TMI Tax Updates - e-Newsletter
October 1, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Returns of income due to be E-filed by 30th September, 2015 may be filed by 31st October, 2015 in cases of Income-tax assessees of the State of Gujarat.
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Income Tax:
Returns of income due to be E-filed by 30th September, 2015 may be filed by 31st October, 2015 in cases of Income-tax assessees of the State(s) of Punjab and Haryana and Union Territory of Chandigarh.
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Income Tax:
Sale of self-developed technical know-how - whether chargeable to tax - AO held as revenue receipt - ITAT held that appellant was liable for capital gains tax in view of the amendment made in section 55 with effect from the assessment year 1998-99 - order of ITAT sustained - HC
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Income Tax:
Addition received as advance for sale of property - there is no evidence why the deal did not mature. How the amounts were returned whether any receipts were taken or not is not clear. All these circumstances make the whole story not plausible - HC
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Income Tax:
Payment of roaming charges does not fall under the ambit of TDS provisions either u/s 194C / 194I or 194J and hence we have no hesitation in directing the Learned Assessing Officer to delete the addition made u/s 40(a)(ia) on this account. - AT
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Income Tax:
TDS u/s 192 - on the payment made to the seconded employees from the assessee’s subsidiary company - matter remanded back to verify - whether the tax has been duly deducted at source by the assessee’s subsidiary company on the payment made by the assessee to the seconded employees and to ascertain the nature of payment - AT
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Income Tax:
Exemption u/s 11 - application of capital gains arising out of disposal of investments - There is no condition that capital asset should be held till the end of the financial year - exemption cannot be denied - AT
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Income Tax:
Stay of recovery of tax demand - AO stay asking to the assessee to pay 50% of the outstanding demand in 18 equal monthly instalments. - the assessee has not complied with the order of the AO - Assessee failed to get relief from CIT(A), CCIT, CBTD - Conditional stay granted - AT
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Income Tax:
Income from house property v/s business income -Management fee (Royalty) received from Kamat Hotels (I) Ltd. is liable to be assessed as ‘business income’. - AT
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Income Tax:
Interest payable u/s 234B for the purpose of adjustment against the tax paid u/s 140A has to be computed with respect to assessed tax determined on the basis of total income declared in the return. - But this is only for the limited purpose of adjustment of payment made u/s. 140A against interest payable u/s 234B while making computation of interest payable by the assessee u/s 234B, which has to be computed with respect with respect to the total income determined in regular assessment as per the definition of assessed tax given in section 234B - AT
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Customs:
Undue benefit of Target Plus Scheme (TPS) - Export of cut and polished diamonds (CPD) without value addition - warehousing of imported CPD - it is alleged that after import, the goods were taken into private bonded warehouse and without processing the same were removed for export within 3-4 hours or the next day as the case may be. - All the allegations of revenue rejected - AT
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Customs:
Served From India Scheme - SFIS scrip should not allowed to be used for payment of customs duty on the Restricted goods i.e. on Radars, Navigational Equipments, VHF & OME Equipments - AT
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Customs:
Maintainability of appeal before tribunal - Seizure of goods - Section 110(A) - Two member bench disagrees with the decision of larger bench - matter referred to the President to constitute larger bench - AT
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Customs:
Classification of product – basmati Rice or Not – Nowhere in DGFT Policy, it was mentioned that if grain size restrictions were satisfied then Agmark authority’s opinion will be Final Say on classification of Basmati Rice - confiscation is not valid - AT
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Customs:
Once the fuel oil contained in the bunker i.e., engine room tanks, falls within the ambit of sub para (b), as a natural corollary the same would be classifiable along with the vessel under 89.08 of the Heading No. 89.07 of the Customs Tariff Act - AT
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Indian Laws:
Declaration for No TDS - Government Simplifies the Format and Procedure for Self Declaration in form No.15G or 15H to Reduce the Cost of Compliance and Ease the Compliance Burden
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Service Tax:
Refund claim - service tax was paid cum-tax computation - It, therefore, does not alter the origin of the funds utilized for discharge of tax liability - viz. from the common funds of the appellant without recourse to the members who paid nothing more than the entrance fee - Not a case of unjust enrichment - refund allowed - AT
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Service Tax:
Application for Modification / Rectification of mistake in the stay order - it was contended that services were rendered outside India and no part of the service was performed in India. Therefore, he submits that they are not liable for predeposit and also pleaded for revenue-neutrality - Application rejected - AT
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Service Tax:
Commercial Training or Coaching Services - There is nothing to even suggest that the appellant was deliberately causing delay to take advantage of time-bar - substantial demand set aside on the ground of period of limitation - AT
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Service Tax:
GTA service - during the period in dispute the appellants were unregistered partnership firm and the unregistered partnership firms were brought into service tax net with effect from 1.7.2012. - prima facie case is in favor of assessee - AT
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Central Excise:
CENVAT Credit - Whether the respondents are entitled to Cenvat credit of Education cess and Secondary & Higher Education cess when inputs are supplied by 100% EOU - Education Cess and SHE Cess Component, Forming Part of CVD allowed - AT
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Central Excise:
Penalty under Rule 26 of the Central Excise Rules 2002 - Purchase of clandestinely cleared goods - incriminating documents were recovered from the appellant's office - penalty imposed is in order. - AT
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Central Excise:
Removal/ Shifting of goods from the old factory to the proposed factory (adjacent premises) without payment of duty - Confiscation of goods - Finished goods were cleared on payment of duty from new premises. Work-in-progress goods were converted into finished goods and cleared on payment of duty. - Redemption fine and penalty set aside - AT
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Central Excise:
Suo moto availment of credit - whether suo motu re-credit of the credit already reversed is permissible and no refund claim is required to be filed - correction of errors and omissions in the entries would not require permission of the Department - AT
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Central Excise:
Manufacture - Immovability - office furniture systems and work stations - assessee failed to justify that the items are immovable property - demand confirmed - AT
Articles
Notifications
Circulars / Instructions / Orders
News
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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, Areca Nuts, Gold and Silver Notified
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Index of Eight Core Industries (Base: 2004-05=100) August, 2015
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Clarification Regarding Rumours of Government Ban on Export of Basmati Rice
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Government Simplifies the Format and Procedure for Self Declaration in form No.15G or 15H to Reduce the Cost of Compliance and Ease the Compliance Burden for both, the Tax Payer and the Tax Deductor; Procedure for Submission of the Forms by the Deductor also Simplified;
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RBI Reference Rate for US $
Case Laws:
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Income Tax
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2015 (9) TMI 1362
Sale of self-developed technical know-how - whether chargeable to tax - cost of acquisition is Nil - AO held as revenue receipt - ITAT held that appellant was liable for capital gains tax in view of the amendment made in section 55 with effect from the assessment year 1998-99 - whether the first agreement is a composite agreement or taking the said agreement as a whole, whether the clauses in it are severable? - Held that:- Clauses of the first agreement, particularly Clauses 1,2,3,4,8 and 9 thereof, have to be scrutinized closely. To understand the actual effect of the first agreement, such through consideration is necessary. So far as Clause 1 is concerned we find that not only the appellant was to "render, supply, furnish and provide said technical Know-how, advice, guidance" to Truepack but was also under an obligation to "provide information, assistance and services for day to day operation, production and manufacture" of bottles. Thus this Clause, a composite provision, provided not only for transfer of technology for manufacture of bottles but also to provide assistance for running the factory on a daily basis. In this connection it is worth mentioning that Clause 3 is near similar to Clause 1 as the appellant was not only to provide "all the relevant information, data, documents, drawings, design, manuals pertaining to technical know-how for the product and manufacture" of bottles but was also to "provide its expert advice on all aspects so as to enable the transferee to have the sufficient information to run the operations of manufacturing" the bottles. Then under Clause 2 appellant was to depute a technical person on the request of Truepack to train the staff to run the factory and maintain the machines and to optimize the methods of operation required for manufacture of bottles which was essential "for day to day operation" under Clause 1. In this context it is not material that the appellant had undertaken to bear the expenses for food and lodging of such technical person. From an analysis of the Clauses of the first agreement we find that mere parting by the appellant of the technical know-how to Truepack was not the sole object with which the said agreement was entered into but was also to assist the transferee in renovation, in installing and in commissioning the plant. It is clear from the language of the Clauses of the first agreement that the sale of know-how and the renovation, installation and commissioning of the plant were interlinked. In view of the discussion on the first agreement, no discussion is required on the subsequent agreement, the non-competition agreement, which refers to first agreement. Since Court has to look at the nature and substance of the transaction in the background of the agreement and as in the case in hand under the first agreement the appellant had transferred the know-how and had agreed to provide other services from renovation and installation of machinery till the commissioning of the plant as evident of the first agreement, on facts the judgments of the Supreme Court in CIT vs. B.C. Srinivasa Setty (1981 (2) TMI 1 - SUPREME Court), CIT vs. D.P. Sandu Bros. Chembur P. Ltd (2005 (1) TMI 13 - SUPREME Court) and the judgment of the Bombay High Court in CIT vs. Ralliwolf Ltd: [1982 (7) TMI 48 - BOMBAY High Court] are not applicable. Since payment of balance consideration of ₹ 44,00,000/- is linked with the installation and commissioning of machines at the transferee place and after trial production and as it appears that the installation had taken place in the assessment year 1998-99, the principles of law laid down in paragraph 8 of the judgment in Ajay Guliya v. Assistant Commissioner of Income-tax, New Delhi(2012 (7) TMI 530 - DELHI HIGH COURT) are not applicable. - order of ITAT confirmed - Decided in favour of the Revenue
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2015 (9) TMI 1361
Addition u/s 36 (1)(iii) - ITAT upholding the decision of Ld. CIT(A) deleting the addition - whether the assessee company has debited huge amount to profit and loss account on account of interest expenditure? - Held that:- Similar addition had been made in appellant's case during the assessment years 2005-06 and 2006-07 and the addition was deleted by CIT(A) following the decision of the Hon'ble Supreme Court in the case S.A. Builders Ltd. Vs. Commissioner of Income Tax [2006 (12) TMI 82 - SUPREME COURT]. The order of the CIT(A) has been upheld by the Hon'ble ITAT for both the assessment years. The Tribunal had affirmed the aforesaid deletion. It was not shown that the findings in the case of the assessee on the basis of which the matter had been decided in its favour has been displaced by any higher court. - Decided against revenue. Disallowance made under Section 40A(2)(b) - ITAT deleted the addition - Held that:- the method adopted by the A.O. for comparing the rates of purchases made from the sister concerns is not correct method. In view of the fact that there are fluctuations in price of waste on day to day basis, the correct method is to compare the rates of purchases made by the appellant from sister concerns at a particular point of time by comparing the same with the rates given for the similar goods to other outside parties at the same point of time. As mentioned above the relevant details were duly produced at the time of assessment proceedings but the AO chose to ignore the evidence. As submitted by the appellant, date wise and item wise detail of material purchased from related concern and outside independent parties in the month of November 2006, January 2007, February 2007 and March 2007 payment made to M/s Malwa Cotton Spinning Mills for purchase of Comber Waste and Flat Waste was neither excessive nor unreasonable. Keeping in view the above position, the addition made by the Ld. AO on this account is deleted - Decided against revenue. Disallowance of bank charges amounting - ITAT deleted the addition - Held that:- These expenses have been incurred by the appellant on account of processing fees paid by the appellant to bank to process the working capital facility to meet day to day requirement of funds which is recurring in nature. Further as clarified in the written submissions the fund based and non fund based working capital facilities sanctioned by the banks had been utilized by the appellant to meet the day-to-day requirement of funds for business. The working capital facilities are generally for a period of one year and such charges are levied by the bank every year. As pointed out by the AR of the appellant, it is seen that similar addition had been made during the Asstt. Years 2005-06 and 2006-07 and the addition was deleted by CIT(A). The order of the CIT(A) has been upheld by the Hon'ble ITAT for both the Asstt. Years. The Tribunal had affirmed the said deletion. Again, learned counsel for the revenue was not able to displace the reasoning and the findings of fact recorded by the CIT(A) and the Tribunal so as to raise any law point.- Decided against revenue. Disallowance of expenses incurred on account of building repair and maintenance - ITAT deleted the addition - Held that:- The Tribunal also recorded that the genuineness of the expenses. The said expenses were incurred for maintenance of road and boundary wall as the factory building of the assessee was already in existence and had started its manufacturing activities in the financial year 1997-98. Keeping in view the quantum of expenditure, it was held to be revenue in nature. The CIT(A) and the Tribunal had rightly decided the issue which does not involve interpretation of any provisions of law.- Decided against revenue.
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2015 (9) TMI 1360
Penalty under Section 271(1)(c) - disallowance under Section 80IB was made by the Assessing Officer not because of any difference of opinion but because such deduction was not available to the assessee by virtue of specific provision of law - ITAT deleted the penalty - Held that:- The CIT(A) as well as the Tribunal had concurrently concluded that the assessee in the computation of income while claiming deduction under Section 80IB of the Act had disclosed complete facts. The assessee had claimed permanent registration as small scale unit by District Industries Centre, Patiala. The books of account of the assessee were duly audited. The claim made by the assessee was under bonafide belief that it was a small scale industry. The error on the part of the assessee had occurred due to various notifications issued by the concerned Ministry from time to time fixing the limit of investment to qualify for being small scale industry. The value of exclusive plant and machinery as on 1.4.2004 was ₹ 2.93 crores and because of the addition made in the assessment year under appeal of ₹ 58.33 lacs, the total investment came to ₹ 3.51 crores. In such circumstances, it could not be said that the assessee had not made a bonafide claim of deduction under Section 80IB of the Act. Therefore, the penalty was rightly deleted by CIT(A) and upheld by the Tribunal. We do not find any error in the approach adopted by the CIT(A) as well as the Tribunal - Decided in favour of assessee.
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2015 (9) TMI 1359
Addition received as advance for sale of property - Held that:- It is very difficult to believe that the assessee who is not owner of the land had entered into agreement when the land belonged to her husband. Though it was stated before Assessing Officer and the Ld. CIT(A) that Power of Attorney was executed by her husband in favour of the assessee but copy of the power of attorney has not been produced before the Assessing Officer and, therefore, the Ld. CIT(A) should have been little careful in asking for the power of attorney but he simply believed this theory without examining the Power of Attorney All the four persons have not stated how much money each one of them has paid. No specific source of the payment has been explained and it has been simply stated that they are agriculturists. When four persons have paid a sum of ₹ 43 lakhs the Assessing Officer could have verified the sources only if such persons were produced before him. We fail to understand how Ld. CIT(A) believed these affidavits particulars when the Assessing Officer had insisted on producing these persons. The affidavits are clearly in the nature of self serving documents and cannot be believed. Further there is no evidence why the deal did not mature. How the amounts were returned whether any receipts were taken or not is not clear. All these circumstances make the whole story not plausible. In our opinion it seems to be only a story to explain the deposits of cash and does not have any substance. Therefore, we set aside the order of Ld. CIT(A) and restore that to Assessing Officer. The aforesaid findings of fact recorded by the assessing authority and the Tribunal sustaining the addition though received as advance for sale of property are not shown to be erroneous or perverse in any manner. Thus, no substantial question of law arises in this appeal. - Decided against assessee.
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2015 (9) TMI 1358
Roaming charges paid to other telecom operators - whether liable for deduction of tax at source? - Held that:- From the statement recorded from technical experts pursuant to the directions of the Supreme Court in CIT vs Bharti Cellular Ltd (2010 (8) TMI 332 - Supreme Court of India ) which has been heavily relied upon by the Learned CITA, we find that human intervention is required only for installation / setting up / repairing / servicing / maintenance / capacity augmentation of the network. But after completing this process, mere interconnection between the operators while roaming, is done automatically and does not require any human intervention and accordingly cannot be const rued as technical services. It is common knowledge that when one of the Subscribers in the assessee's circle travels to the jurisdiction of another circle, the call gets connected automatically without any human intervention and it is for this, the roaming charges is paid by the assessee to the Visiting Operator for providing this service. Hence we have no hesitation to hold that the provision of roaming services do not require any human intervention and accordingly we hold that the payment of roaming charges does not fall under the ambit of TDS provisions u/s 194J of the Act. We hold that 194C is applicable only where any sum is paid for carrying out any work including supply of labour for carrying out any work. Thus, 'carrying out any work' is the substance for making the payment relating to such work, liable for deduction of tax at source u/s 194Cof the Act. For carrying out any work, manpower is sine qua non and without manpower, it cannot be said that work has been carried out. Under sect ion 194C each and every work/service is not covered, hence the nature of work done or service performed is required to be seen. Moreover, the term 'work' is defined in section 194C of the Act. The word 'work' in section 194C referred to and comprehends only the activities of workman. It is the physical force which has comprehended in the word 'work'. We have al ready held that the payment of roaming charges does not require any human intervention. Hence in the absence of human intervention, the services rendered in the context of the impugned issue does not fall under the definition of 'work' as defined in section 194C and hence the provisions of sect ion 194C are not applicable to the impugned issue. A subscriber to a telephone service could not reasonably be taken to have intended to purchase or obtain any right to use electromagnetic waves or radio frequencies when a telephone connection is given. Nor does the Subscriber intend to use any portion of the wiring, the cable, the satellite, the telephone exchange, etc. As far as the subscriber is concerned, no right to the use of any other goods, incorporeal or corporeal, is given to him or her with the telephone connection. In view of the above, we hold that the payment of roaming charges by the asesssee to other service provider cannot be considered as rent within the meaning of section 194I of the Act. Accordingly, we hold that the payment of roaming charges does not fall under the ambit of TDS provisions either u/s 194C / 194I or 194J and hence we have no hesitation in directing the Learned Assessing Officer to delete the addition made u/s 40(a)(ia) on this account. - Decided in favour of assessee. Disallowance of Interest on loans borrowed - Held that:- In the facts and circumstances of this case, we hold that the borrowed funds advanced to subsidiary by the assessee was on the ground of commercial expediency and accordingly the interest paid would be allowed as deduction in the hands of the assessee. We direct the Learned Assessing Officer to delete the addition made towards disallowance of interest - Decided in favour of assessee. Applicability of TDS provisions for international roaming - Held that:- The payment of roaming charges does not fall under the ambit of Fee for Technical Services as no human intervention is required for the same and hence the income of non-resident telecom operator is not chargeable to tax in India u/s 195 of the Act and hence we refrain to give our opinion on the other beneficial provisions provided in the DTAAs for the assessee in the facts of the impugned issue. Accordingly, the ground raised by the assessee with regard to applicability of TDS provisions for international roaming charges is allowed.- Decided in favour of assessee. Disallowance of Penalty paid to Department of Telecommunications - whether the sum paid as penalty to Department of Telecommunications (DOT) by the assessee would fall under the Explanation to section 37(1) of the Act treating the same as amount paid for infraction of any law? - Held that:- We find that the penalty paid to DOT is only for non-compliance of terms and conditions of the license agreement and not paid for infraction of any other law so as to warrant the Explanation to section 37(1) of the Act. Penalty paid to DOT does not come under the ambit of Explanation to Section 37(1) of the Act and accordingly, the grounds raised by the assessee in this regard are allowed.- Decided in favour of assessee. Disallowance of provision for Asset Restoration Obligation (ARO) written back - Held that:- It is pertinent to note that section 41(1) of the act uses the term 'deduction' in earlier years at the time of creation of such liability. Whereas in the instant case, the assessee had only claimed allowance of depreciation on the said provision for ARO and admittedly, claim of depreciation is only an 'allowance' and not a 'deduction'. We find that the Learned CIT(Appeals) had stated in his order that the assessee had not filed any documentary evidences before the Learned Assessing Officer to enable him to verify the authenticity of claim made by the assessee. In the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned Assessing Officer to decide the veracity of the claim in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard and assesse is also directed to provide complete details of depreciation claimed on ARO in earlier years and necessary workings in this regard. - Decided in favour of assessee for statistical purposes. Disallowance of amortization of payments made to IBM - Held that:- We are admitting the additional evidence filed by the Learned AR containing the Master Service Agreement entered into by the assessee as it is very crucial for determining the issue under appeal. Since this agreement was not verified by the Learned Assessing Officer, we deem it fit and appropriate, in the facts and circumstances of the case, in the interest of justice and fair play, to set aside this issue to the file of the Learned Assessing Officer to decide this issue afresh in accordance with law. The Learned Assessing Officer is al so directed to mention in his order regarding the status of amortizat ion payment s made in the earlier years and the tax treatment given in the assessments of earlier years for the same. Needless to mention that the assessee be given reasonable opportunity of being heard - Decided in favour of assessee for statistical purposes. Addition made towards repayment of principal on finance lease - Held that:- We are not able to ascertain the real facts of this issue. It is also seen that no discussion has been made by the Learned Assessing Officer in the assessment order with regard to this issue. Hence in the interest of justice and fair play, we deem it fit and appropriate to set aside this issue to the file of the Learned Assessing Officer to decide the issue afresh in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard - Decided in favour of assessee for statistical purposes. Disallowance of Unrealized foreign exchange fluctuation gain and Realized foreign exchange gain - CIT(A) allowed part relief - Held that:- There is no dispute that the provisions of section 43A of the Act would become applicable for recognizing the exchange fluctuation if the loan was obtained for acquisition of fixed assets only at the time of making payment and accordingly the exchange gain, if any, would go to reduce the cost of the fixed asset. Since in the instant case, the exchange gain is derived only on a notional basis and is unrealized, by applying the provisions of section 43A of the Act, the said gain needs to be reduced from the taxable income. We also find that the Learned Assessing Officer having accepted to the facts of the case and the relevant provision of the Income Tax Act in his remand report, ought not to have come on appeal before us on this issue. We also find that this issue is covered by the decision of the Supreme Court in the case of CIT vs Woodward Governor of India P Ltd reported in (2009 (4) TMI 4 - SUPREME COURT) wherein the principles were laid down for recognition of exchange gain/loss under various circumstances. - Decided against revenue. Deduction of bad debts written off - CIT(A) allowed claim - Held that:- AO having accepted this issue in the remand proceedings which is mentioned in page 74 para 27 of the Learned CIT(Appeals) order and had not given any adverse comments about the impugned issue, ought not to have come on appeal before us on this issue. Hence we are not inclined to interfere with the decision of the Learned CIT(Appeals). Accordingly, the ground no. 4 raised by the revenue is dismissed.- Decided against revenue.
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2015 (9) TMI 1357
Estimation of profit from the sale of Audio and Video Cassettes - CIT (A) estimated sale of video cassette at 6 lac, audio cassette at 2 lac which was in confirmity with the statement of the assessee recorded at the time of search - Held that:- We agree with the finding of the CIT (A) that no justification was given by the A.O. for enhancing the sale of video album as well as audio album. CIT (A) has also reduced the estimate of profit from sale of each copy of video and audio album. Assessing Officer has estimated the profit from sale of each video album at ₹ 8 while from sale of audit album at ₹ 3. The CIT (A) estimated the profit from sale of video album at ₹ 5/- and audio album at ₹ 3/-. We have considered the arguments of both the sides and perused the order of lower authorities. The CIT (A) has pointed out from the statement of the assessee that the estimate of the profit by the A.O. was excessive. The A.O. has not given any proper basis or justification for the estimation of profit from sale of each cassette by assessee. We find that the CIT (A) has referred to the statement of the assessee and has considered the cost of production of each video/audio cassettes, packing charges of each cassette and also the sale price and then estimated the profit at ₹ 5 per video cassettes and ₹ 3 per audio cassettes. After considering the facts of the case and the arguments of both the sides we are of the opinion that the estimate of income from production and sale of video /audio cassette by the CIT (A) is quite fair and reasonable. We therefore, uphold the same and reject the appeal filed by the assessee as well as Revenue on this count. Addition for low withdrawal of Household expenses - Held that:- CIT (A) has estimated the household expenditure of the same amount for all the five years i.e. for A.Y. 2002-03 to 2006-07. In our opinion with the increase in cost of living the estimation of same household expenditure for a period of 5 years cannot be said to be justified. We therefore, uphold the order of the CIT (A) so far as the issue of household expenditure is concerned for A.Y. 2002-03 & 2003- 04. In our opinion, it would be fair and reasonable to estimate the household expenditure at ₹ 11,000/- per month i.e. ₹ 1,32,000/- per annum for A.Y. 2004-05 and 2005-06 and for A.Y. 2006-07 at ₹ 12,000/- per month i.e. ₹ 1,44,000/- per annum. We agree with the submission of the Ld. Counsel that the set off of the addition made to the business income is to be allowed while considering the addition for less household expenditure. Accordingly, we direct the A.O. to work out the availability of the cash with the assessee and if the availability of cash is sufficient to incur the household expenditure as estimated above then no addition is to be made in respect of the household expenses. Addition u/s. 69 - CIT(A) deleted the additions - Held that:- No infirmity in the above finding of the CIT (A). Admittedly the property under consideration is in the name of Smt. Geetaben Parmar and Smt. Maniben Parmar. Both are assessed to Income tax. Therefore, the CIT (A) has held that the addition for the same cannot be made in the name of the assessee who is a different assessee. He has directed the A.O. to verify these facts from the record and delete the addition after verification. In our opinion the finding of the CIT (A) does not require any modification and the same is upheld and this ground of the Revenue’s appeal is rejected. - Decided against revenue. Unexplained investment in the payment of Insurance Premium - CIT (A) deleted the addition - Held that:- A.O. has recorded that out of 5 amounts of ₹ 45,000/- considered by the A.O. for making the addition, there were only 2 payments of ₹ 45,000/- each as the Insurance Premium. The other three were welcome letter in respect of certain policies. He has also recorded the finding that these two payments of ₹ 45,000/- each were already recorded in the books of Smt. Gitaben. Here also the CIT (A) has directed the A. O. to verify these facts and then delete the addition.We do not find any infirmity in the above directions of the CIT (A) the same is sustained and this ground of the revenue is rejected. - Decided against revenue. Unexplained investment in movable assets - CIT (A) deleted the addition - Held that:- After considering the facts of the case and the arguments of both the sides we agree with the contention of the Ld. Counsel that the separate addition cannot be made for the income and application of such income. However, whether the enough cash is available for investment in those assets needs verification at the hand of the A.O. We therefore set aside the order of the Authorities below on this point and restore the matter back to the file of the A.O. We direct him to verify the availability of cash with the assessee and if cash available with the assessee is more than the assets found then no addition would be made for unexplained investment in assets. We also direct him to allow adequate opportunity of being heard to the assessee while re-adjudicating this issue.- Decided in favour of revenue by way of remand. Addition u/s. 69 for unexplained cash and jewellery - CIT (A) deleted the addition - Held that:- CIT (A) has not deleted the addition made by the A.O. in respect of cash found and seized during the course of search but has only directed the A.O. to consider the availability of cash with the assessee, after considering the income in the preceding year. We do not find any infirmity in the above direction of the CIT (A). In fact, while considering the unexplained investment in the movable asset for A.Y. 2005-06 we have decided the issue with a similar direction. We therefore, uphold the direction of the CIT (A) with regard to cash found and seized during the course of search.- Decided against revenue. Unexplained investment in jewellery - CIT (A) deleted the addition - Held that:- The total jewellery found with the assessee was 1064.650 gms. As per the instruction of the CBDT vide instruction No.1916, considering the members in the family jeweler upto 1400 gms should not be seized. This fact has not been disputed by the Revenue before us. But the only argument advanced by the Ld. D.R. was that above instruction of the CBDT was with regard to the seizure of the gold ornaments and not with regard to the explanation of the gold ornaments in the assessment proceedings. We agree with the Ld. D.R. that the above instruction was with regard to the seizure of the gold ornament but a consistent view is taken by the Tribunal that such instruction should also be considered while considering whether the ornament is unexplained or not. The above instruction of the CBDT is based upon the probability of the availability of the gold ornament with a married lady and unmarried lady considering customs prevailing in our country. Such probability would be equally applicable while considering such gold ornaments during assessment proceedings. Therefore, in our opinion CIT (A) has rightly considered the above circular and deleted the above addition made by Assessing Officer. Estimation of household expenditure - Held that:- The Revenue has accepted the order of CIT (A) while the assessee is in appeal against the addition sustained. We have already discussed this issue in assessee’s own case for A.Y. 2002-03 to 2006-07. For the detailed discussion therein we hold that the household expenditure disclosed by the assessee was less considering the facts of the case and number of family members. In fact we have estimated the higher household expenditure than what is estimated by the CIT (A) in the immediately preceding year. However, as the Revenue is not in appeal, therefore, we uphold the order of CIT (A) in this regard and reject assessee’s ground of appeal which was against the addition sustained for low household expenses. - Decided against assessee. Reduction in the estimate of income by the CIT (A) - Held that:- Admittedly the assessee has not maintained the regular books of account for all the years under consideration. Therefore, the business profit disclosed by the assessee from the business of production of audio-video cassettes and the video shooting is not verifiable and therefore, result shown by the assessee as per Profit and loss account is rightly rejected by the A.O. by invoking provisions of Sec. 145 of the Act. After considering the facts of the case and the argument of the sides in our opinion the estimation of profit by the CIT (A) is quite fair and reasonable. Therefore, we do not find any justification to interfere with the same. Accordingly the assessee’s appeal for A.Y. 2002-03 to 2005-06 C.O. for A.Y. 2006-07 and appeal for A.Y. 2007-08 & 2008-09 are rejected. The Revenue’s ground No.,1 in both the years i.e. A.Y. 2005-06 and 2006-07 are also rejected.- Decided against revenue. Unexplained investment in respect of immovable property - CIT(A) deleted the addition - Held that:- So far as investment of ₹ 1 lac is concerned it was explained by the Ld. Counsel that the same is already reflected in the Balance Sheet. Morevoer, the assessed income of the assessee in this year and in the preceding year is much more than to finance for the investment of ₹ 1 lac. So far as the addition of ₹ 10,01,000/- is concerned it was reiterated by the Ld. Counsel that no asset was acquired by the assessee and therefore the question of any unexplained investment does not arise. The photocopy of the loose paper was also produced before us and from the said loose paper we are unable to agree with the A.O. that there was any unexplained investment by the assessee to the tune of ₹ 10,01,000/-. As per the assessee the above loose paper only reflected the total of ₹ 73,000/-. How the Assessing Officer has worked out the investment of ₹ 10,01,000/- from the said loose paper is not at all clear. In view of the above we uphold the order of the CIT (A) in this regard - Decided against revenue.
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2015 (9) TMI 1356
Addition made on account of unaccounted jewellery - CIT(A) deleted the addition - Held that:- No infirmity in the above order of the CIT(A). He treated gold ornament as explained considering the CBDT Instruction No. 1916 dated 11th May, 1994. He has also referred to various decisions of ITAT wherein a view has been taken that such circular is to be considered even during the assessment proceedings. We find that before the Assessing Officer also this circular was referred by the assessee’s counsel. However, Assessing Officer allowed credit only in respect of five married ladies that to 400 gms each as against 500 gms each as prescribed in the Board’s Circular. Assessing Officer has not allowed any credit in respect of unmarried daughters and male members of the family. The CIT(A) allowed the relief only as per the instruction of CBDT. In view of above, we do not find any infirmity in the order of CIT(A). The same is sustained - Decided against revenue. Addition on account of unaccounted sarafi business - CIT(A) allowed part relief - Held that:- No infirmity in the order of CIT(A). He has recorded the finding that the assessee has made another disclosure of ₹ 5 lacs in respect of unaccounted payment to brokers. Those payments are also recorded in the same seized pages and were part of the total payments made by the assessee at ₹ 76,30,540/-. Therefore, he reduced the addition to the extent of ₹ 5 lacs. This factual finding recorded by CIT(A) has not been controverted before us. We, therefore, find no justification with the finding of the CIT(A) in this regard. - Decided against revenue. Addition made on account of unaccounted investment in commodity trading - CIT(A) deleted the addition - Held that:- No justification to interfere with the order of the CIT(A). He has recorded the finding that various papers were found and seized from the assessee’s premises in which details of payments made by the assessee were mentioned. In those details, the payment of only ₹ 5 lacs to the brokers was mentioned and not ₹ 7,50,000/-. Therefore, the addition made by the Assessing Officer was only on the basis of statement of some brokers which was found to be contrary to the facts on record by the CIT(A). This finding of the CIT(A) has not been controverted at the time of hearing before us. We, therefore, uphold his order - Decided against revenue. Computation of interest u/s.234A, 234B & 234C - Held that:- As submitted by the learned counsel that assessee has already filed an application u/s. 154 before the Assessing Officer requesting him to first adjust the cash seized against the tax liability and thereafter, compute interest u/s. 234A, 234B & 234C. He, therefore, submitted that only request at this stage is to direct the Assessing Officer to dispose of assessee’s application u/s.154 expeditiously. The ld. DR has not objection to the above request of the assessee’s counsel and he stated that even without direction of the ITAT, the Assessing Officer is supposed to dispose of the application filed u/s. 154 by any assessee. In view of above, we direct the Assessing Officer to dispose of the assessee’s application, if any, filed u/s. 154 in accordance with law at an early date. - Decided in favour of assessee as directed
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2015 (9) TMI 1355
TDS u/s 192 - Disallowance u/s 40(a)(ia) - non deducting tax on the payment made to the seconded employees from the assessee’s subsidiary company which is to be reimbursed by the assessee’s subsidiary company - Held that:- We find merit in the contention of the assessee. If tax is already deducted at source on the salary paid to the seconded employees by the assessee’s subsidiary company, then once again deduction of tax on such salary payment would amount to double deduction of tax at source. It is apparent from the facts of the case that the assessee company is obtaining some service from its subsidiary company for which the assessee company pays service charges to its subsidiary company. Ld. A.R. submitted before us that the amount paid to the seconded employees from the assessee’s subsidiary company is not the additional remuneration paid to the assessee’s subsidiary company but only a payment in the nature of advance which is to be reimbursed by the assessee’s subsidiary company. If that is so, then such payments would not attract the provisions of tax deducted at source. However, these aspects are not clearly brought out in the orders of the Revenue. Since the Both the Revenue Authorities has not examined the following aspects and held the issue against and in favour of the assessee; i.e., whether the tax has been duly deducted at source by the assessee’s subsidiary company on the payment made by the assessee to the seconded employees from the assessee’s subsidiary company, whether the payment made by the assessee company to the seconded employees from the assessee’s subsidiary company amounts to advance payment to the assessee’s subsidiary company which is reimbursable and does not amount to additional service charges payable by the assessee company to the assessee’s subsidiary company and also the decisions cited by the assessee hereinabove, we hereby remit back the matter to the file of the Ld. Assessing Officer to consider all these aspects discussed hereinabove. - Decided in favour of revenue for statistical purposes. Disallowance of U/s.14A of the Act read with Rule 8D - Held that:- D.R could not controvert to the findings of the Ld. CIT (A) that this issue is not covered in favour of the assessee by the order of the Chennai Benches of the Tribunal in the case EIH Associates Hotels Vs. CIT [2013 (9) TMI 604 - ITAT CHENNAI ] wherein it was held that the investments made by the assessee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the hotel industry. The assessee is not into the business of investment and the investments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore the investments made by the assessee in its subsidiary are not to be reckoned for disallowance U/s.14A r.w.r. 8D. The Assessing Officer is directed to re-compute the average value of investment under the provisions of Rule 8D after deleting investments made by the assessee in subsidiary company - Decided in favour of assessee.
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2015 (9) TMI 1354
Grant interest U/S.244A on the self assessment tax paid - Revenue’s case is that self assessment tax in question is not entitled for section 244A interest and the same is further allowable in advance tax/TDS/TCS and taxes paid in compliance to a demand notice u/s. 156 - CIT(A) allowed interest - Held that:- View favouring the assessee holding self assessment tax to be entitled for section 244A interest has to be adopted in this backdrop of conflicting judicial precedents. We order accordingly and uphold the CIT(A)’s order - Decided against revenue Revenue’s second argument that the CIT(A) has ignored the Assessing Officer’s findings alleging the assessee to have caused delay in refund on account of non-furnishing of proof of tax payment nowhere forms part of adjudication in the lower appellate order. It is evident that the Assessing Officer’s relevant findings are only in the context of section 244A interest on TDS payment of ₹ 15,401/- nowhere germane to the issues raised in the instant appeal. The same is accordingly rejected. - Decided against revenue Interest on interest - Held that:- As decided in CIT, Gujarat vs. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. We follow the hon’ble apex court’s decision and hold that the CIT(A) has erred in awarding interest on interest in assessee’s favour - Decided in favour of revenue
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2015 (9) TMI 1353
Disallowance u/s 36(1)(iii) - CIT(A) held that the capital work in progress in the balance sheet is shown at ₹ 6,59,49,078/-, therefore, interest attributable to such amount has to be disallowed in view of the proviso to section 36(1)(iii) - as the assessee has already disallowed interest to the extent of ₹ 33,55,108/- on capital work in progress, therefore, credit for the said amount was allowed CIT(A) restricted the disallowance at ₹ 45,58,781/- - Held that:- As relying on CIT v. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA ] as well as the amendment by way of insertion of proviso to section 36(1) (iii), the interest on monies borrowed for acquiring a capital asset would be disallowed till it is brought to use on the basis that it would add to the cost of the asset. We observe that addition to the CWIP for the relevant assessment year under consideration is ₹ 4,74,04,622/- Further we observe as the extension took place throughout the year, one cannot apply the rate of interest 12% on each item. The assessee has given a detailed chart regarding the calculation of interest pertaining to each restaurant which is amounting to ₹ 33,22,108/-. As the interest was payable on each restaurant starting at different months during the year it is not correct on the ld.CIT(A) to apply the rate of interest for the full year. The assessee has applied mean method and arrived at ₹ 2,37,02,311/- on which the interest is applied at the rate of 12 % which comes to ₹ 28,44,277/-. The assessee has already capitalized ₹ 33,22,108/-. Neither the assessing officer nor the Ld. CIT(A) has verified the interest capitalized and the calculation of capital work in progress by the assessee, and has made addition on notional basis. The authorities below has also not brought on recorded any evidence on the basis of which they have rejected assessee’s claim.In the interest of justice, we remit the issue back to ld.A.O for verifying the interest capitalized by the assessee with a direction that the disallowance should not be on notional basis. The assessing officer is further directed that in the event the working provided by the assessee, that has been reproduced in hereinabove appears to be correct, he may allow the same. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1352
Exemption u/s 11 - application of capital gains arising out of disposal of investments - acquisition of new capital assets (Fixed Deposits) which was not existing on the last day of the previous year - Fixed Deposits got matured before 31st March - Held that:- There is no condition that capital asset should be held till the end of the financial year. We are not inclined to accept the interpretation placed by the ld. CIT(Appeals) that the term ‘so held’ implies that the capital asset which was acquired out of the net sale consideration should be held in that form till the end of the financial year. We, accordingly, set aside the order of ld. CIT(Appeals). Decided in favour of assessee.
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2015 (9) TMI 1351
Revision u/s 263 - Claim of deduction in accordance with the provision of section 36 (1)(viia) - Held that:- Now a settled position of law that if the assessment order is passed by the A.O. without enquiry or without application of mind, the assessment order is erroneous and prejudicial to the interest of the revenue and in that situation; the CIT gets the jurisdiction to pass revisionary order u/s 263. Learned CIT has observed that it would be factually incorrect to hold that the AO made the assessment after enquiry and the order of the AO is found to have been passed without enquiry. In the written submissions of the assessee there is no objection raised regarding this specific finding of CIT and hence, we find no infirmity in the order of the CIT because if the assessment order has been passed by the A.O. without enquiry, the same is erroneous. Regarding this aspect that it is prejudicial to the interest of revenue or not, we find that the AO has allowed deduction of ₹ 2.84 Crores claimed by the assessee in the revised return of income as business loss and as per written submissions of the learned AR of the assessee as reproduced above, the assessee has not debited the same in the Profit & Loss Account but the same was partly out of Statutory Reserves and partly out of Opening Credit balance of Profit & Loss Account. Generally business loss is adjusted against profit of the present year and Capital Loss is adjusted against Reserves and/or Opening Balance of Profit & Loss Account. When this position is seen in the light of this fact that no enquiry was made by the A.O., there remains no doubt that the action of the A.O. in allowing deduction is prejudicial to the interest of revenue also. Learned CIT has not decided the issue either way and he has directed the A.O. to pass the assessment order de novo after proper examination of the issue and after affording a fair and reasonable opportunity of being heard to the assessee. No infirmity in the impugned order of the CIT and hence, we decline to interfere therein - Decided against assessee.
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2015 (9) TMI 1350
Treating the agricultural income as ‘income from other sources’ - Held that:- Exact quantum of agricultural income which could reasonably be earned from the agricultural land holding is a matter of debate or further enquiry, but, the fact that assessee is having agricultural income cannot be disputed or doubted considering the evidences brought on record by assessee. However, considering the fact that the entire receipts from agricultural operations is in cash and the expenditure incurred is also in cash and as alleged by the department they are not supported by proper vouchers, we are of the view that the matter requires examination by AO as far as quantum of agricultural income earned by assessee. Moreover, certificate dated 29/08/2011 obtained from Tahsildar, Kadiam only indicates the produce grown by assessee without mentioning the yield per acre or income which one can reasonably expected to earn annually from such land holding and sell of agricultural produce. If assessee is able to substantiate the net agricultural income shown by him with supporting evidence, the same has to be accepted, other wise, AO can estimate the agricultural income on a reasonable basis after giving an opportunity to assessee to establish his claim. With the aforesaid observations, we set aside the impugned order of ld. CIT(A) and remit the matter back to the file of AO for considering afresh after due opportunity of being heard to assessee. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1349
Stay of recovery of tax demand - AO stay asking to the assessee to pay 50% of the outstanding demand in 18 equal monthly instalments. However, the assessee has not complied with the order of the AO granting the stay - Assessee failed to get relief from CIT(A), CCIT, CBDT - Now, the plea of the ld. AR is that absolute stay to be granted to the assessee as the assessee is Golden Egg laying Goose and immediate recovery of the outstanding disputed amount of tax would destroy the dayto- day operations of the assessee and the Department shall not destroy the tax paying assessee by creating such high-pitched demand, which is not sustainable in law. - Addition u/s.68 towards unexplained cash credit being inter corporate deposit taken from Cineyug - Disallowance towards interest payment to Cineyug - Disallowance of depreciation on the capitalized interest paid to Cineyug on petition u/s.154. Held that:- the assessee has not made out a case to establish that there exists financial stringency to pay the outstanding demand by instalments. Since, the assessee has not paid any amount so far towards demand, we are not intending to grant absolute stay as requested by the assessee. On the other hand, we are inclined to grant conditional stay as follows: (i) The assessee shall pay ₹ 10 crores on or before 15th Sept., 2015. (ii) The assessee shall pay 10% of the collection including receivables from various heads to the Department towards outstanding demand and this shall be paid once in a week i.e. Friday of every week. (iii) The assessee shall give total details of collections including receivables once in every week to the Department (iv) Further the assessee shall deposit all collections from various heads and receivables into bank account, which are disclosed bank accounts of the assessee and the assessee shall not open or operate any new bank account for its day-to-day operations in any place in the name of the assessee. (v) The assessee shall submit to the AO all details of bank account being operated by the assessee as of now. Thus, all the revenue, receipts and receivable shall deposit in various accounts to be brought to the knowledge of the Assessing Officer, once in every week and the assessee shall furnish the copy of challan of payment of 10% of the collections including receivables to the Department once in a week i.e. Friday of every week. Accordingly, recovery of balance outstanding tax is stayed for a period of 180 days or till the disposal of the appeals involved herein, whichever is earlier. If the assessee fails to comply any of the above conditions of the stay, the stay will get automatically vacated and the case will be taken out of hearing. With this observation, the stay petitions are partly allowed
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2015 (9) TMI 1348
Disallowance of the loss incurred on forward contract in foreign exchange - CIT(A) deleted the addition - Held that:- In view of the ratio laid down by the Hon’ble Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. (2007 (4) TMI 118 - HIGH COURT , DELHI) which squarely covers the issue in favour of the assessee, we uphold the order of the CIT(A) in deleting the addition made on account of disallowance of the loss incurred on forward contract in foreign exchange. The grounds of appeal raised by the Revenue are thus dismissed. - Decided in favour of assessee.
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2015 (9) TMI 1347
Management fee (Royalty) received - Income from house property v/s business income - Held that:- As decided in assessment years 2007-08 and 2008-09 we allow the claim of the assessee that the Management fee (Royalty) received from Kamat Hotels (I) Ltd. is liable to be assessed as ‘business income’. - Decided in favour of the assessee Disallowance applying section 14A - Held that:- In view of the above precedent, the matter was put to the parties in the course of the hearing. The rival Counsels fairly agreed that the matter relating to the computation of disallowance under section 14A of the Act be restored back to the file of the Assessing Officer for a decision afresh in the light of the directions of the Tribunal in the assessee’s own case for earlier assessment years and as per law. Needless to mention, the Assessing Officer shall rework the disallowance u/s. 14A of the Act, if any, after allowing the assessee an opportunity of being heard. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1346
Diversion of interest bearing funds towards non-business purposes - assessee has advanced interest-free funds to related concerns - Held that:- None of the discussion in the orders of AO or CIT(A) makes a reference to any nexus between the interest bearing funds and the impugned interest free advance made to the sister concerns . Moreover, the assessee has pointed out that it has enough interest free funds to cover the impugned interest free advance made to the sister concerns, and therefore, under these circumstances the ratio of the judgment of the Hon’ble Bombay High Court in the case of Reliance Utilities & power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY ) clearly supports the plea of the assessee for deletion of the disallowance out of interest expenditure. The precedents in the assessee’s own case also support the stand of the assessee, therefore, we do not find any merit in sustaining the disallowance of ₹ 2,32,590/- The same is directed to be deleted. - Decided in favour of assessee.
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2015 (9) TMI 1345
Penalty under section 271(1)(c) - claim of deduction under section 80IB(9) - CIT(A) deleted the penalty - Held that:- In the present case, the plea of the assessee was that such incomes have been earned in the course of carrying on its activity of exploration and extracting of oil and, therefore, the same was eligible for the claim of deduction under section 80IB(9) of the Act. Ofcourse, the Revenue has differed with the assessee on this aspect. The Hon’ble Supreme Court in the case CIT vs. Reliance Petroproducts Pvt. Ltd.,(2010 (3) TMI 80 - SUPREME COURT) held that of furnishing inaccurate particulars in the context of section 271(1)(c) of the Act would mean a situation where any of the particulars filed by the assessee are found to be untrue or false. A mere rejection of claim made in the return of income without there being any falsity or untruth in the particulars filed would not invite penalty under section 271(1)(c) of the Act. CIT(A) made no mistake in deleting the penalty levied under section 271(1)(c), qua the denial of deduction under section 80IB(9) of the Act with respect to the incomes on account of interest, foreign exchange fluctuation gain and other income. - Decided against revenue. Disallowance of deduction claimed for exploration expenditure incurred for the business of prospecting for or extraction/production of oil under section 42(1) - Held that:- In the present case the difference between the assessed and the reported income on the aforesaid aspect is based on varying perception of the scope of section 42(1) of the Act and it is not a case reflecting any concealment or furnishing Of inaccurate particulars by the assessee within the meaning of section 271(1)(c) of the Act. Therefore, on this aspect of the matter also we find no error on the part of CIT(A) in deleting the penalty levied by the Assessing Officer under section 271(1)(c) of the Act. - Decided against revenue.
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2015 (9) TMI 1344
Addition on un-reconciled professional receipts on the basis of difference between the information gathered from the Annual Information Report(AIR) and professional receipts declared as per books of account - Held that:- We set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition on the ground that the differences between the information gathered from AIR and the professional receipts as per books of account is not corroborated by any third party evidence to suggest any nondisclosure of professional receipts by the assessee for the year under consideration - Decided in favour of assessee. Computation of interest chargeable under section 234B - whether interest payable under section 234A of the Act, for the purposes of section 140A of the Act, is to be computed with respect to the tax payable on the income returned or on income determined in the regular assessment - Held that:- Identical controversy has been considered by the Tribunal in the assessee’s own case for A.Y 2000-01 and 2001-02 and we agree with the submission made by ld. A.R that the interest payable under section 234B for the purpose of adjustment against the tax paid under section 140A has to be computed with respect to assessed tax determined on the basis of total income declared in the return. But this is only for the limited purpose of adjustment of payment made u/s. 140A against interest payable under section 234B while making computation of interest payable by the assessee under section 234B, which has to be computed with respect with respect to the total income determined in regular assessment as per the definition of assessed tax given in section 234B. The assessee has also followed the same procedure with which we agree. The or of CIT(A) confirming the method followed by the AO is therefore, set aside and the claim of the assessee is allowed - Decided in favour of assessee for statiscal purposes.
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2015 (9) TMI 1343
Disallowance u/s 14A - Held that:- No justifiable reason to interfere with the conclusion drawn by the CIT(A). Notably, the disallowance computed by the Assessing Officer based on Rule 8D of the Rules is not tenable in as much as Rule 8D is applicable only w.e.f. assessment year 2008-09 as laid down by the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). Nevertheless, the provisions of section 14A of the Act, require disallowance of expenses related to the earning of exempt income. In this context, the Assessing Officer has not made any effort to demonstrate that the estimation of such expenditure at ₹ 3800/- made during the original assessment proceedings was unreasonable. The CIT(A), on the other hand, has noted that estimation of such expenditure at ₹ 3800/- made in the course of original proceedings was reasonable, a finding which has not been shown to be untenable by the Revenue before us. Therefore, we find no justifiable reason to interfere with the ultimate conclusion drawn by CIT(A) for assessment year 2005-06, which is hereby affirmed. - Decided against revenue. Disallowance of interest expenditure - Held that:- CIT(A) has directed the Assessing Officer to examine whether the investments made in mutual funds were out of non-interest bearing funds or not; and if the Assessing Officer found it to be made out non-interest bearing funds, he has been further directed to exclude such investments in mutual funds from the total tax free investments as well as total assets for the purposes of calculation of interest disallowable in terms of clause (ii) of Rule 8D(2) of the Rules. The aforesaid direction of CIT(A), in our view is unexceptional and no error has been brought out by the Revenue on this aspect. In the same manner, with respect to quantification of disallowance out of administrative expenditure is concerned, on this aspect also we find no error on the part of the CIT(A) in directing the Assessing Officer to determine the disallowance on a reasonable basis following the judgement of the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(supra).- Decided against revenue.
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2015 (9) TMI 1342
Revision u/s 263 - whether the capital gains can be taxed in AY 2009-10 or not? - Held that:- There is no prejudice caused to the Revenue in the entire transaction as the capital gains gets taxed in either of the years @ 20% only. Even though Ld.CIT considered that agreement of sale cum irrevocable G.O. was registered on 31-03-2009, he could have invoked the powers to bring the capital gains offered in later year to this assessment year, if assessee has given possession as contended by assessee to the extent of first part of transaction. CIT causes prejudice to the Revenue, not the order AO which was considered by the CIT as prejudicial to the interest of Revenue. Not only that, assessee also justified that the loss which was incurred during the year, would be eligible to set-off to the business profits earned in AY 2011-12 onwards, wherein assessee offered positive incomes, offering the tax at 30% of the total income + surcharge there on. Action of the CIT would result in refund of tax to assessee and is beneficial to assessee. Therefore, the second condition prescribed u/s. 263, that the order of AO is prejudicial to the interest of Revenue, does not satisfy either in this year or in the later years. As seen from the consequential order passed, even the small tax offered by assessee was to be refunded. Considering these facts, it cannot be stated that the order of the AO is prejudicial to the interest of Revenue. It is in fact the order of CIT which is prejudicial to the interest of Revenue. In view of this, keeping in view of the principles laid down in the case of Spectra Shares and Scrips Pvt. Ltd., Vs. CIT [2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] to hold that there is no justification in exercising the jurisdiction u/s. 263 by the CIT. - Decided in favour of assessee.
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2015 (9) TMI 1341
Disallowance of interest payment - AO making a reverse working @ 12% interest with reference to the total amount of interest - Held that:- As far as the relations of M/s Chirag International Jaipur and Dr. Neelu Vashishta are concerned, the assessee’s explanation is not convincing, therefore, the same cannot be considered. However, there is some force in the argument of the ld counsel that the assessee company had sufficient interest free funds available to its own. We find merit in the arguments of the ld counsel that if sufficient interest free funds are available with the assessee, then the issue of interest free advances shall be considered in the light of these facts. In view thereof, we are inclined to set aside the issue back to the file of the Assessing Officer to decide the matter afresh in accordance with law keeping in view the above observation in mind after giving adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes
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2015 (9) TMI 1340
Addition on account of suppression of profit - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has noted that no defect or the differences in the product, process, raw materials, end users etc. have been pointed by Revenue and the A.O has proceeded to calculate the income of the 2 units on a wrong assumption. He has further noted that the addition has been made on a hypothetical formula by the A.O. CIT(A) while deleting the addition has also relied on the decisions of Ahmedabad Tribunal of Associated Petroleum Corporation [2010 (8) TMI 755 - ITAT AHMEDABAD] and the decision of Hon’ble Gujarat High Court in CIT vs Vikram Plastics (1998 (8) TMI 43 - GUJARAT High Court) which has not been controverted by Revenue before us. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed. - Decided against revenue.
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Customs
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2015 (9) TMI 1392
Demand of differential duty - Levy of CVD on MRP basis - undervaluation - Confiscation u/s 111(m) - Penalty u/s 112 - Held that:- Following decision of assessee's own previous case [2015 (9) TMI 761 - CESTAT MUMBAI] - Matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 1370
Undue benefit of Target Plus Scheme (TPS) - Export of cut and polished diamonds (CPD) without value addition - warehousing of imported CPD - it is alleged that after import, the goods were taken into private bonded warehouse and without processing the same were removed for export within 3-4 hours or the next day as the case may be. - Rejection of declared FOB value of diamonds - Penalty u/s 114 - Misdeclaration - contravention of the provisions of Section 14 and Section 50 of the Act read with Section 11 of the Foreign Trade (Development & Regulation) Act, 1992 and Rule 11 & Rule 14 of the Foreign Trade (Regulation) Rules, 1993. Held that:- Commissioner has not relied upon any evidence to show that minimum value addition of 5% or more cannot be achieved by such processes. The show cause notice also does not refer to any evidence on this point - if diamonds are segregated into a homogenous lot based on their size and quality, the value shall change even by employing simple labour intensive processes like sieving, boiling and assorting. The only piece of evidence we find on the relationship between the value addition and the process is in the form of representation made by Gem and Jewellery Export Promotion Council vide letter dated 23.10.2006 which relies on the same Circular of the CBEC while dealing with the various schemes in the Policy affecting the business of gem and jewellery including diamond industry. We are informed that the Customs Officers in charge of the bonded warehouse on being satisfied, have also cancelled the bonds, which aspect has been completely overlooked by the Commissioner. Section 14 of the Act provides that where duty is chargeable on ad valorem basis, the value shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation as the case may be in the course of international trade. There is no dispute about the CIF value declared by the Indian companies in the bills of entry. Rather such CIF value has been adopted by the Commissioner, to be the correct FOB value. We shall deal with this aspect later in detail when dealing with circular trading. Value addition is a concept under the Foreign Trade Policy (FTP). On the question of valuation, the Commissioner also records that evidences disclosed in the show-cause notice, there is an allegation that the FOB value declared is not genuine on account of control by AEL over all the overseas parties involved in the transactions as buyers or sellers of diamonds. Having recorded this objection, the Commissioner does not give any categorical finding thereon but instead treads into the question of circular trading. We therefore prefer to deal with this issue in the context of valuation and circular trading as the department has also heavily relied upon the allegations in the show cause notice on the inter relationship between AEL and other Indian companies as well as AEL and overseas entities. There is no allegation of common shareholding except for the subsidiaries. It is also not shown that AEL has the power to appoint Directors or control the composition of Board of Directors of companies in which its employees or its Directors are also partners or Directors. It is not shown that AEL holds sufficient shares or voting power to control the decisions of the entities in which its Directors are also Directors or in which its employees are also Directors or Partners. Mutuality of interest must be proved both ways. It is interest in the business of each other which proves that the parties are related. The inquiries made through the Indian High Commission, Singapore or Indian Consulate in Dubai have not brought out any such factual position on either shareholding pattern or control over the composition of the Board of Directors of the overseas entities except the two subsidiaries. As long as price of exports to independent parties in respect of whom there is no allegation of relationship is available, the same would apply to all other exports including those made to related persons. This is notwithstanding the fact that the department has failed to discharge the onus of proving relationship between AEL and overseas entities - department has failed in discharging the burden cast upon it to produce any tangible evidence in respect of the charge of over-valuation or circular trading. For the same reason, the judgment in Steel India Company vs. CCE, [2014 (12) TMI 1035 - CESTAT MUMBAI] is of no assistance to the department. - declared FOB value is accepted to be the correct FOB value under Section 14 of the Act and to that extent the order of the Commissioner is set aside. Stand of the department in the show-cause notice to be self-contradictory. If the same lot is circulated into India a number of times, it is only rational to take the CIF value only once for the same lot to support the allegation of circular trading. By not doing so, and by accepting the CIG value of each individual consignments of imported diamonds, the department has admitted each consignment to be different from the other, and not of the same goods, thereby militating against their own case of circular trading. The Indian companies contend and rightly so, that the implications of acceptance of CIF value means each time a new consignment has been imported unrelated to any other in the past or future, duly corroborated by remittance of foreign exchange through banks or authorised dealers equal to the value of the goods received in India. Correspondingly in relation to exports, receipt of foreign exchange through banks and authorised dealers as proceeds of exports in compliance with the provisions of Foreign Exchange Management Act, 1999. Payment of commission would be relevant for calculating the value addition if and when the pending applications for grant of duty free scrip under TPS is taken up by the competent authority. - Section 114 of the Act does not create vicarious liability. It is an action in personam. It is therefore necessary to show how each of these individuals acted in a manner which resulted in mis-declaration of FOB value to render the goods liable to confiscation under Section 113(i). We find no justification has been provided by the Commissioner in the order. The statement of these individuals are exculpatory, besides not being adversely implicated by others. In any case, we have set aside penalties on all concerned as aforesaid. - Decided in favour of assessee.
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2015 (9) TMI 1369
Denial of exemption claim - Served From India Scheme - Whether the benefit of exemption notification No.92/2004-Cus. dt. 10.9.94 availed by the appellant in respect of import of restricted goods i.e. Radars, Navigational Equipments, VHF Equipments & DME Equipments etc. under SFIS is correct or otherwise - The appellants contention that DGFTs clarification on import/export shall prevail over customs and customs authority cannot interpret the policy is not at all relevant to the facts of this case - Held that:- There is no dispute on the fact that the goods, Radars & VHF & DME are restricted items under ITC (HS) EXIM code and there is no dispute on the fact that para 3.6.4.5 of FTP 2004-09 (RE-2006) stipulated that SFIS can be utilized for customs duty adjustment only on the goods which are freely importable and not to any restricted items. - It is relevant to state that as rightly held by the adjudicating authority in his findings at para-30 of order that the department has not challenged the importability of impugned goods under FTP but the dispute is restricted to payment of customs duty on the restricted goods through SFIS scrip under the Notification 92/2004. The appellants are entitled to utilize the SFIS scrips for import of any capital goods which are freely importable. That being the case, there is no overlapping of power of DGFT or Customs vice versa. It is a fact that SFIS scrips are issued based on foreign exchange remittance received over previous years and the DGFT issued the SFIS scrips to appellant on 4.7.2006 and utilization of scrip should be as per the condition of FTP as existed on the date of import. It is a settled law that any clause policy provision should be strictly enforceable prospectively w.e.f. from the date of such amendment. In the present case, para 3.6.4.5 of FTP 2004-09 (Re-2006) w.e.f. 1.4.2006 stipulates the utilization of SFIS scrip for customs duty only on the freely importable goods and the customs notification 92/2002 allows exemption as per the policy in force. Therefore, there is no promissory estoppel attracted in the present case. SFIS scrip should not allowed to be used for payment of customs duty on the Restricted goods i.e. on Radars, Navigational Equipments, VHF & OME Equipments which are restricted for import under ITC (HS) EXIM code and the exemption provided under Notfn 92/2002-Cus. Is not applicable for use of SFIS scrip for adjustment of customs duty on import of the said restricted goods. Assessee inadvertently utilized the said SFIS scrips for payment of Customs duty towards import of Radars, and other equipments which are restricted items under policy. The Executive Director in his statement clearly admitted before the Department that they agreed to pay the entire customs duty and they paid the entire customs duty voluntarily under various TR challans. These facts are on record and the same cannot be brushed aside or ignored as there are voluntary statements from responsible senior executives persons in charge of Finance & Planning including the Executive Director Finance and are fully aware of the legal provisions of FTP and Customs exemptions notifications. Therefore, the adjudicating authority rightly denied the exemption under Notfn 92/2004. - Demand of duty confirmed. Confiscation and redemption fine - Held that:- When the goods are not available for confiscation, by respectfully following the ratio of the Hon’ble High Court decisions [2012 (9) TMI 386 - KARNATAKA HIGH COURT] and [2008 (4) TMI 320 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH], we hold that the appellants are not liable for redemption fine. Levy of penalty u/s 112 - held that:- considering the overall circumstances of the case and also considering the fact that appellant paid entire customs duty during investigation itself and before issue of SCN reduction in penalty is warranted in respect of imports made through Chennai and Mumbai. - penalty reduced - Decided partly in favour of assessee.
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2015 (9) TMI 1368
Maintainability of appeal - Seizure of goods - Section 110(A) - whether the appeal against the order passed by the Commissioner under section 110(A) of the Customs Act 1962 lies before the Tribunal or not - Held that:- From the provisions of Section 110A of the Act it is a clear mandate that under section 110A the decision is to be taken by the Adjudicating Authority for imposing conditions for release of seized goods provisionally. - any person aggrieved by decision or order passed by the Commissioner of Customs as an adjudicating authority may appeal to this Tribunal. Therefore, under section 110A the order of provisional release is being passed by Commissioner Customs as adjudicating authority and aggrieved from the said order appeal can be filed before this Tribunal under section 129 A(1) of the Act. With these observations, we are not in agreement with the decision of the larger bench of this Tribunal in the case of Akanksha Syntax Pvt. Ltd. [2013 (9) TMI 138 - CESTAT MUMBAI] and same is required to be reconsidered by a Larger Bench. Registry is directed to place the records before the Hon'ble President for consideration and to constitute the Larger Bench of this Tribunal to decide subject issue.
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2015 (9) TMI 1367
Classification of product – basmati Rice or Not – Whether rice exported by appellant was Basmati Rice or not as per Serial No. 45 AA, as amended, of notification no. 93/RE-2007/2004-2009 – Held that:- according to restrictions imposed as per serial no. 45AA, grain of rice should be more than 6.61mm of length and ratio of length to breadth of grain shall be more than 3.5 – There was no definition of Basmati Rice in notification and there was also no stipulation that inspite of satisfying size still rice can be Non-Basmati Rice – Therefore all Rice Categories being sold as Basmati Rice in Commercial Parlance and having dimension mentioned in notification will not be covered as restricted category of Basmati Rice – Nowhere in DGFT Policy, it was mentioned that if grain size restrictions were satisfied then Agmark authority’s opinion will be Final Say on classification of Basmati Rice – Supreme Court in case of Balwant Singh Vs. Jagdish Singh [2010 (7) TMI 556 - SUPREME COURT OF INDIA] opined that Provisions of Statute had to be given full effect to Legislative intent to achieve intended objective – Therefore in view of said observations Confiscation order was not justified and order set aside – Decided in favour of Assesse.
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2015 (9) TMI 1366
Classification - Whether the fuel oil containing in the engine room tanks is classifiable under heading No. 27.10 or the Vessels under heading as 89.08 of the Customs Tariff Act - Held that:- Gujarat High Court in the recent decision in the case of Priya Holding P Ltd (2012 (11) TMI 532 - Gujarat High Court) held that once the fuel oil contained in the bunker i.e., engine room tanks, falls within the ambit of sub para (b), as a natural corollary the same would be classifiable along with the vessel under 89.08 of the Heading No. 89.07 of the Customs Tariff Act. - impugned order cannot be sustained - Decided in favour of assessee.
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2015 (9) TMI 1365
Whether the fuel oil containing in the engine room tanks is classifiable under heading No. 27.10 or the Vessels under heading as 89.08 of the Customs Tariff Act - Held that:- Gujarat High Court in the recent decision in the case of Priya Holding P Ltd (2012 (11) TMI 532 - Gujarat High Court) held that once the fuel oil contained in the bunker i.e., engine room tanks, falls within the ambit of sub para (b), as a natural corollary the same would be classifiable along with the vessel under 89.08 of the Heading No. 89.07 of the Customs Tariff Act. - impugned order cannot be sustained - Decided in favour of assessee.
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2015 (9) TMI 1364
Waiver of pre-deposit - 100% EOU - Additional Duty of Customs (SAD) on the goods cleared on stock transfer to their own unit - Notification No.23/2003-CE, dated 31.03.2003 - Held that:- In view of the Tribunal’s decision [2014 (11) TMI 154 - CESTAT MUMBAI], the appellant has a prima facie case for waiver of pre-deposit. We, therefore, waive the pre-deposit of adjudged dues and stay recovery thereof till disposal of the appeal. - Stay granted.
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2015 (9) TMI 1363
Rectification of mistake - Held that:- There is no provision for filing ROM application against the order of the Tribunal deciding a ROM application. On this ground, the application filed by the applicant is not maintainable. - ROM order was passed on 29/09/2014 and the order was dictated in the court in the presence of the advocate for the applicant. As per the provisions of Section 129B(2) ROM application can be filed within six months from the date of the order. We find in the present case, the said order was passed on 29/09/2014 and the ROM application has been filed on 01/06/2015. Thus, the application has been filed beyond the period of six months stipulated under Section 129B(2). On this ground also the ROM application needs to be dismissed. - Decided against assessee.
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Service Tax
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2015 (9) TMI 1390
Refund claim - the money has been deposited by the decree-holder with the Department with respect to the Service Tax which is now not applicable - Management, maintenance or repairs service in relation to Road - Held that:- It is an undisputed thing that the decree holder has also filed an undertaking that the decree holder would not make any claim on the Service Tax Department or with the PWD or with any other authority with respect to the said amounts. In view of the said undertaking, there is no impediment why the Department should not pay the remaining amount deposited by the decree-holder as Service Tax. Under these circumstances, I direct that the Department shall forthwith refund the amount of ₹ 1,14,84,925/- which includes service tax element of ₹ 26,25,580/- and interest of ₹ 89,59,345/- out of the total amount of ₹ 4,76,57,617/- deposited by the decree-holder with Delhi Project. The undertaking given by the decree holder which is filed by an affidavit is duly accepted. The Department of Commissioner of Service Tax shall issue the said payment to the decree holder within four weeks - Appeal disposed of.
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2015 (9) TMI 1389
Refund claim - Unjust enrichment - cum-tax computation - deposit of tax which was not leviable - Service tax was paid as Clubs or associations service on amounts collected as entrance fee for admission of new members - Held that:- Mere capacity to deliver a service cannot be equated with providing or agreeing to provide a service; such service has to reach the recipient in exchange for the consideration or the consideration is made over in exchange for a schedule of delivery of the service. In a combined human activity, contribution of, or agreement to contribute, funds cannot, therefore, be construed as consideration to be taxed under Finance Act, 1994 unless attributable to an activity or performance or promise thereof on the part of an identified provider to an identified recipient. Unless the existence of provision of a service can be established, the question of taxing an attendant monetary transactions will not arise. Contributions for the discharge of liabilities or for meeting common expenses of a group of persons aggregating for identified common objectives will not meet the criteria of taxation under Finance Act, 1994 in the absence of identifiable service that benefits an identified individual or individuals who make the contribution in return for the benefit so derived. Tax was paid on the entrance fee without collecting the tax amount from the new members. Though the first appellate authority has granted the benefit of a cum-tax computation of the entrance fee, it must be borne in mind that the tax liability was discharged before the re-computation allowed in the impugned order. It, therefore, does not alter the origin of the funds utilized for discharge of tax liability - viz. from the common funds of the appellant without recourse to the members who paid nothing more than the entrance fee. Moreover, entrance fees are fixed in the bye-laws without reference to tax leviable, if any, thereon. For both these reasons, it can be concluded that tax burden has not been transferred to the members from whom entrance fees were collected. Clearly, the service tax so paid does not carry the taint of unjust enrichment. - Decided in favour of assessee.
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2015 (9) TMI 1388
Application for Modification / Rectification of mistake in the stay order - it was contended that services were rendered outside India and no part of the service was performed in India. Therefore, he submits that they are not liable for predeposit and also pleaded for revenue-neutrality as they are entitled for the entire credit of service tax paid under reverse charge. - Held that:- Tribunal can only rectify any mistake apparent on record in the said order and in this case there is no such mistake brought out by the appellant but only seeking to revisit the facts and findings of this Tribunal order [2015 (8) TMI 958 - CESTAT CHENNAI] Which amounts to review of the order and there is no powers vested with Tribunal to review its own order. Any decision on debatable point of law cannot be treated as mistake apparent from record. The ratio of the Apex court decisions [2002 (12) TMI 87 - SUPREME COURT OF INDIA] and Madras High Court decisions [2010 (12) TMI 698 - MADRAS HIGH COURT] are directly applicable to the facts of the present case. In view of the forgoing discussions and by respectfully following the Apex Court and High Court decisions, we do not find any apparent and manifest mistake in the Tribunal’s interim order so as to exercise the powers to recall or modify the Misc order [2015 (8) TMI 958 - CESTAT CHENNAI] - Decided against assessee.
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2015 (9) TMI 1387
Supplementary questions - Matter was already referred to larger bench in [2015 (6) TMI 695 - CESTAT MUMBAI] - matter to be placed before Third Member on the Supplementary questions:- (i) In the facts and circumstances, whether the services have been received by the appellant-assessee beyond the Indian Territory and hence, not liable to Service Tax as held by Member (Judicial) or Whether the services have been received within Indian Territory and hence liable to Service Tax as held by Member (Technical). (ii) Whether in the facts and circumstances and in law, the benefit of section 80 is available to the appellant-assessee and no penalties are imposable as held by Member (Judicial) or Such benefit is not available and penalties are imposable under Section 76 and 78 of the Finance Act, 1994 as held by Member (Technical)
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2015 (9) TMI 1386
Commercial Training or Coaching Services - bonafide belief - extended period of limitation - Imposition of penalty and interest - Held that:- Something positive other than mere inaction or failure on the assessee's part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. Although there was delay on the part of the appellant in providing information which may have led to delay in issuance of Show Cause Notice, the appellant has claimed the delay was caused as data from large number of centres had to be complied. There is nothing to even suggest that the appellant was deliberately causing delay to take advantage of time-bar. The fact that Delhi data was supplied without delay further supports the view that delay in providing information about outside-Delhi centres was not intentional to evade service tax. However, for invoking the extended period what is required to be established is that there was wilful mis-statement/suppression of facts. - allegation of wilful suppression of facts is not sustainable. Similar view was also been held by CESTAT in the case of Gargi Consultants Pvt. Ltd. Vs. Commissioner [2013 (5) TMI 695 - CESTAT NEW DELHI]. As a consequence, the demand of ₹ 71,50,372/- is hit by time bar and hence the same is not sustainable Regarding demand for normal period - Held that:- Even after the demand was confirmed and the issue no longer remained res integra, the appellant did not remit the said demand. It clearly shows that failure to remit of service tax was not because of any reasonable cause because had it been so, the appellant would have remitted the service tax after the issue was settled in favour of Revenue by Supreme Court. Therefore, the appellant is not eligible or qualified for the benefit of Section 80 ibid. - Decided partly in favour of assessee.
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2015 (9) TMI 1385
Renting of Immovable Property Service - Penalty u/s 76, 77 & 78 - Held that:- If the tax is due as on 6 th of March, 2012 and if the same has been paid alongwith interest within period of six months from the date on which the Finance Bill, 2012 received the assent of the President, no penalties shall be imposable for failure to pay the service tax. - Demand is for the period 2007-2011 and the same was payable on 6 th day of march 2012. The liability of service tax in full alongwith interest has been discharged within the six month from the date on which Finance Bill received assent of the President, which was ending on 28/11/2012, the appellant has paid liability on 26/11/2012. In this undisputed facts, appellant has made out a clear case for waiver of penalties in terms of Section 80(2) of the Finance Act, 1994. I therefore invoking Section 80(2) set aside the penalties imposed under Section 76, 77 and 78 of the Finance Act. - The appellant has not pressed made this discrepancy either before the adjudicating authority or before the Commissioner (Appeals) and no documentary evidence was submitted before the said lower authorities. Therefore same cannot be verified at this stage therefore demand is upheld - Penalties are set aside - Decided in favour of assessee.
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2015 (9) TMI 1383
Waiver of pre deposit - C&F Agent and GTA service - Held that:- Tribunal in the case of M/s. Prakash Agencies Vs. Commissioner of Service Tax, Chennai (2013 (1) TMI 740 - CESTAT CHENNAI) has already granted stay following the decision of the Hon’ble High Court of Delhi in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India (2012 (12) TMI 150 - DELHI HIGH COURT), prima facie, the service tax demand on C&F agency is waived and recovery thereof stayed during the pendency of the appeal. As regards GTA service, we find that during the period in dispute the appellants were unregistered partnership firm and the unregistered partnership firms were brought into service tax net with effect from 1.7.2012. Prima facie, the appellants have made out a case for waiver of pre-deposit. Accordingly, waiver of pre-deposit is granted on GTA services availed and recovery thereof stayed during the pendency of the appeal. - Stay granted.
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2015 (9) TMI 1382
Maintainability of appeal - Monetary limit - Held that:- Impugned order was passed by the Commissioner (Appeals) under section 35A which is specified under clause (b) of sub-section (1) of section 35B. In view of second proviso to section 35B(1), this Tribunal has discretion to refuse or to admit the appeal in respect of order referred to clause (b) or clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/- (before 6/8/2014) and ₹ 2 lakhs (on or after 6/8/2014). - Appeal not maintainable - Decided against assessee.
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Central Excise
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2015 (9) TMI 1391
Denial of modvat credit - penalty under erstwhile Rule 57U(6) read with 173Q(bb) of CER - Held that:- TN Govt had granted mining lease in favour of the respondent for the period of 30 years and 20 years respectively subject to fulfilment of various conditions as set out in the G.O itself and also subject to the payment of royalty and other rents etc. In terms of above G.O's, appellants have executed lease deed dated 17.6.95 and 5.3.92. On perusal of the lease deed, I find that the rights, liabilities, restrictions of use of mines and the mode of payment are set out in the agreement. Therefore, it is clearly established beyond doubt that respondents had captive mining lease during the relevant period from 8.5.1991 onwards - appellants availed the credit on lubricating oils for the use in the manufacture at their captive mines and by following the ratio of the Hon'ble Supreme Court in the case of Vikram Cement Vs CCE (2006 (2) TMI 1 - Supreme court), the appellants are eligible for cenvat credit on capital goods and at captive mines. Accordingly, the impugned order is upheld and Revenue appeal is rejected subject to the condition that mining products in dispute are not cleared to outsiders which may be verified by the Revenue - Decided against Revenue.
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2015 (9) TMI 1381
Denial of credit on parts of surface miners used in the mines - Availment of credit on CCTV Cameras used in the Kiln - Whether percentage of eligibility of credit is 75% or 100% on the goods cleared under project imports prior to 1.3.1997 - Held that:- As per the directions of the Hon’ble High Court, Madras, we have examined the admissibility of credit on each of the inputs used in the mines and whether the appellants have their own captive mines. This Tribunal in CCE Trichy Vs The India Cements Ltd.[2015 (9) TMI 1391 - CESTAT CHENNAI] in appellant s own case dealt the issue of use of capital goods and inputs in their own captive mines. Therefore, there is no dispute on the use of parts of surface mines in the capital goods at mines. Further, we find that in the appellant's own case, the Tribunal in the case of CCE Trichy Vs India Cements reported in [2009 (10) TMI 701 - CESTAT CHENNAI] had held that credit on Lubricants used in machinery like surface miner, dumper, etc. in captive mines and are admissible for credit. It is seen that there are a large number of decisions holding the eligibility for capital goods which are used in the mines and outside the factory premises. Appellants are eligible for credit on parts of surface miners. Further, we find that the goods were imported under project import as is evident from the show cause notice and rightly classifiable under 9801 and not under chapter 8430. The act of the department in seeking to classify the goods under Chapter 8430 as against 9801 being clearly traversing beyond the show cause notice, is not sustainable in law. - As regards admissibility of 100% of credit on the project import goods, we find that credit goods were imported in March 1996. We find that on a perusal of D-3 declaration submitted on 22.3.96 which is annexed in page 23 and 24 of the paper book, the capital goods were received in the factory on 22.3.96. Therefore, the date of receipt of capital goods in the appellant's unit is relevant. - appellants are eligible for credit on parts of surface miners, CCTV Cameras installed in the Kiln and they are also eligible for 100% credit on the CVD paid on the goods imported under project imports. Accordingly, the impugned order is set aside
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2015 (9) TMI 1380
Denial of CENVAT Credit - Whether the respondents are entitled to Cenvat credit of Education cess and Secondary & Higher Education cess when inputs are supplied by 100% EOU, paying duty under Sr. No. 2 Notification No. 23/2003-CE dated 31.3.2003 - Held that:- When goods have been removed from EOU to DTA, availing the exemption under Sr. No. 2 of Notification No. 23/2003 (ibid) there is a restriction carved out by the formula provided in the proviso to Rule 3(7)(a). This restriction is to prohibit taking credit on the BCD component. But credit is available on the Additional Customs duty (CVD) component. As already stated, Additional Customs duty includes excise duty as well as cess on this excise duty. Therefore the respondents are entitled to take credit of an amount equivalent to the Additional Customs Duty inclusive of excise duty and cess thereon. Though the decision in Emcure Pharmaceuticals Ltd case [2008 (1) TMI 147 - CESTAT, MUMBAI] which has been followed in the later judgement noted above, was rendered prior to the amendment inserting the second proviso to Rule 3(7) (a), the principle enunciated therein alongwith the other judgments are correctly applicable to the present case. The legislature in its wisdom has brought forth the amendment of adding the second proviso to Rule 3(7)(a) w.e.f. 7.09.2009 to suppress the mischief, clear the confusion and resolve the same. Therefore I do not find any reason not to allow the Cenvat credit on the Education Cess and SHE Cess Component, Forming Part of CVD. In view of the above discussions, the appeal filed by the Revenue is dismissed - Decided against Revenue.
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2015 (9) TMI 1379
Penalty under Rule 26 of the Central Excise Rules 2002 - Purchase of clandestinely cleared goods - Held that:- it is an admitted position that incriminating documents were recovered from the appellant's office in Mumbai, which indicated that the appellant has purchased clandestinely cleared goods from the manufacturer. In his statement, both the manufacturers and brokers have admitted the position. - penalty imposed is in order. Further, penalty imposed is not on the higher side - Decided against assessee.
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2015 (9) TMI 1378
Denial of refund claim - CENVAT Credit - whether or not appellant is entitled to refund of an amount paid by the appellant representing CENVAT credit availed on inputs used in the manufacture of finished goods lost in fire accident when appellant has recovered the said amount from the Insurance Company - Held that:- The final order passed by Hon'ble Gujarat High Court [2013 (4) TMI 532 - GUJARAT HIGH COURT] held that above amendment carried out in Rule 3 of the Cenvat Credit Rules is only prospective and not retrospective - In the present appeal also the period of dispute is before 07.09.2007, therefore, the law laid down by the jurisdictional High Court squarely applies to the case of the appellant and has to be followed. - Decided in favour of assessee.
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2015 (9) TMI 1377
Removal/ Shifting of goods from the old factory to the proposed factory (adjacent premises) without payment of duty - Confiscation of goods - Held that:- Technically there are some procedural irregularities committed by the appellants. However, the fact remains that the appellants themselves informed about the shifting of the raw materials, etc. within five days of the shifting, applied for registration within the next two days and they have sufficient balance in the Modvat credit/PLA account to take care of the liability while shifting the goods. Moreover, immediately on shifting the goods, the same account would be available as credit of duty in the adjacent premises. Thus, though technically the confiscation of the goods is in order. However, keeping in view of overall circumstances, we do not see any reason to impose redemption fine of ₹ 42 lakhs. In our view ends of justice will meet if the redemption fine of ₹ 50,000/- (Rupees fifty thousand) is imposed. Further, we find that whatever demand has been made could have been paid from the Central credit account/PLA and further the same was available as credit on the same date in the adjacent premises. Further, the revenue themselves have allowed the shifting of the accumulated PLA balance as well as Modvat credit was allowed based upon the appellants request letter dated 11/03/2011. Keeping in view the overall circumstances of the case, in our view there is no need to demand the duty. Finished goods were cleared on payment of duty from new premises. Work-in-progress goods were converted into finished goods and cleared on payment of duty. Keeping in view the peculiar circumstances of the present case, we therefore, set aside the demands made. - Decided in favour of assessee.
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2015 (9) TMI 1376
Demand of interest u/s 11AA - whether demand of interest under Section 11AA is sustainable or otherwise - Held that:- Sub-Rule (3) of Rule 57I and Sub-Rule (8) of Rule 57U of CER clearly stipulates the recovery of interest where the appellant ails to pay amount determined within 3 months from the date of order the interest shall be payable as per Section 11AA of CEA. By virtue of the above provision of Rule 57(I) and Rule 57(U), Section 11AA is made applicable for demand of interest in recovery of modvat cases. - once the demand is confirmed and the same is upheld by the higher Appellate Forum the interest is automatic. The appellants having availed and utilized the credit for payment of excise duty which is due to the govt. interest is leviable for which no notice is required. - interest is payable on the amount already confirmed and upheld by the Tribunal which was belatedly paid only after the Tribunal's order. Accordingly, the impugned order is upheld - Decision in the case of CCE & C Aurangabad Vs Padmashri V.V.Patil S.S.K. Ltd. [2007 (7) TMI 6 - HIGH COURT, BOMBAY] followed - Decided against assessee.
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2015 (9) TMI 1375
Suo moto availment of credit - whether suo motu re-credit of the credit already reversed is permissible and no refund claim is required to be filed - Held that:- The issue is no more res integra in view of the judgment of Hon’ble Madras High Court in the case of ICMC Corporation (2014 (1) TMI 1473 - MADRAS HIGH COURT) - Taking of credit on the basis of available documents, without disputing their genuineness, cannot be equated with the case of self refund. - There is no stipulation in the Cenvat statute that an assessee is required to obtain prior permission from the jurisdictional Central Excise authorities for making any debit entry in the Cenvat records. Hence, in absence of any specific prohibition to that effect, it is not appropriate to disallow the Cenvat benefit, to which the respondent is statutorily entitled to. This Tribunal in the case of Visakhapatnam Steel Plant v. CCE [2002 (3) TMI 169 - CEGAT, BANGALORE] has held that correction of errors and omissions in the entries would not require permission of the Department. - Decided against Revenue.
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2015 (9) TMI 1374
Denial of CENVAT Credit - Capital goods - Held that:- According to the respondent, the steel items, in question, have been used in fabrication of the Coal Ground Hopper, Iron Ore Ground Hopper, Coal Crusher House, Conveyor System, Stock House, After Burning Chamber, Kiln Coller Transformer House etc., which according to the findings of the Commissioner (Appeals), are parts of the machinery and hence, are covered by the definition of capital goods. The grounds of appeal do not dispute the above uses of the steel items and in the grounds of appeal it is simply stated that the items fabricated are supporting structures. I do not accept this plea of the department, as from the nature of the items fabricated, it is clear that the same are component of the various machinery and hence, have to be treated as components of capital goods and accordingly, the steel items used in fabrication of the same would be eligible for Cenvat credit in terms of Rule 2(k) of the Cenvat Credit Rules, 2004. In any case, since on the issue involved in this case, there were conflicting decisions of the Tribunal, in view of the judgment of the Apex Court in the case of Continental Foundation Joint Venture (2007 (8) TMI 11 - SUPREME COURT OF INDIA), no mala fide can be attributed to the respondent and accordingly, the longer limitation period under proviso to Section 11A(1) would not be available to the department and the demand is time barred. - Decided against Revenue.
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2015 (9) TMI 1373
Denial of CENVAT Credit - Whether appellant is eligible to the Cenvat credit on the inputs claimed to have been used in the manufacture of capital goods, construction of the plant as well as installation of machinery etc - Held that:- In view of fair submission of the appellant and also development of the law, appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing for readjudication afresh on the issues involved as emerged from the show-cause notice. - Matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 1372
Manufacture - Immovability - office furniture systems / work stations manufactured and cleared without payment of duty - Held that:- Respondents failed to justify that the items are immovable property and also we find that respondents have not filed any cross objection against Revenue's appeal or any submission before this Tribunal. Therefore, by respectfully following Supreme Court's decision [2011 (2) TMI 2 - SUPREME COURT OF INDIA], we set aside the impugned order - Decided in favour of Revenue.
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2015 (9) TMI 1371
Denial of CENVAT Credit - Whether appellant is eligible to the Cenvat credit on the inputs claimed to have been used in the manufacture of capital goods, construction of the plant as well as installation of machinery etc - Held that:- In view of fair submission of the appellant and also development of the law, appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing for readjudication afresh on the issues involved as emerged from the show-cause notice. - Matter remanded back - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (9) TMI 1393
Estimation of turnover towards local sales whereas no proof of local sale - suppression was detected at check-in-borders during transportation - Demand of security deposit - Habitual defaulter - Conversion of security deposit to penalty - best judgment assessment - Held that:- The assessing officer opined that when a pattern of suppression can be established on the basis of two instances spreading over different months of a financial year, the proposed addition is reasonable. It is also indicated that the detection was noticed while transporting goods through different check-posts at Vazhikadavu and at Tholpetty. It is also found that the modus operandi practised by the dealer was to transport twice the quantity conceded. - Therefore when the authorities under the KVAT Act proceeds on the basis that despite the suppression being detected only twice, taking into consideration the manner in which goods were being transported, the assessment could be made under section 24 of the KVAT Act cannot be found to be unreasonable which requires interference. But, tribunal failed to consider the question relating to the estimation made by the assessing officer in relation to the fact that the assessee has no local sales at all and therefore the turnover estimated under section 6(1) of the Act is bad in law, the same is required to be considered in accordance with the procedure prescribed. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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