Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 8, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Agreement for Avoidance of Double Taxation of Income Derived From International Air Transport - Republic of Maldives - Notification
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Unexplained investment u/s 69B - Applicability of Sections 64 and 65 - clubbing of income - assessee's wife and son are the Directors of M/s. Avis Motors Pvt. Ltd. - This was not the case of the Revenue at any time right upto the Tribunal. - Contentions of the revenue rejected - HC
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Accrual of income - advances received by the assessee from M/s DLF Ltd. and CBDL were for sale of development rights. Since the assessee failed to sell any such rights in the two years in question, the advances received cannot be classified as income. - HC
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Levy of penalty u/s.271D - assessee had taken cash loan from her husband and mother-in-law which has been repaid in cash - the expression “reasonable cause” in section 273B for non imposition of penalty u/s.271D and 271E would have to be construed liberally - No penalty - AT
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Additions u/s 68 - A.O. has not doubted the genuineness of the purchases. The A.O. made additions toward trade creditors for the simple reason that the creditors have not confirmed the transactions with the assessee - Additions deleted - AT
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Disallowance of expenses made in respect of partners remuneration u/s.40(b) - undisclosed income - assessee-firm is engaged in only business of Green Plaza Project and it has only one source of income being construction activity - remuneration allowed - AT
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Taxing Agricultural Income as "Income from other sources" - if there is neither anything in its condition, nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose, the land could not be ''agricultural land''. - AT
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Allowability of depreciation on ‘Furniture and Fixture’, forming part of the leased assets, income from which is assessable u/s. 22 of the Act as ‘Income from house property’ - claim was rightly disallowed - AT
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There were no efforts or contributions made by the Directors to carry on the business of the company as in-fact no business was carried on by the assessee company during the entire previous year, hence in our considered view , the remuneration of ₹ 1,38,000/- paid to Directors was rightly disallowed - AT
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Revision u/s 263 - addition u/s 2(22)(e) - deemed dividend - This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the AO’s order was erroneous and prejudicial to the interest of the revenue - AT
Customs
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Imposition of Redemption fine - violation of restriction for unloading of appellant’s imported goods at Dighi Port - Ignorance of law is no excuse – some leniency granted – amount of redemption fine and penalty decreased - AT
Corporate Law
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Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 - Notification
Service Tax
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In the case of outbound shipment destination of goods shall be outside India. Therefore, place of provision of service of outbound shipment shall be outside India as per Rule 10 of POP Rules, 2012 - no Service Tax on freight margin recovered by the applicant from the customer - AAR
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Taxability of services provided in relation to outbound shipment and inbound shipment - the agreement entered in on on principal to principal basis and not as agent of said airline/shipping line - place of provision of said service will not be location of service provider (as intermediary) - AAR
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Refund claim – time bar – CENVAT credit - input service - export of BAS - credit shall be taken till the last day of the given period, namely the quarter, the claim for refund can only be filed after the last date of the respective quarter and the relevant date is the date of export and are entitled in terms of Notification No. 27/12 r.w.s. 11B of CEA, 1944, and the refund claim is not hit by limitation - AT
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Exemption in relation to services provided towards renting of precincts of a religious place meant for general public - scope of exemption amended
Central Excise
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Cenvat credit - service of Event Management and Video Tape Production - used in or in relation to the manufacture of goods - credit availed during the inauguration of new plant and video tape have been used to introduce a new manufacturing facility - credit allowed - AT
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Refund claim - the doctrine of unjust enrichment is established, even if the credit notes are issued after clearance of goods. - AT
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Cenvat credit - Mono Block Concrete sleepers(MBC) - Cenvat credit on railway track which are used as handling system for raw material is admissible as these are essential and integrally connected to the process of manufacture of final product. Therefore, the appellant has established a case on merits and that credit is admissible on MBC sleepers - AT
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While interpreting an exemption notification, there is no room of any intendment and regard must be had to the language used therein. - AT
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Notification 30/2004-CE dated 9.7.2004 - entitlement for exemption benefit - payment of amount under sub-rule (3)(i) of Rule 6 will make the assessee eligible for claiming such exemption as the present one. - AT
VAT
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Demand of interest - cheques given by petitioner to Enforcement Wing Officials during inspection got dishonoured - In the absence of any assessment, even provisional, and a notice of demand no interest would be payable under Section 24(3) - demand of interest without jurisdiction - writ petition allowed - HC
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Validity of surprise inspection report – TNVAT Act, 2006 - Since the petitioner has raised the question of jurisdiction and the respondents have stated that there is delegation of power, this Court is not inclined to quash the inspection report or the statement, at this juncture. - HC
Case Laws:
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Income Tax
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2016 (9) TMI 264
Unexplained investment u/s 69B - Applicability of Sections 64 and 65 - clubbing of income - assessee's wife and son are the Directors of M/s. Avis Motors Pvt. Ltd. - Held that:- We are unable to understand the grievance of the Revenue before us. This was not the case of the Revenue at any time right upto the Tribunal. This is also not a ground taken in the memo of appeal. Therefore, this issue does not arise from the impugned order of the Tribunal. We find that both the CIT(A) as well as the Tribunal have on the basis of the evidence before it, rendered a finding that the document does not indicate that the amount of ₹ 4.22 crores has been invested by the respondent assessee in M/s. Avis Motors Pvt. Ltd. This is more particularly so as the entire case of the Revenue is on the document which is found in possession of a third party, indicating certain amounts payable by the respondent assessee, when the same has been denied by the respondent assessee at all times. This denial on the part of the respondent assessee of the document has not been addressed to by the Revenue. No additions - Decided against the revenue.
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2016 (9) TMI 263
Accrual of income - accrued income on grant of development rights - Held that:- In the instant case, since no sale occurred, no income can be said to have accrued to the assessee.The assessee's submission that sale is deemed to have taken place when proper conveyance is executed, in the circumstances is sound. In the absence of any sale, the revenue's attempt to bring to tax the advances received by the assessee must also fail, given that such advances were not towards any income that the assessee was entitled to receive in the two assessment years. Indeed, the Business Development Agreement dated 02.08.2006 between M/s DLF Ltd. and the assessee and the Memorandum of Understanding dated 06.12.2006 between M/s DLF Ltd., the assessee and CBDL indicate that the advances received by the assessee from M/s DLF Ltd. and CBDL were for sale of development rights. Since the assessee failed to sell any such rights in the two years in question, the advances received cannot be classified as income.
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2016 (9) TMI 262
Levy of penalty u/s.271D - Held that:- Since in the instant case the assessee had taken cash loan from her husband and mother-in-law which has been repaid in cash and there is no repeated transactions and the assessee has explained the reasonable cause for accepting such loans and repayment thereof in cash, therefore, in our opinion, the expression “reasonable cause” in section 273B for non imposition of penalty u/s.271D and 271E would have to be construed liberally. Accordingly we hold that penalty u/s.271D and 271E are not imposable in the facts of the present case. We, therefore, set aside the order of the CIT(A) and direct the AO to cancel the penalty. - Decided in favour of assessee.
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2016 (9) TMI 261
Additions towards inflation of purchases - A.O. was of the opinion that the assessee has inflated purchases by recording higher value in the books of accounts - Held that:- We find force in the arguments of the assessee for the reason that though there is a difference between value recorded in the books of accounts and provisional invoices, the assessee has explained the differences with final invoices which is matching with the amount recorded in the books of accounts. It is also an admitted fact that the assessee has made the payment for the amount recorded in the books of accounts by way of account payee cheques or electronic transfers. The assessee also issued ‘C’ form for the value shown in the books of accounts. Therefore, we are of the view that the A.O. was not correct in holding that there is a difference in value recorded in the books of accounts when compared to the invoices. The CIT(A) after considering the relevant records directed the A.O. to delete the additions made towards inflation of purchases. We do not see any error or infirmity in the order passed by the Ld. CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue. Addition towards low yield of rice bran oil - A.O. made additions on the sole ground that there is a difference in percentage of yield of rice bran oil - Held that:- No merits in the findings of the A.O. for the reason that before estimation of suppressed turnover, the A.O. has not pointed out any irregularities or mistakes in the books of accounts. The assessee has maintained proper manufacturing and stock registers which was produced before the A.O., however, the A.O. neither pointed out any mistakes in the books of accounts nor noticed any suppression of turnover. The A.O. without going into the quantity of 3 varieties of rice bran purchased for the current year compared the average yield of rice bran oil which is not correct. We further noticed that during the year under consideration, the assessee has purchased 3 varieties of rice bran which is containing different percentage of rice bran oil content. We further observed that purchase of rough rice bran has been doubled when compared to the last financial year because of which there is a reduction in yield of rice bran oil. But, the other final products of rice bran oil extraction is increased because of low yield of rice bran oil. Therefore, the A.O. was not correct in holding that the assessee has suppressed sales turnover by manipulating yield of rice bran oil and rice bran extraction. The CIT(A) after considering the relevant information rightly deleted the additions made by the A.O. There is no error or infirmity in the order passed by the Ld. CIT(A). Hence, we inclined to uphold the order of CIT(A) and reject the ground raised by the revenue. Aaddition towards unexplained credits u/s 68 - AO made additions solely on the ground that the trade creditors are not confirmed the transactions - Held that:- No additions can be made u/s 68 of the Act, towards trade creditors when genuineness of the purchases are not doubted. In the present case on hand, the A.O. has not doubted the genuineness of the purchases. The A.O. made additions toward trade creditors for the simple reason that the creditors have not confirmed the transactions with the assessee. Therefore, we are of the view that the A.O. was not correct in making additions towards trade creditor’s u/s 68 of the Act for non furnishing confirmation of balances by the creditors. The CIT(A) after considering relevant details filed by the assessee rightly deleted the additions. We do not see any reason to interfere with the order based by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue.
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2016 (9) TMI 260
Disallowance of expenses made in respect of partners remuneration u/s.40(b) - undisclosed income - Held that:- It is an undisputed fact that during the course of survey, assessee had disclosed ₹ 1.75 crores as unaccounted income. We find that before the AO, assessee in the written submissions had stated that assessee-firm is engaged in only business of Green Plaza Project and it has only one source of income being construction activity. The aforesaid submission of the assessee has not been controverted by Revenue nor the Revenue has placed any material on record to demonstrate that assessee was having engaged in other than the business of construction. As in the case of Md.Serajuddin & Brothers vs. CIT [2012 (8) TMI 104 - CALCUTTA HIGH COURT] has held that even if the income from other sources is included in the Profit and Loss accounts, to ascertain the net profits qua book profit for computation of the remuneration of the partners, the same cannot be discarded. Thus we are of the view that no disallowance u/s.40(b) of the Act on account of remuneration and salary to partners can be made in the present case and thus the ground of assessee is allowed.
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2016 (9) TMI 259
Taxing Agricultural Income as "Income from other sources" - Held that:- It is a matter of record that the assessee is declaring agricultural income in the return of income filed with the Revenue year to year and the same was accepted by the Revenue in preceding years even under scrutiny assessments framed u/s 143(3) of the Act. The exemption from income-tax can be granted u/s 10(1) of the Act to the agricultural income earned by the assessee if the agricultural activities are actually carried out on the said land by the assessee during the assessment year as stipulated and mandated under Section 2(1A) of the Act to enable earning of agricultural income to fall within exemption as provided u/s 10(1) of the Act. One of the objects for exemption from income-tax is to encourage cultivation or actual utilization of land for agricultural purposes and hence if there is neither anything in its condition, nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose, the land could not be ''agricultural land''. We are also fully aware that principles of res-judicata is not applicable to the income tax proceedings but principle of consistency is to be followed. In our considered view keeping in view the facts and circumstances of the case, this issue needs to be set aside and restored back to the file of the A.O. for denovo determination of the issue on merits Disallowance u/s. 14A - Held that:- Keeping in view the peculiar facts and circumstances of the case, a reasonable disallowance is to be made as the assessee has explained and jsutify the expenses having regard to the accounts of the assessee as per mandate of Section 14A(2) of the Act and in our considered view, keeping in view totality of the circumstances surrounding the assessee case and explanation submitted by the assessee , interest of justice will be best served if disallowance u/s 14A of the Act with respect to indirect expenditure incurred by the assessee with regard to earning of exempt income is restricted to ₹ 2,500/- which in our considered view is reasonable disallowance in the instant case. We order accordingly.
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2016 (9) TMI 258
Allowability of depreciation on ‘Furniture and Fixture’, forming part of the leased assets, income from which is assessable u/s. 22 of the Act as ‘Income from house property’ - Held that:- The letting of the furniture and fixture is incidental (to letting the building) (para 6(b) of SOF). Further, per para 6(c) thereof, as an alternative, a prayer is made for a proportionate allowance, i.e., qua building that is complete and not leased, while that leased or, as the case may be, under construction, being liable to be adjusted against the value of the leased stock and work-in-progress (WIP) respectively. The furniture and fixture in the present case is without doubt only an adjunct to the letting of the building, being in fact appropriated on an equal basis over the house properties under reference. We, therefore, have no hesitation in confirming the impugned disallowance; there being no scope for assessment of the proportionate rent, as contended, as income from other sources. Our decision rests, we may clarify, not on the inseparability of the two lettings, but on the finding of the furniture and fixture under reference forming an integral part of the building, so that it’s letting is, as admitted, incidental. That is, it is a case of a single letting and, therefore, the rent relatable to furniture and fixture is not ascertainable. Add to this, the fact that the property under reference is actually leased out, i.e., constitutes a source of income and, thus, a capital asset by definition, and the assessee’s case becomes untenable on facts – the leased house property constituting the assessee’s capital asset, yielding a regular source of income, and toward which the assessee has, in fact, expended no insubstantial sums. Juxtapose this with the settled position in law that the income assessable under a particular head of income is to be necessarily computed under that head only and in the manner provided under the relevant sections (Sultan Brothers (P.) Ltd. (1963 (12) TMI 4 - SUPREME Court); East India Housing & Land Development Trust Ltd. (2016 (3) TMI 1109 - ITAT RAJKOT)), and there can be no manner of any doubt that the assessee’s claim is not sustainable in law. Decided against the assessee.
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2016 (9) TMI 257
Disallowance of Salary to Director - Held that:- The Hon’ble Gujarat High Court in the case of CIT v. Prayashvin B. Patel, [1999 (10) TMI 60 - GUJARAT High Court ] as well as ACIT v. JNG Builders P. Ltd. [2013 (8) TMI 1016 - ITAT DELHI] have held that there are certain expenses such as audit fees, salaries, professional fee , insurance , printing and stationary, bank charges, house keeping charges , repairs and maintenance etc which are necessary to maintain the corporate entity and are allowable expenses and it is not necessary that every year the assessee must have earned income from business or profession and the assessee may be required to spend the amount for carrying on its activities . The assessee company incurred expenses of ₹ 17,866/- towards legal expenses, audit fees, bank charges and miscellaneous expenses which had been allowed by the ld. CIT(A). However as per the facts emerging from the records, there were no efforts or contributions made by the Directors to carry on the business of the company as in-fact no business was carried on by the assessee company during the entire previous year, hence in our considered view , the remuneration of ₹ 1,38,000/- paid to Directors was rightly disallowed by the A.O. and confirmed by the ld. CIT(A)
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2016 (9) TMI 256
Revision u/s 263 - addition u/s 2(22)(e) - deemed dividend - Held that:- It is not the Department’s case that no information regarding the loan/advance was called for by the AO. That relevant details and documents were furnished by the assessee during the assessment proceedings and forms part of the record. Hence, no inference can be drawn that the AO has not examined the issue although he has not expressed it in as many terms as may be considered appropriate by his superior authority and even if the same is found to be inadequate the same cannot be a ground for revision. It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the AO’s order was erroneous and prejudicial to the interest of the revenue within the terms of section 263 of the Act. Once the issue of loan/advance was considered and examined by the Assessing Officer, Ld. Commissioner cannot set aside the order without recording a contrary finding. This will be contrary to Section 263 of the Act. Therefore, in view of the factual matrix of the case and respectfully following the ratio of the various judicial pronouncements as discussed above, we are of the considered opinion that the impugned action of the Ld. CIT u/s 263 of the Act was patently illegal and is liable to be quashed. The proceedings u/s 263 of the Act are accordingly quashed.
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2016 (9) TMI 255
Additions under Section 68 - Held that:- This Court has considered the concurrent order of the CIT(A) as well as the ITAT. Both these authorities primarily went by the fact that the assessee had provided sufficient indication by way of PAN numbers, to highlight the identity of the share applicants, as well as produced the affidavits of Directors. Furthermore, the bank details of the share applicants too had been provided. In the circumstances, it was held that the assessee had established the identity of the share applicants, the genuineness of transactions and their creditworthiness. The AO chose to proceed no further but merely added the amounts because of the absence of the Directors to physically present themselves before him. The assessee has, in our opinion, complied with the law spelt out by the Supreme Court in CIT v. Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA ] - Decided in favour of assessee
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2016 (9) TMI 254
Reopening of assessment - Held that:- In the present case, the opinion of the AO which is placed on the record discloses that his part of the order is entirely concerned with the transactions to which M/s. H.B. Relan and Company was exclusively a party to. Thereafter, in para 5, the opinion discusses the two transactions whereby the shares of M/s/ Constellation Capital (P) Ltd., were sold by the assessee. The mere circumstance that in respect of this company, M/s. H.B. Relan and Company too had transacted earlier or that it had maintained a bank account does not ipso facto lead to an inference that the assessee’s undisclosed income had escaped assessment due to failure on its part to provide particulars. If such wide margins were to be provided to the AOs, possibly, thousands of entries would lead to reopening of assessment of careless assessees. The link between the assessee’s returns and the amounts said to have escaped assessment had to be necessarily shown. Now, the opinion which led to the reopening of assessment nowhere shows that the assessee had in fact failed to report the transaction itself. In completely omitting to see this aspect, we are of the opinion that the ITAT fell into fundamental error of law. The question of law is accordingly answered in favour of the assessee and against the revenue.
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2016 (9) TMI 253
Expenses on travelling and retainer fees paid - Held that:- Mr. Toor, the learned counsel for the applicant-assessee very fairly states that the issue arising herein stands concluded against the applicant-assessee and in favour of the Respondent-Revenue by the decision of this Court in Commissioner of Income Tax v/s. J. K. Chemicals Ltd. [1992 (10) TMI 18 - BOMBAY High Court] and Larsen & Toubro Ltd. v/s. Commissioner of Income Tax ( 2012 (9) TMI 660 - BOMBAY HIGH COURT ). Eligibility for relief under Section 35D - the payment made after 31st March, 1970 to its promoters - Held that:- As decided in favour of assessee relying on own case for A.Y. 1975-76 [2012 (3) TMI 545 - BOMBAY HIGH COURT]
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2016 (9) TMI 252
Profits from sale of shares - 'business income' OR 'capital gain' - Tribunal held that the assessee lady was a dealer in shares and was not an investor in shares - Held that:- This Court is of the opinion the ITAT has committed serious error of law in holding that the assessee lady was a dealer in shares and was not an investor in shares. It is required to be noted that for the assessment year 1992-93 the department had accepted the status of the assessee to be an investor and purchasing the shares of six companies and selling the shares of three companies could not have converted the status of the assessee from investor into a dealer. - Decided in favour of assessee.
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2016 (9) TMI 251
Deduction claimed under section 54 - Held that:- Merely because construction was not complete in all respect and it was not in a fit condition to be occupied within the stipulated period, would not disentitle the assessee from claiming the benefit under section 54 of the Act. The above facts, therefore, clearly prove that assessee had intention to purchase only plot because old structure and debris were removed by the owner and assessee wanted to raise the construction in the plot itself which was also raised partly. The income tax authority shall have to act on human probabilities by considering surrounding circumstances. In this circular No. 667, dated 18-10-1993, it is provided that aggregate cost of plot and construction should be considered for determining the quantum of deduction under section 54 of the Act. It would also support the case of the assessee for claim of deduction under section 54 of the Act. Thus, the assessee produced sufficient and reliable evidence on record to prove that practically the assessee purchased the plot and raised construction thereon for residential purposes. The assessee, therefore, would be entitled for deduction under section 54 of the Act. - Decided in favour of assessee.
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2016 (9) TMI 250
Rectification of mistake - Claim of section 11 exemption without section 12A registration after its conversion to a section 25 companies - mutuality principle application - Held that:- There is no quarrel between that the assessee has raised its mutuality plea qua members contributions only as collected by organizing gala dinners, property shows and cricket tournaments. Shri Rajdeep Singh fails to rebut the factual position that all these events are in the nature of annual get together being organized for the purpose of promoting brotherhood. Nor is it his case that the relevant figures in this records point out losses really from these activities as evident in assessment year 2006-07. We notice from our order that we had considered case law of Bangalore Club vs. CIT (2013 (1) TMI 343 - SUPREME COURT ) propounding three essential conditions that there has to be a complete identity between the class of contributors and participators leaving the particular level or form by which a mutual association is known to be insignificant, the activities concerned should be in furtherance to mandate of the association and there should not be any scope of profiteering by the contributors from a fund made by them which could only be expanded or retuned to themselves. We deem it appropriate to observe that our order under challenge does not deal with the above stated third aspect of mutuality. As extracted clause reveals that assessee has to make and create from its members contributions a fund for above purposes. It is nowhere stipulated therein that these purposes would form the sole object for collection of funds from members whereas we interpreted the same on these lines only. We reiterate that the assessee has rather suffered losses in organizing the impugned fiestas negating possibility of having organized the same on commercial lines. Its purpose for having organized the activities as stated in the case records are annual get togethers for promoting brotherhood between members only. We observe in these peculiar facts that our appreciation of this clause is not as per the language incorporated in the relevant object clause. We admit our two findings hereinabove to be suffering from mistakes apparent on the face of record in view of all this detailed discussion. There is further no denial of the fact that our order does not deal with third aspect of mutuality principle ROM application allowed
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2016 (9) TMI 249
Deduction under section 80P(2)(a)(i) in respect of interest earnings from the State Bank of India granted
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2016 (9) TMI 248
Penalty u/s 271()(C) - ungenuineness of gift - Held that:- Merely because the additions have been made by the AO and confirmed by the Tribunal on account of inability of the assessee to furnish more evidences as required by the authorities to prove the genuineness of the transaction that itself is not sufficient to hold that the claim of the assessee was wrong, inaccurate or that there was any concealment of income. The penalty proceedings are separate from quantum assessment proceedings. In the case of levy of penalty, it should be proved on the file that the particulars furnished by the assessee were inaccurate particulars of income or that there was concealment of income. Every case of confirmation of addition or disallowance cannot be regarded as a case of furnishing of inaccurate particulars of income or concealment of income. Even it cannot be said that this case of the assessee was a case of no evidence at all. The assessee had already submitted evidences in the shape of gift deed, PAN number of the donor, the bank statement reflecting the transaction and even the copy of the income tax returns and accounts of the assessee. The evidences produced on the file by the assessee have not been proved wrong or false. The Hon’ble Bombay High Court in the case of “CIT vs. Upendra V. Mithani” in ITA (L) No.1860 of 2009 decided on 05.08.2009, has observed in the matter of levy of penalty under section 271(1)(c) of the Act, that if the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee’s case is false, then no penalty can be imposed in such cases - Decided in favour of assessee Disallowance of expenses - Held that:- smallness of amounts involved and also that the assessee was not maintaining the accounts and that the disallowances relating to the claim of expenditure of ₹ 43,832/- and under statement of income of ₹ 45,081/- were not on account of inaccurate particulars of income but due to the reason that the assessee could not furnish the required evidences/reconciliation during the assessment proceedings, we do not find it to be a case for levy of penalty under section 271(1)(c) of the Act.- Decided in favour of assessee Non offering of the income from short term capital gains - Held that:- The assessee has explained that he was under bonafide belief that the said gain was not attracted to tax. The explanation given by the assessee in respect to the disallowance of expenditure understatement of income and addition on account of short term capital gain seems to be plausible. The facts of the case do not suggest that there was any intention on the part of the assessee to furnish inaccurate particulars of income or to conceal his income. No justification on the part of lower authorities in levying/confirming the penalty on these issues also.- Decided in favour of assessee Penalty u/s 271 - whether the compensation of amount received by the assessee was exigible to capital gains tax in A.Y. 2006-07 or in A.Y. 2007-08? - Held that:- in view of the assessee, since the possession had been taken in the Financial Year 2006-07 relevant to A.Y. 2007-08, therefore amount of capital gain was assessable in A.Y. 2007-08 and the assessee had also offered the same in A.Y. 2007-08. The Tribunal, considering the facts, has held that it was a case of difference of opinion and that the issue was a debatable issue but there was no concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal therefore deleted the penalty relating to the similar transaction in the case of the mother of the assessee namely Smt. Asha Laxmikant Babladi. Since the facts of the case of the assessee are identical and are relating to the same transaction, hence respectfully following the above cited decision of the co-ordinate bench of the Tribunal, we hold that the penalty under section 271(1)(c) of the Act is not leviable on this issue in the case of the assessee also.
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2016 (9) TMI 247
Claim for deduction u/s 80IB(10) - consideration of unutilized FSI - Held that:- In the case the operation of unutilized FSI is exorbitant i.e. more than 30% of the total permissible area then the matter has to be looked into from a different angle and one cannot ignore the possibility of the situation wherein claim under section 80IB(10) is intentional deduction from sale of unutilized FSI on which no construction or development has been done and for mere sale of such unutilized land or portion deduction u/s 80IB(10) of the Act is claimed. We find that in the case of assessee almost 60% of the permissible FSI remained unutilized i.e. no construction was made thereon. As per the working appearing in the assessment order, we find that in the project Vaikunth-I permissible FSI was 1423.7 sq.m. and FSI utilized for construction was 571.81 sq.m. which left behind unutilized FSI at 851.89 sq.m. Now observing these facts of the case in the light of judgments of Hon. Jurisdictional High Court, we find that Hon. High Court in the case of Moon Star Developers (supra) came across the fact that only 23% of the FSI was utilized and decision was given in favour of Revenue by confirming the disallowance made for sale of unutilized FSI. However, it was also observed by Hon. High Court that utilization of FSI has to be introspected with the overall project and one has to keep space for the margin for keeping some portion of FSI unutilized depending on case to case. We observe that the same Hon. Bench of the Jurisdictional High Court which has decided the issue in favour of Revenue in the case of Moon Star Developers (2014 (4) TMI 1042 - GUJARAT HIGH COURT ) had dealt with similar issue of allowability of deduction u/s 80IB(10) of the Act for sale of unutilized FSI in the case of M/s Shreenath Infrastructure (supra) and came with the view that 25-30% of non-utilisation of FSI is permissible and assessee should not be devoid of claiming deduction u/s 80IB(10) of the Act. Respectfully following the judgment of Hon. Jurisdictional High Court in the case of Shreenath Infrastructure (2014 (4) TMI 482 - GUJARAT HIGH COURT) we are of the view that assessee should be allowed to claim deduction u/s 80IB(10) of the Act to the extent of 30% of unutilized FSI. We hereby deem it fit to sustain the disallowance to 50% as the assessee has 60% unutilized FSI and after giving the benefit of 30% unutilized FSI. Accordingly, assessee will get relief of ₹ 3,01,869.50 as against disallowance made at the time of assessment at ₹ 6,03,739/-. Accordingly, this ground of Revenue is partly allowed.
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2016 (9) TMI 246
Penalty u/s 271(1) (c) - assessee could not prove the genuineness of the gifts transactions - Held that:- Assessing Officer, in the penalty orders, has observed that the assesseee had concealed the income and has furnished inaccurate particulars. However, the penalty orders are woefully silent on the issue as to how this satisfaction of concealment/furnishing of inaccurate particulars was arrived at. The Ld. CIT (A) has relied on the principle of preponderance of probability while confirming the penalties. The Ld. CIT (A) has held that since the assessee had received a sum of ₹ 26.00 lacs as gifts from 5 parties in a span of two years with whom the assessee had only family relation and that since there was no occasion to warrant these gifts, the credibility and bona fide of assessee’s explanation was eroded and therefore, the penalty was sustainable. We are of the considered opinion that this kind of finding might be very relevant in quantum proceedings but will not suffice in penalty proceedings. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT )has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars - Decided in favour of assessee
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2016 (9) TMI 245
Transaction of shares - business income or capital gain - Held that:- No doubt, as per CBDT circular No.4/2007, the assessee is permitted to maintain two portfolios i.e. trading as well as investment portfolio but the assessee is duty bound to produce evidence that certain transactions were intended to be by way of investment and some are by way of business transactions. As the issue has to be decided based on the facts of the case, in the absence of any evidence on record that the assessee intended to hold certain shares as investments and the fact that in earlier years this was shown as a trading portfolio goes to prove that the claim from the assessee is merely bald. There was no evidence adduced by the assessee to show that some of the transactions were held as investment or to establish intention at the time of purchasing shares that the transactions were undertaken with a motive of investment. Therefore, in the circumstances, the CIT(A) is not justified to come to conclusion that the assessee is an investor without referring to any material or evidence. Therefore, we hold that the respondent-assessee is merely a trader in shares and profit arising on sale of such transaction should be assessed as business income. - Decided in favour of revenue
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2016 (9) TMI 244
Transfer pricing adjustment - determination of the Arms Length Price (‘ALP’) - Assessee adopted the Transactional Net Margin Method (‘TNMM’) and had taken Operating Profit/Total Cost as the profit level indicator (‘PLI’) - TPO, however, applied the CUP method and proceeded to make adjustment on the basis of which the AO framed the assessment on 1st February 2011 - whether it was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not? Held that:- Having heard learned counsel for the Revenue at length and having perused the orders of the TPO, CIT(A) and the ITAT, the Court is of the view that the view taken by the ITAT is plausible one and does not warrant any interference. ITAT appears to have agreed with the contention of the Assessee on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not.
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Customs
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2016 (9) TMI 277
Confiscation in lieu of redemption fine - Import of car for personal use - appellant failed to satisfy the conditions of the Notification No.4/97-2002 dated 31/03/2001 - car provisionally released on ITC Bond - Held that:- it is found that the import of car is restricted. Anyone wishing to import a car has alternate route. The first route is to obtain a licence from the ministry of commerce and the 2nd route is to fulfill the conditions of Notification No.4/97-02. The appellant chose the second route and have failed to produce necessary certificate to avail the benefit of said notification. In these circumstances, the import of car is in violation of import export policy. Therefore, the impugned order rightly confiscated the car and imposed penalty. - Decided against the appellant
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2016 (9) TMI 276
Acceptance or rejection of Appeal - Discretion of Tribunal to admit or refuse the appeal - Second proviso to Section 129A of Customs Act, 1962 - Held that: - in view of the discretion provided to the Tribunal, the appeal is dismissed, only on the ground that amount is below threshold limit of ₹ 2,00,000/-, without going into merit of the case - appeal rejected.
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2016 (9) TMI 275
Confiscation of seized betel nuts - Section 111(b) of the Customs Act, 1962 – imposition of redemption fine - section 125 of the Customs Act, 1962 – imposition of penalty - Section 112(b)(ii) of the Customs Act, 1962 – demand of duty - Section 125(2) of the Customs Act, 1962 – whether 521 bags of betel nuts are of foreign origin and smuggled into India, so as to attract confiscation, fine and penalty ? – Held that: - the case is already decided in Maqsood ALam vs.- Commr. of Customs, Lucknow 2015 (5) TMI 131 - CESTAT NEW DELHI where it was held that the onus to prove that the goods are of foreign origin and are smuggled is squarely on Revenue and this onus cannot be discharged merely on the basis of suspicion - there is no evidence that seized goods claimed by the appellants were of foreign origin and smuggled into India. Also, appellants have produced documents indicating procurement of Betel Nuts. Any impropriety in the documentation for local movement of goods, under the local laws, cannot make the goods liable to confiscation under Section 111(b) of the Customs Act, 1962 – imposition of redemption fine, penalty and duty unjustified – appeal disposed off – decided in favor of appellant.
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2016 (9) TMI 274
Imposition of penalty - Section 114(i) of the Customs Act, 1962 – CHA – export clearance – attempt to illegally export Red Sanders – proper authorization not taken by appellant - forged documents on the part of exporter – Held that: - the CHA and its employee intentionally did not follow the regulation and dealt with unscrupulous person for handling the export container of red sanders. The appellants acted as conduit for enabling the smuggling of red sanders for illegal export – imposition of penalty upheld – appeal disposed off – decided against appellant.
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2016 (9) TMI 273
Imposition of Redemption fine - violation of restriction for unloading of appellant’s imported goods at Dighi Port. - import or Hot Briquetted Iron - Direct Reduced Iron - permission to be unloaded at Dighi Port as per Notification No. 01/2012-Cus.(NT) dated 31.01.2012 – contravention of Section 33 read with Section 8 of the Customs Act, 1962 – Held that: - When there was a restriction of unloading of goods at Dighi Port while filing the IGM and before permitting the unloading, the Customs department could have raised the objection and denied the unloading. Further, the appellant are held equally responsible in as much as they must abide the law prevailing. Ignorance of law is no excuse – some leniency granted – redemption fine and penalty decreased – appeal disposed off – decided against appellant.
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2016 (9) TMI 272
Imposition of penalty - Section 114(iii) of Customs Act, 1962 – CHA – authorization – drawback – mis-decaration - Indian Woolens Floor Covering Carpet having drawback rate @ 13.30% of the FOB - Durries made of wool and jute having drawback rate @ 9.80% of the FOB – Held that: - CHALR has put obligations on the CHA to follow certain procedure laid down in the regulation, which was purposely made to avoid any fraud in the customs clearances. Appellant CHA was not having any fraudulent intention and he was also not supposed to know the content of consignment. But, appellant CHA failed to follow the procedure laid down in CHALR, and did not obtain authorization, for which he was punishable - appellant CHA not involved in the fraudulent availment of drawback by the exporting firm and deserve some leniency – penalty amount reduced – decided partly in favor of appellant.
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2016 (9) TMI 271
Restoration of appeal – non-appearance of both parties at the time of passing of order - Valuation – import of second hand machinery – upward revision of value accepted by assesse – Held that:- Tribunal has the powers to recall an ex-parte dismissal of appeal on merits and infact such orders should be recalled when there was sufficient cause for absence of a party. The Hon'ble Court further observed that ends of justice requires when the party is unable to appear for any fault of his own, the ex-parte order against him should be set aside. Their exists sufficient cause for the advocate not to cause appearance before the Tribunal at the time when appeals were taken up for disposal. The late arrival of the advocate on account of delayed train is not a fault attributable to him - restoration of appeal allowed.
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Corporate Laws
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2016 (9) TMI 267
Scheme of Amalgamation is sanctioned. The sanction of the scheme is subject to the sanction of the Scheme by the Hon’ble High Court of Judicature at Bombay in the petition med by the Transferee company. It is further directed that the petitioner Company shall preserve its books of accounts, papers and record and shall not to dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. The petitioner company is also directed to ensure compliances of all applicable laws and it is also observed that sanction of the Scheme shall not absolve the petitioner company from any of the statutory liability, if any.
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2016 (9) TMI 266
Application for substitution of secured creditor preferred by the applicant bank - Held that:- The learned Company Judge has considered the aspect with regard to registration of charge under Section 125 of the Companies Act, 1956 and also paras 44, 45, 46, 51 and 52 of the judgment of the Apex Court in the case of ICICI Bank Ltd. [2010 (9) TMI 236 - SUPREME COURT OF INDIA ] and definition of banking company, financial institution, reconstruction company, Securitisation company under SARFAESI Act and also that the applicant company was not a bank or a banking company or a financial institution or a securitization company or reconstruction company and, therefore, the appellant was not to be permitted to be substituted in place of IFCI as secured creditor for the purpose of SARFAESI Act. The above clear findings were in the context of submissions made and pleadings in the application and reply and considered by the learned Company Judge to which we are in agreement and in addition to other factual aspects noted and discussed by us hereinabove. That somersault was made in application filed under Rule 9 of the Rules, 1959 that no such status as a secured creditor under SARFAESI Act claimed by the appellant, was rightly rejected by the learned Company Judge. Even applicability of Section 130 of the Transfer of Properties Act in the facts of the case was considered by learned Company Judge is also based on submissions made by learned counsel for the appellant in the context of its claim as a secured creditor under SARFAESI Act. Therefore, prayer of the appellant company for substitution as a secured creditor in place of IFCI Ltd. assignor on the strength of deed of assignment of debts, is rightly rejected by learned Company Judge. In the context of Section 62 of Contract Act, 1872, a novation of contract, in the above case answered the contention raised on behalf of borrower that an assignment of a debt can never carry with it the assignment of the obligations of the assignor unless there is a novation of contract by all parties, the Apex Court [supra] held that an outstanding in the account of borrowers [customers] is debt due and payable by the borrowers to the bank. Further, the bank is the owner of such debt and such debt is an asset in the hands of the bank as a secured creditor or mortgagee or hypothecatee and, therefore, the bank can always transfer its assets. Such transfer in no manner affects the rights and interest of the borrowers [customers] and there is no prohibition in the Banking Regulation Act, 1949 in the bank transferring such assets inter se. According to the Apex Court, the obligations referred in the impugned deed of assignment are obligations, if any, of the assignor bank towards assignee bank in the matter of transfer of NPAs. In the above context, reasons assigned by learned Company Judge for arriving at a finding that no case was made out by the appellant on the strength of decision of the Apex Court in the above case of ICICI Bank Ltd. [supra] cannot be said to be incorrect and application for substitution preferred by the applicant bank is rightly rejected.
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PMLA
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2016 (9) TMI 265
Accused of offense under Sections 3 read with section 4 of PMLA - arrest orders - Held that:- Rigors of Section 45(1)(ii) of PMLA would be attracted only while considering the application of an accused for release on bail or his own bond, if he has been arrested by the authorized officer under Section 19 of the PMLA before taking cognizance. Thus if any person though available was neither arrested during investigation under PMLA, nor produced in custody as envisaged in Section 170 Cr.P.C, if upon issuance of process in a PMLA Complaint either by summons or warrant he appears before Court on his own volition, he would be entitled to forthwith furnish his bonds with or without sureties for further appearances without any incarceration in custody. Section 45(1)(ii) of PMLA has no application in case of a person not arrested under section 19 of PMLA in such execution of bond for further appearance. At post cognizance stage, any person already arraigned as an accused of offence under Sections 3 read with section 4 of PMLA, cannot be arrested under Section 19 of PMLA, and such person can be arrested only upon execution of warrant if issued by the Court taking cognizance.
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Service Tax
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2016 (9) TMI 291
Taxability of services provided in relation to outbound shipment and inbound shipment – freight margin - Rule 2(f), Rule 9(c), Rule 10 of Place of Provision (POP) Rules, 2012 - scope of the term Intermediary – M/S Global Transportation Services Private Limited (hereinafter also referred to as applicant seeks to provide logistics solutions to its customers, comprising of number of services, which are mutually exclusive and can be provided on a standalone basis. - Held that: - In the case before us, applicant would enter into an agreement with the carrier for transportation of cargo i.e. airline/shipping line. This service agreement would be on principal to principal basis and not as agent of said airline/shipping line. Therefore, applicant would be covered by the exclusion clause i.e. provides the main service- inbound and outbound shipment on his own account in terms of Rule 2(f) of POP Rules and thus not covered under Rule 9 ( c) ibid as “intermediary” service. Therefore, place of provision of said service will not be location of service provider. Place of provision of service of transportation of goods shall be the place of destination of the goods, as per Rule 10 of POP Rules. In the case of outbound shipment destination of goods shall be outside India. Therefore, place of provision of service of outbound shipment shall be outside India - no Service Tax on freight margin recovered by the applicant from the customer. Inbound shipment – Held that: - upto 31-5-2016, exemption provided to transportation of goods by aircraft and vessel under Section 66 D of the Act as same is service by way of transportation of goods by air or sea from a place outside India into Indian Customs area - However, exemption provided to transportation of goods by aircraft has been extended vide Notification No. 9/2016-ST (S. No. 53) w. e. f. 01.06.2016 – in view of exemption notification inbound shipment not taxable. Bundled service – section 66F of the act – Held that: - activities of the applicant are mutually exclusive and can be provided on standalone basis – service provided does not come under bundled service. Transportation of goods by aircraft and vessel - Section 66D of the Act – Held that: - section 66D negative list existed prior to 1-6-2016. From 1-6-2016 negative list entry withdrawn. CENVAT credit – input services – Held that – no service tax leviable on applicant – no question of CENVAT credit.
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2016 (9) TMI 290
Restoration of appeal – time bar - condonation of delay – Held that: - the appeal filed by appellant before this Tribunal against the order dismissing their appeal for time bar does not arise at all. Provisions of Section 84 of Finance Act, 1994 clearly mentions that an appeal has to be filed before first appellate authority within the time frame of 60 days on receipt of the order and further 30 days is granted to file an appeal with an application for condonation of delay. The first appellate authority has no power to entertain an appeal which is filed beyond the period of 90 days. In the case in hand the appellant has filed an appeal after almost two years – reference to be made under Section 74 of the Finance Act, 1994 for seeking redressal. Section 74 of the Finance Act, 1994 – rectification of mistake – mistake apparent from the record – Held that: - the adjudicating authority has passed an reasoned order which records all the submissions made by the appellant and the defence raised against the show-cause notice. Thus, no mistake apparent from the record - at the initial stage itself the first appellate authority has no power to entertain the appeal which is filed beyond the period of limitation – appeal dismissed.
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2016 (9) TMI 289
Demand of tax with interest - Rule 14 of CCR read with Section 73 of the Finance Act - imposition of penalty - Rule 14 (3) of CCR 2004 - CENVAT credit – input service - Outdoor catering - Car Hiring Services - Electricity Charges - Rule 2(l) of Cenvat Credit Rules, 2004 – business support services – Held that: - To deny credit on these three impugned service, reliance was placed on the judgement of the Supreme Court in the case of Maruti Suzuki Ltd. Vs CCE Delhi, Sundram Brake Linings & Others Vs CCE and Vandana Global Ltd. Vs CCE. The decision in the case of Maruti Suzuki Ltd. is no longer good law in view of Hon’ble Supreme Court’s decision in the case of Ramala Sahkari Chini Mills Ltd. Vs CCE Meerut-I - 2016 (2) TMI 902 - SUPREME COURT. The Tribunal’s ruling in Sundaram Brake Linings & Others Vs CCE stands overruled by the Hon’ble Madras High Court in their own case reported in 2016 2015 (3) TMI 736 - MADRAS HIGH COURT (Mad.). The ratio laid down by Tribunal’s LB in the case of Vandana Global would have no application to the facts of the present case as that was a case dealing with eligibility of cenvat credit on supporting structures – appeal allowed – decided in favor of appellant.
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2016 (9) TMI 288
Rejection of refund claim – time bar – CENVAT credit - input service - export of business auxiliary services – Held that: - in as much as the refund is related to Cenvat credit taken during the given period and the same shall be taken till the last day of the given period, namely the quarter, the claim for refund can only be filed after the last date of the respective quarter and the relevant date is the date of export and are entitled in terms of Notification No. 27/12 dated 18.06.2012 read with Section 11 B of CEA, 1944, and the refund claim is not hit by limitation - in case of export of services, export is complete only when foreign exchange is received in India, this matter was not considered and requires consideration – matter remanded with the direction to verify the date of receipt of foreign exchange received in India to determine the relevant date of export to decide the limitation aspect – appeal disposed off.
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2016 (9) TMI 287
Refund of service tax – port services – THC charges – bill of lading charges – origin haulage charges – repo charges - GTA services – non-submission of proof of payment – proper invoice not submitted – Held that: - the issue has been covered in many case laws. The decision taken in the case SRF Ltd. vs CCE, Jaipur [2015 (9) TMI 1281 - CESTAT NEW DELHI] is followed here – appeal allowed in favor of assesse. Cleaning activity – Held that: - since the appellant has produced the certificate for the first time before this Tribunal, the same should be verified by the Original Authority - matter remanded. CHA services – description of goods – details of other expenses – Held that: - that the invoices of CHA contained cross reference of S.B./ Invoice, which contains the description of goods. Further, the case Shivam Exports vs. CCE [2016 (2) TMI 259 - CESTAT NEW DELHI] is followed – refund allowed – appeal disposed off – decided in favor of appellant.
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Central Excise
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2016 (9) TMI 286
Cenvat credit - service of Event Management and Video Tape Production - used in or in relation to the manufacture of goods - credit availed during the inauguration of new plant and video tape have been used to introduce a new manufacturing facility - Held that:- it is found that the Event Management was organized to showcase there new plant and its production capacities to the prospective buyers. It was organized within the same plant and therefore it can be considered to be part of the sales promotion activities. Therefore, the credit for the said services would be admissible to the appellant. - Decided in favour of appellant
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2016 (9) TMI 285
Refund claim - goods covered under invoice were eligible for exemption under Notification No. 3/2004-CE dated 08.01.2004 - firstly refund application was filed by the buyer which was subsequently withdrawn and there after respondent had filed the refund application - Held that:- at the time of supply of goods, the respondent herein had charged the Central Excise Duty in the invoices which were paid by the buyer. This fact is evident from the refund claim filed by the buyer. Since the buyer has withdrawn the refund application and on 10.07.2007 the respondent had filed the refund application, it is evident that the Central Excise Duty amount was not returned by the respondent to the buyer till such time. There is also no evidence available in the file that the Department has insisted the buyer to withdraw the refund application. Since the incidence of duty had been passed on from the respondent to the buyer at the time of supply of goods, subsequent issuance of Cheque which is in the form of a credit note cannot be considered as a document to prove the fact that the incidence of duty has not been passed on. We find support from the judgment of Gujarat High Court cited by the Revenue, in the case of Commissioner of Central Excise and Customs vs Dutron Plastics [2015 (8) TMI 1173 - GUJARAT HIGH COURT], wherein the Hon’ble Gujarat High Court have held that the doctrine of unjust enrichment is established, even if the credit notes are issued after clearance of goods. - Therefore, we do not find any merits in the impugned order. - Decided in favour of Revenue
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2016 (9) TMI 284
Cenvat credit - irregular availment of cenvat credit - Mono Block Concrete sleepers(MBC) under the category of capital goods - used for laying railway line which is used for transportation of input materials inside the factory and to carry finished cement outside the factory - connection in or in relation to the process of manufacture of finished goods i.e. cement. Held that:- the use as explained by the appellant makes it clear that these are essential and integrally connected to the process of manufacture. Therefore by following the ratio laid in various judgments of Hon'ble Apex Court and CESTAT wherein it was held that Cenvat credit on railway track which are used as handling system for raw material is admissible as these are essential and integrally connected to the process of manufacture of final product. Therefore, the appellant has established a case on merits and that credit is admissible on MBC sleepers. Period of limitation - disputed period is 1/2008 to 4/2009 and the show cause notice is dated 15-11-2011 - disclosure of availment in ER-1 returns - Held that:- there is no case for revenue that the appellant has not disclosed the credit details in their accounts or in ER-1 returns. They believed that credit is admissible and maintained proper statutory records reflecting the details of credit. On such score, it cannot be alleged that the appellant has willfully suppressed facts with intent to evade payment of duty. Therefore, as the revenue has failed to establish suppression of fact on the part of appellant and no malafide conduct has been proved against appellant, the extended period is not invokable. The show cause notice being time barred is unsustainable. - Decided in favour of appellant with consequential relief
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2016 (9) TMI 283
Denial of exemption Notification No. 108/1995-CE dated 28.08.1995 - clearance of 85.755 MT of M.S. CTD Bars during the month of July 2004 and March 2005 - no certificate produced before removal of goods - certificate produced subsequently was in the name of ANS Construction (P) Ltd. New Delhi and not in the name of the appellant - Held that:- the appellant has not explained as to how the certificate issued in the name of ANS Construction Ltd. should be considered as proper and valid for the purpose of claiming duty exemption contained in the notification dated 28.08.1995. It is an admitted fact on record that the requirement of Notification No. 108/1995-CE dated 28.08.1995 have not been complied with by the appellant, thus the benefit contained therein is not available. In this context, the law is well settled that while interpreting an exemption notification, there is no room of any intendment and regard must be had to the language used therein. Therefore, we do not find any infirmity in the impugned order passed by the Ld. Commissioner (Appeals). - Decided against the appellant
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2016 (9) TMI 282
Notification 30/2004-CE dated 9.7.2004 - entitlement for exemption benefit - Cenvat Credit - appellant reversed 6% of the value of exempted goods in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 - Held that:- the appellants claim on the applicability of sub Rule (3D) of Rule 6 is legally sustainable. The said sub-rule provides for a deeming provision to the effect that payment of amount under sub-rule (3) should be considered as credit not taken for the purpose of such exemption notification. The appellant’s case is covered by the said provision as pointed out by the appellant even before the introduction of the said sub-rule in 2011. The Tribunal held that payment of amount under sub-rule (3)(i) of Rule 6 will make the assessee eligible for claiming such exemption as the present one. It is found the Original Authority had fallen in error in not considering the said sub-rule (3D) and relying on explanation (3) of Rule 3 which has no relevance to the facts of the present case in view of the specific provision of sub-rule (3D) of Rule 6. - Decided in favour of appellant
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2016 (9) TMI 281
Recovery of interest and penalty - Section 11AB(1) of the Central Excise Act, 1944 - used the credit of AED (T&TA) for payment of AED (GSI) - duty paid immediately after the same is pointed out - Held that:- the proviso to the said sub-section becomes operational only when duty become payable, consequent to issue of an order/instruction or direction by the payment under Section 37B. In the instant case, there is no such 37B order and therefore, the proviso to said sub-section cannot be invoked. The said sub-section provides that interest can be demanded even when the duty has been paid. - Decided against the appellant
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2016 (9) TMI 280
Invokation of extended period of limitation - Cenvat credit to recipient of service - service tax paid to the tour operator for arranging transport facility for travelling of the employees from residence to factory and vice-versa - non-disclosure of credit particulars with regard to the disputed service in ER-1 returns - Held that:- the issue is no more res integra in view of various judgement. Since the issue arising out of the present dispute is no more open for any debate, we are of the considered view that the service tax paid on such taxable service shall be available for CENVAT credit. Since taking of CENVAT credit on the disputed service is permissible under the statute on merits, setting aside the adjudication order by the Commissioner (Appeals) on the ground of limitation, in our opinion, will not have any consequence for the Revenue, because on merits, the assessee is entitled to take CENVAT credit on the disputed service. It is found that filing of appeal by the respondent/assessee is not in conformity with Section 35B of Central Excise Act, 1944 in-as-much-as the Commissioner (Appeals) vide impugned order has allowed the appeal with consequential relief. Since the respondent/assessee is not aggrieved by the impugned order, the appeal filed by it is not maintainable. Therefore, the appeal filed by the respondent/assessee is dismissed. - Appeals disposed of
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2016 (9) TMI 279
Imposition of penalties - entire amount of duty along with interest and penalty equal to 25% of duty was paid prior to issuance of show cause notice - Held that:- as is evident from provision of Section 11A (1A) & (2) of the Central Excise Act, 1944, once the entire amount of duty, interest and penalty equal to 25% of the duty demanded was remitted even before the issuance of show cause notice as is evident from the primary adjudication orders in terms of which the same have been duly appropriated, the proceedings were deemed to be conclusive even in respect of other persons to whom notice was served. Therefore, the appeals are allowed to the extent that penalties in excess of 25% of the duty in respect of M/s N.S. Ispat (India) Pvt. Ltd. and M/s Hanuman Ispat Pvt. Ltd. and penalty on Shri Shyam Bansal are set aside. - Decided partly in favour of appellant
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2016 (9) TMI 278
Valuation - inclusion of cost of transportation of pipes in the assessable value - pipes sold at the factory gate being place of removal - non-mentioning of freight separately in the invoice - Held that:- it is found that the department filed appeal against the said original order on the ground that cost of transportation from the place of removal to the place of delivery is available provided, the same is shown separately in the invoice. Since the assessee has not shown such amount separately, the deduction in terms of rule 5 is not available. On such appeal the present impugned order was passed. The lower appellant authority held that the deduction of cost of transportation is not available as the same is not shown separately. The Tribunal in the appellants case held that the freight charges are permissible for deductions from assessable value even when the freight amount has not been shown separately in the sale invoice. Therefore, by considering the factual finding of the original authority and the tribunals decision, the impugned order is unsustainable. - Decided in favour of appellant
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CST, VAT & Sales Tax
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2016 (9) TMI 270
Demand of interest - Section 24(3) of the Tamil Nadu General Sales Tax Act - cheques given by petitioner to Enforcement Wing Officials during inspection got dishonoured - demand of interest arises where there is an Assessment in terms of sub-section (1) of Section 24 of the Act and within the specified date, the tax is not paid - Held that: - the case relied upon is EID Parry (India) Ltd., Vs. CCT [2005 (5) TMI 302 - SUPREME COURT OF INDIA]. It was held in the case that interest becomes payable under Section 24(3) on an amount remaining unpaid after the date specified for its payment under sub-section (1) of Section 24. Sub-section (1) of Section 24 deals with an assessed tax or tax which has become payable under the Act. In case covered by Section 13(2) tax must be paid without any notice of demand. But as stated above, under Section 13(2) tax is to be paid "on the basis of such returns". Tax as per the returns has admittedly been paid. If the returns were incomplete or incorrect as now claimed the assessing authority had to determine the tax payable and issue a notice of demand. In the absence of any assessment, even provisional, and a notice of demand no interest would be payable under Section 24(3) - demand of interest without jurisdiction - writ petition allowed - decided in favor of petitioner.
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2016 (9) TMI 269
Validity of surprise inspection report – TNVAT Act, 2006 – power of officers to conduct surprise inspection or record statement or seize documents – writ jurisdiction – section 48 of TNVAT Act – section 65 of TNVAT Act – rule 20 of TNVAT Rules – Held that: - the petitioner need not have any apprehension that their rights and remedies will stand foreclosed, if they allow the impugned inspection report and the statement to stand. It is always well open to the petitioner to contest the merits of the matter, when the assessing officer takes up the issue - Since the petitioner has raised the question of jurisdiction and the respondents have stated that there is delegation of power, this Court is not inclined to quash the inspection report or the statement - jurisdiction left open to be canvassed by the petitioner as and when notice is issued by the assessing officer – petition disposed off – decided against petitioner.
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2016 (9) TMI 268
Attachment of bank account - section 45(1) of the VAT Act – purchases made from dealers whose registrations were cancelled – genuinity of transactions of petitioner with such dealers - assessment proceedings in progress – Held that: - the entire assessment is yet to be completed and considering the possible tax liability even according to the department if all charges against the petitioner are proved, the condition of maintaining a minimum balance of ₹ 25 lakhs in the bank account imposed under the said interim order dated 28.04.2016 would require no further upward adjustment – petitioner to continue to maintain minimum balance till the completion of assessment – petition disposed off – decided in favor of petitioner.
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