TMI Tax Updates - e-Newsletter
January 14, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Contribution to education fund u/s section 63(1)(b) of the multistate co-operative societies act 2002 - application of income or diversion of income by overriding title - this amount paid during the year is not out of the profits of this year but profits of earlier year - deduction not allowed - AT
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Income Tax:
Delay in filing returns - power to condone - Claim of refund of the tax paid in excess - Taking a lenient view in the matter, and considering the fact that the petitioner is not a habitual offender - delay condoned - AO directed to process the return - HC
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Income Tax:
TDS u/s 195 - whether part of the consideration for purchases of plant, machinery or equipment can be attributed to the installation, commissioning or assembly of the plant and equipment, or any supervision activity - Held No - AT
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Income Tax:
Nature of Central Excise Duty Refund - refund under the sheme of the Union Government with regard to North Eastern State - the said receipts are capital receipts - AT
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Customs:
Restriction on Export of bullet proof jacket - appointment and the functions of the DGFT are as indicated in Section 6 of the FTDR Act and the DGFT is not authorized to interpret other commitments of the Central Government and issue circulars with respect thereto - export of bullet proof vests allowed - HC
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Service Tax:
CENVAT Credit on Input Service - quality control services was rendered outside India, outside the place of removal of excisable goods - credit allowed - AT
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Service Tax:
Commercial Training and Coaching Services - training to candidates who intent to become Insurance Agent - Training imparted by the appellants does not fall under the ambit of Section 65(27) of the Finance Act, 1994 as the training imparted by the appellant is having the recognition of law - AT
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Central Excise:
100% EOU received goods free of duty but returned the rejected goods on payment of duty of excise through cenvat credit to the supplier of goods - Prima facie this action is not permissible since cenvat credit shifted to the supplier - AT
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Central Excise:
CENVAT Credit - - whether the appellant is entitled to take CENVAT credit on Annual Maintenance of Wind Mill which has been located outside their factory and the electricity so generated by the wind mill has been transmitted through MSEB or not - Held yes - AT
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Central Excise:
Denial of CENVAT Credit - Job worker utilising excess CENVATTED inputs than the norms fixed for processing - appellant is entitled to take Cenvat credit and are not required to reverse Cenvat credit on account of excess consumption of input - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (1) TMI 486
Assessment u/s 144 - rejection of books of accounts - order of DRP u/s 144C - Held that:- DRP allowed the assessee to produce books of accounts and other related books and vouchers before the AO, hence, the AO is duty bound to accept the same during the remand proceedings and merely because the assessee had not accounted the additional custom duty paid and the AO had short span of time for verification of books of accounts and related bills and vouchers, the books of accounts of the assessee cannot be rejected. We also hold that when the DRP is allowing the assessee submission of books of accounts, then it is not open for the AO to examine the sufficient cause which prevented the assessee to submit books of acoutns during draft assessment proceedings. Thus inclined to hold that the action of the AO rejecting the books of accounts of the assessee is not based on justified and legal reasoning, hence, ground of the assessee is allowed. Refusal to admit additional evidence submitted by the assessee - Held that:- DRP has allowed the assessee to submit its books of accounts and other relevant bills and vouchers before the AO during remand proceedings, hence, unable to accept this contention of the assessee that the DRP refused or declined to admit the additional evidence. Accordingly, this ground of the assessee being devoid of merits is dismissed. Transfer pricing adjustment - Addition to the income - difference between the value of MRP declared to custom authorities and the value of Maximum Retail Price (MRP) altered by the assessee on account of products sold by it to the Indian AE - Held that:- TPO through its order dated 28.2.2014 passed u/s 154 of the Act rectifying the DRP assessment order dated 26.12.2013 have held that the assessee paid ₹ 31,10,33,139/- for the purchases made from its AE as against ₹ 35,29,83,970/- which is the ALP worked out in accordance with Rule 10B(1)(b) of the Act and the price paid by the assessee for purchases being lower than the ALP worked out therein, no adjustment on this account is being made. Thus, we further hold that the AO/DRP is duty bound to pass an order in this regard in conformity with the value determined by the AO and the provisions of the Act do not allow this authority to take a different stand or view against the order of the TPO. We also note that the sales shown by the assessee to Tianjin India has been accepted by the AO in the case of purchaser i.e. Tianjin India, hence, the sales made by the assessee cannot be disturbed by baseless estimation in the name of suppressed sales as wrongly alleged by the Revenue. Thus reach to a logical conclusion that the estimation of suppressed sale made by the AO of the assessment order dated 13.1.2014 is not justified, cogent and acceptable and further hold that the DRP was not right in upholding the draft assessment order on this issue. Accordingly, ground of the assessee are allowed. Ad hoc addition made by the AO on estimated basis - Held that:- When rejection of books of accounts by the AO is not valid and justified, then the impugned ad hoc disallowance of 10% of the expenditure claimed by the assessee, as proposed by the AO, is not sustainable and held to be without any basis. Therefore, we are inclined to hold that the DRP was right in deleting impugned ad hoc disallowance of ₹ 92,65,306/- being 10% of total expenses claimed by the assessee. Accordingly, this ground of the revenue being devoid of merits deserves to be dismissed and we dismiss the same
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2015 (1) TMI 485
Contribution to education fund - application of income or diversion of income by overriding title - whether the amount is not allowable as deduction? - Held that:- The amount contributed by assessee to the National Cooperative Union, New Delhi is appropriation from the net profits. There is a right to receive the income independent of accrual and receipt of income by the assessee before third party could lay claim to any part of it. Since income reached assessee before it reached to a third party, there is no diversion. As already stated, there is no payment in the year of losses. Therefore, payment under section 63(1)(b) of the multistate co-operative societies act 2002 is only an appropriation of profit. Moreover, this amount paid during the year is also not out of the profits of this year but profits of earlier year. Therefore, on that count also amount cannot be allowed as deduction during the year. For these reasons, we uphold the order of the authorities and reject assessee’s grounds on the issue. In the result, appeal of the assessee is dismissed.
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2015 (1) TMI 484
Depreciation - whether claimed or not has to be foisted upon the assessee even prior to insertion of Explanation 5 to S.32(1) of the Act with effect from 01/04/2002, while calculating deduction under Chapter VI-A of the Act - Held that:- The present appeals deserve to be allowed as the question of law raised in these appeals is answered in favour of the assessee and against the revenue. Accordingly, we hold that the Tribunal was not right in law in holding that depreciation, whether claimed or not, has to be foisted upon the assessee even prior to insertion of Explanation 5 to S.32(1) of the Act with effect from 01/04/2002, while calculating deduction under Chapter VI-A of the Act.
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2015 (1) TMI 483
Delay in filing returns - power to condone - Non explanation of delay - Claim of refund of the tax paid in excess - Held that:- Taking a lenient view in the matter, and considering the fact that the petitioner is not a habitual offender when it comes to complying with the procedure prescribed for filing returns under the IT Act, we quash Ext.P10 order and direct the 2nd respondent to complete the income tax assessment of the petitioner for the assessment year 1999-2000, by treating the delay in filing the return as condoned, and by taking into account Ext.P2 series of certificates produced by him and after verifying the accounts produced by the petitioner to substantiate his declaration of total income. The 2nd respondent shall pass consequential orders as directed in this judgment within a period of three months from the date of receipt of a copy of this judgment after hearing the petitioner. Also if the assessment proceedings completed by the 2nd respondent, as directed in this judgment, results in the grant of any amount by way of refund to the petitioner, the petitioner will not be entitled to claim any interest on the amount paid to him by way of refund.
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2015 (1) TMI 482
Validity of reopening - whether there was no failure on the part of the assessee in disclosing fully and truly all material facts in the course of assessment proceedings? - Held that:- Invoking proviso to Section 147, the pre-condition is that there should be an assessment under sub-section (3) of Section 143, which is absent in the present case. As it is not disputed by the respondent that the return was filed on 31.10.01 and no order has been passed on the said assessment. Therefore, it is abundantly clear that proviso to Section 147 of the Act does not get attracted. The Tribunal, admittedly, fell in error in holding that it is a case falling under proviso to Section 147. Thus the objection raised by the Department is sustained. Appeal filed by the Revenue is allowed by way of remand.
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2015 (1) TMI 481
Deduction u/s.80IB(10) r.w.s. 80IB(1) - ownership of land - approval by the local authority as well as completion certificate was not granted to the assessee - profit derived from sale of unutilized FSI - Held that:- As decided in CIT V. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] a combined reading of section 2(47)(v) of the Act and section 53A of the Transfer of Property Act, 1882, would lead to a situation where the land would for the purpose of the Act be deemed to have been transferred to the assessees. In that view of the matter, for the purpose of income derived from such property, the assessees would be the owners of the land for the purpose of the Act although title in the land had not yet passed on to the assessees and would pass only upon execution of a duly registered sale deed. For the limited purpose of deduction under section 80-IB(10) of the Act, the assessees had satisfied the condition of ownership also, even if it was necessary. - Decided in favour of the assessee.
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2015 (1) TMI 480
Double deduction - Depreciation on the assets costs of which have already been allowed as deduction on account of application of income, would amount to double deduction? - Held that:- The amount spent on acquiring the assets has been treated as application of income in the year in which the income was spent in acquiring these assets. This does not mean that in subsequent years, depreciation in respect of those assets cannot be taken into account. The present Appeal does not raise any substantial question of law. It is accordingly dismissed.
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2015 (1) TMI 479
Adoption of income on the basis of T.D.S. Certificate - Held that:- AO shall not make an adjustment of the nature, which would require an examination of the evidence or a hearing to be given to the assessee. The assessee had carried out certain work on behalf of M/s. Ravi Organizers as sub-contractor and had received ₹ 16,30,000/- from the M/s. Ravi Organizers, who had deducted 2 per cent T.D.S. from the aforesaid amount. The assessee had rightly shown the income to the extent of ₹ 13,70,000/-, whereas, T.D.S. was deducted on ₹ 16,30,000/-. Since, the actual work carried out by the assessee during the relevant year was to the extent of ₹ 13,70,000/- and as the bill was also raised for the same amount, the assessee was justified in not showing his income to be ₹ 16,30,000/-. Even otherwise, it is not the case of the Revenue that the amount, which was carried forward by the assessee, does not reflect in the Balance Sheet. Therefore Tribunal was not right in holding that the AO was right under Section 143(1)(a) in adopting the income of ₹ 16,30,000/- on the basis of T.D.S. Certificate in place of ₹ 13,70,000/- which the assessee had shown as work in progress and billed Ravi Organizers. Decided in favour of assessee.
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2015 (1) TMI 478
Differential stock statement as recorded in the books of accounts as against the same submitted before the bank - Appellate Tribunal deleted the addition made by the Assessing Officer - Held that:- The issue involved in these appeals is already concluded by a decision of this Court in the case of Commissioner of Income-tax, Ahmedabad-III v. Riddhi Steel and Tubes (P) Ltd., [2013 (10) TMI 291 - GUJARAT HIGH COURT] wherein held that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. In favour of assessee.
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2015 (1) TMI 477
Donation to other trust out of trust fund - whether can be termed as genuine activity towards its object and same is charitable activity as defined u/s.2(15) of the Act? - Held that:- As concluded by the decision of Apex Court in the case of Commissioner of Income tax v. Sarladevi Sarabhai Trust [1988 (3) TMI 53 - GUJARAT High Court] that so far as donor-trust is concerned, once it makes payment of the donated amount to the donee-Trust which is a religious and charitable trust which has to utilize the donation for its own purposes, it would be a proper application of the income for charitable and religious purposes. In favour of assessee. Whether ITAT is justified in law and on facts in giving registration u/s.12(A) of the Act to the assessee trust? - Held that:- As decided in KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST case [2012 (12) TMI 876 - GUJARAT HIGH COURT] if the activities of the trust have not commenced, the Commissioner has no authority to reject its application for registration on the ground that the Trust failed to convince him about the genuineness of the activities. In favour of assessee.
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2015 (1) TMI 476
Interior decoration and refurnishing expenses - Revenue v/s Capital expenditure - Held that:- Merely because the income of the hotel has increased, it does not necessarily follow it is because of the refurnishing or repair work done to the hotel rooms. That may be one of the factor. The real test is whether all those acts constitute replacing the existing asset. The existing asset is the hotel building and its rooms. When no extra flooring space or extra room capacity is added on account of such repairs, it cannot be said that a new asset has come into existence. All these repairs are done to preserve and maintain an already existing asset. In the course of such repairs, if they have upgraded the facilities to international standards, then that would not constitute a new asset. Therefore, the Tribunal was justified in holding that the expenditure incurred towards repairs and replacement of old parts would be in the nature of revenue expenditure and not capital expenditure. - Decided in favour of assessee.
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2015 (1) TMI 475
Block assessment - Whether was not barred by time? - whether assessee had not been afforded a reasonable opportunity of hearing during the assessment proceedings? Held that:- The Tribunal has rightly held that the assessment cannot be said to be barred by limitation relying upon a judgment of T.O.Abrahim & Co. versus Assistant Director of Income Tax (Investigation) and others, (1998 (6) TMI 53 - KERALA High Court). - Decided against the assessee. The Tribunal has rightly while holding that adequate opportunity was not provided to assessee, remanded the matter to the Assessing Officer for adjudication afresh. We are unable to infer any prejudice that may have been caused to the assessee as the assessee's argument of lack of adequate opportunity was accepted. The assessment order was, therefore, rightly set aside and the matter was remitted to afford adequate opportunity to the assessee to put forth its case. - Decided against the assessee.
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2015 (1) TMI 474
Fees paid to carry out due diligence for laying pipeline for supply of gas - revenue v/s capital expenditure - Held that:- The project was for expansion of laying down the pipeline for supply of gas which is regular business of the assessee and the expansion of the business by laying down pipe line was one of the purpose for which the feasibility report was to be prepared and the expenses were incurred. Thus the Tribunal cannot be said to have committed any error treating the expenses as business expenses or revenue expanses. Expenses claimed for purchase of Software - revenue v/s capital expenditure - Held that:- The Tribunal correctly found that the projects of software programmes could be said as revenue expenditure. Be it noted that the licence of software programmes was not for resale of such software or for further sale of software but was for the use of software in running day to day business of the assessee. Estimated profit on WIP - Tribunal delete the addition - Held that:- Tribunal correctly concluded that as the assessee has regularly offered the tax, there is no reason to separately consider the work in progress and the expenses incurred thereto for different method for the purpose of assessment of tax. - Decided against the revenue.
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2015 (1) TMI 473
TDS u/s 194A on interest - Exemption under Section 194A(3)(f) - Whether the assessee was required to apply for exemption and the same could only be granted to the assessee after the Central Government issued a notification in this behalf in the official gazette? Held that:- Once the notification stands issued, it is not the requirement of the Act for the assessee to either apply or seek exemption from the Authorities under the Act or the Central Government. Expression “reasons to be recorded in writing” are in reference to the stage preceding issuance of notification by the Central Government. Reasons have to be that of the Central Government and not the assessee. With the issuance of notification by the Central Government, which is not the subject matter of challenge herein, provisions of Section 194(A) (1) of the Act, automatically becomes inapplicable.
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2015 (1) TMI 472
Genuity of gifts - Held that:- The order passed by the Tribunal having been implemented by the Assessing Officer and having once again been set-aside, the controversy involved in the present petition has been rendered infructuous/academic, particularly in the light of the fact that we have affirmed the order of remand dated 04.12.2000 passed in appeals filed by the assessee. There is no error of law in the exercise of jurisdiction by the Tribunal in holding the gifts made by Sh. Surinder Kumar Maheshwari to the Assessee and his two brothers almost in equivalent amounts to each to be genuine without adjudicating upon the capacity of the donor and in directing the A.O. to reconsider the genuineness of the gifts when the addition made by treating the gift as not genuine is justified. Whether the Tribunal was right in law in directing that if any addition is sustained in the hands of the Assessee, the same should be off-set with the surrender in the firm in which the Assessee is a partner to the extent of his share is open to be answered.
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2015 (1) TMI 471
Deduction under 80I - whether should be allowed on the eligible profits without reducing the deduction given under 80 HH even though interest on TDRs favouring TNPCB were not receipts arising in the course of business nor were the said income derived from the industrial undertaking? Held that:- As decided in Mandideep Eng. & Pkg. India (P) Ltd. case [2006 (4) TMI 75 - SUPREME Court] Section 80 HH and 80 I of the Income Tax Act are independent of each other and, therefore, new industrial undertakings can claim deduction under both the sections on the gross total income independently. This appeal fails and the same is dismissed, answering the issue raised in favour of the assessee and against the department.
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2015 (1) TMI 470
Section 43B of the Income Tax Act, 1961 - Held that:- It is, no doubt, true that Section 43B of the Act prohibits the deduction of component of sales tax transactions of an assessee, unless it has been remitted to the State Exchequer. It is almost common that whenever an assessee receives any amount in the form of sales tax, it would be under obligation to remit it to the State Government and on filing proof thereof, the deduction is allowed. The case on hand presents some typical features. The appellant has been extended the benefit of Deferment of Sales Tax. The appellant is not exempted from paying the sales tax. The only facility extended to it was that it can retain with it, the amount representing the sales tax for a period of six years, but it would be under obligation to remit the accumulated amount at the end of the sixth year without interest. For all practical purposes, the assessee in such cases would be holding the amount. Neither it can be treated as income nor does it become liable to be taxed in any other manner. It represents an expenditure deemed to have been incurred. - Decided in favor of assessee.
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2015 (1) TMI 469
Non deduction of tax at source - TDS u/s 195 on foreign remittances - whether part of the consideration for purchases of plant, machinery or equipment can be attributed to the installation, commissioning or assembly of the plant and equipment, or any supervision activity - Held that:- even if a part of the income, embedded in the impugned payments made to non-resident vendors, can indeed be attributed to the installation, assembly or commissioning activities of the plant, machinery or equipment purchased, such an income, on the facts of this case, cannot be brought to tax as business income under article 7 read with article 5 of the respective DTAAs. Hon'ble Supreme Court in the case of Union of India vs. India Fisheries (P) Ltd. [1965 (4) TMI 52 - SUPREME COURT OF INDIA] has held that, "If there is an apparent conflict between two independent provisions of law, the special provision must prevail." If we are to interpret the FTS and FIS clauses overlapping with PE clause in practice, and apply the FTS and FIS clauses when PE taxation cannot be invoked, the very purpose of PE provisions will stand defeated and it will be contrary to the UN Model Convention Commentary quoted earlier in this order, which, as a coordinate bench has held in the case of Graphite India Ltd Vs DCIT [2002 (10) TMI 232 - ITAT CALCUTTA-C], are in the nature of ‘contemporanea expositio’. Just because the assessee has accepted a taxability in respect of some other transaction, no matter howsoever related, the legal remedies available to the assessee cannot be negated. There cannot be, and there is no, estoppel against the law. In view of the above discussions, in our considered view, in a situation in which there are specific PE clauses in relation to a particular type of services, which are covered in the scope of servi ces covered by the scope of the ‘fees for technical services’ or ‘fees for included services’, the taxability of consideration for such services must remain confined to taxability of profits under the relevant specific PE clause. In our humble understanding, the provisions for taxability as FTS or FIS will not come into play in such cases. Installation, commissioning or assembly of a plant, machinery or equipment , or any supervision activity connected therewith, is ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of such a property i.e. plant, equipment or machinery. Therefore, for this short reason, any consideration for installation, commissioning or assembly activities, or supervision services in respect thereof, of a property, which obviously includes a plant, equipment or machinery, cannot be included in fees for included services under the Indo Swiss tax treaty as well. Accordingly, even if there be any income embedded in the impugned payments, in respect of installation, commissioning or assembly activities, or supervisory activities connected therewith, the same cannot be brought to tax, in view of the provisions of Article 12(5)(a) of Indo Swiss tax treaty, in the hands of the Swiss vendors as well. FTS or FIS provisions cannot be invoked for taxing a nonresident on the basis of accrual of liability, whether credited or not, or on the notions of fiction of an element of FTS or FIS being embedded in the business receipts for sale of plant, equipment or machinery. The receipts in the hands of the vendors are in the nature of business income, and the deeming fiction, as sought to be canvassed by the revenue, has no application in the matter. Demands under section 201 r.w. 195 set aside - Decided in favor of assessee. However, the facts stated by the assessee with regard to the PE of foreign vendors not being in existence may need to be verified, and particularly as the assessee did not make proper submissions, duly supported by the facts on this aspect of the matter, at the assessment or the appellate stage. - Matter remanded back for establishing the facts - Decided partly in favor of revenue.
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2015 (1) TMI 468
Unexplained investment in purchase of plot - Held that:- Since enquires were not properly done by Revenue either of assessee contentions that the property is in FTL, so as to make it unfit for construction nor the entries in the slip are corroborated/correlated with any other evidence or enquiry, the matter should be referred to A.O. for making fresh enquiries so as to decide the issue. If assessee contention that the property is in FTL is verified, there may be genuine reason for reduction of price. This aspect requires examination. In order to do the needful, we set aside the issue to the file of A.O. to make necessary enquiries as observed above. Assessee should be given due opportunity to substantiate the contentions. With these observations, the grounds are considered allowed for statistical purposes. Disallowance of interest paid u/s.40a(ia) ₹ 21,11,274 - Held that:- After comparing the proposed and enacted provision which is intended from the replacement of the words in the proposed and enacted provision from the words 'amount credited or paid' to 'payable' it is held that it has to be concluded that provisions of Section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during the previous year, without deduction of TDS. Decided the issue in favour of assessee. A.O. is directed to delete the addition.
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2015 (1) TMI 467
Deduction u/s 80IE - manufacturing process - AO did not find correspondence purchase of raw material to evidence manufacture - AO further observed that less consumable stores have been used, less expenses were incurred during the course of manufacturing process. - Held that:- The conversion of gold bullion or gold bar to the gold chlorate powder is a manufacturing process, in the circumstances and facts of the present case since, the final and manufactured product is new and distinct object with different name character and use which is not possible in the case of raw material. Since, the purchase have not been doubted by the AO or the learned CIT(A) and arguments of learned DR at this stage that no purchases have been made cannot be help the revenue. As satisfied with the explanation of the assessee and therefore, the arguments of learned DR that the case does not inspire confidence cannot help the revenue. Thus in view of findings where assessee's activities have been held to be manufacturing activity and accordingly assessee is eligible for deduction u/s.80IE of the Act. Central Excise Duty Refund - Held that:- As regards assessee's claim of deduction with regard to excise duty refund the explanation submitted by the assessee in this regard is found to be convincing and in view of the scheme of the Union Government with regard to North Eastern State which is akin to and similar to the one in the case of Shree Balaji Alloys(2011 (1) TMI 394 - Jammu and Kashmir High Court) and therefore, in the present circumstances and facts of the case, we are bound by the decision of Shree Balaji Alloys(supra) and the said receipts are held to be capital receipts. Disallowance of interest - Held that:- As assessee explained that a sum of ₹ 24 lac was paid to Smt. Meena Kumari Pradhan for the purposes of land which was not materialized which has been returned back to the assessee company and interest was paid on capital borrowed for purchase of shares, thus since both the investments were made for the business purposes and the assessee company had earned more than investment made. Thus CIT(A) is not justified in disallowance of interest. Appeal of the assessee is allowed.
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2015 (1) TMI 466
Benchmarking approach adopted / contemporaneous documentation rejected - transfer pricing adjustment - international transaction, pertaining to provision of software services ('IT services') and customer support back office services ("ITES Services') to the associated enterprise ('AE'), are not at arm's length under the Income-tax Act, 1961 - Held that:- We have upheld the plea of the assessee for IT service vis-à-vis exclusion of KALS Information System Ltd. and Bodhtree Consulting Ltd. from the final set of comparables. We accordingly, direct the Assessing Officer to re-compute the arm’s length price of the transactions of assessee company with its AEs applying the average profit margin of remaining comparables and if the difference between the arm’s price length so recomputed and the price actually charged is within the limit of +/- 5%, then no Transfer Pricing adjustment is to be made. The grounds of appeal raised by assessee are thus, allowed for statistical purposes. TPO wrongly added and rejected some comparables without even examining as to whether they are functionally comparable or not. If at all the TPO was to reject the same, it was imperative for him to examine all the comparables in the light of the FAR analysis and only thereafter reject the same after passing a speaking order. In the absence of such an approach by the TPO, in our view, the comparability analysis carried out by him is vitiated. In the entirety of the facts and circumstances, we deem it fit to restore this aspect of the issue back to the file of the AO / TPO, who shall consider the aforesaid companies picked up by way of fresh search carried out in ITES segments. Reasonable opportunity of being heard to the assessee should be given in this regard. The said issue with respect to determination of arm’s length price in ITES segment is thus, set aside to the file of AO / TPO and the ground of appeal raised by the assessee in this regard is thus, allowed for statistical purposes.
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2015 (1) TMI 465
Undisclosed income - Additions made the basis of seized material - jurisdiction of the AO to assess the income of the assessee under section 153C read with section 143(3) of the Act challenged - Held that:- This case was earlier heard on 26.08.14 and the matter was reserved for orders. However, in the meantime, the Ld. D.R. Shri S.D. Srivastava, moved an application dated 27.08.14 contending that the date of assignment of the case written in the assessment order as 28.03.07 was a typographical mistake. In fact, case of the assessee was assigned to DCIT, CC-1, Thane on 13.03.08. The case of the partners of the assessee firm namely Shri Amritlal Hirachand Sanklesha (Mutha) and Shri Ramesh Hirachand Sanklesha (Mutha) was in fact assigned on 28.03.07. The reference mentioned on the satisfaction note is pertaining to financial year 2007-08 and even the notice to the assessee was also issued on 27.03.08. Since the Ld. A.R. for the assessee after going through the record produced by the Revenue regarding the typographical error occurred as to the date mentioned on the satisfaction note, could not controvert the plea taken by the Revenue in this respect - - Decided against the assessee. Assessment made u/s 153A - Whether no incriminating material was found during the search against the assessee? - Held that:- The assessee firm had never raised any objection that no incriminating material was found against it, rather has returned the additional income in pursuance to the notice issued to it. Under such circumstances, the assessee had no case that any incriminating material was not found against it or that the satisfaction recorded by the concerned AO was wrong or vitiated. In the absence of such a case, how can it be said that any right of the assessee has been infringed or affected by mere not mentioning the ‘section 153C’ in the body of the notice which has been duly issued as per the provisions of section 153A as prescribed therein under the provision of section 153C itself. - Decided against the assessee. Unaccounted income from money lending - Held that:- The interest of justice will be best served if the additions are reduced considering the submission of the assessee that it is not possible that the assessee had been charging same rate of interest from all the borrowers in the past. We accordingly reduce the addition made by the lower authorities on this issue to the extent of 50% of the added amount. - Decided partly in favour of the assessee. Unaccounted stock of Gold/ jewellery - Held that:- Uphold the decision of lower authorities that assessee had brought unaccounted gold jewellery into business during the previous year relevant to A.Y.2004-05 and the same was added to the income as undisclosed income of the assessee firm. Nothing was brought on record by ld. AR to deviate from the findings recorded by the lower authorities to the effect that no gold was given by Karigar to the assessee in the year 2003. No reason to interfere in the findings recorded by lower authorities to justify the alleged deposit of 2300 gms of gold by karigars. Non explanation by the assessee for excess jewellery valued at ₹ 23,70,079/-, which was added to the total income as unaccounted stock. - Decided against the assessee. Enhancement of income on the basis of torn papers - Held that:- The Ld. CIT(A) has observed that the document seized from the premises of Shri Ramesh H. Sanklesha, one of the partners of the assessee firm represents the receipt and payment arising out of the business of firm which was the unaccounted payment to the partners by the firm. Once it is held that entries so recorded was actually income of the firm, we do not find any infirmity in the order of CIT(A) for enhancing the income of the assessee firm after giving benefit of telescoping in respect of similar income assessed in the assessment year 2003- 04 amounting to ₹ 7,46,544/-. The detailed finding recorded by the CIT(A) are as per material on record, therefore, do not require any interference on our part. Accordingly, we confirm the action of CIT(A) in enhancing the income of assessee firm by ₹ 10,05,568/- in the assessment year 2003-2004. - Decided against the assessee.
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Customs
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2015 (1) TMI 493
Restriction on Export of bullet proof jacket - whether the condition requiring the exporters to obtain permission of DoDP for exports of products such as bullet proof vests is contrary to the FTP and/or the FTDR Act - Held that:- There is no restriction as to export of any item unless it is expressly provided under the FTP or any law in force. In the present case, there is, admittedly, no law that expressly prohibits or restricts the exports of bullet proof vests - Entry no. 4, which relates to military stores indicates that military stores are freely exportable; the same is indicated by the word ‘Free’ under the column under the heading “Policy”. However, it is also provided that a No Objection Certificate from DoDP would be required for export of items other than those listed under Note 1 to Table-A. It is relevant to note that entry no. 4 only applies to military stores as specified by the DGFT. Admittedly, the DGFT has not specified any item of military stores as yet and thus, the present entry has been rendered ineffective. The expression ‘military stores’ only specifies the nature of items that may be specified by the DGFT. This entry cannot be read as restricting all items in the nature of ‘military stores’ unless made freely exportable by the DGFT. Given the underlying intent of FTP - items are freely exportable unless restricted - it is not possible to read any restriction under entry no. 4 unless the DGFT specifies those items. - Plainly, the FTP empowered the DGFT to specify items of military stores that would be freely exportable subject to obtaining a NOC from DoDP. Admittedly, the DGFT has not specified any such list but, by the impugned circular, has sought to pass an omnibus order disallowing export of all goods which are ‘apparently in the nature of ‘Military Stores’’. Clearly, the same is not in conformity with the FTP read with Schedule 2 of ITC (HS), 2012 as notified by the Central Government. Whether the DGFT is empowered under the legal framework to issue such omnibus directions which are, apparently, not in conformity with the notified FTP. - Held that:- entry no. 4 of Table A of Schedule 2 of ITC (HS), 2012 requires that a NOC be obtained from DoDP in respect of items specified by the DGFT. In the circumstances, the only role that the DGFT could play in respect of the said entry was to specify a list of items covered under the said entry. Clearly, the impugned circular is not in conformity with this entrusted function. - appointment and the functions of the DGFT are as indicated in Section 6 of the FTDR Act and the DGFT is not authorized to interpret other commitments of the Central Government and issue circulars with respect thereto. Paragraph 2.1 of the FTP notes that restrictions in exports may be imposed by any other law. However, such restrictions would have to be specified in the text of that law and not by circulars issued by the DGFT. And, it is not the respondent’s case that exports of military stores are restricted under any other law. - implying that the impugned circular has been issued considering India’s commitment regarding non-proliferation of weapons of mass destruction is, plainly, without application of mind. Bullet proof vests and military stores cannot be read as including weapons of mass destruction. Further, the respondent has failed to point out any commitment made by India for restricting export of bullet proof vests, which is the product in question. Admittedly, bullet proof vests are not included in the SCOMET list as yet. In the circumstances, I am unable to accept that the FTP, in any manner, restricts export of bullet proof vests. In any event the impugned circular does not purport to notify any item of SCOMET list but seeks to restrict items, which are apparently considered as ‘military stores’. - bullet proof vests are freely importable in the country. In the circumstances, it does not stand to reason to read in any restriction for export of such items in the FTP. - impugned circular is set aside - Decided in favour of assessee.
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2015 (1) TMI 492
Valuation of goods - Export of Porcelain Mugs - Inflated value of goods - claim of higher export incentives - main contention of the appellants is that the goods exported by them are branded and tailor-made as per the requirement of the buyer in U.K. and obviously such goods would fetch higher price - Supreme Court admitted appeal filed by the appellant against the order of Tribunal [014 (12) TMI 812 - CESTAT MUMBAI] after drawing their attention to the case Commissioner of Customs, New Customs House, Mumbai v. Vishal Exports Overseas Ltd. [2007 (2) TMI 4 - SUPREME COURT OF INDIA].
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2015 (1) TMI 491
Confiscation of the gold and gold ornaments - representation of the Petitioner rejected for the return of the sale proceeds of the gold after adjusting the outstanding government dues - Supreme Court after condoning the delay in the appeal dismissed the SLP filed by the assessee against the order of High Court [2013 (2) TMI 118 - BOMBAY HIGH COURT] wherein High Court found no fault in action that was pursued of selling the confiscated property.
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2015 (1) TMI 490
Demand of differential duty - Demand of respect of crude petroleum on the basis of bill of lading quantity of the liquid cargo - Supreme Court admitted the appeal filed by the assessee against the order of Tribunal [2013 (12) TMI 38 - CESTAT BANGALORE] - wherein Tribunal after following assessee's own previous case [2006 (2) TMI 518 - CESTAT, BANGALORE] held that duty of customs was leviable on the liquid cargo quantity mentioned in the bill of lading.
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2015 (1) TMI 489
Levy of duty on burning loss - whether the burning loss arising in the manufacturing process carried out in the custom bonded warehouse is leviable to custom duty in terms of section 65(2)(b) of Customs Act, 1962 - Held that:- It can be seen from the notification and condition-35 appended thereto that the exemption in respect of raw material has been provided for manufacturing the goods in accordance with the provision of section 65 of the Customs Act, 1962. The burning loss is occurring during the course of manufacture of final product i.e. seamless pipes. The burning loss is nothing but quantity consumed in the manufacture and become invisible. Therefore, exemption notification is applicable even on the quantity of the burning loss. Burning loss does not exist physically, therefore it is neither capable of being cleared from the warehouse nor factually cleared from the warehouse. Therefore, the burning loss occurred in the manufacturing process is nothing but the consumption in the manufacture, though physically not available, hence, the same does not get cleared from the warehouse. With this fact, the burning loss will not fall under the clause (b) of Section 65(2). Accordingly, no duty can be charged on nonexistent quantity of burning loss. It is very important to note that in any processing industry, apart from recoverable waste and scrap, smaller part of the burning loss is also generated. Keeping this aspect into mind the legislators consciously made explicit provision for levy of custom duty on the waste and scrap, which is physically available and cleared from the warehouse. However, as regard the burning loss, no such explicit provision was made. This might be for the reason that the quantity of imported material consumed in the final product includes burning loss also as it has same nature as the raw material which gets consumed in the manufacturing of final product. I am therefore of the considered view that the custom duty cannot be charged on the quantity of the burning loss for two reasons – i.e. This quantity stands consumed in the manufacture of final product and it does not contain in the quantity of waste and scrap and second, it is not cleared physically for home consumption from the custom bonded warehouse. Quantity of burning loss, since, neither cleared out of the custom bonded warehouse for home consumption nor otherwise disposed of, but factually it got consumed in the manufacturing, no custom duty is leviable on the same. - orders of the lower appellate authority are unsustainable in the facts and in law, and the same are set aside - Decided in favour of assesse.
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Service Tax
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2015 (1) TMI 506
Commercial Training or Coaching service - Notification No. 12/2003-ST dated 20.6.2003 - SCN not issued - Supreme Court after condoning the delay dismissed the appeal filed by the Revenue against the order of High Court [2015 (1) TMI 487 - ANDHRA PRADESH HIGH COURT] whereby High Court refused to interfere with the order of Tribunal [2015 (1) TMI 488 - CESTAT BANGALORE] whereby Tribunal held that without a SCN been issued adjudication is a nullity.
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2015 (1) TMI 505
Denial of CENVAT Credit on Input Service - quality control services / Business Auxiliary Service - Reverse Charge Mechanism - Nexus with manufacturing activity - service activity was rendered outside India, outside the place of removal of excisable goods - whether service tax paid by the respondent as recipient of service under Section 66A of Finance Act is eligible to be taken as cenvat credit under CCR 2004 during the period of dispute viz. March 2007 to July 2007 - Held that:- respondent is a 100% EOU for manufacture and export of Rear Axels Housing which is classifiable under CH 87089900 of CETA'85 as motor vehicle parts. These goods are manufactured by the respondent as per the design and specification provided by the buyer. These Rear Axles Housing are used in the assembly/ manufacture of motor vehicle at the buyer's end. The respondents have carried out the activities of removing the rust developed during transit, deburring of certain machined area of axels and also cross checking of dimensions. I find that they engaged a Overseas service provider to carry out these activities at buyer's premises at USA. As seen from the SCN, and the adjudication order the only ground on which the service tax credit was denied is that services were rendered outside the place of removal of goods from the factory premises which is in the nature of post-removal activities. Respondents have availed the services of overseas service provider to carry out quality control activity on Rear Axle Housings at buyer's premises. Appellant being 100% EOU, they have secured orders for fulfillment of export obligation. Being manufacturer of Rear Axles Housing (Motor Vehicle parts), as per the drawing, design and specifications of the overseas buyer, the respondents have to ensure that the activities viz. removal of rust, deburring, quality control checking are done at buyer's premises. If the respondent do not satisfy the quality of the parts manufactured by them, and if it results in rejection, certainly, it will be a loss to his business. Therefore, these activities are related to quality control and in relation to the business of the respondent. Therefore, I am of the considered view that the said services availed by the respondents from the overseas service provider are rightly covered in the inclusive definition of "input services" defined under Rule 2 (l) of CCR 2004. - Following decision of Coca-cola India (P) Ltd. [2009 (8) TMI 50 - BOMBAY HIGH COURT] and CCE Vs Nilkamal Crates & Bins [2010 (2) TMI 232 - CESTAT, AHMEDABAD] - Decided against Revenue.
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2015 (1) TMI 504
Commercial Training and Coaching Services - training to candidates who intent to become Insurance Agent - exam conducted by Insurance Regulatory and Development Authority (IRDA) - whether the activity undertaken by the appellant is liable to service tax under Section 65(27) of the Finance Act, 1994 or not - Held that:- it is mandatory for a candidate to go for practical training from the approved institute which is the appellant. In these set of facts, we are of the view that the certificate of completion of training issued by the appellant having recognition of law. - High Court in [2013 (5) TMI 592 - DELHI HIGH COURT] concluded that the training conducted by the appellant in that case having a recognition of law and is not covered under commercial or coaching training centre as defined under Section 65(27) of the Finance Act, 1994. We have further gone through the decision of Pasha Educational Training Inst. (2008 (12) TMI 80 - CESTAT, BANGALORE) wherein similar set of facts, in the case of the competitor of the appellant this Tribunal held that the appellant was imparting the vocational training and held that the appellant was entitled for benefit of exemption under Notification No. 9/2003-ST dated 20th June 2003. Training imparted by the appellants does not fall under the ambit of Section 65(27) of the Finance Act, 1994 as the training imparted by the appellant is having the recognition of law and covered under exclusion clause of Section 65(27) of the Finance Act, 1994, therefore the appellant is not liable to pay service tax at all. - Impugned order is set aside - Decided in favour of assessee.
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2015 (1) TMI 503
Rejection of refund claim u/s 11B - Bar of limitation - Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 05/2006-CX (NT) dated 01.3.2006 - whether the provision of Section 11B of Central Excise Act, 1944 does not cover refund of Cenvat credit and whether Notification No. 5/2006-C.E. (N.T.) will be applicable for that purpose - Held that:- While going through the judgment of Hon’ble High Court of Madras in the case of Commissioner of Central Excise, Coimbatore Vs. GTN Engineering (I) Ltd. [2011 (8) TMI 960 - MADRAS HIGH COURT]. It is observed that issue have been examined in detail in para 11 to para 15 as referred above clearly indicating the mind of Hon’ble High Court that claim of refund has to be restricted under Section 11B of the Central Excise Act, 1944, under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 05/2006-CX (NT). Hon’ble High Court also distinguished judgement of Madhya Pradesh High Court at Indore reported in 2008 (10) TMI 246 - HIGH COURT OF MADHYA PRADESH AT INDORE] in the case of STI India Ltd. Vs. Commissioner of Customs and Central Excise, Indore. - case is clearly established against the appellants - Decided against assessee.
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2015 (1) TMI 488
Commercial Training or Coaching service - Show Cause Notice (SCN) was not issued - Held that:- no show-cause notice was issued to the present appellant. Adjudication order shows that learned adjudicating authority was guided with several decisions without going into factual evidence on records. Adjudication order does not grant any power to learned adjudicating authority to proceed against appellant where there was no foundation to the demand in absence of show-cause notice issued to the appellant against the demand proposed. We appreciate that the show-cause notice is a foundation of the adjudication and without service of show-cause notice defence is denied. That manes adjudication fatal. - The appellant not having been brought home to the charge following the ratio laid down by Hon’ble Supreme Court in the judgment in the case of Commissioner of C. Ex., Bangalore vs. Brindavan Beverages (P) Ltd. [2007 (6) TMI 4 - SUPREME COURT OF INDIA] the demand of ₹ 2,23,16,485/- for the year 2010-11 does not sustain. - Decided in favor of assessee. In so far as the demand of ₹ 1,07,53,337/- is concerned, Revenue says that there is no finding in the adjudication order as to whether the conditions of notification are fulfilled by the appellant. This aspect also needs verification for which that is also remitted to learned adjudicating authority for verification - Matter remanded back - Decided partly in favour of assessee.
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2015 (1) TMI 487
Commercial Training or Coaching service - demand of service tax without issuance of show cause notice(SCN) - Held that:- Tribunal has remanded the matter for fresh adjudication of all the issues except the demand in relation to ₹ 2,23,16,485/-. The learned Tribunal found that no show cause has been issued to the assessee. In that view of the matter, we are unable to interfere with this fact-finding. When the show cause notice was not issued to the assessee, the proceedings in connection therewith is a nullity and the adjudication thereof is also non est. - Decided against Revenue.
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Central Excise
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2015 (1) TMI 500
Waiver of pre deposit - 100% EOU - received goods free of duty but returned the rejected goods on payment of duty of excise through cenvat credit to the supplier of goods - Revenue's objection is that under Rule 3(4) of the CENVAT Credit Rules, cenvat credit can be utilized for payment of duty in the specified circumstances. - Held that:- In this case, the applicant is not the manufacturer of the goods in dispute. We also note that when the inputs were originally cleared by the supplier, no excise duty was paid and hence no cenvat credit was taken by the applicant. Prima facie, to us it appears that there was no need to pay any duty when the goods were being returned to the original supplier. By the above process, accumulated cenvat credit got shifted from the applicant to the supplier's unit. We have also considered the Tribunal's decision mentioned by the learned counsel. Keeping in view the overall facts, we direct the applicant to deposit 7.5% of the duty demanded, in cash, within a period of eight weeks - Partial stay granted.
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2015 (1) TMI 499
Denial of CENVAT Credit - Nexus with maufacturing activity - activity of conversion of rods and rounds - Held that:- Following decision of R.B. Steel Services and others vs. CCE, Rohtak [2015 (1) TMI 292 - CESTAT NEW DELHI] - after dispensing with the condition of pre-deposit of duty and penalty, set aside the impugned order itself - Decided in favour of assesse.
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2015 (1) TMI 498
CENVAT Credit - - whether the appellant is entitled to take CENVAT credit on Annual Maintenance of Wind Mill which has been located outside their factory and the electricity so generated by the wind mill has been transmitted through MSEB or not - Held that:- As per Rule 3A of the Central Excise Rules, 1944 (sic) the assessee is entitled to take CENVAT credit on service tax paid in respect of the services availed by them in the course of manufacturing activity as a manufacturer. It is not in dispute that the wind mill has been installed by the appellant to generate electricity which in turn used by them. Further, I have gone through the case law relied on by the learned A.R.'s in the cases of Ajanta Transistors Clock Mfg. (2010 (1) TMI 1149 - GUJARAT HIGH COURT), Asian Tubes Ltd. [2010 (9) TMI 468 - CESTAT, AHMEDABAD] and Ellora Times Ltd. (2008 (4) TMI 279 - CESTAT AHEMDABAD) and also the stay order passed by the Tribunal in the case of Maharashtra Seamless Ltd. (2012 (11) TMI 241 - CESTAT MUMBAI). - by a majority decision, this Tribunal granted waiver of pre-deposit to the appellant. In the case of Maharashtra Seamless Ltd. (supra) and Endurance Technologies Ltd. (2011 (7) TMI 373 - CESTAT, MUMBAI) on a similar facts this Tribunal held that the appellant is entitled to take CENVAT credit. As the learned A.R. has not brought out any decision which has been not considered by this Tribunal earlier on record to deny CENVAT credit and it is also an admitted fact that the wind mill installed by the appellant to generate electricity which have been used by the appellant in the course of business of manufacturing. Therefore, relying on the judgment of the Hon'ble Bombay High Court in the case of Ultra Tech Cement Ltd. reported in - [2010 (10) TMI 13 - BOMBAY HIGH COURT] I hold that the appellant is entitled to take CENVAT credit on annual maintenance charges of wind mill. In these circumstances, the impugned order is set aside - Decided in favour of assesse.
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2015 (1) TMI 497
Denial of CENVAT Credit - Chemicals supplied to job worker by appellant for use in processing of semi-finished parts - Job worker utilising excess CENVATTED inputs than the norms fixed for processing - Held that:- Appellant is entitled to take Cenvat credit is not required to reverse any Cenvat credit. In these circumstances, following the precedent decision of this Tribunal in the case of Bajaj Electrical Ltd. (2009 (6) TMI 781 - CESTAT, MUMBAI), I hold that the appellant is entitled to take Cenvat credit and are not required to reverse Cenvat credit on account of excess consumption of input - Decided in favour of assessee.
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2015 (1) TMI 496
Determination of the assessable value - Section 4 - Held that:- Tribunal in the case of Butterfly Gandhimati Appliances Ltd. [2014 (11) TMI 920 - CESTAT CHENNAI] and LLM Appliances Ltd. Vs. CCE, Chennai-III [2014 (11) TMI 920 - CESTAT CHENNAI], decided the issue in favour of the assessee, following the decision of the Hon’ble Supreme Court in the case of M/s. Jayanti Foods Processing Pvt. Ltd. in [2007 (8) TMI 3 - Supreme Court] and the decision in the case of PG Electroplast Ltd. Vs. CCE - [2014 (7) TMI 575 - CESTAT NEW DELHI]. As the Tribunal in the appellants own case decided the issue in favour of the appellants and following the same decision we set aside the impugned order and allow the appeal with consequential relief, if any - Decided in favour of assesse.
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2015 (1) TMI 495
Maintainability of appeal - Non compliance of pre deposit order - Held that:- As per the provisions of Section 35F of Central Excise Act, 1944 as amended in Finance Act, 2014, there is a mandatory requirement of pre-deposit of 7.5% of duty/penalty confirmed by way of impugned order. As statutory requirement has not been fulfilled by the appellants, we are not required to go into the merits of the case - Appeal not maintainable.
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2015 (1) TMI 494
Waiver of pre-deposit - goods were supplied to Tamil Nadu Water Supply and Drainage Board for execution of the project under the World Bank assistance - Notification No.108/95 - Held that:- It has been submitted that the loan is sanctioned by the World Bank only on approval of the project by the Govt. of India and therefore all the conditions of the Notification has been fulfilled. We find that the name of the assessee is specifically appearing on the certificate issued by Secretary to the Government, Finance Deptt., Govt. of Tamil Nadu, Chennai. In view of these facts prima facie we are of the opinion that the Applicant has been able to make out a case for full waiver of the pre-deposit. - Stay granted.
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CST, VAT & Sales Tax
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2015 (1) TMI 502
Liability to deduct TDS @ 4% - Held that:- The Tribunal while rejecting the contentions of the revisionist rightly imposed the penalty to a sum representing 20% of the amount, which should have been deducted at source – revisionist contended that it is not exigible to tax being a statutory corporation and, in fact, there was a proposal, which emanated from the revisionist, which was pending before the State Government seeking exemption from payment of tax - the revisionist Corporation is a corporation, which is constituted under the State Act - even going by the revisionist, revisionist sought exemption from tax, which itself would show that it could not have been the revisionist’s understanding that it still stood exempted from the obligation to follow the provisions of Section 35 and deduct tax as provided therein - the revisionist has been granted considerable relief in the matter of quantum by the Tribunal – as such no substantial question of law arises for consideration - Decided against revisionist.
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2015 (1) TMI 501
Exemption from tax @ 25% or 75% RST - Duty demand along with interest - demand raised, by way of enforcement of the undertaking given by the petitioner-Company, pursuant to the Notification dated 22.2.2002 - A Rajasthan Sales Tax New Incentive Scheme for Industries, 1989 To remove imbalance between different units, Govt. issued special Notification dated 22.2.2002 in exercise of the powers vested under section 15 of the Act whereby 75% exemption was allowed subject to an undertaking in writing to the effect that it will deposit the benefit availed by it exceeding 25% of its tax liability, in case order of Rajasthan HC is modified by the Supreme Court. Assessee filed the undertaking and agreed to pay without demur or loss to exchequer. Supreme Court vide order 19.2.2014, held that RST exemption beyond 25% was not allowable and proceedings in terms of undertaking were initiated against assessee. One company ACRL was declared sick and BIFR passed revival order which provided merger of sick company with assessee on various terms and condition but the Sanctioned Scheme did not relieve the Company of effect of undertaking. The State Government was only required to consider for such relief which was not granted. Further, assessee was availing tax deferment benefit whereby it was recovering full amount of RST and CST from its customers but making deferred payment to exchequer per scheme. State Government by Notification dated 9.3.2007, gave option to the assessees to pay the present discounted value of the deferred amount in full and final settlement of the total deferred amount. Assessee informed revenue with full particulars and no objection was received, made prepayment and after informing revenue discontinued making payment of installments of deferred tax. Held that:- The matter pending before the Supreme Court was finally decided on 19.2.2014, in which it was held that M/s Binani Cements was not entitled to the RST exemption beyond 25% and on which proceedings were initiated against the petitioner-Company. The undertaking became effective as soon as the Supreme Court decided the matter on 19.2.2014 and that any benefit retained by the petitioner, if allowed to be retained, would result into reverse discrimination, whereas M/s Binani Cements would be able to claim incentive only to the extent of 25%, the petitioner despite its undertaking would get incentive of 75%. - terms of the undertaking after it was unconditionally accepted, cannot be altered, as a person seeking exemption on an undertaking, which is agreement, cannot be allowed to reprobate. The doctrine of benefits and burdens postulates that a person taking advantage under an instrument which both grants a benefit and imposes a burden, cannot take the former without complying with the latter. A person cannot approbate and reprobate or accept and reject the same instrument. The only issued before the BIFR was the period of incentive. The question of relieving the Company of its undertaking linking it with the case of M/s Binani Cements, which was pending in the Supreme Court, was not the subject matter, which was either discussed or considered by the BIFR, nor, in our opinion, the BIFR could have de-linked the petitioner Company' from the case of M/s Binani Cements and relieved it from the liability in case the matter was decided by the Supreme Court against M/s Binani Cements. - The rehabilitation scheme (SS-04) sanctioned by the BIFR on 7.1.2004 did not provide for sales tax incentive beyond 25% nor there was any clause in the SS-04, which may have relieved the petitioner-Company from Binani effect. BIFR under section 19 of the Sick Industrial Companies (Special Provisions) Act, 1985 read with Regulation 33, does not have any power to direct, in the absence of specific consent, the State Government to grant any incentive, which is not a part of the policy of the State Government. In view of the decision of the Supreme Court in S tate of U.P. v . UPTRON Employees' Union, CMD ((2006) 5 SCC 319), no direction can be given by the BIFR directing any State to grant or not to grant any incentive or to relieve the petitioner of any statutory liability. Question of pendency of the Appeal filed by the State of Rajasthan against the judgment of the Rajasthan High Court providing 75% exemption to M/s Binani Cements and the undertaking given by the petitioner, in pursuance to the Notification dated 22.2.2002, which clearly provided for giving such undertaking and exemption was dependent on such undertaking, was neither discussed nor considered by the BIFR. Further, in our view, in any case, the BIFR could not have relieved the petitioner Company from its obligations under the Notification dated 22.2.2002 and the undertaking given by the petitioner-Company, which had to come into force only if the judgment of the Rajasthan High Court was modified by the Supreme Court. The BIFR could not foreseen the fact nor it could have granted any relief, which may have come into force on any unforeseeable event in future. The petitioner Company was availing the deferment of 75% in view of the Notification dated 22.2.2002, which on account of the reversal of the judgment of the Rajasthan High Court by the Hon'ble Supreme Court, was reduced to 25% and thus, the legal entitlement for deferment under the Notification dated 31.3.2006 was reduced to 25% for the years 2006-07 to 2008- 09. The petitioner had availed additional benefit of 50%, which was not permissible as an effect of the judgment of Hon'ble Supreme Court in the matter of M/s Binani Cements. This amount was even otherwise required to be paid to the State in the relevant years on monthly or quarterly basis under section 20(1) of the Act of 2003. - no pre-payment in respect of the amount which was already delayed was available. The amount already delayed could not be further postponed by a period of seven years, on which the petitioner claimed for early re-payment. The claim is thus not permissible. The liability in the present case arose in terms of Section 20(4) read with Section 55(1) (a) and (c) for the delay in payment within the time specified under the Act from the day immediately succeeding the date specified for such payment and ending with the day on which such payment is made. The petitioner-Company was liable to pay the interest on the excess of the incentive in terms of the undertaking given by it to return the benefit actually availed and to pay without demur the loss to the revenue. The judgment of Hon'ble Supreme Court in M/s Binani Cements, with which the petitioner's case is linked by undertaking, restored the Eligibility Certificate dated 29.3.1997 with effect from 27.3.1997 and thus, once the original exemption to the extent of 25% was restored, the differential tax has to be paid/disgorged by the petitioner without any loss to the exchequer. The entire benefit had to be restored and on which the petitioner was required to pay interest on the amount withheld by it. The petitioner must restore the amount retained by it as a benefit, after the judgment of Hon'ble Supreme Court dated 19.2.2014 in M/s Binani Cement's case and in terms of the undertaking given by it to the State Government. Any other view will amount to grant of unjust benefit to the petitioner-Company at the expense of the State. The petitioner must restitute and recompensate the State Government in terms of its undertaking which was not diluted, modified or affected in any manner by the order of BIFR or the scheme for deferment of tax. The restitution must be from the date when the petitioner was liable to pay. A perusal of the impugned order would show that the primary issue to be decided, namely, the effect of the Notification dated 22.2.2002 was discussed and considered and by which the competent authority found that the extent of the benefit available to the petitioner-Company would be limited only to 25% i.e. the change in the percentage of incentive, which has consequential effect on the extent of deferment under the Notification dated 31.3.2006, by virtue of Clause (6) and as such, the adjudication with regard to the percentage of incentive available to the petitioner-Company was made in the impugned order. The petitioner-Company is clearly, in view of the undertaking given by it on 19.3.2002, in terms of Clause (3) of the Notification dated 22.2.2002, is not entitled to any relief from this Court. - Decided against Petitioner.
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