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2013 (4) TMI 619
Cenvat Credit - Job Work - Job Worker availed cenvat credit on inputs and capital goods - Held that - If the job work is considered as non-exempted and the CENVAT credit is allowed on the inputs which are used on such job work items, we do not find any valid reason to deny the CENVAT credit of Central Excise duty paid on capital goods, which were received by the appellant during the relevant period and used in the manufacturing of very same job worked goods.
Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. (2004 (12) TMI 108 - CESTAT, MUMBAI), has categorically settled the law as to that if an assessee is functioning under Notification No. 214/86-C.E. and if the ultimate principal manufacturer is discharging Central Excise duty liability after consumption of job worked goods, it has to be held that the said notification does not exempt the goods manufactured on job work by an assessee.
The demand of Central Excise duty CENVAT Credit availed by the appellant on the capital goods is liable to be set aside and we do so. - As regards the penalties imposed on the appellant as well as the individuals, we find that as bulk of the demand is being set aside on the merits of the case itself, there is no reason for visiting the appellant with penalties under any Section or Rules. - Decided in favor of assessee.
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2013 (4) TMI 618
Rejection of refund claim - reduction of price subsequent to clearance of the goods - department issued show-cause notice proposing to reject the refund claim on the ground of limitation and also not hit by the unjust enrichment.
Held that - when an assessee claims refund of duty on the basis of price variation under the price variation clause of the relevant contract subsequent to clearance of the goods, the claim, for whatever reason, cannot be allowed. Such fluctuation in price subsequent to clearance of the goods cannot affect the manufacturers’ liability to pay excise duty. - The ruling of the Apex Court in MRF Ltd. v. Collector of Central Excise, Madras [1997 (3) TMI 104 - S.C.] followed - Refund claim rejected - price variation clause itself is not a ground to consider the assessment as provisional assessment - Decided against the assessee.
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2013 (4) TMI 617
Admissibility of exemption under notification No. 17/98-C.E. whereby tea put up in unit container of content not exceeding 100 grams per unit container was exempted from excise duty. – whether the respondent was eligible for credit in considering available the exemption under Notification No. 17/98 on the Tea pack which were to be put in Bandha Pack by him.
Held that - It can be seen from first appellate authority’s findings that he has considered the evidences produced before him about actual facts as well as arguments put forth by the assessee. It can be seen that Revenue is unable to contradict the factual matrix in the grounds of appeals. In absence of any contrary evidences, the detailed findings recorded by the first appellate authority, remain unrebutted, we hold that Revenue has failed to make out a case.
Period of limitation - held that:- We find that the assessee has been discharging duty liability on the packages which were more than 100 gms. in weight, but they could be under a bona fide belief that they are not liable to pay central excise duty on the Bandha Pack, as the same had smaller pack, which contained Tea which is less than 100 gms. It is also to be noted that the appellant had indicated in the return, the clearance of Tea Packs are less than 100 gms. The findings recorded by the first appellate authority as regards limitation are correct and we concur with the same. Accordingly, we find the said impugned order is correct. - Decided against the revenue.
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2013 (4) TMI 616
Withholding of Allowed refund - Department is not returning the same - Held that:- Under Rule 41 of the CESTAT (Procedure) Rules, 1982, The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of the process or to secure the ends of justice.”
As per the said Rule, this Tribunal can pass such order to secure the ends of justice - In this case, there is no stay application filed by the Revenue. Therefore, to secure justice we direct the concerned officer to return the amount which is entitled to the applicant in consequence to the impugned order within seven days of the receipt of the order - The miscellaneous application is disposed of in the above terms.
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2013 (4) TMI 615
Input tax credit denied - registration certificates of the selling dealers have been cancelled with retrospective effect - TNVAT Act, 2006 - Held that:- Retrospective cancellation of the registration certificate of the selling dealer can have no effect on the person who acted upon the strength of the registration certificate when it was in force. The Supreme Court in State of Maharashtra Versus Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA] had rejected the department's argument that duty is cast on the person who is dealing with the registered dealer to find out whether the registration certificate is valid or cancelled, by stating that such a plea would be against the provisions of the statute.
As in the present case, it is not in dispute that the registration certificates of the selling dealers have been cancelled with retrospective effect and, therefore, to reverse the input tax credit on the plea that registration certificates have been cancelled with retrospective effect cannot be countenanced. Whatever benefits that has accrued to the petitioners based on valid documents in the course of sale and purchase of goods, for which tax has been paid cannot be declined. The transaction that took place when the registration certificates of the selling dealer were in force cannot be denied to the petitioners/assessees on the above plea. This is contrary to the law laid down by the Supreme Court in the above stated case.
Thus the notices, revised assessment orders and the provisional assessment order to deny the benefit of input tax credit to the petitioners -assessee on the ground that the registration certificates of the selling dealers have been cancelled with retrospective effect, are set aside.
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2013 (4) TMI 614
Detention of consignment of diamonds for exhibition - Section 47(8) of the KVAT Act proposing to auction the detained commodity it is at that stage petitioner has filed this writ petition seeking to challenge the aforesaid proceedings - Held that:- In such circumstances, as the petitioner admittedly is the consignor of the goods in question, if the goods are released to them on their furnishing security as demanded no prejudice will be caused to the interest of respondents 1 to 5.
The petitioner will deposit Rs.1,48,800/- demanded as security and on depositing the same the consignment detained will be released to the petitioner. On such release, it will be open to the petitioner to deal with the commodity in the manner as they deem fit. Once the goods are released, the competent authority will conduct adjudication in terms of Section 47 of the KVAT Act with notice to the petitioner and the 6th respondent at the premises of whom the exhibition was to conduct.
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2013 (4) TMI 613
Seizure and confiscation and levy of penalty - passenger carrying golden ornaments,entered the State of Jammu & Kashmir crossing Check Post Lakhanpur - Commissioner Commercial Taxes appear to have received an information, about the appellants stay in Room No.2108 of Grand Palace Hotel possessing some unaccounted for goods with intent to evade tax, has vide his order No.Camp/PA/CCT/325 dated 19.06.2005, authorized,under Section 66(3),Shri K. H. Rizvi, Additional Commissioner, to inspect the premises and also to take action under Section 66(6) of the Act, if necessary.
Held that:- Stringent provisionsas incorporated in the Statute books so as to ensure that the party/dealer shows transparency to the satisfaction of the authorities that tax leviable shall not, in any way, be evaded, have to be adhered to strictly so that contravention may not get chance of encouragement or may not have implication of sending a signal that the stringent provisions only remain on the statute book and are never meant for implementation. - , the appellant, admittedly, on her own showing before the first Appellate Authority has stated that she had come along with golden ornaments for market survey, means she is dealing in the business and had got a huge quantity for sale, therefore, she cannot escape the liability of penalty, as has been imposed. - Levy of penalty confirmed.
The appellants ordinary place of residence i.e. room in hotel Grand Palace where she had stayed, was inspected, so properly proceedings, in accordance with Section 66 of the VAT Act were initiated and there from it has emerged that the appellant had committed a default as she had not declared carrying of goods at Check posts, one at Lakhanpur and another at Lower Munda, while entering into the State of Jammu & Kashmir. Such kind of default has to be dealt with in accordance Section 69(1)(o) and Section 69(1)(s)(xiii).
Additional Commissioner, no doubt, has been authorized so was dealing with the proceedings under Section 66(6) of VAT Act, that falls within the scope of other proceedings. When it is so, the said authority has to be treated as an appropriate authority for the purposes of Section 69(1)(s) of the VAT Act, therefore, Additional Commissioner was competent to impose penalty under Section 69(1)(o) read with Section 69(1)(s)(xiii).
It is clear that when penalty is levied, unless amount of penalty is paid or security in prescribed form is furnished, the seized taxable goods shall not be released. Therefore, when amount of penalty is paid, security is not required.
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2013 (4) TMI 612
Refund claim - unjust enrichment - Erection, Commission and Installation services - Held that:- It is undisputed that the first appellate authority has come to the conclusion that the appellant is eligible for the refund of the amount paid by him during the observation by the audit party. As regards the unjust enrichment, the contentions of counsel needs to be considered by the lower authorities in as much as having been out of business from 2008, appellant would not have passed on the service tax liability to any customer.
On this factual matrix, since there is no evidence, this issue cannot be decided. Accordingly, holding that the lower authorities are required to pass an order on the question of unjust enrichment as per the facts put up by the ld. counsel, portion of the impugned order is set aside and remand the matter back to the adjudicating authority to consider the issue of granting refund to the appellant after ascertaining the claim of the appellant regarding the closure of the business and there cannot be any passing of the service tax liability.
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2013 (4) TMI 611
Rejection of the refund claim - appellant is a 100% HTP unit receiving various services for providing such services and has claimed the refund on the Service Tax paid by the service provider - The department is of the view that services are not used in providing the output service accordingly rejected the refund claim - Held that - I find that by producing the C.A certificate, the appellant has complied with the requirement of CBEC Circular dt.19.01.2010. Since the appellant has complied with the requirement of the documents to be filed along with refund claim, I find that the first appellate authority was in error in rejecting the refund claim filed by the appellant. Thus findings of both the lower authorities are unsustainable.
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2013 (4) TMI 610
Rejection of appeal - violation of condition of deposit - held that - the assesse is directed to file the challan before the appellate authority within two weeks. Thereafter the learned Commissioner (Appeals) shall take up and dispose of the appeal on merits
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2013 (4) TMI 609
Demand of service tax/interest/penalty – laying of the cables - repair and maintenance service. - Held that - On perusal of the work order placed on record, it is clear that the service provided by the Respondent to BSNL is in relation of laying of the cables, are not repair and maintenance. In view of this, we held that there is no infirmity in the impugned order. Revenue’s appeal is dismissed. The Cross-objection also stands dispose of.
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2013 (4) TMI 608
Cost inflation index for computation of long term capital gain - Long term capital gain assessable on the sale of property sold by the father of the assessee as Power of Attorney of the assessee - On 09.07.1984, Shri Suresh Babu gifted the property acquired by him by way of gift from his father, in favour of his nieces & since they were minors at that point of time,a trust deed was executed and appointed their parents as trustees with the condition - CIT(A) convinced with the submissions made by the assessee directed AO to adopt the cost inflation index pertaining to the financial year 1981-82 - Held that:- In s. 48 the expression 'asset held by the assessee' is not defined and, therefore, in the absence of any intention to the contrary the expression 'asset held by the assessee' in cl. (iii) of the Explanation to s. 48 has to be construed in consonance with the meaning given in s. 2(42A). If the meaning given in s. 2(42A) is not adopted in construing the words used in s. 48, then the gains arising on transfer of a capital asset acquired under a gift or will will be outside the purview of the capital gains tax which is not intended by the legislature. Therefore, the argument of the Revenue which runs counter to the legislative intent cannot be accepted. See DCIT vs. Manjula J.Shah (2011 (10) TMI 406 - BOMBAY HIGH COURT). Against revenue.
Whether the CIT(A) was justified in deleting the capital gain relating to "Property No.2" - Held that:- A plain reading of the recitals made in the Gift deed dated 08-06-2005 would show that Shri V.K.Mohan(father of minors) has handed over the possession of the Property No.2 to the assessee herein. Further following recitals made in the irrevocable Power of Attorney dated 13-07-2005 executed by the assessee herein in favour of Shri V.K. Mohan show that the assessee herein accepted the gift and was also in possession of the property
As per the provisions of sec. 47(iii) of the Act, the transfer of property by way of settlement deed by Shri V.K.Mohan to the assessee herein is not considered as a "transfer' and hence the same is not assessable to capital gains. On the execution of the Settlement deed, the assessee herein became absolute owner of the Property No.2 as per the Transfer of Property Act. The provisions of Transfer of Property Act are not overridden by sec. 47(iii) of the Act. Hence, CIT(A) has misdirected himself in interpreting the scope of provisions of sec. 47(iii) of the Act.
Since there was absolute transfer of Property No.2 by way of settlement deed, there is no scope to interpret that there was transfer of income only without transfer of asset so as to attract the provisions of sec. 60 - the various reasoning given by CIT(A) are not in accordance with the law and are liable to be struck down. Accordingly AO was right in law in assessing the capital gain arising on transfer of Property No.2 in favour of the Construction company. Further the assessee would not be entitled for exemption u/s 54F of the Act on the purchase of property by her father. In favour of revenue.
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2013 (4) TMI 607
Exemption u/s 54B denied - Held that:- It is pertinent to note that the assessee herein held the impugned land jointly along with her elder sister who did not claim the impugned land as an agricultural land. Under these circumstances, it is unable to understand as to how the assessee herein alone can claim the same as an agricultural land.
A plain reading of the provision of sec 54B show that the land should have been used for agricultural purposes in the two years immediately preceding the date of transfer and as the assessee did not bring any material on record to show that the impugned land was used for agricultural purposes in the immediately preceding two years the assessee has failed to substantiate her claim with regard to the nature of land and its user in the immediately preceding two years - AO was justified in rejecting the claim of exemption u/s 54B.
Amount invested in Capital Gains Account scheme - whether would be taken at Rs.47 lakhs as per AO or actual investment of Rs.55 lakhs - Held that:- The assessee claims that he has invested a sum of Rs.55 lakhs in the Capital gain Account scheme in two instalments viz., Rs.47.00 lakhs and Rs.8.00 lakhs. It appears that the deposit of Rs.47 lakhs was made in connection with the claim made u/s 54F and the deposit of Rs.8.00 lakhs was made in connection with the claim made u/s 54B. Under these circumstances, the assessing officer was justified in computing the deduction u/s 54F in respect of Rs.47.00 lakhs only. Appeal of assessee rejected.
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2013 (4) TMI 606
Non-signing of the copy of assessment order - as per the assessee copy of the assessment order served upon him was not signed by AO hence, the entire assessment has to be treated as invalid - assessee is a non-resident and is a practicing Ophthalmologist - Held that:- A.R, after examination of the assessment record, has confirmed that the Assessing Officer has duly signed the original assessment order. Accordingly, in view of the decision of Kalyankumar Ray (1991 (8) TMI 291 - SUPREME COURT) and Sushil Chandra Ghose (1991 (8) TMI 291 - SUPREME COURT) the statutory requirement has been duly complied with by the assessing officer. Further, it is pertinent to note that the "Notice of demand" served upon the assessee bore the signature of the assessing officer. Hence, the absence of signature in the copy of the assessment order would not vitiate the assessment. Against assessee.
Validity of reopening of assessment - Held that:- On a perusal of the assessment order, AO has pointed out that (a) the assessee has claimed indexation benefit while computing the short term capital gain, (b) the exemption claimed by the assessee under sec. 54 of the Act is not in order and (c) the land on which short term capital gain was claimed was only a vacant land and not an agricultural land. All these reasons cited by the Assessing Officer cumulatively show that the AO had reason to believe that there was escapement of income. Hence, AO was justified in initiating re-assessment proceedings and accordingly, the grounds raised by the assessee in this regard rejected. Against assessee.
Whether the land sold by the assessee is an agricultural land or not? - Held that:- The issues relating to the nature of land and the claim of exemption u/s 54B have not been properly examined by the tax authorities as the AO as well as the CIT(A) has placed more reliance on the report of the Inspector of Income tax and the development work carried out by the purchaser of land. Thus all these issues require fresh examination at the end of the assessing officer. In favour of assessee for statistical purposes.
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2013 (4) TMI 605
Reopening of assessment – after duration of 4 years - negligence - as the taxpayer has not furnished the details on expenditure incurred on DEPB licence – Disallowance of deduction u/s 80HHC.
Held that - The question arises for consideration is whether there was negligence on the part of the taxpayer in furnishing fully and truly all the material facts necessary assessment. No one could anticipate an amendment which would be brought into the statute book after lapse of 5-6 years retrospectively. Therefore, the taxpayer cannot be blamed for not anticipating a law. It is not in dispute that the taxpayer was claiming deduction on DEPB licence. Moreover, the deduction was not denied because the details of cost was not furnished but because the taxpayer has not complied with Proviso to section 80HHC which was brought into the statute book by Taxation Laws (Amendment) Act, 2005. Therefore, it may not be correct to contend that the taxpayer has not disclosed the expenditure on sale of DEPB licence. The disallowance was made only on the basis of Taxation Laws (Amendment) Act, 2005. Therefore, the taxpayer cannot be blamed after expiry of four years from the end of the relevant assessment year. Thus, the reopening is invalid.
Rectification made by the A.O. on the basis of the Proviso to section 80HHC which was inserted by Taxation Laws (Amendment) Act, 2005. – Held that - The A.O. made an attempt to rectify the original assessment order dated 05-02-2001 on the basis of the retrospective amendment brought in section 80HHC of the Act. On the date of filing of the return, the taxpayer has made the claim on the basis of the law as it stood on the first day of April of the assessment year. Therefore, the amendment made in section 80HHC by Taxation Laws (Amendment) Act, 2005 cannot be a ground to extend the period of limitation for rectifying the original order.
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2013 (4) TMI 604
Revised return - taxpayer's claim of exclusion of the capital gain arising on sale of agricultural land as the same was wrongly included in the original return - valid or not? - Held that - After considering the provisions of section 139(5) of the Act which enables the taxpayer to file a revised return. As per section 139(5), if any person having furnished a return of income either u/s 139(1) or in pursuance of a notice issued u/s 142(1), discovers any omission or wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. In this case, the return was not filed either u/s 139(1) or u/s 142(1) of the Act. Therefore, the taxpayer cannot revise the return. Hence, the revised is not a valid return.
When the taxpayer by mistake or ignorance of law included an income which is not taxable otherwise, can it be brought to the notice of the A.O. in the course of assessment proceedings – held that - In view of the above judgment of the Apex Court in CIT vs Shelly Products [2003 (5) TMI 4], it is obvious that any mistake or inadvertence or on account of ignorance any income which is exempt from payment of tax or is not an income within the contemplation of law it may be brought to the notice of the assessing authority, which, if satisfied, may grant him relief or refund the taxes paid in excess, if any. Therefore, if any income which is otherwise not taxable is included in the return of income, it can be brought to the notice of the assessing authority in the course of assessment proceedings. Thus, the claim made by the taxpayer with regard to the assessability of the capital gain on sale of land needs to be examined by the A.O. even though such a claim was not made in the original return and the revised return was invalid.
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2013 (4) TMI 603
Revision of orders prejudicial to revenue - search - Revenue in exercise of her powers u/s 263 of the Income-tax Act found that there was an undisclosed consideration to the extent of Rs.9 lakhs since the property was immediately mortgaged for Rs.10 lakhs by the purchaser. As per revenue, the taxpayer sold the property for Rs.1 lakhs to Shri RV Radhakrishnan. It appears, Shri RV Radhakrishnan availed a loan of Rs.10 lakhs from Kerala State Co-operative Bank by mortgaging that property. The loan availed was subsequently passed on to Welcare Hospital as loan. Welcare Hospital repaid the loan with interest.
Held that - Direction was issued to A.O. to examine whether the taxpayer has received any amount more than what was disclosed in the registered sale deed. If any material is available on record to suggest that the taxpayer has received more amount than what was disclosed in the sale deed, then that amount has to be treated as sale consideration and be brought to tax for the assessment year 2005-06. This Tribunal is of the considered opinion that there cannot be any addition for assessment year 2008-09 in respect of the sale of property on 31-03-2005. With the above observations, the order of the Administrative Commissioner is confirmed and the appeal filed by the taxpayer dismissed.
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2013 (4) TMI 602
Method of accounting - Change in method valuation of closing stock – Rejection of the same subsequent to which additions were made in the income of the assessee - As per revenue AS-II, issued by the ICAI, is not a valid reason for the change adopted by the assessee and it is not for the assessee's legitimate business needs. Also, once the Companies Act mandates the following and compliance of the Accounting Standards issued by the ICAI, the CIT (A)'s observation that the ICAI Guidelines do not override the Income- tax Act, causes no detriment to the case of the assessee and, as such, the Ld. CIT (A) clearly erred in upholding the addition made by the A.O.
Held that - The Companies Act, in Section 211, prescribes that the assessee shall follow the Accounting Standards issued by the ICAI in preparing its financial statements and AS-II, relevant to the year under consideration, the same has been conformed by the assessee by way of change in its method of valuation of closing stock, it cannot be but said that the action of the assessee in changing its method of valuation of closing stock was bona fide. In Jackson Engineers (P) Ltd. vs. ITO [1989 (2) TMI 159], Hero Honda Motors Ltd. vs. JCIT [2005 (5) TMI 265], Jaipur Taj Enterprises Ltd. vs. ITO [1991 (9) TMI 121] and DCIT vs. Venus Wire Industries Ltd. [2004 (9) TMI 569], it has been repeatedly held that if there is a bona fide change in the method of accounting which is consistently followed, no adverse inference can be drawn against the assessee. Thus, change in method of valuation of closing stock in conformity with AS-II has been held to be a bona fide change. Appeal filed by the assessee is allowed.
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2013 (4) TMI 601
Disallowance u/s 40 (a)(ia) – On the amount paid by the assessee to the consolidator for transfer of rights - As per revenue the payment as consolidation charges had been made without deduction of TDS and the consolidator was working as an agent of the assessee and, hence, made contraventions of provision of Section 40(a)(ia).
Held that – The matter, it is seen, is squarely covered in favour of the assessee by Finian Estates Developers (P) Ltd [2012 (6) TMI 705] inasmuch as in that case, the very same agreement as the one under consideration herein, was at issue. Thus, finding merit in the grievance sought to be raised by the assessee, the same is accepted. Appeal allowed.
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2013 (4) TMI 600
Disallowance u/s 10(23C) (iiiad) - eligible for exemption u/s 11 not considered by CIT(A)- addition of corpus donations received by the appellant society by invoking section 115BBC by CIT(a) - assessment finalized u/s 144 by CIT confirmed and not u/s 143 (3) as contested by assessee - CIT(A)upholding the levy of interest u/s 234B - Held that:- Bare perusal of the observations of the CIT (A) regarding the issues involved shows that indeed, the grievance of the assessee, taken by way of Ground No.5, to the effect that fair and proper opportunity of hearing was not granted to the assessee by the CIT (A), is found to be justified and is accepted as such. The Order under appeal has been passed without even adverting to the afore-quoted written submissions filed by the assessee before the CIT (A).
Therefore, it would be in the interest of justice to remit this case to the file of the CIT (A), to be decided afresh, in accordance with law on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the proceedings before the CIT (A) - appeal of the assessee allowed for statistical purposes.
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