TMI Tax Updates - e-Newsletter
January 25, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Merely because the Place of Effective management of an intermediate holding company is India the POEM of its subsidiaries shall not be taken to be in India. Each subsidiary has to be examined separately
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Income Tax:
CBDT kept the Clarifications on Indirect Transfer provisions under the Income Tax Act. 1961 in abeyance for the time being - Circular
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Income Tax:
Claim for depreciation on Flameless Furnace - nonproduction of vital documents - Assessee was not able to explain even the whereabouts of the Furnace which is alleged to be owned by it - Depreciation was rightly denied - HC
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Income Tax:
MAT - Book adjustment u/s 115JB - arrears of depreciation - the grievance of the Revenue that the clause was inserted only in Finance Act, 2006 w.e.f. 1st April, 2007 and is not applicable for the year under consideration does not carry the issue in the present facts any further. - HC
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Income Tax:
Grant of refund - the attitude on the part of the AO leaves us with a feeling (not based on any evidence) that the Officers of the Revenue seem to believe that it is not enough for the assessee to please the deity (Income Tax Act) but the assessee must also please the priest (Income Tax Officer) before getting what is due to him under the Act. The officers of the State must ensure that their conduct does not give rise to the above feeling even remotely - HC
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Income Tax:
Claim for exemption u/s 11 - charging fee for services - the proviso to section 2(15) of the Act cannot be invoked to exclude assessee Trust from the purview of section 2(15) of the Act since the said proviso only seeks to exclude institutions which are carrying on regular business - AT
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Income Tax:
Even though a notice U/s. 147 was issued, assessee has not filed any revised return. - technically, the assessment has to be completed only U/s. 144, as provided in sub-section 1(a) - Order u/s 144 is valid and affirmed - AT
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Customs:
STPI - Benefit of N/N. 52/03-CUS - import of Data Comp equipments - the exemption can only be claimed by an importer, who has been granted necessary permission to import the said goods by Interministerial Standing Committee for 100% EOCJ, ETC - on merits, the appellant does not have a case. - AT
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Indian Laws:
Order of acquittal - cheque returned with an endorsement of account closed - it is not crystal clear that respondent-accused has taken amount on credit and therefore, an order of acquittal of the respondent is correct - HC
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Service Tax:
CENVAT credit - services provided on Roaming to subscribers of foreign telecom network during their visit to India as leviable to Service tax - the contention that the said services were exempted and that is why 80% of the Service tax credit availed was inadmissible to the appellant is not sustainable - AT
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Service Tax:
Works contract - installation and commissioning charges - service charges/commission for installation was neither separately computed nor mentioned on the body of invoices, whereas they were paying service tax on certain percentage of contracted value - whether demand of tax on these charges and levy of penalty justified? - Held no - AT
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Central Excise:
CENVAT credit - Business Support Services - Appellant is availing the services for keeping a track of the movement of trucks, known as "Truck Khoj services" - eligible input services or not? - Held Yes - AT
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Central Excise:
SSI Exemption number 08/03-CE dated 01.03.2003 - Once the credit availed has been reversed it is to be considered as ab initio not availed - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (1) TMI 1163
Penalty under section 271(1)(c) - defective notice - Held that:- The show-cause notice issued by the Assessing Officer under section 274 for the year under consideration not being in accordance with law, the penalty order passed by the Assessing Officer in pursuance thereof is liable to be cancelled being invalid. We accordingly cancel the order passed by the Assessing Officer imposing penalty under section 271(1)(c) for the year under consideration and allow the appeal of the assessee. See THE COMMISSIONER OF INCOME TAX & OTHS. Versus M/s MANJUNATHA COTTON AND GINNING FACTORY & OTHS.[2013 (7) TMI 620 - KARNATAKA HIGH COURT ] - Decided in favour of assessee
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2017 (1) TMI 1162
Addition made on account of bad debt written off - Held that:- It cannot be said that the finding recorded by the learned CIT(A) and the learned Tribunal that the assessee was in the regular business of money lending is either perverse or contrary to the evidence on record. If that be so, considering Section 36(2) of the Income Tax Act, learned CIT(A) as well as learned Tribunal have rightly deleted the addition made on behalf of Bad Debt Written off - Decided in favour of assessee Addition of interest expenditure not incurred for the business purpose - Held that:- The assessee was already available at his disposal interest free funds to the tune of ₹ 5,29,93,800/out of which, the assessee had only utilized interest bearing funds in the investments in question amounting to ₹ 3,30,01,822/, the learned CIT(A) had rightly reduced the interest disallowance for the period between 27.02.2009 to 31.03.2009 at ₹ 3,47,197/. The aforesaid finding recorded by the learned CIT(A) has gone unrebutted as observed by the learned Tribunal. Thus it cannot be said that the learned Tribunal has committed any error in deleting interest expenditure - Decided in favour of assessee
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2017 (1) TMI 1161
Rejection of Books of Account - Percentage Completion Method of accounting followed by the respondent- assessee resulted in varying profits/income being offered for tax in different assessment years - Held that:- We are unable to understand the objection urged by the Revenue. The Percentage Completion Method of accounting itself implies that the profit/income offered to tax would depend upon the percentage of a particular project being completed. This would necessarily vary from year to year and there is no requirement that it should be the same percentage year to year. There is no bar in adoption of one method of accounting for one source of income/business and another for the other, so long as it is regularly employed and results in appropriate determination of income. Tribunal was justified in sustaining the order of the Commissioner of Income Tax (Appeals) (CIT(A)) holding that the rejection of Books of Account in terms of Section 145 of the Act was not justified Disallowance of business expenditure - Held that:- We find that once the accepted Books of Accounts have been admittedly subjected to audit, then expenses claimed therein have to be allowed. Unless of course, it is the Revenue's case that the expenses were not incurred for the purposes of the business or that the expenses were bogus. Even before us the Revenue does not urge that the expenses claimed were bogus and/or not incurred for the purpose of business. Depreciation in respect of equipment, plant and machinery used in assessee's hotel business and also the loss claimed from its Hotel business - Held that:- We note that the Assessing Officer had in the respondent-assessee's appeal before the CIT(A) had filed a remand report. In the remand report no objection was taken to the evidence led by the respondent-assessee to show that the hotel business had commenced from 17th January, 2004 as well as the plant and machinery and equipment have been put to use during the subject assessment year. Thus entitled to depreciation at 50% as only used for less than 180 days. As the CIT(A) and the Tribunal have come to a concurrent finding of fact that the business is started on 17th January, 2004 and the equipments on which depreciation has been claimed has been used in the running of the hotel business and not shown to be perverse in any manner and the questions (iii) and (iv) as formulated does not give rise to any substantial questions of law. Thus not entertained.
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2017 (1) TMI 1160
Income attribution to India - tenability of the order of ITAT to the extent it attributed 15% of the assessee’s income to India? - assessee provides online airline booking services. It is a Delaware, USA based limited partnership concern and a tax resident of the USA - Held that:- In the present case, the AO had based his conclusions and determined the income based upon figures furnished by the assessee, as is apparent from a plain reading of the order. In the circumstances, the ITAT, in our opinion, ought not to have disturbed that order, without appropriate hearing. In view of the conclusions recorded by us, the present ITA is disposed off with a direction to the ITAT to render specific findings on the questions discussed.
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2017 (1) TMI 1159
Deemed dividend addition u/s 2(22)(e) - Held that:- As the assessee was not share holder of Mahavir Rolling Mills Pvt Ltd to whom loan was given, it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the Assessing Officer on deemed dividend. - Decided in favour of assessee
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2017 (1) TMI 1158
Recovery of dues - Transaction between the petitioner and the original owners declared as void in exercise of powers under Section 281(1) - transfer made for adequate consideration - denial of natural justice - Held that:- If the transferee is in a position to point out that such transfer was made for adequate consideration and without notice of the pendency of any proceedings under the Act, or without notice of such tax or other sum payable by the assessee, such a transfer is not required to be declared as void. Therefore, if the opportunity would have been given to the petitioner transferee, in that case, the petitionertransferee could have pointed out and / or satisfied respondent no.1 that the sale in favour of the petitioner was for adequate consideration and without notice of pendency of proceedings under the Act or without notice of such tax or other sum payable by the assessee. At this stage, it is required to be noted that it is not the case on behalf of the respondent no.1 that the sale in favour of the petitioner was either without adequate consideration and / or petitioner-transferee had knowledge / notice of pendency of any proceedings under the Act against the original assessee or petitioner-transferee had in knowledge / notice as such tax such tax or other sum payable by the assessee. Under the circumstances, the impugned order is absolutely in breach of principle of natural justice and same deserves to be quashed and set aside on the aforesaid ground alone. Thus the impugned order passed by the respondent no.1 declaring the sale between the petitioner and the respondent no.2 with respect to property situated at Plot No. 48/B, Sector 19, Gandhinagar as void in exercise of powers under Section 281(1) of the Act is hereby quashed and set aside
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2017 (1) TMI 1157
Unaccounted money - Held that:- The solitary basis for addition of over ₹ 1.67 crores was the chart recovered from the premises of Mr. B. K. Dhingra. Whatever be the facial indications, one thing is apparent i.e. that it revealed some amounts were paid by the third parties. The details of cheques and other particulars were reflected in the charts. As correctly observed by the ITAT, the evidentiary value of these charts, as far as the assessee was concerned, could not be conclusive given the fact that it was neither the searched party nor was a party receiving notice under Section 153C of the Act. Under the circumstances, the AO could have added these amounts only if he had made a searching enquiry into all the circumstances. That the amounts were reflected by way of cheques and these cheques were entered in the charts is not in dispute. If such is the case, whether those amounts were reflected in the assessee’s Bank accounts or not and were encashed by some other entity was a matter of appropriate enquiries. The AO’s failure to do so could not have resulted in the assessee being taxed for those amounts. - Decided in favour of assessee
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2017 (1) TMI 1156
Claim for depreciation on Flameless Furnace - -Assessee was not able to explain even the whereabouts of the Furnace which is alleged to be owned by it - deleting the claim for depreciation as the purchase and lease was as sham on the basis of a statement of the Director of the lessee u/s. 133 - Held that:- We note that a statement made under Section 133A of the Act is not bereft of any evidentary value. The same may not be conclusive but in the absence of any contrary evidence or explanation as to why the statement made under Section 133A of the Act is not credible, it can be acted upon. In the absence of Assessee offering any explanation as to why the statement cannot be relied upon, no fault can be found on the reliance upon the statement of the Director of M/s. Omega. Further, so far as request for cross examination is concerned, we find that Appellant-Assessee, during the first round of proceedings before the Assessing Officer did not raise any such issue. At that point of time, the person who make the statement, could have been produced by the Assessing Officer. It was only in the second round of proceedings when the Appellant-Assessee was not able to contact the Director of M/s. Omega, that they came up with a request for his cross examination. Therefore, the submission on part of the Appellant that the delay has led to it being unable to produce evidence is of no avail as the delay was in seeking cross examination by it. Further, the documents which were produced were considered along with and/or the facts viz: nonproduction of vital documents. This coupled with the fact that the owner of the Furnace i.e. Appellant did not have any knowledge about its whereabouts at the time of adjudication. Thus the consistent view taken by the authorities under the Act including the Tribunal, is on the facts a possible view. No substantial question of law - Decided against assessee
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2017 (1) TMI 1155
Disallowing the expenditure representing commission paid - disallowance u/s 40(a)(i) - liability to be taxed in India - fees paid to a non-resident - retrospectivity - Held that:- Notably, the payments in question fall during the previous year i.e. 01/01/2009 to 31/03/2010 corresponding to the assessment year before us, whereas the amendment in question came into effect on 08/05/2010 when the Finance Act, 2010 was given assent by the President of India. Though such a retrospective amendment may result in an incidence of tax liability in the hands of recipient of income but it would not result in creating an obligation on the payer of such income to deduct tax at source on the date of payment as it would be impracticable; obviously on the date of payment of income, the said amendment was not on the statute and, therefore, a subsequent amendment cannot create an obligation, which is impossible of performance. Thus, in such a scenario, even if it is held that the income paid to non-resident agent was taxable in India and thus, liable for deduction of tax in India, yet assessee cannot be faulted for non-deduction as on the relevant date there was no such obligation in law. Therefore, under the circumstances, the provisions of section 40(a)(i) could not have been invoked to disallow the impugned payment. - Decided in favour of assessee. Disallowance under section 14A - Held that:- Having regard to the judgment of the Hon'ble Bombay High Court in the case of CIT v. Reliance Utilities & Power Ltd.(2009 (1) TMI 4 - BOMBAY HIGH COURT ), it is to be presumed that the investments are out of interest free funds and that such proposition is applicable even in the context of section 14A of the Act, as held by the Hon'ble Bombay High Court in the cases of CIT vs. HDFC Bank Ltd.(2014 (8) TMI 119 - BOMBAY HIGH COURT ) and HDFC Bank Ltd. vs. DCIT, (2016 (3) TMI 755 - BOMBAY HIGH COURT ). No disallowance out of interest expenditure is merited in terms of section 14A of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the disallowance Disallowance of overhead expenses applying the formula contained in Rule 8D(2)(iii) - Held that:- Following the ratio of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd (2015 (3) TMI 155 - DELHI HIGH COURT ) which prescribes that the disallowance can only be to the extent of the tax exempt income, we direct the Assessing Officer to restrict the disallowance of expenditure to the extent of the exempt income and delete the balance.
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2017 (1) TMI 1154
Revision u/s 263 - genuineness of the transactions by not obtaining the Article 2 - deduction of foreign exchange fluctuation loss - non complete investigation into the nature of amount received, the nature of dispute between the assessee and DOW and the nature of rights and claims waived by the assessee against the DOW - Held that:- We find that because of not producing Article 2 by the assessee before the assessing officer he failed to make proper enquiries to ascertain the true nature of the amount received. We have also considered the contention of the Ld. counsel of the assessee stating that the assessing officer had taken one possible view after conducting necessary inquiries as with the case of Malabar Industrial Company Ltd. [2000 (2) TMI 10 - SUPREME Court]. In this connection, we have perused the assessment order made by the assessing officer and the other related materials as per record. We find that the assessing officer had neither elaborated any kind of inquiry conducted in the assessment order nor given any kinds of findings as per which any possible view had been taken by the assessing officer. We find that all the above stated facts prove that the assessing officer has not verified the genuineness of the transactions by not obtaining the Article 2 which was the material condition for receipt of US$ 1.5 million. Whether the order passed by CIT u/s. 263 was bad in law as the show cause notice given by him was on a point other than the one for which he hold the order passed by assessing officer as erroneous or prejudicial to the revenue? - Held that:- As gone through the assessment order made u/s143(3) of the act by the assessing officer and noticed that at para 3 of the assessment order the assessing officer stated that reduction in the profit of the assessee company had been occurred mainly because of claim of foreign exchange loss. We find that claim of foreign exchange loss indeed was the main issue in the assessment order and the Ld.CIT had issued the show cause related to the issue of foreign exchange loss, therefore, the contention of the assessee mentioned in the additional ground is not found to be correct. - Revision u/s 263 sustained - Decided against assessee
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2017 (1) TMI 1153
Disallowance u/s. 14A r.w.r 8D - Held that:- As the Ld. AR for the assessee has pointed out that net interest is to be taken into account for disallowance purpose, as the assessee company under consideration is a NBFC company which received interest and paid interest during the assessment year under consideration. Therefore, the differential amount of ₹ 39,42,331/- should be considered for the purpose of computation of disallowance u/s. 14A read with Rule 8D(2)(ii) of the Rules. In addition to this, the Ld. AR for the assessee also argued that the disallowance u/s. 14A of the Act should not exceed the exempt income. Therefore, considering the factual position and the precedence cited by the Ld. AR for the Assessee, we direct the AO to consider the net interest amount for the purpose of disallowance u/s. 14A read with Rule 8D(2)(ii) of the I.T. Rules and also should not disallow the amount beyond the exempt income. Disallowance u/s. 14A for the purpose of computation of book profit u/s. 115JB - Held that:- The disallowance made u/s. 14A of the Act cannot be added to the net profit for computing book profit u/s. 115JB of the Act.
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2017 (1) TMI 1152
Disallowance of interest u/s 36 - addition made on the plea that borrowed fund was utilised for non–business purpose - Held that:- We find that the assessee has started real estate development business and treated the Jaipur property as current asset in the Balance Sheet. The Board of Directors of the company have also passed a resolution to that effect in the meeting of the company and accordingly, it was shown as current assets in the Balance Sheet w.e.r. 1st April 2009. We also find that in subsequent assessment year, this property was sold and profit earned on the same was offered by the assessee as business income. Once the income from the said property has been offered as business income, there is no reason to disallow the interest paid for acquiring the said property which was held by the assessee as current asset in its Balance Sheet and income from which has been offered as business income. Accordingly, we do not find any merit in disallowance of interest so made.- Decided in favour of assessee Addition of sundry debtors - addition on advance payment received from National Laminates Corporation - Held that:- Ledger account of this party reveals a fact that throughout the year there is a purchase and sale of goods and receipt of advance and at the end of the financial year there was a closing balance of ₹ 34,15,666. We also find that the Balance Sheet of National Laminates Corporation reveals the fact of credit in the name of the assessee. Accordingly, there is no justification for adding this amount as unexplained credit.National Laminates Corporation is a regular assessee and filing return of income regularly. Under these facts and circumstances, we do not find any reason to interfere with the order of the learned Commissioner (Appeals) deleting the addition - Decided in favour of assessee
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2017 (1) TMI 1151
MAT - Book adjustment u/s 115JB - adjustments made by AO while working out book profit u/s. 115JB in respect of arrears of depreciation - ITAT deleted adjustment - Held that:- The Revenue is unable to point out any flaw / error in the impugned order of the Tribunal. We find that the issue as framed stands concluded by the decision of the Apex Court in Apollo Tyres Ltd (2002 (5) TMI 5 - SUPREME Court ) and the decision of this Court in Kinetic Motor Co. Ltd (2003 (1) TMI 47 - BOMBAY High Court ). The above decisions have held that it is not permissible to the Assessing Officer to tinker with the profit declared in the audited account maintained in terms of Schedule VI of the Companies Act. Whether Tribunal was correct in deleting the adjustments made by the Assessing Officer in respect of arrears of depreciation for A.Y. 2000-01 and 2001-02 while working out the book profit u/s. 115JB without appreciating the fact that clause (iia) of Explanation 1 to Section 115JB which provides for reduction of the depreciation debited to the P & L A/c. was inserted only in the Finance Act 2006 w.e.f. 1.4.2007 and is, therefore, not applicable to the year under consideration? - Held that:- This issue was not urged before the authorities under the Act. Therefore in view of the decision of this Court in CIT vs. Tata Chemicals Ltd. [2002 (4) TMI 42 - BOMBAY High Court] it cannot be urged before this Court for the first time. On the aforesaid facts above we see no reason to entertain this question. In any case, the question as framed proceeds on a fundamentally erroneous basis that the Tribunal has allowed the claim of the respondent-assessee by relying upon clause (iia) of explanation to Section 115JB of the Act. Therefore the grievance of the Revenue that the above clause was inserted only in Finance Act, 2006 w.e.f. 1st April, 2007 and is not applicable for the year under consideration does not carry the issue in the present facts any further.
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2017 (1) TMI 1150
Addition on account of suppressed sales - ITAT deleted the addition - assessee filed return of income declaring total loss - Held that:- Similar additions made by the Assessing Officer, which were on similar ground viz., suppressed sales, came to be set-aside for A.Y 2004-2005 and AY 2005- 2006 and considering the same, when learned Tribunal has deleted the addition of suppressed sales, it cannot be said that the Tribunal has committed any error. The findings recorded by the learned CIT [A], while making deletion are on appreciation of evidence and there was justification for decline in the gross profit in the earlier years, which also came to be considered by the learned Tribunal. - Decided against revenue
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2017 (1) TMI 1149
Grant of refund - only contention on behalf of the Revenue to oppose the petition is that as the Assessing Officer has time available to process the refund till 31st March, 2017, no mandamus can be issued till 31st March, 2015 - Held that:- No reasons are forthcoming from the Revenue as to why the Assessing Officer will not able to dispose of the application for refund or process the return under Section 143(1) of the Act before 31st March, 2017. This conduct / stand of the Assessing Officer, to say the least, is most disturbing in the context of the fact that the petitioners have been seeking refund since April, 2016. First, he does not deem it proper to inform the petitioner in writing why he cannot deal with the application and after the petitioner moves the Court, the stand taken is that no direction can be given to him till 31st March, 2017 which is the last date to process the return under Section 143(1) of the Act. This attitude on the part of the Assessing Officer is preposterous. The action of the officer on the ground urged seems to be in complete variance with the higher echelons of administration of the tax administration being an assessee friendly regime. In this case, the return was filed on 29th November, 2015, yet there is no reason why the Assessing Officer has not processed the refund and taken a decision to grant or not grant a refund under Section 143(1D) of the Act. This attitude on the part of the Assessing Officer leaves us with a feeling (not based on any evidence) that the Officers of the Revenue seem to believe that it is not enough for the assessee to please the deity (Income Tax Act) but the assessee must also please the priest (Income Tax Officer) before getting what is due to him under the Act. The officers of the State must ensure that their conduct does not give rise to the above feeling even remotely. Article 226(1) of the Constitution empowers the Court to issue directions, orders or writs, including writs in the nature of habeas corpus, mandamus, certiorari or any of them. Therefore, in view of the conduct of the Assessing Officer, we are compelled to direct the Assessing Officer to consider and process the petitioner's representation dated 12th August, 2016 and dispose of the same as expeditiously as possible within a period of 8 weeks from today.
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2017 (1) TMI 1148
Validity of reopening of assessment - receipt of on money - whether as the information received by the Assessing Officer required to be investigated and for that reason, the reopening notice was validly issued? - Held that:- Admittedly the assessment order passed on 23rd December, 2009 was under Section 143(3) r/w 153A of the Act on the respondent assessee. This assessment was a result of the search on respondent assessee in March, 2008 inter alia in respect of suppression of sale consideration. In fact, the three buyers i.e. Mrs. Asha Katariya, Mr. Satish Parakh (Individual) and Mr. Satish Parekh (HUF) had all in their statements recorded on 10th March, 2008 u/s 131 had stated that they did not pay any consideration in excess of that recorded in the agreement. Therefore, this itself is evidence of the 'onmoney' in respect of the three flats was subject to enquiry leading to order dated 23rd December, 2009. Further, we find that the Assessing Officer has proceeded on the basis of the documents obtained during the course of the search on third parties were documents to which the presumption under Section 132(4A) of the Act would apply to the assessment of respondent assessee. This cannot be as the documents were recovered during a search made on third party and not on the respondent assessee. Therefore, such a presumption can be applied only in respect of assessment of third party on whom the search was made. It cannot be the basis to form a reasonable belief that income chargeable to tax has escaped assessment in case of respondent assessee. Thus, in the above view the finding of the Tribunal that the Assessing Officer had no reason to believe that income chargeable to tax has escaped assessment is a possible view in the facts of the present case. - Decided in favour of assessee
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2017 (1) TMI 1147
Immunity from prosecution under Section 245H (1A) - Held that:- It is not in dispute that all payments have been made before the appellant approached this Court and filed this appeal by way of special leave petition on 20.01.2016, though the time originally granted by the Settlement Commissioner was only up to 31.07.2015. However, we find from the provision that the Settlement Commissioner is free to grant further time for payment, under Section 245H(1A) of the said Act. Having heard the learned senior counsel for the appellant and learned Additional Solicitor General appearing for the respondents, we are of the view that in the facts and circumstances of this case, it is not necessary to relegate the appellant to the Settlement Commissioner for enlargement of time, since the payments have already been made. Therefore, for all intents and purposes it shall be taken that the appellant has made the payments within the time granted under Section 245H(1A) of the said Act.The appeal is allowed, as above. HC ref case - 2015 (12) TMI 201 - PUNJAB AND HARYANA HIGH COURT
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2017 (1) TMI 1146
Reopening of the assessment - Held that:- We find that the reasons are contrary to the records. The assessee has, during the course of original assessment furnished all its accounts, Balance Sheets and the Revenue account before the AO. Therefore, there is no material suggesting that the assessee has not disclosed the material facts fully and truly for his assessment. Therefore, respectfully following the judgment of the Hon’ble Bombay High Court rendered in the case of Dynacraft Air Controls vs. Sneha Joshi & Others, (2013 (6) TMI 312 - BOMBAY HIGH COURT ), we hereby quash the assessment being invalid. This ground of the assessee is allowed. Benefit of section 11 denied - Held that:- We find that the Coordinate Bench has dealt with the identical issue elaborately in the case of Hoshiarpur Improvement Trust & Others vs. ITO [2015 (9) TMI 902 - ITAT AMRITSAR ] as held that as long as broader public cause is served, whether by the State funding or by efficient regulation of the affairs, it is an object of general public utility. Authorities below were not justified in declining the benefit of section 11 read with section 2(15) to the assessee, and in holding that the assessee trust was not covered by advancement of any object of general public utility. The Coordinate Bench has held that even if the activities in the nature of trade, commerce or business etc. are undertaken in the course of actual carrying out of advancement of any object of general public utility, till the end of the previous year relevant to the assessment year 2016-17, the activities will continue to be covered by the scope of Section 2(15). Addition on the basis of conjectures and surmises without any basis and the profit is estimated @ 30% on sale price which as per the AO was not accounted for in the P&L account - Held that:- Addition has been made at 30% without any basis with the presumption that the profit of 30% should have been earned on auction of commercial properties by the Board. This finding of fact is not controverted by the revenue by placing any contrary material on record. Therefore, we do not see any reason to interfere in the order of ld. CIT (A), which is hereby confirmed. Disallowance of expenses on Haj Yatris - Held that:- We find that the ld. CIT (A) has accepted the contention of the assessee on the ground that it will not make any difference even if such addition Application of income by the Board during the year of ₹ 232,59,28,849/- as specified in Form 10B Audit Report is much more than the total income of the appellant shown at ₹ 98,90,80,448/- in the statement of total income filed with the return. This finding of fact is not controverted by the revenue. Therefore, we do not see any reason to interfere in the order of ld. CIT (A), which is hereby confirmed. Reopening of assessment - Held that:- The basis of reopening of the assessment was that the proviso 1 & 2 to section 2(15) of the Act were held to be applicable to the facts of the case. As per section 147 of the Act, the assessment can be reopened if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Therefore, the reason of the AO was based upon his belief that provisions of section 2(15) were applicable on the facts of the case. Therefore, in our considered view, the AO was justified in reopening the assessment. This ground of the assessee is dismissed. Disallowance on account of Contingency and Equalization Reserve - Held that:- The appellant has been held as a charitable organization and its income to the extent of application as mentioned in section 11 is exempt from taxation u/s 11, therefore there is no justification for making the disallowance specially when the Reserve has been informed created from the sale proceeds of houses and not appropriated from profit shown in the P&L account called Revenue account as presumed by the AO
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2017 (1) TMI 1145
Claim for exemption under section 11 - applicability of the proviso to section 2(15) - non charitable activity - Held that:- Mere action of charging fee for services, by itself, would not justify invoking of the proviso to section 2(15) of the Act unless it is established that the purpose and object is profit motive. Considering the entirety of circumstances we are unable to find any credible reasoning taken by the Revenue to say that the purpose and object of the assessee Trust falls within the meaning of expression ‘trade, commerce or business’ used in the proviso to section 2(15) of the Act. Considering the focused area of the Trust, it could not be inferred that there is any profit motive so as to view the activities to be ‘trade, commerce or business’ as understood for the purposes of proviso to section 2(15) of the Act. Therefore, in our considered opinion, on facts, it is not possible to infer that assessee Trust is carrying on any regular ‘trade, commerce or business’ and on the contrary it is an entity which is essentially existing for charitable purposes but conducting some activities for consideration or fee. In this background, the proviso to section 2(15) of the Act cannot be invoked to exclude assessee Trust from the purview of section 2(15) of the Act since the said proviso only seeks to exclude institutions which are carrying on regular business, as inferred by us following the legal position explained by the Hon’ble Delhi High Court in the cases referred herein above. We therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee for exemption under section 11 & 12 of the Act. - Decided in favour of assessee
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2017 (1) TMI 1144
Revision u.s 263 - assessee has arranged his affairs in the proprietorship concern vis- -vis partnership in such a manner where at the cost of proprietorship, partnership was allowed to earn more income which is tax free, and therefore, a prejudice has been caused to the Revenue - assessee borrowed unsecured loans and paid interest - Held that:- Most of the credit balance in the accounts is on account of sales made by M/s.Meera Impex. If any investment has been made that was made out of personal books and duly reflected. It was not from interest bearing funds. This argument has been jettisoned by the ld.Commissioner by making a reference of total business vis- -vis sundry debtors. Both the issues are altogether non-comparables, specifically by making reference in terms of percentage. How it can be alleged that total unsecured loans taken by the assessee in Meera Impex should be used in the items sold to partnership concern only then business needs will be accepted. The loan was taken for the business purpose of Meera Impex. It cannot be assumed that it was used only in sales made to Metal Alloys. It might have been used for other business needs of Meera Impex. The ld.Commissioner failed to take note of the fact that the assessee was holding a capital of ₹ 415.90 lakhs and noninterest bearing funds of ₹ 60.37 lakhs. These two amounts itself can take care of, if any outstanding balance was available towards M/s.Metal Alloys Corporation. These facts have been highlighted in the written submission filed before the ld.Commissioner. The ld.Commissioner failed to take cognizance of these facts in right perspective. We are of the view that the ld.Commissioner was not justified in taking action under section 263 of the Income Tax Act, 1961, therefore, we allow the appeal of the assessee
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2017 (1) TMI 1143
Addition u/s 14A r.w.s. Rule 8D(2)(iii) - Held that:- AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D of Income Tax Rules. While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½% of the total value. In view of the above and respectfully following the coordinate bench decision in the case of J. K. Investors (Bombay) Ltd., (2013 (5) TMI 580 - ITAT MUMBAI), we reverse the order of lower authorities. Thus, the appeal filed by the assessee is allowed.
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2017 (1) TMI 1142
Penalty under section 271(1)(c) - addition on Dividend stripping u/s. 94(7) - Held that:- There was a boanfide mistake on the part of the assessee in not examining the provisions of section 94(7) of the Act in respect of the concerned transactions. We, therefore uphold the learned CIT(A)’s order in deleting the penalty levied under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income on this issue, since the disallowance under section 94(7) of the Act was made on the basis of details and particulars already furnished by the assessee. Disallowance u/s 14A - Held that:- The said disallowance, we observe, has been increased by the AO to the extent of ₹ 18,39,11,187/- and subsequently on appeal has been reduced by the learned CIT(A) to ₹ 3,68,74,513/-; all this due to different interpretations and formulae adopted by these authorities. In this context, we notice that for making the said disallowance under section 14A r.w. Rule 8D, which is a statutory disallowance, all details have been disclosed by the assessee and the quantum of disallowance has varied only due to different interpretations by the AO and learned CIT(A) and not on account of any furnishing of inaccurate particulars of income. In this factual matrix of the case, as discussed above, we are of the considered view that penalty under section 271(1)(c) of the Act is not leviable in the case on hand and therefore uphold the finding of the learned CIT(A) in deleting the penalty levied under section 271(1)(c) of the Act on this issue of disallowance under section 14A r.w. Rule 8D of the Act in the case on hand. - Decided in favour of assessee
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2017 (1) TMI 1141
Disallowance of travelling cost - Held that:- The assessee being corporate claimed such travelling expenses in the immediate preceding year for ₹ 1,16,10,992/- but in the year before us it is considerably less. Therefore in the instant case ad hoc disallowance to the extent of ₹ 20,000/- of the total expenses made on probabilities which is in our view not justified as no specific item or instance of personal expenditure was found in the circumstances of the case. We have noted that the fact of expenditure was well established by the self made vouchers but the lower authorities failed to bring any instance on record any unreasonableness in the amount of expenditure and the purpose for which it was incurred whether personal or commercial. On these facts, we see no reasons to make any addition/disallowance of travelling cost. Disallowance of proportionate interest expenditure for the loan given to the directors - Held that:- The assessee has submitted that it has its own funds of ₹ 5,22,90,200.00 as on 31.3.2005. Therefore it is clearly established that the assessee was having its own capital greater than the loans and advances given to the directors. We are, therefore, of the considered view that no addition is warranted Treatment to subsidy received from Government of West Bengal as capital receipt - Held that:- The scheme of the West Bengal Gov. does not an all envisage giving any subsidy in respect of specific items of expenses like sales-tax, power, water, etc. and hence the same cannot be regard to be of revenue nature. Since the assessee has received the financial assistance under the same scheme, in our view, the CIT(A) was justified in following the earlier order of the Tribunal for Treatment to subsidy received from Government of West Bengal as capital receipt Addition on account of excise duty pertaining to finished goods - Held that:- The liability for the payment of the excise duty arises at the time of removal of the goods and in the instant case the finished goods are lying in the closing stock. Therefore there is no question of including the excise duty in the closing stock of the finished goods
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2017 (1) TMI 1140
Disallowance of business Loss - CIT(A) held that in the absence of documentary evidences to substantiate the assessee’s claim in respect of the above loss on financing of films, the loss claimed cannot be allowed - Held that:- In the factual matrix of the case, as discussed above, we are inclined to agree with the conclusions of the authorities below since even before us the assessee except for raising this grounds has failed to file any documentary evidence to establish the claim of losses incurred in financing of the films ‘Jungle Love’, ‘Dudhwali’ and ‘Autowali’ amounting to ₹ 6,38,615/-. Finding no reason to interfere with the finding of the learned CIT(A) on this issue, we uphold the same and consequently dismiss grounds raised by the assessee. Deemed Dividend under section 2(22)(e) - Held that:- Respectfully following the ratio of the decisions of the Hon'ble Bombay High Court in the case of Universal Medicare Pvt. Ltd. (2010 (3) TMI 323 - BOMBAY HIGH COURT) and the decision of the Coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2006-07, we hold that the provisions of section 2(22)(e) of the Act are not applicable in the case of the assessee and accordingly uphold the finding of the learned CIT(A) in deleting the addition made by the AO under section 2(22)(e) of the Act.- Decided against revenue Disallowance of Bad Debts - Held that:- AO while relying on the provisions of section 36(2)(i) of the Act to deny the assessee’s claim for write off of bad debts has failed to observe that sub clause (i) of section 36(2) of the Act provides an exception in the case of money lending business; which in our view, the assessee is engaged in as per Article 22 of its MOA and that is evidently so as per the facts on record. In this factual and legal matrix of the case as discussed above, we agree with the finding of the learned CIT(A) that “the sum written off represents money lent to Mayura Films for financing the film ‘Ganga Jamuna’ and therefore the claim of write off of the bad debts thereof is to be allowed under section 36(i)(vii) r.w.s. 36(2) of the Act. We hold and direct accordingly. - Decided against revenue Disallowance of Interest - Held that:- We find from a perusal of the material on record that, as observed by the learned CIT(A), the AO has not brought on record any evidence to prove that the interest paid by the assessee or advances made by assessee was not for business purposes. Neither before the authorities below or before us, has the Revenue been able to contravene the finding of the learned CIT(A) that the assessee has filed the complete details of advances made and basis of not charging interest. In this factual matrix of the case, as discussed above, we uphold the finding of the learned CIT(A) in deleting the disallowance of interest - Decided against revenue
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2017 (1) TMI 1139
Denial of loss on account of realization of export proceeds - Held that:- Short realization of export proceeds to the extent of ₹ 49,64,937/-, took place in next year but it related to export receivable for the instant year, and at the time of finalization of accounts for the instant year, the actual figure was available, and therefore, assessee made no mistake in considering it for the purposes of arriving at the taxable income. Even otherwise, it has to be appreciated that income tax is a levy on income and that what is liable to be assessed is real income and while computing such real income, substance of the matter ought to be appreciated. Quite clearly, the assessee was aware while drawing up its accounts for the previous year relevant to the assessment year under consideration that the export receivables, outstanding as at the year- end were short recovered by a sum of ₹ 49,64,937/-and, therefore, the real income for the instant year could only be deduced after deduction of such loss. Therefore, considering the entirety of facts and circumstances, in our view, the CIT(A) made no mistake in allowing the claim of the assessee, which we hereby affirm.- Decided against revenue Disallowance of foreign travel expenses and foreign exchange purchased for use in foreign travel - Held that:- Assessing Officer could not enter into shoes of the assessee while examining the claim of expenses and noted that the partners of the appellant firm had actually visited the countries concerned and in fact, subsequently substantial business was generated from such countries. CIT-A, therefore, correctly deleted the entire addition of foreign travel expenses on the ground that it related to the purposes of business. With regard to the disallowance out of foreign exchange purchased for foreign travel, in the absence of details, the CIT(A) has found it fit to restrict the disallowance to ₹ 50,000/- only. No reason to interfere with above finding of the CIT(A) - Decided against revenue Disallowance of interest expenditure under section 36(1)(iii) - Held that:- Relevant discussion in the assessment order reveals that as per the Assessing Officer assessee is paying interest on capital raised from the partners also and, therefore, even if the methodology laid down by the CIT(A) in assessment year 2008-09 is to be allowed, the funds to the extent of partner’s capital cannot be treated as an interest free fund, as assessee is paying interest on such funds. Be that as it may, the discussion by the CIT(A) is quite sketchy and is bereft of requisite details, therefore, we deem it fit and proper to set-aside the order of the CIT(A) and direct the Assessing Officer to recomputed the amount disallowable under section 36(1)(iii) of the Act bearing in mind the methodology approved by the CIT(A) in his order dated 02/08/2011 for assessment year 2008-09. Needless to say that the Assessing Officer shall carry out the aforesaid exercise after providing the assessee a reasonable opportunity of being heard. Thus, on this aspect Revenue succeeds for statistical purposes.
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2017 (1) TMI 1138
Undisclosed investment - Held that:- AO has considered only the amount of ₹ 5,57,000/- for making addition and has not examined the other amounts, the reasons of which are not available on record. We are not sure whether those investments were made in this year or in earlier years. Be that as it may, there was a short disclosure to an extent of ₹ 11,98,400/-, out of which ₹ 5,57,000/- was considered as undisclosed in the assessment order. The explanation offered by assessee is not proper in the sense that no reasons were given, why the above amounts were not disclosed earlier. Even though a reconstructed Balance Sheet was prepared, the corresponding sources were not properly explained. Therefore, we are of the opinion that the order of the CIT(A) confirming the above amount does not require any interference. In view of that, we affirm the order of the Ld.CIT(A). Grounds on this issue are rejected. Completion of assessment U/s. 144 - Held that:- No merit in the ground raised by assessee. Even though a notice U/s. 147 was issued, assessee has not filed any revised return. Even though the proceedings were completed by issuance of notices to assessee and examining the issues, technically, the assessment has to be completed only U/s. 144, as provided in sub-section 1(a). We do not find any merit in the ground. Accordingly, this ground is rejected.
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2017 (1) TMI 1137
Inclusion of service tax for the purpose of presumptive income under Section 44B - Held that:- Following the decision of the Coordinate Bench in the assessee’s own case for A.Y. 2007-08 [2013 (10) TMI 743 - ITAT MUMBAI] we hold that service tax collected by the assessee would form part and parcel of the aggregate amount as specified under sub section (2) of section 44B of the Act for the purpose of determining the income/profit and gain thereunder. We, therefore, uphold the impugned order and consequently dismiss ground raised by the assessee. Levy of penalty under Section 271(1)(c) - Held that:- We find that since no penalty under section 271(1)(c) of the Act has been levied on the assessee for A.Y. 2011-12 in the impugned order, no cause of grievance arises to the assessee by mere initiation of these penalty proceedings. This ground, being premature, is not maintainable and is accordingly dismissed as infructuous.
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Customs
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2017 (1) TMI 1120
STPI - Benefit of N/N. 52/03-CUS dated 31.03.2003 - import of Data Comp equipments - denial on the ground that the appellant cannot be termed as user industry; they are neither developing the software nor exporting it - Held that: - the benefit herein is for the goods and not for the importer - the importer alone is entitled to such benefit and further, such importer should have been authorized by the Development Commissioner to establish the unit for the purposes specified in clauses (a) to (e) of the relevant paragraph of the notification - in the General Exemption No. 66, clause (a)(ii) of the notification exempts manufacture or development of software etc., for export by a STP unit or a unit in Software Technology Park Complex under the export-oriented scheme and not by a software technology park perse - the exemption can only be claimed by an importer, who has been granted necessary permission to import the said goods by Interministerial Standing Committee for 100% EOCJ, ETC. - on merits, the appellant does not have a case. Extended period of limitation - Held that: - the department was very much aware of the fact of import between April 2003 to July 2005. The SCN covers the period from April 2003 to July 2005. None the less the department did not issue the SCN till 15.02.2006 and that too was issued invoking extended period of limitation. The appellant has informed the Customs department furnishing each B/E that goods are imported claiming concession of duty under N/N. 52/03-CUS. Therefore the appellant cannot be said to have suppressed facts - SCN time barred and the proceedings set aside. Appeal allowed on the ground of limitation - decided in favor of appellant.
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2017 (1) TMI 1119
Classification of two products - Selective Catalytic Reduction Honeycomb (SCR) - SCR with Ammonia Slip Catalyst Honeycomb (SCR with ASC) - whether SCR classifiable under CTH 38151900 or under CTH 84213990? - The Authorities issued notice and received responses from three Commissionerates of Customs. According to the opinion of Principal Commissioner of Customs, Air Cargo, Chennai, the SCR was classified under CTH 38151900. Another Commissioner of Customs i.e. Patparganj, Delhi, opined that SCR was classifiable under CTH 84213990 - The Ruling Authority was of the opinion that SCR was classifiable as CTH 38151900 and SCR with ASC was classifiable under CTH 38151210. Held that: - there is difference of opinion amongst the various Commissionerates. Apparently, two Commissionerates have expressed opinions, particularly, favouring the applicant’s view, whereas the third Commissionerate i.e. Patparganj Commissionerate, has taken a contrary view - In the light of the opinion, the Authorities appear to have resolved that controversy. By itself, this resolution of the controversy, in our opinion, is not premised upon a grave or erroneous understanding of the law. Moreover, at the time of the import, the likely effect of the classification is the same. In other words, where the products are classifiable under one sub head of Chapter 3815 or the other, the duty impact is the same. The question, therefore, as of now is really academic. Petition dismissed - decided against petitioner.
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2017 (1) TMI 1118
Dropping the proceedings against the respondent on his application u/s 245(2) Cr.P.C - unwarranted remarks against the counsel appearing on behalf of the petitioner in the two orders - whether the criminal proceedings can be quashed in case a person has been exonerated by the adjudicating authority? - Held that: - the issue was decided by the Supreme Court in Radheshyam Kejriwal [2011 (2) TMI 154 - Supreme Court of India] wherein it was held that if a person has been exonerated on merits and not on a technical ground, then the criminal proceedings can be quashed. The respondent was exonerated in departmental inquiry proceedings but in adjudication proceedings for levying penalty under Section 112(B) of the Customs Act, 1962 by the Appellate Tribunal which is a quasi-criminal adjudicatory authority. Further the Appellate Tribunal set aside the penalty after examining the witnesses and not on technical grounds. In the present case though some witnesses were not cross-examined even without presenting the witnesses for cross-examination, it was found out that their statements did not implicate the respondent and at best the allegations against him were in the realm of suspicion which could not reach the pedestal of proof beyond reasonable doubt. Hence, this Court finds no infirmity in the impugned order dated 21st December, 2009 dropping the proceedings against the respondent. As regards the second prayer of the petitioner of expunging the remarks in the two orders dated 8th December, 2009 and 21st December, 2009, a perusal of the same reveals that they were wholly unwarranted and are thus expunged. Petition disposed off - decided in favor of respondent-assessee.
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Corporate Laws
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2017 (1) TMI 1115
Contempt Application - removal of Cyrus Mistry as chairmen from the office - right to make representation to the shareholders - Held that:- This Bench hereby dismisses the Contempt Application filed by the Petitioners. Both the Counsels on either side vehemently argued transgressing to the merits of the case, however, this Bench need not go into the merits of the case at this juncture, henceforth we have not dealt with arguments gone on the substantial aspects of the Company Petition. The Petitioners happened to raise a point in the Contempt petition that the Board of Directors convening to hold EGM on 6.2.2017 for removal of R11 from the Directorship he has been holding. Over this aspect, the Petitioners and R11 has liberty to raise that point before NCLT, thereby notwithstanding whether the procedure followed in proposing for his removal as a Director in Shareholders meeting leaving it open to exercise the democratic rights of the Shareholders, this Bench does not and will not want to curtail the liberty conferred upon them by the statute. Though it is not a point to be taken up in a Contempt Application, having the Petitioners already mentioned and brought it to this bench notice, this Bench, invoking the inherent powers endowed upon this Bench under Rule 11 analogous to powers under section 151 of CPC, the petitioners and R11 are given liberty to file an affidavit limiting it to the proposal for removal of R11 from the Board within three days from the day this order made available to the parties and then the answering Respondents to file reply within three days from thereof and rejoinder if any three days from the date of filing reply affidavit, so that this Bench could hear this issue along with other issues of main company petition.
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FEMA
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2017 (1) TMI 1114
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - forfeiture order - detention of the original petitioners - Held that:- In the present case, the original petitioner is not a person of no means. Her father owned properties and wrote a will. Later, it was cancelled and the family members had a registered deed of partition among themselves. Further, her father was a gold and silver merchant and has declared jewellery under the Gold Control Act to the Superintendent of Central Excise. All these documents have been accepted by the authorities but only doubts have been thrown without any legal basis. The original petitioner had submitted proper records to shift the burden of proof on the department. The mere fact that the Act does not require the competent authority to record a finding that the forfeited property was purchased by monies received from smuggling activities does not end the matter. The burden no doubt is on the person who is in possession of the property to explain their sources. But, once an explanation is forthcoming, then, naturally it is for the competent authority to prove the contrary. This Court is not satisfied with the order of the Appellate Authority. As can be seen from Section 15, the Appellate Authority has ample power to call for any records from anyone and if they were not satisfied with the receipts produced by the petitioner, they could have summoned such of those documents from necessary quarters or examined witnesses in that behalf. This is especially when a property of a person is sought to be confiscated. This Court is satisfied that the original petitioner had discharged her obligation of proving her source of wealth in purchasing the property and in these two decades of litigation, she had also passed away. This is not a matter where a further remand is necessary. Further, the very same properties were under orders of forfeiture in connection with the detention of the original petitioners another son and that was released by the very same Tribunal. Again, the Tribunal, instead of relying upon the full order of that Tribunal chose to rely upon a portion of the order without any reason. The Tribunal also did not keep in mind the order of this Court made earlier remanding the matter. This Court has no hesitation to set aside the order of the 2nd Respondent Tribunal made confirming the forfeiture order of the 1st Respondent.
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Service Tax
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2017 (1) TMI 1136
Refund claim - Service Tax paid on services utilized in relation to export of goods - N/N. 17/2009 - Technical Testing and Analysis Services - loading and unloading services - wharfage charges - denial on the ground that the claim filed belatedly - Held that: - the time limit of 6 months under Notification 41/2007, which was subsequently increased to 1 year in the succeeding Notification 17/2009. CBEC Circular dated 12.03.2009 has already clarified that so long as the refund claims are filed within the extended period of time provided by new Notification, the assessee would be eligible for the benefit of refund/ subject to satisfaction of other conditions stipulated in the Notification - appellant is eligible for refund. Technical Testing and Analysis Services - denial on the ground that the services are not specified services for allowing refund of Service Tax - Held that: - There is no dispute that "Technical Testing and Analysis Services" are one of the specified services under the Notification 17/2009. Since, it is has been collected under the sub heading and there is no dispute on that score. I find no justification to deny the refund of said Service Tax. Loading and unloading services - wharfage charges - Held that: - It is evident that both services have been rendered within the port. These have also been paid by service provider duly authorized by the port. As such, these may be considered as port services as is specified under the Notification - refund allowed. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1135
Benefit of abatement of 67% under N/N. 15/2004-ST dated 10.09.2004 and N/N. 01/2006-ST dated 01.03.2006 - denial on the ground that the appellant has suppressed the information about material supplied free of cost by the service recipient - Held that: - the issue involved in this case is no more res integra in view of the decision of Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd. [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], wherein it has been held that value of free supplies by service recipient do not comprise the gross amount charged for the purpose of levy of service tax - the appellant should be entitled for availing abatement of 67% - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1134
CENVAT credit - input and capital goods - capital goods and services received prior to 10/09/2004 - credit in respect of input services provided on Roaming to subscribers of foreign telecom network, exempted due to export - Held that: - in view of the transitional provisions provided in Rule 11 of Cenvat Credit Rules, 2004, Cenvat credit on input services received prior to 10/09/2004 were admissible to the appellant. Roaming services - Held that: - in view of the said N/N. 36/2007-ST dated 15/06/2007, where Central Government has considered services provided on Roaming to subscribers of foreign telecom network during their visit to India as leviable to Service tax, the contention of the Original Authority that the said services were exempted and that is why 80% of the Service tax credit availed was inadmissible to the appellant is not sustainable. Credit on above two issues allowed - appeal partly allowed - decided partly in favor of appellant.
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2017 (1) TMI 1133
Refund claim - service tax paid on services used for export of goods - N/N. 41/2007-ST dated 06.10.2007 - Held that: - the appellant has not submitted sufficient proof to establish that refund of service tax claimed for port services was actually the service tax paid by port service providers. Since records reveals that the claim of the appellant that the services provided by the service providers stated earlier were not authorized to provide port services and the evidences called for in the impugned notices such as documents to establish that the Cenvat credit was not availed not forthcoming from the records of the case, we do not find any merits in the appeals filed by the appellant - refund not allowed - appeal dismissed - decided against appellant.
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2017 (1) TMI 1132
Works contract - installation and commissioning charges - service charges/commission for installation was neither separately computed nor mentioned on the body of invoices, whereas they were paying service tax on certain percentage of contracted value - whether demand of tax on these charges and levy of penalty justified? - Held that: - the issue, whether works contract service, involving supply, installation and commissioning service, which is composite in nature, could be vivisected, and the service component be charged to service tax under the FA, 1994, has been finally, settled in Larsen & Toubro's case [2015 (8) TMI 749 - SUPREME COURT], where it was held that the works contract service such as the one under consideration cannot be vivisected and subjected to service tax on the service component thereof - In the present case starting from the show cause notice level, it has been alleged that even though the Respondent had rendered Works Contract service and received consolidated charges towards such supply and service, they failed to discharge the service tax on the service component of the charges by vivisecting the works contract into supply and service. Thus, the aforesaid decision is squarely applicable to the facts of the present case - demand set aside - appeal rejected - decided against Revenue.
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2017 (1) TMI 1131
Manpower recruitment and supply service - manufacture of excisable goods or not? - Held that: - the Commissioner (Appeals) states that the activities of work (production on behalf of the appellant) done by the respondent in the instant case falls under the category of “Business Auxiliary Service”. Further, N/N. 14/2004-ST, dated 10/9/2004 exempts taxable service provided to a client by any other persons in relation to the business auxiliary service - appeal rejected - decided against Revenue.
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Central Excise
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2017 (1) TMI 1130
Cement and clinker - whether the cement cleared by the appellant to the customers covered under serial No.1C of the N/N. 4/2006-CE dated 01.03.2006 read with Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and whether such consumers can be categorized as institutional or industrial consumer? - Held that: - the issue is squarely covered by CESTAT decisions in the case of M/s HEIDELBERG CEMENT (INDIA) LTD And M/s ULTRA TECH CEMENT LTD Versus COMMISSIONER OF CENTRAL EXCISE [2014 (8) TMI 251 - CESTAT MUMBAI], where it was held that packages of commodities containing a quantity of more than 25 kg or 25 litre excluding cement and fertilizers sold in bags upto 50 kg and packaged commodity meant the industrial or institutional consumer are excluded from the provisions of the said Rules - the appellant would be eligible for the benefit of Notification No. 4/2006 under Sr. No. 1C of the table annexed to it - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1129
CENVAT credit - Business Support Services - Appellant is availing the services of M/s. Keybell Solutions Ltd. for keeping a track of the movement of trucks, known as "Truck Khoj services" - eligible input services or not? - denial on the ground that the use of the services was post the clearance of the goods - Held that: - It is to be noted that the definition of ‘input services' when used by a manufacturer has two parts - it is used directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. The definition also has an inclusive part within which comes the disputed service. It is the outlook of any manufacturer not only to manufacture the goods but also to ensure timely delivery of goods upto the ultimate destination. With technological advances it is now possible, through software packages, to track safe delivery of the goods loaded in the trucks until the premises of the customer - the said service qualifies as input service because the service has been used in or in relation to manufacture and clearance of the finished products upto the premises of the customer. CENVAT credit allowed - Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1128
Quantum of penalty, imposed u/s 11AC of the act read with rule 25 of CER, 2002 enhanced - evasion of tax by way of mis-declaring the description of finished goods - on pointed out, differential tax paid - Commissioner (Appeals), was pleased to enhance the amount of penalty observing that the case is not fit for lenient imposition of penalty - Held that: - there is no confiscation of any goods in the facts of this case which is a condition precedent for imposition of penalty under Rule 25 read with Section 11 AC of the Act - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1127
SSI Exemption number 08/03-CE dated 01.03.2003 - denial on the ground that the assessee has availed CENVAT credit - The appellant initially availed Cenvat Credit on capital goods to the extent of ₹ 15,317/-, however have reversed the same - whether the SSI benefit will be extended to the appellant? - Held that: - Once the credit availed has been reversed it is to be considered as ab initio not availed as held in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA] - the appellant will be eligible for the SSI benefit under N/N. 08/03. Payment of Excise duty under protest - rejection of refund claim - Held that: - since the appellant will be entitled to the SSI benefit, the refund for the above amount will be admissible on merits. However, the amount will be paid subject to satisfaction of all the conditions prescribed in section 11B. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1126
Clandestine removal - goods not accounted for in daily stock register - confiscation - penalty u/r 15 - SCN issued without any demand of duty - Held that: - reliance placed in the case of Commissioner of C.Ex., Delhi-II vs Ganpati Rollings Pvt. Ltd. [2016 (6) TMI 157 - DELHI HIGH COURT], where there was proposal for imposition of penalty under Rule 25 of Central Excise Rules, 2002 and there was no proposal for demand of duty and there was no invocation of said Section 11AC. This Tribunal had found that if Section 11AC was not invoked then Rule 25 of Central Excise Rules, 2002 was not invokable. I find that the said ruling is squarely applicable in the present case. The impugned show cause notice is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1125
Exemption under N/N. 108/95 CE dated 28.05.1995 - project funded by UN - denial on the ground that the respondent had not supplied goods to the project financed by United Nations but supplied the goods to awardee of the contract - whether benefit will be available for the contract for supply of goods to a project financed by United Nations or an International Organization? - Held that: - the Hon'ble Madras High Court in the case of C.C.E. Pondicherry vs. Caterpillar India Pvt. Ltd. [2013 (7) TMI 244 - MADRAS HIGH COURT], had held that the exemption under N/N. 108/95 CE was admissible to the goods supplied to the contractors which were executing project financed by United Nations or an International Organization - benefit allowed - appeal rejected - decided against Revenue.
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2017 (1) TMI 1124
Works contract - CENVAT credit - Commercial and industrial services - increase in installed capacity of the appellants plant - Held that: - the exclusion of services relating to construction or execution of works contract of a building or a civil structure or a part thereof, was introduced vide N/N. 03/2011-Cus-NT, w.e.f. 01-04-2011. These changes brought about in Rule 2(l) w.e.f. 01-04-2011 are clearly prospective in nature - reliance placed in the case of Liugong Indian Pvt. Ltd. vs CCE, Indore [2014 (3) TMI 984 - CESTAT NEW DELHI], where it was held that the services of setting up modernisation to be eligible for credit prior to 01-04-2011 - the denial of credit on these services prior to 01-04-2011 cannot be sustained and is set aside - for the purpose of calculation of the actual credit the same will have to be decided after verification of invoices if they are for the period after 01-04-2011, the matter is remanded - matter on remand. CENVAT credit - erection, commissioning and installation services - Held that: - these are in no way expressly stated in the definition of input services under 2(l) of Cenval Credit Rules, 2004, before or after the amendment brought about aforesaid - denial of credit not justified and is set aside. CENVAT credit - Maintenance of Railway sidings - Held that: - without the railway sidings laid outside the factory so as to connect factory with a railway station, no purpose would be served - credit allowed. Appeal allowed - partly decided in favor of appellant and part matter on remand.
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2017 (1) TMI 1123
Refund claim - excise duty paid on the freight element for transportation of transformers along with interest - whether the appellant are eligible for refund or not? - Held that: - the appellant had two distinct contracts, one for sale of goods and other one for transport of said goods. The sale is at the factory gate - the appellant is not liable to pay Central Excise duty on such freight. When the refund is eligible for the said amount, we note that interest paid on said duty have to be refunded. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1122
CENVAT credit - Shapes & Sections, Sheets, M.S. Plate, M.S. Channels, Beam, M.S. Angle & M.S. Grinder etc. - whether the said items were actually used by the appellant in their plant to fabricate and manufacture the machines - allowance of credit dependent on actual use condition? - Held that: - the First Appellate Authority did not have the advantage of going through the evidence which was placed before this Tribunal - the evidence to reflect design, specification of machine, parts thereof, accessories thereof fabricated was not available, now that the evidence including the certificate of Chartered Engineer reported on 31/07/2014 to reflect the design, specification of machines, parts thereof, accessories thereof, fabricated and its description etc. was available, he may examine the issue after giving opportunity to the appellant to present their case - matter on remand. Demand of differential duty - whether exemption under N/N. 67/95-CE dated 01/03/1995 allowed? - Held that: - the assessee is paying duty on Core Pipe & taking Cenvat credit of the said duty paid would be the futile exercise and by invoking such exercise exchequer will be not be benefitted - demand set aside. Appeal allowed - decided partly in favor of appellant and part matter on remand.
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2017 (1) TMI 1121
MODVAT/CENVAT Credit - eligibility of credit - capital goods mainly CRSS Coil, HR Coils and Copper Cathode - Held that: - the eligibility of Cenvat/Modvat Credit on capital goods or inputs are depending on the use of the items in the manufacture of the final products as defined in the Cenvat Credit Rules or erstwhile Central Excise Rules, 1944 - In the present case, either the appellant had not produced the details of the use of the items before the lower authorities or the Adjudicating Authority had not examined the manufacturing process in respect of use of these items. It is appropriate that the matter should be remanded to the Adjudicating Authority to decide afresh after examining the use of these items - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (1) TMI 1117
Reversal of ITC - sales invoices - whether mere failure on the part of the selling dealers in reporting corresponding sales, can be the basis of reversing the ITC claimed by the petitioner? - Held that: - The respondent, cannot reverse the ITC of a dealer, merely because, the selling dealer does not report the same. If, the Revenue find any discrepancy, it will have to be put to the petitioner and, only if, the purchasing dealer is unable to satisfy the Revenue, as regards the genuineness of the transaction, can any adverse orders be passed against the concerned dealer - reversal of credit not justified - petition allowed - decided in favor of assessee.
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2017 (1) TMI 1116
Restoration of appeals - pre-deposit - Held that: - all these Appeals are disposed of by directing the common appellant to deposit the total sum of ₹ 50 lakhs by way of pre-deposit to be deposited within a period of two months from today (as agreed) and on such deposit first appellate authority to decide and dispose of the respective Appeals in accordance with law and on its own merits - appeal restored - present appeal allowed - decided in favor of appellant.
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Indian Laws
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2017 (1) TMI 1113
De-registration ordered by BIFR - whether it is vitiated by fraud as it was ordered before the notice intimating the date of hearing was dispatched - whether once the petitioner company was declared 'sick', the BIFR has no jurisdiction to order de-registration and permit the creditor bank to proceed for recovery? - Held that:- In this case it is seen that the bank had already secured a recovery certificate against the petitioner. When the secured creditor, the 4th respondent Bank decided to enforce the security, proceedings before the BIFR has to be treated as abated in the light of 3rd proviso to Section 15 of SICA and the provisions contained in Section 13(4) of the SARFAESI Act.
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2017 (1) TMI 1112
Order of acquittal - cheque returned with an endorsement of account closed - Held that:- From the document at Exh.39 to 51, it is not crystal clear that respondent-accused has taken amount on credit and therefore, on perusal of the documentary evidence, it appears that the learned trial Judge has rightly acquitted the present respondent No.1-accused from the charges levelled against him. As minutely perused the oral and documentary evidence produced on record and also gone through the observations made by the learned trial Court in paras-17 to 19. The learned trial Judge has rightly acquitted the respondent-accused from the alleged offence. As in full agreement with the judgment and order of acquittal passed by the learned District and Sessions Court, Vadodara. In result, present Criminal Revision fails both on law and facts and the same deserves fate of rejection only. Hence, present application is hereby dismissed.
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2017 (1) TMI 1111
The transitional provision of Section 21D of the CA Act, 1949 - misconduct - Held that:- The word ‘complaints’ in Section 21D was read to include information as well. Meaning thereby if information pertaining to an alleged misconduct was pending before the Council, further proceedings have to continue as per the unamended Act. The facts we need to note in the instant case are that a complaint was received by the Council on November 06, 2002. Correspondences ensued between the council and Megha & Associates, the firm of Chartered Accountants. Clarifications sought not being granted, the matter was treated as information and in accordance with regulation 12(6) of the Chartered Accountants Regulations 1988, a letter was issued by the Council on December 30, 2005 calling upon the firm of chartered accountants to disclose the name of the members answerable to the charges. The respondent submitted his written statement of defences on July 25, 2006 i.e. much before the Act was amended on November 17, 2006. We accordingly hold the reference to be maintainable for the reason that matter would have to be decided as per the Chartered Accountants Act 1949 and not as amended by the Chartered Accountants (Amendment) Act, 2006.The application is dismissed.
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