TMI Tax Updates - e-Newsletter
January 14, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Income on account of licence fees and amenities provided to tenant - business income OR income from house property income - It is a case of exploiting the asset commercially and not the case of mere letting it out - to be taxed as business income - AT
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Income Tax:
Addition u/s 40A - interest paid @ 18% in relation to the borrowing made from the persons specified u/s 40A(2)(b) - unreasonable and excessive expenditure - Once there was categorical findings by the Tribunal that 18% per annum interest was reasonable the CIT(A) ought to have followed the same. - AT
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Income Tax:
Nature of compensation/settlement amount paid to the erstwhile MD - capital or revenue expenditure - it is common practice in case of termination of employment to put forth the condition not to engage in act of competition for a year. This cannot be considered to treat the above payment as capital in nature. - AT
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Income Tax:
Amount paid towards Technical know-how and Royalty - ITAT adopted the superficial approach - both the payments to foreign company are in respect of a benefit which is not only of enduring nature but for the purpose of acquiring of an asset and hence a 'Capital Expenditure' and not 'Revenue Expenditure' - HC
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Income Tax:
Validity of reopening of assessment - They claimed deduction which they were not entitled which fact came to the notice of the department only in 2010-11 when it was verified whether the petitioner had rural branches. This, according to us is a valid reason for reopening the assessment. - HC
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Income Tax:
Validity of reopening of assessment - necessary particulars had already been given to the petitioner showing the reasons to believe and there is no reason why this Court should sit in judgment over the same and take a different view in the matter - HC
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Income Tax:
Penalty u/s 272A(2)(k) - late filing of TDS statements / returns - Since section 273B covers the cases of levy of penalty u/s 272A(2), then in line with the provisions of said section in case a person establishes its case of reasonable cause for not complying with the provisions of said section, then no penalty - AT
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Income Tax:
Penalty u/s 272A(2)(k) - late filing of TDS statements / returns - Since section 273B covers the cases of levy of penalty u/s 272A(2), then in line with the provisions of said section in case a person establishes its case of reasonable cause for not complying with the provisions of said section, then no penalty - AT
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Income Tax:
Year end provision - non deduction of tds - assessee in default - in the case of the year end provision where the party/payee is identifiable, the TDS is to be deducted and where the party is not identifiable, no TDS is deductible. - AT
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Income Tax:
Foreign tax credit - quantification of income for the purpose of computing admissible tax credit - The tax credit for both the jurisdictions is to be computed separately but in a similar manner, as is provided in the respective treaties - AT
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Corporate Law:
Winding-up petition - non-payment of the 'Professional Fees' - The winding-up petition cannot partake the character of a money recovery suit and unless the liability is clearly admitted by the Respondent Company - HC
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Service Tax:
Levy of penalty - Delay in payment of tax - The delay has occurred because of change in the procedure of payment of tax and therefore we do not find any justification for imposing penalty - AT
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Service Tax:
Interest on credit availed - mere taking of credit which has been reversed without utilization, no liability for payment of interest or penalty would arise thereof - AT
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Central Excise:
Refund claim - it is a case of the tax collected by the authorities under the Rules by misconstruction or wrong interpretation of the provisions - refund claim would fall within the purview of Section 11B - period of limitation of one year is applicable - AT
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Central Excise:
Recovery of outstanding dues - attachment of property - 100% EOU vacated the property before completion of export obligations - recovery cannot be made from the Lessor by attachment of the property - AT
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Central Excise:
Refund of CENVAT credit - denial on the ground that the respondent failed to establish that the credit involved on the inputs/input services were used for the final products exported during the said quarter - one to one co-relation not required - refund allowed - AT
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Central Excise:
Cenvat credit on such input services stand availed properly on the date of receipt of the service. Hence there is no obligation on the part of the manufacturer to reverse credit in input services at the time of debonding from 100% EOU scheme - AT
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Central Excise:
Cenvat Credit - input services - merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessee is not entitled to the benefit of CENVAT credit - AT
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VAT:
Works contract - construction of flats - the ownership of land is with the builder itself, and there is no development agreement entered into by the builders with the owners of the land. This is a material circumstance, which has completely been omitted from consideration by the Tribunal - HC
Articles
Notifications
Customs-
04/2017 - dated
13-1-2017
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Cus (NT)
Tariff value Notification in respect of Fixation of tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver
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03/2017 - dated
12-1-2017
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Cus (NT)
Amendment in Notification No. 131/2016-Customs (N.T.) dated 31.10.2016 relating to AIR of duty drawback
Service Tax-
4/2017 - dated
12-1-2017
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ST
Seeks to amend notification No. 26/2012-ST dated 20.06.2012 so as to rationalize the abatement for tour operator services
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3/2017 - dated
12-1-2017
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ST
Seeks to amend notification No. 30/2012-ST dated 20.06.2012 so as to specify the person complying with the sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 (52 of 1962) as the person liable for paying service tax in case of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India
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2/2017 - dated
12-1-2017
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ST
Seeks to amend Service Tax Rules, 1994 so as to, (i) exclude such persons from the definition of aggregator who enable a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes subject to fulfillment of certain conditions; (ii) Specify the person complying with the sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 (52 of 1962) as the person liable for paying service tax in case of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India
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1/2017 - dated
12-1-2017
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ST
Seeks to amend notification No. 25/2012-ST dated 20.06.2012 so as to (i) withdraw the exemption from service tax for services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India; (ii) exempt services provided by a business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch
News
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CBEC GST Migration Help (PPT for taxpayers on Migration)
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INDIA’S FOREIGN TRADE: December, 2016
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CBDT prods officials to meet tax collection targets
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold And Silver Notified
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RBI Reference Rate for US $
Case Laws:
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Income Tax
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2017 (1) TMI 740
Penalty levied under section 271(1)(c) - undisclosed income on account of bogus purchases and sales - Held that:- On an appreciation of the material on record we are inclined to concur with the view of the CIT(A) that the explanation put-forth by the assessee in the penalty proceedings was a plausible one, inasmuch as, the circumstances on which the additional income was offered was because the disputed parties with whom these transactions were made were non-cooperative and the assessee having no control over those parties was, therefore, not able to substantiate its claim with necessary material evidence. Therefore, the assessee was constrained in order to avoid lengthy litigation to offer the additional income, which was accepted as such the Assessing Officer. Apex Court in the case of Mak Data P. Ltd. (2013 (11) TMI 14 - SUPREME COURT) while considering the provisions of Explanation 1 to section 271(1)(c) of the Act observed that the general principles of law in respect of penalty for concealment of income, does not grant the assessee automatic immunity from penalty on account of surrender or voluntary disclosure of income. As per the provisions of Explanation 1 to section 271(1)(c) of the Act, the question is whether the assessee has offered any explanation for concealment of income or furnishing of inaccurate particulars of income. In the case own hand we find that the requirement laid down by the Hon’ble Court has been met by the assessee inasmuch as, as observed by the CIT(A), the assessee’s explanation (supra) which appears plausible and which explanation, though brushed aside by the Assessing Officer as an afterthought, has not been brought out or found to be false in respect of furnishing of particulars. We, therefore, uphold this view of the CIT(A) and consequently uphold her order directing the Assessing Officer to delete the penalty levied in the case on hand for assessment year 2009-10 - Decided in favour of assessee
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2017 (1) TMI 739
Penalty u/s. 271(1)(c) - Held that:- CIT(A) by relying upon the Hon’ble Supreme Court of India decision in the case of CIT vs. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] has observed that the assessee had given an explanation, which is bonafide. There is no furnishing of inaccurate particulars of income or deliberate attempt to conceal income, hence, he rightly deleted the penalty in dispute. Even otherwise, we note that the addition on which the penalty in dispute was levied, has already been deleted by the ITAT [2016 (3) TMI 647 - ITAT DELHI], hence, the penalty in dispute will not survive. - Decided in favour of assessee.
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2017 (1) TMI 738
Nature of compensation/settlement amount paid to the erstwhile MD - addition on the ground that the payment was for non- competition and being in capital nature - Held that:- We are of the view that the services of the MD were terminated because the merger of the assessee company took place. Therefore, the compensation paid to the MD was as per the agreement between the assessee and the MD. The AO was wrong in disallowing the amount as capital in nature. The material placed in the paper book demonstrates that the compensation paid to MD is as per the agreed terms. Also, it is common practice in case of termination of employment to put forth the condition not to engage in act of competition for a year. This cannot be considered to treat the above payment as capital in nature. Therefore, we set aside the order of the CIT(A) and delete the addition made by the AO towards compensation/settlement payment made to the MD of the assessee. - Decided in favour of assessee.
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2017 (1) TMI 737
Income on account of licence fees and amenities provided to tenant - business income OR income from house property income - Held that:- We find that the assessee had purchased a property and same was let out to Citigroup, that it had entered into two agreements with its tenant, that it had provided various amenities to the Citigroup, that the rental income received by it was offered under the head business income, that the AO was of the opinion that Leave and license fees and charges received against the amenities were to be taxed under the head income from house property. It is a fact that the main object of the assessee, as evident from the memorandum of incorporation, was to deal in properties as well as to let them out. It had purchased a property, but could not sell it. Later on, it converted the property into commercial asset and provided various amenities to the tenant. Assessee had provided certain amenities and facilities to the tenants. It is a case of exploiting the asset commercially and not the case of mere letting it out. Therefore, in our opinion, the order of the FAA does not suffer from any legal infirmity. In our opinion, facts of JST Reality (2015 (2) TMI 397 - ITAT MUMBAI ) are distinguishable from the facts of the case under appeal. Considering the peculiar facts and circumstances of the case, we decide the effective ground of appeal against the AO.
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2017 (1) TMI 736
Penalty under Section 271-D - receipt of unsecured loan in cash - Held that:- HC Order 2016 (9) TMI 336 - RAJASTHAN HIGH COURT] confirmed as the conduct or the entry and flowing of funds is sufficient to prove that the amount was admittedly received by cash in the account of assessee as having been received from R.P. Goyal and found credited as an “unsecured loan”, proves that it was in the nature of a loan and certainly such loan having been received by cash, falls within the ambit of Section 269-SS. The special leave petitions are dismissed. - Decided against assessee
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2017 (1) TMI 735
Rejection of a stay petition by the CIT(A) an appealable order under section 253 - Does the Tribunal have the power to admit, hear and decide an appeal against the rejection of a stay petition by the CIT(A), when no appeal of the assessee on quantum is before the Tribunal? - Held that:- We find in the present case that the question would not call for adjudication for the reasons that the quantum appeal of the assessee is already pending before this Tribunal and as such, this Tribunal could always pass such interim orders in accordance with law if required. Learned counsel appearing for the appellant submits that even in a case where no appeal is pending before this Tribunal and the CIT(A) is seized of the matter, refusing to grant interim order to stay recovery proceedings, this tribunal can always entertain an appeal against the refusal and adjudicate on the legality of the order. We do not wish to enter into this controversy at this stage as it would be an academic exercise. It is well settled that the adjudicatory body does not answer / entertain academic question. It would not be proper for us to pronounce upon the questions raised before us in these circumstances.
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2017 (1) TMI 734
Disallowance of mark to market (MTM) loss - Held that:- We find that the issue stands decided in favour of the assessee by the Tribunal in the matters relied upon by the AR. It is found that in the of the Kotak Mahindra Investment Ltd. (2013 (7) TMI 355 - ITAT MUMBAI ), the Tribunal has held that M T M losses have be allowed. We do not find any infirmity in the order of the FAA. So, respectfully, following the orders of the Tribunal, we decide issue against the AO. Disallowance under section 14A - Held that:- We find the Judicial Forums have, on more than one occasions, held that no disallowance u/s. 14A could be made if the shares are held as stock in trade or the assessee had not claimed any expenditure against the exempt income. In the case before us, the AO/FAA has not proved that stocks were held by the assessee as investment or that it had claimed by any expenditure for earning the tax free income. Therefore, reversing the order of the FAA, we decide the first ground of appeal in favour of the assessee. Disallowance of depreciation - AO held that assessee was not the owner of the assets, that it had not produced any documentary evidence to prove the payment was made by it, that it was not eligible for claiming depreciation - Held that:- We find that the group concern of the assessee had purchased computers/computer related accessories in Hong Kong, that the foreign-entity had made the initial payment, that the goods were shipped to India, that assets are appearing in the audited books of accounts of the assessee, that the AO had not doubted the genuineness of the details of the block of assets. After considering the available material, including the debit note raised by the foreign entity, we are of the opinion, the AO/FAA was not justified in denying the depreciation to the assessee. - Decided in favour of the assessee
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2017 (1) TMI 733
Revision u/s 263 - disallowance of depreciation - addition u/s 40(a)(ia) - Held that:- There was no lack of enquiry on part of the AO and he had taken an informed decision. Therefore, it cannot be said that no proper enquiry was made. We find that the issue of disallowance of depreciation was discussed and deliberated upon by the Tribunal in assessee’s own case for the year under consideration. Therefore, the consequential disallowance with respect to forex loss capitalised cannot be upheld. As per the settled principle of taxation once forex loss being capitalised , then no disallowance u/s. 40(a) (ia) can be made. In the case under consideration the AO had taken one of the possible views and the view taken by him is not against the provisions of law. Therefore, his order would not fall under the category of an erroneous order. As far as contingent sales tax deposit are concerned, it is found that the AO had passed a rectification order and taxed the disputed amount. By that time the order of CIT was passed. Thus there was no justification for the CIT to direct the AO to initiate penalty proceedings. It is found that the CIT had further directed the AO to make further verification of consumption of containers. We find that assessee had filed all necessary details before the AO during assessment proceedings and he had passed the order after considering the available material. Thus we are of the opinion that, the order passed by the AO was neither erroneous nor prejudicial to the interest of revenue. Thus we hold that the CIT was not justified in invoking the provisions of section 263 of the Act. - Decided in favour of the assessee.
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2017 (1) TMI 732
Disallowance u/s.40(a)(ia) - whether the amendment made is prospective or retrospective w.e.f. 1.4.2005 when the provisions of Sec.40(a)(ia) were introduced? - As argued on behalf of the revenue that the existing provisions allow deduction in the year of payment and to that extent there is no hardship - Held that:- The reasoning of the Hon’ble Supreme Court in the case of Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT) will equally to the amendment to Sec.40(a)(ia) of the Act whereby a second proviso was inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013. The provisions are intended to remove hardship. It was . We are of the view that the hardship in such an event would be taxing an Assessee on a higher income in one year and taxing him on lower income in a subsequent year. To the extent the Assessee is made to pay tax on a higher income in one year, there would still be hardship. The Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd.,[2015 (9) TMI 79 - DELHI HIGH COURT ] has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. It is of the view that it would be sufficient if the order of the CIT(A) is set aside and the issue remanded to the AO for verification as to whether payees have included the receipts from the Assessee in their returns of income in terms of the decisions referred to above.
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2017 (1) TMI 731
Transfer u/s. 45(2) - scope of deeming provisions u/s.50C - CIT(A) held that deeming provisions of Section 50C being a legal fiction cannot be invoked for the purpose of valuation of transfer of tenancy rights - whether mere letting out of property by assessee to the tenant does not envisage any transfer u/s. 45(2)? - Held that:- AO has not disputed the fact that assessee was in receipt of any consideration other than monthly rent. CIT(A) has also considered the scope of deeming provisions u/s.50C on the basis of decision of Mumbai Tribunal in case of Atul G Puranik [2011 (5) TMI 576 - ITAT, Mumbai]. The CIT(A) has also deliberated on the judicial pronouncements laid down in case of Munsons Textiles [2012 (2) TMI 520 - ITAT MUMBAI ] for the applicability of provisions of Section 50C. After going through the entire material placed on record, we also found that there is no transfer or alienation of the said assets, therefore, provisions of capital gain is not applicable. We also found that no finding has been recorded by the AO to the effect that any sale consideration was received by the assessee other than rent and maintenance charges. The detailed findings so recorded by CIT(A) are as per material on record, therefore, do not require any of our interference. Accordingly, grounds taken by the Revenue are dismissed.
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2017 (1) TMI 730
Validity of reference made by the AO to the DVO - Fair Market Value as offered by assessee was more than the value determined by the AO - Held that:- As carefully gone through the order of the Bombay High Court in case of Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT) wherein the facts are exactly similar and reference so made by the AO was held to be invalid for the assessment year falling prior to the amendment so brought in by Finance Act 2012. Undisputedly, relevant assessment year under consideration is assessment year 2004-05, which is prior to the amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 01/07/2012. Facts and circumstances in all the appeals before us are same, respectfully following the decision of Bombay High Court, we do not find any merit for the reference so made by the AO to the DVO, when the value offered by assessee was more than the value determined by the AO in respect of assessment year falling prior to introduction of amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 1/7/2012. - Decided in favour of assessee.
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2017 (1) TMI 729
Amount paid towards "Technical know-how" and 'Royalty' - whether should be treated as "Revenue Expenditure" or "capital expenditure"? - Held that:- As find from record that at the time of entering into "Technical Know-how" agreement, HMCL had only 60% of share holding in HSCIL/Assessee but only in AY 2004-2005, it increased its share holding to 99% and above and thus got virtually entire control and ownership over the alleged joint venture. A.O. has found this exercise as diversion of profit. Assessee explained it to be in accordance with Government policy. Even if the same aspect is ignored, as a relevant consideration for deciding the questions up for consideration before us, yet we find that reasons given in the light of various clauses of the agreement so as to treat "Technical Know-how" fee as "Capital Expenditure" is well founded but unfortunately Tribunal while taking otherwise view has impressed itself with superficial approach treating ownership of "Technical Know-how" fee by parent company and limited tenure etc. without appreciating various clauses of agreement in entirety and thus has erred in law. A.O and CIT(A) were justified in recording their finding and reasons to treat payment of "Technical Know-how" fee and 'Royalty' as "Capital Expenditure" and not "Revenue Expenditure". Reasonings given by the said two authorities similar to what we have also noticed in addition to our discussion have our affirmance. The view taken by Tribunal otherwise is unsustainable and cannot be accepted. No hesitation to hold that both the payments to foreign company are in respect of a benefit which is not only of enduring nature but for the purpose of acquiring of an asset and hence a 'Capital Expenditure' and not 'Revenue Expenditure'. - Decided against Assessee
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2017 (1) TMI 728
Validity of reopening of assessment - valid reasons to believe - review v/s reassessment - Held that:- It is a settled position in law that a reopening of assessment has to be done only by the Assessing Officer based on his reasonable belief that income chargeable to tax has escaped assessment. This satisfaction of the Assessing officer has to be disclosed /made explicit in the reasons recorded and the same cannot be a subject of speculation and /or drawing inferences. Any improvement in the reasons recorded as sought to be done by oral submissions on the basis of the affidavit in reply of the Commissioner of Income Tax Mr. K.K. Deb Burman dated 12 May 1988 has to be ignored. The reasons as recorded can alone be subjected to examination, to determine whether it supports the belief that income chargeable to tax has escaped assessment. On minute examination of the reasons recorded, we find that even when reasons recorded are read as a whole, it does not indicate that there has been a failure on the part of the petitioner to disclose fully and truly all facts necessary for assessment. Nor does it state that there has been any misrepresentation on the part of the petitioner. It is on reexamination of the seized diaries(A1 to A6) alone, without any fresh material which points to the falsity of the diaries(A1 to A6). Therefore when we examine the reasons recorded, without the aid of the affidavit in reply dated 12 March 1988 of the Commissioner of Income Tax, it clearly indicates a change of opinion on the same set of facts. Thus it is a clear case of the Assessing officer seeking to review his decision taken during the earlier assessment/ reopening assessment and not a case of reassessment. In the present facts, it is not the case of the Revenue that any material evidence which was a part of the seized six diaries (A1 to A6),was not brought to the notice of the Assessing Officer, and it does not mention which material relied upon by the Petitioner during the assessment proceedings, had led the Assessing Officer to conclude that the Petitioner is only a finance broker and not a financier. In fact the reasons recorded in this case does not even remotely indicate that any part of the evidence being relied upon to issue the impugned notices were not brought attention to by the petitioner during earlier assessment proceedings for the very assessment years which are sought to be reopened. - Decided in favour of assessee
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2017 (1) TMI 727
Validity of reopening of assessment - passing a composite order - Held that:- As far as the department is concerned, when they have given the reason to believe, for which an objection is filed, and they confirm that there is valid reason to believe, definitely they can proceed with the assessment order. As far as the assessee is concerned, the right to challenge the reason to believe is not lost merely for the reason that a composite order had been passed. Therefore, the assessee's right to appeal against the reopening of the assessment as well as the assessment proceedings can as well be taken up in a regular appeal. In other words, no prejudice will be caused to the assessee on account of a composite order being passed and therefore, do not think such a ground can be sustained. The revenue had proceeded on the basis that there is non disclosure by which the petitioner have derived a benefit which they were not entitled to. They claimed deduction which they were not entitled which fact came to the notice of the department only in 2010-11 when it was verified whether the petitioner had rural branches. This, according to us is a valid reason for reopening the assessment. Whether the assessment proceedings are valid and justifiable? - Held that:- This question, do not think this Court should be keen to answer especially when the petitioner has an appellate remedy available under the statute. In the said circumstances, this writ petition is dismissed with liberty to the petitioner to file appeal before the competent appellate authority. However, it is made clear that the period during which this writ petition was pending shall be excluded from the period of limitation prescribed for filing an appeal as per the statutory provision.
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2017 (1) TMI 726
Validity of reopening of assessment - absence of reasons to believe given - Held that:- The orders informing reason to believe had been supplied as early as on 27/9/2015 and so far, no steps had been taken by the petitioner either to file the return or such other steps in accordance with law and therefore the writ petitions itself are not maintainable for delay and laches. That apart, it is submitted that the reason stated in the enclosure clearly indicates that there is suppression of turnover which itself is enough for the purpose of understanding the reason for reopening the assessment. The enclosure which has been annexed along with the documents clearly narrates why the assessment had to be reopened. Learned counsel for the petitioners however has a case that the enclosure that had been given was for internal purpose and was not intended to be a notice given to the petitioners indicating the reason to believe. In so far as the enclosure is enclosed along with Ext.P5 series and Ext.P7 series, necessarily, the petitioners are put to notice regarding the reason to believe by which the assessment had been reopened. Under such circumstances necessary particulars had already been given to the petitioner showing the reasons to believe and there is no reason why this Court should sit in judgment over the same and take a different view in the matter.
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2017 (1) TMI 725
Disallowance under Section 37(5) - payments made to Welcome Group of hotels under the executive holiday plan whereunder the assessee booked accommodation for 366 days for use of its employee while on leave - Held that:- The insertion of sub-section (5) into section 37 was only to restrict the application of sub-section (4) of section 37 to lodging or boarding provided to any person when he is on a tour or a visit to a place. It does not cover use of the guest house used by employees while on leave which are considered to be holiday home. Therefore, sub-section 5 of section 37 of the Act would have no application when the guest house is being used as holiday home i.e. for exclusive use of employees on leave. The words “while on leave” is absent in sub-section 5 of section 37 and restricts the use of accommodation to be considered as a guest house when used by the employees on a tour or a visit to a place where such accommodation is situated. Therefore, sub-section 5 of Section 37 of the Act can have no application when the guest house is used as a holiday home as defined in second proviso to section 37(4) of the Act. Tribunal was not correct in invoking sub-section 5 of Section 37 to deny the benefit of the second proviso to section 37(4) of the Act available to the applicant assessee. This is so as section 37(5) of the Act will not apply to the cases covered by the second proviso to section 37(4) of the Act. - Decided in favour of assessee and against the respondent Revenue.
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2017 (1) TMI 724
Disallowance of interest on account of interest fee advances - Held that:- Documents of transactions with Menghraj Sons and outstanding debtors details of Menghraj Sons were all filed by the assessee before the AO/CIT(A) as per certificate furnished by the assessee along with paper book filed with the tribunal. We donot find any perversity in the order of learned CIT(A) which we affirm and sustain. No incriminating material has been brought on record by the Revenue to disprove or demolish findings recorded in learned CIT(A) order. The outstanding amount is receivable from M/s Menghraj & Sons on account of normal business transactions between the two entities, although payments were received belatedly. In our considered view, no disallowance of interest towards proportionate interest paid by the assessee on borrowings made by it can be made u/s 40A(2) of the Act as was made by the AO and we order deletion of the said addition by confirming/sustaining the order of learned CIT(A) . - Decided in favour of assessee
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2017 (1) TMI 723
Claim of investment allowance u/s.32A on the value of the plant and machinery leased out by the assessee - Held that:- The same question is answered in CIT vs. Industrial Credit & Investment Corporation of India Ltd. (2005 (2) TMI 863 - BOMBAY HIGH COURT) answered in the affirmative, relying on CIT vs. Shaan Finance (P.) Ltd. (1998 (3) TMI 8 - SUPREME Court) here the business of the Assessee consists of hiring out machinery, or where the income derived by the assessee from the hiring of any machinery is business income, the assessee must be considered as having used the machinery for the purpose of its business. So when a leasing or finance company, which owns the machinery, leases it to the third parties who use the same for manufacture in accordance with Section 32A(2)(b)(iii), the former is entitled to investment allowance in respect of such machinery under Section 32A. - Decided in favour of the Assessee Additional depreciation on the assets leased out by the assessee - Held that:- The decision of Shaan Finance (P.) Ltd. (1998 (3) TMI 8 - SUPREME Court ) is squarely applicable to the claim of additional deprecation. The question is, accordingly, answered in the affirmative, i.e. in favour of the Assessee and against the Revenue. Extra shift allowance of depreciation - Held that:- Supreme Court, in the case of CIT vs. Maharashtra Apex Corporation Ltd. (2001 (9) TMI 4 - SUPREME Court ), following the ratio of Shaan Finance (P.) Ltd. (supra), has held that the assessee was entitled to extra shift allowance of depreciation, even though it was the lessee, and not the assessee, who had used the machinery in double shift. The decision squarely covers the Assessee's case herein. There is no dispute that the respective lessees of the Assessee had worked in extra shift. In his order, the CIT(A) has clearly recorded that “the lessees had worked extra shift and relevant certificates were produced before the Assessing Officer.” The Question is, accordingly, answered in the affirmative, i.e. in favour of the Assessee and against the Revenue.
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2017 (1) TMI 722
Penalty levied under section 272A(2)(k) - late filing of TDS statements / returns - e-TDS was made compulsory for the instant assessment year and where the software was not user-friendly and required amendments at the end of the Government itself from time to time and the compliance being a complex procedure introduced for the first time - can the provisions of section 273B of the Act be applied in order to decide the issue of levy of penalty under section 272A(2)(k) of the Act.? Held that:- Section 272A(2) of the Act, since penalty has been levied for default in furnishing e-TDS returns under section 272A(2)(k) of the Act. Since section 273B of the Act covers the cases of levy of penalty under section 272A(2) of the Act, then in line with the provisions of said section in case a person establishes its case of reasonable cause for not complying with the provisions of said section, then the section provides that such a person shall not be liable to the penalty imposable for the said failure i.e. under section 272A(2) of the Act. The CIT(A) in the case of several assessee before us has wrongly come to the conclusion that the provisions of section 273B of the Act do not cover the defaults under section 272A(2)(k) of the Act. We reverse the finding of CIT(A) in this regard. The onus was upon the authorities to provide platform for easy compliance to newly introduced provisions of the Act. Where such facilities could not be provided by the authorities and the technical support not being available to small assessees, who are in appeal before us, then the delay in furnishing the e-TDS returns late should be liberally construed. Hence, there was practical difficulty on the part of assessee to comply with newly introduced requirement of e-TDS filing of TDS statements, being technical delay and not venial in nature, merits to be considered as reasonable cause for non levy of penalty as per the requirements of section 273B of the Act. We hold so. In this bunch of appeals, there are cases where the assessee has defaulted in not depositing tax deducted at source in time, in such cases, the returns were delayed because of default on behalf of the deductor. In such cases, penalty under section 272A(2)(k) of the Act is leviable. However, the same is to be restricted from the date of payment of TDS to the date of filing e-TDS statements since e-TDS statements cannot be filed without payment of TDS to the credit of Central Government. Also we direct the Assessing Officer to restrict the penalty leviable to first quarter which is in default and for the overlapping default, no penalty is to be levied under section 272A(2)(k) of the Act. We direct the Assessing Officer to verify the claim of assessee in this regard and work out the penalty accordingly.
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2017 (1) TMI 721
Year end provision - Order u/s 201 and 201(1A) - non deduction of tds - whether the assessee can be said to be in default for not deducting the TDS in respect of a provision made at the year end? - Held that:- ITAT, Chennai Bench in the case of Dishnet Wireless Ltd. (2015 (7) TMI 778 - ITAT CHENNAI ) has held that in the case of the year end provision where the party/payee is identifiable, the TDS is to be deducted and where the party is not identifiable, no TDS is deductible. Similar view has been taken by the ITAT Mumbai Bench in the case of Industrial Development Bank of India (2006 (7) TMI 248 - ITAT BOMBAY-H ). After considering the scheme of Chapter XVII-B with regard to tax deduction at source, we agree with the views expressed by ITAT Mumbai Bench and ITAT Chennai Bench. As per the scheme of TDS under Chapter XVII-B Section 199, the credit for the TDS is to be given to the deductee. Thus, the identification of the person from whose account income tax was deducted at source is a pre-requisite condition so as to make the provision for Chapter XVII-B workable. Tax deducted at source is considered to be tax paid on behalf of the person from whose income the deduction was made and, therefore, the credit for the same is to be given to such person. When the payee is not identifiable, to whose account the credit for such TDS is to be given. Thus we set aside the orders of authorities below on this point and restore the matter to the file of AO for both the years under consideration to verify whether the payee is identifiable and the amount payable to him is ascertainable. Then the assessee would be required to deduct tax at source in respect of such provision. However, in case payee is not identifiable, the provision of Chapter XVII-B i.e., tax deduction at source, cannot be pressed into service and, therefore, the assessee is not required to deduct tax at source in such a case. The Assessing Officer will readjudicate the issue afresh after examining the above facts. Needless to mention that he will allow adequate opportunity of being heard to the assessee while giving effect to our order.
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2017 (1) TMI 720
Foreign tax credit - quantification of income for the purpose of computing admissible tax credit - selection of assessment year - treatment to release of retention money - Indo Singapore tax treaty - taxation in source country and resident country - profitability of the projects while computing the Foreign Tax Credit in respect of doubly taxed income - Held that:- Right now, we are dealing with a situation in which a major portion of income, by release of retention money as also by addition of an additional user by the customer, is a somewhat passive income, even though in the nature of business receipt, and as such, to that extent, allocation of all the expenses incurred by the assessee, in respect of such earnings, will not be justified. As regards the income from maintenance contracts, the relates costs have already been allocated and the Assessing Officer has not pointed out any infirmity in the same. In this view of the matter, quantification of income for the purpose of computing admissible tax credit, as done by the assessee and as reproduced earlier, is accepted. The tax credit for both the jurisdictions is to be computed separately but in a similar manner, as is provided in the respective treaties. So far as the tax credit in respect of Indonesian receipts is concerned, as noted above and in view of article 23(1) of the applicable tax treaty, it cannot “exceed the part of the income tax as computed before the deduction is given, which is attributable as the case may be, to the income which may be taxed in that other State”. The income tax is, therefore, required to be computed on proportionate basis The tax has been paid, in this case, on book profits. To the best of our understanding, and particularly in the absence of any other method having been pointed out to us, only way in which be so done is by apportioning the actual tax paid under MAT provisions (i.e. ₹ 54,13,417), in the same ratio as double taxed profit to the overall profits i.e. 35,86,178:4,77,79,403. The amount of tax credit in respect of this income thus comes to ₹ 4,06,315, as against the actual deduction of tax aggregating to ₹ 5,71,878. The tax credit claim is thus admissible to this extent. As for the tax credit in respect of Singaporean receipts, while the formulae for limitation under article 25(2) of the Indo Singapore tax treaty remains broadly the same as it is provided that the credit shall not exceed tax “which is attributable to the income which may be taxed in Singapore” but the first variable i.e. income taxed in both the countries would change. The figure of income taxed in Singapore as also India is 53,23,085. The MAT paid, relatable to this income, will be arrived at by dividing the same in the ratio 53,23,085:4,77,79,403 The amount of tax payable in respect of Singapore income, by the same formulae, works out to ₹ 6,03,107 which is clearly less than ₹ 5,41,029 which was deducted at source in Singapore. The tax credit of ₹ 5,41,029 in respect of Singaporean receipts is thus clearly admissible. As against tax credit claim of ₹ 11,12,907, the tax credit of ₹ 9,47,344 is thus indeed admissible. To this extent, the claim of the assessee is upheld. - Decided partly in favor of assessee.
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2017 (1) TMI 719
Assessability of gain arising on sale of agricultural land - whether the same is exempt from tax? - measurement of distance for the purpose of deciding the character of land - Held that:- The first issue as to whether any agricultural activity is being carried out or not has been elaborately considered by the CIT(A) and he has given finding that the entries in 7/12 extract evidenced the cultivation of land and the same remained uncontroverted. The Revenue before us has also failed to controvert the finding of CIT(A) in this regard and hence, we find no merit in the ground of appeal No.1 raised by the Revenue. Vis-à-vis, the distance to be taken note of, the Hon’ble Punjab & Haryana High Court in CIT Vs. Satinder Pal Singh (2010 (1) TMI 752 - Punjab and Haryana High Court ) had held that for measurement of distance for the purpose of deciding the character of land, whether agricultural or not is to be done in terms of the approach road and not by a straight line distance or horizontal plain or as per crow’s flight. The Talat hi in the certificate has certified that the distance from municipal limits was about 13 kilometers i.e. beyond eight kilometers. Accordingly, we uphold the order of CIT(A) in holding that the gain arising from sale of agricultural land is not to be taxed in the hands of assessee. Upholding the same, we dismiss both the grounds of appeal raised by the Revenue. - Decided in favour of assessee.
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2017 (1) TMI 683
Addition u/s 40A - interest paid @ 18% in relation to the borrowing made from the persons specified u/s 40A(2)(b) - unreasonable and excessive expenditure - disallowing the interest paid in excess of 12% - Held that:- There is a Co-ordinate Bench decision in ACIT vs. M/s. Navjivan Roller Flour & Pulse Mills P. Ltd [2011 (5) TMI 1049 - ITAT AHMEDABAD] holding that the payment of interest @ 18% cannot be said to be excessive or unreasonable for the purposes of Section 40A(2)(b) of the Act. In any event, the rate at which banks are lending advances to it borrowers cannot be treated as a benchmark for loans taken by the assessee from individuals who are not carrying on the business of banking. Essentially, a loan taken from the bank not only involves furnishing of securities and documentation but also is advanced after safeguarding the interest of the lenders in a robust manner. Quite unlike such transactions/borrowings from individuals are much less organized and without the cumbersome requirements of documentation and collateral securities etc. In our considered view, the very action of the Assessing Officer in holding that the borrowings from the specified persons at a rate higher than the rate at which bank would lend its loans to the borrowers, would be excessive and unreasonable and the disallowance made by the Assessing Officer was, therefore, devoid of legally sustainable basis. Once there was categorical findings by the Tribunal that 18% per annum interest was reasonable the CIT(A) ought to have followed the same. Thus we are of the considered view that the impugned disallowance u/s 40A(2)(b) in respect of interest paid in excess to 12% per annum deserves to be deleted - Decided in favour of assessee
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Customs
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2017 (1) TMI 694
Refund - Unjust enrichment - whether the refund claim filed by the appellant as a consequential relief arising out of encashment of bank guarantee and finalisation of provisional assessment done prior to 13/07/2006 is hit by unjust enrichment? - Held that: - It is pertinent to mention that the period involved is prior to 13/07/2006. Section 18 of the Customs Act, 1962 was introduced w.e.f. 13/07/2006. The Hon’ble Court of Delhi in the judgments CC Vs. Indian Oil Corporation [2012 (1) TMI 31 - DELHI HIGH COURT] categorically held that unjust enrichment is not applicable to the refunds in regard to assessments finalised prior to 13/07/2006 - the order passed by the authorities below crediting the sanctioned refund to the consumer welfare fund is unjustified - appellant is eligible for refund - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 693
Refund - classification for imported vessel - scope of Section 128 of the Customs Act, 1962 - Held that: - it would appear that the officer concerned has decided on the claim, which, though not to the satisfaction of the applicant, is nevertheless an order within the scope of Section 128 of the Customs Act, 1962. Consequently, statutory provisions of Customs Act, 1962 for further proceedings before Commissioner (Appeals) is liable to be activated. It would, in the circumstances, be inappropriate for us to decide upon, or even render any observation on, adequacy of compliance with our orders - matter on remand - appeal disposed off.
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2017 (1) TMI 692
Entitlement to the benefit of N/N. 64/88-Cus. - condition 2(a) and 2(b) has been complied with before rescission of N/N. 64/88-Cus - Held that: - On a specific question from the Bench as to the facts of the case, it was informed to us that Customs Duty Exemption Certificate (CDEC) issued by the DGHS authorities in appellant’s case stood withdrawn by the authorities. This factual position was not brought to the knowledge of the Bench which referred the issue to Larger Bench due to which this reference was made - we decline to answer the reference made to us and remit the matter back to the Division Bench to decide the issue on the facts and circumstances of the case - appeal disposed off - matter on remand.
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2017 (1) TMI 691
Reduction in quantum of penalty - During investigation, the appellant had paid some amount of Anti-Dumping Duty alongwith interest. The balance amount of duty and penalty of 25% was deposited by the appellant within one month from the date of issue of show cause notice - Held that: - the entire amount of Anti-Dumping Duty alongwith interest and 25% of penalty was deposited before adjudication of the matter, we are of the view that further penalty (beyond 25% of the duty) to above extent cannot be imposed on the appellants - duty upheld, already paid - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 690
Refund - unjust enrichment - Revenue filed the appeal before the Commissioner (A) mainly on the ground that while sanctioning the refund amount, the Asst. Commissioner of Customs ought to have verified whether the incidence of duty had been passed on to any other person or not and if the same has been passed on, then the refund amount should be ordered to be credited to Consumer Welfare Fund. Further, the department has also taken the objection that the Asst. Commissioner has not verified the balance sheet and other related financial records in order to decide whether the assessee had passed on or not, the incidence of duty. Held that: - this case needs to be remanded back to the original authority to verify all the documents including the balance sheet and other financial records to decide regarding the passing on incidence of duty by the appellant - appeal allowed by way of remand.
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2017 (1) TMI 689
100% EOU - technical collaboration agreement - mis-declaration of goods - undervaluation - suppression of facts - confiscation - penalty - Held that: - the learned Commissioner has correctly valued the imported goods on the basis of various rules of valuation as contained in Customs Valuation Rules and he has also come to the conclusion that the method adopted by the Chartered Engineer was fair and reasonable and has taken into consideration all the relevant factors. Further with regard to the intention of the importer to mis-declare the value of the goods, the evidence which has come clearly shows that he has an intention to mis-declare the value and has not rightly declared the value of the imported products - impugned order upheld - appeal dismissed - decided against appellant.
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Corporate Laws
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2017 (1) TMI 685
Winding-up petition - non-payment of the 'Professional Fees' - maintainability of petition - Held that:- The agreement between the parties about the providing of 'Professional Services' cannot be said to have a smooth sailing at that point of time also and no final 'admitted liability' crystallized in favour of the petitioner - Firm towards the said amount. The jurisdiction of winding-up of a Company cannot be exercised against a solvent Company, if the liability of the Respondent - Company is disputed bona fide by it. The winding-up petition cannot partake the character of a money recovery suit and unless the liability is clearly admitted by the Respondent - Company and is not paid-off, despite service of statutory notice, this jurisdiction is not available to be exercised for exerting any kind of pressure on the Respondent - Company. This Court is satisfied that in the present case, the present winding-up petition does not merit admission and therefore, with liberty to the petitioner - Firm to avail alternative remedy by way of a Civil Suit, the present winding- up petition is liable to be dismissed. The same is accordingly dismissed.
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2017 (1) TMI 684
Compounding of offence under section 441 of the Companies Act - delay in filing annual return - Held that:- We feel that the delay caused in filing of annual return (by the company) due to certain procedural formalities to be completed for obtaining DIN No. and those was a prerequisite for filing the Annual Return. Such procedural aspect took certain time resulting in delay in filing of the same. Hence, it cannot be assumed that the company was having deliberate intention for causing delay in filing of Annual Return and made violation of statutory provision of section 92 of the Companies Act. Moreover, the company has filed its Annual Return along with the late fee, on 26 February 2015 i.e 109 days. The statutory provision Section 403 of the Companies Act, 2013 permits for filing belated return up to two hundred and seventeen days Thus considering the fact and circumstances of the present case and supreme court case in VLS. Finance Ltd. Versus Union of India and others [2013 (5) TMI 348 - SUPREME COURT], we are of the view the reason explained by the petitioner company appears to be reasonable, plausible and are sufficient to grant leave for compounding of offence under section 441 of the Companies Act. Therefore, present CP is allowed and leave is granted as prayed for therein.
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Service Tax
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2017 (1) TMI 718
Delay in payment of tax - change in procedure of payment of tax - imposition of interest and penalty - the appellant paid the amount as per the procedure adopted by them as mentioned in their letter dated 04.04.2001, and not as per the procedure which were required to be followed - Held that: - in the case of CCE Pune Vs. SKF India Ltd.[2009 (7) TMI 6 - SUPREME COURT], Honble Supreme Court has held that delay in payment of duty for whatever reasons, attracts interest - the appellant is liable to pay the interest for the delayed period. Further as far as penalty is concerned, we find that the Department has not been able to establish that there was a malafide intention of the appellant for evasion of tax and for late payment of tax. The delay has occurred because of change in the procedure of payment of tax and therefore we do not find any justification for imposing penalty - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 717
Condonation of delay - Whether movement of limestone and rejects in the mining area involve Cargo Handling Service? - the decision in the case of M/s. Thriveni Earthmovers Pvt. Ltd. Versus Commissioner of Central Excise, Salem [2009 (4) TMI 9 - CESTAT CHENNAI] contested - Held that: - one year time is taken by the appellant to file this appeal for which there is no satisfactory explanation is given - delay not condoned - appeal dismissed on ground of delay - decided against appellant.
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2017 (1) TMI 716
Rectification of mistake - Held that: - We find that it was a mistake apparent on record and the words in Paras 2, 3 and 5 of the stay order mentioned as “He further argued that a lot of construction has been done by them which was of the nature of construction of dams and related activity" instead of “He further argued that the applicant is engaged in the commercial and industrial construction service as well as educational charitable institute.” - ROM allowed - decided in favor of applicant.
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2017 (1) TMI 715
Refund claim - Reverse Charge Mechanism - commission to foreign-based commission agents - period involved prior to 18.04.2006 - Held that: - in the case of M/s Indian National Ship Owners Association Vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT], it was held that Service Tax on the services provided by respondent or from outside India, who does not have any office in India, was not leviable prior to 18.04.2006 - refund allowed - appeal dismissed - decided against Revenue.
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2017 (1) TMI 714
Interest on credit availed - SIM cards - SIM cards are used for providing Telecommunication Services - whether inputs or capital goods? - whether credit availed on SIM cards admissible? - Held that: - mere taking of credit which has been reversed without utilization, no liability for payment of interest or penalty would arise thereof. - the case of the appellant is squarely covered by the decision of the jurisdictional Bench of the Hon’ble High Court of Karnataka in the case of Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise - demand of interest set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 713
Refund claim - The respondents have filed the refund claim on the ground that they have paid excess amount of ₹ 15,27,244/ - - Held that: - the respondent have debited/reduced their balance to the tune of ₹ 15,27,244/- on 01/10/2009. Therefore the Commissioner(Appeals) has rightly discussed that there is no discrepancy at Kakinada and that on the belief that the respondents are eligible for adjustment of the amount already paid in Vizag, they have adjusted the same into their CENVAT credit account. Thus respondents filed the refund claim although they had not made any excess payment. The refund claim has been rejected and the same is upheld by the Commissioner(Appeals). Whether the respondents were allowed to take back the amount ₹ 15,27,244/- into their CENVAT credit account? - Held that: - The Commissioner(Appeals) has observed that there is no infirmity in such direction as the respondents have reduced the said sum in their CENVAT credit account on 01/10/2009. That therefore the respondents are eligible for credit. It is also pertinent to mention that Department has not issued any notice to the respondents when they adjusted the excess amount to their CENVAT credit account. Therefore I do not find any infirmity in the impugned order as such adjustment does not give raise to any revenue loss. Appeal dismissed - decided against Revenue.
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2017 (1) TMI 712
Jurisdiction - power of the Commissioner (Appeals) to remand the case - Held that: - The law contained under section 85(5) of the Finance Act, makes it clear that the said provision does not prohibit the Commissioner (Appeals) from passing an order of remand of the matter - there is no infirmity in the order passed by the Commissioner (Appeals) in directing the re-examination of the issue and remand of the matter. It is seen that the Commissioner (Appeals) has upheld the penalty imposed under section 78 and has given the option of reduced penalty of 25% of the service tax demand. It is settled law that penalty under section 76 and 78 cannot be simultaneously imposed. The amount involved in all the three appeals is below ₹ 10 lakhs. From the above, the appeals filed by department are dismissed on merits, as well as on monetary limits - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (1) TMI 711
Refund claim - Rule 6 (3)(a)(viii)(4) of the Cenvat Credit Rules, 2004 - Section 11B of the Central Excise Rules, 1944 - time bar - Held that: - it is not the case that the provisions of the Central Excise Rules are unconstitutional. In other words, it is a case of the tax collected by the authorities under the Rules by misconstruction or wrong interpretation of the provisions of the Act and Rules and therefore, the claim of refund of amount arises under the provisions of the Act. Hence, the Commr. (Appeals) rightly observed that the refund claim would fall within the purview of Section 11B of the Central Excise Rules, 1944. Therefore, the lower authorities rightly rejected the refund claim as time barred - appeal rejected - decided against Appellant.
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2017 (1) TMI 710
CENVAT credit - whether the appellant is eligible for the credit on the MS items which were used for manufacture of capital goods? - Held that: - Merely denying the credit on the ground that the appellant has not furnished sufficient documents is not proper. The appellant has been able to establish that the subject items have been used for manufacture of capital goods which are integrally connected to the process of manufacture. ₹ 24,679/- was availed on welding electrodes for repair and maintenance. Further the subject items when used for fabrication of capital goods would fall under the category of inputs. The Department does not dispute the receipt of subject items into the factory. So also there is no case that subject items were diverted in any manner - the appellant is eligible for the credit to the tune of ₹ 2,17,188/- - appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 709
CENVAT credit - health insurance service - service received prior to 10.09.2004 - Held that: - it is seen that the services were composite services and the services were received after 10.09.2004 and the payment for the said service is made on 16.12.2004 and thereafter. Therefore, the contention of the department that the appellants received the service prior to 10.09.2004 is baseless. On appreciating the facts and the evidence I am convinced that the respondent has received the service after 10.09.2004 - credit allowed. Health insurance services - Held that: - The issue whether the credit availed on health insurance services prior to 01.04.2011 is covered, by the various judgments - credit allowed. Appeal dismissed - decided against Revenue.
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2017 (1) TMI 708
Stock transfer - Transfer of goods from one unit to another without payment of duty - Held that: - the Assessee has neither maintained any record of manufacture and clearance at their Kajipur unit, nor recorded its receipt and further use at their Kheda unit. Also no excise invoice was prepared for the said movement of the goods and this violation continued for a considerable length of time. Thus, on this count, I do not see any merit in the appeal filed by the Assessee, assailing the impugned order. since the entire amount of duty and interest has been discharged by the Assessee, therefore, they are liable to the benefit of reduction of penalty to 25% of the confirmed demand. With regard to the eligibility of CENVAT Credit on the supplementary invoices issued by Kajipur unit, I find that the issue is covered by the decision of this Tribunal in the case of United Phosphorus Ltd [2013 (11) TMI 1530 - CESTAT AHMEDABAD], where it was held that when there is simply a stock transfer the prohibition under Rule 7(1)(b) will not be applicable - Kheda unit is eligible to the credit on the supplementary invoice issued by the Kajipur Unit. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 707
CENVAT credit - input services - Manpower Supply service - plantation/grass cutting - Civil construction at new land - rain protection work - sprinkler system civil work - R&D Lab Utilisation - civil work for dispensary, cutting and dismantling of old structure and equipments - denial on the ground that the said services were not utilised in or in relation to manufacture of their finished goods hence not an input service as defined under per 2(l) of CCR, 2004. Held that: - the credit availed on Garden Maintenance services is covered by the judgment of Hon’ble Karnatak High Court in M/s Millipore India Pvt Ltd.[2011 (4) TMI 1122 - KARNATAKA HIGH COURT] - on R&D Lab Utilisation Services i.e., Testing and Certification service by the judgment of Gujrat High Court in M/s Cadila Health Care Ltd’s case [2013 (1) TMI 304 - GUJARAT HIGH COURT] - credit allowed. In relation to other services, since no detailed reasons with evidences had been furnished about its claim of use in or in relation to the manufacturing business, hence, it is remanded to the Adjudicating Authority for verification of the said claim - matter on remand. Appeal partly allowed and partly on remand.
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2017 (1) TMI 706
Principles of natural justice - respondent No. 4 has rejected its application for settlement before the Customs and Central Excise Settlement Commission, without granting any opportunity of hearing to the petitioner - Held that: - the Settlement Commission is in agreement with the objections raised in the writ petition and if the petitioner so desires, the Commission may restore the earlier application which was filed in the office on 2-3-2016 or the petitioner may file a fresh application before the Settlement Commission - matter on remand.
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2017 (1) TMI 705
Restoration of appeal - rectification of mistake - Held that: - it is not only issue of classification or refund but it should also have issue of legal and/or recurring nature - On going through the records, I find that the respondent filed refund under N/N. 41/2007-S.T. They also claimed refund alternatively under Rule 5 of CCR, 2004 before Adjudicating Authority as well as Commissioner (Appeals). The Commissioner (Appeals) has extended the benefit of refund on the ground that refund is maintainable under Rule 5 read with N/N. 5/2006-C.E. (N.T) - I do not see, any legal or recurring issue involved in the present case of refund. Therefore, ROA as well as ROM applications are not maintainable - appeal dismissed - decided against appellant.
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2017 (1) TMI 704
Recovery of outstanding dues - attachment of property - Lease of property to 100% EOU - under registered lease deed executed on 30.09.1999, the Appellants had leased their factory, building and plant and machinery to M/s Revawala Exports for a period of six years commencing from 30th Sept. 1999, and till 29th Sept. 2005 and stipulated that in any case, the factory was not to be vacated till the export obligation was discharged. However, the said lessee M/s Revawala Exports has left their premises before completion of export obligations and expiry of lease period of six years. Held that: - I find that on the very same issue, the Tribunal has discussed in detail, the legality of the recovery of the outstanding dues from the lessor when the lessee, an 100% EOU, vacated the premises before fulfillment of the export obligations in Rajabali Ismail Rajbara case [2014 (3) TMI 483 - CESTAT AHMEDABAD (LB)] and by majority held that recovery cannot be made from the Lessor by attachment of the property. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 703
Principles of natural justice - CENVAT credit - fake invoices - whether the appellant had correctly availed CENVAT credit on the nine consignments of copper ingots, which they claim to have been received in their premises/job workers premises and used in or in relation to the manufacture of finished goods? - Held that: - reliance was placed in the case of Manic Chemicals Pvt. Ltd. Vs. Union of India [2015 (12) TMI 1267 - GUJARAT HIGH COURT], denial of cross examination of witnesses by the authorities below in passing the order, goes to the very root of the matter and accordingly untenable in law - the appellant should be given a fair chance for cross examination of the said witness namely, Shri Mahesh Gupta, Authorised Signatory of the Transport Company in the interest of justice - matter on remand - appeal allowed by way of remand.
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2017 (1) TMI 702
Clandestine removal - recovery of duty - confiscation - imposition of penalty - Section 11AC of Central Excise Act, 1944 - Held that: - both the authorities below have not extended the benefit of discharging 25% of the penalty imposed under Section 11AC of Central Excise Act, 1944. The said right is admissible to the Appellant company, in view of the judgment of Hon'ble Gujarat High Court in the case of Santosh Textiles [2011 (3) TMI 1649 - GUJARAT HIGH COURT]. Confiscation of plant and machinery - Held that: - in absence of cogent evidences that the Appellant company is a habitual offender and other circumstances supported with evidences, confiscation of plant and machinery is unsustainable in law and accordingly set aside. Penalties imposed on partners as well as on firm - Held that: - personal penalty had been imposed both on the partnership firm M/s National Metal Industries as well as on its partners viz. Shri Santosh Mittal and Shri Rajendra Agarwal which is contrary to the principle of law laid down by the Hon'ble Gujarat High Court in the case of Santosh Textiles [2011 (3) TMI 1649 - GUJARAT HIGH COURT] - penalty imposed on the partners are set aside. Appeal allowed - decided partly in favor of appellant.
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2017 (1) TMI 701
Interest on delayed refund - Section 11BB of CEA, 1944 - time limitation - supplementary / additional claim of refund amount - Held that: - the Hon’ble Supreme Court in the case of Ranbaxy Industries Ltd. Vs. UOI [2011 (10) TMI 16 - Supreme Court of India], observed that interest is payable after expiry of three months from the date of filing of the refund claim - the appellants are eligible to interest on ₹ 6,13,406/- on expiry of three months from the date of filing of the refund claim till the same was paid to them. Regarding the amount of ₹ 3,62,729/-, I find that the same was claimed for the first time on 24.4.2006 with a request to revise the earlier refund claim of ₹ 6,13,406/- to ₹ 9,76,135/- - Held that: - merely because the refund claim of ₹ 6,13,406/- had been pending beyond three months, it cannot provide a right to the appellant to revise the claim antedated by including additional amount of ₹ 3,62,729/-, which was not because of any arithmetical error in calculation but arose on account of separate payments earlier i.e. between July 2004 and January 2005 - the authorities below had rightly held that the additional amount of ₹ 3,62,739/- claimed through letter 24.4.2006 could not be considered as the claim filed on 11.7.2005 and rejected the same claim on the ground of limitation. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 700
Refund of CENVAT credit - denial on the ground that the respondent failed to establish that the credit involved on the inputs/input services were used for the final products exported during the said quarter - Held that: - the Ld. Commissioner(Appeals) interpreting N/N. 5/2006-CE(NT) dated 14.03.2006, issued under Rule 5 of Cenvat Credit Rules, 2004 and also following the judgement of this Tribunal in Capiq Engineering Pvt. Ltd. [2008 (10) TMI 84 - CESTAT, AHMEDABAD], observed that there is no one to one co-relation required for utilisation of inputs/input services used in or in relation to the manufacture of final product, ultimately exported so as to allow cash refund under Rule 5 of Cenvat Credit Rules, 2004 - refund allowed - appeal rejected - decided against Revenue.
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2017 (1) TMI 699
100% EOU - De-bonding of unit - reversal of credit on input services - GTA services - Held that: - At the time of debonding from the 100% EOU scheme, the appellant has already reversed an amount equal to the credit availed in respect of inputs and capital goods which were transferred to the DTA unit as per the provisions of Cenvat Credit Rules - There is no provision for reversal of Cenvat credit availed on input services at the time of debonding, inasmuch as the input services stand consumed, as soon as it was received. I have already held that the Cenvat credit on such input services stand availed properly on the date of receipt of the service. Hence there is no obligation on the part of the manufacturer to reverse credit in input services at the time of debonding from 100% EOU scheme - demand of reversal of input services not justified - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 698
Interest - the rebate claim of ₹ 28,68,666/- though sanctioned to the appellant on 08-10-2010 / 25-10-2010, but instead of paying that amount, it was adjusted against an Order dated 24/03/2010 against Service Tax dues - Held that: - the issue is squarely covered by the decision of this Tribunal in the case of Indu Nissan Oxo Chem Industry Ltd.[2016 (11) TMI 1222 - CESTAT AHMEDABAD] - appellant is entitled to interest from the date of adjustment of the rebate claim - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 697
Refund claim - export of services - N/N. 41/2007-ST, dt.06.07.2007 - Terminal Handling Services - Transportation of empty containers from yard to the factory for stuffing the export goods - the Appellants could not produce all the evidences as required under the said N/N. 41/2007-ST, dt.06.07.2007 at the time of adjudication, hence remanded the matter for reconsideration of the evidences subsequently produced - Held that: - The observation on merit, that ‘Terminal Handling Services’ and ‘Transportation of empty containers from yard to the factory for stuffing the export goods’ having no nexus with the manufacturing activity cannot be sustained - it is prudent to remand the matter to the Adjudicating authority only for the limited purpose to consider the evidences that would be produced for scrutiny of the same in the light of the requirement of N/N.41/2007 ST - appeal allowed by way of remand.
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2017 (1) TMI 696
CENVAT credit - capital goods - denial on the ground that depreciation charged on the same - Held that: - as per sub-rule 4 of Rule 4 of CCR, there is a prohibition for availing CENVAT credit as well as depreciation under the Income Tax Act. The appellant has availed 50% CENVAT credit in the first year and 50% in the second year and when it was pointed out that they have also claimed depreciation, then they rectified the fact of depreciation by making necessary adjustments in their account so as to wash out the deprecation claimed under the Income Tax Act. According to the appellant, by following the necessary accounting treatment, they have rectified the lapse - the CA certificate certifying that the appellants have not availed double benefit of depreciation as well as CENVAT credit was not produced before the authorities below - this case needs to be remanded back to the original authority to verify from the records produced by the appellant as to whether they have reversed the depreciation by following the account treatment as submitted by them - appeal allowed by way of remand.
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2017 (1) TMI 695
Cenvat Credit - Insurance services - demand on the ground that the activities carried out by the appellant fall within the category of welfare activities and insurance services broadly cover the companies property against exigencies such as fire and the said services are not input services used in or in relation to the manufacture or for furtherance of business - Held that: - this issue is no more res integra and has been held in favor of the appellant in the case of CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT], where it was held that merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessee is not entitled to the benefit of CENVAT credit - credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (1) TMI 688
Works contract - demand of tax on in respect of goods utilized for construction of flats - reliance was placed in the case of K. Raheja Development Corporation Vs. State of Karnataka, [2005 (5) TMI 7 - Supreme Court], as well as judgment in M/S. Larsen and Toubro Limited and another Vs. State of Karnataka and another [2013 (9) TMI 853 - SUPREME COURT], to demand tax. Held that: - the ownership of land is with the builder itself, and there is no development agreement entered into by the builders with the owners of the land. This is a material circumstance, which has completely been omitted from consideration by the Tribunal, while passing the order impugned - Various clauses of the agreement entered into by the builder with the allottee were referred to before the Tribunal. This Court finds that the Tribunal has not examined to any of the clauses of agreement, nor the nature of transaction itself has been commented upon, in order to return a finding that a works contract had come into existence. The Tribunal being the highest Court of fact was expected to have examined the nature of transaction itself, only after analyzing the clauses of agreement entered into between the assessee and prospective allottee, a finding of works contract could have been returned. It seems that Tribunal did not deal with the factual issues relating to transaction itself, as it was under the belief that the ratio of law laid down in K. Raheja Development Corporation as well as M/S. Larsen and Toubro Limited were clearly apparent. The distinction in fact have not been noticed, though it was apparent and had been pressed. In such circumstances, the Tribunal has failed to discharge the obligation imposed upon it by law of dealing with the factual issues raised and pressed before it, and therefore the order of Tribunal cannot be sustained. Since the Tribunal has not gone into factual issues in correct perspective, as such, the findings returned by it on the different issues are not liable to be sustained. Order of Tribunal do not sustain - matter on remand.
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2017 (1) TMI 687
Encashment of Bank Guarantee - bank guarantee proposed to be kept alive, till appellate Tribunal dispose of the application that may be filed by petitioner for stay of the disputed tax demand, and in that event first respondent would not precipitate the matter - Held that: - Till disposal of the said application, first respondent shall not encash the bank guarantee and in the event of cheque having been issued by second respondent – Bank, same shall not be presented for its encashment - Writ petition stands disposed of by reserving liberty to the petitioner herein to file a second appeal before the Karnataka Appellate Tribunal, Bengaluru on or before 10.01.2017 - petition disposed off - decided in favor of petitioner.
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2017 (1) TMI 686
Validity of assessment order - natural justice - The grievance of the petitioner is that the second respondent, viz., the petitioner's Assessing Officer without issuing any notice and inviting any objections from the petitioner has completed the Assessment under the CST Act, for the year 2014-15 - is assessment order valid? Held that: - the Assessing Officer is an independent Statutory Authority, who has to complete the Assessment by considering the objections raised by the dealer and he cannot be a mouthpiece of the Enforcement Wing or Audit Party. The report submitted by the Audit can at the best be an information to the Assessing Officer, which may give a cause of action for issuing a pre-revision notice. After issuance of notice, when the dealer submits its objections, there is a statutory duty on the part of the Assessing Officer to consider the objections on all aspects and then, complete the Assessment, by passing a speaking order, after affording an opportunity of personal hearing. If the Assessing Officer fails to do so, it would amount to abdication of statutory duty cast upon the Assessing Officer, which is more than sufficient to set-aside the impugned order. Impugned assessment order is set-aside - petition allowed - matter on remand - decided in favor of petitioner.
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