TMI Tax Updates - e-Newsletter
September 19, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Fee levied u/s 234E for default in furnishing TDS returns - even prior to amendments vide F Act 2015, imposition of fee was not illegal - HC

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• Higher rate of TDS @20% for non-furnishing PAN u/s 206AA - payment to the non-resident - TDS cannot exceed the rate of tax as per DTAA - Tri

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Articles

1. Purchase of Capital Assets allowed as Application of Income u/s 11(1) as well as Depreciation allowed u/s 32

   By: Surender Gupta

2. Service Exports from India Scheme - Foreign Trade Policy 2015-2020

   By: CA Madhav Kalani

News

1. Sustainable Growth in the Financial Sector: 2015 C.K. Prahalad Lecture (Speech delivered by Dr. Raghuram Rajan, Governor, RBI on September 18, 2015, at the 4th C.K. Prahalad Memorial Lecture)

2. RBI Reference Rate for US $

Notifications

Central Excise

1. 41/2015 - dated 17-9-2015 - CE

Seeks to further amend Notification No.12/2012-Central Excise dated 17.03.2012

Customs

2. 46/2015 - dated 17-9-2015 - Cus

Seeks to further amend Notification No.12/2012-Customs dated 17.03.2012

Indian Laws

3. F. No. 1/9/SM/2015 - S.O. 2363(E) - dated 28-8-2015 - Indian Law

Central Government appoints the 29th day of September, 2015 as the date on which the provisions of Section 132 of the Finance Act 2015 shall come into force

4. F. No. 1/9/SM/2015 - S.O. 2362(E) - dated 28-8-2015 - Indian Law

Central Government appoints the 28th day of September, 2015 as the date on which the provisions of Part I (excluding Section 132) and Part II of Chapter VIII of the Finance Act 2015 shall come into force

Circulars / Instructions / Orders

VAT - Delhi

1. F1/(142)/Ex/Permit/2013-14/2701-2703 - dated 14-9-2015

Public holidays for Banks on every 2nd and 4th Saturday of every month

2. No. F.2 (5)/2015-16/Finance/Infra/Exp-4/4632-4759 - dated 26-8-2015

Preparation for capital infrastructure projects for consideration of the Expenditure Finance Committee for the year 2015-16-submission of proposals thereof for the first meeting

SEZ

3. Minutes of the 66th meeting of the SEZ - dated 27-8-2015

Minutes of the 66th meeting of the Board of Approval for SEZs held on 27th August 2015 to consider proposals for setting up Special Economic Zones and other miscellaneous proposals

Income Tax

4. 10/2015 - dated 16-9-2015

U/s 268A of the Income Tax Act 1961 - Re-Fixation of Monetary Limits for various Income-Tax Authorities

Companies Law

5. 13/2015 - dated 16-9-2015

Extension for a period of one month for the High Level Committee on CSR - reg.

Highlights / Catch Notes

Income Tax

• Assessing Officer Rightly Invoked Section 145 for Income Calculation Due to Assessee's Inadequate Expense Segregation in Books.

  Case-Laws - HC : Rejection of books of accounts - assessee had failed to segregate expenses of the contract business from other nine trucks - there is no presumption in law attaching presumption of correctness to the continuity of income tax returns - A.O. had every reason to invoke Section 145 of the Act in order to work out the real income and thereby deduce the profit and gain therefrom - HC
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• Court Upholds Legality of Section 234E Fees for Late TDS Filings, Valid Even Before 2015 Amendments.

  Case-Laws - HC : Validity of fee levied u/s 234E - late filing of the TDS returns - Fee for default in furnishing statements - even prior to amendments vide Finance Act, 2015, the imposition of fee was not illegal - HC
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• Deduction Eligibility u/s 80IB Includes Disallowed Amounts Added Back to Gross Income Per Section 40[a][ia].

  Case-Laws - HC : Eligibility for deduction under section 80IB - disallowance under Section 40[a] [ia] cannot be treated separately and it gets added back to the gross total income of the assessee - deduction u/s 80IB allowed on such additions also - HC
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• Ruling Clarifies Negative Net Worth Must Be Considered in Slump Sale for Capital Gains Calculation.

  Case-Laws - AT : Slump sale - CIT(A) was not correct in coming to the conclusion that the negative figure of the net worth should be ignored for working out the capital gains in case of a slump sale. - the amount of ‘Net worth’ will be a negative figure and not Zero - AT
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• Interest Granted on Tax Refund u/s 244A(1) of Income Tax Act; Refund Exceeded 10% of Tax Demand.

  Case-Laws - AT : Entitlement to interest u/s. 244A(1) - non granting of interest u/s.244A - Assessee had filed its return in time,that the refund amount exceeded 10% of the tax demand - claim of interest allowed - AT
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• Income from Nursery and Banana Plant Production is Agricultural, Includes Tissue Culture; Greenhouse Use Doesn't Change Classification.

  Case-Laws - AT : Treatment to assessee's income - business of production of nursery plants and banana plants, tissue culture activities etc - merely because a greenhouse in involved, the nature of operations would not change - activities involved basic agricultural operations and therefore income thereof constitutes agriculture income. - AT
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• Can TDS Rate Exceed DTAA Rate? Examining Section 206AA's Impact on Tax Deduction Without PAN.

  Case-Laws - AT : Higher rate of TDS @20% for non-furnishing of PAN u/s 206AA - whether cannot be at a rate prescribed u/s 206AA which is higher than the rate at which the relevant income is chargeable to tax under Act or DTAA - the scope of deduction of tax at source cannot be more than the tax liability under DTAA. - AT
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Customs

• Appellants Confirmed in Violation of Customs Notifications 20/99-Cus and 16/2000 for Misuse of Imported Goods.

  Case-Laws - AT : Violation of notification No.20/99-Cus and 16/2000 – disposal of imported goods did not serve intended purpose of notification – In spite of being fully aware of fact that imported goods were to be used for intended purpose, appellants failed to fulfill undertaking given to Customs authorities as required by condition of notification - demand confirmed - AT
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• Crude Palm Oil Classification Confirmed Under CTH 15111000, Eligible for Exemption Per Notification 21/2002 Sl.No. 29.

  Case-Laws - AT : Imported crude palm oil is rightly classifiable under chapter heading 15111000 of CTH and rightly eligible for exemption under Sl.No. 29 of Notfn 21/2002 and not under Sl.No.434 of the notification - quantity is to be taken for assessment as per the actual quantity loaded on the tankers in the port - AT
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• Demand for Interest and Penalty Challenged Due to Unexplained Three-Year Delay in Customs Notice Service.

  Case-Laws - HC : Demand for interest and penalty – Delay in service of notice – Clearly seen that there is delay of more than three years from date on which first cause of action arose and more than two years from date on which last cause of action arose – Said delay has not at all been explained - HC
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Service Tax

• Operational and Skills Activities in Cost Management Classified Under Management Consultant Services for Tax Purposes.

  Case-Laws - AT : Activities of providing operational improvements and skills in the areas of cost management, manufacturing, production, procurement, sale, marketing and distribution of the product - Activities are clearly gets covered within the ambit of definition of Management Consultant service - AT
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• Service Tax Case: 2014 Show Cause Notice Overruled; Commissioner May Reassess Facts and Issue New Notice if Justified.

  Case-Laws - HC : Validity of SCN - Invocation of extended period of limitation - show cause notice dated 6th January, 2014 is set aside with an option to the Commissioner to scrutinise all relevant facts in the light of this judgment and to issue another show cause notice, if the same is warranted in law - HC
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• CENVAT Credit Valid Even If Invoices Lack Service Provider's Registration Number; Procedural Irregularities Insufficient for Denial.

  Case-Laws - AT : CENVAT Credit cannot be denied merely on the ground that invoices are not showing the registration number of the unit who is providing taxable services to the appellant - the procedural irregularities cannot be made the basis for denying the cenvat credit - AT
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Central Excise

• Tribunal Overlooks Key Disputed Fact Raised by Revenue; Must Address All Factual Issues Presented by Parties.

  Case-Laws - HC : The question of fact, which is disputed by the Revenue, has not been addressed by the Tribunal. Once a finding is recorded by the Tribunal on facts, it is supposed to address each and every issue that is placed before it by the parties on such fact - HC
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• Penalty Not Applicable as Duty Paid Before Show Cause Notice, Contradicts Central Excise Law Principles.

  Case-Laws - HC : Mandatory penalty - The observation that since duty was deposited prior to the show cause notice, penalty could not be levied, is contrary to the principles settled in the central excise laws. - HC
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Case Laws:

• Income Tax

• 2015 (9) TMI 810
  Calculation of court fees - as per HC there are all matters which required urgent attention of the State Government and if it is considered necessary appropriate amendment has to be made urgently to make the provision beyond any doubt. Now that the State legislature by inserting section 73A by the Amendment Act 2003 exempted State and its Officers from the payment of Court fees in official matters whether such a treatment can be extended to the Central Government and its officials in official matters consistent with the scheme of the Income Tax Act and the Wealth Tax Act is also a matter for consideration by the State Government Held that:- Order was passed by High Court i.e. more than 11 years ago. It appears that till date no remedial steps are taken even when the High Court directed that the copy of the said order be sent to the Chief Secretary to the State for perusal and follow up action. In these circumstances, we have inquired from the learned counsel appearing for the State of Kerala as to whether any decision was taken on the aforesaid recommendation of the High Court. Learned counsel wants sometime to seek instructions. Insofar as main issue is concerned, we have heard the learned counsel for the parties for sometime. However, in order to have holistic view in the matter, we would also like to know the steps that are taken by the State Government on the aspect mentioned above.

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• 2015 (9) TMI 809
  Rejection of books of accounts - Whether the accounts maintained by the Assessee were incorrect and incomplete in terms of section 145(3) when it was not possible to verify from such accounts whether any unvouched expenses relating to one business, profits from which are declared on estimate basis, have actually been debited in the accounts of another business? - ITAT reversed AO order - whether while assessing the income of the assessee from running of the trucks on hire, the provisions of Section 44AE have been completely ignored? - Held that:- Unable to agree with the contention of the assessee for the reason that not only were the accounts properly maintained, but even the freight and carriage expenses debited in the profit and loss account at Rs. 1,18,82,600/- are far too excessive, particularly keeping in view the fact that only six trucks were used for contract business. Further, the freight and carriage expenses that were debited were not segreable from unvouched expenses for plying of other nine trucks for which profit had been shown under Section 44AE of the Act. Admittedly, the assessee had failed to segregate expenses of the contract business from other nine trucks. Therefore, in such circumstances, no credence whatsoever could have been given to the books of accounts. We are not satisfied that the reasoning given by the ITAT to reverse such findings only on the ground that the A.O. ought to have satisfied that either the accounts maintained were incorrect or incomplete or the method of accounting followed was such as would not lead to correct estimation of income. We are further failed to understand how the burden to establish that the books of accounts maintained were incomplete or incorrect would rest upon the A.O. The CIT (A) could not have un-necessarily been influenced by the fact that the assessee had been filing his return regularly and was continuing the business of contract and truck hiring to conclude that the accounts were properly maintained. Merely because no one had earlier cared to scrutinize the accounts furnished by the assessee could not be a ground to dislodge the order passed by the A.O. Even otherwise, there is no presumption in law attaching presumption of correctness to the continuity of income tax returns. The assessments of each year have to be viewed and scrutinized independently as these are separate and distinct assessments. A.O. had every reason to invoke Section 145 of the Act in order to work out the real income and thereby deduce the profit and gain therefrom. As already observed earlier, the A.O. had given cogent reasons for not accepting the accounts. Though, these findings were set aside by the ITAT, but then even the ITAT did not conclude that the method of accountancy as employed by the assessee was in any manner correct. In absence of such findings, the order passed by the ITAT cannot be sustained. - Decided in favour of the revenue

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• 2015 (9) TMI 808
  Disallowance u/s 40(a)(ia) - assessee has failed to bring any evidence of record that the payments made are covered under Circular No.723 of 1995 and that the non-residents ship owners/charters had filed returns u/s 172 of the Act - ITAT confirmed CIT(A) order deleleting part disallowance - Held that:- From the findings recorded by the Commissioner (Appeals), it is evident that he has thoroughly examined the facts of the case and has based his conclusions thereon veryfying all the copies of the bills of lading and as per that except in three cases, all payments were made to the agents of non-resident shipping companies which fact was not disputed by the revenue. The Tribunal on an appreciation of the evidence on record has concurred with the findings of fact recorded by the Commissioner (Appeals). It is not the case of the revenue that the findings recorded by the Tribunal are based on irrelevant material or that any relevant material has been ignored. Under the circumstances, the conclusions arrived at by the Tribunal being based upon concurrent findings of fact recorded by it, in the absence of any perversity therein, do not give rise to any question of law much less, a substantial question of law as proposed or otherwise. The appeal is, therefore, dismissed. - Decided against revenue.

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• 2015 (9) TMI 807
  Validity of fee levied u/s 234E - late filing of the TDS returns - Fee for default in furnishing statements - Held that:- The constitutional validity of the statutory provision is not amenable to challenged on the ground that the performance insisted upon by the statutory provision is too onerous or that the statute does not leave sufficient time or does not allow reasonable cause to be considered for violation of the provision. In G.P. Singh's Principles of Statutory Interpretation, 9th Edn., 2004, p. 497, referring to a large number of judgments of the Federal Court and the Supreme Court, it was observed that for upholding the constitutionality of a statute, the Court can construe or interpret its general words narrowly or widely. The Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the Court declare a statute to be unconstitutional. In the present case, the fee was levied under section 200 for late filing of the returns, prior to the amendments made by the Finance Act, 2015 with effect from 1.6.2015 in Sections 200A, 246A and 272A providing for computation and appeal. We do not find that even prior to these amendments the imposition of fee was illegal. We do not in exercise of the power under Article 226 of the Constitution of India find any valid reasons or justification to interfere with the compensatory fees imposed for late filing of the TDS returns on flat rates. The absence of any provision for condonation of delay and the appeal prior to amendments also did not make the imposition of late fees by Section 234E to be ultra vires. - Appeal dismissed.

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• 2015 (9) TMI 806
  Eligibility for deduction under section 80IB - additions were made u/s 40(a)(ia) for TDS default - whether ITAT was justified in holding that the disallowance made under section 40(a)(ia) separately is not permissible under the scheme of the Income Tax Act? - Held that:- The fact that TDS was not effected by the respondent assessee, is not in dispute. In view of the scheme of Section 40 of the Act, as TDS is not effected, payment to contractors cannot be deducted, as those expenditure become inadmissible. The expenditures therefore are added back to the income, which is nothing but, eligible income. This income which is eligible for deduction in terms of Section 80IB(10) of the Act, therefore, only increases by said figure of disallowed expenditure. CIT (Appeals) has in this background referred to judgment in case of Shirke Constructions and Equipments Ltd (2000 (7) TMI 40 - BOMBAY High Court), wherein distinction between certain Sections of Chapter VIA, which refer to deduction out of gross total income and other sections of Chapter VIA, which do not make such reference to gross total income, has been explained. CIT (appeals) has correctly pointed out that the deduction allowable under Section 80IB(10) of the Act is with reference to the respondents gross total income. Hence, disallowance under Section 40[a] [ia] cannot be treated separately and it gets added back to the gross total income of the assessee. Section 40 itself points out that due to error of assessee, such expenditure cannot be deducted while computing income chargeable under the head “profit and gains of business or profession”. That is the only limited effect of the lapse on the part of the respondent assessee in the present matter.ITAT has considered these facts and upheld the same. - Decided in favour of assessee.

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• 2015 (9) TMI 805
  Disallowance under section 40(a)(ia) - non deduction of tds - ITAT deleted the addition holding that the payment in question was not covered within the meaning of either Section 194(C) or Section 194(I) - whether the assessee was liable to deduct TDS while making payment to its sister concern in respect of equipments taken on lease by it from the sister concern either under section 194C or section 194I? - Held that:- Insofar as the applicability of section 194C of the Act is concerned, both, the Commissioner (Appeals) as well as the Tribunal have recorded a concurrent finding of fact to the effect that there was no contract between the assessee and its sister concern and that as and when such equipments were lying idle and the assessee needed them, the same were utilized by the assessee and payment was made to the sister concern. Therefore, the transaction was not in the nature of contract but was in the nature of lease agreement. As regards the applicability of section 194I of the Act, a perusal of the relevant statutory provisions as they stood at the relevant time reveals that section 194I did not include the words, "machinery and equipment" which were inserted only with effect from 14.7.2006. Under the circumstances, having regard to the fact that in the year under consideration the words "machinery and equipment" did not find place in section 194I of the Act, the same would not be applicable in the facts of the present case. Thus it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law - Decided in favour of assessee.

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• 2015 (9) TMI 804
  Addition being direct expenses added to the value of closing stock on estimate basis by the A.O. u/s 145A - CIT(A)deleted the addition - Held that:- We find that the CIT(A) has rendered a finding of fact in the subject assessment year that the valuation of closing stock includes direct expenses such as freight charges incurred on them and are duly supported by the material receipt vouchers. This finding of fact was upheld by the Tribunal by also relying upon it's own order dated 13 January 2011 for the earlier Assessment Year. The reliance placed by the revenue on the observations made in the audit report as reflected in the order of the Assessing Officer would not govern the field, where the CIT(A) and the Tribunal had rendered a finding of fact that direct expenses on account of freight charges, etc. incurred on the closing stock had been added to arrive at valuation of closing stock and are also duly supported by material receipt vouchers. In view of the fact that two authorities have reached a concurrent finding of fact on examination of material receipt vouchers, we see no substantial question of law arising for our consideration - Decided against revenue.

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• 2015 (9) TMI 803
  Validity of search conducted by the Income Tax authorities under Section 132 - Held that:- The primary question raised in this appeal with regard to the validity of search conducted has been raised in this appeal for the first time. Learned counsel for the appellant, however, has no objection to the matter being remanded to the Tribunal for deciding the first substantial question of law.In view of the fact that we are not adjudicating this case on merits and remanding the matter to the Tribunal, we are not inclined to enter into the merits of the third substantial question of law, which is left open to the assessee to challenge the same in case the Tribunal decides the other two questions against the assessee, and if the assessee is so advised.

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• 2015 (9) TMI 802
  Review petition - Held that:- A complete reading of the order under review reveals that the Assessing Officer can proceed in terms of our judgments setting out the legal principles and delivered in the main Appeal. The matter has been sent back to the Assessing Officer and he has to verify the ratable value. If that is to be verified by him, it will be open for the Assessing Officer to consider all the materials including applying the legal principles set out in the main judgment. Therefore, our order should not be taken as in any way adverse to the interests of the Revenue. The Revenue can proceed in accordance with law. We do not find any reason to entertain the Review Petition particularly with the above clarifications.

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• 2015 (9) TMI 801
  Transfer pricing adjustment - selection of comparable - Held that:- British Metal Corpn. Indian Pvt. Ltd. company is engaged in providing agency services in non-ferrous metals, fertilizers and cooking coal etc. In our considered opinion, the nature of services rendered by this company is entirely different and cannot be considered as a comparable. Moreover, the appellant received fixed fee from its AE. Therefore, we direct that this company be omitted from the list of comparables for the period under consideration for the purpose of determining arm’s length price of the international transaction in question. Priya International company is engaged in the provision of commissioning agency and trading of chemicals. This function is totally different from marketing services for the equipment of minerals and therefore, this company should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question. PL Worldways Ltd. company earns commission from air ticket sold and also transactional fees from its customer for sale of holiday packages. This function is totally different from the functions carried out by the appellant and therefore, this company should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question. Publicity Society of India Ltd. company engaged in the business of publication of news papers and publications should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question. Addition under Section 40A(2)(a) - disallowance of 50% of profession paid to M/s Metso Minerals (Mumbai) Pvt. Ltd. - Held that:- Assessing Officer is required to record a finding as to whether the expenditure is excessive or unreasonable in relation to any one of the three requirements prescribed. This opinion has to be formed by the Assessing Officer based on the material evidence available on the record. The Assessing Officer is duty bound to bring on record the comparable fair market value of the services rendered to say that the value paid by the assessee is excessive or unreasonable. We find no evidence on record to notice that the Assessing Officer made efforts in this direction. He simply made disallowance based on the surmises and conjectures. See Commissioner of Income-Tax, West Bengal Versus Edward Keventer Private Limited. [1971 (6) TMI 7 - CALCUTTA High Court] affirmed by SC [1978 (8) TMI 1 - SUPREME Court] - Thus 50% of professional charges paid to M/s Metso Minerals (Mumbai) Private Limited cannot be disallowed - Decided in favour of assessee. Disallowance of unexplained expenditure made against credit card bills - Held that:- The assessing officer while passing the final order did not followed the direction of the DRP and did not re-verified the AIR of the Citi Bank and upheld the adjustment by holding that there was paucity of time so as to verify the AIR of Citi Bank. We are of the considered opinion that the interest of justice would be met, if the matter is restored to the file of the Assessing Officer for fresh adjudication in accordance with law. Accordingly, this ground of appeal is restored to the file of the Assessing Officer.- Decided in favour of assessee for statistical purposes. Comparable Killick Agencies Marketing Ltd. and Cox and Kings (India) Ltd. deleted by DRP - Held that:- Since the comparables in the question are having more than 15% related party transactions, we hold that the Hon’ble DRP is justified in rejecting these two comparables. Hence the grounds of appeals filed by the Revenue are dismissed.

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• 2015 (9) TMI 800
  Entitlement to exemption under sec.11 - Held that:- Running of working womens hostel, womens service center and canteen is a commercial line which cannot be considered as charitable activity, so as to grant exemption u/s.11 of the Act. Accordingly, we are in agreement with the lower authorities and we deny the exemption under sec.11 of the Act. - Decided against assessee. Denial of depreciation on the assets purchased before the financial year 2008-09 - Held that:- As the income of the assessee has to be computed in accordance with strict principles of accounting after denying exemption u/s.11 of the Act. If written down value of assets is already zero, for allowing depreciation, the same cannot be considered in the assessment year under consideration. Accordingly, the appeal of the assessee for the assessment year 2009-10 is dismissed. - Decided against assessee.

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• 2015 (9) TMI 799
  Slump sale - CIT confirming addition of negative net worth of the undertaking transferred under the slump sale to the long term capital gain u/s 50B - Held that:- As decided in V Summit securities Limited case [2012 (3) TMI 176 - ITAT MUMBAI] the Assessing Officer was not right in adding the amount of liabilities being reflected in the negative net worth ascertained by the auditors of the assessee to the sale consideration for determining the capital gains on account of slump sale. However, we allow ground no.2 raised by the Revenue in its appeal by holding that the CIT(A) was not correct in coming to the conclusion that the negative figure of the net worth should be ignored for working out the capital gains in case of a slump sale. The summary of our conclusion is that the amount of ‘Net worth’ will be a negative figure and not Zero. - Decided against assessee. Disallowance of deduction from the profits arising out of the sale of undertaking by way of slump sale while working out the income under the head profits and gains from business - Held that:- The computation of Total income filed by Assessee shows that assessee had starred the computation of business income from (-) Rs. 4,62,67,764/- as per profit and loss account and without increasing it further by the amount of any profit arising on the sale of the business undertaking which is chargeable to tax under the head capital gains and not under the head of profit and gains of the business and profession. It had credited extra-ordinary item in the profit and loss account of Rs. 2,55,74,116/-. As per note no B (6) of schedule 12 of the balance sheet at serial no item no 10 shows profit on sale of non-woven fabrics business under slump sale an amount of Rs. 2,03,46,191/- is shown. In our opinion, said amount has be adjusted in the computation of income and the claim made by the assessee is justified. In the matter of Prithvi Brokers the Hon’ble Bombay High Court [2012 (7) TMI 158 - BOMBAY HIGH COURT] has held that the appellate authorities can admit new claim made before them,though the AO cannot admit such claim without filing of fresh return. We are of the opinion,that in the interest of justice, the matter should be restored back to the file of the FAA for fresh adjudication,who will decide the issue after affording a reasonable opportunity of hearing to the assessee. - Decided partly in favour of assessee. Disallowance of sales tax deferral scheme - assessee had contended that an amount pertaining to sales tax deferred scheme and same is not disallowable u/s 43B of the Act in view of the circular no 496 dated 25.09.1987 - Held that:- It is found that the assessee had also not submitted before AO the details of such claim. Further before FAA details of claims,reconciliation and how it is covered by the circular no 496 dated 25.09.1987were not submitted. Therefore such claim requires verification and also ascertainment whether the conditions and requirements mentioned under circular no 496 is met by the assessee or not. Therefore, in the interest of justice,this ground of appeal is set aside to the file of AO with direction to verify the claim of the assessee in accordance with circular no 496 dated 25.09.1987 and decide the issue in accordance with law after providing proper opportunity to the assessee - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 798
  Disallowance towards premium of keyman insurance policies - Held that:- The keyman insurance policy is a defined concept and as long as it meets the requirements of this definition, the terminology given by the insurers have no relevance for the purposes of the Income Tax Act. All that is necessary is that it should be a life insurance policy, whether pure life insurance policy or not- as such criterion is not set out anywhere in the stature, and it should be taken on the life of a person who is, or has been, an employee of the assessee or any other person who is or was connected in any manner whatsoever with the business of the assessee. These conditions are clearly satisfied on the facts of the case before us. What can be sold as a 'life insurance policy' taken by a business entity for its employee, former employee or any other person important for business of such an entity is between the insurance regulator and insurance service provider. However, once it has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D). It is not open to us to infer the words which are not there on the statute and then proceed to give life and effect to the same. When benefit of policy was assigned to the insured, the policy cannot be said to be for the benefit of the assessee firm. We see no merits in these objections to the commercial expediency. As for the fall in turnover, the benefit of an expenditure cannot be, by any stretch of logic, relevant to determine its commercial expediency, and, in any case. Such a benefit of hindsight cannot be available at the point of time when business decisions are made; more often than not, these are the tools of post mortem of events, rather than inputs for the decision making. As for the statement made by the employees of the insurance companies, nothing turns on these statements. What constitutes a keyman insurance policy under section 10(10D) is not dependent on what is it treated even by the insurer; as long as the assesse is allowed to take life insurance policy on its keymen, as have been undisputedly taken in this case, the same satisfies the requirement of Section 10(10D). In view of these detailed discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and delete the impugned disallowance - Decided in favour of assessee.

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• 2015 (9) TMI 797
  Entitlement to interest u/s. 244A(1) - non granting of interest u/s.244A - assessee’s contention that the interest u/s.244A was not allowed on such refund on the reason that the assessee has not made claims originally under section 244A (2) and any delay on the part of the assessee should be excluded - Held that:- Assessee had filed its return in time,that the refund amount exceeded 10% of the tax demand, that the AO had not followed the directions of the CIT and had not recomputed the interest,that the claim about taxing the securities interest was part of the return filed by the assessee. Therefore,there was no justification on part of the AO not to grant further interest to it. As far as the order of the FAA is concerned,we would like to rely upon the decisions of South Indian Bank Limited (2010 (10) TMI 857 - Kerala High Court) and ACC Ltd.(2011 (12) TMI 350 - ITAT, Mumbai). We hold that the assessee is entitled for interest u/s.244A of the Act from first day of April of the AY. and that the AO was not justified in restricting it to the date from the order of the FAA.- Decided in favour of the assessee

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• 2015 (9) TMI 796
  Validity of reopening u/s.147 - proportionate deduction u/s.80IB(10) - Held that:- As regards the argument of the Ld. Counsel for the assessee that no reasons are recorded for issue of notice u/s.148 for both these assessment years, we find from the perusal of the order sheet entries that the reasons recorded by the AO are sufficient for reopening of the assessment. The argument of the Ld. Counsel for the assessee that the reopening is based on change of opinion is without any merit since the assessments for A.Yrs. 2005-06 & 2006-07 were completed u/s.143(1) and therefore there was no application of mind by the AO. Therefore, it cannot be said that the reopening of the assessments is based on change of opinion especially when new tangible material has come in the possession of the Assessing Officer. In this view of the matter, we are of the considered opinion that the reopening of the assessments by the AO is valid. Since in the instant case the project has been approved prior to 01-04-2005 and the assessee has admittedly completed construction of all the 7 buildings, therefore, the denial of deduction u/s.80IB(10) for non production of completion certificate for the 7th building is not justified in view of the decision of M/s. Satish Bora & Associates Versus Assistant Commissioner of Income Tax (2011 (1) TMI 1215 - ITAT PUNE ). In view of the above decision, the assessee is not required at all to submit the completion certificate since the project has admittedly been approved prior to 01-04-2005. Therefore, the claim of deduction u/s.80IB(10) in respect of all the 7 buildings in our opinion has to be allowed to the assessee. We hold and direct accordingly. In view of our above findings, the grounds raised by the revenue challenging the pro-rata deduction granted by the CIT(A) become infructuous and are dismissed. - Decided in favour of assessee.

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• 2015 (9) TMI 795
  Addition on account of interest receivables on sticky advances - CIT(A) deleted the addition - whether the assessee being a non scheduled bank could not take the benefit of section 43D of the Income Tax Act, 1961? - Held that:- As decided in Lokmangal Co-op Bank Ltd. case [2014 (12) TMI 345 - ITAT PUNE] Pune Bench of the Tribunal in the case of Osmanabad Janata Sahari Bank Ltd (2015 (3) TMI 886 - ITAT PUNE) has decided an identical issue in favour of the assessee after considering the decision of the Hon’ble Supreme Court in the case of Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT OF INDIA] to finally held that the interest income relatable to NPA advances did not accrue to the assessee) which has been followed by the Ld.CIT(A). Interest on the sticky advances/NPA advances cannot be brought to tax . - Decided in favour of assessee.

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• 2015 (9) TMI 794
  Treatment to assessee's income - CIT(A) treated as agriculture income u/s 2(1A)(b)(i) and to exclude said income u/s 10(1) - assessee engaged in the business of production of nursery plants and banana plants, tissue culture activities etc - Held that:- We find no infirmity in the order of the CIT(A) following the decision of Hon’ble Madras High Court in the case of Soundarya Nursery (1998 (8) TMI 37 - MADRAS High Court)and the Explanation (3) to section 2(1A) of the Finance Act, 2008 held that the asessee’s activities involved basic agricultural operations and therefore income thereof constitutes agriculture income. Basic operations are carried out in the present case, which require human skill and labour, and subsequent operations, no matter how sophisticated, if that be used against the assessee, are only to foster the growth and to protect the produce, we find that the income from these operations can only be said to be agricultural income. Their Lordships were also dealing with a situation in which operations were carried on in a greenhouse. Therefore, merely because a greenhouse in involved, the nature of operations would not change - Decided in favour of assessee.

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• 2015 (9) TMI 793
  Estimation of net profit from advertisement revenue - Held that:- So far as the issue relating to addition on account of advertisement revenue and distribution revenue the same stands decided in favour of the assessee by the Tribunal, which has been affirmed by the Hon ble High Court in AY 1999-2000 and also in subsequent years. - Decided in favour of assessee Treatment to distribution receipt as Royalty Income - Held that:- As regards this issue we find that this has been treated as business income and such a finding or conclusion now have attained finality, as pointed out by the Ld. Senior Counsel. Thus, finding of the CIT(A) on the issues are affirmed - Decided in favour of assessee Deletion of interest u/s 234B - Held that:- This issue has now been decided in favour of the assessee by the Hon ble High Court in the case of assessee in the assessment year 1997-98 1998-99, wherein the Hon ble High Court has followed the decision of DIT vs NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT).- Decided in favour of assessee Non-grant of TDS credit - Held that:- DRP has given direction to the Assessing Officer, however in the final assessment order Assessing Officer has not done so. Accordingly, we direct the Assessing Officer to give credit of TDS after verification of records. - Decided in favour of assessee

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• 2015 (9) TMI 792
  Higher rate of TDS @20% for non-furnishing of PAN - whether cannot be at a rate prescribed u/s 206AA which is higher than the rate at which the relevant income is chargeable to tax under Act or DTAA - CIT(A) held that the section 206AA(1) does not apply to those cases whose alight tax liability u/s 115AA and under DTAA - Held that:- In the case in hand, the assessee made payment to the non-resident on account of royalty in some cases and on account of fee for technical services in some other cases. The assesee deducted TDS at the rate of 10% in some cases and at the rate of 10.56% in some other cases as per the provisions of Sec.115A(1)(b) of the IT Act. There is no dispute that the benefit of DTAA is available to the recipients of the payments in question. Therefore, the tax liability of the recipients could not be more than the rate prescribed under the DTAA or the income tax Act, whichever is lower. In the case in hand, the AO while issuing the intimation u/s 200A has computed the tax liability at the rate of 20%, as provided/s 206AA of the Act. Since the benefit of DTAA is available to recipient. Therefore, in any case, the scope of deduction of tax at source cannot be more than the tax liability under DTAA. Following the decisions of M/s Bharti Airtel Ltd [2014 (12) TMI 642 - KARNATAKA HIGH COURT] we do not find any error or illegality in the order of the CIT(A) that there is no scope for deduction of tax at the rate of 20% as provided under the provisions of Section 206AA of the IT Act when the benefit of DTAA is available. In the case in hand, it is not a simple case of deduction of tax at source by applying the rate only as per the provisions of Act, when the benefit of DTAA is available to the recipient of the amount in question. Therefore, the question of applying the rate of 20% as provided u/s 206AA of the IT Act is a issue which requires a long drawn reasoning and finding. Hence, we are of the considered opinion, that applying the rate of 20% without considering the provisions of DTAA and consequent adjustment while framing the intimation u/s 200A is beyond the scope of the said provision. Thus, the AO has travelled beyond the jurisdiction of making the adjustment as per the provisions of Section 200A of the IT Act, 1961. - Decided in favour of the assessee

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• 2015 (9) TMI 791
  Validity of reassessment proceedings - Held that:- In the course of original assessment proceedings, not only all the necessary details were on record, a specific question with respect to unrealized rent was raised during the assessment proceedings, this fact was duly recorded in the proceedings sheet before the Assessing Officer. We have perused the assessment records and we are satisfied about this fact. In this view of the matter, as the assessee, rightly submits that the reopening of the assessment is nothing but review of the decision of the predecessor Assessing Officer on the same set of facts and without any fresh evidence or material coming to the record. This, as is the settled legal position, is not permissible under the scheme of the Act. For the reasons set out above, we uphold the grievance of the assessee against reopening of the assessment. As the reassessment itself is quashed, all other issues raised in this appeal are rendered academic and infructuous - Decided in favour of assessee.

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• Customs

• 2015 (9) TMI 818
  Violation of notification No.20/99-Cus and 16/2000 – Goods not used in manner intended – Appellants had shut down plant and disposed entire plant and machinery consisting of old as well as new machinery by e-auction – Imported goods which were cleared under concessional rate of duty forming part of plant and machinery were also disposed – Such disposal was alleged by Customs as violation of condition of notification No.20/99-Cus and 16/2000 on ground that imported goods have not been put to intended use but were sold – DRI seized imported machinery but were released provisionally on execution of bond and giving of bank guarantee – Differential customs duty was also demanded alongwith redemption fines and penalty – Held that:- Appellants took decision to close down Plant within 2 years of importation – Reasons for shut down of plant is irrelevant in so far as customs exemption availed under Notification No.20/99 and 16/2000 is concerned – Therefore, disposal of imported goods did not serve intended purpose of notification – In spite of being fully aware of fact that imported goods were to be used for intended purpose, appellants failed to fulfill undertaking given to Customs authorities as required by condition of notification – That warranted appellant to pay duty in event of failure of not using goods for manufacture of fertilizer. Members of successful bidder/awardee in their statements admitted that they have to bear all duties and taxes as stipulated in e-auction but there was no mention of any payment of customs duty on imported machineries – When whole plant was sold to third party, nothing prevented appellant to collect differential customs duty on imported goods contained in plant which was sold – Appellant cannot take shelter on ground that mere installation of imported machinery and commissioning plant for short period shall absolve it from liability – Therefore, adjudicating authority rightly demanded Customs duty from appellant who are owners and beneficiary of imports – Decided against Appellant.

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• 2015 (9) TMI 817
  Import of crude palm oil of edible grade - Classification of goods - Classification under Chapter 15119090 or under Chapter Heading 15111000 - Benefit of exemption notification at Sl.No.29 of Notification No.21/2002-Cus. dt.1.3.2002 - Held that:- Classification of imported goods should strictly be made as per the chapter note, section note and the description of specific sub headings read with HSN Explanatory Notes. Main Chapter heading 1511 covers palm oil and fractions whether or not refined but not chemically modified. Chapter 15111000 covers crude oil and chapter 151190 covers Others. On perusal of records, and test reports, we find there is no dispute on the fact that the goods imported are Crude Palmolein (Edible Grade). It is also not disputed in the impugned order that the appellant is a manufacturer of refined oil and the imported crude palmolein is further refined after clearance and sold for human consumption. When the imported goods conform to the specific description under Ch 15111000 as crude Oil and there is no specific chapter note or HSN Explanation specifying criteria of acid value or carotenoid content for classifying the crude oil, therefore the goods imported are appropriately classifiable under Chapter 15111000 of CTH and any specific description given under Sl.No.34 of notification 21/2002 for the purpose of exemption cannot be taken as criteria for classification of the product under Chapter Heading 15119090 as Others. Following the Tribunal s decision [2009 (6) TMI 662 - CESTAT, AHMEDABAD], we hold that imported crude palm oil is rightly classifiable under chapter heading 15111000 of CTH and rightly eligible for exemption under Sl.No.29 of Notfn 21/.2002 and not under Sl.No.434 of the notification. The impugned order to the extent of classification of goods under chapter 15119090 is liable to be set aside. Vessel has not discharged imported crude oil to shore tank directly but which are transferred to the barges and loaded into the tankers. The actual weighment of the tankers is done at the port and it is the quantity which should be taken for assessment - The Hon’ble Supreme Court in the case of Garden Silk Mills Ltd. (1999 (9) TMI 88 - SUPREME COURT OF INDIA) held that import is complete only when the goods are delivered. This plea is reiterated by the Tribunal in the case of Nilkhil Refineries Ltd. (2011 (7) TMI 843 - CESTAT, BANGALORE) where if there is a case of shortage and the goods not discharged, only the master of vessel is liable for action for short-landing of the goods. Therefore, we find that there is no infirmity in the impugned order in so far as the quantity taken for assessment as per the actual quantity loaded on the tankers in the port. The impugned order in so far as the quantity issue as discussed above is liable to be upheld. - Decided in favour of assessee.

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• 2015 (9) TMI 816
  Non-communication of Order – Original order was not served on petitioner – Petitioner also made application under Right to Information Act, wherein it has been stated that despatch details were not available – Admittedly, order has been passed on 30.12.2009 and petitioner was demanded to pay sum together with interest from 17.11.1995 – Held that:- respondent contended that order referred to which was allegedly communicated to petitioner, there is no proof for despatch of same and there is no acknowledgment on file – Hence, accepting contention of petitioner, impugned order passed by first respondent is set aside – Consequently, impugned recovery notice issued by second respondent also set aside – Therefore petition disposed of.

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• 2015 (9) TMI 814
  Evasion of Duty – Necessity of sanction under Section 155, Cr.P.C – Respondent was prosecuted for offence punishable under Section 135 of Customs Act, 1962, however by judgment, respondent came to acquitted – Petitioner submitted that requirement of sanction under section 155 of Cr.P.C was not followed – Whether sanction under Section 155(2), of Magistrate was necessary, before investigation into non-cognizable offence can be conducted – Held that:- It is trite that Courts do not embark or attempt to decide questions, which are purely of academic nature – Even if view taken by Magistrate, insofar as requirement of sanction under Section 155 of Cr.P.C is reversed, fact that order of adjudication is set aside by CESTAT would come in way of appellant – In view of matter, appeal disposed of.

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• 2015 (9) TMI 813
  Demand for interest and penalty – Delay in service of notice – Show cause notice came to be issued to Respondent calling upon it to show cause as to why interest and penalty should not be demanded – Adjudicating authority confirmed issue and imposed penalty – Respondents thereafter preferred appeal before tribunal which is allowed by impugned order – Held that:- Demand for interest pertains to dues which were paid on various dates – Clearly seen that there is delay of more than three years from date on which first cause of action arose and more than two years from date on which last cause of action arose – Said delay has not at all been explained – In that view of matter, it cannot be said that Tribunal was unjustified in holding that delay in issuing show cause notice was not sustainable in law – Tribunal has rightly allowed appeal of Respondent – Decided against Revenue.

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• Service Tax

• 2015 (9) TMI 839
  Demand of service tax - Management Consultant Service - Held that:- Dabur inter alia provided operational improvements and skills in the areas of cost management, manufacturing, production, procurement, sale, marketing and distribution of the product in the territory and in such other areas as may be agreed upon between the parties from time to time. - Consequently the services rendered as per the agreement between the appellant and M/s. Redrock qualify to be Management Consultant service as appellants clearly gets covered within the ambit of definition of Management Consultant quoted in the wake of provisions of Section 65A(2) (b) Benefit of export - Held that:- As regards the adjudicating authority’s contentions that they neither claimed the benefit of exemption for export of service nor submitted figures relating to the impugned services in their ST-3 Returns before the Show Cause Notice, it is to state that the appellants contention was that they were not providing any taxable service as their service did not fall under ‘Management Consultant’ service and therefore the question of claiming the exemption for export of service simply did not arise. The appellants are well within their right to claim the exemption on account of export of service if their service was held taxable under ‘Management Consultant’ service. Extended period of limitation - Held that:- mere failure or negligence on the part of the assessee is not sufficient to sustain allegation of suppression and wilful mis-statement coupled with the appellants submissions in this regard, the allegation of suppression of facts is not sustainable, as a result of which demand is also hit by time bar. - demand set aside - Decided in favour of assessee.

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• 2015 (9) TMI 838
  Denial of refund claim - Notification No.17/09-ST dt.7.7.2009 - CHA services - Held that:- As regards incomplete invoices/bills etc., rule 4A of the Service Tax Rules, 1994 prescribes the statutory requirement. Compliance of this rule requires that the invoices/challan/bills should be complete in all respect. Therefore, the exporter claiming refund of service tax under notification No.41/2007-ST should ensure in their own interest that invoices/bills/challan should contain requisite details. Refund claim cannot be allowed on the basis of invoices not having complete details as required verification cannot be carried out by the department on the basis of incomplete invoices. Invoices issued by the service provider have been mentioned services which have been provided by the service provider in detail and detail regarding the services received by the appellant are mentioned in the invoices. It is also not disputed that the appellant has received the services and paid service tax thereon. In the circumstances, relying upon the above said decisions, I hold that the appellant is entitled for the refund claim. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (9) TMI 837
  Quashing of Show cause notice - Jurisdictional error - Held that:- Petitioner will have to demonstrate that it is not rendering any services within the meaning of Finance Act 1994, much less the 'business support services'. It is the allegation in the show cause notice that the shipping lines / airlines are approached by the Petitioner - Assessee after getting inquiry from the clients and that is how the space or the slot is booked. That there is no such client who had approached the petitioner but the space is booked irrespective of any such inquiry from the client is a version of the Petitioner which the petitioner will have to establish and prove. That there is no customer of the Petitioner and therefore the Petitioner is not an agent of such customer and hence whatever amounts are collected are not in the nature of service charge, are all matters which raise essentially disputed questions of fact. - No merit in petition - Decided against assessee.

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• 2015 (9) TMI 836
  Condonation of delay - whether the first appellate authority i.e., second respondent herein was justified in dismissing the appeal filed by petitioner who is a service provider on the ground that there is delay of 78 days in filing the appeal - Held that:- Appeal came to be presented on 13.09.2012 and as such petitioner himself has filed an application seeking for condonation of delay of 78 days in filing the appeal. - In the absence of any proof being tendered petitioner cannot be heard to contend that this court in exercise of power under Article 226 of Constitution of India can condone such delay. When the statue prescribes the period of 90 days as the limitation to file an appeal and there being no provision under the Finance Act, 1994 to condone the delay by first appellate authority, question of entertaining such application for condonation of delay will not be in the domain of appellate authority. - No merit in this petition - Condonation denied.

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• 2015 (9) TMI 835
  Demand of service tax - Validity of SCN - Invocation of extended period of limitation - Held that:- It is for the department to investigate whether the issue of a works contractor not including the value of the materials supplied to them to the service recipients is related to the subject matter of the impugned show cause notice. The two issues may not be identical but are related to each other. But this question of fact as to the extent to which the subject matter of the earlier three show cause notices was a factor in the issuance of the impugned show cause notice, with all data and necessary details have to be gone into by the Commissioner and not by this court. If it is found by him that the facts, data and factors, which were the basis of the earlier show cause notices were relevant in issuing the impugned show cause notice, then the show cause notice would be clearly hit by the judgment of the Hon’ble Supreme Court [2006 (4) TMI 127 - SUPREME COURT OF INDIA]. In other words, the show cause notice would be barred by the laws of Limitation, because the department had knowledge of the ingredients of the impugned show cause notice. The petitioner could not be charged with suppression to invoke the longer period of limitation. - show cause notice dated 6th January, 2014 is set aside with an option to the Commissioner to scrutinise all relevant facts in the light of this judgment and to issue another show cause notice, if the same is warranted in law - Decided in favour of assessee.

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• 2015 (9) TMI 834
  Penalty u/s 78 - Delay in depositing service tax - Held that:- The Tribunal has recorded a finding that the appellant has paid the entire amount of Service Tax and that there was insufficiency of the grounds for imposing penalty under Section 78 of the Finance Act. We find no reason to differ with the findings recorded by the Tribunal, which is the last fact finding authority. As such, we do not find that the ingredients of Section 78 of the Finance Act are found in the facts of the present case and also we do not see any substantial question of law, which arises for determination by this Court in this appeal. - Decided against Revenue.

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• 2015 (9) TMI 833
  Demand of service tax - Rent a cab service - Held that:- Tribunal in the case of M/s Shree Gayatri Tourist Bus Service Vs Commissioner of Central Excise, Vadodara-I - [2012 (5) TMI 126 - CESTAT, AHMEDABAD [LB]] on the identical issue in respect of demand of service tax under “Rent-a-Cab” in connection with the agreement with ONGC, set aside the demand and allowed the appeal filed by the assessee. The learned Advocate on behalf of the assessee submits that the said decision came after passing of the instant Adjudication order. On perusal of the Adjudication order, we find that the Adjudicating authority had not given any finding on the demand of service tax for the period April 2000 to March 2002. It is noticed that the Appellant contested the demand on limitation as well as on merit. The Appellant also filed an application for additional grounds with various documents in support of their contention that the demand is barred by limitation and also not sustainable on merit. In our considered view, the matter should be re-examined by the Adjudicating authority in the light of the decision of the Tribunal in the case of M/s Shree Gayatri Tourist Bus Service (supra) - Matter remnded back - Decided in favour of assessee.

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• 2015 (9) TMI 832
  CENVAT Credit - transfer of credit on de-merger of company - Held that:- By letter dt.18.02.2011, the Appellant requested to allow Service Tax credit under Input Service Distributor in the name of M/s Adani Gas Ltd; in view of de-merger of city gas distributor business from M/s Adani Energy Ltd to M/s Adani Gas Ltd. - it is a factual dispute and as the Commissioner (Appeals) remanded the matter, the Adjudicating authority should have also examined the facts in Para 6 of the impugned order - Appeal disposed of.

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• 2015 (9) TMI 831
  Business Auxiliary Services - trading activity or commission agent - concept of multilevel marketing - allegation that the appellant is selling various types of products of M/s. FSL under the concept of multilevel marketing termed as “Right Concept Marketing”, as a distributor through their dedicated network of distributors called her down-liners and received various kind of incentives, commission etc. in a pre-defined manner depending on kit purchases and repurchases by her down-liners. - Held that:- the service provided by the appellant falls within the ambit of Business Auxiliary Service as defined in Section 65(19) of the Act and is liable to Service Tax under Section 68(1) of the Act read with Rule 6 of the Service Tax Rules, 1994. Further, I find from the records that the appellant has also received various kinds of incentives, commission etc. on account of promotion and marketing of their products by her down-liners and there is no evidence on record to establish that sales tax has duly been paid on the full sale value of such incentives and commissions. Thus the, adjudicating authority has rightly held that the activities carried out by the appellants are covered under the category of Business Auxiliary Services and thus are taxable. - Decided against the assessee. Extended period of limitation - Held that:- they neither supplied any data regarding providing of such services to the department, nor they fulfilled statutory obligations and this act of appellants was entirely unwarranted which resulted into gross violation of law governing the issue as well as Revenue loss to the Government exchequer. Therefore, suppression with intent to evade Service Tax is clearly spelt out. - Demand of service tax with penalty confirmed - Decided against the assessee.

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• 2015 (9) TMI 830
  Settlement of cases - Admissible of application for settlement - Construction of residential complex service - sale of residential flats in their newly constructed Residential Complex to the prospective buyers - period from 1-7-2010 to 30-9-2011 - Held that:- It is observed that because of uncertainty about the taxability of the said service during the relevant period, the applicant failed to obtain registration and file ST-3 Returns in the prescribed manner which was an essential condition for the admissibility of an application under Section 32-E Proviso (a) of the Central Excise Act, 1944. The Bench observes that adequate circumstances existed for non-filing of the returns in the present case as the entire issue of taxability, of ‘construction of residential complex service’ was before the Hon’ble Bombay High Court. Therefore, taking cue from the spirit of the said amendment of Section 32E of the Central Excise Act, 1944 with effect from 6-8-14, the Bench takes a pragmatic view and considers the subject application admissible even though it was filed prior to the subject amendment. The Bench observes that the applicant have discharged the entire tax liability of Rs. 41,72,645/- as demanded in the SCN along with interest. They have co-operated with the investigation and in the proceedings before this Commission. Accordingly, the application filed by the applicant is settled in terms of the following order passed under sub-Section (5) of Section 32-E of the Central Excise Act, 1944 as made applicable to Service Tax vide Section 83 of the Finance Act, 1994. - The Service Tax payable in this case is settled at Rs. 41,72,645/-. The Bench imposes a penalty of Rs. 1,00,000/- (Rupees one lac only) on the applicant for the violations as alleged in the SCN. Immunity is granted to the applicant from payment of penalty in excess of the said amount. - immunity granted from prosecution .

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• 2015 (9) TMI 823
  Denial of CENVAT Credit - Invocation of extended period of limitation - whether CENVAT credit of service tax paid on commission charges under Business Auxiliary Services, paid to the Foreign Agency by the appellant will be admissible under Rule 2(l) of Cenvat Credit Rules, 2004 - Held that:- CENVAT credit taken by the appellant with respect to Commission Charges paid to the Foreign Agencies, which was required to be paid under reverse charge by the appellant. The issue was decided by the Hon'ble Gujarat High Court in the case of CCE, Ahmedabad vs. Cadila Healthcare [2013 (1) TMI 304 - GUJARAT HIGH COURT]. In the present factual matrix, extended period of limitation for demanding duty can not be invoked as the appellant was under bonafide belief that such credit on Commission Charges paid was admissible. It is further observed that show cause notice for the years 2005-06 to November 2007 was issued on 22.03.2011 and was clearly time-barred. - Decided in favour of assessee.

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• 2015 (9) TMI 821
  Denial of CENVAT Credit - input services - C&F Agent Service, Courier Services - credit has been disallowed to the appellant on the ground that cenvatable documents are not showing the registration number of the unit who is providing taxable services to the appellant - Held that:- So far as the admissibility of cenvat credit is concerned, the same is covered by the case law of this Bench in the appellant s own case of Meghmani Organics Limited vs. CCE, Ahmedabad (2011 (8) TMI 542 - CESTAT, AHMEDABAD) and Meghachem Industries vs. CCE, Ahmedabad (2011 (4) TMI 221 - CESTAT, AHMEDABAD), wherein it is held that cenvat credit of Courier Services and CHA up to the place of export are admissible. Appellant s case is therefore covered by the ratio laid down by this Bench and credit with respect to Courier Service and C&F Agent service, in relation to export is admissible. So far as denial of cenvat credit with respect to certain documents on which registration number of service provider was not indicated, it is observed that Respondent subsequently produced necessary certificates from the jurisdictional Central Excise authorities showing registration number of the service provider. As per the provisions contained in Rule 9(2) of the Cenvat Credit Rules, if documents does not contain all the particulars but contains details of service tax paid, description of taxable services etc. then the same can be got verified from the jurisdictional Central Excise officers. Further, the procedural irregularities cannot be made the basis for denying the cenvat credit. Accordingly, cenvat credit was admissible to the appellant on the issue of certain documents for which necessary registration number etc. were provided by the Respondent. - Decided against Revenue.

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• Central Excise

• 2015 (9) TMI 828
  Waiver of pre deposit - Whether the Tribunal is correct in rejecting the claim of waiver of pre-deposit in the circumstances of the case where the levy is challenged on the ground of merits as well as on the ground of jurisdiction - Held that:- Work undertaken by the appellant is to restore waste pits and for this purpose the service providers have to undertake skimming of oily waste, collection, redistribution and transportation of oily and non-oily drilling waste and thereafter restoration and back-filling of the pits with locally available soil. It is evident from this that the main nature of work is to clean the pits by removing oily and non-oily waste completely and thereafter put in fresh soil (back-filling) but not site formation since the drilling site is already existing and the appellant has to clean up all the wastage and bring it back to the original condition. - when a statutory appeal is pending on the file of the Tribunal and any opinion that is expressed by the Tribunal granting interim relief pending disposal of the appeal, is only a prima facie view and not a conclusive one. Therefore, it is always open for the appellant to plead further before the appellate authority to sustain his plea. - Tribunal directed a sum of Rs. 25.00 lakhs to be deposited as a condition precedent in exercise of the power under Section 35-E of the Act would indicate that the Tribunals view expressed on merits is only a prima facie view and the Tribunal would be considering the case on merits at the time of hearing the appeal. - Appeal disposed of.

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• 2015 (9) TMI 827
  Duty demand - Abatement under Rule 96ZQ(7) (e) of Central Excise Rules, 1994 - Held that:- In the decision reported in [2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS], in the case of Beauty Dyers vs. Union of India, this Court has held that Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998; Rules framed under Notification Nos. 14/2000-C.E. (N.T.) and 19/2000-C.E. and Notification No. 2/99-C.E. are ultra vires of erstwhile Section 3A of the Central Excise Act, 1944. - In view of the order passed by this Court in the case of Beauty Dyers vs. Union of India reported in [2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS] in and by which the Hot Air Stenter Independent Textile Processors Annual Capaciy Determinatin Rules, 1998 are held to be ultra vires of erstwhile Section 3A of the Central Excise Act, 1944, the questions of law raised in these two appeals become acadamic in nature - Appeal disposed of.

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• 2015 (9) TMI 826
  Export of yarn without payment of duty under Rule 19 - no permission was obtained from the jurisdictional Assistant Commissioner nor the procedure under Rule 19 of Central Excise Rules, 2001 read with Notification No.43/2001-CE (NT) dated 20.06.2001 was followed by M/s. Loyal Textile Mills Ltd - Held that:- no permission was sought for and granted to the assessee so far as yarn is concerned. This is despite the fact that a specific plea has been taken by the 2nd respondent/assessee in the appeal before the Tribunal. A copy of the said letter addressed by the Superintendent of Central Excise to the assessee has been placed before this Court, which has also been recorded by the Tribunal in its order. Though, the said letter was before the Tribunal and forms part of its order, however, this question of fact, which is disputed by the Revenue, has not been addressed by the Tribunal. Once a finding is recorded by the Tribunal on facts, it is supposed to address each and every issue that is placed before it by the parties on such fact. - Matter remanded back - Decided in favour of Revenue.

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• 2015 (9) TMI 825
  Mandatory penalty - Whether the Tribunal can override the statutory provisions enshrined in the law in as much as the second proviso to Section 11AC of Central Excise Act, 1944, has been ignored in reducing the penalty wherein specific provisions are enlisted that the benefit of reduced penalty shall be available only when penalty is paid within 30 days of the date of communication of the Order which is not the case in the present matter - Held that:- The central excise duty is payable on the manufacture of excisable goods. It is not payable on the issuance of the show cause notice, or at any time thereafter. The Proviso to Section 11AC is applicable, if the payment is made within 30 days of communication of the order levying penalty, and not from the date of issuance of the show cause notice - The judgment was rendered on equity, which is not applicable to the laws relating to central excise. The observation that since duty was deposited prior to the show cause notice, penalty could not be levied, is contrary to the principles settled in the central excise laws. - The judgment was rendered on equity, which is not applicable to the laws relating to central excise. The observation that since duty was deposited prior to the show cause notice, penalty could not be levied, is contrary to the principles settled in the central excise laws. - Decided in favour of Revenue.

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• 2015 (9) TMI 824
  Denial of CENVAT Credit - 'Welding Electrode' - Whether it is capital goods - Held that:- The definition of 'capital goods' under Rule 2(b) of Rules, 2002 and Rule 2(a) of Rules, 2004 is exhaustive in the sense that it clearly specifies what 'capital goods' would mean. The items which fall under certain chapters of Central Excise Tariff Act are specifiably mentioned in Rule 2(b)(i) of Rules, 2002 and Rule 2(a)(A)(i) of Rules, 2004. Then comes pollution control equipment', moulds and dies, jigs and fixtures, refractories and refractory material, tubes and pipes and fittings thereof and storage tank. All these things, if used in the factory of manufacturer of final products, or, for providing output service, would mean 'capital goods'. However, it would not include any equipment or appliance used in office. There is one more aspect, i.e., Rule 2(b)(iii) of Rules, 2002 and Rule 2(a)(A)(iii) of Rules, 2004, which say that in respect to items mentioned in Rule 2(b)(i) and (ii) of Rules, 2002 and Rule 2(a)(A)(i) and (ii) of Rules, 2004, components, spares and accessories of the goods specified thereunder would also fall within the category of 'capital goods'. - For the reasons given in the judgment in M/S Upper Ganges Sugar & Industries Ltd. Vs. Commissioner Customs & Central Excise (2015 (5) TMI 569 - ALLAHABAD HIGH COURT), the aforesaid question of law is answered in favour of Revenue - Decided in favour of Revenue.

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• 2015 (9) TMI 822
  Admissibility of Cenvat Credit of Mobile Phone Services, Garden Maintenance Services and for fencing of the Factory Premises - held that:- It is observed from the Case Laws relied upon the appellant [2011 (9) TMI 509 - CESTAT, AHMEDABAD], and [2008 (9) TMI 190 - CESTAT, BANGALORE] that these services have been held to be entitled to Cenvat Credit. Some of these relied upon Case Laws are pertaining to the same appellant on Mobile Phone Services and Garden Maintenance Services. In the subsequent periods even first appellant’s authority and Adjudicating Authority have themselves allowed credit on the same issues - Decided in favour of assessee.

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• 2015 (9) TMI 820
  D100% EOU - DTA clearance - Denial of benefit of Notification No. 8/97-CE dated 01/3/97 - Non maintenance of separate accounts - Held that:- The admitted fact is that the appellant did not maintain separate accounts of raw material during the period. The appellant were admittedly clearing a very small portion of the production (less than 1%) in DTA. It is seen that the tripods cleared in DTA have suffered only concessional rate of duty on the ground that they were made out of indigenous raw material only. It is established by the appellant that they had no imports of raw material prior to 13/01/2004. The goods for DTA clearances now subject matter of dispute were made prior to that date. The demand for differential duty were sustained only on the ground that no separate accounts were maintained and the appellant failed to establish that the said items were manufactured only out of indigenous raw material. Considering the facts now pleaded by the appellant it is clear that no differential duty can be demanded as there was no import of raw materials prior to the date of manufacture of goods later cleared to DTA. These were earlier rejected/returned tripods. Though the appellant pleaded these grounds before the lower authority no findings were given except the observation that the same is not subject matter of the instance case as the appellant themselves paid the duty without insistence by the Department. However, in the order duty on tripods and aluminium dust and slag was confirmed by the Original Authority. - Decided in favour of assessee.

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• 2015 (9) TMI 819
  Clandestine removal of goods - Shortage of goods - Held that:- Commissioner has examined the duty demand on the goods covered by 17 invoices alleged to have been parallel invoices. While he held the duty amount of Rs. 1,38,912/- on goods covered by 17 parallel invoices is sustainable there was no discussion regarding the dutiablity of goods namely generic medicines or PP medicines in the said impugned order. He only observed that there is no logic or wisdom of clearing exempted goods on parallel invoices and the appellant also did not raise the issue during investigation. It is necessary to segregate dutiable PP medicines from exempted generic medicines for arriving at the correct duty liability in respect of goods cleared under the cover of parallel invoices. Similarly, regarding shortage of various types of medicines on physical verification vis-`-vis the RG-1 account, it is necessary to co-relate the destruction and export made under ARE-4 and clearances declared in RT-12 return with reference to dutiable or exempted medicines. These has to be done by Original Authority after due verification of records. - Matter remanded back - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 829
  Benefit of Set-off/input tax paid – Whether dis-allowance of appellant's claim for Input Tax Rebate under Section 14 of MP VAT Act, 2002 in respect of Input Tax paid on cotton seeds purchased and sale of by-product oil cake is proper – Held that:- on going through order passed by in M/s. Shreeram Agro Industries v. Commissioner of Commercial Tax [2015 (8) TMI 959 - MADHYA PRADESH HIGH COURT], court of view that question, involved has already been answered in favour of appellant-assesse – In circumstances, appeal allowed in terms of order holding that assesse is entitled to get benefit of set off / Input Tax paid on entire amount of tax paid on purchase of raw material and principle of proportionate liability cannot be invoked – Appellant shall be entitled for refund of tax, in accordance with law – Decided in favour of Appellant.

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• Indian Laws

• 2015 (9) TMI 812
  Application seeking appointment of an arbitrator - The area of dispute is small and narrow, namely, the entitlement of the petitioner to 5% of his claimed dues which, according to the petitioner, has been wrongly withheld by the respondent. - Held that:- the Court does not find any ambiguity or inconsistency in the description of parties so as to non-suit the applicant-petitioner by dismissing its application on the above basis. The ambiguity, if any, in the description of the parties having been explained and the respondent Company itself having issued L.O.Is. and having exchanged subsequent correspondences with the applicant with regard to the works under the sub-contracts, though executed in the name of the Taiyo Membrane Corporation and Taiyo Membrane Corporation (India), the applicant's petition cannot be held to be not maintainable as urged on behalf of the respondent. Having held as aforesaid and the remaining objections, as noticed, being within the province of the Arbitrator the Court is inclined to grant the prayers made. Accordingly, Dr. Justice M.K. Sharma, a former Judge of this Court is appointed as the sole Arbitrator.

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• 2015 (9) TMI 811
  Review petition - Jurisdiction - Validity of action under SARFAESI Act, 2002 - in respect of the secured asset being the immovable property mortgaged by the opposite party no. 1/plaintiff to secure the repayment of loan obtained from the defendant no. 1 bank. - By the impugned order the learned Court below held that since the claim of the defendant no. 1 bank against the opposite party no. 1/plaintiff is Rs. 6,10,111/- which is less than the Rs. 10 lakhs, the suit is not barred under the Act of 2002 and the City Civil Court has the pecuniary jurisdiction to try the suit. Held that:- Section 31(h) of the Act of 2002 provides that the provisions of the Act of 2002 shall apply to any security interest for securing repayment of any financial asset exceeding one lakh rupees. However, Section 17 of the 2002 Act being a provision of a subsequent special statute confers the appellate jurisdiction on the Debts Recovery Tribunal to decide an application of any person aggrieved by any measure adopted by the secured creditor under sub-section (4) of Section 13 of the Act of 2002. Sub-section (4) of Section 1 the RDB Act relates to the original jurisdiction of the Debts Recovery Tribunal to entertain an application of the banks or financial institutions for recovery of their dues from the borrowers under the said Act and by no means the said provisions can be construed to have any bearing on the jurisdiction conferred by the Act of 2002 to entertain an appeal under Section 17 of the said Act against any decision of the secured creditor under sub-section (4) of Section 13 of the Act of 2002. Section 35 of 2002 Act provides that the provisions of the said Act shall have overriding effect on any provision of any Act, which is inconsistent with the provisions of the said Act. The suit, filed by the opposite party no. 1 is not maintainable and the impugned decision of the learned court below rejecting the application under Order 7 Rule 11(d) of the Code cannot be sustained. - Decided in favor of appellant.

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