TMI Tax Updates - e-Newsletter dated: August 24, 2015 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter August 24, 2015 Case Laws in this Newsletter: Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax TMI SMS Classification – Entry 48 and 63 – UPTT - Difference found in English and Hindi version of Notification, Hindi version would prevail - HC Highlights / Catch Notes Income Tax TDS - since the Indian branch of IFA was a non-profit organisation registered under Section 12 AA of the Act, its income was not taxable and the question of deducting tax at source from the payment made to it in terms of Section 40(a)(ia) did not arise - HC Visit to Get Source Condonation of delay of 2403 days - the action or rather inaction on part of the appellant shows clear gross negligence in not taking the necessary steps in filing the subject appeal in time and the same cannot be accepted. - AT Visit to Get Source Disallowance of depreciation by applying Explanation 10 to section 43(1) - the action of the AO in reducing the subsidy from the cost/w.d.v of assets for allowing depreciation u/s. 32 is held to be not tenable and addition made on this account is deleted - AT Visit to Get Source Depreciation relating to Held to Maturity (HTM) investments - When there is no distinction between the three categories of securities viz.,HTM, AFS and HFT. The assessee can provide for depreciation in all the securities on the same footing - AT Visit to Get Source Penalty u/s. 271D - Payment made by the Directors to the creditors to save the company from litigation - Violation of Section 269S and 269T - Transaction is reflected in the books of accounts through Journal Entries - Where there is a reasonable cause, no penalty can be levied - AT Visit to Get Source Disallowance of misuse charges - The mere nomenclature in the books of account does not determine the allowability or otherwise of the claim u/s 37(1) - The mere nomenclature in the books of account does not determine the allowability or otherwise of the claim - claim of expense allowed - AT Visit to Get Source FEMA FDI – e-Biz platform - GOI has enabled online filing of the Foreign Currency Transfer of Shares (FCTRS) returns for reporting transfer of shares, convertible debentures, partly paid shares and warrants from a person resident in India to a person resident outside India or vice versa. Visit to Get Source Export of goods to Myanmar not exceeding U.S.$ 1000 or its equivalent in value per transaction under the Barter Trade Agreement - Exemption from declaration withdrawn Visit to Get Source Service Tax CENVAT Credit - input service provided by the distributors of SIM cards has the nexus with output Telecommunication Service - credit allowed - AT Visit to Get Source Levy of penalty - Renting of immovable property - - issue is of interpretation of law of the imposition of Service Tax on renting of immovable properties, by invoking the provisions of Section 80 of the Finance Act, 1994 - AT Visit to Get Source Refund of unutilized CENVAT Credit - Export of exempted service - revenue contended that input services are not eligible service - Advisory services - back office operation - provisions of Rule 3(2) of Export of Service Rules being satisfied - refund allowed - AT Visit to Get Source Evasion of service tax - execution of works contract - where the projects executed for Government which are not for commerce and industry are not liable to tax, the appellant cannot be found fault with if they entertained a belief that service tax may not be payable, benefit of doubt has to be extended. - AT Visit to Get Source Valuation of service - Inclusion / exclusion of value of the materials supplied - Since the issue relates to verification of factual details, we are of the considered view that the matter has to go back before the adjudicating authority for consideration afresh of all the documentary evidences - AT Visit to Get Source Central Excise Duty demand - Duty on fly ash - the appellant is not selling the fly ash and the appellant offered the same free to any person who was ready to lift the same. The department has not been able to prove with tangible evidence that there is existence of market for the ash - AT Visit to Get Source Denial of CENVAT Credit - Capital goods - Rule 9 (5) of Cenvat Credit Rules, 2004 provides that the burden of proof regarding admissibility of the Cenvat credit shall lie upon the manufacturer taking such credit. - AT Visit to Get Source VAT Classification of shampoo – Entry 48 and 63 – UPTT - In light of difference found in English and Hindi version in Entry No.48 of Notification, Hindi version would prevail - HC Visit to Get Source Transit Declaration form – Possession before entry – Seizure for non-compliance – UP VAT - Act does not specifically provide for seizure of goods for not carrying Transit Declaration Form - HC Visit to Get Source Service of Notice – Notice published on website – re-assessment - extended period was invoked as per Section 29(4) of Punjab value Added tax act, 2005 – failure of department to serve individual notices was incurable defect, that renders assessment orders null and void - HC Visit to Get Source Articles Anti-Dumping Anti Dumping Duty CONTINGENT CONTRACT Notifications FEMA 347/2015-RB - dated 24-7-2015 - FEMA Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2015 Circulars / Instructions / Orders FEMA - 09 - dated 21-8-2015 Foreign Direct Investment – Reporting under FDI Scheme on the e-Biz platform Case Laws: Income Tax 2015 (8) TMI 856 Entitlement to claim deduction under Section 80IB(10) - Tribunal allowed the assessee's appeal by inter-alia holding that the sanction obtained by the local authority on 23 June 2003 was in respect of a project different from the sanction obtained, called revised sanction, of the local authority on 31 July 2004 - Held that:- The impugned order of ITAT records that the housing project, reflected in the sanction dated 31 July 2004, was different from the housing project approved on 23 June 2003 by the local authority. The sanction dated 31 July 2004, the impugned order finds, was in relation to area 104-R reflected by Survey No.61/2+3+4+5+6, whereas the earlier sanction on 23 June 2003 was in respect of area 84-R of land area consisting of Survey No.61/2+3+5+6. This by itself would indicate that the sanction which has been obtained on 31 July 2004 is in respect of distinct and separate project, then the approval obtained on 23 June 2003 for the housing project. The mere use of the revised sanction by the local authority in the sanction given on 31 July 2004, would not by itself make it an amendment or a change to a earlier sanction when in fact it is a sanction for a materially different housing project. Reliance on Commissioner of Income Tax v/s Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT] in support of its conclusion that the project sanctioned on 21 July 2004 is different from the project sanctioned on 23 June 2003 is true. The finding recorded by the impugned order is a pure finding of fact. The revenue has not been able to show that this finding of fact recorded by the Tribunal is, in any manner, perverse and/or arbitrary. - Decided against revenue. 2015 (8) TMI 855 Disallowance u/s 40(b)(v) - whether remuneration paid to the partners of the Respondent Assessee firm was not in accordance with the provision of Section 40(b)(v) - ITAT deleted addition - Held that:- No reason to take a view different from the one taken by the ITAT. Clause 6(a) of the partnership deed dated 20th June 2008 clearly indicates the methodology and the manner of computing the remuneration of partners. The remuneration of the partners has been computed in terms thereof. The Court additionally notes that under Section 28(v) of the Act, any salary or remuneration by whatever name called received by partners of a firm would be chargeable to tax under the head profits and gains of business or profession. The proviso to Section 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted to the extent of the amount not so allowed to be deducted. Further Section 155 (1A) states that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with a view to adjusting the income of the partner to the extent of the amount not so deductible. A conspectus of these provisions makes the opinion the ITAT consistent with the legal position. - Decided against revenue. Addition on account of payment made to the Indian Branch of the International Fiscal Association - as per AO it was not relatable to the business purposes of the Assessee - ITAT deleted addition - Held that:- ITAT has accepted the explanation of the Assessee that the IFA was a professional body and a non-profit organisation engaged in the study of international tax laws and policies. It, inter alia, undertakes research, holds conferences and publishes materials for the use of its members. Mr. Ajay Vohra, one of the partners of the Assessee firm, was also a member of the executive body of the IFA. In the facts and circumstances, the contribution made by the Assessee to the IFA was held to be for inter alia creating greater awareness of the Assessee firm's activities and therefore an expenditure incurred for the purposes of the profession of the Assessee. It was accordingly held to be allowable as a deduction under Section 37(1) of the Act. Further, since the Indian branch of IFA was a non-profit organisation registered under Section 12 AA of the Act, its income was not taxable and the question of deducting tax at source from the payment made to it in terms of Section 40 (a) (ia) did not arise. - Decided against revenue. 2015 (8) TMI 854 Revision u/s 263 - as per CIT(A) proper inquiry should be made with regard to the charging of excise duty which could have impacted the drastic decrease in the rate of gross profit and net profit as compared to earlier assessment years - ITAT set aside revision order - Held that:- We are of the opinion that Section 263 of the Act, cannot be exercised by the authority in the instant case. We are of the opinion that once an inquiry has been made and the reply of the assessee has been considered, the same matter cannot be re-agitated on the ground that some further inquiry was necessary. In our view, Section 263 can be exercised where there was a lack of inquiry by the Assessing Officer and not on the ground of inadequate inquiry. If there was an inquiry and due consideration was made by the Assessing Officer, the said assessment cannot be opened on the ground that the inquiry made was inadequate. There is a distinction between lack of inquiry and inadequate inquiry. See Commissioner of Income Tax v. Sunbeam Auto Ltd. (2009 (9) TMI 633 - Delhi High Court) and CIT v. Vikas Polymers (2010 (8) TMI 745 - Delhi High Court) - Decided in favour of assessee. 2015 (8) TMI 853 Retirement benefit on settlement of account with the partnership firm - whether was taxable under Section 10(3) in the hands of Partner? - ITAT held that the amount received by the Appellant is not on account of goodwill and set aside the order of the CIT(A) who held the amount not taxable under Section 10(3) - Held that:- The impugned order upsetting the finding of the CIT(A) is on a factually erroneous basis as pointed out herein above and cannot be sustained. The fact that the amount of ₹ 1,75,000/- paid to the Appellant by the firm was in the nature of payment of goodwill is also supported by the fact that the firm considered only the amount of ₹ 1,75,000/- being a part of ₹ 5 lakhs as attributable to Appellant goodwill. This amount was on account of having paid the retiring partners their contribution to the goodwill of the firm. Accordingly, we hold that the amount of ₹ 1,75,000/- paid to Appellant is goodwill. Once we reach a conclusion that the amount of ₹ 1,75,000/- was received by the Appellant in consideration of the goodwill left behind in the firm, then without anything more, the receipt of the above amount cannot be said to be casual for the purposes of Section 10(3) of the Act. In fact, the CIT(A) in his order holds that the amount received by the Appellant being a portion of the goodwill, cannot be said to be casual. The goodwill the firm possesses is inherent in it. It is at the time when the Appellant retired that the same was quantified to enable the firm to exploit the goodwill left behind by the retiring partner. For the purposes of Section 10(3) of the Act applying not only should the receipt qualify as income but it has also to be casual and non-recurring. Therefore, the amount of ₹ 1,75,000/- received by the Appellant not being casual as it was always foreseen and anticipated prior to retirement. It has only been quantified at the time of retirement of the Appellant. Thus, the receipt is not hit by Section 10(3) of the Act - Decided in favour of assessee. 2015 (8) TMI 852 Reopening of assessment - Deduction under Section 80 HHC reduced - Held that:- Escaped assessment can always form the basis for re-opening of assessment. Department, on the question of law, pure and simple, may be correct in his submissions that under clause (c)(iv) under Explanation II to Section 147, computation of any allowance in excess of the permissible limits, can be ordered as a case where income chargeable to tax had escaped assessment. But, can that form the basis for re-opening of assessment is a most fundamental question to be answered. It is well settled that merely because another Assessing Officer finds some thing wrong with the order of assessment passed by the previous one, assessment cannot be re-opened. The provisions of Section 147, which enables the Assessing Officer, who has reason to believe that income chargeable to tax has escaped assessment to reopen the assessment and recompute the assessment, cannot be exercised merely because one officer finds fault with the previous one. Hence, we do not find any justification to entertain the appeal. Therefore, it is dismissed. - Decided in favour of assessee. 2015 (8) TMI 851 Condonation of delay - dismissal of the appeal for nonremoval of office objection - Held that:- It is very clear from the facts as stated that the applicants were aware of its appeal having being dismissed on 23 July 2009 itself when they were represented. After that date, the revenue took out a review petition on 29 October 2009 which also they did not prosecute. The affidavit in support of notice of motion gives no reason as to why the revenue did not take out the present notice of motion earlier to 12 June 2012. No explanation is offered as to why even after knowledge of the order dated 23 July 2009 the applicants took no steps to take out the present notice of motion which was registered on 12 June 2012. As no satisfactory explanation has been offered nor any responsibility fixed for this gross delay of 980 days, we do not see any reason to condone the delay. 2015 (8) TMI 850 Cessation of liability - whether the conversion of liabilities of the Assessee into equity share capital at a premium resulted in any benefit to the Assessee within the meaning of Section 28 (iv) or Section 41(1) (a) of the Act? - Held that:- The finding returned concurrently by both the CIT (A) and the ITAT that the conversion of loans into capital did not result in any benefit to the Assessee and that the nature of the liability essentially remained the same. The Court concurs with the said view. Indeed there was no cessation of liability on account of the allotment of shares in favour of the creditors. It has rightly been held by the ITAT that the decision in CIT v. T.V. Sundram Iyengar & Sons [1996 (9) TMI 1 - SUPREME Court] has no applicability to the facts of the present case. - Decided against revenue. 2015 (8) TMI 849 Levy of interest tax - Finance charges received on purchase and hire back transactions - whether is in the nature of loan and hence chargeable to interest tax as held by ITAT - whether the real intention of parties in all cases of purchase and hire back transactions is only to obtain finance and not to hire the asset? - Held that:- We are unable to accept the contention of assessee that if the sale precedes the Hire Purchase Agreement, it would still fall within the definition of Sale and Hire Back Transaction. It is clear that transactions can be treated as hire purchase transactions only if there is bonafide and complete sale of goods, as evidenced by documents. But no agreements or documents have been produced before us for such verifications The later part of paragraph 4 of the circular No. 760 issued by the CBDT, which we extracted above would be applicable to the facts of the present case as we find that all the authorities have consistently held that there is no proof of actual sale though it is claimed as Sale and Hire Back transaction. As all these are findings of fact, we have no other option but to accept the department's plea and reject the assessee's contention. - Decided against assessee. 2015 (8) TMI 848 Exemption under Section 10(23C)(vi) denied - Whether an educational institution would cease to exist 'solely' for educational purposes and not for purposes of profit merely because it has generated surplus income over a period of 4/5 years after meeting its expenditure? - Held that:- The impugned order cannot be justified solely on the ground that in view of a clause which provided that the Trust could run a business, it would be debarred as such from registration on the ground that it was not existing solely for educational purposes. That merely a conferment of power to do business would not debar the right for consideration to the trust without any finding being recorded that the predominant object of the Trust was to do business. Thus, respondent no. 1 misdirected itself by rejecting the application on this ground without coming to any conclusion that the trust was carrying on any other activity as per clause (i). It is also a matter of fact, as noticed, now that the trust has already also deleted the objectionable clause and which has also been noticed in the subsequent assessment made in the assessment order dated 21.12.2012 for the year 2010-11. - Decided in favour of assessee. 2015 (8) TMI 847 Condonation of delay of 2403 days- necessary relief against the rejection of his application under section 80G seeked - Held that:- Appellant’s neglect of its own right for a long time in preferring appeals. In such a case, then it cannot be expected from us to inquire into belated and stale claims on the ground of equity. We respectfully follow the decision of Hon’ble Supreme Court in the case of Pundlik Jalam Patil (2008 (11) TMI 611 - SUPREME COURT OF INDIA) wherein it was held that the evidence on record suggests neglect of its own right for a long time in preferring the appeals, then the settled rights cannot be lightly interfered with by condoning inordinate delay without there being any proper explanation of such delay. Secondly, the onus is on the appellant to establish and substantiate the day to day delay of 2403 days. In this case, the appellant has miserably failed to offer any satisfactory explanation for such extraordinary delay of 2403 days. The petition of the appellant is totally silent on this aspect beyond a mere cryptic and standard reply that the appeal documents were handed over to the Counsel’s clerk, the documents were not traceable in the intervening period and thereafter when the documents were finally traced, the appeal was filed. We wonder whether the appellant would have taken a similar stand and the position where there are criminal or other civil proceedings against him. Would he had waited for such a long time to reach out to his Counsel again after handing over the papers initially and waited for his Counsel to file appeal on his behalf. In our considered view, the action or rather inaction on part of the appellant shows clear gross negligence in not taking the necessary steps in filing the subject appeal in time and the same cannot be accepted. In such a case, the appellant has no legal right to expect a liberal approach from us in condoning the delay notwithstanding the merits, if any in the matter. 2015 (8) TMI 846 Penalty u/s 271(1)(c) - deduction on account of provision for bad and doubtful debts as per RBI guidelines - CIT(A) deleted the penalty - Held that:- Allowability of deduction u/s 36(1)(vii) and 36(1)(viia) of the Act in respect of provision for bad and doubtful debts as per RBI Guidelines was debatable issue when the return of income was filed by the assessee and therefore, the disallowance is all right but it cannot be considered as concealment of income or furnishing of inaccurate particulars of income and therefore, penalty is not justified. See Southern Technologies Ltd. v. JCIT, [2010 (1) TMI 5 - SUPREME COURT OF INDIA] and Catholic Syrian Bank Ltd. v.CIT, [2012 (2) TMI 262 - SUPREME COURT OF INDIA] - Decided against revenue 2015 (8) TMI 845 Entitlement to exemption u/s 10B - Held that:- There is a blending of tea in the present case of assessee and assessee before AO during remand proceedings have proved the complete procedure explaining that there is blending of tea. This is exactly in line with the order of ITAT Kolkata Special Bench in the case of Madhu Jayanti International Ltd (2012 (7) TMI 531 - ITAT KOLKATA) wherein held that the assessee who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s. 10B. Hence, respectfully following it we feel that issue is now covered against Revenue and in favour of assessee Disallowance commission payment - CIT(A) deleted the addition - Held that:- Issue is covered in favour of assessee and against Revenue exactly on identical facts and circumstances of Hon'ble jurisdictional High Court in the case of CIT v. Rajarani Exports P. Ltd.(2013 (5) TMI 410 - CALCUTTA HIGH COURT) wherein considered that assessee made payment of commission in consideration of services rendered. The CIT(A) held that the commission on export activity was fully disclosed in all correspondence and activities in relation to export, the commission was paid through banking channels with the Reserve Bank approval and it was paid pursuant to an agreement approved by the Government of India and the United Nations, that the payment of commission was for business consideration and there was no illegality in it, that besides this, nothing was brought on record to show that the transaction relating to payment of commission were not genuine or that the payments were excessive or unreasonable, that the Volker Committee report had discussed the utilisation of money by the recipient of the commission and stated that neither the assessee nor the Government of India was involved in parting with some of the funds so received as commission under a pact between the Iraq Government and the United Nations. - Decided against revenue. 2015 (8) TMI 844 Disallowance of depreciation by applying Explanation 10 to section 43(1) - CIT(A) deleted disallowance - Held that:- Capital subsidy scheme is exactly identical as was in AY 2007-08 in assessee’s own case considering that in AY 2003-04 & 2004-05, no such partial disallowance of depreciation was made by reduction of subsidy from actual cost/w.d.v of fixed assets along with the act that in last year, such partial disallowance of depreciation was deleted by my predecessor in office and also considering the judgments cited by the appellant, the action of the AO in reducing the subsidy from the cost/w.d.v of assets for allowing depreciation u/s. 32 is held to be not tenable and addition made on this account is deleted and Hon’ble High court has not admitted the question referred to by revenue u/s. 260A of the Act regarding depreciation on capital subsidy. Once Hon’ble High Court has declined to admit the question, order of Tribunal has become final. Accordingly, this issue is covered in favour of the assessee and against the revenue. Hence, we confirm the finding of CIT(A) and this issue of revenue is dismissed. - Decided in favour of assessee. Disallowance of expenses qua interest against exempt income by invoking the provision of section 14A - CIT(A) deleted disallowance - Held that:- Now the revenue could not establish that the investments made in shares giving exempted income is out of borrowed funds on which interest is paid by assessee. There is no nexus whatsoever. On specific query Ld. Sr. DR could not controvert that the assessee has made in investment in shares giving exempt income out of own funds which is at about 2429 lacs and investment is at ₹ 365 lacs only. Once this fact has not been denied and CIT(A) has categorically observed that the assessee has made investment in shares out of its own funds no disallowance can be attributed qua the interest paid on borrowed funds for investing the same in interest free funds. In view of the above, we confirm the order of CIT(A) on this common issue. - Decided against revenue. 2015 (8) TMI 843 Claim of depreciation on non-compete right as intangible asset - Held that:- The Tribunal in assessee’s own case for the assessment years 2003-04 to 2006-07 [2015 (8) TMI 750 - ITAT MUMBAI] held that the non compete clause under agreement should be read as a supporting clause to the transferor of the copy rights and patents rather to strengthen the commercial right, which was transferred in favour of the assessee. Rejected the argument of revenue that non-compete fee is in the nature of a negative right and it cannot be of a commercial right of similar nature and the expression 'similar nature' shall be relatable to patents, copy rights and trade mark license or franchise or any other business - the assessee is entitled for depreciation for non-compete payment for acquiring non-compete right which is intangible asset - Decided in favour of assessee. Disallowance of contractual payment - Held that:- Even if the assessee was under contractual obligation to compensate for income-tax liability, then also same cannot be claimed as deduction, because it tantamounts to paying of sum on account of any rate or tax levied on the profits and gains of any business or profession as stipulated in section 40(a)(ii). Either the assessee pays the income-tax liability of the other person or pays by itself or compensates the same, will not make a difference as there cannot be distinction between such discharge of liability. That it cannot be held to be a allowable expenditure. Thus, the finding of the CIT(A) that income-tax liability cannot be allowed as deduction is upheld. Similarly, regarding payment of excise duty, it has not been rebutted before us that same is not towards penalty for evasion of excise duty and that such a penalty is not “penal” but compensatory in nature. Thus, without any detail to controvert this finding of CIT(A), it can be inferred as relating to the evasion of duties and penal in nature. Accordingly, the said amount of ₹ 15,90,229/- being amount of penalty and additional duty cannot be held to be allowable within the ambit of section 37(1). Thus, on this score also the decision of the Hon’ble CIT(A) is upheld. - Decided against assessee. Determining the ALP u/s 92C(2) after granting 5% sale harbour - Held that:- The standard adjustment of ± 5% as given by the CIT(A) cannot be allowed as this controversy has been set at rest by Finance Act, 2012 with insertion of sub-section (2A) to section 92C with retrospective effect. With this amendment, it has been clarified that where variation by way of arithmetic mean comprised at which transaction has actually been undertaken, exists by 5% of the arithmetic mean, the assessee shall not be entitled to exercise the option. Accordingly, we hold that Ld. CIT(A) has not justified in granting standard adjustment of 5%. - Decided in favour of revenue. 2015 (8) TMI 842 TDS liability - CIT on his jurisdiction u/s 263 directed the AO to disallow payment of foreign commission u/s 40(a)(i) - Held that:- It is incumbent on the part of the Assessing Officer to disclose the reasons in the assessment order for allowing or disallowing a claim of the assessee. This Tribunal is of the considered opinion that the CIT has rightly exercised his jurisdiction u/s 263 of the Act. However, the CIT has directed the Assessing Officer to disallow a sum of ₹ 37,18,965/- said to be paid to the non-residents for non-compliance of provisions of section 40(a)(i) of the Act. This Tribunal is of the considered opinion that an opportunity shall be given to the assessee to explain the nature of payment before the Assessing Officer. Accordingly, the order of the CIT is modified and the Assessing Officer is directed to examine the payment of commission to the non-residents independently and decide the same in accordance with law. It is made clear that the Assessing Officer shall examine the issue independently without being influenced by the observation made by the CIT in the impugned order or by this Tribunal in this order and decide the same in accordance with law after giving a reasonable opportunity to the assessee. - Decided in favour of assessee in part. 2015 (8) TMI 841 Unexplained investment in the property - difference between the stated consideration and the value determined by the stamp duty valuation - Held that:- Assessee has appropriately explained the reasons for the difference between the stated consideration and the value determined by the stamp duty valuation authority and/or the report of the DVO. The assessee had explained before the CIT(A) that the premises were acquired on the basis of a price negotiated in September, 2007 and that he had paid almost 70% of the total consideration in September & October 2007 itself knowing fully that the premises would be available for occupation only after a period of 3 ½ years to 4 years. The second aspect canvassed by the assessee was the increase in the stamp duty Ready Reckoner rates in 2008 visa- vis the rates in 2007. The facts and figures, in this regard have been reproduced in the order of the CIT(A) which clearly establish that the stamp duty ready recknor rate in 2008 were almost 53.5% higher than those in 2007. All the aforesaid explanations furnished by the assessee to show that the purchase consideration paid was justified, has not been controverted or found to be false by the income tax authorities. Therefore, in the absence of any repudiation of the explanation furnished by the assessee, we are satisfied that the difference in the stated consideration paid vis-à-vis market value in March, 2008 is quite justified and is certainly not reflective of payment of any consideration by the assessee over and above the stated consideration. Thus direct the AO to delete the entire addition made on account of unexplained investment in the property. - Decided in favour of assessee. Sale of shares and securities - Long Term Capital Gain as well as Short Term Capital Gains V/S business income - Held that:- In the present case, the pertinent facts are that the assessee was employed with Larsen & Toubro Ltd. for 41 years and retired in the year 2001 as the President of the company. In the years 1999 and 2000, assessee was offered stock options which resulted in his getting 41000 equity shares of the said concern in 2004 and after the bonus issue in the year 2006-07, the total share holding increased to 82000 shares. Out of this holding, a small quantity of 6895 shares were sold by the assessee which has resulted in a long term capital gain of ₹ 2,61,39,275/-, out of the total long term capital gain of ₹ 3,85,55,838/-. The balance of the long term capital gain has also resulted out of the shares which have been held since 2004 and 2005 and it is also brought out that assessee has sold shares of only eight companies, which has resulted in the long term capital gain. The aforesaid factual background does not inspire any confidence in the plea of the Revenue that the assessee transacted in shares as a trader. It is also notable that assessee had canvassed before the lower authorites that no borrowed funds have been used for making the investment in shares. Thus no error on the part of the CIT(A) in holding that the long term as well as the short term capital gains earned by the assessee are not to be assessed as business income. - Decided against revenue. 2015 (8) TMI 840 Penalty u/s.271(1)(c)- addition made on account of cash credit/disallowance of expenditure claimed as revenue in nature - Held that:- There is no dispute with regard to the addition was made on account of the expenditure claimed as revenue expenditure by the assessee which was treated as capital expenditure by the AO. The assessee has not concealed any particulars of income or furnished inaccurate particulars of income. The only difference in treatment of the particular of the expenditure. Therefore, in our considered view, the authorities below were not justified in confirming the penalty. Hence, in view of the case of CIT vs. Reliance Petroproducts (P) Ltd., [2010 (3) TMI 80 - SUPREME COURT] we direct the AO to delete the penalty - Decided in favour of assessee. Penalty u/s.271(1)(c) - Disallowance in respect of the difference between in the Profit & Loss A/c. filed along with the original return and in the revised return - Held that:- CIT(A) has observed that bills cropped up when additional income was detected. It is not the case of the Revenue that bills furnished before the AO were not genuine as there is no finding by the AO that these bills/vouchers were not genuine and no inquiry has been made at the end of the AO. Therefore, we are of the view that this is not the case were penalty deserves to be sustained. We therefore accordingly direct the AO to delete the penalty. As a result, ground raised by the assessee is allowed and appeal of the assessee for AY 2005- 06 is allowed. - Decided in favour of assessee. Penalty u/s.271(1)(c) - disallowance made u/s.40(a)(ia) - Held that:- As relying on Commissioner of Income-tax-IV Versus LG Chaudhary [2013 (8) TMI 192 - GUJARAT HIGH COURT] wherein held CIT(A) and ITAT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. - Decided in favour of assessee. 2015 (8) TMI 839 Unsecured loan as unexplained cash credit u/s.68 - Held that:- Considering the contention of the assessee that the assessee had furnished PANs, addresses, etc. to prove the identity, genuineness of the transaction and creditworthiness of the depositors. We find that the assessee has filed PANs, addresses, etc. for demonstrating that the depositors were assessed to tax. In view of the case-laws as relied upon by assessee more particularly judgement of Hon’ble Jurisdictional High Court in the case of CIT vs. Dharamdev Finance (P.) Ltd. reported at (2014 (4) TMI 1005 - GUJARAT HIGH COURT) . Therefore, we direct the AO to delete the addition. - Decided in favour of assessee 2015 (8) TMI 838 Penalty u/s.271(1)(c) - addition on account of low G.P. - Held that:- So far as sustenance of penalty on addition on account of estimation of GP is concerned, in quantum, addition has been sustained upto the stage of this Tribunal wherein the Tribunal has estimated the profit @ 9% as adopted by the AO of 11%. Hence, the entire addition is purely made on the basis of estimation. The contention is that book of accounts could not be produced because of the destruction in flood. It is settled principle of law that the quantum and the penalty proceedings are two different and distinct proceedings. Therefore, after considering the totality of the facts of the present case, we are of the view that levy of penalty would not be justified. Therefore, we direct the AO to delete the penalty on addition made on the basis of estimation. Thus, this issue is allowed. - Decided in favour of assessee. Disallowance of depreciation on computer - Held that:- It is the contention of assessee that it had purchased computer on which depreciation was claimed. In view of the judgement of Hon’ble Supreme Court rendered in the case of CIT vs. Reliance Petroproducts Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] wherein held a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee, we hereby direct the AO to delete the penalty. - Decided in favour of assessee. 2015 (8) TMI 837 Addition on account of excess cash found during survey - CIT(A) deleted the addition - contention of the assessee is that one of the partners entered into the sale agreement and received advance from six parties as cash in part which was utilized for introducing capital into the firm and balance was utilized for improvement of house property of the partners - Held that:- There is no dispute with regard to the fact that one of the partners of the assessee-firm has owned up the excess cash found during the course of survey subsequent to survey action. It is also not in dispute another partner surrendered the same as undisclosed income during the course of survey. Subsequently, the other partner retracted from his statement and claimed that the excess cash found was in fact capital introduced by other partner. The source of excess cash and unexplained expenses, being the advance received, the partner of firm upon entering into agreement to sale of immovable property. We agree with the view of ld.CIT(A) that so far as issue of taxability of amount introduced by the partners of firm is concerned, the AO has not made any inquiry to verify the veracity of explanation. The partner of firm claims to be his capital introduced into firm’s account. So far as assessee-firm is concerned, it has an explanation although same is subject to further verification on the part of AO. The Revenue has not placed any material suggesting the explanation of assessee being false. Under these facts, we do not see any reason to interfere with the order of ld.CIT(A), same is hereby upheld - Decided against revenue. Addition on account of unaccounted excess stock - CIT(A) deleted the addition - Held that:- Undisputedly, the assessee retracted from the statement recorded during the survey proceedings and offered explanation towards disclosure of ₹ 43,35,039/- out of total disclosure of ₹ 70,02,520/-. The explanation so offered was not accepted by the AO on the ground that purchase bill of ₹ 28,09,862/- and accounts were produced on 24/12/2009 when further verification was impossible due to time constraint. The ld.CIT(A) deleted the addition on the ground that the AO has not found any defects in the books of accounts maintained by the assessee. We do not agree with the reasoning of ld.CIT(A), as the AO has recorded that the purchase bill and related accounts were furnished only on 24/12/2009. Therefore, the AO had not examined the accounts and verified the genuineness of purchase bill. Under these facts, the ld.CIT(A) ought to have verified the veracity of purchase bill and examined the related accounts. The ld.CIT(A) could have sought remand report from the AO. Thus we set aside the order fo the ld.CIT(A) on this ground and restore this issue to the file of AO for decision afresh. The AO would verify the claim of the assessee that one of the purchase bill was not entered into the accounts on the date of survey and the same was recorded subsequently. The AO would also verify the genuineness of purchase bill by making necessary inquiry. Needless to say that the AO would grant sufficient opportunity to the assessee. - Decided in favour of revenue for statistical purpose 2015 (8) TMI 836 Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- In assessee’s own case for preceding AY, the Tribunal has held that before introduction of Rule 8D, disallowance u/s 14A of the Act has to be made at a reasonable rate. In this context, Tribunal in assessee’s own case has held that expenditure incurred towards two months salary for officers and staff in investment division could be considered as disallowance to be made u/s 14A of the Act. As it appears, assessee in terms with the aforesaid direction of Tribunal has disallowed expenditure of ₹ 7,03,500 u/s 14A of the Act. In the aforesaid view of the matter, we do not find any infirmity in the order of ld. CIT(A) in deleting addition made by AO. - Decided against revenue. Disallowance of deduction claimed u/s 36(1)(viia) - Held that:- AR fairly conceded that the decision of ld. CIT(A) to restrict the deduction claimed u/s 36(1)(viia) to the extent of provision actually made in the books of account is fair and reasonable. Considering such submissions of ld. AR, we uphold the order of ld. CIT(A) on this issue and dismiss the ground raised. Disallowance of provision for NPAs claimed as deduction u/s 36(1)(vii) - Held that:- wWhen the proviso to section 36(1)(vii) applies to bad debts written off relating to rural advances, the same cannot be applied for disallowing deduction claimed on account of write off of bad and doubtful debts relating to non-rural/urban advances. As far as application of explanation to section 36(1)(vii) is concerned, we agree with the ld. AR that its operation will be prospective and will not apply to the impugned AY. For this proposition, we rely upon the decision of the ITAT Mumbai in case of Bank of India Vs. Addl. CIT [2014 (5) TMI 929]. Even otherwise also, careful reading of explanation to section 36(1)(vii) would indicate that nowhere it suggests that the proviso to section 36(1)(vii) would apply in respect of bad debt written off relating to non-rural advances. In the aforesaid view of the matter, we hold that assessee would be eligible to avail deduction of an amount of ₹ 209.94 crore representing actual write off in the books of account of bad debts relating to non-rural/urban advances in terms with section 36(1)(vii), as proviso to the said section would not apply to non-rural advances. Accordingly, we delete the addition made by AO and confirmed by ld. CIT(A). - Decided in favour of assessee. Depreciation relating to Held to Maturity (HTM) investments - Held that:- On perusal of materials on record, we find that this particular issue has been subject matter of dispute from AY 2003-04 onwards. In AY 2003-04, ITAT while deciding the issue in dispute allowed assessee’s claim of depreciation on HTM securities by holding that they are in the nature of stock-in- trade. Also coordinate bench in its latest order passed for AY 2009-10 [2013 (12) TMI 70 - ITAT HYDERABAD] to hold Main business of the banking company being to accept deposits to advance loans to appropriate persons, money constitutes its stock in trade - The amount required to kept in India as per section 24 of the Banking Regulation Act, 1949 in the form of cash, gold and unencumbered securities is part of stock in trade of the assessee - When there is no distinction between the three categories of securities viz.,HTM, AFS and HFT. The assessee can provide for depreciation in all the securities on the same footing - Decided in favour of assessee. Addition made on account of broken period interest - CIT(A) deleted the addition - Held that:- The issue is covered by the decision of ITAT in assessee’s own case [2013 (12) TMI 70 - ITAT HYDERABAD] wherein held the bank purchased government securities paid towards interest in respect of securities purchased for the broken period from the preceding due date for payment of interest upto the date of purchase - Broken period from the preceding due date for payment of interest upto the date of the sale. The assessee claimed the amount of interest paid for the broken period upto the date of purchase as deduction on the ground that the securities were held stock in trade - The broken period interest is an allowable deduction - Decided against Revenue. Disallowance u/s 14A - CIT(A) deleted addition - Held that:- No disallowance u/s 14A can be made as assessee’s investments in shares is as per the business needs of assessee, hence, earning of exempt income is incidental to assessee’s business. As stated earlier, security held as HTM//AFS/HFT are in the nature of stock-in-trade of assessee. Moreover, holding of such securities is ancillary and incidental to assessee’s business. In the aforesaid view of the matter, shares/securities held by assessee cannot be treated as investment so as to attract provisions of section 14A. In the aforesaid view of the matter, we find no infirmity in the order of CIT(A) in deleting the addition made by AO. Accordingly, we uphold the same by dismissing ground raised by department.- Decided against Revenue. 2015 (8) TMI 834 Application of provisions of sec. 50C - CIT(A) deleted the additions as relying on case of CIT Vs. Khoobsurat Resorts Pvt. Ltd. [2012 (11) TMI 590 - DELHI HIGH COURT] as convinced that no permanent structure of any kind can be erected on the impugned land and AO has not considered the circumstances relating to land and has mechanically applied the provisions of sec. 50C - Held that:- The undisputed fact is that the assessee has shown sale consideration from the sale of impugned property, whose stamp duty value was much higher. It is also undisputed fact that the assessee had sold the property under duress. It is also an undisputed fact that the bungalow erected on the impugned land was demolished by the local authorities. Such facts lead to only one conclusion that the stamp duty valuation is not done considering these related factors. In our considered opinion, the matter should have been referred to the District Valuation Officer (DVO) to value the property after considering all the related facts in the impugned land. In the interest of justice and fair play, we therefore, restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to refer the matter to the DVO mentioning the special character of the impugned property and decide the issue afresh after giving reasonable and fair opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purpose. 2015 (8) TMI 832 Penalty u/s. 271D - Payment made by the Directors to the creditors to save the company from litigation - Violation of Section 269S and 269T - Transaction is reflected in the books of accounts through Journal Entries - CIT(A) deleted penalty levy - Held that:- From the perusal of ledger copy furnished by the Ld. AR, no cash entries in the ledger account of Shri K. Anil Kumar were passed. It is only through journal entries the transactions between the respondent assessee-company and the Managing Director Shri K. Anil Kumar were reflected. Further, we notice that Shri K. Anil Kumar had issued his personal cheques to meet the urgent business needs of the respondent assessee-company directly in favour of the persons to whom the respondent assessee-company owes money and no cash in any form either loan or deposit was directly given by him to the respondent, assessee-company. Case of CIT Vs. Preeti Fuels and Flames P. Ltd., [2010 (11) TMI 702 - CHHATTISGARH HIGH COURT ] had held that when the transactions in question went through bank and were deposited by some other Directors, the provisions of Section 269SS are not applicable. Case of Gururaj Mini Roller Flour Mills Vs. Additional Commissioner of Income Tax [2015 (2) TMI 362 - ANDHRA PRADESH HIGH COURT] held that, "Mere book adjustment of funds by the assessee vis-à-vis its sister concern can by no means be said to be violation of Section 269SS/269T so as to attract penalty u/s. 271D/271D. Where there is a reasonable cause for accepting the cash, penalty cannot be levied - See Srishti Life Needs (P) Ltd., Hyderabad Vs. Addl. CIT, Range- 3, Hyderabad [(2015) 2 TMI 245, ITAT, Hyderabad] - Decided in favour of assessee. 2015 (8) TMI 831 Reopening of assessment - Held that:- Admittedly, there was no scrutiny assessment. Hence, based on the information contained notes to account, the audit party pointed out to the Assessing Officer that impugned amount cannot be allowed as deduction as the amount was paid for infraction of law. The Assessing Officer after considering the information had come to a conclusion that the income got escaped assessment and therefore, initiated the reassessment proceedings. In our considered view this constitutes reason to believe that income got escaped assessment. Therefore, the reassessment proceeding was valid. - Decided against assessee. Disallowance of misuse charges - premises used for the purpose of business on the ground that the same is in the nature of penalty and does not relate to the year under appeal - Held that:- It was mandatory to pay the misuse charges due as on the date of exercising the option of owning the property from leasehold to freehold. In our opinion, the claim was not on account of bad debts, but towards the charges paid for regularization usage of building. The mere nomenclature in the books of account does not determine the allowability or otherwise of the claim and, therefore, considering the fact that the amount was paid under the policy announced by the Government itself, it does not amount to penalty for infraction of the any provision of law. Following the ratio laid down in the case of CIT Vs. Ahmedabad Cotton Mfg. Co. Ltd. [1993 (10) TMI 1 - SUPREME Court] we hold that the amount in question is not in the nature of penalty and, therefore, allowable as deduction. Decided in favour of assessee statistical purposes. 2015 (8) TMI 805 Penalty u/s 271(1)(c) - income surrendered during search - Held that:- Assessee had surrendered a sum of ₹ 2.5 crores and he could have easily sought immunity against the penalty under explanation 5 to Section 271 (1) (c). However, the assessee did not owned his commitment and retracted from the declaration made during search and did not include the amount of surrendered income in the original return filed by him. The assessee filed revised return on 2.12.2008 through which surrender amount has been included in the return but this has clearly been done after the assessee was again cornered during the assessment proceedings. In any case as observed by the ld. CIT(A) mere filing of revised return would not grant any immunity to the assessee from levy of penalty is true. The combined reading of Section 132 (4) and explanation 5 to Section 271 (1) (c) would clearly show that immunity is available if the income is surrendered during search and the manner of earning such income is also disclosed and the assessee based on such disclosure paid tax on the same. In case before us after having made surrender the assessee simply retracted from the statement and did not include the amount of surrender in the return of income. The income was included through revised return which has not been accepted by the Assessing Officer because same was late. In any case the revised return was furnished only when the assessee was fully cornered during the assessment proceedings. In addition some more items of income were also found to be concealed particularly in respect of platinum and silver jewellery. Therefore, it is a clear case of concealment and penalty has been rightly levied and confirmed by the ld. CIT(A). - Decided against assessee. 2015 (8) TMI 803 Penalty u/s 271FA - failure to file AIR within time - assessee argued that the assessee has never been served notice for filing the annual information return - Held that:- On perusal of section 285BA of the Act, which was introduced by the Finance (No.2) Act, 2004 w.e.f.1.4.2005, it is not the case that this section has been introduced for the first time by Finance (No.2) Act, 2004. Prior to its substitution, section 285BA was inserted by the Finance Act, 2003 w.e.f. 1.4.2004, where any assessee who enters into any financial transaction, as may be prescribed, with any other person, shall furnish, within the prescribed time, an annual information return in such form and manner, as may be prescribed in respect of such financial transaction entered into by him during any previous year. Rule 114A to 114E prescribes such return to be furnished in Form No.61A and shall be verified in the manner indicated therein. At item No.6 of the said Rule, return shall be furnished on or before 31st August, immediately following the financial year in which the transaction is registered or recorded Penalty order dated 22.12.2010 has been served on the assessee is not in dispute against which the assessee filed appeal on 31.01.2011 before the ld. CIT(A), Bathinda. The Ld. CIT(A)’s order dated 14.12.2012 has also been served upon the assessee on 09.01.2013 at the same address has also not been disputed by the ld. counsel for the assessee. Therefore, the arguments made by the Ld. counsel for the assessee that one notice dated 20.11.2006 having mentioned wrong District is part of the paper book cannot prove that the notice dated 20.11.2006 and other six notices as mentioned hereinabove have not been issued and served on the assessee. Therefore, the argument of the ld. counsel for the assesse is rejected that no notice u/s 285BA(5) has been issued/served upon the assessee even in remand proceedings when all notices were confronted. Therefore, the reliance placed by the ld. counsel for the assessee on the decisions of various courts of law on service of notice cannot be made applicable in the present case and cannot help the assessee. As regards the reasonable cause we may refer that ignorance of law is not an excuse, as per our findings hereinabove and also as per decision of the Hon’ble Gujrat High Court in the case of Pattan Nagrik Sahakari Bank Ltd. (2011 (3) TMI 719 - Gujarat High Court).It is settled law that ignorance of law is of no excuse, as decided by the Hon’ble Supreme Court in the case of MotiLal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors reported in (1978 (12) TMI 45 - SUPREME Court ). - Decided against assessee. Customs 2015 (8) TMI 829 Waiver of pre-deposit - Imposition of Pre-Deposit Condition while remanding back the matter – Application for modification was made against order of Tribunal wherein Tribunal had directed appellant to make pre-deposit of 25% of penalty imposed and on such compliance lower authorities to hear appeal on merits – While relying upon Maa Mahamaya Industries Ltd. Vs. CCE, Visakhapatnam [2014 (11) TMI 747-Andhra Pradesh High Court] appellant prayed that proceedings be held invalid abinitio and if case was remanded back condition of pre-deposit may be waived – Held that:- since there was no order on merits passed by lower appellate authority, therefore remand was ordered – Order to make pre-deposit of 25% of penalty was imposed with prima facie view that appellant did not conspire with exporter in mis-declaration of IEC code – Tribunal has absolute power while considering appeal to amend, modify and nullify orders of lower authorities – Therefore, conditions of pre-deposit of 25% of penalty imposed cannot be said to be contrary to law – Thus, no any merit in application for modification found – Decided against Assesse. 2015 (8) TMI 828 Testing of Sample – “Calcite Powder” – Petitioner being dissatisfied with testing of samples done by respondent no.5 i.e. Central Revenue Control Laboratory, prays for testing of samples of "Calcite Powder" be done at any laboratory other than respondent no.5 – Held that:- Without entering into issue qua retesting being permissible under law or not, interest of substantial justice would be served by requiring respondent no.2 to take decision on applications made by petitioner without being influenced by any of observations made by parties – Application of petitioner to be decided by respondent no.2 strictly in accordance with provisions applicable – Petition disposed of – Decided in favour of Petitioner. 2015 (8) TMI 827 Re-Testing of Sample – “Calcite Powder” – Petitioner being dissatisfied with testing of samples done by respondent no.5 i.e. Central Revenue Control Laboratory, prays for testing of samples of "Calcite Powder" be done at any laboratory other than respondent no.5 – Held that:- Without entering into issue qua retesting being permissible under law or not, interest of substantial justice would be served by requiring respondent no.2 to take decision on applications made by petitioner without being influenced by any of observations made by parties – Application of petitioner to be decided by respondent no.2 strictly in accordance with provisions applicable – Petition disposed of – Decided in favour of Petitioner. 2015 (8) TMI 826 Re-Testing of Sample – “Calcite Powder” – Petitioner being dissatisfied with testing of samples done by respondent no.5 i.e. Central Revenue Control Laboratory, prays for testing of samples of "Calcite Powder" be done at any laboratory other than respondent no.5 – Held that:- Without entering into issue qua retesting being permissible under law or not, interest of substantial justice would be served by requiring respondent no.2 to take decision on applications made by petitioner without being influenced by any of observations made by parties – Application of petitioner to be decided by respondent no.2 strictly in accordance with provisions applicable – Petition disposed of – Decided in favour of Petitioner. 2015 (8) TMI 819 Imposition of Penalty for abetting of smuggling of Vitamin B1 – Vide impugned order, adjudicating authority imposed penalty on each appellant under Section 112(a) and 112(b) of Customs Act, 1962 – Held that:- Appellant-2 admitted purchasing of Vitamin B1 from Appellant-1 – Admittedly said vitamin B1 was imported and appellant-2had not asked for bill of entry for these materials nor has he issued any bills for sale of these goods – Settled position that confessional statements recorded by custom officer was valid piece of evidence for proceedings under Customs Act – Thus, case against Appellant-2 of aiding and abetting of smuggling of Vitamin B1 was clearly established as he has dealt with smuggled goods, by undertaking resale after import – Appelant-1 has also in his confessional statement admitted to having undertaken smuggling of Vitamin B1 and tetracycline hydro chloride under cover of paraffin wax – Therefore, imposition of penalty on Appellat-1 and appellant-2 under Section 112(a) cannot be faulted at all – Decided against Appellant. 2015 (8) TMI 814 Denial of Benefit of Notification no. 65/88-Cus – By denying benefits of notification no. 64/88-Cus in respect of medical equipment imported by appellant, demand of customs duty and penalty was imposed – Appellants alleged that they were claiming benefit of Notification No.65/88-Cus before adjudicating authority and said was not considered in impugned order –– Held that:- appellants had not claimed benefit of Notification No.64/88 instead they had claimed benefit of Notification No.65/88-Cus before adjudicating authority – As per provisions of Notification No.65/88-Cus, duty liability reduced to ₹ 5,06,253/- – Therefore, appellants directed to deposit said amount – Matter remanded to adjudicating authority – Impugned order set aside – Decided in favour of Appellant. 2015 (8) TMI 808 Condonation of delay - When matters was called, appellants was unrepresented - Since matter was coming up for disposal repeatedly, court decline adjournment and take up appeals for disposal - It seems that appellants was not serious in prosecuting their applications and hence applications for condonation of delay dismissed for non-prosecution - Application and appeal dismissed. 2015 (8) TMI 801 Claim for Refund – Unjust Enrichment – Appellant contended that Section 27(3) of Customs Act, 1962 does not require meeting of test of unjust enrichment – Whether refund arose shall be granted meeting tests of unjust enrichment – Held that:- section 27(3) of Act, while permitting refund arising out of sub-section (2) nowhere states that Section 27(1) was not applicable to refund arising under that section – Had intention been to oust test of unjust enrichment, there would have been overriding mandate in sub section (2) itself – Therefore sub section (1) and sub section (3) operate on their own field and all refunds undergo test by sub section (1) of Section 27 – This could be said by following apex Court judgement in case of Sahakari Khand Udyog Vs. CCE [2005 (3) TMI 116 - SUPREME COURT OF INDIA] – Both authorities had no evidence before them as to meeting of test of unjust enrichment by appellant – However Tribunal being final court of fact no evidence was found in relation to overruling unjust enrichment thus, it was difficult to impeach first appellate order – For said reason Impugned order upheld – Decided against Assesse. Service Tax 2015 (8) TMI 835 Denial of CENVAT Credit - input services - operation and maintenance of Wind Mill - Whether the appellant is eligible to CENVAT credit of service tax paid on services of operation and maintenance of Wind Mill located for away from the factory premises - Held that:- present appeal is covered by the case law of CCE & Cus., Aurangabad vs. Endurance Technology Pvt. Limited (2015 (6) TMI 82- Bombay High Court). Accordingly, the appeal filed by the appellant is allowed - Decided in favour of assessee. 2015 (8) TMI 825 Benefit of amnesty scheme from payment of penalty where Service Tax and Interest was paid earlier - Held that:- Government of India introduced an amnesty scheme where, those persons who have not paid tax, if they pay the tax within the stipulated period under the scheme, the entire interest and penalty is waived. - when the assessee has paid the tax and the interest, the benefit of the scheme should be given to him - Decided in favour of assessee. 2015 (8) TMI 818 CENVAT Credit - input service provided by the distributors of SIM cards - Telecommunication Service - Nexus with output service - Held that:- Moreover, it is a fact that only when SIM card is available, the service provider can provide cellular phone service and receiver can avail the same. What is required to be considered in this case is whether the service rendered by the service provider to the appellant is having nexus with output service and has been used for output service or not. It cannot be a case of anybody that the SIM cards sold by the distributors or distributed by the distributors or service has not been used for providing output service namely, telecom service. In these circumstances, the decision in the case of Cadila Healthcare Ltd. (2013 (1) TMI 304 - GUJARAT HIGH COURT) may not be applicable to the present case since in that case, the Hon’ble High Court has observed that commission agent was not promoting the sales and there was no evidence to that effect. Moreover, the facts are also not comparable since here what is required to be examined is whether input service has been used for providing output service or not which, in our opinion, has been used. Issue as to whether the appellant is eligible for Cenvat credit on input service provided by the distributors of SIM cards is held as admissible in favour of the appellant. As regards the documents/invoices, the matter is remanded to the original adjudicating authority - Decided in favour of assessee. 2015 (8) TMI 817 Manpower Recruitment Agency Service - Held that:- Applicant has already collected the amount. In view of that, we direct the applicant to predeposit a further amount of RS. 50,00,000 within a period of eight weeks and report compliance on 7.10.2014. Upon such deposit, predeposit of the balance dues stands waived and recovery thereof stayed during the pendency of the appeals. The prayer for remanding the matter back to the adjudicating authority will be considered after complying with the stay order. - Decided partly in favour of assessee. 2015 (8) TMI 816 Levy of penalty - Renting of immovable property - waiver u/s 80 - Held that:- Taxable service brought under statute, there was dispute and the matter has not yet reached finality as the appeal is pending before the Honble Apex Court in the case of Home Sales Retail India Ltd. I also find that the first appellate authority has recorded in impugned order as an issue involving question of interpretation of the provision of the law, I find that ld. counsel is right in contending that if this is a question of interpretation for setting aside penalties under Sections 76 & 77, the same reasoning would be applicable for penalties under Section 78. Having acknowledged that the issue involved in this case is the interpretation of the law, I find that upholding penalty under Section 78 of the Finance Act, 1994 seems to be incorrect. - issue is of interpretation of law of the imposition of Service Tax on renting of immovable properties, by invoking the provisions of Section 80 of the Finance Act, 1994. I set aside the penalty imposed under Section 78 of the Finance Act, 1994. - Decided in favour of assessee. 2015 (8) TMI 815 Waiver of pre deposit - Denial of CENVAT Credit - Capital goods - exemption under Notification No.25/2007-ST, dt.22.05.2007 - Held that:- with respect to CENVAT Credit of inputs, used in the making of a civil structure for providing an output service, credit has been held to be admissible as per decision of Andhra Pradesh High Court in the case of CCE Vishakhapatnam-II Vs Sai Sahmita Storages (P) Ltd (2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT) - appellant has made out a prima facie good case for complete waiver of the confirmed dues and penalties. Accordingly, it is ordered that there will be a stay on recoveries of the amounts and penalties till the disposal of these appeals. - Stay granted. 2015 (8) TMI 813 Waiver of pre deposit - Held that:- Vide Note Order dated 8.1.2014 and 5.2.2014, after considering the various orders of the Hon’ble High Courts, directed the appellant to produce a stay order against the Tribunal’s order [2013 (12) TMI 209 - CESTAT CHENNAI]. On a query from the Bench, the learned counsel neither produced any stay order from the higher forum nor has complied with the stay order dated 26.8.2013 of the Tribunal. In view of that the appeal is dismissed for non-compliance of the stay order under Section 35F of the Central Excise Act, 1944 - Decided against assessee. 2015 (8) TMI 810 Refund of unutilized CENVAT Credit - Export of exempted service - revenue contended that input services are not eligible service - Advisory services - back office operation - in the nature of export of service or not - Held that:- The grounds of rejection dismissed for the reason that the two conditions under Rule 3(2) of Export of Service Rules being satisfied as discussed in the preceding paragraph, there is no doubt that there have been export of service by the respondent assessee. With regard to the back office support provided in India to its client located outside India - This issue has been decided by the Division Bench of this Tribunal in the case of Commissioner of Central Excise, Hyderabad Vs. Deolite Tax Services India Pvt. Ltd. [2008 (3) TMI 35 - CESTAT, BANGALORE], wherein the back office service provided by the Deolite to their client situated outside India was held to be export of service in the nature of Business Auxiliary Services. Place of Use of service - In case of remittance of money by a person located outside India through a Banker of Remitter located outside India to a person in India. In such case, the transaction relating to the services provided by the Indian company (counterpart) by way of delivering the money in India to the receiver of the money is a service rendered to the client located outside India, who is the receiver of service, having paid for the said services. - impugned appellate order is fit to be upheld - Decision in the case of Paul Merchants Ltd. Vs. Commisisoner of Central Excise, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] - Decided against Revenue. 2015 (8) TMI 806 Evasion of service tax - execution of works contract - Interest u/s 75 - Penalty u/s 76 & 77 - Benefit of exemption claim - Held that:- Pump house and other facilities were erected by the appellant to lift the water from lower level to higher level of canals. In these circumstances, the appellant has made out prima facie case for complete waiver in view of the fact that the period involved is subsequent to October 2009 and during the relevant period, exemption notification was available. - where the projects executed for Government which are not for commerce and industry are not liable to tax, the appellant cannot be found fault with if they entertained a belief that service tax may not be payable, benefit of doubt has to be extended. In such a situation, the demand for the period beyond one year may not be sustainable - Stay granted. 2015 (8) TMI 804 Valuation of service - Inclusion / exclusion of value of the materials supplied - whether the appellants have supplied/sold the materials during the course of rendering of the repair services and if so, whether they are eligible for benefit of Notification No. 12/2003 - Held that:- It is seen that, in the invoices raised, the appellant had indicated the value of the materials supplied during the course of rendering of the service. Though the descriptions given are in general terms and does not indicate the nature of the materials supplied, there is evidence of the quantity and value of materials supplied. The appellants have also furnished a copy of the VAT Returns filed by them before the jurisdictional VAT authorities, wherein they have claimed exemption from tax in respect of the materials supplied. They have also produced a Chartered Accountant’s certificate certifying that the appellants have sold the materials and the figures given in the VAT Returns are correct. The sub-contractors have also confirmed the value of the materials supplied on which Service Tax has been demanded by the adjudicating authority. Since the issue relates to verification of factual details, we are of the considered view that the matter has to go back before the adjudicating authority for consideration afresh of all the documentary evidences - Matter remanded back - Decided in favour of assessee. Central Excise 2015 (8) TMI 833 Duty demand - Duty on fly ash - whether fly ash obtained by burning of coal in the boiler the course of manufacture of sponge iron is dutiable - Held that:- Fly ash is not containing metal or metal oxide. Though the ash obtained by the incineration of municipal waste and other type of ash is covered under heading 2621, the Tribunal in series of judgements mentioned above, as held that such fly ash is not excisable - Tribunal in the case of Shaw Wallace Gelatines Ltd. [2001 (3) TMI 379 - CEGAT, NEW DELHI] has been held that coal ash is obtained from burning of coal as fuel for production of steam, is not an excisable product and not leviable to duty under heading 26.21 of Central Excise Tariff. The same view has been taken by the Apex Court in the case of Union of India vs. Ahmedabad Electricity Co.Ltd. (2003 (10) TMI 47 - SUPREME COURT OF INDIA). It is settled law that just because an item is covered some heading/sub-heading of the tariff, it would not become excisable, unless there is evidence on record to prove that the same is marketable in the sense that it is worthwhile to trade in that product and there is existence of market for the same. It is also well settled law that the burden of proving the marketability is on the department. In this case, the appellant is not selling the fly ash and the appellant offered the same free to any person who was ready to lift the same. The department has not been able to prove with tangible evidence that there is existence of market for the ash. - appellant have made a strong prima facile case in their favour.- Decided in favour of assessee. 2015 (8) TMI 830 CENVAT Credit - SAD - Supplementary invoices - Clearance of raw material without payment of duty - Held that:- Present proceedings were initiated pursuant to the discrepancy noted by Revenue in the records of M/s MIRC Electronics. As the said issue was concluded in favour of M/s MIRC Electronics, no cause of action remains against the present appellant. As such I set aside the impugned order - Decided in favour of assessee. 2015 (8) TMI 821 Valuation of goods - Undervaluation - MRP based valuation of ceramic tiles - Demand of differential duty - Held that:- on the identical issue, the Tribunal by Final Order [2014 (12) TMI 1132 - CESTAT AHMEDABAD] allowed the appeals filed by the Appellants-Assessees and rejected the appeals filed by the Revenue. Following the order of this Tribunal, dt.24.09.2014, the appeals filed by Appellants-Assessees to that extent are allowed and the appeals filed by the Revenue to that extent are rejected. - Decided against Revenue. 2015 (8) TMI 820 Denial of CENVAT Credit - Held that:- Main appellant had availed various amounts as CENVAT Credit which is sought to be disallowed in these proceedings. In our considered view, the issue needs reconsideration in the hands of the adjudicating authority in as much as, vide our Final Order [2014 (10) TMI 809 - CESTAT AHMEDABAD], and some connected matters in respect of the very same assessee-appellant herein, this Bench had taken a view as to whether the factories to be considered as separate entities or one entity. In our considered opinion, the findings recorded by the Bench in Order dt.27.10.2014 may have some implications on the issue in these two appeals. Since this order dt.27.10.2014 was not available with the adjudicating authority, we consider it fit to set aside the impugned order before us and remand the matter back to the adjudicating authority to reconsider the issue afresh in the light of the views expressed by this Bench in final order dt.27.10.2014. - Matter remanded back - Decided in favour of assessee. 2015 (8) TMI 812 Extension of stay order - Extension beyond the period of 365 days - Held that:- applications for extension of stay are allowed in the light of the Larger Bench decision in the case of IPCL Vs. CCE Vadodara reported in [2004 (6) TMI 52 - CESTAT, NEW DELHI] as upheld by the Hon’ble Supreme Court [2005 (1) TMI 114 - SUPREME COURT OF INDIA] and also as held by Hon'ble High Court of Allahabad - [2013 (10) TMI 1194 - ALLAHABAD HIGH COURT], stay is extended for a further period of six months - Stay extended. 2015 (8) TMI 811 Extenion of stay order - Held that:- Stay extended in the light of the Larger Bench decision in the case of IPCL vs. C.C.E., Vadodara reported in [2004 (6) TMI 52 - CESTAT, NEW DELHI] as upheld by the Honble Supreme Court [2005 (1) TMI 114 - SUPREME COURT OF INDIA] and also as held by Honble High Court of Allahabad [2013 (10) TMI 1194 - ALLAHABAD HIGH COURT] for a period of six months - Stay extended. 2015 (8) TMI 809 Demand u/s 11AB - whether the assessees are liable to pay interest under Section 11AB of the Central Excise Act, 1944 on differential duty paid consequent to price escalation after clearance of goods by raising supplementary invoices - Held that:- Supreme Court in the case of Commissioner of Central Excise, Pune Vs SKF India Ltd. reported in [2009 (7) TMI 6 - SUPREME COURT ] held that payment of differential duty at a later date is clearly a case of short-payment of duty at the time of clearance and, therefore, interest is payable under Section 11AB of Central Excise Act, 1944. The Hon’ble Supreme Court restored the order passed by the Assistant Commissioner insofar as charge of interest and also observed that there is no question of imposition of penalty. - Respectfully following the decision of the Hon’ble Supreme Court, in all these appeals we uphold the demand of interest and penalties are set aside. - Decided against Revenue. 2015 (8) TMI 807 Evasion of Central Excise duty - Registration not taken - Held that:- Review petition filed by the Revenue in Maruti Udyog case was dismissed by the Hon’ble apex Court as reported in [2004 (12) TMI 669 - SUPREME COURT]. Thus, the grounds urged in the appeal memorandum no longer exists. As regards the contention that the ratio of Amrit Agro Industries Ltd [2007 (3) TMI 14 - SUPREME COURT OF INDIA]. would apply to the fact of the present case, from the records, it is evident that in the purchase orders and invoices were raised, the appellant had indicated that the price charged is inclusive of all taxes. If that be so, the price charged has to be taken as cum tax and the benefit of Section 4 (4) (d) (ii) has to be granted to the appellant, which the adjudicating authority has been done in the present case. - Infirmity in the impugned order passed by the adjudicating authority - Decided against Revenue. 2015 (8) TMI 802 Denial of CENVAT Credit - Capital goods - Imposition of penalty - Held that:- Assessee availed credit on the basis of invoices showing the description of material MS Round, M.S. Wire, M.S. Wire coils etc. received from the registered dealers. The rate of duty is higher than M.S. scrap. On investigation, it was found that the dealers supplied non-duty paid scrap procured from the market and issued invoices of M.S. Rounds, M.S. Wire etc. to the Applicant No.1 in order to claim cenvat credit under Cenvat Credit Rules, 2004. It is well known that M.S. Rounds, M.S. wire etc. are virgin material which cannot be used as scrap in the furnace. - Prima facie, it is difficult to accept that a prudent business would use virgin material as scrap and such statement is contrary to the statements of dealers and this virgin materials usually cannot be used in melting scrap in the Furnace. We find that Rule 9 (5) of Cenvat Credit Rules, 2004 provides that the burden of proof regarding admissibility of the Cenvat credit shall lie upon the manufacturer taking such credit. It is apparent from the evidences, namely statements, process of manufacture etc. that the applicant received non-duty paid M.S. scrap, S.S. scrap in the guise of MS & HR plates, MS Wire coil, MS Round coils etc. from various registered dealers and availed cenvat credit, which is not permissible under Cenvat Credit Rules. - Partial stay granted. CST, VAT & Sales Tax 2015 (8) TMI 858 Classification of shampoo – Entry 48 and 63 – Assessing authority assessed good taxable at 8% under Entry No. 48 – UPTT - Thereafter, assessing authority had doubt as to whether shampoo imported by petitioner was taxable at 8% or 12 % under entry No. 63 and, accordingly, submitted proposal for grant of sanction under Section 21(2) of U.P. Trade Tax Act, 1948 – Petitioner alleged that it was clear case of change of opinion, which was not permissible in view of settled position of law – Held that:- Entry No.48 of Notification No.101 of 2000, as notified in Hindi language was different – As per hindi notification, Entry No. 48 only relates to such soaps which were used for washing clothes, whereas, as per english version, Washing soaps and other materials used for washing purposes – In light of difference found in English and Hindi version in Entry No.48 of Notification and decision of Supreme Court in Associated Distributors Limited [2008 (5) TMI 394 - SUPREME COURT OF INDIA], Hindi version would prevail – Entry No.48 was with regard to soap which were used for washing clothes – Shampoo, which petitioner was importing and selling, was being used for washing hairs would not be covered under Notification – No error in order of sanction found – Petition dismissed – Decided against Assesse. 2015 (8) TMI 857 Revisional Orders – barred by limitation – Penalty imposed on assesse under Section 5A(3)(i) of Karnataka Sales Tax Act, 1957 was reversed – Additional Commissioner issued suo moto notice for reversal of orders and thereafter passed reversal order – Whether reversal orders passed were barred by time limitation – Held that:- Section 22(4) imposes limitation of four years for reversing assessment orders – Impugned order which was served on assessee on 21.09.2011 was ante-dated order passed only to circumvent limitation of four years provided under Sub-section(4) of Section 22A of KST Act – Serving copies of order after more than 1½ years of date of order was unjustified – On said ground alone impugned order quashed – Decided in favour of Assesse. 2015 (8) TMI 824 Transit Declaration form – Possession before entry – Seizure for non-compliance – UP VAT - Revision was sought for consideration, whether proceedings of seizure and direction for furnishing security was within jurisdiction of respondent- authority since order was passed only on ground that during mobile search, document namely "transit declaration form" was not found in possession of transporter – It was alleged that transporter was obliged to download form and communicate respondent-authority at time when he enters territory of State of Uttar Pradesh – Held that:- Said issue was settled finally in case of M/s Prakash Transport Corporation Vs. Commissioner, Commercial Tax, U.P. Lucknow [2013 (12) TMI 921 - ALLAHABAD HIGH COURT] – It was opined that Act does not specifically provide for seizure of goods for not carrying Transit Declaration Form – Impugned order set aside –Answered in favour of revisionist. 2015 (8) TMI 823 Service of Notice – Notice published on website – Notice on Cases were selected for re-assessment, but as period of three years, provided for re-assessment, had expired, extended period was invoked as per Section 29(4) of Punjab value Added tax act, 2005 – Assessments were finalised by raising further demand – However in appeal, Tribunal allowed appeals holding that service of notice on website of department, was not valid service and personal notices were not issued or served – Held that:- Section 29(4) provides that assessment under sub-section (3) may be made within three years after date when annual statement was filed – It was held in A.B. Sugars Limited versus State of Punjab and others, [2009 (9) TMI 895 - PUNJAB AND HARYANA HIGH COURT], that power under Section 29(4) cannot be invoked without affording opportunity of hearing to dealer – Admittedly no individual notice was ever served upon assessees, before order extending period of limitation was passed – After referring to Rule 86 of Rules, it was held that failure of department to serve individual notices was incurable defect, that renders assessment orders null and void – Therefore no error of jurisdiction or of law in impugned order found – Service of individual notice was sine qua non for invoking power and admitted absence of any such individual notice, renders assessment orders, illegal and void – Decided against Revenue. 2015 (8) TMI 822 Registration of Vehicle - Imposition of Entry Tax - Respondent waives service of notice - Direction issued to register vehicle of petitioner on condition that petitioner shall deposits 1/3rd of entry tax - Petitioner not to alienate vehicle or otherwise create any encumbrance on vehicle without permission of Registering Authority.
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