TMI Tax Updates - e-Newsletter
January 28, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Validity of special audit u/s 142(2A) - in the absence of show cause notice given before making the order proposing conduct of special audit, the proceedings are vitiated because of non compliance to the principles of natural justice - Consequently, the assessment order passed was beyond the period of limitation and hence, the same is invalid and bad in law. - AT
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Income Tax:
Bogus purchases - entire addition cannot be made. The only addition which can be made is only NP addition. In the instant case, the assessee has shown NP rate of 1.62% of total turnover. - AO directed to apply Net profit on above purchases at the rate of 6% - AT
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Income Tax:
Unaccounted cash found during the course of search - Apex Court has approved the concept of telescoping - Revenue has not been able to prove that undisclosed has been invested in investment other than cash and jewellery - No additions - AT
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Income Tax:
Revision u/s 264 - though not as a challenge to Section 143(1) notice, when the petitioner has filed a revised return and has sought for interference by the Commissioner, necessarily the claim has to be considered in accordance with law - HC
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Income Tax:
By claiming the diminution in the value of securities during the year under consideration, the assessee is trying to get the benefit which he did not get u/s. 80P in the earlier years - Additions confirmed - HC
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Income Tax:
Reopening of assessment - sale of flats - solely on the observations made by another Assessing Officer with respect to the subsequent assessment years ie., 2007-2008, the reopening was not permissible for the AY 2005-2006 - HC
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Income Tax:
Penalty u/s 271(1)(c) - The Statute has provided distinction between concealment of income and furnishing of inaccurate particulars of income, which may be thin line of distinction, but the same has to be kept in mind while recording satisfaction by the Assessing Officer - AT
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Income Tax:
Additions u/s 69 - assessee’s father has purchased site in assessee’s name and also the assessee’s father has invested towards construction of property, the A.O. was incorrect in making addition towards cost of construction in the hands of the assessee. - AT
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Income Tax:
Computation of capital gain towards transfer of asset between the assessee and his father - transfer - no consideration passed on - there is no transfer within the meaning of section 2(47)(v) - A.O. directed to delete addition made towards computation of long term capital gain- AT
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Income Tax:
Transfer pricing adjustments - Obligation of the assessee to follow procedure u/s 144C - once the Revenue itself admits the order passed to be a draft assessment order, it cannot in law proceed to collect the demand raised, so that the raising of demand would be without the sanction of law. - AT
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Income Tax:
When no valid notice u/s 148 has ever been served upon the assessee either through registered post or through affixture necessary to reopen the assessment, the entire exercise as to opening the assessment is illegal and void, hence not sustainable - AT
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Customs:
100% EOU - diverted goods are not available for confiscation - The Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable. - HC
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Indian Laws:
Clarifications on implementation of GAAR provisions under the Income Tax Act, 1961
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Indian Laws:
Dishonor of cheque - notice was sent on a fictitious and non-existent address - there can be no deemed service on a non-existent address. Thus, essential ingredient of Section 138 NI Act has not been complied with - HC
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Service Tax:
The activity of software maintenance provided, which is subject matter of the dispute in this appeal, has become taxable only with effect from 01.06.2007 - AT
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Central Excise:
CENVAT credit - non-existent dealers - fake invoices - in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied - AT
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Central Excise:
Valuation - related party transactions - Rule 9 is applicable when all the productions made by the appellant is cleared to their sister unit or related person which is not the case here as appellants are clearing the goods to independent buyers as well as related person. - AT
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Central Excise:
The amount of refund cannot be adjusted against arrears of revenue when the matter in dispute has not attained finality - AT
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Central Excise:
Benefit of Exemption N/N. 108/95-CE - Merely, on the ground that the goods have been supplied to the contractor directly who has executed the project in question and after the implementation of the products the machine shall remain with the property of the contractor cannot be reasons to deny the benefit of notification - AT
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Central Excise:
Shortage of stock - Clandestine removal - retraction has not been addressed to the investigation officer who recorded the statement - weighment exercise was done in the presence of the Director, with his active assistance - demand confirmed - AT
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VAT:
Validity of Assessment Proceedings - even if an extension is made u/s 25B, the same would not enable the State to initiate proceedings after expiry of the period of limitation provided u/s 25(1) of KVAT - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (1) TMI 1264
Revision u/s 264 in favor of assessee - scope of revisional power of the Commissioner under Section 264 - Held that:- A mere intimation does not amount to an order which could be revised under Section 264. In Parekh Brothers (1983 (8) TMI 17 - KERALA High Court ), the question which was considered was whether Section 264 can be invoked for the purpose of making a claim of deduction under Section 35B. The argument that independent of the notice issued under Section 143(1)(a), if there is failure on the part of the petitioner in making a claim for deduction, whether it is possible for the Commissioner to grant one more opportunity in the matter. It is settled law that the revisional powers are very wide. Petitioner is now faced with a demand which according to the petitioner is liable to be reduced on specific reasons. In Parekh Brothers (supra), this Court held that even if no such claim has been made earlier, such a claim can be entertained by the Commissioner under Section 264. Viewed in that angle, it is of the view that though not as a challenge to Section 143(1) notice, when the petitioner has filed a revised return and has sought for interference by the Commissioner, necessarily the claim has to be considered in accordance with law. Thus taking cue from Parekh Brothers (supra), the Commissioner will be justified in considering the claim for deduction by the petitioner in accordance with law under Section 264 of the Act.
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2017 (1) TMI 1263
Capital gain computation - cost of acquisition of the asset sold as on 01.04.1981 - AO’s action in referring valuation issue of the very capital asset in question as not sustainable u/s.55A - Held that:- The very cost of acquisition of the capital asset in question as on 01.04.1981 has to be adopted in all co-owners’ cases instead of the particular appellant hereinabove. We can’t adopt different cost of acquisition qua the very capital asset. We thus follow the same reasoning herein as well to delete the impugned long term gain addition. All these assessees accordingly succeed in their first common substantive ground. Seeking to claim Section 54F deduction - CIT(A) observes that since the latter two assessees have reinvested their sale consideration money / long term capital gains in the names of their mother and brother, they are not entitled to claim the said deduction on this score alone - Held that:- We reiterate the Section 54F of the Act is in the nature of a deduction provision in a taxing statute to be liberally constitute. There is no such stipulation that the said re-investment of sale consideration/long term capital gains in question is to be made only in the names of vendor assessees. Both the parties are very fair in forming the bench that the hon’ble jurisdictional high court has not adjudicated the impugned issue. We thus quote decisions of CIT vs. Kamal Wahal [2013 (1) TMI 401 - DELHI HIGH COURT ] and CIT vs. Ravinder Kumar Arora (2011 (9) TMI 343 - DELHI HIGH COURT) to conclude that the above deduction provision neither provides for purchase of new residential house either in the concerned assessee’s own name or exclusively in his name. The latter two assessees’ deduction claim u/s.54F of the Act is accordingly held allowable. Their corresponding substantive ground stands accepted.
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2017 (1) TMI 1262
Addition towards the provision on account of diminution in the value of securities - Held that:- We are in complete agreement with the view taken by the learned Tribunal for the diminution in the value of securities for earlier years, the assessee was required to claim the loss in those years, which he did not claim, because in the relevant years, his income was deducted u/s. 80 P of the Act. The learned Tribunal has rightly observed that, by claiming the diminution in the value of securities during the year under consideration, the assessee is trying to get the benefit which he did not get u/s. 80 P of the Act in the earlier years. In view of the above foregoing reasons, we see no reason to interfere with the order passed by the learned Tribunal. No substantial question of law arise
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2017 (1) TMI 1261
Reopening of assessment - sale of flats - Held that:- With respect to flats sold in AY 2005-2006, as a detailed questionnaire was asked by the Assessing Officer before framing the scrutiny assessment under section 143 [3] which was supplied by the assessee and only thereafter, the Assessing Officer framed the scrutiny assessment for AY 2005-2006. From the reasons recorded to reopen the assessment for A.Y 2005-2006, it appears that the same is sought to be reopened by the Assessing Officer on the basis of observations made by Assessing Officer, while framing the assessment for A.Y 2007-2008 with respect to the flats sold during the year under consideration, wherein it was found that the assessee had received on-money with respect to the flats sold and in the A.Y 2007-2008 and therefore, the Assessing Officer while issuing the Notice for reopening has presumed and assumed that with respect to the flats sold in AY 2005-2006, the assessee must have received on-money. From the record available, it appears that there is no further tangible material available with the Assessing Officer to form a belief that the assessee had received on-money with respect to the flats sold in A.Y 2005-2006 and/or had received any on-money in the AY 2005-2006. Even with respect to addition made in respect of on-money received in A.Y 2007-2008, the same has been subsequently set-aside by the learned CIT [A], against which an appeal was preferred which has been dismissed on the ground of low tax effect. Considering the aforesaid facts and circumstances of the case and solely on the observations made by another Assessing Officer with respect to the subsequent assessment years ie., 2007-2008, the reopening was not permissible, more particularly in absence of any other tangible material available with the Assessing Officer that in the year 2005-2006, the assessee had received any on-money. Under the circumstances, it was not open for the Assessing Officer to re-open the assessment for A.Y 2005-2006, that too beyond the period of four years and more particularly when the original assessment was done under Section 143 (3) of the I.T Act. - Decided in favour of assessee
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2017 (1) TMI 1260
Premium received on sale of assets - Addition on account of Revenue recognition of the premium received on allotment of plots - Held that:- Assessee was following cash method of accountancy and upto the preceding year of assessment, the income of the assessee was exempted under Section 10 (20A) of the Income Tax Act being the local authority. The year under consideration was the first year after the exemption period was over. Therefore, the learned Tribunal has rightly held that, no addition was called for on account of Revenue recognition of the premium received on allotment of plots by way of spreading the revenue for a period of 10/20/25 years on the basis of AG (Audit) Report. No substantial question of law. Appeal is ADMITTED to consider the following substantial question of law: (B) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in confirming the decision of CIT (A) and deleting addition of ₹ 20,68,73,968/on account of depreciation, when the assessee is assessed u/s. 11 (1) of the Act?”
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2017 (1) TMI 1259
Addition of consulting charges and amount paid to Chartered Accountant for management of consultancy and towards commission - Held that:- Tribunal remanded the matter to the AO only qua the disallowance towards consulting charges and set aside the order passed by the AO with respect to other disallowance. Despite the above, on remand the AO again made disallowance of not only towards consulting charges, he also disallowed amount paid to Chartered Accountant for management consultancy and commission which was as such earlier not approved by the learned Tribunal. Therefore, the learned Tribunal is justified in deleting disallowance paid to Chartered Accountant for management consultancy and towards commission, which by observing that thereafter the AO has not justified on remand in making the aforesaid disallowance which was not earlier approved by the learned Tribunal. Disallowance towards consulting charges - CIT(A) as well as learned Tribunal have observed that on remand the learned AO has not found any additional material and therefore, in absence of any further material collected during the remand, the AO was not justified in making the disallowance towards consulting charges. Even no reasons were assigned by the AO while passing the order in remand and again making disallowance. He only reiterated what was stated in the original assessment order which as such was set aside by the learned Tribunal and the matter was remanded. Considering the aforesaid facts and circumstances of the case, it cannot be said that the learned Tribunal has committed any error in deleting the disallowance of towards consulting charges also. - Decided against revenue
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2017 (1) TMI 1258
Addition on account of undisclosed income - addition made relying upon the retracted statement of the Managing Director of the assessee recording during the course of survey - excluding undisclosed income from the book profit computed under Section 115JB - Held that:- In the present case, there is no other material / evidence with the Assessing Officer while making addition of ₹ 2 crores as undisclosed income. Assessing Officer solely relied upon the statement of the Managing Director which was recorded during the survey conducted on 18.12.2006 which was subsequently retracted on 03.01.2007. In view of the above, it cannot be said that both the learned CIT (A) as well as learned Tribunal have committed any error in deleting amount of ₹ 2 crores. Under the circumstance, present appeal deserves to be dismissed and is accordingly dismissed. - Decided in favour of assessee
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2017 (1) TMI 1257
Reference to DVO - non rejection of books of accounts - addition u/s 69 - Held that:- The Tribunal while discussing and examining the matter has come to the conclusion that the books of accounts as maintained by the assessee have not been rejected by the AO and such being the defect of the case, it is not open to the AO to refer the matter to the Department Valuation Officer (DVO) for determining the value of the property and in absence of the same the tribunal has come to the conclusion that no addition would have been made on account of investment under Section 69 of the Income Tax Act to the income of the assessee. Assessee has also relied upon a decision in the case of Sargam Cinema Vs. Commissioner of Income Tax [2009 (10) TMI 569 - Supreme Court of India] wherein held that once it is found that Books of accounts of the assessee have not been rejected by the AO then it will not be open to him to refer the matter for valuation. This is also the consistent view of the several High Courts. - Decided in favour of assessee
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2017 (1) TMI 1256
Penalty under section 271(1)(c) - Invalid notice - non-recording of satisfaction - difference between concealment of income and furnishing of inaccurate particulars of income - Held that:- Under the provisions of section 271(1)(c) of the Act, penalty for concealment is leviable where the assessee has fulfilled either conditions i.e. concealment of income or furnishing of inaccurate particulars of income. The Assessing Officer while initiating penalty proceedings has to be satisfied as to under which limb, the penalty is leviable and consequent thereto, issue notice in this regard. However, in the facts of the present case and as pointed out hereinabove, the Assessing Officer has failed to record satisfaction correctly and consequently, we hold that initiation of penalty proceedings against the assessee are not valid for non-recording of satisfaction by the Assessing Officer while completing assessment proceedings. Further, the Assessing Officer has failed to strike off either of the limbs of section 271(1)(c) of the Act, which are not satisfied by the assessee and consequently, notice issued under section 274 r.w.s. 271(1)(c) of the Act is bad in law and order levying penalty for concealment thereafter, is infructuous. Accordingly, we hold so. The Statute has provided distinction between concealment of income and furnishing of inaccurate particulars of income, which may be thin line of distinction, but the same has to be kept in mind while recording satisfaction by the Assessing Officer. - Decided in favour of assessee
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2017 (1) TMI 1255
Accrual of income - Interest due on Non Performing Assets - as per CIT(A) addition made by treating accrued interest on NPAs as income of the assessee directed to be deleted - Held that:- It remains an undisputed fact that the assessee co-operative bank has been following the mercantile system of accounting, except with regard to interest pertaining to NPAs. As noted by the ld. CIT(A), this position stands accepted by the department in the earlier years. The assessee has been following the RBI guidelines in this matter. Its method of accounting is entirely in accordance with the RBI guidelines. The RBI guidelines need to be mandatorily followed by the assessee. Moreover, this method of accounting, adopted by the assessee, is in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India. Section 45Q of the RBI Act provides, in the non obstante Clause with which it begins, that the provisions of the Chapter under which section 45Q falls, shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being inforce. In “M/s Vasisth Chay Vyapar Ltd.” (2010 (11) TMI 88 - Delhi High Court ), it has been held that when an NBFC classifies an asset as a Non-performing Asset in accordance with the directions issued the Reserve Bank of India, it is legitimate to infer that the interest income thereon is not accrued, even though the NBFC is following the mercantile system of accounting. Interalia, “M/s Southern Technologies Ltd.” (2010 (1) TMI 5 - SUPREME COURT OF INDIA ) has been distinguished “in M/s Vasisth Chay Vyapar Ltd.” (supra). Apropos the applicability of section 43D of the I.T. Act, it is on record that during the proceedings before the ld. CIT(A), the assessee, by way of submission dated 17.09.2015, the assessee had stated that the assessee had been confirmed by the Headquarter of the Punjab State Co-operative Bank , to be a scheduled bank. This position has not been disputed. - Decided against revenue
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2017 (1) TMI 1254
Allocation of proportionate expenditure - Held that:- We do not agree with the contention of the learned counsel of the assessee to accept the allowance of pro rata expenses towards the short term income(s), due to the following reasons: i. that in the first round of proceeding, the claim of allowance of pro rata expenses towards short term income(s) was not accepted by the Tribunal and the matter was restored to the Assessing Officer to identify expenses towards each of the short term income. ii. that the Assessing Officer has not followed the finding of the Tribunal while passing the order in compliance to direction of the Tribunal. iii. that the learned Commissioner of Income Tax (Appeals) has also not taken into consideration the direction of the Tribunal and allowed the relief to the assessee, which was not approved by the Tribunal in first round of proceeding. iv. that the lower authorities are bound to follow the direction issued by the Tribunal and cannot act according to their wish or choice, while complying the direction of the Tribunal. v. that the direct expenses like interest etc. are prima facie not allowable against the lease income etc. on prorata basis. The interest expenses incurred for borrowing funds was required to be examined by the Assessing Officer from terms and conditions of money borrowed. If same were incurred exclusively for long term borrowing, then no interest expenses was required to be allocated against short term income from fixed deposit in banks or inter corporate deposits etc. The Assessing Officer was required to examine all these issues, which he has not done. In view of above, we feel it appropriate to restore the matter back to the file of the learned Commissioner of Income Tax (Appeals), who is directed to follow the direction of the Tribunal given in the first round of proceedings and decide the issue accordingly after giving sufficient opportunity of hearing to the assessee. The grounds of appeal raised by the Revenue are allowed for statistical purposes. Allocation for expenses other than direct expenses towards short-term income - Held that:- We agree with the finding of the learned Commissioner of Incometax (Appeals) that the main activity of the assessee was for earning from long-term finance and, therefore, allowing proportionate expenditure was not justified. In our opinion, the estimation of ₹ 25 lakh towards the short-term income by the learned Commissioner of Income-tax (Appeals) is most reasonable and justified. In our opinion, the order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is well reasoned and no interference on our part is required, accordingly, we uphold the finding of the learned Commissioner of Income-tax (Appeals) on the issue in dispute and the ground of the cross objection of the assessee is rejected.
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2017 (1) TMI 1253
Revision u/s 263 - whether the closing stock valued are proper and if so, how it is prejudicial to the interests of revenue - Held that:- Looking at the business model of the assessee, he procures the leaves and process the leaves. Based on the result of processing, it sells the same to the vendors. The valuation of stock depends on the results of the processing. The assessee will adjust the standard loss on the marketable products and the balance of the cost will be appropriated to the balance of the inferior quality of the leaves, which are also marketable, but, not at the same at par with the superior quality. This is nothing but the actual result of the processing. What is left after selling to vendors are valued at market price or cost, whichever is less. The closing stock submitted before the AO on the same principle. The stock left over cannot be equated with the purchase price. We observe that the AO has recorded the business of the assessee as “engaged in business of procurement, processing and selling of tobacco products”, which is matching with the 3CD report submitted by the assessee. Whereas the CIT recorded as “engaged in the business of purchase and selling of tobacco and tobacco products”. There is difference of perception in the mind of CIT. CIT has found out that the order passed by the AO is erroneous, but, could not be quantified how it is prejudicial to the interests of revenue. The assessee has bought the tobacco leaves and sold the leaves as per the processing result. That means the cost of the purchase was apportioned and adjusted in the selling price. The left over of the stock was valued as per market price. This will be the opening value for the following year. There is no loss to the revenue as presumed by the ld. CIT. In the absence of any finding as loss to the revenue, we find it appropriate to adjudicate that the order of the AO is not prejudicial to the revenue and accordingly the order of CIT is quashed. - Decided in favour of assessee.
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2017 (1) TMI 1252
Validity of special audit under section 142(2A) - non issue of notice - Held that:- The appeal for instant assessment year relates to the year of search, wherein also special audit under section 142(2A) of the Act was proposed to be carried out by the Assessing Officer. However, no notice was given to the assessee at the pre-decisional stage and following the principle laid down in assessee’s own case in earlier years, we hold that in the absence of show cause notice given before making the order proposing conduct of special audit under section 142(2A) of the Act and the CIT having approved the said proposal, though after giving opportunity of hearing to the assessee, is vitiated because of non compliance to the principles of natural justice. Consequently, the assessment order passed was beyond the period of limitation and hence, the same is invalid and bad in law. Accordingly, we hold so. The preliminary issue raised by the assessee is thus, allowed
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2017 (1) TMI 1251
Bogus purchases - parties were not found at their address - accommodation entries by giving purchase invoices - Held that:- Assessing Officer has not issued any notice for the presence of the parties i.e M/s Nirma Trading Company and Shri Omkar Enterprises. Therefore, we are of the view that the Assessing Officer has not doubted the bank transaction and the Assessing Officer has not made any inquiry whether the bank transaction was genuine or not. We find that in this case the cotton bales are sold by identifying the same lot numbers to various manufacturers by identifying press numbers, the goods have been purchased and ultimately sold, quantity details are maintained and they are reflected in tax audit report u/s 44AB of the Act, hence, if at all the purchases are not found to have been made from these two parties and treated as bogus purchases, the entire addition cannot be made unless there is some evidence in support of the claim that money reached back to the assessee. We find that in the instant case, the Assessing Officer has not doubted the bank transaction. Therefore, we are of the view that the entire addition cannot be made. The only addition which can be made is only NP addition. In the instant case, the assessee has shown NP rate of 1.62% of total turnover. Therefore, we direct to apply Net profit on above purchases at the rate of 6%. - Decided partly in favour of assessee
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2017 (1) TMI 1250
Unaccounted cash found during the course of search - addition on the amount of peak credit - Held that:- Undisclosed income of ₹ 50 lacs warrants telescoping, which explains the source of cash and jewellery found as a result of search. The Hon’ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. Versus CIT [1980 (4) TMI 2 - SUPREME Court] has approved the concept of telescoping. The Revenue has not been able to prove that undisclosed has been invested in investment other than cash and jewellery. Therefore, having regard to the settled proposition of law and in absence of any material placed on record by the Learned CIT(DR) to rebut the factual findings recorded by the learned Commissioner of Income Tax (Appeals), we reject the grounds of appeal of revenue
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2017 (1) TMI 1249
Quantum of deduction allowable u/s. 80IB and 80IC - Held that:- The adjustment of brought forward losses for the purpose of arriving “Income from Business”, in our view, cannot be come in the category of determining the “Net income of the eligible undertaking” for the year under consideration, since the brought forward losses cannot be considered to be expenses incurred to earn the profits and gains of eligible undertakings. The adjustment of brought forward losses is the process prescribed by the statute to determine the “Gross total income”. Hence we are of the view that, for the purpose of determining the quantum of deduction, the Profits and gains of eligible business of eligible undertaking should be considered before setting off of brought forward losses, but the deduction should restricted to the amount of “Gross Total income” as per the provisions of sec. 80A(2) of the Act. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the aggregate amount of deduction u/s 80IB and 80IC of the Act to the aggregate amount or the Gross Total income, whichever is less. Disallowance made u/s 14A - Held that:- On a careful perusal of the submissions made by the assessee and the Ld D.R, we find merit in the submissions made by Ld A.R. We have noticed the nature of investments and the volume of transactions. Considering these factual details, we are of the view that the disallowance of ₹ 1,65,000/- is reasonable. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance of administrative expenses u/s 14A to ₹ 1,65,000/-. We direct the AO to add the amount disallowed u/s 14A of the Act under the normal provisions of the Act to book profit computed u/s 115JB of the Act. ESOP expenses allowability - Held that:- We notice that an identical issue was considered by the Special bench of Bangalore in the case of M/s Biocon Limited Vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE] held that the discount on ESOP is allowable as deduction. The Special bench has also prescribed the manner of computation of discount and the adjustments to be made in the succeeding years. There should not be any dispute that the decision rendered by the larger bench of Tribunal is required to be preferred over the division bench. Accordingly we are of the view that this issue requires fresh examination in accordance with the decision rendered by the Special bench in the case of Biocon Ltd (supra).
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2017 (1) TMI 1248
Revision u/s 263 - whether the assessment order passed under section 143(3) r.w.s. 153A of the Act is erroneous and prejudicial to the interest of the Revenue? - Held that:- PCIT has independently, on verification of assessment records found that the information contained in the seized document at page Nos. 82 to 86 vide Annexure Ann/PS/SS/B&D/S-3 dated 10.01.2012, which was seized during the course of search under section 132 of the Act has been omitted by the Assessing Officer while framing the assessment under section 143(3) r.w.s. 153A of the Act dated 24.03.2014. Under the above facts and circumstances, we are of the considered opinion that the ld. PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. We find no infirmity in the order passed by the ld. PCIT - Decided against assessee
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2017 (1) TMI 1247
Transfer pricing adjustments - obligation of the AO to follow the procedure u/s 144C - failure to pass the draft assessment order - ‘Eligible assessee’ u/s 144C(15) - Held that:- The use of the word ‘and’ instead of ‘or’ in s. 144C(15) must be regarded as the law prescribing two categories of persons in whose case sec. 144C shall apply. That is, persons falling under sub-clauses (i) and (ii) of clause (b) of section 144C(15). This is apparent from a plain reading of the provision; the identification of a ‘foreign company’ being preceded by the word “means”, and followed by the sub-clauses (a) and (b), and not, for example, by the words to the effect or signifying a person satisfying the conditions as set out in the said sub-clauses. As such, a foreign company is an eligible assessee, independent of the variation to its returned of income being by way of a transfer pricing adjustments - the other condition set out in s. 144C(15)(b)(i), or otherwise. Validity of assessment - Held that:- The order has been passed by the AO by, in effect, without allowing the assessee the opportunity of being heard by the DRP, i.e., prior to it being finalized. That there is no vested right against procedure is well-settled. Again, it is nobody’s case that the same was done to purchase time, or that in the event the said opportunity was allowed, the assessment would get barred by time. In fact, no such contention could in law be raised as s. 144C(13) itself excludes the operation of s. 153 (or s. 153B), stipulating time limit for passing orders order the Act, setting it at one month after the receipt by the AO of the directions by the DRP. There is no question of the assessment getting time barred or having crossed the bar of time by which it could have been passed. Once the Revenue itself admits the order passed to be a draft assessment order, it cannot in law proceed to collect the demand raised, so that the raising of demand would be without the sanction of law. The decision in Vijay Television (P.) Ltd. (2014 (6) TMI 540 - MADRAS HIGH COURT ) is judicially binding on us. The same is directly on the point, and is therefore squarely applicable. In fact, in the present case there is no attempt by the AO to rectify his mistake. We have set out our humble opinion in the matter only with a view of its consideration by the Hon’ble Court in a given case. Respectfully following the decision in Vijay Television (P.) Ltd. (supra), we hold the assessment in the present case as bad in law. In consequence, the assessee is only liable for tax on its’ returned income (refer: CIT v. Shelly Products [2003 (5) TMI 4 - SUPREME Court]. The assessment failing, we do not consider it relevant or necessary to address the issue arising in quantum assessment on merits.
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2017 (1) TMI 1246
Profit earned on sale of shares - short term capital gain OR business income - Held that:- We are of the opinion that conduct of the assessee reflect the intention of business activity and, thus, we, accordingly, hold the shortterm capital gain declared by the assessee amounting to ₹ 35,14,66,127/- as the profit and gains from business activity of purchase and sale of shares. Accordingly, the ground of the appeal of the Revenue is allowed.
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2017 (1) TMI 1245
Disallowance under section 40(a)(ia) - Held that:- From the above findings of the ld. CIT(A), it is amply clear that he has given any decision in any of the issues on merits. On perusal of the appellate order, we find that before the ld. CIT(A) the assessee vide his letter sought for time till November, 2012 and accordingly, the case was posted for hearing on 22.11.2012. Again the assessee vide his letter dated 19.11.2012 asked for three months time. When the case was again posted for hearing, the assessee once again asked for three months. Despite sufficient opportunities were given to the assessee, the assessee has not furnished any particulars in support of his claim. However, the ld. CIT(A) has not decided the issue on merits. Under the above facts and circumstances, we direct the ld. CIT(A) to decide the issue of disallowance made under section 40(a)(ia) of the Act on merits in accordance with law. Disallowance under section 40A(3) - Held that:- No details are emanating from the assessment order as to on what purpose the distributors have directly paid the amounts to the Gemini Laboratories. Moreover, the Assessing Officer has not distinguished or given any valid reason as to why the case law relied on by the assessee in the case of K.R. Film Pvt. Ltd. v. ITO (1998 (9) TMI 113 - ITAT BOMBAY-A ) is not applicable. For this issue also, the ld. CIT(A) has not given any findings. After obtaining necessary details, the ld. CIT(A) is directed to decide the issue on merits in accordance with law. Disallowance of loss of the production for movie “Ashoka Mitran” - CIT(A) has not decided the issue on merits. Accordingly, we direct the ld. CIT(A) to decide the issue on merits in accordance with law by keeping in view of the decision of Hyderabad Benches of the Tribunal in the case of RGV Film Factory Ltd. v. DCIT (2015 (9) TMI 1237 - ITAT HYDERABAD ).
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2017 (1) TMI 1244
Reopening of assessment - non valid notice - Held that:- Bare perusal of the notice dated 27.03.2003 allegedly refused by Chowkidar of the assessee company as reported by Inspectors of the Revenue, goes to prove that this is an exercise in futility because neither name of the Chowkidar has been mentioned who has refused to accept the notice nor the factum of refusal by the Chowkidar has been got attested from any of the independent witness. Secondly, Inspectors reported to be deputed for service of notice u/s 148 have decided on their own to get the service of notice affected through affixture without reporting the factum of refusal of the Chowkidar of the assessee to the AO and got the notice affixed on the premises of the assessee on 27.03.2003. Chronology of the events as to issuance of the notice u/ 148 on 26.03.2003 through speed post and then without waiting for the outcome of the service or non-service, as the case may be, issued the notice dated 27.03.2003 to be served by the two Inspectors of the Revenue who reported that the Chowkidar of the assessee has refused to accept the notice and then they have decided on their own to get the service affected on 27.03.2003 through affixture goes to prove that no effort has been made by the Revenue to serve the notice u/s 148 upon the assessee rather paper work has been completed within two days. Revenue is not aware till passing of the assessment orders after a period of one year from the date of alleged service through affixture as to what was the fate of notice sent through speed post. The entire exercise of completing assessment without service of notice upon the assessee has been made in haste. It is humanly not possible to believe that service of notice through registered post can be affected on the same date i.e. 26.03.2003 on which it was issued/posted. Moreover, perusal of the assessment record produced by the Revenue during the course of argument goes to prove that the notice u/s 148 has never been issued at the registered office address of the assessee at Delhi registered with ROC, Delhi and Haryana. So, we are of the considered view that when no valid notice u/s 148 has ever been served upon the assessee either through registered post or through affixture necessary to reopen the assessment, the entire exercise as to opening the assessment is illegal and void, hence not sustainable. - Decided in favour of assessee
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2017 (1) TMI 1243
Unexplained/undisclosed income - Held that:- We are of the considered view that the assessee might have been disposed-off the opening stock as on 01.04.2005 during the year, therefore, credit of opening stock or sales affected during the year have to be given. Be that as may be, we have to believe that there was sales made during the year. This view is also fortified with the facts that the assessee has shown sales with return of income for the year under consideration. The assessee has been arguing that source of cash deposits is out of sale proceeds and it has been done by her at Indore and by travelling to Haridwar. The two copies of specimen of books published by her also filed by the ld. A.R. showing that she had been earning her livelihood by selling the religious books only. Considering the totality of facts and circumstances, and the facts that the assessee is no more, we have to consider her affidavit as basis of her assertion of facts and return of income filed with department as evidence, therefore, we have to give credit of opening stock and sales shown by her. Accordingly, the source of cash deposits to the extent sales of ₹ 15,00,250/- out of ₹ 17 lakhs is allowed to set off out of sale proceeds and remaining balance amount of ₹ 2 lakh is treated as unexplained/undisclosed income in the hands of the assessee. Therefore, addition of ₹ 15 lakh is deleted and ₹ 2 lakh is upheld. This grounds of appeal is therefore, partly allowed.
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2017 (1) TMI 1242
Rejection of rectification application - order passed under Section 254(1) was passed beyond the period of 90 days from the date of conclusion of its hearing - it records that administrative clearance had been taken to pass such an order beyond the period of 90 days - Held that:- We are unable to comprehend the meaning of 'Administrative clearance' in the face of Rule 34 (5)(c) read with Rule 34(8) of the Tribunal Rules. It is clear that the above provisions mandate the Tribunal to pronounce its order at the very latest on or before the 90th day, after the conclusion of the hearing. In fact, this Court in Shivsagar Veg. Restaurant (2008 (11) TMI 64 - HIGH COURT BOMBAY ) after referring to various decisions of the Apex Court directed the President of the Tribunal to frame guidelines to prevent delay in delivery of orders/judgments. It also directed all the revisional and appellate authorities (including Tribunal) under the Act to decide the matters heard by them within a period of three months from the date of the conclusion of the hearing. This is further compounded by the fact that the submission of the petitioner in respect of the entire issue being covered by orders of coordinate benches was according to the petitioner, lost sight of while passing the order dated 3rd February, 2016. In the above view, the impugned order rejecting rectification application has not considered the aforesaid Rules and the binding decisions of this Court. Therefore on the aforesaid ground alone, the impugned order is not sustainable.
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2017 (1) TMI 1241
Penalty u/s.271(1)(c) - unaccounted stock addition along with GP computed there upon - Held that:- It is evident that the lower authorities have simply gone by stock statement difference in assessee’s books as compared to that declare to the above stated co-operative bank totaling to ₹ 41,39,130/- in the first round and the same has been split over in the two impugned assessment years in the latter consequential round subject matter of appeal before us. They don’t even refer to a single piece of evidence apart from assessee’s stock statement disclosed to the bank which could indicate there has been any excess stock item in its relevant books or other evidence. It is thus apparent that the impugned addition is based upon assessee’s stock statement given to the bank as prepared on estimation basis only instead of actual figures. - Decided in favour of assessee Disallowance is of interest expenses - Held that:- We reiterate that the impugned quantum disallowance has been made only on the ground that the assessee had utilized interest bearing fund for non business purposes u/s.36(1)(iii) of the Act. This is not the Revenue’s case that it had not disclosed all the relevant particulars resulting in the impugned disallowance. It is thus evident that the assessee sought to contest Assessing Officer’s show cause alleging diversion of interest bearing funds which ultimately went in Revenue’s favour. We accordingly conclude that the same cannot be held to be a case of furnishing of inaccurate particulars or concealment of income as rightly held in the lower appellate proceedings. - Decided in favour of assessee
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2017 (1) TMI 1240
Revision u/s 263 - there is a lack of enquiry on the part of the A.O. in examining the issue of exemption u/s 54F - Held that:- In the present case on hand, though the assessee did not prove with necessary evidences that the remaining amount of ₹ 20,80,000/- has been spent within the due date u/s 139(1) of the Act, but undoubtedly the assessee has proved that he had spent the amount within the due date specified u/s 139(4) of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s 54F of the Act, even though the property was purchased in the name of his close family members. In this case, the assessee has purchased the property in the name of his son by entering into sale agreement-cum-GPA. As claimed by the assessee, there is no intention to purchase property in the name of his son, which is evident from the fact that finally the property has been transferred in the name of the assessee. Therefore, the assessee is eligible for exemption u/s 54F of the Act and the A.O. has rightly allowed exemption and hence, we are of the view that there is no prejudice is caused to the revenue. Accordingly, the CIT was incorrect in assuming jurisdiction to revise the assessment order u/s 263 of the Act. - Decided in favour of assessee Computation of capital gain towards transfer of asset between the assessee and his father - transfer - Held that:- In the present case on hand, on perusal of the facts available on record, we find that there is no consideration passed on between the assessee and his father. The consideration has been paid for purchase of property to the seller of the property as per the original sale agreement dated 7.6.2007 has been directly paid by the assessee’s father to the seller. Therefore, we are of the view that there is no transfer within the meaning of section 2(47)(v) of the Act, towards transfer of property between the assessee and his father. Accordingly, we direct the A.O. to delete addition made towards computation of long term capital gain. - Decided in favour of assessee Addition towards cost of construction u/s 69 - Held that:- As we hold that the transaction between the assessee and his father towards transfer of property is a transaction belonging to his father. Since, we hold that the assessee’s father has purchased site in assessee’s name and also the assessee’s father has invested towards construction of property, the A.O. was incorrect in making addition towards cost of construction in the hands of the assessee. The CIT(A) without appreciating the facts, simply confirmed additions made by the A.O. Therefore, we reverse the order of CIT(A) and direct the A.O. to delete additions made towards cost of construction u/s 69 of the Act.- Decided in favour of assessee
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2017 (1) TMI 1217
Disallowance u/s.14A r.w.rule 8D - Held that:- There is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the order of the ITAT Mumbai Bench in the case of M/s. Daga Chemicals Pvt. Ltd., (2015 (1) TMI 1204 - ITAT MUMBAI ) and the facts relied on by him. Ld. AR has submitted that disallowance u/s.14A r.w.rule 8D cannot exceed the exempt income. Considering the factual position and the case law relied on by the ld. AR of the assessee, we are of the view that the addition made by the AO and confirmed by the ld CIT(A) should be deleted. Accordingly, we delete the addition. - Decided in favour of assessee
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Customs
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2017 (1) TMI 1223
100% EOU - Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that when the charge against the respondent, which is 100% EOU of diversion of imports and the goods are not available for confiscation, the question of confiscation of such goods and redemption u/s 125 of the Customs Act, 1962 does not arise? - Held that: - the respondent-Unit was permitted to deposit the goods in a bonded warehouse without making payment of the Customs duty, on certain terms and conditions and one of the condition was that the finished product was required to be exported, meaning thereby the goods which were permitted to be imported and thereafter deposited in a warehouse without payment of customs duty, were not required to be sold in the open market in India. Thus, once the confiscation of such goods was authorized, Section 125 of the Customs Act shall be applicable. The goods were not available for confiscation, as the goods were already diverted/permitted to be warehoused without payment of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable. The matter is remanded to the Adjudicating Authority for imposition of redemption fine in lieu of confiscation with respect to the goods which were illicitly diverted into the open market - appeal allowed by way of remand.
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2017 (1) TMI 1222
Condonation of delay of 332 days - Section 130 of the Customs Act, 1944 - Held that: - it appears that there was a bona fide delay on the part of the appellant in preferring the appeal in time before the respondent. Therefore, while exercising discretion under Section 5 of the Limitation Act, the Court ought to have adopted a pragmatic approach. A distinction must be made between a case where the delay is inordinate and the case, the delay is of few days. The appellant was reasonably diligent in pursuing the appeal/applications before the competent authorities, and there was no negligence on his part in preferring the Appeal. A valuable right is secured to the successful party of which he should not be deprived of lightly. While dealing with an Application under Section 5 of the Limitation Act for condoning the delay, the Court ought not to light heartedly disturb the legal right accrued to the appellant on failure to prefer the appeal or application within the time prescribed for it - delay condoned - appeal allowed - decided in favor of appellant.
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Service Tax
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2017 (1) TMI 1239
Commercial and industrial construction - demand for the period prior to 1.6.2007 - Held that: - the tax along with interest has been paid before the issue of SCN; a lenient view has been taken with regard to the penalties by invoking Section 80 of the Finance Act and penalties rightly dropped - reliance placed in the case of CCE vs. Lawson Travel and Tours (I) Pvt. Ltd. [2015 (1) TMI 232 - MADRAS HIGH COURT] - appeal dismissed - decided against Revenue.
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2017 (1) TMI 1238
Maintainability of appeal - condonation of delay - Time limitation - Held that: - The appeal before the Commissioner was filed 93 days after the appeal period and as per the relevant provision, the Commissioner could only condone three months delay and beyond three months even Commissioner does not have the power of condonation. Therefore in view of the statutory provisions, we do not find any infirmity in the impugned order and the same is upheld by dismissing the appeal - appeal dismissed - delay not condoned.
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2017 (1) TMI 1237
100% EOU - Principles of Natural Justice - Held that: - Since the appellant did not file the reply to the show-cause notice and did not appear before the Commissioner at the personal hearing, the learned Commissioner proceeded to decide the case without the presence of the appellant on the basis of the records produced before the Commissioner and confirmed the demand and the penalties - this matter needs to be remanded back to the Commissioner with a direction to decide the case after complying the principles of natural justice and offer one more opportunity to the appellant to file the reply to the show-cause notice and if in spite of the opportunity, the appellant does not file the reply, the Commissioner will be at liberty to decide the case on the basis of documents available on record - appeal disposed off - matter on remand.
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2017 (1) TMI 1236
100% EOU - Refund claim of CENVAT credit - rejection on the ground that these services do not affect the quality and efficiency of the export services and secondly the details of usage of input services is not furnished - Held that: - the impugned order is not sustainable in law in view of the fact that all the services for which CENVAT credit of service tax has been denied are in fact input services and the assessee is entitled to get refund of CENVAT credit lying unutilized in the CENVAT credit account and therefore, I set aside the impugned order by allowing the assessees appeals subject to verification of the documents by the original authority - appeal allowed by way of remand.
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2017 (1) TMI 1235
Software maintenance services - demand on the ground that such software maintenance activity would fall under the category of management, maintenance or repair service - whether the service is taxable and appellant liable to pay service tax from 09.07.2004? Held that: - reliance placed in the case of Phoenix IT Solutions Ltd. Versus Commissioner of Central Excise, Visakhapatnam [2011 (1) TMI 642 - CESTAT, BANGALORE], where it was held that maintenance of software became taxable only from 1-6-2007 - the activity of software maintenance provided by the appellant, which is subject matter of the dispute in this appeal, has become taxable only with effect from 01.06.2007. This being the case as the period of dispute is prior to this date, the impugned order will not sustain - appeal allowed. Software maintenance services - period from April 2007 to March 2008 - Held that: - for the period prior to 01.06.2007, the activity of software maintenance provided by the appellant to APEPDCL will not be liable to service tax liability. However, for the period subsequent to 01.06.2007, said activity will definitely be liable to service tax under the management, maintenance, repair services - the issue has already been in agitation and that periodical SCN have been issued to the appellant, issue being one of interpretation, the imposition of penalty under section 76 on the appellant is hereby set aside - The matter is remanded to the original authority for the limited purpose of calculating the tax liability of the appellant for the said services for the period 01.06.2007 till 31.03.2008 - matter on remand. Appeal partly allowed and part matter on remand.
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Central Excise
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2017 (1) TMI 1234
CENVAT credit - during the audit, the Department discovered assessee has availed service tax credit on marketing consultancy service on traded goods rendered by M/s. Carl Bechem Lubricants Middle East FZC and as per the reverse charge mechanism under Section 66A of the Finance Act, the assessee has wrongly taken the proportionate CENVAT credit to the extent of service tax attributable to trading activity from Chennai. Further the CENVAT credit has been reversed on being pointed out by the audit party. Held that: - as far as confirmation of demand and interest is concerned, I do not find any infirmity in the impugned order. Levy of penalty u/r 15(2) of the CENVAT Credit Rules - Held that: - unless and until there is a finding that there was suppression of fact and irregular availment of CENVAT credit, the question of levying penalty under Rule 15(2) of the said Rules does not arise - Moreover, in this case the appellant reversed the duty along with interest on being pointed out by the Department and there was no intention to evade payment of duty as is required under Rule 15 read with Section 11AC - penalty set aside. Appeal disposed off - decided partly in favor of assessee.
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2017 (1) TMI 1233
CENVAT credit - scrap - job work - denial on the ground that the scrap generated during the job work is not received back by them but is retained and sold by the job workers without payment of excise duty on such scrap - a comparison of the provisions of Rule 57F(2) of Central Excise Rules, 1944 and the present Rule 4(5)(a) of CCR, 2004, it is very clear that in the erstwhile Rule 57F(2), the raw material suppliers was required to either get back the scrap generated/produced at the job worker's end or was required to pay duty on such scrap, whereas under the present Rule 4(5)(a) of CCR, the Legislature in its wisdom has specifically omitted the words "either to get back the scrap generated / produced at the job worker's end or to pay duty on the same" - Time limitation. Held that: - In the case of Mahendra Hinoday Industries Ltd., [2011 (9) TMI 139 - CESTAT, MUMBAI], it has been observed by the Tribunal that the liability to pay excise duty and the manner of payment of duty are governed by Rule 4 and 8 of Central Excise Rules, 2002. They are, not in any way, altered or changed by the CCR, 2004 which deals with allowing of CENVAT credit. The CCR, 2004 does not create any liability to pay excise duty under any of its provision. It provides for reversal of credit in case the credit has been taken wrongly. Therefore under Rule 4(6) of CCR, 2004 only such conditions can be prescribed which are in conformity with Rules 4 and 8 of Central Excise Rules, 2002 and not conditions which are repugnant or contrary to the provisions of these Rules - appeal dismissed - decided against Revenue.
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2017 (1) TMI 1232
CENVAT credit - non-existent dealers - fake invoices - Held that: - in the absence of any corroborative evidence to show that the respondents have not received the goods, it cannot be alleged against the respondents that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer - in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the respondents - appeal dismissed - decided against Revenue.
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2017 (1) TMI 1231
CENVAT credit - non-existent dealers - fake invoices - Held that: - in the absence of any corroborative evidence to show that the respondents have not received the goods, it cannot be alleged against the respondents that they have received the invoices and not the goods merely on the ground that there was not storage facility specifically when the landlord made a statement that the godown was let out to the dealer - in the absence of any investigation at the end of manufacturer/supplier or the transporter, the cenvat credit cannot be denied to the respondents - appeal dismissed - decided against Revenue.
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2017 (1) TMI 1230
100% EOU - CENVAT credit - Courier Service - Financial Service - Photography Machine Service - Transport Service - Placement Service - Commission - Consultancy Service - Printer Cartridge Services - denial on the ground that credit had been availed on activities which were not input services within the meaning of Rule 2(l) of Cenvat Credit Rules, 2004 - Held that: - the appellant is not entitled to cenvat credit on Car Hire Service and Transport Service which have been specifically excluded in the definition of input service' after 01.04.2011. The appellants are entitled to Consultancy Service, Courier Service, Financial Services, Photocopy Machine Services and Placement Services as of those services are covered in the inclusive part of the definition of 'input service' under Rule 2(I) of Cenvat Credit Rules, 2004. Imposition of penalty u/r 15(1) of Cenvat Credit Rules - Held that: - since the issue relates to interpretation of provision and there is no mens rea on the part of the appellant, therefore, I do not think it that penalty is imposable under Rule 15(1) of the Cenvat Credit Rules. Appeal disposed off - decided partly in favor of appellant.
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2017 (1) TMI 1229
Valuation - related party transactions - invocation of provisions of Rule 9 read with Rules 8 of the Valuation Rules, 2000 - whether the provisions of Rule 9 read with Rule 8 of the Valuation Rules are applicable to the appellant when the appellant is clearing goods to independent dealer as well as to sister concern or not? - Held that: - Rule 9 is applicable when all the productions made by the appellant is cleared to their sister unit or related person which is not the case here as appellants are clearing the goods to independent buyers as well as related person. Therefore, the Provisions of Rule 9 are not applicable to the facts of this case - appeal allowed - decided in favor of assessee.
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2017 (1) TMI 1228
100% EOU - Refund claim of cenvat credit - input services - Car Hire Charges - Foreign Travelling - Freight Outward - Fuel Interstate - Rent Charges - rejection on the ground that nexus between input services and manufactured goods was not provided and the appellant failed to produce the document in support of his claim - Held that: - I find that as far as Car Hire Charges, Foreign Travel and Freight Outward and Rental Charges and Transportation Charges are concerned, they fall in the definition of ‘input service’. But in order to prove that appellant has incurred these expenditure, the appellant is required to produce the documents in support of the same before the original authority who will verify the same and thereafter will allow the refund as per law - In view of this, I am of the considered opinion that this case needs to be remanded back to the original authority with a direction to examine all the documents which may be filed by the appellant - appeal allowed by way of remand.
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2017 (1) TMI 1227
Benefit of Exemption N/N. 108/95-CE dated 28/08/1995 - scope of SCN - appellants cleared machines to different contractors for carrying out contract work - denial of benefit on the ground that after completion of the projects, the said machines remained with the contractors, and where not sent to appellants - Whether in the facts and circumstances of the case, the Adjudicating Authority has gone beyond the scope of the show cause notice or not? - Held that: - the issue before the Adjudicating Authority was that the goods after completion of the projects remained with contractors but the Adjudicating Authority has held that the goods were not supplied to the projects, therefore, we hold that the adjudication authority has gone beyond the show cuase notice - reliance placed in the case of Caprihans India Ltd. [2015 (11) TMI 1170 - SUPREME COURT], where it was held that where the impugned order is beyond the allegation in the SCN, the same is to be set aside - impugned order not sustainable. Whether in the facts and circumstances of the case the appellant is entitled to avail benefit of Exemption N/N. 108/95 dated 28.08.95 or not? - Held that: - As all the conditions of the Notification have been satisfied by the appellants, therefore, the appellant is entitled for benefit of the above Notification. Merely, on the ground that the goods have been supplied to the contractor directly who has executed the project in question and after the implementation of the products the machine shall remain with the property of the contractor cannot be reasons to deny the benefit of notification - reliance placed in the case of Caterpillar India Pvt. Ltd. [2005 (3) TMI 243 - CESTAT, NEW DELHI] - benefit of notification allowed. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1226
Refund claim - recovery during pendency of appeal - Held that: - reliance placed in the case of Vira Scooters vs. CCE, Ludhiana [2010 (4) TMI 564 - CESTAT NEW DELHI], where it was held that the department cannot take coercive action when the appeal is pending before the higher judicial forum. Whether the refund can be adjusted by arrears of revenue? - Held that: - refund cannot be adjusted against arrears of revenue when the matter in dispute has not attained finality. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 1225
Maintainability of petition - Unjust enrichment - refund claim - refund claim rejected on the ground that there are multiple remedies to challenge this order. Firstly, there is a remedy to approach the Commissioner (First Appellate Authority) and eventually the Tribunal. Held that: - Once we have seen that this is not a case entirely based on refund of amounts deposited as pre deposit but there was a blend or mix of such sums with the amount paid under protest, then, all the more we do not think that the judgments on the point of a writ being maintainable despite availability of alternate efficacious remedy would be applicable in the facts of this case. We are mindful of the fact that availability of an alternate equally efficacious remedy is not an absolute bar in entertaining a writ petition under Article 226 of the Constitution of India. It is not a prohibition but a rule of caution and prudence. Eventually everything must depend on facts and circumstances in each case. The petitions cannot be entertained on the ground that there are factual issues involved. The mixed questions of fact and law are, therefore, capable of being properly resolved in the appellate remedies available to the petitioners under the scheme of the Central Excise Act - petition dismissed as not maintainable - decided against petitioner.
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2017 (1) TMI 1224
Shortage of stock - Clandestine removal - a quantity of 1410.200 MT was physically verified against a recorded balance of 2813.903 MT. Central Excise authorities thus found a shortage of 1403.703 MT of scrap in the factory premises - the reasons for shortage were due to the fact that the material had not been received in their factory or due to the fact that the appellant had been showing less burning loss during the previous years? Held that: - The appellants have referred to the retraction made by him on 27.09.2011. From the said retraction, it is seen that the retraction has been filed before the Commissioner of Central Excise, Chandigarh. Further, the appellants have not alleged that there was any kind of coercion or force or pressure or duress while recording the statement. Without giving any reason, they simply said that the statement was not voluntary. I find that in the absence of any allegation or evidence of force or coercion, or pressure or duress, the retraction carries no weight and is an afterthought particularly since they are admitting that they were actively associated with the officers in the entire verification exercise. I also find that the retraction has not been addressed to the investigation officer who recorded the statement. The appellant have also argued that no panchnama was drawn on the spot. I find that the weighment exercise was done in the presence of the Director, with his active assistance. The Director has certified the correctness of the weighment exercise and subsequently admitted the shortage of scrap. Therefore, he cant take this plea at this stage. No infirmity in the impugned order - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2017 (1) TMI 1221
Interest on refund - Whether on the refund amount of predeposit, which the petitioner deposited while preferring the appeal before the learend Tribunal, when the petitioner has succeded before the learned Tribunal and the demand of tax is set aside and consequently the amount of predeposit is refunded, the petitioner-dealer is entitled to interest on such refund of predeposit as mandatory under Setion 54(1)(aa) of the Act? Held that: - Considering subsection (4) of Section 65 of the Act, whatever the amount is deposited would be towards payment of the tax / part payment of the tax, may be as a condition precedent for availing right of appeal. In a given case, if the appeal against the assessment order is dismissed and the tax liability / demand of tax is confirmed, in that case, whatever amount deposited at the time of preferring the appeal may be by way of predeposit is required to be given credit and the balance amount of tax liability is required to be thereafter deposited with the interest as provided under the Act. On conjoint reading of the subsection( 4) of Section 65 and Section 54, on the appeal being allowed and th tax liability is either reduced or set aside by the appellate authority in that case, concerned person shall be entitled to get back the said amount / refund the said amount with interest on completion of 90 days from the date of order passed by the Appellate Authority / Tribunal. Any other contrary view shall deprive interest of the concerned person. However, consdiering Section 54 the period of 90 days shall be calculated from the date of reciept of such order by the Sales Tax Officer (order passed by the Appellate Authority / Tribunal). The petitioners shall be entitled to interest at the rate of 9% p.a on the amount deposited by them as predeposit while preferring the appeal against the assessment order - petition allowed - decided in favor of petitioner.
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2017 (1) TMI 1220
Interpretation of statute - Limitation provided u/s 25(1) of the KVAT Act - whether the words employed in sub section (1) indicates only an initiation of proceedings within the limitation period and not the conclusion of the assessment? - Held that: - The proviso, as it reads, only indicates that completion of assessments including those in which an extension is made under Section 25B and expiring on 31.03.2015, would stand extended up to 31.03.2016. There is no limitation for completion of assessment provided therein - In the present case the assessment year is 2010-2011 and the limitation for initiating proceedings, u/s 25(1) expires only on 31.03.2016. The notice impugned herein is dated 19.03.2016; within the limitation period as provided u/s 25(1) of the Act. The argument is that the proviso deems conclusion of assessment within the extended period. Section 25B confers powers on the Deputy Commissioner to extend the time for completion of investigation or enquiry, for good and sufficient reasons notwithstanding Sections 24 and 25, thus enabling extension of the period of completion of the assessment beyond the period specified in those Sections. Section 25(1) does not speak of any limitation for completion of the proceedings. In such circumstances, if at all extension of completion of assessment is permitted by the Deputy Commissioner, that would not enable the State to initiate proceedings after the limitation period is over nor can a limitation be found from the proviso - even if an extension is made under Section 25B, the same would not enable the State to initiate proceedings after expiry of the period of limitation provided under sub section (1) of Section 25 of the Act. The power of extension granted under Section 25B having been found to be redundant, there can be no limitation for conclusion of the proceedings and as the Full bench held, there can only be a mandate that the proceeding should be completed within a reasonable time - petition dismissed - decided against petitioner.
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Indian Laws
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2017 (1) TMI 1219
Maintainability of the complaint case for if no legal notice was served on the petitioner as required under Section 138 of the NI Act - Held that:- There is no challenge to the finding of the learned Metropolitan Magistrate that the address C-16, Amushi Industrial Area, Nandur Gant, Lucknow, UP was a non-existent address. This was upheld by the revisional Court vide the impugned order dated 12th October, 2010. As per the complaint legal notice as required under Section 138 of the NI Act was issued to the petitioner at the address C-16, Amushi Industrial Area, Nandur Gant, Lucknow, UP. According to the complaint notice through UPC was duly served i.e. deemed to be served and registered AD was not received, hence it was deemed service. However, there can be no deemed service on a non-existent address. Thus, there is merit in the contention of learned counsel for the petitioner and since no notice of legal demand was served on the petitioner/ accused complaint case is quashed
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2017 (1) TMI 1218
Company Petition under Insolvency and Bankruptcy Code, 2016 for realization of this money - Default by Corporate Debtor - Objective under MRU Act - Whether an order could be passed u/s.7 of the Code or not? - Held that:- This Bench, on perusal of this documents filed by the Creditor, it is evident that the Corporate Debtor defaulted in making payments as mentioned above, and he has placed the record of the default with Information Utility and he also placed the name of the Insolvency Resolution Professional to act as interim resolution Professional, having this Bench noticed that default has occurred and there is no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this Application declaring Moratorium with the directions as mentioned below: 1. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 2. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. 3. That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. 4. That the order of moratorium shall have effect from 17.1.2017 till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be. 5. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code. 6. That this Bench hereby appoints Mr. Dhinal Shah, 9, Urmikunj Society, Nr. St. Xavier College Corner, Navrangpura, Ahmedabad -389009, Gujrat, email: dhinal.shah@in.ey.com, Registration No. IBBI/IPA-01/2016-17/015 as interim resolution professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
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