TMI Tax Updates - e-Newsletter
January 14, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax
Advance ruling - Notice u/s 143(2) was issued before filing the application - It is clear that the question was already pending before the Income-tax Authorities and the application is barred by Proviso (1) of section 245R(2) - AAR
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Rejecting of application for approval u/s 80G - assessee has spent more than 5% of the income for religious purpose - not entitled for approval u/s 80G(5)(vi) - AT
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Cost of improvement - Exemption u/s 54 / 54EC - Even if a return is filed in terms of sub-section (4) of section 139 that would not dilute the infraction in not furnishing the return in due time as prescribed under sub-section (1) of section 139 - AT
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Eligibility for exemption u/s 54EC - The investment was made in the financial year 2006-07, i.e. before the date of transfer - The lower authorities have rightly found that the assessee is not entitled for exemption u/s 54EC of the Act - AT
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Deduction u/s 54/54F – construction of more then one unit / floor in a house - the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction - AT
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Additional Depreciation - between the words acquired and installed, the conjunction used is 'and' and not 'or' which means both the conditions i.e. acquisition and installation has to take place after the specific date for getting eligibility to additional depreciation - AT
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Customs
Prohibition on export of rice under tripartite agreements - debarment is never permanent and the period of debarment invariably depends upon the nature of the offence committed by the erring contractor - HC
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Merely because the claim of DEPB was made which were not extended to them on the ground that certain conditions did not stand fulfilled by them, it cannot be held that exports were under the DEPB claim - AT
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Corporate Law
Proceedings u/s 138 of the Negotiable instruments Act - when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereofn - SC
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Service Tax
Penalty u/s 76 - Delay in payment of service tax on repeated occassion - Section 73(3) of Finance Act does not differentiate between a habitual defaulter and a non-habitual defaulter - penalty waived - AT
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VAT
Denial of tax revision - Imposition of penalty - For multifarious reasons, the assessee could not file the reply in time - Deputy Commissioner ought to have given some more time to the appellant to file his reply - SC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (1) TMI 621
Disallowance u/s 14A - Held that:- Following Godrej & Boyce Manufacturing Company Ltd. vs. DCIT and Others [2010 (8) TMI 77 - BOMBAY HIGH COURT] - the provision of section 14A are applicable and the disallowance has to be worked out by the A.O. on some reasonable basis and not under Rule 8D. Since the A.O. while calculating the disallowance u/s.14A has also applied Rule 8D of the Income Tax Rules, 1962, which is applicable from the A.Y. 2008-09 - The issue has been restored for fresh adjudication. Exemption u/s 10(35) - Held that:- The assessee has earned tax free income from bonds of UTI - CIT(A) held that the decisions in CIT vs. Silk & Art Silk Mills Association Ltd. [1989 (10) TMI 35 - BOMBAY High Court] distinguish - Even if the income is exempt, the same has to be included in the gross receipts and has to be applied as per provisions of section 11(1) because income has to be computed in commercial manner - The ld. CIT(A) has not adjudicated the issue properly and has not passed a reasoned order - The issue has been restored to the file of CIT(A) for fresh adjudication in accordance with the decision in General Insurance Corporation of India vs. DCIT [2011 (12) TMI 70 - BOMBAY HIGH COURT]. Whether depreciation on fixed assets claimed as application of income be double deduction - Held that:- Following Lissie Medical Institutions vs. CIT [2012 (4) TMI 115 - KERALA HIGH COURT] - Assessee is not claiming double deduction on account of depreciation as has been held by the Revenue Authorities - The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purpose of Trust - There is no double deduction claimed by the assessee - Decided in favour of assessee. Denial of claim of adjustment of carry forward of excess application of income - Held that:- The assessments for the earlier assessment years (i.e. 2003-04) are still pending before the A.O. in which the Tribunal has directed the A.O. to allow exemption as a result of registration u/s 12AA which is now available to the assessee - The issue has been restored for fresh adjudication in view of the decision of the Tribunal. Interest u/s 234D - Held that:- Following CIT vs. M/s Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT] - As per Explanation 2 which has been inserted in sec 234D by the Finance Act, 2012 with retrospective effect from 1.6.2003 - The provisions of sec. 234D shall also apply to the assessment year commencing before the first day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date - The A.O. was justified in charging the interest u/s 234D of the Act - Decided against assessee.
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2014 (1) TMI 608
Admissibility of the application - Held that:- Only when the issues are referred in the return and notice under section 143(2) is issued, the question raised in the application will be considered as pending for adjudication before the Income-tax Authorities - In the case of assessee, return of income was filed before filing application to the Authority for Advance Rulings - Notice under section 143(2) was issued after the application was filed before the Authority - Following Hyosung Corporation Korea [2013 (8) TMI 487 - AUTHORITY FOR ADVANCE RULINGS] - The question cannot be said to be already pending before the Income-tax Authorities, as no notice under Section 143(2) was issued before filing the application though return was filed - The application is, admitted under section 245R(2) of the IT Act, 1961 – Decided in favour of assessee.
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2014 (1) TMI 607
Admissibility of application u/s 245R - Held that:- Only when the issues are shown in the return and notice under section 143(2) is issued, the question raised in the application will be considered as pending for adjudication before the Income-tax Authorities - In the case of assessee company - Not only return of income was filed but even notices under section 143(2) and 142(1) were already issued before filing of the application - Return of income for the relevant assessment year was filed on 30.9.2008 and a revised return was filed on 31.3.2010 i.e. before filing the application to the Authority for Advance Rulings on 19.5.2011 - Notice under section 143(2) was issued on 20.9.2010 which was before filing the application - The assessment was also completed under section 143(3) of the Act by the Assessing Officer on 1.2.2012 – It is clear that the question was already pending before the Income-tax Authorities and the application is barred by Proviso (1) of section 245R(2) of the Act – Decided against assessee.
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2014 (1) TMI 606
Excess realisation of levy sugar price - contingent liability or not – Held that:- Following Commissioner of Income Tax v. Dhampur Sugar Mills Ltd. (No.2) [2004 (9) TMI 38 - ALLAHABAD High Court] – Decided in favour of assessee. Incentive Scheme 1988 – Held that:- Following Commissioner of Income Tax and another v. Kisan Sahkari Chini Mills Ltd. [2009 (5) TMI 72 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.
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2014 (1) TMI 604
Rejecting of application for approval u/s 80G of the Act – Held that:- The assessee has not spent any money for charitable activity during the previous year relevant to the assessment year 2006-07 - The assessee has spent more than 5% of the income for religious purpose - The observation/ note said to be made by the Commissioner who was holding additional charge on 17-10-2012 is contrary to the materials available on record - The assessee is not entitled for approval u/s 80G(5)(vi) of the Act. The Tribunal is of the opinion that the High Court directed the Commissioner to pass order either by granting or rejecting approval under Rule 11AA(4) or 11AA(5) of the Income-tax Rules, 1962 - Since it is a remanded matter by the High Court and direction to pass order after verifying the books of account, this Tribunal is of the considered opinion that the limitation prescribed under rule 11AA(6) shall not be applicable - The consequence of not passing the order within the prescribed time was not provided in the Act – The approval was not granted – Decided against assessee.
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2014 (1) TMI 603
Cost of improvement - Held that:- The original construction was made in 1991-92, therefore, the assessee would have spent considerable amount during the assessment year 2006-07 atleast for maintenance of the building, if not for improvement - The Tribunal is of the considered opinion that this amount of Rs.3.5 lakhs shall be taken as cost of improvement - When the assessee borrowed loan and it was used for improvement or maintenance of the building it cannot be said that the assessee could not have used the funds merely because housing loan was not borrowed - The assessee could have invested the funds due to passage of time after the construction, rejecting the claim of the assessee in toto is not justified - Decided in favour of assessee. Undisclosed sales consideration - Held that:- The assessee admitted the receipt of Rs.9 lakhs over and above the sale consideration disclosed in the sale deed - The assessing officer has also found that this Rs.9 lakhs was credited in the account of the assessee's wife Smt. K.S. Beena - Since the amount was received by cheque and it was credited in the name of the assessee's wife Smt. K.S. Beena and the same was also admitted by the assessee by a letter dated 18-09-2009, the CIT(A) was justified in making addition - Decided against assessee. Exemption u/s 54EC - Held that:- Following Jagriti Agarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] - After referring to sub clause (2) of section 54 and section 139(1) of the Act, the Punjab & Haryana High Court found that sub section 139(4) provides the extended period of limitation for filing of return of income which is an exception to sub section (1) of section 139 - Due date for furnishing of return of income as per section 139(1) is subject to extended period provided u/s 139(4) of the Act - In view of section 54 of the Act it is obvious that if the assessee could not utilize the amount within one year either for purchase of a new asset or for construction of a new asset, the capital gain shall be deposited in the appropriate account before the due date for filing of return of income u/s 139(1). Following Prakash Nath Khanna & Ors vs CIT & another [2004 (2) TMI 3 - SUPREME Court] - While interpreting section 139(1), 139(2) and 139(4) of the Act, the Apex Court found that due date certainly mean due date as prescribed in sub section (1) of section 139 -The time within which the return is to be furnished is indicated only in sub-section (1) of section 139 and not in sub-section (4) of section 139 - Even if a return is filed in terms of sub-section (4) of section 139 that would not dilute the infraction in not furnishing the return in due time as prescribed under sub-section (1) of section 139 - Otherwise, the use of the expression "in due time" would lose its relevance and it cannot be said that the said expression was used without any purpose - This judgment of the Apex Court was not brought to the notice of the CIT(A) as well as the assessing officer – The issue was restored for fresh adjudication.
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2014 (1) TMI 602
Rejection of registration u/s 12AA - Held that:- Following Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharmamsey Kakoo Charitable & Religious Trust [1967 (9) TMI 26 - BOMBAY High Court] - There is no basis for distinction drawn by the Tribunal between a religious purpose so far as personal law of the settler is concerned and a religious purpose within the meaning of Income-tax Act - The High Court found that income of the trust arising from the scheme of the management was exempt u/s 4(3)(i) of the Act. The assessee mainly contends that death anniversary of some of the personalities were observed and the philosophy of Sree Narayanan Guru was propagated among the general public - This contention of the assessee was not examined by the Commissioner - The Commissioner proceeded on the footing that the creation of the sangham itself was not established by producing necessary evidence - Even though the assessee claims that the sangam was registered with Registrar of Joint Stock Companies, the copy of the registration certificate was not produced before the Commissioner of Income-tax - The Commissioner of Income-tax doubted the very existence of the trust - This Tribunal is of the considered opinion that unless and until the assessee establishes the creation of the trust by producing necessary material it cannot claim any registration u/s 12AA of the Act - It is obligatory on the part of the assessee to produce necessary material for its existence in law - Giving one more opportunity to the assessee to produce necessary material to establish the creation of the trust may not prejudice the interest of the revenue in any way – The issue was restored to the CIT(A) for fresh adjudication.
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2014 (1) TMI 601
Eligibility for exemption u/s 54EC - taxability of advance - Held that:- Under section 2(47)(v), if the possession was handed over as part performance of the agreement, then, there is a "transfer" within the meaning of section 2(47) of the Income-tax Act, even though there may not be a "transfer" under the common law - The assessee, by her letter dated 26-12-2008 admits that as on 31-03-2006 she was the owner of the property - It is clear that the possession was not handed over on 01-02-2006 and it was handed over only on 16-06-2006 - The transfer of property took place only in the assessment year 2007-08 and not in 2006-07 Since it was an advance relatable to the capital asset it was not taken as income - This advance shall be adjusted when the property would be transferred and the capital gain computed - The advance could be adjusted against the purchase price when the transfer of the property is taken place, i.e. in the year under consideration. Section 54EC provides for exemption in respect of capital gain arising from transfer of a long term capital asset if the same was invested at any time within a period of six months after the date of transfer of the capital asset - The investment of Rs.20 lakhs was made in the financial year 2006-07, i.e. before the date of transfer - The lower authorities have rightly found that the assessee is not entitled for exemption u/s 54EC of the Act - Decided against assessee. Improvement cost - Held that:- The power of the CIT(A) is co-terminus with that of the assessing officer, therefore, the powers exercisable by the assessing officer can also be exercised by the CIT(A) - The CIT(A) restricted the cost of improvement to Rs.5 lakhs instead of Rs.10 lakhs allowed by the assessing officer - When the income of the assessee is increased, he has to give a notice of enhancement and seek the comments / response from the assessee as required u/s 251(2) of the Income-tax Act - The Tribunal is of the considered opinion that the CIT(A) is not justified in increasing the income by restricting the cost of improvement without issuing a notice of enhancement. However, this is a rectifiable defect - The issue is set aside for fresh adjudication.
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2014 (1) TMI 600
Block assessment - Undisclosed income for the period 1.4.92 to 31.3.93 - Held that:- The assessee has expressed its inability to produce the original books of accounts - The Tribunal is unable to test the correctness of income returned for regular assessment against the income to be determined from the estimated turnover - The responsibility to show that the income or turnover found in the seized records was already been accounted for or disclosed shall lie upon the assessee - The seized records pertained to Narakkal range consisting of 50 shops - The AO has determined the turnover for all the 110 shops on the basis of turnover noticed in the seized record pertaining to 50 shops falling in Narakkal range for 3-1/2 months - It is not correct to estimate the turnover and income for the entire 110 shops falling in three ranges, when the seized record pertained to only one range consisting of 50 shops - The Ld CIT(A) has determined the whole year's turnover for Narakkal range at Rs.1.00 crore. Since the revenue did not file any appeal against the order of Ld CIT(A), the turnover so determined by him has attained finality - The undisclosed income has to be estimated on Rs.57 lakhs - The AO has adopted the net profit rate at 5% in the succedding year - In order to maintain consistency, the net profit rate may be adopted at 5% in this year also - The undisclosed income calculated @ 5% on the suppressed turnover of Rs.57.00 lakhs shall work out to Rs.2.85 lakhs - The order of CIT(A) has been set aside - Decided against assessee. Undisclosed income for the period 01.4.93 to 31.3.94 - Held that:- In this year, the assessee has not maintained books of account and hence it has offered income on estimated basis during the course of regular assessment proceedings also - In the absence of regular books of accounts, the AO was justified in taking the aggregate amount of collections as the turnover of the assessee and estimating income thereon - The assessing officer has given set off of proportionate amount relatable to the 50 shops falling in Narakkal range while arriving at the undisclosed income of the assessee for this year - Decided against assessee.
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2014 (1) TMI 599
Whether depreciation on assets claimed as application of income be treated as double deduction - Held that:- The assessee has filed revised depreciation workings and revised memo of total income, wherein they have claimed depreciation only on those assets, the cost of which were not claimed as deduction as application of income - The assessing officer has not examined the said submissions made by the assessees - Following M/s Lissie Medical Insitution [2010 (10) TMI 667 - ITAT, COCHIN] - Depreciation is admissible on those assets, the cost of which was not claimed as deduction as application of income - The issue has been restored for fresh examination. Quantum of application of income - Held that:- The AO has simply allowed the deduction of Rs.27,80,774/- and did not discuss anything about the reasons for rejecting the claim of the assessee in respect of the balance amount - The AO has not considered the revised computation filed by the assessee - The issue has been restored for fresh examination.
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2014 (1) TMI 598
Whether order passed by the AO u/s 143(3) r.w.s 158BC and r.w.s 264 is sustainable in law as the AO did not take prior approval of the Additional CIT – Held that:- The learned DR has produced the copy of the approval and it is seen there from that the relevant approval as required u/s 158BG has been obtained - The legal ground raised by the assessee does not survive – Decided against assessee. Whether any incriminating material was found during the course of search for initiating proceedings u/s 158BC – Held that:- It was found that the assessee was not maintaining proper books of accounts and has not disclosed the correct income - For invoking the jurisdiction u/s 158BC of the IT Act, there should have been a search conducted u/s 132 or books of account and other documents or assets should have been requisitioned u/s 132A - The AO should be satisfied that the assessee has not or would not disclose its correct income but for the search - The assessee has not only not maintained proper books of accounts but has also during the course of search in the sworn statement admitted to not disclosing the proper and correct income - The AO has rightly invoked the jurisdiction u/s 158BC of the Income-tax Act – Decided against assessee. Whether the cash deposits recorded by the assessee in its books of accounts could be treated as undisclosed income u/s. 158B(b) – Held that:- Following CIT Vs. J.M.D International [2008 (9) TMI 880 - DELHI HIGH COURT] - The assessee has claimed to have maintained regular books of accounts and filed returns regularly reflecting the income but the AO has not examined this claim of the assessee - If the receipts were reflected in the regular returns of the relevant assessment years falling in the block period, then they cannot be considered as undisclosed income of the assessee for the block period - The assessee has failed to file any documents in support of its claim of filing returns regularly for the relevant assessment years - The entire receipts cannot be considered as the income of the assessee. If the assessee has not been able to prove the claim of expenditure, the AO ought to have allowed reasonable expenditure – The issue was set aside for fresh adjudication. Disallowance of expenses – Held that:- When the assessee makes a claim of expenditure, the burden is on the assessee to prove its claim with necessary evidence - The agreements of the assessee with the principles as well as the sub-contractors were seized during the course of search - The stand of the assessee has been that these documents were the evidence in proof of necessity to make the payments made by the assessee and were in the custody of the Assessing Officer - He was rightly prevented from furnishing necessary evidence before the AO in proof of the expenditure claimed by it is correct - If the assessee fails to prove its claim, the AO has to make the assessment on the basis of the material available with him - The view taken by the CIT(A) that the entire addition has to be deleted because the AO has not looked into the material available with him, is wrong - The income of the assessee not only constitutes the receipts but also the expenditure incurred by the assessee for earning those receipts – The issue was set aside for fresh adjudication.
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2014 (1) TMI 597
Depreciation as application of income – Held that:- Following ACIT vs. Shri Adichunchanagiri Shikshana Trust [2013 (11) TMI 123 - ITAT BANGALORE] - The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purpose of Trust - There is no double deduction - The assessee is entitled to the deduction of depreciation – Decided in favour of assessee. Exemption u/s 10(34) – Held that:- Following assessee's own case for AY 2006-2007 - The ld. CIT(A) held that even if the income is exempt, the same has to be included in the gross receipts and has to be applied as per provisions of section 11(1) because income has to be computed in commercial manner - The ld. CIT(A) has not adjudicated the issue properly and has not passed a reasoned order – The issue was restored for fresh adjudication in the light of decision in case of General Insurance Corporation of India vs. DCIT. Adjustment of carry forward of excess application of income of earlier years – Held that:- Following assessee's own case for AY 2006-2007 - The exemption u/s 11 in the earlier years was not claimed by the assessee and the returns are barred by limitation, therefore, the question of excess application does not arise – The Tribunal held that the issue requires fresh examination with a direction "to examine the matter, on merit, for eligibility to tax exemption as a result of the registration u/s 12AA now available to the assessee and in the light of the requisite audit report and other documents now filed by the assessee" - The assessments for the earlier assessment years are still pending – The issue was restored for fresh adjudication. Interest u/s 234D – Held that:- Following assessee's own case for AY 2006-2007 - As per Explanation 2 which has been inserted in section 234D by the Finance Act, 2012 with retrospective effect from 1.6.2003 - The provisions of sec.234D shall also apply to the assessment year commencing before the first day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date - The A.O. was justified in charging the interest u/s 234D of the Act – Decided against assessee.
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2014 (1) TMI 596
Addition on account of unexplained initial cash balance – Held that:- The matter remitted back to the AO for fresh adjudication to examine the availability of cash from earlier assessment years. Addition made on account of low withdrawals – Held that:- The AO is directed to restrict the addition to 50% on account of low withdrawals - Both the Assessing Officer and the CIT(A) have tabulated the withdrawals made by the assessee and his family members - there is some difference in each of the tabulation - AT the same time, the assessee also could not bring any material on record to show that the withdrawals made by him and his family members are sufficient to meet the domestic expenses – Decided partly in favour of Assessee.
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2014 (1) TMI 595
Deletion of disallowance u/s 10(33) of the Act - Eligibility for exemption - Disallowance as interest expenditure – Expenses incurred for earning dividend on shares - Nexus between tax free income and interest bearing funds – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed - the investments are made by the assessee form its own funds - The Hon'ble High Court of Judicature at Mumbai has upheld the order of the ITAT on the ground that the finding of fact that the investments were made out of assessee's own funds was not challenged – even revenue could not furnish any evidence to show that interest bearing funds were utilised for the purpose of making investments to earn tax free income – Decided against Revenue. Deletion made in respect of guarantee commission – Held that:- The Bench called upon the assessee to furnish the agreements which gave rise to commission in the year under consideration, i.e. for A.Y. 2001-02 and also the agreements for subsequent two years so that it can be compared and if the conditions are the same the order or the Tribunal as well as the order of the Hon'ble High Court can be followed - Copies of the agreements were not immediately available with both the parties – Matter remitted back to the AO to verify the agreements – Decided partly in favour of Assessee. Applicability of Rate of Tax to domestic companies – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed – with the insertion of explanation in section 90 with retrospective effect from 01.04.1962 the matter decided in favour of Revenue and against the assessee. Interest paid to head office/overseas branches – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed - interest paid to the head office of the assessee bank as well as its overseas branches by the Indian branch cannot be taxed in India being payment to self which does not give rise to income that is taxable in India as per the domestic law or even as per the relevant 'tax treaty' – Decided in favour of Assessee.
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2014 (1) TMI 594
Deduction u/s 54/54F of the Act – construction of more then one unit / floor in a house - Held that:- Following Commissioner of Income Tax Versus Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT] - the assessee's claim for deduction u/s 54/54F of the Act in respect of the house/units in the first and second floors holding that they were separate and independent residential units having separate entrances and cannot be considered as one unit to enable the assessee to claim the deduction - The Tribunal expresses the view that the words 'a residential house' appearing in Section 54/54F of the Act cannot be construed to mean a single residential house since u/s 13(2) of the General Clauses Act, a singular includes plural - Section 54/54F uses the expression 'a residential house'. The expression used in not 'a residential unit' - A person may construct a house according to his plans and requirements - Most of the houses are constructed according to the needs and requirements and even compulsions - We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house - the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s - 54/54F - It is neither expressly nor by necessary implication prohibited – Decided in favour of Assessee. Non-monetary consideration – Cost Indexation Index – Held that:- Following Commissioner of Income Tax Versus Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT] - Non-monetary consideration have to be taken as consideration towards purchase of property – and in Commissioner of Income-tax Versus Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] it was held that the benefit of indexation shall be available from the year when previous owner first acquired it. If expression "held by assessee" interpreted differently to give benefit of indexation from the period when assessee acquired it, would defeat the purpose of statute. If the object of the legislature is to tax the gains arising on transfer of a capital acquired under a gift or will by including the period for which the said asset was held by the previous owner in determining the period for which the said asset was held by the assessee, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee – Decided in favour of Assessee and against Revenue.
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2014 (1) TMI 593
Allowability of expense - Commencement of business - Addition of Additional Evidences under Rule 29 of Income-tax (Appellate Tribunal) Rules – Held that:- Additional evidences are admitted relying on Commissioner Of Income-Tax Versus Kum. Satya Setia [1982 (4) TMI 22 - MADHYA PRADESH High Court]. The assessee's business commenced from 1994-95 itself which was followed by a lull in the intervening periods. This does not mean cessation of the assessee's business, in view of the above facts. In any case, looking from any angle, it has to be held that the assessee's business of consultancy was set up in this year as substantial revenue is earned in the next 2 years. Therefore, we are inclined to allow the claim of the assessee by holding that the assessee's business was commenced and alternatively relying on the setting up of business as held in the cases of Hughes Escorts Communications Ltd. [2007 (9) TMI 261 - DELHI HIGH COURT] and Whirlpool of India Ltd. [2009 (8) TMI 28 - DELHI HIGH COURT]. Allowability of Expenditure – Amount of Returns allowed as business expenditure or not – Held that:- Not returning the amount to the Government would have cost the assessee its business prospectus and its title over the business by way of withdrawing the joint venture, etc. - the assessee in order to protect its business interest and business propriety refunded the amount which can be termed as compensation, return ; interest or by whatever name - Its accrual, crystallisation and finalisation is relatable to this year - the amount of return is allowable to the assessee in this year as business expenditure - the assessee's business has already commenced the entire amount paid to M/s. Wilbur Smith Associates is to be allowed to the assessee being professional fee for consultancy services – Decided in favour of Assessee.
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2014 (1) TMI 592
Disallowance of labour expenses and cartage expenses - Books of accounts rejected – Held that:- What a person does in a particular month need not follow in all other months as well - Enquiries on Cartage expenses seems vague local enquiries, even if these inquiries actually took place, were neither place on record or confronted to the assessee - there is a direct confirmation from Amul which is on record and this confirmation is contrary to the local enquiries - There may not have been any cartage expenses in the last year because there may not have been any such work in the last year, but that fact alone cannot lead to the conclusion that all cartage bill are fake or highly inflated - It is unreasonable to accept the assessee to produce for verification the persons who did all this work for him - Once the books are rejected, the Assessing Officer may as well have examined the reasonableness of profits of the assessee and pointed out how the profits of the assessee are lesser than the normal profits in that line of business but that exercise has also not been carried out. On one hand, the Assessing Officer has rejected the books of account, and on the other hand, the Assessing Officer has adopted the same book results and disallowed the expenses on estimate basis from the book results – the order for disallowance set aside, which are made by improperly rejecting the books of account and adopting some hypothetical computations about labour work and proceedings on the basis of surmises and conjectures – decided in favour of Assessee.
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2014 (1) TMI 591
Validity of Revisionary order u/s 263 of the Act – Entitlement for Additional Depreciation - Conditions prescribed u/s 32(i)(ii) of the Act – Held that:- Section 32(1)(iia) was inserted by Finance Act, 2005 to grant further incentive, if any machinery etc was acquired and installed after 31st March, 2005 - It is to be seen that machinery on which assessee become eligible for additional depreciation was required not only to be acquired but also installed after a particular date i.e. 31.3.2005 - between the words acquired and installed, the conjunction used is 'and' and not 'or' which means both the conditions i.e. acquisition and installation has to take place after the specific date for getting eligibility to additional depreciation - The machine was acquired after this date which is in any case after 31.3.2005 - From the Octroi receipt and bill of entry for showing date of entry of goods in the country by the Customs Department makes it clear that machine could be installed only after that date i.e. 11.4.2005 - the assessee has acquired and installed the machinery after 31.3.2005 – Thus, entitled to additional depreciation as per provisions section 32(1)(iia) of the Act – revisionary order quashed – Decided in favour of Assessee.
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2014 (1) TMI 590
Demand of Interest u/s 201(1A) of the Act – Belated payment of TDS made – Held that:- The amount was deposited in a separate bank account as directed by the competent jurisdictional High Court - The assessee having acted under the court order, the Ld CIT(A) has rightly deleted the interest – Decided against Revenue
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2014 (1) TMI 589
Nature of Expenses – Revenue OR Capital Expenditure – Replacement of Machinery – Held that:- Machinery has been replaced by the assessee to bring latest technology and for improving the efficiency of the plant and machinery - The replacement of machinery has resulted in increase in productivity as well as profits - Following CIT Vs. M/s. Mangayarkarasi Mills P.Ltd. [2009 (7) TMI 17 - SUPREME COURT] - expenditure incurred on replacement of machinery as capital expenditure - such expenditure is not allowable as revenue expenditure under the provisions of Sec.37 of the Act – Decided against Assessee. Levy of Interest u/s 220(2) of the Act – Held that:- Following M/s PRECOT MERIDIAN LTD [2014 (1) TMI 104 - ITAT CHENNAI] - The period specified under section 220(1) has to be taken into consideration from the date of passing of the fresh assessment order and not the earlier assessment order, which has been set aside – decided in favour of Assessee. Interest u/s 234B and 234C of the Act – Held that:- The interest u/s 234B and 234C is mandatory in nature - The interest is charged for contravening the provisions of the Act i.e. non-payment of advance tax within the stipulated time – there was no infirmity in the order of CIT(A) – Decided against Assessee.
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2014 (1) TMI 588
Computation of deduction u/s 80HHC of the Act – Reduction of 90% of miscellaneous income – Income treated as non-operational business income - Held that :- miscellaneous income consist mainly of scrap sales, sales tax refund and discount - Nowhere it is mentioned that exchange gain is also included - Be that as it may, if there is any exchange gain involved the assessee is entitled for deduction under section 80HHC - the Assessing Officer was directed not to reduce 90% of Miscellaneous income from the eligible business profits for the purpose of computation of deduction u/s 80HHC - Decided against Revenue. Allowability of Expenses – Bad debts u/s 36(i)(vii) r.w. 36(2) of the Act OR business loss u/s 37(1) of the Act – Held that:- The assessee has not written off the amount as bad debt but has claimed loss on assignment due to transfer of the debtors by a deed of assignment - for claiming the bad debt as allowable under the provisions of the Income Tax Act the same must be written off in conformity with the provisions of the Income Tax Ac - By transferring the debt to Mahindra & Mahindra Ltd., the assessee has lost the ownership over the debts - the assessee has made the provisions of section 41(4) redundant - the assessee has not shown any income on account of recovery of part of such debt since the assessee has assigned the debts to Mahindra & Mahindra. It is not the business of the assessee to assign debts - the assessee, i.e. the assignor has undertaken to collect the debts on behalf of the assignee and has remitted the same periodically - The submission of the assessee that M/s. Mahindra & Mahindra Ltd. has paid tax on the debts so recovered and therefore taxing the same in the hands of the assessee amount to double taxation is without any merit – Thus, the contention of the assessee that amount of Rs.1,34,99,999/- should be allowed either as a bad debt or a business loss cannot be accepted - the assessee has adopted a colourable device to compensate Mahindra & Mahindra for the surrender of their 51% shareholding and therefore this is a capital expenditure – Decided against Assessee. Nature of Expenses – Capital OR Revenue expenditure – Expenses paid for use of trade name – Expenses treated as payment made for purchase of goodwill – Depreciation not allowed on these expenditure – Held that:- There is no dispute to the fact that the assessee has incurred expenditure of Rs.75 lakhs being one time licence fee paid to the owner for granting to the user, the licence to continue to use the trade mark as per the name licence agreement dated 18-07-2002 - the assessee treated the same as Revenue expenditure in the books - Assessee contended that the entire amount should be allowed as Revenue expenditure – the decision given in CIT Vs. SMIFS Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] followed - goodwill under Explanation 3(b) of section 31(2) of the Act is eligible for depreciation - Thus, the order of the CIT(A) set aside and the matter remitted back to the AO to allow depreciation on the goodwill – Decided in favour of Assessee. Disallowance of Prepaid charges – Charges paid in respect of debentures issued – Held that:- Decision of the SC in CIT Vs. Ashok Leyland Ltd. [1972 (10) TMI 1 - SUPREME Court] followed - The amount incurred by the assessee being prepayment charges paid in respect of debentures issued are expenses incurred for the purpose of business and the same is an allowable expenditure – Decided in favour of Assessee.
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2014 (1) TMI 587
Addition made towards low withdrawals – Withdrawals made for domestic expenses – Held that:- The tax authorities have estimated the amount of addition, uniformly at ₹ 40,000/- in all the years - the tax authorities have not given any basis for arriving at the figure of ₹ 40,000 - Both the assessing officer and the learned CIT(A) have tabulated the withdrawals made by the assessee and his family members and we notice that there is some difference in each of the tabulation - the assessee also could not bring any material on record to show that the withdrawals made by him and his family members are sufficient to meet the domestic expenses - the assessing officer directed to restrict the addition 50% of the additions made by the assessing officer – Decided partly in favour of Assessee.
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Customs
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2014 (1) TMI 586
Conviction under NDPS Act - Search and seizure of Contraband article - Non fulfillment of requirement u/s 42 - Trial Court sustained conviction - Held that:- appellant was arrested by the raiding party with contraband article though was arrested from a public place but they were having a wireless set with them but they did not make any effort even to partially comply with the mandatory provisions of Section 42 of Act appears to be correct as from the evidence of the P.W. 1 and P.W. 2 it is apparent that they had admitted before the trial court in their evidence that they did not inform the superior officers about the arrest of the appellant with contraband article nor they even tried to incorporate the same in the G.D. of the concerned police station when they had reached with the appellant along with the recovered article at the concerned police station. The instant case appears to be a case of totally non compliance of the mandatory provisions of Section 42 of the Act. In a prosecution relating to the NDPS Act, the question as to how and where the samples had been stored or as to whom they had been dispatched or received in the laboratory is a matter of great importance on account of the huge penalty involved in these matters. Thus on that count also the conviction of the appellant by the trial court is not sustainable in the eyes of law - From the record it is further evident that the alleged sample did not bear any signature or thumb impression of the appellant and the offence under the N.D.P.S. Act is a technical offence and the safeguard in the enactment requires strict compliance. Failure, in the evidence by the prosecution witnesses, to show that when the sample were taken from the same contraband article creates doubt on the authenticity of the prosecution case. In this connection the absence of signature of the accused on the sealed bag raises doubt about the recovery of contraband article from the possession of the appellant. 29 packets have been recovered from a white bag with which the appellant was found sitting and the appellant has stated the contraband article weighed about 25 Kgs. Charas but P.W.1, who had made the arrest and seizure of the appellant did not weighed the contraband article recovered from him and only on the statement of appellant it was believed to be 25 Kgs. Charas and no actual weight was taken by P.W.1 which further creates doubt whether the alleged contraband article was the same which was recovered from the possession of the appellant and sent to chemical analysis - it is apparent that the recovery of the contraband article from the possession of the appellant appears to be doubtful and the prosecution has not proved its case beyond reasonable doubt against the appellant proving the recovery against him in strict compliance of the provisions of N.D.P.S. Act, hence his conviction and sentence by the trial court is not sustainable in the eyes of law - Decided in favour of appellant.
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2014 (1) TMI 585
Prohibition on export of rice under tripartite agreements - Debarring of company - Duration of debarring - Held that:- no duration of the debarring of the petitioner has been fixed in the said order, meaning thereby that it has the effect of permanent black listing/debarring of the petitioner - debarment is never permanent and the period of debarment invariably depends upon the nature of the offence committed by the erring contractor - orders debarring the petitioners from all future transactions with MMTC, STC and PEC will remain in force only for a period of four years commencing 10.11.2010, meaning thereby that the aforesaid order shall come to an end on 09.11.2014 - Following decision of M/s Kulja Industries Limited Versus Chief Gen. Manager WT. Proj. BSNL & Others [2013 (10) TMI 733 - SUPREME COURT] - Decided partly in favour of petitioner.
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2014 (1) TMI 584
Import of Non-radial Bias Tyres, Tubes and Flaps - Imposition of anti-dumping duty - Interest under Section 28AB - Notification No. 106/2006-Cus., dated 9-10-2006 - Held that:- if the anti-dumping duty imposed by the Central Government on the basis of final findings is higher than the provisional duty already imposed and collected, the differential duty shall not be collected from the importer. Final price is higher than the provisional price and the differential duty shall not be collected from the importer - Stay granted.
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2014 (1) TMI 583
Stay application - Prohibition to transact business - Two employees of the appellant who are ‘H’ Card holders and working for the assessee Custom House Agent indulged in illegal export of Red Sanders - Whether decision passed by Commissioner administrative or appealable order - Held that:- unable to appreciate how a decision which was an administrative decision earlier becomes an appealable order just because of another order is passed in terms of the directions of the Hon’ble High Court requiring the Commissioner to consider the representation giving opportunity to the appellant to present their case and to pass an order. Under these circumstances, I am unable to consider the stay application, since the appeal itself in not maintainable - Decided against assessee.
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2014 (1) TMI 582
Stay application - Duty demand - Denial of the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 - Held that:- EPCH certificate stands obtained on wrong representation of facts. As such, the lower authorities by denying the benefit of notification on the above ground, has confirmed the demand and imposed penalty. At this prima facie stage, we do not agree with the reasoning adopted by the lower authorities. Once EPCH certificate stands produced by the appellant, the Revenue was not having jurisdiction to question the correctness of the same and the benefit of notification has to be extended. As such, at this prima facie stage, we are of the view that the applicant has been able to make out a good case in their favour so as to allow the stay petition - Stay denied.
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2014 (1) TMI 581
Duty claim under Duty Entitlement Passbook Scheme - Benefit of Notification No. 94/96-Cus., dated 16-12-1996 - Limitation of reimport of goods - Export of consignment of handicraft items - Held that:- DEPB benefit do not stand extended by the Revenue. It is only in the Shipping Bill that the appellant sought to export the goods under the said scheme. In fact, when we compare S. No. 1 of the notification with S. No. 2(a), we find distinction between the two can be easily noticed, Whereas S. No. 1 relates to goods exported under “no claim for drawback or rebate, under S. No. 2(a) talks of goods exported under DEPB scheme. As such, by comparing the two Serial Numbers, it can be fairly concluded that while S. No. 1 is applicable to the goods exported under claim for draw back etc. S. No. 2(a) takes it into ambit the goods actually exported under DEPB scheme and not under claim of DEPB scheme. In the present case, the goods stand exported under claim of DEPB scheme and not actually under DEPB scheme. As such, we hold that the export is not covered under S. No. 2(a) of the notification in which case, the same would be covered under S. No. 3 which allow reimport of the goods at nil rate of duty. The proviso (a) to the notification laying down the condition that reimport of the goods exported under DEPB scheme should be within one year of export is thus not applicable to the present reimport of the exported goods Exports were made by the appellants under the claim of DEPB benefit but no such benefit stand extended to the appellant at the time of export. It is the appellants contention that inasmuch as the DEPB benefits were not extended to them, it cannot be held that the goods were exported under the DEPB scheme. Merely because the claim of DEPB was made which were not extended to them on the ground that certain conditions did not stand fulfilled by them, it cannot be held that exports were under the DEPB claim. In such a scenario, the limitation of one year for reimport of the goods would not be applicable - appellants are entitled to the benefit of notification in question - Decided in favour of assessee.
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Corporate Laws
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2014 (1) TMI 580
Quashing of proceeding u/s 482 Cr.P.C. - Proceedings initiated u/s 138 of the Negotiable instruments Act - Absence of basic ingredients of offence punishable under Sections 138 - High Court refused to quash proceeding - whether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused - Held that:- words “as well as the company” appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof - for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. Cheque has been issued on behalf of M/s. Som Distilleries & Breweries Limited and the appellants are Managing Director and Directors of another company, namely, M/s. Som Distilleries Limited, having no connection with the company issued the cheque - Decided in favour of appellant.
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Service Tax
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2014 (1) TMI 622
Stay application - Reversal of CENVAT Credit - Held that:- Assessee have been maintaining separate accounts for input services attributable to taxable services and exempted services and for the common input services, and that they have reversed the credit amount attributable to exempted services and such reversal should be sufficient for admission of appeal stay has been granted in the earlier case. Hence we waive the requirement of pre-deposit of dues arising from the impugned order for admission of appeal and there shall be stay of collection of dues arising from the impugned order during pendency of appeal - Stay granted.
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2014 (1) TMI 618
Stay granted - Maintenance and Repair Services - Held that:- applicant has not shown the value of material consumed in the retreading process in the invoices separately and therefore they are liable to pay duty on gross amount and not entitled to benefit of exemption under Notification No.12/03. Hence, applicant failed to make out a case for waiver of entire amount of tax along with interest and penalty. Therefore, we direct the applicant to deposit within 6 weeks. Upon such deposit, predeposit of balance tax along with interest and penalty would be waived and recovery thereof stayed during pendency of appeal - Prima facie case not in favour of assessee - Stay granted partly.
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2014 (1) TMI 617
Demand of service tax - Free service provided during the warranty period - Held that:- The entire dispute arises out of the fact that this service being provided is commonly referred to in this industry as free service. This is not free service at all. This is rendered at a cost both for the services and for the parts which are paid by the manufacturer to the appellant. However, the owner of vehicle is one of the beneficiaries of the activity. The vehicle manufacturer is also a beneficiary because such services enhances his brand value and the reputation of his goods and customer satisfaction which helps in further business. So the manufacturer pays for it and naturally it is a service provided to the manufacturer of vehicles. Similarly the person who pays for the parts is the person to whom goods are sold. Therefore, we are of the view that there is sale of goods in this case and the benefit of exemption notification No.12/03-ST dt. 20.6.2003 is prima facie available to the applicant - Stay granted.
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2014 (1) TMI 616
Demand of service tax - Imposition of penalties under Section 76, 77 and 78 - Service tax on the entire value of spare parts sold - Held that:- It would appear that even in a case of composite transaction involving sale of goods and rendering of service, if the bill/invoices issued clearly shows payment of sales tax/VAT on the spare parts, then the value of such spare parts would not be includable in the gross consideration received for rendering of service. The Commissioner has not considered these submissions made by the appellant and also the clarifications issued on the matter. Therefore, we are of the considered view that the mater has to go back to the adjudicating authority for fresh consideration. First of all, all the transactions involving only sale of spare parts should be excluded for the purpose of computation of service tax demand. Secondly, even in a case where the transaction involves both sale of spare parts and also rendering of service, the value of sale of spare parts should be excluded if sales tax/VAT liability has been discharged on such sales as is evident from the invoices/bills issued in this regard - Decided in favour of assessee by way of remand.
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2014 (1) TMI 615
Denial of cenvat credit of CHA services - Waiver of Pre-deposits – Held that:- Assessee contended that the place of removal is Port and they are taking cenvat credit of the service tax paid on the services used upto the port - Following M/s MTR Foods Ltd. Bangalore. Versus The Commissioner of Central Excise, [2011 (1) TMI 143 - CESTAT, BANGALORE] - Activities relating to business are covered by the definition of input service – pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 614
Denial of credit of service tax – Tax paid on input service used in or in relation to the generation of electricity in a captive power plant – Waiver of Pre-deposit – Held that:- The adjudicating authority denied the credit in respect of service tax paid on the taxable services which are used in or in relation to generation of electricity - Part of such electricity was sold outside the factory - The applicants are availing proportionate credit in respect of the service tax paid on the taxable services which are used in or in relation to manufacture of goods - the applicants are availing only proportionate credit in respect of the taxable services which are used in or in relation to generation of electricity which is, further used in the manufacture of excisable goods – thus, the applicants made out a prima facie case for waiver of pre-deposit – pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 613
Waiver of pre deposit - Stay of recovery - Management or Business Consultancy Service - Demand under reverse charge mechanism - Taxability of legal services - Held that:- No good reason to hold that these invoices were raised by Management Consultant. Prima facie, the description of services given in these invoices can squarely fit in the definition of legal services . By and large, under cover of these invoices, appellant was receiving services such as due diligence in respect of corporate entities considered for mergers/acquisitions, framing of terms and conditions of various agreements, conveyancing and the like. Prima facie, these services cannot be considered to be services in the nature of advice or consultancy in relation to financial management of the appellant - Following decision of Sobha Developers Ltd. Vs Commissioner of Central Excise, Bangalore [2010 (7) TMI 597 - CESTAT, BANGALORE] - Stay granted.
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2014 (1) TMI 612
Availment of CENVAT credit of service tax - Input service Distributor (ISD) – Waiver of Pre-deposit – Held that:- The service tax paid by ILTD and distributed to the factories relate to post threshing activities only has not been contradicted either by the Commissioner - the claim was made by the ITC Ltd. before the original authority and original authority has not got any verification done or has not contradicted this stand anywhere - In the absence of any evidence to show that credit distributed related to pre-threshing activities, the stand taken by the Revenue that the credit was not admissible therefore could not be distributed prima facie cannot be sustained - there is no evidence to show that ILTD is not a division of ITC Ltd. - ILTD can be considered a branch or an office of the manufacturer in terms of definition of Input Service Distributor - Prima facie, service tax credit would be admissible since the service relates to procurement of inputs which is one of the activities entered by definition of service tax - the appellant has made out a prima facie case in their favour – Pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 611
Penalty u/s 76 - Delay in payment of service tax on repeated occassion - Held that:- According to proviso to sub-section 73(3) of Finance Act, 1994 if an assessee pays service tax with interest on the basis of ascertainment of a Central Excise Officer or on his own ascertainment and inform the department of such payment, no show-cause notice shall be issued unless the short payment has occurred because of suppression, fraud, willful mis-statement etc. for which separate provisions are available. In this case even though there have been several occasions on which there was delay in payment of Service Tax, in all such cases, Service Tax was paid with interest and there is no dispute that payment was made before the issue of show-cause notice. Section 73(3) of Finance Act does not differentiate between a habitual defaulter and a non-habitual defaulter. Therefore the issue is squarely covered by the statutory provisions and hence the impugned order cannot be faulted - Decided against Revenue.
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2014 (1) TMI 610
Disallowance of CENVAT Credit - Imposition of penalty - Nexus with input service and manufacture - Held that:- credit could be availed on the tax paid on the input service, as long as the manufacturer could demonstrate that the advertisement services availed had an effect or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. Once the cost incurred by the service had to be added to the cost, and was so assessed, it was recognition by Revenue of the advertisement services having a connection with the manufacture of the final product. This test would also apply in the case of sales promotion. We find that this observation on the link with the assessable value of the final product was incidental in the facts of that case and that the language of the definition and the reading of their lordships do not find such a requirement for services to qualify as input services. It would, therefore, appear that all services which constitute activities related to business need not have a nexus with manufacture - issues involved are complex and do not lend themselves to one clear interpretation - Therefore, penalties are set aside - Other matter remitted back to Commissioner - Decided partly in favour of assessee.
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2014 (1) TMI 609
Computation of Small Service provider exemption upto 10 lakhs - Benefit of notification No. 1/2006 ST dated 1.3.06 - Whether the 60% abatement of the total value received by assessee is required to be included while computing the aggregate value of the services or not - Held that:- Preamble of the notification is to the effect that same exempts the taxable services of description specified in volume 3 of the table to the extent shown in corresponding entry in column 4 of the said table. Inasmuch as the notification in question uses the expression exemption, we at this prima facie stage, agree with the learned advocate that exempted part of the services should not be taken into account while computing the total value of the services for the purpose of falling under the SSI notification. We accordingly grant waiver of pre-deposit of and stay the recovery thereof - Decided in favour of assessee.
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Central Excise
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2014 (1) TMI 579
Eligibility for availment of benefit of Notification No. 30/2004 - Waiver of pre-deposit – Personal Penalty – Held that:- The appellant, after opting for the benefit of Notification No. 30/2004, has not availed any cenvat credit on the inputs which are utilised for such products which are cleared by them under exemption Notification No. 30/2004-CE - If that be so, the entire show cause notice which seeks to demand of duty for non-compliance of the conditions, seems to be misconstrued as there is no condition which has not been complied with by the assessee – The appellants have made out a strong prima facie case in their favour – pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 578
Invoices issued in the name of head office – No distribution of service as Input Service Distributor – Waiver of pre-deposit – Held that:- The services for which the invoices are raised, are the services mostly received in the manufacturing unit and where the credit has been raised and that they have made the payments of such services from the factory account - if the services are received at the factory where the credit is raised and payment is made, mentioning of head office in the service provider’s invoice, being a rectifiable mistake, which can be pardoned – Following Valco Industries Ltd. Versus CCE [2012 (12) TMI 30 - CESTAT, New Delhi] - Prima facie, the appellant has made out a strong prima facie case for the waiver of pre-deposit of amounts – stay granted.
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2014 (1) TMI 577
Modification of stay order – 50% amount ordered to be made – Held that:- The appellant’s contention as made in their appeal memo at the time of hearing have been considered - just on the ground of financial difficulty, the requirement of pre-deposit cannot be waived as revenue’s interest have also to be safeguarded - the pre-deposit is only of 50% of the duty demand – there is no ground for modification of the stay order – Thus, the appellants are directed to deposit the amount within the prescribed time – Decided against Assessee.
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2014 (1) TMI 576
Modification of stay order – Revenue was of the view that the stay is in respect of limited amount and not an unconditional stay – Held that:- The understanding of the Superintendent as reflected in the letter is not appropriate and the stay order is for the entire amount involved in the order - The Tribunal has passed a detailed order and has already considered the effect of Larger Bench decision and inasmuch as, there is a subsequent judgement of the Hon’ble High Court – there was no justifiable reasons to recall the stay order and to vacate the stay – Decided against Revenue.
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2014 (1) TMI 575
Rectification of Order – Held that:- There was two factual errors pointed out by the appellant in Final Order - interest on receivables was held to be includible in the assessable value of the goods - – Following Government of India Vs. Madras Rubber Factory [1995 (5) TMI 28 - SUPREME COURT OF INDIA] - Final Order was in favour of the department, the same was accepted - the question of the department filing an appeal against the said Final Order did not arise - the second sentence of para 3 need to be rectified - the conclusion recorded in para 4 of Final Order in favour of the respondent cannot be rectified.
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2014 (1) TMI 574
Classification of Zircon Ore/Concentrate – Held that:- Following CLASSIC MICROTECH PVT. LTD. Versus COMMISSIONER OF CUS.. AHMEDABAD [2013 (1) TMI 469 - CESTAT, AHMEDABAD] - the goods imported by the appellant are eligible for the benefit of Notification No. 4/2006-CE as the goods which are imported are nothing but Zirconium Ore – Decided against Assessee.
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2014 (1) TMI 573
Activity manufacture or not - Fabrication and manufacture of various articles of iron - Waiver of Pre-deposit - Held that:- Following Mahindra & Mahindra Ltd. vs. CCE, Aurangabad, Chandigarh, Kanpur & Chennai [2005 (11) TMI 103 - CESTAT, NEW DELHI] - Prior to the Mahindra & Mahindra Ltd. case, the issue of excisability of fabrication of items were highly debatable and it has been decided in favour of the assessee - the applicant made an offer to deposit Rupees Fifteen Lakhs as pre-deposits which is accepted – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 572
Denial of Cenvat credit - Process amounts to manufacture or not - Zinga process to be done on TMT bars – Waiver of Pre-deposit – Held that:- The assessee had cleared TMT bars from Paharpur unit on payment of duty and CENVAT Credit was availed at their Dankuni unit - Prima facie, there was no merit in the department’s allegation that CENVAT Credit would not be admissible on TMT bars at their Dankuni unit, when subjected to ‘Zinga process’ and processed goods were cleared on payment of duty - the pre-deposit of CENVAT Credit waived till the disposal – Stay granted.
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2014 (1) TMI 571
Pre-deposits waived on numerous services – Held that:- Revenue contended that the subject matter of the decided appeal and the other pending appeal is a part of the subject matter of the present appeal - Whether this submission is correct will be examined at final hearing stage - Prima facie the assessee is able to prove a case in their favour - the stay application filed by the appellant gets rejected – Decided against Revenue.
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2014 (1) TMI 570
Excess Penalty of 100% imposed u/s 11AC – 25% penalty already paid – Held that:- Further deposit of penalty waived and the amount stayed till the disposal – Stay granted.
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CST, VAT & Sales Tax
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2014 (1) TMI 620
Denial of tax revision - Discrepancy in the turn-over reflected in the books of accounts and the actual stock - Imposition of penalty - Held that:- matter requires to be remanded back to the Deputy Commissioner for fresh consideration pursuant to the notice issued by him under Section 35 of the Act. We say so for the reason that the Deputy Commissioner in his order issued under Section 35 of the Act, inter alia, directed the appellant to show cause why the orders passed by the assessing authority, dated 27.11.1990 should not be revised. For multifarious reasons, the assessee could not file the reply in time - Deputy Commissioner ought to have given some more time to the appellant to file his reply and explain in detail as to why the order passed by the assessing authority should not be modified. The right to file a reply has been considered to be an indispensible facet of right to proper hearing. The maxim of audi alteram partem is an epitome of general principles governing fair hearing. The principle of fair hearing has two justiciable elements. In a case where huge tax liability is being imposed on an assessee, he has a right to file a reply and represent his case before the adjudicating authority. Should such sufficient opportunity not be afforded to the assessee, he would be deprived of his valuable right. In the facts of the instant case, sufficient time was not granted to the assessee by the Deputy Commissioner who had passed the ex-parte order, dated 27.7.1995 imposing a huge tax liability on the assessee and since the same is opposed to the principles of natural justice, in our considered opinion, the order of the Deputy Commissioner requires to be set aside - Therefore, High Court was not justified in allowing the revenue's revision petition - Decided in favour of assessee.
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2014 (1) TMI 619
Cancellation of eligibility certificate - Section 4A of the UPTT - Replacement of Directors - Held that:- The Directors were replaced and new Board of Directors was constituted as per the Company Act as observed by the Tribunal. When it is so, then there is no reason to interfere with the impugned order passed by the Tribunal - Decided against Revenue.
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Indian Laws
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2014 (1) TMI 605
Disciplinary proceedings against the member of ICAI - Stay of enquiry proceedings - Held that:- The respondents had in the minutes of the proceedings interpolated reasons for their order refusing the petitioners' application to stay the proceedings – The court has not express any views on this aspect - It would be open to the petitioners to raise these contentions in subsequent proceedings including in support of their contention that the same evidences bias - No purpose would have been served by further delaying the matter by remanding the matter to the respondents - At the petitioners' request, it is directed that the enquiry being conducted by the respondents shall not be proceeded with until and including 17.12.2013 – Decided in favour of petitioner.
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