TMI Tax Updates - e-Newsletter
September 25, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Board Circulars contrary to the judgements of Hon’ble Supreme Court become non-est in law and should not be followed - CBEC Circular

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Articles

1. APPLICABILITY OF SERVICE TAX ON PLANTING THE TREES

   By: KASTURI SETHI

2. Valuation of Non-monetary consideration in case of service tax

   By: Ravi Kumar Somani

News

1. Government Decides to Amend Income-Tax Act 1961 so that with Effect from 1st April, 2001, the Provisions of Section 115JB Shall Not be Applicable to a Foreign Company If the Foreign Company is a Resident of a Country Having DTAA with India and Such Foreign Company Does Not have a Permanent Establishment within the Definition of the Term in the Relevant DTAA;

2. RBI Reference Rate for US $

Notifications

Central Excise

1. 20/2015 - dated 24-9-2015 - CE (NT)

100% EOU - DTA Clearance - conditions, safeguards and procedures for supply of items like tags, labels, printed bags, stickers, belts, buttons and hangers for the purpose of their exportation out of India

Income Tax

2. 168/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - ANJALI (Society for Rural Health and Development) Gujarat

3. 167/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - SOS Children's Villages of India, New Delhi

4. 166/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Shanti Samaj Sevi Samiti, Farrukhabad Uttar Pradesh

5. 165/2015 - dated 20-7-2015 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - SOS Children Villages of India-Chatnath Homes, Chennai

SEZ

6. S.O. 2438(E) - dated 21-8-2015 - SEZ

Rescinds the sector specific Special Economic Zone for Gems and Jewellery at Ichhapor, Surat, in the State of Gujarat

Circulars / Instructions / Orders

FEMA

1. 15 - dated 24-9-2015

Opening of foreign currency accounts in India by ship-manning / crew-management agencies

2. 16 - dated 24-9-2015

Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Providers

Highlights / Catch Notes

Income Tax

• Participation in reassessment without proper Section 148 notice does not waive jurisdictional requirement under Income Tax Act.

  Case-Laws - HC : The mere fact that an Assessee participated in the re-assessment proceedings despite not having been issued or served with the notice under Section 148 of the Act in accordance with law will not constitute a waiver of the said jurisdictional requirement. - HC
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• Advance Duty Payment Under Protest Complies with Sections 37 & 43B; Not Disallowed as Loan or Advance.

  Case-Laws - HC : Duty paid by the assessee in advance under protest - assessee has incurred expenditure is only a duty payment. - assessee satisfied both the statutory provisions of Sections 37 and 43B - cannot be disallowed the same as in the nature of loan and advance - HC
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• Assessee Revises Tax Return, Attributes Additional Agricultural Income to Father's Farming Activities, Accepts Previously Declared Income.

  Case-Laws - HC : Agriculture income - The assessee on one hand pleaded before the authorities below earning of the lesser agricultural income and has now taken a contrary stand to accept the agricultural income declared in the return of income by claiming that father of the assessee also earned agricultural income - HC
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• TDS Refund Request Denied u/s 119(2)(b) Due to Six-Year Delay in Application Submission.

  Case-Laws - HC : Refund of TDS claimed after 6 years - The application under Section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 2004-05. - HC
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• Taxpayers' Unexplained Cash Deposits from Livestock Sales Under Scrutiny for Income Legitimacy in Native Village.

  Case-Laws - AT : Unexplained source of cash deposits - source from sale of live stock - would be highly improbable that in the absence of the assessees anyone will take care of live stock for such a long period in the native village. - AT
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• Tax Tribunal Rules Transfer Pricing Adjustment for Deemed Loan Interest on Share Premium as Unsustainable.

  Case-Laws - AT : Transfer pricing adjustment - the addition of ₹ 15.18 lac on account of interest on the deemed loan due to under-receipt of share premium cannot be sustained - AT
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Customs

• Appellant entitled to Section 129E benefit as vehicle was seized from a third party; tribunal must consider this.

  Case-Laws - HC : Waiver of pre-deposit - ppellant actually sought was a waiver of penalty - The fact remains that the appellant is entitled to the benefit of Section 129E in view of the admitted position that the vehicle was seized from the custody of a third party - tribunal cannot ignore the fact - HC
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• Goods Not Available for Confiscation Can't Incur Fine; Demand for Differential Drawback and Interest Upheld.

  Case-Laws - AT : Excess Drawback Rebate – Settled legal position that goods which were not physically available for confiscation redemption fine cannot be demanded – however demand of differential amount of Drawback and interest thereupon maintained - AT
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• Penalty Reduced for Improper Importation of Restricted Industrial Rags Under CTH 63101090 Classification.

  Case-Laws - AT : Improper importation of old white and coloured, cut wiper industrial rags – it was correctly classifiable as others under CTH 63101090, which was restricted - penalty levied - However appellant deserve reduction in fine and penalty - AT
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Corporate Law

• Appellant Breaches 5% Securities Acquisition Limit, Faces Legal Action for Unfair Trade Practice Despite Subsequent Sale.

  Case-Laws - SC : Unfair Trade Practices relating to Securities Market - ceiling of 5% had been violated by appellant - Even if such acquisition is followed by sale in the same financial year, the liability of making the public announcement would remain unaffected and shall attract action, as in this case - SC
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• Director Removed Illegally from Quasi-Partnership; Act Deemed Oppressive Under Company Law.

  Case-Laws - Board : Oppression and mismanagement - the petitioner has been removed as a Director illegally without following due course of law. Further, the Company is in the nature of quasi-partnership, hence, the removal of the Petitioner as a director amounts to an act of oppression. - CLB
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Indian Laws

• Cheque Dishonor Case: Respondent Fails to Rebut Presumption u/s 139, Burden of Proof Remains Unshifted.

  Case-Laws - HC : Offence under Section 138 of the Negotiable Instruments Act - Dishonor of cheque due to insufficient funds - respondent herein has not rebutted the presumption invoked u/s 139 - Further, he has not probabilised his defence. Hence, the onus does not shift to the complainant - HC
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• Dying Declaration's Credibility Questioned When Not Recorded in Declarant's Words; Prosecution Must Prove Reliability.

  Case-Laws - SC : Credibility of dying declaration - the dying declaration is recorded not directly from the actual words of the maker but as dictated by somebody else, in our opinion, this by itself creates a lot of suspicion about credibility of such statement and the prosecution has to clear the same to the satisfaction of the court. - SC
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Wealth-tax

• Supreme Court Rules Incorrect Valuation of Vacant Land Under Ceiling Act Affects Wealth Tax Assessments.

  Case-Laws - SC : Valuation of vacant land attached to the Property - Property which had come within the mischief of the Ceiling Act - Such estimation of the price which the asset would have fetched if sold in the open market on the valuation date(s), would clearly be wrong - SC
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Service Tax

• Court Rules on Taxable Service Valuation: Quarterly Royalty Reversals and Interest Liabilities Explained Under Associated Enterprise Regulations.

  Case-Laws - AT : Valuation of taxable service - associated enterprise - booking of royalty every month has a credit and debit entry just as the reversal at the end of each quarter - , the appellant's liability is limited to interest for the first two months of each quarter to the extent of amount not paid or short-paid - AT
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• No Service Tax Liability for Free Supervision of Erection and Commissioning of Supplied Plant.

  Case-Laws - AT : Even if it is held that there was a service component in the form of supervision of erection and commissioning of the plant supplied, the said service was manifestly rendered free of cost and thus no service tax liability can arise in this case - AT
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• Marketing Activity Under Scrutiny: No Sale of Gas to Appellant, Falls Under Finance Act 1994, Section 65 (105) (zzb).

  Case-Laws - AT : BAS - marketing or sale of goods belonging to IGL - there is no sale of natural gas or CNG to the appellant - prima facie the activity would fall within the ambit of Section 65 (105) (zzb) read with Section 65 (19) of the Finance Act, 1994. - AT
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• CENVAT Credit Case: Network Services Recognized as Integral for Output Service, Establishing Essential Nexus for Service Tax.

  Case-Laws - AT : CENVAT Credit - Network services - Nexus with output service provided - The network services availed by the appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. - AT
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• Dispute Over Denied Service Tax Exemption for SEZ Units Under Notification No.4/2004-ST Raises Compliance vs. Benefit Issues.

  Case-Laws - AT : Denial of exemption claim to SEZ units - Notification No.4/2004-ST - denial of the benefit of the notification to the appellant shall result in mockery when the appellant satisfies condition of the notification - AT
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Central Excise

• Clearance Rules for EOUs: Tags, Labels, and More to DTAs for Export; Central Excise Updates and Tax Implications.

  Notifications : 100% EOU - DTA Clearance - conditions, safeguards and procedures for supply of items like tags, labels, printed bags, stickers, belts, buttons and hangers for the purpose of their exportation out of India - Notification
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• Windmill Doors and Electrical Boxes Ruled as Parts of Wind-Operated Electricity Generators; Tower Inclusion Sets Precedent.

  Case-Laws - SC : Whether windmill doors and electrical boxes are components and/or parts of wind operated electricity generators - since the tower is held as part of the generator, door thereof has to be necessarily a part of the generator - SC
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• Tribunal's Interim Stay Limited to 365 Days u/s 35-C(2A) of Central Excise Act, 1944.

  Case-Laws - HC : Extension of stay order - the order of the Tribunal insofar as it directs that the interim order would continue till the decision of the appeal must be read to mean that the interim order shall continue for a period of 365 days, in terms of Section 35-C(2A) of the Act, 1944 and nothing beyond it - HC
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• Rectification u/s 35C(2) hinges on order communication date, not order passing date, for limitation period.

  Case-Laws - HC : Application for rectification - Computation of period of limitation - Section 35C(2) of Central Excise Act, 1944 - it becomes the date of communication of order and not the date of mere passing of order - HC
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• Refund Claim Denied: Delay in Finalizing Prices Not Provisional, Section 11B Limitation Period Applies.

  Case-Laws - AT : Denial of refund claim - Just because the prices were not finalized by the respondents' customers within 3 to 4 months, the assessment cannot be treated as provisional, and, therefore, the limitation period prescribed under section 11B would be applicable for filing of the refund claim - AT
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• Appellant Penalized for Not Reversing CENVAT Credit; Extended Limitation Period Applied After Department Detection.

  Case-Laws - AT : CENVAT Credit - Appellant was aware of such shortages and still did not reverse the credit on these shortages until detected by the department - demand confirmed with penalty invoking extended period of limitation - AT
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• Appeal Denied for Non-Compliance with Pre-Deposit Order; Recovery Already Completed by Authorities; Change in Circumstances Unfavored.

  Case-Laws - AT : Restoration of appeal - Non compliance of pre deposit order - Revenue has recovered the amount by initiating the recovery proceedings under the law. Thus, the submission of the learned Senior Advocate that the instant applications were filed in respect of change of situation would be against the applicants. - Restoration denied. - AT
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• Claimant Seeks Refund for Excess Duty Paid; No Additional Documents Required for Verification.

  Case-Laws - AT : Refund claim - evidence of excessive duty paid - duty was paid based upon the computation done by the Assistant Collector - now they are claiming the refund on the basis of computation. - No other documents are required to be submitted by the respondent to prove their claim - AT
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• CENVAT Credit Allowed Despite Initial Denial Due to Unregistered Input Service Distributor Status at Head Office.

  Case-Laws - AT : Denial of CENVAT Credit - whether appellant is entitled to avail Cenvat Credit on the services which has been availed by their Head Office and the Head Office is not registered as input service distributor during the impugned period or not - Credit allowed - AT
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• Supreme Court Rulings Override Conflicting Board Circulars; Judicial Precedence Takes Priority Over Administrative Instructions.

  Circulars : Clarification regarding binding nature of circular and instructions - Board Circulars contrary to the judgements of Hon’ble Supreme Court become non-est in law and should not be followed - Circular
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VAT

• Debate on VAT Rate for Margarine: Determining if 4% or 12.5% Applies, Excluding Liquid Forms, Under HSN Code 1517.

  Case-Laws - HC : Applicable rate of VAT on "Margarine" - 4% or 12.5% - Moving from abstract to the concrete, we can say Margarine is a generic produce having sub-classifications, among which Liquid Margarine stands excluded. Essentially what follows is that the rest of varieties are included or at least have not been separately dealt with. - Classifiable with HSN Code No. 1517 - HC
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Case Laws:

• Income Tax

• 2015 (9) TMI 1099
  Rectification proceedings - whether the process of reasoning adopted by the Tribunal, in relying upon the IRDA guidelines which find no mention in the Income Tax Act, and in holding that only pure life insurance policies are covered by Section 10(10D), was a mistake apparent on record or nor? - Held that:- The order passed by the Tribunal did suffer from mistake apparent from record inasmuch as, without adjudicating upon the specific submissions of the assesse, the Tribunal proceeded to decide the matter on the basis of the IRDA circulars. The Tribunal has held that these circulars are clarificatory and, therefore, retrospective in effect. The alternate contention was picked up for disposal without dealing with the core contention. It is a wholly academic issue as to whether these circulars are prospective or retrospective. That aspect of the matter could be relevant only in case the circulars are held to be binding at all. We, therefore, recall the order of ITAT for the purposes of adjudicating upon the plea of the assessee to the effect that, on the facts of this case, the IRDA circulars have no role to play in deciding whether the premium on the insurance policies paid are covered by the scope of ‘keyman insurance policy’ under section 10(10D) of the Act, and for deciding the matter afresh in the light of the said adjudication. We have noted that an earlier decision of this Tribunal, in the case of Shri Nidhi Corporation Vs Additional CIT [2014 (2) TMI 1022 - ITAT MUMBAI], was not taken into account by the Tribunal, while disposing of the matter, as the said order, though passed earlier, was not in public domain by that point of time. Now that the matter is going back to the Tribunal for fresh consideration, needless to say, this decision will also have to be taken into account.

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• 2015 (9) TMI 1064
  Validity of reopening of assessment - photocopy of the notice was given to the Assessee during the re-assessment proceedings - sufficient service of notice on the Assessee or not? - Held that:- In light of the law explained by the Supreme Court in R.K. Upadhyaya v. Shanbhai P. Patel (1987 (4) TMI 5 - SUPREME Court) which has in turn been followed by this Court in Chetan Gupta (2015 (9) TMI 756 - DELHI HIGH COURT), the requirement of both the issuance and the service of such upon the Assessee for the purposes of Section 147 and 148 of the Act are mandatory jurisdictional requirements . The mere fact that an Assessee participated in the re-assessment proceedings despite not having been issued or served with the notice under Section 148 of the Act in accordance with law will not constitute a waiver of the said jurisdictional requirement. On facts, therefore, the Court finds no legal error committed by the ITAT in holding that there was no proper service of notice on the Assessee under Section 148 of the Act. - Decided in favour of assessee.

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• 2015 (9) TMI 1063
  Allotment of residential accommodation to the Members of the ITAT - Held that:- The matter of allotment of residential accommodation to members of the ITAT shall be dealt with fairly and on a priority basis. We are of the view that the same principle should be followed for the future so as to obviate writ petitions being required to be filed by members of the Tribunal or on their behalf before this Court. Unless proper accommodation is made available to the members of the ITAT, the work on the judicial side cannot be expected to be discharged with a degree of efficiency. This is a matter which should be dealt with on a high priority in all respects. We record the assurance of the ASG as noted above. We also direct the learned Standing Counsel to communicate a copy of this order to the Collector and District Magistrate so that the request of the members of the ITAT for the allotment of appropriate accommodation in the circuit house or in a guest house commensurate with the officer is duly considered subject to normal exigencies.

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• 2015 (9) TMI 1062
  Reopening of assessment - Held that:- The "reasons to believe" as recorded by the Assessing Officer does not aver that the assessee had failed to fully and truly disclose all material facts necessary for the assessment, which is a condition precedent for reopening the assessment after four years. The reason to believe only indicates that the reasons for reopening is based on the assessment records and the balance sheet. In our view, the foundational requirement for reopening an assessment beyond four years had not been fulfilled, as per the proviso to Section 147, which is a condition precedent. Consequently, we are of the opinion that the notice issued for reopening the assessment was contrary to law since it did not meet with the foundational requirement of the proviso to Section 147. Similar view was held by this Court in ACI Oils P. Ltd. Vs. DCIT and Anr., (2014 (11) TMI 187 - ALLAHABAD HIGH COURT), which is fully applicable in the present case. - Decided in favour of assessee.

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• 2015 (9) TMI 1061
  Disallowance made on account of communication, travelling and conveyance expenses - ITAT confirmed order of CIT(A) deleting the disallowance - Held that:- The order of the CIT (A) sets out in a tabular form the details provided by the Assessee for every item of expense. The Assessee also appears to have produced supporting vouchers and bills as well as copies of the concerned ledger account. The finding of the CIT (A) has been concurred with by the ITAT. In that view of the matter, the Court is unable to be persuaded to hold that the order of the ITAT is perverse. No substantial question of law arises - Decided against revenue.

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• 2015 (9) TMI 1060
  Admission of additional evidence - Held that:- It is seen that before the CIT (A), the Assessee did produce the details on the basis of which the CIT (A) reduced the disallowance proportionate to the expenditure incurred on behalf of the sister concerns both as regards the sales and distribution expenses and administrative expenses. These details have been set out in the order of the CIT (A). The ITAT has also concurred with the finding of the CIT (A). As regards the plea concerning Rule 46 A of the IT Rules, the Court finds that no such point was urged by the Revenue before the ITAT. The Court does not propose to permit the Revenue to urge such question for the first time in this Court. Nothing has been shown to the Court to persuade the Court to conclude that the impugned order of the ITAT is perverse. The findings of both the CIT (A) and the ITAT turned on facts. - Decided against revenue.

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• 2015 (9) TMI 1059
  Admitting additional evidence - whether Tribunal has ignored the legal provisions of Rule 46A of the I.T. Rules, by upholding legally untenable action of CIT(A) of admitting additional evidence in clear disregard of the provision of Rule 46A? - Held that:- No fault can be found with the orders of the CIT(A) as well as the Tribunal. This is for the reason that the Assessing Officer had himself in response to the CIT(A) for his comments on admissibility on such additional evidence has in his report had submitted that the additional evidence filed by the assessee has to be admitted in the interest of natural justice as the respondent-assessee could not file this evidence during the course of the original proceedings before him. In view of the remand report clearly indicating that there was sufficient ground to admit and consider additional evidence, no fault can be found with the order of the CIT(A) as upheld by the Tribunal in admitting and considering the additional evidence in terms of Rule 46A of the Rules. Further the question of failure to produce the necessary evidence before the original authority and the reasons for that failure are all questions of appreciation of facts and in the absence of the findings been shown to be perverse and/or arbitrary, no question of law arises for our consideration. - Decided against revenue.

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• 2015 (9) TMI 1058
  Admission of additional evidence - non disclosure of sale of the joint family property in the return of income - whether the Tribunal was justified in making an allowance for any fresh claim of deduction without the claim being made in the return of income or without filing a revised return of income? - Held that:- Failure to disclose the fact of receipt of capital gains on sale of joint family property in the return of income, was deliberate and malafide, also does not stand for scrutiny. This for the reason that the entire amount which would otherwise be chargeable to tax as long term capital gain would be entitled to deduction, in view of the same having been invested in terms of Section 54 and 54EC of the Act. This itself is an indication of the fact that there was nothing to be gained by the respondent-assessee in not disclosing the fact of sale of joint family property. Besides neither the grounds of appeal before us nor in the appeal filed before the Tribunal has the Revenue even taken up the plea that non disclosure of sale of the joint family property in the return of income by the respondent assessee is malafide and therefore, the respondent - assessee is not entitled to deduction under Section 54 and 54EC of the Act. We find that the question of law as proposed by the Revenue stands covered in favour of the respondent - assessee by the decision of the Apex Court in the case "Geotez India Ltd." (2006 (3) TMI 75 - SUPREME Court) and the decision of this Court in the case "Pruthvi Brokers and Shareholders P. Ltd."(2012 (7) TMI 158 - BOMBAY HIGH COURT) wherein held held that though the Assessing Officer would not be empowered to deal with the claim of deduction which did not find place either in the return of income or in the revised return of income filed before the Assessing Officer, yet it would not fetter the powers of Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961 to consider such a claim. Thus no substantial question of law arises for our consideration. - Decided against revenue.

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• 2015 (9) TMI 1057
  Registration under Section 12A denied - jurisdiction of the Respondent under Section 12AA(3) of the Act to withdraw the registration granted under Section 12AA - Held that:- Ground (i) with regard to jurisdiction has been referred to the President of the Tribunal for considering the constituting of Larger Bench. In these facts, the legal maxim sublato fundaments credit opus would apply meaning thereby, in case the foundation is removed, the superstructure falls, so far as the Tribunal is concerned. It may be open to the Assessing Officer during the assessment proceedings to consider whether the activities of the Appellant are hit by the proviso to Section 2(15) of the Act and entitled to exemption. There is a difference between Registration and exemption; Respondent has no jurisdiction to withdraw / cancel registration granted under Section 12AA of the Act in exercise of its power under Section 12AA(3) of the Act. The order dated 10th April, 2015 has disposed of the Appellant's appeal under Section 254(1) of the Act finally on one issue and kept pending on the other issues. The Tribunal under the Act is the final fact finding authority and has to consider all question that are raised before it arising from orders of Authorities under the Act. Thus, this piecemeal disposal of an appeal under Section 254(1) of the Act is not normally resorted to for the reasons pointed out in question (b) above. Moreover, such approach on the part of the Tribunal would lead to confusion viz: can an appeal be filed from such an order as the appeal is still pending with the Tribunal. Therefore, normally all Appellate Authorities dispose of the appeal before them at one stage and not at different stages. If during the pendency of the appeal there is an urgency to decide an issue, the same is decided by an interim order, pending the final disposal of the appeal.

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• 2015 (9) TMI 1056
  Demurrage claim paid to a non-resident shipping company - AO disallowed part of the above expenditure for failure to deduct tax at source under Section 195 - Held that:- The respondent-assessee placed reliance upon Section 172 of the Act in respect of payments made by it to a non-resident shipping company by way of demurrage charges. The tax which is deducted at source by the assessee company is on behalf of the recipient of the charges. The issue before the Court was whether demurrage charges which are paid by the respondent-assessee to a non-resident company would be allowed as an expenditure in the absence of deduction of tax at source in view of Section 40(a)(i) of the Act. Although the Court was concerned with the issue in an appeal concerning a resident company. The introduction of section 172 of the Act by the assessee was to determine whether in view thereof, was there any obligation to deduct tax at source by the payerassessee. Section 172 of the Act has to be examined through the prism of the non-resident shipping company in respect of it's income. It is in the above view that Section 172 of the Act and Circular No. 723 issued by the CBDT was relied upon by the respondent-assessee to point out that as Section 172 of the Act provides a complete code itself for levy recovery of tax ship wise and journey wise. Thus there is no occasion to deduct tax under Chapter XVII of the Act. It is a settled position under the law of precedents that, it is not open to us (Division Bench) to take a view contrary to the view taken by another Division Bench of this Court. In case, we are unable to agree with the view of the earlier Division Bench and it does not fall within the exclusionary categories of binding precedent by being contrary to and/or in conflict with a decision of the Apex Court or rendered per-incurrim. In such a case it is best that the issue is resolved at the hands of a Larger Bench of this Court. Certainty of law is an important ingredient of Rule of Law. We direct the Registry to place papers and proceedings of the present two appeals before the Hon'ble The Chief Justice to obtain suitable directions to place the following question of law for the opinion of the Larger Bench of this Court as under: Whether while dealing with the allowability of expenditure under Section 40(a)(i) of the Act, the status of a person making the expenditure has to be a non-resident before the provision to Section 172 of the Act can be invoked? It is made clear that all the substantial questions of law would be considered after the receipt of the view of the Full Bench of this Court.

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• 2015 (9) TMI 1055
  Disallowance of interest on borrowed loan - Held that:- In the instant case, though the borrowed money was advanced in favour of the sister concern of the assessee in the year 1999-2000, the sister concern has also not utilized the said amount for the said purpose. Even after three years, the said project has not been commenced, however the sister concern has diverted the said amount for some other project.The Tribunal, after examining the contention taken by the assessee, confirmed the order passed by the First Appellate Authority as well as the Assessing Authority. We find that there is no infirmity or irregularity in the finding of the Tribunal. The finding recorded by the authorities below is purely a question of fact and the same is not liable to be interfered with by this Court. SA BUILDERS LTD. Versus COMMISSIONER OF INCOME-TAX case [2006 (12) TMI 82 - SUPREME COURT] not applicable on assessee - Hence, the substantial questions of law framed in these appeals are answered against the assessee

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• 2015 (9) TMI 1054
  Duty paid by the assessee in advance under protest - whether Tribunal was right in holding that the duty paid by the assessee in advance under protest by treating the payment as loan and advance in the balance sheet without debiting the payment in the profit and loss account is allowable as a deduction under Sections 37 and 43B ? - Held that:- As rightly pointed out by the Tribunal the assessee has actually paid the said amount as excise duty in the relevant previous year for enabling them to move the goods out of their factory. This payment was made pursuant to an order passed by this Court. The fact that the assessee has taken up the matter on appeal to the Supreme Court on their litigation with the Department of Central Excise, would not make the payment a non payment. The heading, under which, the assessee has incurred expenditure is only a duty payment. Therefore, the Tribunal was right in holding that the assessee satisfied both the statutory provisions of Sections 37 and 43B. What the Assessing Officer has recorded is that no order or demand of excise duty served upon the assessee was produced. But, the Assessing Officer has recorded the fact that even in the order of the High Court, it was mentioned that the goods moved out of the factory after payment. The point that was raised by the Assessing Officer was that there was no demand on the part of the Department. The crystallization of demand may not really be a ground to suspect the actual payment. In any case, it is a question of fact. Hence, we are of the considered view that the question of law raised by the Department does not arise for consideration. - Decided against revenue.

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• 2015 (9) TMI 1053
  Agriculture income - whether can be treated as income from other sources when there is no evidence of income from other sources? - Whether Tribunal is justified in rejecting evidence of agriculture land owned by father of the appellant? - Held that:- The assessee has declared agricultural income of Rs. 32 lacs and admitted before Assessing Officer that assessee and his brother and mother are also having agricultural land and their total income is around Rs. 10 lacs to Rs. 12 lacs approximately and the share of the assessee comes to Rs. 3 lacs p.a. It would,therefore, show that whatever agricultural income was established in the return of income, was not earned out of agricultural operation and was thus rightly considered by the authorities below to be income from other sources. The onus upon assessee to prove earning of the agricultural income was thus not substantiated through any evidence on record. Even before learned CIT(Appeals), the assessee failed to substantiate regarding earning of the agricultural income. Therefore, authorities below were justified in rejecting the claim of assessee of earning agricultural income. The assessee never pleaded before authorities below earning of any agricultural income by his father. The assessee on one hand pleaded before the authorities below earning of the lesser agricultural income and has now taken a contrary stand to accept the agricultural income declared in the return of income by claiming that father of the assessee also earned agricultural income. This fact is pleaded for the first time before the Tribunal and thus cannot be taken into consideration. Therefore, whatever photo copies of some land holding have been filed in the paper book, cannot be taken into consideration. Considering the totality of the facts and circumstances and in the absence of any evidence on record in favour of the assessee, we do not find any justification to interfere with the orders of the authorities below. - Decided against assessee.

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• 2015 (9) TMI 1052
  Genuineness of the deposits and withdrawals made by the assessee in his bank accounts - revision order u/s 263 of CIT(A) set aside by ITAT observing that he was not justified in cancelling the assessment made by the Assessing Officer under Section 143(3) - Held that:- The entirety of the facts were required to be gone before upsetting the order of the CIT by the Tribunal. Further, the order dated 30.7.2012 (Annexure A-3) passed by the Tribunal is not a speaking order giving detailed reasons allowing the appeal of the assessee except mentioning that once having examined the source of deposits, the CIT cannot be given power to give his opinion and direct the Assessing Officer to write the order as per the desires of the CIT. It was also noticed that even if inadequate examination or enquiry had been conducted by the Assessing Officer, the CIT cannot direct the Assessing Officer to re-write the order or to make the enquiry again. The Tribunal being final fact finding authority was required to deal with all aspects of factual matrix and then record its conclusions based thereon. Thus the order of ITAT does not satisfy the requirements of being a reasoned order as enunciated by the Apex Court in M/s Kranti Associates Pvt. Ltd's case (2010 (9) TMI 886 - SUPREME COURT OF INDIA), noticed herein above - matter is remanded to the Tribunal for fresh adjudication - Decided in favour of revenue for statistical purposes.

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• 2015 (9) TMI 1051
  Addition on valuation of immovable properties - ITAT deleted the addition - Held that:- It is not disputed that for the assessment years 2004-05 and 2006-07 arising from the same order raising similar issue have already been dismissed by this Court vide order dated 21.5.2015 [2015 (6) TMI 145 - PUNJAB & HARYANA HIGH COURT] holding that the findings are purely questions of fact. Accordingly, no substantial question of law arises in these appeals. The appeals are dismissed.

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• 2015 (9) TMI 1050
  Recovery of tax and stay operation - Held that:- Since the order passed by the Assessing officer under Section 220 (6) of the Income Tax Act, 1961 is not under challenge, it is not proper for this Court to interfere with the same. Therefore, we hereby provide that if the petitioner is not in a position to follow the same, he may challenge it before the appellate authority, who shall consider it and pass appropriate order. Learned counsel for the petitioner undertakes to file an appeal within two days, therefore, we hereby provide that on submission of appeal, the appellate authority shall dispose of petitioner's application for interim relief, with due notice to the respondents within two weeks.

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• 2015 (9) TMI 1049
  Disallowance under section 40(a)(ia) - non deduction of TDS - ITAT confirming the order of CIT(A) restricting the part disallowance - Held that:- Tribunal has proceeded on the basis that the total disallowance was Rs. 61,32,54,820/-. It thereafter states that out of this amount, the Assessing Officer himself admitted the claim of the assessee to the extent of Rs. 30,71,97,689/-. This itself is factually erroneous because paragraph 7 of the first appellate authority's order states that in the report dated 13.11.2013, what is stated by the Assessing Officer was that, out of the total disallowance of Rs. 61,32,54,820/-, only an amount of Rs. 30,71,97,689/- is sustainable, as the assessee could satisfactorily explain with evidence the balance amount. This does not mean that by making such observation, the Assessing Officer had admitted the claim of the assessee to the extent as mentioned by the Tribunal. Thereafter, the Tribunal, without any explanation, proceeded to hold that the dispute was only with regard to Rs. 28,28,38,187/-. Even if the last two figures are added, the total amount would not be the amount of total disallowance as mentioned by the Tribunal. This itself shows that there is error in the figures shown. Secondly, the Tribunal says that it is an admitted fact that the assessee has filed form 15-I to the extent of Rs. 27,67,63,963/- and it is on that basis, the Tribunal confirmed the finding of the first appellate authority sustaining the disallowance of Rs. 60,74,224/-. Thus we are inclined to think that there are factual mistakes committed by the Tribunal, requiring re-examination of the issues raised by the Revenue in its appeal. For that reason, we set aside the order and remit the matter back to the Tribunal with direction to dispose of the same afresh with notice and after hearing both sides. - Decided in favour of revenue for statistical purposes.

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• 2015 (9) TMI 1048
  Validity of reopening of assessment - assessee has not fulfilled the conditions laid down in clause (II) & (III) of subsection (2) of Section 10 A of the Act, the income chargeable to the tax has escaped assessment - contention on behalf of the petitioner that as in the first assessment year i.e. assessment year 2006-07 the assessee was allowed the deduction / exemption under Section 10A and therefore, in the subsequent assessment years the assessee is eligible for deduction / exemption under Section 10A and assessee cannot be denied / doubted in the subsequent years such eligibility under Section 10 A - Held that:- Whether the petitioner has fulfilled the conditions mentioned in clause (II) & (III) of subsection (2) of Section 10 A of the Act is not and/or whether the petitioner is eligible to claim exemption / deduction under Section 10 A of the Act are all question of facts and it is a mixed question of law and facts which are to be considered by the AO while framing the assessment / reassessment and at that time, the assessee shall have ample opportunity to put forward its case. Even while disposing of the objections against reopening, the AO is not required to observe anything in detail on merits of the case and with respect to eligibility of the petitioner assessee regarding deduction / exemption under Section 10 A of the Act. When in the respective assessment years, there were intimation under Section 143(1) of the Act and as such there do not appear to be any application of mind while allowing deduction / exemption under Section 10 A of the Act and mechanically same has been allowed on the basis of claim allowed in the previous year i.e. 2006-07 which has been doubted by the revenue, but the assessment for AY 200607 could not be reopened in view of bar under Section 149 of the Act and after considering the material on record and AO has reason to believe that the income chargeable to tax has escaped assessment as the conditions mentioned in clause (II) & (III) of subsection (2) of Section 10 A of the Act have not been fulfilled and therefore, the petitioner assessee is / was not eligible for deduction/ exemption under Section 10 A of the Act and therefore, income chargeable to tax has escaped assessment, in the facts and circumstances of the case, it cannot be said that the impugned notices under Section 148 of the Act are invalid and / or wholly without jurisdiction and / or assumption of jurisdiction under Section 147 of the Act is illegal. Ample opportunity shall be given to the petitioner to put forward its case with respect to eligibility under Section 10 A of the Act as claimed, during the assessment / reassessment proceedings. Under the circumstances and in the facts and circumstances of the case, we are of the opinion that this is not a fit case to exercise powers under Article 226 of the Constitution of India and to quash and set aside the impugned notices under Section 148 of the Act.

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• 2015 (9) TMI 1047
  Admission of additional evidence - non furnishing of time to verify the evidence to revenue - Held that:- In the case in hand, the reasons assigned by the Assessing Officer for asking for further time to verify the documents filed by the assessee was bonafide as he was on election duty and number of cases of assessment in which limitation was going to expire was pending and, therefore, Assessing Officer was busy and thus, the reason assigned by him for asking more time was sufficient. He was prevented by sufficient cause from submitting the report. The learned Commissioner (Appeals) as well as learned ITAT have not been able to consider these relevant facts in their correct perspective before passing the impugned order. The discretion exercised by the Commissioner (Appeals) while refusing to grant further time to admit the additional evidence has not been based on sound judicial principles. The assessing authority had given satisfactory explanation and sufficient cause for not verifying the additional evidence filed before the appellate authority. The authorities ought to have granted some reasonable time to the Assessing Officer to verify the additional evidence. On due consideration of the aforesaid, we are of the view that Commissioner as well as learned Tribunal erred in proceeding with the matter and admitting the additional evidence filed by the assessee without granting further time to verify the same and submit a report. Thus, we set aside the impugned orders dated 23.8.2013, 29.7.2013, 23.8.2013 passed by the Income Tax Appellate Tribunal, by answering the question of law in favour of the appellant department and remit the matter back to the learned Commissioner (Appeals) with a direction that sufficient time be granted to the department to verify the documents and rebut that evidence and thereafter decide the controversy a fresh in accordance with law, as early as possible, and endeavour shall be made to conclude it within a period of six months from the date of receipt of certified copy of the order. Decided in favour of the revenue

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• 2015 (9) TMI 1046
  Refund of Tax deducted at source denied - delay of 6 years in claiming the refund - non entertaining the application for condonation of delay for claiming refund - Held that:- It is not disputed by the respondent revenue that on merits the petitioner is entitled to the benefit of refund of TDS as the payment received under the scheme is exempted under Section 10(10C) of the Act. The decision of the Apex Court in the matter of Chandra Ranganathan and ors. Vs. CIT (2009 (10) TMI 498 - SUPREME COURT OF INDIA) concludes the issue. This is also the view of the revenue as clarified in CBDT Circular dated 8 May 2003. The application under Section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 200405. In this case the revised return of income filed on 30 September 2009 should itself be considered as application for condonation of delay under Section 119(2)(b) of the Act and refund granted. It will be noted that on 8 May 2009 the CBDT issued a circular clarifying and reviewing its earlier decision to declare that the employees of RBI who opted for early retirement scheme under the Scheme will be entitled to the benefit of Section 10(10C) of the Act. Immediately after the issue of circular dated 8 May 2009 by the CBDT the petitioner filed on 30 September 2009 a revised return of income seeking refund of TDS paid on her behalf by RBI. We allow the petition and direct the revenue to grant refund due to the petitioner.

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• 2015 (9) TMI 1045
  Notional interest on the alleged loan given by the assessee to its AE - Held that:- Tribunal for AY 2008-09, has deleted the addition by following the decision rendered by Hon'ble Bombay High Court in the cases of Vodafone india Services Pvt Ltd Vs. Union of India and Ors (2014 (10) TMI 278 - BOMBAY HIGH COURT) and M/s Shell India Markets Pvt Ltd (2014 (11) TMI 897 - BOMBAY HIGH COURT). The Ld D.R did not dispute these facts. The notional interest has been levied i.e., the addition relating to the difference in issue price which was considered to be the deemed loan”, has since been deleted by the Tribunal. In that case, the impugned addition pertaining to notional interest made in both the years under consideration does not survive and is accordingly liable to be deleted. Accordingly, we direct the AO to delete the addition relating to notional interest in both the years. - Decided in favour of assessee. Disallowance made in respect of revaluation loss on index linked debentures - Held that:- It is an accepted and prudent accounting practice to provide for all known liabilities and losses as on the date of Balance Sheet. The accounting standards also mandate the companies to provide for known liabilities and losses. During the years under consideration, the claim of the assessee is that the nifty index level has gone up vis-à-vis the level existed at the time of allotment of debentures, meaning thereby the liability of the assessee was known as on the date of Balance Sheet. Accordingly, we are of the view that the said liability would fall in the category of „expenditure , since it is in the nature of interest liability only. Accordingly, we are of the view that the ratio of the decision rendered by the Hon ble Supreme Court in the case of Woodward Governor India (P) Ltd shall apply to the facts of the present case also. As noticed that the assessing officer did not examine the workings relating to the liability quantified by the assessee. We notice that the terms and conditions relating to the debentures prescribe a particular methodology to arrive at the interest liability at the time of redemption of debentures. In our view, the liability of the assessee as on the Balance sheet date should be determined under the very same methodology. Accordingly, we are of the view that the computation made by the assessee requires verification at the end of the assessing officer. Thus we set aside the order of the AO/Ld DRP on this issue in both the years under consideration and restore the same to the file of the AO for the limited purpose of examining the computation made by the assessee in both the years. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 1044
  Disallowance of advertisement and sale promotion expenses - CIT(A) deleted the disallowance - Held that:- The undisputed fact is that the Assessing Officer has not disputed the genuineness of the expenses. It is also not a case where the expenses have not been incurred wholly and exclusively for the purposes of business. When the twin conditions having been fulfilled i.e. genuineness of the expenses and wholly and exclusively incurred for the purposes of the business, we decline to interfere with the findings of the Ld. CIT(A). - Decided against revenue. Disallowance of sales commission paid to M/s. Aquarius Engineers Pvt. Ltd., Pune - CIT(A) was of the opinion that the Assessing Officer was not justified in restricting the sales commission to 5% in place of 7.5% and accordingly, directed the Assessing Officer to delete the addition - Held that:- The addition has been made u/s. 40A(2) of the Act. The Assessing Officer has restricted the payment of commission from 7.5% to 5%. However, we find that not even a single comparable case has been brought on record to justify this act of the Assessing Officer. Without bringing any comparable case, in our considered opinion, no disallowance can be made u/s. 40A(2) of the Act. Considering the disallowance from all the possible angles, we do not find any reason to interfere with the findings of the Ld. CIT(A) - Decided against revenue.

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• 2015 (9) TMI 1043
  Grant of registration u/s. 12AA rejected - as per CIT(A) assessee is providing services in lieu of fee - assessee Board has been established for regulating employment of Private Security Guards employed in factories and establishment - Held that:- As decided in Nashik District Security Guards Board Vs. CIT case [2015 (6) TMI 752 - ITAT PUNE] As per the provisions of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 that the said legislation is intended to regulate the employment of private security guards employed in factories and establishments in the State of Maharashtra for making better provisions in the terms and conditions of their employment and welfare through the establishment of the Boards. We are enumerating the clauses of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 only to point out that the legislature has enacted the aforesaid statute not with the purpose of carrying out of any trade, commerce or business or any activity of rendering any services in relation to any trade, commerce or business. Ostensibly, the said objectives are for regulating the employment of private security guards employed in factories and establishments in the State of Maharashtra and for making better provision for terms and conditions of their employment and welfare. Clearly, it is a welfare measure of the Government of Maharashtra and in our view, the activities of the Board cannot be said to be falling foul of the proviso to section 2(15) of the Act, as contended by the Commissioner. The objections raised by the Commissioner are not germane to reject the assessee’s plea for registration u/s 12A(1)(a) of the Act.- Decided in favour of assessee.

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• 2015 (9) TMI 1042
  Unexplained source of cash deposits - contention of the ld. AR is that the cash amounts credited in the saving bank accounts are sale proceeds of standing crop, shesham trees and live stock - Held that:- We agree with the observations of the authorities below that the documents furnished by the assessee in support of their contentions are not full proof and the veracity of the documents furnished is not established. We find that the Assessing Officer has also not exercised his jurisdiction to verify the genuineness of the documents produced by the assessee. In our considered view there were deficiencies on the part of the assessee as well as Revenue to ascertain the authenticity of the transactions. The assessee has not placed on record Revenue records viz. Jamabandi, Khasra Girdwaries etc. to substantiate the presence of shesham trees, the nature of crop and the extent of crop grown on the agricultural land jointly held by the assessees and their brothers. Thus remit the file back to the Assessing Officer to decide the issue afresh after considering the relevant documents. As far as live stock is concerned, we do not find force in the argument of the ld. AR of the assessees. It is an admitted fact that the assessees have migrated to Pune (Maharashtra) 10-12 years back. It would be highly improbable that in the absence of the assessees anyone will take care of live stock for such a long period in the native village. More so, when the assessees have no intention to return to their roots in near future, it would be implausible to maintain live stock in native village. Therefore, we confirm the addition in respect of cash receipts from the sale of live stock. - Decided partly in favour of assessee for statistical purpose

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• 2015 (9) TMI 1041
  Transfer pricing adjustment - addition on interest on the deemed loan resulting from the receipt of share application money equal to face value in full and final settlement of consideration, at value lower than the fair value estimated by the Transfer Pricing Officer (TPO) - whether any addition towards transfer pricing adjustment on account of interest on deemed loan can be made under the circumstances as are obtaining in the instant case? - Held that:- Though the international transaction on capital account itself would not lead to generation of any income because of the transfer pricing adjustment, but the international transaction on capital account, which impacts income, such as, under reporting of interest or over reporting of interest paid or claiming of depreciation etc. is required to be adjusted to the ALP price, which is not a tax on the capital receipts. Thus if such offshoot transactions of the original transaction on capital account, such as, interest or depreciation are not at arm’s length price, then it is mandatory to determine their ALP and make addition, if any, on account of transfer pricing adjustment. The Hon’ble Bombay High Court in Shell India Markets Pvt. Ltd. Vs. ACIT and Others, (2014 (11) TMI 897 - BOMBAY HIGH COURT) has dealt with a case in which equity shares were allotted by an Indian enterprise to its non-resident AEs at face value. The TPO enhanced the value of shares from the face value of Rs. 10 to Rs. 183.44 per share and computed the ALP of this transaction accordingly. Apart from making the resultant addition on account of such transaction on capital account, he also held that interest on the deemed loan due to short receipt of the consideration resulting in transfer pricing adjustment, was also to be made. Such interest was also benchmarked and addition was made. The Hon’ble High Court, following the judgment in Vodafone India Services Pvt. Ltd. (2014 (10) TMI 278 - BOMBAY HIGH COURT) held that there can be no addition by applying the provision under Chapter-X on account of less share premium received and also the consequential interest on the resultant deemed loan. The learned DR has not drawn our attention towards any contrary judgment not mandating the determination of ALP of interest on deemed loan consequent upon issue of shares by an Indian company to its non-resident AE at lower price than its fair market value. Respectfully following the precedent, we hold that the addition of Rs. 15.18 lac on account of interest on the deemed loan due to under-receipt of share premium, upheld by the learned CIT(A), cannot be sustained. Accordingly, the addition is deleted - Decided in favour of assessee.

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• 2015 (9) TMI 1040
  Employees' contribution to PF and ESI - failure to deposit before due date - applicability of section 43B read with section 2(24)(x) - Held that:- This issue is covered against the assessee by the decision in the case of CIT Vs. Gujarat State Road Transport Corporation, reported in (2014 (1) TMI 502 - GUJARAT HIGH COURT). Disallowance of provision for Cess on royalty - as per assessee he has reversed the provision in the subsequent year and offered the same amount, therefore, if the addition is sustained in this year, then suitable direction may be given in the other year wherein this provision is reversed - Held that:- The assessee has not filed any supporting document in support of his contention that the provision is reversed in the subsequent year and the income is offered. He has not even mentioned the assessment year in which the provision is reversed. In the above circumstances, we decline to issue any direction so far as the other year is concerned. However, the assessee will be at liberty to put up the proper claim in the year in which the provision is reversed and the income is offered. With this remark, we sustain the addition - Decided against assessee. Disallowance of credit for TDS - AO did not allow the credit of TDS on the ground that the tax has been deducted on the rent received by the assessee - Held that:- The identical issue is considered by the ITAT Mumbai Bench in the case of the assessee for Assessment Year 2007- 08 [2012 (5) TMI 138 - ITAT MUMBAI ] wherein the ITAT directed the Assessing Officer to allow the credit for the Tax Deducted at Source As per section 199 any deduction made in accordance with the foregoing provisions of Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made and credit shall be given to him for the amount so deducted for the assessment year for which such income is assessable - Decided in favour of assessee.

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• Customs

• 2015 (9) TMI 1075
  Valuation of goods - Reassessment of bill of entry - Held that:- The order passed by the Commissioner (Appeals) nowhere gives any justification for accepting the declared value by giving the reasons for the same. In the absence of any cogent reasons, direction for accepting the declared value by the Commissioner (Appeals) was unjustified. Accordingly, the Tribunal was right in staying the operation of the impugned order in appeal with regard to direction for reassessment of the bill of entry on the declared value. - Decided against assessee.

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• 2015 (9) TMI 1074
  Waiver of pre-deposit - tribunal dismissed the appeal for non compliance with an order imposing a pre-deposit condition. - appellant actually sought was a waiver of penalty, due to the fact that the duty itself was not assessed and also due to the admitted fact that the vehicle was seized from the custody of a third party. - Held that:- The fact remains that the appellant is entitled to the benefit of Section 129E in view of the admitted position that the vehicle was seized from the custody of a third party. - Tribunal rejected the said contention on the short ground that the appellant did not raise this point at the time when the conditional order was passed Once these things are actually borne out by records, it was not correct on the part of the Tribunal to take a stand that at the time of passing the conditional order, the plea regarding bank guarantee was not raised. Even if the plea regarding the bank guarantee was not raised, this was not a case where a pre-deposit condition, even if it is leviable, cannot be twice the amount of penalty, which was the only item that was assessed even in the order on appeal. Therefore, we are of the considered view that the appellant is entitled to succeed. - Matter restored before the tribunal - Decided in favour of assessee.

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• 2015 (9) TMI 1073
  Excess Drawback Rebate – Bona-fide Mistake – Appellant claimed higher drawback amount under provision of notification 36/2005-Cus, as appellant had declared rate under column for no Cenvat credit whereas in other document he declared he used Cenvat credit – Differential amount of said drawback was paid back by appellant – However vide impugned order appellants goods were confiscated, redemption fines and penalties were imposed – Held that:- appellant admittedly paid back Drawback amount before issuance of show cause notice – Appellant have correctly declared that they were availing facility of Cenvat credit – This shows that it was case of bona fide mistake occurred in declaring Drawback under column ‘A’ of Drawback Schedule, for this reason Section 113(ii) was not invokable – Goods on which excess Drawback was sanctioned were exported and not available for confiscation –Settled legal position that goods which were not physically available for confiscation redemption fine cannot be demanded – Confiscation and redemption fines hereby set aside, however demand of differential amount of Drawback and interest thereupon maintained - Decided partially in favour of Assesse.

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• 2015 (9) TMI 1072
  Improper importation of old white and coloured, cut wiper industrial rags – Classification of Goods – Appellant filed Bill of Entry for clearance of ‘old white and coloured, cut wiper industrial rags’ classified under CTH 63109010 as woolen rags – On examination, it revealed that out of 480 bales, 180 bales were coloured and remaining 300 bales white and also goods appeared to be new – Adjudicating authority confiscated impugned goods under Section 111(d) of Customs Act, 1962 and redemption fine and penalty was imposed – Held that:- in test report it was found that goods were not rags and it was not found to be completely mutilated rags– It was observed that impugned goods were admittedly small new textile cutting and same was restricted under Foreign Trade Policy – Therefore impugned goods were not classifiable however, it was correctly classifiable as others under CTH 63101090, which was restricted – As appellant has not obtained special import licence for clearance of same, therefore they have made liable themselves for imposition of penalty – However appellant deserve reduction in fine and penalty – Decided partly allowed Assesse.

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• 2015 (9) TMI 1071
  Classification of Goods – Re-assessment Order – Petitioner claims that goods imported were classified as ‘quilt covers’ whereas Department had taken position that they were in nature of ‘polyester fabric’ – Held that:- respondents do not disagree that if goods were classifiable as polyester fabric they would have to pass re-assessment order under Section 17(5) of Customs Act, 1962 –Therefore respondent-1 directed to pass re-assessment order in terms of Customs Act, 1962 –Petition disposed of – Decided in favour of Petitioner.

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• Corporate Laws

• 2015 (9) TMI 1070
  Unfair Trade Practices relating to Securities Market - main contention of the appellant is that SEBI failed to consider that the appellant was not only a promoter having more than 15% shares of SIL but it was also in the business of sale and purchase of shares which was being done simultaneously and hence exceeding the limit of 5% at any one point of time was immaterial unless on a net accounting it could be found that such ceiling of 5% had been violated by appellant on account of its retaining more than 5% shares of SIL at the end of a financial year. Held that:- Even if such acquisition is followed by sale in the same financial year, the liability of making the public announcement would remain unaffected and shall attract action, as in this case. - Hence, the main contention advanced on behalf of the appellant is found to be without any merit. The other contention is that Regulation 14(2) of the Regulations of 1997 postpones the time for required public announcement to acquisition of voting rights when purchased securities are actually converted. According to the contention, only when securities or shares are converted by the acquirer into voting rights by getting it registered or upon exercise of option to acquire voting rights, the liability of making public announcement can be fastened. - Held that:- We find that the plea that the matter at hand relates to Regulation 14(2) was not raised before the original authority or the Tribunal. We also find that it is a plea of desperation and undeserving of acceptance. There is no merit in these appeals and hence they are dismissed with consolidated cost of Rs. 50,000/- to be paid by the appellant to SEBI within eight weeks. - Decided against the appellants.

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• 2015 (9) TMI 1069
  Oppression and mismanagement - illegal removal of the Petitioner as a Director of the Company - illegal increase in the authorized share capital - Respondent No. 3 has been illegally appointed with a view to gain control over the management of the Company by the Respondent No.2 alone - siphoning off funds and non-payment of dividend - Held that:- It is a well-settled proposition of law that if a party approaches a court for redressal of his grievances under equitable jurisdiction, he must come with clean hands and, in case, such party conceals any material facts or suppresses the relevant documents, he is not entitled to the discretionary reliefs from the court. - Petitioner has suppressed any material facts or documents in this petition. Therefore, this preliminary objection is also not tenable and deserves to be rejected. Regarding illegal increase in the authorized share capital - Held that:- Undisputedly, the Respondent No.3 became a shareholder only on 1/9/2007 and could not be present at the said meeting as he was not a shareholder then. The said meeting was not held at the registered office of the company. All these reasons clearly go to prove that the purported meeting held on 18/6/2007 for Increasing the authorized share capital of the company was not held in accordance with law. The decisions taken at the said meeting smack mala fide intention on the part of the Respondents. - the resolutions deserves to be set aside. Regarding illegal allotment of additional shares to the Respondent Nos. 2 and 3 - Held that:- Where the Directors seek, entering into an agreement to issue new shares, to prevent a majority shareholder from exercising control of the Company, they will not be held to have failed in their fiduciary duty to the Company if they act in good faith In what they believe, on reasonable grounds, to be the interests of the Company, but if the power to issue shares is exercised from an improper motive, the issue is liable to be set aside and it is immaterial that the issue is made in bona fide belief that it is in the interest of the Company. - allotment of shares was mala fide and purpose was to gain control and management of the Company - allotments are bad in law and deserves to be set aside. Removal of the Petitioner as a Director of the company - Held that:- The Petitioner is admittedly has been primary director of the company ever since his induction as the shareholder since 1996 and 1976 and has also been the chairman of the company. In a family company, undisputedly, the principles of quasi-partnership do apply. - the petitioner has been removed as a Director illegally without following due course of law. Further, the Company is in the nature of quasi-partnership, hence, the removal of the Petitioner as a director amounts to an act of oppression. On a overall analysis of the facts of the case discussed hereinabove, in my opinion, the Petitioner has succeeded to prove that the acts of the Respondents are burdensome, harsh and wrongful and lack in probity and fair deal to the Petitioner. The effect of acts complained of is continuous in nature. The petition, therefore, deserves to be allowed. To bring an end to the acts complained of and to do substantial justice between the parties. - Respondent No.2 has siphoned off the Company's funds, and the company has suffered loss, the same shall same shall be reimbursed by the Respondent No.2. - Special Auditor Appointed - Decided in favor of appellant.

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• Service Tax

• 2015 (9) TMI 1098
  Waiver of pre-deposit of demand of Service Tax - Business Auxiliary services - buying the gas from IGL and thereafter selling the same. - Held that:- In similar set of facts in the case of Bharat Petroleum Corpn. Ltd. (2014 (7) TMI 159 - CESTAT MUMBAI) and Bhagyanagar Gas Ltd. (2012 (9) TMI 860 - CESTAT BANGALORE), this Tribunal held that it is a case of sale of goods and not a case of providinig services under business auxiliary service, on the premise that in Mumbai and Bangalore, VAT is payable on gas but in Delhi VAT is exempted from tax. Therefore, it is only distinguishable facts as the goods are exempted from payment of VAT in Delhi that does not mean that applicant shall fall under the category of Business auxiliary services. Therefore, prima facie, we are of the view that facts of the applicants case are similar to Bharat Petroleum Corpn. Ltd. (supra). In these circumstances, the appellant has made out a case for complete waiver of pre-deposit. Consequently, we waive the requirement of pre-deposit of entire amount of service tax, interest and penalty and stay recovery thereof during the pendency of the appeal. - Stay granted.

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• 2015 (9) TMI 1097
  Valuation of taxable service - associated enterprise - booking of royalty every month has a credit and debit entry just as the reversal at the end of each quarter - Intellectual property service - payment of royalty towards receipt of technical know-how service for manufacturing of Motor Vehicle - reverse charge mechanism - Held that:- This is not a dispute about taxability. Tax liability has been discharged by the appellant, albeit in a schedule of their own choosing, relying on the principle of "receipt" of consideration by the service provider. As this happens to be at variance with the provisions of Rule 6 of Service Tax Rule, 1994 and Rule 7 of Point of Taxation Rules, 2011, the tax liability needs to be computed for each month on the amount booked in the "royalty accrued" account with the reversal being taken into account whenever that has occurred. As the taxes have been discharged during the period under dispute, the appellant's liability is limited to interest for the first two months of each quarter to the extent of amount not paid or short-paid. This should have been effected in the impugned order but, not having been done, needs to be remedied. In the circumstances of discharge of tax liability by the appellant, there is no justification to invoke the extended period and consequent penal provisions under section 78 of Finance Act, 1994. Penalty under section 77 of Finance Act, 1994 is also set aside. The penalty under section 76 of Finance Act, 1994 is set aside as there is no tax due on the date of notice. - Decided partly in favor of assessee.

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• 2015 (9) TMI 1096
  Waiver of pre deposit - Section 35F - Penalty u/s 77 - Held that:- In this appeal the LAA has dismissed the appeal for non-compliance of predeposit, even though appellate authority mentioned that appeal is decided on merit. The appellate authority has not discussed the issue on merits and dismissed the appeal for non-compliance. Therefore the case to be remitted to L.A.A. We also find that appellant made a submissions before the lower authorities on limitation which was not examined. Taking into overall facts and circumstances, we direct the appellant to make a deposit of Rs. 5,00,000 within 8 weeks and to report compliance by 19.8.2015. Upon compliance, they shall produce the proof of deposit before Commissioner (Appeals) who shall decide the appeal on merits - Decided in favour of assessee.

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• 2015 (9) TMI 1095
  Admissibility of CENVAT Credit - canteen/catering services - Held that:- Appellant had produced a Chartered Accountant’s certificate from the competent authority and claimed that no cost of food recovered from its employees, then the same cannot be brushed aside by the Revenue on a presumption without taking any alternative opinion from an expert that such a cost has been recovered from its employees. No documentary evidence has been brought on record by the Revenue that some portion of the cost of food supplied by the Appellant is recovered from the employees. In the present factual matrix, the case law of Hon'ble Mumbai High Court in the case of CCE Nagpur Vs Ultratech Cement Ltd (2010 (10) TMI 13 - BOMBAY HIGH COURT) is not applicable as there is no evidence on record that any amount is recovered by the Appellant from its employees towards the cost of food. Accordingly, it is held that the entire Service Tax credit is admissible to the Appellant and the order passed by the First Appellate Authority is required to be set aside. - Decided in favour of assessee.

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• 2015 (9) TMI 1094
  Denial of refund claim - Appellant had not adhered to the conditions of Notification No. 41/2007-ST - Terminal Handling charges - Held that:- It transpires that the refund claims filed by the appellant were in respect of service tax paid on the services received and utilised by them for export of goods during the period October, 2007 to September, 2008. It is undisputed that the services which were received by the appellant were for the purpose of export of the goods and the main services which were received by the appellant were in respect of GTA, Terminal Handling Charges, C&F charges and General Insurance service. We find that the first appellate authority has erred in interpreting the conditions of Notification No.41/2007 dated 06/10/2007 while rejecting the appeal filed by the appellant. - On plain reading of condition (e), it is very clear that the said condition restricts the refund of the service tax paid if an assessee has claimed drawback of service tax paid on specified input service. It is on record, in this case, that the appellant has not filed or claimed drawback of the service tax paid on the specified services. - Rejection of the refund claim of the appellant on this ground is totally incorrect and not sustainable - Decided in favour of assessee.

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• 2015 (9) TMI 1093
  Erection, commissioning or installation service and consulting engineer service - Penalties under Sections 76, 77 and 78 - Held that:- Appellant was required to supply the plant and provide supervision of erection and commissioning thereof for which it was to depute its engineers for 30 man days at site in 3 visits free of cost - there has been no charge for such supervision which has been provided free of cost. Thus there is no consideration received for such supervision. A careful perusal of the purchase order makes it clear that notwithstanding its subject-title, it is essentially for supply of limestone crushing plant. Even if it is held that there was a service component in the form of supervision of erection and commissioning of the plant supplied, the said service was manifestly rendered free of cost and thus no service tax liability can arise in this case as the value of the goods supplied cannot be included in the assessable value even as per Notification No. 12/2003-ST as no Cenvat credit has been taken by the appellant in respect of such goods. - impugned service tax demand is not sustainable and therefore the same is set aside - Decided in favour of assessee.

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• 2015 (9) TMI 1092
  Waiver of pre deposit - Business Auxiliary Service - marketing or sale of goods belonging to IGL - Held that:- Prima facie, in view of stipulation in clause 13.2.3, it appears that there is no sale of natural gas or CNG to the appellant and sale of CNG the retail customers is by IGL itself without an intermediary transfer of property in CNG in favour of the applicant. If that be prima facie the position emanating from the agreement, between the applicant and IGL, the activity of the appellant in marketing or sale of goods belonging to IGL, would fall within the ambit of Section 65 (105) (zzb) read with Section 65 (19) of the Finance Act, 1994. - in respect of identical transactions covered by a substantially similar agreements the Final Order in Bharat Petroleum Corporation Ltd. (2014 (7) TMI 159 - CESTAT MUMBAI) and the Interim Order in Indian Oil Corporation Ltd. (2015 (9) TMI 1098 - CESTAT NEW DELHI). - balancing interests of Revenue and of the applicant justify a pre-deposit of 50% of the assessed liability along with proportionate interest by the applicant - Partial stay granted.

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• 2015 (9) TMI 1091
  Waiver of pre doposit - Works Contract Service - benefit of Notification No.1/06 - exclusion of value of the material sold - Held that:- On perusal of the records, appellants are registered in the service tax for construction of residential complex and they have not registered under WCS which came into effect from 1.6.2007. The period involved relates to Oct'07 to March'12. Appellant claimed the benefit of Notification 1/06. They also claimed that educational institutions are not taxable. Appellants informed vide their letter dt. 25.9.2014 addressed to the Superintendent of Central Excise for verification of payment of Rs. 61,95,312/- as recorded in OIO and the confirmation of payment is yet to be received. Taking overall facts and circumstances of the case, we are of the view that appellants have not made out a prima facie case for total waiver. - Partial stay granted.

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• 2015 (9) TMI 1090
  Refund of CENVAT credit - Export of Information technology software services - Eligible input services - duty paying documents - order beyond the scope of SCN - Monitory limit of adjudicating officer - Held that:- The proper course to adopt was to hold up the rebate claim, issue a show-cause notice proposing to deny the CENVAT credit and that has to be a separate proceedings since the total amount proposed to be denied was in excess of the adjudication powers of the concerned authority. If it was within the power of concerned authority, one could take a view that the Assistant Commissioner did not exceed his powers in compiling the show-cause notice denying the CENVAT credit while considering the rebate claim. - Therefore the action by the Assistant Commissioner cannot be sustained. Nevertheless I also find that it cannot be said that these services have no nexus. It was submitted that the hotel bills related to the training of the employees which is definitely an input service covered in the definition. As regards air travel, there are several decisions taking a stand that service tax credit in respect of air travel of the employees for the business purpose is admissible as credit. As regards employees insurance, Hon'ble High Court of Karnataka in the case of CCE Vs. Stanzen Toyotetsu Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] has held that credit is admissible. Further repair of vehicles also cannot be said to be unrelated to the output service. Therefore on merit also, I find that CENVAT credit cannot be said to be inadmissible and therefore the benefit has to be given to the appellants. - Decided in favour of assessee.

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• 2015 (9) TMI 1089
  Disallowance of CENVAT Credit - Network services - Nexus with output service provided - whether the service tax paid on net work service availed by the appellant for its computer net work to provide input service for generation of output service of management, and repair of heavy machinery, shall entitle the assessee to the cenvat credit of that tax - held that:- The network services availed by the appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. GTA service - Held that:- In absence of any contrary evidence as to the deposit of that amount of service tax by the GTA service provider, learned Commissioner (Appeals) has reached to a proper conclusion for which the Revenue's appeal on this count is dismissed. - Decided in favour of assessee.

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• 2015 (9) TMI 1088
  Denial of exemption claim to SEZ units - Notification No.4/2004-ST dated 31.3.2004 - Held that:- The appellate order demonstrates piecemeal reading of the notification. It not only grants exemption to the service provider providing service to a developer of SEZ but also service provided to a unit of SEZ for consumption thereof within the said location is exempt. But the authorities erroneously constructed the purview of the notification. There is no finding that the appellant is not a management consultancy service provider to a unit in SEZ. It is on record that it was provider of such service but it was not registered. Appellate authority did not doubt status of the appellant. Therefore, denial of the benefit of the notification to the appellant shall result in mockery when the appellant satisfies condition of the notification - Decided in favour of assessee.

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• Central Excise

• 2015 (9) TMI 1085
  Valuation of goods - Determination of assessable value - mutuality of interest - Held that:- Tribunal's findings are pure findings of facts after analysing the documents on record and does not call for any interference. There is also a finding recorded by the authorities below that the assessee was the real manufacturer and not M/s. Nestle. - Decided against Revenue.

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• 2015 (9) TMI 1084
  Classification of flexible laminate foil of plastic and articles for packaging of goods and waste and scrap of plastic under appropriate Chapter Heading 39 meant for plastics - Held that:- When all this material was made available to the department and the classification list have been approved and RT-12 returns assessed down the years, it is difficult to find any justification for upholding the allegation of misstatement or suppression of facts. Since the show-cause notice was barred by limitation and we do not find any error in the order of the Commissioner on this aspect, there is no need to refer the matter back to the Tribunal. - Decided against revenue.

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• 2015 (9) TMI 1083
  Benefit of exemption Notification No. 06/2002-CE dated 01.03.2002 - Whether windmill doors and electrical boxes are components and/or parts of wind operated electricity generators - Held that:- As far as windmill doors or tower doors are concerned, it is a safety device which is used as security for high voltage equipments fitted inside the tower, preventing unauthorised access and preventing entries of reptiles, insects, etc., inside the tower. This, according to us, would be sufficient to make it part of the electricity generator. We further find that this was so held by the Commissioner of Central Excise and Customs, Raipur in Order-in-Original dated 28.02.2005 as well as by the Commissioner (Appeals), Raipur, vide his orders dated 10.02.2003. The said orders were accepted by the Revenue as it is recorded by the CESTAT that the Revenue could not produce any evidence to show that those orders were challenged by it. Further, since the tower is held as part of the generator, door thereof has to be necessarily a part of the generator. - No case of interference is made out - Decided against Revenue.

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• 2015 (9) TMI 1082
  Extension of stay order - Held that:- Tribunal being a creation of a Statute is bound by the provision under which it has been created. Therefore, the Tribunal does not have the power to pass interim orders in teeth of statutory provision of Section 35-C(2A) of the Act, 1944. The Tribunal is bound to confine the interim orders to the period provided for under the said section i.e. 365 days and nothing beyond it. A Division Bench of this Court in the case of Commissioner of Central Excise [2015 (5) TMI 27 - ALLAHABAD HIGH COURT] has held that the provision of Section 35-C(2A) of the Act, 1944 are mandatory in nature. - no hesitation to hold that the order of the Tribunal insofar as it directs that the interim order would continue till the decision of the appeal must be read to mean that the interim order shall continue for a period of 365 days, in terms of Section 35-C(2A) of the Act, 1944 and nothing beyond it - Appeal disposed of.

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• 2015 (9) TMI 1081
  Application for rectification - Computation of period of limitation - Whether period of six months under Section 35C(2) of Central Excise Act, 1944, commence from date of knowledge of order by assessee, whereas assessee proposed to avail remedy therein or not - Held that:- Where an order is delivered and signed, and if same authority has to exercise power of rectification, modification, correction etc. suo-moto, limitation would commence from the date of signing and delivery of the said order and not when it is communicated to other side. Reason is that, knowledge of order by authority concerned can easily be attibuted on the date when order is signed and delivered by it. But the same thing would not apply when a similar exercise i.e. review, modification, rectification etc. has to be availed by other side i.e. party concerned. That party can only avail such remedy when it is made aware of the order. Therefore, for the purpose of computation of commencement of period of limitation, when the remedy has to be availed by a party, it is the date on which order is communicated to it and not the date on which order is signed or delivered, unless, it can be shown that date on which order was signed and delivered, party concerned was present in the court and had due knowledge thereof, and therefore, limitation should commence therefrom. Even in that case, it becomes the date of communication of order and not the date of mere passing of order. - Order of Tribunal is accordingly set aside. - Decided in favour of assessee.

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• 2015 (9) TMI 1080
  Denial of refund claim - Unjust enrichment - Provisional assessment - Bar of limitation - Held that:- refund claim is in respect of the clearances made during the period from 10.04.01 to 21.05.2001. However, it is not in dispute that the excess duty paid whose refund has sought had been paid on 19.04.2001, 30.04.2001 and 15.05.2001. The Assistant Commissioner has taken the date of clearance as the "relevant date" under section 11 B for counting the limitation period of one year and on this basis has held that the refund claim filed on 16.04.2002 is barred by limitation. However, in terms of definition of the term 'relevant date' in section 11 B, in the present case the relevant date would be the date of payment of duty. Since the excess duty paid whose refund has sought had been paid on 19.04.2001, 30.04.2001 and 15.05.2001, in our view, the refund claim of the duties filed on 16.04.2002 would be within limitation period. Respondents' plea is that though the duty initially had been paid on final price which was higher than the final price, the duty reimbursement received by them from the HPCL was only of the duty payable on the final price and not of the duty paid on the provisional price which was higher. If this is so, the bar of unjust enrichment would not apply. Just because the prices were not finalized by the respondents' customers within 3 to 4 months, the assessment cannot be treated as provisional, and, therefore, the limitation period prescribed under section 11B would be applicable for filing of the refund claim. Therefore, this refund claim had been correctly rejected as hit by limitation by the Assistant Commissioner and the Commissioner (Appeals) order holding that the same is not time barred is not correct. - Decided partly in favour of Revenue.

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• 2015 (9) TMI 1079
  CENVAT Credit - Credit availed in respect of defective goods - Held that:- When inputs are defective on account of supplier s fault then the same are rejected and sent back to the supplier by reversing the CENVAT Credit. The remaining inputs have to be treated as inputs cleared for manufacture of the finished goods a negligible part of which become damaged during the course of assembly of finished goods. Percentage of such loss is only 0.28 to 0.49% of the total value of the inputs/parts utilized by the appellant. The same is also converted into scrap by the appellant and sold on payment of duty. - So far as demand of Rs. 8,65,408/- is concerned it is observed from the case records that the same pertains to inputs found short. It is also observed that this shortage was as a result of verification undertaken by the Audit of the appellant much before the same was detected by the Revenue. Appellant was thus aware of such shortages and still did not reverse the credit on these shortages until detected by the department. Therefore, extended period will be applicable for the demand of Rs. 8,65,408/- and penalty under Section 11AC of the Central Excise Act, 1944, read with relevant CENVAT Credit Rules, is imposable. However, no option of 25% reduced penalty was extended to the appellant by the Adjudicating authority. - As penalty under Section 11AC of the Central Excise Act, 1944 has been upheld the other penalty of Rs. 5,00,000/- imposed upon the appellant is set aside - Decided partly in favour of assessee.

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• 2015 (9) TMI 1078
  Restoration of appeal - Non compliance of pre deposit order - Held that:- after the dismissal of the appeals by order dated 06.06.2007, the right would accrue upon the Department to recover the sums due to the Government. In the present case, the Revenue enforced the recovery of dues by attachment of the property in terms of powers conferred upon them under Section 142 of the Customs Act, 1962. In effect, the Revenue had executed recovery proceeding after dismissal of appeal before the Tribunal. In such a situation, the Tribunal has no powers to recall the order and restore the appeals for hearing as the order of the Tribunal has already been acted upon. - applicants have not deposited the amount in terms of the stay order. In other words, the Revenue has recovered the amount by initiating the recovery proceedings under the law. Thus, the submission of the learned Senior Advocate that the instant applications were filed in respect of change of situation would be against the applicants. - Restoration denied.

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• 2015 (9) TMI 1077
  Refund claim - deduction of expenses relating to carriage and freight in the assessable value - Held that:- Fact that the respondent was not paying duty on carriage and freight element while clearing individual consignment is not being disputed. In fact they started filing the price list only after the Hon’ble Bombay High Court directed to pay the duty on the carriage and freight element and on cardboard box packaging and interest on distributors advances. They did not agree and filed appeal to the Hon’ble Supreme Court. It is on the direction of the Hon’ble Supreme Court that they paid the duty on these three components along with interest. The said duty was paid based upon the computation done by the Assistant Collector at that point of time and now they are claiming the refund on the basis of computation. Under the circumstances, we do not see what other documents are required to be submitted by the respondent to prove their claim. We, therefore, dismiss the appeal of the Revenue on this count. - In view of the decision of the Larger Bench [2013 (9) TMI 652 - CESTAT AHMEDABAD], the doctrine of unjust enrichment will not be applicable in the facts and circumstances of the present case. - Decided against Revenue.

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• 2015 (9) TMI 1076
  Denial of CENVAT Credit - whether appellant is entitled to avail Cenvat Credit on the services which has been availed by their Head Office and the Head Office is not registered as input service distributor during the impugned period or not - Held that:- Therefore, relying on the case laws cited by the Ld. Counsel in the case of Demosha Chemicals Pvt. Ltd. (2014 (2) TMI 209 - CESTAT AHMEDABAD) and Doshion Ltd. (2012 (10) TMI 952 - CESTAT AHMEDABAD) we hold that appellant has correctly taken Cenvat Credit on the services namely Selling Commission, Royalty, Consultancy & Professional, Banking Charges, Audit Fee, AMC Charges, etc. - Therefore, impugned order is set aside - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 1087
  Applicable rate of VAT on "Margarine" - 4% or 12.5% - Classification of Margarine - Kerala Value Added Tax Act, 2003 - Held that:- all the subjects of enumeration should constitute a class or category and that there should be no indication of a different legislative intent. In the present instance, however, it is very clear that HSN Code Nos. 1516 and 1517 have their own distinctive enumerations. As it could be seen from the above ratio, the principle of ejusdem generis can be applied to a particular class or category, but not across the classes or categories. No interpretation, however appealing it is, can be permitted by doing violence to the plain language of the statute. The aids of interpretation are meant to steer clear of statutory ambiguities, but not to create one in the place of none. Margarine is shown with HSN Code No. 1517 and it has not even remote mention in HSN Code No. 1516. Just because supposedly similar products are listed in 1516, we cannot deracinate and transport Margarine from 1517 to 1516. At best the controversy could be confined to one aspect: With the exclusion of 'Liquid Margarine', can we presume that margarine, sans liquid margarine includes every other category, or is there anything left so that it can be classified along with other analogous products, going by their technical analysis of its constituent elements? Hon'ble Supreme Court has already disapproved the technical analysis of products to extricate them from the tax net. Further, it is, again, a well established cannon of statutory interpretation that if a genus comprises many species and only one or a few of the species have been excluded for a particular purpose, the inexorable indication of such an arrangement is that all the rest of species have been included under the genus. Moving from abstract to the concrete, we can say Margarine is a generic produce having sub-classifications, among which Liquid Margarine stands excluded. Essentially what follows is that the rest of varieties are included or at least have not been separately dealt with. Classifiable with HSN Code No. 1517 - liable to be tax @12.5% - Decided against the assessee.

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• 2015 (9) TMI 1086
  Exemption under the Expansion Scheme - Section 4A of UPTT - Whether stock transfers and consignment sales have to be included in calculating the base production - Apex court dismissed the appeal against the decision of HC [2010 (10) TMI 945 - ALLAHABAD HIGH COURT (LB)], wherein HC has decided that, "under the notification no. 640 dated 21.2.1997 the unit undergone expansion is entitled for the exemption on the turnover of the "quantity" in excess of the "quantity of base production" plus stock of the base production of the previous years. The base production includes the quantity of the stock transfer/consignment transaction."

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• Wealth tax

• 2015 (9) TMI 1065
  Valuation of vacant land attached to the Property - wealth tax assessment - Property which had come within the mischief of the Ceiling Act. - admittedly possession had not been taken, which remained with the assessee for want of notification under Section 10, the proceedings abated and the said vacant land remained with the assessee - Held that:- The Assessing Officer took into consideration the price which the property would have fetched on the valuation date, i.e. the market price, as if it was not under the rigors of Ceiling Act. Such estimation of the price which the asset would have fetched if sold in the open market on the valuation date(s), would clearly be wrong even on the analogy/rationale given by the High Court as it accepted that restrictions and prohibitions under the Ceiling Act would have depressing effect on the value of the asset. Therefore, the valuation as done by the Assessing Officer could not have been accepted. Hypothetical presumptions of such sales are to be discarded as we have to keep in mind the conduct of a reasonable person and “ordinary way” of the presumptuous sale. When such a presumed buyer is not going to offer more than Rs. 2 lakhs, obvious answer is that the estimated price which such asset would fetch if sold in the open market on the valuation date(s) would not be more than Rs. 2 lakhs. Having said so, one aspect needs to be pointed out, which was missed by the Commissioner (Appeals) and the Tribunal as well while deciding the case in favour of the assessee. The compensation of Rs. 2 lakhs is in respect of only the “excess land” which is covered by Sections 3 and 4 of the Ceiling Act. The total vacant land for the purpose of Wealth Tax Act is not only excess land but other part of the land which would have remained with the assessee in any case. Therefore, the valuation of the excess land, which is the subject matter of Ceiling Act, would be Rs. 2 lakhs. To that market value of the remaining land will have to be added for the purpose of arriving at the valuation for payment of Wealth Tax - Decided in favor of assessee.

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• Indian Laws

• 2015 (9) TMI 1068
  Offence under Section 138 of the Negotiable Instruments Act - Dishonor of cheque due to insufficient funds - Held that:- Once the issuance of the cheque has been admitted, the appellant/complainant is entitled to invoke presumption under Section 118 and 139 of the Negotiable Instruments Act that the cheque has been issued for discharging the legally subsisting liability. The said presumption is a rebuttable one and so, the burden is upon the respondent/accused to prove that the cheque was not issued for discharging the legally subsisting liability but only as a security. Whether the respondent has rebutted the presumption - Held that:- It is admitted that the respondent has borrowed Rs. 35 lakhs and that amount was also shown in the Income Tax returns. Further, when a suggestion was posted to the appellant that at the time of borrowal of money, blank cheques were issued which was subsequently filled up and complaint has been filed was denied by him. - respondent herein has not rebutted the presumption invoked under Section 139 of the Negotiable Instruments Act. Further, he has not probabilised his defence. Hence, the onus does not shift to the complainant. Hence, I am of the view that the cheque has been issued for discharging the legally enforceable debt. When the cheque was presented for encashment, it was returned as 'insufficient funds' on 11.09.2002. Hence, statutory notice has been issued to the respondent on 14.09.2002. However, the same was returned as could be evidenced by the return cover and postal receipt. Since the respondent/accused neither repaid the amount nor sent any reply, the appellant herein had preferred a complaint. In such circumstances, I am of the view that the appellant herein has proved the guilt of the accused under Section 138 of the Negotiable Instruments Act. The respondent/accused is convicted for the offence under Section 138 of the Negotiable Instruments Act.

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• 2015 (9) TMI 1067
  Credibility of dying declaration - Conviction on the basis of dying declaration alone - Held that:- The sanctity is attached to a dying declaration because it comes from the mouth of a dying person. If the dying declaration is recorded not directly from the actual words of the maker but as dictated by somebody else, in our opinion, this by itself creates a lot of suspicion about credibility of such statement and the prosecution has to clear the same to the satisfaction of the court. The accused were entitled to the benefit of doubt which was rightly given to them by the trial court - appeals are allowed.

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• 2015 (9) TMI 1066
  Rights over the tenancy - claim of the appellants that Dinshaw solely acquired the tenancy rights through the Wills of Bomanji and Daulatbai - it was contended that the Will of Daulatbai was not probated and no right is asserted by such a Will. Even if reliance is placed on the Will of Daulatbai, it clearly states that only nursery business and not the tenancy is bequeathed to Dinshaw. - Held that:- the transfer dated September 18, 1981 by the BMC in favour of Dinshaw Irani based on the letter dated October 25, 1961 is illegal and the reliance on the same by BMC is misplaced. Transfer of tenancy by BMC in the name of Dinshaw is illegal and void ab initio. Consequently, all the events that follow, being the surrender of part of the tenancy by Dinshaw to BMC in lieu of the new plot allotted to him, are also rendered void ab initio. Since the lease of the 1152 sq. mts executed by BMC in favour of Dinshaw is rendered void ab initio, the construction by the appellants on the said plot is also illegal. The position as it exists today is that the remaining portions of Irani Wadi have been acquired by the BMC; and on the other portion, the structure erected by Dinshaw exists and the portion being the residential bungalow occupied by the respondents may also be acquired by BMC in due course.

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