TMI Tax Updates - e-Newsletter
January 23, 2016
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:
Electronic Verification CODE (EVC) for electronically filed Income Tax Return - Additional Modes - Notification
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Income Tax:
Taxability of Settlement amount received - The nature of settlement amount is of capital receipt and it cannot be categorized as income. Further this amount has been received against surrender of right to sue which cannot be considered for the purpose of capital gains u/s 45 - AAR
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Income Tax:
The Supply Management Services fees received by the applicant is not in the nature of FTS or royalties under the India-UK Tax Treaty - AAR
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Income Tax:
Investment in equity shares of Dow Agrosciences India Private Limited - capital asset u/s 2(14) - There is no material to hold that the applicant has a PE in India and therefore, the income arising out of the transfer of shares should be treated as business income. - AAR
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Income Tax:
Reopening of assessment - return was filed before the wrong authority - Such being the facts, it cannot be stated that the petitioner had filed no return. The very foundation for issuing notice, therefore, as recorded in the reasons, would be belied. - HC
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Income Tax:
Reopening of assessment - There were multiple other remedies available to the revenue to exercise within the time frame provided under the statute, but to reopen an assessment beyond the period of four years of the assessment order was simply not one of them since there is no failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment - HC
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Income Tax:
Depreciation worked out with reference to the written down value computed as a result of order passed under Section 250(6) - Higher WDV - No error could be pointed out in the approach - HC
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Income Tax:
Nature of Subsidy - The predominant purpose of the scheme is to ensure that tea manufactures function more profitably and not for setting up of a new unit or expansion of the existing unit. - the subsidy in question is revenue subsidy and was rightly brought to tax - AT
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Income Tax:
Disallowance of interest on delayed payment on excise duty or delayed payment of sales-tax - These are more or less compensatory in nature and cannot be held as any infraction or violation of any law - AT
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Income Tax:
Brought forward losses of firm - covered u/s 187 OR u/s. 78 - change in the terms and conditions of the partnership - the reconstitution of the partnership was made only as a result of changes in the profit sharing ratio amongst the partners - CIT(A) has rightly allowed carry forward losses to be set off, as claimed by the assessee - AT
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DGFT:
Strict adherence to the Notification No 114 dated 12th March 2015 specifying number of mandatory documents required for Export and Import - Trade Notice
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Corporate Law:
Petition praying the official liquidator be restrained from taking possession of the said plot - transaction itself is not bona-fide and in view of the settled legal position that a transaction not completed before the order of winding up has been passed, cannot be completed after the winding up order is passe - HC
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Indian Laws:
Rectification of register where trademark 'BLENDERS PRIDE' was registered by inadvertence/error - time for filing notice of opposition within the three month - The Registrar's power to maintain the purity of the register of trademarks would still remain intact - SC
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Service Tax:
Swachh Bharat Cess – Can it be “collected” without “levy”? - Service Tax
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Service Tax:
Attachment and seizure by the Service Tax Department for substantial service tax dues not paid - there is no final assessment of the petitioner's duty and penalty liabilities. - Goods to be releases subject to specific conditions - HC
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Service Tax:
Cenvat Credit - Allocation of input services to the concerned department as earned by the Table-C department - appellant provides taxable service as well as exempted service - entire disallowance does not call for any decision in favour of Revenue. - AT
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Service Tax:
Classification of Import of services from M/s. Society for Worldwide Interbank Financial Telecommunication (SWIFT) which is a non-resident entity, not having an office in India - reverse charge - Demand conformed invoking the extended period of limitation - AT
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Central Excise:
Seeks to amend Notifications No.56/2002-CE & No.57/2002-CE both dated 14.11.2002 so as to insert a sunset clause of 31.03.2016 and to deny the benefit of the exemption to goods on which certain specified processes have been undertaken - Notification
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Central Excise:
Allegation of fraudulent export of goods to Nepal - . It is the departmental internal correspondence to ascertain the fact that export is complete or not. For the lapses of the department, appellant cannot be held faulted - AT
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Central Excise:
Valuation - stock transfer - Differential duty on clearances to their Faridabad unit - comparable price - while the value adopted is to be based on comparable value there is no sanction to take highest of the independent sale price for such purpose. - AT
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Central Excise:
Classification - manufacture - change in the scope of tariff entries - iron and steel structures like trusses, columns, staircase, windows and section etc. - These steel structures are commonly known as component parts of building/ shed. - these goods are not excisable - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (1) TMI 793
Taxability of Settlement amount received - trading business or capital receipts - Settlement Amount to be received by Aberdeen US as trustee for the Claims trusts from Satyam - Held that:- The nature of settlement amount is of capital receipt and it cannot be categorized as income. Further this amount has been received against surrender of right to sue which cannot be considered for the purpose of capital gains under section 45 of the Income-tax Act. In this case the object of the investment is not to have business profit because the shares of Satyam were not being purchased and sold at regular interval. In the light of this even CBDT Circular No.4 of 2007 does not support the stand of Revenue that Aberdeen investors were engaged in trading business. There is no doubt that the settlement amount is relatable to Satyam shares, i.e., if shares would not have been purchased the question of class action or right to sue would not have arisen. However, this does not mean that the settlement arrived with the approval of the US Court is to compensate business receipt of Aberdeen investors. The fact remains that the Aberdeen investors entered into a settlement agreement with Satyam considering the time, effort and costs involved in litigation and the agreement provided for a full, final and complete resolution of all claims asserted or which could have been asserted with respect to the released claims. The Aberdeen investors fully, finally and forever waived, released, discharged and dismissed each and every of their legal claims against Satyam and PwC. This was also agreed vice versa. It is clear, therefore, that the settlement amounts have been received not as part of business profit or to compensate the future income but as a result of surrender of the claim against Satyam and PwC. Surely, even in accordance with the principle of surrogatum such amount is not assessable as income because it does not replace any business income.In the light of above it is concluded that the settlement amount received by Aberdeen investors is not taxable under the provisions of the Income-tax Act and question No.1 of all three applications is answered accordingly
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2016 (1) TMI 792
Supply management service fees received - is in the nature of “Fees for Technical Services” or “royalties” within the meaning of the term in Article 13 of the India-UK double tax avoidance agreement (‘India-UK treaty’)? - concept of ‘make available’ - Held that:- The objection of the Revenue that the agreement entered into by the applicant with CTIL is a scheme for tax avoidance is without any merits. To say that the applicant has entered into contract with Indian company with the main purpose to take advantage of India-UK Treaty is factually incorrect. The facts as stated by the applicant in the application show that the applicant maintains Global Cummins contract supply agreement with suppliers and is responsible for finalization of supplier prices to Cummins Turbo Technologies worldwide, including CTIL , from UK and US suppliers. There is no mandate for CTIL to source the components from the approved suppliers only and if CTIL finds a better pricing from an alternate supplier, it shall be free to source the component from them. It is incorrect to say that such arrangement has been done with the main purpose to avoid tax. Therefore, the objection of the Revenue on this count fails. As regards services being royalty and covered under Article 13(3), it must be said that the nature of services related to identification of products and competitive pricing cannot qualify as royalties under the provisions of Article 13 under India-UK Tax Treaty because it is not related with the use of, or the right to use any copyright, patent, trademark, design or modal, plan, secret formula or process etc. The Supply Management Services fees received by the applicant is not in the nature of FTS or royalties under the India-UK Tax Treaty. In view of the fact that the applicant has no PE in India, the fees received are not taxable in India. CTIL is not required to withhold tax under section 195 of the Indian Income-tax Act.
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2016 (1) TMI 791
Investment in equity shares of Dow Agrosciences India Private Limited - whether would be considered as ‘capital asset’ under section 2(14) of the Act? - whether capital gains arising from the proposed transfer of shares of DAS India by the Applicant to DAS Singapore (a company proposed to be incorporated in Singapore), would be subject to tax in India? - Held that:- There is no material before us to hold that the applicant has a PE in India and therefore, the income arising out of the transfer of shares should be treated as business income. We are unable to accept the claim of the Revenue regarding the PE. Once that objection is rejected, then the only relevant clause which remains for our consideration is Article 13(4) which is clear in itself. We have already recorded a finding on the PE that the applicant does not have any office, employees or agents in India nor does it have a permanent place from where it operates from India. These assertions of the fact have not been traversed by the Revenue even at the cost of repetition that there is no material before us to hold that the applicant has any PE in India. In that view even if the gains that the applicant makes from the proposed transfer are treated as business income, even then there will be no question of taxation on those gains. Application of Section 115JB - Held that:- With effect from 1.4.2015, the provisions of section 115JB would not be applicable to foreign company if the foreign company is a resident of a country having DTAA with India and such foreign company does not have a PE within the definition of the term in relevant DTAA or to the foreign company which is a resident of a country which does not have a DTAA with India and such foreign company is not required to seek registration under section 592 of the Companies Act, 1956 or section 380 of the Companies Act, 1956. It is clear that the present applicant is clearly covered as it is a company in Mauritius, which country has DTAA or as the case may be DTAC with India. Again we have already given a finding that the applicant does not have a PE in India. As such we answer this question in favour of the applicant holding that there will be no applicability of section 115JB to the applicant. Applicability of the provisions of Section 92 to 92F - - Held that:- Unless the transaction is taxable in India, there would be no application of Sections 92 to 95. Section 92 is not an independent charging section and would be applicable only if there is any chargeable income arising from the international transaction. In the present case even though the proposed transfer of shares could result in income/capital gain from the international transaction since this income is not chargeable to tax in India in accordance with Article 13, there will be no question of the applicability of section 92 to 92F. Applicability of section 195 - Held that:- The capital gains earned out of proposed transaction are not taxable there will be no question of the applicability of section 195 of the Act. As per the Ruling of the Hon’ble Supreme Court in Transmission Corporation of AP Ltd. vs. CIT [1999 (8) TMI 2 - SUPREME Court ]. Requirement to file return of income under section 139 - Held that:- No applicability of section 139(1) of the Act to the present applicant
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2016 (1) TMI 790
Disallowance of liability of licence fee and on account of interest on arrears of licence fee payable to N.D.M.C. for running the business at Chanakya Cinema - Ascertained or accrued liability - Held that:- There was no question of there being no liability on the Assessee whatsoever for the renewal of the licence. Merely because the Assessee had chosen to challenge in Court the enhancement of the licence fee, which was permissible to be raised by it in accordance with law, did not preclude the Assessee, which was following the mercantile system of accounting, from claiming it as a liability during the AYs in question. The Court, therefore, does not, in view of the averments made by the Assessee in the pleadings in the suit filed by it against the NDMC, as a reason to preclude the Assessee from claiming the licence fee, the head office fee and the interest on arrears payable to the NDMC in terms of the renewed licence deed as a liability for the AYs concerned. The ITAT also appears to have drawn a distinction between a statutory liability and a contractual liability and opined that a deduction in respect of the contractual liability would be permissible “only when the disputes are settled.” This is contrary to the legal position as explained in the above decisions of the Courts. Even where a challenge is laid to a liability arising under a contract, by a challenger initiating legal proceedings, such challenger can still for the purposes of its accounts and for the purposes of computation of its income tax liability claim the entire amount under challenge as an accrued liability as long as such amount is ascertainable. Corresponding adjustments would be made in the year in which the suit is finally decided or the disputes settled. That, however, would not preclude the Assessee from claiming it as an ascertained liability. The ground urged on behalf of the Assessee as regards consistency also merits acceptance. There is indeed a demonstrable inconsistency in the Revenue’s stand in the matter. While the Assessee consistently claimed liability towards licence fee, the Revenue appears to have accepted it in its entirety some years and not in some others. In AYs 1982-83 to 1986-87, the AO fully allowed the amount as claimed in respect of the licence fee as well as interest by the Assessee in terms of the Agreement dated 23rd September, 1980. ITAT was in error in declining the plea of the Assessee for the AYs in question with regard to the full claim of the payment towards licence fee and interest on the arrears of licence fee. The question framed is answered in the negative, i.e., in favour of the Assessee and against the Revenue.
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2016 (1) TMI 789
Penalty u/s 271 (1)(c) - disallowance of expenditure - Held that:- A wrong explanation cannot amount to furnishing of an incorrect particular. The non-furnishing of explanation falls within the same zone of consideration unless there is any adverse evidence to indicate that the concealment was deliberate or incorrectly depicted in the return with a view to evade any liability. The explanation in relation to Section 271 (1)(c) as pressed into service read with clause (B) if read together, the same would clearly indicate that the ratio of the judgment in the case of Commissioner of Income Tax Vs. Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) is clearly attracted. The Commissioner Income Tax (Appeal) has specifically recorded that the variation in returned income and assessed income is disallowance of expenses not found allowable, no penalty under Section 271(1)(c) of the Act is imposable and once such a finding has specifically been recorded, the penalty proceedings in the facts and circumstances of the case can not be sustained. - Decided in favour of assessee.
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2016 (1) TMI 788
Reopening of assessment - Held that:- Reasons 3 to 7 of the order dated 30th March, 2011, based as they are on audit objections, in terms of which the AO felt constrained as a result of the CBDT Instruction No. 9 of 2006, to reopen the assessment for the AY 2004-05, are unsustainable in law. The Court holds instruction No.9 of the CBDT dated 7th November, 2006 cannot possibly override the statutory powers to be exercised by an AO in terms of Section 147 of the Act. In other words the said instruction has to be read consistent with proviso (a) to Section 119 (1) of the Act and cannot, as was erroneously understood by the Respondent, compel the AO to issue the notice dated 30th March, 2011. If the CBDT Instruction No. 9/2006 is read to the contrary, it would fall foul of Section 119 of the Act. In the first instance when the original assessment was framed. This included the account books, tax audit reports etc. The return was picked up for scrutiny and after two questionnaires were answered to the AO's satisfaction by the Assessee, the assessment was framed under Section 143 (3) of the Act. In the circumstances, the reference by the AO to Explanation 1 to Section 147 of the Act is, misconceived for the simple reason that once the original return was picked up for scrutiny and the accounts and other documents were subjected to a detailed examination by the AO, the question of there being no full and true disclosure of the material facts did not arise. Significantly, the reasons for re-opening fail to mention which material was failed to be disclosed by the Assessee Despite the Assessee earning dividend which was treated as exempt under Section 10 (34) no disallowance of expenditure was made under Section 14-A - It is seen that during the original assessment proceedings under Section 143(3) of the Act, there was a specific query raised by the AO in the letter dated 24th December, 2004 addressed to the Assessee. Question 8 required the assessee to give details of dividend exempt under Section 10 (34) received from HDFC along with copies of accounts. It is further seen that Question 9 of the AO's letter dated 25th February, 2005 was regarding the dividend of ₹ 1.85 crores received from HDFC. The Assessee submitted detailed replies in this regard on 31st January, 2005 enclosing the complete details. Another reply was furnished on 16th March, 2005. Para 8 of the said reply deals with in detail with the query regarding the dividend of ₹ 1.85 crores received from HDFC. Assessee was unable to reconcile the receipts of USD, 10369250 from Ranbaxy USA despite various opportunities. In this regard the AO had sought an explanation from the Petitioner by issuing a notice dated 25th January, 2011 even prior to issuance of the notice under Section 147/148 of the Act. This information had been furnished to the AO by the Petitioner by its letter dated 11th February, 2011. It was explained that USD 1,03,69,250/- was a total of six of the seven receipts and was, therefore, included in the sum of USD 1,13,17,472/-. A certificate was also provided from Ranbaxy USA to the effect that no other amount was paid by them during the relevant period. In the counter affidavit filed by the Respondent, it is simply reiterated that the Petitioner had not reflected USD 948,222 as income in the relevant AY despite the fact that Ranbaxy USA has disclosed this in its return. As pointed out by Mr Syali, it was the above reason that prompted the AO to issue a letter in the first instance to the Petitioner on 25th January, 2011. The explanation offered by the Petitioner in its reply dated 11th February, 2011 that the said amount was included in the amount already disclosed was obviously overlooked while seeking to reopen the assessment. Consequently, there appears to be no basis in the conclusion of the AO that Petitioner was unable to reconcile the receipts from Ranbaxy USA. The Court is, therefore, satisfied that reason 8 is also unsustainable in law. - Decided in favour of assessee
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2016 (1) TMI 787
Reopening of assessment - return was filed before the wrong authority - Held that:- To the assertion of the petitioner that the return was filed before the same authority where it was previously done and that the norms required the Director of the company to file the return before the same authority where company has to be assessed, there is no serious grounds raised by the respondent. Further, the return filed by the petitioner was acknowledged and intimation under sub-section (1) of Section 143 was issued. Such being the facts, it cannot be stated that the petitioner had filed no return. The very foundation for issuing notice, therefore, as recorded in the reasons, would be belied. Other than recording that no return was filed such reasons recorded that as per the Form 26AS, it was noticed that the petitioner has received salary income of ₹ 36 lacs and had also purchased immovable properties worth ₹ 70 lacs. When the ground of non filing of the return disappears and as can be seen from the return, there was fully disclosure about the salary income of the petitioner, the reasons recorded by the Assessing Officer become completely invalid. Her attempt now to rope in the question of deemed dividend cannot be permitted since the validity must be judged on the basis of reasons recorded and not on the basis of extraneous material. Reopening quashed - Decided in favour of assessee.
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2016 (1) TMI 786
Reopening of assessment - additions made during the course of the original assessment by applying arm's length price u/s.92-C would not qualify for deduction under section 10-A - Held that:- Nowhere the Assessing Officer had recorded that excess deduction was granted to the petitioner due to failure on the part of the assessee to disclose truly and fully all necessary material facts, a prime requirement under the provisions of section 147 of the Act which enables the Assessing Officer to reopen an assessment previously framed after scrutiny beyond the period of four years of the assessment order. If at all it was an error on the part of the Assessing Officer to grant larger relief than what was justified under the legal provisions. At any rate, this would not be a ground for reopening an assessment beyond four years. There were multiple other remedies available to the revenue to exercise within the time frame provided under the statute, but to reopen an assessment beyond the period of four years of the assessment order was simply not one of them since the requirement of such income chargeable to tax having escaped assessment must be relateable to the failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment.- Decided in favour of assessee. Disallowance of expenditures in the form of telecommunication charges, freight and insurance could not be formed part of export turn over - Held that:- In the return filed the assessee had pointed out to the Assessing Officer that for computing export turn over, telecommunication charges for export of computer software were not considered as telecommunication expenses. The same are fixed in nature and not incurred specifically for export of software. However, in case such expenses are reduced for the purpose of computing export turn over, the same are also to be reduced from the computation of total turn over. In other words, according to the assessee, if such charges were to be eliminated from the denominator of the ratio by which profit of business is to be multiplied for computing the exemption under section 10-A of the Act, the same would also be eliminated from the denominator. Whatever be the validity of the petitioner's such contention, surely, the petitioner cannot be stated to have not disclosed truly and fully all material facts. Quite apart from this conclusion, we notice that under communication dated 26.12.2011 to the Assessing Officer, the assessee had given detailed clarification regarding the telecommunication expenses and freight and insurance charges. Thus, not only in the original return filed the assessee had made full disclosures, this issue was examined by the Assessing officer during the original assessment for which the assessee had given written explanation. Any permission now to the Assessing Officer to re-examine the question would be allowing him to change the opinion originally framed. - Decided in favour of assessee.
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2016 (1) TMI 785
Entitlement to the benefit of commission, purportedly paid by the assessee to its commission agents - Held that:- Having considered the value and utility of the PAN, viz-a-viz, the power of the Income-Tax Authorities, it may not be difficult for the Income Tax Department to track the transactions of the Commission Agents. Considering the scope of submissions made on both sides and also considering the scope of enquiries that can be made utilizing the power under section 131 of the Income Tax Act, 1961, we are of the view that the matter must be remanded back to the Assessing Officer, with liberty to both sides to place materials with reference to the contentions raised on both sides. Having regard to the limited scope of remand, the Assessing Officer shall pass orders as expeditiously as possible.
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2016 (1) TMI 784
Expenses for setting off new business and fee paid - ITAT treated as as revenue in nature - Held that:- The expenditure in dispute incurred by the assessee as revenue in nature and allowable as deduction because the assessee has incurred the aforesaid expenses on different businesses owned by the assessee including health care business which constituted one business only. As regards the payment made to McKinsey & Company the expenditure incurred was commensurate with the services rendered specially as it happened to be a world renowned firm. The learned first appellate authority has rightly held that the observations of the A.O. that agreement had been entered by the MTVL with McKinsey & Company and not the assessee was incorrect as MTVL is a subsidiary company and was not carrying on any business activities. The bill was raised by McKinsey & Co. in the name of the assessee. The payment was made by the assessee only. The CIT(A) had held that in so far as genuineness of this payment is concerned, there was no controversy that it was actually paid to Mckinsey & Co. After appreciating the material, it was further recorded that this expenditure was revenue in nature. - Decided against revenue Depreciation worked out with reference to the written down value computed as a result of order passed under Section 250(6) of the Act for the assessment year 1998-99 - Held that:- Since the order of CIT(A) in the case of the assessee for the assessment year 1998-99 had resulted in higher WDV of the asset, and the said order was affirmed by the tribunal in appeal, the depreciation for the assessment year 1999- 2000 had thus been rightly directed to be worked out with reference to the WDV computed as a result of order passed under Section 250(6) of the Act for the assessment year 1998-99. No error could be pointed out in the approach adopted by the CIT(A) as well as the Tribunal for taking the higher WDV of the asset of the assessee for the assessment year 1999-2000 - Decided against revenue
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2016 (1) TMI 783
Nature of Subsidy under the “Quality Upgradation and Product Diversification Scheme” - whether the subsidy received by the Assessee was capital in nature not chargeable to tax or was revenue in nature, chargeable to tax? - Held that:- Quality Awareness programme for upgrading the quality of tea produced by the Bought leaf factories (processing the green leaf supplied by small growers) A detailed list of machinery items eligible for subsidy and their basic cost is annexed as annexure-1. A perusal of annexure-1 would show that the purpose of the scheme is to ensure better working of the tea manufacturing unit, plucking practices adopted in the tea garden etc. Subsidy is given for improving the infrastructure of the existing tea manufacturing unit. The predominant purpose of the scheme is to ensure that tea manufactures function more profitably and not for setting up of a new unit or expansion of the existing unit. We are therefore the view that the subsidy in question is revenue subsidy and was rightly brought to tax. - Decided against assessee
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2016 (1) TMI 782
Disallowance of provision of warranty expenses - CIT(A) allowed the claim - Held that:- The provision for such warranty is being made on the basis of past experience and has been computed in a systematic and scientific manner, as in the present case, surely we have to appreciate that these warranty expenses are towards expenses which have been incurred or are likely to be incurred within the period for which warranty has been assured to the customers against the sale of products and as such, such expenses are deductible as business expenditure. Such expenditure having been incurred wholly for the purpose of business is fully allowable as business expenditure. Accordingly, we uphold the order of CIT(A). See Retork Controls India P. Ltd. Vs. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA ) - Decided against revenue
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2016 (1) TMI 781
Disallowance of interest on delayed payment on excise duty or delayed payment of sales-tax - Held that:- These are more or less compensatory in nature and cannot be held as any infraction or violation of any law. Such a payment of interest on delayed payment or excess credit also cannot be disallowed as it is pure compensatory and accordingly, the order of the CIT(A) on this score is reversed. We find that the Tribunal in assessee’s own case for AY 2005-06 has deleted the delayed payment of sales tax. Accordingly, on same reasoning we also allow these payments - Decided in favour of assessee
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2016 (1) TMI 780
Disallowance of deduction u/s.80IB - Held that:- Assessee has been unable to substantiate his claim of deduction u/s.80IB of the Act and therefore, we find it justified to confirm the disallowance made by the Assessing Officer and allow the appeal of the Revenue. - Decided against assessee
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2016 (1) TMI 779
Addition on account of difference in the Closing stock - addition on basis of value as submitted to bank and as per the final accounts - undisclosed income of the appellant u/s. 69C - Held that:- The distribution of small quantities of samples is a commercial reality and it cannot simply be brushed aside as improbable. It was open to the authorities below to seek further clarification on the same but is could not have been dismissed as outright impossible. In any case, just because stock statement shows this quantity it does not become gospel truth. So far as sale of 37,953 ft. of material is concerned, contention of the assessee is that since sale took place on 31st March but before taking figures for stock statement, this variation in stock statement to bank and stock figures as per books of accounts is fully explained. We see merits in this explanation. There is no contradiction in this approach. In any event, an item cannot be included in sale and yet in closing stock as well. As long as fact of sale being dated 31st March and being accounted for as such is not in dispute, which precisely is the situation here, the items sold cannot be included in stock as well. In any case, just because a higher stock value is shown in bank statements as held in the case of Munish Kumar Bansal vs. JCIT (2015 (4) TMI 185 - ITAT AMRITSAR ), the difference cannot be added to the income of the assessee. - Decided in favour of assessee Additional depreciation on Plant and Machinery purchased disallowed - Held that:- We see no merits in ld. CIT(A)’s objection to the effect that the assessee cannot be granted deprecation because it cannot be treated as manufacturer and only job work is claimed by the assessee. No material has been brought on record to controvert the certificate from the manufacturer. As a matter of fact, this stand of the authorities below to the effect that machines are used machines is not supported by any material and is based on surmises and conjectures. In this view of the matter, we do not see any legally sustainable merit in the ld. CIT(A)’s stand or to decline the additional depreciation in question.- Decided in favour of assessee Addition on account of interest disallowance - CIT(A) deleted the addition - Held that:- As we are decline to disturb the finding of the ld. CIT (A). We have noted that there is no finding to the effect that interest-bearing funds were used in granting these interest free advances to the directors. On the contrary, it is evident from the material on record that the assessee has received interest free advance from the directors as well. Bearing in mind these facts as also entirety of the case, we decline to interfere in the conclusion arrived at by the ld. CIT(A) - Decided in favour of assessee Disallowance on account of difference in book debts - CIT(A) deleted the addition - Held that:- CIT(A) was quite justified in deleting the impugned addition inasmuch as a difference simpliciter between the bank statement and the audited books of account cannot be reason enough to make an addition particularly when difference is reasonably explained by the assessee. - Decided in favour of assessee Disallowance of depreciation on UV machine - CIT(A) deleted the addition - Held that:- We have gone through the records carefully. Sale of a product cannot be used as a pre-condition to ascertain whether the machine was used by the assessee for the purpose of production. The very approach of the Assessing Officer was vitiated in law, and, in any case. the first appellate authority has recorded finding of fact that machine was put to use and it was ready to use for the purpose of business. On the facts of this case, therefore, depreciation cannot be denied to the assessee. After going through the well reasoned order of the ld. CIT(A), we do not see any reason to interfere in the same. - Decided in favour of assessee Addition on account of excess deprecation claimed on old machinery - CIT(A) deleted the addition - Held that:- We are unable to see any legally sustainable merits in this grievance. It is admitted position that the permission of the JCIT which is sine qua non was not obtained on the facts of this case. In this view of the matter, the ld. CIT(A) was legally justified in deleting the impugned disallowance. - Decided in favour of assessee Disallowance of depreciation on machines claimed to be put to use before 30th September, 2006 - CIT(A) deleted the addition - Held that:- We find that the Assessing Officer was indeed in error in proceeding on the basis that sale of production can be taken to be reasonable basis for ascertaining the machines being put to use. It is not elementary that the use of machine is linked to the production and not ales and, therefore, irrespective whether or not productions of a machine are same at a point of time. The assessee is eligible in respect of depreciation as long as machinery has been put to use. There is no cogent material brought on record to dispute the claim of the assessee that the machinery was put to use before 24th September, 2006. As a matter of fact, there is categorical finding of the ld. CIT(A) that production had commenced within the period. On these facts, the is assessee indeed eligible for depreciation in respect of whole year and ld. CIT(A) was, therefore, justified in deleting the impugned addition - Decided in favour of assessee Addition made on account of profit earned on preoperative sales - CIT(A) deleted the addition - Held that:- There is no material brought on record to controvert or even seriously dispute the finding of the ld. CIT(A) to the effect that expenses incurred by the assessee in earning this amount of rupees have been ignored altogether and that if such expenses are taken into account, they will be indicative figure. In this view of the matter, the relief granted by the ld. CIT(A) does not call for any interference.- Decided in favour of assessee
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2016 (1) TMI 778
Revisionary order passed by ld. CIT u/s. 263 - claim of additional depreciation - Held that:- There has been non application of mind on the issue of additional depreciation by the A.O and therefore ld. CIT has rightly invoked the revisionary power u/s. 263 of the Act. As far as the submissions of Assessee that it is eligible for claiming additional depreciation in view of the various decisions cited by ld. A.R. is concerned, we are of the view that ld. CIT has directed the A.O to examine the issue in light to the submissions made before him and ld. CIT has not directed the A.O to disallow the expenses. In such a situation, we are of the view, that the claim of Assessee will be examined on the basis of facts and law by the A.O and if Assessee is eligible for deduction, the same will be allowed to it and thus no prejudice will be caused to Assessee. We therefore find no infirmity in the order of ld.CIT and therefore it requires no interference. - Decided against assessee.
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2016 (1) TMI 777
Addition of undervaluation of stock - Held that:- Apart from the submission that the quality of oil is substandard, no evidence in its support has been filed by Assessee. Further, Assessee has also not placed any material to support her contention the oil was indeed sold subsequently at the realizable value considered by the Assessee for the purpose of valuation. In such circumstances, we find no reason to interfere with the order of AO - Decided against assessee Disallowance of 50% of sales promotion expenses - Held that:- Assessee's submission that the expenses have been incurred for supplying 1 liter mineral water bottle to the customers who have got their fuel tanks filled for more than ₹ 1,000, almost all the expense has been incurred by account payee cheque and the expenses have not been found to be bogus not supported by any evidence and at the same time, the aforesaid submissions of the Assessee have also not been controverted by Revenue. Further, Revenue has also not placed any evidence on record to demonstrate that the expense is not for business purpose. Considering the fact that the submissions of both the parties are not supported by any evidence, the disallowance being made by A.O on adhoc basis, the passing of a cryptic order of ld. CIT(A), we are of view that in the present case considering the fact that the matter is more than 7 years old and no useful purpose would be served in remanding the matter back. In such a situation, we are of the view that the ends of justice shall be met if the disallowance is restricted to ₹ 25,000/- as against ₹ 2,20,000/- made by A.O. - Decided partly in favour of assessee. Disallowance of tanker and house- keeping expenses - Held that:- Considering the nature of expense and the finding of A.O, we are of the view that ld. CIT(A) was justified in reducing the disallowance to 20% as against 50% made by A.O. We thus find no infirmity in the order of ld. CIT(A). - Decided against assessee.
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2016 (1) TMI 776
Penalty u/s. 271(1) (c) - Held that:- A case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation. 1 to Section. 271(1)(c), as per which if in relation to any addition in the assessment, the assessee offers no explanation or offers explanation which is found to be false or is not able to substitute the explanation and is also not able to prove that the explanation is bonafide, the addition made would amount to concealment of particulars of income. It is a settled legal position that penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings Further, merely because Assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself will not be sufficient for the authorities either to initiate penalty proceedings or impose penalty. In the present case, we are of the view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income. In the present case no penalty is leviable u/s 271(1)(c) and therefore direct its deletion - Decided in favour of assessee.
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2016 (1) TMI 775
Disallowance u/s 43B - Held that:- Deduction on account of contribution to EPF, though deposited late, is allowable u/s 36(1)(va), 43B of the Act. Consequently, we are of the considered view, addition made by the A.O. and confirmed by Ld. CIT(A) is to be allowed as deduction. Loss of fixed asset - Held that:- The assessee claimed loss of fixed asset but the same has been made as addition to his income on the ground that the same has not been added back to the income of the assessee in computation sheet. When the amount of ₹ 2810/- has not been added back to the income of the assessee in computation sheet, the same has been rightly added to the income of the assessee and rightly confirmed by Ld. CIT(A).
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2016 (1) TMI 774
Royalty payment - revenue expenditure OR capital expenditure - Held that:- A bare perusal of the terms and conditions of Royalty Agreement entered into between the assessee and NMESA WLL goes to prove that the Royalty in the case in question was exclusively for the purpose of use of trademark, trading norms and know how without any acquisition of any capital research in the year under consideration, thus not of any enduring benefit for the assessee so as to consider any part of royalty expenditure as capital expenditure. In the assessee’s own case for the Assessment Year 2005-06 [2011 (7) TMI 65 - DELHI HIGH COURT ] has categorically held that the payment of royalty is revenue expenditure. - Decided against revenue.
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2016 (1) TMI 773
Validity of assessment - Non-service of notice u/s 143(2) - Held that:- It clear that the Revenue miserably failed to discharge its onus to show that the notice u/s 143(2) of the Act was validly and properly served upon the assessee within the prescribed limit and hence, the contention of the Revenue is rejected. We are, therefore, of the considered opinion that it is a clear case of non-service of notice u/s 143(2) of the Act within the statutory period as per proviso to Section 143(2) of the Act as existed in the statutory provisions of the Act prior to substitution of new sub-section (2) to Section 143 w.e.f. 01.06.2002 and, therefore, the assessment order cannot be held as sustainable and we quash the same - Decided in favour of assessee.
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2016 (1) TMI 772
Admission of additional evidence - Held that:- The written submission supported by documentary evidence was forwarded to the AO for his examination and comments and the AO furnished remand report dated 26.06.2012 on the same. The copy of the remand report of the AO was also provided to the Assessee who also filed rejoinder before the ld.CIT(A). After considering the contentions of both the parties, the ld. CIT(A) observed that the additional evidences filed are relevant and vital that would go to root of the matter while deciding the issues to which they relate. He, therefore, admitted the same on record. We do not find any incongruity in this conclusion of the ld. CIT(A). The ld. DR failed to point out as to which of the conditions of Rule 46A was not fulfilled by the assessee - Decided against revenue Brought forward losses of firm - covered under section 187 OR u/s. 78 - change in the terms and conditions of the partnership - Held that:- CIT(A) has rightly allowed the appeal of the assessee on this issue because mere change in the profit sharing ratio would not amount to reconstitution of the partnership for the purpose of section 78 of the Act. It is not in dispute that all the partners after reconstitution of firm remained same and there is no instance of any incoming or outgoing partner. It is also borne out on record that the firm was incurring continuous losses and filing returns of income as such. if there is change in the constitution of a firm by way of a retirement or death of any partner, then the firm is not entitled to have carried forward and set off so much of the loss proportionate to the share of a retired or deceased partner which exceeds his share of profits. In the instant case, the reconstitution of the firm is not made as a result of retirement of any partner or death of any partner. As a matter of fact, the reconstitution of the partnership was made only as a result of changes in the profit sharing ratio amongst the partners. Therefore, in our considered opinion, the ld. CIT(A) has rightly allowed carry forward losses to be set off, as claimed by the assessee - Decided in favour of assessee Disallowance u/s. 37(1) - CIT(A) deleted the addition - Held that:- The narration made on bill No. SRK/4/(08-09)/154 dated 30.07.2008 is “To fee for representation in Block assessment proceedings before various Income-tax authorities (In response to notices)”. We have perused the block assessment order, which stood completed on 27.02.2004. Even the appeals against the block assessment proceedings stood disposed of on 20.12.2004. This shows that the work assigned to the consulting firm was completed in F.Y. 2004-05. But the liability was not created due to non issuing of bill by the Consulting Firm . We are agree with the arguments made done by Ld. AR. . The assessee has maintained the books of account in mercantile system and he did not make any provision in this regard in his books of account in earlier years. There is no agreement on record to indicate that the assessee may make such payments whenever he thinks fit. We, therefore, find that the ld. CIT(A) has rightly deleting the disallowance made by the AO - Decided in favour of assessee Addition of expenses towards repair of the building - CIT(A) allowed partial relief - Held that:- There is no good reason to interfere with the conclusion reached by the ld. CIT(A). The ld. CIT(A) while deciding this issue has taken into consideration the statement of repairs and maintenance as also the bills of repairs & maintenance submitted by the assessee, which could not be rebutted by the ld. DR before us. We therefore, find no error in the conclusion reached by the ld. CIT(A) - Decided in favour of assessee Addition account of expenses pertaining to rates and taxes u/s. 37(1) - CIT(A) allowed claim - Held that:-CIT(A) has rightly allowed these expenditure. We do not find any error in the finding of CIT(A) that the impugned expenditure were incurred by the assessee irrespective of the fact the same were paid by his sister concern. The bills raised were in the name of assessee and in the ledger account of assessee, the sister concern is shown as creditor. The expenditures were in the nature of annual commercial use charges, registration charges and regularization charges etc. The documentary evidences furnished by the assessee nowhere depict the nature of payment to be that of penalty in contravention of any law. In fact these payments were made in compensation to protect the asset which was being used for assessee’s business for so many years. No good ground is made out on behalf of the Revenue to hold that the impugned payments were in the nature of penalty. - Decided in favour of assessee Disallowance of interest and bank charges - CIT(A) allowed claim - Held that:- A perusal of the impugned order reveals that the ld. CIT(A) has deleted the addition only on the ground that such expenses were allowed in the preceding assessment years 2002-03 to 2006-07 on the identical facts. The record nowhere reveals whether the loan taken by the assessee was a term loan for construction/renovation etc. of building, or it was working capital loan taken for the purpose of business. No documentary evidences of the bank are available before us to ascertain this fact. Secondly, the ld. CIT(A) has failed to consider the new fact emerged only in the year under consideration, inasmuch as three floors of the building are let out by the assessee and remaining two floors were used for business purposes. Therefore, in case, it was a term loan taken for construction/renovation of building, then the expenses incurred by the assessee on such loan, shall be apportioned in the ratio of 60:40 as done in the case of other expenses dealt by the ld. CIT(A) itself. If it was a working capital loan, then it has to be thrashed out as to under what circumstances and for what purpose, the capital accounts of the partners were showing continuous debit balances. All these facts need verification at the stage of Assessing Officer before finally deciding the issue. We, therefore, think it appropriate to remand the issue to the file of Assessing Officer to decide the same afresh - Decided in favour of revenue by way of remand. Addition made u/s. 68 - CIT(A) allowed claim - Held that:- we find no justification to interfere with the order of the ld. CIT(A). It is notable that the lender is an old creditor, as he had an opening balance and his PAN was already available on record. During the enquiry made by AO in the remand proceedings, the creditor had satisfied the requirements of the AO. The copy of IT return of the creditor filed showing total income at ₹ 93,02,056/- in our opinion, goes to prove the creditworthiness of the creditor as also observed by ld. CIT(A). Considering all these facts, we are of the considered opinion that the ld. CIT(A) has rightly deleted this addition u/s. 68 - Decided in favour of assessee
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Customs
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2016 (1) TMI 794
Import of food items, i.e., 'energy gel' and 'energy chews' of different flavours - prohibited items or not - Scope of Food Safety Standard Authority of India ('FSSAI') - Held that:- The mere fact that 'energy gel' and 'energy chew' are not mentioned in Appendices A and B would not ipso facto mean that they are prohibited from being imported. The FSSAI will have to examine if 'energy gel' and 'energy chew' which are proprietary foods are unsafe or contain any ingredient which is prohibited under the FSS Act. - Consequently, the Court is of the view that the first reason given by the FSSAI in its letter dated 2nd December 2015 addressed to the Customs for not drawing samples of the consignments in question is not justified in terms of Section 22 of FSS Act. Accordingly, FSSAI directed to visit and inspect the goods - The procedure/protocol set out under Section 47 of FSS Act will be followed while taking samples.
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2016 (1) TMI 761
Review petition against the order [ 2015 (8) TMI 94 - SUPREME COURT]- Denial of benefit of Notification No. 21/2002 - capacity expansion of an existing caustic soda unit using membrane cell technology or setting up of a new caustic unit soda using membrane cell technology. - Apex Court dismissed the review petition by observed that, we find no error much less apparent in the order impugned.
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Corporate Laws
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2016 (1) TMI 760
Petition praying the official liquidator be restrained from taking possession of the said plot - bona-fide purchaser of plot - it was stated that the applicant has paid consideration and purchased the lease rights (not purchased the plot of land) as a bona-fide purchaser without notice. - Held that:- In this case, in addition to the fact that I cannot accept that it was a bona-fide transaction, as on 20.03.2012 when the Company was ordered to be wound up and the official liquidator was appointed, the parties had only entered into an agreement for assignment of lease and actually assignment happened on 24.12.2012, i.e., 9 months after the Company was ordered to be wound up. The settled position is upon passing of the order of winding up, no new rights can be completed and no incomplete rights can be completed. - the alleged assignment cannot be validated under Section 536(2) of the said Act. The application, therefore, stands dismissed. At this stage, the counsel for the applicant requested for a stay of eight weeks of this order. When I have found that the transaction itself is not bona-fide and in view of the settled legal position that a transaction not completed before the order of winding up has been passed, cannot be completed after the winding up order is passed I cannot grant any stay. Hence, stay is rejected.
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Service Tax
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2016 (1) TMI 771
Development of land activity - Construction of complex - Tribunal has decided the issue in favor of assessee in [2014 (7) TMI 1017 - CESTAT NEW DELHI] - Apex Court found no ground to interfere with the judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal. - Revenue's appeal dismissed.
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2016 (1) TMI 770
Attachment and seizure by the Service Tax Department for substantial service tax dues not paid - there is no final assessment of the petitioner's duty and penalty liabilities. The petitioner is seeking installments for depositing the amount demanded by the Department, so that the bank accounts which are attached and the godowns of the petitioner which are sealed may be released from such attachment and sealing. - Held that:- we are of the opinion that, upon certain conditions, the bank accounts and the godowns of the petitioner can be released from attachment, provided the petitioner deposits a total sum of ₹ 3.54 crores which would include ₹ 2.46 crores already collected by the Department so far. The Department shall release attachment of the bank accounts of the petitioner and remove the seals from the business godowns of the petitioner, on the conditions specified in the order.
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2016 (1) TMI 769
Valuation - exclusion of cost of goods used for providing taxable services - where the goods were neither sold nor reflected in invoice, nor VAT is paid/discharged on it - Scope of Notification No.12/2003-ST dated 20.06.2003 - Held that:- Having regard to the facts and circumstances of the case, following the Judgment of this court in Adlabs’ case [2010 (3) TMI 1087 - KARNATAKA HIGH COURT] and for the reasons stated therein, the instant appeal is dismissed as not maintainable. In view of the appeal being dismissed as not maintainable, answering the substantial questions of law in this appeal does not arise.
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2016 (1) TMI 768
Cenvat Credit - Allocation of input services to the concerned department as earned by the Table-C department - appellant provides taxable service as well as exempted service - appellant's submission is that when the records clearly demarcated the extent of credit allocable to departments in Table-A and Table-B that ought to have been verified by the Revenue before questioning. But that was not done - Held that:- Once the conduct of the appellant in the manner indicated by the material facts stated above is very clear because of the proportionality of the credits allocated, due to its division of the department and maintenance of records, there cannot be any presumption by Revenue that the appellant's case falls under Rule 6 (3) of CCR 2004. It is also apparent from record that the order passed by the Authority below is unreasonable for the reason that as against credit of ₹ 6,66,423/- allocated to the department in Table-B which provided exempted service, disallowance of entire credit of ₹ 1,11,07,075/- allocated to Departments in Table-A providing taxable service is contrary to the principal of proportionality. Therefore, entire disallowance does not call for any decision in favour of Revenue. As an abundant caution, to make sure that the mathematical exercise is properly made by the appellant for allocation of credit rationally, the matter is remitted to the Adjudicating Authority to a limited extent to examine the allocation of the credit received by the appellant through departments in Table-C and allocable to departments in Table-A in the manner the appellant has carried out. Appellant's averment that the credit of ₹ 6,66,423/- allocated to the department in Table-B is reversed needs to be examined. - Matter remanded back for limited purpose - Decided in favor of assessee.
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2016 (1) TMI 767
Classification of Import of services from M/s. Society for Worldwide Interbank Financial Telecommunication (SWIFT) which is a non-resident entity, not having an office in India - reverse charge - service involved is transfer of information and also includes data processing - Banking and Other Financial Services or not - Held that:- From the detailed process involved, it is clear that the activities appear to amount to provision and transfer of information and data processing in relation to banking and other financial services, as defined under the Act and clearly covered under the entry provided in sub-clause (a)(vii) of Section 65(12) i.e. "provision and transfer of information and data processing". As regards the contention of the appellant that SWIFT does not fall under the category of ‘banking and other financial institution's as SWIFT is not engaged in the business of banking and other financial services, we find that if any person provides the service which is covered under the four corners of definition of "Banking and Other Financial Services", it shall be taxable. As per the plain reading of the definition, apart from ‘banking and other financial institution', the category of a person such as ‘body corporate' and ‘any other person' are also covered. Therefore it is not significant as to what is the nature of the person who is providing the service, but if the service is covered under the definition, such service is liable to service tax, even if it is presumed that SWIFT is not involved in "Banking and Other Financial Services". The service shall remain taxable as the service is clearly covered under the definition of "Banking and Other Financial Services" in clause (vii) of Section 65 (12). Moreover the appellant being liable to pay the service tax is ‘deemed service provider'. Therefore, the status of the appellant is required to be considered and not the status of service provider who is located outside India. For this reason the appellant is undisputedly the deemed banking and other financial institution. - However the demand of the period prior to 18-4-2006 is not sustainable. On the issue of principle of mutuality, we find that the relationship between the SWIFT and the Appellant is not like club or Association and their members. As regards the submission of the appellant that present case is of revenue neutrality as the tax payable on the subject service is cenvatable, we are of the view that the bank is providing various services, some of the services are taxable and some are exempted. Therefore, it cannot be decided that the entire service tax payable on services of SWIFT can be allowed as Cenvat Credit. Merely because Section 80 was invoked, it cannot be said that proviso to Sec 73(1) shall not apply. Both provisions have separate ingredients. In the present case the appellant have not disclosed the data related to service charges paid to SWIFT to the department. Therefore, as there is a suppression of the fact on the part of the appellant, proviso to Section 73(1), gets correctly invoked. Demand conformed invoking the extended period of limitation - Decided partly in favor of assessee.
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Central Excise
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2016 (1) TMI 766
Allegation of fraudulent export of goods to Nepal - demanding duty and denial of cenvat credit along with interest and imposing penalty on both the appellants - Held that:- As per the condition IV of the said notification no. 45/2001-CE(NT) dated 26.06.2001 the goods were required to be presented before Nepalese custom office and who has to endorse the certificate of the goods received in Nepal and is required directly sent to the officer of the Custom in charge and it is the duty of the custom in charge to send the duplicate copy of invoice to central excise officer to comply the said condition, appellant have no role to play. It is the departmental internal correspondence to ascertain the fact that export is complete or not. For the lapses of the department, appellant cannot be held faulted. Therefore, duty cannot be demanded from the appellant. With these observations, as find that appellant has been able to prove his case of export of the goods to Nepal. Therefore, no duty can be demanded from the appellant and Cenvat Credit cannot be denied. As duty cannot be demanded from the appellant penalties on both the appellants is not imposable. With these terms, impugned order is set aside. Appeals are allowed with consequential relief if any.
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2016 (1) TMI 765
Valuation - stock transfer - Differential duty on clearances to their Faridabad unit - comparable price - Held that:- The appellants are selling the gases to different set of buyers while comparing the price for valuation purposes, as already stated, it is necessary to have comparable volume and proximity of time and comparable class of buyers. Revenue's stand that the highest of value is a comparable price is not supported by the provisions of law. We find that while the value adopted is to be based on comparable value there is no sanction to take highest of the independent sale price for such purpose. Accordingly, we hold that the price of gases sold to independent buyers of similar class should be considered for valuation of gases cleared by the appellants on stock transfer basis. The appellants’ claim that during the relevant period their sale to M/s. Saraswati Air Products will satisfy the criteria for comparable price in view of volume and class of buyers. We find that this claim merits consideration. We find in the present case the demands were issued based on scrutinizing of periodical monthly returns filed by the appellants. On advice by departmental officers the appellants paid the differential/additional duty on 5.10.99 well before the adjudication. Certificates under Rule 57E were also issued to them for availing credit. We find in these circumstances imposition of penalties equal to duty difference demanded is not justifiable and accordingly, we set aside the same.
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2016 (1) TMI 764
CENVAT Credit on GTA services - Disallowance of credit on service tax paid on GTA Services in respect of outward transportation services - Held that:- Undisputedly the transactions are FOR destination and the value of the goods include cost of transportation upto destination plus insurance. The Board has issued a Circular No. 97/6/2007-ST dated 23.8.2007, wherein it is clarified that the GTA service availed for outward transportation of the goods from the factory/depot to the customer's premises would be treated as 'input service' only when the place of removal of the goods is the customer's premises or in other words the sale transaction is on FOR destination basis. Thus as per the clarification, if assessable value of the goods on which duty is paid is the FOR destination price, the credit on the service tax paid on freight upto buyer's door step would be admissible. The Hon'ble High Court in the case of CCE Vs. Parth Poly Wooven (P) Ltd, (2011 (4) TMI 975 - GUJARAT HIGH COURT ) has categorically held that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of 'input service' provided in Rule 2(1) of the Cenvat Credit Rules, 2004. - Decided in favour of assessee.
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2016 (1) TMI 763
Demand of differential duty on account of non-inclusion of AED (T&TA) in the cost of Grey Fabrics for excise purposes - inclusion of AED (T&TA) in the cost of Grey Fabric is sent for job work when the same is available as credit to the appellant - Held that:- It is clear that in the case under consideration of CCE, Pune vs. Dai Ichi Karkaria Ltd [1999 (8) TMI 920 - SUPREME COURT OF INDIA] the assessee can utilize the credit taken to pay excise duty on the finished product, as such, the Hon’ble Apex Court observed in such situation the duty which was already credited and which can be used for discharging duty on final product need not be included in the cost. In the present case we find the appellant though availed the credit as permissible by the law, cannot utilize the same as the finished product Grey Fabric is not liable to AED (T&TA). As such, the said duty paid on inputs will become cost to the appellant, which cannot be passed on by way of utilization of the said credit for discharging the duty on finished product. This much is clear from appellant’s own treatment of the said credit as expenditure in the balance sheet for the year 2003-2004. Their not showing the said duty as expenditure in the next year will not affect the fact the AED paid has to be observed as a cost in view of the fact that they are not able to utilize the same - Decided against assessee.
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2016 (1) TMI 762
Classification - manufacture - change in the scope of tariff entries - iron and steel structures like trusses, columns, staircase, windows and section etc. - These steel structures are commonly known as component parts of building/ shed. - Held that:- We find that there is a change in the scope of tariff entries in respect of the impugned goods pre and post 1.3.1988. The CETH 73.08 effective from 1.3.88 clearly covers structures and parts of structures like bridges, towers, roofs, doors and windows of iron and steel, plates, rods, angles, sheds, sections etc. prepared for use in structure of iron and steel. Thus, the clear and specific classification of the impugned items were available with effect from 1.3.1988. Prior to that date, the classification was sought to be made under 7308 90 : as ‘Misc’ ‘other articles of iron and steels’. Similar issue came into consideration before this Tribunal in Elecon Engineering Co. Ltd. (2005 (5) TMI 168 - CESTAT, NEW DELHI ) relying on decision in the case of Aruna Industries [1986 (5) TMI 169 - CEGAT, NEW DELHI] and in Wainganga Sahkari S Karkhana Ltd. [2002 (4) TMI 55 - SUPREME COURT OF INDIA], later confirmed by the Hon’ble Supreme Court in [2002 (4) TMI 55 - SUPREME COURT OF INDIA] and Hon’ble Bombay High Court decision in Sunflag Iron and Steel Co. Ltd. [2001 (2) TMI 147 - HIGH COURT OF JUDICATURE AT BOMBAY], held that these goods are not excisable. - Decided in favour of assessee.
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Indian Laws
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2016 (1) TMI 759
Rectification of register where trademark 'BLENDERS PRIDE' was registered by inadvertence/error - time for filing notice of opposition within the three month - power of the Registrar to correct his own mistakes under Section 57(4) of the Act - interpretation of Section 125 - Held that:- A perusal of this letter shows that the notice of opposition was taken on record. This could not have been done unless time had been extended by one month, as the said notice of opposition was filed only on 19.1.2004, i.e. within the 30 days period after three months were over on 6.1.2004. Though Section 131 of the Act refers to the Registrar's satisfaction and refers to conditions which he may think fit to impose, it is clear that he need not pass a separate order in every case if he wishes to extend the time. It is true that time to file a notice of opposition is to be done within the time that is expressly provided in Section 21(1) and that Section 131 of the Act would not therefore apply. However, Section 131 is a pointer to the fact that the extension of time by the Registrar is a ministerial act for which no hearing is required. It is thus clear that time has been extended by the Registrar, as is evidenced by the letter dated 16.2.2004. Therefore, it is clear that any registration certificate granted prior to the 30 days extended period from 6.1.2004 would be violative of Section 23(1) of the Act. In this view of the matter, the Appellate Board and the Division Bench are clearly right in declaring that the registration certificate, having been issued on 13.1.2004, would be violative of Section 23(1)(a), and the register would have to be rectified by deleting the said trademark therefrom. In paragraph 10 of the plaint, there is a specific averment by the plaintiffs that upon necessary inquiries being made, the plaintiffs have learnt that the defendants have not even applied for registration of the trademark 'BLENDERS PRIDE' in their favour. It may also be noticed that the suit is both a suit for infringement as well as passing off, and it is significant that Austin Nichols has not been made a party defendant to the said suit. Also, the very issue as to validity of the registration of the trademark concerned has to be determined in the application for rectification of the register, which would obviously bind only the parties to the suit and nobody else. For these reasons, the application for rectification, not having been made by any of the party defendants in the said suit for infringement and passing off, Section 125(1) would have no application. Division Bench of the High Court is also correct in reasoning that Section 125(1) would only apply to applications for rectification of the register, and not to the exercise of suo motu powers of the Registrar under Section 57(4). The reason is not hard to seek. If the Registrar is barred from undertaking a suo motu exercise under Section 57(4) to maintain the purity of the register, there could conceivably be cases where a defendant, after raising the plea of invalidity in a suit for infringement, chooses not to proceed with the filing of a rectification petition before the Appellate Board - The Registrar's power to maintain the purity of the register of trademarks would still remain intact even in such cases, as has been held by the judgment in Hardie's case. The Division Bench judgment requires no interference. - Decided against the appellants.
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