TMI Tax Updates - e-Newsletter
November 18, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Whether interest u/s 234C of the Act is to be calculated based on date of clearing of the cheque or date of presentation of the cheque - Once the cheque issued by the assessee is encashed, the payment relates back to the date of receipt of the cheque - HC
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Income Tax:
When the royalty for transfer of right to use of computer software does not fall under Explanation 2 to sec. 9(1)(vi), but the same falls under Explanation 4 to sec. 9(1)(vi), then in view of the Explanation to sec. 40(a)(i), the amount cannot be disallowed under the provisions of sec. 40(a)(i) of the Act - AT
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Income Tax:
TDS on salary u/s 192 Where the assessee-company has no control in granting rebate to its employees in consumption of electricity, the rebate given to the employees cannot be called to be perquisite in the hands of the employees - not liable to TDS on rebate - AT
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Income Tax:
Claim of deduction on business expenses incurred for earning remuneration from the firm - assessee a qualified Chartered Accountant was a partner in two firms - proportionate deduction allowed - AT
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Income Tax:
Jurisdiction of CIT u/s 263 AO is not only an adjudicator but also an investigator - AO has totally failed to make any enquiry - the invocation of section 263 by the CIT is correct. - AT
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Income Tax:
Imposition of penalty u/s 271(1)(c) Since TDS was made from the payments made to the artists and amount was duly deposited with the department, merely on the ground of non-receipt of any reply from the said artists, for which there could be several reasons, it cannot be inferred that assessee had advanced wrong claim - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (11) TMI 488
Stay application - Disallowance made to M/s.Jaldhi Overseas Pvt. Ltd. Held that:- Following the decision in M/s. Anand Transport (Private) Ltd. Versus Assistant Commissioner of Income Tax [2014 (2) TMI 434 - MADRAS HIGH COURT] - the transaction between the assessee and non-resident company would be taxable only in Singapore and not in India - disallowance u/s 49(a)(i) for alleged non-deduction of tax at source in terms of Section 195(1) of the Income Tax Act is upheld - the issue raised for consideration is prima facie covered by the decision of the Hon'ble Division Bench - Therefore, it is a good ground for granting stay of the demand - the demand which has been raised on the petitioner under the 1st head shall remain stayed till the disposal of the appeal by the CIT(A). Disallowance of interest on amount borrowed and advances to Sister company for development of group business Held that:- In assessees own case for the earlier assessment year wherein the assessee had filed appeal before the CIT(A) and pleaded for deletion of the disallowance by relying upon SA BUILDERS LTD. Versus COMMISSIONER OF INCOME-TAX [2006 (12) TMI 82 - SUPREME COURT] - the assessee has established prima facie case - Though it is stated by the learned Standing Counsel for the Revenue that it is for the AY 2009-2010, yet legal principles, which were adopted by CIT (A) as on date holds good and it is for the appellate authority in the present appeal to consider that issue independently. Disallowance u/s 14A Held that:- Though the submission was made by the petitioner, the 1st respondent has not assigned any reason either accepting or rejecting the petitioner's contention, but only proceeded to direct the petitioner to pay tax due immediately - the scheme of the Act reposes such duty on the AO, while examining the stay petition, filed by the assessee requesting for stay of the demand till the appeal against the order of assessment is heard by the CIT(A) - this principle has not been adhered to and the order is a non speaking order thus, the disallowance is set aside and the matter is remitted back for fresh consideration. Disallowance for difference in 26AS Held that:- The revenue has granted liberty to the petitioner to file necessary documents and statements and granted time revenue is entitled to proceed with in accordance with law, after receipt of documents and statements from the petitioner Decided in favour of assessee.
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2014 (11) TMI 487
Calculation of interest u/s 234C Date of presentation of cheque - Whether interest u/s 234C of the Act is to be calculated based on date of clearing of the cheque or date of presentation of the cheque Held that:- Following the decision in Commissioner of Income Tax v. Ogale Glass Works Ltd. [1954 (4) TMI 3 - SUPREME Court] - none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening of the condition subsequent, dishonour by non-payment and that being so there can be no question, that the assessee did not receive payment by the receipt of the cheques - The position is that there was an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques - Once the cheque issued by the assessee is encashed, the payment relates back to the date of receipt of the cheque no substantial question of law arises for consideration Decided against revenue.
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2014 (11) TMI 486
Ascertainment of base year Held that:- Out of 456 units the approval granted for 222 units of plots and 234 units of residential units from Vadodara Mahanagar Seva Sadan - assessee contended that the assessee has made claim with regard to residential units only and not with regard to the plots - CIT(A) followed the decision in Commissioner of Income-tax IV Versus Tarnetar Corporation [2012 (10) TMI 803 - GUJARAT HIGH COURT] 0 wherein it has been held that the assessee had not only completed the construction two years before the final date but had applied for the building use permission - Such building permission was not rejected on the ground that construction was not completed but on some other technical ground - the assessee had completed the construction and applied for the issuance of completion certificate - the order of the CIT(A) is upheld Decided against revenue. Allowability of deduction u/s 80IB(10) proportionate disallowance on the completed units of the project Held that:- The application for certificates was made on 09.05.2007, i.e. before the due date of 31.03.2008 - only 3 units out of total 223 approved by the BMC remained incomplete on which deduction u/s.80IB(10) will not be available - CIT(A) has followed the judgement of The Commissioner of Income Tax Business Ward XV(3), Chennai. Versus M/s. Sanghvi and Doshi Enterprise [2012 (12) TMI 84 - MADRAS HIGH COURT] Decided against revenue. Deduction on unutilized FSI units Held that:- In The Commissioner of Income Tax-I Versus Moon Star Developers [2014 (4) TMI 1042 - GUJARAT HIGH COURT] it has been held that Marginal underutilization of FSI certainly cannot be a ground for rejecting the claim u/s 80IB(10) of the Act - Even if there has been considerable underutilization, if the assessee can point out any special grounds why the FSI could not be fully utilized, the case may stand on a different footing - in cases where the utilization of FSI is way short of the permissible area of construction, looking to the scheme of section 80IB(10) of the Act and the purpose of granting deduction on the income from development of housing projects envisaged, bifurcation of profits arising out of such activity and that arising out of the net sell of FSI must be resorted to thus, the matter is remitted back to the file of AO to verify the unutilization of FSI and decide this issue afresh in the light of the judgement as mentioned Decided in favour of assessee.
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2014 (11) TMI 485
Claim of deduction u/s 80IB - Business of manufacturing and printing of packing material Assessee was having factory license before it started manufacturing activities or not - Held that:- As decided in assessees own case for the earlier assessment year, it has been held that Assessee has already been granted deduction under 80IB in earlier years and therefore deduction cannot be denied in the third year - the Assessees claim for deduction u/s 80IB has been allowed by CIT(A) and the copy of the orders are placed on record - With respect to the submission of the A.O that in the absence of power it cannot be said that Assessee could have started manufacturing process, the Assessee has submitted that its requirement of power was met through D.G sets the order of the CIT(A) is upheld Decided against revenue. Addition on capital introduction - Proof of credit worthiness and genuineness of cash introduction Held that:- During the year Assessee had introduced fresh capital of ₹ 5,40,376/-. The Assessee was asked to give explanation in support of the source of capital to which AO has noted that Assessee neither gave any explanation nor furnished any documentary evidence nor the bank book or statement was made available to AO - CIT(A) by a cryptic order has allowed the claim of Assessee - the matter needs re-examination at the end of AO thus, the matter is to be remitted back to the AO for fresh examination Decided in favour of revenue. Addition of unsecured loan - Onus to prove the genuineness of the transaction Held that:- Before AO Assessee did not file any confirmation to prove the identity creditworthiness and genuineness of the transaction - Before CIT(A) Assessee submitted that the lender of the amount was the father of the Assessee - the AO be granted an opportunity to examine the submission of the Assessee thus, the matter is remitted back to the AO to verify the factual position as submitted by the Assessee before CIT(A) Decided in favour of Revenue.
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2014 (11) TMI 484
Channel placement fees u/s 40(a)(ia) disallowed TDS not deducted u/s 194J Held that:- The DRP held that the disallowance u/s. 40(a)(ia) on account of short deduction of tax is not warranted - the channel placement fee paid to the cable TV operator/DTH provider cannot be regarded as royalty as it does not fall under the definition in terms of Explanation-2 of Section- 9(1)(vi) of the Income tax Act - Though there is an amendment in the provision and as per newly inserted Explanation-6 with retrospective effect the term process has been defined and it includes transmission, uplinking and down linking of signals etc. But the said retrospective amendment cannot be pressed into service for the purpose of disallowance u/s. 40(a)(ia) because of the reason that at the relevant time when the Assessee has deducted the tax at source it was not in the statute relying upon M/s. Channel Guide India Limited vs. ACIT [2012 (9) TMI 95 - ITAT MUMBAI] - the amount in question paid by the assessee to SSA was not taxable in India in the hands of SSA either u/s.9(1)(vi) or 9(1)(vii) as per the legal position prevalent at the relevant time and the assessee therefore was not liable to deduct tax at source from the said amount paid to M/s. SSA and there was no question of disallowing the said amount by invoking the provisions of sec.40(a)(i) - when the royalty for transfer of right to use of computer software does not fall under Explanation 2 to sec. 9(1)(vi), but the same falls under Explanation 4 to sec. 9(1)(vi), then in view of the Explanation to sec. 40(a)(i), the amount cannot be disallowed under the provisions of sec. 40(a)(i) of the Act Decided against revenue.
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2014 (11) TMI 483
Reimbursement of cost of salary and other expenses to holding company Non-deduction of TDS u/s 40(a)(ia) secondment of employees - Held that:- Following the decision in Temasek Holdings Advisors (I) P. Ltd. Versus Dy. Commissioner of Income Tax [2013 (9) TMI 48 - ITAT MUMBAI] - The salary can be paid either by the first company to whom the seconded employees belong or the other company which are availing the services of seconded employee. In the present case, the secondment agreement clearly provides that these two employees will work for the assessee company under their supervision and under the control of the Board of Directors of the Indian company - disallowance made with respect to reimbursement of salaries and the expenses of seconded employees were deleted on the plea that tax has been deducted at source u/s 192 of the Act - with regard to reimbursement of expenditure towards payment of professional fees was restored back to the file of the AO to examine and decide afresh thus, the disallowance made with respect to reimbursement of salaries and expenses of seconded employees is set aside and the for reimbursement of expenditure on account of professional fee is remitted back to the AO for fresh adjudication Decided partly in favour of revenue. Transfer pricing adjustment u/s 92CA Receipts of investment advisory services Selection of comparables - Held that:- Following the decision in Temasek Holdings Advisors (I) P. Ltd. Versus Dy. Commissioner of Income Tax [2013 (9) TMI 48 - ITAT MUMBAI] - The assessee which is mainly engaged in rendering of investment advisory services to its parent company at Singapore has received mark-up of 21% - This margin of 21% has been benched marked by using TNMM as the most appropriate method with PLI as operating profit to operating cost - its margin on the transaction carried out with its parent company was at ALP - The TPO out rightly rejected the assessee's comparables, firstly, on the ground that they are not in investment advisory services and secondly the assessee has not carried out search by using the key phrase "investment advisory services". No proper reasoning has been given by the TPO as to why data from "Prowess" is not reliable and the "capital line data" should have been taken - He has also not established that by entering the key phrase "investment advisory service", the selection of the functionally similar companies are available from the data - The companies selected as comparable by TPO are engaged in the "asset management" are basically responsible for mobilizing the funds from the investors by marketing the scheme - Their main functions are sales and marketing, investment and management of the funds mobilized under various schemes - They are responsible for providing management and administrative services mostly to the mutual funds and to deploy such funds - The risk is also assumed by such companies in the form of service liabilities, regulatory and reputational risk - Moreover, the asset management companies are also regulated entities which are required to be licensed by SEBI - Thus, these companies also fail the test of FAR analysis with the investment advisory companies - all the six companies shortlisted by the assessee are quite good comparables looking to the overall functions and also that the same have been found to be so by the Department in the preceding and succeeding years - the entire adjustment made by the TPO cannot be sustained as the margin of the assessee at arm's length looking to the average margin of the comparables - the order of the DRP is upheld Decided against revenue.
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2014 (11) TMI 482
Whether the amount brought to tax by the AO is not undisclosed income Amount deposited with bank taxable as income or not Held that:- Shailendra Mahto, Suraj Mandal and Simon Marandi had never filed income tax returns u/s 139 of the Act between 1st April, 1986 and 26th April, 1996 - They were never assessed to tax for the period - Shailendra Mahto, in fact, did not file returns even on issue of notice u/s 158BC of the Act - The block assessment orders in the case of individual assessees would show that the major and substantial amount of undisclosed income relates to the period between 1st April, 1993 and 31st March, 1994 - sub-clause (ca) of Section 158BB(1) would be applicable as no return of income was filed by the individual asseessee before the due date of filing of return - The income returned accordingly would be treated as NIL inspite of the entries, if any, in the books of accounts or documents - Shibu Soren had filed return for the assessment year 1994-95 on 31st March, 1996, but this would be a return u/s 139(4) of the Act which permits filing of a belated return, but it would not be a return u/s 139(1) of the Act - this return cannot be treated as a return filed before the due date. Whether additions made relate to undisclosed income Held that:- The Tribunal has only decided the second aspect, i.e. whether or not the deposits in Punjab National Bank, Naoroji Nagar, New Delhi could have been made subject matter of addition as undisclosed income in the block assessment proceedings - the assessees throughout had pleaded and claimed that the money deposited in the bank accounts did not belong to them but was money of JMM - there is a fundamental fallacy in the reasoning given by the Tribunal to hold that no addition could have been made in the block assessment proceedings for want of undisclosed income - The Tribunal ignored the position that the four individual assessees had not filed returns of income and therefore, Section 158BB(1) clause(ca) of the Act would be attracted - the factum that the details of SB A/cs and the FDRs were made available would not make any difference - The search undertaken had revealed several incriminating evidence/material relating to the opening and operation of bank accounts and on how the money was utilized, etc. - These details were relevant to examine and consider the contention of the respondent individual assessee that the money did not belong to them but to the political party, JMM - It would be incorrect or improper to state that the search did not reveal or unearth relevant material or evidence relating to undisclosed income as defined u/s 158B(b) of the Act. In the case of JMM notice u/s 158BD read with Section 158BC of the Act was issued and there was also a search of the premises of M/s Anjali Jain and Associates, Chartered Accountant and Auditor of JMM where books of accounts and other documents were found and seized. Subsequently, during investigation, statements of different persons referred to above, were recorded to ascertain and decipher whether the money deposited in the bank accounts had any connection or belonged to JMM or the said money was undisclosed income of the individual assessees - Assessment in the hands of JMM was on a protective basis - The Tribunal has not considered and examined the said evidence and has also not gone into the question whether and if in case no addition could be made in the hands of the individual assessee, substantive addition on the basis of the said evidence or material could be sustained in the hands of JMM - in case substantive addition in the hands of the individual assessee stands finally affirmed, the protective addition in the hands of the JMM would dissipate and would not be sustainable - there was no undisclosed income which could be made subject matter of block assessment and additions, if any, could be made only in the regular/normal assessment - the Tribunal has not gone into and examined the merits - Thus, an order of remand would be justified and is required as other issues on merits etc. have to be examined Decided in favour of revenue.
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2014 (11) TMI 481
Taxability of 'license fee' - Income derived from license fee from letting out a commercial property Income from house property or business income - Revenue was of the view that the income needs to be assessable as 'income from house property' Held that:- Merely because an income arises from exploitation of immovable property, it would not ipso facto be assessable under the head 'income from house property'- What is required to be appreciated is the peculiar facts and circumstances of each case to decide whether a particular rental income is assessable under the head 'house property' or not relying upon CIT vs. Shambhu Investment (P.) Ltd. [2001 (3) TMI 77 - CALCUTTA High Court] - if the main intention of the assessee is to let out the property, the income must be considered as rental income assessable under the head 'income from house property - the assessee was deriving rental income by merely letting out the property which was assessable under the head 'income from house property'. It is not a case where the license fee has been earned from merely letting out of office space, but has been earned as a result of undertaking composite activities, comprising of leasing of office space and providing services of cafeteria/pantry, conference rooms and equipments such as LCD projectors, PA system etc., use of computer terminals, electrical fittings, UPS, network services and net-switch charges, etc. - The providing of such services along with the office space cannot be regarded as exploitation of the immovable property for earning rentals but it is a case where the commercial property has been exploited by undertaking complex commercial activities and therefore such income has to be held assessable as 'business income' - CIT(A) made no mistake in holding that the impugned 'license fee' received from the users of the office infrastructure facilities in 'IndiaCo iCenter Plaza' was assessable as 'business income' and not under the head 'income from house property' - no material has been lead by the Revenue to show any change of facts during the year the order of the CIT(A) is upheld Decided against revenue.
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2014 (11) TMI 480
Method adopted for preparation of books of accounts Difference in accounting method - EMI method to account the finance charges for the income tax purposes - hire purchase agreement - Held that:- Assessee relied on the decision of Commissioner of Income Tax v. Ashok Leyland Finance Ltd. [2012 (7) TMI 590 - Madras High Court] - Section 145(1) of the Income Tax Act prior to its amendment by the Finance Act, 1995 provided for computation of income from business or profession or income from other sources in accordance with the method of accounting regularly employed by the assessee - many assessees are following the hybrid method in a manner that does not reflect the correct income - The Finance Act, 1995 has amended section 145 of the Income Tax Act to provide that income chargeable under the head ''Profits and gains of business or profession'' or ''Income from other sources'' shall be computed only in accordance with either the cash or the mercantile system of accounting, regularly employed by an assessee - Prior to this amendment, the first proviso to sub-section (1) of section 145 gave an option to the assessee to determine the income by adopting any one of the methods - the assessee are justified insofar as following one system of accounting for the purpose of books of accounts and another for the purpose of determination of tax Decided in favour of assessee.
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2014 (11) TMI 479
Addition u/s 68 - Share capital and share premium received treated as unexplained cash credits Held that:- The issue of shares at premium is always a commercial decision which does not require any justification - Further the premium is a capital receipt which has to be dealt with in accordance with Sec. 78 of the Companies Act, 1956 - the company is not required to prove the genuineness, purpose or justification for charging premium of shares, share premium by its very nature in a capital receipts and is not income for its ordinary sense - the assessee had filed all the requisite details/documents which are required to explain credits in the books of accounts by the provisions of Sec. 68 of the Act - The assessee has successfully established the identity of the companies who have purchased shares at a premium - The assessee has also filed bank details to explain the source of the shareholders and the genuineness of the transaction was also established by filing copies of share application forms and Form No. 2 filed with the Registrar of Companies. The amendment has been brought in the Income Tax Act under the head "Income from other sources" by inserting Clause (viib) to Sec. 56 of the Act wherein it has been provided that any consideration for issue of shares, that exceeds the fair value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be treated as the income of the assessee but the legislature in its wisdom has made this provision applicable w.e.f 1.4.2013 i.e. on and from A.Y. 2013-14 - the transaction has to be considered in the light of the provisions of Sec. 68 of the Act - the assessee has given details of names and addresses of the shareholders, their PAN Nos, the bank details and the confirmatory letters - the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee - Even if it is held that excess premium has been charged, it does not become income as it is a capital receipt - The receipt is not in the revenue field - if the identity is proved, no addition can be made u/s. 68 of the Act the order of the CIT(A) is upheld Decided against revenue. Restriction of disallowance u/s 14A r.w. section 8D Held that:- The AO has followed the decision in the case of GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - CIT(A) has very correctly upheld the findings of the AO that Rule 8D is applicable during the year under consideration - CIT(A) has restricted the disallowance of expenditure to the extent claimed by the assessee there was no error or infirmity in the findings of the CIT(A) Decided against revenue.
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2014 (11) TMI 478
TDS on salary u/s 192 Supply of electricity covered u/s 17(2)(iii) as perquisite or not - rebate in supply of electricity - Held that:- Assessee-company is a Government Public Limited Company and subsidiary of holding company, U.P. Power Corporation Limited and also engaged in distribution of power to its consumers like government, Semi-Government and private bodies - the rates for supply of electricity including departmental employees are fixed and decided by the UPERC and such rates are binding on all the consumers as well as distribution companies - As per LMV-10, the UPERC has fixed the rates of charges for metered and un-metered supply to the departmental employees and pensioners - the rates of charges for supply of electricity to departmental employees and pensioners are lesser than the ordinary consumers. Where the assessee-company has no control in granting rebate to its employees in consumption of electricity, the rebate given to the employees cannot be called to be perquisite in the hands of the employees and the assessee-company cannot be held responsible for deduction of TDS on the perquisite availed by the employees - In Commissioner of Income-Tax And Another Versus Chief Officer, State Bank of India [2005 (12) TMI 68 - UTTARANCHAL High Court] it has been held that no perquisite value could be added in the hands of the assessee - no interest would be charged u/s 201/201(1A) of the Act from the assessee on account of lesser deduction of tax - whatever rates of electricity charges are fixed, they were fixed by the UPERC and the assessee has no control thereon - The reasons for charging lesser rate of electricity were also explained - the assessee cannot be held to be in default for non-deduction of TDS on the value of perquisites as alleged to be availed by the employees on account of lesser rate of electricity charges thus, the order of the CIT(A) is upheld - Decided against revenue.
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2014 (11) TMI 477
Validity of reopening of assessment u/s 147 - Reopening made in the absence of tangible material or fresh information - Held that:- Initiation of proceedings u/s 147 of the Act is based on the scrutiny of accounts attached with the return of income - The contention of the assessee on the issue of validity of initiation of proceedings u/s 147 of the Act is that mere reappraisal of the return of income cannot confer jurisdiction to proceed u/s 147 of the Act following the decision in CIT vs. Orient Craft Ltd. [2013 (1) TMI 177 - DELHI HIGH COURT] - the reasons disclosed that the AO reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return u/s 143(1) were without scrutiny and nothing more - This was nothing but a review of the earlier proceedings and an abuse of power by the AO - there was nothing in the reasons recorded to show that any tangible material which came to the possession of the AO subsequent to the issue of the intimation - the notice reflected an arbitrary exercise of the power conferred u/s 147 of the Act thus, the reopening was bad in law in that case also where reopening was made in the absence of tangible material or fresh information Decided in favour of assessee.
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2014 (11) TMI 476
Electricity expenses disallowed Held that:- CIT(A) is rightly of the view that the electricity charges debited to the profit and loss account for the year is only ₹ 8,19,537/-, including the sum of ₹ 6,73,947 - the electricity charges debited to the P&L account of the financial year under consideration included the amount which was related to the arrears of the earlier years - the claim of the assessee cannot be said to be comprised of contingent liability and the CIT(A) rightly deleted the disallowance and addition the order of the CIT(A) is upheld Decided against revenue. Legal and professional expenses disallowed Held that:- The AO has not disputed the fact that the assessee obtained premises situated at F-89/24, Okhla Phase I on lease from M/s Superex Steel Products Pvt. Ltd. who was recorded owner of the premises - when the immoveable property/premises belonged to a particular person or entity and the same is leased and handed over to another person or entity, then in case of any dispute pertaining to the electricity payment raised, the dispute would be titled in the name of the owner of the property/premises - it cannot be said that the expenses incurred by the assessee on legal and professional charges paid to Shri K.C. Mittal were not pertaining to the assessee firm - the legal and professional charges paid by the assessee in the case before Hon'ble Delhi High Court which was titled in the name of recorded owner of the premises are certainly the expenditure wholly and exclusively for the purpose of the business of the assessee which is allowable u/s 37 of the Act the order of the CIT(A) is upheld Decided against revenue. Mobile expenses disallowed Held that:- The AO has not disputed the fact that fringe benefit tax has been paid by the assessee firm on telephone expenses - The AO has not also disputed the fact that the partners of the assessee firm have to operate the business of the assessee with overseas clients and customers who reside in different time zones around the world - the explanation of the assessee is acceptable that the residential telephones as well as mobile phones of the partners were largely used for international calls and internet - the CIT(A) rightly granted relief for the assessee Decided against revenue. Mutual funds disallowed Held that:- As per copies of the mutual fund statement in the name of the assessee for the period, it is clear that the earning of dividend which were directly credited to the assessee's bank account are receipts in the nature of dividend from mutual funds which are eligible for exemption u/s 10(35) of the Act - the CIT(A) rightly granted relief for the assessee and we are unable to see any justified reason to interfere with the order in this regard Decided against revenue.
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2014 (11) TMI 475
Addition u/s 68 Share application money received during the year Initial burden discharged by assessee or not - Held that:- The assessee had discharged the initial burden of proof that lay on it - The investor company M/s VIP Leasing & Finance Pvt. Ltd. directly sent a confirmation letter to the Assessing Officer, along with its balance sheet - The AO had the PAN No. and complete address of the investor company - the assessee produced all the documents and evidences which he could and whereas, the revenue failed in conducting any enquiry or in gathering any evidence against the assessee As decided in COMMR. OF INCOME TAX Versus M/s LOVELY EXPORTS(PVT) LTD [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - if the assessee produces the names, addresses, PAN details of the shareholders then the onus on the assessee to prove the source of share application money stand discharged - If the Assessing Authority to verify the same in the hands of the shareholders concerned - as the assessee has discharged its initial burden of proof and as the revenue did not do any enquiry or investigation and hence did not discharge the onus that shifted to it, the contentions of the assessee is upheld Decided in favour of assessee.
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2014 (11) TMI 474
Transaction covered u/s 269T/271E or not Bonafide of transaction Contravention of section 2699SS/T or not - Held that:- There cannot be any justification in making repayments in cash when at the same time the assessee had received payments through transfer entries from the same party - The argument of the assessee that cash was paid after making adjustment of sales made to assessee is also not correct as the sales were made at the closing of month of December whereas the cash payments were made in the month of November - repayments in contravention of provisions of section 269T are ₹ 10,80,000 - All these payments were made in Ghaziabad as the assessee is based in Ghaziabad whereas the Bank of the firm M/s Premsons Forging Pvt. Ltd. is situated at Kanpur - It is not understandable as to how these payments were carried from Ghaziabad to Kanpur and that too on many days in the month whereas the facility of online deposit in third party bank account was also available - The classification by assessee in his balance sheet cannot alter the nature of transaction which necessarily was a loan or deposit and even if the amount is considered deposit then deposit includes advance against goods - There was no reasonable cause in making cash payments as the repayments made in Ghaziabad has been claimed to have been deposited in Kanpur which is beyond human probabilities specifically keeping in view of the fact that during the period of repayments in cash the assessee received from same party through journal entries huge amounts the order of the CIT(A) is upheld Decided against assessee.
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2014 (11) TMI 473
Claim of deduction on business expenses incurred for earning remuneration from the firm - assessee a qualified Chartered Accountant was a partner in two firms - Whether authorities were justified in disallowing the claimed deduction on account of business expenses on running, maintaining and on account of depreciation on motor car for earning the income from profession Held that:- Following the decision in Commissioner of Income-Tax, Bihar Versus Ramniklal Kothari [1969 (3) TMI 1 - SUPREME Court] - the assessee has claimed that the expenditure on maintenance and running of car was incurred by him for the purpose of discharging his professional duties as a partner of the firm - the expenditure on running and maintenance of the car was incurred by the assessee for the purpose of earning share income and remuneration from the firm - the assessee has received remuneration in addition to the share of profit from the firms, the expenditure incurred by the assessee for running and maintenance of motor car is to be allocated between the share of profit from the firms and remuneration from the firm - This allocation has to be made on the proportionate basis i.e. the expenditure on running and maintenance of motor car, depreciation etc. is to be allocated in proportion of share of profit from the firms and the remuneration received from the firms thus, the AO is directed to allow the proportionate deduction in respect of running and maintenance of motor car and depreciation against the remuneration received from the firm Decided partly in favour of assessee. Unexplained cash deposits - Whether the authorities below are justified in making and sustaining the addition for unexplained cash deposits out of cash earlier withdrawn Held that:- There was cash deposits in the bank account aggregating to ₹ 52,60,000/- which are clearly covered by earlier withdrawals of ₹ 54,65,000 - there is no reason to doubt the explanation of the assessee that the deposits were from the earlier withdrawals - The period of paring the money withdrawn ranging from 123 days to 8 days is also not so long to doubt the explanation of the assessee that the money was kept for the purchase of land for which dealing was going on but ultimately could not be materialized - There is a need to verify the claim of the assessee that these withdrawals from the bank were kept intact and were not used for house hold expenditure as the entries accounted for in the cash book maintained in this regard furnished by the assessee were exclusive of house hold withdrawals thus, the matter is remitted to AO for verification Decided in favour of assessee.
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2014 (11) TMI 472
Jurisdiction of CIT u/s 263 Failure to make inquiry by AO - LTCG and STCG on sale of shares Gifts received by assessee - Held that:- AO has not asked any query whatsoever with regard to the capital gains - it cannot be said that some enquiry was done by the AO - The assessment order is also very short and does not contain any reference to such enquiry. Hence, it cannot be said that AO has formed any opinion - the long term and short term capital gains have arisen only in respect of dealing of shares of Mawana Sugar Ltd. - frequency and magnitude of transaction are also important factor to decide whether the transaction is business transaction or investment transaction - the magnitude of share transaction does call for any enquiry on the part of the AO as to whether these are investments transactions or business transactions AO is not only an adjudicator but also an investigator - AO has totally failed to make any enquiry - the invocation of section 263 by the CIT is correct. Creditworthiness of the donor is also to be established by the assessee - No document in this regard has been submitted, nor the AO has made any enquiry - AO has not made any enquiry whatsoever in this regard and the same is not at all reflected in the enquiries made and the entries of the order sheet - CIT is correct in holding that this aspect needs further examination - It can also not be said that AO has adopted one of the two possible views when no enquiry has been made, when the same was required CIT rightly observed that AO has made the assessment in haste without applying his mind properly relying upon Gee Vee Enterprises Versus Additional Commissioner Of Income-Tax, Delhi I, And Others [1974 (10) TMI 29 - DELHI High Court] - CITs direction to make enquiry on the issue of capital gain earned by the assessee and the gift received by the assesse is sustainable the order of the CIT is upheld Decided against assessee.
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2014 (11) TMI 471
Classification of expenses - Take Out Assistance Fee Capital or revenue expenses Held that:- Following the decision in Commissioner of Income Tax Versus M/s Noida Toll Bridge Co Ltd. [2012 (11) TMI 556 - ALLAHABAD HIGH COURT] - take out assistance fee paid by the assessee is allowable expense u/s 37(1) of the Act thus, the addition made by the AO and confirmed by Ld. CIT(A) needs to be deleted Decided in favour of assesse. Classification of expenses revenue or capital - Amortization of zero coupon bonds treated as part of the package of relief and concessions granted by CDR empowered group of the Corporate Debt Restructuring Cell Held that:- Assessee rightly contended that the zero coupon bond is issued in order to compensate the loss of interest payable to them and accordingly amortization of zero coupon bond is nothing but the payment of interest to them and it is deductible expenditure as per Section 37(1) of the it act being revenue in nature relying upon CIT Vs Gujarat Guardian Ltd. [2009 (1) TMI 13 - HIGH COURT DELHI] - addition made by the AO and confirmed by Ld. CIT(A) could not be made in view of the facts and circumstances of the case the AO is directed to delete the addition Decided in favour of assessee.
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2014 (11) TMI 470
Unexplained cash credits u/s 68 Onus to prove discharged by assessee - Held that:- The AO made addition being difference of closing and opening balance under the head Unsecured Loans - CIT(A) rightly made a finding that there was no evidence or material that the money directly or indirectly emanated from the assessee so that it could be said that the assessees own money was brought in the guise of loans and the assessee has successfully established the three requirements of section 68 which are Identity of creditors, Capacity of creditors to advance money and genuineness of the transaction - when all the three conditions are proved by the assessee, then the burden shifts to the revenue to prove that amount belonged to the assessee - the assessee was able to prove the identity of the creditors and was able to show their creditworthiness and could demonstrate the genuineness of the transaction by sufficient evidence thus, the order fo the CIT(A) is upheld Decided against revenue. Depreciation on new fixed assets Evidences filed by assessee - Held that:- CIT(A) had rightly observed that the AO has not found any discrepancy in the supporting evidence furnished by it regarding the acquisition and installation of the new fixed assets during the relevant year - he has verified the evidence regarding the new fixed assets acquired during the AY and the claim of the assessee in respect to the depreciation is valid in law the order of the CIT(A) to allow the depreciation for the new fixed asset as per the claim of the assessee is upheld Decided against revenue. Administrative and manufacturing expenses Held that:- CIT(A) has recorded a finding that there was no material available with the AO on the basis of which he could have estimated the disallowance to the extent of 10% of expenses - there was no material or evidence before the AO, to support the disallowance at an ad-hoc rate of 10% of the total expense - CIT(A) has pointed out that the disallowance of the ad-hoc disallowance, smacks of arbitrariness and is devoid of any logic thus, the order of the CIT(A) is upheld Decided against revenue. Amount surrendered during the survey operation u/s 133A Held that:- CIT(A) have pointed out that the AO has in all fairness has admitted in the remand report that the addition stands explained as the amount has been already included by the assessee in the profit and loss account under the head Other Incomes and the return of income was filed accordingly - thus, the order of the CIT(A) is upheld Decided against revenue.
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2014 (11) TMI 469
Imposition of penalty u/s 271(1)(c) Inaccurate particulars furnished or not - Held that:- In the absence of any particular form of disclosure of the transaction, the disclosure in its books of account as done by the assessee was sufficient in law - in the absence of any provision of particular disclosure of the transaction, the disclosure in its books of account as done by the assessee was sufficient in law - There cannot be any charge of furnishing inaccurate particulars as well - the disallowance u/s 40A(2)(b) cannot be considered as concealment of income or furnishing of inaccurate particulars - the facts of the case does not warrant penalty u/s 271(1)(c) thus, the order of the CIT(A) is set aside Decided in favour of assessee. Additions made Hiring charges Sale of software Editing transfer charges - Held that:- There was no material on the basis of which this addition was made - Merely on the ground of dual rates being charged by assessee for the same episode the addition was made - No discrepancy had been found in the disclosures made by the assessee - the penalty is not sustainable The AO had not pointed out any discrepancy in the disclosures made by assessee on this count in its books of account - The disallowance has been made primarily u/s 40A(2)(b) on account of reasonableness of expenses - The assessees explanation has not been found to be false but only because of difference of opinion held by AO thus, the penalty levied on the disallowance is not sustainable Decided in favour of assessee. Payments made to artists Held that:- Since TDS was made from the payments made to the artists and amount was duly deposited with the department, merely on the ground of non-receipt of any reply from the said artists, for which there could be several reasons, it cannot be inferred that assessee had advanced wrong claim - the onus lies on the assessee to substantiate its claim but for the purposes of levying penalty u/s 271(1)(c) of the I.T. Act, this is not sufficient - where the assessees explanation is not malafide and he has not failed to disclose material in that regard, penalty cannot be levied - assessee had given details regarding various artists out of which only eight did not respond and the reason for the same was the time gap between the payment made to the artists and the enquiries initiated by AO - assessees explanation cannot be branded as malafide. Excess food expenditure Held that:- AO had not pointed out even a single voucher in his order which was not verifiable - by no stretch of reasoning can be held to be a wrong claim made by assessee - The nature of expenditure was such for which infallible evidence could not be expected - there was no basis for levying penalty - Decided in favour of assessee.
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Customs
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2014 (11) TMI 492
Denial of refund claim - Final assessment of bill of entry already done - whether the refund claim can be entertained when the person asking for refund has not challenged the assessments made finally on the bills of entry - Held that:- before issue of Circular dated 06.11.1997, another Circular dated 22.1.1985 was existing. Para -2 of the circular dated 06.11.1997 highlights the lapses pointed out by the CAGs audit regarding assessments made with respect to such conversions of vessels from foreign run to costal run. As a modification to the exisitng Circular an alternative method of duty payment on the ships stores etc., required to be consumed during the costal run, was extended to the importers. However, assessment with respect to duty paid on estimated quantity of ship stores consumed in costal run was also required to be made provisionally. In the light of prescribed procedure respondent was required to keep on record the fact that vessel after running on coastal run for some time will again taken out for foreign run and that appellant will be seeking refund claim of the excess duty paid. In the absence of compliance with the prescribed procedure, it cannot be said that duty assessments made on the bill of entry were provisional. Findings recorded by the first appellate authority to that extent are not legally correct. Once it is held that assessments made by the Revenue on the bills of entry were final then the judgments relied upon by the learned AR become relevant. refund claim contrary to the assessment orders is not maintainable without that order of assessment being modified in appeal - Following decision of Priya Blue Industries Limited [2004 (9) TMI 105 - SUPREME COURT OF INDIA] - Decided in favour of Revenue.
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2014 (11) TMI 491
Classification of goods - whether the goods imported by the petitioner are 'calcite powder' or 'precipitated calcium carbonate' - Held that:- Division Bench of this Court had directed the Commissioner, Customs and Central Excise to decide the applications filed by the petitioners so as to determine whether it was necessary to get a re-testing done from an equipped laboratory. applications have not been decided and notices have been issued to the petitioners for finalization of the provisional assessment. Interest of justice would, therefore, require that an appropriate decision should be taken after the Commissioner, Customs and Central Excise passes an order on the applications submitted by the petitioners. - Matter remanded back.
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2014 (11) TMI 490
Deletion of penalty by the tribunal where importer has not challenged the confiscation of goods - Misdeclaration of quantity - Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the levy of penalty imposed under Section 112(a) of the Customs Act, 1962 - Held that:- In order to invoke Section 112(a) of the Customs Act, it is essential that a person, who .in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or in terms of clause (b) of Section 112 acquires possession of or is in any way concerned in carrying, removing, depositing, keeping, etc., any goods which he knows or has reason to believe are liable to confiscation under Section 111. The case would fall within the ambit of clause (a) of Section 112. The importer has not challenged the order of confiscation. In such event, penalty would stand attracted in terms of sub-clause (iii) under clause (b) which states that in the case of goods in respect of which the value stated in the entry made under the Act is higher than the value thereof, the importer is liable for penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees which ever is the greater. The Tribunal, did not assign any specific reason for cancelling the penalty but pointed out that in every case of enhancement of value it cannot lead to an inference of misdeclaration of value. However, this finding appears to be inconsistent with the facts since the importer has not challenged the order of confiscation, which has been confirmed by the Tribunal also, wherein there is a clear finding that the importer was not able to satisfactorily explain the huge difference in quantity. Therefore, Section 112(a)(iii) stands attracted - penalty of ₹ 10,000/- imposed - Decided partly in favour of Revenue.
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2014 (11) TMI 489
Court dismissed the petition regarding confirmation of duty of ₹ 31 Lakhs as the appeal against the duty is pending with the Tribunal. Since the said appellate authority would be required to consider the legality and propriety of the demand since confirmed by the Assistant Commissioner of Customs it is not proper for this Court to express any view and/or opinion with regard to the claim made in the petition. Since the said appellate authority is in seisin over the matter the appellate authority is requested to dispose of the appeal preferably within a period of six months from the date of communication of this order without granting any unnecessary adjournment to either of the parties.
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Service Tax
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2014 (11) TMI 505
Modification of order - Order passed in assessee's absence - in the cause list published by CESTAT, appeal and stay application filed by the appellant did not figure - Held that:- The notices are often issued few months in advance and at the time of issue of notice, there is no guarantee / certainty that there would a Bench on that date for hearing. That is why the cause list is published every week. Therefore, if an assessee finds that his case is not listed in the cause list published and does not appear for personal hearing, it is difficult to find it as assessees fault. If an assessee has to ascertain from office of the Tribunal over phone whether their case is listed or not, the very purpose of publishing cause list in website is defeated. In our opinion, if an assessee has made efforts to verify the cause list and their case is not found listed, they cannot be found fault with. In this case, it is so. Therefore, we have to take a view that paragraph 6 of CESTATs Circular applies to this case and the matter has to be considered afresh. - Decided in favour of assessee.
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2014 (11) TMI 504
Waiver of pre deposit - CENVAT Credit - Trading activity - Held that:- Bench in the case of Lacto Cosmetics (Vapi) Pvt.Ltd Vs CCE Daman [2012 (12) TMI 642 - CESTAT AHMEDABAD] and Gulf Oil Corpn. Ltd. Vs CCE Vapi [2012 (8) TMI 45 - CESTAT, AHMEDABAD] has held that credit with respect to services availed in trading activities is not admissible. High Court of Gujarat in the case of Lally Automobiles Pvt.Ltd Vs Commissioner (Adjudication) Central Excise [2013 (10) TMI 863 - DELHI HIGH COURT] has also ordered for a pre-deposit in one such case. appellant has not made out a, prima facie, case for complete waiver of the confirmed demand - Partial stay granted.
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2014 (11) TMI 503
Banking and Finance Institution service - Reverse charge mechanism - Invocation of extended period of limitation - Held that:- money lender BNP Paribas has secured the loan amount lended (sic) to appellant from COFACE France and have secured their money they have paid insurance guarantee to COFACE France. When these facts are clear in this case, therefore, the service receiver is BNP Paribas and the service provider is COFACE, France. The appellant is only the beneficiary of the transaction held between BNP Paribas and COFACE, France. As the appellant is neither service provider nor service recipient, the appellant is not liable to pay service tax at all under Reverse charge mechanism - Decided in favour of assessee.
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2014 (11) TMI 502
Waiver of pre deposit - Business Auxiliary service - services in relation to manufacture and processing of goods by the applicant to M/s. SKOL Breweries Ltd. - applicant has merged with M/s. SKOL Breweries Ltd. with effect from 31.03.2009 - Held that:- Effective date of the merger is on 31.03.2009. Therefore, the question of rendering service by the applicant to M/s. SKOL Breweries Ltd. does not arise. In these circumstances, the applicant has made out a case for complete waiver of pre-deposit. - Stay granted.
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2014 (11) TMI 501
Waiver of pre deposit - Supply of tangible goods service - Site formation & clearances, excavation, earth moving and demolition service - Held that:- On perusal of details of the contracts/work orders executed by the appellant for various clients, it prima facie appears that the service provided by them was taxable as the site formation & clearances, excavation, earth moving and demolition service under section 65(105)(zzza), dredging service taxable under section 65(105)(zzb) and supply of tangible goods service taxable under section 65(105)(zzzzj) w.e.f. 16.05.08. It is also seen from the records that the appellant during the period of dispute had recovered an amount of ₹ 25,11,701/- from their customers towards service tax, the details of which are mentioned in para 9 of the Show Cause Notice and this fact is not disputed by the appellant. Though the appellant s plea is that the substantial amount received by them does not represent the turnover for any taxable service, this plea requires detailed examinations of the records which is possible only at the time of final hearing. - Partial stay granted.
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2014 (11) TMI 500
Waiver of pre deposit - Classification of service - Assessee entered in to an Agreement / Arrangement with Gujarat Cricket Association (GCA). By virtue of agreement / arrangement, the appellant could enter into agreement with companies and other clients for sponsorship of sports events and other sports marketing services in the stadium - Held that:- Under Operational assistance for marketing only is covered and when we talk of operational assistance of marketing, prima facie, it may not cover the advertisement or facilitation for advertisement which seems to be the activity of the appellant. Prima facie, we are unable to find merits in the stand taken by the Revenue. Nevertheless, the issue is debatable and involves interpretation of service vies-a-vies definition of service and classification of service and in such a situation, confirmation of demand by invoking extended period may not be sustainable. In this case, period involved is April 2007 to March 2008 and show-cause notice was issued on 20.12.2010, thereby rendering the entire demand is beyond normal period of limitation. In view of above, we consider that the appellant is entitled to waiver of pre-deposit. Accordingly, there shall be waiver of pre-deposit and stay against recovery of adjudged dues during pendency of the appeal - Stay granted.
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2014 (11) TMI 499
Renting of Immovable Property - cum-duty value - levy of service tax on security amount - Imposition of interest and penalty - Benefit of Section 80 - Held that:- Admittedly, the security deposit collected by the appellant is refundable at the time of termination of lease/rent agreement. Therefore, the said security deposit cannot form a part of service provided by the appellant. Therefore, on the said amount, service tax is not payable. Cum-duty price - As per the agreement, the service tax is payable separately by the lessee. As the appellant has not recovered service tax from the lessee, they may recover separately. Therefore, the contention of the appellant as they have not recovered the service tax from the lessee, the rent recovered by them be treated as cum-service tax is not acceptable. In these circumstances, we hold that the rent received by the appellant shall be treated as gross value of taxable service and on the said amount the appellant is required to pay service tax. Levy of penalty - On the understanding of the appellant that what amount of rent they received the same is treatable as cum-service tax, therefore, they have not paid full amount of service tax. This understanding by the appellant is not acceptable. In these circumstances, substantial benefit of Section 80(2) cannot be denied. In these circumstances, we hold that the appellant is entitled for the benefit of dropping the penalty on the appeal as per Section 80 (2) of the Finance Act, 1994 - Decided in favour of assessee.
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Central Excise
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2014 (11) TMI 498
Waiver of pre deposit - SSI exemption - Held that:- The specific case of the assessee was that in a similar case, the Tribunal, in [2009 (11) TMI 389 - CESTAT, CHENNAI], in the case of Data Tech Systems v. Commissioner of Central Excise, Coimbatore held that duty demand within the normal period should be recalculated and imposition of penalty should be considered afresh. Further, it was pointed out that in the case of [2010 (2) TMI 1120 - CESTAT CHENNAI] (Sumangala Steels (P) Ltd. v. CCE), the Tribunal has held that the time limit for demand of short-paid duty was only six months prior to the period 2000. The learned counsel appearing for the appellant asserts that the decision in the case of Data Tech Systems v. Commissioner of Central Excise, Coimbatore (cited supra) has been accepted by the Revenue. Thus, taking note of the status of the assessee as SSI unit, apart from the prima facie case made out, we are of the view that the assessee would be entitled for complete waiver of pre-deposit - stay granted.
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2014 (11) TMI 497
Recovery of Interest Section 11AB - Differential duty - Period of limitation - whether the liability to pay interest on differential excise duty already paid at the time of issue of supplementary invoices would continue and if so can such interest liability be demanded beyond the normal period of limitation of one year from the date of supplementary invoice under Section 11A read with Section 11AB of the Act - Held that:- Following decision of M/s Jai Bharat Maruti Ltd. Versus Commissioner of Central Excise, Delhi-III [2013 (10) TMI 355 - PUNJAB & HARYANA HIGH COURT] wherein it was held that period of one year would apply to the present case. - Decided in favour of assessee.
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2014 (11) TMI 496
Levy of interest - tribunal deleted the interest demand - period from 1-4-2001 to 31-1-2002 - Section 11AB of Central Excise Act, 1944, which stands amended with effect from 11-5-2001 - Held that:- liability to pay interest would arise in case where there has been a delayed payment of duty as determined under Section 11A(2) of the Act, which was with an intention to evade payment of duty and in such circumstances, the assessee would be liable to pay interest. we have held that there was no intention on the part of the assessee to evade payment of duty and there was a dispute as regards the classification of the product. Therefore, the Tribunal was justified in deleting the interest. Even though interest on the duty demanded is statutory, yet when the statute requires the stated conditions as referred to above, the Tribunal rightly concluded that interest was not chargeable on the facts of the case. - Decided in favor of assessee. Eligibility to avail Modvat Credit - at the relevant point of time, the assessee was not registered with the Department - Held that:- At the relevant point of time, the assessee was not registered with the Department and in fact, it subsequently obtained registration from the Department and therefore, if at all the assessee is entitled to any credit it would accrue only subsequent to the date of the registration with the Department. Even though the assessee claimed exemption on the ground that they had subsequently registered with the Department, as regards the liability as found in the order of adjudication as well as in the order of the Tribunal, we do not find any justifiable ground to accept the plea of the assessee based on the exemption Notification alone that the registration being not a mandatory one, the assessee would be entitled to the benefit of Modvat credit. - Decided against the assessee.
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2014 (11) TMI 495
Exemption under Notification No. 23/98-C.E. - Manufacturing of newsprint - Held that:- It is an admitted that if any Mill or Industry deals with manufacturing of newsprint material, the same can very well get exemption after getting proper notification under the Newsprint Control Order, 1962. The claim of the appellant/Department is based upon the fact that the second unit of the respondent has not been notified as per Newsprint Control Order, 1962. Only with regard to first unit proper notification has been obtained - for getting exemption from paying Central Excise Duty each unit must be separately or distinctly notified under the Newsprint Control Order, 1962 and admittedly, the respondent has not been notified under the said order. As stated in many places, both the Authorities have given identical findings to the effect that both units are doing identical work and therefore the second unit (respondent) need not to get notification separately. - Since for getting exemption from paying Central Excise Duty notification under Newsprint Control Order, 1962 is very much essential, mere doing of identical works is not at all sufficient for getting exemption. Therefore, the concurrent views expressed by the Commissioner of Appeals as well as the CESTAT are not factually and legally correct - Decided in favour of Revenue.
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2014 (11) TMI 494
Condonation of delay - Delay caused due to application filed to make the correct to mistake in the impugned order - Whether the expression sufficient cause means the delay has to be appropriately explained by showing the factual causes sufficiently leading to the delay or it should be interpreted that the factual cause itself should be justified and reason on its own merit notwithstanding the fact that the reasons for the delay have been sufficiently explained - Held that:- It is a settled legal position that the law of limitation has not been enacted for the purpose of defeating the rights of the parties and if a person has not been diligent and acted in a mala fide and with deliberate intention presented the appeal belatedly for certain other reasons, then, it would be a case, where, the Court would not exercise discretion in condoning the delay. From the facts of the case, the case on hand does not appear to be one such case as there is no dispute regarding the communications between the appellant and the department, and even in the communication dated 8-9-2008, the Commissioner has observed that if the appellant does not accept the order dated 14-3-2008, it is open to them to move the higher appellate forum - Delay condoned - matter restored before the tribunal - Decided in favour of assessee.
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2014 (11) TMI 493
Imposition of penalty - Demand of differential duty - Whether the order passed by the second respondent dated 20-2-2003 has any force after the omission of Section 3A and Rule 96ZP with effect from 11-5-2001 - Held that:- decision of the Division Bench of the Gujarat High Court reported in Krishna Processors v. Union of India - [2012 (11) TMI 954 - GUJARAT HIGH COURT] was rendered on 16-3-2012 and the Finance (No. 2) Act, 2009 (Act No. 33 of 2009) has not been brought to the notice of the Division Bench of the Gujarat High Court. Admittedly, there is no challenge to the validity of the Finance (No. 2) Act, 2009 (Act No. 33 of 2009) at the instance of the appellant. In such circumstances, by virtue of the Finance (No. 2) Act, 2009 (Act No. 33 of 2009) the omission of Section 3A of the Act by Section 121 of the Finance Act, 2001 is deemed to be valid and therefore, the contentions urged on behalf of the appellant does not merit acceptance. Rules 96ZQ, 96ZP and 96ZO of the Rules provides for mandatory penalty, provision for imposition of mandatory penalty even for slightest bona fide delay without discretion is beyond the purpose of legislation. It was further held that the provisions in the Rules permitting minimum penalty without any discretion and without having regard to extent and circumstances for delay are ultra vires the Act and the Constitution of India. penalty under Section 11AC is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. there is no scope for exercise of discretion by the Tribunal in the matter of imposing penalty. Consequently, we do not find any reason to interfere with the order of CESTAT, confirming the order passed by the original authority - Following decision of Bansal Alloys & Metals Private Limited v. Union of India [2010 (11) TMI 83 - PUNJAB & HARYANA HIGH COURT] - Decided against assessee.
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