TMI Tax Updates - e-Newsletter
October 1, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Fee for Technical services - DTAA with Singapore - Section 9(1)(vii) of the Income tax - fee paid for training, in-class teaching and on-line teaching - not taxable - AAR
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Income Tax:
Charitable activities u/s 2(15) - exemption u/s 10(23C) - Whether receipt of royalty in lieu of IPR is charitable activity or not - Requirement of separate books of accounts - not a business activity - exemption allowed - HC
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Income Tax:
Whether the excise duty on raw material consumed during the year is allowable u/s. 37(1) - held yes - HC
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Income Tax:
Disallowance u/s 40(a)(i) for Non TDS – method of accounting - v Thus a circular may not override or detract from the provisions of the Act but can seek to mitigate the rigour of a particular provision for the benefit of an assessee in specified circumstances - HC
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Income Tax:
Deduction u/s 80G - charitable activities u/s 2(15) or not - activities of Akhand naam sankirtan, Thakur Sewa of Shri Girdhari Ji and Samadhi of Baba Gaurang Das. and organization of Bhadaras - held as charitable in nature - HC
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Income Tax:
Reassessment - Issue of Notice u/s 148 to the wrong address – notice is not valid - provisions of Section 292BB would also not help the department. - HC
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Income Tax:
Cash Credit - Addition u/s 68 - It is impossible to accept that this transaction is genuine when the income tax returns show a meager amount of Rs.1.00 lakh and odd and how the creditors could advance huge sums of Rs. 5.00 lakhs each - HC
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Income Tax:
Authorization for search u/s 158 BD of the Income Tax Act - ITAT observed that nothing to show that the Addl OIT (Inv.) was authorized to issue warrant of authorization - search was invalid - HC
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Income Tax:
Expenditure u/s 37(1) - whether levy of redemption fine and personal penalty was in the nature of fine and penalty and are not to be allowed as deductible business expenditure - expenditure allowed - HC
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Income Tax:
Deduction u/s 10B of the Income Tax Act – whether printing of textbooks is eligible activity for claiming exemption u/s 10B - held yes - HC
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Income Tax:
Revision u/s 263 - ITAT failed to record anywhere that the method, that was adopted by the Assessing Officer to attribute profit of the assessee, is recognised by any law in India. This aspect of the matter goes to the root - revision upheld - HC
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Income Tax:
Application of section 56(2)(vi)(b) - taxability of gifts received on occasion of the marriage his daughter – The expression “marriage of the individual“ is unambiguous in its intent and does not admit to an interpretation, that it would include an amount received on the marriage of a daughter. - HC
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Income Tax:
Waiver/ reduction of penalty u/s 273A - poser of commissioner to reduce or waive penalty imposed under sections 271(1)(a) and 273(2(c) - CIT rejected the application - matter remanded back to CIT - HC
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Income Tax:
Deduction u/s 80IB - Delayed filing of return u/s 139(4) - Power to condone the delay in filing return - vires of Section 80-AC - Assessee directed to make application before CBDT - HC
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Customs:
Exemption from levy of CVD - the goods imported by the appellant were exempt from duty of excise vide Notification No. 4/2006-C.E. as the goods which were imported were nothing but Zirconium Ore - No CVD - AT
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Customs:
Assessable Value of Goods – inclusion of fee payable by the appellants for the Sole Distribution Rights - the department could not show any evidence that the aforesaid fee was liable to be loaded in terms of Rule 10(1)(d) - demand set aside - AT
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Customs:
Penalty on CHA - There was no deliberate attempt on the part of the appellant in violating the law; therefore penalty against the appellant herein is much on the higher side, especially considering the fact that the appellant was only a small time CHA - penalty reduced - AT
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Customs:
Penalty u/s 112(a) - frozen peas, the goods under importation, has not been found fit for importation - penalty confirmed - AT
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Customs:
Penalty - Confiscation of foriegn currency - carrying currency in excess of prescribed limit - penalty reduced - AT
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Service Tax:
Stay application - non deposit of service tax as collected from the clients / customers - having regard to financial hardship, stay granted partly - AT
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Service Tax:
CENVAT Credit - Residential land line telephone services - prima facie credit is allowable - stay granted - AT
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Service Tax:
Export of services - Money transfer business – Location of the consumer - Following decision of Paul Merchants Ltd. vs. C.C.E., Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] - stay granted - AT
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Service Tax:
Vocational training - the adjudicating authority prima facie erred in holding that since the degree in hotel management granted by the petitioner is a professional qualification and holder of such degree cannot secure self-employment unlik a tailor/draftsman etc., the exemption benefit was inapplicable - stay granted - AT
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Service Tax:
Demand beyond normal period of limitation - Whether waiver of penalty u/s 80 would mean that no demand can be confirmed beyond the normal period of limitation - stay granted partly - AT
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Central Excise:
Issuance of Show cause notice beyond normal period of Limitation – recovery of interest on late payment of duty - when no suppression of facts no demand beyond one year - HC
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Central Excise:
Duty on Finished Goods Short Found - no fault can be found with the decision of the authorities below in discarding the statement/panchanama recorded on the date of search as the records found during the course of search establish to the contrary - HC
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Central Excise:
Classification of goods - Condensing Unit of Air-conditioning Machines - Words and Phrases - Valuation - Import policy - the components which were required for completion of one air-conditioning machine could be reconsidered as essential. - HC
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Central Excise:
Valuation of Goods - physician’s samples - There cannot be two valuations for the physician’s sample and for the open market sale - HC
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Central Excise:
Transfer of Cenvat Credit on transfer of capital goods - Rule 10 - another factory of the manufacturer was not under Cenvat Scheme - demand confirmed - HC
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VAT:
Penalty - Evasion of tax - Inter state sales during the movement of goods - The petitioner has remained unsuccessful in setting out a case of it being a sale in transit from the documents. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
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Bilateral Trade Target of USD 90 Billion Between India and Africa Achievable By 2015: Anand Sharma
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Gold and Silver Notified
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CAD will be Contained at US $ 70 Billion; Government Committed to the path of Fiscal Consolidation and to Contain Fiscal Deficit within 4.8% of GDP: says Dr Arvind Mayaram, Secretary, Department of Economic Affairs (DEA)
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RBI Reference Rate for US $ and Euro
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Second Quarter Review of Monetary Policy 2013-14 on October 29, 2013
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Reserve Bank Penalises United Commercial Co-operative Bank Limited, Kanpur, Uttar Pradesh
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ICSI National Seminar on ‘Indian Financial Code’ at Chennai
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SFIO Submits Interim Report on Investigations Conducted Against 63 'Chit Fund' Companies
Case Laws:
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Income Tax
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2013 (10) TMI 20
Fee for Technical services - DTAA with Singapore - Section 9(1)(vii) of the Income tax - fee paid for training, in-class teaching and on-line teaching - Whether the payments made by the applicant to INSEAD for various services under the terms of the programme partnership agreement is in the nature of "Fees for Technical Services" within the meaning of the term in Article 12 of the Convention between the Govt. of Republic of India and the Govt. of Republic of Singapore for the Avoidance of Double Taxation and the Convention of fiscal evasion with respect to taxes on income' ("the India-Singapore Tax Treaty") and/or under the provisions of Section 9(1)(vii) of the Income tax Act, 1961 – Held that:- payments made by the applicant to INSEAD for services rendered under the terms of Agreement are not in the nature of "Fees for Technical Services" as it falls under the exclusive clause of Article 12.5(c) of the Treaty though the payment for the service may be fees for technical services under the provision of Section 9(1)(vii) of the Indian Income Tax Act, 1961. Withholding of TDS u/s 195 of the Income Tax Act – Held that:- Payments are held to be not taxable in India there is no case for withholding tax under Section 195 of the Income-tax Act, 1961 - Decided in favor of assessee.
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2013 (10) TMI 19
Charitable activities u/s 2(15) - exemption u/s 10(23C) - Whether receipt of royalty in lieu of IPR is charitable activity or not - Requirement of separate books of accounts Registration of charitable institution u/s 10(23C) of the Income Tax Act Held that:- the contention of the Revenue that the petitioner charges fee and, therefore, is carrying on business, has to be rejected. The intention behind the entire activity is philanthropic and not to recoup or reimburse in monetary terms what is given to the beneficiaries. Element of give and take is missing, but decisive element of bequeathing is present. In the absence of -profit motive and charity being the primary and sole purpose behind the activities of the petitioner is perspicuously discernible and perceptible. As observed above, fee charged and quantum of income earned can be indicative of the fact that the person is carrying on business or commerce and not charity, but we must keep in mind that charitable activities require operational/running expenses as well as capital expenses to be able to sustain and continue in long run. The petitioner has to be substantially self-sustaining in long-term and should not depend upon government, in other words taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under the residuary clause -general public utility Regarding separate books of accounts - Held that:- We fail to understand when the petitioner is maintaining the books of accounts with regard to their receipts/income as well as the expenses incurred for their entire activity then how it can be held that separate books of accounts have not been maintained for business activities. The -business activities are intrinsically woven into and part of the charitable activity undertaken. The -business activity is not feeding charitable activities. In any case, when we hold that the petitioner is not carrying on any business, trade or commerce, question of requirement of separate books of accounts for the business, trade or commerce is redundant. Restriction under First proviso to section 2(15) - Held that:- Question is whether the legislative intent is to exclude from definition of charitable purpose any activity which has the aim and object of providing services to trade, commerce or business. The matter is not free from doubt but there are good reasons to hold that the bar or probation is not with reference to activity of the beneficiary but the activity of the assessee under the residuary clause. Value of Ra. 10 lacs (Now ₹ 25 lacs) under Second proviso to section 2(15) - Held that:- A small charitable organization that receives token fee of more than ₹ 80,000/- a month or now ₹ 2,00,000/- per month approximately, would disqualify and lose their charitable status. The object of the proviso is to draw a distinction between charitable institutions covered by last limb which conduct business or otherwise business activities are undertaken by them to feed charity. The proviso applies when business was/is conducted and the quantum of receipts exceeds the specified sum. The proviso does not seek to disqualify charitable organization covered by the last limb, when a token fee is collected from the beneficiaries in the course of activity which is not a business but clearly charity for which they are established and they undertake. Petitioner can be denied benefit of registration/notification under Section 10(23C)(iv) - Decided in favor of assessee.
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2013 (10) TMI 18
Whether the excise duty on raw material consumed during the year is allowable u/s. 37(1) - Whether the assessee is entitled to MODVAT credit on account of excess of excise duty/additional customs duty, paid by it on purchase of raw material, over the duty payable on finished goods, in the year of accrual i.e. when the raw material is purchased or in the year of receipt, when the assessee is maintaining accounts on mercantile system of accounting? - Held that:- As payment of excise and additional customs duties had been made, it was to be allowed as a deduction under Section 37(1) of the Act. Unutilised MODVAT credit remained on the credit side and was refunded in the next assessment year, i.e., Assessment Year 1996-97, when income of the assessee to the tune of Rs.7.16 crores was taxed on account of refund. This would amount to double taxation of the same amount in the two years. The issue in question is covered by the decision of the Supreme Court in CIT versus Indo Nippon Chemicals Company Limited, [2003 (1) TMI 8 - SUPREME Court], wherein it was observed that the Assessing Officer/Revenue was not correct in holding that MODVAT credit was irreversible credit available to the manufacturers upon purchase of duty paid raw material and it should amount to income, which is liable to be taxed under the Act - In the said case it was also noticed that the assessee had uniformly applied the net method, namely, valuing the raw material at purchase price minus MODVAT credit and the order of the Assessing Officer/Revenue was adversely commented upon because they had adopted “gross method” which included the MODVAT credit at the time of purchase and “net method” at the time of valuation of stock in trade. This practice was depreciated. MODVAT credit paid was brought to tax in the next year - Decided against the Revenue.
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2013 (10) TMI 17
Disallowance u/s 40(a)(i) for Non TDS – method of accounting - validity of circular - whether circular issued u/s 119 is contrary to section 145 - under the circulars, payments made in form of a commission or discount to the foreign party was not chargeable to tax in India under Section 9(1)(vii) - Held that:- Circular aided in uniform and proper administration and application of the provisions of the Act - The respondent-assessee was entitled to rely upon the circulars. In light of the judgments of the Supreme Court in CIT versus Eli Lilly Company (India) Private Limited, [2009 (3) TMI 33 - SUPREME COURT] and G.E India Technologies Centre Private Limited versus CIT, [2010 (9) TMI 7 - SUPREME COURT OF INDIA], once the income was not exigible or chargeable to tax, TDS was not required to be deducted. Money paid to the third parties, who did not have any office or permanent establishment in India, was exempt and not chargeable to tax. Thus on payments or income, TDS was not required to be deducted - Payments in question were made prior to circular No. 7/2009. On this aspect, there is no dispute – Deleted the addition made by the Assessing Officer under Section 40(a)(i) of the Act. The appeal, being devoid of merit, is dismissed – Decided against the Revenue. Mandatory nature of Circular – Held that:- No any inconsistency or contradiction between the circular issued and Section 145 of the Income Tax Act - In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to Section 145 of the Income Tax Act or illegal in any form. It is meant for a uniform administration of law by all the Income Tax Authorities in a specific situation and, therefore, validly issued under Section 119 of the Income Tax Act. As such, the circular would be binding on the Department. Relying upon the decision in the case of Catholic Syrian Bank Limited versus Commissioner of Income Tax, [2012 (2) TMI 262 - SUPREME COURT OF INDIA], it has been observed that the Central Board of Direct Taxes has statutory right to issue circulars under Section 119 of the Act to explain or tone down the rigours of law and to ensure fair enforcement of the provisions. Circulars issued have force of law and are binding of the Income Tax authorities though they cannot be enforced adversely against the assessee - Normally these circulars cannot be ignored. Thus a circular may not override or detract from the provisions of the Act but can seek to mitigate the rigour of a particular provision for the benefit of an assessee in specified circumstances
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2013 (10) TMI 16
Addition made for undervaluation of closing stock - change in method of accounting – Held that:- Changed method of accounting was more scientific and did not result any evasion of payment of tax. The question was considered and decided by the Madras High Court in CIT vs. Carborandum Universal Ltd [1983 (8) TMI 39 - MADRAS High Court] – Decided against the Revenue. Income of the assessee on account of incentives subsidy received – Subsidy received on free sale of sugar – Held that:- Reliance has been placed upon the judgment in the case of Commissioner of Income Tax v. Ponni Sugars and Chemicals Ltd [2008 (9) TMI 14 - SUPREME COURT] in which it was held in respect of same scheme namely the Sugar Incentive Scheme based on recommendation of Sampat Committee that where the object of the assistance under the subsidy scheme is to enable the assessee to set up a new unit or to expand an existing unit, then the receipt of the subsidy would be on capital account – In the present case, assesee was allowed additional free sale of sugar quota under the scheme for setting up or expanding the sugar unit. The benefit was given to the sugar mills to meet the capital outlay in setting up or expanding the sugar mills – Decided against the Revenue. Pre-operative trial run expenses, a revenue expense of capital expenditure – Held that:- Reliance has been placed upon the judgment in the case of CIT vs Kanoria General Dealers P. Ltd [1986 (1) TMI 86 - CALCUTTA High Court] – In the present case, pre-operation expenses have been detailed in the material produced before the AO, in respect to Co-Generation Plant, Rauzagaon; Oxalic Acid, Dhampur and thus the pre-operational expenses, were revenue expenses and not capital expenses. These expenses were actually claimed as revenue expenses in the computation with the return and were to be allowed as revenue expenses – Decided against the Revenue. Disallowance on account of convertible premium notes - Expenditure on Convertible Premium Notes (CPM) was spread over the period of life on CPM for six years. The year of payment was six years and on which the expenditure was incurred by paying maturity value – Held that:- Expenditure in this case spread over the period for which the discount has been paid – Reliance has been placed upon the judgment in Madras Industrial Investment Corpn. Ltd v. Commissioner of Income Tax [1997 (4) TMI 5 - SUPREME Court] is applicable and that the expenditure had to be spread out for a period of six years, and was not allowable in the years 1997-98 and 1998-99 alone – Decided in favor of Revenue. Expenses for technical know-how as revenue expenditure instead of capital expenditure – Held that:- In the present case the assessee is engaged in manufacture and sale of sugar. The Barabanki unit was set up in the same line of business from the funds borrowed by the company. There is no material to contend that the new unit was under different management or that there is no unity of control between the assessee in respect of business of manufacture and selling sugar and the business of manufacture and sale of sugar in the new unit at Barabanki – Decided against the Revenue.
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2013 (10) TMI 15
Deduction u/s 80G - charitable activities u/s 2(15) or not - whether the objects mentioned in trust deed like Akhand naam sankirtan in aashram uninterruptedly, Thakur Sewa of Shri Girdhari Ji and Samadhi of Baba Gaurang Das. And organization of Bhadaras on all important religious festival and other festivals like avirbhav and tirobhav tithes of Gaudiya Sampradayas bibhutis are pourely religious in nature and not in accordance with the section 2 (15) of the I.T. Act, 1961 - Rejection of registration u/s 12AA of the Income Tax Act – Held that:- Reliance has been placed upon the judgment in the case of Radhasoami Satsang v. CIT [1991 (11) TMI 2 - SUPREME Court] - From the object of the trust it cannot be said that the object and purpose of establishment of trust was not genuine and that activities as delineated in the object were not carried out by the trust. The findings that Akhand Naam Sankirtan is one type of meditation and yoga with organising Bhandara unless it was proved that it was for any particular community or group of persons and that food was not provided to the persons irrespective of caste and religion could not be a ground to reject the registration – Decided against the Revenue.
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2013 (10) TMI 14
Reassessment - Issue of Notice u/s 148 to the wrong address – Held that:- provisions of Section 292BB would also not help the department. - The invalidity of the notice issued under Section 148 renders the entire reaassessment proceedings as null and void whereas non service of a notice issued u/s 148 renders the assessment framed as bad in law. in this case there is no doubt that notice u/s 148 was served on an incorrect address and against which the explanation of the department is that the address of the assessee is well known and the Inspector of the department had gone to a correct address to serve this notice, is not tenable in the eyes of the law when the record reveals that the notice was never served upon the assessee - A notice issued u/s 142 (1) was sent back by Shri Alik Farsaiya, the legal consultant on the reasoning that the notice did not belong to any of his clients. Another notice, allegedly, sent and received by Shri Mahesh, the alleged employee of Dr. Ajay Prakash, when it is found that he was not an employee of the assessee, cannot be said to be duly served – Decided against the Revenue.
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2013 (10) TMI 13
Cash Credit - Addition u/s 68 - creditor’s creditworthiness - genuineness of transactions – Held that:- The existence of the creditor’s creditworthiness is one of the most important factors - After analyzing the materials produced by the assessee, found that the so-called two creditors had no creditworthiness and this is reflected from the accounts as well as from the tax returns - It is impossible to accept that this transaction is genuine when the income tax returns show a meager amount of Rs.1.00 lakh and odd and how the creditors could advance huge sums of Rs. 5.00 lakhs each; and wherefrom these huge amounts have come is not clear - Materials produced before the revenue officials by the assessee were not sufficient to adjudge that the assessee has discharged his burden - When the material produced before the revenue officials are good enough to come to conclusion that there is no genuine transaction of lending and borrowing of money, no further or other material is required – Decided in favor of Revenue.
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2013 (10) TMI 12
Addition on account of unexplained expenditure u/s 69C of the Income Tax Act - Addition made by the Assessing Officer under Section 69C of the Act are factual – Held that:- - Order of the Assessing Officer is brief, devoid of details and indicates the half-hearted attempt to make the addition – Assessee had used machinery of their sister concern and had not paid any money for the same. No further attempt was made by the Assessing Officer to verify the facts whether the sister concern had the requisite machinery or not and whether the electricity bills of the said sister concern justify the stand of the respondent-assessee – Decided against the Revenue.
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2013 (10) TMI 11
Waiver / Reduction of penalty u/s 273A - CIT rejected the application for failure to secure the interest of the revenue - CIT observed that, the assessee has neither paid nor made any satisfactory arrangement of payment of taxes, petition of the assessee cannot be accepted as all the conditions for application of provisions of Section 273A are not satisfied– Held that:- Application was dismissed for failure to secure the interest of the revenue and as the petitioner does not fulfil the conditions laid down in Section 273-A of the 1961 Act, but without pointing out the conditions the petitioner does not fulfil. The impugned order is, therefore, non-speaking. However, as the petitioner has during pendency of the writ petition furnished a bank guarantee, it would be appropriate and in the interest of justice that the Commissioner of Income Tax is directed to consider the matter afresh and in accordance with parameters set out in Section 273-A of the 1961 Act – Decided in favor of Assessee.
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2013 (10) TMI 10
Who was authorized and competent to issue warrant of authorization for search u/s 158 BD of the Income Tax Act - the warrant of authorization was issued by the Addl. DIT (Inv.). - ITAT observed that nothing to show that the Addl OIT (Inv.) was authorized to issue warrant of authorization – Held that:- Reliance has been placed upon the decision of the Hon’ble Delhi High Court in the case of Dr. Nalini Mahajan Vs. Director of Income Tax (Investigation), [2002 (5) TMI 29 - DELHI High Court] - Authorization under Section 158 BD issued in the case of respondent herein is invalid – Decided against the Revenue.
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2013 (10) TMI 9
Expenditure u/s 37(1) - whether levy of redemption fine and personal penalty was in the nature of fine and penalty and are not to be allowed as deductible business expenditure – Held that:- In Prakash Cotton Mills Pvt. Ltd.’s case [1993 (4) TMI 3 - SUPREME Court], the Supreme Court pertinently observed that whenever an authority has to decide whether to grant or refuse deduction under section 37(1) of the Income Tax Act, the governing test would be whether the amount payable is compensatory in nature – In the present case, personal penalty on the appellant is deleted – Regarding confiscation of goods, appellant was given the choice of redeeming the goods by depositing redemption fine - Amount of redemption fine of Rs.4,00,000/- in the present case was compensatory and therefore, fell outside the mischief of explanation of Section 37(1) of the Income Tax Act – Decided in favor of Assessee.
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2013 (10) TMI 8
Deduction u/s 10B of the Income Tax Act – whether printing of textbooks is eligible activity for claiming exemption u/s 10B - Reassessment u/s 147/148 - Held that:- Section 10B applies to 100% export oriented undertaking engaged in export of articles, things or computer software - The words “articles” and “things” are wide and by no stretch it can be said that the petitioner does not produce an article or a thing. After receipt of manuscripts from abroad, the petitioner has to do type setting, make/process/print on paper and then bind printed pages into books. Thus, a new product, distinct and separate from the bare manuscripts takes shape and gets a physical shape in form of books. Books are an article or a thing and the process involved is certainly production, if not manufacture – Decided in favor of Assessee. Reliance has been placed in the case of A. Mukherjee and Company Private Limited [1977 (9) TMI 26 - CALCUTTA High Court], wherein it was held that a publisher of books should be a manufacturer of books it is wholly unnecessary for him either to be an owner of a printing press or to be a book-binder himself. A paper is not a book, though it is printed on papers. A publisher may get the books printed from any printer but the printer is not the manufacturer but a mere contractor. The findings of the Tribunal in our opinion conclusively show that the assessee was carrying on the activity of manufacturing and also of processing of books which are also goods – This judgment does not support the Revenue - reassessment notice quashed - Decided in favor of assessee.
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2013 (10) TMI 7
Addition u/s 68 of the Income Tax Act – Held that:- The assessee on having parted with the confirmation by the creditors, the bank statements, PAN numbers as well as copy of the acknowledgment of the returns filed by those persons, had duly discharged his obligation, as the law has cast on him, and therefore, if any other further inquiry is necessary, it is for the Assessing Officer to so do and it was also so requested by the assessee while furnishing these details. On Assessing Officer having failed to exercise his discretion, in wake of overwhelming evidences in possession of the Revenue authorities, he was not right in making such additions - Both CIT [A] as well as the Tribunal when have concurrently held on an issue which is predominantly factual in nature, they deleted the addition – Decided against the Revenue.
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2013 (10) TMI 6
Revision u/s 263 appropriate or not – method of determination of international income - ITAT has held that 10 per cent thereof assessed as taxable income will establish that the Revenue was not prejudiced in the instant case and, accordingly, exercise of power under Section 263 of the Act was inappropriate - Held that:- the method referred to in paragraph 5 of Article 7 of the Treaty is a method known to the domestic law of the contracting State, in the instant case, India. The Assessing Officer and the Tribunal have failed to record anywhere that the method, that was adopted by the Assessing Officer to attribute profit of the assessee, is recognised by any law in India. This aspect of the matter goes to the root. There is no question, when the assessee has represented that it has maintained accounts, either in cash or in mercantile system, but has failed to establish that it has, in fact, maintained any such accounts, of applying best judgment method of assessment. In other words, if the assessee has maintained the accounts and has established that its expenses are more than its income or receipt, it is not liable to pay any tax in India. In the event, however, it fails to establish all or any of its expenses, the expenses shown to have been incurred, which could not be established, will be treated as the income of the assessee. - matter remanded to AO for reconsideration - Decided in favor of assessee.
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2013 (10) TMI 5
Deduction u/s 80IA of the Income Tax Act - Whether the "market value", as specified in Section [80-IA (8)] of the Act would be the same as the "sale price" of the State Electricity Board when the assessee did not incur any transmission loss or administrative or any other charges which the State Electricity Board has to incur for the same - The Assessee manufactures iron and steel. It has established a Captive Power Plant(CPP) to supply electricity to its manufacturing unit. The excess power is sold to the Chhattisgarh State Electricity Board - AO computed the market value of the power supplied to the Steel-Division and disallowed the difference between the market value claimed by the Assessee and the market value assessed by him – Held that:- CPP of the Assessee qualifies for claiming deductions under this sub-section 80-IA (4) (iv) of the Act - Sub-section (8) of section 80-IA {80-IA (8)} of the Act provides that for the purposes of deduction under this section profits and gains of eligible business are to be computed as if the transfer was done on the market value on that date - The proviso to section 80-IA (8) of the Act requires the AO to compute the profits and gains in the manner already proved. And in case the manner presents exceptional difficulties then the AO is empowered to compute profits and gains on such reasonable basis as he may deem fit. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market - AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer - Decided against the Revenue.
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2013 (10) TMI 4
Application of section 56(2)(vi)(b) - taxability of gifts received on occasion of the marriage his daughter – Held that:- The expression "individual" appearing in proviso (b) of Section 56(2)(vi) of the Act, is preceded by the words "marriage" and therefore, relates to the marriage of the individual concerned, i.e., the assessee and not to the marriage of any other person related to him in whatsoever degree, whether as his daughter or son. The expression "marriage of the individual" is unambiguous in its intent and does not admit to an interpretation, that it would include an amount received on the marriage of a daughter. If legislature had intended that gifts received on the occasion of marriage of the assessee's children should be exempted, nothing prevented Legislature from adding the words "or his children", after the words "marriage of the individual” - Addition made to the appellant's income on account of gifts received on the occasion of his daughter's marriage is affirmed – Decided against the Assessee.
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2013 (10) TMI 3
Waiver/ reduction of penalty imposed u/s 273A - poser of commissioner to reduce or waive penalty imposed under sections 271(1)(a) and 273(2(c) - CIT rejected the application – Held that:- Section 273-A of the Act enacts a non-obstante clause which empowers the Commissioner of Income Tax, whether on his own motion or otherwise, to reduce or waive penalty imposed or imposable. The discretion so conferred has to be exercised within the informed parameters set out in sub-clauses (a), (b), and (c) read along with Explanation I, as prevalent on the date of the application. The non-obstante clause indicates that the power so exercised would take colour from the sub-sections and sub-clauses of Section 273-A of the Act, and from no other provision of the Act. The opening words of Section 273-A of the Act, i.e., “Notwithstanding anything contained in this Act...”, confine consideration by the Commissioner of Income Tax to factors enumerated in Section 273-A of the Act. An adjudication based on grounds, other than grounds referred to in Section 273-A, would necessarily invite a valid charge that the order is null and void for an illegal exercise of jurisdiction, or a failure to exercise jurisdiction in accordance with statutory parameters set out in Section 273-A of the Act. Assessee had, prior to issuance of notice under sub-section 2 of Section 139 of the Act, voluntary made full disclosure of his income prior to any detection of the concealed income or the inadequacy of the particulars furnished - A perusal of the impugned order reveals that the Commissioner of Income Tax has assumed the role of an Assessing Officer and while dismissing the petition and rejecting the plea for reduction/waiver of the amount of penalty imposed has referred to the very same factors that led the Assessing Officer to impose penalty - Impugned order is set aside and the matter is remitted to the Commissioner of Income Tax, Bhatinda – Decided in favor of Assessee.
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2013 (10) TMI 2
Recording of reasons to believe for issuance of notice u/s 148 of the Income Tax Act – Necessity for re-assessment u/s 147 of the IT Act – Non inclusion of receipt of Japanese Yen 8,99,92,707 (Rs.3,35,58,280/-) in returned income - Held that:- it will be just and proper to direct that the petitioner should furnish complete and full details before the Assessing Officer in the reassessment proceedings in regard to receipt of Japanese Yen 8,99,92,707 in India and the fact that the said amount was shown in the taxable income and received in the previous year. In case the petitioner is able to satisfy the Assessing Officer on the said aspect, necessary and consequential assessment order will follow. Only in case the petitioner is not able to satisfy the Assessing Officer on the said aspect, the Assessing Officer can proceed with the reassessment in accordance with law. We clarify that only one assessment order can be and will be passed and the petitioner cannot insist that a separate order be passed. - Decided partly in favor of assessee.
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2013 (10) TMI 1
Deduction u/s 80IB - Delayed filing of return u/s 139(4) - Power to condone the delay in filing return and allow the deduction u/s 80IB- vires of Section 80-AC - According to the petitioner the Assessing Officer rejected the claim for deduction on the premise of the strict application of Section 80-AC. - Held that:- Under clauses (b) and (c) of Section 119 of the Act, it is the Central Board of Direct Taxes (CBDT) which has the jurisdiction to extend the benefit of condonation of delay since the claims for deduction under Sections 80-IB(10), 80-IA arising out of Section 80AC fall under chapter IV-A of the Act. Petitioners to file necessary applications enclosing all material information and records to the CBDT for a decision over condonation of the delay in filing the returns and if the CBDT has issued any circular/instructions delegating such powers to its officers, then the CBDT, it is needless to state, to forward the papers to the concerned delegate of the power to consider the applications and pass orders in accordance with law. If petitioners file the representation within one month from today, there is no reason to believe that the CBDT or its delegates would not pass orders within an outer limit of five months from the date of filing applications.
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Customs
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2013 (10) TMI 38
Exemption from levy of CVD - Benefit of Exemption Notification No. 4/2006 CE - import of Zircon Sand/ Zircon Ore – Held that:- Following CLASSIC MICROTECH PVT. LTD. Versus COMMISSIONER OF CUS. . AHMEDABAD [2013 (1) TMI 469 - CESTAT, AHMEDABAD] - the respondent were eligible for availment of benefit of Notification No. 4/2006-CE - Principal raw material was Zircon sand and Classified the same under CTH 2615 10 00 - Whether import of goods and declared the same as Zircon sand (Zircon Ore) and claimed the benefit of non-payment of CVD by availing the benefit of Notification No. 4/2006-C.E. was correct or not – Held that:- The goods which were imported i.e. Zircon sand were nothing but the Zircon Ore, the expert opinion having been not rebutted by any other opinion from any other expert, and specifications of imported goods seems to match with specification of the ISI standard for Zirconium Ore - Therefore the goods imported by the appellant were eligible for the benefit of Notification No. 4/2006-C.E. as the goods which were imported were nothing but Zirconium Ore – Decided in favour of Assessee.
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2013 (10) TMI 37
Bar of Unjust Enrichment – Refund Claim – Held that:- The appellant submitted that in spite of these specific directions, the refund sanctioning authority had not complied with the directions - the appellants were heard on the matter much after the time-limit specified had expired - There was a complete disregard and defiance on the part of the refund sanctioning authority of the orders passed by the Tribunal - The concerned authority was directed to pass order on the refund claims filed by the appellant – Decided in favour of Assessee.
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2013 (10) TMI 36
Assessable Value of Goods – inclusion of fee payable by the appellants for the Sole Distribution Rights - Held that:- Relying upon Commissioner of Customs Versus M/s Ferodo India Pvt. Ltd [2008 (2) TMI 12 - Supreme Court] - sole distribution fee payable under the agreement cannot be includible under Rule 10(1) (d) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller was includible in the assessable value. The contention of the appellant was that this fee payable by the appellants for the Sole Distribution Rights which facts the ld. Commissioner (Appeals) also did not dispute in his order - the department could not bring out any evidence that above amount was any part of proceeds of any subsequent resale, disposal of use of imported goods - the amount of ₹ 4.963 corres per annum sought to be loaded to assessable value was towards Sole Distribution Rights fees and the amount and its determination was a mechanism to determine the quantum of fee - the department could not show any evidence that the aforesaid fee was liable to be loaded in terms of Rule 10(1) (d) – order set aside – Decided in favour of Assessee.
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2013 (10) TMI 35
Penalty on CHA for wrong declaration of Classification of Goods - Duty Drawback – Interest – Penalty u/s 114(iii) - Revenue was of the view that the goods under 830700 attracted a lower rate of drawback – Held that:- As per Central Excise invoices and ARE-1, the goods were classifiable under Chapter Heading 8307 whereas in the drawback shipping bill classification claimed is 7307 and/or 7222 which attracted a higher rate of drawback of 1 1/2 % /2% as against the eligible drawback of 1% - The exporter in the case had admitted to the wrong claim of drawback and had paid back the excess drawback along with interest - Section 114 of the Customs Act provides for penalty for attempt to export goods improperly. The section covered imposition of penalty without mens rea and also on mens rea - When the law provides that penalty shall be imposable for commission and/or omission of an act without any mens rea such shall be imposable irrespective of any mens rea as held by the hon'ble apex Court in the case of Gujarat Travancore Agency, Cochin Vs. Commissioner of Income Tax Kerala, Ernakulam [1989 (5) TMI 1 - SUPREME Court ] - Penalties imposed for the omission on the part of the appellant in wrongly declaring the Chapter Heading under the drawback schedule which led to the claim of ineligible drawback, therefore, cannot be faulted. There was no deliberate attempt on the part of the appellant in violating the law; therefore penalty against the appellant herein is much on the higher side, especially considering the fact that the appellant was only a small time CHA - Taking into account the circumstances of the case penalty was reduced.
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2013 (10) TMI 34
Penalty u/s 112(a) - frozen peas, the goods under importation, has not been found fit for importation - Held that:- it is clear that frozen peas, the goods under importation, has not been found fit for importation by the Plant Quarantine authorities as per the Plant Quarantine (Regulation of Import into India) Order, 2003 and the same has been ordered to be destroyed to avoid threat of ‘peas cyst nematode'. Therefore, there cannot be any challenge to the absolute confiscation and order of destruction of the frozen peas under import under Section 111(d) of the Customs Act, 1962. It is not in dispute that the CHA filed along with Bill of Entry, invoice, packing list, country of origin certificate, phytosanitary certificate and other documents pertaining to the import of frozen peas - The plea that somebody in the appellant's firm handed over the documents to the CHA is bereft of logic and lacks conviction. Unless the appellant had decided to import these items and file Bill of Entry, the question of handing over these documents to the CHA would not arise at all. Therefore, in may view, the appellant directed the CHA to file the Bill of Entry and handing over the documents relevant to the importation is a clear evidence to come to this conclusion - the imposition of penalty under Section 112(a) of the Customs Act, 1962 on the importer is justified - Decided against assessee.
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2013 (10) TMI 33
Penalty - Confiscation of foriegn currency - Held that:- It is not disputed by the adjudicating authority that a person who is going abroad can carry USD 25000 with him. Therefore, the contention of the ld. Counsel is acceptable that redemption fine and penalties are on higher side as held by the tribunal in the case of Savier Poonolly (supra). Therefore, we are of the opinion that redemption fine and penalties are to be considered separately for each of the appellants. As Shri Rajesh Narendra Mewawalla was carrying USD 105,800 and Thai Baht 139,070 therefore, considering the quantum, we impose redemption fine of Rs.6 lakhs (Rupees Six lakhs) and reduced penalty to Rs. 3 lakhs (Rupees Three lakhs) on Shri Rajesh N. Mewawall under sec. 114(i) of the Customs Act, 1962. With regard to Shri Arun Ramlal Sura who was carrying USD 40,000/- and British Pounds 520 therefore, redemption find of Rs.1,00,000/- (Rupees One lakh) is imposed and penalty is reduced to Rs.50,000 - Shashikant Munshilal Katiyar was carrying USD 1100 which is within the permissible limit, therefore, no redemption fine is imposed on him and penalty is also dropped - Decided partly in favour of assessee.
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Corporate Laws
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2013 (10) TMI 32
Amendment of written statement - Inclusion of secondary evidence - Transfer of shares - Onus to prove transfer of shares - CLB rejected amendment of written statement - Held that:- In the application seeking amendment of the written statement, the appellant herein has referred to facts which are not necessary for the purpose of determining the real question - core issue to be decided in the application was whether there was a transfer of the 23800 equity shares out of 23900 equity shares held by D.K. Jain in favour of C.S. Aggarwal on 28.03.2008. - decision of the CLB that the amendments sought to be made to the written statement are irrelevant to the main controversy and that the facts and circumstances stated in the application and which are sought to be incorporated in the written statement as "brief background" were already known to both the parties, are findings of facts from which no question of law arose. It is a pre-requisite for the adjudication of an appeal under Section 10F of the Act that the appeal should involve a question of law. The finding of fact cannot also be termed perverse - Decided against petitioner.
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2013 (10) TMI 31
Nature of Company - Whether R1 was a family Company to which Principles of quasi partnership applied - Held that:- it was difficult to find out that a right was impliedly reserved for family members to be on the Board as of right - CLB found that the appointment of Directors was done in accordance with the Articles of Association and therefore, it had taken the view that the principles of dissolution of partnership cannot be invoked in the case on hand - merely because the Company owns several cars and one was being used by the second respondent, the same cannot be said to be mismanagement of the affairs of the Company by the second respondent. Oppression and Mismanagement - Whether the second respondent had mismanaged the company – Held that:- The appellants have not made out a case under Section 397 of the Act and that they have not proved 'oppression' - For the court to grant relief under section 397, the respondents must fail to show that just and equitable winding up would unfairly prejudice them and the petitioners must succeed in showing that just and equitable winding up would, even if granted, unfairly prejudice the petitioners - Sometimes, in minority petitions, asking the question whether the company petitioner will be unjustly prejudiced on winding up, becomes an obviously unnecessary and empty exercise. Such is the case where two groups of nearly equal shareholding fight with each other for the control of the company. If one were to wait during a battle of this type, and ask, if the company petitioners have made out the case that winding up of the company will unfairly prejudice them, the simple and straightforward answer would be that nobody wants a winding up, the two sets are fighting for the company not its winding up. The principle of 'just and equitable' clause - Scope of section 433 (f) - Section 433 provides for the circumstances in which a company may be wound up by the court - There are six recipes in this section and we are concerned with the sixth, namely, that a company may be wound up by the court if the court is of the opinion that it was just and equitable that the company should be wound up - Section 222 (f) of the English Companies Act, 1948 was in terms identical with the Indian counter-part, Section 433(f). It is now well established that, the sixth clause, namely, 'just and equitable' is not to be read as being ejusdem generis with the preceding five clauses. While the five earlier clauses prescribe definite conditions to be fulfilled for the one or the other to be attracted in a given case, the just equitable clause leaves the entire matter to the wide and wise judicial discretion of the court. The only limitations are the force and content of the words themselves, 'just and equitable'. Since, however, the matter cannot be left so uncertain and indefinite, the courts in England for long have developed a rule derived from the history and extent of the equity jurisdiction itself and also born out of recognition of equitable considerations generally. This is particularly so as section 35(6) of the English Partnership Act, 1890 also contains, inter alia, an analogous provision for the dissolution of partnership by the court. Section 44(g) of the Indian Partnership Act also contains the words 'just and equitable' - Decided against Appellant.
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Service Tax
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2013 (10) TMI 45
Stay application - non deposit of service tax as collected from the clients / customers - Held that:- assessee has not followed the proper procedure despite registered under Service Tax Act and has collected the amounts from his clients. At the same time, we are convinced that the appellant would be under severe financial hardship, as it is a common knowledge that mining has been banned by the Government of India. - stay granted partly.
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2013 (10) TMI 44
CENVAT Credit - Residential land line telephone services - Held that:- Commissioner (Appeal) has given a general observation that the telephone installed at the residence cannot be related to business activity without giving any evidence in this regard - as per definition of input services during the relevant period under Rule 2 (l) of Cenvat Credit Rules, 2004 the credit on input services used in the business activities are admissible - prima facie the applicant has been able to make out a case for staying the operation of the order passed by Commr. (Appeal) - Stay granted.
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2013 (10) TMI 43
Export of services - Money transfer business – Location of the consumer - held that:- Following decision of Paul Merchants Ltd. vs. C.C.E., Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] - stay granted.
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2013 (10) TMI 42
Waiver of pre-deposit - vocational training - degree in hotel management granted by the petitioner - Held that:- adjudicating authority however misdirected himself on the interpretation aspect by assuming that courses or instructions provided by the petitioner must be recognized by law and not the degrees or certificates issued. In so far as the claim for exemption having provided vocational training is concerned (i.e. the earlier period), the adjudicating authority prima facie erred in holding that since the degree in hotel management granted by the petitioner is a professional qualification and holder of such degree cannot secure self-employment unlik a tailor/draftsman etc., the exemption benefit was inapplicable - fundamental fallacy in the reasoning process applied in respect of both periods. Prima facie case in favor of assessee - stay granted.
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2013 (10) TMI 41
Condonation of delay - Order not received - Held that:- appellant/ assessee had not received the adjudication order at all since the adjudication order was passed ex-parte. Such a plea was never raised before the Commissioner. The appellant to have pleaded before the Commissioner (Appeals) in its application for condonation of delay, all the relevant and material facts to substantiate the claim either that there was no delay in preferring the appeal or that there was valid justification for the delay in preferring the appeal and that such delay was within the permissible limits and within the jurisdiction of the appellate Commissioner to condone. Without any such pleading the condonation of delay application was filed before the lower appellate authority. The Commissioner (Appeals), under the proviso to Section 85(3) had power to condone the delay of only a further 3 months - Decided against assessee.
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2013 (10) TMI 40
Demand beyond normal period of limitation - Whether waiver of penalty u/s 80 would mean that no demand can be confirmed beyond the normal period of limitation - Waiver of pre-deposit - Held that:- provisions contained in Section 80 that the same talks about waiver of penalty under Sections 76, 77 and 78 of the Finance Act, 1994, if reasonable cause is shown by the appellant. The provision of Section 78 talks of the situations like fraud, wilful misstatement and suppression of facts etc. with intention to evade payment of duty. By virtue of the fact that Section 78 has been mentioned in Section 80 of the Finance Act, 1994, situation even in such a case does not prima facie mean that extended period will not be applicable where penalty imposed under Section 78 is waived under Section 80. Since the issue is debatable one and needs deeper consideration whether once the provisions of Section 80 are made application there will not be any case where extended period is invokable - Therefore, at the stay stage, the appellant has not made out a prima facie case for complete waiver of confirmed dues - stay granted partly.
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Central Excise
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2013 (10) TMI 30
Issuance of Show cause notice beyond normal period of Limitation – recovery of interest on late payment of duty - Held that:- There was no dispute that assessee had paid the differential duty on supplementary invoices regularly and had shown the same in the ER-I returns, which were filed regularly before the department, therefore, issuance of show cause notice for interest on the delayed payment should also be within a period of one year as stipulated under Section 11-A of the Act - department had absolutely no jurisdiction to issue show cause notice after expiry of the period of limitation for interest on the delayed payment for the period – Relying upon Kwality Ice Cream Company and another vs. Union of India and others [2012 (1) TMI 88 - Delhi High Court] - Period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest – there was no illegality or jurisdictional error in the order passed by Tribunal. - Decided against the revenue.
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2013 (10) TMI 29
Stay / waiver of predeposit - Whether the CESTAT was justified in declining to stay the order-in-appeal and order-in-original – Held that:- Unless the prima facie view of the CESTAT was recorded, it was not possible to ascertain the basis on which the CESTAT had declined to grant stay - the order was quashed and set aside insofar as it related to declining the stay to the order passed by the Commissioner (Appeals) and the matter was restored to the file of the CESTAT for fresh consideration of the issue.
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2013 (10) TMI 28
Condonation of Delay - Whether CESTAT was correct in not exercising its powers vested in Section 35B of the Central Excise Act, 1944 in condoning the delay permitting the appellant to defend the case – Held that:- Since delay was of 142 days and the appellant was under bona fide belief that if M/s. Gujarat Cypromet Limited has filed its reply to the show cause notice then case will be covered and he was not required to file any separate reply to the show cause notice - Further once the penalty was imposed, appeal was filed with delay which was condoned - Therefore, even if there was 142 days delay for filing appeal before the tribunal, it ought to have been condoned - the delay of 142 days in filing the appeal was condoned and the matter was remitted back to the Tribunal for deciding the tax appeal on merits.
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2013 (10) TMI 27
Duty on damaged goods - Ex-parte Order u/s 35EE of the Central Excise Act – Held that:- The question as to whether the Revenue was justified in demanding the duty even before the damaged goods were cleared by the assessee, was the question which had not been considered by the Revisional Authority - Since the damaged goods were claimed to be still lying in the factory of the assessee, whether the duty can be demanded was a question which had not been answered by the Revisional Authority - In these circumstances, it would be just and proper to set aside the ex parte order passed by the Revisional Authority and remand back the matter for fresh consideration - the order of the Revisional Authority was quashed and set aside, the matter was restored to the file of the Revisional Authority for fresh consideration in accordance with law.
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2013 (10) TMI 26
Duty on Finished Goods Short Found - Whether the CESTAT was justified in upholding the order of the Adjudicating Authority in dropping the demand of excise duty on finished products found short during the course of search – Held that:- The assessee on the basis of the registers maintained and seized during the course of search had demonstrated that there was no shortage except and accordingly demand of duty on man-made fabrics in excess had been dropped - It was not the case of the revenue that the entries made in the lot registers maintained by the assessee to the effect that the goods were lying in the factory at different stages of production were erroneous or contrary to the inventory made - In the absence of any evidence to establish that the entries made in the lot registers were not in consonance with quantity of semi-finished goods found during the course of search, no fault can be found with the decision of the authorities below in discarding the statement/panchanama recorded on the date of search as the records found during the course of search establish to the contrary – Decided against the revenue.
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2013 (10) TMI 25
Modification of Application – Held that:- As the order for deposit of the amount was not complied with, the Tribunal had no option but to dismiss the appeal - Once the order of the Appellate Tribunal stood confirmed by the court by order there appears to be no justification for the petitioner to make request before the Tribunal to modify the earlier order - If for want of compliance of the earlier order passed by the Tribunal as confirmed by this court, the appeal had been rejected, there was no error in the order in the appeal.
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2013 (10) TMI 24
Classification of goods - Condensing Unit of Air-conditioning Machines - Words and Phrases - Valuation - Import policy - Consumer goods – Held that:- The Tribunal had remanded the matter back to decide the dispute in view of the Circular, dated 25-9-2002 - It may be noted that there were divergent views with regard to exemption of parts of air-conditioning machine - The Central Board of Excise and Customs, New Delhi issued the aforesaid Circular, dated 25-9-2002 to set at rest the said controversy - In the circular the Board noticed the order of CEGAT in the case of Universal Commercial Corporation v. C.C., Delhi [1993 (7) TMI 220 - CEGAT, NEW DELHI ] - the components which were required for completion of one air-conditioning machine could be reconsidered as essential. Penalty u/s 11AC –Held that:- So far as the penalty was concerned the Tribunal had rightly set it aside - Mens rea is an essential part for levy of penalty - Where a provision of statute was not clear and there was divergent judicial pronouncements, it cannot be said the there was mens rea on the part of manufacturer if he chooses to follow his course of action in the light of one of the judicial pronouncements - It had been rightly observed to be by the Tribunal that the issue was one of interpretation and application of Rule 2(1) of the Interpretative Rules - The penalty matter should have been left open for re-consideration by the Commissioner Clearly, no case of levy of any penalty was made out and the penalty order was rightly set aside.
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2013 (10) TMI 23
Condonation of delay - Benefit of Section 14 of Limitation Act - Delay in filing revision before Central Government due to filing of appear before CESTAT wrongly earlier – Held that:- The provisions of Section 14 of the Limitation Act would be attracted in view of the judgment of this Court in Rajkumar Shivhare v. Union of India [2011 (7) TMI 861 - BOMBAY HIGH COURT] - The period for filing a revision under Section 35EE(2) of the Central Excise Act, 1944 was three months - However, the Central Government, if the applicant was prevented by sufficient cause from presenting the application within three months may allow the application to be presented within a further period of three months - There was no dispute about the position that if the period which was spent in prosecuting the proceedings before the Tribunal, was excluded, the revision which was filed before revisional authority would be within the stipulated period under sub-section (2) of Section 35EE – order passed by the Revisional Authority was set aside and the matter was restored to the Revisional Authority in the Government of India, Ministry of Finance (Department of Revenue) for disposal on merits in accordance with law. - Decided in favor of assessee.
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2013 (10) TMI 22
Valuation of Goods - physician’s samples - The discrepancy in the method of variation in relation to the valuation of the product cleared for the market sale and of those cleared as physician’s samples was revealed – Held that:- There cannot be two valuations for the physician’s sample and for the open market sale - order does not suffer from any illegality and jurisdictional error. - Decided against the revenue.
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2013 (10) TMI 21
Transfer of Cenvat Credit on transfer of capital goods - Rule 10 - Reversal of CENVAT Credit - Revenue was of the view that the appellant did not clear the capital goods under the provisions of Rule 3(5) of the Cenvat Credit Rules, 2004 by reversing applicable Cenvat credit – Held that:- Since factory at Roorkee was not operating under Cenvat Scheme, therefore, finding of the learned Tribunal that in the present case no transfer of credit was possible because the factory at Roorkee was not operating under Cenvat Scheme - Rule 10 cannot be read as a provision enabling removal of capital goods from one factory of a manufacturer to another factory of the manufacturer where Cenvat Scheme was not applicable, seems to be justified - Therefore, there was no jurisdictional or legal error in the order. - Decided against the assessee.
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CST, VAT & Sales Tax
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2013 (10) TMI 46
Penalty - Evasion of tax - Inter state sales during the movement of goods - Held that:- When the goods had moved from Harihar party, it had disclosed the destination at Rajpura. Rajpura party, as per the petitioner, is the second purchaser. It is, however, clear from the documents that goods right from the very start had been booked to be delivered at Rajpura to the second purchaser. It is not the case that the goods were booked for Ludhiana and during transit, by making endorsement on the documents, were sold and, therefore, delivered to the second purchaser. - The petitioner has remained unsuccessful in setting out a case of it being a sale in transit from the documents. Regarding penalty, contention of the petitioner is that since there was no deliberate disregard of statutory obligations, it is a case where no penalty was imposeable - Held that:- This argument again has no merit. - the petitioner, though adjournment had been sought for explaining apparent dichotomy in documents which had raised suspicion on genuineness of documents and for furnishing original G.R., no one came forward resulting in conclusion of proceedings ex-parte against the petitioner. Unlike in the cited authority, the petitioner in the present case had played hide and seek with the Assessing Officer. Power of the AO - held that:- it is clear enough that the Assessing Officer did not go into the nature of the transaction which was not his domain but had confined himself to his field of duty and functions of ascertaining genuineness of documents and thus he had rightly done so. - levy of penalty confirmed.
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Indian Laws
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2013 (10) TMI 39
Right to information - Incomplete and incorrect information in reply - Held that:- CESTAT, has not cited any of the exemption provisions of the RTI Act for not disclosing the information to the appellant, neither has the CPIO furnished any reasons for holding that the 3rd party information cannot be provided. The FAA has quoted the provision of Section 8(1)(h) of the RTI Act without, however, giving reasons as to how the information if disclosed would impede the process of investigation/enquiry or apprehension or prosecution of offenders - Shri Victor James, the then CPIO/Under Secretary, has prima facie provided misleading information to the appellant, at Clause (f) of his reply dated 16-9-2011 that no such report of the Enquiry Committee headed by Dr. C. Satapathy has been received in the Department of Revenue, whereas Registrar, CESTAT by his letter dated 18-8-2011 has already forwarded a copy of the said report to the Department of Revenue. A separate show-cause notice u/s 20(1) of the RTI Act would be issued to the Shri Victor James, the then CPIO/Under Secretary asking him to show-cause why a penalty should not be imposed upon him for providing misleading information to the appellant- Decided in favour of appellant.
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