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TMI Tax Updates - e-Newsletter September 3, 2015 Case Laws in this Newsletter: Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS When duty demand itself is not sustainable on Revenue Neutrality, Not correct to demand interest on differential duty voluntarily paid - Tri Interest u/s 201(1A) -delay in payment of TDS -the term month must be given ordinary meaning of 30 days period & not British cal. month -Tri Articles HISTORICAL BACKGROUND OF THE COMPETITION ACT, 2002 GST Transitional Challenges: Ongoing service contracts RECEIVER CANNOT AVAIL THE BENEFIT OF THRESHOLD EXEMPTION SCHEME News Report on Applicability of Minimum Alternate Tax (MAT)on FIIs / FPIs for the period prior to 01.04.2015 Due-Date for E-Filing Returns of Income for Assessment Year 2015-16 Extended up to 7th September 2015 in Respect of all Taxpayers who were Required to E-File their Returns of Income by 31st August 2015 RBI Reference Rate for US $ NITI Aayog to organize a workshop on Transforming Urban India: Government accepts the Recommendation of the Justice A.P. Shah Committee to clarify the Inapplicability of MAT to FIIs/FPIs and has decided that an appropriate Amendment to the Income-Tax Act will be carried out; Ms Anjuly Chib Duggal Takes Over as Secretary, Department of Financial Services(DFS), Ministry of Finance Notifications Indian Laws F. No. 4/1/7/2015-IR - dated 20-8-2015 - Indian Law Central Government declares the second and the fourth Saturday of every month as public holiday for banks in India Circulars / Instructions / Orders Companies Law 12/2015 - dated 1-9-2015 Extension of time for filing of cost audit report to the Central Government for the Financial Year 2014-2015 in form CRA-4 - reg. Highlights / Catch Notes Income Tax .Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. - HC Visit to Get Source After purchase of the property, no agricultural operations were carried on by the appellants and further that the property was sold within a short period which discloses nothing but an adventure in the nature of trade liable to be taxed - HC Visit to Get Source Validity of reopening of assessment - claim for deductions under section 80HHC and 80IA - the order of the A.O. stood merged with the order of the CIT(A) and had no existence of it’s own, and, as such, assessment could not be reopened in respect of the said item. - AT Visit to Get Source Credit of tax deducted at source u/s 199 denied - mismatch - AO directed to verify whether any credit of the TDS has been allowed in the hands of other person or not. If it has been not allowed, then the credit of this amount should be given in the hands of the assessee - AT Visit to Get Source Interest u/s 201(1A) - delay in payment of TDS - the term "month" must be given the ordinary meaning of the term of 30 days period and not the British calendar month as defined in section 3(35) of the General Clauses Act. - AT Visit to Get Source Penalty levied under section 271(1)(c) - AO has initiated penalty proceedings under one default or limb of section 271(1)(c) of the Act, but levied for another default or limb of that section - penalty deleted - AT Visit to Get Source Customs Settled position in law that opposite party to litigation cannot defeat lis validly brought before Court by contending that cause of action had disappeared - HC Visit to Get Source Refund of excess duty – Import of vessel for dredging work – If refund claim was in respect of Bunkers on imported vessels namely dredger, then that could have been entertained and allowed - HC Visit to Get Source Import of arecanut - origin of goods from Srilanka - Petitioner is entitled to obtain provisional release of goods more so because goods in question are perishable in nature - HC Visit to Get Source Service Tax The rate of service tax applicable on the date of which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received - AT Visit to Get Source Central Excise Non-payment of interest on account of Revenue Neutrality - when duty demand itself is not sustainable on Revenue Neutrality, it will not be correct to demand interest on differential duty voluntarily paid by the Appellant - AT Visit to Get Source Manufacture of sand lime bricks known as calcium silicate bricks - fly ash bricks or not - using 50% by weight of pond ash as filler -in the absence of testing of the product, prima facie case is against the assessee - AT Visit to Get Source Export of goods directly from Job work's premises - necessary conditions for export under bond without payment of duty under Rule 19 have been satisfied and the prescribed procedure had been followed - demand of duty set aside - AT Visit to Get Source VAT Valuation - inclusion of freight into Sale price – Freight incurred for transporting goods from outside to inside of State was inward freight made prior to sale and, thus, it would be part of turnover - HC Visit to Get Source Case Laws: Income Tax 2015 (9) TMI 109 Eligibility for registration under section 12AA - Commissioner after examining the objects of the trust, came to the conclusion that the trust was for the benefit of Leuva Patel Community and therefore, would be covered under section 13(1)(b) and rejected registration application - ITAT allowed claim - Held that:- The question whether the trust is created or established for the benefit of any particular religious community or caste would be relevant when the income of the trust is being assessed and the question whether such income should be excluded from the total income of the trust in terms of section 11 of the Act. Insofar as section 12AA of the Act is concerned, the Commissioner had to take a decision if the trust fulfilled necessary requirements of registration as provided under section 12A of the Act. As decided in Shantagauri Ramniklal Trust v. CIT [1998 (11) TMI 87 - GUJARAT High Court] while considering an application for registration of a trust, the Commissioner must also make a clear distinction between the requirement of registration and the requirement for claiming tax benefit. The latter question falls squarely to be considered by the Assessing Officer. Section 12A neither makes registration of trust as condition precedent for claiming benefit under sections 11 and 12 read with section 13, nor registration obviates enquiry into the conditions envisaged under section 13 by the Assessing Officer before the tax benefit can be allowed. Mere filing of application for registration of the trust is enough to claim benefit of its income under sections 11 and 12 and jurisdiction to the Assessing Officer to enquire into that claim, which also includes question as to who are the beneficiaries of trust. On other conditions being fulfilled, the exemption must follow whether registration is accorded or not. - Decided in favour of assessee. 2015 (9) TMI 108 Depreciation claim under section 80IB(10) rejected - Held that:- In order to answer the question as to whether the condition precedent for deduction under section 80IB has been satisfied inasmuch as whether or not the assessee is engaged in “developing and building housing projects”, all that is material is whether assessee is taking the entrepreneurship risk in execution of such project. When profits or losses, as a result of execution of project as such, belong predominantly to the assessee, the assessee is obviously taking the entrepreneurship risk qua the project and is, accordingly, eligible for deduction under section 80IB(10) in respect of the same. It is not even the case of the Assessing Officer that the assessee did not assume the entrepreneurship risks of the housing project. The format of arrangements for transfer of built up unit, and business model of the assessee for that purpose, is not decisive factor for determining eligibility of deduction under section 80 IB (10), but that is all that the authorities below have found fault with. The objections of the authorities below are thus devoid of legally sustainable merits. In view of the above discussions, and bearing in mind entirety of the case, we are of the considered view that the stand of the authorities below, in declining deduction under section 80IB (10) and on the facts of this case, is incorrect. We vacate the same and direct the Assessing Officer to delete the disallowance. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - Held that:- It is not in dispute, in the light of a series of judgments of Hon’ble jurisdictional High Court, that the amendment brought to Section 40(a)(ia), which provides that as long as the taxes deducted at source have been deposited before the due date of filing return under section 139(1), disallowance under section 40(a)(ia) cannot be invoked for delay in depositing the tax deducted at source, is only clarificatory in nature and it will also apply to the assessment years prior to the assessment years 2010-11 as well. There is no dispute that on the facts of this case, the taxes were deposited in May 2006, as is the categorical finding in paragraph no. 17 of the order passed the CIT(A), which was well before the due date of filing income tax return under section 139(1). Thus we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee. 2015 (9) TMI 107 Deduction u/s. 80IA in respect of profits of Windmill-I (4.14 MW) - CIT(A) directed to allow claim - Held that:- In the present case, as can be seen from the computation of total income filed by the Assessee, which is given as an annexure to this order, there was no carry forward loss/depreciation to be set off. The deduction claimed u/s.80-IA of the Act is not greater than the gross total income. In such circumstances, we are of the view that the CIT(A) was justified in directing the AO to allow the claim of the Assessee for deduction u/s.80-IA in respect of Unit-I. Following the decision of the Tribunal in assessee's own case [2012 (11) TMI 507 - ITAT BANGALORE] we uphold the order of the CIT(Appeals) - Decided against revenue. Disallowance u/s 14A - CIT(A) restricted disallowance in part - Held that:- proceeded to hold that from Asst. Year 07-08 to Asst. Year 08-09, the assessee has shifted the investments which would yield income which is taxable to investments which would yield income which is tax exempt. This cannot be the basis on which the AO can make disallowance u/s.14A read with Rule 8D of the Rules. The second reason given by the AO was that the assessee has taken working capital loan of more than ₹ 50 crores and paid interest thereon. According to the AO the Assessee when it liquidated investments which would yield income which is taxable, it ought to have used the proceeds on such liquidation to fund the working capital instead of investing such proceeds in investments which would yield income which is tax exempt. This cannot also be the basis on which the AO can reject the claim of the Assessee that no interest expenses were incurred to earn tax free income. The law is well settled that the AO cannot sit in judgment over the manner in which a businessman has to arrange his business affairs and decide as to what should be the manner in which a particular decision has to be made. He can invoke jurisdiction to make disallowance u/s.14A of the Act only on a finding that interest expenditure were incurred for earning tax free income. In our view the CIT(A) has rightly accepted the stand of the Assessee that no interest expenses whatsoever were incurred in respect of funds which were used to make investments which yielded tax free income. We do not find any grounds to interfere with the order of the CIT(A). The Assessee has not taken any specific stand regarding expenses claimed as deduction while computing its income is only in relation to earning such income and that no indirect expenses can be attributed to the earning of tax free income. In this regard it is necessary that the Assessee should point out as to how each item of expense debited to profit and loss account is wholly for the purpose of earning income which is taxable. We are of the view that it would be just and appropriate to direct the Assessee to make its claim in this regard. The AO will examine the claim of the Assessee and thereafter decide the issue in accordance with law as explained in judicial decisions. - Decided in favour of assessee for statistical purposes. 2015 (9) TMI 80 Assesment u/s 153A - Deemed dividend u/s 2(22)(e) - Completed Assessment - Whether additions made to the income of the Assessee for the AYs were not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search? - Held that:- Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Thus the present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Decided in favour of the Assessee 2015 (9) TMI 79 Retrospectivity of the second proviso to Section 40(a) (ia) - disallowance by the AO of the payment made by Assessee to Ansal Properties and Infrastructure Ltd. (‘APIL’) which payment, according to the Revenue, ought to have been made only after deducting tax at source under Section 194J - Held that:- The second proviso to Section 40(a) (ia) was inserted by the Finance Act 2012 with effect from 1st April 2013. The effect of the said proviso is to introduce a legal fiction where an Assessee fails to deduct tax in accordance with the provisions of Chapter XVII B. Where such Assessee is deemed not to be an assessee in default in terms of the first proviso to sub-Section (1) of Section 201 of the Act, then, in such event, “it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso As relyng on Agra Bench of ITAT in Rajiv Kumar Agarwal v. ACIT (2014 (6) TMI 79 - ITAT AGRA) in which it was held that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April 2005, merits acceptance. No substantial question of law arises - Decided in favour of the Assessee 2015 (9) TMI 78 Condonation of delay of 1203 days - affidavit in support of the notice of motion states that the reason for the delay was the change in the panel of advocates representing the revenue with effect from June 2008 - Held that:- The affidavit in support does not inspire confidence. It states the appeal was dismissed on 17 April 2007 while the advocate representing the revenue in this case was removed from the panel in June 2008. Thus there is no explanation for the period of more than 1 Year and 2 Months from the date of the dismissal of the appeal and removal of the advocate. It does not state the date on which the deponent of the affidavit came to know of the order of this Court dated 17 April 2007 dismissing it's appeal. The aforesaid date would be the primary date around which would revolve the application for condonation of delay and consideration of the reasons for the delay. Besides no particulars have been listed out in the affidavit to point out, what efforts were made, if any, to be in touch with their counsel appearing in respect of the appeal and the result of their attempts at contacting the advocate. The explanation offered for the delay is without any basis particularly because the date of coming to know of the dismissal of the appeal is not stated in the affidavit. The manner in which the affidavit in support has been filed display a casual approach. Notice of motion as filed by the revenue is dismissed 2015 (9) TMI 77 Stay on balance demand of tax denied - no financial difficulty is caused by the deposit - Held that:- As decided in UTI Mutual Fund Vs. ITO [2013 (3) TMI 350 - BOMBAY HIGH COURT] where a strong prima facie case has been made out in its favour by the assessee, the requirement of predeposit would by itself be a matter of hardship. We are informed that the CIT (Appeals) has already commenced the hearing of petitioner's appeal filed from the assessment order dated 24th March, 2014 for the Assessment Year 2008-09 with effect from 18th August,2015. The appeal has now been adjourned to 29th October,2015 as the concerned CIT (Appeals) is on leave. Mr.Kapoor states, on instructions, he is on leave for a period of two months. In view of the fact that the CIT (Appeals) is seized of the matter and hearing it, it would be appropriate that in the peculiar facts of the present case the Revenue does not adopt any coercive proceedings till such time as the CIT (Appeals) disposes of the petitioner's appeal arising out of assessment order dated 24th March, 2014 and for the period of two weeks thereafter. However, as the hearing has already commenced, we would direct the CIT (Appeals) to dispose of the appeal as expeditiously as possible and preferably on or before 15th December,2015. 2015 (9) TMI 76 Short deduction of TDS - whether the contract in question is a composite contract in the nature of a works contract to attract tds? - Held that:- An agreement was entered into by the assessee for the purchase of certain items vide quotation No.210.62 dated 04/05/2006 a purchases made from M/s Marine Power International, Dubai so also various other purchase contract similar in nature. This was not a composite contract, it was a simple purchase contract for purchase of certain items, all these purchase agreements were made for unit No.1 and are beyond the purview of deductions contemplated under Section 195 (2), however, the assessee also has a separate unit known as unit No.2 which has a separate TAN and PAN and assessment for this unit is also done separately and for this unit a worthy contract was entered into with Koppern Germany for supply, purchase and installation of certain machinery i.e. a composite works contract. The Assessing Officer in his remand note has admitted this position and the order passed by the Commissioner Appeals these aspects have been taken note of and it is specifically held that the contract on the basis of which the AO made the addition by treating the appellant company in default is for unit No.2 and not for unit No.1. If that be the factual position, its clear that for unit No.1 the contract in question for which addition has been made was one for which the provision of Section 195(2), 201(1) and 201(1A) is not attract as the contract for the said unit was not a composite contract. Accordingly, if the principle laid down in the case of GE India Technology ( 2010 (9) TMI 7 - SUPREME COURT OF INDIA) are applied in the facts of the present case, no question of law arises for consideration. - Decided in favour of assessee. 2015 (9) TMI 75 Judicial review in respect of final orders passed by the Commission under Section 245D(4) - Held that:- In the present case, the additional income was offered by the Respondent No.2 Assessee, only after the Petitioner had filed its Rule 9 report and it was only during the course of hearing under Section 245D(4) of the Act that the additional income of ₹ 59.11 Crores and ₹ 3 Crores were offered. This also on accepting the view of the Petitioner and without prejudice to their primary contention that the same cannot be added. This acceptance of the further offer only with a view to expeditiously settle the dispute, according to us, in the peculiar facts of the case, cannot be held against the Petitioner. It is clear that disclosure of 'full and true' particulars of undisclosed income and 'the manner' in which such income had been derived are the prerequisites for a valid application under Section 245C(1) of the Act. Additionally, the amount of incometax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasis that section 245C(1) of the Act mandates 'full and true' disclosure of the particulars of undisclosed income and 'the manner' in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the manner covered by the application. Case of Ajmera Housing (2010 (8) TMI 35 - SUPREME COURT OF INDIA) differentiated. Consequently, the same in the peculiar facts of the present case, cannot be applied. Therefore we do not agree with the submission of the Petitioner that there has been a failure to disclose truly and fully undisclosed income in the settlement application in the peculiar facts of the Petitioner’s case. So far as the other objection is concerned viz failure to disclose the manner in which this income has been derived, we find that the application for settlement sufficiently explains the source of the income being declared. The application mentions how the additional income which is being disclosed as been derived i.e. on application of the ALP in respect of exports made to its Associated Enterprise viz holding company. We do not see any merit in the above submission on behalf of the petitioner. Whether the income has really accrued or arisen must be judged in the light of the reality of the situation. It is on application of the above principle that the Commission has come to the conclusion that unbilled revenue was only a book entry and no real income accrued or arose. This view of the Commission in the impugned order cannot be said to be perverse in the least. It is a possible view. Therefore no reason to interfere with the merits of the decision in the present facts.Therefore, keeping in view the self imposed limitations as set out in Jyotinderesinghji (1993 (4) TMI 1 - SUPREME Court) we see no reason to interfere with the merits of the decision in the present facts. 2015 (9) TMI 74 Refund application denied - reopening of the proceedings - adoption of wrong figures for calculating part of the additional compensation and part of the interest based on statement obtained from the Land Acquisition Officer - declarations under Voluntary Disclosure of Income (VDI) Scheme - Held that:- So far as tax paid by late Annamma Ouseph is concerned, it was on the basis of the compensation amount received by her under the Land Acquisition proceedings after the death of the original awardee which she was liable to pay for the aforesaid assessment years. Therefore, so far as the payment of tax for the said assessment years are concerned, the same were in accordance with law and did not require any correction in terms of Sec.143 (1)(a) of the Act. We also appreciated the fact that subsequent payment of the tax amount under the VDI Scheme by the 1st appellant, s/o late Annamma Ouseph was as per the scheme launched by the Income Tax Department and at that point of time, if he was cautious enough, he should have restricted the payment to the balance amount after deducting the payment made by late Annamma Ouseph for the assessment years 1994-1995 and 1995-1996. Circumstances being so, late Annamma Ouseph could not have sought reopening of the proceedings finalized under Sec.143(1)(a) of the Income Tax Act, invoking Sec.264 of the Act. We are of the considered opinion that there is no illegality or legal infirmity in the judgment warranting our interference. 2015 (9) TMI 73 Purchase value for the purpose of computation of capital gains - whether has to be reckoned as per Annexure C Agreement and on the basis of Statement recorded under Sec.132 (4) of the Act? - Held that:- Appellate Tribunal has discussed the entire issues put forth by the appellants and has arrived at a reasonable conclusion that the basis for adoption of sales price of ₹ 25,000/- per cent was the sale agreement seized during search and also confirmation of the same by the appellant and the purchaser of property, Sri.A.A. Davis in their sworn statements. It is therefore clear that the sale price of ₹ 25,000/- per cent was arrived at basically relying on the sale agreement and not the sworn statement alone. Further the Tribunal has found that the claim that the appellants have purchased the property for ₹ 10,250/- and ₹ 10,500/-respectively per cent made in the sworn statement of the appellant was not corroborated by any proof or materials and therefore the Assessing Authority was left with no other alternative than to decline the claims so raised by the appellants. Further the Tribunal has found that the responsibility to substantiate the purchase consideration was on the appellants and appellants have not adduced any evidence or put forth any material to substantiate the case advanced by them and therefore, the claim of the appellants that they were entitled to seek reckoning of the amount allegedly paid by them when they effected purchase of the property cannot be considered to be real at all. The Appellate Tribunal has thereupon declined to interfere with the orders passed by the First Appellate Authority. The circumstances which led to the addition of amounts in the assessment order was based fully upon the facts unearthed during the search operations at the residence of one Pavunni. Further the authorities below have found that there was no evidence at all to prove that while the property was conveyed by executing sale deed, the same was an agricultural land. But on the other hand, the assessing officer has clearly found that the property in question was barren land and further it was revealed that after purchase of the property, no agricultural operations were carried on by the appellants and further that the property was sold within a short period which discloses nothing but an adventure in the nature of trade liable to be taxed under the Act. These are all circumstances based on facts and the authorities below have appreciated the contentions put forth by the appellants and arrived at a fair and reasonable conclusion that the agreement relating to the sale deed was a crucial document showing the exact price of the property, which was also not denied by the appellants. - Decided against assessee. 2015 (9) TMI 72 N.P. estimation - Tribunal applied net profit ratio of 5.2% - Held that:- We are in complete agreement with the view taken by the learned tribunal as well as learned CIT(A). When the evidences of total expenditure or purchase were not available with the revenue and consequently the assessee as well as A.O. both decided to determine the income by applying a reasonable estimate of profit and that estimation was found very near to the income offered by the assessee, the learned tribunal has rightly dismissed the appeals preferred by the revenue. - Decided against revenue. Undisclosed closing stock added by the Assessing Officer - CIT(A) deleted addition - Held that:- We are of the view that learned CIT(A) has correctly appreciated the facts of the case and held that in the absence of any stock found at the time of search there was no justification to tax unaccounted stock in the hands of the assessee. We have also noted that the AO was not definite about the said stock; hence, no authentic finding was given but it was held by him that there might be stock in godown. We, therefore, hold that in such a situation learned CIT(A) was correct in deleting the addition which according to him was based upon conjecture only.- Decided against revenue. Application of provisions of Section 40(A)(3) of the Act becomes infructuous, as once the question No.1 is held against the revenue and the judgement and order passed by the learned tribunal applying net profit ratio of 5.2% for respective Assessment Years has been confirmed, there is no question of further making any addition under section 40(A)3 2015 (9) TMI 71 Stay of Recovery of difference of tax - it is contended that, the impugned additions of income in the hands of a practising advocate are absolutely uncalled for and unjustified and said addiitons were made in the declared income of the practising advocate in the Department out of vengeance and mala fide reasons on the part of the Assessing Aurthority and therefore the impugned assessment order as well as interim stay orders with the aforesaid conditions of deposit of 40% of the disputed demand are liable to be quashed. - held that:- The matter require consideration. - stay granted 2015 (9) TMI 70 Disallowance of interest on borrowed funds - Held that:- The assessee was having sufficient interest-free funds at the time of advances made to its sister-concerns can be verified from its records. The ld.Sr.DR has no objection to this proposal. Therefore, after taking into consideration and looking to the totality of the facts of the case we hereby set aside the orders of the authorities below and restore the issue back to the file of the AO for limited purpose of verification. The AO would verify from the records placed before him that the fact of availability of interest-free funds for the purpose of making advances to its sister-concerns. In case, the AO finds that the assessee was having sufficient interest-free funds available for making advances to its sister-concerns, the AO would delete the disallowance. However, the AO would also verify whether the borrowed funds had been utilized for business purposes or not. In the event of the mixed funds, if at the time of making advances the assessee had both the borrowed funds as wells as the interest-free funds, the AO would verify the quantum of advances made by the assessee. If the AO finds that the amount of interest-free funds was higher than the advances made, in that event, the AO would delete the addition made on account of disallowance of interest on borrowed funds - Decided in favour of assessee for statistical purposes. Disallowance u/s.36(i)(iii) - advances given to sister concern - assessee submitted that these loans are not liable for tax even u/s.41(1) - Held that:- CIT(A) has followed the judgement of Hon’ble Apex Court rendered in the case of CIT vs. T.V.Sundaram Iyengar & Sons Ltd. reported at (1996 (9) TMI 1 - SUPREME Court ). The contention of the ld.counsel for the assessee is that the facts are distinguishable in the present case as in that case it was trading a receipt, but in the present case these are the loans by the sister-concerns being capital in nature. Since the evidence in support of this contention was not furnished before the AO, therefore, it would be appropriate that the issue be restored to the file of AO for verifying the claim of the assessee that the impugned amount was not a trading receipt. The AO would verify the nature of amount and in case it is found that it was not a trading advance, then the AO would delete the same - Decided in favour of assessee for statistical purposes. 2015 (9) TMI 69 Disallowance u/s 40A (3) - Held that:- Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has not claimed any expenses relatable to addition & the payments were not claimed as expenditure as is noted by AO - Decided in favour of assessee. Addition on on account of interest on Post Dated Cheques alleged to have been paid outside the books of accounts - CIT(A) deleted the addition - Held that:- The date of issue of cheques and date of encashments of PDCs is mentioned by AO himself and we find that the cheques were encashed within a period of six months and therefore respectfully following the Tribunal order in Westland Developers case [2014 (12) TMI 254 - ITAT DELHI ] we dismiss the ground of revenue. 2015 (9) TMI 68 Deduction under section 80IB(10) - Held that:- Entrepreneurial risk in the present case was undisputedly borne by the assessee, we confirm the stand taken by the ld CIT(A) and grant of deduction under section 80IB(10) to the assessee, and decline to interfere in the matter. See Shri Umeya Corporation vs. Income Tax Officer [2015 (9) TMI 108 - ITAT AHMEDABAD] - Decided in favour of assessee. 2015 (9) TMI 67 Validity of reopening of assessment - claim for deductions under section 80HHC and 80IA - Held that:- In the course of the original assessment proceedings the claim for deductions under section 80HHC and 80IA of the Act were discussed in length and on those issue the matter was carried in appeal before the ld. CIT(A) who had partly allowed the appeal. On these facts, in the light of the law laid down by Hon’ble jurisdictional High Court in the case of United Phosphorus Limited vs. ACIT [2011 (3) TMI 1555 - GUJARAT HIGH COURT ], the order of the A.O. stood merged with the order of the CIT(A) and had no existence of it’s own, and, as such, assessment could not be reopened in respect of the said item. For this short reason alone, the impugned reassessment proceedings must stand quashed. When it was put to the learned Departmental Representative, he did not have much to say except to place reliance on the stand of the authorities below and submit that a particular aspect of the deduction was not specifically considered by the A.O. and the ld. CIT(A). That aspect of the matter is, however, not really relevant because once we come to the conclusion that order of the A.O. stood merged in the order of the ld. CIT(A) on the issue of deduction under section 80IA and 80HHC of the Act, as we are obliged to hold in the light of law laid down by Hon’ble jurisdictional High Court, these aspect of the matter are wholly academic. - Decided in favour of assessee. 2015 (9) TMI 66 Addition on account of long term capital gain u/s.50C - whether the correct thing is to adopt the stamp duty valuation as on the date of sale of agreement? - Held that:- As evident from a copy of the income tax return and computation of income filed by the assessee for the assessment year 2003-04 the assessee had duly disclosed the fact of this sale transaction and resultant capital gains for the relevant assessment year. We have also noted that the buyer i.e. Vinod Bansal, has paid society maintenance charges for the period 31.08.2002 to 31.12.2004 vide cheque numbers 032425 and 032426 dated 12.01.2005 for ₹ 39,188/- and ₹ 19,028/- respectively. On these facts, in our considered view, the assessment year in which the capital gains on transfer of this asset can be brought to tax is indeed assessment year 2003-04. The Assessing Officer was clearly in error in addressing himself to the taxability of this capital gain in the assessment year before us i.e. 2007-08. Thus the erudite discussions about applicability of Section 50C in the present assessment year are wholly irrelevant and do not call for any adjudication. That aspect of the matter is academic. Once we hold, as we have held in this case, that an item of income is not taxable in the present assessment year, it is wholly academic to examine modalities of quantifying that income. - Decided in favour of assessee. 2015 (9) TMI 65 Transfer pricing adjustment - Selection of comparable Capital Trust Ltd. as selected by assessee denied by CIT(DR) - Held that:- The assessee was in the business of repair services, computer hardware and software related services, erection, commissioning and installation services. Capital Trust Ltd. was, inter alia, imparting consultancy to foreign banks not having any branches or representative offices in India. The assessee’s contention is that this consultancy segment is comparable to the services rendered by assessee. We are not inclined to accept the assessee’s contention on this ground because the consultancy service rendered to foreign banks are in no way comparable with the assessee’s business. We are not confirming the action of lower authorities on the basis of loss being incurred in two years by Capital Trust Ltd., but on the ground that functional profile being entirely different from that of the assessee. Further, we find considerable force in the argument of ld. CIT(DR) that since the consultancy segment is very meager as compared to the overall activities carried on by assessee, therefore, it cannot be held that merely because segmental details are provided, therefore, the financial consultancy to foreign bank assumes significance. We, accordingly, confirm the assessment order of AO on the issue in question. - Decided against assessee 2015 (9) TMI 64 Credit of tax deducted at source u/s 199 denied - Held that:- TDS Certificate has been issued to the assessee only and as per data base of Income-tax department, the TDS is reflecting against the assessee only, therefore allowing credit in the hands of Shri Kapil Ahluwalia was not possible. Neither party should be made unjust enriched at the cost of the other. We hold that the credit of the ₹ 12,23,608/- is allowable in the hands of the assessee, in view of the clear provisions of sub section(1) of section 199 of the Act and Rules made thereunder. However, we direct the assessing officer to verify whether any credit of the TDS of ₹ 12,23,608/- has been allowed by the Income-tax Department in the hands of Shri Kapil Ahluwalia or not. If it has been not allowed, then the credit of this amount should be given in the hands of the assessee. Decided in favour of assessee. 2015 (9) TMI 63 Revision u/s 263 - no proper inquiry was made by AO - Held that:- It is very clear that if there is an inquiry even inadequate that would not by itself gives power to the Commissioner to pass order under Section 263 of the Act merely because he had a different opinion in the matter. It is only in the cases of total lack of inquiry that the revision under section 263 would be justified. The assessment can’t be set aside to the file of the Assessing Officer for the purposes of further inquiry/investigation and to come to the conclusion that the assessment order is erroneous. The CIT himself has to conduct the inquiry before the order under Section 263 is passed. Assessing Officer as an investigator of the case, it is open to him where to start or stop inquiry. The CIT(A) cannot direct the Assessing Officer to conduct inquiry in a particular manner since it is a well settled principle of law that the Commissioner had no valid power to direct the Assessing Officer to frame the assessment order in a particular manner. In these circumstances, we have no hesitation to quash the order passed under Section 263 of the Act by the CIT - Decided in favour of assessee. 2015 (9) TMI 62 Addition of unaccounted payment of ₹ 20 lacs added u/s. 158BC - CIT(A) deleted the addition - Held that:- Revenue's sole endeavor is to get restored the impugned addition of ₹ 20 lacs by way of unaccounted investment unearthed in the course of search. It has come on record that balance sum of ₹ 45 lacs already stood declared in the return. The Assessing Officer himself observes that this remaining sum of ₹ 20 lacs was yet to be paid after the search in question. Meaning thereby the Revenue fails to lead any evidence much less a cogent one to prove actual payment of ₹ 20 lacs in question. We uphold the CIT(A)’s in these peculiar facts and rejects the Revenue’s arguments accordingly. - Decided in favour of assessee. 2015 (9) TMI 61 Reduction in the disallowances under sections 80IA and 80IC - Allocation of remuneration to directors, audit fee and travelling expenses towards income of unit exempt under sec. 80IA and 80IC - Held that:- We do not find reason to interfere with the orders of the authorities below regarding the making of reduction in the disallowances under sections 80IA and 80IC of the Act on account of reallocation of directors’ remuneration, travelling expenses etc. on proportionate basis by the Assessing Officer in absence of the evidence furnished by the assessee that all the expenses were separately maintained in the eligible units as relying on earlier assessment years. We, however, find substance in the alternative arguments of AR that the allocation made by the Assessing Officer on the proportionate basis was excessive and disproportionate inasmuch as allocation of directors’ remuneration, travelling expenses and audit fee etc. to the Punjab Paper Unit amounted to double directors’ remuneration, travelling expenses etc. for Kala Amb Unit. We thus set aside the matter to the file of the Assessing Officer to examine the alternative contention made by the Learned AR in this regard and while allocating the expenses to the eligible units take into consideration the expenses, if any, already debited by the assessee in these eligible units while computing the deduction claimed under sec. 80IA and 80IC of the Income-tax Act, 1961 on proportionate basis to avoid double addition, after affording opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Reduction of insurance claim received from the income eligible for exemption under sec. 80IC reducing the exemption - Held that:- Assessing Officer following the decision of Hon'ble Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) held that there is no first degree nexus between the insurance/interest receipt and business undertaking hence, it does not form part of net profit of eligible industrial undertaking and the same cannot be treated as income derived from industrial undertaking. The Learned CIT(Appeals) has upheld the same with this noting that the assessee did not furnish evidence to substantiate that the claim that these were only repair expenses and not capital expenses. He noted further that ₹ 2,00,921 on account of fall of factory wall was already taken into consideration by the assessee.Since the assessee has failed to improve its case before us on the issue, we do not find reason to interfere with the first appellate order in this regard. Same is upheld. - Decided against the assessee. 2015 (9) TMI 60 Unexplained investment in stock - CIT(A) deleted the addition - Held that:- The inventory was drawn by the income-tax authorities on the date of survey with the help of the assessee’s employees on 5.12.2003. The same was examined and verified by Shri S.K. Vasudevaji, the Chief General Manager of the assessee-firm who accepted the correctness of the statement so drawn and offered to surrender the excess stock to the tune of ₹ 31.85 lac on the basis of such statement. Not only that, Shri Sudhir Sekhri, a partner in the assessee-firm, attended the office of the AO after a week’s time on 12.12.2003. He also did not dispute the valuation of stock recorded in the statement and approved the contents of the statement made by Shri S.K. Vasudevaji. It is beyond our comprehension as to how the valuation of inventory which was made on 5.12.2003 with the help of employees of the assessee company, as approved firstly by its Chief General Manager on the date of survey and then by a partner after a week’s time, can be branded as wrong at a later date. It is more so because there is no corroboration of the rates given by the assessee in its later statement showing lower rates. There is no basis for checking the rates given by the assessee in its so-called inventory depicting difference in the rates of items. When the stock statement prepared by the Incometax authorities at the time of survey is pitted against a later one-sided statement with lower rates made by the assessee, we prefer to go with the former. The reason is obvious that it was drawn on the basis of actual verification done and as per the rates given by the employees of the assessee and as affirmed by the Chief General Manager and then the partner of the assessee firm. As such, we refuse to accept the veracity of the statement tendered during the course of assessment proceedings giving lower rates and go with the statement prepared at the time of survey. The impugned order is vacated on this issue and the addition made by the AO to the tune of ₹ 31.85 lac is restored - Decided against assessee. Addition on account of suppressed gross profit - rejection of books of accounts - CIT(A) deleted the addition - Held that:- AO categorically asked the assessee to give details about the break-up of closing stock, which the assessee failed to adduce. Once there is no authentication of the value of stock as shown by the assessee, how such valuation can be accepted, more so, when the gross profit rate has sharply declined. No accounts can be said to have been properly maintained unless the figures of opening and closing stock are subject to verification. As the assessee miserably failed to corroborate the value given for closing stock and, further, there was absence of details of accessories/raw materials, semi-finished and finished goods, wastage, etc., we overturn the impugned order upholding the proper maintenance of books of account. Accordingly, the action of the AO in rejecting the books of account is upheld. - Decided against assessee. Unless the facts and circumstances are shown to have undergone change, ordinarily, the gross profit of the immediately preceding year constitutes a good guide for adoption and implementation. When we advert to the facts of the instant case, we find that the AO was more than reasonable in applying GP rate of 20% as against the immediately preceding year’s GP rate of 27.84%. The impugned order is vacated and the addition so deleted in the first appeal is restored. This ground is allowed. - Decided against assessee. Disallowance of foreign travelling expenses - Held that:- it is seen that the foreign travel expenses were incurred by the assessee on its employees and no foreign travel was undertaken by the partners. In such circumstances, there can be no reason for making any ad hoc disallowance. We, therefore, approve the impugned order in deleting this addition - Decided in favour of assessee. 2015 (9) TMI 59 Penalty U/s.271(1)(c) - addition made on account of claim of depreciation, deduction claimed u/s.80IA and disallowance of deduction u/s.80IB - CIT(A) deleted penalty - Held that:- We find that this issue being debatable and there being decisions in favour of the assessee at the time of filing of return for the relevant assessment year, it could not be said that the conduct of the assessee in claiming the deduction was not bona fide. In this view of the matter, we hold that it is not a fit case for levy of penalty u/s.271(1)(c) of the Act which was accordingly cancelled by the CIT(A) and the order of Ld.CIT(A) is confirmed. - Decided in favour of assessee. 2015 (9) TMI 58 Interest under section 201(1A) - interest as computed by the Assessing Officer by taking the period of delay on the basis of British calendar month instead of month of 30 days as claimed by the assessee - Held that:- In the present case, clause (ii) of section 201(1A) read with clause (b) of rule 119A is applicable and it provides that where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month, and the interest shall be so calculated. It is observed that similar controversy had arisen in the case of CIT v. Arvind Mills Ltd. [2011 (9) TMI 244 - GUJARAT HIGH COURT ] wherein the assessee claimed interest under section 244A on the basis of British calendar month.. The Tribunal allowed the same. When the matter was carried before the hon'ble Gujarat High Court in an appeal filed by the Revenue, their Lordships held that a reading of sub-section (1) of section 244A, the relevant provisions of which are analogous to the provisions of clause (ii) of section 201(1A) read with rule 119A, would make it clear that the term "month" must be given the ordinary meaning of the term of 30 days period and not the British calendar month as defined in section 3(35) of the General Clauses Act. It was held that the definition given in the General Clauses Act cannot be adopted for the purposes of sub-section (1) of section 244A as such importation of the definition would lead to anomalous situation. In our opinion, the ratio of the decision of the hon'ble Gujarat High Court in the case of CIT v. Arvind Mills Ltd. (supra) is squarely applicable in the present case and direct the Assessing Officer to recompute the interest payable under section 201(1A) by taking a period of 30 days as a month instead of British calendar month - Decided in favour of assessee. 2015 (9) TMI 57 Penalty levied under section 271(1)(c) - assessee had not offered this amount of ₹ 7,63,600 in its return of income filed under section 139(1) the assessee has concealed his particulars of income - Held that:- Levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being conceal ment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind. Penalty proceedings having been initiated on the ground of "furnishing inaccurate particulars of income", imposition of penalty on the ground of "concealment of income" was not justified. See K. M. Bhatia (Quarry) v. CIT reported in [1991 (7) TMI 56 - GUJARAT High Court] - In the instant cases we have noticed that the Assessing Officer has initiated penalty proceedings under one default or limb of section 271(1)(c) of the Act, but levied for another default or limb of that section - Decided in favour of assessee. 2015 (9) TMI 56 Reassessment proceedings - disallowance of proportionate interest and addition u/s. 40(a)(ia) - CIT(A) annulled Reassessment proceedings and deleted disallowance - Held that:- The assessment year involved is AY 2005-06 and, hence, the re-opening of the assessment is after four years and therefore, the 1st proviso to section 147 of the Act is applicable. As per the reasons recorded by the AO for re-opening of the assessment, it is seen that it is noted by the AO in the reasons that the reasons are on the basis of perusal of the assessment records and there is no allegation that there was nay failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the present case, it is established that the requirement of first proviso to section 147 are not being complied with and therefore, the re-opening after four years is not valid. Therefore, we uphold the finding of the ld.CIT(A) regarding annulment of the assessment. - Decided against revenue. Customs 2015 (9) TMI 88 Goods at duty free shops are imported into India – Appellants consignment was not cleared by Custom Authorities for reason that consignment being of food products, required NOC from FSSAI – Though goods were later cleared, appellant filed petition before Single Judge seeking clarification that goods subject matter of consignment being meant for sale in Duty Free shops, cannot be treated as imported into India and that said goods do not enter country as same are sold at Duty Free shops, which was disposed of – Held that:- Appellant contended that inspite of consignment owing to non-clearance of which writ petition was filed being cleared, to decide question of law, so that if contention of appellant is right, it does not face such situations in future – Admittedly work of appellant is recurring in nature – Cause of action for filing of petition from which this appeal arises was not stray one – It is common knowledge that some time is taken in engaging advocates, preparing and filing the petition, listing thereof in Court and in hearing of petition even qua interim relief claimed and during all of which time goods would not be released – Settled position in law that opposite party to litigation cannot defeat lis validly brought before Court by contending that cause of action had disappeared – Appeal allowed – Order of Single Judge disposing of petition set aside – Writ Petition restored - Decided in favour of Appellant. 2015 (9) TMI 87 Maintainability of Appeal – Competent person to file Appeal – Only apprehension of appellant is that Tribunal has made certain observations and drawn certain conclusions which would affect appellant adversely – There was serious debate on maintainability of appeal at instance of appellant who was not party before Tribunal – Held that:- Tribunal rendered above findings and conclusions without giving any opportunity to Appellant to place its version – In event competent authority deciding to proceed in pursuance of show cause notice issued to appellant, it would be open to appellant to urge that order of Tribunal and any observation, finding and conclusion therein will not be binding as appellant was not party before Tribunal – It would be open for appellant to point out to competent authority adjudicating show cause notice that in light of limited role played by it, appellant cannot be termed as custodian within meaning of said term under Customs Act – Appeal disposed of. 2015 (9) TMI 86 Refund of excess duty – Import of vessel for dredging work – Revenue challenges order passed by Tribunal setting aside Order-in-Original and allowing Appeal of assessee for refund of duty – Held that:- Tribunal found that vessel was put on par with Cargo Vessels and other categories which were noted in Board Circular No. 58/97 and as per clarification issued by Kandla Custom House – Thus, Cargo Vessels, Tanker Ships and Dredger Ships were to be treated at par – If refund claim was in respect of Bunkers on imported vessels namely dredger, then that could have been entertained and allowed – When such was approach of Tribunal, its order cannot be termed as perverse – Appeal fails and dismissed – Decided against revenue. 2015 (9) TMI 85 Import of arecanut - Benefit of concessional rate under Notification No.26/2000 – Release of goods – Petitioner was denied benefit of concessional rate of duty – Respondent-2 directed petitioner to comply with certain conditions for provisional release of consignments of arecanut, that were imported by petitioner – Petitioner is aggrieved by condition requiring payment of 35% of differential duty, stipulated as one of conditions for provisional clearance of consignments imported by him – Held that:- petitioner submitted documents with regard to origin of goods from Srilanka – Petitioner has also placed reliance on Ext.P19-letter, that was issued by High Commission of Srilanka and addressed to Commissioner of Customs, confirming issuance of certificates of origin in respect of goods that were imported by petitioner – Therefore petitioner succeeded in discharging his prima facie burden in establishing that goods qualified for benefit of concessional rate in terms of Notification – Petitioner is entitled to obtain provisional release of goods more so because goods in question are perishable in nature – Therefore, interests of justice would require to permit petitioner to provisionally clear goods on compliance with conditions mentioned inExt.P17 communication, except for payment of differential duty – While payment that is required of petitioner in Ext.P17 communication is 35% of differential duty, court feel respondents will be justified in insisting only on payment of 20% of duty, relying on Customs (Provisional Assessment) Regulations – Therefore, condition modified to payment of 20%, in lieu of 35% of differential duty – On petitioner satisfying said conditions, respondents shall release goods on provisional basis – Decided partially in favour of petitioner. 2015 (9) TMI 84 Waiver of Penalty –Release of confiscated goods – Whether Tribunal was justified in holding that goods in question were not liable for confiscation under Section 111(p) and deleted penalty imposed under Section 112 of Customs Act, 1993 – Held that:- Tax Appeal was not maintainable as upon whom penalty was imposed along with respondent has not been made party – Even company was not made party to this appeal – Since judgment of Tribunal had become final this appeal challenging penalty imposed upon respondent would not be maintainable – Tax Appeal dismissed and order of confiscation set aside – Decided in favour of Appellant. 2015 (9) TMI 83 SHIS Scheme and Zero duty EPCG Scheme – Re-Validation of License – Petitioner raises grievance as to revalidation of Status Holders Incentive Scrip (SHIS Scheme) and revalidate licence even if it has lapsed – Merely because show cause notice was issued benefits of SHIS Scheme and Zero duty EPCG Scheme should not be denied and continued as such – Held that:- respondents apprehended that despite pendency of show cause notice and proceedings, they would clear consignments of petitioner provided petitioner produces either SHIS or EPCG valid licences – Petitioner agreed to apprehensions made by respondent – Petition disposed of – Decided in favour of Assesse. Service Tax 2015 (9) TMI 106 Penalty u/s 78 - Interpretation of law - Held that:- Adjudicating authority was correct in coming to the conclusion that penalty, in these kind of matters wherein question of interpretation involved, does not arise and invoking the provisions of Section 80, which in our view, is very correct - Impugned order is upheld to that extent with regard to the penalty being not imposed by invoking Section 80 of the Finance Act - Decided against Revenue. 2015 (9) TMI 105 GTA - Eligibility of Notification No.34/2004-ST dated-3/12/2004 and Notification No. 01/2006-ST dated-1/03/2006 - applicant could not justify their claim by filing sufficient evidences as the declaration on the respective consignment notes were not accepted by the department and its authenticity has been doubted - Held that:- appellant has placed before us declarations received from the respective service providers, and in view of the aforesaid judgments the same could be considered in extending the exemption Notification. However, the said declarations require scrutiny/examination by the adjudicating authority. In the result, the impugned order is set aside and the appeal is remitted to the adjudicating authority only for the purpose the scrutiny of the documents/evidences. - Matter remanded back - Decided in favour of assessee. 2015 (9) TMI 104 Condonation of delay - Inordinate delay of 2799 days - Held that:- In view of the judgment of the Hon’ble Supreme Court in the case of Singh Enterprises Vs. Commr. of Central Excise, JSR reported in [2007 (12) TMI 11 - SUPREME COURT OF INDIA], the Ld. Commissioner (Appeals) can condone the delay for a period of three months in addition to the statutory limit of three months as was in force at the relevant point of time, prescribed under Section 85 of the Finance Act, 1994 - Tribunal is also not empowered to condone the said delay - Condonation denied. 2015 (9) TMI 103 Demand of service tax - Works Contract Service - Composition Scheme - Held that:- In the case of Vistar Construction (2013 (2) TMI 52 - DELHI HIGH COURT), the Delhi High Court has held that the taxable event, in so far as service tax is concerned, is the rendition of the service. That being the position, the taxable events in the present writ petition had admittedly occurred prior to 1.3.2008. At that point of time the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 1.3.2008. Therefore the rate of tax applicable on the date of which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. - Decided against Revenue. 2015 (9) TMI 102 Construction of Residential Complex service - Tax demanded under works contract - Held that:- Appellant was regularly paying service tax whereas in the show-cause notice it is seen that the demand covers a period of 2006-07 to 2010-11. Year-wise calculation of the amount paid as service tax, amount of consideration received, etc. are not forthcoming. On the one hand, we have situation where the Commissioner has confirmed the demand on the ground that the appellant has not paid service tax and on the other hand, there is a situation where the appellant has claimed that they were paying service tax but there was no clarity. - no reasons have been given as to why the appellants did not make any payment of service tax even after 1.7.2010 and made a payment of ₹ 20 lakhs when investigation was taken up. No detailed statement showing the actual liability, the amount paid, the amount received, claimed as abatement have been presented. - except for claim for abatement of 67% which may have some force, we are unable to come to any conclusion in favour of the assessee. The conclusion is that the appellant is liable to pay tax demanded. - stay granted partly. 2015 (9) TMI 101 Waiver of pre deposit - Denial of CENVAT Credit - Premises occupied in pursuance of SARFAESI Act - Land further leased out - Tax paid in the name of borrower - Revenue contends that the tax is to be paid by the Bank - Held that:- Bank is not the original owner but only is deemed owner in exercise of the power of lessor under the SRFAESI Act. Further, as the tax has already been paid, which is not disputed and were accepted and further that the show-cause notice have been issued invoking the extended period - we grant waiver of pre-deposit and stay the recovery of tax, interest and penalty till disposal of the appeal. - Stay granted. 2015 (9) TMI 100 Claim for refund – Fulfilment of conditions prescribed in CENVAT Credit Rules, 2004 – Appellant claimed refund but show-cause notice was issued proposing rejection of said refund on ground that documents submitted by them failed to fulfil conditions prescribed in CENVAT Credit Rules, 2004(CCR) and appellants have not been able to show that incidence of duty has not been passed on – Held that:- in respect of CENVAT credit refund, there is no need to examine unjust enrichment. - Once the appellant is able to establish that they cannot utilize the credit, it has to be granted in cash. In view of observation made in Fibres & Fabrics International P. Ltd. Vs. CC [2009 (2) TMI 110 - CESTAT Bangalore] , Glittek Granites Ltd. Vs. CC [2009 (9) TMI 306 - CESTAT, BANGALORE] and Bisazza India Pvt. Ltd. Vs. CCE [2008 (6) TMI 16 - CESTAT AHMEDABAD] all said cases directly relate to present issue – Therefore, in view of observations made in said cases, it has to be held that appellant is eligible for benefit of refund – In absence of specific defects identification, rejection on such ground does not arise – Thus, appellants eligible for refund and accordingly appeals are allowed – Decided in favour of Appellant. Central Excise 2015 (9) TMI 94 Demand of Differential duty - suppression of facts - Invocation of extended period of limitation - suppression of facts - Held that:- The Range Superintendent was very well aware of the variation between the commercial invoice and the excise invoice. Therefore, the records clearly confirms that demand is hit by limitation. The adjudicating authority as well as appellate authority in spite of the direction issued by Tribunal in the final order dt. 10.9.99 has not discussed on the issue of limitation and not made out a case of suppression of facts against appellant. In this context, we find that Hon’ble Supreme Court in the case of Orissa Bridge & Construction Corpn. Ltd. Vs CCE Bhubaneswar (2008 (8) TMI 585 - SUPREME COURT OF INDIA) clearly held that demand is hit by limitation and extended period cannot be invoked and there is no suppression of facts established by department. - show cause notice involved in the present demand for the period 1994-97 was issued on 6.8.1998 only demanding differential duty for the period March 1994-95 to March 1996-97. There is no suppression of facts by the appellant. By respectfully following the Supreme Court decision (supra), we hold that demand is hit by limitation. - Decided in favour of assessee. 2015 (9) TMI 93 Demand of CENVAT credit - credit on plastic crates - plastic crates where the appellant has used both in dutiable and in exempted goods - Held that:- The issue is already settled by virtue of retrospective amendment in the Finance Act, 2010. We also find from the letter dated 13.3.2015 issued by the Commissioner of Central Excise, Puducherry addressed to the appellant that the four show-cause notices which are the subject matter in the impugned order has been considered in his letter where the appellant has filed application consequent on retrospective amendment. We also find that the application dated 2.11.2010 was filed before Commissioner on 4.11.2010 by the appellant. - Since the adjudicating authority has accepted the application of the appellant relating to the demand covered in four show-cause notices and held that the appellant has not availed MODVAT/CENVAT credit on the crates used for exempted goods and held that there is no further demand due from the appellant. Accordingly, the impugned order is set aside - Decided in favour of assessee. 2015 (9) TMI 92 Demand of interest u/s 11AB on differential duty - Extended period of limitation - Held that:- The relevant date for demanding interest will have to be mutatis mutandis, one year from the date of payment of interest made under Section 11A of the Central Excise Act, 1944, because on the date of payment of duty only the exact amount of interest, from the date of clearances to the date of payment of differential duty, can be calculated for the purpose of issuing a quantified demand on account of interest. The demand for interest was thus issued within a period of one year. Non-payment of interest on account of Revenue Neutrality - Held that:- none of these two High Court orders were placed before the cases relied upon by the learned Authorised Representative. Jurisdictional Gujarat High Court held in CCE &C, Vadodara-II Vs Indeos ABS Ltd (2010 (3) TMI 656 - GUJARAT HIGH COURT) that when supplies are made to the sister concerns then demand cannot be upheld on Revenue Neutrality which means both differential duty and interest cannot be demanded. Further, in view of Hon'ble Bombay High Courts order in the case of CCE Pune II Vs Siddheshwar Textile Mills Pvt.Ltd. (2014 (11) TMI 621 - BOMBAY HIGH COURT) when duty demand itself is not sustainable on Revenue Neutrality, it will not be correct to demand interest on differential duty voluntarily paid by the Appellant. - Decided in favour of assessee. 2015 (9) TMI 91 Demand of duty - Imposition of interest and equivalent penalty - Violation of principle of natural justice - Opportunity of cross examination not granted - Held that:- Certain documents has resumed from the third party and statements of third parties have been recorded. The case has been made out by the Revenue on the basis of the document resumed from the third parties and corroborative statement of those parties as well as to some extent the statement of Shri Mukesh Benara and the Shailender Kumar Singhal, Senior Sales Officer of BAPL. It is admitted fact that appellants sought cross examination of the third parties whose statements has been relied by the Adjudicating Authority but the Adjudicating Authority has not granted cross examination which is in gross violation of principal of natural justice - Therefore for fair trial, the matter requires cross examination of the person whose statements have been relied upon by the Adjudicating Authority. With these observation, we are of the view that after setting aside the impugned order, the matter should go back to the Adjudicating Authority - Decided in favour of assessee. 2015 (9) TMI 90 Waiver of pre deposit - manufacture of sand lime bricks known as calcium silicate bricks - fly ash bricks or not - using 50% by weight of pond ash as filler - Exemption under Notification No. 5/06-CE and 6/06-CE till 28/2/11 - Held that:- when in the Central Excise Tariff there is no definition of a term in a tariff entry, its meaning as understood in the commercial parlance or trade parlance has to be adopted and for this purpose, one has to rely on the how the product is described in the ISI Standard, if any, for the same. In the present case no test has been carried out to ascertain as to whether the bricks, in question, conform to ISI standards for fly ash bricks or whether the same conform to the ISI Standard for sand lime bricks. In absence of such test, in our prima facie view it would not be correct to say that the bricks, in question, are fly ash bricks covered by heading 6815 - Moreover, in terms of Ministry of Environment notification, the appellant were required to use at least 25% fly ash. Though, admittedly the weight of the fly ash used in the form of pond ash is 50% and admittedly, the pond ash contains moisture and, the total weight of the ash being used in the manufacture of bricks would be much less than 50% and as such, it cannot be said that the fly ash is the pre-dominant constituent. - Partial stay granted. 2015 (9) TMI 89 Duty demand - Job work - clearances for export made by the appellant from the job worker's premises - Whether in terms of sub-rule (2) of Rule 12 B, the appellant company was liable to pay duty in respect of these goods - Held that:- Person whether a manufacturer or a trader can export the goods under bond under Rule 19 from the factory where the same have been manufactured. Since in the present case, there is no dispute that the necessary conditions for export under bond without payment of duty under Rule 19 have been satisfied and the prescribed procedure had been followed, the Department's stand that the duty would be chargeable on the clearance made by the appellant for export from job worker's premises is not correct. In view of this, the impugned order upholding the duty demand of ₹ 19,41,761/- along with interest and imposing penalty of equal amount on the appellant is not sustainable and has to be set aside. Confiscation of goods - Imposition of redemption fine - Penalty under Rule 26 - Held that:- while at the time of officers' visit to the factory on 24.11.2004, the RG-I register was not there but the same was produced on 29.11.2004 - imposition of fine of ₹ 50,000/- is on a much higher side, when duty involved on the goods is only ₹ 38,000/-. In view of this, the redemption fine is reduced - penalty under Rule 26 is not sustainable. - Decided partly in favour of assessee. CST, VAT & Sales Tax 2015 (9) TMI 99 Maintainability of Suit – Statutory Bar to entertain Suit – Suit was filed before trial court, praying for decree of declaration that notice, issued by Department, was illegal and void – Said suit was dismissed on ground for non-prosecution – Appeal filed for restoration of suit was also rejected – Held that:- Appellate judge considered affidavit filed by petitioner, in light of order passed by trial court –Appellate Judge had very clearly held that petitioner invented new reasons to suit his convenience however had not given any explanation with regard to contradictory stand taken by him – Also Section 77 of Tamil Nadu Value Added Tax Act, 2006 contains statutory bar which limits Civil Court from entertaining civil suit to set aside or modify any assessment made under Act – This provision was overlooked by trial court, while entertaining suit – Petitioner wanted Civil Court to be converted as appellate authority over authorities constituted under TNVAT Act – In view of said observations impugned order sustains – Decided against Assesse. 2015 (9) TMI 98 Levy of Tax – Absence of Sufficient reasons – Vide impugned order petitioner was asked to pay tax under provisions of Gujarat Value Added Tax Act, 2003 wherein it was held that registration of those sellers from whom petitioner had purchased some goods had been cancelled and therefore, petitioner was liable to pay tax – Petitioner seeking quashing of assessment order passed by Respondent and direction to grant input tax credit – Held that:- AO has not dealt properly with case and ought to have discussed and appreciated material produced by petitioner on record – In absence of sufficient reasons assigned by Assessing Officer, order becomes vulnerable and therefore, requires to be quashed and set aside – Therefore impugned order hereby quashed and set aside – However, matter remanded to AO to reconsider documentary evidence and pass order in accordance with law – Decided in favour of Assesse. 2015 (9) TMI 97 Cancellation of Registration certificate – After issuing notice, registration of assesse under VAT Act was cancelled by assessing officer on ground that firm is not in existence – Assessing officer proceeded only on basis that goods are not stored at address given in registration certificate – Held that:- fact remains that Act never requires that goods are required to be stored at place of registration – whereas Act contemplates that dealer need not stores goods at place from where he carries on business – Tribunal concluded that conclusion of assessing officer that business of revisionist is not in existence based only on informations said to have been collected from unidentified persons that premises remains closed, was unjust and not sustainable – further that no case of cancellation, had been made out and, was not also attempted to be established or established – View taken by tribunal was just and needs no interference – Decided against revenue. 2015 (9) TMI 96 Benefit of Input Credit Tax – During assessment Appellant could not appear and produce record so as to claim benefit of input credit – Issue was decided against appellant, on appeal, all documents were produced before appellate authority but appeal was dismissed on ground that no document could be produced in appeal – Held that:- it is contended by parties that issue raised in appeals is no longer res integra and stands concluded by decisions of this court in Vijay Cottex Ltd. v. State of Haryana [2013 (12) TMI 1447 - Punjab and Haryana High Court], wherein it has been held that dealer is entitled to produce form VATC-4 and tax invoices before assessing authority who shall verify same and pass fresh order, in accordance with law – In view of above, appeals disposed of in same terms as in Vijay Cottex Ltd. case – Decided in favour of Assesse. 2015 (9) TMI 95 Valuation - inclusion of freight into Sale price – Assessing authority found that coal was purchased by society and after transportation, it has been distributed amongst members of society dividing cost and freight equally on basis of “no profit-no loss” but sale price would include freight – Tribunal upheld finding of assessing authority – Held that:- present case in case of Commissioner, Trade Tax, U. P., Lucknow v. Agrawal Mandi Janta Ent Nirmata Association [2006 (8) TMI 560 - ALLAHABAD HIGH COURT] observed, assuming that freight was paid by customer since railway receipt was in name of dealer and liability to pay freight was of dealer, it is deemed to have been paid on behalf of dealer by purchaser – Freight incurred for transporting goods from outside to inside of State was inward freight made prior to sale and, thus, it would be part of turnover – In view of above, question answered against assesse – Revision dismissed. Indian Laws 2015 (9) TMI 82 Application under Section 17 SARFAESI Act - Loan taken from respondent Bank - Assessee classified as NPA - Petition dismissed by Supreme Court - Respondent also filed an application under section 14 before the District Magistrate - District Magistrate issued a notice and on receipt of the notice, the petitioner filed the instant Securitization Application as provided under section 17 on 4-6-2014, challenging the demand notice as well as the notice dated 21-6-2013 issued by respondent No. 1 Bank under section 13(4) - Tribunal rejected the application - Held that:- In the present case, it cannot be said that the Tribunal has just dismissed the application for stay by merely stating that it is dismissed. Even if it is presumed as stated in the additional affidavit filed by the petitioner that certain contentions raised by the Tribunal, though recorded, are not dealt with, is examined, it cannot be said that no reasons are given. The Tribunal was dealing with an application for stay and therefore, prima facie case was to be examined. - contentions raised herein touches the merits of the main application which requires elaborate examination and even considering the impugned order, it cannot be said that there is no consideration by the Tribunal and hence, it cannot be said that there is breach of principles of natural justice as contended by the petitioner and in facts arising out of this petition, such a contention deserves to be negatived while exercising extraordinary discretionary jurisdiction of this Court. The petitioner having failed even before the Apex Court has filed this petition directly under Article 226 of the Constitution of India. The decision of the Apex Court in the case of Keshavlal Khemchand & Sons Pvt. Ltd. (2015 (2) TMI 686 - SUPREME COURT OF INDIA) was rendered in a group of petitions and one of the petitions therein was filed by the present petitioner. - Tribunal was examining the application for stay and not the main Securitization Application under Section 17 of the Act and therefore, the Tribunal was required to consider only the primafacie case of the petitioner. - Tribunal has given its findings on merits and in facts and circumstances of this case, as observed above, the same cannot be termed as breach of principles of natural justice and in opinion of this Court, permitting the petitioner to bypass the statutory remedy of filing an appeal would be against the very purpose and object of the Act. It is true that alternative remedy is not an absolute bar; however, in facts of this case, the same does not warrant bypassing the statutory remedy. Even considering the facts of this case, the petitioner has been litigating before different forums including this Court and also the Apex Court and the points in issue raised by the petitioner even in this petition are entirely on merits of the main Securitization Application. The record indicates that the petitioner as well as the Bank were heard extensively by the Tribunal and therefore, considering the same, when the petitioner has an alternative efficacious remedy, the present petition under Article 226 and/or Article 227 of the Constitution of India does not deserve to be entertained keeping in mind the ratio laid down by the Apex Court in the case of United Bank of India (2010 (7) TMI 829 - SUPREME COURT) and Kanaiyalal Lalchand Sachdev (2011 (2) TMI 1277 - SUPREME COURT OF INDIA). The aspect which would touch the merit of the main application, in facts of this case, needs to be examined in a fullfledged appeal as provided under Section 18 of the Act. The petitioner has got an alternative efficacious remedy by way of filing an appeal and the petitioner deserves to be relegated to such an alternative remedy, leaving it open for the appellate authority to examine the same in accordance with law if any appeal is filed by the petitioner. The facts and circumstances of the case on hand do not fall within the exceptions carved out by the Apex Court in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors. reported in [1998 (10) TMI 510 - SUPREME COURT] and the facts do not lead to the conclusion that there is breach of principles of natural justice, which would enable this Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India. - though the learned advocates have also gone into the merits of the application which is decided by the Tribunal by the impugned order, the same is not examined by this Court in view of the fact that the petition is not being entertained on the ground of availability of alternative remedy. - Decided against appellant. 2015 (9) TMI 81 Deprivation from promotion - 'Good' remark in Annual Confidential Report instead of “Outstanding” or “Very good” - whether such a downgradation of Annual Confidential Report would amount to adverse remark and thus it would be required to be communicated or not - Held that:- Every entry in ACR of a public servant must be communicated to him/her within a reasonable period is legally sound and helps in achieving threefold objectives. First, the communication of every entry in the ACR to a public servant helps him/her to work harder and achieve more that helps him in improving his work and give better results. Second and equally important, on being made aware of the entry in the ACR, the public servant may feel dissatisfied with the same. Communication of the entry enables him/her to make representation for upgradation of the remarks entered in the ACR. Third, communication of every entry in the ACR brings transparency in recording the remarks relating to a public servant and the system becomes more conforming to the principles of natural justice. We, accordingly, hold that every entry in ACR – poor, fair, average, good or very good – must be communicated to him/her within a reasonable period. - appellant has already been promoted. In view thereof, nothing more is required to be done. Civil Appeal is disposed of with no order as to costs. However, it will be open to the appellant to make a representation to the concerned authorities for retrospective promotion in view of the legal position - Decision in the case of Dev Dutt vs. Union of India [2008 (5) TMI 632 - SUPREME COURT] followed.
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