TMI Tax Updates - e-Newsletter
September 16, 2015

Case Laws in this Newsletter:

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

TMI SMS

• If one organ of UOI doesn't comply with Court order, other organ can't take benefit of same - Can't act prejudicial to interest of party -HC

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Articles

1. LOSS ON VALUATION OF INTEREST RATE SWAP CONTRACTS – DEDUCTIBLE?

   By: DR.MARIAPPAN GOVINDARAJAN

2. Statutory Registers under Companies Act, 2013

   By: Parth Sharma

News

1. Notification Issued Imposing a Provisional Safeguard Duty Effective from Today on Hot-Rolled Flat Products of Non-Alloy and Other Alloy Steel in Coils of a Width of 600 MM or More [Falling Under Heading 7208 or Tariff Item 7225 30 90] at the Rate of 20% (Twenty Percent) Ad-Valorem for a Period of 200 Days

2. FM: Inflationary Pressures Continued to Moderate Across-the-Board in August 2015; Core Inflation (Excluding Food and Fuels) is Continuing the Momentum of Decelerating Core Inflation

Notifications

Companies Law

1. F.No 1/8/2013-CL-V - dated 15-9-2015 - Co. Law

The Companies (Acceptance of Deposits) Second Amendment Rules, 2015.

Customs

2. 92/2015 - dated 15-9-2015 - Cus (NT)

Tariff Notification in respect of fixation of T V of Edible oil, Brass, Poppy seed, Areca nut, gold and Sliver

3. 2/2015-Customs (SG) - dated 14-9-2015 - Safeguard

Seeks to levy provisional safeguard duty on Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more [heading 7208 or tariff item 7225 30 90] at the rate of 20% for a period of 200 days.

Circulars / Instructions / Orders

FEMA

1. File No. 12/15/2009-FC-1 - dated 15-9-2015

Clarification on FDI Policy on Facility Sharing Arrangements between Group Companies

2. Press Note No. 09 (2015 Series) - dated 15-9-2015

Review of the existing Foreign Direct Investment policy on Partly Paid Shares and Warrants.

Highlights / Catch Notes

Income Tax

• Court Denies Interest Waiver; No Genuine Hardship Proven u/s 220(2), Petitioner Fails to Meet Standards.

  Case-Laws - HC : Waiver of interest under Section 220(2) rejected - whether petitioner suffered genuine hardship? - "Hardship" when pressed into service must be genuine and must smack of a conduct of a worthy citizen. - No waiver - HC
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• Section 194C TDS Not Applicable: Payments to Jobbers, Arbitragers in Profit-Sharing Deal Are Principal-to-Principal.

  Case-Laws - AT : TDS u/s 194C - profit sharing - provisions of section 194C of the Act are not attracted in this case as the payments made by the assessee to jobbers / arbitragers represent share of the jobbers / arbitragers under the agreement which is on principal to principal basis - AT
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• Earmarking Bank Deposits for Income Accumulated u/s 11(2) Meets Compliance with Income Tax Act.

  Case-Laws - AT : Accumulation of income - The provisions of sec. 11(2)(a) talks about “income”, where as the provisions of sec. 11(2)(b) talks about the “money” so accumulated - earmarking of existing bank fixed deposits, which is free from any lien, towards the income accumulated u/s 11(2) of the Act during the year under consideration would be sufficient compliance of sec. 11(2)(b)- AT
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• Assessing Officer Unjustified in Excluding Interest Income from Partner Remuneration Calculation u/s 40(b)(v.

  Case-Laws - AT : Disallowance treating remuneration paid to the partners under the provisions of section 40(b)(v) as excessive - A.O was not justified in working out the claim of remuneration after excluding the interest income. - AT
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• Foreign Travel Expenses Not Considered Charitable Purpose for Tax Purposes, Not an Application of Income Abroad.

  Case-Laws - AT : Charitable purpose - Expenses incurred outside India on account of foreign traveling - foreign travelling expenses incurred by the assessee cannot be held as application of income outside taxable territories of the assessee. - AT
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• Unexplained cash credits identified, but wife's income excluded from assessee's tax assessment due to separate filings.

  Case-Laws - AT : Unexplained cash credits and payments of credit cards from undisclosed sources - income of the assessee’s wife has to be excluded from the income tax assessment of the assessee, as the wife of the assessee is filing her returns with the respective ITO. - AT
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• Software Park Lease Income Qualifies as Business Income for Deduction u/s 80IA of Income Tax Act.

  Case-Laws - AT : Eligibility for deduction under section 80IA - whether lease rent income received from letting out modules of software technology park to various lessees would constitute income from business and eligible for deduction u/s 80IA? - Held Yes - AT
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• SEBI Disgorgement Order Leads to No Tax on Short-Term Capital Gains from Illegally Earned Share Transactions.

  Case-Laws - AT : Short term capital gains in view of the SEBI’s disgorging order - Whatever amounts they have illegally earned, which could be assessed as their income has been taken away from them - ultimately no income has resulted to the assessees, out of these share transactions - no addition - AT
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• Partnerships must value stock at market price when distributing or withdrawing it during business termination.

  Case-Laws - AT : Valuation of stock - partnership firm - when stock in trade is distributed or withdrawn at the termination of when stock in trade is distributed or withdrawn at the termination of business, they have to be value at the market price - AT
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Customs

• Union of India Organs Must Comply with Court Orders; Non-Compliance Cannot Harm Party Interests.

  Case-Laws - HC : If one organ of Union of India does not comply with orders passed by this Court, other organs of Union of India cannot take benefit of same and act prejudicial to interest of party - HC
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Central Excise

• No Penalty for Broker u/r 26: Lack of Evidence on Handling or Possession of Excisable Goods.

  Case-Laws - AT : Levy of penalty on Broker for abetment - penalty under Rule 26 of Central Excise Rules cannot be levied - It have nowhere been found that the appellants have acquired possession or handled any excisable goods in any manner, rendering the goods liable to confiscation - AT
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• Appellant Not Required to Reverse Cenvat Credit Due to No Initial Credit Taken on Clandestinely Procured Inputs.

  Case-Laws - AT : When an input has been procured clandestinely, definitely Cenvat Credit on the said input has not been availed by the appellant. Therefore, the question of reversal of same does not arise when there is no credit taken - AT
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• Court Finds No Duty Payment Required for Goods Cleared Under ARE-3 with CT-3 Certificates Due to Lack of Evidence of Diversion.

  Case-Laws - AT : Cleared the goods under ARE-3 on the strength of the CT-3 certificates without payment of duty - Partially Oriented Yarn - failure to produce warehousing certificates - there is no material available on record that the goods were diverted in the local market by the appellant - no demand - AT
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• Control panels classified as apparatus under Heading 9022.10; not eligible for nil duty rate as parts or accessories.

  Case-Laws - AT : Classification of control panels - control panels are apparatus in themselves and cannot be considered as "parts or accessories" of X-ray machines - would be classified under Heading 9022.10, but since these are not parts or accessories, the same will not be entitled to the benefit of nil rate of duty - AT
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Case Laws:

• Income Tax

• 2015 (9) TMI 665
  Issue of interest income restored to the file of the A.O. by ITAT to exclude 90 % of 'net' interest income - whether the receipt on account of electronic data processing and professional services is not income but in the nature of reimbursement of expenses. Therefore, no occasion to invoke clause (bba) of Explanation to 80HHC would arise? - Held that:- We accept the revenue's contention that the receipts attributable to electronic data process and professional services would be in the nature of income. Therefore while answering Question in negative i.e. in favour of the appellant-revenue and against the respondent-assessee, the Assessing Officer while giving effect to this order, would examine whether or not, there is any income on net basis i.e. after reducing expenditure from gross receipts. It is only thereafter, if there is a positive income, the Assessing Officer would apply the provisions of clause (baa) of the Section 80HHC of the Act. - Decided against assessee.

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• 2015 (9) TMI 664
  Waiver of interest under Section 220(2) rejected - whether petitioner suffered genuine hardship? - Held that:- petitioner, a partnership firm, did not submit its returns for the year 2006-07 and 2007-08 within the time stipulated but did so only after the machinery provided under the Income Tax Act was put into force i.e. a search conducted and notice issued, pursuant to which returns were filed on 20.9.2010. The conduct of the petitioner speaks volumes of its commitment to rule of law. The fact that returns submitted when accepted, petitioner was required to pay tax of Rs. 74,74,229/- for the assessment year 2006-07 and Rs. 2,06,00,000 for the assessment year 2007-08. Petitioner did not make the payments immediately thereafter but did so only after coercive steps were taken by attaching the Bank accounts and property of the petitioner, whence Rs. 35 lakhs was paid on 8.5.2014 and the balance of Rs. 75,21,573/- on 20.1.2015 for the assessment year 2006-07, while for the assessment year 2007-08 Rs. 15 lakhs was paid on 11.9.2014 and Rs. 1,11,75,366/- on 20.1.2015. Despite the laxity on the part of the Department in the matter of recovery of the taxes by reason of which petitioner was in possession of the amounts due and payable as tax for almost ten years from the assessment year 2006-07, yet again speaks volumes of the conduct of the petitioner in the matter of payment of taxes. If regard is had to the aforesaid facts and material dates, the contention that petitioner suffers from hardship hence entitled to waiver of interest under Section 220(2) of the Income Tax Act is far from acceptance. "Hardship" when pressed into service must be genuine and must smack of a conduct of a worthy citizen. In the facts and circumstances hardship cannot be comprehended in favour of the petitioner. Suffice it to state that the Prl. Commissioner of Income Tax Act-V, Bangalore was fully justified in declining waiver of interest at the request of the petitioner. - Decided against assessee.

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• 2015 (9) TMI 663
  Use of drawings, procedure and trademark of MPL - whether was going to bring an advantage of an enduring nature to the Assessee, therefore, capitalized as royalty paid by the Assessee to MPL also confirmed by CIT(A)? - ITAT was of the view that the CIT(A) was not justified in enhancing the addition made by the AO by capitalising the royalty - Held that:- There was sufficient opportunity for the AO, if he doubted the genuineness of the payment of royalty by the Assessee to MPL, to have conducted a detailed inquiry. The Assessee on its part furnished the agreement between itself and MPL under which it was inter alia permitted to use the trademark 'Macnaught' on its products. The royalty was payable per unit of the product and, therefore, was clearly linked to sales. There was also no doubt that such payment was in fact made by the Assessee to MPL. It is also not in doubt that MPL was not related to the Assessee in any manner. In the circumstances, there should have been some reasonable basis for the CIT(A) to simply conclude that this was a sham transaction and proceed to enhance the disallowance. The interpretation of the agreement by the ITAT appears to be plausible. The Court is not persuaded to hold that the impugned order of the ITAT is perverse. - Decided in favour of assessee.

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• 2015 (9) TMI 662
  Rental income received by the assessee from the tenants in occupation of the property - 'income from business' OR 'income from house property' - Held that:- In view of the fact that the Assessee has accepted the decision of the Income Tax Appellate Tribunal for the AYs 1992-93 till 1999-2000 and has expressed no objection to the Revenue's appeals for AYs 1990-91 and 1991-92 being allowed, the above questions in the Revenue's aforementioned appeals are answered in the negative i.e. favour of the Revenue and against the Assessee. In other words, it is held that even for the said AYs 1990-91 and 1991-92, the rental income received by the Assessee from the tenants in occupation of the property known as Scindia House, Connaught Place, New Delhi shall be taxed as income from house property. - Decided against the Assessee

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• 2015 (9) TMI 661
  Condonation of delay - delay of about 554 days - Held that:- It appears that for the first time the assessee has taken the plea that address mentioned on registered post is wrong or that the letter was sent on wrong address and there was no business at that time as it was closed in 2008. As regards the Plea that there was no business as it was closed in 2008, do not find an iota of evidence in support of this contention. Even otherwise also this contention of the assessee cannot be accepted on the ground that the assessee has never submitted any application before the AO regarding change of address, if any. The above plea taken by the assessee is afterthought. Thus, decline to accept the contention of the assessee. From the records, it is clear that the assessment order alongwith demand notice were sent by registered post on 31/12/2009 (photocopy of receipt from Postal Authorities is available on record). There is no dispute that the registered letter was received back with remarks from the Postal Authorities "refused to receive". Photocopy of envelope is also available on record. Fully agree with these observations of the CIT that there are no sufficient reasons for the inordinate delay in filing the appeal almost after one and half years. It is well settled that the phase "sufficient cause" is not a question of principle, but is a question of fact. Hence, whether to condone the delay or not depends upon the facts and circumstances of each case as "sufficient cause" for condonation of delay depends only on the fact placed by the applicant / appellant before the authority concerned. In the instant case, the facts are crystal clear. There is no evidence on record to show that there was diligence on the part of assessee/appellant. Furthermore, party guilty of negligence can not ask for condonation of inordinate delay of about 554 days in filing the appeal before the CIT(A). - Decided against assessee.

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• 2015 (9) TMI 660
  Addition u/s 69 - unaccounted investment - Held that:- The authorities below have not disputed the fact that Shri Adisal was owning 8 acres of land jointly with other co-owners. However, the CIT(A) discarded and rejected the explanation of the assessee, affirming the conclusion of the AO that there has been no evidence given by the assessee to substantiate that he had received proceeds from agricultural produce. When we observe the copies of the revenue patwari record column 5, we note that in the details of agriculturists it has been mentioned “Khud Kast” meaning thereby the owner of the land himself is doing agricultural activities on the said land, therefore, we may safely infer that the father of the assessee was actively doing agricultural activity on the 8 acre of land which was owned by him jointly with other co-owners prior to the relevant financial year 2007-08. In this situation, we are unable to agree with the conclusion of the authorities below that there has been no evidence given by the assessee to substantiate that he (Shri Adisal) received proceeds from agriculture produce which was further given to the assessee towards purchase of steel for construction of assessee’s house. In this situation, primary onus lies on the assessee as per requirement of section 69 of the Act and has been discharged by the assessee. In this situation, the onus was shifted on the AO to show that the explanation submitted by the assessee was not sustainable and the father of the assessee Shri Adisal had not earned any agricultural income from agricultural land owned by him. Finally, we reach to a conclusion that the assessee properly explained source of investment of Rs. 2,80,000 which was incurred by him towards purchase of steel towards construction of his house, therefore, no addition u/s 69 of the Act is called for. See CIT vs Lal Transport Corporation (2008 (7) TMI 957 - HIGH COURT OF PUNJAB & HARYANA). - Decided in favour of assessee.

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• 2015 (9) TMI 659
  TDS u/s 194C - profit sharing - Disallowance under section 40(a)(ia) - non deduction of tds - payments made by the assessee to jobbers / arbitragers - CIT(A) deleted disallowance - Held that:- We respectfully follow the order of the Tribunal in the case of M/s Asset Alliance Securities Pvt. Ltd. (2010 (7) TMI 720 - ITAT MUMBAI) and uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer holding that the provisions of section 194C of the Act are not attracted in this case as the payments made by the assessee to jobbers / arbitragers represent share of the jobbers / arbitragers under the agreement which is on principal to principal basis. - Decided in favour of assessee. Computation of capital gain - CIT(A) reversing the order of AO deleted the disallowance made by the Assessing Officer in view of the specific provisions of section 55(2)(ab) wherein it is provided that the assessee should be allowed to take cost of the acquisition of the original BSE card as cost of acquisition of BSE equity shares - Held that:- CIT(A) warranting interference at the instance of the Department inasmuch as the learned CIT(A) accepted the claim of the assessee holding that the assessee was allowed to take the cost of acquisition as per the specific provisions of section 55(2)(ab) of the Act. DR has not brought anything on record contrary to the above noted specific provisions of the Act. - Decided against revenue.

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• 2015 (9) TMI 658
  Assessment of part of income accumulated u/s. 11(2) - disallowance of income accumulated u/s 11(2) - whether the bank fixed deposits, which were made in the immediately preceding year, could be earmarked towards the income accumulated u/s 11(2) of the Act or not, in compliance with the provisions of sec. 11(2)(b)? - Held that:- In the instant case, there is no dispute that the assessee has passed a resolution for accumulation of income duly specifying the purpose of accumulation. Out of the sum of Rs. 31.35 lakhs claimed u/s 11(2) of the Act as accumulation of income, a sum of Rs. 20.00 lakhs was found to have been deposited in bank fixed deposits during the year under consideration. For the remaining amount, the assessee has earmarked the fixed deposits already available with it towards the income accumulated u/s 11(2) of the Act. Considering the objective of the provision of sec. 11(2)(b), in our view, what is required to be seen is whether the income accumulated has been deposited or invested in the forms prescribed u/s 11(5) of the Act, i.e., there should be corresponding investment, which could be identified with the income accumulated. The period of six months prescribed in Form No.10, in our view, is the outer limit for making deposit/investment. The provisions of sec. 11(2)(a) talks about “income”, where as the provisions of sec. 11(2)(b) talks about the “money” so accumulated. The “money” available with the assessee may be pertaining to the current year’s income or earlier year’s income. Further, if the view taken by the tax authorities that the deposit should have been made out of current year’s income is accepted as correct for a moment, then the assessee trust shall be forced to foreclose the existing deposit and thereafter make a new deposit, thus losing considerable amount towards loss of interest/penalty. The same would be very much technical in nature. Hence, in our considered view, the earmarking of existing bank fixed deposits, which is free from any lien, towards the income accumulated u/s 11(2) of the Act during the year under consideration would be sufficient compliance with the provisions of sec. 11(2)(b) of the Act, since the accumulated income is represented by the corresponding deposit/investment. Thus set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the disallowance of income accumulated u/s 11(2) of the Act. - Decided in favour of assessee. Validity of re-opening of assessment - Held that:- As the return of income filed by the assessee had earlier been processed u/s 143(1) of the Act only and further the assessment has been reopened within four years from the end of the relevant assessment year. Further there was prima facie reason with the assessing officer to believe that the assessee had not made investment in terms of sec. 11(2)(b) of the Act. Even though the prima facie reason may go wrong subsequently, the reopening cannot be held to be invalid on that count. Under these set of facts, by following the decision of Hon’ble Supreme Court rendered in the case of Rajesh Jhaveri Stock Brokers Ltd (2007 (5) TMI 197 - SUPREME Court), we uphold the re-opening of assessment. - Decided against assessee.

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• 2015 (9) TMI 657
  Deemed dividend u/s 2(22)(e) - CIT(A) deleted the addition - Held that:- We agree with the findings of the Commissioner of Income-tax (Appeals) that the payments made by the assessee on behalf of the company, for its business purposes and the reimbursement thereof to the assessee by the said company cannot be treated as deemed dividend under section 2(22)(e) of the Act. However, it is seen from the paper book filed by the assessee that some of the payments using his credit card were also towards his personal expenditure. Such payments for personal expenditure, if reimbursed by the company, have to be treated as loans or advances under section 2(22)(e) of the Act. Therefore, we deem it fit and proper to remand the issue to the file of the Assessing Officer only for verification of the personal expenditure reimbursed by the company to the assessee and treat only such expenditure out of the accumulated profits of the assessee as deemed dividend under section 2(22)(e) of the Act. - Decided partly in favour of revenue for statistical purposes.

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• 2015 (9) TMI 656
  Disallowance treating remuneration paid to the partners under the provisions of section 40(b)(v) as excessive - whether the interest income is to be considered for the purpose of calculation of remuneration to the partners? - Held that:- On perusing the assessment order, we find that though the A.O has stated that the interest of Rs. 8,30,979/- is in the nature of non business income and taxable under the head “income from other sources” but no such adjustment has been made by him while computing the income from business meaning thereby that he has accepted interest income as business income. We further find that interest receipts in A.Y. 07-08 & 09-10 were considered as non business income by the A.O. and thereafter after excluding it, the remuneration was worked u/s. 40(b)(v) but the addition made by the A.O was deleted by ld. CIT(A) . Before us, no material has been placed on record by the Revenue to demonstrate that the decision of the ld. CIT(A) for A.Y.20 07-08 & 2009-10 has not been accepted by the Revenue. See case of Md. Serajuddin & Brothers [2012 (8) TMI 104 - CALCUTTA HIGH COURT] A.O was not justified in working out the claim of remuneration after excluding the interest income. We thus direct the A.O to include the interest income while calculating the remuneration payable to partner u/s. 40(b)(v) of the Act - Decided in favour of assessee.

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• 2015 (9) TMI 655
  Eligibility for registration u/s 12A - whether the society is not being run according to the objects and thus contravenes the provisions of section 12AA(3)? - CIT(A) denied registration - Held that:- When the object clause shows that the education and treatment has to be provided free of cost and the assessee society is charging fees for those facilities, it has to be accepted that the assessee society is not being carrying out its activities as per its object clause and once this is found that activities of the assessee society are not being carried out in accordance with the objects of the trust, the CIT shall pass an order in writing cancelling the registration of the assessee society u/s 12AA(3) of the Act. In the facts of the present case, we find no infirmity in the order of CIT in denying registration u/s 12A. - Decided against assessee.

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• 2015 (9) TMI 654
  Charitable purpose - Expenses incurred outside India on account of foreign traveling - whether were not allowable as application of income as the assessee was not notified by the CBDT in this regard? - CIT(A) granted relief for the assessee - Held that:- Undisputedly and admittedly, the main objective of the assessee association is to promote trade and industry in India that in the present era of economic globalization, sending delegation to foreign countries cannot be held as outside the ambit of main objective of the assessee association. Per contra, from the Article of Association available it is vivid that the main objects as contained in clause (3) of the Memorandum of Association, objectives cannot be fulfilled without sending foreign delegation and, therefore, foreign travelling expenses incurred by the assessee cannot be held as application of income outside taxable territories of the assessee. Therefore, we are inclined to agree with the conclusion of the CIT(A) and we are unable to see any infirmity, perversity or any other valid reason to interfere with the same - Decided in favour of assessee.

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• 2015 (9) TMI 653
  Unexplained cash credits and payments of credit cards from undisclosed sources - CIT(A) deleted the addition - reopening of assessment - Treating the unexplained cash credits as business receipt and determining income from business by applying net profit @ 5% of the business receipts - Held that:- CIT(A) has correctly mentioned that the income of the assessee’s wife has to be excluded from the income tax assessment of the assessee, as the wife of the assessee is filing her returns with the respective ITO. The CIT(A) has correctly directed the Assessing Officer to compute the assessee’s income from salary and income from small business under Section 44AF at 5% of turnover and recomputed the same. The Assessing Officer has failed to establish that the Income of the wife is not separate from the assessee’s income along with his salary income. - Decided against revenue.

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• 2015 (9) TMI 652
  Computation of deduction u/s. 10B - whether the CIT(Appeals) was justified in directing the AO to exclude the expenditure incurred in foreign currency such as salaries, travelling and conveyance, sub-contracting, software development charges, communication, etc. from the export turnover, with reducing the same from the total turnover also? - Held that:- CIT(Appeals) following the decision of the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) held that whatever is excluded from the export turnover, has also to be excluded from the total turnover. We are of the view that as of today, law declared by the Hon’ble High Court of Karnataka which is the jurisdictional High Court is binding on us. We therefore hold that the order of CIT(A) does not call for any interference and accordingly the same is confirmed. - Decided against revenue. Rrefusing to admit the additional ground - Held that:- A plain reading of the provisions of section 251 shows that the CIT(Appeals) has plenary powers in disposing of an appeal. His powers are co-terminus with that of the AO. The assessee has placed the business transfer agreement. The CIT(Appeals) has powers to consider the same after confronting it to the Assessing Officer for his comments. He could render a finding as to whether there was any payment for acquisition of goodwill and if so, what is the quantum of such payment. The question as to whether the ratio laid down by the Hon’ble Supreme Court in the case of Smiffs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) would apply to the case of the assessee is also a matter which could be investigated by the CIT(Appeals). In our view, the order refusing to admit the additional ground cannot be sustained. We are also of the view that since the claim has been made before the CIT(Appeals) for the first time and since the AO did not have an opportunity to examine the claim of assessee, it would be just and proper if the order of CIT(Appeals) on this issue is set aside and the issue is remanded to the AO for consideration de novo. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 651
  Levy of penalty u/s 271(1)(c) - disallowance of claim of depreciation on land - assessee submitted that he had computed and claimed the depreciation on land due to misconception and confessed the mistake at the time of hearing by submitting a fresh depreciation chart - CIT(A) deleted penalty levy - Held that:- Order of the Ld. CIT(A) finds support from the order of the Tribunal passed in the case of the assessee itself in the immediately preceding assessment year 2005-06 on identical set of facts. No specific error could be pointed out by the Ld. D.R. in the above-quoted order of the CIT(A). The Ld. DR could not bring any materials on record to show that the order of the Tribunal in assessee’s own case, relied on by him, for deleting the levy of penalty was varied in appeal by any higher forum. We find that the order of the Ld. CIT(A) is supported by the decision of the Hon’ble Supreme Court in the case of CIT-vs- Reliance Petro Products Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT) wherein held a mere making of an claim not sustainable in law, would not invite penalty. - Decided in favour of assessee.

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• 2015 (9) TMI 650
  Eligibility for deduction under section 80IA - whether lease rent income received from letting out modules of software technology park to various lessees would constitute income from business and eligible for deduction under section 80IA? - Held that:- The issues in both the appeals of the assessee and Revenue have been decided by the Tribunal in assessee’s own case for the assessment year 2008-09 holding that lease rent income from modules built up space of industrial park is assessable under the head ‘income from business’ and interest income and other income is to be assessed under the head “income from other sources”. Therefore, we direct the Assessing Officer to treat interest income and other income only under the head “income from other sources” and allow deduction under section 80IA on rest of the incomes i.e. rent from premises, operation and maintenance income, revenue sharing income, common facilities such as rent from auditorium and rent from others - Decided against revenue. As far as the contention of the assessee that interest on debtors should be considered as income from business in view of the decision of jurisdictional High Court in Madras Motors Ltd.(2002 (3) TMI 10 - MADRAS High Court), we find that the decision is distinguishable on facts. In that decision, it was the case of the assessee where the assessee, an export oriented company, is manufacturing forgings derived interest on delayed payment of sale proceeds. In the case of the assessee interest was not received on export of sale proceeds but it was delay in paying the rental income to the assessee. Therefore the decision relied on by the assessee is not applicable to the facts of the present case. - Decided against assessee.

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• 2015 (9) TMI 649
  Reopening of assessment - CIT(A) restricting depreciation rate @15% instead of 20% on dumper vehicle thereby resulting in the impugned disallowance on merits - Held that:- Revenue strongly supports the impugned reopening action. However, it fails to rebut the factual position that the Assessing Officer has not decided assessee’s stated objection. We are of the view in this backdrop of facts that such a course of action is mandatory on an Assessing Officer’s part before framing reassessment. See G K & Drysofts India Ltd. vs. ITO [2002 (11) TMI 7 - SUPREME Court] and GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX.[2012 (8) TMI 714 - GUJARAT HIGH COURT] Thus once the Assessing Officer in the instance case has not decided/disposed of assessee’s objections to the reopening, the same is liable to be quashed - Decided in favour of assessee.

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• 2015 (9) TMI 648
  Short term capital gains in view of the SEBI’s disgorging order - CIT(A)’s action challenged upholding assessment as short term capital gains on account of profits derived from sale of shares despite the fact that the same stood appropriated in SEBI’s favour - Held that:- From the findings of the SEBI, it is implicit clear that both the assessees have indulged in violation of SEBI regulations, while making investments in IPOs. Whatever amounts they have illegally earned, which could be assessed as their income/, has been taken away from them. They have already disgorged the amount, though, the payment was made after the close of accounting year, and even after passing of the assessment order. But these payments related to same share transactions, which have given rise to the alleged income in the hands of the assessee. The appeal before the CIT(A) is a continuation of the original proceedings. Before the CIT(A), the assessee have already taken additional grounds of appeal on the strength of the SEBI order. Therefore, we find force in the contentions of the Id. Counsel for the assessee that ultimately no income has resulted to the assessees, out of these share transactions. See Monal Thappar vs. ACIT [2015 (7) TMI 913 - ITAT AHMEDABAD] - Decided in favour of assessee.

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• 2015 (9) TMI 647
  Treatment to Commission on share application made on behalf of PMS clients as income of the assessee - Held that:- There is uncontroverted finding in the assessment order as well as in the impugned order that even after set-aside proceedings, the assessee did not produce any evidence in support of its contention that the transaction and subscription was on account of PMS client account, thus, the addition was again made. Even, the submission of the assessee vide letter dated 23/06/2011 were considered and before the ld. Commissioner of Income Tax (Appeals) also no such evidence was produced. Even before us, no evidence was produced by the assessee, therefore, we have no option but to confirm the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) - Decided against assessee. Disallowance of loss on revaluation of securities - Held that:- There is uncontroverted finding in the impugned order that the assessee could not produce any evidence for substantiating its claim of proving that it was held as stock in trade. These investment were shown in the category of investment only in the balance sheet to comply with schedule-6 of the company Act. Thus, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals). - Decided against assessee. Disallowance of accrued interest on overdue lease rentals - Held that:- Totality of facts clearly indicates that even pursuant to the direction of the Tribunal, the assessee neither filed any basis nor any agreement and merely claimed that it was waived on case to case basis and the circumstances. Even, no such circumstance was adduced before the Assessing Officer /Commissioner of Income Tax (Appeals), thus, we find no infirmity in the impugned order.- Decided against assessee.

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• 2015 (9) TMI 646
  Genuity of loss on sale of shares - Held that:- No reasons to reject the loss on sale of shares by the assessee. The prices at which shares are sold cannot be subjected to our scrutiny and determination, but then rejecting the loss in entirety ends up holding that the assessee ought to have sold the shares at the prices at which the same were purchased. That is beyond the plea of tax authorities to decide, and it is for the businessman as to how he conducts his business – though within the framework of law and without any subterfuges. In view of the above discussions, and bearing in mind entirety of the case, we uphold the grievance of the assessee. Accordingly, the Assessing Officer is directed to delete the disallowance on account of sale of shares. The assessee gets the relief accordingly. - Decided in favour of assessee.

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• 2015 (9) TMI 645
  Entitlement to claim of deduction u/s.80IB(10) - disallowance of claim - Held that:- The AO has allowed the claim of the assessee for deduction u/s.80-IB(10) of the Act for assessment pertaining to the AY 2006-07, wherein also the AO also allowed the claim of the assessee of deduction u/s.80IB(10) of the Act. Facts are identical and project is also same and the Revenue has not pointed out as to how the claim that was allowed in earlier years and under the same facts and circumstances would be disallowable in the year under consideration. It is settled position of law that every year is an independent year, however, the rule of consistency is to be adopted by the Revenue authority while framing the assessment. In the present case, the Revenue has not brought out any new material on the basis of which a different view has been taken for the year under consideration. The construction of any agreement cannot be different in two different assessment years, therefore the orders of the authorities below rejecting the claim of deduction u/s.80-IB(10) of the Act cannot be confirmed, more particularly in the light of the judgement of the Hon’ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers reported at (2011 (12) TMI 248 - GUJARAT HIGH COURT ) - Decided in favour of assessee.

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• 2015 (9) TMI 644
  Transfer pricing adjustment - calculation of OP/TC of EIL - CIT(A) deleted the addition - Held that:- We find that the major item of ‘Other income’ is Interest income which rightly deserves exclusion from the operating profit. When we compare other figures from the Profit & Loss account of EIL and the Annexure-I, it comes to light that the figures of all the expenses tally. To put it simply, the assessee took all the expenses, including the non-operating expenses, in the calculation of operating profit of EIL. It is but natural that if the items of non-operating income are to be excluded from the computation of operating profit, then the items of non-operating expense should also be excluded. One-sided exercise has been done with the obvious reason to bring down the OP/TC of EIL at 6.98%. The net effect of the exercise carried out by the assessee in calculating OP/TC of EIL at 6.98% by taking the figure of operating income on one hand and total expenses (both operating and non-operating) on the other is patently misleading, inasmuch as the figure of profit so computed is neither operating profit nor net profit. It lies somewhere between the two as it has become excess of operating income over total expenses (both operating and non-operating). In our considered opinion, the view canvassed by the ld. CIT(A) in accepting the correctness of the assessee’s calculation of OP/TC of EIL at 6.98% at its face value, cannot be sustained because of the apparent flaws as discussed above. Under these circumstances, we set aside the impugned order on this issue and remit the matter to the file of the AO/TPO for a correct de novo determination of the OP/TC of EIL. After doing this exercise, the TPO will compute ALP of the international transaction as per law. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 643
  Disallowance made u/s 14A - Held that:- Even though the assessee has contended that it has used only its own funds for making the investments, in our view, the availability of own funds on the date of making investments needs to be verified. Admittedly, the facts relating thereto are not available on record. Since full facts which are required to be considered in order to properly appreciate various contentions of the assessee are not available before us, the bench suggested that this issue may be set aside to the file of the assessing officer in order to enable him to examine this issue afresh. Both the parties agreed to the same. Accordingly, we set aside the order passed by Ld CIT(A) on this issue in all the three years and restore the same to the file of the assessing officer with the direction to examine this issue afresh - Decided in favour of assessee for statistical purposes. Disallowance of amortization of premium paid on HTM (Held To Maturity) investments - Held that:- The loss arising on amortization of premium on 'investments held to maturity' has been held to be deductible in the assessee's own case by Hon'ble jurisdictional Bombay High Court and the decision of the High Court is reported as CIT Vs. HDFC Bank Ltd in (2014 (8) TMI 119 - BOMBAY HIGH COURT ). Since this issue has been decided in favour of the assessee by the jurisdictional High Court and since the decision rendered by Ld CIT(A) in all the three years is in accordance with the decision of jurisdictional High Court, we do not find any reason to interfere with his order on this issue - Decided in favour of assessee. Disallowance of broken period interest - Held that:- This issue has also been decided in favour of the assessee by the Hon'ble jurisdictional High Court in the assessee's own case (2014 (8) TMI 119 - BOMBAY HIGH COURT). By following the said decision of the Hon'ble jurisdictional High Court, we direct the AO to delete the disallowance of broken period interest made in AY 2009-10 and 2010-11. Accordingly, the order passed by Ld CIT(A) on this issue in AY 2009-10 is confirmed and the order passed by him on this issue in AY 2010-11 is set aside.- Decided in favour of assessee. Disallowance made u/s 36(1)(viia) - Held that:- We have earlier noticed that the Ld CIT(A) has allowed deduction only in respect of those branches, where there is no doubt about their classification as "rural branches". In respect of other branches, no fresh material was placed to contradict the findings given by Ld CIT(A).. In the appeal filed by the revenue, it is contended that the assessee has withdrawn the claim and hence the Ld CIT(A) was not justified in allowing the claim. We have earlier noticed that the assessee, indeed, filed a letter withdrawing the claim made u/s 36(1)(viia) of the Act and making additional claim of bad debts u/s 36(1)(vii) of the Act. However, subsequently the assessee has withdrawn its earlier letter during the course of assessment proceeding before finalization of the assessment. Hence, the withdrawal letter given by the assessee, in our view, should not be taken cognizance of. Accordingly, we do not find merit in the said ground of the revenue.- Decided in favour of assessee.

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• 2015 (9) TMI 642
  Income generated in sale of Carbon Credits - whether treated as a capital receipt and not taxable as held by CIT(A) - Held that:- The issue in dispute is squarely covered by the decision of the ITAT, Hyderabad Bench in case of M/s My Home Power Ltd. Vs DCIT (2012 (11) TMI 288 - ITAT HYDERABAD), which has been confirmed by the Hon’ble Jurisdictional High Court in case of same assessee while dismissing department’s appeal as reported in [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT ] holding that the amount on sale of carbon credits is in the nature of capital receipt, hence, is not taxable. - Decided in favour of assessee. Disallowance of deduction u/s 80IA - CIT(A) deleted the disallowance admitting additional evidence - Held that:- As can be seen from the assessment order, while computing assessee’s claim of deduction u/s 80IA, AO has excluded the amount of Rs. 7,79,389 by treating it as interest income without ascribing any reasons. However, the learned CIT(A), as it appears, after examining details with regard to the component of Rs. 7,79,389, which includes Rs. 7,14,138 towards scrap sales and Rs. 65,251 as interest on FDRs. has allowed assessee’s claim of deduction u/s 80IA. On perusal of letter dated 01/12/2010 along with accompanying documents submitted before Assessing Officer, copies of which were also placed on record, it appears assessee has furnished the details of other income amounting to Rs. 7,79,389. Hence, department’s claim that Ld. CIT(A) has considered additional evidence in violation of Rule 46A is devoid of merit. As the department has challenged the decision of Ld. CIT(A) on this issue only on violation of Rule 46A, without going into merits of assessee’s claim of deduction, we uphold the order of ld. CIT(A). - Decided in favour of assessee. Employees compensation expenses (ESOPs) disallowed - CIT(A) allowed claim - Held that:- Order of CIT(A) that after verifying details CIT(A) has allowed the expenditure claim by assessee. Undisputedly, expenditure incurred towards ESOPs is an allowable expenditure. Therefore, the only thing which needed verification is whether assessee has actually incurred the expenditure. When the learned CIT(A) by verifying the material on record has found that assessee has actually incurred the expenditure, then, no useful purpose would have been served in getting it verified again through AO. In the aforesaid view of the matter, we do not find any infirmity in the order of the CIT(A) in deleting the addition made by AO and accordingly we uphold the same - Decided in favour of assessee.

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• 2015 (9) TMI 641
  Valuation of stock - partnership firm - Addition to income being difference between market value and the book value of the stock in trade of the appellant firm on the alleged dissolution of the appellant firm - Held that:- Once the dissolution takes place, distribution of stock in trade before the actual dissolution deed was drafted and signed will have to be valued at market price with a view to balancing the accounts. The business stated to be had come to a standstill as there was a dispute among the partners. Withdrawal of the stock in trade or distribution of the same in the profit share ratio can only be considered as a necessary or concomitant formality for dissolution or, in other words, this distribution of stock, in trade has been done in the course of dissolution and, therefore, it is imperative that valuation of such stock in trade has to be at the market price. The argument of the assessee that the amendment bought about by the Finance Act, 1987 in this regard would go to show that the law has been changed with effect from 1.4.1988 has to be rejected as irrelevant. The decision referred to above clearly go to show that when stock in trade is distributed or withdrawn at the termination of when stock in trade is distributed or withdrawn at the termination of business, they have to be value at the market price. See ALA Firm Versus Commissioner of Income-Tax [1991 (2) TMI 1 - SUPREME Court] - Decided against assessee.

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• Customs

• 2015 (9) TMI 671
  Conviction under Section 15 of the NDPS Act, 1985 - Held that:- mere nonjoining of the independent witness itself is not a ground to discard the prosecution case. The testimonies of the official witnesses also carries the same evidentiary value as that of any other witness - defence plea of the appellant that he has been falsely implicated at the instance of Leela Singh due to party faction has no substance, so there was no motive for the false implication of the accused-appellant by SI Budh Singh, the Investigating Officer of the case. - The recovery in this case has been effected from a bag which the appellant was carrying on his head. So, it is not the case where the recovery has been effected from the personal search of the accused. Hence, the provisions of Section 50 of the Act were not applicable in this case. - No doubt, the Investigating Officer of the case has not produced the case property before the Magistrate to comply with the provisions of Section 52-A of the Act but that lapse on the part of the Investigating Officer will also not vitiate the conviction or trial as the provisions of Section 52-A of the Act are directory and not mandatory in nature. There is no material on record to establish that the accused had any criminal background or was involved in any other case under the provisions of the Act. There is also no material on record to show that he was a previous convict. The recovery effected from the appellant is non commercial quantity. He has already faced the agony of the proceedings/prosecution for the last more than 12 years. Thus, in these circumstances the appellant certainly deserves the reduction in sentence. He has been sentenced to undergo rigorous imprisonment for a period of four years and has been ordered to pay a fine of Rs. 40,000/- in default of payment of fine, he has been directed to to further undergo rigorous imprisonment for a period of one year. In my opinion, the rigorous imprisonment for two years and a fine of Rs. 20,000/- in default of payment of fine, to further undergo rigorous imprisonment for a period of four months will suffice the ends of justice - Decided partly in favour of appellant.

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• 2015 (9) TMI 670
  Conviction u/s 21(c) of NDPS Act and under Section 14 of Foreigners Act - Non compliance with Section 50 - Held that:- Recovery of heroine was not effected from the person of the appellant but from the handbag carried by him, hence the prosecution was not under an obligation to serve a notice under Section 50 of NDPS Act on the accused. - PW4/A under Section 50 of NDPS Act shows that the accused has been duly informed about his legal right to get his search conducted before a Gazetted Officer or Magistrate and in the reply which is in his own handwriting and duly signed by him, he has refused to get his search conducted in the presence of a Gazetted Officer or Magistrate. - it can be safely held that compliance of Section 50 NDPS Act has been done by the raiding party before conducting the search. So on this score, the appellant cannot avail any benefit. Link witnesses examined by the prosecution as well as the FSL report duly proved that the samples which were taken were sent to FSL, were examined there and further that at the time of examination, the seals were found intact and tallied with the specimen seal. - Thus, from the evidence adduced by the prosecution, the recovery of heroine weighing 1400 grams with purity of 80.1 percent was proved beyond any reasonable doubt. The arrest of the appellant, who is a Nigerian national, in a case under NDPS Act was duly informed to the concerned Embassy through proper channel. It has also been proved by the prosecution that visa of the appellant had already expired much prior to his arrest in this case. Thus the conclusion arrived at by learned Special Judge (NDPS) convicting the appellant under Section 21(c) of NDPS Act and under Section 14 of Foreigners Act is based on sound reasoning and proper appreciation of the testimony of prosecution witnesses. The impugned order cannot be termed as perverse or suffering from any illegality as all the necessary requirements have been duly complied with by the police in this case and the recovery of contraband i.e. heroine weighing 1400 grams which is the commercial quantity (purity level 80.1 percent) stands duly proved. - Decided against the petitioner.

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• 2015 (9) TMI 669
  Release of bank guarantee - Provisional release of the orders of cars/ vehicles seized under section 110 of the Customs Act - Held that:- appropriate orders for the release of bank guarantee and also consequential orders applying the law declared in Jatin Ahuja v. Union of India and Ors. (2012 (12) TMI 675 - DELHI HIGH COURT) would be issued in tune with section 110 of the Customs Act within a week. The statement of the customs authorities and the Dy. Commissioner is hereby recorded. The respondents are accordingly directed to release the bank guarantee and also issue consequential order as assured within two weeks - Decided in favour of assessee.

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• 2015 (9) TMI 668
  Validity of impugned order - Dismissal of appeal on technical ground - Held that:- Review committee assigned reasons while directing the Department to prefer an appeal. Learned Judicial Member has not considered the ground mentioned by the Committee while recommending for filing of the appeals. On a technical ground of the appeals were dismissed. We are of the view, that since the report of the Committee was available with the Tribunal, it should have looked into the grounds on the basis of which the Committee had directed filing of appeals and could not have dismissed the appeal on a technical ground that one of the member did not put the date below signature. Such technical defect should have been avoided. - Matter remanded back.

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• 2015 (9) TMI 667
  Entitlement of benefit of exports made by its sister concern – Grant of EODC – Encashment of bank guarantee – Present Court held that petitioners were entitled to benefit of exports made by its sister concern – Though petitioners in pursuance to order approached respondent-4 for grant of EODC, same has not yet been issued by respondent No. 4 to the petitioners – Meantime, respondent-1 to 3 have addressed communication to Respondent-6 for encashment of one of bank guarantees submitted by petitioners as petitioners have not submitted Export Obligation Discharge Certificate – Held that:- Respondent-2 and 3 and respondent-4 are all organs of Union of India – If one organ of Union of India does not comply with orders passed by this Court, other organs of Union of India cannot take benefit of same and act prejudicial to interest of party, though party is entitled to benefit as per orders passed by present Court – Respondent-1 has not yet complied with directions issued by present Court and on other hand, respondent-2 and 3 are trying to take benefit of non-compliance by respondent-4 of order – In view of matter, petitioners have made out case for grant of ad-interim relief – Decided in favour of petitioner.

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• 2015 (9) TMI 666
  Levy of education cess and additional duty when basic customs duty is exempt - duty-free imports were being made under DEPB scheme - Benefit of Exemption Notification No. 32/2005-Cus. - Supreme Court after condoning the delay found no ground to interfere with the appeal file dby the Revenue against the deciison of High Court [2014 (1) TMI 169 - GUJARAT HIGH COURT] wherein High court held that Merely because the conditions provided for adjustment of credit in the DEPB scrips, it cannot be stated that either there was no exemption from payment of customs duty or that the Central Government was levying and collecting customs duty from the importers in form of adjustment of credit in the DEPB scrips. Thus through such adjustments on the DEPB scrips at the time of further imports, customs duty component is sought to be neutralised.

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• Service Tax

• 2015 (9) TMI 689
  Denial of refund claim - unutilized CENVAT Credit - nexus between input service and export service - Held that:- There cannot be two yardsticks that in one hand availability of Cenvat credit is not under dispute but for granting the refund dispute was raised. - the ratio of the judgment of previous case MORGAN STANLEY ADVANTAGE SERVICES LTD [2014 (12) TMI 330 - CESTAT MUMBAI] is directly applicable in the present case. - Commissioner(Appeals) have considered the issue in detail and given findings which is found to be absolutely correct and legal and same does not require any interference. - Decided in favour of Assessee.

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• 2015 (9) TMI 688
  Denial of refund claim - when the services are provided within and outside India and the recipient has paid the Service Tax, whether the appellant is entitled to refund on the part of services provided outside India by the service provider - Held that:- Admittedly the claim of refund is not time barred under the provisions of Finance Act or under Section 11B of the Central Excise Act. Hence, the ruling of the Hon'ble Bombay High Court relied upon by the Revenue in the case of Andrew Telecom (2014 (4) TMI 507 - BOMBAY HIGH COURT) has not application in the facts of this case. Secondly, I hold that under the facts and circumstances, Revenue have received the amounts deposited either as tax or deposit, the Revenue is bound to refund the same when a claim have been made under the provisions of the Act in accordance with law. The amount of Service Tax credited to the exchequer on which admittedly the Service Tax is not leviable under the Act, takes the nature of deposit. - No amount can be collected from the assessee by the Revenue if it is not in accordance with the tax law, as has been provided under Article 265 of the Constitution of India - Decided in favour of assessee.

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• 2015 (9) TMI 687
  Rejection of refund claim - Bar of limitation - Held that:- There is no dispute as to the fact that the appellant had exported the services and are claiming the refund of the service tax paid on the input services, which are used for providing such export service. It is also undisputed that the refund claims have been filed on 26/03/2010 and that foreign remittance have come during the period April to June 2009. - Consultant was correct in stating that this judgement of the Tribunal [2013 (7) TMI 490 - CESTAT NEW DELHI] has been upheld by the Hon'ble High Court in the case of Hyundai Motor India Engineering (P) Ltd. (2015 (3) TMI 1049 - ANDHRA PRADESH HIGH COURT). - impugned orders of rejection of refund claim of Rs. 11,41,592/- on the ground of limitation, are liable to be set aside - Decided in favour of assessee.

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• 2015 (9) TMI 686
  Waiver of pre deposit - Commercial Training or Coaching Services - Whether the appellant's activity of training, coaching in spoken English language would fall into the category of vocational training or not - Held that:- while passing the stay order, the appellants own case for earlier period bench relied upon the orders passed by the co-ordinate bench in the case of Apex Institute of English vs. CCE - [2010 (8) TMI 245 - CESTAT, BANGALORE] and ICM English Centre vs. Commissioner of Service Tax, Bangalore - [2012 (6) TMI 456 - CESTAT, BANGALORE], and waiver of pre-deposit was granted. The appellant's case is now weak as this bench in the case of Prof. Ulhas Vasant Bapat (2013 (10) TMI 582 - CESTAT MUMBAI) has taken a view, which is against the assessee. In the absence of any such evidence, we are unable to entertain the plea of financial hardship of the appellant. - appellant should be put to conditions for hearing and disposal of the appeal on merits as we have already held that the issue needs deeper consideration - Partial stay granted.

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• 2015 (9) TMI 685
  Extension of stay - Extension beyond the period of 365 days - Held that:- Any stay order passed by the Tribunal, if it is in force beyond 07/08/2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension of orders granting stay either fully or partially. - Decision in the case of M/s. Venketeshwara Filaments Pvt. Ltd. & Ors. Vs. CCE & ST., Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] - Stay extended.

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• 2015 (9) TMI 684
  Imposition of penalty - Delay in filing returns - Held that:- Rule 7C read with first proviso makes it abundantly clear that the maximum penalty that can be imposed under the said Rule is the one prescribed under Section 70. During the impugned period i.e. April 2008 to March 2011 the maximum penalty that could be imposed under Section 70 was Rs. 2,000/-. Therefore, in respect of six returns, the maximum penalty that could have been imposed was only Rs. 12,000/- and not more than that amount. Since one return has been filed in time, penalty is liable only on five returns and thus the total liability to penalty is only Rs. 10,000/-. Inasmuch as the appellant has paid the said amount, there is no further liability to penalty. - Penalty is upheld - Late fees is set aside - Decided partly in favour of assessee.

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• Central Excise

• 2015 (9) TMI 690
  SSI Exemption - availing SSI benefit for one unit and paying full rate of duty from another unit simultaneously - Denial of exemption benefit under Notification No. 1/93-CE dated 28.02.1993 - Held that:- A bare reading of the amendment, which was inserted in the early Notification 1/93-CE, appears to suggest that this was done as manufacturers were coming in and out of this exemption. They first used to opt for exemption in a financial year and thereafter for other clearances they opted out of the exemption. The extended meaning of the amendment which says “subject to the condition that such manufacturer shall pay duty at the rate applicable but aforesaid exemption on all subsequent clearances of specified goods made after availing such option, in a financial year in which such date of option falls,” shows the real intention behind the amendment. - if an aggregate value of the total clearance of a manufacturer exceeds rupees two crore in the preceding financial year, it cannot claim exemption under the notification. There are other similar provisions with the same goal in mind. The most important and in fact the decisive words in para 2 of the Notification No.1/93-CE is that only such clearances can get exemption where the “aggregate value of the clearances of the specific goods for home consumption” is of a certain value. The provision in the main Notification No.1/93-CE as well as the amended Notification No. 59/94 have been placed in order to check this abuse. It is for this reason that we find that once the respondent had exercised to keep out of the exemption for its Sitapur unit, it cannot claim benefit of the notification for its Dehradun unit consequently the demand of the excise authorities is justified. We have no difficulty in accepting the legal proposition that fiscal laws have to be strictly interpreted. That is the settled manner of interpretation of fiscal statutes. - manufacturer could not have availed the benefit of exemption under Para (1) of the Notification No. 01/93-CE dated 28.02.1993, since it had opted to full rate of duty in a financial year in relation to its other unit. - Decided in favour of Revenue.

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• 2015 (9) TMI 680
  Levy of penalty on Broker for abetment - Rebate of duty - export of goods under Rule 18 - Revenue contended that the rebate claims were filed by submitting false, fabricated and forged documents with an intention to fraudulently claim rebate of duty and to defraud the Government. - appellant contended that It is also submitted that they are only the commission agents. It is also argued that there is no documentary evidence on record to substantiate that the appellants are involved in the fraudulent rebate claim. - Held that:- none of the conditions precedent as prescribed under Rule 26 of Central Excise Rules are satisfied for imposition of penalty. - Thus in absence of satisfaction of the condition precedent, I find that learned Commissioner is in error in imposing penalty under Rule 26 of Central Excise Rules. It have nowhere been found that the appellants have acquired possession or handled any excisable goods in any manner, rendering the goods liable to confiscation. The impugned order against these appellants is set aside. The amount deposited during investigation or pendency of appeal should be refunded forthwith, with interest as per Rules, within a period of 45 days from the date of receipt of a copy of this order.

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• 2015 (9) TMI 679
  Denial of CENVAT Credit - Clandestine removal of goods - Duty demand u/s 11D - Captive consumption - Demand of interest - Held that:- Every person who is liable to pay duty under this act or rules made thereunder has collected any amount in excess of duty assessed or determined is required to pay to the Central Government amount so collected. As per the show cause notice, the allegation of the Revenue is that as the activity of the appellant does not amount to manufacture therefore, the appellant is not liable to pay duty. Therefore, the provisions of section 11D of the Act are not applicable to the facts of this case. Although the appellant has paid to the Central Government what amount is collected from the customers as duty, therefore, the demand under section 11D of the Act is not sustainable. Consequently, interest is also not payable. As per the CBEC Circular No. 345/2/2000 TRU dated 29.08.2000 which explains that in the exact procedure that the manufacturer can export goods under bond without payment of duty. This is a facility that is available to the manufacturer under the excise procedure and in such case appropriate duty on goods i.e. payable is nil, therefore, there is no bar for the manufacturer to remove inputs or capital goods for exports undergone. It is further seen that as per the CBEC Circular 283/117/96-CX dated 31.12.1996 it has clarified that MODVAT credit in RG 23A part 2 account against the export of inputs as such under bond can be utilized in the same manner as it is utilized for final product under the proviso of Rule 57(F)(4). Therefore, it falls from that such input should be allowed to be exported under bond without any reversal of credit. Admittedly, in this case as per the Revenue, the appellant has exported the inputs as such. Therefore, as per the CBEC Circular cited here in above, the appellant is entitled to avail Cenvat Credit thereon. Therefore, the question of reversal of the same does not arise. With these terms, the demand on this account is set aside. Definitely the appellant is required to pay duty on captively processed goods which are liable for duty. But we should not forget the fact that the final product which does not amount to manufacture has been cleared by the appellant on payment of duty. Therefore, the said payment of duty shall amount to payment of duty on captively consumed product i.e. polythene film. In these terms, the demand of Rs. 75,80,380/- is not sustainable. Accordingly same is set aside. - appellant used the raw material purchased clandestinely in the production of finished goods. When an input has been procured clandestinely, definitely Cenvat Credit on the said input has not been availed by the appellant. Therefore, the question of reversal of same does not arise when there is no credit taken. In these terms, the demand of Rs. 14,70,682/- and Rs. 3,90,734/- are also not sustainable. Therefore, demand is set aside. - Decided in favour of assessee.

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• 2015 (9) TMI 678
  Review/recall of order - Tribunal rejected revenue plea on account of procedural irregularity - appeal signed as well as filed by commissioner - Held That:- review is filed beyond limitation by 632 days. The appeal was decided after bipartite hearing. We do not see any justification for condoning the delay in any manner - Decided against assessee.

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• 2015 (9) TMI 677
  Waiver of pre deposit - Held that:- In view of the agreement between the counsel for the parties, the writ petition is disposed of by modifying the order dated 11.3.2013 - The petitioner, as a pre-condition, shall, deposit with the concerned department 25% of the duty demanded, i.e., Rs. 8.50 lacs within 15 days - Decided conditionally in favour of assessee.

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• 2015 (9) TMI 676
  Penalty u/s 11AC - Tribunal reduced penalty - Held that:- In the light of the Judgment of the Apex Court in the case of Union of India v/s. Rajasthan Spinning & Weaving Mills, reported in [2009 (5) TMI 15 - SUPREME COURT OF INDIA], Counsel for the parties state that the impugned order of the CESTAT be quashed and set aside and the matter be restored to the file of the CESTAT for fresh decision on merits in accordance with law. - impugned decision of the CESTAT dated 22.11.2005 is quashed and set aside and the matter is restored to the file of the CESTAT - Decided in favour of Revenue.

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• 2015 (9) TMI 675
  Cleared the goods under the cover of ARE-3 on the strength of the CT-3 certificates without payment of duty - Partially Oriented Yarn - failure to produce warehousing certificates in respect of 13 ARE 3s - Imposition of penalty and interest - Held that:- Appellants cleared the goods under the cover of ARE-3 on the strength of the CT-3 certificates without payment of duty issued by M/s. Enkay Texofood Industries Ltd. - Tribunal in the case of Skyron Overseas Vs. Commissioner of Central Excise (Surat) allowed the appeal of the assessee, on identical situation. It has been observed that duty demand on failure to furnish re-warehousing certificate for clearance against CT 3 certificates issued by the recipient and responsibility is on the consignor once duplicate copy of ARE-3 received by him and the informed to the Jurisdictional Range Officer. In the present case, it is evident from the records that the Range Officer was informed the clearance of the goods and receipt of the goods by the said Company. It is also noted that there is no material available on record that the goods were diverted in the local market by the appellant. Hence, duty liability cannot be raised on the appellant. - impugned order cannot be sustained and it is set-aside. The appeal filed by the appellant is allowed - Decided in favour of assessee.

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• 2015 (9) TMI 674
  Classification of control panels - manufactured for general electric and can be put to use for X-ray machines and the application is exclusive. - Classification under Heading 8537.00 or Heading 9022.10 - Held that:- Typically in a medical X-ray, there are number of independent apparatus which are put together and work as a system. - 4-digit level in the HSN and in the Central Excise Tariff is exactly same. Further in the Central Excise Tariff, further division at 6-digit level is based upon whether such apparatus are for medical, surgical, dental or veterinary use or otherwise, while in the case of HSN at the 6-digit level, are also similar. However, it further distinguishes between X-rays and alpha, beta or gamma radiations. - parts and accessories are separately listed thereafter in the HSN Explanatory Notes and examples are also listed. Thus, under the HSN Explanatory Notes, X-ray control panels and desks are not considered as parts and accessories. - control panels are apparatus in themselves and cannot be considered as "parts or accessories". Undoubtedly, these apparatus are based on the use of X-ray and are for medical purpose. These would be classified under Heading 9022.10, but since these are not parts or accessories, the same will not be entitled to the benefit of nil rate of duty. - Decided against assessee.

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• 2015 (9) TMI 673
  Waiver of pre-deposit - clandestine removal of goods - validity of evidences - Penalty u/s 11AC and Rule 26 - Held that:- Out of total duty demand of Rs. 74,06,356/-, Rs. 12.93 lakh is based on the entries in the purchase file recovered on 12/11/2008 from the premises of M/s.KIL at J-1200, Palam Vihar, Gurgaon , a portion of which was rented out to Shri Ravi Saini, an employee of KIL. There is no dispute that Shri Devender Arora, Managing Director of the appellant company in his statement dated 19.3.2009 when shown the above mentioned purchase file, admitted that the entries in this purchase file pertaining to his company are true, and that the goods had been supplied to KIL without payment of duty. However, out of duty demand of Rs. 12.93 lakh based on the entries in the purchase file, the appellant have already paid Rs. 10 lakh. The remaining duty demand of Rs. 61 lakh is based on the data retrieved from the pen drives and CPU. Duty demand of Rs. 44 crores had been raised against M/s.KIL based on the CPU data and the Commissioner by order dated 5.1.14 expressing doubt about the genuineness of that data has dropped the demand on the ground that the data has been tempered with. However, in the present case, the Commissioner while confirming the duty demand based on the data retrieved from the pen drives has not gone into the question as to whether the data is genuine or is tampered with. However, at this stage, we do not express any opinion as to the veracity of data retrieved from CPU/pen drives on the basis of which, the demand of Rs. 61 lakh has been against the appellant company. - Partial stay granted.

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• 2015 (9) TMI 672
  Denial of refund claim - Cash refund - Held that:- Tribunal remanded the matter to the Adjudicating authority to verify the use of CENVAT Credit on payment of disputed duty and now refunded amount, the assessee were compelled to pay duty out of the PLA during the said period. - despite the order of the Tribunal, the Adjudicating Authority upheld the earlier Adjudication order. I find that the Commissioner (Appeals) has given detailed findings on this issue and he has also verified the documents as directed by the Tribunal. - Revenue has not disputed the examination of records by the Commissioner (Appeals) in the grounds of appeal. In my considered view, the Commissioner (Appeals) passed the order following the directions of remand order dated 01.5.2008, of the Tribunal. Revenue stated in the grounds of appeal that they preferred appeal before Hon'ble High Court against the Tribunal’s order, which is still pending. No order was passed by the Hon'ble High Court against the Final Order dated 01.5.2008. Commissioner (Appeals) rightly passed the order as per directions of the Tribunal. - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 683
  Charging VAT on amount other than value of good - Petitioners seeking declaration that Explanation (i) of Section 2(1) (zg) of Haryana Value Added Tax Act, 2003 and Rule 25 (2) of Haryana Value Added Tax Rules, 2003 and other related provisions, so far as they include value of land for charging VAT on developers to be ultra vires to Constitution of India – Held that:- In case provisions of law was seeking to charge sales tax on any amount other than value of goods transferred in course of execution of works contract, provisions would be ultra vires Constitution of India – Tax was to be computed on value not exceeding value of transfer of property in goods on and after date of entering into agreement – In said circumstances, petition disposed of – Decided against Petitioner.

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• 2015 (9) TMI 682
  Retention of goods – One-time payment for release – Petition was filed challenging impugned order by which, on verification of bills, delivery address, TIN Number and CST Number, was not found, violating Rule 5 of TNVAT Act 2006 and thereby, goods were retained – However, petitioner submitted that in order to avoid further loss of time, petitioner was prepared to pay one time tax reserving his right to challenge impugned order – Held that:- respondent submitted that if petitioner comes forward to pay one time tax for release of goods, on payment of entire one time tax indicated in order, fourth respondent will not hesitate to release goods – Thus, petitioner directed to pay one time tax before Assessing Officer – Decided in favour of Petitioner.

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• 2015 (9) TMI 681
  Detention of goods – Condition for release of goods – Petitioner aggrieved by notice detaining consignment of machinery and parts that was purchased by petitioner and also by imposition of security deposit as condition for release of goods and vehicle – Held that:- on verification of details available in KVATIS, it was found that petitioner had no branch or godown – It was therefore suspected that onward movement of goods, from check post, was pursuant to sale effected by petitioner to person in address – Discrepancy in description of place to which goods were consigned and explanation offered by petitioner has to be examined by adjudicating authority – Therefore 2nd respondent directed to release goods and vehicle to petitioner on petitioner furnishing an amount of 30% of security deposit amount demanded – On deposit of said amount, Adjudicating authority shall adjudicate matter and pass orders – Decided partially in favour of petitioner.

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