TMI Tax Updates - e-Newsletter
October 20, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Validity of assessment u/s 147 instead of u/s 153C - AO should not confuse the expression ‘belongs to’ with the expression ‘relates to’ or ‘refers to’. - the documents in the case in hand belonged to the searched person. Under such circumstances the reopening in the case in hand has rightly been done under section 147 of the Act by the AO. - AT
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Income Tax:
Nature of rent received from the company - benefit or perquisite or rent itself - Section 2(24)(iv) of the Act will normally come into play only when the company in which the directors or its relatives have taken advantage in respect of any obligation which the director and their relatives are expected to discharge. In the present facts, section 2(14)(iv) has no application - AT
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Income Tax:
Penalty u/s. 271B - failure to get accounts audited - When a particular authority has been designated to record his satisfaction on any particular issue, then it is that authority alone who should apply his independent mind to record his satisfaction and satisfaction so recorded should be independent and not borrowed or dictated satisfaction - No penalty - AT
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Income Tax:
Entitlement to exemption u/s 11 - merely because the assessee is charging fees from the patients for providing diagnostic service, whether exemption under section 11 of the Act could be denied or not ? - Exemption allowed - AT
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Income Tax:
Levy of interest under section 220(2) - The period specified under section 220(1) has to be taken into consideration from the date of passing of the fresh assessment order and not the earlier assessment order, which has been set aside - AT
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Income Tax:
Entitlement to deduction u/s 80QQB - whether the royalty income is not derived by the appellant in the exercise of profession and is therefore not entitled to deduction u/s 80QQB? - Held No - There is also no material on record to say that whether the assessee is having education in the field of cookery either in the college or university or even by experience - AT
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Income Tax:
Good work reward - it was an ex gratia payment or some sort of reward given to an employee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for improving the working of the assessee. - it would not fall u/s 36(1)(ii) but would fall u/s 37 - AT
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Income Tax:
Credit for foreign tax paid in Mauritius - whether should not be excluded while computing interest under section 234C? - The payment of taxes in Mauritius cannot be considered as advance tax. It makes 'no difference, under what circumstances the taxes were paid - AT
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Income Tax:
Levy of penalty u/s 271B - Failure to get accounts audited u/s 44AB - the claim of the Assessee that he was under reasonable and bona fide belief that his turnover did not exceed ₹ 40 lacs is clearly a bona fide claim on which no penalty is leviable u/s 271B. - AT
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Income Tax:
Penalty u/s.271B - non furnishing of tax audit report u/s 44AB - determination of turnover - the assessee's case, despite a default of s. 44AB of the Act, is not liable in law for penalty u/s.271B - AT
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Customs:
Import of Palmolive oil - Exemption under Rule 8 of the Customs (Import of goods to concessional rate of duty for manufacture of excisable goods) Rules 1996 – the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage - HC
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Customs:
Benefit of Status Holders Incentive Scrip scheme - Import of accessories for Steam Turbine Generator cannot be considered as upgradation of technology of capital goods of chemical industry – appellants are not eligible for benefit of SHIS scrip under Notf no 104/09 - AT
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Service Tax:
Denial of CENVAT Credit - scope of SCN - the show cause notice is the foundation of the demand - that the order-in-original and the subsequent orders passed by the appellate authorities would be confined to the show cause notice, the question of examining the validity of the impugned order on grounds which were not subject matter of the show cause notice would not arise. - HC
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Service Tax:
Liability of Service Tax for felling, conversion, debarking, collection, stacking, transportation and delivery of pulp wood from the captive plantation – Matter remanded back to ascertain whether the process is amount to manufacture or not - AT
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Service Tax:
Challenge the SCN issued for Levy of Service Tax service tax under section 65(105)(zzze) of the Finance Act, 1994 - SCN set aside to the extent demand is made in respect of Club and Association Service - HC
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Service Tax:
Service tax liability for auctioning of abandoned cargo – Excess amount earned on auction of cargo shown in income – amount cannot be taxed under storage and warehousing service - AT
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Service Tax:
Denial of CENVAT credit - though the appellant has availed CENVAT credit belatedly which is well within the provisions of CENVAT Credit Rules, 2004 - credit allowed - AT
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Central Excise:
Valuation - Section 4 or 4A - manufacture of Powder Hair Dye (PHD) - whether the appellant is required to print/affix MRP on sachets and/or on the mono pack containing 6/8 sachets - both the methods are incorrect in as much as since the goods were not sold from the factory but sold from the depots, therefore, Section 4(1)(b)read with Rule 7 of the Central Excise Valuation Rules, 2000 are relevant for determination of the assessable value. - AT
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Central Excise:
Exemption to textile products - whether jute bags manufactured by the Appellant and classifiable under Chapter Heading 6305, printed with some particulars of other person, could be considered as bearing a brand name or sold under a brand name. - Held Yes - AT
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Central Excise:
Classification of goods - products viz., 'Neelibhringadi Thailam (Gingelly Oil base), Neelibhringadi Thailam (Coconut Oil base) and SugandhamThailam and Danta Dhavana Churnam' - products in question are ayurvedic medicaments, which will be classifiable under the heading 3003.30 - AT
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Central Excise:
The penalty imposed on the employees of the appellant company cannot be sustained for the reason that they worked on the basis of the instruction of the employer. There is no material available the employees of the appellant company had gained in any manner - AT
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Central Excise:
Claim of refund - period of limitation - it is apparent that the appellants were contesting the liability right from the date of payment of duty before various forums. Thus it can be considered that the duty was paid by them under protest. In view of above the refund claim cannot be considered as time-barred. - AT
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Central Excise:
Denial of CENVAT Credit - emergence of byproducts which is exempted from duty - If in that process certain unintended byproducts emerge as a technical necessity then it cannot be said that part of the said inputs have been used in Manufacturer of the byproducts - demand set aside - AT
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Central Excise:
CENVAT Credit - appellant has used cement for stabilization of hazardous waste 'jarosite' as toxic effluent at secured land fill which is part and parcel of their manufacturing activity - credit allowed - AT
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Central Excise:
The Catheters are different from Cannula in structure and function, though there may be certain overlapping in their nature of usage - the exemption available to Cannula as per Entry No.34 in List 37 of Notification No.21/2002-Cus cannot be extended to the CVC manufactured by the appellants - AT
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Central Excise:
CENVAT Credit - reversal of credit on the raw material and the demand of duty on the finished goods solely on the ground of physical stock taking done by the assessee is not sustainable due to the nature and possibility of accounting error - AT
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Central Excise:
MRP based Valuation - Section 4A - free supply of items - The retailers could be selling individual pieces (not having MRP printed on them to the individual ultimate consumers) is no reason to disregard the retail sale pattern observed by the appellant - AT
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Central Excise:
Appellant / revenue has not been to show any notification by which the benefit of CENVAT credit has been expressly denied where the payment of customs duty or additional customs duty is made using DEPB scrips issued in terms of the FTP 2002-07 - Cenvat Credit cannot be denied - HC
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Central Excise:
SSI exemption - manufacture of labels / stickers bearing the band name of the customer - An interpretation of Clause 4(e) to the effect that stickers would mean only gummed labels is not borne by sound reasoning. We do not appreciate the thin line of distinction being attempted by Revenue to differentiate between the stickers and labels. - exemption allowed - AT
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Central Excise:
Availment of CENVAT Credit - capital goods / moulds were not available during the next year - e appellant is not entitled for Cenvat Credit to the extent of remaining 50% - AT
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Central Excise:
Duty demand - Clubbing of turnover of the Job workers - dispute regarding Valuation - dummy units or not - If the department disputed the price at which excise duty paid by the eleven units the demand should have been made on the eleven units, who are already registered with the Department. Duty cannot be demanded on the appellants for trading of goods. - AT
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Central Excise:
Denial of refund claim - Unjust enrichment - appellant have booked excess duty paid under the head of expenditure in the profit and loss account - Adjudicating authority directed to verify the revised balance sheet - AT
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Central Excise:
Manufacturing activity or not - Appellant is only undertaking the process of Chemiking and Spotting which is akin to the process of washing and cannot be considered to have brought a new marketable product into existence which is brought and sold in the market - not a manufacturing activity - AT
Notifications
News
Case Laws:
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Income Tax
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2015 (10) TMI 1522
Deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (10) TMI 1521
Interest tax - accrual of income - whether Amount collected by the assessee bank from its borrowers as amount for interest tax, was not part of the interest on loans and advances within the meaning of section 2(7) read with section 2(5), 5 and 6 of the Interest Act, 1974 ? - Held that:- Even though the amount of interest tax is recovered by the assessee from its customers, the income in actual fact never reaches the assessee, who collects it, not as a part of its income but on behalf of the Government to whom it is payable. Therefore, payment of interest tax out of the amount collected from the customers towards payment of interest tax cannot be said to be application of the income of the assessee. The additional amount charged from the assessee payable towards interest tax cannot in any manner be said to be interest which has accrued or arisen to the assessee. Therefore, such amount collected from the borrowers/customers towards payment of interest tax as expressly provided therefor by the RBI guidelines cannot be taken into consideration for the purpose of computing chargeable interest. Therefore, when the nature of the amount collected by the assessee does not fall within the ambit of chargeable interest as contemplated in subsection (5) of section 2 of the Act, the same cannot be taken into consideration while computing the chargeable interest. Consequently, the explanation to section 6 on which strong reliance has been placed by the learned counsel for the revenue would have no applicability to the facts of the present case. RBI has issued guidelines permitting the financial institutions to recover the amount payable by way of interest tax from the customers. If the amount recovered from the customers towards interest tax is also considered as chargeable interest, further interest at the prescribed rate would have to be paid by the assessee on the total amount recovered by the assessee, namely, interest on loans and advances plus the amount collected from the customer towards interest tax, which would exceed the amount collected from the customer towards interest tax, thereby frustrating the very intention of the RBI guidelines, namely, to collect interest tax from the customer and not from the bank. - Decided in favour of the assessee
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2015 (10) TMI 1520
Addition on account of suppressed production and sale of AMT cut at Unit G-3 & G-4 - ITAT deleted the addition - Held that:- The Court is of the view that opinion of the CIT (A), which has been concurred with by the ITAT, was essentially based on facts as found that the AO had presumed the length of the entire polyester film roll to be 6100 m, whereas, all rolls were not of that length. Even the wastage of batch of roll was presumed to be 14% without making a comparison with the actual production. There was no reason given by the AO as to why the details of actual production were ignored. Moreover, the manufacturing record was verified by the excise authorities and no discrepancy had been noted in the relevant statutory registers. Even the calculation of the excess production based on consumption of chemicals was factually incorrect particularly since the chemical was not the principal raw material. CIT (A) also noted that the AO had made additions by taking the sale of AMT cut at ₹ 3 per cut, which was inclusive of excise duty of 60 paise.. The order of the CIT (A) has elaborately discussed the said facts in support of its conclusion. With the factual findings of both the CIT (A) and the ITAT being concurrent, the Court is of the view that no substantial question of law arises for consideration, as far this issue is concerned. - Decided against revenue. Addition on account suppressed sale of blank audio cassettes from Namoli Unit - ITAT deleted the addition - Held that:- Additions were made without there being any evidence of under-invoicing of sales. The additions were made on the basis of suspicion. Merely because some of the cassettes were sold at a higher price, it did not mean that all cassettes ought to have been sold at a higher price. - Decided against revenue. Deduction u/s 80HH and 80-I in respect of the Namoli Unit and deduction u/s 80-IA in respect of Malanpur Unit? - Held that:- Decided in favour of the Assessee and against the Revenue by the decision of the Supreme Court in JCIT v. Mandideep Engineering & Packing Industries (P) Ltd. (2006 (4) TMI 75 - SUPREME Court) and the decision of this Court in CIT v. SKG Engineering Pvt. Ltd. (2005 (5) TMI 37 - DELHI High Court) which in turn refers to the decisions in CIT v. J.P. Tobacco (1996 (8) TMI 29 - MADHYA PRADESH High Court) and CIT v. Chokshi Contracts Pvt. Ltd. (2001 (2) TMI 66 - RAJASTHAN High Court). - Decided against revenue. Undisclosed investment in production in Unit G-5 & G-6 - ITAT deleted the addition - Held that:- The CIT (A) correctly pointed out that even according to the AO's own calculations, the content of polyester film in a VMT cut worked out to 76.34 grams. The CIT (A) concluded that the polyester film content of 1 VMT E-180 could not be 90 gm as surmised by the AO because that would exceed the gross weight of the polyester film. The very foundation of the alleged understatement of consumption was therefore found to be misconceived. 90 gm of VMT comprised polyester film (76.34 grams) and chemicals (14 grams). The AO in making the addition did not consider the weight of the chemicals. As a result, the entire calculation was rendered erroneous. - Decided against revenue.
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2015 (10) TMI 1519
Deduction on account of commission paid to M/s UNIPLUS INDIA LTD - ITAT allowed the claim - Held that:- The Court is unable to find any justification for the ITAT to have overlooked the factual findings of the AO and the CIT (A) which showed that the story made up by the Assessee of engaging the services of UIL for procuring orders from the Government of Punjab and other parties, was not substantiated. The ITAT surmised that "There must have been something in the bottom that assessee was able to procure the order and able to sell the machine of ₹ 5.35 lakhs at a sum of ₹ 13.76 lakhs". This was the phototypesetting machine procured by the controller of printing and stationery, Government of Punjab. It is inconceivable that for making a profit in the sum of ₹ 8 lakhs, the Assessee would agree to pay ₹ 5 lakhs as commission. The order of the ITAT fails to discuss the elaborate reasons given both by the AO and the CIT (A) for concluding that no 'finder services' were shown to have been rendered by the UIL to the Assessee. The only conclusion that the Court can draw from a reading of the impugned order of the ITAT is that it completely overlooked the evidence on record and came to a conclusion that can only be termed as perverse. The Court is, therefore, unable to sustain the impugned order of the ITAT. - Decided in favour of the Revenue
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2015 (10) TMI 1518
Rectification application u/s 154 to rectify the factual error which had crept into the earlier order dated 16.11.2010 - application under section 254(2) of the Act seeking recall of the order passed by the Tribunal in the light of the fact that the same confirmed the previous order passed by the Commissioner (Appeals), which already stood merged with the subsequent order - Tribunal dismissed the miscellaneous application mainly on the ground that there was no sufficient reason for non-appearance at the time of hearing of the appeal on the part of the assessee - Held that:- The approach adopted by the Tribunal cannot in any manner be said to be reasonable. When the order which was subject-matter of challenge before the Tribunal was no longer in existence as the same had merged with the subsequent order passed by the Commissioner (Appeals), the Tribunal was not justified in not recalling the previous order passed by it on the appeal preferred by the assessee confirming the previous order passed by the Commissioner (Appeals). Merely because the Tribunal did not find that sufficient cause had been made out by the assessee of remaining absent at the time when the appeal came to be decided, was no reason for the Tribunal, having regard to the facts and circumstances of the case to reject the application filed by the petitioner. Besides, it is an admitted position that against the subsequent order dated 3.3.2011 passed by the Commissioner (Appeals), the revenue had already preferred an appeal which is pending before the Tribunal, which fact had also not been brought to the notice of the Tribunal by the departmental representative. It is in these circumstances that the Tribunal had proceeded to uphold the previous order passed by the Commissioner (Appeals). Having regard to the overall facts of the case, in the opinion of this court the Tribunal ought to have allowed the application and recalled its previous order confirming the order passed by the Commissioner (Appeals), inasmuch as on that date the said order passed by the Commissioner (Appeals) already stood merged with the subsequent order. Rectification allowed - Decided in favour of assessee.
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2015 (10) TMI 1517
Disallowance of interest u/s 36(1)(iii) in respect of interest free advances - CIT(A) deleted the disallowance - Held that:- Three appeals preferred by the revenue in relation to assessment years 1993-94, 1994-95 and 1995-96 were heard together by the Tribunal and by a common order dated 01.11.2006, the Tribunal dismissed all the three appeals by following its decision in the case of ACIT v. Torrent Financiers, (2001 (6) TMI 165 - ITAT AHMEDABAD-A ) wherein it was held that if the total interest free advances including debit balance of partners of assessee firm do not exceed the total interest free funds available with the assessee, no interest is disallowable on account of utilization of funds for non-business purpose. The Tribunal noticed that the Commissioner (Appeals) had after examining the details furnished by the assessee, gave a categorical finding that the non-interest bearing funds available with the assessee were sufficient to cover up the interest free advance. The Tribunal agreed with the concurrent findings of fact recorded by the Commissioner (Appeals) and noted that the assessee had interest free funds which were sufficient to cover the interest free loans. Besides, the Assessing Officer had not made out any case that the assessee had utilized borrowed funds other than for business purposes and upheld the deletion of allowance by the Commissioner (Appeals). - Decided in favour of assessee.
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2015 (10) TMI 1516
Addition under section 43B - failure to make provident fund contribution payments on due dates - ITAT deleted the addition - Held that:- Second proviso to section 43B of the Act came to be deleted and the first proviso came to be amended with effect from assessment year 2004-05. The amended first proviso provided that nothing contained in that section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. The Supreme Court in the case of Commissioner of Income Tax Kolkata-III v. Alom Extrusions Limited, (2009 (11) TMI 27 - SUPREME COURT) held that the second proviso to section 43B of the Act, which came into effect from 1st April, 2004 is retrospectively applicable with effect from 1st April, 1988. The controversy involved in the present case stands concluded by the above decision which would be squarely applicable to the facts of the present case. Under the circumstances, the view adopted by the Tribunal being in consonance with the law laid down by the Supreme Court in the above decision, it cannot be said that there is any infirmity in the impugned order passed by the Tribunal in upholding the order passed by the Commissioner (Appeals) in deleting the addition made under section 43B of the Act. Decided in favour of the assessee.
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2015 (10) TMI 1515
Revision u/s 263 - unaccounted receipt of compensation - addition on accrual basis - Held that:- The Assessee received only ₹ 2,50,00,000 towards compensation from M/s Charm India Pvt. Ltd. during the year under consideration and as the Appellant was following cash system of accounting, as is apparent from clause (11a) of tax audit report i.e. Form 3CD the Appellant rightly accounted for the actual amount of receipt of compensation on receipt basis and therefore, there was no justification on the part of the Id. CIT to make addition of ₹ 38,48,050/- to the income of the Assessee on accrual basis. Keeping in view of the above, the impugned order u/s 263 is also illegal as the Ld. CIT has not conducted any independent enquiry/verification before making addition of ₹ 38,48,050/- on account of compensation. In this regard, we draw our support from case of ACIT vs. Manas Salt Iodisation Industries (P) Ltd. (2015 (5) TMI 674 - ITAT GAUHATI ) in which the Hon'ble ITAT had endorsed the view taken in the case of Bharat Petroleum Corporation Ltd vs. Jt CIT (2004 (4) TMI 516 - ITAT MUMBAI) wherein held as under: "The CIT by deciding the fate of the issues himself has pre-empted the assessee company in agitating the matter before the various authorities right from the assessment onwards in a systematic and consistent manner. Therefore, that part of the conclusion of the revision order is not sustainable". Thus the assessment framed by the Assessing Officer was not erroneous and prejudicial to the interests of revenue so as to attract the proceedings u/s. 263 - Decided in favour of assessee.
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2015 (10) TMI 1514
Reopening of assessment - order of assessment passed under section 147 instead of section 153C - whether the assessment framed under section 147 is not without jurisdiction as no sanction has been taken from the authorities, as envisaged in section 151, before assuming jurisdiction? - Held that:- Hon’ble Gujarat High Court in the case of Vijaybhai N. Chandrani vs. ACIT (2010 (3) TMI 770 - Gujarat High Court) the condition precedent for issuing notice under section 153C is that the money, bullion, jewellery or other valuable article or thing or books of account or document seized or requisitioned should belong to such other person. If the above requirement is not satisfied recourse cannot be heard to the provisions of section 153C. The Hon’ble High Court has further observed that though in the loose papers recovered during the search proceedings, there was a reference to the petitioner in as much as his name was reflected in the list. However, the loose papers did not belong to the petitioner. The Hon’ble High Court, therefore, has held that under such circumstances, the condition precedent for issuance of notice under section 153C was not fulfilled and any action taken under section 153C of the Act stood vitiated. The Hon’ble Delhi High Court in the case of ‘Pepsico India Holding (P.) Ltd. vs. ACIT (2014 (8) TMI 898 - DELHI HIGH COURT) has held that the AO should not confuse the expression ‘belongs to’ with the expression ‘relates to’ or ‘refers to’. The Hon’ble High Court has held that unless it is established that the document in question does not belong to the searched person the question of invoking section 153C does not arise. Admittedly, the documents in the case in hand belonged to the searched person. Under such circumstances the reopening in the case in hand has rightly been done under section 147 of the Act by the AO. So far as the contention that the limitation period had expired for reopening of assessment under section 147 of the Act is concerned, we do not find any merit in the said contention. The income which the AO believed to have escaped assessment was above ₹ 1 lakh i.e. ₹ 5 lakh which is more than ₹ 1 lakh. As per the provisions of section 149, the reassessment can be done beyond the period of six years from the end of the relevant assessment year if the income chargeable to tax which has escaped assessment amounts to ₹ 1 lakh or more. Under such circumstances, this contention of the Ld. A.R. is not acceptable. - Decided against assessee. Addition u/s 68 - Held that:- In the case of the assessee before us, the AO has not pointed out about any direct or material evidence against the assessee to hold that the share transactions were not genuine. The assessee had furnished before the AO all the necessary details and evidences relating to the share transactions in question. The AO did not raise any query or doubt about the genuineness of the details and evidences submitted by the Assessee. The AO has made additions on the basis of general statement of Mr. Chokshi made before the investigation wing. The name of the assessee did not appear specifically in any of the statements of Mr. Chokshi. The assessee was not provided opportunity to confront Mr. Chokshi in relation to transactions related to the assessee. The assessee before the CIT(A) has also submitted the confirmation of Sh. Mukesh Chokshi about the share transactions done through his share broking company. The AO in the remand proceedings, however, insisted to produce said Mr. Chokshi for examination as a witness before him. The assessee though could request Mr. Chokshi to appear before the AO, however had no authority or power to force Mr. Chokshi to appear before the AO. On the other hand, the AO u/s 131 of the Act has been given powers as are vested in a civil court to summon and enforce the attendance of witnesses or to compel the production of records before him. Hence under such circumstances, merely because the assessee could not produce Mr. Chokshi before the AO, that itself is not a sufficient ground for the confirmation of the additions. If the AO required the presence of Mr. Chokshi before him, he could have exercised his powers under the Act to secure the presence of Mr. Chokshi before him. Even the Ld. AO, in his remand report, has not controverted the evidences filed by the assessee. Thus we hold that additions made by the AO u/s 68 are not warranted in this case and are accordingly ordered to be deleted. - Decided in favour of assessee. Disallowance of set off of business loss being consequential to the addition made u/s 68 of the profits from sale of shares is accordingly decided in favour of the assessee.
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2015 (10) TMI 1513
Reopening of assessment - mode of service of notice - CIT(A) quashed reassessment - Held that:- As the facts emerge the first notice was transmitted by ld. AO through speed post which is not been disputed by the assessee after inspection. It is thus clear that the notice was under transmission by handing over to the postal authority who acted as an agent of the recipient. The speed post notice has been returned mentioning the address as wrong or undelivered which is a standard practice of the postal Department. Assessee's AR in the initial hearings never indicated that 148 notice was not properly served. The lame objection is taken at the fag end of assessment, which clearly smack of a design. Thus in the entirety of facts and circumstances of the case and case laws of CIT vs. Yamu Industries Ltd. (2007 (5) TMI 237 - DELHI HIGH COURT) and ITO vs. Shri Sarabh (Saurabh) Charan (2015 (10) TMI 1272 - ITAT JAIPUR), it is held that the ld. CIT(A) glossed over the relevant facts and committed an error in quashing the reassessment proceedings. Consequently the order of ld. CIT(A) quashing the reassessment is quashed - Decided in favour of revenue. As held in the case of Phool Chand Bajrang Lal (1993 (7) TMI 1 - SUPREME Court), that sufficiency of reasons cannot be gone into by the court at the time of recording of reasons as it is the beginning of the process of reassessment. Assessee attitude was totally non-cooperative in compliance and the alleged discrepancy about information cannot be held to be fatal to the recording of the reasons. - Decided in favour of revenue.
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2015 (10) TMI 1512
Determination of Income from profession - Held that:- It is an undisputed position that certain registers incorporating month-wise professional receipts and expenses in cash and cheques along with month-wise profit were impounded during the course of survey. Such registers pertained to various years. In so far as the assessment year under consideration is concerned, total income was computed by the AO from such registers to the tune of ₹ 54.00 lac. In the absence of any worthwhile objection from the AO during the remand proceedings, the ld. CIT(A) accepted the assessee’s working of month-wise profit from such register at ₹ 40.17 lac for the year in question. The ld. DR could not point out any discrepancy in such working of net profit submitted by the assessee with any cogent material. When the position is such, we fail to appreciate as to how a different view can be taken from the one canvassed by the ld. CIT(A). It is palpable that when the assessee pointed out mistakes to the AO in his calculation of professional receipts and expenses for the year in question but the AO chose not to adversely comment the same, the natural presumption is that the assessee’s calculation was correct. Under these circumstances, we are of the considered opinion that the ld. CIT(A) was justified in sustaining the addition at ₹ 40,17,517/-. We are unable to comprehend the rationale behind the assessee’s assailing the addition to the extent sustained in the first appeal, because the same is based only on the working of net professional receipts submitted by the assessee himself. We, therefore, dismiss these two grounds taken by the Revenue and the challenge made by the assessee to the sustenance of this addition in his ground of appeal. - Decided in favour of assessee. Addition of income from undisclosed sources - CIT(A) deleted part addition - Held that:- Assessee categorically stated before the AO that certain deposits in saving bank account no. 702611 maintained with ABN Amro Bank, were transfer entries from one account to another. Even entry-wise details were also furnished which the AO refused to accept for want of any further corroboration. When the current account and savings bank account were available with him, the AO was obliged to cross check the entries. The ld. CIT(A) has examined this aspect and found the assessee’s contention correct. The ld. DR failed to controvert the position ascertained by the ld. CIT(A) in this regard. We, therefore, hold that the ld. CIT(A) was justified in reducing the addition to ₹ 2,82,838/-, being the same amount as was offered by the assessee himself. Again, we do not find any logic behind the assessee’s contention for allowing further relief because the assessee himself admitted undisclosed income from this bank account amounting to ₹ 2,82,838/-. We, therefore, countenance the view taken by the ld. CIT(A) on this score. - Decide against assessee. Addition on bank interest - CIT(A) deleted the addition - Held that:- it is noticed that bank interest of ₹ 15,490/- emanating from the savings bank account which was not disclosed by the assessee and other credit entries in this bank account, except the transfer entries, have been separately added, for which we have sustained an addition of ₹ 2,82,838/-. Since the bank interest of ₹ 15,490/- is part of such addition sustained in the first appeal, any further addition for the bank interest would amount to double taxation of same income. We, therefore, approve the view taken by the ld. CIT(A) in deleting this addition. - Decided in favour of assessee.
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2015 (10) TMI 1511
Disallowance under section 14A - CIT(A) restricted the addition - Held that:- Ld. DR of the department could not point out any new fact or law arising out in the case under consideration which may justify our interference in the above well reasoned order of the CIT(A) that the interest expenditure was attributable to the business activities and not to the investment activity. Had there been no such investment, the interest expenditure would have remained the same. He therefore rightly held that the interest expenditure was not attributable to investment activity. He further observed from the balance sheet that there was a decrease in borrowed funds on which interest expenditure was incurred. Therefore, the increase in investment during the year could not be related to the borrowed funds. He further observed that as per cash flow statement in the balance sheet, the company was having cash balance which was increased during the year. He therefore considering the overall facts and circumstances of the case observed that no indirect interest expenses were attributable to investment activity and could not be related to earning of exempt dividend income. He therefore correctly deleted the disallowance of indirect interest expenditure of ₹ 98,50,220/- . The Ld. CIT(A) however upheld the disallowance of administrative and managerial expenses pertaining to management of investments which had yielded exempt dividend income made by the AO as per formula provided in sub clause (iii) of rule 8D(2) at ₹ 9,45,855/- - Decided against revenue. Disallowance of interest expenditure while computing the long-term capital gain on account of cost of improvement - CIT(A) deleted the addition - Held that:- Admittedly, the compensation was paid to M/s. Tropicana for release of its rights over the said land in question. The interest component was part of the settlement. The principal amount of compensation had already been allowed by the AO as revenue expenditure. The interest expenditure paid for the said land for relinquishment of development rights by M/ s. Tropicana Properties Ltd, ultimately resulted in enhancement of value of the property and the development rights of the said land became available to the assessee on incurring of such interest expenditure. We therefore do not find any infirmity in the order of the CIT(A) in holding that the interest expenditure was nothing but cost of improvement allowable while computing the capital gains. Decided in favour of the assessee.
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2015 (10) TMI 1510
Nature of rent received from the company - benefit or perquisite or rent itself - Additions made u/s 2(24)(iv) - AO taxed under the same under the head Income From Other Sources - AO alleged that the property has been let out an exorbitant rent of ₹ 10,82,121/- per annum against which the assessee has also simultaneously obtained interest-free deposit which is adjustable towards rent charges. - Held that:- Section 2(24)(iv) of the Act will normally come into play only when the company in which the directors or its relatives have taken advantage in respect of any obligation which the director and their relatives are expected to discharge. In the present facts, section 2(14)(iv) has no application. The agreement has been entered into with the company for which rent has been paid and hence the rent has been derived as a quid-proquo for letting out the property. Such receipt of rent cannot be characterized as benefit or perquisite under S. 2(24)((iv). This is not some kind of benefit bestowed gratuitous and without consideration. Accordingly, we subscribe to the view taken by the CIT(A) and decline to interfere with his order cancelling the addition made in taxing the rental income under section 2(24)(iv) of the Act. - Decided against revenue. Additions made u/s 2(24)(v) for Notional Interest - CIT(A) deleted the addition - Held that:- Interest-free deposit in letting out the property is not anything unusual in common parlance and is attributable to decision taken based on exigencies involved. Such action of the assessee cannot be inferred adversely. The issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of J.K. Investors (2000 (6) TMI 9 - BOMBAY High Court) relied upon by the assessee and other spate of judicial decisions. We also find the Pune Bench of the Tribunal in the case of Shri Bhavarlal Hiralal Jain (2015 (10) TMI 1278 - ITAT PUNE) has decided the issue in favour of the assessee on similar facts. Respectfully following the binding precedents, this issue regarding the chargeability of notional interest on interest-free deposits is also decided in favour of the assessee.
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2015 (10) TMI 1509
Disallowance u/s.14A r.w. Rule 8D(2)(ii) - CIT(A) deleted the addition - Held that:- Considering all the submissions of both the parties and facts and circumstances of the case and judgment of Hon’ble Bombay High Court in the case of Reliance Utilities & Power Ltd (2009 (1) TMI 4 - HIGH COURT BOMBAY ), we find that the assessee had sufficient funds in the form of Share Capital amd Reserves & Surplus so as to enable it to make tax free investments. Further the exempt income is merely to the tune of ₹ 500/-, received in the form of dividend in the investments made in earlier years. It is further noted by us that the disallowance of ₹ 2,99,801/- on account of proportionate expenses out of indirect expenses incurred by the assessee, has been accepted by the assessee. Under these facts and circumstances, we find that the order of Ld. CIT(A) in deleting the disallowance on account of interest for ₹ 7,13,542/- is justified and no interference is called for in the order of Ld. CIT(A) on this issue. - Decided in favour of assessee. Disallowance of Depreciation on Imported Car. - CIT(A) deleted the addition - Held that:- Disallowance made by the AO was not justified. It has been observed by us that AO has not anywhere mentioned that the said car was not used for the purpose of business of the Baroda 7 Rayon Co. Ltd.. assessee company. The accounts of the assesee company are audited by the statutory auditors as well as by the tax auditors. No defect has been pointed out in any audit report. The depreciation claimed on the car was on account of opening value of the WDV. The depreciation has been allowed on this car in earlier years. Thus, in our considered view the disallowance made by the AO was not justified and Ld. CIT(A) has rightly deleted the same - Decided in favour of assessee.
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2015 (10) TMI 1508
Disallowance of expenses incurred under the head “Pre-operative expenses" - in the profit and loss account the assessee treated these expenses as pre-operative expenses but in the computation sheet the assessee claimed deduction of these expenses - Held that:- We rely upon the judgment of Kedarnath Jute Mfg. Co. Ltd. (1971 (8) TMI 10 - SUPREME Court ) wherein Hon’ble Apex Court held that whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights; nor can the existence or absence in his books of account be decisive or conclusive in the matter. In view of the given facts and well settled position of law, we hold that these expenses are allowable to the assessee and therefore, disallowance made by the AO is directed to be deleted. - Decided in favour of assessee. Disallowance of certain expenses, reimbursed to M/s. Cargoways India Pvt. Ltd., invoking the provisions of section 40A(2)(b) - Held that:- In addition to the reasoning given by the AO, the Ld. CIT(A) has further held that the assessee has defaulted in terms of provision of section 40(a)(ia) by not deducting TDS and therefore for these reasons also these expenses are not allowable. In addition to the above the Ld. CIT(A) has also given some observations with regard to some alleged variation in the books of account. We have observed that the AO and Ld. CIT(A) are not factually correct. As per as provisions of section 40(a)(ia) are concerned, same is concerned with disallowance of expenses on the plea of non-deduction of tax at source. As far as variations in the accounts are concerned, we have observed that these issues have not been appreciated in the right context. The assessee has not been given proper opportunity to explain its case. Both the lower authorities did not consider it appropriate to cross verify the facts and figures with the concerned party i.e., M/s. Cargoways India Pvt. Ltd. Disallowance has been made and confirmed by the Ld. CIT(A) by making presumptions and surmises - re-examine all the facts and figures involved in this case and in case some doubts are observed, the cross verification should be made with the said party. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1507
Penalty u/s. 271B - failure to get accounts audited - Held that:- AO had to take permission from the Joint Commissioner before levying the penalty as the amount of penalty exceeded ₹ 10,000/-. There is nothing in the order of the penalty which could show that the ITO has taken prior permission from the Joint Commissioner. When a statute required a thing to be done in a certain manner, it shall be done in that manner alone. When a particular authority has been designated to record his satisfaction on any particular issue, then it is that authority alone who should apply his independent mind to record his satisfaction and satisfaction so recorded should be independent and not borrowed or dictated satisfaction. Considering the facts of the case, in the light of the provisions of Sec. 274 of the Act, we have no hesitation to hold that the AO has levied penalty incontravention to the provisions of Sec. 274 of the Act and, therefore, the order of the First Appellate authority is liable to be set aside. We direct the AO to delete the penalty so levied. - Decided in favour of assessee.
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2015 (10) TMI 1506
Addition on account of provisions for gratuity and leave encasement - CIT(A) deleted the addition - Held that:- In the present case, the assessee by way of scientific methodology had established that the impugned provisions were recognized by using a substantial scientific methodology and estimation which was also certified by an actuarial specialist. In this situation, the provision for gratuity and leave encashment made by the assessee are held to be fully explained or sustainable and the same is allowable as per ratio laid down by the Hon’ble Apex Court in the case of Rotork Controls (2009 (5) TMI 16 - SUPREME COURT OF INDIA ). Accordingly, we are unable to see any infirmity or any other valid reason to interfere with the impugned order and we upheld the same. Accordingly, sole ground of the Revenue being devoid of merits being dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1505
Short payment of TDS and/or late payment of TDS - Held that:- At the time of hearing of the Departmental's appeal before us learned counsel for the assessee Shri Tapan Gupta stated that the company had filed the revised eTDS return in Form 24Q Q1 of the financial year 2007-08 for rectifying the mistakes/ errors in its original eTDS return. It was brought to our notice that post filing of said revised eTDS return, the tax demand payable by the company has become nil and there is no further tax payable by the company. A copy of status of payment of TDS traces was produced before us. Since the alternate ground raised by the assessee has not been discussed by the Commissioner of Income-tax (Appeals) or the Assessing Officer, we deem it fit in the circumstances to set aside this issue to the file of the Assessing Officer to verify whether the statement made by learned counsel before us is correct and thereafter decide the same in accordance with law.
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2015 (10) TMI 1504
Entitlement to exemption under section 11 - merely because the assessee is charging fees from the patients for providing diagnostic service, whether exemption under section 11 of the Act could be denied or not ? - Held that:- We have carefully gone through the trust deed of the assessee. Clause 15 of the trust deed clearly says that no funds shall be applied or paid or distributed among the trustees and shall be applied towards furtherance of the objects of the trust. Even at the time of dissolution, it shall be devoted to the objects similar to those of the trust. Therefore, the profit of the assessee-trust is applied only for charitable activity and there was a prohibition in the trust deed to divert the funds for any other object. Therefore, this Tribunal is of the considered opinion that merely because the assessee is charging fees for diagnostic service, it cannot be said that the assessee is not doing any charitable activity. Thus, the lower authorities are not justified in denying the assessee relief under section 11 of the Act as it is not doing any charitable activity. Whether diagnostic service cannot be considered to be a medical relief? - Held that:- In the modern medical field, no doctor could give any treatment without actually diagnosing the nature of illness. So, diagnostic service facilitates enabled the doctors to give proper treatment at the appropriate time. The assessee is providing diagnostic service which would enable the doctors to give proper treatment. Therefore, this Tribunal is of the considered opinion that diagnostic service would fall within the meaning of medical relief. Even otherwise, the same has to be treated as other public utility service. There is no justification in denying the claim of the assessee under section 11 of the Act. - Decided in favour of assessee.
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2015 (10) TMI 1503
Entitlement to accumulate the unutilised fund - claim exemption under S.11 - Held that:- As gone through the order passed by the CIT(A) in assessee’s own case for assessment year 2002-03, wherein in identical circumstances, the assessee was given the benefit of doubt and concluded that the assessee is entitled to accumulate the unutilised fund, since From 10 alongwith the auditor’s report was furnished alongwith the revised return. Having regard to the circumstances of the case, I deem it fair and reasonable to set aside the order passed by the CIT(A) and restore the matter to his file with a direction to the learned CIT(A) to reconsider the matter in the light of the view taken in assessee’s own case for assessment year 2002-03; if, by the time case is reconsidered by the CIT(A), the Tribunal takes any view in assessee’s own case for the earlier year, the same can also be taken into consideration by the learned CIT(A). CIT(A) is directed to reconsider the matter by assuming that the accumulation is not more than the actual amount received in this year, unless it is proved that the assessee has admitted at any stage of the proceeding with regard to accumulation in excess of the receipts - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1502
Levy of interest under section 220(2) - selection of date to levy interest - Held that:- The Assessing Officer has levied interest under the provisions of section 220(2) from the date of passing of the original assessment order whereas the original assessment order was set aside by the Tribunal and the same was remitted back to the Assessing Officer for deciding the matter afresh. Since a fresh assessment order has been passed by the Assessing Officer, the demand notice period specified under section 220(1) has to be taken into consideration from the date of passing of the fresh assessment order. The assessee is liable to pay demand within thirty days from the service of the demand notice in pursuance of the assessment order dated 21.12.2011. If the assessee fails to pay the amount demanded within the period specified under section 220(1), the assessee is liable to pay interest u/s.220(2) of the Act. On this issue, we do not agree with the findings of CIT(A). Our view is further fortified by the Hon’ble Bombay High Court in the case of CIT Vs. Chika Overseas (P) Ltd. (2011 (11) TMI 118 - BOMBAY HIGH COURT ) and Vikrant Tyres Ltd. (2001 (2) TMI 129 - SUPREME Court). In view of our above finding, this ground of appeal of the assessee is allowed.” The period specified under section 220(1) has to be taken into consideration from the date of passing of the fresh assessment order and not the earlier assessment order, which has been set aside. Accordingly, this issue is decided in favour of the assessee.
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2015 (10) TMI 1501
Entitlement to relief under section 10B or alternatively under section 10A - CIT(A) held that assessee was not entitled to claim relief under section 10A only on the technical ground that the claim had been made under section 10B in the return of income for the assessment year under consideration and not under section 10A in respect of its profit derived from its 100% EOU from export of computer software registered with STPI - Held that:- The Hon’ble Delhi High Court in the case of CIT Vs. Regency Creations Pvt.Ltd. (2012 (9) TMI 627 - DELHI HIGH COURT ) held that in order to claim exemption under section 10B, an undertaking must have been approved by the Board appointed in this behalf by the Central Government in exercise of powers conferred by section 14 of the Industries (Development & Regulation) Act, 1951 and rules made thereunder. In this case, assessee is a unit recognized by the STPI. It was not placed on record to suggest that unit was approved by the Board appointed by the Central Government under section 14 of Industries (Development and Regulation) Act, 1951, therefore assessee is not eligible for 10B deduction. However, if the assessee is not entitled for deduction under section 10B, the claim made by the assessee under section 10A of the Act should be considered by the lower authorities. Thus we set aside the orders of lower authorities and remit the matter back to the file of Assessing Officer with a direction to consider the claim of the assessee under section 10A after examining the allowability of the claim afresh in accordance with law and in light of the above observations. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1500
Set-off the losses of the assesse’s Gurgaon 10A unit against the profits of its other 10A unit - Held that:- As decided in Hindustan Unilever Limited [2010 (4) TMI 206 - BOMBAY HIGH COURT] after the substitution of section 10B by the Finance Act of 2000, the provision as it now stands provides for a deduction of such profits and gains as are derived by a 100 per cent. export oriented undertaking from the export of articles or things or computer software for ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce. Consequently, it is evident that the basis on which the assessment has sought to be reopened is belied by a plain reading of the provision. The Assessing Officer was plainly in error in proceeding on the basis that because the income is exempted, the loss was not allowable. All the four units of the assessee were eligible under section 10B. Three units had returned a profit during the course of the assessment year, while the Crab Stick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income. In these circumstances, the basis on which the assessment is sought to be reopened is contrary to the plain language of section 10B - Decided in favour of assessee.
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2015 (10) TMI 1499
Claim of deduction under section 80IB(10) - CIT(A) allowed the claim - Held that:- CIT(A) after analyzing the development agreement, and thereafter following the decision of the Ahmedabad Bench of the Tribunal in the case of Shakti Corporation (2008 (11) TMI 436 - ITAT AHMEDABAD) and Radhe Developers (2007 (6) TMI 316 - ITAT AHMEDABAD ) has allowed the claim of deduction under section 80IB(10) to the assessee. We find that the CIT(A) has given a finding that the entire risk for development of the project was taken by the assessee and the assessee was not paid remuneration as contractor. The assessee purchased the land for fixed consideration and developed the housing project on its own cost, and there was no joint venture with the land owner. This finding of the CIT(A) has not been controverted by the DR by bringing any positive material on record. Further, no material was also brought on record to show why the decision of the Tribunal in the case of Shakti Corporation (supra) and the Radhe Developers (supra) should not have been followed by the CIT(A). In the absence of the same, we find no good reason to interfere with the order of the CIT(A), which is confirmed and the ground of the appeal of the Revenue is dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1498
Registration under section 12AA denied - assessee-trust is not registered under the new Haryana Registration and Regulation of Societies Act, 2012 as held by CIT(A) - Held that:- This may not be the requirement under section 12AA of the Act to get registered under the new Haryana Registration and Regulation of Societies Act, 2012. Further the assessee is a registered trust, therefore, need not go for registration under the Societies Act. The reasons given by the learned Commissioner of Income-tax are wholly incorrect and alien to the provisions of section 12AA of the Act. The material brought on record by the learned Commissioner of Income-tax clearly suggest that the assessee-trust existed for charitable activities only. Therefore, there was no reason for the learned Commissioner of Income-tax to deny registration to the assessee-trust under section 12AA of the Act. - Decided in favour of assessee.
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2015 (10) TMI 1497
Addition of various expenses like cargo, brokerage and commission, business promotion, insurance and legal expenses, etc. - CIT(A) deleted the addition in part - Held that:- Both the A.O. and the Ld. CIT(A) have not stated that the expenses are not genuine and there is no allegation as to any cash receipts. All receipts are through proper banking channels. The accounts are audited the method of accounting certified as proper as per Accounting Standard. The only point of consideration is whether while interpreting the clauses of agreement it should be taken as "All" the expenses and not only those expenses as per the manifest. The very fact that the entire expenses have not been claimed by the assessee would show that the assessee has gone by the terms of the agreement and claimed as reimbursement only expenses of ₹ 10830728/–. With respect to all other expenses which the assessee has to bear it by himself, we are of the opinion that they are business expenses which would be necessary in the course of the business and therefore revenue in nature and is allowable - Decided in favour of assessee.
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2015 (10) TMI 1496
Entitlement to deduction u/s 80QQB - whether the royalty income is not derived by the appellant in the exercise of profession and is therefore not entitled to deduction u/s 80QQB? - Held that:- No particulars have been placed on record to show that the assessee is specially qualified apart from the skill and ability to write the book. There is also no material on record to say that whether the assessee is having education in the field of cookery either in the college or university or even by experience. There is no such material on record to suggest that the assessee is qualifying for the parameters laid down for considering a particular activity as a professional activity. In any case, the income earned by the assessee as royalty cannot be said to be earned by the assessee “in the exercise of her profession” which is the main requirement of the section according to which deduction can be allowed under section 80QQB. The non-fulfillment of such condition would disentitled the assessee to claim deduction under section 80QQB. Therefore, we do not find any infirmity in the order passed by the learned Commissioner (Appeals) vide which it has been held that the assessee is not entitled for deduction under section 80QQB, we decline to interfere - Decided against assessee.
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2015 (10) TMI 1495
Addition on account of share capital receipts - whether the assessee failed to establish the identity, credit worthiness and genuineness of the transaction despite adequate opportunity - CIT(A) deleted the addition - Held that:- In the present case, it appears that the AO wrongly presumed that the deposit of ₹ 20,00,000/- made by M/s D.N. Kansal Securities Pvt. Ltd. who was a regular client of the assessee, was received as a share application money. The said amount was received by the assessee in normal course of business as a margin money which was taken as per the normal trade practice prescribed by National Stock Exchange of India. The ld. CIT(A) verified the above facts from the copy of account furnished before him. In the present case, the AO had also not controverted this submission of the assessee that the amount in question was received from a regular client who had executed business in the stock market through the assessee. Therefore, the addition made by the AO was not justified and the ld. CIT(A) rightly deleted the same. We do not see any valid ground to interfere with the findings given by the ld. CIT(A) - Decided in favour of assessee.
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2015 (10) TMI 1494
"Good work reward" - whether it constitutes bonus within the meaning of the section 36(1)(ii) or an Inam payment allowable u/s 37? - Held that:- There is nothing to suggest that the good work reward given by the assessee to its employees has any relation to the profits that the assessee may or may not make. It appears from the order of the Tribunal that it has relation to the good work that is done by the employee during the course of his employment and that at the end of the financial year on the recommendation of a senior officer of the assessee, the reward is given to the employee. Consequently, the "good work reward" cannot fall within the ambit of section 36(1)(ii) of the Act as contended by the Revenue. In CIT vs. Autopins (India) [1991 (4) TMI 96 - DELHI High Court] court had occasion to consider payment of various kinds of bonus such as production bonus, attendance bonus and incentive bonus and whether they were within the contemplation of the Payment of Bonus Act, 1965. It was held that such types of bonus as well as ex gratia payment would not fall within the provisions of section 36(1)(ii) of the Act and that they were payments allowable as revenue expenditure having been incurred for the purpose of business expediency. These payments were not of the type contemplated by the Payment of Bonus Act. It was held that it was an ex gratia payment or some sort of reward given to an employee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for improving the working of the assessee. Therefore, it would not fall within the meaning of section 36(1)(ii) of the Act but would fall within the ambit of section 37 of the Act. - Decided in favour of the assessee.
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2015 (10) TMI 1493
Penalty levied u/s 271(1)(c) - enhancement of net profit on account of unproved labour payment - Held that:- As the notice u/s 271(1)(c) of the Act was not served on the assessee, the assessee could not be expected to offer any plausible explanation before the Assessing Officer. When he started investigation, it was noted by him that letters u/s 133(6) of the Act could not be served on the labourers. However, no disallowance of labour expenses claimed was made by the Assessing Officer despite the non-verification of labour expenses. Instead of disallowing labour expenses, the Assessing Officer preferred to estimate Net Profit rate of 5%. Apart from the discussion on labour expenses in the assessment order, there is no reference to detection of any concealment of facts or income. In appeal, the CIT(A) reduced the addition made by the Assessing Officer. In Second Appeal, ITAT also reduced the Net Profit rate to 3%. Reduction in the rate of profit itself shows the fact that nothing could be certain with regard to profit which ipsofacto could not tantamount to concealment of income. The assessee cannot be said to have concealed the particulars of income merely because the books of accounts were rejected by the Assessing Officer and subsequently, the Assessing Officer and CIT(A) applied different Net Profit rate to estimate the income. In diamond job work, labourers keep on migrating one place to another and in most cases, they are not traceable as they normally do not have permanent establishment. In absence of details of labourers, it cannot be inferred that how much services have been rendered by them to the assessee. In the case before us, the assessee had submitted a party-wise list of sub-contractors with details of TDS. So, the expenses incurred cannot be said to be bogus; however, here in the case before us, the recourse of estimation of Net Profit was made because the assessee could not provide certain facts/details about labourers which cannot be a sound basis for levying penalty u/s 271(1)(c) - Decided in favour of assessee.
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2015 (10) TMI 1492
Addition on deposits in savings bank account of the assessee - Held that:- This deposit includes an amount of ₹ 2 lakhs transferred from M/s. Star Tex through cheque No. 800244 and also noted that Star Tex is a concern from which the assessee is regularly purchasing cloth as raw material to be consumed in his proprietorship concern M/s Hoor Creators, which is engaged in manufacturing of garments. In the light of these facts, it has to be accepted that the deposit in this bank account is business transaction and business receipts and therefore, in respect of such deposit in bank account, the addition should be made to the extent of gross profit on such undisclosed business turnover and not the entire deposit in bank account. Regarding the gross profit rate the addition to the extent of accepted gross profit rate of 10.82 per cent. of the turnover of ₹ 16,90,811 should be confirmed. We order accordingly. Addition on account of initial capital for doing this business outside the books - Held that:- Assessee was having opening balance of ₹ 3,18,872 in this bank account and in our considered opinion, for doing an annual turnover of ₹ 16.90 lakhs for which the addition has been made by the Assessing Officer, this much fund is sufficient as initial capital. Hence, in our considered opinion, in the facts of the present case, no addition is called for on account of initial capital for doing this business outside the books. We confirm the addition to the extent of ₹ 1,82,945 being 10.82% of ₹ 16,90,811 and delete the balance addition. - Decided partly in favour of assessee. Addition made with regard to credit balance of three creditors - addition appears to have been made by the Assessing Officer under section 41(1) - Held that:- It is noted by the Assessing Officer that these creditors were having opening balances and there is no purchase during the present year. Regarding the addition to be made under section41(1), it is essential that the liability should cease to exist as per the judgment of the hon'ble apex court rendered in the case of Chief CIT v. Kesaria Tea Co. Ltd. In the present case, it is seen that the assessee is still showing these creditors as liability. Assessee has not written back the liability in his accounts. In the light of these provisions of section 41(1) and the judgment of the hon'ble apex court in the case of Kesaria Tea Co. Ltd. [2002 (3) TMI 1 - SUPREME Court] and CIT v. Sugauli Sugar Works P. Ltd. [1999 (2) TMI 5 - SUPREME Court] we hold that the addition made by the Assessing Officer in this regard is not sustainable and therefore, on this issue, we do not find any reason to interfere in the order of the Commissioner of Income-tax (Appeals). - Decided in favour of assessee.
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2015 (10) TMI 1491
Disallowance of interest expenditure under section 36(1)(iii) - AO made disallowance on account of diversion of interest-bearing borrowed funds to group companies - CIT(A) allowed the claim - Held that:- Assessee has established that interest-bearing term loan was directly utilised for acquisition of land and meeting the cost of construction. Assessing Officer has failed to establish that the loan amount advanced to sister concerns is out of interest-bearing funds only. The assessee has given the details of the borrowings and utilisation of the same. The assessee has also furnished the details of interest-free funds available with the assessee during the relevant period.A perusal of the same shows that a sum of ₹ 17 crores sanctioned as term loan was directly disbursed by the bank on behalf of the assessee to M/s. Sai Enterprises on different dates for purchase of land. Another sum of ₹ 2,54,00,000 was disbursed by the bank as term loan, that was utilised by the assessee for making payments to M/s. Soorya Developers (Rs.1,48,46,000) and M/s. Meghana Developers (Rs. 1,06,04,000) for development and construction of villas. The assessee has been able to explain utilisation of the entire secured loan of ₹ 20 crores for business purposes. The assessee has also given the details of interest-free funds, amounting to ₹ 82.47 crores. The details of interest-free funds and utilisation of the entire borrowed funds for business of the assessee have not been controverted by the Revenue. As far as, the argument of the Revenue with respect to utilisation of own funds for the repayment of loan instead of advancing to group companies is concerned, we are of the considered opinion that the Revenue should not step into the shoes of the assessee. The Revenue cannot dictate the assessee to conduct its business affairs in a particular manner. As long as the assessee is conducting its business affairs within the legal framework, it is at liberty to manage and utilise its resources according to its own prudence and skill. We find no infirmity in the impugned order. The order of the Commissioner of Income-tax (Appeals) is confirmed and the appeal of the Revenue is dismissed being devoid of merit. - Decided in favour of assessee.
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2015 (10) TMI 1490
Reopening of assessment - Unaccounted cash receipts introduced in the previous year - Held that:- It is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. Thereafter, the Assessing Officer passed the impugned re-assessment order on 19.11.2009, disposing off the objections to re-assessment proceedings of the assessee in the order itself. Thus, these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the Assessing Officer by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before proceeding with the reassessment. See General Motors India P. Ltd. v. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] Thus he impugned order of re-assessment passed by the Assessing Officer without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. - Decided in favour of assessee.
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2015 (10) TMI 1489
Disallowance u/s 40(a)(ia) with regard to Section 194C - non furnish the declaration to the income-tax authorities, within due date - Held that:- Merely because the assessee did not furnish the declaration to the income-tax authorities, within due date, which was after the date on which the assessee could have otherwise deducted tax at source, it cannot be held that the assessee made any default by not deducting the tax at source. Therefore, as the assessee was not required to deduct the tax at source as per the provisions of second proviso to sub-section (3) to section 194C, the said amount cannot be disallowed by invoking the provisions of section 40(a)(ia) of the Act. If the assessee has defaulted in furnishing the copy of the prescribed form no.15-I received by it within the prescribed time, then the consequence for that default may follow, but certainly disallowance under section 40(a)(ia) of the Act cannot be made. DR could not produce before us the copy of form no.15-I furnished by the assessee to the income-tax authorities, and nor has been able to point any material to show that the assessee was liable to deduct TDS on payment made to sub-contractors from whom it received declaration in the prescribed form. Our above view finds supports from the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Valibhai Khanbhai Mankad, (2012 (12) TMI 413 - GUJARAT HIGH COURT ) wherein it was held that once conditions in second proviso to section 194C(3) are satisfied, liability to deduct tax at source ceases and requirement of furnishing Form No.15J is not related to liability to deduct tax at source. We, therefore, delete the addition - Decided in favour of assessee.
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2015 (10) TMI 1488
Disallowance under section 14A - expenditure incurred for earning of exempt income - Held that:- The straightway application of rule 8D in the case of the assessee by the lower authorities is not sustainable. Taking into consideration the overall facts and circumstances of the case especially the nature of investments made by the assessee and further that most of the investments were made in earlier years, in our view, the expenses equal to 2% of the exempt income earned by the assessee would constitute a reasonable disallowance and the same is restricted to that extent accordingly. This ground of appeal of the assessee is thus partly allowed. Disallowance out of motor car expenses and depreciation at the rate of 33.3% as against the claim of the assessee that the same be restricted to 25% - Held that:- The disallowance at the rate of 25% of the motor car expenses and also out of the claim of depreciation is a reasonable disallowance which assessee herself has offered. We accordingly restrict the disallowance in relation to motor car expenses and depreciation to the extent of 25% instead of 33.3% made by the lower authorities. - Decided in favour of assessee in part.
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2015 (10) TMI 1487
Business receipt - Held that:- Merely because a payment is reflected in AS-26 and is shown to have been made to the assessee, it cannot be brought to tax in his hands when the said money is not received by the assessee. We have noted that the stand of the assessee is that these payments made by BPCL, AIR and IOC were never received by the assessee, and the monies, received fraudulently in the name of and on behalf of the assessee, were received by some other person. Neither this aspect of the matter is examined on merits, nor any effort is made to find out through appropriate inquiries through related banks, the actual beneficiary of these payments. It is only elementary that income tax proceedings are not adversarial proceedings and the powers vested in the income tax authorities are to be used when circumstances so warrant or justify. It is a fit case in which the Assessing Officer ought to have established the trail of money and find out actual beneficiary of the payments which were admittedly made through banking channels. As a matter of fact assessee has given ample evidence that some other person had opened a bank account in assessee's name and appropriated the funds on his own, in such account. All these facts require to be properly investigated. In this view of the matter, we delete the additions in respect of monies said to have been paid by BPCL, AIR and IOC and restore the matter to the file of the AO with the direction that the same can be brought to tax in the hands of the assessee only when, a result of proper inquiries to be carried out in the light of our above observations and after confronting the assessee, it can be established that assessee was actual beneficiary of these payments. In any other case, the appropriate action is to be taken in the hands of the actual beneficiary of these payments. As far as the variation in BHEL receipts (Rs. 24,89,710), we direct the Assessing Officer to examine the explanation of the assessee on merits and in the event of these receipts having been included in the receipts disclosed for the subsequent year on account of late receipts, exclude the same for double taxation in this year as well.
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2015 (10) TMI 1486
Addition made under section 144 - penalty under section 271(1)(c) - Held that:- Even though A.O. has given many opportunities and also issued show cause notices proposing additions under section 144, just because assessee Managing Director could not appear on the given date, in our view, the additions could not be made without analyzing the business activity of assessee. A.O. can enquire expenditure claims made in the P & L account. However, the outstanding sundry creditors or liabilities are not from the P & L account but are Balance Sheet amounts. The outstanding amount cannot become income, unless it is established that the credits were received during the year and further they are unexplained. Nothing was brought on record by the A.O. and only the outstanding amount was brought to tax without examining the nature of the amounts. Moreover, when assessee sought to file additional evidence, in our view, Ld. CIT(A) rejected admission of the same without any valid reason. Assessee is justifying that Managing Director could not appear before the A.O. on the given date due to ill-health. If Ld. CIT(A) has any doubt about the claims made, then it is for the Ld. CIT(A) to ask assessee to furnish necessary evidences. Without doing so the contention cannot be rejected on the reason that necessary evidence was not furnished. Even otherwise, the additions per se cannot be justified without examining the contentions. In view of this, we have no hesitation in setting aside the order of the Ld. CIT(A) and A.O. and restore the assessment to the file of A.O. to do it afresh, as per the facts of the case and law on the subject. Needless to say that assessee should be given due opportunity in the proceedings. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1485
Estimation of income - surrender of income to settle and to purchase peace with the department - Held that:- As seen from the orders, except admitting income at 5% on the liquor sales there was no other agreed addition as stated by the Ld. CIT(A) in the order. Even though assessee has contested the income on sale of liquor at 5%, we are of the opinion that this estimation is reasonable considering the facts of the case. However, the A.O. is directed to correct the arithmetic error that occurred in the order. Estimation of income on food items at 20% - Held that:- A.O. has not given any comparable cases to arrive at the profit of 20% on food sales. He simply estimated at 20% without there being any basis. Considering the facts of the business and location of the appellant Bar and Restaurant in Hyderabad, we are of the opinion that income can be estimated at 10% of the food sales. Accordingly, assessee has gets relief. A.O. is directed to adopt income of ₹ 1,96,400 as against ₹ 3,92,800 added by him in the order. Addition of ₹ 24 lakhs as income offered from Bar and Restaurant by the assessee's partner - Held that:- Except the statement given by the partner during the course of survey, there is no other evidence establishing that assessee could earn that much income from the business. During the survey no incriminating material was found nor any excess stock was found. Even though books of accounts were rejected that does not mean the declaration given by the partner in the course of survey has any relevance for the business activity of the assessee. There was no evidence brought on record by the Revenue either in the form of excess stock found during the survey or excess cash available with the assessee or any other incriminating material to establish that assessee is earning unaccounted incomes. As can be seen from the statement also after enquiring about assessee's business activities, various investments, turnovers etc., and after conclusion of statement, last question was asked in the 11 page of the statement asking the assessee whether he want to state any thing further. At that point of time, assessee's partner seems to have declared additional ₹ 24 lakhs in order to "settle" with the Income Tax Department. In view of the scope and ambit of the materials collected during the course of survey, the action under section 133A would not have any evidentiary value and that it could not be said solely on the basis of the statement given by one of the partners of the firm that the disclosed income was assessable as lawful income of the assessee. The statement given by the partner has no rational linking to the issues being enquired nor for the incomes of the business. Therefore, the same cannot be considered as a basis for making the addition. Under these circumstances, we are of the opinion that there is no basis for making an addition of ₹ 24 lakhs solely on the basis of statement. In view of this, we have no hesitation in deleting the same. A.O. is directed to re-work out the incomes accordingly. - Decided in favour of assessee in part by way of remand.
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2015 (10) TMI 1484
Penalty under section 271E - CIT(A) held that the penalty order passed by the Assessing Officer was barred by limitation - Held that:- CIT(A) rightly held that the penalty order passed by the Assessing Officer was barred by limitation as the penalty order was passed beyond six months from the end of the month in which penalty proceedings were initiated, while penalty proceedings were initiated in the month of December 2007 and the penalty order was thus required to be passed before 30th June, 2008, the penalty order was in fact passed on 20th March, 2012. In view of the settled legal position, as set out in CIT vs. Worldwide Township Projects Ltd (2014 (6) TMI 47 - DELHI HIGH COURT ) the date on which CIT(A) had passed order in the quantum proceedings had no relevance as it did not have any bearing on the issue of penalty. Learned CIT(A) was thus quite justified in his conclusions. As for the ground taken in respect of violation of Rule 46-A, we have noticed that learned CIT(A) has not decided any factual aspects on merits nor has he admitted any additional evidence. In any event, no specific arguments were advanced in support of this grievance. - Decided in favour of assessee.
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2015 (10) TMI 1483
Validity of the notice issued under section 154 - disallowance u/s 14A - condonation of delay - Held that:- When the assessee has explained the facts and circumstances under which the assessee was having confusion in the mind for filing the separate appeal against the order passed u/s 154 on the issue of disallowance u/s 14A because the assessee had already filed an appeal before the CIT(A) raising the ground against the disallowance made u/s 14A by applying Rule 8D. Therefore, when there is no material or circumstances which suggest that the delay is deliberate or on account of culpable negligence and the assessee could not stand to benefit by resorting the alleged delay then the technical considerations should give the way to cause of substantial justice and, therefore, a liberal interpretation has to be given to the expression "sufficient cause". When the assessee was not going to take a benefit by filing the appeal belatedly then the explanation of the assessee has a sufficient cause cannot be doubted. Accordingly, we are satisfied that the assessee explained a sufficient cause for delay in filing the appeal before the CIT(A). Addition made under Rule 8D(2)(iii) being 0.5% of the average investment - Held that:- Rule 8D is not applicable for the A.Y. 2008-09 in view of the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT ]. Accordingly, the addition made by Assessing Officer while passing the order u/s 154 is not sustainable and the same is deleted. We make it clear that the issue of disallowance u/s 14A is pending in the appeal against the original assessment order passed u/s 143(3) and, therefore, our observation and finding in this matter shall have no bearing on the merits of the issue of disallowance u/s 14A de hors the Rule 8D of the Income Tax Rules. Accordingly, we set aside the order passed u/s 154 of the Income Tax Act. - Decided in favour of assessee.
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2015 (10) TMI 1482
Penalty u/s 271(1)(c) - assessee has concealed income by setting off interest against expenditure - CIT(A) delted the penalty - Held that:- Similar to the facts of the case before the Delhi High Court in CIT Vs. Mushashi Autoparts India P.Ltd. (2010 (12) TMI 106 - Delhi High Court) and therefore held that there was no filing of inaccurate particulars of income and there was no concealment of income on the part of the assessee. We also find that the action of the Assessing Officer in not allowing set off of interest subsidy against the expenditure incurred by the assessee before commencement of business is only a mere change of opinion and there is no concealment of income or furnishing of inaccurate particulars by the assessee. In the case of CIT Vs. Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court) the Hon'ble Supreme Court referring to the decision of Chellapalli Sugars Ltd. Vs. CIT (1974 (10) TMI 3 - SUPREME Court) held that if the assessee receives any amounts which are inextricably linked with the process of setting up of its plant and machinery such receipts will go to reduce the cost of its assets and these receipts are of the capital nature and cannot be taxed as income. In the circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) in deleting the penalty. - Decided in favour of assessee.
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2015 (10) TMI 1481
Penalty under section 271(1)(c) - claim for deduction of various expenses, etc., in the computation of income under the head "Income from house property" - Held that:- Here is a case in which the assessee earned rental income to the tune of ₹ 84 lakhs on which it claimed deduction under section 24(i) for a sum of ₹ 18.75 lakhs. Despite that, it further claimed deduction for various expenses and allowance in respect of let out property from which rental income was earned. Such claim for deduction of various expenses, etc., in the computation of income under the head "Income from house property" is patently and ex facie untenable. It is not an issue on which two opinions can possibly be formed and the assessee chose to follow the view favourable to it. The provisions of Chapter IV-C are simple and plain in not admitting any deduction for expenses, etc., of the nature which have been claimed by the assessee, within its ambit. As the assessee knowingly made a wrong claim which is patently inadmissible, we cannot, but, uphold penalty under section 271(1)(c) of the Act. Our view is fortified by a recent judgment from the hon'ble jurisdictional High Court in CIT v. NG Technologies Ltd. [2014 (12) TMI 481 - DELHI HIGH COURT), in which the assessee claimed deduction for loss on sale of fixed assets in its profit and loss account. The hon'ble Delhi High Court upheld the penalty in respect of such patently inadmissible claim. The facts of the instant case are on all fours with that of NG Technologies Ltd. inasmuch as here also the assessee claimed deduction for expenses and depreciation, etc., against income from house property, which is clearly not allowable. We, therefore, approve the view taken by the learned Commissioner of Income-tax (Appeals) in affirming the instant penalty. - Decided against assessee.
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2015 (10) TMI 1480
Reopening of assessment - proceedings initiated without a valid notice - Held that:- We are conscious that the apex court in Pooran Mal v. Director of Inspection (Investigation) [1973 (12) TMI 2 - SUPREME Court] clarified that the test of admissibility of evidence under the Indian jurisprudence lies in its relevance, so that even materials or information found during or as a result of an illegal search could also be put to use or relied on in framing an assessment. Why, even independent of the said decision, an assessment could only be on the strength of the materials and, further, upon duly confronting the same to the assessee, and the validity of the reliance would not be impacted on the process or the manner in which the information/material has come in the possession of the Revenue. So, however, it is the validity of the assessment proceedings itself that is at stake in the present case. The proceedings initiated without a valid notice under section 148(1) cannot be recognised in the eye of the law. - Decided in favour of assessee
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2015 (10) TMI 1479
Addition made u/s.41(1) - cessation of liability - Held that:- Revenue has not brought any material on record to show that the assessee was allowed deduction in respect of liability in question, and if it was allowed then in which year. Further, it is observed that the Revenue has admitted that the amount in question was shown as liability by the assessee in its balance sheet of the year under consideration. We find that no material has been brought on record to show that the liability in question ceased to exist during the year under consideration or any benefit was derived by the assessee in respect of the liability in question during the year under consideration. The Hon'ble Gujarat High Court in the case of CIT Vs. Ravjibhai Becharbhai Dhameliya, (2013 (7) TMI 292 - GUJARAT HIGH COURT) has held that in the absence of material to show that there was a remission or cessation of liability as contemplated under section 41(1) of the Act as well as in the absence of material to indicate deriving of any benefit in cash or otherwise by the assessee section 41 is not applicable. In the above facts of the case, in our considered view, the addition made by invoking the provision of section 41(1) of the Act is not sustainable. We, therefore, delete the addition - Decided in favour of assessee. Addition made u/s.68 - Held that:- We find that the identities of the share applicants are not in doubt. The Revenue has brought no material, after proper verification, to show that the share applicants in question were not genuine. Before us, the AR of the assessee filed additional evidence in the form of affidavits of ten persons. Before these additional evidences are accepted, in our considered view, it is in the interest of justice that the AO examine the same. The AR of the assessee submitted that the issue, therefore, be restored to the file of AO for examination of additional evidences now filed by the assessee. In the circumstances, it shall be in the interest of justice to restore the issue back to the file of the AO for adjudication afresh after proper verification. The assessee is also directed to cooperate with the AO and file all the materials, which it wishes to rely upon before the AO, as and when called upon by the AO.- Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 1478
Registration under sections 80G and 12AA denied - Held that:- It has come on record that the assessee's main objects are covered by the charitable purposes education under section 2(15) of the Act. The Commissioner of Income-tax holds that the Assessing Officer has made certain queries and the assessee is found running a preschool for tiny tots, classes by collecting fees and imparting education. The hon'ble jurisdictional High Court, in the case of DIT v. Seervi Samaj Tambaram Trust [2014 (2) TMI 32 - MADRAS HIGH COURT] holds that initiation of charitable activity does not form subject of section 12AA registration issue. The Revenue fails to bring any distinction on facts. Therefore, we hold that the assessee's objects are covered by the charitable purposes education . It is held entitled for section 12AA registration. Rest of the issues of carrying on of charitable activities, application of income etc., are left to be considered in appropriate proceedings. The assessee's appeal seeking section 12AA registration succeeds. Challenging the Commissioner's order refusing section 80G registration is remitted back for decision afresh, as per law. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1477
Addition on notional rent from farm house - AO made addition considering rent as receipt from “income from house property” - CIT(A) restricted part addition - Held that:- We find that the Assessing Officer while fixing the notional rent value at ₹ 2.5 lakhs per month from the Farm House has not given the basis for arriving at the figure. Though, he stated that it is on the basis of the enquiry got conducted by the Inspector of the Ward. The Report of the Inspector was not put to the assessee for his rebuttal. The value of ₹ 75,000/- per month as fixed by the Ld. CIT(A) is based on the ALV fixed by the Municipal Corporation as on 1.12.2005, which is very much reasonable and justified. Therefore, we are of the view that the Ld. CIT(A) was justified in estimating the notional rent of ₹ 75,000/- per month of the aforesaid Farm House, which is based on the ALV fixed by the Municipal Corporation. - Decided against revenue. Admission of additional evidence - Held that:- Additional evidences have been admitted by the Ld. CIT(A) in the interest of natural justice and equity. The additional evidences admitted on record is nothing, but the ALV fixed by the Municipal Corporation, which is an accurate valuation fixed by the Joint Assessor and Collector of MCD, Delhi. After admitting the additional evidences, the Ld. CIT(A) had called for the Remand Report from the AO. The AO in his Remand Report has not per se faulted the ALV fixed by the Municipal Corporation, therefore, we see no reason to interfere with the Order of the Ld. CIT(A) in admitting the additional evidences.- Decided against revenue.
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2015 (10) TMI 1476
Penalty under section 271(1)(c) - reopening of assessment - Held that:- The assessee in this case has suo motu offered the additional income and the same was not detected during any course of action by the Revenue authorities against the assessee. Under such circumstances, it cannot be said to be a case where any concealment of income is detected against the assessee inviting penalty action under section 271(1)(c) of the Act. Hence, it cannot be said to be a case of concealment of income by the assessee so far as the assessment proceedings under section 147 are concerned. The assessment proceedings under section 147, as discussed above, were carried out just to validate the invalid revised return and not on account of any detection of escapement of income. In view of the above, we do not find it as a case fit for levy of penalty under section 271(1)(c). The penalty so levied by the lower authorities is, therefore, ordered to be deleted. - Decided in favour of assessee.
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2015 (10) TMI 1475
Penalty under section 271(1)(c) - Held that:- Undoubtedly, it is not the case of either any concealment of income or furnishing of inaccurate particulars of income. As we see, it is not the case of any revenue loss either. When we look at the decision of Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] the hon'ble Supreme Court has very categorically held that penalty cannot be visited if the details and particulars had been placed on record. We find that the assessee made the claim in its return of income, which the Revenue authorities interpreted differently. This means that only on the facts, there was a difference in opinion, as to how to characterise the income/loss. In such a case, where there is a difference of opinion amongst the Revenue authorities themselves, penalty, in such a case is not exigible. We, therefore, set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to cancel the penalty. - Decided in favour of assessee.
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2015 (10) TMI 1474
Penalty u/s 271(1)(b) - non comply with the notice of the AO u/s 142(1) - Held that:- The assessing officer issued notice on 8.11.2010 fixing the date 15.11.2010 and assessee by way of written application requested for adjournment to January, 2011 it was dismissed and the assessing officer pass the assessment order on 31.12.2010 under Section 144 of the Act. DR has no dispute on this fact that the AR submitted an application for adjournment on the fix date of hearing i.e. 15.11.2010. Hence, it cannot be presumed that the assessee did not comply with the notice of the AO u/s 142(1) of the Act. Under this facts and circumstances, the assessee cannot be held guilty of non-complying with the notice issued u/s 142(1) of the Act and penalty u/s 271(1)(b) of the Act is not sustainable and the AOs directed to delete the penalty. - Decided in favour of assessee.
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2015 (10) TMI 1473
Penalty u/s. 271(1)(c) - addition u/s. 2(24) - CIT(A) deleted the penalty levy - Held that:- Addition directed to be made u/s. 2(24) by the Ld. CIT(A) was deleted. We also find that as the quantum addition has been deleted, the penalty relating thereto does not survive and was rightly deleted, which does not need any interference on our part, hence, we uphold the decision of the Ld. CIT(A) on this issue. Addition on account of scrap sales - Held that:- ITAT vide order restored the matter to the AO with the direction to decide the same after giving the assessee a reasonable opportunity of hearing in this regard. We note that as the quantum addition has been restored to the AO for fresh decision, the penalty imposed relating thereto was rightly cancelled by the Ld. CIT(A). - Decided in favour of assessee.
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2015 (10) TMI 1472
Addition on cash deposited in the banks - treating the Long Term Capital gain as Short Term Capital Gain - Held that:- In the present case, it appears that the assessee could not produce certain relevant documents during the course of assessment proceedings which were furnished to the ld. C.I.T.(A) who admitted the same under Rule 46A of the IT Rules and asked the remand report of the AO. However, in the impugned order there is no discussion about the contents of the remand report and the submission of the assessee. Therefore by considering the totality of the facts, it is of the view that this issue requires a fresh adjudication at the level of the AO. Accordingly the impugned order is set aside and the case is remanded back to the file of the AO to be adjudicated afresh in accordance with law, after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1471
Disallowance under section 80IB - Held that:- Since the same issue has been decided in favour of the assessee by the Tribunal in assessee’s own case wherein held that the A.O. concluded that the deduction under section 80IB was not allowable for assessment year 2005–06 onwards, whereas the deduction under section 80IB in respect to Unit–V has already been granted while passing the assessment order under section 143(3). Therefore, if the order of the A.O. for assessment year 2003–04 or 2004–05 was wrong, then those orders were to be rectified first, and hereafter the deduction under section 80IB could have been withheld for assessment year 2005–06 onwards. Accordingly, we held that the disallowance of deduction under section 80IB for assessment year 2005–06 to 2007–08 were not correct. Accordingly, we direct the A.O. to allow the deduction under section 80IB for these three years, we do not find any reason to deviate from the same. - Decided in favour of assessee.
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2015 (10) TMI 1470
Addition on 'speculation loss' - the same was not eligible for set off against the business income of the appellant as held by CIT(A) - whether the impugned transaction is of speculative in nature or not? - Held that:- One of the tests to determine whether the transaction is done with an intention to speculate and make profit from the rate fluctuation is to see whether the assessee has sufficient funds to make the payment for purchases. If the assessee does not have money to make the payment for purchases, then the conduct of the assessee is suggestive of speculation. Undisputedly, the purchase and sales are supported by respective invoices. The transactions have also been confirmed by the respective parties. However, at the same time we find that the impugned transactions have not been verified by the AO from the respective parties which is a clear distinguishing factor from the facts of the decision relied upon in the case of Mobile Trading & Investment Pvt. Ltd. (2015 (6) TMI 637 - ITAT MUMBAI). In that case the parties were produced before the AO . We also find that in that case the AO has issued summons u/s. 131 of the Act to the dealers from whom the assessee claimed to have purchases and sales, such investigations are not made in the present case. Therefore, in the interest of justice and fair play, we restore this issue to the file of the AO. The AO is directed to verify the impugned transactions from the respective parties by making verifications from their end as per the provisions of the law. The AO is also directed to verify whether the assessee was having sufficient funds to make the first purchase and decide the issue afresh after giving reasonable and fair opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 1469
Addition made towards unearned income - assessee used to raise invoices against services to be rendered - CIT(A) deleted the addition - Held that:- Consedring the contention of AR hat the deferred income in this assessment year was carried forward and duly taken into account in the next assessment year and offered for taxation the Bench put a question to the ld. AR to show how it was offered for taxation in respect of each assessment year. The ld. AR of the assessee was not able to point out the exact amount offered for taxation in subsequent assessment years. Being so, we feel it appropriate to remit the entire issue to the file of the AO to examine, whether the assessee has offered the deferred income of each assessment year in subsequent assessment years for taxation and if it is actually offered for taxation by the assessee in the subsequent assessment years, the addition is unwarranted. With these observations, we remit the entire issue to the file of the AO for fresh consideration. - Decided in favour of revenue for statistical purposes.
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2015 (10) TMI 1468
Validity of reopening of assessment - Held that:- Now the settled position of law is that once the Assessing Officer is failed to make an addition on an issue on which assessment was reopened, he cannot assess or reassess other income which escaped assessment and came to his notice during the course of hearing. In the instant case, undisputedly no income was assessed on the capital gain which was considered to be escaped assessment while reopening the assessment. Therefore, addition made on other issues on which assessment was not reopened is not sustainable in the eyes of law. Accordingly we set aside the order of the ld. CIT(A) and delete the additions made on other issues. - Decided in favour of assessee.
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2015 (10) TMI 1467
Deemed dividend u/s.2(22)(e) - CIT(A) deleted the addition - Held that:- Similar issue was considered by the Tribunal in assessee's own case [2013 (9) TMI 1051 - ITAT CHENNAI] wherein held that deemed dividend under s. 2(22)(e) of the I.T. Act, 1961 can be assessed only in the hands of a shareholder of the lender company and not in the hands of any other person. Here admittedly the assessee-company was not holding any shares in the lender company at all. - Decided in favour of assessee.
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2015 (10) TMI 1466
Credit for foreign tax paid in Mauritius - whether should not be excluded while computing interest under section 234C? - whether the payment made by the assessee on 10.09.2004 in Mauritius can be considered as advance tax as was done by the assessee or can it be a self-assessment tax as was considered by the Assessing Officer? - Held that:- The Commissioner of Income Tax (Appeals) has considered the submissions of the assessee and the averments of the Assessing Officer elaborately and held that amount paid by the assessee has to be considered as selfassessment tax for the purpose of computing interest under section 234C of the Act and not as advance tax and further held that the issue cannot be considered as debatable. The payment of taxes in Mauritius (Rs. 1,60,31,359/-) on 10.9.2004 i.e. after the end of the financial year 2003-04 cannot be considered as advance tax. It makes 'no difference, under what circumstances the taxes were paid. Since the taxes were paid after 31st March of the relevant financial year (F.Y. 2003-04) the said payment can only constitute the self assessment taxes. When the statute clearly provides that all the payments made after the 31st March of the financial year are self assessment taxes, and therefore the issue cannot be considered as debatable. Mere argument for the sake of argument cannot make the clear and unambiguous provisions into debatable ones. AO rightly treated the tax payments made after the end of the financial year (paid on 10.9.2004) as self assessment taxes and re determined the levy of interest u/s 234C of the Act. The action of the AO by rectifying the assessment u/s 154 of the Act is very well justified and therefore the appellant's contentions are hereby rejected. - Decided against assessee.
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2015 (10) TMI 1465
Unexplained cash credit under section 68 - Held that:- there is no material brought out by the Revenue to doubt the bonafides of explanation furnished by the assessee with regard to the build-up of cash in hand and the deposits in the bank account as and when assessee required certain cheques to be cleared in the bank. Moreover, factually speaking, whenever the impugned deposits were made by the assessee, there was a positive balance of cash in hand. There does not appear to be any negative balance in the cash flow statement. Considering the entirety of circumstances and the explanation furnished by the assessee, whose bonafides are not doubted, we deem it fit and proper to hold that the impugned cash deposits in the bank account cannot be construed as unexplained within the meaning of section 68 of the Act. Accordingly, we set aside the order of CIT(A) and direct the Assessing Officer to delete the addition - Decided in favour of assessee.
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2015 (10) TMI 1464
Re-computation of deduction u/s 10A - Held that:- Rhe issue raised by the revenue is no longer res integra and has now been decided by the Hon’ble High Court of Karnataka in the case of in the case of Tata Elxsi Ltd. in(2011 (8) TMI 782 - KARNATAKA HIGH COURT ) wherein it has been held that whatever is excluded from export turnover should also be excluded from the total turnover. Addition being employees contribution of PF and ESI on account of its remission beyond the due date - CIT(A) deleted the addition - Held that:- As decided in case of M/s Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT] the explanation clause(va) of Section 36 of the IT Act, further makes it very clear that the amount actually paid by the assessee on or before the due date applicable in this case at the time of submitting returns of income under section 139 of the Act to the revenue in respect of the previous year can be claimed by the assessees for deduction out of their gross income. The above said statutory provisions of the IT Act abundantly make it clear that the contention urged on behalf of the revenue that deducted from out of gross income for payment of tax at the time of submission of returns under section 139 is permissible only if statutory liability of payment of PF or other contribution funds referred to in clause(b) are paid within the due date under the respective statutory enactments by the assessees as contended by the learned counsel for the revenue is not tenable in law and therefore, the same cannot be accepted by us - Decided against revenue.
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2015 (10) TMI 1463
MAT computation - Waiver of principal amount on one Time Settlement (OTS) of loan by Vijaya Bank added in computing Book Profit u/s 115JB - CIT(A) deleted the addition - Held that:- The provisions relating to book profit u/s 115JB are absolutely clear that same is to be computed on the basis of profit and loss account prepared in accordance with the provision of Part-II and Part-III of Schedule-VI of the Companies Act and to such profit only certain adjustments as provided in Explanation 1 can be made. The Assessing Officer does not have the power to tinker with such accounts prepared as per Schedule VI and certified by the Auditors. Assessing Officer has also not specified categorically that as to how the Part II & III of Schedule VI has not been followed or is against the prescribed accounting standard there is a requirement of law that waiver of loan taken for utilizing capital expansion is to be routed only through profit and loss account and cannot be credited to the 'General Reserve', i.e. directly in the Balance sheet. Thus, the finding of the CIT(A) is purely in accordance with the provisions of the law and the principle laid down by the Hon'ble Supreme Court in the case of Apollo Tyres (2002 (5) TMI 5 - SUPREME Court ). The Hon'ble Bombay High Court in the case of CIT vs Akshay Textiles Trading And Agencies (P) Ltd., [2007 (10) TMI 251 - BOMBAY HIGH COURT ] and in the case of CIT vs Adbhut Trading Co. Pvt Ltd, [2011 (7) TMI 716 - Bombay High Court ], following the aforesaid decision of the Hon'ble Supreme Court held that accounts prepared under the Companies Act and certified by the authorities under the said "Act" have to be accepted. Thus, we do not find any merits in the grounds raised by the revenue and is accordingly dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1462
Undisclosed investment - assessee, submitted that the assessee and his wife jointly purchased a property - assessee submitted that the assessee belonged to Marwari community and the source was savings from childhood - Held that:- Saving of money in routine course cannot be ruled at the outright. Since the assessee claims that the money was deposited in the bank account in a regular course, this Tribunal is of the considered opinion that the bank account maintained by the assessee's wife in which all the savings were deposited has to be examined and the availability of funds on the date of payment made for purchasing the property has to be examined. On perusal of the registered sale deed, it shows that the property was purchased jointly without any reference to the share of the assessee. Therefore, for all practical purposes, the assessee and his wife have equal sharing in the property. It is also to be examined when the assessee has equal share in the property and the assessee himself claims that a sum of ₹ 40 lakhs was invested by him out of ₹ 47,35,000/-, it is not known how the assessee's wife could claim 50% of the share in the property on the basis of the sale deed. These aspects need to be examined by the Assessing Officer and find out whether the assessee's wife has actually invested the money or the entire money was invested by the assessee. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the bank account that was said to be maintained by the assessee's wife and thereafter decide the matter in accordance with law, after giving reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1461
Non-deduction of tax at source under section 194J on roaming charges paid to other telecom operators - 'assessee in default' - appellant liable to pay tax U/s. 201(1) and interest U/s.201(1A) - Held that:- In case of the assessee the roaming charges paid by the assessee will not fall under the category of 'fees for technical services' and therefore, the provisions of section 194J of the Act would not be attracted in the case of the assessee. Further, since Sections 201(1) & 201(1A) of the Act are consequential, they will also not be applicable to the case of the assessee. See M/s Dishnet Wireless Limited, Chennai Versus The Deputy Commissioner of Income Tax, TDS Circle – 1, Chennai [2015 (7) TMI 778 - ITAT CHENNAI ] - Decided in favour of assessee.
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2015 (10) TMI 1460
Non deduction of TDS as per the provisions of sec.194A - CIT (Appeals) has deleted the addition on the ground that M/s. L & T Finance has shown the said amount as income in the return of income filed and has paid the tax due thereon - Held that:- The purpose of deducting tax at source is that there is no loss to the Government for tax due on income embedded in the amount paid by the assessee to the recipient of the amount. When the recipient of the amount includes the said receipt in its income and pays tax thereon, then there is no loss of revenue to the Government and, therefore, in our considered view, the Commissioner of Income Tax (Appeals) was fully justified in deleting the addition. Our view is supported by the insertion of the second proviso to sec. 40(a)(ia) of the Act by the Finance Act 2012 w.e.f. 01/04/2013 wherein held that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso - Decided in favour of assessee.
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2015 (10) TMI 1459
Deduction u/s 54B - CIT(A) had accepted the Assessee's claim that the land sold was an agricultural land and had also allowed the Assessee's claim of deduction u/s 54B to the extent of ₹ 1 crore representing the amount paid by the Assessee to the seller of the agricultural land - Held that:- A perusal of the land records, more specifically Form No. II, in Nagarcem Palolem shows that the land sold by the Assessee has been recorded in the Revenue records as an agricultural land. In these circumstances, as the Revenue records of the State clearly hold the land which has been sold as an agricultural land, we are of the view that the finding of the ld. CIT(A) in holding the land sold by the Assessee as an agricultural land does not call for any interference. The cost of the land in the Assessee's case being the figure as disclosed in the sale deed is only ₹ 27,14,288/-, the Assessee would be entitled to the deduction u/s 54B only to the extent of this amount and not ₹ 1 crore as allowed by the ld. CIT(A). The Assessee has relied upon the decision of Janardan Dass reported in [2007 (10) TMI 172 - ALLAHABAD HIGH COURT] therein assessee had purchased a land alongwith tubewells and trees which were part of the agricultural land. This is not a case where the Assessee had paid separately for the land and separately for the plantation whereas in the Assessee's case the sale deed has been registered only for ₹ 27,14,288/-. Consequently, this decision of the Hon'ble Allahabad High Court does not help the Assessee's case. In the circumstances, the order of the ld. CIT(A) on this issue stands modified and the AO is directed to grant the Assessee the benefit of deduction u/s 54B to the amount as disclosed by the Assessee in the sale deed being ₹ 27,14,288/-. In the result, the appeal of the Revenue is partly allowed.
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2015 (10) TMI 1458
Delayed payment of employees’ contribution to PF & ESI - CIT(A) deleted the addition holding that they were paid before the due date of filing of the return of income - Held that:- As decided in case of VBC Industries Ltd Vs. DCIT [2015 (6) TMI 1 - ITAT HYDERABAD] keeping in view the proposition of law and following the decision of CIT Vs. Nipso Polyfabriks Ltd. (2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT) we hold that employees contribution to PF & ESI remitted before the due date of filing of return u/s 139(1), will be allowable as deduction - Decided in favour of assessee.
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2015 (10) TMI 1457
Disallowance of proportionate amount of premium paid on redemption of non-convertible debentures - Held that:- This issue is decided by the Tribunal in assessee’s own case in A.Y. 1992-93 following the decision of the Hon’ble Supreme Court in the case of Madras Industrial Investment Corpn. Ltd. [1997 (4) TMI 5 - SUPREME Court] allowed proportionate claim of the premium payable on the debentures to be spread over to the period of debenture. Respectfully following the findings of the Tribunal in assessee’s own case, we direct the AO to allow proportionate claim of the premium payable in line with the findings of A.Y. 1992-93. - Decided in favour of assessee Disallowance of depreciation on the written down value of foreign visitors’ expenditure - Held that:- This issue has been decided by the Tribunal in assessee’s own case in A.Y. 1992-93 wherein the Tribunal has held that the expenditure incurred on foreign visitors form part of the cost of the project therefore would be eligible for depreciation as per Sec. 32 of the Act. - Decided in favour of assessee Taxability of Receipt of non compete fees - Held that:- Once the Tribunal has accepted that the total sale consideration is inclusive of non-compete fees and once the Tribunal has decided the issue on a total consideration treating it as a slum sale, the issue relating to non-compete fees became infructuous and should have been treated as otiose - Decided in favour of assessee Disallowance of VRS expenses - Tribunal has set aside the matter only with a direction to see that the amount claimed is as per actuarial valuation certificates - Held that:- After giving a thoughtful consideration, we find force in the contention of the Ld. Senior Counsel. In the assessment year 1993-94, the Tribunal has restored the issue with a direction to see that the amount claimed is as per actuarial valuation certificate. However, during the year under consideration, the liability for payment of pension is only incremental liability and there is no need for verification by actuarial valuation certificate. To this extent, we modify the findings of the Tribunal.- Decided in favour of assessee
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2015 (10) TMI 1456
Registration under section 12AA(3) cancelled - Commissioner of Income-tax's order has been passed ex parte - The assessee submits not to have received the Commissioner of Income-tax's notice proposing cancellation of registration. He has proceeded to cancel its registration for non-filing of return -- Held that:- A perusal of section 12AA(3) makes it clear that such a power can be exercised only if the concerned charitable trust's or institution's activities not genuine or are not been carried out in accordance with its objects as the case may be. Needless to say, non-filing of a return does not find a mention as a cause for cancellation of section 12AA registration. We make it clear that we are dealing with a tax statute wherein the powers of the Revenue have to be literally interpreted. The Revenue fails to quote any case law widening scope of section 12AA(3) in facts of the case. Therefore, we reject the assessee's technical argument of non-service of notice and reverse the Commissioner of Income-tax's order on this legal aspect itself. - Decided in favour of assessee.
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2015 (10) TMI 1455
Addition u/s 68 - Held that:- We do find merit in the submissions made by the assessee with regard to ₹ 7,30,000/- that it was an opening balance. The reason that the assessee cannot hold this much amount in hand for such a long period of time, is, basically a bald observation made by the CIT(A). The CIT(A) has seen from the facts that the amount was actually pertaining to preceding year is not controverted even by the DR. In such a case, we cannot sustain the addition of ₹ 7,30,000/-. Coming to the smaller additions of ₹ 40,500/- and ₹ 40,250/- wherein the assessee sold his old items of furniture - The CIT(A) went through the evidence as filed by the assessee - Held that:- The fact that the assessee sold certain old furniture items is mentioned in the impugned order. The main reason for rejecting the assessee claim is an apprehension that the furniture items may be capital asset. At the outset, we find this argument of the CIT(A) to be incomprehensible as to how an item of furniture could become capital asset. We, therefore are inclined to accept the argument of the AR and reverse the findings of the CIT(A). Coming to addition of ₹ 41,250/- received gifts at house warming ceremony - assessee has submitted the card before the CIT(A), who has rejected the explanation and evidence - - Held that:- On going though the order of the CIT(A), we feel that the CIT(A) has held the issue dispassionately, because during ceremonies like this, some kind of gift, which is either in cash or kind is received by the person, who is performing the ceremony. In such a case, we reverse the order of the CIT(A) on this issue. Coming to addition of ₹ 2,00,000/-, which is explained by the assessee/AR that it is actually withdrawal and not deposit - Held that:-This issue once again has been dealt with by the CIT(A), who has negated the explanation of the assessee, by simply saying that assessee’s explanation cannot be accepted.This issue, according to us, needs fresh adjudication at the level of the AO. Decided partly in favour of assessee in statistical purposes.
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2015 (10) TMI 1454
Penalty under sec. 271AAA - CIT(A) deleted the penalty - Held that:- The assessee had agreed to the addition and clearly stated in reply to question Nos. 28 and 29 that stock records are not maintained and stock is considered on estimate basis. None-maintenance of stock records with stock being valued on estimate basis is a fact accepted by the department. The assessee has also paid the tax together with interest in respect of undisclosed income. We thus find that all the above three ingredients have been fulfilled by the assessee in the present case. The assessee has not only admitted the undisclosed income and specified the manner in which such income has been derived in its statement recorded during the course of search but has also substantiated the manner in which the undisclosed income was derived. It is an undisputed fact that the assessee has paid the tax together with interest, if any, in respect of the undisclosed income. Under these circumstances, we are of the view that the Learned CIT(Appeals) has rightly deleted the penalty in question levied by the Assessing Officer. - Decided in favour of assessee.
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2015 (10) TMI 1453
Reference to TPO u/s 92CA(1) - addition on account of payment for management and technical services availed and payment of technical and consulting services - assessee aggrieved as without informing the assessee about the reason for disregarding the Arm’s Length Price and without granting due opportunity of being heard to the assessee while making the reference to TPO - Held that:- We find that the necessary details with supporting evidences were filed by the assessee, whereas, the ld. TPO passed the order just in three pages in hurried manner. Without going into much deliberation and keeping in view, the principle of natural justice and to safeguard the interest of both sides, we deem it appropriate to remand this appeal to the file of the ld. Assessing Officer/TPO, with a direction to examine the claim of the assessee afresh, uninfluenced by the observation made in the impugned order and decide afresh in accordance with law by passing a speaking order. Needless to mention here that due/sufficient opportunity of being heard with further liberty to furnish evidence, if any, in support of its claim, be provided to the assessee.- Decided in favour of assessee for statistical purposes only.
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2015 (10) TMI 1452
Eligible for exemption under section 10(23C)(iiiad) - CIT(A) allowed the claim - Held that:- Commissioner of Income-tax (Appeals) has considered the issue and the submissions made by the authorised representative and rightly observed that the Assessing Officer himself held that the donations received by the society are for the corpus fund for the construction of building of the society. Donations for the corpus fund are exempt under section 11 of the Act. In the present case, though the society was registered under section 12A of the Act, exemption under section 11 was not claimed in the return of income and as such it cannot be entertained. We find that the corpus donations received by the assessee-society are separated, the annual receipts of the educational institution are only ₹ 69,24,857. Keeping in view of the order of the Income-tax Appellate Tribunal in the case of Jat Education Society v. Deputy CIT [2011 (3) TMI 569 - ITAT DELHI ] exemption under section 10(23C)(iiiad) can be denied if the aggregate annual receipts of each educational institution is more than ₹ 1 crore. We are of the view that since the annual receipts of the educational institution of the assessee- society are below ₹ 1 crore, exemption under section 10(23C)(iiiad) of the Act the surplus is allowable and accordingly, the learned Commissioner of Income-tax (Appeals) has rightly deleted the addition in dispute. - Decided in favour of assessee.
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2015 (10) TMI 1451
Depreciation on capital expenditure applied for the object of the trust - whether allowance of deduction on account of depreciation will amount to double deduction? - CIT(A) allowed the claim - Held that:- No force in the contentions raised by the learned Departmental representative as the relief has been granted by the learned Commissioner of Income-tax (Appeals) on the basis of decision of jurisdictional High Court in the case of DIT v. Vishwa Jagriti Mission (2015 (8) TMI 89 - DELHI HIGH COURT ). When the decision of the jurisdictional High Court is available on any issue then as per well established law, the same is binding upon the authorities working under the jurisdiction of the High Court. The issue raised by the Revenue is squarely covered by the aforementioned decision of the hon'ble jurisdictional High Court in the case of DIT v. Vishwa Jagriti Mission (supra) therefore, we do not find any error in the relief given by the learned Commissioner of Income-tax (Appeals) to the assessee in respect of both the impugned assessment years. Accordingly, we decline to interfere and the Departmental appeals being devoid of merits are dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1450
Disallowance of "Sundry Balances written off" - Held that:- We find that the disputed amount was paid to EIPL as an advance for purchasing the raw material; that the assessee did not honour the transaction; that the EIPL refused to return the money. In the circumstances, it cannot be said that it was a bad debt actually it was not a debt at all. It was an advance only, so the assessee cannot get the benefit of Section 36 of the Act. However, the claim made by the assessee about business loss has to be considered because the genuineness of the payment and its relation with the business of the assessee is not denied by any of the authorities. We find that the EIPL had confirmed the order of the AO as he was of the opinion that amount was not written off during the year under appeal. From the paper book filed by the assessee, it is find the amount has been written off in the year under consideration. In these circumstances, we are of the opinion, that in the interest of justice, matter should be restored back to the file of FAA to decide the issue afresh after affording reasonable opportunity of hearing of the assessee. Decided in favour of assessee by way of remand.
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2015 (10) TMI 1449
Undisclosed cash deposits in the bank account - Unexplained income from undisclosed sources - Held that:- Matter requires reconsideration at the level of the Assessing Officer. The assessee specifically submitted that he has withdrawals from the bank account, which were redeposited. Copy of the cash-flow statement was filed, which supports the contention of the assessee. The assessee has stated specifically that the amount was redeposited on withdrawal from the bank and sufficient cash was available. Therefore, it was the duty of the Assessing Officer to examine this fact. Further nothing is brought on record that the amount was utilised by the assessee on withdrawal from the bank account. Considering the facts of the case in the light of the decision of the hon'ble Punjab and Haryana High Court in the case of Shiv Charan Dass [1980 (4) TMI 74 - PUNJAB AND HARYANA High Court] we set aside the orders of the authorities below and restored the issue to the file of the Assessing Officer with directions to redecide this issue - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1448
Reduced depreciation on reduced cost of fixed assets - whether grant received by assessee from State Govt. towards cost of capital had to be considered in the manner provided in section 43(1) of the Act, that the AO was justified in reducing the grant in question? - Held that:- We find that the AO had not invoked the provisions of section 43(l) Expl.(10) while completing the assessment, although he had held that government grants on capital assets would affect depreciation allowable to the assessee and that the revenue grants and subsidies were taxable. Thus, it is clear that the issue of actual cost as per the provisions of section 43(1) of the Act was not deliberated upon or decided by the AO. It was the FAA who held that the AO should have invoked the provisions of section 43(l)Expl.(10). In our opinion the AO had no chance to examine the letter dated 03.03.2009 of the Assam Govt. and take a decision about the issue-especially the contribution by the Govt. as promotor's quota. In our opinion the matter need further verification and investigation. Therefore, in the interest of justice we are remitting back the issue to the file of the AO for fresh adjudication. He is directed to decide the assessee issue afresh after considering the material to be produced by the assessee and the judgment of Bharat Sanchar Nigam Ltd. v. Dy. CIT [2013 (5) TMI 416 - DELHI HIGH COURT]. - Decided in favour of the assessee for statistical purposes.
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2015 (10) TMI 1447
Expenditure under the head "repairs and maintenance" for replacing old windmill with the new one - revenue v/s capital expenditure - Held that:- It is not clear from the records before us whether the assessee has replaced only damaged parts of the existing windmill or has replaced entire old windmill with the new one. These facts have to be ascertained from books, purchase order, job sheet, etc. In case, the assessee has replaced only damaged parts of the windmill, without there being substantial change in original performance and generation capacity of windmill the expenditure is allowable as claimed by the assessee. We find that the judgment of the hon'ble Allahabad High Court in the case of CIT v. Renu Sagar Power Co. Ltd. [2007 (9) TMI 183 - ALLAHABAD HIGH COURT] also supports the contentions of the learned authorised representative. Needless to say that if it is case of replacing a new windmill in the place of old windmill, the expenditure would certainly be capital in nature. The file is remitted back to the Assessing Officer with a direction to decide the issue afresh after verifying the factual aspect. The Assessing Officer while deciding the issue de novo shall grant an opportunity of hearing to the assessee, in accordance with law.- Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1446
Disallowance of expenses on account of carriage fees - non-deduction of TDS u/s. 194C - CIT(A) deleted the disallowance - Held that:- The AO has disallowed the expenses in respect to the six parties at ₹ 30,99,790/- and qua this assessee has already deducted TDS and made payment. The amendment to the provisions of section 40(a)(ia) of the Act by the Finance Act, 2010 is curative in nature and will apply for and from AY 2005-06. The relevant assessment year involved in this appeal is AY 2006-07 and hence, the CIT(A) has rightly deleted the disallowance and we confirm the same. This ground of appeal of revenue is dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1445
Disallowance of development expenses - Held that:- Assessee failed to produce any evidence in support of the claim of development expenses before the authorities below. Therefore, assessee failed to prove that development expenses were incurred wholly and exclusively for the purpose of business of the assessee. Therefore, in the absence of any evidence or material on record, we do not find any justification to interfere with the orders of authorities below. - Decided against assessee.
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2015 (10) TMI 1444
Registration u/s.12A denied - Held that:- At the time of registration u/s.12A, the CIT is required to verify the objects of the trust and genuineness of its activities. If the objects of trust is charitable and its activities are genuine, the registration is to be granted. If subsequently it is found that assessee is not following its object or that objects are not charitable or its activities are not genuine then during the course of assessment, the AO has all the powers to tax such receipts of the trust which are non-charitable or commercial in nature or to apply the provisions of Section 13 of the Act so as to exclude inform from properties held under a trust for private religious purposes which does not enure for the benefit of the public. During the course of assessment, the AO is also empowered to exclude such receipts/income of the trust if he finds that any funds of the trust or institution are invested or deposited in any form or mode specified in sub-section (5) of Section 11. The AO is also empowered to exclude income of such trust from the provisions of exemption if he finds that such funds were utilized for benefit of any of the persons, who made substantial contribution to the trust or institution, any trustee of the trust or manager of the institution or any concern, in which any of the persons referred in clause (a), (b), (c) and (d) of the sub-section 3, as substantial interest. Furthermore, various clauses in the trust deed with regard to promote education, medical relief in no way amounts to carry on any business so as to deny the claim of registration u/s.12AA. - Decided in favour of assessee.
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2015 (10) TMI 1443
Disallowance paid to C&F Agent on account of Lorry Freight - disallowance u/s 40(a)(ia) - non deduction of tds - Held that:- No disallowance can be made u/s.40(a)(ia) on account of reimbursement of expenses incurred by the agent on behalf of the assessee for transportation and other charges, when the obligation to deduct tax at source was complied with by the agent, who had made payment on its behalf See Gujarat Narmada Valley Fertilizers Co. Ltd. case [2014 (4) TMI 235 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2015 (10) TMI 1442
Applicability of provisions of Explanation 3 to section 43(1) to the secondhand windmill purchased - adoption of cost - Held that:- In the instant case, we have noticed that the assessee had purchased the windmill on March 23, 2009 and she has also claimed depreciation thereon during the assessment year 2009-10. Accordingly, it was pointed out to both parties that the question of determination of "actual cost" shall arise only in the assessment year 2009-10 and not during the year under consideration. On verification of details, both parties submitted that the assessment relating to the assessment year 2009-10 had been reopened by the Assessing Officer and the depreciation claim of the assessee has been restricted. It was further submitted that the assessee has preferred an appeal against the same and it is pending before the learned Commissioner of Income-tax (Appeals). Under these set of facts, the learned Departmental representative fairly agreed that the question of determination of "actual cost" during the year under consideration does not arise and in this year, the depreciation has to be allowed on the written down value of the windmill as determined in the assessment year 2009-10. Under these set of facts, we are of the view that the issue contested before us is consequential, i.e., it would depend upon the outcome of the identical disallowance made in the assessment year 2009-10. For the above said reason, the decision rendered by the learned Commissioner of Income-tax (Appeals) is liable to be set aside. Restore all the issues to the file of the Assessing Officer with the direction to re-work the amount of depreciation on the written down value determined in the assessment year 2009-10 after the receipt of appellate order of the learned Commissioner of Income-tax (Appeals). - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1441
Disallowance of traveling and conveyance expenses - Held that:- Tribunal has been called upon to give its own reasons for affirming or rejecting the reasoning given by the AO as well as the CIT(A). We afforded an opportunity to the assessee to co-relate the trips of these three directors to Malaysia and UK with the business purpose. Except for filing a tour report of one of the directors, which is an simply an internal evidence, the ld. AR could not place on record any external evidence to suggest that any business meetings were held in Malaysia or UK, which were attended by these three directors. On being called upon to file any correspondence with the Japanese company to support the assessee’s contention that meetings were organized in Malaysia and UK, the ld. AR fairly conceded that no such evidence was available. This shows that except for a bald statement that the business meetings were organized by the Japanese company in Malaysia and UK, there is no evidence worth the name to support such a claim. When the position is such, the natural conclusion which follows is that there is no positive evidence to the effect that these foreign trips were undertaken by the three directors for any business purpose. Under such circumstances, the view taken by the authorities below cannot be disturbed. We, therefore, countenance the impugned order in sustaining the disallowance of ₹ 22.47 lac. - Decided against assessee.
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2015 (10) TMI 1440
Maintainability of appeal - treatment to Rental income received - Commissioner of Income-Tax (Appeals)-XII treated as its business income as against income from house property as treated by the AO - Held that:- In the present case, the tax effect involved in each of the four appeals filed by the Revenue in the month of February, 2014 is less than the monetary limit of ₹ 3 lakhs prescribed by the CBDT vide Instruction dated 09.02.2011 (supra) and the same being in contravention of the said instruction issued by the CBDT which have attained a statutory status as a consequence of the insertion of the section 268A in the Income-Tax Act, 1961 as held by the Hon’ble Punjab & Haryana High Court in the case of Oskar Laboratories Pvt. Ltd.[2009 (2) TMI 28 - PUNJAB AND HARYANA HIGH COURT ] hold that the same are not maintainable. All these four appeals filed by the Revenue are accordingly dismissed. - Decided against revenue.
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2015 (10) TMI 1439
Disallowance of service charges for getting back the refund from Excise Department - CIT(A) allowed the claim - Held that:- The assessee has filed all the relevant documentary evidences before the A.O. as well as before the Ld. First Appellate Authority which has properly been appreciated by them and the addition in dispute has been rightly been deleted by the Ld. First Appellate Authority. No interference is called for in the well reasoned order passed by the Ld. First Appellate Authority, uphold the impugned order by dismissing the appeal filed by the Revenue. - Decided in favour of assessee.
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2015 (10) TMI 1438
Deemed dividend u/s 2(22)(e) - Held that:- It is not in dispute that the assessee-company is not a shareholder in M/s Trimex Industries Private Limited. Section 2(22)(e) of the Act clearly says that any payment made by a company by way of advance or loan to a shareholder or to the benefit of the shareholder, it has to be treated as deemed dividend under Section 2(22)(e) of the Act. Dividend has to be assessed only in the hands of the shareholders. If the payment was made on behalf of the shareholder or benefit of the shareholder, the assessment has to be made only in the hands of the shareholder on whose benefit the advance was made as deemed dividend under Section 2(22)(e) of the Act. In this case, even though there are common shareholders/Directors in assessee company as well as its sister concern M/s Trimex Industries Private Limited, admittedly, the assessee-company is not a shareholder, therefore, addition if any has to be made only in the hands of common shareholders/Directors on whose benefit the advance was made. Since the assessee-company is not a shareholder in M/s Trimex Industries Private Limited, this Tribunal is of the considered opinion that the provisions of Section 2(22)(e) of the Act is not applicable. - Decided in favour of assessee.
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2015 (10) TMI 1437
Disallowance under section 40(a)(ia) - non deduction of TDS on internet lease line charges - Held that:- A similar issue is considered by the Special Bench of the Tribunal (Vizag) in the case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) wherein it was held that the provisions of section 40(a)(ia) are applicable only to the expenses that are "payable" and outstanding at the end of the close of the year relevant to the assessment year and not to the amount already paid. The same view was taken by the High Court of Allahabad in the case of CIT vs. M/s. Vector Shipping Services (P) Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] by holding that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year. Being so, in our opinion an amount outstanding at the end of the close of the assessment year is not to be allowed u/s.40(a)(ia) of the Act. We direct the Assessing Officer to disallow only that amount which is outstanding at the end of the close of the assessment year. With these observations, we are remitting the issue back to the file of the Assessing Officer for fresh consideration. - Decided partly in favour of assessee for statistical purposes.
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2015 (10) TMI 1436
Levy of penalty u/s 271B - Failure to get accounts audited - Held that:- Income of the Assessee is basically from commission on transportation. The penalty levied u/s 271B is not a blanket penalty but is subject to the control of Sec. 273B. Thus, the Assessee does have the ground to raise the issue of reasonable cause. The Assessee has explained and shown with evidence that the Assessee is accounting only the commission as its income/turnover in its Profit & Loss account. Admittedly, no defect in its books of accounts have been found to show that the Assessee has done any fraudulent activity either. It is also an accepted fact that the ‘Freight payable’ account is separately maintained which contains the details of the ‘Freight payable’ which is received by the Assessee and which is disbursed by the Assessee. This being so, the claim of the Assessee that he was under reasonable and bona fide belief that his turnover did not exceed ₹ 40 lacs is clearly a bona fide claim on which no penalty is leviable u/s 271B. In the circumstances, the penalty levied u/s 271B by the AO, and as confirmed by the ld. CIT(A) stands deleted. - Decided in favour of assessee.
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2015 (10) TMI 1435
Determination of Fair Market Value - determination of claim of deduction u/s 54EC - Held that:- As neither the basis on which the AO has made the valuation nor the valuation report of the Assessee is before us, we are unable to ascertain all the facts in the present case. In these circumstances, in the interest of justice we are of the view that the issue of Fair Market Value of the said two properties as on 1.4.1981 is liable to be restored to the file of the AO who shall obtain a proper valuation from the District Valuation Officer (DVO) in respect of the Fair Market Value of the said properties and re-decide this issue after granting the Assessee adequate opportunity to substantiate his claim and we do so. - Decided partly in favour of assessee for statistical purpose.
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2015 (10) TMI 1434
Deduction claimed u/s. 80P(2)(a)(i) disallowed - Held that:- Sec. 80P(4) was introduced by the Finance Act 2006 w.e.f. 01/04/2007 excluding the said benefit to a Cooperative Bank. Thus, the intention of the legislature is clear if a cooperative bank is exclusively carrying on banking business, then income derived from the said business cannot be deducted in computing the total income of the assessee, as the assessee is not a Cooperative Bank carrying on exclusively banking business and there is no finding that it possess a licence from RBI to carryon business. It is not a Cooperative Bank, it is a Cooperative Society which also carries on business of lending money to its Members which is covered u/s. 80P(2)(a)(i). Set aside the findings of the Ld. CIT(A) and direct the Assessing Officer to allow deduction u/s. 80P(2) of the Act as claimed by the assessee. See CIT Vs. Billuru Gurubasava Pattinas Sahakari Sangha Niyamat [2015 (1) TMI 821 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2015 (10) TMI 1433
Addition of sundry creditors - Record of Rights had not been produced - Held that:- As the Assessee has produced fresh evidences before us in the form of Record of Rights of some of the creditors who have been disbelieved and whose credits have been added in the hands of the Assessee, as also taking into consideration the confirmation given by the ld. AR that he would be able to produce these evidences before the AO, this issue is restored to the file of the AO for re-adjudication after granting the Assessee adequate opportunity to substantiate its claim. - Decided in favour of assessee for statistical purposes. Disallowance of ‘Vehicle expenditure’ - Held that:- . Considering the fact that the Assessee is operating in remote places in Belgaum and also taking into consideration that the expenditure relates to trucks also, we are of the view that the interest of justice would be served if the disallowance is restricted to 10% of the total expenditure. 10% of the total expenditure would come to about ₹ 75,100/- which is rounded off to ₹ 75,000/-. Consequently, the AO is directed to restrict the disallowance to ₹ 75,000/-. - Decided in favour of assessee in part.
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2015 (10) TMI 1432
Addition in the course of the assessment on the basis of the 131 statement recorded - Held that:- Assessee has specifically given an undertaking that he would appear before the AO and give all the details and explanations called for by the AO, as also taking into consideration the fact that the Assessee is handicapped insofar as the books of accounts and the connected documents are seized by the Revenue Department, in the interest of justice all the issues in this appeal are restored to the file of the AO for re-adjudication after granting the Assessee an adequate opportunity to substantiate its claims. - Decided partly in favour of assessee for statistical purposes
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2015 (10) TMI 1431
Penalty u/s.271(1)(c) - variation in the claim of deduction u/s.10A - Held that:- In the quantum proceedings the AO has disallowed the claim on some income/expenditure which was partly allowed by the CIT(A). However, the CIT(A) has reduced the claim u/s.10A by allowing certain expenditure which were claimed by assessee against other unit. On the issue of imposition of penalty for wrong claim of expenditure, the Hon’ble Supreme Court in the case of Reliance Petroproducts Ltd. (2010 (3) TMI 80 - SUPREME COURT) held that merely because the assessee had claimed the expenditure, where claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion attract the penalty under Section 271(1)(c) In the instant case before us, the enhancement of ₹ 50,00,000/- was made by CIT(A). the penalty proceedings should be commenced in the course of, and before the completion of the proceedings in which the income tax authority is satisfied about the default which attracts the penalty. Here in this case the CIT(A) was satisfied and completed the proceedings by making enhancement. However, he has not initiated any penalty proceeding. Hence no merit in the penalty levied with reference to variation in the amount of claim for deduction u/s.10A - Decided in favour of assessee.
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2015 (10) TMI 1430
Disallowance of Depreciation on Goodwill - Held that:- In view of the decision of the Hon'ble Supreme Court in the case of SMIFS Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT ] the AO is directed to allow the claim of depreciation on the said intangible asset as claimed by the Assessee. - Decided in favour of assessee. Disallowance of depreciation in respect of Tudou plant - Held that:- Admittedly, after the concept of block of assets for the purpose of depreciation, if any part of the plant and machinery falling within the block is put to use during the relevant assessment year, then, the depreciation becomes eligible for the said block of assets. Admittedly, the dry plant of Tudou division has been put to use during the relevant assessment year. It is only the wet process which had been temporarily shut down in view of the order of the Forest Department. The dry plant having been used during the relevant assessment year and as the plant and machinery falls within the block of assets, the Assessee would be entitled to depreciation in respect of the said block of assets. In these circumstances, the AO is directed to grant the Assessee depreciation in respect of the Tudou plant as claimed. - Decided in favour of assessee.
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2015 (10) TMI 1429
Eligibility u/s. 10(23C)(iiiac) denied - Held that:- In the case in hand, there is no dispute that the assessee is a wholly/substantially funded by the Government of India/State Govt. of Karnataka. This being the fact of the matter, the assessee is entitled for exemption u/s. 10(23C)(iiiac) of the Act. As no distinguishing facts/decisions have been brought on record by the Revenue, respectfully following the decision of the Coordinate Bench in the case of Raichur District Health & Family Welfare Society (2013 (5) TMI 635 - ITAT BANGALORE) we direct the Assessing Officer to allow the assessee exemption u/s. 10(23C)(iiiac) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 1428
Rejection of claim under section 80P(2)(a)(i) - AO denied exemption on the ground that as per sub-section (4) of section 80P, the provision of section 80P is not applicable in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank - Held that:- As decided in case of Jafari Momin Vikas Co-op. Credit Society Ltd [2014 (2) TMI 28 - GUJARAT HIGH COURT] section 80P, sub-section (4), would be applicable only in the case of a credit co-operative bank and not a credit co-operative society. Still the dispute remains whether the assessee is a credit co-operative bank or a credit co-operative society. Admittedly, the Assessing Officer has not examined this aspect. The Commissioner of Income-tax (Appeals), of course, has dealt with on this, but he has not allowed any specific opportunity to the assessee so as to point out how the assessee is not a co-operative bank. In our opinion, it would meet the ends of justice if the orders of the authorities below are set aside and the matter is restored back to the file of the Assessing Officer for re-examination in the light of the decision of the hon'ble jurisdictional High Court in the case of Jafari Momin Vikas Co-op. Credit Society Ltd. (supra). - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1427
Penalty u/s 271(1)(c) - disallowance of commission - CIT(A) deleted the penalty - Held that:- There is no finding that any details supplied by the assessee in its return of income are incorrect or erroneous or false. That merely because the claim of commission is disallowed by the Assessing Officer and upheld by the appellate authorities will not amount to concealment of income or furnishing of inaccurate particulars of income of the assessee. In view of the above, in our opinion, the CIT(A) rightly cancelled the penalty relying upon the decision of Hon'ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd, reported in [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.
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2015 (10) TMI 1426
Rejection of claim of deduction u/s. 54F - assessee failed to deposit the net consideration in the capital gain account scheme - Held that:- The undisputed fact is that the assessee has purchased a new house property before filing the return u/s. 139(4) of the Act. It is also an undisputed fact that this transaction has not been disputed by the AO. As from a reading of Sec. 54F(4), it is clear that only Sec. 139 have been mentioned therein in the context that the unutilized portion of the capital gains on the sale of property used for residence should be deposited before the date of furnishing the return of income u/s. 139 of the Act. At this point, it can be said that Sec. 139 cannot mean only Sec. 139(1) but it means all sub-sections of Sec. 139. Under Sub-Sec. 4 of Sec. 139, any person who has not furnished a return within the time allowed to him, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. There is no dispute that the return of the assessee was filed u/s. 139(4) of the Act. There is also no dispute that the assessee has otherwise complied with the provisions of Sec. 54F of the Act i.e. invested the entire consideration in the purchase of house property. The Revenue authorities have taken a hyper technical issue which in our considered opinion cannot be accepted as it would deny the benefit of a beneficial provision of the assessee. We, therefore, set aside the order of the Ld. CIT(A) and direct the AO to allow the deduction u/s. 54F of the Act to the assessee. - Decided in favour of assessee.
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2015 (10) TMI 1425
Disallowance of deduction u/s 80IC(2)a(ii) - CIT(A) allowed the claim - Held that:- Since input and output of the assessee was entirely different products and the final product was manufactured after using different hardware and software and the finished product being different from the raw material purchased by the assessee, CIT(A) was justified in holding that the activity carried out by the assessee definitely falls under the definition of manufacture and therefore was entitled to the deduction. In this view of the matter, we confirm the order of the CIT(A) and ground of appeal of the revenue is dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1424
Depreciation of school building, labour huts, store building etc. - Held that:- The assessee constructed/completed a big project of Rajasthan Housing Board. As per the agreement the assessee was to construct certain assets/buildings like school, labour huts at the site to stay for labour and store building to keep the material at site, site office building etc. The same were handed over to the Rajasthan Government. The assessee written of the assets by claiming 100% of depreciation. There is no dispute that the assessee incurred expenses on such construction like site office building, labour huts and store building which were lateron handed over to the Rajasthan Housing Board. These were part and partial of the project, thus, the construction expenses has to be allowed as revenue expenditure. The assessee preferred to do in two installment by claiming 50% depreciation in two different assessment year when the project was in existence. In view of these facts, we affirm the stand of the ld. Commissioner of Income Tax (Appeals) on this issue in granting relief with respect to claim of depreciation, thus, the appeal of the Revenue is having no merit. Addition made on accrued interest on fixed deposit - AO disallowed a sum on the ground that the accrued interest on F.Ds was not accounted for in the books of accounts by the assessee - Held that:- If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsels, if kept in juxtaposition and analyzed, we find that the assessee is a partnership firm carrying on the business of civil construction broadly with the Government and Semi Government Organisations. We find that the bank directly credited the interest on F.Ds and due to non-communication to the assessee at the relevant time, could not be shown, however, the F.Ds matured in the assessment year 2010-11 and the Bank along with interest credited the income for which the assessee declared the same in his profit & loss account on maturity and offered the income on such interest in the assessment year 2010-11. There is no loss to the Revenue since the interest was offered as income. Thus, this appeal of the assessee is allowed and the addition so made is deleted. - Decided in favour of assessee.
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2015 (10) TMI 1423
Tds liability - CIT(A) treating the use of water front royalty u/s 194J against 194I by the A.O. - assessee filed additional evidences stating that the payments made are payable to Government of Gujarat, therefore, on these payments no tax was required to be deducted being payment to Government - Held that:- considering the arguments and submissions of both the sides, we deem it proper to set aside the orders of the authorities below and restore the matter back to the file of the Assessing Officer. We direct the assessee to produce all the evidences and explanation before the Assessing Officer; thereafter, the Assessing Officer is directed to examine whether the assessee is at all responsible for deduction of tax at source. If he comes to the conclusion that the assessee is liable for deduction of tax at source, then he will further adjudicate whether the tax was required to be deducted u/s 194I or 194J, and thereafter, he will arrive at the conclusion whether the assessee can be said to be in default u/s 201(1) or 201(1A). - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1422
Estimation of the income @ 4% of turnover - CIT(A) confirmed estimate of the income without rejecting the books of account - Held that:- It is undisputed fact that the order of the learned CIT(A) is deficient on the issues relating to the rejection of the books of account. Insofar as the adopting the flat rate of 4% of the total receipts as income of the assessee is concerned, there is no justification and the orders of the learned CIT(A) / Assessing Officer have not provided any basis to support the same. In our considered opinion, there is a need to remand all the issues to the file of the Assessing Officer for want of issue based adjudication of all the grounds by passing a speaking order. Accordingly, we set aside the impugned order passed by the learned CIT(A) and restore all the grounds raised by the assessee to the file of the Assessing Officer for denovo adjudication. Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1421
Penalty made u/s. 271(1)(c) - disallowance of deduction u/s. 54F in part - Held that:- It is an undisputed fact that the assessee has tendered loan to the builder much earlier to the date of purchase. It is also an undisputed fact that the loan amount of ₹ 12.75 lakhs was converted into sale consideration which is also evident from the sale deed placed on record. Whether the assessee is entitled for deduction u/s. 54F of the Act on this conversion of loan into sale consideration is definitely a highly debatable issue, therefore, in our considered opinion, penalty cannot be levied u/s. 271(1)(c) of the Act in respect of the claim of ₹ 12.75 lakhs. In so far as the claim of deduction in respect of additions/alteration of ₹ 08 lakhs is concerned, we find that the assessee had furnished all the details although he failed to succeed in claiming the deduction but that by itself would not make the claim a false claim. We, therefore, do not find this a fit case for the levy of penalty u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 1420
Disallowance of bad debt u/s 36(1)(vii) read with section 36(2) - assessee contented that the amount was actually written off in its books of accounts, therefore, in view of the decision in T.R.F. Ltd. vs CIT (2010 (2) TMI 211 - SUPREME COURT) the claim of the assessee has to be allowed - Held that:- If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we note that after 01/04/1989, it is not necessary for the assessee to establish that debt, in fact, has become irrecoverable, it is enough, if bad debt is written off as irrecoverable in the accounts of the assessee as was held in T.R.F. Ltd. vs CIT [supra] The fact of amendment to section 36(1)(vii) read with section 36(2) is only that now for claiming deduction u/s 36(1)(vii) mere writing off debt or part thereof as irrecoverable is a substantial compliance. Our view is further supported by the decision in CIT vs Kohli Brothers Color Lab Pvt. Ltd. (2009 (11) TMI 3 - ALLAHABAD HIGH COURT ) and CIT vs Smt. Nilopher I. Singh (2008 (8) TMI 165 - DELHI HIGH COURT ) . In view of the aforementioned judicial pronouncements, the claim of the assessee is allowed - Decided in favour of assessee.
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2015 (10) TMI 1419
Unaccounted bank deposits - Held that:- The assessee is an employee of M/s. JR and Sons. The Assessing Officer and the Commissioner of Income-tax (Appeals) did not believe the version of the assessee for the reason that she was not able to establish the amounts deposited which were subsequently transferred to the account of JR and Sons' account. Now the assessee has filed all the details and books of account of JR and Sons, IDBI bank account statement and account copy of auto spare agencies from whom the assessee received the amounts, ICICI bank statement, etc. In view of the details filed by the assessee before us we find that in the interest of justice, these details are necessary to be examined by the Assessing Officer. Therefore, we set aside the order passed by the Commissioner of Income-tax (Appeals) and remit the matter back to the file of the Assessing Officer. The Assessing Officer is directed to examine the details filed by the assessee and then decide the issue afresh in accordance with law after giving opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 1418
Disallowance u/s 14A read with Rule 8D - Held that:- Since the assessee has made investment in a Wholly Owned Subsidiary Overseas - Epsilon Limited, Mauritius, the dividend income of which was liable to be taxed in India, the A.O. was not justified in taking such investment for computing disallowance to be made under Rule 8D. The same should not be taken into account while computing the disallowance under Rule 8D(2)(iii) of the I.T. Rules. Accordingly we direct the A.O. to exclude such strategic investment while computing disallowances under Rule 8D. From the record we also found that the assessee had made fresh investments in Birla Sun Life Cash Plus, in LIC Mutual Fund Income Plus Fund and LIC MF Liquid Fund. The initial investment is made from cash generated from operating activities which was ₹ 24,74,14,673/- as per cash flow statement forming part of annual report. After making above initial investments the assessee have made various redemptions in respective plans during the years from such redemption proceed only new purchases of investments have been made. It appears that no borrowings had been used for investing in Mutual funds from which income not forming part of total income have been earned. Therefore the interest cost which had been used by ACIT - (OSD) should be excluded while applying Rule 8D. In view of the above discussion, we restore the matter back to the file of A.O. for re-working the amount of disallowance to be made u/s 14A of the Act. - Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 1417
Addition under the head "inventory written off" - CIT(A) deleted the addition - Held that:- High Court of Delhi in assessee’s own case i.e. Suzuki Motorcycle (India) Pvt. Ltd. vs CIT (2013 (1) TMI 67 - DELHI HIGH COURT) and submitted that similar kind of issue of inventory written off has been allowed in favour of the assessee. Ld. DR fairly accepted that similar kind of issue for AY 2008-09 has been allowed by Hon’ble High Court in favour of the assessee and the relevant figures for verification on this limited issue for limited purpose have been remitted to the AO for verification - We clearly observe that the CIT(A) has also followed order of Hon’ble High Court and has directed the assessee to verify the percentage of inventory written off as claimed by the assessee - Decided against revenue.
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2015 (10) TMI 1416
Addition on cash paid to partner Shri Sukhdev Singh - Held that:- We find that the basic facts in this case are not in dispute. The assessee firm has paid ₹ 16.5 lacs to its partner Shri Sukhdev Singh and the necessary entries were passed in the regular books of account of the assessee firm. The cash entry of ₹ 16.5 lac was reflected in the ledger account of Shri Sukhdev Singh in the books of account of the assessee firm, copy of which has been filed by the assessee before the CIT(A). The CIT(A) in these facts held that AO did not properly appreciate the facts of the case and that the entries were explained and addition was deleted. The cash payment made by the assesee firm to its partner was genuine and duly reflected in the accounts book of assessee firm and was fully explained and therefore no case of addition of this amount as income in the hands of the assessee firm is made out by the revenue and there being no merit in the ground No. 1 of the revenue, the same is dismissed. - Decided in favour of assessee. Addition on account of purchase made for non business purpose - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding that there is no basis for holding by the AO that these transactions of purchases were not for business purposes of the assessee. The purchases were supported by the purchase bills produced by the assessee. The complete postal address of the seller parties were furnished to the AO. The CIT(A) has recorded that during the relevant year the assessee has diversified and started the business of supplying construction material and entered into the MOU with M/s. Pushan Properties and Developers Pvt. Ltd. and therefore the finding of the AO that the purchase transactions were for the purpose of non business was not correct. There being no mistake in the order of the CIT(A) on this issue. - Decided in favour of assessee.
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2015 (10) TMI 1415
TDS u/s 194C not deducted - Addition made under section 40(a)(ia) - assessee involved in sizing work - Held that:- Special Bench of the Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) and judgment of CIT v. Vector Shipping Services (P.) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] held that section 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year in respect of these payments. However, the assessee has not brought on record, the details of outstanding expenses or schedule of sundry creditors showing whether the impugned amount is outstanding at the end of the close of the previous year relevant to the assessment year either in the name of the party or outstanding expenses. Hence, in the interest of justice, we are remitting the issue back to the file of the Assessing Officer with direction to verify the claim of the assessee and the assessee shall place necessary evidence in support of his claim. Further, we make it clear that if the impugned amount is not outstanding at the end of the close of the assessment year in respect of the expenses either as outstanding expenses or as sundry creditors, this amount cannot be disallowed. This ground is remitted back to the Assessing Officer for fresh consideration. - Decided in favour of assessee for statistical purposes. Disallowance at 20 per cent. on weaving charges - Held that- Ad hoc disallowance made by the Assessing Officer at 20 per cent. on the ground that supporting vouchers are self-made vouchers is on higher side. In our opinion, it is appropriate to disallow only 10 per cent. of weaving charges supported by self-made vouchers - Decided partly in favour of assessee.
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2015 (10) TMI 1414
Addition u/s 68 and u/s 69A - assessee had applied under Rule 46 for admission of additional evidence in form of confirmations, copy of I.T. returns, PAN nos. copy of bank statements etc. of the share applicants - Held that:- For want of decision on 46A and for insisting on only physical presence of the share applicants and ignoring all material available on record, the principle of natural justice have been violated in this case. Besides, for these deficiency the order is unsustainable As the facts emerge ld. CIT(A) has referred to the additional evidnce filed by the assessee and remand report dated 30-4-2012 susbmitted by assessing officer. However, there is no finding as to whether the additional evidence has been admitted or not. Besides, it appears that the additional evidence which consists of income-tax record, confirmations etc. of the share applicants necessary for discharge of the onus of the assessee has not been cross verified by assessing officer from the department's record. In the absence of consideration thereof we are inclined to set aside the issue back to the file of assessing officer to decide the same afresh in accordance with law, after giving the assessee an opportunity of being heard - Decided in favour of assessee for statistical purposes
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2015 (10) TMI 1413
Disallowance under section 40(a)(ia) - failure to deduct tax at source under section 194C and 194J and deposit the same with the Government within the prescribed time under section 200 - Held that:- The Agra Bench of the Tribunal in the case of Rajeev Kumar Agarwal Vs. ACIT [2014 (6) TMI 79 - ITAT AGRA] has held that "the provisions of Section 40(a)(ia), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer". Therefore, the Tribunal held that insertion of second proviso is a curative amendment to avoid unintended consequences is to be treated as retrospective in nature. As both the lower authorities have not looked into the matter from this angle, we set aside the orders of the lower authorities and restore the matter to the file of the AO for ajudication of the issue afresh in light of the discussion made hereinabove, after allowing reasonable and proper opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 1412
Registration under section 12AA - condition imposed by the DIT (Exemptions) while granting registration under section 12AA to obtain registration from the competent authority of the Government of Andhra Pradesh under section 43 of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987 and furnish copy of such order of registration within a period of six months - Held that:- On a careful reading of the provision contained under section 12A read with section 12AA of the Act, we do not find any condition imposed therein to indicate that for the purpose of obtaining registration under section 12AA of the Act, a trust or institution has to get itself registered under section 43 of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. The learned Departmental representative also could not bring to our notice any other provisions of the Act imposing such condition. Therefore, as the direction of the learned Director of Income-tax (Exemptions) is not in consonance with the statutory provision, the same is not required to be acted upon. - Decided in favour of assessee.
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2015 (10) TMI 1411
Penalty under section 221(1) - delay in making payment of self-assessment tax - Commissioner of Income-tax (Appeals) observed that the assessee was having meagre cash and current balances and the assessee was in financial constraints during the year under consideration thus cancelled penalty - Held that:- Though several grounds were raised before us, the learned Departmental representative was unable to point out as to whether the assessee had sufficient cash/ bank balance so as to meet the tax demand. The learned Departmental representative also could not point out as to whether any funds were diverted for non-business purposes at the relevant point of time so as to say that an artificial financial scarcity was created by the assessee. In the absence of any relevant material on record we are unable to find any infirmity in the order passed by the learned Commissioner of Income-tax (Appeals). We, therefore, uphold the orders passed by the learned Commissioner of Income-tax (Appeals) and dismiss the appeals filed by the Revenue. - Decided in favour of assessee.
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2015 (10) TMI 1410
Enhanced claim of deduction under section 10A - CIT(A) allowed at 100 per cent. against 50 per cent. claimed by the assessee - Held that:- This issue is no more res integra as it has been settled in favour of the assessee and against the Revenue by the decision in the case of CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] wherein the hon'ble jurisdictional High Court has considered the decision of the hon'ble Supreme Court in the cases of Goetze India Ltd. v. CIT [2006 (3) TMI 75 - SUPREME Court ] and National Thermal Power Co. Ltd. v. CIT [1996 (12) TMI 7 - SUPREME Court ] and finally concluded that even if a claim is not made before the Assessing Officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254 of the Act. - Decided against revenue.
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2015 (10) TMI 1409
Additional depreciation u/s.32(1)(iia) rejected - Held that:- In a situation when the Assessee is in the business of embroidery processing and for that machinery was installed then he is entitled for additional depreciation u/s.32(1)(iia). We have also noted that the Hon’ble Apex Court in the case of S.S.M & Brothers Pvt. Ltd., (1999 (1) TMI 2 - SUPREME Court) has also held that a machinery used for the production of embroidery is entitled for the development rebate therefore applying the same legal ratio the Tribunal has held that such type of machinery is also entitled for additional depreciation. - Decided in favour of assessee.
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2015 (10) TMI 1408
Deduction under section 80P(2)(a)(i) denied - such amount was interest from investments, which income fell under the head "Income from other sources" - Held that:- In the case of Renukadevi Urban Credit Co-operative Society Ltd. [2011 (4) TMI 1313 - KARNATAKA HIGH COURT] held that a reading of the Section 80P provision specifies that the assessee is entitled for deduction on the interest earned from the business of banking. The word 'banking' is not defined in the Income-tax Act. Therefore, it is necessary for us to take into consideration the definition clause in the Banking Regulation Act, 1949 wherein section 5(b) defines banking as under : '(b) 'banking' means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft order or otherwise.' From this definition, it is manifest that deposit of money which earns interest falls under the definition of 'banking'. In the instant case, the assessee had the excess money with them which was not taken by its shareholders. Instead of keeping money idle with the assessee, they have deposited the same in a private limited company so that it can earn interest. In the instant case, the appellant-assessee deposited the same in a private limited company namely M/s. Renuka Sugars Ltd. This court in identical circumstances, in CIT v. Grain Merchants Co-operative Bank Ltd. [2003 (10) TMI 21 - KARNATAKA High Court ] held that the interest earned on the deposits made by the assessee in any banking activity is exempted under section 80P of the Income-tax Act. Therefore, for the reasons stated above, we answer the quantum of law framed above in favour of the assessee/appellant and against the Revenue.
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2015 (10) TMI 1407
Unexplained jewellery found during the course of search - assessee has relied on the Instruction of the Central Board of Direct Taxes No. 1916 of May 11, 1994 laying down the guidelines that in the case of a person not assessed to wealth tax, gold jewellery and ornaments to the extent of 500 grams for a married lady need not be seized - Held that:- Tribunal in various cases has relied on the said circular to hold that the guidelines laid down by the Central Board of Direct Taxes in Circular No. 1916 are suggestive of normal quantity of gold ornaments held by any Indian family. In one such decisions rendered in the case of Asst. CIT v. Rameshchandra R. Patel [2004 (2) TMI 271 - ITAT AHMEDABAD-A] Tribunal has held that the Central Board of Direct Taxes Instruction No. 1916 dated May 11, 1994 impliedly suggests the quantity of jewellery that a family is supposed to hold as received at the time of marriage from parents and in laws. It was also held that though the said Instruction gives a guideline in the matter of seizure, the same can be extended to treat the quantum of jewellery as mentioned therein as explained, keeping in view the customs and practices in the Indian society. Thus we hold that the gold jewellery of 472 grams found during the course of search can reasonably be treated as explained, being the streedhan of the assessee's wife, having been received by her on the occasion of marriage as well as subsequent occasions over the period. Accordingly, we delete the addition - Decided in favour of assessee.
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2015 (10) TMI 1406
Disallowance of part of depreciation claimed on vehicles - Held that:- Since the financial statements clearly prove that the assessee has received rental receipts on hiring of vehicles, we are of the view that the assessee is entitled to higher rate of depreciation at the rate of 30 per cent. Accordingly, we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue and restore the issue to the file of the Assessing Officer with a direction to allow depreciation on vehicles at the rate of 30 per cent. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1405
Addition on account of "Interest paid to Bank" - Held that:- It emerges from the record that the assessee provided breakup of overdraft interest utilization before lower authorities. Without rebutting the same, it has been held that the assessee has not established the nexus. Thus, this finding of the lower authorities is not borne out from record. On merits also the assessee is eligible for overdraft interest qua the interest earned, availability of assessee's surplus funds is also not disputed. Looking into the entirety of the facts and circumstances of the case and the ITAT's judgment in assessee's brother's case, the interest paid by the assessee on overdraft facility is allowable as expenditure. - Decided in favour of assessee.
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2015 (10) TMI 1404
Rectification of mistake - rectification of the order on the ground that in para 4 of the order passed under section 12AA of the Act, the Director of Income-tax (Exemption) has observed that the registration is granted with effect from March 31, 2008 onwards, whereas, as per proviso 1 to section 12A(1) of the Income-tax Act, the registration granted shall be effective from 1st day of the financial year in which the application is made - Held that:- assessee will be entitled for exemption under section 11 of the Act for the assessment year following the financial year in which he has made the application for registration under section 12A of the Act. In the present case, there is no dispute to the fact that the assessee has applied for registration on March 31, 2008 i.e., in financial year 2007-08. Therefore, as per section 12A(2) the provisions of sections 11 and 12 of the Act will be applicable to the assessee from the assessment year 2008-09. In the order passed under section 12AA of the Act, Director of Income-tax (Exemption) has not made any observation with regard to the applicability of the provisions under section 11 of the Act from a particular assessment year. This aspect has to be examined by the Assessing Officer keeping in view the relevant statutory provisions. In these circumstances, we fail to understand the need for the assessee to file the application under section 154 of the Act. Be that as it may, considering the relevant statutory provisions as contained under section 12A(2) of the Act, we are inclined to hold that the provisions of sections 11 and 12 of the Act would apply to the assessee from the assessment year 2008-09 and not financial year 2008-09 as observed by the learned Director of Income-tax (Exemption). Accordingly, grounds of the assessee are allowed.
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2015 (10) TMI 1403
Rectification of mistake - no interest is payable to the assessee and withdrew the interest granted under section 244A of the Act as held by AO - Assumption of jurisdiction under section 154 by the Deputy Commissioner of Income-tax - Held that:- It is not in dispute that the refund granted to the assessee was withdrawn by way of rectification order under section 154 of the Act. It is also not in dispute that the hon'ble High Court of Bombay in the case of Stock Holding Corpn. of India [2014 (11) TMI 899 - BOMBAY HIGH COURT ] has held that the assessee is entitled to interest on refund under section 244A of the Act in respect of self-assessment tax paid. Considering the facts in the light of the judicial decisions referred to hereinabove, in our considered view, the Assessing Officer erred in assuming jurisdiction under section 154 of the Act on a debatable issue. The learned Commissioner of Income-tax (Appeals) further erred in confirming the order of the Assessing Officer. We, therefore, set aside the order of the learned Commissioner of Income-tax (Appeals) and hold that the order passed by the Assessing Officer under section 154 of the Act is bad in law. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1402
Revision u/s 263 - liability payable to the sub-contractors (customer) represents profit of the assessee - Held that:- We notice that the learned Commissioner of Income-tax has considered the balance- sheet of the assessee and has come to the conclusion that the assessee has raised a bill of ₹ 48.05 crores and has incurred the work-in-progress expenditure of ₹ 47.59 crores. Whereas, the assessee has demonstrated before us that the amount of ₹ 48.05 crores is the bill amounts raised by its customers against the assessee. The assessee has deducted the value of work-in-progress from the abovesaid amount, instead of showing the same in the assets side of the balance-sheet. If the assessee had shown the work-in-progress amount in the asset side of the balance-sheet, then the matter would have been more clear. Thus, we notice that there is a conceptual misunderstanding on the part of the learned Commissioner of Income-tax about the facts prevailing in this case. When the learned Commissioner of Income-tax proceeds on erroneous line on misunderstood facts and accordingly passes the revision order, in our view, the same cannot be sustained. - Decided in favour of assessee.
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2015 (10) TMI 1401
Determination of FMV as on 1.4.1981 - Held that:- CIT(A) has considered the advantages relating to the plot; report submitted by the approved valuer and all other characteristics attached to the plot. Accordingly, he determined the FMV as on 1.4.1981 at ₹ 5200/- per sq. yard. We further notice that the ld. CIT(A) has also given liberty to AO to substitute the value determined by the DVO as and when the report received from DVO. Under these set of facts, we do not find any infirmity in the order of the ld. CIT(A) on this issue. - Decided against revenue. Deduction claimed u/s 54 - Held that:- The department could not furnish any material to contradict the findings given by the ld. CIT(A). Under these circumstances, we are inclined to agree with the decision of the ld. CIT(A) that the assessee has sold the land and residential building and hence he is entitled for deduction u/s 54 of the Act. - Decided against revenue.
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2015 (10) TMI 1400
Unexplained cash credit - Held that:- As regards to Shri Vivek Chaudhary assessee was in receipt of an average salary of 6,208/- the preponderance of the probability indicates that the alleged gift by the donor cannot be accepted. A person receiving merely 6,000/- as ‘salary’ deposits of 2 lakhs in his bank account and immediately thereafter gives a gift of 2 lakh cannot be accepted as genuine. Hence, the gift of 2 lakh from Shri Vivek Chaudhary has rightly been treated by Authorities below as unexplained cash credit in the hands of the assessee. As regards other donors, the adverse inference has been drawn only on the basis that their returns of income were low. We find that there is no presumption that personal receiving small income cannot make small savings. On the facts of this case, we find that the small amount of savings as claimed by the donors cannot be rejected. In these circumstances when the confirmations is there, identity is established and return of income is also on record and no adverse features have been noticed in their bank account, the small amount given by them as gift to the assessee cannot be added in the hands of the assessee. Accordingly, except for the gift from Shri Mahabir Pd. Sharma, which we have conformed as above, the gifts from other three person added by the AO as unexplained cash credit in the hands of the assessee is deleted. - Decided partly in favour of assessee.
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2015 (10) TMI 1399
Disallowance of labour expenses - Held that:- Assessee firm is in business of project development etc. for immovable property. Assessing Officer observed that labour cost was proportionately higher as compared to usual rate in real estate business. He has shown higher labour payments in comparison to the payment for materials. The entire labour expenditure of ₹ 38,48,068/- with regard to Saket-II Project plus ₹ 18,28,063/- with regards to Saket-III Project were claimed to be incurred by assessee. The same could not be verified because all payments were not through cheques and cash payments have also been made. Accordingly, disallowance was made on this account. In appeal, CIT(A) restricted the disallowance to 10% of labour expenses of ₹ 56,76,131/-. Taking all facts and circumstances, disallowance is restricted to 5% instead of 10% done by CIT(A). Assessing Officer is directed accordingly. - Decided partly in favour of assessee.
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2015 (10) TMI 1398
Maintainability of appeal - Unexplained cash credit - CIT(A) deleted the addition - Held that:- Instructions issued in the circulars issued by the Central Board of Direct Taxes are applicable to pending cases also. Therefore we are of the considered view that Instruction No. 5 of 2014, dated July 10, 2014 issued by the Central Board of Direct Taxes are applicable to the pending cases also and in the said instructions, the monetary tax limit for filing appeals before the Income-tax Appellate Tribunal is ₹ 4 lakhs. Accordingly, without going into merit of the case, we dismiss this appeal of the Department on account of tax effect being less than ₹ 4 lakhs.
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2015 (10) TMI 1397
Cost towards abandoned film - CIT(A) allowed the claim - Held that:- Assessee is in the business of film production, claimed ₹ 3,38,58,888/- as allowable deduction on the project "fauz mein mauz" as there was no taker of the film, consequently, the assessee abandoned the same and debited the expenditure so incurred on the production of the same as work in progress and routed the same in its profit & loss account. The disallowance cannot be made on account of cost of abandoned film; hence no addition is being made on this account. See CIT vs Rajesh Khanna [2011 (9) TMI 979 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2015 (10) TMI 1396
Penalty under section 272(2)(k) - assessee has failed to file e-TDS returns for first and second quarter with delay of 252 days and 160 days - Held that:- In this case, the assessee explained that there was a reasonable cause for failure to comply with the requirement because it was not aware of the fact that a return was to be filed at the branch level. It is admitted fact that the TDS amount was deducted on time and paid to the Revenue Department and the necessary return was also filed later on, therefore, no loss of revenue had occurred on account of late filing of the return. Thus, the penalty was merely technical in nature because the Revenue has not suffered any loss on account of late filing of the return. The issue, therefore, would be covered by the decision of the hon'ble Punjab and Haryana High Court in the case of H.M. T. Ltd. Tractors Division v. CIT [2004 (8) TMI 50 - PUNJAB AND HARYANA High Court] - Decided in favour of assessee.
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2015 (10) TMI 1395
Grant of approval u/s 80G(5)(vi) rejected - land required by appellant for establishing its activities has not yet been registered in its name - AR submitted that when appellant has been registered as a charitable institution u/s 12AA of the Act and there is no doubt with regard to charitable object of appellant, denial of approval u/s 80G(5) is illegal - Held that:- A plain reading of section 80G(5) would make it clear that approval can be granted under clause (vi) if the conditions of clause (i) to (v) are fulfilled. On a perusal of the impugned order of ld. DIT(E) it is evident, the only reason on which he denied approval is land required by appellant for establishing its activities has not yet been registered in its name. There is absolutely no allegation by the ld. DIT(E) that appellant has not fulfilled any of the conditions of clause (i) to (v) of section 80G(5). Furthermore, there is no dispute the fact that appellant is a charitable institution with charitable objects, as ld. DIT(E) himself has granted registration to appellant u/s 12AA. That being the case, we are of the view, ld. DIT(E) was not correct in rejecting appellant’s application for grant of approval u/s 80G(5). Moreover, in course of hearing, ld. AR has submitted that in the meantime land has also been registered in the name of the society. Therefore, the objection of ld. DIT(E), as it appears, has also been taken care of . In aforesaid view of the matter, we set aside the impugned order of ld. DIT(E) and direct him to grant approval u/s 80G(5)(vi). - Decided in favour of assessee.
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2015 (10) TMI 1394
Disallowance of exemption from capital gains tax under section 54F - tenancy rights - whether owner of the flat has transferred and assigned all his rights and interests in favour of the assessee? - Held that:- In view of the overall facts and circumstances of the case and the amount of rent being a meager amount when compared to the amount of rent otherwise payable on such a property in the area, it is apparent that the assessee is not the mere tenant in the house. She has purchased substantial rights in the flat in question. A perusal of clause-7 of the agreement reveals that the assessee is entitled to carry out repairs and renovation in the said flat except the changes which could be detrimental to the basic structure of the building. The owner is not entitled to terminate the tenancy of the assessee in the said flat on any ground, whatsoever, except for non payment of rent. In the event of destruction of the said building or construction of a new building, the assessee/tenant is entitled to obtain tenancy in respect of the new flat having the same carpet area on the same floor without any payment or consideration or premium to the owner under the agreement. The assessee has absolute rights to transfer or assign the tenancy rights in respect of the said flat in favour of any person of her choice and to charge such consideration/premium for such transfer/assignment and the tenant/assessee will not be required to obtain any permission from the owner and will not be required to pay any premium for consideration to the owner for such transfer/assignment of the tenancy rights. The tenant is also entitled to create mortgage in respect of the tenancy rights in the said flat and also bequeath the tenancy rights in respect of any person. The rights of the assessee in the flat are not the mere tenancy rights but are substantial rights giving the assessee dominion, possession and control over the property in question with transferable rights, which are almost identical to that of an owner of the property. There is no denial that the assessee has purchased the rights in the said flat for residential purposes. It may be observed that the provisions of section 54F of the Act having regard to its beneficial objects are required to be interpreted liberally. The assessee is entitled to the benefit of deduction under section 54F of the Act. - Decided in favour of assessee.
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2015 (10) TMI 1393
Penalty u/s. 271(1)(c) - brought forward business loss can be set off against business income of the current year and the same cannot be set off against income of the current year which is chargeable under the head ‘income from other sources’ - advice given by the professional person - Held that:- Assessee claimed set off of brought forward business loss on his bonafide belief that the advice given by the professional person who is actively engaged in the profession of tax consultancy was correct. In the above circumstances, when the assessee makes a claim on the advice of a tax expert, though erroneous, and when complete particulars relating to the claim were truly and completely furnished by the assessee before the Assessing Officer, in our considered view, the assessee cannot be visited with penalty u/s. 271(1)(c) of the Act on the ground of furnishing of inaccurate particulars of income. We, therefore, delete the penalty - Decided in favour of assessee.
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2015 (10) TMI 1392
Addition on account of excess agricultural income under the head ' income from other sources' - Held that:- No merit in the appeal of the assessee. The assessee has declared agricultural income of ₹ 32 lacs and admitted before Assessing Officer that assessee and his brother and mother are also having agricultural land and their total income is around ₹ 10 lacs to ₹ 12 lacs approximately and the share of the assessee comes to ₹ 3 lacs p.a. It would, therefore, show that whatever agricultural income was established in the return of income, was not earned out of agricultural operation and was, thus, rightly considered by the authorities below to be ' income from other sources'. The onus upon assessee to prove earning of the agricultural income thus, not substantiated through any evidence on record. Even before ld. CIT(Appeals) , the assessee failed to substantiate regarding earning of the agricultural income. Therefore, authorities below were justified in rejecting the claim of assessee of earning agricultural income.- Decided against assessee.
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2015 (10) TMI 1391
Estimation of profit at 6 per cent - Held that:- Keeping in view the assessee's turnover and the nature of business being transport business, it would meet the ends of justice, if the business income is estimated at 5 per cent. of the turnover of ₹ 1,87,25,469 as against 6 per cent. determined by the Commissioner of Income-tax - Decided partly in favour of assessee. Profit estimated at a flat rate under section 68 - Held that:- The hon'ble Supreme Court in the case of CIT v. Devi Prasad Vishwanath Prasad [1968 (8) TMI 5 - SUPREME Court] has, inter alia, observed that whether in a given case the Income-tax Officer may tax the cash credit entered in the books of account of the business, and at the same time estimate the profit must, however, depend upon the facts of each case. Therefore, the facts have to be examined before arriving at any conclusion. The gross receipts of the assessee were at ₹ 1,87,25,469, 5 per cent. of which will come to ₹ 9,36,273, which is more than the sundry creditors shown at ₹ 8,81,683. Further, since books of account were rejected, the detailed scrutiny of sundry creditors was not done. There is no other source of income earned by the assessee. In view of the above discussion, we are of the opinion that no separate addition is called for in regard to sundry creditors. - Decided in favour of assessee.
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2015 (10) TMI 1390
Bad debts claim - CIT(A) allowed the claim - Held that:- We find that the issue of allowability of bad debts is covered in favour of the assessee with the decision in TRF Ltd. Vs. CIT (2010 (2) TMI 211 - SUPREME COURT) and Girish Bhagwatprasad [1999 (9) TMI 5 - GUJARAT High Court] . We find that the CIT(A) has rightly followed the decision of the Hon’ble Gujarat High Court in Girish Bhagwatprasad (supra) wherein held that once it is established that the assessee has written off the business debt, it is not necessary to establish that the said debt had become bad. The fact that the assessee has written off the amount of debt in its account books, has not been doubted by the Revenue. In these facts, following the decisions of the Hon’ble Apex Court and Hon’ble jurisdictional High Court, we decide the issue in favour of the assessee
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2015 (10) TMI 1389
Disallowance of lease equalization - Held that:- Identical issues were therein earlier assessment years als [2013 (11) TMI 64 - ITAT MUMBAI ] as held that relevant transactions are treated as finance lease and the assessee is allowed depreciation after having found him the owner of the leased assets, the depreciation allowed as per the rates prescribed in the Income Tax Act could be more than the depreciation claimed by the assessee in its books of account at the rate prescribed under the Companies Act. For example, the assessee may be entitled to claim depreciation at 100% on the leased assets in the first year itself under the income Tax Act whereas in the books of account, it might have claimed depreciation on the said leased assets under the companies Act @ 10%. In such a case, if the annual leasing charge is equivalent to 30% of the value of leased assets, the assessee would debit its P&L account by lease equalization charges to the extent of 20% of the value of asset as per the guidance note issued by ICAI. If the lease equalization charges so debited are allowed as deduction while computing the total income of the assessee under the Income tax Act in addition to 100% depreciation already allowed, the assessee will get deduction of 120% of the value of asset in the first year itself and the very purpose of adopting the concept of lease equalization based on the rationale of matching cost with the revenue would be defeated. This will result in absurdity and give misleading results. In our opinion, it is therefore necessary that while allowing deduction on account of lease equalization charges for the purpose of computing total income under the Income Tax Act, the difference between the annual lease charge of the leased assets and depreciation allowed on the said leased asset under the Income Tax Act should be taken into consideration and not the difference between the annual lease charge and depreciation claimed by the assessee in the books of account as per the Companies Act - Restored this issue to the file of the A.O. for deciding the same afresh. The assessee is directed to furnish the working of lease equalization charges based on the figures of the depreciation on the leased assets allowed as per the income Tax Act which the A.O. shall verify and allow the claim of the assessee for deduction on account of lease equalization charges based on such verification in accordance with law. - matter remanded back - decided in favor of assessee by way of remand.
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2015 (10) TMI 1388
Revision u/s 263 - as per CIT(A) order passed by AO is erroneous and prejudicial to the interest of revenue to the extent of non disallowance of subscription charges paid to the TV channels for non deduction of TDS under the provisions of section 40(a)(ia) - Held that:- Revisional powers invoked by learned Commissioner appears to be corrected because the AO has not examined the applicability of the provisions of Section 194C to be read with Section 40(a)(ia). The assessment order being silent on this aspect; hence, under the powers prescribed to learned Commissioner the matter can be examined by him. But the second aspect is whether the learned Commissioner has examined all those aspects before directing the AO to disallow the claim. In other words, learned Commissioner is expected to investigate all relevant facts and only thereupon must direct the AO to do the needful required under the circumstances. We have noted that the aspects as discussed hereinabove were not examined by the learned Commissioner based upon certain fundamental evidences such as nature of payment and the contract between the parties. Matter remanded to the Commissioner for passing a fresh order - We direct that the assessee should file requisite information and the agreements before learned Commissioner and fully co-operate in the proceedings. Side by side learned Commissioner is also expected to pass a detailed order considering the relevant provisions of the IT Act in the light of the evidences on record. Since, the matter is restored back for afresh adjudication - Decided in favour of assessee for statistical purpose
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2015 (10) TMI 1387
Transfer pricing adjustment - AO determining the Arms Length Price under CUP Method i.e. 11.40% in respect of interest free advance given to the Associated Enterprises of the assessee and in making addition of the same to returned income - Held that:- It is a fact that there was international transaction between the assessee and Associate Enterprise during the year under consideration on which no interest has been charged on the loan given to the subsidiary company. The DRP applied 11.40% interest rate on international transaction on the basis of BBB Bond and considering the risk in case of loan given to the Associate Enterprise. The loan given to subsidiary company has a lower risk as the assessee has indirect control on it. Further LIBOR + nominal adjustment has been upheld by various ITAT Benches as reasonable. Therefore, we find that interest rate proposed by the assessee @ 8.90% is reasonable as against 11.40% decided by DRP. - Decided partly in favour of assessee. Disallowance of belated payment of PF and ESI - Held that:- Where the payments on account of contribution to the provident fund, employees' State insurance, etc., are made within the due date of filing the return, such deductions are allowable - See CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2014 (8) TMI 677 - RAJASTHAN HIGH COURT] - Decided in favour of assessee. Restricting the brought forward business losses and unabsorbed depreciation - Held that:- The DRP already directed the AO to verify the assessee's claim for brought forward unabsorbed depreciation on the basis of I.T. records or assessee's records and allow the same as per law. We are also of the considered view that this issue requires reconsideration by the AO and the AO is directed to very the assessment records of the assessee and allow unabsorbed depreciation as per law. The assessee is also directed to cooperate and produce the evidence before the AO to decide the issue afresh - Decided against assessee.
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2015 (10) TMI 1386
Penalty u/s.271B - non furnishing of tax audit report u/s 44AB - determination of turnover - Held that:- The notice of penalty and the basis for the A.O. in levying the penalty was that the assessee's work-in-process (WIP) had witnessed an increase during the year for an amount beyond the prescribed limit. Though, therefore, we do not regard the ld. CIT(A) to have, in confirming the penalty, based it on a different cause; the default being the same, it does amount to a different view being adopted on the same set of facts, confirming the view, if one was required, that the matter is liable to be considered in more ways than one. The inclusion of 'purchases', as stated by the A.O. with reference to the Sales Tax Act, for the purpose of invoking s. 44AB, is without merit. This is for the simple reason that the word 'turnover' stands clearly and separately defined under the sales-tax legislation to include purchases as well. Even following the legal principles on the basis of the legal maxims ejusdem generis and noscitus A Sociis would operate to exclude 'purchases' from forming part of the qualifying criterion. Rather, a provision, for the purpose of levy of penalty, is to be even otherwise strictly construed. It is perhaps for the reason of the same not finding approval of the ld. CIT(A) that she chose not to advert thereto in the impugned order. As explained by the apex court in Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court] a penalty, even where the provision stands attracted, may lawfully be not levied where the default is not found to be a result of a conscious disregard by the tax payer of his legal obligations or a conduct contumacious, which is clearly not the case in the instant case. In view of the foregoing, we are of the clear and unambiguous view that the assessee's case, despite a default of s. 44AB of the Act, is not liable in law for penalty u/s.271B in the facts and circumstances of the case. We, accordingly, direct its deletion. - Decided in favour of assessee.
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2015 (10) TMI 1385
Revision u/s 263 - capital gain was not computed as per the provisions of section 50C - assessment order was rectified of not considering the provisions of section 50C - Held that:- We find that assessment in this case was originally completed under section 143(3) on December 17, 2011 and the order was rectified under section 154 on December 19, 2013 whereby the Assessing Officer had rectified the mistake of not considering the provisions of section 50C in the original assessment proceedings. Therefore, the date of issue of notice under section 263 is January 27, 2014 which is after the date of the rectified order dated December 19, 2013. The order dated December 17, 2011 which was sought to be rectified, did not exist. The assessee in response to the notice under section 263 had brought this matter to the notice of the Commissioner of Income-tax but the Commissioner of Income-tax without considering the submissions, passed order under section 263 for initiating proceedings de novo which is not legally valid and is not based upon the facts of the present case. Commissioner of Income-tax had no jurisdiction to pass order under section 263 against the order dated December 17, 2011 which already stood merged with the order under section 154 dated December 19, 2013. - Decided in favour of assessee.
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2015 (10) TMI 1384
Long-term capital loss (LTCL) arising on sale of shares allowed by CIT(A) - Held that:- It is an undisputed fact that the assessee had sold the shares of Suvik Hitech P. Ltd. which is a private limited company and is not listed on the stock exchange. The Commissioner of Income-tax (Appeals) while granting the relief has given a finding that the shares were transferred to the Hindu undivided family of the assessee's father which is a separate legal entity and the consideration of the same was received by the assessee from the said Hindu undivided family through banking channels. He has also noted that the shares were sold at a price which were on the basis of a report of the Government approved valuer. The Commissioner of Income-tax (Appeals) has further given a finding that the decision in the case of McDowell and Co. Ltd. (1985 (4) TMI 64 - SUPREME Court) and the other case laws were not applicable to the facts of the case. He thus relying on the decision of the hon'ble apex court in the case of Union of India v. Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME Court ] held that the transaction of sale of shares in the present case cannot be considered as a sham or a device to void tax. Before us, the learned Departmental representative could not controvert the findings of the Commissioner of Income-tax (Appeals) by bringing any contrary material on record. In view of the aforesaid facts, we find no reason to interfere with the order of the Commissioner of Income-tax (Appeals) and thus this ground of the Revenue is dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1383
Revision u/s 263 - CIT(A) directed the ITO(TDS) to look into the correctness of tax deducted at source on the entire roaming charges of ₹ 95.86 crores paid by all the 21 circles and debited to audited profit and loss account, and not only the roaming charges paid by Mumbai circle - Held that:- In the instant case, the CIT has alleged the order of ITO(TDS), Mumbai as erroneous and prejudicial, therefore, it is not correct to allege the order passed by other ITO(TDS) at different places without pointing out any fault therein. Accordingly, CIT(TDS) was to be confined to the erroneous act of ITO(TDS), Mumbai with respect to roaming charges, discount and commission pertaining to Mumbai circle only. In respect of TDS on commission and discount, we found that Hon’ble Delhi High Court in the case of CIT Vs. Idea Cellular Limited, [2010 (2) TMI 24 - DELHI HIGH COURT ] has already decided the issue against the assessee, held that commission is subject to TDS 194H. Accordingly, the CIT was justified in alleging that ITO(TDS) was not correctly appreciated assessee’s default for non-deduction of tax at source in respect of commission and discount. In view of the above, it is not a fit case for grant of any stay of the proceedings. Accordingly, we modify the order of CIT(TDS), Mumbai only to a limited extent of directing the ITO(TDS) to verify the correctness of tax deducted at source in respect of roaming charges, discount and commission pertaining to Mumbai circle only, in place of entire expenditure debited in the profit and loss account which is pertaining to all 21 TANs allotted to the assessee all over India. Assessee is directed to furnish full details with regard to the actual amount of expenditure debited in respect of roaming charges, discount and commission before the AO along with documentary evidence so as to substantiate its claim of expenditure being pertaining to Mumbai circle.
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2015 (10) TMI 1382
Disallowance of bad debts claim - assessee submitted that there is no onus on the assessee to show that the debt has become bad and mere writing off the debt in the books is sufficient to claim deduction of bad debts u/s 36(1)(vii) - CIT(A) dismissed the appeal filed by the assessee - Held that:- There is no dispute between the parties that there was fire accident in the business premises of the assessee. Under these circumstances, in our view, one should duly take into account the inability of the assessee to produce the necessary details due to the reasons beyond its control. As submitted by the Ld A.R, the names of all the parties, except "Smooth Sky Tours Pvt Ltd" shows that they are also in chemical business. Under these circumstances, in our view, there is some merit in the contention of the assessee that they are trade debtors. The very fact that these amounts are outstanding since 1997-98 (almost 10 years old) would show that the assessee had cut off the relationship with them and in this peculiar circumstance, one cannot expect that the above said parties would co-operate with the assessee. In the case of Smooth Sky Tours Pvt Ltd, the submission of the assessee is hard to accept, since the name of the above said party shows the nature of business carried on by it and hence he could not have been in the chemical business. The submission made by the assessee needs to be accepted, viz., that the above said parties excepting Smooth Sky Tours Pvt Ltd are trade debtors of the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the disallowance of the claim of ₹ 2,50,000/- relating to M/s Smooth Sky Tours Pvt Ltd. In respect of the claim relating to remaining parties, we are of the view that there is no justification in disbelieving the claim of assessee - Decided partly in favour of assessee.
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2015 (10) TMI 1381
Disallowance u/s. 40(a)(ia) delay in remitting TDS within the time allowed into Government account - Held that:- As it has been admitted by the assessee itself that the TDS has been remitted into Government account on 5.10.2009, we direct the CIT(A) to allow the TDS payment in the next year. Disallowance of depreciation - Held that:- AO has passed ex-parte order u/s. 144 of the Act and reasonable opportunity was not given to the assessee to represent its case. Assessee submitted that the assessee is in possession of relevant bills with respect to purchases made during the year under consideration. However, the same were not produced even before the CIT(A). In the interest of justice, we remit the issue back to the file of the CIT(A) to examine the bills and thereafter consider the claim of depreciation made by the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of various expenses incurred by the assessee - Held that:- CIT(A) has not applied his mind on disallowance pertaining to (1) packaging charges, commission expenses and (2) distribution charges and, therefore, we remit the issue of disallowance of expenditure in respect of the above three items to the file of the CIT(A) with a direction to adjudicate upon these items in the light of the evidences produced by the assessee before him, and decide in accordance with law.- Decided in favour of assessee for statistical purposes. Disallowance of expenditure incurred for material consumed - CIT(A) allowed the claim - Held that:- CIT(A) has given a finding that increase in material consumption has effected a corresponding increase in circulation revenue. It is the basic principle that when there is a rise in circulation revenue there should be a corresponding increase in material consumption. The consumption of raw material increases on printing more number of copies of printed publication. Hence, we are in conformity with the order of the CIT(A) on this issue and allow the expenditure incurred for material consumed - Decided in favour of assessee
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2015 (10) TMI 1380
Deduction under section 80P(2)(a)(i) denied - CIT(A) held that the assessee are not engaged in the business of providing credit facilities to its members only but extending loans to class "B" members who are all nominal members and not recognising them as members for audit, hence does not qualify for deduction - Held that:- A perusal of definition of the term 'member' clearly shows that 'member' includes 'associate member'. The reference of class 'B' members by the Commissioner of Income-tax (Appeals) is with respect to associate members. The Commissioner of Income-tax (Appeals) has denied deduction to the assessees only for the reason, that credit facilities have been extended to a particular class of members, who are not normal members of the society. We do not agree with the Commissioner of Income-tax (Appeals) on the issue. The authorities under the Act cannot go beyond their jurisdiction and make classification within a classification of members to deny the benefit of deduction. The co-ordinate Bench of the Tribunal in the case of SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. v. ITO [2014 (5) TMI 556 - ITAT CHENNAI] has held held under the very provision that for the purpose of impugned deduction, it is irrelevant so far as classification of the members in "A" or "B" category is concerned. - Decided in favour of assessee.
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2015 (10) TMI 1379
Transfer pricing adjustment - upward adjustment made u/s.92CA(3) - TPO re-calculated the arithmetic mean of comparables to 16.70% - non provide the list of comparables considered for final determination of the ALP to assessee - Held that:- We find that the objections raised by the assessee are valid. The assessee has not been provided with the list of comparables considered for final determination of the ALP. Even the objections of the assessee with respect to the business activities of the comparables have not been addressed. Thus, the principles of natural justice and fair play have been violated. The impugned order is set aside, the file is remitted back to the Assessing Officer with a direction to re-determine ALP after adopting external comparables and suitable method to determine ALP of the transactions with the AE. Needless to say that, while determining ALP, the Assessing Officer shall only take into consideration the international transactions with AE and not the transactions with un-related parties. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee and thereafter, pass denovo assessment order in accordance with law. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1378
Amortisation of project development expenses - disallowance u/s 35D - CIT(A) allowed the claim - Held that:- The expenses claimed by the assessee are not preliminary but were work in progress as per the expenditure incurred on infrastructure by it. These expenses are of the nature of revenue but cannot be claimed in one year because the assessee is to be recovered its investment as well as profits from toll tax up to toll period of respective project. The expenditure is not capital in nature as the assets owned by the State Government and used for the purpose of public. The assessee had claimed these expenses on the basis of the terms and conditions of the contract as well as estimated toll receipts for the period of the contract. When the assessee has shown revenue receipts accordingly the expenditure is to be allowed on matching principle of accountancy. After respectfully following the co-ordinate Bench decision in the assessee's own case the orders of the learned Commissioner of Income-tax (Appeals) were justified in both years. - Decided in favour of assessee.
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2015 (10) TMI 1377
Renewal of approval granted u/s 80G(5) rejected - assessee is registered as a charitable trust u/s 12A of the Act since 1976 which is continuing till date - Held that:- Plain reading of section 80G(5)would make it clear that an institution or fund would be eligible for approval firstly if it is established in India for charitable purpose and secondly if it fulfils the conditions prescribed under clause (i) to (v) of section 80G(5). So far as the first condition i.e., 'established in India for a charitable purposes' is concerned, admittedly, the assessee is a trust established in India for charitable purpose is evident from the fact that it is registered u/s 12A of the Act but, which continues till date. So far as fulfilment of conditions prescribed under clauses (i) to (v) of section 80G(5) is concerned, there is neither any allegation nor any material brought on record to show that assessee has not fulfilled those conditions. That being the case, assessee is entitled for approval u/s 80G(5) of the Act. The reasons basing on which the DIT (E) has denied approval to the assessee are extraneous and beyond the scope of statutory provisions as contained u/s 80G(5) of the Act. Another important aspect which merits consideration is the assessee was granted approval u/s 80G(5)(vi) till 31-3-2003. Therefore, when there is no change in situation which existed when the renewal was granted to the assessee in 2000, there is no justifiable reason to deny approval to the assessee u/s 80G(5). Inclined to accept assessee's contention for grant of approval u/s 80G(5). - Decided in favour of assessee.
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2015 (10) TMI 1376
Disallowance of brought forward loss and non consideration of TDS credit and advance tax payment - Held that:- After hearing both sides, we are of the opinion that this issue has to be reconsidered by the Assessing authority in the light of assessment order as well as in the light of evidence available with the assessee. Accordingly, the case for the impugned assessment year is remanded back to the Assessing Office to reconsider both issues in the light of material or evidence that may be produced by the assessee.
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2015 (10) TMI 1375
Registration under section 12 AA denied - Held that:- In the present case, as evident from perusal of case records, the assessee had duly furnished all the information as requisitioned, including objectives of the trust, latest on 18th February 2014 and the learned Commissioner did not have any issues with the same. As a matter of fact, learned Commissioner was satisfied with the same and the hearing was concluded on that aspect. As regards investment in the construction, and acquisition of land, the assessee had duly explained the same vide letter dated 10th February 2014 and the relevant part of explanation is also placed. There is nothing more that the assessee could do, nor did the learned Commissioner ask him to do anything more than that. Yet, learned Commissioner has rejected the registration on the ground that "the range Addl. CIT and the AO have not testified the source of investment". This stand of the learned Commissioner is entirely unsustainable in law. The assessee cannot have any control on the internal functioning of the tax authorities, and his application cannot be rejected on the ground that some internal reports, which are anyway non-statutory in nature, have not been received.Under these circumstances, in our considered view, learned Commissioner did indeed err in rejecting the application-particularly as there were no adverse findings on the fundamental issue regarding objectives of the trust. As for the issues regarding investments etc, unless there is a categorical finding about lack of 'bonafides' in activities, these aspects donot affect the registration and can be addressed at the time of assessment. Matter being remitted to the file of the learned Commissioner for the limited purposes of verifications regarding objects of the trust as no categorical findings have been given on the same. - Decided in favour of assessee for statistical purposes
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2015 (10) TMI 1374
Validity of reopening of assessment - Held that:- A plain look at the reasons recorded for reopening the assessment also prima facie shows the casual manner in which the exercise has been carried out simply on the basis of inputs received from the investigation inasmuch as the aggregate of eight entries, which is shown as closing balance, is again added to the entries and, as against total entries of ₹ 37,80,000, the income escaping the assessment is taken at double that amount i.e. ₹ 75,60,000. However, we refrain from making any further observations on this issue and, suffice to say, that learned Commissioner (Appeals) will deal with all issues relating to validity of reopening the assessment, including the issues touched upon above, as the assessee may raise, give a fair and reasonable opportunity of hearing to the assessee and decide the matter in accordance with the law and by way of a speaking order and to dispose of the matter within six months from the date of receipt of this order - Decided in favour of assessee for statistical purposes
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2015 (10) TMI 1373
Transfer Pricing Adjustment on account of AMP expenses - Held that:- We agree in principle with the contention that the expenses directly connected with sales should be excluded. The Special Bench in LG Electronics (2013 (6) TMI 217 - ITAT DELHI) has specifically dealt with this issue and held that the dealers commission and sales commission etc. are in the nature of the expenses directly connected with sales and hence should not be included within the overall AMP expenses for processing them u/s 92 of the Act. Since, such detail is not available on record, we direct the A.O/TPO to examine the detail of total AMP expenses and exclude such sales specific expenses in line with the decision of LG Electronics for working out the remaining amount to be considered for proceeding with the AMP expenses under the TP provisions. We therefore, set aside the impugned order and remit the matter to the file of the AO / TPO to decide this issue afresh in conformity with the Special Bench decision in the case of LG Electronics (Supra). - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1372
Disallowance of transportation charges u/s 40(a)(ia) - non deduction of tax under the provision of section 194C(2) - Held that:- Following the above ratio laid down by the hon'ble Punjab and Haryana High Court [2011 (3) TMI 1017 - PUNJAB AND HARYANA HIGH COURT] and hon'ble Himachal Pradesh High Court [2010 (9) TMI 494 - HIMACHAL PRADESH HIGH COURT] in the assessee's own case, we find no merit in the ground of appeal raised by the Revenue. The assessee in the present case is not liable to deduct tax at source out of payments made to its members and hence, no merit in the disallowance under section 40(a)(ia) of the Act. The ground of appeal raised by the Revenue is dismissed. - Decided in favour of assessee.
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2015 (10) TMI 1371
Royalty paid for using the brand name “Cryo Bank” - revenue or capital expenditure - Held that:- As per various clauses of license agreement the assessee was to pay at the time of entering of agreement certain amounts cover equipment and training and further it was required to pay regular annual royalty on all domestic sales which was to be calculated on the basis of turnover. The Ld CIT(A) therefore has rightly held the payment to be of revenue nature and has rightly allowed the relief. See case of Climate Systems India Ltd. [2009 (10) TMI 116 - DELHI HIGH COURT] - Decided in favour of assessee Depreciation on computer peripherals - @ 15% or 60% - Held that: - Computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60%. See case of BSES Rajdhani Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] - Decided in favour of assessee
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Customs
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2015 (10) TMI 1538
Implementation of LOC Policy to restrict illegal import of items and exclude Almonds – Almonds being brought to India from Pakistan are not the Almonds grown in Pakistan but Californian Almonds – Revenue contests that Almonds are grown in and produced in Jammu and Kashmir and Pakistan Occupied Kashmir; thus allowed to be traded across LoC – Specific complaint needed to be made rather than petition. Held That:- Court cannot enter into domain of Policy making and cannot decide whether trade across LOC in Almonds should be permitted or not – Found no merit in the petition; but does not restrain petitioner from making complaints to respondents for violation of policy – Decided in favour of Revenue.
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2015 (10) TMI 1537
Refusal for conversion free Shipping bills to DEEC shipping bills – Appellant contends that Superintendent of Central Excise may depute the Inspector to examine and seal the consignment if he is not available – Further contended that authorities have refused to act on the ground that Inspector not duly authorized officer and the same cannot be held against the assesse – Revenue contested that benefit of DEEC scheme and decoded licence number was not mentioned in ARE Forms – Further contends that consignments should be examined and sealed by Superintendent of Central Excise and authorities were justified in declining the request. Held That:- As the consignments have been examined and sealed by the Inspector, it cannot be held that assessee is not entitled to benefit – Moreover, without an authorization by Superintendent of Central Excise, Inspector cannot examine and as such both the authorities have not applied their mind in this direction – Appeal allowed and order set-aside – Matter remanded back to the Commissioner of Customs – Decided in favour of the Assessee.
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2015 (10) TMI 1536
Petition against the order under Regulation 23 - Prohibition under Customs Brokers Licensing Regulations 2013 - Impugned order is challenged on grounds of opportunity of hearing not given to Petitioner – Respondent contends that order under Regulation 23 is in the nature of interlocutory order for and no show-cause notice is required to be issued – Held That:- Impugned order cannot be sustained and the same passed by the authority not vested any power to exercise jurisdiction under Regulation 20 - Liberty is granted to Respondent to pass fresh order, after giving opportunity of hearing to the Petitioner – Decided in favour of the Petitioner.
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2015 (10) TMI 1535
Appeal to remove consignments from the Premises – Petitioner functions as Container Freight Station (CFS) under Section 45 of the Customs Act, 1962 – Petitioner contends that license issued to them for the operation of CFS cancelled and as such consignments seized be removed from their premises - Held That:- There is no justifiable reason for retaining goods in the premises of the Petitioner as the same does not have a license of CFS – Respondents are directed either to auction the confiscated goods or otherwise shift them from the place of the Petitioner – Decided in favour of the Assessee.
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2015 (10) TMI 1534
Waiver of pre-deposit to entertain appeal under Section 128 – Petitioner contends that the same were declined of the right to file appeal for non-compliance of Section 129E of the Customs Act - Revenue holds that Petitioners are liable of pre-depositing 7.5% of the penalty imposed for filing appeals – Held That:- Impugned order is set aside and Respondent is directed to consider the appeals without insisting upon the pre-deposit of 7.5% of the penalty – Decision made in the case of Fifth Avenue Sourcing Private Limited v. Commissioner of Service Tax [2015 (7) TMI 391 - MADRAS HIGH COURT] followed – Decided in favour of the assessee.
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2015 (10) TMI 1533
Appeal to settle the payment of duty – Petitioner holds that the same is ready to pay the amount of differential duty along with interest within the prescribed time – Revenue contends that they do not agree to settle the matter and amount being accepted in full and final settlement of all claims and have no objection if the impugned order is quashed and set aside – Held That:- It will not be proper to bind the petitioners in terms of this undertaking any longer and once the Revenue has not agreed to the proposal – Order quashed and set aside and the application is restored for settlement - Matter remanded back to the Commissioner – Decided in favour of the Assessee.
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2015 (10) TMI 1532
Import of Palmolive oil - Exemption under Rule 8 of the Customs (Import of goods to concessional rate of duty for manufacture of excisable goods) Rules 1996 – Appellant contends that loss of .07% was on account of the fact that some of the oil remained stuck on the side of the container which was transporting the oil and they are entitled for the exemption – Held That:- the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage - Impugned order is quashed and appeal allowed - Decision made in the case of BPL Display Devices Ltd [2004 (10) TMI 92 - SUPREME COURT OF INDIA] followed - Decided in favour of the Appellant.
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2015 (10) TMI 1531
Appeal for Bail – Offense under Section 135 read with Section 104 of the Customs Act, 1962 – Petitioner contends that he has been detained in custody for about 46 days on the allegation of transporting about 1 kg of gold and no interrogation is done so far – Petitioner states that his detention would serve no fruitful purpose thus bail appealed – Revenue contends that petitioner was transporting about 6 kgs of gold which has a value of about ₹ 1 crore 60 lakh – Held That:- On consideration of the nature of allegation made against the petitioner, the gravity of the offence, the period of detention of the petitioner in custody and the progress of investigation of the case, I am inclined to grant bail to the petitioner on some conditions – Bail Granted conditionally.
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2015 (10) TMI 1530
Stay the reference order passed by the Tribunal - Tribunal, without even going into the merits of the case, passed an order referring the matter to the Larger Bench and the same does not disclose the compliance of law as laid down by the Apex Court in its context – Respondent seeks time to prepare the matter and argue the same at length – Held That:- No need for the matter to be referred by the Larger Bench; stay granted as such and issues with regard to waiver of pre-deposit will be considered with other appeals.
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2015 (10) TMI 1529
Appeal for Condonation of Delay – No affidavit filed by the Appellant till date explaining the proper reasons for delay of 661 days in filing the Appeal – Held That:- Vague statement has been given by the Appellant for the delay – Application is rejected and the appeal stands dismissed – Decided against the Appellant.
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2015 (10) TMI 1528
Refund of SAD under Notification No. 102/07 – Commissioner rejected refund of SAD under provisions of Notification No. 102/07 on ground of unjust enrichment – Held that:- admitted fact that appellant have shown amount as receivable from Customs in their Balance-sheet as per certificate issued by C.A – Evident from Sales Invoice that SAD has not been shown separately – It is also not intention of Government to allow importer to recover 4% CVD from buyer as well as to claim refund of this amount from Customs – In this view of matter, Commissioner has erred in holding that appellant have passed burden of CVD/SAD to buyer – Appellant would be entitled to refund of SAD – Thus, appeal allowed with consequential relief – Decided in favour of assesse.
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2015 (10) TMI 1527
Benefit of Status Holders Incentive Scrip scheme - Appellants imported goods under Status Holders Incentive Scrip scheme and claimed benefit of Notification No.104/09 – Adjudicating authority and commissioner denied benefit of notification as goods were not covered under SHIS scheme as goods are not related to chemical industry and is only for generation of electricity – Held that:- evident that SHIS Scrip is issued to manufacturer of specific sector for import of capital goods for upgradation of technology – It is also evident that import of capital goods under SHIS scrip, under Notification 104/09 is for purpose of upgradation of technology and also it is sector specific – What is imported by appellants are accessories of Steam Turbine Generator used in generation of steam which in turn used for generating electricity whereas SHIS is applicable only for import of capital goods for Basic Chemical Industry – Import of accessories for Steam Turbine Generator cannot be considered as upgradation of technology of capital goods of chemical industry – Therefore, appellants are not eligible for benefit of SHIS scrip under Notf no 104/09 – Impugned order upheld – Decided against Appellant.
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2015 (10) TMI 1526
Clandestinely clearance of duty free inputs – Demand of duty – It was alleged that appellant sold imported chemicals of different types to merchants on cash basis without payment of duty of Central Excise and Customs – Show cause notice was issued proposing demand of duty alongwith interest for clandestinely clearing duty free inputs without payment of duty – By impugned order, demand of duty alongwith interest and penalty was confirmed – Held that:- entire case was made out on basis of statement of Director of Company and statements of other two processors – Admittedly adjudicating authority has denied opportunity of cross-examination – Court of considered opinion that appellant should be allowed cross-examination of two processors – Actual consumption of imported raw material, should be considered by adjudicating authority – Impugned order set aside – Matter remanded to decide afresh – Decided partly in favour of Appellant.
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2015 (10) TMI 1525
Condonation of delay - violation of the provisions of Section 129D(3) of the Customs Act - Held that:- Tribunal is not empowered to condone the delay in passing of review order, as provided under the provisions of sub Section 3 or Section 129D of the Customs Act. Thus I hold that the appeal is time barred and not entertainable by this Tribunal in absence of a legal review order under sub Section 3 of Section 129D of the Act. - Decided against Revenue.
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Corporate Laws
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2015 (10) TMI 1524
Petition under Sections 247, 250, 397 to 405 of the Companies Act, 1956 – Prevention of oppression and mismanagement – Petitioner contends that HTA had illegally linked the shares with the employability and compelled to surrender his share owned by him on ceasing to be its employee – Further contends that prohibition be imposed concerning transfer of shares under provision of Section 250 of the Act and directing 'HTA' to pay to the Petitioner price of the share at current rate prevalent in the market. Respondent contends that Petitioner was allotted share from time to time thus the issue is not in dispute - Further contended that a member when ceased to be an employee of HTA he would lose his right to transfer the share held or owned by him and he would be entitled to an amount equivalent to the face value of the share held by him on the transfer of shares - Petition not maintainable u/s 397 to 405 as Petitioner fails to satisfy the requirement of Section 399. Held That:- Petition not maintainable u/s 247 and 250 of the Act as no investigation in the affairs of the HTA would be called for as the Petitioner himself shown the WPP (Manutius) holding 74% shares of HTA and 24% shares held by KTA employees - Petition u/s 397 & 398 not maintainable as petitioner fails to answer the requirement of Section 399 – In case of conflict between an agreement amongst shareholders placing restriction on their right of transfer and Articles of Association of a Company then latter prevails – Petition dismissed with costs – Decided in favour of the Respondent.
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2015 (10) TMI 1523
Appointment of Liquidator - Interim Restrain order for disposal of company's assets – Respondent proposes to dispose of its assets in pursuance of the CDR scheme; without making any payment to Applicant and with a view to defeat the legitimate claim of Applicant – Appellant sought an order of provisional liquidator; Respondent submits that no jurisdiction of court lies to either continue its order of protective relief qua the property of the company. Held That:- Respondent shall not dispose of any of its assets or create any third party rights and shall keep the Petitioner informed about the progress and status of the implementation of the C.D.R. Scheme and declaration of relief undertaking - Petitioner granted liberty to press for admission of the petition and relief in the matter as and when the notification of relief undertaking ceases to apply to the Respondent – Decided in favour of Appellant.
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Service Tax
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2015 (10) TMI 1583
Demand of service tax - storage and warehousing service - Held that:- issue is no more res integra as this bench in the case of Maersk India Pvt. Ltd. vs. CCE & C, Raigad reported in [2012 (11) TMI 612 - Cestat, Mumbai ] has relied upon the Board's Circular, as well as, the view taken in the case of Mysore Sales International ltd., vs. Asst. CCE & ST, Bangalore reported in [2010 (12) TMI 453 - CESTAT, BANGALORE] held in favour of appellant/assessee therein. - impugned order is not sustainable and the impugned order is liable to set aside - Decided in favour of assessee.
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2015 (10) TMI 1582
Challenge the SCN issued for Levy of Service Tax service tax under section 65(105)(zzze) of the Finance Act, 1994 - Club and Association Service - Sale of space or time for advertisement – Held That:- Provisions of Section 65(105) (zzze) stand ultra vires and unconstitutional as decided in the case of Ranchi Club Ltd. v. Chief Commissioner of C.Ex. & S.T., Ranchi Zone [2012 (6) TMI 636 - Jharkhand High Court] – the petition partly succeeds and is accordingly allowed to the following extent. The impugned show-cause notice dated 3rd August, 2010 issued under section 73(1) of the Finance Act, 1994 is hereby quashed and set aside to the extent the same seeks to invoke the provisions of section 65(105)(zzze) of the Finance Act qua the noticee therein. – Decided in partly in favour of assessee.
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2015 (10) TMI 1581
Liability of Service Tax for felling, conversion, debarking, collection, stacking, transportation and delivery of pulp wood from the captive plantation – Revenue contends that same falls under Business Auxiliary Services – Activity undertaken is of processing or manufacture? – Malafide on part of assessee to supress facts of work orders – Imposition of penalties pleaded by appellant to be set aside. Held That:- it is not a simple case of cutting of trees and then transporting the cut and debarked wood to the premises of their client. The appellants are required to convert the cut wood into billets of specific sizes, which sizes are fit for use in the pulp plant. - the activities undertaken by them in any case amounts to processing. However, such an activity may amount to manufacture also as contested by the learned advocate. Inasmuch as the issue of manufacture was never raised before the authorities below, we deem it fit to set aside the impugned orders and remand the matters to the original adjudicating authority for the purpose of deciding on the said plea of the assessees Extended period of limitation - Held that:- the Revenue, though in the context of dispute involving the Mysore Paper Mills, was aware of the fact of placing work orders upon various contractors, for extraction collection, debarking stacking of the pulp wood. From this it becomes clear that there was no malafide on the part of the contractors to suppress the fact of placement of work orders upon them - No malafides found on part of assessee. Issue of imposition of penalties in respect of demands which are within the limitation period left to Assistant Commissioner to decisde – Order set aside and matter remanded back – Appeal disposed in favour of Assessee.
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2015 (10) TMI 1580
Service tax liability for auctioning of abandoned cargo – Excess amount earned on auction of cargo shown in income – Amount rendered is of storage and warehousing services or not? Held That:- Issue is no more res integra; amount cannot be taxed under storage and warehousing service - Appeal filed by Revenue is devoid of merits - Impugned order is set aside – Decision made in the case of Gateway Distri Parks Ltd. Vs. Commissioner of Central Excise, Raigad [2013 (4) TMI 739 - CESTAT MUMBAI] and Central Warehousing Corporation [2015 (10) TMI 1583 - CESTAT MUMBAI] followed – Decision made in favour of assessee.
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2015 (10) TMI 1579
Waiver of Pre-deposit with interest and penalty – whether tribunal has erred in directing pre-deposit – Appellant contends that such PSU’s are not called for pre-deposit but interest of justice is protected by taking an undertaking or bond – Respondent contends that appeal does not involve any substantial question of law and discretion found at initial stage need not be interfered. Held That:- Observations made by the Tribunal are tentative and only for the purpose of disposal of the application seeking waiver of condition of pre-deposit and beyond that, Court shall not influence the Tribunal while deciding the Appeal finally – Time to deposit the sum extended – Decided in favour of Revenue.
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2015 (10) TMI 1578
Demand of Interest – Service Tax liability paid under protest - Whether after payment of entire dues by the acquiring bank, still a demand can be made against the issuing bank is yet to be adjudicated? Held That:- Issue that has been decided by the Tribunal Mumbai so also at Delhi pertains to the period prior to 1-5-2006 - Clarification from Respondent sought whether on a representation made by the Indian Bank’s Association a decision has been taken by the C.B.E. & C. or not – Further affidavit required as to whether in fact a meeting was held between Indian Bank’s Association and Mr. Reddy, the Addl. Commissioner of Service Tax, Mumbai.
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2015 (10) TMI 1577
Denial of CENVAT Credit - Construction service - Held that:- manufacturer of goods is entitled to avail Cenvat credit on the services received for setting up of a factory. It is not disputed that construction service has been received by the respondent for setting of their factory. Therefore, the Boards Circular cannot be relied upon. In these circumstances, I hold that learned Commissioner (Appeals) has rightly allowed the Cenvat credit to the appellant for construction services which was used by the respondent for setting up of their factory. - Decided against Revenue.
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2015 (10) TMI 1576
Denial of CENVAT Credit - GTA services - Held that:- In the facts of this case it is the appellant who is the receiver of transport service. It is immaterial as to who facilitates the transportation to the appellant. Accordingly I hold that the appellant is entitled to service tax credit or CENVAT credit on the transportation charges incurred for transport of inputs and materials to its factory. - Decided in favour of assessee.
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2015 (10) TMI 1575
Denial of CENVAT credit - construction services and manpower recruitment agency service - Held that:- lower authorities should have got the details verified from the concerned Range of the service provider, if in doubt, instead of holding against the appellant. As regards the surrendering of licence by the Radhika Engineering, the service provider, I find that the service tax registration certificate was surrendered on 16.04.2007 for the services rendered on 2005-06 after service tax liability has been discharged. In my view if the service tax liability has not been discharged by the registered unit, Revenue will not accept surrendering the registration certificate. In the absence of any contrary evidence, I have to hold that the service tax paid by the service provider during 2005-06, though the appellant has availed CENVAT credit belatedly which is well within the provisions of CENVAT Credit Rules, 2004. - Decided in favour of assessee.
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2015 (10) TMI 1574
Denial of CENVAT Credit - credit of service tax on the Commission paid to the agents for sale of finished goods - Held that:- It is evident from the show cause notice that there is no dispute that the appellant sold the goods through Commission Agents and paid the Commission to the Agents. The dispute relates to eligibility to CENVAT credit on the service tax paid on Commission. The findings of the Commissioner (Appeals) that the appellants are selling the goods to their dealers are totally inconsistent witht the allegation in the show cause notice. Hence, such order can not be sustained in the eye of law. - impugned order is set-aside. The matter is remanded to the Commissioner (Appeals) to decide afresh on merits as well as on limitation - Decided in favour of assessee.
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2015 (10) TMI 1571
Denial of CENVAT Credit - scope of the show cause notice - input services - Availment and utilization of credit before actual installation of the capital goods - Port Services - service tax paid under section 66 A of the said Act is not qualified to avail the Cenvat credit as the same has not been specified under Rule 3 of Cenvat credit Rule 2004 - Held that:- Issues raised in the questions proposed do not find place in the show cause notice. - In the show cause notice, the assessee was not called upon to state as to whether the services of “Consulting Engineers” and “Banking and other Financial Services” are “input services” of the respondent or as to whether the capital goods were used for providing “output services” provided by the respondent viz. “Port Services”, etc. Evidently therefore, in the present appeal, the appellant seeks to challenge the impugned order passed by the Tribunal on grounds which were never subject matter of the show cause notice. In the light of the settled legal position as emerging from the above referred decisions of the Supreme Court, that the show cause notice is the foundation of the demand under the Central Excise Act and that the order-in-original and the subsequent orders passed by the appellate authorities under the statute would be confined to the show cause notice, the question of examining the validity of the impugned order on grounds which were not subject matter of the show cause notice would not arise. - In the absence of any infirmity in the findings recorded by the Commissioner or the Tribunal, there is no warrant for interference. The questions proposed by the appellant which were not subject matter of the show cause notice, do not arise out of the impugned order passed by the Tribunal - Decided against Revenue.
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Central Excise
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2015 (10) TMI 1570
Valuation - Section 4 or 4A - whether the Powder Hair Dye (PHD) be assessed to duty by determining its value under Section 4 or under Section 4A of CEA, 1944 - whether the appellant is required to print/affix MRP on sachets and/or on the mono pack containing 6/8 sachets - Held that:- both sachets and mono pack are capable of being sold in retail, a situation fairly accepted by the Appellant. But, the Appellant insisted on their plea that it was not their intention to sale the sachets in retail but the mono pack. Needless to mention that the provisions of Section 4A would be applicable only when there is a legal requirement of printing/affixing the MRP on the package of the notified goods under the Standards of Weights and Measures Act, 1976 or Legal Metrology Act, 2009. Neither the appellant nor the Revenue collected any information/opinion on the said issue from the appropriate authority i.e. Legal Metrology Department of the State to the effect that whether the appellant would be required to affix the MRP on the sachets or on the multi piece packages or on both under the aforesaid Acts and the Rules made thereunder. - The method of valuation under Sec.4 of CEA,1944 and consequently computation of the demand adopted by the Ld.Commissioner, in the respective appeals, in our opinion is erroneous. It is an admitted fact that the appellant removed the goods from their factory to the Depot from where the same were sold. We find in Appeal No.( E/70200/13), the adjudicating authority has adopted average selling price whereas in appeal No. (E/76111/14), the adjudicating authority has adopted the abated value i.e. after deducting 35% from the declared MRP as the basis for determination of value under Section 4 of CEA, 1944. In our opinion, both the methods are incorrect in as much as since the goods were not sold from the factory but sold from the depots, therefore, Section 4(1)(b)read with Rule 7 of the Central Excise Valuation Rules, 2000 are relevant for determination of the assessable value. - Impugned Orders are set aside - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1569
Exemption to textile products - whether jute bags manufactured by the Appellant and classifiable under Chapter Heading 6305, printed with some particulars of other person, could be considered as bearing a brand name or sold under a brand name. - Denial of benefit of Notification No.30/2004-CE dated 09.7.2004 - whether the appellants are eligible to the benefit of Notification No.30/2004-CE dated 09.7.2004 as amended by Notification No.12/2011-CE dated 01.3.2011 and Notification No.30/2011-CE dated 24.3.2011 - Held that:- Facts in issue in Prakash Industries' case was that the appellants therein were manufacturers of HDPE sacks solely for the supply to M/s Orissa Cement Ltd. on which they had printed/affixed the brand name of the buyers. The Appellant claimed the benefit of SSI exemption Notification No.175/86-CE dated 1.3.1986. On reference of the issue, whether the Appellant are eligible to the said exemption, the Larger Bench of the Tribunal had observed that affixation of the buyer's name on the HDPE sacks/bags, would not come within the mischief of para 7 of the Notification No. 175/86-CE, accordingly, the benefit of SSI exemption Notification No.175/86 dated 1.3.1986 could not be denied to them. The reasoning and observation of the Larger Bench of the Tribunal in this case was specifically overruled by the Hon'ble Supreme Court in Kohinoor Elastics Pvt. Ltd.'s case [2005 (8) TMI 115 - SUPREME COURT OF INDIA]. On affixing the brand name/trade name of another person, an assessee would be ineligible to avail the benefit of the exemption notification. It flows from the said observation that it is not necessary to examine the reason/cause for affixing the brand-name of another person. It is also clearly laid down that trade does not indicate a trade in its general sense that the goods be brought to the market for sale, but the dealing/trade between the assesse-manufacturer and its customers would meet the requirement. Also, it has been clearly laid down that the goods manufactured need not be sold to the customers, but even if it is used captively by the person whose brand name has been used, the manufacturer would not be eligible to the benefit of the said notification. - undisputedly the appellants have affixed the names, logos and other particulars of another person i.e. FCI etc. to whom the bags are sold/cleared. Therefore, in our opinion, on affixing the particulars which have also been considered as branding by the jute commissioner, since branding charges are also included in the price of the jute bags, hence, it cannot be denied that the jute bags bear the brand name of another person and accordingly not eligible to the benefit of Notification No.12/2011-CE dated 1.3.2011 and 30/11-CE dated 24.3.2011. Show Cause Notices were issued proposing denial of the benefit of the exemption Notifications, which have been adjudicated by the Ld. Commissioner on the basis of a fair interpretation of the Notifications and the principles of law settled by the courts and Tribunal on the issue and concluded that the benefit of the exemption notification is not admissible. - we set aside the impugned Order to the extent of imposition of penalty and also confirmation of the demands, wherever extended period of limitation has been invoked. In such cases, the duty however, should be computed for the normal period of limitation - Decided partly in favour of assessee.
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2015 (10) TMI 1568
Classification of goods - Ayurvedic formulations / medicaments - products viz., 'Neelibhringadi Thailam (Gingelly Oil base), Neelibhringadi Thailam (Coconut Oil base) and SugandhamThailam and Danta Dhavana Churnam' - whether the impugned goods are classifiable under chapter 3305.99 according to the Revenue or classifiable under chapter 3303. 39 according to the respondents and whether Danda Dhavan Churam is classifiable under chapter 33.06.10 according to the Revenue or classifiable under chapter 3303.39 according to the respondents - Held that:- Commissioner (Appeals) in his impugned order had observed that the assessees products as certified by various Doctors and Consumers to show that the impugned goods were prescribed and used as medicines and the assessee had been able to satisfy the common parlance test and held that the impugned products in question are ayurvedic medicaments, which will be classifiable under the heading 3003.30 of the CETA, 1985 and not under 3305.10. By following the Apex Court decision [2013 (8) TMI 467 - SUPREME COURT] and the decision of the Tribunal [2007 (2) TMI 573 - CESTAT, AHMEDABAD], the impugned order is upheld - Decided against Revenue.
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2015 (10) TMI 1567
Denial of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of goods - Violation of principle of natural justice - Opportunity of cross examination not granted - Held that:- there are direct allegations against the appellants and therefore, their involvement cannot be ruled out. In the circumstances the benefit of the aforesaid decision of the Hon’ble High Court [2013 (5) TMI 705 - GUJARAT HIGH COURT] cannot be extended to the appellants. - The appellants had given detailed reasons for seeking cross-examination of witnesses. It is seen that the cross-examination has been denied solely on the grounds that there is hard evidence which is corroborated by the statements and therefore no cross-examination is necessary. It is observed that this is not sufficient ground for denying cross-examination of witnesses whose statements have been relied upon. If cross-examination is to be denied then cogent reasons for denying in each case need to be given. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1566
Clandestine manufacture and removal of goods - moisture contained in tobacco - Confiscation of goods - Imposition of penalty - Held that:- the appellant has produced a report dated 14th February 2007 of Harcourt Butter Technological Institute, Kanpur which confirms that moisture content is 15.38%. The said report produced by the appellant has been brushed aside by the Adjudicating Authority which is not proper. As it is an admitted fact that tobacco being an agriculture product having moisture content and no sample of raw tobacco has been drawn to ascertain the moisture content, the demand on the basis of consumption of tobacco in a particular period on which test is conducted later on is not sustainable. There is no evidence to show the excess consumption of the other raw materials to be used in manufacture of Gutkha in the show cause notice. As without the usage of other raw materials which forms 92% quantity to manufacture Gutkha the demand is not sustainable. - he is not going by the balance sheet figure and test report only, but Department has adduced sufficient corroborative evidence but no such evidence has been discussed in the impugned order. Moreover, the statements relied upon by the Adjudicating Authority of various persons, the cross-examination has not been afforded to the appellant for fair trial. The allegation of clandestine manufactured and removal of goods is not a simple allegation, the allegation is to be supported by sufficient and required evidence as held by this Tribunal in the case of Arya Fibres Pvt. Ltd. vs. CCE, Ahmedabad - II reported in [2013 (11) TMI 626 - CESTAT AHMEDABAD], wherein the following principals have been laid down to allege clandestine manufacture/removal - Without establishing the above evidences, the demand on account of clandestine manufacture/removal is not sustainable - Decided in favour of assessee.
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2015 (10) TMI 1565
Duty demand - Manufacture - Job works within the premises of principal - Demand notices were issued to the appellants demanding Central Excise duty on the ingots manufactured by them on the grounds that the appellant's are manufacturers in their own right and should have obtained separate registration - Held that:- In the very same facts of the impugned case the tribunal has already held that the same activities are entitled to be treated as that of a job worker. The said decision of tribunal [2015 (7) TMI 183 - CESTAT MUMBAI] drops the demand of duty on the waste cleared by the AEL to the appellants treating it as job work. Since the ratio of the case is squarely applicable to the present case the appellants have to be treated as independent manufacturers doing jobwork for AEL. Since the clearance of aluminium waste is treated as clearance for jobwork the same treatment is to be given to the material manufactured and returned by appellants. As a result the demands can not be sustained. - Decided in favour of assessee.
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2015 (10) TMI 1564
Availment of CENVAT Credit - input services - nexus with manufacture - Suppression of facts - Inadmissible documents - erection, installation and commissioning services - Held that:- Appellants have paid excise duty on the same price on the invoice price of the conductors which includes the installation charges. Accordingly, the said services of installation, erection and commissioning provided by a third party have been utilised by the appellant in the course of its business of manufacture and sale. Accordingly, I find that the said services have been utilised in the course of manufacturing and accordingly, the Cenvat credit is allowable. The appellant also points out that out of total amount of ₹ 3,29,697/- in respect of erection and commissioning and installation services of ₹ 86,808/- on account of credit on service tax paid by sub-contractor wherein the appellant have undertaken sub-contract for erection and commissioning. The appellant also paid service tax on the provision of said services and as such the input service credit taken of ₹ 86,808/- is allowable which is paid by the sub-contractor. I hold that the said credit of ₹ 86,808/- also allowable. It is also held that the services in respect of clearance of the final product from the place of removal. Under the circumstances, if the premises of the buyers as the appellant had taken both selling of the products as well as the installation which is included in the selling price. So far as the credit taken on the telephone service is concerned, it is an admitted fact that the said telephone connections although justifying that it occupies in the factory premises, in the admitted that during the period under consideration, the appellant is on the occupation of the premises in the case manufacturing activities and they have utilising the telephone credit I also find that the appellant paid most of the bills for the telephone through account pay cheques and the payments are reflected in the bank statements. Under the circumstances, I hold that the Cenvat credit is allowed. As regard denial on the ground of inadmissible documents appellant have not brought any additional records even at the first appellate stage before this tribunal in support of the allowability of the credit disallowed. As such, I uphold the allowance of input credit on account of defective documents. - Decided partly in favour of assessee.
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2015 (10) TMI 1563
SSI Exemption - manufacture of readymade garments bearing brand name or trade-name of another person - export of goods - contravention of procedures, conditions and provisions specified under Rule 18/ Rule 19 of the Central Excise Rules, 2002 read with Notification No. 42/2001-CE (NT) dated 26.6.2001 - penalty under Rule 25 of the Central Excise Rules, 2002 - Held that:- Exemption shall not apply to the goods bearing a brand name or trade name of another person, except where the goods are manufactured in a factory located in Rural Area. In other words, it is clear that if the goods are manufactured by a factory located in Rural Area, as is claimed by the appellants, the goods will be eligible for the SSI exemption granted by the said Notification No. 8/2003-CE dated 01.03.2003. It is further observed that Simplified Export Procedure for export of ready made garments prescribed vide Circular No. 705/21/2003-CX dated 08.04.2003 is meant for exempted units. It is also observed that in the communication dated 25.09.2014, subsequent to the impugned order-in-original, the Assistant Commissioner (Review), Central Excise & Customs, Daman has categorically stated that the ready made garments in question here have been exported. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1562
Manufacture - Marketability - Intermediate product - Captive consumption - During the manufacture of beer, an intermediate product wort comes into existence and this product is captively consumed by the respondent-assessee. - held that:- No grounds or any evidence brought forward by the Revenue against the above findings of the Tribunal. In the absence of any such evidence, we respectfully follow the earlier order of this Tribunal [2003 (9) TMI 485 - CESTAT, MUMBAI] - Decided against Revenue.
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2015 (10) TMI 1561
Duty demand - Seizure of goods - Undervaluation of goods - Non accounting goods - Reliance on diary of Production manager - Held that:- Appellant cannot accept the diary on piecemeal basis. Once they have accepted the contents of the seized diary in respect of demand of duty of ₹ 5,75,062.00 tallying with finished goods register, it is the duty of the appellant company to justify the clearance of goods on the basis of the said diary on demand of ₹ 13,64,527.00, which they failed to do so. Hence, the demand of duty of ₹ 13,64,527.00 is justified. But, we find force in the submission of the Learned Advocate in respect of demand of duty of ₹ 5,75,062.00, as the lower authorities should have verified to documents as placed by the appellants. - appellants cleared the goods under the description of Second Grade Enameled Wires of Copper-SWG Mix Size . The Adjudicating Authority observed that the cartoons were indicating F or M for fine or medium type of goods. It was observed that the description the invoices were not tallying with the grade, size as mentioned in the production slip. We find that it is evident from the record that the appellant company cleared the goods, mix size, medium grade as mentioned in the invoices and cartoons, which were arising after the production stage. The material available on record would show that the goods cleared second quality. Thus, the finding of the Adjudicating Authority that these goods are not second quality is without any basis and the demand of duty is not proper. The penalty imposed on the appellant company and the dealer are to be determined as per outcome of the denove adjudication. In any event, the penalty imposed on the employees of the appellant company cannot be sustained for the reason that they worked on the basis of the instruction of the employer. There is no material available the employees of the appellant company had gained in any manner. - Decided partly in favour of assessee.
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2015 (10) TMI 1560
Claim of refund - period of limitation - duty was paid under protest or not - Denial of exemption under the Notification13/94-CE(NT) and 8/96 - Classification - Held that:- Appellant protested the recovery of duty by the ordinance factory from him and later contested the claim right up to the Hon ble High Court. It is only when High Court decided that the civil Courts did not have jurisdiction in the matter they approached the department with a refund application. There is no doubt that the appellants have been protesting against recovery of this amount right from the day the same was recovered from them. However can this be considered a valid protest for the purpose of section 11 B. Tribunal in the case of Kota Oxygen Limited [2000 (9) TMI 163 - CEGAT, NEW DELHI] has ruled that the duty paid while contesting the said payment before appellate forum is to be considered as duty paid under protest. For this the tribunal relied on the decision of Hon ble Supreme Court in case of Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT OF INDIA]. There is no evidence that the delay or litigation was deliberate. In the instant case it is apparent that the appellants were contesting the liability right from the date of payment of duty before various forums. Thus it can be considered that the duty was paid by them under protest. In view of above the refund claim cannot be considered as time-barred. Issue of classification and availability of exemption - Held that:- impugned order does not deal with the same. No findings have been given on the matter of classification in the impugned order and to that extent it is a non-speaking order. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1559
Denial of CENVAT Credit - emergence of byproducts which is exempted from duty - Held that:- The arguments of revenue are largely based on the plain reading of the provisions of rule 6. The argument of the revenue is that a part of the inputs on which credit has been claimed are used in production of the byproduct namely blast furnace gases. It has therefore been argued that credit of such quantity of inputs as are used in the production of the byproduct need to be reversed, and if that has not been done in terms of sub-rule 3 of rule 6 of CCR a certain amount needs to be reversed. The reliance placed by the revenue on the decision of Hon’ble Apex Court in case of Commissioner of sales tax versus Bharat petroleum Corporation Limited [1992 (2) TMI 250 - SUPREME COURT OF INDIA], is misplaced as the issue in the said case was leviability of sales tax on byproduct sold. In the instant case the issue is substantially different from that. If in that process certain unintended byproducts emerge as a technical necessity then it cannot be said that part of the said inputs have been used in Manufacturer of the byproducts. In other words the credit of that quantity of raw materials shall be allowed which is required for manufacture of the intended quantity of final products, irrespective of the fact that certain byproducts emerge as technical necessity. To support this proposition the appellants have relied on the decision of the Apex Court in the case of Hindustan zinc Limited (2014 (5) TMI 253 - SUPREME COURT). It is seen that Hon’ble Apex Court has laid down the ratio that when a byproduct emerges as a technical necessity, it cannot be said that any inputs have been used for the Manufacturer of the byproduct. The ratio of this judgement clearly applies to the facts of the impugned case. Moreover on perusal of the clarification dated 3.4.2000, it is seen that CBEC Circular also agrees with the said ratio laid down by the Hon’ble Apex Court. - Decided in favour of assessee.
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2015 (10) TMI 1558
Denial of CENVAT Credit - appellant availed cenvat credit on the cement used for treating the effluent jarosite before dumping it in the land fill - Held that:- In Indian Farmers Fertilisers Coop. Ltd. (1996 (7) TMI 141 - SUPREME COURT OF INDIA), the issue came up before the Hon'ble Apex Court for directions to agricultural plant wherein the Apex Court has held that the apparatus used for treatment of effluent in a plant manufacturing a particular end-product is a part and parcel of the manufacturing process of end-product - appellant has used cement for stabilization of hazardous waste 'jarosite' as toxic effluent at secured land fill which is part and parcel of their manufacturing activity. In these terms, we hold that appellant has correctly taken cenvat credit and consequently, they are not required to reverse the same. With these observations, we set aside the impugned order - Decided in favour of assessee.
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2015 (10) TMI 1557
Denial of exemption for Intra Venous Cannula (IVC) and Central Venous Catheters (CVC) as per notification no.6/2003-CE as amended, read with notification no.21/2002-customs (List 37, Sl.No.34) - Held that:- Denial of exemption to IVC manufactured by the appellants is solely based on the DGHS opinion. While DGHS elaborately discussed the difference between the aorta and vena cavae on one side and peripheral vessels at the other side, there is no clarity from the records as to what is the scope of the term that "blood vessels". The IVC manufactured by the appellants are used as Cannula is not disputed. The department's contention is that the Cannula is not eligible for exemption as per the terms of the above entry. It is common knowledge that the circulator system of the body consisted of arteries, veins and capillaries. It is also not disputed that there are different types of arteries and veins and aorta and vena cava are anatomically and physiologically different from smaller peripheral, arteries and veins. If IVC manufactured by the appellants are used in the similar such arteries and veins, the exemption is certainly eligible. - exemption notification does not prescribe the degree of similarity in respect of "blood vessels" similar to aorta and vena cavae and in a broad sense, even peripheral veins would be similar to vena cavae as both carry deoxygenated blood from various parts of the body to heart and peripheral arteries would be similar to aorta as they carry oxygenated blood from the heart to various parts of the body. - impugned orders for denial of exemption to IVC are not sustainable. - Decided in favour of assessee. There are separate entries in the exemption notification for Cannula and for Catheters of different types. The appellants claim for exemption under entry no.34 in the List 37 of the Notification no.21/2002-Cus is not tenable as the entry talks about only disposable and non-disposable Cannula for various types of blood vessels and intra-corporal spaces. Entry No.33 talks about some specific type of Catheters. Except for claiming that the Catheters manufactured by them can be broadly brought under the category of Cannula, the appellant did not make any corroborative submissions we find that the CVC manufactured by the appellant are meant for delivery of drugs and monitoring of central venous pressure. The Catheters are different from Cannula in structure and function, though there may be certain overlapping in their nature of usage. As such, we find that the exemption available to Cannula as per Entry No.34 in List 37 of Notification No.21/2002-Cus cannot be extended to the CVC manufactured by the appellants. - appellants are eligible for exemption for Cannula and not for catheters manufactured by them - Decided against assessee.
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2015 (10) TMI 1556
Denial of CENVAT Credit - Whether a manufacturer is required to reverse the cenvat credit taken by him in respect of the inputs which are proved to have been used in manufacture of the goods which are liable to concessional rate of duty - Held that:- In view of the Notification no.60/2003-CE dated 29.07.03, which provides that no credit taken in respect of the inputs which are used in manufacture of the final products on which benefit of concessional rate of duty has been availed by the appellant in terms of notification no.60/2003-CE ibid. - in the case of Surya Roshini Ltd. Vs. CCE, Meerut-II [2015 (10) TMI 984 - CESTAT NEW DELHI], a similar issue came up before this Tribunal, wherein the appellant were manufacturer of electric bulbs and procuring inputs,capital goods and availing cenvat credit thereon. Thereafter they opted for availing exemption under notification no.50/2003-CE i.e. the area based exemption. Revenue is of the view that as the appellant have opted for exemption from duty, therefore, on the day for opting for exemption, whatever input/ inputs contained in work-in-progress and final product, the appellant is required to reverse the cenvat credit. - at the time when appellant took cenvat credit on inputs, their final product was dutiable and later on, they opted for availing benefit of concessional rate of duty as per notification no.50/2003 - appellant is not required to reverse the cenvat credit on inputs, inputs contained in work in progress/finished goods lying in their factory on the said date - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 1555
Denial of CENVAT Credit - whether or not the accounting errors as claimed by the assessee resulted in certain short payment of duty on finished goods and availment of irregular credit on certain inputs. - held that:- While the whole discrepancy in physical stock has come to light only as per the stock taking conducted by the assessee, there is no allegation or evidence to the effect that the shortages/excesses are not attributable to accounting errors or complexities but are due to unaccounted clearances finished goods and consumption of raw material. In the absence of any such corroboration the assessee's plea on the non-sustainability of order reversing credit or demanding duty has strong force and is to be admitted. Accordingly, we find the reversal of credit on the raw material and the demand of duty on the finished goods solely on the ground of physical stock taking done by the assessee is not sustainable in the facts and circumstances of the present case. - physical inventory was in fact done by the assessee and the Revenue came into the picture much later. In any case, the nature and possibility of accounting error not being denied the adjustment as ordered by the Commissioner on the clear reasoning cannot be faulted. We find that remand of the case on this ground will not serve any purpose. - Decided in favour of assessee.
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2015 (10) TMI 1554
Classification of goods - MRP based Valuation - Section 4A - free supply of items - Invocation of extended period of limitation - Held that:- Regarding re-classification of chloromint under Heading No.30.03, it is clear that the second show cause notice, which resulted in the impugned order, was issued after the matter was already agitated by an earlier notice dated 4.3.2005, which finally entered in settlement of the case vide order dated 20.11.2005 - The fact that the appellant was classifying the product under Heading No. 1704 was always in the knowledge of the Department through ER-1 Returns, classification, declarations, letter dated 5.11.97 and also the demand and settlement of the demand as discussed earlier in the latter period. As such, we find that the demand for excise duty on Chloromint indicating extended period is not sustainable because of application of time bar under Section 11 A of Central Excise Act, 1944. Regarding valuation of free supply items when the goods are subjected to MRP based assessment, we find strong force in the appellant's plea that the retail packing in these cases are the jars, which bear the MRP declaration as per the legal requirements and also clear indication to the effect that numbers of free pieces inside the said pack - Jar. The retailers could be selling individual pieces (not having MRP printed on them to the individual ultimate consumers) is no reason to disregard the retail sale pattern observed by the appellant. - CBEC vide Circular dated 28.10.2002 clarified that if an individual item is supplied free in the multi pack and has no MRP printed on it, the MRP printed on the multi pack will be taken for the purposes of valuation under Section 4 A. We find that the case law and the clarification of the Board are applicable to the present situation and as such, we hold that the demand of central excise duty in respect of such free items is not sustainable. The lower authority had disallowed the discounts only on the ground that the same are referred to as promotional schemes and not as quantity discounts. We find that all discounts are basically promotional schemes. This could not be the reason for disallowing a discount if all other conditions are fulfilled. The nature of these transactions is that certain extra numbers of items are supplied free which can very well be considered as quantity discounts since they are known before hand. There is no reason to deny such abatement from assessable value and as such, we find that the demand of differential duty on this ground is not sustainable. - Decided in favour of assesee.
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2015 (10) TMI 1553
Denial of CENVAT Credit - Customs duty as well as additional customs duty were paid using Duty Entitlement Pass Book (DEPB) scrips issued in terms of the 2002-07 Foreign Trade Policy (FTP) - Held that:- In terms of the Notification No. 34/97-Customs dated 7th April 1997 goods specified in Schedule I to the Customs Tariff Act, 1975 (CTA) imported would be exempted from payment of the whole of the duty of customs as well as additional duty subject to importer having DEPB with sufficient credit. - Division Bench of Punjab and Haryana High Court in has in its order [2010 (4) TMI 281 - PUNJAB & HARYANA HIGH COURT] (Commissioner of Central Excise v. M/s. Neel Kanth Rubber Mills) referred to the EXIM Policy which was amended by the Notifications dated 28th January 2004 and 17th September 2004 which entitled an importer to avail Cenvat credit of additional customs duty against the amount debited in the DEPB scrips. It was noted by the High Court that there was no condition in the said notifications that the debits made in the DEPB issued under a particular FTP alone would be eligible for CENVAT credit and that debits in a DEPB issued under a previous FTP would not be eligible for credit. - Court finds that the said decision indeed covers the issue against the Department on all fours. The Appellant has not been to show any notification by which the benefit of CENVAT credit has been expressly denied where the payment of customs duty or additional customs duty is made using DEPB scrips issued in terms of the FTP 2002-07. - No substantial question of law arises for consideration by the Court - Decided against Revenue.
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2015 (10) TMI 1552
Denial of CENVAT Credit - Penalty u/s 11AC - Held that:- In the show cause notice itself allegation against the appellant is that they have taken the excess Cenvat credit wrongly. If appellant has taken cenvat credit wrongly, it means that he have taken the cenvat credit by mistake not with intention to take inadmissible cenvat credit. When show cause notice itself is alleging that appellant has taken cenvat credit wrongly and same has been supported by earlier audit. When the facts of wrong availment of credit was pointed out to the appellant they reversed the excess cenvat credit availe by them. In these circumstances, I hold that extended period of limitation is not invokable relying on the decision of Tribunal in the case of Yashwant Industries (2011 (1) TMI 997 - CESTAT, MUMBAI) - for the period the appellant has reversed the excess cenvat credit availed along with interest. As allegation against the appellant is that they have taken cenvat credit wrongly, it means that they have taken the cenvat credit by mistake. In these circumstances, penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act is not imposable. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 1551
Duty demand - Clandestine removal of goods - Imposition of equivalent penalty - Held that:- The allegation in the show cause notice is that the said sponge iron has been used by the appellant for manufacturing final product. Admittedly, to manufacture final product i.e. MS Ingots the sponge iron as well as iron scrap is required. But as per the evidence on record there is no shortage of iron scrap. Therefore, the allegation of manufacturing MS Ingots of the sponge iron used for manufacturing the same is not sustainable in the absence shortage of iron scrap. In these circumstances, the allegation against the appellant is only on the basis of presumptions and assumptions. Duty cannot be demanded on allegations based on assumption and presumption - in the case of Gulabchand Silk Mills Pvt. Ltd. (2005 (3) TMI 192 - CESTAT, BANGALORE) there was excess goods found in the factory and same cannot be explained by the assessee. Therefore, it was held that the excess stock is meant for clandestine clearance but that is not the case here. Further, I find that in the case of Nissan Thermoware (P) Ltd. (2010 (12) TMI 487 - GUJARAT HIGH COURT) relied upon by the appellant the shortage of input which has been admitted by the director cannot be ground to demand duty for holding that same has been used in manufacturing of goods removed clandestinely. Therefore, I hold that the revenue failed to prove that the sponge iron found short was used in manufacturing of final product. Therefore, demand is not sustainable. - Decided in favour of assessee.
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2015 (10) TMI 1550
SSI exemption - manufacture of labels / stickers bearing the band name of the customer - Denial of exemption under Notification No. 8/2003-CE dated 01/03/2003 - Interest u/s 11AB - Held that:- Intention of the Government is to grant the benefit of SSI exemption to goods, namely, packing material, containers, metal labels, etc. which may carry a brand name of the customer. The stated policy is clearly not to consider these labels manufactured by one person themselves as having any connection in the course of trade with the goods manufactured by the Customer for whom labels are made. The labels are made for customer who put them on the containers of goods manufactured by them (customers). - Even in the absence of a dictionary meaning we find no reason not to consider a label or sticker especially in view of the fact that the metal labels are also mentioned in Clause 4(e). An interpretation of Clause 4(e) to the effect that stickers would mean only gummed labels is not borne by sound reasoning. We do not appreciate the thin line of distinction being attempted by Revenue to differentiate between the stickers and labels. We do not think it necessary to go into the aspect of the affidavit or the dispute regarding presentation of labels before the adjudicating authority. Accordingly, we hold that the labels manufactured by the appellant are eligible for exemption in terms of Notification No. 08/2003-CE as amended by Notification No. 47/2007. - Decided in favour of assessee.
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2015 (10) TMI 1549
Demand of interest u/s 11AB - Held that:- Allegation in the show cause notice is that the appellant utilized the credit cannot be sustained. The adjudicating authority confirmed the demand of interest only on the ground that they have taken the credit and they are liable to pay interest - petitioner utilized the credit of ₹ 5,71,47,138/- only. In this contest, it was held that the appellant/petitioner is liable to pay interest from the date of availing credit and not from the date of utilization. I find that the Hon’ble Madras High Court in the case of Strategic Engg Pvt Ltd (2014 (11) TMI 89 - MADRAS HIGH COURT) after considering the decision of the Hon’ble Supreme Court in the case of Indo Swift Laboratories Ltd (2009 (7) TMI 98 - PUNJAB & HARYANA HIGH COURT) held that mere taking credit itself would not compel the assessee to pay interest as well as penalty. It is also observed that subsequent amendment Rule 14 of cenvat credit would make it clear. Demand of duty for the extended period of limitation cannot be sustained. payment of interest under Section 11AB to the Central Excise Act as they have not utilised such credit and the imposition of penalty under Section 11AC of the said Act, cannot be sustained. - Decided in favour of assessee.
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2015 (10) TMI 1548
Duty demand - Imposition of penalty - Held that:- Tribunal remanded the matter to the Adjudicating Authority for verifications of the reconciliation of the clearance mentioned in the documents and the watchman’s private register with the duty paying documents. On a query from the Bench, the Learned Advocate of the appellant submits that they are not challenging the reconciliation of the statements in the present appeal. I find that the Adjudicating Authority passed the order following the directions of the Tribunal in so far as to verify the reconciliation of the documents recovered from the security guard alongwith duty paying documents. The Learned Advocate has not disputed the reconciliation. - it is directed that the appellant is entitled to pay penalty 25% of duty alongwith duty and interest within 30 days from the date of communication of this order under Section 11AC of the Act. - Decided partly in favour of assessee.
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2015 (10) TMI 1547
Duty liability under Rule 96ZP(3) - penalty under Rule 96ZP(3) - compounded levy scheme - Held that:- No discretion is provided to any authority either to reduce or to waive penalty and interest in any circumstances, therefore when there is admitted delay in the payment under compounded levy scheme the interest and penalty as provided under above proviso shall unavoidably imposed. - plain reading of Rule 96ZP(3) of the Central Excise Act,1944, penalty and interest were rightly imposed by the adjudicating authority and upheld by the Ld. Commissioner (Appeals) which do not require any interference. Therefore impugned order is upheld - Decision in the case of Kannapiran Steel Re-rolling Mills (2010 (12) TMI 146 - SUPREME COURT OF INDIA) relied upon - Decided against assessee.
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2015 (10) TMI 1546
Demand of duty - principle of natural justice - no personal hearing was granted - Held that:- Three show cause notices dated 25.1.2002, 22.10.2002 and 18.2.2003 for the period February 2001 to November 2002, have already decided by the Tribunal, which is upheld by the Hon'ble Supreme Court. In our considered view, the demand of duty on these three show cause notices have already been merged with the Hon'ble Supreme Court decision [2009 (10) TMI 99 - SUPREME COURT]. The appellant is not contesting the classification of the goods on merit. - notice of hearing was issued in respect of the said show cause notices dated 16.6.1997 and 04.3.1997. So, confirmation of demand of duty alongwith interest and penalties in respect of the said two show cause notices are not sustainable. - matter remanded back - Decided partly in favour of assessee.
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2015 (10) TMI 1545
Availment of CENVAT Credit - capital goods / moulds were not available during the next year - appellant has availed 50% Cenvat credit under capital goods on C.I. Moulds at the time of receipt and subsequent 50% was availed in the subsequent financial year - Held that:- There is no dispute in the fact that appellant has availed Cenvat Credit in respect of C.I. Moulds to the extent of 50% at the time of receipt thereof and balance 50% was availed in the subsequent financial year. At the time of taking balance 50% credit in the subsequent financial year, the mould is neither in the possession of the appellant nor the same was in use as same were consumed or become waste after use and said waste have been cleared from the factory. Under these set of undisputed facts in term of Rule 4(2)(b) the balance of 50% credit is not admissible to the appellant - balance 50% Credit can be taken only in case where such capital goods is in possession of the assessee and also in use. In the present case since at the time of taking remaining 50% credit, moulds were not available with the appellant Cenvat credit of remaining 50% was correctly disallowed. This position has been made clear in the judgments of Silver Ispat (P) Ltd. [2008 (5) TMI 104 - CESTAT MUMBAI] and Sri Krishna Alloys (2006 (1) TMI 411 - CESTAT, CHENNAI) as cited by Ld. A.R. In view of this settled legal position and Board clarification the appellant is not entitled for Cenvat Credit to the extent of remaining 50% therefore impugned order is upheld - Decided against assessee.
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2015 (10) TMI 1544
Duty demand - Clandestine removal of goods - Held that:- Central Excise officers visited appellant’s factory on 10.07.2003 and the appellant produced the copies of the invoices by 04.08.2008 before the Commissioner (Appeals). We agree with the findings of the Commissioner (Appeals) and such invoices, can not be accepted at this belated stage. It is also noted that the appellant have not submitted any reconciliation of the demand of duty in respect of the said invoices. The shrinkage as claimed on the basis of sample invoices, the appellant has not produced any authentic basis for shrinkage. - appellant had paid duty during investigation and the adjudicating authority should have extended the benefit to pay reduced penalty of 25% of duty within stipulated period. - Adjudicating authority shall re-quantify the demand of duty by extending the benefit of cum-duty price. We also direct that the appellant may opt to pay the entire amount of duty alongwith interest and penalty of 25% of duty within 30days from the date of communication of this order, as per Section 11AC of the Central Excise Act, 1944 - Appeal disposed of.
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2015 (10) TMI 1543
Duty demand - Clubbing of turnover of the Job workers - dispute regarding Valuation - dummy units or not - Invocation of extended period of limitation - Held that:- Prima facie the adjudicating authority in his findings held that eleven units are nothing but job workers of the appellants merely on the grounds that these were controlled by the appellants by way of supply of raw materials and arrange for supply of raw materials etc. We also find that there is no dispute on the fact that each of the unit are independently registered with the central excise and nowhere in the adjudication order it was brought out that they are inter related. Appellant's unit cleared match sticks after paying excise duty on sale to other units and they in turn manufacture final product under the brand name "Chavi" and discharged excise duty. If the department disputed the price at which excise duty paid by the eleven units the demand should have been made on the eleven units, who are already registered with the Department. Duty cannot be demanded on the appellants for trading of goods. Prima facie, we find there is contradictions in the allegations. It has not been clearly brought out in the order whether the appellants are the principal manufacturer and whether eleven units are only job workers. It is seen from the records that neither the appellants nor eleven units have opted any job work procedure. Whereas the adjudicating authority has defined them as job workers and availed duty on the price at which the match boxes are sold by the appellants, which is contrary to Rule 10A of Central Excise Valuation Rules. By relying the Tribunal order in the case of Diamond Cements Ltd. (2012 (6) TMI 73 - CESTAT, NEW DELHI) and other citations, we find that the appellants have made out a prima facie case for waiver of pre-deposit. - Stay granted.
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2015 (10) TMI 1542
Denial of CENVAT Credit - failure to discharge the full duty liability - payment of that duty through PLA along with interest - Held that:- Requirement of this sub-rule to pay duty without utilizing CENVAT Credit during the period of delay in discharge of duty liability for a particular month, which is beyond the period of one month from the due date, is unconstitutional; and though Hon'ble Madras High Court in the case of Unirols Airetx Vs. Assistant Commr. Of C. Ex. Coimbatore (2013 (12) TMI 1398 - MADRAS HIGH COURT) and Commr. Of C. Ex., Chennai-III Vs. A.R. Metallurgicals Pvt Limited (2011 (10) TMI 542 - MADRAS HIGH COURT) and Hon'ble Karnatka High Court in the case of Manjunatha Industries Vs. Commissioner of C. Ex. (Appeals-I), Bangalore (2013 (4) TMI 534 - KARNATAKA HIGH COURT) have, taking into the account the provisions of Rule 8 (3A) held that during the period of delay in discharge of monthly duty liability for a particular month beyond the period of one month from due date, the provisions of Rule 8 (3A) become applicable and the duty on the goods cleared during this period is required to be paid without utilizing the CENVAT Credit, the High Courts have not gone into the question of constitutionality of this provision. - When sub-rule 3 (A) of Rule 8 of the Central Excise Rules, 2002 has been struck down as unconstitutional by two High Courts, in our view, Commissioner's order based on the Rule 8 (3A) would not survive. Hence, the impugned order is set aside. - Decided in favour of assessee.
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2015 (10) TMI 1541
Denial of refund claim - Unjust enrichment - appellant have booked excess duty paid under the head of expenditure in the profit and loss account - Held that:- It is undisputed fact that amount for which refund is sought for is towards the excess payment of duty and was booked by the appellant as expenditure in the profit and loss account, it clearly shows that incidence of duty has been passed on to the person whom the appellant made sale during the relevant period. - If the revised balance sheet for the entire period are found correct and if the same has been audited or if the appellant produced evidence of acknowledgement of such revised balance sheet to the concerned Income Tax authority then refund claim of the appellant shall not be hit by unjust enrichment. Since revised balance sheet have not been produced either before the original authority or before the Ld. Commissioner (Appeals) the matter requires to be remanded to original adjudicating authority. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1540
Denial of CENVAT Credit - security service - services appears to have not used/consumed exclusively for the manufacture of excisable goods - Held that:- The guest house is used for lodging of the employees, outside auditors which performing their service to the appellant's factory. Nothing is available on record to show that guest house is used for any other purpose. In view of this fact, since guest house used for the stay of employee, auditors which has directed nexus with factory which produces excisable goods therefore Cenvat credit is admissible to the appellant. On going through judgments relied upon by the rivals, I find that in the case of L'Oreal India Pvt. Ltd. (2010 (11) TMI 143 - CESTAT, MUMBAI) house keeping service of guest house has been held admissible and in the case of Hindustan Zinc Ltd. (2009 (4) TMI 129 - CESTAT, BANGALORE) maintenance service of guest house was allowed as input service. Since the similar service involved in the present case, the ratio of both the judgments are squarely applicable in the appellant's case also. - In the present case no such material was available that guest house was available for the personal needs of the employee therefore judgment of MRF Ltd. is distinguished - in facts and circumstances of the case, security service provided to the guest house in the factory is admissible input service, therefore I set aside the impugned order - Decided in favour of assessee.
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2015 (10) TMI 1539
Levy of penalty where duty has been paid with interest before issuance of SCN - Reversal of CENVAT Credit - Written off value of certain inputs - held that:- Appellant has paid amount of ₹ 9,90,630/- alongwith interest as per their calculation immediately after pointed out by CERA audit team and intimated to the department. In my view the act of the appellant regarding the payment of Cenvat amount alongwith interest without any contest is covered by subsection (2B) of Section 11A(1), according to which if the duty amount alongwith interest is paid, no show cause notice should be issued. In this position since show cause notice should not have been issued the penalty could not have been imposed. Considering overall facts and circumstances of the case, I am of the view that penalty commensurate to the amount of Cenvat Credit of ₹ 9,90,630/- is not sustainable therefore the same is set aside. However, I agree with the ld. Commissioner (Appeals) that total demand of ₹ 11,32,147/- sustainable accordingly appellant is directed pay difference Cenvat amounting to ₹ 1,41,517/- alongwith interest and also penalty of equal amount of ₹ 1,41,517 - Decided partly in favour of assessee.
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2015 (10) TMI 1370
Eligibility of welding electrodes used for repair and maintenance of the plant and machinery for Cenvat credit - Held that:- welding electrodes used for repair and maintenance of plant and machinery are eligible for Cenvat credit - denial of Cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery and Cenvat credit demand on this basis is not sustainable. - Decision in the case of Union of India vs. Hindustan Zinc Ltd. reported in [2006 (5) TMI 44 - HIGH COURT RAJASTHAN] appeal against it has been dismissed by the Apex court vide judgment reported in [2006 (11) TMI 551 - SUPREME COURT OF INDIA]. As regards the capital goods Cenvat credit in respect of CI Slag pot, this issue also stands decided in favour of the appellant by the judgment of the Tribunal in the case of CCE, Delhi - III vs. Jindal Strips Ltd. reported in [2000 (2) TMI 158 - CEGAT, NEW DELHI]. In view of this, we hold that the denial of Cenvat credit in respect of this demand and Cenvat credit on this basis is not sustainable. Various depots had transferred the end cuttings of pipes under invoices wherein the proportionate duty paid on the pipes at the time of clearance from their respective factories had been mentioned. The Department seeks to re-calculate this duty on the basis of the scrap value of the end cuttings, as mentioned in the depot invoices and restrict the Cenvat credit to that amount. In our view this stand of the Department is not correct in view of the Apex court's judgment in the case of Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. reported in [2008 (8) TMI 37 - SUPREME COURT], wherein it has been held that the receiver manufacturer who had received the duty paid inputs from a supplier - manufacturer is entitled to Cenvat credit of the duty paid by the supplier manufacturer and the Central Excise Authorities having jurisdiction for the recipient manufacturer cannot review the assessment of the duty at the end of the supplier manufacturer. - Decided in favour of assessee.
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2015 (10) TMI 1369
Availment of CENVAT Credit - Shortage of inputs - Held that:- Issue involved is squarely covered by the appellants own case for the earlier period [2010 (8) TMI 945 - CESTAT MUMBAI]. Accordingly, after waiver of the condition of pre-deposit, I took up the appeal for disposal with the consent of both the parties. - As the issue is squarely covered by the decision of this Tribunal cited hereinabove holding that where the shortage below 0.5% of inputs in the course of manufacturing processes Cenvat credit cannot be denied. Following the same, I allow the appeal of the appellants - Decided in favour of assessee.
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2015 (10) TMI 1368
Denial of refund claim - duty was paid under protest on sizing of yarn - Captive consumption - appellant had not produced any evidence to establish that the incidence of duty has not been passed on directly or indirectly to any other person - Held that:- Duty was paid on sizing of yarn and such sized yarn used in the manufacture of fabric which has been exported. The refund of duty either paid on the exported goods or on the material used in the manufacture of exported goods is covered under Rule 18 of Central Excise Rules, 2002 - From the clause (a) of first proviso to subsection (2) of Section 11B of Central Excise Act, 1944, it is clear that the provision of unjust enrichment is not applicable in respect of rebate of duty of excise paid on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India. Duty paid in respect of sized yarn which has been used in the manufacture of fabric and the said fabric was exported out of India, therefore duty so paid on sized yarn is clearly rebatable under Rule 18 and in accordance with clause (a) of first proviso to subsection (2) of Section 11B, the bar of unjust enrichment is not applicable. Therefore without going into the facts whether incidence of such duty has been passed on or otherwise refund of duty is admissible. In view of the above undisputed and unambiguous position in law, I set aside the impugned order. - Decided in favour of assessee.
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2015 (10) TMI 1367
Admissibility of Cenvat Credit - welding electrodes - repair and maintenance of the machinery - Whether the Cenvat Credit in respect of welding electrodes used for repair and maintenance of machinery is admissible or otherwise - Held that:- Assessee could not established ratio of material welding electrodes used for repair and maintenance or otherwise and it is on that fact order was passed therefore ratio of the said judgment cannot be applied. As regard the judgment of Sree Rayalaseema Hi-Strength Hypo Ltd. supra, I observed that in para of the said judgment Hon'ble Andhra Pradesh High Court has distinguished the Rajasthan High court judgment in Hindustan Zink Ltd. on the ground it did not pertain to welding electrodes, which is apparently wrong fact. The very judgment is clearly on the issue of availment of Cenvat Credit in respect of welding electrodes used for repair and maintenance of plant and machinery. - judgment of Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. Vs. UOI [2008 (7) TMI 55 - HIGH COURT RAJASTHAN] and also Suprem Court in UOI Vs. Hindustan Zinc Ltd. [2006 (11) TMI 551 - SUPREME COURT OF INDIA], which was upheld by the Hon'ble Apex Court are squarely applicable in the present case and considering the same I am of the view that Cenvat credit in respect of welding electrodes used for repair and maintenance of the machinery in the appellant's factory is admissible - Decided in favour of assessee.
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2015 (10) TMI 1366
Fraudulent Duty drawback - Availment of inadmissible Cenvat Credit - penalty under Rue 26 of the Central Excise Rules - Held that:- penalty is imposable under Rule 26 during the relevant period if any person who acquires the possession or not or is in any way concerned transporting removing, depositing, keeping, concealing, selling or purchasing or in any manner deals with excisable goods, as in this case the allegation against the appellant is that the appellant has issued only invoices not supplied the excisable goods to M/s. Pawan Jain & Sons to avail inadmissible Cenvat Credit. Therefore, from the facts, it is clear that appellant has not dealt with excisable goods for availment of inadmissible Cenvat Credit by M/s. Pawan Jain & Sons and merely issued invoices. The provision for the person issuing invoices without supply of goods have come into force for imposition of penalty under Rule 26 has come into force w.e.f. 01.03.2007 and the said provision was not instituted during the relevant period. Therefore, I hold that appellants have not dealt with excisable goods. Therefore, penalty under Rule 26 is not imposable on appellants. - Decision in the case of Duggar Fiber Ltd. [2015 (9) TMI 246 - CESTAT NEW DELHI] followed - Decided in favour of assessee.
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2015 (10) TMI 1365
Recovery of erroneous refund - excise duty paid on scented suprari - Held that:- Present appeal is an offshoot of refund claim which was originally rejected by the adjudicating authority in his order dt. 30.5.2001 on limitation which is upheld by Tribunal in Final order [2005 (7) TMI 428 - CESTAT, CHENNAI] and Hon'ble High Court [2014 (9) TMI 478 - Madras High Court]. By respectfully following the order of Hon'ble High Court (supra), I hold that the demand of recovery of erroneous refund with interest is upheld. Accordingly, the impugned order is upheld - Decided in favour of Revenue.
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2015 (10) TMI 1364
Demand of interest - Whether the respondent-assessee under the facts and circumstances is entitled to interest from the date of enactment of Section 11BB as already allowed or whether the respondent-assessee is entitled to interest from the expiry of 3 months from the date of its application and/or order of this Tribunal dated 25 th of June, 2007 - Held that:- The explanation appearing below proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Asst. Commissioner of Central Excise or Dy. Commissioner but by an appellate authority or the Court, then for the purpose of this of the section the order made by such higher appellate authority or by the Court shall be deemed to be on order made under subsection 2 of Section 11B of the Act. It is clear that the explanation under Section 11BB of the Act. Manifestly interest under Section 11 BB of the Act becomes payable, if on an expiry of period of 3 months from the date of receipt of the application for refund, the amount claimed is not so refunded. Thus, the only interpretation of section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of 3 months from the date of receipt of the application under sub section 1 of Section 11BB of the Act becomes payable. - board have directed that responsibility should be fixed for not disposing of the refund claims within 3 months from the date of receipt of the application. Thus the Hon'ble Apex Court noticed that ever since Section 11BB was inserted in the Act with effect from 26/5/95 the department has taken the consistent stand about its interpretation. That it is evident that interest is payable from the date of expiry of 3 months from the date of receipt of application under Section 11B(1) of the Act. - impugned order does not suffer from any illegality or impropriety - Decided against Revenue.
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2015 (10) TMI 1363
Manufacturing activity or not - whether the processes of Chemiking and Spotting undertaken by the Appellant amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 or not - Held that:- Appellant is only undertaking the process of Chemiking and Spotting which is akin to the process of washing and cannot be considered to have brought a new marketable product into existence which is brought and sold in the market - In the case of CCE, Coimbatore Vs K.G Denim Ltd (2005 (7) TMI 650 - CESTAT BANGALORE) also, it was held that every process undertaken on the fabrics will not go into the category of 'any other process' as mentioned in Note 2 of the Chapter 52 of the Central Excise Tariff Act, 1985. - processes of Chemiking and Sporting undertaken by the Appellant does not amount to manufacture - Decided in favour of assessee.
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2015 (10) TMI 1362
Denial of CENVAT Credit - whether the assessee is entitled to take Cenvat Credit on the inputs which is gone in the process of manufacturer of final product and during the process some inputs have been lost as floor sweeping or not - Held that:- Clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004 would be invoked where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules 2002, the Cenvat Credit taken on the inputs used in the manufacture of production of said goods shall be reversed. - In view of the items referred to in clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004, the question of reversal would occur only when the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules 2002. The said Rule deals with remission of duty. Admittedly, the assessee has not claimed any remission and no final product has been removed. Hence, for that reason also, reliance was placed on clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004. Following the decision in the case of Fenner India Ltd. (2014 (11) TMI 704 - MADRAS HIGH COURT) I hold that the provisions of Rule 21 of the Central Excise Rules 2002 and provisions of Rule 3(5)(c) and Cenvat Credit Rules 2004 are not applicable to the facts of this case. Consequently, the goods lost in work in process the assessee is entitled to take Cenvat Credit. Consequently, I hold that the assessee has correctly taken the Cenvat Credit on the inputs which has been lost during the work in progress and same has been affirmed by this Tribunal in the case of Harinagar Sugar Mills Ltd. (2014 (5) TMI 494 - CESTAT MUMBAI). - Decided in favour of assessee.
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2015 (10) TMI 1361
Valuation - related person - mutuality of interest - Invocation of extended period of limitation - Held that:- So far as the appeal filed by the Revenue regarding extended period invocable is concerned, it is observed from the order passed by the First Appellate Authority that the demand for the extended period was not only confirmed on the basis of Apex Court’s judgment in the case of M/s Nizam Sugar Factory Ltd (2006 (4) TMI 127 - SUPREME COURT OF INDIA) but also by giving detailed finding in Para 10 and 11 of the OIA dt.13.02.2007 as to why there is no intention to evade duty. - Mahalaxmi Fabrics Mills Ltd was clearing the goods on provisional basis as the exact amount of costing could be arrived at only at the end of the financial year. As the entire facts of the valuation and clearances were within the knowledge of the Department, the First Appellate Authority has correctly held that the extended period under proviso to Section 11A cannot be invoked and also that no penalty under Section 11AC of the Central Excise Act, 1944 are imposable upon the assessee. - The concept of revenue neutrality for not confirming the demand cannot be raised for the period within the limitation. If the duty is payable by the Appellant is paid by the Appelalnt, the credit of the same can be taken by M/s Mahalaxmi Exports Ltd. - Decided against assessee.
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2015 (10) TMI 1360
SSI Exemption - Job work - Modvat / CENVAT Credit - exemption from payment of duty under Notification No. 8/99-CE dated 28.2.1999 and Notification No. 8/2000-CE dated 01.3.2000 - Held that:- Appellant supplied components to job workers under Rule 57S(7) of the erstwhile Central Excise Rules, 1944. It is seen that the job workers, after processing (alignment etc.) supplied capital goods namely, Reactor Vessel, Sigma Mixer Machine and Mixer Muller. The Tribunal accepted that the job worker is eligible to the benefit of exemption Notification No. 214/86-CE. There is no dispute that these capital goods were used in the manufacture of the final product at the appellant’s factory and cleared on payment of duty. - No reason to deny the modvat credit to the appellant. Accordingly, we set-aside the impugned order - Decided in favour of assessee.
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2015 (10) TMI 1359
Valuation - demand u/s 11D for amount collected in the name of Excise Duty - Held that:- So far as the amount collected separately from buyers to the extent of ₹ 6,53,169.36 is concerned, even though collection made was prior to introduction of Section 11D, it is necessary to verify whether this money has gone to the treasury or not. This can be stated following the ratio laid down by the Hon'ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. Vs. CCE - [2005 (3) TMI 116 - SUPREME COURT OF INDIA]. It may be stated that no one can be enriched at the cost of the state following the ratio laid down by the Apex Court in the case of S.P. Chengalvaraya Naidu Vs. Jagannath - [1993 (10) TMI 315 - SUPREME COURT] and no Court shall allow the party to retain the gain made by a person what that was not due to him. Therefore assessee is required to deposit the same even in absence of Section 11D of the CEA,1944. The authority shall verify the deposit particulars and evidence and pass appropriate order on this limited issue only. Revision of cost has no significance when it is supplied by buyer to the assessee not being liable to duty because its finished goods are ultimately exempted which remained undisputed by Revenue. - Decided partly in favour of Revenue.
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2015 (10) TMI 1358
Denial of CENVAT Credit - Bogus invoices - Non receipt of physical goods - Held that:- Assessee is required to find out while taking Cenvat Credit to ensure that the input on which Cenvat Credit is taken, the relevant document is accompanied by them or not. Admittedly, in this case the appellant is able to produce the invoice against which appellant has availed Cenvat Credit and same has been entered in their RG-23 Register. Therefore, the burden cast on the revenue to prove that this is only a paper transaction and goods have not been received by the appellant at all. To ascertain this fact that appellant has not received the goods, the statement of transporter is very much relevant to find out the truth. Moreover, investigation at the end of manufacturer supplier also reveal the truth whether the manufacture supplier has supplied the goods to the appellant through the registered dealer or not. - appellant has produced invoice on the strength of which they have availed Cenvat Credit and the goods have been entered in their RG-23 register and same has been supported by the weightment slips which were produced by the appellant before the authorities below. When these material evidence are on record then the burden of not receiving the goods by the appellant shifts on the revenue which revenue failed to do so. - charge against the appellant that they have not received goods and it was only the paper transaction is not sustainable. - Decided in favour of assessee.
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2015 (10) TMI 1357
Duty demand - Marketability of goods - Whether the aluminium dross and skimming arising in course of manufacture of aluminium products during the period of dispute would attract Central Excise duty - Held that:- No such evidence of existence of market for aluminium dross and skimming, like prices of this item being quoted in commercial journals and news papers, existence of persons selling this product or e-commence websites for sale of Aluminium dross and skimming etc. has been produced. We also find Hon ble Bombay High Court in the case of Hindalco Industries Ltd. vs. CCE, Belapur, Mumbai III (2014 (11) TMI 385 - CESTAT MUMBAI (LB)) has reversed the finding of the Larger Bench judgment of the Tribunal in the same case that during the period w.e.f. 10/5/08 the aluminium dross and skimming were excisable. In view of this judgment also the finding of the Commissioner (Appeals) that the goods, in question, are not excisable cannot be assailed. - There is one more reason why the impugned order is correct. In terms of Chapter Note 3 to Chapter 26 of the Tariff, heading 26.20 applies only to that ash and residue which are used in the industry for extraction of metal or as starting material for manufacture of metal compounds. Such ash and residues would, obviously, be marketable as there would be demand for the same from metal extraction and chemical industry. But in this regard, no evidence in form of evidence of end use of the dross for extraction of Aluminium or for manufacture of Aluminium compound has been produced. Therefore the dross and residues, in question, is not covered by 2620. - Decided against Revenue.
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2015 (10) TMI 1356
Waiver of pre deposit - Reversal of CENVAT Credit - Imposition of penalty - Held that:- Appellant purchased the capital goods in the period between 2003 and 2005 and used them in its factory till they were sold to M/s. Harsh International (Khaini) Pvt. Ltd. in June and July, 2007. Thus the capital goods were used for a period of 2 to 4 years. They cannot therefore be stated to be sold ‘as such’ capital goods. They were sold as used capital goods. We agree with the Bombay and Punjab & Haryana High Courts and hold that the appellant was not liable to pay excise duty in accordance with Rule 3(5) when it removed the used capital goods and consigned them to M/s. Harsh International (Khaini) Pvt. Ltd. - there is no question of paying any penalty under Section 11AC of the Act or any interest on the duty. Thus the appellant is not liable to the payment of duty, interest or penalty. - requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal - Stay granted.
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2015 (10) TMI 1355
Imposition of penalty - Assessee supplied the raw material to the loan licencee/job workers - They have paid the duty on the cost of raw materials and conversion charges - - Held that:- Commissioner observed that though by majority, it was held by the Tribunal that the actual processor of the goods was the manufacturer and that the duty demanded on the price at which the raw material supplier sold the goods, was not sustainable, the Department has filed a Civil Appeal before Hon’ble Supreme Court. The Adjudicating authority proceeded on the basis of the minority view of the said decision. We find that the Hon’ble Supreme Court upheld the majority view in the case of M/s Cosme Farma Laboratories Ltd (2015 (4) TMI 355 - SUPREME COURT). - facts of the present case are identical to the case of Cosme Farma Laboratories Ltd (supra). Hence, the impugned order passed by the Commissioner cannot be sustained - Decided in favour of assessee.
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2015 (10) TMI 1354
Duty demand - Valuation - Inclusion of expenses incurred after clearance of the goods - Held that:- Adjudicating Authority confirmed the demand of duty on the excess collection of amount of State Surcharges, Retail Pump Outlet (RPO) charges, RPO Surcharges, Railway Siding/Shunting Charges, Airfield etc. The Adjudicating Authority confirmed the demand of duty alongwith interest and imposed penalty for the period March, 1994 to June 1996 on the ground that the appellants cleared the goods from Vadodara Refineries to Sabarmati Terminal and the expenses incurred after clearance of the goods from Vadodara Refinery would be included in the assessable value. Commissioner (Appeals) set-aside the Adjudication order. - there was a factory gate (refinery) sale of the appellant during the relevant period. The appellant paid duty on the price at factory gate. - issue is no more res-integra, in view of the decision of the Tribunal in the case of Bharat Petroleum Corporation Ltd. vs. Commissioner of Central Excise, Cochin [1998 (12) TMI 223 - CEGAT, MADRAS], which is upheld by the Honble Supreme Court has reported in [1998 (12) TMI 580 - SUPREME COURT OF INDIA]. - No reason to interfere the order of the Commissioner (Appeals). - Decided against Revenue.
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2015 (10) TMI 1353
Denial of CENVAT Credit - cellular services, insurance premium of vehicles used by their employees and by the company - Failure to produce relevant documents - Held that:- It is seen that after personal hearing, the appellant had indeed submitted the said evidence and the same could not be considered while passing the order. The appellants produced a copy of their letter dated 02/06/2010 wherein they have submitted the bills of telephone and insurance papers. The same have not been considered in the order. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1352
Denial of benefit of concessional rate of duty - Notification No. 75/84-CE dtd 1.3.1984 - Commissioner allowed refund claim - meanwhile, a show cause notice was issued proposing to recover the erroneous refund, paid to the respondent - Adjudicating authority dropped the proceeding, as the matter was decided by the Tribunal - Held that:- Tribunal order has not yet been set aside by the appellate court till date. So, we do no find any reason to interfere the order of the Commissioner. - Decided against Revenue.
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2015 (10) TMI 1351
Valuation of goods - Imposition of penalty - Held that:- Appellant is liable to pay duty on the physician samples under Rule 4 of the Valuation Rules. This fact was not disputed by the Learned Advocate on behalf of the appellant. Duty is payable under Rule 4 of the Valuation Rules as held by the High Court and that Larger Bench of the Tribunal. Thus, the Revenue has every right to demand the duty for the normal period of limitation under Section 11 A of the Central Excise Act. Hence, the decision of the Tribunal in the case of Indchemie Health Specialities (2008 (11) TMI 514 - CESTAT, AHMEDABAD) would not be applicable herein. So, the demand of duty alongwith interest is justified. - demand of duty alongwith interest is upheld. The penalty is set-aside - Decided in favour of assessee.
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2015 (10) TMI 1350
Duty demand - Imposition of penalty - SSi exemption - Brand name - Held that:- There is no dispute for payment of duty which has fairly been admitted by the appellant that they are liable to pay duty. Therefore, the appellant shall pay duty along with interest. Now, we come to the issue of penalty. We find that in this case although the observations had been made by BIFR not to take any penal action against the appellant, which is not binding on us but we consider the factual matrix of the case that the appellant is manufacturing Skimmed Milk Powder since 1968 under the brand name of "INDANA". Only for a short period of 47 days, the duty was levied on the said product, therefore, it cannot be said that the appellant was having any malafide intention not to pay duty on the products. It is only issue of interpretation that when the appellant is using the brand name of third party, they are entitled for SSI exemption or not. Therefore, we hold that in such circumstances, penalty is not imposable on the appellants. - Demand of duty along with interest is confirmed - Decided partly in favour of assessee.
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2015 (10) TMI 1349
Waiver of pre deposit - Imposition of penalty - whether the applicant who declared themselves as a manufacturer is in fact manufacturer or a trader; the said fact rests on appreciation of evidences - Held that:- Considering the financial hardship expressed on behalf of the applicant and the amount already deposited during adjudication, in our view the offer to deposit ₹ 20.00 Lakhs at this stage seems to be reasonable. Accordingly, in the interest of justice, the applicant is directed to deposit ₹ 20.00 Lakhs within a period of eight weeks and report compliance on 28.9.2015. On compliance, the balance dues adjudged against the applicant No.1 and all dues against applicant No.2 would stand waived and its recovery stayed during the pendency of the appeal - Partial stay granted.
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2015 (10) TMI 1348
Denial of CENVAT Credit - Held that:- Assessee has produced the documents in respect of two Bills of Entry before the Commissioner (Appeals) and the Adjudication order was modified to that extent and the CENVAT Credit was denied to ₹ 6,88,010.00 along with interest and penalty. He fairly submits that after passing of the impugned order of the Commissioner (Appeals), they obtained a certificate in lieu of lost / misplaced/ destroyed/ mutilated Bill of Entry dt.25.06.2011 from the Customs authorities. He drew the attention of the Bench to the said certificate. I find that the Appellant received a certificate in respect of Bills of Entry to the amount of ₹ 6,88,010.00. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1347
Denial of CENVAT Credit - Bar of limitation - Held that:- Adjudicating authority denied the CENVAT Credit of ₹ 34,714.00 alongwith interest and imposed penalty of equal amount, which was upheld by the Commissioner (Appeals). The appellant availed the credit during the period from December 2004 to March 2005 and thereafter, fire occurred in the factory and therefore, the documents were destroyed in the fire. The Central Excise Audit party during the audit in the year 2007-08, directed them to produce the documents. The appellant failed to produce the documents destroyed in fire. A show cause notice dt.15.7.2009 was issued, proposing to deny CENVAT Credit along with interest and penalty. Demand is barred by limitation. Both the authorities below have not given any specific finding that the Appellant had suppressed the fact with intent to evade payment of duty. On the contrary, it is evident that the appellant has availed the credit in December 2004 to March 2006 and filed monthly return timely to the Central Excise Department. There is no suppression of facts with intent to evade payment of duty and the extended period of limitation cannot be invoked and therefore, the imposition of penalty is unwarranted. Accordingly, the impugned orders are set aside - Decided in favour of assessee.
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2015 (10) TMI 1346
Denial of refund claim - Denial of exemption claim - Held that:- Both the authorities below observed that refund claim is premature as the de-novo adjudication is still pending. On a query from the Bench, the learned Advocate for the appellant submits that the Tribunal passed the order in 2011 and de-novo adjudication is still pending. In my considered view, as the de-novo adjudication is pending before the Commissioner and therefore, the matter may be remanded to the Commissioner to decide afresh. - impugned order is set-aside. The matter is remanded to Commissioner - Decided in favour of assessee.
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2015 (10) TMI 1345
Denial of CENVAT Credit - Held that:- CENVAT Credit in dispute have been availed by the appellant on two invoices issued by their registered office as input service distributor. The Commissioner has not accepted the said invoices in allowing the CENVAT credit on the ground that the supporting documents disclosing the details of services received from the service providers had not been enclosed with the respective input service invoices issued by their registered office as input service distributor. The Ld. Chartered Accountant for the applicant submits that because of the voluminous nature of the supporting documents, only consolidated statements were furnished whereas they are in a position to submit invoices issued by the respective service providers in favour of the registered office. In view of the categorical claim of the appellant, in the interest of justice, we are of the view that the matter be remanded to the adjudicating authority for examination of the supporting documents so as to ascertain whether the appellant are eligible on the invoices issued by their registered office as input service distributor availed CENVAT Credit in January, 2007. In the result, the impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 1344
Refund claim - Eligibility of CENVAT Credit - Duty paid under protest - Held that:- Commissioner (Appeals) observed that the Adjudicating Authority adjusted this amount on the consent of the appellant, and therefore, the appeal of the appellant cannot be accepted. In Appeal No. E/1544/2010, it is observed by the Commissioner (Appeals) that the appellants had not contested the demand of ₹ 6,99,436.00/-. I find that the appellant contested the demand of the said amount by filing the refund claim. The appellant contended that the Larger Bench of the Tribunal in the case of H.M.T. (2008 (10) TMI 54 - CESTAT, NEW DELHI) held that when the input credit legally taken and utilized on the duty of final product need not be reversed on the final product becoming exemption subsequently. In my considered view, it is required to examine the facts of the case in respect of applicability of the Larger Bench decision. - impugned order is set-aside except refund amount of ₹ 7,496.00/- as already allowed. - Decided partly in favour of assessee.
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2015 (10) TMI 1343
Denial of CENVAT Credit - Capital goods - Held that:- Credit was disallowed only on the premise that the original equipment was purchased in 1991 where no credit scheme was in force. Prima facie , I find that there was no such provision in Cenvat rules for denial of capital goods credit on the parts imported for replacement, particularly during that period original equipments were not covered under modvat scheme. Compensation scheme from the insurance company has no relevance for availment of credit on capital goods purchased in 2006. Prima facie , appellants have made out a case for waiver of predeposit of demand in question. Accordingly, predeposit of dues arising out of the impugned order is waived and recovery thereof stayed during pendency of appeal - Stay granted.
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2015 (10) TMI 1342
Refund claim - Unjust enrichment - Held that:- First appellate authority has not disputed or controverted the certificate of C.A. produced by the appellant to indicate that the amount for which claim of refund is filed was not debited to Profit and Loss account as expenses by not addressing on such a vital document produced by the appellant. - In the absence of any contradiction, the question of doctrine of unjust enrichment will not come in a way in this case. Reliance placed by learned AR in the case of Union of India v. Jain Spinners Ltd. - [1992 (9) TMI 88 - SUPREME COURT OF INDIA] and United Spirits Ltd. v. C.C. (Import) - [2009 (6) TMI 23 - BOMBAY HIGH COURT] may not carry the case of the Revenue any further in the facts and circumstances of the case law was decided. It is to be recorded that the Revenue is bound by its own Board’s Circular which states that no refund claim needs to be filed for reclaiming an amount deposited on direction of appellate authority. Revenue is supposed to retain the amounts so deposited, an appeal being decided in assessee’s favour; suo motu. - In the facts and circumstances of this case where the appellant has deposited an amount for hearing and disposing of the appeal on merits and having succeeded in appeal and also having evidenced that the amount has not been debited to Profit and Loss account as expenses, the question of holding back the amount by the Revenue does not arise.- Decided in favour of assessee.
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2015 (10) TMI 1341
Valuation - Determination of assessable value - Clandestine removal of goods - Held that:- They have also not quantified the amount before the lower authorities and even before the Tribunal. The contention of the learned Advocate that the duty was not properly quantified cannot be accepted, at this stage. However, we agree with the submission of the learned Advocate that penalty should not be imposed on the Director of the Appellant Company. We do not find any material available on record for imposition of penalty on the Director of the Appellant Company. We have also considered that the Adjudicating authority has not given the option to pay penalty 25% of the duty within specified period imposed under Section 11AC of Central Excise Act, 1944. - Appellant would pay the penalty equal to 25% of the duty within 30 days alongwith duty and interest from the receipt of this order, failing which they have to pay the entire amount of penalty - Decided partly in favour of assessee.
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2015 (10) TMI 1340
Denial of refund claim - Unjust enrichment - Held that:- Tribunal came to the conclusion that in such a case by issuing mere debit note does not pass the bar of unjust enrichment. The decision of the Rajasthan Processors (India) Pvt. Ltd. (1994 (1) TMI 275 - SUPREME COURT) have no relevance to the facts of this case, as in that case there was no reduction of duty in the finance bill and on the basis of that the supplier of goods filed refund claim and issued credit note to the buyers. But, fact was not ascertainable whether buyers have reversed the cenvat credit to duty paid by them or not. I have gone through the decision of Ispat Industries Ltd. (2014 (12) TMI 271 - CESTAT MUMBAI) wherein it has been ascertainable that excess duty has been reversed in the cenvat credit account by the buyer and same is the case here. Therefore, when the fact is ascertained, duty credit has not been availed by the buyer of the goods, in that situation the appellant has discharged their burden of unjust enrichment and same in this case, therefore, I hold that the appellant is entitled for refund claim with these terms impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 1339
Availment of CENVAT Credit - GTA Services - Held that:- Both the Lower Authorities held that the place of removal is at factory gate and no evidence produced claiming that sale is on F.O.R destination basis. On perusal of the copy of the agreement dt. 24.1.2002 and copy of purchase order dt. 26.3.2010, 6.4.2010 produced by the appellant. I find that the terms of supply is inclusive of freight, loading, unloading etc. and upto the point of destination and terms of the delivery is F.O.R. destination and the unit price is inclusive of freight and other charges. The Co-ordinate Division Bench of Tribunal in the case of Ultra Tech Cement Vs CCE & ST Rohtak (2014 (10) TMI 679 - CESTAT NEW DELHI) decided the very same issue and held that credit is entitled on GTA outward transport service where the goods are sold on FOR basis. By respectfully following the ratio of the decision (supra), I hold that appellants are eligible for credit on GTA outward transport service as it is evident from the above that the sale is on FOR Destination basis - Decided in favour of assessee.
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2015 (10) TMI 1338
Reversal of CENVAT Credit - Trading of goods - Held that:- Issue relates to demanding proportionate credit on the input service credit availed on the trading of goods. There is no doubt that the appellant is a manufacturing unit availed the credit distributed by their ISD. As regards the objection raised by the ld. Advocate on the jurisdiction of the Commissioner, Pondicherry, for raising demand on the appellant for reversal of credit under Rule 6(5) the Tribunal's decision in the case of Eveready Industries India Ltd. (2009 (8) TMI 437 - CESTAT, CHENNAI), DB of this Tribunal in Final Order has held that the Commissioner having jurisdiction of the recipient unit has a power to examine the availment of cenvat credit. In view of the above decision and also considering the fact that the lower appellate authority has confirmed only the proportionate credit and not the entire demand under Rule 6(5) on the value, prima facie, appellant do not satisfy the requirement for total waiver of pre-deposit. - stay granted partly.
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2015 (10) TMI 1337
Denial of CENVAT Credit - Delay in discharging monthly duty - Held that:- Prima facie, the issue is covered by the decision of Hon’ble Gujarat High Court in the case of M/s Indsur Global Ltd (2014 (12) TMI 585 - GUJARAT HIGH COURT). Hence, it is appropriate that the matter should be re-examined by the Commissioner (Appeals). Accordingly, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) to decide afresh the stay petitions, after considering the decision of Hon’ble Gujarat High Court in the case of M/s Indsur Global Ltd. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 1336
Denial of exemption claim - Customs Notification No. 42/96 dated 23.07.96 - Held that:- Goods cleared were used in Drinking water supply project, which is a notified project under the aforesaid notification. The notification has flown under clause (6) of CTH 9801. Reference to CTH 9801 finds place in notification No. 6/06-CE dated 01.03.06 as well as notification No. 12/11-CE dt. 07.03.12. Reading of the customs notification, tariff heading, nature of goods cleared and central excise notifications enables to hold that the goods cleared by appellant were meant for Drinking water supply project only. The goods so used was certified by the appropriate authority. Therefore in absence of any contrary evidence, the goods cleared by appellant cannot be denied exemption. - Decided in favour of assessee.
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2015 (10) TMI 1335
Reversal of CENVAT Credit - Capital goods - Held that:- Since Assessee have already discharged duty at the time of clearance of the said capital goods, the balance amount payable is only ₹ 3,639/- whereas the appellant already paid an amount of ₹ 6,168/- by way of debit in RG23A. The issue has already been settled by LB of the Tribunal in the case of Navodhaya Plastic Industries Ltd., (2013 (12) TMI 82 - CESTAT CHENNAI ). - The appellant has already paid the differential credit of ₹ 6,168/- by debiting in their RG-23A as per depreciation formula given in the said Board's Circular. Therefore, the differential demand is restricted to ₹ 3,639/-. Since they have paid the differential amount and interest before adjudication, there is justification for waiver of penalty. Accordingly, the demand is restricted to ₹ 3,639/- and the penalty is set aside - Decided partly in favour of assessee.
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2015 (10) TMI 1334
Imposition of penalty - clandestine manufacture and clearance of the goods - Held that:- Appellant Shri Kaluram Ramdayal Heda supplied raw materials on bills and without bills to the manufacturer M/s. J.M. Copper. It is observed from the statement of Shri Kaluram Ramdayal Heda dated 09.06.2009, reproduced in Para 7 of the show cause notice dated 21.8.2009 that appellant has sold the copper wire rods to the manufacturer without bills. However, it is not coming out anywhere from his statement or statement dated 27.3.2009 of Shri Vikram Jagdishbhai Khunt, power of attorney holder of the manufacturer M/s. J.M. Copper that appellant was aware that the raw materials supplied will be used in the clandestine manufacture and clearance of the goods. Secondly, the appellant, at no stage has dealt with the goods clandestinely manufactured and cleared by the manufacturer. - it is evident that for imposition on a person he should have acquired possession of or in any way concerned in transporting, removing, depositing etc. of any excisable goods which he knows or has reason to believe, are liable to confiscation under the Central Excise Act or Central Excise Rules. There is no evidence on record that appellant had knowledge that raw materials supplied by him will be used in the clandestine manufacture and clearance of the finished goods made out of raw material supplied. The case law of Ashok Joshi vs. Commissioner Central Excise, Jaipur (2003 (6) TMI 304 - CESTAT, NEW DELHI) clearly apply to the facts of the present case. - Decided in favour of assessee.
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2015 (10) TMI 1333
Denial of refund claim - CENVAT Credit - whether cash refund is required to be allowed to M/s Sit Flexible Hose Pvt Ltd for certain amount which were debited from the cenvat credit account - Held that:- It is observed from the facts available that the present respondent debited certain amounts from their cenvat account during the period Sept. 2008 to Decmber2009. Subsequently, the credit reversed by the assessee was held to be admissible and was accordingly allowed in the cenvat account to the appellant. The credit so allowed was availed by the assessee and the same also started utilising the credit in the payment of central excise duty. It is also observed from the case records that at no stage Revenue insisted the assessee to pay the amount in cash. The case laws relied upon by the First Appellate authority in Para No 5 of OIA dtd 3.2.2011 pertains to the situations where liability was insisted by the Revenue to be paid from PLA and assessee was prevented from utilising cenvat credit. As the facts of the relied upon the case laws are different that the present facts the same can not be pressed into service to sanction the refund in cash. - Impugned order is set aside - Decided in favour of Revenue.
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2015 (10) TMI 1332
Denial of refund claim of redemption fine - period of limitation - Held that:- Refund of ₹ 5,32,481/- was ordered to be taken as Cenvat credit as per Order-in-Appeal dated 29.12.1999 and unit was undertaking manufacture and clearance up to 19.9.2003. Appellant did not produce accounts of not taking credit during the period 29.12.1999 to 19.09.2003. In view of the above facts, first appellate authority has correctly rejected the appeal of the appellant with respect to refund of ₹ 5,32,481/-, as the appellant has also not produced any records with this appeal to the extent that no credit of ₹ 5,32,481/- was taken as a result of earlier favourable order passed by the first appellate authority. - so far as refund of ₹ 1,00,000/- redemption fine paid by the appellant is concerned, it is observed that the same is not a duty of excise to which the provisions Section 11B of the Central Excise Act, 1944 will be applicable. Accordingly, the time bar of one year or unjust-enrichment will not be applicable to refund of redemption fine paid by the appellant. - Decided in favour of assessee.
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