disallowance to 10% of the total claim made by the assessee. - Decided against revenue. Disallowance of salary - CIT(A) deleted addition - Held that:- complete details and evidences have been furnished before the learned CIT(A). The Assessing Officer has examined the details and evidences and nothing adverse was found and he was free to examine whatever further he required and the disallowance cannot be sustained merely on the ground that salary was paid in cash, particularly when complete details and evidences are available. It is further seen that the assessee submitted Salary Muster, and nothing adverse has been reported in the remand report. Keeping in view the facts and submissions and material placed before us, we find that no interference is called for in the order of the learned CIT(A).- Decided against revenue. Admission of additional evidence by the learned CIT(A) in terms of rule 46A of the I.T. Rules, 1962 - Held that:- No case has been brought out by the learned Departmental Representative to convince us as to how and in what manner provisions of rule 46A has not been complied with by the learned CIT(A). On the other hand, it is seen by us that the learned CIT(A) had called for the remand report, providing thus adequate opportunity to the Assessing Officer to examine all the details and evidences being relied upon by the assessee. Under the circumstances, the learned CIT(A) was justified in considering the evidences and submissions submitted by the assessee. See CIT v/s Virgin Securities & Credits Pvt. Ltd. [2011 (2) TMI 207 - DELHI HIGH COURT] - Decided against revenue.

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• 2015 (9) TMI 380
  Disallowance of amount of service tax payable u/s 43B - Held that:- Since the said amount of service tax was not received during the year, the ld. AR argued that no disallowance can be made on this score u/s 43B. For this proposition, he relied on the judgment of CIT VS. Ovira Logistics (P) Ltd. (2015 (4) TMI 684 - BOMBAY HIGH COURT). For similar proposition, he relied on the order passed by the Chennai bench of the tribunal in ACIT VS. Real Image Media Technologies (P) Ltd. (2007 (12) TMI 263 - ITAT MADRAS-C ) in which it has been held that service-tax though billed but not received not having become payable to the credit of the Central Government by virtue of s. 68 of the Finance Act, 1994, r/w r. 6 of the Service-tax Rules, 1994, the same cannot be disallowed under s. 43B. No contrary decision has been brought to our notice by the ld. AR. Thus we hold that since the amount of service tax in dispute was admittedly not realized by the assessee, the same could not be disallowed u/s 43B. Decided in favour of assessee. Addition of amount of bad debts written off in the books of account - Held that:- There is no dispute on the fact that the assessee wrote off a sum of Rs. 7.75 lac in his books of account as bad debt. The Hon’ble Supreme Court in T.R.F. Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT ) has held that after 1.4.1989 the assessee is not required to establish that the debt has become bad in the previous year and a deduction on account of bad debts is permissible on a simple write off of the amount of bad debt. The deduction on account of bad debts is permissible on write off only if the amount of debt has been taken into account in computing the income of the assessee for the instant year or an earlier year. As decided in DCIT vs Shreyas S. Morakhiya (2010 (7) TMI 455 - ITAT MUMBAI ) amount receivable by the assessee share broker on account of brokerage is a part of debt receivable by him from his clients against purchase of shares on their behalf and, once such brokerage is credited to his Profit & Loss Account and the same is taken into account in computing his income, the condition stipulated in section 36(2)(i) gets satisfied and, therefore, the write off of the debt representing the irrecoverable amount receivable from the clients against purchase of shares on their behalf is allowable as bad debt. The Hon’ble Bombay High Court in CIT vs. Shreyas S. Morakhiya (2012 (3) TMI 103 - BOMBAY HIGH COURT) has approved the view taken by the Special Bench supra. The facts of the instant case are, mutatis mutandis, similar to those considered and decided in the aforenoted judicial precedents. As such, the assessee deserves to succeed on this ground. - Decided in favour of assessee. Non-deduction of tax on commission and brokerage u/s 40(a)(ia) - AO opined that the assessee was required to deduct tax at source u/s 194H - Held that:- The instant assessee is an individual. As such, he is liable to make deduction of tax at source from commission income u/s 194H only if the condition enshrined in the second proviso is satisfied, i.e. sales or gross receipts must exceed the monetary limit (Rs.40 lac at that time) during the financial year preceding the financial year in which commission is paid. Thus if the assessee in question pays commission or brokerage in the previous year 2007-08 relevant to assessment year 2008-09, then, his sales, gross receipts or turnover for the previous year 2006-07 relevant to assessment year 2007-08 must exceed Rs. 40 lac so as to make him liable for deduction of tax at source u/s 194H of the Act. Adverting to the facts of the instant case, we find that the total turnover of the assessee for the immediately preceding year was Rs. 26.74 lac. Since this amount of total turnover for the immediately preceding year does not breach the limit of Rs. 40 lac, there can be no obligation on the assessee to deduct tax at source on commission paid in the previous year relevant to assessment year under consideration.- Decided in favour of assessee. Addition u/s 68 - CIT(A) deleted the addition - Held that:- The assessee furnished reconciliation before the ld. CIT(A) in respect of balances of the parties appearing in his books of account and the corresponding balances in the books of such parties. The ld. CIT(A) found reconciliation in order and, accordingly, deleted the addition. The ld. DR could not controvert any discrepancy in such reconciliation. Under such circumstances, we are of the considered opinion that the ld. CIT(A) has taken an unimpeachable view on this issue.- Decided in favour of assessee.

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• 2015 (9) TMI 379
  Addition of unsecured loans - Held that:- It is clear that the assessee is unable to prove the immediate source of the transaction for the reason that the creditor is having bank account no. 071696 of UCO Bank, Barakar where an amount of Rs. 3,00,000/- was deposited on 03.10.2006 and on that very same day this amount was given as loan to the assessee i.e. her husband. Apart from this amount of Rs. 3,00,000/- there are small entries varies from Rs. 10,000/- to Rs. 20,000/- in the bank account and there was never a balance of more than Rs. 20,000 to Rs. 30,000/- in this bank account. Thus the assessee is unable to explain this transaction. Hence, confirm the orders of the lower authorities and the addition is confirmed. - Decided against assessee. Addition of unsecured loan received from Smt. Shashi Devi Poddar - Held that:- As gone through the current account bank statement wherein various entries of cash deposits and cheques issued are there from 24th April, 2006 to 3rd October, 2006 and on various dates the bank balance was more than Rs. 20,000/- and sometimes even Rs. 1 lac. It means that there was regular cash flow in the bank account from which the loan of Rs. 2,50,000/- was given to the assessee i.e. her nephew. In view of the above, it is of the view that Shashi Devi Poddar was having sufficient basis and funds to give loan of Rs. 2,50,000/- to the assessee. Therefore, no reason to doubt the same. Accordingly, this is accepted as genuine and delete the addition.- Decided against revenue. Cash credit received from Shri Kanhaiya Lal Poddar - Held that:- This is a merely small amount of Rs. 49,000/- advanced out of current year’s income. The current year’s income of the loan creditor is about Rs. 1,10,250/-, which is sufficient to meet this loan amount. Even otherwise, the loan was advanced on 23.12.2006 almost at the end of the year. Presuming that this amount was available with the loan creditor and amount was given by way of demand draft, no reason to doubt the same. Accordingly, this is accepted as genuine and delete the same.- Decided against revenue. Addition on low household withdrawal - Held that:- Assessee filed the details of other family members’ withdrawals like assessee’s wife Smt. Rinku Poddar wherein she has declared household withdrawals at Rs. 21,600/- and Smt. Shashi Devi Poddar amounting to Rs. 48,000/-. If these two withdrawals are also treated for family withdrawals then it will be more than the amount estimated by the AO at Rs. 60,000/-. Hence, there is no need to make any separate addition of Rs. 60,000/-. This ground of appeal of assessee is allowed.- Decided against revenue.

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• 2015 (9) TMI 378
  Applicability of principle of mutuality - interest earned by the assessee from the financial institutions who are members of the assessee Club treated as taxable income of the assessee - Held that:- No merits in the arguments submitted by the Ld. A.R. The decision of the Tribunal in the assessee’s own case for A.Ys 2002-03 to 2007-08 the Bench had followed the decision of the Hon’ble Apex Court in the case of CIT Vs. Vegetable Products Limited in (1973 (1) TMI 1 - SUPREME Court) wherein it was held that when two views are possible on the same issue by the two different High Courts, then the view in favour of the assessee has to be upheld. However, in the present situation the Hon’ble apex Court in the case of Bangalore Club (supra) has categorically held that the interest earned by the assessee from the financial institutions who are members of the assessee Club will not fall within the ambit of mutuality principle and therefore will be exigible to income tax in the hands of the assessee club. In the case before us the situation is much worse than the case of Bangalore Club, because the financial institutions from whom the interest is received by the assessee are not members of the Assessee Company but third parties. The relation between them is only as clients of the financial institutions and there is no scope of mutuality existing between them. Further it an income earned by the assessee company from its resources out of the transactions with third parties which are available for the members of the assessee company for their collective enjoyment though not available for distribution as dividend. For these reasons in the case of the Bangalore Club, the assessee itself had admitted, that the interest received from the financial institutions who are not members of the assessee Club, as its income. Therefore, respectfully following the elaborate order of the Hon’ble Apex Court, we hereby confirm the orders of the Revenue. - Decided against assessee.

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• 2015 (9) TMI 377
  Income from unexplained source - gift received from the members of the assessee’s family - Held that:- The assessee had submitted cash flow statements, bank statements and affidavits from his wife and daughter in law for having received Rs. 23 lakhs. When the assessee had made such submissions, it is the duty of the Revenue to examine the veracity of the claim of the assessee by examining the source of the donee either by summoning them or by verifying the documents furnished by the assessee/donee. We do not find any such attempt made by the Revenue in the case before us. Moreover, though the reasons stated by the Ld. Assessing Officer and the Ld. CIT (A) appears to have some merits, a detail finding on the submissions of the assessee with respect to the gift received from donors is lacking. Therefore in the interest of justice we remit the matter back to the file of the Ld. Assessing Officer for denovo consideration. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 376
  Entitlement to indexed cost of acquisition for working of capital gains - addition made on account of denying the exemption claimed under section 54 by treating the LTCG claimed by the assessee as STCG, as the assessee has held the ownership of the flat for less than 36 months - holding period of the flat sold by the assessee during the year under consideration, should be counted from which date? - Held that:- The assessee is holding the possession of the flat since 15th April 1996 and this fact is not denied and is duly supported with the evidence submitted by the assessee. The evidences available on record clearly show that the assessee has been holding this flat as a user and as an owner since beginning. No adverse comment has been given by the Assessing Officer either during the course of assessment proceedings or in the remand proceedings. The family declaration / confirmation dated 8th August 2008, is also placed. Allotment letter dated 15th April 1996 in the name of Shri Ratansingh C. Pethani, showing allotment of the impugned flat i.e., flat no.502, Ashirwad Building, 55, Shankar Lane, Kandiwali, Mumbai 400 067, in the name of the assessee. On a perusal of these documents and evidences, it is clearly established that the assessee has been the owner in possession of the said flat since 15th April 1996. Even otherwise, there cannot be any doubt on the fact that the assessee has been enjoying this property as a “defacto owner”. The concept of defacto ownership is not alien to the income tax law. Thus, viewed from any angle, the assessee is holding this flat since 15th April 1996 and, therefore, the learned CIT(A) has rightly allowed the claim of the assessee. Decided against revenue.

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• 2015 (9) TMI 375
  Exemption under section 11 denied - car purchased in the exclusive name of a trustee - Held that:- Admittedly, the assessee trust had not received any compensation in the year under consideration. The learned Judicial Member stated that while analysing the nature of the provision, particularly the quantum of compensation, should be tested/appreciated in a "subjective manner". With due regards, provisions of the Act have to be analysed and understood keeping in mind the 'object of the Legislature' and it should not be interpreted subjectively. In the instant case the language of section 13(2)(b)/13(3) does not give any discretion to the AO to give any other interpretation to the words 'made available for use'. In considered opinion if a car is purchased in the exclusive name of a trustee, who has complete control over the car and had no personal car of his own, in the absence of any resolution passed by the trust in writing, it has to be assumed that it was made available for use of the trustee irrespective of whether it was actually used or not. On a conspectus of the matter, there is violation of provisions of section 13(2)(b) r.w.s. 13(3) of the Act. Denial of exemption under section 11 should be limited to the amount which was diverted (in the instant case the car was purchased in the name of the prohibited person) in violation of section 13(2)(b) of the Act. With this observation the points of difference are answered as under: - (i) The car can be held as made available for the use of the trustee. (ii) 'Made available' for use include 'deemed use/applied for the benefit of the trustee', with or without actual use for personal benefit of the trustee. (iii) The act of the assessee falls within the ambit of section 13(2)(b) of the act. (iv) Denial of benefits of section 11 deserves to be restricted to such income of the trust which is used/applied directly or indirectly; in the instance case the car was purchased in the name of a prohibited person by applying the funds of the trust.

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• 2015 (9) TMI 374
  Entitlement to exemption under section 54F - Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house - assessee found favour with CIT (A) on the basis that the Flat "B" itself was the new asset, so that it could not be said that the assessee had more than one residential house, excluding the new asset, as on the date of the transfer of the original asset, i.e., July 21, 2008. Any investment made during the period July 21, 2007 and July 21, 2010 would thus qualify for exemption under section 54F - Held that:- The restrictions, as of a maximum of two residential houses ; retention of one qua which deduction is availed of for a period of three years (lest the same becomes a trade), etc., stand clearly spelt out in the section itself (section 54F). Once the purchase of a residential house has crystallised, as ostensibly on July 27, 2007 in the present case, any capital gain arising on a long-term capital asset (non-residential) could be appropriated towards its cost as long as the conditions of the section are met. A beneficial provision, as section 54F, has even otherwise to be construed liberally. In the case of allotment of flats through self-financing schemes, as by the Delhi Development Authority, the same is considered as an acquisition by way of construction, entitling the assessee to complete the test of dominion over an increased period of time, i.e., three years, as provided by the statute for the same (construction) after the date of transfer. In the facts of the present case, the assessee paid Rs. 51 lakhs in July, 2007, receiving the letter of allotment. Whether the same would amount to a purchase of the relevant asset would be the next and the relevant question to be asked. Even though the same may not by itself be considered as constituting a "purchase" in terms of test laid down by the hon'ble court in the case cited supra, the subsequent payments would definitely lead to one, so that the payments made in July, 2007 can, in retrospective, only be considered as towards purchase of flat B, the new asset. But for the payments in July, 2007, it may be appreciated, the payment/s during the relevant previous year (Rs. 40 lakhs) would not result in the payment of the entire sum during the current year, even as we observe substantial payment to have been made, meeting the test of substantial control, by December, 2008, whereat therefore the purchase, as explained by the hon'ble court, can be said to have taken place or matured. A reasonable construction of the provision, thus, would only be of the purchase, as indeed construction, being a manner of acquisition, which is to be completed within the time as provided under the provision, i.e., one year before or two years subsequent to the date of transfer of the relevant capital asset. Further, determination of the purchase date of flat B in December, 2008 would, however, result in no adverse impact on the assessee's case either for the assessment year 2007-08 or for the current year. - Decided in favour of assessee.

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• 2015 (9) TMI 372
  Bogus purchases - non-availability of some companies from whom the assessee had made purchases - Held that:- AO has not doubted the construction made by the assessee. He only doubted the genuineness of the purchases. So, any company which is carrying the construction, it is necessary to buy/ use necessary materials like iron, cement, sand, wood, etc. Without there being any material, the assessee cannot complete the construction work. We find that there is sound reasoning in the submissions of the assessee. Therefore, we set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the Assessing Officer to examine and decide the issue de novo after considering the details filed by the assessee in accordance with law after allowing sufficient opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purpose.

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• 2015 (9) TMI 371
  Addition u/s 69A on account of cash deposit in the bank account - Held that:- On examining the bank account submitted by the assessee we find that the assessee had withdrawn cash in most of the instances by way of issuing cheques to various parties from Surat and other places. Similarly, cash was deposited from various places in the assessee’s bank account. This points out that there was some activity carried on by the assessee relating to business. The revenue has it means to find out the nature of transactions transacted in the bank accounts of the assessee. However, the revenue has failed to make such exercise and simply presumed the facts to its convenience that the entire cash deposited by the assessee was the income of the assessee. We do not subscribe to this view of the revenue. The revenue has also not brought anything on record before us stating that the assessee had made any investment from such income. Further, considering the particulars of transactions reflected in the bank statement one can presume that the assessee was indulging in trading activities probably of art silk cloth as claimed by the assessee. No doubt, the onus is on the assessee to establish his claim which he has not complied fully. However, the revenue has also not brought anything on record to show that the cash deposited in the bank account of the assessee was his income from undisclosed sources without commenting on the cash withdrawals made by the assessee. Thus the entire deposits of Rs. 45,85,861/- made by the assessee in his bank account as observed by the learned AO has to be treated as total turnover of the assessee with respect to his undisclosed business of trading in art silk cloth and accordingly the income of the assessee shall be estimated at 8% of the total turnover. It is ordered accordingly. - Decided partly in favour of assessee.

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• Customs

• 2015 (9) TMI 402
  Levy of Anti-dumping Duty on USB Flash Drives - validity of investigation and findings of the Designated Authority (DA) - Sub section (5) of Section 9A of the Customs Tariff Act, 1975 - It is contended by the petitioner that the non-supply of the data/evidence relied upon by the Designated Authority violated the principles of natural justice and curtailed the rights of the petitioner to defend/oppose the imposition of the Anti-Dumping Duty and also amounted to a denial of an opportunity to effectively participate in the investigation - Held that:- In the present case, the Designated Authority has disregarded the transaction-by-transaction import statistics submitted by the domestic industry alongwith the application seeking initiation and introduced fresh data and relied on the transactions-by-transactions imports statistics obtained by him from the respondent No.4 at the very fag end of the investigation. The data was introduced after a period of seventeen months of initiation of investigation. Neither the copy of the said data relied upon by the Designated Authority nor the non confidential summary thereof was not supplied to the petitioners despite the same being demanded on the ground of confidentiality. The DA, in not providing the information/material considered by him, has violated the principles of natural justice and the same is fatal to the Final Findings rendered. Consequently, the Final Findings, having been rendered in violation of the principles of natural justice, stand vitiated and cannot be sustained. As a result, the impugned Final Findings are quashed. - Decided in favor of appellants. There is no merit in the contention of the respondent that since, the Final Finding are only recommendatory in nature, the petition is premature. It is no longer res-integra that this court in exercise of powers under Article 226 of the Constitution of India is empowered to entertain a petition challenging the Final Findings even prior to the same being accepted by the central government more so in a case where the principles of natural justice have not been complied with. The fact that the Rules prescribe that if the Designated Authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information, further emphasises the fact that for an investigation to comply with the principles of natural justice, it mandatorily entails sharing with the interested parties, the information/data being considered by the Designated Authority.

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• 2015 (9) TMI 401
  Offence punishable under Section 21 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) - Contention of learned counsel for the appellants that the statements before the Revenue Officials are not admissible in evidence, is untenable and unacceptable. - Furthermore, contention of learned counsel for the appellants that there are number of cuttings in statement suffered by Sukhchain Singh rendering it inadmissible, is not tenable - carrying approx. 5 Kg. of heroin in a hand bag - Held that:- Prosecution has proved its case beyond reasonable doubt against both the appellants on the basis of clear and cogent evidence. There is no ground for setting aside their conviction and sentence imposed vide impugned judgment and order dated 04.09.2009 passed by learned Judge - Decided against the appellants.

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• 2015 (9) TMI 400
  Non-Compliance of Notification No.12 of 2012 – Provisional conditional release – Drill ship and rig respectively was brought in by petitioners and in order to fulfill obligation under contracts with ONGC – Drill ship 'ABAN ICE' and drilling Rig 'ABANIV' were seized by respondent no.3 on belief that though it were exempted from payment of duty under Notification No.12 of 2012 but terms and conditions of this notification are not complied with – Held that:- Admittedly petitioners have received provisional release order, but same imposed unreasonable conditions namely deposit of entire duty with interest and submission of bank guarantee and also submission of bond of 100% of value – Petitions can be disposed of by accepting undertakings of petitioners given to Court – Subject to compliance of this, petitioners shall be permitted to deploy its drill ships/rigs as per requirement of ONGC – However petitioners shall not be permitted to remove these drill ships/ rigs out of India save and except with prior permission of respondent no.3/ respondent no.4 – Petitions are disposed of accordingly.

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• 2015 (9) TMI 399
  Levy of Education-cess – Exemption of duty under Notification No.45/02/Customs – Respondent-assessee filed about 16 bills of entries and claimed benefit of Notification No.45/02/Customs – On finalization of assessment, benefit of notification was extended to all bills of entries, exempting duties leviable subject to conditions that duties leviable were debited from relevant pass book under scheme known as DEPB scheme – Education cess at 2% on these duties was also debited from duties of DEPB as per clause of Finance Bill 2004 – Assesse protested against debit of education cess and in appeal it was held that debit of education cess and in terms DEPB scheme so also exemption notification was impermissible in law – Whether tribunal has jurisdiction to hold and declare that notification/circulars issued by Board are inconsistent to legislature – Held that:- duty exemption remission scheme and duty exemption pass book scheme are essentially to promote economic growth and in terms of new policy adopted by Government of India – Education cess on imported goods shall be in addition to any other duties of customs chargeable on such goods under Customs Act, 1962 or any other law for the time being in force – As per view taken by Gujarat high court in case of Gujarat Ambuja Exports Ltd. [2012 (7) TMI 679 - GUJARAT HIGH COURT] if customs duty is exempted in favour of assesse, then education cess on imported goods is also not to be levied and collected – Following High Court Gujarat Judgment, substantial question of law answered in favour of assessee – Decided against revenue.

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• 2015 (9) TMI 398
  Restoration of Appeal – In support of prayer for restoration of appeal, Tribunal refused to oblige appellants – Held that:- no fault with approach of Tribunal inasmuch as pre-deposit order was made in year 2007 – That was not complied with, appeals came to be dismissed – Tribunal, therefore, could not be asked to recall its order on application for restoration preferred as late as in 2013 –In said circumstances, Tribunal rightly refused to restore appeals and that too on ground that original conditions imposed be waived – Failure to comply with condition would result in automatic dismissal of appeals, and thereafter, no restoration application for extension of time shall be entertained –Decided against assesse.

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• 2015 (9) TMI 397
  Issue of certificate – Supply of Forged documents – Vide impugned order tribunal forfeited/penalty sum as imposed for violation of Regulation 19(1) and 19(8) of Customs House Agent Licensing Regulation, 2004 – Employee of respondent company who applied to Customs Authorities for issue of H Card had enclosed forged documents with application – Held that:- appellant authorities accepted and believed that certificate was genuine and validly issued certificate which was accepted by respondent employer – There was no allegation that there was collusion or respondent employer was aware that certificate was forged and fabricated – No substantial question of law arises for consideration – Not inclined to issue notice on application for condonation of delay – Appeal dismissed – Decided against revenue.

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• 2015 (9) TMI 396
  Sanction of refund due – According to petitioner, refund application was made as early as in 2004 and yet refund was not granted – It was contended that if appeal was filed by Department, then question of granting refund at that stage does not arise – Held that:- petitioner should be informed in writing by respondent as regard fate of his refund claim – If department preferred appeal against order of Commissioner (Appeals), petitioner should be put on notice – Direction issued to respondent to consider petitioner’s request and pass orders on merits and in accordance with law – Petition disposed of – Decided partly in favour of assesse.

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• Service Tax

• 2015 (9) TMI 425
  Vocational training Institute - Running of Commercial Coaching Classes for the students of Chartered Accountant examination and providing coaching for different Chartered Accountant courses - exemption Notification No. 24/2004-ST dated 10.09.2004 - Clubbing of income of other relatives to the taxable turnover of the assessee - appellant strongly relied upon the decision of the Tribunal in the case of Pasha Educational Training Inst. [2008 (12) TMI 80 - CESTAT, BANGALORE] - Held that:- he appellants institute was recognised by IRDA. In such a situation, the Tribunal held that the training imparted should be considered a vocational training. In the present case, the appellant s institute is not recognised for imparting coaching by the Institute of Chartered Accountants India and therefore, the said case law would not applicable in the facts of this case. So, the appellant is not eligible for the benefit of exemption notification as vocational training institute. - Decided against the assessee. Clubbing of turnover - Held that:- There is no material available on record that the Central Excise Officers had made any inquiry of the property shown in the income tax returns and from the Income Tax Department in respect of such Income Tax returns. Hence, we are unable to accept the clubbing of the income of the other relatives of the appellant as fees on the basis of the Income Tax returns. The other aspect of this matter is that while clubbing the income of the relatives with the appellant, no show cause notice was issued to the relatives. The relatives are all independent existence, not disputed by the Department. The Adjudicating authority should not pre-determine the issue, without issuing show cause to the relatives. - Decided in favor of assessee. Determination of taxable turnover - Held that:- It is noticed that the taxable value was determined on the basis of three sources (a) Fees collected (as per computer print out Pages taken out at the time of search) (b) Fees collected (as per details provided by the appellant vide Annexure A , B and C (fees receipt ledger) letter dated 04.05.2012 and (c) Fees collected/ income (by clubbing the income shown in the income tax return of the 13 persons/firm). - The highest amount, among all these three sources in each year had taken on year-wise taxable value for determining demand of tax - service tax cannot be levied in such manner, on the basis of pick and choose method of the documents, which is totally inconsistent, misconceived and irrational. - Decided partly in favor of assessee. Extended period of limitation - Held that:- appellant had not disclosed to the department tax liability and it is a clear case of suppression of facts with intent to evade payment of tax and extended period of limitation and penal provisions under Finance Act, 1994 would be invoked - Decided against the assessee.

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• 2015 (9) TMI 424
  Nature of service - Whether every service rendered in mining area would have to be classified under "Mining Service" or it has to be classified according to its scope and nature of the work? - Whether the service as defined in the scope of the contract could be more appropriately classifiable under "Cargo Handling Services"? - Whether the Tribunal was right in holding that the limestone and rejects are not goods? - Held that:- while this Court is not inclined to deal with the matter, while disposing off the present appeal as not maintainable, is inclined to grant liberty to the appellant/department to pursue the matter before the Supreme Court, if so advised. - this appeal is disposed of with liberty to the appellant/department to move before the Supreme Court, if so advised - appeal dismissed - decided against the revenue.

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• 2015 (9) TMI 423
  Restoration of appeal - Tribunal dismissed the appeals for non-compliance of pre-deposit order - Held that:- We do not think that such litigants deserve sympathy or there should be a premium on their lapses and deficiencies by an order from higher Court granting unconditional restoration of the Appeal and directing the Tribunal to decide the same on merits. It would be a travesty of justice if such an approach is adopted in all cases of this nature. We are therefore of the view that the Tribunal's order in the peculiar circumstances of this case is fully justified and no fault can be found therewith. The discretion to restore the matter has been exercised judiciously. Since the Appeal of the Appellants before us in the Tribunal has already stood dismissed without adjudication on merits, in the larger interest of justice, we grant a final opportunity to the Assessees/Appellants and if within a period of three months from today the Appellants report compliance of the conditional stay order dated 16th May, 2013 and produce proof before the Tribunal in that regard, the Tribunal shall decide the Appeal of the Assessees, by restoring it to its file, on merits and in accordance with law. - Decided in favor of assessee.

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• 2015 (9) TMI 422
  Waiver of pre-deposit - tribunal did not follow the order of similar bench to grant full waiver - HPCL was providing Business Auxiliary Services ('BAS') to IGL with regard to the sale of CNG through the retail outlet of HPCL - CESTAT proceeded to analyse the individual clauses of the Agreement dated 31st October, 2007 between HPCL and IGL and came to prima facie, conclusion that "there is no sale of natural gas or CNG to the appellant and sale of CNG the retail customers is by the IGL itself without an intermediary transfer of property in CNG in favour of the applicant". The corresponding prima facie, conclusion, therefore, was that the activity of BPCL in marketing without IGL would be exigible to service tax. Held that:- If the Principal Bench of the CESTAT felt that the agreement between HPCL and IGL, identical to the agreement between HPCL and MGL, called for a different interpretation, and that therefore the decision of the Coordinate Bench of the same strength in BPCL v. CST, Mumbai required reconsideration, then the appropriate course for the Principal Bench, CESTAT to adopt would be to refer the matter to a larger Bench of the CESTAT. In any event, at the stage of considering an application for stay, the CESTAT, Principal Bench ought to have proceeded on the basis that in light of the final judgment in BPCL v. CST, Mumbai (2014 (7) TMI 159 - CESTAT MUMBAI) being favour of HPCL, it had a prima facie case. CESTAT was not justified in declining to grant an unconditional stay in favour of the Appellant, without requiring the making of any pre-deposit. - stay granted - decided in favor of assessee.

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• 2015 (9) TMI 421
  Levy of service tax - services rendered prior to levy - payment received after the levy - consulting engineering services - Held that:- the demand of service tax is in relation to services received prior to 18.4.2006 and, therefore, by virtue of the above said circular dated 26-9-2011, there will be no liability. - Decided against the revenue.

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• 2015 (9) TMI 420
  Supply of tangible goods - assessee did not file reply to the SCN - assessee contended that authority has made up his mind and is bound to create unnecessary and abnormal demand and calling for his reply to the impugned notice remains a empty formality and is not going to serve any purpose. It is further contended that the statements recorded during search and indicated in the show cause notice impugned herein, are under duress and cannot be read against him - Assessee contended that the authority is biased in approach from the initial stage of issuing notices, show cause notice, impugned herein, further opportunity is of no use and in these facts & circumstances, the petitioner had no option except to approach this Court under the extraordinary jurisdiction of this Court u/Art. 226 of the Constitution of India. Held that:- On perusal of the show cause notice, we feel that it is only a prima facie view which the Commissioner, as a quasi-judicial authority, has expressed at this stage, placing reliance on the material collected, at the time of search and in our view, it cannot be said that the Commissioner has prejudged the matter of imposition of service tax and that may be considered after the reply to show cause notice is submitted by the petitioner. The instant petition, preferred by the petitioner at this stage, is premature and does not require interference of this Court u/Art. 226 of the Constitution of India. - Decided against the assessee.

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• 2015 (9) TMI 419
  Levy of penalty u/s 78 - corresponding modification (upward) in penalty due to final computation of service tax liability - benefit of reduced penalty of 25% - Held that:- Commissioner proceeds to recompute and recalculate the tax liability and penalty. The penalty that he has computed is based on evasion and consistent therewith. However, he has not ignored the proviso to Section 78 and in computing the benefit thereunder that he refers to the figures in a table, copy of which is found at page 153 of the Appeal paper book. Hence, if the Assessee is required to pay the balance of Service Tax amounting to Rs. 3,62,80,398/- and appropriate interest under Section 75 on the total amount confirmed under this order less the amount already paid and the differential penalty under Section 78 which is 25% of the Service Tax demand confirmed, less 25% of the Service Tax demand confirmed under the earlier order and already paid, then, the Assessee would get the benefit of reduced penalty. It is this computation which has been reflected in the operative order in para 14. That order has been complied with by the Assessee and as certified by the Commissioner at page 162 of the Appeal paper book. 25% of the amount of penalty as redetermined and recomputed, if deposited, the benefit would be available. In such circumstances, we do not think that the Tribunal intended to impose any outer limit or cap on the penalty. The understanding of the Revenue that the outer limit of Rs. 10 crores is imposed in the impugned order on the quantum of penalty is therefore not correct and has no basis - appeal dismissed - Decided against the assessee.

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• 2015 (9) TMI 418
  Validity of Show Cause notice - proper officer - argument was raised before the tribunal first time - it was contended that notice has been issued by the Superintendent of the Central Excise. He lacks jurisdiction and, therefore, the order passed by the Adjudicating Authority was void ab initio - it was contended that show cause notice could have been issued only by the Commissioner of Central Excise or any delegate of the Commissioner duly and properly delegated the powers to adjudicate in terms of the Finance Act, 1994 and the Central Excise Act, 1944. Held that:- whether the entire proceedings from the inception were under the authority of the Superintendent and he concluded the adjudication, was an argument raised for the first time before the Tribunal that the Tribunal found it fit to reject it by assigning reasons inter alia of acquiescence. - We do not find that the Tribunal’s order in relation to this aspect raises any substantial question of law. - appeal dismissed - Decided against the assessee.

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• 2015 (9) TMI 417
  Storage and Warehouse Services - Levy of service tax on supervision charges paid to the Government - For the purpose of deputing staff for supervision of the work, the charges levied at 5% were levied under Section 28-A of Madhya Pradesh Excise Act, 1915 - charges in respect of storage of Foreign Liquor undertaken by the Liquor Contractor in the warehouse - Held that:- That being so, the activities of the staff appointed to supervise the work of the warehouse and the act of the State Government in appointing the supervisor does not fall within the purview of providing service by a service provider to a client. In view of the above, we see no error in the order passed by the Tribunal holding that the supervision in the warehouse undertaken by the State Government does not amount to ‘service’ and is not taxable under the head ‘Storage and Warehouse Services’. It does not fulfil the requirement of service as provided under Section 65(105)(zza) of the Finance Act, 1994 and is not included in the purview of the words ‘Storage and Warehouse Services’ - On the contrary, it is only a fees levied for the supervision undertaken by the State Government to ensure proper functioning of the warehouse and storage in accordance to the statutory requirement. - appeals dismissed - Decided against the revenue.

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• Central Excise

• 2015 (9) TMI 412
  Evasion of duty - Request to furnish documents sought for - Held that:- Documents referred to in the show cause notices in question has been furnished to petitioners. Concededly the documents which are now sought for by petitioners in their respective representations have not been relied upon in the show cause notices by respondent except seizure mahazar. In fact, documents referred in seizure mahazar has also been furnished to petitioners along with the documents in three (3) volumes and as such, this Court is of the considered view that question of issuing any writ of mandamus to respondent to furnish copies of documents to petitioners, as sought for in the respective representations, does not arise. - In the show cause notices in question respondent has clearly indicated that if there are any non relied upon records which is required by petitioners it can be collected by the noticees namely, petitioners within 30 days of receipt of show cause notices. It is not the case of petitioners that documents which are indicated in the show cause notices have not been furnished to petitioners. It is also not their case that same has been relied upon by the respondent. Hence, for this reason also no direction can be issued to respondent. Hence, writ petitions stand dismissed as being devoid of merits - Decided against assessee.

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• 2015 (9) TMI 411
  Condonation of delay - Non receipt of order - Held that:- Alleged adjudication order dated 19th November, 2012 was not received by them. Only a recovery notice dated 29/30th December, 2014 was received by the writ petitioner. It is also alleged by the writ petitioner that after issuance of the show cause notice dated 26th July, 2011, no communication at all was received from the respondent authorities. Since it was not favoured with the copy of the adjudication order, the writ petitioner was unable to prefer any appeal from the adjudication order. - grievance of the writ petitioner will be redressed if now the respondent authorities are directed to 2 supply a copy of the adjudication order to the writ petitioner so that the writ petitioner may file an appeal against the same, if necessary with an application for condonation of delay. - Decided conditionally in favour of assessee.

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• 2015 (9) TMI 410
  Remission of duty - Loss of goods due to flood - Application of the assessee came to be rejected on the ground that the goods were destroyed in the absence of the officer of the Central Excise Department - Held that:- Undoubtedly after the goods became contaminated and though several reminders were sent to the department as aforesaid, the department chose to remain silent and as such the Respondent was left with no other option, but to destroy the goods as there was a risk of entire production area being contaminated and hazardous to the human-being. These goods were destroyed only after giving intimation to the department. The department woke up after the goods were destroyed and issued a notice to the Respondent to remain present for hearing on his application for remission and after that the said application was rejected on the ground that the goods were destroyed in the absence of the officer/representative of the department. The Chapter 18 of the Excise Manual provides for a time-bound programme in which the officer of the department is expected to act in such matters. Undoubtedly, in the present case the department has not acted in the time-bound programme. - The department cannot be permitted to take advantage of its own wrong - Decided against Revenue.

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• 2015 (9) TMI 409
  Violation of the principles of natural justice - Cross examination opportunity not given - Held that:- Court finds that the case put up by the petitioner is not liable to be entertained in view of the law declared by the Apex Court as per the decision Telestar Travels Pvt. Ltd. v. Special Director of Enforcement cited [2013 (2) TMI 396 - SUPREME COURT]. In the said circumstance, interference is declined and the writ petition is dismissed - Decided against Assessee.

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• 2015 (9) TMI 408
  Invocation of extended period of limitation - Suppression of facts - Held that:- Once the issue of invocation of extended period of limitation raises a mixed question of fact and law, then the Tribunal found and on facts that assuming the larger period could have been invoked the Revenue / Department was aware that the assessee sold the goods from the depot piece meal. Once the Revenue was so aware and as found by the Tribunal on facts, then, the extended period could not have been invoked and applied. Any larger controversy and wider question was really not arising in the given facts and circumstances. by alleging suppression can the larger period be invoked and for that purpose a fresh show cause notice can be issued or not is a question which we keep open for decision in an appropriate case. We find that on facts the Tribunal was justified in interfering with the order-in-original. - Decided against Revenue.

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• 2015 (9) TMI 407
  Maintainability of appeal - Section 35G - Held that:- An appeal under Section 35G of the Act would not lie to the High Court in terms of sub-section 1 of that Section in relation to an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment. Any question having a relation to the value of goods for the purpose of assessment goes out of the jurisdiction of the High Court in terms of Section 35G in view of the exclusionary clause provided by sub-section 1 of that section. The determination of the value of the goods for the purpose of assessment necessarily takes in the quantification of the goods involved in the assessment. - Appeal is not maintainable - Decided in favour of assessee.

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• 2015 (9) TMI 406
  Area based exemption - determination of substantial expansion - Notification No. 1/2010-C.E., dated 6-2-2010 - new investment by more than 25% in the existing plant and machinery which also resulted into generation of employment by 50% - Revenue contended that Since the notification is primarily aimed at increasing the industrial activity by expansion etc., taking the depreciated value of plant & machinery would go against the spirit of the notification. - Held that:- The adjudicating authority has taken the depreciated value to calculate the percentage increase/expansion in the Capital. However, such an interpretation would defeat the very purpose to the context in which it has been used both technically as well as logically. - I find merits in the revenue’s appeal, so far as the condition as stipulated in para 8(b)(i) for availing exemption under the notification. - Decision in the case of Bhai Jaspal Singh [2010 (10) TMI 899 - SUPREME COURT OF INDIA] relied upon. Reliance of the assessee on Board’s Circular dated 21-1-2004 is misplaced as the same has been issued in context to area based Notification No. 56/2002-C.E., dated 14-11-2002, - Notification 56/2002-C.E. requires substantial expansion by way of increase in installed capacity whereas Notification 1/2010 speaks of substantial expansion by way of increase in the value of fixed capital investment in plant and machinery for the purposes of expansion of capacity or modernization and diversification. However, the benefit of the Notification would still be admissible to the respondents in case they satisfy the condition laid down under Para 8(b)(ii) regarding employment. Increase in employment - revenue contended that increase in labour is not attributable to investment but was done on account of regular need of the respondents - Held that:- , I find that the regular employee’s strength of the respondents has increased by much over 25% over the base employment on making new investment in plant & machinery, as such, they have fulfilled the criteria for admissibility of area based exemption to them, clause 8(b)(ii) of the notification. Assessee is entitled to area based exemption, under the notification. Accordingly, the impugned order is upheld and the appeal of the revenue is rejected. - Decided against the revenue.

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• 2015 (9) TMI 405
  Cenvat Credit - Waiver of pre-deposit - abnormal consumption of inputs i.e. pig iron, scrap, CPC production apart from low production yield resulting in high utilization of Cenvat credit - majority order - Held that:- in this case the applicant has produced 2 reports showing consumption pattern of the input which show that the pattern the consumption shown by the applicant is correct. Further, in the case of Sanco Plastics Pvt. Ltd. (2003 (11) TMI 519 - CESTAT, NEW DELHI) this Tribunal has held that in view of the conflicting opinion brought on record by both the sides for consumption pattern and the allegation is not proved by tangible evidence, in that case allegation is not sustainable. In this case also no investigation took place and there is no allegation that the applicant has not received the input or cleared input/finished goods clandestinely. Further, when the applicant is filing ER-6 returns regularly showing their consumption pattern, in these circumstances, the applicant prima facie having a case on limitation also. I concur with the view taken by the Hon’ble Member Judicial relying on the decision of Adit Ispat (2013 (11) TMI 439 - CESTAT NEW DELHI) to make pre-deposit of Rs. 30.00 lakhs at this stage. - Stay granted partly.

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• 2015 (9) TMI 404
  Levy of interest on payment of differential duty - valuation - clearance of goods on provisional price basis without opting for provisional assessment - assessee submitted an explanation in which it was submitted that sub-rule (4) of Rule 7 makes it clear that the interest payment arises only from the first day of the month succeeding the month for which such amount is determined and according to the assessee, it was to be determined from the date of finalization of the provisional assessment and not the date of payment of final duty, it was submitted that neither interest nor penalty is leviable and accordingly, it was requested that the proceeding be dropped - Held that:- In our view, under sub-rule (4) the interest arises only from the first day of the month succeeding the month for which such amount is determined till the date of payment thereof and in our view, it is very clear and unambiguous that the interest liability arises only upon determination of the value or the duty by the adjudicating authority and only after determination this liability arises. In our view, merely because an application was not moved to the Assessing Officer and which the respondent-assessee did not move on such fact, no interest would be leviable nor penalty can be said to be leviable, though requirement of the Act/Rule needs to be fulfilled but in this particular case, it would be too technical to come to the said conclusion that the application was not moved by the assessee and it becomes fatal. - Demand of interest and penalty set aside - Decided in favor of assessee.

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• 2015 (9) TMI 403
  Cenvat Credit - export of tractors - duty was paid on captive consumption of parts where the parts were exempted unconditionally - revenue contended that appellants were not required to pay duty on the aggregate parts and are therefore, not entitled to take credit of the duty so paid? - Sr. No. 92 of Notification No. 6/2006-C.E. - Scope of Section 5A(1A) of Central Excise Act, 1944 - Held that:- Though the aggregates are exempted from duty, the assessees are paying duty on the aggregates used for manufacture of tractors cleared for export. They are paying this duty and, then, claiming drawback though the duty is not chargeable at all on the aggregates. There is substance in the contention that when the Column No. 3 describes in clear terms that all goods except road tractors for semi-trailers of engine capacity more than 1800 CC and Sr. No. 92 clarifies for parts, used within the factory of production for manufacture of goods of Heading 8701 shall carry Nil rate of duty but both Sr. Nos. 40 and 92 in the subject Notification do not refer to any condition, then, it is not possible to accept the arguments of Mr. Sridharan that the exemption is not absolute but conditional. Once we have taken the above view, then, it is not necessary to refer to other judgments relied upon by Mr. Sridharan with regard to interpretation of exemption notifications. It is only when the exemption claimed is conditional or that two views are possible on a reading of the exemption notification that these judgments can have any application. These judgments also, therefore, do not assist the assessees-appellants. Writ petitions failed - That bifurcation made by the Tribunal is in clear terms traceable to the above Rules. Hence, the Tribunal’s order confirming the demand partially does not require any interference. The grounds which have been taken in these Writ Petitions and the Central Excise Appeals are based on the option to pay duty on the tractor parts consumed within the factory of production for manufacture of tractors exported under bond. However, that option itself is not available in view of the language of Section 5A(1A) and the Cenvat Credit Rules. In these circumstances, we do not find any fault in the orders passed by the Central Government and that of the Tribunal. - Decided against the assessee.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 416
  Cancellation of Registration – Genuineness of Transaction – Tribunal vide impugned order dismissed revision application of appellant confirming order passed by authorities cancelling registration certificates of petitioner – Held that:- Admitted that registration of petitioner was cancelled ab-initio under VAT Act as well as CST Act on ground that petitioner indulged into billing activities only with respect to the alleged purchases – Tribunal observed that after examining issue afresh and considering genuineness of transactions / purchases alleged to have been made by petitioner, further consequential actions with respect to cancellation of registration may be taken – Under said circumstances, matter was required to be remanded to A.O. and fresh decision was required to be taken with respect to cancellation of registration certificates in light of genuineness of transactions / purchases made by petitioner – Thus matter remanded back to tribunal – Decided against Assesse.

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• 2015 (9) TMI 415
  Fixation of 'floor rate' for collection of advance tax – Petitioner challenges Ext.P6 Circular, issued by commissioner, alleging that digitally signed Form 15 was not practical, to be followed in case of petitioners who are engaged in field of timber business – It is also pointed out that, Commissioner adopted discriminative stand in so far as, some of dealers trading 'Cement' and 'Rubber' stand excluded from satisfying requirement under Ext.P6 – Held that:- Admitted position that Commissioner have power to issue Circular under different circumstances to meet requirements under statute, especially with regard to fixation of 'floor rate' for collection of advance tax under Section 16(A) of Act – Therefore while sustaining power and jurisdiction of Commissioner to have issued relevant Circular, Court directs Commissioner to consider grievance of petitioners as per relevant representations, especially with reference to non-availability of internet facility at relevant place and also as to transportation of goods through railway wagons – Decided partially in favour of Petitioner.

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• 2015 (9) TMI 414
  Detaining of Goods - Documents not accompanied with goods - Levy of tax and compounding fee - Petitioner goods were intercepted and respondent detained on ground that documents were not accompanied goods – Therefore, impugned detention notice was issued were goods were detained and authority demanded tax together with compounding fee – Held that:- respondent detained goods when goods were diverted to some other place, while all relevant documents show that goods were meant to be delivered at petitioner’s factory –Admitted fact that goods were not accompanied by any of documents as required under Act and Rules framed thereunder – Court not inclined to permit petitioner to take away goods without complying requirements under detention notice – Thus, petitioner directed to pay tax and compounding fee as demanded by respondent – On such payment, goods in question shall be released – Decided in favour of Petitioner.

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• 2015 (9) TMI 413
  Revocation of Penalty – Tribunal vide impugned order set aside penalty order and remanded matter back for ascertaining rate of tax applicable – It was alleged that Tribunal erred in cancelling penalty as dealer had transported inverters and not UPSs thus, was liable to pay tax at rate of 12.5 per cent whereas tax on UPSs was leviable at rate of four per cent – Held that:- Tribunal came to conclusion that nature of transaction could be determined by Assessing Authority – Assessing Authority shall adjudicate whether goods were actually inverters or UPS – Officers who were authorised to carry out checking on roadside in exercise of powers conferred under section 51 of Act cannot delve into question of nature of item and rate of tax applicable thereto – No error could be pointed out in approach of Tribunal which may warrant interference – No merit in appeal – Decided against revenue.

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