TMI Tax Updates - e-Newsletter
January 10, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Mere fact that the assessee has also quickly sold shares in some instances within the short interval would not ipso facto lead to a conclusion that the assessee was a trader in the shares. The action of the CIT(A) in bifurcating the gains based on the period of holding of less than 30 days and more than 30 days is not supportable by the scheme of the Act. - AT
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Income Tax:
Section 44BB is a complete code in itself and the amount received, be it by way of reimbursement, is not, in any way, excluded from the ambit of Section 44BB. Therefore, placing reliance on Section 2(45) or Section 5(2) cannot advance the case of the appellant. - HC
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Income Tax:
Reopening of assessment - Reason to believe - Application of mind by the sanctioning authority - the instant case is not that of mere rubber stamping - He himself wrote “I am satisfied that it is a fit case for issue of notice u/s 148” - validity of notice upheld - HC
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Income Tax:
Rental receipts from letting out commercial properties is assessable under the head income from profits & gains of business or profession and not as income from house property - AT
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Income Tax:
Allowability of commission payment - proof that the services rendered to the assessee by the payees - assessee has placed on record all possible details in order to discharge its onus on the one hand whereas the commission payments have been held to be excessive without any such comparison on the other - entire deduction allowed - AT
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Income Tax:
Renewal of approval u/s 80G(5) / 12AA denied - genuine charitable / education activity u/s 2(15) - as for the previous three years, the assessee has shown surpluses - whether the activities of the assessee were in the nature of commercial enterprises - Held No - registration allowed - HC
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Income Tax:
Unaccounted purchases - since these purchases too were made outside the books of account and proper accounting or reconciliation could not be made by the assessee, the value of the investment and the estimated profits on the basis of the undisputed rate i.e. 4.5 % GP had to be adopted - HC
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Income Tax:
Exemption u/s 11 - Condonation of delay for extending the due date of filing of the return of the income - There is no prohibition for condoning delay even if the deposit is made belatedly - revenue directed to reconsider the application u/s 119(2)(b) - HC
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Customs:
Classification of imported item - Fused Silica cannot be considered as Glass microsphere or for that purpose, as glass beads to be classified under chapter 7018 - the classification declared by chapter heading 2505 1019 is correct. - AT
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Customs:
Valuation of imported goods - related party - enhancement of value - The restrictive clauses are general clauses, always agreed upon by the seller and the purchaser in order to have healthy business relations and cannot be considered as a clause which denotes the relationship - AT
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Customs:
Classification of imported goods - Monotype Machine - eligibility of exemption N/N. 114/80-Cus - the machine imported namely Monotype Machine imported by the appellant is nothing but Hot Metal Monotype Machine and entitled for the exemption - AT
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Customs:
Confiscation - penalty - illegal attempt to export of Dal to Nepal - The allegation of an attempt to export to Nepal cannot be made merely on assumption and presumption because so far as the said trucks were stationed at a place near Muzaffarpur - AT
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Customs:
Classification of Network Security Device - Since as per the application and function of the product, it is used for communication and transmission of the data, the subject goods is correctly classifiable under CTH 8517 and not under CTH 8543 - AT
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Corporate Law:
The removal of petitioner as Director of the company does not stand to judicial review. Therefore, Respondent no. 2 giving cheque power to another Director in the place of petitioner by itself cannot be canvased as one of the ground in support of the plea of mismanagement.
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Service Tax:
Classification of taxable services - Commissioner (Appeals) put the responsibility of classification only on the appellant without giving his finding on the claim made by the appellants - the matter needs reconsideration. - AT
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Service Tax:
BAS - The motor vehicle department is assigned a statutory obligation to issue registrations; such statutory activities are not, even remotely, describable as service rendered which the appellant is required to promote or as service of the department procured for the customers. - AT
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Central Excise:
CENVAT credit - input procured for intended to be used in export but actually used - a manufacturer who adopts the strategy of procurement for export, on the strength of interpretation as proposed by appellant, would be misusing this facility to deprive exchequer of taxes in excess of normal offset of credit on inputs - AT
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Central Excise:
Manufacture - excisability of food flavours - Valuation - inclusion of amount paid for Royalty - the food flavours were “prepared” by mixing of various essences (odoriferous substances) - tribunal has returned a cryptic finding - matter remanded back - SC
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Central Excise:
SSI exemption - value of clearances exceeding ₹ 300 lakhs - Revenue has not taken any pain to determine the value of food prepared and cake and pastries prepared by the respondent in their kitchen - the benefit of exemption notification cannot be denied blindly - AT
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Central Excise:
CENVAT credit - the appellants have failed to prove transport, receipt and consumption of impugned goods in their factory - demand confirmed - AT
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Central Excise:
Classification of nylon/viscose fabrics - As the product of appellant contains nylon, it cannot be classified in the heading that relates to use of staple fibre - only plausible heading is 5409 - AT
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Central Excise:
Levy of additional duty first time - Once the levy is not there at the time when the goods are manufactured or produced in India, it cannot be collected at the stage of removal of the said goods - AT
Articles
Circulars / Instructions / Orders
- Income Tax - 1/2017 - dated
4-1-2017
Double Taxation Agreement - India-Sweden Convention For Avoidable Of Double Taxation And Prevention Of Fiscal Evasion - Suspension Of Collection Of Taxes During Mutual Agreement Procedure (Map)
- DGFT - 53 (RE: 2016)/2015-20 - dated
9-1-2017
Corrections in SION C172, C244, C248, C270, C271, C272, C472, C473, C1834, C1835, C1836, C1855, C1856, C1939, C1983, C1984, C2034, C2035, C2036 and C2037 of Engineering Products in the Hand Book Procedures Vol.-II - reg.
News
Case Laws:
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Income Tax
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2017 (1) TMI 511
Rental income from letting out of commercial properties - nature of income - treated under the head “income from house property” as per revenue the assessee is involved in the activity of taking lands lease and construction of commercial buildings and let out the same on monthly rental whereas assessee has considered rental receipts under the head “income from business” - Held that:- Respectfully following the decision of coordinate bench of this Tribunal in assessee’s own case for the assessment year 2008-09 [2016 (3) TMI 1016 - ITAT VISAKHAPATNAM] and also following the Supreme Court decision in the case of Rayala Corporation Pvt. Ltd. Vs. ACIT (2016 (8) TMI 522 - SUPREME COURT ), we are of the view that rental receipts from letting out commercial properties is assessable under the head income from profits & gains of business or profession and not as income from house property. - Decided in favour of assessee
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2017 (1) TMI 510
Allowability of commission payment - proof that the services rendered to the assessee by the payees - Held that:- There is no dispute that the assessee has actually made the impugned commission payments after deducting TDS thereupon at the prescribed rates in furtherance to various agreements with its payees for marketing and other alike services. It has further placed on record their confirmations by way of contra accounts and debit notes. The same is nowhere doubted before both the lower authorities since the Assessing Officer is of the view that there is no evidence of the actual services rendered followed by CIT(A)’s opinion that there is not prescribed rate of the commission payments in agreement concerned and further that these payments ranging between 2% to 24% are on extremely higher side.
There is no distinction drawn between facts of the impugned assessment year vis-à-vis those in earlier years hereinabove. Coming to the CIT(A)’s observation terming the assessee’s commission payments to be excessive, we notice that there is no comparative tabulation with market rate of such payments; if any before arriving at the said conclusion. We accordingly observe that the ld. CIT(A) has erred in directing the Assessing Officer to restrict assessee’s commission payments @3% after observing that the said authority had not been careful before disallowing the impugned payments wherein the assessee has placed on record all possible details in order to discharge its onus on the one hand whereas the commission payments have been held to be excessive without any such comparison on the other. We thus accept assessee’s arguments supporting its sole substantive ground and to direct the Assessing Officer to allow its entire claim of commission payments. The Revenue’s contentions seeking to restore entire disallowance amount are accordingly rejected. - Decided in favour of assessee
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2017 (1) TMI 509
Reopening of assessment - no tax was deducted on the warehousing charges paid by the assessee u/s 194I - reopening on reliance on audit objection - Held that:- The audit party has raised objection with regard to non deduction of tax on warehousing charges paid. The issue whether warehousing charges are liable for tax deduction at source u/s 194I, is purely a legal issue. Hence, the audit objection cannot be a ground for reopening of assessment, especially when in the course of original assessment proceedings, the said issue was considered by the Assessing Officer in detail and the contention of the assessee was accepted. For the aforesaid reasons uphold the order of the CIT(A). It is ordered accordingly. - Decided in favour of assessee
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2017 (1) TMI 508
Unexplained gold jewellery and silver articles - all found during the course of search - Held that:- Merely because the assessee places before the A.O. and CIT(A) a bank account copy, indicating the payment to Maharaj Shree Rajendra Jewellers, it would not indicate that it was only towards purchase of gold jewellery. There may be some other transaction with the said jeweller other than purchase of jewellery; At any rate it is for the assessee to prove that the jewellery of a specified description was purchased and ordinarily for such huge amounts there should be a bill indicating the nature of jewellery purchased with the hallmark stamp etc., Nowhere the assessee had stated that the jewellery seized was with hallmark stamping and guaranteed by seller in the form of invoice or bill. Therefore, we are of the opinion that the initial onus placed upon the assessee is not fully discharged.
However it cannot be denied that a specified sum was paid by the assessee to jeweller, as recorded in the Axis Bank account copy. It is to be seen as to what was the rate prevailing on that date and whether the amount paid is sufficient to cover 340 grams of jewellery of specified karatage. Unless the description is available or given by the assessee to the A.O. it may be difficult, even for the A.O, to cross-verify the same.
In the interest of substantial justice, the assessee has to furnish all the details before the A.O. to prove its point.
We hereby give one more opportunity to the assessee to submit the details to the A.O. to substantiate the claim that the jewellery purchased in the month of May 2011 are included in the jewellery found during the search. - Decided in favour of assessee by way of remand.
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2017 (1) TMI 507
Allowance of deduction under section 80IB(10) - Interest received - treated as “Income from Other sources” OR "business receipts" - Held that:- The issue of assessability of interest income is decided against the assessee by the Tribunal in assessee’s own case in the appeals relating to assessment years 2008-09 and 2009-10 wherein it has been held that the assessee was unable to demonstrate that the receipt of income was derived from and was part of business receipts in order to enable it to claim deduction under section 80IB(10) of the Act. Following the same parity of reasoning and in view of the concession of the learned Authorized Representative for the assessee, we decide this issue against the assessee.
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2017 (1) TMI 506
Validity of reopening of assessment under Section 147 - deduction u/s 80HHC and 80IB - Non-application of certain provision of law - Held that:- It is evident that the Assessing Officer has nowhere mentioned that there was any failure on the part of the assessee to disclose fully and truly all material facts. The Assessing Officer has mentioned the facts and figure relating to deduction u/s 80HHC and 80IB claimed by the assessee and allowed by the Assessing Officer in the order u/s 143(3). Thereafter, the Assessing Officer has mentioned “It is seen that while calculating deduction u/s 80HHC the amount of deduction u/s 80IB was not reduced from the profit of export business in view of the provisions of section 80IA(9)”. Thus, the alleged escapement of income was on account of non-application of a certain provision of law by the assessee as well as Assessing Officer.
Non-application of certain provision of law cannot be equated with the failure on the part of the assessee to disclose fully and truly all material facts. Moreover, in the reasons recorded, the Assessing Officer has not mentioned that there was any failure on the part of the assessee to disclose fully and truly all material facts. Learned DR tried to justify the action of the Assessing Officer on the ground that in the order dated 2nd December, 2008 passed by the Assessing Officer rejecting the assessee’s objection against the reopening of assessment, he has clearly mentioned that there was failure on the part of the assessee to disclose fully and truly all material facts. He, therefore, stated that the reasons recorded should be read along with Assessing Officer’s order wherein the assessee’s objection has been rejected. We find that the identical situation was considered by Hon'ble Jurisdictional High Court in the case of Haryana Acrylic Manufacturing Co. (2008 (11) TMI 2 - DELHI HIGH COURT).
Thus we hold that the reopening of assessment beyond the period of four years from the end of the relevant assessment year was not justified because – (i) there was no failure on the part of the assessee to disclose fully and truly all material facts and (ii) there was no whisper in the reasons recorded that there was any failure on the part of the assessee to disclose all material facts.- Decided in favour of assessee
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2017 (1) TMI 505
Determining value of the property - Addition made adopting the guide line value of the property for stamp duty purpose - Addition u/s 50C - adoption the value adopted by the stamp valuation authority for the purpose of computation of capital gains - AO chose to brush aside the submissions, by not referring the matter to the DVO - whether the AO can be given a second opportunity to make good his deficiencies at the cost of expenditure to be incurred by the assessee by continuing the litigation for a further period, particularly, in view of the period of limitation prescribed u/s 153?
Held that:- Referring to the speech of the Finance Minister as well as circular issued by the CBDT bringing the intention of the legislature whereby it was held that the AO is duty bound to refer the matter to the Valuation officer when the reasons were thoroughly mentioned by the assessee for the FMV that the assessee could fetch in these circumstances. Despite making request to refer the matter to the DVO, the AO purposely did not refer the matter to the DVO on the ground that he is duty bound to go by the valuation adopted by the stamp valuation authority.
Litigation in the Bombay, particularly, under the Maharashtra Rent Control Act, is well known and needs to be taken judicial notice. A property which is in the occupation of tenants for more than 60 years one cannot fetch full market value and in fact the party who purchased the property had agreed to the terms and conditions i.e. the property was purchased on “as is where is” condition with a specific clause that any further litigation will be dealt with by the purchaser and under those circumstances, generally, market value cannot be adopted. In these circumstances, the Courts time and gain held that reference u/s 50C(2) of the IT Act is mandatory and the AO having failed to follow the provisions of the Act, he should not be given one more chance to refer the matter to the DVO.
Recently, the Hon’ble Supreme Court in the case of Manish Mahaeswari Vs. ACIT and another, and Indore Construction P. Ltd. Vs. CIT, [2007 (2) TMI 148 - SUPREME COURT OF INDIA] vis-à-vis the provisions of section 153C of the Act, observed that if the AO has not recorded his satisfaction for issue of notice u/s 153C of the Act, the proceedings deserve to be quashed rather than giving the AO another chance to record proper reasons. The same principle holds good even in this case; when the AO has not followed the procedure prescribed in law, the addition made deserved to be deleted. Under these circumstances the order of the CIT(A) in deleting the addition made by the AO, does not call for any interference. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue. - Decided in favour of assessee
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2017 (1) TMI 520
Renewal of approval under Section 80G (5) denied - as for the previous three years, the assessee has shown surpluses and, therefore, the CIT drew the conclusion that the activities of the assessee were in the nature of commercial enterprises and no charitable activity whatsoever was being pursued - Held that:- The word education utilised in the section stands independently on its own and to suggest that the word may be confined either to the rich or poor or any other strata of the society is not acceptable. The word education has been used in its widest term. It cannot be confined to any section, indeed education is something which is the birth right of every individual. To confine it to a certain group would not be fair in view of the definition as given in Section 2 (15) of the Income Tax Act and in view of the provisions of Section 10 ( 23C) of the Income Tax Act. It is abundantly clear that the assessee was clearly entitled to be granted exemption under Section 80G (5) of the Income Tax Act for the current year as it has been done in the previous year in view of the law and in view of the findings recorded. - Decided in favour of assessee
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2017 (1) TMI 504
Income from sale of shares - LTCG and STCG or business income - Held that:- While the volume, frequency and magnitude of transactions are relevant factors for determinative of nature of transactions, no single test by itself is determination of the issue. The cumulative effect has to be weighed to determine as to whether the impugned transactions bear the trappings of adventure in the nature of trade or commerce etc. or otherwise. On the totality of the facts, we find no reason to draw adverse inference against the claim of the assessee as in the nature of “capital gains”. Therefore, the appeal of the Revenue is liable to be dismissed.
As regards the grievance of the assessee, we find considerable merit therein. Mere fact that the assessee has also quickly sold shares in some instances within the short interval would not ipso facto lead to a conclusion that the assessee was a trader in the shares. The action of the CIT(A) in bifurcating the gains based on the period of holding of less than 30 days and more than 30 days is not supportable by the scheme of the Act. The STCGs as defined under section 2(42A) does not contemplate such bifurcation. Thus, the aforesaid action of the CIT(A) is a mere ipse dixit of the CIT(A) and is not sustainable in law. Hence, the plea on behalf of the assessee deserves acceptance. As a result, grievance of the assessee raised in ground No.1 is decided in favour of assessee.
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2017 (1) TMI 503
Reopening of assessment - Held that:- In the facts of this case, when we find, on merits, that the notice under Section 148 of the Income Tax Act, 1961, was erroneously issued and there was no reason to make addition to the income originally assessed, the question whether the Assessing Officer who issued the notice under Section 148 of the Act was authorised to do it or not need not be gone into. HC order [2015 (5) TMI 1087 - GUJARAT HIGH COURT]
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2017 (1) TMI 519
Reopening of assessment - depreciation on goodwill disallowed - Held that:- Subsequently with respect to the assessment for AY 2003-04, 2004-05, 2005-06 and 2007-08 while passing the reassessment order the Assessing Officer disallowed the depreciation on goodwill, however it is reported that subsequently the Tribunal has set aside the addition made by the Assessing Officer while disallowing the depreciation on goodwill. It is reported by Shri Shah, learned advocate appearing on behalf of the petitioner that the orders passed by the learned Tribunal has not been challenged.
Apart from the above, now the issue with respect to depreciation of goodwill is now not res integra in view of the decision of the Hon’ble Supreme Court in the case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) and the decision of the Division Bench of this Court in case of Swastik Industries (2016 (4) TMI 169 - GUJARAT HIGH COURT ). Under the circumstances also, it cannot be said that any income chargeable to tax has escaped the assessment. Under the circumstances also, the impugned notice under Section 148 of the IT Act and the reassessment proceedings deserve to be quashed and set aside.
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2017 (1) TMI 518
Reopening of assessment - AO has not obtained approval of the appropriate authority as required under Section 151 - Held that:- it is not in dispute that after the impugned Notices are issued, relying upon and considering the directions issued by the learned CIT [A] made in the Appeal for AY 2011- 2012, the directions issued by the learned CIT [A] have been set-aside by the Income Tax Appellate Tribunal. In that view of the matter, the impugned reopening proceedings for the respective assessment years, for want of approval under Section 151 of the Act, cannot be sustained.
While quashing and setting aside the impugned Notices at this stage, it is observed that in case, the Revenue succeeds in the Appeal that may be filed against the decision of the learned Tribunal setting aside the direction issued by the learned CIT [A] in the Appeal for AY 2011-2012 and the directions issued by the learned CIT [A] are restored. In that case, it would be open for the Revenue to submit appropriate application/s in the present proceedings to revive the present writ petitions and thereafter, the same may be considered in accordance with law and on merits.
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2017 (1) TMI 517
Reopening of assessment - validity of assessment - reasons to believe - it was not clear that income was taxable in the hands of assessee or loaner - Held that:- AO was in receipt of information from the Deputy Director of Income Tax (Investigation), Faridabad, which revealed that out of his agricultural income and advances received from his friends, loaner had advanced payments as interest free unsecured loan to the petitioner and his family members. - The factum of advancement of such money came to be admitted only in response to the notice. Prior thereto, both the petitioner and his family members maintained stoic silence - also, the source from which the loaner itself received such income, prima facie, was found to be false
The Assessing Officer, in our considered view, has considered the entire material while forming its prima facie view with regard to the alleged payments of interest. Also what was the purpose of loan and what was the source from where it came to be returned is a question, which being a jurisdictional fact requires adjudication by the Assessing Officer. The petitioner may also have justifiable explanation of repayment, but from the material placed before us, it cannot be said that either the initiation of process of assessment or rejection of objections is on flimsy grounds or in an arbitrary manner.
We find existence of reasonable ground, enabling the Assessing Officer to form a belief, with regard to the non-disclosure/escapement of income -
In the instant case, we find that the petitioner seeks adjudication, on merits, of the fact in issue, which is impermissible in law. In the absence of definite and authentic information, this Court cannot as a fact finding authority, by way of a roving inquiry examine the matter, holding the proceedings initiated under Section 148 of the Act to be untenable on merits. Assessee is always open to make all such submissions before the appropriate authority.
Application of mind by the sanctioning authority - Held that:- the instant case is not that of mere rubber stamping, for the competent authority, in principle, was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded, with proper application of mind. He himself wrote “I am satisfied that it is a fit case for issue of notice u/s 148”.
Rejection of objections - Held that:- It cannot be said that rejection of the objections are based on frivolous or extraneous factors and circumstances. There is complete and proper application of mind to the attending facts and circumstances. The objections rejected, by a speaking order, also stands duly communicated to the petitioner. Mere rejection of objections cannot lead to formation of an opinion about the Assessing Authority, under all circumstances, deciding the matter in favour of the revenue.
Reliance on a decision dated 04.03.2016, rendered by the Calcutta High Court in Prem Chand Shaw (2016 (3) TMI 328 - CALCUTTA HIGH COURT) is only for the purpose of pressing the provisions of Section 292-B of the Act, which, in the instant case, we do not find to be applicable.
At this stage, what is required to be considered by the jurisdictional authority is only reasons to believe and not “the established fact of escapement of income”, on the lines of Rajesh Jhaveri (2007 (5) TMI 197 - SUPREME Court).
Petition dismissed - Decided against the assessee.
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2017 (1) TMI 516
Appeals under Section 260A - non grant of adequate or sufficient opportunity to support its claim that the amount received from its share applicants was in respect of genuine transactions - Held that:- The CIT (A)'s order clearly sets out specific details about the dates when opportunities were given to the assessee to substantiate its submissions. In fact on the fifth date (the previous dates being, 25.08.2014, preceded by a letter of 14.08.2014; 02.09.2014 and 09.09.2014), the CIT (A) clearly stated that final opportunity would be granted on the date fixed, i.e., 29.09.2014, failing which appeal would be decided on its merits. On the date given, i.e., 29.09.2014, neither did the appellant appear nor was any appearance on its behalf caused. Having regard to the above material, the additions were made and brought to tax; the ITAT concurred with this order.
Having regard to the above factual material and also having considered the additional documents which are now part of the record, we are of the opinion that so far as the question of opportunity is concerned, there is no occasion for interference under Section 260A of the Act. The assessee clearly defaulted - if not at the original stage, but at the appellate stage and, therefore, cannot complain that its right to adduce additional evidence was not properly appreciated. No question of law arises
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2017 (1) TMI 515
Exemption u/s 11 - Condonation of delay for extending the due date of filing of the return of the income and for giving notice to deposit accumulated amount - delay could be condoned for filing Form No.10, since the deposit of accumulation is made under Section 11(2), there is no provision in the circular to condone the delay - Held that:- When there is a specific provision enabling the Commissioner to condone delay even in respect of “investment of the money in the prescribed securities” if it is found to be on account of oversight, necessarily, the Commissioner can exercise the power under Section 119 (2)(b) of the Act. It is not confined to failure to give notice to the Income Tax Officer under Section 11(2) alone. Even under Clause (d) as extracted above, time can be extended under Section 11(2). There is no prohibition for condoning delay even if the deposit is made belatedly. Under such circumstances, it of the view that there is justification on the part of the petitioner to challenge Ext.P5.
Accordingly, this writ petition is allowed. Ext.P5 is set aside and the 3rd respondent is directed to reconsider the matter afresh in the light of the observations made above and an order may be passed within a period of two months from the date of receipt of a copy of this judgment.
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2017 (1) TMI 514
Unaccounted purchases - method for discerning the cost of the raw material - GP adoption - Held that:- Once the raw material quantity that did not appear in the regular books of account was discovered and could be inferred as a result of the search, the onus lay upon the assessee to furnish full particulars as to the cost of that raw material or the average cost. Its explanation by relying upon a letter of 1996 produced more than a year later, was by an afterthought really speaking. Its creditability, was in our opinion correctly doubted and entirely rejected by the AO who adopted a safer method for discerning the cost of the raw material which was not reflected in the regular books of account.In these circumstances, the ITAT’s reasoning cannot be sustained. It is plainly contrary to the facts on the record and contrary to any reasonable approach that could have been adopted under the circumstances of the case.
Likewise in respect of the same issue-vis-a-vis the stocks relating to M/s Garware Polysters, theassessee’s explanation was in fact no explanation at all. It stated that since the reconciliation could not be made on account of bunching of documents (for which the AO was not responsible at least), some leeway or concession ought to be given. The ITAT merely accepted that explanation which in our opinion was correctly rejected by the AO. The AO inferred correctly that since these purchases too were made outside the books of account and proper accounting or reconciliation could not be made by the assessee, the value of the investment and the estimated profits on the basis of the undisputed rate i.e. 4.5 % GP had to be adopted. Therefore, the findings of the ITAT are plainly unreasonable and could not have been arrived at. The impugned order cannot be sustained on this aspect as well. - Decided in favour of the revenue
Excess Stock - Held that:- As against the valuer’s estimate of ₹ 25,490, the value of the stock determined by the AO was ₹ 73,76,782. The ITAT accepted the explanation and went on to independently value each item of the stock all over again. This court is of opinion that the method adopted by the ITAT was not warranted. The assessee did not produce the valuer’s report within time; instead, it waited for a considerable period after the search to rely on it. Furthermore, the valuer’s report is unverified. This made the document suspect and was correctly brushed aside by the AO. In the circumstances, the AO’s decision to rely on materials which showed a clear value of the goods, was an acceptable principle rather than the valuation report, which weighed considerably with the AO. This question too has to be answered in favour of the revenue.
When the assessee had admitted ₹ 7,49,459/- made by A.O. on account of unaccounted purchase made from M/s GarwarePlyster Ltd the deletion directed by the ITAT was not justified.
Addition made on the basis of Mr. J.P. Agarwal’s statement, recorded during the course of search proceedings - Held that:- Mr. Agarwal was no doubt a family member and a relative of the assessee’s directors. At the same time, it is undeniable that he too was a director of the assessee company at the relevant time. The documents seized (A-5, A-6 and A-7) detailed elaborate workings of accounts and what is more, quantities of raw materials and profits. The documents were prepared at the time a family settlement was arrived at, sometime in 1990-91. The statements- recorded on 20-3-1996 were corroborated by the materials. As far as the question relating to cross examination is concerned, the court notices that though the documents were furnished to the assessee, it had not sought opportunity of cross examination; this was made at the fag end, in March, 1997. This court finds no justification to reject the statements, which merely explain the documents seized; the assessee could well have given a full explanation instead of seeking rejection of the documents on the ground that they were prepared in the context of a family dispute leading to a settlement. This quesiton of law too, is answered against the assessee
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2017 (1) TMI 513
Deduction u/s. 80-IA(4) allowable for generation of power for captive consumption - Held that:- The issues in the present appeal require to be answered in favour of the assessee and against the revenue. See Tamilnadu Petro Products Ltd. Versus Assistant Commissioner of Income-tax [2010 (11) TMI 645 - MADRAS HIGH COURT] and Commissioner of Income Tax Versus Cethar Limited [2014 (9) TMI 831 - MADRAS HIGH COURT ]
Adjustment made on account of disallowance u/s 14A of the Act in computation of book profit u/s 115JB - Held that:- Taking into consideration the evidence on record and considering the decision of this court in the case of Commissioner of Income-tax-I vs. Gujarat State Fertilizers & Chemicals Ltd. [2013 (7) TMI 701 - GUJARAT HIGH COURT ] we are of the opinion that issue Nos. (iii) and (iv) required to be answered in favour of the assessee and against the revenue.
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2017 (1) TMI 512
Taxation under Section 44BB - calculation of amount - whether reimbursement of actual expenses were not to be included within the amount which is to be reckoned for the purpose of taxation under Section 44BB - Held that:- The question has engaged the attention of this Court in an earlier judgment in the case of Commissioner of Income Tax vs. Halliburton Offshore Services Inc., reported in (2007 (9) TMI 230 - UTTARAKHAND HIGH COURT). We also think that Section 44BB is a complete code in itself and the amount received, be it by way of reimbursement, is not, in any way, excluded from the ambit of Section 44BB. Therefore, placing reliance on Section 2(45) or Section 5(2) cannot advance the case of the appellant.
Appeals are meritless and the questions of law are answered against the appellant
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Customs
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2017 (1) TMI 478
Levy of CVD on import of silk fabrics - the matter is squarely covered by the judgment of this Court passed in Civil Appeal NO. 9440 of 2003 titled as “M/s. SRF Ltd. vs. Commissioner of Customs, Chennai”. The High Court in the impugned judgment has been mainly influenced by the fact that review petition was filed by the Revenue in the said judgment in which notice was issued - the decision in the case of The Commissioner of Customs (Exports) Versus M/s. Prashray Overseas Private Limited, Customs Excise & Service Tax Appellate Tribunal [2016 (5) TMI 1106 - MADRAS HIGH COURT], contested - Held that: - matter on remand - petition disposed off.
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2017 (1) TMI 470
Benefits of N/N. 11/97-Cus dated 1-3-1997 - penalties - import of CD-ROM - denial on the ground that the same do not figure in the letter of department of electronics addressed to Electronics and Computer Software Export Promotion Council - Held that: - The letter of department of electronics, was in respect 27 different titles and in respect of some imports, probably made in Bangalore. Absence of these titles in the said list does not make these titles non interactive. Further it is noted from the description of the CD’s, as it appears in net, which has been produced by the Ld. Counsel, that Sr. 1, 2 and 4 clearly interactive in nature. In respect of Sr. 3, it is apparent that the said title is covered in the letter of department of electronics - benefit of notification available - penalties set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 472
Classification of imported item - Fused Silica - classified under chapter heading 2505 1019 or under 7018 2000 - Held that: - It can be seen from the customs tariff heading the claim of the department that the product merits classification under 7018 2000 is totally misconceived. The said chapter heading is in respect of Glass microsphere not exceeding 1mm in diameter which would be small. In the case in hand, there is nothing on record that the goods imported ‘Fused Silica’ are exceeding 1mm in diameter. Further, we find that by any stretch of imagination, ‘Fused Silica’ cannot be considered as Glass microsphere or for that purpose, as glass beads to be classified under chapter 7018 - the classification declared by chapter heading 2505 1019 is correct.
Where department seeks reclassification it is their duty to produce evidence in support of their claim. In the absence of any such evidence from the department side, we are of the view that the classification declared by the respondent is to be accepted.
Appeal rejected - decided against Revenue.
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2017 (1) TMI 467
Valuation of imported goods - related party - enhancement of value - related party transaction - Held that: - A reading of the contract clearly indicates that the appellant has to import the goods and sell the same at the maximum price decided by the supplier himself does not mean that appellant and supplier are related. On perusal of the exporter’s price list, we find that the price declared by appellant for the consignment in question is in accordance with the price list as published by the supplier. The said price list produced by appellant is not disputed by the revenue.
The restrictive clauses are general clauses, always agreed upon by the seller and the purchaser in order to have healthy business relations and cannot be considered as a clause which denotes the relationship as per provisions of Rule 2(2) of the Customs Valuation Rules, 1988 - the enhancement of value not justified - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 466
Confiscation - penalty - illegal attempt to export of Dal to Nepal - Held that: - the trucks were starting at a place near Muzaffarpur town which is far away from the Indo-Nepal Border. In the present appeal, no contrary evidence was produced. Furthermore, the respondents appeared before the Customs Officers and the statements were recorded. The Adjudicating Authority observed that no further investigation was done. The allegation of an attempt to export to Nepal cannot be made merely on assumption and presumption because so far as the said trucks were stationed at a place near Muzaffarpur - appeal dismissed - decided against Revenue.
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2017 (1) TMI 465
Confiscation of imported goods - Imposition of redemption fine and penalty - Valuation of goods - Held that: - there is no merit in the appeal as adjudicating authority has correctly held that the the assessable value is less than the value limit prescribed under the Policy, Policy provisions have been violated in this case. To that extent, we uphold the impugned order.
the adjudicating authority has imposed redemption fine of ₹ 11 lakhs. The norms, as can be seen from various decisions of the Tribunal on the same issue, is that the redemption fine is imposed @ 20% of the enhanced value which in this case approx ₹ 4 lakh, which we find will meet the ends of justice. Accordingly, the redemption fine imposed on the appellant is reduced to ₹ 4 lakh.
As regards the penalty imposed, we find that the penalty imposed on the appellant is not excessive in relation to the value of landed cost of the marble.
Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 471
Classification of imported goods - Network Security Device - classified under CTH 8517 or under CTH 8543? - Held that: - the product is a Gateway Security Device. It has the function of transmitting the data through Network from one server to other and it has function of security for the data transmitted. Since the product has feature of transmission of data, it merits classification under the communication apparatus i.e. under CTH 8517. Since as per the application and function of the product, it is used for communication and transmission of the data. It finds place under the specific entry i.e. under 8517 - subject goods is correctly classifiable under CTH 8517 and not under CTH 8543 - appeal dismissed - decided against Revenue.
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2017 (1) TMI 469
Classification of imported goods - Monotype Machine - eligibility of exemption N/N. 114/80-Cus - whether the Monotype Machine is a Hot Metal Monotype Composing Machine? - Held that: - From the above affidavit, which is based on the brochure of Monotype Machine and manufacturing company, it is clear that Monotype Machines are always Hot Metal Monotype Machine and same contained electric melting pot. The department could not discard this Affidavit or the technical literature without any contrary and acceptable evidence, therefore we accept the submission of the appellant - the machine imported namely Monotype Machine imported by the appellant is nothing but Hot Metal Monotype Machine and entitled for the exemption under N/N. 114/80-Cus. - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 477
Classification of import of Multimedia Speakers - the decision in the case of Logic India Trading Co Versus Commissioner of Customs [2016 (3) TMI 5 - CESTAT BANGALORE] referred - Held that: - We find no reason to interfere with the impugned judgment - delay condoned - appeal dismissed.
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2017 (1) TMI 476
Review petition - the decision in the case of Andhra Sugars Ltd. Versus Commissioner [2016 (1) TMI 761 - SUPREME COURT] referred - Held that: - Despite time granted by learned Chamber Judge vide order dated 27-4-2016, learned counsel for the petitioner has not taken any steps to pay deficit Court fee - review petition dismissed for non-prosecution.
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2017 (1) TMI 468
Suspension of the warehousing licence- suspension on the ground that some case enquiry was going on against the appellant - Held that: - It is provided under the sub-section (3) of Section 58 of the Customs Act, 1962 that - “Pending an enquiry whether a licence granted under sub-section (1) should be cancelled under clause (b) of sub-section (2), the Assistant/Deputy Commissioner of Customs may suspend the licence” - The licence was suspended exercising the power given under Section 58(3) of the Customs Act, 1962 - no illegality in the order of the Assistant Commissioner suspending the warehousing licence of the appellant - appeal dismissed - decided against appellant.
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2017 (1) TMI 475
Valuation - Import of Oracle packaged software - the decision in the case of Shri Atul Kaushik, Shri Krishan Dhawan, M/s. Oracle India Pvt. Ltd. Versus C.C. (Export) , New Delhi [2015 (9) TMI 317 - CESTAT NEW DELHI] - Held that: - delay condoned - appeal dismissed - decided against appellant.
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2017 (1) TMI 474
Undue benefit of Target Plus Scheme (TPS) - the decision in the case of CC (II) Airport Special Cargo, Mumbai And Others Versus Shri Samir Vora And Others [2015 (9) TMI 1370 - CESTAT MUMBAI] contested - Held that: - We see no reason to interfere with the orders passed by the Customs, Excise and Service Tax Appellate Tribunal - appeal dismissed - decided against appellant.
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2017 (1) TMI 473
Waiver of pre-deposit - Violation of notification No.20/99-Cus and 16/2000 - the decision in the case of [2015 (9) TMI 818 - CESTAT CHENNAI] contested - Held that: - no coercive steps shall be taken for realization of the dues as per the judgment of the adjudicating authority, subject to the petitioner paying 75 per cent of the principal amount. If any amount has been deposited or paid earlier, the same shall be adjusted - imposed penalty is stayed - stay granted.
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Corporate Laws
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2017 (1) TMI 462
Oppression and mismanagement - removal of petitioner as director - Petition for winding up of the company - theft of intellectual property was levelled against the petitioner by the company - Held that:- the removal of Petitioner as director has been done duly following the procedure contemplated under the Act and Articles. - the material on record justifies the management of the company to come to a reasonable conclusion that it is in the interests of the company to remove the petitioner from management of the company. Further Petitioner did not choose to disclose his interest in other companies to Respondents at a right point of time.
The crucial test whenever a director was removed from the board of the directors is, whether it has been done with an intention to keep the removed director away from the management of the company to have their own man in the management of the company or with a view that the presence of the removed director is detrimental to the interest of the company.
The removal of petitioner as Director of the company does not stand to judicial review. Therefore, Respondent no. 2 giving cheque power to another Director in the place of petitioner by itself cannot be canvased as one of the ground in support of the plea of mismanagement.
Increase in the share capital - Held that:- when the 2nd Respondent took decision to increase the share capital of the company which is within the knowledge of the Petitioner, it cannot be said that increase in the paid up share capital or allotment of shares to his group is an act of mismanagement unless and until it is shown that such course of things are detrimental to the interests of company and causes prejudice to the exercise of rights by the minority shareholders.
One of the reliefs sought by the petitioner in this petition is to direct any of the parties either to sell or purchase the shares of other parties, after reducing the paid up capital increase in the year 2010 and by taking the share of the Petitioner as 20% of the paid up capital by bidding.
In view of the above said findings and as per the admission of Respondent in the reply the shareholding of the petitioner on the date of filing of the petition was determined as 10.96% of the paid up capital of the Company.
In the result petitioner is not entitled for any of the reliefs as prayed for by him in the petition. But the following directions are just and reasonable in the facts and circumstances of the case:
Respondents 2 to 7 are directed to purchase the 10.96% shareholding of petitioner in the paid up share capital of the 1st Respondent company with their own funds, as per the value of equity share of 1st respondent company determined by the valuer appointed by this Tribunal, on the application filed by the petitioner, in case petitioner is willing to sell his share capital.
This petition is disposed of accordingly with the terms and directions.
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FEMA
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2017 (1) TMI 461
Maintainability of the writ petitions before this Court - whether issue involved in these writ petitions relate to 2G Spectrum Case and therefore, this Court has no jurisdiction to entertain these writ petitions? - Held that:- Since the investigation carried on by the respondents is being monitored by the Honourable Supreme Court, it is too early for this Court to take up these writ petitions for adjudication on merits. Consequently, the preliminary objection raised on behalf of the respondents is sustained. The writ petitions are dismissed as they are not maintainable before this Court.
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Service Tax
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2017 (1) TMI 502
Correctness of Tribunal's order - Refund claim - the decision in the case of Principal Commissioner Of Service Tax, Delhi-I Versus T.T. Limited [2016 (9) TMI 492 - DELHI HIGH COURT], contested - Held that: - We do not find any merit in this petition - The special leave petition is dismissed.
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2017 (1) TMI 501
Short payment of tax - Management Consultancy Services - classification of services - Held that: - the services rendered by the appellant may be classifiable under Public Relation Services from the date of their application for registration, this by itself does not mean the services not covered under any other taxable service earlier. The learned Commissioner (Appeals) put the responsibility of classification only on the appellant without giving his finding on the claim made by the appellants - the matter needs reconsideration.
Non-inclusion of reimbursable expenditures in taxable value - Held that: - the appellants have submitted sample documents of invoices with corroborative supportive entries in their account to state that various expenses like conveyance, photocopying, courier, fax, telephone charges etc. were claimed as reimbursable expenditure on actual basis, with supporting evidence of each, in terms of a contract with the clients - these aspects requires verification with documentary support submitted by the appellant.
Appeal allowed by way of remand.
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2017 (1) TMI 500
Imposition of penalty - Reverse charge mechanism - consideration for technical advices and consultancy services - service providers situated abroad - Held that: - the period involved in this case is from 18/04/2006 to 30/09/2006 during which period there was confusion as to whether service tax liability would arise on the person making the payment for the services received from overseas service providers - Since there was confusion and constitutional validity of the provisions of Section 66A was being challenged, we find that it is a fit case to hold that the appellant had justifiable reasons for not discharging service tax liability under reverse-charge mechanism - Invoking the provisions of Section 80 of the Finance Act, 1994, penalty u/s 78 set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 499
Refund of accumulated CENVAT credit - Rule 5 of CCR, 2004 - Held that: - Appellant exports all its output services. Even if there is a lag in claiming the refund of credit availed in a different quarter, there is no reason to hold that such credit pertains to goods that were not exported and hence not eligible for the refund - A construction of paragraph 4 of the N/N. 5/2006-CE (NT) dated 14th March 2006, in the disposal of refund claim of appellant, is in conflict with rule 5 of CENVAT Credit Rules, 2004 to the detriment of the appellant-exporter and imposes conditions that are not envisaged in the said rule. Consequently, the denial of the claim for refund by the two lower authorities cannot sustain - refund granted - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 498
Business Auxiliary services - amounts paid by customers for registration of vehicles - evasion of tax - Held that: - The payment is effected by customers of vehicles who is purportedly the recipient of service; if that be so, the adjudicating authority should have pin-pointed the particular description in section 65 (19) of Finance Act, 1994 that matches the service rendered to car purchasers when registering vehicles of customers. The motor vehicle department is assigned a statutory obligation to issue registrations; such statutory activities are not, even remotely, describable as service rendered which the appellant is required to promote or as service of the department procured for the customers. This aspect has not been examined by the adjudicating authority - the composition and quantum of duty liability needs to be reconsidered - appeal allowed by way of remand.
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Central Excise
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2017 (1) TMI 483
Manufacture - excisability of food flavours - Valuation - inclusion of amount paid for Royalty - the food flavours were “prepared” by mixing of various essences (odoriferous substances) - The liquor manufacturers under the manufacturing agreement would use food flavours in such proportions as identified by the respondent and the blending proportion was maintained as a trade secret of the respondent - The royalty paid to the respondent by the liquor manufacturers, as asserted, is the difference between their selling prices of IMFL to outside buyers and the EDP of such IMFL. As pleaded, the payment of royalty has no nexus or connection with the food flavours. - Extended period of limitation.
Held that: - from the order of the tribunal the exact nature of the process undertaking and how mixing is undertaken and the process involved is not discernible and has not been ascertained and commented. It remains ambiguous and inconclusive. The respondent claims that about 26% of the sales of odoriferous substances were brought from third party and sold without any modification or process. These are all questions of fact which must be first authenticated and the actual factual position validated. The tribunal has answered the question in favour of the respondent without the background check as to the actual process involved and undertaken. Different flavours may have different processes.
The tribunal has held that certain show cause notices are barred by limitation - As we notice, the tribunal on this score has also not scrutinized the dates appropriately, but has returned a cryptic finding.
Appeal allowed by way of remand.
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2017 (1) TMI 494
Imposition of penalty - Classification of intermediate product in dispute for long time - Soya Gums - Held that: - Ultimately, the classification of the product under heading 1522 has been accepted by the assessee and differential duty paid. Under the circumstances, I am of the view that the benefit of section 11A (2)(B) cannot be extended in view of the explanation-1.
The appellant will be entitled to the benefit of payment of penalty of 25% of the differential duty as the differential duty as well as interest stands paid by them before issue of Show Cause Notice - appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 493
Clandestine removal - MS Ingots - demand of duty, interest and penalty - the case of the Revenue is based on the note book recovered from the possession of Shri Sarat Kumar Das (Supervisor of Shri Purna Ramdas Labour Contractor) and the various statements.
Held that: - No such evidences to the above effect has been brought by the Revenue on record therefore, the demand is not sustainable against the appellant alleging clandestine removal. Moreover, we also take note of the fact that pilot experiments were conducted to ascertain the electricity consumption for manufacturing of One MT of MS ingot twice and same were found in order therefore, Revenue has failed to establish how the goods were manufactured in the factory of the appellants - As there is no positive evidence has been produced by the Revenue to allege clandestine removal goods, therefore the impugned order is not sustainable.
Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 492
SSI exemption - value of clearances exceeding ₹ 300 lakhs - Held that: - the respondent is supplying foods items along with beverages, juices, alcohol and other items which are not prepared by the respondent. Most of the items are bought out items. The sale figures of these items have been shown in the balance sheet is of all the items; i.e. bought out and prepared in the kitchen and this figures have been taken by the Revenue to deny the benefit of exemption notification which is not correct. Moreover, the Revenue has not taken any pain to determine the value of food prepared and cake and pastries prepared by the respondent in their kitchen. As revenue has failed to quantify the correct figures of food and cake and pastries prepared by the respondent, in that circumstances, the benefit of exemption notification cannot be denied blindly - appeal dismissed - decided against Revenue.
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2017 (1) TMI 491
Valuation - Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 or Rule 6(b)(ii) - price is not the sole consideration - allocation of expenses and inclusion of notional profit margin of 10% - processing of grey fabric - Held that: - during the relevant period, there was no statutory requirement or Board s guidelines regarding submission of CAS-4 Certificate. The standards were incorporated through the Circular dated 13.02.2003 of the Board for future guidelines.
in the appellants own case for the subsequent period [2016 (6) TMI 716 - CESTAT NEW DELHI], identical issue came up before this Tribunal where The Original Authority held that the costing should have done only on actuals. However, while arriving at the figures for purported undervaluation the Revenue relied on Profit & Loss Account and Balance Sheet of second Respondent for cost of grey fabrics. Further, addition to the cost thus arrived was made towards freight, tax, insurance, commission, etc. again based on the said Balance Sheet. We find such exercise to arrive at assessable value for the impugned period is without any legal basis and arbitrary - valuation adopted and relied upon M/s. SKL is correct and in terms of law.
Further, the issue which has attained finality in remand proceedings, cannot be reopened.
Appeal partly allowed - partly decided in favor of appellant.
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2017 (1) TMI 480
Prosecution proceedings against the central excise officers - allowing conditional exemption to the unit illegally - Issuance of forged document in favour of the Company though there was no commercial production by the Company - Criminal misconduct - compromise or compounding of offence - Held that: - under Section 13(1)(d), the basic requirement is to the effect that the accused himself should have obtained either for himself or for any other person either any valuable thing or pecuniary advantage either by corrupt or illegal means or by abusing his position and without any public interest. Therefore, when there is no allegation about any such fact, it can be said that there is no prima-facie evidence regarding criminal misconduct as alleged.
Once main offence is compounded then there is catana of judgments by Supreme Court that when the department has compounded the offences then there is no reason to continue the criminal proceedings, more particularly when offences are either in the form of breach of rules or technical offences
In the present case, though some documents are alleged to be forged practically there is no forgery of any documents. It is submitted by the petitioners that, in fact an advance appreciation of work by the Company as per project report happens as per fixed schedule was disclosed. However for one reason or another if such time schedule could not be adhered to either during installation or during production it may not amount to committing offence of forgery, since there is no mens rea and practically there is no financial benefit accrued in favour of the petitioners.
Revision application allowed - charge-sheet to proceed further against petitioners are hereby quashed and set aside - decided in favor of petitioner.
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2017 (1) TMI 479
Adjournment of matters - stalling the process of Promotion to the cadre of Assistant Commissioner of Central Excise - Held that: - It is not appropriate for the learned Tribunal in allowing the matters adjourned for indefinite period and at the same time, continuing the interim order which, in fact, would not any way advance the cause of administration. In any event, any action taken by the Department pending proceedings either before the Tribunal or before this Court is always subject to the final outcome of the pending proceedings.
Having said so, in the interest of administration, it is appropriate that the Original Application is directed to be disposed of by the Tribunal as expeditiously as possible, protecting the rights of the parties concerned - petition disposed off - decided in favor of petitioner.
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2017 (1) TMI 497
Star Export House - classification of HDPE / PP Bags, Flexible Intermediate Bulk Container (FIBC Bags) - classified under CETSH 6305 32 00 or under CETH 3923 29 90 - on the same set of facts for the subsequent period namely, 01.12.2013 to 31.10.2014, calling upon the petitioner to show cause notice as to why the product should not be re-classified under CETSH 3923 2990.
Held that: - The petitioner has given a detailed reply dated 13.06.2015 for the above said show cause notice, stating that the show cause notice issued is totally invalid and without jurisdiction and further stated that the issue of classification of FIBC Bags is settled as CETSH 6305 3200 by the earlier order of this Court and also by the order passed by the Ministry of Finance Circular and Ministry of Commerce Norms Committee and by earlier orders of Appellate Authorities and requested to drop the show cause notice and requested for a personal hearing. As no final orders are passed so far, this writ petition has been filed.
Petition disposed off - matter on remand.
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2017 (1) TMI 496
Grant of export rebate - Held that: - it is submitted that the same shall be considered and granted within a period of two weeks from the date of providing necessary particulars such as AR-4 and bank realization certificate. Concerned respondents are directed to act accordingly and consider the grant of rebate within a period of two weeks from furnishing the aforesaid documents.
Interest on delayed payment of rebate - Held that: - the prayer with respect to the interest on delayed payment of rebate is dismissed as not pressed.
Return of Bank Guarantee - Held that: - As and when such prayer is made with proof of export, the question with respect to return of bank guarantee may be considered and dealt with at the earliest.
Imposition of penalty u/r 17 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 - Held that: - On considering Rule 17 the purpose and object to levy the penalty seems to be that on one hand the concerned person has exported the dutiable goods under bond (without making the payment of duty) and on the other hand thereafter he fails to furnish the proof of such export to the satisfaction of the Excise Commissioner. Meaning thereby, he continues to get the benefit of export without making the payment of duty as he has exported the goods under bond - the respondent authority is not justified to levy the penalty upon the petitioners under Rule 17 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956.
Petition allowed - decided partly in favor of petitioner.
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2017 (1) TMI 495
Maintainability of appeal - monetary limit - Held that: - The instructions dated 17.12.2015 and 01.01.2016 would disclose that a fair decision has been taken by the Ministry of Fiance Department of Revenue, Central Board of Excise and Customs not to file any appeal before the CESTAT, below the monetary limit of ₹ 10,00,000/- and before the High Courts, below the monetary limit of ₹ 15,00,000/- and before the Supreme Court, below the monetary limit of ₹ 25,00,000/- and despite that instructions, the above appeals have been filed - appeal dismissed - decided against Revenue.
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2017 (1) TMI 490
CENVAT credit - removal of inputs as such for export - input procured for intended to be used in export but actually used - credit on ‘stainless steel plates’ procured from M/s Jindal Stainless Steel Co by the assessee, M/s Visen Industries Ltd, vide invoices dated 16th January 2008 and 21st February 2008 and exported as such vide ARE-1 - whether order of recovery of credit holding a view that the products were exported as such, is justified?
Held that: - Allowing of accounting offset would impose any limit on the number of such clearances that may be transacted by the appellant. By such procurement, by and export of such procurement as such, the appellant would accumulate adequate credit to avoid paying duty through account current. Though such accumulation is allowed when finished goods manufactured by the appellant are exported. Such a privilege is in concord with the general principle that taxes are not exported.
But a manufacturer who adopts the strategy of procurement for export, on the strength of interpretation as proposed by appellant, would be misusing this facility to deprive exchequer of taxes in excess of normal offset of credit on inputs. This is not consistent with intend of tax by statute to levy of duty on manufacture of goods.
Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 489
Classification of manufactured item - nylon/viscose fabrics - demand - Held that: - We see from chapter 54 of the Schedule to the Central Excise Tariff Act, 1985 that headings from 5409 cover various types of fabric made of manmade filament yarn with 5412 specifically for fabric made of polyester filament yarn. 5410 is for fabrics processed without aid of power or steam and 5411 relates to handlooms. Hence, if the impugned product were to be covered by chapter 54, the only plausible heading is 5409. Heading 5508 is for fabric made of staple fibres. As the product of appellant contains nylon, it cannot be classified in the heading that relates to use of staple fibre. It would appear that the two lower authorities have erroneously presumed that the product of the appellant is classified under heading 5508 - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 488
CENVAT credit - clandestine removal - whether CENVAT Credit of ₹ 1,64,286/- availed by the appellant on the imported goods on the basis of the Bill of Entry No. 854886 dated 28.04.2005 is a case of fraudulent availment of CENVAT Credit since the allegation is that appellant has not actually received and used the said goods in the manufacture of declared output goods?
Held that: - I find that the evidences submitted by the department in support of the fact that the goods were actually not received and consequently not use by the appellant is very conclusive and convincing. On the contrary, the Director of the appellant Company Sh. Kalpesh Prakas Oswal was specifically asked to provide evidence of transportation and receipt of the goods in his factory. He could only say that they could not find such documents and did not produce any document to substantiate transport and receipt of impugned goods in their factory.
The appellants have argued that the Cenvat register entries are proof of the goods having been used in the factory - In the case of Viraj Alloys Ltd. Vs. CCE, Thane-Il [2004 (8) TMI 223 - CESTAT, MUMBAI], the Tribunal has held that the entry in RG-23A Part-I could not prove that inputs had been received in factory.
Also, in the case of Harsaran Dass Sita Ram Vs. CCE. Panchkula [2015 (4) TMI 933 - PUNJAB & HARYANA HIGH COURT], it was held that in cases of wrong availment of credit without receipt of goods, the burden to prove genuineness of transaction or the fact that the appellant actually received and consumed the goods is on the appellants - In this case, the appellants have failed to prove transport, receipt and consumption of impugned goods in their factory.
Appeal rejected - decided in favor of Revenue.
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2017 (1) TMI 487
Refund claim - denial on the ground that there is no proof of export and that appellant cleared the goods without ARE-I, and thus failed to comply with the procedure prescribed in N/N. 42/2001-C.E. (N.T.), dated 26-6-2001 - Held that: - It is settled law that procedural infractions of notifications/circulars should be condoned if exports have really taken place. In the instant case, the Department has no case of fraud or mischief on the part of appellant. Further the appellant is a public sector undertaking. It is not the case of department, nor has it been disputed by them that the impugned goods have not actually been exported. This being so, the non-submission of an application for exporting the goods in ARE-I format will have to be treated as a procedural lapse which can be condoned - appellant eligible for refund - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 486
Cenvat credit - various Input services - gta service - outward transportation up to the place of removal - Held that: - The modus operandi adopted by the appellant clearly shows that the ownership / title of goods were passed on at the buyer's premises. Therefore, the service tax paid on the transportation charges should be considered as input service for the reason that “outward transportation up to the place of removal” is specifically appearing in the definition of input service contained in Rule 2 (l) of the Cenvat Credit Rules, 2004.
With regard to the other disputed service, namely, rent-a-cab service, courier and authorized service station service, I find that those services were availed by the appellant for the manufacturing activities and the expenditure on that count have been considered in their books of accounts. Thus, those services are confirming to the definition of input service under the head “activity relating to business - Appeal allowed.
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2017 (1) TMI 485
Cement - CENVAT credit - welding electrodes and gases used in repair, maintenance of capital goods - Held that: - the definition of ‘input’ post 1-3-2011, is more expansive, broadbanded and includes ‘all goods used in the factory, there being no caveat, that such goods should only be ‘used in or in relation to manufacture of final products.
Reliance placed in the case of M/s. Cement Corporation of India v. CCE, Hyderabad [2016 (7) TMI 490 - CESTAT HYDERABAD], involving period 1-11-2011 to 31-10-2012 after the said amendment, has held that the credit cannot be denied on welding electrodes used for repair and maintenance.
Credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 482
Denial of refund claim - deposit under protest - period of limitation - SLP against the decision in the caaseof Mahalakshmi Cable Industries Versus Commissioner of Central Excise [2015 (3) TMI 658 - DELHI HIGH COURT] - Held that: - delay condoned - SLP dismissed.
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2017 (1) TMI 484
Whether the respondent-assessee engaged in the manufacture of chewing tobacco, is liable to pay additional duty of Excise imposed vide Finance Act, 2005 with effect from 1-3-2005?
Held that: - the issue in this appeal is similar to the issue decided by Hon’ble Supreme Court in Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Company Ltd. [1996 (2) TMI 138 - SUPREME COURT OF INDIA], where it was held that where the new levy is imposed, the same is not applicable on the goods manufactured prior to imposition of levy but cleared thereafter and collection of duty at the stage of removal is for the sake of convenience. Once the levy is not there at the time when the goods are manufactured or produced in India, it cannot be collected at the stage of removal of the said goods - appeal dismissed - decided in favor of respondent-assessee.
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2017 (1) TMI 459
Valuation - value of free supply of rails to be included in assessable value or not? - benefit of N/N. 5/2006-C.E was taken away by N/N. 12/2012-C.E., dated 17-3-2012 and again was restored by N/N. 03/2014-C.E - now the question is whether the 2012 Notification will have retrospective effect or not and the penalty to be imposed u/s 11AC(1)(b) of the Central Excise Act, 1944 on assessee or not?
Held that: - Section 102 of Finance Bill, 2015 read with Third Schedule provided that the 2012 Notification shall have retrospective effect inasmuch as it would apply during the intervening period, i.e., from 17-3-2012 to 2-2-2014 - decided in favor of appellant.
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2017 (1) TMI 481
Whether “Touch Screen Kiosks” are eligible for exemption u/not. 6/02 as “computers” - appeal against the decision in the case of HCL PERIPHERALS Versus COMMISSIONER OF C. EX., CHENNAI [2008 (4) TMI 195 - CESTAT, CHENNAI] - Held that: - The Civil Appeal is dismissed on the ground of delay - decided against appellant.
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CST, VAT & Sales Tax
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2017 (1) TMI 464
Grant of appropriate adjustment, on account of payment of local tax in other States, upon the same goods, by virtue of Section 18-A(5) of the Act - nearly half of the amount of tax is liable to be adjusted, if due credit was accorded by the appellate authority to the payment of local tax in other States,in terms of Section 18-A(5) - Held that: - it would be appropriate to modify the order dated 26.12.2016 by providing that in case the petitioner deposits 20% of the disputed tax amount, after adjusting the amount allegedly paid by it towards local tax in other States in respect of the same goods, which is to the extent of nearly 50% of disputed tax amount, within 2 weeks from today, the appellate authority shall entertain and decide the appeal on merits - petition disposed off - decided in favor of petitioner.
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2017 (1) TMI 463
Refund of compounding fee - release of detained goods - Held that: - Though in the counter affidavit in paragraph No.8, it is stated that it is a tax component and compounding fee, the release order does not specifically say so nor there is a quantification of tax. Thus, the respondent himself is not clear as to under what head the amount has been collected.
The amount has been paid under protest and so that the petitioner would able to clear the goods immediately as it was a promotional material intended to launch a product in that particular area.
The respondent is directed to refund a sum of ₹ 47,095/- which was collected from the petitioner - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (1) TMI 460
Sale of liquor in retail - Natural justice - Direction to shift the shop - report R.C.No.1510/2015/TDP/G1, dated 21.09.2015 referred - Held that: - based on a report obtained behind the back of the petitioner from the Municipal Corporation, respondent No.4 ought not to have arrived at unilateral conclusion that A4 shop of the petitioner is situated in Division No.20 and not in Division No.21. Such an action constitutes blatant violation of the principles of natural justice and also patent arbitrariness. The petitioner, who has claimed to have invested huge amounts, cannot be denied the valuable opportunity of establishing that A4 shop is located in the Division for which he was granted license - Respondent No.4 is directed to issue a notice to the petitioner to establish that his A4 shop is situated in Division No.21 and not in Division No.20 - matter on remand - petition allowed by way of remand.
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