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Showing 341 to 360 of 1359 Records
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2015 (4) TMI 1021
Waiver of pre deposit - CENVAT Credit - Capital goods - whether the appellant would be eligible for cenvat credit in respect of MS angles, channels, bars etc., which had been taken by them during the period from September 2010 to February 2012 - Held that:- There is no evidence that the fabrication of the capital goods had been declared by them in the ER-1 returns or by any other specific information in this regard given by the appellant. The steel items, in question, - MS angles, channels, bars etc. are not covered by the definition of capital goods and the same would be eligible for cenvat credit only if there is evidence on record to prove that the same had been used for fabrication of capital goods and only in that case such steel items would be eligible for cenvat credit as inputs. But for this there must be some clear evidence on record which, prima facie, is not there in this case. - this is not a case for total waiver from the requirement of pre-deposit. After considering the overall facts and circumstances of the case and also the plea of financial hardship pleaded by the appellant, we direct the appellant to deposit an amount of ₹ 40 lakh within a period of 8 weeks. On deposit of this amount within the stipulated time period, the requirement of pre-deposit of balance amount of cenvat credit demand, interest and penalty would stand waived and recovery thereof is stayed - Partial stay granted.
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2015 (4) TMI 1020
Penalty u/s 11AC - whether penalty under Section 11AC has been rightly imposed on the appellant in the fact that due to change in the warehousing provisions w.e.f. 6.9.2004 vide Notification No. 17/04-CE, the appellants are having certain quantity of stock in the warehouse, which was declared to the department on 6.9.2004 itself - Held that:- Issue as to differential duty has been arisen in the facts of this case as a matter of interpretational issue. There is no concealment or contumacious conduct on part of the appellant found by the Revenue. Accordingly, the penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 is set aside. The appellant shall be liable to pay interest as held in the impugned order under Section 11AB and shall deposit the same, if not paid so far - Decided partly in favour of assessee.
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2015 (4) TMI 1019
Denial of Cenvat credit - credit on pet coke which was used for generation of electricity by the sister unit of the respondent which in turn sent the electricity to the respondent which was ultimately used in the manufacture of final product - whether the respondent is entitled to take Cenvat credit on pet coke which has been used in generation of electricity outside the factory and said electricity has been used by the respondent in manufacturing of their final product or not - Held that:- Admittedly electricity so generated has not been used in the manufacture of final product. Further in the said case the Hon’ble Apex Court analyzed how the Cenvat credit can be availed on inputs which have been sent to the job worker and ultimately used in the manufacture of final product - in the case of Haldia Petrochemicals Ltd. (2005 (1) TMI 306 - CESTAT, NEW DELHI), the identical issue was before this Tribunal wherein this Tribunal has held that naphtha, as such or after being partially processed, sent to power plant and raw material used by the power plant for generation of electricity; said electricity is sent to the principal manufacturer. On such inputs sent to the job worker, the assessee is entitled to take Cenvat credit. Similarly, in the case of pet coke which has been sent by the respondent to their sister unit for manufacturing of electricity which ultimately has been used by the respondent for manufacturing of their final product, i.e. cement. Therefore, the respondent has qualified for entitlement of Cenvat credit as per Rule 2 (k) of the CCR, 2004. Consequently, I do not find any infirmity in the impugned order, the same is upheld. - Decided in favour of assessee.
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2015 (4) TMI 1018
Addition u/s 68 - taxability under section 41(1) of the Act in a case where long outstanding sundry creditors were treated as taxable - Held that:- CIT(A) had dealt with the issue threadbare. The appellant has chosen not to file the confirmation letters in respect of all the creditors before the Assessing Officer. It was only during the course of proceedings before the learned CIT(A), the appellant has filed two confirmation letters in respect of M/s R&A Techniques and M/s Millennium Marketing for credit balance of ₹ 6,76,000/- and ₹ 7,79,101/- respectively and had not filed any confirmation in respect of M/s Ganesh Enterprises and M/s Goyal Fasterners for credit balance of ₹ 3,70,588/- and ₹ 1,35,347/- respectively. The appellant filed these two confirmation letters before CIT(A) as additional evidence along with the application under Rule 46A of the Income Tax Rules, 1962. Apparently, after admitting this additional evidence, the learned CIT(A) has called for remand report from the Assessing Officer, who in turn, examined Mr. Rajesh Raheja Prop. of R&A Techniques and Mr. Anubhav Raheja Prop. of Millennium Marketing on oath. They stated on oath that there were no money payable to M/s Perfect Paradise Emporium Ltd. i.e. the appellant and they further stated that they never signed any confirmation letters. The remand report of the Assessing Officer was furnished to the Authorized Representative of the appellant by the learned CIT(A). This amounts to affording an opportunity to rebut the remand report. While responding to the remand report, it is noticed that the appellant had not asked for the opportunity to cross examine those two parties except stating that the amounts were written off unilaterally by those two concerns. This, in our considered opinion, is not acceptable, inasmuch as, it is for those concerns to explain that the outstanding amounts have been written off in the earlier year itself. Pleading at this stage that the CIT(A) has not given opportunity to cross examine those parties is not tenable in the eyes of law since no party can take the advantage of its own mistakes. Therefore, the depositions made by those two creditors have become final and the depositions remain uncontroverted. This clinches the issue that sundry creditors can be held to be fictitious and no longer payable by the appellant. Therefore, in our considered opinion, the CIT(A) is justified in holding that the sundry creditors are factious.
The amount in question cannot be brought to tax in the year under appeal under the provisions of Section 41(1) of the Act. It is trite law that an addition under Section 68 can be made only in the year in which credit was made to the account of the creditors in the books of account maintained. Admittedly, in this case the credit to the account of creditors was made in the earlier years and therefore, the amount even cannot be brought to tax under Section 68 in the year under appeal. However, it is open to the Department to levy tax on such amount by resorting to the remedies available under the provisions of Act by duly following the procedure known to the law. - Decided in favour of assessee.
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2015 (4) TMI 1017
Denial of request for lodging DECE book - Non submission of proper documents - Assessee contends that documents already lying with dept. - Held that:- documents came in the light after the order was passed by the Commissioner (Appeals). In view of that, it is appropriate that the matter should be re-examined by the Adjudicating authority. - Matter remanded back - Decided in favour of assessee.
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2015 (4) TMI 1016
Provisional assessment - Import of LNG - whether the final assessment of the Bills of Entry would be on the basis of provisional invoice which was issued on the basis of unit price as per contract and load port quantity declared in the Bill of Lading on the basis of final invoice, which was issued on the basis of the actual quantity delivered to the Appellant at discharge port in terms of the contract with the supplier - Held that:- issue is no more res integra in view of the decision of the Tribunal in the case of Commissioner of Customs, Ahmedabad Vs M/s Reliance Industries Ltd - [2014 (4) TMI 339 - CESTAT AHMEDABAD], whereby the Tribunal rejected the appeal filed by the Revenue. It has been observed that the assessable value would be determined on the basis of quantity of LNG discharged in India at the contracted price arrived on the basis of an agreement. - No reason to interfere with impugned order - Decided against Revenue.
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2015 (4) TMI 1015
Duty demand - DTA Clearances - Shortage of goods - Confiscation - Imposition of redemption fine and penalty - Held that:- Adjudicating Authority has not given option for payment of the penalty of 25% of the duty along with entire duty and interest within 30 days from the date of receipt of Adjudication order as per Section 11AC of Central Excise Act, 1944. The High Court of Gujarat in the case of CCE, Surat Vs Rajshree Mill Pvt Ltd - [2014 (9) TMI 291 - GUJARAT HIGH COURT]. held that the assessee is entitled to get an option for payment of reduction of penalty 25% of duty within 30 days from the date of receipt of Adjudication order, by the Adjudicating Authority. Regarding the other issue, the Larger Bench of the Tribunal in the case of Shiv Kripa Ispat Pvt Ltd (2009 (1) TMI 124 - CESTAT MUMBAI) held that if the goods are not available for seizure, confiscation and redemption amount cannot be sustained. Regarding the demand of Customs duty on the raw material used in the manufacture of final products, we find that the Adjudicating Authority had also confirmed demand of Central Excise duty on the finished product, which has been paid by the appellant. The Tribunal in the case of Sanjay Twisters (2007 (9) TMI 369 - CESTAT, AHMEDABAD) rejected the appeal of the Revenue on the identical issue and held that duty demanded on duty free imported raw material by availing the exemption notification used in final product, cleared in DTA and demand of Central Excise duty was raised, Customs duty on raw material cannot be sustained. Regarding the imposition of penalty on the Director, it is noticed that separate penalties were imposed under the Customs Act and Central Excise Act, which cannot be sustained. - demand of Customs duty alongwith interest and penalty under the Customs Act are set aside. The confiscation of the goods which is not available and imposition of redemption fine are also set aside - Decided in favour of assessee.
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2015 (4) TMI 1014
Denial of refund claim - Assessee not challenged the assessement order - Held that:- Appellant paid the Education Cess by mistake. It is also noticed that in one case, the Appellant paid cess under protest. The present cases are covered by the decisions of the Hon'ble High Court [2009 (9) TMI 41 - DELHI HIGH COURT] and Tribunals [2013 (9) TMI 840 - CESTAT BANGALORE]. - refund claim filed by the appellant under Section 27 of the Customs Act, 1962 is maintainable. Accordingly, the impugned orders passed are set aside and the matter is remanded to the Adjudicating authority to decide the refund claims afresh on merit. - Decided in favour of assessee.
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2015 (4) TMI 1013
Denial of benefit of exemption notification No.41/2005, dt.01.03.2005 - Classification under Heading No. 1516 or under 1517 - Held that:- issue is no more res integra in view of the decision of the Tribunal in the case of Adani Wilmar Ltd Vs Commissioner of Customs Kandla - [2012 (12) TMI 151 - CESTAT, AHMEDABAD]. Following the same, impugned order is set aside - Decided in favour of assessee.
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2015 (4) TMI 1012
Whether the sale/supply of the Tetra Pack Milk by the petitioner Nos. 2 and 3 to the Northern Command of the Army in the State of Jammu and Kashmir is a sale in the course of inter-state trade - whether the members of petitioner-Federation like petitioner Nos. 2 and 3 are liable to pay VAT and should register themselves as dealers under the Act for the said sale/supply - Held that:- No VAT shall be levied on the turnover from sale of goods which takes place in the course of inter-state trade or commerce. We may say that the VAT under the Act shall not be imposed when a sale takes place in the course of inter-state trade or commerce and tax on such sale shall be governed by the CST Act. On plain reading of section 3 (a) of the CST Act, a sale or purchase can be said to have taken place in the course of inter-state trade if two conditions are fulfilled viz (i) a transaction of sale or purchase of goods and (ii) movement/transportation of those goods from one State to another pursuant to the sale or purchase. It should be evident from the sale transaction that the buyer has purchased the goods in one State with the intention of using/consuming them in another State. The movement of goods from one State to another should be incidental to the sale/purchase of those goods. - sale/supply of goods viz. the Tetra Pack Milk by petitioner Nos. 2 and 3 from their manufacturing units in the States of Gujarat and Rajasthan to Army locations of the Northern Command in the State of Jammu and Kashmir is a sale in the course of inter-state trade and, therefore, not subject to levy and collection of VAT under the Act in the State of Jammu and Kashmir.
As per the petitioners, which is not disputed, rates quoted by the petitioner Nos. 2 and 3 in response to the tenders floated by the Northern Command of the Army were accepted and pursuant thereto supply orders were issued in their favour. The identical supply orders dated 04.10.2013 issued by the Offg. MG Northern Command for an on behalf of the President of India were addressed to the petitioners in the States of Gujarat and Rajasthan respectively. Petitioner No. 2 is required to make supply worth ₹ 2,26,82,294/ of Tetra Pack Milk at Field Supply Depot, ASC Narian in the State of Jammu and Kashmir and likewise, petitioner No. 3 is required to make supply worth ₹ 2,80,40,700/ at supply Point of ASC, Bandipora in the State of Jammu and Kashmir. It has been made clear in the supply orders that the tendered rates shall include transportation charges and all taxes. It admits of no doubt that the goods viz. Tetra Pack Milk have been sold at the manufacturing units of petitioners 1 and 2 in the States of Gujarat and Rajasthan for their consumption by the troops in the State of Jammu and Kashmir and their transportation/movement from respective manufacturing units to the places of their consumption in the State of Jammu and Kashmir is inherent in the transaction of the sale/purchase and covenanted in the supply orders. It is, therefore, a distinguishing example of sale in inter-state trade, which is subject to levy and collection of tax under the CST Act and not to VAT under the Act.
Not to levy and collect tax on sale or purchase when such sale or purchase has taken place in the course of inter-state trade or commerce and not to take steps in this regard and not to create hurdles on that score is a constitutional obligation of a State Government and not a discretion or mere concession. The Authorities of a State Government have to show due caution and sensitivity while dealing with the matter and not to act arbitrarily. Stand taken by the respondents that the petitioners are making the supplies on FOR basis has no substance in relation to their liability to pay VAT. Supply on FOR (Free on Rail/Road) basis rather would show that the transportation/movement of the sold goods is a covenant of and pursuant to the contracts of the sale between the Army and petitioner Nos. 2 and 3 and the contracts shall not be said to have been executed until supply of goods at specified delivery points in the State of Jammu and Kashmir is made by the petitioners. Stand taken by the respondents, we may say, is without any basis and repugnant to constitutional scheme.
Sale/supply of the goods viz. Tetra Pack Milk by petitioner Nos. 2 and 3 to the Northern Command of the Indian Army in the State of Jammu and Kashmir pursuant to aforementioned supply orders fulfills all the ingredients of a sale is in the course of inter-state trade and, therefore, is not liable to levy and collection of VAT under the Act on entry of the goods in the State of Jammu and Kashmir. We also hold that petitioners are not required to get registered as dealers under the Act for aforementioned sales. - Decided in favour of assessee.
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2015 (4) TMI 1011
Adjustment made in the international transaction undertaken by the assessee with its associated enterprises - selection of comparables - Held that:- In view of the above observations regarding nature of business carried on by Motilal Oswal and the judicial pronouncements, it is crystal clear that in addition to investment advisory services in which assessee was involved, M/s Motilal Oswal Investment Advisory Pvt. Ltd. was engaged in diversified activities and registered with SEBI as a merchant banker. Thus, M/s Motilal Oswal Investment Advisory Pvt. Ltd. is functionally different from the assessee. Accordingly, we direct the AO to exclude M/s Motilal Oswal Investment Advisory Pvt. Ltd. form the list of comparables.
ICSL is functionally dissimilar, therefore, it should be excluded from the list of comparables. From the record we also found that while computing arms’ length margin, the AO has independently considered weighted margin of M/s Future Capital Investment Advisory ltd. at 20.35% instead of single year margin of 15.71%. To this effect, a letter was already given to the AO vide submission dated 10.10.2012.
After exclusion of two comparables namely M/s Motilal Oswal and Integrated Capital, the only comparable remains is Future Capital Investment having margin of 15.71%. Since the margin of comparable which is left out remains at 15.71% as against margin of 19.70% earned by the assessee on provision of investment advisory services, which is more than the margin of 15.71%, no transfer pricing adjustment is warranted while computing arms’ length price. - Decided in favour of assessee
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2015 (4) TMI 1010
Waiver of pre deposit - Availment of invalid duty drawback - Penalty u/s 114(i) - Held that:- adjudicating authority has held that duty draw back of ₹ 29,52,303/- needs to be recovered from M/s.Reliable Group & Exports or Shri Vijay Mehta. The adjudicating authority also recorded that in case it is not possible to recovery the said amount from Shri Vijay Mehta and from M/s.Reliable Group & Exports, the same shall be recovered from the CHA or from the appellant, who was an agent of CHA. In our considered view, this portion of the order of the adjudicating authority seems to be prima facie not in consonance of law. For deciding the issue of penalty appellant need to be put to some condition - Partial stay granted.
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2015 (4) TMI 1009
Non-furnishing of information as per the RTI application - information with respect to letter dated 25-11-2014 filed in relation to demolition drive being undertaken in Priyadarshini Vihar by DDA Namely, On which date the letter was placed before Home Secretary, GNCTD, Steps taken by Home Secretary. etc. Superintendent Home on 17-12-2014 replied that the letter of the applicant was transferred to DCP (HQ) - Held that:- The Commission notes that the respondent authority should have transferred the RTI application to Delhi Police. Instead, simply forwarded the same, and also there was delay in their part in replying to the life and liberty RTI application which should have been done within 48 hours.
The Commission noted that the respondent-Home Department has dealt with the life related RTI request to be a routine file. Even if it was not life related RT request, it should have been forwarded within 05 days. After a long duration the Delhi Police inquired into the application and decided that there was no threat to his life. It was the fortune of applicant that the threat disappeared, otherwise he would have suffered serious risk in spite of his request for security and information as action taken.
The objective of provision of RTI Act [Section 7(1) Proviso] that life and liberty related information shall be given in 48 hours is to inculcate responsive attitude in the Police Authority. It is pathetic to note that Home Deptt. did not exhibit any concern and remained unresponsive. They simply passed on the back to Delhi Police. He requested for security on 25-11-2014, filed RTI request on 28-11-2014, which should have been transferred to Delhi Police immediately when received. It was forwarded after 7 days.
As there was no response appellant approached Delhi High Court, which directed Police to ensure his safety. Yet there was neither any action, nor action taken report. It is a fit case where penalty proceedings should be initiated. The Commission directs the PIO, Shri R.K. Ahuja, Dy. Secretary (Home) to explain why maximum penalty cannot be imposed for not responding to RTI application in time which pertains to life and liberty. His explanation should reach the Commission within 21 days from the date of receipt of this order.
The Commission also directs the Police authority to develop a mechanism to respond life and liberty related RTIs within 48 hours and report the same to the Commission within 48 hours and post the same on official website.
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2015 (4) TMI 1008
RTI application - whether the respondents have provided the required information to the Complainant or not? - Held that:- As under Section 18(2) of the RTI Act, 2005, that there appears a reasonable ground to proceed further by making a proper inquiry in the matter. In view of this, the Commission feels that it would be appropriate and even justified to direct Shri Udai Singh Kumawat, Joint Secretary (Revenue), Department of Revenue, 46/North Block, New Delhi, to conduct an inquiry in the matter and identify the officers who are responsible for not providing the required information to the Complainant in the matter and submit an exhaustive report to the Commission, within 4 weeks from the date of receipt of this order to enable the Commission to proceed in the matter further. Thus, Shri Udai Singh Kumawat, Joint Secretary (Revenue), is hereby directed accordingly.
Further, Shri Udai Singh Kumawat, Joint Secretary (Revenue), Department of Revenue, may also depute the concerned learned First Appellate Authority and/or CPIO along with the exhaustive inquiry reports and also the complete record of the case, to present the case on behalf of respondents, before proceeding under Section 18 read with 20 of the RTI Act, 2005. In case of failure, the Commission will be left with no option but to proceed u/s 18 read with Section 20 of the RTI Act, 2005 on the basis of record made available in the case file
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2015 (4) TMI 1007
Revision u/s 263 - assessee's plea that the assessment u/s 153A was completed under the monitoring of the CIT/CCIT/ CBDT and such order could not be regarded as erroneous much less prejudicial to the interest of revenue - Held that:- As per the directions of the Hon'ble High Court fresh notice was issued and the proceedings under section 263 have been initiated for giving assessee opportunity to respond. The fresh order u/s 263 is being passed after considering all the submissions of the assessee and with an independent mind without being influenced by the observations made in the earlier order. In these circumstances the relevance of showing old files containing interdepartmental correspondence, has no relevance. Therefore, the assessee's stand that while passing the fresh order the Commissioner will again be influenced by the alleged correspondence, cannot be accepted.
Whether the present proceedings are fresh proceedings or the continuation of earlier proceedings, initiated vide issue of show cause notice dated 23-7-2007? - Held that:- in the order passed by the Hon'ble High Court on 11-12-2009, it was specifically clarified in para 24 of its order that since the writ petitions were pending before the Hon'ble High Court, issue of limitation could not be raised by the assessee. Therefore, it cannot be inferred that the directions were only in regard to passing of the order u/s 263 and not for taking up fresh revisional proceedings. There is no separate limitation prescribed for initiation and passing of order u/s 263. As a matter of fact, Hon'ble High Court granted liberty to ld. CIT to appropriately deal with the matter and pass fresh order, after giving opportunity of being heard to the assessee on various points, canvassed before him, or which it intended to raise at the time of fresh hearing. This implied that ld. CIT had to apply his mind independently and for appropriately dealing with the matter had to re-examine the records before embarking upon to take revisional proceedings.
Whether issues which had been discussed and scrutinized by the AO in detail while framing the assessment u/s 143(3)/ 153A could not be set aside to AO? - CIT exercised powers u/s 263 on the ground that while passing the assessment order, the AO did not consider whether the expenditure in question was revenue or capital expenditure - Held that:- An inquiry which is just farce or mere pretence of inquiry, cannot be said to be an inquiry at all, much less an inquiry needed to reach the level of satisfaction of the AO on the given issue. The level of satisfaction would obviously mean that he has conducted the inquiry in a manner whereby he places on record the material enough to reach the satisfaction, which a rational person, being informed of the nuances of tax laws would reach after due appreciation of such material. If this component is missing, it will always be a case of lack of inquiry and not inadequate inquiry. We find that ld. Commissioner, while considering this argument of assessee has observed that the representative of the assessee was assured that this issue will be considered with independent application of mind while passing the order u/s 263. Therefore, when specific issues will be considered, it will be examined whether the AO had reached the level of satisfaction by carrying out necessary inquiries qua that issue or not. Ground is disposed of accordingly.
Whether exercise of jurisdiction by CIT u/s 263 on the ground that the various claims, which were duly supported by judicial precedents, could, at best, be said to be debatable ousting jurisdiction of Commissioner under the said section? - Held that:- Issues in hand have to be examined in the light of various decisions relied by both the sides including the decision of Hon'ble Delhi High Court in the case of Goetz India (2013 (12) TMI 607 - DELHI HIGH COURT). The main thrust is on the level of inquiries conducted by AO to arrive at a particular conclusion. A possible view taken by AO after due appreciation of evidence on record particularly found during course of search, in present context, will not render the Assessment Order erroneous and prejudicial to the interest of revenue merely because another view could be taken which was beneficial to the interest of revenue. However, the position will be entirely different if AO merely raises various queries and accepts the assessee's explanation without proper appreciation of evidence on record.This aspect will be taken into consideration while deciding the various issues, keeping in view the arguments of both the sides.
Whether jurisdiction u/s 263, in respect of issues, which were beyond the jurisdiction of the AO, while framing the original assessment u/s 143(3)/ 153A, cannot be exercised? - Held that:- In the present case material in the form of e-mails, copies of a/cs, documents etc., was seized during search and statements were also recorded, which have been filed before us by way of compilation and the same had direct nexus with the issue raised by ld. CIT. Therefore, assessments had to be made after proper scrutiny of those documents as well as on the basis of books of a/c found in course of search. There is no quarrel with the proposition advanced by ld. counsel for the assessee, as fairly accepted by ld. Special Counsel, that the bar which apply to the AO equally applies to the CIT for the purposes of section 263 of the Act, as was held by the Hon'ble Kerala High Court in the case of CIT Vs. Paul John, Delicious Cashew Co. [2010 (1) TMI 646 - KERALA HIGH COURT ]
Whether Commissioner erred in setting aside the various issues without recording any prima facie finding on the merits of the issue? - Held that:- Ratio laid down in the case of Gee Vee Enterprise [1974 (10) TMI 29 - DELHI High Court] as well as DG Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT ] have to be taken into consideration depending upon the facts obtaining in a particular case while deciding various issues. The broad principle that emerges from various decisions is that if AO has merely accepted the assessee's explanation on various issues without proper inquiry then the same would come within the ambit of 'lack of enquiry'and not ' inadequate inquiry' . If a particular issue comes within the ambit of complete lack of inquiry then the order is to be considered as erroneous as well as prejudicial to the interests of revenue but if the case is of inadequate inquiry, then ld. CIT has to demonstrate that how the order was erroneous and prejudicial to the interests of revenue. This aspect we will take into consideration while deciding various issues on merits. In the result, this ground is disposed of accordingly.
Setting aside the claim for exemption u/s 10B as erroneous and prejudicial to the interests of the revenue on the ground that the same was not examined by the AO while passing the order u/s 143(3)/153A - Held that:- Admittedly the deduction u/s 10B was being claimed and allowed to assessee since AY 1994-95. In response to the AO's notice dated 17-3-2006, the assessee had furnished vide letter dated 24-3-2006 all the approvals received from STPI authorities of relevant states, where the EOU unit was established along with note on various business units including EOU units, the nature of operations carried out by them. Ld. Counsel has rightly relied on the decision of Tribunal dated 30-5-2014 in the case of HCL Technologies Ltd. Vs. ACIT (2014 (10) TMI 356 - ITAT DELHI) wherein it had been held that it is beyond the power of the AO to examine whether the undertakings were formed in the earlier years by splitting up or reconstruction of existing business. Therefore, this could not be held to be a case where AO had not applied his mind to the assessee's claim regarding eligibility u/s 10B and, therefore, this, in our opinion, does not come within the revisionary powers of ld. CIT. Therefore, we hold that , as regards the eligibility of claim u/s 10B, the revisional proceedings taken were not in accordance with law.
Determination of assessee's claim u/s 10B - Held that:- Ld. CIT's main objection was that the common expenses had not been allocated on an appropriate basis. He also, after considering the assessee's reply, observed that assessee's reply was quite dumb and it had not given any bifurcation or specific distribution of expenses between EOU and non EOU units. The contention of ld. CIT was that even as per the submission of the assessee there was no consistent method of distribution of expenses. Ld. CIT had arrived at this conclusion after observing that assessee had, inter alia, claimed that service expenses were charged on the basis of revenue of EOU and non EOU units and had in other reply stated that service expenses had been allocated on the basis of man power. Thus, there was no consistency in assessee's claim.
AO failed to bring even primary facts on record to justify his conclusion in accepting the assessee's claim particularly when assessee never provided any bifurcation of common expenses amongst EOU and non EOU units. Thus, AO failed to examine whether the expenses had been distributed in proportionate manner on the basis of some specific and scientific basis between EOU and non EOU units. As regards the plea of assessee on the basis of doctrine of merger in principle, we do not agree with Ld. Special Counsel's submission that if a particular aspect permeates through all the assessment years within the block period then, if, in one year the issue has been examined by ld. CIT(A), then doctrine of merger will not apply to other assessment years. However, ld. CIT has clearly demonstrated that the issue of allocation of expenses was not examined in assessment year 2001-02. In view of above discussion, we concur with the finding of ld. CIT on this issue.
Non maintaining separate books of account for each eligible undertaking - Held that:- The assessee's submission was that the accounts were maintained through FAMS/ SAP software, which contained separate code for each head of expenditure and for each of the units of the asessee. We find that this reply of assessee was sufficient enough for dropping the objection raised on this count by ld. CIT. We further find force in the submission of ld. counsel for the assessee that in view of the decision of Hon'ble Supreme Court in the case of Bongaigaon Refinery and Petrochemical Ltd. [2012 (9) TMI 371 - SUPREME COURT] and CBDT Circular no. 01/13 dated 17-1-201, in any view of the matter, non- maintenance of separate books of a/c was not detrimental to the claim of deduction u/s 10B. We, accordingly, reverse the finding of CIT on this aspect.
Acceptance by the AO of revenue of the export oriented unit without calling for any details on this ground - Held that:- The AO was required to verify whether software was actually exported or the payments were in realty in regard to transaction not amounting to export of software. The AO failed to conduct the basic and preliminary inquiry with regard to nature of the so called export revenue. The AO had disallowed the claim of ₹ 25.20 lacs on the ground that the amount received from Kwetliso Holdings was in lieu of technical know how fees as opposed to export of technical reference material Softec. These findings were reversed by ld. CIT(A). The AO was required to bring the primary facts on record in respect of all the invoices and not bringing the said details on record resulted into error creeping into the assessment order, which caused prejudice also to the revenue.We do not find much substance in the submission of ld. counsel for the assessee that it is a case of merger with CIT(A)'s finding because CIT(A) deleted the disallowance made by AO. The same finding will be relevant only with reference to the invoices considered by AO and not with respect to invoices in respect of rest of the parties. We accordingly uphold the order of CIT on this aspect.
Non allocation of foreign exchange fluctuation loss to EOU unit - Held that:- Admittedly, the AO had not made any inquiries on this count. Assessee failed to furnish transactions which resulted into loss on account of foreign exchange fluctuations. Considering the fact that assessee was having EOU and non EOU units and was regularly exporting the software and getting the profits in foreign exchange, it was incumbent upon the AO to at least bring the primary facts on record so as to reach the level of satisfaction where he could come to the correct conclusion as to whether the foreign exchange loss pertained to EOU or non EOU units. We, therefore, sustain the finding of ld. CIT on this count.
Netting off of interest income and expenses in the order passed u/s 143(3)/153A - AO failed to appreciate that this issue had already been examined and scrutinized in detail during the original assessment proceedings u/s 143(3)/153A - Held that:- The assessee had netted this interest income against the interest expenditure of ₹ 17,03,49,186/-. This claim of netting off of interest made by assessee was accepted by the AO without examining the primary details regarding nexus of interest received against interest paid. Interest expenditure incurred for the purpose of business could be adjusted against business profits and not against income from other sources and, therefore, the AO was required to examine this aspect. Further, when assessee was claiming exemption u/s 10B in respect of certain EOUs, it was incumbent upon AO to carry out basic inquiry as to against which business unit expenses were to be allocated. Ld. Counsel has demonstrated that interest relating to EOU was debited in the particular unit. But the fact remains whether AO enquired into this aspect to find out the correctness of claim or not. There is nothing on record to suggest that this issue at all was examined by AO. The lack of necessary inquiries being made by AO resulted in passing of an erroneous order, which was prejudicial to the interest of revenue. We accordingly, sustain the findings of ld. CIT on this count.
Interest free advances/ loans/ investments having been made by the assessee for non-business purpose out of interest bearing funds - AO having failed to examine the aforesaid issue - Held that:- The present issue is to be examined with reference to the decision of Hon'ble Delhi High Court in the case of GeeVee Electronics (supra), as it is a case of complete lack of inquiry. We, accordingly, sustain the findings of ld. CIT on this count.
Repair expenses claimed by the assessee and allowed by the AO without any verification or enquiry - Held that:- Assessee in his submissions has submitted that ld. CIT did not give any finding/ pin point any expenditure or gave reasons as to why and on what basis particulars of the repairs expenses were to be considered as capital expenditure. In our opinion since the present issue comes within the ambit of lack of inquiry, therefore, ld. CIT was justified in setting aside the issue to the file of AO for examining the entire issue as per law. In the result, this ground is rejected.
Steep rise in course execution charges incurred by the assesee was accepted by the AO without any verification and inquiry - Held that:- CIT did not take into consideration the further query raised by AO vide letter dated 8-2-2006, contained at page 959 of PB wherein he has specifically required the assessee to give justification for increase, inter alia, in course execution expenses. This was duly replied by assessee vide reply dated 27-2-2006 contained at pages 900-961, wherein assessee, inter alia, specifically pointed out as to why the percentage of expenses worked out 30-32% as compared to 22% in the FY 1997-98. Therefore, the very premise of ld. CIT, in holding the order as erroneous and prejudicial to the interest of revenue, does not survive. Once the AO had applied his mind to this issue, then at best this issue could be held to be a case of inadequate inquiry and, therefore, ld. CIT was required to give his findings as to how the assessment order was erroneous and prejudicial to the interest of revenue. Ld. CIT has not given any such finding and, therefore, we are not inclined to accept the finding of ld. CIT on this issue.
Setting aside the assessment on the issue of deduction on account of bad debts on the ground that same had been allowed without any verification or enquiry by the AO - Held that:- CIT has not disputed that the bad debts had been written off in the books of account. It is now settled law that post 1-4-1989, the only requirement for allowing bad debts is that the same should have been written off in the books of account. The assessee in its replies had given the details of bad debts written off. Ld. CIT has not disputed that the impugned debts were trade debts. Therefore, it could not be said that the assessment order was erroneous, in any view of the matter, as the assessee's claim was legally sustainable. If assessee's claim is legally allowable and the quantum of amount claimed is not disputed by ld. CIT, then it cannot be said that the assessment order was erroneous and prejudicial to the interest of revenue
AO failed to verify whether any expenses were incurred for earning exempt income, which were required to be disallowed u/s 14A - order of the AO was erroneous and prejudicial to the interests of revenue - Held that:- Admittedly no query qua applicability of section 14A was raised by the AO during the course of assessment proceedings and, therefore, it was a case of lack of enquiry which justified the action of the CIT. Section 14A is a specific section for making disallowance in respect of exempt income. Therefore, the AO was duty bound to consider the applicability of section 14A, particularly because the assessment was finalized by AO on 1- 6-2006, which date fell after the date given in the Circular no. 14 of 2001.The AO has to pass a fresh assessment order u/s 153A and in doing so he has to consider the applicability of all relevant provisions of Act. Even otherwise, ld. CIT has elaborately considered as to why the said decision is not applicable. We concur with his findings noted earlier. We, therefore, uphold the order of ld. CIT on this count.
Technical service fee paid to various non- residents without deduction of tax at source - Held that:- If we closely examine the queries raised by AO on different dates, we find that queries were raised on 2-11-2005, 10-2-2006 and then on 1-3- 2006, which were replied by assessee. In its query letter the AO specifically stated that assessee was acting as distributor but the distributorship agreement was not brought on record by assessee. It is pertinent to note that in letter dated 1-3-2006, the AO had referred to various documents leading to conclusion that the payments were towards AMC. In regard to payment to M/s Conversant Group Corporation, the AO had referred to agreement dated 22-9-2000, E-mail dated 17-11-2000 and note of Rajesh Mathur to NIIT GIS Ltd. The assessee in its reply did not give specific replies on these counts and only gave a general reply. Similarly, AO had raised specific queries with respect to M/s Relativity Technologies and payment to M/s Prosoft Training Company. The assessee did not give specific replies and yet AO accepted the replies without assigning any reason. The AO was required to give proper reasoning before coming to any conclusion. This aspect definitely can be examined by ld. CIT because if AO has not properly appreciated the facts on record, which is demonstrated by ld. CIT in his order, then ld. CIT can resort to revisionary proceedings u/s 263. We find that ld. CIT has given his finding with reference to various e-mails to come to the conclusion that bogus purchase orders were raised to remit money for AMC contract. Therefore, it is clear that AO had not arrived at a rational conclusion. He has merely accepted the assessee's plea on this issue without proper scrutiny of documents found during the course of search. We, accordingly, confirm the order of CIT setting aside the assessment order on this issue and restore the matter to the file of AO for fresh consideration
'Net Varsity' from NIIT USA was fictitious, the order of the AO allowing depreciation on the value of Net Varsity, was erroneous and prejudicial to the interest of the revenue - Held that:- The AO was required to record a finding how the allegation of 'Net Varsity' software being developed in India, on the basis of details found at web site of NIIT were met by assessee and whether the same was duly rebutted asessee or not. The AO was also required to give his specific findings with reference to queries raised by him in connection with e-mail dated 8-2-2000 from Mr. Nicholas George to Ms. Nilangana Paul. 83.2. The findings of Enforcement Directorate were recorded on 30-4-2004 and search took place on 10-11-2004. Therefore, though ED's findings could not be ignored, but they had to be considered by AO along with material found during course of search. We, therefore, uphold the order of ld.CIT on this issue.
Assessee had imported obsolete CBTs from NETg (UK) in order to remit payments in the nature of 'royalty' to NETg - AO having failed to examine the said issue, the assessment order in this regard was erroneous and prejudicial to the interest of the Revenue - Held that:- During search operations certain e-mails were found and the statement of employees was gathered. The detailed scrutiny of these e-mails was necessary to find out the true import of the e- mails as to whether the payment made was towards royalty or towards purchase of software. Ld. Counsel submitted that payment made to NETg was in terms of distributorship agreement and in respect of physical import of CBTs only for which invoices relating to import were produced before AO. However, in course of search proceedings, certain evidences were brought on record, which suggested a contrary state of affair and, therefore, it was incumbent upon the AO to resort to detailed inquiry and not accept the assessee's contention based on documents available with it on the basis of which it had earlier advanced its claim. Proper appreciation of evidence on record is sine qua non under such circumstances.Merely bringing the evidence on record without proper appreciation of import of such documents cannot be said to be a case of proper inquiry. Under such circumstances, ld. CIT was fully justified in restoring the matter to the file of AO.
AO having allowed deduction u/s 35D of the Act in respect of public issue expenses without verification/ inquiry the assessment order was erroneous and prejudicial to the interest of revenue - Held that:- It is not disputed that the claim of assessee was accepted in AY 1993-94 and, therefore, we are in agreement with ld. Counsel for the assessee that mere non-examination of this issue by AO will not render the assessment order as erroneous and prejudicial to the interest of revenue, particularly when assessee's claim was legally allwoable. We, accordingly, do not concur with the finding of ld. CIT on this issue.
Setting aside the issue of loan transactions between the assessee and various business and other parties - CIT(A) alleging that the said issue was not examined by the AO - Held that:- The AO merely accepted the assessee's contention without carrying out necessary inquiries in this regard. Ld. CIT, as noted earlier, has pointed out that in none of the cases details of PAN were given. Therefore, it cannot be said that ld. CIT has restored the matter without recording any specific finding as to how the assessment order was erroneous and prejudicial to the interest of revenue on account of inadequate inquiries carried out by the AO. We, accordingly, confirm the order of ld. CIT on this issue for the detailed reasons given by the ld. CIT in his order.
Credit for taxes paid/ deducted abroad was claimed by the assessee and allowed by the AO without verification - Held that:- The assessee had claimed credit of ₹ 47,81,828/- in respect of tax paid in foreign jurisdiction as per the applicable laws of the said countries. The AO had not verified this claim and allowed relief to assessee and, therefore, ld. CIT rightly held that assessment order was erroneous and prejudicial to the interest of revenue, in the absence of proper verification. We, accordingly, uphold the finding of ld. CIT on this issue. - Appeal decided partly in favour of assessee.
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2015 (4) TMI 1006
Scope of Continental Shelf and Exclusive Economic Zone of India for the purpose of service tax - Legislative intent - Interpretation of Notification No.1/2002-Service Tax dated 1.3.2002, as amended by Notification No.21/2009-ST dated 7.7.2009 and the Notification No.14/2010-ST dated 27.2.2010 - whether the Notification No. 14/2010-ST dated 27.2.2010 is clarificatory / declaratory in nature - whether during the aforesaid period, the appellant was also liable to pay the service tax on the services rendered by these vessels for the purpose of prospecting mineral oil and as such for the services consumed by continental shelf of India or exclusive economic zone of India.
Held that:- If the statute uses the words "it is declared" or "it is clarified for removal of doubts", then it will be presumed that the amending law is declaratory or clarificatory. However, merely using the said words would not be sufficient to conclusively hold that the Act is declaratory. Even by use of such words, a statute may introduce new rules of law and that in such case, it would amount to substantial change in the law and will not be necessarily retrospective. It has been held that for determining the nature of the Act regard must be had to the substance rather than the form. It has been held that if a new Act is to explain an earlier Act, it would be without object unless construed retrospectively. It has been further held that an explanatory act is generally passed to supply an omission or to clear up doubts as to meaning of previous Act. However, in the absence of clear words indicating that the meaning of the Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous.
2002 Notification was issued under the provisions of the Maritime Zones Act on 1.3.2002 thereby extending provisions of Chapter V of Finance Act to the designated areas in the continental shelf and exclusive economic zone of India as declared by the Notification of the Government of India in the Ministry of External Affairs dated 18.7.1986 and 19.9.1996 with immediate effect. It would thus be seen that for the first time from 1.3.2002, the areas in respect of which the notifications were issued in 1986 and 1996 were brought under the purview of the service tax. However, the notification only extended the applicability of service tax to the areas which were covered under the said notifications of 1986 and 1996. Even after issuance of 2002 notification, the provisions of Chapter V of the said Act did not apply to the other areas in the continental shelf and exclusive economic zone of India which were not covered by the said notifications.
Plain reading of the 2009 Notification would give a clear meaning and it cannot be said to be obscure. The words are clear and plain capable of giving only one meaning that the provisions of Chapter V of the Finance Act are extended to the installations, structures and vessels in the continental shelf and exclusive economic zone of India. We find that the words used in the said notification are not capable of giving two meanings. - the 2010 Notification cannot be said to be clarificatory in nature, but it brings about substantive change in law. Whereas the 2002 Notification as amended by 2009 Notification is applicable only to the services rendered to installations, structures and vessels, the 2010 Notification widens the tax scope and amongst various other services also brings into the service tax net the services rendered to or by the installations, structures and vessels.
It can thus be seen that the present transaction, which is in the nature of providing services by the vessels of the appellant for the purpose of prospecting mineral oil and as such is a service consumed by the seabed of Continental Shelf of India would come in the tax net only after 2010 Notification came into effect. We are of the considered view that the said service cannot be said to be a service rendered to the installations, structures and vessels. Not only this, but the Respondent also in the order- in-original has noted that the appellant is discharging applicable service tax on the services received by installations, structures and vessels in the Continental Shelf and Exclusive Economic Zone of India but was not discharging the service tax on services consumed by the seabed of Continental Shelf of India. - Decided against the revenue.
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2015 (4) TMI 1005
Valuation - Commercial Coaching or Training Service - Students make 100% payment to M/s Aptech Ltd. - Assessee gets only 80% of such fees and discharge service tax on 80% - Whether appellant is required to discharge service tax liability on an amount which represents 20% as retained by M/s. Aptech Ltd - held that:- students issue the cheques for the payment of fees in the name of M/s. Aptech Ltd. It is on record that appellant is not receiving any amount from the students directly. The provisions of Section 67 of the Finance Act, 1994 envisage for considering the gross value for discharge of service tax liability. The said section specifically provides that the gross value which is charged for the services has to be considered for payment of service tax liability. In the case in hand, the amount received by the appellant for the provision of services under the category of ‘Commercial Coaching or Training Services' is the 80% of the amount paid by the students, as students make 100% of the payment directly in the name of M/s. Aptech Ltd. If that be so, appellant has correctly discharged the service tax liability on an amount received by him for the services rendered under the category of ‘Commercial Coaching or Training Services'. - impugned orders are unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (4) TMI 1004
Penalty u/s 78 - waiver of penalty u/s 80 demand of differential service tax leviable on sugarcane transportation charges and inward freight charges - Held that:- During the material period i.e. upto August 2008, the issue was being agitated and the appellant had also taken a plea that due to financial crisis they were not able to pay the balance amount on transportation of sugarcane and inward transportation of stores material. We find that in this case, non-discharge of service tax liability is not due to ulterior motive but due to financial difficulties that was faced by the appellant. In our view it is a fit case for us to invoke the provisions of Section 80 of the Finance Act, 1994 and we do so. By invoking the provisions of Section 80 we set aside the penalty imposed by the adjudicating authority and upheld by the first appellate authority while upholding the confirmation of demand of service tax liability and the interest thereof. - Decided partly in favour of assessee.
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2015 (4) TMI 1003
Manufacturing activity or Packaging Services - appellants, manufacturers of country liquor, were also engaged in the activities of bottling, labelling, affixing the hologram stickers and sealing of glass bottles of country liquor - Held that:- Appellants had been manufacturing and clearing alcoholic beverages. It is also not the Revenue s case that the appellants were only doing packaging activities and the processes prior to packaging were done by someone else. In these circumstances, the appellants are clearly manufacturers of liquor. Indeed manufacturers of any product which involves packaging for clearance are never held to be providing packaging services because while every process of manufacture may not amount to manufacture, Manufacture includes any process incidental or ancillary to the completion of a manufactured product as per Section 2(f) of Central Excise Act, 1944. Thus for a manufacturer of goods, packing them (prior to their clearance) is a process of manufacture and not provision of service. In the case of Maa Sharada Wine Traders (2008 (3) TMI 319 - MADHYA PRADESH HIGH COURT), the M.P. High Court has categorically held that manufacturing process does not necessarily include excisable goods, but also includes process incidental or ancillary to completion of manufactured product. - Following this decision - Decided in favour of assessee.
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2015 (4) TMI 1002
Refusal to grant registration certificate - Held that:- Registering authority cancelled/withdrawn the provisional registration certificate under the VAT Act to the respondent - dealer mainly on the ground that commodity in which the respondent - dealer is to deal is a sensitive item, and in a particular area where the respondent - dealer is carrying on business, there are large number of bogus billing activities and therefore, apprehending that the respondent - dealer may also indulge into such bogus billing activities, the registering authority has refused the registration certificate. - On the basis of some other dealers indulging into the bogus billing activities, the dealer, who has applied for the registration certificate cannot be branded or labeled with the dealer indulging into the bogus billing activities. After granting registration certificate, if it is found that a particular dealer is indulging into the bogus billing activities and/or has indulged into the bogus billing activities, in that case after following due procedure as required, its registration certificate can be cancelled. However, on apprehension and that too on the basis of some other dealers indulging into the bogus billing activities, registration certificate cannot be denied to the respondent - dealer. - No substantial question of law arises in the present tax appeal - Decided against Revenue.
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