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Showing 101 to 120 of 914 Records
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2020 (4) TMI 814 - ITAT BANGALORE
Rectification u/s 254 - apparent mistake in the impugned Tribunal order - Deduction u/s 54F - if the assessee is owning more than one residential house other than the new asset on the date of the transfer of the original asset, it has to be seen as to whether income from such residential houses is chargeable under the head “Income from house property" and since this aspect was not examined and decided, there is an apparent mistake in the impugned Tribunal order which should be rectified or this Tribunal order should be recalled - HELD THAT:- Assessee purchased two house properties on 25.04.2014 and 28.04.2014. One of these two properties is new asset for which deduction is claimed u/s 54F. Proviso will be applicable if the condition prescribed in Proviso (b) that income is taxable under the head “Income from House Property” for the second house is satisfied. In para No.11 of the impugned Tribunal order as reproduced above, there is no discussion or finding on this aspect as to whether income from property purchased on these two dates is chargeable to tax under the head ‘income from house property’ or not.
There may be various reasons due to which income from house property may not be chargeable to tax under the head ‘income from house property’ and since this aspect was not examined and decided by the Tribunal in the impugned Tribunal order, we find force in the submission of the learned AR of the assessee that there is apparent mistake in the impugned Tribunal order to this extent. We feel it proper to recall this ex-parte Tribunal order for a fresh decision on this limited aspect as to whether the income from these two house properties purchased by the assessee on 25.04.2014 and 28.04.2014 are chargeable to tax under the head ‘income from house property’ or not and thereafter decide about the applicability of the proviso to section 54F(1) - Miscellaneous petition filed by the assessee stands allowed.
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2020 (4) TMI 813 - ITAT MUMBAI
Deduction u/s 80HHC - amount received from sale of scrap in the total turnover - HELD THAT:- While deciding identical issue in assessee’s own case for Assessment Years 1998-99 to 2000-01, the Tribunal has held that the income received from sale of scrap has to be included in the total turnover for computing the deduction under section 80HHC of the Act, however, subsequently the Hon'ble Supreme Court in case of CIT vs. Punjab Stainless Steel Industry [2014 (5) TMI 238 - SUPREME COURT] has held that the income from sale of scrap cannot be included in total turnover. Keeping in view the ratio laid down by the Hon’ble Supreme Court in the aforesaid decision, the Tribunal while deciding identical issue in assessee’s own case for Assessment Year 2001-02 has restored the issue to the Assessing Officer for considering afresh keeping in view the ratio laid down by the Hon’ble Supreme Court in the decision referred to above. Facts being identical, respectfully following the decision of the Tribunal in assessment year 2001-02, as referred to above, we restore the issue to the Assessing Officer for fresh adjudication with similar direction.
Disallowance under section 14A - HELD THAT:- Investments on which the assessee has received dividend income were made long time back and not in the current year. Further, in the year under consideration, the assessee had sufficient interest free funds available with it. Therefore, no disallowance of interest expenditure can be made. It is further noticed, while deciding identical issue in assessee’s own case in Assessment Year 2001-02 (supra), the Tribunal after examining the availability of fund and all other aspects has deleted disallowance of interest expenditure and further, has restricted the disallowance of administrative expenditure to 1% of the exempt income earned. Keeping in view the facts of the present case as well as the decision of the Tribunal in Assessment Year 2001-02, we hold that learned Commissioner (Appeals) was justified in restricting the disallowance to ₹ 2 lacs.
Disallowance of depreciation on share issue expenses incurred and capitalized in earlier assessment years - HELD THAT:- Tribunal has allowed assessee’s claim of depreciation. It is also relevantly observe, while deciding the appeals filed by the Revenue against the decision of the Tribunal in Assessment Years 1984-85 to 2000-01, the Hon’ble jurisdictional High Court has also upheld the decision of the Tribunal allowing assessee’s claim of depreciation. In view of the aforesaid factual and legal position, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. The ground raised is dismissed.
Disallowance of bad debt - HELD THAT:- Only because the bad debts were not actually written off during the current year but were written off after March 2002, the Assessing Officer disallowed the same. Notably, while deciding identical issue in assessee’s own case in Assessment Years 2000-01 and 2001-02 the Tribunal following the decision of the Hon’ble Calcutta High Court in the case of Turner Morrison And Co. Ltd. vs. CIT [2000 (3) TMI 34 - CALCUTTA HIGH COURT] has allowed assessee’s claim of bad debt.
Depreciation after reducing estimated Written Down Value (WDV) of block of assets transferred - HELD THAT:- On a perusal of the latest order of the Tribunal for Assessment Year 2001-02 it is noticed that the Tribunal after following its earlier decision has directed the Assessing Officer to allow deprecation after reducing the WDV of FPU assets from the block of assets. Facts being identical, respectfully following the decisions of the Tribunal in the preceding assessment years, we uphold the order of learned Commissioner (Appeals) on this issue. Ground raised dismissed.
Disallowance made on account of closing stock of diesel, oil and coal - following the decision of Tribunal in Assessment Year 1995-96 has allowed assessee’s claim with regard to consumable items. It is further relevant to observe, the Hon'ble Jurisdictional High Court has also upheld the decision of the Tribunal in the preceding assessment years while deciding Revenue’s appeal.
Deduction u/s 80IB - HELD THAT:- In assessee’s own case for Assessment Year 2001-02, the Tribunal has held that till the date of approval of amalgamation in October, 2001, the NIP at Bangalore was functioning independently without intervention of the assessee. Therefore, head office expenses of the assessee cannot be allocated to the Bangalore unit. The Tribunal has also observed that appropriate head office expenses of SBPI had already been allocated to the Bangalore Unit. Accordingly, the Tribunal upheld the order of learned Commissioner (Appeals) on this issue. Facts being identical, the aforesaid decision of co-ordinate bench squarely applies to the case. Therefore, we do not find any infirmity in the order of learned Commissioner (Appeals). Ground raised is dismissed.
Interest liability on account of Drug Price Equalization Account (DPEA) has to be allowed on year to year basis - HELD THAT:- Issue relating to DPEA has already attained finality as the Hon'ble Supreme Court vide order dated 30.03.2011 has confirmed the DPEA demand raised by the Central Government while dismissing the petitions filed by the assessee. Thus, in effect, the DPEA demand has also crystallised. That being the case, the decision of learned Commissioner (Appeals) on the issue deserves to be upheld. Ground raised is dismissed.
Claim of deduction under section 80HHC of the Act has to be allowed only on actual amount of advance licence benefit utilized and offered to tax. Accordingly, we restore the issue to the Assessing Officer for deciding afresh after due opportunity of being heard to the assessee.
TP Adjustment - mark-up of 15% has been challenged - HELD THAT:- from the material available on record it is noticed that the employees of the Procurement Department were exclusively engaged in managing procurement activities of the assessee till 31st December, 2001. Provision of global procurement services to AEs started only with effect from 1st January, 2002. The aforesaid factual position has not been controverted by the Revenue through any supporting evidence brought on record. Further, the observation of learned Commissioner (Appeals) that the average time spent for global Sourcing support services by the eight employees was about 60% appears to be on the basis of evidences furnished by the assessee and has not been controverted through any cogent evidence brought on record by the department. It is also a fact on record that the mark-up of 15% applied by the Transfer Pricing Officer is purely on estimate and has no basis at all. On the contrary, the finding of learned Commissioner (Appeals) that the assessee has already earned mark-up of about 66% is on sound basis. In view of the aforesaid, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on this issue. Ground raised is dismissed.
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2020 (4) TMI 812 - ITAT MUMBAI
Nature of expenses - Disallowance of Software Expenses - revenue or capital ependiture - AO proceeded to capitalise the said expenditure and granted depreciation @60% - HELD THAT:- As decided in own case [2019 (5) TMI 689 - ITAT MUMBAI] expenditure incurred by the assessee on purchase of software application and payment made for acquiring license to use those applications was to be allowed as a revenue expenditure. In the backdrop of the aforesaid settled position of law, we are of the considered view that as the aforesaid software purchased by the assessee did not form part of its profit making apparatus and only facilitated carrying its business more efficiently, therefore, the same was rightly claimed by it as a revenue expenditure. - Decided in favour of assessee.
Addition made u/s.145A in respect of unutilised MODVAT credit - HELD THAT:- As decided in own case [2019 (5) TMI 689 - ITAT MUMBAI] We have perused Clause 12(b) of the Tax Audit report of the assessee and find that it is the claim of the assessee that the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by inter alia including the effect of CENVAT credit will be Nil, subject to Sec. 43B that the duty, taxes, cess etc. is paid before the ‘due date’ of filing of the return of income. As the ld. D.R had submitted that the aforesaid working of the assessee would require to be verified, we therefore, in all fairness restore the matter to the file of the A.O for readjudication. Needless to say, the A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee, who shall remain at a liberty to substantiate its claim before him.
Disallowance of expenditure on Interest and Prepayment Charges by treating it as capital expenditure - HELD THAT:- In the instant case, the expenditure on interest and prepayment charge had been incurred by the assessee to expand the existing business of the assessee company. It was submitted by the ld AR that it was with the intent of acquiring the business of M/s RPIL that, subsidiary of the assessee company had purchased shares of M/s RPIL and, since the loan had been raised for purchase of the shares of subsidiary company so as to enable the assessee company to acquire the business of M/s RPIL, hence the expenditure incurred in respect of loan raised in the instant year is a revenue expenditure u/s 36(l)(iii)of the Act. We find lot of force in the said argument of the ld AR and we accept the same.
Proviso to section 36(1)(iii) in any case would not be applicable for the year under consideration as the same was introduced in the statute only with effect from Asst Year 2004-05 and not applicable for earlier years.
Payment of prepayment charges also partakes the character of interest . We find that there cannot be any iota of doubt that the entire transaction of acquisition of business assets by the assessee has been done on the grounds of commercial expediency and hence the entire interest payment of ₹ 27.11 crores and prepayment charges of ₹ 8.62 crores would be squarely allowable as deduction u/s 36(1)(iii) of the Act itself. Accordingly, the Ground raised by the assessee is allowed.
Addition u/s 35DD OR 37(1) - 1/5th of expenditure incurred in respect of payment made to M/s. Accenture - HELD THAT:- Services to be rendered by Accenture, it could be seem that Accenture had purely rendered professional services by way of pre-proposal study to understand the viability of the merger by integrated operations of RPIL with NPIL and the resultant profitability that the resultant merged entity would derive in short to medium term. Hence, it is a clear case of simple professional services rendered by Accenture to the assessee which at any cost cannot be considered as a capital in nature. We find that the said expenditure has to be considered as wholly and exclusively as deduction u/s.37(1) of the Act. We hold that the provisions of Section 35DD as alleged by the ld. CIT(A) cannot be made applicable in the instant case as admittedly the same only refers to expenses incurred pursuant to amalgamation. Hence, we direct the ld. AO to grant deduction of the said expenditure u/s.37(1) of the Act
Write off of Stocks / receivables - HELD THAT:- Assessee being in pharmaceutical industry, has no other option but to write off the same in its books and claim the same as deduction which is a normal business loss occurring to the assessee. We find that the assessee had submitted before the lower authorities that out of total stock of ₹ 133.48 lacs, entire stock had expired other than stock to the tune of ₹ 1,41,698/-. We find that with regard to the observation made by the ld AO for non-furnishing of stock register by the assessee , we find that the assessee had duly adduced the reason that entire records stood destroyed in fire on 22.12.2004, evidences in support of the same are enclosed in pages 328 to 336 of paper book I. In view of these facts and circumstances, we hold that the assessee would be entitled for deduction in respect of write off of dead stocks of ₹ 133.48 lacs during the year under consideration.
Write off of receivables on discontinuation of joint venture - Joint venture company had discontinued the business and thereby the stocks lying with it became dead. The joint venture did not pay any sum due to the assessee company and hence the debtors balance had to be written off by the assessee during the year under consideration and claim deduction towards bad debts u/s 36(1)(vii) - assessee had duly complied with the provisions of section 36(2) of the Act. It is not in dispute that the said trade debts had been duly written off as irrecoverable in the books of accounts of the assessee company. Hence it is eligible for deduction u/s 36(1)(vii) of the Act.
Write off of receivables on discontinuation of distributorship arrangement - Settlement was reached between the two parties as is evident from the settlement letter dated 23.5.2002, as a result of which, a sum of ₹ 195.22 lacs was written off by the assessee. The assessee had also furnished the invoice wise statement of the amounts written off. These details are available in pages 251 to 257 of paper book I. Since Voltas Ltd did not pay the sum due to the assessee company , it became irrecoverable pursuant to settlement letter dated 23.5.2002 as stated supra, the assessee had no other option but to write off the same which was duly done in its books. Accordingly, the assessee would be entitled for deduction u/s 36(1)(vii) of the Act in respect of the same.
Compensation paid to Cost and Freight Agents (CFAs) - Whether a particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances, and by the application of principles of commercial trading. The question must be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit- earning process and not for acquisition of an asset or a Tight of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure - we hold that the assessee would be entitled for deduction in respect of compensation paid to CFAs.
Loss on closure of Hospital Products division - When the stocks come back to the assessee, the same are included in the closing inventory and hence there cannot be any grievance for the revenue. Hence there is no artificial loss as claimed by the revenue in the instant case. Hence we direct the ld AO to grant deduction towards loss on closure of USS Subdivision.
Loss on closure of STYR Subdivision - Assessee had submitted that the same was on account of demonstration stocks which are used to demonstrate the features, efficiency, usefulness etc of the products to the customers including potential customers. These stocks obviously would lose their value over a period of time. It was submitted that on account of improper use and wear and tear of stocks, the stocks had to be disposed off at a reduced price. We further find that this explanation has been found to be acceptable by the ld AO in the remand proceedings. Then there is absolutely no basis for the ld CITA to deny the claim of deduction.
Loss on closure of G2 Subdivision - We find that the assessee had submitted that the stock of ₹ 5,23,626/- was sold for ₹ 94,361/- resulting in a loss of ₹ 4.28 lacs. Since these stocks had already undergone huge wear and tear and on account of improper use , the same would not fetch the real market price and had to be sold at a much discounted price. This commercial decision of the assessee cannot be questioned by the revenue. Accordingly we direct the ld AO to grant deduction of ₹ 4.28 lacs towards loss on closure of G2 Subdivision which is a genuinely incurred business loss by the assessee company.
Treating Sale of Scrap, Cash discount and insurance claim in the nature of receipt covered by the clause (baa) of Explanation to Section 80HHC - HELD THAT:- We find that cash discounts are only in respect of purchases made by the assessee company and therefore not in the nature of receipts specified in clause (baa) of Explanation to Section 80HHC of the Act. Infact pursuant to this cash discount, the value of purchases had been reduced having direct nexus with the profits of the business. We find that it has been held in the following decisions that the aforesaid receipts would be ‘profits of the business’ for the purpose of computation of deduction u/s 80HHC i PFIZER LTD. [2010 (6) TMI 433 - BOMBAY HIGH COURT], M/S. RN. GUPTA [2013 (1) TMI 626 - PUNJAB AND HARYANA HIGH COURT] and GKN SINTER METAL PVT LTD [2014 (1) TMI 588 - ITAT PUNE].
Computation of capital gains on arising out of transfer of property styled as “Rhoni Poulenc House” - whether assessee’s case falls under 55(2)(b)? - HELD THAT:- Assessee company herein as well as M/s. RPIL were in possession of the said lease hold rights in perpetuity. We hold that the perpetual lease cannot be compared at par with normal lease. Hence, we cannot say that assessee has only acquired the tenancy rights from RPIL pursuant to merger so as to fall within the ambit of Section 55(2)(a)(i) of the Act. There is no dispute that assessee would be entitled to enjoy the entire sale consideration of ₹ 33.13 Crores received during the year under consideration at its own whims and fancy and there is no diversion of such income by over riding title warranting the need to pass on some portion of such sale consideration to any other party including the main lessor who had given perpetual lease to the assessee i.e. Municipal Corporation of City of Bombay - assessee need not to transfer any part of its sale consideration to Municipal Corporation of City of Bombay. This itself goes to prove that assessee had not acquired any tenancy rights pursuant to perpetual lease granted by Municipal Corporation of City of Bombay on 04/04/1938.
Lease creates right or interest in the demised property. The lease is a transfer of interest in land. The interest transferred is called “lease hold interest”. The lessor parts with his right to enjoy the property and lessee gets that rights to the execution of the lessee. Hence, the said acquisition of interest cannot be construed to be in the nature of tenancy rights. In the instant case pursuant to the perpetual lease deed conferring lease hold rights for 999 years, the said lease deed did provide to the assessee not a mere right to use in a particular way but also ownership of control of the property. In the instant case, we hold that assessee’s case falls under 55(2)(b) of the Act, wherein assessee is entitled to substitute the actual cost of acquisition with fair market value as on 01/04/1981.
Hence we direct the ld AO to recompute the long-term capital gains on sale of land and short term capital gains and sale of building in the light of above mentioned directions and findings. Accordingly, the ground raised by the assessee and ground of the revenue are disposed off in the aforesaid manner.
Claim of depreciation on assets - HELD THAT:- When the matter as to whether the sale of the two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal.
TDS u/s 195 - addition u/s.40(a)(i) in respect of payment in foreign exchange for professional services rendered - HELD THAT:- Retrospective amendment in the Act cannot fasten any TDS liability on the payer as the TDS application would lie on the payer only based on the law prevailing at the time of payment or incurrence of the expenditure. Obviously the payer i.e. assessee herein could not have pre-empted the retrospective amendment in the statute while making the payment. It is well settled that the retrospective amendment could fasten income tax liability but not TDS liability on the payer herein. Hence, no disallowance could be made in the hands of the payer u/s.40(a)(i) of the Act based on retrospective amendment in the statute. Accordingly, the ground No.2 raised by the revenue is dismissed.
Allowable deduction u/s.37 - legal and professional fees - HELD THAT:- Legal and professional fees were paid to parties for rendering professional services for improving the overall functioning of the company and consequentially to improve the revenue of the assessee company. Hence, we hold that the said expenditure is squarely allowable as revenue expenditure in terms of Section 37 of the Act. We do not find any infirmity in the action of the ld. CIT(A) granting relief to the assessee in this regard.
Computing deduction u/s.80HHC - action of ld. CIT(A) in holding that 90% of the processing charges - HELD THAT:- We find that other income of the assessee included processing charges and the assessee had not reduced 90% of the said processing charges to work out the profits of the business while computing deduction u/s 80HHC of the Act. The ld. AO accordingly re-worked deduction u/s.80HHC of the Act on the premise that the said receipt is in the nature of receipt covered by the Explanation (baa) to Section 80HHC of the Act. We find that this issue is covered by the decision of Hon’ble Supreme Court in the case of Southern Sea Foods Ltd., vs. JCIT [2009 (3) TMI 988 - SUPREME COURT] - we hold that processing charges has got direct nexus with the export activity of the assessee and the said receipt would not be in the nature of receipt covered by Explanation (baa) of Section 80HHC.
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2020 (4) TMI 811 - ITAT MUMBAI
Penalty u/s 271D - receipt of deposit of loan or repayment of the same otherwise than banking channel - genuineness of the transaction made through journal entries is in doubt - reasonable cause under section 273B - CIT-A deleted the addition - HELD THAT:- As decided in M/S BRIGHTGOLD CONSTRUCTION PVT. LTD.[2019 (7) TMI 1609 - ITAT MUMBAI] where loan / deposit has been repaid by day to day accounts of the parties through journal entries, it must be held that the assessee has committed default for the contravention of provisions of section 269SS or 269T as the case may be.
But the Hon’ble Bombay High Court in Lodha developers Pvt. Ltd [2018 (2) TMI 603 - BOMBAY HIGH COURT] and Triumph International Finance (I) Ltd [2012 (6) TMI 358 - BOMBAY HIGH COURT] has clarified the position with effect from 12.06.2012 date when the judgement was pronounced and prior the date of decision of Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd (supra) there was a reasonable cause for the assessee to receive deposit of loan or repayment of the same through journal entries. Accordingly, the assessee’s case is squarely falls under a reasonable cause under section 273B of the Act and therefore, in our view, penalty levied by the addl. CIT under section 271D of the Act has rightly been deleted - Decided in favour of assessee.
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2020 (4) TMI 810 - MADRAS HIGH COURT
Reopening the Assessment u/s 147 - period of limitation - limitation under sub-Section 2 to Section 150 - whether the reopening of the assessment for the three Assessment Years would get time-barred in view of the order of the Income Tax Appellate Tribunal - Computation of deduction u/s 10B - HELD THAT:- Limitation under sub-Section 2 to Section 150 will apply only when the limitation had already expired by the time before the assessment order for the Assessment Year 2006-07 was made. If not, there is a saving of limitation u/s 150(1) - It is for this reason, the Income Tax Appellate Tribunal [2015 (8) TMI 1500 - ITAT CHENNAI] held that such recomputation will be subject to limitation.
No merits in the present Writ Petitions. The petitioner is directed to participate in the proceedings before the respondent. Since the dispute pertains to the AY 2003-04 to 2005-06, the petitioner is directed to file objections/ representations, if any, within a period of thirty days from the date of receipt of a copy of this order.
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2020 (4) TMI 809 - PUNJAB AND HARYANA HIGH COURT
Maintainability of appeal - appropriate forum - issue relates to taxability or excisability of goods - primary objection taken by the Revenue is that this case would not be covered under Section 35G of the Central Excise Act, 1944 but under Section 35L of the Act - HELD THAT:- From Section 35L(1) (b) of the Act it is evident that the appeal shall lie to the Supreme Court on the question in relation to rate of duty of excise or value of goods. Sub-Section(2) of Section 35L of the Act clarifies that the rate of duty shall include the determination of taxability or excisability of goods - In the present case, the issue involved is as to whether the activity of the appellant falls within the definition of Section 65 (19) of the Finance Act, 1994 and thereby whether the cost of activity would form part and parcel of the charge levied by the Revenue.
The case would be covered by Section 35L of the Act because taxability depends on whether the activity carried out by the Assessee is a business auxiliary service or not - appeal dismissed as not maintainable.
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2020 (4) TMI 808 - MADRAS HIGH COURT
Striking off the name of the petitioner company from the Registrar of Companies - main grievance of the petitioner is that there should have been an obligation on the respondents to pass an order under Sections 248 (5) and 248 (6) of the Companies Act, 2013 - HELD THAT:- As per Section 248 (6) of the Companies Act, 2013, before passing an order under Section 248(5) of the Companies Act, 2013 (to strike off) the Registrar shall satisfy himself that sufficient provision has been made for the release of all amounts due to the company for payment or discharge of its liability and obligations by the company and also shall obtain necessary undertakings from the Managing Directors/Directors or the person in-charge of the companies with respect to such discharge of liabilities.
In the instant case, the records do not show that the petitioner had actually filed any application seeking to classify it as a dormant company or inactive company. Hence, the provision under Section 455 of the Companies Act, 2013 will not be applicable. Even otherwise, Section 245 (1) (c) of the Companies Act, an exemption from a company not to be struck off can be granted only, when the company voluntarily applied to the Registrar, seeking to declare it as a Dormant company. If it makes an application under Section 248 (c), then the Registrar will have to follow the procedure under Section 455 of the Companies Act, 2013 - In the present case, the petitioner had not taken recourse to the provisions of Section 248 (c) of the Companies Act, 2013.
Petition dismissed.
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2020 (4) TMI 807 - MADHYA PRADESH HIGH COURT
Validity of changes brought in Rule 6(3) (i) of Cenvat Credit Rules, 2004 - main contention of the counsel for the appellant is that the adjudicating authority as well as the Tribunal failed to appreciate the significant change brought in Rule 6(3) (i) of Cenvat Credit Rules, 2004 w.e.f. 1.3.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 - HELD THAT:- The adjudicating authority and the Tribunal erred in not appreciating the significant change brought in Rule 6(3) of Cenvat Credit Rules, 2004, w.e.f. 1.3.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 which as noticed in the OIO with reference to sale of goods, was deleted and in its place the emphasis was shifted to the payment of an amount equal to 10% of the 'value' of exempted goods - In the absence of any findings to this effect that the provisions prescribed in the relevant Rule with reference to changes brought in Rule 6(3) of Cenvat Credit Rules, 2004 w.e.f. 1.3.2008 have been complied with or not, the dropping of the demand is against the spirit of law.
Thus, dropping of the demand is correct only upto February,2008 in terms of Rule 6(3)(b) and demand raised for period March, 2008 onward is required to be examined in terms of changes brought in Rule 6(3)(b) of Cenvat Credit Rules, 2004 w.e.f. 01.03.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 - the matter requires to be remanded to the Tribunal for reconsideration of the matter - appeal allowed by way of remand.
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2020 (4) TMI 806 - CESTAT NEW DELHI
Refund of Service tax - amount was paid under protest - time limitation - unjust enrichment - HELD THAT:- The facts are not in dispute that this Tribunal held that appellants are not liable to pay service tax vide order issued on 16.11.2016 and the refund claims were filed by the appellants on 02.11.2012, therefore, the impugned refund claims were filed within one year of the date of issuance of the order by this Tribunal - the relevant date for filing the refund claim is 16.11.2016 and from the date within one year, they were required to file refund claim in terms of Section 11B of the Central Excise Act, 1944 which the appellants have done - thus, refund claim cannot be rejected as barred by limitation.
Principles of unjust enrichment - HELD THAT:- The service tax has been paid by the appellant under protest. Moreover, at the time of issuance of invoice, they have not charged any service tax from the service recipient for reimbursement of any amount towards service tax to the appellant - the appellant have passed the bar of unjust enrichment which is not applicable to the facts of the present case.
The appellant are entitled to the refund of the amount for which they have filed refund claims - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 805 - CESTAT NEW DELHI
Refund of SAD - N/N. 102/2007-Cus. - Refund denied on the ground of non-stamping of the invoices - denial on the ground that the invoices showing sale of the goods do not bear ‘no credit of additional duty of Customs leviable under sub-section 5 of Section 3 of Customs Act shall be admissible’ - HELD THAT:- Non-declaration in the invoices as per para 2(b) of the notification indicating that no credit of additional duty is admissible to the customer is only a procedure required to be adopted. The purpose of the said declaration is that the buyer does not have undue Cenvat credit in case SAD has not been shown separately in the invoices.
Refund also denied on the ground that CA certificate is not supported by any documentary evidence to show that the duty incidence has not been passed on to the customers - HELD THAT:- The impugned order stands passed beyond the scope of the show cause notice. Once there is no proposal in the notice to deny refund claim on a particular ground which also does not stand considered by the original adjudicating authority, the consideration of the same by Commissioner (Appeals) amounts to travelling beyond the show cause notice. Inasmuch as the appellant has produced the Chartered Accountant’s certificate, the same has to be allowed on this ground alone.
Refund allowed - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 804 - CESTAT, NEW DELHI
Valuation of import goods - automobile parts - requirement of affixing of ‘retail selling price’ - goods, subject to assessment under section 4A of Central Excise Act, 1944 when manufactured in India, are mandatorily to be subject to additional duties of customs under the corresponding proviso in Customs Tariff Act, 1975 even when not sold ‘as such’ after import - notification no. 44(RE-2000)/97-2002 dated 24th November 2000 - Third Member, has held, by majority, that there was no provision for assessment by recourse to ‘retail selling price’ except upon voluntary adoption at the time of import - HELD THAT:- Admittedly, appellant is barred from disposal of the impugned goods without affixing the various particulars prescribed under Legal Metrology Act, 2011 and, therefore, in conjunction with inclusion in Third Schedule of Central Excise Act, 1944, the goods cannot be denied assessment to additional duty of customs by reference to declared, or assessed, transaction value. The expression that is variably deployed in connection with such assessment is ‘intended for retail sale’ and, thereby, implies the existence of such labelled price from the time of import or clearance from factory, as the case may be, till arrival at the point of retail sale as demonstrative of intention. Such goods when routed through channels for industrial/institutional consumers are explicitly excluded from the statutory requirement under Legal Metrology Act, 2011. It would, therefore, appear that demonstrated intention of the importer/manufacturer by affixing of ‘retail selling price’ is the sole decider for adopting the alternative mechanism for assessment of additional duties of customs or duties of central excise, as the case may be.
From the decision of the Tribunal in STARLITE COMPONENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK [2013 (4) TMI 624 - CESTAT, MUMBAI], it is deduced that, even if such goods are covered by notification for assessment to duties of central excise on ‘retail selling price’ to the extent that these are further subject to duties of central excise in circumstances of inclusion in the Third Schedule to Central Excise Tariff Act, 1985, the prescription of affixing of ‘retail selling price’ and assessment thereof does not arise. Therefore, the consequence is assessment on the basis of transaction value.
The assessment insisted upon in the impugned order is not in accordance with law - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 803 - CESTAT, NEW DELHI
Confiscation - Imposition of redemption fine and penalty - claim of drawback for export of ‘ready-made garments - Valuation of export goods - declaration of value for the purposes of exports - case of appellant is that the amount realized is the correct transaction value and that settled law holds that the market inquiry in India is not a valid substitute for a market inquiry in the country of destination - HELD THAT:- Even though the factum of goods being other than declared is not in dispute nothing has been brought to evidence that this was deliberate act. It is limited to a small portion of the consignment. Also, the consequence of misdeclaration is only ₹ 1,01,000/- and the difference drawback claimed and eligible drawback is mere 2%.
The confiscation of goods and imposition of penalty does not appear to be appropriate - redemption fine and penalty set aside - appeal allowed.
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2020 (4) TMI 802 - CESTAT NEW DELHI
100% EOU - Demand of Differential Cost Recovery Charges paid - Claim of refund of excess MOT charges paid - The case of the appellant is that they have paid both the Merchant Overtime Charges and also cost recovery charges on sharing basis till the time of debonding, when application was made on 08.12.2014. Prior to this, vide their application dated 01.04.2014, they filed option with the appropriate officer on 01.04.2014 that they shall be paying only MOT charges.
HELD THAT:- The Commissioner (Appeals) have erred in holding that the appellant have not raised the issue initially. Admittedly, from the facts it is evident that such issue was never raised by the appellant earlier and it was raised for the first time on 28.03.2014. As regards the allegation of short recovery of ‘cost recovery charges’, admittedly such charges (short paid) amounting to ₹ 71,25,382/- have been paid under protest and after sometime the appellant have applied for refund of the same. Thus, the finding of the Commissioner is factually wrong.
The impugned order is set aside and appeal is allowed, so far as it has confirmed the levy of cost of recovery charges.
Such cost recovery charges of ₹ 38,51,558/-, the Assistant Commissioner is directed to refund the above amount alongwith interest as per Rules, within a period of thirty days from the date of receipt of the order. - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 801 - CESTAT ALLAHABAD
CENVAT Credit - intermediate goods - press mud and bagasse - exempt goods - demand of an amount of 6% on the value of clearance of the said goods in terms of Rule 6(3)(i) of the Cenvat Credit Rules, 2004 - HELD THAT:- Inasmuch as according to Supreme Court’s decision in the case of UNION OF INDIA VERSUS DSCL SUGAR LTD. [2015 (10) TMI 566 - SUPREME COURT], bagasse has been held to be an agricultural waste or residue, there could be no manufacturing activity. The press mud has also been held to be a waste and not a manufactured product. As such the amendment made in the provisions of Rule 6 would not have any effect to the facts and circumstances of the present case.
Appeal dismissed - decided against Revenue.
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2020 (4) TMI 800 - CESTAT ALLAHABAD
Principles of natural justice - opportunity for cross-examination of Panch witnesses and DRI officers - HELD THAT:- The appellant’s request for cross-examination of Panch witnesses as also the officers is prima facie genuine request so as to complete the adjudication proceedings judiciously. In as much as the Panch witnesses have already been allowed cross-examination, though according to the learned advocate they have not appeared during any of the hearings so fixed for the said purpose, we deem it fit to direct the Adjudicating Authority to ensure the appearance of Panch witnesses during the next date of hearing to be fixed by him.
Appeal allowed by way of remand.
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2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT
Nature of activity - sale or service - use of the paper upon which an image is printed using certain consumables and chemical in the photography service - valuation of photography service to be determined in isolation of cost of such goods or not - meaning of ‘sale’ appearing in exemption Notification No.12/03-ST dated 20.06.200 - deemed sale - whether the appellant-assessee was entitled to the benefit of Notification No.12/2003-ST dated 20.06.2003?
Whether for the purposes of service tax the value of photography service can be determined separately from the value of certain consumables and chemicals which are used on the paper for printing the image and whether such printed photograph can be said to be a sale of goods in terms of Article 366(29A)(b) of the Constitution? - HELD THAT:- The view expressed by the Apex Court in Bharat Sanchar Nigam Limited’s case [2006 (3) TMI 1 - SUPREME COURT ] that after the 46th Amendment, the sale element of those contracts which are covered by the six sub-clauses of clause (29A) of Article 366 are separable and may be subjected to sales tax by the States under Entry 54 of List II and there is no question of the dominant nature test applying, was reiterated by the Apex Court in M/s Pro. Lab’s case - the finding of the Tribunal that in Bharat Sanchar Nigam Limited’s case, the Apex Court has only given the passing remarks and did not overrule either C.K. Jidheesh [2005 (10) TMI 3 - SUPREME COURT ] or Rainbow Colour Lab and Another vs. State of Madhya Pradesh and others, [2000 (2) TMI 2 - SUPREME COURT ], is unsustainable.
Whether appellants having once paid the VAT under the State Act as works contractor on the material and chemicals consumed in photography service, can be charged service tax on the same value? - HELD THAT:- In view of the law laid down by the Apex Court in M/s Pro. Lab’s case, it can be safely held that photography service, which has both the elements of goods and services is covered under works contract. Thus, in a works contract which involves transfer of property, the provisions as contained in Article 366(29A) of the Constitution are attracted. Therefore, in the light of sub-clause (b) of Clause (29A) of Article 366 of the Constitution, in execution of a works contract when there is transfer of property even in some other form than in goods, the tax on such sale or purchase of goods is leviable. In this view of the matter, after the 46th Amendment, there is no question of dominant nature test applying in photography service and the works contract, which is covered by Clause (29A) of Article 366 of the Constitution where the element of goods can be separated, such contracts can be subjected to sales tax by the States under Entry 54 of List II of Schedule II - Once that is so, value of photographic paper and consumables cannot be included in the value of photography service for the purposes of imposition of service tax.
The term ‘sale’ appearing in exemption Notification No.12/03-ST dated 20.06.2003 would also include “deemed sale” as defined by Article 366(29A)(b) of the Constitution.
Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 798 - GUJARAT HIGH COURT
Release of confiscated goods alongwith the vehicle - section 129(1) of the GST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law.
It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged.
Application disposed off.
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2020 (4) TMI 797 - GUJARAT HIGH COURT
Release of confiscated goods alongwith the vehicle - section 129(1) of the GST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law.
It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged.
Application disposed off.
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2020 (4) TMI 796 - GUJARAT HIGH COURT
Release of confiscated goods alongwith the vehicle - section 129(1) of the GST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law.
It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged.
Application disposed off.
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2020 (4) TMI 795 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT
Input Tax Credit - bunds/ crystallizer which are constructed and used in the manufacture of salt and bromine chemicals - Zero Rated Supply or not - AAR held that Input tax credit of GST paid on goods and services used to construct the “bunds” is admissible to M/s. Satyesh Brinechem Private Limited, provided that the bunds are used for making zero rated supplies and fulfill the conditions which are necessary for treating the bunds as “plant and machinery” - challenge to AAR decision.
HELD THAT:- Since the salt would be exported, the same would be considered as ‘zero rated supply’ and object to the provisions of section 17(5) of the CGST Act, 2017, credit of input tax may be availed for making such zero rated supplies. In view of the provisions of section 16 of the IGST Act, 2017.
Sub-section (5) of section 17 of the GST Acts starts with non-obstane clause and will have overriding effect on the provisions of Section 16(1) of the GST Acts. Therefore,’ if the goods and/ or services are covered under sub-section (5) of Section 17 of the GST Acts, the input tax credit Shall not (sic) be available - Also, credit of input tax may be availed for making zero rated supplies in view of the provisions of sub-section (2) of section 16 of the IGST Act, 2017. However, this provision in also subject to the provision of of sub-section (5) of section 17 of the CGST Act, 2017 - thus, the input-tax credit shall not be available on goods or services covered by sub-section (5) of section 17 of the GST Acts, even if the same are indispensible in the process of manufacture.
Whether the goods and services used by the applicant for construction of “bunds” / “crystallizers” are covered under sub-section (5) of section 17 of the GST Acts or otherwise? - HELD THAT:- The ‘plant and machinery’ would be outside the purview of clauses (c) and (d) of Section 17(5) of the CGST Act, 2017 and would be eligible for input tax credit.
Whether ‘bunds’ are ‘plant and machinery’? - HELD THAT:- As held by Hon’ble Apex Court in the case of COLLECTOR OF C. EX., CALCUTTA VERSUS ALNOORI TOBACCO PRODUCTS [2004 (7) TMI 91 - SUPREME COURT] circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases; that disposal of cases by blindly placing reliance on a decision is not proper - thus, ‘bund’ / crystallizer’ are not covered within the definition of ‘plant and machinery’ given under Section 17 of the GST Acts.
Whether ‘bunds’ are ‘any other civil structure? - HELD THAT:- In the present case, the natural meaning of the phrase ‘any other civil structures’, as discussed herein above, is compatible with clauses (c) and (d) of Section 17(5) and definition of ‘plant and machinery’ given under Section 17 of the GST Acts. Even otherwise, the specific words ‘land’ and ‘building’ preceding general words ‘any other civil structures’ do not constitute a genus - Therefore, the bunds constructed by mixing chemical Terrazyme, GSB Metal, Water with dugged aud laying LDPE film wherever required, can be said to be covered under ‘any other civil structures’.
Thus, Bunds are not ‘plant-and machinery within the definition of the said term under Section 17 of the GST Acts, and therefore, in view of clauses (c) and (d) of. Section 19(5) read with explanation below Section 17 of the GST Acts, Input Tax Credit in respect of works contract service or goods or services used in construction of ‘bunds’ is not admissible.
Ruling of AAR modified.
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