TMI Tax Updates - e-Newsletter
January 2, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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Income Tax:
Charitable activity - Scope of Section 2(15) - the omission of Section 10(20A) did not affect the rights of the parties claiming the benefit of Sections 2(15), 11, 12, 12A and 12AA - HC
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Income Tax:
Annual letting value - Property deemed to be let out - provisions cannot be applied when there is a time lag between the acquisition of the property and letting out of the property and there is no allegation of deliberate unreasonable delay in letting out of the property - no additions - AT
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Income Tax:
Both the transactions i.e. the transactions in the derivative and transactions in the cash segment can be treated as speculative transactions as per explanation to section 73 and hence the profit or loss against both the segments can be adjusted or set off against each other. - AT
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Income Tax:
Claim for deduction paid upon cancellation of Joint Venture Agreement - the compensation was paid by the assessee in the course of carrying on his commercial activities and the same would go to increase the value of stock in trade, being the property here - claim allowed - AT
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Income Tax:
Penalty u/s 271(1)(c) - though the claim of expenses made by the assessee has been found to be not sustainable by the AO, but without bringing anything on record to show whether any inaccurate particulars were filed by the assessee or if any concealment was done by the assessee, no penalty - AT
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Customs:
Refund claim of excess paid duty - imported goods, USB Modem - since the duty incidence has been borne by the respondent, claiming of refund of such excess duty in terms of Section 27 is in conformity with the statutory provisions. - AT
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Customs:
Foreign brand wrist watches - when the supplier is not existing at the address given in the invoice then there is no need to go into other documents - since the appellant could not discharge the burden that the goods seized is other than the smuggled goods, the goods have been rightly confiscated absolutely, which is upheld. - AT
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Service Tax:
Manpower supply service - there is no agreement for utilization of services of an individual ; but the agreement is for carrying out job work or lump-sum work as entrusted to the appellant for execution for example milk packing, butter packing etc - demand of service tax set aside - AT
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Service Tax:
Coaching services - denial of benefit of N/N. 24/2004-ST, dated 10.09.2004 - appellant claims to be entitled to the benefit of Notification for the reason that the trainings imparted is in the nature of vocational training or coaching, which is covered under the said exemption Notification - benefit of exemption allowed - AT
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Service Tax:
Mobilization advances - the demand of service tax on advances received is unsustainable when asessee has paid service tax on the total value of services periodically deducting the same from the advances received - AT
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Central Excise:
Classificattion of Noscapine B.P. and Papavarine S.R - Although, they are generated from the opium, but do not contain opium - to be classified by under Chapter Heading No. 2939.1900 and are liable to payment of duty of Central Excise. - AT
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Central Excise:
Refund - Rule 5 of the CER, 2004 - 100% EOU - instead of utilizing the credit accumulated due to export for DTA clearance, EOU unit claimed refund - Refund allowed - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (1) TMI 59
Validity of reopening of assessment - Held that:- Required notice has been sent and reasons for issuance of notice/initiation of proceeding have also been disclosed to the petitioner. The argument of the petitioner regarding receipt of query letter by Maruti Nandan Sah can also be looked into by the Assessing Officer. Required sanction was also obtained from competent authority. In such situation, the Court is not inclined to entertain the writ petition for quashing the notice issued under Section 148 of the Act. Rather, it will be appropriate for the petitioner to approach the Assessing Officer and reply the notice. It is always open for the petitioner to take all the pleas before the Assessing Officer which he has taken before the Court. It is not the case of the petitioner that the Authority has not proceeded as per relevant provisions of the Act or is proceeding in the mater in defiance of the fundamental principles of judicial procedure, or has not/is not providing proper opportunity of hearing to the petitioner. In view of the above, the Court is not inclined to grant any relief to the petitioner. The writ petition is, accordingly, dismissed.
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2017 (1) TMI 58
Entitlement to deduction u/s 54EC - assessee not fulfilled the mandatory requirement of making the investment within six months from the date of the transfer - Agreement to Sale dated 21st February, 2006 was never produced before the authorities - Held that:- We find that the Sale Deed dated 5th April, 2007 is produced. This itself in clause (d) thereof records the fact that the Agreement to Sale had been entered into on 21st February, 2006 in respect of the subject property and the amounts being received by the vendor (respondent assessee) under that Agreement to Sale. Thus, these amounts when received as advance under an Agreement to Sale of a capital asset are invested in specified bonds, the benefit of Section 54EC of the Act is available. In the above view, the Tribunal holds that the facts of the present case are similar to the facts before the Tribunal in Bhikulal Chandak HUF (2009 (6) TMI 605 - ITAT NAGPUR ). The Revenue does not dispute the same before us. Moreover, on almost identical facts, this Court in Ms. Parveen P. Bharucha Vs. DCIT, [2013 (1) TMI 295 - Bombay High Court] held that the earnest money received on sale of asset, when invested in specified bonds under Section 54EC of the Act, is entitled to the benefit of Section 54EC of the Act. This was in the context of reopening of an assessment and reliance was placed upon CBDT Circular No. 359 dated 10th May, 1983 in the context of Section 54E of the Act. - Decided in favour of assessee
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2017 (1) TMI 57
Applicability of provisions of Section 179 - Liability of directors of private company in liquidation - maintainability of the writ petition - Held that:- The petitioner has an alternative remedy to file a revision before the Commissioner under Section 264 of the Income Tax Act. The plea that the provision of Section 179 are not applicable in the case of the petitioner can be raised by the petitioner before the revisional authority.
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2017 (1) TMI 56
Additions made towards difference in value of stock in process - Held that:- We find merits in the arguments of the assessee for the reason that the value of stock submitted to the bank cannot be taken to be the exact value of the stock. This is the usual practice adopted by the businessmen by inflating the stock of the assets in order to avail better financial help from the banks. The A.O. has not mentioned or observed any deviation from accounting principles adopted by the assessee for valuation of closing stock. He had also not found any defects in the books of accounts of the assessee or any bogus purchases and sales to come to the conclusion that the books of accounts along with stock registers maintained by the assessee are incorrect. In so far as stock in process, though there was a difference in quantity between the figure shown to the bank and figure shown in the books of accounts, the assessee claims that stock in process cannot be taken accurately because the items of stock in process cannot be counted accurately. The A.O. could not controverted the claim of the assessee with any positive findings to the effect that stock and financial books of accounts were found with discrepancies. Therefore, we are of the view that without any findings as to the correctness of books of accounts and stock registers, additions towards stock difference solely based on the stock statement filed with the bankers is incorrect. In view of the above, the A.O. has wrongly added the difference in the valuation as declared in the books of accounts and one which was recorded in the statements produced before the bank. Hence, the addition made by the A.O. towards stock difference is deleted. - Decided in favour of assessee Disallowance of amount paid to gratuity fund - assessee failed to furnish the copy of approval of gratuity fund from the competent authority - Held that:- As contended that its gratuity fund has been approved by the Principal Commissioner of Income-Tax-2, Visakhapatnam vide his order dated 29.3.2016 and the full benefit had been given w.e.f. 7.1.2001. To this effect, it has furnished copy of order approving the gratuity fund by the competent authority. We find that the gratuity fund of the assessee has been approved by the competent authority vide its order dated 29.3.2016 w.e.f. 7.1.2001. Therefore, we are of the view that the A.O. was erred in disallowing contribution to gratuity fund.- Decided in favour of assessee
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2017 (1) TMI 55
Addition u/s 40A(2)(b) - interest payments to related parties over and above 13.2% - Held that:- the assessee has paid similar rate of interest to non-related parties. When the assessee is having no control over non-related parties and rate of interest is common in both the cases, payment of interest to non-related parties cannot be considered as not prevailing in the open market during such period. Since, the rate of interest paid to related parties is on par with the rate of interest paid to non-related parties, the A.O. was erred in applying the provisions of section 40A(2)(b) of the Act, to hold that interest payment made to relatives is excessive or unreasonable. The CIT(A) without appreciating the facts simply, followed adhoc rate of interest of 15% to restrict the disallowance made by the A.O. towards interest payments to related parties. Therefore, we are of the view that the A.O. was erred in disallowing interest payments to related parties over and above 13.2%. - Decided in favour of assessee.
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2017 (1) TMI 54
Interest charge under Section 206C(7) - deductee assessee in the case of TDS had paid the tax or filed a “nil” return Held that:- A plain reading of the Section indicates that the assessee is liable under sub-section (7). This is, of course, on the basis that the provisions of Section 206C(1C) are applicable to the assessee. We have today, by a separate order and judgment decided [2016 (12) TMI 1534 - PUNJAB AND HARYANA HIGH COURT] which is also the assessee's case under Section 201 including sub-section (1A) thereof. On a parity of reasoning, this appeal also ought to be decided in favour of the Revenue. Moreover, even assuming that the judgment in Hindustan Coca Cola case (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) applies to this case, the assessee's liability under subsection (7) cannot be applied on the basis thereof. The last sentence in paragraph No.10 quoted above makes it clear that where the deductee assessee in the case of TDS had paid the tax or filed a “nil” return. The demand for the principal amount cannot be enforced. However, this would not alter the liability to pay interest under Section 201(1A) or for penalty under Section 271(C). For the same reasons, therefore, even assuming that the liability to collect tax at source cannot be enforced on account of the deductee assessee, i.e. concessionaire in this case, having paid the tax, the liability for interest under sub-section (7) would not be affected. The appeals, are allowed, the impugned orders are set aside. The Tribunal shall, however, permit the assessee to raise its main contention namely that it was not liable to collect tax at source under Section 206 C (1C).
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2017 (1) TMI 53
Charitable activity - appellant was engaged in only one activity, namely, printing and publishing the newspaper - Held that:- The appellants’ activities, therefore, constitute the advancement of an object of general public utility.That is, however, not sufficient for the appellants activities to fall within the definition of ‘charitable purpose’ in Section 2(15) Profit is the predominant motive, purpose and object of the assessee. The assessee has over the years accumulated huge profits which today aggregate to several crores of rupees. The Tribunal referred to the income and expenditure account which shows that out of the total revenue of about Rs. 161 crores, a sum of Rs. 124.87 crores was received from the advertisements and Rs. 11.38 crores from the interest of F.D.Rs. only. Thus about 85% of the revenue was from advertisements and interest only. Rs. 17.49 crores was from the sale of newspapers and Rs. 3.07 crores was from subscriptions of the dailies. Moreover the balance in the corpus account was Rs. 121 crores. The respondents have not suggested that these profits have been used for any purpose contrary to the trust created in the Will. Nor is it suggested that the appellants will do so. It did occur to us at one stage that this fact would save the assessee from being excluded from the provisions of section 2(15) but on further reflection it does not. A person does not make profit for the sake of making profits. He does so with a purpose. The purpose is obviously within his special knowledge. He must, therefore, disclose it and the Assessing Officer must then test the case and analyse it. If that were not so it would enable an assessee to circumvent the provisions of the Act meant for the benefit of the persons engaged in activities for charitable purposes. They would accumulate huge profits for several years. The assessment in respect of these years would attain finality after about 8 years and cannot, thereafter, be reopened. After this period the assessee could utilize the profits for any purpose- charitable or otherwise. We hasten to add that the assessee before us has not done so and there is nothing to indicate that it will do so. It is, as we mentioned earlier, a highly reputed and respectable publication and is not likely to adopt such a course. That, however, is not the point. What is relevant is that in such a case any assessee would by this simple expedient circumvent the provisions of the Act. Thus the accumulation of a huge profit without any explanation for the same or without any indication that it is for the advancement of the object of general public utility would take the assessee out of the definition in Section 2(15) of ‘charitable purpose’. There is nothing in this case to show that the surplus accumulated over the years has been ploughed back for the charitable purposes. Although there were several other objects, the appellant’s only activity was the business of printing and that activity was found to have been carried on on commercial lines. If, therefore, the predominant activity of the trust is charitable purpose and the profit resulting from its ancillary or incidental business activity, is for the charitable purpose only of the advancement of an object of general public utility, it is sufficient. It is not necessary that such income must also be for the advancement or the purpose of another charitable purpose as well. - Decided against assessee. Whether benefit of Section 11 should be granted to the assessee in view of the proviso to Section 2(15) of the Income Tax Act, 1961? - Held that:- The assessee, namely, Moga Improvement Trust is undoubtedly an authority constituted in India. It is also constituted by or under a law, namely, the Punjab Town Improvement Act, 1922. Further, it is engaged for the purpose of dealing with and satisfying the need for housing accommodation. It is also constituted for the purpose of planning, development of improvement of cities, towns and villages or for both as is evident from Sections 22 to 28 of the PTI Act quoted above. The appellants, would, therefore, undoubtedly have been entitled to the benefit of Section 10(20A). The assessee would not have been entitled to the benefit of Section 10(20A) upon its omission by the Finance Act, 2002 with effect from 01.04.2003. Section 10(20A) of the Act did not contain any other requirement. It was wider than Section 2(15). However, Section 2(15) and the corresponding sections including Sections 11, 12, 12A and 12AA are independent of Section 10(20A) of the Act. Upon the omission of Section 10(20A), the provisions of the other sections were not affected. They remained intact. An assessee could have been entitled to the provisions of Section 10(20A) and the other provisions simultaneously. The omission of one, however, does not affect the validity or the existence of the others. The two provisions are distinct and independent of each other. Thus the omission of Section 10(20A) did not affect the rights of the parties claiming the benefit of Sections 2(15), 11, 12, 12A and 12AA of the Act. - Decided in favour of assessee
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2017 (1) TMI 52
Annual letting value - Property deemed to be let out - benefit of vacancy allowance - Held that:- In the case on hand the assessee has claimed that prior to the lease agreement produced before the Assessing Officer it was not possible for the assessee to let out the property and therefore it claimed the benefit of vacancy allowance. In the absence of any contrary finding that the assessee has deliberately not let out during the year under consideration, it cannot be presumed. Therefore pre-letting out period cannot be deemed to be let out the property. In any case, if the provisions of section 23(1)(c) of the Act are to be understood that the vacancy allowance is available only in the case where the property is already let out and there is a vacancy in between then the deeming provision of section 23(4) r.w.s. 23(1) shall also be understood that in case of vacancy of the property in between from the initial letting out, it will be deemed as let out. Therefore, these provisions cannot be applied when there is a time lag between the acquisition of the property and letting out of the property and there is no allegation of deliberate unreasonable delay in letting out of the property. Thus the addition made by the Assessing Officer is not justified and the same is deleted. Addition on account of deemed advance - Assessing Officer has made an addition of income as notional interest @ 12% p.a. on deemed advance received from the tenant - Held that:- There is no dispute that as per the lease agreement the advance was received by the assessee only in the next assessment year at the time of execution of the lease agreement. Therefore there is no justification in making the addition by deeming the advance from the tenant. The Assessing Officer has not disputed the fact that the advance was received only at the time of lease agreement therefore, the addition of notional interest is highly arbitrary action on the part of the Assessing Officer as there is no actual benefit received by the assessee. Hence, the said addition made by the Assessing Officer is absolutely illegal and without any basis and accordingly deleted. Addition by applying the guiding value as per section 50C as cost of purchase of the property - Held that:- The provisions of section 50C are applicable only for the purpose of capital gains. The said provisions postulate a deemed full value of consideration received or accruing as a result of transfer of capital asset. Therefore for the purpose of computation of Capital Gains irrespective of the actual consideration received or accruing on transfer of the capital asset being land or building or both the full value consideration will be adopted as the valuation for the purpose of stamp duty valued by the stamp valuation authority. In the case on hand the assessee has purchased the property in question and therefore the provisions which are meant for computation of capital gains and deemed consideration cannot be applied as it is only for the receipt or accruing amount in the hand of the seller as a result of capital asset. Therefore the said provision cannot be applied in assessing the income under Section 69 of the Act. It is pertinent to note that an amendment in this regard has been brought to the provision of section 56(2)(vi) w.e.f. 1.4.2010 therefore, the said provision is also not applicable for the year under consideration. Thus the addition is not justified and the same is deleted. Assessee appeal allowed.
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2017 (1) TMI 51
Validity of reopening of assessment - reason to believe - Held that:- Machinery has been provided by the Act for assessment/reassessment. Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer should serve on the assessee a notice requiring him to furnish a return of income within such period as may be specified in the notice. But, before issuing a notice, the Assessing Officer is required to record reasons for doing so. In the present case, find that required notice has been sent to the petitioner. Further, reasons for issuance of notice/initiation of proceeding have also been disclosed to the petitioner. Required sanction was also obtained from competent authority. In such situation, the Court is not inclined to entertain the writ petition for quashing the notice issued under Section 148 of the Act. Rather, it will be appropriate for the petitioner to approach the Assessing Officer and reply the notice. It is always open for the petitioner to take all the pleas before the Assessing Officer which he has taken before the Court. It is not the case of the petitioner that the Authority has not proceeded as per relevant provisions of the Act or is proceeding in the mater in defiance of the fundamental principles of judicial procedure, or has not/is not providing proper opportunity of hearing to the petitioner. - Decided against assessee.
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2017 (1) TMI 50
Nature of grants received - revenue v/s capital receipt - Held that:- The Tribunal has examined the matter at length and has given reasons for reaching conclusions that the subsidy, which was received by the assessee was in the nature of capital subsidy and has been used towards development of capital expenditure as the business of the assessee was to set up waterways. The Tribunal categorically comes to the conclusion that there was no income to the assessee, which was of revenue in nature and in the absence any accrual of income to the assessee on account of the subsidy grants it could not be said that the assessee was liable to pay any taxes on the same. The other finding recorded by the Tribunal is that the project has not commenced and was incomplete and the money was being utilized towards capital expenses. - Decided in favour of the assessee
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2017 (1) TMI 49
Disallowance of depreciation on intangible assets - depreciation on BSE/ NSE cards - Held that:- We have gone through the order 28.2.2014 of the ITAT in the own case of the assessee for AY 2008-09. We notice that the Tribunal has allowed the similar claim of the assessee for depreciation on BSE/ NSE cards following the decision of the Hon’ble Supreme Court in the case of ‘Tecno Shares and Stock ltd’. reported in (2010 (9) TMI 6 - SUPREME COURT OF INDIA ). Respectfully following the decision of the Co- ordinate bench of the Tribunal in the own case of the assessee, we allow this issue in favour of the assessee. Disallowance of lease rentals paid on motor vehicles - Held that:- R of the assessee, before us, has submitted that the Tribunal in appeal relating to A.Y. 2007 – 08 vide order dated 28.06 2013 has restored the matter back to the file of the AO directing it to be decided in the light of the decision of the Hon'ble Supreme Court in the case of “ICDS v. CIT” (2013 (1) TMI 344 - SUPREME COURT ) . Following the same line, the tribunal in assessee’s appeal relating to AY -2008-09 vide order dated 28.2.2014 has again restored the matter to the file of the AO with direction to decide the same as per the directions given by the Tribunal in order dated 28. 06 2013 for AY 2007-08. Since the issue involved and the material facts relevant thereto are identical in nature, hence this issue accordingly with same directions as given by the Tribunal for AY 2007-08, is restored to the file of the AO for decision a fresh. Additional disallowance u/s. 14A - Held that:- A perusal of the assessment order in the case in hand reveals that the AO has not followed the guidelines of objective satisfaction as laid down by the Hon’ble Bombay high Court in the case of Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT ) while making the disallowance. He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions of section 14A of the Income Tax Act. The ld. CIT(A) also ignored the mandate of the provisions of section 14 A, while confirming the disallowance. Hence, in the light of the above referred to judicial pronouncements and respectfully following the decision of the Tribunal in the own case of the assessee for AY 2007-08, the disallowance u/s 14A for the year under consideration is restricted to that has been suo- moto offered by the assessee in the return of income. This issue is accordingly decided in favour of the assessee. Addition of deemed speculation loss under explanation to section 73 - assessee has wrongly set off a speculative loss against a non-speculative income - Held that:- The nature of the business of the assessee is such that the transactions of the assessee in both segments are part of composite business of the assessee and the transactions are so managed that the resultant figure will be a profit. We, therefore, do not find any justification on the part of the lower authorities to interpret the provisions of the Income Tax Act to the disadvantage of the assessee and to segregate the transactions in cash and future segment which, in our view, will be against the spirit of the taxation laws. Delhi High Court in the case of “CIT vs. DLF Commercial Developers’ (2013 (7) TMI 334 - DELHI HIGH COURT) held that in terms of explanation to section 73, by all accounts, derivatives are based on stocks and shares which fall squarely within explanation to section 73 and therefore loss from sale-purchase of such derivatives would be speculative loss. The Hon’ble Delhi High Court has, thus, held that though under provisions of section 43(5), the transactions in derivatives at certain stock exchanges are deemed to be non-speculative, however, as per the explanation to section 73 for the purpose of computation of business loss the derivative transactions squarely fall within the scope of explanation to section 73. Under the circumstances, both the transactions i.e. the transactions in the derivative and transactions in the cash segment can be treated as speculative transactions as per explanation to section 73 and hence the profit or loss against both the segments can be adjusted or set off against each other. - Decided against revenue
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2017 (1) TMI 48
Additions made u/s.41(1) - cessation of the liability - Held that:- The assertions of the assessee that due to financial crisis faced by the assessee due to mining recession and closure of mining in Goa , these payments of ₹ 51,191/- could not be made and also that ₹ 26,746/- was written back in the financial year ended on 31-03-2014 requires verification and enquiries by the AO. The AO is directed to verify as to whether the assessee has written back an amount of ₹ 26,746/- in the year ending 31/03/2014 and if it be so, then additions to the extent of ₹ 26,746/- shall stand deleted as no prejudice is caused to the Revenue as the amount stood written back and offered for tax albeit in the assessment year 2014-15. While with respect to ₹ 25,445/-, assessee has to prove before the AO that the said amount was still payable by the assessee as on 31-03-2012 for which necessary confirmations and verifications are required and the matter is set aside and restored to the file of the AO for necessary verifications and enquiries and de-novo adjudication of the issue on merits. Write off of bad debts - Held that:- The assessee had claimed that it is due to recession in mining and due to closure of mines , the amount has become bad and irrecoverable , this contentions of the assessee has also remained unsubstantiated as no financials of Surface Tech were brought on record. We have perused the financial statement of the assessee for the year ended 31-03-2012 filed in the paper book before the tribunal (pages 1-10) which shows a healthy financial position of the assessee as the share capital is of 70 lakhs while Reserves and Surplus are to the tune of ₹ 4.06 crores. In our considered view , the order of learned CIT(A) is not sustainable in law and needs to be set aside and matter is to be remanded and restored to the file of the AO for de-novo adjudication of the issue on merits after making necessary enquiries and verifications as he may deem fit in order to decide this issue on merit. Addition u/s 40A - payment in cash during the relevant previous year towards ‘Repairs and Maintenance’ and also towards ‘Salaries and wages’ - Held that:- . The contentions that since the assessees’ cheques were bouncing and hence parties were not accepting cheques and insisting on cash is also not proved before us as no evidence to that effect is on record. Rather perused of the financial statement of the assessee for the year ended 31-03-2012 filed in the paper book before the tribunal (pages 1-10) shows a healthy financial position of the assessee as the share capital is of 70 lakhs while Reserves and Surplus are to the tune of ₹ 4.06 crores. All these contentions and assertions raised by the assessee need verification by the Assessing Officer and appellate order of the Ld. CIT(A) cannot be sustained as the learned CIT(A) has not undertaken the required verification and accepted the contentions of the assessee without any enquiry / verification. In our considered view, this issue needs to be set aside and restored to the file of the AO for de- novo adjudication of the issue on merits by the AO after conducting necessary verification and enquiry as he may deem fit in order to decide the issue on merits.
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2017 (1) TMI 47
Profit arising on sale of property - capital gain or business income - Computation of capital gain - Held that:- The assessee was not idle after purchasing the land. Before expiry of two months period from the date of purchase, he has entered into a Joint Venture Agreement for development of the property, which fact, in our view, shows that the intention of the assessee was not to keep the property as a Capital asset, but to exploit the same as a commercial asset with a view to make the profit. The subsequent legal complications have paralysed the project of the assessee and hence the project could not be executed. These facts have not been disputed and hence we are of the view that the Ld CIT(A) was not justified in holding that the impugned asset is a capital asset for the reason that it was not actually exploited commercially. In our view, “actual exploitation” should not the lone deciding factor. The assessee has intended to commercially exploit the property by developing it and he has been pursuing the same thereafter for many years. Hence, the intention of the assessee, from the very beginning, was to exploit the property as a commercial asset and not to hold it as a Capital asset. Accordingly we are of there is merit in the claim of the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the profit arising on sale of impugned property as business income of the assessee. As held that that the impugned property was not a capital asset. Hence the question of application of provisions of sec. 50C does not arise. Disallowance of claim for deduction paid upon cancellation of Joint Venture Agreement - Held that:- A perusal of the order passed by Ld CIT(A) would show that the tax authorities are not disputing the existence of Joint Venture agreement and the cancellation thereof. In fact, the assessee has furnished copy of both the agreements in the paper book and they have also been filed before the tax authorities. We have earlier held that the assessee has carried out the activity of purchase of property as a commercial venture and he has also paid the compensation on cancellation of the Joint Venture Agreement. Hence, in our view, the compensation was paid by the assessee in the course of carrying on his commercial activities and the same would go to increase the value of stock in trade, being the property here. Accordingly we direct the AO to treat the same as incremental cost to stock in trade and compute the profit accordingly Disallowance of depreciation on windmill - assessee had capitalised expenditure on Tower, Civil foundation, Erection & Commissioning, Consultancy fee, Freight charges, Finance charges, Warranty expenses etc as part of Wind Mill cost and claimed depreciation @ 80% - Held that:- We notice that the consultancy fee, freight charges, warranty expenses, finance charges are connected with the purchase of wind mill before it is ready to commence its operations. The civil foundation, erection & Commissioning, 40 Mtr Tower are part of wind mill, without which the wind mill would not function. Hence we are of the view that there is merit in the claim of the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow depreciation at the higher rate of 80% on the rest of the items by considering the same as part of cost of wind mill.
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2017 (1) TMI 46
Addition on account of closing stock difference - Concealment of income from other sources - addition on account of closing stock submitted by the assessee to the bank and in the regular books of account and stock register maintained by the assessee - Held that:- It is a common knowledge that the balance sheet prepared as on 31.03.2008 is only in respect to the closing stock as on that date and not the previous date or the subsequent date. So even if there is a variation in the closing stock as on 05.04.2008, it cannot give rise to any fact which will point out that there is a inflated closing stock shown by the assessee to the bank for hypothecating the goods for the purpose of credit notes in CC Account as on 31.03.2008, which is reflected in the balance sheet which is audited. We find that the ld. CIT(A) erred in going through the replies forwarded by the State Bank of India to the AO which forms part of the remand report to come to a conclusion that the State Bank of India has physically verified the stock as on 31.03.2008 when the fact remains that the assessee’s contention was that the closing stock shows to this bank was dated 05.04.2008 and the fact remains that bank has never stated that it has physically verified the stock of the assessee. Therefore we set aside the order of the ld. CIT(A) and we direct the deletion of the addition made by the AO which was added by the AO as concealed income from other sources. - Decided in favour of assessee Fresh addition of bogus purchase - addition made without confronting the appellant - Held that:- Assessee’s statement before the ld. CIT(A) which have been reproduced above, wherein the assessee has candidly made admission which has been forwarded to the AO for remand report and thereafter the ld. CIT(A) in all fairness has taken the written submission from the assessee and thereafter passed the order after hearing the assessee. In such a scenario the grounds of appeal raised by the assessee that without confronting the assessee in respect to the addition has no legs to stand and therefore is devoid of merits. Therefore we dismiss the appeal on this issue.
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2017 (1) TMI 45
TDS u/s 194C - Disallowance of vehicle hire charges - non deduction of tds - Held that:- Since the payments are below ₹ 20,000/- limit and it is not contravening any provision of section 194C, there is no obligation on the part of the assessee to acquire the details of PAN or registration certificate from the temporary transporters, we are inclined to allow the ground raised by the assessee and delete the disallowance made by the AO towards vehicle hire charges. Disallowance u/s 40a(ia) - non deduction of tds on interest on car loan - Held that:- Even though, AR submitted that it is EMI payment and hire charges as per hire purchase agreement but no document was filed before us nor before the revenue authorities. Accordingly, the grounds raised are rejected. Disallowance of cash payment for maintenance expenses - Held that:- No doubt the bills/vouchers are self made or not authorized bills and we agree with the assessee that in this line of business for such repairs, no proper bills are made. But, assessee can insist for proper bills or resorting to do the service from the registered dealers. In our view, the action of the AO/CIT(A) is proper. Hence, the ground raised by the assessee is dismissed.
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2017 (1) TMI 44
Penalty u/s 271(1)(c) - disallowance of entire expenses in absence of commencement of business - Held that:- In the facts brought before us it has been demonstrated by the assessee that the assessee had appointed its managing director and other employees in the impugned year itself. In the immediately subsequent year, the assessee had employed 25 employees and also made huge income as is evident from the profit and loss account of A.Y. 2006-07. The assessee claimed that it was ready to cater to its customers in F.Y. ending 31.03.2005 (i.e. A.Y. 2005-06), but in absence of any order from the customers, no revenue could be earned. The claim of the assessee cannot be said to be without any basis. Under these circumstances, the view adopted by the assessee that its business was set up cannot be said to be devoid of any bonafide belief. As per AO, assessee’s claim of set up of business in A.Y. 2005-06 remained unsubstantiated therefore, it was rejected by him. But, it is noted that the AO was also not able to disprove the claim of the assessee. The possibility of the claim of the assessee being correct cannot be totally ruled out. Under these circumstances, it can certainly be said that the claim of the assessee was not disproved by the AO. Further, it is noted from the order of the Tribunal dated 17.04.2014 passed in the quantum proceedings that it was found by the Tribunal after analyzing all the facts and circumstances of the case that assessee’s case was unsubstantiated and unproved. Apart from that, it is further noted by us that full particulars of expenses claimed have been furnished. Nothing has been brought on record by the AO indicating if any expense was bogus or false. Thus though the claim of expenses made by the assessee has been found to be not sustainable by the AO, but without bringing anything on record to show whether any inaccurate particulars were filed by the assessee or if any concealment was done by the assessee. Rather, in the given facts and circumstances, it can be said that the claim of the assessee was bonafide. Thus we do not find it to be a fit case for levy of penalty - Decided in favour of assessee
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2017 (1) TMI 43
Interest charged u/s.234B - CIT(A) deleted the interest charged u/s.234B relying on the decision of Ajay Prakash Verma [2013( (1) TMI 140] - Held that:- No mistake in the order of the ld CIT(A) could be pointed out by ld D.R. It is admitted by ld D.R. that the SLP filed before the Hon'ble Supreme Court is still pending for disposal. Hence, as on date the decision of Hon'ble Jurisdictional High Court is valid and binding. Therefore, so far as question of law involved in this appeal that whether the interest could have been levied against the assessed income of the assessee under section 234A & 234B is concerned, in view of the Full Bench judgment of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej Kumari (2000 (9) TMI 52 - PATNA HIGH COURT), the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the A.O. to that extent. - Decided against revenue
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2017 (1) TMI 42
Disallowance of employees contribution to PF and ESI - amounts not deposited before the due date - Held that:- It is not in dispute that the contribution to PF and ESI was deposited by the assessee before due date of filing the return of income u/s.139(1) of the Act. Therefore, set aside the orders of lower authorities and delete the disallowance of employees contribution to PF and ESI. See COMMISSIONER OF INCOME TAX, CIRCLE-I, KOLKATA Versus M/s. VIJAY SHREE LIMITED [2011 (9) TMI 30 - CALCUTTA HIGH COURT] and Essae Teraoka (P) Ltd.vs DCIT [2014 (3) TMI 386 - KARNATAKA HIGH COURT ]- Decided in favour of assessee.
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2017 (1) TMI 41
Penalty proceedings u/s 271 (1) (c) - assessment order abated - Held that:- As in the notice dated 12-03-2012, the learned AO has specifically mentioned initiation of penalty proceedings in terms of the order dated 22-12-2009 and, not order dated 30-12-2008, and secondly, in the wake of the proceedings u/s 153A/153C the said assessment order automatically stands abated in terms of second proviso to Section 153A. Such an abated assessment cannot be revived for the purpose of levying penalty u/s 271 (1) (c). Thus, such an observation and finding of the learned CIT (A) cannot be upheld. Once, the original assessment stands abated, then consequently, no proceedings u/s 271 (1) (c) Act can be initiated or penalty can be levied in terms of the said assessment order. So far as levy of penalty u/s 271 (1) (c) in respect of the assessment order dated 22-12-2009 is concerned, the same again is unwarranted, because there is no initiation of penalty proceedings u/s 271 (1) (c) in the abetment order and nothing is discernible from the said assessment order that the AO had some kind of ‘satisfaction’ for initiating proceedings or levying penalty u/s 271 (1) (c). - Decided in favour of assessee
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Customs
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2017 (1) TMI 11
Valuation - export of goods - Section 14 of the Customs Act, 1962 - consignment rejected by purchaser due to dispute in Fe, and were sold to other party, can the valuation be revised on this basis that the appellant had received less amount than the contracted value? - Held that: - once the ship sails from the port after the Let Export Order, and the cargo does not arrive at the destination, the assessment entered by the adjudicating authority at the time of Let Export Order remains and does not undergo any change even for the reason that the goods are lost at sea. The exporter does not have a claim for refund - If this principle is applied, which is the correct principle for valuation as per Section 14 of the Customs Act, 1962, the consignment having been declared to be unaccepted by the purchaser cannot be a reason for reduction in the value of the consignment as cleared from India - appeal dismissed - decided against appellant.
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2017 (1) TMI 10
Confiscation of imported goods - second hand machinery - restricted goods - import licence to be procured - Held that: - We have also held that the goods are liable for confiscation and hence are to be released only on payment of redemption fine and penalty - In the case of Marque Enterprises vs. C.C. (Preventive), Amritsar,[2015 (4) TMI 201 - CESTAT NEW DELHI] the Tribunal has examined various other decisions dealing with import of second-hand photocopiers and has observed that several coordinate Benches have taken a uniform view regarding imposition of redemption fine and penalty to the tune of 10% and 5% respectively. In the facts and circumstances of the case, we are of the view that redemption fine can be reduced to 10% and 5% of the approved value of the goods. Valuation - second hand machinery - Held that: - The nature of the goods is such that the valuation will have to be decided on case to case basis after examining the goods from the point of view of year of manufacture, the present condition of the machinery, expected life span etc. Since it is impossible to find identical contemporaneous import in the case of second-hand equipment, the fixing of price on the basis of the opinion of the Expert Chartered Engineer cannot be faulted with. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 9
Valuation - rejection of declared value - confiscation with redemption fine and penalty - scarf mixed colour - mis-declaration of description, quantity and value of goods - classification of goods - classified under Chapter 6214 9060 or under 6117 8090 or under 6214 3000 - suppression of facts - Held that: - it is clear that this is a simple case of wrong supplies by the supplier where instead of 48 cartons of socks, 47 cartons of men’s hand gloves and leggings were supplied. Consequently, the orders issued by Lower Revenue Authorities (Impugned Order-in-Appeal as well as Order-in-Original dated 22.10.2013) are hereby set aside. All the declared goods deserve clearance in terms of the findings given above; the goods which have been supplied by mistake i.e. Men’s gloves and leggings have also to be cleared under appropriate headings and on appropriate payment of duty of customs - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 8
Imposition of penalty u/s 112 of CA, 1962 - undervaluation of goods - section 47 of Customs Act, 1962, it is for the proper officer to be satisfied that the import duty assessed after ascertaining value has been paid - Held that: - The situation of the appellant is not much different from that of shippers/consigners of the goods - the imposition of penalty on the appellant for an alleged act that has nothing to do with the obligation devolving on imports under section 46 and section 47 of the Customs Act, 1962 may not be proper - Lack of jurisdiction that precludes the appellant from approaching the Settlement Commission is a clear indication that the provisions of section 112 were not intended to cover persons who are not concerned with the goods after its landing in India - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 7
Refund claim of excess paid duty - imported goods, USB Modem - The imported goods were assessed under CTH 85176292 as free rate of duty. However, neither the respondent had claimed, nor the assessing authority had extended the benefit of 'nil' rate of Excise Duty/CVD provided under the Notification No. 6/2006-CE dated 01.03.2006, as amended and also the benefit of exemption of Additional Duty of Customs of 4% provided under the Notification No. 20/2006-Cus., dated 01.03.2006, and excess duty paid by respondents. Held that: - Section 27 ibid provides the modalities and procedures for claiming refund of Customs Duty. The said provision mandates that duty paid in pursuance of an order of assessment or borne by the importer, can claim the same as refund. In this case, an amount of ₹ 6,06,887/- towards excise duty / additional duty of customs was paid by the respondent, since the benefit provided under notifications dated 01.03.2006 was not claimed in the Bill of Entry. On the basis of information furnished by the respondent, since the Bill of Entry was assessed by the Customs Department and the assessed duty was paid by the respondent, it cannot be said that the duty was paid by the respondent in pursuance of an order of assessment. The case of the respondent falls under the second category i.e. borne by him contained in Section 27 ibid, according to which, since the duty incidence has been borne by the respondent, claiming of refund of such excess duty in terms of Section 27 ibid, in our view is in conformity with the statutory provisions. Appeal dismissed - decided against Revenue.
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2017 (1) TMI 6
Imposition of ADD - re-organization of business - It was contended by the petitioners that the important consideration which appeared to have dominated the mind of the Designated Authority was that Solvay SA which was the non-participating party in the original anti-dumping proceedings had obtained significant interest in the joint venture entity and thus became a significant shareholder in two of the petitioner entities - whether imposition of ADD ON Solvay SA, justified? Held that: - this Court is of the opinion that the Designated Authority should restrict its enquiry into the genuineness of the transaction whereby Solvay SA is said to have divested itself of the shareholding of the Inovyn JV resulting in restoration of status quo ante as it were on the date of rendering of submission of final report dated 04.04.2014, culminating in the notification dated 13.06.2014. In case the authority concludes that as a matter of fact Solvay SA has no shareholding any longer in the joint venture company which owned 50% or any such significant percentage of shareholding in the petitioner companies, it should proceed to grant the request for change of name in the notification and recommend to that effect to the central government so that appropriate changes can be made by way of corrigendum. Petition allowed by way of remand.
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2017 (1) TMI 5
Mis-declaration of imported goods - goods declared were Tesa Electronic Door Locks, whereas goods were Tesa Guest Room Safes - EPCG scheme - carelessness on the part of Commissioner (Appeals) in adjudication process - Held that: - On going through the impugned order, we find that the order is cryptic in as much as the Commissioner (Appeals), though set aside the adjudication order and allowed the appeal but did not express his views or given any direction what is to be done after setting aside the order, for this reason also we are of the view that the impugned order cannot sustain - appeal allowed - decided in favor of appellant and against Revenue.
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2017 (1) TMI 4
Restoration of CHA licence - time limitations - there was inordinate delay about 3 to 4 years in processing the actions in CBLR, 2013 and CHALR, 2004 - the Bench seeks to understand if this is an exceptional case or such delays are happening as a matter of routine in total disregard of Regulation and CBE&C instructions - There are various decisions which hold that the time limits prescribed under the regulations are not directory but mandatory. There are some decisions otherwise too. In similar circumstances, earlier in the case of Skylark Travel Pvt. Ltd.[2016 (4) TMI 186 - CESTAT MUMBAI], wherein delay of 4 years had occurred, the Bench had sought data to ascertain if delays are regular or exceptional. The said data was not provided for a period of almost four months. The matter was heard on 23.11.2015, the Bench waited for four months for the data, however order pronounced on 22.03.2016. The order had to be passed without the benefit of the said data. There is an obvious resistance to providing the data. This creates a suspicion. It is obvious that some Customs Brokers suffer on account of such delays and some get benefit on account of such delays. Some custom broker, who have not committed any serious fraud and who ought not to be punished, get out of work for long periods during which the proceeding are delayed - In either case, it is bad for the system. It is in this context, the CBEC has issued the circulars dated 8.4.2010 - In exercise of powers under CESTAT Procedure Rule, 1982, we direct the Revenue to present the data regarding observation of various time limits prescribed under regulations. This data may be given in respect of cases taken up or pending in the Mumbai Customs since the amendment made by N/N. 30/2010-cus dated 8.4.2010 till 30.6.2016. The respondents are directed to produce the said data on 23.8.2016 at the time of next hearing. - Matter adjourned.
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2017 (1) TMI 3
Illegal import - baggage rules - whether under the facts of circumstances whether absolute confiscation was warranted for the two Gold Bars/Biscuits recovered from each of the respondents weighting 111 gms approximately each, which was not declared to the Customs and found while respondents were walking out through green channel? Held that: - I find that the respondents had been working abroad in Saudi Arabia for the last 14 months. I further find that the quantity of 233.280 gms of gold each is not a commercial quantity and is valued at ₹ 7,05,672/- which cannot be said to be a quantity which the respondents could not purchase and import into India from their savings out of their earnings. Further, I find that the respondents could have imported gold up to 1 Kg each subject to proper declaration. Thus a case of non-declaration is made out at best, against the respondents. I do not find any reason to interfere with the order of the learned Commissioner (Appeals) who have upheld the order of confiscation with redemption fine, redeemable on deposit of duty and fine. I further find that the penalty imposed on the respondents, is adequate - absolute confiscation not needed - appeal dismissed - decided against appellant-Revenue.
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2017 (1) TMI 2
Absolute Confiscation - penalty - smuggling - wrist watches - notified goods u/s 123 of the Act - the foreign brand watches seized, are notified goods therefore the burden to prove that the goods are not smuggled is on the person from whom the goods were seized - Held that: - the appellant is claiming the ownership of the goods contained in 6 cartons. The invoice submitted by the appellant has been verified by the investigating agency and it was fond that so called supplier M/s. Srusthi Enterprises is not existing on the address given in the invoice. In view of this fact the supplier of goods has not been established. All other documents submitted by the appellant, in my view of no help to the appellant for the reason that when the supplier is not existing at the address given in the invoice then there is no need to go into other documents. I am therefore of the view that since the appellant could not discharge the burden that the goods seized is other than the smuggled goods, the goods have been rightly confiscated absolutely, which is upheld. Imposition of penalty of ₹ 1,00,000/- - Held that: - the penalty of ₹ 1,00,000/- imposed on the appellant appears to be on higher side, hence, the same needs to be reduced. I therefore reduce the penalty of ₹ 1,00,000/- to ₹ 40,000/-. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 1
Valuation - transaction value - related party transaction - Held that: - After going through the record of the case including the orders passed by both the authorities below, we are convinced that the order passed by the original authority merits no interference, in the light of the distributor agreement between the respondent and the foreign supplier. In any case the original authority has provided sufficient safety measures in his order to secure interest of the Revenue. Accordingly, we find no reasons to interfere with the impugned order - transaction value accepted - appeal rejected - decided against Revenue.
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Corporate Laws
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2016 (12) TMI 1565
Money lending - loans advanced at a rate of interest beyond the prescribed limit - Held that:- Loan cum Hypothecation Agreement, Letter of Continuity, Promissory Note, Registration Book of each of such customers have been relied upon by the Inspector to support his case and to show that the amount of money advances is a loan and therefore the company, a company registered under the Companies Act,1956 is a company advancing loans for vehicles and operating without a license. Application for a license was made on 4/7/2007 and subsequently withdrawn on 27/8/2007. The complaint therefore states that no fresh license has therefore been issued to the Company. Nothing has been stated in the application to dispute this fact in the complaint. All these transactions are, therefore, loans advanced at a rate of interest beyond the prescribed limit under the Act making the Company responsible for the breach of the provisions of the Money Lending Act. Accordingly the application seeking a prayer to quash the Criminal Complaint being Criminal Case filed before the Court of the Metropolitan Magistrate, Court No. 20, Ahmedabad is not entertained and the prayer to seek quashing of the same is rejected. Application accordingly stands rejected. Rule is discharged.
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2016 (12) TMI 1564
Scheme of amalgamation - Held that:- As nothing prejudicial to the interest of creditors, members of both transferor companies and the transferee company or to public interest. All required procedures had been followed. Consequently, the company petition is allowed. This court does hereby sanction the amended scheme of amalgamation and does hereby declare the same to be binding on creditors and equity shareholders of transferor companies and the transferee company. The parties to the amalgamation or other persons interested shall be at liberty to apply to this court for any directions that may be necessary in regard to the working of the amalgamation.
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2016 (12) TMI 1563
Scheme of Amalgamation - Held that:- On the consideration of all the relevant facts, the procedural requirements contemplated under Sections 391-394 of the Act, the relevant Rules and on due consideration of the report of the Regional Director, Northern, Ministry of Corporate Affairs, New Delhi, the Composite Scheme of Arrangement is hereby sanctioned and as a result thereof, the assets and liabilities relating to Amalgamating Company No.1 & 2 shall stand vested in the Amalgamated/De-merged company and the Amalgamating Company No.1 & 2 shall be dissolved without being wound up, the assets and liabilities relating to “Demerged Undertaking i.e. Jim Corbett Undertaking” of Amalgamated/Demerged Company shall stand vested in the Resulting Company No.1 and the assets and liabilities relating to “Demerged Undertaking i.e. J.R. Recreation Undertaking” of Amalgamated/Demerged Company shall stand vested in Resulting Company No.2. The Petitioner-Companies shall comply with all the applicable Accounting Standards upon sanctioning of the Scheme. The Scheme shall be binding on the Petitioner-Companies, their respective shareholders, creditors and all concerned. Let formal order of sanction of the Scheme be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt of the same.
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2016 (12) TMI 1562
Sanction of the Scheme of Amalgamation - Held that:- On due consideration of the report of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi and the Official Liquidator, the Scheme of Amalgamation is hereby sanctioned and as a result thereof, all the assets and liabilities of the Transferor Company shall stand vested in the Transferee Company and the Transferor Company shall be dissolved without being wound up. The Scheme of Amalgamation shall be binding on both the Transferor and Transferee Company, their respective shareholders, creditors and all concerned. Let a formal order of sanction of the Scheme of Amalgamation be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt of the same.
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Service Tax
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2017 (1) TMI 40
Manpower supply service - lump-sum work - there is no agreement for utilization of services of an individual ; but the agreement is for carrying out job work or lump-sum work as entrusted to the appellant for execution for example milk packing, butter packing etc. The rate specified is also on a piece rate for example for packing of milk in 200, 500 and 100 Ml packets, the rate was fixed as ₹ 12/- per thousand packets - Held that: - reliance placed in the case of Ritesh Enterprises vs. CCE, Bangalore [2009 (10) TMI 182 - CESTAT, BANGALORE], wherein it was held that lump-sum work was not covered under manpower recruitment or supply agency - appeal dismissed - decided against Revenue.
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2017 (1) TMI 39
Classification of services - main function of the appellant under the agreement was to receive the goods on the strength of invoice on stock transfer basis and sell the goods on negotiated price to various customers - whether the service would fall under the head commission agent services or under the head Clearing and Forwarding Agent services? - appellant is providing services of receiving/dispatching of goods etc. on the direction of its principal and not for the principal. Held that: - the appellant is neither clearing the goods for M/s.B.A.L. nor dispatching the goods at the directions of M/s. B.A.L. The appellant itself identifies and is selling the goods to its buyers as per the terms of agreement between M/s.B.A.L. and the appellant. Thus, the appellant is effectively causing sale of goods on behalf of M/s.B.A.L. and not clearing and forwarding the goods - in an identical set of facts, this Tribunal in the case of D.R. Polymers [2013 (6) TMI 262 - CESTAT NEW DELHI] has held that no liability to pay service tax as C & F agent arises, when the service provider is free to sell the goods to the buyers arranged by him - appellant cannot be considered as C & F agent. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 38
Convention services - whether room rent to be included in assessable value - Held that: - providing of rooms on rent is a distinct, separate and independent activity, which has no relation to the convention service. Further giving the room on rent cannot be considered as a part of convention service - room rent need not be added. Whether the value of meals and beverages supplied to the participants of the conference is to be included in the value of the conventional services? - Held that: - It is on record that such charges alongwith the room rent have been indicated separately in the bills. It is also on record that the respondent has been paying VAT to the State Government on sale of food and beverages to the customers as indicated in the bills raised by them. It is a settled position of law that two taxes i.e. VAT and Service Tax cannot be levied on the same value - the supply of food and beverages is not an activity ancillary to the primary activity of convention service - value of food items need not be added. Appeal dismissed - decide against Revenue.
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2017 (1) TMI 37
Coaching services - denial of benefit of N/N. 24/2004-ST, dated 10.09.2004 - appellant claims to be entitled to the benefit of Notification for the reason that the trainings imparted is in the nature of vocational training or coaching, which is covered under the said exemption Notification - Held that: - the term Vocational Training Institute has been defined as one which provides vocational training, which will enable the trainee to seek employment or undertake self-employment directly after such training or coaching. It is common knowledge that acquiring skills in English language definitely improves better chance to seek employment. In this view of things, it is possible to say that the services rendered by the appellant could be covered by the Notification. N/N. 24/2004-ST has been further amended vide N/N. 03/2010-ST, dated 27.02.2010 in which the term vocational training institute has been taken to mean industrial training institute of an industrial training centre affiliated to National Council for Vocational Training. The contra decision has been delivered in the context of the amended provisions of the Notification. It has been held by the Tribunal in the case of Actor Prepares Vs.CST, Mumbai [2013 (12) TMI 1070 - CESTAT MUMBAI] that the above amendment made in N/N. 24/2004-ST cannot be taken with retrospective effect. The demand in the present case covers the period from April, 2005 to March, 2008 and is prior to the date of amendment, i.e., 27.02.2010. As such, the amendment can have no effect for the period of demand. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 36
Composite works contract - commercial construction, erection, commissioning or installation of plant machinery and equipment services in connection with construction of petrol pumps for oil companies - sale of goods in property and also rendering of service - Held that: - The Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] held that such contracts are liable to service tax only w.e.f. 01/06/2007 when a new tax entry under the category of works contract service was introduced for the first time in the Finance Act, 1994. Accordingly, we find that the service tax liability confirmed against the appellants for the period prior to 01/06/2007 is not legally sustainable. Eligibility of composition rate - Held that: - On fulfillment of the conditions laid down therein for availing the composition rate of tax, the tax liability of the appellants has to be re-worked and demanded. Non-filing of request for such composition scheme cannot be held as a reason for denial of such concession Time Bar - Held that: - It is seen that with the introduction works contract service as a separate tax entry w.e.f. 01/06/2007 though the tax liability on works contract was specified by name, even thereafter the dispute continued about vivisecting the contract for valuing tax purpose - invoking extended period for alleging fraud etc. is not legally sustainable. As such, the service tax liability under works contract service against the appellants shall be restricted to normal period as applicable under Section 73 of the Finance Act, 1994. On the same reasoning, penalties imposed on the appellants are also set aside in terms of Section 80 of the Finance Act, 1994. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 35
Cable operator services - evasion of tax - time limitation - arbitrary quantification - Held that: - the statement of the proprietor relied upon by the Revenue, can at best raise suspicion to suggest that the taxable value declared by the appellant is not correct or suppressed. However, before fastening the service tax demand and the connected penalties under various sections, it was incumbent on the revenue to come up with tangible evidence to prove the suppression of facts and to quantify the demand on the basis of documentary evidence. On the other hand, what we notice is rather arbitrary quantification on the basis of a ball park figure indicated by the proprietor. Accordingly, we find it difficult to uphold the demands imposed upon the appellant - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 34
Refund claim of interest - tax and interest paid under protest - foreign agent commission service - issue of taxability pending adjudication - Held that: - the matter has to be re-considered for the reason that the refund of interest has been rejected by the refund sanctioning authority solely on the ground that the issue whether appellant is liable to pay, service tax is pending adjudication. It is now settled that appellant is not liable to pay service tax for the period prior to 18.04.2006. In view thereof, I deem it fit to remand the matter to the original authority to re-consider the issue of refund of interest in the present situation - appeal allowed by way of remand.
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2017 (1) TMI 33
Imposition of penalties - architect services - availed input services namely Landscape Consultancy Services from outside India - Reverse charge mechanism - Held that: - It is not disputed that the appellant paid the alleged short paid service tax along with interest and also reversed the irregularly availed credit immediately on pointing out by the audit party. Thus the outstanding liabilities were discharged by the appellant in 2009 itself, much prior to the issuance of Show Cause Notice. The Show Cause Notice is seen issued on 09.02.2011 only - In the case of Adecco Flexione Workforce Solutions Ltd.,[2011 (9) TMI 114 - KARNATAKA HIGH COURT] the Honorable Karnataka High Court had occasion to consider similar issue where service tax was paid before issuance of Show Cause Notice. The Honorable Court held that when the assessee paid the service tax along with interest prior to the issuance of Show Cause Notice, no penalty can be imposed - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 32
STPI unit - Rejection of refund claim - Rule 5 of CCR - N/N. 5/2006 dated 14.03.2016 - Held that: - The Tribunal in the case of Alliance Global Services IT India (P) Ltd., Vs. CCE & ST Hyderabad [2016 (6) TMI 720 - CESTAT HYDERABAD) had occasion to analyze the same services and held that these services qualify as input services and are eligible for credit - the rejection of refund is unjustified - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 31
Mobilization advances - penalty - The appellants received advances from service recipient and adjusted such amount towards the payment that has to be received from service recipient - Held that: - The decision in the case of Thermax Instrumentation Ltd., Vs. CCE, Pune-I [2015 (12) TMI 1222 - CESTAT MUMBAI] relied upon by Ld. Counsel covers the issue in hand. The Tribunal in the said judgment held that the demand of service tax on advances received is unsustainable when asessee has paid service tax on the total value of services periodically deducting the same from the advances received - penalty not imposable - demand of interest upheld - appeal disposed off - decided partly in favor of appellant.
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Central Excise
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2017 (1) TMI 30
CENVAT credit - forged invoices - natural justice - Held that: - all the invoices issued by are fake and without receipt and supply of the material - fraudulent Cenvat credit have been passed - demand of credit, with interest and penalty sustains. Natural justice - Held that: - all the invoices are fake and without receipt and supply of goods then the plea of the Ld. Counsel of non observance of principles of nature justice has no meaning and will not be of any help of the appellant. Appeal dismissed - decided against appellant.
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2017 (1) TMI 29
CENVAT credit - inputs in the fabrication / manufacture of cranes which in turn used in the factory premises for handling materials - Held that: - the items of goods involved in the present appeal are not supporting structure but they are used for manufacture of assembly lines and tracks for hoists and cranes without which it is not possible to manufacture the final products - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 28
Classificattion of Noscapine B.P. and Papavarine S.R. - Interest - Penalty - Time limitation - it is clear that the Noscapine B.P & Papavarine S.R were non pehnantherene (Antherium) alkaloid and they were non Narcotic products. Therefore, both the products are not capable of causing or producing in human beings dependence, tolerance and withdrawal syndromes, thus they are not covered under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955) and State Excise duties were leviable there on. It is clear that both the products were non-narcotic products and these goods belonging to alkaloids of opium and their derivative, salts thereof, in the instant case both the products as such did not contain opium . Although, they are generated from the opium, but do not contain opium, and in this view, the contention of the noticee is not correct. - to be classified by under Chapter Heading No. 2939.1900 and are liable to payment of duty of Central Excise. Extend period of limitation - It appears that the Revenue has been in the knowledge of the subject issue of classification of the subject products. Further, the department has failed to provide any evidence to prove the intention to evade the duty on the part of the appellant - Demand confirmed for one year only - Appeal allowed partly.
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2017 (1) TMI 27
Cenvat credit on capital goods - Penalty - Time limitation - Held that: - the entire facts regarding availment of modvat credit on the capital goods in question have been correctly disclosed to the department. In my view nothing prevented the department to issue a show cause notice well within the normal period, however show cause notice was issued almost on completion of five years from the date of credit taken. Since there is no suppression of facts on the part of the appellant, the show cause notice is time bar, on this ground itself impugned order is not sustainable
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2017 (1) TMI 26
Interest - Penalty - N no.2/96-CE and N No.67/95-CE - Polyester Synthetic Tops/Manmade yarn - Held that: - the Notification No.22/96 dated 23.07.96, which exempts all the goods falling within the Schedule to the Central Excise Tariff Act, 1985 specified under Col.4 of the Table annexed to the said notification no.22/96, when such inputs are manufactured in a factory and used within the factory of production in or in relation to the manufacture of corresponding final products of the description given in Col. 2 of the table annexed to the Notification No.22/96 (Supra) and falling under Chapter Heading No. or sub-heading nos. of the final products given in Col. 3 of the table annexed to the Notification, from the whole of the duty of excise and additional duty of excise leviable thereon - Synthetic Tops are used in the manufacture of yarn within the factory of production and the said yarn is further used in the manufacture of fabrics - Appeal dismissed - decided in favor of the assessee.
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2017 (1) TMI 25
Denial of exemption Notification No. 6/2002-CE - Held that: - There is no dispute the dyed yarn was manufactured out of duty paid texturised yarn, accordingly the condition of notification stand complied with, merely because at the intermediate stage twisted yarn made that does not alter the duty paid character of the principal yarn i.e. texturised yarn - Appeal dismissed.
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2017 (1) TMI 24
Clandestine removal - Penalty - Rule 25 of the CER, 2002 - Principles of natural justice - Held that: - It is undeniable that the petitioner did not pay duty in Delhi where the goods were actually manufactured. It is not as if duty was not paid only in respect of Kathua unit for which benefits and credits were sought from Kathua. In fact, there were 411 DG sets working out to over 20% of the quantity produced. What is more, to compound the non-payment of duty, the petitioner committed a further violation in claiming that the goods were cleared from Kathua when they were not, and proceeded to draw the revenues and then also sought CENVAT credit - It is an attempt to supplement the concession as it were during the course of the proceedings - an indication that it somehow sought to tide-over and close the dispute even though there is no common moot point or the possibility of a moot point with the revenue - Petition dismissed.
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2017 (1) TMI 23
Whether on the facts and circumstances of the case, the CESTAT is correct in holding that the demand raised by the Show Cause Notices dated 06.12.2004 and 07.12.2004 is not barred by limitation under the proviso to Section 11A of the Central Excise Act, 1944? - Cenvat credit on capital goods - Held that: - the appellant-assessee had placed all the relevant material before the authorities as was sufficient for them to ascertain the veracity or otherwise of the claim of the appellant. The officers of the Department failed to examine the admissibility or otherwise of the claim of the assessee and defaced the invoices submitted by the assessee by putting the endorsement “Modvat Credit availed under rule 57” which means that the Department was aware that the assessee had claimed Modvat credit in respect of the capital goods in question - Appeal allowed - decided in favor of the assessee.
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2017 (1) TMI 22
Reversal of CENVAT credit - The appellants purchased DG Sets in February, 97 and installed the same in their factory in the state of Karnataka and were using the same. Later on the same were shifted to their unit at Imlai in Madhya Pradesh, where the same were installed on 03.06.2002 and used - damage of machinery due to fire - insurance compensation received - reversal of credit on the ground that the same were deemed to have been removed and the same tantamount to claiming cenvat credit irregularly and that the applicant suppressed relevant facts - whether reversal justified? Held that: - the subject matter is covered by the decision of Hon'ble Gujarat High Court in the case of CCE vs. Tata Advanced Materials Ltd., [2011 (4) TMI 1124 - KARNATAKA HIGH COURT], where it was held that Merely because the Insurance Company paid the assessee the value of goods including the excise duty paid, that would not render the availment of the cenvat credit wrong or irregular, assessee has paid the premium and covered the risk of this capital goods and when the goods were destroyed in terms of the insurance policy, the Insurance Company has compensated the assessee - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 21
CENVAT credit - various items of inputs and capital goods - manufacture of sponge iron - Held that: - the Revenue's contention that these items upon fabrication become immovable in character and, hence, cannot be considered as capital goods as also been examined by the Original Authority. It was held by the Original Authority relying on the decision of the Tribunal in P.G. Foils Ltd. vs. CCE, Jaipur [1999 (10) TMI 307 - CEGAT, NEW DELHI] to the effect that embedding of machine on concrete foundation to ensure wobble free operations does not make them immovable property. The availability of credit of various MS items used in the fabrication of steel structures which form part of operating machinery in a manufacturing plant, has been a subject matter of decision by various High Courts and this Tribunal. In all the cases such credits have been allowed. Appeal dismissed - credit allowed - decided against Revenue.
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2017 (1) TMI 20
CENVAT credit - Angles, channels, beams, flat, joist and plates etc. - Held that: - the issue is squarely covered by the decision of the Tribunal in the case of Lafarge India Pvt. Limited vs. C.C.E., Raipur [2016 (10) TMI 615 - CESTAT NEW DELHI], where it was held that the decision in the case of Commissioner vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] relied upon where it was held that the steel items when they are used in fabrication of capital goods and their accessories inside the manufacturer premises are eligible for credit by applying user test - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 19
CENVAT credit - fake invoices - Held that: - Admittedly, during the impugned period, the main appellant did manufacture final products and cleared them on payment of duty. No examination of this aspect has been made either in the investigation or by the Adjudicating Authority. On the same set of investigations, the invoices issued to various other manufacturer, who were dealing with KPIPL in producing PVC compounds and master batches were questioned. In many cases, the proceedings were concluded by denying credits availed in such transactions. On appeal, we find that the Tribunal had upheld the appellant s plea regarding correctness of the credit availed. Regarding credit of ₹ 1,89,789/- availed on imported inputs, the appellants are not contesting the same. The denial of credit in the present case cannot be sustained on the basis of reasoning adopted by the Original Authority - appeal allowed - credit allowed - decided in favor of appellant.
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2017 (1) TMI 18
CENVAT credit on inputs and capital goods - manufacture of sponge iron - capital goods and components thereof manufactured out of the said inputs were duly used for captive consumption under N/N. 67/95-CE dated 16.3.1995 - Held that: - the issue is squarely covered by the decision of the Apex Court in the case of CCE, Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where the Apex Court has referred to the ‘user test’ evolved by the Apex Court in the case of CCE, Coimbatore Vs. Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT OF INDIA] which is required to be satisfied to find out whether or not particular goods could be said to be ‘capital goods’. When we apply the ‘user test’ to the case in hand, we find that the structural steel items have been used for the fabrication of support structures for capital goods - the goods fabricated, using such structural items, will have to be considered as parts of the relevant machines. The definition of capital goods includes, components, spares and accessories of such capital goods - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 17
Cement - CENVAT credit - MS plates, MS angles, channels, steel tubes, rebars, pastable items, ceramic tiles etc - Held that: - The Chartered Engineer certificate certifies that the capital goods manufactured using the subject items are essential for carrying out manufacturing activity of the appellant - When the appellant uses railway sidings for the purpose of transportation, it has to be invariably laid outside the factory and connected to a railway station in order to facilitate the transportation of bulk quantities of inputs and final products. Needless to say that the railway sidings laid outside the factory are part and parcel of the facility for transportation provided inside the factory premises - the appellant is eligible for credit availed on MS items, angles etc. Credit in tiles - Held that: - The credit availed on tiles i.e. ₹ 13,076/- is disallowed and the same along with interest as well as equal amount of penalty to this amount of ₹ 13,076/- is confirmed. Appeal disposed off - decided partly in favor of assessee.
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2017 (1) TMI 16
Refund of unutilized cenvat credit - credit on Car Rentals, CHA Service, Chartered Accountant, Courier, Travel Agency, Professional fees, Goods Transport Service, Machine Maintenance, Bank Charge Service, Security Service, Goods Testing - denial on the ground that the said services are not used in the manufacture of final products - Held that: - there is nothing wrong in the impugned order allowing refund of unutilized accumulated cenvat credit of input services. The original authority has allowed cenvat credit after proper verification of the records of the respondents and all these services on which credit has been availed have been held to be input services - credit allowed - appeal dismissed - decided against Revenue.
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2017 (1) TMI 15
Refund - Rule 5 of the CER, 2004 - 100% EOU - instead of utilizing the credit accumulated due to export for DTA clearance, EOU unit claimed refund - Held that: - I find that similar issue has came up before the Tribunal in the case of CCE Vs. Motherson Sumi Electric Wires [ 2009 (5) TMI 498 - CESTAT, BANGALORE ] wherein it was held that We agree with the learned Commissioner (Appeals) that there is no such requirement under the Cenvat Credit Rules, 2004. We have already reproduced the finding of the Commissioner (Appeals), which is well reasoned. He had also come to the conclusion based on the figures that the respondent is not in a position to utilize the credit availed on inputs used in the manufacture of goods, which were exported under bond and which are getting accumulated from time to time. He has correctly applied Rule 5 of CCR, which provides for sanction of refunding cash in respect of goods exported under bond/letter of undertaking - Appeal allowed.
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2017 (1) TMI 14
Interest - Penalty - Rule 25 of the Central Excise Rules, 2001/2002 - Held that: - In my considered view that this unacceptable proposition for a simple reason that the provision of Central Excise Act more specifically, Section 11AB is for demand of interest on the amount of Central Excise duty which have been confirmed and paid by an assessee - Appellant has himself voluntarily discharged the duty liability, that does not mean there would be no interest liability, as provision of Section 11AB were specifically amended to include such a situation, accordingly it is held that the appeal filed by the appellant is liable to be rejected and I do so. In my view the findings of the first appellate authority are correct that there is no dispute that appellant-assessee himself come forward requesting the department to issue show-cause notice, so that they can discharge the duty liability, I find that there is no merit in the appeal - Appeal rejected.
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2017 (1) TMI 13
Clandestine removal - Penalty - Held that: - it is noticed that appellant is unable to dislodge the findings. There is no dispute that the consignment of Gutkha Pan Masala which was intercepted on 19th November, was non-duty paid consignment; in the instant case despite being given an opportunity to prove they have discharged the duly liability on goods cleared prior to 19th November, 1998, appellant had failed miserably to do so - Appeal rejected - decided against the assessee.
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2017 (1) TMI 12
Cenvat Credit - Penalty - Interest - Held that: - appellant have not submitted correlation between HR/CR coils and HR/CR cut sheet received by them whereas they submitted correlation between HR/CR sheets and components made there from which is not relevant. This clearly shows that direction given by the Tribunal has not been properly complied with by the appellant. I therefore of the view that one more opportunity can be given to the appellant to satisfy to the Adjudicating authority about correlation - Appeal allowed by way of remand.
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Indian Laws
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2016 (12) TMI 1561
Recovery of the debt - jurisdiction of the Recovery Officer - recovery of the amount by execution of the certificate - Held that:- It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the Banks/Financial institutions should go to the Civil Court or the Company court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under Section 19(22) has, in our opinion, to be executed only by the Recovery Officer. It is also observed that the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other Court or authority much less the Civil Court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act. Considering the aforesaid, we are unable to agree with the contention of the learned Senior Counsel for the appellants that the Bank has a lien over the surplus amount of ₹ 29,80,150.80/-. The writ court has rightly directed the appellant - Bank to refund the amount to the respondent No.1 along with interest. No case to interfere with the order dated 27/07/2016, passed by the learned writ court, as prayed is made out. Also gone through the application for contempt filed by the respondent No.1 for drawing contempt proceedings against the officers of the appellant - Bank for non-compliance of the order dated 9/09/2016, 26/11/2016 and 22/11/2016.Admittedly, the amount was deposited in the account of respondent No.1 only on 18/11/2016 and, thus, we direct the office to register the application for drawing contempt petition against the appellants as per rules, separately and fix the matter in the first week of January, 2017.
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2016 (12) TMI 1560
Application under Section 11 of the Arbitration and Conciliation Act - seeking appointment of independent arbitrator for adjudication of the disputes arisen between the applicant and respondents - Held that:- The first objection raised by the respondent regarding pendency of the proceeding under BIFR and registration under SICA is not tenable. In addition to the aforesaid, it is to be noted here that The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 has been incorporated by Act No.1 of 2004 which has been implemented w.e.f today vide the Gazette of India Extraordinary, Ministry of Finance (Department of Financial Services) Notification New Delhi, the 25th November, 2016 of the Central Government. As per Section 5 under the saving clause nothing has been saved which runs contrary to the aforesaid legal position to which any benefit may be derived by the respondents. Another objection is with respect to not agreeing on the name for appointment of Hon’ble Mr. Justice P.D. Mule (Retd.). Therefore, it is apparent that respondent is not agreeing on the name of arbitrator proposed by the applicant. In view of the aforesaid, exercising the power as per Section 11 of the Arbitration and Conciliation Act, 1996, in the opinion of this Court, Hon’ble Mr. Justice A.M. Naik (Retd.) may be appointed as arbitrator to resolve the dispute on a fees as specified in the Schedule which shall be borne by both the parties equally. The Registry of this Court may take appropriate step seeking consent of the arbitrator and place the same on record. In view of the foregoing, this application is hereby allowed and Hon’ble Mr. Justice A.M. Naik (Retd.) is appointed as arbitrator.
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