TMI Tax Updates - e-Newsletter
October 6, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

TMI SMS

• IT - Provision for foreseeable losses - not a contingent liability - Deduction Allowed while computing business income - Tri

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• VAT - Classification of Keo Karpin Baby oil had prophylactic qualities - entitling it to be classified as a medicine/drug - HC

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• VAT - the benefit of ITC in respect of packing materials used for its finished goods, which were stock transferred - credit not allowed - HC

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• Painting of walls of the floor of commercial building would fall under industrial construction service - eligible for abatement - Tri

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• Club membership - Refundable security deposit & interest there-on received from members should not be subjected to Service Tax - AAR

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Highlights / Catch Notes

• Income Tax:

  Computation of the taxable income u/s 44BB - The service tax is not an amount paid or payable, or received or deemed to be received by the Assessee for the services rendered by it. The Assessee is only collecting the service tax for passing it on to the government - not to be included - HC
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• Income Tax:

  Direction for special audit - an order under Section 142(2A) cannot be passed on the basis of the seized material unless the assessee failed to produce books of accounts, which in the instant case has not happened - HC
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• Income Tax:

  Rejection of Books of Account - The Assessing Officer was unable to pinpoint as to any specific defect noticed during course of the proceedings except that the Books of Account were rejected on certain discrepancies. It was for the AO to come out clearly as to the basis for rejection of the Book of Accounts - HC
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• Income Tax:

  Non deduction of TDS u/s 194A - additions u/s 40(a)(ia) - payee has taken the amount in computing its income and paid tax thereon - the proiviso that was inserted w.e.f. 1.4.2013 are to remedy unintended consequences and therefore, the same are treated as clarificatory in nature and retrospective in operation - AT
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• Income Tax:

  TDS liability on advertisement - There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194C. - AT
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• Income Tax:

  Addition made on account of performance related pay provisions to directors and staff - ascertained liability - there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. - AT
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• Income Tax:

  Addition made towards “provision for lease equalization charges” while computing the book profit of the assessee for the purpose of determining tax U/s.115JB - the “Book Profit” computed as per the provisions of the Companies Act and in compliance with the Accounting Standards - However, AO and CIT(A) did not record such facts - matter remanded back for verification. - AT
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• Income Tax:

  Taxing the compensation received - whether be taxed as Capital Receipt? - the fact that the land has remained with the assessee and that the assessee in future may earn profits from the said land cannot be a ground to hold that the compensation received by the assessee in lieu of damage caused to the land was revenue receipt. - AT
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• Income Tax:

  Reopening of assessment - explanation 2 to section 153 - It is nowhere held by the Tribunal that the income of the assessee is relatable to any other assessment year. - explanation not application - assessment is barred by limitation - AT
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• Income Tax:

  Penalty u/s.271(1)(c) - assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate concealment of income or furnishing inaccurate particulars of such income - No penalty - AT
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• Income Tax:

  The nature of receipts in the hands of assessee is income being surplus in its account held with the Venture Capital Company distributed to assessee at the time of squaring up the account of assessee with the Venture Capital Company - Receipt of share from Venture Capital Company is taxable - AT
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• Income Tax:

  Disallowance of foreseeable losses - Provision for foreseeable losses debited by the assessee in the Profit & Loss Account, is not a contingent liability so as to be disallowed while computing business income for the year under consideration - AT
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• Income Tax:

  Addition made in respect of share capital contribution received - The proviso in section 68 has been inserted w.e.f.1.4.2013 and therefore, the onus to prove the nature and source of such sum so credited shall be on the assessee only from assessment year 2013-14 not prior to that. - AT
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• Income Tax:

  Disallowance for payments in respect of remuneration and interest on capital paid to the partners - disallowance under section 184(5) comes into play not as a result of the assessment under section 144 but as a result of the lapses as mentioned in section 144. - AT
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• Income Tax:

  Disallowance of interest expenses - direct nexus - If the amount so taken from the parties was not utilized for the purpose of making fixed deposit where from the assessee has earned the interest, under such circumstances, the assessee would not be entitled for deduction of the expenditure claimed u/s.57 of the Act - AT
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• Income Tax:

  Transfer Pricing adjustment - the method adopted by the TPO is slightly better than the method adopted by the assessee. More so when the allocation by the assessee is not supported by any certificate from the management. - AT
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• Income Tax:

  Levying penalty u/s. 271(1)(c) - A return is not only an ordinary documentary. Assessees have to verify the returns and declare that details furnished are true. Therefore,when an totally unsustainable claim is made it cannot be considered a debatable claim about which two views were possible - levy of penalty confirmed - AT
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• Customs:

  Enhancement of value as per DOV alert – Consent given by CHA – appellant agreed for same and paid duty at enhanced value without any protest/objection - subsequent appeal is not maintainable - AT
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• Customs:

  As imports under ITC(HS) 89.08 are free without any restrictions, therefore, such MGO/HSD contained in vessels brought in for breaking up, cannot be held as liable for confiscation under Customs Act, 1962 and no penalties upon appellants are imposable - AT
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• Customs:

  Mis-declaration of Value – validity of statement - Law is settled that customs officers not being police officers evidence recorded under section 108 of Act cannot be discarded unless it is otherwise found that same suffers from disability prescribed by law – No element of disability prescribed by law present in case to discard statement recorded by Customs - AT
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• Customs:

  Failure to mention Advance License Number in Bills of entry – Denial of advance license scheme – appellants are eligible for conversion of all nine shipping bills from DEPB scheme to Advance License Scheme - AT
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• Service Tax:

  Club membership - the Membership fee, Annual fee and other charges received from members from time to time be liable for Service Tax. - Refundable security deposit and interest there-on should not be subjected to Service Tax as per provisions of the Finance Act, 1994. - AAR
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• Service Tax:

  Renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010, and not so, earlier to this date - HC
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• Service Tax:

  Industrial construction service - Painting of walls of the floor of commercial building would fall under industrial construction service and being in the nature of completion and finishing service would not be entitled to abatement of 67% under Notification No.15/20045-ST - AT
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• Service Tax:

  Denial of cenvat credit - GTA services - credit availed by the appellant as a recipient of GTA services discharged by their registered office and distributed to the appellant unit - credit allowed - AT
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• Service Tax:

  Denial of CENVAT Credit - invoice issued in the name of head office and endorsed to the appellant’s unit - Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration and therefore, there is no reason to deny the CENVAT Credit - AT
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• Central Excise:

  Denial of CENVAT Credit - whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not - cenvat credit is admissible to the appellant. - AT
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• Central Excise:

  Duty demand - Assessee wrongly claiming exemption under Notification No.8/2002, dt.01.03.2002 - extended period of limitation - declared in the RT 12 return - claim of the notification wrongly would not amount to suppression of facts with intent to evade payment of duty. - AT
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• Central Excise:

  Denial of CENVAT Credit - Credit availed on detergent soap which was supplied free along with detergent powder - MRP based valuation - credit was rightly allowed - AT
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• Central Excise:

  Demand of interest - CENVAT Credit - inter unit transfer - revenue neutral situation - period of limitation - e appellants are not liable for demand of interest and also not liable for penalty - AT
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• Central Excise:

  Denial of cenvat credit - whether CVD credit availed by the appellant on T.R.6 challan is a valid documents for availing the credit of CVD paid by the appellant on the Jumbo Rolls purchased through auction from Customs - Held Yes - AT
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• VAT:

  Input tax credit - it is not necessary that the Assessees have to be dealers in the same commodity, i.e. the DEPB scrips - As long as it is shown that use of the DEPB scrip has impacted the cost of the product that is sold, either directly or indirectly, the credit of the input tax paid on the DEPB scrip cannot be denied to the Assessees - HC
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• VAT:

  Benefit of input tax credit (ITC) on Packing material - finished goods were stock transferred - Appellant is not entitled to the benefit of ITC in respect of packing materials used for its finished goods, which were stock transferred. - HC
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• VAT:

  Legality and validity of order on the basis of the audit report - same authority to issue the audit report and pass the assessment order - principle of natural justice demands that nobody shall be a judge of his own cause - HC
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• VAT:

  Classification of Keo Karpin Baby oil as cosmetic or medicine - Rate of VAT - 6% or 12% - product in issue was manufactured under a licence issued under the Act of 1940 and had prophylactic qualities, protecting children from rickets and checking vitamin A and E deficiency in them, entitling it to be classified as a medicine/drug - HC
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• VAT:

  Principle of promissory estoppel - Once the Government had given a promise to give exemption of the entry tax in order to give thrust to industrial growth and in fact such benefit from exemption of entry tax for seven years is being given to all similarly situate industries, then there is no justification to limit it - HC
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• VAT:

  Validity of circular - clarification runs counter to meaning of the expression "textile" including "artificial silk" given by Supreme Court. - the clarification could not be issued against an order passed by the competent authority interpreting similar provision. - HC
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• VAT:

  Classification of HDPE/PP Woven Fabric - Whether Artificial silk - Rate of VAT - HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and is exempted from payment of tax. - HC
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Articles

• STRICTURES AGAINST ‘CESTAT’ /DEPARTMENTAL OFFICERS
• GSTN- How far is privatization justified?

Circulars / Instructions / Orders

• Service Tax - 186/5/2015 - dated 5-10-2015
  Service tax levy on services provided by a Goods Transport Agency

News

• Central Board of Excise and Customs (CBEC) to Host the 11th Asia Europe Meeting (ASEM) of the Directors General-Commissioners of Customs in Goa on 8th and 9th October, 2015; to Focus on the Five Main Priorities of ASEM viz. Trade Facilitation and Supply Chain Security; Combating Infringement on IPR; Protection of Society and Environment; Involving Business; and Communication and Visibility; Directors General-Commissioners of Customs to Deliberate on a new Action Plan for 2016-17

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• Commerce Secretary Inaugurates “Advantage Healthcare India – 2015”

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• Statement after the Press Conference of Secretaries, Ministry of Finance: India Emerged as the Fastest Growing Major Economy in the World;

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• Union Finance Minister Shri Arun Jaitley to be on Official Tour from 7th October to 11th October, 2015 to Lima, Peru to attend the Annual Meetings of the International Monetary Fund (IMF) and the World Bank;

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• RBI Reference Rate for US $

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Case Laws:

• Income Tax

• 2015 (10) TMI 262
  Extension of date for filing returns of income in the ITR Form Nos. 3,4,5,6, and 7 to 31st October, 2015 - extension seeked on the ground that on similar grievances such a prayer has been finally allowed by orders in Vishal Garg v/s. Union of India (2015 (9) TMI 1307 - PUNJAB & HARYANA HIGH COURT) and All Gujarat Federation of Income Tax Consultants v/s. Central Board of Direct Taxes (2015 (10) TMI 25 - GUJARAT HIGH COURT ) - Held that:- The present situation has arisen only in view of the delay on the part of CBDT in discharging its obligations of making available the ITR Form Nos. 3,4,5,6, and 7 in due time. Thus, the need to extend the due date. One more feature which was emphasized was that in case of ITR Forms 1,2,2A and 4S being non-audit cases, necessary forms were notified only on 22nd June, 2015 instead of 1st April, 2015 i.e. a delay of 83 days. The normal date of filing of return in such cases would be 31st July, 2015. However, the CBDT extended the same to 7th September, 2015 by an order dated 2nd September, 2015 under Section 119 of the Act. This on the ground that the delay in notifying the forms would cause great hardship to the tax payers. We are unable to appreciate how a delay of 83 days in making the ITR Form Nos.1,2, 2A and 4S in case of non-audit will cause great prejudice and delay of 120 days in making ITR Form Nos.3,4,5,6 and 7 does not cause any prejudice. The Gujarat High Court noted that the Scheme of the Act indicates that ordinarily a period of 180 days is available to the assessee to file income tax return in case of E-filing of return of income in Form Nos.3,4,5,6, and 7. Any curtailment of this period on account of non-availability of the necessary utility for filing a return online, does certainly cause prejudice to the assessee wholly on account of the delay on the part of the CBDT to notify the ITR Forms. It is clear that it was also of the view that the CBDT should make available the necessary ITR Forms on 1st April of the subject Assessment Year for the benefit of the assessee. However, in case, there is any delay, the same should be recorded in writing and also consider whether in view of the delay, an extension of time in filing return is warranted. Taking into account the fact that the decision of the Gujarat High Court and Punjab and Haryana High Court have been accepted by the CBDT issuing orders under Section 119 of the Act but very unfairly in case of an all India Statute restricting its benefit to only two States and one Union Territory. This itself warrants an extension of due date to the same date as is available for the assessees in Gujarat, Punjab and Haryana to avoid any discrimination to the assessees else where.The Respondent No.2 i.e. CBDT is directed to forthwith issue the order/ notification under Section 119 of the Income Tax Act and extend the due date for E-filing of the Income Tax Returns in respect of the assessee who are required to file return of income by 30th September, 2015 to 31st October,2015.

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• 2015 (10) TMI 261
  Validity of reopening of assessment - assessee had debited an amount to the profit and loss account by way of provision for obsolete stock - Income of the trading unit was required to be assessed separately and could not be set off against the brought forward losses of the Pune unit - incorrect allowance of deduction had been given to the assessee when it was not eligible for the same - goods in transit as also stores and spares - Held that:- All the queries and issues have been specifically raised and answered by the assessee in the original assessment proceedings. Thus, even though the Assessing Officer did not make any addition in the assessment order, it would have to be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make any addition or to reject the stand of the assessee. Consequently, it will have to be presumed that the Assessing Officer had formed an opinion which is now sought to be changed through the re-assessment notice, which cannot be permitted. For all the foregoing reasons, the impugned notice under Section 148 dated 28.03.2013 and the impugned order dated 18.02.2014 are set aside and the re-assessment proceedings in respect of the assessment year 2006-07 stand quashed. - Decided in favour of assessee.

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• 2015 (10) TMI 260
  Extension of due date of filing of returns - Held that:- It is to be noted that a representation was made to the Government of India for extension of date, which has been rejected vide communication dated 9th September, 2015 (Annexure-1). The reason for rejection is that income tax return forms were notified on 29.7.2015 and the same were made available on 7th August, 2015 and therefore, there was enough time for compliance. It is also taken into consideration that changes in the forms were not extensive as compared to the earlier years. Not oniy this, the tax-payers entering into either international transactions or specified domestic transactions have been permitted to file returns by 30th November, 2015. Having regard to the reasons given by the Government of India for not extending the date of filing returns, we find no merit in the petition. Even otherwise, we are of the view that the Court should not interfere in such policy decision of the Government.It is to be noted that Delhi High Court in AVINASH GUPTA Versus UNION OF INDIA & ORS [2015 (9) TMI 1123 - DELHI HIGH COURT] has also dismissed W.P.seeking the same relief for extension of time.

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• 2015 (10) TMI 259
  Computation of the taxable income under Section 44BB - Whether the amount of service tax collected by the Assessee from its various clients should have been included in gross receipt while computing income? - Held that:- The Court concurs with the decision of the High Court of Uttarakhand in DIT v. Schlumberger Asia Services Ltd (2009 (7) TMI 51 - UTTARAKHAND HIGH COURT) which held that the reimbursement received by the Assessee of the customs duty paid on equipment imported by it for rendering services would not form part of the gross receipts for the purposes of Section 44 BB of the Act. The Court accordingly holds that for the purposes of computing the ‘presumptive income’ of the assessee for the purposes of Section 44 BB of the Act, the service tax collected by the Assessee on the amount paid t it for rendering services is not to be included in the gross receipts in terms of Section 44 BB (2) read with Section 44 BB (1). The service tax is not an amount paid or payable, or received or deemed to be received by the Assessee for the services rendered by it. The Assessee is only collecting the service tax for passing it on to the government. The Court further notes that the position has been made explicit by the CBDT itself in two of its circulars. In Circular No. 4/2008 dated 28th April 2008 it was clarified that “Service tax paid by the tenant doesn't partake the nature of "income" of the landlord. The landlord only acts as a collecting agency for Government for collection of Service Tax. Therefore, it has been decided that tax deduction at source under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax.’ In Circular No. 1/2014 dated 13th January 2014, it has been clarified that service tax is not to be included in the fees for professional services or technical services and no TDS is required to be made on the service tax component under Section 194J of the Act. - Decided in favour of the Assessee.

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• 2015 (10) TMI 258
  Transfer of jurisdiction to Assistant Commissioner of Income Tax challenged - urged as no notice or opportunity of hearing was given - validity of order of ACIT directing to conduct a special audit under Section 142(2A) of the Act - Held that:- This Court is of the opinion that the impugned order dated 23rd September, 2008 passed by the Commissioner of Income Tax-VIII, New Delhi transferring the case to the Assistant Commissioner of Income Tax, Meerut was patently illegal and in gross violation of the principles of natural justice. It was imperative for the authority to give notice and an opportunity of hearing to the petitioner before transferring the case under Section 127 of the Act, which in the instant case has not been done. Therefore, the impugned order dated 23rd September, 2008 as well as the corrigendum dated 26th October, 2009 issued by the Commissioner of Income Tax-VIII, New Delhi under Section 127 of the Act cannot be sustained. In the light of the aforesaid, all consequential proceedings initiated by the Assistant Commissioner of Income Tax, Meerut by issuance of notice dated 30th October, 2009 and the notice dated 7th December, 2009 and the consequential order dated 18th December, 2009 directing to conduct a special audit under Section 142(2A) of the Act being without jurisdiction also cannot be sustained. In our opinion, it is necessary and essential for the authority to give reasons indicating the complexity of the accounts and the need to get the accounts audited under Section 142(2A) of the Act. We also find that an identical order was issued to another assessee which order was quashed by this High Court on the ground that no reasons had been given. An order dated under Section 142(2A) of the Act entails civil consequences and, an order is required to be passed upon an application of mind and with due care. Complexity of the accounts can only be judged upon a perusal of the books of accounts and after inviting explanation from the assessee. If the books of accounts are not perused, the question of complexity cannot be judged. We are of the opinion that an order under Section 142(2A) cannot be passed on the basis of the seized material unless the assessee failed to produce books of accounts, which in the instant case has not happened, inasmuch as no hearing took place on 4th December, 2009 on the date when the petitioner was required to produce the books of accounts. For the reasons stated aforesaid, the order dated 23rd September, 2008 passed by the Commissioner of Income Tax, Delhi-VIII, New Delhi and the corrigendum issued by the said authority on 26th October, 2009 are quashed as a consequence thereof notices issued under Section 153A of the Act dated 30th October, 2009 issued by the Assistant Commissioner of Income Tax, Meerut as well as the notice dated 7th December, 2009 and the order dated 18th December, 2009 issued by the said authority under Section 142(2A) of the Act are quashed. - Decided in favour of assessee.

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• 2015 (10) TMI 257
  Capital gains in respect of sale of trees only - ITAT remanded the matter to the Assessing Officer to recompute the capital gains by taking 70% of the sale proceeds as market value of the land as on 1-4-1981 - Held that:- The Tribunal has accepted the case of the assessee and has arrived at the cost as claimed at 70% relying on certain earlier decisions of the Tribunal wherein, for valid reasons, 70% of the sale proceeds has been accepted. In view of the aforesaid, we are of the opinion that it cannot be said that the order of the Tribunal is improper as it has followed its earlier decision in the case of Sangameshar Coffee Estate as well as other cases, and thus, has recorded a finding of fact, which need not be disturbed by this Court. - Decided in favour of assessee.

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• 2015 (10) TMI 256
  Fringe Benefits - whether cannot arise when the expenditure is incurred on non-employees - whether Tribunal was justified in law in holding that expenses which are specifically mentioned in Section 115WB(2) can be reduced from the valuation of fringe benefit if they have not been incurred for employees? - Held that:- Identical appeals filed by the revenue from the common impugned order in respect of other parties to this Court were dismissed [2015 (10) TMI 86 - BOMBAY HIGH COURT]. This was by following the decision rendered of this Court in CIT Vs. Kotak Mahindra Old Mutual Life Insurance Ltd. being Income Tax [2015 (10) TMI 82 - BOMBAY HIGH COURT] - Decided against revenue.

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• 2015 (10) TMI 255
  Undisclosed income - credit entry not proved - search and seizure operation - Held that:- It is needless to point out that when an investment made by a person is claimed to have come from a particular source, it is up to the assessee to prove it. In this case, the assessee did not and could not discharge the burden cast upon him. Therefore, the Assessing Officer as well as the Tribunal were right in holding the issue against the appellant insofar as the amount claimed to have been received from Beauty Apparels is concerned. - Decided against assessee.

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• 2015 (10) TMI 254
  Re-assessment proceedings - ITAT quashed re-assessment order - Held that:- Very initiation of proceedings under Section 147 was bad due to non service of notice. - Decided against revenue.

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• 2015 (10) TMI 253
  Expenditure incurred on payments made to the pensioners - whether is allowable as revenue expenditure notwithstanding the fact that the said amount was not an allowable deduction under section 36(1)(iv) and (v)? - Held that:- An analysis of the provisions of section 36(1)(iv) of the Act shows that any sum which is paid by the assessee as an employer to a recognised provident fund or an approved superannuation fund is admissible as deduction thereunder. Under Clause (v) of Section 36(1) of the Act, deduction is allowed in respect of any sum paid by the assessee as an employer as contribution to an approved gratuity fund created by the employer for the exclusive benefit of the employees under an irrevocable trust. Admittedly, in the present case, the contributions were towards the unrecognised pension/superannuation fund and gratuity fund. Thus, the assessee was not entitled to any deduction in respect of the said amounts either under Section 36(1)(iv) or Section 36(1)(v) of the Act. Therefore, the said amount also could not be allowed as deduction under Section 37(1) of the Act as held by the Delhi High Court in Sony India P. Limited's case (2006 (6) TMI 76 - DELHI High Court ). In so far as actual payment made to the pensioners is concerned, the same has been held to be admissible to the assessee on the principle that where an expenditure which is wholly and exclusively expended for the purposes of the business or profession of the assessee is permissible to be deducted from the income under Section 37 of the Act. There was no error in the approach of the Tribunal in allowing the aforesaid expenditure as deduction under Section 37 of the Act. No substantial question of law - Decided against revenue.

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• 2015 (10) TMI 252
  Rejection of Books of Account - Trading addition - whether where Books of Account are rejected, does it entitle the Assessing Officer to make an addition to the Trading results? - CIT(A) held that rejection of Books of Account by resorting to Section 145 of the Act, will not necessarily lead to addition to the Returned income, and accordingly deleted the Trading addition also confirmed by ITAT - Held that:- CIT(A) as well as the Tribunal, after appreciation of evidence on record and considering the facts have come to a definite finding of fact that the trading results were not required to be interfered with merely because G.P. rate had decreased to an extent. The assessee has pin-pointedly placed material on record that the turn over stood increased from about 2 crore in the assessment year 2002-03 to 3.74 crore in the assessment year 2003-2004, and apart from this fact the Assessing Officer has not controverted or observed contrary to the claim of the assessee that cost had increased, when specific material was placed, before the Assessing Officer. Though the Books of Account have been rejected, and proper estimation can certainly be made but it is no ground to make an addition in a case where the Assessing Officer was not able to come to further material or controvert the facts narrated by the assessee during the course of assessment proceedings. The Assessing Officer was unable to pinpoint as to any specific defect noticed during course of the proceedings except that the Books of Account were rejected on certain discrepancies. It was for the Assessing Officer to come out clearly as to the basis for rejection of the Book of Accounts. As decided in CIT v. Gotan Lime Khanij Udyog [2001 (7) TMI 19 - RAJASTHAN High Court] in the absence of any finding recorded by the Commissioner (Appeals) that the expenses incurred on any account appeared to be unreasonable or excessive, the additions sustained merely on suspicion of pilferage or leakage were not justified. This conclusion was a finding of fact keeping in view that the additions in the profits and gains returned by the assessee were not a necessary concomitant of an order made under sections 145(1) or 145(2). Therefore, there was no error in the order of the Tribunal deleting the entire additions to the trading results after holding that the proviso to section 145(1) was applicable - Decided against revenue.

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• 2015 (10) TMI 251
  Penalty under section 271(1)(c) - assessee has knowingly/deliberately disclosed the sale consideration of property at a lesser rate than what was determined by the registering authority - assessee an individual is a non-resident Indian - Held that:- As can be seen from the language of section 50C it is a deeming provision. In a case where A.O. finds that the value determined by the stamp duty authority for the purpose of stamp duty is more than the consideration claimed to have been received by the party, then the value adopted by the SRO shall be deemed to be the consideration received by the assessee for the purpose of computation of capital gain. Thus, for application of section 50C of the Act, it is not necessary for the A.O. to examine whether actually assessee has received anything over and above the amount mentioned in the sale deed as he simply has to go by the valuation adopted by the SRO. However, as far as imposition of penalty is concerned, there must be positive evidence before the A.O. to conclude that assessee has received the amount as valued by SRO for stamp duty purpose. Unless there are positive evidence to indicate Bhavya Anant Udeshi, Hyderabad. receipt of on money to the extent of valuation made by SRO by the assessee, penalty under section 271(1)(c) cannot be imposed. Further, in the present case as is evident from the materials on record, the assessee in the course of assessment proceeding has furnished all necessary and relevant documents relating to the transaction of the property in question including registered sale deed. The assessee has not suppressed any material fact from the notice of the A.O. In these circumstances, the imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income or concealment of income, in our view, is not appropriate. Imposition of penalty under section 271(1)(c) of the Act in the present case is not valid. - Decided in favour of assessee.

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• 2015 (10) TMI 250
  Claim of deduction u/s 80IAB disallowed - assessee has not made the claim in its original return of income, has not filed Form 10CCB alongwith the return of income and has not maintained separate books of accounts - Held that:- As regards the first objection, we find that it is not sustainable as the assessee had filed a revised return of income in which the claim u/s 80IAB was made. According to the AO, the revised return was barred by limitation, but the fact that he has acted upon it by accepting the income returned therein belies his contention that it is not a valid return. Having accepted the revised return in part, he cannot ignore the claim of the assessee u/s 80IAB of the Act. As regards the second objection that Form 10CCB was not filed along with the return of income, we find that Rule 18BBB required that Form 10CCB be filed along with the return of income, we are of the opinion that it would also fulfil the requirement if it is filed before completion of the assessment proceedings. In the case before us, the the assessee has filed Form No.10CCB on the last date of hearing due to which AO could not have verified the same to appreciate the correctness of the claim. As regards the third objection, we find that the CIT (A) has relied on section 80IA(10) dealing with similar provisions as section 80IAB to hold that the AO in computing the profit and gains of the eligible business for the purpose of the deductions u/s 80IA, can take the amounts of profit as may be reasonably deemed to have been derived therefrom. Thus, it is clear that even if the assessee is not maintaining separate books of accounts for eligible units, the AO shall compute the deduction on a reasonable basis provided the business transacted between eligible business and any other person produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business. In the case before us, the CIT (A) has simply applied the said provision without examining whether the assessee satisfies the conditions prescribed thereunder. Therefore, for verification as to whether the assessee satisfied the conditions u/s 80IA(10) of the Act and for computation of deduction u/s 80IAB of the Act, we deem it fit and proper to remand the issue to the file of the AO. - Decided in favour of assessee for statistical purposes. Disallowance of the interest paid to NTPC u/s 40(a)(ia) - non deduction of TDS - CIT(A) deleted the disallowance - Held that:- At the time of hearing the ld Counsel for the assessee filed before us copies of the orders of the Tribunal at Agra in the case of Satish Chand Agarwal Vs JCIT [2014 (6) TMI 430 - ITAT AGRA] and Rajeev Kumar Agarwal Vs ACIT [2014 (6) TMI 79 - ITAT AGRA ] both dated 29.05.2013, wherein after discussing the issue at length, the Tribunal has held that insertion of provisos are treated as declaratory and clarificatory in nature and therefore, it has retrospective effect from 1.4.2005 i.e. from the date from which sub clause (ia) of section 40(a)(ia) was inserted by the Finance Act, 2004. Respectfully following the said decision of the Tribunal on the legal issue about the retrospective effect of the amended provisions of section 40(a)(ia), we see no reason to interfere with the order of the CIT (A)who has taken note of amendment to section 201 and section 40(a)(ia) made by the Finance Act of 2012 w.e.f. 1.4.2013 to the effect that the said provisions would not apply, if the payee has taken the amount in computing its income and paid tax thereon. We find that the CIT (A) has observed that the proiviso that was inserted w.e.f. 1.4.2013 are to remedy unintended consequences and therefore, the same are treated as clarificatory in nature and retrospective in operation - Decided in favour of assessee.

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• 2015 (10) TMI 249
  Expenditure incurred towards the drugs consumed for quality control disallowed - Held that:- On evidence put forth by the assessee-company, the Assessing Officer is not justified in making observation that the assessee was not required to act as a drug/medicine testing agency. The Assessing Officer has to verify the evidence produced by the assessee and find out whether the assessee has acted as a testing agency or not. It is not for the Assessing Officer to comment that the assessee was not required to act as a drug/medicine testing agency. Since the material available on record clearly suggest that the assessee has tested the quality of drugs procured, this Tribunal is of the considered opinion that the expenditure incurred by the assessee towards the drugs consumed for quality control has to be allowed as expenditure. Expenditure on damaged drugs and unusable drugs - Held that:- This Tribunal is of the considered opinion that the Assessing Officer has to examine the matter afresh after considering the necessary material that may be filed by the assessee to support the claim of damaged drugs, unusable drugs and drugs consumed for quality control. In other words, the assessee has to produce necessary details with regard to damaged drugs, unusable drugs and drugs consumed for quality control, liquidated damages, if any, claimed from the respective companies for the damaged and unusable drugs. In view of the above discussion, the orders of the lower authorities are set aside and the entire claim of damaged drugs, unusable drugs and drugs consumed for quality control is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matte afresh in the light of the material/details that may be filed by the assessee with regard to damaged drugs, unusable drugs and drugs consumed for quality control and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee. Cost of blood pressure checking apparatus said to be supplied to the members of the State Legislative Assembly - Held that:- This Tribunal is of the considered opinion that the cost of blood pressure checking apparatus cannot be considered to be a marketing expense. The assessee-company was expected to procure the drugs, medicines, equipments etc. and supply the same to the Government Hospitals. Supply of any machinery or equipment including blood pressure checking apparatus to the members of the State Legislative Assembly or to any of the Officers of the Government, in their individual capacity cannot be considered as marketing expenses, therefore, this Tribunal is of the considered opinion that the expenditure of ₹ 6,45,741/- cannot be allowed as customer care expenses for the assessment year 2010-11. Accordingly, the order of the CIT(A) on this issue for assessment year 2010-11 is set aside and that of the Assessing Officer is restored. - Appeal Decided partly in favour of assessee for statistical purposes.

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• 2015 (10) TMI 248
  Addition on Capital gains - AO made the impugned additions solely on the basis of information received from the DDI (Inv.) - Held that:- The contentions of the assessee that they have not received the cheques have not been disproved by the assessing officer. It is not understandable as to how the assessing officer could assess the alleged bogus capital gains in the hands of these assessees, when these assessees have not disclosed the same in their respective books of accounts or in the income tax returns. Though there is a possibility that these assessees might have encashed the alleged bogus capital gains through some other bank accounts, yet the said inference would be against the human probabilities as no prudent person would avail bogus capital gain with the purpose of not disclosing the same. Hence, in the absence of any other corroborative material to show that these assessees have received the cheques from Mukesh chokshi and his group of companies as per the information available in their computer record which could be corroborated with any other material and further in view of the fact that these assessees have denied the said receipts, we are of the view that the ld CIT(A) was not justified in confirming the additions made by the assessing officer. Tax authorities have taken the view that these assessees have failed to discharge the burden placed upon them, but there should not be any dispute that it would be difficult for anyone to prove the negative truth. Thus additions are liable to be deleted - Decided in favour of assessee.

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• 2015 (10) TMI 247
  TDS liability on advertisement - falls within the purview of section 194C and not section 194I? - Held that:- t it is an undisputed fact that assessee has entered into a contract with M/s Portland India Outdoor Advertising Pvt Ltd and Poster Publicity Division of Media-edge (CIA India Pvt Limited) (payee firms) for display of advertisement of its clients. These payee firms in turn obtained display services for displaying advertisement on hoardings sites etc., taken from the hoarding contractors/service providers/Municipal Corporation etc. There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194 C. The finding of the CIT(A) as recorded above are based on correct appreciation of facts, law and the clarification issued by the CBDT and accordingly same is affirmed. Thus grounds raised by the revenue are dismissed in both the years. - Decided in favour of assessee.

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• 2015 (10) TMI 246
  Addition u/s 40A(3) - assessee had made cash payments exceeding ₹ 20,000/- for the purchases from a single party in a day during the relevant period - Held that:- The assessee does not fall within the exception given in Clause (k) of Rule 6DD. It is not the case of the assessee that the assessee or the suppliers of the materials are not having bank account. The exceptions in Rule 6DD are provided to mitigate the situations where, either of the parties to the transaction does not have the benefit of banking facilities or are strained by some exceptional or unavoidable circumstances to deal in cash. Submissions of the ld. Counsel for the assessee that the cash payments were made to the authorised representative who would travel 90 kms for weekly bazzar to the place of assessee to collect orders and the payments of the material supplied is unsustainable. Travelling 90 kms to collect payment certainly cannot be an excuse to make payment in violation of the provisions of the Income Tax Act. As far as agents referred in Rule 6DD(k) are concerned, the authorised representatives of the supplier of material cannot be equated with the ‘agents’ referred to in Rule 6DD(k) of Income Tax Rules. The Assessing Officer had not made any addition by applying GP rate by rejecting the books of account of the assessee. It is the case of the assessee that no books of account are maintained. Further, except for the disallowance u/s. 40A(3) no addition has been made by the Assessing Officer in scrutiny assessment. The case of the assessee is entirely on a different footing and no benefit of the case laws relied upon by the ld. Counsel for the assessee can be given. We concur with the findings of the Commissioner of Income Tax (Appeals) confirming the addition made invoking provisions of S. 40A(3). The impugned order is well reasoned and justified, no interference is warranted in the impugned order. - Decided against assessee. Charging of interest u/s. 234A, 234B and 234C is mandatory and consequential (CIT Vs. Anjum M.H. Ghaswala -2001 (10) TMI 4 - SUPREME Court ). - Decided against assessee.

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• 2015 (10) TMI 245
  Addition made on account of performance related pay provisions to directors and staff - ascertained liability - CIT(A) deleted the addition - Held that:- We find from the order of the CIT(A) that the documents which were placed before the AO were not disputed by the AO, from which it is clear that the Director was entitled to performance related pay and as the actual amount had not been approved by the Board, the assessee had made provision for a crystallised liability and debited it in the P&L Account. As soon as the approval was received from the Board of Directors in the meeting held on 15th June 2009, the actual payments were made after deducting tax at source. From the above, it proves that the payment had to be made to the director, the liability had duly crystallised however, on non-availability of the approval it could not be quantified exactly. It is also seen that the payment made was exactly as per the provision made by the assessee. Under the circumstances, it stands that there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. Accordingly, we see no reason to interfere in the findings of the CIT(A). Apart from this, the issue of disallowance of provisions has already been decided by the Tribunal in assessee’s own case vide its order dated 13-11-2006 and also for the assessment year 2009-2010 wherein the Tribunal deleted the addition so made on the provisions for expenses. - Decided in favour of assessee.

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• 2015 (10) TMI 244
  Disallowance of claim of deduction u/s.36(1)(va) - late payment of employee’s contribution towards ESIC though the same was paid before the due date of the return of income - Held that:- It is an admitted fact that the assessee in the instant case has deposited the employees contribution to ESIC after the due dates as per provisions of the ESIC Act. However, it is very clear from the chart that the employees contribution to ESIC fund were made much prior to the due date of filing of the return of income. We find the issue stands covered in favour of the assessee by the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transport Ltd. reported in [2014 (10) TMI 402 - BOMBAY HIGH COURT] wherein it has been held that the decision of the Supreme Court in Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] applies to employees’ contribution as well as employer’s contribution and therefore are covered under the amendment to section 43B of the I.T. Act, 1961. Since the assessee in the instant case has admittedly deposited the contributions before the due date of filing of the return of income, therefore, no disallowance is called for u/s.36(1)(va) r.w.s. 2(24)(x) warranted - Decided in favour of assessee. Disallowance of claim proportionate interest on the belief that interest bearing funds were used for extending interest free loans and advances for other than business purpose - Held that:- Since in the instant case it is an admitted fact that no disallowance was made by the AO on account of such interest free advance to the above 4 parties, therefore, it will not be equitable on the part of the revenue to take a different stand now in respect of the amounts which were the subject matter of previous years’ assessment. We accordingly set aside the order of the CIT(A) and direct the AO to delete the disallowance made. See Commissioner Of Income-Tax Versus Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA High Court ] - Decided in favour of assessee.

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• 2015 (10) TMI 243
  Deduction u/ss.80HH & 80I allowed before setting off of loss of another division - Held that:- There is no issue between the parties so far as facts of the case are concerned. The assessee claims section 80HHC and 80I deduction qua its profits derived from Mandali Undertaking whereas it has incurred losses from toilet soap division quoting case law of CIT vs. Modi Xerox [2010 (4) TMI 858 - Allahabad High Court ], CIT vs. Emmbros Metal (P) Ltd. [2012 (10) TMI 61 - HIMACHAL PRADESH, HIGH COURT] and CIT vs. Premier Explosives Ltd [2014 (10) TMI 708 - ANDHRA PRADESH HIGH COURT], to pray for acceptance of its appeal. We put a specific query to the parties as to whether or not the hon'ble jurisdictional high court has decided this substantial question of law. The reply received is in negative. We proceed further and notice that hon'ble Allahabad high court hereinabove has considered case law of Synco (2008 (3) TMI 13 - Supreme court ) and observes that two principles of law emerged therefrom. The first one is that for the purpose of computing gross income, losses of other units are to be taken into consideration. The second one is that the very course is not to be adopted whilst computing section 80HHC/80I deductions and the profits are to be considered as if the same are the only source of income of that unit. The Revenue fails to quote any distinction on facts or law. Therefore, we accept the assessee's legal submission on first aspect of the matter. We come to objection of the lower authorities on applicability of section 80A amendment (supra) and find that the same is only introduced by the Finance Act, 2009 with retrospective effect from 1.4.2003 and does not deal with the relevant issue of adjustment of losses. We further reiterate that the impugned assessment year is 1991-92. The assessee's sole substantive ground accordingly succeeds. - Decided in favour of assessee.

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• 2015 (10) TMI 242
  Addition made towards “provision for lease equalization charges” while computing the book profit of the assessee for the purpose of determining tax U/s.115 JB - CIT(A) deleted the addition - Held that:- “Provisions for lease equalization charges” cannot be added back to the profit of the assessee company for computing tax under the provisions of section 115JB of the Act and also under the normal provisions of the Act, because the assessee has only rightly recognized its actual lease rental income in its profit and loss account for the relevant assessment year following the “Matching Concept” and the Accounting Standard-19. Precisely the “Book Profit” computed by the assessee in such case would be as per the provisions of the Companies Act and in compliance with the Accounting Standards which is mandatory. However, neither from the order of the Ld. Assessing Officer nor from the order of the Ld. CIT (A) these facts are revealed. Therefore with the above observations, we remit back both these cases to the file of Ld. Assessing Officer to verify whether the “Provision for lease equalization charges” debited in the P&L A/c of the assessee with the corresponding credit to “lease equalization reserves” are provided in the manner as stated hereinabove by the Ld. A.R and accordingly computed the profit of the assessee as per the normal provisions of the Act, and also for the purpose 115JB of the Act, and if so, delete the addition made on account of “Provision for lease equalization charges” as directed by the Ld. CIT (A) - Decided in favour of revenue for statistical purposes

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• 2015 (10) TMI 241
  Rectification of mistake - whether there had occurred a mistake apparent from record in the tribunal's order in-as-much as the tribunal had assumed that exemption u/s.10(21) was not an issue before the ld. CIT(A)? - denial of exemption u/s.10(21) and 10(23C) - benefit of exemption u/s.11 - Held that:- The assessee has brought on record the approval u/s. 35(1)(ii) dated 27.06.2008 w.e.f. 01.04.2002, and which is a prerequisite for the applicability of s. 10(21). The same is subject to certain additions specified therein, and which have not been examined for their satisfaction by the A.O., being not furnished before him. It was thus incumbent on the ld. CIT(A) to have caused so after admitting the said Approval by way of additional evidence under rule 46A. Not only does he not do so, he also does not issue any finding qua the satisfaction or otherwise of those conditions, and proceeds, as afore-stated, on the basis of the matter being covered by the tribunal's order for the earlier years, and which is definitely not the case. The Revenue, on its part, has brought on record the copy of the order u/s.10(23C)(via) dated 31.12.2008 (for A.Ys. 1999-2000 to 2007-08) by the prescribed authority, refusing the approval there-under to the assessee, claiming it to have a bearing in the matter. The same, we observe, contains findings on the aspect of the surcharge @ 20% on the bills issued to the indoor patients, and transferring the same, as also 25% of the fees paid to the doctors, to the corpus fund, even as the same are not in the nature of donations. These factors are duly noted by the A.O. at pg. 2 of his order, and which the assessee explains before the tribunal (for A.Ys. 1995-96 and 2001-02) as being voluntary in-as-much as this was being so done at the instance of the Charity Commissioner and, besides, being earmarked for the upgradation of the hospital, stand diverted by overriding title. These aspects stand duly considered in the Order u/s.10(23C)(via) supra. In view of the foregoing, we, under the circumstances, consider it only fit and proper to restore the matter back to the file of the A.O. to consider and determine the issue of exemption u/s. 10(21) on the income of the assessee's research centre afresh. This is a subsisting issue in the assessee's case. The A.O. shall consider the matter in all its aspects, and decide the same in accordance with the law per a speaking order, taking into account all the material deemed relevant for the purpose, allowing reasonable opportunity to the assessee to state its case. We decide accordingly. - Decided in favour of revenue for statistical purposes.

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• 2015 (10) TMI 240
  Taxing the compensation received - whether be taxed as Capital Receipt? - it is an admitted fact that the assessee received a sum towards the damages to the land belonging to it and the AO taxed it considering the same as revenue receipt, the ld. CIT(A) upheld the view taken by the AO. Held that:- On a similar issue their lordships of the Hon’ble Bombay High Court in the Case of Dr. (Ms) Avimay S. Hakim Vs ITO (2011 (8) TMI 147 - Bombay High Court) held that the fact that the land has remained with the assessee and that the assessee in future may earn profits from the said land cannot be a ground to hold that the compensation received by the assessee in lieu of damage caused to the land was revenue receipt. Accordingly, we answer the question in favour of the assessee and against the revenue. The impugned addition sustained by the ld. CIT(A) is deleted because the amount received towards the damage to the land belonging to the assessee cannot be said to be a revenue receipts. - Decided in favour of assessee.

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• 2015 (10) TMI 239
  Unexplained cash credits u/s.68 - unexplained deposits in assessee's savings bank account - CIT(A) deleted the addition - Held that:- From the order of the Ld. CIT (A), it appears that though the facts submitted by the assessee are acceptable, the source of bank deposit that was initially available in the bank account of the assessee has not been established. No doubt it is apparent that the assessee had withdrawn the money from his bank account and paid to Shri C.Subramnia Gounder for purchase of land and since the sales has not materialized the amount was refunded and re-deposited in the bank, however the source of the bank deposit available initially with the assessee has not been established. Unless the source of bank deposit initially available with the assessee is found to be genuine, it cannot be held that the assessee had accounted money in his bank account which was utilized for payment of advance for purchase of land and subsequently returned since the sale has not materialized. Therefore, in the interest of justice we hereby remit the matter back to the file of the Ld. Assessing Officer for denovo consideration. - Decided in favour of revenue for statistical purposes

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• 2015 (10) TMI 238
  Transfer pricing adjustment - adjustment to the international transactions of the assessee with its Associated Enterprises (AEs) - assessee is a subsidiary of TRUMPF Group Company TRUMPF International Beteiligungs – GmbH and TRUMPF Finance GmbH - non supply of segmental details - DRP observed that the assessee has not submitted valuation certificate regarding import of software for the machinery - Held that:- It is an undisputed fact that segmental reporting was not part of the audited annual accounts. It is an admitted fact that Accounting Standard – XVII on segmental report was not applicable. However, it is also an undisputed fact that segmental results were made available to the TPO during the course of assessment proceedings. The TPO has not pointed out any default or error in the segmental analysis provided by the assessee. In our considered opinion, once the segmental results were made available, it was incumbent upon the TPO to consider the same for determining the ALP. A similar view has been taken in the case of M/s Honeywell Electrical devices & Systems India Ltd. Vs. ACIT [2014 (5) TMI 728 - ITAT CHENNAI] and M/s 3i Infotech Limited vs. ITO [2013 (5) TMI 834 - ITAT MUMBAI]. Drawing support from the decision of the co-ordinate Bench (supra), we restore this issue to the file of the TPO/A.O. The TPO is directed to consider the segmental results provided by the assessee and decide the issue afresh after giving a reasonable and proper opportunity of being heard to the assessee. In respect of international transactions pertaining to capital goods, import of spares and consumables, import of tools, we find that the valuation certificates for import of capital goods, tools and spares covered 93% of the total aggregated value of such transactions and third party CUP (international CUP analysis) for import of capital goods, tools and spares covered 75% of the total aggregated value of such transactions. We find that the TPO has got no cogent material available on record to establish the contrary. We therefore do not find any merit in making any adjustment in respect of these transactions. We further find that the import of software of ₹ 1,15,590/- has been sold by the assessee at ₹ 1,23,656/- which is higher than the price at which it was procured, therefore, no adverse inference should be drawn in respect of this. - Decided in part in favour of assessee for statistical purpose.

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• 2015 (10) TMI 237
  Stay of demand - object of the assessee is to provide affordable accommodation/tenements as well as other services of infrastructure to the targeted category of peoples who could not afford the accommodation at the market price - Held that:- Subsequent to the grant of stay vide order dated 28.03.2014, the appeal of the assessee could not be heard due to the reasons recorded in the order-sheet of the appeal file. We have perused the order-sheet of the appeal file, and find that delay in hearing and disposal of appeal is not attributable to the assessee. Acordingly, in the facts and circumstances of the case and in the interest of justice, we extend the stay against balance outstanding demand for a period of 180 days or till disposal of appeal which ever is earlier. We make it clear that the stay granted/extended by us shall stand vacated if the assessee seeks unnecessary adjournment of hearing of the appeal.

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• 2015 (10) TMI 236
  Reopening of assessment - addition on account of foreign travelling expenses of the directors - CIT(A) held that the provisions of section 150 are not applicable in this case and the reassessment is barred by limitation as held BY ITAT in assessee's own case - Held that:- We find that a perusal of the order of the Tribunal reveals that the observations made by the Tribunal cannot be treated as direction under section 150(1) of the Act. The Tribunal simply deleted the additions made by the AO in the block assessment holding that such additions cannot be made in the block assessment as there was no incriminating material found during the search action. The mere observation that the decision given by the Tribunal should not be construed as an authority for the proposition that the disallowance of foreign travelling expenses cannot be made at all in regular assessment of income or on the basis of statement recorded by the directors, was a general observation to the effect that the decision given by the Tribunal in respect of block assessment years should not be taken as a precedent in regular assessment proceedings. Neither any direction was given by the Tribunal for assessing the foreign travelling expenses afresh, nor for reopening of any assessment. A perusal of the said explanation 2 to section 153 of the Act reveals that the said explanation is also not applicable to the facts of the present case. The said explanation provides that if any income is excluded from the total income of the assessee for an assessment year by an order, then such income is to be assessed in the relevant assessment year for which it was held to be relatable. This proposition is not applicable to the facts of the present case at all. It is nowhere held by the Tribunal that the income of the assessee is relatable to any other assessment year. Hence, we do not find any infirmity in the order of the ld. CIT(A) holding that the reopening was barred by limitation. Hence the consequential reopened assessments are not sustainable in law. - Decided against Revenue.

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• 2015 (10) TMI 235
  Demand raised u/s. 201(1) - short deduction of TDS on salary paid to Expatriate employees - TDS was deducted after search - Addition on account of perquisites and disallowing the relief u/s. 90 - enhancing the income of the expatriate employees - CIT(A) deleting the demand raised u/s. 201(1) and reducing the interest liability - assessee is a Liaison Office of US Based NGO established in 1943 having its operation in India for many years as an approved agency under the Indo US bilateral agreement - Held that:- We find considerable force in the contention of the Ld. Counsel of the assessee. We also find that the Ld. CIT(A) while allowing the claim of the assessee has relied upon the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Nestle Ltd. (2000 (1) TMI 35 - DELHI High Court) wherein it has been held that the deduction of income tax subject to regular assessment in the hands of the payee / recipients. We see no reason to interfere in the order of the Ld. CIT(A) nor any flaw or infirmity has been pointed out by the Ld. DR so as to take different view in the matter. The order of the Ld. CIT(A) is accordingly upheld. - Decided against revenue.

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• 2015 (10) TMI 234
  FBT - Validity of the reopening of assessment under Section 115WG - Addition on account of contribution towards pensions fund - Held that:- Contribution can be brought to the value of fringe benefit provided there is an employer-employee relationship and the same is paid to an approved superannuation fund. The Circular No.8/2005 dated 29.08.2005 also clarifies that employer- employee relationship is pre requisite for the levy of Fringe Benefit Tax. The other important aspect is that, the contribution must be to an approved superannuation fund. The contention of the assessee is that it is not contribution made to its employees but lumpsum payment to the Department of Telecommunication and even assuming it is payment to its employees it is not a contribution to an approve superannuation fund. On perusal of the orders of both the Assessing Officer as well as the CIT(A), we notice these contentions of the assessee has not been properly addressed to. Therefore, in the interest of justice, we are of the view that this matter needs to be reconsidered by the Assessing Officer taking into consideration of the contentions raised by the assessee. Hence, this issue is restored to the Assessing Officer for de novo consideration.- Decided in favour of assessee for statistical purposes.

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• 2015 (10) TMI 233
  Penalty u/s.271(1)(c) - ACIT while imposing penalty held that exemption u/s.10(14) in respect of interest on NRE deposits is available only to non-resident Indians. Whereas, the assessee is resident. He further held that ignorance of law cannot be excused. The non-disclosure of income is deliberate on the part of the assessee - Held that:- The assessee has not disclosed interest from Fixed Deposits in his return of income for the AY under consideration. The assessee had made investment in NRE Fixed Deposits from his NRE SB A/c in the year 2002. During that period, the assessee was sent on a particular assignment by the employer company to US. The assessee was allegedly under bonafide impression that since the deposits are made from NRE A/c, the interest income there from is exempt u/s.10(4), even though the assessee had returned to India and was a resident in India. The FERA, 1973 has been repealed and has been replaced with FEMA, 1999. The corresponding provisions contain in section 2(q) defining 'person resident outside India' in FERA, 1973 are contained in section 2(w) of FEMA, 1999. The 'person resident outside India' and 'persons resident in India' as defined under FEMA, 1999. In the present case, we find that the assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate concealment of income or furnishing inaccurate particulars of such income. The assessee was under bonafide impression that he is a 'person resident outside India' as defined under FEMA. The explanation furnished by the assessee in not disclosing the interest income in the return appears to be quite genuine. We do not agree with the findings of the authorities below that the explanation furnished by the assessee is not covered by Clause(B) of Explanation-1 to Section 271(1)(c) of the Act. After examining chronology of events and documents on record, we are satisfied that the explanation furnished by assessee is bonafide and acceptable. - Decided in favour of assessee.

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• 2015 (10) TMI 183
  Penalty imposed u/s 271(1)( c) r/w section 274 - disallowing excess and incorrect deduction u/s 80IA on account of profit from trading of VSAT equipment , service charges for computer software updating of NMS, FDRs pledged with Bank for availing non fund based working capital limits treating it as income from other sources and profit earned from segment charges - CIT(A) deleted penalty levy - Held that:- The issue of penalty is consequential to the disallowance/addition made in the quantum proceedings. As per facts submitted by the assessee and fairly accepted by the ld. DR, we observe that all four issues have not attained finality and these are pending before the AO and the Tribunal for a fresh adjudication as per order of Hon’ble High Court dated 17.5.2012 and order of the Tribunal dated 31.3.2010. Therefore, we find it appropriate to restore the issue of penalty for a fresh adjudication to the file of AO with the direction that the AO shall decide the penalty proceedings after affording due opportunity of hearing for the assessee and keeping in view the outcome of quantum proceedings orders by respective quasi-judicial and judicial forums and without being prejudiced from the earlier penalty and impugned appellate orders. - Decided in favour of revenue for statistical purposes

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• 2015 (10) TMI 182
  Disallowance of expenses u/s 14A with Rule 8D of the IT Act - Held that:- We have considered rival contentions and found that relevant assessment year under consideration are 2005-06 to 2007-08 in which rule 8D is not applicable, however, reasonable disallowance is warranted. The Tribunal in assessee's own case for the assessment year 1997-98 & 2000-01 & 2001-02 has decided the similar issue and restricted the disallowance to the extent of 5% of the dividend income. As the facts and circumstances of the case are same, we direct the AO to restrict the disallowance to 5% of the dividend income. - Decided partly in favour of assessee. Taxing interest income as income from other sources - Held that:- Major portion of the interest income was received by the assessee through ICD and not from securities as is stated u/s.56 of the I.T.Act. In case of M/s Chennai Properties & Investment Ltd. (2015 (5) TMI 46 - SUPREME COURT), the Hon'ble Supreme Court held that where the main object of the company is letting out of the property, rental income received from such letting out, is assessable as business income and not under the head of income from house property. In this case also one of the main objections of the assessee company was lending money on interest. Accordingly, we restore this issue to the file of the AO for deciding afresh the nature of income received - Decided partly in favour of assessee. Receipt of share from Venture Capital Company - Held that:- In the instant case before us what has been distributed by the Venture Capital Company to assessee is the surplus in the account of assessee with the Venture Capital Company. The distribution of the surplus is definitely chargeable to tax. In the present case a doubt has arisen only because this distribution has been done not in terms of money but in terms of kind, shareholding in a corporate entity. However, the nature of distribution of surplus can neither decide nor govern the taxability of income in the hands of assessee. Income has definitely been earned in terms of kind. In the present facts the income has really been earned in terms of kind as shares of the corporate entity. Nevertheless the nature of receipts in the hands of assessee is income being surplus in its account held with the Venture Capital Company distributed to assessee at the time of squaring up the account of assessee with the Venture Capital Company. Accordingly, we do not find any infirmity in the order of lower authorities for taxing the amount distributed by Venture Capital Company to the assessee. - Decided against assessee.

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• 2015 (10) TMI 181
  Disallowance of foreseeable losses - whether represent ascertained liability - whether these expenses admittedly pertain to period April 2003 to November 2006? - CIT(A) held that the Assessing Officer was wrong in inferring that the assessee has offered income on receipt basis - Held that:- There is nothing to disagree with the CIT(A) on this aspect of the matter. Infact, the financial statements of the assessee company. Also point out that the assessee company is maintaining its accounts on a mercantile system. In so far as the issue of allowability of future foreseeable losses is concerned, a similar situation had come up in the case of ITD Cementation India Ltd. (2013 (11) TMI 223 - ITAT MUMBAI) wherein assessee was carrying on the business of infrastructure development and the work was executed on a contractual basis. The assessee therein was executing a fixed price contract and in terms of Accounting Standard-7 issued by Institute of Chartered Accountant of India (ICAI) made a Provision for future foreseeable losses and claimed deduction of such a Provision. The Revenue disallowed the Provision made for such foreseeable losses. The Tribunal concurred with the stand of the assessee that such a Provision was an allowable deduction. Therefore, in view of the aforesaid precedents in-principle, it has to be inferred that where an assessee is executing an infrastructure development fixed price contract, the foreseeable losses of future years can be recognized following the rationale of AS-7 issued by ICAI, and such a Provision is an allowable deduction. In the present case, the estimate made by the assessee has been benchmarked against PWD notified rates and it appears to be reasonable. The fact that in the subsequent year, assessee has writtenback only a portion of the Provision does not indicate its unreasonableness, rather the facts indicate that assessee indeed incurred expenditure on maintenance work which is more that the receipts due to it as per the contract. Therefore, the judgement of the assessee that it was likely to incur loss on maintenance work after five years was indeed justified, as the factum of incurrence of such loss is not disputed. In sum and substance, we are in agreement with the CIT(A) that the Provision for foreseeable losses debited by the assessee in the Profit & Loss Account, is not a contingent liability so as to be disallowed while computing business income for the year under consideration. As a consequence, we hereby affirm the order of the CIT(A) and Revenue fails in its appeal. - Decided against revenue

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• 2015 (10) TMI 180
  Transfer pricing adjustment - rejection of comparables on the ground of related party transactions - Held that:- It can be seen from the assessee’s letter dated 26.10.2006 addressed to the TPO, a copy of which is available that the assessee submitted computation of related party transactions at more than 25% in respect of Datamatics Technologies Ltd. and Hinduja TMT Ltd. Since the details about the computation of RPTs being more than 25%, in these two companies were filed by the assessee before the TPO, which have not been adversely commented, we do not find any reason on the part of the ld. CIT(A) in not accepting such calculation which was made before the TPO himself. We, therefore, uphold the exclusion of these two companies. As regards the third company, namely, Mukand Engineers Ltd., in respect of which the ld. CIT(A) accepted the RPTs at 45%, the ld. AR candidly accepted that the calculation of such percentage of RPT was not before the TPO and the same was filed before the ld.CIT(A) for the first time. This calculation, on the basis of the Annual accounts of Mukand Engineers Ltd., in our considered opinion, constitutes an additional evidence. The ld. CIT(A) was required to seek the comments of the TPO before accepting the correctness of the percentage of related party transactions as calculated by the assessee. We, therefore, set aside the impugned order on this issue and send the matter to the AO/TPO for verifying the correctness of the percentage of the RPTs of this company as per law after allowing a reasonable opportunity of being heard to the assessee. If such computation shows RPTs at less than 25%, then, this company should be included in the list of comparables. In the otherwise situation, the view taken by the ld. CIT(A) in excluding it from the list of comparables, be upheld. Inclusion of Weal Infotech Ltd. - Held that:- As regards the first issue, we do not find any reason to disturb the view of the ld. CIT(A) because the assessee included it in the list of comparables in its Transfer pricing study. The very comparability of this company was not disputed by the TPO. In that view of the matter, the ld. CIT(A) cannot be faulted with for directing to include the data of a company in the list of comparables, which was originally included by the assessee and not objected to by the TPO. As regards the second aspect of the computation of the profit margin of this company, we find that the ld. CIT(A) accepted the data furnished by the assessee of this company and proceeded to include the same in the list of comparables without affording any opportunity to the TPO for examining the same. We, therefore, find that there is violation of rule 46A to this extent. Accordingly, we set aside the impugned order on this score and send the matter back to the AO/TPO for verifying the correctness of the calculation of OP/TC of this company for the purposes of calculating arithmetic mean of PLI of the comparable companies. Exclusion of Tricom India Ltd. - Just like a situation in which the assessee chooses a company as comparable which can be excluded by the TPO on finding it as incomparable, there can be no fetters on the assessee requesting for the exclusion of a company originally considered by it as comparable by inadvertence. After all, it is for the TPO to examine and evaluate such contention and decide about its comparability on merits. To foreclose the raising of such a contention by the assessee for further appraisal at the TPO’s end, is impermissible. The Special Bench of the Tribunal in the case of DCIT vs. Quark Systems Pvt. Ld. (2010) 132 TTJ (Chd) (SB) has allowed the assessee to claim exclusion of certain companies from the list of comparables, which were inadvertently included by it in its Transfer pricing study. We, therefore, reject this foundational argument raised on behalf of the assessee. On the merits, we remit the matter to the file of TPO/AO for examining the assessee’s contention that the high profit of this company was due to abnormal circumstances. Here, we want to make it clear that a potential comparable cannot be excluded simply on the ground of high profit rate, unless it is conclusively shown that such higher profit was the result of some abnormal conditions prevailing in that case alone. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in this regard. - Decided partly in favour of assessee for statistical purposes.

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• 2015 (10) TMI 179
  Validity of proceedings initiated under section 153C - CIT (Appeals) held that assessing officer has validly assumed jurisdiction u/s 153C - Held that:- The issue is covered by the decision of Hon‘ble Delhi High Court in the case of SSP Aviation ltd vs DCIT (2012 (4) TMI 335 - DELHI HIGH COURT) which reads that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. The last line states that there is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income. The facts of this case are that there had been a survey in P group of companies. In the course of search, certain documents were found showing that the assessee acquired certain development rights from P group of companies. A satisfaction was recorded by the Assessing Officer in the case of the assessee u/s 153C. Thereafter, the proceedings were initiated against the assessee u/s 153A and the assessee was directed to file returns for the six assessment years. Assessments were completed u/s 143(3) read with section 153C. As the appeals were pending before the CIT(A), the assessee filed Writ petition before the Hon‘ble High Court contending that the AO had illegally assumed jurisdiction u/s 153C read with section 153A and that there was no undisclosed income to be assessed in the assessee‘s hands. Dismissing the petition, the Hon‘ble High Court held that the satisfaction that is required to be reached by the AO having jurisdiction of the person searched is that the valuable articles or books of account, etc., seized during the search belong to a person other than the person searched and there was no requirement in section 153C(1) that the AO should also be satisfied that such valuable articles or books of account, etc., belonging to the other person must conclusively reflect or disclose any undisclosed income. - Decided against assessee. Addition made in respect of share capital contribution received - Held that:- all the companies who has contributed towards the share capital of the assessee are duly registered under the Companies Act with the Registrar of Companies. It is not a case where the companies are not in existence. The companies are having their respective PAN Nos., filing their income tax returns, holding bank account, issuing cheques in favour of the assessee as contribution towards share capital. The identity of the companies who have contributed towards share capital are duly proved. The transaction that they have contributed towards share capital is also proved as they have issued cheques by submitting the share application to the company and the company has allowed the shares in the name of those companies. This fact has not been denied. Merely because these companies are not able to prove the source from where they have invested and deposited the amount in their bank accounts, the assessee cannot be made liable, as in our opinion, the assessee is not required to prove the source of source. The proviso in section 68 has been inserted w.e.f.1.4.2013 and therefore, the onus to prove the nature and source of such sum so credited shall be on the assessee only from assessment year 2013-14 not prior to that. Hon‘ble Jurisdictional High Court in the case of CIT vs. Metachem Industries,(1999 (9) TMI 21 - MADHYA PRADESH High Court) has also taken the similar view. Even the Hon‘ble Gujarat High Court in the case of Deputy Commissioner of Income Tax vs Rohini Builder, [2001 (3) TMI 9 - GUJARAT High Court ] has also taken the view that the assessee is not required to prove the source of source. On this basis also, following the decision of Hon‘ble Supreme Court in the case of Lovely Exports (2008 (1) TMI 575 - SUPREME COURT OF INDIA ), the additions made are to be deleted. The AO is directed to take action in the hands of the companies/persons, who has contributed towards share capital in the case of the assessee in accordance with law in respect of which the addition has been made Also from the assessment order, we noted that the AO observed that Mr Vinay Gandhi, who was a Chartered Accountant, in his statement dated 14.2.2009 stated that his source of income is C.A. practice and he has arranged entries for the assessee company by introducing him to Sunil Agarwal. Even in the statement of Shri Gunjan Karun S/O. Shri J.K.Ray recorded on 21.12.2009, it has been stated that they have signed the cheque and given it to C.A. Mr Vinay Gandhi for share capital entry. The C.A. who is in practice is barred to carry on any other business as per the code of conduct formulated by the Institute of Chartered Accountants. Even in case the C.A. has accepted that he was engaged in such illegal action, the AO is directed to take action against the C.A. before the Institute of Chartered Accountants so that disciplinary action be taken as the C.A. who is holding certificate of practice cannot be engaged in the business of providing the entries - Decided in favour of assessee.

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• 2015 (10) TMI 178
  Unexplained cash deposits in bank - CIT(A) deleted the addition - Held that:- Though it was stated before Assessing Officer and the Ld. CIT(A) that Power of Attorney was executed by her husband in favour of the assessee but copy of the power of Attorney has not been produced before the Assessing Officer and, therefore, the Ld. CIT(A) should have been little careful in asking for the power of Attorney but he simply believed this theory without examining the Power of Attorney. Before us also a copy of Power of Attorney is not filed. It is very difficult to ascertain in what circumstances the Power of Attorney was given by her husband. This fact itself is sufficient to disbelieve the story of Agreement to Sell entered by the assessee. Normally, no purchaser would agree to purchase the land from attorney holder until and unless such Attorney is duly registered or the persons owning the land becomes a confirming party in the Agreement to sell. As observed above, Power of Attorney has no been filed before us and the perusal of the Agreement to sell clearly shows that Shri I.D. Mehta who is husband of the assessee is not a confirming party in the Agreement to Sell. The perusal of the affidavits would show that exactly the same language has been used in all the affidavits. All the four persons have not stated how much money each one of them has paid. No specific source of the payment has been explained and it has been simply stated that they are agriculturists. When four persons have paid a sum of ₹ 43 lakhs the Assessing Officer could have verified the sources only if such persons were produced before him. We fail to understand how Ld. CIT(A) believed these affidavits particulars when the Assessing Officer had insisted on producing these persons. The affidavits are clearly in the nature of self serving documents and cannot be believed. Further there is not evidence why the deal did not mature. How the amounts were returned whether any receipts were taken or not is not clear. All these circumstances make the whole story not plausible. In our opinion, it seems to be only a story to explain the deposits of cash and does not have any substance. Therefore, we set aside the order of Ld. CIT(A) and restore that to Assessing Officer. - Decided in favour of assessee.

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• 2015 (10) TMI 177
  Deemed dividend u/s 2(22)(e) - CIT(A) deleted the addition - Held that:- The basis of the decision arrived at by the CIT(A) is the undisputed fact, that the assessee is not a shareholder of SMRL. In such a case import of provisions of section 2(22)(e) does not hold ground. For this, we may gainfully place reliance on the decision of ACIT vs Bhaumik Colour Pvt. Ltd. (2008 (11) TMI 273 - ITAT BOMBAY-E). Though the assessee has placed reliance of a number decisions of various fora, we, on the basis of the facts, are of the view that there is no infirmity in the order of the CIT(A), which we sustain. Consequentially, the ground as raised in the instant appeal, as filed by the department is rejected. - Decided in favour of assessee.

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• 2015 (10) TMI 176
  Entitlement to claim of depreciation - cost of acquisition of asset was treated as application of income for the purpose of claiming exemption under section 11 of the Act - CIT(A) allowed the claim - Held that:- In view of the conflicting decisions of the High Courts on the issue, the decision in favour of the assessee is to be followed is the ratio of the decision of the hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court]. Therefore, respectfully following the decisions of the hon'ble Bombay High Court and the hon'ble Karnataka High Court in the cases of CIT v. Institute of Banking [2003 (7) TMI 52 - BOMBAY High Court ] and CIT v. Society of the Sisters of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court ] respectively and also this Tribunal in the assessee's own case, we sustain the order of the Commissioner of Income- tax (Appeals) on this issue to held that Depreciation should be allowed even on assets, the cost of which had been allowed as exempt under section 11 in the preceding years - Decided against revenue.

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• 2015 (10) TMI 175
  Disallowance for payments in respect of remuneration and interest on capital paid to the partners - whether in computation of taxable income of the firm, can be made under section 184(5) when even though assessment is completed under section 144 but the assessee has not committed any such failure as is set out in section 144 - Held that:- A plain look at the two legislative provisions shows that the disallowance under section 184(5) comes into play not as a result of the assessment under section 144 but as a result of the lapses as mentioned in section 144. The disallowance under section 184(5) does not have a cause and effect relationship with assessment being framed under section 144. In this regard, it is noteworthy that Section 184(5) categorically states that when “there is, on the part of a firm, any such failure as is mentioned in section 144, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income”. This disabling provision comes into play only when the assessment is framed under section 144 only as a result of the assessee’s committing any such failure as is contemplated under section 144. However, in a situation in which the assessment is completed in the manner as prescribed in section 144 but such a course of action has been adopted because of “the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee”, referred to in section 145(3), clearly the disabling provisions of Section 184(5) do not come into play. Thus as noted from the observations made by the CIT(A) the assessment under section 144 has been upheld on the basis of section 145(3) even as it is not disputed that the failures enumerated in section 144 itself were not committed. Learned CIT(A) indeed erred in invoking disallowances under section 184(5) for interest and salaries paid to the partners. Therefore, delete these disallowances - The assessee will get the relief accordingly. - Decided in favour of assessee.

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• 2015 (10) TMI 174
  Eligibility of deduction u/s 80IB(10) - whether CIT (Appeals) should not have granted deduction under section 80IB(10) proportionately in respect of the flats where built up area is less than 1500 sq.ft.? - whether the completed housing project did not satisfy the condition which mandates each residential unit should not exceed built up area of 1500 sq.ft? - Held that:- As relying on case of CIT vs M/s Sanghvi and Doshi Enterprise [2012 (12) TMI 84 - MADRAS HIGH COURT] we direct the Assessing Officer to allow the claim of the assessee for deduction under section 80IB(10) of the Act for the residential units where built up area is 1500 sq.ft or less. We affirm the order of the Commissioner of Income Tax (Appeals) on this issue and reject the grounds of appeal raised by the Revenue. - Decided in favour of assessee.

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• 2015 (10) TMI 173
  Addition on account of difference in value of stock submitted to bank in the form of stock statement and the stock as per books of account of the assessee - CIT(A) deleted the addition - Held that:- We find that the stock statement as per books of account carried more value than stock statement submitted to bank and difference was to the tune of ₹ 10,74,921/-. Therefore, there is no loss to the revenue as the assessee has taken in the trading account higher figures for the purpose of calculation of profits. Ld. CIT(A) has passed a very reasoned and speaking order on which we do not intend to interfere. - Decided against revenue.

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• 2015 (10) TMI 172
  Allowability of claim of deduction on account of write-off of Railway/Insurance claims - Held that:- The claim of bad debt can be allowed only when the amount has been taken into account in computation of income in the earlier year. It has not been made clear as to how the amount claimed as deduction has been taken into account in the computation of income of earlier year. On account of shortages found in transportation of goods assessee must have made claim with the insurance agencies and railways. It is not clear whether the claim lodged by the assessee with railways/insurance had been declared as income in the year of the claim, because only in that case the assessee can make claim of bad debt in the subsequent year when the full claim is not received. Facts being not clear, the issue in our opinion requires fresh examination. We, therefore, set aside the order of CIT(A) and restore the matter to AO for fresh adjudication after necessary examination in the light of observations made above and after allowing opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes only. Rejection of the claim of the appellant of excluding 100% of the export profits from net profit while computing the book profit u/s. 115JB of the Act instead of 80% of the export profits - Held that:- Facts in brief are that the assessee had deducted an amount of ₹ 74,74,754/- being dividend exempt u/s. 10(33) of the Act. In the computation of income u/s. 115JB, the assessee has reduced the above amount for computing its profits. During the course of assessment proceedings the assessee was asked as to why the above said amount should not be disallowed u/s. 14A of the Act. The assessee vide its letter dated 22/1/2004 stated that the company has not incurred expenditure for the purpose of earning of any income, which is exempt under the Act and hence, provision of section 14A will not be applicable in the case of the assessee. However, this claim was not found acceptable by the AO. According to the AO the said section came with retrospective effect from 1.4.1962 by the Finance Act, 2001, and clearly lays down that for the purpose of computation of total income no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which has not formed part of total income. Consequent to the insertion of above provision, expenses incurred towards exempt income are liable for disallowance under the above section and where expenses are not ascertainable, the same have to be determined and allocated towards the said income for disallowance. As the assessee did not provide the details about the interest amount referable to investment in tax free bonds etc., there is no option but to make proportionate allocation . The AO following the earlier orders for Assessment Years 1999-2000 and 2000-01 disallowed a sum of ₹ 31,17,643/- out of total interest expenses on proportionate basis as expenditure alleged to be incurred for earning dividend income. The ld. CIT(A) followed the order of his predecessor and allowed the ground of the assessee. Keeping in view the totality of facts and the circumstances the ld. Assessing Officer is directed to re-compute as per the decision of the Hon'ble Supreme Court in Ajanta Pharma Ltd. vs. CIT (2010 (9) TMI 8 - SUPREME COURT) and decide afresh for which due opportunity of being heard to be provided to the assessee . Decided in favour of assessee for statistical purposes. Disallowance of HPSEB, being Electricity sub-station, transformer and transmission lines etc. near Gagal, not owned - Held that:- We note that during the relevant year the assessee contributed ₹ 39,90,000/- to HPSEB for the aforesaid purposes for the cement plant of the assessee to ensure adequate and regular power supply. We find no infirmity in the conclusion drawn in the impugned as identically for Assessment Year 2000-01 to 1993-94 was decided in favour of the assessee . Our view finds support from the decision in CIT vs. Associated Cement Companies Ltd. (1988 (5) TMI 2 - SUPREME Court) and also National Organic Chemical Industries Ltd. (1993 (2) TMI 48 - BOMBAY High Court). Thus, this ground is decided in favour of the assessee . Disallowance of expenditure on temporary structure at customer site - Held that:- We note that capital cost of RMC plant has been duly capitalized in the books and the temporary structures on site, which is not owned by the assessee has no relevance once the job at the site is over/completed. Identical view was taken for Assessment Year 2000-01, thus, in the absence of any contrary facts we find no infirmity in the conclusion drawn by the ld. CIT(A). Disallowance of contribution for compulsory afforestation to make up the forest area lost due to mining done by the assessee for the Gagal Cement Plant - Held that:- In view of the decision in Gujarat Ambuja Cement Ltd. (2005 (6) TMI 486 - ITAT MUMBAI ) wherein reliance was placed upon the decision from Hon'ble Apex Court in the case of Empire Jute Company Ltd. (1980 (5) TMI 1 - SUPREME Court ), the amount in question is held to be an allowable deduction u/s. 37(1) of the Act. Contribution to construction of stadium in Himachal Pradesh - Held that:- This expenditure was incurred for commercial expediency to maintain good and healthy relation with local people/State Government which essential to run the large industrial unit. Therefore, we find no infirmity in the order more specifically when identically, for Assessment Year 2000-01 it was allowed in favour of the assessee. Provision for contingencies in computation of book profit u/s. 115JB - Held that:- That in view of the amendment in sec.115 JB of the Act, the issue is covered against the assessee Profit on sale of fixed asset while making computation of book profit u/s. 115JB and sales tax subsidy are covered against the assessee.

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• 2015 (10) TMI 171
  Reopening of the assessment u/s 148 - Held that:- It is not in dispute that the assessment was reopened within four years by issuing a notice on 24-04- 2012. After completion of the assessment u/s 143(3) the assessing officer received AIR information in respect of freight charges paid to M/s Geep Batteries India Pvt Ltd, Acme Chemicals (P) Ltd and Vikram Sarabhai Space Centre (VSSC). The assessee has not deducted tax for payment of freight charges. This Tribunal is of the considered opinion that excess allowance has been granted to the assessee. Therefore, the assessing officer has rightly reopened the assessment by issuing notice u/s 148 on the basis of the information received. Hence, this Tribunal do not find any infirmity in the order of the lower authority. Disallowance of difference of amount received from Geep Batteries India Pvt Ltd. - Held that:- The only claim of the assessee before this Tribunal is that certain receipts pertaining to earlier year was not accounted in the books of account. The fact remains is that the assessee has received ₹ 18,970 during the year under consideration. To this extent, the AIR information available before the assessing officer can be considered. The assessee could not explain why the amount received during the year under consideration should be taken as receipt in the next accounting year. In the absence of any such explanation, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition of ₹ 18,970. This Tribunal do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed. Difference of the amount received and the AIR information from Acme Chemicals Pvt Ltd. - Held that:- As in the case of Geep Batteries India Pvt Ltd, the ld.senior counsel for the assessee claims that certain receipts relating to next accounting year was not accounted in the ledger. Therefore, the difference occurred. As already observed, when an amount is received during the year under consideration and it is not the claim of the assessee that it was advance received for the work to be carried out in the next accounting year, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition. Disallowance of lorry hire charges - non deduction of TDS - CIT(A) restricted part disallowance - Held that:- Admittedly, the assessee has not filed form 15-I. The ld.senior counsel now claims that the assessee could not collect form 15-I for lapse of time. It is not for the assessee to collect form 15-I; it is for the recipient of the amount to furnish form 15-I to the assessee if the amount received is not taxable in their hands. Therefore, form 15-I has to be furnished before making the payment. The assessee now cannot collect form 15-I from the recipients of the amounts. Therefore, the claim of the assessee that due to lapse of time they could not collect form 15-I is not justified. Unless and until it is shown to the satisfaction of the assessing officer that the amounts in the hands of the recipients are not taxable, this Tribunal is of the considered opinion that the assessee is liable to deduct tax. Therefore, failure to deduct tax would attract disallowance u/s 40(a)(ia) of the Act. Hence, the CIT(A) has rightly restricted the disallowance to the extent of ₹ 60,74,224. This Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. - Decided against revenue.

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• 2015 (10) TMI 170
  Disallowance of part of electrical replacement expenses - revenue v/s capital - Held that:- It is the nature of the expenditure which has to be considered while allowing the expenditure in the hands of the assessee. We find merit in the plea of the assessee that the expenditure incurred by the assessee is on account of repairs and renewals carried out at his business premises and are in the nature of current repairs which is allowable as expenditure under section 31(1) of the Act. In view of the admission of the assessee, we direct the Assessing Officer to allow the expenditure of ₹ 2,28,238/- as revenue expenditure and the balance expenditure of ₹ 22,400/- is to be treated as capital in nature. - Decided partly in favour of assessee. Treatment of repairs and renewal expenses - revenue v/s capital- Held that:- he first bill referred to by the assessee is dated 02.05.2008 of Mangal Electricals & Refrigeration for ₹ 2,00,000/-. The nature of the expenditure is the repairs of toilet rooms which changes of tiles, painting, water proofing and plumbing. Though the assessee has booked the expenses at ₹ 2,00,000/- but the same comprises of various items under which, the repairs of the toilets by way of changing the tiles and also plumbing in different rooms of the hospital have been carried out. Another expenditure of ₹ 75,628/- has been claimed by the assessee by way of payment to M/s. Bharatkumar Dayal & Co vide invoice dated 05.06.2008. The assessee had purchased various carpentry items from the said concern for replacing the old items. Where the assessee has carried on repairs of existing items, then the said expenditure is to be allowed as revenue expenditure in the hands of the assessee. In the entirety of the above facts and circumstances, we are of the view that the part of the expenditure claimed by the assessee is revenue in nature i.e. expenditure incurred on replacing of tiles and bath rooms along with water proofing, plumbing work carried out, the carpentry material purchased by the assessee and other hardware items purchased for replacing of the existing items including painting and supervision charges for repair works. The expenditure incurred on bore well drilling of ₹ 14,100/- is of enduring benefit and is to be treated as capital expenditure. Accordingly, we direct the Assessing Officer to treat the expenditure of ₹ 5,64,517/- -Rs.14,100/- = 5,50,417/-, tabulated by the assessee, as revenue expenditure and the balance expenditure of ₹ 3,40,196+14,100/- = 3,54,296/- as capital expenditure - Decided partly in favour of assessee.

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• 2015 (10) TMI 169
  Validity of assessment framed u/s 147 r.w.s 143(3) - notice issued u/s 148 was not served upon the assessee within the prescribed time limit - Held that:- The assessee had filed its return of income for the assessment year 2005-06 and subsequent assessment years with the new address. On the changed address intimation/order and correspondence have also been made by the department. Intimation u/s 143(1) dated 25.01.2008 for assessment year 2006-07 was also sent by the same AO at the changed address. Hence we concur with the contention of the Ld. AR that there was no justification for the AO to issue notice u/s 148 of the Act dated 27.03.2008 in question at the old address of the assessee. The revenue also fail to establish that on which address out of the two addresses mentioned in the notice u/s 148 was sent and served upon the assessee. The presumption of service comes to the rescue of the revenue only when the notice is dispatched through registered post and the notice is properly addressed. Here is the case where the dispute is to whether the notice u/s 148 dated 27.03.2008 was sent on a proper address or not. It is an established position of law that service of notice u/s 148 of the Act within the prescribed time limit is a condition precedent and mandatory to acquire jurisdiciton by the AO to frame the assessment u/s 147 r.w.s 143(3) of the Act. In absence of service of the said notice issued u/s 148 of the Act upon the assessee, the assessment in question u/s 147 r.w.s 143(3) of the Act is null & void. - Decided in favour of the assessee

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• 2015 (10) TMI 168
  Calculation of deduction u/s 80IB - excluding "gross" or "net" CENVAT/MODVAT receipts - Held that:- We are not convinced with claim of "net receipts" on CENVAT receipts as there cannot be any expenditure. However, the Assessing Officer shall examine as to whether expenditure has been incurred for earning the income. The Assessing Officer shall after providing reasonable opportunity to the assessee to submit necessary proof and evidence regarding allocation/allowability of such expenditure against the receipts to be excluded, decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.

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• 2015 (10) TMI 167
  Unexplained unsecured loan and interest thereon - genuineness of transaction and creditworthiness of the company was not proved - CIT(A) deleted the addition - Held that:- Assessee has raised loan of ₹ 10 lakh by way of three cheques during the month of January, 2003. These cheques have been debited in the bank account of the CSR Electronics Pvt. Ltd. CSR Electronics Pvt. Ltd. is being assessed to income tax and it has confirmed having made the payment. The Assessing Officer’s only allegation as emerging from the assessment order is that there is a cash deposit in the bank account of the CSR Electronics Pvt. Ltd. We are of the view that only that cannot be a ground for making the addition and treating the cash credit as unexplained credit. There is no bar against any person on depositing cash in his bank account. Deposit of cash in the bank account can raise a doubt in the mind of Assessing Officer and on that basis, he is supposed to carry out further investigation to take issue to the logical end. This loan is reflected in the books of the CSR Electronics Pvt. Ltd. Further the bank statement of CSR Electronics Pvt. Ltd. reflects that there are various debits and credits through cheques. Assessing Officer’s allegation is that there is a deposit of cash in the bank account of the creditor but we find that all the money has not been deposited in cash. In fact there are cash withdrawals from the bank account. The assessee company had produced confirmations. The evidences in support of the loan were filed that this advance was received from CSR Electronics Pvt. Ltd. and the same has accounted for in its books of account. The creditor company was being assessed independently to income-tax. In view of this, there is no reason to draw adverse inference against the assessee company unless there is something other material to demonstrate that the transaction entered into by the CSR Electronics Pvt. Ltd. are not genuine or are accommodation entries. Without carrying out investigation to the logical end and finding out anything adverse in such investigation, the Assessing Officer cannot come to a conclusion that the credit received by the assessee company is not genuine. There is no allegation of any accommodation entry or there is any statement by any of the person that CSR Electronics Pvt. Ltd. has indulged into accommodation entries. The assessee company has discharged its onus by filing the necessary confirmation, copy of income tax return and copy of bank account. The assessee company has also paid interest and deducted TDS. In view of these facts the CIT(A) was justified in deleting the addition and we uphold the order of the CIT(A). - Decided in favour of assessee.

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• 2015 (10) TMI 166
  Disallowance of commission amount paid to foreign agents u/s 40(a)(i) - non deduction of tax at source - Held that:- . We notice that the assessing officer or Ld CIT(A) has not brought any material on record to substantiate their views that some other kind of services were also rendered by the foreign agents. Hence, we have to agree with the submission of the assessee that the commission amounts were paid for procuring sales orders. Hence, by following the decision rendered by the Hon’ble Madras High Court in the case of CIT V/s Faizan Shoes Pvt Ltd [2014 (8) TMI 170 - MADRAS HIGH COURT] and Delhi Bench of the Tribunal in the case of Dy. CIT v Angelique International Ltd. (2013 (10) TMI 17 - DELHI HIGH COURT) we hold that the payment made for technical services will not fall in the category of “Fee for Technical Services” as defined u/s 9(1)(vii) of the Act. Accordingly, we hold that the Assessee is not liable to deduct tax at source from the commission payments made to the foreign agents in the facts and circumstances of the instant case. Accordingly, we set aside the order of ld. CIT(A) and direct the AO to delete the impugned disallowance. - Decided in favour of assessee.

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• 2015 (10) TMI 165
  Disallowance u/s. 14A - CIT(A) sustained the addition - Held that:- It is a well settled law that application of the provisions of section 14A(2) & (3) r.w. Rule 8D is not automatic. The provisions of section 14A and Rule 8D have to be applied after examining the facts of each and every case. Unless proximate connection between the expenditure incurred and the income not forming part of total income is established, the provisions of section 14A(2)&(3) and Rule 8D will not be operative. [CIT Vs. Walfort Share and Stock Brokers P. Ltd.,(2010 (7) TMI 15 - SUPREME COURT) and Godrej and Boyce Manufacturing Co. Ltd., Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT). Thus the matter needs re-visit to the Assessing Officer for fresh adjudication. The Assessing Officer shall re-compute dis-allowance u/s.14A after taking into consideration the entire facts of the case and the well settled law. - Decided in favour of assessee for statistical purposes. Disallowance u/s. 40(a)(i) - payment of overseas commission without deduction of tax at source - CIT(A) deleted the addition - Held that:- The contentions of the assessees that commission is paid on the export of garments for orders procured by foreign agents; the commissions were paid outside India through normal banking channels; and that the foreign agents do not have any place of business or Permanent Establishment in India have not been rebutted by the Revenue. The Hon'ble Supreme Court of India in the case of GE India Technology Centre P. Ltd., Vs. CIT reported as (2010 (9) TMI 7 - SUPREME COURT OF INDIA ) has held that if the remittances are not chargeable to tax in India, there is no question of deduction of tax at source. We do not find any error in the findings of CIT(Appeals) on the issue. Therefore, the ground raised by the Revenue in its appeals is rejected - Decided in favour of assessee. Foreign Exchange Fluctuation loss dis-allowance upheld by CIT(Appeals) - Held that:- Assessing Officer has dis-allowed an amount claimed by assessee as foreign exchange fluctuation loss by relying on the decision of Bangalore bench of the Tribunal in the case of ACIT Vs. K.Mohan & Co., (Exports) (2009 (8) TMI 968 - ITAT BANGALORE). We find that the facts of the case are entirely different from the facts of the case in hand. Therefore, the ratio laid down by the Hon'ble Bangalore bench of the Tribunal in the case of ACIT Vs. K.Mohan & Co., (Exports) (supra) is not applicable in the facts of the present case. The matter is remitted back to Assessing Officer for fresh decision in the light of the facts of case and the judgment of the Bombay High Court in the case of CIT Vs. Badridas Gauridu (P) Ltd., (2003 (1) TMI 61 - BOMBAY High Court ).- Decided in favour of assessee for statistical purposes.

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• 2015 (10) TMI 164
  Addition of net profit rate @ 8% - Held that:- In past, in assessee’s own case for A.Y. 2001-02 and 2002-03 had decided N.P. rate @ 8% subject to allowance of interest and depreciation. The assessee has relied upon the various case laws before us but their financial results are not available for verification wherein N.P. rate was reduced to 5% by the Hon’ble ITAT. The learned AR had not controverted the findings given by the learned CIT(A). He had accepted the defects in the books of account by not pressing the ground of appeal for rejection of book result. Therefore, we upheld the order of the learned CIT(A). - Decided against assessee.

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• 2015 (10) TMI 163
  Disallowance of interest expenses - CIT(A) deleted the addition - Held that:- There is no dispute as regard to expenditure of interest incurred by the assessee. The interest has been incurred on the loan received from Mahima Trading & Investment Pvt.Ltd., CMC (I) Pvt.Ltd. and SBI on OD account. During the course of hearing, a query was raised by the Bench to the ld.counsel for the assessee as to when FDR was made and when the OD facilities from SBI was taken by the assessee. It was also asked from the ld.counsel for the assessee whether the interest was paid to the bank towards the money out of which Fixed Deposit was made and earned interest therefrom. We find that this aspect is not examined by the ld.CIT(A) whether the interest paid to the bank was towards the money deposited for the purpose of making FDR wherefrom the assessee has earned interest income. Therefore, the issue is remitted back to the file of ld.CIT(A) to decide it afresh and he is directed to verify whether the interest claimed as expenditure by the assessee has direct nexus to the amount deposited by the assessee for making FDR. If the amount so taken from the parties was not utilized for the purpose of making fixed deposit where from the assessee has earned the interest, under such circumstances, the assessee would not be entitled for deduction of the expenditure claimed u/s.57 of the Act. - Decided in favour of revenue for statistical purposes Expenditure u/s.57 towards the interest paid to Mahima Trading & Investments Pvt.Ltd., CMC(I) Pvt.Ltd. and SBI disallowed - Held that:- During the course of hearing, a query was raised by the Bench to the ld.counsel for the assessee as to when FDR was made and when the OD facilities from SBI was taken by the assessee. The ld.counsel for the assessee could not give any explanation as to whether the amount paid to SBI was towards the amount taken as loan for making the FDR. In the absence of such material, we do not find any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. - Decided against assessee.

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• 2015 (10) TMI 162
  Addition on under valuation of closing stock of gold and silver - furnishing inaccurate particulars of stock - reopening of assessment - CIT(A) deleted the addition - Held that:- Undisputedly the assessee had disclosed all material information before the Assessing Officer in its return of income. The reopening of assessment is stated to be after four years, this fact is not rebutted by the Revenue. Hence, we do not find any infirmity in the order of ld.CIT(A), same is hereby upheld - Decided against revenue.

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• 2015 (10) TMI 161
  Inclusion of reimbursement of expenses for the purpose of computing commission income - Held that:- As decided by the Tribunal in assessee’s case for A.Y. 2007-08 if the Schedule ‘A’ categorically provides that commission is not to be computed on the sale orders which requires the procurement of local content by the assessee, then on such procurement of equipments by the assessee, commission cannot be imputed, because it is the reimbursement of the cost of local equipments procured. Further, it appears that this relevant piece of document which is also a part of “Distribution and Representation Agreement”, has not been examined by the Assessing Officer. Therefore, for the purpose of verification and examining of the content of this Schedule, we restore the matter back to the file of AO, to adjudicate this issue afresh in light of the aforesaid document, because it changes the entire colour of the conclusion drawn by the AO. - Decided in favour of assessee for statistical purpose Addition on account of attribution of profits to Permanent Establishment - Held that:- As decided by the Tribunal in assessee’s case for A.Y. 2007-08 the assessee branch, does not constitute PE of Varian-Italy and, therefore, the addition being 10% of gross made by Varian Italy to its customer in India, cannot be taxed in the hands of the assessee. - Decided in favour of assessee. Transfer Pricing adjustment - Held that:- The assessee has used allocation key of employee head account. The expenses like rent, depreciation, electricity, insurance charges, office maintenance and other miscellaneous expenses have no co-relation with the number of employees. On the contrary, these expenses have a direct bearing to the revenue generation. As per Rule 10-B(1) of the Act, determination of ALP u/s 92CA(2) of the Act, the ALP in relation to an international transaction has to be determined by the most appropriate method. In our considered opinion, the method adopted by the TPO is slightly better than the method adopted by the assessee. More so when the allocation by the assessee is not supported by any certificate from the management. Considering the nature of expenses in totality, we do not find any merit in the case of the assessee. Adjustment of Transfer pricing is accordingly confirmed - Decided against assessee. Short credit of TDS - Held that:- We restore this matter to the file of the A.O. The A.O. is directed to verify the detail and allow proper credit of TDS to the assessee. - Decided in favour of assessee for statistical purpose

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• 2015 (10) TMI 160
  Levying penalty u/s. 271(1)(c) - expenses not related to earning of income u/s. 56 - AO held that as per the provisions of section 57 assessee could claim expenses u/s. 57 to the expenditure if same were necessary to earn the income u/s.56, that it was impossible to incur expenses of ₹ 4.83 Lakhs to the earn income of ₹ 1,00,308/-,that the expenses were not related to earning of income u/s. 56 - Held that:- Undisputed facts of the case are that the assessee borrowed funds for making investment in shares,that she paid interest for purchasing shares,that she made claim of interest expenditure under the head income from other sources,that under that head the assessee had shown loss,that quantum addition was not challenged by her,that AO and FAA were of the opinion that she had filed inaccurate particulars.The assessee was very well aware about the borrowing of the funds and their utilisation. The claim made by the assessee under the provisions of a particular section (section 57)shows that she knew the implication of such claim.Under the Act,the income of an assessee is one and various sections direct the modes in which the income is to be levied. No one of those sections can be treated as general or specific for the purpose of any one particular source of income ; they are all specific and deal with various heads in which an item of income of an assessee falls. These sections are mutually exclusive and where an item of income falls specifically under one head, it has to be charged under that head and no other.Similarly,expenditure incurred by the assessee are directly related to the heads under which same could be claimed. If the assessee makes a claim to reduce his or her tax incidence by changing the heads of expenditure it has to be held that the particulars filed by him or her are not accurate. A return is not only an ordinary documentary. Assessees have to verify the returns and declare that details furnished are true. Therefore,when an totally unsustainable claim is made it cannot be considered a debatable claim about which two views were possible. In the matter before us,there is no ambiguity about the section under which claim for interest expenditure could be made and the assessee knew it.Non filing of appeal against the quantum order prove that the assessee took a chance while filing the return and made a claim that was not permissible by law at all. We are of opinion that the assessee was guilty of filing inaccurate particular of income and thus concealing her income. We hold that the order of the FAA does not suffer from any legal infirmity. Penalty confirmed - confirming his order we decide effective ground of appeal against the assessee.

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• 2015 (10) TMI 159
  Revision u/s 263 - allowance of royalty expenditure - CIT(A) annulling the order u/s. 143(3)/147 while holding invalid the reopening u/s. 147 - Held that:- It is an admitted fact that decision of the Hon’ble Supreme Court in the case of Sourthern Switchgear Ltd. v. CIT [1997 (12) TMI 105 - SUPREME Court] was very much available at the time of assessment. The decision of the Hon’ble Supreme Court of India is a Law of Land in which it is clearly held that royalty expenditure is not allowable expenditure. But the AO has escaped overlook the aforesaid judgments and has not considered the same while completing the original assessment. But later on as and when it came to the notice of the AO, he adopted the prescribed procedure under the law for reopening of case of the assessee and has rightly reopened the case of the assesee and completed the assessment under section 147 w.e.f. 143(3) of the Act vide order dated 30.11.2009. But the Ld. First Appellate Authority has not appreciated this version of the AO while cancelling the assessment made by the AO on 30.11.2009. In our considered opinion, Ld. First Appellate Authority has cancelled the order dated 30.11.2009 passed by the AO and held that the case of the assessee has been reopened by the AO on the basis of change of opinion, in view of the decision of the CIT vs. Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA). In our view the finding of the Ld. First Appellate Authority is contrary to the facts of the case, because the decision of the Hon’ble Supreme Court in Sourthern Switchgear Ltd. v. CIT was very much available, but the same has been escaped/ overlooked by the AO while completing the original assessment. Therefore, later on the AO has rightly reopened the assessment u/s. 147. In our considered opinion, the impugned order is not sustainable in the eyes of law and hence, we cancel the impugned order dated 02.7.2010 passed by the Ld. CIT(A) as the Ld. CIT(A) has not decided the case of the assessee on merits. She has only declared the assessment anulled and which we have cancelled as mentioned in the forging paragraph. Ld. CIT(A) is also directed to decide the case of the assessee on merits, after giving adequate opportunity of being heard the parties. - Decided in favour of revenue for statistical purposes

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• 2015 (10) TMI 158
  Addition u/s. 68 - Assessee has stated that he has withdrawn the cash from the bank for the purchase of land but again deposited the same due to non-utilization of the same. Assessee has also changed his stand that he has received some advance from his father-in-law and also filed confirmation alongwith PAN card. - Held that:- AO called the information alongwith documentary evidence from the assessee for substantiating the cash deposits in the bank and for purchased a motor vehicle. Assessee has furnished some information before the AO and AO issued notice u/s. 133(6) to Axis Bank asking them to submit the bank statement of all the relevant period. In response to the same, the bank has submitted the statement on account of the assessee for the period 1.4.2008 to 31.3.2009 which confirmed that cash deposit of ₹ 25,07,400/-. The assessee was confronted that the cash deposits in his bank account. We find that before the assessee has changed its stand before the Ld. CIT(A) as rightly stated by the Ld. DR. Assessee has stated that he has withdrawn the cash from the bank for the purchase of land but again deposited the same due to non-utilization of the same. Assessee has also changed his stand that he has received some advance from his father-in-law and also filed confirmation alongwith PAN card. This averment has not been made before the AO and the Ld. First Appellate Authority has wrongly deleted the addition in dispute by accepting the arguments of the assessee. We are of the view that the assessee has changed his stand before the Ld. First Appellate Authority in which the AO has not given a chance to rebut the documentary evidence filed before the Ld. CIT(A) and the addition in dispute is contrary to the principles of natural justice. In our considered opinion, the impugend orde of the Ld. CIT(A) is not sustainable in the eyes of law and therefore, we cancel the impugend order. Keeping in view the facts and circumstances of the present case and the averments made by the assessee before the AO as well as Ld. CIT(A) alongwith the documentary evidence filed by him, we are of the view that the issue in dispute requires re-examination at the level of the Assessing Officer, therefore, we set aside the issue in dispute. - Decided in favour of revenue for statistical purposes.

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• Customs

• 2015 (10) TMI 273
  Revocation of License – Appellant challenging order passed by Commissioner of Customs revoking licence issued to appellant under Custom Broker Licensing Regulation, 2013 on ground that appellant had aided and abetted in commitment of breach of law using various IECs of others and there were undervaluation of goods imported – Held that:- No doubt, consequent upon allegation made by DRI as to commitment of offence made by appellant, prohibitory order was issued by Commissioner – Despite entire materials were there on record, before Commissioner, he failed to proceed against appellant in terms of Regulation 20 within stipulated time – When that Regulation is mandatory and requires public authority to act publicly to pass public order and he fails to do so within time prescribed, recourse to that provision is no more available to him on expiry of period so stipulated – Therefore, when mandatory requirement of Regulation was paid scanty regard, appellant is correct to plead that he is entitled to benefit of principles relating to limitation – Violation of principles of natural justice by belated action of authority made its order fatal – Therefore, appeal allowed – Impugned order set aside – Decided in favour of Appellant.

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• 2015 (10) TMI 272
  Non-fulfilment of pre-deposit condition – Non-compliance of High Court’s order – Vide tribunal's order appellant was directed to pre-deposit amount within period of 4 weeks – Appellants appeal before High Court was dismissed however extended time for compliance on 24.8.2015 – It was submitted that as High Court dismissed their CMA and upheld Tribunal order therefore Tribunal order got merged with High Court order – Held that:- In view of High Court's order, Tribunal order got merged with High Court order and appellant failed to comply High Court order – After High Court's order, sufficient time was given to appellant for compliance and appellant failed to comply with orders of High Court – Since appellants have not complied predeposit ordered, appeal is dismissed for non-compliance of High Court's order – Decided against appellant.

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• 2015 (10) TMI 271
  Enhancement of value as per DOV alert – Consent given by CHA – Appellant imported aluminium scrap and filed four Bills of Entry AO assessed Bills of Entries by enhancing value on basis of DOV alert and appellant agreed for same and paid duty at enhanced value without any protest/objection – Subsequently, appellant filed appeals before Commissioner (Appeals), who taking note of fact that enhancement of value was done with consent of appellant rejected its appeals – Held that:- It has been clearly recorded by Commissioner (Appeals) that appellant agreed to loading and had categorically stated on body of invoice that they have no objection if value is loaded as per DOV alert – Appellant’s argument that consent by CHA cannot be taken to be its consent is not maintainable as CHA is agent of appellant and therefore its action was binding on appellant – Tribunal in case of Vikas Spinners Vs. CC, Lucknow [2000 (11) TMI 196 - CEGAT, COURT NO. IV, NEW DELHI] held that having once accepted loaded value of goods and paid duty accordingly thereon without any protest or objection they are legally estopped from taking somersault and to deny correctness of same, they settled their duty liability once for all and paid duty amount on loaded value of goods – In light of analysis, no merit in appeals and therefore same are dismissed – Decided against Assesse.

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• 2015 (10) TMI 270
  Classification of Vessel with surplus fuel under CTH 8908 – Appellants are contesting imposition of redemption fine and penalties in respect of importation of vessels for breaking purpose alongwith surplus fuel – Held that:- identical issue was discussed by Tribunal in case of M/s. R.K. Industries and anrs. vs. Commissioner of Customs [2015 (9) TMI 369 - CESTAT AHMEDABAD] held that as per clarification/opinion of Joint DGFT, surplus fuel stored in fuel tanks of vessels/ship brought for breaking up is classifiable under 89.08 along with main vessel – Well settled law that clarifications on Import Policy issued by office of DGFT is binding on Customs – As imports under ITC(HS) 89.08 are free without any restrictions, therefore, such MGO/HSD contained in vessels brought in for breaking up, cannot be held as liable for confiscation under Customs Act, 1962 and no penalties upon appellants are imposable – In view of decision of Tribunal appeals are allowed – Decided in favour of Assesse.

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• 2015 (10) TMI 269
  Initiation of Second proceedings on same cause – It was alleged that there was violation of Advance license – Tribunal held that appellant failed to comply pre-deposit direction – Meanwhile adjudicating authority initiated second proceeding on same grounds – Held that:- It is established fact that self-same licence has been dealt by two adjudication orders as above in respect of self-same cause, which is not permissible in law – Tax was not being multiple taxation law, impugned order passed against appellant is unsustainable – Accordingly order set aside – Decided in favour of Assesse.

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• 2015 (10) TMI 268
  Mis-declaration of Value – validity of statement - Imposition of redemption fines and penalty – Goods imported by appellants through bills of entry were assessed by Customs noticing misdeclaration of value – DRI detected that goods of kind imported by appellant were undervalued causing prejudice to Revenue – In adjudication, there was levy of duty on differential value and imposition of redemption fine and penalty – Held that:- Law is settled that customs officers not being police officers evidence recorded under section 108 of Act cannot be discarded unless it is otherwise found that same suffers from disability prescribed by law – No element of disability prescribed by law present in case to discard statement recorded by Customs – appellant has also no merit to show that goods were technically tested either by appellant or request to Revenue was made to make reference for technical report before making clearance – Therefore becomes difficult in absence of any technical report of examination of goods to disturb valuation – Accordingly, undervaluation by assessee established – Once allegation is upheld, there shall not be any concession or relief on duty – Looking to quantum of duty involved as well as facts and circumstances, it is considered proper to reduce redemption fine – Therefore appeal partly allowed only to extent of redemption fine reduced – Decided partly in favour of Assesse.

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• 2015 (10) TMI 207
  Mis-declaration of good – Demand of Duty & Imposition of Penalty – Appellant had not declared certain goods in cargo declaration because of which said undeclared goods were confiscated and demand of duty alongwith interest and penalty was imposed – Held that:- appellant purchased vessel for ship breaking purpose vide Memorandum of Agreement on “As is Where is” basis – On perusal of said agreement, it was clearly evident that appellant purchased vessel “RITA” for ship breaking purpose – It was clear from expert opinion that seized goods were used in oil field, wherein vessel in question was passenger vessel – Thus it was clear that these items were not part and parcel of vessel and if they were so, they would have been brought on record and declared as ship stores –Hence these items were nothing but ‘cargo’/ ‘goods’, which ought to have been declared in IGM – No material available on record that these items were kept in vessel from other source and that appellant had paid any amount for seized goods – Demand of duty on these seized items separately can not be sustained which was already included in MOA price as per agreement on lumsum basis – Thus, there was no mis-declaration on part of appellant – Therefore impugned order can not be sustained – Decided in favour of Appellant.

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• 2015 (10) TMI 206
  Imposition of penalty on CHA – Transacting business for non-existent exporter – Appellant filed shipping bills under claim of drawback – However it was alleged that while filing shipping bill in respect of said exporter, appellant failed to ascertain genuineness of said exporter and transacted business for non-existent / non-traceable exporter – Adjudication took place and penalty on appellant is confirmed as per show cause notice – Held that:- In law it is nowhere required that before dealing with new client CHA is required to meet client personally – But to verify antecedents of exporter which appellant has done in this case by verifying bank account, IEC and by obtaining proper authorization – Therefore, appellant has taken due care for knowing antecedent of exporter – Appellant was not having any knowledge that exporter was fraudulent and their shipping bill have been filed to claim undue drawback by overvalue of exported goods – In view of discussion, appellant has not violated provisions of Customs Act – Penalty imposed on appellant set aside – Decided in favour of appellant.

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• 2015 (10) TMI 205
  Valuation - Related person - Determination of transactional value - Held that:- Both the adjudicating authority and the Commissioner (Appeals) have not passed a well reasoned order. There is no dispute on the fact that the appellant is related to the supplier (Principal) being a 100% subsidiary of the supplier. Rule 3 of the Valuation Rules provides for discarding the invoice price if there is evidence that the relationship between the supplier and the importer has influenced the price. The facts in this case are that the appellant is receiving goods at a value which is discounted by 35 to 45% on the value in the List price. There is no evidence whatsoever forthcoming from the record that the relationship has influenced the price. Mere passing of discount by the supplier to the importer does not necessarily lead to a conclusion that the discount has been passed on account of the relationship. The appellant have explained that the discount was also given to an independent dealer. The commission received by the appellant to the extent of 15% over the price at which Inteltek was importing the goods is also explained by them. This is a normal commercial practice. Unfortunately, neither the adjudicating authority nor the Commissioner (Appeals) have followed the legal provisions and judicial pronouncements in rejecting the transaction value declared by the appellant. They have not proceeded sequentially through the Valuation Rules in determining the value. The whole case has been dealt by the lower authorities in a very casual manner without examining the evidence and circumstances provided by the appellant in the form of import by another independent dealer and the provisions of law, particularly the Valuation Rules. Therefore, it would be most appropriate to remand this case back to the adjudicating authority for taking a proper legal view in the matter. - Decided in favour of assessee.

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• 2015 (10) TMI 204
  Goods imported having less than 60% shelf life – Confiscation, imposition of redemption fines and penalty – FSS authorities had declined to issue NOC for import of goods on ground that imported goods did not have shelf life of 60% of original shelf life as required under provisions of FSS Act – Vide impugned order, appellate authority has upheld confiscation order of adjudicating authority wherein redemption fine was imposed on goods imported and penalty was imposed on appellant – Held that:- confiscability of goods is not in doubt – Inasmuch as confiscation is sustainable, goods being offending in nature, is liable to imposition of fine under Section 125 and importer liable to penalty under Section 112 – However, mitigating factor is that appellant had in their purchase order specifically requested for fresh production so that at time of importation, shelf life norms could be adhered to or complied with – In these circumstances, in absence of mens rea and also considering that goods have been exported back, imposition of penalty under Section 112 is not warranted – Accordingly, penalty imposed is set aside – Also fine imposed upon appellant reduced – But for above modification, impugned order is sustained – Decided partly in favour of Assesse.

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• 2015 (10) TMI 203
  Mis-declaration of Quantity and Values – Imposition of composite penalty – Importer was alleged to have mis-declared excess quantities and also as to value of goods imported – Investigation revealed that CHA have handled import document without proper authorization and as such aided and abetted importer in smuggling – Commissioner (A) vide impugned order imposed composite penalty imposed on appellant under Section 112(a), 112 (b)(ii) and 114AA of Customs Act, 1962 was confirmed – Held that:- Admittedly appellant has only introduced importer and CHA – It was urged that appellant is not responsible for acts of importer nor to be subjected to penalty for violation of law and/or attempted smuggling by importer and/or CHA – There is no finding against appellant to aiding and abetting, save and except preparation of purported letter on behalf of Shipper on his computer – Therefore composite penalty imposed on appellant set aside – Decided in favour of Appellant.

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• 2015 (10) TMI 202
  Re-determination of value of goods – Appellant firm imported consignment of 60 Tonnes of used Aircraft Tyres however it was proposed that imported tyres should be ordered for re-export and to enhance declared value – Penalty on Firm as well as on Proprietor was imposed – Adjudicating authority rejected assessable value and re-determined value of imported tyres and also confiscated imported goods – Held that:- Appellant contended that subject imported goods can be used for fitting in Animal Driven Vehicles – Appellant should be given opportunity to place evidences in support of their contention that imported goods can be used for fitting in ADV and other materials – Matter to be re-examined by Adjudicating authority in light of materials placed including valuation of goods – Therefore impugned order set aside – Matter remanded to Adjudicating authority to decide afresh – Decided partly in favour of Appellant.

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• 2015 (10) TMI 201
  Classification of Bakery Shortening – Classification under 1517 or 1516 – Whether imported goods described as Bakery Shortening in import documents would be classifiable under heading 15179090 of customs Tariff Act as held by Adjudicating Authority or under heading 15162091 as claimed by appellants – Held that:- Tribunal in earlier case of ADANI WILMAR LTD. [2012 (12) TMI 151 - CESTAT, AHMEDABAD] held that:- classifying goods under Chapter heading 1517, it would be necessary to show that same had been further prepared by processes like emulsification, churning, texturation etc., to change basic character of same from being product classifiable under Chapter heading 1516 to that of Chapter heading 1517 – Classifying goods under Chapter Heading 15162091, allowing exemptions from additional duty of excise under Notification No. 4/2005 – Following earlier decision of Tribunal, impugned order cannot be sustained – Accordingly, impugned orders set aside – Appeals are allowed with consequential relief.

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• 2015 (10) TMI 200
  Conversion of quantity of timber logs – Hoppus Ton to cubic meter – Timber logs were imported in Hoppus Ton whereas sales were made in cubic meter – Appellants had discharged Special Additional Duty at time of importation and after selling in domestic market on payment of VAT, they filed refund claims for amount of SAD paid by them as per Notification No. 102/2007 – Authorities reduced refund claim of appellant while adopting conversion at 1.8027 cubic meter – Whether authorities were justified in adopting different conversion formula – Held that:- Tribunal while dealing with similar issue of Royal Timbers [2013 (11) TMI 1300 - CESTAT BANGALORE] decided matter in favour of assesse – Moreover assesse produced copy of letter of Additional Principal Chief Conservator of Forests (Protection) which also shows that formula followed by appellants is correct – In view of above observations appeals have to be allowed with consequential relief to appellants – Decided in favour of assesse.

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• 2015 (10) TMI 199
  Goods diverted to local market – Imposition of Custom Duty – Appellants being 100% EOU attempted to divert goods to quantity of 16,420.600 kgs in local market – By Impugned Order, Commissioner confirmed demand of Excise duty and customs duty on indigenous and imported raw materials – Admittedly Assesse paid excise duty as was applicable, however commissioner levied additional excise duty upon assesse - It also confiscated seized goods and imposed redemption fine – Whether imposing custom duty, on indigenous and imported raw material and additional excise duty was justified – Held that:- It was not in dispute that duty free import and indigenous raw materials were used in manufacture of finished products – Appellants being 100% EOU discharged Central excise duty on goods, cleared to local market, amount equal to customs duty and therefore, separate demand of custom duty on raw materials would not sustain – It was evident from record that Excise Officers detained seized goods, which was attempted to divert in local market – So, confiscation of goods was justified and accordingly imposition of redemption fine was warranted – Impugned order modified – Demand of Central Excise duty and customs duties on raw materials hereby set aside – Decided partially in favour of Assesse.

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• 2015 (10) TMI 198
  Denial of Concessional rate – Non-compliance of Project Import Regulations, 1986 – In terms of Project Import Regulations, 1986, appellant imported Photo Composing System and Agfa Type Setting Equipment availing benefit of Notification No. 91/94-Cus – 20 Bills of Entry were provisionally assessed on payment of concessional rate of duty which were finalized denying concessional rate on ground that appellant had not complied with requirement as per Regulation 7 – Held that:- From Regulation, it is quite clear that what is required to be submitted within three months is reconciliation statement to enable authorities to verify whether deference between total value of imports and total quantity of imports has been paid correctly or not – Admittedly Regulation 7 is not condition for determining eligibility to concessional rate of duty – Appellant has produced Installation Certificate in first round of litigation and copies were produced before Commissioner (Appeals) in second round and when copies are taken, naturally they are taken on fresh paper – Therefore benefit of exemption notification cannot be denied on ground that Installation Certificate has not been produced – In absence of any evidence showing that equipment was not installed, appeals have to be allowed with consequential relief – Appeals allowed – Decided in favour of Assesse.

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• 2015 (10) TMI 197
  Quantity in excess of declared quantity – Confiscation of goods and imposition of penalty – Appellant filed Bill of Entry through their CHA, declaring import of goods as polyester knitted fabric and viscose knitted fabric – In checking, Viscose knitted fabrics were found in excess of declared quantity and was alleged that importers are resorting to mis-declaration of value of import of fabrics from China – Commissioner confiscated goods and imposed penalty – Held that:- Commissioner has not examined as to whether variation in weight of imported fabrics was on account of moisture content or otherwise – Also commissioner has not referred any evidence before discarding transaction value and consequently, its enhancement – Plea taken that entire quantity of imported fabrics were confiscated for concealment and not for mis-declaration of value, is required to be deliberated in detail – Therefore order of commissioner is cryptic and not speaking one and liable to be set aside – Commissioner directed to address all issues raised by both parties and pass fresh order after hearing – Appeal disposed of.

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• 2015 (10) TMI 196
  Non-fulfilment of obligation as per notification – Appellant procured indigenous goods for production of shrimps and also imported raw materials and capital goods – Taking view that appellant had not fulfilled obligation as per notification and sales made to other EOUs/ job work entrusted to other EOUs cannot be considered as exports therefore proceedings were initiated – Held that:- Supreme Court in case NCC Blue Water Products [2010 (9) TMI 13 - Supreme Court of India] took view that even if indigenous raw materials have been procured under Notification No.8/97, when tariff rate itself is ‘nil’, rate of duty applicable would be in terms of Section 3(1) of Central Excise Act, 1944 and it is not necessary to go to proviso at all – Further it was also submitted during course of hearing that exports were made in name of appellants only – View has also been taken that clearances to EOUs cannot be considered as exports which again is contrary to provisions of law – Once order is set aside, it is non est and further there is no indication in Commissioner’s order that submissions relating to exports made and in respect of raw materials imported after 2000 have been dealt with in earlier order – In such situation, we consider that Commissioner should consider matter once again and therefore remand matter with request to reexamine all matters afresh – Therefore impugned order is set aside and matter remanded to original adjudicating authority – Decided partly in favour of Assesse.

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• 2015 (10) TMI 195
  Demand of Custom and Excise duty – Imposition of fines and penalty – show cause notice was issued to Unit No. 1 of assesse proposing demand of customs duty under Section 28 of Customs Act 1962 alongwith interest and penalty on ground that Unit No 1 cleared duty free raw materials against fake advance licences – Also show cause notice was also issued to unit II proposing demand of Excise Duty alongwith interest and to impose penalty on ground that being 100% EOU, unit had cleared goods as DTA sale without payment of CE duty – Adjudicating Authority confirmed demand of duty and imposed redemption fine and penalty – Held that:-show cause notices were issued against both units proposing central excise duty on finished goods and appeals was filed against demand of duty on raw materials – Tribunal in case of Vandevi Texturisers Pvt Ltd vs. CCE., Surat - [2007 (6) TMI 433 - CESTAT, AHMEDABAD] held that demand of duty on raw material as well as finished products cannot be sustained – Therefore matter should be remanded to Adjudicating Authority to decide afresh after considering allegations in all show cause notices against both units – Impugned orders are set aside – Matters remanded to Adjudicating Authority – Decided partly in favour of Assesse.

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• 2015 (10) TMI 194
  Failure to mention Advance License Number in Bills of entry – Conversion of shipping bills - Denial of advance license scheme – Appellants failed to mention Advance License Numbers in nine shipping bills under which appellants have exported goods, DGFT has denied benefit under DEPB scheme and appellants sought to claim alternative export benefit under advance license scheme – Hence Appellant sought for amendment in shipping bills under Section 149 of Customs Act which was denied – Held that:- goods were cleared from factory of manufacture through ARE-1 – On perusal of ARE-1 it is clearly declared that export is in discharge of export obligation under Quantity base Advance License – ARE-1 were duly verified by Superintendent in charge of factory which was again verified by customs officer at Fort – Therefore, it is clearly confirmed that said goods mentioned under these shipping bills were exported under Advance License Scheme and these documents were in existence before export of goods – Therefore tribunal fully agree with appellant's contention and hold that appellants are eligible for conversion of all nine shipping bills from DEPB scheme to Advance License Scheme – Accordingly, impugned order is set aside – Decided in favour of Assesse.

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• 2015 (10) TMI 193
  Principle of Natural Justice – Appellant stated that he received show cause notice and made detailed submissions in reply to show cause notice but none of his submissions have been considered by Commissioner in his adjudication order – Further commissioner come to conclusion that appellant had not merely diverted goods sold on High Sea Sale Basis but also funded/financed transaction and no opportunity was given by Commissioner – Held that:- clear that principles of natural justice have not been followed – From reading of statements it cannot be concluded that appellant had funded consignments in absence of any other evidence – In view of said reasons, it is appropriate to remand matter to adjudicating authority for fresh adjudication by following principles of natural justice – Appeal disposed of.

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• 2015 (10) TMI 192
  Goods mis-declared as prime – Refund of differential duty demanded – Consignment of appellant was stopped by DRI as goods were purportedly mis-declared as “Prime” and benefit of exemption under Notification No. 21/2002-Cus. was wrongly claimed – Appellant were issued show cause notice for claiming wrong exemption and differential duty was demanded – Appellant paid differential duty so demanded and thereafter filed application for refund of duty paid – Refund amount was partly released against which appellant appealed before commissioner who rejected appeal – Held that:- Appellant initially filed refund claim for amount however sanctioning authority disposed of refund for partial amount but in respect of balance amount neither rejected nor even disposed of and has not given any findings for this refund – Since appellant admittedly filed refund claim for balance amount along with all documents, refund claim was well within stipulated time period of one year and same should not have been rejected on time bar – On very same issue Delhi High Court in Sony India Pvt. Ltd. [2014 (4) TMI 870 - DELHI HIGH COURT] has held that in respect duty paid prior to amendment Notification No. 93/2008-Cus. one year period shall not apply – Appellant correctly and legally entitled for refund claim – Decided in favour of Assesse.

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• 2015 (10) TMI 191
  Refund of SAD – Non-consideration of documents produced – Appellant filed refund claim against 4% SAD paid in respect of imported goods – Adjudicating authority rejected claim on finding that importer has failed to submit all documents required for processing refund claim – Commissioner (A) also upheld order rejecting appeal – Held that:- no specific document was pointed out while rejecting refund claim – Therefore, on basis of mere statement without discussing about any document, rejection of claim was not warranted – Despite appellant having submitted all documents before original authority and further clarificatory certificate from C.A. before Commissioner, Commissioner has neither whispered nor given any finding on such vital documents –VAT/CST payment, copies of challan evidencing deposit of VAT/CST which gets correlated with sale invoice, it is evidenced that VAT/CST was paid on goods sold by appellant – These facts not only establish from basic records but also reinforced by clarificatory certificate issued by Chartered Accountant – No deficiency in respect of payment of CST/VAT and that amount being shown as receivable in balance sheet – Therefore, appeal allowed with consequential relief –Decided in favour of Assesse.

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• 2015 (10) TMI 190
  Rejection of Interest on delayed refund payment – Appellant imported goods during assessment of bills of entry, Customs Duty was computed and was paid accordingly – However, bills of entry were re-asessed and consequent to said reassessment, appellant filed refund claims for difference of duty between initial assessment and reassessment of bills of entry – Refund claim was sanctioned to appellant belatedly by nearly two years however, no interest was given – Aggrieved with non-payment of interest, appellant filed appeals which was rejected vide impugned order – Held that:- main ground for rejection of interest claim of appellant is that they have informed department for disclaimer of interest – There is no statutory provision regarding filing of any undertaking or disclaiming interest on refund amount – There is no dispute that refund was sanctioned almost after two years from date of filing of application – Therefore, appellant is entitled for interest – On very issue of interest on refund, Supreme Court in case of Ranbaxy [2011 (10) TMI 16 - Supreme Court of India] held that wherever there is delay in sanction of refund beyond three months from date of application, interest has to be paid to claimant – Thus, matter remanded to original adjudicating authority to consider claim of interest afresh – Appeal allowed by way of remand – Decided in favour of Assesse.

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• 2015 (10) TMI 189
  Waiver of pre-deposit condition – Inordinate delay in supply of adverse test reports - Applicants imported coal and filed Bills of entry declaring goods as “Bespoke Optimum Semi Soft Corex Coke” – Goods were assessed and provisional assessments were finalized by denying benefit of Notification claimed by applicants – Commissioner upheld decision of adjudicating authority denying benefit of Notification – Therefore, applicants seeking waiver of pre-deposit of duty – Held that:- applicants are disputing Chief Examiner’s report showing CSN ‘Zero’ and At present stage, re-test will not serve any purpose, as goods in question is perishable in nature – Also adverse test reports were supplied to applicants with inordinate delay – In said circumstances, adverse test report cannot be relied in light of load port certificate showing CSN is one or more –Purchase contract shows that applicants have asked for supply of coal as load port certificate having CSN of one or more – In case of Adani Exports Ltd. v. Commissioner of Customs, Jamnagar [2009 (8) TMI 439 - CESTAT, AHMEDABAD] Tribunal held that without discarding load port certificate, test report of Chemical Examiner is not acceptable – Therefore, non-supply of adverse report to applicants in time is violation of principles of natural justice – Claim of applicants with regard to classification of steam coal instead of coking coal before finalization of provisional assessment which may be resulted in refund, has not been considered by both lower authorities. Concurring View –Coal is not perishable commodity – However, applicant has produced evidence how samples get oxidized and CSN changes in samples – Admittedly in Customs Act there is no right to seek retest – In fact in old Central Excise Rules there was concept of retesting – However, there is delay in providing test report to applicant – Therefore Applicants have made out case for complete waiver of pre-deposit of duty – stay granted.

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• 2015 (10) TMI 188
  Classification of VGA card/TV tuner – Invocation of extended period for imposing demand of duty – Vide impugned order, adjudicating authority classified VGA card/box/TV Tuner imported by appellant falling under CTH 8528 71 00 as reception apparatus for television not designed to incorporate video display as against claim of appellant that same falls under CTH 8473 30 99 as parts/accessories of computer – Consequently, authority confirmed confiscation, penalty and duty demand by invoking extended period of time along with interest thereon – Held that:- show cause notice has been issued after lapse of six months from date of import of impugned goods, and has been issued beyond normal period of limitation – Goods were subjected to first check before they were finally assessed and, therefore, department was fully aware of nature of product imported – Therefore, question of invoking extended period of time would not arise – Clear that there were divergent practices with regard to classification of TV tuners used for ADP machines and, therefore, appellant is right in entertaining bona fide belief that classification of goods imported by them could be under CTH 8473 30 99 – In said circumstances, bona fide of belief entertained by appellant cannot be questioned at all –Consequently, entire demand and consequent liability are not legally sustainable and is set aside – Decided in favour of Assesse.

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• 2015 (10) TMI 187
  Classification of POP-POP Party snappers – Whether explosive goods or not – Revenue filed appeal against order in respect of goods namely "POP-POP Party snappers" which were absolutely confiscated by adjudicating authority holding them to be classifiable under CTH 36041000 as fire crackers restricted for import as per F.T.P. 2009-14 and prohibited under Rule 7 & Rule 8 of Explosive Rules 2008 – Hence requiring for import thereof permission/authorization from DGFT and Explosive Department which respondents did not produce – Commissioner (A) vide impugned order agreed with contention of Respondents by classifying goods under CTH 9505 – Held that:- As evident from report of CRCL they have not given any definite opinion whether impugned goods would fall in category of Explosives – Neither CRCL nor Controller of Explosives has given opinion whether impugned goods would fall in category of explosives subject to various restrictions relating to explosives – Thus original adjudicating authority has clearly erred in stating that his basis of classification of impugned goods under CTH 36041000 is CRCL report – Commissioner (A) concluded that impugned goods would not fall under category of fireworks merely on ground that impugned goods contain very small quantity of silver fulminates – This can not be held to be sustainable basis to so conclude specially in respect of goods which contain material covered under Explosive Act, 1884 – Thus both adjudicating authorities have gravely erred in deciding way they have decided case – Matter remanded to primary authority to pass de novo order – Impugned order set aside – Appeal disposed of.

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• 2015 (10) TMI 186
  Smuggling of prohibited goods – Confiscation and imposition of penalty – Commissioner (Appeals) upheld order in which goods involved in smuggling were absolutely confiscated and, apart from penalties on others, penalty each of appellants was imposed – Appellant challenges imposition of penalty upon appellant – Held that:- Attempt to smuggle Red Sandalwood was carefully planned operation involving various people but for whose acts of commission or omission, attempt to smuggle would not have taken place – Role of appellant does not appear to be free from doubt at all – Appellant accepted export invoice and did not verify factory stuffing permission or even care to see whether factory stuffing documents and seal on container are genuine – Mere contravention of provisions of Act and Regulations justifies imposition of penalty – Apex Court as observed that "mens rea is not a necessary ingredient and there is no scope for any discretion in imposition of any penalty" –Therefore penalty is imposable – Decided against Appellant.

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• 2015 (10) TMI 185
  Import of medical equipment between - Benefit of Exemption Notification No. 64/88-Cus – Extension of exemption notification – Appellant availed exemption under Notification No. 64/88-Cus., however failed to fulfil condition of notification – After investigation, Commissioner confiscated goods under Section 111(o) of Customs Act, 1962 with option to redeem same on payment of fine, penalty and customs duty – Held that:- on careful perusal of records and statement given by CEO of appellant’s Hospital, appellant could not produce any record in support of their claim as regard free treatment given to IPD and OPD patients – It is categorically mentioned in notices that “in none of years, proper registers are maintained in support of statistics filed” – Settled position in law that it is for person who claiming benefit of exemption notification to lead evidence to show that he is entitled for same – As regard claim of appellant for Notification No. 65/88-Cus. to be extended, court of view that this particular issue has not been dealt with by lower adjudicating authority – Therefore appellants not entitled for exemption under notification, however, penalty is waived – Matter remanded to adjudicating authority to consider admissibility of Notification No. 65/88-Cus. to appellant in accordance with law – Appeal disposed of.

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• 2015 (10) TMI 184
  Rejection of Refund claim – Commissioner upheld order of rejection of refund applications of appellant on ground that amount in refund application and as claimed to be deposited is not reconcilable – Held that:- no dispute that amount for which refund is sought for by both appellants are over and above adjudged amount confirmed in demand order therefore it is clear that this amount is, in principle, refundable to persons who deposited – In view of said no reason found in rejection of refund applications of appellants – Once Commissioner explicitly confirmed deposit and given attested copies of TR 6 challan and also deposit has been recorded in demand order, refund claim should not have been rejected – When payment as per adjudication order is known to assessing authority, refund as per appellate order is duty of assessing authority – Assessing authority cannot retain amount and deprive assessee of use of his money unreasonably – Impugned order rejecting claim for refund set aside – Decided in favour of Assesse.

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• Corporate Laws

• 2015 (10) TMI 267
  Validity of penalty imposed under Section 15A(b) and 15HB of Securities Exchange Board of India Act – Appellant contends that there wasn’t any intention on his part to suppress purchase and sale of shares – Appellant holds that failure to make disclosure has not resulted in any profit for him or loss to the investors and was simply an inadvertent error with no malafide intention -– Appellant further contends that violation is not repetitive in nature and the Adjudicating Officer is not justified in imposing the penalty of ₹ 5 lac and ₹ 2 lac under section 15A(b) and 15HB – Appellant drafted a compilation to show that the company has been making losses so the penalty should substantially be reduced. Held That:- There was seen no merit in the contentions of the Appellant - Disclosures have not at all been made, still the Adjudicating Officer has imposed a penalty of ₹ 5 lac and ₹ 2 lac under Section 15A(b) and Section 15HB instead of ₹ 1crore which cannot be said to be excessively harsh or unreasonable – Penalty is imposable irrespective of the fact that the company/promoter-director have been incurring losses or not - Omission on the part of the appellant was detrimental to the interest of the investors and hence no fault can be found with the decision of SEBI – Decided in favour of the Respondent.

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• 2015 (10) TMI 266
  Validation of Participatory Notes as ‘offshore derivative instruments’ (ODIs) - alleged statement by the Finance Minister – Petitioner contends with regard to the Participatory Notes which are nothing but ODI’s and the alleged statement made by the Finance Minister – Respondent holds that ODI’s include participatory notes which are entered into by a Foreign Portfolio Investor – Held That:- Premise on which the writ petition is found does not exist - Regulation 22 of SEBI(Foreign Portfolio Investors) Regulations,2014 prescribes the conditions for issuance of ODI’s of which, a participatory note is an example - Finance Minister has only stated that the Government would not take any ‘knee-jerk’ reaction with regard to stipulating or not stipulating any norms stricter than what are already in place - Petitioner cannot validate any cause for filing the present petition – Decided against the appellant.

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• 2015 (10) TMI 265
  Scope of power under Section 111 of the Companies Act, 1956 – Rectification of share register - Transmission and transfer of shares on the basis of succession certificate, transfer deed and revalidation letter issued by the ROC – High Court held that the succession certificate issued by the competent court had to be taken as conclusive evidence under Section 381 of the Indian Succession Act - Court had refused to grant any interim injunction in favour of UD Group and other plaintiffs - whether there is any real dispute between the parties about the entitlement of DR Group to have the shares transferred in their favour and whether the exercise of jurisdiction by the High Court is beyond the scope of Section 111 of the Companies Act. Held that:- there is no real dispute between the parties as held by the High Court. DR Group has furnished the succession certificate as well as the transfer deed executed by GD in their favour. The same had to be acted upon - DR Group followed the due procedure. It had the succession certificate in its favour apart from the transfer deed from GD, who admittedly inherited rights from LMJS. Will in favour of GD is beyond any dispute. Thus, the DR Group derived rights from the GD by documents executed by her in her lifetime and conveyed to the Company. Even if the Will of GD is not taken into account, for purposes of issue of rectification, the documents executed by GD clearly entitled the DR Group to have the rectification made - CLB had no justification to reject the claim of the DR Group and the High Court rightly reversed the said order – Decided against appellant.

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• FEMA

• 2015 (10) TMI 264
  Otherwise acquired foreign currencies - Proceedings under FERA, 1973 - holding the currency as owner thereof and handing a part of for safe custody with the appellant's mother and wife - ownership of foreign currencies - validity of statement before income tax authorities - Held that:- FERA and the Income Tax Act are two separate and independent Acts operating in two different fields. Therefore, we do not think that the appellants can take advantage of the decision rendered in the tax case appeal. The decision rendered by the Authorities under the Income Tax Act has to be viewed in the context of the most fundamental principle that no income can be taxed twice. If one person makes a claim for certain amount of money and pays income tax, the Department cannot tax the same money at the hands of another, unless that other person has received it in the form of income through a secondary transaction. Therefore, the non inclusion of the value of these currencies in the income of the appellant in the first miscellaneous appeal, may have been driven by circumstances that provide for avoidance of double taxation. Hence, the first question of law is to be answered against the appellants. The Appellate Tribunal itself has gone into the question relating to the expression 'acquire' in Section 8(1) and came to the conclusion that the non examination of Mrs.Seethalakshmi Nagaraj on the side of the defence was fatal. It was not relied upon by the prosecution. There was no explanation as to why and how the appellant in the second miscellaneous appeal came to the premises that was being raided, with a briefcase carrying foreign currencies. In such circumstances, we do not think that the orders of the Adjudicating Authority and the Appellate Tribunal call for any interference. - Decided against the appellants.

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• Service Tax

• 2015 (10) TMI 297
  Club membership - Membership fee, Annual fee and other charges received from members - refundable security deposit - Whether the relationship between the applicant and members of the club could be considered as provision of ‘service’ by one person (service provider) to another person (service receiver) - Held that:- The relationship between the applicant and members of the club should be considered as provision of “service” by one person (service provider) to another person (service receiver) for the purpose of Section 65B (44) of the Finance Act, 1994 read with Sections 66B, 66D and Section 66E of the Finance Act, 1994 and accordingly, the Membership fee, Annual fee and other charges received from members from time to time be liable for Service Tax. Refundable security deposit and interest there-on should not be subjected to Service Tax as per provisions of the Finance Act, 1994. Decided partly in favor of assessee.

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• 2015 (10) TMI 296
  Levy of service tax on letting out of vacant land in furtherance of business and commerce - w.e.f. 01.07.2010 or w.e.f. 01.06.2007 - Held that:- The findings of the tribunal in case of NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [2014 (1) TMI 1203 - CESTAT NEW DELHI] are legally justified - In view of clear exclusion of vacant land from the ambit of immovable property prior to 1.7.2010 it cannot gainfully be contended by Revenue, that clause (v) to Explanation I (introduced in 2010), was a mere clarificatory endeavour, explicating the implicit and inherent meaning of Section 65 (105)(zzzz). Clause (v) is clearly an amendment which expands the scope of the taxable service; and prospectively. The statement of objects and reasons accompanying the Finance Bill, 2010 also clarify that clause 75 of the Bill seeks to amend Chapter V of the Finance Act, 1994; to modify the scope of certain taxable services including the taxable service defined and enumerated in Section 65(105)(zzzz) , of the Act. These several contemporaneous exposition and administrative constructions and the scope of sub-clause (v) of Explanation I in Section 65(105)(zzzz) fortify the conclusion the scope of sub-clause (v). To modify and expand the scope of the taxable service to cover and include vacant land on lease or licence for construction of a building or a temporary construction at a later stage to be used for furtherance of business or commerce, within the ambit of 'immovable property' is thus the taxable service. Since the introduction of this sub-clause in Explanation I expands the scope of the taxable service and renders the taxable (a) hitherto non-taxable transaction, and absent of explicit retrospective reach provided to the amendment and insertion of this sub-clause, , these transactions covered by this sub-clause of the Explanation have only the prospective operation. Renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010, and not so, earlier to this date. - Decided in favor of assessee.

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• 2015 (10) TMI 295
  Industrial construction service - benefit of abatement of 67% under Notification NO.15/2004-ST - Held that:- We are not in agreement with the contention that the services rendered at the residential houses in which employees of the respondent reside would be tantamount to rendering industrial construction service. Similarly an amount of ₹ 5,71,646/- received for painting of goods /material/other article other than building and civil structures would not be part of industrial construction service. However, Painting of walls of the floor of commercial building would fall under industrial construction service and being in the nature of completion and finishing service would not be entitled to abatement of 67% under Notification No.15/20045-ST. Disallowing such abatement and allowing exemption upto the value of 4 lakhs, Service tax liability of ₹ 36,233/- on taxable value of Rs,.3,55,229/- would arise. As regards the issue of wilful mis-statement or suppression of facts, we find that the only ground to sustain this allegation is that the respondent did not file ST-3 returns nor registered with the Service Tax department. However the Commissioner (Appeals) held that no service tax was liable. In the case of Continental Foundation Jt.Venture vs. CCE, Chandigarh-I- [2007 (8) TMI 11 - SUPREME COURT OF INDIA], the Supreme Court has in effect held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty - Suppression means failure to disclose full information with intent to evade payment of duty - An incorrect statement cannot be equated with a wilful mis-statement - There cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for purpose of proviso to Section 11A ibid - Mis-statement of fact must be wilful. In view of the said observation of Supreme Court and even the Commissioner (Appeals) holding that no service tax was payable, we are of the view that the allegation of suppression/wilful mis-statement is not sustainable as a consequence of which the demand is rendered time barred. - Decided against Revenue.

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• 2015 (10) TMI 294
  Waiver of pre deposit - whether the GTA service availed for transportation of the goods from the factory to the warehouse/retails outlets and various services availed at the retail outlets would be eligible for cenvat credit - Held that:- identical issue was involved in the case of M/s.Cantabil Retail India Ltd. & Ors.(2014 (11) TMI 543 - CESTAT NEW DELHI) and the Tribunal vide stay order observing that it is the warehouse /retail outlet which has to be treated as the place of removal and, therefore, the assessee would be eligible for cenvat credit in respect of the services availed upto the place of removal had ordered unconditional waiver from the requirement of pre-deposit. Though in the appellant's own case for the previous period, the Tribunal vide Stay Order had taken a contrary prima facie view and had ordered pre-deposit, that order was based on the Tribunal's judgement in case of Ultra Tech Cement reported in [2014 (10) TMI 679 - CESTAT NEW DELHI] and that judgement have now been set aside by the Hon'ble Chattisgarh High Court vide judgement reported in [2014 (8) TMI 788 - CHHATTISGARH HIGH COURT]. In view of this, following the Tribunal's judgement in the case of M/s.Cantabil Retail India Ltd. & Ors. (supra), we waive the requirement of pre-deposit of cenvat credit demand, interest and penalty for hearing of the appeal and stay the recovery thereof till the disposal of the appeal. - Stay granted.

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• 2015 (10) TMI 293
  Denial of cenvat credit - GTA services - credit availed by the appellant as a recipient of GTA services discharged by their registered office and distributed to the appellant unit - Held that:- Adjudicating authority has denied the credit solely on the ground that their registered office is not authorized to pay service tax on GTA after taking centralized registration at Mumbai. On perusal of the findings, at para 5.51, 5.52 and 5.53, the adjudicating authority has discussed only on the provisions of centralized registration and held that service tax paid by the corporate office is not eligible as cenvat credit availed by the appellant. There is no dispute on the fact that appellant's registered office at Mumbai obtained centralized registration for discharge of service tax on various services including GTA services and discharged service tax. The jurisdictional Service Tax Commissionerate at Mumbai not raised any dispute on the payment of service tax nor any demand issued against them. The registered office is registered as ISD is also not under dispute. The Tribunal in the case of Rohit Surfactants Pvt. Ltd. Vs CCE Jaipur (2012 (12) TMI 612 - CESTAT NEW DELHI), has discussed the identical issue and set aside the impugned order and allowed the appeal. - there is not even iota of dispute raised by the Mumbai Commissionerate on the centralized registration obtained by the registered office of the appellant. - Decided in favour of assessee.

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• 2015 (10) TMI 292
  Denial of CENVAT Credit - input service distributor (ISD) - Respondents are engaged in the manufacture of Conductors and availed credit of the input services on the strength of invoice which is issued in the name of head office and endorsed to the appellant’s unit - Held that:- Head Office of the appellant was holding Central Excise registration under Business Auxiliary Service since 2004. The appellant company has two units at Ghaziabad and Vapi. In the present case, the Head Office endorsed the invoice in the name of Vapi unit for availing CENVAT Credit - It is seen that as per Master Circular, of the appellant company has incorporated the additional service as Input Service Distributor (ISD) w.e.f. 21.11.2007 in the registration, which they are holding since 2004. Therefore, in the present case, it cannot be said that the Head Office was not registered with the Service Tax authorities. I find that the Tribunal in the appellant s own case, for the subsequent period in the case of CCE Vapi Vs Samita Conductors Ltd - [2012 (11) TMI 432 - CESTAT, AHMEDABAD] rejected the appeal filed by the Revenue - Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration and therefore, there is no reason to deny the CENVAT Credit - No reason to interfere the order of the Commissioner (Appeals) - Decided against Revenue.

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• 2015 (10) TMI 232
  Denial of refund claim - export of services - eligible input services - nexus with output services - Notification No. 5/06 CE (NT) dated 14.3.2006 - Held that:- Services which are clearly covered by the inclusive part of the definition of input service which provide for CENVAT credit of service tax paid on input services used by the manufacturer in relation to setting up, modernization, renovation or repairs of a factory, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business such as accounting, audit, financing, recruitment, quality control, coaching and training, computer net-working, credit rating, share registry, security etc. Since in my opinion, all the services are covered by the definition of input services, the appellant is eligible for the refund claimed by them. - Decided against Revenue.

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• 2015 (10) TMI 231
  Denial of CENVAT Credit - Denial on outward transportation of goods - Held that:- With regard to the goods sold on FOR basis as transportation charges have been included in the assessable value of the goods and goods are delivered on the door of the buyer. Therefore,the ownership of the goods remains with the appellant. In these circumstances appellant has complied with the condition of the CBEC circular no. 97/8/2007 dated 23/8/2007. Therefore, I hold that on transportation charges where the goods are sold on FOR basis appellant is entitled to claim Cenvat Credit on outward transportation. - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 230
  Denial of refund claim - Service Tax used in the export of the goods - Held that:- as per Rule 3 of Cenvat Credit Rules, 2004, the appellant is entitled to take credit of duty/Service Tax paid by them. Moreover, Notification No. 17/2009-S.T., dated 7-7-2009 also provided exemption claimed by the exporter shall be provided by way of refund of Service Tax ‘paid’ on the specified service used for export of the said goods. Admittedly this is specified service as per Notification No. 17/2009-S.T., dated 7-7-2009 the Service Tax has been paid by the appellant. Therefore, this contention of the ld. AR is not acceptable. In the circumstances, I hold that the appellant is entitled to claim refund on actual Service Tax paid on Inland Haulage Service Charges and GTA service. Service provider in India was required to be delivered the goods outside India at the destination of the buyers, the charges on the services have to be formed part of the price of the goods in question. Therefore, I hold that the appellant is entitled to claim refund of Service Tax on these services. With regard to learned AR’s contention that the appellant has never said that the goods sold were under the ownership of the appellant till they reached to foreign buyers. With regard to courier service charges, I find that the invoices have been raised by M/s. TMT Logistics Pvt. Ltd. for providing courier service through Fedex for transporting the goods and Service Tax has been paid thereon. Therefore, I hold that the appellant is entitled to claim refund of Service Tax paid on courier service wherein the invoices showed that the appellant has paid Service Tax. - Decided in favour of assessee.

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• 2015 (10) TMI 229
  Demand of service tax - Commercial or industrial construction service - Held that:- Clause (d) of the definition provides that the repair undertaken in respect of buildings in clause (b) and (c) would be leviable to Service Tax and clause (c) speaks of only new buildings. Moreover, it was also submitted that they replaced only doors and the door cost has also been included. It is an arguable issue and the show cause notice was issued on 20-4-2011 and therefore, substantial portion of the demand would be beyond the normal period of limitation and therefore, at this stage, we consider that we need not insist for pre-deposit in respect of this service - appellant has not made out a prima facie case in respect of Service Tax demand of about ₹ 25 lakhs. Taking note of the fact that the appellant has deposited an amount of ₹ 10 lakhs as per the directions of the learned Commissioner (Appeals) for hearing the appeal, we consider that appellant should be directed to deposit another ₹ 10 lakhs within six weeks - Decided against assessee.

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• 2015 (10) TMI 228
  Air Travel Agency Services - Penalty u/s 76, 77 & 78 - Held that:- Demand of service tax and payment thereof, interest and penalty under Sections 76 and 77 are not the subject matter of the appeal. The Revenue is only contesting the setting aside the penalty under Section 78 by the learned Commissioner (Appeals) - there is sufficient cause to set aside the penalty under Section 78 which is provided under Section 80 of the Finance Act, 1994. Therefore, in my considered view, the learned Commissioner (Appeals) has rightly exercised the power vested in him for setting aside the penalty imposed under Section 78. It is also a fact that the respondent have themselves suo motu deposited the service tax amount. The respondent also declared part of the taxable value in their ST-3 returns. The show cause notice was issued within the normal period of one year. Taking into consideration all these facts I am of the considered view that the penalty under Section 78 was correctly set aside - Decided against Revenue.

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• 2015 (10) TMI 227
  Waiver of pre-deposit of Service Tax - civil construction activities - Turn-Key Project - availing cenvat credit while availing benefit of abatement - Penalty u/s 78 & 77 - Held that:- As per the Notification No. 01/2006-S.T., dated 1-3-2006, as was applicable during the relevant period, the services provided on ‘Erection, Commissioning or Installation Services’ and ‘Commercial or Industrial Construction’, the services were leviable after allowing the abatement of 67% of the taxable value, subject to the condition that no Cenvat credit of Service Tax on Inputs or Capital Goods or Input Services used for providing such taxable service, had been taken under the provisions of Cenvat Credit Rules, 2004. It is not in dispute that the applicant had availed the credit in respect of the entire services. A lump-sum price was agreed upon for the total Project pertaining to the work of ‘Commercial or Industrial Construction Service’, he observed that as per Bills of Entry and shipping bills in the contract, it was agreed that the Notice would raise the bill for break-up of the contract price, phasewise and itemwise. The Bills of Entry/shipping bills of the contract did not have the provision for raising bills separately, showing the value for construction of roads, bridges, residential quarters, etc. In view of these facts, prima facie, we are not impressed with the contention of the applicant that the contract has a separate break-up for these services. In view of the rival claims put forward by the applicant and the Revenue, we find that their claim is required to be examined in detail, with reference to the terms of the contract, the books of account maintained by the applicant and the other evidences put forth by both the parties, which could be examined in detail, at the time of disposal of the appeal. However, in view of various facts of this case, enumerated as above, prima facie, at this stage, we are of the opinion that the applicant has not been able to make out a case for total waiver of the pre-deposit. - Partial stay granted.

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• 2015 (10) TMI 226
  Denial of refund claim - Notification No. 12/2005 - appellant had claimed rebate of Service Tax on bills which are prior to the date of declaration under Notification No. 12/2005 and also prior to the date of export, which is October, 2010 - Held that:- Rebate has been sought under the provisions of Notification No. 12/2005 issued in terms of Rule 5 of the Export of Service Rules, framed under Notification No. 9/2005, dated 3-3-2005. I find that there is no dispute on the fact that the appellant had followed the procedure laid down in the notification regarding filing of declaration giving all requisite details such as description, value, amount of duty payable on input services actually required to be used in providing taxable services to be exported. I find inconsistency between the order of the adjudicating authority and that of the Appellate Authority. - No doubt regarding actual use, as has been raised. The fact that the date of input service invoices need not be of the same date or of around the same date as the date of the export is a very natural and normal phenomena. When the whole process of receiving input service and providing output service is a continuous ongoing process, it is quite natural that there will be time lag. The appellants have been providing all the details of input service and the output service and a major portion of the refund claim amounting to ₹ 9,08,188/- was sanctioned based on same facts of use of input services for providing output service. The amount of ₹ 1,47,539/- was rejected only on the ground that the period of export is October 10, whereas the period of invoice relating to input service is different. There is no requirement under Notification No. 12/2005 that the period should be same or that the declaration should be filed before the date of the input invoice. Therefore, I allow the rebate claim as valid in law - refund claim was rejected without the proper show cause notice proposing rejection and the whole process violates the principles of natural justice. - Decided in favour of assessee.

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• Central Excise

• 2015 (10) TMI 289
  Recovery of CENVAT Credit - Trading of goods - Held that:- On the major portion of the demand the Ld. Commissioner has proceeded on the premise that the appellant are engaged in trading of the goods and they have wrongly availed CENVAT Credit on input services used in carrying out the trading activities. The claim of the appellant on the other hand is that the softwares down loaded from the overseas supplier have been used in or in relation to the manufacture of the dutiable goods. - in the interest of justice, it is prudent to remit the case to the Ld. Commissioner to decide the issue afresh taking into consideration all evidences and the issues raised by the appellant in their reply to the show cause notice. credit. Consequently, the impugned order is set aside and the matter is remitted to the Ld. Commissioner for deciding the issue afresh on merit. - Decided in favour of assessee.

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• 2015 (10) TMI 288
  CENVAT Credit - reversal of proportionate credit towards exempted goods or the appellant is required to pay 10% amount on the value of exempted goods as per the provision of Rule 6(3) of the Cenvat Credit Rules 2004 - Held that:- the present case is covered by the decision in the case of Swiss Parenterals Pvt. Ltd. vs Commissioner of Central Excise & Service Tax, Ahmedabad [2014 (6) TMI 720 - CESTAT AHMEDABAD] and Global Pharmatech Pvt Ltd. [2011 (1) TMI 234 - CESTAT, CHENNAI] The only aspect required to be verified is whether amounts proportionate to exempted goods stand reversed as per appellant's Letter dated 28.10.2010, alongwith interest, as agitated by learned AR - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 287
  Duty demand - Unutilized CENVAT Credit lapsed - conversion from DTA unit to 100% EOU unit - Interest u/s 11AB and penalty u/s 11AC - Held that:- Board Circular no. 77/99-Cus quoted does not elaborate under what provision the unutilised credit will stand lapsed. In any case, the said circular was issued when Rule 100H under old Central Excise Act, 1944 (sic) were existing and at that point of time 100% EOU were outside the scheme of modvat/Cenvat Credit, which is not so after the CENVAT Credit Rules, 2004 have come into existence. The present case is pertaining to the period after 2004. We have also seen the Tribunal's judgment in the case of Indira Gandhi Mahila Sahakari Soot Girni Ltd. (2011 (10) TMI 206 - CESTAT, MUMBAI), the facts of that case are entirely different and that case pertain to the time when the old rules were in existence, and therefore not applicable to the present facts of the case. On limitation also we find the appellant has strong case as when unit got converted in EOU all details of unutilised credit etc. were made known to the department and revenue after five years cannot allege that there was wilful mis-statement or suppression of fact. - Decided in favour of assessee.

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• 2015 (10) TMI 286
  Short reversal of SAD - On the Department pointing out the mistake in September, 2006, the assessee made good the short payment - clearances of the imported inputs to ancillary units for manufacture of PCBs - Interest u/s 11AB - Penalty u/s 11AC - Held that:- Demand in this case is barred by limitation. Further, as the appellant were having sufficient balance in their Cenvat Credit Account, the demand of interest is also not sustainable. Further, as the show cause notice was also issued by invoking extended period of limitation, therefore, penalty on the appellant is not imposable. It is also noted here that as the appellant has reversed the Cenvat credit of SAD, which has ultimately taken up by the buyer in that case, consequent to this order, the appellant will not avail cenvat credit again in SAD in their Cenvat Credit Account - Decided partly against assessee.

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• 2015 (10) TMI 285
  Denial of CENVAT Credit - whether Nitrogen Cylinders and Welding Electrodes used by the appellants in their factory are eligible for Cenvat Credit - Held that:- Subject cylinders are used for filling Nitrogen gas which is used in the analytical laboratory as well as the process plant and these cylinders are used for the storage of Nitrogen gas which is utilized for in or in relation to manufacture of finished excisable goods. It is observed that the capital goods are defined to mean inter alia, "storage tank used in the factory of the manufacturer of the final products." From the usage of the subject Nitrogen Cylinder, it is clear that they are used for storing the Nitrogen Cylinder and therefore serves the purpose of storage tank. - As regards Welding Electrodes, it has been held that the Welding Electrodes are eligible for Cenvat Credit either as capital goods, or as inputs under Rule 2(g) of Cenvat Credit Rules 2002, by this Hon'ble Tribunal the case of Hindustan Zinc Ltd. Vs. Commissioner of Central Excise, Jaipur [2009 (9) TMI 788 - CESTAT NEW DELHI], and the Hon'ble High Court of Uttarakhand in the case of Commissioner of Central Excise Vs. ACC Glass containers Ltd.[2013 (10) TMI 194 - UTTARAKHAND HIGH COURT]. In view of the same, it is held that the appellants are eligible for Cenvat Credit on welding electrodes. - Decided in favour of assessee.

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• 2015 (10) TMI 284
  Denial of exemption claim - whether appellant is entitled to claim duty free exemption under notification no. 6/02 dated 1/3/2002 at serial no. 260A for steel plates required by them to Delhi Metro Rail Corporation of India or not - Held that:- conditions stipulated to the appellant is that the appellant is to produce the certificate issued by Managing Director, Co-Director- Rolling Stock Electrical and Signaling and Co-Directors-Finance of Delhi Metro Rail Corporation - As per notification, all items of equipments are entitled for exemption. Definitely the steel plates have been used by the appellant for fabrication of equipment/structures which also have the support of the TRU letter No. F. No. 354/7/2003 dated 14.09.2004 to say the item in question is part of traction equipment. Therefore, we hold that appellant has complied with the conditions of notification no. 6/02 dated 1/3/2002 serial no. 260A, the appellant is entitled for benefit of the said notification. - Decided in favour of assessee.

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• 2015 (10) TMI 283
  Determination of annual capacity - Declaration filed under Rule 96ZP (4) - Held that:- It is clear from the perusal of records and as admitted in order-in-appeal dated 6.7.2000 the declaration filed by the appellant on 17.7.1998 is evidenced. Even in the impugned order of Ld. Commissioner (Appeals) he observed that declaration filed could not be traced by department and hence penalty cannot be imposed. It is also clear that the date declaration taken as 1.1.1999 by the ld. Commissioner is not correct and it is a mix up with the effective date of re-determination of ACP decided by the Tribunal. In the ex-parte order dated 21.1.2003 of original authority no specific discussion was found regarding date declaration or reason for confirmation of demand for the period prior to 1.1.1999. On appeal in the impugned order also no specific findings were recorded on these. The demands in show cause notices relating to the period prior to February, 1999 were issued on the ground that declaration was not filed by the appellant under Rule 96ZP. Since, the declaration dated 17.7.1998 filed by the appellant is not disputed, the duty liability has to be accordingly arrived at - The demands of duty made without reference to such declaration will not survive. - duty liability for this period is to be as per the declaration - Appeal disposed of.

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• 2015 (10) TMI 282
  Denial of CENVAT Credit - whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not - Held that:- Trolleys, for which cenvat credit is taken, are used by the appellant for carrying material from one part of the assembly line to another part of the assembly line or the place to and from where assembly of goods is taking place. It has been held by the Larger Bench in the case of Banco Products (India) Limited vs. CCE, Vadodara (2009 (2) TMI 101 - CESTAT AHMEDABAD) that credit of Plastic Crates used for handling of materials within the factory is admissible for credit under Rule 2 (b) of the Cenvat Credit Rules, 2002 presently Rule 2(a) of Cenvat Credit Rules, 2004. The nature of function attributable to the Plastic Crates and Trolleys used by the appellant are the same. The case law Commissioner of Pondicherry vs. Mohan Brewaries Limited (2010 (8) TMI 281 - MADRAS HIGH COURT) has been relied upon by the Revenue. The issue in this case relied upon by the Revenue was cenvat credit of duty paid on steel plates and M.S. Channels used for fabrication of Chimney. The facts involved in that case were different and, therefore, it was not be proper on the part of the first appellate authority to distinguish the Larger Bench judgment in the case of Banco Products (India) Limited vs. CCE, Vadodara (supra) as the facts and nature of equipment involved in the present proceedings are similar. Therefore, cenvat credit is admissible to the appellant. - Decided in favour of assessee.

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• 2015 (10) TMI 281
  MODVAT credit - Denial of exemption benefit under Advance Licence - Invocation of Rule 57E - Held that:- Adjudicating authority rejected the claim of the Appellant on the ground that the Rule 57E of the erstwhile Central Excise Rules, 1944 has put a bar for availing MODVAT Credit on account of fraud, collusion, or any willful mis-statement or contravention of any rules. It is observed that the said Company has contravened the provisions of Customs Act as well as EXIM Policy and therefore, they are not entitled for MODVAT Credit. - Settlement Commission has given a categorical finding on the bonafide of the Appellant. There is no material available on malafide or mis-statement of fraud, etc on the part of the Appellant. Hence, in our considered view, the claim of the Appellant cannot be barred under Rule 57E - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 280
  Duty demand - Assessee wrongly claiming exemption under Notification No.8/2002, dt.01.03.2002 - extended period of limitation - Held that:- Respondents cleared the goods under the cover of Central Excise invoices and declared in the RT 12 return. It is also noted that on an identical issue, for the earlier period, the Assistant Commissioner passed an order dt.27.02.2004. It is seen from the said order that the Respondent paid an amount equal to 8% on the price of the exempted goods as they have availed the CENVAT credit on the common inputs. We find that the Commissioner (Appeals) examined in detail that the Respondents disclosed all the facts in the returns and therefore, there is no reason for holding suppression of facts with intent to evade payment of duty. - claim of the notification wrongly would not amount to suppression of facts with intent to evade payment of duty. - No reason to interfere the order of the Commissioner (Appeals). - Decided against Revenue.

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• 2015 (10) TMI 279
  Denial of CENVAT Credit - Credit availed on detergent soap which was supplied free along with detergent powder - MRP based valuation - Held that:- respondents had packed free supply of one detergent soap (valueRs.5 per piece) inside the washing powder of 500 gms. and correctly declared the net weight of the combi-pack of 575 gms. and discharged duty on the detergent powder. The respondents are rightly covered under Section 2(f) (3) of Central Excise Act. The lower authority has rightly relied on decision of this Bench of the Tribunal in the case of Lotte India Corporation Ltd. (2007 (12) TMI 66 - CESTAT, CHENNAI). - ratio of the Hon'ble Gujarat High Court judgement (2010 (10) TMI 881 - GUJARAT HIGH COURT) is rightly applicable to the present case. Therefore, I do not find any infirmity in the orders of the Lower Appellate Authority since he has rightly relied on this Tribunal's decision [2009 (1) TMI 465 - CESTAT, AHMEDABAD] which has been upheld by the Hon'ble Gujarat High Court - Decided in favour of assessee.

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• 2015 (10) TMI 278
  Demand of interest - CENVAT Credit - inter unit transfer - revenue neutral situation - period of limitation - Held that:- Appellants not contravened any provisions of CCR. The clearance of inputs amounts to inter-unit transfer of inputs and it is not the case of the department that appellant's Unit-II has utilized the credit. The decision of the Tribunal's Principle Bench in the case of Kesarwani Zarda Bhandar (2007 (2) TMI 531 - CESTAT, NEW DELHI) and in the case of Sona Koyo Steering Systems Ltd. (2012 (4) TMI 528 - CESTAT NEW DELHI) are squarely applicable to the facts of the present case. - demand of interest raised after three years is hit by limitation. By respectfully following the above decision, I hold that the appellants are not liable for demand of interest and also not liable for penalty. Accordingly, demand of interest and imposition of penalty are liable to be set aside. - Decided in favour of assessee.

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• 2015 (10) TMI 277
  Denial of cenvat credit - whether CVD credit availed by the appellant on T.R.6 challan is a valid documents for availing the credit of CVD paid by the appellant on the Jumbo Rolls purchased through auction from Customs - held that:- Appellant has rightly availed credit based on T.R.6 challan which is duly certified by Kandla Customs. In view of above facts and relying on the above decisions, I hold that credit availed by the appellant on the T.R.6 challan which is duly supported by the Customs by a certificate is a valid document for availing credit. The case law relied by Revenue is not applicable to the present case as it pertained to sale of goods by the ship breaker. In the said case, it was held that vessel was not imported by auction purchaser who is not an importer and it was sold with condition that no customs duty was payable on it whereas in the present case it is purchase of imported goods for which duty has been validly paid. - impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 276
  Waiver of pre deposit - Applicable precedent - Held that:- Admittedly, the decision of the Hon'ble High Court of Gujarat in the case of Cadila Healthcare Ltd (2013 (1) TMI 304 - GUJARAT HIGH COURT) is against the applicant and the Hon'ble Supreme Court had not granted any stay and the said decision is in "force and binding on this Bench. Co-ordinate Bench of Tribunal in the case of Sushil Agarwal (2012 (12) TMI 49 - CESTAT, MUMBAI) made the observation without going into the facts in the case of West Coast Paper Mills Ltd (2004 (2) TMI 344 - SUPREME COURT OF INDIA). It is noted that a judgement has to be read in the context of its facts and it is not permissible to pick and choose certain words from the judgement and it cannot be a precedent. - No merit in application filed - Decided in favour of Revenue.

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• 2015 (10) TMI 275
  Clandestine removal of goods - Clearance of goods without payment of duty - officers seized the various records and documents including a diary written by Shri Surjeet Singh - Held that:- After the search of the factory premises of the said Company, the Central Excise Officers issued Summons to examine the eight merchant manufacturers, who had refused to appear before the Officers. The Learned Authorised Representative submitted that the Department initiated criminal proceedings against the eight merchant manufacturers for refusal of the appearance. However, we find that the Adjudicating Authority had not given any detail finding on the outcome of cross-examination. - Adjudicating Authority should have examined to contents of the diary as claimed by the appellants and to pass a reasoned order after considering the submission of the appellants. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 274
  Denial of refund claim - Unjust enrichment - Payment of excess duty - Appellant applied price escalation from 01.01.2009 instead of 01.07.2009, therefore, the entire amount of ₹ 3,28,136/-paid in the supplementary invoices, was in excess - Held that:- Authorities below had not recorded a categorical finding about the eligibility of refund and also applicability of unjust enrichment. Besides, I find that the documents now produced by the ld.Consultant for the Appellant, were not placed before the adjudicating authority so as to enable him to scrutinize whether burden of duty had been passed to the customer and also on the aspect of eligibility of refund claim by the Appellant. Both sides agree that all the documents/evidences need to be scrutinized along with other evidences that would be produced in support of the claim. - Impugned order set aside - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 157
  Penalty under Rule 26 of the Central Excise Rules, 2002 - CENVAT Credit - Held that:- No statement of the appellant has been recorded neither any summons to record the statement have been issued to the appellant. The statement of manufacturing supplier shows that they were issuing invoices to M/s. Rupesh Bansal. The contention of the appellant before me is that they have received the goods under the cover of invoices issued by M/s. Khemka Ispat Limited. This statement of the appellant made before me was never tried to test the level of investigation him nor any other corroborative evidence have been produced in investigation that the appellant has received invoices, not the goods. On the contrary, the statement of the second stage dealer to whom the appellant has issued invoices in his statement categorically admitted that they have received the goods from the appellant against the duty paid which were sold to the manufacturing buyer who already admitted that he has received the goods. Therefore/ the statement of the second stage dealer and manufacturing buyer supposed the case of the appellant and in the absence of any statement of the appellant now the question arises why the statement of the appellant was not recorded during the course of investigation. Therefore, I conclude that investigation against the appellant is incomplete. - penalty on the appellant is not imposable without any corroborative evidence against the appellant.

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• 2015 (10) TMI 156
  Classification of goods - Classification under sub-heading 1704.90 or under sub-heading 1704.10 - Held that:- On the identical facts the Department had initiated proceedings against Chennai Unit and the Commissioner vide Order in original No.8/09 dated 31.03.2009 have confirmed duty demand of ₹ 5,47,94,432/-against Chennai Unit in respect of clearances of mentos mint, and six other products of similar nature during the period from March, 2003 to February, 2005. However, the Tribunal in respect of appeal filed against this order, has set aside the Commissioner's order vide final order dated 03.05.2013 on the grounds of limitation, Since the proceedings against the Gurgaon Unit are based on proceedings against the Chennai Unit, and since in this case also the show cause notice for demand of duty for the period from April 2003 to February, 2005 has been issued by 30th April 2008, primafacie the same would also be time barred. Goods covered under sub-heading 1704.10 would be those where it is the gum which gives them essential character and in-fact in terms of the Provisions of Food Adulteration Rules 1955 (para A/25.02.01) the bubblegums and chewing gums must contain not less than 12.5% to 14% of gums. The product, in question, contains contains 97% of sugar and glucose, about 2% fats and colours and flavours and about 1% or less of gum arabic which is used as stabilizer and emulsifier, and its function is to prevent the crystallization of sugar and maintain uniform distribution of the fat and this it is sugar which provides the essential character to the product not the gum arabic whose function is only as stabilizer and emulsifier. Thus, even on merit the appellants have strong primafacie case in their favour. - requirement of pre-deposit of the duty demand, interest and penalty for compliance with the provisions of section 35F would cause undue hardship to the appellant - Stay granted.

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• 2015 (10) TMI 155
  Cenvat Credit - clearance of goods to SEZ unit - Notification No. 50/2008-CE (NT) dated 31/12/2008 - Held that:- Amendment under Rule 6(6)(i) made on 31.12.2008 is clarificatory in nature and is applicable retrospective from the date when the 2004 Rules were implemented. Accordingly, the impugned orders are set aside - issue involved in the present case stands settled that the appellant is not required to pay 10% in terms of Rule 6 (3) (b) of Cenvat Credit Rules, 2004 therefore the demand confirmed by the original authority and upheld by the Commissioner (Appeals) is liable to be dropped. In view of discussion, the impugned order is not sustainable, hence the same is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 154
  Denial of refund claim - payment of duty whereas it was held that process like cutting, drilling would not amount to manufacture - Held that:- When the Order in Dodsal's case [2000 (8) TMI 93 - SUPREME COURT OF INDIA] was within the knowledge of the department while order of dismissal of their appeals was passed by Apex Court in Civil Appeal [2006 (11) TMI 633 - SUPREME COURT], Revenue did not make any mention before the Hon'ble court that its appeals may also be tagged with the matter in Collector of Central Excise, Jaipur Vs Man Structurals Ltd. reported in [2001 (4) TMI 87 - SUPREME COURT OF INDIA] referred to larger bench. In absence of any mention by Revenue, the judgment of the Hon'ble Supreme Court in Civil Appeal reached to finality. This can be said following the ratio laid down by apex court in Kunhayahmmed Vs State of Kerala reported in [2000 (7) TMI 67 - SUPREME Court] explaining the doctrine of merger. Accordingly, in view of the ratio laid down therein, Revenue has no scope further to agitate the self same issue against the appellant on self same fact contrary to the doctrine of res judicata. Therefore, it can unambiguously be stated that the activity carried out by the appellant does not amount to manufacture and goods coming out of the activity carried out by it is not classifiable under Heading 7308 2011 - Refund allowed. CENVAT credit shall only be admissible on inputs used in any other activity resulting in duty liability other than the impugned activity. There shall not be levy of interest or penalty for no levy of duty ordered by this order. Reversal of input credit if any required under law be made within a month of receipt of this order and learned Adjudicating Authority informed as to the same within two weeks thereof. - refund shall be made in accordance with law subject to verification of the deposit particulars. - Decided in favour of assessee.

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• 2015 (10) TMI 153
  Validity of impugned order - Exparte order - Held that:- appellant's factory is closed since November, 2004. The appeal by the appellant company and its Directors, against the impugned order were filed in November, 2005. When the factory was closed since November, 2004, we fail to understand as to why in the column in Memorandum of appeal for the "address for communication", it is the address of the factory which was given and not any other address where the appellant company had its office. It is also seen that in the memorandum of appeal, in addition to the factory address, the address of the appellant's Counsel "V.Laxmi Kumaran, Advocate, B-6/10, Safdarjung Enclave, New Delhi 110029" had also been given - Though the appellants Counsel withdrew his appearance sometime in January, 2014, thus, since, January, 2014, other than the factory address of the appellant which was closed there was no address to which any directions to them regarding date of hearing could be communicated, if the appellant were really serious in pursuing the appeal they should have given the same other address for communication at which they would be available and not the address of the factory which was closed since one year prior to filing of the appeal - ppellant has not cooperated at all with the Tribunal in this regard. We, therefore, are not convinced with the reasons given by the appellant for restoration of the appeal - Decided against assessee.

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• 2015 (10) TMI 152
  Wrongful availment of CENVAT Credit - Interest u/s 11AB - Penalty u/s 11AC - Held that:- It is seen from the show cause notice that the appellant reversed the credit in the monthly ER1 return which was audited by the Central Excise audit party during the period 2004-2006. The Central Excise audit party after examining the ER1 return, detected the non-payment of interest. Show cause notice was issued on 8.8.2011 after more than 4= years. The Adjudicating Authority had given a clear finding that there is no suppression of fact with intent to evade payment of duty and dropped the penalty under Section 11AC of the Act. - liability of the payment of interest under Section 11AB linked with sub section (2) or (2B) of Section 11A where the limitation is prescribed. In the present case, the demand notice was issued beyond the period of limitation as prescribed under Section 11A (2B) of the said Act and therefore the demand of interest could be not sustained. - Tribunal in the case of Gujarat State Fertiliser Co Ltd (2013 (9) TMI 581 - CESTAT AHMEDABAD) on the identical situation set aside the demand of interest as time barred. - impugned order to the extent of demand of interest is set aside. - Decided in favour of assessee.

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• 2015 (10) TMI 151
  Denial of refund claim - unutilised balance of CENVAT credit - Export of goods - Held that:- Commissioner (Appeals) observed that the appellant has exported the goods and they are entitled for the refund of the CENVAT credit on the inputs used in the manufacture of export goods but for the said purpose, they have to establish the quantity gone into the manufacture of export goods and the CENVAT credit availed by them on the said inputs. It is further observed that the appellant failed to establish from the record as well as during the personal hearing that the amount in respect of which refund is claimed by them as the amount of CENVAT credit availed by them on the inputs, which were used in the manufacture of said exported goods during the period August to September 2008. The adjudicating authority observed that earlier adjudication order has not given findings on various issues. In my considered view, the findings of the adjudicating authority has acted as an appellate authority against earlier adjudication order, which is not permissible under the law. It is clear from the records that the appellant had submitted all the documents and the statements before the lower authorities, which were not looked into by the authorities below. So, the findings of the lower authorities cannot sustain. The adjudicating authority is required to examine the documents placed by the appellant. - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 150
  Duty demand - Imposition of penalty - Penalty on partner of firm - Held that:- Division Bench of the Tribunal in the case of Shri Labdi Prints (2014 (4) TMI 145 - CESTAT AHMEDABAD), following the decision of the Hon,ble Bombay High Court held that penalty is imposable on partner for availing Cenvat Credit fraudulently, I find that in the case of Praveen N. Shah (2012 (7) TMI 850 - GUJARAT HIGH COURT ), the question of law before the Hon’ble High Court was whether in the facts of circumstances case, the Tribunal was right in penalty of ₹ 10 lacs imposed on the appellants under Rule 209 A of the erstwhile Central Excise Rule,1944, in the Rule 26 of Central Excise Rule, 2001. The Hon’ble High Court set-aside the penalty with the observation that penalty has imposed on the firm, no separate penalty can be imposed on partner.

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• 2015 (10) TMI 149
  Clandestine removal of the finished goods - Penalty u/r 26 - Held that:- Regarding the imposition of penalty on the co-appellants, the Learned Advocate relied upon the decision of the Tribunal in the case of M/s. Shitala Prasad Sharma (2004 (12) TMI 195 - CESTAT, MUMBAI). It has been held that when main accused stands absolved of penal consequences, no question of penalty on co-accused. In the present case the penal consequences on the main appellant was upheld and therefore, the case law relied by the appellant would not apply in this case. I find that the Appellant 3 to 5 were merchant manufacturers, supplied grey fabric to the Appellant No. 1, where the penalty under Section 11 AC of the Act was invoked. Considering the overall facts and circumstances of the case, the quantum of penalty on the co-notices should be reduced. - demand of duty along with interest and penalty on appellant No. 1 M/s Praygraj Dyg. & Ptg. Mills Pvt. Ltd. is upheld. It is directed that if, the duty alongwith interest as determined by the Adjudicating Authority is paid within thirty days of communication of this order penalty liable to the pay shall be 25% of the duty and to be paid within the period so specified. Penalty on Shri Surendra Kumar Dalmia Director of the appellant No. 1 is reduced to ₹ 50,000/- and other appellants reduced to ₹ 25,000/- each - Decided partly against assessee.

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• 2015 (10) TMI 148
  Clandestine removal of goods - Shortage of goods found - Denial of CENVAT Credit - supplementary Invoices - Held that:- supplier admitted the clandestine removal of the goods - the supplier paid the duty and issued supplementary invoices to the assessee whereby a short levy by reason of fraud, collusion or misstatement or suppression of fact with intent to evade payment of duty. So, the assessee is not eligible to avail CENVAT credit. - adjudicating authority already invoked Section 11AC for imposition of penalty on the assessee and therefore, penalty on the employee is not warranted. It is seen that the Hon'ble Gujarat High Court in the case of Pravin N. Shah vs. CESTAT (2012 (7) TMI 850 - GUJARAT HIGH COURT) held that once the firm is penalised, separate penalty is not imposable upon partner of the firm, as the partner is not a separate legal entity and cannot be equated with employee of firm. - Decided against assessee.

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• 2015 (10) TMI 147
  Denial of Benefit of Cenvat Credit - appellant availed credit on the rejected inputs/raw-materials, lying in the factory, which could not be put to use in the final product - Held that:- Commissioner observed that appellant availed Cenvat Credit of ₹ 18,035.00/- on rejected raw-materials, Rule 3 of the Cenvat Credit Rules, 2004 provides that the manufacture is eligible to avail Cenvat Credit on duty paid inputs used in or in relation to the manufacture of final products. In the present case, there is no dispute that the inputs were rejected material and cannot be used in or in relation to the manufacture of the final products. The appellant reversed credit during the investigation. Admittedly the input is rejected materials and it cannot be used in the manufacture products. - demand of duty of ₹ 18,035.00/- alongwith interest is a upheld. The demand of duty in respect of the other issues and penalty are set-aside - Decided partly in favour of assessee.

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• 2015 (10) TMI 146
  Condonation of delay - Delay of 90days in filing appeal - Hed that:- impugned order was received on 21.02.2014 and appeal was filed on 19.08.2014 and as such there is about 90 days delay in filing of the appeal. According to the appellant, their factory was closed in January, 2014 and at that time only one worker namely Shri Shiv Kant Tiwari, Incharge of the factory, used to remain in the factory, who received the order and kept the same in the Almirah and thereafter, he failed to inform the management about that order and that he also left his job on 07.08.2014 without informing the management about that order and it is only when sometime in August, 2014 somebody found the order in the factory, the appeal was filed. The reason given by the appellant for delay is not disputed by the Department. - appellant has given a reason for about 90 days delay in filing of appeal which is plausible and which is not disputed by the Department. Moreover, the delay of 90 days in filing of appeal also cannot be said to be unreasonable and such a long delay which cannot be condoned, more so, when according to the appellant's version, they discovered the order of Commissioner (Appeals) order in their employee's cupboard in sometime in August, 2014 and immediately thereafter, filed the appeal. This is not a case, when looking to the length of delay and the conduct of the appellant, it can be said that condoning the delay would result in injustice to the other side, rather not condoning the delay would result in injustice to the appellant. - Delay condoned.

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• 2015 (10) TMI 145
  Waiver of pre deposit - Whether the appellant, who are body builders, would be liable to pay automobile cess on the complete vehicles cleared by them from their factory - held that:- Tribunal's judgement in the case of S.M. Kannappa Automobiles P.Ltd. (2007 (11) TMI 207 - CESTAT, BANGALORE) is based on the Board's Circular no.41/88 dated 31.08.88, wherein it has been clarified that the matter had been referred to the Administrative Ministry, who have intimated that the intention behind the notification levying the automobile cess is to realize such levy from the vehicle manufacturers and not from the body builders, that the provisions of IDR Act, 1951, under which the notification levying the cess has been issued, provides that the rate of cess shall not, in any case, exceed two annas per cent of the value of the goods and if the cess is levied in line with the Central Excise Tariff Act, 1985, the same would exceed the maximum rate of 1/8th per cent prescribed in the IDR Act and therefore, the cess may continue to be levied and collected on the vehicles in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builders on the cess paid chassis. - prima facie view that notwithstanding the introduction of Chapter Note-5 of Chapter 87 w.e.f. 2005, the Board's Circular No.41/88 dated 31.08.88, which has been issued after consultation with the Administrative Ministry, is still valid. Therefore, prima facie, the impugned order is not correct and the appellant have strong prima facie case in their favour - Stay granted.

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• 2015 (10) TMI 144
  Denial of CENVAT Credit - Imposition of penalty - Defective goods - whether the appellant has contravened the provisions of rule 11(2) of the Central Excise rules 2002 or not - Held that:- On going through the Rule 11(2) of Central Excise Rules 2002 and on verification of the invoices in question I find that all the details required under Rule 11(2) of Centra! Excise Rules 2002 has been fulfilled. M/s. NAW has shown purchase returns. This information was not required to be shown in the invoice as per Rule 11(2) of the Central Excise Rules 2002. Therefore, I hold that appellant has not contravened the provision of Rule 11(2) of the Rules. In these circumstances, I hold that M/s. Sadhu Forgings Ltd. has availed Cenvat Credit correctly as there is no dispute regarding payment of duty by M/s. NAW on these goods and M/s. Sadhu Forgings Ltd. has cleared goods on payment of duty after removing the defects. As appellants have not contravened the provisions of Rule 11(2) therefore penalty on all the appellants are not imposable. - Decided against assessee.

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• 2015 (10) TMI 143
  Waiver of pre deposit - Availment of CENVAT Credit - Non maintenance of separate accounts - Held that:- Commissioner, relying upon the verification report of the Divisional Officer reporting that E bikes kits for being assembled and the parts for being sold as spares, were being imported separately and as such they were not using common inputs for the manufacture of E-bikes and the spare parts, has held that the provisions of rule 11 (3) would be applicable in respect of E-bikes and on this basis the Commissioner has confirmed the cenvat credit demand of ₹ 10,35,147/- alongwith penalty of equivalent amount. Since the basic point of dispute in this case stands decided by the Commissioner which is based on the verification by the jurisdictional central excise officers reporting that the inputs for E-Bikes and the inputs to be sold as spare parts were being separately imported, we are of the view that this is not the case for total waiver of pre-deposit. The appellant are, therefore, directed to deposit an amount of 10% of the cenvat credit demand within a period of four weeks - Partial stay granted.

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• 2015 (10) TMI 142
  Denial of CENVAT Credit - Installation of capital in unregistered premises - Held that:- Respondent is not eligible to avail CENVAT Credit in respect of the installation of capital goods in the unregistered premises. In any event, the appellant is entitled to avail the credit from 20.07.2004 when the registration certificate was issued to the distilliery unit. In such situation, the assessee would be liable to pay the interest for availing 50% of the credit prior to registration. - It is not clear as to whether the appellant had utilized the credit prior to registration This is required to be examined by the Adjudicating Authority - Matter remanded back - Decided in favour of Revenue.

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• 2015 (10) TMI 141
  Removal of capital as such - Reversal of CENVAT Credit - Held that:- Explanation to Rule 57AB of Central Excise Rules 1944 provides when inputs or capital goods are removed from the factory, the manufacturer of the final product would pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the same factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A of the said Rules. - Provision was changed from time to time. The Larger Bench of the Tribunal in the case of Eicher Tractors (2005 (9) TMI 340 - CESTAT, NEW DELHI) while dealing with the Rule 3(5) of CENVAT Credit Rules on the issue in respect of valuation of inputs on which CENVAT Credit has been availed and removed as such held in favour of the assessee. Rule 3(5) of CENVAT Credit Rules 2004 provides that when inputs or capital goods on which CENVAT Credit has been taken are removed as such from the factory, the manufacturer of the final product shall pay an amount equal to the credit availed in respect of such inputs. - Decided in favour of assessee.

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• 2015 (10) TMI 140
  Condonation of delay - Delay due to the maternity leave of Mrs. Paniveni - whether there is any plausible and acceptable explanation for condoning the enormous delay of 325 days - Held that:- Fact of one of the concerned employee, who in any case has also not been shown to be associated with the matter, going on maternity leave cannot be considered to be a reasonable cause for leading to such a huge delay of 325 days. - explanation tendered by the appellant for the delay in filing the appeal, is flimsy and does not inspire confidence. It is a clear case of latches on the part of the assessee in which case the ground of limitation cannot be diluted and the inordinate delay of 325 days cannot be condoned. - appeals are liable to be dismissed as barred by limitation. - Condonation denied.

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• 2015 (10) TMI 139
  Classification of goods - cosmetic preparations or Ayurvedic medicine - Classification under Chapter 30 or 33 - Held that:- Appellants have taken a categorical stand that the goods were being manufactured by them under the Drug licence issued by ASU Drugs Controller of the Kerala Government and all the ingredients used by them in the said product have been placed in ancient Ayurvedic Text Books. The said two contentions raised by the appellant do not stand rebutted by the Revenue but the lower authorities have solely relied upon the report of the Chemical Examiner, which opined that the items appeared to be appropriately classifiable as ‘Cosmetic preparations' - while dealing with the disputed issue, the Hon'ble Supreme Court in the case of Puma Ayurvedic Herbal (P) Ltd. [2006 (3) TMI 141 - SUPREME COURT OF INDIA] has observed that it has to be seen that how the common man understands the product in question and whether the ingredients used in the product stand mentioned in the authoritative text books of Ayurveda and as to whether the goods have been manufactured under Drug Controllers licence. Lower authorities have not disputed the appellant's stand that they have a Drug licence from the Drug Controller to manufacture the goods in question and the ingredients also find place in the ancient Ayurvedictext books. As such we are of the view that appellant has a good prima facie case in its favour so as to allow the stay petitions unconditionally. - As per the Board's Circular No. 25/91 dated 03.10.1991 clarifying that in cases of Ayurvedic medicines and in case of doubts, the Collectors are required to make a reference to the Board, who would take up the matter with the Drugs Controller of India or the Commissioner may exercise his option to take up the matter and seek clarification from the Drug Controller. The said Circular also talks about the twin tests laid down for determining the classification of the product, by the Hon'ble Supreme Court in the case of CCE, Hyderabad V. M/s. Richardson Hindustan Ltd [1989 (1) TMI 352 - SUPREME COURT OF INDIA]. The said two tests are the common parlance test as also the mentioning of the ingredients in the authoritative books on Ayurvedic medicines. - Impugned order is set aside - matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 138
  Valuation - clubbing of clearance - proceedings were initiated against HPCEL on the ground that a portion of the clearance shown in the name HEC were actually cleared by them and HEC did not have manufacturing facility and it was only a trading firm - Revenue contends that the Commissioner (Appeals) failed to take note of the fact that the HEC has not incurred any expenditure on electricity and manpower and further, the Commissioner (Appeals) has simply ignored the statement of Shri Jayarama Reddy wherein he had agreed that HEC is only a trading firm - Held that:- Investigating officers did not visit the premises of HEC which would have finally settled the issues. When Shri Jayarama Reddy retracted his statement, the officers could have visited the premises which also was not done. The claim made by HPCEL that conveyance charges and labour charges mentioned in the Profit & Loss Accounts are actually related to electricity and manpower has not been verified and discussed. The original authority could have asked for details of persons employed and actual consumption of electricity and could have verified whether electricity consumption and manpower / employees were sufficient or not for the production shown by HEC. This also has not been done. The fact that there was another statement of one Shri Krishna Reddy who was Director of HPCEL who categorically stated that HEC was a separate unit, has not been discussed. - As regards the Sales Tax Assessment Order, it was simply observed that the sales tax officers did not visit HEC. Unfortunately, the same applies to the officers of Central Excise also who did not visit the unit and did not gather evidence to show that there is no machinery to manufacture the goods. There is a major defect which has been discussed by the Commissioner (Appeals) also. The defect is that no notice has been issued to HEC separately. - Decided against Revenue.

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• 2015 (10) TMI 137
  Denial of CENVAT Credit - whether the appellant is entitled to take CENVAT Credit on the inputs which has lost during the process of manufacturing at the end of job worker or not - Held that:- As per Rule 4 (v) (a) of the CENVAT Credit Rules, 2004, Ld. counsel for the appellant has explained the process of manufacturing. As per the process of manufacturing, the led contains dust and clay, thereafter, it is to be granted and filtered vast and dissolved in water. The material is required to be removed and then it is to be dissolved with the chemical then the undesired particles remove and chemical slug recovered from thereof. If this is the manufacturing process in that way, whatever input have sent to the job worker for manufacturing, definitely the appellant will not receive the full quantity of inputs converted into final goods. - if whole of the inputs have been used for manufacturing and there is a process loss, same is required to be allowed. The Revenue has not contraverted, this contention with any supporting evidence that in the process of manufacturing of goods, there is no manufacturing loss and also have not obtained any expert opinion thereof. - appellant is entitled to take CENVAT Credit on the inputs which has gone for manufacturing at the end of job worker - Decided in favour of assessee.

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• 2015 (10) TMI 136
  Denial of exemption claim - refund of terminal excise duty - invalidated EPCG licences - Whether the respondent would be eligible for the exemption under Notification No. 56/02-CE - Held that:- The customer. M/s Reliance Telecom Infrastructure Limited had not availed Cenvat credit in terms of Rule 12 of the Cenvat Credit Rules, 2004 and in this regard had given a certificate that they will not claim refund of TED from DGFT. Based on this certificate, the respondent claimed refund of the excise duty from. DGFT. It is seen that as per the policy of DGFT, refund of terminal excise duty is not admissible if the goods supplied are exempted goods and in this regard DGFT has initiated proceedings against the respondent and has imposed penalty of ₹ 11 crores for wrongly claiming the refund availment of excise duty. In our view the matter of claiming terminal excise duty refund from DGFT in respect of the goods supplied by the respondent is a matter between them and the DGFT and on this ground it would not be correct to deny the benefit of Notification No. 56/02-CE to the Respondent for which the necessary condition stand satisfied by them. - Since, the respondent had availed the exemption under Notification No. 56/02-CE in respect of the goods supplied by them to M/s Reliance Telecom Infrastructure Limited against invalidated EPCG licences, the respondent should not have claimed refund of terminal excise duty from DGFT and since they have claimed the refund, DGFT has imposed penalty on them. But this cannot be the ground for denial of the benefit of the exemption notification to the respondent. - Decided against Revenue.

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• 2015 (10) TMI 135
  Waiver of pre deposit - levy of Automobile Cess. - Exemption from payment of duty - Notification No. 63/95 - Held that:- In terms of the decision of the Hon’ble High Court of H.P. in the case of Indo Farm Tractors & Motors Ltd. (2007 (7) TMI 150 - HIGH COURT, HIMACHAL PRADESH), the fact that the excisable item is exempted from excise duty does not lead automatically to the exemption of cess. - On going through the expression “automobiles”, as appearing in sub item 5 of Item 7 in 1st Schedule to the Industries (Development and Regulation) Act, 1955, we find that the same reads as under: “Automobiles (motor cars, buses, trucks, motor cycles, scooters and the like)”, which indicates that all types of vehicles would get covered under the expression automobiles. - all the demands are within the period of limitation and the appellant has also not specifically pleaded any financial hardship and has not produced any evidentiary documents on record to that effect. As such, we are of the view that the appellant should be directed to deposit the entire amount of dues involved in all the four stay petitions - Partial stay granted.

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• 2015 (10) TMI 134
  Disallowance of trade discounts - Provisional assessment - Held that:- The present proceedings originated when this Jurisdictional Superintendent, Central Excise in pursuance of the Assistant Commissioner’s order 24-1-1997, finalizing the provisional Assessment, directed the Superintendent to quantify the duty demand. The Superintendent, Central Excise quantified the duty demand on the basis of the Assistant Commissioner’s order dated 24-1-1997 and this show cause notice had been issued only for the purpose of quantification, subsequent to finalization of provisional assessment. When the Assistant Commissioner’s Order dated 24-1-1997 has been upheld by the Commissioner (Appeals) vide Order-in-Appeal dated 17-9-2004 and appeal to Tribunal against that order had also been dismissed, the Commissioner (Appeals) could not reopen the finalization of provisional assessment on merits by observing that the Order-in-Original dated 24-1-1997 of the Assistant Commissioner finalizing the provisional assessment was ex parte order or that the same was not correct. Moreover, since the assessments were provisional, the limitation period under Section 11A(1) would not apply. - Decided against assessee.

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• 2015 (10) TMI 133
  Confiscation of seized goods - penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11(AC) of the Act - Clandestine removal of the inputs and excess stock unaccounted in their records - Held that:- factory was closed on 15-5-2010 was intimated by the respondent to the department is correct. The respondent could not inform to the department when they started production again but at the time of visit on 6-7-2010 the factory was found running which shows that the respondent was involved in the activity of clandestine manufacture of goods and clearing thereof without payment of duty without accounting them in their books of accounts. Therefore, I do not agree with the contention of the ld. Commissioner (A) that it is the case of mere non accountal of goods in their statutory records. Considering the conduct of the respondent, I hold that excess stock found during investigation was meant for clandestine clearance without payment of duty. In these circumstances, I hold that goods are liable for confiscation. The same can be redeemed on payment of redemption fine. - total duty component works out to ₹ 1.61 lakhs but redemption fine is imposed to the tune of ₹ 4 lakhs which is excessively very high. Therefore, I reduce the redemption fine to ₹ 50,000/-. As intent of the respondent is very clear, therefore, I confirm the penalty imposed by the adjudicating authority appropriate. - Decided partly in favour of assessee.

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• 2015 (10) TMI 132
  Denial of CENVAT Credit - Demand on the ground that appellant has placed purchase order to M/s. Nowrangroy Rameshwar to supply aluminium sheets/coils to be delivered directly to M/s. National Wire Netting Agency and taken the Cenvat credit on the invoices issued by M/s. Nowrangroy Rameshwar which is not correct - Held that:- Rates quoted on subject invoices are of job work charges only, although the job worker has paid the VAT thereon. For that, it cannot be concluded that the goods have been sold by the job worker to the appellant. The contention of the appellant that they have sent the goods to the job worker for further processing, if the goods have been processed by the job worker, then the shapes of the inputs received by the job worker would definitely go to a change and the manufactured goods will be a distinct product. - under Notification 214/86 the job worker is required to intimate the department that they are undertaking the activity of job worker and not required to pay duty but that fact has also been not verified by the department - appellant has purchased the goods from the supplier of the goods and sent directly to the job work purpose to the job workers which has been received by them after job work, the appellant is entitled to take Cenvat credit. Consequently the impugned order is set aside. - Decided in favour of assessee.

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• 2015 (10) TMI 131
  Demand of differential duty - SSI exemption - Held that:- Once the diary entries are not found reliable and on this basis, the duty demand of ₹ 70,65,182/- has been dropped, the Commissioner cannot consider those diary entries for calculation of the differential duty by denying SSI exemption as has been done by him in para-43 of the impugned order. On perusal of the calculation of differential duty of ₹ 8,70,402 confirmed by him in para-43 of the impugned order, it is seen that he has compared the higher of the two figures - sales value declared by the appellant during the financial year in the sales tax returns and the sales figures as per diary entries and has compared the higher of these two figures with the value of the sales figures including duty in the RT-12 Returns and, the duty has been demanded on the difference. Once the diary entries have not been found reliable, the Commissioner can compare only the sales value including duty as declared in the RT-Returns and the sales figures in the Sales Tax Return. Though there is some small difference in the sales figures declared in the Sales Tax Return and the figures declared in the RT-12 Return, according to the appellant, there are valid reasons for the same like the Sales Tax Return figures also includes the export sales and in some cases, the value of the returned goods has also been included twice. - the impugned order is not sustainable. The same is set aside and the matter is remanded to the Commissioner for de novo adjudication - Decided in favour of assessee.

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• 2015 (10) TMI 130
  Denial of CENVAT Credit - Bogus invoices - Held that:- Order of Commissioner (Appeals) that on the basis of DGCEI investigation several show cause notices were issued to various manufacturers on the similar ground that they have availed cenvat credit only on the basis of invoices issued by M/s. Pranav Metal Mart without receiving the goods. In this connection, Commissioner (Appeals) referred one of the stay order of this Tribunal in respect of other manufacturer. On perusal of the impugned order, I find that he cenvat credit was denied to the appellant on the basis of investigation against M/s. Pranav Metal Mart. Revenue has not raised any objection in respect of the evidences placed for receipt of the goods by the appellant in the nature of payment particulars, transportation of the goods from the dealer’s premises to the appellant’s factory etc. I find that, in the same situation, the Tribunal in the case of M/s. Monarch Metals Pvt. Limited set-aside the impugned order. - there is no evidence that the appellant had not received the material from the registered dealer - impugned orders are set-aside - Decided in favour of assessee.

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• 2015 (10) TMI 129
  Denial of CENVAT Credit - Furnace Oil - Notification No. 214/1986 dtd 25.3.1986 - Held that:- Furnace oil used in the manufacture of final product cleared on job work material under exemption Notification No 214/86-CE. The Commissioner (Appeals) observed that the appellant cannot take the cenvat credit of inputs, which has been used in the manufacture of goods cleared under the exemption notification. I find that the appellants” own case as reported in [2009 (5) TMI 734 - CESTAT, AHMEDABAD] on the identical facts allowed the appeal on identical issue - So, the appellant is eligible to avail cenvat credit on merit and the finding of the Commission (Appeals) is not sustainable - Decided in favour of assessee.

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• 2015 (10) TMI 128
  Denial of benefit of concessional rate of duty as provided in Notification No. 239/86 - fabrication of bodies / tanks for transportation of LPG Gas - they are not mounting the bodies or the tankers on the chassis supplied by the customer. - Demand of differential duty - Held that:- Appellant herein had discharged duty liability on the products which roll out of their premises, under Heading 87.04 as motor vehicles for transport of goods, availing the benefit of exemption Notification No. 239/86-C.E. as amended. It is also undisputed that the appellant is fabricating tanks in their premises and attaches one end to the prime mover while attaching the other end to a non-prime mover - lower authorities are accepting the fact that what rolls out of factory of the appellant is a “Motor vehicle for transportation of goods”, and have accepted the duty liability so discharged. We find that this is the view which has been expressed by the C.B.E. & C. in Circular No. 2/89, dated 13-1-1989 as is relied upon by the departmental representative. - Appellant is eligible for the benefit of Notification No. 217/86, we find that the impugned order confirming the demands on the appellant is liable to be set aside - impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 127
  Denial of refund claim - Unjust enrichment - Provisional assessment - Held that:- Appellant discharged the duty liability on the basis of ACP provisionally fixed by the Commissioner of Central Excise as 5 MT. It was subsequently re-determined by the Tribunal as 4 MT instead of 5 MT. The refund claim of the excess duty, was rejected by the lower authorities on the ground of unjust-enrichment. The Larger Bench of the Tribunal in the case of Shivagrico Implements Limited (2006 (4) TMI 5 - CESTAT, NEW DELHI), held that the payment of duty erroneously under Section 3A of Central Excise Act, 1944 being in the nature of duty under Compounded Levy Scheme attracts the principles of unjust-enrichment. - Appellant should be given an opportunity to place this certificate before the adjudicating authority to establish that the duty was not passed on to the customers, in the interest of justice. - Appeal disposed of.

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• 2015 (10) TMI 126
  Denial of CENVAT Credit - Supplementary invoices - violation of Rule 9(1)(b) of the Cenvat Credit Rules - Held that:- Preventive Officers during their visit detected the transfer of goods from Unit-1 to Unit-2 on the payment of duty on tariff rate. According to the department, the Unit-1 should have paid duty on CAS-4. The appellant immediately paid the differential duty and issued supplementary invoices and Unit-2 availed the cenvat credit on the basis of supplementary invoices. - there is restriction imposed for availing CENVAT credit on the basis of supplementary invoices issued by manufacturer factory from where the goods are sold by, or on behalf of the said manufacturer. In the present case, admittedly, there is no sale of goods but It is inter unit transfer of stock. It is seen that Unit-1 transferred the goods to their Unit-2. I find that this issue is settled by the decision of the Hon'ble Andhra Pradesh High Court in the case of Jairaj Ispat (2008 (2) TMI 440 - HIGH COURT OF ANDHRA PRADESH). - Respectfully following the decision of the Hon'ble Andhra Pradesh High Court in the case of Jairaj Inspat Limited (supra), I set-aside the impugned orders - Decided in favour of assessee.

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• 2015 (10) TMI 125
  Demand of CENVAT credit - Invocation of extended period of limitation - Held that:- it is noticed that Commissioner (Appeals) has clearly observed that the assessee is not part to the fraud committed by the grey fabric suppliers. In this case also the grey fabric suppliers issued invoices. So, the present case is squarely covered by the decision or the Hon'ble High Court in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited (2013 (5) TMI 705 - GUJARAT HIGH COURT). So, the demand of inadmissible CENVAT credit is clearly barred by limitation and is not sustainable and the penalty is also not imposable. - impugned order is set-aside - Decided against Revenue.

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• 2015 (10) TMI 124
  Duty demand u/s 11A - demand of duty by fixing annual capacity of production under Rule 96ZQ - whether the proceedings against the appellant can be continued under Rule 96 ZQ of the erstwhile Rules after 1.3.2001 or not has been dealt with by this Tribunal in Alwar Processors Pvt. Ltd. (2014 (12) TMI 156 - CESTAT NEW DELHI) - Held that:- show cause notices were issued for the period 1998-99 which is prior to 1.3.2001 and same has attained finality vide order of the adjudicating authority on 31.10.11 therefore, following the decision of Alwar Processors (supra), I hold that proceedings against the appellant are not sustainable in the impugned orders. In these terms, impugned orders are set aside. - Decided in favour of assessee.

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• 2015 (10) TMI 123
  Clandestine removal of goods - Demand of differential duty - Board's circular No.643/34/2002 dt. 1.7.2002 - Held that:- As the issue of removal of capital goods after use and the reversal of credit thereof on the depreciated value is settled by the Hon'ble High Court in the case of CCE Vs Rohini Mills (2010 (10) TMI 424 - MADRAS HIGH COURT), the said decision of Hon'ble Madras High Court is squarely applicable to the present case. - appellants are liable to pay differential duty on the value of capital goods removed to their sister unit by adopting depreciation as per the Board's circular No.643/34/2002 dt. 1.7.2002 read with Circular No.495/16/1993-Cus. dt.26.5.93. The impugned order is therefore liable to be set aside. - taking into the facts and circumstances of the case, I take a lenient view that the respondents are not liable for penalty. In view of the above, the impugned order is set aside and OIO is restored to the extent of confirming the demand - Decided partly in favour of assessee.

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• 2015 (10) TMI 122
  Denial of CENVAT Credit - Exemption Notification No. 63/95-CE dated 16/3/95 - penalty imposed on them under Rule 15 (2) - Reopening of assessment - Held that:- During the period of dispute, that is from 01/3/11 to 23/3/11, the coal received by the appellant from Coal India Ltd. was fully exempt from duty under Notification No. 63/95-CE dated 16/3/95 and at the same time duty @ 1% adv. has been imposed by Notification No. 1/11-CE subject to condition that no Cenvat credit is taken and duty @5% has been imposed under Notification No. 2/11-CE with Cenvat credit. The We find that this issue stands decided against the Department by the Apex court judgment in the case of MDS Switchgear reported in [2008 (8) TMI 37 - SUPREME COURT] and same view has been taken by Hon'ble Punjab & Haryana High Court in the cases of CCE, Chandigarh vs. Ranbaxy Labs Ltd. reported in [2006 (7) TMI 216 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] and in the case of V.G. Steel Industry vs. CCE reported in [2011 (5) TMI 154 - Punjab and Haryana High Court] holding that the assessments made at the supplier's end cannot be reopened at the recipient's end and on this basis the Cenvat credit of the duty paid by the supplier cannot be denied to the recipient. In view of this, the impugned order is not sustainable. The same is set aside. - Decided in favour of assessee.

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• 2015 (10) TMI 121
  Duty demand jointly and severally - Tribunal in the same appellants case vide earlier orders [2015 (9) TMI 1317 - CESTAT NEW DELHI] and [2014 (3) TMI 983 - CESTAT NEW DELHI] have held that such confirmation of demands or imposition of penalties jointly and severally are not in accordance with the law - . The duty demand being of pre-September 1996 period, the same was immune from interest liability under Section 11AB and the interest liability under Section 11AA, as the same stood during that period, would arise only on expiry of three months from the date of the adjudication order. It was, therefore, in the interest of the Department to complete the adjudication as early as possible. But surprisingly the matter was adjudicated for the first time only vide order dated 26/5/10 and this adjudication was done in such a manner that there was no option for the Tribunal but to remand this matter for denovo adjudication, as the order bearing the date of the decision as "26/5/10" was bearing the signature of the Commissioner who had retired long time back and the order had been passed without supply of documents and without hearing the appellant. The only persons to gain from such avoidable delay in adjudication of this matter are M/s GTC Industries Ltd. and M/s MP Tobacco Ltd. against whom the duty demand may be confirmed, as the interest liability under Section 11AA of the person held to be liable to pay the duty would start only on expiry of three months from the date of the adjudication order. - We hope that the Central Board of Excise & Customs (CBEC), takes these matters against M/s GTC Industries Ltd. seriously and this time, the matter is adjudicated strictly in accordance with our observations and directions in this order and an expeditiously as possible.

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• 2015 (10) TMI 120
  Duty demand - Clandestine removal of goods - Whether the appellant is entitled to claim the burning loss of 5.8% or not and whether the appellant succeeds on limitation or not as directed by the remand order of this Tribunal dated 25-7-2005 - Held that:- Appellant has explained that there is a burning loss in the manufacturing process. Therefore, as there is some mistake in recording the statutory records about the burning loss, the Revenue cannot claim that there is a clandestine removal of the goods. - burning loss varies from 3 to 16.7%. This record has not been controverted by the Revenue. If the average is to be taken it will come out about 10% of burning loss. Moreover, this Tribunal also held in the case of Bansal Steel Corporation (1996 (10) TMI 309 - CEGAT, MUMBAI) the burning loss in such activity can occur upto 10%. Admittedly in this case the appellant has claimed the burning loss is 5.8%. Therefore, the appellant has been able to prove the burning loss of 5.8% is appropriate. In these circumstances, as there is no supporting evidences of clandestine removal, the appellant is entitled for burning loss of 5.8% as claimed by the appellant. - appellant has explained that their activities, involves process of heating, hammering and forging certain scaling appears on the top skin of the MS Block and claimed burning loss but the department has not taken any steps to verify whether there is burning loss as claimed by the appellant but merely alleged clandestine removal of the goods. The show cause notice has been issued by invoking extended period of limitation and admitted that these is burning loss. In these circumstances, the allegation of clandestine removal of goods is not sustainable. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 119
  Demand of duty jointly and severally - joint imposition of penalty - Held that:- In the denovo proceedings, the Commissioner must give clear findings as to whether M/s Chinar Cigarettes (P) Ltd., Bharatpur, Rajasthan is the manufacturer or M/s GTC Ltd., Mumbai is the manufacturer and the duty demand is to be confirmed only against the person who has been held to be the actual manufacturer based on the finding to whether M/s Chinar Cigarettes (P) Ltd. is an entity floated by GTC Ltd. fully controlled by them or is an independent entity. The duty demand cannot be confirmed against both M/s GTC Ltd., Mumbai and M/s Chinar Cigarettes (P) Ltd. similarly, penalty under Rule 173Q (1) would be impassable only on the person who has been held to be the actual manufacturer. Joint penalty under Rule 173Q (1) cannot be imposed both on M/s Chinar Cigarettes (P) Ltd. and M/s GTC Ltd - Commissioner before adjudication should ensure that all the relied upon documents as well as non-relied upon documents seized from the appellant and in respect of which there is the request of the appellant for supply, must be supplied and to the extent such documents cannot be supplied, the same cannot be relied upon while confirming the duty demand. - Matter remanded back - Appeal disposed of.

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• CST, VAT & Sales Tax

• 2015 (10) TMI 298
  Prohibition on selling and transporting the empty beer bottles duly collected inside the State of Tamil Nadu by the petitioner and to sell and transport outside the State of Tamil Nadu - Violation of Article 19(1)(g) and Article 301 - Whether the stoppage of the petitioner's lorry carrying empty beer bottles at Hosur Check post on 18.12.2014 on the premise that the empty beer bottles carried in their lorries would be misused can be a basis for doing so - Held that1:- Nowhere the respondent has thrown any light against any such misuse committed by the petitioners. Even as per the counter affidavit, it could be seen that only preliminary investigation has been conducted by Dr. T. Kannan, Inspector of Police, PEW, Krishnagiri at Indore (Madhya Pradesh), he had not supported the inference that the empty beer bottles belonging to Tamil Nadu Breweries are being misused in Madhya Pradesh State. When the respondents have not produced any document showing the registration of complaint against any person belonging to the petitioner's company showing that the empty beer bottles purchased from Tamil Nadu have been illegally misused, in the absence of such document produced before this Court, the action of the respondent cannot be espoused. Besides, a mere prevention of movement of empty beer bottles by way of an executive action without legislative authority is invalid, since such an action infringes the fundamental right of the petitioner to carry on business, for it is guaranteed under Article 19(1)(g) of the Constitution of India and also under Article 301 of the Constitution of India. - Decided in favour of assessee.

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• 2015 (10) TMI 291
  Input tax credit - whether the Appellant Assessees are entitled to input tax credit on purchase of duty entitlement pass book scrips - DEPB Credit - Held that:- The resultant position was that input tax credit can be claimed in respect of the turnover of purchases made for all of the aforementioned periods except the period 1st April 2010 to 30th September 2011 in respect of the purchases arising in the course of the Assessee”s activities as a dealer. As already noticed hereinbefore the periods with which these two appeals are concerned are prior to 1st April, 2010. Therefore, during that relevant period the change brought about by the DVAT Amendment Act 2009, was not operational. - The case of the DTT is that unless the DEPB scrips are “used” in the imported goods which are then sold, no such input tax credit can be availed of. According to Mr. Satyakam, the mere using of DEPB scrips as cash to reduce the incidence of customs duty cannot constitute usage for the purposes of Section 9(4) of the Act. There can be no doubt that the price of the goods imported has an element of customs duty paid on such goods. The component of customs duty is reduced to the extent of the usage by the Assessee of the DEPB scrips. The reduced customs duty is embedded in the resale price of the imported goods. Thus, the use of the DEPB scrips is for the purpose of the Assessee selling the imported goods. 'Usage' in this context has to be seen as a use that affects the price of the goods although it may not be used tangibly in the goods themselves. There is no warrant to limit the understanding of the word “use” to an actual direct tangible or physical use in the imported goods. The usage by the Assessees, who are registered dealers, of the DEPB scrips purchased by them from another registered dealer after paying the input tax for reducing the incidence of customs duty should be held to constitute use of such DEPB scrip for the purposes of sale of the imported commodity. The DEPB scrip has contributed, if not directly then indirectly, to the price of the imported commodity sold by the Assessees in the market. There could be any number of intangibles that have an impact on the value of the final product like advertisement costs in respect of which input service tax credit may have been availed of, as was in the case of Coca Cola India Pvt. Ltd. (2009 (8) TMI 50 - BOMBAY HIGH COURT). All that is to be shown is that such input tax paid goods have contributed to the sale of the final product in some way directly or indirectly. In order to avail of the input tax credit in the present case it is not necessary that the Assessees have to be dealers in the same commodity, i.e. the DEPB scrips which were used in payment of customs duty on the imported goods in which they were dealing. Such an interpretation will negate the object of introducing the system of value added taxes, i.e. to reduce the cascading effect of multiple taxes at various stages. As long as it is shown that use of the DEPB scrip has impacted the cost of the product that is sold, either directly or indirectly, the credit of the input tax paid on the DEPB scrip cannot be denied to the Assessees. - demands created on the Appellant Assessees, forming the subject matter of these appeals, are held unsustainable in law. Consequently, the question of payment of penalty does not arise and the orders levying penalty on each of the Appellants are also set asid - Decided in favour of assessee.

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• 2015 (10) TMI 290
  Benefit of input tax credit (ITC) on Packing material - finished goods were stock transferred - Held that:- Appellant cannot impugn the provisions contained in Section 6(3)(d) of the Act along with the proviso, as falling foul of Article 301 and Article 304. It may be an unwise move on the part of the State, which is also a criticism, which is levelled by Mr. C.S. Lodha that the States should encourage products from its own soil by giving concessions as are given all over the country by other States. Mr. Lodha would contend that the manufacturer in Uttarakhand is being put at a disadvantage as, in respect of stock transferred finished goods, if the interpretation is placed that it would not include right to ITC on packing materials, the result would be that the manufacturer would procure raw materials from other States. Likewise, when the manufacturer, after stock transfer, sells the product in the teeth of competition which he would face on account of higher prices, which it would have to demand on account of denial of ITC, it would suffer. Mr. C.S. Lodha would, in fact, submit that the complaint of the State would appear to have been that, when packing material is procured and the finished goods are stock transferred and sold in another part of the country, insofar as there is no inter-State sale, the State is not getting any revenue in the absence of an inter-State sale and the State, therefore, cannot forgo its revenue by way of ITC being given on the packing material. To allege lack of wisdom is beyond the province of the court to probe. The Court is concerned only with constitutionality of the statute. It is not concerned with the policy behind the law. All goods, which are manufactured, which otherwise fall within Section 6(3)(d), are treated equally. The State only wished to provide the benefit of ITC in a limited manner even in respect of raw materials used for production of finished goods, which are stock transferred. We cannot deny the right of the State with its plenary powers of legislation within the field of legislation, which is admittedly and legitimately exercised by it otherwise, the right to raise taxes. The Court must strike a balance between the right of the State to raise taxes, which forms the major source of revenue for it for carrying out various public purposes, no doubt, while it stands ever vigilant against any move to treat goods manufactured from or brought from other States in a discriminatory manner. States have provided for the benefit of ITC in respect of packing materials even on stock transferred products, or that the Committee of Ministers have provided for ITC on such transactions. We would think that none of these factors will detract from the width of the power of a sovereign Legislature exercising plenary legislative powers. - appellant has not made out any case for interfering with the judgment of the learned single Judge. We have set out the effect of Section 6. Appellant is not entitled to the benefit of ITC in respect of packing materials used for its finished goods, which were stock transferred. Even the Circular of 2008, in our view, does not as such clearly provide for the grant of such benefit. Lack of clarity and place for doubt in a stray sentence in a Circular cannot be seized upon by the appellant to claim that, contrary to the clear mandate of the Legislature, it should be given the benefit of ITC for the years 2008-2009, 2009-2010 and 2010-2011. - Decided against assessee.

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• 2015 (10) TMI 225
  Evasion of tax - Levy of penalty - Undervaluation of goods - Held that:- Sales made are a bulk sale and the market is a competitive market. Merely because the sales made to the Sahara Airlines is much lower price than the price at which it is sold at the restaurant is not a ground in itself that the price is undervalued. The contract is a written contract and the amounts received are also assessable to income-tax. Both, the petitioner and the Sahara Airlines are income-tax assessees and the payments are made by cheques. In that view of the matter the view taken by the assessing authority that the sale price is undervalued and that assessing the goods at the market value is untenable. - writ petition is of the year 2007 and it is admitted coming up for hearing after almost seven years. Therefore it is inequitable at this stage to drive the petitioner to have recourse to the remedy of appeal - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 224
  Underaluation - Determination of taxable turnover - prescribed authority classified the taxable turnovers and levied tax at four per cent. on certain items and subjected to levy of tax at 12.5 per cent on some goods - Whether the contract executed by the assessee for M/s. KPTCL is a divisible contract or indivisible contract notwithstanding the fact, it is treated as a composite contract - Held that:- For convenience of operation and for payment of sales tax on supply portion, it is treated as a contract for supply. Therefore, the intention of the parties is a manifest coupled with the said clause. The other terms and the conduct of the parties disclose in terms of the bid, the assessee supplied the materials as per specifications and paid tax thereon and transferred title in the goods to M/s. KPTCL. Thus, KPTCL became the owner of the said materials. They in turn, handed over the materials for safe custody to the assessee to enable him to perform the said contract, i.e., erection work. As the KPTCL had entered into four contracts, unless these four contracts are performed in unison, the object of given contract would have been frustrated. All the four contracts are given to the same assessee. Therefore, they wanted to ensure that the erection work which is purely a labour work was also to be treated as an integral part of this composite contract on the single source responsibility basis and the contractor was bound to perform the total contract in its entirety and non-performance of any portion of the contract was to be treated as a breach of the entire contract. In respect of the contract for sale of material taxes have been paid in accordance with law. No tax is payable in respect of contract for supply of labour. In civil works, it is a works contract and tax is levied under Schedule VI, entry 23. In those circumstances, we find that the finding recorded by the Tribunal that it is a divisible contract and the order passed by the revisional authority was erroneous is proper. The Tribunal was justified in setting aside the order of revisional authority and restoring the order passed by the prescribed authority. - Decided against Revenue.

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• 2015 (10) TMI 223
  Legality and validity of order on the basis of the audit report - same authority to issue the audit report and pass the assessment order - Held that:- A perusal of the assessment order dated August 1, 2014 under annexure 6 reveals that tax audit of the dealer-company for the period April 1, 2011 to March 31, 2013 was conducted by the audit team headed by the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar, who submitted the audit report in form VAT-303under sub-rule (3) of rule 45 of the OVAT Rules, 2005 and the said audit report has been utilized against the petitioner for passing the impugned assessment order. The impugned assessment order further reveals that same has been passed by the Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswar as assessing authority. A portion of the audit visit report under annexure 2 quoted above reveals that opposite party No. 3-Deputy Commissioner of Sales Tax, Bhubaneswar had issued letter No. 747 dated January 21, 2014 relying upon which audit visit report was prepared. - Deputy Commissioner of Sales Tax, Bhubaneswar-II Circle, Bhubaneswar-opposite party No. 3, who has passed the impugned order of assessment on the basis of the audit visit report is involved in the audit process - principle of natural justice demands that nobody shall be a judge of his own cause - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 222
  Denial of exemption claim - Recalculation of notional tax liability - Held that:- Tribunal on appreciation of evidence had come to the conclusion that the plea of the assessee for recalculation of notional tax liability for the years 1997-98 and 1999-2000 could not be accepted as the same were not the subject matter of the present appeal. - findings recorded by the Tribunal which were not shown to be perverse or erroneous in any manner, no substantial question of law arises in this appeal for consideration. The judgment in M/s Punjab State Electricity Board, Patiala's case (1982 (1) TMI 167 - PUNJAB AND HARYANA HIGH COURT) relied upon by the learned counsel for the appellant was relating to various issues arising in the same assessment year and, thus, being on different fact situation is of no help to the assessee. - Decided against assessee.

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• 2015 (10) TMI 221
  Denial of refund claim - Unjust enrichment - whether there was unjust enrichment on the part of the appellant whereby it could be said that the appellant had collected the tax on sale of closing stock of liquor which was available on 25.6.2001 but was sold subsequently till 14.10.2001 - Held that:- IMFL was tax free before 26.6.2001 and if the dealer had realized the same price for the sale of IMFL immediately before and after 26.6.2001, then it could not be said that he had charged any tax from the customers but if he had realized higher sale price on or after 26.6.2001, then the higher realization could be attributed to the tax charged from the customers. - dealer had not charged anything extra on sale of IMFL after the levy of tax thereon. Thus, on appreciation of evidence, it could not be concluded that the dealer had charged any tax from the customers. The finding recorded by the majority Members of the Tribunal is based on conjectures and surmises without there being any material on record to arrive at the conclusion that the assessee-appellant had charged tax on sale of IMFL in respect of stock as on 25.6.2001, which was sold during the period 26.6.2001 to 14.10.2001. Moreover, no cogent reasons have been given therein to record a finding different from the one noticed - The finding recorded by the Tribunal is thus, legally unsustainable - Decided in faovur of assessee.

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• 2015 (10) TMI 220
  Seizure of goods - demand of security for release of the goods - Held that:- court has noted in detail the willful and deliberate suppression of facts by the applicant and his prima-facie involvement in evasion of tax. Even despite time granted, the applicant did not comply with the order of this court dated August 21, 2014. Even, he has not filed affidavit disclosing certain details and facts, as was directed by this court in paragraph 7 of the order dated August 21, 2014 - The original record has also been shown to the learned counsel for the applicant. In the said record information of ten TDF in two pages down loaded from departmental website is available. These two pages are singed by the officers also. Perusal of it shows that ten transit declaration forms for PVC dana were downloaded by the applicant within a short span of four or five days. This paper contains complete details, namely, truck number name of selling dealer and value of goods, etc. This document is undisputed and has not even been denied by the applicant despite the direction given to him vide para 7 of the order dated August 21, 2014. All the authorities including the Tribunal have recorded a finding that the goods in question was brought to evade payment of tax. I find that prima-facie, the facts and circumstances of the case and evidences available on record shows that under the cover of TDF attempt to evade payment of commercial tax was made showing dispatches to a non-existing/non-bona fide dealer of Bihar with the help of manipulated paper and false declaration. - No infirmity in the impugned order of the Tribunal. No question of law arises from the order of the Tribunal - Decided against assessee.

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• 2015 (10) TMI 219
  Penalty under section 78(5) - Contravention of Section 78(2) of the 1994 Act read with Rule 53(1) (a)(ii) of the Rules - Held that:- Where goods in transit are found to be unaccompanied by any material document required under Section 78(2) of the 1994 Act, on show cause notice being issued in respect therefor if such document is supplied filling up the lacuna, no penalty would be leviable. The Hon'ble Supreme Court has not defined the nature of mistake which alone would be rectifiable by submitting the required documents with the reply to show cause notice. As long as the missing document, in this case as the declaration form ST-18-A, was furnished with the reply to show cause notice, it ought to have sufficed. Aside of aforesaid, it is not in dispute that the goods in transit were in the course of stock transfer from petitioner's factory at Aurangabad to its branch at Jaipur and a case of tax evasion could not be made out. The Assessing Officer or for that matter the Appellate Authority and the Tax Board have not held that the goods were not being transported under a branch transfer and have yet based their judgment on a purported intent to evade tax. The allegation of intent to evade tax was palpably facetious, the declaration in form ST-18-A having been submitted with the reply - order of the appellate authority and assessing officer levying penalty under Section 78(5) of the 1994 Act is liable to be set aside - Decided in favour of assessee.

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• 2015 (10) TMI 218
  Classification of goods - Classification of Keo Karpin Baby oil as cosmetic or medicine - Rate of duty - 6% or 12% - Held that:- burden to prove that a certain items is exigible to tax and falls under a given taxable entry is always on the revenue - Held that:- burden on the Revenue department to bring it within entry No. 70 relating to cosmetic as notified under section 5 of the extant Rajasthan Sales Tax Act, 1954 (hereinafter "the Act of 1954") was not at all discharged. No evidence of any sort with regard to the ingredients of the product sold or other aspects relating to its label and literature were even adverted to, what of considered by the assessing authority. The assessing authority merely seems to have proceeded on its own ipse dixit. That was mechanically dittoed by the appellate authority in its order dated October 30, 1996. - Further the product in issue was manufactured under a licence issued under the Act of 1940 and had prophylactic qualities, protecting children from rickets and checking vitamin A and E deficiency in them, entitling it to be classified as a medicine/drug. - no force in the challenge to the impugned order dated February 20, 2001, passed by the Tax Board - Decided against Revenue.

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• 2015 (10) TMI 217
  Denial of benefit of notification dated March 6, 1991 - Held that:- Tax Board has rightly held that goods of which the dominant and essential component was copper were "products of copper". Hence the manufacture of electrical wires, PVC power electrical cables and electrical cables with 85 per cent. component of copper satisfied the condition of the notification dated March 6, 1991 that the copper purchased at a concessional rate was to be utilised for the manufacture of copper products. There is no illegality or perversity in the impugned order dated November 4, 2003 passed by the Tax Board. Further the OIC has not been able to establish that the view of the Tax Board on the question in issue as enumerated in the case of Jai Ambe Copper Industries was challenged or set aside. - Decided against Revenue.

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• 2015 (10) TMI 216
  Levy of penalty under section 15A(1)(a) of the U.P. Trade Tax Act, 1948 - delayed deposit of trade tax/Central sales tax - Whether, on the facts of the case, the Tribunal is legally justified in confirming the penalty under section 15A(1)(a) of the Act - Held that:- specific grounds were taken by the applicant with complete disclosure of facts before the appellate authority that the bank draft/pay order for the tax amount was deposited well within time in the SBI which was collected by the SBI after two or three days which allegedly caused delay of two or three days as evident from the facts mentioned in the grounds of appeal as well as in the written submission filed before the first appellate authority and before the Tribunal - payment of cheque is a recognised mode of payment of sales tax dues. Now question arises that what is the date of payment, when the cheque was given to the Department or the date on which it was encashed. Payment by cheque realised subsequently on the cheque being honoured and encashed relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque. Applicants have clearly mentioned the date of respective bank draft/pay order/cheque and the date of deposit thereof along with challan form in the SBI which facts have not been disputed or denied by the assessing authority. It cannot be said that there was any delay. Even according to the respondents, there was delay of only two or three days. The same was properly explained by the applicant. There was no occasion before the assessing authority to levy penalty for alleged delay in deposit of tax for the relevant months - Decided in favour of assessee.

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• 2015 (10) TMI 215
  Determination of revisional jurisdiction - whether the revisional authority had initiated action under section 34 of the HVAT Act within the period of limitation of three years - Held that:- Wherever the return has been filed and which is complete in all respects, the acknowledgment issued to the assessee would be deemed to be an assessment order. It was not disputed by the learned State counsel that no notice under sub-section (2) of section 15 of the HVAT Act was issued for scrutiny of the return to the dealer. In such a situation, the State counsel was unable to explain and justify as to how the order on November 25, 2005 came to be passed and what was the nature of the same. Thus, it could not be termed to be a valid assessment order. Once the acknowledgment is deemed to be assessment order as discernible from section 15(1) of the HVAT Act in the present case which is dated November 19, 2004, limitation for passing order under section 34 of the HVAT Act was up to November 30, 2007, i.e., three years from the last date of November 30, 2004 of filing the return for the assessment year 2003-04. The same having been passed on June 13, 2008 was clearly beyond limitation. The Tribunal was thus in error in holding that the order passed on June 13, 2008 was within limitation. - Decided in favour of assessee.

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• 2015 (10) TMI 214
  Benefit of exemption from entry tax - Whether or not M/s. VM Extrusions Private Limited (the respondent) is entitled to exemption of entry tax on the principle of promissory estoppel - Held that:- The State also issued a notification dated April 26, 2002 under the 2001- 06 Policy explaining the new industries that are included in the thrust sector. So far as "cement and downstream industries" under the "mineral based industries" are concerned, manufacture of HDPE woven bags is included under this notification - industrial unit set up by the respondent is included in the thrust sector in the "mineral based industry" as envisaged under the 2001-06 Policy. The fact that the respondent is a medium scale industry is admitted - The respondent commenced its commercial production on June 16, 2004. Had it commenced production after November 1, 2004, then it would have got exemption irrespective of the fact whether it was set up in pursuance of the 2001-06 Policy or the 2004-09 Policy. - it is not relevant under which policy the notification was issued. The relevant thing is whether the respondent could claim exemption of entry tax on the principle of "promissory estoppel or not". The respondent has set up its own industrial unit in pursuance of the promise given by the State Government under the 2001-06 Policy. It had already got exemption from payment of electricity duty as envisaged under the 2001-06 Policy. The Government has come out with the notification granting exemption in entry tax but not within the time stipulated under the 2001-06 Policy. The Government was negligent and there was slackness on its part - Once the Government had given a promise to give exemption of the entry tax in order to give thrust to industrial growth and in fact such benefit from exemption of entry tax for seven years is being given to all similarly situate industries, then there is no justification to limit it only for industrial unit starting production after November 1, 2004 especially when such notification ought to have been issued within 60 days of issuance of the 2001-06 Policy namely in 2002 itself. - Decided against Revenue.

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• 2015 (10) TMI 213
  Disallowane of set off under rule 41D - Manufactured goods were used in works contract in other States, and were not sold in those States as contemplated by section 2(28) of the Bombay Sales Tax Act, 1959 - Drawback, set-off, etc., of tax paid by a manufacturer in respect of purchases made on or after the notified day. - Held that:- Certificate is issued by his manager or as the case may be, his agent who declared, interalia, that the goods will be in fact sold by him or will be used by him in the manufacture of goods which will be in fact sold by him and that there is a registration in their favour under the Bombay Sales Tax Act, 1959 in respect of that place of business. Undisputedly, such certificate was produced. Once such a certificate was produced and export is defined inclusively to mean a dispatch as above, then, any larger controversy or wider question should not have been gone into and decided by the Tribunal at all. The reference to the circular was wholly unnecessary because the claimant/dealer can despatch the goods to his own place of business or his agent outside the State. He would be able to obtain the reliefs in terms of sub rule (1), provided certificate in "form 31C" is produced. - Admittedly, that certificate was produced and it contains the relevant particulars. Tribunal had before it the material that the branches of the claimant dealer were registered under the local Act as well as the Central Sales Tax Act, qua those States. The definition of "sale" in those States includes a "works contract" as defined in the law in force in those States. In such circumstances, the Tribunal was right in the conclusion it reached. We are of the opinion that the questions have been rightly decided. In the circumstances, the reference at the instance of the Revenue ought not to have been made to this court but having been made and we are called upon to decide, that we conclude that the Tribunal correctly read rule 41D and granted relief thereunder. The reference is, therefore, answered against the Revenue and in favour of the assessee.

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• 2015 (10) TMI 212
  Evasion of tax - Held that:- A perusal of the findings recorded by the Tribunal shows that the assessee was given sufficient opportunity by the assessing authority before framing the reassessment. The list of documents impounded along with the bills and the details collected from the barrier were confronted to the assessee. It has been further recorded by the Tribunal that neither the books of account had been produced nor any reply to the show-cause notice was given by the assessee. Learned counsel for the appellant has not been able to show that findings are illegal or perverse in any manner. Thus, no substantial question of law arises - Decided against assessee.

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• 2015 (10) TMI 211
  Rejection of books of accounts and the disclosed turnover - day-to-day entries have not been done in the register of raw material - Held that:- provisions of section 12(2) of the Act, were not followed by the applicant-assessee. Under the circumstances, the books of accounts were liable to be rejected in the light of the observations made by honourable Supreme Court in the case of Commissioner of Sales Tax, U. P., Lucknow v. Girja Shanker Awanish Kumar [1996 (9) TMI 515 - SUPREME COURT OF INDIA]. The Tribunal has merely remanded the matter to the first appellate authority to pass a fresh order. - No error in the impugned order of the Tribunal. No question of law is involved in the order of the Tribunal - Decided against assessee.

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• 2015 (10) TMI 210
  Classification of HDPE/PP Woven Fabric - Whether Artificial silk - Rate of VAT - Entry 51 of Schedule B of Haryana VAT Act, 2003 - Held that:- The Hon'ble Supreme Court in Porritts & Spencer's case [1978 (9) TMI 72 - SUPREME COURT OF INDIA] was considering the same entry as in the present case and held that the word "textiles" is derived from Latin 'texere' which means 'to weave' and it means any woven fabric. - In the aforesaid case, Hon'ble Supreme Court further held that the use does not determine the character as textile. Therefore, an argument that "dryer felts" are used only as absorbents of moisture in the process of manufacture which does not fall within the category of "textiles", was rejected. In view of the judgment in Porritts & Spencer's case (supra) and keeping in view the test that in a taxing statute words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance and the fact that textile means any woven fabric and therefore the fabric manufactured out of HDPE by warp and weft pattern is a textile falling within entry 51 of Schedule B. It will thus be a good exempted - The entry 51 is inclusive entry. It includes all varieties of cotton, woolen or silken textiles and also rayon, artificial silk or nylon. Thus any textile may be cotton, woolen or silk either from natural fiber or man made fiber falls within the scope of exempted goods. The clarification issued by the Financial Commissioner-cum- Principal Secretary, Government of Haryana, Excise and Taxation Department on 10.12.2009 that the products manufactured by similar manufacturers are not covered under entry 52 and 53 of Schedule B nor under Schedule C of the Act, therefore, an unclassified good is liable to be taxed at the rate of 12.5%. We find that such clarification runs counter to meaning of the expression "textile" including "artificial silk" given by Supreme Court. In view of the interpretation of the similar provision, in respect of the present assessee itself, we find that the clarification could not be issued against an order passed by the competent authority interpreting similar provision. HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and is exempted from payment of tax. - Decided in favor of assessee.

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• 2015 (10) TMI 209
  Refusal of authorities to issue Form F - assessing officer deeming subject sales in the course of exports which are duly covered by form H between the branch office at Sahibabad and the head office at Mumbai to be inter-State sales - validity of section 6A - Held that:- All that the assessing officer has done by his notice dated September 14, 2013 is to call upon the petitioner to submit information and has furnished an opportunity of a personal hearing. Undoubtedly, during the course of the assessment proceedings, all the submissions which have been made by the petitioner in these proceedings, can be made before and considered by the assessing authority. The petitioner essentially seeks a direction to the assessing officer in regard to the manner in which he must form a view in the course of the assessment proceedings. The assessing officer, as a creature of statute, is bound to enforce the provisions of the Central Sales Tax Act and is governed by the binding precedents of the Supreme Court on the subject. Consequently, at this stage, it would not be appropriate or proper for the court to entertain the petition. - petition is clearly premature and it would not be appropriate or proper for the court to entertain this petition. In the circumstances, at this stage, it is not necessary to consider the constitutional validity of the provisions of section 6A of the Act. - Appeal disposed of.

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• 2015 (10) TMI 208
  Denial of exemption claim - Tribunal partly allowed the appeal by granting benefit of tax exemption with regard to manufacturing unit with production capacity of 28 MT but denied the claim of tax exemption with regard to the manufacturing unit with production capacity of 14 MT gwar gum powder per day - Held that:- After going through the judgment and order passed by the High Court [2003 (10) TMI 645 - RAJASTHAN HIGH COURT] we are of the opinion that the High Court has not committed any error, whatsoever, which would call for our interference. - Decided against Revenue.

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• Wealth tax

• 2015 (10) TMI 263
  Reopening of wealth tax assessment - non declaration of property - ownership dispute - Held that:- though the assessee has disputed his ownership right over the property but he has failed to bring any evidence on record to show that there is any legal dispute with regard to the ownership of the property pending before any Court of law. On the other hand, the documents available on record clearly establish assessee’s ownership over the property. - Additions confirmed. - Decided against the assessee. Commercial property or not - Urban Land - asset has not been shown in the return of wealth - Held that:- after the amendment of the definition of urban land by the Finance Act, 2013 with retrospective effect from 01.04.1993, land classified as agricultural land in the records of the Government and used for agricultural purpose is outside the purview of urban land. - the nature and character of land in question remained agricultural as on 31.03.2008 as the conversion of land from agriculture to non-agriculture took place only on 27.01.2009 i.e., in the assessment year 2009-2010 - the land having been classified as agricultural land in the records of the Government for the relevant period and used for agriculture, it cannot be treated as urban land. - No addition - Decided in favor of assessee.

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