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TMI Tax Updates - e-Newsletter
September 21, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Capital Gains - valuation u/s 50C - AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee - HC
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TDS u/s 194C - Works contract or contract for sale - Though the supply portion and erection portion dovetail into each other, the erection portion does not control the supply portion and the supply contract does not become a works contract, just because there is an obligation cast on the supplier to erect the equipment which by that time has become the property of the purchaser. - no TDS on supply order - AT
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Product Development expenditure - Development of new product - AIt was a case of expansion of existing business of the assessee of manufacturing liners by diversifying the existing products using different materials for making the same suitable for even other applications. - expenses allowed as revenue in nature - AT
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Clim of doubtful debts - NBFC - Provision for non-performing assets in terms of the Directions of the Reserve Bank of India does not constitute “expense” on the basis of which deduction can be claimed by the non-banking financial companies u/s 36(1)(vii) of the Act - AT
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Cash credit u/s 68 - determination of new credit - Difference in opening and closing balance - the claim of the assessee cannot be accepted or cash credit cannot be taken as explained satisfactorily only on the ground that loan had been received through banking channel - AT
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Capital Gains - Transfer u/s 2(47) - whether receipt of advance against agreement of sale (duty registered) would constitute transfer or relinquishment of the asset and extinguishment of any right - held No - AT
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Jurisdiction u/s 263 – Doctrine of merger - once the order of the AO got merged with the appellate order of the CIT(A) on a particular issue, the CIT cannot invoke the provisions of section 263 on the premise to verify the eligibility of deduction under section 80-IB - AT
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Fair Market Value - Capital Gains - FMV represents the price that a seller is willing to accept and a buyer is willing to pay in the open market - the sale consideration of an asset, as recorded in the registered sale deed is generally understated and, hence, cannot be taken as FMV as on 1.4.1981 - AT
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Nature of receipt of Rs. 108 crores from Gillette USA for repayment of its debts pursuant to sales of its entire shareholding in the assessee-company to Newell - Capital receipt or revenue receipt - major portion held as capital in nature - AT
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Forfeiture of deposit to be treated as revenue loss, allowable for deduction or capital loss not allowed in the profit & loss account - AEPC had forfeited its Earnest Money Deposit - held as revenue in nature - AT
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Transfer pricing adjustments - the order passed by the learned Dispute Resolution Panel is a non-speaking order not stating the objections raised by the assessee and the reasons have also not been given as simply the order of the TPO and the AO are referred - matter remanded back - AT
Customs
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Anti- Dumping Duty – challenge to show cause notice - Goods Sold to SEZ - Show Cause notice was issued to the petitioner as to why he should not be made liable for anti dumping duty chargeable in respect of the goods sold by the petitioner from Palta Special Economic Zone to third parties under domestic tariff area - Writ petition dismissed - HC
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Filing of Baggage Declaration Form - where Baggage Declaration Form was not filed, jurisdiction under Section 127B(1) of the said Act cannot be exercised by the Settlement Commission. - HC
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Setting Aside Auction Sale – The Company Judge rightly concluded that it was not possible to speculate at this stage that the goods sold to the auction purchaser in 2007 were in fact the very goods that were confiscated by the Customs Department in 1997 - HC
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Levy of interest for failure to comply with the export obligation - though, there is no specific provision for demanding interest in case of violation of terms and conditions of the licence issued under the Act, in terms of the bond such interest could be demanded - HC
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Duty demand under section 125 - the provisions of Section 125 (2) are attracted only when the goods are seized and thereafter confiscated. - AT
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Import of Micropore Surgical Tape - exemption from customs duty and CVD - the tape in no way improves the efficiency of the medical equipment or aid in its functioning - It merely holds the needle to the skin because of the adhesive nature of the tape - It was a general purpose surgical tape as can be seen from the product catalogue. - AT
Corporate Law
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Shareholding - The petitioners themselves admitted that they signed blank transfer forms and handed over the possession of share transfer deeds and share certificates based on the understanding in the agreements - the shares now stand transferred - The chain of events proved in this case clearly established that the petitioners had relinquished their rights as shareholders of the company - Tri
Indian Laws
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Liquor licence - Sub letting of license - licence granted under the U.P. Excise Act could not be sub-let on the strength of power of attorney. - HC
Service Tax
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Liability to pay duty - Section 66A - BCCI entered into a contract with the non-residents service providers to produce audio- visual coverage of cricket match, on behalf of BCCI - prima facie case is against the assessee - AT
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Appeal against the stay order directing the petitioner to pre-deposit 35% of the Credit - Wrong Utilization of CENVAT credit - a real estate company engaged in construction of shopping malls - appeal rejected - HC
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Appeal was dismissed due to Noncompliance of the Order of Pre-deposit – The appellant could not comply with the order passed by the Commissioner [Appeals] as well as the order passed by the Tribunal of predeposit due to financial crunch - appeal restored - HC
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Commercial Training or Coaching Services - Maintenance and Repair services - the appellant was granted license by the DGCA under the specific Rule for training and issuing such certificate - stay granted - AT
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Broadcasting services section 65(15)- income on account of transmission of music clippings in between running of the programmes - sale of time slots and the rate of service charges is for the duration of the time of advertisement - prima facie case is against the assessee - AT
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Waiver of penalty - it was not possible the provisions of section 73(3) to meant that an assessee can collect and keep the tax with him and deposit when it comes to the notice of the department and no penal consequence will follow other than interest - AT
Central Excise
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Penalty under Rule 26 and u/s 11AC - Personal penalty on Director, transporter and other persons - Clandestine manufacture and clearance of goods - levy of penalty confirmed but reduced - AT
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Marketability and Excisability of Goods - Captive consumption - Compactness / tensile strength / dimensional stability of “non-woven fabrics” cleared from factory was much more than that of goods - held as dutiable - AT
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SSI Exemption - clubbing of turnover - Family members have several SSI units - common directors in private limited company and common partners in firm - The demand for duty from KI in respect of goods manufactured by all the units cannot be sustained and accordingly was set aside - AT
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Deemed Manufacture - Cutting/sawing of marble blocks / slabs - process of resin filling, polishing - With effect from 26.02.2010, as a Chapter note was inserted in Chapter 68 declaring such activities as deemed manufacture, such declaration and chapter note inserted w.e.f. 26.02.2010 will be effective from that date and cannot be applied to an activity for the earlier period. - AT
Case Laws:
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Income Tax
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2013 (9) TMI 647
Issue of notice u/s 148 of the Income Tax Act for assessing escaped income – Held that:- Assessee has filed the Income Tax Return on 27.11.2003 declaring income of Rs. -22,53,000/-, which was processed u/s. 143(1) of the IT Act on 28.4.2004. Since, it was not a case where an assessment was completed after proper scrutiny of the case u/s. 143(3) of IT Act, therefore, there was no question of due application of mind at the first instance; and therefore, theere is no question of change of opinion on the part of the AO. Rather, while processing u/s. 143(1) of the IT Act, the AO did not express any opinion at all and a return was processed as such - AO has not applied his mind in respect of claim of depreciation on goodwill on that occassion. There was no requisite inquiry in respect of the said claim - Income which was alleged to be chargeable into tax had escaped assessment, therefore, the AO had a convincing reason to believe that the said income escaped assessment hence lawfully reopened the assessment – Decided against the Assessee. Depreciation on goodwill - The assessee company was formed on 19.2.1999. In support a certificate of incorporation is placed on record. The goodwill was acquired by the assessee in the Assessment Year 1999-2000 when the firm, as a going concern, was taken over by the company/ appellant along with all the assets. – Held that:- Reliance has been placed upon the judgment in the case of B. Raveendran Pillai, [2010 (9) TMI 434 - Kerala High Court]. Wherein it has been held that goodwill is certainly comparable with trade mark, franchisee, copy right, etc., hence, entitled for the depreciation – Respectfully following this decision wherein the doctrine of ejusdem generic is applied and held that the Goodwill is of like nature of intangible asset as prescribed, therefore, hold that under the totality of the facts and circumstances of the case the assessee is entitled for the claim of depreciation on the DWV of the goodwill for the year under consideration – Decided in favor of Assessee. Disallowance of interest on advance made to sister concern - Interest of ₹ 2,12,507/-, being interest @ 12% on advances made to sister concern amounting to ₹ 17,70,891/- - Interest free deposits to the tune of ₹ 204.04 were available. The assesse has claimed that the said interest free deposits were advanced to the sister concern – Held that:- Merely by stating that the funds are available, no practical purpose is served unless and until through bank statements it is established that the interest free funds have actually been disbursed to the sister concern. In certain precedents, even the Courts have held that if the assessee has sufficient interest free bank balance, other than interest bearing funds, then he has to prove that out of those interest free bank balance transferred the funds to a sister concern. In the absence of any direct evidence, finding of Revenue is affirmed – Decided against the Assessee.
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2013 (9) TMI 646
Capital Gains - valuation u/s 50C - Whether the value adopted or assessed or assessable by Stamp Valuation Authority under sub-section (1) of Section 50C of the Act exceeds the fair market value of the property as on the date of transfer, the Assessing Officer should refer the valuation of the capital asset to a Valuation Officer under Section 50 C (2) of the Act – Held that:- Relying upon the judgment in the case of CIT Vs. Chandani Bhochar [2010 (1) TMI 502 - Punjab and Haryana High Court], it is held that stand taken by the AO that the value adopted by the Stamp Duty Authority alone is taken to be the fair market value as on October, 2004 is not correct – A.O. should have referred the matter in assessment to the DVO as both the ingredients of provisions of section 50C(2) are present which compels the AO to refer such matter for valuation by DVO in accordance with provisions of section 55A of the I.T. Act, 1961 and the said provisions of section 50C(2) are essentially to be read in conjunction with the provisions of section 50C(1) of the I.T. Act – Appeal is partly allowed. Value adopted or assessed or assessabe by the Stamp Valuation Authority under sub-section (1) of Section 50-C exceeds the fair market value of the property on the date of transfer, the AO has to apply his mind on the validity of the objection of the assessee – A.O. may either accept the valuation of the property on the basis of the report of the approved valuer filed by the assessee, or invite objection from the department and refer the question of valuation of the capital asset to DVO in accordance with Section 55-A of the Act. In all these events, the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee – Decided in favor of Revenue.
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2013 (9) TMI 645
Applicability of CUP method for determination of ALP in international transaction – Geographical difference of comparable material – Held that:- Geographical difference is not material so far as it applies to the logistics industry - There is splitting of gross profit equally at 50:50 even in Pakistan, Bangladesh and Sri Lanka which fall under the same geographical region – No any infirmity in the CUP method (50:50 module) adopted by the assessee – Decided in favor of Assessee. Disallowance of expenditure whose records are not available and destroyed - AO not being satisfied, disallowed 2% of expenditure - Accordingly, a sum of Rs.6,23,90,000/- was disallowed - Held that:- FIR has been lodged and copy of FIR was also submitted for the destruction of the records - In absence of records some estimate of disallowance has to be made. The chart given by the assessee before Ld. DRP has not been controverted. The difference in the sales and cost of sales as compared to earlier year is 1%. Therefore, disallowance upto 1% of Rs.311,95,42,386/- will meet the interest of justice – Decided partly in favor of Assessee.
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2013 (9) TMI 644
TDS u/s 194C - Works contract or contract for sale - Assessee has entered into two separate contracts for procurement and installation of plant and equipments required for commissioning 1000MW SSTPP Stage-II - First contract is entered up to the stage of making the plant and equipment ready at the site of the manufacturer and the second contract is entered in connection with the transportation from manufacturer's place, installation and commissioning, conducting performance and guarantee tests and handing over of all the equipments - Second contract was treated as "Contract of Work" and accordingly deducted at source u/s 194C of the Act - First contract was treated by the assessee as a "Contract for sale" and hence it did not deduct tax at source u/s 194C of the Act – Held that:- Reliance has been placed upon the ratio laid down by Hon'ble Supreme Court in the case of State of Andhra Pradesh v. Kone Elevators (India) Ltd. [2005 (2) TMI 519 - SUPREME COURT OF INDIA], wherein it has been held that the issue is as to the time and situs of passing of the property and as to whether the property passes "brick by brick" on the theory of accretion or as a chattel qua chattel- If the erection portion cannot be taken as the main object of these contracts, title in goods was transferred as movables prior to erection. The erection portion being subsequent to passing of title by execution of the supply portion, it cannot be said that the erection portion controls the supply portion, though the fulfillment of the conditions of the erection contract has a bearing on the fulfillment of the condition of supply portion of the contract, and though in some cases both the contracts are in the same document. The scope and object of each part of the contract is different - Though the supply portion and erection portion dovetail into each other, the erection portion does not control the supply portion and the supply contract does not become a works contract, just because there is an obligation cast on the supplier to erect the equipment which by that time has become the property of the purchaser. In view of the foregoing discussions, "Supply Contract" entered into by the assessee is in the nature of "Contract of sale" and hence the provisions of sec. 194C shall not apply to it, in the present case – Appeal allowed – Decided in favor of Assessee.
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2013 (9) TMI 643
Product Development expenditure - Development of new product - AO observed that said expenditure had resulted in growth in the turnover of the assessee in the subsequent years was sufficient to show that the same was of enduring benefit to the assessee. - capital expenditure or revenue - deduction u/s 35 or section 37 or none - Held that:- assessee-company is engaged in the business of manufacturing of automobile parts and casting and as par the quantitative details furnished in the notes forming parts of the account, the products so manufactured also included liners. The said expenditure thus was incurred by the assessee on development of existing products being manufactured by it although from a different material i.e. Stainless Steel and merely because the new liners being developed by the assessee in Stainless Steel had application in industries other than automobile industry, we are of the view that the manufacturing of Stainless Steel liners cannot be considered as a new line of business. It was a case of expansion of existing business of the assessee of manufacturing liners by diversifying the existing products using different materials for making the same suitable for even other applications. The expenditure incurred by the assessee on development of Stainless Steel liners thus was relating to its existing business and the same, cannot be treated as capital expenditure merely on the basis of accounting treatment given by the assessee. Moreover a perusal of the details of the development expenditure in question incurred by the assessee clearly shows that the entire expenditure incurred by the assessee was basically of revenue in nature and it cannot be said by any stretch of imagination that same resulted in any enduring benefited to the assessee and that too in the capital filed - expenditure in question incurred by the assessee on product development is revenue expenditure allowable u/s- 37(1) - Decided in favour of assessee.
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2013 (9) TMI 642
Clim of doubtful debts - NBFC - as per the mandatory requirements of directions of RBI, the assessee had made a provision for doubtful debts at a specified percentage based on the classification of assets viz. sub standard, doubtful and loss assets. The AO disallowed the assessee’s claim treating the same as contingent liability. - Held that:- this issue is covered against the assessee by the decision of Hon’ble Supreme Court in the case of Southern Technology Ltd. [2010 (1) TMI 5 - SUPREME COURT OF INDIA], wherein it was held that Provision for non-performing assets in terms of the Directions of the Reserve Bank of India does not constitute “expense” on the basis of which deduction can be claimed by the non-banking financial companies u/s 36(1)(vii) of the Act. - Decided against the assessee. Accrual of Interest on sticky loans and advances - CIT deleted addition - Held that:- non-receipt of interest for the first three years will not be treated as interest on a doubtful loan. But if after three years the payment of interest is not received, from the fourth year onwards it will be treated as interest on a doubtful loan and will be added to the income only when it is actually received. There is no inconsisteny or contradiction between the circular so issued and section 145 of the Income-tax Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to sec. 145 of the Income tax Act or illegal in any form. It is meant for a uniform administration of law by all the income-tax authorities in a specific situation and is, therefore, validly issued u/s119 of the Income-tax Act. As such, the circular would be binding on the Department - Following decision of UCO Bank vs. CIT [1999 (5) TMI 3 - SUPREME Court] - Decided against Revenue. Computation of book profit - Minimum alternate Tax (MAT) u/s 115JB - Held that:- the decision of Special Bench in the case of Usha Martin Ind. Ltd. (2006 (12) TMI 171 - ITAT CALCUTTA) is not applicable. - AO had rightly added both the provisions debited to Profit & Loss Account viz. provision for doubtful debts (Rs. 3,61,30,700/-) and provision for servicing securitized assets as both the provisions resulted into diminution in the value of assets.
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2013 (9) TMI 641
Deemed dividend - section 2(22)(e) - Loan or advances - assessee claimed that this amount shown as loan in the assessee's balance-sheet was not a loan but an advance received for sale/purchase of land - Held that:- it would be in the fitness of things for the issue of deemed dividend under section 2(22)(e) of the Act to be remitted to the file of the learned Commissioner (Appeals) for de novo consideration by him - matter remanded back. Cash payment of expenditure in excess of ₹ 20,000 - Section 43A(3) r.w.r. 6DD - Held that:- assessee's arguments that the transactions were genuine; that the cash payments were made in the absence of proper banking facilities being available in Devanahalli, that the payments were made on consideration of business expediency, etc., are not acceptable as the assessee has failed to prove with any cogent evidence that it was covered by exceptional circumstances as per the exemption clause under section 40A(3) read with rule 6DD. It is also seen that the assessee has failed to establish that Devana halli taluk of Bangalore District had no banking facilities at the time these payments were made. In this view of the matter, we have no hesitation in upholding and sustaining the disallowance of ₹ 17,58,527 (being 20 percent. of the amount paid in cash, i.e., ₹ 87,92,635) made by the Assessing Officer under section 40A(3) of the Act - Decided against assessee. Disallowance of Commission and brokerage expenses - Held that:- Out of the total expenses of ₹ 92,20,663 claimed under the head brokerage and commission, we find that the Assessing Officer holding that in this line of business of land transaction the average percentage of commission and brokerage is one per cent., disallowed the balance of ₹ 33,52,658. It is seen that the learned Commissioner (Appeals) examined the matter in detail and came to the view that expenses on commission and brokerage charges, on which TDS had been deducted and remitted to the treasury in the instant case were genuine as per the facts placed before him and accordingly allowed the assessee relief of ₹ 29,10,316 and sustained the disallowance to ₹ 4,44,342. Before us learned counsel for the assessee has merely reiterated the submission made before the learned Commissioner (Appeals). No cogent evidence has been brought on record to establish that any part of the expenses, brokerage and commission out of ₹ 4,44,342 were genuine - Decided against assessee.
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2013 (9) TMI 640
Cash credit u/s 68 - determination of new credit - Difference in opening and closing balance - Held that:- In the original assessment order made under section 144, the Assessing Officer noted that unsecured loans had increased by ₹ 23,64,272 being difference of closing balance and opening balance of loans shown in the balance sheet. Since the assessee had not filed any confirmations, the Assessing Officer added the said sum under section 68 of the Act. The intention of the Assessing Officer was obviously to add the new credits during the year on account of loans but since it was an ex parte assessment and the assessee had not given details, the new credits were computed as the difference between the closing and opening balance - it is not a case that the Assessing Officer had not added a particular cash credit in the original assessment but the same was added in the fresh assessment. The Assessing Officer in this case in the original assessment had added new cash credits in the ex parte assessment which on verification in the fresh assessment was found to be more and, therefore, it cannot be said that any new addition has been made by the Assessing Officer - Following decision in case of Mcorp Global P. Ltd. [2009 (2) TMI 5 - SUPREME COURT] - Decided against assessee. Unexplained cash credit - Held that:- the claim of the assessee cannot be accepted or cash credit cannot be taken as explained satisfactorily only on the ground that loan had been received through banking channel. In case the assessee is not assessed to tax, the burden is on the assessee to show the source from which the loan had been received. But in this case no material has been produced to show creditworthiness of the creditor. The assessee must prove the identity and creditworthiness of the creditor and bank transactions are not sacrosanct - matter remanded back for verification and re-adjudication. Disallowance of loss - The dispute is regarding allowability of loss claimed by the assessee in the business on account of sale of shares. - Held that:- Normally the assessee is required to give distinctive numbers of shares sold for the purpose of verification but in this case since shares sold were purchased earlier and shown in the balance-sheet, in case, the assessee files reconciliation of shares sold with respect to the shares declared earlier in the years, the claim of loss in our view should be considered. However, we also make it clear that in the balance-sheet, the assessee had shown shares as investment and, therefore income/loss arising from sale of shares has to be con sidered as capital loss and not business loss. Further, since shares are shown as investment and loss has to be considered as capital loss, provisions of the Explanation to section 73 is not applicable in such cases. In our view matter requires fresh consideration at the level of the Assessing Officer - Decided partly in favour of assessee.
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2013 (9) TMI 639
Capital Gains - Transfer u/s 2(47) - whether receipt of advance against agreement of sale (duty registered) would constitute transfer or relinquishment of the asset and extinguishment of any right - Held that:- Smt. Raj Rani Devi Ramna v. CIT [1992 (5) TMI 11 - PATNA High Court] - sale deed, though registered, stipulating a condition precedent that the property shall pass only on receipt of sale consideration, transaction did not take place on the date of registration of sale deed - the assessee having executed the agreement, which only contemplated the sale property to the purchaser on a future date on certain terms without transferring any right of ownership, and no possession of property is given or right to use the property or right to receive income arising in the property was also not given to the purchaser - in such circumstances, it was not a transfer in terms of section 2(47) of the Income-tax Act Following CIT v. Rasiklal Maneklal (HUF) [1989 (3) TMI 3 - SUPREME Court] - there was neither an "exchange" nor a "relinquishment" and no capital gains arose from the transaction - An "exchange" involves the transfer of property by one person to another and reciprocally the transfer of property by that other to the first person -There must be a mutual transfer of ownership of one thing for the ownership of another - A "relinquishment" takes place when the owner withdraws himself from the property and abandons his rights thereto - It presumes that the property continues to exist after the relinquishment - Where, upon amalgamation, the company in which the assessee holds shares stands dissolved, there was non "relinquishment" by the assessee - In view of the above discussion, there was no relinquishment of right over the property. – decided against Revenue. Confirmation of Addition Towards Payment Made - addition was sustained in the hands of the assessee on the reason that it was deleted in the hands of the recipients - Held that:- The deletion of the addition by the Commissioner of Income-tax (Appeals) in the hands of recipients may be on various reasons, but that itself cannot be a reason to sustain the same in the hands of the assessee who has incurred this expenditure wholly and exclusively for the purpose of business. Considering the facts and circumstances of the case, we are inclined to delete the addition - When the payment of this amount arose out of the same transaction, in our opinion, this payment alone cannot be disallowed - More so, all these persons had claimed the right over the property which the assessee dealt with by selling the same to DLF group of companies - At that time, they initiated civil litigation and this expenditure, in our opinion, it was incurred by the assessee on account of business and commercial exigencies for the purpose of business. Disallowance of Site-Levelling Expenditure – Held that:- As the situation warrants the assessee must have incurred the expenditure - The reason for disallowance was that incurring of the expenditure was not stipulated in the memorandum of understanding - The Department not doubted incurring of the expenditure - When the assessee had incurred the expenditure wholly and exclusively for the purpose of business it cannot be disallowed on the reason that it was not stipulated in the memorandum of understanding - Relying upon CIT v. Malayalam Plantations Ltd. [1964 (4) TMI 9 - SUPREME Court ] - The Assessing Officer also stated that the valuation report does not mention incurring of the expenditure - If the assessee incurred the expenditure in the year under consideration before executing the sale deed in the month of August 2007 the same had to be allowed. Disallowance of Payment to Sub-Agents – Held that:- The Department had not got anything on record to show that the payment was excessive or it was made to relatives of director of the assessee-company - the claim of the assessee had to be allowed - relying upon Commissioner Of Income-Tax, Kerala Versus Malayalam Plantations Limited[ 1964 (4) TMI 9 - SUPREME Court] During the course of search action, the Department found material in the form of receipts for payments made through account payee cheques to sub-agents to the tune of ₹ 1.70 crores and the same was seized - This payment was subjected to TDS - The subagents have filed their returns of income after payment of advance tax as applicable - Even during the course of investigation, the assessee placed necessary evidence before the investigating authority explaining the payment - Thereafter the assessee also filed acknowledgement for receipt of commission. Disallowance of Architect Fee - Held that:- The expenditure had to be allowed as business expenditure and the same was allowed - the assessee filed all the requisite details in the form of bill and receipt from the architect - Payment was made by cheque and also subjected to TDS - The expenditure was incurred towards consulting services provided by the architect with regard to site plan, SEZ specific building plan - More so, the Department had not brought anything to show that the assessee had not incurred this expenditure for the purpose of the business and it was presumed that it was incurred for the purpose of business and the same had to be allowed. Disallowance of Technical Expenditure – Held that:- The assessee claimed the above expenditure but had not filed explanation regarding this expenditure and had also not filed proof for having spent this expenditure - This expenditure was relating to the earlier year and the same was disallowed - Before us also no evidence was produced by the assessee as a proof for incurring this expenditure wholly and exclusively for the purpose of business - Being so this ground is dismissed. Disallowance of Expenditure Towards Video Surveillance Charges - Held that:- if the expenditure has been incurred for the purpose of business in the assessment year under consideration it had to be allowed as business expenditure while determining the income from the business - Accordingly, if this expenditure by the assessee was for the purpose of the business it had to be allowed though the entire property was not sold by the assessee in the year under consideration - Only incurring expenditure wholly and exclusively for the purpose of the business was important - Relying upon Commissioner Of Income-Tax, Kerala Versus Malayalam Plantations Limited [1964 (4) TMI 9 - SUPREME Court] - we allow the claim of the assessee as incurring of expenditure by the assessee was for the purpose of business was not doubted.
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2013 (9) TMI 638
Jurisdiction u/s 263 – Jurisdiction of CIT - Doctrine of merger - Deduction u/s 80IB - Held that:- Deduction claimed by the assessee had been restricted by the Assessing Officer to the extent that deduction in respect of a part of profits relating to the income from sale of undivided interest of land - On appeal, this issue had been decided by the Commissioner of Income-tax (Appeals) - Inasmuch as the issue relating to deduction under section 80-IB of the Act the same had been seized by the Commissioner of Income-tax (Appeals) and after deliberation, he decided the issue in favour of the assessee - Thus, there was merger of the order of the Assessing Officer with that of the Commissioner of Income-tax (Appeals) - As rightly contended by the learned authorised representative for the assessee, there was no jurisdiction under section 263 of the Act available to the Commissioner of Income-tax. The Assessing Officer had considered the provisions of section 80-IB(10) in its totality and on the basis of which the Commissioner of Income-tax (Appeals) analysed the issue in depth and negated the stand of the Assessing Officer for the reasons recorded in his order - Thus, we are unable to agree with the Commissioner of Income-tax's perception that the Commissioner of Income-tax can revise u/s 263 on the question of eligibility of deduction under section 80-IB(10) since those were two different views by relying on the Delhi Tribunal's finding in the case of Modi Xerox Ltd. v. Deputy CIT [1998 (4) TMI 162 - ITAT DELHI-C ]. Following Commissioner of Income-Tax Versus Shri Arbuda Mills Ltd. [1996 (1) TMI 11 - SUPREME Court] - once the order of the Assessing Officer got merged with the appellate order of the Commissioner of Income-tax (Appeals) on a particular issue, the Commissioner of Income-tax cannot invoke the provisions of section 263 of the Act on the premise to verify the eligibility of deduction under section 80-IB since those were two different issues - The Assessing Officer had adopted one of the possible views in law, which has not been agreed upon by the Commissioner of Income-tax - the order passed by the Assessing Officer cannot be treated as erroneous order and prejudicial to the interests of the Revenue, thereby the provisions of section 263 of the Act have no role to play.
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2013 (9) TMI 637
Disallowance u/s 36(1)(iii) of interest expenditure of ₹ 95,69,72,766 allegedly incurred by the assessee for earning income exempt under section 10(23G) of the Act – use of own funds or borrowed funds - Held that:- the assessee had made investments from its own funds and the borrowed funds - The assessee has made investment in certain order of preference, viz., infrastructure loans which are eligible for deduction under section 10(23G), thereafter in infrastructure equity for claiming benefit under section 80M and remaining amount of own funds in infrastructure loan for claiming exemption under section 36(1)(viii) – Issue remitted to the Assessing Officer for limited purpose to determine whether at the time of making investments as claimed by the assessee its own funds were available to the extent of investment made. In case, the assessee had own funds at the time of making investments, the benefit be granted to the assessee – Appeal allowed – Decided in favor of Assessee. Carry forward of loss under the head ‘Capital Gains’ arising from sale of shares by treating the investment as eligible for exemption under section 10(23G) of the Act – Held that:- The assessee cannot be allowed to take benefit both ways i.e. exemption u/s 10(23G) and setting off of loss - Since the income is not taxable, the loss incurred from the sale of shares cannot be allowed to be carried forward – Decided against the Assessee. Indexation of long term capital loss on listed securities – Held that:- The provisions of section 48 of the Act provides that the benefit of indexation is not available in case of certain specified long-term capital assets. Apart from the specified assets the benefit of indexation is available to all long-term capital assets. The provisions of section 112 provides for the tax on long term capital gains at the flat rate of 20 percent In case listed securities/ shares/units are transferred without the benefit of indexation, then the long-term capital gain is taxable at the rate of 10 percent – Decided in favor of Assessee. Eligibility of underwriting commission for exemption u/s 10(23G) of the Income Tax Act – Held that:- As per the provisions of section 10(23G) any income by way of dividend, interest on long-term capital gains is eligible for deduction. As per Explanation 1(f) to the proviso of section 10(23G) "interest" includes any fee or commission received by a financial institution for giving any guarantee or enhancing credit in respect of enterprises which has been approved by the Central Government for the purpose of this clause. Underwriting commission does not fall within the definition of "interest" as provided in Explanation 1 to the proviso of section 10(23G) – Decided against the Assessee.
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2013 (9) TMI 636
Fair Market Value - Capital Gains - Section 55A - determination of FMV as on 1-4-1981 - average value of land adopted by the Revenue, at Rs. 27,030 per acre, on the basis of registered sale deeds – Held that:- "Fair market value" in relation to a capital asset has been defined under section 2(22B) of the Act. The fair market value in relation to capital asset, means the price that the capital asset would ordinarily fetch on its sale in the open market on the relevant date - Therefore, adoption of the average value of land by the Revenue, at Rs. 27,030 per acre, on the basis of registered sale deeds, cannot be considered as "fair market value" within the definition of fair market value in relation to a capital asset, as contained under section 2(22B) of the Act. The rationale and philosophy behind insertion of section 50C of the Act is that there is a wide gap between the sale consideration shown in the registered sale deed and the "fair market value" of the asset sold. Therefore, the Legislature deemed it fit, to introduce the deeming provisions of section 50C, which contemplate a deeming situation in respect of full value of consideration, for the purpose of levy of capital gains - Conceptually and factually, there is wide difference between the sale consideration, as recorded in the registered sale deed and the "fair market value" of the asset. The "fair market value" represents the price that a seller is willing to accept and a buyer is willing to pay in the open market. The price or sale consideration as specified in the registered sale deed of an asset in India represents the price or sale consideration negotiated or determined not in the open market but in the parallel operating market where such transactions crystallised in a clandestine manner. In view of this, the sale consideration of an asset, as recorded in the registered sale deed is generally understated and, hence, cannot be taken as the "fair market value" as on April 1, 1981 for the purpose of computation of "capital gains" - Having regard to the fairness, the fair market value of the land in question, deserves to be taken at Rs. 3.50 lakhs per acre, as on April 1, 1981, for the purpose of computation of capital gains – Appeal of assessee partly allowed.
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2013 (9) TMI 635
Income from house property - Interest claim as deduction u/s 24(a) of the Income Tax Act – Held that:- Rental income from the individual flats owned by the assessee and her husband Shri Gurdas Mann have been included in their respective hands, the deduction on account of the interest paid on borrowed capital utilised for the purchase of the said flat is to be allowed in the equal proportion in the hands of the assessee and her husband Shri Gurdas Mann - The UTI bank in their certificate has clearly mentioned the name of the applicant to be Shri Gurdas Mann and name of co-applicant to be Smt. Manjit Mann. The total loan of Rs. 1.50 crores has been utilised for the purchase of the two flats - Claim of the assessee in relation to the interest paid on housing loan totalling Rs. 5,14,802 has been allowed – Decided in favor of Assessee. Ad-hoc disallowance of expenditure made by assessee – Held that:- The assessee had booked the expenditure and the Assessing Officer had disallowed 3 per cent, resulting in addition of certain amount - The addition made by the Assessing Officer is ad hoc addition as the assessee had furnished partial vouchers and bills raised by parties, were not maintained - In the interest of justice and to plug the leakage of revenue, restricted the disallowance at one per cent of the total expenditure. Disallowance of expenditure under the head "repair and maintenance" – Expenditure was incurred on replacement of electricity installation and also for the purchase of new furniture – Held that:- No merit in the claim of the assessee that it was a case of mere replacement and not the case of coming into existence of new fixed asset. The expenditure incurred on purchase of new furniture cannot be held to be replacement and the same being in the nature of capital expenditure, is not to be allowed as a deduction while computing the income of the assessee – Further, assessee had failed to bring on record any evidence to establish its claim of having replaced the electric installation or the nature of the electric installation so replaced – Decided against the Assessee.
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2013 (9) TMI 634
Nature of receipt of Rs. 108 crores from Gillette USA for repayment of its debts pursuant to sales of its entire shareholding in the assessee-company to Newell - Capital receipt or revenue receipt - Gillette was neither its shareholder nor it increased the shareholding of Gillette USA or its subsidiaries in the assessee company. - Held that:- it is not correct that the assessee company obtained any subsidy or grants in aid or compensation as a result of remittance of a sum to the banks. The Delhi Bench of the Tribunal in the case of Deputy CIT v. Lurgi India Co. Ltd. [2007 (8) TMI 379 - ITAT DELHI-A] relied upon by the learned authorised representative has held that the receipt of Rs. 13 crores by an assessee as a non-refundable grant from its parent company was a capital receipt, despite the fact that the payment was made to compensate the assessee for trading loss since it did not stem from any business consideration. - Decided against the revenue. Taxability of amount credited in the account of Assessee in the absence of reasonable explanation to the said credit in the account – Held that:- Commissioner (Appeals) has sustained this addition out of the addition of Rs.118.09 crores on the basis that M/s. Gillette Co., USA, had paid the said amount to the credit of the assessee's account - Since the assessee had already credited a sum of Rs. 1.99 crores to its profit and loss account, and offered it to tax, the learned Commissioner of Income-tax (Appeals) restricted the addition to Rs. 9.58 crores, since the amount was credited to the bank account of the assessee. Hence, in the absence of any contrary and satisfactory explanation by the assessee, the learned Commissioner of Income-tax (Appeals) has rightly treated this amount as income of the assessee – Decided against the Assessee. Waiver of loan to be treated as revenue receipt taxable under the Income Tax Act or capital receipt not taxable - Waiver of loan of Rs. 3.34 crores by M/s. Gillette Co., USA – Held that:- Reliance has been placed upon the Hon’ble Delhi High Court in the case of Logitronics P. Ltd. v. CIT [2011 (2) TMI 12 - DELHI HIGH COURT], wherein it has been held that if a loan was taken for acquiring a capital asset, waiver thereof would not amount to any income exigible to tax. On the other hand, if the loan was for trading purpose and was treated as such from the very beginning in the books of account the waiver thereof may result in income more so when it was transferred to the profit and loss accounts - Unless it is examined in the present case as to what was the purpose of taking the loan amount which was waived, the taxability of the waived amount as income cannot be adjudicated upon - Since this material aspect of the facts has remained to be examined by the authorities below before holding the waived amount as income exigible to tax - Remanded the matter to the file of the Assessing Officer with direction to adjudicate upon the issue afresh in view of the decision of the Hon'ble Delhi High Court in the case of Logitronics P. Ltd. v. CIT [2011 (2) TMI 12 - DELHI HIGH COURT].
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2013 (9) TMI 633
Repairs and renovation work in the leased property to be treated as revenue expenditure of capital expenditure – Held that:- Repairs conducted on tenanted/leased property and is purely in the nature of business expenditure - Assessee had undertaken repairs and renovation work in the leased property, meant to be for the purpose to showcase the products under the “Brand TATA” - Time has come that there has to be a proper display and single roof display of one’s own products shall boost the business, if the business is multi product – Relying upon the decision in the case of Lakshmi Sugar Mills Co. (P) Ltd. v/s CIT reported in [1971 (8) TMI 13 - SUPREME Court], it is held that the expenditure of renovation is revenue in nature – Decided in favor of Assessee. Disallowance on account of system software development expenses – Held that:- Relying upon the judgment Hon’ble Jurisdictional High Court of Bombay in the case of CIT Vs Raychem RPG Ltd., Mumbai [2011 (7) TMI 953 - Bombay High Court], it has been held that expenses are revenue in nature and hence deleted the addition made by revenue authorities. Forfeiture of deposit to be treated as revenue loss, allowable for deduction or capital loss not allowed in the profit & loss account - AEPC had forfeited its Earnest Money Deposit – Held that:- Reliance has been placed on the order of the co-ordinate Bench of Delhi ITAT in the case of Pyoginam vs. ACIT, reported in [2010 (2) TMI 819 - ITAT, Delhi], wherein it has been held that amount on account of non-fulfillment of quota cannot be treated as penalty - Assessee got quota allotted on the basis of past performance of export business and not on the basis of the earnest money deposited. The earnest money was paid on percentage basis of quota allotted. Therefore, the payment of earnest money was in the course of business activities and hence, cannot be treated as capital in nature. - Decided in favor of assessee.
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2013 (9) TMI 632
Transfer pricing adjustments - DRP order being non-speaking – Rejection of comparables selected by assessee – allowance of benefit of Añ 5 per cent. - Held that:- Reliance has been placed upon the similar case namely Evalueserve.com P. Ltd. v. ITO [2011 (11) TMI 111 - ITAT, DELHI], wherein it has been held that directions passed by the Dispute Resolution Panel under section 144C(5) are not speaking about what objections were raised by the assessee and how they have been found to be not acceptable. The Dispute Resolution Panel has simply observed that all the questions raised by the assessee have been answered in detail by the Transfer Pricing Officer and by the Assessing Officer in the draft order. The rejections of comparables are based on detailed reasoning and after applying reasonable filters. The denial of working capital adjustment as also capacity adjustment is based on cogent reasoning, use of current data has been found more appropriate and fresh search has been rejected as there is no valid reason. Similarly, the Dispute Resolution Panel has rejected the other grounds. Therefore, the order passed by the learned Dispute Resolution Panel is a non-speaking order not stating the objections raised by the assessee and the reasons have also not been given as simply the order of the Transfer Pricing Officer and the Assessing Officer are referred. In the present case, matter restored back to the file of the Dispute Resolution Panel to pass a speaking order stating all the objections of the assessee and disposing them by giving cogent reasons for adjudication of the objections of the assessee – Decided in favor of assessee for statistical purpose.
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Customs
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2013 (9) TMI 664
Anti- Dumping Duty – challenge to show cause notice - Goods Sold to SEZ - Show Cause notice was issued to the petitioner as to why he should not be made liable for anti dumping duty chargeable in respect of the goods sold by the petitioner from Palta Special Economic Zone to third parties under domestic tariff area - Held that:- The authority having its competence to raise any legitimate and valid demand, in excise of powers conferred under Section 28(1) of the Customs Act, 1962 and in terms of B-17 bond requested the writ petitioner to explain by orally or written statement and to show cause to the Commissioner of customs within 15 days from the date of receipt of the notice as to why an amount being the customs duty which was equivalent to anti-dumping duty should not be demanded from the writ petitioner. Petitioner imported various items for the purpose of using the same for its manufacturing purpose and during manufacturing certain imported materials were left out and could not be used for manufacturing in the said unit of the petitioner - Petitioner made applications before the Development Commissioner seeking permission for sale of the said goods to the indigenous buyers - Petitioner urged that the said permission was subject to payment of duty of customs by the third party purchaser - Admittedly, petitioner in pursuance to the permission granted by the Development Commissioner sold and delivered it to one third party buyer - Petitioner had claimed that the third party purchaser cleared the goods on payment on duties payable to customs as determined by the Customs Authorities. The petitioner had not taken any steps to appear before the Customs Authorities and submits their representation either orally or in writing/ they straight way had come before this Court challenging the legality and propriety of the notices - The authority concerned had not yet taken any action in pursuance to their notice served upon the present petition - Both the parties raised some points involving the question of law as well as facts which required to be adjudicated by the Authority concern upon submission of representation to the show cause notice - There were provisions in the law to move before higher forum if the petitioner was aggrieved with the decision whatever may be taken by the Authority concern. [I.T.C. LTD. Versus UNION OF INDIA 1988(10) TMI 53 - HIGH COURT AT CALCUTTA] - show cause notice issued by Statutory Authority may be challenged before Writ Court only on ground of where no case have been made out against the petitioner - Otherwise, adjudicating authority was to find and decide all questions including question of facts - High Court should not enquire into the correctness of facts - Ordinarily a writ petition was not maintainable against a show cause notice in as much as when a show cause notice was issued, the party gets an opportunity to place his case before the Authority concerned and there was elaborate procedure by way of an appeal and the revision against such order passed in such proceeding - it was not the proper stage for a writ court to interfere into the alleged matter as the authority concerned had made out a prima facie case which required to be adjudicated - So writ court should not intervene into the matter on allegations of incorrect and illegal inferences of facts and law. Writ petition dismissed.
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2013 (9) TMI 663
Filing of Baggage Declaration Form - Whether the C & E Settlement Commission was justified in rejecting the petitioner's application for settlement under the Customs Act, 1962 merely on the ground that the petitioner had not filed a Baggage Declaration Form – Held that:- Proforma of Baggage Declaration Form as prescribed under Section 81 of the Act had a column for description of goods - Therefore, the submission of the Counsel for the petitioner that the goods were not required to be described in the Baggage Declaration Form, cannot be accepted - In this case, the petitioner had not been able to even establish that the Baggage Declaration Form had at all been filed and if so, by whom and when - Hence, where Baggage Declaration Form was not filed, jurisdiction under Section 127B(1) of the said Act cannot be exercised by the Settlement Commission. The petitioner had not filed any bill of entry so as to satisfy the strict reading of the proviso (a) to Section 127B(1) of the said Act - Commissioner of Customs, Mumbai v/s. Manish Kalvadia [2006 (12) TMI 159 - HIGH COURT OF JUDICATURE AT BOMBAY] - the Settlement Commission would have jurisdiction to settle cases, even in case where no bill of entry had been filed for imported goods, if the same had been cleared under a Baggage Declaration Form - Therefore, the petitioner would be entitled to the benefit of Section 127B(1) of the said Act if the Baggage Declaration Form had been filed at the time of the import of goods. However, in this case, it was an admitted position that no Baggage Declaration Form had been filed before the Settlement Commission by the petitioner to evidence its filing at the time of import - In these circumstances, the impugned order held that the petitioner cannot avail of the remedy of Settlement Commission to settle its dispute with the Customs Department in the absence of a Baggage Declaration Form. In fact, the show cause notice does not extend the benefit of exemption Notification on the ground that they were smuggled goods - Nonfiling of Baggage Declaration Form before the Settlement Commission would imply that no Baggage Declaration Form mentioning the said goods has even been filed - Therefore, the goods have been smuggled into India i.e. without having disclosed the same at the time of import - The submission of the petitioner that as the said goods were imported in baggage, it follows that the Baggage Declaration Form has been filed cannot be accepted - It was the case of the revenue in the show cause notice that though the said goods have come as baggage, however, no Baggage Declaration Form has been filed, resulting in the said goods being smuggled into India - The import of goods as baggage does not ipso facto mean that Baggage Declaration Form had been filed by the carrier. - Decided against the assessee.
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2013 (9) TMI 662
Setting Aside Auction Sale – Permission to Sell Plant and Machinery - Application for seeking the setting aside of the auction sale of the capital goods and raw materials - Permission to sell the plant and machinery of YMIL purchased by him in the auction sale to enable him to generate capital for his company - Held that:- In the event the capital goods and raw material tally with the goods confiscated by the Customs Department, this Court would be inclined to either return the aforesaid capital goods and raw material to the Customs Department or direct the secured creditors to pay the auctioned price to the Customs Department - The Customs Department is directed to inform this Court about its stand within two weeks - This Court may also indicate that in the event the auction conducted by this Court was set aside or the secured creditors were directed to refund the amount to the Customs Departments, this Court would be inclined to impose costs on the Customs Department as it did not intimate the Court prior to the confirmation of the auction that goods had been confiscated by it. Stay of Auction – Held that:- confiscated by the Customs Department in 1997 - What had been produced by the Customs Department were Bills of Exchange and Packing List dated 1990 and 1991 recording ‘capital goods and ‘raw materials - In the absence of any inventory prepared by the Customs Department at the time of confiscation in 1997, it was not possible to verify whether the ‘capital goods described in the Bills of Exchange and Packing List nearly six years earlier to the confiscation were the ones that were in fact confiscated - Another reason and in our opinion a very cogent one, which was given by the learned Company Judge, was that in the absence of any mark on said ‘capital goods to indicate that they had been confiscated by the Customs Department, it was not possible to conclude that they were the ‘plant and machinery which were sold to and handed over to the auction purchaser in February, 2007 - The learned Company Judge concluded and we think rightly so that the laxity of the Customs Department and its failure to mark the goods confiscated by it rendered the goods incapable of identification - We may note at this juncture that one of the secured creditors, namely, IDBI also urged before the Company Court that Customs Departments prayer was highly belated and should not be entertained at this stage when the auction sale had already been confirmed by the Company Court and the proceeds of the dues of the auction sale distributed amongst the workmen and secured creditors pro rata in accordance with Section 529A of the Act. The Customs Department had been not only extremely lax but appallingly negligent in the matter - It was more than evident that no inventory was drawn up by the Customs Department at the time when the goods were confiscated way back in the year 1997 - The goods were not even marked for the purpose of identification at the time of confiscation - Then again, having confiscated the goods the Customs Department sat on the fence and watched the auction sale take place - The application for setting aside of the auction sale was eventually filed by it in the year 2008, i.e., eleven years after it had confiscated the goods in question - There being nothing with the Official Liquidator to indicate that the goods were confiscated by the Customs Department, the Department sought to rely upon the Bills of Exchange dated 1990 and 1991 prepared six years earlier to the confiscation, which in no way are indicative of the goods confiscated by the Department. The Company Judge rightly concluded that it was not possible to speculate at this stage that the goods sold to the auction purchaser in 2007 were in fact the very goods that were confiscated by the Customs Department in 1997 - The Customs Department not only failed to inform the Official Liquidator that goods had been confiscated by it, but also could not place on record any material to identify the goods confiscated by it 11 years ago - Suffice it to state that at this stage when the workmen and secured creditors have been paid pro rata by the Official Liquidator from out of the proceeds of the auction sale, it was not possible to turn back the clock and entertain the prayer of the Customs Department to cancel the auction sale and return the auctioned goods to the Customs Department.
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2013 (9) TMI 661
Export Promotion Capital Goods Scheme - Export obligation - Levy of interest for failure to comply with the export obligation - Held that:- interest has not been demanded by the authorities under the Customs Act, in terms of any of the provisions of the Customs Act. On the contrary, interest has been demanded by the second respondent viz., Deputy Director General of Foreign Trade. There is no controversy before this Court that under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade (Regulation) Rules, 1993, there is no specific provision empowering the second respondent to demand interest for the failure of the exporter to fulfil his export obligation. It is on this ground, the learned counsel for the petitioner contended that the demand for interest in terms of the bond is illegal - at the time when the petitioner applied for licence, he was required to execute a bond and accordingly, he executed the bond, thereby, undertaking to pay interest at the rate of 24%, in the event of failure to fulfil the export obligation. Admittedly, the petitioner had failed to fulfil the export obligation, though, he had imported goods by using the licence. It is also admitted that he paid less duty in terms of the licence by making use of the Scheme. When it is not in controversy that the petitioner had failed to fulfil the export obligation, then, the second respondent is entitled to enforce the terms of the bond. Interest payable as per the terms of the Customs Act is different from the interest payable under the bond executed in terms of the Foreign Trade (Development and Regulation) Act, 1992. If any interest is to be levied under the terms of the Customs Act, undoubtedly, the procedure contemplated under the Customs Act is to be followed by the customs authority to demand customs duty together with interest. But, under the Foreign Trade (Development and Regulation) Act, 1992, though, there is no specific provision for demanding interest in case of violation of terms and conditions of the licence issued under the Act, in terms of the bond such interest could be demanded - Decided against assessee.
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2013 (9) TMI 660
Duty demand under section 125 - Held that:- The demand of duty on the vessel by the Commissioner was clearly unsustainable in law - there was no seizure and there was no confiscation as is evident from the Commssioner's order - the demand of duty had been confirmed under the provisions of Section 125 (2) – the provisions of Section 125 (2) are attracted only when the goods are seized and thereafter confiscated. Proper Documentation - department contended that the assessee did not file proper IGM and Bill of Entry for home consumption in respect of the said vessel – Held that:- The question of payment of duty by the assessee or filing of IGM or Bill of Entry would not arise at all - from Circular No. 16/2012 it was very clear that only w.e.f. 17/03/2012, the requirement of filing IGM and Bill of Entry had been made mandatory in respect of vessels brought from abroad which are being converted for coastal trade – the vessel was brought into India on 02/02/2011 much before the levy of CVD was imposed on 16/03/2011 - assessee had made out a strong case in their favour - waiver of pre-deposit granted – stay granted.
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2013 (9) TMI 659
Application for early hearing – Held that:- The proper officer was the Assistant Commissioner of Customs u/s 30(3) for disposal of the representations of the Appellant relating to amendment of the IGM as per Notification No.40/2012 issued u/s 2(34) - Appeals filed against the decisions of the AC were not maintainable u/s 129A - On a plain reading of the decisions/letters, it was clear that the finding/decision was passed by the AC of Customs himself and not on the direction of the Commissioner of Customs - Nowhere in the said decisions/letters, the AC of Customs had mentioned that the same were communicated by him as being directed by the ld. Commissioner of Customs – miscellaneous application also rejected - decided against assessee.
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2013 (9) TMI 658
Nature of goods - import of Micropore Surgical Tape - Exemption under Notification No. 21/2002 and CVD exemption under Notification No.6/2006 claiming the goods under importation as accessories of medical equipment falling under headings No. 9018 and 9019 - The benefit was denied – To be eligible for exemption under this Notification, the goods should be accessories of the goods specified under Sl. No. 357A which are the goods required for medical, surgical, dental or veterinary use - Held that:- It cannot be considered as accessories of the medical equipment referred to in CTH 9018 to 9022 - the tape in no way improves the efficiency of the medical equipment or aid in its functioning - It merely holds the needle to the skin because of the adhesive nature of the tape - It was a general purpose surgical tape as can be seen from the product catalogue. Benefit of CVD exemption - Held that:- the benefit of CVD exemption will not be available to the goods under importation - In the Bills of Entry filed, the appellant has classified the goods under CTH 3005 9060 which deals with pharmaceutical goods. In fact, the said entry specifically covers Microporous Surgical Tapes which are the goods under importation - the said goods cannot fall under CTH 9018, 9019 or 9022 – decided against assessee.
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2013 (9) TMI 657
Confiscation of goods u/s 111(d) & (e) – redemption fine u/s 125(1) – penalty u/s 112(a) & (b) - DEEC scheme - violation an actual user condition of silk yarn - Assesse imported the goods which were confiscated by the department on the ground that no factory exist on the address provided by the assesse and the address reported was fictitious – Held that:- Commissioner (Appeals) was reasoned one and deserved to be upheld – this was a case of non-application of mind and harassment to the assesse – more than 10 years had elapsed since the goods were seized and confiscated and which had been lying with the department – the order of the lower authority was not at all sustainable on facts since it had been decided on incorrect facts which cannot be sustained - it was noticed that no activity of manufacture was found to be carried out and the report of the jurisdictional authority that the said address was fictitious – lower authority had not at all applied his mind – revenue ignored the positive evidence put forth by the assesse – Decided against revenue.
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Corporate Laws
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2013 (9) TMI 656
Re-Opening of proceedings - Held that:- The Guidelines do not confer a vested right in any person to insist on the acceptance of a proposed settlement - the adjudication which was initiated by SEBI had attained finality before the Supreme Court - A proceeding which had attained finality, cannot be reopened and the attempt to enforce terms of consent would result in nullifying the effect of the order of the Supreme Court which was impermissible - There was no merit in the submissions that were urged on behalf of the Petitioners - The Guidelines in so far as they mandate that proceedings should either be in contemplation or be pending before they can be resolved, were based on a valid rationale - The whole purpose of the Guidelines was to ensure that the time and effort of the regulator was devoted to cases which duly merit trial and enforcement - The Guidelines thus recognize an enabling power in SEBI to resolve certain cases which in the view of SEBI can be set at rest without compromising either an issue of principle or public interest. The High Court in the exercise of its jurisdiction under Article 226 of the Constitution would not be justified in issuing a mandamus to SEBI to act upon a settlement or to accept a settlement as proposed - The guidelines which have been framed by SEBI are administrative in character - it had been a settled principle of law that if administrative guidelines issued by an authority have no statutory force, they can confer no right on an individual that could be enforced by a writ of mandamus - it is equally fundamental, while analyzing the provisions of the guidelines to emphasise that where the guidelines have conferred a discretionary power upon SEBI to resolve a dispute which has still not reached the stage of adjudication or criminal action, or a dispute for that matter which is pending proceeding, it is for SEBI, on a considered view of all the circumstances of each case, to determine as to whether the dispute merits an amicable solution.
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2013 (9) TMI 655
Nature of Company – Listed or Not - Whether Premier Roller Flour Mills was a listed company - Held that:- The petitioners were estopped from challenging the validity of these transactions, to which they have been consenting parties - Petitioners cannot blow hot and cold and cause prejudice to the respondents - contention of the petitioners to treat the company as a listed one was bound to fail - They were estopped from contending that the respondents have not complied with the SEBI takeover code by offering the shares to the public - Petitioners had been parties to the execution of transfer deeds, party to the Board meetings and resolution for transfer of shares by executing a compromise ratifying the transfer, and receiving consideration and repeatedly acknowledging the validity of transfer - The petitioners did not care to produce any documents to show that it was a listed company - It appeared that based on a letter dated 29th January, 2010 from the petitioners, SEBI had called for certain information regarding the change in promoters and their shareholding, percentage of shareholding since the year 2003-04, etc. - But the letter was not conclusive enough to show that the company was a listed one - Materials produced by the respondents sufficiently established that the petitioners had been holding out the company as unlisted. Shareholders or not – Oppression and Mismanagement u/s 397 and 398 – Relief u/s 402(f) - Whether the petitioners were shareholders of the company as on the date of filing the case - Whether the petitioners have made out a case of oppression and mismanagement u/s 397 and 398 of the Act - Whether the petitioners were entitled to any reliefs u/s 402(f) of the Act – Held that:- The company petition does not make out a case of oppression or mismanagement - The subsequent sale of the property had the approval of the Board and the valuation appears to be reasonable - No relief under section 402(f) could be granted since the CP was filed three months after the date of sale - The petitioners were not entitled to any reliefs u/s 397 and 398, because they had derived the benefits of the arrangement between the two parties through various payments spanning over a period from 2004-08, after voluntarily relinquishing their interest in the company by signing the deed of compromise, which is binding between the parties - The petitioners signed the deed of compromise fully aware of the legal implications. The petitioners themselves admitted that they signed blank transfer forms and handed over the possession of share transfer deeds and share certificates based on the understanding in the agreements - the shares now stand transferred - The chain of events proved in this case clearly established that the petitioners had relinquished their rights as shareholders of the company - The share transfer was challenged in the civil suit on the ground of fraud and coercion, but unconditionally withdrawn and on the basis of a settlement deed - No liberty had been reserved to file fresh proceedings on the same subject-matter - In such circumstances a petition under section 111A was not maintainable as held in Gulabrai Kalidas Naik v. Laxmidas Lallubhai Patel [1977 (5) TMI 70 - HIGH COURT OF GUJARAT ]. It was not necessary to go into details regarding the genuineness of the sale deed, undervaluation, etc. - Those issues were beyond the purview since a consideration of oppression and mismanagement arises only if the petitioners were found to be shareholders of the company - That issue being held against them the other issues pleaded in the CP do not arise - The petitioners had been indulging in forum shopping with some ulterior motive probably to extract money from respondents - Petitioners approached with unclean hands and they were not entitled to any equitable reliefs' - The attempt of the petitioners to reagitate the concluded issues was nothing but an abuse of the process of the court - The company petition was devoid of any merits – Decided against Petitioner.
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Service Tax
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2013 (9) TMI 670
Liability to pay duty - Section 66A - BCCI entered into a contract with the non-residents service providers to produce audio- visual coverage of cricket match, on behalf of BCCI and the producers undertake to produce the audio-visual coverage of cricket match for broadcasting on the terms and conditions of the agreement - Held that:- service provider has installed 30-32 cameras in the stadium to capture the images of the cricket match. The applicants have to set up a broadcast control room (BCR) in the stadium. The images taken by the cameras are transmitted to vision colour correction unit and the same are viewed by the experts and after processing, these images are transmitted to the director's vision desk. Waiver of pre deposit - Held that:- activities undertaken by the service provider and the terms and conditions of the agreement, prima facie we find no merit in the contention of the applicants that the applicants are not covered under the scope of ‘programme producer service' as provided under the Finance Act. In view of this, we find that the applicants have not made out a case for total waiver of the amount of service tax. The applicants are directed to deposit 50% of the service tax confirmed in each case within eight weeks. - stay granted partly.
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2013 (9) TMI 669
Appeal against the stay order directing the petitioner to pre-deposit 35% of the Credit - Wrong Utilization of CENVAT credit - The assessee was a real estate company engaged in construction of shopping malls - The appellant had availed CENVAT credit on input services and CENVAT credit on inputs used for construction of buildings – Held that:- Both Judicial Member and the Technical Member agreed that the appellant is not entitled to CENVAT credits on inputs. The appellant got the building constructed from the works contract service provider - The credit of service tax paid by the work contract service provider already stand availed by the appellant - if there was any doubt with regard to any benefit of CENVAT credit on the inputs for construction of building the fact that the appellant had engaged works contract service provider, who had availed the benefit of CENVAT credit by opting for payment of service tax at a lesser rate on the condition of non-availability of credit of duty paid on inputs used in construction of building, such benefit could not have been claimed by the appellant. By an amendment vide Notification dated 10.9.2004 CENVAT Credit Rules 2004 have been amended and by which the input credit on any goods used for construction of buildings, civil structures or parts had been excluded from the meaning "input" under Rule 2 (k). Waiver of Pre-deposit - Whether pre-deposit of 35% of the total Cenvat Credit denied by the order was to be called for admitting these appeals as directed by the Judicial Member – Held that:- There was no error in the orders passed by the CESTAT directing the appellant to deposit 35% of the CENVAT credit - We make it clear that the appellant had been given stay of pre-deposit of the entire CENVAT credit availed of input service and amounts to small fraction of entire liability of CENVAT Credit and input denied, which was still subject matter of the appeal.
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2013 (9) TMI 668
Noncompliance of the Order of Pre-deposit – Held that:- The appellant could not comply with the order passed by the Commissioner [Appeals] as well as the order passed by the Tribunal of predeposit due to financial crunch - The financial difficulty/financial position of the appellant was evident from the balance sheet of the appellant, which was placed on the record - It appeared that in the meantime, a substantial amount towards tax liability was already recovered by the Department - The appellant was ready and willing to deposit balance amount towards tax liability to show its bona fides - The appellant was also ready and willing to pay reasonable cost for remanding the matter to the first appellate authority - Further deposit as balance tax liability and deposit towards cost if the impugned orders were quashed and the matter was remanded to the appellate authority to consider the appeal of the appellant on merits, it will meet with the ends of justice. The amount already recovered by the Department from the appellant be treated as recovery of service tax from the appellant, payable under the order in original - On deposit of the aforesaid amount, the appellant to submit an appropriate application before the original authority to defreeze the bank accounts and the appropriate authority was directed to defreeze the bank accounts which were already ordered to be freezed.
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2013 (9) TMI 667
Supply of Tangible Goods - Commercial Training or Coaching Services - Maintenance and Repair services - Stay - Held that:- The particular issue of certificate issued by a flying club can be recognised or not was within the ambit of the DGCA as per the Indian Aircraft Acts and Rules made there unde - the issue needed to be examined in depth which can be done only at the time of final disposal of appeal - The certificate was recognised by the DGCA for allowing the candidate/ student to appear for the examination of Commercial Pilot License - schedule 2, Section-A, of the schedule annexed to Indian Aircraft Rules, which are prescribed under the provisions of Indian Aircraft Act - sub-rule 2 in the said schedule which talks about flying experience and more specifically to clause (a) - the evidence which was required for granting of Commercial Pilot License by DGCA, was a certificate to be given by an appropriate authority specified in sub-rule 4 of Rule 67A - the appellant was granted license by the DGCA under the specific Rule for training and issuing such certificate - the said licenses were being validated time to time and one of the most important clauses was that the flying experience certified by the appellant would be considered had been acquired by the pupil pilot for issue of Commercial Pilot License in accordance with Aircraft Acts and Rules made thereunder. Waiver of Pre-deposit - appellant had made out a case for the waiver of pre-deposit of the balance amounts involved in this case - stay granted.
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2013 (9) TMI 666
Broadcasting services section 65(15)- broadcasting agency or organization - income on account of transmission of music clippings in between running of the programmes - sale of time slots and the rate of service charges is for the duration of the time of advertisement. - appellant is an agent of the foreign company - Held that:- The demand for service tax on the appellant under the category of broadcasting agency service is sustainable in law - activity undertaken by the appellant is a taxable service u/s 65 (105)(zk). Pre deposit – appellant directed to make a pre-deposit of Rs. 84 lakhs (Rupees Eighty Four Lakhs only), which is the approximate service tax demand for the normal period of time – stay granted partly.
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2013 (9) TMI 665
Waiver of penalty - Short Payment of Duty – Delayed Payment of Duty - Business Auxiliary Services and Goods Transport Agencies – Penalty u/s 78 - Revenue noticed that the assesse had not discharged their service tax liability on Business Auxiliary Service during Dec'06 to Mar'07 and on services of Goods Transport Agency during the period Jan'05 to Mar'07 – Penalty imposed u/s 78 was challenged by the assesse - Held that:- There was no justifiable reason for invoking provisions of section 80 of Finance Act, 1994 thus the penalty imposed u/s 76 could not be waived – relying upon COMMISSIONER OF SERVICE TAX, BANGALORE Versus GOWRI COMPUTERS (P) LTD. [2011 (9) TMI 808 - CESTAT, BANGALORE]. Contention of the assesse that they should be extended benefit of either section 73(1A) or section 73 (3) could not be accepted - There was element of suppression involved and the benefit of section 73(1A) could have been given only if 25% of duty was paid as penalty - Secondly section 73 (3) deals with recovery of tax not paid - Section 76 deals with penalty for delay in payment of tax - it was not possible to interpret these provisions to meant that an assessee can collect and keep the tax with him and deposit when it comes to the notice of the department and no penal consequence will follow other than interest - the defaults continued even for periods after the point of time the issue was pointed out by audit – Decided against assesse.
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Central Excise
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2013 (9) TMI 654
Penalty under Rule 26 and u/s 11AC - Personal penalty on Director, transporter and other persons - Clandestine manufacture and clearance of goods - Held that:- penalty of Rs. 10 Lakh imposed upon Shri Ajay S. Singhal, Director the first appellate authority did not think it proper to alter the imposition made by adjudicating authority. It is observed from the statement of Shri Ajay S. Singhal, Director that Shri Sandesh T. Bhingarde was working under his supervision and directions. MS Ingots manufactured by the main appellant M/s. Signora Texport were clandestinely removed and the main appellant has paid the entire amounts quantified by the department. Details of confessional statement are reflected in Para 26.11 of the adjudication order dated 31.03.2011. Therefore, on merits there is no case for setting aside the penalty upon the Director but there is weight in the argument of the advocate of the appellant that the main party M/s. Signora Texport Pvt. Limited has gone away with payment of only 25% of the penalty imposed under Section 11AC. Authorized signatory is liable to be penalised even if day to day business is controlled by the Director of the company. It is observed from the statement of authorised signatory in the present case that he was very much aware of clandestine activities under taken by the main company and in fact was assisting the main party and its Director in doing clandestine removals of the goods - Following decision of Hansa Gosalia vs. CCE, Thane-II [2013 (6) TMI 143 - BOMBAY HIGH COURT]. - However, looking to the quantum of duty evaded and the penalty imposed upon the Director, it is ordered that penalty of Rs. 5 Lakh upheld by the first appellate authority upon Shri Santesh T. Bhingarde, authorised signatory is reduced to Rs. 2,00,000/- (Rupees two lakh only). Evident from his statement recorded during the course of investigation that entries made in the note pad maintained for clandestine removals showed the transportation made by him in all such clearances. It is admitted by him that he did not know the exact address and name of concerns where the Ingots were delivered as he had not issued any lorry receipts. It is also accepted by him that freight charged by him from the main party was received in cash. Therefore, the conduct and act of the transporter is not free from doubt as he was not maintaining any written records like lorry receipt, registers etc. so that clandestine activities done by the main party could not be detected by any agency. Therefore, from the conduct of the transporter Shri Amrit K. Chauhan, it is clear that he was very much aware of the clandestine activities being undertaken by M/s. Signora Texport Pvt. Limited and the plea of the appellant that he was not aware of the clandestine activities of the main appellant is required to be rejected - However, looking at the role played by him viz-a-viz the role played by the other appellants and the keeping in mind the Central Excise duty evaded in this case, penalty of Rs. 8 Lakhs imposed upon him and upheld by first appellate authority, is reduced to Rs. 2,00,000/- (Rupees two lakhs only). - Decided partly in favor of appellants.
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2013 (9) TMI 652
Refund claim - Unjust enrichment - finalization of provisional assessment - Held that:- Even under the amendment made by Notification No.45/99-CE (NT) dt . 25.06.1999 only the procedure established under sub-sec. (2) of sec. 11 B of Central Excise Act, 1944 has been made applicable to the refunds arising out of finalization of provisional assessments under Rule 9B of the Central Excise Rules, 1944. Accordingly the procedure regarding application of unjust enrichment to refunds on finalization of provisional assessments will be applicable to the provisional assessments made after 25.06.1999 and not before that date. The addition of proviso to Rule-9 B (5) has not been made with retrospective effect. Based on the ratio of the law laid down by Hon'ble Supreme Court in the case of CCE, in the case of Commissioner of Customs Vs Hindalco (2008 (9) TMI 372 - HIGH COURT OF GUJARAT AT AHMEDABAD), the doctrine of unjust enrichment will, therefore, not be attracted to the refunds pertaining to the finalization of provisional assessments for period prior to 25/06/1999 when the linking proviso under Rules 9B(5) of Central Excise Rules 2004 was not existing. The linking provision under proviso to Rule 9B( 5) was made by an amendment with effect from 25.06.1999 and will be applicable only w.e.f . 25.06.1999 -Following decision of Commissioner of Customs vs. Hindalco Industries Ltd. [2008 (9) TMI 372 - HIGH COURT OF GUJARAT AT AHMEDABAD] - Decided against Revenue.
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2013 (9) TMI 651
Marketability and Excisability of Goods - Captive consumption - Whether the product “non-woven fabrics” was marketable and therefore excisable - Held that:- Goods were capable of being marketed and were therefore excisable and dutiable - The goods do have some compactness/tensile strength/dimensional stability - Compactness/tensile strength/dimensional stability of “non-woven fabrics” cleared from factory was much more than that of goods - Appellants had not submitted any literature to show for marketability compactness,/tensile strength/dimensional stability should exceed a particular limit. Valuation of Goods - Held that:- The goods were used Captively and were not comparable to goods cleared by them from their factory, value was to be determined as per Valuation Rules - Court directed the Commissioner to re-determine the value of goods as per Valuation Rules - While re-adjudicating the case, Commissioner should have considered issue of valuation of goods raised before Commissioner particularly when Department itself had determined the assessable value for the period on the basis 115% or 110% of cost of production under Valuation Rules - Commissioner should re-determine the duty liability after re-determining the value of impugned goods used captively as per Valuation Rules on the quantity of impugned goods equal to quantity of jute carpets cleared by them. Quantity of Fabrics - Held that:- Commissioner was directed to re-determine the duty on quantity equal to quantity of jute carpets cleared by them. Penalty - Held that:- Imposition of penalty to be considered by the Commissioner afresh after re-determination of duty - since duty amount was to be re-determined by the Commissioner on account of valuation as well as quantity of fabrics, imposition of penalty will depend on the duty re-determined. Commissioner will consider the imposition of penalty afresh after re-determination of duty - Commissioner had taken a view that assesses had withheld the fact that goods had dimensional stability which was sole criterion to be tested for marketability of goods in view of direction of CESTAT - This view of the Commissioner was not correct in as much as CESTAT had not given any such direction - case was remanded back to Commissioner for decision after affording an opportunity of hearing to the assesses - Appeal was disposed off by way of remand.
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2013 (9) TMI 650
SSI Exemption - clubbing of turnover - Family members have several SSI units - common directors in private limited company and common partners in firm - Revenue was of the view that KI was the main unit having the required infrastructure for manufacturing and maintenance of accounts and all the other firms/companies were created for the purpose of showing them as independent manufacturing units which they were not to derive maximum benefit from SSI exemption notification - Held that:- It was KMPL for whom goods were manufactured by all the units and KMPL did control the supply of raw materials, quality of raw materials, payment for raw materials and job charges and receipt of finished goods from them and sale thereof whereas no records/evidences have been put forth to show that it was KI in such a position - Revenue had not been able to make out a case that KI had to be treated as the manufacturer and the clearances of other units have to be clubbed and KI had to be held as liable to pay duty on all the goods manufactured by all the concerned units. Receipt of Raw Materials - It was the claim of the Revenue that all the units had a common head office, there was neither allegation nor finding that other units were nonexistent or were located in the same premises - Therefore the claim that all the raw materials were received in the premises of KI does not emerge from the facts. Costing Job Work Charges - There was no relationship between the two - If KI was supposed to be treated as the manufacturer and clubbing was to be done - department had to show that other units did not had the facility and were controlled by the two partners of KI i.e. Shri Chimanbhai Nanjibhai Hapani and Ms. Sonalben B. Hapani - Neither of the two partners were shown to be involved in determination of job work charges or in control of supply of raw materials. Accounting Methods - Quality of Goods Manufactured - Each unit had been identified as separate, separate registration certificates had been issued by the department -Just because accounting policy was determined and methods followed were same by all the units, clubbing cannot take place - ll units was controlled by Shri Manoj Kacha, it was submitted by the ld. counsel that Shri Manoj Kacha is an employee of KMPL and therefore quality control by him is natural and is in the fitness of things. The demand for duty from KI in respect of goods manufactured by all the units cannot be sustained and accordingly was set aside - the penalties imposed on various appellants cannot be sustained – Decided in favor of Assesse.
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2013 (9) TMI 649
Benefit of Notification No.32/99 – Inadmissible Refund - The investigation revealed that the unit did not have any manufacturing facility and issued only Central Excise invoices to different buyers without clearance of the goods - The unit paid duty on the goods and obtained refund of the duty paid as per provisions of Notification No.32/99 - The issue was regarding recovery of inadmissible refund - Whether cross examination should have been extended in the case or not - Held that:- The demand for wrongly availed cenvat credit was sustainable with interest - Department had done enough in the case to show that goods had not been received and appellant failed to discharge the burden of showing that they had actually received the goods - The department produced prima-facie evidence to show that M/s. Matiz Metals Pvt. Ltd. did not supply the goods to M/s. Shakti Enterprises and M/s. Shakti Enterprises did not supply the goods to CEPL and the transporter admitted not transporting the goods, the burden to show that there was actually receipt of the goods would fall on the appellant - CEPL have not chosen to make any efforts to produce any evidence to show such receipt of goods - appellant was a party to the conspiracy of passing on cenvat credit without actually supplying the goods. Benefit of Reduced Penalty - Whether the Commissioner (Appeals) was right in allowing the benefit of reduced penalty if the payment of Cenvat credit demanded with interest and 25% towards penalty was made within thirty days of communication of the order - Held that:- The fact that original adjudicating authority had extended such a facility, no appellate authority could once again make similar offer - even after the original adjudicating authority had given an option, similar option can be extended again at the appellate stage can be said to have laid down such a ratio - The original adjudicating authority had extended the option in paragraph 14(3) of his order - once an option was given, if the appellant failed to utilise the same, such an option cannot be extended again – Decided in favor of Revenue. Penalty - Held that:- Taking note of the fact that total wrong credit was availed and the appellant will have to pay mandatory penalty of 100% having not availed the option given and also having regard to the facts and circumstances of the case and the role of the director – it would be to reduce the penalty - Decided against Assesse.
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2013 (9) TMI 648
Deemed Manufacture - Cutting/sawing of marble blocks / slabs - process of resin filling, polishing - classification under CSH No.25151220, 68101990 and 68022190 - Held that:- the activities carried out by the appellants prior to 1-3-2006, would not amount to manufacture. From 1-3-2006, the goods in question are classifiable under Chapter 25 and benefit of Notification No. 4/2006-C.E., dated 3-2-2006 are admissible. Hence, the demand of duty and penalty are not sustainable. Benefit of exemption Notification No.4/2006 - classification - held that:- adjudicating authority has failed to note that sub-heading 6802 9100 and three sub-headings following it are a sub-classification of group of articles described as other which is preceded by. It would mean that sub-heading and three entries are in the nature of residual entries and can be considered only if the subject goods are not classifiable under preceding entries. In the case in hand, we find that the goods are polished marble slabs and are covered under sub heading No.6802.21 and hence merit classification under sub heading No.6802 2190. Leviability of duty on the processed agglomerated marble slabs for the period from 01.03.2006 to March 2008 - held that:- The appellant received such agglomerated marble slabs, and undertook the activity of resin filling and polishing as may be required before dispatch of such agglomerated marble slabs into the market. As already held by us hereinabove that the process of resin filling, polishing etc will not amount to manufacture in view of the facts discussed above, fortified by the judgment of co-ordinate Bench in the case of Oriental Trimex Ltd (2009 (8) TMI 454 - CESTAT, NEW DELHI), we find that the activity of resin filling, polishing by the appellant on agglomerated marble slabs will not amount to manufacture. Hence, the demand of duty on such processed agglomerated marble slabs for the period prior to March 2008 is un-sustainable in law. The duty liability, if any, arises on the appellant, on the marble slabs which they received prior to March 2006 from their job workers on payment of duty, the appellant is eligible to avail the CENVAT Credit on such amount and he would have been eligible for benefit of Notification No.4/2006-CE and they would discharge of duty liability @ Rs.30 per sq.mtr as indicated in the said notification, which is revenue neutral position. With effect from 26.02.2010, vide Finance Bill 2010, as a Chapter note was inserted in Chapter 68 declaring such activities as deemed manufacture, such declaration and chapter note inserted w.e.f. 26.02.2010 will be effective from that date and cannot be applied to an activity for the earlier period. In our view, the demand of duty raised and confirmed on processed agglomerated marble slabs falling under Chapter 68 for the period March 2008 to 26.02.2010 is not sustainable under the law. Demand set aside - Decided in favor of assessee.
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Indian Laws
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2013 (9) TMI 653
Liquor licence - Sub letting of license - Held that:- licence granted under the U.P. Excise Act could not be sub-let on the strength of power of attorney. A liquor licence is given to a person considering his financial status, and subject to good conduct. No one is entitled to get a licence in the name of third person, and thereafter to run the business benami through a power of attorney executed by the licencee. The entire arrangement was illegal - it is admitted that the petitioner, who is also Ex-chairman of Nagar Palika Parishad, was given licencee, for sale of liquor in whole sale in the entire district Saharanpur At the same time, he was also running the business of sale of liquor in retail benami in the name of respondent Nos. 5 and 6, for which entire licence fee, bank guarantee etc had been given/deposited by him. Petitioner had agreed in the compromise, entered between him and respondent Nos. 5 and 6, that any liability in relation to excise licence to any department will be borne by the plaintiff-petitioner in respect of FL-2 licence, he cannot escape from the liability to repay the amount, which was actually deposited by him and refunded to him. It is not his case that the amount refunded by the Excise Department was not received by him. The petitioner himself was running the business benami through respondent Nos. 5 and 6. He has deposited the licence fee, bank guarantee for and on behalf of respondent Nos. 5 and 6, for running the business. As a tracepoint of the amount refunded by the State Government, the petitioner cannot escape from the liability of recovery of levy amount of which the levy has been made valid retrospectively - Decided against assessee.
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