TMI Tax Updates - e-Newsletter
January 27, 2016
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
-
Income Tax:
When the trading by the assessee company is accepted by the Revenue as incidental to its main business during the earlier years, the income cannot be treated as income from other sources rather it is a business income - AT
-
Income Tax:
Charging of late fee u/s 234E while processing the return u/s 200A - While processing the return u/s 200A of the Act, the ld.AO cannot impose levy of fees under section 234E - AT
-
Income Tax:
Addition on account of long term capital gain on transfer of development rights of undivided share in a property - the assessee was only liable for long term capital gains on the considered received, i.e. ₹ 17.50 lakhs on transfer of her 1/4th share in the property. - AT
-
Income Tax:
TDS u/s 194H - whether expenditure towards “Authority to Guarantee charges” falls within the ambit of section 194H or not?- Held no - The requirement of an agent and principal relationship is found absent in this case - AT
-
Income Tax:
Addition on interest income on the basis of AIR data - once the interest amount has been credited to the assessee and tax has been deducted by the payer, the assessee cannot take the plea of not offering the income on the ground that he has not actually received the same. - AT
-
Income Tax:
Disallowance of interest expenditure under section 36(1)(iii) - assessee has a business interest in the sister concern, therefore, advancement of interest free loan to the sister concern can be considered to be for commercial expediency. - AT
-
Income Tax:
Club membership fees paid for employees is allowable u/s 37 - assessee has given detailed list of persons for whom the membership is taken. Therefore disallowance of club membership is deleted - AT
-
Customs:
The appellant who is the second purchaser, bought the car from the first purchaser i.e. M/s. HFCL after a year or so, was not at all aware of the mischief played by the importer. His bonafides are confirmed by the Commissioner, who did not impose any penalty on him - demand of duty set aside - AT
-
Customs:
Export of Basmati Rice - length and breadth, of the grain - AGMARK standards - DGFT policy circular has clearly indicted that the same may be done - the goods are described in the Customs Notifications (Supra) as "Basmati Rice", and therefore Customs Authorities are fully justified to verify the impugned goods are Basmati Rice or not - AT
-
Corporate Law:
Companies (Incorporation) Amendment Rules, 2016 - Notification
-
Indian Laws:
Money Laundering - offenses are bailable or not - whether the offence is cognizable or non-cognizable - as noticed, Section 4 provides for punishment for more than 3 years and thus offences would be cognizable as provided in the Cr.P.C. itself - HC
-
Service Tax:
Import of services - 'pouring fees' and 'signing fees' - clearly the service activity involved is not sale of space and time as contended by the appellant. What is sold is the right to advertise and promote the product of the CCIPL - Appellant provided BAS to its client CCIPL on which tax is payable - AT
-
Service Tax:
Territorial Jurisdiction - SCN issued by Mumbai Office of Service Tax Department for whole of India offices -The Commissioner should have refrained from adjudicating and instead could have initiated the process of making show cause notice answerable to the jurisdictional Commissioners or he should have written to the Central Board of Excise and Customs seeking power to adjudicate the case of services rendered pan India - AT
-
Service Tax:
Extended period of limitation - Valuation - Real Estate Agent services - inclusion of administrative charges/transfer charges recovered by it from its clients - Extended period in this case is not invocable and therefore penalty u/s 78 ibid is also not sustainable - The appellant is eligible for the cum tax benefit - AT
-
Service Tax:
Marketing and advertising activities undertaken for ICICI Bank - The respondent has not been able to demonstrate as to how and on what basis it had a bonafide belief that the impugned service did not fall under BAS. - Demand of service tax confirmed - AT
-
Central Excise:
SSI Exemption - The leaflets manufactured by the appellant are not branded goods since that was not traded as such for purchase by general public. Such fundamental test negates stand of the appellant that it manufactured branded goods. Accordingly, turnover therefrom shall enter into aggregation process to compute the limit prescribed by the Notification - AT
-
VAT:
Levy of VAT / Sales Tax - Since the the sale of goods has taken place outside the State of Gujarat, the question as to whether or not subjecting the Natural Gas to the process of sweetening amounts to manufacture becomes redundant, and hence, it not necessary to enter into the merits of the question as to whether or not the processing of the Natural Gas at ONGC’s sweetening and separation facility at Hazira, whereby the sour gas is converted into sweetened gas, amounts to manufacture. - HC
-
VAT:
Input Tax Credit on the capital goods - crushing of stone is manufacturing activity or not. - TNGST - the crusher machine cannot be treated as capital goods - HC
Articles
Notifications
News
Case Laws:
-
Income Tax
-
2016 (1) TMI 868
Validity of revision u/s 263 - order barred by time limitation - Held that:- The issue raised by the Appellant is no longer res-integra as an identical issue has been subject matter of consideration before this Court in the case of CIT v/s ICICI Bank Ltd., reported in (2012 (2) TMI 308 - BOMBAY HIGH COURT ) and CIT v/s Lark Chemicals Ltd., reported in (2013 (9) TMI 959 - BOMBAY HIGH COURT) wherein this Court has held that jurisdiction under Section 263 of the Act can be exercised only within the period of two years from the end of the financial year in which the order of the Assessing Officer was passed dealing with the issue which is being subjected to exercise of powers by Revenue under Section 263 of the Act. Thus Tribunal was correct in law in holding that order u/s 263 of the Income Tax Act, 1961 dated 28th March 2011 was barred by time limitation - Decided against revenue
-
2016 (1) TMI 867
Disallowance of depreciation - no business activity has been carried out by the assessee during the Assessment Year under consideration - Held that:- The assessee company is entitled for depreciation on computer and software during the year under assessment (Assessment Year 2008-09 and 2010- 11) though not actually used for the purpose of business on the grounds inter alia that when during the previous Assessment Year i.e. Assessment Year 2007-08, the assessee disclosed receipt from technical consultancy and training fee, income from trading activities and other income but shown the income from technical consultancy and training fee at ‘nil’ in Assessment Years 2008-09 and 2010-11, it is entitled for depreciation u/s 32 of the Act as the same has not been discarded by the assessee company; that when the machinery in question was in fact used in the earlier year and depreciation was allowed on block of assets, the assessee company is entitled for depreciation; that though the usage of machinery in the business was not in the relevant assessment year but in the earlier financial year its entire machinery remained in “ready to use” mode because the assessee company has come up with logical explanation that due to not having received any order for technical consultancy nor it carried out any training activity, the income from its business comes to ‘nil’; that when the A.O. has accepted the contention of the assessee that it has made sales representing trading items incidental to its main business activity and has earned profit from such activity, he cannot disallow the depreciation claimed by the assessee; that even Ld. CIT(A) has erred in doubting the trading activities stated to have been carried out by the assessee company during the Assessment Year 2008-09 without any investigation though in the past, such activity has been accepted by the Revenue specifically; that no doubt, the assessee has not produced the vouchers to prove the claim of sale and purchase but when the Revenue has accepted the audited profit and loss statement, they cannot be allowed to sail in two boats; that when the assessee company has not sold, discarded, demolished or destroyed the assets during the previous year, the assessee has certainly become entitled for depreciation.- Decided in favour of the assessee. Expenses against the income - income from other sources OR business income - Held that:- CIT(A) has himself allowed the expenditure of the assessee relating to audit fees, communication expenses, legal and professional charges, electricity and water, bank interest and charges, printing and stationary u/s 57 and directed the Assessing Officer to allow thee expenses against the income determined u/s 57, as business expenditure, the assessee is proved to be carrying out the business activities from which it has shown the business income during the year under assessment and consequently entitled for depreciation. Even otherwise, when the trading by the assessee company is accepted by the Revenue as incidental to its main business during the earlier years, the income cannot be treated as income from other sources rather it is a business income. - Decided in favour of the assessee.
-
2016 (1) TMI 866
Charging of late fee under section 234E while processing the return under section 200A - Held that:- While processing the return under section 200A of the Act, the ld.AO cannot impose levy of fees under section 234E of the Act. Respectfully following the order in the case of Sibia Healthcare Pvt. Ltd. VS. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] as well as Indian Overseas Bank Vs. DCIT [2015 (9) TMI 1290 - ITAT AHMEDABAD ] we allow both the appeals and delete imposition of fees under section 234E of the Income Tax Act. - Decided in favour of assessee.
-
2016 (1) TMI 865
Capital gain computation - Applicability of section 50C - Held that:- Admittedly, the MIDC has originally given the lease of the land in the year 1964. The Assessee had purchased the leasehold rights in the property in 1991 for a sum of ₹ 9 lakhs and after carrying out his business for 15 years had sold the same for ₹ 25 lakhs vide deed of assessment dated 29.04.05. Hence, the assessee had sold the leasehold rights for the remaining period of 55 years. A perusal of the provisions of section 50C of the Act reveals that the same are applicable for the transfer of land or building or both, however, the leasehold rights or the tenancy rights are different from the ownership of land or building itself. In view of the settled position on this issue, the section 50C is not applicable to the case in hand. Hence, the capital gains offered by the assessee by adopting the sale consideration actually received by him are to be taxed as such. We, therefore, do not find any justification on the part of the Ld. CIT(A) in adopting the value of the DVO. We accordingly direct the AO to tax the capital gains on the assessee by adopting the sale value of the property at ₹ 25 lakhs as offered by the assessee.
-
2016 (1) TMI 864
Disallowance u/s 14A - CIT(A) deleted addition - Held that:- No infirmity in the order of the CIT(A) deleting the disallowance of interest so made as where the assessee has both own funds as well as borrowed funds and the own funds are sufficient as compared to the amounts of investments, then it is to be presumed that investments have been made out of own funds. So far as the CIT (A) has upheld the disallowance of administrative expenses u/s 14A in the ratio of exempt income to the total turnover of business, the issue is covered by the decision of Tribunal in assessee’s own case for assessment year 2004-05. Disallowance of interest u/s 36(1)(iii) - CIT(A) deleted the disallowance - Held that:- As per the details of opening and closing balance and purchases made in last three years, it is very clear that this is not a non business advance but it is a pure business advance given in the interest of business, accordingly there is no infirmity in the order of CIT(A) appeal for deleting the disallowance of interest so made. From the record we also found that there has been no disallowance in earlier years up to assessment year 2001-02 when these advances had been given. However, in the current year, the department cannot make such a disallowance unless there is any change in the facts during the year. Accordingly, we do not find any merit in the action of the AO for disallowing the interest even in view of consistency principle laid down in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME Court] and by Paul Brothers [1992 (10) TMI 5 - BOMBAY High Court ]. Accordingly, we uphold the action of CIT(A) deleting the disallowance of interest u/s 36(1)(iii) of the I.T. Act. Denial of deduction u/s 80IB in respect of new unit set up at Daman - Held that:- Considering the facts and circumstances of the case vis-à-vis order of the Tribunal in assessee’s own case for assessment year 2004-05 and also the order of the AO giving effect to the order of Tribunal allowing assessee’s claim of deduction u/s 80-IB, we do not find any merit in the action of lower authorities in declining assessee’s claim for deduction u/s 80IB in respect of new unit set up at Daman during the assessment year 2005-06 and 2006-07. Accordingly, the AO is directed to allow assessee’s claim for deduction u/s 80IB for assessment year 2005-06 and 2006-07. Denial of deduction u/s 80IB on interest income treating it as income from other sources instead of business income - Held that:- Fixed deposits were kept for the purposes of business it partakes the character of business income. The earning of interest income is incidental to the main business of the assessee, therefore, it does not constitute a separate activity in itself for it to be taxed separately. The words used in Sec 80-IB are ‘profit and gains derived from any business’ are wide enough to cover the interest income. As exactly similar issue was considered by Tribunal in assessee’s own case for assessment year 1999-00, 2001-02, & 2003-04 for interest on FD kept as margin money to be considered as business income and deduction to be allowed u/s 80HHC. We found that the issue of netting of interest is squarely covered by the decision of Hon’ble Supreme Court in the case of ACG Associated Capsules (P) Ltd. (2012 (2) TMI 101 - SUPREME COURT OF INDIA ). However, in view of the fact that interest being earned out of the deposit given to the bank as business compulsion, we have held that entire interest is eligible for deduction u/s 80-IB of the Income Tax Act Addition on account of excise duty to closing stock of finished goods which were not subject to duty under excise Act - Held that:- Excise duty liability crystallizes on the day of clearance of excisable goods and not on the date of manufacture and, therefore, excise liability was not incurred by the assessee in respect of unsold sugar lying in the stock and cannot be included in the value of closing stock of sugar. Respectfully following the order of Jurisdictional High Court in the case of Loknet Balasaheb Desai SSK Ltd [2011 (6) TMI 48 - BOMBAY HIGH COURT] we do not find any merit in the action of lower authorities for making additions on account of excise duty to closing stock of finished goods which were not subject to duty under the excise Act. Deduction u/s 80IB on the hedging profit earned in the commodity exchange - Held that:- The expression used in section 80-IB i.e. profit derived from business of the industrial undertaking is much wider than the expression used in section 80-HH/80-I i.e. ‘profits and gains derived from an industrial undertaking. We also found that the profit earned out of squaring off future contracts is profit earned on account of hedging transaction. Thus there is a direct nexus between the activity of Jammu unit and the profit earned in the hedging contracts. The hedging Mentha Oil stemmed from the activity of Jammu unit of manufacturing Menthol Products. Thus the income from hedging in Mentha oil formed an integral part of the income of the Jammu unit and was eligible for deduction u/s. 80-IB. The detailed finding recorded by the CIT(A) while concluding that when such profit was eligible for deduction u/s 80IB is as per material on record and the same has not been controverted by bringing any positive material by Ld. DR. Accordingly, we do not find any reason to interfere with the finding recorded by the CIT(A) holding that assessee is eligible for deduction u/s 80IB in respect of such profit. Disallowance of depreciation on the plea that the Daman unit had discontinued its business activity - Held that:- The year under consideration is not the first year of asset acquiring, therefore, the assets of closed unit will remain part of the block of assets. The said block of assets was used for the purpose of business during the year. Under these circumstances, the assets of the said closed unit amounts to use for the purpose of business in the year under consideration. It was, therefore, held that assessee is entitled for depreciation. Similar view has been taken in the case of KJS India Pvt. Ltd. [2011 (9) TMI 667 - Delhi High Court] and Pfizer Ltd. [2010 (6) TMI 433 - Bombay High Court ]. Respectfully following these decisions, we do not find any ground/reason for declining the assessee’s claim for depreciation in respect of assets forming part of block of asset. AO is, therefore, directed to allow the assessee’s claim. Reopening of assessment - disallowance u/s 14A - Held that:- the assessee is exporter of Menthol products and other oils in the international market. The company had surplus funds in its balance sheet which were invested in tax free securities during the prior years. There is no fresh/ additional investment made during the year. There was only reshuffling of investments. The total investments have reduced by ₹ 11.13 crores. As per the figure of share capital and free reserves vis-a-vis investment during the years, we found that the assessee had ₹ 39.84 crores in the form of share capital and reserve surplus against which investment was merely ₹ 9.16 crores. Applying proposition of law laid down in the case of Reliance Utilities Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) we do not find any merits in disallowing proportionate interest. With respect to claim of administrative expenses, we found that main administrative expenditure of the assessee was towards manufacturing activity. However, full detail of such expenses have not been furnished, therefore, we restore the issue of disallowance of administrative expenditure as per Rule 8D for deciding afresh as per law.
-
2016 (1) TMI 863
Revision u/s 263 - as per CIT(A) Assessing Officer under section 143(3) allowing the claim of the assessee in considering peak credit on the cash deposits is without application of mind - Held that:- In the instant case, the Assessing Officer neither examined any details with regard to the request of the assessee to adopt peak credit nor made any enquiry before allowing such claim of the assessee while completing the assessment. Therefore, in view of the above discussion, we are of the view that the order passed by the Assessing Officer under section 143(3) allowing the claim of the assessee in considering peak credit on the cash deposits is without application of mind and without examining the correct position of law and therefore is certainly an order passed erroneously and prejudicial to the interests of the Revenue. Therefore, the Commissioner of Income Tax had rightly invoked the provisions under section 263 of the Act directing the Assessing Officer to redo the assessment under section 143(3) of the Act afresh. Accordingly, we uphold the impugned order of the Commissioner of Income Tax and reject the grounds of appeal raised by the assessee. - Decided against assessee
-
2016 (1) TMI 862
Disallowance u/s 40A(3) read with Rule 6DD - CIT(A) deleted the disallowance - Held that:- The assessee is in poultry business and purchasing birds at certain intervals with cash payments and has produced the ledger copy of M/s. Suguna Foods Ltd which is not disputed by Assessing Officer and relied on interpretation of clause (e) of Rule 6DD and explained that purchase of chicken birds falls within definition of livestock. Considering the above provisions of law, facts and circumstances of the case , the ld. CIT(A) has examined evidence available on record vis-a-vis explanations made by the assessee and there being no infirmity in the order of the ld.CIT(A), we are inclined to uphold the same by dismissing the ground raised by the Department. - Decided in favour of assessee. Disallowance of diesel and driver batta expenditure - CIT(A) deleted the disallowance - Held that:- We are of the considered opinion that the expenditure claimed by the assessee are reasonable and incidental to business and the ld.CIT(A) has rightly analyzed the nature of expenses and therefore, we are inclined to uphold the order of the ld.CIT(A) and dismiss the grounds of the Revenue.- Decided in favour of assessee.
-
2016 (1) TMI 861
Addition on account of long term capital gain on transfer of development rights of undivided share in a property - Held that:- We observe that the authorities below have erred in holding that the assessee was the absolute owner of the property acquired by her through WILL. As stated earlier the assessee had only lifetime interest in the property with no right of alienation. It was only through a family arrangement that the assessee got absolute right over 1/4th share in the property. The Ld. AR of the assessee has stated at the Bar that the other 3 co-owners of the property have declared the long term capital gains in their respective return of income and the said amount has already been assessed to tax in the hands of respective co-owners. This fact has not been controverted by the Ld. DR. In the light of the facts discussed above, we are of the considered view that the assessee was only liable for long term capital gains on the considered received, i.e. ₹ 17.50 lakhs on transfer of her 1/4th share in the property. Thus, the second ground of appeal raised by the assessee is allowed in the aforesaid terms. Disallowance of the claim of exemption u/s.54F - Held that:- Transfer of any rights in the capital asset would constitute transfer within the meaning of section 2(47) of the Act and the assessee is eligible to claim benefit u/s. 54 on such transfer. In view of our above findings, we hold that the assessee is eligible to claim exemption u/s.54F of the Act. - Decided in favour of assessee.
-
2016 (1) TMI 860
TDS u/s 194H - commission expenditure incurred by the assessee company - non deduction of tds - whether the impugned expenditure towards “Authority to Guarantee charges” falls within the ambit of section 194H or not?- demand raised by the A.O. u/s 201 and 201(1A) - Held that:- It is noticeable from the definition of expression “commission or brokerage” as appearing in section 194H of the Act that (a) a payment should be received by a person for services rendered only and (b) such person should be acting on behalf of the other person to whom the services have been rendered in respect of buying and selling of goods, etc.. It is clear from the factual matrix of the case that there is no component of service rendered by the finance company to the assessee against recovery of portion of losses, if any. In our view, it is a simple business proposition whereby an arrangement has been entered into by the assessee to assist its customers to enable them ready finance of their products and simultaneously assured the finance company for recovery of losses, if any due to default in repayment by the customers. The requirement of an agent and principal relationship is found absent in this case. Also, no nexus is found between the amount of sales made by the assessee and the expenditure towards ‘authority to guarantee charges’. We find that the ratio of both the judgements below are squarely applicable to the present fact-situation also, wherein finance company is not acting on behalf of the assessee. The finance company is merely providing financial services in the form of loan and subsequently collecting the payment against the assurance for sharing a part of losses. Respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in Intervet India P. Ltd. (2014 (4) TMI 353 - BOMBAY HIGH COURT ) and also by the Hon’ble Delhi High Court in JDS Apparels Pvt. Ltd. (2014 (11) TMI 732 - DELHI HIGH COURT), we are of the considered view that section 194H is not applicable in the facts of the case - Decided in favour of assessee
-
2016 (1) TMI 859
Addition on interest income on the basis of AIR data - Held that:- There is no dispute to the fact that the assessee is following mercantile system of accounting. Moreover, as per the AIR information available in Assessing Officer’s record, assessee in the relevant F.Y. has received interest of ₹ 6,60,822 from Everest Niwara. This fact is also evident from form no.26AS, a copy of which is submitted before us by the learned Counsel for the assessee. Therefore, once the interest amount has been credited to the assessee and tax has been deducted by the payer, the assessee cannot take the plea of not offering the income on the ground that he has not actually received the same. We, therefore, do not find any infirmity in the action of the Departmental Authorities in assessing the amount of ₹ 6,60,822. However, we accept assessee’s alternative claim that if the said amount is treated as income of the assessee, then credit for TDS has to be given. As it appears from Form no.26AS, an amount of ₹ 68,064, has been deducted at source by the payer while crediting the interest amount of ₹ 6,60,822. We, therefore, direct the Assessing Officer to verify this fact and give credit of the TDS to the assessee accordingly. Disallowance of professional fee and salary expense - non–deduction of tax as reason as no proof of same has been submitted - Held that:- The assessee has submitted documents by way of additional evidence to indicate that expenditure incurred towards professional fee and salary are genuine. Considering the fact that the evidence produced have a crucial bearing for determining assessee’s claim, we admit them as additional evidence. However, it is a fact on record that these evidences were not filed before the Departmental Authorities. Moreover, it has been contended by the learned counsel that payment of professional fee would not attract the provisions of section 194J in view of the second provision to sub–section (1) of section 194J. It is found that this argument advanced by the learned counsel before us was not taken before the Assessing Officer or the first appellate authority. Therefore, considering the submissions made by the learned counsel as aforesaid on applicability of section 194J as well as the additional evidence produced, we are of the view that the matter relating to allowance of assessee’s claim on professional fee and salary requires examination afresh.
-
2016 (1) TMI 858
Penalty u/s 271(1)(c) - disallowance of deduction under section 80IB(10) - CIT(A) deleted the penalty - Held that:- It may be a fact that assessee has accepted the disallowance under section 80(IB)(10) by not preferring any appeal against the order of the learned Commissioner (Appeals) but that cannot be a reason alone for concluding that assessee has furnished inaccurate particulars of income. When there are enough material on record to show that the issue on which assessee’s claim of deduction under section 80IB(10) was disallowed are highly debatable issues on which more than one view is possible, the assessee’s claim of deduction in the return of income has to be considered to be under bona fide belief that he is eligible for such deduction. As far as the specific allegation of the learned Departmental Representative that assessee has furnished inaccurate particulars of income by mentioning the are of plot to be more than one acre, it needs to be observed that on reference to the same Annexure–A of the audit report, it would be relevant to note that the assessee has also mentioned the area of plot as 3207.20 sq.mtr. which measure to less than one acre. Thus, it appears that the statement of the assessee that plot of area is more than one acre as referred to by the learned Departmental Representative, a bonafide mistake and cannot be termed as furnishing of inaccurate particulars of income. In view of the aforesaid, we are of the opinion that learned Commissioner (Appeals) was justified in deleting the penalty imposed under section 271(1)(c) of the Act. Accordingly, we uphold the order of the learned Commissioner (Appeals). - Decided against revenue
-
2016 (1) TMI 857
Disallowance of interest expenditure under section 36(1)(iii) - interest free loan to sister concern - Held that:- When the assessee had sufficient interest free funds available with it, the plea of the assessee that it has advanced the interest free loan to the sister concern out of such non–interest bearing funds is acceptable. Therefore, in our view, no disallowance of interest expenditure can be made. As far as commercial expediency is concerned, it has been brought to our notice by the learned Counsel for the assessee that almost the entire product manufactured by the sister concern to which interest free loan was advanced was sold to the assessee. This very fact reveals that assessee has a business interest in the sister concern, therefore, advancement of interest free loan to the sister concern can be considered to be for commercial expediency. In view of the aforesaid, we delete the addition made by the Assessing Officer on account of disallowance of interest expenditure - Decided in favour of assessee Disallowance under section 14A - Held that:- Considering the fact that the assessee has not challenged the disallowance before the first appellate authority, and a plea was taken before us by the learned counsel that the assessee did not earn any exempt income during the impugned assessment order, hence, no disallowance under section 14A is called for, we consider it appropriate to restore the issue to the file of the Assessing Officer for examining assessee’s claim and decide it in accordance with law after due opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.
-
2016 (1) TMI 856
Disallowance u/s 14A - Addition towards expenditure alleged to be incurred in earning exempt income - Held that:- It is undisputed fact that there was no exempt income earned during the previous relevant assessment year under consideration. It is trite law that in the absence of any exempt income, no addition under Section 14A can be made. We hold that no addition is called for on account of any alleged expenditure towards any exempt income. - Decided in favour of assessee. Disallowance under Section 40(a)(ia) - TDS deducted was remitted by delay - Held that:- The undisputed facts of the case are that the amount of TDS deducted was remitted to the account of the Government before the due date of filing of the return of income. This fact is emerging out of the assessment order vide page no. 13 of the assessment order. It is settled principle of law that the second proviso to section 40(a)(ia) is applicable with retrospective effect and in this connection reliance is placed on ITO Vs. Anil Kumar & Co., (2013 (7) TMI 231 - KARNATAKA HIGH COURT )- Decided in favour of assessee. Disallowance under Section 80G - Held that:- There is no evidence on record to show that the receipts are produced before the Assessing Office. Accordingly, we restore the matter to the file of the Assessing Officer for verification of the donations made. - Decided in favour of assessee for statistical purposes. Disallowance of gifts and awards distributed to the trainees for the best performance - Held that:- Since the assesee company was engaged in the business of management consultancy and training, it is not in dispute that the expenditure was actually incurred. The Assessing Officer only disallowed the same on the ground that the expenditure is not for business purposes. In the absence of management consultancy, training & development and human resource development, this expenditure cannot be considered to be non-business purposes and the reasoning of the Assessing Officer cannot be accepted. - Decided in favour of assessee
-
2016 (1) TMI 855
Allocation of expenses relating to agency service activity in proportion to the turnover by the TPO - Transfer pricing adjustment - Held that:- Following the decision for the assessment year 2003-2004 as concluded that aggregate indirect expenses common to both the functions should be done on the basis of gross margin of distribution function and commission income receipts and not on the basis of sales, as adopted by the TPO. Allocation of expenses in proportion to sales would amount to give equal weightage in terms of functions performed, assets utilized and risks assumed to both distribution function as well as agency service activity, which otherwise involves much lesser functions and utilization of assets and risk. - Decided in favor of assessee.
-
2016 (1) TMI 854
Disallowance of interest expenses - CIT(A) deleted the addition - whether the assessee was having adequate interest free funds at its disposal without considering the fact that had interest free funds would been available with the assessee then the assessee would not applied for debt restricting with the financial institutions - Held that:- Assessee has huge interest free fund available with it and therefore the disallowance u/s 36(1) (iii) on account of advances given to other parties from of interest cannot be disallowed. Therefore we confirm the order of CIT (A) in deleting the disallowance on account of amounts advanced to sister concerns without charging interest. - Decided in favour of assessee. Disallowance of club membership fees holding that these are of personal nature - Held that:- Club membership fees paid for employees is allowable u/s 37 of the Act. Before CIT (A) assessee has given detailed list of persons for whom the membership is taken. Therefore disallowance of club membership is deleted. Ground of the appeal is allowed.- Decided in favour of assessee.
-
2016 (1) TMI 853
TP adjustment on account of interest free loans given to the AEs - Held that:- On perusal of the said orders / directions of the Revenue Authorities, we find, in principle DRP did not agree with the TPO's proposal of relying on the internal comparables and adopting 15% as applicable rate of interest in benchmarking the transactions with CNK Singapore. However, having held so, DRP also relied on SBI-PLR, which is not the applicable interest rate in the country of Singapore. It is the settled proposition in law that the interest in respect of the current year in which the transaction has taken placed should be considered while calculating the interest on loan granted in foreign currency. Therefore, in principle, we reject the direction of the DRP in thrusting on assessee the SBI-PLR and direct the lower authorities to consider the LIBOR of Singapore. Considering the suo moto adjustments of the assessee, which amounts to addition of ₹ 2,49,260/-, we direct the Assessing Officer to restrict the addition of adjustment to the said amount and delete the balance of addition - Decided in favour of assessee in part. Benchmarking of corporate guarantee related taxes - Held that:- We direct the AO to restrict the adjustments to 0.5% as upheld by the Hon‟ble High Court in the case of Everest [2015 (5) TMI 395 - BOMBAY HIGH COURT] Adjustment on account of share premium - Held that:- Adjustment made on account of ‘share premium’ and ‘interest’ charged on account of ‘under charged premium amount’ does not attract the TP provisions. - Decided in favour of assessee. Disallowance made u/s 14A read with Rule 8D - Held that:- Issue remanded for reconsideration consedring the case of the assessee that the assessee has not earned any dividend income or exempt income during the year and therefore, the said provisions of section 14A of the Act do not attract.- Decided in favour of assessee for statistical purposes. Disallowance in respect of the Annual Information Report (AIR) qua reconciliation - Held that:- The onus is on the Assessing Officer to inform the assessee giving all the details as to on, on what issue, the reconciliation is required, how that entry relates to the assessee etc. How any assessee can reconcile an entry or transaction which does ot pertains to him. Therefore, the onus is on the AO to inform the same. Considering the same and the finding of the Assessing Officer that no exhaustive exercise of reconciliation is undertaken by him during the assessment, we find need for remanding. Accordingly, we remand this ground to the file of the Assessing Officer for fresh adjudication of the issue after granting a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
-
2016 (1) TMI 852
Penalty levied u/s 271(1)(c) - whether the gains arising on sale of shares constitute business income or capital gains - Held that:- The average holding period was reasonably good. The repetition of transactions were very minimal, i.e, upto a maximum of four transactions only. The assessee has not borrowed funds for purchasing the shares. The assessee has held major shares for more than one year and has declared long term capital gains. We notice that the assessing officer has ignored all other factors, which are in favour of the assessee and has decided the issue against the assessee by considering only two factors. We have seen that even the two factors that were considered by the assessing officer works out in favour of the assessee only. Hence, in our view, the decision taken by the assessing officer in AY 2006-07 is not correct in the facts and circumstances of the case and hence the assessment orders passed in other years by following the decision rendered in AY 2006-07 would consequently rendered incorrect. Under these set of facts, we are of the view that there is merit in the contentions of Ld A.R that the assessing officer was not justified in assessing the gains arising on sale of shares as business income of the assessee. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justified in directing to assess the Long term capital gains under the head Capital gains only. In respect of Short term capital gains, we set aside his order for the reasons discussed in the previous paragraphs and direct the assessing officer to assess the same under the head Capital gains only for all the years under consideration. Thus the penalty order passed by the assessing officer will not survive. - Decided in favour of assessee.
-
Customs
-
2016 (1) TMI 838
Import of Car - demand of duty from the second purchaser - Additional Commissioner held the car liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Public Notice of DGPT for violation of post import condition of no sale. - demand of duty from the purchaser of car - This is a case where an imported car has been confiscated twice. The second confiscation arose because DRI found that the year of manufacture of the car was rnis-declared. - Held that:- duty cannot be demanded from the owner because the details of import are established and the importer is known and duty was correctly demanded from the importer in the Show Cause Notice. Whether with the passing of first adjudication order by the Asstt. Commissioner, the principle of res-judicata will apply and prevent the second adjudication of the case. The first purchaser was not even issued a show cause notice. The appellant who is the second purchaser, bought the car from the first purchaser i.e. M/s. HFCL after a year or so, was not at all aware of the mischief played by the importer. His bonafides are confirmed by the Commissioner, who did not impose any penalty on him. But the Commissioner found an easy way out by saddling the second purchaser with duty and imposing a penalty on the importer to try and safeguard Revenue. However he has ignored the fact that legal provisions must be followed strictly. Order of the Commissioner is not sustainable in law. - Order of confiscation is set aside. Duty demand, redemption fine and penalty on appellant are also set aside. - Decided in favor of appellants.
-
2016 (1) TMI 837
Detention Notice was issued towards the recovery of further duty - Demand of additional interest on confirmed demand - adjudicating authority passed the order confirming demand of additional interest holding that there was an error in calculation of interest notice dated 03.12.2010 - Several round of litigation - Held that:- the appellant has complied with the directions of this Tribunal, but the adjudicating authority has not complied with the directions of this Tribunal and without complying the directions of this Tribunal, detention notices were issued to the appellant, which is against the directions of this Tribunal and the adjudicating authority was not warranted to issue such detention notices without complying the directions of this Tribunal. Therefore, we set aside the orders of the detention notices to demand duty and interest. With these terms the detention notices dated 23.11.2010, 03.12.2010 and 28.12.2012 are set aside. In the light of the interest of justice, the adjudicating authority is directed to comply with the directions of this Tribunal vide order dated 25.06.2008 within a period of 90 days from the date of receipt of this order to quantify whether any demand is payable by the appellant or not and thereafter to decide the issue whether interest is payable or not after hearing the appellant.
-
2016 (1) TMI 836
Confiscation of vehicles - carrying Red sanders wood alongwith plaster of Paris for export - no claimant of these goods came forward - bonafide transporter - Held that:- It is observed from the case records that vehicles were used for the clandestine activity in relation to export of Red sanders wood and both the drivers had full knowledge of the nature of goods and the destination. Though both the drivers also changed their story in reply to the show cause notice but the same has to be treated as an afterthought and was not made in a reasonable period after recording of their first statements. In the existing factual matrix it has to be held that both the vehicles were used for clandestine activity with the knowledge & consent of the appellants and the same were correctly confiscated by the Adjudicating authority. There is also no merit in the argument of the appellants that no show cause notice was issued to the appellants before confiscation of their vehicles because a specific mention of the same is made in the show cause notice issued to the appellants. In view of the above observation and the settled proposition of law penalties have been rightly imposed upon the appellants and appeals filed are required to be dismissed.
-
2016 (1) TMI 835
Ex-parte decision - adjudicating authority refused to Adjournment application - Held that:- It the interest of justice we are of the considered opinion that matter should be remanded to the Adjudicating authority to decide the issue again after giving an opportunity of effective personal hearing to the appellants. As appellants have now received all the relied upon documents, they should file their replies to the show cause notice within four weeks. Adjudicating proceedings should be completed preferably within a period of three months from the date of receipt of this order. - Matter remanded back.
-
2016 (1) TMI 834
Export of Basmati Rice - length and breadth, of the grain - AGMARK standards - prohibited items or not - appellant had exported goods claiming the benefit of the Notification No 55(RE-2008)/2004-2009 - Held that:- The grain they have exported undoubtedly satisfies the same as per the test report. However, we find force in the argument of the Learned Authorised Representative for the Revenue that these specification of "Nature of Restrictions" is applicable to the goods which is described under column 4 of the Notification, which against Sr. No 45AA specifies "Basmati Rice including Pusa Basmati 1121". It, therefore, undoubtedly means that the goods allowed to be exported under this Notification has to be Basmati Rice. We find that the original Adjudicating Authority has gone into the great detail whether the impugned goods are Basmati Rice or not. AGMARK standards - DGFT policy circular has clearly indicted that the same may be done - the goods are described in the Customs Notifications (Supra) as "Basmati Rice", and therefore Customs Authorities are fully justified to verify the impugned goods are Basmati Rice or not. We, therefore, find no illegality in the orders of the lower authorities in the said respect. Confiscation of goods already exported - Held that:- There is a difference between confiscation and liable to confiscation. It is settled law that the goods which are liable to confiscation can be ordered for to be confiscated, and fine in lieu of confiscation can be imposed. We also find that the amount of redemption fine in the instant case is only ₹ 3 lacs whereas value of the goods is ₹ 30,96,207/- which is considerate and appropriate. - Decided against the the appellants.
-
PMLA
-
2016 (1) TMI 833
Money Laundering - offenses are bailable or not - whether the offence is cognizable or non-cognizable in view of the amendment made and whether the authorities under the Act have any jurisdiction to investigate into the cognizable offence. - offences under Sections 406, 419, 420, 467, 471, 120B of IPC and under Sectins 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988 - Held that:- The first schedule of the Cr.P.C. specifically provides the classification of offences which are cognizable or non-cognizable, bailable or non-bailable and by what Court triable apart from the punishment which is provided for the said offences. Under Part II of the first schedule, classification of offences against other laws provide that offences punishable with imprisonment for more than 3 years and upwards would be cognizable and non-bailable. - as noticed, Section 4 provides for punishment for more than 3 years and thus offences would be cognizable as provided in the Cr.P.C. itself and thus, the first submission raised by counsel for the petitioner is without any basis. Whether the petitioners have been prejudiced - Held that:- It is not disputed that the summons issued to the petitioners which are subject matter of challenge are as per Form V. The petitioner has not challenged any of the rules or the sections of the Act and neither any challenge has been raised to the vires of the Act that it is violative of any procedure and that his fundamental rights under the Constitution are infringed. Thus, it is apparent that it is in pursuance of the statutory powers, the authorities have issued summons. In the present case, as noticed, the complaint has to be filed and with the investigation being at the initial stage the same cannot be quashed at a thresh hold in the absence of any legal bar provided under the Statute. - The ancillary prayers made for videography at the time of investigation in the presence of the advocate while recording statements thus is the only issue left for consideration in view of the above discussion. It is to be noticed that counsel for the respondent, vide order dated 19.03.2015, had undertaken that on the petitioners joining the investigation, they would have no objection to the interrogation/examination being videographed and necessary arrangements would be made for the same. - Petition dismissed - Decided against the petitioner.
-
Service Tax
-
2016 (1) TMI 851
Classification - Activity of arrangement for dispatch and transportation of goods to various destinations as per the directions of the service recipient - clearing and forwarding agent service - bona fide belief - Extended period of limitation - Held that:- as per the activities performed by the appellant, it is squarely covered within the definition of clearing and forwarding agent and it provided service to a client in relation to clearing and forwarding operations. Extended period of limitation - Bona fides belief is not a hallucinatory belief; it is a genuine belief of a reasonable person operating in an appropriate environment. When the terms of the agreement were so clear, any reasonable person operating in an appropriate environment would have no basis to entertain a belief that the service rendered by it in terms of the agreement cited above by any stretch of imagination would not be covered under the scope of clearing and forwarding agent service. Therefore the extended period has been rightly invoked. - Demand confirmed - Decided against the assessee.
-
2016 (1) TMI 850
Territorial Jurisdiction - SCN issued by Mumbai Office of Service Tax Department for whole of India offices - assessee have separate registration for each premises - Import of service - payment made to foreign architects for service of concept design and interior decoration of their Multiplexes. - They also received 'Pouring Fees' and 'Signing Fees' - Held that:- The Commissioner should have refrained from adjudicating and instead could have initiated the process of making show cause notice answerable to the jurisdictional Commissioners or he should have written to the Central Board of Excise and Customs seeking power to adjudicate the case of services rendered pan India just as DGCEI has the power to issue the show cause notice on pan India basis. - the demand of ₹ 38,39,984/- is confirmed beyond the jurisdiction of the Commissioner and, is therefore, set aside as invalid. - Decided in favor of asessee. Import of services - 'pouring fees' and 'signing fees' - Held that:- clearly the service activity involved is not sale of space and time as contended by the appellant. What is sold is the right to advertise and promote the product of the CCIPL. Similarly right to use the Inox Logo, as contended by the Ld. Advocate is not the right that is under consideration before us. What is under consideration is the right to promote the product of CCIPL for which CCIPL pays fees to the appellant. It is beyond doubt, therefore, that that the services provided are covered under BAS. Appellant provided BAS to its client CCIPL on which tax is payable. However, we agree with the appellant that the service tax on import of 'Architect Services" attracts levy of service tax only from 18/4/2006 onward. We need not dwell on this issue that service tax on import of services is payable by the recipient of the service under Section 66 (A) only w.e.f. 1/5/2006 when the Section 66(A) was brought into effect. This is the settled legal position. Decided partly in favor of assessee.
-
2016 (1) TMI 849
Waiver of pre-deposit - import of services - Held that:- While it may be arguable that the service provided by the Representative Offices of the appellant to the appellant would amount to import of service in view of Explanation -1 to Section 66A (2) of the Finance Act, 1994, at this interlocutory stage, in view of the above quoted observation of CESTAT in the case of Torrent Pharmaceuticals Ltd., the appellant deserves waiver of pre-deposit - Stay granted.
-
2016 (1) TMI 848
Extended period of limitation - Valuation - Real Estate Agent services - inclusion of administrative charges/transfer charges recovered by it from its clients - bonafide belief - Held that:- It is seen that the primary adjudicating authority in the impugned order has clearly noted that the appellant undoubtedly accounted for all the transactions in the statutory records. But the primary adjudicating authority held that the appellant was guilty of wilful misstatement/suppression of facts with intention to evade service tax as it never approached the Department to ascertain the details of their liability to pay service tax and the evasion would have gone undetected but for the investigation by the Department. In this regard it is pertinent to mention that in case of a bona fide belief about the non-taxability of certain transactions, the appellant would not approach Revenue for any clarification because clarification is sought only when there is some confusion/doubt. Matter remanded back - Extended period in this case is not invocable and therefore penalty under Section 78 ibid is also not sustainable - The appellant is eligible for the cum tax benefit. - Decided partly in favor of appellant.
-
2016 (1) TMI 847
Refund of service tax - Eligibility for exemption of Notification No..41/2007-ST, dated 06.10.2007 - Held that:- There is no doubt that the service tax was paid on GTA service by the respondent and the goods were transported directly from the factory to the port. In this case, there is a merchant exporter involved, but the merchant exporter cannot claim the refund of service tax that was not paid by him. Seen in the context the provisions of clause 2(b) of the Notification, which has to be read harmoniously with the provisions of clause 2(a), once it is settled that the respondent was eligible for the benefit of exemption Notification No.41/2007-ST the sanction of refund is only the operationalisation of the said exemption. As decided in case of Gee Pee Agri Pvt. Ltd. Vs. CCE [2015 (9) TMI 362 - SUPREME COURT ] there is some dispute about who is entitled to the refund of service tax, but in any case, the respondents cannot hold the service tax since they are not entitled to do so. The service tax should be refunded to the petitioner within six weeks. - Decided against revenue.
-
2016 (1) TMI 846
Marketing and advertising activities undertaken for ICICI Bank - Business Auxiliary Service or Not - Commissioner (Appeals) held that services rendered did not fall under BAS - Extended period of limitation - Levy of penalty - Held that:- neither at the time of adjudication at the primary level nor at the first appellate level, the issue of time bar was raised, though it being a mixed question of fact and law, it can be raised at this stage. However, we find that the nature of service rendered was such that it was clearly covered under the definition of BAS. The respondent has not been able to demonstrate as to how and on what basis it had a bonafide belief that the impugned service did not fall under BAS. Bonafide belief is not a hallucinatory belief; it is a belief of a reasonable person working in appropriate environment. It can hardly be the respondent's case that it was guided by CESTAT judgment. Revenue's appeal allowed except that penalty under section 76 is set aside and penalty under section 78 is reduced to 25% of ₹ 5,82,025/- provided the respondent pays the entire amount of service tax alongwith interest and reduced (25% of ₹ 582025/-) penalty within 30 days of receipt of this order. It is clarified that amount already paid towards the impugned demand /interest penalty will be counted for this purpose. - Decided in favor of Revenue.
-
Central Excise
-
2016 (1) TMI 845
SSI Exemption - determination of turnover - Notification No. 8/2003-CE dated 1.3.2003 - excluding certain clearance/turnover from the aggregate clearance computed as per the Notification - Held that:- The leaflets manufactured by the appellant are not branded goods since that was not traded as such for purchase by general public. Such fundamental test negates stand of the appellant that it manufactured branded goods. Accordingly, turnover therefrom shall enter into aggregation process to compute the limit prescribed by the Notification stated above. As both the parties were in dispute as to determination of liability under the mandate of the notification, in question, there shall be no penalty on the appellant upon readjudication of the matter proposed by this order. However, duty liability if any arises shall follow interest if such duty is not already paid or short paid. With the aforesaid observations and directions, the matter is remanded to adjudicating authority to re-do the adjudication a fresh. The appellant is entitled to reasonable opportunity of hearing. A reasoned and speaking order is expected to be passed.
-
2016 (1) TMI 844
Cenvat Credit - Genuineness of the transaction not proved - Held that:- The appellant failed to establish through cogent evidences that the materials mentioned in the respective invoices were received and the duty amount mentioned in the said invoices were also paid to the treasury by the input supplier. Now, before me also, the ld.Advocate for the appellant could not place any of these documents except Xerox copy of one demand draft of ₹ 1.00 Lakh drawn in favour of M/s.Three F-Filters (P) Ltd. dated 08.03.2001, without establishing that this amount related to the inputs purchased from M/s.Three F-Filters (P) Ltd., New Delhi during the relevant period and against the disputed invoices. In absence of evidence to rebut the charges labeled in the demand notice, the findings recorded by the authorities below needs no interference. In the result, the order of the ld. Commissioner(Appeals) is upheld and the Appeal is rejected. - Decided against assessee.
-
2016 (1) TMI 843
Demand of 10% of the value of the goods cleared to developers of SEZ - whether supplies to developer of SEZ is deemed as export? - whether the amendment to Rule 6(6)(1) of CCR 2004 (notification 50/08-CE dated 31.12.2008) would have retrospective effect or not? - Held that:- The goods cleared to developer of SEZ are deemed to be export and for such clearances, provisions of sub-rule (1), (2), (3), (4) of Rule 6 of CCR 2004 would not apply and consequently there is no requirement of payment of 10% of the value of the goods cleared to SEZ developers. Further it is also now settled position of law that the amendment to Rule 6(6)(1) to be retrospective and to apply with effect from 10.09.2004. - Decided in favour of assessee.
-
2016 (1) TMI 842
Entitlement to Refund claim denied - whether the duty has been paid twice on the scrap and if so whether the appellant is entitled to the refund claim or not? - Held that:- On the one hand the appellant is stating that the scrap only came back from job workers premises; that the enclosed invoices indicating that the removal has taken place under the assessee’s own premises. The commissioner also observed that the appellant has admitted to have indulged in fabrication of invoice by showing thereon imaginary road tempo no., imaginary quantity/assessable value/ duty on scrap etc. After considering the facts and circumstances and after going through the impugned order passed by the Commissioner (Appeals), no infirmity in the impugned order. - Decided against assessee
-
2016 (1) TMI 841
Determination of ACP on the re-rolled products manufactured and cleared by the appellants under Section 3 (A) - Held that:- On scrutiny of the provisional ACP order dated 12.09.1997 and the final order dated 03.04.1998, the Commissioner has fixed the quantity as 14187.978 MT. On perusal of the verification report dated 23.09.97 by the jurisdictional range authorities, we find that the value of nominal diameter and other parameters were certified and found correct. We find that at col.2 relating to normal centre distance of the diameter has been confirmed as 300 mm. Whereas at column 7 for “w” it has been estimated at 2.466 kgs/mtr. as per the notification No. 32/97, which is meant for “d” purpose for diameter 311 - 360 mm consequently the higher ACP was arrived resulting to consequential demand. On perusal of the Notification No. 32/97 dated 01.08.97 and the amended notification No. 45/97 dated 30.08.97, the said formula for determination of ACP has been revised for “d” and “w” for a normal distance of the diameter (“d”) of 260 - 310 mm, “w” has been revised to 1.200 kg/per meter. It is confirmed from the verification report of the appellant’s, normal distance is 300 mm. Therefore, it is evident that the appellant falls within the category “d” 261 to 310 mm and automatically for “w” applicable is 1.200 kg/mtr. and not 2.466 kg/mtr. In view of the above, and also considering that the Hon’ble Madras High Court in the case of Triveni Alloys Ltd. Vs. Cestat, Chennai - 2014 (306) ELT 617 (Mad.) and this Tribunal has already remanded the case under Section 3. Thus we hold that revised value of “d” and “w” is applicable for the appellant case. Accordingly, the impugned order is set aside and remanded to the Commissioner for re-fixing the ACP by applying the correct formula as per the amended notification No. 4/97 -NT dated 30.08.97, by taking the “d” and “w” diameter for 300 mm (d) and 1.200 kg/mtr. - Decided in favour of assessee of remand.
-
2016 (1) TMI 840
Redemption fine along with penalties - clandestine removal - non-duty paid stock - Held that:- As out of total seized goods of ₹ 73,28,787/-, the learned Commissioner (Appeals) held that goods amounting to ₹ 18,27,926/- is liable for confiscation on the ground that M/s. Metro was not able to show the invoices for the same. The appellant has contended that they are receiving wire and cables of spools and selling the wire and cables after cutting the size according to the requirements of various customers. For selling the wires and cables on spools in length, there is difference in length which is a trade practice and difference in stock works out to 2% of the total purchases made by M/s. Metro. This contention has not been controverted by the Revenue with cogent reasons. Moreover, the Revenue has also failed to come to a concrete conclusion that if the goods have not been transferred from M/s. Pymen Cables as the charge of clandestine removal against M/s. Pymen Cable has been set aside, then from where, Metro procured such wire and cables. In these circumstances, the contention of M/s. Metro is acceptable that there is marginal difference of 2% of stock in excess is due to excess length of wire and cables on spool being a trade practice. As they are receiving wire and cable of spools and on having spools on wires and cables on extra length. In these circumstances, the excess stock of ₹ 18,27,926/- is not liable for confiscation. Consequently, the redemption fine on M/s. Metro is set aside. As the charge against M/s. Metro has been set aside and no penalty has been imposed on M/s. Metro by the authorities below, in these circumstances, the penalty on Shri Sandeep Garg director of M/s. Metro is also not imposable under Rule 26 of Central Excise Rules, 2002. Therefore, the penalty imposed on Shri Sandeep Garg is also set aside. - Decided in favour of assessee.
-
2016 (1) TMI 839
Improper availment of benefit of small scale exemption under notification no. 8/98 dated 2nd June, 1998 - demand and interest thereof along with penalties imposed - whether the lower authorities were correct in including an amount received by the appellant for discharge of duty liability on the allegation that the said amount was received for manufacturing activity or otherwise? - Held that:- On perusal of the invoices, it transpires that the main appellant had in few invoices rectified the MS plates, as per drawings and instructions, did machining of M.S. plates, repair and took trial of the work carried out on the die for delamination and repaired the die on job work basis. This document indicated that main appellant had carried out the repairing work as the dies received by them from the customers and to our mind, both the lower authorities misdirected their findings without appreciating the factual matrix. Since the amounts received by the main appellant is for the repairing/reconditioning of old used dies and machinery metal part we hold that the amounts on which duty liability is confirmed along with interest is incorrect and should not have been included for discharge of duty liability as the said amount is not for any manufacturing activity. Since we are setting aside the demand of the duty liability, question of interest and penalty on both the appellants does not arise.
-
CST, VAT & Sales Tax
-
2016 (1) TMI 870
Levy of VAT / Sales Tax - protected transactions by Article 286 of the Constitution - supply of Natural Gas from Panna-Mukta oil/gas fields to GAIL - Production Sharing Contracts for development and exploration of Panna- Mukta and Mid-South Tapti Oil and Gas fields, in the west-coast off shore, India. Under the terms of the Production Sharing Contract (hereinafter referred to as “the PSC”) - Held that:- On a conjoint reading of the Production Sharing Contract and the Interim Sales and Purchase Agreement, it is apparent that what was agreed to be sold and purchased was Natural Gas. The goods, viz., Natural Gas were ascertained goods at the time when they came to be separated and measured at the Offshore Processing Facility. The ascertained goods upon being separated and measured came to be appropriated to the contract and delivered at the Delivery Point. In terms of Article 27.2 of the PSC, the title to the goods also passed to the Buyer at the Delivery Point. The situs of the sale is the Offshore Processing Facility where the goods were appropriated to the contract. Therefore, it cannot be said that the goods in question were within the State of Gujarat at the time of their appropriation to the contract of sale so as to fall within the ambit of clause (b) of section 4(2) of the Central Sales Tax Act, 1956. The transactions in question are, therefore, not amenable to tax under the provisions of the Gujarat Sales Tax Act, 1969. Merely because the Natural Gas upon being delivered at the Delivery Point was commingled with other gases, does not mean that it was not in a deliverable state because having regard to its unique physical properties, large volumes of Natural Gas can be transported only in a continuous stream and once delivered in the pipeline for transportation, it becomes commingled with other natural gas. Individual molecules are not separately indentified and cannot be accurately tracked or traced. As a result, natural gas is sold and purchased on a “quality and quantity” basis. The act of sweetening of natural gas, having taken place post appropriation, after the goods were delivered and the title had passed to the Buyer outside the State of Gujarat, merely because post appropriation the goods were subjected to the process of sweetening within the State of Gujarat it cannot be said that the sale of goods has taken place within the State of Gujarat. Since the provisions of the Customs Act, 1962 have been extended beyond the designated area, the Panna Mukta oil fields from where the movement of goods is occasioned fall within the customs frontiers of India Consequently, the sale of goods cannot be said to have taken place in the course of import of goods into the territory of India as contemplated under sub-section (2) of section 5 of the Central Sales Tax Act, 1956. Since the the sale of goods has taken place outside the State of Gujarat, the question as to whether or not subjecting the Natural Gas to the process of sweetening amounts to manufacture becomes redundant, and hence, it not necessary to enter into the merits of the question as to whether or not the processing of the Natural Gas at ONGC’s sweetening and separation facility at Hazira, whereby the sour gas is converted into sweetened gas, amounts to manufacture. The show cause notices which form the basis of the impugned assessment orders are without jurisdiction as the same have been issued without formation of the requisite opinion as required under the provisions of section 41 and 44 of the Gujarat Sales Tax Act, 1969 and are based on a mere change of opinion. The petitions succeed and are accordingly allowed - the sales in question have not taken place within the State of Gujarat, the State of Gujarat has no authority to levy the sales tax under the provisions of the GST Act on the transactions in question - Decided in favor of assessee.
-
2016 (1) TMI 869
Input Tax Credit on the capital goods - crushing of stone is manufacturing activity or not. - TNGST - for the purpose of quarrying operations, crushing plants, excavators and front end loaders and its spare parts and accessories are purchased within the State as well as from other States against Form C under the Central Sales Tax Act, 1956. - Held that:- the crusher machine cannot be treated as capital goods - this Court is not inclined to interfere with the impugned orders and these Writ Petitions are liable to be dismissed. - Decided against the assessee.
|
