TMI Tax Updates - e-Newsletter
September 5, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Cenvat Credit on input services - serial number was not pre-printed but hand written on Invoice - prime facie credit is not admissible - Tri

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• TDS on interest - When interest income is not liable for taxation, assessee bank is not required to to make deduction of tax at source - Tri

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Articles

1. Government pushing GST to meet April, 2016 deadline

   By: Bimal jain

2. POWERS OF INCOME TAX APPELLATE TRIBUNAL

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Focus of Pradhan Mantri Jan Dhanyojana (PMJDY) Moves from Account Opening to the Provision of Cash-Out Facilities at an Approachable Distance to Reap the Real Benefits of Pmjdy; Under Pmjdy, Close to 18 Crore (180 Million) Accounts Opened; 15.74 Crores Rupay Debit Cards Issued;

2. India Among Bright Spots In Otherwise Gloomy Global Economy: President Shri Pranab Mukherjee

3. RBI Reference Rate for US $

4. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

5. CBDT Issues a Circular Clarifying Another Set of 27 Queries Relatinga to Tax Compliance Provision Under Chapter VI of the Black Money Act

Notifications

Customs

1. 46/2015 - dated 4-9-2015 - ADD

Seeks to levy definitive anti-dumping duty on imports of Acrylonitrile Butadiene Rubber (NBR), originating in or exported from Korea RP for a period of five years.

2. 85/2015 - dated 4-9-2015 - Cus (NT)

Amendment in Principal Notification No. 12/97-Customs(N.T.) dated 02.04.1997

DGFT

3. 19/2015-2020 - dated 4-9-2015 - FTP

Amendment of General Notes No.10 regarding Import Policy

Circulars / Instructions / Orders

DGFT

1. 32/2015-2020 - dated 4-9-2015

Incorporating a new Appendix

Customs

2. 22/2015 - dated 3-9-2015

Delay in furnishing reply to the Queries raised by the Department- reg.

Highlights / Catch Notes

Income Tax

• Depreciation Claims Denied on Exempt Income Assets u/s 32 and Section 11 of Income Tax Act.

  Case-Laws - AT : Claim of depreciation on capital assets - income which does not form part of total income as the same was exempted u/s 11 as application of income, the assessee cannot claim depreciation u/s 32 - AT
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• Non-Deduction of TDS u/s 194H Not a Violation if Payees Paid Taxes, No Assessee Liability.

  Case-Laws - AT : Non deduction of TDS u/s. 194H - if the payees to whom the amounts have been paid have already included the payments received from Assessee in their income and have also paid the taxes on the same and therefore there is no violation of the provisions of s. 201(1) - AT
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• Commissioner of Income Tax (Appeals) wrongly upheld addition u/s 41(1) despite Department's acceptance of balances.

  Case-Laws - AT : Addition u/s 41(1) - The Department having accepted the balances outstanding in the previous year, it was not open by Ld. CIT(A) to confirm the addition on the ground that assessee could not prove the genuineness of the said transactions which were undertaken. - AT
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• Interest Income Exempt from Taxation u/s 12AA; No Tax Deduction at Source Required for Bank Assessee.

  Case-Laws - AT : TDS on interest - interest incomes are not liable to be taxed in view of the Registration u/s 12AA - When the interest income is not liable for taxation, there is no obligation on the part of the assessee bank to make deduction of tax at source. - AT
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• AO to Re-evaluate Penalty u/s 272A(2)(k) Due to Delayed PAN Submission by Deductees, Affecting TDS Filing.

  Case-Laws - AT : Penalty u/s 272A(2)(k) - there was a delay on the part of the concerned deductees to furnish their PAN details and the same constituted a reasonable cause which prevented the assessees from filing the relevant TDS returns within the stipulated time - AO to re-adjudicate the issue - AT
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• Operating Profit Calculation: Bad Debts and Non-Recoverable Advances Treated as Operating Costs under Tax Rules.

  Case-Laws - AT : Computation of Profit Level Indicator (PLI), being, the Operating Profit/Total Cost (OP/TC) of the assessee -Like debts becoming bad from the sale of goods assuming the character of operating cost, the advances given in relation to trading items, becoming non-recoverable, also cannot be considered as anything other than an item of operating cost - AT
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Customs

• Amended petition replaces original case; respondent should challenge Show Cause Notice separately for clarity and fairness.

  Case-Laws - HC : Amendments to petition – Amended petition would virtually tantamount to substitution of altogether new case when compared to original case – It is appropriate that respondent challenges Show Cause Notice in different proceedings and not mix up facts and submissions - HC
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• Recovery of Demurrage Charges: Commissioner (Appeals) Confirms Enforcement Through Bond by Right Holder.

  Case-Laws - AT : Revenue has no ground to be aggrieved by Commissioner (Appeals’) order which only stated that the recovery of demurrage charges can be made from the right holder by enforcing the bond executed by him - AT
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• Refund Denied: Exemption Claim Too Late, Goods Misclassified, No Challenge to Assessment Under Notification No. 56/2008-Cus.

  Case-Laws - AT : Denial of refund claim - claim of exemption after assessment and clearance of goods - when Notification No.56/2008-Cus does not cover the heading 72.21 and the issue of classification of goods cannot be undertaken while deciding the refund application and further that the assessment with regard to classification was never challenged by the appellant, refund cannot be granted - AT
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Service Tax

• Cenvat Credit Applies to Vehicle Inspection and MS Plate Services at RTO, Even if Outside Manufacturing Area.

  Case-Laws - AT : Cenvat credit of service tax - services for inspecting vehicles providing MS plates at regional transport office - Certification of the cylinder did not take place in the manufacturing area - definition of "input service" does not restrict that the said service have to be rendered in the factory premises of the manufacturer - AT
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• Job Work in Iron & Steel Fabrication Not Classified as 'Manpower Supply' for Service Tax Purposes.

  Case-Laws - AT : Activity of Job work at the premises of client - fabrication of Iron Steel Products - the services rendered by the respondent assessee will not fall under the category ‘Manpower Supply and Recruitment Services' - AT
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• Court Grants Partial Stay in Cenvat Credit Dispute Over Handwritten Invoice Serial Numbers; Pre-printed Requirement Emphasized.

  Case-Laws - AT : Cenvat Credit - duty paying document - input services - sr. no was not pre-printed but hand written on Invoice - pre-printed of the invoices are required - stay granted partly - AT
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Central Excise

• Appellant Granted Duty Remission Due to Uncontrollable Auto-Combustion Accident; Supported by Central Excise Case Laws.

  Case-Laws - AT : Remission of duty - Auto combustion - accident of auto-combustion was beyond the control of appellant. Therefore the appellant is entitled for remission of duty as claimed. - AT
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VAT

• Court Quashes Tax Order Due to Seller's Registration Cancellation; Insufficient Reasons Given by Assessing Officer.

  Case-Laws - HC : Levy of tax – Validity of purchase – Cancellation of Registration of seller – in absence of sufficient reasons assigned by Assessing Officer, order becomes vulnerable and therefore, requires to be quashed and set aside - HC
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Case Laws:

• Income Tax

• 2015 (9) TMI 218
  Deduction u/s. 80IA - interest income earned in late collection of sales proceeds - Held that:- Tribunal directed the Assessing Officer to verify the detail and this being only the case of remand does not deserve any interference. However, it has been clarified that the Assessing Officer on the basis of prevalent rules shall examine the remanded issue. Exclusion sales tax and excise duty from the total turnover for the computation of deduction u/s. 80HHC even after insertion of section 145A - Held that:- Tribunal is right in law and on facts in directing to exclude sales tax and excise duty from the total turnover for the computation of deduction u/s. 80HHC even after insertion of section 145A of the Act See 2014 (3) TMI 934 - See Commissioner of Income Tax Versus Pogagen Amp Nagarsheth Powertronics Ltd. [2014 (3) TMI 934 - GUJARAT HIGH COURT] - Decided in favour of assessee.

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• 2015 (9) TMI 189
  Disallowance of income generated in the running of Working Women Hostel while computing the taxable income - assessee-society is registered as charitable institution under Section 12A - Held that:- It is not in dispute that as per the Memorandum, the predominant object of the assessee-society is education. It is not clear from the orders of the lower authorities whether the assessee was running any educational institution. Even though the assessee is providing funds to the students, it is not clear from the orders of the lower authorities whether such funds are provided by way of or scholarship or any other form of assistance. This Tribunal is of the considered opinion that the activity of the assessee-society has to be examined in the light of the Memorandum of the assessee-society before examining the claim under Section 11 of the Act. It also needs to be examined whether the establishment of Working Women Hostel would fall under the head “public utility service” under Section 2(15) of the Act. Since these aspects were not examined by the authorities below and the facts are not clear from the orders of the lower authorities with regard to activity of the assessee, this Tribunal is of the considered opinion that the Assessing Officer has to re-examine the issue and he has to bring out the entire facts with regard to object and activity of the assessee-society on record. Accordingly, the orders of the lower authorities are set aside and the entire claim of deduction under Section 11 of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue afresh in the light of the Memorandum of the assessee-society and the activity which is actually carried on by the assessee and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee. - Decided in favour of assessee for statsitical purposes. Claim of depreciation on the asset on which the assessee claims deduction under Section 11 as application of income - Held that:- Section 32 of the Act, which provides for depreciation on capital asset falls under Chapter IV (D) of the Act. Section 32 of the Act which provides for depreciation is also falling in Chapter IV (D) of the Act. Therefore, for the purpose of computation of total income, depreciation has also to be allowed on the capital asset. In fact, depreciation has to be allowed on the value of the capital asset. This Tribunal is of the considered opinion that Chapter III of the Act deals with an income which does not form part of total income, while Chapter IV deals with situation for computation of total income. Hence, an income which does not form part of total income as the same was exempted under Section 11 as application of income, this Tribunal is of the considered opinion that the assessee cannot claim depreciation under Section 32 of the Act. In other words, Section 11 which falls in Chapter III overrides Section 32 which falls in Chapter IV(D) of the Act. Therefore, this Tribunal is of the considered opinion that the assessee cannot claim depreciation, especially when the cost of asset was allowed as application of income under Section 11 of the Act. - Decided in favour of revenue.

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• 2015 (9) TMI 188
  Assessment under section 153A - additions or disallowances other than on the basis of incriminating material found during search operations challenged by assessee - Held that:- No addition can be made for any assessment year u/s 153A, the assessment for which is not pending on the date of search, unless any incriminating material is found in the course of search. See Sanjay Aggarwal vs. DCIT [2014 (7) TMI 254 - ITAT DELHI] - Decided in favour of assessee.

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• 2015 (9) TMI 187
  Non deduction of TDS u/s. 194H - payment of discount and rebate given by the Assessee to the consignment agent - Held that:- We find force in the arguments of Ld AR that the nature of payment is of discount and not commission which is liable for TDS more so in view of the fact that in the subsequent assessment orders for AY 2008-09,2009-10 and 2010-11, that have been framed u/s 143(3) and after the impugned order, wherein no disallowance u/s 40(a)(ia) on account of non deduction of TDS on the payments was resorted to by the AO and it is more relevant when the present impugned order was passed prior to the assessment orders passed u/s 143(3) and the assessing officer while framing the assessments u/s 143(3) was having the impugned orders before him and when the scope of assessment u/s 143(3) is much wider and it covers the computation of the total income by the assessee. Apart from the above, we find that issue in dispute is squarely covered in favour of Assessee by the decision of Hon’ble Apex Court in the case of Hindustan Coco Cola (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) AR also submitted that the payees to whom the amounts have been paid have already included the payments received from Assessee in their income and have also paid the taxes on the same and therefore there is no violation of the provisions of s. 201(1) of the Act and in support of this contention the assessee placed copy of the confirmations of the parties but however we find that there is no finding of AO or CIT(A) on the same. We are therefore of the view that the issue needs to be reexamined and decided. Therefore remit the issue to the file of AO to decide the issue afresh in the light of the foregoing - Decided in favour of assessee for statistical purposes

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• 2015 (9) TMI 186
  Registration application u/s 12AA(1)(b)(ii) r.w.s. 12A(a) denied - CIT observes the assessee trust to have been set up to serve a particular caste only and not to the whole society - 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. See CIT vs. Leuva Patel Seva Samaj Trust [2015 (9) TMI 109 - GUJARAT HIGH COURT] CIT’s objection quoting caste issue would qua some of assessee’s objects would be relevant only during sec. 11 proceedings and not at the impugned registration stage. The assessee’s sole substantive ground succeeds. - Decided in favour of assessee.

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• 2015 (9) TMI 185
  Undisclosed Receipts - assessee submitted that the income arising out of the entire receipts could not be taxed and prayed that the matter be restored to the file of AO for verifying the bank accounts and determine the net profit in the hands of assessee - Held that:- We find that the Bank accounts, in which the impugned amounts were deposited, have not been examined by the lower authorities. We are in agreement with the plea of the ld. counsel for the assessee that the entire receipt s cannot be assessed in the hands of assessee. D. R. has relied on page 7 of the assessment order and the contents had been produced earlier in which it was stated that the assessee had not made any claim that it had incurred any additional expenditure over and above what has been claimed in the accounts. However, in the affidavit of Manish K. Chetwani it was the submission that he had incurred expenses from his bank accounts. Under such circumstances, it is necessary that before arriving at any conclusion, these three bank accounts in which the amount s have been deposited, are examined by the Assessing Officer to arrive at proper conclusion. We, accordingly, set aside the order of ld. CIT(Appeals) and restore the matter back to the file of Assessing Officer for verification of Bank accounts to determine the income arising from the receipts credited in the impugned Bank ac counts. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 184
  Validity of assessment order passed under section 158BD - notice issued under section 158BD was issued upon a deceased person - Held that:- Section 159(2) nowhere authorize the AO to take proceeding against the individual who has already expired, that is why the legal representative under section 2(7) are regarded to be assessee. This aspect can also appreciated by an example, viz. an assessee died leaving behind four legal representatives. The AO issued notice on the deceased. One of the legal representatives participated in the proceedings and the AO passed assessment order. All the four legal representatives had inherited property of the deceased. Can tax liability imposed upon the deceased assessee will be recovered from the rest of the legal representatives, who inherited the property, but did not participate in the proceeding, because they had not received any notice ? Section 292BB will not help the AO in this situation. Therefore, considering from all angles, we find that notice issued by the AO upon the deceased is defective notice and no valid assessment order could be passed. Respectfully following the order of the ITAT in the case of Sikandarlal Jain (2010 (12) TMI 623 - ITAT, Agra ), we allow the first ground of appeal and quash the assessment order. - Decided in favour of assessee.

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• 2015 (9) TMI 183
  Disallowance of interest Exp. @ 50% of late payment interest paid - CIT(A) deleted addition - Held that:- The assessee has alleged that it made purchases of yarn of Rs. 2,95,92,854/-. On certain occasion it could not make payment in time. Therefore, it has to make the payment of yarn along with interest on the amount due. The AO did not find fault with the purchases made by the assessee nor doubted the existence of the parties who have supplied the yarn. Any way, the AO has interfered in the wisdom of assessee of doing the business. The ld. AO felt that assessee should do the business in a particular way and should not keep some cash balance in hand. It should discharge its liability towards purchase of yarn. But, i.e. not the correct way visited with the AO. Therefore, in our opinion, ld. first appellate authority has rightly deleted the addition. - Decided in favour of assessee. Addition estimating G.P. - CIT(A) deleted addition - Held that:- AO has not pointed out any defect in the books which unable him to deduce the true income. His approach was that assessee ought to have earned more income than the one shown by it. G.P. disclosed during this year is better than that of immediately preceding two yeaRs. The ld. counsel for the assessee pointed out that in earlier two years assessments were under section 143(3). The reference of Rs,62,704 made by the AO is in respect of income where the GP of the assessee is Rs. 88 lacs. If this approach of the AO is considered then no assessee shall have any loss. The ld. CIT(A) has appreciated this aspect in his findings. After going through the finding of CIT(A) we do not find any error in his order. This ground of appeal is rejected. - Decided in favour of assessee.

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• 2015 (9) TMI 182
  Addition u/s 41(1) - Held that:- In the facts of the present case, it is not possible to conclude that the debt has become unenforceable. It is well settled that reflecting an amount as outstanding in the balance sheet by a concern amounts to the concern acknowledging the debt for the purpose of Sec. 18 of the Limitation Act, 1963. Further, sundry creditors have been reflected in the balance sheet of the assessee and AO has confirmed that there was a liability standing at the end of the year. The outstanding balances reflected as payable to the four sundry creditors are the opening balances which had been carried forward from previous year. The issue as to the genuineness of a credit entry thus does not arise in the current year and this issue could only be examined in the year in which the liability was recorded as having arisen. The Department having accepted the balances outstanding in the previous year, it was not open by Ld. CIT(A) to confirm the addition on the ground that assessee could not prove the genuineness of the said transactions which were undertaken. Thus hereby delete the addition made by AO u/s 41(1) - Decided in favour of assessee.

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• 2015 (9) TMI 181
  Non deduction of tds - assesses paid interest to KIADB - assessee had a belief that it was not liable to deduct tax since KIADB was exempt from tax, being registered under Section 12A - Assesee in default - Held that:- In the instant case, the assessee bank had taken term deposit from KIADB. The KIADB was entitled to interest on these term deposits. These interest incomes which have received by KIADB are not liable to be taxed in view of the Registration under Section 12AA enjoyed by KIADB. When the interest income is not liable for taxation, there is no obligation on the part of the assessee bank to make deduction of tax at source. Since the interest income was not liable to be taxed in the hands of the recipient, there is no obligation on the part of the assessees to deduct tax at source. However, since the Hon'ble High Court judgment in the case of CIT Vs. ITC Hotels Ltd. [2015 (8) TMI 987 - KARNATAKA HIGH COURT] is rendered subsequent to the order of the CIT (Appeals), the CIT (Appeals) did not have the benefit to peruse the same Restore the issue for de novo consideration to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes.

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• 2015 (9) TMI 180
  Penalty under section 272A(2)(k) - failure on the part of the assessees to file the quarterly returns of TDS in Form 24Q and 26Q for the year under consideration - CIT(A) deleted the penalty - Held that:- Assessee has not furnished the relevant details and documents to support and substantiate the case of the assessees that the delay on the part of the concerned deductees in furnishing details resulted into the delay in filing the relevant TDS returns by all the assessees. He however has contended that the assessees are in the position to produce all these relevant details as well as documentary evidence before the A.O. to establish that there was a delay on the part of the concerned deductees to furnish their PAN details and the same constituted a reasonable cause which prevented the assessees from filing the relevant TDS returns within the stipulated time. He therefore has urged that one opportunity may be given to the assessees by sending the matter back to the A.O. for this purpose. Thus consider it fair and proper and in the interest of justice to accept this contention of the Ld. Counsel for the assessee and since the learned D.R. has also not raised any objection in this regard, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the A.O. with a direction to decide the issue relating to imposition of penalty under section 272A(2)(k) afresh, after giving the assessees proper and sufficient opportunity to support and substantiate their case of reasonable cause by producing relevant details and documentary evidence - Decided in favour of revenue partly by way of remand.

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• 2015 (9) TMI 179
  Penalty levied u/s 271C - non deduction of TDS from the payments made to creditors for expenses, unpaid labour charges, job work charges, transport charges, labour charges and royalty payments - Held that:- Assessee in the present case has given explanation before the authorities below that the due to circumstances prevailing and under bonafide belief that tax was not required to be deducted at source U/S.194C on the payments in question. Moreover, no such issue was made out by Revenue in A.Y. 2002-03, in which year assessee has paid an amount of Rs. 1060.04 lakhs as against Rs. 948.09 lakhs during this year. Thus the non-deduction of tax at source on such payments cannot be said to be without a reasonable cause within the meaning of Section 273C. Therefore, the penalty levied u/s.271C in the instant case is not justified. As for as the short deduction is concerned, the assessee itself did not pursue the matter and conceded the lapses, which is evident from the order of the Tribunal in quantum appeal. Therefore, there was lapse on the part of the assessee by short deducting tax at source from payments made to Job work charges and Transportation charges u/s 194A and 194C for the A.Y. 2003-04 and u/s 194C for the A.Y. 2004-05, which was accepted by the authorized representative before the Bench. Thus short deduction of TDS u/s 194A amounting to Rs. 38,268/- and Job work charges and transportation charges u/s 194C amounting to Rs. 65,555/- for the A.Y. 2003-04 and short deduction of TDS u/s 194C for labour charges and transportation charges amounting to Rs. 40,900/- for the A.Y. 2004-05 is confirmed. - Decided in favour of assessee in part.

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• 2015 (9) TMI 178
  Computation of Profit Level Indicator (PLI), being, the Operating Profit/Total Cost (OP/TC) of the assessee - Advances written off treated as non-operating in the calculation of its OP/TC by assessee - TPO held it to be an operating cost - Held that:- On a pertinent query, it was admitted by the ld. AR that the Advances so written off were given in relation to trading items. Like debts becoming bad from the sale of goods assuming the character of operating cost, the advances given in relation to trading items, becoming non-recoverable, also cannot be considered as anything other than an item of operating cost. In our considered opinion, such amount has rightly been considered as an operating cost. Fixed assets written off - Held that:- The amount of Rs. 3,84,196/- is distinct from the amount of depreciation claimed by the assessee at Rs. 1.45 crore. This represents a loss on the fixed assets which has been written off. The purchase of fixed assets is capital expenditure. As such, the amount of fixed assets when written off, otherwise than by depreciation, falls for consideration as an item of non-operating cost. We, therefore, accept the assessee’s contention for treating this sum of Rs. 3,84,196/- as non-operating. Loss on foreign exchange - Held that:- The amount of foreign exchange gain/loss arising out of revenue transactions is required to be considered as an item of operating revenue/cost, both of the assessee as well as comparables. We, therefore, hold that the AO was justified in considering forex loss as operating cost as against the assessee’s claim of non-operating cost. Computation of transfer pricing adjustment in respect of transaction with Associated Enterprises (AEs) and non-AEs - AR contended that no transfer pricing adjustment is possible in respect of transactions with non-AEs - Held that:- As the entire exercise under Chapter-X is confined to computing total income of the assessee from international transactions having regard to the arm’s length price, there is no scope for computing income from non-international transactions having regard to the ALP. As the TPO has computed the transfer pricing adjustment qua all the transactions carried out by the assessee with reference to the base of ‘total costs’, also inclusive of costs relevant for transactions with non-AEs, we vacate the impugned order on this issue and restore the matter to the file of the TPO/AO for recalculating the amount of addition of transfer pricing adjustment by taking into consideration the international transactions only under this segment, to the exclusion of transactions with non-AEs. Non considering operating profit margin from internal comparables in computing the ALP of international transactions - Held that:- Various Benches of the Tribunal have repeatedly held that internal comparables should be preferred over external comparables, if these are actually comparables. The Mumbai bench of the tribunal in Gharda Chemicals Ltd. vs. DCIT (2009 (11) TMI 653 - ITAT MUMBAI ) has held that internal comparables should be preferred over the external comparables. Since this issue was not taken up before the TPO and the DRP has not given any finding on specific objection taken before it in this regard, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is restored to the file of the TPO/AO with a direction to decide this issue afresh, as per law, after allowing a reasonable opportunity of being heard to the assessee. Disallowance on account of expenses incurred for improving the existing product - Held that:- Both the sides are in agreement that the facts and circumstances of this ground are mutatis mutandis similar to ground no. 3 of the assessee’s appeal for the AY 2005-06. Vide our separate order passed for the said earlier year, we have accepted the assessee’s claim in this regard by relying on an earlier order passed by the Tribunal in the assessee’s own case for the AY 2007-08. This ground is, therefore, allowed in favour of the assessee

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• 2015 (9) TMI 177
  Denial of deduction made by the Society U/s 80P(2)(a)(i) - Held that:- After going through the case laws cited by the assessee as well as byelaws of society, revealed that the assessee is not a cooperative bank but cooperative society. The exclusive provision to Sub-section (4) of Section 80P is not applicable in the case of the assessee. The department itself has allowed deduction U/s 80P(2)(a)(i) of the Act in A.Y. 2007-08, which has not been reopened U/s 148 and no order U/s 263 was passed by the department. The ld Dr had not brought on record any evidence that in preceding year, the Assessing Officer’s order in A.Y. 2007-08 had not been accepted by the department. By respectfully following the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd.(2014 (2) TMI 28 - GUJARAT HIGH COURT) on identical issue, we hold that the assessee is a cooperative society not a cooperative bank and is entitled for deduction U/s 80P(2)(a)(i) of the Act. - Decided in favour of assessee.

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• 2015 (9) TMI 176
  Disallowance of expenses - CIT(A) deleted addition - Held that:- The assessee’s attitude was not cooperative with this Bench, therefore, we have not allowed further adjournment and on perusal of the assessment order that the ld Assessing Officer made specific observation on various points as mentioned in the preceding paras of this order. However, the ld CIT(A)’s order is not specific, is very sketchy and cryptic, therefore, in the interest of justice, we set aside the order to the CIT(A) and directed to consider all the aspects referred by the Assessing Officer in his assessment order and pass a speaking order. - Decided in favour of revenue for statistical purposes only.

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• 2015 (9) TMI 175
  G.P. addition - CIT(A) reducing the G.P. rate on the turnover - Held that:- It is undisputed fact that the assessee did not produce complete books of account with vouchers for verification by the assessee as the assessment was made U/s 144 of the Act. However, the ld CIT(A) had called for remand report from the Assessing Officer, who has proposed the G.P. rate after verification of the certain bills @ 30.73% as against 25.35% applied by the Assessing Officer. However, the ld CIT(A) found defect in the computation of G.P. rate, which was calculated on purchases bill but as per accountancy, the G.P. rate is always calculated on sale, which has rightly been applied by the ld CIT(A). After examining the defect, the ld CIT(A) came to conclusion that 20.72% G.P. rate is applicable in assessee’s case on enhanced sale. Therefore, the ld CIT(A) has thoroughly analysed the remand report and assessee’s submissions, which has not been controverted by the ld DR. Therefore, we uphold the order of the ld CIT(A). - Decided against revenue Unexplained loan - CIT(A) deleted addition - Held that:- CIT(A) admitted the additional evidence even without passing order on admitting the additional evidence in his order. The assessee had not furnished any evidence before the Assessing Officer as he was non-cooperative at the time of assessment proceedings. Even creditors are assessed with the same Assessing Officer. It is settled law that the assessee has to furnish the required details with confirmation before the Assessing Officer for any claim. However, the technical defects found in the order of the ld CIT(A) is waived as minor son’s income is clubbed in the hands of assessee himself and explanation for assessee’s mother loan had been filed, therefore, we do not intervene in the order of the ld CIT(A) on technilities. Accordingly, we uphold the order of the ld CIT(A). - Decided against revenue

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• 2015 (9) TMI 174
  Disallowance interest/ bank charges paid to bank on overdraft - Held that:- It is a fact that whatever names mentioned by the ld. CIT(A) in his findings were the loanee in preceding years. Therefore, the ld. CIT(A)’s finding is totally wrong. However, the AO’s findings in case of M/s. Mittal Pigment (P) Ltd. and M/s. Gaurav (P) Ltd. were found correct that during the year under consideration the assessee had given Rs. 60 lacs on CD A/c maintained with HDFC Bank bearing A/c no. 1672070000032 on 12-12-2005 to M/s. Mittal Pigment (P) Ltd. and Rs. 1.50 crores to M/s. Gaurv (P) Ltd. on 17-01-2006 from the bank saving a/c No. 450101 – 423915 maintained with Rajasthan Bank Ltd., Kota. The assessee has transferred Rs. 43 lacs from CD A/c of HDFC Bank, Kota to A/c No. 1672070000032 on 1-02-2005 in the bank maintained with Rajasthan Bank Ltd., Kota. The assessee had not charged any interest. It is undisputed fact that the assessee had paid bank interest of Rs. 472,324/- which includes interest paid to HDFC Bank, Kota at Rs. 1,21,214/- and SBI, Chawni Branch, Kota at Rs. 3,51,110/- which has been directly adjusted by the assessee against interest income. The AO had established the nexus that the assessee had borrowed the funds on interest and advance the interest free loans to the sister concerns or other concerns. Thus in view of the above deliberations, we confirm the order of the ld. CIT(A). - Decided against assessee.

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• 2015 (9) TMI 173
  Penalty U/s 271(1)(c) - CIT(A) deleted part addition - Held that:- Explanation-1 to Section 271(1)(c) of the Act raises a presumption of concealment when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee to show otherwise by cogent and reliable evidence. When the initial onus placed by the explanation has been discharged by him, the onus shifted to the department to show that the amount in question constituted income and not otherwise. In case before us, the assessee has no intention to declare its true income. It is further held that satisfaction of the Assessing Officer need not to be recorded in a particular manner. Same view also expressed by the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Shyamraj Singh (2014 (5) TMI 776 - PUNJAB & HARYANA HIGH COURT ). The satisfaction for initiation of penalty is coupled with the findings of the assessment order would show that satisfaction existed in the course of assessment itself and deemed to constitute satisfaction. The Hon'ble Supreme Court in the case of Union of India Vs. Dharmendra Testile Processors [2008 (9) TMI 52 - SUPREME COURT] has held that willful concealment is not an essential ingredient for attracting civil liability. The assessee intentionally claimed the capital expenditure as revenue expenditure on new project (i.e. cement), which was separate activity of the assessee company from the existing business i.e. production of fertilizers. Therefore, we uphold the order of the ld CIT(A). - Decided against revenue.

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• 2015 (9) TMI 172
  Disallowance of interest expenses on the basis of net debit cumulative balance of all the partners - Held that:- All the capital accounts of the partners are to be examined by the AO while disallowing the interest on debit balance. The assessee has calculated the disallowance of interest on the basis of credit and debit balances of all the partners at Rs. 4,91,054/-. Therefore, we uphold the order of ld. CIT (A). Thus Revenue’s appeal on this ground and assessee’s cross objection are dismissed. Trading addition - Held that:- The facts and circumstances of the case are identical to A.Y. 2008-09. During the year under consideration the assessee has prepared the closing stock on estimated basis which cannot be verified as no quantitative and qualitative stock was maintained by the assessee. The GP rate has increased compared to preceding year on enhanced turnover. However, the defects pointed out by the AO required to be confirmed certain addition, therefore, we reverse the order of ld. CIT (A) and in the interest of justice, addition to the tune of Rs. 1,00,000/- is confirmed against addition made by the AO at Rs. 3,00,000/-. Decided partly in favour of assessee.

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• 2015 (9) TMI 171
  Revision u/s 263 - Held that:- For bank charges paid of Rs. 8363/-. The amount is nominal and ld. AO has examined the details of bank reconciliation with bank charges. Therefore, on this point, we do not find the order of AO erroneous and prejudicial to the interests of the revenue. But commission payment, quantitative details and interest issue had not been examined by the AO after calling the partial details and there is no application of mind before allowing the same. It is fact that assessee is a commission agent and wholesale general merchant of grains. However, the commission claimed to be paid to M/s. Rajesh Pipe Centre, Madurai who is dealing in MS, GI and PVC pipes. Further, in quantitative details, there was a discrepancy in assessment record which has not been verified by the AO during the assessment proceedings which is also lack of application of mind. Similarly, no interest has been charged by the assessee on loans given to Shri Jagdish Meena but the AO has collected the information from the assessee and simply put on record which also shows that AO had not applied his mind on it. Malabar Industrial Co. Ltd. case(2000 (2) TMI 10 - SUPREME Court) squarely applies wherein held that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase “ prejudicial to the interests of the Revenue” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. The ld. CIT had set aside the order of the AO on certain issues for making proper enquiry and allow the adequate opportunity of being heard to the assessee on issues set right in the order itself. Accordingly we allow the assessee’s appeal partly as discussed in the paras above. - Decided partly in favour of assessee.

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• 2015 (9) TMI 170
  Entitlement to deduction u/s 80P - interest income earned on the deposits kept with banks - whether is not eligible for deduction u/s 80P(2)(a)(i) of the Act and hence liable to be assessed as income from other sources as held by CIT(A)? - Held that:- As decided TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED case [2015 (2) TMI 995 - KARNATAKA HIGH COURT] in the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. See Totagars Co-operative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT) - Decided in favour of assessee.

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• 2015 (9) TMI 169
  Telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign exchange - whether should not be excluded from the export turnover for the purpose of computing deduction under section 10B - Held that:- Respectfully following the judgment of the jurisdictional High Court in the case of Motor Industries Co. Ltd. (2015 (7) TMI 876 - KARNATAKA HIGH COURT) to which both of us are signatories, we direct the AO not to exclude the expenditure incurred in foreign currency towards travelling and also salary of the employees of the assessee deployed abroad for development of, testing, installation and monitoring of software outside India, after verification of the exact nature of expenditure while computing deduction u/s 10A of the Act. - Decided in favour of assessee.

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• 2015 (9) TMI 168
  Disallowance of expenditure on account of Guest Complimentary and Guest Supplies - CIT(a) deleted disallowance - Held that:- Principally as regards allowability of expenditure debited on account of food and beverages under the head Guest complimentary expenses and expenditure on account of supply of sundry cosmetics under the head guest complimentary the same is allowable. However, we note that as regards guest complimentary before the ld. CIT(A) the assessee has submitted that it was on account of complimentary breakfast and the accounting entry made was guest complimentary is debited and room rents are credited. This has been justified on the ground that room rent is debited on the gross amount which is inclusive of complimentary break fast and or meal. Now in this regard we find from the paper book submitted by the assessee that there is a guest complimentary ledger. This aspect has neither been explained by the assessee nor appreciated by the ld. CIT(A). The scheme of entry shown as above showed that it is not a simple matter as debiting guest complimentary on account of food and beverages and crediting room rent. It cannot be said that the ld. CIT(A) has properly understood the scheme of assessee's entry. Before us also except producing copy of the ledger account the ld. Counsel of the assessee could not explain in detail the impact of the entries in the aforesaid complimentary ledger account. How the guest complimentary account is affected by business promotion, staff welfare and F&B cost adjustment has not been explained. In such circumstances in our considered opinion the issue needs to be remitted to the file of AO. AO is directed to examine in detail the nature of guest complimentary ledger account and the entries made therein. After detail examination of the ledger complimentary account he is directed to consider the allowability of the expenditure booked/affected through this account - Decided in favour of revenue for statistical purposes.

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• 2015 (9) TMI 164
  Condonation of delay - Held that:- The order of the ITAT has been passed on 3rd September, 2010 and the MA No. has been preferred on 24.1.2014, after a lapse of more than three years, but filed on 28.8.2014. There was clear admission by the DR at the time of hearing the appeal that the Department has not preferred an application to COD even. There is no explanation on that, even though the Hon’ble Supreme Court has withdrawn the constitution of COD by the above order. The inordinate delay cannot be condoned and, therefore, we dismiss the MA filed by the Revenue. - Decided against revenue.

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• Customs

• 2015 (9) TMI 197
  Application for Settlement – Bar as per section 127B(1) and 123(2) – Revenue contended that application filed by respondent for settlement of its case could not have been entertained by Settlement Commission because there was express bar contained in third proviso to Section 127B(1) of Customs Act, 1962 – Held that:- plain reading of third proviso to Section 127B(1), it is evident that no application for settlement can be made if it relates to goods to which Section 123 applies – Section 123(2) specifically provides that said Section applies to, gold – Therefore, clear that when two provisions are read together, no application under Section 127B(1) can be made in relation to gold – Respondent made application, nevertheless, to Settlement Commission which has entertained same and has also rejected plea raised by Revenue that it did not have jurisdiction to entertain such application – Thus, Settlement Commission did not have jurisdiction to entertain such application as there was complete bar as per Section 127B(1) read with Section 123 – For all said reasons, impugned order passed by Settlement Commission is without jurisdiction and is set aside – Decided in favour of revenue.

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• 2015 (9) TMI 196
  Bail Application – Smuggling of gold – Statement of each of accused-petitioners revealed that accused-petitioners jointly and in connivance to each other on previous several occasions smuggled gold into India without declaration and payment of customs duty – As value of customs duty evaded or attempted to be evaded was more than Rupees Fifty Lacs, offence committed by each of accused-petitioners was non-bailable within meaning of sub-section (6) of Section 104 of Act – Held that:- Section 104(6) of Customs Act, 1962 provides that notwithstanding anything containing in Code, offences punishable under Section 135 of Act shall be non-bailable. If any person in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon shall be punishable with imprisonment for term which may extend to seven years and with fine in case of offence relating to any goods market price of which exceeds one crore rupees or evasion or attempted evasion of duty exceeding fifty lakh of rupees – Further offence under Section 135 of Act for evasion or attempted evasion of duty must be treated to be continuous offence until customs duty is paid upon goods which have been imported without payment of customs duty upon them – Expression "Any person" used in Section 135 of Act does not mean only one person but more than one person also if they jointly and knowingly involve themselves for fraudulent evasion or attempted evasion of customs duty chargeable of goods – If more than one person acting in concert with each other has evaded or attempts to evade customs duty, each of them should be treated as "Any Person" within meaning of Section 135. Looking to gravity of offence, petitioners are not entitled to bail on merit – Also accused-petitioners permanently reside in Muskat and it is unlikely that they will return to India to face trial once bail is granted to them – Consequently, all applications for grant of bail hereby, dismissed – Decided against Accused.

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• 2015 (9) TMI 195
  Amendments to petition – Cancellation of Importer-Exporter Code no. – Certain disputes arose between respondent and STC – STC filed summary suits for recovery against respondent against which petition was filed – Meanwhile Addl. DGFT issued Show Cause Notice to respondent for having prima facie violated provisions of Foreign Trade (Development and Regulation) Act, 1992 and was called upon to show cause why its Importer- Exporter Code No.(IEC) should not be cancelled – Pursuant to which respondent sought amendment in prayer clause of petition for adding Show Cause Notice which was allowed – Held that:- clear by proposed amendment that nature of petition gets substantially and materially altered and changed from original writ petition – Amendments which seek to add entirely new cause of actions which virtually amount to substitution of new plaint or new cause of action in place of what was originally there, would normally be refused by Court – Hence, principles regarding amendment of pleadings as provided in CPC would be guiding factor while adjudicating applications for amendment in writ petition – Amendment now sought by respondent has effect of changing entire writ petition substantially – New facts and issues are being added to petition – Amended petition would virtually tantamount to substitution of altogether new case when compared to original case – It is appropriate that respondent challenges Show Cause Notice in different proceedings and not mix up facts and submissions – Appeal allowed.

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• 2015 (9) TMI 194
  Suspension of clearance of goods - Infringement of IPR - contravention of Section 11 of the Customs Act, 1962 read with Notification No. 47/2007-Cus.(NT) dated 8.5.2007 - Held that:- DR is not able to explain as to how Revenue is aggrieved by the impugned order of Commissioner (Appeals) which allowed enforcement of bond executed by the right holder for recovering of demurrage charges. The grounds of appeal are identical to the grounds advanced by Revenue in its appeal before the Commissioner (Appeals) and we find that those grounds are adequately dealt with by Commissioner (Appeals). Revenue has no ground to be aggrieved by Commissioner (Appeals’) order which only stated that the recovery of demurrage charges can be made from the right holder by enforcing the bond executed by him. Indeed setting aside the impugned order-in-appeal would meant that the Revenue cannot recover the demurrage charges by enforcing the bond executed by the right holder. In these circumstances, we are of the view that Revenue cannot be said to be aggrieved by the impugned order-in-appeal and consequently has no right to file an appeal there-against under Section 129A of the Customs Act under which only a person aggrieved by the impugned order can file appeal - Decided against Revenue.

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• 2015 (9) TMI 193
  Valuation of goods - Undervaluation of goods - Misdeclaration of goods - Held that:- There is no basis given in the adjudication order to suspect that the goods were of superior quality and the test reports are not supportive of this inference - there is no legal basis to base the finding on the basis of Palm Oil Refiners Association of Malaysia ( PORAM )'s product specifications particularly when the goods were of Oman origin. Further based on PORAM it was held that the goods were PFAD of superior quality. This finding directly flies in the face of the CRCL Report which categorically stated that the goods are Vegetable Fatty Acid. Further for the purpose of valuation the Adjudicating authority proceeded to compare the import data of PFAD and that too from Malaysia and Indonesia and not from Oman. In the impugned order it is clearly noted that the said import data is not valid for the purpose of valuation in terms of Rules 5 and 6 of valuation Rules 1988 and "no further data pertaining to Rule 7/ 7A was available". Therefore the determination of the value of the impugned goods contained in nine containers based on the import data of PFAD (which is not the same as vegetable fatty acid) and that too from countries other than the country of origin and under Rule 8 without giving any methodology is totally without any sustainable legal basis. It is also seen that the goods contained in nine containers were released without any bond or undertaking and therefore, in the wake non-availability of the goods, the redemption fine is not imposable. - The value of the goods in the 10th container was adopted on the basis of the Tariff Value for Crude Palm Oleic for which again there is no legal justification as the CRCL report about the contents of the 10th containers no where stated that the goods are Crude Palm Oleic. We also find that the show cause notice alleged that the declared value was U.S.$ 410 Per MT while in fact the value declared by the importers was U.S.$ 420 PMT. The Adjudicating authority has recorded that the goods were found to be odorless, off-white in colour and goods were not of Oman Origin although there is no basis whatsoever cited for recording such findings. None of the laboratory reports stated that the goods were odorless and off-white in colour . - No infirmity in impugned order - Decided in favour of assessee.

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• 2015 (9) TMI 192
  Penalty u/s 114 - Import of illicit consignment - Held that:- Appellant that he cannot be penalised on the basis of the statements of the co-accused particularly in the absence of cross-examination. However, I find that he himself gave statement under Section 108 ibid that he agreed to use of IE code of M/s. ICI India Pvt. Ltd. and affixed the signatures on the documents to get the consignment cleared. This statement was never retracted and is an admissible evidence. Indeed, the statement of the appellant which was never retracted is in complete harmony with the statements of Mr. Rajeev Gupta and Shri Nand Ram. Thus, even if the statements of both these persons are not relied upon, the very fact that they are in harmony with the statement of the appellant, further enhances the evidentiary value of the appellant’s statement to a degree sufficient for the purpose of imposition of penalty under Section 114 ibid. In the light of the foregoing and having regard to the nature of mis-declaration and nature of the impugned goods, I am of the view that the appellant is liable to penalty under Section 114 of the Customs Act. Also the penalty imposed by the adjudicating authority is neither excessive nor arbitrary or perverse. Therefore, I see no reasonable ground to set aside the impugned order - Decided against assessee.

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• 2015 (9) TMI 191
  Denial of refund claim - import of wire rods in coils - claim of exemption after assessment and clearance of goods - Denial on the ground that appellant did not challenge the assessment citing judgements of Hon'ble Supreme Court in the cases of Priya Blue Industries Ltd. Vs. CC (Prev.) [2004 (9) TMI 105 - SUPREME COURT OF INDIA] and CC Vs. M/s. Flock (India) Pvt. Ltd. [2000 (8) TMI 88 - SUPREME COURT OF INDIA] - Held that:- In the case of Aman Medical Products Ltd. (2009 (9) TMI 41 - DELHI HIGH COURT), the High Court of Delhi has held that for claiming benefit of a Notification to which the appellant was entitled, the original assessment need not be challenged when higher duty was paid by inadvertence without taking benefit of Notification due to ignorance. We, however, notice that the issue here involves classification because Notification No.56/2008-Cus, dated 29.04.2008 is admittedly not applicable to goods classified under CTH 72139990. In these circumstances, the appellants contention that it was entitled to the benefit of Notification No.56/2008-Cus is totally untenable. As regards the contention that its goods were classifiable under 72.13 (which is covered under exemption Notification No.56/2008-Cus), it is pertinent to note that the classification of the goods requires examination thereof and in absence of the goods there is no way the Customs would be able to take up the issue of classification at this stage. It needs to be reiterated that classification under 72.21 was claimed by the appellant itself and Customs found the said classification to be correct and accordingly assessed the Bill of Entry. In these circumstances, when Notification No.56/2008-Cus does not cover the heading 72.21 and the issue of classification of goods (specially in the absence thereof) cannot be undertaken while deciding the refund application and further that the assessment with regard to classification was never challenged by the appellant, we find no infirmity in the impugned order - Decided against assessee.

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• 2015 (9) TMI 165
  Classification of grade of steel imported and exported – Cancellation of redemption certificate – Petitioner submitted that in view of communication of Norms Committee, it makes no difference whether actual import was of Non-Alloy or of Alloy Steel HR Coils/Plates so long as grade of steel of exported pipes is same as that of imported HR Coils/Plates – However, in spite of above direct Addl. DGFT, in impugned order cancelled Redemption Certificates abinitio and imposed fiscal penalty equivalent to value of duty exemption availed against Advance Authorizations – Held that:- 'grade' of steel exported (such as API) has to be compared with 'grade' of steel imported by petitioner to ensure compliance with directions of Norms Committee – This has admittedly not been done – Therefore fit case for granting interim stay against operation and implementation of order of Additional DGFT – Said interim order shall not come in way of respondent authority considering alloy and non-alloy, are not be treated as grades – Interim stay granted in favour of Assesse.

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• PMLA

• 2015 (9) TMI 190
  Denial of security clearance - rejection of the application for pre-qualification for the e-auction of the first batch of private FM Radio Channels (Phase – III) - Lifting of corporate veil - Held that:- whether the security assessment in respect of Shri Dayanidhi Maran and Shri Kalanithi Maran is germane to the requirements of security clearance prescribed in clause 3.8 of the NIA. Clause 3.8 stipulates the requirement of a security clearance of the “company” as well as all its “Directors on the Board”. Now, on a plain reading, this would imply that the company which has applied must be security cleared. Not only the corporate entity, which is distinct and separate in law, but also its Directors as individuals, distinct from the corporate entity, have to be security cleared. At the same time, the clause does not, on a plain reading, extend to shareholders of the applicant company. - Wherever the respondent wanted to bring in a shareholder or refer to the concept of control over the company it has done so specifically as would be evident from clauses 3.2.1(b), 3.6 and 3.9 as pointed out earlier in this judgment. It therefore follows that there is no explicit reference to shareholders of the company in clause 3.8 of the NIA. But, this does not mean that the respondent is prevented from looking behind the corporate identity of the applicant company. There is no allegation that the petitioner companies were created as a camouflage to shield the persons exercising control over them from any liability. There is also no allegation that the petitioner companies themselves have indulged in any activities which could raise security concerns. In fact, both the petitioner companies have been operating their licenses under Phases I and II since 2002/2003. Even when the cases against the Marans were registered in 2011, the petitioner companies have continued to operate their respective radio channels without any objection concerning security issues. - petitioner companies themselves have not been alleged to be vehicles of any transgression of law. They have been functioning since 2002 / 2003 without there being any allegation regarding their functioning resulting in any security concerns. - we quash the impugned decision denying security clearance to the petitioner companies. The said petitioner companies shall be entitled to participate in the e-auction subject to other conditions being fulfilled. - Decided in favour of appellant.

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• Service Tax

• 2015 (9) TMI 217
  Cenvat credit of service tax - services for inspecting vehicles providing MS plates at regional transport office - Held that:- "input service" means any service which is used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products. In the case in hand, it is undisputed that CNG can be filled only in those cylinders which are certified to be fit to carry the CNG and conform to the provisions of the Explosives Act and rules made thereunder. It is also mandated that there is restriction in filling of any cylinder with compressed gas unless fitness of such cylinder is approved by an agency authorised to do so. It is undisputed that the cylinder cannot be filled with CNG unless they are certified to be worthy of filling of gas which in this case is being done by the outside agency appointed by the appellant. It has to be held that unless the cylinders are certified, the appellant cannot fill the gas in the said cylinder, is an activity in connection to their business of sale of CNG. Certification of the cylinder did not take place in the manufacturing area, will also not carry the case of the revenue any further as the definition of "input service" does not restrict that the said service have to be rendered in the factory premises of the manufacturer - that when the cylinder are certified by an agency and service tax is paid on such services Cenvat credit cannot be denied to appellant. - Impugned order unsustainable - Decided in favour of assessee.

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• 2015 (9) TMI 216
  Denial of refund claim - clearing and forwarding agent services - Revenue contends that that service tax paid on clearing and forwarding agent services are post clearance of the final products from factory and the ownership of the goods still vested in the assessee's hand; that the place of removal cannot be port where the services are received - Held that:- larger bench in the case of Honest Biobet Pvt. Ltd. (2014 (11) TMI 579 - CESTAT AHMEDABAD) has held that load port is to be considered (as place of removal) under sec. 4(3)(c)(iii) of the Central Excise Act, 1944; accordingly it has to be held that any services received by an assessee at the port for export of goods has to be held as eligible for Cenvat credit under the provision of Cenvat Credit Rules, 2004. - Decided against Revenue.

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• 2015 (9) TMI 215
  Demand of service tax - Receipt of royalty - Held that:- both the lower authorities have erred in coming to a conclusion that appellant is liable to pay the service tax. if amount which is paid for as royalty and remains undisputed, the said amount of royalty cannot be covered under the Intellectual Property Service which came into tax net from 10.9.2004. It is seen from the records that the lower authorities have sought to recover the service tax liability from the appellant by invoking the provisional collection of tax to hold that service tax liability arises. In our view, this is incorrect, atleast, in respect of service tax liability, as in the case of service tax liability on any new services, it comes into effect only from the date which is notified by the Central Government by notification. - notification which was issued for taxing an amount paid as royalty under Intellectual Property Service was w.e.f. 10.9.2004. If that be so, service tax liability would not arise on the amount received by the appellant during the period 20.4.2004 to 10.9.2004. - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

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• 2015 (9) TMI 214
  Services of Supply of Manpower - Job work at the premises of client - fabrication of Iron Steel Products - Respondent assessee had undertaken certain jobs which has been bundled as a contract. Held that:- In the entire records or the memo of appeals on the ground, Revenue has not brought any contrary evidence disputing the factual matrix recorded by the first appellate authority. - first appellate authority was correct in coming to a conclusion that the services rendered by the respondent assessee will not fall under the category ‘Manpower Supply and Recruitment Services'. We concurred with the views of first appellate authority that the issue is now squarely covered by the various decision of this Bench which relied upon judgment and order of the Tribunal in the case of M/s. Ritish Enterprises Vs. CCE, Bangalore [2009 (10) TMI 182 - CESTAT, BANGALORE]. - Decided against Revenue.

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• 2015 (9) TMI 213
  Business Auxiliary service - Receipt of commission from various financial institutions for rendering services of collecting, bringing and forwarding the loaners to the banks and also verifying their forms - eligibility of Notification No. 13/03-ST and Notification No.24/04-ST - Held that:- Commissioner has correctly come to the conclusion that the appellant is not eligible for the benefit of the Notification No. 13/03-ST as he is not a Commissioner agent. We notice from the impugned order that the Commissioner has not held the appellant as commission agent. Secondly, as regards the Notification No. 24/04, the claim of the appellant is that they are providing services on behalf of the clients seems to be incorrect, inasmuch as the appellant is providing services to their clients i.e. financial institutions, hence the Commissioner has correctly denied claim. Since the issue is covered in appellants own case against him, we do not find any merit in the appeal, accordingly the appeal is rejected as devoid of merits. - Decided against assessee.

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• 2015 (9) TMI 212
  Denial of refund claim - Refund in respect of outward transportation - refund not claimed in respect of inward transportation - Held that:- assessee's act of not claiming refund in respect of inward transportation is not relevant to determine the eligibility for refund of tax paid on outward transportation. Show-cause notice issued had no merits and both the orders passed on that basis also have no merit.

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• 2015 (9) TMI 211
  Denial of refund claim - Refund of unutilized CENVAT Credit - Revenue contend that the service provided by the service provider was supply of tangible goods service and this service became liable to service tax only from 16.05.2008 and therefore since tax itself was not liable to be paid and the assessee could not have taken the credit - Held that:- It is not the service receiver's responsibility to determine when the service provider was liable to pay tax or not. Therefore this Rule 6(2) is not relevant. I also find force in the argument that when the show-cause notice did not take the ground that service provider was not liable pay the tax, the Revenue could not have raised a totally new ground before the Tribunal. The submission of the learned counsel and the reliance upon the decision in the CC Mumbai Vs Toyo Engineering India Ltd [2006 (8) TMI 184 - SUPREME COURT OF INDIA] is relevant. - Decided against Revenue.

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• 2015 (9) TMI 210
  Denial of refund claim - Bar of limitation - Held that:- Commissioner (Appeals) has not discussed the issue relating to limitation and in the interim order passed by this Tribunal, in the case of Apotex Research Ltd & Others [2015 (3) TMI 346 - CESTAT BANGALORE], this issue has been dealt with and it has been laid down as to how the time limit has to be calculated for the purpose of sanction of refund under Rule 5 of CENVAT Credit Rules 2004. - Matter remanded back - Decided in favour of Revenue.

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• 2015 (9) TMI 201
  Cenvat Credit - Duty paying document - input services - sr. no was not pre-printed but hand written on Invoice - Waiver of pre deposit - Mandatory pre deposit - Held that:- Adjudicating authority disallowed the credit, following the decision of the Hon ble Andhra Pradesh High Court in the case of CHANDRA LAXMI TEMPERED GLASS CO. PVT. LTD. [2008 (7) TMI 257 - HIMACHAL PRADESH HIGH COURT] and the CBEC Supplementary Instructions. The learned Advocate relied upon the decision of Single Member Bench of the Tribunal. It is found that the Hon ble High Court, after considering the various aspects of the interpretation of the statute, observed that pre-printed of the invoices are required. Hence, the Applicant failed to make out a prima facie case for waiver of the pre-deposit of entire amount of duty along with interest and penalty. - Partial stay granted.

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• Central Excise

• 2015 (9) TMI 206
  Duty demand - Shortage of goods - Seizure of goods - Fraudulent availment of MODVAT Credit - Non receipt of actual goods - Held that:- From the contents of paragraphs 24 to 29 of the order-in-original, the contention of the appellant regarding violation of principle of natural justice appears to be incorrect - In view of the concurrent finding of fact recorded by both the authorities, Court does not find any substance in these appeals and moreover appeals involve no substantial question of law - appeals have no merit - Decided against assessee.

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• 2015 (9) TMI 205
  Penalty imposed under proviso 3 (ii) of Rule 96ZO (3) of the Central Excise Rules, 1944 - Held that:- As per the dictum of the Apex Court in the case of Kolhapur Canesugar Works Ltd. (2000 (2) TMI 823 - Supreme Court of India), the normal effect of repealing a statute or deleting a provision would mean as if same statute has never been passed and such repealed or omitted statute shall be considered as a law which never existed and the effect and omission of repealing of such statute without saving clause in favour of the pending procedure, all action must stop where the omission finds them and if final relief has not been granted, shall not be granted, however, savings of the nature contained in Section 6 of General Clause Act or Special Act may modify the position. Therefore, operation of repeal or deletion as to the future and the past largely depends on the savings applicable. - by way of Section 111 of the Finance (No.2) Act, 2009, any action done or purported to be done pursuant to the notification dated 1st August, 1997, i.e. enactment of Rule 96ZO of the Central Excise Rules, 1944 were saved and held to be valid. Therefore, imposition of penalty against the petitioner by the order dated 06.08.2002 as confirmed / upheld by the Apex Court is valid and does not require any interference. - Decided against assessee.

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• 2015 (9) TMI 204
  Renewal/Encashment of Bank Guarantee – Finalization of Contract – Petitioner addressed letter to Respondent No.1 stating that since everything at Petitioner's end was complied with, assessment was required to be completed within sixty days and as such, requested for finalization of contract and further requested that renewal of bank guarantees may not be insisted upon – However, Respondent No.1 addressed letter to Respondent No.2 for renewal of bank guarantees – Held that:- Constitutional Bench of Apex Court in case of Collector of C. Ex, Vadodara v. Dhiren Chemical Industries [2001 (12) TMI 3 - SUPREME COURT OF INDIA] and Steel Authority of India v. Collector of Customs, Bombay [1999 (10) TMI 67 - SUPREME COURT OF INDIA] held that circulars issued by Central Board of Excise and Customs are binding on all sub-ordinate authorities – Circular clearly provides that if everything which is required to be done at end of concerned party is done and inspite of that if assessment is not completed within period of six months, authorities will not insist upon renewal of bank guarantees –Aforesaid narration clearly shows that in Petitioner had done everything which is required to be done, even after that Respondent No.1 has not taken any steps for completing assessment –Therefore Petitioner cannot be penalized for non-compliance of direction and is entitled to benefit of circular issued by CBEC – Respondent Nos.1 and 2 directed not to renew/encash bank guarantees till finalization of project – Decided in favour of Appellant.

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• 2015 (9) TMI 203
  Demand of differential duty - SSI exemption under Notification No.1/93 - Whether the Tribunal is justified in upholding the order of the lower authority despite the fact that there is no estoppel against the statutes and it is always open to the appellant or an assessee to adopt the correct assessable value in terms of Section 4 (1) (a) of the Central Excise Act, 1944 for the purpose of computing the clearances in terms of above said notification, notwithstanding the fact that duty was paid incorrectly at higher value by mistake or otherwise - Held that:- Admittedly, no statutory appeal was preferred against the order under Rule 173-I of the Rules. The appellant, though did not challenge the order of assessment under Rule 173-I of the Rules, in the instant proceedings, in effect, has challenged the said order contending that they were not liable to pay the duty as determined by the Adjudicating Officer under Rule 173-I of the Rules. This, in our opinion, is not permissible in law. It is not in dispute that the show-cause notice was issued on the basis of the order under Rule 173-I of the Rules passed by the Adjudicating Authority and therefore it is not open to the appellant, in the proceedings arising from a show-cause notice, such as one in the present case, to contend that more duty was recovered from them based on the provisions of Section 4 (1), as it stood at the relevant time, of the Act. - no question of law arises for our consideration as the entire case is based on facts leading to the finalization of assessment and its consequential effect. - Decided against assessee.

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• 2015 (9) TMI 202
  Validity of Rule 5 of the Hot Rerolling Mills Annual Capacity Determination Rules, 1997 - Whether Rule 5 of the Rules is liable to be declared unconstitutional, violative of Article 14 and/or ultra vires Section 3A of the Central Excise Act, 1944 - Held that:- it has been held by the Division Bench [2015 (9) TMI 151 - KARNATAKA HIGH COURT] that Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is neither violative of Article 14 of the Constitution of India or ultra vires of the provisions contained in Section 3A of the Central Excise Act, 1944 and thereby dismissed the appeals. Thus, it would clearly indicate that co-ordinate Bench of this Court as well as Division Bench of this Court has dealt extensively with regard to constitutional validity of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 - Decided against assessee.

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• 2015 (9) TMI 200
  Remission of duty - Auto combustion - Whether the appellant is entitled for remission of duty in case of auto-combustion which took place in the factory of appellant or not - Held that:- It is not in dispute that auto-combustion took place in the factory and molasses have been destroyed. To avoid the auto-combustion, the appellant has taken care to save the molasses. It is also on record that appellant has takes steps to save auto-combustion by way of spraying water to keep lower the temperature of tanks, recirculation of molasses and use of anti foaming agents. Nothing more has been suggested by the adjudicating authority to avoid auto combustion. Therefore, remission of duty cannot be denied in the light of decisions of Hon'ble High Court of Allahabad [1998 (8) TMI 599 - Allahabad High Court] and this Tribunal [2000 (5) TMI 316 - CEGAT, NEW DELHI]. - accident of auto-combustion was beyond the control of appellant. Therefore the appellant is entitled for remission of duty as claimed. In these circumstances, I do not find any merit in the impugned order, same is set aside - Decided in favour of assessee.

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• 2015 (9) TMI 199
  Duty Demand - Imposition of penalty - Violation of principle of natural justice - Opportunity of cross examination not given - Held that:- Appellants sought for the cross examination of the Works Manager and the job workers which was turned down. In the interest of justice, we are of the opinion that adjudicating authority should make effort in granting cross-examination of the relied upon witnesses and, thereafter pass a reasoned order in this case. Accordingly, we set aside the Order-in-Original dated 29/3/2011 and remand the case to the adjudicating authority for de novo consideration after allowing the cross-examination of the witnesses which appellants have sought as cross-examination. We make it clear that this Bench has not expressed any opinion on the merits of the case and all issues have been kept open for the adjudicating authority to deliberate upon. - matter remanded back - Decided in favour of assessee.

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• 2015 (9) TMI 198
  Recovery of CENVAT Credit - CENVAT Credit on cylinders used in transporting various gases - capital goods - Held that:- There is no allegation of suppression of facts in availing CENVAT Credit on the cylinders during the relevant period. Needless to mention that the appellant while claiming CENVAT Credit on these cylinders as capital goods, disclosed all the facts to the Department. Hence, imposition of penalty under sub-rule (2) of Rule 13 of CENVAT Credit, in my opinion is unwarranted. However, it cannot be denied that they have contravened the provisions of CENVAT Credit Rules in availing the CENVAT credit on cylinders. Hence, the present facts fall under the category of sub-rule (1) of rule 13 of CENVAT Credit Rules, 2002. Consequently, the appellant is liable to pay penalty under the said rules and the maximum penalty imposable is Rs. 10,000/-. Consequently, the impugned order is set aside - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (9) TMI 209
  Eligibility for exemption – Scheme under Rule 28A – Fulfilment of rule Higher Level Screening Committee (HLSC) reopened order of secretary and held that appellant’s industrial unit is eligible for sales tax exemption only on fixed capital investment and appellant to avail exemption to that extent alone, as appellants’ company did not fulfil requirements in view of HGST Rules, 1975 – Tribunal vide order rejected application for review – Held that:- as per scheme under Rule 28A, order of Secretary had attained finality and that it was not open to HLSC to ignore order and to hear matter afresh on ground that HLSC had failed to consider particular aspect of matter – In order to be considered an eligible industrial unit, enterprise must be new industrial unit, the unit must be one which has been set up in State of Haryana and has not been or is not formed as result of purchase or transfer of old machinery except when purchased in course of import into territory of India or when cost of old machinery does not exceed 25% of total cost of machinery, etc – Admittedly machinery was new and not old so, this finding has attained finality– It was never contended by department that unit had not been set up in State of Haryana – Order of Secretary expressly records that it was not disputed that appellant had purchased part of machinery and that appellant had shifted this machinery to Chennai, which implied therein finding that machinery had been set up in Haryana. Under scheme of Rule 28A, there is clear hierarchy – Orders of LLSC are appealable to HLSC and orders of HLSC are appealable to Secretary – Order of HLSC in appeal shall be final and in second case order in appeal of Secretary shall be final – Orders appealed against merge into orders of appellate authorities – It is not open then for HLSC to reopen order of Secretary which had attained finality on another ground – HLSC, had no power or jurisdiction to review, modify or set aside order of Secretary – Tribunal wrongly held that merely because issue had not been considered in appeal, it was open to HLSC to suo motu reopen case – Impugned order of Tribunal and of HLSC set aside – Decided in favour of Appellant.

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• 2015 (9) TMI 208
  Levy of interest – Computation of interest period – Tribunal vide impugned order held that interest was leviable from date of order by which assessing authority or any other competent authority had taxed incidental charges for first time for any year – Held that:- primary issue that arises for consideration relates to date from which interest would be chargeable – It was not disputed that issue stands concluded by judgment of apex court in J. K. Synthetics Ltd. v. Commercial Taxes Officer [1994 (5) TMI 233 - SUPREME COURT] wherein it was held that interest was payable by dealer from date of passing of assessment order – In light of said decision, interest chargeable from date of passing of assessment order and not from date of passing of assessment order in any other year by which assessing authority has taxed incidental charges for first time – Decided against Assesse.

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• 2015 (9) TMI 207
  Levy of tax – Validity of purchase – Cancellation of Registration of seller – It was submitted by petitioner that impugned order by which petitioner has been asked to pay tax under provisions of Gujarat Value Added Tax Act, 2003 wherein it is held that registration of those sellers from whom petitioner had purchased some goods had been cancelled and therefore, petitioner is liable to pay tax – There is no discussion in order about genuineness of petitioner and his purchases and therefore, order is required to be quashed and set aside – Held that:- Assessing Officer has not properly dealt with case and ought to have discussed and appreciated material produced by petitioner on record – True that there is alternative remedy in form of statutory appeal – However, we are of opinion that in absence of sufficient reasons assigned by Assessing Officer, order becomes vulnerable and therefore, requires to be quashed and set aside – However, matter remanded to Assessing Officer for fresh consideration – Decide in favour of Petitioner.

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• 2015 (9) TMI 166
  Seizure proceedings – Non-furnishing of transit declaration form – Whether proceedings of seizure and direction for furnishing security is within jurisdiction of respondents authorities since orders have been passed only on ground that during mobile search, document namely "transit declaration form" was not found in possession of transporter – According to respondents, transporter was obliged to download form and communicate respondents authorities at time when he enters territory of State of Uttar Pradesh – Held that:- Said dispute has been settled finally in M/s Prakash Transport Corporation [2013 (12) TMI 921 - ALLAHABAD HIGH COURT] – In said case it was held that Act does not specifically provide for seizure of goods for not carrying Transit Declaration Form – Therefore impugned order set aside on basis of said case – Decided in favour of Revisionist.

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• Indian Laws

• 2015 (9) TMI 167
  Quantum of compensation - Compensation under Motor Vehicles Act, 1988 - Held that:- Tribunal and the High Court have failed to consider the fact-situation of this case, without taking any pragmatic view and further without considering the price-index prevailing at the moment, assessed the compensation ignoring the principle laid down by this Court in the recent decisions and without revisiting the present situation, came to the conclusion and awarded the total compensation for a sum of 4,28,000/-. In our opinion, such award suffers from proper assessment of compensation awarded by the Tribunal, and High Court on the conventional heads, i.e., ‘loss of consortium’ to the spouse, ‘future prospects of the deceased’ and further the sum awarded under the head ‘funeral expenses’, cannot be said to be a just compensation. - compensation under the head ‘loss of consortium’ to the spouse, loss of love, care and guidance to children and funeral expenses amounts should have been awarded under such heads, that is, for 1,00,000/- and 25,000/- respectively and we award such compensation under the said heads. So far as the head of ‘salary’ is concerned, we do not express any opinion since we have found that the appellant could not prove the salary certificate and for such reason, we do not intend to interfere with the opinion expressed by the Tribunal on the established principle of notional income and accordingly, we do not want to disturb the said notional income while calculating the total compensation in favour of the appellant. - appellant is entitled to a sum of 6,55,400/- plus interest @ 8 per cent per annum from the date of filing of the claim petition till the date of payment as compensation. - Decided partly in favour of appellant.

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