TMI Tax Updates - e-Newsletter
January 29, 2016
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Reopening of assessment - AO could have no reason to believe that the dividend income earned by the Petitioner from the aforesaid three mutual funds had escaped assessment. As stipulated in section 10(33), the said income was exempt and therefore could not have been brought to tax. - HC
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Income Tax:
Business compulsions and expediency in making the cash purchases - In the absence of any specific detail, the vague statements made in response to the show cause notice, cannot offset the entries made in the books of accounts. - HC
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Income Tax:
Credit of taxes paid and set off of MAT credit as per the provisions of section 115JAA -AO directed to compute pro rata quantification of the demerged undertaking MAT, TDS and advance tax credits as per law - AT
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Income Tax:
Taxability of interim amount received towards arbitration award - whether the interim amount received by the assessee is taxable on receipt basis for the year under consideration? - Held No - AT
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Income Tax:
Nexus between the revenue earned and cost incurred - ascertaining whether a service has actually benefitted the taxpayer or not is not within the prerogative of the Tax Authorities. To avail a service or not is a commercial decision which cannot be challenged by the Tax Authorities - AT
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Income Tax:
Validity of order passed u/s. 143(3) read with section 144C(13) - the final order should have been passed on or before 30.11.2014, but the same has been passed on 30.01.2015, which is clearly beyond the period of limitation as prescribed u/s. 144C - the order is s bad in law ab initio - AT
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Income Tax:
Deemed dividend u/s 2(22)(e) - exempted capital gains shall not enter the stream of the expression ‘accumulated profits’ and the company BKFCPL has got only negative accumulated profits after exclusion of exempted capital gains and hence the provisions of section 2(22)(e) cannot be invoked - AT
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Customs:
Levy of penalty on employee of CHA - The appellant was aware of the mis-declaration of the value and the description of the goods of the consignments in question in this appeal as well as for the earlier consignments. Hence retraction of the statement would not improve the case of the appellant before this Tribunal - AT
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Customs:
Maintainability of appeal before Apex Court - Challenge to the order passed by the High Court dismissing the review application on merit as well as delay - if the basic judgment is not assailed and the challenge is only to the order passed in review, this Court is obliged not to entertain such special leave petition. - SC
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Customs:
Retrospective Imposition of ADD - the final anti-dumping notification has no applicability to the bills of entry presented prior to the said date - Decision of tribunal affirmed - SC
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Customs:
Wrong Claim of exemption from CVD - respondents claimed classification of goods as “medicament” under Chapter 30 with intention to avail exemption of CVD at NIL rate - intention of the respondent is established the contravention u/s 111 for confiscation is fully justified - Demand of duty confirmed - however redemption fine and penalty reduced - AT
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Service Tax:
Service Tax Dispute - Settlement Commission rejected the application - We specifically reject and repeal the reason given by the Settlement Commission that it cannot take evidence or that, when confronted with conflicting submissions on facts and law, its only recourse is to dismiss a settlement application brought before it. - HC
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Service Tax:
Self adjustment of excess service tax paid towards payment of service tax during the subsequent period - appellants had not intimated the said adjustment to the department - Demand of duty and penalty set aside - levy of penalty of ₹ 5,000/- u/s 77 upheld - AT
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Service Tax:
Levy of penalty u/s 76 and 78 - waiver u/s 80 - delay in payment of service tax - penalty imposed on the Respondents under Section 78 of the Finance Act, 1994, is to be reduced to 50% of the same in respect of the first show cause notice dated 30.08.2011, provided that the Respondents pay the said amount within thirty days from the receipt of this order. - AT
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Central Excise:
Eligibility to take cenvat credit on “8 cavity mould for flip to cap” sent to job worker without bringing the same into their factory - The purpose of bringing the moulds first to the factory premises and then clearing the same to a job worker may not serve any purpose except for incurring some additional transportation cost to the appellant - Credit allowed - AT
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Central Excise:
Classification - articles of fabrics - the width of the tape is of 1.5 mm, classifiable as textile fabrics and articles of fabrics rightly classifiable under chapter heading 60059000 and the strips (HDPE) not exceeding 5mm is classifiable under 54049020 - AT
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Central Excise:
Eligibility for CENVAT credit - iron and steel items used for fabrication of components / accessories of various machinery like rotary klin, rotary cooler, conveyor systems, raw material preparation plant, power plant and pollution control equipment - credit allowed - AT
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VAT:
Premature recovery proceedings where there is time to file such an appeal - no precipitative action would be taken if the petitioner would file an appeal within the period prescribed for filing the appeal. - HC
Articles
Notifications
FEMA-
7(R)/2015-RB - dated
21-1-2016
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FEMA
Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015
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10(R)/2015-RB - dated
21-1-2016
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FEMA
Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 ((Amended upto June 01, 2016)
Income Tax-
S.O. 3445(E) - dated
17-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Anuvrat Gram Bharti Sansthan, Bhilwara, Rajasthan
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S.O. 3444(E) - dated
17-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Shri Ugam Education Trust, Sabarkantha, Gujarat
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S.O. 3443(E) - dated
17-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Lions Club Care Foundation Charitable Trust, Sangli, Maharashtra
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S.O. 3441(E) - dated
17-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Tomorrow’s Foundation, Kolkata, West Bengal
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S.O. 3440(E) - dated
17-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Haji Abdul Majid Memorial Public Trust, Assam
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S.O. 3442(E) - dated
7-12-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On – Ayodhya Charitable Trust, Pune
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (1) TMI 950
Monetary limit - Held that:- As per Instruction No. 2/2005 dated 24.10.2005 of the CBDT, no appeals were to be filed where the tax effect was less than ₹ 10 lakhs . Dismiss the appeal on the ground of low tax effect only.
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2016 (1) TMI 949
Reopening of assessment - Assessing Officer formed a belief that provisions of section 2(22)(e) of the Act would apply - Held that:- The assessee during the year under consideration was a director of the company and had purchased 88,300 shares by investing ₹ 1.76 crores out of which ₹ 1 crore was paid back to the petitioner by the company as advance. It was in this context, the Assessing Officer formed a belief that section 2(22)(e) of the Act would apply. His assertion that the petitioner was holding in excess of 10% of the value of shareholding has nowhere been denied by the petitioner. In the objections raised, the petitioner merely called upon the Assessing Officer to reveal the source from which he had gathered such information. If the case of the petitioner was that he in fact, did not hold more than 10% of shares of the company, it was easy for him to asset and demonstrate the same. - Decided against assessee
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2016 (1) TMI 948
Reopening of assessment - receivable from GCMMFL for which a provision was made by the assessee which according to the Assessing Officer was not shown as income of the assessee in the Profit and Loss account - Held that:- Provision of ₹ 76 crores was made for milk purchases and sales account for milk pool price receivable from GCMMFL. It was clarified that same has been credited to respective primary cooperative societies. It was further clarified that to this extent trading, profit and loss account and balance sheet show provisional figures. This note, in fact, clarified that said sum of ₹ 76 crores was a provisional figure for milk purchases and sales account receivable from GCMMFL. In fact, it clarifies that such sum has been reflected in the trading, profit and loss account and balance sheet on the basis of provisional figures. The Assessing Officer's assertion therefore, that the said sum was not reflected under the profit and loss account is not correct. This ground for reopening therefore, must fail. - Decided in favour of assessee. Interest under section 80P(2)(d) was not allowable - Held that:- The entire issue of the petitioner's claim of deduction of interest of ₹ 2.29 crores under section 80P(2)(d) of the Act was examined by the Assessing Officer threadbare during the original assessment proceedings. It was in response to the queries raised by the Assessing Officer that the petitioner made a detailed representation and pointed out that the petitioner had earned interest income of ₹ 2.29 crores which was earned out of investment of amount received on sale of milk, milk products from GCMMFL. It was pointed out that since the interest was received from the cooperative society and earned out of investment made from its own fund, the assessee was entitled to full deduction under section 80P(2)(d) of the Act. It was further clarified that such interest was earned on short term deposits with the cooperative banks or from Cooperative societies. It was stated that no expenditure in the form of interest was incurred for earning such interest. The assessee also submitted that the expenditure of interest has no nexus with the income of the interest earned during the year. The assessee relied on decisions in its own case for earlier years pointing out that on this very ground, the assessee has succeeded before the appellate Tribunal.However, having accepted the detail explanation of the assessee on the question of deduction of interest, the Assessing Officer cannot be allowed to reopen the issue on a mere rethinking - Decided in favour of assessee. Prior period expenditure not allowable - Held that:- Reviewing compilation of this petition which forms part of the trading, profit and loss account, the assessee had deducted a sum of ₹ 14.69 lacs from the expense side and further showed a sum of ₹ 7.14 lacs towards the income of prior period. Thus a total sum of ₹ 21.34 lacs was reflected in the income side. Though somewhat curiously and rather awkwardly, the assessee reduced the expenditure by ₹ 14.69 lacs and thereby indirectly increasing the income. The Assessing Officer was therefore, wrong in recording that said sum of ₹ 14.68 lacs represented prior period expenditure of the assessee. There was no material to support this assertion and consequently his conclusion that such expenditure though not allowable was claimed benefit of and income to that extent escaped assessment. This ground therefore, lacks validity. - Decided in favour of assessee.
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2016 (1) TMI 947
Reopening of assessment - undisclosed dividend income - entitlement to exemption from tax under section 10(33) - Held that:- In the facts of the present case, even otherwise from the record we find that the Petitioner had disclosed fully and truly all material facts relating to the dividend income received by it. This is clear firstly from the return of income filed by the Petitioner on 27th November, 2000 where in the computation annexed to the return, the Petitioner had stated that it had earned dividend income which was fully exempt from tax under section 10(33) of the Act. Secondly, in the profit and loss account, the Petitioner had disclosed by way of Schedule 'M' that it had earned dividend income of the aforesaid amount. Thus there being a full and true disclosure of all material facts relating to earning of dividend income from units of mutual funds and the claim for exemption under section 10(33) of the Act, the the impugned notice is without jurisdiction as it fails to satify the criteria as set out in the first proviso to section 147 of the Act. Assessing Officer, during the regular assessment proceedings under section 143(3) of the Act, had specifically applied his mind to the dividend income earned by the Petitioner during the A.Y. 2000-2001 and on due consideration of these facts, he passed his assessment order under section 143(3) of the Act forming an opinion that the dividend income earned by the Petitioner was exempt from tax. This would clearly establish that there was due application of mind to all relevant facts and thereafter an opinion was formed that dividend income earned from the aforesaid three mutual funds are exempt from tax under section 10(33) of the Act. We have therefore no hesitation in holding that the initiation of reassessment proceedings has been undertaken merely on the basis of a change of opinion. Thus, the impugned notice is not sustainable also on the ground that it proceeds on a mere change of opinion. Assessing Officer could have no reason to believe that the dividend income earned by the Petitioner from the aforesaid three mutual funds had escaped assessment. As stipulated in section 10(33) of the Act, the said income was exempt and therefore could not have been brought to tax. Thus the impugned notice is also without jurisdiction as the Assessing Officer could have had no reason to believe that income chargeable to tax had escaped assessment. - Decided in favour of assessee
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2016 (1) TMI 946
Reopening of assessment - capital gain addition - Held that:- Under sub-clause (iii) of section 47 of the Act, therefore, nothing would apply to any transfer of capital assets under a gift or will or irrevocable trust. It is not the case of the Assessing Officer that the present case is not one of transfer of asset under a gift. In terms of sub-clause (iii) of section 47 of the Act, thus such transfer would not be governed by section 45 of the Act. For apparent reasons, the proviso to subsection (iii) of section 47 of the Act would not apply to the present case, since it applies to any transfer under gift or irrevocable trust under capital asset in the nature of shares, debentures or warrants allotted by a company to its employees under Employees' Stock Option Plan or Scheme. Admittedly, this is not such a case. This proviso is in the nature of exclusion to main provisions of sub-clause (iii) of section 47 of the Act. Under the circumstances, the case on hand would be governed by the main body of sub-clause (iii) of section 47 of the Act and consequently, the provision of section 45 of the Act pertaining to capital gain would not apply. Also proviso to section 48 would not apply in the case on hand. Firstly section 48 of the Act itself provides for mode of computation of income chargeable as capital gain. Sub-clause (iii) of section 47 of the Act excludes application of section 45 of the Act in case of certain transfers. By no application of section 48 of the Act, such exclusion can be ignored. Section 48 of the Act only aims to provide for formula for computation of income chargeable as capital gain. Further, this proviso provides for computation of income which is referred to in proviso to sub-clause (iii) of section 47 of the Act, and thus, would cover cases which are to be excluded from the purview of sub-clause (iii) of section 47 of the Act. As noted, the case on hand does not fall within the proviso to subclause (iii) of section 47 of the Act, and therefore, mode of computation provided under section 48 of the Act would simply not apply. Thus The reasons recorded by the Assessing Officer to form belief that the income chargeable to tax had escaped assessment lack validity. - Decided in favour of assessee
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2016 (1) TMI 945
Depreciation on the de-capitalized assets on the written down value ('WDV') basis on the block of assets in terms of Section 43(6) (c) - itat allowed the claim - as per revenue some of the assets had been converted into stock-in-trade at nominal value - Held that:- As noted by the ITAT this method of de-capitalising assets which have ceased to be of utility has been consistently followed by the Assessee. The Revenue has been unable to demonstrate how the Revenue's interest is adversely affected thereby or if there is any escapement of income from assessment. On the other hand if indeed the profit as a result of subsequent sale of the asset is offered to tax, there cannot be any prejudice to the Revenue. Consequently, this Court finds no reason to disagree with the reasoning or conclusion of the ITAT in this regard and therefore is not inclined to frame question on this issue. - Decided against revenue 'Revenue recognition' in respect of certain types of sales made - Held that:- The change in the accounting policy is required to be satisfactorily explained by the Assessee and there has to be a consistency in adopting such a change. It is not the Revenue's case that the above change of accounting policy is not a bona fide. It is consistent with Accounting Standard 9 issued by the Institute of Chartered Accountants of India. The explanation for the change has been furnished by the Assessee as part of its audited accounts. It is pointed out that in subsequent AY the change was recognized and accepted by the Revenue.- Decided against revenue
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2016 (1) TMI 944
Bad debt claim - ITAT allowed the claim - as per revenue bad debt was never shown as income in the preceeding years and the money was not held as stock in trade as the assessee was not engaged in the business of money lending - Held that:- Tribunal as the last fact finding authority has come to the conclusion that more than 50% of the capital of the assessee is deployed in money lending. Therefore, the fact that the assessee is in the money lending business cannot be doubted. All the points advanced by Mrs. Gutgutia have thus been rejected. In the result, the questions formulated at the time of admission of the appeal answered in the negative. - Decided against revenue
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2016 (1) TMI 943
Deduction u/s 10A - CIT(A) allowed the claim confirmed by ITAT - mandate of Rule 46-A (3) ignored - Held that:- The statutory obligation which the CIT (A) was required to discharge, under Rule 46-A(3) of the Rules, cannot be whittled down, or brushed aside as performing a ritual. While sub-rule (4) of Rule 46-A of the Rules, no doubt, confers power on the first appellate authority to cause production of documents, justice and fair play would require the assessing authority to be given the opportunity to examine such documents and put forth his objections, if any, thereto. The document which the assessee intends to place before the appellate authority, cannot be entertained by the CIT (A) except on fulfillment of the following conditions:- (1) recording reasons in writing for receiving such evidence; and (2) giving the assessing authority an opportunity to examine the documents. The order under appeal must be, and is accordingly, set aside. As the CIT (A) has examined the documents, without giving the assessing officer an opportunity of being heard, his order must also be set aside. The CIT (A) shall make available copies of the documents, placed before him by the assessee, to the assessing officer and, after giving him an opportunity of being heard in this regard, pass orders afresh and in accordance with law. - Decided in favour of revenue
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2016 (1) TMI 942
Reopening of assessment - addition u/s 69A - Held that:- There was true and full disclosure by the assessee of all material facts. As that in the scrutiny assessment order, the Assessing Officer accepted the claim of the assessee under Section 69A and that however, after the expiry of four years, the Assessing Officer sought to reopen the proceedings contrary to the proviso to Section 147 and the reopening of assessment is contrary to law. - Decided in favour of assessee
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2016 (1) TMI 941
Assumption of jurisdiction under section 263 - disallow the cash purchases in terms of Section 40A(3) - Held that:- Without examining the details of the expenditure involved, the assessing officer accepted the sales turnover reported by the assessee and allowed the benefit of deduction under section 40A(3). The question as to whether the assessee had made payments in excess of ₹ 20,000/- on a single day to a single person was not examined by the assessing officer. This is an error that led the Commissioner to initiate proceedings under section 263. The fact that this aspect was not gone into by the assessing officer in his scrutiny assessment order dated 31.3.2003 is borne out from para 3 of the said order. Once it is seen that such an error was committed, the next question is as to whether the same was prejudicial to the interest of the Revenue or not. The answer to this question is too obvious for any elaborate detail.If the assessee is not entitled to a deduction under section 40A(3), the income chargeable to tax will go up and the tax payable by him will naturally go up. If it is not, the benefit goes to the assessee. Therefore, it is clear that this is a case which satisfies the twin requirements under section 263(1). - Decided against assessee Applicability of the provisions of section 40A(3) - Held that:- The details furnished in the show cause notice dated 18.2.2005 by the Commissioner show that the assessee had admittedly made payments of ₹ 1,00,000/- on three different dates viz., 1.10.1999, 14.10.1999 and 20.10.1999. The assessee had made payments of ₹ 2,00,000 on 31.10.1999, 2.11.1999 and 3.11.1999. All those payments are indicated in the books of accounts of the assessee to have been made to a supplier by name "Standard Fireworks". Similarly payments have been made to another supplier by name "Sivakasi Fireworks". Since the name of one supplier mentioned in the books of accounts of the assessee himself to whom a payment of more than ₹ 20,000/- had been made on everyone of those days, the contingencies stipulated in sub-section (3) of section 40A have arisen. - Decided against the assessee. Business compulsions and expediency in making the cash purchases - Held that:- We are not for a moment to be understood to suggest that the books of accounts should have been more carefully drawn. All that we are suggesting is that atleast the names of the agencies or agents or retailers to whom payments were made on a day to day basis, on behalf of the original manufacturers should have been mentioned. In the absence of any specific detail, the vague statements made in response to the show cause notice, cannot offset the entries made in the books of accounts. Therefore, we cannot find fault with the conclusion reached either by the Commissioner or by the Tribunal in this regard. Hence, question of law is answered against the assessee. Applicability of Rule 6DD of the Income Tax Rules, 1969 - Held that:- Unfortunately, the assessee neither pleaded nor proved the existence of any one of those circumstances indicated in Rule 6DD. Therefore, Rule 6DD cannot also go to the rescue of the appellant/assessee. - Decided against the assessee.
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2016 (1) TMI 940
Credit of taxes paid and set off of MAT credit as per the provisions of section 115JAA - Pro rata quantification of the demerged undertaking MAT, TDS and advance tax credits - Held that:- As once the demerged gas distribution undertaking no more exists w.e.f. 01-01-2007 coming to be the appointed day, the assessee-resulting company is entitled for all the pro rata adjustments of TDS, advance tax and MAT credits as per law; to be utilized in former's account. The net result of our above discussion is that assessee's arguments in principle are accepted in view of clauses of the above stated demerger scheme, sections 391 to 394 of the Companies Act, Section 2(19AA) of the Income Tax Act. We direct the Assessing Officer to compute pro rata quantification of the demerged undertaking MAT, TDS and advance tax credits as per law after affording adequate opportunity of hearing
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2016 (1) TMI 939
Conversion of income as Stock in trade - capital gain or business income - Held that:- Admittedly, the assessee, the owner of the capital asset converted the same into stock-in-trade in the year 2005. Though the assessee converted the investment as stock-in-trade, it offered the capital gains from the transaction in these two assessment years as income from capital gains. It is not correct. In our opinion, the Assessing Officer has to compute the income under two heads by applying sec. 45(2) though the assessee has raised a ground relating to applicability of provisions of sec. 45(2) before the CIT(A). The CIT(A) wrongly observed that the income generated from the development of IT Park to be considered as capital gains which is not appropriate. In our opinion, the entire issue has to be relooked by the Assessing Officer so as to apply the provisions of sec. 45(2) of the Act and he has to compute the income upto the date of conversion as income from capital gains and thereafter income has to be computed as income from business. The stand of the assessee right from the beginning and even now before us that capital asset in question are its investment and any gain on sale is capital gain and not business. This is not based on any sound principles. The assessee has converted the property as stock-in-trade in the year 2005 when it entered into an agreement with Project Engineer and from that date onwards the assessee's landed property is to be considered as stock-in-trade and income generated from the transfer thereafter has to be considered as business income only. To that extent, we remit this issue to the file of the Assessing Officer for re-computation of income as indicated above. Decided in favour of Revenue for statistical purposes.
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2016 (1) TMI 938
Deduction under section 10A denied - Held that:- As relying onassessee's own case for the assessment year 2006-07 to 2009-10 [2015 (4) TMI 1059 - ITAT CHENNAI] the assessee is entitled for deduction under section 10A of the Act. However, the claim shall be restricted only to 50% in view of the provisions of section 10A(1A) of the Act.
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2016 (1) TMI 937
Addition made by applying declared GP rate of 19.3% on the amount of stock - CIT(A) deleted the addition - Held that:- The assessee produced complete books of account before Assessing Officer in which no defects have been pointed out either in the cash book or sales or purchases. Therefore, book results could not have been rejected by the Assessing Officer. Thus, ld. CIT(Appeals) properly appreciating the facts and circumstances of the case, correctly deleted the addition in the matter. The apprehension of the ld. DR during the course of arguments had been that in case assessee would ask for loss to be carried forward of earlier year, then assessee would ask for the refund of the taxes already paid on additional surrendered income. However, the Managing Director of the assessee has filed affidavit to the effect that assessee would never ask for the refund of the taxes already paid on surrendered amount in future. It is also affirmed that no refund has been claimed by assessee on the same. Considering the totality of the facts and circumstances of the case in the light of affidavit of assessee's Managing Director placed on record, we do not find any infirmity in the order of the ld. CIT(Appeals) in deleting the addition. The departmental appeal thus, has no merit - Decided in favour of assessee.
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2016 (1) TMI 936
Transfer pricing adjustment - bench marking technique - Held that:- The assessee facilitated the acquisition of CII Carbon LLC by RCUSA by lending loan to its wholly owned enterprises. The assessee has taken the decision to make investment in its AE either on share capital or lending loan using its business expediency. Since, it had made the decision to make loan to its AE. By virtue of amendment to section 92B, it is international transaction. Once it is considered as international transaction, it is prudent to make bench marking also in the international arena. Determination of rate of corporate guarantee - Held that:- There is no corporate guarantee commission charged by the assessee. Therefore, we remit this issue to the file of the AO/TPO to determine the ALP of the corporate guarantee by following the judicial precedents, more particularly, the case of Glenmark Pharmaceuticals Vs. ACIT (2013 (11) TMI 1583 - ITAT MUMBAI ). In the result both the assessee’s as well as revenue’s appeal are treated as allowed for statistical purposes.
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2016 (1) TMI 935
Reopening of assessment - Held that:-The A.O. at the time of issuing notice u/s 148 of the Act, is not necessarily to establish the fact that there is escapement of income. But, what is necessary is that there must be some material evidence, on which the formation of opinion is arrived at by the A.O. In the instant case, the A.O. issued notice u/s 148, based on the information that the assessee has received arbitration amount which was not offered to tax, which constitute the valid reason for reopening the assessment. Therefore, we are of the view that the A.O. has rightly reopened the assessment. The CIT(A), after elaborate discussions rejected the assessee arguments and upheld the validity of reopening. Therefore, we upheld the reopening of the assessment and reject the grounds raised by the assessee. Taxability of interim amount received towards arbitration award - whether the interim amount received by the assessee is taxable on receipt basis for the year under consideration? - Held that:- The interim amount received towards arbitration award after furnishing security and also on personal guarantee of the Directors of the company, cannot be treated as income of the assessee on receipt basis in the year of receipt. On going through the facts of the present case, we noticed that issue is not yet final. The Hon'ble A.P. High court, finally dismissed the review petition filed by the DGNP on 18.6.2014 and upheld the arbitration award. Therefore, in our opinion, the assessee has got absolute right to receive the amount, when the Hon'ble A.P. High Court finally upheld the arbitration award and not in the impugned assessment years. Under these circumstances, interim amount received by the assessee cannot be brought to tax as income of the assesse for the assessment years 2005-06 & 2008-09. - Decided in favour of assessee
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2016 (1) TMI 934
Capital gain computation - adoption of fair market value as on 01.04.1981 - Held that:- The Tribunal has directed the Assessing Officer to adopt the fair market value of the asset as on 1.4.1981 at ₹ 102/- only. Nothing contrary was brought to our knowledge on behalf of the Revenue. Facts being similar, so following same reasoning, the Assessing Officer is directed to adopt the fair market value of the asset as on 1.4.1981 at ₹ 102/- per sq. meter and re-compute the same accordingly.
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2016 (1) TMI 933
Transfer pricing adjustment - whether the services received by the assessee should be considered to be arm’s length under TNMM - Held that:- With regard to PSM and RIS segments, the markup charged by the AEs is within the +/-5% range, allowed under second proviso to section 92C of the Indian Income Tax Act, 1961. Accordingly, these services can be considered to be at arm’s length And with regard to of GVP services, VIPFS services and Ticketing Hub Services, the service charges paid by the Assessee, represents the actual cost incurred by the AEs, without application of any markup. Accordingly, these can be considered to be at arm’s length. Based on the above discussion, we are of the opinion that the services received by the assessee should be considered to be arm’s length under TNMM. We have perused the OECD guidelines which has recommend an aggregate bench marking approach in situation, where the underline transactions are closely linked to the core business operation. Principle of aggregation, is a well-established rule in transfer pricing analysis. This principle seeks to combine all closely linked transactions wherein arm’s length price can be determined for a number of transactions taken together. The OECD Guidelines recommends an aggregate benchmarking approach, in situations where, the underlying transactions are closely linked to the core business operations. The assessee is predominantly a manufacturer and the services received by the assessee from its AEs are intrinsically linked to the core business operations of the assessee, in the following form: i. Based on the support provided by the AEs in terms of marketing services and strategic services, the assessee is able to achieve higher sales, both in terms of higher sales quantity and sale prices. ii. Based on the support provided by the assessee in terms of operations and logistics the assessee has been able to procure raw materials at lower costs. Accordingly, the impact of such support services is received by the assessee in the form of lower direct costs. We observe that there exists a direct nexus between the revenue earned/cost incurred by the Assessee and the majority intra-group services received, it would be incorrect to analyze the intra-group service received as a single element of cost in isolation. In this regard, the Assessee would like to place reliance on the following rulings, wherein aggregation of closely interlinked international transactions. We are of the opinion that, ascertaining whether a service has actually benefitted the taxpayer or not is not within the prerogative of the Tax Authorities. To avail a service or not is a commercial decision which cannot be challenged by the Tax Authorities. - Decided in favour of assessee.
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2016 (1) TMI 932
Validity of order passed u/s. 143(3) read with section 144C(13) - Held that:- Section 144C(13) provides that the order should have been passed within one month from the end of the month in which such direction is received. In the instant case, the ld. DRP gave directions on 24.09.2014 and as per above referred letter dated 03.11.2015, such directions were received by concerned AO on or before 28.10.2014. Therefore, the final order should have been passed on or before 30.11.2014, but the same has been passed on 30.01.2015, which is clearly beyond the period of limitation as prescribed u/s. 144C of the Act. Therefore, in our considered opinion, the order passed u/s. 143(3) read with section 144C(13) is bad in law ab initio and not sustainable having been passed beyond the period of limitation. Accordingly, the order appealed against is liable to be quashed. Once the final order passed by the AO has been held as invalid on the legal aspect of the case, we do not deem it appropriate to adjudicate upon the other grounds raised before us on merits of the addition. - Decided in favour of assessee.
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2016 (1) TMI 931
Deemed dividend u/s 2(22)(e) - applicability of clubbing provision for deemed income - whether the exempt capital gain is to be excluded from accumulated profits for the purpose of section 2(22)(e)? - whether the provisions of section 2(22)(e) of the Act could be invoked on the family members of the assessee who are not shareholders in the lending company and accordingly whether clubbing provision would be applicable for deemed income? - Held that:- The legal fiction created in the Explanation 2 to section 2(22) of the Act that ‘accumulated profits’ shall include all profits of the company upto the date of distribution or payment should be understood to include the current year profits of the company and not otherwise. For reckoning the accumulated profits, apart from the opening balance of accumulated profits, the profits earned in the current year also are to be added and then the total accumulated profits should be considered for the purpose of calculation of dividend out of accumulated profits, if any. The said Explanation nowhere contemplates to bring within the ambit of expression ‘accumulated profits’, any capital profits which are not liable to capital gains tax. Accordingly, even going by the provisions of the statute, it can safely be concluded that the capital gains could be included for reckoning the accumulated profits only when the said capital gains has been duly subjected to tax. In the instant case, the capital gains derived by the company to the tune of ₹ 197.20 lacs is exempt and hence the same should not be included in accumulated profits and if the same is excluded, then there is only negative accumulated profits available with the company. Admittedly, the provisions of section 2(22)(e) could be invoked only to the extent of the company possessing accumulated profits. In the absence of accumulated profits, there is no scope for making any addition towards deemed dividend. Thus we hold that the exempted capital gains shall not enter the stream of the expression ‘accumulated profits’ and the company BKFCPL has got only negative accumulated profits after exclusion of exempted capital gains and hence the provisions of section 2(22)(e) of the Act cannot be invoked in the facts and circumstances of the case.- Decided in favour of assessee.
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2016 (1) TMI 930
Disallowance of amounts spent on member benevolent fund and member’s death relief fund - Held that:- The amount spent by the assessee for the welfare of its members out of the earmarked funds cannot be deductible as expenditure wholly and exclusively incurred for the purpose of business. From the findings of the facts, the CIT(A) did not appreciated the facts correctly while deleting the impugned additions. There is difference of findings of facts in the orders of the CIT(A). The assessee contends that the amounts spent out of members benevolent fund and members death relief fund but, the CIT(A) states that the amount contributed to these funds are for the welfare of the employees. Thus, there is clear difference between findings of facts by both the authorities, which needs to be relooked by the CIT(A). Therefore, we remit the issue back to the file of the CIT(A) in the light of the discussion above and direct the CIT(A) to consider the issue after affording an opportunity of hearing to the parties. Disallowance of amortisation of premium paid on Govt. Securities - Held that:- The assessee is eligible for deduction towards amortisation of premium paid on Govt. securities as relying on case of Sir.M. Visweswaraya Co-op Bank Ltd., Vs. JCIT [2012 (9) TMI 774 - ITAT, BANGALORE]
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2016 (1) TMI 929
Disallowance invoking provisions of sec. 40(a)(ia) - Held that:- Hon'ble Kerala High Court in the case of Thomas George Muthoot (2015 (7) TMI 810 - KERALA HIGH COURT ) had categorically held that Section 40(a)(ia) disallowance is also applicable to the expenditure which are paid during financial year also. - The language of the Section does not warrant an interpretation that it is attracted only if the interest remains payable on the last day of the financial year. If this contention is to be accepted, this Court will have to alter the language of Section 40(a) (ia) and such an interpretation is not permissible. - Decided against assessee
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Customs
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2016 (1) TMI 916
Levy of penalty - appellant being an employee of CHA filed bill of entry for clearance of radio cassette recorders, crockery, etc. imported in the name of one of M/s. Idol Enterprises and the said consignment was mis-declared in respect of value as well as quantity. - whether the appellant has acted or omitted to act in the manner which would render the goods liable for confiscation and the appellant being an employee of CHA whether he is liable for penalty under Section 112(a) of the Customs Act, 1962. Held that:- Firstly, though the appellant has retracted the statement given by him to the authorities, factually he has produced documents which indicated mis-declaration of the consignments which were cleared earlier. The said mis-declaration of the value as well as quantity is concerned with Mr. Phirozebhai, whom the appellant was unable to present before the authorities. The appellant was, in my view, aware of the mis-declaration of the value and the description of the goods of the consignments in question in this appeal as well as for the earlier consignments. Hence retraction of the statement would not improve the case of the appellant before this Tribunal. Secondly, if the appellant had nothing to hide, his action of producing some other person as Phirozebhai before the investigating authorities itself indicate that he had something to hide and was not cooperating with the authorities to ascertain the mis-declaration of the value as well as description of goods. Levy of penalty confirmed - Decided against the appellant.
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2016 (1) TMI 915
As per the new litigation policy of the Government dated 17/12/2015 Government has decided not to litigate any matters wherein the monetary limit is less than ₹ 10 lakhs in the case of matters lying before the Tribunal. Since, in the case in hand, the amount of penalty sought to be contested is ₹ 5 lakhs, I dismiss the appeal as per the new litigation policy, keeping the larger issue open to be decided in appropriate matter.
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2016 (1) TMI 914
Maintainability of appeal before Apex Court - Challenge to the order passed by the High Court dismissing the review application on merit as well as delay - Earlier HC had dismissed the writ petition - Claim of refund - period of limitation - appellant contended that assessment was provisional and hence, it remained provisional for all purposes and on finalisation of assessment under Section 18(2) of the Act if refund is due, then it was obligatory on the part of the customs authorities to refund the amount without applying the provisions contained in Section 27 - appellant claimed that the rejection of the application for refund was absolutely unsustainable. It was also urged that the refund was rightly claimed under Section 18(2)(a) of the Act inasmuch as Section 27 was remotely not applicable. Held that:- It has to be understood that the Court has evolved and formulated a principle that if the basic judgment is not assailed and the challenge is only to the order passed in review, this Court is obliged not to entertain such special leave petition. The said principle has gained the authoritative status and has been treated as a precedential principle for more than two decades and we are disposed to think that there is hardly any necessity not to be guided by the said precedent. - the appeal, being not maintainable, stands dismissed. - Decided against the appellant.
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2016 (1) TMI 913
Classification of goods - Bituminous Coal or Steam Coal - Apex Court dismissed the appeal against the decision of tribunal in [2014 (10) TMI 674 - CESTAT BANGALORE] on ground of delay - There is a delay of 359 days in filing the civil appeal which has not been satisfactorily explained. Therefore, the appeal stands dismissed on the ground of delay alone.
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2016 (1) TMI 912
Retrospective Imposition of ADD - Tribunal in [2015 (10) TMI 93 - CESTAT NEW DELHI (LB)] has held that, the final anti-dumping notification has no applicability to the bills of entry presented prior to the said date. Inasmuch as the applicant has already been assessed to zero anti-dumping duty, the further demand of anti-dumping duty in terms of the subsequent notification is not called for. - Apex Court dismissed the revenue appeal as devoid of any merit.
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2016 (1) TMI 911
Imposition of penalty - appellant contended that order of penalty was based entirely on his retracted confession - Seizure of goods - Unlawful import of goods - non production of relevant documents - Appeal against the decision of HC [2015 (2) TMI 263 - DELHI HIGH COURT] - Apex Court dismissed the appeal of the assessee.
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2016 (1) TMI 906
Claim of exemption from CVD - Import of Chlortetracycline 15% (Medicaments) - Animal Feed Supplements - Classification - Notification No.3/2005-c.Ex (Sl.No.29) dt. 24.2.2005. - Revenue's appeal is limited to confiscation and imposition of fine and penalty which was set aside by the Commissioner (Appeals) - Held that:- On perusal of OIO, we find that in spite of several opportunities were given to the respondent to appear for personal hearing, the respondent to appear for hearing to defend their case and the having accepted the classification before Commissioner (Appeals) we do not find any merit in the respondents contention on classification of imported goods in their cross objection. We also find that the adjudicating authority and the appellate authority have discussed the classification issue at length and rightly held that the goods are “Animal Feed Supplement” and classifiable under Chapter 23 of CTA. Therefore, the cross objection on their issue is liable to be rejected. Nowhere in the invoice the goods were described as “Medicaments” but they have added and inserted the words “medicaments” while describing the description of the goods in the B/E and claimed classification under Chapter 30 to evade payment of appropriate duty of customs. It is evident that respondents claimed classification of goods as “medicament” under Chapter 30 with intention to avail exemption of CVD at NIL rate under Central Excise notification No.3/2005-C.Ex Sl.No.29). Therefore, intention of the respondent is established the contravention under Section 111 for confiscation is fully justified. Demand of duty confirmed - however redemption fine and penalty reduced - Decided partly in favor of Revenue.
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PMLA
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2016 (1) TMI 907
Applicants have prayed to release them on bail - offence punishable under Sections 3 read with Section 4 of the PMLA read with Section 120B of the Indian Penal Code - Held that:- . It appears that the applicants were involved in cricket betting and was setting the accounts with respect of the money generated out of cricket betting. It is an admitted position that cricket betting is not a scheduled offence and hence the money generated out of cricket betting does not come within the purview of the definition of proceeds of crime. In the present case, the scheduled offences are cheating and forgery and the conspiracy to commit the same with an object of procuring SIM Cards on the basis of false and forged documents. All the SIM Cards in the present case were recovered during the search conducted on the 19.03.2015 under Section 37 of the FEMA, 1999 and since the applicant herein was not present there at the time of search he has nothing to do with those SIM Cards. Even for the sake of argument if we believe that the contents of Case No.85 of 2015 are correct, then also what emerges out of the scheduled offences are the SIM Cards. That what was derived or obtained directly or indirectly were the SIM Cards, and as far as the usage of the SIM Cards are concerned, it is a separate offence and the same is not relied upon by the Enforcement Directorate. It is true that in the case of Ankush Bansal, whose bail order forms part of the bail application, this Hon’ble Court while admitting the bail in para No.10 have observed that money generated from cricket betting are not proceeds of crime. If this is the situation, then without there being any proceeds of crime the offences under Section 3 of PMLA is not made out against the present applicant herein and since no offence as such under the PMLA are made out against the applicant, hence, the applicability of Section 45 of the PMLA does not arise. A bare perusal of Section 45 of the PMLA shows that when the Courts are satisfied that there is a reasonable ground of believing that when the applicant is not guilty of such offence and that he is not likely to commit any offence while on bail, he can be granted bail. Since, in the present condition there are no proceeds of crime existing hence Section 3 of the PMLA does not arise. In view of above observation, I am of the opinion that present both the applications require consideration. Hence, both the applications are allowed and the applicants are ordered to be released on bail.
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Service Tax
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2016 (1) TMI 928
Service Tax Dispute - Settlement Commission rejected the application - The Petitioners say that since they had accepted that there was a short payment of service tax and interest, in addition to filing periodical returns as required, the Petitioners approached the Settlement Commission for a settlement of the dispute - The Settlement Commission purported to note that the Petitioners did not have sufficient supporting documentation. Held that:- Settlement Commission has plenary powers to summon and take evidence. If there was any doubt about this, it is completely set at rest by the plain wording of Section 32-L(2) which speaks specifically of the Central Excise Officer being entitled to use all the materials and information produced by a petitioner before the Settlement Commission, “or the result of the enquiry held or evidence recorded” by the Settlement Commission in the course of proceedings before it “as if such materials, information, enquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of proceedings before him”. For the Respondents to say, therefore, in paragraph 2 that the Settlement Commission is “not a forum for evaluating evidence or deciding a matter involving complicated issues of facts and law” is clearly incorrect. We will assume for the purpose of this Petition that a copy of the Revenue’s report was in fact made available to the Petitioners. We find, however, that the Petitioner was given no opportunity of meeting it. The Settlement Commission seems to have straightaway accepted that Report not only as gospel, but as totally incontrovertible, and incapable of being subjected to any rational settlement. There is absolutely no basis for this, other than the Settlement Commission saying, to all intents and purposes, that the matter is apparently too onerous and too taxing on the Settlement Commission’s time, energy and resources. This is wholly unacceptable. The very least the Settlement Commission ought to have done, in our view, was to give the Petitioner an opportunity to respond to the Revenue’s observations and Report. Had the Petitioners then failed to do so, or if, on a close examination, that response was found on merits to be without substance, the application could have been dealt with accordingly. But to deny that opportunity and to thereby short-circuit a properly brought Settlement Case in this fashion is not, in our view, in keeping with the statutory mandate at all. We are satisfied that there has been a fatal violation of the principles of natural justice. We are also satisfied that the Settlement Commission has not proceeded in accordance with its statutory mandate under Chapter V of the CEA. We specifically reject and repeal the reason given by the Settlement Commission that it cannot take evidence or that, when confronted with conflicting submissions on facts and law, its only recourse is to dismiss a settlement application brought before it. Nothing could be further from the statutory intent. The Petition succeeds in part. - Matter restored before the Settlement Commission for a fresh consideration.
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2016 (1) TMI 927
Condonation of delay in filing of appeal before Commissioner (appeals) - delay of 104 days - Held that:- law is the Commissioner and the High Court has no power to admit an appeal where it is filed beyond the statutory time limit prescribed in the statute including the condonable period. Though the ‘Order' passed in ITC Ltd. [1990 (8) TMI 173 - SUPREME COURT OF INDIA] is strongly relied on by the appellant, the same is not applicable as the said ‘Order' was passed considering the peculiar facts and circumstances of the said case and in view of the concession made on behalf of the Revenue as evident from paragraph 1 of the said ‘Order'. - Delay cannot be condoned - Decided against the assessee.
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2016 (1) TMI 926
Delay in filing of an appeal before Commissioner (Appeals) - Appellant contended that, there has been no real delay in the filing of the appeal - Revenue contended that assessee has filed the appeal beyond the condonable period - At this stage of the hearing of the above matters, the learned counsel appearing on behalf of the assessee had submitted that the assessee may be permitted to file an appeal before the Customs, Excise and Service Tax Appellate Tribunal, under Section 86 of the Finance Act, 1994, on depositing 10% of the service tax demanded by the department, leaving it open to the assessee to show that in fact, there was no delay in the filing of the appeal before the Commissioner (Appeals), while challenging the Order-in-Original, dated 27.1.2011. Held that:- this court finds it appropriate to permit the assessee to prefer an appeal against the order of the Commissioner of Appeals, dated 27.1.2011, before the Customs, Excise and Service Tax Appellate Tribunal, within 15 days from the date of the receipt of a copy of this order. The assessee shall deposit 10% of the service tax demanded by the department, before the filing of the said appeal. It would be open to the assessee to prove, by sufficient evidence, before the Appellate Tribunal, that the appeal filed by the assessee, before the Commissioner of Appeals, was within the time limit prescribed by the relevant provisions of law.
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2016 (1) TMI 925
Waiver of pre-deposit - appellant was suffering undue financial hardship - Tribunal has passed the impugned order directing the appellant to deposit a sum of ₹ 20,00,000/- - Held that:- In the facts and circumstances of the case, this court finds it appropriate to set aside impugned order, dated 12.10.2015, passed by the Tribunal and to remit the matter back to the Tribunal, to decide the issue relating to the plea of the appellant that it was suffering undue financial hardship. Accordingly, the impugned order of the Tribunal is set aside and the matter is remitted back to the Tribunal for consideration of the said issue and to pass appropriate orders thereof. It is for the appellant to furnish sufficient evidence before the Tribunal to substantiate its claim that it was suffering undue financial hardship. - Matter remanded back.
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2016 (1) TMI 924
Self adjustment of excess service tax paid towards payment of service tax during the subsequent period - appellants had not intimated the said adjustment to the department - Rules 6(4A) and 6(4B) of the Service Tax Rules, 1994 - Held that:- there is no dispute about the fact that appellants have paid excess service tax amount of ₹ 2,49,858/- in May 2010. The dispute revolves around the procedure they have followed in adjusting the said excess amount against the future service tax liabilities in June, July and August 2010 suo-moto. We find force in the arguments of the learned Senior Adviser of the appellants that infringement of the procedure is not serious enough to impose equivalent penalty of ₹ 2,49,858/- under Section 78 in the instant case. It is so especially, since in reality there is no short payment of service tax of ₹ 2,49,858/- in the instant case, and it is a question about adjustment of excess service tax paid which has been adjusted suo-moto against the subsequent service tax liability. Demand of duty and penalty set aside - levy of penalty of ₹ 5,000/- u/s 77 upheld - Decided in favor of assessee.
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2016 (1) TMI 923
Levy of penalty u/s 76 and 78 - waiver u/s 80 - delay in payment of service tax - earlier have not filed ST-3 returns and have not remitted the service tax collected from the customers to the Govt. exchequer - only after the investigation was started the Respondents started paying the service tax though belatedly. - Held that:- There is enough reason to view the non-payment of service tax on due dates by the Respondents leniently. It is observed that the Respondents have paid almost the entire amount of service tax due before issuance of show cause notice. We also find that the legislature in its wisdom has also amended the provisions of Section 78, albeit from 01.4.2011, that the penalty under Section 78 may be reduced to 50% when true and complete details of the transactions are available in the specified records. In view of the same, we hold that the equivalent penalty imposed on the Respondents under Section 78 of the Finance Act, 1994, is to be reduced to 50% of the same in respect of the first show cause notice dated 30.08.2011, provided that the Respondents pay the said amount within thirty days from the receipt of this order. - Decided partly in favor of assessee.
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Central Excise
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2016 (1) TMI 922
Admissibility of capital goods credit - parts used by the appellant in the capital goods of plant and machinery which in turn are used in the manufacture of excisable goods, cement and clinker and inputs used in manufacture of final product - Held that:- We find that the Hon'ble Supreme Court in the case of CCE Coimbatore Vs Jawahar Mills Ltd. (2001 (7) TMI 118 - SUPREME COURT OF INDIA) has settled the issue of credit availed on various parts used in the plant and machinery as capital goods and under erstwhile rule 57Q. In respect of input 'Aquachem', this Tribunal in the case of India Cements Vs CCE Trichy [2010 (1) TMI 394 - CESTAT, CHENNAI] has already allowed input credit. By respectfully following the apex court's decision (supra) and the Tribunal's decision (supra), we hold that appellants are eligible for credit on items used in the plant and machinery for manufacture of cement and clinkers under rule 57Q (1) of the CER 1994. Accordingly, we set aside the impugned order to the extent of denial of credit and the consequential demand of recovery. Impugned order is set aside and the appeal is allowed. - Decided in favour of assessee.
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2016 (1) TMI 921
Exemption under notification NO.6/2002-CE dated 1.3.2002 as amended vide Notification No.29/2003-CE dated 10.4.2003 denied - failure to produce the certificate before clearances and therefore are not eligible for the exemption - falire v/s late production of certificates - Held that:- From the copy of certificate produced before adjudicating authority, it is clear that the goods were cleared to DMRC Ltd. for use in DMRC project and therefore the goods satisfied the condition for being exempted. The only dispute is on pressing into application the benefit of exemption the condition to produce the certificate before clearance was not complied with. In our view, when the goods have otherwise satisfied the conditions for granting the benefit, then a liberal interpretation is called for at the stage of applicability. After taking into consideration the facts, evidence and arguments placed before us, we hold that the certificate having been produced, the delay, if any, to produce the certificate is only a procedural lapse for which the benefit of exemption cannot be denied. In the appellants' own case KEI Indus Ltd. vs. CCE, Jaipur-2008 (2007 (10) TMI 497 - CESTAT, NEW DELHI ) in a similar issue, this Tribunal has held that mere late production of essentiality certificate is not a ground for denying the benefit of exemption. - Decided in favour of assessee.
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2016 (1) TMI 920
Eligibility to take cenvat credit on “8 cavity mould for flip to cap” sent to job worker without bringing the same into their factory - Held that:- As under Rule-4(5)(b) moulds etc can be sent to the job worker but no condition, like its receipt back within 180 days etc as prescribed in Rule-4(5) (a) of the cenvat crdtit Rules -2004 is specified. The argument of the appellant , that such moulds may not be brought back by the appellant if it has exhausted its production capability, has got some force. The purpose of bringing the moulds first to the factory premises and then clearing the same to a job worker may not serve any purpose except for incurring some additional transportation cost to the appellant. It is an accepted norm that raw materials can also be directly sent to the job worker without being actually brought into the factory of an assessee. In view of the above observations & settled proposition of law appeal filed by the appellant is allowed with consequential relief, if any.
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2016 (1) TMI 919
Classification - DHPE warp knitted fabrics, HDPE ropes, strips, rachal knitted fabrics for agro products and wastes made out of plastic strip less than 5 mm in width - Held that:- Chapter Note 1A to Chapter 54 was inserted with effect from 29.06.2010 with retrospective effect. The products under question in the present appeals are not plastic woven bags. These are knitted fabrics used as agro net. Hence distinct from the plastic bags considered in the earlier cases. By taking into account the changes in the scope of the tariff heading and the item under consideration recently the Ahmedabad Bench of the Hon'ble Tribunal in the case of Flora Agrotech Vs. CCE Vapi (2014 (11) TMI 114 - CESTAT AHMEDABAD ) has held that such knitted fabrics are classifiable under 60059000. The fabrics manufactured by the appellants are warp knitted fabrics made out of synthetic yarn of width less than 5mm be classified under 6005. Further, the ISI standard notified by Bureau of Indian Standards for agro textiles shade nets for agriculture and horticulture and as per this standard the above textile fabrics are made from tapes of 1.7 mm width. And in the present case the width of the tape is of 1.5 mm and the goods manufactured by the appellants are classifiable as textile fabrics and articles of fabrics rightly classifiable under chapter heading 60059000 and the strips (HDPE) not exceeding 5mm is classifiable under 54049020 - Decided in favour of assessee.
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2016 (1) TMI 918
Rent or compensation charges for the loss or damage - whether will form part of the transaction value and duty is required to be paid on the said amount? - Held that:- In appellants own case, the Bangalore bench of the Tribunal [2008 (6) TMI 427 - CESTAT, BANGALORE ] held that the rental charges are leviable when the cylinder is retained for a period longer than the stipulated time. When such is the case, how can one hold that such charges are in relation to the sale of the gases? Hence, we do not find any merit in the impugned order. We set aside the same and allow the appeal with consequential relief. - Decided in favour of assessee.
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2016 (1) TMI 917
Eligibility for CENVAT credit - iron and steel items used for fabrication of components / accessories of various machinery like rotary klin, rotary cooler, conveyor systems, raw material preparation plant, power plant and pollution control equipment - Held that:- As in the case of Rajasthan Spinning Mills (2010 (7) TMI 12 - SUPREME COURT OF INDIA ) held that steel plates and MS channels used in the fabrication of chimney would fall within the ambit of capital goods. In the case of CCE vs. India Cements Ltd. [2014 (7) TMI 881 - MADRAS HIGH COURT ] held that MS plates, angles, channels etc. used in the erection of various machineries such as electrostatic precipitator for raw mill project, additional fly ash handling system, MMD crusher, etc. can be considered as eligible for cenvat credit as component of capital goods. The Hon’ble High Court held after examining the various case laws in favour of assessee. Applying this principles, we find that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. Applying the principle of “user test” laid down by the Hon’ble Supreme Court in Jawahar Mills case (2001 (7) TMI 118 - SUPREME COURT OF INDIA ) the angles, beams and channels used in the making and fabrication of these capital goods are found eligible for Cenvat credit.- Decided in favour of assessee.
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CST, VAT & Sales Tax
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2016 (1) TMI 910
Detention of truck along with the goods which are in the nature of ceramic tiles. Case of the petitioner is that the goods were transported for interstate sale originating from Rajasthan for sale at Maharashtra State. The authorities have detained such goods on the ground of insufficient documents. - Held that:- Truck / goods are allowed to released after deposit of tax at applicable rate and subject to further conditions.
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2016 (1) TMI 909
Premature recovery proceedings where there is time to file such an appeal - Held that:- The learned Government Advocate submits that no precipitative action would be taken if the petitioner would file an appeal within the period prescribed for filing the appeal. - Recording the submission of the learned Government Advocate, the petitions stand disposed of. If no appeal is filed, it is open for the respondents to execute the order.
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2016 (1) TMI 908
VAT Commissioner revised the order u/s 75 of GVAT and raised the demand - It is this order that the petitioners have challenged in this petition primarily on the ground that merely because the judgment of the Tribunal, which was in favour of the petitioner, has been carried in appeal by the Department, would not be ground to enable the Commissioner to exercise revisional powers and set aside the order of appellate authority. Held that:- the course adopted by the Commissioner is wholly erroneous. - The judicial discipline required that the Commissioner did not ignore such pronouncement of the Tribunal. Merely because the Department was aggrieved by such judgment and challenged the same before the High Court, would not be ground enough to enable the Commissioner to exercise revisional powers and to set aside the order of appellate authority. At best, the Department, in order to pursue the issue further, could and in fact ought to have filed appeal against the order of the Joint Commissioner. - Decided in favor of assessee.
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