TMI Tax Updates - e-Newsletter
September 13, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Cabinet approves creation of GST Council and its Secretariat - 1st meeting of the GST Council will be held on 22 & 23 September in New Delhi

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• Input tax credit is not a right but it is a concession granted by the statute - conditions specified for availing ITC must be fulfilled - SC

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Articles

1. Contact details of tax officers must be complete – CBDT must issue further instructions and tax authorities must follow instructions- erring officers must be penalised in appropriate manner

   By: DEVKUMAR KOTHARI

2. GST IN INDIA: IS 1ST APRIL 2017 SACROSANCT?

   By: Dr. Sanjiv Agarwal

3. OFFENCES AND PENALTIES UNDER MODEL GOODS AND SERVICE TAX ACT, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cabinet approves creation of GST Council and its Secretariat - The Finance Minister decided to call the first meeting of the GST Council on 22nd and 23rd September 2016 in New Delhi.

2. Finance Minister Shri Arun Jaitley to inaugurate the ‘Mahalekha Niyantrak Bhawan’, the new official premises of the Office of Controller General of Accounts(CGA); On the occasion,FM will also launch a Web Responsive Pensioner’s Service Portal to provide a one-stop solution for pensioners and help in speedy redressal of pensioners’ grievances

3. Indirect Tax Collections upto August, 2016 show an increase of 27.5% over the net collections for the corresponding period last year.

4. Direct Tax Collections up to August, 2016 show an Increase of 15.03% over the net collections for the corresponding period last year; Till August 2016, 22.30% of the Budget Estimates of direct taxes for Financial Year 2016-17 has been achieved.

5. Government extends due date for filing of Income Tax Returns from 30th September, 2016 to 17th October, 2016

6. Cabinet approves Exchange of Tariff concessions under the Fourth Round of Negotiations APTA

7. Cabinet approves Cadre Review of Group 'A' Executive Officers of Border Security Force

8. Cabinet approves enhancing the buffer stock of pulses up to 20 lakh tonnes

9. Cabinet approves initiation of the Third Phase of Technical Education Quality Improvement Programme (TEQIP)

10. THE TAXATION LAWS (AMENDMENT) ACT, 2016

11. DEPARTMENT OF INDUSTRIAL POLICY & PROMOTIONS MAJOR ACHIEVEMENTS (April 2016-July 2016)

Notifications

Companies Law

1. F. No. A-45011/14/2016-Ad-IV - dated 9-9-2016 - Co. Law

Certain provisions of companies act, 2013 came into force w.e.f. 9-9-2016

Circulars / Instructions / Orders

VAT - Delhi

1. 14 of 2016-17 - dated 9-9-2016

Filing of online return for first quarter of 2016-17 - extension of period thereof.

Highlights / Catch Notes

GST

• GST Council and Secretariat Established; First Meeting Set for September 22-23, 2016 in New Delhi.

  News : Cabinet approves creation of GST Council and its Secretariat - The Finance Minister decided to call the first meeting of the GST Council on 22nd and 23rd September 2016 in New Delhi.
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Income Tax

• Manufacturers can claim Section 80IB deduction for job work using spare capacity, ensuring tax benefits extend to additional operations.

  Case-Laws - AT : Once the assessee is involved in the business of manufacture of goods or articles which is eligible for claiming deduction u/s 80IB of the Act, job work done in the spare capacity available also eligible for deduction u/s 80IB of the Act - AT
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• Insurance Firm Must Deposit Full Compensation; No Tax Deduction at Source Allowed u/s 194A.

  Case-Laws - HC : TDS u/s 194A - the insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. - HC
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• Director Liable for Tax on Sale Proceeds, Not Assessee-Company, Due to Deemed Ownership of Assets for Depreciation.

  Case-Laws - AT : The assessee was treated as deem owner for the limited purpose of claiming of depreciation. As such, assessee-company never became the owner of the land and building. Therefore sale proceeds received by Director of the assessee-company is taxable in the hands of Director and not in the hands of assessee-company - AT
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• Section 40A(3) scrutinizes cash payments over limits to Electricity Company, targeting black money and allowing business needs.

  Case-Laws - AT : Disallowance of Expenses u/s.40(A)(3) - cash payments made to Electricity Company for the supply of Electricity. - the paramount consideration of section 40A(3) is to curb and reduce the possibilities of black money transactions and section does not eliminate considerations of business expediencies. - AT
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• Indian Port Trusts Assessed as 'Local Authority', Not 'Company'; Reassessment Proceedings Quashed.

  Case-Laws - AT : Major port trusts in India had given confirmation to the assessee port trust that they are being assessed only as a ‘local authority’ and not in the status of a ‘company’ under the Income Tax Act - reassessment proceedings quashed - AT
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• Taxpayer's Profit and Loss Account Rejected; Section 132(4) Statement Not Decisive in Share Purchase Nature.

  Case-Laws - AT : Rejection of P/L A/C prepared by the assessee - the expression used in the statement given u/s 132(4) cannot be taken as determinative factor for deciding the character of the purchase of shares. - AT
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• Payments to 17 non-resident associates, excluding Honda Motors Japan, not taxable u/ss 195 & 40(a)(i) of Income Tax Act.

  Case-Laws - AT : Except in the case of Honda Motors Japan, payments made to all other 17 non-resident associate companies do not attract the provisions of S.195 and consequently 40(a)(i) of the Act, as no portion of the income of these companies arising from the supply of parts etc. was liable for tax in India. - AT
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• Section 40(a)(ia) Deeming Provision Can't Justify Penalties u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Penalty U/s 271(1)(c) - legal fiction created U/s 40(a)(ia) cannot be extended for levy of penalty U/s 271(1)(c) of the Act as the deeming provision inserted for specific purposes - AT
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• Land Purchase Recorded as Stock in Trade; No Disallowance u/s 40A(3) for Unclaimed Expenditure in Income Calculation.

  Case-Laws - AT : Cash expenditure - purchase of land shown as stock in trade - as no expenditure having been claimed by the assessee in the profit and loss account while computing its total income, no disallowance u/s 40A(3) can be made - AT
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Customs

• Customs Authority Justifies Enhanced Value of Steel Tape; Confiscation and Penalty Overturned Due to Lack of Malafide Intent.

  Case-Laws - AT : Rejection of declared value by customs - import of high speed steel tape - though enhancement of value is found to be sustainable, it is clear that there is no malafide or mensrea on the part of the appellant, when it declared the value in the Customs documents and the enhancement of value is the result of the legal provisions regarding determination of the assessable value for the customs purposes – confiscation and penalty set aside - AT
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• Imported LCDs for Energy Meters Classified Under Customs Tariff Heading 90138010.

  Case-Laws - AT : Classification of imported goods – ‘Liquid Crystal Display’ for energy meters i.e. LCDs - the correct classification is under Customs Tariff Heading 90138010 - AT
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• Appeals Commissioner Cannot Impose Preconditions for Rehearing Cases, Ensuring Unbiased Original Authority Decisions.

  Case-Laws - AT : The commisioner (appeals) cannot put pre-condition to decide the case in de novo as that would prejudice the mind of the original authority while deciding the issue - AT
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Service Tax

• Service Tax Applies to Trade Mark/License Fees and Payments in H&M GBC Deal per Finance Act, 1994.

  Case-Laws - AAR : Declared services - The Trade Mark/ License Fee and the payment made in terms of the foreign collaboration agreement by the applicant to H&M GBC are liable to Service Tax in terms of the Finance Act, 1994. - AAR
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• Service Tax Paid by Main Contractor Covers Sub-Contractor's Tax Liability, Says Court.

  Case-Laws - AT : The payment of service tax made by main contractor on the activity conducted by the appellant (sub-contractor) is considered as discharge of service tax liability by the appellant - AT
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• Appellant Exempt from Paying Service Tax on Commission for BSNL SIM Card Sales under Business Auxiliary Services.

  Case-Laws - AT : As the appellant is engaged in the activity of sale and purchase of the SIM Cards of BSNL and on these SIM Cards of BSNL deposit service tax, the appellant is not liable to pay service tax under the category of Business Auxiliary Services on the commission received by them - AT
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• Penalty u/s 78 Set Aside as Appellant Paid u/s 73 (4A) Provisions.

  Case-Laws - AT : As the appellant has already paid the penalty as per Provisions of Section 73 (4A), therefore, impugned qua imposing penalty under Section 78 of the Act is set aside. - AT
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Central Excise

• Excess Duty Adjustment Allowed Against Short Paid Duty in Provisional Assessment; Interest Applies on Remaining Shortfall.

  Case-Laws - AT : Whether excess paid duty can be adjusted against the short paid duty, essentially when the assessment is provisional - Held Yes - since after adjusting the duty liability from the excess paid duty further amount is payable, the interest liability is required to be discharged for short payment of such duty - AT
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• Caustic soda lye value for sister units must match independent buyers, per Section 4(1)(a) Central Excise Act.

  Case-Laws - AT : The assessable value for caustic soda lye supplied by the appellant to its sister unit would be the same as determined for the independent buyers in terms of Section 4(1)(a) - AT
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VAT

• Court Rules Against Denying Eligibility Certificate Due to Manufacturing Tax-Free Goods.

  Case-Laws - HC : Issuance of eligibility certificate - The rejection of the case of the petitioner for issuance of eligibility certificate merely on the ground that the petitioner is manufacturer of tax free goods cannot be legally sustained. - HC
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• Sale of Sugarcane Residue, Bagasse, Deemed Tax-Free; Not Recognized as Distinct Product or Goods.

  Case-Laws - HC : Once it has been consistently held that residue or waste of something like sugarcane does not amount to manufacturing a distinct product or goods known to the commercial world, then, no question of taxability arises – no ambiguity regarding the taxability of bagasse – sale of bagasse is a tax free sale - HC
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Case Laws:

• Income Tax

• 2016 (9) TMI 459
  Penalty imposed u/s.271(1)(c) - exclusion of interest income and miscellaneous income for the purpose of deduction u/s.80IA - Held that:- CIT(A) has held that the amounts representing interest and miscellaneous income for which assessee has claimed deduction u/s.80IA but was not granted by the A.O., would not be considered as furnishing of inaccurate particulars or concealment of income. As far as the other two items are concerned i.e. Duty Draw Back and sale proceeds of DEPB license are concerned, we find that assessee has filed the return of income on 01.02.2002. There was a controversy, whether the income resulting on transfer of duty draw back or DEPB license would be considered as derived from industrial undertaking. This controversy has been resolved finally by the Hon’ble Supreme Court on 31.08.2009 in the case of Liberty India Ltd. V. CIT (2009 (8) TMI 63 - SUPREME COURT ). When assessee has filed the return, this decision was not in picture. The decision of Hon’ble Gujarat High Court in the case of India Gelatine & Chemicals Ltd., reported in (2004 (4) TMI 20 - GUJARAT High Court ) was in favour of the assessee. Therefore, at that time, it was a quite debatable issue. The ld. CIT(A) has observed that in view of the decision of Hon’ble Supreme Court in the case of Pandian Chemicals Ltd. v CIT (2003 (4) TMI 3 - SUPREME Court ) or in the case of CIT v. Sterling Foods (1999 (4) TMI 1 - SUPREME Court) assessee ought to have not made this claim is concerned that inspite of these decisions, the deduction was granted to the assessee. Therefore, in our opinion, before the decision of Liberty India Ltd. V. CIT(A) (supra), it was a debatable issue and for inclusion of these amounts for the purpose of claiming deduction u/s.80IA, assessee cannot be held guilty of concealing the particulars of income. We delete the penalty with regard to disallowance made in the claim of deduction u/s.80IA of the Act. As far as the deduction claimed u/s.80HHC is concerned, it emerges out that against the original disallowance the issue travelled up to the Tribunal. The Tribunal has set aside the matter to the Assessing Officer. In the fresh assessment order, ld. A.O. has not initiated penalty proceedings against the assessee u/s.271(1)(c) of the Act. The A.O. has nowhere in the assessment order observed that the penalty proceedings against the assessee would be taken up. Therefore, no penalty can be imposed upon the assessee on this issue. In view of above, no penalty is sustainable upon the issue. We allow the appeal of the assessee and delete the penalty alleged to have been confirmed by the ld. CIT(A) - Decided in favour of assessee

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• 2016 (9) TMI 458
  Unexplained investment in land, residential flat & shop, etc. - Held that:- It is seen from the material available on record that in the order of assessment, the AO has not disputed the datewise transactions maintained in the cash book by the Assessee. Therefore there should not be any difficulty in calculating the availability of cash on any given day. There were deposits and withdrawals in this cash book. The AO has come to the conclusion here that cash book was not properly maintained. This conclusion of the AO was not based on any discrepancy in the cash book but rather on surmises. The AO does not mention any gaps occurring in the cash book. The AO has not also disputed the source of cash as one from the sale proceeds of business. Therefore rejection of cash book by the AO was not proper. The circumstance that the Assessee is the owner of a retail cloth shop and in that line of business all transactions are wholly in cash cannot also be disputed. The AO has himself noted in the assessment order that the Assessee’s business turnover for the year was Rs. 2,67,54,866/- and that he had no debtors. Therefore, availability of cash with the Assessee does not appear to be in doubt. The correlation between the cash book and the deposit in the bank account has also been accepted by the CIT(A). The source of funds in so far as it relates to the Assessee’s wife has also been given but the same was neither examined nor rejected by the AO. Therefore the conclusion that the Assessee invested the entire funds including the share of the Assessee’s wife was rightly held by the CIT(a) to be incorrect. The fact that the Assessee had taken a loan from M/s. ICICI Bank, is clear from the evidence on record but in his conclusion the AO did not give credit to this loan as funds explained by the Assessee. The above findings of the CIT(A) have not been shown before us to be incorrect based on material available on record. In the given circumstances, we are of the view that the addition made by the AO was rightly deleted by the CIT(a) - Decided in favour of assessee. Addition on account of gift received - failure to prove the creditworthiness of the donors from the party of the assessee - Held that:- As seen from the Record that the AO himself has admitted that the Assessee has submitted the name of the donor, the amount of gift and the mode of transaction which, admittedly, is through cheque. Therefore the CIT(A) has rightly concluded that the initial onus on the party of the Assessee was discharged. Thereafter the onus has shifted onto him once these basic details have been submitted by the Assessee. He is not seen to have conducted any enquiries on these issues. Without an enquiry, the action of the AO bases itself on surmises and cannot be held to be correct. Besides, no adverse comments are seen to have been made by the AO on any of the details submitted. Under the circumstances, we uphold the order of the CIT(A) in this regard and dismiss Gr.No.2 of the Revenue.- Decided in favour of assessee. Addition on account of liabilities for failing to substantiate the same - Held that:- There was no evidence for the AO to come to a conclusion that liability in question was not genuine. On the other hand, the payment to the above said party by the assessee in the subsequent year by cash and the availability of cash to make payment were satisfactorily explained by the assessee - Decided in favour of assessee. Unexplaned loans - Held that:- As far as the loan of Rs. 3 lakhs received from Aparna Banerjee is concerned, the loan in question was given on 15-4-2008 and therefore, no addition could have been made in AY 2008-09, because the credit in question cannot be said to be a credit in the books of account of the assessee for the AY 2008-09. The addition, therefore, is directed to be deleted. As far as, the loan received from Swapan Das is concerned it is seen from the bank account of Sri Swapan Kumar Das that there was cash deposit of Rs. 2 lakhs on 25-03-2008. Immediately, thereafter on 27-28 March 2008 four cheques of Rs. 50,000/- each ws issued to the assessee by Swapan Kumar das. Prior to deposit of cash, Mr. Swapan Kr. Das had a balance of Rs. 2,50,000/- in his bank account. In these circumstances, we are of the view that the assessee failed to satisfactorily explain the loan taken from Swapan Kumar Das. We, therefore, confirm this addition.- Decided against assessee.

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• 2016 (9) TMI 457
  Correction in mistakes in Trust Deed - preparation of fresh deed - Held that:- When provisions had been made to enable the trustees with the previous concurrence and approval in writing of the employer to alter, vary or amend any of the Trusts or provisions of this Deed and the Rules, petitioner can as well make such amendments and thereafter, the same can be produced before the Commissioner of Income Tax for approval. In fact, such a method has not been adopted by the petitioner as evident from the records. Petitioner had only sent Ext.P4 which does not contain the required amendments as specified under the Trust Deed. Therefore, it is necessary that the petitioner will have to submit an amendment made in accordance with the provisions and seek approval of the Commissioner of Income Tax. However, it is clarified that a fresh deed is not required in the matter as contemplated in Ext.P5. Accordingly, this writ petition is disposed of as under: (i) Petitioner is free to alter or correct the mistakes that had crept in the Trust Deed and thereafter comply with the procedure prescribed in Clause 5 as stated above. (ii) If such an application is filed, it shall be open for the Commissioner of Income Tax to take appropriate decision in the matter in accordance with law.

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• 2016 (9) TMI 456
  Interest u/s.234B - whether interest should be charged on the amount after considering refund which was issued on passing intimation u/s.143(1)(a) of the I.T. Act? - Held that:- In the present case, the assessee paid advance tax aggregating Rs. 9.00 Crores for the A.Y. 199495. There was a refund of Rs. 60,22,161/, after deducting the amounts of tax payable and TDS. The Assessing Officer issued intimation u/s.143(1) of the Act and the refund was worked out at Rs. 59,38,056/. For the said A.Y., the assessment u/s.143(3) of the Act was completed on 08.01.1997. Considering the aforesaid aspects of the case, we are of the opinion that the provision of Section 234D of the Act would not be applicable in this case since the assessment was completed in January 1997. The provision of Section 234D would have applied if the assessment had been completed after 01.06.2003. In our view, the issue on hand is squarely covered by the decision of this Court in CIT v. Gujarat State Financial Services Ltd.’s case [2014 (2) TMI 1218 - GUJARAT HIGH COURT] -. Hence, the Tribunal committed serious error in law in holding that interest u/s.234B should have been charged in the present case. - Decided in favour of the assessee

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• 2016 (9) TMI 455
  Revision u/s 263 - Claim of deduction u/s 80IB - Held that:- The assessee has filed complete details along with copy of audit report and also explained how job work charges is eligible for deduction u/s 80IB of the Act. The A.O. after considering the explanations furnished by the assessee and also taken into note of judicial judgments relied upon by the assessee allowed the claim of deduction u/s 80IB of the Act. Therefore, we are of the view that the CIT was not correct in coming to the conclusion that the A.O. has not conducted proper enquiry of the issues before completion of assessment. We further observed that as regards the eligibility of deduction u/s 80IB of the Act towards job work charges, the assessee contended that it is into the business of manufacturing of goods which is eligible for claiming deductions u/s 80IB of the Act. In addition to its own manufacturing, it has taken up job work for others in view of the spare capacity available. We find that the A.O. has not doubted the activity of the assessee. But, he is of the opinion that only goods manufactured by the assessee on its own is eligible for deduction, but not job work done for others. We do not agree with the stand taken by the A.O., for the reason that once the assessee is involved in the business of manufacture of goods or articles which is eligible for claiming deduction u/s 80IB of the Act, job work done in the spare capacity available also eligible for deduction u/s 80IB of the Act. We further observed that the said section does not place any restriction on job work receipts. Once, assessee proves that it is involved in the eligible business i.e. manufacturing of goods or article which is eligible for claiming deduction, it is immaterial whether it manufactures on its own or manufactures for others. So long as it is in the business of manufacturing of goods or articles, it is eligible for deduction u/s 80IB of the Act. - Decided in favour of assessee

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• 2016 (9) TMI 454
  Treating the agricultural land as capital asset - Held that:- It is observed that no such ground was taken before the First Appellate Authority as is evident from Form No. 35. However, this being a legal ground and goes to the very root of the taxability of the capital gain, we deem it proper that the same be admitted for adjudication. Accordingly, the same is admitted. The contention of the assessee is that the agricultural land falls beyond the specified limit from the Municipal limit, hence could not be amenable to capital gains tax. We find that both the authorities below have accepted the fact that the land being transferred was an agricultural land. However, neither of them has given a clear finding as to how the transfer of agricultural land would be transfer of capital asset and is outside the exemption clause of section 2(14) of the Act. Since this issue goes to the very root of the taxability of capital gains, therefore, we hereby set aside the impugned order of ld. CIT (A) and restore the issue to the file of the AO to decide it afresh in the interest of justice. The AO would verify the distance of agricultural land from the limit of Municipality. In the event, he finds that the transfer of agricultural land sweep within the definition of Capital Asset, he would compute the capital gain on such transfer as per law after giving the deductions as available to the assessee under the Act. - Decided in favour of assessee for statistical purposes.

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• 2016 (9) TMI 453
  Disallowance / addition u/s 40A(3) - AO has disallowed the purchases where the payment was exceeding more than Rs. 20,000/- in accordance with the provision of section 40A(3) - Held that:- From the submission of the assessee we find that the assessee was the only authorized dealer in Asansol for the supply of country liquor to the authorized Excise Vendors. The assessee can take the delivery of the goods only after depositing the payment with the company. The assessee was to keep sufficient stock of country liquor as prescribed by the Excise Department and in case stock falls short of the prescribed limit then the Department used to impose penalty. Therefore the assessee avoided the process of depositing the cash in his bank account and thereafter getting the demand draft in the name of the company in order to keep the stock within the prescribed limit at all the times. It is also important to note that the company was also not accepting the account payee cheque of the assessee as it will take couple of days time in clearance. So in our considered view the exception provided in the provisions of section 40A(3) with regard of the business expediency then applicable for the assessment year 2008- 09 is met by the assessee. It is pertinent to note that the primary object of enacting section 40A(3) were two folds, firstly, putting a check on trading transactions with a mind to evade the liability to tax on income earned out of such transaction and, secondly, to inculcate the banking habits amongst the business community. Apparently, this provision was directly related to curb the evasion of tax and inculcating the banking habits. Therefore, the consequence, which were to be fallen on account of nonobservation of Section 40A(3) must have nexus to the failure of such object. Therefore, the genuineness of the transactions being free from vice of any device of evasion of tax is relevant consideration. With regard to the purpose of bringing the provisions of section there is no doubt about the identity of the party. The ld. AR has directly deposited the cash in the account of the companies and has produced the sales bills of the company. The AO has also verified the transactions from the companies by issuing notice under Section 133(6) of the Act. So in the instant case there is no evasion of tax by claiming the bogus expenditure in cash. - Decided in favour of assessee.

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• 2016 (9) TMI 452
  Transfer of land under section 2(47) - Held that:- The physical possession was never handedover to the developer in which event it cannot be said that there is a transfer of property within the meaning of section 2(47) of the I.T. Act. ITAT, in the first round of litigation, recorded a finding based on the terms of development agreement but proceeded, on a cautious assumption, that the finding is on account of the fact that the said development agreement was not cancelled. The basis for assumption is disturbed by virtue of a decree of Arbitral Tribunal whereby the development agreement was cancelled. Even going by the order of the ITAT dated 16.12.2011 had the development agreement been cancelled at a later date the Tribunal was willing to accept the proposition that there is no ‘transfer’. Consent decree passed in 2014 thus supports the ultimate reasoning of the ITAT while setting the matter for consideration afresh. Under the Income Tax Act what is taxable is the real income and mere hypothetical income should not be taxed. In the wake of the findings and conclusions of the Arbitral Tribunal, we are of the firm view that no transfer took place with regard to the land which was hitherto given for development since physical possession was continuously enjoyed by the assessee and his family members and thus even under the Income Tax Act the transfer cannot be said to have taken place in the year under consideration. We hold accordingly. - Decided in favour of assessee

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• 2016 (9) TMI 451
  TDS u/s 194A - whether the insurance company was justified in deducting tax at source while depositing the compensation in favour of the claimants? - Held that:- The case of credit of interest on compensation awarded by the Claims Tribunal continues to find place in the exclusion clause contained in sub section (3) of Section 194A. In fact, it would prima facie appear that the ceiling of Rs. 50,000/- per annum for such exclusion is now done away with in case of crediting of interest on compensation awarded by the Claims Tribunal while retaining such limit in cases of payment of interest on such compensation. However, we need not thresh out this last part of the issue since admittedly, in the present case, for none of the years under consideration, the interest income exceeded Rs. 50,000/-. In fact, this Court in case of Smt. Hansagauri Prafulchandra Ladhani and ors vs. The Oriental Insurance Company Ltd (2006 (10) TMI 383 - GUJARAT HIGH COURT) provided for further splitting up of this ceiling of Rs. 50,000/- per claimant basis. Looked from any angle, the insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. The Claims Tribunal had committed no error in insisting on the insurance company in making good the shortfall.

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• 2016 (9) TMI 450
  Capital computation - Companies (Profits) Surtax Act, 1964 - Tribunal held that the amount be reduced from the General Reserve being the amount transferred from the profit of the last year for the purpose of capital computation? - Held that:- We find that the issue raised herein above stands concluded against Applicant-Assessee and in favour of the Respondent-Revenue by a virtue of the decision of this Court in CIT v/s. Bharat Bijlee Ltd.[1976 (7) TMI 38 - BOMBAY High Court ]. Mr. Thakkar, learned Counsel appearing for the Applicant-Assessee sought to distinguish the same by pointing out that in the case of Bharat Bijlee Ltd., (supra), the amount was set aside on the last date of the previous year of the earlier Assessment Year. In this case also, the amount of Rs. 25,000/was transferred to the general reserve from the profits of the earlier year. Thus, reducing the capital only by Rs. 25,000/and not Rs. 91,000/as done by the Assessing Officer and CIT(A).Accordingly, question as posed for our opinion is to be answered in the affirmative i.e. in favour of the Respondent-Revenue and against the Applicant-Assessee. Debentures issued to Indian Medical Research Society - whether were not includable in the capital computation? - Held that:- Debentures were redeemable at the option of the Applicant-Assessee at any time by giving three calender months prior notice, even before the expiry of seven years from the date of issue. Thus, they are required to be included in the capital of the company in terms of subrule (iv) to Rule 1 of the Second Schedule to the said Act.In the above view, question (b) as framed for our opinion is answered in the affirmative i.e. in favour of the Respondent-Revenue and against the Applicant-Assessee.

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• 2016 (9) TMI 449
  Penalty u/s 271D - validity of notice - period of limitation - Held that:- Once it is realized that the proceedings were initiated on 26th December, 2006 when the notice was issued by the Assessing Officer, the period of limitation necessarily expired on 30th June, 2007 whereas the order imposing penalty was passed on 21st September, 2007. No elaborate reasoning is required to demonstrate that the order is hit by limitation. In that view of the matter, the substituted question is answered in the negative and against the revenue.

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• 2016 (9) TMI 448
  Short Term Capital Gain - transfer of cost of improvement being addition to building - whether the sale proceed received by Director of assessee-company was also forming part of the sale against the building occupied by assessee-company? - Held that:- From the facts of the case, we find that the assessee, after having incurred renovation expense on the land and building belonging to the Director of assessee-company, made the place as usable for the purpose of its manufacturing activities. The assessee was treated as deem owner for the limited purpose of claiming of depreciation. As such, assessee-company never became the owner of the land and building. Therefore in our considered view sale proceeds received by Director of the assessee-company is taxable in the hands of Director and not in the hands of assessee-company. In view of above, we uphold the order of Ld. CIT(A). Revenue’s appeal is dismissed. Addition made on account of damaged opening stock - Held that:- Assessee has written off its stock of finished goods on the ground it became unfit for human consumption and for this reason stock of finished goods was for an amount of Rs. 7,19,336/- was destroyed. However the AO found that some sale out of the opening stock of finished goods was made during the relevant year. Therefore the claim of assessee was declined by AO. However, L’d CIT(A) deleted the addition made by AO as the amount involved of meager amount of Rs. 24,501/- only. We find that assessee has written off the closing stock of finished goods by debiting in its profit and loss a/c. We also find that business of assessee was of fruit and vegetable and raw materials used for the business was of green mango which was highly perishable. The business of assessee was severely affected for the reason discussed above. From the facts we also find that assessee had to sale its property under distress to repay the loan of the bank. As such, we find that the business of assessee as decreasing on yearto- year basis. Accordingly, we agree with the contention of L’d AR that the opening stock of finished goods became unfit for human consumption and same was duly debited in the profit and loss a/c of assessee. L’d DR has not brought anything contrary to the find of L’d CIT(A). Addition on account of damage/destruction of entire opening stock of packing material - Held that:- AO made the addition on surmise and conjecture without bringing any evidence on record. The AR has submitted the ledger copies of the parties for the purchase and sale of goods which is placed on page 88 of the paper book. In this view of the matter, we uphold the order of L’d CIT(A) and ground raised by Revenue is dismissed.

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• 2016 (9) TMI 447
  Revenue loss or business loss - Held that:- As rightly pointed out by the assessee as well as by the Ld. CIT(A) the assessee has been wholly and exclusively engaged in the business of running hotels, boarding and lodging for the past two decades and the scrap, if any, generated out of the main line of activity was sold. The material presented before us nowhere indicate that the assessee was carrying on the activity of purchasing plant and machinery with a view to re-sale the same. The assessee participated in the tender for purchase of land and building and plant and machinery with the main purpose of acquiring the land which is a capital asset and in fact it was shown in the balance sheet as acquisition. Such being the case, plant and machinery cannot be said to have been purchased for the purpose of carrying on the business of purchase and sale of scrap since it is not even remotely connected to the main line of activity. Assessee has nowhere specified as to what is the price quoted towards plant and machinery at the time of offering its tender. On the contrary, the facts indicate that the dominant object was to purchase the capital assets and in fact the assessee has merely quoted the lumpsum price which was accepted by the Official Liquidator. The land and machinery was kept idle for more than one year but the assessee did not choose to obtain any report from the registered valuer with regard to the value of such plant and machinery which also indicate that the price now sought to be fixed at Rs. 294 lakhs is only an imaginary value so as to claim deduction from the business income overlooking the fact that it was purchased as an asset and reflected in the balance sheet as such. In our considered opinion, the Ld. CIT(A) has not given any reasons to accept the contention of the assessee despite the fact that not even an iota of evidence is placed to support such contention. On the other hand, the circumstances, categorically indicate that there is no nexus between purchase of land, building and plant and machinery on one hand and the hotel business being carried on by the assessee for the past two decades. On a conspectus of the matter, we of the firm view that the order passed by the Ld. CIT(A) is contrary to law and facts of the present case and therefore, deserves to be set aside and we direct accordingly. In the result, we set aside the order passed by the Ld. CIT(A) and uphold the view taken by the A.O, since the loss claimed by the assessee cannot be treated as revenue loss or business loss.

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• 2016 (9) TMI 446
  Addition made on account of interest for delayed realisation of revceivables from AE - TPA- Held that:- We modify the order of CIT(A) in deleting entire upward adjustment made on account of interest receivable on delayed realisation of export proceeds from A.E., and restrict the disallowance to Rs. 49,66,277/- as there was delay of 76 days more than the delay in case of credit extended by the assessee to Non-AE. Interest rate has been confirmed for earlier year was US LIBOR rate for debts of 1 year maturity period. Hence, such rate for financial year 2008-09 is 2.83%. Accordingly as in the last year, Libor plus 2% works out to 4.83%. Hence, the interest working will be 49.66 crores (net receivables x 4.83%x76 days/365=49,66,277/-). Thus, an amount of Rs. 49,66,277/- will be the transfer pricing adjustment on account of charging of interest to trade debt in r/o A.E.’s. Thus, instead of deleting entire addition as done by CIT(A), we upheld the addition to the extent of Rs. 49,66,277/-. Computation of book profit u/s.115JB without including income earned from unit in Special Economic Zone (SEZ), which is exempt u/s.10A - Held that:- We confirm the action of CIT(A) for directing the AO to exclude the profit earned from unit exempt u/s.10A while computing book profit u/s.115JB of the I.T.Act.

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• 2016 (9) TMI 445
  Disallowance of Expenses u/s.40(A)(3) - cash payments made to Electricity Company for the supply of Electricity. - Held that:- The payment of Electricity was the purpose of business, the payee to whom the assessee has made the payment has not been doubted by the AO; meaning thereby that the genuineness of payment and identity of the payee are not in doubt. In such a situation, we find that the Hon’ble Jurisdictional High Court in the case of Anupam Tele Services vs. ITO reported at (2014 (2) TMI 30 - GUJARAT HIGH COURT ) has held that the paramount consideration of section 40A(3) is to curb and reduce the possibilities of black money transactions and section does not eliminate considerations of business expediencies. Before us, Revenue has not placed any contrary binding decision. In view of the aforesaid facts and after placing reliance on the aforesaid decision of Hon’ble Gujarat High Court, we are of the view that in the present case the expenditure cannot be disallowed. Thus, this ground of assessee is allowed. Disallowance made u/s.40(a)(ia) - Held that:- The issue in the present case is with respect to disallowance of expenses u/s.40(a)(ia) of the Act on account of non-deduction of TDS. Before us also, apart from the oral submissions, assessee has also not placed any material on record to demonstrate that the recipients of the amounts have considered the amounts received from the assessee as their income. We find that there is no finding of the lower authorities to the effect that the payment made by the assessee have been considered by the respective payees as their income. Second proviso to section 40(a)(ia) has retrospective effect from 1st April-2005 and in the absence of any material on record which could show that the payees have already offered the amounts received from assessee as their income, we are of the view that the issue needs to be restored back to the file of ld.CIT(A) to decide the issue afresh in the light of our aforesaid discussion and decide the issue afresh in accordance with law.

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• 2016 (9) TMI 444
  Deduction u/s. 54F - Held that:- In the instant case, when the assessee made a claim before the first appellate authority regarding deduction u/s. 54F for the purpose of determining the capital gain, it was incumbent upon the first appellate authority to make enquiry into the matter or could direct the Assessing Officer to enquire into and to give report on the allowability of such claim in the facts and circumstances of the case. However, the ld. CIT(A) has not exercised its discretionary powers judiciously and has failed to give categorical findings on the allowability of assessee’s claim u/s. 54F of the Act before confirming the addition made on account of long term capital gains. In the peculiar facts of the case, we, therefore, think it proper to restore the matter to the file of ld. CIT(A) to decide the appeal afresh after making proper enquiry into the matter and to record clear findings on the allowability of claim of assessee made u/s. 54F of the It Act. Needless to say, the assessee shall be given reasonable opportunity of being heard. The assessee is also directed to cooperate with the Revenue authorities. Accordingly, the appeal of the assessee is allowed for statistical purposes.

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• 2016 (9) TMI 443
  Assessee port trust status - whether the assessee port trust could be assessed in the status of a ‘local authority’ or in the status of a ‘company’ - Held that:- The assessee’s status to be assessed as a local authority and its income was exempt u/s 10(20) of the Act was accepted by the Income Tax Department upto Asst Year 2002-03. Only pursuant to an amendment made in section 10(20) of the Act with effect from Asst Year 2003-04, the situation has undergone change wherein the activities of the assessee port trust would not fall under the definition of the expression ‘local authority’. At the cost of repetition, we state that the said definition inserted in section 10(20) is only applicable for the purpose of section 10(20) of the Act and for assessee’s claiming exemption under that section. It is not in dispute that the assessee had not claimed any exemption u/s 10(20) of the Act for the impugned assessment years under appeal before us. Hence the amendment in section 10(20) is not at all applicable to the assessee port trust. We also find from the paper book filed by the assessee vide pages 77 to 83 of paper book that major port trusts in India had given confirmation to the assessee port trust that they are being assessed only as a ‘local authority’ and not in the status of a ‘company’ under the Income Tax Act and the same has been accepted by the Income Tax Department - Assessment u/s 147 quashed for want of jurisdiction - Decided in favor of assessee.

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• 2016 (9) TMI 442
  Penalty u/s 271(1)(c) - default in declaring the income - whether income is not assessable in the hands of assessee in his individual capacity at the first place and is rightly assessable in the hands of different person i.e. AOP? - Held that:- plea of the assessee that the bank statement were given to the chartered accountant and he failed to offer the impugned income is too vague and bald to be assigned any acceptance. The bounden duty of assessee to furnish true and correct particulars of income in the return of income cannot be overemphasized. This income not offered at the first instance is of sizeable amount in the context of the case of assessee and could not ordinarily be lost sight of. It is not palatable to accept that a transaction of this magnitude routed through banking channel has been overlooked while determining taxable income. Be that as it may, apart from declaring the income as aforesaid; the assessee is expected to meet advance tax and self assessment tax obligations as per the framework of law. The assessee has not shown to have paid any tax towards impugned gain. Thus, this plea of oversight on behalf of the Assessee is listless. Hence, no case of reasonable cause for omitting to include the income in the first return is successfully made out. The preponderance of probabilities is weighed against the assessee. We also wish to note here that penalty proceedings in question are governed by S. 271(1)(c) read with Explanations appended thereto. The assessee is expected to justify his bonafides in the light of Explanation 1 of S. 271(1)(c) of the Act. The condonation of penalty for compliance failure on the grounds of ‘reasonable cause’ as provided under S. 273B is foreign to the scope of S. 271(1)(c) of the Act. All the other co-owners except the assessee have discharged their tax obligations in their individual capacity. This serves as a clear indicator that while the parties may have agreed to come together for better co-operation, the parties were to bear their own losses or retain their own profits contrary to the case made out by the assessee. If the version of the Assessee is to be given any credence, one has to see the conduct of the assessee. The obligations of the Assessee as one of the members who allegedly combined to form alleged AOP is placed at par with other members to comply with tax laws. No PAN number in the capacity of AOP was reportedly obtained. The alleged AOP is also not shown to have paid any advance tax or self assessment tax which could have probably served as a guiding factor for appreciating bonafides. The return of income in the capacity of AOP for the combined income is not admittedly filed. Common bank account for alleged consortium is also not referred to. Thus, the onus of the existence of contract ( oral or written) for sale of property giving rise to impugned income in the capacity of AOP is not discharged at all. Coupled with this, the other alleged members have acted in their respective personal capacity which belies presence of any alleged understanding in the nature of purported AOP. The above is enumeration to show that no assertive justification has been advanced by the assessee to prove bonafides of plea of existence of AOP. Mere abstract reliance on case laws without any connection with the underlying facts deserves to be discredited. In the light of above discussion, the explanation offered for the default in declaring the income is palpably improbable. Omission to declare chargeable income cannot be held to be a bonafide error in the given circumstances. Hence, we find no error in the orders of the authorities below in imposing penalty under S. 271(1)(c) of the Act. - Decided against assessee

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• 2016 (9) TMI 441
  Rejection of P/L A/C prepared by the assessee - assessee was practising as Chartered Accountant - addition on share trading rejection of claim of purchase and sale of shares - Held that:- As admitted by assessee that he has carried on trading activity in shares in the name of his family members, under these set of facts, we are of the view that the Ld CIT(A) was not correct in referring to the capital gains declared by the assessee in his return of income. The purchase of shares, in the accounting parlance, may be accounted as “current investment” or “fixed investment” depending upon the character in which it is going to be retained. Generally trading asset is referred to as current investment. Accordingly, we are of the view that the expression used in the statement given u/s 132(4) cannot be taken as determinative factor for deciding the character of the purchase of shares. On the contrary, the statement given by the assessee that he has been carrying on trading in shares in the name of family members has not been controverted by the revenue. Under these set of facts, we are of the view that there is no reason to doubt the claim that the assessee has carried on trading activities in shares. With regard to the purchase and sale of shares, we notice that the assessee has produced bills in support of the same. The assessee also expressed its inability to support other documents, since the records of the broker got destroyed in fire. We notice that the assessee has furnished necessary proof to support the claim of fire and those documents were not disproved by the assessing officer. We notice that the AO has reported that the purchase and sale transactions were not found in the records of stock exchange. We notice that the assessment year involved is 1995-96, i.e., prior to introduction of dematerialisation scheme, and during those period, the shares used to be traded in cash till the book closure time. Hence, it was not always necessary that the purchase and sales should be routed through the stock exchange. We are also of the view that the inability of the assessee to produce other documents for the reasons beyond his control cannot be used against the assessee. Accordingly, we are of the view that the tax authorities, in the facts and circumstances of the case, are not justified in rejecting the claim of purchase and sale of shares. 9. Having held that the assessee’s claim of trading in shares should be accepted, we are of the view that the closing stock valued by the assessee should also be accepted, since the valuation was not controverted with any tangible material. Accordingly, we are of the view that there is no reason to reject the profit and loss account prepared by the assessee. Accordingly, we set aside the order of Ld CIT(A) passed on this issue and direct the AO to accept the profit declared by the assessee in the place of Rs. 25.45 lacs assessed by him. - Decided in favour of assessee.

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• 2016 (9) TMI 440
  Allowability of deduction u/s 10A - Held that:- From the Tribunal order in AY: 2009-10, it is seen that in that year, the matter was restored back to the file of the AO for a fresh decision regarding assessee’s claim for deduction u/s 10A of the IT Act, 1961, instead of Sec.10B of the IT Act, 1961 claimed earlier. In the present year also, the entire discussion in the assessment order is regarding allowability of deduction u/s 10B of the IT Act and there was no claim before the AO for deduction u/s 10A of the Act in the present year also. Hence, we find force in the submissions of the ld. DR of the revenue that the matter should go back to the file of the AO in the present year also as has been restored back by the Tribunal in AY: 2009-10.

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• 2016 (9) TMI 439
  Disallowance made u/s 40(a)(i) - payments to non-resident companies without deducting tax at source u/s 195 - Held that:- there is no dispute of the fact that out of 18 non-resident associate companies to whom payments have been made, it was held that 16 associated enterprises do not have a P.E. in India. The D.R.P. in the case of Asia Honda Thailand for the A.Y. 2009-10 has held that the Non-resident company had no P.E. in India. Revenue has not filed an appeal on this finding of the D.R.P. Hence we have to reverse the finding of the Ld.CIT(A) that Asia Honda Thailand has a P.E. in India in this A.Y. Thus we have to hold that, except in the case of Honda Motors Japan, payments made to all other 17 non-resident associate companies do not attract the provisions of S.195 and consequently 40(a)(i) of the Act, as no portion of the income of these companies arising from the supply of parts etc. was liable for tax in India. Applicability of the provisions of S.195 r.w.s. 40(a)(i) to Honda Motor Company Ltd issue decided in favour of the Assessee and against the Revenue by holding that Section 40 (a) (i) of the Act is discriminatory and therefore, not applicable in terms of Article 26 (3) of the Indo-US DTAA.

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• 2016 (9) TMI 438
  Disallowances of dehusking charges - inflation in the expenses - self-made vouchers - cash expenditures - Held that:- AO has not recorded the statement of labourers produced before him, but simply wrote their names against the signature. The CIT(Appeals) was of the view that there would be some inflation in the expenses claimed by the assessee and made a fair estimate that 20% of dehusking charges to be excessive and therefore upheld the addition to the extent of 20% of dehusking charges. We are of the opinion that in this kind of business where labour is employed and vouchers are prepared by the assessee, there ought to be certain inflation in the expenses and therefore we find no infirmity in the order of the CIT(Appeals) in determining 20% of dehusking charges to be excessive. We find that the addition sustained by the CIT(Appeals) is reasonable and therefore we confirm the same. We dismiss the ground raised by the department in its appeal as well as by the assessee in its CO on this issue. Disallowance of hamali, loading and unloading charges - Held that:- We subscribe to the view of the CIT(Appeals) that in the self-made vouchers, the probability of inflation has to be taken into account. The CIT(A) has reasonably restricted the disallowance to the extent of 10% of the total expenditure. Hence, we confirm the order of the CIT(Appeals) and dismiss the respective grounds raised by the department in its appeal as well as by the assessee in its CO on this issue. Cash payments in contravention of provisions of section 40A(3) - Held that:- We find the fact remains that the coconuts are products of farmers in rural areas and they need to be paid in cash only and each payment on the reverse of the bill is less than Rs. 20,000, even though each transaction mentioned in the voucher was more than Rs. 20,000 since the vouchers were prepared for transactions in respect of 3 to 4 farmers. Provisions of section 40A(3) shall not apply to purchases from farmers in rural areas as it is covered by exemption under proviso to section 40A(3). Further, the CIT(Appeals) has found that the assessee has been in this business for the past 30 years and for the AY 2008-09, no disallowance was made u/s. 40A(3), whereas in the AY 2009-10 the assessee’s claim was accepted by the AO in the set aside proceedings. Since coconuts purchases are from farmers and in the present year, each payment is less than Rs. 20,000, provisions of section 40A(3) is not applicable. Accordingly, we confirm the order of the CIT(Appeals) on this issue and dismiss the ground raised by the department.

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• 2016 (9) TMI 437
  Penalty U/s 271(1)(c) - Held that:- It is a fact that the ld Assessing Officer in assessment proceedings had not mentioned any particular limb of penalty whether it is for concealment of income or for furnishing inaccurate particulars of income. He also had not given any finding in the penalty order that this penalty was on account of a particular limb. The ld DCIT at the time of imposing penalty, has also not taken approval from the ld JCIT U/s 274(2)(b) of the Act. It is also undisputed fact that the assessee has not deducted TDS on commission expenses claimed during the year under consideration but it has been explained that this provision was inserted w.e.f. 01/4/2005 which was amended from time to time. There was an ambiguity and doubts in application of this provision. The auditor of the assessee had also not pointed out this defect in the audit report whether TDS was liable to be deducted or not on commission expenses claimed by the assessee. Non-deduction of TDS is a technical violation U/s 40(a)(ia) of the Act. The disallowance under this Section are made on the basis of deeming provision held that legal fiction created U/s 40(a)(ia) cannot be extended for levy of penalty U/s 271(1)(c) of the Act as the deeming provision inserted for specific purposes. The case laws relied upon by the assessee are squarely applicable, therefore, we uphold the order of the ld CIT(A). - Decided against revenue.

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• 2016 (9) TMI 436
  Disallowance u/s 40A(3) - cash purchase - Held that:- The assessee has made payment of purchase under exceptional circumstances out of business expediency and also filed all the relevant documents and evidence in support of the same before both the lower authorities and the lower authorities have not brought any material on record by verifying the same that they are false, bogus or unreliable. Therefore, in the given circumstances, we are of the view that the assessee is covered by the exceptions in the proviso below sub-section (3A) to section 40A(3) and no disallowance u/s 40A(3) can be made in the hands of the assessee. Further with regard to the contention of the assessee that the land purchased was shown as part of its closing stock thereby no expenditure having been claimed in the profit and loss account during the year under consideration in the computation of business profits, no disallowance u/s 40A(3) can be made by the Assessing Officer. We find that before the Assessing Officer the assessee filed tax audit report and submitted that it is evident from the tax audit report that the assessee has not claimed expenditure and entire cost of land and development work is carried forward to next assessment year which fact has not been disputed either by the Assessing Officer or the learned CIT(A). Therefore, as no expenditure having been claimed by the assessee in the profit and loss account while computing its total income, no disallowance u/s 40A(3) can be made. Our above view is fortified by the decision of the Delhi Bench of the Tribunal in the case of M/s Saral Motors and General Finance Ltd. vs. ACIT (2008 (5) TMI 301 - ITAT DELHI-B ) wherein it was held that there cannot be disallowance of expenditure without any claim of allowance of expenditure having been made. Therefore, the disallowance in the instant case u/s 40A(3) cannot be made on this count also. We, therefore, set aside the orders of the lower authorities and delete the disallowance - Decided in favour of assessee Disallowance under the head bogus purchases - Held that:- Assessing Officer has himself allowed deduction for purchases of Rs. 2,45,000/- made from Kailash Porwal. Thus, part of the purchases was accepted from the said party by the Assessing Officer as genuine. He has doubted the purchases of Rs. 13,34,400/- only for the reason that payments were made in cash for them. The Assessing Officer has brought no material after verification to show that the purchases were bogus and the assessee has shown the same in its profit and loss account to reduce its profit. No material has been brought on record after comparing the material consumed in the year under appeal and in earlier year to show that the purchases are inflated by the assessee. It can be a case where the assessee due to business necessity has to make payments for materials through vouchers in cash but that alone cannot be a ground for disallowing the genuine business expenditure of the assessee. In our considered view, suspicion howsoever grave cannot take place of proof and entitle the Assessing Officer to make disallowance of genuine business expenditure claimed by the assessee. Therefore, we set aside the orders of the authorities below and vacate the disallowance.

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• Customs

• 2016 (9) TMI 473
  Revocation of CHA licence - Regulation 22(7) of the Customs House Agent Licensing Regulations 2004 - forefeiture of security deposit - CHA Regulation No. 22(5) - Madras High Court judgment in the case of AM Ahmad Co. vs CC Chennai [2014 (9) TMI 237 - MADRAS HIGH COURT] is relied upon. - Held that: - At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs shall prepare a report of the inquiry recording his findings thereon submit the report within a period of 90 days from the date of issue of notice under sub-Regulation 1. The SCN in this case under Regulation 22(1) ibid was issued on 05.06.2012 but the inquiry report was submitted on 20.03.2015 i.e. more than 21 months after issuance of SCN - the impugned order is unsustainable on account of time bar - appeal disposed off - decided in favor of appellant.

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• 2016 (9) TMI 472
  Conversion of shipping bill – free shipping bill – export promotion shipping bill - export of Poly Tube Graphite Heat Exchanger - Board's Circular No.36/2010 dt. 23.9.2010 - Section 149 of the Customs Act, 1962 – time limit for conversion of shipping bill – Held that: - the appellant is a manufacturer-exporter and obtained valid Advance Authorisation issued by the authorities concerned – matter remanded to the learned Commissioner to reconsider and re-examine the request of the appellant for conversion of free shipping bill into Advance Authorisation shipping bill on merits, without going into the aspect of limitation, after proper verification of all the documents that are alleged to be placed before that authority – opportunity of heard granted to appellant and appellant are also permitted to file additional documents to substantiate their claim - matter remanded – appeal disposed off.

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• 2016 (9) TMI 471
  Rejection of declared value by customs - import of high speed steel tape - Rule 8 of Customs Valuation (Determination of Value of Export Goods) Rules, 2007 – opinion sought by chartered engineer – Confiscation of consignments and levy of penalty - Held that: - though enhancement of value is found to be sustainable, it is clear that there is no malafide or mensrea on the part of the appellant, when it declared the value in the Customs documents and the enhancement of value is the result of the legal provisions regarding determination of the assessable value for the customs purposes – confiscation and penalty set aside – enhancement of value upheld – appeal allowed – decided partly in favor of appellant.

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• 2016 (9) TMI 470
  Chargeability of interest – warehoused goods – private bonded warehouse – interest free period of 180 days - the notification No. 23/2001-Cus(NT) dated 22/5/2001,issued, effective from 1/6/2001, the interest was chargeable after expiry of bond period of 30 days – interest chargeable on over and above 30 days or 180 days? – Held that: - the goods were warehoused prior to issue of Notification No. 23/2001-Cus(NT) during that time the statue has mandated interest free bonding period of 180 days. Under that provision the appellant has executed the bond and warehoused the goods. Though the Notification No. 23/2001-Cus reduced period of 180 days to 30 days w.e.f. 1/6/2001 but goods which already warehoused prior to that date, will not be governed by amended notification, particularly for the reason that the period of 180 days provided under statue was not curtailed by this statue. Notification will have prospective effect - appellant are entitled for the interest free period of 180 days in respect of goods warehoused prior to 1/6/2001, cleared for home consumption thereafter – appeal allowed – decided in favor of appellant.

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• 2016 (9) TMI 469
  Classification of imported goods – clearance of ‘Liquid Crystal Display’ for energy meters i.e. LCDs - Customs Tariff Heading 90138010 or CTH 90289010 as parts of ‘energy meters’ – exemption from BCD under notification 24/2005-Cus Sr. No. 29 - Held that: - the decision has been taken based on the case Secure Meters Ltd Vs. Commissioner of Customs, New Delhi [2004 (4) TMI 108 - CESTAT, NEW DELHI]. It was held that the correct classification is under Customs Tariff Heading 90138010. Thus, benefit of exemption from BCD available – appeal allowed – decided in favor of appellant.

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• 2016 (9) TMI 468
  Confiscation of goods – section 125 of the Customs Act, 1962 – denial of DEPB – imposition of penalty - Section 114(i) of the Customs Act, 1962 – attempt to export Alprazolam tablets without NOC as obtained by Narcotic Commissioner, Gwalior – statutory obligation to produce NOC – Held that: - It is surprised that when NOC is required which is known to the Appellant exporter as they themselves applied for the same, then why the same was not informed to Custom/CHA. This clearly shows the mala fide intention on the part of appellant. Though the appellant applied for NOC but it was a futile exercise as they did not have importer country’s permit for said Narcotic Drug without which, CBN can not issue NOC – malafide intention on the part of appellant – confiscation of goods, denial of DEPB and penalty under section 114(i) justified. Mis-declaration of goods – imposition of penalty – section 114 AA of the Customs Act, 1962 – Held that: - there is no mis-declaration on the part of appellant exporter either in respect of description of goods or value – penalty not imposed. Imposition of penalty – CHA – involvement of CHA in the attempt to export the goods without NOC – Held that: - no mis-declaration found on the part of CHA. It was the client who suppressed the fact of NOC not from custom but also from CHA. On pointing out by the custom regarding NOC for Alprazolam tablet, the CHA immediately informed their client – no fault on the part of CHA – penalty not imposed on CHA – appeal decided in favor of CHA.

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• 2016 (9) TMI 467
  Confiscation of consignment – option to redeem on payment of redemption fine – mis-declaration - yarn waste - polyester sewing thread – examination of consignment – admitted by the appellant that consignment of polyester sewing thread sent to appellant without his knowledge – a strenuous attempt to differentiate the contents of 160 jumbo poly bags with that of in 530 corrugated Boxes – Held that: - the Appellant had mis-declared the imported goods as ‘polyester yarn waste’, whereas, in fact, they imported new sewing threads which were ready for sale. The proprietor of the Appellant nowhere disputed the test result that the goods imported were not polyester sewing thread but waste yarn as declared by them. Further, on chemical examination, the goods were certified in both the cases as sewing thread other than waste yarn. Also, the Appellant has failed to produce the evidence to justify their case that the contents of 160 jumbo poly bags were Yarn Waste - the determination of assessable value by the Department on the basis of market enquiry found correct while the sales invoices submitted by the Appellant rejected – appeal disposed off – decided against appellant.

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• 2016 (9) TMI 466
  Valuation - Direction to pay 1% of EDD of the invoice value - Valuation – import from related overseas firm – whether the Commissioner (Appeals) while remanding the appeal has power to direct the lower authority to put pre-condition to decide the case in de novo - Held that: - the portion of the Commissioner (Appeals) order directing 1% EDD is set aside following the judgement of the case Terumo Penpol Ltd. Vs. CC 2015 (6) TMI 500 - MADRAS HIGH COURT. Thus, commisioner (appeals) cannot put pre-condition to decide the case in de novo as that would prejudice the mind of the original authority while deciding the issue – decided in favor of appellant.

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• Corporate Laws

• 2016 (9) TMI 460
  Oppression/mismanagement - Held that:- One thing which is evident from the pleadings is that as on today there is a deadlock and the interests of the company (respondent No. l) are at stake. It is also a fact that no Board of Directors is functioning. The other directors like Ms. Doris Chung Gim Lian and Ms. Kah Chuan Kenneth Ho or Mr. Ashish Mittal have been the additional directors and there is a dispute in respect of their continuation because one version is that they could not be confirmed in the Board Meeting which was required to be held in September 2015. According to Share Purchase agreement it is a part obligation of the petitioner and their sole responsibility to infuse fund in Respondent No. l-Company. The petitioner has pointed out that various Institutions of Engineering, MBA, BBA, designing course have been adversely affected on account of non-functioning of Respondent No. 1. Therefore in order to make respondent No. l-company functional a Board of directors is necessary. Therefore we deem it appropriate to pass the following interim orders by invoking the powers under section 241(g) & (h) read with section 242 of 2013 Act:- "The petitioner shall nominate two directors on the Board of Directors of Respondent No. l-company but shall not name Ms. Doris Chung Gim Lian. Likewise Respondent Nos. 2 & 3 shall nominate one more director in addition to Mr. Shantanu Prakash-Respondent No. 4 but they shall not nominate Mr. Ashish Mittal-Respondent No. 10. Ms. Doris Chung Gim Lian (petitioner's nominee) and Mr. Ashish Mittal (Respondents' nominee) have been excluded because for the time being there is some controversy about both of them either raised in the petition or before the Ministry of Corporate affairs. Their temporary exclusion shall not construe to their prejudice because this court aims to achieve peaceful conduct of the affairs of Respondent No. 1-company. The needful shall be done within two weeks from today and thereafter the Board Meeting may be held, if necessary even in accordance with the provisions of section 173(2) of the 2013 Act read with Rule 3 of Companies (Meetings of Board and its Powers) Rule 2014 It is further directed that the Board meeting shall be chaired and initiated by the nominee of the petitioner as they have 58.18% shareholding and they have also undertaken complete responsibility of funding Respondent No. l-company as is clear from the Share Purchase Agreement. According to clause 3.1.2 the funding of the operations of Respondent No. l-company shall be exclusive responsibility of the purchaser i.e. petitioners. The aforesaid directions shall operate till the next date of hearing".

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• Service Tax

• 2016 (9) TMI 493
  Rejection of Refund - co-relation between the amount of refund claim and the documents produced – CHA services – Held that: - records properly verified by the first appellate authority. Also, condition of Notification No.41/2002 satisfied from the documents. Foreign commission agent services – Held that: - The first appellate authority has categorically recorded a factual finding that the respondent exporter has produced a copy of agreement and shipping bills which are clearly indicating the sales commission vis-a-vis relevant exports – relevant documents on record. Technical testing and analysis services – non-production of copies of written agreement entered into with the buyer – Held that: - the first appellate authority has considered the copies of standard operating procedure, hereby establishing that the necessary documents were produced by the appellant – allowance of refund justified – decided against Revenue.

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• 2016 (9) TMI 492
  Correctness of Tribunal's order - Refund claim - eligibility - Notification No.41 of 2007, as amended by later Notifications Nos.17/2008, 3/2008 and 33/2008 - export of manufactured cotton yarn - Held that:- the assessee’s contention that the subsequent notifications were merely clarificatory and must be held to relate back or apply from the date the base notification came into force, cannot be accepted. The CESTAT reasoning is therefore incorrect. As far as the assessee’s submission that the adjudicating authority could not have increased scope of remand is concerned, whilst the submission has some merit, this Court notices that at least in two places, where the Commissioner remitted the matter for verification, the scope of the remit was widened. Having regard to the fact that exemption and refund applications are to be construed strictly and narrowly which has been dealt with [Refer Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal 2010 (11) TMI 13 - SUPREME COURT OF INDIA], it cannot be said that the adjudicating authority lacked primary jurisdiction merely because of a circumscribed demand as being contended by the assessee. This contention too therefore fails. Therefore, the impugned order is unsustainable. - Decided in favour of Revenue

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• 2016 (9) TMI 491
  Service tax liability - Whether the Trade Mark/ License Fee and the payment made in terms of the foreign collaboration agreement by the applicant to H&M GBC is liable to Service Tax in terms of the Finance Act, 1994 - Held that:- the applicant has entered into Trademark License Agreement with M/s H & M Hennes & Muritz GBC AB, Sweden to use the trademark rights and other intangible property rights and required to pay the License Fee. All intellectual property rights and other rights, including without limitation patents, design rights, trademarks, copyright and know-how, relating to the IP shall all times be the exclusive property of H&M GBC, Sweden. Accordingly, services received by the applicant fall under the declared services and would attract the levy of Service Tax under reverse charge mechanism. Service tax liability - Whether the sales and Business Support Fee paid by the applicant to H&M GBC is liable to Service Tax in terms of the Finance Act, 1994 - Held that:- Sales and Business Support Agreement will be covered in the definition of “service’ under Section 65B (44) of the Finance Act, 1994. Section 68 (2) provides that in respect of such taxable service as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed. Therefore, in terms of above Section 68(2) read with Notification No.30/2012-St dated 20.06.2012, taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory, service tax is payable by the person receiving the service. Therefore, the service is proposed to be provided by H&M GBC, Sweden. Further, as per the provisions of Section 66D, Services received by the applicant does not fall under the “negative list of services’ and would attract the levy of Service Tax under reverse charge mechanism. - Decided against the appellant

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• 2016 (9) TMI 490
  Cenvat credit - Courier Service, Insurance Service, Catering Service, Rent-a-cab Service and Civil electrical Repair Service - Cenvat credit taken on outdoor catering service prior to 01.04.2011 and no input service credit have been taken on outdoor catering service after 01.04.2011 - Civil Electrical & Repair service also availed prior to 01.04.2011 - Held that:- as the ld. Commissioner (A) in the impugned order has observed that courier service has been received by the respondent for dispatch of misc documents/material/samples which is directly related to the manufacturing activity, insurance service, has been availed for insurance of laptop and medical accidental insurance of employees which is directly related to manufacturing activity, rent a cab service has been used for procurement of inputs/sale promotion/banking and other financial accounting purposes which are directly related to their manufacturing activity, also the Civil Electrical & Repair service, has been availed for renovation to factory premises prior to 01.04.2011, Therefore, all these services are entitled to take cenvat credit. With regard to the outdoor Catering service for the period prior to 01.04.2011, the respondent is entitled to take cenvat credit in the light of the decision in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT]. Further, post 01.04.2011, the respondent is not entitled to take cenvat credit but it is the contention of respondent that the amount of Rs. 27,892/- pertains to the period prior to 01.04.2011 has not been coming out of the impugned order. Therefore, for verification of this fact by the adjudicating authority whether the respondent has not taken any cenvat credit on outdoor catering service after 01.04.2011 and holding that the respondent is entitled to take the cenvat credit on courier service, insurance service, rent a cab, civil electrical or repair service and outdoor catering service for the period prior to 01.04.2011, remanded back to the adjudicating authority. - Appeal disposed of

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• 2016 (9) TMI 489
  Demand of service tax from sub-contractor - Site Formation Service and Mining Services since 2007-2008 - hiring of equipment for excavation, loading of Coal/OB at Pit No. of Dongamouha Open Case Coal mines of M/s Jindal Steel Power Projects Ltd. (JSPL) and transporting the same to JSPL’s crushing plant/OB Dump within distance of 3 km from the edge of the quarry and unloading of coal in the JSPL’s hopper as would be directed by GSA - Held that:- by relying on the decision of Tribunal in the case of Vijay Sharma & Co. [2010 (4) TMI 570 - CESTAT, NEW DELHI] and the decision of Hon'ble Supreme Court in the case of M/s. Hindustan Coca Cola Beverage Pvt. Ltd [2007 (8) TMI 12 - SUPREME COURT OF INDIA], we hold that the payment made by main contractor on the activity conducted by the appellant is considered as discharge of service tax liability by the appellant. Further we find that the payment made by the main contractor has not been disputed by Revenue. In that circumstances, we hold that the payment of main contractor on behalf of the appellant shall be treated as payment made by the appellant. We further hold that in the light of the Section 97 of the Finance Act, 2012, the appellant is not liable to pay service tax on the activity of maintenance & repair roads, therefore, demand on this account is also set aside. The matter is remanded back to the adjudicated authority for verification purposes whether the appellant paid service tax for the remaining part of the services tax demand. If the same is found to correct, no demand shall be sustainable against the appellant. - Appeal disposed of

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• 2016 (9) TMI 488
  Demand alongwith interest and penalty - Business Auxiliary Service - commission received on purchase and sale of SIM Cards of BSNL - Held that:- the issue has been dealt by this Tribunal and the same has been affirmed by the Hon’ble Allahabad High Court in the case of Daya Shankar Kailash Chand [2015 (8) TMI 1007 - ALLAHABAD HIGH COURT]. Therefore, in the light of the above decision, as the appellant is also engaged in the activity of sale and purchase of the SIM Cards of BSNL and on these SIM Cards of BSNL deposit service tax, therefore, we hold that the appellant is not liable to pay service tax under the category of Business Auxiliary Services on the commission received by them on sale and purchase of SIM Cards. - Decided in favour of appellant with consequential relief

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• 2016 (9) TMI 487
  Waiver of pre-deposit - Demand alongwith interest and penalties - Section 73 of the Finance Act, 1994 - Commercial Training and Coaching Service - applicant contended that they are only providing infrastructure support to educational institute and is not providing the alleged Commercial Training and Coaching Services - Held that:- the applicant is providing infrastructural service by way of providing in working and providing class room to the institutes to provide commercial training and coaching services and the applicants is receiving certain amount on this account on profit sharing basis, therefore, The activity of the applicant prima-facie do not fall under the category of commercial training and coaching service therefore, the applicant has made out a case of complete waiver of pre deposit. Accordingly, we waive the requirement of pre deposit of entire amount of service tax, interest and penalties and stay recovery, thereafter, during the pendency of the appeal. - Waiver granted

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• 2016 (9) TMI 486
  Imposition of penalty - Section 78 of the Finance Act, 1994 - Service tax not paid on Man Power Recruitment or Supply Agency - period involved is 2009-2010 and 2010-2011 - appellant paid service tax alongwith interest and 1% of service tax as penalty in terms of section 73(4A) of the Finance Act, 1994 as soon as it realized about the same - Held that:- the provisions of section 73 (4A) came into force w.e.f 08.04.2011 and the show cause notice was issued to the appellant in 2013. Therefore, when the show cause notice was issued to the appellant the provisions of Section 73(4A) of the Act were in force, therefore, I hold that the appellant is entitled for the benefit of the said provisions. Moreover, the said provision does not specifically states that these provisions will apply to register dealer only. In these circumstances, I hold that penalty under Section 78 of the Act is not imposable of the appellant. As the appellant has already paid the penalty as per Provisions of Section 73 (4A) of the Act, therefore, impugned qua imposing penalty under Section 78 of the Act is set aside. - Appeal disposed of

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• 2016 (9) TMI 485
  Refund claim - period involved is 1.10.2007 to 31.12.2007 - THC charges, bills of lading charges, origin haulage charges, repo charges - Revenue rejected on the following grounds viz., (i) not covered under Port Services as the service providers are registered under different category and proof of deposition of tax under port services not produced, (ii) non-submission of proof of payment of service tax on GTA services, (iii) proper invoice not submitted, (iv) Cleaning activity as per OIA condition of Notification not satisfied, particularly, service provider not approved as accredited agency, (v) Rejection of Service Tax paid on technical inspection and certification services on the ground that conditions of exemption Notification not fulfilled. Held that:- the issues mentioned at Sr. No. (i) (ii) & (iii) are indeed covered in assessees favour by the various judgments. Therefore, by following the precedents, we allow the appeal in favour of the appellant. With regard to cleaning activity (Point No. (iv), since the appellant has produced the certificate for the first time before this Tribunal, we are of the view that the same should be verified by the Original Authority. Therefore, we remand the matter to the original authority for verification of such certificate. If the same is in order, the refund shall be granted to the appellant. With regard to Point No. (v), the appellant has not pressed for the refund on such ground. Thus, the appeal is dismissed as not pressed. - Appeal disposed of

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• 2016 (9) TMI 484
  Maintainability of appeal - authorizing a designated Central Excise officer to file an appeal - composition of the Committee of commissioners – compliance with section 35B(2) of Central Excise Act, 1944 – Held that: - The plea for substitution by new authorization and deemed acceptance of earlier appeal has been made by the appellant-Commissioner. Without doubt, he is the appellant but with the authorized committee having designated a specific officer to handle the appeal, a plea entered by one not authorized by the committee for a decision that was not placed specifically before the authorized committee for a decision is a unilateral act beyond the scope of the powers of a Commissioner. These flaws are severe enough to hold that procedure should not be allowed to come in ‘the way of justice and it is not meant to trip justice’ to the present application – miscellaneous application failed – decided in favor of Revenue.

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• Central Excise

• 2016 (9) TMI 483
  SSI Exemption - Demand alongwith interest and penalty - utilized cenvat credit on inputs used in the manufacture of specified goods cleared before the aggregate value of clearance of specified goods exceeded rupees one crore - failed to fulfill the condition of the Notification No. 8/2003-CE dated 01.03.2003 - Held that:- the goods cleared by the appellant for home consumption, as no availed cenvat credit. Therefore, by following the decision of Hon'ble Apex Court in the case of Nabulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT] wherein the Hon’ble Apex Court has held that the assessee is entitled to benefit of exemption notification 8/2003-CE dated 01.03.2003, the impugned order is set aside and the appellant is entitled to the benefit of Notification No. 8/2003-CE. - Decided in favour of assessee

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• 2016 (9) TMI 482
  100% EOU - Recovery of duty alongwith interest and penalty attributable to inputs - input, i.e., paper procured without payment of duty, used for manufacture of finished product i.e. printed books, sold in the DTA and not exported - pursuant to investigation, appellant deposited central excise duty attributable to inputs - Held that:- in absence of export of printed books, the duty foregone on procurement of the input, namely paper, shall not be eligible for the exemption contained in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Thus, duty demand confirmed by the authorities below, is in conformity with the statutory provisions. It is found that the amount deposited by the appellant before adjudication of the matter, was appropriated in the adjudication order towards duty liability. Since interest in the present case has not been deposited by the appellant, we are of the view that the interest for delayed payment of Central Excise duty has to be paid by the appellant. With regard to imposition of penalty, it is found that the issue involved in the case relates to interpretation of the Notification No. 22/2003 dated 31st March, 2003 and in an identical case, this Tribunal in the case of the appellant itself reported in [2010 (4) TMI 954 - CESTAT NEW DELHI] has set aside the penalty imposed on the appellant. Therefore, the penalty cannot be imposed on the appellant in the given circumstances of the case. - Decided partly in favour of appellant

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• 2016 (9) TMI 481
  Job-work - Whether excess paid duty can be adjusted against the short paid duty, essentially when the assessment is provisional - appellant during the disputed period have short paid Rs. 38,36,604/- and also excess paid duty to the tune of Rs. 30,44,912/- with regard to the same product, namely, unprocessed man maid fabrics. Thus, in effect short paid duty is only to the tune of Rs. 7,91,692/-, against which the appellant claimed that they have already deposited Rs. 7,93,582/-. Held that:- by respectfully following the decision of Larger Bench of this Tribunal in the case of Hindustan Zinc Ltd. vs CCE Jaipur-II [2015 (11) TMI 953 - CESTAT NEW DELHI (LB)] which was relied on the judgment of Hon’ble Karnataka High Court in the case of Toyota Kirloskar Auto Parts India Pvt. Ltd. vs CCE [2011 (10) TMI 201 - KARNATAKA HIGH COURT] held that adjustment is possible and after adjustment if any further amount is payable, on that amount the interest liability is required to be discharge. Therefore, the adjustment of excess duty against short fall in the duty liability is permissible under the law. However, in the present case since after adjusting the duty liability from the excess paid duty further amount is payable by the appellant, which was subsequently, we are of the view that the interest liability is required to be discharged for short payment of such duty. So far as computation of the interest and liability is concerned, we find that the Hon’ble Allahabad High Court in the case of Bharat Heavy Electricals vs CCE Kanpur [2015 (8) TMI 1055 - ALLAHABAD HIGH COURT] has held that wherever there is short payment of duty the interest liability shall be payable for the period when the duty was short paid. Thus, in this case wherever the duty liability for the respected month has been short paid by the appellant, interest liability is required to be discharged. Since the interest liability has not been properly computed by the adjudicating authority, we are of the view that the matter shall be remanded to the original authority for quantifying the interest liability. - Appeal disposed of

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• 2016 (9) TMI 480
  Quantification of demand - demand of Rs. 11,33,711/- is not part of the total demand of Rs. 50,98,279/- - Held that:- it is found that the duty demand of Rs. 50,98,279/- pertains to the period 05.08.2006 to 31.07.2007, when the assessee cleared the goods in contravention of the provisions of Rule 8(3A) ibid, whereas, the duty demand of Rs. 11,33,711/- pertains to the period June, 2006 and July, 2006, which was not proposed for recovery in the Show Cause Notice. Thus, the adjudicating authority has not quantified the demand properly in the adjudication order. Whether the payment of defaulted amount through debit in the Cenvat account is in conformity with the provisions of Sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 - default in making payment of duty beyond thirty days from due date - Held that:- the provisions of sub-rule (3A) of Rule 8 ibid are applicable to the facts of the case, according to which the assessee was required to pay the excise duty for each consignment at the time of removal. The fact is not under dispute that out of the central Excise duty amount of Rs. 50,98,279/- payable under Rule 8(3A) ibid, the assessee had paid Rs. 7,16,712/- from PLA and the balance amount of Rs. 43,81,567/- from the Cenvat account with interest for delayed payment. So far as the restrictions contained in Rule 8(3A) ibid that Cenvat credit cannot be utilised for payment of duty on removal of goods consignment-wise, we find that the Hon'ble Gujarat High Court, in the case of Indsur Global Ltd. Vs. Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT] has declared the phrase “without utilising the Cenvat credit” contained in Rule 8(3A) as ultra vires. The effect of the said Rule after pronouncement of the above judgement is that the assessee can discharge its duty liability by making debit entry in the Cenvat account. In the present case, since the assessee has paid the entire duty through PLA and Cenvat account along with interest, in our considered view, such payment is in conformity with the provisions of Rule 8(3A) of the Rules. Imposition of penalty - non-payment of duty consignment-wise - Held that:- there is contravention of Rule 8(3A) of the Rules, for which the penalty imposed under Rule 25 of the Rules is justified. However, considering overall facts and circumstances of the case, we are of the view that penalty imposed in the adjudication order is on the higher side, which is required to be reduced in the interest of justice. - Appeal disposed of

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• 2016 (9) TMI 479
  Valuation - determination of assessable value - caustic soda lye supplied to the appellant’s sister unit - supply of caustic soda lye to independent buyers also - Held that:- in the present case, normal price, i.e., the price of caustic soda lye ordinarily sold by the appellant to independent buyers in the course of wholesale trade is available and therefore by virtue of Section 4(1)(a) ibid that will be deemed to be assessable value obviating the need to go to Section 4(1)(b) ibid and the Valuation Rules framed thereunder. Therefore, the assessable value for caustic soda lye supplied by the appellant to its sister unit would be the same as determined for the independent buyers in terms of Section 4(1)(a) ibid. As a consequence the contention of the appellant regarding deduction of freight element for transporting goods upto the sister unit’s premises is rendered irrelevant. - Decided against the appellant

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• 2016 (9) TMI 478
  Cenvat credit - channels, Joist, C.R. Strips, H.R. Coils, G.R. Strips, Angles etc. - Cenvat credit wrongly taken on the basis of invoices without actually receiving the inputs into the factory - respondents could produce all the witnesses whose cross-examination was sought but only the statement of witnesses were produced whom could not be produced in person - Held that:- the original authority has relied upon the findings only on the basis of statements of such witnesses whose cross-examination could not be conducted, since the respondent could not produce them. The contention of Revenue is that the inputs were not received by the appellants but it is a fact that appellants manufactured their final product and paid duty on the final product and filed statutory returns for the same and such returns are not questioned by Revenue then, obviously Revenue should have investigated as to from which raw materials, the assessee i.e. appellant manufactured the goods. The failure of the Revenue to establish the source of Raw material in the absence of non-receipt of inputs on which Cenvat Credit was taken, brings us to the conclusion that the entire case of Revenue is on the basis of presumption. We have also found that there is sufficient force in the arguments put forth by the appellants and the various case laws cited by him, are squarely applicable in the present case. Therefore, the impugned Order-in-Original is not tenable in law. - Decided in favour of appellant

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• 2016 (9) TMI 477
  Valuation - non-inclusion of third party test/inspection charges being made at the request of the customers, in addition to the normal test, in the value of Transformers - charges recovered separately from the customers - Held that:- the learned Commissioner (Appeals), after recording the submissions advanced by the Appellant, has observed that the cost of additional test/inspection carried out by the third party at the behest/request of the buyer cannot be included in the assessable value under the circumstances, recorded in the said order. The learned Commissioner (Appeals), after accepting the said principle, remanded the matter to the Adjudicating authority for verification of the facts viz. whether the third party tests carried out by the Appellant is in addition to the normal test and at the behest of the customers etc. We do not see any deficiency in the findings of the ld. Commissioner (Appeals). Instead, the Appellant should have followed the direction of the learned Commissioner (Appeals) and submitted the evidences before the Adjudicating authority and by now, the matter would have been disposed of. Nevertheless, we remand the matter to the Adjudicating authority to examine the facts and evidences on record, in the light of the case laws and the observations made by the learned Commissioner (Appeals) and decide the issue afresh. - Appeal allowed by way of remand

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• 2016 (9) TMI 476
  Validity of impugned order - power of commissioner (appeals) to admit / seek additional evidences - Rule 5 of Central Excise (Appeals) Rules, 2001 - drawings, designs and various detailed supporting charts as per Chartered Engineers certificate were produced before the Appellate authority and not before the Original Authority - Held that:- The Commissioner (Appeals) is well within his right to seek clarification to explain any evidences submitted before him, before appreciating the said evidence for a finding. Seeking additional information or clarification on evidences on record to facilitate the proper finding cannot be apparently barred by the above mentioned rule. There is no allegation that the new set of evidences have been submitted by the respondent which came into existence after the said case was decided by the Original Authority. I find no substantial ground in the appeal by the Revenue when there is no challenge on merit. A perusal of the impugned order to examine the merit reveals that the factual usage of various items have been examined by the Commissioner (Appeals) and he was guided by various decided cases including the application of user test as laid down by the Hon’ble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] and in General Mills [2001 (7) TMI 118 - SUPREME COURT OF INDIA]. The eligibility of the credit has been decided by the lower authority on such merits. - Decided against the Revenue

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• 2016 (9) TMI 475
  Whether the Appellant would be eligible to discharge duty @ 16% as per tariff rate or the benefit of Notification No.6/2002-CE, dt.01.03.2002 be allowed in calculating the duty liability on the cleared quantity of 26157.600 kgs of Textured yarn - period involved is 01.04.2002 to 07.06.2002 - Held that:- from the impugned order we could not notice any observation on the evidentiary value of the CA certificate and its acceptability showing that the said quantity of POY had been purchased and consumed in their factory and the payments were made through A/C payee cheques, particularly when the statements dt.08.06.2002 and 17.10.2003 of Shri Ratanlal Mahavirprasad Daruka are contradictory in nature and the invoices were produced on 02.09.2002 by the Appellant before the notice was issued to them on 28.04.2005. Therefore, it is appropriate to verify/examine the said evidences before arriving at the conclusion. Accordingly, in the interest of justice, we remand the matter to the Ld. Commissioner (Appeals) to decide the issues afresh after considering all evidences on record and the evidences that would be produced by the Appellant and in particular the acceptability or otherwise of the CA Certificate. - Appeal disposed of

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• 2016 (9) TMI 474
  Demand - disallowance of Cenvat Credit - service tax paid by the service provider in relation to the cleaning services, garden maintenance service, civil and construction work, painting work, fencing work etc. - Held that:- by applying the ratio of decisions of the Hon'ble High Court of Karnataka in the case of Millipore India Ltd. and Stanzen Toyotetsu India Pvt. Ltd. a wherein it has held that the service tax paid on the services rendered for landscaping factory garden, catering bill, canteen etc. have to be considered as service rendered in relation to the manufacturing activity and the Larger Bench of the Supreme Court in Ramala Sahkari Chini Mills Ltd. [2016 (2) TMI 902 - SUPREME COURT] where the word include is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. Therefore, the First Appellate Authority was correct in coming to a conclusion that the respondent is eligible for availment of Cenvat Credit on the services rendered by various service providers which were within the factory premises. - Decided against the Revenue

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• CST, VAT & Sales Tax

• 2016 (9) TMI 465
  Issuance of eligibility certificate - manufacture of cattle feed - tax incentives - Section 13-B of the Haryana General Sales Tax Act, 1973 - eligibility certificate - Rule 28-A of the Haryana General Sales Tax Act, 1973 - eligible industrial unit - Rule 28-A(2)(f) of the Rules - notional sales tax liability - Rule 28A (2)(n) of the rules - negative list not entitled to the benefits - benefit of purchasing raw material without payment of tax - tax free goods - Rule 28A(4)(a) of the rules - Held that: - neither the product being manufactured by the petitioner, namely, cattle feed, nor the unit engaged in manufacturing of tax free products, is mentioned in the nagative list under sub-rule 5 of Rule 28A of the rules. Meaning thereby there is no bar as such to issue eligibility certificate to a unit engaged in manufacture of cattle feed or for that matter any product which may be tax free on the date. The eligibility certificate is issued, in case specifically not mentioned in the negative list. The quantum of benefit or type of benefit which the industrial unit may avail after issuance of eligibility certificate is a stage subsequent to the issuance thereof. As has already been referred to by the petitioner that in terms of notification issued by the Government, an eligible industrial unit availing exemption from payment of tax may be entitled to purchase goods without payment of tax. In the overall scheme, the object may be to promote industrialisation. This Court is not opining on the issue as to whether the petitioner will be entitled to any benefit and how the benefit, if any available, under the Rules will be calculated, as this is not the stage for that as only issue under consideration before this Court is as to whether the petitioner can be denied issuance of eligibility certificate. The rejection of the case of the petitioner for issuance of eligibility certificate merely on the ground that the petitioner is manufacturer of tax free goods cannot be legally sustained. Petition allowed - issuance of eligibility certificate granted - decided in favor of petitioner.

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• 2016 (9) TMI 464
  Taxability - bagasse – tax free commodity – is the sale of 'bagasse' is a tax free sale under section 5 of the Bombay Act covered under schedule entry A-44? - whether bagasse is sugarcane or not? – Held that: - It was held that so long as these are not identifiable and distinctly known goods to the commercial world, they cannot be brought to tax or if they are part and parcel of sugarcane or are a waste or a by-product when sugarcane is crushed, then, that cannot be brought to tax. Once it has been consistently held that residue or waste of something like sugarcane does not amount to manufacturing a distinct product or goods known to the commercial world, then, no question of taxability arises – no ambiguity regarding the taxability of bagasse – sale of bagasse is a tax free sale – appeal allowed – decided against Revenue.

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• 2016 (9) TMI 463
  Eligibility of exemption – village industries - the exemption notification in G.O.Ms.No.122 dated 20.03.1992 – TNGST Act, 1959 – CST Act, 1956 – Held that: - in case of Ramnad District Sarvodaya Sangam, Srivillliputhur it was decided that once exemption of the products specified in the schedule to the Khadi and Village Industries Commission Act, 1956 without any condition relating to goods, are granted in favour of certain institutions under the Tamil Naud Government Sales Tax Act, such institutions are also deemed to be enjoying the same benefit of exemption under the Khadi and Village Industries Commission of Act, 1956, by virtue of Section 8(2-A) of Central Sales Tax Act, 1956 – following the above judgement it is held in this case that exemption granted to the petitioner under the provisions of the Central Sales Tax Act, 1956 – matter remanded to apply the case of Ramnad District Sarvodaya Sangam, Srivillliputhur and to allow exemption – petition allowed

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• 2016 (9) TMI 462
  Denial of notional input tax credit - Rule 20(3)(a) of the Telangana VAT Rules – second hand vehicles – tax invoice – assessment order - pre-assessment show cause notice - Form VAT 305-A – Held that: - If the words already registered in the State under the Motor Vehicles Act, 1988 in Rule 20(3)(a) is construed to include vehicles initially registered in another State and thereafter, on its being brought within the State of Telangana, were again registered within the State, then that would render Rule 20(3)(a) ultravires the provisions of the Act, and a dealer being extended the benefit of input tax credit on vehicles which have not even suffered tax under the VAT Act, as VAT is imposed only on the sale of new vehicles by registered dealers within the State. The assessment order, to the limited extent the petitioner was denied notional input tax credit on their purchase of used/second hand vehicles on the ground that they had failed to produce a tax invoice, is set aside. The assessing authority shall afford the petitioner an opportunity of a personal hearing, and to produce documentary evidence to show (1) the price actually paid by them on the purchase of used/second hand vehicle, and (2) that the vehicles purchased by them had suffered VAT at the time of their initial registration, under the Motor Vehicles Act, 1988, within the State of Telangana. Matter remanded back - Decided partly in favor of assessee.

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• 2016 (9) TMI 461
  Classification - hair oil taxable at 12.5%, under Entry-20 (Commodity Code 321 of Part 'C' under I Schedule) of TNVAT – pure coconut oil – VVD Herbal – VVD Hibiscus – VVD Anti-dandruffs – vegetable oil - Held that: - Court is of the view that the matter required to be remitted back to the respondent, to enable the petitioner to furnish the full details, because, for the first time, before the Court, they stated that the commodity code number is '765' - the petitioner is directed to treat the impugned proceedings, as show cause notices, and submit their objection(s) to the same, within a period of two weeks from the date of receipt of a copy of this order and along with the objection(s), the petitioner shall produce the proper proof from the manufacturers, as regards the nature of products, which were sold to the petitioner, along with the commodity code(s) and other related documents – opportunity of hearing to be provided and assessment to be done – petition disposed off – decided in favor of petitioner.

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